STOCKHOLDERS AGREEMENT
This Stockholders Agreement ("Agreement") is entered into on this 31st
day of July, 1997, among Franklin Plastics, Inc., a Delaware corporation (the
"Company"), Suiza Foods Corporation, a Delaware corporation ("Suiza"), Xxxxx
X. Xxxxxx and Xxxx X. Xxxxxx (collectively, the "Purchasers"). Capitalized
terms not defined elsewhere herein shall have the respective meanings
assigned to them in part 11 of this Agreement.
RECITALS:
Suiza has entered into a Stock Purchase Agreement (the "Purchase
Agreement") dated as of June 20, 1997 and amended as of July 30, 1997,
providing, among other things, for the purchase by Suiza from certain sellers
named therein, including the Purchasers, of all of the shares of outstanding
common stock and limited liability company interests of the Plastics
Companies, as that term is defined in the Purchase Agreement (the "Plastic
Interests").
Suiza desires to contribute all of the Plastic Interests to the Company
in exchange for (i) a Senior Note in the original principal amount of
$71,500,000 and in substantially the form of EXHIBIT A (the "Senior Note"),
(ii) a Mezzanine Note in the original principal amount of $32,500,000 and in
substantially the form of EXHIBIT B (the "Mezzanine Note"), (iii) 21,667
shares of Series A Preferred Stock, and (iv) 433,049 shares of the Common
Stock.
The Purchasers desire to purchase from the Company certain Common Stock
Purchase Warrants in substantially the form of EXHIBIT C (the "Warrants"),
providing for the right to purchase an aggregate of 91,880 shares of Common
Stock for $10.00 per share.
This is one of the Plastics Documents referred to in the Purchase
Agreement. The execution and delivery of this Agreement is a closing
condition to the obligations of Suiza and the Purchasers to effect the
transactions contemplated by the Purchase Agreement.
The parties hereto agree as follows:
1. AUTHORIZATION AND SALE OF SECURITIES.
1A. AUTHORIZATION. The Company has, or before the Closing, will have
duly authorized the issuance and sale, pursuant to the terms of this
Agreement, of (i) the Senior Note, (ii) the Mezzanine Note, (iii) 21,667
shares of its Series A Preferred Stock, having the rights, restrictions,
privileges and preferences set forth in the Certificate of Designation of
Series A Redeemable Preferred Stock in substantially the form attached as
EXHIBIT D (the "Certificate of Designation"), (iv) 433,049 shares of Common
Stock, and (v) Warrants for the purchase of an aggregate of 91,880 shares of
Common Stock. The Company has, or before Closing will have, adopted and
filed the Certificate of Designation with the Secretary of State of the State
of Delaware. The shares of Common Stock issued or issuable upon the exercise
of the Warrants are referred to as the "Warrant Shares." The shares of
Common Stock and the shares of Series A
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Preferred Stock being issued to Suiza under this Agreement are referred to
collectively as the "Suiza Shares." The Senior Note, the Mezzanine Note, the
Suiza Shares and the Warrants are referred to collectively as the
"Securities."
1B. SALE OF SECURITIES TO SUIZA. Subject to the terms and conditions of
this Agreement, at the Closing, the Company will issue and sell to Suiza, and
Suiza will purchase, the Senior Note, the Mezzanine Note, and the Suiza
Shares in exchange for the Plastics Interests.
1C. SALE OF WARRANTS. Subject to the terms and conditions of this
Agreement, at the Closing, the Company will issue and sell to each of the
Purchasers, and each of the Purchasers will purchase, Warrants entitling each
such Purchaser to purchase the number of Warrant Shares set forth opposite
such Purchaser's name on EXHIBIT E attached hereto, for the purchase price of
$4.17 per underlying Warrant Share.
2. THE CLOSING.
The closing of the issuance, sale and purchase of the Securities under
this Agreement (the "Closing") shall take place as soon as practicable after
the satisfaction or waiver of the conditions to the Closing set forth in part
4, at the same location as that of the closing under the Purchase Agreement,
or at such other location or such other time as the Company, Suiza and the
Purchasers may agree. At the Closing, (i) the Company shall deliver to Suiza
(a) the Senior Note, (b) the Mezzanine Note, (c) a certificate representing
the number of shares of Series A Preferred Stock being issued to Suiza,
registered in the name of Suiza, and (d) a certificate representing the
number of shares of Common Stock being issued to Suiza, registered in the
name of Suiza, (ii) Suiza will deliver to the Company certificates
representing the Plastics Interests, endorsed for transfer to the Company,
and (iii) the Company shall deliver to each Purchaser a Warrant, to purchase
the number of Warrant Shares set forth opposite such Purchaser's name on
EXHIBIT E, registered in the name of such Purchaser, against payment to the
Company of the purchase price therefor, by wire transfer, check, or other
method acceptable to the Company.
3. REPRESENTATIONS AND WARRANTIES.
3A. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby
represents and warrants to Suiza and the Purchasers as follows:
(i) The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware
and has full corporate power and authority to conduct its business as
presently conducted and as proposed to be conducted by it and to enter
into and perform this Agreement and to carry out the transactions
contemplated in this Agreement. The Company is duly qualified and in
good standing to do business as a foreign corporation in each
jurisdiction in which the failure to so qualify would have a material
adverse effect on its business or properties.
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(ii) The execution, delivery and performance by the Company of
this Agreement, and the consummation by the Company of the
transactions contemplated herein, have been duly authorized by all
necessary corporate action. This Agreement has been duly executed and
delivered by the Company and constitutes the valid and binding
obligation of the Company enforceable against the Company in
accordance with its terms, and upon due execution and delivery, the
Senior Note, the Mezzanine Note and the Warrants will represent the
valid and binding obligations of the Company upon payment of the
applicable purchase price therefore to the Company. The execution,
delivery and performance of the transactions contemplated in this
Agreement and compliance with its provisions by the Company will not
violate any provision of law and will not conflict with or result in
any breach of any of the terms, conditions or provisions of, or
constitute a default under, or require a consent or waiver under, its
Certificate of Incorporation or Bylaws (each as amended and currently
in effect) or any indenture, lease, agreement or other instrument to
which the Company is a party or by which it or any of its properties
is bound, or any decree, judgment, order, statute, rule or regulation
applicable to the Company.
(iii) Immediately prior to the Closing, the authorized capital
stock of the Company shall consist of 5,000,000 shares of Common Stock,
of which only 100 shares shall be issued, and outstanding and owned by
Suiza, and 1,000,000 shares of Preferred Stock, none of which shares
shall be issued and outstanding.
(iv) The issuance, sale and delivery of the Securities in
accordance with this Agreement, and the issuance and delivery of the
Warrant Shares upon exercise of the Warrants, have been, or will be on
or prior to the Closing, duly authorized by all necessary corporate
action on the part of the Company. The Suiza Shares, when so issued,
sold and delivered against payment therefor in accordance with the
provisions of this Agreement, and the Warrant Shares, when issued upon
exercise of the Warrants in accordance with the terms of the Warrants,
will be duly and validly issued, fully paid and non-assessable.
(v) No consent, approval, order or authorization of, or
registration, qualification, designation, declaration or filing with,
any governmental authority is required on the part of the Company in
connection with the execution and delivery of this Agreement, or the
transactions to be consummated at the Closing as contemplated in this
Agreement, except such filings as shall have been made prior to and
shall be effective on and as of the Closing.
(vi) Since its formation and as of the date hereof, the Company
has no material assets or liabilities, except as otherwise
contemplated by this Agreement and the Purchase Agreement.
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3B. REPRESENTATIONS AND WARRANTIES OF SUIZA. Suiza hereby represents
and warrants to the Company and the Purchasers as follows:
(i) Suiza is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware and has full
corporate power and authority to conduct its business as presently
conducted and as proposed to be conducted by it and to enter into and
perform this Agreement and to carry out the transactions contemplated
in this Agreement. Suiza is duly qualified and in good standing to do
business as a foreign corporation in each jurisdiction in which the
failure to so qualify would have a material adverse effect on its
business or properties.
(ii) The execution delivery and performance by Suiza of this
Agreement, and the consummation by Suiza of the transactions
contemplated herein, have been duly authorized by all necessary
corporate action. This Agreement has been duly executed and delivered
by Suiza and constitutes the valid and binding obligation of Suiza
enforceable against Suiza in accordance with its terms.
(iii) No consent, approval, order or authorization of, or
registration, qualification, designation, declaration or filing with, any
governmental authority is required on the part of Suiza in connection
with the execution and delivery of this Agreement, or the transactions
to be consummated at the Closing as contemplated in this Agreement,
except such filings as shall have been made prior to and shall be
effective on and as of the Closing.
3C. REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS. Each of the
Purchasers severally represents and warrants to the Company and Suiza as
follows:
(i) Such Purchaser is acquiring the Warrants for his own account
for investment and not with a view to, or for sale or resale in
connection with, any distribution thereof, nor with any present
intention of distributing or selling the same, and, except as
contemplated in this Agreement, such Purchaser has no present or
contemplated agreement, undertaking, arrangement, obligation,
indebtedness or commitment providing for the disposition thereof.
Such Purchaser acknowledges the restrictions on transfer of the
Warrants and the Warrant Shares set forth in this Agreement.
(ii) Such Purchaser has full power and authority to enter into
and to perform this Agreement in accordance with its terms.
(iii) Such Purchaser is an "accredited investor," as such term is
defined in Regulation D promulgated under the Securities Act.
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(iv) Such Purchaser acknowledges that he is able to fend for
himself, can bear the economic risk of his investment, and has such
knowledge and experience in financial or business matters that he is
capable of evaluating the merits and risks of the investment in the
Warrants and the Warrant Shares.
(v) Such Purchaser understands that the Warrants and the Warrant
Shares will be "restricted securities" pursuant to Rule 144 under the
Securities Act inasmuch as they are being acquired from the Company or
an Affiliate of the Company in a transaction not involving a public
offering, and that such securities may be resold without registration
under the Securities Act only in certain limited circumstances. In
this connection, such Purchaser represents that it is familiar with
Rule 144 promulgated under the Securities Act, as presently in effect,
and understands the resale limitations imposed thereby and by the
Securities Act.
4. CONDITIONS TO CLOSING.
4A. CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE CLOSING. The
respective obligations of the parties to effect the transactions contemplated
herein are subject to the satisfaction, on or prior to the Closing, of the
following conditions:
(i) The closing under the Purchase Agreement shall have been
consummated.
(ii) All authorizations, consents, orders or approvals of, or
declarations or filings with, or expirations of waiting periods
imposed by, any governmental entity or other public or private third
party, the failure of which to obtain would have a material adverse
effect on the Company, shall have been filed, occurred or been
obtained.
(iii) No temporary restraining order, preliminary or permanent
injunction or other order issued by any court of competent jurisdiction
or other legal restraint or prohibition preventing the consummation of
the transactions contemplated herein shall be in effect (each party
agreeing to use all reasonable efforts to have any such order reversed
or injunction lifted).
4B. CONDITIONS OF OBLIGATIONS OF THE COMPANY AND SUIZA. The obligation
of the Company and Suiza to effect the transactions contemplated herein is
subject to the satisfaction of the following conditions, on or prior to the
Closing, unless waived by the Company and Suiza:
(i) The representations and warranties of the Purchasers
contained herein shall be true and correct in all material respects as
of the Closing as though made on and as of the Closing.
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(ii) The Purchasers shall have performed in all material respects
all of their respective obligations required to be performed by them
under this Agreement at or prior to the Closing.
(iii) The Purchasers shall have delivered all of the items
set forth in part 2.
4C. CONDITIONS OF OBLIGATIONS OF THE PURCHASERS. The obligation of each
Purchaser to effect the transactions contemplated herein is subject to the
satisfaction of the following conditions, on or prior to the Closing, unless
waived by such Purchaser:
(i) The representations and warranties of the Company and Suiza
contained herein shall be true and correct in all material respects as
of the Closing as though made on and as of the Closing.
(ii) The Company and Suiza shall have performed in all material
respects all of their respective obligations required to be performed
by them under this Agreement at or prior to the Closing.
(iii) The Company and Suiza shall have delivered all of the items
set forth in part 2.
5. PURCHASE OF WARRANTS.
5A. RIGHT TO PUT WARRANTS. For a period of 15 calendar days commencing
on April 1 of each year beginning on April 1, 2002 (each, a "Put Exercise
Period"), each Purchaser shall have the right and option (the "Put Option")
to sell to Suiza and to require Suiza to purchase from such Purchaser, at the
Put Price, all of such holder's right, title and interest in the Warrants
held by such Purchaser and his Permitted Transferees.
5B. RIGHT TO CALL WARRANTS. For a period of 15 calendar days commencing
on March 15 of each year beginning on March 15, 2004 (each a "Call Exercise
Period"), Suiza shall have the right and option (the "Call Option") to
purchase from the holders of the Warrants and to require such holders to
sell, at the Call Price, all of such holder's right, title and interest in
the Warrants held by such holder.
5C. CHANGE IN CONTROL PUT. For a period commencing on the date that
there has been a change in control of Suiza and ending 15 calendar days after
all holders of Warrants receive notice that there has been a change in
control of Suiza (the "Change in Control Put Period"), each Purchaser shall
have the right and option (the "Change in Control Option") to sell to Suiza
and to require Suiza to purchase from such Purchaser and his Permitted
Transferees, at the Call Price, all of such holder's right, title and
interest in the Warrants held by such Purchaser and his Permitted
Transferees. For purposes of this paragraph 5C, a change in control of Suiza
shall be deemed to occur when (i) Suiza shall have been merged or
consolidated with or into another corporation, shall have sold, leased or
otherwise disposed of all or substantially all of its assets,
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and as the result thereof the stockholders of Suiza shall own less than 50%
of the common stock of the surviving corporation after such transaction, (ii)
the stockholders of Suiza shall have adopted a plan of liquidation, or (iii)
any corporation, person or group (within the meaning of Sections 13(d) and
14(d)(2) of the Exchange Act), becomes the beneficial owner (within the
meaning of Rule 13d-3 under the Exchange Act) of voting securities of Suiza
representing more than 50% of the total number of votes eligible to be cast
at any election of directors of Suiza. Suiza shall give the Purchasers 15
calendar days prior notice of any anticipated change of control of Suiza
pursuant to clauses (i) and (ii) above and, to the extent practicable clause,
(iii) above and shall give the Purchasers prompt notice of the actual
occurrence of a change of control.
5D. NOTICE. To exercise the Put Option, a Purchaser shall give Suiza
written notice during the Put Exercise Period (the "Put Notice") and shall
specify in such notice the number of Warrant Shares underlying the Warrants
held by such Purchaser and his Permitted Transferees and may specify in such
notice a proposed date of sale. To exercise the Call Option, Suiza shall
give each record holder of the Warrants written notice during the Call
Exercise Period (the "Call Notice"), and may specify in such notice a
proposed date of sale. To exercise the Change in Control Option, a Purchaser
shall give Suiza written notice during the Change in Control Exercise Period
(the "Change in Control Notice") and shall specify in such notice the number
of Warrant Shares underlying the Warrants held by such Purchaser and his
Permitted Transferees and may specify in such notice a proposed date of sale.
The closing of any purchase of the Warrants pursuant to paragraphs 5A, 5B or
5C shall take place at the offices of Suiza at 10:00 a.m., Dallas, Texas
time, on a Business Day (the "Warrant Closing Date") which shall not be later
than the latest to occur of (i) the date specified in the Put Notice, the
Call Notice or the Change in Control Notice, as the case may be (which shall
not be less than 15 Business Days after the date of the Put Notice, the Call
Notice or the Change in Control Notice), and (ii) the date 15 Business Days
after a final determination of the Put Price or the Call Price, as the case
may be.
5E. PAYMENT. On or prior to the Warrant Closing Date, Suiza shall
deliver to each holder of the Warrants being purchased an amount equal to the
aggregate Put Price or Call Price, as the case may be, for the Warrants being
purchased from such holder by wire transfer of immediately available funds to
any account specified in writing, at least two Business Days prior to the
Warrant Closing Date, by such holder to Suiza. At its sole option, Suiza may
make payment to any holder of Warrants pursuant to this paragraph 5E by
tendering to the holder of the Warrants being purchased shares of Suiza
Common Stock having an aggregate Market Value Per Share that is not greater
than the aggregate Put Price or Call Price for the Warrants being purchased
and by paying any remaining amount of the Put Price or Call Price in cash, as
provided above.
5F. RESTRICTIONS ON PAYMENTS. In the event that Suiza is restricted
from paying the holders of the Warrants any or all of the Put Price pursuant
to paragraph 5A or the Call Price pursuant to paragraph 5C, as the case may
be, because of the provisions contained in any agreement or instrument, the
obligation to purchase the Warrants shall remain an obligation of Suiza and
shall be performed as soon as the payment thereof is allowed under such
agreement or instrument. If Suiza is so prohibited, it shall, to the extent
permitted by any such agreement or
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instrument, if requested by any holder of the Warrants, make payment to such
holder by tendering shares of Suiza Common Stock having an aggregate Market
Value Per Share that is not greater than the aggregate Put Price or Call
Price for the Warrants being purchased. Suiza may not exercise its right to
purchase the Warrants under paragraph 5B unless it is able to pay the holders
of the Warrants the entire Call Price or unless it elects to issue Suiza
Common Stock pursuant to paragraph 5E.
5G. DELIVERY OF CERTIFICATES: REISSUANCE. Upon the timely receipt of
the Put Price or the Call Price, as the case may be, for Warrants sold to
Suiza pursuant to paragraphs 5A, 5B or 5C, the holder thereof shall forward,
on or prior to the Warrant Closing Date, the Warrants so sold to Suiza, free
and clear of any liens or other encumbrances of any kind, other than security
interests of third party creditors of the Company or Suiza.
6. VOTING PROVISIONS.
6A. COMPOSITION OF BOARD OF DIRECTORS. Suiza and the Purchasers agree
that in any election of directors of the Company, they shall vote all shares
of capital stock of the Company owned or controlled by them, including the
Warrant Shares issuable upon exercise of the Warrants, to elect a Board of
Directors comprising not less than three directors designated as follows:
(i) one director shall be designated by the holders of a
majority of the Warrant Shares, assuming full exercise of each of the
Warrants (the "Purchaser Director"); and
(ii) the remaining directors shall be designated by Suiza (each a
"Suiza Director").
Until notice is given to the contrary, the Purchaser Director shall be Xxxxx
X. Xxxxxx and the Suiza Directors shall be Xxxxx X. Xxxxxx and Xxxxx X. Xxxx.
The obligation to vote shares in accordance with this paragraph 6A shall be
specifically applicable to and enforceable against any transferees of the
parties hereto.
6B. VACANCIES; REMOVAL. In the event of any vacancy in the Board of
Directors, each of the Purchasers and Suiza agree to vote all Warrant Shares
and shares of Common Stock owned or controlled by them and to otherwise use
their best efforts to fill such vacancy so that the Board of Directors of the
Company will include directors designated as provided in paragraph 6A. Each
of the Purchasers and Suiza agree to vote all Warrant Shares and shares of
Common Stock owned or controlled by them for the removal of a director
whenever (but only whenever) there shall be presented to the Board of
Directors the written direction that such director be removed, signed by the
holders of a majority of the Warrant Shares, assuming full exercise of the
Warrants, in the case of a Purchaser Director, or by Suiza, in the case of
the Suiza Director. Each of the parties agrees to use its best efforts to
cause designees to be elected to the Board of Directors as provided in
paragraph 6A.
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7. PROVISIONS RELATING TO TRANSFERS OF COMPANY SECURITIES.
7A. GENERAL RESTRICTIONS ON TRANSFER OF SECURITIES.
(i) For purposes of this Agreement, "Restricted Securities" are
the Warrants, Warrant Shares and other Equity Securities of the
Company now owned or subsequently acquired by any Purchaser, a
Permitted Transferee or Suiza. During the term of this Agreement,
none of the Restricted Securities may be sold, assigned, transferred,
pledged, encumbered or otherwise disposed of (a "transfer") except in
a "Permitted Transfer" (as defined below).
(ii) Any attempted transfer of Restricted Securities other than
in accordance with this Agreement shall be null and void and the
Company shall refuse to recognize any such transfer and shall not
reflect on its records any change in record ownership of Restricted
Securities pursuant to any such transfer.
(iii) The following transfers by any holder other than Suiza
of Restricted Securities may be made free of the restrictions: (a) an
individual holder of Restricted Securities may transfer any or all of
the Restricted Securities owned by him to his spouse or children, or
to trusts established for the benefit of his spouse or children,
provided that (1) the transferor Purchaser retains all rights to
consent to any action hereunder, including the right to amend this
Agreement, (2) the transferee grants to the transferor an irrevocable
proxy coupled with an interest to vote all of the Restricted
Securities so transferred and (3) the transferee agrees to be bound by
the provisions of this Agreement; (b) a holder may sell Warrants to
Suiza pursuant to part 5 of this Agreement; and (c) a holder may
transfer Warrants to the underwriters of a Qualified Public Offering.
(iv) The following transfers by Suiza of Restricted Securities
may be made free of the restrictions: (a) sales allowed under
paragraph 7B; (b) Suiza may transfer any of the Suiza Shares to the
underwriters of an underwritten public offering involving the
securities of the Company; (c) a bona fide pledge of any of the Suiza
Shares in connection with any third party financing provided to Suiza
or the Company and (d) transfers which in the aggregate do not exceed
5% of the Suiza Shares.
(v) Each of transfers in paragraphs 7A(iii) and 7A(iv) are
referred to herein as a "Permitted Transfer."
7B. CO-SALE - SALES BY SUIZA.
(i) Whenever and as often as Suiza desires to sell any shares of
Common Stock pursuant to a bona fide written offer to purchase such
shares (but excluding any offers not exceeding in the aggregate for
all such offers 5% of the Suiza Shares), Suiza shall give written
notice (the "Sale Notice," for purposes of this
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paragraph 7B) to the Purchasers to such effect, enclosing a copy of such
offer and specifying the number of shares of Common Stock that Suiza
desires to sell, the name of the Person or Persons to whom Suiza desires
to make such sale and the consideration per share of Common Stock that
has been offered in connection with such offer. Upon receipt of the Sale
Notice, each Purchaser shall have the right, at such Purchaser's option,
to participate in the sale to the prospective purchaser pursuant to
paragraph 7B(ii).
(ii) Suiza will use best efforts to arrange for the sale to the
prospective purchaser of the number of shares of Common Stock of each
Purchaser or his Permitted Transferees that bears the same proportion
to the total number of shares of Common Stock (including Warrant
Shares purchasable upon exercise of Warrants) owned by such Purchaser
and his Permitted Transferees as the number of shares of Common Stock
being sold by Suiza bears to the total number of shares of Common
Stock owned by Suiza, at the purchase price per share and on the terms
and conditions specified in the Sale Notice. If the prospective
purchaser will not purchase all the shares of Common Stock that Suiza
and the Purchasers and their Permitted Transferees wish to sell
pursuant to this paragraph 7B(ii), the number of shares of Common
Stock that Suiza and the Purchasers and their Permitted Transferees
shall be entitled to sell to such prospective purchaser shall be a
number of shares equal to the number of shares of Common Stock that
the prospective purchaser desires to purchase times a fraction, the
numerator of which is the number of shares of Common Stock
beneficially owned by Suiza or each selling Purchaser and its
Permitted Transferees, as appropriate, and the denominator of which is
the Outstanding Common Stock.
(iii) A Purchaser may exercise his right to participate in the sale
to the prospective purchaser pursuant to paragraph 7B(ii) by giving written
notice of exercise to Suiza within ten Business Days after receipt of the
Sale Notice.
(iv) The Purchasers acknowledge that their right to participate
in a sale to the prospective purchaser pursuant to paragraph 7B(ii)
does not apply to any bona fide pledge by Suiza of any Common Stock in
connection with any third party financing provided to Suiza or the
Company, or the sale or other transfer by such third party of any of
such shares.
7C. PURCHASERS OR TRANSFEREES OF RESTRICTED STOCK. Except as otherwise
specifically provided herein, any Permitted Transferee or other Person who
shall acquire any shares of Restricted Stock shall have all of the rights and
be bound by all the terms and conditions of this Agreement to the same extent
as the parties hereto and, prior to registration of the transfer of any such
securities on the books of the Company, any Purchaser or other transferee
shall execute an agreement with the parties hereto agreeing to be bound
hereby.
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8. PREEMPTIVE RIGHTS.
If, prior to a Qualified Public Offering, the Company shall issue any
Equity Securities, each Purchaser shall be entitled to purchase the portion
of such Equity Securities to be issued necessary in order that the aggregate
shares of Common Stock held by such Purchaser and his Permitted Transferees
constitute the same percentage of the Outstanding Common Stock after the
issuance of such Equity Securities as before the issuance thereof; PROVIDED,
HOWEVER, that such preemptive right shall not apply to (a) issuances of
Common Stock or Equity Securities (1) pursuant to or in connection with a
Qualified Public Offering or (2) pursuant to an Approved Plan, (b) issuances
to third parties as consideration for acquisitions by the Company, (c)
issuances of Common Stock or Equity Securities upon the conversion, exercise
or exchange of Equity Securities to which the preemptive right was applicable
(d) issuances of Common Stock or Equity Securities in connection with an
exercise of the preemptive rights granted hereunder, (e) issuances of Warrant
Shares upon exercise of Warrants, or (f) issuances of Equity Securities
contemplated in this Agreement. The price of Equity Securities that each
Purchaser becomes entitled to purchase by reason hereof shall be the same
price at which such Equity Securities are offered to others. If such Equity
Securities are being offered in combination with any other Equity Securities
that are not Common Stock or convertible into Common Stock, each Purchaser
electing to exercise his preemptive right hereunder must also purchase such
other Equity Securities in the same proportion as such other Equity
Securities are being purchased by others. A Purchaser may exercise his right
under this paragraph 8 to purchase Equity Securities by paying the purchase
price therefor at the principal office of the Company at the same time as the
purchase price is paid by others in connection with the issuance giving rise
to the rights granted hereunder. The Company shall give the Purchasers notice
of any such issuance (which notice by the Company shall be given at least 35
calendar days before the issuance of the Equity Securities) stating the
number or amount of Equity Securities (including the other Equity Securities,
if any) it intends to issue, the price and characteristics thereof and the
date payment therefor must be made. The Purchaser shall pay such purchase
price by wire transfer of immediately available funds, to the extent such
purchase price is cash. A Purchaser's contractual preemptive rights
hereunder shall be deemed to be exercised immediately prior to the close of
business on the day of payment of the purchase price in accordance with the
foregoing provisions, and at such time such Purchaser shall be treated for
all purposes as the record holder of the Equity Securities. As promptly as
practicable (and in any event within ten calendar days) after the purchase
date, the Company shall issue and deliver at its principal office a
certificate or certificates for the number of full shares or amount,
whichever is applicable, of Equity Securities, together with cash for any
fraction of a share or portion of an Equity Security at the purchase price to
which the Purchaser is entitled hereunder.
9. REGISTRATION RIGHTS.
9A. REGISTRABLE SHARES. As used in this part 9, the term "Registrable
Stock" shall mean all Warrant Shares issued or issuable as a result of
exercise of the Warrants held by a Purchaser or his Permitted Transferee.
For purposes of this part 9, the Warrant Shares to be issued upon exercise of
the Warrants are deemed to be issued.
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9B. REQUIRED REGISTRATION. In the event that:
(i) after the closing of a Qualified Public Offering, any of the
Purchasers or their Permitted Transferees propose to dispose of at
least the Minimum Number (as defined in paragraph 9C) of shares of
Registrable Stock;
(ii) at the time of such proposal the Company is not actively
considering or pursuing a public offering of Equity Securities within
60 days (other than on Form S-8 or successor form); and
(iii) in the opinion of counsel for the Company such disposition may
not be effected pursuant to Rule 144 (other than pursuant to Rule 144(k))
in three months or less without registration of such shares under the
Securities Act;
then the Purchasers may request the Company in writing to effect such
registration, stating the number of shares of Registrable Stock to be
disposed of and the intended method of disposition of such shares. Upon
receipt of such request of such proposed registration (the "Registration
Request"), the Company will give prompt written notice (the "Registration
Notice") to all other Persons owning Registrable Stock. The holder or
holders of any shares of Registrable Stock shall have ten calendar days after
receipt of such Registration Notice to request in writing (collectively, the
"Additional Registration Requests") that the Company also register all or a
portion of such holder's or holders' Registrable Stock by stating the number
of shares of Registrable Stock to be disposed of and the intended method of
disposition of such shares by such holder or holders. The Company will use
its best efforts to effect promptly the registration under the Securities Act
of (a) all shares of Registrable Stock specified in the Registration Request
and the Additional Registration Requests, and (b) such other shares of Common
Stock as may be required to be registered under other agreements of the
Company with respect to registration rights covering securities of the
Company.
9C. MINIMUM NUMBER. The Minimum Number shall mean 30% of the Warrant
Shares issuable or issued pursuant to the exercise of any and all Warrants;
provided, however, if the number of Warrant Shares not previously sold
pursuant to an effective registration statement or Rule 144 is less than 30%,
then the Minimum Amount shall be all of the remaining Warrant Shares.
9D. LIMITATION ON REQUIRED REGISTRATIONS.
(i) The Company shall not be required to effect more than two
registrations pursuant to paragraph 9B.
(ii) The Company shall not be required to effect more than one
registration pursuant to paragraph 9B during any 12 month period.
(iii) The Company shall not be required to cause a registration
statement requested pursuant to paragraph 9B to become effective prior
to 90 calendar days following the effective date of the most recent
registration by the Company under
12
the Securities Act (except with respect to registration statements on
Forms S-4 or S-8 or another form not available for registering the
Registrable Stock for sale to the public or in connection with mergers,
acquisitions, exchange offers, dividend reinvestment plans or stock
option or other employee benefit plans of the Company); PROVIDED,
HOWEVER, that the Company shall use its best efforts to achieve such
effectiveness promptly following such 90-day period if the request
pursuant to paragraph 9B has been made prior to the expiration of such
90-day period.
(iv) The Company shall not register securities for sale for its
own account or for any other Person's account in any registration
requested pursuant to paragraph 9B other than to the extent it is
required to do so under registration rights outstanding at the date
the Registration Request is actually received by the Company or unless
permitted to do so by written consent of the holders of at least 50%
of the Registrable Stock as to which registration has been requested
in the Registration Request and the Additional Registration Requests
pursuant to paragraph 9B.
9E. INCIDENTAL REGISTRATION. If shares of Common Stock are proposed to
be registered under the Securities Act (except with respect to registration
statements on Forms S-4 or S-8 or another form not available for registering
the Registrable Stock for sale to the public or in connection with mergers,
acquisitions, exchange offers, dividend reinvestment plans or stock option or
other employee benefit plans of the Company), the Company will each such time
give written notice to the Purchasers of such event. Upon the written
request of a Purchaser given within ten calendar days after receipt of any
such notice (stating the number of shares of Registrable Stock to be disposed
of and the intended method of disposition of such shares), the Company will
use its best efforts to cause promptly all such shares of Registrable Stock
intended to be disposed of, the Purchasers shall have so requested
registration thereof, to be registered under the Securities Act so as to
permit the sale or other disposition (in accordance with the intended methods
thereof as aforesaid) by such holder or holders of the shares so registered,
subject to the limitations set forth in xxxxxxxxx 0X.
0X. LIMITATIONS ON INCIDENTAL REGISTRATION. If the Company gives notice
pursuant to paragraph 9E for the purpose of permitting a disposition (either
underwritten or otherwise) of securities of the Company, the Company shall
have the right to exclude (i) all shares to be sold on behalf of selling
shareholders if the Company's underwriters or financial advisors determine
such exclusion is necessary or advisable to insure a successful offering of
Company securities, and (ii) any shares to be sold on behalf of any
shareholder who has twice previously registered shares of Common Stock
pursuant to paragraph 9E. If the Company limits the number of (but does not
exclude) shares sold by selling shareholders, the number of shares to be
registered on behalf of any holder of Registrable Stock shall be determined
by multiplying the number of shares of Registrable Stock such holder has
requested be registered by a fraction, the numerator of which is the number
of shares of selling shareholders to which the registration is limited, and
the denominator of which is the number of shares of Common Stock validly
requested to be included in such registration by all holders of Common Stock
having registration rights.
-13-
9G. DESIGNATION OF UNDERWRITER. The Company shall have the right to
designate the managing underwriter for any public offering of the Company's
securities effected through a registration under paragraph 9B; provided
however, that such designation shall be subject to the approval of the
holders of a majority of Registrable Stock being included in such offering,
which approval shall not be unreasonably withheld.
9H. REGISTRATION PROCEDURES. If and whenever the Company is required by
the provisions of this part 9 to use its best efforts to effect promptly the
registration of shares of Registrable Stock under the Securities Act, the
Company will:
(i) prepare and file with the Commission a registration
statement with respect to such shares and use its best efforts to
cause such registration statement to become effective as soon as
practicable and remain effective as provided herein for a period of
not less than six months except that the Company shall not be required
to conduct any special audit and if such an audit would be required,
the Company may delay such registration statement until such time as
such special audit is no longer required;
(ii) prepare and file with the Commission such amendments and
supplements to such registration statement and prospectus used in
connection therewith as may be necessary to keep such registration
statement effective and current and to comply with the provisions of
the Securities Act with respect to the sale or other disposition of
all shares covered by such registration statement, including such
amendments and supplements as may be necessary to reflect the intended
method of disposition from time to time of the prospective seller or
sellers of such shares for a period of not less than six months;
(iii) furnish to each prospective seller such number of copies of
a prospectus, including a preliminary prospectus, in conformity with the
requirements of the Securities Act, and such other documents as such
seller may reasonably request in order to facilitate the public sale or
other disposition of the shares owned by such seller; and
(iv) use its best efforts to register or qualify the shares
covered by such registration statement under such other securities or
blue sky or other applicable laws of such jurisdictions within the
United States, as each prospective seller shall reasonably request, to
enable such prospective seller to consummate the public sale or other
disposition in such jurisdictions of the shares owned by such seller.
Each prospective seller of Registrable Stock, and each underwriter
designated by such seller, shall be required to furnish to the Company such
information as the Company may reasonably require from such seller or
underwriter for inclusion in the registration statement (and the prospectus
included therein).
14
Each Purchaser will notify the Company two Business Days prior to any
sale of Registrable Stock pursuant to the registration statement by such
Purchaser or his Permitted Transferee. If, upon receipt of such a notice,
the Company certifies to such Purchaser in writing that (i) due to a change
in circumstances or a pending transaction, the registration statement
contains an untrue statement of a material fact or omits to state any
material fact required to be stated therein or necessary to make the
statements therein not misleading and (ii) the public disclosure required to
correct such misstatement or omission would be injurious to the Company, then
such Purchaser or Permitted Transferee will refrain from selling any shares
pursuant to the registration statement for the period of time requested by
the Company; but the obligations of the Company with respect to maintaining
any registration statement current and effective shall be extended by a
period of days equal to such time period. The Company will use reasonable
efforts to minimize the time period during which any holder of Registrable
Stock is required to refrain from selling under this paragraph 9H, and
notwithstanding anything to the contrary contained herein, the aggregate of
such time periods will not exceed 180 calendar days during any 12 month
period.
9I. EXPENSES OF REGISTRATION. All expenses incurred in effecting any
registration pursuant to this part 9 including, without limitation, all
registration and filing fees, printing expenses, expenses of compliance with
Blue Sky laws, fees and disbursements of counsel for the Company, and
reasonable fees and disbursements of one counsel for the Purchasers, shall be
borne by the Company, save and except the following which shall be borne by
the holders of the securities registered pursuant to such registration, pro
rata based upon the value of their securities so registered as compared to
all securities so registered:
(i) all fees and disbursements of any additional counsel for
such holders;
(ii) the cost of any special audit required by the Securities Act
or the regulations thereunder as a result of the Company's obligation
or election to maintain a registration statement current for six
months pursuant to subparagraphs (i) and (ii) of paragraph 9H; and
(iii) underwriting discounts and commissions.
9J. INDEMNIFICATION.
(i) The Company agrees to indemnify each holder requesting or
joining in a registration, each person or entity who controls such
holder within the meaning of Section 15 of the Securities Act, and
each underwriter and selling broker of the securities so registered,
and their respective successors, against all claims, losses, damages,
liabilities, fines and penalties (or actions in respect thereof)
arising out of or based on any untrue statement (or alleged untrue
statement) of a material fact contained in any prospectus, offering
circular or other document incident to any registration, qualification
or compliance (or in any related registration statement, notification
or the like) or any omission (or alleged omission) to state therein a
15
material fact required to be stated therein or necessary to make the
statements therein not misleading, or any violation by the Company of
any rule or regulation promulgated under the Securities Act applicable
to the Company and relating to action or inaction required of the
Company in connection with any such registration, qualification or
compliance, and agrees to reimburse each such holder, each person or
entity who controls such holder within the meaning of Section 15 of
the Securities Act, and each such underwriter, and their respective
successors, for any legal and any other expenses reasonably incurred
in connection with investigating or defending any such claim, loss,
damage, liability or action, PROVIDED, HOWEVER, that the Company will
not be liable in any such case if (and to the extent that) such
statement or omission was made in reliance upon information
(including, without limitation written negative responses to
inquiries) furnished to the Company by an instrument duly executed by
such holder or underwriter and stated to be specifically for use in
such prospectus, offering circular or other document (or related
registration statement, notification or the like) or any amendment or
supplement thereto.
(ii) Each holder requesting or joining in a registration and each
underwriter of the securities so registered will indemnify the Company
and its officers and directors and each person, if any, who controls
any thereof within the meaning of Section 15 of the Securities Act and
their respective successors against all claims, losses, damages,
liabilities, fines and penalties (or actions in respect thereof)
arising out of or based on any untrue statement (or alleged untrue
statement) of a material fact contained in any prospectus, offering
circular or other document incident to any registration, qualification
or compliance (or in any related registration statement, notification
or the like) or any omission (or alleged omission) to state therein a
material fact required to be stated or necessary to make the
statements therein not misleading, and will reimburse the Company, as
applicable, and each other person indemnified pursuant to this
subparagraph (ii) for any legal and any other expenses reasonably
incurred in connection with investigating or defending any such claim,
loss, damage, liability or action, PROVIDED, HOWEVER, that this
subparagraph (ii) shall apply only if (and only to the extent that)
such statement or omission was made in reliance upon information
(including, without limitation, written negative responses to
inquiries) furnished to the Company by an instrument duly executed by
such holder or underwriter and stated to be specifically for use in
such prospectus, offering circular or other document (or related
registration statement, notification or the like) or any amendment or
supplement thereto.
9K. OPTION TO PURCHASE REGISTRABLE STOCK. For a period of 20 calendar
days commencing on the date that the Company receives a request by the
Purchasers to include Registrable Stock in a registration statement pursuant
to this part 9, the Company shall have the right and option, in lieu of
including such Registrable Stock in such registration, to purchase for cash
from the holders of the Registrable Stock requested to be included in such
registration and to require such holders to sell, at the Market Value Per
Share, all of such Registrable Stock. In order to exercise its option to
purchase Registrable Stock pursuant to this paragraph 9K, the
16
Company must give written notice to the Purchasers of such exercise (the
"Purchase Notice") during such 20-day period. The closing of any purchase of
Registrable Stock pursuant to this paragraph 9K shall take place at the
offices of Suiza at 10:00 a.m., Dallas, Texas time, on a Business Day which
shall be no earlier than 30 calendar days after the date of the Purchase
Notice. If the Company exercises its option to purchase Registrable Stock
under this paragraph 9K in lieu of a registration under paragraph 9B, upon
the payment of the purchase price in cash for such Registrable Stock, the
Company shall be considered as effecting one registration pursuant to
paragraph 9B.
10. POST-CLOSING COVENANTS.
10A. FINANCIAL STATEMENTS AND OTHER INFORMATION. The Company shall
deliver to each Eligible Purchaser:
(i) within 90 calendar days after the end of each fiscal year of
the Company, an audited balance sheet of the Company as at the end of
such year and audited statements of operations and of cash flows of
the Company for such year, certified by a firm of certified public
accountants of established national reputation selected by the
Company, and prepared in accordance with generally accepted accounting
principles; and
(ii) within 45 calendar days after the end of each fiscal
quarter, an unaudited balance sheet of the Company as at the end of
such quarter and unaudited statements of operations and of cash flows
of the Company for such quarter and for the current fiscal year to the
end of such quarter.
The foregoing financial statements shall be prepared on a consolidated basis;
PROVIDED, HOWEVER, that for purposes of determining Excess Cash Flow and Net
Income, the Company will be treated for tax purposes as an independent
company and not as part of a consolidated group.
10B. APPLICATION OF COMPANY CASH FLOW. To the extent permissible under
applicable law and the third party credit facilities of the Company and Suiza
for each quarter, all Excess Cash Flow will be applied by the Company as
follows: (i) first, to accrued and unpaid dividends on the Series A Preferred
Stock; (ii) second, to the repayment of principal of the Senior Note, until
repaid in full; (iii) third, to the repayment of principal of the Mezzanine
Note, until repaid in full; (iv) fourth, to the redemption or repurchase of
the Series A Preferred Stock, as provided in the Certificate of Designation,
until no shares of the Series A Preferred Stock are outstanding; and (v)
fifth, to the holders of Common Stock, as dividends.
10C. MANAGEMENT SERVICES BY SUIZA. The parties acknowledge that Suiza
will be providing management services to the Company after the Closing, for
which Suiza will receive management fees from the Company equal to its direct
and indirect costs of providing such services. In connection therewith,
Suiza and the Company will execute a management services agreement (or a
similar agreement or series of agreements) reasonably acceptable to the
Purchasers.
17
10D. ACQUISITIONS BY SUIZA. Suiza agrees that it will not make an
acquisition of any Person primarily engaged in the Company Business, except
through the Company. Notwithstanding the foregoing, Suiza will not be
required to contribute to the Company any of the existing operations of Suiza
or the plastics operations of any future acquisitions whose primary business
is not the Company Business. However, if Suiza determines to contribute any
of its operations engaged in the Company Business to the Company, Suiza and
the Purchasers will agree to the consideration to be received by Suiza from
the Company for such operations prior to such contribution. In addition,
Suiza will consult with the Purchasers prior to the sale by Suiza to a third
party of any of its operations engaged in the Company Business.
10E. ADDITIONAL FUNDING BY SUIZA. Suiza may, at its sole option, provide
additional financing of up to $10,000,000 to the Company, but has no
obligation to do so. If any future financing of the Company by Suiza is for
working capital purposes, such financing will be pursuant to a revolving debt
facility with terms and conditions similar to those contained in the Senior
Note. In addition, Suiza may provide the Company with cash management
services, pursuant to which Suiza will provide the Company with its daily
cash requirements and the Company will transfer to Suiza all of its excess
cash on a daily basis. All other financing of the Company by Suiza,
including for acquisitions by the Company, will be made in exchange for
securities of the Company in the following percentages: (i) 55% in
indebtedness with economic terms similar to the Senior Note; (ii) 25% in
indebtedness with economic terms similar to the Mezzanine Note; (iii) 16-2/3%
in additional shares of Series A Preferred Stock or other Preferred Stock
with economic terms similar to the Series A Preferred Stock; and (iv) 3-1/3%
in shares of Common Stock. If on or about the third anniversary of the
Closing, Suiza determines after reasonable inquiry that the Company is then
able to receive third party financing on terms materially more favorable than
those of the Senior Note and the Mezzanine Note, and Suiza does not match the
terms of such third party financing, the Purchasers may require the Company
to refinance in full all of its indebtedness to Suiza, whether pursuant to
the Senior Note, the Mezzanine Note, or any additional financing contemplated
by this paragraph 10E, with such third party financing.
10F. LINE OF BUSINESS. The Company shall not enter any line of Business
other than the Company Business except pursuant to acquisitions permitted by
paragraph 10D.
10G. AFFILIATE TRANSACTIONS. Suiza shall cause the Company not to enter
into any transaction with an affiliate of the Company unless such transaction
is on fair and reasonable terms, which are not less favorable to the Company
than could be obtained in a comparable arms-length transaction with a
non-affiliated person.
18
11. DEFINITIONS.
For the purposes of this Agreement, the following terms shall have the
meanings set forth below:
"AFFILIATE" means with respect to any Person, a Person that directly, or
indirectly through one or more intermediaries, controls, is controlled by, or
is under common control with, such Person, and, in the case of an individual,
includes any relative or spouse of such person, or any relative or such
spouse, who has the same home as such Person. The term "control" means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a person, whether through the
ownership of voting securities, by contract or otherwise.
"APPROVED PLAN" means any written stock option, stock purchase or similar
incentive plan approved by the Board of Directors, pursuant to which up to 5%
of the Outstanding Common Stock would be available for issuances to officers
and key employees of the Company.
"BOARD OF DIRECTORS" means the board of directors of the Company.
"BUSINESS DAY" means any day of the year on which banks in Dallas, Texas
and New York, New York are open to the public for conducting all regular
business and are not required to close.
"BYLAWS" means the bylaws of the Company, as amended and in effect at the
Closing.
"CALL PRICE" means, for each Warrant (determined on the basis of the
number of Warrant Shares into which it is then exercisable) which is to be
purchased by Suiza pursuant to paragraphs 5B or 5C, the amount obtained by
multiplying (i) the Call Share Value by (ii) the number of Warrant Shares
into which such Warrant is then exercisable.
"CALL SHARE VALUE" means the excess over the exercise price per Warrant
Share of the Warrant of the product obtained by multiplying (i) 14 by (ii)
the quotient obtained by dividing (a) the Net Income for the last full fiscal
year immediately preceding the Call Notice or the Change in Control Notice,
as the case may be, by (b) the Outstanding Common Stock as of the date of the
Call Notice or the Change in Control Notice, as the case may be.
"COMMON STOCK" means the Company's Common Stock, par value $0.001 per
share.
"COMPANY BUSINESS" means the business of manufacturing, distributing,
marketing or selling of blow mold PET or high density polyethylene plastic
containers.
"ELIGIBLE PURCHASER" means a Purchaser holding at least 5% of the
Outstanding Common Stock, and for purposes of determining whether the number
of shares held by a Purchaser
19
qualifies such Purchaser as a Eligible Purchaser, shall include shares held
by Affiliates of such Purchaser.
"EQUITY SECURITIES" means any capital stock or similar security,
including without limitation, securities containing equity features
(including dividend or liquidation preferences) and securities containing
profit participation features, or any security convertible or exchangeable,
with or without consideration, into or for any stock or similar security, or
any security carrying any warrant or right to subscribe for or purchase any
stock or similar security, or any such warrant or right.
"EXCESS CASH FLOW" means for any period, Net Income plus all non-cash
expense items, minus (i) all scheduled payments of principal on the Senior
Debt or any other indebtedness of the Company and (ii) all capital
expenditures of the Company.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"MARKET VALUE PER SHARE" means, with respect to either Common Stock or
Suiza Common Stock, as the case may be, the average closing price for such
stock for the ten trading-day period ending on the Warrant Closing Date, or
the date of the Purchase Notice, as the case may be, as reported in THE WALL
STREET JOURNAL.
"NET INCOME" for any period means the net income of the Company for such
period, determined in accordance with generally accepted accounting
principles and the provisions of paragraph 10A; PROVIDED, HOWEVER, that all
extraordinary items will be excluded and only those management fees charged
to the Company by Suiza for services actually rendered will be included.
"OUTSTANDING COMMON STOCK" means all of the outstanding Common Stock,
including in such outstanding Common Stock the Warrant Shares and all shares
of Common Stock which could be acquired from the Company upon exercise or
conversion of any outstanding options or other Equity Securities then
exercisable or convertible into Common Stock.
"PERMITTED TRANSFEREE" means any transferee of a Purchaser in a
Permitted Transfer.
"PERSON" means an individual, a partnership, a corporation, an
association, a joint stock company, a trust, a joint venture, a limited
liability company, an unincorporated organization or a governmental entity or
any department, agency or political subdivision thereof.
"PREFERRED STOCK" means the Company's Preferred Stock, par value $0.001
per share.
"PUT PRICE" means, for each Warrant (determined on the basis of the
number of Warrant Shares into which it is then exercisable) which is to be
purchased by Suiza pursuant to paragraph 5A, the product obtained by
multiplying (i) the Put Share Value by (ii) the number of Warrant Shares into
which such Warrant is then exercisable.
20
"PUT SHARE VALUE" means the excess over the exercise price per Warrant
Share of the Warrant of the product obtained by multiplying (i) 12 by (ii)
the quotient obtained by dividing (a) the Net Income for the last full fiscal
year immediately preceding the Put Notice by (a) the Outstanding Common Stock
as of the date of the Put Notice.
"QUALIFIED PUBLIC OFFERING" means (i) any underwritten offering by the
Company of shares of Common Stock to the public pursuant to an effective
registration statement under the Securities Act in which the aggregate cash
proceeds to be received by the Company and selling shareholders from such
offering (without deducting underwriting discounts, expenses and commissions)
are at least $20,000,000, or (ii) any distribution or offering by Suiza of
shares of Common Stock to the stockholders of Suiza, which distribution or
offering is registered pursuant to the Securities Act or the Exchange Act, in
which the aggregate Market Value Per Share of the Common Stock transferred to
the stockholders of Suiza after such distribution or offering is at least
$20,000,000.
"SECURITIES ACT" means the Securities Act of 1933, as amended, or any
similar federal law then in force.
"SERIES A PREFERRED STOCK" means the Company's Series A Redeemable
Preferred Stock, $0.001 par value, more fully described in the Certificate of
Designation.
"SUBSIDIARY" means any corporation more than 50% of the outstanding
voting securities of which are owned by the Company or any Subsidiary,
directly or indirectly, or a partnership or limited liability company in
which the Company or any Subsidiary is a general partner or manager or holds
interests entitling it to receive more than 50% of the profits or losses of
the partnership or limited liability company.
"SUIZA COMMON STOCK" means the common stock of Suiza, $0.01 par value.
12. GENERAL PROVISIONS.
12A. LEGENDS ON CERTIFICATES. During the term of this Agreement, each
certificate representing shares of Common Stock will bear a legend in
substantially the following form:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE AND THE SALE, ASSIGNMENT,
TRANSFER, PLEDGE OR OTHER DISPOSITION AND VOTING THEREOF ARE SUBJECT TO
CERTAIN RESTRICTIONS AND AGREEMENTS CONTAINED IN A STOCKHOLDERS AGREEMENT, AS
AMENDED FROM TIME TO TIME, AMONG THE COMPANY AND CERTAIN STOCKHOLDERS. A
COPY OF THE STOCKHOLDERS AGREEMENT AND ALL APPLICABLE AMENDMENTS THERETO WILL
BE FURNISHED BY THE COMPANY TO THE RECORD HOLDER OF THE SHARES REPRESENTED BY
THIS CERTIFICATE WITHOUT CHARGE UPON WRITTEN REQUEST TO THE COMPANY AT ITS
PRINCIPAL PLACE OF BUSINESS OR REGISTERED OFFICE."
The Company shall make a notation on its records and give instructions to any
transfer agent of the Common Stock in order to implement the restrictions on
transfer established in this Agreement.
21
12B. TERMINATION; AMENDMENT.
(i) This Agreement may be terminated at any time prior to the
Closing (a) with the written agreement of Suiza and the Purchasers or
(b) upon the termination of the Purchase Agreement prior to the
closing thereunder.
(ii) This Agreement may be terminated at any time after the
Closing (a) with the written agreement of Suiza and the holders of 66-2/3%
or more of the Warrant Shares outstanding (assuming the exercise of all
of the Warrants), or (b) upon the acquisition by a single Person of all
of the Outstanding Common Stock.
(iii) The provisions of parts 5 through 8 and part 10 of this
Agreement shall terminate immediately prior to the closing of a
Qualified Public Offering.
(iv) In the event of a termination of this Agreement as provided
in this paragraph 12B, this Agreement shall forthwith become void and
there shall be no liability or obligation on the part of any party
hereto or their Affiliates; PROVIDED, HOWEVER, that any such
termination shall not relieve any party from liability for willful
breach of this Agreement.
(v) This Agreement may be amended only with the written
agreement of Suiza and the holders of 66-2/3% or more of the Warrant
Shares outstanding (assuming the exercise of all of the Warrants).
12C. NOTICES. All notices, requests, consents, and other communications
under this Agreement shall be in writing and shall be delivered personally or
by facsimile transmission or by overnight delivery service or 72 hours after
having been mailed by first class certified or registered mail, return
receipt requested, postage prepaid:
If to the Company or Suiza, at Suiza Foods Corporation, 0000 Xxxxxx Xxxxx
Xxxxxxxxx, Xxxxx 0000, Xxxxxx, Xxxxx 00000, Attention: Xxxxx X. Xxxxxx,
Chairman, or at such other address or addresses as may have been furnished in
writing by the Company or Suiza to the Purchasers, with a copy to Xxxxxx &
Xxxx, L.L.P., 0000 Xxxx Xxxxxx, Xxxxx 0000, Xxxxxx, Xxxxx 00000, Attention:
Xxxx X. Xxxxxxxx.
If to a Purchaser, at 0000 Xxxx Xxxxxxx Xxxxxx, Xxxxxxxx, Xxxxxxxxxxxxx
00000-0000, or at such other address or addresses as may have been furnished
to the Company and Suiza in writing by such Purchaser, with a copy to
Xxxxxxxx, Xxxxxxx & Xxxxxxx, a Professional Corporation, 000 Xxxxxxx Xxxxxx,
Xxxxxx Xxxxxxxxxxxxx 00000, Attention: Xxxxxxx X. Xxxxxx.
12D. GOVERNING LAW. The construction, validity and interpretation of
this Agreement and the related Senior Note, Mezzanine Note and Warrants will
be governed by the internal laws of the State of Delaware without giving
effect to any choice of law or conflict of law provision or rule
22
(whether of the State of Delaware or any other jurisdiction) that would cause
the application of the laws of any jurisdiction other than the State of
Delaware.
12E. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of
which shall be one and the same document.
12F. REORGANIZATION. The provisions of this Agreement shall apply to any
shares or other securities resulting from any stock split or reverse split,
stock dividend, reclassification, subdivision, consolidation or
reorganization of any shares or other equity securities of the Company and to
any shares or other securities of the Company or of any successor company
which may be received by any of the parties hereto by virtue of their
respective ownership of any shares of securities of the Company.
12G. HEADINGS. The headings of this Agreement are for convenience only
and do not constitute a part of this Agreement.
12H. SEVERABILITY. The invalidity or unenforceability of any provision
of this Agreement shall not affect the validity or enforceability of any
other provision of this Agreement.
12I. BINDING EFFECT. Notwithstanding the transfer of Warrants or Warrant
Shares to a Permitted Transferee, the rights and obligations of each
Purchaser under this Agreement may not be assigned by such Purchaser to any
Permitted Transferee without the written consent of the Company and Suiza.
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IN WITNESS WHEREOF, this Agreement has been executed by the parties
hereto as of the date first written above.
COMPANY:
FRANKLIN PLASTICS, INC.
By: /s/ Xxxxx X. Xxxxxx
-------------------------------
Xxxxx X. Xxxxxx,
Chairman
SUIZA:
SUIZA FOODS CORPORATION
By: /s/ Xxxxx X. Xxxxxx
-------------------------------
Xxxxx X. Xxxxxx,
Chairman
PURCHASERS:
/s/ Xxxxx X. Xxxxxx
------------------------------------
Xxxxx X. Xxxxxx
/s/ Xxxx X. Xxxxxx
------------------------------------
Xxxx X. Xxxxxx
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