EXHIBIT 4.7
Execution Copy
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SECURITYHOLDERS AGREEMENT
BCO HOLDING COMPANY
Dated as of February 7, 2003
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Table of Contents
Page
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1. Restrictions on Transfer of Securities..........................................................1
1.1 Restriction on Transfers by the Hayfords................................................1
1.2 Restriction on Transfers by the Management Securityholders..............................1
1.3 Restrictions on Transfers by the Outside Investor.......................................2
1.4 Permitted Pledges.......................................................................2
1.5 Estate Planning Transfers; Transfers to Charities.......................................2
2. Sale by Management Securityholders to the Company ("Put Rights")................................3
2.1 Right to Sell...........................................................................3
2.2 Notice..................................................................................3
2.3 Payment.................................................................................4
3. Right of the Company to Purchase from Management Securityholders ("Call Right").................4
3.1 Right to Purchase.......................................................................4
3.2 Notice..................................................................................5
3.3 Payment................................................................................ 5
4. Purchase Price..................................................................................6
4.1 Appraisal...............................................................................6
4.2 Fair Market Value...................................................................... 6
4.3 Carrying Value..........................................................................7
5. Prohibited Purchases............................................................................7
6. Tag-Along and Drag-Along Rights.................................................................9
6.1 Tag-Along Rights....................................................................... 9
6.2 Drag-Along Rights......................................................................11
7. Involuntary Transfers..........................................................................13
8. Election of Directors..........................................................................13
9. Company Affiliate Transactions.................................................................16
10. Preemptive Rights..............................................................................16
11. Certain Charter Amendments.....................................................................17
12. Stock Certificate Legend.......................................................................17
13. Covenants; Representations and Warranties......................................................18
13.1 Management Securityholders.............................................................18
13.2 No Other Arrangements or Agreements....................................................18
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Table of Contents
(continued)
Page
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13.3 Additional Representations and Warranties..............................................19
14. Amendment and Modification.....................................................................19
15. Parties........................................................................................20
15.1 Assignment by the Company..............................................................20
15.2 Assignment Generally...................................................................20
15.3 Termination............................................................................20
15.4 Agreements to Be Bound.................................................................20
15.5 The Hayfords...........................................................................21
16. Recapitalizations, Exchanges, etc..............................................................21
17. No Third Party Beneficiaries...................................................................21
18. Further Assurances.............................................................................21
19. Governing Law..................................................................................22
20. Invalidity of Provision........................................................................22
21. Waiver. .......................................................................................22
22. Notices........................................................................................22
23. Headings.......................................................................................24
24. Counterparts...................................................................................24
25. Fax Signatures.................................................................................24
26. Entire Agreement...............................................................................25
27. Injunctive Relief..............................................................................25
28. Defined Terms..................................................................................25
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SECURITYHOLDERS AGREEMENT
SECURITYHOLDERS AGREEMENT, dated as of February 7, 2003, among
BCO Holding Company, a Delaware corporation (the "Company"), Xxxxx Investment
Associates VI, L.P., a Delaware limited partnership ("KIA VI"), KEP VI, LLC, a
Delaware limited liability company ("KEP VI"; and, together with KIA VI,
"Xxxxx"), Magnetite Asset Investors III L.L.C. (the "Outside Investor"), Xxxxxx
X. Xxxxxxx ("WJH"), Xxxx Xxx Xxxxxxx ("MLH"; and together with WJH, the
"Hayfords"), Xxxx-Xxxxxx Xxxxx ("JPE"), Xxxxxx X. Xxxxxxxx, Xxxxx X. Xxxx,
Xxxxxxx X. X'Xxxxxxx and Xxxxxxx X. Xxxxxxxx (collectively, the "Management
Securityholders"; and together with the Hayfords, the "Non-Xxxxx
Securityholders"). The Continuing Securityholders, together with the Outside
Investor, are hereinafter referred to as the Non-Xxxxx Securityholders, and the
Non-Xxxxx Securityholders, together with Xxxxx, are hereinafter referred to as
the "Securityholders". Capitalized terms used herein without definition are
defined in Section 27.
The parties hereto agree as follows:
1. Restrictions on Transfer of Securities.
1.1 Restriction on Transfers by the Hayfords. No Securities
now or hereafter owned by WJH or MLH or any permitted transferee of WJH or MLH
pursuant to Section 1.5 and in compliance with Section 15.4 ("Xxxxxxx
Securities"), nor any interest therein nor any rights relating thereto, may be
Transferred, provided that, Xxxxxxx Securities may be Transferred (i) pursuant
to Section 1.4 ("Permitted Pledges"), (ii) pursuant to Section 1.5 ("Estate
Planning Transfers") or, in case of the death of either WJH or MLH, by will or
by the laws of intestate succession, to his or her executors, administrators,
testamentary trustees, legatees or beneficiaries, (iii) pursuant to Section 6.1
("Tag-Along Rights"), (iv) pursuant to Section 6.2 ("Drag-Along Rights"), (v) in
accordance with Section 7 ("Involuntary Transfers"), (vi) in connection with a
registered offering pursuant to the Registration Rights Agreement, or (vii) at
any time to any third party with the consent of Xxxxx, such consent not to be
unreasonably withheld.
1.2 Restriction on Transfers by the Management
Securityholders. No Securities now or hereafter owned by any Management
Securityholder, nor any interest therein nor any rights relating thereto, may be
Transferred, provided that, Securities held by any Management Securityholder may
be Transferred (i) pursuant to Section 1.4 ("Permitted Pledges"), (ii) pursuant
to Section 1.5 ("Estate Planning Transfers") or, in case of the death of such
Management Securityholder, by will or by the laws of intestate succession, to
his or her executors, administrators, testamentary trustees, legatees or
beneficiaries, (iii) pursuant to Section 2 ("Put Rights"), (iv) pursuant to
Section 3 ("Call Right"), (v) pursuant to Section 6.1 ("Tag-Along Rights"), (vi)
pursuant to Section 6.2
("Drag-Along Rights"), (vii) in accordance with Section 7 ("Involuntary
Transfers") or (viii) in connection with a registered offering pursuant to the
Registration Rights Agreement.
1.3 Restrictions on Transfers by the Outside Investor. No
Securities now or hereafter owned by the Outside Investor, nor any interest
therein nor any rights relating thereto, may be Transferred, provided that,
Securities held by the Outside Investor may be Transferred (i) pursuant to
Section 6.1 ("Tag-Along Rights"), (ii) pursuant to Section 6.2 ("Drag-Along
Rights), (iii) in accordance with Section 7 ("Involuntary Transfers"), (iv) in
connection with a registered offering pursuant to the Registration Rights
Agreement or (v) at any time to any third party with the prior written consent
of Xxxxx in its sole discretion.
1.4 Permitted Pledges. A Continuing Securityholder may
pledge any or all Securities now or hereafter owned by him, or her or grant a
security interest therein to secure indebtedness of such Continuing
Securityholder owing to a bank or other financial institution, in either case
upon prior notice and provision of the pledge agreement and all other material
documentation underlying such pledge to Xxxxx, provided, however, that any
pledgee pursuant to this first sentence of Section 1.4 shall acquire only a
security interest in such Securities entitling such pledgee to (i) the proceeds
from any sale of such shares made in compliance with the terms of this Agreement
and (ii) any proceeds of any distribution to Securityholders on account of the
Securities in any liquidation as a result of any bankruptcy proceeding or the
winding up of affairs of the Company, and in no event shall such pledgee be
entitled to receive title to such shares or any other rights incident thereto
other than those specified above. Notwithstanding the foregoing sentence, the
Hayfords may, with Xxxxx'x prior written consent, pledge any or all Xxxxxxx
Securities in a manner permitting the pledgee to receive title to such shares or
any other rights incident thereto. The pledge agreements or other related
financing agreements of any Continuing Securityholder, including the Hayfords,
shall be subject to and acknowledge the rights of the Company and the other
Securityholders set forth herein and, in the case of Continuing Stockholders
other than the Hayfords, shall acknowledge the restrictions imposed on the
pledgee's security interest pursuant to the first sentence of this Section 1.4.
1.5 Estate Planning Transfers; Transfers to Charities.
Securities held by any Continuing Securityholder may be Transferred for
estate-planning purposes of such Continuing Securityholder, to (i) a trust under
which the distribution of the Securities may be made only to beneficiaries who
are such Continuing Securityholder, his or her spouse, his or her parents,
members of his or her immediate family or his or her lineal descendants, (ii) a
charitable remainder trust, the income from which will be paid to such
Continuing Securityholder during his or her life, (iii) a corporation, the
stockholders of which are only such Continuing Securityholder, his or her
spouse, his or her parents, members of his or her immediate family or his or her
lineal descendants or (iv) a partnership
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or limited liability company, the partners or members of which are only such
Continuing Securityholder, his or her spouse, his or her parents, members of his
or her immediate family or his or her lineal descendants, provided that, any
Transfers pursuant to clause (ii) above shall be subject to Xxxxx'x prior
written consent, such consent not to be unreasonably withheld. Securities held
by any Continuing Securityholder may be Transferred to any charitable
institution or organization, subject to Xxxxx'x prior written consent, such
consent not to be unreasonably withheld.
2. Sale by Management Securityholders to the Company ("Put
Rights").
2.1 Right to Sell. Subject to all subsections of this
Section 2 and to Section 5 ("Prohibited Purchases"), each of the Management
Securityholders shall have the right to sell to the Company, and the Company
shall have the obligation to purchase from each such Management Securityholder,
all, but not less than all, of such Management Securityholder's Securities
following the termination of employment of such Management Securityholder, at
their Fair Market Value (as defined in Section 4.2(a)), if the employment of
such Management Securityholder with the Company or any subsidiary that employs
such individual (or by the Company on behalf of any such subsidiary) (a) is
terminated without Cause or (b) terminates as a result of (i) the death or
Disability of such Management Securityholder (ii) the resignation of such
Management Securityholder for Good Reason or (iii) the termination of such
Management Securityholder's employment with the Company or any Subsidiary upon
or after reaching the age of 65 ("Retirement").
2.2 Notice. If any Management Securityholder desires to
sell Securities pursuant to Section 2.1, he or she (or his or her estate, trust,
corporation or partnership, as the case may be) shall notify the Company (a) not
more than 180 days after a termination of employment as a result of the death or
Disability of such Management Securityholder or (b) not more than 60 days after
a termination of employment as a result of a termination without Cause, the
resignation of such Management Securityholder for Good Reason or Retirement;
provided that if the Securities desired to be sold after a termination of
employment as described in clause (b) of this Section 2.2 are shares of Common
Stock acquired at any time by such Management Securityholder pursuant to an
exercise of any stock options granted to such Management Securityholder within
six months prior to the date of termination of employment of such Management
Securityholder (including, without limitation, after the termination of
employment), then the notice required by this Section 2.2 shall be given to the
Company not earlier than six months and one day nor later than eight months
after the acquisition of such shares. Each such notice shall specify the number
of Securities such Management Securityholder owns at the time notice is given.
If the Company exercises its rights pursuant to the last sentence of Section 5
with respect to the Securities which are the subject of such notice, then the
Management
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Securityholder who has delivered such notice shall be entitled to revoke such
notice, in whole or in part.
2.3 Payment.
(a) Subject to Section 5 ("Prohibited Purchases"), payment
for any Securities sold by a Management Securityholder pursuant to Section 2.1
shall be made on the date that is 30 days (or the first business day thereafter
if the 30th day is not a business day) following the date of the receipt by the
Company of such Management Securityholder's notice with respect to such shares
pursuant to Section 2.2; provided, however, that in the event the Appraisal (as
defined in Section 4.1) is not completed by such 30th day, then within five
business days of the completion of the Appraisal.
(b) Any payments based on Fair Market Value required to be
made by the Company under this Section 2.3 shall accrue simple interest at a
rate per annum of 6% from the date of termination of employment of the relevant
Management Securityholder to the date the Company has paid in full for all of
the Securities, provided that payments in respect of shares of Common Stock
acquired at any time by such Management Securityholder pursuant to an exercise
of any stock options granted to such Management Securityholder within six months
prior to the date of termination of employment of such Management Securityholder
(including, without limitation, after the termination of employment) shall bear
interest from the date such Management Securityholder provides notice pursuant
to Section 2.2. All payments of interest accrued hereunder shall be paid only at
the date of payment by the Company for the Securities being purchased.
3. Right of the Company to Purchase from Management
Securityholders ("Call Right").
3.1 Right to Purchase. Subject to all subsections of this
Section 3 and to Section 5 ("Prohibited Purchases"), the Company shall have the
right to purchase from each Management Securityholder, and each such Management
Securityholder shall have the obligation to sell to the Company, all, but not
less than all, of such Management Securityholder's Securities:
(i) at the Fair Market Value of such Securities to be
purchased if such Management Securityholder's employment with the
Company and any subsidiary that employs such individual is terminated
as a result of (A) the termination by the Company and any such
subsidiary (or by the Company on behalf of any such subsidiary) of
such employment without Cause, (B) the death or Disability of such
Management Securityholder, (C) the resignation of such Management
Securityholder for Good Reason or (D) the Retirement of such Management
Securityholder;
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(ii) at the lesser of the Fair Market Value and the Carrying
Value of such Securities to be purchased if such Management
Securityholder's employment with the Company and any subsidiary that
employs such individual is terminated by the Company and any such
subsidiary (or by the Company on behalf of any such subsidiary) for
Cause; or
(iii) at the Fair Market Value or the Carrying Value of such
Securities to be purchased, in the sole discretion of the Board
(excluding such Management Securityholder and other members of the
board who are designees of any Management Securityholders) if such
Management Securityholder's employment with the Company and any
subsidiary that employs such individual is terminated by the Company or
such Management Securityholder for any reason other than as a result of
an event described in either subparagraph (i) or (ii) of this Section
3.1, provided, however, that there shall be no obligation of a
Management Securityholder to sell to the Company any Rollover
Securities in the case of a termination of such Management
Securityholder for any reason other than as a result of an event
described in either subparagraph (i) or (ii) of this Section 3.1.
3.2 Notice. If the Company desires to purchase Securities
from a Management Securityholder pursuant to Section 3.1, it shall notify such
Management Securityholder (or his or her estate, trust, corporation or
partnership, as the case may be) not more than 60 days after the termination of
employment as a result of the event giving rise to the Company's right to
acquire such Management Securityholder's Securities; provided that, with respect
to the Company's purchase of shares of shares of Common Stock acquired at any
time by such Management Securityholder pursuant to an exercise of any stock
options granted to such Management Securityholder within six months prior to the
date of termination of employment of such Management Securityholder (including,
without limitation, after the termination of employment) in connection with any
termination other than as a result of death, Disability or for Cause, the notice
required by this Section 3.2 shall be given by the Company not earlier than six
months and one day nor later than eight months after the acquisition of any such
shares.
3.3 Payment.
(a) Subject to Section 5 ("Prohibited Purchases"), payment
for any shares of Common Stock purchased by the Company pursuant to Section 3.1
shall be made on the date that is 30 days (or the first business day thereafter
if the 30th day is not a business day) following the date of the receipt by a
Management Securityholder of the Company's notice with respect to such shares
pursuant to Section 3.2; provided, however, that in the event the Appraisal is
not completed by such 30th day, then within five business days of the completion
of the Appraisal.
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(b) Any payments based on Fair Market Value required to be
made by the Company under this Section 3.3 shall accrue simple interest at a
rate per annum of 6% on the amounts not paid from the date of termination of
employment of the relevant Management Securityholder to the date the Company
makes such payments, provided that payments in respect of the Company's purchase
of shares of Common Stock acquired at any time by such Management Securityholder
pursuant to an exercise of any stock options granted to such Management
Securityholder within six months prior to the date of termination of employment
of such Management Securityholder (including, without limitation, after the
termination of employment) shall bear interest from the date such Management
Securityholder is given notice with respect to such shares pursuant to Section
3.2. All payments of interest accrued hereunder shall be paid only at the date
or dates of payment by the Company for the Securities (including Option Common
Stock) being purchased.
4. Purchase Price.
4.1 Appraisal. The Company shall engage, from time to time
at the discretion of the Board, but not less often than within 90 days after
every fiscal year, commencing with the fiscal year ending on September 28, 2003,
an independent valuation consultant or appraiser of recognized national
standing, reasonably satisfactory to Xxxxx (the "Appraiser"), to appraise the
Fair Market Value of the Securities as of the last day of the calendar year then
most recently ended or, at the request of the Company, as of any more recent
date (the "Appraisal Date"), and to prepare and deliver a report to the Company
describing the results of such appraisal (the "Appraisal"). In connection with
sales by or purchases from any Management Securityholder pursuant to Sections 2
or 3 hereof, such Management Securityholders shall have the right to request an
updated Appraisal if (i) such Management Securityholder owns, on a fully-diluted
basis, Securities constituting 5% or more of the fully diluted capital stock of
the Company and (ii) the most recent Appraisal obtained by the Company pursuant
to the first sentence of this Section 4.1 is as of a date that precedes the date
of such request by such Management Securityholder by at least 180 calendar days.
The Company shall bear the fees and expenses of each Appraisal pursuant to this
Section 4.1.
4.2 Fair Market Value.
(a) The "Fair Market Value" of any Security shall be:
(i) with respect to any share of Common Stock, (A) the fair market value of the
entire Common Stock equity interest of the Company taken as a whole, without
additional premiums for control or discounts for minority interests or
restrictions on transfer, divided by (B) the number of outstanding shares of
Common Stock, calculated on a fully-diluted basis, provided that the Appraiser
shall be entitled to determine in its reasonable judgment the extent to which
any stock options, the exercise price of which exceeds the Fair Market Value of
the underlying shares of Common Stock, should be included in the calculation
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of the number of fully diluted shares of Common Stock, and (ii) with respect to
any Exchange Option, (A) the Fair Market Value of the underlying share of Common
Stock determined pursuant to clause (i) of this Section 4.2(a), less (B) the
exercise price of such Exchange Option.
(b) The Fair Market Value of any Security shall be
calculated with reference to the most recent Appraisal and as of the most recent
Appraisal Date prior to the termination of the relevant Management
Securityholder's employment or the Involuntary Transfer, as the case may be,
provided that if the relevant Management Securityholder or the Company gives
notice in accordance with Section 2.2 or Section 3.2, respectively, concerning
shares of Common Stock acquired at any time by such Management Securityholder
pursuant to an exercise of any stock options granted to such Management
Securityholder within six months prior to the date of termination of employment
of such Management Securityholder (including, without limitation, after the
termination of employment), the Fair Market Value of any share of Common Stock
acquired at any time pursuant to an exercise of stock options with respect to
which such notice was given shall be calculated with reference to the most
recent Appraisal and as of the most recent Appraisal Date prior to the date of
such notice (or as of the first Appraisal and the first Appraisal Date in the
event that such termination or Involuntary Transfer occurs prior to September
28, 2003).
4.3 Carrying Value. For the purposes of this Agreement, the
"Carrying Value" of: (a) any share of Common Stock being purchased by the
Company shall be equal to the price paid by the selling Continuing
Securityholder for any such share, less the amount of dividends and
distributions paid in respect of such share; provided that the price of any
share of Common Stock which was either acquired by MLH pursuant to her Exchange
Agreement with the Company or acquired by another Continuing Securityholder
pursuant to the exercise of Exchange Options shall be equal to $10.00, less the
amount of dividends and distributions paid in respect of such share, and (b) any
Exchange Option being purchased by the Company shall be equal to the excess of
$10.00 over the exercise price for such Exchange Option.
5. Prohibited Purchases. Notwithstanding anything to the
contrary herein, the Company shall not be obligated to purchase any Securities
from a Management Securityholder hereunder to the extent (a) the Company is
prohibited from purchasing such Securities by applicable law or by any debt
instruments or agreements, including any amendment, renewal, extension,
substitution, refinancing, replacement or other modification thereof, which have
been entered into or which may be entered into by the Company or any of its
subsidiaries, including those to finance the acquisition of the Company on the
date hereof, and any future acquisitions by the Company or recapitalizations of
the Company (the "Financing Documents"), (b) an event of default has occurred
(or, with notice or the lapse of time or both, would occur) under any Financing
Document and is (or would be) continuing, (c) the purchase of such Securities
7
would, or in the view of the Board (excluding such Management Securityholder and
other members of the Board who are designees of any Continuing Securityholder),
would reasonably be likely to result in the occurrence of an event of default
under any Financing Document or create a condition which would reasonably be
likely to, with notice or lapse of time or both, result in such an event of
default or (d) the purchase of such Securities would, in the reasonable view of
the Board (excluding such Management Securityholder and other members of the
Board who are designees of any Continuing Securityholder), be materially
detrimental to the Company in view of the financial condition (present or
projected) of the Company or any of its subsidiaries or the anticipated impact
of the purchase of such Securities on the Company's or any of its subsidiaries'
ability to meet their respective obligations under any Financing Document or
otherwise. If Securities which the Company has the right or obligation to
purchase on any date exceed the total amount permitted to be purchased on such
date pursuant to the preceding sentence (the "Maximum Amount"), the Company
shall purchase on such date only those Securities up to the Maximum Amount (if
any) (and shall not be required to purchase more than the Maximum Amount) in
such amounts as the Board shall in good faith determine, applying the following
order of priority:
(a) First, the Securities of all Management Securityholders
whose Securities are being purchased by the Company by reason of termination of
employment due to death or Disability and, to the extent that the number of
Securities that the Company is obligated to purchase from such Management
Securityholders (but for this Section 5) exceeds the Maximum Amount, such
Securities pro rata among such Management Securityholders on the basis of the
total number of Securities held by each of such Management Securityholders that
the Company is obligated or has the right to purchase, and,
(b) Second, to the extent that the Maximum Amount is in
excess of the amount the Company purchases pursuant to clause (a) above, the
Securities of all Management Securityholders whose Securities are being
purchased by the Company by reason of termination of employment without Cause or
due to Retirement or resignation for Good Reason up to the Maximum Amount (as
reduced by shares described in clause (a) to be purchased) and, to the extent
that the number of Securities that the Company is obligated to purchase from
such Management Securityholders (but for this Section 5) exceeds the Maximum
Amount (as reduced by shares described in clause (a) to be purchased), such
Securities pro rata among such Management Securityholders on the basis of the
total number of Securities held by each of such Management Securityholders that
the Company is obligated or has the right to purchase, and
(c) Third, to the extent the Maximum Amount is in excess of
the amounts the Company purchases pursuant to clauses (a) and (b) above, the
shares of Common Stock of all other Management Securityholders whose Securities
are being purchased by the Company up to the Maximum Amount (as reduced by
shares described
8
in clauses (a) and (b) to be purchased) and, to the extent that the number of
Securities that the Company is obligated to purchase from such Management
Securityholders (but for this Section 5) exceeds the Maximum Amount (as reduced
by shares described in clauses (a) and (b) to be purchased), the Securities of
such Management Securityholders in such order of priority and in such amounts as
the Board (excluding such Management Securityholders and other members of the
Board who are designees of any Continuing Securityholder) in its sole discretion
shall in good faith determine to be appropriate under the circumstances.
Notwithstanding anything to the contrary contained in this
Agreement, if the Company is unable to make any payment when due to any
Management Securityholder under this Agreement by reason of this Section 5, the
Company shall have the option to either (i) make such payment at the earliest
practicable date permitted under this Section 5 and any such payment shall
accrue simple interest (or if such payment is accruing interest at such time,
shall continue to accrue interest) at a rate per annum of 6% from the date such
payment is due and owing to the date such payment is made or (ii) pay the
purchase price for such Securities with a subordinated note bearing interest at
a rate of 6% per annum which is fully subordinated in right of payment and
exercise of remedies to the lenders' rights under the Financing Documents,
provided, that such subordinated note shall be paid off at the earliest
practicable date permitted under this Section 5.
6. Tag-Along and Drag-Along Rights.
6.1 Tag-Along Rights.
(a) In the event that at any time Xxxxx proposes to sell
shares of Common Stock owned by it to any person or entity (a "Proposed
Purchaser"), other than any Transfer (i) pursuant to a Registration or Rule 144
or (ii) to an Affiliate, and the shares proposed to be sold, together with all
shares of Common Stock previously sold by Xxxxx, would represent more than 15%
of the aggregate number of shares of Common Stock owned by Xxxxx immediately
after the Closing, then Xxxxx will promptly provide each Non-Xxxxx
Securityholder written notice (a "Sale Notice") of such proposed sale (a
"Proposed Sale") and the material terms of the Proposed Sale as of the date of
Sale Notice (the "Material Terms"), including the aggregate number of shares of
Common Stock the Proposed Purchaser is willing to purchase. If within 30 days of
the receipt of the Sale Notice, Xxxxx receives a written request (a "Sale
Request") to include shares of Common Stock (i) held by one or more Non-Xxxxx
Securityholders or (ii) to be acquired pursuant to the exercise of either
Exchange Options or options (to the extent exercisable) granted to a Management
Securityholder under the Stock Incentive Plan in the Proposed Sale, the Common
Stock held or to be acquired by such Non-Xxxxx Securityholders shall be so
included as provided therein; provided, however, that any Sale Request shall be
irrevocable unless (x) there shall be a material adverse change in the Material
Terms or
9
(y) otherwise mutually agreed to in writing by such Non-Xxxxx Securityholders
and Xxxxx.
(b) The number of shares of Common Stock that any Non-Xxxxx
Securityholder will be permitted to include in a Proposed Sale on a pro rata
basis pursuant to a Sale Request is equal to the product of (i)(A) the number of
shares of Common Stock held by such Non-Xxxxx Stockholder divided by (B) the
number of shares held by all Securityholders participating in such Proposed Sale
and (ii) the aggregate number of shares of Common Stock proposed to be sold in
such Proposed Sale.
(c) Shares of Common Stock subject to a Sale Request
(including any shares of Common Stock acquired pursuant to the exercise of
Exchange Options that are subject to such Sale Request) will be included in a
Proposed Sale pursuant hereto and to any agreement with the Proposed Purchaser
relating thereto, on the same terms and subject to the same conditions
applicable to the shares of Common Stock which Xxxxx proposes to sell in the
Proposed Sale. Such terms and conditions shall include, without limitation, (i)
the sale consideration (which shall be reduced by the fees and expenses incurred
by Xxxxx and the Company in connection with the Proposed Sale), and (ii) the
provision of information, representations, warranties, covenants and requisite
indemnifications; provided, however, that (x) any representations and warranties
relating specifically to any Securityholder shall only be made by that
Securityholder and shall only be with respect to title, ownership, capacity to
engage in the sale or similar matters; (y) any indemnification provided by the
Securityholders shall be based on the number of shares of Common Stock being
sold by each Securityholder in the Proposed Sale (including any shares of Common
Stock acquired pursuant to the exercise of options) , either on a several, not
joint, basis or solely with recourse to an escrow established for the benefit of
the Proposed Purchaser (the Securityholders' contributions to such escrow to be
on a pro-rata basis in accordance with the number of shares of Common Stock
(including shares acquired pursuant to the exercise of options) being sold by
each Securityholder in such Proposed Sale), it being understood and agreed that
any such indemnification obligation of a Securityholder shall in no event exceed
the net proceeds of such Securityholder from such Proposed Sale, and (z) that
the form of consideration to be received by Xxxxx or any of its Affiliates in
connection with the Proposed Sale may be different from that received by the
Non-Xxxxx Securityholders so long as the per share value of the consideration to
be received by Xxxxx is the same or less than that to be received by the
Non-Xxxxx Securityholders (as reasonably determined by the Board of Directors of
the Company in good faith).
(d) Upon delivering a Sale Request, each Non-Xxxxx
Securityholder will, if requested by Xxxxx, execute and deliver a custody
agreement and power of attorney in form and substance satisfactory to Xxxxx (a
"Custody Agreement and Power of Attorney") with respect to the shares of the
Common Stock which are to be included in the Proposed Sale pursuant to this
Section 6.1. The Custody Agreement and Power of
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Attorney will provide that, subject to the inclusion of the terms and conditions
set forth in Section 6.1(c) in an agreement regarding the Proposed Sale, each
such Non-Xxxxx Securityholder will deliver to and deposit in custody with Xxxxx,
named as the custodian and attorney-in-fact therein, a certificate or
certificates representing such shares of Common Stock (duly endorsed in blank by
the registered owner or owners thereof or accompanied by duly executed stock
powers in blank) and irrevocably appoint Xxxxx as such Non-Xxxxx
Securityholder's agent and attorney-in-fact with full power and authority to act
under a custody agreement and power of attorney on behalf of such Non-Xxxxx
Securityholder with respect to the matters specified therein. Notwithstanding
anything to the contrary in this Section 6.1(d), each Non-Xxxxx Stockholder
shall have the right to review the agreement and other documentation relating to
such Proposed Sale.
(e) Each Non-Xxxxx Securityholder agrees that he or she
will execute such other agreements as Xxxxx may reasonably request in connection
with the consummation of a Proposed Sale and Sale Request and the transactions
contemplated thereby, including, without limitation, any purchase,
recapitalization or merger agreement, escrow agreement or other ancillary
agreements, proxies, written consents in lieu of meetings or waivers of
appraisal rights.
(f) Each Non-Xxxxx Securityholder wishing to include shares
of Common Stock that are acquirable pursuant to the exercise of Exchange Options
in a Proposed Sale must include with such Non-Xxxxx Stockholder's Sale Request
an irrevocable commitment to exercise such Exchange Options, subject only to
closing of such Proposed Sale.
6.2 Drag-Along Rights.
(a) In the event that any time Xxxxx proposes to sell for
cash shares of Common Stock owned by it to any Proposed Purchaser other than any
Transfer (i) pursuant to a Registration or Rule 144, or (ii) to an Affiliate,
and the shares proposed to be sold, together with all shares of Common Stock
previously sold by Xxxxx would represent more than 85% of the aggregate number
of shares of Common Stock owned by Xxxxx immediately after the Closing, then
Xxxxx may provide each Non-Xxxxx Securityholder written notice (a "Drag-Along
Notice") of such Proposed Sale and the Material Terms thereof not less than 25
business days prior to the proposed closing date of the Proposed Sale and each
such Non-Xxxxx Securityholder hereby agrees to sell to such Proposed Purchaser
that number of shares of Common Stock equal to the product of (i) the number of
shares of Common Stock then held or acquirable pursuant to the exercise of
Exchange Options by such Non-Xxxxx Securityholder or of options (to the extent
exercisable) granted to a Management Securityholder under the Stock Incentive
Plan multiplied by (ii) the aggregate percentage of the Common Stock held by
Xxxxx and its Affiliates that is represented by the Common Stock that Xxxxx and
its Affiliates propose to sell in the Proposed Sale.
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(b) Shares of Common Stock subject to a Drag-Along Notice
(including any shares of Common Stock acquired pursuant to the exercise of
options that are subject to such Drag-Along Notice) will be included in the
Proposed Sale pursuant hereto and to any agreement with the Proposed Purchaser
relating thereto, on the same terms and subject to the same conditions
applicable to the shares of Common Stock which Xxxxx and its Affiliates propose
to sell in the Proposed Sale. Such terms and conditions shall include, without
limitation, (i) the sale consideration (which shall be reduced by the fees and
expenses incurred by Xxxxx and the Company in connection with the Proposed Sale)
and (ii) the provision of information, representations, warranties, covenants
and requisite indemnifications, provided, however, that (x) any representations
and warranties relating specifically to any Securityholder shall only be made by
that Securityholder and shall only be with respect to title, ownership, capacity
to engage in the sale or similar matters; (y) any indemnification provided by
the Securityholders shall be based on the number of shares of Common Stock being
sold by each Securityholder in the Proposed Sale either on a several, not joint,
basis or solely with recourse to an escrow established for the benefit of the
Proposed Purchaser (the Securityholders' contributions to such escrow to be on a
pro-rata basis in accordance with the number of shares of Common Stock
(including shares acquired pursuant to the exercise of options) being sold by
each Securityholder in such Proposed Sale), it being understood and agreed that
any such indemnification obligation of a Securityholder shall in no event exceed
the net proceeds of such Securityholder from such Proposed Sale and (z) the form
of consideration to be received by Xxxxx or any of its Affiliates in connection
with the Proposed Sale may be different from that received by the Non-Xxxxx
Securityholders (including, but not limited to, non-cash consideration) so long
as the per share value of the consideration to be received by Xxxxx or any of
its Affiliates is the same or less than that to be received by the Non-Xxxxx
Securityholders (as reasonably determined by the Board of Directors of the
Company in good faith) and the Non-Xxxxx Securityholders receive cash. No
Non-Xxxxx Securityholders shall exercise any dissenter's rights with respect to
the consummation of any such Proposed Sale pursuant to this Section 6.2.
(c) Each Non-Xxxxx Securityholder will, if requested by
Xxxxx, execute and deliver a Custody Agreement and Power of Attorney in form and
substance satisfactory to Xxxxx with respect to the shares of Common Stock which
are to be included in the Proposed Sale pursuant to this Section 6.2. The
Custody Agreement and Power of Attorney will provide that, subject to the
inclusion of the terms and conditions set forth in Section 6.2(b) in an
agreement regarding the Proposed Sale, each such Non-Xxxxx Securityholder will
deliver to and deposit in custody with Xxxxx, named as the custodian and
attorney-in-fact therein, a certificate or certificates representing such shares
of Common Stock (duly endorsed in blank by the registered owner or owners
thereof or accompanied by duly endorsed stock powers in blank) and irrevocably
appoint Xxxxx as such Non-Xxxxx Securityholder's agent and attorney-in-fact with
full power and attorney to act under a custody agreement and power of attorney
on behalf of such Non-Xxxxx Securityholder with respect to the matters specified
therein. Notwithstanding anything to
12
the contrary in this Section 6.2(c), each Non-Xxxxx Stockholder shall have the
right to review the agreement and other documentation relating to such Proposed
Sale.
(d) Each Non-Xxxxx Securityholder agrees that he or she
will execute such other agreements as Xxxxx may reasonably request in connection
with the consummation of a Proposed Sale and Drag-Along Notice and the
transactions contemplated thereby, including, without limitation, any purchase,
merger or recapitalization agreement, escrow agreement or other ancillary
agreements, proxies, written consents in lieu of meetings or waivers of
appraisal rights.
(e) Each Non-Xxxxx Securityholder holding shares of Common
Stock that are acquirable pursuant to the exercise of Exchange Options and that
are to be included in a Proposed Sale pursuant to a Drag-Along Notice agrees to
provide to Xxxxx, upon delivery of the Drag-Along Notice, an irrevocable
commitment to exercise such Exchange Options, subject only to closing of such
Proposed Sale.
7. Involuntary Transfers. Any transfer of title or
beneficial ownership of Securities upon default, foreclosure, forfeit, divorce,
court order or otherwise than by a voluntary decision on the part of a
Securityholder (each, an "Involuntary Transfer") shall be void unless the
Securityholder complies with this Section 7 and enables the Company to exercise
in full its rights hereunder. Upon any Involuntary Transfer, the Company shall
have the right to purchase such Securities pursuant to this Section 7 and the
person or entity to whom such Securities have been Transferred (the "Involuntary
Transferee") shall have the obligation to sell such Securities in accordance
with this Section 7. Upon the Involuntary Transfer of any Securities, such
Securityholder shall promptly (but in no event later than two days after such
Involuntary Transfer) furnish written notice (the "Notice") to the Company
indicating that the Involuntary Transfer has occurred, specifying the name of
the Involuntary Transferee, giving a detailed description of the circumstances
giving rise to, and stating the legal basis for, the Involuntary Transfer. Upon
the receipt of the Notice, and for 60 days thereafter, the Company shall have
the right to purchase, and the Involuntary Transferee shall have the obligation
to sell, all (but not less than all) of the Securities acquired by the
Involuntary Transferee for a purchase price equal to the lesser of (i) the Fair
Market Value of such Securities and (ii) the Carrying Value of such Securities;
provided that the excess, if any, of the purchase price so determined over the
amount of the indebtedness or other liability that gave rise to the Involuntary
Transfer shall be paid directly to the Securityholder and not to the Involuntary
Transferee.
8. Election of Directors.
(a) Each Securityholder shall vote all of its shares of
Common Stock and any other voting securities of the Company over which such
Securityholder has voting control and shall take all other necessary or
desirable actions within such Securityholder's
13
control (whether in such Securityholder's capacity as a stockholder, director,
member of a board committee or officer of the Company or otherwise, and
including, without limitation, attendance at meetings in person or by proxy for
purposes of obtaining a quorum, execution of written consents in lieu of
meetings and approval of amendments and/or restatements of the Company's
certificate of incorporation or by-laws), and the Company shall take all
necessary and desirable actions within its control (including, without
limitation, calling special board, stockholder meetings and approval of
amendments and/or restatements of the Company's certificate of incorporation or
by-laws), so that:
(i) the authorized number of directors on the Board shall
be established by Xxxxx;
(ii) WJH, or a Xxxxxxx Family Member, or, with the consent
of Xxxxx, such consent not to be unreasonably withheld, a non-Xxxxxxx
Family Member (each of these persons, an "Eligible Xxxxxxx Director"),
which will be designated by the Hayfords, shall be elected to the
Board; provided that, if the authorized number of directors on the
Board is eleven or more, two Eligible Xxxxxxx Directors, which will be
designated by the Hayfords, shall be elected to the Board;
(iii) for so long as JPE continues to serve as Chief
Executive Officer or Chairman of BWAY Corporation, JPE shall be elected
to the Board, and, if JPE becomes unable to serve as Chief Executive
Officer and Chairman of BWAY Corporation, an Xxxxx Family Member or,
with Xxxxx'x consent, such consent not to be unreasonably withheld, a
non-Xxxxx Family Member (each of these persons, an "Eligible Xxxxx
Director"), in either case, as designated by JPE, or, in the event of
his death or incapacity, by a majority in interest of the Xxxxx Family
Members shall be elected to the Board; provided that such Eligible
Xxxxx Director shall be removed from the Board upon the Transfer of any
Securities now or hereafter owned by any Xxxxx Family Member;
(iv) the remainder of the directors, which will be
designated by Xxxxx, shall be elected to the Board;
(v) the removal from the Board (with or without cause) of
any representative designated pursuant hereto by Xxxxx or the Hayfords
shall be at the written request of Xxxxx or the Hayfords, respectively,
but only upon such written request and under no other circumstances;
(vi) in the event that any representative designated
pursuant hereto by Xxxxx or the Hayfords for any reason ceases to serve
as a member of the Board during his or her term of office, the
resulting vacancy on the Board shall be filled by a representative
designated by Xxxxx or the Hayfords, as the case may be; and
14
(vii) the Compensation Committee of the Board shall be
comprised of JPE, for so long as he is Chief Executive Officer of BWAY
Corporation, and two Xxxxx directors.
(b) If either Xxxxx or the Hayfords fail to designate a
representative to fill a directorship pursuant to the terms of this Section 8,
the election of a person to such directorship shall be accomplished in
accordance with the Company's by-laws and applicable law.
(c) WJH or a designated Xxxxxxx Family Member who is a
member of the Board shall receive an annual director's fee of $100,000, for so
long as WJH or a Xxxxxxx Family Member is a member of the Board; provided that
in no event shall the Company be required to pay more than $100,000 for any
one-year period pursuant to this Section 8(c).
(d) Any non-Xxxxxxx Family Member designated pursuant to
clause (ii) of Section 8(a) shall be entitled to receive the same director's fee
being paid to other outside directors of the Board.
(e) The Company shall reimburse each director in accordance
with the Company's policies for the reasonable out-of-pocket expenses incurred
by him or her in connection with his or her attendance at Board meetings.
(f) In order to secure each Non-Xxxxx Securityholder's
obligation to vote its shares of Common Stock and other voting securities of the
Company in accordance with the provisions of Section 8 hereof, each Non-Xxxxx
Securityholder hereby appoints Xxxxx as its true and lawful proxy and
attorney-in-fact, with full power of substitution, to vote all of such Non-Xxxxx
Securityholder's shares of Common Stock and other voting securities of the
Company for the election and removal of directors and all such other matters as
expressly provided for in this Section 8. Xxxxx may exercise the irrevocable
proxy granted to it hereunder at any time any Non-Xxxxx Securityholder fails to
comply with the provisions of this Section 8. The proxies and powers granted by
each Non-Xxxxx Securityholder pursuant to this paragraph (e) are coupled with an
interest and are given to secure the performance of the obligations under this
Agreement. Such proxies and powers will be irrevocable until the termination of
this Agreement and will survive the death, incompetency and disability of each
Non-Xxxxx Securityholder and the holders of each of his or her respective shares
of Common Stock. It is understood and agreed that Xxxxx will not use such
irrevocable proxy unless the Non-Xxxxx Securityholder fails to comply with this
Section 8 and that, to the extent Xxxxx uses such irrevocable proxy, it will
only vote such shares of Common Stock and other voting securities with respect
to the matters specified in, and in accordance with the provisions of, this
Section 8.
15
9. Company Affiliate Transactions. The Company will not
engage in a Company Affiliate Transaction unless:
(a) WJH consents to such transaction; or
(b) in the event that WJH is no longer a member of the
Board, if a Xxxxxxx Family Member who is a member of the Board consents to such
transaction; or
(c) in the event that neither WJH nor a Xxxxxxx Family
Member is a member of the Board, the disinterested members of the Board consent
to such transaction;
provided that this Section 9 shall not apply to any transactions contemplated by
this Agreement, the Merger Agreement, the Registration Rights Agreement or the
Financial Advisory Agreement, dated as of the date hereof, by and between Xxxxx
and the Company, including, without limitation, the Company's payment of any
fees to Xxxxx pursuant thereto, and provided, further, that this Section 9 shall
apply to any transactions contemplated by any amendments to any of the
agreements referenced in the foregoing proviso.
10. Preemptive Rights. In the event that the Company
proposes a New Issue, each of the Continuing Securityholders (provided that in
the case of any Continuing Securityholder other than the Hayfords and JPE, such
Continuing Securityholder is employed by the Company at such time; each such
Continuing Securityholder, a "Preemptive Rights Holder") shall have the right,
exercisable for a 20-day period after the Company has given notice to such
Preemptive Rights Holder of such proposed New Issue, to purchase, on the same
terms and conditions as those of the proposed New Issue (including, without
limitation, as to price) a proportion of such shares of the New Issue equal to
such Preemptive Rights Holder's percentage ownership on a fully-diluted basis of
Securities, using the treasury method, as of a record date to be set by the
Board not more than 30 days prior to the date of such New Issue. Such notice
shall state the number of shares of the New Issue to be offered to each
Preemptive Rights Holder, the aggregate consideration to be paid for such shares
by each Preemptive Rights Holder and the proposed date, time and location of the
closing of such purchase (which shall not be earlier than 21 days or later than
120 days after the date of such notice). At the closing of each such additional
purchase, the Company shall issue and deliver to each Preemptive Rights Holder
stock certificates representing that number of fully paid and nonassessable
shares of the New Issue (or executed agreements representing equity securities
other than shares) that each such Preemptive Rights Holder has agreed to
purchase pursuant to this Section 10 and each such Preemptive Rights Holder
shall pay to the Company by wire transfer of immediately available funds the
aggregate consideration for such equity securities. Notwithstanding the
foregoing or anything in this Section 10 to the contrary, the Company shall not
be required to sell any shares of the New Issue to a Continuing
16
Stockholder that is not an "accredited investor", as such term is defined in
Rule 501 of Regulation D, promulgated under the Securities Act.
11. Certain Charter Amendments. Any proposed amendment to
the Company's Certificate of Incorporation that would adversely affect the
Continuing Securityholders as a group must be approved by the affirmative vote
of a majority of the voting power of all issued and outstanding Common Stock
owned by such Continuing Securityholders or, to the extent (and only to the
extent) any particular Continuing Securityholder would be uniquely and adversely
affected by a proposed amendment to the Company's Certificate of Incorporation,
by such Continuing Securityholder; provided that the following actions shall not
be deemed to adversely affect the Continuing Securityholders: (i) the Company's
issuance of Common Stock or any other equity securities to Xxxxx or (ii) the
Company's issuance of Common Stock or any other equity securities to any new or
existing investors with rights that are pari passu with or junior to those
granted to the Continuing Securityholders.
12. Stock Certificate Legend. A copy of this Agreement
shall be filed with the Secretary of the Company and kept with the records of
the Company. Each certificate representing shares of Common Stock owned by the
Securityholders shall bear upon its face the following legends, as appropriate:
(a) "THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE BEEN
ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT"), AND MAY NOT BE OFFERED, SOLD, ASSIGNED,
PLEDGED, HYPOTHECATED, TRANSFERRED OR OTHERWISE
DISPOSED OF UNLESS AND UNTIL REGISTERED UNDER THE ACT
AND ANY APPLICABLE STATE SECURITIES LAWS OR UNLESS, IN
THE OPINION OF COUNSEL TO THE SECURITYHOLDER, WHICH
COUNSEL MUST BE, AND THE FORM AND SUBSTANCE OF WHICH
OPINION ARE, SATISFACTORY TO THE ISSUER, SUCH OFFER,
SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION, TRANSFER OR
OTHER DISPOSITION IS EXEMPT FROM REGISTRATION OR IS
OTHERWISE IN COMPLIANCE WITH THE ACT, SUCH LAWS AND THE
SECURITYHOLDERS AGREEMENT OF THE ISSUER, DATED AS OF
FEBRUARY 7, 2003 (THE "SECURITYHOLDERS AGREEMENT")."
(b) THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE ARE
SUBJECT TO RESTRICTIONS ON TRANSFER AND OTHER
CONDITIONS, AS SPECIFIED IN
17
THE SECURITYHOLDERS AGREEMENT, COPIES OF WHICH ARE ON
FILE AT THE OFFICE OF THE ISSUER AND WILL BE FURNISHED
WITHOUT CHARGE TO THE HOLDER OF SUCH SHARES UPON
WRITTEN REQUEST."
In addition, certificates representing shares of Common Stock owned by residents
of certain states shall bear any legends required by the laws of such states.
All Securityholders shall be bound by the requirements of such
legends. Upon a Registration of any shares of Common Stock or, if any shares of
Common Stock of any Securityholder can be sold pursuant to Rule 144(k) under the
Securities Act, the certificate representing the registered shares shall be
replaced, at the expense of the Company, with certificates not bearing the
legends required by clauses (a) and (b) of this Section 12.
13. Covenants; Representations and Warranties.
13.1 Management Securityholders. Each of the Securityholders
hereby agrees that any employee of the Company or any of its subsidiaries who
after the date of this Agreement is offered shares of any class of Common Stock
or holds stock options exercisable into shares of Common Stock may, as a
condition precedent to the acquisition of such shares of Common Stock or the
exercise of such stock options, as the case may be, (a) become a party to this
Agreement by executing a signature page to the same and (b) if such employee is
a resident of a state with a community or marital property system, cause his or
her spouse to execute a Spousal Waiver in the form of Exhibit A attached hereto,
and deliver such executed signature page to this Agreement and Spousal Waiver,
if applicable, to the Company at its address specified in Section 22 hereof.
Upon such execution and delivery, such employee shall be a Management
Securityholder and, with Xxxxx'x consent, a Continuing Securityholder for all
purposes of this Agreement and the Company may amend this Agreement accordingly.
13.2 No Other Arrangements or Agreements. Each
Securityholder hereby represents and warrants to the Company and to each other
Securityholder that, except for this Agreement, the Merger Agreement, the
Registration Rights Agreement, the applicable Exchange Agreements, if any, with
the Company and in the case of any affected Management Securityholder, any
employment agreement with the Company and any stock option agreement of the
Company applicable to such Management Securityholder, he or she has not entered
into or agreed to be bound by any other arrangements or agreements of any kind
with any other party with respect to any Securities, including, but not limited
to, arrangements or agreements with respect to the acquisition or disposition of
Securities or any interest therein or the voting of shares of Common Stock
(whether or not such agreements and arrangements are with the Company or any of
its subsidiaries, or other Securityholder) and each Non-Xxxxx Securityholder
18
agrees that, except as expressly permitted under this Agreement, he or she will
not enter into any such other arrangements or agreements.
13.3 Additional Representations and Warranties. Each
Securityholder represents and warrants to the Company and each other
Securityholder that:
(a) such Securityholder has the power, authority and
capacity (or, in the case of any Securityholder that is a limited liability
company or limited partnership, all corporate limited liability company or
limited partnership power and authority, as the case may be) to execute, deliver
and perform this Agreement;
(b) in the case of a Securityholder that is a limited
liability company or limited partnership, the execution, delivery and
performance of this Agreement by such Securityholder has been duly and validly
authorized and approved by all necessary limited liability company or limited
partnership action, as the case may be;
(c) this Agreement has been duly and validly executed and
delivered by such Securityholder and constitutes a valid and legally binding
obligation of such Securityholder, enforceable in accordance with its terms,
subject to bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting or relating to creditors' rights generally and general principles
of equity; and
(d) the execution, delivery and performance of this
Agreement by such Securityholder does not and will not violate the terms of or
result in the acceleration of any obligation under (i) any material contract,
commitment or other material instrument to which such Securityholder is a party
or by which such Securityholder is bound or (ii) in the case of a Securityholder
that is a limited liability company or limited partnership, the certificate of
formation and the limited liability company agreement, or the certificate of
limited partnership and the limited partnership agreement, as the case may be.
14. Amendment and Modification. Except as otherwise
provided in Section 13.1, this Agreement may be amended, modified or
supplemented by the Company only with the written consent of Xxxxx, the Hayfords
and JPE, and (i) to the extent (and only to the extent) any particular
Securityholder would be uniquely and adversely affected by such amendment,
modification or supplement, by such Securityholder or (ii) a majority (by number
of shares) of any other Securityholders whose interests as a group would be
adversely affected by such amendment, modification or supplement; provided that
the Company and the Hayfords may amend Section 8(c) without the consent of any
other party hereto except Xxxxx. The Company shall notify all Securityholders
promptly after any such amendment, modification or supplement shall have taken
effect.
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15. Parties.
15.1 Assignment by the Company. The Company shall have the
right to assign to Xxxxx all or any portion of its rights and obligations under
Sections 2, 3 and 7, provided that any such assignment or assumption is accepted
by Xxxxx. If the Company has not exercised its right to purchase Securities
pursuant to any such Section within 15 days of receipt by the Company of the
letter, notice or other occurrence giving rise to such right, then Xxxxx shall
have the right to require the Company to assign such right. Xxxxx shall have the
right to assign to one or more of its Affiliates all or any of its rights to
purchase Securities pursuant to this Section 15.1.
15.2 Assignment Generally. The provisions of this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective heirs, legal representatives, successors and assigns, provided that
neither the Company nor any Non-Xxxxx Securityholder may assign any of its
rights or obligations hereunder without the consent of Xxxxx unless, in the case
of a Non-Xxxxx Securityholder, such assignment is in connection with a Transfer
explicitly permitted by this Agreement and, prior to such assignment, such
assignee complies with the requirements of Section 15.4, and further provided
that the board designation rights set forth in Section 8, the veto rights set
forth in Section 9 and the preemptive rights set forth in Section 10 are not
assignable without the consent of Xxxxx in its sole discretion.
15.3 Termination. Any Securityholder who ceases to own
Securities or any interest therein, shall cease to be a party to, or Person who
is subject to, this Agreement and thereafter shall have no rights or obligations
hereunder, provided, however, that a Transfer of Securities not explicitly
permitted under this Agreement shall not relieve a Non-Xxxxx Securityholder of
any of his or her obligations hereunder. Sections 1, 2, 3, 4, 6.1, 6.2, 7 and 8
shall terminate on an IPO. This entire Agreement shall terminate on a sale of
Common Stock by Xxxxx to a Third Party Investor, whether in a stock sale
transaction, merger or otherwise, (i) following which sale a majority of the
issued and outstanding shares of the Common Stock are owned by Third Party
Investors and (ii) in which sale the Non-Xxxxx Securityholders have been
afforded a right to participate pursuant to Section 6.1, whether or not the
Non-Xxxxx Securityholders in fact exercise such right.
15.4 Agreements to Be Bound. Notwithstanding anything to the
contrary contained in this Agreement, any Transfer of Securities by a Non-Xxxxx
Securityholder (other than pursuant to (i) a Registration, (ii) Rule 144(k)
under the Securities Act or (iii) Sections 2 or 3) shall be permitted under the
terms of this Agreement only if the transferee shall agree in writing to be
bound by the terms and conditions of this Agreement pursuant to an instrument of
assumption reasonably satisfactory in substance and form to the Company, and in
the case of a transferee of a Management Securityholder who resides in a state
with a community property system, such transferee
20
causes his or her spouse, if any, to execute a Spousal Waiver in the form of
Exhibit A attached hereto. Upon the execution of the instrument of assumption by
such transferee and, if applicable, the Spousal Waiver by the spouse of such
transferee, such transferee shall enjoy all of the rights and shall be subject
to all of the restrictions and obligations of the transferor of such transferee,
including, without limitation, if such transferor was a Management
Securityholder, the provisions of Sections 2 and 3 (which shall continue to
apply as though such transferor were still the holder of such shares).
15.5 The Hayfords. Any rights exercisable by the Hayfords
under this Agreement shall be exercisable solely by the Hayfords acting
together; provided that notwithstanding the foregoing or anything in this
agreement to the contrary, MLH hereby delegates to WJH the authority to exercise
any of her rights hereunder and the parties hereto agree and acknowledge that
the Company shall be entitled to deal exclusively with WJH and to rely on the
consent, waiver or other action of WJH as the consent, waiver or other action of
the Hayfords, and MLH hereby appoints WJH as her true and lawful proxy and
attorney-in-fact, with full power of substitution, to vote all of MLH's shares
of Common Stock and other voting securities of the Company with respect to all
such matters expressly provided for in this Agreement. The proxy and power
granted by MLH pursuant to this Section 15.5 is coupled with an interest and
given to secure the performance of the obligations under this Agreement. Such
proxy and power will be irrevocable until the termination of this Agreement and
will survive the death, incompetency and disability of MLH.
16. Recapitalizations, Exchanges, etc. Except as otherwise
provided herein, the provisions of this Agreement shall apply to the full extent
set forth herein with respect to (a) the shares of Common Stock, (b) the
Exchange Options and (c) any and all shares of capital stock of the Company or
any successor or assign of the Company (whether by merger, consolidation, sale
of assets or otherwise) which may be issued in respect of, in exchange for, or
in substitution for the shares of Common Stock, by reason of any stock dividend,
split, reverse split, combination, recapitalization, reclassification, merger,
consolidation or otherwise. All share numbers and percentages shall be
proportionately adjusted to reflect any stock split, stock dividend or other
subdivision or combination effected after the date hereof.
17. No Third Party Beneficiaries. Except as otherwise
provided herein, this Agreement is not intended to confer upon any Person,
except for the parties hereto, any rights or remedies hereunder.
18. Further Assurances. Each party hereto shall do and
perform or cause to be done and performed all such further reasonable acts and
things and shall execute and deliver all such other reasonable agreements,
certificates, instruments and documents as any other party hereto or Person
subject hereto may reasonably request in
21
order to carry out the intent and accomplish the purposes of this Agreement and
the consummation of the transactions contemplated hereby.
19. Governing Law. This Agreement and the rights and
obligations of the parties hereunder and the Persons subject hereto shall
be governed by, and construed and interpreted in accordance with,
the laws of the State of Delaware, without giving effect to the choice of law
principles thereof.
20. Invalidity of Provision. The invalidity or
unenforceability of any provision of this Agreement in any jurisdiction shall
not affect the validity or enforceability of the remainder of this Agreement in
that jurisdiction or the validity or enforceability of this Agreement, including
that provision, in any other jurisdiction.
21. Waiver. Waiver by any party hereto of any breach or
default by the other party of any of the terms of this Agreement shall not
operate as a waiver of any other breach or default, whether similar to or
different from the breach or default waived. No waiver of any provision of this
Agreement shall be implied from any course of dealing between the parties hereto
or from any failure by either party to assert its or his or her rights hereunder
on any occasion or series of occasions.
22. Notices. All notices, requests, demands, waivers and
other communications required or permitted to be given under this Agreement
shall be in writing and shall be deemed to have been duly given if (a) delivered
personally, (b) mailed, certified or registered mail with postage prepaid, (c)
sent by next-day or overnight mail or delivery or (d) sent by fax, as follows
(or to such other address as the party entitled to notice shall hereafter
designate in accordance with the terms hereof):
(i) If to the Company, to:
BWAY Corporation
0000 Xxxxxxx Xxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxx 00000-0000
Attention: Xxxx-Xxxxxx Xxxxx or Xxxxx Xxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
with a copy (which shall not constitute notice) to
Xxxxx at its address set forth below.
(ii) If to a Management Securityholder, to his or her
attention at:
c/o BWAY Corporation
0000 Xxxxxxx Xxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxx 00000-0000
22
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
with a copy (which shall not constitute notice) to:
Xxxxxxxx & Xxxxx
Aon Center
000 Xxxx Xxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxx, P.C. or Xxxxx X. Xxxx,
Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
(iii) If to the Hayfords, to their attention at:
0000 X. Xxxxxxxx Xxxx, Xxxxx 00X (Summer Home)
Xxxxxxxx, Xxxxxxxx 00000
Facsimile: (847) 853-8108
0000 X.X. Xxxxxxxxx Xxxxx (Xxxxxx Xxxx)
Xxxx Xxxxx, Xxxxxxx 00000
Facsimile: (000) 000-0000
with a copy (which shall not constitute notice) to:
Xxxxxxxx & Xxxxx
Aon Center
000 Xxxx Xxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxx, P.C. or Xxxxx X. Xxxx,
Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
(iv) If to any Continuing Securityholder who is not a
Management Securityholder, to his or her attention at
the last address of record for such Continuing
Securityholder in the books and records of the
Company.
(v) If to the Outside Investor, to:
Magnetite Asset Investors III L.L.C.
c/o BlackRock Financial Management, Inc.
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxx Xxxxxx
23
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
(vi) If to Xxxxx, to:
Xxxxx & Company
000 Xxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxx X. Xxxxxxx XX
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
with a copy (which shall not constitute notice) to:
Debevoise & Xxxxxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxxxx X. Xxxxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
All such notices, requests, demands, waivers and other communications shall be
deemed to have been received by (w) if by personal delivery, on the day
delivered, (x) if by certified or registered mail, on the fifth business day
after the mailing thereof, (y) if by next-day or overnight mail or delivery, on
the day delivered, or (z) if by fax, on the day delivered, provided that such
delivery is confirmed.
23. Headings. The headings to sections in this Agreement
are for the convenience of the parties only and shall not control or affect the
meaning or construction of any provision hereof.
24. Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed an original but all of
which together shall constitute one and the same instrument.
25. Fax Signatures. Each of the parties hereto (i) has
agreed to permit the use, from time to time and where appropriate, of faxed
signatures in order to expedite the Closing, (ii) intends to be bound by its
respective faxed signature, (iii) is aware that the other parties hereto will
rely on the faxed signature, and (iv) acknowledges such reliance and waives any
defenses to the enforcement of the documents effecting the transaction
contemplated by this Agreement based on the fact that a signature was sent by
fax.
24
26. Entire Agreement. This Agreement, the Merger Agreement,
the Registration Rights Agreement, the applicable Exchange Agreements, if any,
with the Company and, in the case of any affected Management Securityholder, any
employment agreement with the Company and any stock option agreement of the
Company applicable to such Management Securityholder, constitute the entire
agreement and understanding of the parties hereto with respect to the matters
referred to herein. This Agreement and the agreements referred to in the
preceding sentence supersede all prior agreements and understandings among the
parties with respect to such matters. There are no representations, warranties,
promises, inducements, covenants or undertakings relating to the Securities,
other than those expressly set forth or referred to herein, in the Registration
Rights Agreement, the applicable Exchange Agreements, if any, with the Company
and, in the case of any affected Management Securityholder, any employment
agreement with the Company and any stock option agreement of the Company
applicable to such Management Securityholder.
27. Injunctive Relief. The Securities cannot readily be
purchased or sold in the open in the market, and for that reason, among others,
the Company and the Securityholders will be irreparably damaged in the event
this Agreement is not specifically enforced. Each of the parties therefore
agrees that in the event of a breach of any provision of this Agreement, the
aggrieved party may elect to institute and prosecute proceedings in any court of
competent jurisdiction to enforce specific performance or to enjoin the
continuing breach of this Agreement. Such remedies shall, however, be cumulative
and not exclusive, and shall be in addition to any other remedy which the
Company or any Securityholder may have. Each Securityholder hereby irrevocably
submits to the non-exclusive jurisdiction of the state and federal courts in New
York for the purposes of any suit, action or other proceeding arising out of or
based upon this Agreement or the subject matter hereof. Each Securityholder
hereby consents to service of process made in accordance with Section 22.
28. Defined Terms. As used in this Agreement, the following
terms shall have the meanings ascribed to them below:
Affiliate: Person that directly, or indirectly through one or
more intermediaries, controls, or is controlled by,or is under common control
with, the Person specified.
Board: the board of directors of the Company.
Cause: the meaning as set forth in the employment agreement
between the Company and such Management Securityholder, or, if such Management
Securityholder is not a party to an employment agreement, a termination of such
Management Securityholder's employment by the Company or any Subsidiary (or by
the Company on behalf of any such Subsidiary) due to (i) the refusal or neglect
of the Management
25
Securityholder to perform substantially his or her employment-related duties,
which refusal or neglect has not been cured within 20 calendar days after a
written demand (communicated in accordance with Section 22 hereof) for
substantial performance is delivered to such Management Securityholder, (ii) the
Management Securityholder's willful misconduct or breach of fiduciary duty,
(iii) the Management Securityholder's conviction of or entering a plea of guilty
or nolo contendere (or any applicable equivalent thereof) to a crime
constituting a felony (or a crime or offense of equivalent magnitude in any
jurisdiction) or his or her willful violation of any other law, rule, or
regulation (other than a traffic violation or other offense or violation outside
of the course of employment which in no way adversely affects the Company or any
Subsidiary or its reputation or the ability of the Management Securityholder to
perform his or her employment related duties or to represent the Company or any
Subsidiary) or (iv) the material breach by the Management Securityholder of any
covenant or agreement with the Company or any Subsidiary, or any written policy
of the Company or any Subsidiary, not to disclose any information pertaining to
the Company or any Subsidiary or not to compete or interfere with the Company or
any Subsidiary if, in the case of a covenant, agreement or written policy not to
compete or interfere with the Company or any Subsidiary, such material breach
has not been cured within 20 calendar days after a written demand (communicated
in accordance with Section 22 hereof) for substantial performance of such
covenant or agreement is delivered to such Management Securityholder.
Closing: the closing of the Merger Agreement.
Common Stock: the Common Stock of the Company, par value $.01
per share.
Company Affiliate Transaction: Any agreement, contract or
transaction, to or by which the Company or any Subsidiary, on the one hand, and
any "controlling person" of the Company (within the meaning of Section 20 of the
Exchange Act and including, without limitation, Xxxxx and its Affiliates), on
the other hand, are parties or are otherwise bound.
Disability: With respect to a Management Securityholder, the
term "Disability" shall have the meaning set forth in the employment agreement
between the Company and such Management Securityholder, or, if such Management
Securityholder is not a party to an employment agreement, the termination of the
employment of any Management Securityholder by the Company or any Subsidiary (or
by the Company on behalf of any such Subsidiary) as a result of such Management
Securityholder's incapacity due to reasonably documented physical or mental
illness that shall have prevented such Management Securityholder from performing
his or her duties for the Company on a full-time basis for more than six months
and within 30 days after written notice of termination has been given to such
him or her, such Management Securityholder shall not have returned to the full
time performance of his or her duties.
26
The date of termination in the case of a termination due to "Disability" shall
be deemed to be the last day of the aforementioned 30-day period.
Xxxxx Family Member: JPE, his wife or the lineal descendants
of JPE and his wife.
Exchange Act: the Securities Exchange Act of 1934, as amended,
or any successor federal statute, and the rules and regulations thereunder which
shall be in effect at the time.
Exchange Agreement: the Exchange Agreements, each dated as of
September 30, 2002, between the Company and each of the Continuing Stockholders,
as the same may be amended from time to time.
Exchange Options: any options to purchase shares of Common
Stock that were acquired by a Continuing Securityholder pursuant to an Exchange
Agreement.
Good Reason: the meaning as set forth in the employment
agreement between the Company and such Management Securityholder (which, with
regard to JPE, is set forth in Section 4(e) of the JPE Employment Agreement),
or, if such Management Securityholder is not a party to an employment agreement,
a termination of a Management Securityholder's employment with the Company and
any subsidiary that employs such individual shall be for "Good Reason" if such
Management Securityholder voluntarily terminates his employment with the Company
and any such subsidiary as a result of either of the following:
(i) without the Management Securityholder's prior written
consent, a significant reduction by the Company or any such subsidiary
of his or her current salary, other than any such reduction which is
part of a general salary reduction or other concessionary arrangement
affecting all employees or affecting the group of employees of which
the Management Securityholder is a member proportionately (after
receipt by the Company of written notice and the expiration of a 20-day
cure period); or
(ii) the taking of any action by the Company or any such
subsidiary that would substantially diminish the aggregate value of the
benefits provided him or her under the Company's or such subsidiary's
accident, disability, life insurance and any other employee benefit
plans in which he or she was participating on the date of his or her
execution of this Agreement, other than any such reduction which is (A)
required by law, (B) implemented in connection with a general
concessionary arrangement affecting all employees or affecting the
group of employees of which the Management Securityholder is a member
27
proportionately or (C) generally applicable to all beneficiaries of
such plans (after receipt by the Company of written notice and a 20-day
cure period).
Xxxxxxx Family Member: any of WJH, MLH or the lineal
descendants of WJH and MLH.
IPO: an underwritten initial public offering of Common Stock
after which such Common Stock will be listed and traded on the New York Stock
Exchange or the American Stock Exchange, or quoted on the National Association
of Securities Dealers Automated Quotation System.
JPE Employment Agreement: the Employment Agreement between
JPE and BWAY Corporation, dated January 1, 2000, as the same may be amended from
time to time.
Merger Agreement: the Merger Agreement, dated as of
September 30, 2002, by and among the Company, BCO Acquisition, Inc. and BWAY
Corporation, as the same may be amended from time to time.
New Issue: (i) any shares of equity securities, whether
authorized now or not; (ii) any rights, options or warrants to purchase shares
of Common Stock; and (iii) any securities that are, or may become, convertible
into or exchangeable for Common Stock; provided that, the term "New Issue" does
not include: (A) shares of Common Stock that are issuable upon the exercise of
Exchange Options; (B) any securities offered to the public pursuant to a
registration statement approved by the Board and filed pursuant to the
Securities Act; (C) any securities issued in connection with the acquisition of
another Person by the Company by merger, stock purchase, purchase of
substantially all the assets of such Person or otherwise or other reorganization
approved by the Board; (D) any securities issued in connection with any
borrowings, direct or indirect, from financial institutions by the Company that
are approved by the Board, whether or not presently authorized, including any
type of loan or payment evidenced by any type of debt instrument; (E) any
securities issued in connection with any equipment leases that are approved by
the Board; (F) any securities issued to employees, consultants, officers or
directors of the Company pursuant to any stock option plan, stock purchase plan,
stock bonus arrangement or other similar plan approved by the Board; and (G) any
securities issued in connection with any stock split, reverse stock split, stock
dividend, merger, recapitalization or other similar event if an adjustment has
been made to the shares held by all Preemptive Rights Holders as a result of
such event.
Person: an individual, corporation, partnership, limited
liability company, joint venture, association, trust or other entity or
organization, including a government or political subdivision or an agency or
instrumentality thereof.
28
Registration: the closing of a public offering pursuant to an
effective registration statement under the Securities Act.
Registration Rights Agreement: the Registration Rights
Agreement, dated as of the date hereof, as the same may be amended from time to
time, among the parties hereto.
Rollover Securities: any shares of Common Stock that were
acquired by a Continuing Stockholder pursuant to an Exchange Agreement and/or
the exercise of Exchange Options.
Securities: any shares of Common Stock or Exchange Options.
Securities Act: the Securities Act of 1933, as amended, or any
successor federal statute, and the rules and regulations thereunder which shall
be in effect at the time.
Stock Incentive Plan: the BCO Holding Company Stock Incentive
Plan, as in effect and as amended from time to time.
Subsidiary: any corporation a majority of whose outstanding
voting securities is owned, directly or indirectly, by the Company.
Third Party Investor: any Person other than an Affiliate of
Xxxxx.
Transfer: any direct or indirect sale, assignment, mortgage,
transfer, gift, pledge or other form of disposal.
29
IN WITNESS WHEREOF this Agreement has been signed by each of
the parties hereto, and shall be effective as of the date first above written.
BCO HOLDING COMPANY
By: /s/ Xxxxx X. Xxxxxxx XX
-------------------------------------
Name: Xxxxx X. Xxxxxxx XX
Title: Vice President and Secretary
XXXXX INVESTMENT ASSOCIATES VI, L.P.
By: Xxxxx XX VI, LLC.,
its general partner
By: /s/ Xxxxx X. Xxxxxxxxxx
-------------------------------------
Name: Xxxxx X. Xxxxxxxxxx
Title: Managing Member
KEP VI, LLC
By: /s/ Xxxxx X. Xxxxxxxxxx
-------------------------------------
Name: Xxxxx X. Xxxxxxxxxx
Title: Managing Member
/s/ Xxxxxx X. Xxxxxxx
-----------------------------------------
Xxxxxx X. Xxxxxxx
/s/ Xxxx Xxx Xxxxxxx
-----------------------------------------
Xxxx Xxx Xxxxxxx
/s/ Xxxx-Xxxxxx Xxxxx
-----------------------------------------
Xxxx-Xxxxxx Xxxxx
/s/ Xxxxxx X. Xxxxxxxx
-----------------------------------------
Xxxxxx X. Xxxxxxxx
/s/ Xxxxx X. Xxxx
-----------------------------------------
Xxxxx X. Xxxx
/s/ Xxxxxxx X. X'Xxxxxxx
-----------------------------------------
Xxxxxxx X. X'Xxxxxxx
/s/ Xxxxxxx X. Xxxxxxxx
-----------------------------------------
Xxxxxxx X. Xxxxxxxx
MAGNETITE ASSET INVESTORS III L.L.C.
By: BLACKROCK FINANCIAL
MANAGEMENT, INC.
As Managing Member
By: /s/ Xxxxxx X. Xxxxxxx
-------------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Managing Director
Exhibit A
SPOUSAL WAIVER
[INSERT NAME] hereby waives and releases any and all equitable
or legal claims and rights, actual, inchoate or contingent, which she may
acquire with respect to the disposition, voting or control of the Securities
subject to the Securityholders Agreement of BCO Holding Company, dated as of
February 7, 2003, as the same shall be amended from time to time, except for
rights in respect of the proceeds of any disposition of such Securities.
-------------------------
Name:
