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EXHIBIT 2.2
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CONTRIBUTION, REDEMPTION AND PURCHASE AGREEMENT
AMONG
XXXXXXXX'X, INC.,
KIRKLAND HOLDINGS L.L.C.,
MEMBERS OF XXXXXXXX HOLDINGS L.L.C.,
THE WARRANTHOLDERS,
THE XXXXXXX XXXXX XXXXXXXX TRUST
THE XXX XXXXXXXXX XXXXXXXX TRUST
THE XXXX X. XXXXXXXX GRANTOR RETAINED ANNUITY TRUST 97-1
XXXX XXXXXXXX,
XXXXXX XXXXXXXX,
AND
XXXXXX XXXXXXXX
DATED AS OF: APRIL 29, 1998
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TABLE OF CONTENTS
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ARTICLE 1 - CHARTER AMENDMENT AND STOCK SPLIT............................. 4
1.1. Consent and Authorization................................. 4
1.2. Ratification.............................................. 4
1.3. Acknowledgment............................................ 4
1.4. Waiver of Notice.......................................... 4
ARTICLE 2 - CONTRIBUTION OF AFFILIATE SHARES AND EXCHANGE OF
PREFERRED SHARES.............................................. 4
2.1. Contribution and Exchange................................. 4
2.2. Deliveries................................................ 5
ARTICLE 3 - EXERCISE OF WARRANTS AND CONSENT TO AMENDMENTS................ 5
3.1. Warrant Exercise. ....................................... 5
3.2. Exercise Price............................................ 5
3.3. Contribution of Affiliate Warrant Shares.................. 6
3.4. Deliveries................................................ 6
ARTICLE 4 - PURCHASE AND REDEMPTION OF CLASS C PREFERRED SHARES........... 6
4.1. Affiliate Shares Purchase. .............................. 6
4.2. Company Preferred Redemption.............................. 6
4.3. Payment................................................... 6
4.4. Deliveries................................................ 7
ARTICLE 5 - REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS,
THE MEMBERS AND THE WARRANTHOLDERS............................ 7
5.1. Authority................................................. 7
5.2. Title; Third-Party Options................................ 8
5.3. No View to Distribution or Resale......................... 8
5.4. No Transfer Without Registration or Exemption............. 8
5.5. New Common Shares Are Not Registered...................... 8
5.6. Securities Legend......................................... 9
5.7. Investment Risk........................................... 9
5.8. Review of Company's Business and Records.................. 9
5.9. Opportunity to Question; Full Satisfaction................ 9
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5.10. Review of Company's Registration Statement............... 10
5.11. Knowledge and Experience................................. 10
5.12. Accredited and Institutional Investor Status............. 10
5.13. No Reliance.............................................. 10
5.14. Definitions.............................................. 10
ARTICLE 6 - REPRESENTATIONS AND WARRANTIES OF THE COMPANY................ 11
6.1. Organization and Standing................................ 11
6.2. Authority................................................ 11
ARTICLE 7 - ORDER OF TRANSACTIONS........................................ 11
7.1. ......................................................... 11
ARTICLE 8 - MISCELLANEOUS................................................ 12
8.1. Consents................................................. 12
8.2. Failure to Deliver Shares................................ 12
8.3. Assignment and Binding Effect............................ 13
8.4. Waiver................................................... 13
8.5. Notices.................................................. 13
8.6. Delaware Law to Govern................................... 13
8.7. No Benefit to Others..................................... 13
8.8. Contents of Agreement.................................... 13
8.9. Cooperation.............................................. 14
8.10. Severability............................................. 14
EXHIBIT A - Members of Kirkland Holdings L.L.C.
EXHIBIT B - The Warrantholders and Warrantholder Shares
EXHIBIT C - Affiliates of Xxxxxxxx'x, Inc.
EXHIBIT D - Shareholder Ownership
EXHIBIT E - Company Charter
Schedule 4.12 - "Accredited Investor"
Schedule 6.4 - Notices
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CONTRIBUTION, REDEMPTION AND PURCHASE AGREEMENT
This CONTRIBUTION, REDEMPTION AND PURCHASE AGREEMENT (the
"Agreement") is dated as of this 29th day of April, 1998 and is by and among the
following parties:
XXXXXXXX'X, INC., a Tennessee corporation (the "Company");
KIRKLAND HOLDINGS L.L.C., a Delaware limited liability company
("Holdings"),
The MEMBERS of Holdings (the "Members") identified on Exhibit A
attached hereto, being the holders of one hundred percent
(100%) of the interests in Holdings' capital and profits;
THE WARRANTHOLDERS (the "Warrantholders"), identified on Exhibit B
attached hereto,
THE XXXXXXX XXXXX XXXXXXXX TRUST (the "ALA Trust"),
THE XXX XXXXXXXXX XXXXXXXX TRUST (the "AKA Trust"),
THE XXXX X. XXXXXXXX GRANTOR RETAINED ANNUITY TRUST 00-0 (xxx
"Xxxxxxxx XXXX"),
XXXX XXXXXXXX ("CK"),
XXXXXX XXXXXXXX ("RK"),
AND
XXXXXX XXXXXXXX ("RA," and together with Holdings, the ALA Trust, the
AKA Trust, the Xxxxxxxx XXXX, CK, and RK, the "Shareholders")
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WHEREAS, the Shareholders own all of the outstanding capital
stock of the Company and the affiliated corporations (the "Affiliates")
identified on Exhibit C hereto, such stock being owned in the amounts set forth
on Exhibit D hereto;
WHEREAS, the Warrantholders own warrants to acquire the amount
of common capital stock of the Company and the Affiliates set forth opposite
their names on Exhibit B hereto;
WHEREAS, the Company and the Affiliates have filed with the
Secretary of the State of Tennessee amendments (the "First Charter Amendment")
to their charters (the "Company Charter" and the "Affiliate Charters,"
respectively) effecting, inter alia, changes in the voting rights, conversion
rights, redemption rights, and liquidation preference, if any, of the Common
Stock, Class A Preferred Stock, Class B Preferred Stock, and Class C Preferred
Stock of the Company and the Affiliates;
WHEREAS, the Company has approved further amendments (the
"Second Charter Amendment") to the Company Charter authorizing blank check
preferred stock, modifying certain corporate governance provisions of the
Company, increasing the authorized Common Stock of the Company and effectuating
a stock split of the Common Stock of the Company (the "Stock Split") pursuant to
which each outstanding share of Common Stock of the Company will be split into a
larger number (the "Split Number") of shares of Common Stock of the Company;
WHEREAS, the Company intends to conduct an initial public
offering of the Common Stock of the Company (the "IPO") on the terms set forth
on a registration statement on Form S-1 (the "Registration Statement") to be
filed with the United States Securities and Exchange Commission (the "SEC") on
or about April 30, 1998, and the time at which such Registration Statement is
declared effective by the SEC is herein referred to as the "Effective Time;"
WHEREAS, effective upon the time (the "Price Determination")
at which the pricing committee of the Company determines the price per share
that the common stock of the Company will be offered to the public (the "IPO
Price"), the parties hereto desire that the following steps be taken to
reorganize the Company:
1. The Shareholders will contribute (the "Affiliate Preferred
Contribution") 68,400 shares of Class A Preferred Stock of each of the
Affiliates (the "Affiliate Class A Contribution Shares") and 23,700
shares of Class B Preferred Stock of each of the Affiliates (the
"Affiliate Class B Contribution Shares"), constituting 100% of each
such class of Preferred Stock in each of the Affiliates (collectively,
the "Affiliate Preferred Shares") in exchange for newly issued shares
of Common Stock of the Company (the "Contributed New Common Shares")
having a value equal to the aggregate stated value of the Affiliate
Preferred Shares plus the accrued dividends thereon;
2. The Company will recapitalize its outstanding shares of Class A and
B Preferred Stock, pursuant to which the Shareholders will exchange
(the "Company Preferred Exchange") 68,400 shares of the Class A
Preferred Stock of the Company (the "Company
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Class A Shares") and 23,700 shares of the Class B Preferred Stock of
the Company (the "Company Class B Shares," and together with the
Company Class A Shares, the "Company Preferred Shares"), constituting
100% of each such class of Preferred Stock of the Company, into newly
issued shares of common stock of the Company (the "Exchanged New Common
Shares") having a value equal to the aggregate stated value of the
Company Class A Shares and Company Class B Shares plus accrued dividend
thereon;
3. The Shareholders will contribute (the "Affiliate Common
Contribution") 92,100 shares of the common stock of each of the
Affiliates (the "Affiliate Common Contribution Shares") to the Company
for which no new shares of the Company's common stock shall be issued
in light of the fact that the Shareholders own 92,100 shares of Common
Stock of the Company in the same proportions as they own the Affiliate
Common Contribution Shares. The Affiliate Preferred Contribution and
the Affiliate Common Contribution are herein referred to collectively
as the "Affiliate Shares Contribution;"
4. The Warrantholders will exercise (the "Warrant Exercise") all of
their warrants and receive a number of shares of Common Stock of the
Affiliates equal to 11,905 multiplied by the Split Number (the
"Affiliate Warrant Shares") and a number of shares of Common Stock of
the Company equal to 11,905 multiplied by the Split Number (the
"Company Warrant Shares"), and the Warrantholders will contribute (the
"Warrant Shares Contribution") their Affiliate Warrant Shares to the
Company for which no new shares of the Company's Common Stock shall be
issued in light of the fact that the Warrantholders own the Company
Warrant Shares in the same proportions as they own the Affiliate
Warrant Shares; and
WHEREAS, effective simultaneously with and conditioned upon
the closing (the "Closing") of the IPO, the parties agree that:
1. The Company will redeem (the "Company Shares Redemption") 17,122
shares of Class C Preferred Stock of the Company (the "Company Class C
Shares"), constituting all of the outstanding shares of the Class C
Preferred Stock of the Company for $524,542.06;
2. For an aggregate sum of $16,597,457.94, which amount represents the
stated value of the shares of Class C Preferred Stock being purchased,
the Company will purchase (the "Affiliate Shares Purchase") from the
CK, RA and RK ("Class C Shareholders"), an aggregate of 17,122 shares
of Class C Preferred Stock of each of the Affiliates having authorized
Class C Preferred Stock (the "Affiliate Class C Shares"), such shares
constituting 100% of the issued and outstanding Affiliate Class C
Shares;
WHEREAS, upon completion of the Affiliate Shares Purchase and
the Affiliate Shares Contribution, all of the outstanding shares of capital
stock of the Affiliates shall be owned by the Company and the Company shall be
the parent corporation of the group of companies comprised of the Company and
the Affiliates.
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NOW, THEREFORE, in consideration of the premises and the
respective covenants, representations and warranties herein contained, and
intending to be legally bound hereby, the parties hereto agree as follows:
ARTICLE 1
CHARTER AMENDMENT AND STOCK SPLIT
1.1. Consent and Authorization. The Shareholders and
Warrantholders hereby consent to and authorize, acknowledge and agree that the
Company shall file the Second Charter Amendment prior to the Price
Determination.
1.2. Ratification. The Shareholders and Warrantholders hereby
ratify, confirm and consent to the First Charter Amendment.
1.3. Acknowledgment. The Warrantholders further acknowledge
and agree that the execution of this Agreement satisfies the prior written
consent requirements set forth in Section 7.02(k) of the Note and Warrant
Purchase Agreement with respect to the First Charter Amendment and Second
Charter Amendment.
1.4. Waiver of Notice. The parties hereto agree and
acknowledge that the execution of this Agreement shall constitute a waiver of
the requirements of giving or receiving any separate written notice under the
terms of the Company Charter with respect to any of the transactions
contemplated hereby.
ARTICLE 2
CONTRIBUTION OF AFFILIATE SHARES AND EXCHANGE OF PREFERRED SHARES
2.1. Contribution and Exchange. Immediately upon the Price
Determination, and without the requirement of any further authorization, the
following transactions will occur:
2.1.1. The Shareholders will contribute to the Company
the Affiliate Class A Contribution Shares in exchange for a number of fully paid
and non-assessable Contributed New Common Shares having a value per share equal
to the IPO Price and having an aggregate value equal to the aggregate stated
value of the Affiliate Class A Contribution Shares plus accrued dividends
thereon.
2.1.2. The Shareholders will contribute to the Company
the Affiliate Class B Contribution Shares in exchange for a number of fully paid
and non-assessable Contributed New Common Shares having a value per share equal
to the IPO Price and having an aggregate value equal to the aggregate stated
value of the Affiliate Class B Contribution Shares plus accrued dividends
thereon.
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2.1.3. The Company will recapitalize the Company Class A
Shares and Company Class B Shares into shares of Common Stock of the Company.
Pursuant to such recapitalization, (i) Holdings will exchange the Company Class
A Shares for a number of fully paid and non-assessable Exchanged New Common
Shares having a value per share equal to the IPO Price and having an aggregate
value equal to the aggregate stated value of the Company Class A Shares
exchanged, plus accrued dividends thereon, and (ii) the Class C Shareholders
will exchange the Company Class B Shares for a number of fully paid and
non-assessable Exchanged New Common Shares having a value per share equal to the
IPO Price and having an aggregate value equal to the aggregate stated value of
the Company Class B Shares exchanged, plus accrued dividends thereon.
2.1.4. The Shareholders will contribute the Affiliate
Common Contribution Shares to the Company as a contribution to the capital to
the Company for which no new shares of Common Stock of the Company will be
issued.
2.2. Deliveries. The Shareholders will deliver to the Company,
and the Company will accept from the Shareholders, the stock certificates
representing the Affiliate Preferred Shares, the Company Preferred Shares and
the Affiliate Common Contribution Shares duly endorsed or accompanied by
appropriate stock powers. The Company will deliver to the Shareholders, and the
Shareholders will accept immediately prior to the Closing, stock certificates
representing Contributed New Common Shares and Exchanged New Common Shares
received upon the Affiliate Preferred Contribution and the Company Preferred
Exchange pursuant to this Article 2.
ARTICLE 3
EXERCISE OF WARRANTS AND CONSENT TO AMENDMENTS
3.1. Warrant Exercise. Immediately following the transactions
set forth in Article 2 hereof and immediately upon the Price Determination, the
Warrantholders will exercise all of the outstanding Common Stock Purchase
Warrants identified on Exhibit B hereto (the "Warrants") to purchase the
Affiliate Warrant Shares and Company Warrant Shares, such aggregate number to be
purchased by the individual Warrantholders in the proportions more particularly
set forth in Exhibit B attached hereto.
3.2. Exercise Price. The Warrantholders hereby authorize and
direct the Company and the Affiliates to apply a portion of the amount payable
by the Company and the Affiliates as of the date of Closing under the Senior
Subordinated Notes (the "Notes"), as described in Section 1.3 of the Warrants,
in payment of the exercise price of the Warrants. The Warrantholders and the
Company agree that the exercise price payable for the Company Warrant Shares
upon exercise of Warrants issued by the Company will be paid through the
surrender of a portion of the amount payable by the Company under the Notes.
3.3. Contribution of Affiliate Warrant Shares. The
Warrantholders will contribute to the Company, simultaneously with the
transactions set forth in Article 2 hereof, and the Company will receive from
the Warrantholders all of the Affiliate Warrant Shares issued upon the exercise
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the Warrants as set forth in this Article 3, as a contribution to the capital of
the Company for which no additional shares of Common Stock of the Company will
be issued.
3.4. Deliveries. The Warrantholders will deliver to the
Company, and the Company will accept from the Warrantholders, the stock
certificates representing the Affiliate Warrant Shares, duly endorsed or
accompanied by appropriate stock powers.
ARTICLE 4
PURCHASE AND REDEMPTION OF CLASS C PREFERRED SHARES
4.1. Affiliate Shares Purchase. Effective simultaneously with
and conditioned upon the occurrence of the Closing, the Company will purchase
from the Class C Shareholders, and such Shareholders will sell to the Company,
the Affiliate Class C Shares for the aggregate sum of $16,597,457.94, allocated
among the Affiliates in proportion to the aggregate stated value of the issued
and outstanding shares of Class C Preferred Stock of each Affiliate owned of
record by such Shareholders. No such Shareholder shall be obligated to sell more
Affiliate Class C Shares to the Company pursuant to this Section 4.1 than the
number of such Shares to which such Shareholder has record ownership.
4.2. Company Preferred Redemption. Effective simultaneously
with and conditioned upon the occurrence of the Closing, the Company will redeem
from the Class C Shareholders, all outstanding Company Class C Shares, and each
holder of shares of Company Class C Shares will receive from the proceeds of the
IPO a redemption payment in cash equal to $30.64 per share of Class C Preferred
Stock so redeemed for an aggregate payment to such Shareholders of $524,542.06
pursuant to this Section 4.2.
4.3. Payment. The Company will pay to the Class C Shareholders
at the Closing, the aggregate amount of $16,597,457.94 pursuant to the Affiliate
Shares Purchase set forth in Section 4.1 hereof by wire transfer of immediately
available federal funds to such account or accounts of the Class C Shareholders
as are designated by them prior to the Closing. The Company will pay to the
Class C Shareholders at the Closing, an aggregate amount of $524,542.06 pursuant
to the Company Shares Redemption set forth in Section 4.2 hereof by wire
transfer of immediately available federal funds to such account or accounts of
the Class C Shareholders as are designated by them prior to the Closing. Each
such aggregate payment shall be divided among the Class C Shareholders in
proportion to the number of shares of Class C Preferred Stock owned of record by
each Class C Shareholder.
4.4. Deliveries. Upon confirmation of the transmission of the
wire transfers contemplated by Section 4.3 hereof, the Class C Shareholders will
deliver to the Company, and the Company will accept from the Class C
Shareholders, the stock certificates representing the Affiliate Class C Shares
and the Company Class C Shares, duly endorsed or accompanied by appropriate
stock powers.
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ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS, THE MEMBERS
AND THE WARRANTHOLDERS
Each of the Shareholders, the Members and the Warrantholders,
severally and not jointly, hereby represents, warrants, covenants, agrees and
acknowledges to the Company and to each of the other Shareholders, Members, and
Warrantholders the following to be true and correct in all respects as to
himself of itself:
5.1. Authority. The Shareholder, Member or Warrantholder has
full power and authority to execute and deliver this Agreement and the other
instruments to be executed and delivered by it pursuant hereto and to consummate
the transactions contemplated hereby. This Agreement has been duly executed and
delivered by the Shareholder, Member or Warrantholder and constitutes the legal,
valid and binding obligations of the Shareholder, Member or Warrantholder
enforceable in accordance with its terms, except as enforcement may be limited
by insolvency, bankruptcy, moratorium or other laws affecting creditors' rights
generally and except as enforcement may be limited by principles of equity. The
execution and delivery by the Shareholder, Member or Warrantholder of this
Agreement and the consummation by the Shareholder, Member or Warrantholder of
the transactions contemplated hereby will not violate any law or any judgment,
decree, award or order of any court or other federal, state or local department,
official, commission, authority, board, bureau, agency or other public body,
domestic or foreign ("Governmental Entity") to which the Shareholder, Member or
Warrantholder is subject. No approval, authorization, consent or other order or
action of or filing with any Governmental Entity or any other individual or
entity is required for the execution and delivery by the Shareholder, Member or
Warrantholder of this Agreement or such other agreements and instruments or the
consummation by Shareholder, Member or Warrantholder of the transactions
contemplated hereby or thereby.
5.2. Title; Third-Party Options. There are no contracts,
options, commitments or rights of any kind, by or through the Shareholder,
Member or Warrantholder, with, to or in any third party to acquire all or any
portion of the Affiliate Preferred Shares, Affiliate Common Contribution Shares,
Affiliate Warrant Shares, Company Preferred Shares, or the Company Warrant
Shares and the Shareholder, Member or Warrantholder has good title to such
shares and owns such shares free and clear of any claim, mortgage, assignment,
conditional sale, lease, easement, consignment, bailment, contingent interest,
pledge, lien, option, charge, security interest, preemptive right, encumbrance
or other restrictions of any kind or nature whatsoever (a "Lien"), but not a
restriction imposed by the Securities Act or any other securities laws other
than restrictions imposed by contracts which, by the terms thereof, will lapse
upon the consummation of the IPO.
5.3. No View to Distribution or Resale. The Shareholder will
acquire the Contributed New Common Shares and the Exchanged New Common Shares
solely for his or its own account without a view to the distribution or resale
thereof, and does not have any contract, undertaking, agreement or arrangement
to sell or otherwise transfer or dispose of any of such shares in any manner to
any person except as contemplated by this Agreement.
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5.4. No Transfer Without Registration or Exemption. The
Shareholder or Warrantholder will not, except as contemplated by this Agreement,
sell, transfer or otherwise dispose of any of its Contributed New Common Shares,
Converted New Common Shares, or its Company Warrant Shares (such shares
collectively, the "New Common Shares") or the Affiliate Warrant Shares,
respectively, in any manner, unless at the time of any such transfer: a
Registration (as hereafter defined) under the Securities Act (as hereafter
defined) and under the Applicable Laws (as hereafter defined) is in effect with
respect to the New Common Shares or Affiliate Warrant Shares to be sold,
transferred or disposed of, and the Shareholder or Warrantholder complies with
all of the requirements of the Securities Act and the Applicable Laws with
respect to the proposed transaction; or the Shareholder has obtained and has
provided to the Company an opinion from counsel satisfactory to the Company (as
to both the counsel rendering such opinion and the substance of the opinion)
that the proposed sale, transfer or disposition does not require Registration
under the Securities Act or the Applicable Laws.
5.5. New Common Shares Are Not Registered. The New Common
Shares issuable by the Company pursuant to this Agreement have not been sold to
the Shareholders or the Warrantholders by the Company pursuant to a Registration
under the Securities Act. Except as may otherwise be provided in the
registration rights agreement dated as of June 12, 1996, (i) any subsequent
Registration under the Applicable Laws will not authorize sales, transfers or
dispositions of any New Common Shares so issued by any Shareholder, and (ii)
neither the Company nor any other person has any obligation or intention to
effect the Registration of the such New Common Shares for sale, transfer or
disposition by the Shareholder, the Member or the Warrantholder under the
Securities Act or the Applicable Laws, or to take any action or provide any
information (including, without limitation, the filing of reports or the
publication of information required by Rule 144 under the Securities Act) which
would make available any exemption from the Registration requirements of the
Securities Act or the Applicable Laws. The Shareholders and Warrantholders must
therefore hold their New Common Shares indefinitely except as contemplated by
this Agreement, and unless a subsequent Registration or exemption therefrom is
available and is obtained. No federal or state agency has reviewed the
transactions set forth in this Agreement or approved or disapproved the New
Common Shares for investment or any other purpose. All of the New Common Shares
have been issued and sold to the Shareholders or Warrantholders, respectively,
in reliance upon a specific exemption from the Registration requirement of the
Securities Act which depends, in part, upon the accuracy of the representations,
warranties, covenants, acknowledgments and agreements of the Shareholders,
Members and Warrantholders set forth in this Agreement.
5.6. Securities Legend. A legend will be placed on the
certificates evidencing all New Common Shares and stop-transfer instructions
will be issued to any transfer agent with respect to such New Common Shares, to
ensure compliance with the provisions of this Agreement and of the Securities
Act and the Applicable Laws.
5.7. Investment Risk. The Shareholder, the Member or
Warrantholder can bear the economic risk of his or its acquisition and ownership
of their New Common Shares, including the total loss of his or its investment,
has no need for liquidity in this investment and, either individually or with
his or its advisers, has such knowledge and experience in financial and business
matters that
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he or it is capable of evaluating the merits and risks of the Company and the
investment in his or its New Common Shares.
5.8. Review of Company's Business and Records. Prior to the
execution of this Agreement, the Shareholder, Member or Warrantholder and his or
its advisers have been provided with full and free access and opportunity to
inspect, review, examine and inquire about all books, records and information
(financial or otherwise) of the Company its business and affairs, and the
Shareholder, Member or Warrantholder and his or its advisers have made such
inspection, review, examination and inquiry as they have deemed appropriate; and
the Shareholder, Member or Warrantholder and his or its advisers have been
offered the opportunity to ask such questions and obtain such additional
information concerning the Company and its business and affairs as each
Shareholder, Member or Warrantholder and his or its advisers have requested so
as to understand the nature of the investment in the New Common Shares
(including the Company Warrant Shares) and to verify the accuracy of the
information obtained as a result of their investigation.
5.9. Opportunity to Question; Full Satisfaction. The
Shareholder, Member or Warrantholder and their advisers, if any, have had a
reasonable opportunity to ask questions of and receive answers from a person or
persons acting on behalf of the Company concerning the New Common Shares and all
such questions have been answered to the full satisfaction of the Shareholder,
Member or Warrantholder and his or its advisers, if any.
5.10. Review of Company's Registration Statement. The
Shareholder, Member or Warrantholder has received a draft of the Company's
Registration Statement on Form S-1 and all other documents requested by the
Shareholder, Member or Warrantholder have been carefully reviewed by him or it
and he or it understands the information contained therein.
5.11. Knowledge and Experience. The Shareholder, Member or
Warrantholder or his or its representatives, as the case may be, together with
his or its advisers, have such knowledge and experience in financial, tax, and
business matters, and, in particular, investments in securities, so as to enable
them to utilize the information made available to them in connection with the
New Common Shares to evaluate the merits and risks of an investment in the New
Common Shares and to make an informed investment decision with respect thereto;
5.12. Accredited and Institutional Investor Status. The
Shareholder, Member or Warrantholder is at least one of the following: (i) an
"accredited investor," as such term is defined under Regulation D under the
Securities Act and as set forth on Schedule 4.12 attached hereto, or (ii) a
"financial institution or institutional investor" or a "financial institution or
institutional buyer" as such terms are used in the state securities law in the
state of organization of such Shareholder, Member or Warrantholder.
5.13. No Reliance. The Shareholder, Member or Warrantholder is
not relying on the Company or any of its employees or agents with respect to the
legal, tax, economic and related considerations of an investment in the New
Common Shares, and the Shareholder, Member or
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Warrantholder has relied on the advice of, or have consulted with, only his or
its own advisers with respect to such matters.
5.14. Definitions. As used herein: the term "Registration"
means registration under the Securities Act and, with respect to the Applicable
Laws, such registration thereunder (or, with respect to any of the Applicable
Laws which do not provide for registration, such compliance therewith which is
similar to registration) which has then resulted in statutory or administration
authorization for the proposed transaction; the term "Securities Act" means the
Securities Act of 1933, as amended, and the rules and regulations thereunder;
and the term "Applicable Laws" means any applicable state securities laws and,
to the extent applicable to offers or sales of securities, the Securities
Exchange Act of 1934, as amended, and the rules and regulations under the
foregoing.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to the Shareholders and
the Members the following to be true and correct in all respects:
6.1. Organization and Standing. The Company is a corporation
duly organized, validly existing and in good standing under the laws of
Tennessee, with full corporate power and authority to own, lease and operate its
respective properties and assets and to carry on its respective business and
operations.
6.2. Authority. The Company has full corporate power and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. All corporate acts and other proceedings
required to be taken by or on the part of the Company to authorize the Company
to execute, deliver and perform this Agreement have been duly and properly
taken. This Agreement has been duly executed and delivered by the Company and
constitutes the legal, valid and binding obligation of Company, enforceable in
accordance with its terms except as enforcement may be limited by insolvency,
bankruptcy, moratorium or other laws affecting creditors' rights generally and
except as enforcement may be limited by principles of equity. The execution and
delivery by the Company of this Agreement and the consummation by the Company of
the transactions contemplated hereby will not violate any law or any judgment,
decree, award or order of any court or other Governmental Entity to which the
Company is subject, and will not conflict with the Charter or Bylaws of the
Company, nor will it conflict with, or be prohibited, limited or restricted in
any way by the documents executed and delivered by the Company in connection
with the transactions contemplated hereby. No approval, authorization, consent
or other order or action of or filing with any Governmental Entity or any other
individual or entity is required for the execution and delivery by the Company
of this Agreement or such other agreements and instruments or the consummation
by the Company of the transactions contemplated hereby.
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ARTICLE 7
ORDER OF TRANSACTIONS
7.1. The parties agree that for all purposes, the transactions
contemplated by this Agreement shall be deemed to occur in the following order:
(1) the Stock Split in connection with the Second Step Amendments
pursuant to which the Company will make all adjustments to the
price per share and number of shares issuable upon the
exercise of outstanding options and warrants as a result of
the Stock Split;
(2) the Price Determination;
(3) the Affiliate Preferred Contribution as set forth in Section
2.1.1 and Section 2.1.2 hereof;
(4) the Company Preferred Exchange as set forth in Section 2.1.3
hereof;
(5) the Affiliate Common Contribution as set forth in Section
2.1.4 hereof;
(6) the Warrant Exercise as set forth in Section 3.1 hereof;
(7) the Warrant Shares Contribution as set forth in Section 3.3
hereof;
(8) the Effective Time of the Registration Statement;
(9) the Affiliate Shares Purchase as set forth in Section 4.1
hereof; and
(10) the Company Preferred Redemption as set forth in Section 4.3
hereof.
ARTICLE 8
MISCELLANEOUS
8.1. Consents. The execution of this Agreement by the Company,
Shareholders, Members and Warrantholders shall constitute consent of all such
parties to the Affiliate Preferred Contribution, the Company Preferred Exchange,
the Affiliate Common Contribution , the Warrant Exercise, the Warrant Shares
Contribution, Company Shares Redemption and Affiliate Shares Purchase, to the
extent such consent is required under the terms of the Company Charter or any
agreement to which the Company and/or any such Shareholder, Member or
Warrantholder is a party.
8.2. Failure to Deliver Shares. If a Shareholder or
Warrantholder (the "Transferring Holder") becomes obligated to transfer any
Affiliate Class A Contribution Shares, Affiliate Class B Contribution Shares,
Affiliate Common Contribution Shares, Company Class A
-11-
15
Shares, Company Class B Shares, Warrant Shares, Company Class C Shares or
Affiliate Class C Shares (any or all thereof being referred to in this Section
8.2 as the "Shares") to the Company pursuant to any part of this Agreement and
fails to deliver such Shares in accordance with the terms of this Agreement, the
Company may, at its option, in addition to all other remedies it may have,
either (i) send to the Transferring Holder the purchase price for such Shares or
the stock certificate for Contribution New Common Shares of Exchanged New Common
Shares relating thereto as is herein specified, or (ii) deposit such amount or
the Contribution New Common Shares or Exchanged New Common Shares relating
thereto with a trustee or escrow agent for the benefit of the Transferring
Holder for release upon delivery of such Shares to the trustee or escrow agent
in accordance with the terms of this Agreement. Thereupon, the Company, without
written notice to the Transferring Holder, shall cancel on its books the
certificate or certificates representing the Shares so required to be
transferred by the Transferring Holder. The Transferring Holder failing to
deliver Shares in accordance with this Agreement shall reimburse the Company for
any legal or other expenses reasonably incurred by the Company in connection
with the enforcement of obligations under this Agreement or utilizing the
remedies set forth in this Section 8.2. All of the Transferring Holder's rights
in and to such Shares shall terminate as of the Closing.
8.3. Assignment and Binding Effect. This Agreement may not be
assigned by any party hereto without the prior written consent of the other
parties. Subject to the foregoing, all of the terms and provisions of this
Agreement shall be binding upon and inure to the benefit of and be enforceable
by the successors and assigns of the parties.
8.4. Waiver. Any term or provision of this Agreement may be
waived at any time by the party entitled to the benefit thereof by a written
instrument executed by such party.
8.5. Notices. Any notice, request, demand, waiver, consent,
approval or other communication which is required or permitted hereunder shall
be in writing and shall be deemed given only if delivered personally (to the
attention of the person identified) to the address set forth in Schedule 7.4
attached hereto, or sent by telecopy, telegram or by certified mail, postage
prepaid, or to such other address as the addressee may have specified in a
notice duly given to the sender and to counsel as provided herein. Such notice,
request, demand, waiver, consent, approval or other communication will be deemed
to have been given as of the date so delivered or telegraphed or, if mailed,
three business days after the date so mailed.
8.6. Delaware Law to Govern. This Agreement shall be governed
by and interpreted and enforced in accordance with the substantive laws of the
State of Delaware without regard to the conflicts of law doctrine thereof.
8.7. No Benefit to Others. The representations, warranties,
covenants and agreements contained in this Agreement are for the sole benefit of
the parties hereto and their heirs, executors, legal representatives, successors
and assigns, and they shall not be construed as conferring and are not intended
to confer any rights on any other persons.
-12-
16
8.8. Contents of Agreement. This Agreement together with any
documents referred to herein set forth the entire agreement of the parties
hereto and supersede any prior agreement or understanding of the parties with
respect to the transactions contemplated hereby. This Agreement may not be
amended except by an instrument in writing signed by the parties hereto, and no
claimed amendment, modification, termination or waiver shall be binding unless
in writing and signed by the party against whom or which such claimed amendment,
modification, termination or waiver is sought to be enforced.
8.9. Cooperation. Subject to the provisions hereof, the
parties hereto shall use their best efforts to take, or cause to be taken, such
action, to execute and deliver, or cause to be executed and delivered, such
additional documents and instruments and to do, or cause to be done, all things
necessary, proper or advisable under the provisions of this Agreement and under
applicable law, both before and after the date hereof, to consummate and make
effective the transactions contemplated by this Agreement.
8.10. Severability. Any provision of this Agreement which is
invalid or unenforceable in any jurisdiction shall be ineffective to the extent
of such invalidity or unenforceability without invalidating or rendering
unenforceable the remaining provisions hereof, and any such invalidity or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Contribution Agreement as of the date first written above.
XXXXXXXX'X, INC.
By: /s/ Xxxx Xxxxxxxx
------------------------------------
Name: Chief Executive Officer
Title: President
/s/ Xxxx Xxxxxxxx
----------------------------------------
Xxxx Xxxxxxxx
/s/ Xxxxxx X. Xxxxxxxx
----------------------------------------
Xxxxxx X. Xxxxxxxx
-13-
17
/s/ Xxxxxx Xxxxxxxx
----------------------------------
Xxxxxx Xxxxxxxx
XXX XXXXXXXXX XXXXXXXX TRUST,
by Xxxx Xxxxxxxx, its trustee
/s/ Xxxx Xxxxxxxx
----------------------------------
XXXXXXX XXXXX XXXXXXXX TRUST,
by Xxxx Xxxxxxxx, its trustee
/s/ Xxxx Xxxxxxxx
----------------------------------
XXXX X. XXXXXXXX GRANTOR
RETAINED ANNUITY TRUST 97-1, by
Xxxxxx Xxxxxxxx, its trustee
/s/ Xxxxxx Xxxxxxxx
----------------------------------
KIRKLAND HOLDINGS L.L.C.
By: /s/ Xxxxx X. Xxxxxxxx
------------------------------------
Name: Xxxxx X. Xxxxxxxx
Title:
ADVENT DIRECT INVESTMENT
PROGRAM LIMITED PARTNERSHIP, by
Advent International Corporation, its General
Partner
By: /s/ Xxxxx X. Xxxxxxxx
------------------------------------
Name: Xxxxx X. Xxxxxxxx
Title:
-14-
18
GLOBAL PRIVATE EQUITY II LIMITED
PARTNERSHIP, by Advent International
Corporation, its General Partner
By: /s/ Xxxxx X. Xxxxxxxx
------------------------------------
Name: Xxxxx X. Xxxxxxxx
Title:
ADVENT PARTNERS LIMITED
PARTNERSHIP, by Advent International
Corporation, its General Partner
By: /s/ Xxxxx X. Xxxxxxxx
------------------------------------
Name: Xxxxx X. Xxxxxxxx
Title:
SSM/KIRKLAND EQUITY PARTNERS, L.P.,
by SSM Venture Partners, L.P., by SSM I, L.P.,
its general partner, by SSM Corporation, its
general partner
By: /s/ X. Xxxxxx Xxx, III
------------------------------------
Name: X. Xxxxxx Xxx, III
Title:
CT/KIRKLAND EQUITY PARTNERS, L.P.,
by Xxxx Holdings Ltd., its general partner
By: /s/ Xxxx X. Xxxxxx
------------------------------------
Name: Xxxx X. Xxxxxx
Title:
TCW/KIRKLAND EQUITY PARTNERS,
L.P., by Crescent/Mach I Partners, L.P., by
TCW Asset Management Company, its
investment manager
By: /s/ Xxxxxx Xxxxxxxx
------------------------------------
Name: Xxxxxx Xxxxxxxx
Title:
-15-
19
MARLBOROUGH/KIRKLAND EQUITY
PARTNERS, L.P., by The Marlborough Capital
Investment Fund, L.P., its general partner, by
Marlborough Capital Management, L.P., its
general partner
By: /s/ Xxxxxxxx Xxxxxx
---------------------------------------------
Name: Xxxxxxxx Xxxxxx
Title:
R-H CAPITAL PARTNERS, L.P., by
R-H/Travelers, L.P., its general partner, by R-H
Capital, Inc., its general partner
By: /s/ Xxxxxxx Xxxxxx
---------------------------------------------
Name: Xxxxxxx Xxxxxx
Title:
CAPITAL RESOURCE LENDERS II, L.P., by
Capital Resource Partners II, its general partner
By: /s/ Xxxxxxxxx XxXxxxx
---------------------------------------------
Name: Xxxxxxxxx XxXxxxx
Title:
ALLIED CAPITAL CORPORATION
By: /s/ Xxxx Xxxxxxxx
---------------------------------------------
Name: Xxxx Xxxxxxxx
Title:
THE MARLBOROUGH CAPITAL
INVESTMENT FUND, L.P., by Marlborough
Capital Management L.P., its general partner
By: /s/ Xxxxxxxx Xxxxxx
---------------------------------------------
Name: Xxxxxxxx Xxxxxx
Title:
-16-
20
CAPITAL TRUST INVESTMENTS, LTD.,
By: /s/ Xxxx X. Xxxxxx
---------------------------------------------
Name: Xxxx X. Xxxxxx
Title:
-17-
21
EXHIBIT A
Members of
Kirkland Holdings L.L.C.
Advent Direct Investment Program Limited Partnership
Global Private Equity II Limited Partnership
Advent Partners Limited Partnership
SSM/Kirkland Equity Partners, L.P.
CT/Kirkland Equity Partners, L.P.
TCW/Kirkland Equity Partners, L.P.
Marlborough/Kirkland Equity Partners, L.P.
R-H Capital Partners, L.P.
A-1
22
EXHIBIT B
The Warrantholders and Warrantholder Shares
Affiliate Common Stock
Warrant Company Purchase
Warrantholders Shares(1) Warrant Shares(2) Warrant No.
-------------- --------- ----------------- ------------
Capital Trust Investments, Ltd. 1,071 1,071 PW-1
The Marlborough Capital 2,262 2,262 PW-2
Investment Fund, L.P.
Allied Capital Corporation(3) 3,810 3,810 PW-3,PW-4
Capital Resource Lenders II, L.P. 4,762 4,762 PW-5
-------------------
(1)These number of shares will be increased and the exercise price
adjusted as a result of the Stock Split.
(2)These number of shares will be increased and the exercise price
adjusted as a result of the Stock Split.
(3)Allied Capital Corporation II ("Allied II") has merged into Allied
Capital Corporation ("Allied") and the warrants originally held by Allied II are
now held by Allied in addition to the warrants originally held by Allied.
B-1
23
EXHIBIT C
Affiliates of Xxxxxxxx'x, Inc.(4)
[List of the Affiliates: Attach current list of Kirkland's companies]
-------------------
(4)Any corporations formed after the date of this Agreement to own and
operate a Kirkland's store the shares of which are owned by any of the
Shareholders shall be deemed to be included in this list of Affiliates for all
purposes of this Agreement.
C-1
24
EXHIBIT D
Shareholder Ownership
Group A and Group B Companies
Class A Class B Class C
Common Preferred Preferred Preferred
Shareholders Stock(5) Stock Stock Stock
------------ -------- --------- --------- ---------
Kirkland Holdings L.L.C. 68,400 68,400 0 0
Xxxx Xxxxxxxx 0 0 7,900 7,917
Xxxxxx Xxxxxxxx 7,900 0 7,900 7,544
Xxxxxx Xxxxxxxx 5,900 0 7,900 2,878
The Xxxx X. Xxxxxxxx Grantor 7,900 0 0 0
Retained Annuity Trust 97-1,
Xxxxxx Xxxxxxxx, Trustee
The Xxxxxxx Xxxxx Xxxxxxxx Trust, 1,000 0 0 0
Xxxx Xxxxxxxx, Trustee
The Xxx Xxxxxxxxx Xxxxxxxx Trust, 1,000 0 0 0
Xxxx Xxxxxxxx, Trustee
--------------
(5)The number of shares of Common Stock will be increased as result of
the Stock Split.
D-1
25
Group C and Group D Companies
Class A Class B
Shareholders Common Stock(6) Preferred Stock Preferred Stock
------------ --------------- --------------- ---------------
Kirkland Holdings L.L.C. 68,400 68,400 0
Xxxx Xxxxxxxx 0 0 7,900
Xxxxxx Xxxxxxxx 7,900 0 7,900
Xxxxxx Xxxxxxxx 5,900 0 7,900
The Xxxx X. Xxxxxxxx Grantor 7,900 0 0
Retained Annuity Trust 97-1,
Xxxxxx Xxxxxxxx, Trustee
The Xxxxxxx Xxxxx Xxxxxxxx Trust, 1,000 0 0
Xxxx Xxxxxxxx, Trustee
The Xxx Xxxxxxxxx Xxxxxxxx Trust, 1,000 0 0
Xxxx Xxxxxxxx, Trustee
Group E Companies
Shareholders Common Stock(7)
------------ ---------------
Kirkland Holdings L.L.C. 684
Xxxxxx Xxxxxxxx 79
Xxxxxx Xxxxxxxx 59
The Xxxx X. Xxxxxxxx Grantor Retained 79
Annuity Trust 97-1, Xxxxxx Xxxxxxxx, Trustee
The Xxxxxxx Xxxxx Xxxxxxxx Trust, Xxxx 10
Kirkland, Trustee
The Xxx Xxxxxxxxx Xxxxxxxx Trust, Xxxx 10
Kirkland, Trustee
----------------
(6)The number of shares of Common Stock will be increased as a result
of the Stock Split.
(7)The number of shares of Common Stock will be increased as a result
of the Stock Xxxxx.
X-0
00
X-0
27
EXHIBIT E
Company Charter
E-1
28
Schedule 4.12
"Accredited Investor"
A Shareholder which meets any one of the following definitions will constitute
an accredited investor as defined in Rule 501(a) of Regulation D adopted under
the Securities Act:
1. Any director or executive officer of the Company;
2. A natural person whose individual net worth, or joint net
worth with that person's spouse, at the time of his purchase exceeds
$1,000,000;
3. A natural person who had an individual income in excess of
$200,000 in each of the two most recent years or joint income with that
person's spouse in excess of $300,000 in each of those years and has a
reasonable expectation of reaching the same income level in the current
year;
4. A bank as defined in Section 3(a)(2) of the Act or any
savings and loan association or other institution as defined in Section
3(a)(5)(A) of the Act whether acting in its individual or fiduciary
capacity; any broker dealer registered pursuant to Section 15 of the
Securities Exchange Act of 1934; any insurance company as defined in
Section 2(13) of the Act; any investment company registered under the
Investment Company Act of 1940 or a business development company as
defined in Section 2(a)(48) of that act; any Small Business Investment
Company licensed by the U.S. Small Business Administration under
Section 301(c) or (d) of the Small Business Investment Act of 1958; any
plan established and maintained by a state, its political subdivisions,
or any agency or instrumentality of a state or its political
subdivisions, for the benefit of its employees, if such plan has total
assets in excess of $5,000,000; any employee benefit plan within the
meaning of the Employee Retirement Income Security Act of 1974, if the
investment decision is made by a plan fiduciary, as defined in Section
3(21) of such act, which is either a bank, savings and loan
association, insurance company, or registered investment adviser, or if
the employee benefit plan has total assets in excess of $5,000,000 or,
if a self-directed plan, with investment decisions made solely by
persons that are accredited investors;
5. A private business development company as defined in
Section 202(a)(22) of the Investment Advisers Act of 1940;
6. An organization described in Section 501(c)(3) of the
Internal Revenue Code, corporation, Massachusetts or similar business
trust or partnership, not formed for the specific purpose of acquiring
the securities offered, with total assets in excess of $5,000,000;
29
7. A trust with total assets in excess of $5,000,000, not
formed for the specific purpose of acquiring the securities offered,
whose purchase is directed by a person who has such knowledge and
experience in financial and business matters that he or it is capable
of evaluating the merits and risks of an investment or prospective
investment in the Company; and
8. Any entity in which all of the equity owners are accredited
investors.
30
Schedule 8.4
Notices
If to the Company, to:
Xxxxxxxx'x, Inc.
000 Xxxxx Xxxxxxx, X.X. Xxx 0000
Xxxxxxx, XX 00000
Attention: Xxxx Xxxxxxxx
Telecopy No.: (000) 000-0000
With a copy to:
Xxxxxx Xxxxxxxx LP
3000 Two Xxxxx Square
00xx xxx Xxxx Xxxxxxx
Xxxxxxxxxxxx, XX 00000-0000
Attention: Xxxxx X. Xxxxxxx, Esquire
Telecopy No.: (000) 000-0000
If to Holdings or to the Members, to:
Kirkland Holdings L.L.C.
000 Xxxxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Xxxxx X. Xxxxxxxx
Telecopy No.: (000) 000-0000
If to the Warrantholders, care of:
Capital Resource Lenders II, L.P.
00 Xxxxxxxx Xxxxxx
Xxxxx 000
Xxxxxx, XX 00000
Attention: Xxxxxxxxx X. XxXxxxx
Telecopy No.: (000) 000-0000
31
With a copy to:
Xxxxx Xxxxxxx & Xxxxxxxxx
000 Xxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Xxxxx Xxxxx, Esquire
Telecopy No.:
If to Xxxx Xxxxxxxx, Xxxxxx Xxxxxxxx, the Xxxxxxx Xxxxx Xxxxxxxx Trust, the Xxx
Xxxxxxxxx Xxxxxxxx Trust, and the Xxxx X. Xxxxxxxx Grantor Retained Annuity
Trust 97-1, care of:
Xxxxxxxx'x Inc.
000 Xxxxx Xxxxxxx, X.X. Xxx 0000
Xxxxxxx, XX 00000
Attention: Xxxx Xxxxxxxx
Telecopy No.: (000) 000-0000
With a copy to:
Baker, Donelson, Bearman & Xxxxxxxx
20th Floor
2000 First Tennessee Building
000 Xxxxxxx Xxxxxx
Xxxxxxx, XX 00000
Attention: Xxxxxx Xxxxxx, Esquire
Telecopy No.: (000) 000-0000
If to Xxxxxx Xxxxxxxx, to:
CBK, Ltd.
000 Xxxx Xxxxxxxx
Xxxxx Xxxx, XX 00000
Attention: Xxxxxx Xxxxxxxx
Telecopy No.: (000) 000-0000
