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SETTLEMENT AGREEMENT AND MUTUAL RELEASES
This Settlement Agreement and Mutual Releases (this "Agreement") is
made as of December 29, 2000 by and among Outlook Group Corp. ("OGC"), Outlook
Packaging Inc. ("OPI"), Xxxxxx Xxxxxx ("Baksha"), Barrier Films Ltd. - New York,
Inc. ("Barrier - NY"), Barrier Films Corporation ("BFC"), and Xxxxxx Xxxxxxx
("Shemesh"). OGC, OPI, Baksha, Barrier - NY, BFC, and Shemesh are sometimes
referred to collectively in this Agreement as the "Parties."
1. BACKGROUND
1.1 Parties. The Parties to this Agreement, and
additional relevant individuals, are identified as follows:
(a) OGC is a publicly traded Wisconsin
corporation with a principal business address of 0000 Xxxxxxxx Xxxxx, Xxxxxx, XX
00000.
(b) OPI is a Wisconsin corporation with a
principal business address of 0000 Xxxxxxxx Xxxxx, Xxxxxx, XX 00000; OPI also
has a facility in Oak Creek, WI. OPI is a wholly-owned subsidiary of OGC.
(c) Baksha is a citizen of Illinois and the
President and Chief Operating Officer of OGC.
(d) Barrier - NY is a New York corporation with a
principal business address of 00 Xxxx Xxxxxxx Xxxx, Xxxxxxxxxx Xxxxxxx, XX.
(e) BFC is a Nevada corporation with a principal
business address of 000 Xxxxxxx Xxx, Xxxxxx, XX 00000. BFC is a wholly-owned
subsidiary of Barrier - NY.
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(f) Shemesh is a New York citizen and the
principal owner and chief executive of Barrier - NY and World Class Film Corp.
("World Class") of Yonkers, NY.
(g) Xxxxxxx Xxxxxx ("Xxxxxx") is citizen of
Nevada and a current officer and employee of BFC.
(h) Xxxxx Xxxxxx is a citizen of Nevada and a
former employee of BFC.
(i) Xxxxxxx Xxxxxx ("Xxxxxx") is a citizen of
Nevada and a former officer and employee of BFC.
1.2 Contracts. On or about May 12, 1997, OGC and
Barrier - NY entered into a Stock Purchase Agreement (the "Stock Purchase
Agreement") to effectuate the sale of the entire capital stock of BFC by OGC to
Barrier - NY. Simultaneously with this Stock Purchase Agreement, and in partial
payment of the Stock Purchase Agreement's stated price for the stock of BFC,
Barrier - NY executed a Secured Promissory Note in favor of OGC in the amount of
$2,300,000 (the "Original Promissory Note"). At the same time, OGC, on behalf of
its subsidiary, OPI, entered into a Rebate and Supply Agreement (the "Rebate and
Supply Agreement") with Barrier - NY, BFC, and World Class, the purpose of which
was to permit Barrier - NY, BFC and World Class to supply certain packaging
films to OGC and OPI, with the price of said films serving in part to pay
amounts due under the Original Promissory Note.
1.3 Litigation. The Parties are litigants in the
following civil actions:
(a) OGC, Barrier - NY and Baksha are the parties
in Case No. 99-CV- 3057, a civil action pending in the United States District
Court for the Eastern District of New York (the "New York Action"). In the New
York Action, Barrier - NY alleges numerous claims
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against OGC and Baksha, including but not limited to breach of the Stock
Purchase and Rebate and Supply Agreements, tortious interference with
third-party contracts, and improper dissemination of trade secrets. Among the
claims for breach of contract asserted by Barrier - NY against OGC are claims
that OGC failed to obtain certain consents from Xxxxxx and Xxxxxx to the Stock
Purchase Agreement and that OGC subsequently failed to indemnify Barrier - NY
for other claims brought by Xxxxxx and Xxxxxx related to matters predating the
Stock Purchase Agreement. OGC has counterclaimed in the New York Action,
alleging that Barrier - NY defaulted on the Original Promissory Note and the
Stock Purchase Agreement.
(b) OPI and BFC are the parties in Case No.
00-C-0202, a civil action originally filed in the United States District Court
for the Eastern District of Wisconsin (the "Wisconsin Action"), and subsequently
transferred to the Eastern District of New York for consolidation with the New
York Action. In the Wisconsin Action, OPI alleges that BFC tortiously interfered
with OPI's relationship with its customers, Vegetable Growers Supply and River
Ranch, misrepresented material facts, and breached implied warranties regarding
the composition of certain films BFC delivered to OPI. BFC alleges counterclaims
in the Wisconsin Action that mirror Barrier - NY's allegations in the New York
Action.
1.4. Purpose. The Parties have now determined to resolve
voluntarily all of the disputes between them, including but not limited to the
claims and counterclaims stated in the New York Action and the Wisconsin Action.
The purpose of this Agreement is to effectuate the resolution of these disputes
fully and completely, and to release in full any and all claims and
counterclaims the Parties may have against each other relating to the subject
matters of the New York Action and the Wisconsin Action.
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1.5. Consideration. The Parties enter into this Agreement
in consideration of the mutual promises and covenants contained herein, the
receipt and sufficiency of which the Parties acknowledge.
2. TERMS OF SETTLEMENT
In settlement of all claims and counterclaims which have been or could
have been brought in the New York Action and the Wisconsin Action, OGC, OPI,
Baksha, Barrier - NY, BFC and Shemesh hereby promise and covenant to do all of
the following:
2.1 BFC Payments. BFC will pay OGC principal sums equal
to $2,149,501 (plus or minus interest, credits and other payments provided in
this Settlement Agreement or the Notes) according to the payment schedule set
out in Exhibit A hereto (the "Settlement Payment Schedule"), which is
incorporated herein. This Settlement Payment Schedule calls for monthly payments
to be made beginning on January 15, 2001 and ending on February 15, 2004. A
portion of payments made pursuant to the Settlement Payment Schedule will be
evidenced by two new promissory notes as detailed below in paragraph 2.2 and
secured by the arrangements discussed in paragraph 2.6 (the "Security Details
Paragraph"). The $264,686.00 balance of the principal payment shall not bear
interest and shall be paid in cash or by wire transfer by BFC to OGC on February
15, 2004, subject to the credits provided herein.
2.2 BFC New Promissory Notes. BFC will execute two new
promissory notes in favor of OGC as follows:
(a) BFC will execute a Promissory Note in favor of
OGC securing the first three monthly payments due pursuant to the Settlement
Payment Schedule on January 15, 2001, February 15, 2001 and March 27, 2001 in
the amount of $550,000 (the "First New
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Promissory Note"), attached hereto as Exhibit B and incorporated herein. The
First New Promissory Note shall not bear interest and shall be secured as
detailed in the Security Details Paragraph.
(b) BFC will execute a Promissory Note in favor
of OGC securing the remaining monthly payments due pursuant to the Settlement
Payment Schedule in the amount of $1,334,815 (the "Second New Promissory Note"),
attached hereto as Exhibit C and incorporated herein. The Second New Promissory
Note shall bear interest at the rate stated therein of 8.3% per annum, and shall
be secured as detailed below in the Security Details Paragraph.
2.3 BFC Prepayment Right. BFC shall have the right to
prepay the Second New Promissory Note at any time and, in the event of such
prepayment, no interest on the Second New Promissory Note after such prepayment
will be charged or due, except such interest at the rate of 8.3% per annum as
will have already accrued by the date of prepayment. The interest that shall
have accrued by the date of prepayment of the Second New Promissory Note shall
be discounted in the following manner:
(a) If the Second New Promissory Note is prepaid
in full within 12 months of the date of this Agreement, the accrued interest
then due on the note shall be reduced by 25%.
(b) If the Second New Promissory Note is prepaid
in full within 24 months of the date of this Agreement, the accrued interest
then due on the note shall be reduced by 10%.
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2.4 Third Party Releases.
(a) Xxxxxx, Xxxxx Xxxxxx and Xxxxxx Releases.
Barrier - NY shall immediately obtain complete and full releases of all claims
by Xxxxxx, Xxxxx Xxxxxx and Xxxxxx against OGC, OPI, Baksha, or any other entity
or person affiliated in any way with OGC, including without limitation its and
their former and present joint venturers, predecessors, successors, insurers,
assigns, officers, directors, employees, attorneys and agents, including any and
all former employers of Baksha. The form for these releases shall be as stated
in the "Xxxxxx Release," "Xxxxx Xxxxxx Release," and "Xxxxxx Release," attached
hereto as Exhibits D, E and F and incorporated herein.
(b) World Class Release. Barrier - NY shall
immediately obtain a complete and full release of all claims by World Class
against OGC, OPI, Baksha or any other entity or person affiliated in any way
with OGC including without limitation its and their former present joint
venturers, predecessors, successors, insurers, assigns, officers, directors,
employees, attorneys and agents. The form for this release shall be as stated in
the "World Class Release," attached hereto as Exhibit G and incorporated herein.
(c) Consideration of Third Party Releases.
OGC's execution of and performance under this Agreement shall be consideration
for Barrier - NY's obtaining the releases described above in subparagraphs (a)
and (b). As additional consideration for Barrier - NY's obtaining the Xxxxxx
Release and Xxxxx Xxxxxx Release, OGC shall pay $40,000 to Xxxxxx within two (2)
business days after said release is presented to OGC by Barrier - NY. As
additional consideration for Barrier - NY obtaining the Xxxxxx Release, OGC
shall pay $5,000 to Xxxxxx within two (2) business days after said release is
presented by Barrier - NY to OGC.
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(d) Indemnification for Failure to Obtain Third
Party Releases. In the event Barrier - NY is unable to obtain the aforementioned
third party releases by March 1, 2001, OGC shall not be liable for the payments
to Xxxxxx and Xxxxxx defined above, and Barrier - NY shall indemnify and hold
harmless OGC, OPI or Baksha for any claims against them brought by Xxxxxx, Xxxxx
Xxxxxx or Xxxxxx, including reimbursing OGC, OPI or Baksha for the reasonable
costs, including actual attorneys fees, incurred in defending against said
claims. OGC shall have the power to select counsel and control the defense of
any claims against OGC, OPI or Baksha brought by Xxxxxx, Xxxxx Xxxxxx or Xxxxxx.
All amounts due to OGC, OPI or Baksha under this indemnification provision shall
be secured according to the terms of the Security Details Paragraph below.
2.5 OGC Payment to Barrier - NY. OGC will pay $200,000 to
Barrier - NY on or before February 15, 2004 conditioned upon BFC completing all
payments owing to OGC pursuant to the Settlement Payment Schedule. To qualify
for this payment, BFC must have completed all payments owing to OGC under the
First and Second New Promissory Note on time in their full amounts without
exception. However, BFC shall be allowed a 10-day grace period after written
notification to Shemesh and a copy thereof to Xxxxxx Xxxx Xxxxx, Esq. on
payments owing to OGC under the First or Second New Promissory Note, and
payments under the First or Second New Promissory Note made after their due
dates but within said grace period shall not disqualify Barrier - NY from
receiving the payment contemplated under this paragraph. The Parties agree that
this paragraph is to be strictly construed and that any failure on the part of
BFC to make payments to OGC within the allowed time periods stipulated in this
paragraph shall and will immediately discharge OGC's liability for the
aforementioned $200,000 payment,
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except that, in the event of a default by BFC, Barrier - NY will still qualify
for the $200,000 payment if, within sixty days of default, any guarantor pays
the entire remaining balance on the two new promissory notes in full with the
interest that has accrued through the time of payment.
2.6 Security Details. As security for the two new
promissory notes described above in [P]2.2, BFC, Barrier - NY, and Shemesh will
do the following:
(a) To secure its obligations to OGC created or
contemplated hereby, BFC hereby grants OGC a security interest in BFC's
inventory and accounts receivable, and will execute all documents necessary to
provide OGC with a perfected lien on said collateral including without
limitation appropriate UCC financing statements. As continuing evidence of the
value of this collateral, and so long as amounts due on the two new promissory
notes remain outstanding in excess of $500,000, BFC will provide no later than
the 25th day of each month a full and updated list of its inventory, a full and
updated list of its accounts receivable, and an aging report on those accounts
receivable. OGC shall keep the information provided by BFC under this
sub-paragraph confidential, shall disclose the information only to those of its
employees or agents who have a need to know the information in order to
effectuate the terms of this Agreement, and shall not disclose the information
to any third party except when required to do so by valid court order or
pursuant to a validly issued subpoena.
(b) As further security for the two new
promissory notes, Barrier - NY, as the parent of BFC, will guarantee all
payments due under the two new promissory notes. This guarantee shall be in the
form given in Exhibit H hereto and incorporated herein.
(c) As further security for the two new
promissory notes, Shemesh will execute two personal guarantees. The First
Shemesh Guarantee shall be a personal
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guarantee in the amount of $550,000 guaranteeing all payments and amounts due
under the First New Promissory Note. The Second Shemesh Guarantee shall be a
personal guarantee in the amount of $667,407.50 guaranteeing in part the
payments and amounts due under the Second New Promissory Note. Shemesh's
personal guarantees shall be in the form given in Exhibits I and J hereto and
incorporated herein.
(d) Upon payment in full of all sums owed under
the two new promissory notes, OGC shall file all necessary UCC statements or
other documents required or requested to evidence payment in full and discharge
of any liens hereby created.
2.7 Exhibit K. OGC and Shemesh shall execute the
agreement attached hereto as Exhibit K and incorporated herein which shall be
considered by all Parties to be a material part of this Agreement, and the
execution of which by OGC and Shemesh shall be additional and necessary
consideration for the Parties performance under this Agreement.
2.8 Termination of Prior Contracts. It is expressly
agreed that all prior contracts between the Parties, including without
limitation the Stock Purchase Agreement, the Original Promissory Note and the
Rebate and Supply Agreement identified above in paragraph 1.2, and all
obligations thereunder, shall, if not previously terminated by operation of
their terms, terminate as of the date of the execution of this Agreement, and
that the parties thereafter shall have no obligations to each other than those
specified in this Agreement and the Exhibits hereto. However, this paragraph
shall not have any affect on the Standstill Agreement between OGC and American
Capital Resources.
2.9 Termination of Litigation. By executing this
Agreement, the parties authorize their respective attorneys to execute and file
forthwith such stipulations of dismissal,
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with prejudice, and without costs to any party, as are necessary to terminate
the New York Action and the Wisconsin Action. Such stipulations will be in the
form attached hereto as Exhibit L and incorporated herein.
2.10 Confidentiality. The parties agree that the terms of
this Settlement Agreement shall be kept confidential. In that regard, the
Parties and their counsel may disclose terms of this Agreement only (a) to those
of their employees who have a need to know such terms, (b) to the attorneys,
accountants or tax advisors consulted by a Party on a professional basis and
having a need to know such terms and who have first agreed not to reveal the
terms to others, (c) as otherwise required by law, including in response to
valid subpoenas, pursuant to a court order, or as required by federal or state
securities laws or SEC or NASDAQ reporting rules; or (d) to effectuate the terms
of this Agreement. A Party shall not initiate contact with the press, the media
or others who are not employees of the Party regarding this Agreement or its
terms. In response to bona fide inquiries from the press, the media or others
regarding the status of the New York and Wisconsin Actions or in a general
statement about the New York and Wisconsin Actions or this Agreement to its
employees, a Party shall be limited to statements similar in substance to:
The Parties have reached a mutually agreeable resolution of the cases.
The terms are confidential. None of the parties in either case have
admitted liability. The cases have been dismissed.
2.11 Additional Criteria for Default. In addition to
failure to perform any obligations created under this Agreement, it shall also
constitute a default under this Agreement if any Party declares bankruptcy or is
involuntarily forced into bankruptcy or receivership.
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3. RELEASES
3.1. Outlook Release. OGC, for itself and its subsidiaries
and other affiliated entities, including OPI, and its and their joint venturers,
predecessors, successors, insurers, assigns, officers, directors, attorneys and
agents, including Baksha, (hereinafter referred to as the "Outlook Releasers"),
hereby releases and discharges Barrier - NY and World Class, and the parents,
subsidiaries and other affiliated entities of each of them, including BFC, and
its and their joint venturers, predecessors, successors, insurers, assigns,
officers, directors, employees, attorneys and agents, including Shemesh, from
any and all claims, obligations and liabilities the Outlook Releasers now have
or in the future may have relating to the subject matters of the New York Action
and the Wisconsin action, except that OGC's release will only operate to release
Xxxxxx, Xxxxx Xxxxxx or Xxxxxx if OGC has previously received their releases as
referenced above in paragraph 2.4(a).
3.2 Barrier Release. Barrier - NY and BFC for themselves
and their parents, subsidiaries and other affiliated entities, including World
Class, and its and their joint venturers, predecessors, successors, insurers,
assigns, officers, directors, shareholders, attorneys and agents, including
Shemesh (the "Barrier Releasers"), hereby release and discharge OGC and its
subsidiaries and other affiliated entities, including OPI, and its and their
joint venturers, predecessors, successors, insurers, assigns, officers,
directors, employees, attorneys and agents, including Baksha, from any and all
claims, obligations and liabilities the Barrier Releasers now have or in the
future may have relating to the subject matters of the New York Action and the
Wisconsin Action.
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3.3 Securities Law Compliance. Notwithstanding any other
provision of this Agreement, all Parties and their affiliates shall remain
responsible for all of their reporting, compliance and other requirements and
obligations under federal and state securities laws, including without
limitation those arising out of Sections 13 or 16 of the Securities Exchange Act
of 1934, which arise as a result of the acquisition or holding of shares of OGC,
or the execution or performance of this Agreement or of any of the Exhibits
attached hereto or the transactions contemplated herein. Nothing in these
agreements shall be a waiver or release by any Party of any such requirements or
obligations on the part of any other Party.
4. GENERAL PROVISIONS
4.1 Merger. This Agreement constitutes the entire
agreement of the parties and supersedes all prior oral and written
understandings, negotiations, representations and agreements between the Parties
hereto on the subject matter of this Agreement.
4.2 No Admissions of Liability. This Agreement is the
compromise of disputed claims and neither the promises exchanged between the
Parties nor any other statements herein are to be construed as an admission of
any fault or liability on the part of any Party with respect to any claim,
counterclaim, obligation or liability released, or any other form of admission
with respect to any matter, thing or dispute. Any such liability is expressly
denied by all Parties.
4.3 Parties Bound By Agreement. This Agreement, and the
rights, obligations and covenants contained hereunder, shall be binding upon the
Parties hereto and their respective parents, subsidiaries, officers, directors,
partners, employees, heirs, conservators, successors, devisees and assigns.
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4.4 Agreement Based Upon Advice of Counsel. Each of the
Parties represent and warrant that they have read this Agreement, understand it
fully, and agree to each and all of the terms and conditions set forth herein.
The parties further represent and warrant that they have received independent
legal advice concerning all tax, securities, and other ramifications of this
Agreement, that they have had full and fair opportunity to analyze and consult
with counsel regarding the terms of this Agreement, and that in executing it
they have not relied upon any statement or representation made by any of the
Parties or by anyone who has acted for or on behalf of any of the Parties.
4.5 Construction.
(a) The language of this Agreement shall be
construed as a whole, according to its fair meaning, and not strictly for or
against any Party, regardless of who drafted or was principally responsible for
drafting the Agreement or any specific term or condition hereof. This Agreement
shall be deemed to have been drafted by all parties, and no party shall urge
otherwise.
(b) Whenever possible, each paragraph of this
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision shall be held to be prohibited or invalid,
such provision shall be ineffective only to the extent of such prohibition or
invalidity, without invalidating the remainder of such provision or the other
remaining provisions of the Agreement.
(c) The headings in this Agreement are for
convenience only. They in no way limit, alter or affect the meaning of this
Agreement.
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4.6 Amendment. This Agreement may not be altered,
amended, modified or otherwise changed in any respect whatsoever except by a
writing duly executed by an authorized representative of each of the parties.
4.7 Enforcement. The sole remedy for breach of all
obligations created by this Agreement shall be an action to enforce this
Agreement, and in no event shall a breach of any obligation created by this
Agreement entitle any party to reopen either the New York Action or the
Wisconsin Action or to litigate in any way the subject matters of those actions.
If any Party successfully enforces the obligations imposed on another Party
under this Agreement, or if any Party successfully defends against an action to
enforce this Agreement, the losing Party shall reimburse and indemnify the
successful Party for the actual costs incurred by that Party in said enforcement
or defense, including, but not limited to, attorney's fees at the actual hourly
rate customarily charged by that Party's counsel for the time reasonably spent
in the enforcement or defense activity.
4.8 Authority. Each corporate Party represents and
warrants for itself that it is validly organized and existing under the laws of
its place of incorporation; and that it has the full power and authority to
enter into this Settlement Agreement and to perform all transactions, duties and
obligations set forth herein. Each signatory to this Settlement Agreement who
signs on behalf of a corporate Party represents and warrants that he or she has
the actual authority to sign on behalf of that Party.
4.9 Cooperation. The Parties agree to cooperate fully and
execute any and all supplementary documents and to take all additional actions
which may be necessary or appropriate to give full force and effect to the basic
terms and intent of this Agreement.
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4.10 Notice. Written notice under this Agreement shall be
effective if sent by certified mail, return receipt requested, to the following
addresses:
(a) Notice to Barrier - NY, BFC or Shemesh:
Xxxxxx Xxxxxxx
World Class Film Corp.
00 Xxxxxxxxx Xx.
Xxxxxxx, XX 00000
With a copy to:
Xxxxxx Xxxx Xxxxx, Esq.
Xxxxxx Xxxx Xxxxx, P.C.
Suite 307
33 Xxxx Xxxxxxx Xxxx
Xxxxxxxxxx Xxxxxxx, XX 00000
(b) Notice to OGC, OPI or Baksha:
Xxxxxx X. Xxxxxx
Outlook Group Corp.
0000 Xxxxxxxx Xxxxx
X.X. Xxx 000
Xxxxxx XX 00000-0000
With a copy to:
Xxxxxxx X. Xxxxxxx, Esq.
Xxxxxxx & Xxxxx LLP
000 X. Xxxxxxxxx Xxx.
Xxxxxxxxx, XX 00000
4.11 Signing. This Settlement Agreement may be signed in
counterparts. Facsimiles of signatures shall be accepted as original signatures.
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FOR THE OUTLOOK RELEASERS:
OUTLOOK GROUP CORP.
By /s/
---------------------------------
Its Chairman
--------------------------------
Dated: 12-29-00
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OUTLOOK PACKAGING, INC.
By /s/
---------------------------------
Its Chairman
--------------------------------
Dated: 12-29-00
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XXXXXX XXXXXX
/s/
----------------------------------
Dated: 12-29-00
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FOR THE BARRIER RELEASERS:
BARRIER FILMS LTD. - NEW YORK, INC.
By /s/
-----------------------------------
Its President
----------------------------------
Dated: 12-29-00
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BARRIER FILMS CORPORATION
By /s/
-----------------------------------
Its V. President
----------------------------------
Dated: 12-29-00
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XXXXXX XXXXXXX
/s/
---------------------------------
Dated: 12-29-00
-------------------------------
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EXHIBITS
A. Settlement Payment Schedule
B. First New Promissory Note
C. Second New Promissory Note
D. Release of Xxxxxxx Xxxxxx
E. Release of Xxxxx Xxxxxx
F. Release of Xxxxxxx Xxxxxx
G. Release of World Class Film Corp.
H. Barrier - NY Guaranty
I. First Shemesh Guaranty
J. Second Shemesh Guaranty
K. Agreement Between OGC and Shemesh
L. Stipulation and Proposed Order of Dismissal
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EXHIBIT K
STOCK REPURCHASE AGREEMENT
This Stock Repurchase Agreement is made as of December 29, 2000 by and
among Outlook Group Corp. ("OGC") and Xxxxxx Xxxxxxx ("Xxxxxxx"). OGC and
Shemesh enter into this Stock Repurchase Agreement based upon the following
understandings:
WHEREAS OGC is a publicly traded Wisconsin corporation with a principal
business address of 0000 Xxxxxxxx Xxxxx, Xxxxxx, XX 00000; and
WHEREAS Shemesh is a New York citizen and the principal owner and chief
executive of Barrier Films Ltd. - New York, Inc. ("Barrier - NY") and World
Class Film Corp. ("World Class"); and
WHEREAS Barrier - NY is the parent corporation to Barrier Films
Corporation ("BFC"); and.
WHEREAS OGC, Barrier - NY, BFC and Shemesh are parties to the
Settlement Agreement and Mutual Releases to which this Stock Repurchase
Agreement is attached as Exhibit L; and
WHEREAS Shemesh, as President and principal owner of Barrier - NY is
materially affected by and interested in the execution and enforcement of the
Settlement Agreement and Mutual Releases; and
WHEREAS Shemesh is the owner of certain shares of OGC common stock; and
WHEREAS Shemesh believes that the book value of OGC common stock
exceeds the current market value and that the true value of his concentrated
stock ownership position exceeds the market value; and
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WHEREAS, OGC is willing to pay the amounts set forth below for
Shemesh's OGC stock as a means of settling the legal disputes involving OGC,
Barrier - NY and BFC; and
WHEREAS Shemesh and OGC further agree that their mutual execution of
the following Stock Repurchase Agreement is a necessary and important condition
to the Settlement Agreement and Mutual Releases, and a material and integral
part thereto;
NOW, THEREFORE, Shemesh and OGC agree as follows:
1. Stock Repurchase Provision. If BFC has made all payments due
under the New Promissory Notes described in paragraph 2.2 of the Settlement
Agreement and Mutual Releases, and complied with all other material terms of
that agreement, Shemesh may require OGC to purchase up to 450,000 shares of OGC
Common Stock now held by Shemesh, and OGC agrees to purchase such shares, all in
accordance the provisions of this paragraph as follows:
(a) Shemesh may require the purchase of such OGC shares
now held by him on the dates (the "Purchase Dates"), and in amounts up to the
amounts set forth below:
PURCHASE DATE NUMBER OF SHARES
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January 15, 2001 50,000
February 9, 2001 75,000
March 27, 2001 75,000
April 15, 2001 75,000
May 3, 2001 75,000
July 20, 2001 100,000
(b) Shemesh may exercise such right by giving written
notice to OGC by certified mail, specifying the number of shares to be tendered
and sold to OGC, said notice to be served on OGC not fewer that five business
days prior to any such Purchase Date.
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(c) Upon delivery to OGC of a certificate or certificates
representing such shares to be purchased by OGC, duly endorsed by Shemesh or
accompanied by a stock power duly endorsed by Shemesh and sufficient to transfer
such shares to OGC, or upon delivery to OGC of appropriate documents authorizing
an electronic DTC brokerage transfer, on each such Purchase Date for which
notice is given and on which shares are tendered, OGC shall pay for such shares
as are tendered by wire transfer to an account designated by Shemesh or, if no
such account is designated, by a certified or bank cashier's check, in an amount
equal to $7.00 times the number of shares duly tendered, which the parties agree
represents the fair value of said shares. In addition, the tender by Shemesh of
OGC stock pursuant to this Stock Repurchase Agreement shall entitle Barrier - NY
to the credit described below in paragraph 3. If delivery is via DTC transfer,
OGC shall deposit with its broker prior to each such transfer sufficient funds
to effectuate the simultaneous wire transfer of funds and stock.
(d) In the event, and to the extent, that Shemesh does
not provide the required notice prior to, or duly tender shares on, any Purchase
Date in accordance with this agreement, Shemesh's right to require OGC to
purchase the shares relating to that Purchase Date, and OGC's obligation to
purchase such shares, shall terminate.
(e) In the event of tender by Shemesh pursuant to this
paragraph, all share and per share amounts set forth herein shall be adjusted
equitably in the case of stock split, reverse stock split, recapitalization or
similar change in the outstanding common stock of OGC. In any event, the net
effect of any change shall not be detrimental to, or, alternatively, increase
the value of the OGC shares held by Shemesh as of the date of this Agreement.
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2. Agreement to Not Purchase.
(a) From and after the date of the Settlement Agreement
and Mutual Releases, and until the final date for tender of shares hereunder,
none of Shemesh, Barrier - NY, World Class or BFC, or any of their affiliates,
officer or directors, shall purchase any shares of OGC common stock except as
described below in subparagraphs 2(b) and 2(c) unless, prior to the purchase by
OGC of any shares pursuant to paragraph 1 hereof, they shall have provided
notice that Shemesh waives in writing all of his rights under paragraph 1
hereof, such notice to include a copy of said written waiver, in which event the
provisions of this Stock Repurchase Agreement shall be of no further force and
effect. If Shemesh waives his rights under this Stock Repurchase Agreement
pursuant to this sub-paragraph, any right to purchase additional OGC stock
thereby created shall be contingent upon payments due under the two new
promissory notes remaining current in compliance with the terms of the
Settlement Payment Schedule attached to the Settlement Agreement and Mutual
Releases as Exhibit A.
(b) Notwithstanding the stipulations in subparagraph (a)
above, Shemesh may purchase an additional 50,000 shares of OGC common stock from
the date of the Settlement Agreement and Mutual Releases until January 15, 2001,
based on Shemesh's representation that he has already contracted to make such
purchases, to the extent that prior contracts require him to make such
purchases. Shemesh further represents and warrants that any such purchases by
Shemesh will be in compliance with federal and state securities laws.
(c) From the date of the final tender of shares by
Shemesh pursuant to paragraph 1(a) above until the later of: (a) the final
payment due under the two new promissory notes or (b) three years from the final
tender of shares by Shemesh, none of Shemesh, Barrier -
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NY, World Class, or BFC or any of their affiliates, officers, or directors shall
under any circumstances individually or collectively purchase a total amount of
OGC common stock greater than 5% of the total stock of OGC then outstanding.
However, (i) this restriction shall not apply if Shemesh waives his right to
tender shares pursuant to paragraph 2(a) hereof prior to the tender of any such
shares, including compliance with the payment schedule for the two new
promissory notes; and (ii) no person or entity restricted by this section may
make any purchases in the event BFC is not then current under either the First
or the Second New Promissory Notes.
3. Barrier - NY Right to Credit. Barrier - NY shall be entitled
to a credit against interest due under the Second New Promissory Note referenced
in paragraph 2.2(b) of the Settlement Agreement and Mutual Releases in the
amount of $ 0.275 (27 and 1/2 cents) for each share of OGC stock tendered by
Shemesh in conformity with this Stock Repurchase Agreement provided that Shemesh
shall have complied with this agreement in all material respects. Barrier- NY
shall not be entitled to any additional payment or consideration in the event
the amount of the credit exceeds the interest due on the Second New Promissory
Note. Instead, if the amount of the credit exceeds the amount of the interest
due on the Second New Promissory Note, the excess credit shall be payable to
Shemesh individually.
4. Securities Law Compliance. Notwithstanding any other provision
of this Stock Repurchase Agreement, all Parties hereto and their affiliates
shall remain responsible for all of their reporting, compliance and other
requirements and obligations under federal and state securities laws, including
without limitation those arising out of Sections 13 or 16 of the Securities
Exchange Act of 1934, which arise as a result of the acquisition or holding of
shares of OGC, or the execution or performance of the Settlement Agreement and
Mutual Releases and
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this Stock Repurchase Agreement or the transactions contemplated therein.
Nothing in these agreements shall be a waiver or release by any Party of any
such requirements or obligations on the part of any other Party.
5. General Provisions. The general provisions contained in the
Settlement Agreement and Mutual Releases at [P][P] 4.1- 4.11 are expressly
incorporated herein. All terms found in this Stock Repurchase Agreement are to
be construed according to the meaning ascribed to them in the Settlement
Agreement and Mutual Releases, unless otherwise indicated.
OUTLOOK GROUP CORP.
By /s/
---------------------------------
Its Chairman
--------------------------------
Dated: 12-29-00
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XXXXXX XXXXXXX
/s/
-----------------------------------
Dated: 12-29-00
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