Exhibit 10.6
OPTION AGREEMENT
This OPTION AGREEMENT (this "Agreement") is made as of January 26, 2002,
by and between SF Holdings Group, Inc., a Delaware corporation (the "Grantor"),
and Xxxxxxxxx & Company, Inc. (the "Grantee").
1. Grant of Option. Grantor hereby grants to the Grantee an option (the
"Option") to purchase from the Grantor 49% of each class or series of equity
securities (collectively, the "Stock") of whichever of the following exists at
the time of exercise of the Option: (a) Sweetheart Holdings Group, Inc., a
Delaware corporation ("Sweetheart"), and The Xxxxx Group, Inc., a Delaware
corporation ("Xxxxx"), or (b) the surviving entity or entities resulting from
the merger, combination, reorganization, share exchange or similar transaction
between Sweetheart and Xxxxx (the "Surviving Entity"). Sweetheart, Xxxxx and/or
the Surviving Entity are collectively and individually referred to herein as the
"Company." Upon exercise of the Option, the Grantee shall assign to Grantor all
of the Series A Secured Notes due January 24, 2009 (the "Series A Notes"), of
Newcup, L.L.C., a Delaware limited liability company ("Borrower"), in the
original aggregate principal amount of $34,500,000, which Series A Notes are
guaranteed by Grantor pursuant to the terms of that certain Guaranty Agreement
dated January 26, 2002 among Grantor, the Grantee and certain other parties
thereto (the "Guaranty Agreement"), during the period of, and upon the terms and
conditions set forth in, this Agreement. Upon the purchase of the Stock in
accordance with this Agreement, the Grantee shall become the holder of the Stock
and shall have all of the rights of a stockholder of the Company under the
applicable laws of the State of Delaware or other applicable law
("Stockholder"). Upon exercise of the Option, the Series A Notes shall be deemed
to be paid in full, and the Grantee shall xxxx each Note as "Cancelled."
2. Exercise Period and Term. The Option shall be exercisable only if the
Series A Notes shall have been declared due and payable pursuant to the
provisions of Section 4(b) of the Note Purchase Agreement (as defined in the
Guaranty Agreement) and only in accordance with the terms of the Series A Notes.
In such event, the Option shall be exercisable in accordance with the terms of
the Series A Notes, in whole but not in part, at any time until payment in full
of the Series A Notes; provided, however, the Option Agreement shall not be
exercisable from and after the time that all of the Obligations of the Company
under the Guaranty Agreement and the Collateral Documents are paid or otherwise
satisfied or terminated in full.
3. Exercise of Option. To exercise the Option, the Grantee(s) constituting
the holder(s) of at least a majority in aggregate outstanding principal amount
of the Series A Notes must deliver to the Grantor (a) notice of the Grantee's
exercise, in the form substantially similar to "Exhibit A" attached hereto and
(b) the Notes, together with such forms of assignment as may be necessary to
effect such assignment. The Stock is (or when issued will be) validly issued,
fully paid and non-assessable and free from all taxes and charges with respect
to the issue or transfer thereof, and all other liens, claims, and encumbrances.
Upon exercise of the Option, Grantor immediately shall use its best efforts and
take all such necessary or reasonable actions as may be requested by the Grantee
to enable the Collateral Agent (as defined in the Guaranty
Agreement) to deliver to the Grantee certificates representing the Stock in the
name of Grantee or Grantee's designee, in such combination as specified by the
Grantee.
4. Who May Exercise. The Option may be exercised by the Grantee or any
assignee of Grantee's rights hereunder, all of which are referred to herein as
the Grantee.
5. Execution of Stockholders Agreement. Upon exercise of the Option,
Grantor shall enter into that certain Stockholders Agreement by and between
Grantor and the Grantee, in form substantially similar to "Exhibit B" attached
hereto (the "Stockholders Agreement"). The Grantee shall execute the
Stockholders Agreement upon Grantor's execution thereof. Grantor hereby grants
to the Grantee its irrevocable proxy to vote all of its shares of equity
securities of the Company to cause the actions contemplated by paragraph 1 of
the Stockholders Agreement and Section 4.27 of the Guaranty Agreement to be
taken immediately upon exercise of the Option. Grantor acknowledges that the
foregoing grant is irrevocable and is coupled with an interest.
6. Assignability. The Option shall continue in effect, regardless of any
transfer of the Stock by Grantor. The Option is assignable, in whole or in part,
by the Grantee only to any holder of the Series A Notes. Upon any assignment of
Series A Notes, the holder thereof shall be deemed to be a Grantee hereunder,
with the right, upon exercise of the Option, to acquire shares of Stock in
accordance with such holder's percentage ownership of all of the Series A Notes.
Any assignee of any Grantee shall, upon such assignment, be deemed to be a
Grantee hereunder. Any purported assignment or transfer in violation of the
foregoing provisions shall be void and ineffective.
7. Rights of Stockholder. The Grantee will have no rights as a stockholder
with respect to the Stock subject to the Option until the exercise of the
Option.
8. Legend. Each certificate evidencing shares of Stock that are now or
hereafter held by Grantor and each certificate issued in exchange for or upon
the transfer of any such shares shall be stamped or otherwise imprinted with a
legend in substantially the following form:
"The securities represented by this certificate are subject to an
Option Agreement dated as of January 26, 2002. A copy of such Option
Agreement shall be furnished without charge by the Company upon
written request."
9. Amendment and Waiver. Except as otherwise provided herein, no
modification, amendment or waiver of any provision of this Agreement shall be
effective unless such modification, amendment or waiver is approved in writing
by Grantor and the Grantee (or its assignee). The failure of any party to
enforce any of the provisions of this Agreement shall in no way be construed as
a waiver of such provisions and shall not affect the right of such party
thereafter to enforce each and every provision of this Agreement in accordance
with its terms.
10. Severability. Whenever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be invalid,
illegal or unenforceable in any respect under any
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applicable law or rule in any jurisdiction, such invalidity, illegality or
unenforceability shall not affect the validity, legality or enforceability of
any other provision of this Agreement in such jurisdiction or affect the
validity, legality or enforceability of any provision in any other jurisdiction,
but this Agreement shall be reformed, construed and enforced in such
jurisdiction as if such invalid, illegal or unenforceable provision had never
been contained herein.
11. Entire Agreement. Except as otherwise expressly set forth herein, this
Agreement embodies the complete agreement and understanding among the parties
hereto with respect to the subject matter hereof and supersedes and preempts any
prior understandings, agreements or representations by or among the parties,
written or oral, which may have related to the subject matter hereof in any way.
12. Successors and Assigns. This Agreement shall inure to the benefit of
and be enforceable by the Grantee and its successors and assigns.
13. Counterparts. This Agreement may be executed in multiple counterparts,
each of which shall be an original and all of which taken together shall
constitute one and the same agreement.
14. Remedies. The Grantee shall be entitled to enforce its rights under
this Agreement specifically, to recover damages by reason of any breach of any
provision of this Agreement and to exercise all other rights existing in its
favor.
15. Notices. Any notice provided for in this Agreement shall be in writing
and shall be either personally delivered, or mailed first class mail (postage
prepaid) or sent by reputable overnight courier service (charges prepaid) to the
parties at the addresses set forth below. Notices shall be deemed to have been
given hereunder when delivered personally, three days after deposit in the U.S.
mail and one Business Day after deposit with a reputable overnight courier
service:
If to the Grantor: SF Holding Group, Inc.
000 Xxxxxxx Xxxxxx
Xxxxxxxx, Xxx Xxxx 00000
Telecopier No.: (000) 000-0000
Attention: Xxxxxx X. Xxxxxxxx
With a copy to: Kramer, Levin, Naftalis & Xxxxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Telecopier No.: (000) 000-0000
Attention: Xxxxx Xxxxxxx
If to the Grantee: Xxxxxxxxx & Company, Inc.
00000 Xxxxx Xxxxxx Xxxx.
Xxxxx 0000
Xxx Xxxxxxx, XX 00000
Telecopier No.: (000) 000-0000
Attention: Xxxxxx X. Xxxxxxxxx
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With copies to: TCW/Crescent Mezzanine, L.L.C.
000 Xxxxxxxx Xxxxx
Xxxxx 0000
Xxxxxx, Xxxxx 00000
Telecopier No.: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxxxx
and
Gardere Xxxxx Xxxxxx LLP
0000 Xxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000-0000
Telecopier No.: (000) 000-0000
Attention: Xxxx X. Xxxxx
or to such other address or to the attention of such other person as the
recipient party may specify by prior written notice to the sending party.
16. Governing Law; Submission to Jurisdiction. The General Corporation Law
of the State of Delaware shall govern all issues concerning the relative rights
of the Company and the Grantee. All other questions concerning the construction,
validity, enforcement and interpretation of this Agreement shall be governed by
the internal law of the State of New York, without giving effect to any choice
of law or conflict of law provision or rule (whether of the State of New York or
any other jurisdictions) that would cause the application of the laws of any
jurisdictions other than the State of New York. The parties hereby irrevocably
submit to the jurisdiction of any New York State Court or any Federal court
sitting in the Borough of Manhattan in the City of New York in respect of any
suit, action or proceeding arising out of or relating to this Agreement and each
party hereto irrevocably accepts for itself and in respect of its property,
generally and unconditionally, jurisdiction of the aforesaid courts. The parties
irrevocably waive, to the fullest extent each may effectively do so under
applicable law, any objection which each party hereto may now or hereafter have
to the laying of the venue of any such suit, action or proceeding brought in any
such court and any claim that any such suit, action or proceeding has been
brought in an inconvenient forum. Nothing herein shall affect the right of the
parties hereto to serve process in any other manner permitted by law or to
commence legal proceedings or otherwise proceed against the other party in any
other jurisdiction.
17. Business Days. If any time period for giving notice or taking action
hereunder expires on a day which is a Saturday, Sunday or legal holiday in the
state in which the Company's chief executive office is located, the time period
shall automatically be extended to the business day immediately following such
Saturday, Sunday or legal holiday (a "Business Day").
18. Descriptive Headings. The descriptive headings of this Agreement are
inserted for convenience only and do not constitute a part of this Agreement.
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IN WITNESS WHEREOF, the Grantor and the Grantee have duly executed this
Agreement, to be effective as of January 26, 2002.
SF HOLDINGS GROUP, INC.
By: /s/ Xxxx X. Xxxxxxx
-------------------------
Name: Xxxx X. Xxxxxxx
Title: Senior Vice President
JEFFERIES & COMPANY, INC.
By: /s/ Xxxx Xxxx
-------------------------
Name: Xxxx Xxxx
Title: Executive Vice President
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Exhibit A
NOTICE OF EXERCISE
This Notice of Exercise ("Notice") is delivered pursuant to Section 2 of
that certain Option Agreement (the "Agreement") dated as of January 26, 2002, by
and between SF Holdings Group, Inc., a Delaware corporation ("Grantor"), and
Jefferies & Company, Inc. (the "Grantee").
By executing and delivering this Notice, accompanied by the cancelled
Series A Notes (as defined in Section 1 of the Agreement), the Grantee hereby
exercises the option granted to the Grantee by Grantor under the terms and
conditions of the Agreement.
IN WITNESS WHEREOF, this Notice has been executed as of __________,
200___.
JEFFERIES & COMPANY, INC.
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
Exhibit B
STOCKHOLDERS AGREEMENT
THIS STOCKHOLDERS AGREEMENT is made as of , ____, by and among [Name
of Company], a Delaware corporation (the "Company"), SF Holdings Group, Inc., a
Delaware corporation (the "Original Stockholder"), and each of the Persons
listed on the Schedule of Investor Stockholders attached hereto (the "Investor
Stockholders"). The Investor Stockholders and the Original Stockholder are
collectively referred to as the "Stockholders" and each individually as a
"Stockholder." Unless otherwise provided in this agreement, capitalized terms
used herein are defined in paragraph 9 hereof.
WHEREAS, under the terms of that certain Option Agreement dated
January 26, 2002, by and among Jefferies & Company, Inc. ("Jefferies") and the
Original Stockholder (the "Option Agreement"), the Investor Stockholders have
purchased shares of equity securities of the Company; and
WHEREAS, the Investor Stockholders seek certain assurances set forth
in this Agreement in connection with their equity ownership in the Company, and
the Company and Original Stockholder, in consideration for the Investor
Stockholders' purchase of shares of equity securities of the Company, have
agreed to provide such assurances;
NOW, THEREFORE, in consideration of the mutual covenants contained
herein and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties to this Agreement hereby agree as
follows:
1. Board of Directors.
(a) Immediately upon exercise of the Option (as provided in the
Option Agreement) and until the provisions of this paragraph 1 cease to
be effective, the Original Stockholder shall vote all of its
Stockholder Shares which are voting shares and any other voting
securities of the Company over which such holder has voting control and
shall take all other desirable actions within its control (whether in
its 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 and execution of written consents in lieu of meetings), and
the Company shall take all reasonably necessary or desirable actions
within its control (including, without limitation, calling special
board and stockholder meetings), so that:
(i) the authorized number of directors on the board of directors
of the Company (the "Board") shall be established at five
directors;
(ii) the following individuals shall be elected to the Board:
(A) two individuals designated by the Majority Investor
Stockholders (the "Investor Stockholder Directors");
(B) two individuals designated by the Original Stockholder
(the "Original Stockholder Directors"); and
(C) the remaining director selected jointly by the
Majority Investor Stockholders, on the one hand, and
the Original Stockholder, on the other hand (the
"Joint Director");
(iii) the composition of the board of directors of each of the
Company's Subsidiaries (each a "Sub Board") shall be the
same as that of the Board;
(iv) the removal from the Board or a Sub Board (with or without
cause) of any representative designated hereunder shall be
at the written request of the person or persons which
designated such representative, respectively, but only upon
such written request and, except as provided herein, under
no other circumstances (provided that, in the case of the
Joint Director, such removal to be only at the joint request
of both the Majority Investor Stockholders and the Original
Stockholder);
(v) notwithstanding the provisions of subparagraph (iv) above,
if at any time upon or following the exercise of the Option
and until the termination of this Agreement, the Company is
in default under the provisions of Section 4.27 of the
Guaranty Agreement, the Investor Stockholders shall be
entitled to remove from the Board and each Sub Board any
Original Stockholder Director or Joint Director; and
(vi) in the event that any director ceases to serve as a member
of the Board or a Sub Board during his term of office, the
resulting vacancy on the Board or the Sub Board shall be
filled by the group that appointed the individual that
ceased to serve as a director, as provided hereunder;
provided that the Investor Stockholders shall be entitled to
designate individuals to fill any vacancy on the Board or a
Sub Board resulting from the removal of representatives as
provided in subparagraph (v) above. The Company and the
Stockholders hereby agree that, if necessary, the Bylaws of
the Company shall be amended to conform to the terms set
forth in this Section 1.
The Company and the Stockholders agree that upon exercise of
the Option that they shall take such actions as may be
necessary or appropriate in order to cause the Board and the
Sub Boards immediately to be reconstituted as set forth above.
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(b) the Company shall pay the reasonable out-of-pocket expenses
incurred by each director in connection with attending the meetings of
the Board, any Sub Board and any committee thereof.
(c) The provisions of this paragraph 1 shall terminate
automatically and be of no further force and effect upon a Public
Offering.
(d) If any party fails to designate a representative to fill a
directorship pursuant to the terms of this paragraph 1, the election of
an individual to such directorship shall be accomplished in accordance
with the Company's bylaws and applicable law.
2. Representations and Warranties. The Original Stockholder represents
and warrants that (i) such Original Stockholder is the record owner of the
number of Stockholder Shares set forth opposite its name on the signature page
of this agreement, (ii) this Agreement has been duly authorized, executed and
delivered by such Original Stockholder and constitutes the valid and binding
obligation of such Original Stockholder, enforceable in accordance with its
terms and (iii) such Original Stockholder has not granted and is not a party to
any proxy, voting trust or other agreement which is inconsistent with, conflicts
with or violates any provision of this Agreement. No holder of Stockholder
Shares shall grant any proxy or become party to any voting trust or other
agreement which is inconsistent with, conflicts with or violates any provision
of this Agreement.
3. Restrictions on Transfer of Stockholder Shares.
(a) Transfer of Stockholder Shares. Except pursuant to the
provisions of this paragraph 3 or as otherwise set forth in this
Agreement or pursuant to a Public Sale, no holder of Stockholder Shares
shall sell, transfer, assign, pledge or otherwise dispose of (whether
with or without consideration and whether voluntarily or involuntarily
or by operation of law) (a "Transfer") any interest in his, her or its
Stockholder Shares; provided that in no event shall any Transfer of
Stockholder Shares pursuant to this paragraph 3 be made for any
consideration other than cash payable upon consummation of such
Transfer or in installments over time and no Stockholder Shares may be
pledged (except for a pledge pursuant to the provisions of the Pledge
Agreement or a pledge of Stockholder Shares by a transferee to secure
indebtedness to the transferor thereof hereunder). No holder of
Stockholder Shares shall consummate any Transfer (other than a Public
Sale) until 30 days after the later of the delivery to the Company and
the other Stockholders of such Stockholder's Offer Notice (as defined
in Section 4) or Sale Notice, as defined below, (if any), unless the
parties to the Transfer have been finally determined pursuant to this
paragraph 3 prior to the expiration of such 30-day period (the
"Election Period").
(b) Participation Rights. (i) At least 30 days prior to any
Transfer of Stockholder Shares (other than a Public Sale or a Transfer
to a Permitted Transferee), the holder of Stockholder Shares making
such Transfer (the "Transferring Stockholder") shall deliver a written
notice (the "Sale Notice") to the Company and the other Stockholders
holding the same class of Stockholder Shares (the "Other
Stockholders"),
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specifying in reasonable detail the identity of the prospective
transferee(s), the number of shares to be transferred and the terms and
conditions of the Transfer (which notice may be the same notice and
given at the same time as the Offer Notice under paragraph 4). The
Other Stockholders may elect to participate in the contemplated
Transfer at the same price per share and on the same terms by
delivering written notice to the Transferring Stockholder within 15
days after delivery of the Sale Notice. If any Other Stockholders have
elected to participate in such Transfer, the Transferring Stockholder
and such Other Stockholders shall be entitled to sell in the
contemplated Transfer, at the same price and on the same terms a number
of Stockholder Shares equal to the product of (i) the quotient
determined by dividing the percentage of Stockholder Shares owned by
such Person by the aggregate percentage of Stockholder Shares owned by
the Transferring Stockholder and the Other Stockholders participating
in such sale and (ii) the number of Stockholder Shares to be sold in
the contemplated Transfer.
For example, if the Sale Notice contemplated a sale of 100
Stockholder Shares by the Transferring Stockholder, and if the
Transferring Stockholder at such time owns 30% of all Stockholder
Shares and if one Other Stockholder elects to participate and owns
20% of all Stockholder Shares, the Transferring Stockholder would be
entitled to sell 60 shares (30% / 50% x 100 shares) and the Other
Stockholder would be entitled to sell 40 shares (20% / 50% x 100
shares).
Each Transferring Stockholder shall use reasonable best efforts to
obtain the agreement of the prospective transferee(s) to the
participation of the Participating Stockholders in any contemplated
Transfer, and no Transferring Stockholder shall transfer any of his,
her or its Stockholder Shares to any prospective transferee unless (A)
the prospective transferee(s) agrees to allow the participation of the
Participating Stockholders or (B) the Transferring Stockholder agrees
to purchase from the Participating Stockholders the number of
Stockholders Shares which the Participating Stockholders would have
been entitled to sell pursuant to this paragraph 3(b) at the same price
and on the same terms.
Each Stockholder transferring Stockholder Shares pursuant to this
paragraph 3(b) shall pay his, her or its pro rata share (based on the
number of Stockholder Shares to be sold) of the expenses incurred by
the Stockholders in connection with such transfer and shall be
obligated to join on a pro rata basis (based on the number of
Stockholder Shares to be sold) in any indemnification or other
obligations that the Transferring Stockholder agrees to provide in
connection with such transfer (other than any such obligations that
relate specifically to a particular Stockholder such as indemnification
with respect to representations and warranties given by a Stockholder
regarding such Stockholder's title to and ownership of Stockholder
Shares); provided that no holder shall be obligated in connection with
such Transfer to agree to indemnify or hold harmless the transferees
with respect to an amount in excess of the net cash proceeds paid to
such holder in connection with such Transfer.
(c) Permitted Transfers. The restrictions set forth in this
paragraph 3 shall not apply with respect to any Transfer of Stockholder
Shares by any Stockholder (i) pursuant
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to applicable laws of descent and distribution or among such
Stockholder's Family Group, (ii) if a non-individual person, among its
Affiliates, limited partners, members or fiduciary accounts, (iii) to
any Person in a Public Sale or a Sale of the Company, or (iv) that is
an Investor Stockholder, to any TCW/Crescent Investor, Audax or the
Company (collectively referred to herein as "Permitted Transferees");
provided that, in the case of a Transfer pursuant to clause (i) or (ii)
the restrictions contained in this paragraph 3 shall continue to be
applicable to the Stockholder Shares after any such Transfer and
provided further that the transferees of such Stockholder Shares shall
have agreed in writing to be bound by the provisions of this Agreement
affecting the Stockholder Shares so transferred. Notwithstanding the
foregoing, no party hereto shall avoid the provisions of this Agreement
by making one or more transfers to one or more Permitted Transferees
and then disposing of all or any portion of such party's interest in
any such Permitted Transferee.
(d) Termination of Restrictions. The restrictions on the Transfer of
Stockholder Shares set forth in this paragraph 3 shall continue with
respect to each Stockholder Share until the date on which such
Stockholder Share has been transferred in a Public Sale, the
consummation of a Public Offering, or pursuant to the definition of
"Stockholder Shares" in Section 9 hereof.
4. First Refusal Right. At least 30 days prior to making any Transfer
of any Stockholder Shares (other than a Public Sale or a Permitted Transfer
under Section 3(c) above), a Stockholder (the "Transferring Stockholder") shall
deliver a written notice (an "Offer Notice") to the Company and each other
Stockholder. The Offer Notice shall disclose in reasonable detail the proposed
number of Stockholder Shares to be transferred, the proposed terms and
conditions of the Transfer and the identity of the prospective transferee(s) (if
known). First, the Company may elect to purchase all (but not less than all) of
the Stockholder Shares specified in the Offer Notice at the price and on the
terms specified therein by delivering written notice of such election to the
Transferring Stockholder and the other Stockholders as soon as practical but in
any event within ten days after the delivery of the Offer Notice. If the Company
has not elected to purchase all of the Stockholder Shares within such ten-day
period, each Stockholder (together with the Company if the Stockholders electing
to purchase Stockholder Shares consent to the Company's participation in such
purchase) may elect to purchase all (but not less than all) of his, her or its
Pro Rata Share (as defined below) of the Stockholder Shares specified in the
Offer Notice at the price and on the terms specified therein by delivering
written notice of such election to the Transferring Stockholder as soon as
practical but in any event within 15 days after delivery of the Offer Notice.
Any Stockholder Shares not elected to be purchased by the end of such 15-day
period shall be reoffered for the five-day period prior to the expiration of the
Election Period by the Transferring Stockholder on a pro rata basis to the
Stockholders who have elected to purchase their Pro Rata Share and, if there are
any such Stockholder Shares remaining after such allocation, the Company shall
have the right to purchase such remaining Stockholder Shares; provided that in
each case the Transferring Stockholder receives notice of such Stockholder's
and/or the Company's election during the Election Period.
If the Company or any Stockholder elects to purchase Stockholder
Shares from the Transferring Stockholder, the transfer of such shares shall be
consummated as soon as practical after the delivery of the election notice(s) to
the Transferring Stockholder, but in any
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event within 15 days after the expiration of the Election Period. To the extent
that the Company and the Stockholders other than the Transferring Stockholder
have not elected to purchase all of the Stockholder Shares being offered, the
Transferring Stockholder may, within 90 days after the expiration of the
Election Period and subject to the provisions of paragraph 3 above, transfer
such Stockholder Shares to one or more third parties at a price no less than the
price per share specified in the Offer Notice and on other terms no more
favorable to the transferees thereof than offered to the Company and the
Stockholders in the Offer Notice. Any Stockholder Shares not transferred within
such 90-day period shall be reoffered to the Company and the Stockholders other
than the Transferring Stockholder under this paragraph 4 prior to any subsequent
Transfer. The purchase price specified in any Offer Notice shall be payable
solely in cash at the closing of the transaction or in installments over time.
Other than Permitted Transfers under Section 3(c) and pledges permitted pursuant
to the parenthetical set forth in the proviso of the initial sentence of Section
3(a), no Stockholder Shares may be pledged without the prior written consent of
the Stockholders which consent may be withheld in their sole discretion and
except on terms and conditions satisfactory to the Original Stockholder. Each
Stockholder's "Pro Rata Share" shall be based upon such Stockholder's
proportionate ownership of all Stockholder Shares owned by the Stockholders.
The provisions of this paragraph 4 shall terminate automatically and
be of no further force and effect upon a Public Offering.
5. First Offer Rights.
(a) Except as set forth in subparagraph (b) below, the Company
shall not issue, sell or otherwise transfer for consideration (an
"Issuance") any common stock or other equity securities or rights to
acquire common stock or other equity securities unless, at least 30
days and not more than 60 days prior to such Issuance, the Company
notifies each holder of Stockholder Shares in writing of the Issuance
(including the price, the proposed purchasers thereof and the other
terms thereof) and grants to each holder of Stockholder Shares the
right (the "Right") to subscribe for and purchase such additional
securities so issued at the same price and on the same terms as issued
in the Issuance such that, after giving effect to the Issuance and
exercise of the Right, the common stock or other equity securities
(including, for purposes of this calculation, the issuance of common
stock or other equity securities upon conversion, exchange or exercise
of all securities so convertible, exchangeable or exercisable then
outstanding) owned by such holder shall represent the same percentage
of the outstanding common stock or other equity securities (including,
for purposes of this calculation, the issuance of common stock or other
equity securities upon conversion, exchange or exercise of all
securities so convertible, exchangeable or exercisable then
outstanding) as was owned by such holder prior to the Issuance, or such
lesser amount designated by such holder. If the Company proposes to
sell its equity securities in a strip of shares of Common Stock or any
combination thereof (a "Strip"), the Right may only be exercised -----
to purchase a portion of such Strip. The Right may be exercised by such
holder at any time by written notice given to the Company within 15
days after the giving to such holder of the notice from the Company
referred to above. The closing of the purchase and sale pursuant to the
exercise of the Right shall occur at least 15 days after the holder
gives notice of the exercise of the Right and concurrently with the
closing of the Issuance. In the event that
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the consideration received by the Company in connection with an
Issuance is property other than cash, each holder of Stockholder Shares
may, at his, her or its election, pay the purchase price for such
additional securities in such property or solely in cash. In the event
that any such holder elects to pay cash, the amount thereof shall be
determined based on the fair value of the consideration received or
receivable by the Company in connection with the Issuance.
(b) Notwithstanding the foregoing, the Right shall not apply to (i)
the issuance of common stock or other equity securities (or securities
convertible into or exchangeable for, or options to purchase, common
stock or other equity securities) pro rata to all holders of common
stock or other equity securities, as a dividend on, subdivision of or
other distribution in respect of, the common stock or other equity
securities in accordance with the Company's bylaws, (ii) the issuance
of common stock or other equity securities pursuant to a Public
Offering or (iii) the issuance of common stock or other equity
securities as consideration in connection with the acquisition (by
merger, consolidation, purchase, reorganization or otherwise) of a
company, assets or a business.
(c) The provisions of this paragraph 5 will terminate upon the
consummation of a Qualified Public Offering.
6. Sale of the Company.
(a) If the Board, the Majority Investor Stockholders, and the
holders of a majority of the Stockholder Shares approve a Sale of the
Company in a bona fide, arms-length transaction (an "Approved Sale"),
all holders of Stockholder Shares shall consent to and raise no
objections against the Approved Sale of the Company, and if the
Approved Sale of the Company is structured as a sale of stock, the
holders of Stockholder Shares shall agree to sell their Stockholder
Shares and surrender their stock options, if any, on the terms and
conditions approved by the Board, the Majority Investor Stockholders
and the holders of a majority of the Stockholder Shares. The
Stockholders shall take all desirable actions in connection with the
consummation of the Approved Sale of the Company.
(b) The obligations of the holders of Stockholder Shares with
respect to the Approved Sale of the Company are subject to the
satisfaction of the following conditions: (i) upon the consummation of
the Approved Sale, all of the holders of shares of Common Stock shall
receive the same form and amount of consideration per share of Common
Stock, or if any holders of Common Stock are given an option as to the
form and amount of consideration to be received, all holders shall be
given the same option; and (ii) all holders of rights to acquire shares
of Common Stock shall be given an opportunity to either (A) exercise
such rights prior to the consummation of the Approved Sale and
participate in such sale as holders of shares of Common Stock or (B)
upon the consummation of the Approved Sale, receive in exchange for
such rights consideration equal to the amount determined by multiplying
(1) the same amount of consideration per share of Common Stock received
by the holders of shares of Common Stock in connection with the
Approved Sale less the exercise price per share of Common Stock of
7
such rights to acquire shares of Common Stock by (2) the number of
shares of Common Stock represented by such rights.
(c) If the Company or the holders of the Company's securities enter
into any negotiation or transaction for which Rule 506 (or any similar
rule then in effect) promulgated by the Securities Exchange Commission
pursuant to Regulation D may be available with respect to such
negotiation or transaction (including a merger, consolidation or other
reorganization), the Stockholders (other than those qualifying as
"accredited investors" under such Rule) shall, at the request of the
Company, appoint a "purchaser representative" (as such term is defined
in Rule 501) acceptable to the Company. If any holder of Stockholder
Shares appoints a purchaser representative designated by the Company,
the Company shall pay the fees of such purchaser representative.
However, if any holder of Stockholder Shares declines to appoint the
purchaser representative designated by the Company, such holder shall,
if required, appoint another purchaser representative = acceptable to
the Company, and such holder shall be responsible for the fees of the
purchaser representative so appointed.
(d) All holders of Stockholder Shares shall bear their pro-rata
share (based upon the number of shares sold) of the costs of any sale
of Stockholder Shares pursuant to an Approved Sale to the extent such
costs are incurred for the benefit of all holders of Stockholder Shares
and are not otherwise paid by the Company or the acquiring party. Costs
incurred by any Stockholders on their own behalf shall not be
considered costs of the transaction hereunder.
(e) The provisions of this paragraph 6 shall terminate upon the
completion of a Qualified Public Offering or the Sale of the Company.
7. Legend. Each certificate evidencing Stockholder Shares and each
certificate issued in exchange for or upon the transfer of any Stockholder
Shares (if such shares remain Stockholder Shares after such transfer) shall be
stamped or otherwise imprinted with a legend in substantially the following
form:
"The securities represented by this certificate are subject to a
Stockholders Agreement dated as of _________________, among the
issuer of such securities (the "Company") and certain of the
Company's stockholders, as amended and modified from time to time. A
copy of such Stockholders Agreement shall be furnished without
charge by the Company to the holder hereof upon written request."
The Company shall imprint such legend on certificates evidencing Stockholder
Shares outstanding as of the date hereof. The legend set forth above shall be
removed from the certificates evidencing any shares which cease to be
Stockholder Shares in accordance with paragraph 9 hereof or upon termination of
this Agreement.
8. Transfer. Prior to transferring any Stockholder Shares (other than a
Public Sale or a Sale of the Company) to any Person, the transferring holder of
Stockholder Shares
8
shall cause the prospective transferee to be bound by this Agreement and to
execute and deliver to the Company and the other holders of Stockholder Shares a
counterpart of this Agreement.
9. Definitions.
(a) "Affiliate" of a Stockholder means any other Person, directly
or indirectly controlling, controlled by or under common control with
such Stockholder, any partner of a Person that is a partnership or any
member of a Person that is a limited liability company.
(b) "Audax" means, collectively, Audax Mezzanine Fund, L.P., a
Delaware limited partnership, Audax Co-Invest, L.P., a Delaware limited
partnership, Audax Trust Co-Invest, L.P., a Delaware limited
partnership, or any of their Affiliates.
(c) "Common Stock" means shares of Common Stock, no par value, of
the Company.
(d) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
(e) "Family Group" means a Stockholder's spouse and descendants
(whether natural or adopted) and any trust solely for the benefit of
the Stockholder and/or the Stockholder's spouse and/or descendants.
(f) "Guaranty Agreement" means that certain Guaranty Agreement
dated January 26, 2002, among the Original Stockholder, the Investor
Stockholders, and certain other Persons party thereto.
(g) "Initial Investor Stockholders" means the Investor Stockholders
to whom Stockholder Shares were originally issued pursuant to the
conversion of the Series A Notes and any Permitted Transferees.
(h) "Investor Stockholders" means, collectively, Jefferies and any
transferee, including but not limited to the TCW/Crescent Investors or
Audax, who, from time to time, acquires Stockholder Shares from an
Investor Stockholder or pursuant to the conversion of a Series A Note
and becomes party to this Agreement by executing and delivering to the
Company an instrument in a form reasonably satisfactory to the Company
pursuant to which such Person agrees to be bound by the terms of this
Agreement to the same extent as Jefferies, together with an amendment
to the Schedule of Investor Stockholders reflecting such new Investor
Stockholder. Such amended Schedule of Investor Stockholders shall
replace the then-current Schedule of Investor Stockholders.
(i) "Majority Investor Stockholders" means holders of a majority of
the then outstanding Stockholder Shares of all Investor Stockholders.
(j) "Participating Stockholders" means any Other Stockholders who
elect to participate in a Transfer pursuant to the provisions of
paragraph 3 hereof.
9
(k) "Person" means an individual, a partnership, a corporation, a
limited liability company, an association, a joint stock company, a
trust, a joint venture, an unincorporated organization and a
governmental entity or any department, agency or political subdivision
thereof.
(l) "Pledge Agreement" means that certain Pledge Agreement dated
January 26, 2002, by the Original Stockholder in favor of TCW/Crescent
Mezzanine, L.L.C., in its capacity as collateral agent for the
purchasers party to the Guaranty Agreement.
(m) "Public Offering" means the sale in an underwritten public
offering registered under the Securities Act of shares of the Company's
Common Stock.
(n) "Public Sale" means any sale of Stockholder Shares to the
public pursuant to an offering registered under the Securities Act or
to the public through a broker, dealer or market maker pursuant to the
provisions of Rule 144 adopted under the Securities Act.
(o) "Qualified Public Offering" means a Public Offering having an
aggregate offering value of at least $25 million (in a sale or series
of sales).
(p) "Sale of the Company" means (i) the sale, lease, transfer,
conveyance or other disposition (other than by way of merger or
consolidation), in one or a series of related transactions, of all or
substantially all of the assets of the Company and its subsidiaries,
taken as a whole to any "person" (as such term is used in Section
13(d)(3) of the Exchange Act) or "group" (as defined in Sections
13(d)(3) and 14(d)(2) of the Exchange Act) other than the Original
Stockholder, (ii) the consummation of any transaction (including,
without limitation, any merger or consolidation) the result of which is
that any "person" or "group" (as defined above), other than the
Original Stockholder and the Initial Investor Stockholders,
collectively, become the "beneficial owner" (as such term is defined in
Rule 13d-3 and Rule 13d-5 under the Exchange Act), directly or
indirectly, of a direct or indirect majority in interest (more than
50%) of the Capital Stock or the Voting Stock (each as defined in the
Guaranty Agreement) of the Company.
(q) "Securities Act" means the Securities Act of 1933, as amended
from time to time.
(r) "Series A Note" means the Series A Secured Notes due January
24, 2009, of Newcup, L.L.C., a Delaware limited liability company.
(s) "Stockholder Shares" means (i) any shares of Common Stock
purchased or otherwise acquired by any Stockholder and (ii) any shares
of Common Stock issued or issuable with respect to the securities
referred to in clause (i) above by way of stock dividend or stock split
or in connection with a combination of shares, recapitalization,
merger, consolidation or other reorganization. For purposes of this
Agreement, any Person who holds rights to acquire Stockholder Shares,
either by option, warrants or conversion, shall be deemed to be the
holder of the Stockholder Shares issuable directly or indirectly upon
conversion or exercise thereof and regardless of any restriction or
10
limitation on the conversion or exercise thereof. As to any particular
Stockholder Shares, such shares shall cease to be Stockholder Shares
when they have been (a) effectively registered under the Securities Act
and disposed of in accordance with the registration statement covering
them or (b) distributed to the public through a broker, dealer or
market maker pursuant to Rule 144 under the Securities Act (or any
similar provision then in force).
(t) "Subsidiary" means, with respect to any Person, any
corporation, limited liability company, partnership, association or
other business entity of which (i) if a corporation, a majority of the
total voting power of shares of stock entitled (without regard to the
occurrence of any contingency) to vote in the election of directors,
managers or trustees thereof is at the time owned or controlled,
directly or indirectly, by such Person or one or more of the other
Subsidiaries of that Person or a combination thereof, or (ii) if a
limited liability company, partnership, association or other business
entity, a majority of the limited liability company, partnership or
other similar ownership interests thereof is at the time owned or
controlled, directly or indirectly, by any Person or one or more
Subsidiaries of that Person or a combination thereof. For purposes
hereof, a Person or Persons shall be deemed to have a majority
ownership interest in a limited liability company, partnership,
association or other business entity if such Person or Persons shall be
allocated a majority of limited liability company, partnership,
association or other business entity gains or losses or shall be or
control the managing director or general partner of such limited
liability company, partnership, association or other business entity.
(u) "TCW/Crescent Investors" means, collectively, TCW/Crescent
Mezzanine Partners III, L.P., a Delaware limited partnership, and
TCW/Crescent Mezzanine Trust III, a Delaware business trust, or any of
their Affiliates (each, individually, a "TCW/Crescent Investor").
10. Transfers in Violation of Agreement. Any Transfer or attempted
Transfer of any Stockholder Shares in violation of any provision of this
Agreement shall be void, and the Company shall not record such Transfer on its
books or treat any purported transferee of such Stockholder Shares as the owner
of such shares for any purpose.
11. Amendment and Waiver. Except as otherwise provided herein, no
modification, amendment or waiver of any provision of this Agreement shall be
effective against the Company or the Stockholders unless such modification,
amendment or waiver is approved in writing by the Company, the Majority Investor
Stockholders and the holders of at least a majority of the Stockholder Shares,
respectively; provided that no modification, amendment or waiver which adversely
affects the rights or interests of the Investor Stockholders or confers
additional material rights with respect to any other holders of Stockholder
Shares shall be effective unless approved by the Majority Investor Stockholders.
The failure of any party to enforce any of the provisions of this Agreement
shall in no way be construed as a waiver of such provisions and shall not affect
the right of such party thereafter to enforce each and every provision of this
Agreement in accordance with its terms.
11
12. Severability. Whenever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be invalid,
illegal or unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability shall not affect
the validity, legality or enforceability of any other provision of this
Agreement in such jurisdiction or affect the validity, legality or
enforceability of any provision in any other jurisdiction, but this Agreement
shall be reformed, construed and enforced in such jurisdiction as if such
invalid, illegal or unenforceable provision had never been contained herein.
13. Entire Agreement. Except as otherwise expressly set forth herein,
this Agreement embodies the complete agreement and understanding among the
parties hereto with respect to the subject matter hereof and supersedes and
preempts any prior understandings, agreements or representations by or among the
parties, written or oral, which may have related to the subject matter hereof in
any way.
14. Successors and Assigns. Except as otherwise provided herein, this
Agreement shall bind and inure to the benefit of and be enforceable by the
Company and its successors and assigns and the Stockholders and any subsequent
holders of Stockholder Shares and the respective successors and assigns of each
of them, so long as they hold Stockholder Shares.
15. Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be an original and all of which taken together
shall constitute one and the same agreement.
16. Remedies. The Company, the Original Stockholder, and the Investor
Stockholders shall be entitled to enforce their rights under this Agreement
specifically, to recover damages by reason of any breach of any provision of
this Agreement and to exercise all other rights existing in their favor. The
parties hereto agree and acknowledge that money damages would not be an adequate
remedy for any breach of the provisions of this Agreement and that the Company,
the Investor Stockholders and the Original Stockholder may in his, her or its
sole discretion apply to any court of law or equity of competent jurisdiction
for specific performance and/or injunctive relief (without posting a bond or
other security) in order to enforce or prevent any violation of the provisions
of this Agreement.
17. Notices. Any notice provided for in this Agreement shall be in
writing and shall be either personally delivered, or mailed first class mail
(postage prepaid) or sent by reputable overnight courier service (charges
prepaid) to the Company at the address set forth below and to any other
recipient at the address indicated on the schedules hereto and to any subsequent
holder of Stockholder Shares subject to this Agreement at such address as
indicated by the Company's records, or at such address or to the attention of
such other person as the recipient party has specified by prior written notice
to the sending party. Notices shall be deemed to have been given hereunder when
delivered personally, three days after deposit in the U.S. mail and one business
day after deposit with a reputable overnight courier service. The Company's
address is:
[ ]
___________________
___________________
___________________
___________________
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18. Governing Law; Submission to Jurisdiction. The General Corporation
Law of the State of Delaware shall govern all issues concerning the relative
rights of the Company and the Stockholders. All other questions concerning the
construction, validity, enforcement and interpretation of this Agreement shall
be governed by the internal law of the State of New York, without giving effect
to any choice of law or conflict of law provision or rule (whether of the State
of New York or any other jurisdictions) that would cause the application of the
laws of any jurisdictions other than the State of New York. The parties hereby
irrevocably submit to the jurisdiction of any New York State Court or any
Federal court sitting in the Borough of Manhattan in the City of New York in
respect of any suit, action or proceeding arising out of or relating to this
Agreement and the Warrant and each party hereto irrevocably accepts for itself
and in respect of its property, generally and unconditionally, jurisdiction of
the aforesaid courts. The parties irrevocably waive, to the fullest extent each
may effectively do so under applicable law, any objection which each party
hereto may now or hereafter have to the laying of the venue of any such suit,
action or proceeding brought in any such court and any claim that any such suit,
action or proceeding has been brought in an inconvenient forum. Nothing herein
shall affect the right of the parties hereto to serve process in any other
manner permitted by law or to commence legal proceedings or otherwise proceed
against the other party in any other jurisdiction.
19. Business Days. If any time period for giving notice or taking
action hereunder expires on a day which is a Saturday, Sunday or legal holiday
in the state in which the Company's chief-executive office is located, the time
period shall automatically be extended to the business day immediately following
such Saturday, Sunday or legal holiday.
20. Descriptive Headings. The descriptive headings of this Agreement
are inserted for convenience only and do not constitute a part of this
Agreement.
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IN WITNESS WHEREOF, the parties hereto have executed this
Stockholders Agreement on the day and year first above written.
[___________________________________
By:
---------------------------------------
Its:
--------------------------------------
SF HOLDINGS GROUP, INC.
By:
---------------------------------------
Its:
--------------------------------------
Address:
------------------------------
Number of Stockholder Shares Owned:
JEFFERIES & COMPANY, INC.
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
14
SCHEDULE OF INVESTOR STOCKHOLDERS
---------------------------------
Name and Address Number of Stockholder Shares
---------------- ----------------------------
Jefferies & Company, Inc. __________
00000 Xxxxx Xxxxxx Xxxx.
Xxxxx 0000
Xxx Xxxxxxx, XX 00000
Attention: ____________________
Telephone No.: (___) __________
Telecopy No.: (___) ___________
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