Exhibit 10.1
KFI Holding Corporation
10 1/8% SENIOR SUBORDINATED NOTES DUE 2008
________________________
PURCHASE AGREEMENT
------------------
March ▇, ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ & ▇▇.
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ Securities
Corporation
c/o Goldman, Sachs & Co.
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇.
Ladies and Gentlemen:
KFI Holding Corporation, a Delaware corporation (the "Company"),
proposes, subject to the terms and conditions stated herein, to issue and sell
to the Purchasers named in Schedule I hereto (the "Purchasers") an aggregate of
$100,000,000 principal amount of the 10 1/8% Senior Subordinated Notes due 2008
of the Company, specified above (the "Notes"). The Notes will be fully and
unconditionally guaranteed (the "Guarantees", and together with the Notes, the
"Securities") as to payment of principal, interest, liquidated damages, if any,
and premium, if any, on a senior subordinated basis, jointly and severally by
each of the Company's current and future subsidiaries, (each a "Guarantor", and
collectively, the "Guarantors"). All references to "subsidiaries" contained
herein, assume the consummation of all transactions contemplated by the
Acquisition Documents (as defined herein) as of the date hereof.
1. The Company and each of the Guarantors party hereto, jointly and
severally, represent and warrant to, and agree with, each of the Purchasers
that:
(a) A preliminary offering circular, dated February 19, 1998 (the
"Preliminary Offering Circular") and an offering circular, dated March 5, 1998
(the "Offering Circular"), have been prepared in connection with the offering of
the Securities. Any reference to the Preliminary Offering Circular or the
Offering Circular shall be deemed to refer to and include any Additional Issuer
Information (as defined in Section 5(f) hereof) furnished by the Company prior
to the completion of the distribution of the Securities. The Preliminary
Offering Circular or the Offering Circular and any amendments or supplements
thereto did not and will not, as of their respective dates, and, in the case of
the Offering Circular, as of the Time of Delivery, contain an 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, however, that this representation and
warranty shall not apply to any statements or omissions made in reliance upon
and in conformity with information furnished in writing to the Company by a
Purchaser through ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co. expressly for use therein;
(b) No registration of the Securities under the Securities Act of 1933, as
amended (the "Act"), and no qualification of an indenture under the Trust
Indenture Act of 1939, as amended (the "Trust Indenture Act") with respect
thereto, is required for the offer, sale and initial resale of the Notes by the
Purchasers in the manner contemplated by this Agreement;
(c) Neither the Company nor any of its subsidiaries has sustained since
the date of the latest audited financial statements included in the Offering
Circular any loss or interference with its business from fire, explosion, flood
or other calamity, whether or not covered by insurance, or from any labor
dispute or court or governmental action, order or decree, otherwise than as set
forth or contemplated in the Offering Circular which would have a material
adverse effect on the current or future financial position or prospects,
stockholders' equity or results of operations of the Company and its
subsidiaries (a "Material Adverse Effect"); and, since the respective dates as
of which information is given in the Offering Circular, there has not been any
change in the capital stock or long-term debt of the Company or any of its
subsidiaries or any material adverse change, or any development involving a
prospective material adverse change, in or affecting the general affairs,
management, financial position, stockholders' equity or results of operations of
the Company and its subsidiaries, otherwise than as set forth in or contemplated
by the Offering Circular;
(d) The Company and its subsidiaries have good and marketable title in fee
simple to all real property and good and marketable title to all personal
property owned by them, in each case free and clear of all liens, encumbrances
and defects except such as are described in the Offering Circular or such as do
not materially affect the value of such property and do not interfere with the
use made and proposed to be made of such property by the Company and its
subsidiaries; and any real property and buildings held under lease by the
Company and its subsidiaries are held by them under valid, subsisting and
enforceable leases with such exceptions as are not material and do not interfere
with the use made and proposed to be made of such property and buildings by the
Company and its subsidiaries;
(e) Each of the Company and its subsidiaries has been duly incorporated
and is validly existing as a corporation in good standing under the laws of its
jurisdiction of incorporation, with corporate power and authority to own its
properties and conduct its business as described in the Offering Circular, and
has been duly qualified as a foreign corporation for the transaction of business
and is in good standing under the laws of each other jurisdiction in which it
owns or leases properties or conducts any business so as to require such
qualification, or is subject to no material liability or disability by reason of
the failure to be so qualified in any such jurisdiction;
(f) The Company and each of the Guarantors has all requisite corporate
power and authority to execute, deliver and perform their obligations under this
Agreement, the Indenture (as defined below), the Notes, the Guarantees, the
Registration Rights Agreement (as defined below),
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the Exchange Notes (as defined below) and the Exchange Guarantees (as defined
below) (collectively, the "Operative Documents") to which they are, or will be,
a party and to consummate the transactions contemplated hereby and thereby,
including without limitation the corporate power and authority to issue, sell
and deliver the Notes and the Exchange Notes and to issue the Guarantees and the
Exchange Guarantees, as applicable, as provided herein and therein;
(g) Each of the Preliminary Offering Circular and the Offering Circular,
as of their respective dates, contains the information specified in Rule
144A(d)(4) under the Act;
(h) After giving effect to the transactions contemplated by the
Acquisition Documents (as defined below), the Company will have an authorized
capitalization as set forth in the Merger Agreement (as defined below), and all
of the issued shares of capital stock of the Company have been duly and validly
authorized and issued and are fully paid and non-assessable; all of the issued
shares of capital stock of each subsidiary of the Company have been duly and
validly authorized and issued, are fully paid and non-assessable and (except for
directors' qualifying shares) are owned directly or indirectly by the Company,
free and clear of all liens, encumbrances, equities or claims except such as are
described in the Offering Circular; and the Company has no subsidiaries other
than the Guarantors listed on the signature page hereto;
(i) This Agreement has been duly authorized, executed and delivered by the
Company and each of the Guarantors;
(j) The registration rights agreement in the form attached hereto as Annex
II (the "Registration Rights Agreement"), has been duly authorized by the
Company and each of the Guarantors and, when duly executed and delivered by the
Company and each of the Guarantors, will be the valid and legally binding
obligation of the Company and each of the Guarantors, enforceable against the
Company and each of the Guarantors in accordance with its terms, subject as to
enforcement, bankruptcy, reorganization, insolvency or other similar laws
affecting creditors' rights generally or by general principles of equity and, as
to rights of indemnification or contribution, to principles of public policy or
federal or state securities laws relating thereto; pursuant to the Registration
Rights Agreement, the Company will agree to file with the Securities and
Exchange Commission (the "Commission"), under the circumstances set forth
therein a registration statement under the Act relating to another series of
debt securities and Guarantees of the Company and the Guarantors, respectively,
with terms identical to the Notes (the "Exchange Notes") and the Guarantees (the
"Exchange Guarantees" and together with the Exchange Notes, the "Exchange
Securities") to be offered in exchange for the Securities (the "Exchange
Offer"), and to the extent required by the Registration Rights Agreement, a
shelf registration statement pursuant to Rule 415 under the Act relating to the
resale by holders of the Notes, and, as provided in the Registration Rights
Agreement, to use their best efforts to cause such applicable registration
statement or registration statements to be declared effective; and the
Registration Rights Agreement will conform to the descriptions thereof in the
Offering Circular;
(k) The Notes have been duly authorized and, when issued and delivered
pursuant to this Agreement, will have been duly executed, authenticated, issued
and delivered and will constitute valid and legally binding obligations of the
Company entitled to the benefits provided by the Indenture to be dated as of
March 12, 1998 (the "Indenture") between the Company, the
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Guarantors and State Street Bank and Trust Company, as Trustee (the "Trustee"),
under which they are to be issued, which will be substantially in the form
previously delivered to you; the Indenture has been duly authorized and, when
executed and delivered by the Company and the Trustee, the Indenture will
constitute a valid and legally binding instrument, enforceable in accordance
with its terms, subject, as to enforcement, to bankruptcy, reorganization,
insolvency and other similar laws relating to or affecting creditors' rights
generally and to general principles of equity; and the Notes, and the Indenture
will conform to the descriptions thereof in the Offering Circular and will be in
substantially the form previously delivered to you;
(l) The Exchange Notes have been duly authorized for issuance by the
Company, and when issued and authenticated in accordance with the terms of the
Indenture and the Registration Rights Agreement, will be the valid and legally
binding obligations of the Company, enforceable against the Company in
accordance with their terms and entitled to the benefits of the Indenture,
subject, as to enforcement, to bankruptcy, insolvency, reorganization,
moratorium and other laws of general applicability relating to or affecting
creditors' rights and to general principles of equity (whether considered in a
proceeding in equity or at law); and the Exchange Notes, when issued, will
conform to the descriptions thereof in the Offering Circular;
(m) The Guarantees have been duly authorized by each of the Guarantors
and, when executed and delivered in accordance with the terms of the Indenture
and when the Notes have been issued and authenticated in accordance with the
terms of the Indenture and delivered to and paid for by the Purchasers in
accordance with the terms of this Agreement, will be the valid and legally
binding obligations of the Guarantors, enforceable against the Guarantors in
accordance with their terms, except as the enforcement thereof may be limited by
applicable bankruptcy, reorganization, insolvency or other similar laws
affecting creditors' rights generally or by general principles of equity; and
Guarantees, when issued, will conform to the description thereof in the Offering
Circular;
(n) The Exchange Guarantees have been duly authorized by each of the
Guarantors and, when executed and delivered in accordance with the terms of the
Indenture and when the Exchange Notes are issued and authenticated in accordance
with the terms of the Indenture and the Registration Rights Agreement, will be
the valid and legally binding obligation of the Guarantors, enforceable against
the Guarantors in accordance with their terms, except as the enforcement thereof
may be limited by applicable bankruptcy, reorganization, insolvency or other
similar laws affecting creditors' rights generally or by general principles of
equity; and Exchange Guarantees, when issued, will conform to the description
thereof in the Offering Circular;
(o) The Company and each of its subsidiaries, as applicable, has all
requisite corporate power and authority to execute, deliver and perform their
obligations under (i) the credit agreement (the "Credit Agreement"), to be dated
March 12, 1998, by and among the Company, each of its Subsidiaries named
therein, Bank of America National Trust and Savings Association and the various
other lenders named therein (ii) and any and all other agreements and
instruments ancillary to or entered into in connection with the transactions
contemplated by the Credit Agreement (items (i) and (ii) are referred to
collectively as the "Credit Documents"). Each of the Credit Documents has been,
or will prior to the Time of Delivery be, duly authorized by the Company and
each of its subsidiaries named therein and, when duly executed and delivered by
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the Company and each of its subsidiaries named therein will be the valid and
legally binding obligation of the Company and each of its subsidiaries named
therein, enforceable against each of them in accordance with its terms, subject,
as to enforcement, to bankruptcy, reorganization, insolvency and other similar
laws relating to or affecting creditors' rights generally and to general
principles of equity. The Company will have at least $39 million of borrowings
available to it under the Credit Agreement after giving effect to all
transactions contemplated by the Credit Documents, the Operative Documents and
the Acquisition Documents (as defined herein) and after giving effect to any
borrowing base requirements. All representations and warranties to be made by
any party under any of the Credit Documents will be true and correct in all
material respects as of the Time of Delivery as if made at the Time of Delivery;
provided, that any such representations and warranties that speak as of a
specific date shall be deemed to be made as of such date.
(p) The Company and each of its subsidiaries, as applicable, has all
requisite corporate power and authority to execute, deliver and perform their
obligations under (i) the Investment Agreement (the "Investment Agreement"),
dated as of February 19, 1998, by and among the existing shareholders of KFI
Holding Corporation and certain holders of stock appreciation rights of AGI
Incorporated and KFI Holding Corporation, (ii) the Agreement and Plan of Merger,
dated as of February 19, 1998 (the "Merger Agreement"), by and among KFI Holding
Corporation, Klearfold, Inc., AGI Incorporated, AGI Acquisition Corporation and
certain shareholders and holders of stock appreciation rights of AGI
Incorporated and (iii) any and all other agreements and side letters ancillary
to or entered into in connection with the transactions contemplated by any of
the foregoing (items (i), (ii) and (iii) are referred to collectively as the
"Acquisition Documents"). Each of the Acquisition Documents has been duly
authorized, and has been, or prior to the Time of Delivery of any such
Acquisition Document will be, executed and delivered by the Company and each of
its subsidiaries named therein, and, constitutes or will constitute the valid
and legally binding obligation of the Company and each of its subsidiaries named
therein, enforceable against each of them in accordance with its terms, subject,
as to enforcement, to bankruptcy, reorganization, insolvency and other similar
laws relating to or affecting creditors' rights generally and to general
principles of equity and except that certain indemnification and contribution
provisions may be limited by considerations of public policy. All
representations and warranties made by any party under any of the Acquisition
Documents, dated and delivered prior to this Agreement, are true and correct in
all material respects as of the date hereof and all of the representations and
warranties made by any party under any of the Acquisition Documents to be dated
and delivered after the date of this Agreement will be true and correct in all
material respects as of the date of such Acquisition Documents.
(q) The Company has delivered to the Purchasers true and correct, executed
copies of each of the Acquisition Documents that have been executed and
delivered to date and there have not been and prior to the Time of Delivery will
not be any amendments, alterations, modifications or waivers to any of the
Acquisition Documents or the exhibits or schedules thereto other than those as
to which the Purchasers shall previously have been advised and shall not have
reasonably objected after being furnished a copy thereof. The Company has
delivered to the Purchasers true and current negotiated drafts of the Credit
Documents, and there have been and prior to the Time of Delivery will not be any
alterations, modifications or waivers to any of such drafts of the Credit
Documents or the exhibits or schedules thereto other than those as to which the
Purchasers shall previously have been advised and shall not have reasonably
objected after
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being furnished a copy thereof. The Acquisition Documents and Credit Documents
will conform in all material respects to the descriptions thereof in the
Offering Circular.
(r) Except as disclosed in the Preliminary Offering Circular and the
Offering Circular, and after giving effect to the transactions contemplated by
the Acquisition Documents, there are no outstanding (i) securities or
obligations of the Company or any of the Guarantors convertible into or
exchangeable for any capital stock of the Company or any such Guarantor, (ii)
warrants, rights or options to subscribe for or purchase from the Company or any
of the Guarantors any such capital stock or any such convertible or exchangeable
securities or obligations, or (iii) obligations of the Company or any of the
Guarantors to issue any shares of capital stock, any such convertible or
exchangeable securities or obligations, or any such warrants, rights or options,
in each case, other than the options set forth on Schedule 1C hereto which are
in the aggregate not material to the Company;
(s) There are no holders of securities of the Company or any of the
Guarantors who, by reason of the execution of this Agreement or any other
Operative Document by the Company or the Guarantors, as the case may be, or the
consummation of the transactions contemplated hereby and thereby, have the right
to request or demand the Company or any of the Guarantors to register under the
Act or analogous foreign laws and regulations any securities held by them (other
than pursuant to the Registration Rights Agreement);
(t) None of the transactions contemplated by this Agreement (including,
without limitation, the use of the proceeds from the sale of the Securities)
will violate or result in a violation of Section 7 of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), or any regulation promulgated
thereunder, including, without limitation, Regulations G, T, U, and X of the
Board of Governors of the Federal Reserve System;
(u) Prior to the date hereof, neither the Company nor any of its
affiliates has taken any action which is designed to or which has constituted or
which might have been expected to cause or result in stabilization or
manipulation of the price of any security of the Company in connection with the
offering of the Securities;
(v) Except for certain consents required under certain real estate leases
in connection with the transactions contemplated by the Acquisition Documents,
which will either be obtained prior to the Time of Delivery or are not material,
the issue and sale of the Securities and the compliance by the Company and each
of the Guarantors with all of the provisions of this Agreement, each of the
other Operative Documents, the Credit Documents and the Acquisition Documents
and the consummation of the transactions herein and therein contemplated will
not conflict with or result in a breach or violation of any of the terms or
provisions of, or constitute a default under, any indenture, mortgage, deed of
trust, loan agreement or other agreement or instrument to which the Company or
any of its subsidiaries is a party or by which the Company or any of its
subsidiaries is bound or to which any of the property or assets of the Company
or any of its subsidiaries is subject, nor will such action result in any
violation of the provisions of the Certificate of Incorporation, Articles of
Incorporation or By-laws, as applicable, of the Company or any of the Guarantors
or any statute or any order, rule or regulation of any court or governmental
agency or body having jurisdiction over the Company or any of its subsidiaries
or any of their
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properties; no consent, approval, authorization, order, registration or
qualification of or with any such court or governmental agency or body is
required for the issue and sale of the Securities or the consummation by the
Company or any of its subsidiaries of the other transactions contemplated by
this Agreement, the other Operative Documents, the Credit Documents and the
Acquisition Documents, except for the filing of a registration statement
pertaining to the Exchange Securities by the Company and each of the Guarantors
with the Commission pursuant to the Act, the Registration Rights Agreement and
Section 5(k) hereof, such consents, approvals, authorizations, registrations or
qualifications as may be required under state securities or Blue Sky laws in
connection with the purchase and distribution of the Securities by the
Underwriters and such filings (all of which have been made) as may be required
under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as amended (the
"▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act"); and the applicable waiting period under the ▇▇▇▇-
▇▇▇▇▇-▇▇▇▇▇▇ Act has expired or been terminated in accordance with the
provisions thereof without any action by the United States Department of Justice
or Federal Trade Commission to prevent consummation of any of the forgoing
transactions;
(w) Except as described in the Offering Circular, neither the Company nor
any of its subsidiaries is in violation of its Certificate of Incorporation,
Articles of Incorporation, or By-laws, as applicable, or in default in any
material respect in the performance or observance of any material obligation,
covenant or condition contained in any indenture, mortgage, deed of trust, loan
agreement, lease or other agreement or instrument to which it is a party or by
which it or any of its properties may be bound;
(x) The statements set forth in the Offering Circular under the caption
"Description of Notes", insofar as they purport to constitute a summary of the
terms of the Securities, and under the captions "Certain Federal Income Tax
Consequences", "The Combination", "Description of Other Indebtedness", and
"Underwriting", insofar as they purport to describe the provisions of the laws
and documents referred to therein, are accurate, complete and fair in all
material respects;
(y) Other than as set forth in the Offering Circular, there are no legal
or governmental proceedings pending to which the Company or any of its
subsidiaries is a party or of which any property of the Company or any of its
subsidiaries is the subject which, if determined adversely to the Company or any
of its subsidiaries, would individually or in the aggregate have a Material
Adverse Effect; and, to the best of the Company's knowledge, no such proceedings
are threatened or contemplated by governmental authorities or threatened by
others;
(z) When the Securities are issued and delivered pursuant to this
Agreement, the Securities will not be of the same class (within the meaning of
Rule 144A under the Act ("Rule 144A")) as securities which are listed on a
national securities exchange registered under Section 6 of the United States
Securities Exchange Act or quoted in a U.S. automated inter-dealer quotation
system;
(aa) Neither the Company, nor any of the Guarantors is, and after giving
effect to the offering and sale of the Securities, will be an "investment
company", or an entity "controlled" by an "investment company", as such terms
are defined in the United States Investment Company Act of 1940, as amended (the
"Investment Company Act");
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(ab) None of the Company, the Guarantors, or any person acting on its or
their behalf has offered or sold the Securities by means of any general
solicitation or general advertising within the meaning of Rule 502(c) under the
Act or, with respect to Securities sold outside the United States to non-U.S.
persons (as defined in Rule 902 under the Act), by means of any directed selling
efforts within the meaning of Rule 902 under the Act and the Company, the
Guarantors, any affiliate of the Company and the Guarantors, and any person
acting on its or their behalf has complied with and will implement the "offering
restriction" within the meaning of such Rule 902;
(ac) Within the preceding six months, none of the Company, the Guarantors
or any other person acting on its or their behalf has offered or sold to any
person any Securities, or any securities of the same or a similar class as the
Securities, other than Securities offered or sold to the Purchasers hereunder.
The Company and the Guarantors will take reasonable precautions designed to
insure that any offer or sale, direct or indirect, in the United States or to
any U.S. person (as defined in Rule 902 under the Act) of any Securities or any
substantially similar security issued by the Company and the Guarantors, within
six months subsequent to the date on which the distribution of the Securities
has been completed (as notified to the Company by ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co.), is made
under restrictions and other circumstances reasonably designed not to affect the
status of the offer and sale of the Securities in the United States and to U.S.
persons contemplated by this Agreement as transactions exempt from the
registration provisions of the Act. None of the Company, the Guarantors or any
of its or their affiliates or any person acting on its or their behalf (other
than the Purchasers, as to whom the Company and the Guarantors make no
representation) has engaged or will engage in any directed selling efforts
within the meaning of Regulation S under the Act with respect to the Notes or
the Guarantees;
(ad) The Company and each of the Guarantors maintains a system of internal
accounting controls sufficient to provide reasonable assurance that (i)
transactions are executed in accordance with management's general or specific
authorizations; (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and to maintain accountability for assets; (iii) access to
assets is permitted only in accordance with management's general or specific
authorization and (iv) the recorded accountability for assets is compared with
the existing assets at reasonable intervals and appropriate action is taken with
respect thereto;
(ae) The consolidated historical financial statements, together with
related schedules and notes, set forth in the Preliminary Offering Circular and
the Offering Circular comply as to form in all material respects with the
requirements applicable to registration statements on Form S-1 under the Act and
fairly present the consolidated financial position of the Company and each of
its subsidiaries as of the dates indicated and the results of their operations
and their cash flows for the periods indicated, in accordance with generally
accepted accounting principles consistently applied throughout such periods
(except as otherwise disclosed therein). The pro forma financial statements
contained in the Preliminary Offering Circular and the Offering Circular comply
as to form in all material respects with the requirements of the rules
promulgated under the Act and have been prepared on a basis consistent with the
historical statements, except for the pro forma adjustments specified therein,
and give effect to assumptions made on a reasonable basis and present fairly the
historical and proposed transactions contemplated by this Agreement, the other
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Operative Documents, the Credit Documents and the Acquisition Documents. The
other financial and statistical information and data included in the Preliminary
Offering Circular and the Offering Circular, historical and pro forma, are, in
all material respects, accurately presented and prepared on a basis consistent
with such financial statements and the books and records of the Company and the
Guarantors. The statistical and market-related data included in the Preliminary
Offering Circular and the Offering Circular are based on or derived from sources
which the Company and the Guarantors believe to be reliable and accurate in all
material respects;
(af) KPMG Peat Marwick LLP, who have certified certain financial statements
of the Company and its subsidiaries, and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP and Price
Waterhouse LLP, who have each certified certain financial statements of AGI
Incorporated, are each independent public accountants as required by the Act and
the rules and regulations of the Commission thereunder.
(ag) The Company and each of the Guarantors has complied in all respects
with all laws, regulations and orders applicable to them or their businesses the
violation of which would have a Material Adverse Effect;
(ah) Except as would not, individually or in the aggregate, have a Material
Adverse Effect, (i) the Company and each of the Guarantors has all certificates,
consents, exemptions, orders, permits, licenses, authorizations, or other
approvals (each, an "Authorization") of and from, and has made all declarations
and filings with, all federal, state, local and other governmental authorities,
all self-regulatory organizations and all courts and other tribunals, necessary
or required to engage in the business currently conducted by it in the manner
described in the Offering Circular; (ii) all such Authorizations are valid and
in full force and effect and (iii) the Company and each of the Guarantors is in
compliance in all material respects with the terms and conditions of all such
Authorizations and with the rules and regulations of the regulatory authorities
and governing bodies having jurisdiction with respect thereto;
(ai) The Company and each of the Guarantors owns or possesses or has the
right to use the patents, patent rights, licenses, inventions, copyrights, know-
how (including trade secrets and other unpatented and/or unpatentable
proprietary or confidential information, systems or procedures), trademarks,
service marks and trade names (collectively, the "Intellectual Property")
presently employed by it in connection with, and material to, individually or in
the aggregate, the operation of the businesses now operated by it, and neither
the Company nor any of the Guarantors has received any notice of infringement of
or conflict with asserted rights of others with respect to the foregoing which,
individually or in the aggregate, if the subject of an unfavorable decision,
ruling or finding, would result in a Material Adverse Effect. To the best
knowledge of the Company and the Guarantors, the use of such Intellectual
Property in connection with the business and operations of the Company and the
Guarantors does not infringe on the rights of any person, except as would not,
individually or in the aggregate, result in a Material Adverse Effect;
(aj) All tax returns required to be filed by the Company or any of the
Guarantors in all jurisdictions have been timely and duly filed, other than
those filings being contested in good faith, except where the failure to so file
any such returns could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect. There are no tax returns of the
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Company or any of the Guarantors that are currently being audited by state,
local or federal taxing authorities or agencies (and with respect to which the
Company or any of the Guarantors has received notice), where the findings of
such audit, if adversely determined, would result in a Material Adverse Effect.
All taxes, including withholding taxes, penalties and interest, assessments,
fees and other charges due or claimed to be due from such entities have been
paid, other than those being contested in good faith and for which adequate
reserves have been provided or those currently payable without penalty or
interest;
(ak) The Company and each of the Guarantors maintains insurance covering
their properties, operations, personnel and businesses which insures against
such losses and risks as is adequate in accordance with its reasonable business
judgment to protect the Company and the Guarantors and their businesses.
Neither the Company nor the Guarantors has received notice from any insurer or
agent of such insurer that substantial capital improvements or other
expenditures will have to be made in order to continue such insurance. All such
insurance is outstanding and duly in force on the date hereof and will be
outstanding and duly in force at the Time of Delivery;
(al) Except as disclosed in the Preliminary Offering Circular and the
Offering Circular (including, without limitation, the documents incorporated by
reference therein), there are no business relationships or related party
transactions which would be required to be disclosed therein by Item 404 of
Regulation S-K of the Commission and each business relationship or related party
transaction described therein is a fair and accurate description of the
relationships and transactions so described in all material respects;
(am) The Company and each of the Guarantors is in compliance in all
material respects with all presently applicable provisions of the Employee
Retirement Income Security Act of 1974, as amended, including the regulations
and published interpretations thereunder ("ERISA"); no "reportable event" (as
defined in ERISA) has occurred with respect to any "pension plan" (as defined in
ERISA) for which the Company or any Guarantor would have any liability; neither
the Company nor any of the Guarantors has incurred or expects to incur liability
under (i) Title IV of ERISA with respect to termination of, or withdrawal from,
any "pension plan" or (ii) Section 412 or 4971 of the Internal Revenue Code of
1986, as amended, including the regulations and published interpretations
thereunder (the "Code"); and each "pension plan" for which the Company or any
Guarantor would have any liability that is intended to be qualified under
Section 401(a) of the Code is so qualified in all material respects and nothing
has occurred, whether by action or by failure to act, which would cause the loss
of such qualification, except, in each case, as would not have a Material
Adverse Effect;
(an) There is (i) no material unfair labor practice complaint pending
against the Company or any of the Guarantors, or, to the best knowledge of the
Company, threatened against any of them, before the National Labor Relations
Board or any state or local labor relations board, and no significant grievance
or significant arbitration proceeding arising out of or under any collective
bargaining agreement is so pending against the Company or any of the Guarantors,
or, to the best knowledge of the Company, threatened against any of them, (ii)
no material strike, labor dispute, slowdown or stoppage pending against the
Company or any of the Guarantors nor, to the best knowledge of the Company and
the Guarantors, threatened against the Company or
10
any of the Guarantors and (iii) to the best knowledge of the Company and the
Guarantors, no union representation question existing with respect to the
employees of the Company or any of the Guarantors and, to the best knowledge of
the Company and the Guarantors, no union organizing activities are taking place,
except, in each case, as would not have a Material Adverse Effect;
(ao) The Company and each of the Guarantors has reviewed the effect of
Environmental Laws (as defined below) and the disposal of hazardous or toxic
substances, wastes, pollutants and contaminants on the business, assets,
operations and properties of the Company and each of the Guarantors, and
identified and evaluated associated costs and liabilities (including, without
limitation, any material capital and operating expenditures required for clean-
up, closure of properties and compliance with environmental, safety or similar
laws or regulations applicable to it or its business or property relating to the
protection of human health and safety, the environment or hazardous or toxic
substances or wastes, pollutants or contaminants ("Environmental Laws"), all
permits, licenses and approvals, all related constraints on operating activities
and all potential liabilities to third parties). On the basis of such reviews,
the Company and the Guarantors have reasonably concluded that such associated
costs and liabilities would not have a Material Adverse Effect. Neither the
Company nor any of the Guarantors has violated any Environmental Laws, lacks any
permit, license or other approval required of it under applicable Environmental
Laws or is violating any term or condition of such permit, license or approval
which could reasonably be expected to, either individually or in the aggregate,
have a Material Adverse Effect;
(ap) None of the Company, the Guarantors or, to the Company's and the
Guarantors' knowledge, any director, officer, agent, employee or other person
associated with or acting on behalf of the Company or any of the Guarantors, has
used any corporate funds during the last five years for any unlawful
contribution, gift, entertainment or other unlawful expense relating to
political activity; made any unlawful payment to any foreign or domestic
government official or employee from corporate funds; violated or is in
violation of any provision of the Foreign Corrupt Practices Act of 1977, as
amended; or made any bribe, rebate, payoff, influence payment, kickback or other
unlawful payment, except, in each case, such as would not have a Material
Adverse Effect;
(aq) Other than as contemplated by or described in this Agreement, there is
no broker, finder or other party that is entitled to receive from the Company or
any of the Guarantors any brokerage or finder's fee or other fee or commission
as a result of any of the transactions contemplated by this Agreement or any of
the Operative Documents; and
(ar) Each certificate signed by any officer of the Company or any Guarantor
and delivered at the Time of Delivery to the Purchasers or counsel for the
Purchasers shall be deemed to be a representation and warranty by the Company or
such Guarantor, as the case may be, to the Purchasers as to the matters covered
thereby.
2. Subject to the terms and conditions herein set forth, the Company and
the Guarantors, jointly and severally agree to issue and sell to each of the
Purchasers and each of the Purchasers agrees, severally and not jointly, to
purchase from the Company and the Guarantors,
11
at a purchase price of 97.0% of the principal amount thereof, the principal
amount of Notes (together with the Guarantees) set forth opposite the name of
such Purchaser in Schedule I hereto.
3. Upon the authorization by you of the release of the Securities, the
several Purchasers propose to offer the Securities for sale upon the terms and
conditions set forth in this Agreement and the Offering Circular and each
Purchaser hereby represents and warrants to, and agrees with the Company and the
Guarantors that:
(a) It will offer and sell the Securities only to:(i) persons who it
reasonably believes are "qualified institutional buyers" ("QIBs") within the
meaning of Rule 144A in transactions meeting the requirements of Rule 144A or,
(ii) upon the terms and conditions set forth in Annex I to this Agreement;
(b) It is an institutional "Accredited Investor" (within the meaning of
Rule 501 of the Act); and
(c) It will not offer or sell the Securities by any form of general
solicitation or general advertising, including but not limited to the methods
described in Rule 502(c) under the Act.
4. (a) The Securities to be purchased by each Purchaser hereunder will be
represented by one or more definitive global Securities in book-entry form which
will be deposited by or on behalf of the Company with The Depository Trust
Company ("DTC") or its designated custodian. The Company will deliver the
Securities to ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co., for the account of each Purchaser, against
payment by or on behalf of such Purchaser of the purchase price therefor by
certified or official bank check or checks, payable to the order of the Company
in Federal (same day) funds, by causing DTC to credit the Securities to the
account of ▇▇▇▇▇▇▇, Sachs & Co. at DTC. The Company will cause the certificates
representing the Securities to be made available to ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co. for
checking at least twenty-four hours prior to the Time of Delivery (as defined
below) at the office of DTC or its designated custodian (the "Designated
Office"). The time and date of such delivery and payment shall be 9:30 a.m.,
New York City time, on March 12, 1998 or such other time and date as ▇▇▇▇▇▇▇,
Sachs & Co. and the Company may agree upon in writing. Such time and date are
herein called the "Time of Delivery".
(b) The documents to be delivered at the Time of Delivery by or on behalf
of the parties hereto pursuant to Section 7 hereof, including the cross-receipt
for the Securities and any additional documents requested by the Purchasers
pursuant to Section 7 hereof, will be delivered at such time and date at the
offices of ▇▇▇▇▇▇▇ ▇▇▇▇ Murase LLP, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ (the
"Closing Location"). A meeting will be held at the Closing Location at 4:00
p.m., New York City time, on the New York Business Day next preceding the Time
of Delivery, at which meeting the final drafts of the documents to be delivered
pursuant to the preceding sentence will be available for review by the parties
hereto. For the purposes of this Section 4, "New York Business Day" shall mean
each Monday, Tuesday, Wednesday, Thursday and Friday which is not a day on which
banking institutions in New York are generally authorized or obligated by law or
executive order to close.
12
5. Each of the Company and the Guarantors party hereto, jointly and
severally, agrees with each of the Purchasers:
(a) To prepare the Offering Circular in a form approved by you; to make no
amendment or any supplement to the Offering Circular which shall be disapproved
by you promptly after reasonable notice thereof; and to furnish you with copies
thereof;
(b) Promptly from time to time to take such action as you may reasonably
request to qualify the Securities for offering and sale under the securities
laws of such jurisdictions as you may request and to comply with such laws so as
to permit the continuance of sales and dealings therein in such jurisdictions
for as long as may be necessary to complete the distribution of the Securities,
provided that in connection therewith the Company and the Guarantors shall not
be required to qualify as a foreign corporation or to file a general consent to
service of process or become subject to taxation in any jurisdiction;
(c) Prior to 10:00 a.m., New York City time, on the New York Business Day
next succeeding the date of this Agreement and from time to time to furnish the
Purchasers with three copies of the Offering Circular and each amendment or
supplement thereto signed by an authorized officer of the Company with the
independent accountants' report(s) in the Offering Circular, and any amendment
or supplement containing amendments to the financial statements covered by such
report(s), signed by the accountants, and additional copies thereof in such
quantities as you may from time to time reasonably request, and if, at any time
prior to the expiration of nine months after the date of the Offering Circular,
any event shall have occurred as a result of which the Offering Circular as then
amended or supplemented would include an 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 when such
Offering Circular is delivered, not misleading, or, if for any other reason it
shall be necessary or desirable during such same period to amend or supplement
the Offering Circular, to notify you and upon your request to prepare and
furnish without charge to each Purchaser and to any dealer in securities as many
copies as you may from time to time reasonably request of an amended Offering
Circular or a supplement to the Offering Circular which will correct such
statement or omission or effect such compliance;
(d) During the period beginning from the date hereof and continuing until
the date six months after the Time of Delivery, not to offer, sell contract to
sell or otherwise dispose of, except as provided hereunder any securities of the
Company or any of its subsidiaries that are substantially similar to the
Securities;
(e) Not to be or become, at any time prior to the expiration of three
years after the Time of Delivery, an open-end investment company, unit
investment trust, closed-end investment company or face-amount certificate
company that is or is required to be registered under Section 8 of the
Investment Company Act;
(f) At any time when the Company and the Guarantors are not subject to
Section 13 or 15(d) of the Exchange Act, for the benefit of holders from time to
time of Securities, to furnish at their expense, upon request, to holders of
Securities and prospective purchasers of securities
13
information (the "Additional Issuer Information") satisfying the requirements of
subsection (d)(4)(i) of Rule 144A;
(g) If requested by you, to use its best efforts to cause the Securities
to be eligible for the PORTAL trading system of the National Association of
Securities Dealers, Inc.;
(h) To furnish to the holders of the Securities as soon as practicable
after the end of each fiscal year an annual report (including a balance sheet
and statements of income, stockholders' equity and cash flows of the Company and
its consolidated subsidiaries certified by independent public accountants) and,
as soon as practicable after the end of each of the first three quarters of each
fiscal year (beginning with the fiscal quarter ending after the date of the
Offering Circular), consolidated summary financial information of the Company
and its subsidiaries for such quarter in reasonable detail (the foregoing shall
be deemed satisfied by the delivery of Annual Reports on Form 10K and Quarterly
Reports on Form 10-Q.);
(i) During a period of five years from the date of the Offering Circular,
to furnish to you copies of all reports or other communications (financial or
other) of the type that would be customarily furnished to public stockholders of
the Company, and to deliver to you (i) as soon as they are available, copies of
any reports and financial statements furnished to or filed with the Commission
or any securities exchange on which the Securities or any class of securities of
the Company are listed; and (ii) such additional information concerning the
business and financial condition of the Company and the Guarantors as you may
from time to time reasonably request (such financial statements to be on a
consolidated basis to the extent the accounts of the Company and its
subsidiaries are consolidated in reports furnished to its stockholders generally
or to the Commission);
(j) During the period of two years after the Time of Delivery, not to, and
not to permit any of its "affiliates" (as defined in Rule 144 under the Act
("Rule 144")) to, resell any of the Securities which constitute "restricted
securities" under Rule 144 that have been reacquired by any of them;
(k) To comply with all terms of the Registration Rights Agreement,
including, without limitation, filing on or prior to 90 days after the Time of
Delivery and using commercially reasonable efforts to cause to be declared or
become effective under the Act, on or prior to 150 days after the Time of
Delivery, a registration statement on Form S-4 providing for the registration of
another series of debt securities of the Company, with terms identical to the
Securities (the "Exchange Securities"), and the exchange of the Securities for
the Exchange Securities, all in a manner which will permit persons who acquire
the Exchange Securities to resell the Exchange Securities pursuant to Section
4(1) of the Act; and
(l) To use the net proceeds received by them from the sale of the
Securities pursuant to this Agreement in the manner specified in the Offering
Circular under the caption "Use of Proceeds".
6. Each of the Company and the Guarantors party hereto, jointly and
severally covenant and agree with the several Purchasers that the Company and/or
the Guarantors will pay
14
or cause to be paid the following: (i) the fees, disbursements and expenses of
the Company's and the Guarantors' counsel and accountants in connection with the
issue of the Securities and all other expenses in connection with the
preparation, printing and filing of the Preliminary Offering Circular and the
Offering Circular and any amendments and supplements thereto and the mailing and
delivering of copies thereof to the Purchasers and dealers; (ii) the cost of
printing or producing any agreement among Purchasers, this Agreement, the
Registration Rights Agreement, the Indenture, the Blue Sky and Legal Investment
Memoranda, closing documents (including any compilations thereof) and any other
documents in connection with the offering, purchase, sale and delivery of the
Securities; (iii) all expenses in connection with the qualification of the
Securities for offering and sale under state securities laws as provided in
Section 5(b) hereof, including the reasonable and customary fees and
disbursements of counsel for the Purchasers in connection with such
qualification and in connection with the Blue Sky and legal investment surveys;
(iv) any fees charged by securities rating services for rating the Securities;
(v) the cost of preparing the Securities; (vi) the fees and expenses of the
Trustee and any agent of the Trustee and the fees and disbursements of counsel
for the Trustee in connection with the Indenture and the Securities; (vii) any
cost incurred in connection with the designation of the Securities for trading
in PORTAL and (viii) all other costs and expenses incident to the performance of
their obligations hereunder which are not otherwise specifically provided for in
this Section. It is understood, however, that, except as provided in this
Section, and Sections 8 and 11 hereof, the Purchasers will pay all of their own
costs and expenses, including the fees of their counsel, transfer taxes on
resale of any of the Securities by them.
7. The obligations of the Purchasers hereunder shall be subject, in their
discretion, to the condition that all representations and warranties and other
statements of the Company and the Guarantors herein are, at and as of the Time
of Delivery, true and correct, the condition that the Company and the Guarantors
shall have performed all of their obligations hereunder thereunder to be
performed, and the following additional conditions:
(a) ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, counsel for the Purchasers, shall have furnished to
you such opinion or opinions, dated the Time of Delivery, with respect to such
matters as you may reasonably request, and such counsel shall have received such
papers and information as they may reasonably request to enable them to pass
upon such matters;
(b) ▇▇▇▇▇▇▇ ▇▇▇▇ LLP, counsel for the Company, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇▇
LLP, and Ballard, Spahr, ▇▇▇▇▇▇▇ & Ingersoll, counsel to Klearfold and its
subsidiaries and ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, counsel to AGI Incorporated,
shall have furnished to you their written opinion dated the Time of Delivery, in
the form attached hereto as Exhibit A, Exhibit B, Exhibit C and Exhibit D,
respectively.
(c) On the date of the Offering Circular prior to the execution of this
Agreement and also at the Time of Delivery, KPMG Peat Marwick LLP, ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ LLP and Price Waterhouse LLP shall have furnished to you "comfort
letters," dated the respective dates of delivery thereof, substantially in the
forms heretofore approved by the Purchasers;
(d) (i) Neither the Company nor any of its subsidiaries shall have
sustained since the date of the latest audited financial statements included in
the Offering Circular any loss or
15
interference with its business from fire, explosion, flood or other calamity,
whether or not covered by insurance, or from any labor dispute or court or
governmental action, order or decree, otherwise than as set forth or
contemplated in the Offering Circular, and (ii) since the respective dates as of
which information is given in the Offering Circular there shall not have been
any change in the capital stock or long-term debt of the Company or any of its
subsidiaries or any change, or any development involving a prospective change,
in or affecting the general affairs, management, financial position,
stockholders' equity or results of operations of the Company and its
subsidiaries, otherwise than as set forth or contemplated in the Offering
Circular, the effect of which, in any such case described in Clause (i) or (ii),
is in the judgment of the Purchasers so material and adverse as to make it
impracticable or inadvisable to proceed with the public offering or the delivery
of the Securities on the terms and in the manner contemplated in this Agreement
and in the Offering Circular;
(e) On or after the date hereof (i) no downgrading shall have occurred in
the rating accorded the Company's debt securities by any "nationally recognized
statistical rating organization", as that term is defined by the Commission for
purposes of Rule 436(g)(2) under the Act, and (ii) no such organization shall
have publicly announced that it has under surveillance or review, with possible
negative implications, its rating of any of the Company's debt securities;
(f) On or after the date hereof there shall not have occurred any of the
following: (i) a suspension or material limitation in trading in securities
generally on the New York Stock Exchange or on the Nasdaq National Market
(NASDAQ); (ii) a general moratorium on commercial banking activities declared by
either Federal or New York State authorities; (iii) the outbreak or escalation
of hostilities involving the United States or the declaration by the United
States of a national emergency or war, if the effect of any such event specified
in this Clause (iii) in the judgment of the Purchasers makes it impracticable or
inadvisable to proceed with the offering or the delivery of the Securities on
the terms and in the manner contemplated in the Offering Circular; or (iv) the
occurrence of any material adverse change in the existing, financial, political
or economic conditions in the United States or elsewhere which, in the judgment
of the Purchasers, would materially and adversely affect the financial markets
or the markets for Securities and other debt securities;
(g) The Securities have been designated for trading on PORTAL;
(h) The Company shall have complied with the provisions of Section 5(c)
hereof with respect to the furnishing of Offering Circulars on the New York
Business Day next succeeding the date of this Agreement;
(i) The Company and the Guarantors shall have furnished or caused to be
furnished to you at the Time of Delivery certificates of officers of the Company
and the Guarantors reasonably satisfactory to you as to the accuracy of the
representations and warranties of the Company and the Guarantors herein at and
as of such Time of Delivery, as to the performance by the Company and the
Guarantors of all of their obligations hereunder to be performed at or prior to
such Time of Delivery, as to the matters set forth in subsections (d) and (e) of
this Section and as to such other matters as you may reasonably request.
16
(j) The Company, the Guarantors and the Trustee shall have entered into
the Indenture and the Purchasers shall have received counterparts, conformed as
executed, thereof.
(k) The Company, the Guarantors and the Purchasers shall have entered into
the Registration Rights Agreement in the form attached hereto as Annex II and
the Purchasers shall have received counterparts, conformed as executed, thereof.
(l) Prior to or simultaneously with the closing of the transactions
contemplated by Section 2 hereof, the Company and the Guarantors shall have
consummated all of the transactions contemplated by the Credit Documents and the
Acquisition Documents, including, without limitation, the Combination (as
described in the Offering Circular), the initial borrowings under the Credit
Agreement (as described in the Offering Circular), if any, and the issuance of
the Letters of Credit under the Credit Documents (as described in the Offering
Circular).
(m) Prior to or simultaneously with the closing of the transactions
contemplated by Section 2 hereof, the Company shall have entered into each of
the Employment Agreements (as defined in the Offering Circular) and each of such
Employment Agreements shall be in the form previously agreed to by the
Purchasers and described in the Offering Circular.
(n) ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, counsel for the Purchasers, shall have been
furnished with final, executed copies of each of the documents set forth above
and such other documents, in addition to those set forth above, as they may
reasonably require for the purpose of enabling them to review or pass upon the
matters referred to in this Section 7 and in order to evidence the accuracy,
completeness or satisfaction in all material respects of any of the
representations, warranties or conditions herein contained.
8. (a) The Company and the Guarantors will, jointly and severally,
indemnify and hold harmless each Purchaser against any losses, claims, damages
or liabilities, joint or several, to which such Purchaser may become subject,
under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon an
untrue statement or alleged untrue statement of a material fact contained in any
Preliminary Offering Circular or the Offering Circular, or any amendment or
supplement thereto, or arise out of or are based upon the omission or alleged
omission to state therein a material fact necessary to make the statements
therein not misleading, and will reimburse each Purchaser for any legal or other
expenses reasonably incurred by such Purchaser in connection with investigating
or defending any such action or claim as such expenses are incurred; provided,
however, that the Company and the Guarantors shall not be liable in any such
case to the extent that any such loss, claim, damage or liability arises out of
or is based upon an untrue statement or alleged untrue statement or omission or
alleged omission made in any Preliminary Offering Circular or the Offering
Circular or any such amendment or supplement in reliance upon and in conformity
with written information furnished to the Company by any Purchaser through
▇▇▇▇▇▇▇, Sachs & Co. expressly for use therein.
(b) Each Purchaser will, severally and not jointly, indemnify and hold
harmless the Company and the Guarantors against any losses, claims, damages or
liabilities to which the Company may become subject, under the Act or otherwise,
insofar as such losses, claims,
17
damages or liabilities (or actions in respect thereof) arise out of or are based
upon an untrue statement or alleged untrue statement of a material fact
contained in any Preliminary Offering Circular or the Offering Circular, or any
amendment or supplement thereto, or arise out of or are based upon the omission
or alleged omission to state therein a material fact or necessary to make the
statements therein not misleading, in each case to the extent, but only to the
extent, that such untrue statement or alleged untrue statement or omission or
alleged omission was made in any Preliminary Offering Circular or the Offering
Circular or any such amendment or supplement in reliance upon and in conformity
with written information furnished to the Company by such Purchaser through
▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co. expressly for use therein; and will reimburse the Company
and the Guarantors for any legal or other expenses reasonably incurred by the
Company and the Guarantors in connection with investigating or defending any
such action or claim as such expenses are incurred.
(c) Promptly after receipt by an indemnified party under subsection (a) or
(b) above of notice of the commencement of any action, such indemnified party
shall, if a claim in respect thereof is to be made against the indemnifying
party under such subsection, notify the indemnifying party in writing of the
commencement thereof; but the omission so to notify the indemnifying party shall
not relieve it from any liability which it may have to any indemnified party
otherwise than under such subsection. In case any such action shall be brought
against any indemnified party and it shall notify the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to participate
therein and, to the extent that it shall wish, jointly with any other
indemnifying party similarly notified, to assume the defense thereof, with
counsel satisfactory to such indemnified party (who shall not, except with the
consent of the indemnified party, be counsel to the indemnifying party), and,
after notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof, the indemnifying party shall not be
liable to such indemnified party under such subsection for any legal expenses of
other counsel or any other expenses, in each case subsequently incurred by such
indemnified party, in connection with the defense thereof other than reasonable
costs of investigation. No indemnifying party shall, without the written consent
of the indemnified party, effect the settlement or compromise of, or consent to
the entry of any judgment with respect to, any pending or threatened action or
claim in respect of which indemnification or contribution may be sought
hereunder (whether or not the indemnified party is an actual or potential party
to such action or claim) unless such settlement, compromise or judgment (i)
includes an unconditional release of the indemnified party from all liability
arising out of such action or claim and (ii) does not include a statement as to,
or an admission of, fault, culpability or a failure to act, by or on behalf of
any indemnified party.
(d) If the indemnification provided for in this Section 8 is unavailable
to or insufficient to hold harmless an indemnified party under subsection (a) or
(b) above in respect of any losses, claims, damages or liabilities (or actions
in respect thereof) referred to therein, then each indemnifying party shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages or liabilities (or actions in respect thereof)
in such proportion as is appropriate to reflect the relative benefits received
by the Company and the Guarantors on the one hand and the Purchasers on the
other from the offering of the Securities. If, however, the allocation provided
by the immediately preceding sentence is not permitted by applicable law or if
the indemnified party failed to give the notice required under subsection (c)
18
above, then each indemnifying party shall contribute to such amount paid or
payable by such indemnified party in such proportion as is appropriate to
reflect not only such relative benefits but also the relative fault of the
Company and the Guarantors on the one hand and the Purchasers on the other in
connection with the statements or omissions which resulted in such losses,
claims, damages or liabilities (or actions in respect thereof), as well as any
other relevant equitable considerations. The relative benefits received by the
Company and the Guarantors on the one hand and the Purchasers on the other shall
be deemed to be in the same proportion as the total net proceeds from the
offering (before deducting expenses) received by the Company and the Guarantors
bear to the total underwriting discounts and commissions received by the
Purchasers, in each case as set forth in the Offering Circular. The relative
fault shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the Company
and the Guarantors on the one hand or the Purchasers on the other and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission. The Company, the Guarantors and
the Purchasers agree that it would not be just and equitable if contribution
pursuant to this subsection (d) were determined by pro rata allocation (even if
the Purchasers were treated as one entity for such purpose) or by any other
method of allocation which does not take account of the equitable considerations
referred to above in this subsection (d). The amount paid or payable by an
indemnified party as a result of the losses, claims, damages or liabilities (or
actions in respect thereof) referred to above in this subsection (d) shall be
deemed to include any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any such action
or claim. Notwithstanding the provisions of this subsection (d), no Purchaser
shall be required to contribute any amount in excess of the amount by which the
total price at which the Securities underwritten by it and distributed to
investors were offered to investors exceeds the amount of any damages which such
Purchaser has otherwise been required to pay by reason of such untrue or alleged
untrue statement or omission or alleged omission. The Purchasers' obligations in
this subsection (d) to contribute are several in proportion to their respective
underwriting obligations and not joint.
(e) The obligations of the Company and the Guarantors under this Section 8
shall be in addition to any liability which the Company and the Guarantors may
otherwise have and shall extend, upon the same terms and conditions, to each
person, if any, who controls any Purchaser within the meaning of the Act; and
the obligations of the Purchasers under this Section 8 shall be in addition to
any liability which the respective Purchasers may otherwise have and shall
extend, upon the same terms and conditions, to each officer and director of the
Company and the Guarantors and to each person, if any, who controls the Company
within the meaning of the Act.
9. (a) If any Purchaser shall default in its obligation to purchase the
Securities which it has agreed to purchase hereunder, you may in your discretion
arrange for you or another party or other parties to purchase such Securities on
the terms contained herein. If within thirty-six hours after such default by
any Purchaser you do not arrange for the purchase of such Securities, then the
Company at its discretion shall be entitled to a further period of thirty-six
hours within which to procure another party or other parties satisfactory to you
to purchase such Securities on such terms. In the event that, within the
respective prescribed periods, you notify the Company that you have so arranged
for the purchase of such Securities, or the Company notifies you that it has so
arranged for the purchase of such Securities, you or the Company shall
19
have the right to postpone the Time of Delivery for a period of not more than
seven days, in order to effect whatever changes may thereby be made necessary in
the Offering Circular, or in any other documents or arrangements, and the
Company agrees to prepare promptly any amendments to the Offering Circular which
in your opinion may thereby be made necessary. The term "Purchaser" as used in
this Agreement shall include any person substituted under this Section 9 with
like effect as if such person had originally been a party to this Agreement with
respect to such Securities.
(b) If, after giving effect to any arrangements for the purchase of the
Securities of a defaulting Purchaser or Purchasers by you and the Company as
provided in subsection (a) above, the aggregate principal amount of such
Securities which remains unpurchased does not exceed one-eleventh of the
aggregate principal amount of all the Securities, then the Company shall have
the right to require each non-defaulting Purchaser to purchase the principal
amount of Securities which such Purchaser agreed to purchase hereunder and, in
addition, to require each non-defaulting Purchaser to purchase its pro rata
share (based on the principal amount of Securities which such Purchaser agreed
to purchase hereunder) of the Securities of such defaulting Purchaser or
Purchasers for which such arrangements have not been made; but nothing herein
shall relieve a defaulting Purchaser from liability for its default.
(c) If, after giving effect to any arrangements for the purchase of the
Securities of a defaulting Purchaser or Purchasers by you and the Company as
provided in subsection (a) above, the aggregate principal amount of Securities
which remains unpurchased exceeds one-eleventh of the aggregate principal amount
of all the Securities, or if the Company shall not exercise the right described
in subsection (b) above to require non-defaulting Purchasers to purchase
Securities of a defaulting Purchaser or Purchasers, then this Agreement shall
thereupon terminate, without liability on the part of any non-defaulting
Purchaser or the Company, except for the expenses to be borne by the Company and
the Purchasers as provided in Section 6 hereof and the indemnity and
contribution agreements in Section 8 hereof; but nothing herein shall relieve a
defaulting Purchaser from liability for its default.
10. The respective indemnities, agreements, representations, warranties
and other statements of the Company, the Guarantors and the several Purchasers,
as set forth in this Agreement or made by or on behalf of them, respectively,
pursuant to this Agreement, shall remain in full force and effect, regardless of
any investigation (or any statement as to the results thereof) made by or on
behalf of any Purchaser or any controlling person of any Purchaser, the Company,
the Guarantors or any officer or director or controlling person of the Company
or the Guarantors, and shall survive delivery of and payment for the Securities.
11. If this Agreement shall be terminated pursuant to Section 9 hereof,
the Company shall not then be under any liability to any Purchaser except as
provided in Sections 6 and 8 hereof; but, if for any other reason, the
Securities are not delivered by or on behalf of the Company and the Guarantors
as provided herein, the Company and the Guarantors will reimburse the Purchasers
through you for all reasonable out-of-pocket expenses, including fees and
disbursements of counsel, reasonably incurred by the Purchasers in making
preparations for the purchase, sale and delivery of the Securities, but the
Company and the Guarantors shall then be under no further liability to any
Purchaser except as provided in Sections 6 and 8 hereof.
20
12. In all dealings hereunder, you shall act on behalf of each of the
Purchasers, and the parties hereto shall be entitled to act and rely upon any
statement, request, notice or agreement on behalf of any Purchaser made or given
by you.
All statements, requests, notices and agreements hereunder shall be in
writing, and if to the Purchasers shall be delivered or sent by mail, telex or
facsimile transmission to you in care of ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co., ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: Registration Department, with a copy to
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇;
and if to the Company or any of the Guarantors shall be delivered or sent by
mail, telex or facsimile transmission to the address of the Company set forth in
the Offering Circular, Attention: Secretary, with a copy to ▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇;
provided, however, that any notice to a Purchaser pursuant to Section 8(c)
hereof shall be delivered or sent by mail, telex or facsimile transmission to
such Purchaser at its address set forth in its Purchasers' Questionnaire, or
telex constituting such Questionnaire, which address will be supplied to the
Company by you upon request. Any such statements, requests, notices or
agreements shall take effect upon receipt thereof.
13. This Agreement shall be binding upon, and inure solely to the benefit
of, the Purchasers, the Company, the Guarantors and, to the extent provided in
Sections 8 and 10 hereof, the officers and directors of the Company and each
person who controls the Company or any Purchaser, and their respective heirs,
executors, administrators, successors and assigns, and no other person shall
acquire or have any right under or by virtue of this Agreement. No purchaser of
any of the Securities from any Purchaser shall be deemed a successor or assign
by reason merely of such purchase.
14. Time shall be of the essence of this Agreement.
15. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK.
16. This Agreement may be executed by any one or more of the parties
hereto in any number of counterparts, each of which shall be deemed to be an
original, but all such respective counterparts shall together constitute one and
the same instrument.
21
If the foregoing is in accordance with your understanding, please sign and
return to us three counterparts hereof, and upon the acceptance hereof by you,
on behalf of each of the Purchasers, this letter and such acceptance hereof
shall constitute a binding agreement between each of the Purchasers, the Company
and each of the Guarantors named below. It is understood that your acceptance
of this letter on behalf of each of the Purchasers is pursuant to the authority
set forth in a form of Agreement among Purchasers, the form of which shall be
submitted to the Company for examination upon request, but without warranty on
your part as to the authority of the signers thereof.
Very truly yours,
KFI Holding Corporation
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title:
Klearfold, Inc., as Guarantor
By: /s/ H. ▇▇▇▇▇ ▇▇▇▇▇▇
----------------------------------------
Name: H. ▇▇▇▇▇ ▇▇▇▇▇▇
Title: President
AGI Incorporated, as Guarantor
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Vice President-Finance
KF-International, Inc., as Guarantor
By: /s/ H. ▇▇▇▇▇ ▇▇▇▇▇▇
----------------------------------------
Name: H. ▇▇▇▇▇ ▇▇▇▇▇▇
Title: President
KF-Delaware, Inc., as Guarantor
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title:
22
Accepted as of the date hereof:
▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co.
▇▇▇▇▇▇▇▇▇, Lufkin & ▇▇▇▇▇▇▇▇ Securities Corporation
By: /s/ ▇▇▇▇▇▇▇, Sachs & Co.
----------------------------------------------
(▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co.)
23
SCHEDULE I
PURCHASERS
Principal
Amount of
Securities
to be
Purchaser Purchased
--------- --------------
▇▇▇▇▇▇▇, Sachs & Co. .................................................................. $ 65,000,000
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ Securities Corporation ................................... $ 35,000,000
--------------
Total ............................................................................ $100,000,000
==============
s-1
ANNEX I
TERMS AND CONDITIONS OF SALES
UNDER REGULATION S UNDER THE ACT
(1) The Securities have not been and will not be registered under the Act
and may not be offered or sold within the United States or to, or for the
account or benefit of, U.S. persons except in accordance with Regulation S under
the Act or pursuant to an exemption from the registration requirements of the
Securities Act. Each Purchaser represents that it has offered and sold the
Securities, and will offer and sell the Securities (i) as part of their
distribution at any time and (ii) otherwise until 40 days after the later of the
commencement of the offering and the Time of Delivery, only in accordance with
Rule 903 of Regulation S or Rule 144A or pursuant to Paragraph 2 of this Annex I
under the Act. Accordingly, each Purchaser agrees that neither it, its
affiliates nor any persons acting on its or their behalf has engaged or will
engage in any directed selling efforts with respect to the Securities, and it
and they have complied and will comply with the offering restrictions
requirement of Regulation S. Each Purchaser agrees that, at or prior to
confirmation of sale of Securities (other than a sale pursuant to Rule 144A) or
pursuant to Paragraph 2 of this Annex I, it will have sent to each distributor,
dealer or person receiving a selling concession, fee or other remuneration that
purchases Securities from it during the restricted period a confirmation or
notice to substantially the following effect:
"The Securities covered hereby have not been registered under the
U.S. Securities Act of 1933, as amended (the "Act") and may not
be offered and sold within the United States or to, or for the
account or benefit of, U.S. persons (i) as part of their
distribution at any time or (ii) otherwise until 40 days after
the later of the commencement of the offering and the closing
date, except in either case in accordance with Regulation S (or
Rule 144A if available) under the Act. Terms used above have the
meaning given to them by Regulation S."
Terms used in this paragraph have the meanings given to them by Regulation S.
Each Purchaser further agrees that it has not entered and will not enter
into any contractual arrangement with respect to the distribution or delivery of
the Securities, except with its affiliates or with the prior written consent of
the Company.
(2) Notwithstanding the foregoing, Securities in registered form may be
offered, sold and delivered by the Purchasers in the United States and to U.S.
persons pursuant to Section 3 of this Agreement without delivery of the written
statement required by paragraph (1) above.
(3) Each Purchaser further represents and agrees that (i) it has not
offered or sold and will not offer or sell any Securities to persons in the
United Kingdom except to persons whose ordinary activities involve them in
acquiring, holding, managing or disposing of investments (as principal or agent)
for the purposes of their businesses or otherwise in circumstances which have
not resulted and will not result in an offer to the public in the United Kingdom
within the meaning of the Public Offers of Securities Regulations 1995, (b) it
has complied, and will comply, with all applicable provisions of the Financial
Services Act of 1986 of Great Britain with respect to
anything done by it in relation to the Securities in, from or otherwise
involving the United Kingdom, and (c) it has only issued or passed on and will
only issue or pass on in the United Kingdom any document received by it in
connection with the issuance of the Securities to a person who is of a kind
described in Article 11(3) of the Financial Services ▇▇▇ ▇▇▇▇ (Investment
Advertisements) (Exemptions) Order 1996 of Great Britain or is a person to whom
the document may otherwise lawfully be issued or passed on.
(4) Each Purchaser agrees that it will not offer, sell or deliver any of
the Securities in any jurisdiction outside the United States except under
circumstances that will result in compliance with the applicable laws thereof,
and that it will take at its own expense whatever action is required to permit
its purchase and resale of the Securities in such jurisdictions. Each Purchaser
understands that no action has been taken to permit a public offering in any
jurisdiction outside the United States where action would be required for such
purpose. Each Purchaser agrees not to cause any advertisement of the Securities
to be published in any newspaper or periodical or posted in any public place and
not to issue any circular relating to the Securities, except in any such case
with ▇▇▇▇▇▇▇, Sachs & Co.'s express written consent and then only at its own
risk and expense.
