1
EXHIBIT 2.4
RESTRICTED STOCK AGREEMENT
THIS RESTRICTED STOCK AGREEMENT (this "Agreement") is made and entered
into as of May 13, 1999, by and among INTERVISUAL BOOKS, INC. (the "Company"),
and Xxxxxx X. Xxxx and Xxxxxx Xxxxx, as Co-Trustees of the Xxxxxx Xxxx and
Xxxxxx Xxxxx Revocable Family Trust UTD April 18, 1991 ("Trust"), Xxxxxx
Xxxxxxxxxx, an individual ("Xxxxxxxxxx"), Xxxxxxx Xxxxxx, an individual
("Abella"), Xxxxxx Xxxxxx, an individual ("Xxxxxx") and Xxxxxx Xxxxxxx, an
individual ("Xxxxxxx"; Sapirstein, Abella, Trust, Xxxxxx and Xxxxxxx sometimes
hereinafter are referred to collectively as "Shareholders" and individually as
"Shareholder").
RECITALS
A. In connection with the merger of Fast Forward Marketing, Inc. ("FFM")
with and into a subsidiary of the Company pursuant to the Agreement and Plan of
Merger dated March 29, 1999 (the "Merger Agreement") among Company, Xxxxxx X.
Xxxx, FFM, FFM Acquisition Corp. and Trust, Company shall, among other things,
issue to the Shareholders an aggregate of 670,000 shares (the "Original Shares")
of the Company's common stock, no par value per share. All capitalized terms
used but not defined herein shall have the meaning ascribed to such terms in the
Merger Agreement.
B. A portion of the Original Shares are being issued to Selsky, Wallace,
Xxxxxxxxxx and Abella pursuant to Section 1.12 of the Merger Agreement and the
remainder are being issued to the Trust as a result of the Merger. After such
issuances, the Original Shares will be held as follows:
Trust 594,940 shares (the "Trust Shares")
Xxxxxxxxxx 4,662 shares (the "Xxxxxxxxxx Shares")
Abella 4,662 shares (the "Abella Shares")
Xxxxxx 51,749 shares (the "Xxxxxx Shares")
Xxxxxxx 13,987 shares (the "Xxxxxxx Shares")
The definitions of Trust Shares, Xxxxxxxxxx Shares, Abella Shares, Xxxxxx Shares
and Xxxxxxx Shares shall include any common stock of Company received by the
applicable Shareholder as stock dividends, in connection with stock splits or
recombinations or otherwise due solely to such Shareholder's ownership of the
Trust Shares, Xxxxxxxxxx Shares, Abella Shares, Xxxxxx Shares and Xxxxxxx
Shares, respectively. The Trust Shares, Xxxxxxxxxx Shares, Abella Shares, Xxxxxx
Shares and Xxxxxxx Shares shall collectively be referred to as the "Shares".
C. As a condition to the closing of the transactions contemplated by the
Merger Agreement, Shareholders have agreed to execute and deliver this
Agreement.
2
NOW, THEREFORE, in consideration of the mutual representations,
warranties and covenants contained herein, the parties hereto agree as follows:
1. General Restrictions on Transfer.
A. During the term of this Agreement, no Shareholder will directly
or indirectly sell, pledge, mortgage, give, transfer, create a security interest
or lien, place in a trust, assign or in any other way encumber or dispose of (in
each case, a "Transfer") any Shares or any interest in such Shares or the stock
certificate or certificates representing any Shares, except in accordance with
the terms and conditions of Section 1(C) below and applicable federal and state
securities laws.
B. Any Transfer of any interest in the Shares purported to have been
effected by any Shareholder shall require the prior written consent of the
Company which the Company shall withhold, and shall not register upon its
records, unless such Transfer is made in accordance with the terms and
provisions of this Agreement and applicable federal and state securities laws.
Any such Transfer which is not made in accordance with the terms and conditions
of this Agreement shall be void and shall not be binding upon the Company.
C. Subject to applicable federal and state securities laws, the
following Transfers may be made without any violation of this Agreement and
without any consent of the Company:
(i) In any subsequent twelve-month period beginning on the date
hereof and on each year anniversary of the date hereof, the Shareholders will
each be permitted to transfer up to ten percent (10%) of the shares they receive
such that the Trust may Transfer up to 59,494 shares of Trust Shares, Xxxxxxxxxx
may Transfer up to 466 shares of the Xxxxxxxxxx Shares, Abella may Transfer up
to 466 shares of the Abella Shares, Xxxxxx may Transfer up to 5,174 shares of
the Xxxxxx Shares and Xxxxxxx may Transfer up to 1,398 shares of the Xxxxxxx
Shares during each twelve-month period;
(ii) Each Shareholder may Transfer his or her respective Shares
to a trust for the benefit of himself or herself or his or her immediate family,
provided the trustee of such trust acknowledges in a written agreement
satisfactory to the Company that such Shares are subject to this Agreement;
(iii) If any Shareholder becomes disabled or mentally unable to
deal with his or her affairs and a guardian is appointed for such Shareholder, a
Transfer of title to the guardian shall not violate this Agreement as long as
the guardian acknowledges that the Shares are held subject to this Agreement;
(iv) Transfers to the Company; and
(v) Transfers to a third party or parties upon the occurrence of
a Liquidity Event (defined below).
D. Notwithstanding anything contained herein to the contrary, the
respective general restrictions on transfer contained in this Section 1 shall
terminate with regard to each of Sapirstein, Abella, Xxxxxx and Xxxxxxx upon
their respective termination of employment from the Company or its subsidiaries.
The termination of employment of one of the above individuals shall not
terminate the general restrictions applicable to the other individuals and the
Trust.
-2-
3
2. Liquidity Event.
"Liquidity Event" shall mean (a) the affirmative vote of the
shareholders holding a majority of the Company's common stock to effect (i) a
merger or consolidation by the Company with or into any other entity, or (ii) a
sale, lease or other disposition of all or substantially all of the Company's
assets and properties in a single transaction or in a series of related
transactions to an unaffiliated third party purchaser or (iii) a voluntary or
involuntary liquidation, dissolution or winding up of the Company, or (b) the
occurrence of a Change of Control (as hereinafter defined). A "Change of
Control" shall occur when any "person" (as such term is used in Section 13(d)
and 14(d) of the Securities Exchange Act of 1934, as amended), other than the
Company or any "person" who as of the date of this Agreement is a director or
officer of the Company (including any trust of such director or officer), is or
becomes the "beneficial owner" of securities of the Company representing fifty
percent (50%) or more of the combined voting power of the Company's then
outstanding securities; provided, however, that the following shall not
constitute a "Change of Control":
(a) any acquisition directly from the Company;
(b) any acquisition by an employee benefit plan (or related trust)
sponsored or maintained by the Company or any corporation controlled by the
Company; or
(c) upon the death of any person who as of the date of this
Agreement is a director or officer of the Company, the transfer (a) by
testamentary disposition or the laws of intestate succession to the estate or
the legal beneficiaries or heirs of such person, or (b) by the provisions of any
trust to the beneficiaries thereof of the securities of the Company beneficially
owned by such director or officer of the Company.
3. Transfers by Court Order or Operation of Law.
Any person who becomes the owner of, or acquires a right to hold any
interest in, any Shares by reason of a judgment against any Shareholder,
including a judgment of divorce or other marital dissolution, shall obtain no
rights to vote any Shares of the stock and shall obtain only an economic
interest in any amounts to be distributed from the Company with respect to the
Shares. The Company shall not recognize any Transfer to such person and shall
have the right, upon written notice to the person acquiring such an interest, to
acquire the Shares at their fair market value.
4. Stock Certificate Legends.
A copy of this Agreement shall be filed with the Secretary of the
Company and kept with the corporate records of the Company. Every certificate
representing Shares owned by Shareholders or issued in exchange for any such
certificate shall, until the expiration of this Agreement, bear upon its face
the following legend in addition to any legend otherwise required by law:
THE SALE OR TRANSFER OF SHARES EVIDENCED BY THIS
CERTIFICATE IS SUBJECT TO CERTAIN RIGHTS AND RESTRICTIONS
CONTAINED IN A RESTRICTED STOCK AGREEMENT DATED AS OF
MAY 13, 1999, AS IT MAY BE AMENDED FROM TIME TO TIME. A COPY
OF THIS AGREEMENT IS ON FILE AT THE OFFICE OF THE COMPANY.
-3-
4
5. Investment Representations.
Each Shareholder hereby represents that he or she is acquiring his
or her respective Shares for his or her own account, not as a nominee or agent,
for investment and not with a view to, or for resale in connection with any
distribution or public offering thereof within the meaning of the Securities Act
of 1933 (the "Securities Act"). Each Shareholder understands that the Shares
have not been registered under the Securities Act by reason of a specific
exemption therefrom and, notwithstanding any provision contained in this
Agreement, may not be transferred or resold except pursuant to an exemption for
the registration and prospectus delivery requirements of the Securities Act.
Each Shareholder has been furnished with such materials and has been given
access to such information relating to Company as requested and has been
afforded the opportunity to ask questions regarding Company as such Shareholder
has found necessary to make an informed investment decision. Each Shareholder
has the knowledge and experience in financial and business matters and
investments in general that such Shareholder is capable of evaluating the merits
and risks of the transactions contemplated by this Agreement.
6. Termination of Restrictions.
All restrictions in this Agreement shall terminate on the earlier of
(a) May 13, 2002 and (b) the closing of a Liquidity Event.
7. Amendment and Modification.
This Agreement may be amended, modified or supplemented only by a
written agreement of all the parties to this Agreement.
8. Further Assurances.
Every party to this Agreement shall do and perform or cause to be
done and performed all additional or further acts and things and shall execute
and deliver all such other agreements, certificates, instruments or documents as
any other party to this Agreement may reasonably request to carry out this
intent and accomplish the purposes of this Agreement.
9. Incentive Compensation Plan.
Each of Sapirstein, Abella, Xxxxxx and Xxxxxxx hereby agree and
acknowledge that the obligations of FFM under the Incentive Compensation Plan
and the Participation Agreements entered into with such persons pursuant
thereto, as modified, shall be satisfied in full in accordance with the
provisions of Section 1.12 of the Merger Agreement. Such persons further
acknowledge that the Company is obligated to withhold certain taxes from the
compensation delivered to such persons and agrees that the Company shall
withhold such taxes.
-4-
5
10. Legal Representation.
Each Shareholder acknowledges that he or she is aware that the
legal, financial and related matters contained in this Agreement are complex and
that such person is free to seek independent professional guidance or counsel
with respect to this Agreement. Each Shareholder has either sought such guidance
or counsel or determined after reviewing this Agreement carefully that such
person waives such right. Each Shareholder acknowledges that he or she is not
relying upon any representation or advice from the Company (or any attorney for
the Company) about this Agreement, its contents or effect.
11. Governing Law.
This Agreement and the rights and obligations of the parties
hereunder shall be governed by and construed in accordance with the laws of the
State of California, United States of America.
12. Invalidity of a Single Provision.
The unenforceability or invalidity of any provision of this
Agreement shall not affect the validity or enforceability of the remainder of
this Agreement, nor shall the unenforceability under the laws of any particular
jurisdiction of a provision affect its enforceability under the laws of other
provisions.
13. Notices.
All notices and other communications under this Agreement shall be
in writing and unless otherwise provided herein shall be delivered personally or
by facsimile, or mailed by registered or certified mail with a return receipt
request to the parties at the addresses set forth below their signatures to this
Agreement. Notices to the Company shall be sent to the Company at its address on
the signature pages of this Agreement with a copy to Paul, Hastings, Xxxxxxxx &
Xxxxxx LLP, 17th Floor, 000 Xxxx Xxxxxx Xxxxx, Xxxxx Xxxx, Xxxxxxxxxx
00000-0000, Attention: Xxxxxxx X. Xxxxx.
14. Headings and Execution in Counterparts.
The headings and captions contained in this Agreement are for
convenience only and shall not control or affect the meaning or construction of
any provision of this Agreement. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original and all of which
together shall constitute a single agreement.
[SIGNATURES ON FOLLOWING PAGE]
-5-
6
[SIGNATURE PAGE - RESTRICTED STOCK AGREEMENT]
IN WITNESS WHEREOF, the parties have caused this Restricted Stock
Agreement to be executed as of the date first written above
"Company"
INTERVISUAL BOOKS, INC.
a California corporation
By: /s/ Xxxxx X. Xxxx
-----------------------------------------
Name: Xxxxx X. Xxxx
Title:Chairman and Chief Executive Officer
"Trust"
/s/ XXXXXX X. XXXX
---------------------------------------------------
Xxxxxx X. Xxxx, as Co-Trustee of the Xxxxxx Xxxx
and Xxxxxx Xxxxx Revocable Family Trust UTD
April 18, 1991
/s/ XXXXXX XXXXX
---------------------------------------------------
Xxxxxx Xxxxx, as Co-Trustee of the Xxxxxx Xxxx and
Xxxxxx Xxxxx Revocable Family Trust UTD
April 18, 1991
"Xxxxxxxxxx"
/s/ XXXXXX XXXXXXXXXX
---------------------------------------------------
Xxxxxx Xxxxxxxxxx
"Abella"
/s/ XXXXXXX XXXXXX
---------------------------------------------------
Xxxxxxx Xxxxxx
"Xxxxxx"
/s/ XXXXXX XXXXXX
---------------------------------------------------
Xxxxxx Xxxxxx
"Xxxxxxx"
/s/ XXXXXX XXXXXXX
---------------------------------------------------
Xxxxxx Xxxxxxx
-6-
7
CONSENTS OF SPOUSES
Omitted
-7-
