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EXHIBIT 14
SHARE EXCHANGE AGREEMENT
AGREEMENT, dated as of December 12, 1995 (the "Agreement"), by and
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between L.A. Gear, Inc., a California corporation (the "Company") and Trefoil
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Capital Investors, L.P., a Delaware limited partnership ("Trefoil"), the holder
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of all of the shares of Series A cumulative convertible preferred stock
("Series A Preferred Stock") of the Company.
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WHEREAS, the Company and Trefoil desire to exchange the Series A
Preferred Stock for newly issued Series B cumulative convertible preferred
stock ("Series B Preferred Stock"), having the terms set forth in the
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Certificate of Determination (the "Certificate of Determination") attached
hereto as Exhibit A. ----------------------------
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth in this
Agreement, the parties hereto agree as follows:
ARTICLE I - THE EXCHANGE
SECTION 1.01. The Exchange.
Upon the terms and subject to the conditions set forth in this
Agreement, at the Closing (as defined in Section 1.02 hereof),
(a) Trefoil shall assign, transfer, and convey to the Company one
million (1,000,000) shares of Series A Preferred Stock and all accrued and
unpaid dividends thereon. Trefoil shall deliver at the Closing certificates
representing such shares duly endorsed in blank or accompanied by stock powers
duly endorsed in blank in exchange for and against delivery by the Company of
certificates representing the number of shares of Series B Preferred Stock to
which Trefoil is entitled pursuant to Section 1.01(b) hereof.
(b) The Company shall issue and deliver to Trefoil (i) one million
(1,000,000) shares of Series B Preferred Stock, plus (ii) an additional number
of shares of Series B Preferred Stock (rounded up to the next whole number)
equal to a certain amount of accrued and unpaid dividends in respect of the
Series A Preferred Stock through the Closing (the "Arrearage Amount") divided
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by 100, in exchange for and against delivery by Trefoil of certificates
evidencing one million (1,000,000) shares of Series A Preferred Stock, and in
satisfaction of all accrued and unpaid dividends thereon. For purposes of
determining the Arrearage Amount, the amount of accrued and unpaid dividends
shall be equal to the sum of (i) dividends accrued and unpaid through November
30, 1995, plus (ii) additional dividends, accruing at a rate of 7.5% per annum
during the period beginning December 1, 1995 and ending on the Closing Date
(the "Interim Period"), on any dividends on the Series A Preferred Stock which
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were accrued and unpaid as of November 30, 1995, plus (iii) current dividends
accruing and becoming payable on the Series A Preferred Stock during the
Interim Period, which shall accrue at the rate of 7.5% per annum during the
Interim Period. The Company shall deliver to Trefoil one or more certificates
representing the aggregate number of shares of Series B Preferred Stock Trefoil
is entitled to in
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accordance with this Section 1.01(b) (the transactions contemplated by this
Section 1.01 being referred to herein as the "Exchange") and the Registration
Rights Amendment (as defined in Section 5.02(d)).
SECTION 1.02 Consummation of the Exchange.
The Exchange will be consummated (the "Closing") at the
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offices of Fried, Frank, Harris, Xxxxxxx & Xxxxxxxx, 000 Xxxxx Xxxxxxxx Xxxxxx,
Xxx Xxxxxxx, Xxxxxxxxxx at 10:00 a.m. on the third business day after
satisfaction or waiver of all conditions in Article V (or such other time and
place as the parties may mutually agree) (the "Closing Date"), unless this
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Agreement has been earlier terminated in accordance with its terms.
ARTICLE II - REPRESENTATIONS AND WARRANTIES OF TREFOIL
Trefoil hereby represents and warrants to the Company as
follows:
SECTION 2.01. Authority; Approval.
Trefoil has all requisite power and authority to execute and
deliver this Agreement, to perform its obligations hereunder and to consummate
the transactions contemplated hereby. The execution and delivery of this
Agreement by Trefoil and the consummation by Trefoil of the transactions
contemplated hereby has been duly authorized by all necessary corporate or
partnership action and no other proceedings on the part of Trefoil are
necessary to authorize the execution, delivery or performance of this Agreement
or the consummation of the transactions contemplated hereby. This Agreement
has been duly and validly executed and delivered by Trefoil and, assuming the
due authorization, execution and delivery thereof by the Company, constitutes
the legal, valid and binding obligations of Trefoil, enforceable against
Trefoil in accordance with its terms, except that such enforceability may be
limited by applicable bankruptcy, insolvency, moratorium or other similar laws
affecting or relating to enforcement of creditors' rights generally.
SECTION 2.02. No Conflict.
(a) The execution and delivery of this Agreement by
Trefoil and consummation of the Exchange contemplated hereby does not, and the
performance of this Agreement and the Exchange by Trefoil will not: (i)
conflict with or violate the Certificate of Limited Partnership or Agreement of
Limited Partnership, in each case as amended or restated, of Trefoil, (ii)
result in any breach of or constitute a default (or an event that with notice
or lapse of time or both would become a default) under, or give to others any
rights of termination, amendment, acceleration or cancellation of, or result in
the creation of any Encumbrance (as defined in Section 7.03) on any of the
properties or assets of Trefoil pursuant to, any note, bond, mortgage,
indenture, contract, agreement, lease, license, permit, franchise, or other
instrument or obligation to which Trefoil is a party or by which Trefoil is
bound or affected.
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(b) The execution and delivery of this Agreement by
Trefoil and consummation of the Exchange contemplated hereby does not, and the
performance of this Agreement and the Exchange by Trefoil will not, require any
consent, approval, authorization or permit of, or filing with or notification
to, any governmental or regulatory authority, either domestic or foreign
("Governmental Entities").
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SECTION 2.03. Absence of Litigation.
There is no claim, action, suit, litigation, proceeding, legal
administrative or arbitration or investigation of any kind, at law or in equity
(including actions or proceedings seeking injunctive relief, collectively,
"Litigation"), pending or threatened against, affecting or involving Trefoil
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which seek to challenge the record or beneficial ownership of the Series A
Preferred Stock by Trefoil, or, as of the date hereof, which seek to prevent or
challenge the transactions contemplated hereby.
SECTION 2.04. Title.
Trefoil is the record and beneficial owner of 1,000,000 shares
of Series A Preferred Stock. Trefoil has good and marketable title to the
Series A Preferred Stock proposed to be exchanged by Trefoil hereunder and full
right, power and authority to assign, transfer and deliver such Series A
Preferred Stock hereunder, free and clear of all voting trust arrangements,
liens, encumbrances, equities, security interests, restrictions and claims
whatsoever (other than those imposed by the Securities Act of 1933, as amended
(the "Securities Act") and the state securities or "blue sky" laws of certain
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jurisdictions); and upon delivery of Series B Preferred Stock in exchange for
such Series A Preferred Stock hereunder, the Company will acquire title to such
Series A Preferred Stock, free and clear of all liens, encumbrances, equities,
claims, restrictions, security interests, voting trusts or other defects of
title whatsoever. Except as provided in this Agreement, Trefoil has not
appointed or granted any proxy, which appointment or grant is still effective,
with respect to the Series A Preferred Stock, nor has Trefoil granted or
assigned any rights to receive any accrued and unpaid dividends on the Series A
Preferred Stock.
SECTION 2.05. Investment Purposes.
Trefoil is acquiring the Series B Preferred Stock for its own
account and not with a view to or for sale in connection with any distribution
of the Series B Preferred Stock.
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ARTICLE III - REPRESENTATIONS AND
WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Trefoil as
follows:
SECTION 3.01. Organization and Qualification.
The Company is a corporation duly organized, validly existing
and in good standing under the laws of California ("California Law"), has all
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requisite corporate power and authority to own, lease and operate its
properties and to carry on its business as is now being conducted.
SECTION 3.02. Articles of Incorporation and Bylaws.
The Company has heretofore furnished to Trefoil complete and
correct copies of the Articles of Incorporation and the Bylaws, in each case as
amended or restated, of the Company, which are in full force and effect.
SECTION 3.03. Capitalization; Title to Shares and Notes.
(a) The authorized capital stock of the Company consists of:
(1) 80,000,000 shares of common stock, no par value (the "Common Stock"), of
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which, as of the date hereof 22,936,433 shares of Common Stock were issued and
outstanding, and (2) 10,000,000 shares of Preferred Stock, 1,000,000 of which
shares are designated as the Series A Preferred Stock, par value $100 per
share. 1,000,000 shares of the Series A Preferred Stock are issued and
outstanding. None of the issued and outstanding shares of capital stock are
subject to preemptive rights created by statute, the Company's Articles of
Incorporation or Bylaws or any agreement to which the Company is a party or is
bound. Each of the outstanding shares of capital stock of the Company is duly
authorized, validly issued, fully paid and nonassessable.
(b) Upon consummation of the Exchange, all shares of the
Series B Preferred Stock (the "Series B Shares") will be duly authorized,
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validly issued, fully paid and nonassessable, will be convertible into Common
Stock of the Company in accordance with the terms of the Certificate of
Determination and will be entitled to all of the powers, preferences and rights
set forth therein. The shares of Common Stock initially issuable upon
conversion of the Series B Shares (the "Conversion Shares") have been duly
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authorized and on the Closing Date will be reserved for issuance upon such
conversion, and when issued upon conversion will be validly issued, fully paid
and nonassessable.
SECTION 3.04. Authority; Approval.
The Company has all requisite corporate power and authority to
execute and deliver this Agreement, to perform its obligations hereunder and to
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement and the Registration Rights Amendment by the Company, the
approval of the Certificate of Determination by the Board of
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Directors of the Company, and the consummation by the Company of the
transactions contemplated in this Agreement have been duly authorized by all
necessary action by the Board of Directors and no other corporate proceedings
on the part of the Company other than approval by the Company's shareholders as
contemplated herein are necessary to authorize this Agreement, the Registration
Rights Amendment, or the Certificate of Determination, or to consummate the
transactions contemplated by this Agreement. This Agreement has been, and the
Registration Rights Amendment upon execution and delivery pursuant hereto will
be, duly and validly executed and delivered by the Company and, assuming the
due authorization, execution and delivery thereof by Trefoil, constitutes, and
the Registration Rights Amendment upon execution and delivery pursuant hereto
will constitute, the legal, valid and binding obligations of the Company,
enforceable against the Company in accordance with its terms, except that such
enforceability may be limited by applicable bankruptcy, insolvency, moratorium
or other similar laws affecting or relating to enforcement of creditors' rights
generally.
SECTION 3.05. No Conflict.
(a) The execution and delivery of this Agreement by the
Company and consummation of the Exchange contemplated hereby does not, and the
performance of this Agreement and the Exchange by the Company will not: (i)
conflict with or violate the Articles of Incorporation or Bylaws, in each case
as amended or restated, of the Company, (ii) except for terms of the Credit
Agreement as to which consents or waivers will be obtained prior to the Closing
Date, result in any breach of or constitute a default (or an event that with
notice or lapse of time or both would become a default) under, or give to
others any rights of termination, amendment, acceleration or cancellation of,
or result in the creation of any Encumbrance (as defined in Section 7.03) on
any of the properties or assets of the Company pursuant to, any note, bond,
mortgage, indenture, contract, agreement, lease, license, permit, franchise, or
other instrument or obligation to which the Company is a party or by which the
Company is bound or affected.
(b) The execution and delivery of this Agreement by the
Company and consummation of the Exchange contemplated hereby does not, and the
performance of this Agreement and the Exchange by the Company will not (other
than the required filing of the Certificate of Determination and filings
required under the federal and the state securities or "blue sky" laws of
certain jurisdictions, all of which filings will have been made on or prior to
the Closing Date) require any consent, approval, authorization or permit of, or
filing with or notification to, any Governmental Entity.
SECTION 3.06. Absence of Litigation.
As of the date hereof, there is no Litigation pending or
threatened against, affecting or involving the Company or any of its
subsidiaries or any properties or rights of the Company or any of its
subsidiaries which seek to prevent or challenge the transactions contemplated
hereby.
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SECTION 3.07. Opinion of Financial Advisor.
The Company and the Special Committee have received the
written opinion (the "Fairness Opinion") of Sutro & Co. Incorporated, dated as
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of the date of this Agreement to the effect that the Exchange is fair, from a
financial point of view, to the shareholders of the Company (other than
Trefoil).
ARTICLE IV - ADDITIONAL AGREEMENTS
SECTION 4.01. Meeting of Shareholders.
The Company, acting through its Board of Directors, shall take
all action necessary in accordance with California Law and its Articles of
Incorporation and Bylaws to convene a meeting of the Company's shareholders to
act on this Agreement and the Exchange (the "Shareholders' Meeting") not later
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than April 10, 1996. The Company, acting through its Board of Directors, shall
use its reasonable best efforts to solicit from shareholders of the Company
proxies in favor of the approval of the Exchange and issuance of the Series B
Preferred Stock by the Requisite Vote, as defined in Section 7.03 below, of the
shareholders of the Company.
SECTION 4.02. Best Efforts; Consents; Filings.
Subject to the terms and conditions of this Agreement, the
Company and Trefoil shall each use their reasonable best efforts to (i) take
promptly, or cause to be taken, all appropriate action, and to do promptly, or
cause to be done, all things necessary, proper or advisable under applicable
foreign, federal, state or local law, statute, treaty, ordinance, rule,
regulation, order, writ, injunction, decree, judgment or decree (collectively,
"Laws") or otherwise to consummate and make effective the transactions
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contemplated by this Agreement; (ii) obtain from any Governmental Entities any
consents, licenses, permits, waivers, approvals, authorizations or orders
required to be obtained or made by the Company or Trefoil or any of their
subsidiaries in connection with the authorization, execution and delivery of
this Agreement and the consummation of the transactions contemplated herein,
including, without limitation, the Exchange; (iii) make any necessary filings
and thereafter make any other required submissions, notifications and filings
with respect to this Agreement and the Exchange required under (A) the
Securities Act and the Securities Exchange Act of 1934 ("Exchange Act") and the
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rules and regulations thereunder, and any other applicable Law, including,
without limitation, any other federal or state securities laws and (B) the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, if applicable, provided,
however, that Trefoil and the Company shall cooperate with each other in
connection with the making of all such filings, including, without limitation,
providing copies of all such documents to the non-filing party and its advisors
prior to any filing and, if requested, to accept all reasonable additions,
deletions or changes suggested by the non-filing party in connection therewith;
and (iv) remove any injunctions or other impediments or delays, legal or
otherwise, in order to consummate and make effective the transactions
contemplated by this Agreement for the purpose of securing to the parties
hereto all benefits contemplated by this Agreement. The Company and Trefoil
shall furnish all information required for any application
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or other filing to be made pursuant to the rules and regulations of any
applicable Law in connection with the transactions contemplated by this
Agreement. Prior to the Closing, the Company shall file the Certificate of
Determination with the Secretary of State of California.
SECTION 4.03. NYSE Listing.
The Company shall use its reasonable best efforts to cause the
Conversion Shares to be approved for listing on the New York Stock Exchange,
Inc. ("NYSE") as of the Closing Date.
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SECTION 4.04. Voting Agreement.
Trefoil hereby agrees, during the time this Agreement is in
effect, at any meeting of the shareholders of the Company (including, without
limitation, the Shareholders' Meeting) and in any action by written consent of
the shareholders of the Company or the Series A Preferred Stockholders as a
class, if and as requested to do so by the Company, to: (a) appear at any
annual or special meeting of shareholders of the Company (including, without
limitation, the Shareholders' Meeting) for the purpose of obtaining a quorum;
(b) vote in person or by proxy, all of the shares of Common Stock now owned or
with respect to which Trefoil has or shares voting power and all shares of
Series A Preferred Stock (collectively, the "Shares") in favor of this
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Agreement and the Exchange; (c) vote the Shares against any action, proposal or
agreement that could reasonably be expected to result in a breach in any
material respect of any covenant, representation or warranty or any other
obligation of the Company under this Agreement, or which could reasonably be
expected to result in any of the conditions to the Company's obligations under
this Agreement not being fulfilled; and/or (d) waive its rights to vote in any
manner (whether separately as a class or together with the Common Stock) with
respect to this Agreement and the Exchange.
SECTION 4.05. Sale of Series A Preferred Stock.
Trefoil hereby agrees that, other than the transfer
contemplated by this Agreement, Trefoil shall not, until termination of this
Agreement, directly or indirectly sell, transfer, assign or otherwise dispose
of, or pledge, grant any option or security interest with respect to, or
otherwise encumber shares of Series A Preferred Stock; provided, however, that
Trefoil may sell or enter into an agreement to sell its shares of Series A
Preferred Stock at any time prior to the twentieth day prior to the date
scheduled for the Shareholders' Meeting and in connection therewith assign
rights hereunder with respect thereto (a "Transfer") if: (i) the person so
acquiring shares of Series A Preferred Stock (the "Transferee") agrees in
writing to be bound by the terms of this Agreement, (ii) the Transfer will not
impede or delay in any material respect consummation of the transactions
contemplated under this Agreement (it being understood and agreed that
compliance by the Company with any requirement that any proxy or other
solicitating material for use in connection with the Shareholders' Meeting be
supplemented, modified, recirculated, and/or redistributed, or filed, cleared
or declared effective with or by any governmental entity or the NYSE, on
account of a Transfer shall not be deemed to impede or delay in any material
respect consummation of the transactions contemplated under this
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Agreement within the meaning of this clause (ii) provided that Trefoil and the
Transferee cooperate with the Company in connection therewith), and (iii)
Trefoil agrees in writing to remain liable hereunder for any breach of its
obligations or the obligations of the Transferee under this Agreement.
Notwithstanding anything to the contrary herein, if Trefoil Transfers any
Series A Preferred Stock, Trefoil shall reimburse the Company for all
additional out of pocket expenses incurred by the Company in complying with its
obligations under this Agreement directly or indirectly as a result of a
Transfer up to an aggregate amount of $50,000.
SECTION 4.06. Election of Directors.
Trefoil hereby agrees that, until termination of this
Agreement, it shall not exercise the right, as set forth in Article III,
Section 3.d.(i) of the Articles of Incorporation and triggered by the
non-payment of dividends payable in an amount equal to three full quarterly
dividends, to elect four directors in addition to the three directors to which
the Series A Preferred Stockholders are currently entitled.
SECTION 4.07 Certain Anti-Dilution Adjustments.
If, at any time during the period between the date hereof and
the Closing Date (the "Adjustment Period"), the Company shall issue any shares
of Common Stock (or rights, warrants or other securities convertible into
Common Stock) or make any distributions to holders of Common Stock under
circumstances which would have required an adjustment to the Conversion Price
and the Conversion Ratio (as such terms are defined in the Certificate of
Determination) pursuant to Section 8.g.(2) of the Certificate of Determination
if the Series B Preferred Stock had been issued at the beginning of the
Adjustment Period, then the Conversion Price and the Conversion Ratio in the
Certificate of Determination as filed with the Secretary of State of the State
of California shall be adjusted, prior to the Closing Date, in respect of such
issuance as if the Series B Preferred Stock had been outstanding at the
beginning of the Adjustment Period.
ARTICLE V - CLOSING CONDITIONS
SECTION 5.01. Conditions to Obligations of Each Party Under
This Agreement.
The respective obligations of each party to effect the
Exchange shall be subject to the satisfaction at or prior to the Closing Date
of the following conditions, any or all of which may be waived, in whole or in
part, to the extent permitted by applicable law:
(a) No Order. No Governmental Entity or federal or state
court of competent jurisdiction shall have enacted, issued, promulgated,
enforced or entered any statute, rule, regulation, executive order, decree,
injunction or other order (whether temporary, preliminary or permanent) which
is in effect and which restricts, prevents or prohibits consummation of the
Exchange.
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(b) Government Consents. All consents, waivers,
approvals and authorizations required to be obtained, and all filings or
notices required to be made, by the Company and Trefoil prior to consummation
of the transactions contemplated in this Agreement shall have been obtained
from and made with all required Governmental Entities, and all requirements of
any Law.
(c) Shareholder Vote. This Agreement and the Exchange
shall have been approved and adopted by the Requisite Vote of the shareholders
of the Company.
(d) Fairness Opinion. The Fairness Opinion described in
Section 3.07 shall not have been modified, rescinded or otherwise withdrawn.
SECTION 5.02. Additional Conditions to Obligations of Trefoil.
The obligations of Trefoil to effect the Exchange shall be
subject to the satisfaction at or prior to the Closing Date of the following
conditions, any or all of which may be waived, in whole or in part, to the
extent permitted by applicable law:
(a) Representations and Warranties. Each of the
representations and warranties of the Company contained in this Agreement shall
be true and correct in all material respects (except that where any statement
in a representation or warranty expressly includes a standard of materiality,
such statement shall be true and correct in all respects giving effect to such
standard) when made and as of the Closing Date as though made on and as of the
Closing Date, except that those representations and warranties which address
matters only as of a particular date shall remain true and correct in all
material respects (except that where any statement in a representation or
warranty expressly includes a standard of materiality, such statement shall be
true and correct in all respects giving effect to such standard) as of such
date. Trefoil shall have received a certificate of an executive officer of the
Company, as of the Closing Date, to such effect.
(b) Agreements and Covenants. The Company shall have
performed or complied in all material respects with all agreements and
covenants required by this Agreement to be performed or complied with by it on
or prior to the Closing Date. Trefoil shall have received a certificate of an
executive officer of the Company, as of the Closing Date, to that effect.
(c) Legal Opinion. Trefoil shall have received the
written legal opinion, dated the Closing Date, of Fried, Frank, Harris, Xxxxxxx
& Xxxxxxxx substantially in the form of Exhibit B.
(d) Registration Rights Amendment. The amendment to the
Registration Rights Agreement, dated as of May 27, 1991, between the Company
and Trefoil (the "Registration Rights Amendment") shall have been executed and
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delivered by the Company at or prior to the Closing Date, substantially in the
form attached hereto as Exhibit C.
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(e) NYSE Listing. The shares of the Common Stock
issuable upon conversion of the Series B Preferred Stock shall have been
approved for listing on the NYSE as of the Closing Date.
SECTION 5.03. Additional Conditions to Obligations of the
Company.
The obligations of the Company to effect the Exchange shall be
subject to the satisfaction at or prior to the Closing Date of the following
conditions, any or all of which may be waived, in whole or in part, to the
extent permitted by applicable law:
(a) Representations and Warranties. Each of the
representations and warranties of Trefoil contained in this Agreement shall be
true and correct in all material respects (except that where any statement in a
representation or warranty expressly includes a standard of materiality, such
statement shall be true and correct in all respects giving effect to such
standard) when made and as of the Closing Date as though made on and as of the
Closing Date, except that those representations and warranties which address
matters only as of a particular date shall remain true and correct in all
material respects (except that where any statement in a representation or
warranty expressly includes a standard of materiality, such statement shall be
true and correct in all respects giving effect to such standard) as of such
date. The Company shall have received a certificate of an executive officer of
the general partner of Trefoil, as of the Closing Date, to such effect.
(b) Agreements and Covenants. Trefoil shall have
performed or complied in all material respects with all agreements and
covenants required by this Agreement to be performed or complied with by it on
or prior to the Closing Date. The Company shall have received a certificate of
an executive officer of the general partner of Trefoil, as of the Closing Date,
to that effect.
(c) Consent. The Company shall have obtained the consent
of the Bank (as defined in Section 7.03 below) pursuant to the Credit Agreement
to the transactions contemplated herein, including but not limited to the
Exchange, and the waiver of any provisions of the Credit Agreement which may be
deemed to prohibit such transactions.
ARTICLE VI - TERMINATION, AMENDMENT AND WAIVER
SECTION 6.01. Termination.
This Agreement may be terminated at any time prior to the
Closing Date:
(a) by mutual consent of the Company and Trefoil;
(b) by Trefoil, upon a material breach of any
representation, warranty, covenant or agreement on the part of the Company set
forth in this Agreement, or if any representation or warranty of the Company
shall have become untrue in any material respect;
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(c) by the Company, upon a material breach of any
representation, warranty, covenant or agreement on the part of Trefoil set
forth in this Agreement, or if any representation or warranty of the Trefoil
shall have become untrue in any material respect;
(d) by either Trefoil or the Company, if there shall be
any final, non-appealable order or injunction imposed by a court of competent
jurisdiction preventing the consummation of the Exchange;
(e) by either Trefoil or the Company, if the Exchange
shall not have been consummated on or before April 15, 1996; provided, however,
Trefoil shall have no right to terminate this Agreement pursuant to this clause
(e) prior to May 15, 1996 if the Exchange shall not have been consummated prior
to April 15, 1996 as a direct or indirect result of a Transfer; and
(f) by Trefoil at any time prior to the Mailing Date if
Trefoil shall have theretofore received a bona fide offer to acquire from
Trefoil, or Trefoil shall have entered into an agreement or agreements to sell,
or sold, not less than a majority of the outstanding shares of Series A
Preferred Stock.
SECTION 6.02. Amendment.
This Agreement may not be amended except by an instrument in
writing signed by the parties hereto.
SECTION 6.03. Early Termination.
If Trefoil terminates this Agreement pursuant to clause (f) of
Section 6.01, Trefoil and the Transferee shall (i) irrevocably consent and
agree to extend each mandatory redemption date contained in Section 5(b) of
Article 3 of the Company's Restated Articles of Incorporation for a period of
an additional 16 months from the date so specified, (ii) if and as requested by
the Company take all the actions specified in Section 4.04 hereof with respect
to all shares of Common Stock and the Series A Preferred Stock held by Trefoil
or such Transferee in connection with the adoption or approval of an amendment
of such Section 5(b) effecting the extension described in clause (i) of this
Section 6.03 and (iii) if and as requested by the Company take all other
actions reasonably necessary to effect such extension. This Section 6.03 shall
survive termination of the Agreement pursuant to Section 6.01(f).
ARTICLE VII - GENERAL PROVISIONS
SECTION 7.01. Company Approval.
Any waiver, consent or amendment of this Agreement by the
Company shall not be effective unless approved by the Special Committee, as
defined in Section 7.03 below, of the Company's Board of Directors, and by the
holders of a majority of the Series A Preferred Stock.
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SECTION 7.02. Notices.
All notices and other communications given or made pursuant
hereto shall be in writing and shall be deemed to have been duly given or made
as of the date delivered, mailed or transmitted, and shall be effective upon
receipt, if delivered personally, mailed by registered or certified mail
(postage prepaid, return receipt requested) to the parties at the following
addresses (or at such other address for a party as shall be specified by like
changes of address) or sent by electronic transmission (provided that a
confirmation copy is sent by another approved means) to the telecopier number
specified below:
(a) If to the Company:
L.A. Gear, Inc.
0000 Xxxxx Xxxx Xxxxxxxxx
Xxxxx Xxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxx, Esq.
Telecopier No.: (000) 000-0000
Xxxxxxx X. Xxxxxxx, Chairman of the Special Committee
c/o Xxxxx Xxxxxx Inc.
00000 Xxxxxxxx Xxxxxxxxx, Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Telecopier No.: (000) 000-0000
with a copy to each of:
Fried, Frank, Harris, Xxxxxxx & Xxxxxxxx
000 Xxxxx Xxxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000-0000
Attention: Xxxxx Xxxxxxx, Esq.
Telecopier No.: (000) 000-0000
Xxxxxx, Xxxx & Xxxxxxxx
000 Xxxxx Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxxx X. Xxxxx, Esq.
Telecopier No.: (000) 000-0000
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(b) If to Trefoil Capital Investors, L.P.:
Trefoil Capital Investors, L.P.:
0000 Xxxxxxxx Xxxxx, 0xx Xxxxx
Xxxxxxx, Xxxxxxxxxx 00000-0000
Attention: Xxxxxx X. Xxxxxxxxx
Telecopier No.: (000) 000-0000
with a copy to:
Sanders, Barnet, Xxxxxxx, Xxxxxx & Mosk
0000 Xxxxxx xx xxx Xxxxx, Xxxxx 000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxx X. Xxxxxx, Esq.
Telecopier No.: (000) 000-0000
SECTION 7.03. Certain Definitions.
For purposes of this Agreement, the term:
"Affiliate" means, with respect to any Person, a Person,
directly or indirectly, through one or more intermediaries, controlling,
controlled by, or under common control with such Person; the term
"control," as used in this definition, means, with respect to a Person,
the possession, directly or indirectly, of the power to direct or cause
the direction of the management or policies of the Person.
"business day" means any day other than a day on which banks
in the State of California are authorized or obligated to be closed.
"Bank" means BankAmerica Business Credit, Inc.
"Credit Agreement" means the Loan and Security Agreement
between L.A. Gear California, Inc. and the Bank, dated as of November
22, 1993, as amended to date.
"Encumbrance" means, with respect to any real or personal,
tangible or intangible property, any lien, charge, reservation, right of
entry, possibility of reverter, encroachment, easement, right of way,
restrictive covenant, lease, security interest (whether based on common
law, statute or contract and, including without limitation, any interest
arising from any capitalized lease, conditional sale, trust receipt or
deposit interest), option, right of first refusal, right of first offer
or any other imperfection of title or right by any person to assert a
claim with respect to such property.
"Interested Director" shall mean a director of the Company
within the meaning given to the term "Interested Director" used in or
construed under Section 310 of the California Corporations Code.
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"Mailing Date" means the date on which the Company first mails
or distributes to its shareholders a proxy statement with respect to the
Shareholders' Meeting.
"Person" means an individual, partnership, joint venture,
corporation, trust, unincorporated association or other entity or
association.
"Requisite Vote" means the affirmative vote of a majority of
the shares of Common Stock present and voting (excluding any rights of
Series A Preferred Stock to vote together with the Common Stock, and
excluding any shares of Common Stock owned by Trefoil or any Interested
Director) at a meeting duly held for approval of the Exchange, at which
a quorum is present (excluding any rights of Series A Preferred Stock to
vote together with the Common Stock, and excluding any shares of Common
Stock owned by Trefoil or any Interested Director).
"Special Committee" means the committee established by the
Company's Board of Directors in connection with the transactions
contemplated herein, whose members, as of the date hereof, are Messrs.
Dalshaug, Davis, Xxxxxxx and Xx. Xxxxxx.
SECTION 7.04. Legend.
On the date hereof, certificates representing all shares of
the Series A Preferred Stock have been delivered to the Company and shall
promptly hereafter be returned to Trefoil bearing the following legend:
THE SHARES OR INTERESTS REPRESENTED BY THIS CERTIFICATE AND THE
TRANSFER OF SUCH SHARES OR INTERESTS ARE RESTRICTED BY THE TERMS
AND CONDITIONS OF A SHARE EXCHANGE AGREEMENT DATED AS OF DECEMBER
12, 1995 AMONG TREFOIL CAPITAL INVESTORS, L.P. AND L.A. GEAR,
INC., A COPY OF WHICH IS AVAILABLE UPON REQUEST AT THE OFFICES OF
THE COMPANY.
SECTION 7.05. Headings.
The headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement.
SECTION 7.06. Severability.
If any term or other provision of this Agreement is invalid,
illegal or incapable of being enforced by any rule of law or public policy, all
other conditions and provisions of this Agreement shall nevertheless remain in
full force and effect so long as the economic or legal substance of the
transactions contemplated hereby is not affected in any manner materially
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adverse to any party. Upon such determination that any term or other provision
is invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in an acceptable manner to the end
that transactions contemplated hereby are fulfilled to the extent possible.
SECTION 7.07. Entire Agreement.
This Agreement, together with the Exhibits hereto, constitute
the entire agreement of the parties and supersede all prior agreements and
undertakings, both written and oral, between the parties, or any of them, with
respect to the subject matter hereof.
SECTION 7.08. Assignment.
Except as expressly permitted hereunder, this Agreement shall
not be assigned by any party hereto.
SECTION 7.09. Parties in Interest.
This Agreement shall be binding upon and inure solely to the
benefit of each party hereto, its successors and permitted assignees and
nothing in this Agreement, express or implied, is intended to or shall confer
upon any other person any right, benefit or remedy of any nature whatsoever
under or by reason of this Agreement.
SECTION 7.10. Failure or Indulgence Not Waiver; Remedies
Cumulative.
No failure or delay on the part of any party hereto in the
exercise of any right hereunder shall impair such right or be construed to be a
waiver of, or acquiescence in, any breach of any representation, warranty or
agreement herein, nor shall any single or partial exercise of any such right
preclude other or further exercise thereof or of any other right. All rights
and remedies existing under this Agreement are cumulative to, and not exclusive
of, any rights or remedies otherwise available.
SECTION 7.11. Governing Law.
This Agreement shall be governed by, and construed in
accordance with, California Law without regard to rules respecting conflicts of
law.
SECTION 7.12. Counterparts.
This Agreement may be executed in one or more counterparts,
and by the different parties hereto in separate counterparts, each of which
when executed shall be deemed to be an original but all of which taken together
shall constitute one and the same agreement.
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SECTION 7.13. Construction.
All section and article references are to this Agreement,
unless otherwise expressly provided. As used in this Agreement, (a) "hereof",
"hereunder", "herein" and words of like import shall be deemed to refer to this
Agreement in its entirety and not just a particular section of this Agreement
and (b) unless the context otherwise requires, words in the singular number or
in the plural number shall each include the singular number or the plural
number, words of the masculine gender shall include the feminine and neuter,
and, when the sense so indicates, words of the neuter gender shall refer to any
gender.
SECTION 7.14. Expenses.
Except as otherwise provided in Section 4.05 hereof, each
party hereto shall bear its own expenses in connection with the Exchange
contemplated by this Agreement; provided, however, that unless this Agreement
is terminated pursuant to Section 6.01(f) hereof, the Company shall pay the
reasonable out of pocket expenses incurred by Trefoil in connection with the
Exchange contemplated by this Agreement, up to an aggregate amount of $17,500.
SECTION 7.15. Specific Enforcement.
The Company and Trefoil acknowledge and agree that irreparable
damage would occur in the event that any of the provisions of this Agreement
were not performed in accordance with their specific terms or were otherwise
breached. It is accordingly agreed that the parties shall be entitled to an
injunction or injunctions to prevent or cure breaches of the provisions of this
Agreement and to enforce specifically the terms and provisions hereof in any
court of the United States or any court of the State of California located in
Los Angeles, California, having jurisdiction, this being in addition to any
other remedy to which they may be entitled by law or equity.
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IN WITNESS WHEREOF, the Company and Trefoil have caused this
Agreement to be executed as of the date first written above by their respective
officers and representatives thereunto duly authorized.
L.A. GEAR, INC.
By: /s/ XXXXXXX X. XXXXXXX
---------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: President
TREFOIL CAPITAL INVESTORS, L.P.
By: TREFOIL INVESTORS, INC., its
general partner
By: /s/ XXXXXX X. XXXXXXXXX
---------------------------------
Name: Xxxxxx X. Xxxxxxxxx
Title: Managing Director
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