EXHIBIT 4.2
RIVERWOOD INTERNATIONAL CORPORATION
$250,000,000
10-5/8% Senior Notes due 2007
PURCHASE AGREEMENT
July 23, 1997
CHASE SECURITIES INC.
CREDIT SUISSE FIRST BOSTON CORPORATION
XXXXXXX LYNCH, PIERCE,
XXXXXX & XXXXX INCORPORATED
c/o CHASE SECURITIES INC.
000 Xxxx Xxxxxx, 0xx xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
Riverwood International Corporation, a Delaware corporation (the
"Company"), proposes to issue and sell to the Initial Purchasers (as defined
herein) $250,000,000 aggregate principal amount of its 10-5/8% Senior Notes due
2007 (the "Securities"). The Securities will be issued pursuant to an indenture
to be dated as of July 28, 1997 (the "Indenture"), among the Company, as issuer,
RIC Holding, Inc., a Delaware corporation ("RIC Holding") and Riverwood Holding,
Inc., a Delaware corporation ("Holding"), as guarantors, and State Street Bank
and Trust Company N.A., as trustee (the "Trustee"). The Company hereby confirms
its agreement with Chase Securities Inc. ("CSI"), Credit Suisse First Boston
Corporation and Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated (together
with CSI, the "Initial Purchasers") concerning the purchase of the Securities
from the Company by the several Initial Purchasers.
The Securities will be offered and sold to the Initial Purchasers
without being registered under the Securities Act of 1933, as amended (the
"Securities Act"), in reliance upon an exemption therefrom. The Company has
prepared a preliminary offering memorandum dated July 10, 1997 (the "Preliminary
Offering Memorandum"), and will prepare an offering memorandum dated the date
hereof (the "Offering Memorandum") setting forth information concerning the
Company, RIC Holding and Holding (collectively, the "Riverwood Companies") and
the Securities. Copies of the Preliminary Offering Memorandum have been, and
copies of the Offering Memorandum will be, delivered by the Company to the
Initial Purchasers pursuant to the terms of this Agreement. Any references
herein to the Preliminary Offering Memorandum and the Offering Memorandum shall
be deemed to include all amendments and supplements thereto, unless otherwise
noted. The Company hereby confirms that it has authorized the use of the
Preliminary Offering Memorandum and the Offering Memorandum in connection with
the offering and resale of the Securities by the Initial Purchasers in
accordance with Section 2.
Holders of the Securities (including the Initial Purchasers and
their direct and indirect transferees) will be entitled to the benefits of an
Exchange and Registration Rights Agreement, substantially in the form attached
hereto as Annex A (the "Registration Rights Agreement"), pursuant to which the
Company will agree to file with the Securities and Exchange Commission (the
"Commission") (i) a registration statement under the Securities Act (the
"Exchange Offer Registration Statement") registering an issue of senior notes of
the Company (the "Exchange Securities") which are identical in all material
respects to the Securities (except that the Exchange Securities will not contain
terms with respect to transfer restrictions) and (ii) under certain
circumstances, a shelf registration statement pursuant to Rule 415 under the
Securities Act (the "Shelf Registration Statement").
Capitalized terms used but not defined herein shall have the
meanings given to such terms in the Offering Memorandum.
1. Representations, Warranties and Agreements of the Company. The
Company represents and warrants to, and agrees with, the several Initial
Purchasers on and as of the date hereof and the Closing Date (as defined in
Section 3) that:
(a) Each of the Preliminary Offering Memorandum and the Offering
Memorandum, as of its respective date, did not, and on the Closing Date
the Offering Memorandum will not, contain any untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary in order to make the statements therein, in the light
of the circumstances under which they were made, not misleading; provided
that the Company makes no representation or warranty as to information
contained in or omitted from the Preliminary Offering Memorandum or the
Offering Memorandum in reliance upon and in conformity with written
information relating to the Initial Purchasers furnished to the Company by
or on behalf of any Initial Purchaser specifically for use therein (the
"Initial Purchasers' Information").
(b) Each of the Preliminary Offering Memorandum and the Offering
Memorandum, as of its respective date, contains all of the information
that, if requested by a prospective purchaser of the Securities, would be
required to be provided to such prospective purchaser pursuant to Rule
144A(d)(4) under the Securities Act.
(c) Assuming the accuracy of the representations and warranties of
the Initial Purchasers contained in Section 2 and their compliance with
the agreements set forth therein, it is not necessary, in connection with
the issuance and sale of the Securities to the Initial Purchasers and the
offer, resale and delivery of the Securities by the Initial Purchasers in
the manner contemplated by this Agreement and the Offering Memorandum, to
register the Securities under the Securities Act or to qualify the
Indenture under the Trust Indenture Act of 1939, as amended (the "Trust
Indenture Act").
(d) Each of the Riverwood Companies, each of the Company's
subsidiaries and Igaras Papeis e Embalagens S.A., a Brazilian corporation
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("Igaras"), has been duly incorporated or organized and is validly
existing in good standing (if applicable) under the laws of its
jurisdiction of incorporation or organization, is duly qualified to do
business and is in good standing (if applicable) as a foreign corporation
in each jurisdiction in which its ownership or lease of property or the
conduct of its businesses requires such qualification, and has all power
and authority necessary to own or hold its properties and to conduct the
businesses in which it is engaged as described in the Preliminary Offering
Memorandum and Offering Memorandum, except where the failure to be so
incorporated or organized, so qualify or have such power or authority
would not reasonably be expected to have, singularly or in the aggregate,
a material adverse effect on the financial position, results of operations
or business of Holding and its direct and indirect subsidiaries, taken as
a whole (a "Material Adverse Effect").
(e) The consolidated capitalization of the Company as of March 29,
1997, as adjusted to give effect to the offering of the Securities (the
"Offering"), is as set forth in the Offering Memorandum under the heading
"Capitalization". All of the issued shares of capital stock of each
subsidiary of the Company have been duly and validly authorized and
issued, and are fully paid and non-assessable (if applicable). All of the
outstanding shares of capital stock of each of the Riverwood Companies
have been duly and validly authorized and issued and are fully paid and
non-assessable. Approximately 50% of the outstanding capital stock of
Igaras is owned by Riverwood Brazilian Investments, Inc., a subsidiary of
the Company, free and clear of any claim, lien, encumbrance, security
interest, restriction upon voting or transfer or any other claim of any
third party, except as provided in the shareholders agreement, by-laws and
other documents relating to the Company's interest in Igaras.
(f) (i) Each of Holding and RIC Holding have the corporate power to
execute and deliver the Indenture, and to perform its obligations
thereunder; and all corporate action required to be taken for the due and
proper authorization, execution and delivery of the Indenture by each of
Holding and RIC Holding and the consummation by each of Holding and RIC
Holding of the transactions contemplated thereby has been duly and validly
taken and (ii) the Company has the corporate power to execute and deliver
this Agreement, the Indenture, the Registration Rights Agreement and the
Securities (collectively, the "Transaction Documents"), and to perform its
obligations hereunder and thereunder; and all corporate action required to
be taken for the due and proper authorization, execution and delivery of
each of the Transaction Documents by the Company and the consummation of
the transactions by the Company contemplated thereby has been duly and
validly taken.
(g) This Agreement has been duly authorized, executed and delivered
by the Company and constitutes a valid and legally binding agreement of
the Company, enforceable against the Company in accordance with its terms,
except to the extent that such enforceability may be limited by applicable
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium
and other similar laws affecting creditors' rights and remedies generally
and by general equitable principles (whether considered in a proceeding in
equity or at law), and except to
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the extent that rights to indemnity or contribution under this Agreement
may be limited by applicable law.
(h) The Registration Rights Agreement has been duly authorized by
the Company and, when duly executed and delivered in accordance with its
terms by each of the parties thereto, will constitute a valid and legally
binding agreement of the Company enforceable against the Company in
accordance with its terms, except to the extent that such enforceability
may be limited by applicable bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and other similar laws affecting creditors'
rights and remedies generally and by general equitable principles (whether
considered in a proceeding in equity or at law), and except to the extent
that rights to indemnity or contribution under the Registration Rights
Agreement may be limited by applicable law.
(i) The Indenture has been duly authorized by each of the Riverwood
Companies and, when duly executed and delivered in accordance with its
terms by each of the parties thereto, will constitute a valid and legally
binding agreement of the Company as issuer, and Holding and RIC Holding,
as guarantors, enforceable against each in accordance with its terms,
except to the extent that such enforceability may be limited by applicable
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium
and other similar laws affecting creditors' rights and remedies generally
and by general equitable principles (whether considered in a proceeding in
equity or at law). On the Closing Date, the Indenture will conform in all
material respects to the requirements of the Trust Indenture Act and the
rules and regulations of the Commission applicable to an indenture which
is qualified thereunder.
(j) The Securities have been duly authorized by the Company and,
when duly executed, authenticated, issued and delivered as provided in the
Indenture and paid for as provided herein, will be duly and validly issued
and outstanding and will constitute valid and legally binding obligations
of the Company entitled to the benefits of the Indenture and enforceable
against the Company in accordance with their terms, except to the extent
that such enforceability may be limited by applicable bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and other
similar laws affecting creditors' rights and remedies generally and by
general equitable principles (whether considered in a proceeding in equity
or at law).
(k) Each Transaction Document conforms in all material respects to
the description thereof contained in the Offering Memorandum.
(l) The execution, delivery and performance of (A) the Indenture by
the Riverwood Companies and (B) each of the other Transaction Documents by
the Company, the issuance, sale and delivery of the Securities by the
Company and the compliance by the Riverwood Companies, with respect to the
Indenture, and the Company, with respect to the other Transaction
Documents, with the terms thereof and the consummation of the transactions
contemplated by the Transaction Documents will (i) not contravene any
existing statute or any judgment, order, decree, rule or regulation of any
court or arbitrator or
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governmental agency or body having jurisdiction over any of the Riverwood
Companies, the Company's subsidiaries or Igaras or any of their respective
properties or assets (except as would not reasonably be expected to have a
Material Adverse Effect), (ii) not violate the certificate of
incorporation or by-laws (or similar organizational document) of any of
the Riverwood Companies, the Company's subsidiaries or Igaras, and (iii)
not conflict with or result in a breach or violation of any of the terms
or provisions of, or constitute a default under, or result in the creation
or imposition of any lien, charge or encumbrance upon any property or
asset of any of the Riverwood Companies, the Company's subsidiaries or
Igaras pursuant to, any indenture, mortgage, deed of trust, loan agreement
or other agreement or instrument to which any of them is a party or by
which any of them is bound or to which any of their respective properties
or assets is subject (except as would not reasonably be expected to have a
Material Adverse Effect). Except as disclosed in the Preliminary Offering
Memorandum and the Offering Memorandum, except for the consents,
approvals, authorizations, orders, filings or registrations required to be
obtained or made under the Securities Act and applicable state securities
laws in connection with the Exchange Securities and as provided in the
Registration Rights Agreement and except for such other consents,
approvals, authorizations, orders, filings or registrations the failure of
which to be obtained or made would not reasonably be expected to have or
result in a Material Adverse Effect, no consent, approval, authorization
or order of, or filing or registration with, any court or arbitrator or
governmental agency or body having jurisdiction over any of the Riverwood
Companies, the Company's subsidiaries or Igaras under any existing statute
or any judgment, order, decree, rule or regulation is required for the
execution, delivery and performance of (A) the Indenture by the Riverwood
Companies and (B) each of the other Transaction Documents by the Company,
the issuance, sale and delivery of the Securities by the Company and the
compliance by the Company with the terms thereof and the consummation of
the transactions contemplated by the Transaction Documents.
(m) To the knowledge of the Company, Deloitte & Touche LLP are
independent public accountants with respect to the Riverwood Companies and
the Company's subsidiaries, and Coopers & Lybrand, Biedermann, Bordasch
are independent public accountants with respect to Igaras, as required by
the Securities Act and the rules and regulations thereunder. The
historical financial statements (including the related notes) contained in
the Offering Memorandum comply in all material respects with the
requirements applicable to a registration statement on Form S-1 under the
Securities Act (except that certain supporting schedules are omitted);
such financial statements have been prepared in accordance with generally
accepted accounting principles consistently applied throughout the periods
covered thereby and present fairly in all material respects the financial
position of the entities purported to be covered thereby at the respective
dates indicated and the results of their operations and their cash flows
for the respective periods indicated.
(n) There are no legal or governmental proceedings pending to which
any of the Riverwood Companies or any of the Company's subsidiaries is a
party or of which any of the properties or assets of any of the Riverwood
Companies or any
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of the Company's subsidiaries is the subject which, singularly or in the
aggregate, would reasonably be expected to have a Material Adverse Effect;
and, to the knowledge of the Company, no such proceedings are threatened
or contemplated by governmental authorities or threatened by others.
(o) No action has been taken and no statute, rule, regulation or
order has been enacted, adopted or issued by any governmental agency or
body which prevents the issuance of the Securities or suspends the sale of
the Securities in any jurisdiction; no injunction, restraining order or
order of any nature by any federal or state court of competent
jurisdiction has been issued with respect to any of the Riverwood
Companies or any of the Company's subsidiaries which would prevent or
suspend the issuance or sale of the Securities or the use of the
Preliminary Offering Memorandum or the Offering Memorandum in any
jurisdiction; no action, suit or proceeding is pending against or, to the
knowledge of the Company, threatened against or affecting any of the
Riverwood Companies or any of the Company's subsidiaries before any court
or arbitrator or any governmental agency, body or official, domestic or
foreign, which would reasonably be expected to interfere with or adversely
affect the issuance of the Securities or in any manner draw into question
the validity of any of the Transaction Documents or any action taken or to
be taken pursuant thereto.
(p) None of the Riverwood Companies, the Company's subsidiaries or
Igaras (i) is in violation of its charter or by-laws, (ii) is in default
in any respect, and no event has occurred which, with notice or lapse of
time or both, would constitute such a default, in the due performance or
observance of any term, covenant or condition contained in any indenture,
mortgage, deed of trust, loan agreement or other agreement or instrument
to which it is a party or by which it is bound or to which any of its
properties or assets are subject or (iii) is in violation in any respect
of any law, ordinance, governmental rule, regulation or court decree to
which it or its properties or assets may be subject, except any violation
or default under clauses (i), (ii) or (iii) that would not reasonably be
expected to have a Material Adverse Effect.
(q) Each of the Riverwood Companies and the Company's subsidiaries
possesses all material licenses, certificates, authorizations and permits
issued by, and has made all declarations and filings with, the appropriate
federal, state or foreign regulatory agencies or bodies which are
necessary for the ownership of its properties or the conduct of its
businesses as described in the Offering Memorandum, except where the
failure to possess or make the same would not reasonably be expected to
have, singularly or in the aggregate, a Material Adverse Effect, and none
of the Riverwood Companies or the Company's subsidiaries have received
notification of any revocation or modification of any such license,
certificate, authorization or permit or have any reason to believe that
any such license, certificate, authorization or permit will not be
renewed.
(r) All material tax returns required to be filed on or prior to the
Closing Date by each of the Riverwood Companies and each of the Company's
subsidiaries in any jurisdiction have (or by the Closing Date will have)
been filed or the time for filing such returns has (or by the Closing Date
will have) been
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validly extended to a date after the Closing Date, other than those
filings being contested in good faith, and all material taxes, penalties
and interest, assessments, fees and other charges due or claimed to be due
on or prior to the Closing Date from such entities have (or by the Closing
Date will have) been paid, other than (i) as described in the Preliminary
Offering Memorandum and the Offering Memorandum, with respect to any
additional tax liability to the State of Louisiana resulting from the
Company's election under Section 338(h)(10) of the Internal Revenue Code
of 1986, as amended (the "Code"), relating to transactions in March, 1996,
(ii) those being contested in good faith and for which adequate reserves
have been provided or (iii) those currently payable without penalty or
interest. All material taxes required to be withheld by the Riverwood
Companies or the Company's subsidiaries prior to or on the Closing Date in
connection with payments to any employee, independent contractor or
creditor have (or by the Closing Date will have) been timely and duly paid
to the appropriate governmental authorities or properly set aside in
accounts for such purposes.
(s) None of the Riverwood Companies is (i) an "investment company"
or a company "controlled by" an investment company within the meaning of
the Investment Company Act of 1940, as amended (the "Investment Company
Act"), and the rules and regulations of the Commission thereunder or (ii)
a "holding company" or a "subsidiary company" of a holding company or an
"affiliate" thereof within the meaning of the Public Utility Holding
Company Act of 1935, as amended.
(t) Holding and its subsidiaries maintain a system of internal
accounting controls sufficient to provide reasonable assurance that in all
material respects (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
asset accountability, (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 to any differences.
(u) The Company and its subsidiaries have and will maintain
insurance covering their respective properties, operations, personnel and
businesses, which insurance is in amounts and insures against such losses
and risks, in each case as in accordance with customary industry practice,
except where the failure to maintain such insurance would not reasonably
be expected to have a Material Adverse Effect.
(v) Except as disclosed in the Offering Memorandum, the Company and
its subsidiaries own or possess adequate rights to use all material
patents, patent applications, trademarks, service marks, trade names,
trademark registrations, service xxxx registrations, copyrights, licenses
and know-how (including trade secrets and other unpatented and/or
unpatentable proprietary or confidential information, systems or
procedures) necessary for the conduct of their respective
7
businesses, except where the failure to own or possess any such
intellectual property would not reasonably be expected to have a Material
Adverse Effect;
(w) The Company and each of its subsidiaries have good title in fee
simple to, or have valid rights to lease or otherwise use, all items of
real and personal property which are material to their respective
businesses, free and clear of all liens, encumbrances, claims and title
defects (collectively, "Liens") that would reasonably be expected to have
a Material Adverse Effect, other than Liens granted to lenders under the
Credit Agreements, and except as do not materially interfere with the use
of such properties.
(x) No labor disturbance by the employees of the Company or its
subsidiaries exists or, to the knowledge of the Company, is contemplated,
except as would not reasonably be expected to have a Material Adverse
Effect.
(y) Except as disclosed in the Preliminary Offering Memorandum and
the Offering Memorandum, there is no claim pending or, to the knowledge of
the Company, threatened under any Environmental Law (as defined below)
against the Company or any of its subsidiaries that would reasonably be
expected to have a Material Adverse Effect, and except as disclosed in the
Preliminary Offering Memorandum and the Offering Memorandum, there are no
past or present actions or conditions which are reasonably likely to form
the basis of any such claim under existing law against the Company or any
of its subsidiaries that would reasonably be expected to have a Material
Adverse Effect. The term "Environmental Law" means any federal, local or
foreign law, regulation, ordinance, order, judgment, decree, permit or
rule (including rule of common law) now in effect governing pollution or
protection of the environment.
(z) On and immediately after the Closing Date, each of the Riverwood
Companies (after giving effect to the issuance of the Securities and to
the other transactions related thereto as described in the Offering
Memorandum) will be Solvent. As used in this paragraph (z), the term
"Solvent" means, with respect to a particular date, that on such date (i)
the present fair market value (or present fair saleable value) of the
assets of each of the Riverwood Companies is not less than the total
amount required to pay the probable liabilities of such company on its
total existing debts and liabilities (including contingent liabilities) as
they become absolute and matured, (ii) each of the Riverwood Companies is
able to realize upon its assets and pay its debts and other liabilities,
contingent obligations and commitments as they mature and become due in
the normal course of business, (iii) assuming the sale of the Securities
as contemplated by this Agreement and the Offering Memorandum and the
other transactions described in the Preliminary Offering Memorandum and
the Offering Memorandum, the Company is not incurring debts or liabilities
beyond its ability to pay as such debts and liabilities mature and (iv)
none of the Riverwood Companies is engaged in any business or transaction,
or is about to engage in any business or transaction, for which its
property would constitute unreasonably small capital after giving due
consideration to the prevailing practice in the industry in which such
company is engaged. In computing the amount of such contingent liabilities
at any time, it is intended that such liabilities will be computed at the
amount that, in the light of
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all the facts and circumstances existing at such time, represents the
amount that can reasonably be expected to become an actual or matured
liability. In making this representation, the Company has relied upon its
analysis of internal cash flow projections (which, among other things,
assume that the Company will in the future realize certain selling price
and volume increases and favorable changes in product mix) and estimated
values of assets and liabilities of the Company.
(aa) Except as described in the Offering Memorandum, to the
knowledge of the Company, there are no outstanding subscriptions, rights,
warrants, calls or options to acquire, or instruments convertible into or
exchangeable for, or agreements or understandings with respect to the sale
or issuance of, any shares of capital stock of or other equity or other
ownership interest in the Company.
(bb) None of the proceeds of the sale of the Securities will be
used, directly or indirectly, for the purpose of purchasing or carrying
any "margin security", as that term is defined in Regulations G and U of
the Board of Governors of the Federal Reserve System (the "Federal Reserve
Board"), for the purpose of reducing or retiring any indebtedness which
was originally incurred to purchase or carry any margin security or for
any other purpose which might cause any of the Securities to be considered
a "purpose credit" within the meanings of Regulation G, T, U or X of the
Federal Reserve Board.
(cc) Other than this Agreement or as disclosed in the Offering
Memorandum, none of the Riverwood Companies is a party to any contract,
agreement or understanding with any person that would give rise to a valid
claim against any of the Riverwood Companies or the Initial Purchasers for
a material brokerage commission, finder's fee or like payment in
connection with the Offering.
(dd) The Securities satisfy the eligibility requirements of Rule
144A(d)(3) under the Securities Act.
(ee) The Riverwood Companies, their affiliates or any person acting
on their behalf have not engaged and will not engage in any directed
selling efforts (as such term is defined in Regulation S under the
Securities Act ("Regulation S")), and all such persons have complied and
will comply with the offering restrictions requirement of Regulation S to
the extent applicable.
(ff) None of the Riverwood Companies or their affiliates have,
directly or through any agent, sold, offered for sale, solicited offers to
buy or otherwise negotiated in respect of, any security (as such term is
defined in the Securities Act), which is or will be integrated with the
sale of the Securities in a manner that would require registration of the
Securities under the Securities Act.
(gg) The Riverwood Companies, their affiliates or any other person
acting on their behalf have not engaged, in connection with the Offering,
in any form of general solicitation or general advertising within the
meaning of Rule 502(c) under the Securities Act.
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(hh) Other than the Existing Notes (as defined in the Indenture),
there are no securities of any of the Riverwood Companies registered under
the Exchange Act, or listed on a national securities exchange or quoted in
a U.S. automated inter-dealer quotation system.
(ii) The Riverwood Companies have not taken and will not take,
directly or indirectly, any action prohibited by Regulation M under the
Exchange Act in connection with the Offering.
(jj) Since March 29, 1997, except as otherwise stated in the
Preliminary Offering Memorandum and the Offering Memorandum, (i) there has
been no material adverse change or any development involving a material
adverse change in the financial position, results of operations or
business of Holding and its subsidiaries, taken as a whole, whether or not
arising in the ordinary course of business, (ii) none of the Riverwood
Companies have entered into any material transaction other than in the
ordinary course of business (except as would not reasonably be expected to
have a Material Adverse Effect) and (iii) there has not been any dividend
or distribution of any kind declared, paid or made by the Company, other
than those made pursuant to the provisions of the indentures governing the
Existing Notes and pursuant to the Credit Agreements, on any class of its
capital stock.
2. Purchase and Resale of the Securities. (a) On the basis of the
representations, warranties and agreements contained herein, and subject to the
terms and conditions set forth herein, the Company agrees to issue and sell to
each of the Initial Purchasers, severally and not jointly, and each of the
Initial Purchasers, severally and not jointly, agrees to purchase from the
Company, the principal amount of Securities set forth opposite the name of such
Initial Purchaser on Schedule 1 hereto at a purchase price equal to 97.25% of
the principal amount thereof plus any additional amount of Securities that such
Initial Purchaser may be obligated to purchase pursuant to the provisions of
Section 7 hereof. The Company shall not be obligated to deliver any of the
Securities except upon payment for all of the Securities to be purchased as
provided herein.
(b) The Initial Purchasers have advised the Company that they
propose to offer the Securities for resale upon the terms and subject to the
conditions set forth herein and in the Offering Memorandum. Each Initial
Purchaser, severally and not jointly, represents and warrants to, and agrees
with, the Company that (i) it is purchasing the Securities pursuant to a private
sale exempt from registration under the Securities Act, (ii) it has not
solicited offers for, or offered or sold, and will not solicit offers for, or
offer or sell, the Securities (a) by means of any form of general solicitation
or general advertising within the meaning of Rule 502(c) of Regulation D under
the Securities Act ("Regulation D"), (b) in any manner involving a public
offering within the meaning of Section 4(2) of the Securities Act or (c) in any
jurisdiction other than jurisdictions in which such Initial Purchaser is
qualified to do so and (iii) it has solicited and will solicit offers for the
Securities only from, and has offered or sold and will offer, sell or deliver
the Securities, as part of its initial offering, only to persons whom it
reasonably believes to be qualified institutional buyers ("Qualified
Institutional Buyers") as defined in Rule 144A under the Securities Act, or if
any such person is buying for one or more institutional accounts for which such
person is acting as fiduciary or agent, only when
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such person has represented to it that each such account is a Qualified
Institutional Buyer to whom notice has been given that such sale or delivery is
being made in reliance on Rule 144A and in each case, in transactions in
accordance with Rule 144A. Each Initial Purchaser, severally and not jointly,
agrees that, prior to or simultaneously with the confirmation of sale by such
Initial Purchaser to any purchaser of any of the Securities purchased by such
Initial Purchaser from the Company pursuant hereto, such Initial Purchaser shall
furnish to that purchaser a copy of the Offering Memorandum (and any amendment
or supplement thereto that the Company shall have furnished to such Initial
Purchaser prior to the date of such confirmation of sale). In addition to the
foregoing, each Initial Purchaser acknowledges and agrees that the Company and,
for purposes of the opinions to be delivered to the Initial Purchasers pursuant
to Sections 5(d) and (e), counsel for the Company and for the Initial
Purchasers, respectively, may rely upon the accuracy of the representations and
warranties of the Initial Purchasers and their compliance with their agreements
contained in this Section 2, and each Initial Purchaser hereby consents to such
reliance.
(c) The Company acknowledges and agrees that the Initial Purchasers
may sell Securities to any affiliate of an Initial Purchaser and that any such
affiliate may sell Securities purchased by it to an Initial Purchaser.
3. Delivery of and Payment for the Securities. (a) Delivery of and
payment for the Securities shall be made at the offices of Cravath, Swaine &
Xxxxx, 825 Eighth Avenue, New York, New York, or at such other place as shall be
agreed upon by the Initial Purchasers and the Company, at 10:00 A.M., New York
City time, on July 28, 1997, or at such other time or date, not later than seven
full business days thereafter (unless postponed in accordance with Section 7
hereof), as shall be agreed upon by the Initial Purchasers and the Company (such
date and time of payment and delivery being referred to herein as the "Closing
Date").
(b) On the Closing Date, payment of the purchase price for the
Securities shall be made to the Company by wire or book-entry transfer of
same-day funds to such account or accounts as the Company shall specify prior to
the Closing Date or by such other means as the parties hereto shall agree prior
to the Closing Date against delivery to CSI on behalf of the Initial Purchasers
of the certificates evidencing the Securities. Time shall be of the essence, and
delivery at the time and place specified pursuant to this Agreement is a further
condition of the obligations of the Initial Purchasers hereunder. Upon delivery,
the Securities shall be in global form, registered in the name of Cede & Co., a
nominee of The Depository Trust Company ("DTC"), and deposited on behalf of the
Initial Purchasers with the Trustee, as custodian for DTC, for credit to the
respective participant accounts of the Initial Purchasers unless otherwise
directed by CSI on behalf of the Initial Purchasers not less than two full
business days prior to the Closing Date. The Company agrees to make one or more
global certificates evidencing the Securities available for inspection by CSI on
behalf of the Initial Purchasers in New York, New York at least 24 hours prior
to the Closing Date.
4. Further Agreements of the Company. The Company agrees with each
of the several Initial Purchasers:
11
(a) to advise CSI on behalf of the Initial Purchasers promptly and,
if requested, confirm such advice in writing, of the happening of any
event which makes any statement of a material fact made in the Offering
Memorandum untrue or which requires the making of any additions to or
changes in the Offering Memorandum (as amended or supplemented from time
to time) in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; to advise CSI on
behalf of the Initial Purchasers promptly of any order preventing or
suspending the use of the Preliminary Offering Memorandum or the Offering
Memorandum, of any suspension of the qualification of the Securities for
offering or sale in any jurisdiction and of the initiation or threatening
of any proceeding for any such purpose; and to use reasonable best efforts
to prevent the issuance of any such order preventing or suspending the use
of the Preliminary Offering Memorandum or the Offering Memorandum or
suspending any such qualification and, if any such suspension is issued,
to use reasonable best efforts to obtain the lifting thereof at the
earliest possible time;
(b) to furnish to CSI on behalf of the Initial Purchasers and
counsel for the Initial Purchasers, without charge, as many copies of the
Preliminary Offering Memorandum and the Offering Memorandum (and any
amendments or supplements thereto) as may be reasonably requested;
(c) prior to making any amendment or supplement to the Offering
Memorandum, to furnish a copy thereof to CSI on behalf of the Initial
Purchasers and counsel for the Initial Purchasers and not to effect any
such amendment or supplement to which CSI on behalf of the Initial
Purchasers shall reasonably object by notice to the Company after a
reasonable period to review;
(d) if, at any time prior to completion of the resale of the
Securities by the Initial Purchasers, any event shall occur or condition
exist as a result of which it is necessary, in the reasonable opinion of
counsel for the Initial Purchasers or counsel for the Company, to amend or
supplement the Offering Memorandum in order that the Offering Memorandum
will not include 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 existing at the time it is delivered to a
purchaser, not misleading, or if it is necessary to amend or supplement
the Offering Memorandum to comply with applicable law, to promptly prepare
such amendment or supplement as may be necessary to correct such untrue
statement or omission or so that the Offering Memorandum, as so amended or
supplemented, will comply with applicable law;
(e) for so long as the Securities are outstanding and are
"restricted securities" within the meaning of Rule 144(a)(3) under the
Securities Act, to furnish to holders of the Securities and prospective
purchasers of the Securities designated by such holders, upon request of
such holders or such prospective purchasers, the information required to
be delivered pursuant to Rule 144A(d)(4) under the Securities Act, unless
Holding or the Company (x) is then subject to and in compliance with
Section 13 or 15(d) of the Exchange Act or (y) is otherwise filing reports
under Section 13 or 15(d) of the Exchange Act (the
12
foregoing agreement being for the benefit of the holders from time to time
of the Securities and prospective purchasers of the Securities designated
by such holders);
(f) for so long as the Securities are outstanding or for a period of
no more than three years, whichever is shorter, to furnish to the Initial
Purchasers copies of any annual reports, quarterly reports and current
reports filed by any of the Riverwood Companies with the Commission on
Forms 10-K, 10-Q and 8-K, or such other similar forms as may be designated
by the Commission, and such other documents, reports and information as
shall be furnished by the Company to the Trustee or to the holders of the
Securities pursuant to the Indenture or the Exchange Act or any rule or
regulation of the Commission thereunder;
(g) prior to the completion of the resale of the Securities by the
Initial Purchasers, to promptly take from time to time such actions as the
Initial Purchasers may reasonably request to qualify the Securities for
offering and sale under the securities or Blue Sky laws of such United
States jurisdictions as CSI on behalf of the Initial Purchasers may
designate and to continue such qualifications in effect for so long as
required for such resale of the Securities; provided that the Riverwood
Companies and the Company's subsidiaries shall not be obligated to qualify
as foreign corporations in any jurisdiction in which they are not so
qualified or to file a general consent to service of process in any
jurisdiction;
(h) to assist CSI on behalf of the Initial Purchasers in arranging
for the Securities to be designated Private Offerings, Resales and Trading
through Automated Linkages ("PORTAL") Market securities in accordance with
the rules and regulations adopted by the National Association of
Securities Dealers, Inc. ("NASD") relating to trading in the PORTAL Market
and for the Securities to be eligible for clearance and settlement through
DTC;
(i) not to, and to cause its affiliates not to, sell, offer for sale
or solicit offers to buy or otherwise negotiate in respect of any security
(as such term is defined in the Securities Act) which could be integrated
with the sale of the Securities in a manner which would require
registration of the Securities under the Securities Act;
(j) except following the effectiveness of the Exchange Offer
Registration Statement or the Shelf Registration Statement, as the case
may be, not to, and to cause their affiliates not to, and not to authorize
or knowingly permit any person acting on their behalf to, solicit any
offer to buy or offer to sell the Securities by means of any form of
general solicitation or general advertising within the meaning of
Regulation D or in any manner involving a public offering within the
meaning of Section 4(2) of the Securities Act; and not to offer, sell,
contract to sell or otherwise dispose of, directly or indirectly, any
securities under circumstances where such offer, sale, contract or
disposition would cause the exemption afforded by Section 4(2) of the
Securities Act to cease to be applicable to the Offering as contemplated
by this Agreement and the Offering Memorandum;
13
(k) for a period of 120 days from the date of the Offering
Memorandum, not to offer for sale, sell, contract to sell or otherwise
dispose of, directly or indirectly, or file a registration statement for,
or announce any offer, sale, contract for sale of or other disposition of
any debt securities issued or guaranteed by any of the Riverwood Companies
or any of the Company's subsidiaries (other than promissory notes or other
debt securities issued or guaranteed in de minimis amounts in the ordinary
course of business, the Securities or the Exchange Securities) without the
prior written consent of CSI on behalf of the Initial Purchasers, which
consent shall not be unreasonably withheld;
(l) during the period from the Closing Date until two years after
the Closing Date, without the prior written consent of CSI on behalf of
the Initial Purchasers which consent shall not be unreasonably withheld,
not to, and not permit any of its affiliates (as defined in Rule 144 under
the Securities Act) to, resell any of the Securities that have been
reacquired by them, except for Securities purchased by the Company or its
affiliates and resold in a transaction registered under the Securities
Act;
(m) in connection with the Offering, until CSI on behalf of the
Initial Purchasers shall have notified the Company of the completion of
the resale of the Securities by the Initial Purchasers, not to, and to
cause its affiliated purchasers (as defined in Rule 100 of Regulation M
under the Exchange Act) not to, either alone or with one or more other
persons, bid for or purchase, for any account in which it or any of its
affiliated purchasers has a beneficial interest, any Securities, or
attempt to induce any person to purchase any Securities; and not to, and
to cause its affiliated purchasers not to, make bids or purchase for the
purpose of creating actual, or apparent, active trading in or of raising
the price of the Securities;
(n) in connection with the Offering, to make the officers,
employees, independent accountants and legal counsel of the Riverwood
Companies and the Company's subsidiaries reasonably available upon request
by CSI on behalf of the Initial Purchasers;
(o) to furnish, or cause to be furnished, to CSI on behalf of the
Initial Purchasers on the date hereof or as soon thereafter as
practicable, but in any case not later than the Closing Date, two copies
of each of the independent accountants' reports included in the Offering
Memorandum signed by the accountants rendering such reports;
(p) to not take any action prior to the execution and delivery of
the Indenture which, if taken after such execution and delivery, would
have violated any of the covenants contained in the Indenture;
(q) to use reasonable best efforts to satisfy all conditions
precedent to the delivery of the Securities;
14
(r) to use its reasonable best efforts not to take any action prior
to the Closing Date which, in the Company's reasonable judgment, would
require the Offering Memorandum to be amended or supplemented pursuant to
Section 4(d);
(s) prior to the Closing Date, not to issue any press release or
other communication directly or indirectly or hold any press conference
with respect to the Riverwood Companies or the Company's subsidiaries,
their condition, financial or otherwise, or earnings, business affairs or
business prospects (except for routine oral marketing communications in
the ordinary course of business and consistent with the past practices of
the Riverwood Companies or the Company's subsidiaries and of which CSI on
behalf of the Initial Purchasers is notified), without the prior written
consent of CSI on behalf of the Initial Purchasers, unless in the judgment
of the Company and its counsel, and after notification to CSI on behalf of
the Initial Purchasers, such press release or communication is required by
law; and
(t) to apply the net proceeds from the sale of the Securities as set
forth in the Offering Memorandum under the heading "Use of Proceeds".
5. Conditions of Initial Purchasers' Obligations. The respective
obligations of the several Initial Purchasers hereunder are subject to the
accuracy, on and as of the date hereof and the Closing Date, of the
representations and warranties of the Company contained herein, to the accuracy
of the statements of the Company and its officers made in any certificates
delivered pursuant hereto, to the performance by the Company of its obligations
hereunder, and to each of the following additional terms and conditions:
(a) The Offering Memorandum (and any amendments or supplements
thereto) shall have been printed and copies distributed to the Initial
Purchasers as promptly as practicable on or following the date of this
Agreement or at such other date and time as to which CSI on behalf of the
Initial Purchasers may agree; and no stop order suspending the sale of the
Securities in any jurisdiction shall have been issued and no proceeding
for that purpose shall have been commenced or shall be pending or
threatened.
(b) None of the Initial Purchasers shall have discovered and
disclosed to the Company on or prior to the Closing Date that the Offering
Memorandum or any amendment or supplement thereto contains an untrue
statement of a fact which, in the reasonable opinion of counsel for the
Initial Purchasers, is material or omits to state any fact which, in the
reasonable opinion of such counsel, is material and is required to be
stated therein or is necessary to make the statements therein not
misleading.
(c) All corporate proceedings and other legal matters incident to
the authorization, form and validity of each of the Transaction Documents
and the Offering Memorandum, and all other legal matters relating to the
Transaction Documents and the transactions contemplated thereby, shall be
satisfactory in all material respects to CSI on behalf of the Initial
Purchasers, and the Company shall have furnished to CSI on behalf of the
Initial Purchasers all documents and
15
information that they or their counsel may reasonably request to enable
them to pass upon such matters.
(d) Debevoise & Xxxxxxxx, special counsel to the Company, and Xxxx
Xxxxxxxx, counsel to the Company, shall have furnished to the Initial
Purchasers their written opinions addressed to the Initial Purchasers and
dated the Closing Date, in form and substance reasonably satisfactory to
the Initial Purchasers.
(e) The Initial Purchasers shall have received from Cravath, Swaine
& Xxxxx ("CS&M"), counsel for the Initial Purchasers, such opinion or
opinions, dated the Closing Date, with respect to such matters as the
Initial Purchasers may reasonably require, and the Company shall have
furnished to such counsel such documents and information as they request
for the purpose of enabling them to pass upon such matters.
(f) The Company shall have furnished to the Initial Purchasers a
letter (the "Initial Letter") from each of (a) Deloitte & Touche LLP, (b)
Coopers and Xxxxxxx L.L.P. and (c) Coopers & Lybrand, Biedermann,
Bordasch, addressed to the Initial Purchasers and dated the date hereof,
in form and substance reasonably satisfactory to the Initial Purchasers.
(g) The Company shall have furnished to the Initial Purchasers a
letter (the "Bring-Down Letter") from Deloitte & Touche LLP addressed to
the Initial Purchasers and dated the Closing Date (i) confirming that they
are independent public accountants with respect to the Riverwood Companies
and the Company's subsidiaries, (ii) stating, as of the date of the
Bring-Down Letter (or, with respect to matters involving changes or
developments since the respective dates as of which specified financial
information is given in the Offering Memorandum, as of a date not more
than three business days prior to the date of the Bring-Down Letter), that
the conclusions and findings of such accountants with respect to the
financial information and other matters covered by the Initial Letter are
accurate and (iii) confirming in all material respects the conclusions and
findings set forth in the Initial Letter.
(h) The Company shall have furnished to the Initial Purchasers a
certificate, dated the Closing Date, of its chief executive officer and
its treasurer stating that (A) such officers have carefully examined the
Offering Memorandum, (B) in their opinion, the Offering Memorandum, as of
its date, did not include any untrue statement of a material fact and did
not omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, and since the
date of the Offering Memorandum, no event has occurred which should have
been set forth in a supplement or amendment to the Offering Memorandum and
(C) to the best of his knowledge after reasonable investigation, as of the
Closing Date, the representations and warranties of the Company in this
Agreement that are qualified as to materiality or knowledge are true and
correct and those not so qualified are true and correct in all material
respects, the Company has complied in all material respects with all
agreements and satisfied in all material respects all conditions on its
part to be performed or satisfied hereunder on or prior to the Closing
Date, and subsequent to the date of
16
the most recent financial statements contained in the Offering Memorandum,
there has been no material adverse change or any development which in his
reasonable judgment would involve a material adverse change in the
financial position, results of operation or business of the Company and
its subsidiaries taken as a whole, except as set forth in the Offering
Memorandum.
(i) The Initial Purchasers shall have received a counterpart of the
Registration Rights Agreement which shall have been executed and delivered
by a duly authorized officer of the Company.
(j) The Indenture shall have been duly executed and delivered by the
Company, RIC Holding, Holding and the Trustee and the Securities shall
have been duly executed and delivered by the Company and duly
authenticated by the Trustee.
(k) The Securities shall have been approved by the NASD for trading
in the PORTAL Market.
(l) If any event shall have occurred that requires the Company under
Section 4(d) to prepare an amendment or supplement to the Offering
Memorandum, such amendment or supplement shall have been prepared, the
Initial Purchasers shall have been given a reasonable opportunity to
comment thereon, and copies thereof shall have been delivered to CSI on
behalf of the Initial Purchasers reasonably in advance of the Closing
Date.
(m) There shall not have occurred any invalidation of Rule 144A
under the Securities Act by any court or any withdrawal or proposed
withdrawal of any rule or regulation under the Securities Act or the
Exchange Act by the Commission or any amendment or proposed amendment
thereof by the Commission which in the reasonable judgment of CSI on
behalf of the Initial Purchasers would materially impair the ability of
the Initial Purchasers to purchase, hold or effect resales of the
Securities as contemplated hereby.
(n) Subsequent to the execution and delivery of this Agreement or,
if earlier, the dates as of which information is given in the Offering
Memorandum (exclusive of any amendment or supplement thereto), except as
set forth in the Offering Memorandum (exclusive of any amendment or
supplement thereto), there shall not have been any material adverse change
in the capital stock or long-term debt of the Company and its
subsidiaries, taken as a whole, or any material adverse change, or any
development involving a material adverse change, in or affecting the
financial position, results of operations or business of the Company and
its subsidiaries taken as a whole, the effect of which, in any such case
described above, is, in the reasonable judgment of the Initial Purchasers,
after oral notice to and consultation with (but not subject to the
agreement or approval of) the Company, so material and adverse as to make
it impracticable to proceed with the resale or delivery of the Securities
on the terms and in the manner contemplated by this Agreement and the
Offering Memorandum (exclusive of any amendment or supplement thereto).
17
(o) No action shall have been taken and no statute, rule, regulation
or order shall have been enacted, adopted or issued by any governmental
agency or body which in the reasonable judgment of the Initial Purchasers,
after oral notice to and consultation with (but not subject to agreement
of or approval by) the Company would, as of the Closing Date, prevent the
issuance or sale of the Securities; and no injunction, restraining order
or order of any other nature by any federal or state court of competent
jurisdiction shall have been issued as of the Closing Date which in the
reasonable judgment of the Initial Purchasers, after oral notice to and
consultation with (but not subject to agreement of or approval by) the
Company would prevent the issuance or sale of the Securities.
(p) Subsequent to the execution and delivery of this Agreement (i)
no downgrading shall have occurred in the rating accorded the Securities
or any of the Company's other debt securities by any "nationally
recognized statistical rating organization", as such term is defined by
the Commission for purposes of Rule 436(g)(2) of the rules and regulations
of the Commission under the Securities Act and (ii) no such organization
shall have publicly announced that it has under surveillance or review
(other than an announcement with positive implications of a possible
upgrading), its rating of the Securities or any of the Company's other
debt securities.
(q) Subsequent to the execution and delivery of this Agreement there
shall not have occurred any of the following: (i) trading in securities
generally on the New York Stock Exchange, the American Stock Exchange or
the over-the-counter market shall have been suspended or materially
limited, or minimum prices shall have been established on any such
exchange or market by the Commission, by any such exchange or by any other
regulatory body or governmental authority having jurisdiction, or trading
in any securities of the Company on any exchange, in the over-the-counter
market or in the PORTAL Market shall have been suspended or (ii) any
moratorium on commercial banking activities shall have been declared by
federal or New York state authorities or (iii) an outbreak or escalation
of hostilities or a declaration by the United States of a national
emergency or war or such a material adverse change in general economic,
political or financial conditions (or the effect of international
conditions on the financial markets in the United States shall be such) as
to make it, in the case of any event specified in this clause (q), in the
reasonable judgment of the Initial Purchasers, after oral notice to and
consultation with (but not subject to the agreement or approval by) the
Company, impracticable or inadvisable to proceed with the sale or the
delivery of the Securities on the terms and in the manner contemplated by
this Agreement and in the Offering Memorandum (exclusive of any amendment
or supplement thereto).
All opinions, letters, evidence and certificates mentioned above or
elsewhere in this Agreement shall be deemed to be in compliance with the
provisions hereof only if they are in form and substance reasonably satisfactory
to counsel for the Initial Purchasers.
6. Termination. The obligations of the Initial Purchasers hereunder
may be terminated by the Initial Purchasers, after oral notice to and
consultation with (but not
18
subject to the agreement or approval by) the Company, by notice given to and
received by the Company prior to delivery of and payment for the Securities if,
prior to that time, any of the events described in Section 5(m), (n), (o), (p)
or (q) shall have occurred and be continuing.
7. Defaulting Initial Purchasers. (a) If, on the Closing Date, any
Initial Purchaser defaults in the performance of its obligations under this
Agreement, the non-defaulting Initial Purchaser or Initial Purchasers shall use
reasonable efforts to make arrangements for the purchase of the Securities that
such defaulting Initial Purchaser agreed but failed to purchase, on the terms
contained herein by other persons satisfactory to the Company and the
non-defaulting Initial Purchaser or Initial Purchasers. If no such arrangements
are made within 36 hours after such default, then the Company shall be entitled
to a further period of 36 hours within which to procure another party or other
parties reasonably satisfactory to the non-defaulting Initial Purchaser or
Initial Purchasers to purchase such Securities on such terms. If, after giving
effect to any arrangements for the purchase of the Securities of a defaulting
Initial Purchaser or Initial Purchasers by the non-defaulting Initial Purchaser
or Initial Purchasers and the Company as provided herein, 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,
subject to the terms and conditions hereof, the Company shall have the right to
require each non-defaulting Initial Purchaser to purchase the principal amount
of Securities which such defaulting Initial Purchaser agreed to purchase
hereunder and, in addition, to require each non-defaulting Initial Purchaser to
purchase its pro rata share (based on the principal amount of Securities which
such Initial Purchaser agreed to purchase hereunder) of the Securities of such
defaulting Initial Purchaser or Initial Purchasers for which such arrangements
have not been made.
If, after giving effect to any arrangements for the purchase of the
Securities of a defaulting Initial Purchaser or Initial Purchasers by the
non-defaulting Initial Purchaser or Initial Purchasers and the Company as
provided above, the aggregate principal amount of Securities which remains
unpurchased exceeds one-eleventh of the aggregate principal amount of all
Securities, or if the Company shall not exercise the right described above to
require non-defaulting Initial Purchaser or Initial Purchasers to purchase
Securities of a defaulting Initial Purchaser or Initial Purchasers, then this
Agreement shall terminate without liability on the part of the non-defaulting
Initial Purchaser or Initial Purchasers or the Company, except that the Company
and the Initial Purchasers shall remain responsible (except, in the case of the
Company, to a defaulting Initial Purchaser) for the expenses to be paid or
reimbursed by them pursuant to Sections 8 and 12 and except that the respective
obligations of the Company and the Initial Purchasers pursuant to Sections 9 and
10 shall remain in effect. As used in this Agreement, the term "Initial
Purchaser" includes, for all purposes of this Agreement unless the context
otherwise requires, any party not listed in Schedule 1 hereto who, pursuant to
this Section 7, purchases Securities which a defaulting Initial Purchaser agreed
but failed to purchase.
(b) Nothing contained herein shall relieve a defaulting Initial
Purchaser of any liability it may have to the Company or any non-defaulting
Initial Purchaser for damages caused by its default. If other persons are
obligated or agree to purchase the Securities of a defaulting Initial Purchaser,
either the non-defaulting Initial Purchasers or
19
the Company may postpone the Closing Date for up to seven full business days in
order to effect any changes that in the opinion of counsel for the Company or
counsel for the Initial Purchasers may be necessary in the Offering Memorandum
or in any other document or arrangement, and the Company agrees to promptly
prepare any amendment or supplement to the Offering Memorandum that effects any
such changes.
8. Reimbursement of Initial Purchasers' Expenses. If this Agreement
shall have been terminated pursuant to Section 7 or if for any reason permitted
under this Agreement the purchase of the Securities by the Initial Purchasers is
not consummated, the Company and the Initial Purchasers shall remain responsible
(except, in the case of the Company, to a defaulting Initial Purchaser) for the
expenses to be paid or reimbursed by them pursuant to Section 12 and the
respective obligations of the Company and the Initial Purchasers pursuant to
Sections 9 and 10 shall remain in effect. In addition, if the purchase of the
Securities by the Initial Purchasers is not consummated because of any refusal,
inability or failure on the part of the Company to perform any agreement herein,
fulfill any condition herein or comply with any provision hereof other than by
reason of a default by the Initial Purchasers, the Company will reimburse the
Initial Purchasers promptly for all reasonable out-of-pocket expenses (including
reasonable fees and disbursements of CS&M) that shall have been incurred by them
in connection with this Agreement and the proposed purchase and sale of the
Securities.
9. Indemnification. (a) The Company shall indemnify and hold
harmless each Initial Purchaser and their respective officers, directors and
employees, and each person, if any, who controls any Initial Purchaser within
the meaning of the Securities Act or the Exchange Act (collectively referred to
for purposes of this Section 9(a) and Section 10 as an Initial Purchaser), to
the fullest extent lawful, against any loss, claim, damage or liability, joint
or several, or any action in respect thereof to which that Initial Purchaser may
become subject, whether commenced or threatened, under the Securities Act, the
Exchange Act, any other federal or state statutory law or regulation, at common
law or otherwise, insofar as such loss, claim, damage, liability or action
arises out of, or is based upon, (i) any untrue statement or alleged untrue
statement of a material fact contained in the Preliminary Offering Memorandum or
the Offering Memorandum or in any amendment or supplement thereto or (ii) the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading, and shall
reimburse each Initial Purchaser for any legal or other expenses reasonably
incurred by that Initial Purchaser in connection with investigating or defending
or preparing to defend against or appearing as a third party witness in
connection with any such loss, claim, damage, liability or action as such
expenses are incurred; provided, however, that the Company shall not be liable
in any such case to the extent that any such loss, claim, damage, liability or
action arises out of, or is based upon, an untrue statement or alleged untrue
statement in or omission or alleged omission from the Preliminary Offering
Memorandum, the Offering Memorandum or any such amendment or supplement in
reliance upon and in conformity with any Initial Purchasers' Information; and
provided, further, that with respect to any such untrue statement or alleged
untrue statement in or omission or alleged omission made in the Preliminary
Offering Memorandum, the indemnity agreement contained in this Section 9(a)
shall not inure to the benefit of any such Initial Purchaser from whom the
person asserting any such loss, claim, damage, liability or action purchased the
Securities concerned if both
20
(A) a copy of the Offering Memorandum was not sent or given to such person at or
prior to the written confirmation of the sale of such Securities to such person
and (B) the untrue statement or alleged untrue statement in or omission or
alleged omission from the Preliminary Offering Memorandum was corrected in the
Offering Memorandum unless, in either case, such failure to deliver the Offering
Memorandum was a result of non-compliance by the Company with Section 4(b);
provided, further, that with respect to any such untrue statement or alleged
untrue statement in or omission or alleged omission made in the Offering
Memorandum, the indemnity agreement contained in this Section 9(a) shall not
inure to the benefit of any such Initial Purchaser from whom the person
asserting any such loss, claim, damage, liability or action purchased the
Securities concerned if both (A) a copy of any supplement or amendment to the
Offering Memorandum was not sent or given to such person at or prior to the
written confirmation of the sale of such Securities to such person and (B) the
untrue statement or alleged untrue statement in or omission or alleged omission
from the Offering Memorandum was corrected in such amendment of or supplement to
the Offering Memorandum, unless, in either case, such failure to deliver such
amendment or supplement was a result of non-compliance by the Company with
Section 4(b).
(b) Each Initial Purchaser, severally and not jointly, shall
indemnify and hold harmless the Company and its officers, directors, employees,
and each person, if any, who controls the Company within the meaning of the
Securities Act or the Exchange Act (collectively referred to for purposes of
this Section 9(b) and Section 10 as the Company), to the same extent as the
foregoing indemnity from the Company to each Initial Purchaser against any loss,
claim, damage or liability, joint or several, or any action in respect thereof,
to which the Company may become subject, under the Securities Act, the Exchange
Act, any other federal or state statutory law or regulation, at common law or
otherwise, insofar as such loss, claim, damage, liability or action arises out
of, or is based upon, (i) an untrue statement or alleged untrue statement of a
material fact contained in the Preliminary Offering Memorandum or the Offering
Memorandum or in any amendment or supplement thereto or (ii) the omission or
alleged omission to state therein a material fact required to be stated therein
or necessary in order to make the statements therein not misleading, but in each
case only to the extent that the untrue statement or alleged untrue statement or
omission or alleged omission was made in reliance upon and in conformity with
any Initial Purchasers' Information, and shall reimburse the Company for any
legal or other expenses reasonably incurred by the Company in connection with
investigating or defending against or preparing to defend against or appearing
as a third party witness in connection with any such loss, claim, damage,
liability or action as such expenses are incurred.
(c) Promptly after receipt by an indemnified party under this
Section 9 of notice of any claim or the commencement of any action, the
indemnified party shall, if a claim in respect thereof is to be made against the
indemnifying party pursuant to Section 9(a) or 9(b), notify the indemnifying
party in writing of the claim or the commencement of that action; provided,
however, that the failure to notify the indemnifying party shall not relieve it
from any liability which it may have under this Section 9 except to the extent
that it has been materially prejudiced (through the forfeiture of substantive
rights or defenses) by such failure; and, provided, further, that the failure to
notify the indemnifying party shall not relieve it from any liability which it
may have to an indemnified party otherwise than under this Section 9. If any
such claim or action shall
21
be brought against an indemnified party, and it shall notify the indemnifying
party thereof, the indemnifying party shall be entitled to participate therein
and, to the extent that it wishes, jointly with any other similarly notified
indemnifying party, to assume the defense thereof with counsel reasonably
satisfactory to the indemnified party. After notice from the indemnifying party
to the indemnified party of its election to assume the defense of such claim or
action, the indemnifying party shall not be liable to the indemnified party
under this Section 9 for any legal or other expenses subsequently incurred by
the indemnified party in connection with the defense thereof other than
reasonable costs of investigation; provided, however, that an indemnified party
shall have the right to employ its own counsel in any such action, but the fees,
expenses and other charges of such counsel for the indemnified party will be at
the expense of such indemnified party unless (1) the employment of counsel by
the indemnified party and the payment of fees, expenses and other charges by the
indemnifying party has been authorized in writing by the indemnifying party, (2)
the indemnified party has reasonably concluded (based upon advice of counsel)
that there may be legal defenses available to it or other indemnified parties
that are different from or in addition to those available to the indemnifying
party, (3) a conflict or potential conflict exists (based upon advice of counsel
to the indemnified party) between the indemnified party and the indemnifying
party (in which case the indemnifying party will not have the right to direct
the defense of such action on behalf of the indemnified party) or (4) the
indemnifying party has not in fact employed counsel to assume the defense of
such action within a reasonable time after giving notice of the election to the
indemnified party to assume the defense of the action, in each of which cases
the reasonable fees, disbursements and other charges of counsel will be at the
expense of the indemnifying party or parties. It is understood that the
indemnifying party or parties shall not, in connection with any proceeding or
related proceedings in the same jurisdiction, be liable for the reasonable fees,
disbursements and other charges of more than one separate firm of attorneys (in
addition to any local counsel) at any one time for all such indemnified party or
parties. Each indemnified party, as a condition of the indemnity agreements
contained in Sections 9(a) and 9(b), shall use all reasonable efforts to
cooperate with the indemnifying party in the defense of any such action or
claim. The indemnifying party shall not be liable for amounts paid or payable in
the settlement of any such action effected without its written consent (which
consent shall not be unreasonably withheld), but if settled with its written
consent, the indemnifying party agrees to indemnify and hold harmless any
indemnified party as provided in and subject to the terms of Sections 9(a) and
9(b).
The obligations of the Company and the Initial Purchasers in this
Section 9 and in Section 10 are in addition to any other liability that the
Company or the Initial Purchasers, as the case may be, may otherwise have,
including in respect of any breaches of representations, warranties and
agreements made herein by any such party.
10. Contribution. If the indemnification provided for in Section 9
is unavailable or insufficient to hold harmless an indemnified party under
Section 9(a) or 9(b), then each indemnifying party shall, in lieu of
indemnifying such indemnified party, contribute to the amount paid or payable by
such indemnified party as a result of such loss, claim, damage or liability, or
action in respect thereof, (i) in such proportion as shall be appropriate to
reflect the relative benefits received by the Company on the one hand and the
Initial Purchasers on the other from the Offering or (ii) if the allocation
provided by clause (i) above is not permitted by applicable law, in such
proportion as is
22
appropriate to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of the Company on the one hand and the Initial
Purchasers on the other with respect to the statements or omissions that
resulted in such loss, claim, damage or liability, or action in respect thereof,
as well as any other relevant equitable considerations. The relative benefits
received by the Company on the one hand and the Initial Purchasers on the other
with respect to the Offering shall be deemed to be in the same proportion as the
total net proceeds from the Securities purchased under this Agreement (before
deducting expenses) received by or on behalf of the Company bear to the total
discounts and commissions received by the Initial Purchasers with respect to the
Securities purchased under this Agreement, in each case as set forth in the
table on the cover page of the Offering Memorandum. 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 the Company or information supplied by the Company on
the one hand or to any Initial Purchasers' Information on the other, the intent
of the parties and their relative knowledge, access to information and
opportunity to correct or prevent such untrue statement or omission. The Company
and the Initial Purchasers agree that it would not be just and equitable if
contributions pursuant to this Section 10 were to be determined by pro rata
allocation (even if the Initial Purchasers were treated as one entity for such
purpose) or by any other method of allocation that does not take into account
the equitable considerations referred to herein. The amount paid or payable by
an indemnified party as a result of the loss, claim, damage or liability, or
action in respect thereof, referred to above in this Section 10 shall be deemed
to include, for purposes of this Section 10, any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending or preparing to defend any such action or claim. Notwithstanding
the provisions of this Section 10, no Initial Purchaser shall be required to
contribute any amount in excess of the amount by which the total price at which
the Securities purchased by it and resold in the initial distribution were
resold in the initial distribution, exceeds the amount of any damages which such
Initial Purchaser has otherwise paid or become liable to pay by reason of any
untrue or alleged untrue statement or omission or alleged omission. No person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation. The Initial Purchasers'
obligations to contribute as provided in this Section 10 are several in
proportion to their respective purchase obligations and not joint. In no event
shall any person have liability to any other person pursuant to this Section 10
in respect of any loss, claim, damage, expense or liability, or action in
respect thereof, for which indemnification pursuant to Sections 9(a) or (b)
hereof would not have been available in accordance with the terms thereof.
11. Persons Entitled to Benefit of Agreement. This Agreement shall
inure to the benefit of and be binding upon the Initial Purchasers, the Company
and their respective successors. Nothing expressed or mentioned in this
Agreement is intended or shall be construed to give any person, firm or
corporation, other than the Initial Purchasers, the Company and their respective
successors, and the controlling persons and officers, directors and employees
referred to in Sections 9 and 10 and their heirs and legal representatives, any
legal or equitable right, remedy or claim under or in respect of this Agreement
or any provision contained herein. No purchaser of the Securities from
23
any Initial Purchaser shall be deemed a successor or assign by reason merely of
such purchase.
12. Expenses. The Company agrees with the Initial Purchasers to pay
(a) the costs incident to the authorization, issuance, guarantee, sale,
preparation and delivery of the Securities and any taxes payable in that
connection; (b) the costs incident to the preparation, printing and distribution
of the Preliminary Offering Memorandum, the Offering Memorandum and any
amendments or supplements thereto; (c) the costs of reproducing and distributing
each of the Transaction Documents; (d) the costs incident to the preparation,
printing and delivery of the certificates evidencing the Securities, (e) the
fees and expenses of the Company's counsel and independent accountants; (f) the
fees and expenses of qualifying the Securities under the securities laws of the
several jurisdictions as provided in Section 4(h) and of preparing, printing and
distributing Blue Sky Memoranda (including reasonable related fees and expenses
of counsel for the Initial Purchasers); (g) any fees charged by rating agencies
for rating the Securities; (h) the reasonable fees and expenses of the Trustee
(including reasonable related fees and expenses of any counsel to the Trustee);
(i) all expenses and application fees incurred in connection with the
application for the inclusion of the Securities on the PORTAL Market and the
approval of the Securities for book-entry transfer by DTC; and (j) all other
costs and expenses incident to the performance of the obligations of the Company
under this Agreement; provided, however, that except as provided in this Section
12 and Section 8, the Initial Purchasers shall pay their own costs and expenses,
including the costs and expenses of their counsel, any taxes on the Securities
which they may sell and the expenses of advertising and offering of the
Securities made by the Initial Purchasers.
13. Survival. The respective indemnities, rights of contribution,
representations, warranties and agreements of the Company and the Initial
Purchasers contained in this Agreement or made by or on behalf of the Company or
the Initial Purchasers pursuant to this Agreement or any certificate delivered
pursuant hereto shall survive the delivery of and payment for the Securities and
shall remain in full force and effect, regardless of any termination or
cancelation of this Agreement or any investigation made by or on behalf of any
of them or any of their respective affiliates, officers, directors, employees,
representatives, agents or controlling persons.
14. Notices, etc.. All statements, requests, notices and agreements
hereunder shall be in writing, and:
(a) if to the Initial Purchasers, shall be delivered, sent by mail
or telecopy transmission to Chase Securities Inc., 000 Xxxx Xxxxxx, Xxx
Xxxx, Xxx Xxxx 00000, Attention: Xxxxxx X. Xxxxxx (telecopy no.: (212)
270-0994); and
(b) if to the Company, shall be delivered, sent by mail or telecopy
transmission to the address of the Company set forth in the Offering
Memorandum, Attention: Xxxx Xxxxxxxx, Esq., with a copy to Debevoise &
Xxxxxxxx, 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Xxxxx X.
Xxxxxxxxxx, Esq.;
provided that any notice to an Initial Purchaser pursuant to Section 9(c) shall
also be delivered or sent by mail to such Initial Purchaser at its address set
forth on the signature
24
page hereof. Any such statements, requests, notices or agreements shall take
effect at the time of receipt thereof. The Company shall be entitled to act and
rely upon any request, consent, notice or agreement given or made on behalf of
the Initial Purchasers by CSI.
15. Definition of Certain Terms. For purposes of this Agreement, (a)
the term "business day" means any day on which the New York Stock Exchange, Inc.
is open for trading, (b) except where otherwise expressly provided, the term
"affiliate" has the meaning set forth in Rule 405 under the Securities Act and
(c) the term "subsidiary" of any person means any corporation, association,
partnership or other business entity, of which more than 50% of the total voting
power of shares of capital stock or other interests (including partnership
interests) generally entitled (without regard to the occurrence of any
contingency) to vote in the election of directors, managers or trustees thereof
is owned or controlled, directly or indirectly, by (i) such person or (ii) one
or more subsidiaries of such person, except Igaras shall not be considered a
subsidiary of the Company.
16. Initial Purchasers' Information. The parties hereto acknowledge
and agree that, for all purposes of this Agreement, the Initial Purchasers'
Information consists solely of the following information in the Preliminary
Offering Memorandum and the Offering Memorandum: (i) the last paragraph on the
front cover page concerning the terms of the offering by the Initial Purchasers;
(ii) the legend on the inside front cover page concerning over-allotment and
trading activities by the Initial Purchasers; and (iii) the statements
concerning the Initial Purchasers contained in the third, fourth, sixth and
seventh paragraphs under the heading "Plan of Distribution".
17. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
18. Counterparts. This Agreement may be executed in one or more
counterparts (which may include counterparts delivered by telecopier) and, if
executed in more than one counterpart, the executed counterparts shall each be
deemed to be an original, but all such counterparts shall together constitute
one and the same instrument.
19. Amendments. No amendment or waiver of any provision of this
Agreement, nor any consent or approval to any departure therefrom, shall in any
event be effective unless the same shall be in writing and signed by the parties
hereto.
20. Headings. The headings herein are inserted for convenience of
reference only and are not intended to be part of, or to affect the meaning or
interpretation of, this Agreement.
25
If the foregoing is in accordance with your understanding of our
agreement, kindly sign and return to us a counterpart hereof, whereupon this
instrument will become a binding agreement between the Company and the several
Initial Purchasers in accordance with its terms.
Very truly yours,
RIVERWOOD INTERNATIONAL CORPORATION
By
----------------------------
Name:
Title:
Accepted by:
CHASE SECURITIES INC., on behalf of the Initial Purchasers:
Chase Securities Inc.
Credit Suisse First Boston Corporation
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated
By
----------------------------
Authorized Signatory
Address for notices pursuant to Section 9(c):
0 Xxxxx Xxxxx, 00xx xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Legal Department
26
SCHEDULE 1
Principal
Amount
Initial Purchasers of Securities
------------------ -------------
Chase Securities Inc. $150,000,000
Credit Suisse First Boston $ 50,000,000
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated $ 50,000,000
------------
Total $250,000,000
ANNEX A
[Form of Exchange and Registration Rights Agreement]
ANNEX B
Form of Opinion of Counsel for the Company
ANNEX C
[Form of Initial Comfort Letter]
The Company shall have furnished to the Initial Purchasers a letter
from each of (a) Deloitte & Touche LLP and (b) Coopers & Lybrand, Biedermann,
Bordasch, addressed to the Initial Purchasers and dated the date of the Purchase
Agreement, in form and substance satisfactory to the Initial Purchasers,
substantially to the effect set forth below:
(i) in the case of Deloitte & Touche LLP, they are independent
certified public accountants with respect to the Riverwood Companies and
the Company's subsidiaries within the meaning of Rule 101 of the Code of
Professional Conduct of the AICPA and its interpretations and rulings;
(ii) in the case of Coopers & Lybrand, Biedermann, Bordasch, they
are independent certified public accountants with respect to Igaras within
the meaning of Rule 101 of the Code of Professional Conduct of the AICPA
and its interpretations and rulings;
(iii) in the case of Coopers & Xxxxxxx L.L.P. they were independent
certified public accounts with respect to the Riverwood Companies and the
Company's subsidiaries within the meaning of Rule 101 of the Code of
Professional Conduct of the AICPA and its interpretations and rulings for
audit years 1994 and 1995;
(iv) in their opinion, the audited financial statements and pro
forma financial information included in the Offering Memorandum and
reported on by them comply in form in all material respects with the
accounting requirements of the Exchange Act and the related published
rules and regulations of the Commission thereunder that would apply to the
Offering Memorandum if the Offering Memorandum were a prospectus included
in a registration statement on Form S-1 under the Securities Act (except
that certain supporting schedules are omitted);
(vi) based upon a reading of the latest unaudited financial
statements made available by the Riverwood Companies or Igaras, as the
case may be, the procedures of the AICPA for a review of interim financial
information as described in Statement of Auditing Standards No. 71,
reading of minutes and inquiries of certain officials of the Riverwood
Companies or Igaras, as the case may be, who have responsibility for
financial and accounting matters and certain other limited procedures
requested by the Initial Purchasers and described in detail in such
letter, nothing has come to their attention that causes them to believe
that (A) any unaudited financial statements included in the Offering
Memorandum do not comply as to form in all material respects with
applicable accounting requirements, (B) any material modifications should
be made to the unaudited financial statements included in the Offering
Memorandum for them to
be in conformity with generally accepted accounting principles applied on
a basis substantially consistent with that of the audited financial
statements included in the Offering Memorandum or (C) the information
included under the headings "Summary Historical Consolidated Financial
Data", "Capitalization", "Selected Historical Consolidated Financial
Data", "Management's Discussion and Analysis of Financial Condition and
Results of Operations" and "Management--Compensation Summary" is not in
conformity with the disclosure requirements of Regulation S-K that would
apply to the Offering Memorandum if the Offering Memorandum were a
prospectus included in a registration statement on Form S-1 under the
Securities Act;
(v) based upon the procedures detailed in such letter with respect
to the period subsequent to the date of the last available balance sheet,
including reading of minutes and inquiries of certain officials of the
Riverwood Companies or Igaras, as the case may be, who have responsibility
for financial and accounting matters, nothing has come to their attention
that causes them to believe that (A) at a specified date not more than
three business days prior to the date of such letter, in the case of the
Riverwood Companies, there was any change in capital stock, increase in
long-term debt or decrease in net current assets as compared with the
amounts shown in the March 29, 1997, unaudited balance sheet included in
the Offering Memorandum or, in the case of Igaras, there was any change in
capital stock, increase in long-term debt or decrease in net current
assets as compared with the amounts shown in the December 31, 1996,
audited balance sheet included in the Offering Memorandum or (B) for the
period from March 29, 1997, or December 31, 1996, as the case may be, to a
specified date not more than three business days prior to the date of such
letter, there were [any decreases, as compared with the corresponding
period in the preceding year, in net sales, income from operations, EBITDA
or net income](1), except in all instances for changes, increases or
decreases that the Offering Memorandum discloses have occurred or which
are set forth in such letter, in which case the letter shall be
accompanied by an explanation by the Riverwood Companies or Igaras, as the
case may be, as to the significance thereof unless said explanation is not
deemed necessary by the Initial Purchasers;
(vii) they have performed certain other specified procedures as a
result of which they determined that certain information of an accounting,
financial or statistical nature (which is limited to accounting, financial
or statistical information derived from the general accounting records of
the Riverwood Companies or Igaras, as the case may be) set forth in the
Offering Memorandum agrees with the accounting records of the Riverwood
Companies or Igaras, as the case may be, excluding any questions of legal
interpretation; and
----------
2
