Exhibit 10.3
STOCKHOLDER AGREEMENT
This Stockholder Agreement (this "Agreement"), dated as of March 12,
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1998, is by and among IMPAC Group, Inc., a Delaware corporation, formerly known
as KFI Holding Corporation ("Holding"); Heritage Fund I Investment Corporation,
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a Delaware corporation ("Heritage"); Xxxxxx X. Xxxxxx and H. Xxxxx Xxxxxx, each
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of whom is an individual; Xxxxxxx X. Xxxxxx, not individually but as trustee
under an Indenture of Trust of Xxxxxx X. Xxxxxx dated June 4, 1996 (the "Xxxxxx
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Family Trust"); Xxxxxx X. Xxxxxx, not individually but as trustee under an
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Irrevocable Deed of Trust dated August 12, 1992, f/b/o H. Xxxxx Xxxxxx (the
"Xxxxx Trust") (collectively, Xxxxxx X. Xxxxxx, H. Xxxxx Xxxxxx, the Xxxxxx
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Family Trust and the Xxxxx Trust are sometimes referred to herein as the "Xxxxxx
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Stockholders"); each of the stockholders of Holding named on Schedule 1 hereto
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(the "Klearfold Managers", and together with the Xxxxxx Stockholders,
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collectively, the "Klearfold Management Stockholders"); each of the stockholders
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of Holding and other Persons named on Schedule 2 hereto (the "AGI Management
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Stockholders"); and each other Person who becomes a party to this Agreement by
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executing and delivering to Holding an Instrument of Accession in the form of
the attached Exhibit A which is subsequently accepted in writing by Holding (an
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"Instrument of Accession"). Each of the parties to this Agreement other than
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Holding is sometimes referred to herein as a "Stockholder", and all of them,
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collectively, are sometimes referred to herein as the "Stockholders."
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The parties desire to enter into this Agreement in order to establish
certain rights and obligations with respect to their ownership of Securities (as
defined herein) and with respect to the internal affairs of Holding.
Capitalized terms used herein and not defined on their first use shall have
the meanings set forth in Section 8 below.
The parties further agree as follows:
1. RESTRICTIONS ON TRANSFER OF SECURITIES.
1.1. TRANSFER. No Stockholder shall sell, assign, pledge, or otherwise
dispose of or transfer any Securities or any interest (legal, beneficial, or
otherwise) in any Securities (a "Transfer"; or to effect any such Transfer, to
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"Transfer"), either voluntarily, involuntarily, by operation of law, or
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otherwise, except any Transfer:
(A) pursuant to and in accordance with the repurchase provisions of
Section 2.1 hereof or the repurchase provisions of those certain Employment,
Non-Competition and Stock Repurchase Agreements, Agreements relating to
Employment and Stock Ownership, or Stock Purchase or Stock Restriction
Agreements entered into by each of the
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Stockholders who is a natural person and by each natural person whose Family
Trust is a Stockholder, as amended and in effect from time to time (each, a
"Repurchase Agreement");
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(B) in the case of any Stockholder who is a natural person, to (i) such
Stockholder's Family Members, provided that such Stockholder retains exclusive
voting control over the Transferred Securities, and (ii) such Stockholder's
Personal Representative, and in the case of any Stockholder which is a Family
Trust, to (A) the individual for whom, or for the benefit of whose Related
Persons, such Family Trust was created, and (B) the Family Members of such
individual, provided that, in the case of any transfer pursuant to clauses (A)
or (B) such individual retains exclusive voting control over the Transferred
Securities, and (C) such individual's Personal Representative;
(C) at any time prior to June 7, 2002, to any Person, provided that such
Transfer shall have been previously approved in writing by Stockholders holding
a majority of the Securities then outstanding, other than the Securities held by
the Stockholder proposing such Transfer and any Affiliate or Family Member of
such Stockholder, and in any event subject to the provisions of Section 1.4
hereof;
(D) pursuant to a Public Offering or an Approved Sale;
(E) in the case of any Xxxxxx Stockholder, to another Xxxxxx Stockholder,
and in the case of any Block Stockholder, to another Block Stockholder;
(F) in the case of any Heritage Securities, (i) to Heritage Fund I, L.P.,
a Delaware limited partnership (the "Heritage Fund"), (ii) to a successor entity
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of any Heritage Holder, as a result of a merger, consolidation, or sale of all
or substantially all of the assets of such Heritage Holder, and (iii) by the
Heritage Fund, to the extent required pursuant to the terms of the First Amended
and Restated Agreement of Limited Partnership of the Heritage Fund dated as of
December 14, 1994, as in effect on the date hereof (it being understood and
agreed that such limited partnership agreement may be further amended from time
to time after the date hereof in accordance with its terms, but that
notwithstanding any such amendment, a Transfer of Heritage Securities by the
Heritage Fund will be permitted under this Section 1.1(f)(iii) only to the
extent that such Transfer would have been required pursuant to the terms of such
limited partnership agreement as in effect on the date hereof);
(G) from and after June 7, 2002, to any Person, provided that the
Transferring Stockholder shall first have complied with all of the provisions of
Sections 1.2 and 1.3 below;
and provided, further, in the case of any such Transfer other than a Transfer to
Holding or pursuant to a Public Offering or an Approved Sale, that (x) the
restrictions contained in this Section 1 shall continue to be applicable to the
Transferred Securities after such Transfer, and (y) the Transferee of such
Securities shall either already be a party hereto or
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shall first have executed and delivered to Holding an Instrument of Accession
which, if such Transfer is otherwise in compliance with this Section 1.1, shall
be accepted in writing by Holding.
1.2. FIRST REFUSAL RIGHTS.
(A) At least 30 days prior to any Transfer proposed to be made pursuant to
Section 1.1(g) hereof, the Transferring Stockholder (the "Transferring
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Stockholder") shall deliver a written notice (the "Transfer Offer Notice") to
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Holding and, if the Securities proposed to be transferred are AGI Holder
Securities, Klearfold Holder Securities or Heritage Securities, to each of the
Stockholders holding Securities of the Type to be Transferred (collectively, the
"Non-Transferring Same-Type Stockholders") in accordance with the provisions of
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Section 9(b) hereof. The Transfer Offer Notice shall disclose in reasonable
detail the number of Securities of each Type that are proposed to be
Transferred, the proposed terms and conditions of the Transfer (including
without limitation the consideration to be paid for such Securities and any
deferred payment terms), and the identity of the proposed Transferee(s). If the
Securities proposed to be transferred are AGI Holder Securities, Klearfold
Holder Securities or Heritage Securities, each of the Non-Transferring Same-Type
Stockholders may elect to purchase any or all of the Securities of the Type
proposed to be Transferred, as specified in the Transfer Offer Notice, at the
price and on the terms specified therein (provided, that each such Non-
Transferring Same-Type Stockholder shall have the option to substitute for any
non-cash consideration proposed to be received in respect of such proposed
Transfer, cash in the amount of the fair market value thereof), by delivering
written notice of such election to the Transferring Stockholder and Holding
within 30 days after the delivery of such Transfer Offer Notice (the "Initial
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Stockholder Election Period"). If one or more of such Non-Transferring Same-
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Type Stockholders duly elect to purchase all of the Securities of any such Type
so offered, the Transfer of such Securities shall be consummated 30 days after
the expiration of the Initial Stockholder Election Period, or such earlier date
as agreed upon by the Non-Transferring Same-Type Stockholders who will be
purchasing not less than a majority of the Securities to be Transferred,
provided that written notice of such earlier date is delivered not later than
ten (10) days prior to such date to the Transferring Stockholder, Holding and
each of the other Non-Transferring Same-Type Stockholders electing to purchase
any of such Securities pursuant to this Section 1.2(a). If the Non-Transferring
Same-Type Stockholders oversubscribe for the Securities of any such Type being
offered, each Non-Transferring Same-Type Stockholder electing to purchase such
Securities shall be entitled to purchase from the Transferring Stockholder a pro
rata portion (based upon the respective numbers of shares of such Type of
Securities then held by each of the participating Non-Transferring Same-Type
Stockholders (calculated on a Fully Diluted Basis)) of the Securities of such
Type being offered.
(B) If either (i) the Securities proposed to be transferred are AGI Holder
Securities, Klearfold Securities or Heritage Securities and the Non-Transferring
Same-Type Stockholders do not duly elect to purchase all of such Securities
within the Initial Stockholder Election Period in accordance with Section 1.2(a)
hereof then within fifteen
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(15) days of the expiration of the Initial Stockholder Election Period, or (ii)
the Securities proposed to be transferred are Other Stockholder Securities, then
within thirty (30) days after the delivery of the Transfer Offer Notice (such
period of fifteen or thirty days pursuant to clauses (i) or (ii) above, as
applicable, being referred to herein as the "Holding Election Period"), Holding
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may elect to purchase any or all of the Securities specified in the Transfer
Offer Notice, at the price and on the terms specified therein, but excluding any
such Securities which Non-Transferring Same-Type Stockholders shall have elected
to purchase pursuant to Section 1.2(a) hereof, to the extent applicable
(provided, that Holding shall have the option to substitute for any non-cash
consideration proposed to be received in respect of such proposed Transfer, cash
in the amount of the fair market value thereof), by delivering written notice of
such election to the Transferring Stockholder within the applicable Holding
Election Period. If Holding, alone or in combination with the Non-Transferring
Same-Type Stockholders, duly elects to purchase all of the Securities so
offered, the Transfer of such Securities shall be consummated not less than ten
(10) nor more than thirty (30) days after the expiration of the applicable
Holding Election Period. The date of the consummation shall be determined by a
majority vote of the Board of Directors of Holding, on the date it elects to
purchase such Securities, and Holding shall promptly, but not less than ten (10)
days prior to the proposed date of consummation, provide notice thereof to the
Non-Transferring Same-Type Stockholders, if any, which elected to purchase any
of the Securities proposed to be Transferred pursuant to Section 1.2(a) hereof.
(C) If Holding and/or, to the extent applicable, the Non-Transferring
Same-Type Stockholders do not duly elect to purchase all of the Securities being
offered within the applicable Holding Election Period, and/or the Initial
Stockholder Election Period, respectively, the Transferring Stockholder shall
within fifteen (15) days after the end of the applicable Holding Election Period
deliver a further Transfer Offer Notice as to such Securities, in the same form
and substance as the first Transfer Offer Notice delivered pursuant to Section
1.2(a) hereof or, in the case of a proposed sale by an Other Stockholder,
Section 1.2(b) hereof, above, to each of the Stockholders other than the Non-
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Transferring Same-Type Stockholders (if any) entitled to receive such first
Transfer Offer Notice (collectively, such other Stockholders being referred to
herein as the "Other Non-Transferring Stockholders") in accordance with the
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provisions of Section 9(b) hereof specifying, in addition, the number of
Securities which the Non-Transferring Same-Type Stockholders and Holding have
elected to purchase in accordance with Sections 1.2(a) and 1.2(b) hereof, and
the number of Securities remaining to be purchased (the "Remaining Securities").
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Each of the Other Non-Transferring Stockholders may elect to purchase all of the
Remaining Securities specified in the further Transfer Offer Notice delivered to
them (but collectively, not more nor less than all of the Remaining Securities),
at the price and on the terms specified therein (provided, that each such Other
Non-Transferring Stockholder shall have the option to substitute for any non-
cash consideration proposed to be received in respect of such proposed Transfer,
cash in the amount of the fair market value thereof), by delivering written
notice of such election to the Transferring Stockholder within 15 days after the
delivery of such Transfer Offer Notice (the "Second Stockholder Election
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Period"). If one or more of such Other Non-Transferring
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Stockholders duly elect to purchase all of the Securities so offered, the
Transfer of such Securities shall be consummated 30 days after the expiration of
the Second Stockholder Election Period, or such earlier date as agreed upon by
the Other Non-Transferring Stockholders who or which will, collectively, be
purchasing not less than a majority of the Securities so offered, provided that
written notice of such earlier date is provided not later than ten (10) days
prior thereto to the Transferring Stockholder, Holding, and each of the other
Stockholders who or which shall have elected to purchase Securities pursuant to
this Section 1.2. If the Other Non-Transferring Stockholders oversubscribe for
the Securities being offered, each Other Non-Transferring Stockholder electing
to purchase such Securities shall be entitled to purchase from the Transferring
Stockholder a pro rata portion (based upon the respective numbers of Securities
then held by each of the participating Other Non-Transferring Stockholders
(calculated on a Fully Diluted Basis)) of the Securities being offered.
(D) In the event that, collectively, Holding, the Non-Transferring Same-
Type Stockholders and the Other Non-Transferring Stockholders fail to purchase
all of the Securities specified in any Transfer Offer Notice in accordance with
Sections 1.2(a), (b) and (c) hereof, the elections to so purchase pursuant to
those sections shall be void and of no further effect, and the Transferring
Stockholder may, within 90 days after the expiration of the Second Stockholder
Election Period, complete the Transfer of such Securities for such consideration
and on such other terms as are no more favorable to the Transferees than the
terms offered to the Non-Transferring Same-Type Stockholders and the Other Non-
Transferring Stockholders in their respective Transfer Offer Notices, provided,
that no such Transfer may be completed except in compliance with Section 1.3, if
applicable, and further provided, that each of such Transferees shall have
executed and delivered to Holding an Instrument of Accession as a condition
precedent to such Transfer. If the Transferring Stockholder fails to consummate
such Transfer within the 90-day period after the expiration of the Second
Stockholder Election Period, any subsequent proposed Transfer of such Securities
shall be once again subject to all of the provisions of Section 1.1 above.
(E) In the event that non-cash consideration is proposed to be received in
respect of any proposed Transfer by a Transferring Stockholder, the Initial
Stockholder Election Period (or, if the Transferring Stockholder is an Other
Stockholder, the Holding Election Period) shall be extended by the period of
time necessary to determine the fair market value of such non-cash
consideration.
1.3. GENERAL CO-SALE RIGHTS. In the event that, collectively, Holding, the
Non-Transferring Same-Type Stockholders and the Other Non-Transferring
Stockholders fail to purchase all of the Securities specified in any Transfer
Offer Notice delivered by a Transferring Stockholder who immediately prior to
giving effect to the Transfer described in such Transfer Offer Notice holds at
least five percent (5%) of the total number of outstanding shares of Common
Stock, on a Fully Diluted Basis, each of the Non-Transferring Same-Type
Stockholders and the Other Non-Transferring Stockholders (collectively, the Non-
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Transferring Stockholders") may elect to participate in the
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contemplated Transfer of Securities by delivering written notice to the
Transferring Stockholder before the lapse of 15 days after expiration of the
Second Stockholder Election Period. If any of such Non-Transferring Stockholders
elects to participate in such sale, the Transferring Stockholder and each of
such participating Non-Transferring Stockholders shall be entitled to sell in
the proposed Transfer a number of Securities equal to the product of (x) a
fraction, the numerator of which is the number of Securities (calculated on a
Fully Diluted Basis) held by such Person, and the denominator of which is the
aggregate number of Securities (calculated on a Fully Diluted Basis) owned by
the Transferring Stockholder and such participating Non-Transferring
Stockholders, multiplied by (y) the number of Securities to be Transferred in
the contemplated Transfer.
(For example: If the notice from the Transferring Stockholder contemplated
a Transfer of 100 shares of Common Stock by the Transferring Stockholder,
and the Transferring Stockholder at such time owns 300 shares of Common
Stock, and if one Non-Transferring Stockholder elects to participate in
such sale pursuant to this Section 1.3 and such Non-Transferring
Stockholder owns 200 shares of Common Stock (calculated on a Fully Diluted
Basis), such Transferring Stockholder would be entitled to sell 60 shares
of Common Stock (300/500 x 100 shares) and such Non-Transferring
Stockholder would be entitled to sell 40 shares of Common Stock (200/500 x
100 shares).)
The Transferring Stockholder shall use all commercially reasonable efforts to
obtain the agreement of the prospective Transferee(s) to the participation of
the Non-Transferring Stockholders in any proposed sale, and in any event shall
not Transfer any Securities to the prospective Transferee(s) if the prospective
Transferee(s) declines to allow the participation of the Non-Transferring
Stockholders on the terms specified herein. The Transferring Stockholder may,
within 90 days after the expiration of the Second Stockholder Election Period,
complete the Transfer of such Securities (i) with respect to which the
Transferring Stockholder has duly given a Transfer Offer Notice, (ii) with
respect to which neither the Company nor any of the Non-Transferring
Stockholders has duly exercised its rights to acquire such Securities pursuant
to Section 1.2 hereof, and (iii) as constitute the excess of the Securities
described in the applicable Transfer Offer Notice over the aggregate amount of
Securities as to which Non-Transferring Stockholders have duly elected to sell
in such proposed sale pursuant to and in accordance with this Section 1.3, for
such consideration and on such other terms as are no more favorable to the
Transferring Stockholder than the terms offered to the Non-Transferring
Stockholders in the applicable Transfer Offer Notice; provided, that each of
such Transferees shall have executed and delivered to Holding an Instrument of
Accession as a condition precedent to such Transfer. If the Transferring
Stockholder fails to consummate such Transfer within the 90-day period after the
expiration of the Second Stockholder Election Period, any subsequent proposed
Transfer of such Securities shall be once again subject to all of the provisions
of Section 1.1 above.
1.4. CO-SALE RIGHTS OF KLEARFOLD MANAGEMENT HOLDERS. In the event that, at
any time prior to June 7, 2002, the Heritage Holders shall have elected to
Transfer more
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than five percent (5%) of the total amount of Heritage Securities then held by
the Heritage Holders, and such Transfer has been approved in writing by
Stockholders holding a majority of the Securities then outstanding (other than
Securities then held by the Heritage Holders and their Affiliates) pursuant to
Section 1.1(c) hereof, but such Transfer has not been approved by the Majority
Klearfold Holders, then the Xxxxxx Stockholders may elect to participate in the
contemplated Transfer of Heritage Securities and Transfer a proportionate
percentage of their Klearfold Holder Securities, by delivery of a written notice
(the "Klearfold Co-Sale Notice") from the Xxxxxx Stockholders to Holding, the
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Heritage Holders and the AGI Management Stockholders within 15 days after the
date of such approval, and the provisions of Section 1.3 shall apply, mutatis
mutandis, to the participation by such Xxxxxx Stockholders, as participating
Non-Transferring Stockholders, in the proposed Transfer by the Heritage Holders,
as Transferring Stockholders. Notwithstanding the foregoing, simultaneously
with, and as a condition to, any participation by the Xxxxxx Stockholders
proposing to participate in such Transfer (the "Transferring Klearfold
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Management Stockholders") in any proposed Transfer by the Heritage Holders, the
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Transferring Klearfold Management Stockholders and the Heritage Holders, pro
rata in accordance with the respective number of shares of Common Stock then
held by each of them, shall offer to the AGI Management Stockholders the
opportunity to acquire up to a maximum number of the Klearfold Holder
Securities and Heritage Securities to be Transferred (collectively, the "Co-Sale
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Securities") equal to the greater of (a) the aggregate number of Co-Sale
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Securities proposed to be Transferred by the Transferring Klearfold Management
Stockholders, and (b) that number of Co-Sale Securities, the acquisition of
which by the AGI Management Stockholders would ensure the ownership by the AGI
Management Stockholders, collectively, of fifty percent (50%) plus one of the
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then outstanding shares of Common Stock. Any such purchase of Co-Sale
Securities shall be at the same price and on the same terms specified for the
proposed Transfer by the Heritage Holders (provided, that each participating AGI
Management Stockholder shall have the option to substitute for any non-cash
consideration proposed to be received in respect of such proposed Transfer, cash
in the amount of the fair market value thereof based on an appraisal by an
Independent Appraiser). If the AGI Management Stockholders wish to exercise
their right to acquire any such Co-Sale Securities, the Majority AGI Holders
shall so indicate by written notice to Holding, the Heritage Holders and the
Klearfold Management Stockholders within 30 days of the date of the Klearfold
Co-Sale Notice (or such longer period, not to exceed 60 days after the effective
date of delivery of the Klearfold Co-Sale Notice, as may be required to
determine the value of non-cash consideration, if non-cash consideration is
proposed to be received in respect of such proposed Transfer). Unless such
notice shall have been timely delivered, the Klearfold Management Stockholders
shall be free to participate fully in the proposed Transfer by the Heritage
Holders in accordance with the first sentence of this Section 1.4, provided that
no such Transfer shall be completed until after the end of the period during
which a Klearfold Co-Sale Notice may be delivered. If such notice is delivered
within such 30-day period, the proposed Transfer by the Heritage Holders shall
be delayed for such period, not to exceed six (6) months from the date of the
Klearfold Co-Sale Notice, as shall be reasonably necessary to permit those AGI
Management
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Stockholders who so wish to acquire any such Co-Sale Securities pursuant to this
Section 1.4.
1.5. CLOSINGS.
(A) In the event of any exercise by any of the Non-Transferring
Stockholders of their first-refusal rights under Section 1.2 hereof, the
Transferring Stockholder shall Transfer to each such Non-Transferring
Stockholder the Securities to be purchased by such Non-Transferring Stockholder
at a closing to be held at 10:00 a.m. at Holding's principal executive offices
on the date specified in accordance with the applicable provisions of Section
1.2 hereof. At such closing, the Transferring Stockholder shall deliver to each
such Non-Transferring Stockholder the certificate(s) representing the Securities
to be purchased by such Non-Transferring Stockholder (properly endorsed or
accompanied by duly executed stock powers or assignments, with signature(s)
guaranteed or similar appropriate documentation of authority to transfer), free
and clear of Liens, against payment therefor as provided herein by certified or
bank check payable to the Transferring Stockholder, or by wire transfer to an
account designated by the Transferring Stockholder.
(B) In the event of any exercise by any of the Non-Transferring
Stockholders of their co-sale rights under Sections 1.3 or 1.4 hereof, the
closing of the sale of the Securities to be sold by such Non-Transferring
Stockholders pursuant to such rights shall take place at the same date, time,
and place at which the Transferring Stockholder is to consummate his or its
Transfer of Securities to the prospective Transferee. At such closing, the
Transferring Stockholder and each of the Non-Transferring Stockholders shall
deliver the certificate(s) representing the respective Securities to be sold by
him or it (properly endorsed or accompanied by duly executed stock powers or
assignments, with signature(s) guaranteed or similar appropriate documentation
of authority to transfer), free and clear of Liens, against payment therefor as
provided herein by certified or bank check payable to him or it, or by wire
transfer to an account designated by him or it.
(C) In the event of any exercise by any of the AGI Management Stockholders
of their rights under Section 1.4 hereof, the Transferring Klearfold Management
Stockholders and Heritage Holders shall Transfer to each such AGI Management
Stockholder the Co-Sale Securities to be purchased by such AGI Management
Stockholder at a closing to be held at the same date, time, and place, subject
to the provisions of Section 1.4 above, as that at which the Transferring
Heritage Holders are to consummate the Transfer of their Securities to their
prospective Transferee pursuant to Section 1.1(c). At such closing, the
Transferring Klearfold Management Stockholders and Heritage Holders shall
deliver to each such AGI Management Stockholder the certificate(s) representing
the Co-Sale Securities to be purchased by such AGI Management Stockholder
(properly endorsed or accompanied by duly executed stock powers or assignments,
with signature(s) guaranteed or similar appropriate documentation of authority
to transfer), free and clear of Liens, against payment therefor as provided
herein by certified or bank check payable to the applicable Transferring
Klearfold Management Stockholder or Heritage
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Holder, as the case may be, or by wire transfer to an account designated by such
Stockholder.
1.6. TRANSFERS OF SECURITIES IN BREACH OF THIS AGREEMENT. Any attempted or
purported Transfer of Securities in breach of this Agreement shall be wholly
void, and commencing immediately upon the date of such attempted or purported
Transfer (a) no dividend or distribution of any kind shall be paid by Holding in
respect of such Securities (all rights to any such payment being hereby
irrevocably waived and relinquished by the Stockholder attempting such transfer
or purporting so to Transfer Securities, for both himself or itself and any
purported Transferee), (b) the voting rights of such Securities, if any, shall
terminate, and (c) neither the Stockholder attempting such transfer or
purporting so to Transfer Securities nor the purported Transferee shall be
entitled to any rights in respect of such Securities unless and until such
attempted or purported Transfer in breach of this Agreement has been rescinded.
2. REPURCHASE OF HERITAGE SECURITIES; SALE OF HOLDING.
2.1. REPURCHASE OF HERITAGE SECURITIES.
(A) RIGHT TO REQUEST REPURCHASE. At any time after June 7, 2002, the
Majority Heritage Holders shall be entitled to request Holding to repurchase all
of the Heritage Securities, at the Repurchase Price determined in accordance
with Section 2.1(c) hereof and at a closing held in accordance with Section
2.1(d) hereof, by delivering to Holding written notice (the "Heritage Put
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Request") requesting such repurchase. Within fifteen (15) days following the
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date on which the applicable Repurchase Price is definitively determined in
accordance with Section 2.1(c) below, Holding shall give written notice (the
"Holding Election") to such Majority Heritage Holders, irrevocably electing one
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of the following alternatives:
(i) that Holding will comply with the Heritage Put Request, in which
case Holding shall be irrevocably obligated to repurchase, and the Heritage
Holders shall be irrevocably obligated to sell, all of the Heritage
Securities, at the Repurchase Price and at a closing to be held in
accordance with Section 2.1(d) hereof, subject only to the limitations set
forth in Section 2.1(b) hereof; or
(ii) that Holding will not comply with the Heritage Put Request, but
will use all commercially reasonable efforts to complete within 180 days
after the date of the Heritage Put Request, either (A) a sale of Holding or
its business (whether by merger, consolidation, sale of all or
substantially all of the assets or capital stock of Holding and/or one or
more of its Subsidiaries, or otherwise), such sale to be approved prior to
the completion thereof by a majority of the directors of Holding and to
comply with the condition stated in Section 2.3 below (any such sale, a
"Qualified Sale"), or (B) a Qualified Public Offering, provided that if
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neither a Qualified Sale nor a Qualified Public Offering shall have been
completed within such 180-day period, then the Majority Heritage Holders
shall immediately
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become, and thereafter shall be, entitled to exercise their rights pursuant
to Section 2.1(h) below;
(iii) that Holding will not comply with the Heritage Put Request and
will not pursue a Qualified Sale or Qualified Public Offering, in which
case the Majority Heritage Holders shall immediately become, and thereafter
shall be, entitled to exercise their rights pursuant to Section 2.1(h)
below;
provided that any failure by Holding duly to make a Holding Election within the
15-day period therefor referred to above, shall constitute an irrevocable
election not to comply with the Heritage Put Request and not to pursue a
Qualified Sale or Qualified Public Offering, with the consequences referred to
in Section 2.1(a)(iii) above. Any decision by the Board of Directors of Holding
as to which Holding Election to make shall be taken by a majority vote of the
members of the Board of Directors of Holding without the participation in such
decision of any of the Heritage Directors (as defined in Section 3.1 below).
Unless both of the Klearfold Directors (as defined in Section 3.1 below) shall
have concurred with a decision of the Board of Directors of Holding to comply
with the Heritage Put Request, in the event of a Holding Election pursuant to
Section 2.1(a)(i), Xxxxxx Xxxxxx, on behalf of himself, the Xxxxxx Family Trust
and their permitted transferees (other than Xxxxx Xxxxxx) after the date hereof
who or which is then a Stockholder, may by written notice to Holding given
within ten (10) days of such Holding Election elect to require Holding to
repurchase all of the Securities owned by him, the Xxxxxx Family Trust and such
permitted transferees simultaneously with, and on the same terms and conditions
as, Holding's repurchase of all of the Heritage Securities described below, and
Xxxxx Xxxxxx, on behalf of himself and each of the other Xxxxxx Stockholders
(including Xxxxxx Xxxxxx, who, in the event such a notice is given by Xxxxx
Xxxxxx, shall be bound by such notice), may or, in the event he is not at the
time of the applicable Holding Election employed by Holding or any of its
Subsidiaries, shall by written notice to Holding, given within ten (10) days of
the applicable Holding Election, elect to require Holding to repurchase all of
the Securities of the Xxxxxx Stockholders and their permitted transferees
simultaneously with, and on the same terms and conditions as, Holding's
repurchase of all of the Heritage Securities described below, provided that in
the event that Xxxxxx Xxxxxx alone shall have notified Holding in accordance
with this sentence and at the time of the applicable Holding Election, Xxxxx
Xxxxxx shall be employed by Holding or any of its Subsidiaries, then (A) Xxxxx
Xxxxxx shall have no right to require Holding to repurchase any of the Klearfold
Management Securities owned by him, the Xxxxx Trust and their permitted
transferees after the date hereof, in connection with Holding's repurchase of
all of the Heritage Securities, and (B) at the end of the ten-day period
described in this sentence, the Employment, Non-Competition and Stock Repurchase
Agreement between Xxxxx Xxxxxx and Holding then in effect shall be amended to
provide for the inclusion of repurchase provisions with respect to the
Securities owned by Xxxxx Xxxxxx, the Xxxxx Trust and their permitted
transferees (which shall not then include Xxxxxx Xxxxxx or any Family Trust for
the benefit of Xxxxxx Xxxxxx) similar in form and substance to the repurchase
provisions in the Employment, Non-Competition and Stock Repurchase Agreements
between Holding and its senior executive employees (other than Xxxxxx Xxxxxx) as
in
-11-
effect immediately after the date hereof. If at any time following a Holding
Election pursuant to Sections 2(a)(i) or 2(a)(ii), the Board of Directors of
Holding determines in good faith, such determination to be made within ten (10)
days after a request in good faith by any of the Heritage Directors for such a
determination, but excluding all of the Heritage Directors for the purpose of
making such determination, that Holding will either (x) not be able to comply
with the Heritage Put Request within the 180-day period specified in Section
2.1(d) (as such period may be extended pursuant to Section 2.4 below), if the
applicable Holding Election was to comply with the Heritage Put Request pursuant
to Section 2.1(a)(i), or (y) not be able to complete a Qualified Sale or
Qualified Public Offering within the 180-day period specified in Section
2(a)(ii) (as such period may be extended pursuant to Section 2.4 below), if the
applicable Holding Election was pursuant to such Section, then, and in either
such case, Holding shall so notify the Heritage Holders, and the Majority
Heritage Holders shall immediately become, and thereafter shall be, entitled to
exercise their rights pursuant to Section 2.1(h) below. In addition, in the
event that at any time subsequent to a Holding Election pursuant to Sections
2(a)(i) or 2(a)(ii), Holding determines that it does not intend to comply with
the Heritage Put Request or to complete a Qualified Sale or a Qualified Public
Offering, then Holding shall immediately so notify the Heritage Holders in
writing, and the Majority Heritage Holders shall immediately become, and
thereafter shall be, entitled to exercise their rights pursuant to Section
2.1(h) below.
(B) LIMITATIONS ON HERITAGE REPURCHASE. Notwithstanding the foregoing or
any other provision hereof, in any circumstance in which Holding becomes
obligated hereunder to repurchase Heritage Securities, no repurchase of the
Heritage Securities shall be required to be made to the extent that to make such
repurchase would violate the Delaware General Corporation Law, the terms of
Holding's senior credit agreement with Bank of America, or any successor senior
credit arrangements refinancing amounts outstanding under such agreement, or the
terms of Holding's senior subordinated notes outstanding from time to time or
the related Indenture; provided, in the event that any such repurchase is not
made as otherwise required hereunder because of the limitation set forth in the
preceding part of this sentence, that the Majority Heritage Holders shall
immediately become, and thereafter shall be, entitled to exercise their rights
pursuant to Section 2.1(h) below.
(C) FAIR MARKET VALUE. The fair market value of Holding's common stock
equity initially shall be determined for purposes of determining the applicable
Repurchase Price under Section 2.1(a) or Section 2.1(i) hereof by an Independent
Appraiser (the "Holding Appraiser") selected by majority vote of the members of
------- ---------
the Board of Directors of Holding who were not designated for election as
directors by the Majority Heritage Holders, whose appraisal (the "Holding
-------
Appraisal") shall be delivered to each of the Heritage Holders within 45 days
---------
after the effective date of the later to be given (the "Last Notice") of (i) the
---- ------
Heritage Put Request, if such determination is pursuant to Section 2.1(a), or
the Second Heritage Put Request, if such determination is pursuant to Section
2.1(i) hereof, and (ii) the Holding Election. If the Majority Heritage Holders
do not object to the determination of the Holding Appraiser within 15 days after
the effective date
-12-
of delivery to them of the Holding Appraisal, the fair market value determined
by the Holding Appraiser shall be conclusive and shall be used to determine the
Repurchase Price of shares of Common Stock, and judgment thereon may be entered
in any court of competent jurisdiction. If the Majority Heritage Holders object
to the fair market value determined by the Holding Appraiser, the Majority
Heritage Holders may select an Independent Appraiser (the "Heritage Appraiser"),
-------- ---------
who shall review the determination of the Holding Appraiser and issue a report
thereon (the "Heritage Appraisal") within 30 days after the effective date of
-------- ---------
the delivery to the Majority Heritage Holders of the Holding Appraisal. Within
10 days after the effective date of delivery of the Heritage Appraisal to
Holding, the Holding Appraiser and the Heritage Appraiser shall meet in order to
resolve any questions or differences with respect to the fair market value of
Holding's common stock equity. If such Appraisers agree on a fair market value
of Holding's common stock equity, such agreed fair market value shall be
conclusive and shall be used to determine the Repurchase Price, and judgment
thereon may be entered in any court of competent jurisdiction. If no such
agreement is reached, such Appraisers within 5 days after such meeting shall
select another Independent Appraiser (the "Third Appraiser"). The fair
----- ---------
market value of Holding's common stock equity shall then be determined by the
Third Appraiser within 30 days after the effective date of delivery of the
Heritage Appraisal to Holding, and the determination of the Third Appraiser
shall be conclusive and shall be used to determine the Repurchase Price, and
judgment thereon may be entered in any court of competent jurisdiction. The
fair market value of Holding's common stock equity shall in all cases be
calculated by determining the fair market value of the entire common stock
equity interests of Holding taken as a whole, without premium for control or
discounts for minority interests or restrictions on transfer. All expenses of
the Holding Appraiser shall be borne by Holding; all expenses of the Heritage
Appraiser shall be borne by the Heritage Holders; and all expenses of the Third
Appraiser shall be borne 50% by Holding and 50% by the Heritage Holders.
(D) REPURCHASE CLOSING. The closing of any repurchase pursuant to this
Section 2.1 shall take place at the offices of Holding as soon as is reasonably
practicable, but in any event not more than 180 days after the effective date of
the Heritage Put Request or the Second Heritage Put Request, if applicable (as
such period may be extended pursuant to Section 2.4 below). At such closing,
the Heritage Holders will deliver to Holding, or its assignee pursuant to
Section 2.1(f) below, certificates evidencing all of the Heritage Securities
(properly endorsed or accompanied by duly executed stock powers or assignments
with signature(s) guaranteed or similar appropriate documentation of authority
to transfer), free and clear of all Liens, and Holding, or such assignee, shall
pay to each of the Heritage Holders in immediately available cash funds the
Repurchase Price for each of the Heritage Securities to be repurchased from such
Heritage Holder. Holding from time to time shall duly and promptly take any
such action, including without limitation to effect any upward revaluation of
the assets and properties of it and/or its Subsidiaries, that may lawfully be
effected so as to eliminate or reduce any legal constraint on the repurchase of
any of the Heritage Securities pursuant to this Section 2.1. If Holding or any
assignee of Holding pursuant to Section 2.1(f) below fails for any reason or for
no reason to repurchase all of the Heritage Securities that it has become
obligated to repurchase in
-13-
accordance with this Section 2.1 within 180 days after the effective date of the
Heritage Put Request or the Second Heritage Put Request, if applicable (as such
period may be extended pursuant to Section 2.4 below), then the Majority
Heritage Holders shall immediately become, and thereafter shall be, entitled to
exercise their rights pursuant to Section 2.1(h) below.
(E) ADDITIONAL PAYMENTS. If at any time within six months after any
closing with respect to the repurchase of any Common Stock pursuant to this
Section 2.1, Holding shall become party to one or more mergers, consolidations,
sales of more than 50% of its assets or other similar corporate actions pursuant
to which the holders of Common Stock (or Holding) receive cash, securities, or
other property, or Holding is acquired by purchase of a majority of its common
equity, or shares of Common Stock shall be sold pursuant to a registration
statement with respect to Common Stock filed under the Securities Act of 1933,
as amended, or Holding or any of its stockholders enter into any written
agreement or written letter of intent contemplating any of the foregoing
transactions, which transaction is consummated within 180 days thereafter,
Holding shall, simultaneously with the consummation of any such transaction or
at such later time as any payment described below is received by Holding or any
of its stockholders, make an additional payment to each Heritage Holder that
held Common Stock repurchased pursuant to this Section 2.1 in an amount per
share of such Common Stock equal to the excess, if any, of (i) the value per
share of the cash, securities, and other property that such Heritage Holder
would have received (or that Holding received and in which such Heritage Holder
would have had a beneficial interest as a holder of Common Stock of Holding) had
such Common Stock not been repurchased, over (ii) the payment received by such
Heritage Holder with respect to each such share pursuant to this Section 2.1.
Each payment to any Heritage Holder pursuant to this Section 2.1(e) shall be
made either in cash or in the form of the securities and other property received
by Holding or the holders of common equity of Holding.
(F) ASSIGNMENT BY HOLDING OF RIGHT TO REPURCHASE. Notwithstanding anything
to the contrary stated herein, Holding may, following a Holding Election
pursuant to Section 2.1(a)(i) above, assign to a third party the right to
repurchase all of the Heritage Securities at the Repurchase Price in accordance
with the terms of this Section 2.1, provided, however, that (i) such assignment
shall have been approved by a majority vote of the members of the Board of
Directors of Holding without the participation in such decision of any of the
Heritage Directors, (ii) Holding shall have given the Heritage Holders written
notice of any such assignment at least thirty (30) days prior to the date
proposed for a repurchase closing with the assignee, and (iii) no such
assignment shall in any way limit or restrict the obligation of Holding to honor
a Holding Election made pursuant to Section 2.1(a)(i) above.
(G) VOTING AGREEMENT. Notwithstanding anything to the contrary stated
herein Heritage hereby agrees to vote or cause to be voted all Securities having
voting rights that are owned by Heritage or over which Heritage or any of its
Affiliates has voting control, and shall use its best efforts to cause the
Heritage Directors (as defined in Section
-14-
3.1(a)(ii) below) to vote, to approve any proposed Qualified Sale or Qualified
Public Offering following any Holding Election pursuant to Section 2.1(a)(ii),
if the proceeds thereof to Holding will be sufficient to permit payment to the
Heritage Holders of the Repurchase Price in accordance with this Section 2.1,
and furthermore (without limiting the foregoing) to approve all actions required
to be approved by the stockholders or directors, as the case may be, of Holding
in order to permit Holding to complete a Qualified Sale or Qualified Public
Offering as described above.
(H) APPOINTMENT OF A SALE COMMITTEE. Upon the occurrence of a Heritage
Put Default (as defined below), the Majority Heritage Holders shall have the
right to request that Holding create a Sale Committee (a "Sale Committee") of
---- ---------
its Board of Directors, which have the authority to (i) solicit and evaluate
proposals to sell Holding or its business, whether by merger, consolidation,
sale of all or substantially all of its assets or capital stock of Holding
and/or one or more of its Subsidiaries, or otherwise (each, a "Sale Proposal"),
---- --------
(ii) hire agents, investment bankers and other professionals for and on behalf
of Holding in connection therewith, (iii) make recommendations to Holding's
Board of Directors regarding any Sale Proposal. A Sale Committee shall be
constituted of two Heritage Directors and shall remain in office for two years
after appointment. In the event that (x) Holding fails to appoint a Sale
Committee within thirty (30) days of a valid request hereunder, or (y) subject
to the provisos below, Holding's Board of Directors fails to approve any Sale
Proposal within thirty (30) days of delivery of written notice to each of the
members of the Board of a recommendation of such Sale Proposal by the Sale
Committee, or fails to duly authorize the taking of such actions as are
reasonably necessary to consummate any such recommended Sale Proposal (in either
case, referred to herein as a "Sale Committee Default"), then the Majority
---- --------- -------
Heritage Holders shall immediately become, and thereafter shall be, entitled to
exercise the right to elect a majority of Holding's Board of Directors pursuant
to Section 3.1(b) hereof, provided, however, that any Sale Proposal recommended
to the Board by the Sale Committee shall comply with the requirements of Section
2.3 below, and provided, further, that from and after the first anniversary of
the Sale Committee's appointment, any Sale Proposal shall first be presented to
the AGI Prospective Purchasers in accordance with, and shall otherwise be
subject to compliance with the provisions of, Section 2.2(a) hereof. For the
purposes hereof, a "Heritage Put Default" shall be deemed to have occurred if
-------- --- -------
any of the following shall occur:
(A) Holding makes an election pursuant to Section 2.1(a)(iii) hereof;
(B) Holding, having made an election pursuant to Section 2.1(a)(i)
hereof, fails to repurchase, or informs the Heritage Holders in writing
that it will be unable to or does not intend to purchase, the Heritage
Securities in full compliance with the provisions of, and within the time
limits specified in Section 2.1 hereof; or
(C) Holding, having made an election pursuant to Section 2.1(a)(ii)
hereof, (1) fails to use commercially reasonable efforts to pursue either a
Qualified Sale or a Qualified Public Offering or (2) fails to consummate,
or informs the Heritage
-15-
Holders in writing that it will be unable to or does not intend to
consummate, a Qualified Sale or a Qualified Public Offering within the time
limitations specified in Sections 2.1(a)(ii) hereof.
(I) DISSOLUTION OF SALE COMMITTEE; SECOND REPURCHASE REQUEST. In the
event that the Sale Committee is still in existence on the second anniversary of
its original appointment pursuant to Section 2.1(h), the Sale Committee shall be
dissolved automatically and without any further action on the part of the Board,
and then and thereafter the Majority Heritage Holders shall be entitled to
submit a second request to Holding to repurchase all of the Heritage Securities,
at a Repurchase Price to be determined as of the date of such second repurchase
request and otherwise in accordance with Section 2.1(c) hereof and at a closing
held in accordance with Section 2.1(d) hereof, by delivering to Holding written
notice (the "Second Heritage Put Request") requesting such repurchase. Upon
------ -------- --- -------
delivery of the Second Heritage Put Request, the provisions of this Section 2.1
shall apply as though such Second Heritage Put Request were the original
Heritage Put Request pursuant to Section 2.1(a), and this Section 2.1 shall be
interpreted accordingly.
2.2. RIGHT OF FIRST REFUSAL; APPROVED SALE.
(A) RIGHT OF FIRST REFUSAL. If at any time after the second anniversary
of the date hereof, Holding's Board of Directors wishes to approve the sale of
Holding or its business, whether by merger, consolidation, sale of all or
substantially all of the assets or capital stock of Holding and/or one or more
of its Subsidiaries, or otherwise (any such sale, "Qualified Proposed Sale"),
--------- -------- ----
whether pursuant to the terms of a bona fide offer to purchase Holding or its
business received by Holding from a third party not Affiliated to any
Stockholder (a "Purchase Offer"), or, subject to the limitations set forth in
-------- -----
Section 2.2(b) below, pursuant to a decision by a majority of the members of the
Board to offer Holding or its business for sale (a "Sale Decision"), the Board
---- --------
shall not recommend approval or approve any such Qualified Proposed Sale unless
Holding has complied in full with the terms of this Section 2.2(a).
(i) Immediately following any Sale Decision or the receipt by Holding
of any Purchase Offer, Holding shall provide written notice thereof (a
"Sale Notice") to the AGI Prospective Purchasers (as defined below),
----- ------
setting forth in such Sale Notice in reasonable detail the nature and the
proposed terms and conditions of the Qualified Proposed Sale, including,
without limitation, the aggregate consideration to be paid (the "Offer
-----
Price"), whether such Sale Notice is being delivered pursuant to a Sale
-----
Decision or with respect to a Purchase Offer and, in the case of any
Purchase Offer, the identity of the proposed purchaser, details of any
deferred payment terms and other details as to the structure of the
proposed consideration, together with a copy of the Purchase Offer if in
writing.
(ii) By delivery of written notice (an "AGI Purchase Notice") to
--- -------- ------
Holding within 30 days of the effective date of delivery of the Sale Notice
(or such longer
-16-
period, not to exceed 60 days after the effective date of delivery of the
Sale Notice, as may be required to determine the value of non-cash
consideration, if non-cash consideration is proposed to be received in
respect of such Qualified Proposed Sale), the AGI Prospective Purchasers
may elect to purchase the following (in any such case, the "Items To Be
----- -- --
Sold"): (A) all of the assets, stock or other properties described in the
----
Sale Notice, at the Offer Price and on the other terms specified therein;
(B) if the Qualified Proposed Sale described in the Sale Notice is a
purchase and sale of all or substantially all of the capital stock of
Holding, all of the shares of capital stock proposed to be sold pursuant to
such Qualified Proposed Sale, other than such shares then owned by the AGI
Prospective Purchasers, at a price per share equivalent to the price per
share which the holders of such capital stock would have received in the
Qualified Proposed Sale described in the applicable Sale Notice and on the
other terms specified therein; or (C) if the Qualified Proposed Sale
described in the Sale Notice is a purchase and sale of all or substantially
all the assets of Holding, at the AGI Prospective Purchasers' discretion,
all of the shares of Holding's capital stock, other than such shares then
owned by the AGI Prospective Purchasers, at a price per share equivalent to
the distribution per share which the holders of Holding's capital stock
(other than the AGI Prospective Purchasers) would have received in the
event that Holding had paid out the purchase price, net of expenses and
taxes incurred in connection with such transaction, for all or
substantially all of its assets as a distribution on its capital stock;
provided, however, that if non-cash consideration is proposed to be
received in any such case, the AGI Prospective Purchasers shall have the
right to pay cash in the amount of the fair market value thereof pursuant
to an appraisal obtained by them from an Independent Appraiser; and any
such appraisal shall be included with the applicable AGI Purchase Notice.
(iii) If (x) the AGI Prospective Purchasers do not timely deliver an
AGI Purchase Notice in accordance with paragraph (ii) above, or (y) the AGI
Prospective Purchasers do deliver an AGI Purchase Notice in accordance with
paragraph (ii) above, but fail to consummate an AGI Purchase (as defined
below) pursuant to and in accordance with Section 2.2(a)(vi) below, then
Holding shall be free, in the case of clause (x), for a period of five (5)
months from the last date upon which an AGI Purchase Notice might have been
timely delivered pursuant to paragraph (ii) above, and in the case of
clause (y), for a period of 12 months from the applicable AGI Purchase
Termination Date (such period, as determined under clause (x) or clause (y)
above, the "Board Sale Period") to pursue and complete the Qualified
----- ---- ------
Proposed Sale, and such sale completed in accordance herewith shall be an
"Approved Sale" hereunder, subject to the terms and conditions set forth in
Sections 2.2(c) and 2.3 hereof. Holding shall notify the AGI Prospective
Purchasers if at any time during a Board Sale Period the fair market value
of the aggregate consideration being offered (with any non-cash
consideration being valued on the same basis as employed in the appraisal,
if any, obtained by the AGI Prospective Purchasers pursuant to paragraph
(ii) above, and if no such appraisal shall have been obtained, as valued in
accordance with an appraisal obtained by
-17-
Holding from an Independent Appraiser reasonably acceptable to the AGI
Prospective Purchasers) shall be less than 92.5% of the Offer Price. At any
such time during a Board Sale Period, or if the Qualified Proposed Sale has
not been consummated within the applicable Board Sale Period and Holding's
Board of Directors determines at the end of such period, subject to the
limitations of Section 2.2(b), that it wishes to continue to pursue a
Qualified Proposed Sale, then and in either such case Holding shall provide
written notice thereof to the AGI Prospective Purchasers (a "Second Sale
------ ----
Notice"), setting forth in such Second Sale Notice the information
------
described in paragraph (i) above with respect to the terms and conditions
of the Qualified Proposed Sale as then proposed, together with any
appraisal obtained by Holding of any non-cash consideration offered in such
Qualified Proposed Sale. If the AGI Prospective Purchasers elect to
purchase the Items To Be Sold as described in such Second Sale Notice, then
they shall so notify Holding by written notice (also an "AGI Purchase
--- --------
Notice") within 30 days of the effective date of delivery of the Second
------
Sale Notice.
(iv) If an AGI Purchase Notice shall have been duly and timely
delivered in accordance with paragraphs (ii) or (iii), then the purchase of
the Items To Be Sold (the "AGI Purchase") shall be consummated, unless
--- --------
otherwise agreed by the AGI Prospective Purchasers, on a pro rata basis
based upon the ratio which the number of shares of AGI Holder Securities
then held by each such electing AGI Prospective Purchaser bears to the
total of AGI Holder Securities held by all of the AGI Prospective
Purchasers who have elected to participate in such purchase (in all cases
calculated on a Fully Diluted Basis). The AGI Purchase shall be
consummated on the terms, as to price and other conditions, referred to in
paragraph (ii) above and such Purchase shall be an "Approved Sale"
hereunder, subject to the terms and conditions set forth in Sections 2.2(c)
and 2.3 hereof. A legally-binding and enforceable agreement to complete
the AGI Purchase on such terms within a period not to exceed 30 days after
the date of such agreement and without a financing contingency (an "AGI
---
Purchase Contract") shall have been entered into on the later of (x) if the
-------- --------
Qualified Proposed Sale were pursuant to a Purchase Offer, the date which
the prospective purchaser proposed to consummate such purchase as described
in such Purchase Offer, or (y) the date five (5) months following the date
of the applicable AGI Purchase Notice, subject in each case to the AGI
Prospective Purchasers' compliance with the provisions of paragraph (v)
below.
(v) From and after the delivery of an AGI Purchase Notice, the AGI
Prospective Purchasers shall use their best efforts to inform Holding's
Board of Directors as to their progress or lack thereof in procuring
financing for the completion of the AGI Purchase. Without limiting the
foregoing general obligation, (x) within 60 days of the delivery of the AGI
Purchase Notice, the AGI Prospective Purchasers shall have delivered to
Holding's Board of Directors reasonably detailed expressions of interest
from one or more financing sources regarding financing in the amounts
necessary to complete the AGI Purchase and
-18-
pay the AGI Prospective Purchasers' related expenses, and (y) within 120
days of the delivery of the AGI Purchase Notice, the AGI Prospective
Purchasers shall have delivered to Holding's Board of Directors letter(s)
of intent from one or more reasonably reputable financing sources setting
forth reasonably detailed proposals for the provision to the AGI
Prospective Purchasers of financing in such amounts as shall then be
necessary to complete the AGI Purchase and pay the AGI Prospective
Purchasers' related expenses, together with a reasonably complete draft of
an AGI Purchase Contract. In any event, the AGI Prospective Purchasers
shall deliver to Holding's Board of Directors copies of all such
expressions of interest and letters of intent and copies of the first and
last drafts of financing documentation and of any proposed AGI Purchase
Contract, as soon as such documents are received by such AGI Prospective
Purchasers. So long as the AGI Prospective Purchasers are complying with
the provisions of this Section 2.2(a)(v), Holding and each of the
Stockholders other than the AGI Prospective Purchasers agree to act with
respect to the proposed AGI Purchase in accordance with the provisions of
Section 2.2(c), and such AGI Purchase shall be deemed to be an Approved
Sale hereunder. Holding and each of such other Stockholders agree to treat
as confidential all information regarding the proposed AGI Purchase
pursuant to this Section 2.2(a)(v).
(vi) If (A) at any time following delivery of an AGI Purchase Notice
pursuant to paragraphs (ii) or (iii) above and prior to entering into an
AGI Purchase Contract, (x) the AGI Prospective Purchasers determine in good
faith (provided that if requested in good faith by any director of Holding,
the AGI Prospective Purchasers shall within ten (10) days after such
request send written notice to Holding's Board of Directors of their
determination as to such matters), that the AGI Prospective Purchasers will
either (1) not be able to enter into an AGI Purchase Contract within the
period specified in paragraph (iv) above, or (2) not be able to complete an
AGI Purchase on the terms required by this Section 2.2(a), or (y) the AGI
Prospective Purchasers elect not to proceed with an AGI Purchase, or (B)
the AGI Prospective Purchasers shall have breached or been unable to comply
with the requirements of paragraphs (iv) and/or (v) above, or (C) the AGI
Prospective Purchasers have not, within ten (10) days of being requested to
do so by any director of Holding, delivered to Holding a written
determination as described in clause (A)(x) above, then, in the case of
clause (A) above, the AGI Prospective Purchasers shall immediately so
notify Holding's Board of Directors in writing, and in any such case the
rights of the AGI Prospective Purchasers to pursue an AGI Purchase pursuant
to this Section 2.2(a) shall thereupon terminate, and thereafter the AGI
Prospective Purchasers shall only be entitled to pursue an AGI Purchase
pursuant to and in accordance with Section 2.2(b) below.
(vii) The term "AGI Prospective Purchasers" means Xxxxxxx Xxxxx,
--- ----------- ----------
individually, together with his Family Members and Family Trusts. No AGI
Prospective Purchaser may assign any or all of his or its rights to deliver
an AGI Purchase Notice, to pursue an AGI Purchase, or to complete an AGI
Purchase under this Section 2.2(a) without the prior written consent of
Holding, provided
-19-
that if the proposed assignee is an entity under the control of ("control",
for purposes of this Section 2.2(a)(vii), includes Xxxxxxx Xxxxx holding a
senior executive position with, or membership of the board of, such entity)
or majority-owned by an AGI Prospective Purchaser, then such consent shall
not be unreasonably withheld or delayed.
(B) SUBSEQUENT PURCHASE RIGHTS. In the event that an AGI Purchase Notice
(other than an Exempt Purchase Notice, as defined below) shall have been
delivered in accordance with Sections 2.2(a)(ii) or 2.2(a)(iii) above, and the
period for the AGI Prospective Purchasers to pursue an AGI Purchase pursuant
thereto shall have terminated pursuant to and in accordance with Section
2.2(a)(vi) above (the date of such termination, the "AGI Purchase Termination
--- -------- -----------
Date"), then the AGI Prospective Purchasers shall have the right to deliver not
----
more than one additional AGI Purchase Notice with respect to any Sale Notices
delivered prior to June 7, 2002, provided that this limitation shall not apply
to limit the AGI Prospective Purchasers' right to deliver AGI Purchase Notices
which are Exempt Purchase Notices under clause (B) of the definition thereof,
and provided further that any AGI Purchase Notice otherwise permitted to be
delivered hereunder and which becomes an Exempt Purchase Notice under clause (A)
of the definition thereof shall not be considered to be an additional AGI
Purchase Notice for purposes of this limitation. If, in response to any Sale
Notice delivered prior to June 7, 2002, the AGI Prospective Purchasers shall
have delivered an AGI Purchase Notice which was not an Exempt Purchase Notice,
then the AGI Prospective Purchasers shall have no right to deliver an AGI
Purchase Notice in response to a Sale Notice delivered after June 7, 2002,
unless such AGI Purchase Notice would be an Exempt Purchase Notice under clause
(B) of the definition thereof, and would be delivered in connection with a Sale
Notice originally delivered prior to June 7, 2002. If the first AGI Purchase
Notice which is not an Exempt Purchase Notice is delivered in response to a Sale
Notice delivered after June 7, 2002, then, except with respect to Exempt
Purchase Notices described in clause (B) of the definition thereof, no other AGI
Purchase Notice may be provided under this Agreement. Notwithstanding anything
herein to the contrary, (i) to the extent that two AGI Purchase Notices shall
have been delivered in response to Sale Notices with respect to Qualified
Proposed Sales, other than Exempt Purchase Notices under clause (B) of the
definition thereof, no further AGI Purchase Notices may be delivered, and (ii)
Exempt Purchase Notices under clause (B) of the definition thereof may be
delivered at any time, including after June 7, 2002, to the extent that any such
Exempt Purchase Notice relates to a Sale Notice with respect to which the AGI
Prospective Purchasers originally had the right to deliver an AGI Purchase
Notice under the other terms of this Section 2.2(b).
As used herein, the term "Exempt Purchase Notice" means (A) any AGI
Purchase Notice delivered in response to a Sale Decision, if no Qualified
Proposed Sale is consummated either pursuant to such AGI Purchase Notice or
during the applicable Board Sale Period thereafter, or (B) any AGI Purchase
Notice delivered during a Board Sale Period in response to a Second Sale Notice
disclosing an Offer Price which is less than 92.5% of the Offer Price disclosed
in the Sale Notice delivered prior to the commencement of such Board Sale
Period.
-20-
In the event that a further AGI Purchase Notice is permitted to be
delivered in accordance with the foregoing provisions of this Section 2.2(b),
the provisions of Section 2.2(a) shall apply to such AGI Purchase Notice and to
the rights and obligations of Holding and the AGI Prospective Purchasers arising
therefrom, except that the period by which an AGI Purchase Contract is to have
been entered into pursuant to Section 2.2(a)(iv)(y) shall be reduced from six
(6) months (or seven (7), as the case may be) to four (4) months (or five (5),
as the case may be), and the periods of 60 and 120 days specified in Section
2.2(a)(v) shall each be reduced by 30 days to 30 and 90 days, respectively.
Subject to the foregoing limitations, Holding shall comply with the provisions
of Section 2.2(a) with respect to any and all Qualified Proposed Sales,
including the requirement to deliver to the AGI Prospective Purchasers Sale
Notices with respect thereto, from and after the second anniversary of the date
hereof, provided, however, that in the event that a Sale Notice resulting from a
Sale Decision has been delivered and no Qualified Proposed Sale has been
consummated within a period of six months (if no AGI Purchase Notice was
delivered in connection therewith) or, in all other cases, twelve (12)
consecutive months following such delivery (as such period may have been
extended to permit the valuation of any proposed non-cash consideration), then
Holding may not deliver another Sale Notice resulting from a Sale Decision for a
period after the end of such 6- or 12-month period, as the case may be (as so
extended), equal to the lesser of (A) six (6) months, or (B) the period to June
7, 2002 (provided that, for the avoidance of doubt, this provision shall not
limit Holding's obligation to deliver Sale Notices with respect to Purchase
Offers received by Holding).
(C) APPROVED SALE. If at any time Holding's Board of Directors approves
the sale of Holding or its business, whether by merger, consolidation, sale of
all or substantially all of the assets or capital stock of Holding and/or one or
more of its Subsidiaries, or otherwise, and (x) if after the second anniversary
of the date hereof, such approval was permitted pursuant to Section 2.2(a), and
(y) if prior to the second anniversary of the date hereof, each of the Majority
AGI Holders, the Majority Heritage Holders and the Majority Klearfold Holders
have consented to such sale pursuant to and in accordance with such Section 3.2
(any such proposed sale, or any sale to one or more AGI Prospective Purchasers
pursuant to and in accordance with Section 2.2(a), an "Approved Sale"), then:
-------- ----
(i) Holding and each of the Stockholders shall cooperate fully in any
Approved Sale and shall not take any action that is prejudicial to or
inconsistent with such Approved Sale.
(ii) Each Stockholder (A) shall vote or cause to be voted all
Securities having voting rights that are owned by such Stockholder or over
which such Stockholder has voting control to approve the terms of any such
Approved Sale and such matters ancillary thereto as may be necessary or
appropriate, in the judgment of the Board of Directors of Holding, to
effect such Approved Sale, (B) hereby irrevocably waives and relinquishes,
to the fullest extent permitted by applicable
-21-
law, all rights to object to or dissent from such Approved Sale (including
without limitation any appraisal or similar rights), and agrees to raise no
objections against, such Approved Sale, (C) with respect to any Approved
Sale structured as a sale of stock, shall sell all of such Stockholder's
Securities on the terms and conditions approved by the Board of Directors
of Holding, and (D) upon Holding's request, shall deliver the certificates
representing all Securities owned or controlled by such Stockholder (duly
endorsed, or accompanied by duly executed instruments of transfer) in
escrow (pending receipt of the purchase price therefor) to Holding's
counsel in such sale.
(iii) Holding shall cause its officers, employees, agents,
contractors, and other Persons under its control to cooperate in any
Approved Sale and not to take any action that might impede any such sale.
Without limiting the generality of the foregoing, any resignation of any
office of Holding prior to closing of any Approved Sale by a director or
executive officer of Holding shall be a breach of this Section 2.2(c)(iii).
Pending the completion of any Approved Sale, Holding shall operate only in
the ordinary course and shall use all commercially reasonable efforts to
maintain all existing business relationships in good standing.
2.3. RECEIVED CONSIDERATION. The obligations of the Stockholders with
respect to any Approved Sale are subject to the satisfaction of the condition
that upon the consummation of such sale, all of the holders of Common Stock
shall receive the same forms and amounts of consideration per share outstanding,
or if any holders are given an option as to the form and amount of consideration
to be received per share, all holders shall be given the same option.
2.4. REPURCHASE DELAY. If a "Change of Control", as such term is defined
in the Indenture, would occur either (a) as a result of an exercise of the AGI
Proposed Purchasers' rights under Section 2.2 above or (b) as a result of a
repurchase of the Heritage Securities and/or certain of the Klearfold Holder
Securities pursuant to and in accordance with Section 2.1 above, then and in
either such case the closing of the transaction which would otherwise result in
such Change of Control may be delayed, at the option of the AGI Prospective
Purchasers, if pursuant to clause (a), or at Holding's option, if pursuant to
clause (b), for a period not to exceed ninety (90) days beyond the end of the
period(s) required for the completion thereof under the applicable sections
above, notwithstanding any provisions to the contrary in such sections. In
addition, in the event that Holding shall have made a Holding Election pursuant
to Section 2.1(a)(i) or 2.1(a)(ii) and the date by which the transaction
proposed to be completed pursuant to such Holding Election would, but for the
provision of this Section 2.4, fall before the first date upon which Holding
shall be able to redeem the Senior Subordinated Notes under and as defined in
the Indenture (such date, the "Redemption Date") then the date for completion of
---------------
such proposed transaction shall be delayed for a period of up to one hundred and
twenty (120) days, but in any event no longer than ten (10) days after the
Redemption Date.
3. VOTING.
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3.1. BOARD OF DIRECTORS.
(A) Subject to the provisions of Sections 3.1(b) - (e) hereof, in any and
all elections of directors of Holding, AGI, Klearfold, and any other Subsidiary
of Holding existing from time to time (whether at a meeting or by written
consent in lieu of a meeting), each Stockholder shall vote or cause to be voted
all Securities having voting rights that are owned by such Stockholder or over
which such Stockholder has voting control, and/or, as relevant, shall use such
Stockholder's best efforts to cause such Stockholder's designees as directors to
vote so as to fix the number of directors of Holding at seven, to cause such
Stockholder's designees as directors of Holding to so act as to ensure that
Holding, in its capacity as stockholder of AGI, Klearfold, and any other such
Subsidiary, fixes the number of directors of each of AGI, Klearfold, and any
other such Subsidiary at seven, and, in each case, to nominate and elect, or use
its best efforts to cause to be nominated and elected, such directors of each of
Holding, AGI, Klearfold, and any other such Subsidiary, respectively, as
follows:
(i) Three individuals (the "AGI Directors") designated as follows:
--- ---------
(A) if Xxxxxxx Xxxxx is both chief executive officer of Holding and holds
at least 75% (on a Fully Diluted Basis) of the number of shares of Common
Stock issued to him pursuant to the Investment Agreement, as adjusted for
splits, combinations, and other recapitalizations from and after the date
hereof, then Xxxxxxx Xxxxx and two individuals designated by Xxxxxxx Xxxxx;
(B) if Xxxxxxx Xxxxx is both chief executive officer of Holding and holds
at least 50% but less than 75% (on a Fully Diluted Basis) of the numbers of
shares of Common Stock issued to him pursuant to the Investment Agreement,
as adjusted for splits, combinations and other recapitalizations from and
after the date hereof, then Xxxxxxx Xxxxx, one individual designated by
Xxxxxxx Xxxxx, and one individual designated by the holders of a majority
of the then outstanding AGI Holder Securities who are then employed by
Holding or its Subsidiaries (the "Majority AGI Employee Holders"); (C) if
-----------------------------
Xxxxxxx Xxxxx is both chief executive officer of Holding and holds less
than 50% (on a Fully Diluted Basis) of the numbers of shares of Common
Stock issued to him pursuant to the Investment Agreement, as adjusted for
splits, combinations and other recapitalizations from and after the date
hereof, then Xxxxxxx Xxxxx and two individuals designated by the Majority
AGI Employee Holders; (D) if Xxxxxxx Xxxxx is not chief executive officer
of Holding and holds at least 50% (on a Fully Diluted Basis) of the numbers
of shares of Common Stock issued to him pursuant to the Investment
Agreement, as adjusted for splits, combinations and other recapitalizations
from and after the date hereof, then one individual designated by Xxxxxxx
Xxxxx and two individuals designated by the Majority AGI Employee Holders;
and (E) if Xxxxxxx Xxxxx is not chief executive officer of Holding and
holds less than 50% (on a Fully Diluted Basis) of the number of shares of
Common Stock issued to him pursuant to the Investment Agreement, as
adjusted for splits, combinations and other recapitalizations from and
after the date hereof, then three individuals designated by the Majority
AGI Employee Holders;
-23-
(ii) Two individuals (the "Heritage Directors") designated by the
-------- ---------
Majority Heritage Holders; and
(iii) Two individuals (the "Klearfold Directors") designated by the
--------- ---------
Majority Xxxxxx Holders;
and a quorum of the Board of Directors of each of Holding, AGI, Klearfold, and
any other Subsidiary of Holding existing from time to time, shall consist of six
directors, provided, however that in the event a quorum is not present at any
meeting of the Board of Directors of any such company, such meeting shall be
adjourned and each director notified by telephone and written telecommunication
of the date and time at which such meeting is to be reconvened, which shall be
not less than 48 hours following the time of the originally-scheduled meeting of
the Board of Directors, and at such reconvened meeting the quorum of the Board
of Directors shall consist of four directors.
(B) Notwithstanding the foregoing Section 3.1(a) and Section 3.1(c) below:
(i) if Holding fails to achieve the minimum levels of operating
earnings specified in the attached Schedule 3.1(b) for the respective
-------- ------
periods specified in such Schedule 3.1(b), then until Holding achieves a
-------- ------
subsequent minimum level of operating earnings so specified; or
(ii) if any Sale Committee Default shall occur, then and for the
period of twelve (12) consecutive months thereafter; or
(iii) if any default in the timely payment of principal or interest
shall have occurred under either (A) that certain Credit Agreement among
Holding, the lenders referred to therein and Bank of America N.T. & S.A.,
as Agent for such lenders, dated the date hereof, (B) those certain Senior
Subordinated Notes of Holding dated the date hereof, and the related
Indenture, or (C) any renewal, refinancing, refunding or extension of any
of the foregoing, all as amended, modified or restated from time to time,
and pursuant thereto the holders of the indebtedness of Holding or any of
its Subsidiaries thereunder shall have the right to accelerate any of such
indebtedness (or would have had such right but for the existence of any
subordination or inter-creditor arrangement between such holders and the
holders of any other indebtedness of Holding or any of its Subsidiaries),
then until such default shall have been cured or waived by the required
holders of such indebtedness pursuant to a written waiver in form and
substance satisfactory to the Majority Heritage Holders;
and in any such case and for the periods respectively specified above, each
Stockholder shall vote or cause to be voted all Securities having voting rights
that are owned by such Stockholder or over which such Stockholder has voting
control, and/or, as relevant, shall use such Stockholder's best efforts to cause
such Stockholder's designees as directors to
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vote, so as to fix the number of directors of Holding at seven, and to nominate
and elect such seven directors as follows:
(x) Four individuals designated by the Majority Heritage Holders
(also being referred to herein as "Heritage Directors"); and
-------- ---------
(y) Two individuals designated by the Majority AGI Holders (also
being referred to herein as "AGI Directors"); and
-------------
(z) One individual designated by the Majority Xxxxxx Holders (also
being referred to herein as a "Klearfold Director", and together with the
------------------
AGI Directors referred to in clause (y) above, the "Non-Heritage
------------
Directors");
and each of the Stockholders will use its best efforts to cause Holding so to
act as to make conforming changes to the Boards of Directors of AGI, Klearfold,
and each other Subsidiary of Holding existing at such time, and each of the
Stockholders shall vote or cause to be voted all Securities having voting rights
that are owned by such Stockholder or over which such Stockholder has voting
control in favor of all matters recommended for approval by the Stockholders by
any Board of Directors elected pursuant to this Section 3.1(b). Upon the
occurrence of any event described in clauses (i) - (iii) above, Holding shall
notify each of the Stockholders thereof, provided that the failure to deliver
any such notice, or any Stockholder's failure to receive any such notice, shall
not limit the effectiveness of this Section 3.1(b). While the Boards of
Directors of Holding, AGI, Klearfold, and any other such Subsidiary are
constituted in accordance with this Section 3.1(b), a quorum of each of such
Boards of Directors shall consist of six directors, provided, however that in
the event a quorum is not present at any meeting of the Board of Directors of
any such company, such meeting shall be adjourned and each director notified by
telephone and written telecommunication of the date and time at which such
meeting is to be reconvened, which shall be not less than 48 hours following the
time of the originally-scheduled meeting of the Board of Directors, and at such
reconvened meeting the quorum of the Board of Directors shall consist of four
directors, provided, further, that in order to constitute a quorum, the number
of Heritage Directors present at any such meeting (including any such reconvened
meeting) shall exceed the number of Non-Heritage Directors so present.
(C) Subject to the provisions of Sections 3.1(b) and (d) hereof, in the
event that Xxxxx Xxxxxx'x employment with Holding and its Subsidiaries is
terminated either (A) by Xxxxx Xxxxxx with Good Reason, at any time after
January 1, 1999, pursuant to clause (i) of the definition of Good Reason in his
Employment, Non-Competition and Stock Repurchase Agreement with Holding, dated
the date hereof, or (B) pursuant to Section 4(f) of such Agreement, then and
thereafter each Stockholder shall vote or cause to be voted all Securities
having voting rights that are owned by such Stockholder or over which such
Stockholder has voting control, and/or, as relevant, shall use such
Stockholder's best efforts to cause such Stockholder's designees as directors to
vote, so as to fix the number of directors of Holding at nine, and to nominate
and elect such nine directors as follows:
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(i) seven individuals designated in accordance with Sections
3.1(a)(i)- (iii) hereof;
(ii) one individual, who shall for the purposes hereof also be
referred to herein as an "AGI Director", designated by Xxxxxxx Xxxxx, so
--- --------
long as Xxxxxxx Xxxxx is chief executive officer of Holding, and otherwise
by the Majority AGI Employee Holders, and approved by the Majority Heritage
Holders in their sole discretion (such approval not to be unreasonably
withheld or delayed) but who shall not be an Affiliate or Related Party of
any AGI Stockholder or any Heritage Holder, nor an employee or officer of
Holding or any of its Subsidiaries; and
(iii) one individual, who shall for the purposes hereof also be
referred to herein as a "Heritage Director", designated by the Majority
-------- --------
Heritage Holders, and approved by Xxxxxxx Xxxxx, in his sole discretion, so
long as Xxxxxxx Xxxxx is chief executive officer of Holding, and otherwise
by the Majority AGI Employee Holders, in their sole discretion (such
approval, in either such case, not to be unreasonably withheld or delayed)
but who shall not be an Affiliate or Related Party of any AGI Stockholder
or any Heritage Holder, nor an employee or officer of Holding or any of its
Subsidiaries.
and each of the Stockholders will use its best efforts to cause Holding so to
act as to make conforming changes to the Boards of Directors of AGI, Klearfold,
and each other Subsidiary of Holding existing at such time, and each of the
Stockholders shall vote or cause to be voted all Securities having voting rights
that are owned by such Stockholder or over which such Stockholder has voting
control in favor of all matters recommended for approval by the Stockholders by
any Board of Directors elected pursuant to this Section 3.1(c). Holding shall
notify each of the Stockholders (other than the Xxxxxx Stockholders) of the
occurrence of a termination of Xxxxx Xxxxxx'x employment with Holding as
described above in this Section 3.1(c), provided that the failure to deliver any
such notice, or any Stockholder's failure to receive any such notice, shall not
limit the effectiveness of this Section 3.1(c). While the Boards of Directors
of Holding, AGI, Klearfold, and any other such Subsidiary are constituted in
accordance with this Section 3.1(c), a quorum of each of such Boards of
Directors shall consist of eight directors, provided, however that in the event
a quorum is not present at any meeting of the Board of Directors of any such
company, such meeting shall be adjourned and each director notified by telephone
and written telecommunication of the date and time at which such meeting is to
be reconvened, which shall be not less than 48 hours following the time of the
originally-scheduled meeting of the Board of Directors, and at such reconvened
meeting the quorum of the Board of Directors shall consist of five directors.
(D) If any vacancy shall occur in any of the Boards of Directors of
Holding, AGI or Klearfold, whether as a result of the death, disability,
resignation, or removal of any director or otherwise, such director's
replacement shall be designated by the Person or Persons who, pursuant to
subsection (a), (b) or (c) of Section 3.1 hereof, as the case may
-26-
be, originally designated such director (unless such subsection (a), (b) or (c)
as the case may be, is not at the time of designation of such replacement
director the operative section governing the election of directors hereunder).
Each Person entitled to designate a director or a replacement for a director
pursuant to this Section 3 shall also be entitled to instruct the Stockholders
to remove such director with or without cause and upon such instruction the
Stockholders shall act to remove such director, whereupon the Person(s)
initiating such removal shall be entitled, subject to the approvals required by
Sections 3.1(c)(ii) or 3.1(c)(iii) above, if applicable, to designate a
replacement for any director so removed. Each Stockholder hereby agrees to vote
or cause to be voted all Securities having voting rights that are owned by such
Stockholder or over which such Stockholder has voting control, and shall use
such Stockholder's best efforts to cause such Stockholder's designees as
directors to vote, so as to comply with this Section 3.1(d).
(E) If at any time Holding or any of its Subsidiaries acquires all or
substantially all of the assets or capital stock of any Person for aggregate
consideration in excess of $10,000,000, then the Stockholders holding a majority
of the then outstanding shares of Common Stock may act to amend this Section
3.1, and any corresponding provision of Holding's or any of its Subsidiaries'
by-laws, so as to permit an increase in the number of directors required hereby
(but not, in any event, to decrease such number), provided that the additional
directors elected pursuant to any such increase may not be selected by any
existing Stockholder with the right (either individually or collectively with
other Stockholders) to designate directors under this Section 3.1 as in effect
immediately prior to such amendment, or by any Affiliate of any such
Stockholder.
3.2. CONSENT TO SALE. Until the second anniversary of the date hereof, and
subject to the provisions of Section 2.3 hereof, each of the Stockholders hereby
irrevocably agrees that such Stockholder shall not vote or permit to be voted
any Securities having voting rights that are owned by such Stockholder or over
which such Stockholder has voting control, and shall use such Stockholder's best
efforts to cause such Stockholder's designees as directors not to vote, in favor
of any sale of Holding or its business (whether by merger, consolidation, sale
of all or substantially all of the assets or capital stock of Holding and/or one
or more of its Subsidiaries, or otherwise), if the proposed sale has not been
previously approved in writing by the Majority AGI Holders, the Majority
Heritage Holders and the Majority Klearfold Holders.
3.3. PROXY. Each Stockholder hereby irrevocably appoints Holding as such
Stockholder's true and lawful proxy and attorney-in-fact, with full power of
substitution, to vote or cause to be voted all Securities having voting rights
that are owned by such Stockholder or over which such Stockholder has voting
control to effectuate the agreements of such Stockholder set forth in this
Agreement in the event of any breach by such Stockholder of its obligations
under this Agreement. The proxies and powers granted by each Stockholder
pursuant to this Section 3.3 are coupled with an interest and are given to
secure the performance of such Stockholder's duties under this Agreement. Such
proxies shall be irrevocable for so long as this Agreement remains in effect and
shall survive the death, incompetence, and/or disability of any Stockholder who
is an individual
-27-
and the merger, liquidation, dissolution, and/or winding-up of any Stockholder
that is not an individual.
3.4. ACTION BY STOCKHOLDERS. Each Stockholder further agrees that such
Stockholder shall not vote or permit to be voted any Securities having voting
rights that are owned by such Stockholder or over which such Stockholder has
voting control, or take any other action as a stockholder of Holding, to
circumvent the voting arrangements set forth in this Section 3. Without
limiting the generality of the foregoing, each Stockholder agrees not to
commence, maintain, or participate in any legal action or proceeding (including
without limitation any stockholder's derivative suit) challenging any action or
transaction duly approved by Holding's Board of Directors in accordance with the
terms of this Agreement.
4. PREEMPTIVE RIGHTS.
4.1. GRANT OF RIGHTS. Subject to the final sentence of this Section 4.1,
if Holding or any of its Subsidiaries authorizes the issuance or sale of any
shares of any class of capital stock or other securities on or prior to June 7,
2002, Holding shall (or shall cause such Subsidiary to) first offer to sell to
each Stockholder a portion of such securities equal to the quotient (expressed
as a percentage) of (i) the number of shares of Common Stock held by such
Stockholder (calculated on a Fully Diluted Basis), divided by (ii) the number of
shares of Common Stock then outstanding (calculated on a Fully Diluted Basis).
Each Stockholder shall be entitled to purchase all or part of such stock or
securities at the same price and on the same terms (including any deferred
payment terms) as such stock or securities are to be offered to any other
Persons, provided, that each such Stockholder shall have the option to
substitute for any non-cash consideration proposed to be received in respect of
such proposed issuance or sale, cash in the amount of the fair market value
thereof. Notwithstanding the foregoing, the provisions of this Section 4.1
shall not apply to the issuance or sale of any shares of capital stock by any of
Holding's Subsidiaries to Holding or to any of its wholly owned Subsidiaries, or
to the issuance of shares of Common Stock (a) pursuant to a Public Sale, (b) as
consideration for the acquisition of all or any substantial portion of the
assets or all or any portion of the capital stock of any Person, provided, for
the avoidance of doubt, that the issuance or sale by Holding or any of its
Subsidiaries of any shares of any class of capital stock or other securities to
generate cash funding of the consideration for any such acquisition shall be
subject to the provisions of the first sentence of this Section 4.1, (c)
pursuant to a management stock option plan or employee incentive plan approved
by the Board of Directors, (d) to, or pursuant to warrants or options issued to,
consultants to, vendors to, or joint venture partners of Holding or its
Subsidiaries, in each case as approved by the Board of Directors, or (e) as a
dividend in respect of the outstanding shares of Common Stock.
4.2. STOCKHOLDERS' EXERCISE OF RIGHT. Each Stockholder must exercise such
Stockholder's purchase rights under Section 4.1 hereof within 30 days after the
effective date of delivery to such Stockholder of written notice from Holding or
its Subsidiary, as the case may be, describing in reasonable detail the stock or
other securities being offered,
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the purchase price thereof, the payment terms, and such Stockholder's allotted
portion thereof, as determined in accordance with Section 4.1 hereof. If all of
such stock or other securities are not fully subscribed for by the Stockholders
within such 30-day period, the stock or securities that are not so subscribed
for shall be re-offered to the Stockholders purchasing their full allotments
upon the terms set forth in this Section 4, except that (i) such Stockholders
must exercise their purchase rights with respect to such re-offered securities
within ten (10) days after receipt of such re-offer, and (ii) unless such
Stockholders so agree, each such Stockholder shall be offered and shall be
entitled to purchase pursuant to this Section 4.2 a portion of the re-offered
securities equal to the quotient (expressed as a percentage) of (x) the number
of shares of Common Stock held by such Stockholder (calculated on a Fully
Diluted Basis), divided by (y) the number of shares of Common Stock (calculated
on a Fully Diluted Basis) then held by the Stockholders receiving such re-offer.
4.3. HOLDING'S EXERCISE OF RIGHTS. Upon the expiration of the offer and
re-offer (if any) periods described above, Holding or its Subsidiary, as the
case may be, shall be free to sell any stock or other securities that the
Stockholders have not elected to purchase during the ninety (90) days following
such expiration, on terms and conditions no more favorable to the purchasers
thereof than those offered to the Stockholders. Any stock or other securities
offered or sold by Holding or such Subsidiary after such 90-day period and prior
to June 7, 2002 must be re-offered to all of the Stockholders pursuant to the
terms of this Section 4.
5. RESTRICTIVE LEGEND. So long as any Securities are subject to the
provisions hereof, all certificates representing such Securities shall have
imprinted on them a restrictive legend in substantially the following form:
"The securities represented by this certificate are subject to the terms of
a certain Stockholder Agreement, dated as of ________ __, 1998, among the
registered holder of this certificate (or such holder's predecessor-in-
interest), the issuer of this certificate, and certain others. The
Stockholder Agreement contains certain restrictive provisions relating to
the voting and transfer of the securities represented hereby. A copy of
the Stockholder Agreement is on file and may be inspected for any proper
purpose at the issuer's principal executive office."
6. REGISTRATION RIGHTS.
6.1. DEFINITIONS. As used in this Section 6:
"Commission" means the Securities and Exchange Commission.
----------
"Holders" means the Stockholders and all Persons to whom any Registrable
-------
Securities are transferred in accordance with the provisions of this Agreement,
and "Holder" means any one of the Stockholders; provided, in the cases of any
elections to be
-29-
made by, and any notices or other communications to be made by or to, any Holder
pursuant to this Section 6, that such elections, notices, or other
communications shall be made by or to the Majority Heritage Holders, in the case
of any Heritage Holder, by or to the Majority Klearfold Holders, in the case of
any Holder who is a Klearfold Management Stockholder, or by or to the Majority
AGI Holders, in the case of any Holder who is an AGI Management Stockholder.
"Majority Demanding Holder(s)" means the Demanding Holder or Demanding
-------- --------- ---------
Holders, as the case may be, as defined in Section 6.2(a)(i) below, holding a
majority of the Registrable Securities held by the Demanding Holders.
"Registered" and "registration" (regardless of whether capitalized) refer
---------- ------------
to a registration effected by preparing and filing a registration statement in
compliance with the Securities Act and the declaration or ordering by the
Commission of effectiveness of such registration statement.
"Registrable Securities" means the shares of Common Stock issued pursuant
----------- ----------
to the Investment Agreement, together with all shares of Common Stock issued to
Stockholders as a result of any exercise of pre-emptive rights pursuant to
Section 4 hereof, and includes any shares of capital stock and other securities
of Holding issued or issuable with respect to any of the foregoing shares of
Common Stock by way of a stock dividend, stock split, combination or division of
shares, recapitalization, merger, consolidation, reorganization, or the like,
and any shares of capital stock and other securities of Holding into which any
of the foregoing shares of capital stock and other securities of Holding are
(directly or indirectly) converted or for which any of the foregoing shares of
capital stock and other securities of Holding are (directly or indirectly)
exchanged, in each case regardless of subsequent transfers of such shares of
capital stock or other securities of Holding. Securities shall cease to be
Registrable Securities when (i) they have been sold pursuant to an effective
registration statement under the Securities Act, or distributed to the public
through a broker, dealer or market maker pursuant to Rule 144 under the
Securities Act, or any other exemption from the registration requirements of the
Securities Act under which the transferee receives securities that are not
"restricted securities" within the meaning of that term as defined in Rule
144(a)(3), or (ii) when they may be resold under Rule 144(k) (or other similar
exemption from registration) without volume limitation.
"Underwriters' Maximum Number" means, with respect to an underwritten
------------ ---------------
registration, that number of securities to which such registration should be
limited, in the reasonable written opinion of the managing underwriters of such
registration in the light of marketing factors.
6.2. DEMAND REGISTRATIONS.
(A) REQUEST FOR DEMAND REGISTRATION. Subject to the limitations set forth
in the following paragraphs of this Section 6.2:
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(i) The Holders of either (A) not less than a majority of all of the
Heritage Shares at any time outstanding or (B) at least twenty percent (20%) (on
a Fully Diluted Basis) of the amount of Registrable Securities outstanding on
the date hereof, as adjusted from time to time for splits, combinations and
other recapitalizations (in either such case, the "Demanding Holders"), may at
--------- -------
any time give to Holding a written request for the registration (a "Demand
------
Registration") by Holding under the Securities Act of all or any part of the
------------
Registrable Securities held by such Demanding Holders. Within five business
days after the receipt by Holding of any such written request, Holding shall
give written notice of such request to all Holders of Registrable Securities.
(ii) After the receipt of a written request for a Demand
Registration, (A) Holding shall be obligated to include in such Demand
Registration all of the Registrable Securities with respect to which Holding
shall receive the written requests of the Holders thereof for inclusion in such
Demand Registration, within 20 days after the date on which Holding shall have
given to all Holders a written notice of registration request pursuant to
Section 6.2(a)(i) of this Agreement, and (B) Holding shall use its best efforts
in good faith to effect promptly the registration of all such Registrable
Securities. All written requests made by Holders of Registrable Securities
pursuant to this Section 6.2(a)(ii) shall specify the number of Registrable
Securities to be registered and shall also specify the intended method of
disposition thereof. Such method of disposition shall, in any case, be an
underwritten offering unless Holding, the Majority Heritage Holders or, if
different, the Majority Demanding Holders mutually consent otherwise, neither of
which consents shall be unreasonably withheld or delayed.
(B) LIMITATIONS ON DEMAND REGISTRATIONS.
(i) Holding shall not be obligated to effect more than three (3)
Demand Registrations pursuant to Section 6.2(a) of this Agreement.
(ii) Holding shall not be obligated to effect any Demand Registration
of any Registrable Securities pursuant to Section 6.2(a) hereof before the
earlier to occur of (A) June 7, 2002, and (B) six months following the
consummation of Holding's initial public offering of shares of Common Stock
registered in an effective registration statement under the Securities Act.
(iii) Any registration initiated as a Demand Registration pursuant to
Section 6.2(a) hereof shall not count as a Demand Registration for purposes of
the limitation set forth in Section 6.2(b)(i) of this Agreement unless such
registration has become effective and at least 75% of the Registrable Securities
of the Demanding Holders requested to be included in such registration have
actually been sold.
(iv) Holding shall not be obligated to effect any Demand Registration
during the period commencing on the date falling 90 days prior to Holding's
estimated date of filing of, and ending on the date 180 days following the
effective date of, any registration statement pertaining to any registration
initiated by Holding, for the account
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of Holding and/or stockholders other than Holders (other than with respect to
securities registered solely in connection with acquisitions, employee benefit
plans, and the like); provided, however, that Holding shall use its best efforts
in good faith to cause any such registration statement to be filed and to become
effective as expeditiously as shall be reasonably possible.
(v) Holding shall not be obligated to effect any Demand Registration
for any 120-day period following receipt of any written request for
registration, if in the good faith judgment of the Board of Directors of
Holding, or of the managing underwriter of such offering if (A) such managing
underwriter was selected pursuant to Section 6.2(d) hereof by the consent of the
Majority Demanding Holders, and (B) Holding has not withheld its approval of any
managing underwriter proposed by the Majority Demanding Holders in connection
with such Demand Registration, the filing of any registration statement during
such 120-day period would adversely affect a material proposed or pending
acquisition, merger, or similar corporate event to which Holding is or expects
to be party.
(C) PRIORITY IN DEMAND REGISTRATIONS. If the managing underwriters in any
Demand Registration advise Holding in writing that the number of securities
proposed to be included in such registration exceeds the Underwriters' Maximum
Number, then: (i) if (x) such registration would not be the first registration
of Common Stock by Holding under the Securities Act (other than with respect to
securities registered solely in connection with acquisitions, employee benefit
plans, and the like) or (y) such registration is the first such registration,
but Holding does not desire to sell shares on its own behalf pursuant thereto,
then (A) Holding shall be obligated to include in such registration that number
of Securities duly requested by the Holders thereof to be included in such
registration as does not exceed the Underwriters' Maximum Number, and such
number of Securities shall be allocated pro rata among such Holders on the basis
of the number of Securities held by each such Holder; (B) if the Underwriters'
Maximum Number exceeds the number of Securities duly requested to be included in
such registration, then Holding shall be entitled to include in such
registration that number of securities as shall have been duly requested by
Holding to be included in such registration for the account of Holding and that
is not greater than such excess; and (C) if the Underwriters' Maximum Number
exceeds the sum of the number of Registrable Securities that are to be included
in such registration pursuant to the foregoing clauses (A) and (B), then Holding
may include in such registration that number of other securities that Persons
other than Holders and Holding have requested be included in such registration
and which is not greater than such excess; and (ii) if (x) such registration
would be the first registration of Common Stock by Holding under the Securities
Act (other than with respect to securities registered solely in connection with
acquisitions, employee benefit plans, and the like) and (y) Holding desires to
sell shares on its own behalf pursuant thereto, then (A) Holding shall be
entitled to include in such registration that number of securities as shall have
been authorized to be included by its Board of Directors for its own account, up
to the Underwriter's Maximum Number; (B) if the Underwriters' Maximum Number
exceeds the number of Securities Holding proposes to offer and sell for its own
account in such registration, then Holding
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shall be obligated to include in such registration that number of Securities
duly requested by the Holders thereof to be included in such registration that
is not greater than such excess, and such number of Securities shall be
allocated pro rata among such Holders on the basis of the number of Securities
held by each such Holder; and (C) if the Underwriters' Maximum Number exceeds
the sum of the number of Securities that are to be included in such registration
pursuant to subclauses (A) and (B) of this clause (ii), then Holding may include
in such registration that number of other securities that Persons other than
Holders and Holding have requested be included in such registration and which is
not greater than such excess. Neither Holding nor any of its other
securityholders shall be entitled to include any securities in any underwritten
Demand Registration initiated pursuant to Section 6.2(x)(i)(A) unless Holding or
such securityholders (as the case may be) agree in writing to sell such
securities on the same terms and conditions as apply to the Heritage Shares to
be included in such Demand Registration.
(D) SELECTION OF UNDERWRITERS. If any Demand Registration is an
underwritten offering, the investment bankers and managing underwriters in such
registration shall be selected by Holding, subject to the approval of the
Majority Demanding Holders, which approval shall not be unreasonably withheld or
delayed. If the Majority Demanding Holders reasonably disapprove of such
investment bankers or underwriters, such Holders shall use their best efforts to
select another investment banker or underwriter reasonably acceptable to Holding
(Holding's approval thereof not to be unreasonably withheld or delayed), and
shall continue such process until such investment bankers or underwriters have
been selected.
6.3. PIGGYBACK REGISTRATIONS.
(A) RIGHTS TO PIGGYBACK.
(i) If (and on each occasion that) Holding proposes to register any
of its securities under the Securities Act, for Holding's own account and/or for
the account of any of its security holders (each such registration not withdrawn
or abandoned prior to the effective date thereof, a "Piggyback Registration"),
--------- ------------
Holding shall give written notice of such proposal to each of the Holders not
later than the earlier to occur of (A) the tenth day following the receipt by
Holding of notice of exercise of any registration rights by any Persons, and (B)
30 days prior to the anticipated filing date of such Piggyback Registration.
Notwithstanding the foregoing, Holding shall not be obligated to give such
notice to Holders with respect to, or to include any Registrable Securities in,
any registration statement on Form S-8 or similar limited-purpose form of
registration statement effected solely to implement an employee benefit plan, or
any registration statement on Form S-4 or similar limited-purpose form of
registration statement effected solely to implement an acquisition.
(ii) Subject to the provisions contained in paragraph (b) of this
Section 6.3 and in the last sentence of this clause (ii): (A) Holding shall be
obligated to include in each Piggyback Registration all Registrable Securities
with respect to which Holding
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receives, within 20 days after the date on which Holding shall have given
written notice of such Piggyback Registration to Holders pursuant to Section
6.3(a)(i) hereof, the written requests of such Holders for inclusion in such
Piggyback Registration, and (B) Holding shall use its best efforts in good faith
to effect promptly the registration of all such Registrable Securities. Holders
shall be permitted to withdraw all or any part of their Registrable Securities
from any Piggyback Registration at any time prior to the effective date of such
Piggyback Registration.
(B) PRIORITY IN PIGGYBACK REGISTRATIONS. If a Piggyback Registration is
an underwritten registration, and the managing underwriters thereof give written
advice to Holding of an Underwriters' Maximum Number, then: (i) Holding shall be
entitled to include in such registration that number of securities which Holding
proposes to offer and sell for its own account in such registration and which
does not exceed the Underwriters' Maximum Number; (ii) if the Underwriters'
Maximum Number exceeds the number of securities which Holding proposes to offer
and sell for its own account in such registration, then Holding will be
obligated and required to include in such registration that number of
Registrable Securities requested by the Holders thereof to be included in such
registration and which does not exceed such excess and such Registrable
Securities shall be allocated pro rata among the Holders thereof on the basis of
the number of Registrable Securities requested to be included therein by each
such Holder; and (iii) if the Underwriters' Maximum Number exceeds the sum of
the number of Registrable Securities which Holding shall be required to include
in such registration pursuant to clause (ii) and the number of securities which
Holding proposes to offer and sell for its own account in such registration,
then Holding may include in such registration that number of other securities
which Persons other than the Holders shall have requested be included in such
registration and which is not greater than such excess.
(C) SELECTION OF UNDERWRITERS. In any Piggyback Registration, Holding
shall (unless Holding shall otherwise agree) have the right to select the
investment bankers and managing underwriters in such registration.
6.4. LOCKUP AGREEMENTS.
(A) RESTRICTIONS ON PUBLIC OFFERING BY HOLDERS OF REGISTRABLE SECURITIES.
If, in connection with any Public Offering, Holding or, if such Public Offering
is pursuant to an underwritten registration, the managing underwriters thereof
so request, each Holder of Registrable Securities, whether or not any of their
Registrable Securities are included in any such Public Offering, shall not,
without the prior written consent of Holding or (if applicable) such
underwriters, effect any Public Offering or other distribution of any equity
securities of Holding, including any sale pursuant to Rule 144, during the seven
days prior to, and during the 180-day period commencing on, the date of such
Public Offering, except in each case in connection with such Public Offering;
provided that each officer, director and other Affiliate of Holding or any of
its Subsidiaries who holds any equity securities of Holding shall enter into
similar agreements, and provided, further, that to the extent that any such
officer, director, or other Affiliate is released (in whole or in
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part) from such lock-up agreement prior to its scheduled termination date, each
Holder bound by a similar lock-up agreement shall have a proportionate
percentage of its securities released from such lock-up agreement.
(B) RESTRICTIONS ON PUBLIC OFFERING BY HOLDING. Holding shall not effect
any Public offering or other distribution of shares of its capital stock or
other equity securities, or securities exercisable or exchangeable for, or
convertible into, such capital stock or other equity securities, during the
period commencing on the seventh day prior to, and ending on the 180th day
following, the effective date of any underwritten registration, except in
connection with any such registration.
6.5. REGISTRATION PROCEDURES. If (and on each occasion that) Holding
becomes obligated to effect any registration of any Registrable Securities
hereunder, Holding shall use its best efforts in good faith to effect promptly
the registration of such Registrable Securities under the Securities Act and to
permit the public offering and sale of such Registrable Securities in accordance
with the Holders' intended methods of disposition thereof, and, in connection
therewith, Holding as expeditiously as possible shall:
(a) prepare and file with the Commission as soon as is practicable, and in
any event within 120 days after a proper request therefor made in accordance
with Section 6.2(a) hereof, a registration statement with respect to such
Registrable Securities, and use its best efforts to cause such registration
statement to become and remain effective as provided in this Agreement;
(b) prepare and file with the Commission such amendments and supplements
to such registration statement and the prospectus included in such registration
statement as may be necessary or advisable to comply in all material respects
with the provisions of the Securities Act with respect to the disposition of all
securities covered by such registration statement or as may be necessary to keep
such registration statement effective and current, but for no longer than nine
months subsequent to the effective date of such registration;
(c) furnish to each seller of Registrable Securities such number of copies
of such registration statement, each amendment and supplement thereto (in each
case including all exhibits thereto), the prospectus included in such
registration statement (including each preliminary prospectus), and such other
documents as any such seller may reasonably request in order to facilitate the
disposition of the Registrable Securities held by such seller;
(d) use its best efforts (i) to list the Registrable Securities to be
registered in such registration on each securities exchange or quotation system
on which similar securities of Holding are then listed (or if none, then at a
minimum on the automated quotations system of the National Association of
Securities Dealers, Inc.), and (ii) to register and qualify the Registrable
Securities covered by such registration statement under such securities or Blue
Sky laws of such jurisdictions as any Holder may reasonably request and do any
and all such other acts and things as may be reasonably necessary or
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advisable to enable such seller to consummate the disposition in such
jurisdictions of the Registrable Securities held by such seller; provided,
however, that Holding shall not be required in connection with such Blue Sky
registration or qualification to qualify generally to do business, subject
itself to taxation, or file a general consent to service of process in any such
jurisdiction;
(e) furnish to each prospective seller and each underwriter a signed
counterpart, addressed to such prospective seller, of (i) an opinion of counsel
for Holding, dated the effective date of the registration statement, and (ii) a
"comfort" letter signed by the independent public accountants who have certified
Holding's financial statements included in the registration statement, covering
substantially the same matters with respect to the registration statement (and
the prospectus included therein) and (in the case of the comfort letter, with
respect to events subsequent to the date of the financial statements), as are
customarily covered (at the time of such registration) in opinions of issuer's
counsel and in comfort letters delivered to the underwriters in underwritten
public offerings of securities;
(f) notify each prospective seller of Registrable Securities, at any time
when a prospectus relating thereto is required to be delivered under the
Securities Act, of the happening of any event as a result of which such
prospectus included in such Registration Statement contains an untrue statement
of a material fact or omits any fact necessary to make the statements therein
not misleading, and, at the request of any such seller, Holding will promptly
prepare (and, when completed, give notice to each prospective seller of
Registrable Securities) a supplement or amendment to such prospectus so that, as
thereafter delivered to the purchasers of such Registrable Securities, such
prospectus will not contain an untrue statement of a material fact or omit to
state any fact necessary to make the statements therein not misleading; provided
that upon such notification by Holding, each prospective seller of such
Registrable Securities will not offer or sell such Registrable Securities until
Holding has notified such seller that it has prepared a supplement or amendment
to such prospectus and delivered copies of such supplement or amendment to such
prospective seller;
(g) provide a transfer agent and registrar for all such Registrable
Securities not later than the effective date of such registration statement;
(h) enter into all such customary agreements (including underwriting
agreements in customary form) and take all such other actions as the holders of
a majority of the Heritage Shares to be registered (in the case of a Demand
Registration) or the Registrable Securities to be registered (in the case of a
Piggyback Registration) or the underwriters, if any, reasonably request in order
to expedite or facilitate the disposition of such Registrable Securities
(including, without limitation, effecting a stock split or a combination of
shares);
(i) make available for inspection on a confidential basis by any Holder,
any underwriter participating in any disposition pursuant to such registration
statement, or any attorney, accountant, or other agent retained by any such
Holder or underwriter (in each
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case after reasonable prior notice), all financial and other records, pertinent
corporate documents, and properties of Holding, and cause Holding's and its
respective Subsidiaries' officers, directors, employees, and independent
accountants to supply on a confidential basis all information reasonably
requested by any such Holder, underwriter, attorney, accountant, or agent in
connection with such registration statement; but in each case only to the extent
reasonably required in order to permit such Holder, underwriter, attorney,
accountant, or agent to conduct an investigation sufficient to establish a "due
diligence" defense in accordance with the Securities Act and the rules,
regulations, and case law thereunder;
(j) permit any Holder who, in his or its sole and exclusive judgment,
might be deemed to be an underwriter or a controlling person of Holding within
the meaning of Section 15 of the Securities Act, to participate in the
preparation of such registration statement and to permit the insertion therein
of material, furnished to Holding in writing, which in the reasonable judgment
of such Holder and his or its counsel should be included, subject to the
omission of such portions, if any, of such furnished material that Holding and
its counsel in good faith may determine was unreasonably furnished;
(k) in the event of the issuance of any stop order suspending the
effectiveness of a Registration Statement, or of any order suspending or
preventing the use of any related prospectus or suspending the qualification of
any Registrable Securities included in such Registration Statement for sale in
any jurisdiction, use its best efforts promptly to obtain the withdrawal of such
order;
(l) if requested by the managing underwriter or underwriters or any Holder
in connection with any sale pursuant to a registration statement, promptly
incorporate in a prospectus supplement or post-effective amendment such
information relating to such underwriting as the managing underwriter or
underwriters or such Holder reasonably requests to be included therein, subject
to the omission of such portions, if any, of such material that Holding and its
counsel in good faith may determine was unreasonably furnished, and make all
required filings of such prospectus supplement or post-effective amendment as
soon as practicable after being notified of the matters incorporated in such
prospectus supplement or post-effective amendment;
(m) cooperate with the holders of Registrable Securities and the managing
underwriter or underwriters, if any, to facilitate the timely preparation and
delivery of certificates (not bearing any restrictive legends) representing
Registrable Securities to be sold under such registration statement, and enable
such Registrable Securities to be in such denominations and registered in such
names as the managing underwriter or underwriters, if any, or such holders may
request;
(n) use its best efforts to cause the Registrable Securities to be
registered with or approved by such other governmental agencies or authorities
within the United States and having jurisdiction over Holding as may reasonably
be necessary to enable the seller
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or sellers thereof or the underwriter or underwriters, if any, to consummate the
disposition of such Registrable Securities; and
(o) otherwise comply with all applicable rules and regulations of the
Commission, and make generally available to its securityholders (as contemplated
by Section 11(a) under the Securities Act) an earnings statement satisfying the
provisions of Rule 158 under the Securities Act no later than ninety (90) days
after the end of the twelve month period beginning with the first month of
Holding's first fiscal quarter commencing after the effective date of such
registration statement, which statement shall cover said twelve month period.
6.6. COOPERATION BY PROSPECTIVE SELLERS, ETC.
(a) Each prospective seller of Registrable Securities shall furnish to
Holding in writing such information as Holding may reasonably require from such
seller, and otherwise reasonably cooperate with Holding in connection with any
registration statement with respect to such Registrable Securities.
(b) The failure of any prospective seller of Registrable Securities to
furnish any information or documents in accordance with any provision contained
in this Section 6 shall not affect the obligations of Holding under this Section
6 to any remaining sellers who furnish such information and documents unless in
the reasonable opinion of counsel to Holding or the underwriters, such failure
impairs or may impair the viability of the offering or the legality of the
registration statement or the underlying offering.
(c) Each Holder of Registrable Securities included in any registration
statement shall not (until further notice) effect sales thereof after receipt of
telegraphic or written notice from Holding to such Holder to suspend sales to
permit Holding to correct or update such registration statement or prospectus
(which Holding shall do as promptly as is practicable); but the obligations of
Holding with respect to maintaining any registration statement current and
effective shall be extended by a period of days equal to the aggregate period
any such suspensions are in effect.
(d) At the end of any period during which Holding is obligated to keep any
registration statement current and effective as provided by Section 6.5 hereof
(and any extensions thereof required by the preceding paragraph (c) of this
Section 6.6), the Holders of Registrable Securities included in such
registration statement shall discontinue sales of shares pursuant to such
registration statement upon notice from Holding to such Holders of its intention
to remove from registration the shares covered by such registration statement
which remain unsold, and such Holders shall notify Holding of the number of
shares registered that remain unsold promptly after receipt of such notice from
Holding.
6.7. REGISTRATION EXPENSES.
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(a) Holding shall be responsible for and shall pay all costs and expenses
incurred or sustained in connection with or arising out of each registration
pursuant to this Section 6, including, without limitation, all registration and
filing fees, fees and expenses of compliance with securities or Blue Sky laws
(including reasonable fees and disbursements of counsel for the underwriters in
connection with the Blue Sky qualification of Registrable Securities), printing
expenses, messenger, telephone, and delivery expenses, fees and disbursements of
counsel for Holding, reasonable fees and disbursements of one counsel
representing the Holders of Heritage Shares and one counsel representing the
Holders of other Registrable Securities, fees and disbursements of all
independent certified public accountants (including the expenses relating to the
preparation and delivery of any special audit or comfort letters required by or
incident to such registration), and fees and disbursements of underwriters
(excluding underwriting discounts and commissions), the reasonable fees and
expenses of any special experts retained by Holding on its own initiative or at
the request of the managing underwriters in connection with such registration,
and fees and expenses of all (if any) other Persons retained by Holding (all
such costs and expenses, collectively, "Registration Expenses"). Holding shall,
------------ --------
in any case, pay its internal expenses (including, without limitation, all
salaries and expenses of its officers and employees performing legal or
accounting duties), the expense of any annual audit, and the fees and expenses
incurred in connection with the listing of the securities to be registered on
each securities exchange or quotation system on which similar securities of
Holding are then listed.
(b) Holding shall not bear the cost of nor pay for any stock transfer
taxes imposed in respect of the transfer of any Registrable Securities to any
purchaser thereof by any Holder of Registrable Securities in connection with any
registration of Registrable Securities pursuant to this Section 6.
(c) To the extent that Registration Expenses incident to any registration
are, under the terms of this Section 6, not required to be paid by Holding, each
Holder of Registrable Securities included in such registration shall pay all
Registration Expenses that are clearly solely attributable to the registration
of such Holder's Registrable Securities so included in such registration, and
all other Registration Expenses not so attributable to one Holder shall be borne
and paid by all sellers of securities included in such registration pro rata in
proportion to the number of securities so included by each such seller.
6.8. INDEMNIFICATION.
(A) INDEMNIFICATION BY HOLDING. Holding shall indemnify each Holder
joining in a registration and each underwriter of the securities so registered,
the officers, directors, and partners of each such Person and each Person who
controls (within the meaning of the Securities Act) any of the foregoing, and
their respective successors and assigns, against any and all Damages to which
such Person is or may become subject arising out of or based on any untrue
statement (or alleged untrue statement) of any material fact contained in any
prospectus, offering circular or other document incident to any registration,
qualification or compliance (or in any related registration statement,
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notification or the like) or any omission (or alleged omission) to state therein
any material fact required to be stated therein or necessary to make the
statements therein not misleading, or any violation by Holding of any rule or
regulation promulgated under the Securities Act applicable to Holding and
relating to any action or inaction required of Holding in connection with any
such registration, qualification, or compliance; provided, however, that Holding
shall not be liable in any such case to the extent that any such Damages arise
out of or are based on any untrue statement or omission based upon written
information furnished to Holding in an instrument duly executed by such Holder,
underwriter, officer, director, partner, or controlling person and stated to be
specifically for use in such prospectus, offering circular, or other document.
(B) INDEMNIFICATION BY EACH HOLDER. Each Holder requesting or joining in
a registration shall indemnify each underwriter of the securities so registered,
Holding and its officers and directors and each person, if any, who controls
(within the meaning of the Securities Act) any of the foregoing, and their
respective successors and assigns, against any and all Damages to which such
Person is or may become subject arising out of or based on any untrue statement
(or alleged untrue statement) of any 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 any material fact
required to be stated therein or necessary to make the statement therein not
misleading, but only if and to the extent that such statement or omission was
made in reliance upon written information furnished to such underwriter or
Holding in an instrument duly executed by such Holder 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; and provided further that each Holder's liability with
respect to any particular registration shall be limited to an amount equal to
the net cash proceeds received by such Holder from the Registrable Securities
sold by such Holder in such registration.
(C) INDEMNIFICATION PROCEEDINGS. Each party entitled to indemnification
pursuant to this Section 6.8 (the "indemnified party") shall give notice to the
party required to provide indemnification pursuant to this Section 6.8 (the
"indemnifying party") promptly after such indemnified party acquires actual
knowledge of any claim as to which indemnity may be sought, and shall permit the
indemnifying party (at its expense) to assume the defense of any claim or any
litigation resulting therefrom; provided that counsel for the indemnifying
party, who shall conduct the defense of such claim or litigation, must be
acceptable to the indemnified party, and the indemnified party may participate
in such defense at such party's expense; and provided, further, that the failure
by any indemnified party to give notice as provided in this paragraph (c) shall
not relieve any indemnifying party of its obligations under this Section 6.8
except if and to the extent that such failure results in a failure of actual
notice to the indemnifying party and such indemnifying party is actually
prejudiced solely as a result of such failure to give notice. No indemnifying
party, in the defense of any such claim or litigation, shall, except with the
consent of each indemnified party, consent to entry of any judgment or enter
into any settlement that does not include as an unconditional term thereof the
giving by the claimant
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or plaintiff to such indemnified party of a release from all liability in
respect to such claim or litigation. The reimbursement required by this Section
6.8 shall be made by periodic payments during the course of the investigation or
defense, as and when bills are received or expenses incurred, and may be
conditioned upon an undertaking by the indemnified party to reimburse the
indemnifying party in the event the indemnified party is finally determined by a
court of competent jurisdiction not to be entitled to indemnification.
6.9. CONTRIBUTION IN LIEU OF INDEMNIFICATION. If the indemnification
provided for in Section 6.8 hereof is unavailable to a party that would have
been an indemnified party in respect of any Damages referred to therein, then
each party that would have been an indemnifying party thereunder shall, in lieu
of indemnifying such indemnified party, contribute to the amount paid or payable
by such indemnified party as a result of such Damages in such proportion as is
appropriate to reflect the relative fault of the indemnifying party and such
indemnified party, respectively, in connection with the statements or omissions
which resulted in such Damages. Relative fault shall be determined by reference
to, among other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact
relates to information supplied by the indemnifying party or such indemnified
party and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. Holding and each
Holder of Registrable Securities agree that it would not be just and equitable
if contribution pursuant to this Section 6.9 were determined by pro rata
allocation or by any other method of allocation that does not take account of
the equitable considerations referred to above in this Section 6.9. No Person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation.
6.10. RULE 144 REQUIREMENTS; FORM S-3 REGISTRATIONS. From time to time
after the earlier to occur of (a) the ninetieth day following the date on which
there shall first become effective a registration statement filed by Holding
under the Securities Act, or (b) the date on which Holding shall register a
class of securities under Section 12 of the Exchange Act, Holding shall make
every effort in good faith to take all steps necessary to ensure that Holding
will be eligible to register securities on Form S-3 (or any comparable or
successor form adopted by the Commission) as soon thereafter as possible (it
being acknowledged that certain aspects of eligibility to use Form S-3, e.g.,
the aggregate market value of Holding's securities held by non-affiliates, are
beyond Holding's control), and to make publicly available and available to the
Holders, pursuant to Rule 144 of the Commission under the Securities Act, such
current public information as shall be necessary to enable the Holders of
Registrable Securities to make sales of Registrable Securities pursuant to that
Rule. Holding shall furnish to the Holders, upon request at any time after the
undertaking of Holding in the preceding sentence shall have first become
effective, a written statement signed by Holding, addressed to each Holder,
describing briefly the action Holding has taken or proposes to take to comply
with the current public information requirements of Rule 144. Upon receipt of a
certificate certifying (i) that such Holder has held such Purchased Securities
for a period of not less than two (2) years (or
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such lesser period after which the exemption from registration pursuant to which
Rule 144(k) may be available), and (ii) that such Holder has not been an
affiliate (as defined in Rule 144) of Holding during the preceding three months,
Holding shall, at the request of any Holder of Purchased Securities, remove from
the stock certificates representing such Purchased Securities any restrictive
legend (or portion thereof) relating to the registration provisions of the
Securities Act. After (and for so long as) Holding qualifies for the use of Form
S-3, then, subject to the provisions of Sections 6.2(b)(iv) and (v) of this
Agreement, any Holder or Holders of Registrable Securities with an aggregate
fair market value of $1,000,000 or more, shall have the right to require Holding
to register Registrable Securities with not less than such aggregate fair market
value on Form S-3, provided, that Holding shall not be obligated to effect such
a registration more frequently than once in any six-month period.
6.11. PARTICIPATION IN UNDERWRITTEN REGISTRATIONS. No Person may
participate in any underwritten registration pursuant to this Section 6 unless
such Person (a) agrees to sell such Person's securities on the basis provided in
any underwriting arrangements approved by the Persons entitled, under the
provisions hereof, to approve such arrangements, and (b) completes and executes
all questionnaires, powers of attorney, custody agreements, indemnities,
underwriting agreements, and other documents reasonably required by the terms of
such underwriting arrangements. Any Holder of Registrable Securities to be
included in any underwritten registration shall be entitled at any time to
withdraw such Registrable Securities from such registration prior to its
effective date in the event that such Holder disapproves of any of the terms of
the related underwriting agreement.
7. LIFE INSURANCE. Holding shall maintain and name itself as the
beneficiary of (i) one or more insurance policies on the life of Xxxxxxx Xxxxx
and each other Stockholder who is also an executive employee of Holding and who
has the right under a Repurchase Agreement to require the repurchase by Holding
of his shares of Common Stock upon his death, and (ii) one or more insurance
policies on the lives of Xxxxxx X. Xxxxxx and H. Xxxxx Xxxxxx, payable upon the
later of the deaths of such two individuals. The amount of such insurance under
such policies shall be as set forth on Schedule 7 hereto. Holding shall have
----------
the right to obtain insurance upon the lives of other Stockholders, in such
amounts and upon such terms as Holding may deem appropriate. Once obtained, any
such life insurance (including the policies referred to in clauses (i) and (ii)
above) shall be maintained; provided, however, that Holding's obligation to
obtain or maintain any such insurance shall be limited, in each instance, to
Holding's attempting in good faith to obtain and maintain such insurance at
standard rates; if such insurance is unavailable at standard rates, Holding
shall have the discretion not to obtain or maintain such insurance, or to obtain
or maintain less than that provided for on Schedule 7 hereto. Holding may, but
----------
shall not be required to, increase or decrease the amount of insurance coverage
from that described on Schedule 7 hereto commensurate with changes in its equity
----------
valuation as reasonably determined from time to time by its Board of Directors.
Holding shall direct each insurance company that has issued a policy pursuant to
this Section 7 to send duplicate premium notices to the insured. In the event
that Holding fails to pay any
-42-
premium due on any such policy it has obtained, the insured may pay the premium
and shall be reimbursed by Holding.
8. DEFINITIONS. As used in this Agreement, the following terms have the
following respective meanings:
"Affiliate" means, with respect to a specified Person, (i) any Person that
---------
directly, or indirectly through one or more intermediaries, controls or is
controlled by, or is under common control with, the specified Person and (ii)
any Person that is an officer, director, trustee, member or general partner of,
or serves in a similar capacity with respect to, the specified Person, or of
which the specified Person is an officer, director, trustee, member or general
partner, or with respect to which the specified Person serves in a similar
capacity or (iii) any Person who is a spouse, parent, sibling or lineal
descendant of such Person or any Person described in clauses (i) or (ii). For
purposes of this definition the term "control" when used with respect to a
-------
Person means (a) the beneficial ownership (as defined in Rule 13d-d promulgated
under the Securities and Exchange Act of 1934, as amended) of 50 percent or more
of the voting interests in such Person, or (b) the possession, direct or
indirect, of the power to direct or cause the direction of the management and
policies of such Person, whether through the ownership of voting securities, by
contract or otherwise.
"AGI" means AGI Incorporated, an Illinois corporation and the surviving
---
corporation of the Merger under and as defined in the Merger Agreement.
"AGI Holder Securities" means the shares of capital stock of Holding
---------------------
originally issued and sold pursuant to the Investment Agreement to AGI
Management Stockholders, any shares of capital stock or other securities of
Holding transferred in accordance with this Agreement or issued from time to
time after the date hereof to any of the AGI Management Stockholders, and any
shares of capital stock issued to any of the AGI Management Stockholders as a
result of any exercise of pre-emptive rights pursuant to Section 4 hereof, and
includes any shares of capital stock and other securities of Holding issued or
issuable with respect to any of the foregoing shares of capital stock or other
securities of Holding by way of a stock dividend, stock split, combination or
division of shares, recapitalization, merger, consolidation, reorganization, or
the like, and any shares of capital stock or other securities of Holding into
which any of the foregoing shares of capital stock or other securities of
Holding are (directly or indirectly) converted or for which any of the foregoing
shares of capital stock or other securities are (directly or indirectly)
exchanged, in each case regardless of subsequent transfers of such shares of
capital stock or other securities of Holding; provided, that shares of capital
stock and other securities of Holding shall cease to be AGI Holder Securities
when transferred (i) to Holding, (ii) pursuant to a Public Sale, or (iii) to any
Heritage Holder, Klearfold Management Stockholder, or Other Stockholder.
"Block Stockholders" means, collectively, (i) Xxxxxxx Xxxxx (ii) Freya
----- ------------
Block, as Trustee of the Xxxxxxx X. Block Family Trust u/t/a/d 4/1/94, and (iii)
any direct or
-43-
indirect transferee of Securities from either of them pursuant to and in
accordance with Section 1.1(b) hereof.
"Common Stock" means the Series A Common Stock, $0.001 par value per share,
------------
of Holding, provided that such defined term, as used in this Agreement, shall
not include the Series B Stock.
"Family Members" means, with respect to any individual, any Related Person
--------------
or Family Trust of such individual.
"Family Trust" means, with respect to any individual, any trust created for
------------
the benefit of such individual and/or one or more of such individual's Related
Persons, and controlled by such individual.
"Fully Diluted Basis" means, with respect to any calculation to be made at
-------------------
any time pursuant to this Agreement, that such calculation shall be made by
treating as outstanding all shares of Common Stock issuable upon exercise of all
outstanding warrants, options, and/or other rights to acquire shares of Common
Stock, but excluding any such warrants, options, and/or other rights (or any
portions thereof) as are not capable of being exercised then or thereafter in
accordance with the respective terms thereof.
"Heritage Holders" means, collectively, the holders, as of the relevant
----------------
time of reference, of the Heritage Securities, and "Heritage Holder" means any
---------------
one of the Heritage Holders.
"Heritage Securities" means the shares of capital stock and other
-------------------
securities of Holding issued and sold to Heritage pursuant to the Investment
Agreement, any shares of capital stock and other securities of Holding issued or
transferred to Heritage or any permitted Transferee of Heritage pursuant to
Section 1.4 hereof, and any shares of capital stock issued to any of the
Heritage Holders as a result of any exercise of pre-emptive rights pursuant to
Section 4 hereof, and includes any shares of capital stock and other securities
of Holding issued or issuable with respect to any of the foregoing shares of
capital stock or other securities of Holding by way of a stock dividend, stock
split, combination or division of shares, recapitalization, merger,
consolidation, reorganization, or the like, and any shares of capital stock and
other securities of Holding into which any of the foregoing shares of capital
stock and other securities of Holding are (directly or indirectly) converted or
for which any of the foregoing shares of capital stock and other securities of
Holding are (directly or indirectly) exchanged, in each case regardless of
subsequent transfers of such shares of capital stock or other securities of
Holding; provided, that shares of capital stock and other securities of Holding
shall cease to be Heritage Securities when transferred (i) to Holding, (ii)
pursuant to a Public Sale, or (iii) to any of the Non-Heritage Holders.
"Indenture" means the Indenture dated of even date herewith between Holding
---------
and State Street Bank and Trust Company, as trustee.
-44-
"Independent Appraiser" shall mean an investment banking or accounting firm
---------------------
or independent appraiser of nationally recognized status and at least ten years
of experience in evaluating businesses similar to those of Holding and its
Subsidiaries, and which is not an Affiliate of Holding, any of its Subsidiaries,
or any Stockholder.
"Investment Agreement" means that certain Investment Agreement dated as of
--------------------
February __, 1998, by and among the AGI Management Stockholders, the Klearfold
Management Stockholders, Heritage, Holding and certain other persons named
therein.
"Klearfold" means Klearfold, Inc., a Pennsylvania corporation.
---------
"Klearfold Holder Securities" means the shares of capital stock of Holding
---------------------------
originally issued and sold pursuant to the Investment Agreement to the Klearfold
Management Stockholders, any shares of capital stock or other securities of
Holding transferred in accordance with this Agreement or issued from time to
time after the date hereof to any of the Klearfold Management Stockholders, and
any shares of capital stock issued to any of the Klearfold Management
Stockholders as a result of any exercise of pre-emptive rights pursuant to
Section 4 hereof, and includes any shares of capital stock and other securities
of Holding issued or issuable with respect to any of the foregoing shares of
capital stock or other securities of Holding by way of a stock dividend, stock
split, combination or division of shares, recapitalization, merger,
consolidation, reorganization, or the like, and any shares of capital stock or
other securities of Holding into which any of the foregoing shares of capital
stock or other securities of Holding are (directly or indirectly) converted or
for which any of the foregoing shares of capital stock or other securities are
(directly or indirectly) exchanged, in each case regardless of subsequent
transfers of such shares of capital stock or other securities of Holding;
provided, that shares of capital stock and other securities of Holding shall
cease to be Klearfold Holder Securities when transferred (i) to Holding, (ii)
pursuant to a Public Sale, or (iii) to any Heritage Holder, AGI Management
Stockholder, or Other Stockholder.
"Lien" means any lien, claim, mortgage, security interest, charge,
----
encumbrance, or restriction on transfer of any kind.
"Majority AGI Holders" means the holders, as of the relevant time of
--------------------
reference, of at least a majority of the AGI Holder Securities.
"Majority Heritage Holders" means the holders, as of the relevant time of
-------------------------
reference, of at least a majority of the Heritage Securities.
"Majority Xxxxxx Holders" means the holders, as of the relevant time of
-----------------------
reference, of at least a majority of the Securities then held by the Xxxxxx
Stockholders.
"Majority Klearfold Holders" means the holders, as of the relevant time of
--------------------------
reference, of at least a majority of the Klearfold Holder Securities.
-45-
"Majority Non-Heritage Holders" means the holders, as of the relevant time
-----------------------------
of reference, of at least a majority of the Non-Heritage Securities.
"Merger Agreement" means the Agreement and Plan of Merger dated as of
----------------
February ___, 1998 by and among Holding, AGI, AGI Acquisition Corporation and
certain stockholders of AGI.
"Non-AGI Holder Securities" means the Heritage Securities, the Klearfold
-------------------------
Holder Securities and the Other Stockholder Securities.
"Non-Heritage Holders" means, collectively, the holders, as of the relevant
--------------------
time of reference, of the Non-Heritage Securities, and "Non-Heritage Holder"
-------------------
means any one of the Non-Heritage Holders.
"Non-Heritage Securities" means the AGI Holder Securities, the Klearfold
-----------------------
Holder Securities and the Other Stockholder Securities.
"Other Agreements" has the same meaning herein as the Investment Agreement.
----- ----------
"Other Stockholder Securities" means shares of capital stock of Holding
----------------------------
originally issued and sold to any Stockholder other than an AGI Management
Stockholder, Klearfold Management Stockholder or Heritage Holder (any such
Stockholder, an "Other Stockholder"), any shares of capital stock or other
-----------------
securities of Holding transferred in accordance with this Agreement or issued
from time to time after the date hereof to any of the Other Stockholders, and
any shares of capital stock issued to any of the Other Stockholders as a result
of any exercise of pre-emptive rights pursuant to Section 4 hereof, and includes
any shares of capital stock and other securities of Holding issued or issuable
with respect to any of the foregoing shares of capital stock or other securities
of Holding by way of a stock dividend, stock split, combination or division of
shares, recapitalization, merger, consolidation, reorganization, or the like,
and any shares of capital stock or other securities of Holding into which any of
the foregoing shares of capital stock or other securities of Holding are
(directly or indirectly) converted or for which any of the foregoing shares of
capital stock or other securities are (directly or indirectly) exchanged, in
each case regardless of subsequent transfers of such shares of capital stock or
other securities of Holding; provided, that shares of capital stock and other
securities of Holding shall cease to be Other Stockholder Securities when
transferred (i) to Holding, (ii) pursuant to a Public Sale, or (iii) to any
Heritage Holder, Klearfold Management Stockholder or AGI Management Stockholder.
"Personal Representative" means the successor or legal representative
-----------------------
(including without limitation, a guardian, executor, administrator or
conservator) of a dead or incompetent Stockholder.
-46-
"Public Offering" means any sale of shares of Common Stock to the public
---------------
pursuant to a public offering registered under the Securities Act.
"Public Sale" means any Public Offering or any sale of shares of Common
-----------
Stock to the public through a broker or market-maker pursuant to the provisions
of Rule 144 (or any successor rule) adopted under the Securities Act.
"Qualified Public Offering" means an underwritten Public Offering, pursuant
-------------------------
to an effective registration statement under the Securities Act, covering the
offer and sale of shares of Common Stock in which an aggregate of not less than
$25,000,000 of gross proceeds from such Public Offering are received by Holding
and/or one or more of the selling stockholders for its and/or his account, as
the case may be.
"Related Persons" means, with respect to any individual, such individual's
---------------
parents, spouse, children, and grandchildren.
"Repurchase Price" means:
----------------
(a) in the case of each share of Common Stock, the quotient obtained by
dividing (i) the fair market value of Holding's common stock equity as of the
effective date of the Heritage Put Request (as determined pursuant to Section
2.1(c) hereof), plus the aggregate consideration to be paid to Holding upon the
exercise of all outstanding and exercisable options, warrants, and other rights
(including convertible or exchangeable securities) pursuant to which Holding is
then obligated to issue shares of Common Stock, by (ii) the number of
outstanding shares of Common Stock, determined on a Fully Diluted Basis;
provided, that in the event that any such calculation results in a Repurchase
Price per share of Common Stock that is less than the per-share price payable
for any shares of Common Stock issuable upon exercise of any options, warrants,
or other rights to acquire shares of Common Stock that were taken into account
in calculating such Repurchase Price (a "Sub-Exercise Repurchase Price"), the
-----------------------------
Repurchase Price shall be recalculated without taking into account such options,
warrants, or other rights or the consideration receivable by Holding upon the
exercise thereof, to the extent necessary to avoid a Sub-Exercise Repurchase
Price; and
(b) in the case of any options or warrants for the purchase of shares of
Common Stock, the excess of (i) the aggregate Repurchase Price per share of the
Common Stock then purchasable thereunder, as determined under the foregoing
clause (a), over (ii) the aggregate exercise price then payable for the shares
issuable upon the exercise of such option or warrant.
"Securities" means all shares of the capital stock or other securities of
----------
Holding, including without limitation the Heritage Securities and the Non-
Heritage Securities, and all options, warrants, and other rights to acquire
shares of the capital stock or other securities of Holding (including without
limitation upon the conversion or exchange of other securities or instruments).
-47-
"Series B Stock" means the Series B Common Stock, $0.001 per value per
--------------
share, of Holding.
"Stockholders" means, collectively, all of the Persons except Holding who
------------
are parties to this Agreement as of the relevant time of reference, and
"Stockholder" means any one of the Stockholders.
-----------
"Type" means, as to any Securities, whether such Securities are AGI Holder
----
Securities, Klearfold Holder Securities, Heritage Securities or Other
Stockholder Securities.
"vote" as a noun, means any vote, resolution, or action by written consent,
----
as the case may be, and as a verb, means to adopt or cast any vote or resolution
or to take any action by written consent, as the case may be.
9. MISCELLANEOUS.
(A) BENEFITS OF AGREEMENT; NO ASSIGNMENTS; NO THIRD-PARTY BENEFICIARIES.
(i) This Agreement shall bind and inure to the benefit of the
parties hereto and their respective heirs, successors, and permitted
assigns.
(ii) No party shall assign any rights or delegate any obligations
hereunder without the consent of the other parties, and any attempt to do
so shall be void; provided, that the rights hereunder of the several
parties other than Holding shall also inure to the benefit of any Person
other than Holding to whom Securities are transferred in accordance with
all of the provisions of this Agreement, except any such Person to whom
such securities were transferred pursuant to a Public Sale.
(iii) Nothing in this Agreement is intended to or shall confer any
rights or remedies on any Person other than the parties hereto, their
respective heirs and successors, and permitted transferees of the
securities issued pursuant to this Agreement, as referred to in Section
9(a)(ii) hereof.
(B) NOTICES. All notices, requests, payments, instructions, or other
documents to be given hereunder shall be in writing or by written
telecommunication, and shall be deemed to have been duly given if (i) delivered
personally (effective upon delivery), (ii) mailed by registered or certified
mail, return receipt requested, postage prepaid (effective five business days
after dispatch), (iii) sent by a reputable, established courier service that
guarantees next business day delivery (effective the next business day), or (iv)
sent by telecopier followed within 24 hours by confirmation by one of the
foregoing methods (effective upon receipt of the telecopy in complete, readable
form), addressed as follows (or to such other address as the recipient party may
have furnished to the sending party for the purpose pursuant to this section).
Any reference in this Agreement to the
-48-
"effectiveness" or the "effective date" of a notice or other communication means
the date as of which such notice or other communication is effective as
determined in accordance with this Section 9(b).
(A) If to Heritage, in care of:
Heritage Partners Management Company, Inc.
00 Xxxxx Xxxxx, Xxxxx 000
Xxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxxx, Managing Director
Telecopier No. (000) 000-0000
with a copy sent at the same time and by the same means to:
Xxxxx X. Xxxxx, Esq.
Xxxxxxx Xxxx LLP
000 Xxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Telecopier No. (000) 000-0000
(B) If to any of the Klearfold Management Stockholders, in care of:
Klearfold, Inc.
000 Xxxxxx Xxxx
Xxxxxxxxxx, Xxxxxxxxxxxx 00000
Attention: H. Xxxxx Xxxxxx
Telecopier No. (000) 000-0000
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with a copy sent at the same time and by the same means to
Xxxxxxx X. Xxxxxxx, Esq.
Xxxxxxx Xxxxx Xxxxxxx & Ingersoll
0000 Xxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000-0000
Telecopier No. (000) 000-0000
(C) If to any of the AGI Management Stockholders, or to the AGI
Prospective Purchasers, in care of:
AGI Incorporated
0000 Xxxxx Xxxx Xxxxxx
Xxxxxxx Xxxx, Xxxxxxxx 00000-0000
Attention: Xxxxxxx Xxxxx and Xxxxx Xxxxxxxxx
Telecopier No. (000) 000-0000
with copies sent at the same time and by the same means to:
Xxxxx Xxxxxxx Xxxxxx, Esq.
Xxxxxxxxxxxx Xxxx & Xxxxxxxxx
Suite 8000 Sears Tower
000 Xxxxx Xxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Telecopier No. (000) 000-0000
(D) If to Holding, to:
IMPAC Group, Inc.
0000 Xxxxx Xxxx Xxxxxx
Xxxxxxx Xxxx, Xxxxxxxx 00000-0000
Attention: Xxxxxxx Xxxxx and Xxxxx Xxxxxxxxx
Telecopier No. (000) 000-0000
with copies sent at the same time and by the same means to each
of the Persons (including counsel) listed under clauses (A) - (C)
above.
(E) If to any other party to this Agreement, to the most recent
address of such party reflected in the register referred to in Section 7 of
the Investment Agreement, or to such address as such Person may have
furnished to the sending party for such purpose pursuant to this section.
-50-
(C) COUNTERPARTS. This Agreement may be executed by the parties in
separate counterparts, each of which when so executed and delivered shall be an
original, but all of which together shall constitute one and the same agreement.
In pleading or proving this Agreement, it shall not be necessary to produce or
account for more than one such counterpart.
(D) CAPTIONS. The captions of sections or subsections of this Agreement
are for reference only and shall not affect the interpretation or construction
of this Agreement.
(E) EQUITABLE RELIEF. Each of the parties hereby acknowledges that any
breach by it of its obligations under this Agreement would cause substantial and
irreparable damage to the other parties, and that money damages would be an
inadequate remedy therefor, and accordingly, acknowledges and agrees that each
of the other parties shall be entitled to an injunction, specific performance,
and/or other equitable relief to prevent the breach of such obligations (in
addition to all other rights and remedies to which such party may be entitled in
respect of any such breach).
(F) CONSTRUCTION. The language used in this Agreement is the language
chosen by the parties to express their mutual intent, and no rule of strict
construction shall be applied against any party.
(G) WAIVERS. No waiver of any breach or default hereunder shall be valid
unless in a writing signed by the waiving party. No failure or other delay by
any party exercising any right, power, or privilege hereunder shall be or
operate as a waiver thereof, nor shall any single or partial exercise thereof
preclude any other or further exercise thereof or the exercise of any other
right, power, or privilege.
(H) FURTHER ASSURANCES. From time to time on and after the Closing Date,
each party hereto shall promptly execute and deliver all such further
instruments and other documents, and shall promptly take all such further
actions, as any other party hereto may reasonably request in order more
effectively to effect or confirm the transactions hereby contemplated and to
carry out the purposes of this Agreement.
(I) ENTIRE AGREEMENT. This Agreement, together with the Merger Agreement
and the Other Agreements, contains the entire understanding and agreement among
the parties, and supersedes any prior understandings or agreements among them,
or between or among any of them, with respect to the subject matter hereof.
(J) GOVERNING LAW. This Agreement shall to the maximum lawful extent be
governed by and interpreted and construed in accordance with the internal laws
of the State of Delaware, as applied to contracts under seal made, and entirely
to be performed, within Delaware, and without reference to principles of
conflicts or choice of law.
-51-
(K) TERMINATION. This Agreement may be terminated by written agreement of
all of the parties, and shall automatically terminate upon and concurrently with
the sale to a third party of all or substantially all of Holding's assets or
capital stock, or of all or substantially all of the assets or capital stock of
any Subsidiary or Subsidiaries that constitute all or substantially all of the
assets of Holding (whether pursuant to a merger, consolidation, or otherwise) in
accordance with the terms hereof and the distribution of the net proceeds of
such sale (after payment of creditors of Holding has been made or provided for)
to the stockholders of Holding. Unless earlier terminated in accordance with the
provisions of the preceding sentence, (i) all provisions of this Agreement other
than Sections 6 through 9 hereof shall automatically terminate upon and
concurrently with the closing of an Approved Sale or a Qualified Public
Offering, and (ii) the provisions of Sections 2.1 and 3 hereof shall
automatically terminate upon and concurrently with the completion of a
repurchase from the Heritage Holders of the Heritage Securities pursuant to and
in accordance with Section 2.1 hereof, and in such event amendments and waivers
pursuant to Section 9(l) hereof shall no longer require the approval of the
Majority Heritage Holders. Any termination of this Agreement shall not affect
the rights or obligations of any party arising, or based on actions or omissions
occurring, before such termination.
(L) AMENDMENT AND WAIVER. Except as expressly set forth in Section 3.1(e)
above, any modification, amendment, or waiver of any provision of this Agreement
shall be effective if, and only if, it is approved in writing by the Majority
Heritage Holders, the Majority AGI Holders and the Majority Klearfold Holders.
(M) NO RIGHTS TO EMPLOYMENT. Nothing contained in this Agreement shall
confer on any Stockholder a right to employment or continued employment with
Holding or any of its Subsidiaries, or to employment in the same position or on
the same terms as those currently in effect.
SIGNATURE PAGE TO THE STOCKHOLDER AGREEMENT
IN WITNESS WHEREOF, each of the parties has executed and delivered this
Agreement to the others as an agreement under seal as of the date first above
written.
IMPAC GROUP, INC.
By /s/ Xxxxxxx Xxxxx
---------------------------
Name: Xxxxxxx Xxxxx
Title:
HERITAGE FUND I
INVESTMENT CORPORATION
By /s/ Xxxxxxx X. Xxxxxxxx
---------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title:
KFI MANAGEMENT STOCKHOLDERS:
-----------------------------
Xxxxxx X. Xxxxxx
/s/ H. Xxxxx Xxxxxx
-----------------------------
H. Xxxxx Xxxxxx
/s/ Xxxxxxx X. Xxxxxx
------------------------------
Xxxxxxx X. Xxxxxx, not individually
but as trustee under an Indenture
of Trust of Xxxxxx X. Xxxxxx dated June 4, 1996
SIGNATURE PAGE TO THE STOCKHOLDER AGREEMENT
/s/ Xxxxxx X. Xxxxxx
-----------------------------
Xxxxxx X. Xxxxxx, not individually
but as trustee under an Indenture
of Trust dated August 12, 1992
f/b/o H. Xxxxx Xxxxxx
/s/ Xxxxxx Xxxxxx
-----------------------------
Xxxxxx Xxxxxx
/s/ Xxxxx Xxxxxx
-----------------------------
Xxxxx Xxxxxx
/s/ Xxxxxx Xxxxxxx
-----------------------------
Xxxxxx Xxxxxxx
/s/ Xxxx XxXxxxxx
-----------------------------
Xxxx XxXxxxxx
/s/ Xxxxxx Xxxxxxx
-----------------------------
Xxxxxx Xxxxxxx
/s/ Xxxxxxx Xxxxxxx
-----------------------------
Xxxxxxx Xxxxxxx
SIGNATURE PAGE TO THE STOCKHOLDER AGREEMENT
AGI MANAGEMENT STOCKHOLDERS:
/s/ Xxxxxxx Xxxxx
-----------------------------
Xxxxxxx Xxxxx
/s/ Xxxxx Xxxxxxxxxxx
-----------------------------
Xxxxx Xxxxxxxxxxx
/s/ Xxxxxxx Xxxxxxxxxxx
-----------------------------
Xxxxxxx Xxxxxxxxxxx
/s/ Xxxxx Xxxxxxxxx
-----------------------------
Xxxxx Xxxxxxxxx
/s/ Xxxx Xxxxxx
-----------------------------
Xxxx Xxxxxx
/s/ Xxxx Xxxxxxx
-----------------------------
Xxxx Xxxxxxx
/s/ Xxxx Xxxxxxx
-----------------------------
Xxxx Xxxxxxx
/s/ Xxxxx Xxxxxx
-----------------------------
Xxxxx Xxxxxx
SIGNATURE PAGE TO THE STOCKHOLDER AGREEMENT
/s/ Xxxxxx Xxxxxxxx
-----------------------------
Xxxxxx Xxxxxxxx
/s/ Xxxxx Xxxxxxxx
-----------------------------
Xxxxx Xxxxxxxx
/s/ Zenas Block
-----------------------------
Zenas Block
/s/ Xxxxxx XxXxxx
-----------------------------
Xxxxxx XxXxxx
/s/ Maary Xxxxxxx Xxxxxxx
-----------------------------
Xxxx Xxxxxxx Xxxxxxx
EXHIBIT A
INSTRUMENT OF ACCESSION
TO
STOCKHOLDER AGREEMENT
The undersigned, ____________________, in order to become the owner or
holder of certain securities of IMPAC Group, Inc., a Delaware corporation
("Holding"), hereby agrees to become an [Heritage] [AGI Management] [Klearfold
---------
Management] [Other] Stockholder party to that certain Stockholder Agreement,
dated as of ___________ __, 1998 (the "Stockholder Agreement"), a copy of which
---------------------
is attached. This Instrument of Accession shall be effective and shall become a
part of such Stockholder Agreement upon acceptance by Holding.
Executed under seal as of the date set forth below under the laws of the
State of Delaware.
Dated_____________ _____________________________
(signature)
Print Name:__________________
Address: ____________________
____________________
____________________
ACCEPTED:
IMPAC Group, Inc.
By_____________________________
Name:
Title:
SCHEDULE 3.1(B)
MINIMUM OPERATING EARNINGS
For purposes of this Schedule 3.1(b), Holding's operating earnings for any
period is the amount equal to its operating income for such period, before
deduction of interest expense, income tax expense and amortization, but after
deduction of depreciation and all other expenses, including without limitation
appropriate accruals for bonuses payable to officers and/or employees of
Holding, as determined in accordance with generally accepted accounting
principles, consistently applied, and reflected in Holding's financial
statements for such period (audited, in the case of year-end financial
statements), provided that Holding will be deemed to have achieved the minimum
levels of operating earnings required (a) as of September 30, 1999, if it
achieves the minimum operating earnings for either (i) the six-month period
ended on that date or (ii) the twelve-month period ended on that date, or (b) as
of December 31, 1999, if it achieves the minimum operating earnings for either
(i) the nine-month period ended on that date or (ii) the twelve-month period
ended on that date:
Period Minimum Operating Earnings
------ --------------------------
($ ,000)
October 1, 1998 - September 30, 1999 $ 16,204
April 1, 1999 - September 30, 1999 $ 10,454
April 1, 1999 - December 31, 1999 $ 14,384
January 1, 1999 - December 31, 1999 $ 16,698
April 1, 1999 - March 31, 2000 $ 16,991
July 1, 1999 - June 30, 2000 $ 17,445
October 1, 1999 - September 30, 2000 $ 18,317
January 1, 2000 - December 31, 2000 $ 18,815
April 1, 2000 - March 31, 2001 $ 19,063
July 1, 2000 - June 30, 2001 $ 19,445
October 1, 2000 - September 30, 2001 $ 20,181
January 1, 2001 - December 31, 2001 $ 20,602
April 1, 2001 - March 31, 2002 $ 20,834
July 1, 2001 - June 30, 2002 $ 21,192
October 1, 2001 - September 30, 2002 $ 21,881
January 1, 2002 - December 31, 2002 $ 22,274
