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EXHIBIT 10.10
AMENDMENT (the "Amendment"), dated as of May 19, 1999, between
The X. X. Xxxxxxx Company, Inc., a North Carolina corporation
("Buyer"), and The Kelly-Springfield Tire Company, a division
of The Goodyear Tire and Rubber Company ("Seller")
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The Buyer and the Seller are parties to an Agreement, dated as
of May 7, 1997 (the "Supply Agreement"), and a Securities Purchase Agreement,
dated as of May 7, 1997 (the "Securities Purchase Agreement"). The Buyer,
certain stockholders of the Buyer and Charlesbank Equity Fund IV, Limited
Partnership ("Charlesbank") have entered into a Stock Purchase Agreement (the
"Stock Purchase Agreement"), dated as of April 21, 1999, pursuant to which such
stockholders have agreed to sell their shares of common stock of the Company to
Charlesbank on the terms and conditions set forth therein.
In consideration of the mutual benefits to be derived from the
transactions contemplated by the Stock Purchase Agreement, and as a condition to
the consummation of the transactions contemplated therein, the parties have
agreed to enter into this Amendment.
Capitalized terms used and not otherwise defined in the text
of this Amendment shall have the meanings given in the Supply Agreement.
The parties agree as follows:
1. Amendment to Supply Agreement. The Supply Agreement is
hereby amended by adding the following immediately after Section 23 thereof:
"SECTION 24. SUPPLEMENTAL PAYMENT. Subject to the restrictions
contained in Section 6.6 of the Second Amended and Restated Articles of
Incorporation of the Buyer or any successor document (the "Articles"), if the
Buyer and its affiliates do not purchase from the Seller tires with an aggregate
purchase price in an amount equal to or greater than (i) for 1999, $125,000,000
and (ii) for each calendar year thereafter, an amount averaging 104% of the Base
Purchase Requirement for the prior calendar year as determined in accordance
with this Section 24, and no Series B Dividends (as defined in the Articles) are
payable in accordance with Section 6.2(a) thereof, the Buyer agrees to make
additional payments to the Seller for tires purchased under this Agreement to
the extent necessary to put the Seller in the same economic position as if
Series B Dividends (as defined in the Articles) had been payable on the Series B
Dividend Payment Date (as defined in the Articles) scheduled to occur in the
following calendar year. For any calendar year, the Base Purchase Requirement
shall be the sum of (x) the aggregate purchase price for tires purchased by the
Buyer and its subsidiaries (provided such subsidiaries were owned by the Buyer
on January 1 of such
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calendar year) from Goodyear during such year and (y) 75% of the aggregate
purchase price for tires purchased from Goodyear during such year by
subsidiaries of the Buyer that were acquired during such year; provided, in each
case, that purchases from Goodyear in any calendar year shall include purchases
of tires from a business acquired by Goodyear after May 1, 1999 only if Goodyear
or such acquired business agrees to continue to supply such products to the
Buyer on substantially the same terms and conditions on and after the date of
acquisition by Goodyear as were offered before the date of such acquisition, in
which case 75% of the aggregate purchase price for tires purchased from such
business shall be included. When used in this Section 24, "Goodyear" means,
collectively, The Goodyear Tire and Rubber Company, the Seller and any other
subsidiary or division of Goodyear that supplies tires to the Buyer and/or its
subsidiaries."
2. Amendment to Securities Purchase Agreement. The Securities
Purchase Agreement is hereby amended as follows:
(a) Section 4.2 is restated to read in its entirety as
follows:
"SECTION 4.2. Change of Control Notice. So long as the
Purchaser holds all of the outstanding Xxxxx Preferred Shares, at least 30 days
prior to the occurrence of any Change of Control (as defined in the Amended and
Restated Articles), the Company shall notify the Purchaser of such pending
Change of Control."
(b) The following text is added immediately after Section 4.5:
"SECTION 4.6. Required Redemption of Preferred Stock.
(a) Redemption Right. Subject to the restrictions contained in
Section 4.6(e), if, at any time after the Series A Issue Date a Change of
Control (as defined below) occurs, the Corporation shall, within 10 Business
Days after such occurrence, send notice of such occurrence to the holders of
Xxxxx Preferred Stock. If, within 10 Business Days of such notice, (i) the
holders of all (but not less than all) of the outstanding shares of Xxxxx
Preferred Stock send notice to the Corporation specifying that such holders
thereby request that the Corporation redeem all of the outstanding shares of
Xxxxx Preferred Stock held by each such holder and (ii) Kelly-Springfield agrees
in writing to the termination of the Supply Agreement, the Corporation shall
redeem, out of the assets of the Corporation legally available therefor, all
such shares within 30 Business Days of the Corporation's receipt of all such
requests (the "Change of Control Redemption Date") at a price per share equal to
the sum of (1) the product of (x) 100% of the Series A Liquidation Preference or
the Series B Liquidation Preference, as applicable, and (y) the Applicable
Premium then in effect as provided in Section 6.5(f) of the Articles and (2) an
amount per share equal to all accrued and unpaid Series A Dividends, 4% Series A
Makewhole Dividends and Additional Series A Makewhole Dividends or Series B
Dividends and Series B Makewhole Dividends, as applicable, whether or not
declared or payable, to the Change of Control Redemption Date, in immediately
available funds.
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(b) Certain Definitions. When used in this Section 4.6,
capitalized terms used and not defined in this Section 4.6 shall have the
meanings given in the Second Amended and Restated Articles of Incorporation of
the Corporation. "Change of Control" means such time as (i) any person or
"group" (within the meaning of Section 13(d) of the Securities Exchange Act of
1934 (the "Exchange Act") other than the Principal Shareholders (as defined
below) or Kelly-Springfield is or becomes the beneficial owner, directly or
indirectly, of outstanding shares of capital stock of the Corporation, entitling
such person or persons to exercise 50% or more of the total votes entitled to be
cast at a regular or special meeting, or by action by written consent, of
stockholders of the Corporation (the term "beneficial owner" shall be determined
in accordance with Rule 13d-3, promulgated by the Securities and Exchange
Commission under the Exchange Act), provided, however, that a person or group
shall not be deemed to be the "beneficial owner" of capital stock of the
Corporation solely by reason of such person or group having entered into a
stockholders or similar agreement with a Principal Shareholder, (ii) a majority
of the Board of Directors shall consist of persons other than Continuing
Directors (the term "Continuing Director" shall mean any member of the Board of
Directors immediately following the closing of the transactions contemplated by
the Stock Purchase Agreement, any member of the Board of Directors elected by
Kelly-Springfield pursuant to Section 6.4(c) of the Articles and any other
member of the Board of Directors who shall be recommended or elected to succeed
or become a Continuing Director by a majority of Continuing Directors who are
then members of the Board of Directors), (iii) the stockholders of the
Corporation shall have approved a recapitalization, reorganization, merger,
consolidation or similar transaction, in each case, with respect to which all or
substantially all the persons who were the respective beneficial owners of the
outstanding shares of capital stock of the Corporation immediately prior to such
recapitalization, reorganization, merger, consolidation or similar transaction
will beneficially own, directly or indirectly, less than 50% of the combined
voting power of the then outstanding shares of capital stock of the Corporation
resulting from such recapitalization, reorganization, merger consolidation or
similar transaction; or (iv) the stockholders of the Corporation shall have
approved the sale or other disposition of all or substantially all the assets of
the Corporation in one transaction or in a series of related transactions to a
person not owning or controlling, or any entity not owned or controlled by the
holders of, directly or indirectly, 50% or more of the combined voting power of
the outstanding shares of capital stock of the Corporation immediately prior to
such disposition. "Principal Shareholders" means Charlesbank Equity Fund IV,
Limited Partnership, Charlesbank Equity Fund IV GP, Limited Partnership,
Charlesbank Capital Partners, LLC, any other funds managed by Charlesbank
Capital Partners, LLC, any person that, as of the closing of the transactions
contemplated by the Stock Purchase Agreement, is a limited partner of
Charlesbank Equity Fund IV, Limited Partnership, members of senior management of
the Corporation that were employees of the Corporation as of the closing of the
transactions contemplated by the Stock Purchase Agreement, and any corporation,
partnership, limited liability company or other entity a majority of the voting
capital stock or partnership, membership or equity interests of which is owned
by any of the foregoing.
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(c) Redemption Procedures. Notice of any redemption of shares
of Xxxxx Preferred Stock pursuant to this Section 4.6 shall be mailed at least
10, but not more than 30, days prior to the date fixed for redemption to each
holder of shares of Xxxxx Preferred Stock to be redeemed, at such holder's
address as it appears on the transfer books of the Corporation. Such notice
shall include instructions for the surrender of the Xxxxx Preferred Stock to be
redeemed and the receipt of payment therefor. In order to facilitate the
redemption of shares of Xxxxx Preferred Stock pursuant to this Section 4.6, the
Board of Directors may fix a record date for the determination of shares of
Xxxxx Preferred Stock to be redeemed, or may cause the transfer books of the
Corporation for the Xxxxx Preferred Stock to be closed, not more than 30 days or
less than 10 days prior to the date fixed for such redemption.
(d) Consequences of Redemption. Notice of redemption having
been given as aforesaid, upon the date fixed for redemption in respect of shares
of Xxxxx Preferred Stock to be redeemed pursuant to this Section 4.6,
notwithstanding that any certificates for such shares shall not have been
surrendered for cancellation, from and after the date of redemption designated
in the notice of redemption, (i) the shares of Xxxxx Preferred Stock represented
thereby shall no longer be deemed outstanding, (ii) the rights to receive
dividends thereon shall cease to accrue, and (iii) all rights of the holders of
shares of Xxxxx Preferred Stock to be redeemed shall cease and terminate,
excepting only the right to receive the applicable redemption price.
(e) Limitations on Mandatory Redemption. Notwithstanding
anything to the contrary in this Section 4.6, so long as any amounts are
outstanding under any Debt Documents (as defined below) or any commitments to
lend under the Debt Documents have not been terminated, the Corporation shall
not make payment in respect of any redemption permitted or otherwise required by
this Section 4.6, or declare, make or pay any dividend or distribution in
respect of any shares of Xxxxx Preferred Stock if any Event of Default (as
defined in the Debt Documents) or default under any of the Debt Documents or any
event which, upon notice or lapse of time, or both, would constitute an Event of
Default has occurred and is continuing or would result therefrom and has not
been cured or waived in writing by the requisite vote of the holders of the
indebtedness represented by the Debt Documents. "Debt Documents" means the Loan
and Security Agreement, dated as of the Series A Issue Date between the
Corporation, Xxxxxx & Xxxxxxx, Inc., the financial institutions party thereto
and BankBoston, N.A., as agent, and the Senior Subordinated Note and Warrant
Purchase Agreement, dated the Series A Issue Date, by and among the Corporation
and The 1818 Mezzanine Fund, L.P., and the notes, mortgages, security documents,
guaranties and other agreements entered into in connection therewith (each as
amended, modified, supplemented and/or restated from time to time in accordance
with its terms, including any replacement agreement therefor and any refinancing
of the debt incurred thereunder, which refinancing may result in a greater
principal amount outstanding in connection therewith).
(f) Reacquired Shares. Any shares of Xxxxx Preferred Stock
exchanged, redeemed, purchased or otherwise acquired by the Corporation in any
manner
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whatsoever shall be retired and canceled promptly after the acquisition thereof.
All such shares of Xxxxx Preferred Stock shall upon their cancellation become
authorized but unissued shares of preferred stock, par value $.01 per share, of
the Corporation and, upon the filing of an appropriate charter amendment with
the Secretary of State of the Corporation's jurisdiction of incorporation, may
be reissued as part of another series of preferred stock, par value $.01 per
share, of the Corporation subject to the conditions or restrictions on issuance
set forth herein, but in any event may not be reissued as shares of Xxxxx
Preferred Stock or other Parity Stock unless all of the shares of Xxxxx
Preferred Stock shall have already been redeemed."
3. Charter Amendment. In consideration of the amendments to
the Securities Purchase Agreement set forth in Section 2(b) above, the parties
agree to do all things necessary (including voting shares of capital stock of
the Buyer held by the Seller) to ensure that Section 6.5(d) of the Second
Amended and Restated Articles of Incorporation will be deleted at such time as
the Buyer effects any amendment to or restatement of such Articles (including in
connection with reincorporation to a jurisdiction other than North Carolina).
4. Effective Date; Continuing Effectiveness. This Amendment
shall be effective upon the closing of the transactions contemplated by the
Stock Purchase Agreement, and shall remain in effect from and after the date
such closing occurs. If, prior to the consummation of the transactions
contemplated therein, the Stock Purchase Agreement is terminated for any reason,
this Amendment shall automatically terminate and be of no further force and
effect. Except as expressly set forth above, the terms and conditions of the
Supply Agreement, the Securities Purchase Agreement and the Buyer's Second
Amended and Restated Articles of Incorporation shall remain in full force and
effect and are hereby ratified and confirmed. In the event of any conflict
between a provision of this Amendment and any provision of the Buyer's Second
Amended and Restated Articles of Incorporation, the provision of this Amendment
shall be deemed to control to the extent of such conflict.
5. Governing Law. This Amendment shall be governed by and
construed in accordance with the laws of the State of Ohio.
(Signature page follows.)
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IN WITNESS WHEREOF, the parties have executed and delivered
this Amendment as of the date first written above.
THE KELLY-SPRINGFIELD TIRE
COMPANY, a division of The Goodyear Tire
and Rubber Company
By: /s/ Xxxx X. Xxxxxxxxxx
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Name: Xxxx X. Xxxxxxxxxx
Title: Vice President
THE X. X. XXXXXXX COMPANY, INC.
By: /s/ Xxxxxxx X. Xxxxxxx
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Name: Xxxxxxx X. Xxxxxxx
Title: President and Chief Executive Officer
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