EXHIBIT 10.8
===============================================================================
MANAGEMENT STOCKHOLDERS' AGREEMENT
dated as of February 3, 1998
among
BLACKSTONE CAPITAL PARTNERS III MERCHANT BANKING FUND L.P.,
BLACKSTONE OFFSHORE CAPITAL PARTNERS III L.P.,
BLACKSTONE FAMILY INVESTMENT PARTNERSHIP III L.P.,
BMP/GRAHAM HOLDINGS CORPORATION,
GRAHAM PACKAGING HOLDINGS COMPANY,
GPC CAPITAL CORP. II
and
THE MANAGEMENT INVESTORS
===============================================================================
-1-
TABLE OF CONTENTS
Page
----
SECTION 1. DEFINITIONS.............................................. 2
1.1 Defined Terms............................................ 2
1.2 Other Definitional Provisions; Interpretation............ 5
SECTION 2. PURCHASE OF AND GRANT OF BMP STOCK....................... 6
2.1 Purchase of and Grant of BMP Stock....................... 6
2.2 The Closing.............................................. 6
SECTION 3. TRANSFERS AND ISSUANCES.................................. 6
3.1 Limitations on Transfer.................................. 6
3.2 Certain Permitted Transfers.............................. 7
3.3 Effect of Void Transfers................................. 7
3.4 Legend on Securities..................................... 7
3.5 Tag-Along Rights......................................... 8
3.6 Public Offerings, etc.................................... 9
3.7 Drag-Along Rights........................................ 9
SECTION 4. CERTAIN SALES UPON TERMINATION OF EMPLOYMENT............. 9
4.1 Put Options.............................................. 9
4.2 Call Options............................................. 10
4.3 Purchase Price........................................... 10
4.4 Obligation to Sell Several............................... 11
SECTION 5. CERTAIN LIMITATIONS ON THE COMPANY'S OBLIGATIONS
TO PURCHASE COMMON STOCK................................. 11
5.1 Deferral of Purchases.................................... 11
5.2 Payment for Common Stock................................. 12
SECTION 6. REGISTRATION RIGHTS...................................... 13
6.1 Incidental Registration.................................. 13
SECTION 7. INVESTMENT REPRESENTATIONS AND COVENANTS................. 13
7.1 Investment Intention; No Resales......................... 13
7.2 BMP Stock Unregistered................................... 13
7.3 Additional Investment Representations.................... 14
SECTION 8. MISCELLANEOUS............................................ 15
8.1 Additional Securities Subject to Agreement............... 15
8.2 Termination.............................................. 15
8.3 Injunctive Relief........................................ 15
8.4 Amendments............................................... 15
8.5 Successors, Assigns and Transferees...................... 15
8.6 Notices.................................................. 16
-i-
Page
----
8.7 Integration.............................................. 17
8.8 Severability............................................. 17
8.9 Counterparts............................................. 17
8.10 Governing Law............................................ 17
8.11 Jurisdiction............................................. 17
8.12 Additional Management Investors.......................... 18
-ii-
EXHIBIT 10.8
MANAGEMENT STOCKHOLDERS' AGREEMENT, dated as of February 3,
1998, among Blackstone Capital Partners III Merchant Banking Fund L.P., a
Delaware limited partnership, Blackstone Offshore Capital Partners III L.P., a
Cayman Islands exempted limited partnership, and Blackstone Family Investment
Partnership III L.P., a Delaware limited partnership (collectively,
"Blackstone"), BMP/Graham Holdings Corporation, a Delaware corporation ("BMP"),
Graham Packaging Holdings Company, a Pennsylvania limited partnership formerly
known as Graham Packaging Company ("Holdings"), GPC Capital Corp. II, a
Delaware corporation ("CapCo. II"), and the parties identified on the signature
pages hereto or to the supplementary agreements referred to in Section 8.12
hereof as Management Investors (the "Management Investors").
W I T N E S S E T H :
---------------------
WHEREAS, on the date hereof, 20,825 shares of common stock,
par value $.01 per share (the "BMP Stock"), of BMP are outstanding, of which
Blackstone owns 19,825 shares;
WHEREAS, pursuant to the transactions contemplated by the
Recapitalization Agreement (as defined below), BMP holds indirectly a 4%
general partnership interest and directly an 81% limited partnership interest
in Holdings;
WHEREAS, CapCo. II is a wholly owned subsidiary of Holdings
and would be the successor to Holdings upon an IPO Reorganization (as defined
below);
WHEREAS, each Management Investor and Holdings are parties to
an Equity Incentive Agreement dated as of February 3, 1998 (each, an "Equity
Incentive Agreement"), which provides that such Management Investor will
receive certain equity incentive awards from Holdings or its affiliates;
WHEREAS, in furtherance of the Equity Incentive Agreements
and on the terms and subject to the conditions hereof and thereof, (i) each
Management Investor desires to purchase from Blackstone, and Blackstone desires
to sell to such Management Investor, one-half of the number of shares of BMP
Stock set forth on such Management Investor's signature page (which aggregate
to 305.185 shares of BMP Stock for all Management Investors) and (ii)
Blackstone desires to grant to each Management Investor one-half of the number
of shares of BMP Stock set forth on such Management Investor's signature page
(which aggregate to 305.185 shares of BMP Stock for all Management Investors),
in each case as hereinafter set forth;
WHEREAS, the parties hereto wish to enter into certain
agreements with respect to the holdings by Blackstone and the Management
Investors and their respective Permitted Transferees of stock of the Company
(as defined below) and securities exercisable or exchangeable for or
convertible into stock of the Company; and
NOW, THEREFORE, in consideration of the mutual covenants and
agreements herein contained, the parties hereto agree as follows:
SECTION 1. DEFINITIONS
1.1 Defined Terms. As used in this Agreement, terms defined
in the headings and the recitals shall have their respective assigned meanings,
and the following capitalized terms shall have the meanings ascribed to them
below:
"Affiliate" means, with respect to any Person, (i) any Person
that directly or indirectly controls, is controlled by or is under common
control with, such Person, or (ii) any director, officer, partner or employee
of such Person or any Person specified in clause (i) above, or (iii) any
spouse, parent, child or sibling of any Person specified in clause (i) or (ii)
above.
"Agreement" means this Management Stockholders' Agreement, as
the same may be amended, supplemented or otherwise modified from time to time.
"Applicable Percentage" means, with respect to any
termination of employment described in Section 4.2(a)(iii) or 4.2(a)(iv)
hereof, (a) 0% if such termination occurs at any time prior to the first
anniversary of the Closing Date, (b) 33.3% if such termination occurs during
the 365 day period commencing on the first anniversary of the Closing Date; (c)
66.6% if such termination occurs during the 365 day period commencing on the
second anniversary of the Closing Date; and (d) 100% if such termination occurs
at any time on or after the third anniversary of the Closing Date.
"Business Day" means a day other than a Saturday, Sunday,
holiday or other day on which commercial banks in New York City or the
Commonwealth of Pennsylvania are authorized or required by law to close.
"Cause" used in connection with the termination of employment
of the Management Investor means a termination of employment of the Management
Investor by the Company or any Subsidiary thereof described in Sections
4(b)(1), (2), (3) or (4) of the applicable Equity Incentive Agreement.
"Closing Date" means the date of the closing under this
Agreement.
"Common Stock" means the common stock, par value $.01 per
share, of the Company.
"Common Stock Equivalents" means any stock, warrants, rights,
calls, options or other securities exchangeable or exercisable for or
convertible into Common Stock.
"Company" means (i) prior to the initial Public Offering, BMP
and (ii) in connection with or after the initial Public Offering, CapCo. II.
-2-
"Cost" means, with respect to shares of Common Stock acquired
pursuant to Section 1 or otherwise, the price per share paid by the Management
Investor (in each case, as proportionately adjusted for all subsequent stock
splits, stock dividends and other recapitalizations).
"Disability" of a Management Investor means the inability of
the Management Investor to perform the essential functions of his job, with or
without reasonable accommodation, by reason of a physical or mental infirmity,
(i) for a continuous period of six (6) months or (ii) at such earlier time as
the Company receives satisfactory medical evidence that the Management Investor
has a physical or mental disability or infirmity which is reasonably likely to
prevent him from returning to the performance of his work duties for six (6)
months or longer. The date of such Disability shall be on the last day of such
six-month period or the fifteenth day following the day on which the Company
receives such satisfactory medical evidence, as the case may be.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder, as the same may
be amended from time to time.
"Fair Market Value" used in connection with the value of
shares of Common Stock means, as of any date (the "Valuation Date") with
respect to each share, the fair market value thereof, disregarding any discount
for minority interest or marketability of shares and assuming the prior
conversion, exercise or exchange of all outstanding Common Stock Equivalents,
as determined within six (6) months of the Valuation Date by the Board of
Directors in its sole discretion (the "Board Determination"), provided that if
the Board Determination is in excess of $500,000 in the aggregate for all
shares being valued and if the Management Investor disagrees, in good faith,
with the Board Determination, the Management Investor shall promptly notify the
Company of such disagreement, in which event an independent appraiser,
accountant, or investment banking firm (the "Appraiser") selected by mutual
agreement of the Management Investor and the Board of Directors of the Company
shall make a determination of the fair market value thereof, disregarding any
discount for minority interest or marketability of shares and assuming the
prior conversion, exercise or exchange of all outstanding Common Stock
Equivalents (the "Appraiser Determination"), and if the Appraiser Determination
is (i) not at least 110% of the Board Determination or greater, "Fair Market
Value" shall be the Appraiser Determination and the Management Investor shall
pay the cost of such Appraiser Determination or (ii) 110% of the Board
Determination or greater, "Fair Market Value" shall be the Appraiser
Determination and the Company shall pay the cost of such Appraiser
Determination.
"Financing Default" means an event which would constitute (or
with notice or lapse of time or both would constitute) an event of default
(which event of default has not been cured) under any of the following as
originally entered into or as they may be amended from time to time: (i) any
agreement under which an amount of indebtedness of the Company or any of its
Subsidiaries in excess of $1,000,000 is outstanding as of the time of the
aforementioned event, and any extensions, renewals, refinancings or refundings
thereof in whole or in part; and (ii) any provision of the Company's or any of
its Subsidiary's certificate of incorporation.
-3-
"Good Reason" used in connection with the termination of
employment by a Management Investor means a termination of employment with the
Company or any Subsidiary thereof described in Section 4(a)(3) of the
applicable Equity Incentive Agreement.
"IPO Reorganization" means, collectively, (i) the transfer of
all or substantially all of Holdings' assets and liabilities to CapCo. II upon
an initial Public Offering, (ii) the dissolution or liquidation of BMP,
BCP/Graham Holdings LLC and Holdings and (iii) all transactions necessary or
incidental thereto.
"NASDAQ" means the Nasdaq Stock Market.
"Permitted Transferee" means any Person to whom the
Management Investors (or any direct or indirect Permitted Transferee thereof)
transfers Securities in accordance with the terms of this Agreement (other than
pursuant to a Public Offering or pursuant to Rule 144 under the Securities Act)
and who becomes a party to, and is bound to the same extent as its transferor
by the terms of, this Agreement.
"Person" means any individual, corporation, partnership,
trust, joint stock company, business trust, unincorporated association, joint
venture, governmental authority or other entity of any nature whatsoever.
"Public Offering" means the sale of Common Stock to the
public in a firm commitment underwritten public offering pursuant to an
effective registration statement (other than a registration statement on Form
S-4, S-8 or similar form) filed under the Securities Act, which results in an
active trading market in such Common Stock (it being understood that such an
active trading market shall be deemed to exist if, among other things, such
Common Stock are listed on a national securities exchange or on NASDAQ).
"Recapitalization Agreement" means the Agreement and Plan of
Recapitalization, Redemption and Purchase dated as of December 18, 1997 by and
among Holdings, Donald C. Graham and certain of his Affiliates, BCP/Graham
Holdings LLC and BMP, as the same may be amended, supplemented or otherwise
modified from time to time.
"Registration Rights Agreement" means the Registration Rights
Agreement dated as of February 2, 1998 among Holdings, CapCo. II, Blackstone,
Graham Capital Corporation and Graham Family Growth Partnership attached as
Exhibit A hereto, as the same may be amended, supplemented or otherwise
modified from time to time.
"Retirement" means, with respect to the Management Investor,
the Management Investor's retirement as an employee of the Company or any of
its Subsidiaries on or after reaching age 65 (or such earlier age as may be
otherwise determined by the Board of Directors of the Company) after at least
three (3) years employment with the Company after the Closing Date.
"Securities" means shares of Common Stock or Common Stock
Equivalents, whether owned on the date hereof or hereafter acquired.
-4-
"Securities Act" means the Securities Act of 1933, as
amended, and the rules and regulations promulgated thereunder, as the same may
be amended from time to time.
"Stockholders" means Blackstone and the Management Investors
and their respective Permitted Transferees.
"Subsidiary" means, with respect to any Person, any
corporation, partnership, association or other business entity of which fifty
percent (50%) or more of the total voting power of shares of capital stock
entitled (without regard to the occurrence of any contingency) to vote in the
election of directors, managers or trustees thereof, or fifty percent (50%) or
more of the equity interest therein, is at the time owned or controlled,
directly or indirectly, by any Person or one or more of the other Subsidiaries
of such Person or a combination thereof.
"Third Party" means any Person other than the Company, the
Stockholders and their Affiliates.
"Transfer" means any transfer, sale, assignment,
distribution, exchange, mortgage, pledge, hypothecation or other disposition of
any Securities or any interest therein.
1.2 Other Definitional Provisions; Interpretation. (a) The
words "hereof", "herein", and "hereunder" and words of similar import when used
in this Agreement shall refer to this Agreement as a whole and not to any
particular provision of this Agreement, and Section, Subsection, Schedule and
Exhibit references are to this Agreement unless otherwise specified.
(b) The headings in this Agreement are included for
convenience of reference only and shall not limit or otherwise affect the
meaning or interpretation of this Agreement.
(c) The meanings given to terms defined herein shall be
equally applicable to both the singular and plural forms of such terms.
(d) For purposes of comparing the beneficial ownership of any
Person on the date of execution and delivery of this Agreement to the level of
such ownership at any later time, the level of ownership on such later date
shall be adjusted to eliminate the effect of any subdivision of the Common
Stock, any combination of the Common Stock, any issuance of Common Stock or
Common Stock Equivalents by reason of any reorganization or reclassification
(including, without limitation, the IPO Reorganization and any reclassification
in connection with a merger or consolidation), or any dividend payable in
Common Stock or Common Stock Equivalents.
-5-
SECTION 2. PURCHASE OF AND GRANT OF BMP STOCK
2.1 Purchase of and Grant of BMP Stock. (a) Pursuant to the
terms and subject to the conditions set forth in this Agreement and the
applicable Equity Incentive Agreement, each Management Investor hereby agrees
to purchase, and Blackstone hereby agrees to sell to such Management Investor,
on the Closing Date, one-half of the number of shares of BMP Stock set forth on
such Management Investor's signature page hereto, at a price per share equal to
$10,000 (which Blackstone represents is the purchase price per share paid by
Blackstone). Each Management Investor agrees to apply all cash payments
received pursuant to Section 3 of the applicable Equity Incentive Agreement to
fund his purchase of BMP Stock pursuant to this Section 2.1(a) and, by
executing this Agreement, such Management Investor hereby (i) appoints Drinker
Biddle & Reath LLP to act as its escrow agent for receiving and disbursing such
cash payments on his behalf pursuant to and in accordance with the terms set
forth in this Section 2, (ii) authorizes Holdings to wire transfer such cash
payments to Drinker Biddle & Reath LLP in full satisfaction of Holdings'
obligations under Section 3 of the applicable Equity Incentive Agreement and
(iii) authorizes Drinker Biddle & Reath LLP to wire transfer all of such cash
payments to Blackstone on such Management Investor's behalf in full
satisfaction of the purchase price for such BMP Stock.
(b) Pursuant to the terms and subject to the conditions set
forth in this Agreement and the applicable Equity Incentive Agreement,
concurrently with the purchase of the BMP Stock pursuant to Section 2.1(a),
Blackstone shall grant to each Management Investor one-half of the number of
shares of BMP Stock set forth on such Management Investor's signature page
hereto.
(c) The parties hereto agree that all shares of BMP Stock
purchased or granted pursuant to this Section 2.1 shall be subject to the
restrictions, terms and conditions set forth in the applicable Equity Incentive
Agreements as well as those set forth herein.
2.2 The Closing. The closing (the "Closing") of the purchase
and grant of BMP Stock hereunder shall take place on or as soon as practicable
after the date hereof at the offices of Simpson Thacher & Bartlett, 425
Lexington Avenue, New York, New York.
SECTION 3. TRANSFERS AND ISSUANCES
3.1 Limitations on Transfer. (a) Each Management Investor and
his Permitted Transferees hereby agrees that such Stockholder will not,
directly or indirectly, Transfer any Securities unless such Transfer complies
with the provisions hereof and (i) such Transfer is pursuant to an effective
registration statement under the Securities Act and has been registered under
all applicable state securities or "blue sky" laws or (ii) such Stockholder
shall have furnished the Company with a written opinion of counsel reasonably
satisfactory to the Company in form and substance reasonably satisfactory to
the Company to the effect that no such registration is required because of the
availability of an exemption from registration under the Securities Act and all
applicable state securities or "blue sky" laws.
-6-
(b) Each Management Investor and his Permitted Transferees
hereby agrees that, except as otherwise provided in Section 3.2 hereof, so long
as Blackstone and its Affiliates beneficially own an aggregate number of shares
of Common Stock that is not less than one-half of the number of shares of
Common Stock beneficially owned by Blackstone on the date hereof (giving effect
to the transactions contemplated hereby), such Stockholder shall not, without
the prior written consent of Blackstone (which consent may be withheld by
Blackstone in its absolute discretion), effect a Transfer prior to the date of
the initial Public Offering, except for Transfers pursuant to Section 3.5, 3.7
or 4 hereof.
3.2 Certain Permitted Transfers. Notwithstanding any other
provision of this Agreement to the contrary, each Management Investors and his
Permitted Transferees shall be entitled from time to time to Transfer any or
all of the Securities beneficially owned by them to (i) such Stockholder or
such Stockholder's spouse or direct lineal descendants or a charitable
remainder trust or trust, in either case the current beneficiaries of which, or
to a corporation or partnership, the stockholders or limited or general
partners of which, include only such Stockholder and/or such Stockholder's
spouse and/or such Stockholder's direct lineal descendants or (ii) the
executor, administrator, testamentary trustee, legatee or beneficiary of any
deceased individual holder of Securities referred to in clause (i), provided
that any such transferee agrees to become a party to, and be bound to the same
extent as its transferor by the terms of, this Agreement and the applicable
Equity Incentive Agreement.
3.3 Effect of Void Transfers. In the event of any purported
Transfer of any Securities in violation of the provisions of this Agreement or
any applicable Equity Incentive Agreement, such purported Transfer shall be
void and of no effect and the Company shall not give effect to such Transfer.
3.4 Legend on Securities. Each certificate representing
Securities issued to any Management Investor or any of its Permitted
Transferees shall bear the following legend on the face thereof:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A
MANAGEMENT STOCKHOLDERS' AGREEMENT AMONG BLACKSTONE CAPITAL PARTNERS
III MERCHANT BANKING FUND L.P., BLACKSTONE OFFSHORE CAPITAL PARTNERS
III L.P., BLACKSTONE FAMILY INVESTMENT PARTNERSHIP L.P., GRAHAM
PACKAGING HOLDINGS COMPANY, GPC CAPITAL CORP. II AND THE MANAGEMENT
INVESTORS PARTIES THERETO, A COPY OF WHICH IS ON FILE WITH THE
SECRETARY OF THE ISSUER. NO TRANSFER, SALE, ASSIGNMENT, PLEDGE,
HYPOTHECATION OR OTHER DISPOSITION OF THE SECURITIES REPRESENTED BY
THIS CERTIFICATE MAY BE MADE EXCEPT IN ACCORDANCE WITH THE PROVISIONS
OF SUCH MANAGEMENT STOCKHOLDERS' AGREEMENT AND (A) PURSUANT TO A
REGISTRATION STATEMENT EFFECTIVE UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR (B) IF THE ISSUER HAS BEEN FURNISHED WITH AN OPINION
REASONABLY SATISFACTORY IN FORM AND SUBSTANCE TO THE ISSUER OF COUNSEL
REASONABLY SATISFACTORY TO THE ISSUER THAT SUCH TRANSFER, SALE,
ASSIGNMENT, PLEDGE, HYPOTHECATION
-7-
OR OTHER DISPOSITION IS EXEMPT FROM THE PROVISIONS OF SECTION 5 OF THE
SECURITIES ACT OF 1933, AS AMENDED, AND THE RULES AND REGULATIONS
THEREUNDER. THE HOLDER OF THIS CERTIFICATE, BY ACCEPTANCE OF THIS
CERTIFICATE, AGREES TO BE BOUND BY ALL OF THE PROVISIONS OF SUCH
MANAGEMENT STOCKHOLDERS' AGREEMENT."
3.5 Tag-Along Rights. (a) So long as (x) this Agreement shall
remain in effect, (y) an initial Public Offering shall not have occurred and
(z) Blackstone and its Affiliates beneficially own an aggregate number of
shares of Common Stock that is not less than one-half of the number of shares
of Common Stock beneficially owned by Blackstone on the date hereof (giving
effect to the transactions contemplated hereby), with respect to any proposed
Transfer by Blackstone of Common Stock (other than to an Affiliate of
Blackstone, including any of its partners), Blackstone shall have the
obligation, and each other Stockholder shall have the right, to require the
proposed transferee to purchase from each Stockholder having and exercising
such right (each, including any Person having and exercising similar rights
pursuant to any other agreement, a "Tagging Stockholder") a number of shares of
Common Stock up to the product (rounded up to the nearest whole number) of (i)
the quotient determined by dividing (A) the aggregate number of shares of
Common Stock beneficially owned on a fully diluted basis by such Tagging
Stockholder and sought by the Tagging Stockholder to be included in the
contemplated Transfer by (B) the aggregate number of shares of Common Stock
beneficially owned on a fully diluted basis by Blackstone and all Tagging
Stockholders and sought by Blackstone and all Tagging Stockholders to be
included in the contemplated Transfer and (ii) the total number of shares of
Common Stock proposed to be Transferred to the transferee in the contemplated
Transfer, and at the same price per share of Common Stock and upon the same
terms and conditions (including, without limitation, time of payment and form
of consideration) as to be paid and given to Blackstone; provided that in order
to sell shares of Common Stock to the proposed transferee pursuant to this
Section 3.5(a), a Tagging Stockholder must make to the transferee the same
representations, warranties, covenants, indemnities and agreements as
Blackstone makes in connection with the proposed Transfer by Blackstone of
Common Stock (except that in the case of representations, warranties,
covenants, indemnities and agreements pertaining specifically to Blackstone, a
Tagging Stockholder shall make the comparable representations, warranties,
covenants, indemnities and agreements pertaining specifically to itself and
only to itself); and provided further that all representations, warranties and
indemnities shall be made by the Tagging Stockholders severally and not jointly
and that the liability of Blackstone and the Tagging Stockholders thereunder
shall be borne by each of them on a pro rata basis.
(b) Blackstone shall give notice to all relevant Stockholders
of each proposed Transfer giving rise to the rights of the Tagging Stockholders
set forth in Section 3.5(a) at least 20 days prior to the proposed consummation
of such Transfer, setting forth the name of Blackstone, the number of shares of
Common Stock proposed to be so Transferred, the name and address of the
proposed transferee, the proposed amount and form of consideration and other
terms and conditions offered by the proposed transferee. The tag-along rights
provided by this Section 3.5 must be exercised by each Tagging Stockholder
within 10 days following receipt of the notice required by the preceding
sentence, by delivery of a written notice to Blackstone indicating such Tagging
Stockholder's desire to exercise its rights and specifying the number of shares
of Common Stock it desires to sell.
-8-
3.6 Public Offerings, etc. The provisions of Sections 3.5 and
3.7 shall not be applicable to offers and sales of Securities in a Public
Offering or pursuant to Rule 144 under the Securities Act.
3.7 Drag-Along Rights. So long as (x) this Agreement shall
remain in effect, (y) an initial Public Offering shall not have occurred and
(z) Blackstone and its Affiliates beneficially own an aggregate number of
shares of Common Stock that is not less than one-half of the number of shares
of Common Stock beneficially owned by Blackstone on the date hereof (giving
effect to the transactions contemplated hereby), if any of Blackstone and its
Affiliates receives an offer from a Third Party to purchase all outstanding
shares of Common Stock (other than shares not being purchased in order to
preserve the availability of recapitalization accounting treatment) owned by
Blackstone and its Affiliates and such offer is accepted by Blackstone, then
each Stockholder hereby agrees that it will Transfer all Securities owned by it
to such Third Party at the same price per share of Common Stock and upon the
same terms and conditions of the offer so accepted by Blackstone, including
making the same representations, warranties, covenants, indemnities and
agreements that Blackstone agrees to make (except that, in the case of
representations, warranties, covenants, indemnities and agreements pertaining
specifically to Blackstone, each other Stockholder shall make the comparable
representations, warranties, covenants, indemnities and agreements pertaining
specifically to itself and only to itself); provided that all representations,
warranties and indemnities shall be made by Blackstone and such Stockholders
severally and not jointly and that the liability of Blackstone and such
Stockholders thereunder shall be borne by each of them on a pro rata basis.
SECTION 4. CERTAIN SALES UPON TERMINATION OF EMPLOYMENT
4.1 Put Options. (a) If any Management Investor's employment
with the Company or its Subsidiaries is terminated due to the Disability, death
or Retirement of such Management Investor prior to an initial Public Offering,
each such Management Investor and his Permitted Transferees (hereinafter
sometimes collectively referred to as the "Management Investor Group") shall
have the right, subject to the provisions of Section 5 hereof, for 90 days
(provided that, in the case of death, such period shall be extended to the
extent reasonably necessary to accommodate any probate proceedings or as may be
otherwise extended by the Board of Directors in its sole discretion) following
the date of such termination of employment of the Management Investor, to sell
to the Company, and the Company shall be required to purchase (subject to the
provisions of Section 5 hereof), on one occasion from each member of the
Management Investor Group, all (but not less than all) shares of Common Stock
(including any fractional shares) then owned by such member, at a price per
share equal to the applicable purchase price determined pursuant to Section 4.3
hereof.
(b) Each member of the Management Investor Group who desires
to sell all of his shares of Common Stock which may be sold pursuant to this
Section 4.1 shall, not later than 90 days after the date of termination of
employment, send written notice to the Company of his intention to sell all of
such shares of Common Stock pursuant to this Section 4.1. Subject to the
provisions of Section 5.1, the closing of the purchase shall take place at the
-9-
principal office of the Company on a date specified by the Company no later
than 30 days after the giving of such notice.
4.2 Call Options. (a) If any Management Investor's employment
with the Company or its Subsidiaries terminates for any of the reasons set
forth in clauses (i), (ii), (iii) and (iv) below prior to an initial Public
Offering, the Company (or any of its assignees) shall have the right and option
to purchase, for a period of 90 days following the date of such termination of
employment of such Management Investor, and each member of the Management
Investor Group shall be required to sell to the Company (or to any such
assignee), any or all of the shares of Common Stock (including any fractional
shares) then owned by such member of the Management Investor Group, at a price
per share equal to the applicable purchase price determined pursuant to Section
4.3 hereof:
(i) if the Management Investor's employment with the
Company or its Subsidiaries is terminated due to the Disability, death
or Retirement of the Management Investor;
(ii) if the Management Investor's employment with the
Company or its Subsidiaries is terminated by the Company or its
Subsidiaries without Cause or by the Management Investor for Good
Reason;
(iii) if the Management Investor's employment with the
Company or its Subsidiaries is terminated by the Management Investor
for any reason not set forth in Sections 4.2(a)(i), (ii) or (iv); or
(iv) if the Management Investor's employment with the
Company or its Subsidiaries is terminated by the Company or its
Subsidiaries for Cause.
(b) If the Company desires to exercise its option to purchase
any shares pursuant to this Section 4.2, the Company shall, not later than 90
days after the date of termination of employment, send written notice to the
Management Investor or such other member of the Management Investor Group of
its intention to purchase shares, specifying the number of shares to be
purchased. Subject to the provisions of Section 5.1, the closing of the
purchase shall take place at the principal office of the Company on a date
specified by the Company no earlier than the tenth and no later than 30 days
after the giving of such notice.
4.3 Purchase Price. In the event of a purchase by the Company
pursuant to Section 4.1(a) or 4.2(a) hereof, the purchase price shall be:
(a) in the case of a termination of employment described
in Section 4.1(a), 4.2(a)(i) or 4.2(a)(ii), a price per share equal to
Fair Market Value; and
(b) in the case of a termination of employment described
in Section 4.2(a)(iii) or 4.2(a)(iv), with respect to the number of
shares being purchased which are the product of (x) the total number
of shares being purchased and (y) the Applicable Percentage, a price
per share equal to Fair Market Value, and (if
-10-
the Applicable Percentage is less than 100%) the purchase price with
respect to the remaining shares being sold shall be a price per share
equal to $0;
provided that in any case the Board of Directors of the Company shall have the
right, in its sole discretion, to increase any purchase price set forth above.
4.4 Obligation to Sell Several. In the event there is more
than one member of the Management Investor Group, the failure of any one member
thereof to perform its obligations hereunder shall not excuse or affect the
obligations of any other member thereof, and the closing of the purchases from
such other members by the Company shall not excuse, or constitute a waiver of
its rights against, the defaulting member.
SECTION 5. CERTAIN LIMITATIONS ON THE COMPANY'S
OBLIGATIONS TO PURCHASE COMMON STOCK
5.1 Deferral of Purchases. (a) Notwithstanding anything to
the contrary elsewhere herein, the Company shall not be obligated to purchase
any shares of Common Stock at any time pursuant to Section 4 hereof, regardless
of whether it has delivered a notice of its election to purchase any such
shares, (i) to the extent that the purchase of such shares (together with any
other purchases of Common Stock pursuant to Section 4 hereof, or pursuant to
similar provisions in the stock purchase, stock subscription or other
agreements with other investors of which the Company has at such time been
given or has given notice) would result (A) in a violation of any law, statute,
rule, regulation, policy, order, writ, injunction, decree or judgment
promulgated or entered by any governmental authority applicable to the Company
or any of its Subsidiaries or any of its or their property or (B) after giving
effect thereto (including any dividends or other distributions or loans from a
Subsidiary of the Company to the Company in connection therewith), in a
Financing Default, (ii) if immediately prior to such purchase there exists a
Financing Default which prohibits such purchase (including any dividends or
other distributions or loans from a Subsidiary of the Company to the Company in
connection therewith), or (iii) if the Company does not have funds available to
effect such purchase. The Company shall within 30 days of learning of any such
fact so notify the members of the applicable Management Investor Group that it
is not obligated to purchase such shares and has deferred its right and/or
obligation to make such purchase until such violation, Financing Default or
unavailability of funds would not result therefrom or be in existence. If, in a
purchase pursuant to Section 4.1, the Company gives such a notice the members
of the applicable Management Investor Group shall have ten (10) days thereafter
to rescind their election to sell the shares to be purchased (the "Purchased
Shares") or to reduce the number of shares to be purchased to the maximum
number of shares which the Company is able to purchase without such violation,
Financing Default or unavailability of funds occurring, subject to any minimum
number thereof being specified by the members of the Management Investor Group.
The Company agrees to use all commercially reasonable efforts to cure any such
Financing Default which is curable.
(b) Anything to the contrary contained in Section 4 hereof
notwithstanding, any shares of Common Stock which a member of a Management
Investor Group has elected to sell to the Company or which the Company has
elected to purchase from members of the
-11-
Management Investor Group, but which in accordance with Section 5.1(a) hereof
are not purchased at the applicable time provided in Section 4 hereof, shall be
purchased by the Company on the tenth business day after such date or dates
that (after taking into account any purchases to be made at such time pursuant
to stock purchase, subscription or other agreements with other investors and
any other agreements or instruments to which any of the Company and its
Subsidiaries is a party or by which any of them is bound on a pro rata basis
therewith (subject to any binding obligation to do otherwise pursuant to any
such agreement or instrument)) it is no longer permitted to defer purchasing
such shares under Section 5.1(a) hereof, and the Company shall give the
Management Investor Group five (5) business days prior notice of any such
purchase.
5.2 Payment for Common Stock. If at any time the Company
elects or is required to purchase any shares of Common Stock pursuant to
Section 4 hereof, the Company shall pay the purchase price for the shares of
Common Stock it purchases (i) by the cancellation of any indebtedness, if any,
owing from the Management Investor to the Company or any of its Subsidiaries
and (ii) then, by the Company's delivery of a bank cashier's check or certified
check for the remainder of the purchase price, if any, against delivery of the
certificates or other instruments representing the Common Stock so purchased,
duly endorsed; provided that if a Financing Default exists or, after giving
effect to such payment (including any dividend or other distribution or loan
from a Subsidiary of the Company to the Company in connection therewith), would
exist which prohibits such cash payment, or if the Company does not have
available funds to make such payment, the portion of the cash payment so
prohibited or unavailable shall be made by the Company's delivery of a junior
subordinated promissory note (which shall be subordinated and subject in right
of payment to the prior payment of all indebtedness of the Company and its
Subsidiaries) of the Company or any of its Subsidiaries (a "Junior Subordinated
Note") in a principal amount equal to the amount of the purchase price which
cannot be paid in cash, payable on the third anniversary of the issuance
thereof and bearing interest payable annually at the publicly announced prime
rate of Bankers Trust Company on the date of issuance; and provided further
that in the case of a purchase pursuant to Section 4.2(a)(iv) the Company may
in any event elect to deliver a Junior Subordinated Note in a principal amount
equal to all or a portion of the cash purchase price (in lieu of paying such
portion of the purchase price in cash). If, in a purchase pursuant to Section
4.1, the Company will pay all or any portion of the purchase price for
purchased shares with a Junior Subordinated Note, the Company shall give the
members of the applicable Management Investor Group notice of the amount of
such note at least 20 days prior to such purchase, and the members of the
applicable Management Investor Group shall have ten days thereafter to rescind
their election to sell such shares. The Company shall have the right set forth
in clause (i) of the first sentence of this Section 5.2(a) whether or not the
member of the Management Investor Group selling such shares is an obligor of
the Company. If the Management Investor Group elects pursuant to the second
preceding sentence to rescind its election to sell such shares, the Management
Investor Group may exercise its right pursuant to Section 4.1 to require the
Company to purchase such shares for a period of ten business days after
receiving notice that the Company is not required to pay any portion of the
purchase price with a Junior Subordinated Note.
SECTION 6. REGISTRATION RIGHTS
-12-
6.1 Incidental Registration. The parties hereto agree that
the Management Investors and their Permitted Transferees shall have all of the
rights and obligations of a "Holder" under the Registration Rights Agreement
(other than those set forth in Section 2 thereof) and that any shares of Common
Stock owned by the Management Investors and their Permitted Transferees shall
constitute "Registrable Securities" under the Registration Rights Agreement
(other than for purposes of Section 2 thereof).
SECTION 7. INVESTMENT REPRESENTATIONS AND COVENANTS
7.1 Investment Intention; No Resales. Each Management
Investor hereby represents and warrants that he is acquiring the BMP Stock for
investment solely for his own account and not with a view to, or for resale in
connection with, the distribution or other disposition thereof.
7.2 BMP Stock Unregistered. Each Management Investor
acknowledges and represents that it has been advised by the Company that:
(a) the offer and sale of the BMP Stock have not been
registered under the Securities Act;
(b) the BMP Stock must be held indefinitely and the
Management Investor must continue to bear the economic risk of the investment
in the BMP Stock unless the offer and sale of such BMP Stock is subsequently
registered under the Securities Act and all applicable state securities laws or
an exemption from such registration is available;
(c) there is no established market for the BMP Stock and it
is not anticipated that there will be any public market for the BMP Stock in
the foreseeable future;
(d) Rule 144 promulgated under the Securities Act is not
presently available with respect to the sale of any securities of the Company,
and, except as set forth herein, the Company has made no covenant to make such
Rule available;
(e) when and if shares of the BMP Stock may be disposed of
without registration under the Securities Act in reliance on Rule 144, such
disposition can be made only in limited amounts in accordance with the terms
and conditions of such Rule;
(f) if the Rule 144 exemption is not available, public offer
or sale of BMP Stock without registration will require compliance with some
other exemption under the Securities Act;
(g) if any of the shares of BMP Stock are at any time
disposed of in accordance with Rule 144, the Management Investor will deliver
to the Company at or prior to the time of such disposition an executed Form 144
(if required by Rule 144) and such other documentation as the Company may
reasonably require in connection with such sale;
-13-
(h) a restrictive legend in the form heretofore set forth
herein shall be placed on the certificates representing the BMP Stock; and
(i) a notation shall be made in the appropriate records of
the Company indicating that the BMP Stock is subject to restrictions on
transfer and, if the Company should at some time in the future engage the
services of a securities transfer agent, appropriate stop-transfer instructions
will be issued to such transfer agent with respect to the BMP Stock.
7.3 Additional Investment Representations. Each Management
Investor represents and warrants that:
(a) the Management Investor's financial situation is such
that he can afford to bear the economic risk of holding the BMP Stock for an
indefinite period of time, has adequate means for providing for his current
needs and personal contingencies, and can afford to suffer a complete loss of
his investment in the BMP Stock;
(b) the Management Investor's knowledge and experience in
financial and business matters are such that he is capable of evaluating the
merits and risks of the investment in the BMP Stock;
(c) the Management Investor understands that the BMP Stock is
a speculative investment which involves a high degree of risk of loss of his
investment therein, there are substantial restrictions on the transferability
of the BMP Stock, and, on the Closing Date and for an indefinite period
following the Closing, there will be no public market for the BMP Stock and,
accordingly, it may not be possible for the Management Investor to liquidate
his investment in case of emergency, if at all;
(d) the Management Investor understands and has taken
cognizance of all the risk factors related to the purchase of the BMP Stock,
and no representations or warranties have been made to the Management Investor
or his representatives concerning the BMP Stock or the Company or any of its
Subsidiaries or their prospects or other matters;
(e) in making his decision to purchase the BMP Stock hereby,
the Management Investor has relied upon independent investigations made by him
and, to the extent believed by the Management Investor to be appropriate, his
representatives, including his own professional, financial, tax and other
advisors; and
(f) the Management Investor has been given the opportunity to
examine all documents and to ask questions of, and to receive answers from, the
Company and its Subsidiaries and their representatives concerning the Company
and its Subsidiaries, the transactions contemplated by the Recapitalization
Agreement and the terms and conditions of the purchase of the BMP Stock and to
obtain any additional information which the Management Investor deems
necessary.
-14-
SECTION 8. MISCELLANEOUS
8.1 Additional Securities Subject to Agreement. Each
Stockholder agrees that any other Securities which it shall hereafter acquire
by means of the IPO Reorganization or a stock split, stock dividend,
distribution, exercise of stock options, or otherwise shall be subject to the
provisions of this Agreement to the same extent as if held on the date hereof.
8.2 Termination. This Agreement shall terminate, and thereby
become null and void, as to any particular Securities, on the date on which
they are sold in a Public Offering or are sold pursuant to Rule 144 under the
Securities Act (unless such Securities are reacquired by a Stockholder).
8.3 Injunctive Relief. The Stockholders and their Permitted
Transferees acknowledge and agree that a violation of any of the terms of this
Agreement will cause the Stockholders and their Permitted Transferees
irreparable injury for which adequate remedy at law is not available.
Accordingly, it is agreed that each Stockholder and Permitted Transferee shall
be entitled to an injunction, restraining order or other equitable relief to
prevent breaches of the provisions of this Agreement and to enforce
specifically the terms and provisions hereof in any court of competent
jurisdiction in the United States or any state thereof, in addition to any
other remedy to which they may be entitled at law or equity.
8.4 Amendments. This Agreement may be amended only by a
written instrument signed by (a) the Company and (b) Stockholders which own on
a fully diluted basis Securities representing at least a majority of the voting
power represented by all Securities outstanding on a fully diluted basis and
owned by all Stockholders; provided, however, that this Agreement shall not be
amended in a manner that adversely affects the Management Investors and their
Permitted Transferees without the prior written consent of holders of a
majority of the Common Stock then beneficially owned by the Management
Investors.
8.5 Successors, Assigns and Transferees. The provisions of
this Agreement shall be binding upon and shall inure to the benefit of the
parties hereto and their Permitted Transferees and their respective successors,
each of which Permitted Transferees shall agree, in a writing in form and
substance satisfactory to the Company, to become a party hereto and be bound to
the same extent as its transferor hereby, provided that no Stockholder may
assign to any Permitted Transferee any of its rights hereunder other than in
connection with a Transfer to such Permitted Transferee of Securities in
accordance with the provisions of this Agreement.
8.6 Notices. All notices, requests and demands to or upon the
respective parties hereto to be effective shall be in writing (including by
telecopy), and, unless otherwise expressly provided herein, shall be deemed to
have been duly given or made when delivered by hand, or when delivered by a
recognized courier or, in the case of telecopy notice, when received, addressed
as follows to the parties hereto, or to such other address as may be hereafter
notified by the respective parties hereto:
-15-
if to the Company:
c/o Graham Packaging Company
1110 East Princess Street
York, Pennsylvania 17403
Attention: Philip R. Yates
Telecopy: (717) 849-8575
with copies to:
The Blackstone Group L.P.
345 Park Avenue
31st Floor
New York, New York 10154
Attention: Howard A. Lipson
Telecopy: (212) 754-8703
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017
Attention: Wilson S. Neely, Esq.
Telecopy: (212) 455-2502
if to Blackstone:
The Blackstone Group L.P.
345 Park Avenue
31st Floor
New York, New York 10154
Attention: Howard A. Lipson
Telecopy: (212) 754-8703
with copies to:
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017
Attention: Wilson S. Neely, Esq.
Telecopy: (212) 455-2502
if to a Management Investor, to him
at his address or telecopy number set
forth in the books and records of the Company.
8.7 Integration. This Agreement and the documents
referred to herein or delivered pursuant hereto contain the entire understanding
of the parties with respect to the
-16-
subject matter hereof and thereof. There are no agreements, representations,
warranties, covenants or undertakings with respect to the subject matter hereof
and thereof other than those expressly set forth herein and therein.
8.8 Severability. If one or more of the provisions,
paragraphs, words, clauses, phrases or sentences contained herein, or the
application thereof in any circumstances, is held invalid, illegal or
unenforceable in any respect for any reason, the validity, legality and
enforceability of any such provision, paragraph, word, clause, phrase or
sentence in every other respect and of the remaining provisions, paragraphs,
words, clauses, phrases or sentences hereof shall not be in any way impaired,
it being intended that all rights, powers and privileges of the parties hereto
shall be enforceable to the fullest extent permitted by law.
8.9 Counterparts. This Agreement may be executed in two or
more counterparts, and by different parties on separate counterparts each of
which shall be deemed an original, but all of which shall constitute one and
the same instrument.
8.10 Governing Law. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of New York
without regard to the conflicts of law principles thereof, except for matters
directly within the purview of the General Corporation Law of the State of
Delaware (the "DGCL"), which shall be governed by the DGCL.
8.11 Jurisdiction. Any action to enforce, which arises out of
or in any way relates to, any of the provisions of this Agreement may be
brought and prosecuted in such court or courts located within the State of New
York or the Commonwealth of Pennsylvania as provided by law; and the parties
consent to the jurisdiction of such court or courts located within the State of
New York or the Commonwealth of Pennsylvania and to service of process by
registered mail, return receipt requested, or by any other manner provided by
the law of such applicable jurisdiction.
8.12 Additional Management Investors. Any employee or
director of the Company or any of its Subsidiaries who becomes party to a stock
subscription agreement or option agreement after the date hereof may become a
party hereto and may become bound hereby by entering into a supplementary
agreement with the Company agreeing to be bound by the terms hereof (or only
specific sections hereof) in the same manner as the other Management Investors.
Each such supplementary agreement shall become effective upon its execution by
the Company and such employee or director, and it shall not require the
signature or consent of any other party hereto. Such supplementary agreement
may modify some of the terms hereof as they effect such employee or director.
-17-
IN WITNESS WHEREOF, each of the undersigned has executed this
Agreement or caused this Agreement to be executed on its behalf as of the date
first written above.
BLACKSTONE CAPITAL PARTNERS III
MERCHANT BANKING FUND L.P.
By: Blackstone Management Associates III LLC,
its General Partner
By: /s/ Howard A. Lipson
` -------------------------------------------
Name: Howard A. Lipson
Title: Member
BLACKSTONE OFFSHORE CAPITAL PARTNERS
III L.P.
By: Blackstone Management Associates III LLC,
its General Partner
By: /s/ Howard A. Lipson
--------------------------------------
Name: Howard A. Lipson
Title: Member
BLACKSTONE FAMILY INVESTMENT
PARTNERSHIP III L.P.
By: Blackstone Management Associates III LLC,
its General Partner
By: /s/ Howard A. Lipson
------------------------------------------
Name: Howard A. Lipson
Title: Member
-18-
BMP/GRAHAM HOLDINGS CORPORATION
By: /s/ Simon Lonergan
--------------------------
Name: Simon Lonergan
Title: Vice President
GRAHAM PACKAGING HOLDINGS COMPANY
By: BCP/Graham Holdings LLC, a general partner
By: /s/ Simon Lonergan
--------------------------
Name: Simon Lonergan
Title: Vice President
GPC CAPITAL CORP. II
By: /s/ Simon Lonergan
--------------------------
Name: Simon Lonergan
Title: Vice President
-19-
[SIGNATURE PAGE TO MANAGEMENT STOCKHOLDERS' AGREEMENT]
MANAGEMENT INVESTOR:
----------------------------------
Name: Philip R. Yates
BMP Shares: 212.63
-20-
[SIGNATURE PAGE TO MANAGEMENT STOCKHOLDERS' AGREEMENT]
MANAGEMENT INVESTOR:
-----------------------------------
Name: Roger Prevot
BMP Shares: 106.31
-21-
[SIGNATURE PAGE TO MANAGEMENT STOCKHOLDERS' AGREEMENT]
MANAGEMENT INVESTOR:
------------------------------------
Name: G. Robinson Beeson
BMP Shares: 59.07
-22-
[SIGNATURE PAGE TO MANAGEMENT STOCKHOLDERS' AGREEMENT]
MANAGEMENT INVESTOR:
-------------------------------------
Name: Scott Booth
BMP Shares: 59.07
-23-
[SIGNATURE PAGE TO MANAGEMENT STOCKHOLDERS' AGREEMENT]
MANAGEMENT INVESTOR:
--------------------------------------
Name: John Hamilton
BMP Shares: 37.84
-24-
[SIGNATURE PAGE TO MANAGEMENT STOCKHOLDERS' AGREEMENT]
MANAGEMENT INVESTOR:
--------------------------------------
Name: Alex Everhart
BMP Shares: 37.84
-25-
[SIGNATURE PAGE TO MANAGEMENT STOCKHOLDERS' AGREEMENT]
MANAGEMENT INVESTOR:
--------------------------------------
Name: Geoffrey Lu
BMP Shares: 21.28
-26-
[SIGNATURE PAGE TO MANAGEMENT STOCKHOLDERS' AGREEMENT]
MANAGEMENT INVESTOR:
--------------------------------------
Name: Albert P.M. Seguin
BMP Shares: 10.67
-27-
[SIGNATURE PAGE TO MANAGEMENT STOCKHOLDERS' AGREEMENT]
MANAGEMENT INVESTOR:
---------------------------------------
Name: George Lane
BMP Shares: 12.76
-28-
[SIGNATURE PAGE TO MANAGEMENT STOCKHOLDERS' AGREEMENT]
MANAGEMENT INVESTOR:
----------------------------------------
Name: Ashok Sudan
BMP Shares: 11.71
-29-
[SIGNATURE PAGE TO MANAGEMENT STOCKHOLDERS' AGREEMENT]
MANAGEMENT INVESTOR:
---------------------------------------
Name: William Mertens
BMP Shares: 10.23
-30-
[SIGNATURE PAGE TO MANAGEMENT STOCKHOLDERS' AGREEMENT]
MANAGEMENT INVESTOR:
---------------------------------------
Name: David Cargill
BMP Shares: 10.23
-31-
[SIGNATURE PAGE TO MANAGEMENT STOCKHOLDERS' AGREEMENT]
MANAGEMENT INVESTOR:
---------------------------------------
Name: Robert Cochran
BMP Shares: 10.01
-32-
[SIGNATURE PAGE TO MANAGEMENT STOCKHOLDERS' AGREEMENT]
MANAGEMENT INVESTOR:
---------------------------------------
Name: George Stevens
BMP Shares: 10.72
-33-