Exhibit 10.5
OPTION AGREEMENT
This OPTION AGREEMENT (this "Agreement") is made as of January 26, 2002,
by and between Cupcorp, Inc., a Delaware corporation (the "Grantor"), and SF
Holdings Group, Inc., a Delaware corporation (the "Grantee").
1. Grant of Option. Grantor hereby grants to the Grantee or its successors
or permitted assigns (as herein provided) an option (the "Option") to purchase
from the Grantor 100% of the membership interests (the "Interest") of Newcup,
L.L.C., a Delaware limited liability company (the "Company"), less such
percentage of the membership interests in the Company theretofore transferred to
the Grantee or its subsidiaries. Upon exercise of the Option, the Grantee shall
pay to Grantor $1,000,000, payable by wire transfer of immediately available
funds. Upon the purchase of the Interest in accordance with this Agreement, the
Grantee shall become the holder of the Interest free and clear of all liens and
encumbrances and shall have all of the rights of a member of the Company under
the applicable laws of the State of Delaware and the Operating Agreement of the
Company.
2. Conditions to Exercise. The Option shall be exercisable only if either
(a) the Grantee shall have paid in full all amounts then owing with respect to
each Note (as defined in the Guaranty Agreement), pursuant to the terms of that
certain Guaranty Agreement dated January 26, 2002, among Grantee, TCW/Crescent
Mezzanine, L.L.C., as Collateral Agent, and the purchasers party thereto (the
"Guaranty Agreement") or (b) the Grantee (together with its subsidiaries) owns
95% or more of the membership interests of the Company.
3. Exercise of Option. To exercise the Option, the Grantee must deliver to
the Grantor notice of the Grantee's exercise, in the form substantially similar
to "Exhibit A" attached hereto. The outstanding membership interests in the
Company are validly issued, fully paid and nonassessable and free from all taxes
and charges with respect to the issuance or transfer thereof, and all other
liens, claims and encumbrances (except as set forth in the Operating Agreement).
Upon exercise of the Option and payment of the exercise price, Grantor
immediately shall deliver to Grantee and/or Grantee's designee(s), in such
combination as specified by the Grantee, an assignment of the Interest, in form
reasonably satisfactory to Grantee.
4. Who May Exercise. The Option may be exercised by the Grantee or any
permitted assignee of Grantee's rights hereunder, as provided in Section 5
below.
5. Assignability. The Option shall continue in effect, regardless of any
transfer of the Interest by Grantor, other than to Grantee or its assigns. The
Option is assignable by the Grantee only to any of its subsidiaries. Any
assignee of any Grantee shall, upon such assignment, be deemed to be the Grantee
hereunder. Any purported assignment or transfer except as provided above shall
be void and ineffective.
6. Rights of Member. Upon the purchase of the Interest in accordance with
this Agreement, execution by Grantee and/or Grantee's designee of the Operating
Agreement of the Company, and satisfaction by such persons of their obligations
under the Operating Agreement
with respect to the acquisition of the Interest, Grantee and/or Grantee's
designees shall become, and shall have all of the rights and obligations of, a
member (or members) of the Company under the applicable laws of the State of
Delaware and the terms of the Operating Agreement.
7. Legend. Each certificate, if any, evidencing membership interests that
are now or hereafter held by Grantor and each certificate, if any, issued in
exchange for or upon the transfer of any such membership interests shall be
stamped or otherwise imprinted with a legend in substantially the following
form:
"The securities represented by this certificate are subject to an
Option Agreement dated as of January 25, 2002. A copy of such Option
Agreement shall be furnished without charge by the Company upon
written request."
8. Amendment and Waiver. Except as otherwise provided herein, no
modification, amendment or waiver of any provision of this Agreement shall be
effective unless such modification, amendment or waiver is approved in writing
by Grantor and the Grantee (or its assignee). The failure of any party to
enforce any of the provisions of this Agreement shall in no way be construed as
a waiver of such provisions and shall not affect the right of such party
thereafter to enforce each and every provision of this Agreement in accordance
with its terms.
9. Severability. Whenever possible, each provision of this Agreement shall
be interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement is held to be invalid, illegal or
unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability shall not affect
the validity, legality or enforceability of any other provision of this
Agreement in such jurisdiction or affect the validity, legality or
enforceability of any provision in any other jurisdiction, but this Agreement
shall be reformed, construed and enforced in such jurisdiction as if such
invalid, illegal or unenforceable provision had never been contained herein.
10. Entire Agreement. Except as otherwise expressly set forth herein, this
Agreement embodies the complete agreement and understanding among the parties
hereto with respect to the subject matter hereof and supersedes and preempts any
prior understandings, agreements or representations by or among the parties,
written or oral, which may have related to the subject matter hereof in any way.
11. Successors and Assigns. Except as otherwise provided herein, this
Agreement shall inure to the benefit of and be enforceable by the Grantee and
its permitted successors and assigns.
12. Counterparts. This Agreement may be executed in multiple counterparts,
each of which shall be an original and all of which taken together shall
constitute one and the same agreement.
13. Remedies. The Grantee shall be entitled to enforce its rights under
this Agreement specifically, to recover damages by reason of any breach of any
provision of this Agreement and to exercise all other rights existing in its
favor.
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14. Notices. Any notice provided for in this Agreement shall be in writing
and shall be either personally delivered, or mailed first class mail (postage
prepaid) or sent by reputable overnight courier service (charges prepaid) to the
parties at the addresses set forth below. Notices shall be deemed to have been
given hereunder when delivered personally, three days after deposit in the U.S.
mail and one Business Day after deposit with a reputable overnight courier
service:
If to the Grantor: Cupcorp, Inc.
c/o TCW Crescent Mezzanine, L.L.C.
11100 Santa Monica Blvd.
Suite 2000
Los Angeles, CA 90025
Telecopier No.: (310) 235-5967
Attention: Rufus Rivers
With a copy to: Gardere Wynne Sewell LLP
3000 Thanksgiving Tower
1601 Elm Street
Dallas, Texas 75201
Telecopier No.: (214) 999-4667
Attention: Gary B. Clark
If to the Grantee: SF Holdings Group, Inc.
115 Stevens Avenue
Valhalla, New York 10549
Telecopier No.: (914) 747-8095
Attention: Harvey L. Friedman
With a copy to: Kramer, Levin, Naftalis & Frankel
919 Third Avenue
New York, NY 10022
Telecopier No.: (212) 715-8000
Attention: Shari Krouner
15. Governing Law; Submission to Jurisdiction. The General Corporation Law
of the State of Delaware shall govern all issues concerning the relative rights
of the Company and the Grantee. All other questions concerning the construction,
validity, enforcement and interpretation of this Agreement shall be governed by
the internal law of the State of New York, without giving effect to any choice
of law or conflict of law provision or rule (whether of the State of New York or
any other jurisdictions) that would cause the application of the laws of any
jurisdictions other than the State of New York. The parties hereby irrevocably
submit to the jurisdiction of any New York State Court or any Federal court
sitting in the Borough of Manhattan in the City of New York in respect of any
suit, action or proceeding arising out of or relating to this Agreement and each
party hereto irrevocably accepts for itself and in respect of its property,
generally and unconditionally, jurisdiction of the aforesaid courts. The parties
irrevocably waive, to the fullest extent each may effectively do so under
applicable law, any objection which each party hereto may now or hereafter have
to the laying of the venue of any
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such suit, action or proceeding brought in any such court and any claim that any
such suit, action or proceeding has been brought in an inconvenient forum.
Nothing herein shall affect the right of the parties hereto to serve process in
any other manner permitted by law or to commence legal proceedings or otherwise
proceed against the other party in any other jurisdiction.
16. Business Days. If any time period for giving notice or taking action
hereunder expires on a day which is a Saturday, Sunday or legal holiday in the
state in which the Company's chief executive office is located, the time period
shall automatically be extended to the business day immediately following such
Saturday, Sunday or legal holiday (a "Business Day").
17. Descriptive Headings. The descriptive headings of this Agreement are
inserted for convenience only and do not constitute a part of this Agreement.
18. Representations and Warranties of Grantor. Grantor represents and
warrants to, and agrees with, Grantee that, as of the date hereof, Grantor is
the owner of all of the outstanding membership interests of the Company.
[Signature page follows]
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IN WITNESS WHEREOF, the Grantor and the Grantee have duly executed this
Agreement, to be effective as of January 26, 2002.
CUPCORP, INC.
By: /s/ Mark Attanasio
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Name: Mark Attanasio
Title: President
SF HOLDINGS GROUP, INC.
By: /s/ Hans H. Heinsen
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Name: Hans H. Heinsen
Title: Senior Vice President
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Exhibit A
NOTICE OF EXERCISE
This Notice of Exercise ("Notice") is delivered pursuant to Section 2 of
that certain Option Agreement (the "Agreement") dated as of January 25, 2002, by
and between Cupcorp, Inc., a Delaware corporation ("Grantor"), and SF Holdings
Group, Inc., a Delaware corporation (the "Grantee").
By executing and delivering this Notice, the Grantee hereby exercises the
option granted to the Grantee by Grantor under the terms and conditions of the
Agreement.
IN WITNESS WHEREOF, this Notice has been executed as of __________,
200___.
SF HOLDINGS GROUP, INC.
By:
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Name:
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Title:
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