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EXHIBIT 10.14
MANAGEMENT STOCK OPTION AGREEMENT
MANAGEMENT STOCK OPTION AGREEMENT, dated as of August 19, 1998,
between Riverwood Holding, Inc. (formerly New River Holding, Inc.), a Delaware
corporation (the "Company"), and the Grantee whose name appears on the
signature page hereof (the "Grantee").
W I T N E S S E T H:
WHEREAS, to motivate key employees of the Company and the Subsidiaries
by providing them an ownership interest in the Company, the Board of Directors
of the Company (the "Board") established the Riverwood Holding, Inc. Stock
Incentive Plan, as the same may be amended from time to time (the "Plan");
WHEREAS, the Board has authorized the grant to the Grantee of the
Options (as defined herein) pursuant to the Plan and the terms set forth in
this Agreement;
WHEREAS, the Grantee and the Company desire to enter into an agreement
to evidence and confirm the grant of such options on the terms and conditions
set forth herein;
NOW, THEREFORE, to evidence the stock options so granted, and to set
forth the terms and conditions governing such stock options, the Company and
the Grantee hereby agree as follows:
1. Certain Definitions. As used in this Agreement, the following
terms shall have the following meanings:
(a) "Acquisition" shall mean the series of transactions
resulting in the indirect acquisition of all of the issued and outstanding
capital stock of Former Riverwood by the Company on March 27, 1996 pursuant to
the Merger Agreement.
(b) "Affiliate" shall mean, with respect to any person,
any other person controlled by, controlling or under common control with such
person.
(c) "Award Agreement" shall mean each agreement
evidencing the grant of any award under the Plan, including, without
limitation, this Agreement.
(d) "Board" shall mean the Board of Directors of the
Company.
(e) "CD&R Fund" shall mean the Xxxxxxx, Dubilier & Rice
Fund V Limited Partnership, a Cayman Islands exempted limited partnership, and
any successor investment vehicle managed by Xxxxxxx, Dubilier & Rice, Inc.
(f) "Cause" shall have the meaning assigned to such term
in the Employment Agreement.
(g) "Change in Control" shall mean the first to occur of
the following events after the date hereof:
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(i) the acquisition by any person, entity or
"group" (as defined in Section 13(d) of the Exchange Act),
other than the Company, the Subsidiaries, any employee
benefit plan of the Company or the Subsidiaries, the CD&R
Fund, any Investor or any Affiliate of the CD&R Fund or of an
Investor, of 50% or more of the combined voting power of the
Company's or Riverwood's then outstanding voting securities;
(ii) the merger or consolidation of the Company
or Riverwood, as a result of which persons who were
stockholders of the Company or Riverwood, as the case may be,
immediately prior to such merger or consolidation, do not,
immediately thereafter, own, directly or indirectly, more
than 50% of the combined voting power entitled to vote
generally in the election of directors of the merged or
consolidated company;
(iii) the liquidation or dissolution of the
Company or Riverwood other than a liquidation of Riverwood
into the Company or into any Subsidiary; and
(iv) the sale, transfer or other disposition of
all or substantially all of the assets of the Company or
Riverwood to one or more persons or entities that are not,
immediately prior to such sale, transfer or other
disposition, Affiliates of the Company, Riverwood, the CD&R
Fund or any Investor.
(h) "Change in Control Price" shall mean the price per
share of Common Stock paid in conjunction with any transaction resulting in a
Change in Control (as determined in good faith by the Board if any part of such
price is payable other than in cash).
(i) "Closing Date" shall mean the date of the closing
date of the Acquisition.
(j) "Common Stock" shall mean the Class A Common Stock,
par value $.01 per share, of the Company.
(k) "Company" shall mean Riverwood Holding, Inc., a
Delaware corporation formerly known as New River Holding, Inc., and any
successor thereto.
(l) "Covered Options" shall have the meaning set forth
in Section 5(c)(i) hereof.
(m) "Credit Agreement" shall mean the Credit Agreement,
dated as of March 21, 1996, as amended, among RIC Holding (as successor to
Former Riverwood), the other borrowers party thereto, The Chase Manhattan Bank,
as administrative agent, and the lenders party thereto from time to time, as
such agreement may be further amended from time to time.
(n) "Cumulative EBITDA Target" shall mean the sum of the
EBITDA Targets for Fiscal Years 1998, 1999, 2000, 2001 and 2002.
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(o) "Delay Period" shall have the meaning set forth in
Section 10(c) hereof.
(p) "Disability" shall have the meaning assigned to such
term in the Employment Agreement.
(q) "EBITDA" shall have the meaning assigned to such
term in the Credit Agreement.
(r) "EBITDA Target" shall mean, with respect to each of
the 1998 and 1999 Fiscal Years, EBITDA target for such fiscal year of the
Company set forth in the original investment case under the business plan
developed by the Company in connection with the financing of the Acquisition,
and, with respect to each subsequent Fiscal Year, the EBITDA targeted for such
Fiscal Year in the business plan of the Company and the Subsidiaries for such
Fiscal Year approved by the Board; provided, however, that in the event the
Company or any Subsidiary consummates a significant acquisition, disposition or
other corporate transaction or series of transactions that, in the judgement of
the Executive Committee of the Board, would reasonably be expected to impact
the consolidated earnings of the Company and the Subsidiaries, the EBITDA
Target for the relevant Fiscal Years may be appropriately adjusted by the Board
to reflect such transaction or series of transactions.
(s) "Employment Agreement" shall mean the employment
agreement, dated as of July 14, 1997, by and among the Company, Riverwood and
the Grantee, as the same may be amended from time to time.
(t) "Exchange Act" shall mean the U.S. Securities
Exchange Act of 1934, as amended.
(u) "Exercise Date" shall have the meaning set forth in
Section 6 hereof.
(v) "Exercise Price" shall have the meaning set forth in
Section 6 hereof.
(w) "Exercise Shares" shall have the meaning set forth in
Section 6 hereof.
(x) "Extraordinary Termination" shall mean a termination
of the Grantee's employment with the Company and the Subsidiaries by reason of
the Grantee's death, Disability or Retirement.
(y) "Fair Market Value" shall mean, as of any date, the
fair market value on such date per share of Common Stock as determined in good
faith by the Executive Committee of the Board. In making a determination of Fair
Market Value, the Executive Committee shall give due consideration to such
factors as it deems appropriate, including, without limitation, the earnings and
certain other financial and operating information of the Company and the
Subsidiaries in recent periods, the potential value of the Company and the
Subsidiaries as a
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whole, the future prospects of the Company and the Subsidiaries and the
industries in which they compete, the history and management of the Company and
the Subsidiaries, the general condition of the securities markets, the fair
market value of securities of companies engaged in businesses similar to those
of the Company and the Subsidiaries and a valuation of the Common Stock, which
shall be performed by an independent valuation firm chosen by the Executive
Committee. Notwithstanding the foregoing, following a Public Offering, Fair
Market Value shall mean the average of the high and low trading prices for a
share of Common Stock on the primary national exchange (including NASDAQ) on
which the Common Stock is then traded on the trading day immediately preceding
the date as of which such Fair Market Value is determined. The determination of
Fair Market Value will not give effect to any restrictions on transfer of the
shares of Common Stock or the fact that such Common Stock would represent a
minority interest in the Company.
(z) "First Purchase Period" shall have the meaning set
forth in Section 5(c)(i) hereof.
(aa) "Financing Agreements" shall have the meaning set
forth in Section 10(a) hereof.
(bb) "Fiscal Year" shall mean a fiscal year of the Company
ending December 31.
(cc) "Former Riverwood" shall mean the Delaware
corporation known as "Riverwood International Corporation" prior to the
Acquisition, which was merged into RIC Holding in connection with the
Acquisition.
(dd) "Good Reason" shall have the meaning assigned to such
term in the Employment Agreement.
(ee) "Grant Date" shall mean the date hereof, which is the
date as of which the Options are granted to the Grantee.
(ff) "Grantee" shall mean the employee whose name appears
on the signature page hereof.
(gg) "Investors" shall mean each of the investors who
purchased shares of Common Stock or shares of Class B Common Stock of the
Company concurrently with the consummation of the merger contemplated by the
Merger Agreement, and their "specified affiliates", within the meaning of the
Stockholders Agreement of the Company, as amended from time to time.
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(hh) "Involuntary Termination" shall mean a termination of
the Grantee's employment with a New Employer or any subsidiary thereof by the
New Employer for any reason.
(ii) "Management Stock Subscription Agreement" shall mean
the management stock subscription agreement entered into by the Company and the
Grantee in connection with the Grantee's exercise of any of the Options and
purchase of the Shares subject to any such Options pursuant to Section 6 hereof.
(jj) "Merger Agreement" shall mean the Agreement and Plan
of Merger, dated as of October 25, 1995, by and among RIC Holding, its wholly
owned subsidiary, CDRO Acquisition Corporation, a Delaware corporation, and
Former Riverwood.
(kk) "New Employer" shall mean the Grantee's employer, or
the parent or a subsidiary of such employer, immediately following a Change in
Control.
(ll) "Normal Termination Date" shall mean (i) in the case
of the Service Options and the Performance Options, the 90th day following the
tenth anniversary of the Grant Date and (ii) in the case of the Special Options,
the 30th day following the fifth anniversary of the Grant Date.
(mm) "Notice of Exercise" shall mean a written notice
delivered to the Grantee by the Company with respect to all of the Special
Options notifying the Grantee of his right to exercise the Special Options
during the 30 day period immediately following the date of delivery of such
notice.
(nn) "Option Price" shall mean the exercise price under
each Option and shall be equal to $100 per Share.
(oo) "Options" shall mean, collectively, the Special
Options, the Performance Options and the Service Options granted to the Grantee
hereby.
(pp) "Performance Options" shall mean those Options which
shall vest, if at all, in accordance with the provisions of Section 3(b) or, if
applicable, Section 3(d) or Section 9 hereof. Performance Options have been
granted to the Grantee pursuant to this Agreement with respect to the number of
Shares specified under Item B on the signature page hereof.
(qq) "Plan" shall mean the Riverwood Holding, Inc. Stock
Incentive Plan, as the same may be amended from time to time.
(rr) "Public Offering" shall mean the first day as of
which sales of Common Stock are made to the public in the United States pursuant
to an underwritten public offering of the Common Stock led by one or more
underwriters at least one of which is an underwriter of nationally recognized
standing.
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(ss) "Registration and Participation Agreement" shall have
the meaning set forth in Section 7(f) hereof.
(tt) "Retirement" shall mean a Grantee's retirement from
employment with the Company and the Subsidiaries at or after age 65.
(uu) "RIC Holding" shall mean RIC Holding, Inc., a
Delaware corporation and wholly owned subsidiary of the Company.
(vv) "Riverwood" shall mean Riverwood International
Corporation, a Delaware corporation and a wholly owned subsidiary of the
Company.
(ww) "Rule 144" shall mean Rule 144 promulgated under the
Securities Act.
(xx) "Second Purchase Period" shall have the meaning set
forth in Section 5(c)(i) hereof.
(yy) "Securities Act" shall mean the U.S. Securities Act
of 1933, as amended.
(zz) "Service Options" shall mean those Options which
shall vest, if at all, in accordance with the provisions of Section 3(a) or, if
applicable, Section 3(d) or Section 9 hereof, based upon a Grantee's completion
of service. Service Options have been granted to the Grantee pursuant to this
Agreement with respect to the number of Shares specified under Item A on the
signature page hereof.
(aaa) "Shares" shall mean the shares of Common Stock
subject to the Options. The number of Shares subject to the Options is set forth
on the signature page hereof.
(bbb) "Special Options" shall mean those Options which
shall be vested as of the Grant Date and which shall be exercisable solely in
accordance with the provisions of Section 3(c) or, if applicable, Section 3(d)
or Section 9 hereof. Special Options have been granted to the Grantee pursuant
to this Agreement with respect to the number of Shares specified under Item C on
the signature page hereof.
(ccc) "Subsidiary" shall mean any corporation or other
person, a majority of whose outstanding voting securities or other equity
interests are owned, directly or indirectly, by the Company.
2. Confirmation of Grant; Option Price. The Company hereby
evidences and confirms its grant to the Grantee, effective as of the date
hereof, of (i) Service Options to purchase the aggregate number of Shares set
forth in Item A on the signature page hereof, (ii) Performance Options to
purchase the aggregate number of Shares set forth in Item B on the signature
page hereof and (iii)
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Special Options to purchase the aggregate number of Shares set forth in Item C
on the signature page hereof. Each Option shall have an option price of $100.00
per share (the "Option Price"). The Options are not intended to be incentive
stock options under the U.S. Internal Revenue Code of 1986, as amended. This
Agreement is subordinate to, and the terms and conditions of the Options
granted hereunder are subject to, the terms and conditions of the Plan. If
there is any inconsistency between the terms hereof and the terms of the Plan,
the terms of the Plan shall govern.
3. Vesting and Exercisability.
(a) Service Options. (i) Except as otherwise provided in this
Agreement (including Section 3(a)(ii) hereof) and subject to the continuous
employment of the Grantee with the Company or one of the Subsidiaries until the
applicable vesting date, the Service Options granted hereby shall vest and
become exercisable (A) as to 40% of the Shares subject thereto on the first
anniversary of the Grant Date and (B) as to 20% of the Shares subject thereto
on each of the second, third and fourth anniversaries of the Grant Date,
respectively; provided that, if (x) the Grantee's employment is terminated by
reason of an Extraordinary Termination or (y)(i)the CD&R Fund and, if
applicable, its Affiliates effect a sale or other disposition of all of the
Common Stock then held by the CD&R Fund and its Affiliates to one or more
persons other than any person who is an Affiliate of the CD&R Fund and (ii)
thereafter, the Grantee's employment is terminated by the Company other than
for Cause or by the Grantee for Good Reason, all Service Options held by the
Grantee as of the effective date of such Extraordinary Termination or
termination under the foregoing clause (y)(ii), whichever is applicable, shall
become immediately 100% vested and exercisable.
(ii) If the Company delivers a Notice of Exercise to the Grantee
and, within the 60 day period after the delivery of such Notice of Exercise,
(a) the Grantee does not exercise any of the Special Options and purchase the
Shares covered thereby in accordance with Section 6 of this Agreement, then,
notwithstanding the provisions of Section 3(a)(i), all of the Service Options
shall become vested solely on the date that is nine years and six months
following the Grant Date and solely if Executive remains in the continuous
employment of the Company or one of its Subsidiaries until such date and (b)
the Grantee exercises Special Options with respect to less than 7,500 Shares
and purchases the Shares covered by such exercise in accordance with Section 6
of this Agreement then, notwithstanding the provisions of Section 3(a)(i),
Service Options with respect to Shares equal to the same percentage of 15,000
as the Special Options exercised by Grantee bears to 7,500 shall become vested
as contemplated by Section 3(a)(i) and the remaining Service Options shall
become vested solely on the date that is nine years and six months following
the Grant Date and solely if Executive remains in the continued employment of
the Company or one of its Subsidiaries until such date.
(b) Performance Options. (i) Except as otherwise provided in this
Agreement (including Section 3(b)(ii) hereof), no portion of any Performance
Options shall vest or become exercisable (i) unless and until the Company shall
have achieved the Cumulative EBITDA Target and (ii) unless the Grantee shall
have been continuously employed by the Company or one of the Subsidiaries from
the Grant Date until the date as of which the Cumulative EBITDA Target is
achieved; provided that, if
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(x) the Grantee's employment is terminated by reason of an Extraordinary
Termination or (y)(i) the CD&R Fund and, if applicable, its Affiliates effect a
sale or other disposition of all of the Common Stock then held by the CD&R Fund
and its Affiliates to one or more persons other than any person who is an
Affiliate of the CD&R Fund and (ii) thereafter, the Grantee's employment is
terminated by the Company other than for Cause or by the Grantee for Good
Reason, then a proportionate share of any Performance Options that have not
vested and become exercisable on or prior to the date of such Extraordinary
Termination or other termination described in the foregoing clause (y)(ii),
whichever is applicable, shall vest and become exercisable as of such date.
Such proportionate share of Performance Options that shall become vested and
exercisable shall equal the product of (i) the percentage obtained by dividing
(x) the cumulative EBITDA achieved by the Company as of the last day of the
calendar quarter ending coincident with or immediately prior to the date of the
Extraordinary Termination or other termination, whichever is applicable, by (y)
the Cumulative EBITDA Target, multiplied by (ii) the total number of Shares
subject to the Performance Options. Any Performance Options held by the Grantee
as of the date of an Extraordinary Termination or other termination whichever
is applicable, that have not become vested and exercisable on or prior to such
date in accordance with this Section 3(b)(i) shall terminate and be canceled
immediately on such date. Notwithstanding the foregoing provisions of this
paragraph (b)(i), subject to the continuous employment of the Grantee with the
Company or one of the Subsidiaries, Performance Options shall vest and become
exercisable nine years and six months following the Grant Date, regardless of
whether the Cumulative EBITDA Target has been achieved.
(ii) If the Company delivers a Notice of Exercise to the Grantee
and, within the 60 day period after the delivery of such Notice of Exercise,
(a) the Grantee does not exercise any of the Special Options and purchase the
Shares covered thereby in accordance with Section 6 of this Agreement, then,
notwithstanding the provisions of Section 3(b)(i), all of the Performance
Options shall become vested solely on the date that is nine years and six
months following the Grant Date and solely if Executive remains in the
continuous employment of the Company or one of its Subsidiaries until such date
and (b) the Grantee exercises Special Options with respect to less than 7,500
Shares and purchases the Shares covered by such exercise in accordance with
Section 6 of this Agreement then, notwithstanding the provisions of Section
3(b)(i), Performance Options with respect to Shares equal to the same number of
Shares for which the Special Options were exercised by Grantee shall become
vested as contemplated by Section 3(b)(i) and the remaining Performance Options
shall become vested solely on the date that is nine years and six months
following the Grant Date and solely if Executive remains in the continued
employment of the Company or one of its Subsidiaries until such date.
(c) Special Options. The Special Options shall be fully vested at
all times. The Special Options shall be exercisable solely during the 60 day
period following the earlier of (x) the date, if any, that the Company delivers
a Notice of Exercise to the Grantee and (y) the fifth anniversary of the Grant
Date. The Company will deliver a Notice of Exercise to the Grantee (a) upon
receipt by the Company of a valuation of the Common Stock of the Company
provided by an independent valuation firm chosen by the Executive Committee
which indicates that the fair market value per share of Common Stock is equal
to or in excess of $100 per share and (b) concurrently with the offer
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by the Company to sell shares of Common Stock to any of its executives or key
employees at a purchase price equal to or in excess of $100 per share.
(d) Conditions. The Board may accelerate the vesting or
exercisability of any Option, all Options or any class of Options, at any time
and from time to time. Shares eligible for purchase may, subject to the
provisions hereof, thereafter be purchased, at any time and from time to time
on or after such anniversary until the date one day prior to the date on which
the Options terminate, provided that any such purchase shall be effected
pursuant to and subject to the provisions contained in the Management Stock
Subscription Agreement related to such Shares.
4. Termination of Options.
(a) Normal Termination Date. Unless an earlier termination date
shall occur as specified in subsection (b), the Options shall terminate and be
canceled on the applicable Normal Termination Date.
(b) Early Termination. (i) Service and Performance Options. If
the Grantee's employment is voluntarily or involuntarily terminated for any
reason, any Service and Performance Options held by the Grantee that have not
vested and become exercisable on or before the effective date of such
termination shall terminate and be canceled on such effective date. Subject to
the provisions of Section 5(c), all Service and Performance Options held by the
Grantee on the date of such termination that shall have become vested and
exercisable on or before the effective date of such termination shall remain
exercisable for whichever of the following periods is applicable, and if not
exercised within such period, shall terminate and be canceled upon the
expiration of such period: (i) if the Grantee's employment is terminated by
reason of an Extraordinary Termination, then any such vested and exercisable
Service and Performance Options shall remain exercisable solely until the first
to occur of (A) the one year anniversary of the Grantee's termination of
employment or (B) the Normal Termination Date and (ii) if the Grantee's
employment is terminated for any reason other than (x) an Extraordinary
Termination or (y) for Cause, then any such vested and exercisable Service and
Performance Options shall remain exercisable for a period of 60 days after the
earliest of (x) the expiration of the Second Purchase Period (as defined in
Section 5(c)(i) hereof), (y) the receipt by the Grantee of written notice that
the CD&R Fund does not intend to exercise its right to purchase the Options
pursuant to Section 5(c)(i) and (z) the Normal Termination Date.
(ii) Special Options. To the extent not exercised, all of the
Special Options shall terminate and be canceled on the earliest of (x) the 61st
day following the date, if any, a Notice of Exercise is delivered to the
Grantee, (y) the applicable Normal Termination Date and (z) subject to the
rights of the Company and the CD&R Fund to purchase the Special Options under
Section 5(c) hereof, the date of any termination of the Grantee's employment
with the Company and any Subsidiary that employs the Grantee.
(iii) Forfeiture Upon Termination for Cause. Notwithstanding
anything else contained in this Agreement, if the Grantee's employment is
terminated for Cause, then all Options (whether or
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not then vested or exercisable) shall terminate and be canceled immediately
upon such termination. Nothing in this Agreement shall be deemed to confer on
the Grantee any right to continue in the employ of the Company or any
Subsidiary, or to interfere with or limit in any way the right of the Company
or any Subsidiary to terminate such employment at any time.
5. Restrictions on Exercise; Non-Transferability of Options;
Repurchase of Options.
(a) Restrictions on Exercise. The Options may be exercised only
to the extent they have become vested and exercisable pursuant to Section 3 of
this Agreement and only with respect to full shares of Common Stock. No
fractional shares of Common Stock shall be issued. Notwithstanding any other
provision of this Agreement, the Options may not be exercised in whole or in
part, and no certificates representing Shares shall be delivered, (i) (A)
unless all requisite approvals and consents of any governmental authority of
any kind having jurisdiction over the exercise of the Options shall have been
secured, (B) unless the purchase of the Shares upon the exercise of the Options
shall be exempt from registration under applicable U.S. federal and state
securities laws, and applicable non-U.S. securities laws, or the Shares shall
have been registered under such laws, and (C) unless all applicable U.S.
federal, state and local and non-U.S. tax withholding requirements shall have
been satisfied or (ii) if such exercise would result in a violation of the
terms or provisions of or a default or an event of default under any of the
Financing Agreements. The Company shall use commercially reasonable efforts to
obtain the consents and approvals referred to in clause (i)(A) of the preceding
sentence, to satisfy the withholding requirements referred to in clause (i)(C)
of the preceding sentence and to obtain the consent of the parties to the
Financing Agreements referred to in clause (ii) of the preceding sentence so as
to permit the Options to be exercised.
(b) Non-Transferability of Options. Except as contemplated by
Section 5(c), the Options may be exercised only by the Grantee or by the
Grantee's estate. Except as contemplated by Section 5(c), the Options are not
assignable or transferable, in whole or in part, and may not, directly or
indirectly, be offered, transferred, sold, pledged, assigned, alienated,
hypothecated or otherwise disposed of or encumbered (including without
limitation by gift, operation of law or otherwise), except that the Service
Options and the Performance Options may be transferred by will or by the laws
of descent and distribution to the estate of the Grantee upon the Grantee's
death, provided that the deceased Grantee's beneficiary or the representative
of the Grantee's estate shall acknowledge and agree in writing, in a form
reasonably acceptable to the Company, to be bound by the provisions of this
Agreement and the Plan as if such beneficiary or the estate were the Grantee.
(c) Purchase of Certain Options on Termination of Employment.
(i) Termination of Employment. If the Grantee's
employment is terminated for any reason other than for Cause, the Company shall
have an option to purchase all or any portion of the Service Options and
Performance Options that have vested and become exercisable by the Grantee on
or prior to the effective date of termination of employment and all or any
portion of the Special Options (such Service Options, Performance Options and
Special Options collectively the "Covered Options") and shall have 30 days from
the date of the Grantee's termination of employment (such 30-
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day period being hereinafter referred to as the "First Purchase Period") during
which to give notice in writing to the Grantee (or, if the Grantee's employment
was terminated by the Grantee's death, the Grantee's estate) of its election to
exercise or not to exercise such right to purchase all or a portion of the
Covered Options. The Company hereby undertakes to use reasonable efforts to act
as promptly as practicable following such termination to make such election. If
the Company (i) fails to give notice that it intends to exercise its right to
purchase the Covered Options within the First Purchase Period, or (ii) chooses
to purchase none or only a portion of the Covered Options, by giving such
notice, the CD&R Fund shall have the right to purchase all or any portion of
the Covered Options not purchased by the Company, and shall have until the
expiration of the earlier of (x) 30 days following the end of the First
Purchase Period, or (y) 30 days from the date of receipt by the CD&R Fund of
written notice that the Company does not intend to exercise its right with
respect to all of the Covered Options (such 30-day period being hereinafter
referred to as the "Second Purchase Period"), to give notice in writing to the
Grantee (or the Grantee's estate) of the CD&R Fund's exercise of its right to
purchase all or any portion of such Covered Options. If the rights of the
Company and the CD&R Fund to purchase all of the Covered Options granted in
this subsection are not fully exercised as provided herein other than as a
result of Section 10 hereof, the Grantee (or the Grantee's estate) shall be
entitled to retain any such Covered Options not so purchased that are Service
Options or Performance Options, subject to all of the provisions of this
Agreement (including, without limitation, Section 4(b)(i)) and any such Covered
Options that are Special Options shall immediately terminate and be canceled as
provided in Section 4(b)(ii).
(ii) Purchase Price, etc. All purchases of any Covered
Options pursuant to this Section 5(c) by the Company or the CD&R Fund shall be
for a purchase price and in the manner prescribed by Sections 5(f), (g) and
(h).
(d) Notice of Termination. The Company shall give written notice
of any termination of the Grantee's employment to the CD&R Fund, except that if
such termination (if other than as a result of death) is by the Grantee, the
Grantee shall give written notice of such termination to the Company and the
Company shall give written notice of such termination to the CD&R Fund.
(e) Public Offering. In the event that a Public Offering has been
consummated, neither the Company nor the CD&R Fund shall have any rights to
purchase the Covered Options pursuant to Section 5(c).
(f) Purchase Price. Subject to Section 10(c) hereof, the purchase
price to be paid to the Grantee (or the Grantee's estate) for the Covered
Options purchased pursuant to Section 5(c) shall be equal to the excess, if
any, of (i) the Fair Market Value of the Shares which may be purchased upon
exercise of such Covered Options as of the effective date of the termination of
employment that gives rise to the right of the Company and the CD&R Fund to
purchase such Covered Options over (ii) the aggregate Option Price of such
Covered Options.
(g) Payment. Subject to Section 10 hereof, the completion of a
purchase pursuant to this Section 5 shall take place at the principal office of
the Company on the tenth business day
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following the receipt by the Grantee (or the Grantee's estate) of the CD&R
Fund's or the Company's notice of its exercise of the right to purchase the
Covered Options pursuant to Section 5(c). The purchase price shall be paid by
delivery to the Grantee (or the Grantee's estate) of a check for the purchase
price payable to the order of the Grantee (or the Grantee's estate), against
delivery of such instruments as the Company may reasonably request, signed by
the Grantee (or the Grantee's estate), free and clear of all security
interests, liens, claims, encumbrances, charges, options, restrictions on
transfer, proxies and voting and other agreements of whatever nature.
(h) Application of the Purchase Price to Certain Loans. The
Grantee agrees that the Company and the CD&R Fund shall be entitled to apply
any amounts to be paid by the Company or the CD&R Fund, as the case may be, to
purchase the Covered Options pursuant to this Section 5 to discharge any
indebtedness of the Grantee to the Company or any Subsidiary, or indebtedness
that is guaranteed by the Company or any Subsidiary, including, but not limited
to, any indebtedness of the Grantee incurred to purchase any shares of Common
Stock.
(i) Withholding. Whenever Shares are to be issued pursuant to the
Options, the Company may require the recipient of the Shares to remit to the
Company an amount sufficient to satisfy any applicable U.S. federal, state and
local and non-U.S. tax withholding requirements. In the event any cash is paid
to the Grantee or the Grantee's estate or beneficiary pursuant to this Section
5 or Section 9, the Company shall have the right to withhold an amount from
such payment sufficient to satisfy any applicable U.S. federal, state and local
and non-U.S. tax withholding requirements. If shares of Common Stock are traded
on a national securities exchange or bid and ask prices for shares of Common
Stock are quoted on the NASDAQ, the Company may, if requested by the Grantee,
withhold shares of Common Stock to satisfy the minimum applicable withholding
requirements, subject to the provisions of the Plan and any rules adopted by
the Board regarding compliance with applicable law, including, but not limited
to, Section 16(b) of the Exchange Act.
6. Manner of Exercise. To the extent that any of the Options
shall have become and remain vested and exercisable as provided in Section 3
and subject to such reasonable administrative regulations as the Board may have
adopted, such Options may be exercised, in whole or in part, by notice to the
Secretary of the Company in writing given on the date as of which the Grantee
will so exercise the Options (the "Exercise Date"), specifying the number of
Shares with respect to which the Options are being exercised (the "Exercise
Shares"), subject to the execution by the Company and the Grantee of a
Management Stock Subscription Agreement substantially in the form attached to
the Plan as Exhibit A ("Management Stock Subscription Agreement"), or in such
other form as may be agreed upon by the Company and the Grantee, such
Management Stock Subscription Agreement to contain (unless a Public Offering
shall have occurred prior to the Exercise Date) provisions corresponding to
Section 5(c) hereof, and the delivery to the Company by the Grantee, on or
within five days following the Exercise Date, in accordance with the Management
Stock Subscription Agreement, full payment for the Exercise Shares in United
States dollars in cash, or cash equivalents satisfactory to the Company, and in
an amount equal to the product of the number of Exercise Shares, multiplied by
$100 (the "Exercise Price"). Upon execution by the Company and the Grantee of
the Management Stock Subscription Agreement and delivery to the Company by the
Grantee of
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the Exercise Price, the Company shall deliver to the Grantee a certificate or
certificates representing the Exercise Shares, registered in the name of the
Grantee and bearing appropriate legends as provided in Section 7(b) hereof. If
shares of Common Stock are traded on a U.S. national securities exchange or bid
and ask prices for shares of Common Stock are quoted over NASDAQ, the Grantee
may, in lieu of cash, tender shares of Common Stock that have been owned by the
Grantee for at least six months, having a Fair Market Value on the Exercise
Date equal to the Exercise Price or may deliver a combination of cash and such
shares of Common Stock having a Fair Market Value equal to the difference
between the Exercise Price and the amount of such cash as payment of the
Exercise Price, subject to such rules and regulations as may be adopted by the
Board to provide for the compliance of such payment procedure with applicable
law, including Section 16(b) of the Exchange Act. The Company may require the
Grantee to furnish or execute such other documents as the Company shall
reasonably deem necessary (i) to evidence such exercise, (ii) to determine
whether registration is then required under the Securities Act and (iii) to
comply with or satisfy the requirements of the Securities Act, applicable state
or non-U.S. securities laws or any other law.
7. Grantee's Representations, Warranties and Covenants.
(a) Investment Intention. The Grantee represents and warrants
that the Options have been, and any Exercise Shares will be, acquired by the
Grantee solely for the Grantee's own account for investment and not with a view
to or for sale in connection with any distribution thereof. The Grantee agrees
that the Grantee will not, directly or indirectly, offer, transfer, sell,
pledge, hypothecate or otherwise dispose of all or any of the Options or any of
the Exercise Shares (or solicit any offers to buy, purchase or otherwise
acquire or take a pledge of all or any of the Options or any of the Exercise
Shares), except in compliance with the Securities Act and the rules and
regulations of the Commission thereunder, and in compliance with applicable
state securities or "blue sky" laws and non-U.S. securities laws. The Grantee
further understands, acknowledges and agrees that none of the Exercise Shares
may be transferred, sold, pledged, hypothecated or otherwise disposed of unless
the provisions of the related Management Stock Subscription Agreement shall
have been complied with or have expired.
(b) Legends. The Grantee acknowledges that any certificate
representing the Exercise Shares shall bear an appropriate legend, which will
include, without limitation, the following language:
"THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE
PROVISIONS OF A MANAGEMENT STOCK SUBSCRIPTION AGREEMENT, DATED AS OF
_______ __, 19___, AND NEITHER THIS CERTIFICATE NOR THE SHARES
REPRESENTED BY IT ARE ASSIGNABLE OR OTHERWISE TRANSFERABLE EXCEPT IN
ACCORDANCE WITH THE PROVISIONS OF SUCH MANAGEMENT STOCK SUBSCRIPTION
AGREEMENT, A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF THE
COMPANY. THE SHARES REPRESENTED BY THIS CERTIFICATE ARE ENTITLED TO
CERTAIN OF THE BENEFITS OF AND ARE BOUND BY CERTAIN OF THE OBLIGATIONS
SET
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FORTH IN A REGISTRATION AND PARTICIPATION AGREEMENT, DATED AS OF MARCH
27, 1996, AMONG THE COMPANY AND CERTAIN STOCKHOLDERS OF THE COMPANY, A
COPY OF WHICH IS ON FILE WITH THE SECRETARY OF THE COMPANY."
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR QUALIFIED UNDER ANY STATE OR NON-U.S.
SECURITIES LAWS AND MAY NOT BE TRANSFERRED, SOLD, PLEDGED,
HYPOTHECATED OR OTHERWISE DISPOSED OF UNLESS (i) (A) SUCH DISPOSITION
IS PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, (B) THE HOLDER HEREOF SHALL HAVE
DELIVERED TO THE COMPANY AN OPINION OF COUNSEL, WHICH OPINION AND
COUNSEL SHALL BE REASONABLY SATISFACTORY TO THE COMPANY, TO THE EFFECT
THAT SUCH DISPOSITION IS EXEMPT FROM THE PROVISIONS OF SECTION 5 OF
SUCH ACT OR (C) A NO-ACTION LETTER FROM THE SECURITIES AND EXCHANGE
COMMISSION, REASONABLY SATISFACTORY TO COUNSEL FOR THE COMPANY, SHALL
HAVE BEEN OBTAINED WITH RESPECT TO SUCH DISPOSITION AND (ii) SUCH
DISPOSITION IS PURSUANT TO REGISTRATION UNDER ANY APPLICABLE STATE AND
NON-U.S. SECURITIES LAWS OR AN EXEMPTION THEREFROM."
(c) Securities Law Matters. The Grantee acknowledges receipt of
advice from the Company that (i) the Exercise Shares have not been registered
under the Securities Act or qualified under any state securities or "blue sky"
or non-U.S. securities laws, (ii) it is not anticipated that there will be any
public market for the Exercise Shares, (iii) the Exercise Shares must be held
indefinitely and the Grantee must continue to bear the economic risk of the
investment in the Exercise Shares unless the Exercise Shares are subsequently
registered under the Securities Act and such state laws or an exemption from
registration is available, (iv) Rule 144 is not presently available with
respect to sales of securities of the Company and the Company has made no
covenant to make Rule 144 available, (v) when and if the Exercise Shares may be
disposed of without registration in reliance upon Rule 144, such disposition
can be made only in limited amounts in accordance with the terms and conditions
of such Rule, (vi) the Company does not plan to file reports with the
Commission or make public information concerning the Company available unless
required to do so by law or the terms of its Financing Agreements, (vii) if the
exemption afforded by Rule 144 is not available, sales of the Exercise Shares
may be difficult to effect because of the absence of public information
concerning the Company, (viii) a restrictive legend in the form heretofore set
forth shall be placed on the certificates representing the Exercise Shares and
(ix) a notation shall be made in the appropriate records of the Company
indicating that the Exercise Shares are subject to restrictions on transfer set
forth in this Agreement and, if the Company should in the future engage the
services of a stock transfer agent, appropriate stop-transfer restrictions will
be issued to such transfer agent with respect to the Exercise Shares.
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(d) Compliance with Rule 144. If any of the Exercise Shares are
to be disposed of in accordance with Rule 144, the Grantee shall transmit to
the Company an executed copy of Form 144 (if required by Rule 144) no later
than the time such form is required to be transmitted to the Commission for
filing and such other documentation as the Company may reasonably require to
assure compliance with Rule 144 in connection with such disposition.
(e) Ability to Bear Risk. The Grantee covenants that the Grantee
will not exercise all or any of the Options unless (i) the financial situation
of the Grantee is such that the Grantee can afford to bear the economic risk of
holding the Exercise Shares for an indefinite period and (ii) the Grantee can
afford to suffer the complete loss of the Grantee's investment in the Exercise
Shares.
(f) Registration; Restrictions on Sale upon Public Offering. The
Grantee acknowledges and agrees that in respect of any Exercise Shares
purchased upon exercise of all or any of the Options, the Grantee shall be
entitled to the rights and subject to the obligations created under the
Registration and Participation Agreement, dated as of March 27, 1996, among the
Company and certain stockholders of the Company, as the same may be amended,
modified or supplemented from time to time (the "Registration and Participation
Agreement"), to the extent set forth therein. The Grantee agrees that, in the
event that the Company files a registration statement under the Securities Act
with respect to any underwritten public offering of any shares of its capital
stock, the Grantee will not effect any public sale or distribution of any
shares of the Common Stock (other than as part of such public offering),
including but not limited to, pursuant to Rule 144 or Rule 144A under the
Securities Act, during the 20 days prior to and the 180 days after the
effective date of any such registration statement. The Grantee further
understands and acknowledges that any sale, transfer or other disposition of
the Exercise Shares by him following a public offering will be subject to
compliance with, and may be limited under, the federal securities laws and/or
state "blue sky" and/or Non-U.S. securities laws.
(g) Section 83(b) Election. The Grantee agrees that, within 20
days of any Exercise Date that occurs prior to a Public Offering, the Grantee
shall give notice to the Company in the event the Grantee has made or intends
to make an election pursuant to Section 83(b) of the Internal Revenue Code of
1986, as amended, with respect to the Exercise Shares purchased on such date,
and acknowledges that the Grantee will be solely responsible for any and all
tax liabilities payable by the Grantee in connection with the Grantee's receipt
of the Exercise Shares or attributable to the Grantee's making or failing to
make such an election.
8. Representations and Warranties of the Company. The Company
represents and warrants to the Grantee that (a) the Company has been duly
incorporated and is an existing corporation in good standing under the laws of
the State of Delaware, (b) this Agreement has been duly authorized, executed
and delivered by the Company and constitutes a valid and legally binding
obligation of the Company enforceable against the Company in accordance with
its terms and (c) the Exercise Shares, when issued, delivered and paid for,
upon exercise of the Options in accordance with the terms hereof and the
Management Stock Subscription Agreement, will be duly authorized,
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validly issued, fully paid and nonassessable, and free and clear of any liens
or encumbrances other than those created pursuant to this Agreement, the
Management Stock Subscription Agreement or otherwise in connection with the
transactions contemplated hereby.
9. Change in Control.
(a) Service Options, Vested Performance Options and Special
Options. Subject to Section 9(d), in the event of a Change in Control, (x) each
then outstanding Service Option and Special Option (regardless of whether such
Service Option or Special Option is at such time otherwise exercisable) shall
be canceled in exchange for a payment in cash of an amount equal to the product
of (i) the excess, if any, of the Change in Control Price over the Option Price
therefor, multiplied by (ii) the aggregate number of Shares covered by such
Service Options and Special Options, and (y) if the Performance Options shall
have become vested and exercisable in accordance with Section 3(b) hereof prior
to the Change in Control, each then outstanding Performance Option shall be
canceled in exchange for a payment in cash of an amount equal to the product of
(i) the excess, if any, of the Change in Control Price over the Option Price
therefor, multiplied by (ii) the aggregate number of Shares covered by such
Performance Options.
(b) Performance Options. Subject to Section 9(d), in the event of
a Change of Control prior to the date as of which the Performance Options shall
have become vested and exercisable in accordance with Section 3(b) hereof, a
proportionate share (determined in accordance with the immediately succeeding
sentence) of each then outstanding Performance Option shall be canceled in
exchange for a payment in cash of an amount equal to the product of (i) the
excess, if any, of the Change in Control Price over the Option Price,
multiplied by (ii) the number of Shares covered by such canceled proportionate
share of the Performance Options. The proportionate share of the Performance
Options that shall be so canceled shall be equal to the product of (A) the
percentage obtained by dividing (x) the cumulative EBITDA achieved by the
Company as of the date of the Change in Control by (y) the Cumulative EBITDA
Target multiplied by (B) the total number of Shares subject to then outstanding
Performance Options.
(c) Timing of Option Cancellation Payments. The cash payments
described in paragraphs (a) and (b) above, shall be payable in full, as soon as
reasonably practicable, but in no event later than, 30 days following the
Change in Control.
(d) Alternative Options. Notwithstanding Sections 9(a), 9(b) and
9 (c) hereof, no cash settlement or other payment shall be made with respect to
any Option in the event that the transaction constituting the Change in Control
is to be accounted for using the "pooling of interest" method of accounting. In
such event, the portion of each Option then held by the Grantee that, but for
the provisions of this paragraph (d), would have been settled for cash pursuant
to paragraphs (a) or (b) of this Section 9 in connection with the Change in
Control, shall become fully vested immediately prior to the consummation of
such transaction and each such Grantee shall have the right, subject to
compliance with all applicable securities laws, to (i) exercise such portion of
the Options in connection with the Change in Control or (ii) provided such
opportunity is made available by the
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New Employer, exchange such portion of the Options for fully exercisable
options to purchase common stock of the New Employer having substantially
equivalent economic value to the Options being exchanged therefor (determined
at the time of the Change in Control).
10. Certain Restrictions on Repurchases
(a) Financing Agreements, etc. Notwithstanding any other
provision of this Agreement, the Company shall not be obligated or permitted to
purchase any Covered Options from the Grantee if (i) such purchase would result
in a violation of the terms or provisions of, or result in a default or an
event of default under, (A) the Credit Agreement, (B) the Equipment Packaging
Machinery Credit Agreement, dated as of March 21, 1996 (the "PMC Agreement"),
among Riverwood International Machinery, Inc., Chemical Bank, as administrative
agent, and the lenders party thereto from time to time, (C) the Indenture,
dated as of March 27, 1996, among Parent, as issuer, the Company and Newco, as
guarantors, and Fleet National Bank of Connecticut, as trustee (the "Senior
Note Indenture"), (D) the Indenture, dated as of March 27, 1996, among Parent,
as issuer, the Company and Newco, as guarantors, and Fleet National Bank of
Massachusetts, as trustee (together with the Senior Note Indenture, the
"Indentures"), or (E) any other guarantee, financing or security agreement or
document entered into (I) by Riverwood or any of its subsidiaries prior to the
Closing Date that remains outstanding in any part on or after the Closing Date,
(II) by the Company or any of its subsidiaries in connection with the
Acquisition, or the financing of the Acquisition, or (III) otherwise from time
to time in connection with the operations of the Company, Riverwood or any of
the other Subsidiaries (the Credit Agreement, the Indentures and such other
agreements and documents, as each may be amended, modified or supplemented from
time to time, are referred to herein as the "Financing Agreements"), in each
case as the same may be amended, modified or supplemented from time to time,
(ii) such purchase would violate any of the terms or provisions of the
Certificate of Incorporation of the Company or (iii) the Company has no funds
legally available therefor under the General Corporation Law of the State of
Delaware.
(b) Delay of Purchase. In the event that a purchase of Covered
Options by the Company otherwise permitted under Section 5(c) is prevented
solely by the terms of Section 10(a), (i) such purchase will be postponed and
will take place without the application of further conditions or impediments
(other than as set forth in Section 5 hereof or in this Section 10) at the
first opportunity thereafter when the Company has funds legally available
therefor and when such purchase will not result in any default, event of
default or violation under any of the Financing Agreements or in a violation of
any term or provision of the Certificate of Incorporation of the Company and
(ii) such purchase right shall rank against other similar purchase rights with
respect to shares of Common Stock or options in respect thereof according to
priority in time of the effective date of the event giving rise to any such
purchase right, provided that any such purchase right as to which a common date
determines priority shall be of equal priority and shall share pro rata in any
purchase payments made pursuant to clause (i) above.
(c) Purchase Price Adjustment. In the event that a purchase of
the Covered Options from the Grantee is delayed pursuant to this Section 10,
the purchase price for such Covered Options when
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the purchase of such Covered Options eventually takes place as contemplated by
Section 10(b) shall be the sum of (a) the purchase price of such Covered
Options determined in accordance with Section 5(f) at the time that the
purchase of such Covered Options would have occurred but for the operation of
this Section 10, plus (b) an amount equal to interest on such purchase price
for the period from the date on which the completion of the purchase would have
taken place but for the operation of this Section 10 to the date on which such
purchase actually takes place (the "Delay Period"), at an annual rate of
interest equal to the weighted average cost of the Company's bank indebtedness
outstanding during the Delay Period.
11. No Rights as Stockholder. The Grantee shall have no voting or
other rights as a stockholder of the Company with respect to any Shares covered
by the Options until the exercise of the Options and the issuance of a
certificate or certificates to the Grantee for such Shares. No adjustment shall
be made for dividends or other rights for which the record date is prior to the
issuance of such certificate or certificates.
12. Capital Adjustments. The number and price of the Shares
covered by the Options shall be proportionately adjusted to reflect any stock
dividend, stock split or share combination of the Common Stock or any
recapitalization of the Company. Subject to any required action by the
stockholders of the Company and Section 9 hereof, in any merger, consolidation,
reorganization, exchange of shares, liquidation or dissolution, the Options
shall pertain to the securities and other property, if any, that a holder of
the number of shares of Common Stock covered by the Options would have been
entitled to receive in connection with such event.
13. Miscellaneous.
(a) Notices. All notices and other communications required or
permitted to be given under this Agreement shall be in writing and shall be
deemed to have been given if delivered personally or sent by certified or
express mail, return receipt requested, postage prepaid, or by any recognized
international equivalent of such delivery, to the Company, the CD&R Fund or the
Grantee, as the case may be, at the following addresses or to such other
address as the Company, the CD&R Fund or the Grantee, as the case may be, shall
specify by notice to the others:
(i) if to the Company, to it at:
Riverwood Holding, Inc.
Suite 1200
0000 Xxxxx Xxxxxx Xxxxxx
P.O. Box 8985
Wilmington, Delaware 19899
Attention: General Counsel
(ii) if to the Grantee, to the Grantee at the address set forth
on the signature page hereof.
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(iii) if to the CD&R Fund, to:
Xxxxxxx, Dubilier & Rice Fund V
Limited Partnership
Xxxxxxxxxx Xxxxx, Xxxxx 000
0000 Xxxxx Xxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxx, III
All such notices and communications shall be deemed to have been received on
the date of delivery if delivered personally or on the third business day after
the mailing thereof. Copies of any notice or other communication given under
this Agreement shall also be given to:
Xxxxxxx, Dubilier & Rice, Inc.
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxxx
and
Debevoise & Xxxxxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxxxxx, Esq.
The CD&R Fund also shall be given a copy of any notice or other communication
between the Grantee and the Company under this Agreement at its address as set
forth above.
(b) Binding Effect; Benefits. This Agreement shall be binding
upon and inure to the benefit of the parties to this Agreement and their
respective successors and assigns. Except as provided in Section 5, nothing in
this Agreement, express or implied, is intended or shall be construed to give
any person other than the parties to this Agreement or their respective
successors or assigns any legal or equitable right, remedy or claim under or in
respect of any agreement or any provision contained herein.
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(c) Waiver; Amendment.
(i) Waiver. Any party hereto or beneficiary hereof may
by written notice to the other parties (A) extend the time for the
performance of any of the obligations or other actions of the other
parties under this Agreement, (B) waive compliance with any of the
conditions or covenants of the other parties contained in this
Agreement and (C) waive or modify performance of any of the
obligations of the other parties under this Agreement, provided that
any waiver of the provisions of Section 5 must be consented to in
writing by the CD&R Fund. Except as provided in the preceding
sentence, no action taken pursuant to this Agreement, including,
without limitation, any investigation by or on behalf of any party or
beneficiary, shall be deemed to constitute a waiver by the party or
beneficiary taking such action of compliance with any representations,
warranties, covenants or agreements contained herein. The waiver by
any party hereto or beneficiary hereof of a breach of any provision of
this Agreement shall not operate or be construed as a waiver of any
preceding or succeeding breach and no failure by a party or
beneficiary to exercise any right or privilege hereunder shall be
deemed a waiver of such party's or beneficiary's rights or privileges
hereunder or shall be deemed a waiver of such party's or beneficiary's
rights to exercise the same at any subsequent time or times hereunder.
(ii) Amendment. This Agreement may not be amended,
modified or supplemented orally, but only by a written instrument
executed by the Grantee and the Company, and (in the case of any
amendment, modification or supplement that adversely affects the
rights of the CD&R Fund hereunder) consented to by the CD&R Fund in
writing. The parties hereto acknowledge that the Company's consent to
an amendment or modification of this Agreement may be subject to the
terms and provisions of the Financing Agreements.
(d) Assignability. Neither this Agreement nor any right,
remedy, obligation or liability arising hereunder or by reason hereof shall be
assignable by the Company or the Grantee without the prior written consent of
the other parties and the CD&R Fund. The CD&R Fund may assign from time to time
all or any portion of its rights under Section 5 to one or more persons or
other entities designated by it.
(e) Applicable Law. THIS AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK, EXCEPT TO
THE EXTENT THAT THE CORPORATE LAW OF THE STATE OF DELAWARE SPECIFICALLY AND
MANDATORILY APPLIES.
(f) Section and Other Headings, etc. The section and
other headings contained in this Agreement are for reference purposes only and
shall not affect the meaning or interpretation of this Agreement.
(g) Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed to be an original and all
of which together shall constitute one and the same instrument.
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(h) Delegation by the Board. All of the powers, duties
and responsibilities of the Board specified in this Agreement may, to the full
extent permitted by applicable law, be exercised and performed by any duly
constituted committee thereof to the extent authorized by the Board to exercise
and perform such powers, duties and responsibilities.
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IN WITNESS WHEREOF, the Company and the Grantee have executed this
Agreement as of the date first above written.
RIVERWOOD HOLDING, INC.
By: /s/ Xxxxxxx X. Xxxxxxxx
----------------------------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: President and Chief Executive Officer
THE GRANTEE:
By: /s/ Xxxxxx X. Xxxxxx
----------------------------------------------
Name: Xxxxxx X. Xxxxxx
Address of the Grantee:
Item A
------
Total Number of Shares
of Common Stock for
the Purchase of Which
Service Options Have Been
Granted: 15,000 Shares
Item B
------
Total Number of Shares
of Common Stock for
the Purchase of Which
Performance Options Have Been
Granted: 7,500 Shares
Item C
------
Total Number of Shares
of Common Stock for
the Purchase of Which
Special Options Have Been
Granted: 7,500 Shares
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Exhibit A
MANAGEMENT STOCK SUBSCRIPTION AGREEMENT
MANAGEMENT STOCK SUBSCRIPTION AGREEMENT, dated as of __________ __,
199_, between Riverwood Holding, Inc., a Delaware corporation (the "Company"),
and the Purchaser whose name appears on the signature page hereof (the
"Purchaser").
W I T N E S S E T H:
WHEREAS, pursuant to the Company's Stock Incentive Plan (the "Plan"),
the Board of Directors of the Company (the "Board") granted to the Purchaser
certain options (the "Options") to purchase shares (each, a "Share" and,
collectively, the "Shares") of the Company's Class A Common Stock, par value
$.01 per share (the "Class A Common Stock"), at an exercise price of $___ per
Share;
WHEREAS, the Purchaser desires to exercise the Options and purchase
the Shares;
WHEREAS, in connection with the Purchaser's exercise of the Options
and purchase of the Shares, the Company desires to enter into an agreement with
the Purchaser evidencing the sale of the Shares to the Purchaser and setting
forth the terms and conditions thereof.
NOW, THEREFORE, to implement the foregoing and in consideration of the
mutual promises, covenants and agreements contained herein, the parties hereto
hereby agree as follows:
1. Purchase and Sale of Common Stock.
(a) Purchase of Common Stock. Subject to all of the terms and
conditions of this Agreement, the Purchaser hereby subscribes for and shall
purchase, and the Company shall sell to the Purchaser, the Shares, at a
purchase price of $___ per Share, at the Closing provided for in Section 2(a)
hereof. Notwithstanding anything in this Agreement to the contrary, the Company
shall have no obligation to sell any Class A Common Stock (i) to (x) any person
who will not be an employee of the Company, Riverwood or a Subsidiary (as
defined in Section 6(c)) immediately following the Closing at which such Class
A Common Stock is to be sold or (y) any person who is a resident of a
jurisdiction in which the sale of Class A Common Stock to such person would
constitute a violation of the securities, "blue sky" or other laws of such
jurisdiction or (ii) prior to the time the Registration Statement is effective.
(b) Consideration. Subject to all of the terms and conditions of
this Agreement, the Purchaser shall deliver to the Company at the Closing
referred to in Section 2(a) hereof, immediately available funds in the amount
of the aggregate purchase price set forth on the signature page hereof.
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2. Closing.
(a) Time and Place. Except as otherwise mutually agreed by the
Company and the Purchaser, the closing (the "Closing") of the transaction
contemplated by this Agreement shall be held at the offices of Debevoise &
Xxxxxxxx, 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx at 10:00 a.m. (New York time) on
or about ___ __,199_.
(b) Delivery by the Company. At the Closing, the Company shall
deliver to the Purchaser a stock certificate registered in such Purchaser's
name and representing the Shares, which certificate shall bear the legends set
forth in Section 3(b) hereof.
(c) Delivery by the Purchaser. At the Closing, the Purchaser
shall deliver to the Company the consideration referred to in Section 1(b)
hereof.
3. Purchaser's Representations, Warranties and Covenants.
(a) Investment Intention. The Purchaser represents and warrants
that the Purchaser is acquiring the Shares solely for the Purchaser's own
account for investment and not with a view to or for sale in connection with
any distribution thereof. The Purchaser agrees that the Purchaser will not,
directly or indirectly, offer, transfer, sell, pledge, hypothecate or otherwise
dispose of any of the Shares (or solicit any offers to buy, purchase or
otherwise acquire or take a pledge of any Shares), except in compliance with
the Securities Act of 1933, as amended (the "Securities Act"), and the rules
and regulations of the Securities and Exchange Commission (the "Commission")
thereunder, and in compliance with applicable state securities or "blue sky"
laws and foreign securities laws, if any. The Purchaser further understands,
acknowledges and agrees that none of the Shares may be transferred, sold,
pledged, hypothecated or otherwise disposed of (i) unless the provisions of
Sections 4 through 8 hereof, inclusive, shall have been complied with or have
expired, (ii) unless (A) such disposition is pursuant to an effective
registration statement under the Securities Act, (B) the Purchaser shall have
delivered to the Company an opinion of counsel, which opinion and counsel shall
be reasonably satisfactory to the Company, to the effect that the Purchaser is
not an "affiliate" of the Company within the meaning of Rule 405 promulgated
under the Securities Act ("Rule 405") or, if the Purchaser is an affiliate
within the meaning of Rule 405, to the effect that such disposition is exempt
from the provisions of Section 5 of the Securities Act or (C) a no-action
letter from the Commission, reasonably satisfactory to the Company, shall have
been obtained with respect to such disposition and (iii) unless such
disposition is pursuant to registration under any applicable state or foreign
securities laws or an exemption therefrom.
(b) Legends. The Purchaser acknowledges that the certificate or
certificates representing the Shares shall bear the following legends:
"THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE
PROVISIONS OF A MANAGEMENT STOCK SUBSCRIPTION AGREEMENT, DATED AS OF
____ __, 199_, AND NEITHER THIS CERTIFICATE NOR THE
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SHARES REPRESENTED BY IT ARE ASSIGNABLE OR OTHERWISE TRANSFERABLE
EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF SUCH MANAGEMENT STOCK
SUBSCRIPTION AGREEMENT, A COPY OF WHICH IS ON FILE WITH THE SECRETARY
OF THE COMPANY. THE SHARES REPRESENTED BY THIS CERTIFICATE ARE
ENTITLED TO THE BENEFITS OF AND ARE BOUND BY THE OBLIGATIONS SET FORTH
IN A REGISTRATION AND PARTICIPATION AGREEMENT, DATED AS OF MARCH 27,
1996, AMONG THE COMPANY AND CERTAIN STOCKHOLDERS OF THE COMPANY, A
COPY OF WHICH IS ON FILE WITH THE SECRETARY OF THE COMPANY."
"THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE TRANSFERRED,
SOLD, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF UNLESS (i) THE
PROVISIONS OF SECTIONS 4 THROUGH 8 OF THE MANAGEMENT STOCK
SUBSCRIPTION AGREEMENT, INCLUSIVE, SHALL HAVE BEEN COMPLIED WITH OR
HAVE EXPIRED, (ii) UNLESS (A) SUCH DISPOSITION IS PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, (B) THE HOLDER HEREOF SHALL HAVE DELIVERED TO THE COMPANY AN
OPINION OF COUNSEL, WHICH OPINION AND COUNSEL SHALL BE REASONABLY
SATISFACTORY TO THE COMPANY, TO THE EFFECT THAT THE HOLDER IS NOT AN
AFFILIATE OF THE COMPANY OR, IF THE HOLDER IS AN AFFILIATE, TO THE
EFFECT THAT SUCH DISPOSITION IS EXEMPT FROM THE PROVISIONS OF SECTION
5 OF SUCH ACT OR (C) A NO-ACTION LETTER FROM THE SECURITIES AND
EXCHANGE COMMISSION, REASONABLY SATISFACTORY TO COUNSEL FOR THE
COMPANY, SHALL HAVE BEEN OBTAINED WITH RESPECT TO SUCH DISPOSITION AND
(iii) SUCH DISPOSITION IS PURSUANT TO REGISTRATION UNDER ANY
APPLICABLE STATE SECURITIES LAWS OR AN EXEMPTION THEREFROM. IF THE
PURCHASER IS A CITIZEN OR RESIDENT OF ANY JURISDICTION OTHER THAN THE
UNITED STATES, OR THE PURCHASER DESIRES TO EFFECT ANY TRANSFER IN ANY
SUCH JURISDICTION, THEN, IN ADDITION TO THE FOREGOING, COUNSEL FOR THE
PURCHASER (WHICH COUNSEL SHALL BE REASONABLY SATISFACTORY TO THE
COMPANY) SHALL HAVE FURNISHED THE COMPANY WITH AN OPINION OR OTHER
ADVICE REASONABLY SATISFACTORY TO THE COMPANY TO THE EFFECT THAT SUCH
TRANSFER WILL COMPLY WITH THE SECURITIES LAWS OF SUCH JURISDICTION."
(c) Securities Law Matters. The Purchaser acknowledges receipt of
advice from the Company that (i) the offer and sale of the Shares hereby have
been registered on Form S-8 under the Securities Act but have not been
qualified under state securities or "blue sky" laws, (ii) the resale of the
Shares by persons who are affiliates of the Company, within the meaning of Rule
405, has not been registered under the Securities Act or qualified under any
state securities or "blue sky" laws, (iii) it is not anticipated that there
will be any public market for the Shares, (iv) the Shares must be
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held indefinitely and the Purchaser must continue to bear the economic risk of
the investment in the Shares unless there is a public market for the Shares
and, to the extent required under the Securities Act, the Shares are registered
for resale under the Securities Act and such state laws or an exemption from
registration is available, (v) Rule 144 promulgated under the Securities Act
("Rule 144") is not presently available with respect to the sales of any
securities of the Company, and the Company has made no covenant to make Rule
144 available, (vi) when and if the Shares may be disposed of without
registration in reliance upon Rule 144, such disposition by an affiliate of the
Company, within the meaning of Rule 405, can be made only in limited amounts in
accordance with the terms and conditions of Rule 144, (vii) the Company does
not plan to file reports with the Commission or make public information
concerning the Company available unless required to do so by law or the terms
of its Financing Agreements (as defined below), (viii) if the exemption
afforded by Rule 144 is not available, sales of the Shares may be difficult to
effect because of the absence of public information concerning the Company,
(ix) a restrictive legend in the form heretofore set forth shall be placed on
the certificates representing the Shares and (x) a notation shall be made in
the appropriate records of the Company indicating that the Shares are subject
to restrictions on transfer set forth in this Agreement and, if the Company
should in the future engage the services of a stock transfer agent, appropriate
stop-transfer restrictions will be issued to such transfer agent with respect
to the Shares.
(d) Compliance with Rule 144. If any of the Shares are to be
disposed of in accordance with Rule 144, the Purchaser shall transmit to the
Company an executed copy of Form 144 (if required by Rule 144) no later than
the time such form is required to be transmitted to the Commission for filing
and such other documentation as the Company may reasonably require to assure
compliance with Rule 144 in connection with such disposition.
(e) Ability to Bear Risk. The Purchaser represents and warrants
that (i) the financial situation of the Purchaser is such that the Purchaser
can afford to bear the economic risk of holding the Shares for an indefinite
period and (ii) the Purchaser can afford to suffer the complete loss of the
Purchaser's investment in the Shares.
(f) Access to Information. The Purchaser represents and warrants
that (i) the Purchaser has carefully reviewed the Registration Statement and
the other materials furnished to the Purchaser in connection with the
transaction contemplated hereby, (ii) the Purchaser has been granted the
opportunity to ask questions of, and receive answers from, representatives of
the Company concerning the terms and conditions of the purchase of the Shares
and to obtain any additional information that the Purchaser deems necessary to
verify the accuracy of the information contained in such materials and (iii)
the Purchaser is, and will be at the time of the Closing, an officer or key
employee of the Company, Riverwood or a Subsidiary.
(g) Restrictions on Sale upon Public Offering. The Purchaser
acknowledges and agrees that the Purchaser shall be entitled to the rights and
subject to the obligations created under the Registration and Participation
Agreement, dated as of March 27, 1996, among the Company and certain other
shareholders of the Company, as the same may be amended from time to time (the
"Registration and Participation Agreement"), and the Shares shall be deemed to
be "registrable
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securities," as defined in the Registration and Participation Agreement, in
each case, to the extent provided therein.
(h) Registration. The Purchaser acknowledges and agrees that, in
the event that the Company files a registration statement under the Securities
Act with respect to an underwritten public offering of any shares of its
capital stock, the Purchaser will not effect any public sale or distribution of
any shares of the Common Stock (other than as part of such underwritten public
offering), including but not limited to, pursuant to Rule 144 or Rule 144A
under the Securities Act, during the 20 days prior to and the 180 days after
the effective date of such registration statement. The Purchaser further
understands and acknowledges that any sale, transfer or other disposition of
the Shares by him following a Public Offering will be subject to compliance
with, and may be limited under, the federal securities laws and/or state "blue
sky" securities laws.
(i) Section 83(b) Election. The Purchaser agrees that, within 20
days after the Closing, the Purchaser shall give notice to the Company in the
event that the Purchaser has made or intends to make an election pursuant to
section 83(b) of the Internal Revenue Code of 1986, as amended, with respect to
the Shares purchased at such Closing, and acknowledges that the Purchaser will
be solely responsible for any and all tax liabilities payable by the Purchaser
in connection with the Purchaser's receipt of the Shares or attributable to the
Purchaser's making or failing to make such an election.
4. Restrictions on Disposition of Shares. Neither the Purchaser
nor any of the Purchaser's heirs or representatives shall sell, assign,
transfer, pledge or otherwise directly or indirectly dispose of or encumber any
of the Shares to or with any other person, firm, trust, association,
corporation or entity (including, without limitation, transfers to any other
holder of the Company's capital stock, dispositions by gift, by will, by a
corporation as a distribution in liquidation or by operation of law other than
a transfer of Shares upon the death of the Purchaser by operation of law to the
estate of the Purchaser or by will to the beneficiary named therein provided
that such estate or beneficiary, whichever is applicable, shall be bound by all
of the provisions of this Agreement) except as provided in Sections 5 through 8
hereof, inclusive. The restrictions contained in this Section 4 (x) shall
terminate in the event that an underwritten public offering of the Common Stock
led by one or more underwriters at least one of which is an underwriter of
nationally recognized standing (a "Public Offering") has been consummated and
(y) shall not apply to a sale as part of the Public Offering or to a sale as
part of a "qualifying sale" within the meaning of Section 5 of the Stockholders
Agreement.
5. Options of the Company and the CD&R Fund Upon Proposed
Disposition.
(a) Rights of First Refusal. If the Purchaser desires to accept
an offer (which must be in writing and for cash, be irrevocable by its terms
for at least 60 days and be a bona fide offer as determined in good faith by
the Board of Directors of the Company, the "Board") from any prospective
purchaser to purchase all or any part of the Shares at any time owned by the
Purchaser, the Purchaser shall give notice in writing to the Company and the
Xxxxxxx, Dubilier & Rice Fund V Limited Partnership (the "CD&R Fund") (i)
designating the number of Shares proposed to be sold,
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(ii) naming the prospective purchaser of such Shares and (iii) specifying the
price (the "Offer Price") at and terms (the "Offer Terms") upon which the
Purchaser desires to sell the same. During the 30-day period following receipt
of such notice by the Company and the CD&R Fund (the "First Refusal Period"),
the Company shall have the right to purchase from the Purchaser the Shares
specified in such notice, at the Offer Price and on the Offer Terms. The
Company hereby undertakes to use reasonable efforts to act as promptly as
practicable following such notice to determine whether it shall elect to
exercise such right. If the Company fails to exercise such rights within the
First Refusal Period, the CD&R Fund shall have the right to purchase the Shares
specified in such notice, at the Offer Price and on the Offer Terms, at any
time during the period beginning at the earlier of (x) the end of the First
Refusal Period and (y) the date of receipt by the CD&R Fund of written notice
that the Company has elected not to exercise its rights and ending 30 days
thereafter (the "Second Refusal Period"). The rights provided hereunder shall
be exercised by irrevocable written notice to the Purchaser given at any time
during the applicable period. If such right is exercised, the Company or the
CD&R Fund, as the case may be, shall deliver to the Purchaser a certified or
bank check for the Offer Price, payable to the order of the Purchaser, against
delivery of certificates or other instruments representing the Shares so
purchased, appropriately endorsed by the Purchaser. If such right shall not
have been exercised prior to the expiration of the Second Refusal Period, then
at any time during the 30 days following the expiration of the Second Refusal
Period, the Purchaser may sell such Shares to (but only to) the intended
purchaser named in the Purchaser's notice to the Company and the CD&R Fund at
no less than the Offer Price and on terms no less favorable to the Purchaser
than the Offer Terms specified in such notice, free of all restrictions or
obligations imposed by, and free of any rights or benefits set forth in this
Agreement, provided that such intended purchaser shall have agreed in writing,
pursuant to an instrument of assumption satisfactory in substance and form to
the Company, to make and be bound by the representations, warranties and
covenants set forth in Section 3 hereof, other than those set forth in Sections
3(f)(i) and (iii) and other than references to Sections 4 through 8 of this
Agreement contained in Sections 3(a)(i) and 3(b). The right of the Purchaser to
sell Shares set forth in this Section 5(a), subject to the rights of first
refusal set forth in this Section 5(a), shall be suspended during the Option
Periods referred to in Section 6 hereof, but the provisions of Section 6 shall
not otherwise restrict the ability of the Purchaser to sell the Shares, whether
before or after such Option Periods, pursuant to the terms and subject to the
restrictions set forth in this Section 5(a).
(b) Public Offering. In the event that a Public Offering has been
consummated, neither the Company nor the CD&R Fund shall have any rights to
purchase the Shares from the Purchaser pursuant to this Section 5 and this
Section 5 shall not apply to a sale to the underwriters as part of the Public
Offering or at any time thereafter.
6. Options Effective on Termination of Employment or Unforeseen
Personal Hardship of the Purchaser.
(a) Termination of Employment. If the Purchaser's Employment is
terminated for any reason whatsoever, the Company shall have an initial option
to repurchase all or any portion of the Shares then held by the Purchaser (or,
if the Purchaser's Employment was terminated by the
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Purchaser's death, the Purchaser's estate) and shall have 60 days from the date
of the Purchaser's termination (such 60-day period being hereinafter referred
to as the "First Option Period") during which to give notice in writing to the
Purchaser (or the Purchaser's estate) of its election to exercise or not to
exercise such initial option. The Company hereby undertakes to use reasonable
efforts to act as promptly as practicable following such termination to make
such election. If the Company (i) fails to give notice that it intends to
exercise such option within the First Option Period or (ii) chooses to
repurchase none or only a portion of the Shares then held by the Purchaser (or
the Purchaser's estate), by giving such notice, the CD&R Fund shall have an
additional option to repurchase all or any portion of the Shares not
repurchased by the Company, and shall have until the expiration of the earlier
of (x) 60 days following the end of the First Option Period and (y) 60 days
from the date of receipt by the CD&R Fund of written notice that the Company
does not intend to exercise its initial option with respect to all of the
Purchaser's Shares (such 60-day period being hereinafter referred to as the
"Second Option Period") to give notice in writing to the Purchaser (or the
Purchaser's estate) of the CD&R Fund's exercise of its option. If (x) the
Company and the CD&R Fund have failed to exercise their respective options
pursuant to this Section 6(a) or have exercised such options with respect to
less than all of the Shares held by the Purchaser (or his estate) within the
time periods specified herein, (y) the Purchaser's Employment is terminated by
the Purchaser for Good Reason, by the Company and its Subsidiaries other than
for Cause or by reason of the Purchaser's Retirement at Normal Retirement Age,
death or Permanent Disability and (z) the Purchaser has held the shares for a
minimum period of six months, then on notice from the Purchaser (or his estate)
in writing and delivered to the Company within 30 days following the end of the
Second Option Period, the Company shall be required to purchase all (but not
less than all) of the Shares then held by the Purchaser (or his estate). All
purchases pursuant to this Section 6(a) by the Company or the CD&R Fund shall
be for a purchase price and effected in the manner prescribed by Section 7
hereof.
(b) Unforeseen Personal Hardship. In the event that the
Purchaser, while in Employment, experiences Unforeseen Personal Hardship, the
Board will carefully consider any request by the Purchaser that the Company
repurchase the Purchaser's Shares at a price determined in accordance with
Section 7 hereof, but the Company shall have no obligation to repurchase such
Shares. The Board shall consider such request with respect to Unforeseen
Personal Hardship as soon as practicable after receipt by the Company of a
written request by the Purchaser, such request to include sufficient details of
the Purchaser's Unforeseen Personal Hardship to permit the Board to review the
request and the circumstances in an informed manner.
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(c) Certain Definitions. As used in this Agreement the following
terms shall have the following meanings:
(i) "Cause" shall mean (A) the willful failure of the Purchaser
substantially to perform his duties under the employment agreement among the
Company, RIC and the Grantee, as amended and restated in connection with the
Acquisition (the "Employment Agreement") (other than any such failure due to
physical or mental illness), or other willful and material breach by the
Purchaser of any of his obligations under the Employment Agreement or under any
of Sections 3 through 8, inclusive, hereof or the similar provisions of any
Option Agreement, after a demand for substantial performance is delivered, and
a reasonable opportunity to cure is given, to the Purchaser by the Board of
Directors of RIC, which demand identifies the manner in which such Board
believes that the Purchaser has not substantially performed his duties or
breached his obligations, (B) the Purchaser engaging in willful and serious
misconduct that has caused or would reasonably be expected to result in
material injury to RIC or any of its affiliates, or (C) the Purchaser's
conviction of, or entering a plea of nolo contendere to, a crime that
constitutes a felony.
(ii) "Good Reason" shall have the meaning assigned to such term in
the Employment Agreement.
(iii) "Permanent Disability" shall mean a physical or mental
disability that prevents the performance by the Purchaser of his duties under
the Employment Agreement lasting for a continuous period of six months or
longer. The determination of the Purchaser's Permanent Disability shall be made
by an independent physician who is reasonably acceptable to RIC and the
Purchaser and shall be final and binding and shall be based on such competent
medical evidence as shall be presented to it by the Purchaser or by any
physician or group of physicians or other competent medical experts employed by
the Purchaser and/or RIC to advise such independent physician.
(iv) "Retirement at Normal Retirement Age" shall mean retirement
from Employment at age 65 or later.
(v) "Subsidiary" shall mean any corporation or other Person
(other than RIC), a majority of whose outstanding voting securities or other
equity interests is owned, directly or indirectly, by the Company.
(vi) "Unforeseen Personal Hardship" shall mean financial hardship
arising from (x) extraordinary medical expenses or other expenses directly
related to illness or disability of the Purchaser, a member of the Purchaser's
immediate family or one of the Purchaser's parents or (y) payments necessary or
required to prevent the eviction of the Purchaser from the Purchaser's
principal residence or foreclosure on the mortgage on that residence. The
Board's reasoned and good faith determination of Unforeseen Personal Hardship
shall be binding on the Company and the Purchaser.
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(d) Notice of Termination. The Company shall give written notice
of any termination of the Purchaser's Employment to the CD&R Fund, except that
if such termination (if other than as a result of death) is by the Purchaser,
the Purchaser shall give written notice of such termination to the Company and
the Company shall give written notice of such termination to the CD&R Fund.
(e) Public Offering. In the event that a Public Offering has been
consummated, neither the Company nor the CD&R Fund shall have any right to
purchase the Shares pursuant to this Section 6 and this Section 6 shall not
apply to a sale as part of the Public Offering.
7. Determination of the Purchase Price; Manner of Payment.
(a) Purchase Price. (i) For the purposes of any purchase of the
Shares pursuant to Section 6, and subject to Section 11(c), the purchase price
per Share to be paid to the Purchaser (or his estate) for each Share (the
"Purchase Price") shall be the Fair Market Value (as defined in paragraph (ii)
below) of such Share as of the effective date of the termination of employment
or determination of financial hardship, as the case may be, that gives rise to
the right or obligation to repurchase, provided that if the Purchaser's
employment is terminated by the Company, RIC or any Subsidiary for Cause, the
Purchase Price for such Shares shall be the lesser of (i) the Fair Market Value
of such Shares as of the effective date of such termination of employment and
(ii) the price at which the Purchaser purchased such Shares from the Company.
(ii) Whenever determination of the Fair Market Value of the Shares
is required by this Agreement, such "Fair Market Value" shall be such amount as
is determined in good faith by the Executive Committee of the Board (the
"Executive Committee"), as of the date such Fair Market Value is required to be
determined hereunder. In making a determination of Fair Market Value, the
Executive Committee shall give due consideration to such factors as it deems
appropriate, including, without limitation, the earnings and certain other
financial and operating information of the Company, RIC and the Subsidiaries in
recent periods, the potential value of the Company, RIC and the Subsidiaries as
a whole, the future prospects of the Company, RIC and the Subsidiaries and the
industries in which they compete, the history and management of the Company,
RIC and the Subsidiaries, the general condition of the securities markets, the
fair market value of securities of companies engaged in businesses similar to
those of the Company, RIC and the Subsidiaries and a valuation of the Shares,
which shall be performed, with respect to the 1996 fiscal year, as promptly as
practicable following the first business day of the 1997 fiscal year of the
Company and each subsequent fiscal year by an independent valuation firm chosen
by the Executive Committee. The determination of Fair Market Value will not
give effect to any restrictions on transfer of the Shares or the fact that such
Shares would represent a minority interest in the Company. The Fair Market
Value as determined in good faith by the Executive Committee and in the absence
of fraud shall be binding and conclusive upon all parties hereto and the CD&R
Fund. If the Company subdivides (by any stock split, stock dividend or
otherwise) the Common Stock into a greater number of shares, or combines (by
reverse stock split or otherwise) the Common Stock into a smaller number of
shares after the Executive Committee shall have determined the Purchase Price
for the Shares (without
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taking into consideration such subdivision or combination) and prior to the
consummation of the purchase, the Purchase Price (including any minimum or
maximum Purchase Price specified herein or in effect as a result of a prior
adjustment) shall be appropriately adjusted to reflect such subdivision or
combination and the Executive Committee's determination as to any such judgment
in good faith shall be binding and conclusive on all parties hereto and the
CD&R Fund, provided however that, in the case of any determination of Fair
Market Value as of any date prior to January 1, 1997, such Fair Market Value
shall be deemed to be equal to $100 unless the Executive Committee determines
otherwise.
(b) Payment. Subject to Section 11 hereof, the completion of a
purchase pursuant to Section 6 hereof shall take place at the principal office
of the Company on the tenth business day following (i) the receipt by the
Purchaser (or the Purchaser's estate) of the notice of the CD&R Fund or the
Company, as the case may be, of its exercise of its option to purchase pursuant
to Section 6(a) or (ii) the Company's receipt of notice by the Purchaser (or
his estate) to sell Shares pursuant to Section 6(a) or (iii) the Board's
determination (which shall be delivered to the Purchaser) that the Company is
authorized to purchase Shares as a result of Unforeseen Personal Hardship
pursuant to Section 6(b). The Purchase Price shall be paid by delivery to the
Purchaser (or the Purchaser's estate) of a certified or bank check for the
Purchase Price payable to the order of the Purchaser (or the Purchaser's
estate), against delivery of certificates or other instruments representing the
Shares so purchased, appropriately endorsed by the Purchaser (or the
Purchaser's estate), free and clear of all security interests, liens, claims,
encumbrances, charges, options, restrictions on transfer, proxies and voting
and other agreements of whatever nature.
(c) Application of the Purchase Price to Certain Loans. The
Purchaser agrees that the Company and the CD&R Fund shall be entitled to apply
any amounts to be paid by the Company or the CD&R Fund, as the case may be, to
repurchase Shares pursuant to Section 5 or 6 hereof to discharge any
indebtedness of the Purchaser to the Company, RIC or any Subsidiary, including,
without limitation, indebtedness of the Purchaser incurred to purchase the
Shares or indebtedness to a third party that is guaranteed by the Company, RIC
or any Subsidiary.
8. Take-Along Rights.
(a) Take-Along Notice. Subject to the prior application of the
provisions of Section 5(a), if the holders of at least 51% of the shares of
Common Stock owned from time to time by any of the Investors (a "Controlling
Group"), acting jointly, intend to effect a sale of all of their shares of
Common Stock to a third party (a "100% Buyer") and elect to exercise their
rights under this Section 8, such Controlling Group shall deliver written
notice (a "Take-Along Notice") to the Purchaser, which notice shall (a) state
(i) that the Controlling Group wishes to exercise its rights under this Section
8 with respect to such transfer, (ii) the name and address of the 100% Buyer,
(iii) the per share amount and form of consideration the Controlling Group
proposes to receive for its shares of Common Stock and (iv) the terms and
conditions of payment of such consideration and all other material terms and
conditions of such transfer, (b) contain an offer (the "Take-Along Offer") by
the 100% Buyer to purchase from the Purchaser all of his Shares on and subject
to the same terms and
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conditions offered to the Controlling Group and (c) state the anticipated time
and place of the closing of the purchase and sale of the shares (a "Section 8
Closing"), which (subject to such terms and conditions) shall occur not fewer
than five (5) days nor more than ninety (90) days after the date such
Take-Along Notice is delivered, provided that if such Section 8 Closing shall
not occur prior to the expiration of such 90-day period, the Controlling Group
shall be entitled to deliver another Take-Along Notice with respect to such
Take-Along Offer.
(b) Conditions to Take-Along. Upon delivery of a Take-Along
Notice, the Purchaser shall have the obligation to transfer all of the
Purchaser's Shares pursuant to the Take-Along Offer, as the same may be
modified from time to time, provided that the Controlling Group transfers all
of its shares of Common Stock to the 100% Buyer at the Section 8 Closing.
Within 10 days of receipt of the Take-Along Notice, the Purchaser shall (i)
execute and deliver to the Controlling Group a power of attorney and a letter
of transmittal and custody agreement appointing, and in form and substance
reasonably satisfactory to, the Controlling Group or one or more of their
respective affiliates designated by the Controlling Group (the "Custodian"),
the true and lawful attorney-in-fact and custodian for the Purchaser, with full
power of substitution, and authorizing the Custodian to take such actions as
the Custodian may deem necessary or appropriate to effect the sale and transfer
of the Shares to the 100% Buyer, upon receipt of the purchase price therefor at
the Section 8 Closing, free and clear of all security interests, liens, claims,
encumbrances, charges, options, restrictions on transfer, proxies and voting
and other agreements of whatever nature, and to take such other action as may
be necessary or appropriate in connection with such sale, including consenting
to any amendments, waivers, modifications or supplements to the terms of the
sale (provided that the Controlling Group also so consents, and, to the extent
applicable, sells and transfers its shares of Common Stock on the same terms as
so amended, waived, modified or supplemented) and (ii) deliver to the
Controlling Group certificates representing the Shares, together with all
necessary duly executed stock powers.
(c) Remedies. The Purchaser acknowledges that the Controlling
Group would be irreparably damaged in the event of a breach or a threatened
breach by the Purchaser of any of its obligations under this Section 8 and the
Purchaser agrees that, in the event of a breach or a threatened breach by the
Purchaser of any such obligation, the Controlling Group shall, in addition to
any other rights and remedies available to it in respect of such breach, be
entitled to an injunction from a court of competent jurisdiction (without any
requirement to post bond) granting it specific performance by the Purchaser of
its obligations under this Section 8. In the event that the Controlling Group
shall file suit to enforce the covenants contained in this Section 8 (or obtain
any other remedy in respect of any breach thereof), the prevailing party in the
suit shall be entitled to recover, in addition to all other damages to which it
may be entitled, the costs incurred by such party in conducting the suit,
including reasonable attorney's fees and expenses. In the event that, following
a breach or a threatened breach by the Purchaser of the provisions of this
Section 8, the Controlling Group does not obtain an injunction granting it
specific performance of the Purchaser's obligations under this Section 8 in
connection with such proposed sale prior to the time the Controlling Group
completes the sale of its shares of Common Stock or, in its sole discretion,
abandons such sale, then the Company shall have the option to purchase the
Shares from the Purchaser at a purchase price per Share equal to the price
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at which the Purchaser purchased such shares of Common Stock from the Company
or, if less, the per share consideration payable pursuant to the Take-Along
Offer.
(d) Public Offering. In the event that a Public Offering has been
consummated, the provisions of this Section 8 shall terminate and cease to have
further effect.
9. Representations and Warranties of the Company. The Company
represents and warrants to the Purchaser that (a) the Company has been duly
incorporated and is an existing corporation in good standing under the laws of
the State of Delaware, (b) this Agreement has been duly authorized, executed
and delivered by the Company and constitutes a valid and legally binding
obligation of the Company enforceable against the Company in accordance with
its terms and (c) the Shares, when issued, delivered and paid for in accordance
with the terms hereof, will be duly and validly issued, fully paid and
nonassessable, and free and clear of any liens or encumbrances other than those
created pursuant to this Agreement, or otherwise in connection with the
transactions contemplated hereby.
10. Covenants of the Company.
(a) Rule 144. The Company agrees that at all times after it has
filed a registration statement after the date hereof pursuant to the
requirements of the Securities Act or Section 12 of the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), relating to any class of equity
securities of the Company (other than (i) the registration of equity securities
of the Company and/or options or interests in respect thereof to be offered
primarily to directors and/or members of management and employees, sales agents
or similar representatives of the Company, RIC or the Subsidiaries, directors
or senior executives of corporations in which entities managed or sponsored by
Xxxxxxx, Dubilier & Rice, Inc. have made equity investments and/or other
persons with whom CD&R has consulting or other advisory relationships, or (ii)
the registration of equity securities and/or options or other interests in
respect thereof solely on Form S-4 or S-8 or any successor form), it will file
the reports required to be filed by it under the Securities Act and the
Exchange Act and the rules and regulations adopted by the Commission thereunder
(or, if the Company is not required to file such reports, it will, upon the
request of the Purchaser, make publicly available such information as necessary
to permit sales pursuant to Rule 144 under the Securities Act), to the extent
required from time to time to enable the Purchaser to sell the Shares without
registration under the Securities Act within the limitation of the exemptions
provided by (i) Rule 144, as such Rule may be amended from time to time, or
(ii) any successor rule or regulation hereafter adopted by the Commission.
(b) State Securities Laws. The Company agrees to use its best
efforts to comply with all state securities or "blue sky" laws applicable to
the sale of the Shares to the Purchaser, provided that the Company shall not be
obligated to qualify or register the Shares under any such law or to qualify as
a foreign corporation or file any consent to service of process under the laws
of any jurisdiction or subject itself to taxation as doing business in any such
jurisdiction.
11. Certain Restrictions on Repurchases.
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(a) Financing Agreements, etc. Notwithstanding any other
provision of this Agreement, the Company shall not be obligated or permitted to
complete a repurchase of any Shares from the Purchaser if (i) such repurchase
would result in a violation of the terms or provisions of, or result in a
default or an event of default under, (A) the Credit Agreement, dated as of
March 21, 1996 (the "Credit Agreement"), among Parent, the other borrowers
party thereto, Chemical Bank, as administrative agent, and the lenders party
thereto from time to time, as such agreement may be assumed by RIC as successor
in interest to Parent, (B) the Equipment Packaging Machinery Credit Agreement,
dated as of March 21, 1996 (the "PMC Agreement"), among Riverwood International
Machinery, Inc., Chemical Bank, as administrative agent, and the lenders party
thereto from time to time, (C) the Indenture, dated as of March 27, 1996, among
Parent, as issuer, the Company and Newco, as guarantors, and Fleet National
Bank of Connecticut, as trustee (the "Senior Note Indenture"), (D) the
Indenture, dated as of March 27, 1996, among Parent, as issuer, the Company and
Newco, as guarantors, and Fleet National Bank of Massachusetts, as trustee
(together with the Senior Note Indenture, the "Indentures"), or (E) any other
guarantee, financing or security agreement or document entered into (I) by
Riverwood or any of its subsidiaries prior to the Effective Time that remains
outstanding in any part on or after the Effective Time, (II) by the Company or
any of its subsidiaries in connection with the Acquisition, or the financing of
the Acquisition or (III) otherwise from time to time in connection with the
operations of the Company, RIC or the Subsidiaries (the Credit Agreement, the
PMC Agreement, the Indentures and such other agreements and documents, as each
may be amended, modified or supplemented from time to time, are referred to
herein as the "Financing Agreements"), in each case as the same may be amended,
modified or supplemented from time to time, (ii) such repurchase would violate
any of the terms or provisions of the Certificate of Incorporation of the
Company or (iii) the Company has no funds legally available therefor under the
General Corporation Law of the State of Delaware.
(b) Delay of Repurchase. In the event that the completion of a
repurchase by the Company otherwise permitted or required under Section 6(a) is
prevented solely by the terms of Section 11(a), the Company shall provide
written notice thereof to the Purchaser and (i) such repurchase will be
postponed and will take place without the application of further conditions or
impediments (other than as set forth in Section 7 hereof or in this Section 11)
at the first opportunity thereafter when the Company has funds legally
available therefor and when such repurchase will not result in any default,
event of default or violation under any of the Financing Agreements or in a
violation of any term or provision of the Certificate of Incorporation of the
Company and (ii) such repurchase obligation shall rank against other similar
repurchase obligations with respect to shares of Common Stock or options or
deferred stock units in respect thereof according to priority in time of the
effective date of the termination of employment or, if applicable,
determination of financial hardship giving rise to such repurchase obligation;
provided that (A) repurchase obligations arising pursuant to the exercise of a
Purchaser's right to require a repurchase under Section 6(a) and repurchase
obligations arising under Section 6(b) by reason of an approved financial
hardship shall take precedence over repurchase obligations arising pursuant to
the Company's exercise of its right to repurchase the Shares under Section 6(a)
and (B) repurchase obligations as to which a common date
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determines priority shall be of equal priority and shall share pro rata in any
repurchase payments made pursuant to clause (i) above.
(c) Purchase Price Adjustment. In the event that a repurchase of
Shares from the Purchaser is delayed pursuant to this Section 11, the purchase
price per Share when the repurchase of such Shares eventually takes place as
contemplated by Section 11(b) shall be equal to the Purchase Price per Share
determined under Section 7 as of the date of the termination or determination
of financial hardship giving rise to such repurchase, increased by interest on
such Purchase Price for the period from the date such repurchase would have
taken place but for a delay of such repurchase pursuant to Section 11(a) to the
date on which the repurchase actually takes place (the "Delay Period"), at an
annual rate of interest equal to the weighted average cost of the Company's
bank indebtedness outstanding during the Delay Period.
12. Miscellaneous.
(a) Notices. All notices and other communications required or
permitted to be given under this Agreement shall be in writing and shall be
deemed to have been given if delivered personally or sent by certified or
express mail, return receipt requested, postage prepaid, or by any recognized
international equivalent of such mail delivery, to the Company, the CD&R Fund
or the Purchaser, as the case may be, at the following addresses or to such
other address as the Company, the CD&R Fund or the Purchaser, as the case may
be, shall specify by notice to the others:
(i) if to the Company, to it at:
Riverwood Holding, Inc.
Suite 1200
0000 Xxxxx Xxxxxx Xxxxxx
P.O. Box 8985
Wilmington, Delaware 19899
Attention: General Counsel
(ii) if to the Purchaser, to the Purchaser at the address set
forth on the signature page hereof.
(iii) if to the CD&R Fund, to:
Xxxxxxx, Dubilier & Rice Fund V Limited Partnership
Xxxxxxxxxx Xxxxx, Xxxxx 000
0000 Xxxxx Xxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxx, III
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All such notices and communications shall be deemed to have been received on
the date of delivery if delivered personally or on the third business day after
the mailing thereof. Copies of any notice or other communication given under
this Agreement shall also be given to:
Xxxxxxx, Dubilier & Rice, Inc.
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxxx
and
Debevoise & Xxxxxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxxxxx, Esq.
The CD&R Fund also shall be given a copy of any notice or other communication
between the Purchaser and the Company under this Agreement at its address as
set forth above.
(b) Binding Effect; Benefits. This Agreement shall be binding
upon the parties to this Agreement and their respective successors and assigns
and shall inure to the benefit of the parties to the Agreement, the CD&R Fund
and their respective successors and assigns. Except as provided in Sections 4
through 8, inclusive, nothing in this Agreement, express or implied, is
intended or shall be construed to give any person other than the parties to
this Agreement, the CD&R Fund or their respective successors or assigns any
legal or equitable right, remedy or claim under or in respect of any agreement
or any provision contained herein.
(c) Waiver; Amendment.
(i) Waiver. Any party hereto or beneficiary hereof may by written
notice to the other parties (A) extend the time for the performance of any of
the obligations or other actions of the other parties under this Agreement, (B)
waive compliance with any of the conditions or covenants of the other parties
contained in this Agreement and (C) waive or modify performance of any of the
obligations of the other parties under this Agreement, provided that any waiver
of the provisions of Sections 4 through 8, inclusive, must be consented to in
writing by the CD&R Fund. Except as provided in the preceding sentence, no
action taken pursuant to this Agreement, including, without limitation, any
investigation by or on behalf of any party or beneficiary shall be deemed to
constitute a waiver by the party or beneficiary taking such action of
compliance with any representations, warranties, covenants or agreements
contained herein. The waiver by any party hereto or beneficiary hereof of a
breach of any provision of this Agreement shall not operate or be construed as
a waiver of any preceding or succeeding breach and no failure by a party to
exercise any right or privilege hereunder shall be deemed a waiver of such
party's or beneficiary's rights or privileges hereunder or shall be
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deemed a waiver of such party's or beneficiary's rights to exercise the same at
any subsequent time or times hereunder.
(ii) Amendment. This Agreement may not be amended, modified or
supplemented orally, but only by a written instrument executed by the Purchaser
and the Company, and, in the case of any amendment modification or supplement
to or affecting any of Sections 4 through 8 inclusive or that adversely affects
the rights of the CD&R Fund hereunder consented to by the CD&R Fund in writing.
The parties hereto acknowledge that the Company's consent to an amendment or
modification of this Agreement may be subject to the terms and provisions of
the Financing Agreements.
(d) Assignability. Neither this Agreement nor any right, remedy,
obligation or liability arising hereunder or by reason hereof shall be
assignable by the Company or the Purchaser without the prior written consent of
the other parties and the CD&R Fund. The CD&R Fund may assign from time to time
all or any portion of its rights under Sections 4 through 8 hereof to one or
more persons or other entities designated by it.
(e) Applicable Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK, EXCEPT TO THE
EXTENT THAT THE CORPORATE LAW OF THE STATE OF DELAWARE SPECIFICALLY AND
MANDATORILY APPLIES.
(f) Section and Other Headings, etc. The section and other
headings contained in this Agreement are for reference purposes only and shall
not affect the meaning or interpretation of this Agreement.
(g) Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original and all of which
together shall constitute one and the same instrument.
(h) Delegation by the Board. All of the powers, duties and
responsibilities of the Board specified in this Agreement may, to the full
extent permitted by applicable law, be exercised and performed by any duly
constituted committee thereof to the extent authorized by the Board to exercise
and perform such powers, duties and responsibilities.
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IN WITNESS WHEREOF, the Company and the Purchaser have executed this
Agreement as of the date first above written.
RIVERWOOD HOLDING, INC.
By:
--------------------------
Name:
Title:
THE PURCHASER:
By:
--------------------------
Name:
Address of the Purchaser:
-----------------------------
-----------------------------
-----------------------------
Total Number of Shares
of Common Stock to be
Purchased:
------------------
Total Cash Purchase
Price:
------------------
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