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EXCHANGE AGENT AGREEMENT
As of July 1, 1997
American Stock Transfer & Trust Company
00 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
In connection with the exchange offer ("Exchange Offer") of Disc Graphics,
Inc., a Delaware corporation (the "Company") as described in the Company's
Exchange Offer dated July 11, 1997 (the "Exchange Offer"), pursuant to the
Exchange Offer, the Company will exchange one share of the Company's common
stock, par value $.01 per share ("Common Stock") for each eight and one-half of
the Company's Class A Redeemable Common Stock Purchase Warrants ("Warrants"),
together with cash (without interest) in lieu of fractional shares at a rate for
each share of Common Stock based on a formula outlined in the Prospectus. You
will be notified of the Expiration Date (as defined in the Prospectus) and the
purchase price for fractional shares by no later than the first business day
following the Expiration Date.
The Company has delivered or will deliver to you or as transfer agent for
the Warrants and the Common Stock you have in your possession (i) a copy of the
letter of transmittal ("Letter of Transmittal") to be sent to holders of record
of Warrants ("Warrantholders"), (ii) copies of all other documents or materials,
if any, to be forwarded to Warrantholders, (iii) a certified copy of resolutions
adopted by the Board of Directors of the Company authorizing the Exchange Offer,
the appointment of an exchange agent and execution of an exchange agent
agreement, (iv) a list showing the names and addresses of all Warrantholders as
of the Expiration Date and the number of Warrants held by each Warrantholder
immediately prior to the Expiration Date, and (v) a list of certificates
(including certificate numbers) representing Warrants that have been or are, as
such date, lost, stolen, destroyed or replaced or restricted as to transfer
(noting the text of the restrictive legends applicable thereto) or with respect
to which a stop transfer order has been noted (such lists being herein referred
to as the "Lists").
As soon as practicable after (and in any event no later than the third
business day after) the effective date of the Registration Statement, as to
which the Company will provide the Exchange Agent with written notice, the
Exchange Agent (as defined below) will mail to each Warrantholder (a) a notice
advising such holder of the Exchange Offer and the applicable terms of the
exchange effected thereby, (b) a Letter of Transmittal with instructions, (c) a
self-addressed return envelope, (d) tax certification guidelines, and (e) any
other material deemed appropriate by the Company.
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This will confirm the appointment by the Company of American Stock Transfer
& Trust Company as the exchange agent ("Exchange Agent") and, in that capacity,
the authorization of the Exchange Agent to act as agent for the Warrantholders
for the purpose of receiving the Common Stock and cash in lieu of fractional
shares to be issued in exchange for Warrants and transmitting the same to the
Warrantholders upon satisfaction of the conditions set forth herein. Your
duties, liabilities and rights as Exchange Agent are as set forth herein and
will be governed, in addition, by the applicable terms of the Exchange Offer.
In carrying out your duties as Exchange Agent, you are to act in
accordance with the following:
1. Examination of Letters of Transmittal. You are to examine Letters
of Transmittal, certificates representing Warrants and other documents delivered
or mailed to you by or for Warrantholders to ascertain, to the extent reasonably
determined by you, whether:
(a) the Letters of Transmittal appear to be duly executed and
properly completed in accordance with the instructions set forth therein;
(b) the certificates for Warrants appear to be properly
surrendered and, if applicable, endorsed for transfer;
(c) the other documents, if any, used in the exchange appear to
be duly executed and properly completed and in the proper form; and
(d) the certificates for Warrants are free of restrictions on
transfer or stop orders.
In the event you ascertain that any Letter of Transmittal or other
document has been improperly completed or executed, that any of the certificates
for Warrants are not in proper form or some other irregularity exists, you shall
attempt to resolve promptly the irregularity and may use your best efforts to
contact the appropriate Warrantholder by whatever means of communication you
deem most expedient to correct the irregularity and, upon consultation with the
Company, shall endeavor to take such other reasonable action as may be necessary
to cause such irregularity to be corrected, and the determination of any
questions referred to the Company or its counsel by you as to the validity, form
and eligibility, as well as the proper completion or execution of the Letters of
Transmittal and other documents, shall be final and binding, and you may rely
thereon as provided in Section 12(a) hereof.
2. Exchange of Warrants. (a) As soon as practicable after the Expiration
Date and after surrender to you of all certificates for Warrants registered to a
particular record holder or holders (and only after surrender of all such
certificates) and the return of a properly completed and signed Letter of
Transmittal relating thereto, you shall cause to be issued and distributed to
the
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holder(s) in whose name such certificates were registered (or such other person
as shall have been specified pursuant to the terms hereof) (i) the whole number
of shares of Common Stock issuable pursuant to the Exchange Offer, registered in
the name of such holder(s) and (ii) a check in lieu of any fractional shares
("Cash Amount"). The Company shall provide you the amount of cash sufficient to
make all payments for fractional shares calculated.
(b) Until so surrendered, each certificate as to which a Letter
of Transmittal was received which immediately prior to the Expiration Date
represented outstanding Warrants shall, at and after the Expiration Date,
entitle the holder(s) thereof only to receive, upon surrender of it and all
other identically registered certificates, the certificates representing shares
of Common Stock and the Cash Amount contemplated by the preceding paragraph.
(c) If any certificates representing shares of Common Stock are
to be issued in, or a Cash Amount is to be paid to, a name other than that in
which the certificate for Warrants surrendered in exchange therefore is
registered, it shall be a condition of the issuance or payment thereof that the
certificate so surrendered shall be properly endorsed and otherwise in proper
form for transfer and that the person requesting such exchange shall pay to you
any transfer or other taxes required, or shall establish to your satisfaction
that such tax has been paid or is not payable.
(d) Certificates to be delivered by mail shall be forwarded by
first class mail under the Exchange Agent's blanket surety bond, which the
Company understand protects the Company and the Exchange Agent from loss or
liability arising by virtue of the non-receipt or non-delivery of such
certificates. It is understood that the market value of the securities in any
one shipment sent by first class mail under this procedure will not be in excess
of $250,000. In the event the market value shall exceed $250,000, the envelope
shall be mailed by registered mail and shall be insured separately for the
replacement value of its contents at the time of mailing.
3. Lost, Stolen or Destroyed Certificates. In the event that any
Warrantholder claims that any certificates representing Warrants is lost, stolen
or destroyed, the Exchange Agent shall mail to such Warrantholder an affidavit
of loss and an indemnity bond. The Exchange Agent shall make the distribution of
certificates representing shares of Common Stock only upon receipt of a properly
completed affidavit of loss and indemnity bond.
4. Reports. The Exchange Agent shall furnish, until otherwise notified,
monthly, or more frequently if requested by the Company, reports to the Company
showing:
(a) number of Warrants surrendered and number of full shares of
Common Stock issued in exchange therefor (previous, herewith and total);
(b) fractional shares adjusted (previous, herewith and total);
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(c) cash paid in lieu of fractional shares (previous, herewith
and total).
5. IRS Filings. You shall arrange to comply with all requirements under
the tax laws of the United States, including those relating to missing tax
identification numbers, and shall file any appropriate reports with the Internal
Revenue Service ("IRS") (e.g., 1099, 1099B, etc.) You may be required to deduct
31% from cash paid in lieu of fractional shares to Warrantholders who have not
supplied their correct taxpayer identification number or required certification.
Such funds will be turned over to the IRS by you.
6. Restricted Certificates for Warrants. The Lists set forth, among other
things, certificates representing Warrants that have been or are, as of the date
of such Lists, restricted as to transfer (noting the text of the restrictive
legends applicable thereto). The Company understands that the Lists will also
set forth a legend or legends to be placed on certificates representing Common
Stock to be issued in exchange for such certificates, if any, and you shall
place such legends on such certificates as directed in the Lists. In the event a
certificate bearing a restrictive legend that is not included in the Lists is
presented, you are instructed to delay issuance of a certificate representing
shares of Common Stock with respect thereto pending instructions from the
Company.
7. Restricted Certificates of Common Stock Each of the persons listed on
Schedule A hereto may be deemed an "affiliate" of the Company within the meaning
of Rule 145 under the Securities Act of 1933, as amended, and applicable rules
and regulations promulgated by the Securities and Exchange Commission.
You are hereby authorized and instructed to place on the face of each of
the certificates representing shares of Common Stock issued to each of the
aforesaid persons in exchange for the Warrants held by them a legend reading in
its entirety as follows:
"THE SHARES REPRESENTED BY THIS CERTIFICATED WERE ISSUED IN A TRANSACTION
TO WHICH RULE 000 XXXXX XXX XXXXXX XXXXXX SECURITIES ACT OF 1933, AS
AMENDED, APPLIES. THESE SHARES MAY NOT BE SOLD, ASSIGNED, PLEDGED,
HYPOTHECATED, OR OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION
STATEMENT FOR SUCH SHARES UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
AND APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF COUNSEL SATISFACTORY
TO THE ISSUER OF THESE SHARES TO THE EFFECT THAT REGISTRATION IS NOT
REQUIRED UNDER SUCH ACT AND SUCH STATE SECURITIES LAWS."
8. Copies of Documents. You shall take such action at the Company's
expense as may from time to time be reasonably requested by the Company to
furnish copies of the Letter of Transmittal to persons designated by the
Company.
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9. Receipt of Disposal. Letters of Transmittal and telegrams, telexes,
facsimile transmissions and other materials submitted to you by Warrantholders
shall be preserved by you until delivered or otherwise disposed of in accordance
with the Company's instructions at or prior to the termination hereof.
10. Maintenance of Records. You will keep and maintain complete and
accurate ledgers showing all shares exchanged by you and payments made by you.
You are authorized to cooperate with and furnish information to any organization
or its legal representatives designated from time to time by the Company in any
manner reasonably requested by any of them in connection with the Exchange Offer
and exchange pursuant thereto.
11. Delivery of Surrendered Warrants. All certificates for Warrants
surrendered to you shall be retained by you and following exchange and payment
thereof shall be forwarded to the Company or elsewhere as directed by the
Company.
12. Exchange Agent's Duties and Obligations. As Exchange Agent, you:
(a) will have no duties or obligations other than those
specifically set forth herein, or may subsequently be agreed to in writing by
you and the Company;
(b) will be regarded as making no representations or warranties
and having no responsibilities regarding the validity, sufficiency, value or
genuineness of any certificates for Warrants surrendered to you or the Warrants
to purchase shares of Common Stock represented thereby; will not be required or
requested to make any representations as to the validity or genuineness of any
certificates for shares of Common Stock or shares of Common Stock represented
thereby; and will not be responsible in any manner whatsoever for the
correctness of the statements made herein or in the Prospectus or in any
document furnished to you by the Company;
(c) will be obligated to institute or defend any action, suit or
legal proceeding in connection with the Exchange Offer, or your duties
hereunder, or take any other action which might in your judgment involve, or
result in, expense or liability to you, unless the Company shall first furnish
you an indemnity satisfactory to you;
(d) may rely on, and shall be protected in acting upon, any
certificate, instrument, opinion, representation, notice, letter, telegram or
other document delivered to you and believed by you to be genuine and to have
been signed by the proper party or parties;
(e) may rely on, and shall be protected in acting upon, written
or oral instructions given by any officer of, or any party authorized by, the
Company with respect to any matter relating to your actions as Exchange Agent;
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(f) may consult with counsel satisfactory to you (including
counsel for the Company), and the written advice or opinion of such counsel
shall be full and complete authorization and protection in the respect of any
action taken, suffered or omitted by you hereunder in good faith and in
accordance with such advice or opinion of such counsel; and
(g) may retain an agent or agents of your choice to assist you in
performing your duties and obligations hereunder, at your cost and without
relieving you of any liability hereunder.
13. Termination of Exchange Agent's Duties and Obligations. This
agreement shall terminate upon demand by the Company, at which time all
undistributed certificates representing shares of Common Stock, cash to be paid
in lieu of fractional shares, and any dividends and distributions in respect of
Common Stock, shall be delivered by the Exchange Agent to the Company.
14. Indemnification of Exchange Agent. The Company hereby covenant
and agree to reimburse, indemnify and hold you harmless from and against any and
all claims, actions, judgments, damages, losses, liabilities, costs, transfer or
other taxes, and expenses (including, without limitation, reasonable attorneys'
fees and expenses) incurred or suffered by you, or to which you may become
subject and not resulting from any negligence, bad faith or willful misconduct
on your part, arising out of or incident to this Agreement or the administration
of your duties hereunder, or arising out of or incident to your compliance with
the instructions set forth herein or with any instructions delivered to you
pursuant hereto, or as a result of defending yourself against any claim or
liability resulting from your actions as Exchange Agent, including any claim
against you by any tendering Warrantholder, which covenant and agreement shall
survive the termination hereof. You hereby represent that you will notify the
Company by letter, or facsimile confirmed by letter, of any receipt by you of a
written assertion of a claim against you, or any action commenced against you,
within five (5) business days after your receipt of written notice of such
assertion or your having been served with the summons or other first legal
process giving information as to the nature and basis of any such assertion.
However, your failure to so notify the Company shall not operate in any manner
whatsoever to relieve the Company from any liability which they may have on
account of this Section 14 if no prejudice occurs. At its election, the Company
may assume the conduct of your defense in any such action or claim at their sole
cost and expense. In the event that the Company elect to assume the defense of
any such action or claim and confirm to you in writing that the indemnity
provided for in this Section 14 applies to such action or claim, the Company
shall not be liable for the fees and expenses of any counsel thereafter retained
by you.
15. Compensation and Expenses. For services rendered as Exchange
Agent hereunder, your fees are approved as set forth in the schedule attached to
this agreement.
16. Modification. Except as otherwise provided in Section 12(a)
hereof, (i) the instructions contained herein may be modified or supplemented
only by authorized representatives of the Company, and (ii) any inconsistency
between this agreement and the
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Prospectus shall be resolved in favor of the Prospectus.
17. Notices. Except as otherwise provided herein, no notice,
instruction or other communication by one party shall be binding upon the other
party unless hand delivered or sent by certified mail, return receipt requested,
nationally recognized overnight courier service or by facsimile transmission
electronically confirmed. Notice to you shall be sent or delivered to your
above-noted address or such other addresses as you shall hereafter designate in
writing in accordance herewith. Notice to the Company shall be sent or delivered
to:
If to the Company:
Disc Graphics, Inc.
00 Xxxxxx Xxxxxx
Xxxxxxxxx, Xxx Xxxx 00000
Attention: Xxxxxx Xxxxxx, Chairman of the Board
with a copy to:
Blau, Kramer, Wactlar & Xxxxxxxxx, P.C.
000 Xxxxxxx Xxxxxxxxxx
Xxxxxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxxxxxx, Esq.
18. Counterparts. This agreement may be executed in several
counterparts, each of which shall be an original and all of which shall
constitute but one and the same agreement.
19. Governing Law; Binding Upon Successors and Assigns. This
agreement shall be construed and enforced in accordance with the laws of the
State of New York, without regard to the principles thereof respecting conflicts
of laws, and shall inure to the benefit of, and the obligations created hereby
shall be binding upon, the successors and assigns of the parties hereto.
Executed this __ th day of July, 1997.
DISC GRAPHICS, INC.
By: /s/ Xxxxxx Xxxxxx
--------------------
Name:
Title:
Agreed To and Accepted:
AMERICAN STOCK TRANSFER AND TRUST COMPANY
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By: /s/ Xxxxxxx X. Xxxxxx
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Name:
Title:
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Schedule A
Xxxxxx Xxxxxx
Xxxx Xxxxxxxx
Xxxxxxx Xxxx
Xxxxxxx Xxxxx
Xxxx Xxxxxxxx
Xxxxxx Xxxxxxxx
Fees
$3,500
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