This STOCKHOLDERS' RIGHTS AGREEMENT is made and entered into
as of March 12, 1998, among SF Holdings Group, Inc., a Delaware corporation
(the "Company"), and the persons listed on Schedule I attached hereto.
WHEREAS, pursuant to an Investment Agreement dated as of December 29,
1997 between American Industrial Partners Capital Fund L.P. ("AIP"), the other
stockholders (together with AIP, the "Stockholders") of Sweetheart Holdings
Inc. ("Sweetheart"), the Company, and Creative Expressions Group, Inc., the
Company is simultaneously herewith acquiring (the "Acquisition") 48% of the
Class A Common Stock and 100% of the Class B Common Stock of Sweetheart;
WHEREAS, in connection with the Acquisition, the Stockholders are
acquiring the number of shares of Exchangeable Preferred Stock (as defined
herein) and Class C Common Stock (as defined herein) of the Company set forth
opposite their respective names on Schedule I hereto; and
WHEREAS, in connection with the Acquisition, under certain
circumstances, the Stockholders may acquire Exchange Warrants (as defined
herein) to acquire the additional number of shares of Class C Common Stock set
forth opposite their respective names on Schedule I hereto.
NOW, THEREFORE, in consideration of the premises, covenants
and agreements contained herein, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto, intending to be legally bound hereby, agree
as follows:
SECTION 1. DEFINITIONS. As used in this Agreement, the
following terms shall have the following meanings:
"Affiliate" of any Person shall mean any other Person who
either directly or indirectly is in control of, is controlled by, or is under
common control with such Person.
"Business Day" shall mean any Monday, Tuesday, Wednesday,
Thursday or Friday that is not a day on which banking institutions in the City
of New York are authorized by law, regulation or executive order to close.
"Class C Common Stock" shall mean the shares of Class C
Common Stock, par value $.001 per share, of the Company.
"Closing Date" shall mean the date first above written.
"Closing Securities" shall mean the shares of Exchangeable
Preferred Stock (including any Subordinated Notes) and Class C Common Stock
acquired by the Stockholders.
"Discount Notes" shall mean the 12.75% Senior Secured
Discount Notes due 2008 of the Company.
"Exchangeable Preferred Stock" shall mean the shares of
Exchangeable Preferred Stock, par value $.001 per share, of the Company.
"Exchange Act" shall mean the Securities Exchange Act of
1934, as amended (or any similar successor federal statute), and the rules and
regulations thereunder, as the same are in effect from time to time.
"Exchange Warrants" shall mean warrants to purchase an
aggregate of 960,000 shares of Class C Common Stock, subject to adjustment as
set forth therein.
"Person" shall mean an individual, partnership, corporation,
limited liability company, joint venture, trust or unincorporated organization,
a government or agency or political subdivision thereof or any other entity.
"Prospectus" shall mean the prospectus included in any
Registration Statement, as amended or supplemented by a prospectus supplement
with respect to the terms of the offering of any portion of the Registrable
Securities covered by such Registration Statement and by all other amendments
and supplements to the prospectus, including post-effective amendments and all
materials incorporated by reference in such prospectus.
"Registrable Securities" shall mean the Closing Securities,
the Exchange Warrants and the Underlying Stock and any securities issuable,
issued or distributed in respect of any of such securities by way of stock
dividend or stock split or in connection with a combination of shares,
recapitalization, reorganization, merger, consolidation or otherwise.
"Registration Expenses" shall have the meaning set forth in
Section 7 hereof.
"Registration Statement" shall mean any registration
statement under the Securities Act which covers any of the Registrable
Securities pursuant to the provisions of this Agreement, including the
Prospectus, all amendments and supplements to such Registration Statement,
including post-effective amendments, all exhibits and all materials
incorporated by reference in such Registration Statement.
"Rule 415" shall mean Rule 415 promulgated under the
Securities Act, as amended from time to time, or any similar successor rule
thereto that may be promulgated by the SEC.
"SEC" shall mean the Securities and Exchange Commission, or
any other federal agency at the time administering the Securities Act.
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"Securities Act" shall mean the Securities Act of 1933, as
amended (or any similar successor federal statute), and the rules and
regulations thereunder, as the same are in effect from time to time.
"Shelf Registration" shall mean the registration of
securities for sale on a continuous or delayed basis pursuant to Rule 415.
"Shelf Registration Statement" shall mean a Registration
Statement filed in connection with a Shelf Registration.
"Subordinated Notes" shall mean the notes issuable upon
exchange of the Exchangeable Preferred Stock pursuant to the terms thereof.
"Sweetheart Stockholders Agreement" shall mean the Sweetheart
Holdings Inc. Stockholders' Agreement dated as of the date first above written
among Sweetheart, the Company and the Stockholders.
"Underlying Stock" shall mean the shares of Class C Common
Stock issuable upon exercise of the Exchange Warrants and any securities
issuable, issued or distributed in respect of any of such shares by way of
stock dividend or stock split or in connection with a combination of shares,
recapitalization, reorganization, merger, consolidation or otherwise.
"Underwritten Offering" shall mean a registered offering in
which securities of the Company are sold to an underwriter for reoffering to
the public.
SECTION 2. TRANSFER OF SECURITIES.
a. Restraints on Transfer. Except as otherwise provided in
this Agreement, each Stockholder may sell, transfer, pledge, exchange or
otherwise dispose of such Stockholder's Registrable Securities at any time to
any person or entity.
b. Legends. The Stockholders agree that the Company may
cause each certificate representing Registrable Securities to bear the
following legend on the face or reverse side thereof:
"The securities represented by this certificate are subject
to certain transfer restrictions pursuant to a certain
Stockholders' Rights Agreement dated as of March 12, 1998
among the Company and certain of its stockholders. Notice of
such Agreement is hereby given and a copy of it is on file at
the principal office of the Company.
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SECTION 3. REGISTRATION.
a. Shelf. The Company shall prepare, and, on or prior to the
earlier of (i) 90 days after the Closing Date or (ii) the date on which the
Company files a Registration Statement with respect to an exchange offer for
the Discount Notes, file with the SEC a Shelf Registration Statement covering
the resale of the Closing Securities, if any are retained by the Stockholders.
b. Demand. At any time after the Exchange Warrants are issued
to the Stockholders pursuant to the Sweetheart Stockholders' Agreement, AIP, on
behalf of all of the Stockholders, shall have the right to request in writing,
specifying that such request is made pursuant to this Section 3(b), that the
Company effect a registration under the 1933 Act of the Exchange Warrants and
the Underlying Stock and specifying the intended method of disposition thereof
(which may include a continuous or delayed offering). Upon receipt of such
written request, the Company will use its best efforts to effect, as
expeditiously as possible, the registration under the Securities Act of the
Exchange Warrants and the Underlying Stock which the Company has been so
requested to register by the Stockholders (a "Demand Registration"). The
Company shall be obligated to effect only two Demand Registrations pursuant to
this Section 3(b); provided, however, that the Company shall not be required to
file a Registration Statement or, in the case of an Underwritten Offering
pursuant to a Shelf Registration Statement, take any action in connection with
a shelf draw-down within four months of the effectiveness of a prior Demand
Registration Statement which is not a Shelf Registration or the filing of a
final Prospectus in connection with an underwritten offering pursuant to a
Shelf Registration. Upon receipt of any request for registration pursuant to
this Section 3(b), if there are other holders of Class C Common Stock, the
Company shall promptly give written notice of such request to all such other
holders. The Company shall include in the requested registration all securities
requested to be included by such of the other holders as shall make such
request by written notice to the Company delivered within fifteen Business Days
after their receipt of the Company's notice. If the Company shall receive a
request for inclusion in the registration of Registrable Securities of
additional holders, it shall promptly so inform AIP on behalf of all of the
Stockholders.
c. Effectiveness of Registration Statement. The Company
agrees to use its best efforts to (i) cause the Shelf Registration Statement to
become effective as promptly as practicable; (ii) cause the Registration
Statement relating to any Demand Registration to become effective as promptly
as practicable following the demand therefor; (iii) keep thereafter such
Registration Statements effective continuously for the period specified in the
next succeeding sentence; and (iii) prevent the happening of any event of the
kinds described in clauses (2), (3) or (4) of Section 5(a)(ii). The Company
will use its best efforts pursuant to this Section to keep a Registration
Statement continuously effective (except as otherwise permitted under this
Agreement) for a period ending on the earliest of (A) the date which is 180
days after, or, as to a Shelf Registration Statement, the second anniversary
of, the effective date of such Registration Statement (subject to extension as
provided in the final paragraph of Section 5(a)), (B) the date on which all
Registrable Securities covered by such Registration Statement have
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been sold and the distribution contemplated thereby has been completed and (C)
the date on which the Stockholders may sell all of the Registrable Securities
covered by such Registration Statement without restriction pursuant to Rule 144
promulgated under the Securities Act unless the Registration Statement relates
to an underwritten public offering of not less than 50% of the original number
of shares of Underlying Stock (calculated as if the Exchange Warrants had been
exercised on the date hereof).
(d) Inclusion of Other Securities. The Company and any other
holder of the Company's securities who has registration rights may include its
securities in any registration effected pursuant to Section 3; provided,
however, that if the managing underwriter or underwriters of a proposed
Underwritten Offering contemplated thereby advise the holder or holders of
securities to be included in such offering in writing that the total amount or
kind of securities which the Company or any such other holder intends to
include in such proposed public offering is such as would, in the judgment of
the managing underwriter or underwriters, materially adversely affect the
success of the proposed public offering requested by the Stockholders, then the
amount or kind of securities to be offered for the account of the Company or
any such other holder shall be reduced to the extent necessary to reduce the
total amount or kind of securities to be included in such proposed public
offering to the amount or kind recommended by such managing underwriter or
underwriters.
(e) Deferral of Filing. The Company may defer the filing (but
not the preparation) of a Registration Statement required by Section 3(b) until
a date not later than 90 days after the proposed filing date (or, if longer,
120 days after the effective date of the registration statement contemplated by
clause (ii) below) if (i) at the time the Company receives a written request
for a Demand Registration from AIP, the Company or any of its subsidiaries is
engaged in confidential negotiations or other confidential business activities,
disclosure of which would be required in such Registration Statement (but would
not be required if such Registration Statement were not filed) and the Board of
Directors of the Company determines in good faith that such disclosure would be
materially detrimental to the Company and its stockholders or (ii) prior to
receiving a written request for a Demand Registration from AIP, the Board of
Directors of the Company had determined to effect a registered underwritten
public offering of the Company's securities for the Company's account and the
Company had taken substantial steps (including, but not limited to, selecting a
managing underwriter for such offering) and is proceeding with reasonable
diligence to effect such offering and the Board of Directors of the Company
determines in good faith that the filing of a Registration Statement pursuant
to Section 3(b), in light of the intended method of distribution, would
materially adversely affect such offering. A deferral of the filing of a
Registration Statement pursuant to this Section 3(e) shall be lifted and the
requested Registration Statement shall be filed forthwith if, in the case of a
deferral pursuant to clause (i) of the preceding sentence, the negotiations or
other activities are disclosed or terminated, or, in the case of a deferral
pursuant to clause (ii) of the preceding sentence, the proposed registration
for the Company's account is abandoned. In order to defer the filing of a
Registration Statement pursuant to this Section 3(e), the Company shall
promptly (but in any event within ten days), upon determining to seek such
deferral, deliver to AIP, on behalf of all of the Stockholders, a certificate
signed by an executive
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officer of the Company stating that the Company is deferring such filing
pursuant to this Section 3(e) and a general statement of the reason for such
deferral and an approximation of the anticipated delay. Within twenty days
after receiving such certificate, AIP, on behalf of all of the Stockholders,
may withdraw its request for a Demand Registration by giving notice to the
Company; if withdrawn, such request shall be deemed not to have been made for
purposes of this Agreement. The beginning of any deferral period shall be at
least 360 days after the end of any prior deferral period.
SECTION 4. PIGGYBACK REGISTRATION. If the Company at any time
proposes to file a registration statement with respect to Exchangeable
Preferred Stock or Common Stock, whether for its own account (other than a
registration statement on Form S-4 or S-8 (or any successor or substantially
similar form), or pursuant to an employee stock option, stock purchase or
compensation plan) or for the account of a holder of securities of the Company
(a "Requesting Holder"), then the Company shall in each case give written
notice of such proposed filing to AIP, on behalf of all of the Stockholders, at
least twenty Business Days before the anticipated filing date of any such
registration statement by the Company, and such notice shall offer to each
Stockholder the opportunity to have any or all of the Registrable Securities
held by such Person included in such registration statement. AIP, on behalf of
all of the Stockholders shall so advise the Company in writing within fifteen
Business Days after the date of receipt of such notice (which request shall set
forth the amount of Registrable Securities for which registration is
requested), and the Company shall include in such registration statement all
such Registrable Securities so requested to be included therein; provided,
however, that the Company may at any time withdraw or cease proceeding with any
such registration statement if it shall at the same time withdraw or cease
proceeding with the registration of all other securities originally proposed to
be registered. Notwithstanding the foregoing, if the managing underwriter or
underwriters of any such proposed public offering advises the Company in
writing that the total amount or kind of securities which the Stockholders, the
Company and any other persons or entities intend to be included in such
proposed public offering is such as would, in the judgment of the managing
underwriter or underwriters, materially adversely affect the success of such
proposed public offering, then, first, the amount or kind of securities to be
offered for the accounts of any other persons requesting registration of
securities pursuant to rights similar to the rights of the Stockholders under
this Section 4 (other than any Requesting Holder) and, second, the amount or
kind of securities to be offered for the account of the Stockholders shall be
reduced, pro rata among each such category based on the number, amount or kind
of securities to be included in such proposed public offering, to the extent
necessary to reduce the total amount or kind of securities to be included in
such proposed public offering to the amount or kind recommended by such
managing underwriter or underwriters before the securities offered by the
Company or any Requesting Holder are so reduced.
SECTION 5. REGISTRATION PROCEDURES.
(a) General. In connection with the Company's registration
obligations pursuant to Section 3 hereof, the Company will file and/or use its
best efforts to keep effective the relevant Registration Statement to permit
the sale of such securities in accordance with the
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intended method or methods of distribution thereof, and pursuant thereto the
Company will as expeditiously as practicable:
(i) prepare and file with the SEC a new Registration
Statement or such amendments and post-effective amendments to an
existing Registration Statement as may be necessary to keep such
Registration Statement effective for the time period set forth in
Section 3(c), provided that as soon as practicable, but in no event
later than five Business Days before filing such Registration
Statement, any related Prospectus or any amendment or supplement
thereto, other than any amendment or supplement made solely as a
result of incorporation by reference of documents filed with the SEC
subsequent to the filing of such Registration Statement, the Company
shall furnish to AIP, on behalf of all of the Stockholders, and the
underwriters, if any, copies of all such documents proposed to be
filed, which documents shall be subject to the review of AIP and the
underwriters; the Company shall not file any Registration Statement or
amendment thereto or any Prospectus or any supplement thereto (other
than any amendment or supplement made solely as a result of
incorporation by reference of documents filed with the SEC subsequent
to the filing of such Registration Statement) to which the managing
underwriters of the applicable offering, if any, or AIP shall have
reasonably objected in writing within three Business Days after
receipt of such documents on the basis that such Registration
Statement or amendment thereto or Prospectus or supplement thereto
does not comply in all material respects with the requirements of the
Securities Act or that any particular information that is to be
contained in such Registration Statement, amendment, Prospectus or
supplement that relates specifically to such Stockholder or to the
manner of distribution is inaccurate in any material respect, and if
the Company is unable to file any such document due to the objections
of such underwriters or AIP, the Company shall use its best efforts to
cooperate with such underwriters and AIP to prepare, as soon as
practicable, a document that is responsive in all material respects to
the reasonable objections of such underwriters and AIP; cause the
Prospectus to be supplemented by any required Prospectus supplement,
and as so supplemented to be filed pursuant to Rule 424 under the
Securities Act; and comply with the provisions of the Securities Act
applicable to the Company with respect to the disposition of all
Registrable Securities covered by such Registration Statement during
the applicable period in accordance with the intended method or
methods of distribution by the sellers thereof set forth in such
Registration Statement or supplement to the Prospectus;
(ii) notify AIP, on behalf of all of the
Stockholders, and the managing underwriters, if any, promptly (1) when
a new Registration Statement, Prospectus or any Prospectus supplement
or post-effective amendment has been filed, and, with respect to any
new Registration Statement or post-effective amendment, when it has
become effective, (2) of any stop order suspending the effectiveness
of any Registration Statement or the initiation of any proceedings for
that purpose, (3) of the receipt by the Company of any notification
with respect to the suspension of the qualification of the Registrable
Securities for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose and (4) of the
happening of any event which (A) makes any statement
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of a material fact made in any Registration Statement, Prospectus or
any document incorporated therein by reference untrue or which
requires the making of any changes in any Registration Statement,
Prospectus or any document incorporated therein by reference in order
to make the statements therein (in the case of any Prospectus, in the
light of the circumstances under which they were made) not misleading
or (B) would require under applicable law (including without
limitation the rules and regulations of the SEC, the National
Association of Securities Dealers, Inc. or any securities exchange or
quotation system operated by a national securities association on
which the Company's securities are traded or listed) that such
Registration Statement, Prospectus or other document be amended; and
use its best efforts to make such filings, amendments and supplements
and to obtain as promptly as practicable the withdrawal of any order
or other action suspending the effectiveness of any Registration
Statement or suspending the qualification or registration (or
exemption therefrom) of the securities for sale in any jurisdiction;
(iii) if reasonably requested by the managing
underwriter or underwriters or AIP, on behalf of all of the
Stockholders, promptly incorporate in a Prospectus supplement or
post-effective amendment such information as the managing underwriters
and AIP agree should be included therein relating to the sale of the
Registrable Securities, including, without limitation, information
with respect to the aggregate number of Registrable Securities being
sold to such underwriters, the purchase price being paid therefor by
such underwriters and with respect to any other terms of the
Underwritten Offering of the Registrable Securities to be sold in such
offering; and promptly make all required filings of such Prospectus
supplement or post-effective amendment;
(iv) furnish to the Stockholders and each managing
underwriter, without charge, copies of the then effective Registration
Statement and any post-effective amendments thereto, including
financial statements and schedules, all documents incorporated therein
by reference and all exhibits (including those incorporated by
reference);
(v) deliver to the Stockholders and the
underwriters, if any, without charge, as many copies of the then
effective Prospectus (including each prospectus subject to completion)
and any amendments or supplements thereto as such Persons may
reasonably request;
(vi) register or qualify or cooperate with the
Stockholders, the underwriters, if any, and their respective counsel
in connection with the registration or qualification of such
Registrable Securities for offer and sale under the securities or blue
sky laws of such jurisdictions as any Stockholder or any underwriter
reasonably requests in writing and do any and all other acts or things
reasonably necessary or advisable to enable the disposition in such
jurisdictions of the Registrable Securities covered by the then
effective Registration Statement; provided, however, that the Company
will not be
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required to (1) qualify to do business in any jurisdiction where it
would not otherwise be required to qualify, but for this paragraph
(vi) or (2) subject itself to general taxation in any such
jurisdiction;
(vii) cooperate with the Stockholders and the
managing underwriters, if any, to facilitate the timely preparation
and delivery of certificates representing Registrable Securities to be
sold and not bearing any restrictive legends;
(viii) upon the occurrence of any event contemplated
by clause (4) of paragraph (ii) above, promptly prepare a supplement
or post-effective amendment to the Registration Statement or the
related Prospectus or any document incorporated therein by reference
or file any other required document so that, as thereafter delivered
to the purchasers of the securities, the Prospectus will not contain
an untrue statement of a material fact or omit to state any material
fact necessary to make the statements therein, in the light of the
circumstances in which they were made, not misleading;
(ix) provide a CUSIP number for the Registrable
Securities;
(x) otherwise use its best efforts to comply with
all applicable rules and regulations of the SEC relating to such
registration and the distribution of the securities being offered and
make generally available to its securities holders earnings statements
satisfying the provisions of Section 11(a) of the Securities Act;
(xi) make available for inspection by a
representative of AIP, on behalf of all of the Stockholders, any
underwriter participating in any disposition pursuant to such
registration, and any attorney or accountant retained by AIP or any
such underwriter, all financial and other records, pertinent corporate
documents and properties of the Company and cause the Company's
officers, directors and employees to supply all information reasonably
requested by, and to cooperate fully with, any such representative,
underwriter, attorney or accountant in connection with such
registration, and otherwise to cooperate fully in connection with any
due diligence investigation; provided that such representatives,
underwriters, attorneys or accountants enter into a confidentiality
agreement, in form and substance reasonably satisfactory to the
Company, prior to the release or disclosure to them of any such
information, records or documents;
(xii) subject to the proviso in paragraph (vi)
above, cause the Registrable Securities covered by the Registration
Statement to be registered with or approved by such other governmental
agencies or authorities as may be necessary to enable the seller or
sellers thereof or the underwriters, if any, to consummate the
disposition of such securities (other than as may be required by the
governmental agencies or authorities of any foreign jurisdiction and
other than as may be required by a law applicable to a selling
Stockholder by reason of its own activities or business other than the
sale of Registrable Securities);
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(xiii) use its reasonable best efforts to cause all
such Registrable Securities to be listed on any securities exchange on
which the class of Registrable Securities being registered is then
listed, if such Registrable Securities are not already so listed and
if such listing is then permitted under the rules of such exchange,
and to provide a transfer agent and registrar for such Registrable
Securities covered by such Registration Statement no later than the
effective date of such Registration Statement;
(xiv) enter into agreements (including an
underwriting agreement in customary form) and take all appropriate and
all commercially reasonable actions in order to expedite or facilitate
the disposition of such Registrable Securities and in such connection,
whether or not an underwriting agreement is entered into and whether
for not the registration is an underwritten registration:
(I) make customary representations and
warranties to the Stockholders and the underwriters,
if any;
(II) obtain opinions of counsel to the
Company and updates thereof (which counsel and
opinions shall be reasonably satisfactory (in form,
scope and substance) to the managing underwriters,
if any, and AIP) addressed to the Stockholders and
the underwriters covering customary matters;
(III) obtain "cold comfort" letters and
updates thereof from the Company's independent
certified public accountants, in customary form and
substance, addressed to the Stockholders and the
underwriters, if any, on such date or dates as may
be reasonably requested by AIP or the managing
underwriter;
(IV) provide the indemnification in
accordance with the provisions and procedures of
Section 8 hereof to all parties to be indemnified
pursuant to such Section (including customary
contribution provisions required by any
underwriters); and
(V) deliver such documents and certificates
as may be reasonably requested by AIP and the
managing underwriters, if any, to evidence
compliance with clause (ii) above and with any
customary conditions contained in the underwriting
agreement or other agreement entered into by the
Company;
(xv) make available its executive officers for a
reasonable period of time to participate in road show or other
investor presentations in connection with any offering; and
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(xvi) use its best efforts to take all action
necessary or advisable to effect such registration in the manner
contemplated by this Agreement.
The Company may require each Stockholder to furnish to the
Company in writing such information regarding such seller and the distribution
of such securities as the Company may from time to time reasonably request in
writing.
Each Stockholder agrees by acquisition of the Registrable
Securities that, upon receipt of any notice from the Company of the happening
of any event of the kind described in Section 5(a)(ii), such Stockholder will
forthwith discontinue disposition of such Registrable Securities pursuant to
the then current Prospectus until (1) such Stockholder is advised in writing by
the Company that a new Registration Statement covering the offer of the
relevant Registrable Securities has become effective under the Securities Act,
or (2) such Stockholder receives copies of a supplemented or amended Prospectus
contemplated by this Section 5(a), or (3) such Stockholder is advised in
writing by the Company that the use of the Prospectus may be resumed (the event
specified in clause (1) or (2), the "Resumption Date"). In the event the
Company shall give any such notice, the effective period specified in Section
3(c) shall be extended from the date of the giving of such notice through the
Resumption Date. The Company shall use its best efforts to limit the duration
of any discontinuance with respect to the disposition of securities pursuant to
this paragraph.
(b) Additional Procedures for Shelf Registration. If any
Stockholder proposes, from time to time, to effect a public sale or
distribution of all or a part of the Registrable Securities pursuant to a Shelf
Registration (a "shelf draw-down") which would require preparation of a
supplement to the Prospectus, such Stockholder shall so notify AIP. Upon
receipt of any request for a shelf draw-down in connection with an Underwritten
Offering pursuant to this Section 5(b) from any Stockholder, AIP shall promptly
give written notice of such request to all other Stockholders. AIP, on behalf
of all of the Stockholders, shall deliver to the Company, at least five
Business Days before such proposed sale or distribution, a written notice
describing, in reasonable detail, the number of Registrable Securities to be
offered and sold pursuant to such Shelf Registration, the intended method of
disposition of such Registrable Securities, and any other material information
that it deems to be relevant to the proposed sale or distribution. The Company
shall include in the requested shelf draw-down all Registrable Securities
requested to be included by AIP; provided that if the managing underwriter or
underwriters of the proposed Underwritten Offering advise AIP in writing that
the total amount of securities to be included in such proposed public offering
is such as would, in the judgment of the managing underwriter or underwriters,
materially adversely affect the success of such proposed public offering, then
the amount of securities to be offered for the account of all Stockholders
shall be reduced pro rata, to the extent necessary to reduce the total amount
of securities to be included in such proposed public offering to the amount
recommended by such managing underwriter or underwriters. Any such Underwritten
Offering shall also be subject to the provisions of Section 3.
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(c) Procedures for Piggyback Registration. In connection with
the Company's registration obligations pursuant to Section 4 hereof, the
Company will file and/or use its best efforts to keep effective the relevant
Registration Statement to permit the sale of such securities in accordance with
the intended method or methods of distribution thereof, and pursuant thereto
the Company will comply with the provisions of Section 5(a), to the extent
applicable.
SECTION 6. LOCK-UP. In the case of the registration of any
underwritten primary offering (other than any registration by the Company on
Form S-4 or Form S-8 (or any successor or substantially similar form), or of
securities issued or issuable pursuant to an employee stock option, stock
purchase or compensation plan), each Stockholder agrees, if and to the extent
requested in writing by the managing underwriter or underwriters administering
such offering as promptly as reasonably practicable prior to the commencement
of the 14-day period referred to below, not to effect any public sale or
distribution of Exchange Warrants or Underlying Stock except as part of such
Underwritten Offering during the period beginning 14 days prior to the
contemplated closing date of such Underwritten Offering and during the period
ending on the earlier of (i) 180 days after the closing date of such
Underwritten Offering and (ii) the date such sale or distribution is permitted
by such managing underwriter or underwriters.
SECTION 7. REGISTRATION EXPENSES. All expenses incident to
the Company's performance of or compliance with this Agreement, including
without limitation all registration and filing fees, fees and expenses of
compliance with securities or blue sky laws (including reasonable fees and
disbursements of counsel in connection with blue sky qualifications or
registrations (or the obtaining of exemptions therefrom) of Registrable
Securities), printing expenses (including expenses of printing Prospectuses),
messenger and delivery expenses, internal expenses (including, without
limitation, all salaries and expenses of its officers and employees performing
legal or accounting duties), fees and disbursements of its counsel and its
independent certified public accountants (including the expenses of any
"comfort" letters required by or incident to such performance or compliance),
securities acts liability insurance (if the Company elects to obtain such
insurance), fees and expenses of any special experts retained by the Company in
connection with any registration hereunder, fees and expenses of other Persons
retained by the Company, and reasonable out-of-pocket expenses incurred by the
Stockholders (except as set forth in the following proviso) (all such expenses
being referred to as "Registration Expenses"), shall be borne by the Company,
whether or not any registration statement becomes effective); provided,
however, that Registration Expenses shall not include any underwriting
discounts, commissions or fees attributable to the sale of Registrable
Securities or fees and expenses of legal counsel to any of the Stockholders
(other than a single counsel for all of the selling Stockholders).
SECTION 8. INDEMNIFICATION.
(a) Indemnification by the Company. The Company agrees to
indemnify and hold harmless, to the full extent permitted by law, each
Stockholder and their respective officers, directors, trustees, employees,
partners, principals, equity holders, advisors, attorneys and agents, against
all losses, claims, damages, liabilities and expenses resulting from any untrue
- 12 -
statement of a material fact in, or any omission of a material fact required to
be stated in, any Registration Statement or Prospectus or necessary to make the
statements therein (in the case of a Prospectus, in light of the circumstances
under which they were made) not misleading; provided, however, that the Company
will not be liable in any such case to the extent that any such loss, claim,
damage, liability or expense (i) arises out of or is based upon any such untrue
statement or alleged untrue statement or omission or alleged omission made
therein in reliance upon and in conformity with written information furnished
to the Company by or on behalf of the Stockholders specifically for inclusion
therein or (ii) is caused by any untrue statement or omission, or any alleged
untrue statement or omission, made in a Prospectus but eliminated or remedied
in a subsequent Prospectus if the Company shall have previously furnished
copies thereof to the relevant Stockholder in accordance with this Agreement
and a copy of the Prospectus was not sent or given by such Stockholder or on
its behalf to the purchaser of Registrable Securities at or prior to the sale
of such Registrable Securities to such Person. The Company will also indemnify
underwriters participating in the distribution, their respective officers,
directors, employees, partners, principals, equity holders, advisors, attorneys
and agents, and each Person who controls such underwriters (within the meaning
of the Securities Act), to the same extent as provided above with respect to
the indemnification of the Stockholders, if so requested.
(b) Indemnification by Stockholders. In connection with any
Registration Statement in which a Stockholder is participating, such
Stockholder, severally but not jointly, agrees to indemnify and hold harmless,
to the full extent permitted by law, the Company, its officers, directors,
employees, equity holders, advisors, attorneys and agents, and each Person who
controls the Company (within the meaning of the Securities Act) against any
losses, claims, damages, liabilities and expenses resulting from any untrue
statement of material fact in, or any omission of a material fact required to
be stated in, the Registration Statement or Prospectus or necessary to make the
statements therein (in the case of a Prospectus, in light of the circumstances
under which they were made) not misleading, to the extent that such untrue
statement or omission is contained in any information furnished in writing by
such Stockholder to the Company specifically for inclusion therein. The Company
and the other Persons described above shall be entitled to receive indemnities
from underwriters participating in the distribution, to the same extent as
provided above with respect to information so furnished in writing by such
Persons specifically for inclusion in any Prospectus or Registration Statement.
(c) Conduct of Indemnification Proceedings. Any Person
entitled to indemnification hereunder will (i) give prompt notice to the
indemnifying party of any claim with respect to which it seeks indemnification
and (ii) permit such indemnifying party to assume the defense of such claim
with counsel reasonably satisfactory to the indemnified party; provided,
however, that any Person entitled to indemnification hereunder shall have the
right to employ separate counsel and to participate in the defense of such
claim, but the fees and expenses of such counsel shall be at the expense of
such indemnified Person unless (A) the indemnifying party has agreed to pay
such fees or expenses, (B) the indemnifying party shall have failed to assume
the defense of such claim and employ counsel reasonably satisfactory to the
indemnified party in a timely manner or (C) in the reasonable judgment of any
such Person, based upon
- 13 -
advice of its counsel, a conflict of interest may exist between such person and
the indemnifying party with respect to such claims (in which case, if the
Person notifies the indemnifying party in writing that such Person elects to
employ separate counsel at the expense of the indemnifying party, the
indemnifying party shall not have the right to assume the defense of such claim
on behalf of such person). The indemnifying party will not be subject to any
liability for any settlement made without its consent (but such consent will
not be unreasonably withheld or delayed). No indemnified party will be required
to consent to entry of any judgment or enter into any settlement which does not
include as an unconditional term thereof the giving by the claimant or
plaintiff to such indemnified party a release from all liability in respect of
such claim or litigation. An indemnifying party who is not entitled to, or
elects not to, assume the defense of the claim will not be obligated to pay the
fees and expenses of more than one counsel for all parties indemnified by such
indemnifying party with respect to such claim, as well as one local counsel in
each relevant jurisdiction.
(d) Contribution. If for any reason the indemnification
provided for in Section 7(a) or Section 7(b) is unavailable to an indemnified
party or insufficient to hold it harmless as contemplated by Section 7(a) and
Section 7(b), then, as between the Company and the Stockholders, the
indemnifying party shall contribute to the amount paid or payable by the
indemnified party as a result of such loss, claim, damage or liability in such
proportion as is appropriate to reflect the relative fault of the indemnifying
party and the indemnified party, which shall be determined by reference to,
among other things, whether the untrue, or alleged untrue, statement of a
material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company, the Stockholders or an
underwriter and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such untrue statement or omission, as
well as any other relevant equitable considerations. No Person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any Person who was not
guilty of such fraudulent misrepresentations.
SECTION 9. PARTICIPATION IN UNDERWRITTEN REGISTRATIONS.
(a) Selection of Managing Underwriter. If any of the
Registrable Securities covered by a Demand Registration or the Shelf
Registration contemplated by Section 3(a) hereunder are to be sold in an
Underwritten Offering, the investment banker or investment bankers and manager
or managers that will administer the offering will be selected by the
Stockholders; provided that such investment bankers and managers shall be
reasonably satisfactory to the Company.
(b) Participation in Underwritten Offering. No Person may
participate in any Underwritten Offering hereunder unless such Person (i)
agrees to sell such Person's Registrable Securities on the basis provided in
any underwriting arrangements approved by AIP, on behalf of all of the
Stockholders, and (ii) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements and other documents required
under the terms of such underwriting arrangements. Nothing in this Section 9
shall be construed to create any additional
- 14 -
rights regarding the registration of Registrable Securities in any Person
otherwise than as set forth herein.
SECTION 10. REDEMPTION OF EXCHANGE WARRANTS.
(a) Class B Preferred Stock Redemption. If the Company
redeems its Class B Series 1 Preferred Stock, par value $.001 per share ("Class
B Preferred Stock"), in whole or in part at any time, the Company shall be
required to make an offer to the Stockholders to apply 10% of the aggregate
amount which would otherwise be applied to such redemption of the Class B
Preferred Stock (such 10%, the "Requisite Amount") to the repurchase of
Exchange Warrants from the Stockholders or, if such redemption occurs prior to
the Exchange (as defined in the Sweetheart Stockholders' Agreement), to the
reduction of the number of Exchange Warrants issuable upon the Exchange
("Warrant Rights"). If the repurchase is consummated on or prior to March 12,
2003, the price at which each Exchange Warrant or Warrant Right would be so
repurchased shall be the Redemption Price (as defined in the Exchange Warrant)
of an Exchange Warrant, including any accretion thereon, as determined pursuant
to Section 8(a) of the Exchange Warrant. If the repurchase is consummated after
March 12, 2003, the price at which each Exchange Warrant or Warrant Right would
be so repurchased shall be the "fair market value" (as defined below) of the
Underlying Stock for which such Exchange Warrant (or Exchange Warrant issuable
upon exercise of a Warrant Right) is then exercisable. Each Stockholder may
require the Company to repurchase that number of whole Exchange Warrants or
Warrant Rights which has an aggregate Redemption Price or fair market value, as
the case may be, equal to the product of (i) the Requisite Amount times (ii) a
fraction in which the numerator is the number of Exchange Warrants received by
such Stockholder upon the Exchange (or which would be received by such
Stockholder upon the exercise of its Warrant Rights in the Exchange) and the
denominator is the total number of Exchange Warrants received by all of the
Stockholders upon the Exchange (or which would be received by all of the
Stockholders upon the exercise of all Warrant Rights in Exchange). In the event
that any or all of the Exchange Warrants have been exercised, each Stockholder
may elect to have the Company repurchase that number of shares of Underlying
Stock, or a combination of Exchange Warrants and Underlying Stock (treating
that number of shares of Underlying Stock for which one Exchange Warrant is
then exercisable as equivalent to one Exchange Warrant). For the foregoing
purposes, the "fair market value" of a share of Underlying Stock shall be as
agreed upon by the Company and AIP, on behalf of all of the Stockholders, or,
failing such agreement within ten (10) Business Days after the date of the
Repurchase Notice (as defined below), such fair market value shall be the
average of the fair market value as determined by two investment bankers, one
selected by the Company and the other selected by AIP, on behalf of all of the
Stockholders; provided, that if the Common Stock of the Company of any class is
publicly traded on a national securities exchange or in an established
over-the-counter market, the fair market value shall be the average of the
daily closing prices of a share of Common Stock for the 20 consecutive trading
days ending on the day immediately preceding the date of the Repurchase Notice.
(b) Repurchase Offer. Not less than fifteen (15) Business
Days prior to the redemption of Class B Preferred Stock, the Company will
deliver a notice (the "Repurchase
- 15 -
Notice") to AIP, on behalf of all of the Stockholders, which shall offer to
repurchase Exchange Warrants (or Warrant Rights or Underlying Stock, as the
case may be) pursuant to this Section 10. The Repurchase Notice shall state (i)
the Requisite Amount; (ii) price at which Exchange Warrants or Warrant Rights
are to be repurchased, if then determined, or, if such price is not then
determined, that such is the case; (iii) the anticipated date on which such
repurchase shall be consummated (which shall be at least ten (10) Business Days
after the date of the Repurchase Notice); and (iv) that Stockholders electing
to have any or all of such Exchange Warrants (or Warrant Rights or Underlying
Stock) repurchased shall be required to surrender the certificates representing
such securities with such customary documents of surrender and transfer as the
Company may reasonably request, duly completed to the Company at the address
specified in the notice at least three (3) days before the date of repurchase.
(c) Consummation of Repurchase. On the repurchase date, the
Company shall accept for payment the Exchange Warrants, Warrant Rights and/or
Underlying Stock tendered pursuant to the Repurchase Notice. The Company shall
promptly (but in any case not later than three (3) Business Days after the
repurchase date) mail or deliver to AIP, on behalf of all of the Stockholders,
an amount equal to the repurchase price of the securities tendered by the
Stockholders and accepted by the Company for repurchase, and the Company shall
promptly issue new certificates for Exchange Warrants and/or Underlying Stock
for the number of securities equal to any unpurchased portion of the
certificates so surrendered.
(d) Cancellation of Exchange Warrants and Underlying Stock.
Because the Class B Preferred Stock is convertible into One Million Three
Hundred Thirty Four Thousand Nine Hundred and Forty Five (1,334,945) shares of
Class A Common Stock, the number of Warrants which the Stockholders are
entitled to receive upon the Exchange is One Hundred Forty Eight Thousand Three
Hundred and Twenty Seven (148,327) greater than the number would have been had
the Class B Preferred Stock not been issued. If the Company redeems the Class B
Preferred Stock, in whole or in part, the number of Exchange Warrants which the
Stockholders are entitled to receive upon the Exchange shall be adjusted to
that number of Exchange Warrants calculated as if the Class B Preferred Stock
so redeemed had never been issued, with each Stockholder bearing that portion
of such adjustment equal to a fraction, the numerator of which is the number of
Exchange Warrants which such Stockholder would have received prior to such
adjustment and the denominator of which is the total number of Exchange
Warrants which all of the Stockholders would have received prior to such
adjustment. If any such redemption occurs after the Exchange, the Stockholders
shall surrender to the Company for cancellation, without additional
consideration, that number of Exchange Warrants (duly endorsed for transfer and
accompanied by all requisite stock transfer stamps) equal to the excess of the
total number of Exchange Warrants received by all of the Stockholders upon the
Exchange over that number of Exchange Warrants which all of the Stockholders
would have received had the Class B Preferred Stock never been issued,, with
each Stockholder being responsible for the surrender of that portion of such
excess equal to a fraction, the numerator of which is the number of Exchange
Warrants which such Stockholder received upon the Exchange and the denominator
of which is the total number of Exchange Warrants which all of the Stockholders
received upon the Exchange. In the event any Stockholder is unable to surrender
the full
- 16 -
number of Exchange Warrants required by the preceding sentence, such
Stockholder shall surrender Underlying Stock, or a combination of Exchange
Warrants and Underlying Stock (treating that number of shares of Underlying
Stock for which one Exchange Warrant is then exercisable as equivalent to one
Exchange Warrant). Each Stockholder agrees that it will retain sufficient
Exchange Warrants and/or Underlying Stock to meet its obligations under this
Section 10(d). In the event any Stockholder fails to surrender the full number
of Exchange Warrants and/or Underlying Stock required by this Section 10(d), in
addition to all other remedies available to the Company, the Company may
unilaterally cancel the proper number of such Exchange Warrants and/or shares
of Underlying Stock registered in such Stockholder's name or owned by such
Stockholder. Each surrender of Exchange Warrants and Underlying Stock pursuant
to this Section 10(d) shall be free and clear of all liens, claims and
encumbrances.
(e) Consummation of Redemption. To the extent that all or any
portion of the Requisite Amount is not applied to the repurchase of Exchange
Warrants and/or Underlying Stock pursuant to this Section 10, such amount shall
be applied to the redemption of Class B Preferred Stock.
10A. TAG-ALONG AND DRAG-ALONG RIGHTS.
(a.) Tag-Along Rights. (i) If Xxxxxx Xxxxxx or any Affiliate
of Xxxxxx Xxxxxx (collectively, "Mehiel") proposes a transaction or
series of related transactions in which it will sell, transfer or
otherwise dispose of for value (collectively, "Sell", with the noun
form being a "Sale") shares of Common Stock (the "Initial Shares") in
an amount in excess of 30% of the then aggregate number of outstanding
shares of Common Stock to a third party or parties, then, subject to
the provisions of this Section 10A and Section 10(d), the Stockholders
shall have the right to participate in such Sale and sell all or a
portion of the Exchange Warrants or Underlying Stock owned by them
(determined as provided below) to such third party or parties. Mehiel
shall deliver to AIP written notice (the "Notice of Sale") of such
proposed Sale, which shall specify the terms and conditions of such
proposed Sale, including the number of shares of Common Stock to be
Sold, the price at which such shares will be Sold and the anticipated
date of consummation of such Sale. On or before the date (the
"Tag-Along Date") which is 30 days after the date of the Notice of
Sale, by written notice (the "Tag-Along Notice") AIP may, on behalf of
all of the Stockholders, irrevocably elect to Sell an aggregate number
of Exchange Warrants or Underlying Stock equal to all or a portion of
each Stockholder's Tag-Along Portion (as defined below) as specified
in the Tag-Along Notice on the same terms and conditions in respect of
such shares as are specified in the Notice of Sale.
(ii) For purposes hereof, a Stockholder's "Tag-Along Portion"
shall mean a number of shares of Underlying Stock (or Exchange
Warrants exercisable for such number of shares) equal to the total
number of Initial Shares multiplied by a fraction, the numerator of
which is the number of shares of Underlying Stock then held by such
- 17 -
Stockholder and the denominator of which is the total number of shares
of Common Stock then outstanding. (For the purposes of the foregoing
calculation, all outstanding Exchange Warrants shall be deemed to have
been exercised in full.) If AIP timely makes the election to Sell
Exchange Warrants or Underlying Stock with Mehiel, the number of
shares to be Sold by Mehiel pursuant to this Section 10A(a) in respect
of such Notice of Sale shall be reduced by the Tag-Along Portions
specified in the Tag-Along Notice unless the purchaser or purchasers
agree to acquire additional shares pro rata from Mehiel and the
Stockholders participating in such Sale on the same terms and
conditions as are specified in the Notice of Sale; provided, however,
that the Stockholders shall not be required to make any
representations or warranties (other than with respect to their
ownership of their Exchange Warrants and Underlying Stock) to the
purchaser or purchasers or to agree to indemnify the purchaser or
purchasers in connection with such sale (other than with respect to
their ownership of their Exchange Warrants and Underlying Stock).
(iii) Each Stockholder agrees to take all steps necessary to
enable it to comply with the provisions of this Section 10A(a),
including, without limitation, the execution of all documents in
connection with such Sale, the delivery, against payment therefor, of
certificates for all such Exchange Warrants and Underlying Stock duly
endorsed or accompanied by appropriate instruments of transfer and
free and clear of any liens or other encumbrances, and, if requested
by Mehiel, the voting of all Exchange Warrants and Underlying Stock
owned by such Stockholder in the manner requested by Mehiel in order
to effect such Sale.
(iv) Mehiel may abandon any such Sale at any time for any
reason or without reason. If Mehiel does not complete the Sale within
90 days after the anticipated date of consummation set forth in the
Notice of Sale (unless such failure to complete is due to actions, or
the failure to act when required to act, of the Stockholders) or
proposes to effect the Sale on terms materially different from those
specified in the Notice of Sale, then the Sale shall remain subject to
the provisions of this Section 10A and Mehiel shall be required to
comply with the provisions of this Section 10A with respect to any
future Sale.
(v) Upon consummation of a Sale pursuant to this Section 10A,
any rights or obligations pursuant to this Agreement will terminate
with respect to the Exchange Warrants and Underlying Stock so Sold and
the purchaser of such Exchange Warrants and Underlying Stock.
b. Drag-Along Right. If Mehiel proposes a transaction or
series of related transactions in which it will Sell shares of Common
Stock for cash in an amount in excess of 30% of the then aggregate
number of outstanding shares of Common Stock to an unaffiliated third
party or parties, then Mehiel shall have the right (the "Drag-Along
Right") to require each of the Stockholders to Sell all, but, subject
to the provisions of Section 10(d), not less than all, of the Exchange
Warrants and Underlying Stock owned
- 18 -
by such Stockholders for the same per share consideration and
otherwise on the same terms and conditions as Mehiel. Each Stockholder
agrees to take all steps necessary to enable it to comply with the
provisions of this Section 10A(b), including, without limitation, the
execution of all documents in connection with such Sale, the delivery,
against payment therefor, of certificates for all such Exchange
Warrants and Underlying Stock duly endorsed or accompanied by
appropriate instruments of transfer and free and clear of any liens or
other encumbrances, and, if requested by Mehiel, the voting of all
Exchange Warrants and Underlying Stock owned by such Stockholder in
the manner requested by Mehiel in order to effect such Sale; provided,
however, that the Stockholders shall not be required to make any
representations or warranties (other than with respect to their
ownership of their Exchange Warrants and Underlying Stock) to the
purchaser or purchasers or to agree to indemnify the purchaser or
purchasers in connection with such sale (other than with respect to
their ownership of their Exchange Warrants and Underlying Stock). To
exercise a Drag-Along Right, Mehiel shall give AIP, on behalf of all
of the Stockholders, a written notice (the "Drag-Along Notice")
containing (i) the name and address of the third party or parties to
whom shares of Common Stock will be Sold and (ii) the proposed
purchase price thereof, terms of payment and other material terms and
conditions of the Sale. Each Stockholder shall thereafter be obligated
to Sell its Exchange Warrants and Underlying Stock subject to such
Drag-Along Notice; provided that the Sale is consummated within 90
days after the anticipated date of consummation set forth in the Drag
Along Notice. If the Sale is not consummated, for any reason
(including abandonment of such Sale by Mehiel), on or before the
expiration of such 90-day period, then each Stockholder shall no
longer be obligated to Sell such Exchange Warrants or Underlying Stock
pursuant to that specific Drag-Along Notice, but each Stockholder's
Shares shall remain subject to the provisions of this Section 10A.
SECTION 11. AMENDMENTS AND WAIVERS. The provisions of this
Agreement, including the provisions of this Section 11, may not be amended,
modified or supplemented except with the written consent of a majority in
interest of the Stockholders and the Company. Any provision of this Agreement
may be waived if, but only if, such waiver is in writing and is signed by the
party waiving such provision.
SECTION 12. NOTICES. All notices and other communications
provided for or permitted hereunder shall be made in writing by registered or
certified first-class mail, hand- delivery, telecopier, or air-courier
guaranteeing overnight delivery:
(a) If to a Stockholder, at the most current address
given by such Stockholder to the Company, in accordance with the
provisions of this Section 12.
(b) If to the Company, at 000 Xxxxxxx Xxxxxx,
Xxxxxxxx, Xxx Xxxx, 00000, attention: Xxxxxx X. Xxxxxxxx, Esq.;
telecopier no. (000) 000-0000.
- 19 -
All such notices and other communications shall be deemed to have been given
and received: if mailed by registered or certified first-class mail, on the
third Business Day after the date of such mailing; if by hand delivery, on the
date of such delivery; if by telecopier, if during normal business hours, on
the date of facsimile, if not, on the next Business Day after the date of
facsimile; and if sent by recognized air courier, on the first Business Day
following the date of such sending.
SECTION 13. SUCCESSORS AND ASSIGNS. This Agreement may not be
assigned by a party without the written consent of the other parties, and shall
inure to the benefit of and be binding upon the parties hereto and their
respective successors, heirs, executors, administrators, personal
representatives and permitted assigns. Notwithstanding the foregoing, (i) First
Plaza Group Trust and Leeway & Co. shall have the right to assign this
Agreement or transfer in whole or in part their obligations under this
Agreement to one or more successor trustees, plans or nominees for, or
successor by reorganization of, a qualified pensions trust, (ii) in the event
one or more of the Stockholders transfer Exchange Warrants or Underlying Stock
to a third party (other than in a public sale), the transferees shall have the
right to become a "Stockholder" under this Agreement by signing a counterpart
hereof, in which event such transferee shall be bound by the terms and
provisions of this Agreement and the Exchange Warrants or Underlying Stock so
acquired by such transferee shall be deemed to be "Registrable Securities"
under this Agreement, and (iii) in the event Closing Securities are transferred
pursuant to an offering effected pursuant to Rule 144A under the Securities
Act, such Closing Securities shall cease to be "Closing Securities" or
"Registrable Securities" for the purposes of this Agreement and no transferee
of such Closing Securities shall be deemed a "Stockholder" under, or have any
rights or obligations under, this Agreement.
SECTION 14. COUNTERPARTS. This Agreement may be executed in
any number of counterparts and by the parties hereto in separate counterparts,
each of which when so executed shall be deemed to be an original and all of
which taken together shall for all purposes constitute one and the same
agreement.
SECTION 15. HEADINGS. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
SECTION 16. GOVERNING LAW; JURISDICTION; FORUM. This
Agreement shall be governed and construed in accordance with the laws of the
State of New York, without giving effect to conflicts of laws principles
thereof.
SECTION 17. SEVERABILITY. In the event that any one or more
of the provisions contained herein, or the application thereof, is held
invalid, illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein, and the
applications thereof, shall not in any way be affected or impaired thereby.
SECTION 18. ENTIRE AGREEMENT. This Agreement is intended by
the parties as a final expression of their agreement and is intended to be a
complete and exclusive statement
- 20 -
of the agreement and understanding of the parties hereto in respect of the
subject matter contained herein. This Agreement supersedes all prior agreements
and understandings between the parties with respect to such subject matter.
SECTION 19. DESIGNATION. AIP is hereby irrevocably
designated as the representative of the Stockholders for the purposes set
forth in this Agreement. By execution of this Agreement, each of the other
Stockholders has duly empowered AIP to act as such representative.
[Remainder of Page Intentionally Left Blank]
- 21 -
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first written above.
SF HOLDINGS GROUP, INC.
By: /s/ Xxxx X. Xxxxxxx
----------------------------------
Name: Xxxx X. Xxxxxxx
Title: Chief Financial Officer
AMERICAN INDUSTRIAL PARTNERS
CAPITAL FUND L.P.
By: American Industrial Partners L.P., its
general partner
By: American Industrial Partners Management
Company, Inc.
By: /s/ Xxxxxxx Xxxxxxx
----------------------------------
Name: Xxxxxxx Xxxxxxx
Title:
LEEWAY & CO.
By: State Street Bank and Trust Company, a
general partner
By: /s/ Xxxxxxxx Xxxxxxxx
----------------------------------
Name: Xxxxxxxx Xxxxxxxx
Title: Assistant Secretary
MELLON BANK, N.A., as Trustee for
FIRST PLAZA GROUP TRUST (as directed
by General Motors Investment Management
Corporation)
By: /s/ Xxxxxxxxxx Xxxx
----------------------------------
Name: Xxxxxxxxxx Xxxx
Title: Authorized Signature
/s/ Xxxxxx X. Xxxxx
-----------------------
Xxxxxx X. Xxxxx
- 22 -
/s/ Xxxxxx X. Xxxxx
-------------------------
Xxxxxx X. Xxxxx
/s/ Xxxxxx X. Xxxxxxx
-------------------------
Xxxxxx X. Xxxxxxx
/s/ Xxxxxxx X. Xxxxxxx
-------------------------
Xxxxxxx X. Xxxxxxx
/s/ Xxxxxxx X. Xxxx, Xx.
-------------------------
Xxxxxxxx X. Xxxx, Xx.
/s/ Xxxxxxx X. XxXxxxxxxx
-------------------------
Xxxxxxx X. XxXxxxxxxx
By its signature below,
CREATIVE EXRESSIONS GROUP,
INC., as the original holder
of the Class B Preferred
Stock, hereby accepts and
agrees to be bound by the
terms of Section 10 of the
foregoing Stockholders' Rights
Agreement
CREATIVE EXPRESSIONS GROUP, INC.
By: /s/ Xxxxxx X. Xxxxxxxx
----------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: Secretary
- 23 -
By his signature below, XXXXXX XXXXXX
hereby accepts and agrees to be bound by
the terms of Section 10A of the foregoing
Stockholders' Rights Agreement.
/s/ Xxxxxx Xxxxxx
------------------------------
Xxxxxx Xxxxxx
- 24 -
SCHEDULE I
Class C Exchange
Stockholder Preferred Stock Common Stock Warrants
----------- --------------- ------------ ----------
American Industrial Partners Capital
Fund, L.P. 1545.387 57,179.319 494,523.84
Leeway & Co. 1003.824 37,141.488 321,223.68
Mellon Bank, N.A., as Trustee for
First Plaza Group Trust 430.209 15,917.733 137,666.88
Xxxxxx X. Xxxxx 1.434 53.058 458.88
Xxxxxx X. Xxxxx .288 10.656 92.16
Xxxxxx X. Xxxxxxx 1.434 53.058 458.88
Xxxxxxx X. Xxxxxxx .072 2.664 23.04
Xxxxxxxx X. Xxxx, Xx. .144 5.328 46.08
Xxxxxxx X. XxXxxxxxxx 17.208 636.696 5,506.56
--------- ------------ ----------
3000.000 111,000.000 960,000.00
- 25 -
