Tender-Offer Solicitation/Recommendation Statement — Schedule 14D-9
Filing Table of Contents
Document/Exhibit Description Pages Size
1: SC 14D9 Tender-Offer Solicitation/Recommendation Statement 33 168K
2: EX-1 Agreement & Plan of Merger & Reorganization 54 219K
3: EX-2 Press Release Issued by the Co. & Parent 2 10K
4: EX-3 Letter Agreement Dated 6/16/97 20 73K
5: EX-4 Memorandum of Agreement Dated 6/16/97 30 92K
6: EX-5 Option Agreement Dated as of 6/16/97 8 32K
7: EX-6 Incentive Option Agreement - Dated 6/16/97 11 35K
8: EX-7 Non-Competition Agreement - Dated 6/16/97 9 32K
9: EX-8 Qualification & Listing of Shares Agreement 6 21K
10: EX-9 Stockholder Letter Dated 6/23/97 1 8K
11: EX-10 Opinion of Crowell, Weedon & Co. 2 16K
EX-5 — Option Agreement Dated as of 6/16/97
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EXHIBIT 5
OPTION AGREEMENT
THIS AGREEMENT made as of the 16th day of June, 1997
B E T W E E N:
SHAHROKH SEDAGHAT,
an individual resident in Los Angeles, California
(hereinafter called "Shawn")
- and -
CCL INDUSTRIES INC.,
a corporation continued under the laws of Canada
(hereinafter called "CCL")
THIS AGREEMENT WITNESSES that in consideration of the covenants, agreements
and warranties herein set out and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties hereto
respectively covenant and agree as follows:
1. Subject to the terms hereof, CCL hereby grants (effective upon the
commencement of employment of Shawn pursuant to an employment agreement
among Seda Specialty Packaging Corp., Shawn and CCL as of the 16th day of
June, 1997 (the "Employment Agreement")) to Shawn an irrevocable option
(the "Option") to purchase from CCL within the time period hereinafter
provided and subject to compliance with all requirements of all stock
exchanges and securities regulatory authorities having jurisdiction, all or
any part of 545,000 authorized and unissued Class B non-voting shares
("Class B Shares") in the capital of CCL (the "Option Shares") at a price
per share equal to the simple average of the daily high and low board lot
trading prices for Class B Shares on The Toronto Stock Exchange for the ten
trading days commenced June 10, 1997 and ending June 23, 1997, less $10.35
(the "Option Price"). CCL and Shawn acknowledge that the Option is intended
to replace existing stock options granted Shawn by Seda Specialty Packing
Corp. which will be cancelled upon completion of the Merger (as defined in
the Employment Agreement).
2. The Option shall be exercisable by Shawn in whole or in part at any time
and from time to time commencing from the date hereof until 4:30 p.m.
(Toronto time) on June 16, 2003 (the "Option Term"). Notwithstanding any of
the provisions hereof, any issuance of Option Shares will occur only upon
compliance by CCL with the terms of section 1.1, and by Shawn of section
1.3, of the Qualification and Listing of Shares Agreement dated June 16,
1997 between CCL and Shawn, but only insofar as such terms relate to the
issue of Class B Shares issuable in connection with the Option, or the
waiver by Shawn of compliance by CCL with such terms.
Page 2
3. In the event Shawn elects to exercise all or any portion of the Option,
Shawn shall duly complete, execute and deliver to CCL at its address
hereinafter provided, a signed notice specifying the number of Option
Shares with respect to which the Option is being exercised together with a
certified cheque, bank draft or money order payable to or to the order of
CCL in an amount equal to the product of the Option Price multiplied by the
number of Option Shares in respect of which the Option is to be exercised.
Upon each exercise of the Option in the manner herein provided, CCL shall
instruct and cause the registrar and transfer agent of CCL to deliver to
Shawn, within a reasonable time of such exercise and at the address
specified in section 18 or such other address as Shawn shall direct in
writing, certificates representing the Option Shares being purchased
registered in the name of Shawn, or subject to section 4 and section 18A,
in such other name as Shawn shall direct in writing at the time of such
exercise.
4. Shawn covenants and agrees that he will not sell, assign, transfer,
encumber or otherwise dispose of any of the Option Shares prior to the
third anniversary of the date hereof without the prior written consent of
CCL, which consent may be granted or withheld by CCL in its sole and
absolute discretion. Notwithstanding the foregoing, but provided that
Shawn is not in breach of his obligations pursuant to sections 5.3, 5.4 or
5.6 of the Employment Agreement, if Shawn's employment is terminated
pursuant to subsection 2.2(b), subsection 2.2(c) or subsection 2.2(d) of
the employment agreement or Shawn dies the three-year period hereinbefore
referred to shall be deemed to have expired upon the occurrence of such
event.
5. CCL represents and warrants to Shawn that:
(a) all corporate action has been taken by or on behalf of CCL to
authorize and permit CCL to enter into and perform this Agreement and
to validly allot and reserve for issuance the Option Shares to and in
favour of Shawn, his heirs, executors, legal representatives and
permitted assigns; this Agreement constitutes a legal, valid and
binding obligation of CCL enforceable against it in accordance with
its terms, except to the extent that enforceability may be limited by
applicable bankruptcy, reorganization, insolvency, moratorium or other
laws affecting the enforcement of creditors' rights generally and by
general principles of equity, regardless of whether such
enforceability is considered in a proceeding in equity or at law; and
upon the due exercise of the Option or any part thereof and upon the
payment of the Option Price, each Option Share issued to Shawn or his
nominee shall be outstanding as a fully paid and non-assessable Class
B Share in the capital of CCL;
(b) CCL is a reporting issuer pursuant to the Securities Act (Ontario)
(the "Act") and is not in default of any provision of the Act or the
regulation or rules promulgated thereunder;
(c) the Class B Shares of CCL are presently listed and posted for trading
on The Toronto Stock Exchange and The Montreal Exchange and CCL is not
in default of the by-laws, policies or rules of such Stock Exchanges;
Page 3
(d) neither the execution and delivery of this Agreement by CCL nor the
performance by CCL of its obligations hereunder will constitute a
violation of, conflict with, or result in a default (or give rise to
any right of termination, cancellation or acceleration) under any
note, bond, mortgage, indenture, licence, contract, commitment,
agreement, understanding, arrangement or restriction of any kind to
which CCL is a party or by which CCL or its properties or assets is
bound, or any judgement, decree, order, injunction, statute, rule or
regulation of any court, agency, securities commission or regulatory
authority of any kind applicable to CCL or any of its assets or
properties, except for violations, conflicts, defaults (or rights of
termination, cancellation or acceleration) which would not impair
CCL's ability to issue the Option Shares to Shawn on the terms and
conditions hereof; and
(e) all consents, approvals and authorizations required to be obtained in
connection with the grant of the Option and the issuance of the Option
Shares have been obtained, other than the approval of the Montreal
Exchange which approval CCL shall use its reasonable best efforts to
obtain.
6. CCL hereby covenants with Shawn that it will, at all times (subject to
section 7 hereof):
(a) cause the Option Shares from time to time acquired by Shawn pursuant
to the terms hereof to be issued as fully paid and non-assessable
Class B Shares in the capital of CCL and to cause the certificate(s)
representing such Option Shares to be delivered in accordance with the
terms hereof;
(b) comply at its expense in all material respects with all legal,
regulatory, stock exchange and administrative requirements applicable
to the Class B Shares (including, without limitation, any such
requirements relating to the Option); and
(c) cause the Class B Shares of CCL to be listed on either the Montreal
Exchange or The Toronto Stock Exchange and cause either of the said
Stock Exchanges to list and reserve for issuance a sufficient number
of Class B Shares of CCL for issuance to Shawn pursuant to this
Agreement, in each case, at its own expense.
7. Each of the representations, warranties and covenants contained in sections
5 and 6 hereof shall survive for a period of twelve months following the
expiration of the three-year period set forth in section 4 with respect to
the Option Shares purchased by Shawn pursuant to this agreement provided
that if Shawn does not exercise the Option herein granted in respect of any
of the Option Shares prior to the expiry of the Option, CCL shall thereupon
be thereafter released from any and all representations, warranties and
covenants herein contained with respect to the unexercised portion of the
Option.
8. Nothing herein contained or done pursuant hereto shall obligate Shawn to
purchase and/or pay for any Option Shares except upon the exercise of the
Option in the manner hereinbefore provided.
Page 4
9. Shawn covenants and agrees:
(a) to execute and deliver to CCL upon request, all such filings as may be
required in respect of the exercise by Shawn of the Option, from time
to time by all stock exchanges and securities regulatory authorities
having jurisdiction; provided that Shawn shall not be responsible for
more than nominal expense for doing so;
(b) not to sell, transfer, or distribute any of the Option Shares in the
United States except pursuant to: (i) an effective registration
statement under the Securities Act of 1933, as amended (the "Act"); or
(ii) if there is no registration statement in effect, pursuant to a
specific exemption from registration under the Act; and
(c) that he will use reasonable commercial efforts to conduct all
dispositions of the Option Shares in an orderly manner such that the
market price of the Class B Shares shall not be unduly affected by any
such disposition, and shawn shall provide reasonable advance notice to
CCL of any proposed disposition, whereupon CCL shall have the right
(which right CCL shall have the right to assign an institution,
pension fund, mutual fund or similar purchaser, provided that any such
assignment shall not relieve CCL from its obligations with respect to
the exercise of such right, and provided that such assignment shall
not delay the right or ability of the Executive to so dispose of his
Class B Shares), but not the obligation, upon notice in writing to
shawn within one business day of receipt by CCL of shawn's notice, to
purchase all or any part of such Option Shares at a price per share
equal to the closing price of the Class B Shares on The Toronto Stock
Exchange on the trading day immediately preceding the date of notice
by Shawn, such purchase and sale to be completed on the third business
day following the date of CCL's (or its assigns) notice to shawn. it
shall be a condition, which shawn may waive, to the right of CCL (or
its assigns) to purchase all or part of such Class B Shares, that
Shawn receive a legal opinion that the sale of such shares to CCL (or
its assigns) shall not result in tax consequences to Shawn which are
materially less favourable than if Shawn were to sell such Class B
Shares in the open market. If such condition is not waived by Shawn,
the opinion shall be obtained at the expense of Shawn (and a copy
delivered to CCL) not more than ten (10) business days following the
giving of notice by Shawn, in which case the time periods in which CCL
(or its assigns) is required to give notice of its intention to
purchase such shares, and to complete the purchase of such shares,
shall not commence until receipt of such opinion by CCL (or its
assigns).
10. If CCL shall amalgamate, consolidate with, or merge with or into another
company or the Class B Shares of CCL are reclassified, the Option, to the
extent it has not been exercised, shall entitle Shawn, upon the future
exercise of the option, to such number and kind of securities or other
property, subject to the terms of the Option, which Shawn would have
received upon such amalgamation, consolidation, merger or reclassification
if Shawn had fully exercised the Option immediately prior to the
amalgamation, consolidation, merger or reclassification.
11. The number of Option Shares issuable upon the exercise of the Option shall
be subject to adjustment from time to time as follows:
Page 5
(a) If and whenever at any time during the Option Term, CCL shall:
(i) subdivide, redivide, reclassify or otherwise change the
outstanding Class B Shares or securities convertible or
exchangeable into Class B Shares into a greater number of Class
B Shares; or
(ii) reduce, combine, or consolidate the outstanding Class B Shares
or securities convertible or exchangeable into Class B Shares
into a lesser number of Class B Shares; or
(iii) issue any Class B Shares, or securities convertible to or
exchangeable for or with respect to Class B Shares, to the
holders of all or substantially all of the outstanding Class B
Shares by way of a stock dividend; or
(iv) issue rights, options or warrants (collectively, "Rights") to
all or substantially all of the holders of its outstanding
Class B Shares entitling them for a period expiring not later
than 60 days after such record date to subscribe for, acquire
or purchase Class B Shares or securities convertible or
exchangeable for Class B Shares;
(any of such events in (i), (ii), (iii) and (iv) being herein called a
"Share Reorganization")
the number of Option Shares issuable upon the exercise of the Option
shall (subject to subsection 11(b) below) be adjusted effective
immediately after the record date of which the holders of common
shares are determined for the purposes of the Share Reorganization, by
multiplying the number of Option Shares which would have been
determined pursuant to section 1 without regard to the Share
Reorganization by a fraction, the numerator of which shall be the
number of Class B Shares outstanding after giving effect to such Share
Reorganization, and the denominator of which shall be the number of
Class B Shares outstanding on such record date before giving effect to
such Share Reorganization. To the extent that any of the Rights are
not so issued or if issued, are not exercised prior to the expiry
thereof, the number of Option Shares issuable upon exercise of the
Option shall be readjusted to that number of Option Shares issuable
upon exercise of the Option without regard to those of the Rights not
so issued or exercised, as the case may be;
(b) No adjustments to the number of Option Shares shall be made pursuant
to paragraphs (iii) and (iv) of subsection 11(a) if Shawn is permitted
to participate in such stock dividend or in the issue of such Rights,
as the case may be, as though and to the same extent as if Shawn had
exercised the Option prior to the applicable record date or effective
date for such stock dividend or the issue of such Rights, as the case
may be;
(c) The adjustment to the number of Option Shares provided for in this
section 11 shall be cumulative and shall apply to successive
subdivisions, reclassifications,
Page 6
reductions, combinations, consolidations, issuances or other events
that result in the requirement for adjustment pursuant to the terms
hereof;
(d) When any action is taken which would, if implemented, require an
adjustment to the number of Class B Shares issuable upon the exercise
of the Option as herein provided, CCL shall forthwith prepare and
deliver to Shawn a certificate signed by a senior officer of CCL
setting forth the details of the proposed Share Reorganization or
other event, the number of Class B Shares before adjustment to which
Shawn would be entitled upon exercise of the Option and details of the
computation of the adjustments required to be made to the number of
Option Shares in accordance with the terms of this section 11. If any
dispute shall at any time arise with respect to such adjustments, such
disputes shall be conclusively determined by the auditors of CCL and
any such determination shall be binding upon CCL and Shawn; and
(e) No fractional shares shall be issued upon the exercise of this Option.
If as a result of any adjustment pursuant to this section 11, Shawn
would become entitled to a fractional share, Shawn will have the right
to purchase only the next lower whole number of shares and no payment
or other adjustment will be made with respect to the fractional
interest so disregarded.
12. Upon the occurrence of a Share Reorganization resulting in an adjustment to
the number of Option Shares issuable upon the exercise of the Option, the
Option Price shall be adjusted by multiplying the Option Price in effect
immediately prior to such time by a fraction which shall be the reciprocal
of the fraction employed in the adjustment of the number of Option Shares.
13. The adjustments provided for in sections 10, 11 and 12 hereof shall be made
successively and cumulatively and in the case of adjustments to the Option
Price shall be computed to the nearest cent. After any such adjustment,
the term "Class B Shares" as used herein shall mean the shares or property,
as a result of such adjustments, which Shawn is entitled to receive upon
exercise of the Option.
14. No modification or waiver of any provision of this Agreement and no consent
by either party to any departure therefrom shall be effective unless in
writing signed by a duly authorized officer of the party so modifying or
waiving, and the same will only then be effective for the period and on the
conditions and for the specific instance and purposes specified in such
writing.
15. All dollar amounts referred to herein are in lawful currency of Canada
unless otherwise expressed.
16. Subject to the terms and conditions herein provided, CCL and Shawn use
their reasonable best efforts to promptly take, or cause to be taken, all
other action and do, or cause to be done, all other things necessary,
proper or appropriate under applicable laws and regulations or otherwise to
consummate and make effective the transactions contemplated by this
Agreement as soon as practicable.
Page 7
17. This Agreement shall be governed by, construed and enforced in accordance
with the laws of the Province of Ontario and the courts of Ontario shall
have non-exclusive jurisdiction to entertain any action arising hereunder.
18. Any notice or other communication required or permitted to be given under
this Agreement shall be in writing and shall be sufficiently given if
personally delivered by courier, charges prepaid, to CCL and to Shawn, as
the case may be, at the applicable address set out below, or transmitted to
it by telecopy:
(a) If to Shawn, addressed to him as follows:
Mr. Shahrokh Sedaghat
2501 West Rosecrans Avenue
Los Angeles, California
90059-3510
Telecopier No. (310) 635-4133
(b) If to CCL, addressed to it as follows:
150 Gordon Baker Road
Willowdale, Ontario
M2H 3P8
Attention: President
Telecopier No. (416) 256-8555
or such other address as the party to whom such writing is to be given
shall have notified the party giving the same in the manner provided in
this section. Any notice delivered to the party to whom it is addressed as
hereinbefore provided shall be deemed to have been given and received on
the date it is so delivered at such address, provided that if such day is
not a business day, then a notice shall be deemed to have been given and
received on the next business day following such day. Any notice
transmitted by telecopy shall be deemed given and received on the first
business day after its transmission.
18A. This Agreement shall enure to the benefit of and be binding upon the
parties hereto and their successors and assigns, but shall not be
assignable by either party without the written consent of the other party
other than by will or by the applicable laws of descent and distribution.
A beneficial interest in the Option shall not be assigned nor shall any
agreement, understanding or commitment to do so be entered into, other than
by will or by the applicable laws or descent and distribution without prior
receipt of all regulatory approvals.
Page S1
19. This Agreement, the employment agreement between Shawn, CCL and Seda
Specialty Packaging Corp. dated June 16, 1997 and the incentive option
agreement between Shawn and CCL dated June 16, 1997 supersede all prior
agreements, understandings and representations (oral, written, implied or
expressed) between Shawn and CCL relating to the Option Shares.
IN WITNESS WHEREOF this Agreement has been executed and delivered by the
parties hereto on the date first above written.
/s/ SHAHROKH SEDAGHAT
----------------------- ----------------------------------
WITNESS SHAHROKH SEDAGHAT
CCL INDUSTRIES INC.
BY: /s/ CCL INDUSTRIES INC.
------------------------------
Dates Referenced Herein and Documents Incorporated by Reference
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