STOCK EXCHANGE AGREEMENT dated as of September 25, 1997 among THE
WARNACO GROUP, INC., a Delaware corporation ("Parent"), NEW RIO,
L.L.C., a Delaware limited liability company (the "Stockholder"),
and each of the members of Stockholder signatory hereto (each, a
"Member").
WHEREAS, concurrently herewith, Parent, WAC Acquisition
Corporation, a Delaware corporation and a wholly owned subsidiary of Parent
("Sub"), and Designer Holdings Ltd., a Delaware corporation (the "Company"),
are entering into an Agreement and Plan of Merger (as such agreement may be
amended from time to time and whether or not such agreement has been
terminated, the "Merger Agreement"; capitalized terms used but not defined
herein shall have the meanings set forth in the Merger Agreement) pursuant to
which Sub or, at the election of Parent, a direct wholly owned subsidiary of
Parent other than Sub will be merged with and into the Company (the
"Merger"), whereby each share of Common Stock, each having a par value of one
cent ($0.01), of the Company ("Company Common Stock") issued and outstanding
immediately prior to the Effective Time of the Merger will be converted into
the right to receive a fraction of a share of Class A Common Stock, par value
$0.01 per share, of Parent ("Parent Class A Common Stock"), other than shares
of Company Common Stock owned, directly or indirectly, by the Company or any
subsidiary of the Company or by Parent, Sub or any other subsidiary of
Parent.
WHEREAS, as a condition to their willingness to enter into the
Merger Agreement, Parent and Sub have required that the Stockholder and the
Members (collectively, the "Sellers") enter into, and the Stockholder and the
Members have agreed to enter into, this Agreement pursuant to which, among
other things, regardless of any termination of the Merger Agreement, Parent
and the Sellers have agreed to exchange shares of Parent Class A Common Stock
for all the shares of Company Common Stock owned by the Sellers on the terms
herein set forth, which in the aggregate constitute a majority of the
outstanding Company Common Stock.
WHEREAS, for Federal income tax purposes, it is intended that, so
long as the Merger occurs, the exchange of Parent Class A Common Stock for
Company Common Stock pursuant to this Agreement and the Merger pursuant to
the Merger Agreement qualify as a reorganization under the provisions of
Section 368 of the Internal Revenue Code of 1986, as amended.
NOW, THEREFORE, in consideration of the representations,
warranties, covenants and agreements contained in this Agreement, the parties
agree as follows:
1. Exchange Transaction.
--------------------
1.1 Exchange. On the terms and subject to the conditions set
--------
forth in this Agreement, the Stockholder agrees to transfer 16,483,868 shares
of Company Common Stock, all of which are owned by the Stockholder and which
represent all of the shares of Company Common Stock owned by the Sellers (the
"Shares"), to Parent, free and clear of any mortgage, pledge, lien, security
interest, claim or other encumbrance (each, a "Lien") or Restriction created
by any Member or by the Stockholder or otherwise binding upon the Shares, and
Parent agrees to issue to the Stockholder, in exchange for the Shares, shares
of Parent Class A Common Stock in accordance with Section 1.2 below, free and
clear of any Lien or Restriction except as contemplated by this Agreement or
any letter entered into for tax purposes relating to restrictions on selling
Exchange Shares (a "Lock-Up Letter"). For purposes of this Agreement,
"Restriction" means, when used with respect to any specified security, any
stockholders or other trust agreement, option, warrant, escrow, proxy, buy-
sell agreement, power of attorney or other contract, agreement or arrangement
which (i) grants to any person the right to sell or otherwise dispose of or
vote such specified security or any interest therein, or (ii) restricts the
transfer of, or the exercise of any rights or the enjoyment of any benefits
arising by reason of, the ownership of such specified security.
1.2 Exchange Ratio. For each Share transferred to Parent pursuant
--------------
to this Agreement, the Stockholder shall receive .324 of a fully paid and
nonassessable share of Parent Class A Common Stock (the "Exchange Ratio").
In the event that the aggregate number of shares of Parent Class A Common
Stock to be issued to the Stockholder, based on the Exchange Ratio, would
result in the issuance by Parent of a fractional share of Parent Class A
Common Stock, such fractional share shall be rounded to the nearest whole
share. The total number of shares of Parent Class A Common Stock to be
issued to the Stockholder hereunder are referred to herein as the "Exchange
Shares".
2. Closing. The closing (the "Closing") of the Exchange shall
-------
take place on the second business day following satisfaction or waiver of the
conditions set forth in Sections 6 and 7, or such other date and time as the
parties shall otherwise agree to. The date of the Closing is referred to
herein as the "Closing Date". The Closing will take place at 10:00 a.m. on
the Closing Date, at the offices of Xxxxxxx Xxxxxxx & Xxxxxxxx, 000 Xxxxxxxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000. At the Closing, (i) the Stockholder shall
deliver to Parent certificate(s) representing all of the Shares, duly
endorsed for transfer to Parent, and (ii) Parent shall deliver to the
Stockholder a stock certificate representing the Exchange Shares.
3. Representations and Warranties of the Members. Each Member,
---------------------------------------------
severally with respect to himself, herself or itself (as the case may be) and
the Shares which are "Allocated Shares" of such Member under the Third
Amended and Restated Limited Liability Company Agreement of the Stockholder
(the "LLC Agreement") makes the following representations and warranties to
Parent.
3.1 Power; Binding Agreement. Such Member has the legal capacity
------------------------
(in the case of individual Members), power and authority to enter into and
perform all of such Member's obligations under this Agreement. Such Member
is the legal and valid owner of, and has good and valid title to, its
interest in the Stockholder. Such Member's allocable interest in the total
number of shares of Company Common Stock owned by the Stockholder is set
forth on Schedule 3.2. The execution, delivery and performance of this
Agreement by such Member will not violate any other agreement to which such
Member is a party (including any trust agreement, voting agreement,
stockholders agreement or voting trust) except to the extent that any such
violations, individually or in the aggregate, could not reasonably be
expected to have a material adverse effect on Parent or to prevent or
materially delay the consummation of the transactions contemplated hereby.
This Agreement has been duly and validly executed and delivered by such
Member and constitutes a valid and binding agreement of such Member,
enforceable against such Member in accordance with its terms. There is no
beneficiary or holder of a voting trust certificate or other interest of any
trust of which a Member is Trustee whose consent is required for the
execution and delivery of this Agreement or the consummation of the
transactions contemplated hereby. If such Member is married and such
Member's Allocated Shares constitute community property, this Agreement has
been duly authorized, executed and delivered by, and constitutes a valid and
binding agreement of, such Member's spouse, enforceable against such person
in accordance with its terms.
3.2 No Conflict. Other than filings required under the Xxxx-
-----------
Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended (the "HSR Act"),
and the filing of Forms 4 and Schedules 13D under the Securities and Exchange
Act of 1934, as amended, and the rules and regulations thereunder (the
"Exchange Act"), no filing with, and no permit, authorization, consent or
approval of, any state or federal public body or authority is necessary for
the execution of this Agreement by such Member and the consummation by such
Member of the transactions contemplated hereby, except for such filings the
failure of which to be made, individually or in the aggregate, could not
reasonably be expected to have a material adverse effect on Parent or to
prevent or materially delay the consummation of the transactions contemplated
hereby. Neither the execution and delivery of this Agreement by such Member
nor the consummation by such Member of the transactions contemplated hereby
nor compliance by such Member with any of the provisions hereof shall (x)
conflict with or result in any breach of any applicable trust or other
organizational documents applicable to such Member, (y) result in a violation
or breach of, or constitute (with or without notice or lapse of time or both)
a default (or give rise to any third party right of termination,
cancellation, material modification or acceleration) under any of the terms,
conditions or provisions of any note, bond, mortgage, indenture, license,
contract, commitment, arrangement, understanding, agreement or other
instrument or obligation of any kind to which such Member is a party or by
which such Member or any of such Member's properties or assets may be bound
or (z) violate any order, writ, injunction, decree, judgment, order, statute,
rule or regulation applicable to such Member or any of such Member's
properties or assets, except to the extent any of the foregoing, individually
or in the aggregate, could not reasonably be expected to have a material
adverse effect on Parent or to prevent or materially delay the consummation
of the transactions contemplated hereby.
3.3 Reliance. Such Member understands and acknowledges that
--------
Parent is entering into, and causing Sub to enter into, the Merger Agreement
in reliance upon such Member's execution and delivery of this Agreement.
3.4 No Broker. Such Member has not employed any investment
---------
banker, broker, finder, consultant or intermediary in connection with the
transactions contemplated by this Agreement which would be entitled to any
investment banking, brokerage, finder's or similar fee or commission in
connection with this Agreement or the transactions contemplated hereby.
3.5 Transfer Instruction. Each Member has instructed the
--------------------
Stockholder, in accordance with Section 11.1(c) of the LLC Agreement, to
transfer its Allocated Shares to Parent and the Stockholder has provided
Parent with true and accurate proof thereof.
3.6 Voting Instruction. Each of the Member Managers (as defined
------------------
in the LLC Agreement) has determined and advised the Stockholder, in
accordance with Section 4.2(b) of the LLC Agreement, that in the event the
Exchange has not occurred by the time of the Company Stockholder Meeting, the
Stockholder shall vote the Shares in favor of the Merger as set forth in
Section 9.3.
4. Representations and Warranties of the Stockholder. The
-------------------------------------------------
Stockholder makes the following representations and warranties to the Parent:
4.1 Power; Binding Agreement. The Stockholder has the power and
------------------------
authority to enter into and perform all of its obligations under this
Agreement (including the power and authority without further action on the
part of the Members to consummate the Exchange and comply with the voting
requirements of Section 9.3). The execution, delivery and performance of
this Agreement by the Stockholder will not violate any other agreement to
which the Stockholder is a party (including any trust agreement, voting
agreement, stockholders agreement or voting trust), except to the extent any
such violations, individually or in the aggregate, could not reasonably be
expected to have a material adverse effect on Parent or to prevent or
materially delay the consummation of the transactions contemplated hereby.
This Agreement has been duly and validly authorized, executed and delivered
by the Stockholder and constitutes a valid and binding agreement of the
Stockholder, enforceable against it in accordance with its terms. The
Members constitute all the members of the Stockholder.
4.2 No Conflict. Other than filings required under the HSR Act,
-----------
and the filing of Forms 4 and Schedules 13D under the Exchange Act, no filing
with, and no permit, authorization, consent or approval of, any state or
federal public body or authority is necessary for the execution of this
Agreement by the Stockholder and the consummation by the Stockholder of the
transactions contemplated hereby, except for any such filings the failure of
which to be made, individually or in the aggregate, could not reasonably be
expected to have a material adverse effect on Parent or to prevent or
materially delay the consummation of the transactions contemplated hereby.
Neither the execution and delivery of this Agreement by the Stockholder nor
the consummation by the Stockholder of the transactions contemplated hereby
nor compliance by the Stockholder with any of the provisions hereof shall (x)
conflict with or result in any breach of the LLC Agreement, (y) result in a
violation or breach of, or constitute (with or without notice or lapse of
time or both) a default (or give rise to any third party right of
termination, cancellation, material modification or acceleration) under any
of the terms, conditions or provisions of any note, bond, mortgage,
indenture, license, contract, commitment, arrangement, understanding,
agreement or other instrument or obligation of any kind to which the
Stockholder is a party or by which the Stockholder or any of the
Stockholder's properties or assets may be bound or (z) violate any order,
writ, injunction, decree, judgment, order, statute, rule or regulation
applicable to the Stockholder or any of the Stockholder's properties or
assets, except to the extent any of the foregoing, individually or in the
aggregate, could not reasonably be expected to have a material adverse effect
on Parent or to prevent or materially delay the consummation of the
transactions contemplated hereby.
4.3 Reliance. The Stockholder understands and acknowledges that
--------
Parent is entering into, and causing Sub to enter into, the Merger Agreement
in reliance upon the Stockholder's execution and delivery of this Agreement.
4.4 Ownership of Shares. The Stockholder is the record owner of
-------------------
16,483,868 Shares, which constitute a majority of the outstanding shares of
ompany Common Stock. The Stockholder has, and at the Closing will have, good
and valid title to the Shares, free and clear of any Liens or Restrictions
and it has the full legal right, power and authority to assign, transfer and
deliver such Shares to Parent pursuant hereto. The Stockholder has sole
voting power, and sole power of disposition, with respect to all of the Shares.
4.5 No Broker. The Stockholder has not employed any investment
---------
banker, broker, finder, consultant or intermediary in connection with the
transactions contemplated by this Agreement or the Merger Agreement which
would be entitled to any investment banking, brokerage, finder's or similar
fee or commission in connection with this Agreement or the transactions
contemplated hereby.
4.6 Purchase for Investment. The Stockholder is acquiring the
-----------------------
Exchange Shares for its own account as principal for investment and not with
a view to resale or distribution or with any present intention of
distribution or selling the same. The Stockholder is fully aware that such
shares of Parent Class A Common Stock have not been registered under the
Securities Act or under any applicable state securities laws, and are being
offered and sold in reliance on exemptions from the registration requirements
of the Securities Act and all such laws. The Stockholder is an "accredited
investor" as such term is defined in Regulation D promulgated under the
Securities Act. The Stockholder is able to bear the economic risk of the
investment in such shares of Parent Class A Common Stock and has such
knowledge and experience in financial and business matters, and knowledge of
the business of Parent, as to be capable of evaluating the merits and risks
of a prospective investment. The Stockholder acknowledges that it has
received or been given access to financial information and other documents
and records necessary to make a well-informed investment decision and has had
an opportunity to discuss Parent's business, management and financial affairs
with Parent's management.
4.7 Limitations on Transferability. In addition to the
------------------------------
restrictions set forth in Section 9.7 and in the Lock-Up Letter, the
Stockholder acknowledges that it may not transfer any of the shares of Parent
Class A Common Stock in the Exchange unless and until the same are registered
under the Securities Act and any applicable state securities laws, or unless
an exemption from such registration is available and that it may transfer
such shares of Parent Class A Common Stock only in accordance with this
Agreement.
4.8 Legend. Each document or certificate evidencing any shares of
------
Parent Class A Common Stock issued in the Exchange shall be stamped or
imprinted with legends substantially as follows:
(a) "The shares of Common Stock, par value $0.01 per share, of
The Warnaco Group, Inc. (the "Company") represented by this
certificate have not been registered under the Securities Act of
1933, as amended, or under the securities laws of any state; and
may not be sold, assigned, transferred, pledged or otherwise
disposed of except in compliance with, or pursuant to an exemption
from, the requirements of such Act or such laws."
(b) "The shares of Common Stock, par value $0.01 per share, of The
Warnaco Group, Inc. (the "Company") represented by this certificate
are subject to restrictions on transfer contained in a Stock
Exchange Agreement dated as of September 25, 1997, as amended from
time to time, a copy of which is on file at the principal office of
the Company."
Parent will exchange certificates without one or both of the foregoing
legends for certificates with one or both of the foregoing legends upon the
request of the Stockholder as follows: (i) in the case of clause (a), upon
such time as the holder thereof may sell such shares without registration of
such sale under the Securities Act, as evidenced by an opinion of counsel to
such holder; and (ii) in the case of clause (b), upon the later to occur of
(x) upon the termination of the restricted period contained in any Lock-Up
Letter to which the holder of such Shares is subject and (y) otherwise, upon
the Release Date.
5. Representations and Warranties of Parent. Parent hereby
----------------------------------------
represents and warrants to the Stockholder as follows:
5.1 Power; Binding Agreement. Parent has the power and authority
------------------------
to enter into and perform all of its obligations under this Agreement. The
execution, delivery and performance of this Agreement by Parent will not
violate any other agreement to which Parent is a party (including any trust
agreement, voting agreement, stockholders agreement or voting trust), except
to the extent that any such violations, individually or in the aggregate,
could not reasonably be expected to have a material adverse effect on Parent
or to prevent or materially delay the consummation of the transactions
contemplated hereby. This Agreement has been duly and validly executed and
delivered by Parent and constitutes a valid and binding agreement of Parent,
enforceable against Parent in accordance with its terms.
5.2 No Conflict. Other than filings required under the HSR Act,
-----------
the filing of a Form 3 and Schedule 13D under the Exchange Act and the filing
of a registration statement under the Securities Act, no filing with, and no
permit, authorization, consent or approval of, any state or federal public
body or authority is necessary for the execution of this Agreement by Parent
and the consummation by Parent of the transactions contemplated hereby,
except in each case for such filings the failure of which to be made,
individually or in the aggregate, could not reasonably be expected to have a
material adverse effect on Parent or to prevent or materially delay the
consummation of the transactions contemplated hereby. Neither the execution
and delivery of this Agreement by Parent nor the consummation by Parent of
the transactions contemplated hereby nor compliance by Parent with any of the
provisions hereof shall (x) conflict with or result in any breach of any
applicable organizational documents applicable to Parent, (y) result in a
violation or breach of, or constitute (with or without notice or lapse of
time or both) a default (or give rise to any third party right of
termination, cancellation, material modification or acceleration) under any
of the terms, conditions or provisions of any note, bond, mortgage,
indenture, license, contract, commitment, arrangement, understanding,
agreement or other instrument or obligation of any kind to which Parent is a
party or by which Parent or any of Parent's properties or assets may be bound
or (z) violate any order, writ, injunction, decree, judgment, order, statute,
rule or regulation applicable to Parent or any of Parent's properties or
assets, except to the extent that any of the foregoing, individually or in
the aggregate, could not reasonably be expected to have a material adverse
effect on Parent or to prevent or materially delay the consummation of the
transactions contemplated hereby.
6. Conditions to Obligations of Parent. Unless waived, in whole
-----------------------------------
or in part, in writing by Parent, the obligations of Parent to consummate the
Exchange and to perform any and all of its postclosing obligations shall be
subject to the satisfaction at or prior to the Closing Date of each of the
following conditions (it being understood that any termination of the Merger
Agreement, including pursuant to Sections 7.01(f), (g) or (j) shall not, in
and of itself, constitute a failure of a condition hereunder or give rise to
any right to terminate this Agreement):
6.1 Accuracy of Representations and Warranties. All
------------------------------------------
representations and warranties of each of the Members and the Stockholder
contained herein shall be true and correct in all material respects when made
and on and as of the Closing Date, with the same force and effect as though
made on and as of the Closing Date, except for changes permitted or
contemplated by this Agreement.
6.2 Performance of Agreements. Each of the Members and the
-------------------------
Stockholder shall have performed in all material respects all obligations and
agreements contained in this Agreement to be performed or complied with by it
prior to or at the Closing Date.
6.3 Majority Ownership. The Shares, immediately following
------------------
consummation of the Exchange, shall constitute a majority of the issued and
outstanding Company Common Stock.
6.4 Merger Agreement Matters. (a) No temporary restraining
------------------------
order, preliminary or permanent injunction or other order issued by any court
of competent jurisdiction or other legal restraint or prohibition enjoining
or preventing the consummation of the Merger or the other transactions
pursuant to the Merger Agreement shall be in effect.
(b) The representations and warranties of the Company set forth in
the Merger Agreement shall be true and correct in all material respects when
made and as of the Closing Date as though made on and as of the Closing Date,
except for those representations and warranties which address matters only as
of a particular date (which shall have been true and correct in all material
respects as of such date).
(c) The Company shall have performed in all material respects the
obligations required to be performed by it under the Merger Agreement at or
prior to the Closing Date.
(d) The Company shall have satisfied, or simultaneous with the
Exchange shall satisfy, its obligations to Parent pursuant to Section 5.14 of
the Merger Agreement.
(e) There shall not be pending or threatened by any Governmental
Entity any suit, action or proceeding (or by any other person any suit,
action or proceeding which has a reasonable likelihood of success), (i)
challenging or seeking to restrain or prohibit the consummation of the Merger
or the Exchange or any of the other transactions contemplated by this
Agreement or the Merger Agreement or seeking to obtain from Parent, the
Stockholder or any member of the Board of Directors of the Company or any of
their respective subsidiaries any damages that are material in relation to
Parent and its subsidiaries taken as a whole, (ii) seeking to prohibit or
limit the ownership or operation by the Company, Parent or any of their
respective subsidiaries of any material portion of the business or assets of
the Company, Parent or any of their respective subsidiaries, to dispose of or
hold separate any material portion of the business or assets of the Company,
Parent or any of their respective subsidiaries, as a result of the Merger or
any of the other transactions contemplated by this Agreement or the Merger
Agreement, (iii) seeking to impose limitations on the ability of Parent or
Sub to acquire or hold, or exercise full rights of ownership of, any shares
of Company Common Stock or Common Stock of the Surviving Corporation,
including the right to vote the Company Common Stock or common stock of the
Surviving Corporation on all matters properly presented to the stockholders
of the Company or the Surviving Corporation, respectively, or (iv) seeking to
prohibit Parent or any of its subsidiaries from effectively controlling in
any material respect the business or operations of the Company or its
subsidiaries.
(f) Parent shall have received evidence, in form and substance
reasonably satisfactory to it, that such licenses, permits, consents,
approvals, authorizations, qualifications and orders of governmental
authorities and other third parties as are necessary in connection with the
transactions contemplated hereby have been obtained, except such licenses,
permits, consents, approvals, authorizations, qualifications and orders which
are not, individually or in the aggregate, material to Parent or the Company
or the failure of which to have received would not materially dilute the
aggregate benefits to Parent of the transactions reasonably contemplated
hereby; provided that the receipt of all required consents of the holders of
Company Stock Options as contemplated by Section 2.02 of the Merger Agreement
shall be considered material.
6.5 No Injunctions. No temporary restraining order, preliminary
--------------
or permanent injunction or other order issued by any court of competent
jurisdiction or other legal restraint or prohibition enjoining or preventing
the consummation of the Exchange shall be in effect.
6.6 No Adverse Enactments. There shall not have been any statute,
---------------------
rule, regulation or order promulgated, enacted or issued by any Government
Entity or court of competent jurisdiction which would make the consummation
of the Exchange hereunder or of the Merger under the Merger Agreement
illegal.
6.7 HSR. The waiting period (and any extension thereof) under the
---
HSR Act applicable to the Exchange and the Merger shall have been terminated
or shall have expired.
6.8 Company Certificate. Parent shall have received a certificate
-------------------
executed by the chief executive officer and the chief financial officer of
the Company to the effect that the conditions set forth in Section 6.4 shall
have been satisfied.
6.9 Members Certificate. Parent shall have received certificates
-------------------
of the Stockholder and of the Members that (i) the representations and
warranties made by each of them, severally, are true and correct in all
material respects (other than Sections 3.1, 3.5, 4.1, 4.4 and 4.6, which
shall be true and correct), in each case on and as of the date of this
Agreement and on and as of the Closing Date as though made on the Closing
Date, except for those representations and warranties which address matters
only as of a particular date (which shall have been true and correct as of
such date) and (ii) each of them has no actual knowledge that the conditions
set forth in Section 6.4 (including that the representations and warranties
of the Company are true and correct in all material respects), shall not have
been satisfied, provided, however, that such certificate shall terminate at
the Effective Time of the Merger other than with respect to the
representations and warranties set forth in Sections 3.1, 3.5, 4.1, 4.4 and
4.6.
7. Conditions to Obligations of the Stockholder and the Members.
------------------------------------------------------------
Unless waived, in whole or in part, in writing by the Stockholder, the
obligations of the Stockholder and the Members to consummate the Exchange as
contemplated by this Agreement shall be subject to the fulfillment prior to
or on the Closing Date of each of the following conditions (it being
understood that any termination of the Merger Agreement, including pursuant
to Sections 7.01(f), (g) or (j) shall not, in and of itself, constitute a
failure of a condition hereunder or give rise to any right to terminate this
Agreement):
7.1 Accuracy of Representations and Warranties. All
------------------------------------------
representations and warranties of Parent contained herein shall be true and
correct in all material respects when made and on and as of the Closing Date,
with the same effect as though made on and as of the Closing Date, except for
changes permitted or contemplated by this Agreement.
7.2 Performance of Agreements. Parent shall have performed in all
-------------------------
material respects all obligations and agreements contained in this Agreement
to be performed or complied with by it prior to or at the Closing Date.
7.3 No Adverse Enactments. There shall not have been any statute,
---------------------
rule, regulation or order promulgated, enacted or issued by any Government
Entity or court of competent jurisdiction which would make the consummation
of the Exchange hereunder illegal.
7.4 No Injunctions. No temporary restraining order, preliminary
--------------
or permanent injunction or other order issued by any court of competent
jurisdiction or other legal restraint or prohibition enjoining or preventing
the consummation of the Exchange shall be in effect.
7.5 HSR Act. The waiting period (and any extension thereof) under
-------
the HSR Act applicable to the Exchange shall have been terminated or shall
have expired.
7.6 NYSE Listing. The shares of Parent Class A Common Stock
------------
issuable to the Stockholder pursuant to this Agreement shall have been
approved for listing on the NYSE, subject to official notice of issuance.
7.7 Merger Agreement Matters. (a) The representations and
------------------------
warranties of Parent set forth in the Merger Agreement shall be true and
correct in all material respects when made and as of the Closing Date as
though made on and as of the Closing Date, except for those representations
and warranties which address matters only as of a particular date (which
shall have been true and correct in all material respects as of such date).
(b) Parent shall have performed in all material respects the
obligations required to be performed by it under the Merger Agreement at or
prior to the Closing Date.
8. Covenants of Parent. Parent hereby covenants and agrees as
-------------------
follows:
8.1 Filings and Other Actions. As promptly as practicable after
-------------------------
the execution of this Agreement, Parent shall file notification reports under
the HSR Act and shall request early termination of the waiting period under
the HSR Act and use its reasonable best efforts to obtain clearance or
authorization under the HSR Act for the Merger and the Exchange at the
earliest practicable time. Parent agrees to cooperate fully with the
Stockholder to promptly effectuate the filing of any notification required
under the HSR Act.
8.2 Reasonable Best Efforts. Subject to the terms and conditions
-----------------------
of this Agreement and the Merger Agreement, Parent agrees to use its
reasonable best efforts to take, or cause to be taken, all actions, and to
do, or cause to be done, all things necessary, proper or advisable to
consummate and make effective the transactions contemplated by this Agreement
and the Merger Agreement. Parent hereby agrees, while this Agreement is in
effect, and except as contemplated hereby, not to intentionally and knowingly
take any action with the intention and knowledge that such action would make
any of its representations or warranties contained herein untrue or incorrect
in any material respect or have the effect of preventing or disabling it from
performing its obligations under this Agreement.
8.3 Registration Statement. (a) Shelf Registration. Parent will
---------------------- ------------------
use its reasonable best efforts to file and have declared effective as
promptly as practicable following the Release Date a registration statement
(a "Shelf Registration") under the Securities Act, on an appropriate form,
for the resale of the shares of Parent Class A Common Stock issued to the
Stockholder in the Exchange and not subject to a Lock-Up Letter. In
connection therewith Parent agrees to use its reasonable best efforts to make
such other filings as are necessary for sales under such Shelf Registration
to be made in accordance with any state securities or "blue sky" laws,
provided, however, that Parent shall not be required to consent to service of
process in any jurisdiction in which it is not now subject in connection
therewith. Such registration statement shall include all shares of Parent
Class A Common Stock issued to the Stockholder and not subject to a Lock-Up
Letter, and may include securities of Parent for sale for Parent's own
account. Upon the request of the Stockholder, following the termination of
any Lock-Up Letter, Parent will use its reasonable best efforts to add to the
Shelf Registration Exchange Shares that had been subject to any such Lock-Up
Letter. The Stockholder shall promptly provide Parent with such information
as it reasonably requests to include in such registration statement with
respect to the Stockholder and the Members. Notwithstanding anything else
contained in this agreement, Parent shall be obligated to keep such
Registration Statement effective only until the earliest of (i) 24 months
after the closing date for the Merger, (ii) such time as all shares of Parent
Class A Common Stock covered by such Registration Statement have been sold or
disposed of and (iii) such time as all such securities are freely tradeable.
(b) Delays. Notwithstanding any another provision of this
------
Agreement to the contrary, if at any time while the Shelf Registration is
effective Parent provides written notice to the Stockholder that in its good
faith and reasonable judgment it would be materially disadvantageous to
Parent (because the sale of shares of Parent Class A Common Stock covered by
such registration statement ("Registrable Securities") or the disclosure of
information therein or in any related prospectus or prospectus supplement
would materially interfere with any acquisition, financing or other material
event or transaction in connection with which a registration of securities
under the Securities Act for the account of Parent is then intended or the
public disclosure of which at the time would be materially prejudicial to
Parent) (a "Disadvantageous Condition") for sales of Registrable Securities
thereunder to then be permitted, and setting forth the general reasons for
such judgment, Parent may refrain from maintaining current the prospectus
contained in the Shelf Registration until such Disadvantageous Condition no
longer exists (notice of which Parent shall promptly deliver to the
Stockholder); provided, however, that (i) upon delivery by the Stockholder of
a certificate stating that any Seller desires to sell Registrable Securities
in order for the Stockholder, its Members or the direct or indirect owners of
its Members to pay taxes due as a result of the failure of the Exchange to be
treated as a tax-free reorganization, so long as, in the good faith judgment
of Parent, the sale of Registrable Securities at such time would not be
reasonably likely to cause Parent to be in violation of Federal securities
laws absent additional disclosure by Parent, Parent shall forgo or rescind
its delivery of a notice of Disadvantageous Condition in such instance and
shall use its reasonable best efforts to ensure that a prospectus is
available for such sales; and (ii) in the event such notice of
Disadvantageous Condition is in connection with an offering of securities in
connection with which Parent has retained an investment bank, Parent shall
certify to the Stockholder that such investment bank has advised Parent that
such notice is reasonably necessary in connection with such offering. Upon
the receipt by the Stockholder of any such notice of a Disadvantageous
Condition (i) the Stockholder shall notify the Members and the Sellers shall
forthwith discontinue use of the prospectus and any prospectus supplement
under such registration statement and shall suspend sales of Registrable
Securities until such Disadvantageous Condition no longer exists and (ii) if
so directed by Parent by notice as aforesaid the Stockholder will deliver to
Parent all copies, other than permanent file copies then in the Stockholder's
possession, of the prospectus and prospectus supplements then covering such
Registrable Securities at the time of receipt of such notice as aforesaid.
Notwithstanding anything else contained in this Agreement, the maintaining
current of a prospectus (and the suspension of sales of Registrable
Securities) in connection with the Shelf Registration may not be delayed
under this paragraph (b) for more than a total of 60 days in any six-month
period.
(c) Expenses. Except as provided herein, Parent shall pay all
--------
registration expenses with respect to the Shelf Registration.
Notwithstanding the foregoing, (i) the Sellers and Parent shall each be
responsible for their own internal administrative and similar costs, (ii) the
Sellers shall be responsible for the legal fees and expenses of their own
counsel and (iii) the Sellers shall be responsible for all underwriting
discounts and commissions, selling or placement agent or broker fees and
commissions, and transfer taxes, if any, in connection with the sale of
securities by the Sellers.
(d) Indemnification and Contribution. (i) Parent agrees to
--------------------------------
indemnify and hold harmless each of the Sellers and each person, if any, who
controls each Seller within the meaning of either Section 15 of the
Securities Act or Section 20 of the Exchange Act from and against any and all
losses, claims, damages and liabilities (including, without limitation, any
legal or other expenses reasonably incurred in connection with defending or
investigating any such action or claim) insofar as such losses, claims,
damages or liabilities are caused by any untrue statement or alleged untrue
statement of a material fact contained in any registration statement or any
amendment thereof, any preliminary prospectus or prospectus (as amended or
supplemented if Parent shall have furnished any amendments or supplements
thereto) relating to the Registrable Securities, or caused by any omission or
alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, except
insofar as such losses, claims, damages or liabilities are caused by any such
untrue statement or omission or alleged untrue statement or omission based
upon information furnished to Parent in writing by the Sellers expressly for
use therein. Parent also agrees to indemnify any underwriter of the
Registrable Securities so offered and each person, if any, who controls such
underwriter on substantially the same basis as that of the indemnification by
Parent of the Sellers provided in this Section 8.3(d).
(ii) Each Seller agrees to indemnify and hold harmless Parent, its
directors, the officers who sign any registration statement and each person,
if any who controls Parent within the meaning of either Section 15 of the
Securities Act or Section 20 of the Exchange Act, from and against any and
all losses, claims, damages and liabilities (including, without limitation,
any legal or other expenses reasonably incurred in connection with defending
or investigation any such action or claim) insofar as such losses, claims,
damages or liabilities are caused by any untrue statement or alleged untrue
statement of a material fact contained in any registration statement or any
amendment thereof, any preliminary prospectus or prospectus (as amended or
supplemented if Parent shall have furnished any amendments or supplements
thereto) relating to the Registrable Securities, or caused by any omission or
alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, but only
with reference to information furnished in writing by such Seller (or any
representative thereof) expressly for use in a registration statement, any
preliminary prospectus, prospectus or any amendments or supplements thereto.
Each Seller also agrees to indemnify any underwriter of the Registrable
Securities so offered and each person, if any, who controls such underwriter
on substantially the same basis as that of the indemnification by the Sellers
of Parent provided in this Section 8.3(d).
(iii) Each party indemnified under paragraph (i) or (ii) above shall,
promptly after receipt of notice of a claim or action against such
indemnified party in respect of which indemnity may be sought thereunder,
notify the indemnifying party in writing of the claim or action, provided
--------
that the failure to notify the indemnifying party shall not relieve it from
any liability that it may have to an indemnified party on account of the
indemnity agreement contained in paragraph (i) or (ii) above except to the
extent that the indemnifying party was actually prejudiced by such failure,
and in no event shall such failure relieve the indemnifying party from any
other liability that it may have to such indemnified party. If any such
claim or action shall be brought against an indemnified party, and it shall
have notified the indemnifying party thereof, unless based on the written
advice of counsel to such indemnified party of conflict of interest between
such indemnified party and indemnifying parties may exist in respect of such
claim, the indemnifying party shall be entitled to participate therein, and,
to the extent that it wishes, jointly with any other similarly notified
indemnifying party, to assume the defense thereof. After notice from the
indemnifying party to the indemnified party of its election to assume the
defense of such claim or action, the indemnifying party shall not be liable
to the indemnified party under this section 8.3(d)(iii) for any legal or
other expenses subsequently incurred by the indemnified party in connection
with defense thereof. Any indemnifying party against whom indemnity may be
sought under this Section 8.3 shall not be liable to indemnify an indemnified
party if such indemnified party settles such claim or action without the
consent of the indemnifying party. The indemnifying party may not agree to
any settlement of any such claim or action, other than solely for monetary
damages for which the indemnifying party shall be responsible hereunder, the
result of which any remedy or relief shall be applied to or against the
indemnified party, without the prior written consent of the indemnified
party, which consent shall not be unreasonably withheld. In any action
hereunder as to which the indemnifying party has assumed the defense thereof,
the indemnified party shall continue to be entitled to participate in the
defense thereof, with counsel of its own choice, but the indemnifying party
shall not be obligated hereunder to reimburse the indemnified party of the
costs thereof.
(iv) If the indemnification provided for in this Section 8.3(d) shall
for any reason be unavailable (other than in accordance with its terms) to an
indemnified party in respect of any loss, liability, cost, claim, or damage
referred to therein, then each indemnifying party shall, in lieu of
indemnifying such indemnified party, contribute to the amount paid or payable
by such indemnified party as a result such loss, liability, cost, claim or
damage (A) in such proportion as is appropriate to reflect the relative
benefits received by Parent on the one hand and the Sellers on the other hand
from the offering of the Registrable Securities or (B) if such proportion as
is appropriate to reflect not only the relative benefits referred to in
clause (A) above but also the relative fault of the indemnifying party or
parties on the one hand and of the indemnified party or parties on the other
hand in damages or liabilities, as well as any other relevant equitable
considerations. The relative benefits received by Parent on the one hand and
the Sellers on the other hand in connection with the offering of the
Registrable Securities shall be deemed to be in the same respective
proportions as the net proceeds from the offering of the Registrable
Securities (before deducing expenses) received by Parent and the Sellers,
respectively, bear to the aggregate public offering price of the Registrable
Securities. The relative fault of Parent on the one hand and the Sellers on
the other hand shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The amount paid or payable by an indemnified party as
a result of the loss, cost, claim, damage or liability, or action in respect
thereof, referred to above in this paragraph (iv) shall be deemed to include,
for purposes of this paragraph (iv), any legal or other expenses reasonably
incurred by such indemnified party in connection with investigating or
defending any such action or claim. Parent and the Stockholder agree that it
would not be just and equitable if contribution pursuant to this Section
8.3(d)(iv) were determined by pro rata allocation or by any other method of
allocation which does not take account of the equitable considerations
referred to in this paragraph. Notwithstanding any other provision of this
Section 8.3, the Stockholder shall not be required to contribute any amount
in excess of the amount by which the total price at which the Registrable
Securities of the Sellers were offered to the public exceeds the amount of
any damages which the Stockholder has otherwise been required to pay by
reason of such untrue or alleged untrue statement or omission o alleged
omission. No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation.
(e) Material Misstatements. Parent shall promptly notify the
----------------------
Stockholder in writing (i) at any time when a prospectus relating to a
registration pursuant to Section 8.3(a) is required to be delivered under the
Securities Act of the happening of any event as a result of which the
prospectus included in such registration statement, as then in effect,
includes an untrue statement of a material fact or omits to state any
material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading, and (ii) of any request by the SEC or any other regulatory
body or other body having jurisdiction for any amendment of or supplement to
any registration statement or other document relating to such offering, and
in either such case, at the request of the Stockholder prepare and furnish to
the Stockholder a reasonable number of copies of a supplement to or an
amendment of such prospectus as may be necessary so that, as thereafter
delivered to the purchasers of Registrable Securities, such prospectus shall
not include an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they are made,
not misleading.
9. Covenants of the Stockholder and the Members. The Sellers,
--------------------------------------------
jointly and severally, hereby covenant and agree as follows:
9.1 Cooperation in Filing Notification under Xxxx-Xxxxx-Xxxxxx.
----------------------------------------------------------
The Sellers agree to cooperate fully with Parent to promptly effectuate the
filing of any notification required under the HSR Act.
9.2 Reasonable Best Efforts. Subject to the terms and conditions
-----------------------
of this Agreement, the Sellers each agree to use all reasonable best efforts
to take, or cause to be taken, all actions, and to do, or cause to be done,
all things necessary, proper or advisable to consummate and make effective
the transactions provided for by this Agreement. Each Seller hereby agrees,
while this Agreement is in effect, and except as contemplated hereby, not to
intentionally and knowingly take any action with the intention and knowledge
that such action would make any of its representations or warranties
contained herein untrue or incorrect in any material respect or have the
effect of preventing or disabling it from performing its obligations under
this Agreement.
9.3 Voting. The Stockholder hereby agrees that, during the time
------
this Agreement is in effect, at any meeting of the stockholders of the
Company (or at any adjournments or postponements thereof), however called, or
in any other circumstances upon which the Stockholder's vote, consent or
other approval is sought, the Stockholder shall vote (or cause to be voted)
the Shares (i) in favor of the Merger, the adoption of the Merger Agreement
and the approval of the terms thereof and each of the other transactions and
other matters contemplated by the Merger Agreement and this Agreement and any
actions required in furtherance hereof and thereof; (ii) against any action
or agreement that would result in a breach in any material respect of any
covenant, representation or warranty or any other obligation or agreement of
the Company under the Merger Agreement; (iii) except as otherwise agreed to
in writing in advance by Parent, against the following actions (other than
the Merger and the transactions and other matters contemplated by the Merger
Agreement): (1) any extraordinary corporate transaction, such as a merger,
consolidation or other business combination involving the Company or its
subsidiaries; (2) a sale, lease or transfer of a material amount of assets of
the Company or its subsidiaries or a reorganization, recapitalization,
dissolution or liquidation of the Company or its subsidiaries; (3) (a) any
change in the majority of the board of directors of the Company; (b) any
material change in the present capitalization of the Company or any amendment
of the Company's Certificate of Incorporation or By-laws; (c) any other
material change in the Company's corporate structure or business; or (d) any
other action; which, in the case of each of the matters referred to in
clauses 3(a), (b), (c) or (d), is intended, or could reasonably be expected,
to impede, frustrate, prevent, interfere with, delay, postpone, discourage or
materially adversely affect the contemplated economic benefits to Parent of
the Exchange or the Merger or the transactions contemplated by the Merger
Agreement and this Agreement or change in any manner the voting rights of the
Company Common Stock. The Stockholder shall not enter into any agreement or
understanding with any person or entity prior to the termination of this
Agreement to vote or give instructions after such termination in a manner
inconsistent with clauses (i), (ii) or (iii) of the preceding sentence.
9.4 Proxy. The Stockholder hereby grants to, and appoints, Parent
-----
and Xxxxx X. Xxxxxxx, Chief Executive Officer of Parent, Xxxxxxx X.
Xxxxxxxxxxx, Chief Financial Officer of Parent, and Xxxxxxx X. Xxxxxxxxxxx,
Vice President, General Counsel and Secretary of Parent, in their respective
capacities as officers of Parent, and any individual who shall hereafter
succeed to any such office of Parent, and any other designee of Parent, each
of them individually, its irrevocable proxy and attorney-in-fact (with full
power of substitution) to vote the Shares as indicated in Section 9.3. The
Stockholder intends this proxy to be irrevocable and coupled with an interest
and will take such further action and execute such other instruments as may
be necessary to effectuate the intent of this proxy and hereby revokes any
proxy previously granted by it with respect to its Shares.
9.5 No Solicitation. During the term of this Agreement, the
---------------
Sellers shall not, directly or indirectly, through any officer, director,
employee, representative or agent of the Sellers or any of its subsidiaries
or otherwise, (i) solicit, initiate or encourage any inquiries, offers or
proposals, or any indications of interest, regarding any merger, sale of
substantial assets, sale of shares of capital stock (including by way of a
tender offer) or similar transactions involving the Sellers or any
significant subsidiary of the Sellers other than the Merger or (ii)
participate in negotiations or discussions concerning, or provide any
nonpublic information to any person relating to, any Acquisition Proposal.
If any of the Sellers receives any such inquiry or proposal, then such Seller
shall promptly inform Parent of the terms and conditions, if any, of such
inquiry or proposal and the identity of the person making it. Each Seller
will immediately cease and cause to be terminated any existing activities,
discussions or negotiations with any parties conducted heretofore with
respect to any of the foregoing.
9.6 Restriction on Transfer of Shares, Proxies and Non-
---------------------------------------------------
Interference; Restriction on Withdrawal. No Seller shall, directly or
---------------------------------------
indirectly: (i) except pursuant to or as contemplated hereby by the terms of
this Agreement or the Merger Agreement, offer for sale, sell (including short
sales), transfer, tender, pledge, encumber, assign or otherwise dispose of
(including by gift) or enter into any contract, option or other arrangement
or understanding (including any profit-sharing arrangement) with respect to
or consent to the offer for sale, sale, transfer, tender, pledge,
encumbrance, assignment or other disposition of, any or all of the Shares or
any interest therein; (ii) except as contemplated hereby, grant any proxies
or powers of attorney, deposit any Shares into a voting trust or enter into
any other voting arrangement with respect to any Shares; or (iii) take any
action that would make any representation or warranty of the Sellers
contained herein untrue or incorrect or have the effect of preventing or
disabling the Sellers from performing their obligations under this Agreement;
or commit or agree to take any of the foregoing actions.
9.7 Transfer of Shares of Parent Class A Common Stock. The
-------------------------------------------------
Sellers agree that they shall not, directly or indirectly, offer, sell,
transfer, tender, pledge or encumber, assign or otherwise dispose of any
shares of Parent Class A Common Stock (a) until the earlier of (i) such time
at or after the Effective Time of the Merger that is no earlier than the time
when holders of Company Common Stock can sell the shares of Parent Class A
Common Stock issued pursuant to the Merger (without giving effect to any
restrictions under applicable securities laws) and (ii) the termination of
the Merger Agreement in accordance with its terms (the date on which such
earlier time occurs, the "Release Date"), (b) other than in accordance with
Section 4.7 and (c) other than in accordance with the terms of any Lock-Up
Letter.
9.8 Transfer Taxes. All transfer, documentary, sales, use,
--------------
registration, stock transfer Taxes and other such Taxes (including all
applicable real estate transfer or gains Taxes) and related fees (including
any penalties, interest and additions to Tax) incurred in connection with
this Agreement and the transactions contemplated hereby shall be paid by the
Stockholder and the Stockholder shall timely make all filings, returns,
reports and forms as may be required to comply with the provisions of such
Tax laws.
9.9 Waiver of Dividend. The Sellers hereby irrevocably waive
------------------
their right to receive with respect to the Exchange Shares, and hereby
instruct Parent not to pay to the Sellers in respect of the Exchange Shares,
any dividend declared by the Board of Directors of Parent payable to holders
of record of Parent as of a record date prior to the Effective Time of the
Merger.
9.10 Standstill. Each Seller agrees that such Seller shall not
----------
(a) acting alone or in concert with others, seek to affect or influence the
control of the management or board of directors of Parent or the business,
operations or policies of Parent; (b) deposit any shares of Parent Class A
Common Stock or securities exercisable or exchangeable or convertible into
shares of Parent Class A Common Stock, or other securities having the right
to vote generally with shares of Parent Class A Common Stock (collectively
"Parent Voting Securities") in a voting trust or subject any Parent Voting
Securities to any proxy, arrangement or agreement with respect to the voting
of such Parent Voting Securities or other agreement having similar effect;
(c) initiate or propose any stockholder proposal or make, or in any way,
participate in, directly or indirectly, any "solicitation" of "proxies" to
vote, other than in connection with the Merger and the Merger Agreement, or
intentionally seek in an organized fashion to influence any person with
respect to the voting of, any Parent Voting Securities in a manner
inconsistent with the position of the board of directors of Parent or become
"participant" in a "solicitation" (as such terms are defined in Regulation
14A under the Exchange Act, as in effect on the date hereof) in opposition to
the recommendation of the majority of the directors of Parent with respect to
any matter; (d) join a partnership, limited partnership, syndicate or other
group, or otherwise act in concert with any other person, for the purpose of
acquiring, holding, voting or disposing of Parent Voting Securities, or,
otherwise become a "person" within the meaning of Section 13(d)(3) of the
Exchange Act relating to any of the matters set forth in clauses (a), (b) or
(c); or (e) take any other action inconsistent with this Section 9.10. The
provisions of this Section 9.10 shall not apply to any Seller following such
time after the Exchange as such Seller cease to beneficially own at least 25%
of the Exchange Shares acquired by such Seller in the Exchange.
9.11 Amendment of LLC Agreement. By the execution and delivery of
--------------------------
this Agreement, each Member hereby agrees that, effective as of the Closing
Date, Sections 11.2 and 11.3 of the LLC Agreement shall be deemed amended to
delete the terms thereof in their entirety. To the extent any provision of
Article XI of the LLC Agreement conflicts with the terms of this Agreement,
the terms of this Agreement shall be controlling.
9.12 Transfer of Shares to Xxxxxxx X. Xxxxxx. Notwithstanding
---------------------------------------
anything to the contrary contained in this Agreement, simultaneously with or
promptly following the execution hereof by Xxxxxxx X. Xxxxxx ("Xxxxxx"), the
Stockholder shall transfer (the "Xxxxxx Transfer") the 225,374 Shares (the
"Xxxxxx Shares") which are the "Allocated Shares" of Xxxxxx to Xxxxxx. From
and after such time as the Xxxxxx Transfer shall have been completed, (i)
Xxxxxx shall, with respect to the Xxxxxx Shares, be fully subject to and
shall comply with and be entitled to the benefits of all of the covenants and
agreements contained herein and applicable to the Stockholder, including,
without limitation, the representations set forth in Sections 4.4 and 4.6,
the requirement to exchange the Xxxxxx Shares at Closing, free and clear of
Liens or Restrictions, in accordance with Section 1 and to comply with the
voting and proxy requirements of Sections 9.3 and 9.4, respectively; (ii) no
representation of the Members shall be deemed to be breached to the extent it
is no longer true solely as a result of the Xxxxxx Transfer; (iii) Xxxxxx
shall make the representation in the last sentence of Section 3.1 in his
capacity as "Stockholder"; and (iv) in order to effectuate the foregoing,
references herein and in the Merger Agreement to the "Stockholder" shall be
deemed to refer to Xxxxxx and the Stockholder. Xxxxxx shall, notwithstanding
the Xxxxxx Transfer, continue to be treated as a Member for purposes of the
representations and warranties of the Members set forth in Section 3 (other
than Section 3.5) and as a Seller for all purposes hereof.
10. Further Assurances. From time to time, at the other party's
------------------
request and without further consideration, each party hereto shall execute
and deliver such additional documents and take all such further action as may
be necessary or desirable to consummate and make effective, in the most
expeditious manner practicable, the transactions contemplated by this
Agreement.
11. Certain Events. The Stockholder agrees that this Agreement
--------------
and the obligations hereunder shall attach to the Stockholder's Shares and
shall be binding upon any person or entity to which legal or beneficial
ownership of such Shares shall pass, whether by operation of law or
otherwise, including without limitation the Stockholder's administrators,
successors or receivers.
12. Stop Transfer. The Stockholder agrees with, and covenants to,
-------------
Parent that it shall not request that the Company register the transfer
(book-entry or otherwise) of any certificate or uncertificated interest
representing any of the Shares, unless such transfer is made in compliance
with this Agreement and the Lock-Up Letter. The Stockholder agrees, with
respect to any Shares in certificated form, that immediately following the
execution hereof, it will present to the Company, the certificates
representing the Shares and the Company will inscribe upon such certificates
the following legend: "The shares of Common Stock, par value $.01 per share,
of Designer Holdings Ltd. (the "Company") represented by this certificate are
subject to a Stock Exchange Agreement dated as of September 25, 1997, and may
not be sold or otherwise transferred, except in accordance therewith. Copies
of such Agreement may be obtained at the principal executive offices of the
Company." The Stockholder agrees that it will no longer hold any Shares,
whether certificated or uncertificated, in "street name" or in the name of
any nominee. Pursuant to the Merger Agreement, the Company has agreed to
notify the transfer agent for any Shares in uncertificated form of the
provisions set forth in this Section 12 and has agreed to, and the
Stockholder agrees to, provide such documentation and to do such other things
as may be required to give effect to such provisions with respect to such
uncertificated Shares. Following the Closing for the Exchange, Parent will
not register the transfer (book-entry or otherwise) of any certificate or
uncertificated interest representing the Stockholder's Parent Class A Common
Stock, unless such transfer is made in compliance with this Agreement.
13. Post-Closing Covenants; Termination.
-----------------------------------
13.1 Termination. If the Closing of the Exchange shall not have
-----------
occurred on or prior to June 30, 1998, other than as a result of a material
breach of this Agreement by any party hereto, the Stockholder or Parent may
terminate this Agreement without liability. If the Closing Date shall not
have occurred on or prior to such date as a result of material breach of any
representation, warranty, covenant or obligation by the Sellers (or any of
them), on the one hand, or Parent on the other, the non-breaching party shall
have the right to terminate this Agreement without liability. Except for
Sections 3.1, 3.5, 4.1, 4.4 and 4.6, the representations and warranties of
the parties set forth herein shall terminate upon the Closing of the
Exchange.
13.2 Noncompetition. (a) Each of Charterhouse Equity Partners II,
--------------
L.P. ("CEP") and Xxxxxx X. Xxxxx (the "Partners") severally agrees that,
commencing on the Closing Date until the second anniversary of the Closing
Date, it will not, and, as to Xx. Xxxxx, he will cause his affiliates not to,
in North America, South America and Central America, directly or indirectly,
invest in (other than a passive equity investment constituting no more than
5% of the equity of the subject company), engage in, become financially
interested in, or be employed by, whether as an employee, consultant,
partner, principal, agent, representative or Stockholder or in any other
corporate or representative capacity, if it involves engaging in, or
rendering services that are integral to the business of or advice pertaining
to, any lines of business Parent was actively conducting on the date of this
Agreement or the date of consummation of the Exchange, except in connection
with an agreement consented to in writing by Parent, or, in the case of CEP,
in connection with its investments existing on the date of this Agreement,
nor will the Partners solicit any business of the type conducted by the
Company from any customer of the Company or hire any employee of the Company
or any of its subsidiaries (or any of their successors) except, as to Xx.
Xxxxx, as he is permitted under his letter agreement of employment between
him and Parent and any subsequent letter agreement or arrangement approved in
writing by Parent; provided, however, that the foregoing shall not prohibit
-------- -------
Xxxxx Xxxxx from being employed by, whether as an employee, consultant or
representative, or acting in any other corporate or representative capacity
to, any entity involved in any of such lines of business.
(b) It is the intention of the parties that if any of the
restrictions or covenants contained herein is held to cover a geographic area
or to be for a length of time that is not permitted by applicable law, or in
any way construed to be too broad or to any extent invalid, such provision
shall not be construed to be null, void and of no effect, but to the extent
such provision would be valid or enforceable under applicable law, a court of
competent jurisdiction shall construe and interpret or reform this Section
13.2 to provide for a covenant having the maximum enforceable geographic
area, time period and other provisions (not greater than those contained
herein) as shall be valid and enforceable under such applicable law. Each of
the Partners acknowledges that any breach of the terms, conditions or
covenants set forth in this Section 13.2 shall be competitively unfair and
may cause irreparable damage to Parent because of the special, unique,
unusual, extraordinary and intellectual character of the Company's business,
and Parent's recovery of damages at law will not be an adequate remedy.
Accordingly, each of the Partners agrees that for any breach of the terms,
covenants or agreements of this Section 13.2, a restraining order or an
injunction or both may be issued against such person, in addition to any
other rights or remedies Parent may have.
(c) Each Seller agrees to hold in strict confidence all data and
information relating to the business of the Company and its subsidiaries (the
"Proprietary Information") obtained in the course of its ownership of shares
or participation in the management of the Company or any of its subsidiaries
or otherwise which is either non-public, confidential or proprietary in
nature. Each Seller agrees that subject to any requirement of law or
tribunal order, it will keep such Proprietary Information confidential and
will not, without the prior written consent of Parent, be disclosed by any
Seller to any person. This Agreement shall be inoperative as to such
portions of the Proprietary Information which (i) are or become generally
available to the public other than as a result of a disclosure by Parent or
any of its Representatives, (ii) become available to any Seller or one of its
Representatives on a nonconfidential basis from a source other than any of
Parent or any of its Representatives, which has not advised such Seller that
it is bound by a confidentiality agreement with, or other contractual, legal
or fiduciary obligation of confidentiality to, any of Parent or any of its
subsidiaries or affiliates with respect to such portions of the Proprietary
Information, or (iii) were known by any Seller on a nonconfidential basis
prior to its commencement of employment with, or ownership of, the Company or
one of its subsidiaries. The Sellers agree that Parent shall be entitled to
equitable relief, including injunction and specific performance, in the event
of any breach of the provisions of this Section 13.2. Such remedies shall
not be deemed to be the exclusive remedies for a breach of this Section 13.2
by any Seller but shall be in addition to all other remedies available at law
or equity. It is further understood and agreed that failure or delay by
Parent in exercising any right, power or privilege under this Section 13.2
shall not operate as a waiver thereof nor shall any single or partial
exercise thereof preclude and other or further exercise of any right, power
or privilege under this Agreement.
14. Survival of Representations and Warranties. The
------------------------------------------
representations and warranties of the parties contained herein shall survive
the Closing and the consummation of the transactions contemplated hereby.
15. Miscellaneous.
-------------
15.1 Successors and Assigns. This Agreement shall be binding upon
----------------------
and inure to the benefit of the parties hereto and their respective
successors and assigns. Other than as set forth in the immediately
succeeding sentence, no party may assign any of its rights, or delegate any
of its duties or obligations, hereunder without the prior written consent of
the other party, and any such purported assignment or delegation shall be
void ab initio. Notwithstanding the foregoing, Parent, its affiliates, and
its successors and assigns, may assign their rights and delegate their duties
(i) to any successor entity resulting from any liquidation, merger,
consolidation' reorganization, or transfer of all or substantially all of the
assets or stock of Parent, or (ii) to any affiliate of Parent; provided, that
--------
in either case, any such assignee shall expressly assume all of the
obligations Parent hereunder.
15.2 Notices. All notices, demands and other communications
-------
(collectively, "Notices") given or made pursuant to this Agreement shall be
in writing and shall be deemed to have been duly given if sent by registered
or certified mail, return receipt requested, postage and fees prepaid, by
overnight service with a nationally recognized "next day" delivery company
such as Federal Express or United Parcel Service, by facsimile transmission,
or otherwise actually delivered to the following addresses:
(a) If to Parent:
------------
The Warnaco Group, Inc.
00 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxx X. Xxxxxxx
Fax: 000-000-0000
with a copy to:
--------------
The Warnaco Group, Inc.
00 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxxx X. Xxxxxxxxxxx
Fax: 000-000-0000
(b) If to the Sellers:
-----------------
c/o Charterhouse Equity Partners II, L.P.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: A. Xxxxxxxx Xxxxx
Fax: (000) 000-0000
with copies to:
--------------
Proskauer Rose LLP
0000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxx X. Xxxx
Fax: (000) 000-0000
Xxxxxx X. Xxxxx
Designer Holdings Ltd.
0000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Fax: (000) 000-0000
Any Notice shall be deemed duly given when received by the addressee thereof.
Any of the parties to this Agreement may from time to time change its address
for receiving notices by giving written notice thereof in the manner set
forth above.
15.3 Amendment: Waiver. No provision of this Agreement may be
-----------------
waived unless in writing signed by all of the parties to this Agreement, and
the waiver of any one provision of this Agreement shall not be deemed to be a
waiver of any other provision. This Agreement may be amended, supplemented
or otherwise modified only by a written agreement executed by all of the
parties to this Agreement.
15.4 Enforcement; Jurisdiction. The parties 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 breaches of this Agreement and to
enforce specifically the terms and provisions of this Agreement in any
Federal court located in the State of Delaware or any Delaware state court,
this being in addition to any other remedy to which they are entitled at law
or in equity. Any suit, action or proceeding seeking to enforce any
provision of, or based on any matter arising out of or in connection with,
this Agreement or the transactions contemplated by this Agreement may be
brought against any of the parties in any Federal court located in the State
of Delaware or any Delaware state court, and each of the parties hereto
hereby consents to the exclusive jurisdiction of such courts (and of the
appropriate appellate courts therefrom) in any such suit, action or
proceeding and waives any objection to venue laid therein. Process in any
such suit, action or proceeding may be served on any party anywhere in the
world, whether within or without the State of Delaware. Without limiting the
generality of the foregoing, each party hereto agrees that service of process
upon such party at the address referred to in Section 15.2, together with
written notice of such service to such party, shall be deemed effective
service of process upon such party.
15.5 Severability. Whenever possible, each provision or portion of
------------
any provision of this Agreement will be interpreted in such manner as to be
effective and valid under applicable law but if any provision or portion of
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 will not affect
any other provision or portion of any provision in such jurisdiction, and
this Agreement will be reformed, construed and enforced in such jurisdiction
as if such invalid, illegal or unenforceable provision or portion of any
provision had never been contained herein.
15.6 Counterparts. This Agreement may be executed in one or more
------------
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each
of the parties and delivered to the other parties.
15.7 Entire Agreement; No Third-Party Beneficiaries. This
----------------------------------------------
Agreement and the other agreements referred to herein constitute the entire
agreement, and supersede all prior agreements and understandings, both
written and oral, among the parties with respect to the subject matter of
this Agreement. This Agreement is not intended to confer upon any person
other than the parties any rights or remedies.
15.8 Governing Law. This Agreement shall be governed by, and
-------------
construed in accordance with, the laws of the State of Delaware, regardless
of the laws that might otherwise govern under applicable principles of
conflicts of laws thereof.
15.9 Headings. The section and subsection headings contained in
--------
this Agreement are included for convenience only and form no part of the
agreement between the parties.
15.10 Expenses. Each party shall pay its own costs, expenses,
--------
including without limitation, the fees and expenses of their respective
counsel and financial advisors.
15.11 Publicity. The initial press release relating to this
---------
Agreement shall be a joint press release, and Parent and the Sellers shall
use reasonable efforts to agree upon the text of any other press release
before issuing any such press release.
15.12 Specific Performance. Each of the parties hereto recognizes
--------------------
and acknowledges that a breach by it of any covenants or agreements contained
in this Agreement will cause the other parties to sustain damages for which
they would not have an adequate remedy at law for money damages, and
therefore each of the parties hereto agrees that in the event of any such
breach the aggrieved party or parties shall be entitled to the remedy of
specific performance of such covenants and agreements and injunctive and
other equitable relief, without the posting of
bond or other security, in addition to any other remedy to which it or they
may be entitled, at law or in equity.
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date first above written.
THE WARNACO GROUP, INC.
By: /s/ Xxxxx X. Xxxxxxx
-----------------------------------
Title: President and
Chief Executive Officer
/s/ Xxxxxx X. Xxxxx
-----------------------------------
Xxxxxx X. Xxxxx
NEW RIO, L.L.C.
By: /s/ Xxxxxx X. Xxxxx
-----------------------------------
Title: Chief Executive Officer
CHARTERHOUSE EQUITY PARTNERS II, L.P.
By: CHUSA EQUITY INVESTORS II, L.P.,
General Partner
By: CHARTERHOUSE EQUITY II, INC.,
General Partner
/s/ Xxxxxx X. Xxxxxxx
-----------------------------------
Attorney-in-Fact
CHEF NOMINEES LIMITED
By: /s/ Xxxxxx X. Xxxxxxx
-----------------------------------
Attorney-in-Fact
A.S. ENTERPRISES, L.L.C.
By: /s/ Xxxxxx X. Xxxxx
-----------------------------------
Title: Chief Executive Officer
/s/ Xxxxxx X. Xxxxxx
-----------------------------------
Xxxxxx X. Xxxxxx
/s/ Xxxxxxx Xxxx Xxxxxx
-----------------------------------
Xxxxxxx Xxxx Xxxxxx
/s/ Xxxxxx X. Xxxxxx
-----------------------------------
Xxxxxx X. Xxxxxx
/s/ Xxxx X. Xxxxxx
-----------------------------------
Xxxx X. Xxxxxx as Trustee f/b/o
Xxxxxx X. Xxxxxx and
Xxxx X. Xxxxxx
/s/ Xxxxxxx X. Xxxxxx
-----------------------------------
Xxxxxxx X. Xxxxxx
SCHEDULE 3.2
SHARES OF
COMMON STOCK
BENEFICIALLY OWNED
------------------
NAME OF BENEFICIAL OWNER NUMBER PERCENTAGE
------------------------ ------ ----------
NEW RIO, L.L.C.:
Charterhouse Equity 8,033,800 25.0%
Partners II, L.P. . . . .
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Xxxxxx X. Xxxxx (2) . . . . . 7,805,813 24.3%
0000 Xxxxxxxx
Xxx Xxxx, XX 00000
Xxxxxx X. Xxxxxx . . . . . . 141,146
Xxxxxx X. Xxxxxx . . . . . . 53,272
Xxxxxxx Xxxx Xxxxxx . . . . . 51,084
Trust for the benefit of
Xxxx X. Xxxxxx and
Xxxxxxx X. Xxxxxx . . . . 167,445
Xxxxxxx X. Xxxxxx . . . . . . 225,374
Chef Nominees Limited . . . . 15,934
NEW RIO, L.L.C. TOTAL . . . . 16,483,868 51.3%
Less than one percent.
Includes 302,924 shares owned by A.S. Enterprises, L.L.C., a company owned
by Mr. and Xxx. Xxxxx.
