PURCHASE AGREEMENT

(a) No Registration Required.  Subject to compliance by the Initial Purchasers with the representations and warranties set forth in Section 2 hereof and with the procedures set forth in Section 7 hereof, it is not necessary in connection with the offer, sale and delivery of the Securities to the Initial Purchasers and to each Subsequent Purchaser in the manner contemplated by this Agreement and the Offering Memorandum to register the Securities under the Securities Act or to qualify the Indentures under the Trust Indenture Act of 1939 (the “Trust Indenture Act,” which term, as used herein, includes the rules and regulations of the Commission promulgated thereunder).

 

(b) No Integration of Offerings or General Solicitation.  None of the Company, the Guarantors or any of their respective affiliates (as such term is defined in Rule 501 under the Securities Act) (each, an “Affiliate”), or any person acting on its or any of their behalf (other than the Initial Purchasers, as to whom the Company and the Guarantors make no representation or warranty) has, directly or indirectly, solicited any offer to buy or offered to sell, or will, directly or indirectly, solicit any offer to buy or offer to sell, in the United States or to any United States citizen or resident, any security which is or would be integrated with the sale of the Securities in a manner that would require the Securities to be registered under the Securities Act.  None of the Company, the Guarantors, nor any of their respective Affiliates, or any person acting on any of their behalf (other than the Initial Purchasers, as to whom the Company and the Guarantors make no representation or warranty) has engaged or will engage, in connection with the offering of the Securities, in any form of general solicitation or general advertising within the meaning of Rule 502 under the Securities Act.  With respect to those Securities sold in reliance upon Regulation S, (i) none of the Company, the Guarantors or any of their respective Affiliates or any person acting on their behalf (other than the Initial Purchasers, as to whom the Company and the Guarantors make no representation or warranty) has engaged or will engage in any directed selling efforts within the meaning of Regulation S and (ii) each of the Company, the Guarantors and their respective Affiliates and any person acting on their behalf (other than the Initial Purchasers, as to whom the Company and the Guarantors make no representation or warranty) has complied and will comply with the offering restrictions set forth in Regulation S.

 

(c) Eligibility for Resale under Rule 144A.  The Securities are eligible for resale pursuant to Rule 144A and will not be, at the Closing Date, of the same class as securities listed on a national securities exchange registered under Section 6 of the Exchange Act or quoted in a U.S. automated interdealer quotation system.

 

(d) The Pricing Disclosure Package and Offering Memorandum. Neither the Pricing Disclosure Package, as of the Time of Sale, nor the Final Offering Memorandum, as of its date or (as amended or supplemented in accordance with Section 3(a), as applicable) as of the Closing Date, contains an untrue statement of a material fact or omits to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided that this representation, warranty and agreement shall not apply to statements in or omissions

 

(e) Company Additional Written Communications.  The Company has not used, authorized, approved or distributed and will not use, authorize, approve or distribute any written communication that constitutes an offer to sell or solicitation of an offer to buy the Securities other than (i) the Pricing Disclosure Package, (ii) the Final Offering Memorandum and (iii) any electronic road show or other written communications, in each case used in accordance with Section 3(a).  Each such communication by the Company or its agents and representatives pursuant to clause (iii) of the preceding sentence (each, a “Company Additional Written Communication”), when taken together with the Pricing Disclosure Package, did not as of the Time of Sale, and at the Closing Date will not, contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided that this representation, warranty and agreement shall not apply to statements in or omissions from each such Company Additional Written Communication made in reliance upon and in conformity with information furnished to the Company in writing by any Initial Purchaser through the Representative expressly for use in any Company Additional Written Communication.

 

(f) Incorporated Documents.  The documents incorporated or deemed to be incorporated by reference in the Offering Memorandum at the time they were or hereafter are filed with the Commission (collectively, the “Incorporated Documents”) complied and will comply in all material respects with the requirements of the Exchange Act.

 

(g) The Purchase Agreement.  This Agreement has been duly authorized, executed and delivered by the Company and the Guarantors.

 

(h) DTC Agreement.  The DTC Agreement has been duly authorized and, on the Closing Date, will have been duly executed and delivered by, and will constitute a valid and binding agreement of, the Company, enforceable against the Company in accordance with its terms, except as the enforcement thereof may be limited by bankruptcy, fraudulent conveyance, insolvency, reorganization, moratorium or other similar laws relating to or affecting the rights and remedies of creditors or by general equitable principles (regardless whether such enforceability is considered in a proceeding in equity or at law) and the discretion of the court before which any proceeding therefor may be brought and except as rights to indemnification may be limited by applicable law and public policy considerations (collectively, the “Enforceability Exceptions”).

 

(i) Authorization of the Securities and the Guarantees.  The Notes to be purchased by the Initial Purchasers from the Company will on the Closing Date be in the form contemplated by the Indenture governing such Note, have been duly authorized for issuance and sale pursuant to this Agreement and the Indenture governing such Note and, at the Closing Date, will have been duly executed by the Company and, when authenticated in the manner provided for in the Indenture governing such Note and delivered against payment of the purchase price therefor, will constitute valid and binding obligations of the Company, enforceable against the Company in accordance with their terms, except as the enforcement thereof may be limited by the Enforceability Exceptions and will be entitled to the benefits of the Indenture governing such Note.  The Guarantees on the Closing Date when issued will be in the respective forms contemplated by the Indenture governing such Guarantee and have been duly authorized for issuance pursuant to this Agreement and the Indenture governing such Guarantee; the Guarantees, at the Closing Date, will have been duly executed by each of the Guarantors and, when the applicable Notes have been authenticated in the manner provided for in the Indenture governing such Guarantee and issued and delivered against payment of the purchase price therefor in accordance with the terms of this Agreement, such Guarantee will constitute a valid and binding agreement of the applicable Guarantor, enforceable against such Guarantor in accordance with its terms, except as the enforcement thereof may be limited by the Enforceability Exceptions and will be entitled to the benefits of the Indenture governing such Guarantee.

 

(j) Authorization of the Indentures.  The Indentures have been duly authorized by the Company and the Guarantors and, at the Closing Date, will have been duly executed and delivered by the Company and the Guarantors and will constitute a valid and binding agreement of the Company and the Guarantors, enforceable against the Company and the Guarantors in accordance with its terms, except as the enforcement thereof may be limited by the Enforceability Exceptions.

 

(k) Authorization of the Intercreditor Agreements.  The Intercreditor Agreements have been duly authorized by the Company and each Guarantor and, at the Closing Date, will have been duly executed and delivered by the Company and each Guarantor and will constitute a valid and binding agreement of the Company and each Guarantor, enforceable against the Company and each Guarantor in accordance with its terms, except as the enforcement thereof may be limited by the Enforceability Exceptions.

 

(l) Security Documents.  Each of the Security Documents has been duly authorized by the Company and/or the applicable Guarantor, as appropriate, and, when executed and delivered by the Company and/or the applicable Guarantor, will constitute a legal, valid and binding agreement of the Company and/or the applicable Guarantor enforceable against the Company and/or the applicable Guarantor (subject, as to the enforcement of remedies, to applicable bankruptcy, fraudulent conveyance, insolvency, reorganization, moratorium or other laws relating to or affecting creditors’ rights generally from time to time in effect and by general principles of equity (regardless whether such enforceability is considered in a proceeding in equity or at law)).  The Senior Priority Security Documents, when executed and delivered in connection with the sale of the Senior

 

 

Priority Securities, will create in favor of the Senior Priority Collateral Agent, for the benefit of itself, the Senior Trustee and the holders of the Senior Priority Notes, valid and enforceable security interests in and liens on the Collateral and, upon the filing of appropriate Uniform Commercial Code financing statements in United States jurisdictions, the filing of appropriate Personal Property Security Act (Canada) (“PPSA”) financing statements in Canadian jurisdictions and the taking of the other actions, in each case as further described in the Senior Priority Security Documents, the security interests in and liens on the rights of the Company or the applicable Guarantor in such Collateral will be perfected security interests and liens, superior to and prior to the liens of all third persons other than as described in the Offering Memorandum.  The Junior Priority Security Documents, when executed and delivered in connection with the sale of the Junior Priority Securities, will create in favor of the Junior Priority Collateral Agent, for the benefit of itself, the Junior Trustee and the holders of the Junior Priority Notes, valid and enforceable security interests in and liens on the Collateral and, upon the filing of appropriate Uniform Commercial Code financing statements in United States jurisdictions, the filing of appropriate PPSA financing statements in Canadian jurisdictions and the taking of the other actions, in each case as further described in the Junior Priority Security Documents, the security interests in and liens on the rights of the Company or the applicable Guarantor in such Collateral will be perfected security interests and liens, superior to and prior to the liens of all third persons other than as described in the Offering Memorandum.

 

(m) Description of Documents.  The Securities, the Indentures, the Security Documents and the Intercreditor Agreements conform in all material respects to the descriptions thereof contained in the Offering Memorandum.

 

(n) No Material Adverse Change.  Except as otherwise disclosed in the Offering Memorandum (exclusive of any amendment or supplement thereto), subsequent to the respective dates as of which information is given in the Offering Memorandum (exclusive of any amendment or supplement thereto):  (i) there has been no material adverse change, or any development that could reasonably be expected to result in a material adverse change, in the condition, financial or otherwise, or in the earnings, business, operations or prospects of Holdings, the Company and their respective subsidiaries, considered as one entity (any such change is called a “Material Adverse Change”); (ii) Holdings, the Company and their respective subsidiaries, considered as one entity, have not incurred any material liability or obligation, indirect, direct or contingent, not in the ordinary course of business nor entered into any material transaction or agreement; and (iii) there has been no dividend or distribution of any kind declared, paid or made by Holdings or the Company or, except for dividends paid to Holdings, the Company or other subsidiaries, any of their respective subsidiaries on any class of capital stock or repurchase or redemption by Holdings, the Company or any of their respective subsidiaries of any class of capital stock.

 

(o) Independent Accountants.  Grant Thornton LLP, which expressed its opinion with respect to the financial statements (which term as used in this Agreement includes the related notes thereto) and supporting schedules filed with the Commission and included in the Offering Memorandum, is an independent public accounting firm

 

 

within the meaning of the Securities Act, the Exchange Act and the rules of the Public Company Accounting Oversight Board.

 

(p) Preparation of the Financial Statements.  The consolidated financial statements, together with the related schedules and notes, included in the Offering Memorandum present fairly in all material respects the consolidated financial position of the entities to which they relate as of and at the dates indicated and the results of their operations and cash flows for the periods specified.  Such financial statements have been prepared in conformity with generally accepted accounting principles as applied in the United States applied on a consistent basis throughout the periods involved, except as may be expressly stated in the related notes thereto.  The financial data set forth in the Offering Memorandum under the captions “Offering Memorandum Summary–Summary Selected Consolidated Financial Data” and “Selected Consolidated Financial Information” fairly present in all material respects the information set forth therein and have been compiled on a basis consistent with that of the audited financial statements contained in the Offering Memorandum.  The statistical and market-related data and forward-looking statements included in the Offering Memorandum are based on or derived from sources that Holdings, the Company and their respective subsidiaries believe to be reliable and accurate in all material respects and represent their good faith estimates that are made on the basis of data derived from such sources.  The interactive data in eXtensible Business Reporting Language included or incorporated by reference in each of the Preliminary Offering Memorandum, the Time of Sale Information and the Offering Memorandum fairly presents the information called for in all material respects and has been prepared in accordance with the Commission's rules and guidelines applicable thereto.

 

(q) Incorporation and Good Standing of Holdings, the Company and their Respective Subsidiaries.  Each of Holdings, the Company and their respective subsidiaries has been duly incorporated or formed, as applicable, and is validly existing as a corporation, limited partnership or limited liability company, as applicable, in good standing under the laws of the jurisdiction of its incorporation or formation, as applicable, and has corporate, partnership or limited liability company, as applicable, power and authority to own, lease and operate its properties and to conduct its business as described in the Offering Memorandum and, in the case of Holdings, the Company and the Guarantors, to enter into and perform its obligations under each of this Agreement, the DTC Agreement, the Securities, the Indentures, the Security Documents and the Intercreditor Agreements to which it is a party.  Each of Holdings, the Company and each subsidiary is duly qualified as a foreign corporation, limited partnership or limited liability company, as applicable, to transact business and is in good standing or equivalent status in each jurisdiction in which such qualification is required, whether by reason of the ownership or leasing of property or the conduct of business, except for such jurisdictions where the failure to so qualify or to be in good standing would not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Change.  All of the issued and outstanding capital stock or other ownership interest of each subsidiary has been duly authorized and validly issued, is fully paid and nonassessable and is owned by Holdings, directly or through subsidiaries, free and clear of any security interest, mortgage, pledge, lien, encumbrance or claim, except as disclosed in the Offering Memorandum.  Holdings does not own or control, directly or indirectly, any corporation, association or other entity

 

 

other than the subsidiaries listed in Exhibit B hereto or in Exhibit 21.1 to Holdings’ Annual Report on Form 10-K for the fiscal year ended December 28, 2013.

 

(r) Capitalization and Other Capital Stock Matters.  At March 29, 2014, on a consolidated basis, after giving pro forma effect to the issuance and sale of the Securities pursuant hereto, the Company and Holdings would have an authorized and outstanding capitalization as set forth in the Offering Memorandum under the caption “Capitalization” (other than for subsequent issuances of capital stock, if any, pursuant to employee benefit plans described in the Offering Memorandum or upon exercise of outstanding options described in the Offering Memorandum).

 

(s) Non-Contravention of Existing Instruments; No Further Authorizations or Approvals Required.  None of Holdings, the Company or any of their respective subsidiaries is (i) in violation of its charter, bylaws or similar constitutive document or (ii) in default (or, with the giving of notice or lapse of time, would be in default) (“Default”) under any indenture, mortgage, loan or credit agreement, note, contract, franchise, lease or other instrument to which Holdings, the Company or any of their respective subsidiaries is a party or by which it or any of them may be bound (including, without limitation, the Company’s 11.50% Senior Notes due 2017, 7.00% Exchangeable Senior Notes due 2017 or the related indentures, and the ABL Facility), or to which any of the property or assets of Holdings, the Company or any of their respective subsidiaries is subject (each, an “Existing Instrument”), except, in the case of clause (ii) above, for such Defaults as would not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Change.  The Company’s and the Guarantors’ execution, delivery and performance of this Agreement, the DTC Agreement, the Indentures, the Security Documents and the Intercreditor Agreements, as the case may be, and the issuance and delivery of the Securities, and consummation of the transactions contemplated hereby and thereby and by the Offering Memorandum (i) have been duly authorized by all necessary corporate action and will not result in any violation of the provisions of the charter, bylaws or other constitutive document of Holdings, the Company or any of their respective subsidiaries, (ii) will not conflict with or constitute a breach of, or Default or a Debt Repayment Triggering Event (as defined below) under, or result in the creation or imposition of any lien, charge or encumbrance upon any property or assets of Holdings, the Company or any of their respective subsidiaries pursuant to, or require the consent of any other party to, any Existing Instrument, except for such conflicts, breaches, Defaults, liens, charges or encumbrances as would not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Change and (iii) will not result in any violation of any law, administrative regulation or administrative or court decree applicable to Holdings, the Company or any of their respective subsidiaries, except for such violations as would not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Change.  No consent, approval, authorization or other order of, or registration or filing with, any court or other governmental or regulatory authority or agency is required for the Company’s or any Guarantor’s execution, delivery and performance of this Agreement, the DTC Agreement, the Indentures, the Security Documents, or the Intercreditor Agreements, or the issuance and delivery of the Securities or consummation of the transactions contemplated hereby and thereby and by the Offering Memorandum, except (A) such as have been obtained or made by the Company and the applicable Guarantor

 

 

and are in full force and effect under the Securities Act or applicable securities laws of the several states of the United States or provinces of Canada, and (B) such filings and recordings as may be required to perfect the liens and security interests granted to the Collateral Agents in the Collateral.  As used herein, a “Debt Repayment Triggering Event” means any event or condition which gives, or with the giving of notice or lapse of time would give, the holder of any note, debenture or other evidence of indebtedness (or any person acting on such holder’s behalf) the right to require the repurchase, redemption or repayment of all or a portion of such indebtedness by Holdings, the Company or any of their respective subsidiaries.

 

(t) No Material Actions or Proceedings.  Except as otherwise disclosed in the Offering Memorandum, there are no legal or governmental actions, suits or proceedings pending or, to the best of the Company’s or any Guarantor’s knowledge, threatened (i) against or affecting Holdings, the Company or any of their respective subsidiaries or (ii) which has as the subject thereof any property owned or leased by Holdings, the Company or any of their respective subsidiaries and any such action, suit or proceeding, if determined adversely to Holdings, the Company or such subsidiary, would reasonably be expected to result in a Material Adverse Change or adversely affect the consummation of the transactions contemplated by this Agreement.  No labor dispute with the employees of Holdings, the Company or any of their respective subsidiaries (a) exists or (b) to the best of the Company’s or any Guarantor’s knowledge, is threatened or imminent and, in each case, would reasonably be expected to result in a Material Adverse Change.

 

(u) Intellectual Property Rights.  Holdings, the Company and their respective subsidiaries own or possess sufficient trademarks, trade names, patent rights, copyrights, licenses, approvals, trade secrets and other similar rights (collectively, “Intellectual Property Rights”) reasonably necessary to conduct their businesses as now conducted; and the expected expiration of any of such Intellectual Property Rights would not reasonably be expected to result in a Material Adverse Change.  Neither Holdings, the Company nor any of their respective subsidiaries has received any notice of infringement or conflict with asserted Intellectual Property Rights of others, which infringement or conflict, if the subject of an unfavorable decision, would reasonably be expected to result in a Material Adverse Change.

 

(v) All Necessary Permits, etc.  Holdings, the Company and each subsidiary possess such valid and current certificates, authorizations or permits issued by the appropriate state, federal or foreign regulatory agencies or bodies necessary to own, lease and operate its properties and to conduct their respective businesses, except the absence of which certificates, authorizations or permits which would not reasonably be expected to result in a Material Adverse Change, and neither Holdings, the Company nor any subsidiary has received any notice of proceedings relating to the revocation or modification of, or non-compliance with, any such certificate, authorization or permit which, singly or in the aggregate, if the subject of an unfavorable decision, ruling or finding, would reasonably be expected to result in a Material Adverse Change.

 

(w) Title to Properties.  Holdings, the Company and each of their respective subsidiaries has good and marketable title to all the properties and assets reflected as

 

 

owned in the financial statements referred to in Section 1(o) hereof (or elsewhere in the Offering Memorandum), in each case free and clear of any security interests, mortgages, liens, encumbrances, equities, claims and other defects, except as disclosed in the Offering Memorandum (including, without limitation, Permitted Liens (as such term is defined in the Offering Memorandum)) and except such as do not materially and adversely affect the value of such property and do not materially interfere with the use made or proposed to be made of such property by Holdings, the Company or such subsidiary.  The real property, improvements, equipment and personal property held under lease by Holdings, the Company or any of their respective subsidiaries are held under valid and enforceable leases, with such exceptions as are not material and do not materially interfere with the use made of such real property, improvements, equipment or personal property by Holdings, the Company or such subsidiary.

 

(x) Tax Law Compliance.  Holdings, the Company and their respective subsidiaries have filed all necessary federal, state and foreign income and franchise tax returns and have paid all taxes required to be paid by any of them and, if due and payable, any related assessment, fine or penalty levied against any of them, except to the extent that the failure of any of the foregoing to be true would, in the aggregate, not reasonably be expected to result in a Material Adverse Change.  Holdings and the Company have made adequate charges, accruals and reserves in accordance with generally accepted accounting principles (“GAAP”) in the applicable financial statements referred to in Section 1(o) hereof in respect of all federal, state and foreign income and franchise taxes for all periods as to which the tax liability of Holdings, the Company or any of their respective subsidiaries has not been finally determined.

 

(y) Company and Guarantors Not “Investment Companies”.  Neither the Company nor any Guarantor is, or after receipt of payment for the Securities and the application of the proceeds thereof as described in the Offering Memorandum will be, an “investment company” within the meaning of the Investment Company Act of 1940, as amended (including the rules and regulations of the Commission promulgated thereunder), and will conduct its business in a manner so that it will not become subject to the Investment Company Act.

 

(z) Insurance.  Each of Holdings, the Company and their respective subsidiaries have insurance covering their respective properties, which insurance is in amounts and covers such losses and risks as are customary for businesses in similar industries.  Neither Holdings nor the Company has received notice from any insurer or agent of such insurer that it or any subsidiary will not be able (i) to renew its existing insurance coverage as and when such policies expire or (ii) to obtain comparable coverage from similar institutions as may be necessary or appropriate to conduct its business as now conducted and at a cost that would not reasonably be expected to result in a Material Adverse Change.

 

(aa) No Price Stabilization or Manipulation.  None of the Company or any of the Guarantors has taken, directly or indirectly, any action designed to or that would be reasonably expected to cause or result in stabilization or manipulation of the price of any security of the Company to facilitate the sale or resale of the Securities.

 

(bb) Solvency.  Immediately after the Closing Date, Holdings, the Company and the Guarantors, on a consolidated basis, will be Solvent.  As used herein, the term “Solvent” means, with respect to any person on a particular date, that on such date (i) the fair market value of the assets of such person is greater than the total amount of liabilities (including contingent liabilities) of such person, (ii) the present fair salable value of the assets of such person is greater than the amount that will be required to pay the probable liabilities of such person on its debts as they become absolute and matured, (iii) such person is able to realize upon its assets and pay its debts and other liabilities, including contingent obligations, as they mature and (iv) such person does not have unreasonably small capital.

 

(cc) Compliance with Sarbanes-Oxley.  Holdings, the Company and their respective subsidiaries and their respective officers and directors are in compliance in all material respects with the applicable provisions of the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act,” which term, as used herein, includes the rules and regulations of the Commission promulgated thereunder).

 

(dd) Accounting Systems.  Holdings, the Company and their respective subsidiaries maintain a system of internal accounting controls that is in compliance with the Sarbanes-Oxley Act and is sufficient to provide reasonable assurances that:  (i) transactions are executed in accordance with management’s general or specific authorization; (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with generally accepted accounting principles as applied in the United States and to maintain accountability for assets; (iii) access to assets is permitted only in accordance with management’s general or specific authorization; (iv) the recorded accountability for assets is compared with existing assets at reasonable intervals and appropriate action is taken with respect to any differences; and (v) any interactive data in eXtensible Business Reporting Language included or incorporated by reference in the Offering Memorandum and the Pricing Disclosure Package present fairly the information called for in all material respects and are prepared in accordance with the Commission’s rules and guidelines applicable thereto.

 

(ee) Disclosure Controls and Procedures.  Holdings has established and maintains disclosure controls and procedures (as such term is defined in Rules 13a-15 and 15d-15 under the Exchange Act); such disclosure controls and procedures are designed to ensure that material information relating to Holdings and its subsidiaries is made known to the chief executive officer and chief financial officer of Holdings by others within Holdings, and such disclosure controls and procedures are reasonably effective to perform the functions for which they were established subject to the limitations of any such control system; Holdings’ auditors and the Board of Directors of Holdings have been advised of:  (i) any significant deficiencies or material weaknesses in the design or operation of internal controls which could adversely affect Holdings’ or the Company’s ability to record, process, summarize, and report financial data; and (ii) any fraud, whether or not material, that involves management or other employees who have a role in Holdings’ internal controls; and since the date of the most recent evaluation of such disclosure controls and procedures, there have been no significant changes in internal

 

 

controls or in other factors that could significantly affect internal controls, including any corrective actions with regard to significant deficiencies and material weaknesses.

 

(ff) Regulations T, U and X.  Neither the Company nor any Guarantor nor any of their respective subsidiaries nor any agent thereof acting on their behalf has taken, and none of them will take, any action that might cause the issuance or sale of the Securities to violate Regulation T, Regulation U or Regulation X of the Board of Governors of the Federal Reserve System.

 

(gg) Compliance with and Liability under Environmental Laws. Except as would not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Change:  (i) each of Holdings, the Company and their respective subsidiaries and their respective operations and facilities are in compliance with, and not subject to any known liabilities under, applicable Environmental Laws, which compliance includes, without limitation, having obtained and being in compliance with any permits, licenses or other governmental authorizations or approvals, and having made all filings and provided all financial assurances and notices, required for the ownership and operation of the business, properties and facilities of Holdings, the Company or their respective subsidiaries under applicable Environmental Laws, and compliance with the terms and conditions thereof; (ii) neither Holdings, the Company nor any of their respective subsidiaries has received any written communication, whether from a governmental authority, citizens group, employee or otherwise, that alleges that Holdings, the Company or any of their respective subsidiaries is in violation of any Environmental Law; (iii) there is no claim, action or cause of action filed with a court or governmental authority, no investigation with respect to which Holdings or the Company has received written notice, and no written notice by any person or entity that has been received by Holdings or the Company alleging actual or potential liability on the part of Holdings, the Company or any of their respective subsidiaries pursuant to any Environmental Law pending or, to the best of the Company’s or any Guarantor’s knowledge, threatened against Holdings, the Company or any of their respective subsidiaries or any person or entity whose liability under or pursuant to any Environmental Law Holdings, the Company or any of their respective subsidiaries has retained or assumed either contractually or by operation of law; (iv) neither Holdings, the Company nor any of their respective subsidiaries is conducting or paying for, in whole or in part, any investigation, response or other corrective action pursuant to any Environmental Law at any site or facility, nor is any of them subject or a party to any order, judgment, decree, contract or agreement which imposes any obligation or liability under any Environmental Law; (v) no lien, charge, encumbrance or restriction has been recorded pursuant to any Environmental Law with respect to any assets, facility or property owned, operated or leased by Holdings, the Company or any of their subsidiaries; and (vi) there are no past or present actions, activities, circumstances, conditions or occurrences at any facility or property owned, operated or leased by Holdings, the Company or any of their subsidiaries, including, without limitation, the Release or threatened Release of any Material of Environmental Concern, that could reasonably be expected to result in a violation of or liability under any Environmental Law on the part of Holdings, the Company or any of their respective subsidiaries, including without limitation, any such liability which Holdings, the Company or any of their respective subsidiaries has retained or assumed either contractually or by operation of law.

 

For purposes of this Agreement, “Environment” means ambient air, indoor air, surface water, groundwater, drinking water, soil, surface and subsurface strata, and natural resources such as wetlands, flora and fauna. “Environmental Laws” means the common law and all federal, state, local and foreign laws or regulations, ordinances, codes, orders, decrees, judgments and injunctions issued, promulgated or entered thereunder, relating to pollution or protection of the Environment or human health, including without limitation, those relating to (i) the Release or threatened Release of Materials of Environmental Concern; and (ii) the manufacture, processing, distribution, use, generation, treatment, storage, transport, handling or recycling of Materials of Environmental Concern.  “Materials of Environmental Concern” means any substance, material, pollutant, contaminant, chemical, waste, compound, or constituent, in any form, including without limitation, petroleum and petroleum products, subject to regulation or which can give rise to liability under any Environmental Law.  “Release” means any release, spill, emission, discharge, deposit, disposal, leaking, pumping, pouring, dumping, emptying, injection or leaching into the Environment, or into, from or through any building, structure or facility.

 

(hh) ERISA Compliance.  Except as would not reasonably be expected to have a Material Adverse Effect:

 

(i)           Holdings, the Company and their respective subsidiaries and any “employee benefit plan” (as defined under the Employee Retirement Income Security Act of 1974 (as amended, “ERISA,” which term, as used herein, includes the regulations and published interpretations thereunder) established or maintained by Holdings, the Company, their respective subsidiaries or their ERISA Affiliates (as defined below) (an “Employee Benefit Plan”) are in compliance with ERISA;

(ii)           To the knowledge of the Company and the Guarantors, each “multiemployer plan” (as defined in Section 4001 of ERISA) to which Holdings, the Company, their respective subsidiaries or an ERISA Affiliate contributes (a “Multiemployer Plan”) is in compliance with ERISA;

(iii)           No “reportable event” (as defined under ERISA) has occurred or is reasonably expected to occur with respect to any Employee Benefit Plan (other than any reportable event for which notice has been waived or for which notice was timely filed) in connection with the offering and the sale of the Notes;

(iv)           Neither Holdings, the Company, their respective subsidiaries nor any of their ERISA Affiliates has incurred or reasonably expects to incur any liability under (A) Title IV of ERISA with respect to termination of, or withdrawal from, any Employee Benefit Plan (except as otherwise disclosed in the Offering Memorandum), or (B) Section 430(k), 4971, 4975 or 4980B of the Code; and

(v)           Each Employee Benefit Plan that is intended to be qualified under Section 401 of the Code (A) has received (or is entitled to rely upon) a favorable IRS determination letter as to its qualified status, or (B) was adopted by means of a prototype plan that has received a favorable IRS opinion letter on which the plan

 

 

sponsor is entitled to rely, and nothing has occurred, whether by action or failure to act, which would adversely affect such determination.  The term “ERISA Affiliate” means, with respect to Holdings, the Company or a subsidiary, any member of any group of organizations described in Section 414(b) or (c) of the Internal Revenue Code of 1986 (as amended, the “Code,” which term, as used herein, includes the regulations and published interpretations thereunder) of which Holdings, the Company or such subsidiary is a member.

 

(ii) No Unlawful Payments.  Neither Holdings nor any of its subsidiaries, nor, to the knowledge of the Company and each of the Guarantors, any director, officer or employee, agent, affiliate or other person acting on behalf of Holdings or any of its subsidiaries has (i) used any corporate funds for any unlawful contribution, gift, entertainment or other unlawful expense relating to political activity; (ii) made or taken an act in furtherance of an offer, promise or authorization of any direct or indirect unlawful payment or benefit to any foreign or domestic government official or employee, including of any government-owned or controlled entity or of a public international organization, or any person acting in an official capacity for or on behalf of any of the foregoing, or any political party or party official or candidate for political office; (iii) violated or is in violation of any provision of the Foreign Corrupt Practices Act of 1977, as amended, or any applicable law or regulation implementing the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions, or committed an offence under  the Bribery Act 2010 of the United Kingdom, or any other applicable anti-bribery or anti-corruption law; or (iv) made, offered, agreed, requested or taken an act in furtherance of any unlawful bribe or other unlawful benefit, including, without limitation, any  rebate, payoff, influence payment, kickback or other unlawful or improper payment or benefit.  Holdings and its subsidiaries have instituted, maintain and enforce, and will continue to maintain and enforce, policies and procedures designed to ensure compliance with all applicable anti-bribery and anti-corruption laws.

 

(jj) Compliance with Money Laundering Laws.  The operations of Holdings and its subsidiaries are and have been conducted for the past five years in compliance with applicable financial recordkeeping and reporting requirements, including those of the Currency and Foreign Transactions Reporting Act of 1970, as amended, and all applicable money laundering statutes of all jurisdictions where Holdings or any of its subsidiaries conducts business, the rules and regulations thereunder and any related or similar rules, regulations or guidelines, issued, administered or enforced by any applicable governmental agency (collectively, the “Anti-Money Laundering Laws”), and no action, suit or proceeding by or before any court or governmental agency, authority or body or any arbitrator involving Holdings or any of its subsidiaries with respect to the Anti-Money Laundering Laws is pending or, to the knowledge of the Company or any of the Guarantors, threatened.

 

(kk) No Conflicts with Sanctions Laws.  Neither Holdings nor any of its subsidiaries, nor, to the knowledge of the Company or any of the Guarantors, any director, officer, employee, agent, affiliate is currently the subject or the target of any sanctions administered or enforced by the U.S. government, (including, without limitation, the Office of Foreign Assets Control of the U.S. Department of the Treasury (“OFAC”) or the U.S. Department of State and including, without limitation, the designation as a “specially designated

 

 

national” or “blocked person”), the United Nations Security Council (“UNSC”), the European Union, Her Majesty’s Treasury (“HMT”), or other relevant sanctions authority (collectively, “Sanctions”), nor is Holdings or any of its subsidiaries or any of the Guarantors located, organized or resident in a country or territory that is the subject or target of Sanctions, including, without limitation, Cuba, Iran, North Korea, Sudan and Syria (each, a “Sanctioned Country”); and Holdings will not directly or indirectly use the proceeds of the offering of the Securities hereunder, or lend, contribute or otherwise make available such proceeds to any subsidiary, joint venture partner or other person or entity (i) to fund or facilitate any activities of or business with any person that, at the time of such funding or facilitation, is the subject or target of Sanctions, (ii) to fund or facilitate any activities of or business in any Sanctioned Country or (iii) in any other manner that will result in a violation by any person (including any person participating in the transaction, whether as underwriter, initial purchaser, advisor, investor or otherwise) of Sanctions.  For the past five years, Holdings and its subsidiaries have not knowingly engaged in, are not now knowingly engaged in and will not engage in any dealings or transactions with any person that at the time of the dealing or transaction is or was the subject or the target of Sanctions or with any Sanctioned Country.

 

(ll) Collateral.  The Company and the Guarantors collectively own, have rights in or have the power to transfer rights in the Collateral, free and clear of any Liens (as defined under the caption “Description of senior priority notes” and “Description of junior priority notes” in the Offering Memorandum) other than Permitted Liens (as defined in the Indentures).

 

(mm) Stock Options. With respect to the stock options (the “Stock Options”) granted pursuant to the stock-based compensation plans of Holdings, the Company and their respective subsidiaries (the “Company Stock Plans”), Holdings has not knowingly granted, and there is no and has been no policy or practice of Holdings of granting, Stock Options prior to, or otherwise coordinating the grant of Stock Options with, the release or other public announcement of material information regarding Holdings, the Company or their respective subsidiaries or their results of operations or prospects.

 

(nn) Regulation S.  The Company, the Guarantors and their respective affiliates and all persons acting on their behalf (other than the Initial Purchasers, as to whom the Company and the Guarantors make no representation) have complied with and will comply with the offering restrictions requirements of Regulation S in connection with the offering of the Securities outside the United States and, in connection therewith, the Offering Memorandum will contain the disclosure required by Rule 902.

 

(oo) Material Business Operations.  None of the Guarantors (other than Holdings and the subsidiaries of Holdings set forth in Schedule C hereto) has any material business operations.

 

Any certificate signed by an officer of the Company or any Guarantor and delivered to the Initial Purchasers or to counsel for the Initial Purchasers in connection with the offering of the Securities shall be deemed to be a representation and warranty by the Company or such Guarantor to each Initial Purchaser as to the matters set forth therein.

 

SECTION 2. Purchase, Sale and Delivery of the Securities.

 

(a) The Securities.  Each of the Company and the Guarantors agrees to issue and sell to the Senior Initial Purchasers and the Junior Initial Purchasers, severally and not jointly, all of the Senior Priority Notes (and related Guarantees) and the Junior Priority Notes (and related Guarantees), respectively, and the Initial Purchasers agree, severally and not jointly, to purchase from the Company and the Guarantors (a) in the case of the Senior Initial Purchasers, the aggregate principal amount of Senior Priority Notes set forth opposite their names on Schedule A(i), at a purchase price of 98.625% of the principal amount thereof payable on the Closing Date and (b) in the case of the Junior Initial Purchasers, the aggregate principal amount of Junior Priority Notes set forth opposite their names on Schedule A(ii), at a purchase price of 98.625% of the principal amount thereof payable on the Closing Date, in each case, on the basis of the representations, warranties and agreements herein contained, and upon the terms, subject to the conditions thereto, herein set forth.  The Company and the Guarantors will not be obligated to deliver any of the Securities except upon payment for all the Securities to be purchased as provided herein.

 

(b) The Closing Date.  Delivery of certificates for the Securities in definitive form to be purchased by the Initial Purchasers and payment therefor shall be made at the offices of Cahill Gordon & Reindel llp, 80 Pine Street, New York, New York 10005 (or such other place as may be agreed to by the Company and the Representative) at 9:00 a.m. New York City time, on June 26, 2014, or such other time and date as the Representative shall designate by notice to the Company (the time and date of such closing are called the “Closing Date”).  The Company hereby acknowledges that circumstances under which the Representative may provide notice to postpone the Closing Date as originally scheduled include, but are in no way limited to, any determination by the Company or the Initial Purchasers to recirculate to investors copies of an amended or supplemented Offering Memorandum or a delay as contemplated by the provisions of Section 17 hereof.

 

(c) Delivery of the Securities. The Company shall deliver, or cause to be delivered, to the Representative for the accounts of the several Initial Purchasers certificates for the Securities at the Closing Date against the irrevocable release of a wire transfer of immediately available funds for the amount of the purchase price therefor.  The certificates for the Securities shall be in such denominations and registered in the name of Cede & Co., as nominee of the Depositary, pursuant to the DTC Agreement, and shall be made available for inspection on the business day preceding the Closing Date at a location in New York City, as the Representative may designate.

 

(d) Initial Purchasers as Qualified Institutional Buyers.  Each Initial Purchaser severally and not jointly represents and warrants to, and agrees with, the Company that:

 

(i) it will offer and sell Securities only to (a) persons who it reasonably believes are “qualified institutional buyers” within the meaning of Rule 144A (“Qualified Institutional Buyers”) in transactions meeting the requirements of Rule 144A or (b) upon the terms and conditions set forth in Annex I to this Agreement;

 

(ii) it is an institutional “accredited investor” within the meaning of Rule 501(a)(1), (2), (3) or (7) under the Securities Act; and

 

(iii) it will not offer or sell Securities by, any form of general solicitation or general advertising, including but not limited to the methods described in Rule 502(c) under the Securities Act.

 

SECTION 3. Additional Covenants.  Each of the Company and the Guarantors further, jointly and severally, covenants and agrees with each Initial Purchaser as follows:

 

(a) Preparation of Final Offering Memorandum; Initial Purchasers’ Review of Proposed Amendments and Supplements and Company Additional Written Communications.  As promptly as practicable following the Time of Sale and in any event not later than two business days prior to the Closing Date, (and, in any event not later than the second business day after the date hereof) the Company will prepare and deliver to the Initial Purchasers the Final Offering Memorandum, which shall consist of the Preliminary Offering Memorandum as modified only by the information contained in the Pricing Supplement.  The Company will not amend or supplement the Preliminary Offering Memorandum or the Pricing Supplement.  The Company will not amend or supplement the Final Offering Memorandum prior to the Closing Date unless the Representative shall previously have been furnished a copy of the proposed amendment or supplement a reasonable period of time prior to the proposed use or filing, and shall not have reasonably objected to such amendment or supplement.  Before making, preparing, using, authorizing, approving or distributing any Company Additional Written Communication, the Company will furnish to the Representative a copy of such written communication for review and will not use, authorize, approve or distribute any such written communication to which the Representative reasonably objects.

 

(b) Amendments and Supplements to the Final Offering Memorandum and Other Securities Act Matters.  If at any time prior to the Closing Date (i) any event shall occur or condition shall exist as a result of which any of the Pricing Disclosure Package as then amended or supplemented would include any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading or (ii) it is necessary to amend or supplement any of the Pricing Disclosure Package to comply with law, the Company will promptly notify the Initial Purchasers thereof and forthwith prepare and (subject to Section 3(a) hereof) furnish to the Initial Purchasers such amendments or supplements to any of the Pricing Disclosure Package as may be necessary so that the statements in any of the Pricing Disclosure Package as so amended or supplemented will not, in the light of the circumstances under which they were made, be misleading or so that any of the Pricing Disclosure Package will comply with all applicable law.  If, prior to the first to occur of the 180th day from the date hereof and the completion of the placement (including the completion of all settlements related thereto) of the Securities by the Initial Purchasers with the Subsequent Purchasers, any event shall occur or condition exist as a result of which it is necessary to amend or supplement the Final Offering Memorandum, as then amended or supplemented, in order to make the statements therein, in the light of the circumstances when the Final Offering Memorandum is delivered to a Subsequent Purchaser, not misleading, or if in the judgment of the Representative or counsel for the Initial Purchasers (or the Company or its counsel) it is otherwise necessary to amend or supplement the Final Offering Memorandum to comply with

 

 

law, the Company and the Guarantors agree to promptly prepare (subject to Section 3 hereof), file with the Commission (with respect to any documents incorporated by reference) and furnish at their own expense to the Initial Purchasers, amendments or supplements to the Final Offering Memorandum so that the statements in the Final Offering Memorandum as so amended or supplemented will not, in the light of the circumstances at the Closing Date and at the time of sale of Securities, be misleading or so that the Final Offering Memorandum, as amended or supplemented, will comply with all applicable law.

 

The Company hereby expressly acknowledges that the indemnification and contribution provisions of Sections 8 and 9 hereof are specifically applicable and relate to each offering memorandum, registration statement, prospectus, amendment or supplement referred to in this Section 3.

 

(c) Copies of the Offering Memorandum.  The Company agrees to furnish the Initial Purchasers, without charge, as many copies of the Pricing Disclosure Package and the Final Offering Memorandum and any amendments and supplements thereto as they shall reasonably request.

 

(d) Blue Sky Compliance.  Each of the Company and the Guarantors shall cooperate with the Representative and counsel for the Initial Purchasers to qualify or register (or to obtain exemptions from qualifying or registering) all or any part of the Securities for offer and sale under the securities laws of the several states of the United States, the provinces of Canada or any other jurisdictions designated by the Representative, shall comply with such laws and shall continue such qualifications, registrations and exemptions in effect so long as required for the distribution of the Securities.  None of the Company or any of the Guarantors shall be required to qualify as a foreign corporation or to take any action that would subject it to general service of process in any such jurisdiction where it is not presently qualified or where it would be subject to taxation as a foreign corporation.  The Company will advise the Representative promptly of the suspension of the qualification or registration of (or any such exemption relating to) the Securities for offering, sale or trading in any jurisdiction or any initiation or threat of any proceeding for any such purpose, and in the event of the issuance of any order suspending such qualification, registration or exemption, each of the Company and the Guarantors shall use its best efforts to obtain the withdrawal thereof at the earliest possible moment.

 

(e) Use of Proceeds.  The Company shall apply the net proceeds from the sale of the Securities sold by it in the manner described under the caption “Use of Proceeds” in the Pricing Disclosure Package.

 

(f) The Depositary.  The Company will cooperate with the Initial Purchasers and use its best efforts to permit the Securities to be eligible for clearance and settlement through the facilities of the Depositary.

 

(g) Additional Issuer Information.  While the Securities remain outstanding and are “restricted securities” within the meaning of Rule 144(a)(3) under the Securities Act, the Company will at any time when the Company is not subject to Section 13 or 15

 

 

of the Exchange Act, for the benefit of holders and beneficial owners from time to time of the Securities, the Company shall furnish, at its expense, upon reasonable request, to holders and beneficial owners of Securities and prospective purchasers of Securities information (“Additional Issuer Information”) satisfying the requirements of Rule 144A(d) under the Securities Act.

 

(h) Agreement Not To Offer or Sell Additional Securities.  During the period of 90 days following the date hereof, the Company will not, without the prior written consent of J.P. Morgan Securities LLC (which consent may be withheld at the sole discretion of J.P. Morgan Securities LLC), directly or indirectly, sell, offer, contract or grant any option to sell, pledge, transfer or establish an open “put equivalent position” within the meaning of Rule 16a-1 under the Exchange Act, or otherwise dispose of or transfer, or announce the offering of, or file any registration statement under the Securities Act in respect of, any debt securities of the Company or securities exchangeable for or convertible into debt securities of the Company (other than as contemplated by this Agreement).

 

(i) No Integration.  The Company agrees that it will not and will cause its Affiliates not to make any offer or sale of securities of the Company of any class if, as a result of the doctrine of “integration” referred to in Rule 502 under the Securities Act, such offer or sale would render invalid the exemption from the registration requirements of the Securities Act provided by Section 4(2) thereof or by Rule 144A or by Regulation S thereunder or otherwise.

 

(j) No General Solicitation or Directed Selling Efforts.  The Company agrees that it will not and will not permit any of its Affiliates or any other person acting on its or their behalf (other than the Initial Purchasers, as to which no covenant is given) to (i) solicit offers for, or offer or sell, the Securities by means of any form of general solicitation or general advertising within the meaning of Rule 502(c) of Regulation D or in any manner involving a public offering within the meaning of Section 4(2) of the Securities Act or (ii) engage in any directed selling efforts with respect to the Securities within the meaning of Regulation S, and the Company will and will cause all such persons to comply with the offering restrictions requirement of Regulation S with respect to the Securities.

 

(k) No Restricted Resales.  The Company will not, and will not permit any of its affiliates (as defined in Rule 144 under the Securities Act) to resell any of the Notes that have been reacquired by any of them until the six-month anniversary of the Closing Date.

 

(l) Legended Securities.  Each certificate for a Security will bear the legend contained in “Transfer Restrictions” in the Preliminary Offering Memorandum for the time period and upon the other terms stated in the Preliminary Offering Memorandum.

 

(m) The Liens.  The Company and the Guarantors shall cause the Senior Priority Securities to be secured by perfected first priority liens on the Fixed Asset Priority Collateral and perfected second priority liens on the ABL Priority Collateral (it being understood that the ABL Facility shall be secured by perfected first priority liens on the

 

 

ABL Priority Collateral and second priority liens on the Fixed Asset Priority Collateral), in each case excluding the Excluded Property, to the extent and in the manner provided for in the Senior Priority Indenture, the ABL Intercreditor Agreement and the Senior Priority Security Documents and as described in the Pricing Disclosure Package and Offering Memorandum, in each case subject to no Liens except Permitted Liens.  The Company and the Guarantors shall cause the Junior Priority Securities to be secured by perfected liens on the Collateral ranking junior in priority to the liens on the Collateral securing the Senior Priority Securities and the ABL Facility to the extent and in the manner provided for in the Junior Priority Indenture, the Junior Priority Intercreditor Agreement and the Junior Priority Security Documents and as described in the Offering Memorandum, in each case subject to no Liens except Permitted Liens.

 

The Representative on behalf of the several Initial Purchasers, may, in its sole discretion, waive in writing the performance by the Company or any Guarantor of any one or more of the foregoing covenants or extend the time for their performance.

 

SECTION 4. Payment of Expenses.  Each of the Company and the Guarantors, jointly and severally, agrees to pay all costs, fees and expenses incurred in connection with the performance of its obligations hereunder and in connection with the transactions contemplated hereby, including, without limitation, (i) all expenses incident to the issuance and delivery of the Securities (including all printing and engraving costs), (ii) all necessary issue, transfer and other stamp taxes in connection with the issuance and sale of the Securities to the Initial Purchasers, (iii) all fees and expenses of the Company’s and the Guarantors’ counsel, independent public or certified public accountants and other advisors, (iv) all costs and expenses incurred in connection with the preparation, printing, filing, shipping and distribution of the Pricing Disclosure Package and the Final Offering Memorandum (including financial statements and exhibits), and all amendments and supplements thereto, this Agreement, the Indentures, the Security Documents, the Intercreditor Agreements, the DTC Agreement and the Notes and Guarantees, (v) all filing fees, attorneys’ fees and expenses incurred by the Company, the Guarantors or the Initial Purchasers in connection with qualifying or registering (or obtaining exemptions from the qualification or registration of) all or any part of the Securities for offer and sale under the securities laws of the several states of the United States, the  provinces of Canada or other jurisdictions designated by the Initial Purchasers (including, without limitation, the cost of preparing, printing and mailing preliminary and final blue sky or legal investment memoranda and any related supplements to the Pricing Disclosure Package or the Final Offering Memorandum, (vi) the fees and expenses of the Trustee, including the fees and disbursements of counsel for the Trustee in connection with the Security Documents, the Intercreditor Agreements, the Indentures and the Securities, (vii) any fees payable in connection with the rating of the Securities with the ratings agencies, (viii) any filing fees incident to, and any reasonable fees and disbursements of counsel to the Initial Purchasers in connection with the review by FINRA, if any, of the terms of the sale of the Securities, (ix) all fees and expenses (including reasonable fees and expenses of counsel) of the Company and the Guarantors in connection with approval of the Securities by the Depositary for “book-entry” transfer, and the performance by the Company and the Guarantors of their respective other obligations under this Agreement, (x) all fees, costs and expenses (including the reasonable expenses of counsel for the Initial Purchasers related thereto) of creating and perfecting security in interests in the Collateral and establishing the Intercreditor Agreements, including all filing, recording and post-closing fees and expenses and related taxes with respect thereto, as set

 

 

forth in the Security Documents and (xi) all expenses incident to the “road show” for the offering of the Securities, including the cost of any chartered airplane or other transportation.  Except as provided in this Section 4 and Sections 6, 8 and 9 hereof, the Initial Purchasers shall pay their own expenses, including the fees and disbursements of their counsel.

 

SECTION 5. Conditions of the Obligations of the Initial Purchasers.  The obligations of the several Initial Purchasers to purchase and pay for the Securities as provided herein on the Closing Date shall be subject to the accuracy of the representations and warranties on the part of the Company and the Guarantors set forth in Section 1 hereof as of the date hereof and as of the Closing Date as though then made and to the timely performance by the Company of its covenants and other obligations hereunder, and to each of the following additional conditions:

 

(a) Accountants’ Comfort Letter.  On the date hereof, the Initial Purchasers shall have received from Grant Thornton LLP, the independent registered public accounting firm for the Company and the Guarantors, a “comfort letter” dated the date hereof addressed to the Initial Purchasers, in form and substance satisfactory to the Representative, covering the financial information in the Pricing Disclosure Package and other customary matters.  In addition, on the Closing Date, the Initial Purchasers shall have received from such accountant, a “bring-down comfort letter” dated the Closing Date addressed to the Initial Purchasers, in form and substance satisfactory to the Representative, in the form of the “comfort letter” delivered on the date hereof, except that (i) it shall cover the financial information in the Final Offering Memorandum and any amendment or supplement thereto and (ii) procedures shall be brought down to a date no more than 3 business days prior to the Closing Date.

 

(b) No Material Adverse Change or Ratings Agency Change.  For the period from and after the date of this Agreement and prior to the Closing Date:

 

(i) in the reasonable judgment of the Representative there shall not have occurred any Material Adverse Change; and

 

(ii) there shall not have occurred any downgrading, nor shall any notice have been given of any intended or potential downgrading or of any review for a possible change that does not indicate the direction of the possible change, in the rating accorded Holdings, the Company or any of their respective subsidiaries or any of their securities or indebtedness by any “nationally recognized statistical rating organization” as such term is defined under Section 3(a)(62) under the Exchange Act.

 

(c) Opinion of Counsels for the Company.  On the Closing Date the Initial Purchasers shall have received the favorable opinions of (i) Hughes Hubbard & Reed LLP, New York counsel for the Company, (ii) DLA Piper, Georgia, North Carolina, Virginia, Maryland and Massachusetts counsel for the Company, (iii) Bose McKinney & Evans LLP, Indiana counsel for the Company, (iv) Davis Graham & Stubbs LLP, Colorado counsel for the Company, (v) Fasken Martineau DuMoulin LLP, Ontario counsel for the Company, (vi) Stewart McKelvey, Nova Scotia counsel for the Company and (vii) Ian Scheinmann, Senior Vice President, Legal Affairs of the Company, each dated as of

 

 

such Closing Date and in form and substance reasonably satisfactory to the Representative.

 

(d) Opinion of Counsel for the Initial Purchasers.  On the Closing Date the Initial Purchasers shall have received the favorable opinion of Cahill Gordon & Reindel llp, counsel for the Initial Purchasers, dated as of such Closing Date, with respect to such matters as may be reasonably requested by the Initial Purchasers.

 

(e) Officers’ Certificate.  On the Closing Date the Initial Purchasers shall have received a written certificate executed by the Chairman of the Board, Chief Executive Officer or President of the Company and each Guarantor and the Chief Financial Officer or Chief Accounting Officer of the Company and each Guarantor, dated as of the Closing Date, to the effect set forth in Section 5(b)(ii) hereof, and further to the effect that:

 

(i) for the period from and after the date of this Agreement and prior to the Closing Date there has not occurred any Material Adverse Change;

 

(ii) the representations, warranties and covenants of the Company and the Guarantors set forth in Section 1 hereof were true and correct as of the date hereof and are true and correct as of the Closing Date with the same force and effect as though expressly made on and as of the Closing Date; and

 

(iii) the Company has complied with all the agreements and satisfied all the conditions on its part to be performed or satisfied at or prior to the Closing Date.

 

(f) Indentures.  The Company and the Guarantors shall have executed and delivered the Senior Priority Indenture and the Junior Priority Indenture, in form and substance reasonably satisfactory to the Senior Initial Purchasers and the Junior Initial Purchasers, respectively, and the Senior Initial Purchasers and the Junior Initial Purchasers, respectively, shall have received executed copies thereof.

 

(g) Security Documents and Intercreditor Agreements.  The Company and the Guarantors shall have executed and delivered a perfection certificate dated as of the Closing Date (the “Perfection Certificate”) in form and substance reasonably satisfactory to the Initial Purchasers.  Except as otherwise provided for in this Agreement, the Security Documents or the Indentures, the Representative and the Collateral Agents shall have received each of the Security Documents and the Intercreditor Agreements, in form and substance reasonably satisfactory to the Initial Purchasers, and all other certificates, agreements or instruments necessary to perfect the Collateral Agents’ security interest in and liens on all of the Collateral to the extent required as described in the Pricing Disclosure Package and Offering Memorandum and pursuant to the Security Documents (including, but not limited to, stock certificates and promissory notes accompanied by instruments of transfer, stock powers and note powers, as applicable, undated and endorsed in blank, Uniform Commercial Code and PPSA financing statements in appropriate form for filing and filings with the United States Patent and Trademark Office and United

 

 

States Copyright Office in appropriate form for filing); each such document shall be executed (if applicable) by the Company, the Guarantors and each other party thereto and each such document shall be in full force and effect to the extent required as described in the Pricing Disclosure Package and Offering Memorandum and pursuant to the Security Documents.  The Representative shall also have received (i) copies of Uniform Commercial Code and PPSA searches, as applicable, for the Company and each Guarantor and (ii) tax and judgment lien searches or equivalent reports or searches, and a copy of searches at the United States Patent and Trademark Office, the United States Copyright Office and the Canadian Intellectual Property Office for the Company and each Guarantor to the extent reasonably requested by the Representative, in the case of each of clauses (i) and (ii), as of a recent date listing all effective financing statements, lien notices or comparable documents that name the Company or any Guarantor as debtor and that are required by the Perfection Certificate or that the Representative deems reasonably necessary or appropriate, none of which shall encumber the Collateral covered or intended to be covered by the Security Documents (other than Permitted Liens and liens to be released, terminated or discharged on the Closing Date).

 

(h) Insurance.  On or before the Closing Date, the Initial Purchasers shall receive certificates of insurance covering the property and assets of the Company and the Guarantors, which certificates, including endorsements thereto, shall reflect the Senior Priority Collateral Agent for its benefit and the benefit of the Senior Priority Trustee and the holders of the Senior Priority Notes and the Junior Priority Collateral Agent for its benefit and the benefit of the Junior Priority Trustee and the holders of the Junior Priority Notes, in each case as an additional insured on liability policies and a loss payee on property policies.

 

(i) Equipment Loan Agreement Amendment. On or before the Closing Date, an amendment to the Term Loan, Guarantee and Security Agreement, dated as of September 16, 2013, among the Company, Envelope Product Group, LLC, Commercial Envelope Manufacturing Co., Inc., the lenders party thereto and ICON Agent, LLC, as agent, shall have been executed and delivered by the parties thereto, and the Initial Purchasers shall have received an executed copy thereof.

 

(j) Additional Documents.  On or before the Closing Date, the Initial Purchasers and counsel for the Initial Purchasers shall have received such information, documents and opinions as they may reasonably require for the purposes of enabling them to pass upon the issuance and sale of the Securities as contemplated herein, or in order to evidence the accuracy of any of the representations and warranties, or the satisfaction of any of the conditions or agreements, herein contained.

 

If any condition specified in this Section 5 is not satisfied when and as required to be satisfied, this Agreement may be terminated by the Representative by notice to the Company at any time on or prior to the Closing Date, which termination shall be without liability on the part of any party to any other party, except that Sections 4, 6, 8 and 9 hereof shall at all times be effective and shall survive such termination.

 

SECTION 6. Reimbursement of Initial Purchasers’ Expenses.  If this Agreement is terminated by the Representative pursuant to Section 5, 10(i) or 10(iv) hereof, the Company and the Guarantors, jointly and severally, agree to reimburse the Initial Purchasers, severally, upon demand for all documented out-of-pocket expenses that shall have been reasonably incurred by the Initial Purchasers in connection with the proposed purchase and the offering and sale of the Securities, including, without limitation, reasonable fees and disbursements of counsel, printing expenses, travel expenses, postage, facsimile and telephone charges.

 

SECTION 7. Offer, Sale and Resale Procedures.  Each of the Initial Purchasers, on the one hand, and the Company and each of the Guarantors, on the other hand, hereby agree to observe the following procedures in connection with the offer and sale of the Securities:

 

(a) Offers and sales of the Securities will be made only by the Initial Purchasers or Affiliates thereof qualified to do so in the jurisdictions in which such offers or sales are made.  Each such offer or sale shall only be made to persons whom the offeror or seller reasonably believes to be Qualified Institutional Buyers or non-U.S. persons outside the United States to whom the offeror or seller reasonably believes offers and sales of the Securities may be made in reliance upon Regulation S upon the terms and conditions set forth in Annex I hereto, which Annex I is hereby expressly made a part hereof.

 

(b) No general solicitation or general advertising (within the meaning of Rule 502 under the Securities Act) will be used in the United States in connection with the offering of the Securities.

 

(c) Upon original issuance by the Company, and until such time as the same is no longer required under the applicable requirements of the Securities Act, the Securities (and all securities issued in exchange therefor or in substitution thereof) shall bear the following legend: