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RECAPITALIZATION AGREEMENT
by and among
SAMSONITE CORPORATION,
ACOF MANAGEMENT, L.P.,
XXXX CAPITAL (EUROPE) LLC,
and
ONTARIO TEACHERS PENSION PLAN BOARD
DATED AS OF MAY 1, 2003
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TABLE OF CONTENTS
ARTICLE I
DEFINITIONS
SECTION 1.1 Certain Defined Terms..............................................................2
SECTION 1.2 Other Defined Terms................................................................9
ARTICLE II
RECAPITALIZATION TRANSACTIONS
SECTION 2.1 Commencement of Solicitations.....................................................11
SECTION 2.2 Issuance of New Preferred Stock and Funding of the Investment.....................13
SECTION 2.3 Charter Amendments; Conversion....................................................14
SECTION 2.4 Certificate of Incorporation......................................................14
SECTION 2.5 Closing...........................................................................14
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
SECTION 3.1 Incorporation and Authority.......................................................15
SECTION 3.2 Capital Stock.....................................................................16
SECTION 3.3 Subsidiaries......................................................................17
SECTION 3.4 Stockholder and Debtholder Approvals Required.....................................18
SECTION 3.5 No Conflict.......................................................................19
SECTION 3.6 Consents and Approvals............................................................19
SECTION 3.7 No Default........................................................................20
SECTION 3.8 Company and Company Board Approval................................................20
SECTION 3.9 SEC Reports; Financial Statements.................................................20
SECTION 3.10 Absence of Certain Changes or Events; No Undisclosed Liabilities..................21
SECTION 3.11 Title and Condition of Properties.................................................21
SECTION 3.12 Absence of Proceedings............................................................21
SECTION 3.13 Licenses and Permits; Compliance with Law.........................................21
SECTION 3.14 Taxes.............................................................................22
SECTION 3.15 Intellectual Property.............................................................23
SECTION 3.16 Real Property.....................................................................24
SECTION 3.17 Employee Benefit Matters..........................................................25
SECTION 3.18 Labor Matters.....................................................................27
SECTION 3.19 Material Contracts................................................................28
SECTION 3.20 Suppliers and Customers...........................................................30
SECTION 3.21 Product Liability.................................................................30
SECTION 3.22 Inventory.........................................................................30
SECTION 3.23 Compliance with Environmental Laws................................................30
SECTION 3.24 Exemption from Registration.......................................................31
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SECTION 3.25 Solicitation Documents............................................................31
SECTION 3.26 Information in Financing Documents................................................31
SECTION 3.27 Affiliated Transactions...........................................................32
SECTION 3.28 State Takeover Statutes; Rights Agreement.........................................32
SECTION 3.29 Accounting Matters................................................................32
SECTION 3.30 Insurance.........................................................................32
SECTION 3.31 Brokers...........................................................................33
SECTION 3.32 Interests of Officers and Directors...............................................33
SECTION 3.33 Opinion of Financial Advisor......................................................33
SECTION 3.34 No Integration....................................................................33
SECTION 3.35 No General Solicitation...........................................................33
SECTION 3.36 Works Council.....................................................................34
SECTION 3.37 Labor Practice....................................................................34
SECTION 3.38 Data Protection...................................................................34
SECTION 3.39 Duties............................................................................34
SECTION 3.40 Insolvency........................................................................34
SECTION 3.41 Competition.......................................................................34
SECTION 3.42 State Aid.........................................................................35
SECTION 3.43 Prohibited Payments...............................................................35
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE MAJOR INVESTORS
SECTION 4.1 Incorporation and Authority of the Major Investors................................35
SECTION 4.2 No Conflict.......................................................................36
SECTION 4.3 Consents and Approvals............................................................36
SECTION 4.4 Absence of Proceedings............................................................36
SECTION 4.5 Sufficient Funds..................................................................36
SECTION 4.6 Brokers...........................................................................36
SECTION 4.7 Securities Filings................................................................36
SECTION 4.8 Voting Agreement..................................................................37
SECTION 4.9 Investment Representations........................................................37
SECTION 4.10 Solicitation Documents............................................................37
SECTION 4.11 Information in Financing Documents................................................38
SECTION 4.12 Loan Commitment...................................................................38
SECTION 4.13 Agreements with Other Company Stockholders........................................38
ARTICLE V
COVENANTS
SECTION 5.1 Stockholders Meeting..............................................................38
SECTION 5.2 Conduct of Business Prior to the Closing..........................................39
SECTION 5.3 Access to Information.............................................................42
SECTION 5.4 Governmental Filings; Reasonable Efforts; Notification............................43
SECTION 5.5 Post-Closing Board................................................................45
SECTION 5.6 No Solicitation...................................................................45
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SECTION 5.7 Public Announcements..............................................................48
SECTION 5.8 Net Consolidated Financial Indebtedness...........................................48
SECTION 5.9 Litigation........................................................................48
SECTION 5.10 Financial Statements..............................................................48
SECTION 5.11 U.S. Real Property Interest Statement.............................................48
SECTION 5.12 Indenture Amendment...............................................................48
SECTION 5.13 Management Group..................................................................49
ARTICLE VI
CONDITIONS TO CLOSING
SECTION 6.1 Mutual Conditions.................................................................49
SECTION 6.2 Conditions to Obligations of the Company..........................................49
SECTION 6.3 Conditions to Obligations of the Major Investors..................................50
ARTICLE VII
TERMINATION AND WAIVER
SECTION 7.1 Termination.......................................................................52
SECTION 7.2 Effect of Termination.............................................................54
SECTION 7.3 Fees and Expenses.................................................................54
SECTION 7.4 Waiver; Authority to Act..........................................................55
ARTICLE VIII
GENERAL PROVISIONS
SECTION 8.1 Survival..........................................................................56
SECTION 8.2 Notices...........................................................................56
SECTION 8.3 Interpretation....................................................................58
SECTION 8.4 Severability......................................................................58
SECTION 8.5 Entire Agreement..................................................................58
SECTION 8.6 Assignment........................................................................58
SECTION 8.7 Advisory Agreement................................................................58
SECTION 8.8 No Third Party Beneficiaries......................................................58
SECTION 8.9 Governing Law.....................................................................59
SECTION 8.10 Counterparts......................................................................59
SECTION 8.11 Specific Performance..............................................................59
SECTION 8.12 Waiver of Jury Trial..............................................................59
SECTION 8.13 Amendments, Modification and Waiver...............................................59
SECTION 8.14 Major Investors Approval..........................................................59
SECTION 8.15 Commercially Reasonable Efforts...................................................60
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EXHIBITS
Exhibit A - Form of Certificate of Designation of New Preferred Stock
Exhibit B - Form of Stockholders Agreement
Exhibit C - Form of Amendment to Certificate of Designation of Existing
Preferred Stock
Exhibit D - Voting Agreement with Holders of Existing Preferred Stock
Exhibit E - PBGC Proposal
Exhibit F - Commitment Letter
Exhibit G - Common Stock Voting Agreements
Exhibit H - Form of New Warrant
SCHEDULES
Schedule 1.1 - Significant Subsidiaries
Annex 1
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This
RECAPITALIZATION AGREEMENT, dated as of May 1, 2003 (this
"AGREEMENT"), is made by and among Samsonite Corporation, a Delaware corporation
(the "COMPANY"); ACOF Management, L.P., a Delaware limited partnership ("ARES");
Xxxx Capital (Europe) LLC, a Delaware limited liability company ("BAIN"); and
Ontario Teachers Pension Plan Board, a non-share capital corporation established
under the laws of Ontario ("OTPP" and, together with Ares and Bain, the "MAJOR
INVESTORS").
RECITALS
WHEREAS, each of the above parties wishes to effect a series of
transactions that shall together constitute a recapitalization of the Company,
all on the terms and subject to the conditions set forth herein; and
WHEREAS, as part of the Recapitalization (as defined herein), the
Major Investors will, on the terms and subject to the conditions contained in
this Agreement, make a cash investment of $106 million (the "INVESTMENT") in the
Company in exchange for the issuance by the Company to the Major Investors of
shares of a new series of preferred stock of the Company (the "NEW PREFERRED
STOCK") having the terms set forth in the form of certificate of designation
attached hereto as EXHIBIT A (the "NEW CERTIFICATE OF DESIGNATION"); and
WHEREAS, as part of the Recapitalization, the Company will, on the
terms and subject to the conditions contained in this Agreement, effect a
conversion (the "CONVERSION") of all of the Company's outstanding 13-7/8% Senior
Redeemable Exchangeable Preferred Stock (the "EXISTING PREFERRED STOCK") into
shares of common stock, par value $.01 per share, of the Company (the "COMMON
STOCK"), a warrant to purchase Common Stock in substantially the form attached
hereto as EXHIBIT H (each, a "NEW WARRANT") and/or New Preferred Stock; and
WHEREAS, prior to or concurrently with the consummation of the
Recapitalization, the Company will, on the terms and subject to the conditions
contained in this Agreement, effect a refinancing of the Original Credit
Agreement (as defined below); and
WHEREAS, in connection with the Investment, the Company, the Major
Investors and certain other holders of New Preferred Stock shall, on the terms
and subject to the conditions contained in this Agreement, enter into a
Stockholders Agreement with respect to, among other things, the ownership of the
New Preferred Stock and the governance of the Company (the "STOCKHOLDERS
AGREEMENT"), a form of which is attached hereto as EXHIBIT B; and
WHEREAS, the consummation of the Investment is expressly conditioned
upon, INTER ALIA, the consummation of the Notes Consent Solicitation, the
Conversion and the completion of the Refinancing; and
WHEREAS, the board of directors of the Company (the "COMPANY BOARD"),
upon the terms and subject to the conditions set forth herein, (i) has approved
(A) the execution and delivery by the Company of this Agreement, the New
Warrants and the Stockholders Agreement and the performance by the Company of
its obligations hereunder and thereunder and (B) the Charter Amendments (as
defined herein) and the New Certificate of Designation and determined that the
Recapitalization is in the best interests of the Company and the Company
Stockholders, other than the Major Investors, and fair to the Company
Stockholders, other than
the Major Investors, and that it is advisable for the Company to consummate the
Recapitalization and the other transactions contemplated by this Agreement, and
(ii) has recommended approval by the holders of Common Stock and Existing
Preferred Stock, as applicable, of the Charter Amendments; and
WHEREAS, in connection with the Recapitalization, certain holders of
the Existing Preferred Stock have entered into a voting agreement, a fully
executed copy of which is attached hereto as EXHIBIT D (the "PREFERRED STOCK
VOTING AGREEMENT"), and certain holders of the Common Stock have entered into
voting agreements, fully executed copies of which are attached hereto as EXHIBIT
G (the "COMMON STOCK VOTING AGREEMENTS").
NOW, THEREFORE, in consideration of the premises and the mutual
agreements and covenants hereinafter set forth, the Company and the Major
Investors hereby agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 CERTAIN DEFINED TERMS. As used in this Agreement, the
following terms shall have the following meanings:
(a) "AFFILIATE" means, with respect to any specified Person, any
other Person that directly, or indirectly through one or more
intermediaries, controls, is controlled by, or is under common control
with, such specified Person, PROVIDED that with respect to Bain for
purposes of SECTION 8.6 (Assignment), "Affiliate" shall also include each
of Bain Fund VII-E (UK) L.P., BCIP Associates III, BCIP Associates III-B,
BCIP Trust Associates III, Sankaty High Yield Partners II, L.P., Sankaty
High Yield Partners III, L.P., Xxxxx Xxxxxxx Capital AS, Xxxxxxxx Street
Partners V, and each investment fund or entity managed or advised by Bain
or any of its Affiliates.
(b) "ANTITRUST LAWS" means the Xxxxxxx Antitrust Act, and the
rules and regulations promulgated thereunder, as amended, the Xxxxxxx Act,
and the rules and regulations promulgated thereunder, as amended, the
Federal Trade Commission Act, and the rules and regulations promulgated
thereunder, as amended, the Investment Canada Act, and the rules and
regulations promulgated thereunder, as amended, and, other than the HSR
Act, any other United States federal or state or foreign statutes, rules,
regulations, orders, decrees, administrative or judicial doctrines or other
Applicable Law that is designed to prohibit, restrict or regulate actions
having the purpose or effect of monopolization or restraint of trade.
(c) "APPLICABLE LAW" means all applicable laws, statutes, rules,
regulations, injunctions, decrees, policies or guidelines promulgated, or
judgments, decisions or Governmental Orders entered by, any Governmental
Authority.
(d) "BUSINESS" means the business of the Company and its
Subsidiaries as conducted by the Company and its Subsidiaries.
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(e) "CERTIFICATE OF DESIGNATION AMENDMENT" means the Amendment to
the Certificate of Designation, Preferences, Powers and Rights of the
Existing Preferred Stock in the form attached hereto as EXHIBIT C.
(f) "CHARTER AMENDMENTS" means amendments to the Company
Certificate of Incorporation that (i) amend the Existing Certificate of
Designation to read in its entirety as set forth in EXHIBIT C hereto, (ii)
increase the number of shares of Common Stock the Company is permitted to
issue to 1,000,000,000 and (iii) eliminate the provisions relating to the
classes of members of the board of directors.
(g) "CLOSING DATE" means the date of the Closing.
(h) "COBRA" means the Consolidated Omnibus Budget Reconciliation
Act of 1985, as amended.
(i) "COMPANY BALANCE SHEET" means the Company's most recent
balance sheet (including the related notes to financial statements) that is
part of an SEC Report filed prior to the date of this Agreement.
(j) "COMPANY BYLAWS" means the By-Laws of the Company as in effect
on the date hereof.
(k) "COMPANY CERTIFICATE OF INCORPORATION" means the Amended and
Restated Certificate of Incorporation of the Company as in effect on the
date hereof.
(l) "COMPANY STOCKHOLDERS" means holders of the Company's Common
Stock and Existing Preferred Stock.
(m) "CREDIT AGREEMENT" means the Original Credit Agreement and any
New Credit Agreement.
(n) "DGCL" means the Delaware General Corporation Law.
(o) "DISCLOSURE SCHEDULE" means the disclosure schedule delivered
by the Company on and dated the date hereof with respect to this Agreement.
(p) "ENVIRONMENTAL CLAIMS" means any and all Actions, complaints,
liens, written notices of noncompliance, written notices of liability or
potential liability, consent orders or consent agreements relating in any
way to any Environmental Law, any environmental permit or any Hazardous
Material or arising from any actual or alleged injury or threat of injury
to health, safety or the environment.
(q) "ERISA" means the Employee Retirement Income Security Act of
1974, and the rules and regulations promulgated thereunder, as amended.
(r) "ERISA AFFILIATE" means each entity that, together with the
Company or any of its Subsidiaries, is considered a single employer under
Section 414 of the Code.
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(s) "EXCHANGE ACT" means the Securities Exchange Act of 1934, and
the rules and regulations promulgated thereunder, as amended.
(t) "EXISTING CERTIFICATE OF DESIGNATION" means the Certificate of
Designation of the Powers, Preferences and Relative, Participating,
Optional and Other Special Rights of the Existing Preferred Stock as in
effect on the date hereof.
(u) "EXISTING CERTIFICATE OF DESIGNATION AMENDMENTS" means those
amendments to the terms of the Existing Certificate of Designation that are
effected by the form of amendment to certificate of designation attached
hereto as EXHIBIT C.
(v) "EXISTING PREFERRED STOCK APPROVAL" means the approval of the
Existing Certificate of Designation Amendments and the transactions
contemplated by this Agreement, by the holders of a majority of the issued
and outstanding shares of Preferred Stock.
(w) "FINAL ORDER" means a Governmental Order as to which (i) no
request for a stay or similar request is pending and no stay is in effect,
has not been vacated, reversed, set aside, annulled or suspended and any
deadline for filing such request that may be designated by statute or
regulation has passed, (ii) no petition for rehearing or reconsideration or
application for review is pending and the time for the filing of any such
petition or application has passed, (iii) is not under reconsideration by
the relevant Governmental Authority on its own motion and the time within
which it may effect such reconsideration has passed and (iv) no appeal is
pending, including other administrative or judicial review, or in effect
and any deadline for filing any such appeal that may be designated by
statute or rule has passed.
(x) "FISCAL YEAR 2004 BUSINESS PLAN" means the Company's business
plan for the fiscal year ended January 31, 2004, a copy of which has been
previously provided to the Major Investors.
(y) "GAAP" shall mean generally accepted accounting principles as
in effect in the United States as of the date hereof.
(z) "GOVERNMENTAL AUTHORITY" means any United States federal,
state or local or any foreign or multinational government (including the
European Union), governmental, regulatory or administrative authority,
agency or commission or any court, tribunal, or judicial or arbitral body
(or any subdivision of any of the foregoing) having jurisdiction or
authority with respect to the particular matter at issue in its context.
(aa) "GOVERNMENTAL ORDER" means any order, writ, judgment,
injunction, decree, stipulation, determination or award entered by or with
any Governmental Authority.
(bb) "HAZARDOUS MATERIALS" means any pollutants, contaminants,
toxic or hazardous substances, materials, wastes, constituents, compounds,
chemicals, including without limitation petroleum or any by-products
thereof, any form of natural gas, asbestos or asbestos-containing
materials, polychlorinated biphenyls or polychlorinated
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biphenyls-containing equipment, radon or other radioactive elements,
carcinogenic or mutagenic agents, pesticides, explosives, flammables,
corrosives and urea formaldehyde foam insulation, in each case that form
the basis of liability, or are subject to regulation, under any
Environmental Laws as of the Closing Date.
(cc) "INDEBTEDNESS" means (i) all indebtedness for borrowed money
or for the deferred purchase price of property or services (other than
current trade liabilities incurred in the ordinary course of business and
payable in accordance with customary practices, and excluding operating
leases not required to be accounted for as capital leases under GAAP), (ii)
any other indebtedness which is evidenced by a note, bond, debenture or
similar instrument, (iii) all obligations under conditional sale or other
title retention agreements relating to property purchased, (iv) capital
lease or sale-leaseback obligations, (v) all liabilities secured by any
Lien on any property (other than operating leases not required to be
accounted for as capital leases under GAAP), and (vi) any guarantee or
assumption of any of the foregoing in CLAUSES (i) through (v) or guaranty
of minimum equity or capital or any make-whole or similar obligation.
(dd) "INDENTURE AMENDMENT" means an amendment to the definition of
"Permitted Holders" contained in Section 1.01 of the Note Indenture so as
to include the Major Investors in such definition.
(ee) "INTERCOMPANY INDEBTEDNESS" means Indebtedness owing by the
Company to one or more wholly-owned Subsidiaries of the Company or owing by
one or more wholly-owned Subsidiaries of the Company to the Company and/or
one or more other wholly-owned Subsidiaries of the Company.
(ff) "IRS" means the Internal Revenue Service.
(gg) "LIABILITIES" means, with respect to any Person, any and all
debts, liabilities and obligations of such Person (whether accrued or
fixed, absolute or contingent, matured or unmatured and determined or
determinable).
(hh) "LIEN" means, with respect to any asset (including any
security), any option to purchase, claim, mortgage, lien, pledge, charge,
security interest or encumbrance of any kind in respect of the disposition
of such asset.
(ii) "MANAGEMENT BONUSES" means the cash bonuses in amounts not to
exceed the amounts previously disclosed to the Major Investors payable
immediately prior to the consummation of the transactions contemplated by
this Agreement to employees of the Company and its Subsidiaries and accrued
in the fiscal year ended January 31, 2003 in respect of the Company's
financial performance for such fiscal year, which shall be applied by the
recipients thereof to purchase shares of New Preferred Stock at the same
purchase price per share as paid by the Major Investors pursuant to the
terms hereof.
(jj) "MANAGEMENT INCENTIVE PLAN" means an incentive plan for
management employees of the Company the principal terms of which shall have
been agreed to by the Company and the Major Investors.
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(kk) "MATERIAL ADVERSE EFFECT" means any change, event, occurrence,
effect or state of facts that, individually or aggregated with any other
such change, event, occurrence, effect or state of facts, has, or could be
reasonably expected to have, (x) (A) a material adverse effect on the
Business, assets (including intangible assets), properties, condition
(financial or otherwise) or results of operations of the Company and its
Subsidiaries, taken as a whole (the "COMBINED BUSINESS"), or (B) an
aggregate reduction of the enterprise value as of the date hereof of the
Combined Business as its business is presently conducted, or proposed as of
the date hereof to be conducted in the future, of at least $50 million,
other than, in each case, any change, event, occurrence, effect or state of
facts relating to the execution of this Agreement or the announcement of
such execution or the transactions contemplated herein, or (y) a material
impairment on the ability of the Company to perform its obligations under
this Agreement or to consummate the transactions contemplated hereby.
(ll) "NET CONSOLIDATED FINANCIAL INDEBTEDNESS" means the total
long-term and current indebtedness of the Company and its Subsidiaries on a
consolidated basis calculated in a manner consistent with the calculation
of the amounts reflected in the line items entitled "short-term debt",
"current installments of long-term obligations" and "long-term obligations,
less current installments" on the Company Balance Sheet, net of cash and
cash equivalents, and in all cases determined in accordance with GAAP.
(mm) "NEW CREDIT AGREEMENT" means one or more revolving senior
credit facilities in form and substance satisfactory to the Major Investors
(it being agreed that any credit facility entitling the Company and its
Subsidiaries to borrow at least $60 million and with terms not materially
less favorable to the Company and it Subsidiaries than the terms described
in the Commitment Letter shall be deemed to be satisfactory to the Major
Investors).
(nn) "NEW PREFERRED PURCHASE PRICE" means $1,000.
(oo) "NOTE APPROVAL" means the approval of the Indenture Amendment
by the holders of a majority of the aggregate principal amount of the
outstanding Notes.
(pp) "NOTE INDENTURE" means the Indenture, dated as of June 24,
1998, by and between the Company and United States Trust Company of
New
York, relating to the Notes.
(qq) "NOTES" means the Company's outstanding 10 3/4% Senior
Subordinated Notes due 2008.
(rr) "OLD WARRANTS" means the warrants to purchase Common Stock of
the Company issued pursuant to the Warrant Agreement, dated as of June 24,
1998, between the Company and BankBoston, N.A., as amended.
(ss) "ORIGINAL CREDIT AGREEMENT" means that certain Second Amended
and Restated Multicurrency Revolving Credit and Term Loan Agreement, dated
as of June 24, 1998, as in effect as of the date hereof, by and among the
Company, Samsonite Europe N.V., a Belgian corporation, Bank of America
National Trust and Savings
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Association, BankBoston, N.A. (f/k/a The First National Bank of Boston) and
the other lending institutions listed on Schedule 1 thereto, Bank of
America National Trust and Savings Association as Administrative Agent,
BankBoston N.A. as Syndication Agent, Canadian Imperial Bank of Commerce as
Documentation Agent, and the other parties thereto, with Bancamerica
Xxxxxxxxx Xxxxxxxx and Bancboston Securities Inc. as Arrangers.
(tt) "OUTSTANDING INDEBTEDNESS" means an aggregate of not greater
than $460 million of Indebtedness of the Company and its subsidiaries
(excluding Intercompany Indebtedness) consisting of, without duplication,
(i) Indebtedness (including letters of credit and liens granted to the
PBGC) not in excess of $120 million under the Credit Agreement, (ii) other
senior Indebtedness in an amount not to exceed $16.6 million, and (iii) the
Notes.
(uu) "PBGC" means the Pension Benefit Guaranty Corporation.
(vv) "PERMITTED PBGC AGREEMENT" means an agreement between the
Company and the PBGC or other arrangement with respect to the Company
confirmed by the PBGC that (i) (A) is substantially consistent in all
material respects with the terms of the proposal set forth in the letter
from Xxxxxxx Xxxx & Xxxxxxxxx to the PBGC, dated as of April 14, 2003, a
copy of which is attached hereto as EXHIBIT E, (B) is no less favorable to
the Company than the proposal contained in the fourth bullet of such letter
and (C) permits the Company, without the PBGC's consent, to conduct the
actions described in the first sub-bullet to the sixth bullet of such
letter or (ii) shall have been approved in writing by the Major Investors.
(ww) "PERSON" means any individual, partnership, firm, corporation,
limited liability company, association, trust, unincorporated organization
or other entity, as well as any syndicate or group that would be deemed to
be a person under Section 13(d)(3) of the Exchange Act.
(xx) "PREFERRED STOCK" means preferred stock, par value $.01 per
share, of the Company.
(yy) "PROXY STATEMENT" means the proxy statement of the Company
related to the Stockholders Meeting and the solicitation of proxies from
the common stockholders of the Company to the Charter Amendments.
(zz) "RECAPITALIZATION" means, collectively, all of the Closing
Transactions referred to in clauses (a) through (e) of SECTION 2.5.
(aaa) "RELATED PARTY TRANSACTION" means any transaction or series of
similar transactions to which the Company or any of its Subsidiaries is a
party, in which the amount involved exceeds $5,000,000 (other than
compensation for services rendered or perquisites in lieu of compensation
received as an employee in the ordinary course of business consistent with
past practice pursuant to the Company's compensation and bonus policies and
procedures) and in which any director or employee of any of the Company or
its Subsidiaries or any holder of more than 1% of the voting power of the
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capital stock of the Company has a direct or indirect material interest;
PROVIDED, that the payment of the Management Bonuses shall not constitute
Related Party Transactions.
(bbb) "REQUISITE COMMON STOCK APPROVAL" means the approval of the
Charter Amendments by the holders of a majority of the issued and
outstanding shares of Common Stock.
(ccc) "REQUISITE STOCKHOLDER APPROVALS" means the Requisite Common
Stock Approval and the Existing Preferred Stock Approval, collectively.
(ddd) "RIGHTS" shall have the meaning assigned thereto in the Rights
Agreement.
(eee) "RIGHTS AGREEMENT" means the Rights Agreement, dated as of May
12, 1998, as amended on April 7, 1999, July 13, 1999 and September 27,
1999, by and between the Company and BankBoston, N.A., as Rights Agent.
(fff) "SEC" means the Securities and Exchange Commission.
(ggg) "SEC CLEARANCE DATE" means (a) the date on which the SEC staff
informs the Company that it has no further comments on the Proxy Statement
or, if applicable, any of the Other Filings or (b) in the event that the
SEC staff declines to review the Proxy Statement and, if applicable, all of
the Other Filings, the date on which the SEC staff informs the Company that
it will not review such filings.
(hhh) "SEC REPORTS" means all forms, reports and documents filed by
the Company with the SEC since January 1, 2000.
(iii) "SECURITIES ACT" means the Securities Act of 1933, and the
rules and regulations promulgated thereunder, as amended.
(jjj) "SIGNIFICANT SUBSIDIARY" shall mean each "Significant
Subsidiary" of the Company, as defined in Rule 1-02 of Regulation S-X
promulgated under the Securities Act, and each of the Subsidiaries of the
Company set forth on SCHEDULE 1.1 hereto.
(kkk) "SOLICITATION DOCUMENTS" shall mean, collectively, all of the
documents necessary to effect each Solicitation.
(lll) "SUBSIDIARY" means, with respect to any Person, another
Person, an amount of the voting securities, other voting ownership or
voting partnership or membership interests of which is sufficient to elect
at least a majority of its board of directors or other governing body that
(or, if there are no such voting interests, more than 50% of the equity
interests of which) is owned or controlled directly or indirectly by such
Person.
(mmm) "TAX" or "TAXES" means any and all taxes, fees, assessments,
levies, duties, tariffs, imposts, and other charges of any kind (together
with any and all interest, penalties, additions to tax and additional
amounts imposed with respect thereto) imposed by any governmental authority
including: taxes or other charges on or with respect to
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income, franchises, windfall or other profits, gross receipts, property,
assets, sales, use, capital stock, payroll, employment, social security,
workers' compensation, unemployment compensation, severance, occupation, or
net worth; taxes or other charges in the nature of excise, withholding, AD
VALOREM, stamp, transfer, estimated, value added, or gains taxes; license,
registration and documentation fees; and customs' duties, tariffs, and
similar charges.
(nnn) "TAX RETURN" means any report, return, document, declaration
or other information or filing required to be supplied to any taxing
authority or jurisdiction with respect to Taxes.
(ooo) "TRUSTEE" means United States Trust Company of
New York, as
Trustee under the Indenture.
SECTION 1.2 OTHER DEFINED TERMS. The following terms shall have the
meanings defined for such terms in the sections set forth below:
Term: Section:
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Action 3.12
Acquisition Proposal 5.6(f)
Agreement Preamble
Ares Preamble
Xxxx Preamble
Charter Amendment Proxy Solicitation 2.1(b)
Closing 2.5
Closing Transactions 2.5
Code 3.14(i)
Commitment Letter 4.12
Common Stock Recitals
Common Stock Voting Agreements Recitals
Company Preamble
Company Benefit Plans 3.17(a)
Company Board Recitals
Company Board Recommendation 3.8
Company Securities 3.2(a)
Confidentiality Agreements 5.3
Controlled Group Liability 3.17(f)
Conversion Recitals
Current 10-K 3.19(a)
Data Acts 3.38
Director Designation Notice 5.5
Environmental Laws 3.23(a)
Equity Interests 5.2(a)(i)
Existing Insurance 3.30
Existing Preferred Stock Recitals
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Term: Section:
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Fairness Opinion 3.33
FCPA 3.43
Financial Statements 3.9
Governmental Approval 3.6
HSR Act 5.4(b)
Intellectual Property 3.15(a)
Investment Recitals
Major Investors Preamble
Material Contract Approvals 3.19(b)
Material Contract 3.19(b)
Multiemployer Plan 3.17(e)
Necessary Governmental Approvals 3.13(a)
New Certificate of Designation Recitals
New Preferred Stock Recitals
New Warrant Recitals
Notes Consent Solicitation 2.1(b)
Other Filings 2.1(e)
OTPP Preamble
Outside Date 7.1(c)
Owned Real Property 3.16(c)
Permitted Liens 3.16(a)
Preferred Stock Consent Solicitation 2.1(b)
Preferred Stock Voting Agreement Recitals
Product 3.21
Real Property 3.16(c)
Real Property Lease 3.19(a)(vi)
Recalls 3.21
Refinancing 6.1(d)
Secretary of State 2.3
Securities Laws 3.9
Solicitations 2.1(b)
Stockholders Agreement Recitals
Stockholders Meeting 5.1
Superior Proposal 5.6(f)
Supplemental Indenture 5.12
Termination Fee 7.3(a)
WARN Act 3.18(b)
Withdrawal Liability 3.17(e)
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ARTICLE II
RECAPITALIZATION TRANSACTIONS
SECTION 2.1 COMMENCEMENT OF SOLICITATIONS.
(a) Promptly following the date of this Agreement, the Company
shall, with the assistance of the Major Investors, (i) prepare, and to the
extent required by Applicable Law, file with the SEC and any other applicable
Governmental Authority, the Solicitation Documents, excluding the Proxy
Statement, and (ii) prepare the Proxy Statement in accordance with the
procedures set forth in SECTION 2.1(e). The parties hereto acknowledge that, to
the extent determined by the Company after consultation with the Major
Investors, the Proxy Statement shall be included as an exhibit to (or the
disclosures contained therein, other than mechanical matters relating to the
voting of the Common Stock, shall be set forth in) the documents relating to the
Preferred Stock Consent Solicitation. The Major Investors and the Company shall
cooperate with each other in the preparation of the Solicitation Documents.
Subject to SECTION 2.1(f), all mailings to the holders of the Existing Preferred
Stock and Common Stock in connection with the Solicitations shall be subject to
the prior review, comment (which comments shall not be unreasonably ignored or
rejected) and approval of the Major Investors, which approval shall not be
unreasonably withheld so long as the mailings are consistent with this Agreement
and otherwise consistent with customary market practice for similar
documentation. Subject to SECTION 2.1(b), within five business days from the
date a request is made by the Major Investors, the Company shall cause the
Solicitation Documents to be mailed to the record holders of the Common Stock,
the Notes and the Existing Preferred Stock, as applicable. The Company shall use
commercially reasonable efforts to identify, and cause the Solicitation
Documents to be mailed to, the beneficial owners of the Notes, the Common Stock
and the Existing Preferred Stock, as applicable. The Company and the Major
Investors shall use reasonable efforts to cause the Solicitation Documents to
comply in all material respects with Applicable Law. Subject to SECTION 2.1(f),
each of the Major Investors and the Company agrees promptly to correct any
information provided by it for use in the Solicitation Documents if and to the
extent that such information shall have become false or misleading in any
material respect, and the Company further agrees to take commercially reasonable
steps necessary to cause the Solicitation Documents as so corrected to be
disseminated to holders of the Common Stock, the Notes and the Existing
Preferred Stock, as applicable, as and to the extent required by Applicable Law.
(b) The Company shall, as promptly as reasonably practicable, but
in no event later than five business days from the date a request is made by the
Major Investors after the SEC Clearance Date (i) commence a solicitation of
consents from the holders of the Existing Preferred Stock to the Existing
Certificate of Designation Amendments, which solicitation will provide the
holders of the Existing Preferred Stock the opportunity to elect to receive in
the Conversion, subject to the terms set forth in the Existing Certificate of
Designation Amendments, with respect to their shares of Existing Preferred Stock
either (A) shares of Common Stock and New Warrants or (B) shares of New
Preferred Stock and shares of Common Stock, with up to an aggregate of $54
million in liquidation preference of New Preferred Stock being issued with
respect to all shares of Existing Preferred Stock (the "PREFERRED STOCK CONSENT
SOLICITATION") and (ii) commence a solicitation of consents from the holders of
the Notes to the Indenture Amendment (the "NOTES CONSENT SOLICITATION"), in each
case on the terms and
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conditions set forth herein, and such other customary terms and conditions as
are reasonably acceptable to the Major Investors. The Company shall, promptly
after the SEC Clearance Date, but in no event later than five business days from
the date a request is made by the Major Investors after the SEC Clearance Date,
commence a solicitation of proxies from the stockholders of the Company to the
Charter Amendments (the "CHARTER AMENDMENT PROXY SOLICITATION" and, together
with the Preferred Stock Consent Solicitation and the Notes Consent
Solicitation, the "SOLICITATIONS") on the terms and conditions set forth herein.
(c) The Notes Consent Solicitation shall expire no earlier than
the 20th business day after the Notes Consent Solicitation is commenced and the
Preferred Stock Consent Solicitation shall expire no earlier than the 10th
business day after the Preferred Stock Consent Solicitation is commenced;
PROVIDED that, subject to SECTION 7.1, the Company shall, from time to time at
the direction of the Major Investors or at its option in the event such
extension is contemplated by the following sentence, extend the Notes Consent
Solicitation and the Preferred Stock Consent Solicitation, it being the
intention of the parties that the Indenture Amendment be executed immediately
prior to the Closing and the Conversion be consummated concurrent with the
Closing. The Investors agree that (A) the Notes Consent Solicitation and the
Preferred Stock Consent Solicitation may be extended so as not to expire prior
to the date that is the earlier of (i) the date this Agreement is terminated or
(ii) the date immediately prior to the date a vote of the common stockholders is
proposed to be taken with respect to the Charter Amendments at a meeting duly
called for such purpose, as such meeting may be postponed pursuant to SECTION
5.1, and (B) the Charter Amendment Proxy Solicitation will continue until the
earlier of (i) this Agreement is terminated, (ii) a vote of the common
stockholders has been taken with respect to the Charter Amendments at a meeting
duly called for such purpose or (iii) the Charter Amendments are approved by the
holders of Common Stock.
(d) Pursuant to the Conversion, and subject to the terms of the
Certificate of Designation Amendment, each share of Existing Preferred Stock
shall be converted into either (i) shares of Common Stock and a New Warrant or
(ii) shares of New Preferred Stock and shares of Common Stock, with up to an
aggregate of $54 million in liquidation preference of New Preferred Stock being
issued with respect to all shares of Existing Preferred Stock. Each holder of
Existing Preferred Stock may elect to receive in the Conversion either (i)
shares of Common Stock and a New Warrant or (ii) shares of New Preferred Stock
and shares of Common Stock. If a holder of Existing Preferred Stock fails to
make an election, then such holder will be deemed to have made the election
described in CLAUSE (ii) of the prior sentence. The Solicitation Documents sent
or given to holders of Existing Preferred Stock shall include an appropriate
form on which such holders may indicate their election, as provided in this
paragraph. Such elections must be made prior to, and may be changed or modified
prior to, (i) in the case of a duly called meeting of the holders of Existing
Preferred Stock, 5:00 p.m.,
New York time, on the business day prior to such
meeting, (ii) in the case of an adjournment of a duly called meeting of the
holders of Existing Preferred Stock, 5:00 p.m.,
New York time, on the business
day prior to the date such meeting is due to be re-convened and (iii) in the
case of action by written consent of the holders of the Existing Preferred
Stock, 5:00 p.m.,
New York time, on the business day prior to the date the
Company publicly announces that the required vote of the Preferred Stock Consent
Solicitation has been obtained; PROVIDED, that in no event shall such elections
be required to be made earlier than 5:00 p.m.,
New York time, on the 9th
business day following the commencement of the Preferred Stock Consent
Solicitation.
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(e) With respect to the Charter Amendment Proxy Solicitation, the
Company, in consultation with the Major Investors, shall as promptly as
practicable following the date of this Agreement prepare and file a preliminary
Proxy Statement with the SEC and shall use commercially reasonable efforts to
respond to any comments of the SEC or its staff with respect to the Proxy
Statement, to cause it to be mailed to the holders of Common Stock as promptly
as practicable and, to the extent determined by the Company after consultation
with the Major Investors, to cause it to be included in the materials relating
to the Preferred Stock Consent Solicitation to be mailed to the holders of
Existing Preferred Stock. As promptly as practicable after the date of this
Agreement, each of the Company and the Major Investors shall prepare and file
any other documents required under the Securities Laws to be filed by them
(other than the documents described above) relating to the Conversion and the
Solicitations or the transactions contemplated by this Agreement (the "OTHER
FILINGS"). Each of the Company and the Major Investors shall notify the other
promptly of the receipt of any comments from the SEC or its staff or any other
governmental officials and of any request by the SEC or its staff or any
governmental officials for amendments or supplements to the Proxy Statement, the
Other Filings or for additional information and will supply the other with
copies of all correspondence between such party or any of its representatives,
on the one hand, and the SEC or its staff or any other governmental officials,
on the other hand, with respect to the Proxy Statement, the Solicitations or any
Other Filing. Each Major Investor shall cooperate with the Company in the
preparation of the Proxy Statement, the Other Filings or any amendment or
supplement thereto, including the supply of any information required to be
included in the Proxy Statement regarding the Major Investors.
(f) If at any time prior to the Stockholders Meeting there shall
occur any event that should or must be set forth in an amendment or supplement
to the Proxy Statement or any Other Filing, the Company or such Major Investor,
as the case may be, will promptly inform the other and the other Major Investors
of such occurrence, and the Company shall promptly prepare and mail to its
stockholders such amendment or supplement; PROVIDED that the Company shall not
mail any Proxy Statement, or any amendment or supplement thereto or file, amend
or supplement any Other Filing to which the Major Investors reasonably object
unless the Company determines, after such objection and after consultation with
counsel, that such amendment or supplement is required by Applicable Law. None
of the Major Investors shall file, amend or supplement any Other Filing to which
the Company reasonably objects unless such Major Investor reasonably determines,
after such objection and after consultation with counsel, that such filing,
amendment or supplement is required by Applicable Law.
(g) The Company Board Recommendation shall be included in the
Proxy Statement, except that, subject to the rights of the Major Investors
contained in ARTICLE VII hereof, the Company Board may withdraw or modify in a
manner adverse to the Major Investors such Company Board Recommendation only if
the Company Board determines, in good faith, after consultation with outside
legal counsel, that the failure to so act would create a reasonable likelihood
of a breach by the Company Board of its fiduciary duties under Applicable Law.
SECTION 2.2 ISSUANCE OF NEW PREFERRED STOCK AND FUNDING OF THE
INVESTMENT.
(a) Upon the terms and subject to the conditions of this
Agreement, at the Closing, the Company shall issue to each Major Investor
certificates representing the number of
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validly issued, fully-paid and nonassessable shares of New Preferred Stock set
forth opposite such Major Investor's name on ANNEX 1 hereto free of Liens
arising out of any act of the Company and preemptive rights (except as provided
in SECTION 3.2(c) hereof), at a per share purchase price equal to the New
Preferred Purchase Price. In consideration of, and concurrently with, the
issuance of the shares of New Preferred Stock pursuant to the preceding
sentence, on the terms and subject to the conditions of this Agreement, at the
Closing, each Major Investor shall deliver or cause to be delivered to the
Company, by wire transfer, an amount in cash equal to the New Preferred Purchase
Price multiplied by the number of shares of New Preferred Stock set forth
opposite such Major Investor's name on ANNEX 1 hereto.
(b) The New Preferred Stock shall have the powers, rights and
other terms set forth in the New Certificate of Designation.
(c) The Company shall give written notice to the Major Investors
of wire transfer instructions at least two business days before the Closing
Date.
SECTION 2.3 CHARTER AMENDMENTS; CONVERSION. On the morning of the
Closing, but subject to the receipt of the Requisite Stockholder Approvals, the
Company shall cause the Charter Amendments (including the Certificate of
Designation Amendment and the New Certificate of Designation) to be executed and
filed with the Secretary of State of the State of Delaware (the "SECRETARY OF
STATE") as provided in the DGCL. At least two business days prior to the
Closing, the Company shall cause the New Certificate of Designation to be
delivered for pre-clearance for filing with the Secretary of State.
SECTION 2.4 CERTIFICATE OF INCORPORATION. At the Closing, the
Company Certificate of Incorporation, as in effect immediately prior to the
Closing, shall be amended pursuant to the Charter Amendments and the New
Certificate of Designation.
SECTION 2.5 CLOSING. The consummation of the Closing Transactions
shall take place at a closing (the "CLOSING") to be held at the offices of
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP, Xxxx Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx
00000, at 10:00 A.M.
New York,
New York time, on the third business day
following the satisfaction or waiver of all conditions to the obligations of the
parties set forth in ARTICLE VI (other than those conditions that by their
nature are to be satisfied by action taken at the Closing but still subject to
their satisfaction or waiver), or at such other place or at such other time or
on such other date as the Major Investors and the Company mutually agree upon in
writing. At the Closing, the following actions (the "CLOSING TRANSACTIONS")
shall take place in the following order:
(a) The Company shall execute and file the New Certificate of
Designation with the Secretary of State.
(b) The Company shall effect the Conversion pursuant to the terms
of the Certificate of Designation Amendment and cancel all shares of the
Existing Preferred Stock.
(c) The Company shall effect, if the holders of a majority of the
aggregate principal amount of the outstanding Notes so approve, the
Indenture Amendments.
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(d) In the manner contemplated by SECTION 2.2, each Major Investor
shall pay to the Company an amount equal to the New Preferred Purchase
Price multiplied by the number of shares of New Preferred Stock set forth
opposite its name on ANNEX 1 hereto by wire transfer in immediately
available funds. In the manner contemplated by SECTION 2.2, the Company
shall deliver to each such Major Investor or its designated Affiliate stock
certificates evidencing the New Preferred Stock purchased by such Major
Investor.
(e) The Company shall pay to each of Ares and Xxxx, by wire
transfer in immediately available funds, a transaction structuring fee in
the amount of $1,000,000.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth on the Disclosure Schedule (each section of which
qualifies the correspondingly numbered representation and warranty to the extent
specified therein and such other representations and warranties to the extent a
matter in such section is disclosed in such a way as to make its relevance to
the information called for by such other representation and warranty reasonably
apparent; PROVIDED that the representations and warranties contained in SECTION
3.9 shall be qualified solely by disclosures actually set forth in SECTION 3.9
OF THE DISCLOSURE SCHEDULE) and except as expressly contemplated by this
Agreement, the Company hereby represents and warrants to each Major Investor as
follows:
SECTION 3.1 INCORPORATION AND AUTHORITY.
(a) The Company is a corporation duly organized, validly existing
and in good standing under the laws of Delaware and has all necessary corporate
power and authority to conduct its business as it is now being conducted, to own
or use the properties and assets that it purports to own or use, to enter into
this Agreement and the Stockholders Agreement, to carry out its obligations
hereunder and thereunder and, assuming receipt of the Requisite Stockholder
Approvals, to consummate the transactions contemplated hereby and thereby. The
Company is duly qualified to do business as a foreign corporation and is in good
standing under the laws of each state or other jurisdiction in which either the
ownership or use of the properties owned or used by it, or the nature of the
activities conducted by it, requires such qualification, except for such
failures which would not reasonably be expected to have, in the aggregate, a
Material Adverse Effect.
(b) The execution and delivery of this Agreement, the New Warrants
and the Stockholders Agreement by the Company, the performance by the Company of
its obligations hereunder and thereunder and the consummation by the Company of
the transactions contemplated hereby and thereby have been duly authorized by
all requisite corporate action on the part of the Company, except, with respect
to consummation, for the Requisite Stockholder Approvals and the filing of the
Charter Amendments with the Secretary of State. This Agreement has been duly
executed and delivered by the Company and (assuming due authorization, execution
and delivery by each of the Major Investors) constitutes a legal, valid and
binding obligation of the Company enforceable against the Company in accordance
with its terms except as such enforcement may be limited by bankruptcy,
insolvency, reorganization,
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moratorium or similar laws now or hereafter in effect relating to or affecting
creditors' rights generally and by general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at law).
The New Warrants and the Stockholders Agreement when executed and delivered in
accordance with the terms herein will have been duly executed and delivered by
the Company and (assuming due authorization, execution and delivery by (x) the
holder thereof in the case of each New Warrant and (y) each of the Major
Investors in the case of the Stockholders Agreement) will constitute a legal,
valid and binding obligation of the Company enforceable against the Company in
accordance with its terms except as such enforcement may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws now or
hereafter in effect relating to or affecting creditors' rights generally and by
general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law). The Company has made available
to the Major Investors correct and complete copies of the Company Certificate of
Incorporation, the Company Bylaws and the organizational documents (and related
joint venture agreements and/or shareholder agreements where not wholly owned)
of each Subsidiary of the Company, as currently in effect.
SECTION 3.2 CAPITAL STOCK.
(a) The authorized capital stock of the Company consists of
60,000,000 shares of Common Stock and 2,000,000 shares of Preferred Stock. As of
April 15, 2003, the Company had (i) issued and outstanding (A) 19,865,573 shares
of Common Stock and (B) 281,131 shares of Existing Preferred Stock, which
constitute as of such date all the issued and outstanding shares of capital
stock of the Company and (ii) 5,659,000 shares of Common Stock reserved for
issuance in respect of the options disclosed in Section 3.2(a) of the Disclosure
Schedule and the Old Warrants. No shares of Common Stock or Preferred Stock have
been issued since such date other than as a result of the exercise of options
outstanding on such date. All shares of Common Stock and Existing Preferred
Stock have been duly authorized and validly issued and are fully paid and
nonassessable and were not issued in violation of any preemptive rights.
Attached to SECTION 3.2(a) OF THE DISCLOSURE SCHEDULE is a copy of a market
position report for the Existing Preferred Stock prepared at the request of the
Company by the Depository Trust Company and which sets forth a list as of a date
within 5 business days of the date hereof of each record holder of shares of
Existing Preferred Stock and the number of shares of Existing Preferred Stock
such Person holds of record. Except as set forth in SECTION 3.2(a) OF THE
DISCLOSURE SCHEDULE, there are no voting trusts, stockholders' agreements,
proxies or other agreements or understandings in effect to which the Company is
a party with respect to the voting or transfer of any of the Common Stock or the
Existing Preferred Stock, except those contained in the Confidentiality
Agreements and the other confidentiality agreements that contain standstill
provisions substantially similar to the Confidentiality Agreements. Other than
(x) as set forth in SECTION 3.2(a) OF THE DISCLOSURE SCHEDULE and (y) the Old
Warrants, there are no options, warrants, convertible securities or other
rights, agreements, arrangements or commitments (whether or not contingent)
relating to the capital stock of, or other equity interest in, the Company
obligating the Company to issue, sell, transfer or otherwise dispose of or sell
any shares of capital stock of, or other equity interest in, the Company.
SECTION 3.2(a) OF THE DISCLOSURE SCHEDULE sets forth (i) the outstanding options
and warrants to purchase Common Stock or to purchase other equity interests in
the Company (and, in the case of equity interests other than Common Stock,
identifies such equity interests), (ii) the respective exercise prices of such
options and warrants and (iii) the holder of all such options. Except as set
forth above,
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there are no outstanding (i) shares of capital stock or other voting securities
of the Company, (ii) securities of the Company or any of its Subsidiaries
convertible into or exchangeable for shares of capital stock or voting
securities of the Company, (iii) options or other rights to acquire from the
Company or any of its Subsidiaries, and obligations of the Company or any of its
Subsidiaries to issue, any capital stock, voting securities or securities
convertible into or exchangeable for capital stock or voting securities of the
Company, or (iv) stock-appreciation rights, security-based performance units,
"phantom" stock or other security rights or other agreements, arrangements or
commitments of similar character (contingent or otherwise) pursuant to which any
Person is or may be entitled to receive any payment or other value based on the
revenues, earnings or financial performance, stock price performance or other
attribute of the Company or any of its Subsidiaries or assets or calculated in
accordance therewith (any of the foregoing referred to in CLAUSES (i) through
(iv), collectively, "COMPANY SECURITIES"). There are no outstanding obligations
of the Company or any of its Subsidiaries to repurchase, redeem or otherwise
acquire any Company Securities, except those contained in the terms of the
Existing Preferred Stock.
(b) As of the date of this Agreement, other than the Outstanding
Indebtedness and Intercompany Indebtedness and except as set forth in SECTION
3.2(b) OF THE DISCLOSURE SCHEDULE, there is no outstanding Indebtedness of the
Company or any of its Subsidiaries. Except (x) as set forth in SECTION 3.2(b) OF
THE DISCLOSURE SCHEDULE, or (y) as contained in the Credit Agreement and Note
Indenture, no Indebtedness of the Company or its Subsidiaries contains any
restriction upon (i) the prepayment of such Indebtedness (other than
Intercompany Indebtedness), (ii) the incurrence of Indebtedness by the Company
or its Subsidiaries, respectively, or (iii) the ability of the Company or its
Subsidiaries to grant any Liens on its properties or assets. The aggregate
principal amount of the outstanding Notes does not exceed $323 million, and
there is no accrued but unpaid interest thereon other than interest accruing
since the last regular interest payment date.
(c) The shares of New Preferred Stock, when issued, sold and
delivered in accordance with the terms hereof for the consideration expressed
herein, and the shares of New Preferred Stock, shares of Common Stock and New
Warrants, when issued and delivered in accordance with the Certificate of
Designation Amendment, will have been duly and validly authorized and the shares
of New Preferred Stock, when issued, sold and delivered in accordance with the
terms hereof for the consideration expressed herein, the shares of New Preferred
Stock and the shares of Common Stock, when issued and delivered in accordance
with the Certificate of Designation Amendment, and the shares of Common Stock
underlying the New Warrants, when issued and delivered in accordance with the
terms of the New Warrants, will be fully paid and nonassessable and will be free
of preemptive rights and Liens other than (i) restrictions on transfer under
applicable state and federal securities laws and (ii) restrictions on transfer
contained in the Stockholders Agreement.
SECTION 3.3 SUBSIDIARIES.
(a) SECTION 3.3(a) OF THE DISCLOSURE SCHEDULE sets forth, with
respect to each Significant Subsidiary, its type of entity, the jurisdiction of
its incorporation or organization, its authorized capital stock, partnership
interests, membership interests or other ownership interests, the number and
type of its issued and outstanding shares of capital stock, partnership
interests,
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membership interests or other ownership interests and the Company's current
ownership of such shares, partnership interests or similar ownership interests.
Each Subsidiary is duly organized, validly existing and in good standing under
the laws of its respective jurisdiction of incorporation or organization and has
the requisite power and authority to own or use the properties and assets that
it purports to own or use and to conduct its business as currently conducted by
such Subsidiary. Each Subsidiary is duly qualified to do business as a foreign
entity and is in good standing under the laws of each jurisdiction in which
either the ownership or use of the properties owned or used by it, or the nature
of the activities conducted by it, requires such qualification, except for such
failures of qualification that would not reasonably be expected to have, in the
aggregate, a Material Adverse Effect. No Subsidiary other than the Significant
Subsidiaries generated revenue in excess of $10 million or net income or net
losses in excess of $1 million for the year ended January 31, 2003 or had assets
with a fair market value in excess of $6.5 million or outstanding Indebtedness
in excess of $500,000 as of the date hereof.
(b) Except as set forth in SECTION 3.3(b) OF THE DISCLOSURE
SCHEDULE, or as contained in the Credit Agreement, Note Indenture or Existing
Certificate of Designation, all of the outstanding capital stock of, or other
ownership interests in, each Subsidiary of the Company is owned by the Company,
directly or indirectly, free and clear of any Lien or any other limitation or
restriction (including any restriction on the right to vote or sell the same,
except as may be provided as a matter of law). All such ownership interests have
been validly issued, and are fully paid and nonassessable, and have been issued
free of preemptive rights. Except for the securities described in SECTION 3.2,
there are no securities of the Company or any of its Subsidiaries convertible
into or exchangeable for, no options or other rights to acquire from the Company
or any of its Subsidiaries, and no other contract, understanding, arrangement or
obligation (whether or not contingent) providing for the issuance or sale, by
the Company or any Subsidiary, directly or indirectly, of any capital stock,
partnership interests, membership interests or other ownership interests in, or
any other securities of, any Subsidiary of the Company, other than in favor of
the Company or a Subsidiary. Except as set forth in SECTION 3.3(b) OF THE
DISCLOSURE SCHEDULE, there are no obligations of the Company or any of its
Subsidiaries to repurchase, redeem or otherwise acquire any outstanding shares
of capital stock, partnership interests, membership interests or other ownership
interests in any Subsidiary of the Company. Except as set forth in SECTION
3.3(b) OF THE DISCLOSURE SCHEDULE, there are no obligations of the Company or
any of its Subsidiaries to make further capital contributions or similar
payments to any Subsidiary.
SECTION 3.4 STOCKHOLDER AND DEBTHOLDER APPROVALS REQUIRED.
(a) No approval of the holders of the Common Stock is required by
the Company Certificate of Incorporation, the Company Bylaws, or Applicable Law
with respect to the entering into or performance of this Agreement or the
consummation of any of the transactions contemplated hereby other than the
Requisite Common Stock Approval. No approval of the holders of the Existing
Preferred Stock is required by the Company Certificate of Incorporation, the
Company Bylaws, the Existing Certificate of Designation or Applicable Law with
respect to the entering into or performance of this Agreement or the
consummation of any of the transactions contemplated hereby other than the
Existing Preferred Stock Approval. Assuming the due and timely receipt of the
Existing Preferred Stock Approval, the entering into and performance of this
Agreement and the consummation of the transactions contemplated
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hereby will not result in any breach of, constitute a default (or event which
with the giving of notice or lapse of time, or both, would become a default)
under, or give to others any rights of termination, amendment, acceleration,
cancellation or increased dividends under the Existing Certificate of
Designation, nor will the Company be obligated to make a "Change of Control
Offer" (as defined in the Existing Certificate of Designation) under the
Existing Certificate of Designation.
(b) No approval of the holders of the Notes is required by the
Note Indenture or Applicable Law with respect to the entering into or
performance of this Agreement or the consummation of any of the transactions
contemplated hereby. Except as set forth in SECTION 3.4(b) OF THE DISCLOSURE
SCHEDULE, no approval of the parties to the Credit Agreement other than the
Company is required by the Credit Agreement or Applicable Law with respect to
the entering into or performance of this Agreement or the consummation of any of
the transactions contemplated hereby.
SECTION 3.5 NO CONFLICT. Except as set forth in SECTION 3.5 OF THE
DISCLOSURE SCHEDULE, assuming (a) the due and timely receipt of the Requisite
Common Stock Approval, (b) the due and timely receipt of the Note Approval and
(c) the due and timely receipt of the Existing Preferred Stock Approval, the
execution, delivery and performance of this Agreement by the Company and the
consummation by the Company of any of the transactions contemplated hereby do
not and shall not (i) violate or conflict with the Company Certificate of
Incorporation or the Company Bylaws or any of the organizational documents of
its Subsidiaries, (ii) conflict with or violate any Applicable Law or threaten
any Governmental Approval applicable to the Company or any of its Subsidiaries
or (iii) result in any breach of, constitute a default (or event which with the
giving of notice or lapse of time, or both, would become a default) under, or
give to others any rights of termination, amendment, acceleration or
cancellation of, or result in the creation of any Lien on any of the assets or
properties of the Company or any of its Subsidiaries pursuant to, any note,
bond, mortgage, indenture, contract, agreement, lease, license, permit,
franchise or other instrument relating to such assets or properties to which the
Company or any of its Subsidiaries is a party or by which any of such assets or
properties is bound or affected except, in the case of CLAUSES (ii) and (iii)
above, as would not, in the aggregate, reasonably be expected to (x) materially
delay the Closing or make illegal the Closing Transactions, (y) have a Material
Adverse Effect, or (z) result in the creation of any Lien on the New Preferred
Stock.
SECTION 3.6 CONSENTS AND APPROVALS. The execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby by the Company do not and shall not require any consent,
approval, authorization or other order of, action by, filing with or
notification to, any Governmental Authority (a "GOVERNMENTAL APPROVAL"), except
for (i) the filing of the Charter Amendments with the Secretary of State, (ii)
such of the foregoing as may be required under the HSR Act and Antitrust Laws,
(iii) any filings required to qualify the New Preferred Stock and the Common
Stock under the Securities Laws of any applicable Governmental Authority, and
(iv) the filings with and clearance from the SEC as contemplated by this
Agreement and except where failure to obtain such consent, approval,
authorization or action, or to make such filing or notification, would not, in
the aggregate, reasonably be expected to (x) materially delay the Closing or
make illegal the Closing Transactions, (y) have a Material Adverse Effect, or
(z) result in the creation of any Lien on the New Preferred Stock.
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SECTION 3.7 NO DEFAULT. None of the Company or any of its
Subsidiaries is in default or violation (and no event has occurred which with
notice or the lapse of time, or both, would constitute a default or violation)
of any term, condition or provision of (a) its certificate of incorporation or
bylaws (or similar organizational and governing documents), (b) any Material
Contract or (c) any Applicable Law applicable to the Company, any of its
Subsidiaries or any of their respective properties or assets, except in the case
of CLAUSES (a) (insofar as such clause relates to Subsidiaries that are not
Significant Subsidiaries), (b) and (c), for such defaults or violations which
would not, in the aggregate, have a Material Adverse Effect. There exists no
"Default" or "Event of Default" under and as defined in the Note Indenture, no
"Default" or "Event of Default" under and as defined in the Credit Agreement,
and no "Voting Rights Triggering Event" under and as defined in the Existing
Certificate of Designation.
SECTION 3.8 COMPANY AND COMPANY BOARD APPROVAL. The Company has
approved of and agreed to undertake the Solicitations. The Company Board, at a
meeting duly called and held, has (i) determined that this Agreement, which
provides, among other things, for the Solicitations, the Conversion and the
Investment, is advisable, fair to, and in the best interests of, the Company and
the Company Stockholders, (ii) approved the Closing Transactions and all of the
other transactions contemplated by this Agreement, (iii) approved the New
Certificate of Designation, (iv) approved the Supplemental Indenture and (iv)
resolved to recommend, and recommended, that (a) the holders of the Common Stock
approve the Charter Amendments, (b) the holders of the Existing Preferred Stock
approve the Existing Certificate of Designation Amendments and the New
Certificate of Designation and (c) the holders of the Common Stock and the
Existing Preferred Stock take all other such action required to approve the
consummation of the transactions contemplated by this Agreement (the "COMPANY
BOARD RECOMMENDATION"); PROVIDED, HOWEVER, that the foregoing determinations,
approvals and recommendations are subject to change to the extent permitted by
the terms of this Agreement. The Company Board, at a meeting duly called and
held, has taken all action under the Rights Agreement to make the
representations and warranties contained in SECTION 3.28 true and correct in all
respects.
SECTION 3.9 SEC REPORTS; FINANCIAL STATEMENTS. The SEC Reports filed
with the SEC since January 1, 2000 constitute all forms, reports and documents
required to be filed by the Company and its Subsidiaries under the Securities
Act, the Exchange Act and similar securities laws of any other applicable
Governmental Authority (together, the "SECURITIES LAWS") since that date. As of
their respective dates, the SEC Reports complied as to form in all material
respects with the applicable requirements of the Securities Laws and did not
contain any untrue statements of material facts or omit material facts required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances in which they were made, not misleading. No
Subsidiary of the Company is required by the Securities Laws to file any form,
report or other document with the SEC or any other Governmental Authority
responsible for compliance with the Securities Laws. The financial statements
included in the SEC Reports (together with the accompanying notes, the
"FINANCIAL STATEMENTS") (a) have been prepared from, and are in accordance with,
the books and records of the Company and its Subsidiaries, (b) complied in all
material respects with applicable accounting requirements and with the published
rules and regulations of the SEC with respect thereto, (c) have been prepared in
accordance with GAAP applied on a basis consistent with the past practices of
the Company (except as may be indicated in the notes thereto) and (d) fairly
present in all material respects the consolidated financial position and the
consolidated results of operations and cash flows (and
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changes in financial position, if any) of the Company and its Subsidiaries as of
the times and for the periods referred to therein.
SECTION 3.10 ABSENCE OF CERTAIN CHANGES OR EVENTS; NO UNDISCLOSED
LIABILITIES. Since January 31, 2002, there has not been any circumstance,
development or event which has had or would reasonably be expected to have, in
the aggregate, a Material Adverse Effect. Except as and to the extent disclosed
or reserved against on the Company Balance Sheet, the Company and its
Subsidiaries taken as a whole do not have any Liabilities, whether absolute,
accrued, contingent or otherwise and whether due or to become due, except those
Liabilities that would not reasonably be expected to have, in the aggregate, a
Material Adverse Effect.
SECTION 3.11 TITLE AND CONDITION OF PROPERTIES. The Company and its
Significant Subsidiaries own or control by lease, license or other form of
contract all of the assets and property, real, personal or mixed, necessary to
conduct the Business in all material respects in the manner in which it is
currently conducted. All of said assets and property are in good condition and
repair subject to normal wear and tear and obsolescence.
SECTION 3.12 ABSENCE OF PROCEEDINGS. Except as described in SECTION
3.12 OF THE DISCLOSURE SCHEDULE or in the SEC Reports filed prior to the date
hereof, there is no suit, arbitration, inquiry, prosecution, claim, action,
hearing, proceeding, notice of violation, demand letter or investigation by, of,
in or before any Governmental Authority (an "ACTION") pending or, to the
knowledge of the Company, threatened to which the Company or any of its
Subsidiaries is a party or to which any of the properties of the Company or any
of its Subsidiaries is subject except Actions that would not reasonably be
expected to have, in the aggregate, a Material Adverse Effect or would not
materially affect the power or ability of any party hereto to perform its
obligations under this Agreement or to consummate the transactions contemplated
hereby. Neither the Company nor any of its Subsidiaries is subject to any
material outstanding Governmental Order.
SECTION 3.13 LICENSES AND PERMITS; COMPLIANCE WITH LAW.
(a) The Company and its Significant Subsidiaries have all
necessary consents, authorizations, approvals, orders, certificates and permits
of and from (and are in compliance with all items and conditions thereof), and
have made all declarations and filings with, all Governmental Authorities, to
own, lease, license and use their properties and assets (collectively, the
"NECESSARY GOVERNMENTAL APPROVALS") and to conduct the Business as currently
conducted and in the manner described in the SEC Reports, except for the
Necessary Governmental Approvals the failure of which to obtain would not
reasonably be expected to have, in the aggregate, a Material Adverse Effect or
constitute criminal action. Neither the Company nor any of its Subsidiaries has,
within the last two years, received written notice or otherwise has knowledge
that any Governmental Authority has the right or intends to suspend, modify,
cancel or terminate any material license, permit, certificate or other
authorization relating to the Business.
(b) The Business is not being, and has not been, conducted in
violation of any Applicable Law, except for those violations that would not
reasonably be expected to have, in the aggregate, a Material Adverse Effect. To
the knowledge of the Company, no investigation or
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review by any Governmental Authority with respect to the Company or any of its
Subsidiaries or any of their respective products is, or during the past three
years has been pending or threatened nor, to the knowledge of the Company, has
any Governmental Authority indicated an intention to conduct the same, except
for those investigations or reviews occurring after the date of this Agreement
that would not reasonably be expected to have, in the aggregate, a Material
Adverse Effect.
SECTION 3.14 TAXES. Except as set forth in SECTION 3.14 OF THE
DISCLOSURE SCHEDULES:
(a) The Company and each of its Significant Subsidiaries has
filed, or has had filed on its behalf, in a timely manner (within any applicable
extension periods) with the appropriate Governmental Authority all income and
other material Tax Returns required to be filed with respect to Taxes of the
Company and each of its Significant Subsidiaries, and such Tax Returns are
correct and complete in all material respects. The most recent Financial
Statements contained in the SEC Reports provide an adequate accrual (determined
in accordance with GAAP) for the payment of Taxes for all periods covered by
such financial statements.
(b) All material Taxes with respect to the Company and its
Significant Subsidiaries have been paid in full to the extent required to be so
paid or have been provided for in accordance with GAAP on the Company Balance
Sheet.
(c) There are no outstanding agreements or waivers extending the
statutory period of limitations applicable to any federal, state, local or
foreign income or other material Tax Returns required to be filed by or with
respect to the Company and its Significant Subsidiaries.
(d) No deficiency, delinquency or default for any Tax has been
claimed, proposed or assessed, in each case, in writing, against the Company or
any of its Significant Subsidiaries which has not been abated, settled or paid
in full and neither the Company nor any of its Significant Subsidiaries have
received written notice of any such deficiency, delinquency or default. No audit
by any tax authority is pending with respect to any Tax Returns (other than
income Tax Returns) that are individually or in the aggregate material or any
income Tax Returns filed by, or Taxes (other than income Taxes) that are
individually or in the aggregate material or income Taxes due from, the Company
or any of its Significant Subsidiaries.
(e) There are no Liens for Taxes upon the assets of the Company or
any of its Significant Subsidiaries except statutory Liens for current Taxes not
yet due.
(f) No power of attorney has been executed by, or on behalf of,
the Company or any of its Significant Subsidiaries with respect to any matter
relating to Taxes which is currently in force.
(g) Neither the Company nor any of its Significant Subsidiaries is
a party to or bound by or has any obligation under any written or unwritten Tax
sharing, Tax indemnity or similar agreement or arrangement.
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(h) There are no outstanding requests for any extension of time
within which to file any Tax Return or within which to pay any Taxes other than
such extensions filed in the ordinary course of business.
(i) Neither the Company nor any of its Significant Subsidiaries
has made an election under Section 341(f) of the Internal Revenue Code of 1986,
as amended (the "CODE").
(j) Neither the Company nor any of its Significant Subsidiaries
has been a member of an affiliated group filing a consolidated federal income
tax return (other than the affiliated group of which the Company is the common
parent) or has any liability for the Taxes of any person (other than the Company
and its Subsidiaries) under Treasury Regulation Section 1.1502-6 (or any similar
provision of state, local or foreign law).
(k) The Company is not, and during the 5-year period ending on the
Closing Date has not been, a "United States real property holding corporation"
within the meaning of Section 897(c)(2) of the Code.
(l) Neither the Company nor any of its Significant Subsidiaries
has constituted either a "distributing corporation" or a "controlled
corporation" in a distribution of stock intended to qualify for tax-free
treatment under Section 355 of the Code (x) in the past 24 month period or (y)
in a distribution which could otherwise constitute part of a "plan" or "series
of related transactions" (within the meaning of Section 355(e) of the Code) in
conjunction with the transactions contemplated by this Agreement.
SECTION 3.15 INTELLECTUAL PROPERTY.
(a) The Company owns or has the legally enforceable right to use
all intellectual property rights used in the conduct of the Business, including
all patents and patent applications, trademarks, trademark registrations and
applications, copyrights and copyright registrations and applications, computer
programs, technology, know-how, trade secrets, proprietary processes and
formulae (collectively, the "INTELLECTUAL PROPERTY"), except for Intellectual
Property the failure of which to own or have the right to use would not
reasonably be expected to have, in the aggregate, a Material Adverse Effect.
Such Intellectual Property is, to the knowledge of the Company, free and clear
of all Liens, except for Permitted Liens.
(b) SECTION 3.15(b) OF THE DISCLOSURE SCHEDULE sets forth a list
of all material franchise, license (other than licenses to use "off-the-shelf"
software or software in respect of which the Company has paid and/or expects to
be required to pay in the future less than $50,000 in the aggregate) and royalty
contracts and agreements as to which the Company or any of its Significant
Subsidiaries is either a licensor or licensee and excluding such licenses
between the Company and/or its Subsidiaries, and, to the knowledge of the
Company, neither the Company nor any such Significant Subsidiary is in material
default under any such license.
(c) No Person, other than the Company and/or its Subsidiaries has
a right to receive a royalty or similar payment in respect of any item of
Intellectual Property pursuant to any contractual arrangements entered into by
the Company or otherwise, other than any royalty or similar payments which are
fully paid. To the knowledge of the Company, no former or
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present employees, officers or directors of the Company hold any right, title or
interest, directly or indirectly, in whole or in part, in or to any Intellectual
Property.
(d) Except as set forth in SECTION 3.15(d) OF THE DISCLOSURE
SCHEDULE, there are no claims or suits pending or, to the knowledge of the
Company, threatened, and the Company has received no notice of any material
claim or suit (i) alleging that the conduct of any aspect of the Business
infringes upon or constitutes the unauthorized use of the proprietary rights of
any third party or (ii) challenging the ownership, use, validity or
enforceability of any Intellectual Property of the Company. Except as set forth
in SECTION 3.15(d) OF THE DISCLOSURE SCHEDULE, to the knowledge of the Company,
no material Intellectual Property of the Company is being violated or infringed
upon by any third party in any manner that could reasonably be expected to
result in any liability, damages, expenses, costs or losses to the Company in
excess of $500,000 in the aggregate. Except as set forth in SECTION 3.15(d) OF
THE DISCLOSURE SCHEDULE, there are no settlements, consents, judgments, other
agreements or Governmental Orders which restrict the Company's rights to use any
material Intellectual Property.
SECTION 3.16 REAL PROPERTY.
(a) The Company or its Subsidiaries has good and marketable title
to all of the Owned Real Property, free and clear of all Liens, other than
Permitted Liens. "PERMITTED LIENS" means (i) mechanics', carriers', workers',
repairers', materialmen's, warehousemen's, landlords' and other similar Liens
arising in the ordinary course of the Company's business, (ii) Liens arising or
resulting from any action taken by or on behalf of the Major Investors in
connection with the transactions described herein, (iii) Liens for current Taxes
not yet due or payable or for supplemental Taxes for which the Company has not
received a written notice of assessment, (iv) Liens securing obligations under
the Credit Agreement and (v) Liens in favor of PBGC.
(b) Each contract and agreement relating to a lease of real
property used by the Company or its Subsidiaries is valid and effective in
accordance with its respective terms, and there is not, under any such lease,
any existing default or event of default by the Company or its Subsidiaries (or
event that, with notice or lapse of time or both, would constitute a material
default), except where such defaults would not reasonably be expected to have,
in the aggregate, a Material Adverse Effect. SECTION 3.16(b) OF THE DISCLOSURE
SCHEDULE sets forth a list of all of the leases of real property entered into by
the Company or its Subsidiaries. Copies of all such leases entered into during
the 3-month period prior to the date hereof or that require the payment of rent
in excess of $100,000 in any twelve month period during the term thereof have
been made available to the Major Investors. To the knowledge of the Company, the
Company has all permits or licenses necessary to use the property subject to
such leases.
(c) The Real Property constitutes, in the aggregate, all of the
real property (other than Real Property owned by Subsidiaries that are not
Significant Subsidiaries) used to conduct the Business in the manner conducted
as of the date hereof. "REAL PROPERTY" means the Owned Real Property and any
property leased by the Company or its Significant Subsidiaries. "OWNED REAL
PROPERTY" means all of the real property (including land, buildings and other
improvements) that the Company or any of its Subsidiaries owns, purports to own,
or uses or occupies other than pursuant to a leasehold.
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(d) Each of the Real Properties is suitable and adequate in all
material respects for its current use, operation and occupancy.
(e) There are no pending or, to the knowledge of the Company,
threatened proceedings relating to eminent domain or the condemnation of any
portion of the Real Property, or impact fees, special assessments or similar
matters with respect thereto, other than proceedings in the ordinary course of
business that could not be reasonably expected to have a Material Adverse
Effect.
SECTION 3.17 EMPLOYEE BENEFIT MATTERS.
(a) All employee or director benefit plans, arrangements or
agreements, whether or not written, including but not limited to any employee
welfare benefit plan within the meaning of Section 3(1) of the ERISA, any
employee pension benefit plan within the meaning of Section 3(2) of ERISA
(whether or not such plan is subject to ERISA) and any other material bonus,
incentive, deferred compensation, vacation, stock purchase, stock option,
severance, employment, change of control or fringe benefit plan, program or
agreement sponsored, maintained or contributed to by the Company, any of its
Subsidiaries or any of its Affiliates for the benefit of any current or former
employee or director of the Company, any of its Subsidiaries or any of its
Affiliates, or with respect to which the Company or any of its Subsidiaries
could have material liability are listed in SECTION 3.17(a) OF THE DISCLOSURE
SCHEDULE (together with all non-material bonus, incentive, deferred
compensation, vacation, stock purchase, stock option, severance, employment,
change of control or fringe benefit plans, programs or agreements sponsored,
maintained or contributed to by the Company, any of its Subsidiaries or any of
its Affiliates for the benefit of any current or former employee or director of
the Company, any of its Subsidiaries or any of its Affiliates, the "COMPANY
BENEFIT PLANS"). True and complete copies of (i) the Company Benefit Plans
listed in SECTION 3.17(a) OF THE DISCLOSURE SCHEDULE (or, in the case of any
unwritten Company Benefit Plan, a description thereof) and any amendment
thereto, (ii) the most recent summary plan description (or similar document) for
each Company Benefit Plan, if any, (iii) the three most recent Annual Reports
(including but not limited to Form 5500 Series in the United States) and
accompanying schedules, if any, and (iv) the most recent determination letter
from the IRS (if applicable) for such Company Benefit Plans have been provided
to the Major Investors. Except as specifically provided in the foregoing
documents, there are no material amendments to any Company Benefit Plan listed
in SECTION 3.17(a) OF THE DISCLOSURE SCHEDULE that have been adopted or approved
nor has the Company or any of its Subsidiaries undertaken to make any such
material amendments to any Company Benefit Plan listed in SECTION 3.17(a) OF THE
DISCLOSURE SCHEDULE or to adopt or approve any new plan, program or agreement
that would be required to be included in SECTION 3.17(a) OF THE DISCLOSURE
SCHEDULE had such plan, program or agreement been in effect on the date hereof.
(b) Except as set forth in SECTION 3.17(b) OF THE DISCLOSURE
SCHEDULE: (i) each Company Benefit Plan has been maintained and administered in
substantial compliance with its terms, the terms of any applicable collective
bargaining agreements and with all Applicable Laws, (ii) each Company Benefit
Plan intended to be qualified under Section 401(a) of the Code has been
determined by the IRS to be so qualified and, to the knowledge of the Company,
no event has occurred that could reasonably be expected to adversely affect the
qualified status of the Company Benefit Plan; (iii) neither the Company nor any
of its Subsidiaries has incurred or
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is reasonably likely to incur any liability or penalty under Sections 4975 or
4976 of the Code or Sections 409 or 502(i) of ERISA; (iv) there are no pending,
nor has the Company or any of its Subsidiaries received notice of any
threatened, material claims against or otherwise involving any of the Company
Benefit Plans (other than routine claims for benefits); (v) no Company Benefit
Plan is under audit or investigation by any Governmental Authority, including
the United States, the IRS, the Department of Labor or the PBGC, and to the
knowledge of the Company, no such audit or investigation is pending or
threatened; (vi) no Company Benefit Plan subject to the laws of any jurisdiction
other than the United States has any unfunded or underfunded liabilities; (vii)
none of the Company, its Subsidiaries, or any ERISA Affiliate has any obligation
to provide retiree health or life or other welfare-type benefits other than as
mandated by COBRA or other Applicable Law; and (viii) no event has occurred, nor
do circumstances exist with respect to any Company Benefit Plan that have
resulted in or could reasonably be expected to give rise to a material liability
of the Company or any of its Subsidiaries, including any posting of any security
with respect to a Company Benefit Plan, or the imposition of any Liens on the
assets of the Company or any of its Subsidiaries.
(c) None of the execution, delivery or performance of this
Agreement, nor the consummation of the transactions contemplated hereby, will
(either alone or upon the occurrence of any additional or subsequent events) (i)
constitute an event under any Company Benefit Plan or related trust that will or
may result in any payment (whether of severance pay or otherwise), acceleration,
forgiveness of indebtedness, vesting, distribution, increase in benefits or
obligation to fund benefits with respect to any current or former employee,
officer or director of the Company or any of its Subsidiaries, or (ii) result in
the triggering or imposition of any restrictions or limitations on the right of
the Company or any of its Subsidiaries to amend or terminate any Company Benefit
Plan and receive the full amount of any excess assets remaining or resulting
from such amendment or termination, subject to applicable taxes. No payment or
benefit that will or may be made by the Company, any of its Subsidiaries or any
of their respective Affiliates with respect to any employee, officer or director
of the Company or its Subsidiaries will be characterized as an "excess parachute
payment," within the meaning of Section 280G(b)(1) of the Code, and no amount of
any payment or benefit to an employee of the Company or any of its Subsidiaries
could fail to be deductible by the Company or any such Subsidiary by reason of
Section 162(m) of the Code.
(d) Except as set forth in SECTION 3.17(d) OF THE DISCLOSURE
SCHEDULE, with respect to each Company Benefit Plan that is subject to Title IV
or Section 302 of ERISA or Section 412 or 4971 of the Code: (i) there does not
exist any accumulated funding deficiency within the meaning of Section 412 of
the Code or Section 302 of ERISA, whether or not waived; (ii) the fair market
value of the assets of each such Company Benefit Plan equals or exceeds the
actuarial present value of all accrued benefits under such Company Benefit Plan
(whether or not vested), based upon the actuarial assumptions used to prepare
the most recent actuarial report for such Company Benefit Plan; (iii) no
reportable event within the meaning of Section 4043(c) of ERISA for which the
30-day notice requirement has not been waived has occurred, and the consummation
of the transactions contemplated by this Agreement will not result in the
occurrence of any such reportable event; (iv) all premiums to the PBGC have been
timely paid in full; (v) no liability (other than for premiums to the PBGC)
under Title IV of ERISA has been or is expected to be incurred by the Company or
its Subsidiaries; and (vi) the PBGC has not instituted proceedings to terminate
any such Company Benefit Plan and, to the Company's and
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each of its Subsidiaries' knowledge, no condition exists that presents a risk
that such proceedings will be instituted or that would constitute grounds under
Section 4042 of ERISA for the termination of, or the appointment of a trustee to
administer, any such Company Benefit Plan.
(e) None of the Company, its Subsidiaries and the ERISA Affiliates
has incurred or is reasonably expected to incur any "withdrawal liability" (as
defined in Part I of Subtitle E of Title IV of ERISA) ("WITHDRAWAL LIABILITY"),
as a result of a complete or partial withdrawal from a multiemployer plan as
such term is defined in Section 3(37) of ERISA (a "MULTIEMPLOYER PLAN"), that
has not been satisfied in full. With respect to each Company Benefit Plan that
is a Multiemployer Plan: (i) if the Company or any of its Subsidiaries or any
ERISA Affiliate were to experience a withdrawal or partial withdrawal from such
plan, no Withdrawal Liability would be incurred that would reasonably be
expected to have a Material Adverse Effect; and (ii) none of the Company, its
Subsidiaries, and the ERISA Affiliates has received any notification, or has any
reason to believe, that any such Company Benefit Plan is in reorganization, has
been terminated, is insolvent, or may reasonably be expected to be in
reorganization, to be insolvent, or to be terminated.
(f) Except as set forth in SECTION 3.17(f) OF THE DISCLOSURE
SCHEDULE, there does not now exist, nor do any circumstances exist that could
result in, any Controlled Group Liability that would be a liability of the
Company or any of its Subsidiaries following the Closing. Without limiting the
generality of the foregoing, neither the Company nor any of its Subsidiaries,
nor any ERISA Affiliate, has engaged in any transaction described in Section
4069 or Section 4204 or 4212 of ERISA. "CONTROLLED GROUP LIABILITY" means any
and all liabilities (i) under Title IV of ERISA, (ii) under Section 302 of
ERISA, (iii) under Sections 412 and 4971 of the Code, (iv) as a result of a
failure to comply with the continuation coverage requirements of COBRA, and (v)
under corresponding or similar provisions of foreign laws or regulations, other
than such liabilities that arise solely out of, or relate solely to, the Company
Benefit Plans.
(g) There is no pending or, to the knowledge of the Company,
threatened administrative claim by any Governmental Authority to reclassify any
independent contractor as an employee of the Company or any of its Subsidiaries.
The reclassification of independent contractors of the Company or any of its
Subsidiaries by any Governmental Authority could not reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect.
SECTION 3.18 LABOR MATTERS.
(a) Except as set forth on SCHEDULE 3.18(a) OF THE DISCLOSURE
SCHEDULE, (i) there is no labor strike, dispute, slowdown, stoppage or lockout
pending or, to the knowledge of the Company, threatened against or affecting the
Company or any of its Subsidiaries, and, during the five years preceding the
date of this Agreement, there has not been any such action, (ii) neither the
Company nor any of its Subsidiaries is a party to or bound by any collective
bargaining or similar agreement with any labor organization, or work rules or
practices agreed to with any labor organization, works council or employee
association applicable to employees of the Company or any of its Subsidiaries,
(iii) none of the U.S. employees of the Company or any of its Subsidiaries is
represented by any labor organization and the Company does not have any
knowledge of any union organizing activities among the U.S. employees of the
Company or any of its Subsidiaries, and (iv) there are no complaints, lawsuits
or other proceedings pending or, to
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the knowledge of the Company, threatened in writing in any forum by or on behalf
of any present or former employee of the Company or any of its Subsidiaries, any
applicant for employment or classes of the foregoing alleging breach by the
Company or its Subsidiaries of any express or implied contract of employment,
any laws governing employment or the termination thereof or other
discriminatory, wrongful or tortious conduct in connection with the employment
relationship, which would reasonably be expected to have, in the aggregate, a
Material Adverse Effect.
(b) The only event requiring notice under the Worker Adjustment
and Retraining Notification Act (the "WARN ACT") with respect to the Company and
its Subsidiaries during the last two years was the closing of the manufacturing
operations of the Company in Denver, Colorado, for which the WARN Act notice was
given in a timely manner and layoffs were performed in compliance with the WARN
Act.
SECTION 3.19 MATERIAL CONTRACTS.
(a) Except for contracts filed as exhibits to the Company's Annual
Report on Form 10-K for the year ended January 31, 2002 (the "CURRENT 10-K"),
SECTION 3.19(a) OF THE DISCLOSURE SCHEDULE (with paragraph references
corresponding to those set forth below) lists each of the following contracts
and agreements (including oral agreements) of the Company and each of its
Subsidiaries:
(i) all material franchise, license (other than licenses
to use "off-the-shelf" software or software in respect of which the Company
has paid and/or expects to be required to pay in the future less than
$50,000 in the aggregate) and royalty contracts and agreements to which the
Company or any of its Subsidiaries is either a licensor or licensee
identified on SECTION 3.15(b) OF THE DISCLOSURE SCHEDULE;
(ii) all contracts with management personnel and contracts
with independent contractors or consultants (or similar arrangements) to
which the Company or any of its Subsidiaries is a party and which are not
cancelable without penalty or further payment in excess of $200,000 and
without more than 30 days' notice;
(iii) other than guarantees by the Company or any of its
wholly-owned Subsidiaries of Indebtedness of the Company or any of its
wholly-owned Subsidiaries, all contracts and agreements pursuant to which
the Company or any of its Subsidiaries has (x) incurred Indebtedness (other
than Intercompany Indebtedness) or (y) directly or indirectly guaranteed
the Indebtedness of any other Person, in each case other than any such
contracts or agreements as do not involve more than $50,000 individually or
$250,000 in the aggregate;
(iv) all material contracts, agreements, commitments,
written understandings or other arrangements with any Governmental
Authority, to which the Company or any of its Subsidiaries is a party;
(v) all contracts and agreements containing any provision
or covenant limiting or purporting to limit the freedom of the Company or
any of its Subsidiaries to compete in any line of business in any
geographic area;
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(vi) all contracts and agreements relating to the lease of
real property used by the Company or its Subsidiaries (each, a "REAL
PROPERTY LEASE") requiring annual payments in excess of $200,000 or
aggregate payments over the remaining term of the contract or agreement in
excess of $1,000,000;
(vii) all collective bargaining or similar agreements with
any labor organization, applicable to U.S. employees of the Company or any
of its Subsidiaries;
(viii) all joint venture, partnership and similar contracts,
agreements and commitments;
(ix) all contracts and agreements with or for the benefit
of any Affiliate of the Company or immediate family member thereof (other
than the Company's Subsidiaries); and
(x) all other contracts and agreements (other than
contracts or agreements in the ordinary course of business for the purchase
of raw materials or finished merchandise or sale of inventory) requiring
the Company to expend, or pursuant to which the Company will receive, funds
in excess of $1 million at any one time or in any twelve-month period.
(b) "MATERIAL CONTRACT" means the contracts filed as exhibits to
the Current 10-K and the contracts and agreements disclosed in SECTION 3.19(a)
OF THE DISCLOSURE SCHEDULE. Each Material Contract: (i) is legal, valid and
binding on the Company or its respective Subsidiary party thereto and, to the
knowledge of the Company, the other parties thereto, and is in full force and
effect and (ii) upon consummation of the transactions contemplated by this
Agreement, except to the extent that any consents set forth in SECTION 3.19(b)
OF THE DISCLOSURE SCHEDULE (the "MATERIAL CONTRACT APPROVALS") are not obtained,
shall continue in full force and effect without penalty or other adverse
consequence. Neither the Company nor any of its Subsidiaries is in breach of, or
default under, any Material Contract. Except as set forth in SECTION 3.19(b) OF
THE DISCLOSURE SCHEDULE, neither the Company nor any of its Subsidiaries has
received any written or, to the knowledge of the Company, oral notice of a
material default (which has not been cured), offset or counterclaim under any
Material Contract, or any other written or, to the knowledge of the Company,
oral communication calling upon it to comply with any provision of any Material
Contract or asserting noncompliance therewith or asserting the Company or any of
its Subsidiaries has waived or altered its rights thereunder, nor has the
Company or any of its Subsidiaries received any written or, to the knowledge of
the Company, oral notice that any party to any Material Contract intends or is
threatening to terminate or fail to exercise any renewal or extension of any
Material Contract.
(c) No other party to any Material Contract is, to the knowledge
of the Company, in material breach thereof or default thereunder.
(d) Except as set forth in SECTION 3.19(d) OF THE DISCLOSURE
SCHEDULE, there is no contract, agreement or other arrangement granting any
Person any preferential right to purchase any of the properties or assets of the
Company or any of its Subsidiaries, other than inventory in the ordinary course
of business consistent with past practice.
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SECTION 3.20 SUPPLIERS AND CUSTOMERS. Since January 1, 2002, no
material licensor, vendor, supplier, licensee or customer of the Company or any
of its Subsidiaries has canceled or otherwise modified (in a manner materially
adverse to the Company) its relationship with the Company or its Subsidiaries
and (i) no such Person has notified the Company of its intention to do so, and
(ii) the Company does not expect that the consummation of the transactions
contemplated hereby will adversely affect any of such relationships except as
could not be reasonably expected to have, in the aggregate, a Material Adverse
Effect.
SECTION 3.21 PRODUCT LIABILITY. Except as set forth in SECTION 3.21
OF THE DISCLOSURE SCHEDULE, there is no Action pending or, to the knowledge of
the Company, threatened against the Company or any of its Subsidiaries
concerning any product (including parts or components) designed, manufactured,
distributed, or sold by or on behalf of the Company or any of its past or
present Subsidiaries (a "PRODUCT"), relating to or resulting from an alleged
defect in the design, manufacture, materials or workmanship of any Product, or,
with respect to any Product, any alleged failure to warn or any alleged breach
of express or implied warranties or representations that has or could be
reasonably expected to result in a material liability to the Company or any of
its Subsidiaries. During the past five years, to the knowledge of the Company,
there has not been any accident, happening or event caused or allegedly caused
by any alleged hazard or alleged defect in the design, manufacture, materials or
workmanship of any Product (including any alleged failure to warn or any breach
of express or implied warranties or representations) that resulted or is alleged
to have resulted in material injury or death to any Person or in material damage
to or destruction of property or other material consequential damages. During
the past five years, there has not been any product recall or post-sale warning
(collectively, "RECALLS") by the Company or any of its Subsidiaries concerning
any Product, or to the knowledge of the Company, any investigation or other
action that is reasonably likely to lead to a Recall. To the knowledge of the
Company, there is no defect in the design, manufacture, materials or workmanship
of any Product, or, with respect to any Product, any alleged failure to warn or
any alleged breach of express or implied warranties or representations that
could be reasonably expected to result in a material liability to the Company or
any of its Subsidiaries.
SECTION 3.22 INVENTORY. All of the inventories of the Company and
each of its Subsidiaries, whether reflected in the Company Balance Sheet or
otherwise, consist of a quality and quantity usable and salable in the ordinary
and usual course of business, except for items of obsolete materials and
materials of below-standard quality, all of which have been written off or
written down on the Company Balance Sheet to fair market value or for which
adequate reserves have been provided therein. All inventories not written off or
written down have been priced at the lower of average cost or market.
SECTION 3.23 COMPLIANCE WITH ENVIRONMENTAL LAWS.
(a) Except as set forth in Section 3.23 of the Disclosure
Schedule, the Company and its Subsidiaries (i) are in compliance with all
material Applicable Laws relating to the protection of human health and
safety, the environment or hazardous or toxic substances or wastes,
pollutants or contaminants ("ENVIRONMENTAL LAWS"), (ii) have received all
material permits, licenses or other approvals required of them under
applicable Environmental Laws to conduct the Business, (iii) are in
compliance with all material terms and conditions of any such permit, license
or approval and have not received any material notice of proceedings relating
to the revocation or modification of any such permit, license or approval,
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and (iv) have not released, discharged or disposed of any material amount of
Hazardous Material on any Real Property or leased real property or on any real
property formerly owned, leased or operated by the Company or any of its
Subsidiaries.
(b) Except as set forth in Section 3.23 of the Disclosure
Schedule, there are no material costs or Liabilities associated with
Environmental Laws.
(c) Except as set forth in SECTION 3.23 OF THE DISCLOSURE
SCHEDULE, there are no pending or threatened in writing Environmental Claims
against the Company, any of its Subsidiaries or any Real Property, other than
past claims which have been resolved prior to January 1, 2000, and, to the
knowledge of the Company, there are no facts that could be reasonably expected
to form the basis of any such Environmental Claim. This SECTION 3.23 shall not
be applicable to compliance with laws other than Environmental Laws (or permits
required thereunder), which is the subject of SECTION 3.13.
(d) The matters disclosed or required to be disclosed in
SECTION 3.23 OF THE DISCLOSURE SCHEDULE, collectively, would not reasonably
be expected to result in and, during the period beginning on the date hereof
and ending on the Closing, shall not have resulted in, costs or Liabilities
(including but not limited to costs and Liabilities associated with
remediation) to the Company and its Subsidiaries in excess of $10 million in
the aggregate.
SECTION 3.24 EXEMPTION FROM REGISTRATION. Assuming the accuracy of
the representation contained in SECTION 4.9, none of the transactions
contemplated as part of the Recapitalization, individually or in the aggregate,
will require the registration of any securities under the Securities Act or any
other Applicable Law.
SECTION 3.25 SOLICITATION DOCUMENTS. None of the information included
in the Solicitation Documents shall, at the time such documents or any
amendments or supplements thereto are first published, sent or given to holders
of the Notes, the Existing Preferred Stock or the Common Stock, as applicable,
contain any untrue statement of material facts or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances in which they were made, not
misleading; PROVIDED that no representation is hereby made by the Company with
respect to information supplied in writing, for such purposes, by any of the
Major Investors included in such Solicitation Documents. The Solicitation
Documents will comply as to form in all material respects with the requirements
of the Securities Laws.
SECTION 3.26 INFORMATION IN FINANCING DOCUMENTS. None of the
information supplied or to be supplied by the Company for the purpose of
inclusion or incorporation by reference in any syndication and other materials
to be delivered to potential financing sources in connection with the
transactions contemplated by this Agreement has contained or will contain, as of
the date delivered, any untrue statement of material fact, nor will such
information as of the date delivered, exclude any material fact required to be
stated therein or necessary in order to make such information, in the light of
the circumstances in which they were made, not misleading.
SECTION 3.27 AFFILIATED TRANSACTIONS. Except for transactions between
the Company and its direct or indirect Subsidiaries or between two or more
directly or indirectly wholly owned Subsidiaries of the Company, and except for
loans to employees of the Company or its Subsidiaries in connection with
authorized relocations not to exceed $50,000, (i) no Affiliate of the Company is
party with the Company or any of its Subsidiaries to an agreement that will
continue after the Closing Date other than Company Benefit Plans disclosed in
SECTION 3.17(a) OF THE DISCLOSURE SCHEDULE; (ii) no Affiliate of the Company
currently owes any money
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to, nor is such Affiliate currently owed any money by, the Company or any of its
Subsidiaries, other than pursuant to Company Benefit Plans disclosed in SECTION
3.17(a) OF THE DISCLOSURE SCHEDULE and other than reimbursement for or
advancement of routine expenses; and (iii) neither the Company nor any of its
Subsidiaries is obligated as of the date hereof, directly or indirectly, to
guarantee or assume, or has guaranteed or assumed, any indebtedness for borrowed
money or otherwise for the benefit of an Affiliate of the Company; and (iv)
since January 31, 2002, neither the Company nor any of its Subsidiaries has made
any payment to, or engaged in any transaction with, an Affiliate of the Company,
or any affiliate of any such Affiliate of the Company, other than pursuant to
Company Benefit Plans and other than reimbursement for or advancement of routine
expenses.
SECTION 3.28 STATE TAKEOVER STATUTES; RIGHTS AGREEMENT.
(a) Pursuant to the Company Certificate of Incorporation, Section 203
of the DGCL does not apply to this Agreement or the transactions contemplated
hereby. No other state takeover statute is applicable to this Agreement or the
transactions contemplated hereby.
(b) The Company has taken all necessary action so that neither the
execution or delivery of this Agreement nor the consummation of any of the
transactions contemplated hereby will (i) cause the Rights issued pursuant to
the Rights Agreement to become exercisable, (ii) cause any Major Investor or any
of their Affiliates to become an "Acquiring Person" (as defined in the Rights
Agreement) or (iii) give rise to a "Distribution Date" (as such term is defined
in the Rights Agreement). The Company has delivered to the Major Investors true
and complete copies of all amendments to the Rights Agreement that fulfill the
requirements of this SECTION 3.28 and such amendments are in full force and
effect.
SECTION 3.29 ACCOUNTING MATTERS. The Company maintains a system of
internal accounting controls sufficient to provide reasonable assurance that (a)
transactions are executed in accordance with management's general or specific
authorizations; (b) transactions are recorded as necessary to permit preparation
of financial statements in conformity with generally accepted accounting
principles and to maintain asset accountability; (c) access to assets is
permitted only in accordance with management's general or specific
authorization; and (d) the recorded accountability for assets is compared with
the existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.
SECTION 3.30 INSURANCE. All of the Company's and any of its
Subsidiaries' material insurance policies (the "EXISTING INSURANCE") are valid,
in full force and effect and the Company and its Subsidiaries are not under any
default under the Existing Insurance and have paid all premiums owed thereunder.
The Existing Insurance insures the Company and its Subsidiaries against such
losses and risks and in such amounts as are prudent and customary in the
business in which it is engaged for similarly situated corporations in
comparable financial conditions. Except for the Wausau Commercial General
Liability Policy, which has been replaced by a commercial general liability
policy with comparable coverage and premiums issued by a reputable issuer with
adequate financial wherewithal, the Company has not been refused any insurance
coverage sought or applied for in the last two years and the Company has no
reason to believe that it will not be able to renew the Existing Insurance as
and when such Existing Insurance expires or obtain similar coverage from similar
insurers as may be necessary
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to continue the Business at a cost that would not reasonably have, in the
aggregate, a Material Adverse Effect.
SECTION 3.31 BROKERS. Except for the engagement of Xxxxxxxx Xxxxxxx &
Company and Jefferies & Company, Inc. (copies of the applicable engagement
letters having previously been provided to the Major Investors), none of the
Company, any of its Affiliates or any director, officer or employee of the
Company, has incurred or will incur on behalf of the Company, any brokerage,
finders', advisory or similar fees in connection with the transactions
contemplated by this Agreement. SECTION 3.31 OF THE DISCLOSURE SCHEDULE
discloses the estimated maximum aggregate amount of all fees and expenses that
the Company believes as of the date of this Agreement will be paid or will be
payable by the Company following the date hereof to all of its brokers, finders,
advisors, attorneys, accountants and investment bankers in connection with this
Agreement and the transactions contemplated hereby.
SECTION 3.32 INTERESTS OF OFFICERS AND DIRECTORS. Except as described
in the SEC Reports filed prior to the date hereof, none of the Company's or its
Subsidiaries' officers or directors has any material direct or indirect interest
in any property, real or personal, tangible or intangible, used in or pertaining
to the Business, or any supplier, distributor or customer of the Company or any
of its Subsidiaries, except by reason of being a stockholder of the Company.
SECTION 3.33 OPINION OF FINANCIAL ADVISOR. The Company Board has
received the written opinion of Xxxxxxxxx & Company, Inc. (the "FAIRNESS
OPINION") to the effect that, as of the date of its opinion, the
Recapitalization, taken as a whole, is fair to the Company and the holders of
Existing Preferred Stock and the holders of Common Stock, other than the Major
Investors, from a financial point of view.
SECTION 3.34 NO INTEGRATION. Neither the Company nor any Subsidiary
of the Company or any other person acting on the Company's behalf has, directly
or through any agent, sold, offered for sale, solicited offers to buy or
otherwise negotiated in respect of, any security (as defined in the Securities
Act) which is or will be integrated with the issuance of the New Preferred Stock
or the issuance of the Common Stock pursuant to the Conversion in a manner that
would require the registration of the New Preferred Stock or such Common Stock
under the Securities Act.
SECTION 3.35 NO GENERAL SOLICITATION. Neither the Company nor any
Subsidiary of the Company or any other person acting on the Company's behalf
has, directly or through any agent, sold, offered for sale or solicited offers
to buy the Common Stock issuable in the Conversion, the New Preferred Stock or
the Common Stock to be issued upon conversion of the New Preferred Stock by
means of any form of general solicitation or general advertising within the
meaning of Rule 502(c) under the Securities Act or in any manner involving a
public offering within the meaning of Section 4(2) of the Securities Act.
SECTION 3.36 WORKS COUNCIL. To the knowledge of the Company, each
works council, association or other labor organization of the Company and each
Significant Subsidiary required by Applicable Law to be notified of, consulted
with respect to, or consent to one of more of the transactions described in this
Agreement has, in accordance with Applicable Law,
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been notified of, been consulted concerning or consented to the transactions
described in this Agreement.
SECTION 3.37 LABOR PRACTICE. The Company and each Subsidiary has in
relation to each of its employees (and, so far as relevant, its former
employees) in all material respects complied with (a) all obligations imposed on
it by Applicable Law, codes of conduct and practice relevant to the relations
between it and its employees and has maintained current and adequate records
regarding the service and terms of employment or such employees and (b) all
collective bargaining agreements, recognition agreements and customs and
practices dealing with such relations or the terms and conditions of employment
of such employees.
SECTION 3.38 DATA PROTECTION. The Company and any of its Subsidiaries
operating in the European Union have obtained and maintained in force each
registration required under national or European Union data protection
legislation (the "DATA ACTS") necessary and appropriate in relation to their
Business, including, without limitation, registration relating to the obtaining,
holding, processing, transfer and disclosure of personal data effected by the
Company and its Subsidiaries. The Company and each Subsidiary subject to the
Data Acts has, in relation to personal data relating to its Business, at all
times complied in all material respects with the Data Acts, as applicable.
SECTION 3.39 DUTIES. All value added tax payable on the import of
goods and all excise duties payable to any Governmental Authority in respect of
any asset of the Company or any Subsidiary have been paid other than such taxes
and duties subject to good faith dispute by the Company or such Subsidiary and
for which adequate reserves have been made in accordance with GAAP.
SECTION 3.40 INSOLVENCY. No order has been made, petition presented
or resolution passed for (a) the liquidation, winding up or other termination of
any Subsidiary, (b) the appointment of a liquidator for any Subsidiary, or (c)
an administration order in respect of any Subsidiary. No receiver has been
appointed to manage any of the assets of the Business. No Subsidiary is
insolvent, unable to pay its debts as they come due, or has stopped paying its
debts as they fall due. No distress, execution or other process has been levied
on an asset of any Subsidiary.
SECTION 3.41 COMPETITION. None of the Company nor any Subsidiary has
given an undertaking to, executed a consent degree with any Governmental
Authority responsible for monitoring restrictive trade practices, competition,
or merger control. None of the Company nor any Subsidiary is adversely affected
by any current or pending order or regulation made under Applicable Law with
respect to restrictive trade practices, competition or merger control. None of
the Company nor any Subsidiary has received a request for information relating
to any aspect of the Business from any Governmental Authority responsible for
monitoring restrictive trade practices, competition or merger control.
SECTION 3.42 STATE AID. None of the Company nor any Subsidiary
currently receives or proposes to receive any aid (as that term is understood
for purposes of Article 92 to 94 of the Treaty of Rome) from any member state of
the European Community or any other Governmental Authority.
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SECTION 3.43 PROHIBITED PAYMENTS. None of the Company nor any
Subsidiary or, to the knowledge of the Company, any officer, director, employee,
consultant or agent thereof acting on their behalf has made, directly or
indirectly, any payment or promise to pay, or gift or promise to give or
authorized such a promise or gift, of any money or anything of value, directly
or indirectly, to (a) any foreign official (as such term is defined in the
Foreign Corrupt Practices Act ("FCPA")) for the purpose of influencing any
official act or decision of such official or inducing him or her to use his or
her influence to affect any act or decision of a government, or any agency or
subdivision thereof; or (b) any political party or official thereof or candidate
for political office for the purpose of influencing any official act or decision
of such party, official or candidate or inducing such party, official or
candidate to use his, her or its influence to affect any act or decision of a
government or agency or subdivision thereof, in the case of both CLAUSES (a) and
(b) above in order to assist the Company or any Subsidiary to obtain or retain
business for, or direct business to the Company or any Subsidiary in
circumstances which would subject the Company or any Subsidiary to liability
under the FCPA.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE MAJOR INVESTORS
Each Major Investor, individually on its own behalf and not on behalf
of the other Major Investors, represents and warrants to the Company and the
other Major Investors as follows:
SECTION 4.1 INCORPORATION AND AUTHORITY OF THE MAJOR INVESTORS. Such
Major Investor (other than in the case of OTPP) is duly organized, validly
existing and in good standing under the laws of its jurisdiction of organization
and, in the case of OTPP, is a legal entity validly existing under its
incorporating statute, and such Major Investor has all necessary organizational
power and authority to enter into this Agreement and the Stockholders Agreement,
to carry out its obligations hereunder and thereunder and to consummate the
transactions contemplated hereby and thereby. The execution and delivery of this
Agreement and the Stockholders Agreement by such Major Investor, the performance
by such Major Investor of its obligations hereunder and thereunder and the
consummation by such Major Investor of the transactions contemplated hereby and
thereby have been duly authorized by all requisite corporate or organization
action. This Agreement has been duly executed and delivered by such Major
Investor and (assuming due authorization, execution and delivery by the Company
and the other Major Investors) constitutes a legal, valid and binding obligation
of such Major Investor enforceable against such Major Investor in accordance
with its terms. The Stockholders Agreement when executed and delivered in
accordance with the terms herein will have been duly executed and delivered by
such Major Investor and (assuming due authorization, execution and delivery by
the Company and the other Major Investors) will constitute a legal, valid and
binding obligation of such Major Investor enforceable against such Major
Investor in accordance with its terms.
SECTION 4.2 NO CONFLICT. Except as may result from any facts or
circumstances relating solely to the Company or any of the other Major
Investors, the execution, delivery and performance of this Agreement by such
Major Investor do not and shall not (a) violate or conflict with the
organizational documents of such Major Investor or (b) conflict with
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or violate any material law, statute, rule, regulation or Governmental Order
applicable to such Major Investor, except in the case of this CLAUSE (b) as
would not, in the aggregate, have a materially adverse effect on such Major
Investor's ability to perform its obligations hereunder.
SECTION 4.3 CONSENTS AND APPROVALS. The execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby by such Major Investor do not and shall not require any
Governmental Approval, except (a) for (i) such of the foregoing as may be
required under the HSR Act and Antitrust Laws and (ii) the filings with and
clearance from the SEC as contemplated by this Agreement, (b) where failure to
obtain such Governmental Approval would not, in the aggregate, reasonably be
expected to (x) materially delay the Closing or make illegal the Closing
Transactions or (y) have a materially adverse effect on such Major Investor's
ability to perform its obligations hereunder and (c) as may be necessary as a
result of any facts or circumstances relating solely to the Company.
SECTION 4.4 ABSENCE OF PROCEEDINGS. There are no Actions pending or,
to the knowledge of such Major Investor, threatened against such Major Investor
before any Governmental Authority, except for those Actions that would not, in
the aggregate, have a materially adverse effect on such Major Investor's ability
to perform its obligations hereunder.
SECTION 4.5 SUFFICIENT FUNDS. Such Major Investor has available
sufficient funds, or the resources or financing capacity to pay, when due in
connection with the Investment, the amount set forth opposite such Major
Investor's name on ANNEX 1 hereto.
SECTION 4.6 BROKERS. No broker, finder or investment banker is
entitled to any brokerage, finder's or other fee or commission in connection
with the transactions contemplated by this Agreement based upon arrangements
made by or on behalf of such Major Investor.
SECTION 4.7 SECURITIES FILINGS. None of the information with respect
to such Major Investor provided in writing to the Company specifically for
inclusion in any of the Solicitation Documents or any other filings made with
the SEC in connection with the transactions contemplated by this Agreement
contains or will contain as of the date delivered any untrue statement of a
material fact or omit 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.
SECTION 4.8 VOTING AGREEMENT. The Major Investors have entered into
the Preferred Stock Voting Agreement attached hereto as EXHIBIT D with holders
of Existing Preferred Stock and the Common Stock Voting Agreements attached
hereto as EXHIBIT G with holders of Common Stock.
SECTION 4.9 INVESTMENT REPRESENTATIONS.
(a) Such Major Investor understands that none of the Common Stock
issuable in the Conversion, the New Preferred Stock or any Common Stock issuable
upon conversion of the New Preferred Stock has been, or shall upon delivery be,
registered under the Securities Act and that the certificates evidencing such
Common Stock and the New Preferred Stock shall bear a legend to that effect.
Such Major Investor also understands that such securities are being
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offered and sold to it pursuant to an exemption from the registration provisions
of the Securities Act, based in part upon its representations contained in this
Agreement.
(b) Such Major Investor is acquiring the New Preferred Stock and
Common Stock underlying the New Preferred Stock for its own account solely for
the purpose of investment and not with a view to, or for offer or sale in
connection with, any distribution thereof. Such Major Investor represents that
by reason of its business and financial experience, and the business and
financial experience of its management, such Major Investor has the capacity to
protect its own interests in connection with the transactions contemplated by
this Agreement. Such Major Investor is not an entity formed for the specific
purpose of consummating the transactions contemplated hereby. Such Major
Investor further represents that it is able to bear the economic risk of an
investment in the New Preferred Stock and the Common Stock to be issued upon
conversion of the New Preferred Stock and has an adequate income independent of
any income produced from an investment in such Common Stock and New Preferred
Stock and has sufficient net worth to sustain a loss of all of its investment in
such securities without economic hardship if such a loss should occur.
(c) Such Major Investor represents that it is an "accredited
investor" as that term is defined in Regulation D promulgated under the
Securities Act.
(d) Such Major Investor has been given access to Company documents,
records and other information, has received physical delivery of all such
documents, records and information, and has asked questions of, and received
answers from, the Company's officers, employees, agents, accountants and
representatives concerning the Company's business, operations, financial
condition, assets, liabilities and other matters relevant to its investment in
the New Preferred Stock and the Common Stock.
SECTION 4.10 SOLICITATION DOCUMENTS. None of the information
regarding such Major Investor supplied in writing, for such purpose, by such
Major Investor included in the Solicitation Documents, shall, at the time such
documents or any amendments or supplements thereto are first published, sent or
given to holders of the Existing Preferred Stock or the Common Stock, as
applicable, contain any untrue statement of material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances in which they were made,
not misleading; PROVIDED that no representation is hereby made by such Major
Investor with respect to information supplied by the Company or any of the other
Major Investors or any other person included in such Solicitation Documents.
SECTION 4.11 INFORMATION IN FINANCING DOCUMENTS. None of the
information to be supplied in writing by any of the Major Investors after the
date of this Agreement specifically for the purpose of inclusion or
incorporation by reference in any syndication and other materials to be
delivered to potential financing sources in connection with the transactions
contemplated by this Agreement and which is reviewed and expressly approved by
such Major Investor for such purpose will contain, as of the date delivered, any
untrue statement of material fact, nor will such information exclude any
material fact required to be stated therein or necessary in order to make such
information, in the light of the circumstances in which it was made, not
misleading.
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SECTION 4.12 LOAN COMMITMENT. The Major Investors have received a
Commitment Letter attached hereto as EXHIBIT F (the "COMMITMENT LETTER") and
have not received any notice that the Commitment Letter has been withdrawn or
terminated.
SECTION 4.13 AGREEMENTS WITH OTHER COMPANY STOCKHOLDERS. None of the
Major Investors is party to any voting or other agreement with any holder of
Equity Interests of the Company other than the Preferred Stock Voting Agreement
and the Common Stock Voting Agreements.
ARTICLE V
COVENANTS
SECTION 5.1 STOCKHOLDERS MEETING. The Company shall take all action
in accordance with the United States federal securities laws, the DGCL and the
Company Certificate of Incorporation and the Company Bylaws necessary to duly
call, give notice of, convene and hold a special meeting of the holders of the
Company Common Stock, to be held on the earliest practicable date determined in
consultation with the Major Investors, for the purpose of obtaining the
Requisite Common Stock Approval (the "STOCKHOLDERS MEETING"). Once the
Stockholders Meeting has been called and noticed, the Company shall not postpone
or adjourn (other than for the absence of a quorum and then only to the next
possible future date) the Stockholders Meeting without consent of the Major
Investors, except the Company may postpone or adjourn the Stockholders Meeting
for a reasonable period of time to allow for the dissemination of materials and
due investor consideration of disclosures required by Applicable Law in the
judgment of the Company Board. The Company Board shall submit the Charter
Amendments to the holders of the Company Common Stock unless, prior to the
meeting of the holders of Company Common Stock called therefor, the Company
Board shall have withdrawn the Company Board Recommendation. The Company shall
solicit from the holders of Company Common Stock proxies to vote with respect to
the Charter Amendments and, subject to the provisions of SECTION 2.1(g) hereof,
shall take all other action necessary or advisable to secure the vote or consent
of such holders required by the DGCL and the Company Certificate of
Incorporation and Company Bylaws to authorize and adopt the Charter Amendments.
Without limiting the generality of the foregoing, subject to the third sentence
of this SECTION 5.1, (i) the Company agrees that its obligation to duly call,
give notice of, convene and hold a meeting of the holders of Company Common
Stock, as required by this SECTION 5.1, shall not be affected by the amendment
or modification of the Company Board Recommendation and (ii) the Company agrees
that its obligations pursuant to this SECTION 5.1 shall not be affected by the
commencement, public proposal, public disclosure or communication to the Company
of any Acquisition Proposal or Superior Proposal.
SECTION 5.2 CONDUCT OF BUSINESS PRIOR TO THE CLOSING.
(a) From the date of this Agreement through immediately prior to the
Closing, the Company shall conduct its operations in the ordinary course
consistent with past practice, and shall use all commercially reasonable efforts
to maintain and preserve its business organization and its material rights and
to retain the services of its officers and key employees
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and maintain relationships with customers, suppliers, lessees, licensees,
licensors and other third parties to the end that their goodwill and ongoing
business shall not be impaired in any material respect. Without limiting the
generality of the foregoing, during the period from the date of this Agreement
through immediately prior to the Closing, the Company shall not, and shall cause
each of its Subsidiaries not to, except for the Closing Transactions and the
other transactions and agreements expressly contemplated hereby, without the
prior written consent of the Major Investors, which consent shall not be
unreasonably withheld:
(i) do or effect any of the following actions with respect to
its capital stock or, if not a corporation, its equity interests (such
capital stock or equity interests, "EQUITY INTERESTS") or other securities:
(A) adjust, split, combine or reclassify Equity Interests of the Company,
(B) make, declare or pay any dividend or distribution on, or directly or
indirectly redeem, purchase or otherwise acquire, any of its Equity
Interests (other than (x) dividends or distributions from, or redemptions,
purchases or other acquisitions by, any Subsidiary of the Company to the
Company or another Subsidiary of the Company, (y) dividends or
distributions payable in accordance with any organizational documents and
agreements relating to any of the Company's joint ventures and (z) the
accrual of dividends in respect of the Existing Preferred Stock) or any
securities or obligations convertible into or exchangeable for any Equity
Interests of the Company, (C) grant any person (other than the Company or a
wholly-owned Subsidiary of the Company) any right or option to acquire any
Equity Interests, (D) issue, deliver or sell or agree to issue, deliver or
sell any additional Equity Interests or any securities or obligations
convertible into or exchangeable or exercisable for any Equity Interests or
such securities (except to the Company or a wholly-owned Subsidiary of the
Company and pursuant to the exercise of any options to purchase Company
Common Stock that are outstanding as of the date of this Agreement), or (E)
enter into any agreement, understanding or arrangement with respect to the
sale, voting, registration or repurchase of Equity Interests other than
between or among the Company and its wholly-owned Subsidiaries;
(ii) except for the Charter Amendment Proxy Solicitation,
Preferred Stock Consent Solicitation and effecting the Charter Amendments,
make or propose any changes in its certificate of incorporation, by-laws or
other similar governing documents;
(iii) except in connection with the extension of the Original
Credit Agreement until not later than July 1, 2004, the execution and
delivery of a New Credit Agreement and the incurrence of Intercompany
Indebtedness or as otherwise set forth in SECTION 5.2(a)(iii) OF THE
DISCLOSURE SCHEDULE, (A) incur or assume any long-term or short-term
Indebtedness or issue any debt securities except in the ordinary course of
business and in amounts not material to the Company and its Subsidiaries
taken as a whole; (B) assume, guarantee, endorse or otherwise become liable
or responsible (whether directly, contingently or otherwise) for the
obligations of any other Person, except in amounts not material to the
Company and its Subsidiaries taken as a whole; (C) make any loans, advances
or capital contributions to, or investments in, any other Person (other
than the Company or its Subsidiaries or customary loans or advances to
employees in the ordinary course of business consistent with past practice
and in amounts not in
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excess of $250,000 in the aggregate) or make any change in its existing
borrowing or lending arrangements for or on behalf of any such Person
(other than the Company or its Subsidiaries or customary loans or advances
to employees in the ordinary course of business consistent with past
practice and in amounts not in excess of $250,000 in the aggregate),
whether pursuant to an employee benefit plan or otherwise; (D) pledge or
otherwise encumber Equity Interests of the Company or any of its
Subsidiaries; or (E) mortgage or pledge any of its material assets,
tangible or intangible, or create or suffer to exist any material Lien
thereupon;
(iv) adopt a plan of complete or partial liquidation or adopt
resolutions providing for the complete or partial liquidation, wind-up,
bankruptcy, insolvency, dissolution, consolidation, merger, restructuring
or recapitalization of the Company or any of its Subsidiaries;
(v) (A) except as may be required by law, as required pursuant
to the terms of any Company Benefit Plan in effect as of the date hereof,
as disclosed in SECTION 5.2(a)(v) OF THE DISCLOSURE SCHEDULE, and other
than the payment and accrual of salaries in the ordinary course of business
consistent with past practices, enter into, adopt or pay, agree to pay,
grant, issue, accelerate or accrue salary or other payments or benefits
pursuant to, or amend or terminate any bonus, profit sharing, compensation,
severance, termination, stock option, stock appreciation right, restricted
stock, performance unit, stock equivalent, stock purchase agreement,
pension, retirement, deferred compensation, employment, severance, welfare,
insurance or other employee benefit agreement, trust, plan, fund or other
agreement, plan or arrangement for the benefit or welfare of any director,
officer or employee in any manner, or (B) except for normal increases
(other than for officers and directors) and bonuses (for all eligible
employees) in the ordinary course of business consistent with past practice
for employees that, in the aggregate, do not result in a material increase
in benefits or compensation expense to the Company or any of its
Subsidiaries, increase in any manner the compensation or fringe benefits of
any director, officer, employee or consultant or pay any benefit not
required by any plan and arrangement as in effect as of the date hereof;
PROVIDED, that nothing contained herein shall be deemed to prohibit the
Management Incentive Plan or any benefit or right thereunder;
(vi) except (x) as contemplated by SECTION 5.4(d), and (y) for
the purchase of the minority interest in Samsonite Singapore PTE Ltd. not
already owned by the Company for consideration in an amount not to exceed
$1.5 million, acquire, sell, transfer, lease, encumber or dispose of any
assets (including capital stock of another Person) outside the ordinary
course of business or any assets (other than (A) transactions between one
or more wholly-owned Subsidiaries of the Company and the Company and/or one
or more other wholly-owned Subsidiaries of the Company and (B) inventory
sold in arm's length transactions with BONA FIDE third parties) which in
the aggregate are material to the Company and its Subsidiaries taken as a
whole, or enter into any commitment or transaction outside the ordinary
course of business consistent with past practice which would be material to
the Company and its Subsidiaries taken as a whole;
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(vii) change any material method or principle of Tax or
financial accounting, except to the extent required by Applicable Laws or
as required by GAAP as advised by the Company's regular independent
accountants;
(viii) except as required by GAAP, revalue in any material
respect any of its assets, including writing down the value of inventory or
writing-off notes or accounts receivable other than in the ordinary course
of business;
(ix) merge or consolidate with any other Person or dissolve,
liquidate, restructure or otherwise alter the corporate structure of the
Company or any of its Subsidiaries;
(x) (A) acquire (by merger, consolidation, or acquisition of
stock or assets) any corporation, partnership or other business
organization (other than any entity that is a wholly-owned Subsidiary of
the Company as of the date hereof) or division thereof or any Equity
Interest therein; (B) enter into any contract or agreement other than in
the ordinary course of business consistent with past practice which would
be material to the Company and its Subsidiaries taken as a whole; (C)
authorize new capital expenditure or expenditures other than capital
expenditures in the ordinary course of business and consistent with past
practices in an amount not to exceed $1 million individually or in the
aggregate; (D) amend any contract, agreement, commitment or arrangement
providing for the taking of any action that would be prohibited hereunder;
(E) open any new retail stores other than in the ordinary course of
business consistent with past practices and consistent with the Fiscal Year
2004 Business Plan; or (F) enter into any new leases for real property with
an annual base rental exceeding $100,000 per annum other than in the
ordinary course of business and consistent with past practices;
(xi) make, revoke or amend any Tax election or settle or
compromise any claim or assessment with respect to Taxes of the Company or
any of its Subsidiaries (except if such action is taken in the ordinary
course of business consistent with past practice) or amend any Tax Return
resulting, or reasonably likely to result, individually or in the
aggregate, in any claim or assessment with respect to Taxes of the Company
or any of its Subsidiaries in excess of $1 million; PROVIDED, HOWEVER, that
the Company and its Subsidiaries shall be entitled to make the elections
set forth in SECTION 3.14 OF THE DISCLOSURE SCHEDULE without the prior
written consent of the Major Investors;
(xii) except for the making of any supplemental pension
contributions to a Company Benefit Plan pursuant to a Permitted PBGC
Agreement, pay, discharge or satisfy any claims, liabilities or obligations
(absolute, accrued, asserted or unasserted, contingent or otherwise), other
than the payment, discharge or satisfaction in the ordinary course of
business consistent with past practice;
(xiii) permit any material insurance policy naming it as a
beneficiary or a loss payable payee to be canceled, terminated, amended or
modified without notice to the Major Investors except in the ordinary
course of business and consistent with past practice unless the Company
shall have obtained a comparable replacement policy;
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(xiv) terminate, amend or modify, or waive any material
provision of, any of the Material Contracts, other than (i) immaterial
modifications or waivers of a ministerial nature made in the ordinary
course of business consistent with past practice, (ii) as contemplated by
this Agreement with respect to the Indenture Amendment or (iii) the
extension of the maturity date of the Original Credit Agreement to a date
that is no later than July 1, 2004;
(xv) settle or compromise any pending or threatened Action if
such settlement or compromise involves any non-monetary relief or involves,
individually or when aggregated with other settlements or compromises,
amounts in excess of $500,000;
(xvi) enter into, amend, modify or waive any contract or
agreement containing any provision or covenant limiting or purporting to
limit the freedom of the Company or any of its Subsidiaries to compete in
any line of business in any geographic area or, other than in the ordinary
course consistent with past practice, to hire any individual or group of
individuals;
(xvii) consummate, or enter into any agreement to consummate, a
Related Party Transaction;
(xviii) file any registration statement with the SEC;
(xix) take or fail to take any action the affect of which could
reasonably be expected to have a material adverse effect on the seasonally
adjusted normalized working capital levels of the Business; or
(xx) take, or agree in writing or otherwise to take, any of the
actions described in SECTIONS 5.2(a)(i) through 5.2(a)(xix) or any action
that would make any of the representations or warranties of the Company
contained in this Agreement untrue or incorrect as of the date when made or
would result in any of the conditions set forth in ARTICLE VI not being
satisfied.
SECTION 5.3 ACCESS TO INFORMATION. From the date of this Agreement
until the earlier of the Closing and termination pursuant to SECTION 7.1, upon
reasonable notice, the Company shall, and shall cause the officers, employees,
auditors and agents of the Company and its Subsidiaries to, (a) afford the
officers, employees and authorized agents and representatives of the Major
Investors reasonable access, during normal business hours, to the offices,
properties, books and records and management employees of the Company and its
Subsidiaries and (b) furnish to the officers, employees and authorized agents
and representatives of the Major Investors access to, and copies of, such
additional financial and operating data and other documents and information
regarding the assets, properties, goodwill and Business as the Major Investors
may from time to time reasonably request. Each Major Investor shall keep any
information obtained pursuant to this SECTION 5.3 confidential pursuant to the
terms of the letter agreement related to confidentiality, dated as of April 15,
2002, by and between Ares and the Company, the letter agreement related to
confidentiality, dated as of April 29, 2003, by and between Xxxx and the
Company, or the letter agreement related to confidentiality, dated as of April
15, 2002, by and between OTPP and the Company, as applicable (such agreements,
the
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"CONFIDENTIALITY AGREEMENTS") and shall cause its directors, officers and
employees and representatives or advisors who receive any portion thereof to
keep all such information confidential, in accordance with the terms of such
Confidentiality Agreement. No investigation conducted pursuant to this SECTION
5.3 shall affect or be deemed to modify any representation or warranty made in
this Agreement. Each of the Major Investors acknowledges that to the extent that
it competes directly or indirectly with the Company and the information would
provide competitive information, its access to such competitive information may
be limited. Notwithstanding anything expressed or implied to the contrary in
this Agreement, the Confidentiality Agreements or any other document relating to
the Closing Transactions, any party to this Agreement (and any of their
respective employees, representatives or other agents) may disclose to any and
all persons, without limitation of any kind, the tax treatment and tax structure
of the Closing Transactions, beginning on the earlier of (i) the date of the
public announcement of discussions relating to the Closing Transactions, (ii)
the date of the public announcement of the Closing Transactions, or (iii) the
date of the execution of the Agreement (with or without conditions) to enter
into the Closing Transactions, PROVIDED, HOWEVER, that no party (nor any
employee, representative or other agent thereof) may disclose any information
that is not necessary to understanding the tax treatment and tax structure of
the Closing Transactions (including the identity of the parties and any
information that could lead another to determine the identity of the parties),
or any information to the extent that such disclosure would result in a
violation of any federal or state securities laws.
SECTION 5.4 GOVERNMENTAL FILINGS; REASONABLE EFFORTS; NOTIFICATION.
(a) Subject to SECTION 5.4(d), each of the parties hereto agrees to
use commercially reasonable efforts to take, or cause to be taken, all actions,
and to do, or cause to be done, and to assist and cooperate with the other
parties to this Agreement in doing, all things necessary, proper or advisable to
consummate and make effective, in the most expeditious manner practicable, the
transactions contemplated by this Agreement, including (A) obtaining the
Existing Preferred Stock Approval, the Note Approval and the Requisite Common
Stock Approval and effecting the Indenture Amendment, the Charter Amendments and
the New Certificate of Designation, (B) the obtaining of all other necessary
actions or nonactions, waivers, consents, licenses, permits, authorizations,
orders and approvals from Governmental Authorities and the making of all other
necessary registrations and filings (including other filings with Governmental
Authorities, if any), (C) the obtaining of all consents, approvals or waivers
from third parties related to or required in connection with the transactions
contemplated hereby or required to prevent a Material Adverse Effect, or a
material adverse effect on any of the Major Investors, from occurring prior to
or after the Closing Date, (D) the execution and delivery of any additional
instruments reasonably necessary to consummate the transactions contemplated by,
and to fully carry out the purposes of, this Agreement, and (E) the providing of
all such information concerning such party, its Subsidiaries, its Affiliates and
its Subsidiaries' and Affiliates' officers, directors, employees and partners as
may be reasonably requested in connection with any of the matters set forth in
this PARAGRAPH (a).
(b) Subject to SECTION 5.4(d), the Company and each Major Investor
shall use commercially reasonable efforts to resolve such objections, if any, as
may be asserted by any Governmental Authority with respect to the transaction
contemplated by this Agreement, including, but not limited to, the Investment
and the Conversion, under the Xxxx-Xxxxx-Xxxxxx
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Antitrust Improvement Act of 1976, and the rules and regulations promulgated
thereunder, as amended (the "HSR ACT"), and Antitrust Laws. In connection
therewith and subject to SECTION 5.4(d), if any Action is instituted (or
threatened to be instituted) challenging any transaction contemplated by this
Agreement as inconsistent with or violative of any Antitrust Law or the HSR Act,
each of the Major Investors and the Company shall cooperate and use commercially
reasonable efforts vigorously to contest and resist such Action, and to have
vacated, lifted, reversed, or overturned any Governmental Order whether
temporary, preliminary or permanent, that is in effect and that prohibits,
prevents, delays or restricts consummation of the transactions contemplated by
this Agreement, including by vigorously pursuing all available avenues of
administrative and judicial appeal and all available legislative action, unless
the Major Investors and the Company jointly determine that litigation is not in
its best interests. Subject to SECTION 5.4(d), each of the Major Investors and
the Company shall use commercially reasonable efforts to take such action as may
be required to cause the expiration of the notice periods or to obtain any
necessary approvals under the HSR Act or other Antitrust Laws with respect to
the transactions contemplated by this Agreement as promptly as possible after
the execution of this Agreement, but in any case any filing to be made under the
HSR Act shall be made within 30 days of the date of this Agreement and filings
under other Antitrust Laws shall be made as soon as practicable.
(c) To the extent not prohibited by Applicable Law, each party to
this Agreement shall use commercially reasonable efforts to furnish to each
other all information required for any application or other filing to be made
pursuant to any Applicable Law in connection with the transactions contemplated
by this Agreement. Each party to this Agreement shall use its commercially
reasonable efforts to (i) cooperate in all respects with each other in
connection with any filing or submission and in connection with any
investigation or other inquiry, including any proceeding initiated by a private
party, (ii) subject to Applicable Law, permit the other party to review in
advance any proposed written communication between it and any Governmental
Authority, (iii) promptly inform each other of (and at another party's
reasonable request, supply to such other party) any communication (or other
correspondence or memoranda) received by such party from, or given by such party
to any Governmental Authority and of any material communication received or
given in connection with any proceeding by a private party, in each case
regarding any of the transactions contemplated hereby, and (iv) consult with
each other in advance to the extent practicable of any meeting or conference
with any Governmental Authority, or in connection with any proceeding by a
private party, with any other Person and, to the extent permitted by applicable
Governmental Authority or other Person, give the other parties the opportunity
to attend and participate in such meetings and conferences.
(d) As may be required by or in conformance with the HSR Act or any
other Antitrust Law or regulation thereunder (or as otherwise requested by
Governmental Authorities administering such laws and regulations) in order to
permit the consummation of the Recapitalization, the Company and its
Subsidiaries, at the request of the Major Investors, and subject to the consent
of the Company (such consent not to be unreasonably withheld), shall agree to
hold separate (including by trust or otherwise) or to divest any of their
respective businesses, Subsidiaries or assets, or to take or agree to take any
action with respect to, or agree to any limitation on, any of their respective
businesses, Subsidiaries or assets; PROVIDED that any such action is conditioned
upon the consummation of the Recapitalization. The Company agrees and
acknowledges that, notwithstanding anything to the contrary in this SECTION 5.4,
neither the
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Company nor any of its Subsidiaries shall, without the Major Investors' prior
written consent, agree to hold separate (including by trust or otherwise) or to
divest any of their respective businesses, Subsidiaries or assets material,
individually or in the aggregate, to the Company and its Subsidiaries, taken as
a whole, or to take or agree to take any action with respect to, or agree to any
limitation material, individually or in the aggregate, to the Company and its
Subsidiaries, taken as a whole on, any of their respective businesses,
Subsidiaries or assets. Anything to the contrary in this Agreement
notwithstanding, no Major Investor shall be required to hold separate (including
by trust or otherwise) or to divest any of the respective businesses,
Subsidiaries or assets of such Major Investor and any of its Affiliates and/or
the Company and any of its Subsidiaries, or to take or agree to take any action
with respect to, or agree to any limitation on, any of their respective
businesses in order to satisfy any of their respective obligations under this
Agreement, including under this SECTION 5.4.
SECTION 5.5 POST-CLOSING BOARD. The Company and each Major Investor,
individually and on its own behalf and not on behalf of any other Major
Investor, agrees to take all action and to do, or cause to be done, all things
necessary, proper, advisable and lawfully within its control (in each case to
the extent consistent with the Company's Corporate Therapeutics attached as
Exhibit C to that certain Stipulation of Settlement dated as of April 28, 2000)
to cause the Company Board to be comprised of the individuals designated by the
Major Investors consistent with the Stockholders Agreement as set forth in a
notice delivered to the Company prior to the Closing (the "DIRECTOR DESIGNATION
NOTICE").
SECTION 5.6 NO SOLICITATION.
(a) From and after the date of this Agreement until the earlier of
the Closing or the termination of this Agreement in accordance with its terms,
the Company shall not, nor shall it permit any of its Subsidiaries to, nor shall
the Company authorize or permit any of its officers, directors or employees to,
and shall cause any investment banker, financial advisor, attorney, accountant,
or other representatives retained by them or any of their respective
Subsidiaries not to: (i) solicit, initiate, encourage (including by way of
furnishing information), knowingly facilitate or induce (directly or indirectly)
any inquiry with respect to, or the making, submission or announcement of, any
proposal that constitutes, or could reasonably be expected to result in, a
proposal or offer for an Acquisition Proposal, (ii) participate in any
discussions or negotiations regarding, or furnish to any Person any nonpublic
information with respect to, or take any other action to knowingly facilitate
any inquiries or the making of any proposal that constitutes or may reasonably
be expected to lead to, an Acquisition Proposal, (iii) approve, endorse or,
subject to SECTION 5.6(d), recommend any Acquisition Proposal, or (iv) enter
into any letter of intent or similar document or any contract, agreement or
commitment contemplating or otherwise relating to any Acquisition Proposal or
transaction contemplated thereby. For the avoidance of doubt, any action by any
officer, director or employee of, or investment banker, financial advisor,
attorney, accountant or other representative of, the Company or any Subsidiary
shall be deemed to be an action by the Company for purposes of this SECTION 5.6
whether or not authorized or permitted by the Company.
(b) Within two business days after receipt of an Acquisition
Proposal or any request for nonpublic information or inquiry that the Company
reasonably believes could lead to an Acquisition Proposal, the Company shall
provide the Major Investors with oral and written
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notice of the material terms and conditions of such Acquisition Proposal,
request or inquiry, including the identity of the Person making any such
Acquisition Proposal, request or inquiry. Upon receipt of the Acquisition
Proposal, request or inquiry, the Company shall provide the Major Investors, as
promptly as practicable, with oral and written notice setting forth all such
information as is reasonably necessary to keep the Major Investors informed in
all material respects of the status and details (including material amendments
or proposed material amendments) of any such Acquisition Proposal, request or
inquiry.
(c) The Company shall, and shall cause its Subsidiaries to,
immediately cease and cause to be terminated, and cause its officers, directors,
employees, investment bankers, consultants, attorneys, accountants, agents and
other representatives to, immediately cease and cause to be terminated, all
discussions and negotiations, if any, that have taken place prior to the date
hereof with any Persons with respect to any Acquisition Proposal.
(d) The foregoing notwithstanding, the Company and Board of Directors
of the Company may, (A) prior to receipt of all of the Requisite Common Stock
Approval, the Note Approval and the Existing Preferred Stock Approval, furnish
nonpublic information to, or enter into discussions with, any Person in
connection with an unsolicited BONA FIDE written Acquisition Proposal by such
Person if and only to the extent that (i) the Company is not then in material
breach of its obligations under this SECTION 5.6; (ii) the Company Board of
Directors believes in good faith (after consultation with its legal and
financial advisors) that such Acquisition Proposal is, or has a reasonable
likelihood of resulting in, a Superior Proposal and the Company Board of
Directors believes, after consultation with outside legal counsel, that the
failure to so act would create a reasonable likelihood of a breach by the
Company Board of its fiduciary duties under Applicable Law; and (iii) prior to
furnishing such nonpublic information to, or entering into discussions or
negotiations with, such Person, the Company Board receives from such Person an
executed confidentiality agreement with terms (including terms relating to
matters other than confidentiality) no less favorable to the Company than those
contained in any confidentiality agreement between the Company and any of the
Major Investors; PROVIDED, HOWEVER, that such executed confidentiality agreement
shall not be required to include any prohibition on such Person from taking
reasonable steps to develop or from making an Acquisition Proposal, (B) comply
with Rules 14d-9 and 14e-2(a) promulgated under the Exchange Act with regard to
an Acquisition Proposal and (C) enter into the confidentiality agreement
referred to in CLAUSE (A)(iii) above.
(e) The Company (i) agrees not to release any Person from, or waive
any provision of, or fail to enforce, any standstill agreement or similar
agreement to which it is a party related to, or that could affect, an
Acquisition Proposal and (ii) acknowledges that the provisions of CLAUSE (i) are
an important and integral part of this Agreement; PROVIDED, however, that the
Company shall be permitted to release any Person from any such agreement in
order for such Person to make an Acquisition Proposal.
(f) "ACQUISITION PROPOSAL" means any offer or proposal for, or any
indication of interest in, any (i) direct or indirect acquisition or purchase of
the Company or any of its Subsidiaries that constitutes 20% or more of the net
revenues, net income or assets of the Company and its Subsidiaries, taken as a
whole; (ii) direct or indirect acquisition or purchase of 20% or more of any
class of equity securities, or 20% of the voting power of the outstanding
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securities, of the Company or any of its Subsidiaries whose business constitutes
20% or more of the net revenues, net income or assets of the Company and its
Subsidiaries, taken as a whole; (iii) tender offer or exchange offer that, if
consummated, would result in any Person beneficially owning 10% or more of any
class of equity securities, or 20% of the voting power of the outstanding
securities, of the Company or any of its Subsidiaries whose business constitutes
20% or more of the net revenues, net income or assets of the Company and its
Subsidiaries, taken as a whole; or (iv) merger, consolidation, business
combination, recapitalization, liquidation, dissolution or similar transaction
involving the Company or any of its Subsidiaries whose business constitutes 20%
or more of the net revenue, net income or assets of the Company and its
Subsidiaries, taken as a whole, other than the transactions contemplated by this
Agreement. "SUPERIOR PROPOSAL" means any BONA FIDE written offer or proposal,
not obtained in breach of this SECTION 5.6, for or in respect of any (i) direct
or indirect acquisition or purchase of the Company or any of its Subsidiaries
that constitutes 40% or more of the net revenues, net income or assets of the
Company and its Subsidiaries, taken as a whole; (ii) direct or indirect
acquisition or purchase of 40% or more of any class of equity securities, or 40%
or more of the voting power of the outstanding securities, of the Company or any
of its Subsidiaries whose business constitutes 40% or more of the net revenues,
net income or assets of the Company and its Subsidiaries, taken as a whole;
(iii) tender offer or exchange offer that, if consummated, would result in any
Person beneficially owning 40% or more of any class of equity securities, or 40%
or more of the voting power of the outstanding securities, of the Company or any
of its Subsidiaries whose business constitutes 40% or more of the net revenues,
net income or assets of the Company and its Subsidiaries taken as a whole; or
(iv) merger, consolidation, business combination, recapitalization, liquidation,
dissolution or similar transaction involving the Company or any of its
Subsidiaries whose business constitutes 40% or more of the net revenue, net
income or assets of the company and its Subsidiaries, take as a whole, other
than the transactions contemplated by this Agreement, on terms that the Board of
Directors of the Company determines in its good faith judgment (after
consultation with its financial advisors and taking into account all the terms
and conditions of the Acquisition Proposal and this Agreement deemed relevant by
such Board of Directors, including, to the extent reasonably deemed relevant by
such Board of Directors, the economic terms, any break-up fees, expense
reimbursement provisions, conditions to and expected timing and risks of
consummation, and the ability of the party making such proposal to obtain
financing for such Acquisition Proposal and taking into account all other legal,
financial, regulatory and all other aspects of such proposal) are more favorable
as a whole to the persons to whom it owes fiduciary duties under Applicable
Laws, other than Major Investors in their capacity as parties to this Agreement
only, than the Recapitalization.
SECTION 5.7 PUBLIC ANNOUNCEMENTS. The Major Investors and the
Company will jointly prepare all press releases and other public announcements
relating to this Agreement and the transactions contemplated thereby; PROVIDED,
HOWEVER, that the Company or any of the Major Investors may make such disclosure
(with such prior notice to the other party of the intention to make, and the
content of, such disclosure as is practicable under the circumstances) as it
reasonably determines is required by Applicable Law, including the Securities
Laws.
SECTION 5.8 NET CONSOLIDATED FINANCIAL INDEBTEDNESS. The Company
shall cause Net Consolidated Financial Indebtedness on a pro forma basis after
giving effect to the Recapitalization (including all transaction costs) not to
exceed $350 million at the time of the Closing.
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SECTION 5.9 LITIGATION. The Company shall consult with the Major
Investors in the defense of any litigation against the Company and/or its
directors relating to this Agreement or the transactions contemplated hereby and
shall not settle any such litigation without the prior written consent of the
Major Investors, which consent shall not be unreasonably withheld.
SECTION 5.10 FINANCIAL STATEMENTS. The Company shall prepare at the
end of each month and deliver to the Major Investors upon completion the balance
sheet, income statement and statement of cash flows of the Company for each
month ended between the date of this Agreement and the Closing, in each case,
prepared in accordance with GAAP (except that if notes to such financial
statements are not typically prepared, preparation of notes to such financial
statements shall not be required). Each such balance sheet, income statement and
statement of cash flows shall be prepared and delivered to the Major Investors
within 15 business days of the end of the relevant month.
SECTION 5.11 U.S. REAL PROPERTY INTEREST STATEMENT. To the extent
required pursuant to Treasury Regulation Section 1.897-2(h), upon a written
request by any Major Investor, the Company shall provide such Major Investor
with a written statement informing the Major Investor whether such Major
Investor's interest in the Company constitutes a U.S. real property interest.
The Company's determination shall comply with the requirements of Treasury
Regulation section 1.897-2(h)(1) or any successor regulation, and the Company
shall provide timely notice to the IRS, in accordance with and to the extent
required by Treasury Regulation section 1.897-2(h)(2) or any successor
regulation, that such statement has been made. The Company's written statement
to any Major Investor shall be delivered to such Major Investor within a
reasonable period of time after receipt of such Major Investor's written request
therefor.
SECTION 5.12 INDENTURE AMENDMENT. The Company shall provide such
evidence, "Officers' Certificates" (as defined in the Indenture) and
indemnities, and shall cause the Company's outside counsel to provide such
"Opinion of Counsel" (as defined in the Indenture) as the Trustee is entitled to
receive or may reasonably request in connection with the execution by the
Trustee of a supplemental indenture effecting the Indenture Amendment (the
"SUPPLEMENTAL INDENTURE"), whether pursuant to Section 8.02 or 8.06 of the
Indenture or otherwise. The Company represents and warrants that the Company's
outside counsel has reviewed the Supplemental Indenture and as of the date of
this Agreement is prepared to be able to deliver, assuming the requisite
consents are obtained, an Opinion of Counsel to the Trustee.
SECTION 5.13 MANAGEMENT GROUP. The Major Investors hereby agree to
sell New Preferred Stock with an aggregate principal value of up to $2.1
million, at a purchase price equal to $1,000 per share, concurrent with or
promptly following the Closing to certain members of the management group in
accordance with the resolutions relating to management bonuses adopted by the
Board on April 29, 2003.
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ARTICLE VI
CONDITIONS TO CLOSING
SECTION 6.1 MUTUAL CONDITIONS. The obligations of the Company and of
each Major Investor to consummate the Closing Transactions shall be subject to
the satisfaction (or to the extent legally permissible, waiver by the Company
and each Major Investor) of the following conditions:
(a) RECEIPT OF SECURITYHOLDER APPROVALS. The Note Approval and the
Requisite Stockholder Approvals shall have been obtained.
(b) EFFECTIVENESS OF CERTAIN AMENDMENTS AND CONSENTS. Each of the
Charter Amendments and the New Certificate of Designation shall have become
effective prior to the Closing Date or on the Closing Date prior to the
Closing.
(c) ANTITRUST LAWS. Any applicable waiting period (and any extension
thereof) under the HSR Act and all other Antitrust Laws relating to the
transactions contemplated by this Agreement shall have terminated or shall
have expired.
(d) REFINANCING. The Company shall have entered into the New Credit
Agreement and all amounts owing under the Original Credit Agreement shall
have been paid in full (the "REFINANCING").
SECTION 6.2 CONDITIONS TO OBLIGATIONS OF THE COMPANY. The
obligations of the Company to consummate the Closing Transactions, shall be
subject to the satisfaction (or to the extent legally permissible, waiver by the
Company) of the following additional conditions:
(a) REPRESENTATIONS AND WARRANTIES; COVENANTS. (i) The
representations and warranties of the Major Investors contained in this
Agreement shall be true and correct (without giving effect to any
"materiality" or material adverse effect qualification or exception
contained therein) as of the date hereof and at and as of the Closing, with
the same force and effect as if made at and as of such date (or, in the
case of representations and warranties that address matters only as of a
particular date, as of such date), except where the failure to be so true
and correct would not, in the aggregate, have a material adverse effect on
the ability of the Major Investors as a group to consummate the
transactions contemplated by this Agreement; and (ii) the covenants and
agreements contained in this Agreement to be complied with by the Major
Investors at or prior to the Closing shall have been complied with in all
material respects.
(b) OFFICER'S CERTIFICATES. Each of the Major Investors shall have
furnished the Company with a certificate dated the Closing Date and signed
on behalf of it by a duly authorized officer to the effect that, with
respect to itself, the condition set forth in SECTION 6.2(a) has been
satisfied as of the Closing.
(c) NO ORDER. No Governmental Authority shall have enacted, issued,
promulgated, enforced or entered any statute, rule, regulation, injunction
or other Governmental Order that is in effect and has the effect of making
the transactions
-49-
contemplated by this Agreement illegal or otherwise restraining or
prohibiting consummation of such transactions.
(d) AUTHORIZATIONS. All Governmental Approvals legally required for
the consummation of the transactions contemplated hereby shall have been
obtained and be in effect at the Closing Date, except where the failure to
obtain the same would not be reasonably likely, individually or in the
aggregate, to have a Material Adverse Effect if the Closing were to occur.
SECTION 6.3 CONDITIONS TO OBLIGATIONS OF THE MAJOR INVESTORS. The
obligations of each Major Investor to consummate the Closing Transactions, shall
be subject to the satisfaction (or to the extent legally permissible, waiver by
each Major Investor) of the following additional conditions:
(a) REPRESENTATIONS AND WARRANTIES; COVENANTS. (i) The
representations and warranties of the Company contained in this Agreement
(other than those referred to in CLAUSES (ii) and (iii) below) shall be
true and correct (without giving effect to any "materiality" or Material
Adverse Effect qualification or exception contained therein) as of the date
hereof and as of the Closing with the same force and effect as if made at
and as of such date (or, in the case of representations and warranties that
address matters only as of a particular date, as of such date), except
where the failure to be so true and correct would not, in the aggregate,
have a Material Adverse Effect; (ii) the representations and warranties of
the Company in the first sentence of SECTIONS 3.1(a) and 3.4 shall have
been true and correct in all material respects as of the date hereof and as
of the Closing with the same force and effect as if made at and as of such
date (or, in the case of representations and warranties that address
matters only as of a particular date, as of such date); (iii) the
representations and warranties of the Company in SECTIONS 3.1(b), 3.2(a),
3.2(c), 3.3(b), CLAUSE (i) of 3.5 and 3.23(d) shall have been true and
correct in all respects as of the date hereof and as of the Closing with
the same force and effect as if made at and as of such date (or, in the
case of representations and warranties that address matters only as of a
particular date, as of such date); and (iv) the covenants and agreements
contained in this Agreement to be complied with by the Company at or prior
to the Closing shall have been complied with in all material respects.
(b) OFFICER'S CERTIFICATES AND OTHER DOCUMENTS. The Company shall
have furnished the Major Investors with (i) a certificate dated the Closing
Date and signed on behalf of it by a duly authorized officer to the effect
that the conditions set forth in SECTIONS 6.3(a), 6.3(f) and 6.3(g) have
been satisfied as of the Closing and (ii) a copy of the Amended and
Restated Certificate of Incorporation of the Company, as in effect on the
Closing Date, certified by the Secretary of State of the State of Delaware.
(c) OTHER APPROVALS. The Company and its Subsidiaries, as applicable,
shall have obtained the Material Contract Approvals and the consent or
approval of any Person (excluding any Governmental Authority) whose consent
or approval shall be required under any agreement or instrument in order to
permit the consummation of the transactions contemplated hereby, except
those that the failure to obtain, individually or
-50-
in the aggregate, would not reasonably be expected to have a Material
Adverse Effect if the Closing were to occur.
(d) NO ORDER. No Governmental Authority shall have enacted, issued,
promulgated, enforced or entered any statute, rule, regulation, injunction
or other Governmental Order that is in effect and has the effect of making
the transactions contemplated by this Agreement illegal or otherwise
restraining or prohibiting consummation of such transactions or that would
give rise to any Lien (except as provided in SECTION 3.2(c) hereof) on any
shares of New Preferred Stock.
(e) AUTHORIZATIONS. All Governmental Approvals legally required for
the consummation of the transactions contemplated hereby shall have been
obtained and be in effect at the Closing Date, except where the failure to
obtain the same would not be reasonably likely, individually or in the
aggregate, to have a Material Adverse Effect if the Closing were to occur
or to result in the creation of any Lien (except as provided in SECTION
3.2(c) hereof) on any shares of the New Preferred Stock. All Governmental
Approvals shall have been obtained pursuant to Final Orders, free of any
conditions that the Major Investors would not be required to accept
pursuant to SECTION 5.4(d) or that would reasonably be expected to have a
Material Adverse Effect on the Company if the Closing were to occur.
(f) NET CONSOLIDATED FINANCIAL INDEBTEDNESS. The Net Consolidated
Financial Indebtedness of the Company on a pro forma basis after giving
effect to the Recapitalization (including all transaction costs), utilizing
financial information as of a date not earlier than the second business day
prior to the Closing, shall not exceed the principal amount of $350
million.
(g) MATERIAL ADVERSE EFFECT. Since the date of this Agreement, there
shall not have been any change, event, occurrence or development that
constitutes a Material Adverse Effect.
(h) STOCKHOLDERS AGREEMENT. The Stockholders Agreement shall have
been executed and delivered by the Company.
(i) PERFORMANCE BY THE MAJOR INVESTORS. With respect to the
obligation of each Major Investor, each other Major Investor shall have
substantially concurrently performed its obligations under SECTION 2.2(a).
(j) INDENTURE AMENDMENT. The Indenture Amendment shall have been
executed and delivered by the Company and the Trustee.
(k) ELECTION OF BOARD MEMBERS. The individuals not set forth in the
Director Designation Notice shall have resigned from the Company Board and
the individuals set forth in the Director Designation Notice shall have
been elected as directors of the Company Board to the extent each is not
already a director of the Company.
(l) PBGC LIEN. The PBGC shall have entered or confirmed, as
applicable, a Permitted PBGC Agreement.
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ARTICLE VII
TERMINATION AND WAIVER
SECTION 7.1 TERMINATION. This Agreement may be terminated at any
time prior to the Closing:
(a) by the mutual written consent of each of the Company and the
Major Investors;
(b) by the Company or the Major Investors, if there shall be any law
or regulation that makes illegal or otherwise prohibited any of (i) the
Investment, (ii) the Conversion, (iii) the Solicitations, (iv) the
execution of the Supplemental Indenture by the parties thereto and (v) the
effectiveness of the Charter Amendments and the New Certificate of
Designation; or if any Governmental Order enjoining the Company or any of
the Major Investors from consummating any of the Closing Transactions shall
have been entered and such Governmental Order shall have become a Final
Order; PROVIDED, HOWEVER, that the provisions of this SECTION 7.1(b) shall
not be available to a party hereto unless such party shall have complied
with its obligations under SECTION 5.4;
(c) by the Company or the Major Investors, if the Closing shall not
have occurred on or prior to the later of (i) August 30, 2003 or (ii) if
the Company shall have mailed the Proxy Statement to the holders of Common
Stock on or prior to August 30, 2003, the earlier of (A) September 30, 2003
and (B) the date which is two business days after the Stockholders Meeting
which shall be no later than thirty (30) days after mailing of the Proxy
Statement (such later date, the "OUTSIDE DATE"); PROVIDED, HOWEVER, that
the right to terminate this Agreement under this SECTION 7.1(c) shall not
be available to any party whose failure to fulfill any obligation under
this Agreement shall have been the cause of, or shall have resulted in, the
failure of the Closing to occur prior to the Outside Date;
(d) by the Company, if the Major Investors shall have breached in any
material respect any of their representations or warranties or failed to
perform in any material respect any of their covenants or other agreements
contained in this Agreement, which breach or failure to perform would
render unsatisfied any condition contained in SECTION 6.1 or 6.2, and (i)
is incapable of being cured or (ii) if capable of being cured is not cured
prior to the earlier of (A) the business day prior to the Outside Date or
(B) the date that is 30 days from the date that the Major Investors are
notified of such breach;
(e) by the Major Investors, if the Company shall have breached in any
material respect any of its representations or warranties or failed to
perform in any material respect any of its covenants or other agreements
contained in this Agreement, which breach or failure to perform would
render unsatisfied any condition contained in SECTION 6.1 or 6.3, and (i)
is incapable of being cured or (ii) if capable of being cured is not cured
prior to the earlier of (A) the business day prior to the Outside Date or
(B) the date that is 30 days from the date that the Company is notified of
such breach;
-52-
(f) by the Major Investors if (i) the Company Board shall withdraw,
modify, change or repudiate the Company Board Recommendation or shall have
publicly indicated its intention to do so in a manner adverse to the Major
Investors or (ii) the Company Board shall have recommended any proposal
related to an Acquisition Proposal other than any such Acquisition Proposal
which is the subject of this Agreement; PROVIDED, that in the event the
Company delivers the written notice to the Major Investors pursuant to
SECTION 7.1(i), such notice shall not be deemed to have resulted in an
event which would give rise to a right to terminate this Agreement as
provided in this SECTION 7.1(f); PROVIDED, FURTHER, that if the Company has
not terminated this Agreement pursuant to SECTION 7.1(i) within two
business days following the end of the five business day period described
in SECTION 7.1(i), the Major Investors shall otherwise have the right to
request the Company Board to confirm the Company Board Recommendation and
if the Company fails to do so within three business days thereafter, the
Major Investors shall have the right to terminate this Agreement pursuant
to SECTION 7.1(f)(i);
(g) by the Major Investors or the Company if at the Stockholders
Meeting (including any postponement or adjournment thereof) the common
stockholders of the Company shall fail to approve the Charter Amendments;
(h) by the Major Investors or the Company if (i) in the case of a
duly held stockholder meeting, the Existing Preferred Stock Approval shall
not have been obtained at such meeting (including any postponement or
adjournment thereof) or (ii) in the case of obtaining written consents, the
Existing Preferred Stock Approval shall not have been obtained within 60
days following the commencement of the Preferred Stock Consent
Solicitation; PROVIDED, that the Preferred Stock Consent Solicitation shall
not be deemed to have commenced until all solicitation materials have been
sent to the holders of the Existing Preferred Stock; PROVIDED, FURTHER,
that if it is determined that a stockholder meeting shall be held in lieu
of obtaining written consents, CLAUSE (ii) shall be inapplicable;
(i) by the Company, if the Company Board authorizes the Company to
enter into a written agreement concerning a transaction that the Company
Board has determined is a Superior Proposal and concurrently with or prior
to such termination the Company pays the Major Investors the Termination
Fee in cash; PROVIDED, that the Company shall not terminate this Agreement
pursuant to this SECTION 7.1(i) and enter into a definitive agreement for a
recapitalization or similar transaction until the expiration of five (5)
Business Days following the Major Investor's receipt of written notice
advising the Major Investors that the Company has received a Superior
Proposal, specifying the material terms and conditions of such Superior
Proposal (and including a copy thereof with all accompanying documentation,
if in writing), identifying the person making such Superior Proposal and
stating whether the Company intends to enter into a definitive agreement
for a recapitalization or similar transaction. After providing such notice,
the Company shall provide a reasonable opportunity for the Major Investors
during such period to make adjustments in the terms and conditions of this
Agreement as would enable the Company to proceed with the Recapitalization
on such adjusted terms, and
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shall execute such amendments hereto as are reasonably necessary in
connection therewith;
(j) by the Major Investors, if the Company shall have incurred any
Indebtedness to refinance the amounts outstanding under the Original Credit
Agreement other than Indebtedness incurred pursuant to a New Credit
Agreement; or
(k) by the Major Investors, if (i) the PBGC shall have notified the
Company that the PBGC will not approve a Permitted PBGC Agreement or (ii)
the Eighth Amendment to Second Amended and Restated Multicurrency Revolving
Credit and Term Loan Agreement dated as of April 30, 2003 shall not have
become effective in accordance with its terms on or prior to June 24, 2003.
SECTION 7.2 EFFECT OF TERMINATION. In the event of termination of
this Agreement as provided in SECTION 7.1, written notice thereof shall
forthwith be given to the other party or parties specifying the provision hereof
pursuant to which such termination is made, and this Agreement shall forthwith
become void and there shall be no liability on the part of any party hereto of
its Affiliates except (a) that the provisions of this SECTION 7.2, SECTION 7.3
and ARTICLE VIII shall survive termination of this Agreement and (b) that
nothing herein shall relieve either party from liability for any willful breach
of this Agreement.
SECTION 7.3 FEES AND EXPENSES.
(a) In the event that (i) the Major Investors or the Company shall
have terminated this Agreement pursuant to SECTION 7.1(c), 7.1(g) or 7.1(h)
(PROVIDED, that in the case of a termination pursuant to SECTION 7.1(h), no
Affiliate of a Major Investor shall have terminated or breached the Preferred
Stock Voting Agreement) or the Major Investors shall have terminated this
Agreement pursuant to SECTION 7.1(e) or 7.1(k) and, except to the extent
provided in clause (iv) below, on or prior to such time any entity or group
(other than the Major Investors or their respective Affiliates) shall have made
an Acquisition Proposal, which Acquisition Proposal has not been revoked by the
entity or group that made such Acquisition Proposal, and the Company executes a
definitive agreement with respect to, or consummates a transaction with respect
to, an Acquisition Proposal reasonably related to such Acquisition Proposal or
with the entity or group which made such Acquisition Proposal within 12 months
following the date of such termination, (ii) the Major Investors shall have
terminated this Agreement pursuant to SECTION 7.1(f), (iii) the Company shall
have terminated this Agreement pursuant to SECTION 7.1(i), or (iv) the Company
or the Major Investors shall have terminated this Agreement pursuant to SECTION
7.1(g) or 7.1(h) (PROVIDED, that in the case of a termination pursuant to
SECTION 7.1(h), no Affiliate of a Major Investor shall have terminated or
breached the Preferred Stock Voting Agreement) and, following the date hereof
and prior to the termination of this Agreement, any Person or "group" (as
defined in Section 13(d)(3) of the Exchange Act) other than the Major Investors
or any of their respective Affiliates shall have become the beneficial owner of
capital stock of the Corporation representing more than 15% of the total voting
power of such capital stock or any beneficial owner of capital stock
representing more than 15% of the total voting power of the capital stock of the
Company as of the date hereof shall acquire any additional shares of capital
stock of the Company, then the Company shall pay to the Major Investors or
their designees, a termination fee (the "TERMINATION FEE"), in cash, of
$8 million less, in the case of a termination pursuant to CLAUSE (i),
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the amounts paid or reimbursed by the Company pursuant to SECTION 7.3(b)
prior to the date of payment of the Termination Fee; PROVIDED, HOWEVER, that
the Company shall in no event be obligated to pay more than one such
Termination Fee with respect to all such agreements and occurrences and such
termination; and PROVIDED, FURTHER, that no such Termination Fee shall be
payable pursuant to CLAUSE (i) if (A) this Agreement shall have been
terminated pursuant to SECTION 7.1(c), (B) such termination shall have
occurred solely as a result of a failure of a condition set forth in SECTION
6.1 or 6.3, (C) the failure of the Company to fulfill any obligation under
this Agreement shall not have been a cause of, and shall not have resulted
in, the failure of such condition and (D) the Company shall not have received
an Acquisition Proposal prior to the failure of such condition. Any
Termination Fee that becomes payable shall be paid on or prior to the
termination in the case of a termination by the Company and within one
business day following termination in the case of termination by the Major
Investors, except that any Termination Fee that becomes payable pursuant to
CLAUSE (i) shall be paid immediately upon execution of the definitive
agreement described therein.
(b) At the Closing, or, in the event of any termination of this
Agreement (other than a termination by the Company pursuant to SECTION 7.1(d) or
a termination with respect to which the Company has paid the Termination Fee
pursuant to SECTION 7.3(a)(ii), (iii) or (iv)), not later than the business day
following the termination of this Agreement, the Company shall pay or, to the
extent such expenses have previously been paid by the Major Investors, reimburse
the Major Investors and their Affiliates for all reasonable legal, accounting,
consulting and other out-of-pocket fees and expenses, which are supported by
customary and appropriate documentation delivered to the Company, which
documentation relates to the amount of the expense and the prior payment thereof
by the Major Investors, if applicable, and which fees and expenses were incurred
by any of them or on their behalf in connection with the any of the transactions
contemplated by this Agreement (including reasonable legal, accounting,
consulting and other out-of-pocket fees and expenses that have been reimbursed
or are agreed to be reimbursed by the Major Investors) and that have not
previously been reimbursed. Notwithstanding the foregoing, in no event shall the
amount to be paid by the Company pursuant to SECTIONS 7.3(a) and 7.3(b), in the
aggregate, exceed the amount of the Termination Fee provided for in SECTION
7.3(a) and the Company shall not be required to pay or reimburse more than $3
million of costs, fees and expenses pursuant to this SECTION 7.3(b).
(c) Except as set forth in SECTION 7.3(b), each party hereto shall
bear its own expenses in connection with this Agreement and the transactions
contemplated by this Agreement. Nothing contained in this Agreement shall limit
the ability of the Company to pay the fees and disbursements of its financial
advisors, legal counsel, accountants and other experts and representatives.
SECTION 7.4 WAIVER; AUTHORITY TO ACT. At any time prior to the
Closing, the Company, on the one hand, and the Major Investors acting
unanimously, on the other hand, may (a) extend the time for the performance of
any of the obligations or other acts of the other party hereto, (b) waive any
inaccuracies in the representations and warranties contained herein or in any
document delivered pursuant hereto or (c) waive compliance with any of the
agreements or conditions contained herein. Any such extension or waiver shall be
valid only if set forth in an instrument in writing signed by the party or
parties to be bound thereby.
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ARTICLE VIII
GENERAL PROVISIONS
SECTION 8.1 SURVIVAL. The covenants of the parties hereto that
contemplate or may involve actions to be taken after the Closing shall survive
until such actions shall have been taken or performed in accordance with their
terms. Except for the representations and warranties set forth in SECTIONS
3.1(b), 3.2(a), 3.2(c), 3.3(b) and 3.5 hereof and the covenants contained in
SECTION 7.2 or 7.3, the representations and warranties contained herein and in
any certificate or other writing delivered pursuant hereto shall terminate at
the Closing or upon the termination of this Agreement pursuant to SECTION 7.1,
as the case may be, and no party to this Agreement shall have any liability with
respect thereto after the Closing.
SECTION 8.2 NOTICES. All notices, requests, claims, demands and
other communications hereunder shall be in writing and shall be given or made
(and shall be deemed to have been duly given or made upon receipt) by delivery
in person, by courier service, by overnight mail, by cable, by telecopy, by
telegram or by telex to the respective parties at the following addresses (or at
such other address for a party hereto as shall be specified in a notice given in
accordance with this SECTION 8.2):
(a) If to the Company, to:
Samsonite Corporation
00000 Xxxx 00xx Xxxxxx
Xxxxxx, Xxxxxxxx 00000
Telecopy: (000) 000-0000
Attention: General Counsel
with a copy to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
Xxxx Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopy: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxxxxx
Xxx X. Xxxxx
(b) If to any Major Investor:
(i) in the case of Ares, to:
ACOF Management, L.P.
c/o Ares Management, L.P.
1999 Avenue of the Xxxxx
Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxx Xxxxxxx
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(ii) in the case of Bain, to:
Xxxx Capital (Europe) LLC
c/x Xxxx Capital, Ltd.
Xxxxxxxxxx Xxxxx,
Xxxxxxx Xxxxx
Xxxxxx, X0X 0XX
XXXXXXX
Facsimile: x00-(0)00-0000-0000
Attn: Xxxxxxxxxx Xxxxxxxx
Xxxxxxx Xxxx
(iii) in the case of OTPP, to:
Ontario Teachers Pension Plan Board
0000 Xxxxx Xxxxxx
Xxxxxxx, Xxxxxxx X0X 0X0
Facsimile: (000) 000-0000
Attn: Xxx Sienna
Xxxxxxx Xxxxxxxx
(iv) with a copy to each other Major Investor at the
address listed under CLAUSE (b) above; and
(v) with a copy to
Milbank, Tweed, Xxxxxx & XxXxxx, LLP
000 Xxxxx Xxxxxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxxxx Xxxxxx
and
Xxxxxxxx & Xxxxx International
Tower 42, 00 Xxx Xxxxx Xxxxxx
Xxxxxx, XX0X 0XX
XXXXXXX
Facsimile: x00-(0)00-0000-0000
Attention: Xxxxx Learner
Xxxxx Xxxxxxx Xxxx
and
Xxxxx, Xxxxxxx & Xxxxxxxxx, LLP
000 Xxxx Xxxxxx
-00-
Xxxxxx, Xxxxxxxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: F. Xxxxxx Xxxxxx
Xxxxx Xxxxxx
SECTION 8.3 INTERPRETATION. The descriptive headings contained in
this Agreement are for convenience of reference only and shall not affect in any
way the meaning or interpretation of this Agreement. As used in this Agreement,
the term "hereof" means this Agreement, the term "date hereof" means the date of
this Agreement and the term "including" shall mean including without limitation.
All references to sections, annexes, exhibits and schedules refer to sections,
annexes, exhibits and schedules to this Agreement, unless otherwise noted. The
term "knowledge" shall mean actual knowledge and knowledge that is known or
should have been known following due inquiry.
SECTION 8.4 SEVERABILITY. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law
or public policy, all other terms and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties hereto as closely as possible in an acceptable
manner in order that the transactions contemplated hereby are consummated as
originally contemplated to the greatest extent possible.
SECTION 8.5 ENTIRE AGREEMENT. This Agreement and the Stockholders
Agreement constitute the entire agreement of the parties hereto with respect to
the subject matter hereof and supersedes all prior agreements and undertakings,
both written and oral, between the Company and each Major Investor with respect
to the subject matter hereof.
SECTION 8.6 ASSIGNMENT. This Agreement shall not be assigned
without the express written consent of the Company and each Major Investor
(which consent may be granted or withheld in the sole discretion of the
Company or any Major Investor), except that no consent shall be required for
any Major Investor to (i) assign its rights and delegate its duties
hereunder, in whole or in part, to one or more of its Affiliates or (ii)
assign its rights and delegate its duties under SECTION 2.2(a) to certain
members of the management group in accordance with SECTION 5.13 (or, to another
Major Investor in order to effect the provisions of SECTION 5.13) with
respect to 2,100 shares of New Preferred Stock in the aggregate. A purported
assignment made in violation of this SECTION 8.6 shall be void and of no
effect.
SECTION 8.7 ADVISORY AGREEMENT. It is anticipated that the
solicitation documents will disclose that following the Closing, the Major
Investors will request that the Company enter into an advisory agreement
pursuant to which the Company would, subject to approval of the reconstituted
Company Board (a) to pay to the Major Investors or their designees, in
consideration for the provision of certain services, an advisory fee and (b)
to such other terms with respect thereto as may be agreed among the parties.
SECTION 8.8 NO THIRD PARTY BENEFICIARIES. This Agreement shall be
binding upon and inure solely to the benefit of the parties hereto, their
successors and their permitted assigns and nothing herein, express or implied,
is intended to or shall confer upon any other
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Person any legal or equitable right, benefit or remedy of any nature whatsoever
under or by reason of this Agreement.
SECTION 8.9 GOVERNING LAW. This Agreement shall be governed by the
laws of the State of
New York, without reference to the choice of law principles
thereof. All actions and proceedings arising out of or relating to this
Agreement shall be heard and determined in any
New York state or federal court
sitting in the City of New York, and the parties hereto hereby consent to the
jurisdiction of such courts in any such action or proceeding.
SECTION 8.10 COUNTERPARTS. This Agreement may be executed in one or
more counterparts, and by the different parties hereto in separate counterparts,
each of which when executed shall be deemed to be an original but all of which
taken together shall constitute one and the same agreement.
SECTION 8.11 SPECIFIC PERFORMANCE. The parties hereto agree that
irreparable damage would occur in the event any provision of this Agreement was
not performed in accordance with the terms hereof and that the parties shall be
entitled to specific performance of the terms hereof.
SECTION 8.12 WAIVER OF JURY TRIAL. Each of the Company and each Major
Investor hereby irrevocably waives all right to trial by jury in any action,
proceeding or counterclaim (whether based on contract, tort or otherwise)
arising out of or relating to this Agreement or the actions of the Company or
any Major Investor in the negotiation, administration, performance and
enforcement thereof.
SECTION 8.13 AMENDMENTS, MODIFICATION AND WAIVER.
(a) Except as may otherwise be provided herein, any provision of this
Agreement may be amended, modified or waived by the parties hereto, if such
amendment or waiver is in writing and signed, in the case of an amendment, by
the Company and the Major Investors, in the case of a waiver, by the party
against whom the waiver is to be effective; PROVIDED that no such amendment,
modification or waiver by the Company shall be effective unless it is authorized
by the Company Board.
(b) No failure or delay by any party in exercising any right, power
or privilege hereunder shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right power or privilege. The rights and remedies herein
provided shall be cumulative and not exclusive of any rights or remedies
provided by law.
SECTION 8.14 MAJOR INVESTORS APPROVAL. Any approval or consent,
request or other action of the Major Investors shall not be deemed to have been
granted, made or taken unless the Major Investors shall have acted unanimously;
PROVIDED, HOWEVER, that with respect to any obligation of the Major Investors,
each Major Investor shall be deemed to have performed or satisfied such
obligation if such Major Investor shall have performed or satisfied its own such
obligation.
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SECTION 8.15 COMMERCIALLY REASONABLE EFFORTS. The term "commercially
reasonable efforts" and any permutation thereof as used in this Agreement shall
not require any party to pay any Person consideration in exchange for any
consent, except, in the case of the Note Solicitation, to the extent approved by
the Major Investors and in all other cases with the exception of filing fees,
professional fees and other amounts that are deemed DE MINIMIS or are otherwise
reasonably related to the benefit derived from obtaining such consent.
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IN WITNESS WHEREOF, each of the parties hereto have caused this
Agreement to be executed as of the date first written above by their respective
officers thereunto duly authorized.
SAMSONITE CORPORATION
By: /s/ Xxx Xxx Xxxxx
------------------------------
Name: Xxx Xxx Xxxxx
Title: President and CEO
SIGNATURE PAGE TO
RECAPITALIZATION AGREEMENT
ACOF MANAGEMENT, L.P.
By: /s/ Xxxx Xxxxxxx
------------------------------
Name: Xxxx Xxxxxxx
Title: Managing Director
SIGNATURE PAGE TO
RECAPITALIZATION AGREEMENT
XXXX CAPITAL (EUROPE) LLC
By: Xxxx Capital, Ltd.
Its: Managing Member
By: /s/ Xxxxxxxxxx Xxxxxxxx
----------------------------
Its: Managing Director
SIGNATURE PAGE TO
RECAPITALIZATION AGREEMENT
ONTARIO TEACHERS PENSION PLAN BOARD
By: /s/ Xxx Sienna
--------------------------------
Name: Xxx Sienna
Title: Vice President,
Merchang Banking
SIGNATURE PAGE TO
RECAPITALIZATION AGREEMENT
EXHIBIT A
FORM OF CERTIFICATE OF DESIGNATION OF NEW PREFERRED STOCK
EXHIBIT A
FORM OF
CERTIFICATE OF DESIGNATION OF THE POWERS,
PREFERENCES AND RELATIVE, PARTICIPATING,
OPTIONAL AND OTHER SPECIAL RIGHTS OF 2003 CONVERTIBLE
PREFERRED STOCK AND QUALIFICATIONS, LIMITATIONS
AND RESTRICTIONS THEREOF
----------
PURSUANT TO SECTION 151 OF THE
GENERAL CORPORATION LAW OF THE
STATE OF DELAWARE
----------
Samsonite Corporation (the "CORPORATION"), a corporation organized and
existing under the General Corporation Law of the State of Delaware, does hereby
certify that, pursuant to authority conferred upon the board of directors of the
Corporation (the "BOARD OF DIRECTORS") by its Certificate of Incorporation, as
amended and restated (hereinafter referred to as the "CERTIFICATE OF
INCORPORATION"), and pursuant to the provisions of Section 151 of the General
Corporation Law of the State of Delaware, in a meeting of the Board of Directors
on [_______], 2003, the Board of Directors unanimously approved and adopted the
following resolution (the "RESOLUTION"):
RESOLVED, that, pursuant to the authority vested in the Board of
Directors by its Certificate of Incorporation, the Board of Directors does
hereby create, authorize and provide for the issuance of a class of preferred
stock having the designations, preferences, relative, participating, optional
and other special rights and the qualifications, limitations and restrictions
thereof that are set forth in the Certificate of Incorporation and in this
Resolution as follows:
(a) DESIGNATION. There is hereby created out of the authorized and
unissued shares of preferred stock, par value $0.01 per share, of the
Corporation a series of preferred stock designated as the "2003 Convertible
Preferred Stock." The number of shares constituting such series shall be 160,000
and are referred to herein as the "2003 CONVERTIBLE PREFERRED STOCK."
(b) RANK. The 2003 Convertible Preferred Stock shall, with respect to
dividend distributions, distributions upon liquidation, winding-up and
dissolution of the Corporation and redemption, rank (i) senior (to the extent
set forth herein) to all classes of Common Stock and to each other class of
Capital Stock of the Corporation or series of Preferred Stock hereafter created
other than Parity Securities and Senior Securities (collectively referred to,
together with all classes of Common Stock, as "JUNIOR SECURITIES"); (ii) on a
parity with any class of Capital Stock of the Corporation or series of Preferred
Stock hereafter created that has been approved by the Holders in accordance with
PARAGRAPH (e)(ii)(C) hereof and the terms of which expressly provide that such
class or series will rank on a parity with the 2003 Convertible Preferred Stock
as to dividend distributions, distributions upon liquidation, winding-up and
dissolution of the Corporation and redemption (collectively referred to as
"PARITY SECURITIES");
PROVIDED that any such class or series that was not approved by the Holders in
accordance with PARAGRAPH (e)(ii)(C) hereof shall be deemed to be Junior
Securities and not Parity Securities; and (iii) junior to each other class of
Capital Stock of the Corporation or series of Preferred Stock hereafter created
that has been approved by the Holders in accordance with PARAGRAPH (e)(ii)(B)
hereof and the terms of which expressly provide that such class or series will
rank senior to the 2003 Convertible Preferred Stock as to dividend
distributions, distributions upon liquidation, winding-up and dissolution of the
Corporation and redemption (collectively referred to as "SENIOR SECURITIES");
PROVIDED that any such class or series that was not approved by the Holders in
accordance with PARAGRAPH (e)(ii)(B) hereof shall be deemed to be Junior
Securities and not Senior Securities.
(c) DIVIDENDS.
(i) Each Holder of outstanding shares of 2003 Convertible
Preferred Stock, in preference to the holders of any Junior Securities of
the Corporation, shall be entitled to receive, when, as and if declared by
the Board of Directors, out of funds legally available for the payment of
dividends, dividends on each share of 2003 Convertible Preferred Stock
payable quarterly in arrears on each Dividend Payment Date in an amount
equal to (A) the then applicable Dividend Rate MULTIPLIED BY (B) the sum of
(1) all accrued but unpaid dividends on such share accrued pursuant to this
PARAGRAPH (c)(i) through the end of the Dividend Period ended immediately
prior to the Dividend Payment Date immediately preceding the Dividend
Payment Date in question and (2) the Liquidation Value, it being understood
that dividends otherwise payable on any Dividend Payment Date on each share
of 2003 Convertible Preferred Stock shall accrue (whether or not declared),
be fully cumulative from the Issue Date and, as a result of CLAUSE (1)
above, be compounded quarterly; PROVIDED that, in the event of a
Liquidation, Change of Control, Qualified Listing or Qualified
Recapitalization following the first anniversary of the Issue Date, the
accrual and compounding of dividends on the 2003 Convertible Preferred
Stock for the period up to and including the Dividend Payment Date
immediately preceding the fourth anniversary of the Issue Date shall be
accelerated and shall be deemed to have fully accrued for such period as of
the date immediately prior to such Liquidation, Change of Control,
Qualified Listing or Qualified Recapitalization. Any payment of Dividends
made in cash shall be applied to pay accrued and unpaid Dividends in
reverse order of accrual thereof.
(ii) Each Dividend shall be payable to the Holders of record as
they appear on the stock books of the Corporation as of the close of
business on the Dividend Record Date immediately preceding the related
Dividend Payment Date. Dividends shall cease to accrue in respect of the
shares of 2003 Convertible Preferred Stock on the date such shares of 2003
Convertible Preferred Stock are redeemed in accordance with PARAGRAPH (f)
unless the Corporation shall have failed to pay the relevant redemption
price on 2003 Convertible Preferred Stock to be redeemed on the date fixed
for redemption. Dividends shall cease to accrue in respect of shares of
2003 Convertible Preferred Stock on the date such shares are converted in
accordance with PARAGRAPH (g) and following such conversion, each Holder
shall be deemed to be the holder of the shares of Common Stock issuable
upon such conversion for all purposes, notwithstanding any delay in issuing
any certificate representing such shares to such Holder.
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(iii) (A) So long as any share of 2003 Convertible Preferred
Stock is outstanding, the Corporation shall not declare, pay or set
apart for payment any dividend on any Parity Securities, or make any
payment on account of, or set apart for payment money for a sinking or
other similar fund for, the purchase, redemption or other retirement
of, any of the Parity Securities or any warrants, rights, calls or
options exercisable for or convertible into any of the Parity
Securities whether in cash, obligations or Capital Stock of the
Corporation or other property (other than in Parity Securities or
Junior Securities or warrants, rights, calls or options exercisable
for or convertible into Parity Securities or Junior Securities), and
shall not permit any corporation or other entity directly or
indirectly controlled by the Corporation to purchase or redeem any of
the Parity Securities or any such warrants, rights, calls or options
(other than in exchange for Parity Securities or Junior Securities or
warrants, rights, calls or options exercisable for or convertible into
Parity Securities or Junior Securities) unless full cumulative
Dividends determined in accordance herewith on the 2003 Convertible
Preferred Stock have been or contemporaneously are paid or are deemed
paid in full in cash from the Issue Date through the end of the most
recently completed Dividend Period for which Dividends have accrued.
(B) So long as any share of 2003 Convertible Preferred
Stock is outstanding, the Corporation shall not declare, pay or set
apart for payment any dividend on any of the Junior Securities (other
than dividends in Junior Securities to the holders of Junior
Securities), or make any payment on account of, or set apart for
payment money for a sinking or other similar fund for, the purchase,
redemption or other retirement of, any of the Junior Securities or any
warrants, rights, calls or options exercisable for or convertible into
any of the Junior Securities whether in cash, obligations or Capital
Stock of the Corporation or other property (other than in exchange for
Junior Securities or warrants, rights, calls or options exercisable
for or convertible into Junior Securities), and shall not permit any
corporation or other entity directly or indirectly controlled by the
Corporation to purchase or redeem any of the Junior Securities or any
such warrants, rights, calls or options (other than in exchange for
Junior Securities, or warrants, rights, calls or options exercisable
for or convertible into Junior Securities); PROVIDED, that if full
cumulative dividends determined in accordance herewith on the 2003
Convertible Preferred Stock have been or contemporaneously are paid in
full in cash from the Issue Date through the end of the most recently
completed Dividend Period for which Dividends have accrued, the
Corporation may:
(1) distribute, by dividend or otherwise, to all
holders of record of Common Stock, evidences of its indebtedness,
shares of any class or series of Capital Stock of the Corporation
other than Common Stock, cash (including in connection with
regular periodic dividends) or assets (including securities), in
which case the Holders shall, with respect to each share of 2003
Convertible Preferred Stock, be entitled to elect (each, a
"PAYOUT ELECTION") in lieu of the Conversion Price adjustment
referred to in PARAGRAPH (g)(iii)(A) or (E), as applicable, if
any, to
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participate in such dividend or distribution PRO RATA with the
holders of Common Stock as if such share of 2003 Convertible
Preferred Stock had been converted into Common Stock (pursuant to
PARAGRAPH (g)(i) hereof) immediately before the record date for
such dividend or distribution; and
(2) effect a Pro Rata Repurchase of Common Stock, in
which case the Holders shall, with respect to each share of 2003
Convertible Preferred Stock, be entitled to elect (each also, a
"PAYOUT ELECTION") in lieu of the Conversion Price adjustment
referred to in PARAGRAPH (g)(iii)(C), if any, to receive an
amount equal to the result obtained by multiplying (x) the
excess, if any, of the price per share at which each share of
Common Stock is to be purchased in such Pro Rata Repurchase minus
the Fair Market Value per share of Common Stock immediately prior
to such Pro Rata Repurchase by (y) the number of shares of Common
Stock into which such share of 2003 Convertible Preferred Stock
would have been converted (pursuant to PARAGRAPH (g)(i) hereof)
if it had been converted into Common Stock immediately prior to
such Pro Rata Repurchase.
Within two Business Days after the declaration of the record date of
such dividend, distribution or Pro Rata Repurchase (or, if no record
date is fixed, within two Business Days after the approval of such
action by the Board of Directors), the Corporation shall mail to each
Holder a notice of the record date of such dividend, distribution or
Pro Rata Repurchase (or the date of such action by the Board), the
date such dividend, distribution or Pro Rata Repurchase shall be made
and a description of the amount and form of such dividend,
distribution or Pro Rata Repurchase by mail first class postage
prepaid to each Holder at the address appearing in the Corporation's
records. Each Payout Election shall be made upon the written consent
or affirmative vote at a meeting called for that purpose by Holders of
at least a majority of the outstanding shares of 2003 Convertible
Preferred Stock and shall be effective as to and binding upon all such
shares, and notice of such Payout Election shall be given to the
Corporation and all of the Holders prior to the date of such dividend,
distribution or Pro Rata Repurchase. Any amount payable to the Holders
as a result of a Payout Election shall be payable to the Holders of
record as they appear on the stock books of the Corporation as of the
close of business on such record date. This PARAGRAPH (c)(iii)(B)
shall not apply to any Liquidation or Business Combination subject to
PARAGRAPH (g)(iii)(D).
(C) So long as any share of 2003 Convertible Preferred
Stock is outstanding, the Corporation shall not:
(1) offer to purchase any shares of 2003 Convertible
Preferred Stock or Parity Securities (except for a consideration
payable in Junior Securities) except for an offer to purchase
shares of 2003 Convertible Preferred Stock made PRO RATA among
the Holders of the shares of 2003 Convertible Preferred Stock
then outstanding, or
-4-
(2) permit any corporation or other entity directly or
indirectly controlled by the Corporation to purchase any Parity
Securities or shares of 2003 Convertible Preferred Stock, except
to the same extent that the Corporation could purchase such
shares in accordance with PARAGRAPH (c)(iii)(C)(1) above.
(iv) The amount of Dividends payable on the 2003 Convertible
Preferred Stock for each full quarterly Dividend Period shall be calculated
utilizing the then applicable per annum Dividend Rate divided by four (4)
and, for incomplete quarterly Dividend Periods, shall be computed on the
basis of a 360-day year of twelve 30-day months and, for periods not
involving a full calendar month, the actual number of days elapsed (but not
to exceed 30 days).
(v) A reference in this Certificate of Designation to dividends
"deemed to have been paid" or words of similar meaning shall mean that, in
respect of a particular dividend, such dividend has been declared and funds
sufficient for the payment thereof have been segregated and irrevocably set
apart in trust for the benefit of the Holders and that there exists no
legal or contractual impediment to the payment of such dividends.
(d) LIQUIDATION PREFERENCE.
(i) Upon the occurrence of the voluntary or involuntary
liquidation, dissolution or winding up of the Corporation (a
"LIQUIDATION"), each Holder of shares of 2003 Convertible Preferred Stock
shall be entitled to be paid, before any distribution or payment is made to
the holders of Junior Securities, for each share of 2003 Convertible
Preferred Stock held thereby, out of the assets of the Corporation legally
available for distribution to its stockholders, an amount in cash or, if
applicable, other assets, property or Capital Stock, equal to the greater
of (A) (1) $1,000 (as adjusted for any stock dividends, combinations,
splits or recapitalizations with respect to such shares) (the "LIQUIDATION
VALUE") PLUS (2) all accrued and unpaid Dividends thereon (including
Dividends the accrual of which shall have been accelerated pursuant to
PARAGRAPH (c)(i)) up to (but excluding) the date fixed for such Liquidation
and (B) the payment such Holder would have received if, immediately prior
to such Liquidation, such share of 2003 Convertible Preferred Stock had
been converted into shares of Common Stock (pursuant to PARAGRAPH (g)
hereof) (such greater amount, the "LIQUIDATION PREFERENCE"). If upon any
Liquidation the assets of the Corporation available for distribution to the
holders of 2003 Convertible Preferred Stock and all other Parity Securities
are insufficient to permit payment in full of the Liquidation Preference of
the 2003 Convertible Preferred Stock and the liquidation preference of such
Parity Securities, the holders of the 2003 Convertible Preferred Stock and
the Parity Securities will share equally and ratably in any distribution of
assets of the Corporation in proportion to the Liquidation Preference of
the 2003 Convertible Preferred Stock and the applicable liquidation
preference of such Parity Securities. After payment of the full amounts to
which they are entitled in accordance with this PARAGRAPH (d), the Holders
will not be entitled to any further participation in any distribution of
assets of the Corporation.
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(ii) For the purposes of PARAGRAPH (d)(i) upon the occurrence of
a Change of Control that occurs following the date on which the Major
Holders collectively cease to beneficially own a majority of the
outstanding Voting Stock of the Corporation, each Holder, other than any
person or group (as such terms are used in Section 13(d)(3) of the Exchange
Act) that effects the transaction or series of related transactions
constituting such Change of Control, may elect to cause such Change of
Control to be deemed to be a Liquidation as to the shares of 2003
Convertible Preferred Stock held by such Holder and by written notice (the
"CHANGE OF CONTROL NOTICE") delivered no later than thirty (30) days
following the consummation of the Change of Control cause the Corporation
to redeem all but not less than all of such Holder's shares of 2003
Convertible Preferred Stock for an amount in cash, from any source of funds
legally available therefor, equal to the Liquidation Value of such shares
of 2003 Convertible Preferred Stock plus any accrued but unpaid dividends
up to (and including) the date of redemption, which shall be paid by the
Corporation in immediately available funds no later than the tenth (10th)
business day following the date of such Change of Control Notice. If there
are insufficient funds to redeem all of the shares of 2003 Convertible
Preferred Stock, such redemption shall be made on a PRO RATA basis among
the Holders of the shares of 2003 Convertible Preferred Stock then
outstanding. The Corporation shall deliver notice of a Change of Control no
later than three (3) business days following the consummation of each
transaction or series of events constituting a Change of Control.
(e) VOTING RIGHTS.
(i) For so long as any share of 2003 Convertible Preferred
Stock is outstanding, each share of 2003 Convertible Preferred Stock shall
entitle the Holder thereof to notice of and to vote, in person or by proxy,
at any special or annual meeting of stockholders, on all matters entitled
to be voted on by holders of Common Stock and any other series or class of
Voting Stock of the Corporation voting together as a single class with all
other shares entitled to vote thereon. With respect to any such vote, each
share of 2003 Convertible Preferred Stock shall entitle the Holder thereof
to cast a number of votes equal to the number of votes that such Holder
would be entitled to cast had such Holder converted such share of 2003
Convertible Preferred Stock into shares of Common Stock in accordance with
PARAGRAPH (g) as of immediately prior to the record date for determining
the stockholders of the Corporation eligible to vote on any such matters.
In any case in which the Holders shall be entitled to vote as a separate
class pursuant to Delaware law, each Holder shall be entitled to one vote
for each share of 2003 Convertible Preferred Stock held on the record date
for determining the stockholders of the Corporation eligible to vote
thereon.
(ii) For so long as any share of 2003 Convertible Preferred
Stock is outstanding, the Corporation shall not, without the written
consent or affirmative vote at a meeting called for that purpose, given in
person or by proxy, by Holders of at least a majority of the outstanding
shares of 2003 Convertible Preferred Stock, voting or consenting, as the
case may be, as one class:
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(A) amend, alter or repeal any provision of the Certificate
of Incorporation or this Certificate of Designation so as to adversely
affect the preferences, rights or powers of the 2003 Convertible
Preferred Stock; PROVIDED that, any such amendment, alteration or
repeal to create, authorize or issue any Junior Securities, or any
security convertible into, or exchangeable or exercisable for, shares
of Junior Securities, shall not be deemed to have any such adverse
effect;
(B) create, authorize or issue any Senior Securities, or
any security convertible into, or exchangeable or exercisable for
shares of Senior Securities, or increase the issued and authorized
number of shares of Senior Securities;
(C) create, authorize or issue any new class of Parity
Securities, or any security convertible into, or exchangeable or
exercisable for shares of Parity Securities, or increase the issued
and authorized number of shares of 2003 Convertible Preferred Stock or
Parity Securities; or
(D) effect, and shall not permit any corporation or other
entity directly or indirectly controlled by the Corporation to effect,
a repurchase, redemption or other retirement of any of the Junior
Securities or any warrants, rights, calls or options exercisable for
or convertible into any of the Junior Securities whether in cash,
obligations or shares of the Corporation or other property (other than
in exchange for Junior Securities and other than the repurchase or
redemption of such securities of officers or employees of the
Corporation in connection with the termination of such officer's or
employee's employment).
The consent or votes required in PARAGRAPH (e)(ii) hereof shall be in
addition to any approval of stockholders of the Corporation which may be
required by law or pursuant to any provision of the Certificate of
Incorporation or the Corporation's By-laws.
(f) REDEMPTION.
(i) OPTIONAL REDEMPTION. The Corporation may, at its option,
redeem in cash at any time on or after the eighth anniversary of the Issue
Date, from any source of funds legally available therefor in the manner
provided for in PARAGRAPH (f)(ii) hereof, all or part of the issued and
outstanding shares of the 2003 Convertible Preferred Stock, at a redemption
price per share equal to the Liquidation Value plus any accrued but unpaid
Dividends up to (and including) the date of redemption; PROVIDED, HOWEVER,
that, notwithstanding the foregoing, the Corporation shall not redeem
greater than 50% of the issued and outstanding shares of 2003 Convertible
Preferred Stock without redeeming all of the issued and outstanding shares
of 2003 Convertible Preferred Stock. If any redemption made pursuant to
this PARAGRAPH (f)(i) will, together with all such other redemptions made
previously, result in the redemption of 50% or more of the shares of 2003
Convertible Preferred Stock outstanding as of the Issue Date, the
Corporation shall not redeem less than all of the issued and outstanding
shares of 2003 Convertible
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Preferred Stock pursuant to this PARAGRAPH (f)(i). Any redemption of 2003
Convertible Preferred Stock shall be made on a PRO RATA basis among the
Holders of the shares of 2003 Convertible Preferred Stock then outstanding.
(ii) PROCEDURES FOR REDEMPTION. (A) At least 30 days (or such
shorter period acceptable to the Holders of a majority of the then
outstanding shares of 2003 Convertible Preferred Stock) and not more than
60 days prior to the date fixed for any redemption of the 2003 Convertible
Preferred Stock pursuant to PARAGRAPH (f)(i) hereof, written notice (the
"REDEMPTION NOTICE") shall be given by first class mail, postage prepaid,
to each Holder of record on the record date fixed for such redemption of
the 2003 Convertible Preferred Stock at such Holder's address as it appears
on the stock books of the Corporation. Any notice mailed in the manner
herein provided shall be conclusively presumed to have been duly given
whether or not the Holder receives the notice. The Redemption Notice shall
state:
(1) that a redemption is being made pursuant to
PARAGRAPH (f)(i) hereof;
(2) the redemption price;
(3) the total number of shares of 2003 Convertible
Preferred Stock being redeemed;
(4) the date fixed for redemption;
(5) that the Holder is to surrender to the
Corporation, in the manner and at the place or places designated,
such Holder's certificate or certificates representing the shares
of 2003 Convertible Preferred Stock to be redeemed; and
(6) that Dividends on the shares of the 2003
Convertible Preferred Stock to be redeemed shall cease to accrue
on such Redemption Date unless the Corporation defaults in the
payment of the redemption price.
(B) Each Holder shall surrender the certificate or
certificates representing such shares of 2003 Convertible Preferred
Stock to the Corporation, duly endorsed (or otherwise in proper form
for transfer, as determined by the Corporation), in the manner and at
the place designated in the Redemption Notice, and on the Redemption
Date the full redemption price for such shares shall be payable in
cash to the Person whose name appears on such certificate or
certificates as the owner thereof, and each surrendered certificate
shall be canceled and retired. In the event that less than all of the
shares represented by any such certificate are redeemed, a new
certificate shall be issued representing the unredeemed shares.
(C) On and after the Redemption Date, unless the
Corporation defaults in the payment in full of the applicable
redemption price, Dividends on
-8-
the shares of 2003 Convertible Preferred Stock called for redemption
shall cease to accrue on the Redemption Date, and all rights of the
Holders of redeemed shares shall terminate with respect thereto on the
Redemption Date, other than the right to receive the redemption price;
PROVIDED, HOWEVER, that if a Redemption Notice shall have been given
as provided in PARAGRAPH (f)(ii)(A) hereof and the funds necessary for
redemption (including an amount in cash in respect of all Dividends
that will accrue up to (and including) the Redemption Date) shall have
been segregated and set aside for the benefit of the Holders of the
shares to be redeemed, then, at the close of business on the day on
which such funds are segregated and set aside, the Holders of the
shares to be redeemed shall cease to be stockholders of the
Corporation and shall have no interest in or claims against the
Corporation, except for the conversion rights provided in PARAGRAPH
(g) hereof until the close of business on the Business Day immediately
prior to the Redemption Date and the right to receive the redemption
price upon surrender of their certificates in the manner required
herein. Subject to applicable escheat laws, any funds so set aside by
the Corporation and unclaimed at the end of two years from the
Redemption Date shall revert to the general funds of the Corporation,
after which reversion the holders of such shares so called for
redemption shall look only to the general funds of the Corporation for
the payment of the redemption price, without interest. Any interest
accrued or other earnings on funds so deposited shall belong to the
Corporation and be paid thereto from time to time.
(D) If a Redemption Notice has been given pursuant to
PARAGRAPH (f)(ii)(A) and any Holder shall, prior to the close of
business on the Business Day immediately preceding the Redemption
Date, give written notice to the Corporation of the conversion of any
or all shares of 2003 Convertible Preferred Stock held by the Holder
and surrender the certificate or certificates representing such shares
of 2003 Convertible Preferred Stock in accordance with the
requirements of PARAGRAPH (g), then such redemption shall not become
effective as to such shares to be converted and such conversion shall
become effective as provided in PARAGRAPH (g), whereupon any funds
deposited by the Corporation for the redemption of such shares
immediately upon such conversion shall be returned to the Corporation
or, if then held in trust by the Corporation, shall automatically and
without further corporate action or notice be discharged from the
trust.
(g) CONVERSION.
(i) CONVERSION RIGHT. Subject to the provisions of this
PARAGRAPH (g), each Holder shall have the right, at any time and from time
to time, at such Holder's option, to convert any or all of such Holder's
shares of 2003 Convertible Preferred Stock, in whole or in part, into fully
paid and non-assessable shares of Common Stock at the conversion price
equal to $0.42 per share of Common Stock, subject to adjustment as
described in PARAGRAPH (g)(iii) hereof (as adjusted, the "CONVERSION
PRICE"). In the case of shares of 2003 Convertible Preferred Stock called
for redemption pursuant to PARAGRAPH (f), conversion rights shall expire at
the close of business on the Business Day
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immediately preceding the Redemption Date. The number of shares of Common
Stock into which a share of the 2003 Convertible Preferred Stock shall be
convertible (calculated as to each conversion to the nearest whole share)
shall be determined by dividing (x) the sum of the Liquidation Value plus
all accrued but unpaid Dividends with respect to such share of 2003
Convertible Preferred Stock (including Dividends the accrual of which shall
have been accelerated pursuant to PARAGRAPH (c)(i)) BY (y) the Conversion
Price, in each case, in effect at the time of conversion.
(ii) MECHANICS OF CONVERSION.
(A) A Holder that elects to exercise its conversion rights
pursuant to PARAGRAPH (g)(i) hereof shall provide notice as follows:
(1) The Holder of shares of 2003 Convertible Preferred
Stock to be converted shall surrender the certificate or
certificates representing such shares of 2003 Convertible
Preferred Stock to the Corporation at the office of the
Corporation with a written notice of election to convert,
completed and signed, specifying the number of shares of 2003
Convertible Preferred Stock to be converted.
(2) Unless the shares of Common Stock issuable upon
conversion are to be issued in the same name as the name in which
such shares of 2003 Convertible Preferred Stock are registered,
each share of 2003 Convertible Preferred Stock surrendered for
conversion shall be accompanied by instruments of transfer, in
form satisfactory to the Corporation, duly executed by the Holder
or the Holder's duly authorized attorney and an amount sufficient
to pay any transfer or similar tax in accordance with PARAGRAPH
(g)(ii)(F) hereof. As promptly as practicable after such
surrender by the Holder of the certificates for shares of 2003
Convertible Preferred Stock, the Corporation shall issue and
shall deliver to such Holder, or on the Holder's written order to
the Holder's transferee, a certificate or certificates for the
whole number of shares of Common Stock issuable upon the
conversion of such shares of 2003 Convertible Preferred Stock and
a check payable in an amount corresponding to any fractional
interest in a share of Common Stock as provided in PARAGRAPH
(g)(ii)(G) hereof.
(B) Each conversion shall be deemed to have been effected
immediately prior to the close of business on the first Business Day
on which the certificates for shares of 2003 Convertible Preferred
Stock shall have been surrendered and such notice received by the
Corporation as aforesaid (the "CONVERSION DATE"). At such time on the
Conversion Date:
(1) the Person in whose name or names any certificate
or certificates for shares of Common Stock shall be issuable upon
such conversion shall be deemed to have become the holder of
record of the shares of Common Stock represented thereby at such
time; and
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(2) such shares of 2003 Convertible Preferred Stock so
converted shall no longer be deemed to be outstanding, and all
rights of a holder with respect to such shares surrendered for
conversion shall immediately terminate except the right to
receive the Common Stock and other amounts payable pursuant to
this PARAGRAPH (g).
(C) All shares of Common Stock delivered upon conversion of
the 2003 Convertible Preferred Stock will, upon delivery, be duly and
validly authorized and issued, fully paid and nonassessable, free from
all preemptive rights and free from all taxes, liens, security
interests and charges (other than liens, security interests or charges
created by or imposed upon the holder or taxes in respect of any
transfer occurring contemporaneously therewith).
(D) If shares of 2003 Convertible Preferred Stock are
converted into shares of Common Stock pursuant to this PARAGRAPH (g),
and except as otherwise provided in this Certificate of Designation,
the Corporation shall make no payment or adjustment for accrued and
unpaid Dividends on shares of 2003 Convertible Preferred Stock,
whether or not in arrears, or for dividends on the shares of Common
Stock issued upon such conversion.
(E) The Corporation will at all times reserve and keep
available, free from preemptive rights, out of its authorized but
unissued Common Stock, solely for the purpose of effecting conversions
of the 2003 Convertible Preferred Stock, the aggregate number of
shares of Common Stock issuable upon conversion of the 2003
Convertible Preferred Stock. The Corporation will take all
commercially reasonable action as may be necessary to ensure that the
shares of Common Stock may be issued without violation of any
applicable law or regulation.
(F) Issuances of certificates for shares of Common Stock
upon conversion of the 2003 Convertible Preferred Stock shall be made
without charge to the Holder for any issue or transfer tax (other than
taxes in respect of any transfer occurring contemporaneously therewith
or as a result of the Holder being a non-U.S. Person) or other
incidental expense in respect of the issuance of such certificates,
all of which taxes and expenses shall be paid by the Corporation;
PROVIDED, HOWEVER, that the Corporation shall not be required to pay
any tax that may be payable in respect of any transfer involved in the
issuance or delivery of shares of Common Stock in a name other than
that of the Holder of the 2003 Convertible Preferred Stock to be
converted, and no such issuance or delivery shall be made unless and
until the Person requesting such issuance or delivery has paid to the
Corporation the amount of any such tax or has established, to the
satisfaction of the Corporation, that such tax has been paid.
(G) In connection with the conversion of any shares of 2003
Convertible Preferred Stock, no fractions of shares of Common Stock
shall be issued, but in lieu thereof the Corporation shall pay a cash
adjustment in respect
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of such fractional interest in an amount equal to such fractional
interest multiplied by the Conversion Price per share of Common Stock
on the Conversion Date.
(iii) ADJUSTMENTS TO CONVERSION PRICE. From and after the Issue
Date, the Conversion Price shall be adjusted from time to time as follows:
(A) COMMON STOCK ISSUED AT LESS THAN THE MEASUREMENT PRICE.
If the Corporation issues or sells any Common Stock (including Common
Stock deemed issued in accordance with (3) below), other than Excluded
Stock, without consideration or for consideration per share less than
the Measurement Price immediately prior to each such issuance or sale,
as of the day of such issuance or sale, the Conversion Price shall
immediately (except as provided below) be reduced to the price
determined by multiplying the Conversion Price in effect immediately
prior to such issuance or sale by a fraction, the numerator of which
shall be the sum of (x) the number of shares of Common Stock
(including Common Stock deemed issued in accordance with (3) below)
outstanding immediately prior to such issuance or sale and (y) the
number of additional shares of Common Stock (including Common Stock
deemed issued in accordance with (3) below) that the aggregate
consideration received by the Corporation for the number of shares of
Common Stock so offered would purchase at a price per share of Common
Stock equal to the Measurement Price immediately prior to each such
issuance or sale, and the denominator of which shall be the number of
shares of Common Stock (including Common Stock deemed issued in
accordance with (3) below) outstanding immediately after such issuance
or sale. For the purposes of any adjustment of the Conversion Price
pursuant to this PARAGRAPH (g)(iii)(A), the following provisions shall
be applicable:
(1) In the case of the issuance of Common Stock for
cash, the amount of the consideration received by the Corporation
shall be deemed to be the amount of the cash proceeds received by
the Corporation for such Common Stock before deducting therefrom
any discounts or commissions allowed, paid or incurred by the
Corporation for any underwriting or otherwise in connection with
the issuance and sale thereof.
(2) In the case of the issuance of Common Stock
(otherwise than upon the conversion of shares of Capital Stock or
other securities of the Corporation) for a consideration in whole
or in part other than cash, including securities acquired in
exchange therefor (other than securities by their terms so
exchangeable), the consideration other than cash shall be deemed
to be the fair value thereof as determined in good faith by the
Board of Directors.
(3) In the case of the issuance of (a) options,
warrants or other rights to purchase or acquire Common Stock
(whether or not at the time exercisable) or (b) securities by
their terms convertible into or exchangeable for Common Stock
(whether or not at the time so
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convertible or exchangeable) or options, warrants or rights to
purchase such convertible or exchangeable securities (whether or
not at the time exercisable):
(i) the aggregate maximum number of shares of Common
Stock deliverable upon conversion of or in exchange
for any such convertible or exchangeable securities,
or upon the exercise of options, warrants or other
rights to purchase or acquire such convertible or
exchangeable securities or Common Stock, and the
subsequent conversion or exchange thereof, shall be
deemed to have been issued at the time such
securities were issued or such options, warrants or
rights were issued and for a consideration equal to
the consideration, if any, received by the
Corporation for any such securities and related
options, warrants or rights, plus the additional
consideration (determined in the manner provided in
PARAGRAPH (g)(iii)(A)(1) and (2) hereof), if any, to
be received by the Corporation upon the conversion
or exchange of such securities, or upon the exercise
of any related options, warrants or rights to
purchase or acquire such convertible or exchangeable
securities and the subsequent conversion or exchange
thereof;
(ii) on any change in the number of shares of Common
Stock deliverable upon exercise of any such options,
warrants or rights or conversion or exchange of such
convertible or exchangeable securities or any change
in the consideration to be received by the
Corporation upon such exercise, conversion or
exchange, but excluding changes resulting from the
anti-dilution provisions thereof (to the extent
comparable to the anti-dilution provisions contained
herein), the Conversion Price as then in effect
shall forthwith be readjusted to such Conversion
Price as would have been obtained had an adjustment
been made upon the issuance of such options,
warrants or rights not exercised prior to such
change, or of such convertible or exchangeable
securities not converted or exchanged prior to such
change, upon the basis of such change;
(iii) on the expiration or cancellation of any such
options, warrants or rights (without exercise), or
the termination of the right to convert or exchange
such convertible or exchangeable securities (without
exercise), if the Conversion Price shall have been
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adjusted upon the issuance thereof, the Conversion
Price shall forthwith be readjusted to such
Conversion Price as would have been obtained had an
adjustment not been made with respect to such
expired, cancelled, or terminated options, warrants,
rights or such convertible or exchangeable
securities; and
(iv) if the Conversion Price shall have been adjusted
upon the issuance of any such options, warrants,
rights or convertible or exchangeable securities, no
further adjustment of the Conversion Price shall be
made for the actual issuance of Common Stock upon
the exercise, conversion or exchange thereof.
(B) STOCK SPLITS, SUBDIVISIONS, RECLASSIFICATIONS OR
COMBINATIONS. If the Corporation shall (1) declare a dividend or make
a distribution on its Common Stock in shares of Common Stock, (2)
subdivide or reclassify the outstanding shares of Common Stock into a
greater number of shares, or (3) combine or reclassify the outstanding
Common Stock into a smaller number of shares, the Conversion Price in
effect at the time of the record date for such dividend or
distribution or the effective date of such subdivision, combination or
reclassification shall be adjusted to the number obtained by
multiplying the Conversion Price in effect at such record date or
effective date by a fraction, the numerator of which shall be the
number of shares of Common Stock outstanding immediately prior to such
action, and the denominator of which shall be the number of shares of
Common Stock outstanding immediately following such action.
(C) CERTAIN REPURCHASES OF COMMON STOCK. In case the
Corporation effects a Pro Rata Repurchase of Common Stock, then the
Conversion Price shall be reduced to the price determined by
multiplying the Conversion Price in effect immediately prior to the
effective date of such Pro Rata Repurchase by a fraction, the
numerator of which shall be (x) the number of shares of Common Stock
outstanding (including any tendered or exchanged shares) at such
effective date MULTIPLIED by (y) the lesser of the Conversion Price
and the Fair Market Value per share immediately prior to such Pro Rata
Repurchase, and the denominator of which shall be the sum of (x) the
fair market value of the aggregate consideration payable to
stockholders based upon the acceptance (up to any maximum specified in
the terms of the tender or exchange offer) of all shares validly
tendered or exchanged and not withdrawn as of such effective date (the
shares deemed so accepted, up to any maximum, being referred to as the
"PURCHASED SHARES") and (y) the product of the number of shares of
Common Stock outstanding (less any Purchased Shares) at such effective
date and the lesser of the Conversion Price and the Fair Market Value
per share immediately prior to such Pro Rata Repurchase, such
reduction to become effective immediately prior to the opening of
business on the day following such
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effective date. The foregoing notwithstanding, no increase in the
Conversion Price shall be made pursuant to this PARAGRAPH (g)(iii)(C).
(D) BUSINESS COMBINATIONS. In case of any Business
Combination or reclassification of Common Stock (other than a
reclassification of Common Stock referred to in PARAGRAPH (g)(iii)(B)
hereof or a Business Combination treated as a Liquidation pursuant to
PARAGRAPH (d)), lawful provision shall be made as part of the terms of
such Business Combination or reclassification whereby the Holder of
each share of 2003 Convertible Preferred Stock then outstanding shall
have the right thereafter to convert such share only into the kind and
amount of securities, cash and other property receivable upon the
Business Combination or reclassification by a holder of the number of
shares of Common Stock into which a share of 2003 Convertible
Preferred Stock would have been convertible immediately prior to the
Business Combination or reclassification. The Corporation or the
Person formed by the consolidation or resulting from the merger or
which acquires such assets or which acquires the Corporation's shares,
as the case may be, shall make provisions in its certificate or
articles of incorporation or other constituent documents (each, a
"CONSTITUENT DOCUMENT") to establish such rights and to ensure that
the dividend, voting and other rights of the holders of 2003
Convertible Preferred Stock established herein are unchanged, except
as permitted by PARAGRAPH (e) hereof or as required by applicable law.
Such Constituent Documents or any amendment thereof in accordance with
this PARAGRAPH (g)(iii)(D) shall contain terms as nearly equivalent as
may be practicable to the terms provided for in this Certificate of
Designation, including adjustments, which, for events subsequent to
the effective date of such Constituent Documents, shall be as nearly
equivalent as may be practicable to the adjustments provided for in
this PARAGRAPH (g).
(E) OTHER DIVIDENDS AND DISTRIBUTIONS. In case the
Corporation shall, by dividend or otherwise, distribute to all holders
of record of Common Stock evidences of its indebtedness, shares of any
class or series of Capital Stock of the Corporation other than Common
Stock, cash (including in connection with regular periodic dividends)
or assets (including securities, but excluding any securities referred
to in PARAGRAPH (g)(iii)(A) or (B) hereof), the Conversion Price shall
be reduced to the price determined by multiplying the Conversion Price
in effect immediately prior to such distribution or dividend by a
fraction, the numerator of which shall be the Measurement Price in
effect immediately prior to the record date for such distribution or
dividend LESS the fair market value on the date of the distribution or
dividend (as determined in good faith by the Board of Directors) of
such number or amount of the evidences of indebtedness, shares of
Capital Stock of the Corporation, cash and assets that is so
distributed to a holder of one share of Common Stock and the
denominator of which shall be the Measurement Price in effect
immediately prior to the record date for such distribution or
dividend. The foregoing notwithstanding, no adjustment shall be made
pursuant to this PARAGRAPH (g)(iii)(E) with respect to any particular
dividend or distribution (a) with respect to which a Payout Election
is made or (b) if the
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numerator of the fraction referred to in the preceding sentence is
zero or less than zero, in which case a Payout Election will be deemed
to have been made.
(F) SUCCESSIVE ADJUSTMENTS. Successive adjustments in the
Conversion Price shall be made, without duplication, whenever any
event specified in PARAGRAPH (g)(iii) hereof shall occur.
(G) ROUNDING OF CALCULATIONS; MINIMUM ADJUSTMENTS. All
calculations under this PARAGRAPH (g)(iii) shall be made to the
nearest 1/10th of a cent. No adjustment in the Conversion Price is
required if the amount of such adjustment would be less than $0.01;
PROVIDED, HOWEVER, that any adjustments which by reason of this
PARAGRAPH (g)(iii)(G) are not required to be made will be carried
forward and given effect in any subsequent adjustment.
(H) STATEMENT REGARDING ADJUSTMENTS. Whenever the
Conversion Price shall be adjusted as provided in PARAGRAPH (g)(iii)
hereof, the Corporation shall forthwith file, at the principal office
of the Corporation, a statement showing in reasonable detail the facts
requiring such adjustment and the Conversion Price that shall be in
effect after such adjustment and the Corporation shall also cause a
copy of such statement to be sent by mail, first class postage
prepaid, to each Holder at the address appearing in the Corporation's
records.
(I) NOTICES. In the event that the Corporation shall give
notice or make a public announcement to the holders of Common Stock of
any action of the type described in PARAGRAPH (g)(iii) hereof (but
only if the action of the type described in PARAGRAPH (g)(iii) hereof
would result in an adjustment in the Conversion Price or a change in
the type of securities or property to be delivered upon conversion of
the 2003 Convertible Preferred Stock), the Corporation shall, at the
time of such notice or announcement, and in the case of any action
which would require the fixing of a record date, at least 10 days
prior to such record date, give notice to the holder of shares of 2003
Convertible Preferred Stock, in the manner set forth in PARAGRAPH
(g)(iii)(H) hereof, which notice shall specify the record date, if
any, with respect to any such action and the approximate date on which
such action is to take place. Such notice shall also set forth the
facts with respect thereto as shall be reasonably necessary to
indicate the effect on the Conversion Price and the number, kind or
class of shares or other securities or property which shall be
deliverable upon conversion of the 2003 Convertible Preferred Stock.
Failure to give such notice, or any defect therein, shall not affect
the legality or validity of any such action.
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(iv) AUTOMATIC CONVERSION. Upon a Qualified Listing, all
outstanding shares of 2003 Convertible Preferred Stock shall be converted
automatically into the number of shares of Common Stock into which such
shares are convertible pursuant to PARAGRAPH (g)(i) as of immediately prior
to the occurrence of such event, without further action by the Holders
thereof and whether or not the certificates representing such shares are
surrendered to the Corporation or its transfer agent for the Common Stock.
(h) REISSUANCE OF 2003 CONVERTIBLE PREFERRED STOCK. Shares of 2003
Convertible Preferred Stock that have been issued and reacquired in any manner,
including shares purchased or redeemed or exchanged, shall (upon compliance with
any applicable provisions of the laws of Delaware) have the status of authorized
and unissued shares of Preferred Stock undesignated as to series and may be
redesignated and reissued as part of any series of Preferred Stock, PROVIDED
that any issuance of such shares of Preferred Stock must be in compliance with
the terms hereof.
(i) BUSINESS DAY. If any payment, redemption or exchange shall be
required by the terms hereof to be made on a day that is not a Business Day,
such payment, redemption or exchange shall be made on the immediately succeeding
Business Day.
(j) SEVERABILITY. If any term or other provision of this Certificate
of Designation is invalid, illegal or incapable of being enforced by any rule of
law or public policy, all other terms and provisions of this Certificate of
Designation shall nevertheless remain in full force and effect. Upon such
determination that any term or other provision is invalid, illegal or incapable
of being enforced, the Corporation, upon receipt of the Holders consent required
pursuant to PARAGRAPH (e)(ii)(A) hereof, if any, shall amend this Certificate of
Designation to replace such term or provision with a valid and enforceable term
or provision that shall achieve, to the extent possible, the economic, business
or other purposes of such invalid or unenforceable term or provision.
(k) DEFINITIONS. As used in this Certificate of Designation, the
following terms shall have the following meanings (with terms defined in the
singular having comparable meanings when used in the plural and vice versa),
unless the context otherwise requires:
"2003 CONVERTIBLE PREFERRED STOCK" shall have the meaning provided in
PARAGRAPH (a) hereof.
"AFFILIATE" means, of any Person, a Person who, directly or
indirectly, through one or more intermediaries controls, or is controlled
by, or is under common control with, such other Person, PROVIDED that, with
respect to Bain, "Affiliate" shall include each of Bain Fund VII-E (UK) LP,
BCIP Associates III, BCIP Associates III-B, BCIP Trust Associates III, BCIP
Trust Associates III-B, Sankaty High Yield Partners II, LP, Sankaty High
Yield Partners III, LP, Xxxxx Xxxxxxx Capital AS, Xxxxxxxx Street Partners
V, and each investment fund or entity managed or advised by Bain or any of
its Affiliates. The term "control" means the possession, directly or
indirectly, of the power to direct or cause the direction of the management
and policies of a Person, whether through the ownership of voting
securities, by contract or otherwise; PROVIDED, HOWEVER, that the ownership
of
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10% or more of the voting power of the common stock of a Person, either
directly or indirectly, shall be deemed control.
"ARES" means ACOF Management, L.P., a Delaware limited partnership.
"BAIN" means Xxxx Capital (Europe) LLC.
"BENEFICIAL OWNER" has the meaning assigned to such term in Rule
13d-3 and Rule 13d-5 under the Exchange Act, except that in calculating the
beneficial ownership of any particular "person" (as such term is used in
Section 13(d)(3) of the Exchange Act), such "person" shall be deemed to
have beneficial ownership of all securities that such "person" has the
right to acquire by conversion or exercise of other securities, whether
such right is currently exercisable or is exercisable only after the
passage of time or upon the occurrence of a subsequent condition.
"BOARD OF DIRECTORS" shall have the meaning provided in the first
paragraph hereof and shall also mean a duly authorized committee thereof (a
"BOARD COMMITTEE"); PROVIDED that the term "Board of Directors" as used in
the definition of "Change of Control" shall not include any Board
Committee.
"BUSINESS COMBINATION" means (i) any reorganization, consolidation,
merger, share exchange or similar business combination transaction
involving the Corporation with any Person or (ii) the sale, assignment,
conveyance, transfer, lease or other disposition by the Corporation of all
or substantially all of its assets or by the Corporation and/or any of its
subsidiaries of assets constituting all or substantially all of the assets
of the Corporation and its subsidiaries on a consolidated basis.
"BUSINESS DAY" means any day except a Saturday, a Sunday, or any day
on which banking institutions in New York, New York are required or
authorized by law or other governmental action to be closed.
"CAPITAL STOCK" means (i) with respect to any Person that is a
corporation, any and all shares, interests, participations or other
equivalents (however designated) of capital stock, including each class of
common stock and preferred stock of such Person and warrants or options to
purchase any of the foregoing and (ii) with respect to any Person that is
not a corporation, any and all partnership, limited liability company or
other equity interests of such Person.
"CERTIFICATE OF DESIGNATION" means this Certificate of Designation, as
amended from time to time, creating the 2003 Convertible Preferred Stock.
"CERTIFICATE OF INCORPORATION" shall have the meaning provided in the
first paragraph hereof.
"CHANGE OF CONTROL" means the occurrence of any of the following: (1)
the consummation of any transaction (including, without limitation, any
merger or consolidation) the result of which is that any "person" or
"group" (as such terms are used in Section 13(d)(3) of the Exchange Act)
other than the Permitted Holders becomes the
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Beneficial Owner, directly or indirectly, of more than (x) 50% of the
voting power represented by the Voting Stock of the Corporation or (y) 35%
of the voting power represented by the Voting Stock of the Corporation if
such "persons" or "group" are the Beneficial Owners of more than the amount
of voting power represented by the Voting Stock of the Corporation of which
the Permitted Holders are Beneficial Owners; (2) the first day on which a
majority of the members of the Board of Directors are not Continuing
Directors; or (3) the Corporation consolidates with, or merges with or
into, any Person, any Person consolidates with, or merges with or into, the
Corporation, or the Corporation sells, transfers or otherwise conveys,
whether directly or indirectly, all or substantially all of the assets of
the Corporation, on a consolidated basis, to any Person, in any such event
pursuant to a transaction in which any of the outstanding Voting Stock of
the Corporation or such other Person is converted into or exchanged for
cash, securities or other property, other than any such transaction where
all or a portion of the Voting Stock of the Corporation outstanding
immediately prior to such transaction is converted into or exchanged for
Voting Stock of the surviving or transferee Person constituting 50% or more
of the voting power represented by such Voting Stock of such surviving or
transferee Person (immediately after giving effect to such issuance).
"COMMON STOCK" means any and all shares, interests or other
participations in, and other equivalents (however designated and whether
voting or non-voting) of, the common stock, par value $0.01, of the
Corporation, whether outstanding on the Issue Date or issued after the
Issue Date, and includes, without limitation, all series and classes of
such common stock.
"CONSTITUENT DOCUMENT" shall have the meaning provided in
PARAGRAPH (g)(iii)(D) hereof.
"CONTINUING DIRECTORS" means, as of any date of determination, any
member of the Board of Directors who: (1) was a member of such Board of
Directors on the Issue Date; (2) was nominated for election by any
Permitted Holder; or (3) was nominated for election or elected to such
Board of Directors with the approval of a majority of the Continuing
Directors who were members of such Board of Directors at the time of such
nomination or election.
"CONVERSION DATE" shall have the meaning provided in
PARAGRAPH (g)(ii)(B) hereof.
"CONVERSION PRICE" shall have the meaning provided in PARAGRAPH (g)(i)
hereof.
"CORPORATION" shall have the meaning provided in the first paragraph
hereof.
"DIVIDEND" means all of the dividends that accrue (or the accrual of
which shall have been accelerated) pursuant to PARAGRAPH (c)(i) and
PARAGRAPH (c)(ii).
"DIVIDEND PAYMENT DATE" means March 15, June 15, September 15 and
December 15 of each year.
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"DIVIDEND PERIOD" means the Initial Dividend Period and, thereafter,
each quarterly period from a Dividend Payment Date to the next following
Dividend Payment Date (but without including such Dividend Payment Date).
"DIVIDEND RATE" means:
(i) with respect to each Dividend Payment Date prior to the
fifth anniversary of the Issue Date, 8.0% per annum;
(ii) with respect to each Dividend Payment Date on and after the
fifth anniversary, but prior to the eighth anniversary, of the Issue Date,
(A) if all Dividends accrued and owing from the first Dividend Payment Date
occurring on or after the fifth anniversary of the Issue Date shall have
been paid in full in cash on or prior to such Dividend Payment Date, 8.0%
per annum, and (B) otherwise, 10.0% per annum;
(iii) if on the eighth anniversary of the Issue Date the Major
Holders (x) collectively beneficially own a majority of the outstanding
Voting Stock of the Corporation or (y) the directors appointed by the Major
Holders pursuant to clauses (A), (B) and (C) of Section 2.2(b)(i) of the
Stockholders Agreement constitute a majority of the Board of Directors,
from and after the eighth anniversary of the Issue Date until the date on
which (I) the Major Holders collectively cease to beneficially own a
majority of the outstanding Voting Stock of the Corporation and (II) the
directors appointed by the Major Holders pursuant to clauses (A), (B) and
(C) of Section 2.2(b)(i) of the Stockholders Agreement constitute less than
a majority of the Board of Directors:
(A) with respect to each Dividend Payment Date on and after
the eighth anniversary, but prior to the ninth anniversary, of the
Issue Date, (I) if all Dividends accrued for all Dividend Periods
ending after the fifth anniversary of the Issue Date shall have been
paid in full in cash on or prior to such Dividend Payment Date, 7.0%
per annum, and (II) otherwise, 9.0% per annum;
(B) with respect to each Dividend Payment Date on and after
the ninth anniversary, but prior to the tenth anniversary, of the
Issue Date, (I) if all Dividends accrued for all Dividend Periods
ending after the fifth anniversary of the Issue Date shall have been
paid in full in cash on or prior to such Dividend Payment Date, 6.0%
per annum, and (II) otherwise, 8.0% per annum;
(C) with respect to each Dividend Payment Date on and after
the tenth anniversary, but prior to the eleventh anniversary, of the
Issue Date, (I) if all Dividends accrued for all Dividend Periods
ending after the fifth anniversary of the Issue Date shall have been
paid in full in cash on or prior to such Dividend Payment Date, 5.0%
per annum, and (II) otherwise, 7.0% per annum; and
(D) with respect to each Dividend Payment Date on and after
the eleventh anniversary of the Issue Date, (I) if all Dividends
accrued for all Dividend Periods ending after the fifth anniversary of
the Issue Date shall have been paid in full in cash on or prior to
such Dividend Payment Date, 4.0% per annum, and (II) otherwise, 6.0%
per annum; and
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(iv) from the later of (x) the eighth anniversary of the Issue
Date and (y) the date on which (I) the Major Holders collectively cease to
beneficially own a majority of the outstanding Voting Stock of the
Corporation and (II) the directors appointed by the Major Holders pursuant
to clauses (A), (B) and (C) of Section 2.2(b)(i) of the Stockholders
Agreement constitute less than a majority of the Board of Directors (such
later date, the "ESCALATION DATE"):
(A) with respect to each Dividend Payment Date on and after
the Escalation Date, but prior to the first anniversary of the
Escalation Date, (A) if all Dividends accrued for all Dividend Periods
ending after the fifth anniversary of the Issue Date shall have been
paid in full in cash on or prior to such Dividend Payment Date, 9.0%
per annum, and (B) otherwise, 11.0% per annum;
(B) with respect to each Dividend Payment Date on and after
the first anniversary, but prior to the second anniversary, of the
Escalation Date, (A) if all Dividends accrued for all Dividend Periods
ending after the fifth anniversary of the Issue Date shall have been
paid in full in cash on or prior to such Dividend Payment Date, 10.0%
per annum, and (B) otherwise, 12.0% per annum;
(C) with respect to each Dividend Payment Date on and after
the second anniversary, but prior to the third anniversary, of the
Escalation Date, (A) if all Dividends accrued for all Dividend Periods
ending after the fifth anniversary of the Issue Date shall have been
paid in full in cash on or prior to such Dividend Payment Date, 11.0%
per annum, and (B) otherwise, 13.0% per annum; and
(D) with respect to each Dividend Payment Date on and after
the third anniversary of the Escalation Date, (A) if all Dividends
accrued for all Dividend Periods ending after the fifth anniversary of
the Issue Date shall have been paid in full in cash on or prior to
such Dividend Payment Date, 12.0% per annum, and (B) otherwise 14% per
annum.
"DIVIDEND RECORD DATE" means March 1, June 1, September 1 and December
1 of each year.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, and the
rules and regulations promulgated thereunder, as amended.
"EXCLUDED STOCK" means (i) shares of Common Stock issued by the
Corporation as a stock dividend payable in shares of Common Stock, or upon
any subdivision or split-up of the outstanding shares of Capital Stock, in
each case which is subject to the provisions of PARAGRAPH (g)(iii)(B)
hereof, or upon conversion of shares of Capital Stock of the Corporation
(but not the issuance of such convertible Capital Stock of the Corporation
which will be subject to the provisions of PARAGRAPH (g)(iii)(A) hereof),
(ii) the issuance of shares of Common Stock in any bona fide underwritten
public offering, (iii) the issuance of Common Stock in connection with any
debt financing from or with
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one or more unaffiliated third parties approved by the Board of Directors
(including upon the exercise of any warrants issued in connection with such
financings), (iv) the issuance of shares of Common Stock (including upon
exercise of options) to directors, advisors, employees or consultants of
the Corporation pursuant to a stock option plan, restricted stock plan or
other agreement approved by the Board of Directors, including any
management performance options, PROVIDED, that such shares of Common Stock,
when taken together with all other issuances of Common Stock excepted from
PARAGRAPH (g)(iii)(A) pursuant to this CLAUSE (iv), do not constitute more
than 9% of the outstanding shares of Common Stock (calculated at the time
of issuance on an as-converted basis), (v) the issuance of shares of Common
Stock in connection with an arms-length acquisition approved by the Board
of Directors of assets or securities of another Person (other than
issuances to Affiliates of the Corporation), (vi) the issuance of warrants
and Common Stock pursuant to the conversion of the Company's 13-7/8% Senior
Redeemable Exchangeable Preferred Stock and shares of Common Stock issuable
upon exercise of such warrants and (vii) the issuance of Common Stock upon
the conversion of shares of the 2003 Convertible Preferred Stock.
"FAIR MARKET VALUE" means the average of the closing prices of Common
Stock on the NASDAQ (or other securities exchange on which Common Stock is
listed or to which shares of Common Stock are admitted for trading, or on a
quotation system on which Common Stock is then listed) for the 20
consecutive trading days prior to the date as of which such value is to be
determined, or, if no such trading market exists, as determined by a
nationally recognized independent investment bank chosen by the Board of
Directors or by the good faith determination of the Board of Directors.
"HOLDER" means a holder of shares of 2003 Convertible Preferred Stock
as reflected in the stock books of the Corporation.
"INITIAL DIVIDEND PERIOD" means the period commencing on the Issue
Date and ending on the first Dividend Payment Date to occur thereafter.
"ISSUE DATE" means the date of original issuance of the 2003
Convertible Preferred Stock.
"LIQUIDATION" shall have the meaning provided in PARAGRAPH (d)(i).
"LIQUIDATION PREFERENCE" shall have the meaning provided in
PARAGRAPH (d)(i).
"LIQUIDATION VALUE" shall have the meaning provided in
PARAGRAPH (d)(i).
"JUNIOR SECURITIES" shall have the meaning provided in PARAGRAPH (b)
hereof.
"MAJOR HOLDERS" means Ares, Bain and OTPP and their Affiliates.
"MEASUREMENT PRICE" means the greater of (x) the Conversion Price and
(y) the Fair Market Value per share of Common Stock.
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"NASDAQ" means the National Association of Securities Dealers
Automated Quotations system.
"OTPP" means Ontario Teachers Pension Plan Board, a non-share capital
corporation established under the laws of Ontario.
"PARITY SECURITIES" shall have the meaning provided in PARAGRAPH (b)
hereof.
"PAYOUT ELECTION" shall have the meaning provided in
PARAGRAPH (c)(iii)(B) hereof.
"PERMITTED HOLDERS" means the Major Holders.
"PERSON" means an individual, partnership, corporation, unincorporated
organization, joint stock company, limited liability company, trust or
joint venture, or a governmental agency or political subdivision thereof.
"PREFERRED STOCK" means the preferred stock, par value $0.01, of the
Corporation and other any Capital Stock of the Corporation that has
preferential rights to any other Capital Stock of the Corporation with
respect to dividends, redemption, or distributions upon liquidation,
winding-up or dissolution.
"PRO RATA REPURCHASE" means any purchase of shares of Common Stock by
the Corporation or any corporation or other entity directly or indirectly
controlled by the Corporation pursuant to any tender offer or exchange
offer subject to Section 13(e) of the Exchange Act, or pursuant to any
other offer available to all or substantially all holders of Common Stock,
whether for cash, shares of Capital Stock of the Corporation, other
securities of the Corporation, evidences of indebtedness of the Corporation
or any other Person or any other property (including, without limitation,
shares of Capital Stock, other securities or evidences of indebtedness of a
Subsidiary of the Corporation), or any combination thereof, effected while
the 2003 Convertible Preferred Stock is outstanding. The "effective date"
of a Pro Rata Repurchase shall mean the date of acceptance of shares for
purchase or exchange under any tender or exchange offer which is a Pro Rata
Repurchase or the date of purchase with respect to any Pro Rata Repurchase
that is not a tender or exchange offer.
"PURCHASED SHARES" shall have the meaning provided in PARAGRAPH
(g)(iii)(C) hereof.
"QUALIFIED LISTING" means the first firm commitment underwritten
public offering pursuant to an effective registration statement or similar
document covering a U.S. or non-U.S. offer and sale of Common Stock to the
public, (i) the public offering price of which is not less than 225% of the
then-applicable Conversion Price, (ii) that will result in net proceeds to
the Corporation and/or its stockholders of not less than $100 million,
(iii) that will result in (A) a sale of not less than 17.5% of the shares
of Common Stock (determined on an as-converted basis) then outstanding, or
(B) an issuance of newly issued shares of Common Stock that, together with
the sales of Common Stock by Major Holders in such public offering, would
result in the Major Holders' aggregate beneficial
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ownership, as a group, of the total issued and outstanding shares of Common
Stock (on an as-converted basis) being reduced by not less than 17.5%.
"QUALIFIED RECAPITALIZATION" means a transaction in which the
Corporation redeems shares of Common Stock and/or pays a dividend, in
either case, in excess of $25 million in the aggregate, or any transaction
with a similar effect.
"RESOLUTION" shall have the meaning provided in the first paragraph
hereof.
"SENIOR SECURITIES" shall have the meaning provided in PARAGRAPH (b)
hereof.
"STOCKHOLDERS AGREEMENT" means the Stockholders Agreement, dated as of
_______, 2003, among the Corporation, Ares, Bain, OTPP and Ares Leveraged
Investment Fund, L.P.
"SUBSIDIARY" with respect to any Person, means (i) any corporation of
which the outstanding Capital Stock having at least a majority of the votes
entitled to be cast in the election of directors under ordinary
circumstances shall at the time be owned, directly or indirectly, by such
Person or (ii) any other Person of which at least a majority of the voting
interest under ordinary circumstances is at the time, directly or
indirectly, owned by such Person.
"VOTING STOCK" of any Person as of any date means the Capital Stock of
such Person that is at the time entitled to vote in the election of the
board of directors of such Person under ordinary circumstances.
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IN WITNESS WHEREOF, said Samsonite Corporation, has caused this
Certificate of Designation to be signed by ___________________, its
______________, this ___ day of ________, 2003.
SAMSONITE CORPORATION
By:
-------------------------------------
Name:
Title:
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EXHIBIT B
FORM OF STOCKHOLDERS AGREEMENT
EXHIBIT B
SAMSONITE CORPORATION
STOCKHOLDERS AGREEMENT
TABLE OF CONTENTS
Page
----
ARTICLE I DEFINITIONS............................................................1
ARTICLE II BOARD OF DIRECTORS....................................................8
2.1 BOARD OF DIRECTORS.....................................................8
2.2 BOARD COMPOSITION......................................................8
2.3 ELECTION OF DIRECTORS.................................................11
2.4 VACANCIES.............................................................12
2.5 REMOVAL OF MAJOR STOCKHOLDER NOMINEES.................................12
2.6 VETO RIGHTS...........................................................13
ARTICLE III REGISTRATION RIGHTS.................................................13
3.1 DEMAND REGISTRATIONS..................................................14
3.2 PIGGYBACK REGISTRATIONS...............................................17
3.3 OBLIGATIONS OF THE COMPANY............................................19
3.4 OBLIGATIONS OF HOLDER.................................................21
3.5 EXPENSES OF REGISTRATION..............................................22
3.6 DELAY OF REGISTRATION.................................................23
3.7 INDEMNIFICATION.......................................................23
ARTICLE IV TRANSFER OF SHARES...................................................26
4.1 RESTRICTION ON TRANSFER...............................................26
4.2 RIGHTS OF FIRST OFFER.................................................26
4.3 TAG ALONG RIGHTS......................................................27
4.4 SECURITIES LAW RESTRICTIONS...........................................28
4.5 LEGENDS...............................................................28
ARTICLE V OTHER MAJOR STOCKHOLDER RIGHTS........................................29
5.1 DRAG-ALONG RIGHTS; SALE...............................................29
5.2 APPROVED IPO..........................................................32
5.3 HOLDBACK AGREEMENTS...................................................32
5.4 EQUITY PURCHASE RIGHTS................................................33
5.5 PROHIBITED ACTIONS....................................................34
5.6 FIDUCIARY DUTIES......................................................34
5.7 STANDSTILL............................................................34
ARTICLE VI MISCELLANEOUS........................................................34
6.1 RULES OF CONSTRUCTION.................................................35
6.2 SUCCESSORS AND ASSIGNS................................................35
6.3 TERMINATION...........................................................35
6.4 RESTRUCTURING, EXCHANGES, ETC., AFFECTING THE SECURITIES..............35
6.5 CONFLICT WITH BYLAWS..................................................36
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6.6 NO THIRD PARTY BENEFICIARIES..........................................36
6.7 GOVERNING LAW; JURISDICTION...........................................36
6.8 COUNTERPARTS..........................................................36
6.9 TITLES AND SUBTITLES..................................................36
6.10 NOTICES..............................................................36
6.11 EXPENSES.............................................................38
6.12 ENTIRE AGREEMENT; AMENDMENTS AND WAIVERS.............................39
6.13 SEVERABILITY.........................................................39
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STOCKHOLDERS' AGREEMENT
THIS STOCKHOLDERS' AGREEMENT (this "AGREEMENT") is made and entered
into as of _______________, 2003 by and among Samsonite Corporation, a Delaware
corporation (the "COMPANY"), ACOF Management, L.P., a Delaware limited
partnership ("ARES"), Xxxx Capital (Europe) LLC ("BAIN"), Ontario Teachers
Pension Plan Board, a non-share capital corporation established under the laws
of Ontario ("OTPP" and, together with Ares and Bain, the "MAJOR STOCKHOLDERS")
and Ares Leveraged Investment Fund, L.P., a Delaware limited partnership (the
"OTHER STOCKHOLDER" and, together with the Major Stockholders, the
"STOCKHOLDERS").
RECITALS
WHEREAS, on [_____________], 2003, the Major Stockholders and the
Company consummated the transactions contemplated by that certain
Recapitalization Agreement (the "
RECAPITALIZATION AGREEMENT") dated as of ____,
2003 and each of the Major Stockholders acquired preferred equity interests in
the Company and the Company was recapitalized in accordance with the terms
thereof (the "RECAPITALIZATION");
WHEREAS, as a result of the consummation of the Recapitalization, the
Stockholders hold that number and class of shares of the Company as set forth on
SCHEDULE 1; and
WHEREAS, the Stockholders desire to organize their mutual relationship
as the principal stockholders of the Company and their participation in the
governance of the Company.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual promises and covenants
set forth herein, the receipt and sufficiency of which are hereby acknowledged,
the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
As used herein, the terms below shall have the following meanings. Any
such term, unless the context otherwise requires, may be used in the singular or
plural, depending on reference.
"AFFILIATE" means, as applied to any specified Person, any other
Person that, directly or indirectly, controls, is controlled by or is under
common control with such Person. For purposes of the foregoing, "control," when
used with respect to any Person, means the possession, directly or indirectly,
of the power to direct or cause the direction of the management or policies of
such Person, whether through the ownership of Voting Stock, by contract or
otherwise, and the terms "controlled" and "controlling" shall have meanings
correlative to the foregoing. When used in connection with Bain, Affiliates
shall include, without limitation, each of Bain Fund VII-E (UK) LP, BCIP
Associates III, BCIP Associates III-B, BCIP Trust
Associates III, BCIP Trust Associates III-B, Sankaty High Yield Partners II, LP,
Sankaty High Yield Partners III, LP, Xxxxx Xxxxxxx Capital AS, Xxxxxxxx Street
Partners V, and each investment fund or entity managed or advised by Bain or any
of its Affiliates.
"AGREEMENT" shall have the meaning ascribed to it in the forepart of
this Agreement.
"APPLICABLE LAW" means all applicable laws, statutes, rules,
regulations, injunctions, decrees, policies or guidelines promulgated, or
judgments, decisions or Governmental Orders entered by, any Governmental
Authority.
"APPROVED BUDGET AND BUSINESS PLAN" shall have the meaning ascribed to
it in Part II of SCHEDULE 2.
"APPROVED IPO" means the first firm commitment underwritten public
offering pursuant to a Registration Statement that became effective after the
date hereof covering a U.S. or non-U.S. offer and sale of Common Stock for the
account of the Company to the public, (A) the public offering price of which is
not less than 225% of the then-applicable Conversion Price (as such term is
defined in the Certificate of Designation of the Powers, Preferences and
Relative, Participating, Optional and Other Special Rights of the Preferred
Stock) of the Preferred Stock, (B) will result in net proceeds to the Company
and/or its stockholders of not less than $100 million and (C) would result in
(1) a sale of not less than 17.5% of the shares of Common Stock (determined on
an as-converted basis) then outstanding or (2) an issuance of newly issued
shares of Common Stock that, together with the sales of Common Stock by the
Major Stockholders in such public offering, would result in the Major
Stockholders' aggregate beneficial ownership, as a group, of the total issued
and outstanding shares of Common Stock (on an as-converted basis) being reduced
by not less than 17.5%.
"APPROVED IPO NOTICE DATE" shall have the meaning ascribed to it in
SECTION 5.2(a).
"ARES" shall have the meaning ascribed to it in the forepart of this
Agreement.
"BAIN" shall have the meaning ascribed to it in the forepart of this
Agreement.
"BOARD OF DIRECTORS" means the board of directors of the Company, as
constituted from time to time.
"BUYER" shall have the meaning ascribed to it in SECTION 4.3.
"BYLAWS" means the Bylaws of the Company.
"CAPITAL STOCK" means (i) with respect to any Person that is a
corporation, any and all shares, interests, participations, rights or other
equivalents (however designated) of corporate stock; and (ii) with respect to
any other Person, any and all partnership, membership or other equity interests
of such Person.
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"CERTIFICATE" means the Certificate of Incorporation of the Company,
as it may be amended from time to time.
"CLOSING DATE" shall have the meaning ascribed to "Closing Date" in
the
Recapitalization Agreement.
"COLLECTIVE DEMAND" shall have the meaning ascribed to it in SECTION
3.1(b)(i).
"COMMON STOCK" means the Common Stock of the Company, par value $0.01.
"COMPANY" shall have the meaning ascribed to it in the forepart of
this Agreement.
"COMPANY PREFERRED STOCK" means any Equity Interest in the Company
that either by its terms (or by the terms of any security into which it is
convertible or for which it is exchangeable) has a preference over the Common
Stock with respect to dividends, redemption or distributions upon liquidation.
"CORPORATE THERAPEUTICS" means the Samsonite Corporate Therapeutics,
adopted pursuant to the Stipulation of Settlement, dated as of April 28, 2000,
by and among the Company and the other parties thereto.
"DEMAND EXERCISE NOTICE" shall have the meaning ascribed to it in
SECTION 3.1(b)(ii).
"DEMAND REQUEST" shall have the meaning ascribed in SECTION 3.1(a).
"DIRECTOR NOMINEE" shall have the meaning ascribed to it in SECTION
2.2.
"DRAG ALONG NOTICE PERIOD" shall have the meaning ascribed to it in
SECTION 5.1(a).
"DRAG ALONG PARTY" and "DRAG ALONG PARTIES" shall have the meanings
ascribed to it in SECTION 5.1(a).
"DRAG ALONG SHARES" shall have the meaning ascribed to it in SECTION
5.1(a).
"DRAG ALONG TRANSACTION" shall have the meaning ascribed to it in
SECTION 5.1(a).
"DRAGGING PARTY" shall have the meaning ascribed to it in SECTION
5.1(a).
"EQUITY INTERESTS" means Capital Stock or warrants, options or other
rights to acquire Capital Stock.
"EXCHANGE ACT" shall mean the U.S. Securities Exchange Act of 1934,
including the rules and regulations promulgated thereunder, as amended.
"EXERCISING STOCKHOLDER" shall have the meaning ascribed to it in
SECTION 3.1(b)(ii).
-3-
"EXPIRING NOMINEE" shall have the meaning ascribed to it in SECTION
2.3(b).
"FAIR MARKET VALUE" of any asset or security of the Company means the
fair market value of such asset or security as determined in the good faith
judgment of the Board of Directors, which shall include a majority of the
Independent directors of the Company.
"FEE LETTER" means the fee letter, entered into on the date hereof,
between the Company, Ares, OTPP and Bain.
"GOVERNMENTAL AUTHORITY" means any United States federal, state or
local or any foreign or multinational government (including the European Union),
governmental, regulatory or administrative authority, agency or commission or
any court, tribunal, or judicial or arbitral body (or any subdivision of any of
the foregoing) having jurisdiction or authority with respect to the particular
matter at issue in its context.
"GOVERNMENTAL ORDER" means any order, writ, judgment, injunction,
decree, stipulation, determination or award entered by or with any Governmental
Authority.
"HOLDER" means any Stockholder owning Registrable Securities.
"INDEPENDENT" means a person other than a director of any Major
Stockholder or an officer or employee of the Company, any of its subsidiaries,
any of the Major Stockholders or any of their respective Affiliates, in each
case during the then current year or any of the three immediately preceding
years, or member of the immediate family of any of the foregoing persons.
"INDIVIDUAL DEMAND" shall have the meaning ascribed to it in SECTION
3.1(b)(i).
"INITIAL OFFERING" means the closing of the first underwritten public
offering of Common Stock on or after the Closing Date after which the Common
Stock is listed on the New York Stock Exchange, admitted for quotation on the
NASDAQ National Market (or any successor thereto) or listed on the London Stock
Exchange.
"MAJOR STOCKHOLDER NOMINEE" shall have the meaning ascribed to it in
SECTION 2.2.
"MAJOR STOCKHOLDERS" shall have the meaning ascribed to it in the
forepart of this Agreement.
"MATERIAL ADVERSE CHANGE" shall have the meaning ascribed to it in
SECTION 3.5.
"MATERIAL SUBSIDIARY" means each "Significant Subsidiary" of the
Company, as defined in Rule 1-02 of Regulation S-X promulgated under the
Securities Act, Samsonite GmbH, Samsonite Limited and Samsonite India Limited.
"NASDAQ" means the National Association of Securities Dealers
Automated Quotations system.
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"NONEXERCISING STOCKHOLDERS" shall have the meaning ascribed to it in
SECTION 3.1(b)(ii).
"OFFER NOTICE" shall have the meaning ascribed to it in SECTION
4.2(a).
"OFFEREES" shall have the meaning ascribed to it in SECTION 4.2(a).
"OFFEROR" shall have the meaning ascribed to it in SECTION 4.2(a).
"ORIGINAL OWNERSHIP" means, with respect to each Stockholder as of
the date of determination, the shares of Common Stock (calculated on an
as-converted basis) underlying the Securities held by such Stockholder
immediately after consummation of the Recapitalization. For the avoidance of
doubt, no right of any Stockholder that is determined with reference to Original
Ownership may be assigned or transferred.
"OTHER STOCKHOLDER" shall have the meaning ascribed to it in the
forepart of this Agreement.
"OTPP" shall have the meaning ascribed to it in the forepart of this
Agreement.
"PER SHARE PURCHASE PRICE" means $1,000.
"PERMITTED TRANSFER" means (a) (i) solely with respect to each of ACOF
Management, L.P., Ares Leveraged Investment Fund, L.P., Ares Leveraged
Investment Fund II, L.P., Sankaty High Yield Partners II, L.P. and Sankaty High
Yield Partners III, L.P., any pledge of Securities made by such Stockholder
pursuant to a bona fide debt transaction which (A) creates a mere security
interest over all or substantially all of the assets of such Stockholder and (B)
is permitted by such Stockholder's limited partnership agreement as of the date
hereof, and (ii) with respect to each other Affiliate of any Major Stockholder
other than ACOF Management, L.P., Ares Leveraged Investment Fund, L.P., Ares
Leveraged Investment Fund II, L.P., Sankaty High Yield Partners II, L.P. and
Sankaty High Yield Partners III, L.P. (each such other Affiliate, a "COVERED
AFFILIATE"), any pledge of Securities made by such Stockholder pursuant to a
bona fide debt transaction which creates a mere security interest over all or
substantially all of the assets of such Covered Affiliate, PROVIDED, that the
Securities subject to such pledge, when taken together with all other pledges
by the Covered Affiliates of such Major Stockholder constitute less than 25% of
the Original Ownership of such Major Stockholder, (b) any Transfer pursuant to
a registration under Applicable Law, (c) any Transfer by any Stockholder to an
Affiliate of such Stockholder, (d) any Transfer by a Stockholder to the equity
investors, partners, members or managers of such Stockholder upon either the
liquidation of such Stockholder or other distribution of securities in-kind to
such equity investors, partners, members or managers and (e) transfers in
accordance with Section 5.13 of the
Recapitalization Agreement.
"PERSON" means an individual, corporation, partnership, limited
liability company, association, trust or other entity or organization, including
a government or political subdivision or an agency or instrumentality thereof.
"PREFERRED STOCK" means the 2003 Convertible Preferred Stock of the
Company, par value $0.01 per share.
-5-
"PRIMARY ACTIONS" shall have the meaning ascribed to it in SECTION
2.6(a).
"RECAPITALIZATION" shall have the meaning ascribed to it in the
recitals of this Agreement.
"RECAPITALIZATION AGREEMENT" shall have the meaning ascribed to it in
the recitals of this Agreement.
"REGISTER," "REGISTERED," and "REGISTRATION" refer to, in the United
States, a registration of securities effected by preparing and, if applicable,
filing a Registration Statement, and, if applicable, the declaration or ordering
of effectiveness of such Registration Statement, and outside of the United
States, refer to the listing, qualification or other process by which securities
are made freely transferable within a jurisdiction or on an applicable
securities exchange.
"REGISTRABLE SECURITIES" means (i) shares of Common Stock (including
those shares of Common Stock issued or issuable upon conversion of the Preferred
Stock) and (ii) any Capital Stock of the Company or any successor entity issued
as (or issuable upon the conversion or exercise of any warrant, right or other
security that is issued as) a dividend or other distribution with respect to, or
in exchange for, or in replacement of, the Registrable Securities referenced in
CLAUSE (i) above. As to any particular Registrable Securities, such securities
shall cease to be Registrable Securities when they have been distributed to the
public pursuant to an offering registered under the Securities Act or sold to
the public through a broker, dealer or market maker in compliance with Rule 144
under the Securities Act (or any similar rule then in force).
"REGISTRATION STATEMENT" means in connection with the public offering
and sale of Equity Interests of the Company (whether in the U.S. or in any
non-U.S. jurisdiction), a registration statement (including pursuant to Rule 415
under the Securities Act), listing application, qualification statement or
similar document on the appropriate form in compliance with Applicable Law and
applicable stock exchange regulations.
"REGISTRATION EXPENSES" shall have the meaning ascribed to it in
SECTION 3.5.
"SALE" shall have the meaning ascribed to it in SECTION 5.1(b).
"SALE PARTY" shall have the meaning ascribed to it in SECTION 5.1(b).
"SALE PERIOD" shall have the meaning ascribed to it in SECTION 4.2(d).
"SALE PRICE" shall have the meaning ascribed to it in SECTION 4.2(a).
"SALE NOTICE DATE" shall have the meaning ascribed to it in SECTION
5.1(b).
"SEC" means the U.S. Securities and Exchange Commission.
"SECTION 5.1 NOTICE" shall have the meaning ascribed to in SECTION
5.1(c)(i).
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"SECTION 5.1 PRICE" shall have the meaning ascribed to in SECTION
5.1(c)(i).
"SECURITIES" means shares of the Preferred Stock and shares of Common
Stock held as of the date hereof and hereafter acquired, and in the case of any
determination of percentage of Original Ownership, shall mean shares of Common
Stock, calculated on an as-converted basis, with respect to shares of Preferred
Stock and Common Stock held as of the date hereof and shall include Preferred
Stock and Common Stock transferred by such Stockholder to any Affiliate of such
Stockholder to the extent still held by such Affiliate at the time of
determination.
"SECURITIES ACT" means the U.S. Securities Act of 1933, as amended.
"SELLING STOCKHOLDER" shall have the meaning ascribed to it in SECTION
4.3.
"SIGNIFICANT ACTIONS" shall have the meaning ascribed to it in SECTION
2.6(b).
"STOCKHOLDERS" shall have the meaning ascribed to it in the forepart
of this Agreement.
"SUBJECT SECURITIES" shall have the meaning ascribed to it in SECTION
4.2(a).
"SUBSIDIARIES" means all Persons in which the Company owns, directly
or indirectly, a majority of the Voting Stock or is a general partner or
otherwise has the power to control, by agreement or otherwise, the management
and general business affairs of such other Person.
"TAG ALONG NOTICE" shall have the meaning ascribed to it in SECTION
4.3.
"TAG ALONG SHARES" shall have the meaning ascribed to it in SECTION
4.3.
"TAG SALE" shall have the meaning ascribed to it in SECTION 4.3.
"TAG SELLER" shall have the meaning ascribed to it in SECTION 4.3.
"TRANSFER" means any direct or indirect sale, assignment, mortgage,
transfer, pledge, hypothecation or other disposition or transfer.
"TRIGGERING HOLDER" shall have the meaning ascribed to in SECTION
5.1(c).
"VIOLATION" shall have the meaning ascribed to in SECTION 3.7(a).
"VOTING STOCK" means, with respect to any Person, any shares of stock
or other equity interests of any class or classes of such Person whose holders
are entitled under ordinary circumstances (irrespective of whether at the time
stock or other equity interests of any other class or classes shall have or
might have voting power by reason of the happening of any contingency) to vote
for the election of a majority of the directors, managers, trustees or other
governing body of such Person.
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ARTICLE II
BOARD OF DIRECTORS
2.1 BOARD OF DIRECTORS. Each Stockholder will use its respective
best efforts to take or cause to be taken such action lawfully within its power
to cause the Board of Directors to initially consist of nine (9) persons, which
may be increased or reduced as provided herein and in accordance with the Bylaws
but not below the number of directors entitled to be nominated by the Major
Stockholders pursuant to SECTION 2.2 without the prior written consent of the
affected Major Stockholder(s). Each Stockholder will use its respective best
efforts to take or cause to be taken such action as may be necessary to
effectuate the provisions of this SECTION 2.1.
2.2 BOARD COMPOSITION.
(a) For so long as the terms of the Corporate Therapeutics
require:
(i) Subject to SECTIONS 2.2(a)(ii) and 2.5, the
rules, regulations and/or interpretations of any securities exchange
or regulatory authority to which the Company is subject, Applicable
Law and the Corporate Therapeutics, each Stockholder agrees that it
will take all action lawfully within its power to cause the Board of
Directors to consist of (A) one (1) director nominated by Ares; (B)
one (1) director nominated by Xxxx; (C) one (1) director nominated by
OTPP; (D) two (2) Independent directors, each of which, subject to
SECTION 2.3(a), will be a person nominated by mutual agreement of Ares
and OTPP (such agreement not to be unreasonably denied or delayed);
(E) three (3) Independent directors, each of which, subject to SECTION
2.3(a), will be a person nominated by Xxxx, PROVIDED that at least one
(1) of such nominees must be acceptable to Ares and OTPP (such
acceptance not to be unreasonably denied or delayed); and (F) one (1)
Independent director, which, subject to SECTION 2.3(a), will be a
person nominated by the Chief Executive Officer of the Company. Other
directors to be nominated as a result of the operation of CLAUSE
(a)(ii)(B) and CLAUSE (a)(ii)(C) below shall be nominated in
accordance with the terms of the Company's Certificate, Bylaws and the
Corporate Therapeutics. Each person nominated for election as a
director of the Company pursuant to CLAUSES (A) through (F) of this
SECTION 2.2(a)(i) and each person elected to fill a vacancy on the
Board of Directors created by such person pursuant to SECTION 2.4, is
referred to herein as a "DIRECTOR NOMINEE" and each person nominated
for election as a director of the Company pursuant to CLAUSES (A)
through (E) of this SECTION 2.2(a)(i) and each person elected to fill
a vacancy on the Board of Directors created by such person pursuant to
SECTION 2.4, is referred to herein as a "MAJOR STOCKHOLDER NOMINEE."
Each Major Stockholder agrees that it will take all action lawfully
within its power to cause each director of the Company to serve for an
initial term of one (1) year or until his or her successor is elected
and qualified or until his or her earlier resignation, or removal.
Each Major Stockholder agrees that, subject to the Corporate
Therapeutics, the rules, regulations and/or interpretations of any
securities exchange or regulatory authority to which the Company is
subject and Applicable Law, it will take all action lawfully within
its power to cause each Major Stockholder to have the right to have at
least one of its Major Stockholder
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Nominees nominated pursuant to CLAUSE (a)(i)(A), (a)(i)(B) or
(a)(i)(C), as applicable, be a member of each committee of the Board
of Directors for so long as such Major Stockholder shall have the
right to nominate one (1) director pursuant to such clause (after
giving effect to any reduction in the number of directors such Major
Stockholder is permitted to nominate pursuant to SECTION 2.2(a)(ii)).
(ii) Each Major Stockholder agrees that,
notwithstanding the foregoing, if:
(A) at any time any Major Stockholder
beneficially owns Securities constituting less than 33% of
the Original Ownership of such Major Stockholder, such Major
Stockholder will no longer be permitted to nominate any
directors pursuant to CLAUSE (a)(i)(A), (a)(i)(B) or
(a)(i)(C) above, as applicable, and the number of directors
constituting the Board of Directors will be reduced, in each
such case, by the number of members such Major Stockholder
was permitted to nominate pursuant to such clause prior to
the operation of this CLAUSE (a)(ii)(A);
(B) (1) at any time Ares beneficially owns
Securities constituting 51% or more of the Original Ownership
of Ares and OTPP beneficially owns Securities constituting
less than 51% of the Original Ownership of OTPP, then Ares
will have the sole right to nominate the Independent
directors pursuant to CLAUSE (a)(i)(D) above; (2) at any time
OTPP beneficially owns Securities constituting 51% or more of
the Original Ownership of OTPP and Ares beneficially owns
Securities constituting less than 51% of the Original
Ownership of Ares, then OTPP will have the sole right to
nominate such Independent directors pursuant to CLAUSE
(a)(i)(D) above; and (3) at any time Ares and OTPP each
beneficially own Securities constituting less than 51% of the
Original Ownership of such Major Stockholder, Ares and OTPP
will no longer be permitted to nominate any directors
pursuant to CLAUSE (a)(i)(D) above;
(C) at any time Xxxx beneficially owns
Securities constituting less than 51% of the Original
Ownership of such Major Stockholder, Xxxx will no longer be
permitted to nominate any directors pursuant to CLAUSE
(a)(i)(E).
(b) Upon the termination of any contrary requirement of the
Corporate Therapeutics:
(i) Subject to SECTIONS 2.2(b)(ii) and 2.5, the
rules, regulations and/or interpretations of any securities exchange
or regulatory authority to which the Company is subject, and
Applicable Law, each Stockholder agrees that it will take all action
lawfully within its power to cause the Board of Directors to consist
of (A) two (2) directors nominated by Ares; (B) two (2) directors
nominated by Xxxx; (C) one (1) director nominated by OTPP; (D) one (1)
Independent director,
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which, subject to SECTION 2.3(a), will be a person nominated by mutual
agreement of Ares and OTPP (such agreement not to be unreasonably
denied or delayed); (E) one (1) Independent director, which, subject
to SECTION 2.3(a), will be a person nominated by Xxxx; (F) one (1)
Independent director, which, subject to SECTION 2.3(a), will be a
person nominated by Xxxx, PROVIDED that such nominee must be
acceptable to Ares and OTPP (such acceptance not to be unreasonably
denied or delayed); and (G) the Chief Executive Officer of the
Company. Other directors to be nominated as a result of the operation
of CLAUSE (b)(ii)(C) and CLAUSE (b)(ii)(D) below shall be nominated in
accordance with the terms of the Company's Certificate and Bylaws.
Each person nominated for election as a director of the Company
pursuant to CLAUSES (A) through (G) of this SECTION 2.2(b)(i) and each
person elected to fill a vacancy on the Board of Directors created by
such person pursuant to SECTION 2.4, is referred to herein as a
"DIRECTOR NOMINEE" and each person nominated for election as a
director of the Company pursuant to CLAUSES (A) through (F) of this
SECTION 2.2(b)(i) and each person elected to fill a vacancy on the
Board of Directors created by such person pursuant to SECTION 2.4, is
referred to herein as a "MAJOR STOCKHOLDER NOMINEE." Each Major
Stockholder agrees that it will take all action lawfully within its
power to cause each director of the Company to serve for an initial
term of one (1) year or until his or her successor is elected and
qualified or until his or her earlier resignation, or removal. Each
Major Stockholder agrees that, subject to the rules, regulations
and/or interpretations of any securities exchange or regulatory
authority to which the Company is subject and Applicable Law, it will
take all action lawfully within its power to cause each Major
Stockholder to have the right to have at least one of its Major
Stockholder Nominees nominated pursuant to CLAUSE (b)(i)(A), (b)(i)(B)
or (b)(i)(C), as applicable, be a member of each committee of the
Board of Directors for so long as such Major Stockholder shall have
the right to nominate one (1) director pursuant to such clause (after
giving effect to any reduction in the number of directors such Major
Stockholder is permitted to nominate pursuant to SECTION 2.2(b)(ii)).
(ii) Each Major Stockholder agrees that,
notwithstanding the foregoing, if:
(A) at any time Ares or Xxxx beneficially
owns Securities constituting more than 33%, but less than
51%, of the Original Ownership of such Major Stockholder, the
number of directors such Major Stockholder is permitted to
nominate pursuant to CLAUSE (b)(i)(A) or (b)(i)(B) above, as
applicable, will be reduced by one (1) director and the
number of directors constituting the Board of Directors will
be reduced by one (1) director;
(B) at any time any Major Stockholder
beneficially owns Securities constituting less than 33% of
the Original Ownership of such Major Stockholder, such Major
Stockholder will no longer be permitted to nominate any
directors pursuant to CLAUSE (b)(i)(A), (b)(i)(B) or
(b)(i)(C) above, as applicable, and the number of directors
constituting the Board of Directors will be reduced, in each
such case, by the number of members
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such Major Stockholder was permitted to nominate pursuant to
such clause prior to the operation of this CLAUSE (b)(ii)(B);
(C) at any time Xxxx beneficially owns
Securities constituting less than 51% of the Original
Ownership of such Major Stockholder, Xxxx will no longer be
permitted to nominate any directors pursuant to CLAUSE
(b)(i)(E) or CLAUSE (b)(i)(F);
(D) (1) at any time Ares beneficially owns
Securities constituting 51% or more of the Original Ownership
of Ares and OTPP beneficially owns Securities constituting
less than 51% of the Original Ownership of OTPP, then Ares
will have the sole right to nominate the Independent director
pursuant to CLAUSE (b)(i)(D) above; (2) at any time OTPP
beneficially owns Securities constituting 51% or more of the
Original Ownership of OTPP and Ares beneficially owns
Securities constituting less than 51% of the Original
Ownership of Ares, then OTPP will have the sole right to
nominate such Independent director pursuant to CLAUSE
(b)(i)(D) above; and (3) at any time Ares and OTPP each
beneficially own Securities constituting less than 51% of the
Original Ownership of such Major Stockholder, Ares and OTPP
will no longer be permitted to nominate any directors
pursuant to CLAUSE (b)(i)(D) above.
(c) BOARD OBSERVERS. Each Major Stockholder shall have the
right to designate one individual to observe and attend all meetings of the
Board of Directors for so long as such Major Stockholder beneficially owns
Securities constituting more than 10% of the Original Ownership of such Major
Stockholder and to receive on a timely basis all notices of meetings of the
Board of Directors and all materials provided to the members of the Board of
Directors, in each case as and when delivered to the members of the Board of
Directors.
2.3 ELECTION OF DIRECTORS.
(a) Each Stockholder agrees to take all actions lawfully
within its power to cause the Director Nominees to be elected as directors of
the Company in any and all elections of directors of the Company held during the
term of this Agreement, including, without limiting the generality or effect of
the foregoing, (i) to vote, or cause to be voted, or, if applicable, execute
written consents with respect to, all Voting Stock held by such Stockholder and
entitled to vote in favor of the Director Nominees to the Board of Directors in
any and all elections of, or solicitations of written consents with respect to
the election of, directors of the Company held during the term of this Agreement
that such Stockholder has the power to vote or in respect of which such Major
Stockholder has the power to direct the vote and (ii) to cause its nominees to
the Board of Directors, if any, to vote in favor of the Director Nominees for
election to the Board of Directors and otherwise take all actions necessary to
cause the Director Nominees to be elected as directors of the Company (including
with respect to the filling of any vacancies in accordance with SECTION 2.4).
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(b) Without limiting the generality or effect of this SECTION
2.3, at each meeting of the stockholders of the Company held during the term of
this Agreement at which the term of office of any Major Stockholder Nominee
nominated by one or more Major Stockholders pursuant to CLAUSE (A), (B), (C),
(D) or (E) of SECTION 2.2(a)(i) or CLAUSE (A), (B), (C), (D), (E) or (F) of
SECTION 2.2(b)(i), as applicable (an "EXPIRING NOMINEE"), expires and at which
time the Major Stockholder(s) that nominated such Expiring Nominee continues to
be entitled to nominate a Major Stockholder Nominee pursuant to such clause,
each Stockholder agrees to take all actions within its power to cause such
Expiring Nominee to be nominated for election to another term as a director of
the Company and to be included in the slate of nominees recommended to
stockholders for election as directors of the Company in any proxy statement
prepared by or on behalf of the Company with respect to such meeting; PROVIDED
that, if the Major Stockholder(s) that nominated such Major Stockholder Nominee
that is an Expiring Nominee so specifies, or such Expiring Nominee declines or
is unable to accept the nomination, each Stockholder agrees to take all action
within its power to cause another individual designated by such Major
Stockholder(s) to be nominated for election as a director of the Company in lieu
of such Expiring Nominee and to be included in the slate of nominees recommended
to stockholders for election as directors of the Company in any such proxy
statement; and PROVIDED, FURTHER, that this SECTION 2.3(b) shall not apply if
the nomination of such Expiring Nominee or such replacement designee, as
applicable, would result in such Major Stockholder(s) that nominated such
Expiring Nominee having nominated more Major Stockholder Nominees than such
Major Stockholder(s) is then entitled to nominate pursuant to SECTION 2.2.
(c) Notwithstanding anything to the contrary in this SECTION
2.3 or SECTION 2.5, in any fiscal year of the Company during which the Major
Stockholders shall have removed more than one individual designated pursuant to
SECTION 2.2(b)(i)(D), (E) or (F), any individual designated pursuant to SECTION
2.2(b)(i)(D), (E) or (F) by the Major Stockholders in such fiscal year to fill
any vacancy created by a removal of a director without cause, other than the
first such vacancy, shall have been approved by a majority of the Independent
directors.
2.4 VACANCIES. Each Stockholder agrees to take all action
lawfully within its power to cause each director to hold his or her office as a
director of the Company for such term as is provided in the Certificate and
Bylaws until his or her death, resignation or removal from the Board of
Directors or until his or her successor has been duly elected and qualified in
accordance with the provisions of this Agreement, the Certificate and Bylaws and
Applicable Law. If any Major Stockholder Nominee ceases to serve as a director
of the Company for any reason during his or her term, each Stockholder agrees to
take all action within its power to cause a nominee for the vacancy resulting
therefrom to be designated in the manner provided in such clause; PROVIDED, that
the designation of such nominee would not result in the relevant Major
Stockholder(s) having nominated more persons pursuant to such clause than such
Major Stockholder(s) is then entitled to nominate pursuant to SECTION 2.2.
2.5 REMOVAL OF MAJOR STOCKHOLDER NOMINEES. If at any time the
Major Stockholder that nominated any Major Stockholder Nominee shall notify the
Company and the other Stockholders in writing of its desire to have removed from
the Board of Directors, with or without cause, such Major Stockholder Nominee,
each of the Stockholders will (and will cause its nominees to the Board of
Directors, if any, to), if necessary, subject to all Applicable Law and the
Bylaws, use its respective best efforts to take or cause to be taken all such
action as may be
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required to remove such Major Stockholder Nominee from the Board of Directors.
Subject to the immediately preceding sentence, no Stockholder will vote or cause
to be voted, or execute written consents with respect to, any Voting Stock that
it has the power to vote or in respect of which it has the power to direct the
vote for (and shall cause its nominees to the Board of Directors, if any, to
refrain from approving or otherwise voting in favor of) the removal of the Major
Stockholder Nominee nominated by any Major Stockholder(s) without the prior
written consent of such Major Stockholder(s). At any time the number of nominees
which a Major Stockholder is then entitled to nominate is reduced by one (1)
pursuant to SECTION 2.2 above, each Stockholder agrees, subject to all
applicable requirements of law and the Bylaws, to use its reasonable best
efforts to take or cause to be taken all such action as may be required to
remove such Major Stockholder Nominee from the Board of Directors, including, in
the case of the Major Stockholder that originally nominated such Major
Stockholder Nominee, using its best efforts to cause such Major Stockholder
Nominee to resign in accordance with the Bylaws and using its best efforts to
cause the remaining members of the Board of Directors, in accordance with the
Bylaws, and provided the Board of Directors shall not have been reduced in
number in accordance with SECTION 2.2(a)(ii) or 2.2(b)(ii), as applicable, to
nominate a replacement nominee, PROVIDED that in the event such Major
Stockholder has the ability to nominate one or more members of the Board and
Directors pursuant to SECTION 2.2 above, then such Major Stockholder shall
provide notice to the Company and the other Major Stockholders designating the
Major Stockholder Nominee that is to be removed from the Board of Directors.
2.6 VETO RIGHTS.
(a) The parties agree that following the Recapitalization,
neither the Company nor its Subsidiaries shall take, or be permitted to take,
any of the actions set forth on Part I of SCHEDULE 2 (the "PRIMARY ACTIONS")
without the prior written consent of the Major Stockholders; PROVIDED, HOWEVER,
that no such prior written consent contemplated by this SECTION 2.6(a) shall be
required at any time when the Major Stockholders, collectively, do not
beneficially own at least 25% of the then outstanding Voting Stock of the
Company.
(b) The parties agree that following the Recapitalization
neither the Company nor its Subsidiaries shall take, or be permitted to take,
any of the actions set forth on Part II of SCHEDULE 2 (the "SIGNIFICANT
ACTIONS") without the prior written consent of two (2) of the three (3) Major
Stockholders; PROVIDED, HOWEVER, that no such prior written consent contemplated
by this SECTION 2.6(b) shall be required at any time when the Major
Stockholders, collectively, do not beneficially own at least 25% of the then
outstanding Voting Stock of the Company.
(c) Except for this Agreement, each Stockholder represents
that it is not party to, and covenants not to enter into, any agreement,
arrangement, understanding or relationship, whether formal or informal, with any
holder of Company Equity Interests (other than its Affiliates or any other
Stockholder) relating to the voting of any Company Equity Interests held by
unrelated holders.
ARTICLE III
REGISTRATION RIGHTS
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3.1 DEMAND REGISTRATIONS.
(a) TIMING OF DEMAND REGISTRATIONS. Subject to the conditions
of this SECTION 3.1, at any time after the earlier of (x) the date which is six
(6) months after the consummation of the Approved IPO and (y) the date which is
five (5) years after the Closing Date, any Major Stockholder, acting alone or
jointly with any of the other Major Stockholders, may request in writing (a
"DEMAND REQUEST") that the Company commence a registration covering Registrable
Securities held by such Major Stockholder(s) with an anticipated aggregate
offering price (before any underwriting discounts and commissions) anticipated
in good faith to be at least $20 million, which Major Stockholder(s) making such
Demand Request and amount of Registrable Securities to be included in such
registration shall be specified in such Demand Request.
(b) NUMBER OF DEMAND REGISTRATIONS.
(i) The Company shall be obligated to prepare, file and use its
reasonable best efforts to cause to become effective pursuant to this
SECTION 3.1 no more than five (5) Registration Statements in the aggregate,
which Registration Statements shall be allocated as follows: (A) each Major
Stockholder will have the right to make a Demand Request with respect to
one (1) registration in such Major Stockholder's sole discretion (each, an
"INDIVIDUAL DEMAND") in which such Major Stockholder will have priority;
and (B) two or more Major Stockholders, acting jointly, will have the right
to make a Demand Request with respect to two (2) registrations (each, a
"COLLECTIVE DEMAND"); PROVIDED, that no Major Stockholder, nor any Major
Stockholders acting jointly, shall be entitled to make more than one Demand
Request during any 9-month period.
(ii) If any Major Stockholder is entitled pursuant to the terms of
this SECTION 3.1 to make a Demand Request and elects to make a Demand
Request, such Major Stockholder (in such capacity the "EXERCISING
STOCKHOLDER") shall give the other Major Stockholders (in such capacity,
the "NONEXERCISING STOCKHOLDERS") written notice of its intent to make a
Demand Request (a "DEMAND EXERCISE NOTICE") not less than ten (10) business
days prior to the date such Demand Request is to be made. Each of the
Nonexercising Stockholders may elect to join in such Demand Request and
include its Registrable Securities on a pari passu basis with the
Registrable Securities of the Exercising Stockholder by notifying the
Exercising Stockholder of such Nonexercising Stockholder's intent and the
number of such Registrable Securities desired to be included not more than
seven (7) business days following receipt of the Demand Exercise Notice, in
which case such Demand Request shall be deemed to be a Collective Demand
and, in such case, each such participating Major Stockholder shall be
deemed to be an Exercising Stockholder. Notwithstanding the foregoing,
after any Major Stockholder acting as a Nonexercising Stockholder shall
have elected to join in the Demand Request of an Exercising Stockholder,
such Exercising Stockholder shall not be required to comply with the
provisions of this PARAGRAPH (ii) with respect to a subsequent Demand
Request made by such Exercising Stockholder.
(c) PARTICIPATION. Within twenty (20) days of the receipt of
any Demand Request, the Company shall give written notice of such Demand Request
to all Holders. Subject
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to the provisions of this SECTION 3.1 (including without limitation SECTION
3.1(d)), the Company shall include in such demand registration all Registrable
Securities that the Holders request to be registered in a written request from
such Holders received by the Company within fifteen (15) days of the mailing of
the Company's notice pursuant to this SECTION 3.1(c). Subject to PARAGRAPH (d)
below, the Company may include in such demand registration securities for sale
for its own account or for the account of other security holders.
(d) UNDERWRITER'S CUTBACKS. Notwithstanding any other
provision of this SECTION 3.1, if the managing underwriter with respect to the
proposed offering advises the Exercising Stockholder(s) in writing that, in its
opinion, the number of securities requested to be included in such registration
exceeds the number of securities which can be sold in such offering without
being likely to have a material adverse effect on the offering of securities as
then contemplated (including a material adverse effect on the price at which it
is proposed to sell the securities), then the Exercising Stockholder(s) shall so
advise the Company and all Holders of Registrable Securities that would
otherwise be underwritten pursuant hereto, and the number of shares that may be
included in the underwriting shall be allocated: (i) first, to the Registrable
Securities of the Exercising Stockholder(s) on a pro rata basis based on the
number of Registrable Securities requested to be included by such Exercising
Stockholder(s) in such registration; (ii) second, to any other Holders of
Registrable Securities on a pro rata basis based on the number of Registrable
Securities requested to be included in such registration; (iii) third, to
securities being sold for the account of the Company; and (iv) last, to any
other stockholders the Company may determine to allow to participate in the
registration. All Holders proposing to distribute their securities through an
underwriting shall enter into an underwriting agreement in customary form with
the underwriter; PROVIDED, HOWEVER, that if less than 85% of the number of
Registrable Securities requested to be included by the Exercising Stockholder(s)
in such registration is included in such registration, such Exercising
Stockholder(s) shall retain their rights pursuant to this SECTION 3.1 as if the
related Demand Request was not made and any related registration shall not count
as an Individual Demand or a Collective Demand, as applicable, or one of the
permitted registrations of the Major Stockholders under this SECTION 3.1.
(e) ADDITIONAL RIGHTS. In the event that the Company effects
a registration pursuant to this SECTION 3.1, (A) in the event of an Individual
Demand, the Major Stockholder making such Demand, and in the event of a
Collective Demand, the Exercising Stockholders, acting together by mutual
agreement, shall have the right to select a nationally recognized investment
banking firm to act as managing underwriter from a list of four (4) investment
banking firms provided by the Company and (B) the Company shall make such
members of Company senior management, as the managing underwriter for such
offering shall reasonably designate, reasonably available for, and shall
otherwise cooperate in good faith in, "road-show" and similar marketing
presentations and other customary marketing efforts prescribed by such managing
underwriter in connection with such registration. In the case of an Individual
Demand, if the related registration
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commenced pursuant to this SECTION 3.1 is subsequently withdrawn, prior to the
time that the Registration Statement is declared effective, at the request of
the Major Stockholder that shall have made such Individual Demand, and such
Major Stockholder shall have reimbursed the Company for all Registration
Expenses pursuant to SECTION 3.5 hereof, such Demand Request under this SECTION
3.1 shall be deemed withdrawn and such Major Stockholder shall retain its rights
to registration under this SECTION 3.1 as though no Demand Request for such
registration had been made by it. In the case of a Collective Demand, if the
related registration commenced pursuant to this SECTION 3.1 is subsequently
withdrawn at the request of (i) two Major Stockholders, in the case of a
Collective Demand made by all three Major Stockholders, or one Major
Stockholder, in the case of a Collective Demand made by two of the Major
Stockholders, and the non-withdrawing Major Stockholder notifies the Company in
writing that it desires to continue the Registration, such Collective Demand
shall constitute an Individual Demand of the non-withdrawing Major Stockholder
under this SECTION 3.1 or (ii) all of the Major Stockholders participating in a
Collective Demand, and each such Major Stockholder shall have reimbursed the
Company for its pro rata portion (based on the number of shares of Registrable
Securities requested to be included in the related registration) of Registration
Expenses pursuant to SECTION 3.5 hereof, such Demand Request under this SECTION
3.1 shall be deemed withdrawn and the Major Stockholders shall retain their
rights to registration under this SECTION 3.1 as though no Demand Request for
such registration had been made by it so long as such request to withdraw was
made prior to the time that the Registration Statement is declared effective.
(f) SHELF REGISTRATION. In the event that the Major
Stockholder(s) making a Demand Request indicate in such Demand Request that the
related registration is to be made on a Registration Statement pursuant to Rule
415 under the Securities Act, the Company shall, notwithstanding SECTION 3.3(a),
keep such Shelf Registration Statement continuously effective (and supplemented
and amended as required by the provisions of SECTION 3.3) to the extent
necessary to ensure that it is available for resales of Registrable Securities
included in such registration by the Major Stockholders, and to ensure that it
conforms with the requirements of this Agreement, the Securities Act and the
policies, rules and regulations of the SEC as announced from time to time, from
the effective date of such Registration Statement until the earlier of (x) 24
months from the effective date, (y) the date all Registrable Securities covered
by such Registration Statement have been sold in the manner set forth and as
contemplated in such Registration Statement and (z) the date on which all
Restricted Securities may be sold without registration pursuant to Rule 144(k)
of the Securities Act.
(g) RESTRICTIONS ON DEMAND REGISTRATIONS. The Company shall
not be obligated to effect any registration pursuant to this SECTION 3.1
(including filing a Registration Statement) within three months after the
effective date of a previous registration pursuant to this SECTION 3.1 or a
previous registration under which the Holders had piggyback rights pursuant to
SECTION 3.2 hereof (irrespective of whether such rights were exercised). The
Company may postpone for up to two months the filing or the effectiveness of a
Registration Statement for a Demand Registration if, based on the good faith
judgment of the Company's Board of Directors (after consultation with its legal
and financial advisors), if (i) such Demand Registration would reasonably be
expected to have a material adverse effect on any proposal or plan by the
Company or any of its Subsidiaries to engage in any acquisition of assets (other
than in the ordinary course of business) or any merger, consolidation, tender
offer, reorganization or similar transaction, (ii) such postponement is
reasonably necessary in order to avoid premature disclosure of a matter and it
is reasonably likely that disclosure of such matter at such time would be
materially detrimental to the interests of the Company, (iii) the Company would
be required by Applicable Law to prepare audited financial statements as of a
date other than its fiscal year end (unless the Major Stockholder(s) requesting
such Demand Registration agree to pay the expenses of such an audit) or (iv)
such postponement is required by Applicable Law; PROVIDED that in such event,
the Major Stockholders(s) initially requesting such Demand Registration shall be
entitled to withdraw such request and, if such request is withdrawn, such
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Major Stockholder(s) shall retain their rights pursuant to this SECTION 3.1 as
if the related Demand Request was not made and any related registration shall
not count as an Individual Demand or a Collective Demand, as applicable, or one
of the permitted registrations of the Major Stockholders under this SECTION 3.1
and the Company shall pay all Registration Expenses in connection with such
registration. The Company may delay a Demand Registration hereunder only once in
any twelve-month period; PROVIDED, HOWEVER, that in no event shall the Company
withdraw a Registration Statement under CLAUSE (i) above after such Registration
Statement has been declared effective. The Company shall provide written notice
to the Major Stockholders initiating such Demand Request of (x) any postponement
or withdrawal of the filing or effectiveness of a Registration Statement
pursuant to this PARAGRAPH (g), (y) the Company's decision to file or seek
effectiveness of such registration statement following such withdrawal or
postponement and (z) the effectiveness of such Registration Statement.
(h) PRE-EMPTION OF DEMAND REGISTRATION. Notwithstanding
anything to the contrary contained herein, at any time a transferee of the
rights of any Major Stockholder hereunder shall have made a Demand Request
pursuant to this SECTION 3.1, the Company may elect at that time to effect an
underwritten primary registration if, based on the good faith judgment of the
Company's Board of Directors, it would be in the best interests of the Company
to access the public market to raise equity capital in order to (i) finance an
acquisition that is the subject of a letter of intent or acquisition agreement
at the time of such Demand Request or (ii) delever the Company to remedy or
otherwise address an imminent covenant default under any material contract. If
the Company elects to effect a primary registration after receiving such a
Demand Request, the Company will give prompt written notice (and in any event
within 10 days after receiving such a Demand Request) to all Holders of its
intention to effect such a registration and shall afford the Holders rights
pursuant to SECTION 3.2 hereof, except that if the managing underwriters of such
offering advise the Company in writing that, in their opinion, the number of
securities requested to be included in such registration exceeds the number of
securities which can be sold in such offering without being likely to have a
material adverse effect on the offering of securities as then contemplated
(including a material adverse effect on the price at which it is proposed to
sell the securities), the provisions of SECTION 3.1(b) hereof shall not apply to
such offering, and instead the Company shall include in such registration the
maximum number of securities which such underwriters advise can be sold in such
offering allocated (x) first, to the securities to be sold by the Company for
its own account, (y) second, pro rata among the Holders on the basis of the
number of shares requested to be registered by such Holders and (z) third, pro
rata among the other selling security holders of the Company on the basis of the
number of shares requested to be registered by such holders. In the event that
the Company so elects to effect such a primary registration after receiving a
Demand Request, the Major Stockholders shall retain their rights pursuant to
this SECTION 3.1 as if the related Demand Request was not made and such
registration shall not count as an Individual Demand or a Collective Demand, as
applicable, or one of the permitted registrations of the Major Stockholders or
their transferees under this SECTION 3.1.
3.2 PIGGYBACK REGISTRATIONS.
(a) PIGGYBACK RIGHTS. If (but without any obligation to do
so) the Company proposes to register, whether or not for its own account, any of
its shares of Common Stock or other Equity Interests in the Company in
connection with the public offering for cash of
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such securities (including the Approved IPO, but excluding any (i) registration
made pursuant to SECTION 3.1, (ii) registration relating solely to the sale of
securities to participants in a Company sponsored benefit plan on Form S-1 or
Form S-8 under the Securities Act or similar forms that may be promulgated under
the Securities Act in the future, (iii) registration relating to a corporate
reorganization, acquisition or other transaction under Rule 145 of the
Securities Act on Form S-4 under the Securities Act or similar forms that may be
promulgated under the Securities Act in the future or (iv) registration on any
form that does not include substantially the same information as would be
required to be included in a Registration Statement covering the sale of the
Registrable Securities), the Company shall, at such time, promptly give each
Holder written notice of such registration. Upon the written request of each
Holder given in writing to the Company within fifteen (15) days after receipt of
such notice by the Company, the Company shall, subject to the provisions of this
SECTION 3.2, include in the registration statement all of the Registrable
Securities that each such Holder has requested to be registered.
(b) RIGHT TO TERMINATE REGISTRATION. The Company shall have
the right to terminate or withdraw any registration initiated by it under this
SECTION 3.2 prior to the effectiveness of such registration and the commencement
of the public offer of the securities covered by such registration, whether or
not any Holder has elected to include securities in such registration. The
expenses of such withdrawn registration shall be borne by the Company in
accordance with SECTION 3.5 hereof. Any such withdrawal shall be without
prejudice to the rights of any Holder to request that a registration be effected
under SECTION 3.1 or to be included in subsequent registrations under SECTION
3.2(a).
(c) UNDERWRITING REQUIREMENTS. In connection with any
offering involving an underwriting of shares of Common Stock for the benefit of
the Company or any security holder of the Company, the Company shall not be
required under this SECTION 3.2 to include any of the Holders' Registrable
Securities in such underwriting pursuant to this SECTION 3.2 unless they accept
the terms of the underwriting as agreed upon between the Company and the
underwriters selected by it and enter into an underwriting agreement in
customary form with an underwriter or underwriters selected by the Company.
Notwithstanding any other provision of this SECTION 3.2, if the managing
underwriter with respect to the proposed offering advises the Company in writing
that, in its opinion, the number of securities requested to be included in such
registration exceeds the number of securities which can be sold in such offering
without being likely to have a material adverse effect on the offering of
securities as then contemplated (including a material adverse effect on the
price at which it is proposed to sell the securities), then the Company shall so
advise all holders of securities that would otherwise be included in such
registration, and the number of shares that may be included in the registration
shall be allocated:
(i) in the case such registration is a primary
registration initiated by the Company, (A) first, to securities being
sold for the account of the Company, (B) second, pro rata among the
Major Stockholders electing to participate in such registration in
accordance with this SECTION 3.2 according to the total amount of
securities requested to be included in such registration and (C) last,
pro rata among the other selling security holders of the Company
according to the total amount of securities requested to be included
in such registration;
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(ii) in the case such registration is a
secondary registration initiated by one or more security holders of
the Company pursuant to an agreement with the Company approved in
accordance with SECTION 2.6(b), (A) first, pro rata among the selling
security holders of the Company requesting such registration and the
Major Stockholders electing to participate in such registration in
accordance with this SECTION 3.2 according to the total amount of
securities requested to be included in such registration, (B) second,
to securities being sold for the account of the Company and (C) last,
pro rata among the other selling security holders of the Company
according to the total amount of securities requested to be included
in such registration; or
(iii) otherwise, (A) first, pro rata among the
Major Stockholders electing to participate in such registration in
accordance with this SECTION 3.2 according to the total amount of
securities requested to be included in such registration, (B) second,
pro rata among the selling security holders of the Company requesting
such registration according to the total amount of securities
requested to be included in such registration, (C) third, to
securities being sold for the account of the Company and (D) last, pro
rata among the other selling security holders of the Company according
to the total amount of securities requested to be included in such
registration.
(d) SELECTION OF UNDERWRITERS. The Company shall have the
right to select the managing underwriter or underwriters to administer any
offering pursuant to this SECTION 3.2.
(e) OTHER REGISTRATIONS. If the Company has previously filed
a Registration Statement with respect to Registrable Securities pursuant to
SECTION 3.1 hereof or pursuant to this SECTION 3.2, and if such previous
registration has not been withdrawn or abandoned, the Company shall not be
obligated to cause to become effective any other registration of any of its
securities under the Securities Act, whether on its own behalf or at the request
of any holder or holders of such securities, until a period of at least three
months has elapsed from the effective date of such previous registration.
3.3 OBLIGATIONS OF THE COMPANY. Whenever required under this
ARTICLE III to effect the registration of any Registrable Securities, the
Company shall, as expeditiously as reasonably possible:
(a) prepare and file with the SEC or other applicable
governmental body or securities exchange a Registration Statement with respect
to such Registrable Securities and use its commercially reasonable efforts to
cause such Registration Statement to become effective, and, subject to SECTION
3.1(f), keep such Registration Statement effective for a period of up to thirty
(30) days or, if earlier, until the distribution contemplated in the
Registration Statement has been completed;
(b) prepare and file with the SEC or other applicable
governmental body or securities exchange such amendments and supplements to such
Registration Statement and the prospectus (or similar offering document) used in
connection with such registration as may be
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necessary to comply with the provisions of Applicable Law with respect to
disposition of all securities covered by such Registration Statement for the
period set forth in PARAGRAPH (a) above;
(c) furnish to each selling Holder and counsel selected by
the selling Holders (which counsel, in the case of a registration made pursuant
to SECTION 3.1, shall be selected by the Major Stockholder(s) that shall have
made the related Demand Request, and otherwise, by a majority in interest of the
Holders participating in such registration) copies of all documents proposed to
be filed with the SEC or other applicable governmental body or securities
exchange in connection with such registration (other than any filings made by
the Company pursuant to the requirements of the Exchange Act), which documents
will be provided to such counsel and each selling Holder prior to the filing
thereof;
(d) furnish to the selling Holders, without charge, such
number of (i) conformed copies of the Registration Statement and of each
amendment or supplement thereto (in each case including all exhibits and
documents filed therewith), and (ii) copies of the prospectus or other offering
document included in such Registration Statement, including each preliminary
prospectus and any summary prospectus, in conformity with the requirements of
Applicable Law, and such other documents, in each case, as they may reasonably
request in order to facilitate the disposition of Registrable Securities owned
by them in accordance with the intended method or methods of such disposition;
(e) in the event of any underwritten public offering, enter
into and perform its obligations under an underwriting agreement, in usual and
customary form, with the managing underwriter of such offering and enter into
such other agreements and take such other actions in order to expedite or
facilitate the disposition of such Registrable Securities, including, without
limitation, preparing for, and participating in, "road shows" and all other
customary selling efforts, all as the underwriters reasonably request;
(f) notify each selling Holder covered by such Registration
Statement, at any time when a prospectus (or other offering document) relating
thereto is required to be delivered under Applicable Law, of (i) the issuance of
any stop order or the like by the SEC or any other applicable governmental body
or securities exchange in respect of such Registration Statement (and use every
reasonable effort to obtain the lifting of any such stop order or the like as
soon as practicable), (ii) any period when the Registration Statement ceases to
be effective, or (iii) the happening of any event as a result of which the
prospectus (or other offering document) included in such Registration Statement,
as then in effect, includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances then
existing, and, as promptly as is practicable, prepare and furnish to such
selling Holder a reasonable number of copies of any supplement to or amendment
of such prospectus (or other offering document) as may be necessary so that, as
thereafter delivered to the purchasers of such securities, such prospectus (or
other offering document) 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 not misleading in light of the circumstances then
existing;
(g) cause all such Registrable Securities registered
hereunder to be listed on each securities exchange or any automated quotation
system (or NASDAQ) on which similar
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securities issued by the Company are then listed or, if not so listed, use its
commercially reasonable efforts to cause such Registrable Securities registered
hereunder to be listed on a securities exchange or any automated quotation
system (or NASDAQ) selected by the Board of Directors;
(h) provide a transfer agent and registrar for all
Registrable Securities registered pursuant hereunder and a CUSIP number for all
such Registrable Securities, in each case not later than the effective date of
such registration;
(i) use its reasonable best efforts to register and qualify
the securities covered by such Registration Statement under such other
securities or blue sky laws of such jurisdictions in the United States as shall
be reasonably requested by the selling Holders and such other jurisdictions as
shall be reasonably requested by the managing underwriter (or obtain an
exemption from registration or qualification under such laws) and do any and all
other acts and things which may be necessary or advisable to enable such selling
Holders to consummate the disposition of the Registrable Securities in such
jurisdictions in accordance with the intended method or methods of distribution
thereof; PROVIDED, HOWEVER, that the Company shall not be required in connection
therewith or as a condition thereto to qualify to do business, where not
otherwise required, or to file a general consent to service of process or become
subject to taxation in any such states or jurisdictions;
(j) request that the independent public accountants who have
issued an audit report on the Company's financial statements included in the
Registration Statement furnish to each selling Holder a signed counterpart of a
"comfort" letter, dated the effective date of the Registration Statement (and,
if any registration includes an underwritten public offering, the date of the
closing under the underwriting agreement), signed by such accountants and
covering such matters as are customarily covered in accountant's letters
delivered to the underwriters in underwritten public offerings of securities and
such other matters as may be reasonably requested by the Major Stockholder(s)
that made the related Demand Request, if any;
(k) otherwise use its best efforts to comply with Applicable
Law, and make available to its security holders, as soon as reasonably
practicable, an earnings statement of the Company (in form complying with the
provisions of Rule 158 under the Securities Act) covering the period of at least
twelve (12) months, but not more than eighteen (18) months, beginning with the
first month after the effective date of the Registration Statement; and
(l) use its commercially reasonable efforts to take all other
reasonable and customary steps typically taken by issuers to effect the
registration and disposition of such Registrable Securities as contemplated
hereby.
3.4 OBLIGATIONS OF HOLDER.
(a) INFORMATION FROM HOLDER. It shall be a condition
precedent to the obligations of the Company to take any action pursuant to this
ARTICLE III with respect to the Registrable Securities of any selling Holder
that such Holder shall, within ten (10) business days of a request by the
Company, furnish to the Company such information regarding itself, the
Registrable Securities held by it, and the intended method of disposition of
such securities as
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shall be reasonably required by the Company to effect the registration of such
Holder's Registrable Securities.
(b) SUSPENSION OF USE OF PROSPECTUS. Each selling Holder of
Registrable Securities agrees by having its securities treated as Registrable
Securities hereunder that, upon receipt of written notice from the Company
specifying that the prospectus (or other offering document) included in such
Registration Statement contains an untrue statement of a material fact or omits
any fact necessary to make the statements therein not misleading as a result of
the happening of any event, such selling Holder will forthwith discontinue
disposition of Registrable Securities until such selling Holder is advised by
the Company that the use of the prospectus (or other offering document) may be
resumed and is furnished with a supplemented or amended prospectus (or other
offering document) as contemplated by SECTION 3.3(f) hereof, and, if so directed
by the Company, such selling Holder will deliver to the Company all copies of
the prospectus (or other offering document) covering such Registrable Securities
then in such selling Holder's possession at the time of receipt of such notice.
If the Company shall give any notice to suspend the disposition of Registrable
Securities, the Company shall extend the period of time during which the Company
is required to maintain the Registration Statement effective pursuant to this
Agreement by the number of days during the period from and including the date of
the giving of such notice to and including the date such selling Holder either
is advised by the Company that the use of the prospectus (or other offering
document) may be resumed or receives the copies of the supplemented or amended
prospectus (or other offering document) contemplated by SECTION 3.3(f).
(c) PARTICIPATION IN UNDERWRITTEN REGISTRATIONS. No Holder
may participate in any registration hereunder which is underwritten unless such
Holder (a) agrees to sell such Holder's securities on the basis provided in any
underwriting arrangements approved by the Person(s) entitled hereunder to
approve such arrangements and (b) completes and executes all questionnaires,
powers of attorney, indemnities, underwriting agreements and other documents
required under the terms of such underwriting arrangements.
3.5 EXPENSES OF REGISTRATION. All expenses (other than
underwriting discounts and commissions) incurred in connection with
registrations pursuant to SECTIONS 3.1 and 3.2, including, without limitation,
all registration, filing and qualification fees, printers' and accounting fees,
fees and disbursements of counsel for the Company and the reasonable fees and
disbursements of one counsel for the selling Holders selected by (x) in the case
of an Individual Demand, the Major Stockholder making such Demand, (y) in the
event of a Collective Demand, the Exercising Stockholders, acting together by
mutual agreement, and (z) otherwise, each Major Stockholder participating in
such registration, acting together by mutual agreement (collectively,
"REGISTRATION EXPENSES"), shall be borne by the Company. Notwithstanding the
foregoing, the Company shall not be required to pay for any expenses of any
registration proceeding begun pursuant to SECTION 3.1 if the registration
request is subsequently withdrawn at the request of the Major Stockholder(s)
that made the related Demand Request (in which case, such Major Stockholder(s)
shall bear such expenses pro rata based upon the number of Registrable
Securities that were requested to be included in the withdrawn registration),
unless (i) in the case of an Individual Demand, the Major Stockholder that shall
have made such Individual Demand agrees to forfeit its right to make one
Individual Demand pursuant to SECTION 3.1, PROVIDED, HOWEVER, that if at the
time of such withdrawal, such Major Stockholder shall have learned of a Material
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Adverse Change (as defined below) from that known to such Major Stockholder at
the time of its Demand Request and shall have withdrawn the request with
reasonable promptness (but in any event within five (5) business days) following
disclosure by the Company of such Material Adverse Change, then such Major
Stockholder shall not be required to pay any of such expenses and shall retain
its rights pursuant to SECTION 3.1 as if such Demand Request was not made and
such registration shall not count as an Individual Demand or a Collective
Demand, as applicable, or one of the permitted registrations of the Major
Stockholders under SECTION 3.1, or (ii) in the case of a Collective Demand, the
Major Stockholders agree to forfeit their right to make one Collective Demand
pursuant to SECTION 3.1, PROVIDED, HOWEVER, that if at the time of such
withdrawal, such Major Stockholders shall have learned of a Material Adverse
Change from that known to such Major Stockholders at the time of their Demand
Request and shall have withdrawn the request with reasonable promptness (but in
any event within five (5) business days) following disclosure by the Company of
such Material Adverse Change, then such Major Stockholders shall not be required
to pay any of such expenses and shall retain their rights pursuant to SECTION
3.1 as if such Demand Request was not made. "MATERIAL ADVERSE CHANGE" means any
change, event, occurrence, effect or state of facts that, individually or
aggregated with any other such change, event, occurrence, effect or state of
facts, is, or could reasonably be expected to have a material adverse effect on
the business of the Company and its Subsidiaries as conducted by the Company and
its Subsidiaries, assets (including intangible assets), properties, condition
(financial or otherwise), results of operations or prospects of the Company and
its Subsidiaries, taken as a whole.
3.6 DELAY OF REGISTRATION. No Holder shall have any right to
obtain or seek an injunction restraining or otherwise delaying any such
registration as the result of any controversy that might arise with respect to
the interpretation or implementation of this ARTICLE III.
3.7 INDEMNIFICATION. In the event any Registrable Securities are
included in a Registration Statement under this ARTICLE III:
(a) To the extent permitted by law, the Company will
indemnify and hold harmless each Holder, the partners, members, managers,
officers and directors of each Holder, any underwriter (as defined in the
Securities Act) for such Holder and each Person, if any, who controls such
Holder or underwriter, within the meaning of the Securities Act or the Exchange
Act, against any losses, claims, damages, expenses or liabilities (joint or
several) (or actions, proceedings or settlements in respect thereof), to which
they may become subject under the Securities Act, the Exchange Act or other
federal, state or foreign securities laws, or common law, insofar as such
losses, claims, damages, expenses or liabilities (or actions proceeding or
settlements in respect thereof) arise out of or are based upon any of the
following statements, omissions or violations (collectively a "VIOLATION") by
the Company: (i) any untrue statement or alleged untrue statement of a material
fact contained in such Registration Statement, including any preliminary
prospectus or final prospectus (or similar offering documents) contained therein
or any amendments or supplements thereto; (ii) the omission or alleged omission
to state therein a material fact required to be stated therein, or necessary to
make the statements therein not misleading; or (iii) any violation or alleged
violation of the Securities Act, the Exchange Act, any state or foreign
securities laws or any rule or regulation promulgated under the Securities Act,
the Exchange Act or other federal, state or foreign securities laws or common
law; and the Company will reimburse each such Holder, partner, member, manager,
officer, director,
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stockholder, counsel, accountant, underwriter or controlling Person for any
legal or other expenses reasonably incurred by them in connection with
investigating or defending or settling any such loss, claim, damage, liability
or action as such expenses are incurred; PROVIDED, HOWEVER, that the indemnity
agreement contained in this SECTION 3.7(a) shall not apply to amounts paid in
settlement of any such loss, claim, damage, liability or action if such
settlement is effected without the consent of the Company (which consent shall
not be unreasonably withheld or delayed), nor shall the Company be liable in any
such case for any such loss, claim, damage, liability or action to the extent
that it arises out of or is based upon a Violation that occurs in reliance upon
and in conformity with written information furnished expressly for use in
connection with such registration by any such Holder, underwriter or controlling
Person; PROVIDED FURTHER, however, that the foregoing indemnity agreement with
respect to any preliminary prospectus (or similar offering document) shall not
inure to the benefit of any Holder in an offering other than an underwritten
offering, underwriter, or any Person controlling such Holder or underwriter,
from whom the Person asserting any such losses, claims, damages or liabilities
purchased shares in the offering, if a copy of the prospectus (or similar
offering document) (as then amended or supplemented if the Company shall have
furnished any amendments or supplements thereto) was not sent or given by or on
behalf of such Holder (in an offering other than an underwritten offering) or
such underwriter (in an underwritten offering) to such Person, if required by
law so to have been delivered, at or prior to the written confirmation of the
sale of the shares to such Person, and if the prospectus (or similar offering
document) (as so amended or supplemented) would have cured the defect giving
rise to such loss, claim, damage or liability. Such indemnity shall remain in
full force and effect regardless of any investigation made by or on behalf of
any Holder and shall survive the transfer of such securities by any Holder.
(b) To the extent permitted by law, each selling Holder, on a
several and not joint basis, will indemnify and hold harmless the Company, each
of its directors, each of its officers, each Person, if any, who controls the
Company within the meaning of the Securities Act, any underwriter, any other
Holder selling securities in such Registration Statement and any controlling
Person of any such underwriter or other Holder, against any losses, claims,
damages, expenses or liabilities (joint or several) (or actions, proceedings or
settlements in respect thereof) to which any of the foregoing Persons may become
subject, under the Securities Act, the Exchange Act or other federal, state or
foreign securities laws, or common law, insofar as such losses, claims, damages
or liabilities (or actions proceedings or settlements in respect thereto) arise
out of or are based upon any Violation, in each case to the extent (and only to
the extent) that such Violation occurs in reliance upon and in conformity with
written information furnished by such Holder expressly for use in connection
with such registration; and each such Holder will reimburse any Person intended
to be indemnified pursuant to this SECTION 3.7(b) for any legal or other
expenses reasonably incurred by such Person in connection with investigating or
defending any such loss, claim, damage, liability or action as such expenses are
incurred; PROVIDED, HOWEVER, that the indemnity agreement contained in this
SECTION 3.7(b) shall not apply to amounts paid in settlement of any such loss,
claim, damage, liability or action if such settlement is effected without the
consent of such Holder (which consent shall not be unreasonably withheld or
delayed), PROVIDED, FURTHER that in no event shall any indemnity under this
SECTION 3.7(b) exceed the net proceeds from the offering received by such
Holder. Such indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of the Company and shall survive the transfer
of such securities by any Holder.
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(c) Promptly after receipt by an indemnified party under this
SECTION 3.7 of written notice of the commencement of any action (including any
governmental action), such indemnified party will, if a claim in respect thereof
is to be made against any indemnifying party under this SECTION 3.7, deliver to
the indemnifying party a written notice of the commencement thereof and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties; PROVIDED, HOWEVER, that an indemnified party
(together with all other indemnified parties that may be represented without
conflict by one counsel) shall have the right to retain one separate counsel,
with the fees and expenses to be paid by the indemnifying party, if
representation of such indemnified party by the counsel retained by the
indemnifying party would be inappropriate due to actual or potential differing
interests between such indemnified party and any other party represented by such
counsel in such proceeding. The failure to deliver written notice to the
indemnifying party within a reasonable time of the commencement of any such
action, if materially prejudicial to its ability to defend such action, shall
relieve such indemnifying party of any liability to the indemnified party under
this SECTION 3.7 to the extent of such prejudice, but the omission to so deliver
written notice to the indemnifying party will not relieve it of any liability
that it may have to any indemnified party otherwise than under this SECTION 3.7.
No indemnifying party, in the defense of any such claim or action, shall, except
with the consent of each indemnified party, consent to entry of any judgment or
enter into any settlement that does not include as an unconditional term thereof
the giving by claimant or plaintiff to such indemnified party of a release from
all liability in respect of such claim or action.
(d) If the indemnification provided for in this SECTION 3.7
is held by a court of competent jurisdiction to be unavailable to an indemnified
party with respect to any loss, liability, claim, damage or expense referred to
herein, then the indemnifying party, in lieu of indemnifying such indemnified
party hereunder, shall contribute to the amount paid or payable by such
indemnified party as a result of such loss, liability, claim, damage or expense
in such proportion as is appropriate to reflect the relative fault of and,
except as to the Company where the Company does not participate in the offering,
the relative benefits received by the indemnifying party on the one hand and of
the indemnified party on the other in connection with the statements or
omissions that resulted in such loss, liability, claim, damage or expense, as
well as any other relevant equitable considerations, PROVIDED that no Person
guilty of fraud shall be entitled to contribution. The relative fault of the
indemnifying party and of the indemnified party shall be determined by reference
to, among other things, whether the untrue or alleged untrue statement of a
material fact or the omission to state a material fact relates to information
supplied by the indemnifying party or by the indemnified party and the parties'
relative intent, knowledge, access to information, and opportunity to correct or
prevent such statement or omission. The relative benefits received by the
indemnifying party and the indemnified party shall be determined by reference to
the net proceeds and underwriting discounts and commissions from the offering
received by each such party. In no event shall any contribution under this
SECTION 3.7(d) exceed the net proceeds from the offering received by such
Holder, less any amounts paid under SECTION 3.7(b).
(e) Notwithstanding the foregoing, to the extent that the
provisions on indemnification and contribution contained in the underwriting
agreement entered into by the Company and a Holder in connection with an
underwritten public offering are in conflict with
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the foregoing provisions, the provisions in the underwriting agreement shall
control with respect to the Company and such Holder.
(f) The obligations of the Company and Holders under this
SECTION 3.7 shall survive the completion of any offering of Registrable
Securities in a Registration Statement under this ARTICLE III and the
termination of this Agreement.
(g) The obligations of the parties under this SECTION 3.7
shall be in addition to any liability which any party may otherwise have to any
other party.
ARTICLE IV
TRANSFER OF SHARES
4.1 RESTRICTION ON TRANSFER. Except for (i) Transfers of
Securities pursuant to and in accordance with the provisions of this ARTICLE IV
and (ii) Permitted Transfers, no Stockholder will make any Transfer of
Securities. Any Transfer of Securities by a Stockholder which is not made in
accordance with, or which violates any of, the provisions of this ARTICLE IV,
will be null and void and have no effect and the Company will not recognize any
such Transfer or recognize the transferee as of holder of such Securities for
any purpose. In the event any Stockholder proposes to Transfer all or any
portion of its Securities to a transferee other than another Stockholder in
accordance with the terms of this Agreement, such transferee, as a condition
precedent to the Transfer, shall become a party to this Agreement by executing
and delivering an additional counterpart signature page to this Agreement and
shall be deemed to be a "Stockholder" for all purposes hereof.
4.2 RIGHTS OF FIRST OFFER.
(a) If prior to the Initial Offering any Stockholder desires
to make a Transfer (other than a Permitted Transfer) of all or any portion of
its Securities ("SUBJECT SECURITIES") to any Person, such Stockholder
("OFFEROR") shall first deliver to each other Stockholder (the "OFFEREES") a
written notice (the "OFFER NOTICE") delivered in accordance with SECTION 6.10
that sets forth the number of Subject Securities, the amount per share that such
holder proposes to be paid for the Subject Securities (the "SALE PRICE"), the
manner of payment and the material terms of such sale. The Offer Notice shall
constitute an irrevocable offer by the Offeror to sell to the Offerees the
Subject Securities at the Sale Price on the terms set forth in the Offer Notice.
(b) Each Offeree shall have fifteen (15) calendar days after
the Offeror delivered the Offer Notice in which to notify the Offeror and the
other Offeree that it accepts such offer as to all or any portion of the Subject
Securities offered to such Offeree for the Sale Price and on the payment terms
set forth in the Offer Notice, which notice shall be delivered in accordance
with SECTION 6.10 and shall specify the maximum number of Subject Securities it
wishes to purchase. In the event each of the Offerees accept such offer and the
maximum amount of Subject Securities specified in the notices delivered by the
Offerees exceed, in the aggregate, the amount of Subject Securities subject of
such offer, such Subject Securities shall be apportioned among the Offerees in
proportion to the number of Securities held by such Offerees.
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(c) If one or more Offerees accept such offer with respect to
all of the Subject Securities, a closing of the purchase of such Subject
Securities shall take place at the principal office of the Company at 10:00 a.m.
on the thirtieth (30th) calendar day (unless such day is not a business day, in
which case it will occur on the next business day) after the date on which the
Offer Notice was delivered unless the parties agree on a different place or
time. The Sale Price shall be payable in accordance with the payment terms of
the Offer Notice.
(d) If the Offerees do not elect to purchase all of the
Subject Securities for the Sale Price prior to the end of the fifteen (15) day
period, the Offeror shall have the right to sell the Subject Securities for a
period of ninety (90) days (the "SALE PERIOD") at a price per share no less than
95% of the price per share specified in the Offer Notice and on other terms no
more favorable to the transferees thereof than offered to the Offerees in the
Offer Notice. Upon consummation of the purchase and sale of such Subject
Securities, the purchaser of such Subject Securities shall agree in writing to
be bound by the terms of this Agreement and to assume and agree to discharge any
and all obligations of the Offeree (except, for purposes of clarity, such
purchaser shall, in all events other than ARTICLE III to the extent that the
rights thereunder are assigned by the transferring Major Stockholder, be
designated a Stockholder and not a Major Stockholder). If the Offeree does not
Transfer the Subject Securities before the end of the Sale Period, such Offeree
may not sell any Subject Securities without repeating the foregoing procedures
or otherwise in accordance with SECTION 4.1.
4.3 TAG ALONG RIGHTS. If one or more Stockholders (collectively,
the "SELLING STOCKHOLDER") desires to sell in one or more series of related
transactions Securities beneficially owned by such Selling Stockholder,
constituting more than 25% of the Original Ownership of such Stockholder, to a
Person (the "BUYER") other than (x) pursuant to a Permitted Transfer or (y)
following an Initial Offering, any sale effected on the securities exchange or
automated quotation system on which the Common Stock is then listed or quoted,
as applicable (each, a "TAG SALE"), then, at least thirty (30) days prior to any
such sale, such Selling Stockholder shall provide to each other Stockholder that
beneficially owns Securities constituting more than 33% of the Original
Ownership of such Stockholder (each, together with its Affiliates, a "TAG
SELLER") a notice (a "TAG ALONG NOTICE") setting forth in reasonable detail the
terms of such sale, the number of shares of Common Stock such Buyer wishes to
purchase (calculated on an as-converted basis) (the "TAG ALONG SHARES") and
identifying the name and address of the Buyer. Upon the written request of any
Tag Seller made within fifteen (15) days after the day the Tag Along Notice is
received by such Tag Seller, the Selling Stockholder proposing to make the sale
shall cause the Buyer to purchase from such Tag Seller the number of shares of
Common Stock underlying the Securities held by such Tag Seller equal to the
lesser of (i) the number of shares of Common Stock underlying the Securities
requested to be included in the Tag Sale by such Tag Seller and (ii) a number
determined by multiplying (x) a fraction, the numerator of which is the total
number of shares of Common Stock underlying the Securities held by such Tag
Seller and the denominator of which is the total number of shares of Common
Stock underlying the Securities held by all of the Tag Sellers by (y) the number
of Tag Along Shares to be sold in such Tag Sale. Such purchase shall be made on
the same date and at the same price and on terms and conditions at least as
favorable to such Tag Seller as the terms and conditions contained in the Tag
Along Notice delivered in connection with such proposed transaction. Each Tag
Seller shall take all actions which the Selling Stockholder deems reasonably
necessary or desirable to consummate such transaction, including, without
limitation, (i) entering into agreements with
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third parties on terms substantially identical or more favorable to such Tag
Seller than those agreed to by the Selling Stockholder and including
representations, indemnities, holdbacks, and escrows, and (ii) obtaining all
consents and approvals reasonably necessary or desirable to consummate such
transaction. The Tag Sellers and the Selling Stockholder shall each pay its pro
rata share (based upon the number of shares of Common Stock (on an as-converted
basis) included in such Tag Sale by each Tag Seller and the Selling Stockholder)
of any reasonable transaction costs associated with the sale other than the
legal expenses and selling commissions of the other participants in the Tag
Sale.
4.4 SECURITIES LAW RESTRICTIONS. Notwithstanding any other
provision in this Agreement, but subject to express written waiver by the
Company in the exercise of its good faith and reasonable judgment, no
Stockholder shall Transfer any Securities without the registration of the
Transfer of such Securities under the Securities Act, unless such Transfer is
exempt from the registration requirements under the Securities Act and
applicable state securities laws as the Company in its good faith and reasonable
discretion deems appropriate in light of the facts and circumstances relating to
such proposed Transfer. Prior to any Transfer of any Securities which is not the
subject of an effective Registration Statement under the Securities Act and in
accordance with the plan of distribution described in such Registration
Statement, the applicable Stockholder will give written notice to the Company of
such Stockholder's intention to effect such Transfer and to comply in all other
respects with this SECTION 4.4. Each such notice shall describe the manner and
circumstances of the proposed Transfer. If within five (5) business days after
receipt by the Company of such notice, the Company requests an opinion of
counsel to such Stockholder that the proposed transfer may be effected without
registration of such Securities under the Securities Act, then, subject to the
other terms of this Agreement, the Company shall not be required to register
such Transfer, and the Stockholder shall not be entitled to effect such
Transfer, unless and until the Company receives such an opinion (which opinion
shall be reasonably satisfactory to the Company). Only after compliance with
this SECTION 4.4 shall such Stockholder be entitled to Transfer such Securities
in accordance with the terms of the notice delivered by such Stockholder to the
Company. Each certificate representing such Securities issued upon or in
connection with such Transfer shall bear the restrictive legends required by
SECTION 4.5.
4.5 LEGENDS. The Company may in its discretion imprint any or all
certificates representing Securities now or hereafter owned by any Stockholder
with the following legends, such imprinting to be without prejudice, however, to
the rights of such Stockholder at all times to sell or otherwise dispose of all
or any part of such Securities, subject to the terms of this Agreement, under an
effective Registration Statement or under an exemption from the registration
requirement available under the Securities Act:
THE SHARES REPRESENTED BY THIS CERTIFICATE AND ANY SHARES OF COMMON
STOCK ISSUABLE UPON CONVERSION OF ANY SUCH SHARES HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 AND MAY NOT BE TRANSFERRED
IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER
SUCH ACT.
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THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO VOTING
AGREEMENTS, TRANSFER RESTRICTIONS AND OTHER TERMS CONTAINED IN A
STOCKHOLDERS AGREEMENT, DATED AS OF __________, 2003, AMONG THE
COMPANY AND CERTAIN STOCKHOLDERS OF THE COMPANY. A COPY OF SUCH
AGREEMENT IS ON FILE AT THE COMPANY'S PRINCIPAL EXECUTIVE OFFICES.
After such time as any of the legends described by this SECTION 4.5
are no longer required on any certificate or certificates representing the
Securities and such Securities are no longer subject to this Agreement, upon the
request of any Stockholder, the Company shall cause such certificate or
certificates to be exchanged for a certificate or certificates that do not bear
such legends.
ARTICLE V
OTHER MAJOR STOCKHOLDER RIGHTS
5.1 DRAG-ALONG RIGHTS; SALE.
(a) Subject to PARAGRAPH (c) below, (x) on and after the
fifth (5th) anniversary, but before the sixth (6th) anniversary, of the Closing
Date, if two or more Major Stockholders, each beneficially owning Securities
constituting more than 51% of the Original Ownership of such Major Stockholder,
wish to sell all of the Securities held by such Major Stockholders and their
Affiliates to a transferee in one transaction or a series of related
transactions (such Major Stockholders, collectively, the "DRAGGING PARTY"), and
(y) on and after the sixth (6th) anniversary of the Closing Date, if any Major
Stockholder beneficially owning Securities constituting more than 51% of the
Original Ownership of such Major Stockholder wishes to sell all of the
Securities held by such Major Stockholder and its Affiliates to a transferee in
one transaction or a series of related transactions (such Major Stockholder, the
"DRAGGING PARTY"), such Dragging Party may, at its option, cause each other
Stockholder (each, a "DRAG ALONG PARTY" and collectively, the "DRAG ALONG
PARTIES") to sell to the transferee, on the same terms and conditions, and at
the same price, as provided with respect to the sale of Securities by such
Dragging Party to such transferee, all of the Securities held by such Drag-Along
Parties (such shares being "DRAG ALONG SHARES" and such transaction being a
"DRAG ALONG TRANSACTION"). To exercise a drag along right pursuant to this
SECTION 5.1(a), such Dragging Party shall give written notice delivered in
accordance with SECTION 6.10 to the Drag Along Parties at least fifteen (15)
business days prior to the Drag Sale. The notice shall specify the terms of such
Drag Sale. The Drag Along Parties shall have not less than ten (10) business
days after receipt of such notice (the "DRAG ALONG NOTICE PERIOD") before such
parties shall be required to Transfer their shares to the transferee. During the
Drag Along Notice Period, the Drag Along Parties in receipt of such notice may
not Transfer any Shares subject to such Dragging Party's drag along rights under
this SECTION 5.1(a) to any Person other than such Dragging Party.
(b) Subject to PARAGRAPH (c) below, (x) on and after the
fifth (5th) anniversary, but before the sixth (6th) anniversary, of the Closing
Date, if two or more Major Stockholders (such Major Stockholders, collectively,
the "SALE PARTY"), each beneficially owning
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Securities constituting more than 51% of the Original Ownership of such Major
Stockholder, wish to cause a sale of the Company (whether by stock sale, asset
sale or merger) and (y) on and after the sixth (6th) anniversary of the Closing
Date, if any Major Stockholder (such Major Stockholder, the "SALE PARTY")
beneficially owning Securities constituting more than 51% of the Original
Ownership of such Major Stockholder wishes to cause a sale of the Company
(whether by stock sale, asset sale or merger) (in each such case, the "SALE"),
such Sale Party shall provide the Company and all other Major Stockholders
written notice of such desire delivered in accordance with SECTION 6.10 (the
date such notice shall have been delivered, the "SALE NOTICE DATE") and, upon
receipt of such notice, the Company shall take all reasonably necessary or
advisable actions requested by such Sale Party to pursue such Sale at the
maximum price attainable, including without limitation hiring one or more
financial advisors to identify potential purchasers (including using an auction
process) in connection with, and to otherwise facilitate, such Sale; PROVIDED,
HOWEVER, that if the Company shall not have entered into an agreement or binding
letter of intent with respect to the Sale prior to the six (6) month anniversary
of the Sale Notice Date, the pursuit of the Sale shall be abandoned at the
election of two Major Stockholders wishing to pursue the Approved IPO in
accordance with SECTION 5.2 upon the delivery of notice of their election
delivered by such Major Stockholders in accordance with SECTION 6.10 to the
other Major Stockholders and the Company. In the event that any offer received
in connection with any proposed Sale (including a Sale to a Major Stockholder)
is acceptable to (x) on and after the fifth (5th) anniversary, but before the
sixth (6th) anniversary, of the Closing Date at least two Major Stockholders,
each beneficially owning Securities constituting more than 51% of the Original
Ownership of such Major Stockholder, and (y) on and after the sixth (6th)
anniversary of the Closing Date, at least one Major Stockholder beneficially
owning Securities constituting more than 51% of the Original Ownership of such
Major Stockholder, then with respect to a Sale to the offering or bidding party
that offers the greatest amount of expected consideration (after taking into
account conditions to closing, likelihood of closing and assumptions of
indebtedness) to the Company and/or its stockholders, as applicable, each
Stockholder shall be required to approve or consent to such Sale, as required in
connection with such Sale, enter into a sale agreement with respect to such Sale
that has customary terms, conditions, provisions for indemnification (with
customary limits on the indemnification obligations of the sellers) and
representations and warranties and take all such other actions reasonably
necessary in accordance with such sale agreement.
(c) Notwithstanding anything to the contrary set forth in
SECTION 5.1(a) or (b), prior to the exercise by any Major Stockholder of the
rights set forth in SECTION 5.1(a) or (b), such Major Stockholder or Major
Stockholders, as the case may be (collectively or individually, the "TRIGGERING
HOLDER") shall comply with the following:
(i) The Triggering Holder shall first deliver
to each other Major Stockholder who is not a Triggering Holder a
written notice (the "SECTION 5.1 NOTICE") delivered in accordance with
SECTION 6.10 that sets forth the amount per share that such holder
proposes to be paid for its Securities (the "SECTION 5.1 PRICE"), the
manner of payment and the material terms of such sale. The Section 5.1
Notice shall constitute an irrevocable offer by the Triggering Holder
to sell to such other Major Stockholders its Securities at the Section
5.1 Price on the terms set forth in the Section 5.1 Notice.
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(ii) Each Major Stockholder other than the
Triggering Holder shall have fifteen (15) calendar days after the
Triggering Holder delivers the Section 5.1 Notice in which to notify
the Triggering Holder and the other Major Stockholders that it accepts
such offer as to all or any portion of the Triggering Holder's
Securities for the Section 5.1 Price and on the payment terms set
forth in the Section 5.1 Notice, which notice shall be delivered in
accordance with SECTION 6.10 and shall specify the maximum number of
Securities it wishes to purchase. In the event each of the Major
Stockholders other than the Triggering Holder accept such offer and
the maximum amount of Securities specified in the notices delivered by
the Major Stockholders exceed, in the aggregate, the amount of the
Triggering Holder's Securities, such Securities shall be apportioned
among such Major Stockholders in proportion to the number of
Securities held by such Offerees.
(iii) If one or more of such Major Stockholders
accept such offer with respect to all of the Triggering Holder's
Securities, a closing of the purchase of such Securities shall take
place at the principal office of the Company at 10:00 a.m. on the
thirtieth (30th) calendar day (unless such day is not a business day,
in which case it will occur on the next business day) after the date
on which the Section 5.1 Notice was delivered unless the parties agree
on a different place or time. The Sale Price shall be payable in
accordance with the payment terms of the Section 5.1 Notice.
(iv) If the Major Stockholders other than the
Triggering Holder do not elect to purchase all of the Triggering
Holder's Securities for the Section 5.1 Price prior to the end of the
fifteen (15) day period, the Triggering Holder shall have the right to
exercise its rights set forth in SECTION 5.1(a) or (b) for a period of
180 days, PROVIDED, that the related Drag Along Transaction or Sale,
as applicable, results in per share consideration not less than 95% of
the Section 5.1 Price. If the Triggering Stockholder or the Company
does not enter into a definitive agreement to effect the Drag Along
Transaction or Sale, as applicable, within such 180-day period, the
Triggering Stockholder may not exercise its rights set forth in
SECTION 5.1(a) or (b) without repeating the foregoing procedures.
(d) Notwithstanding anything to the contrary herein, any
Major Stockholder may participate as a potential purchaser or bidder in any Drag
Along Transaction or Sale initiated pursuant to CLAUSE (a) or CLAUSE (b) above
on the same terms and conditions as other potential purchasers and bidders;
PROVIDED that, until such time as such Major Stockholder permanently ceases to
participate in such Drag Along Transaction or Sale as a potential purchaser or
bidder, such Major Stockholder shall be excluded from participating in the sale
process in any capacity other than as potential purchaser or bidder. Such
exclusion shall include, without limitation, exclusion from (1) participation in
any negotiations with other potential purchasers or bidders and (2) any
discussion or deliberation with respect to such potential Drag Along Transaction
or Sale by the Board of Directors or management of the Company, and such Major
Stockholder shall not be entitled to receive any confidential information about
the Drag Along Transaction or Sale process, including any advice provided by
management or the
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Company's outside advisors, or projections of future performance (except to the
extent such information is provided to other potential purchasers on an
equivalent basis).
5.2 APPROVED IPO.
(a) Each of the Major Stockholders and the Company agrees
that at any time two (2) or more Major Stockholders, each beneficially owning
Securities constituting more than 51% of the Original Ownership of such Major
Stockholder, desire to pursue the Approved IPO and provide the Company and each
other Major Stockholder written notice of such desire delivered in accordance
with SECTION 6.10 (the date such notice shall have been delivered, the "APPROVED
IPO NOTICE DATE"), the other Stockholders shall support and do all things within
its power to approve, and to cause the Board of Directors to approve, the
Approved IPO; PROVIDED, HOWEVER, that if such Approved IPO, following the
exercise of commercially reasonable efforts by the Company, shall not have been
consummated prior to the date that is six (6) months following the Approved IPO
Notice Date, the pursuit of the Approved IPO shall be abandoned at the election
of at least one Major Stockholder beneficially owning Securities constituting
more than 51% of the Original Ownership of such Major Stockholder wishing to
pursue the Drag-Along Transaction or the Sale in accordance with SECTION 5.1
upon the delivery by such Major Stockholder(s) of notice of such election in
accordance with SECTION 6.10 to the other Major Stockholders and the Company.
(b) To the extent required by the managing underwriter in
connection with the Approved IPO, the Company and the Major Stockholders shall
use commercially reasonable efforts to cause the terms of this Agreement as
shall be designated by the managing underwriter as materially unfavorable to the
marketing of the Approved IPO (but excluding those terms set forth in ARTICLE
III and SECTIONS 4.2 and 6.2) to be modified or terminated; PROVIDED, that the
terms described in ARTICLE II (other than SECTION 2.6 which shall be of no
further force or effect upon consummation of an Approved IPO) shall only be
modified or terminated to the extent necessary to meet applicable listing
requirements of any securities exchange or quotation system on which the Common
Stock of the Company is listed or quoted following such Approved IPO.
(c) With respect to the Approved IPO: (i) in the event a
Major Stockholder desires to include its Securities in the Approved IPO
registration and treat such registration as an Individual Demand or Collective
Demand, the provisions of SECTION 3.1 and, to the extent applicable, SECTIONS
3.3 through 3.7, shall apply and (ii) otherwise, the provisions of SECTION 3.2
and, to the extent applicable, SECTIONS 3.3 through 3.7, shall apply.
5.3 HOLDBACK AGREEMENTS. The Company and each Stockholder agrees
not to offer, sell, contract to sell, sell any option or contract to purchase,
purchase any option or contract to sell, grant any option, right or warrant to
purchase or otherwise dispose of any shares of Common Stock, shares of Preferred
Stock or any securities that represent the right to receive shares of Common
Stock, Preferred Stock or other securities of the Company during the 10 days
prior to and the 90 days beginning on the effective date of any underwritten
primary or secondary offering of equity securities of the Company (including,
but not limited to, any underwritten registration effected pursuant to SECTION
3.1, SECTION 3.2 or SECTION 5.2, whether or not shares of Registrable Securities
are included (except as part of such underwritten registration)) unless the
underwriters managing the offering otherwise agree, in each case to the
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extent such Stockholder is timely notified in writing by the Company or by the
managing underwriter or underwriters. The Company and the Stockholders agree
that the provisions of this SECTION 5.3 shall be enforceable by such
underwriter(s) against any Stockholder, it being understood that such
underwriter(s) are intended third party beneficiaries hereof and, if so
requested by such underwriter(s), each Stockholder agrees to execute and deliver
to such underwriter(s) such agreements and instruments, in form and substance
reasonably satisfactory to such underwriter(s), further evidencing such
Stockholder's agreement not to sell such securities during such period.
5.4 EQUITY PURCHASE RIGHTS.
(a) In the event that the Company shall sell or issue shares
of Capital Stock of the Company or securities containing options or rights to
acquire any shares of Capital Stock of the Company to any Person, each
Stockholder that beneficially owns Securities constituting more than 33% of the
Original Ownership of such Stockholder shall have the equity purchase right to
purchase or subscribe for its pro rata share (as defined below) of Common Stock
on the same terms and conditions as such stock is being offered and sold, such
subscription being conditioned upon the actual sale of such stock; PROVIDED,
HOWEVER, that such equity purchase right shall not extend to shares of Capital
Stock if such shares are to be issued by the Company to effect a merger, in
connection with an arms-length acquisition approved by the Board of Directors of
assets or securities of an unaffiliated third party, pursuant to employee stock
option plans, employee stock purchase plans, restricted stock plans or other
employee benefit plans or other agreements established exclusively for
compensatory purposes, which plans or agreements have been or are approved by
the Board of Directors of the Company in accordance with the terms of this
Agreement (including any management performance options), under a plan of
reorganization approved in a proceeding under any applicable act of Congress
relating to the reorganization of corporations, upon conversion of or exercise
of convertible securities, warrants or options, or pursuant to a public
offering, in connection with any debt financing obtained on an arms-length basis
from or with any unaffiliated third parties approved by the Board of Directors,
in connection with any stock split or subdivision, stock dividend or
recapitalization of the Company or in connection with bona fide corporate
partnering transactions or other bona fide strategic transactions on terms
approved by the Board of Directors the primary purpose of which are not to raise
capital for the Company. A Stockholder's pro rata share, for purposes of this
SECTION 5.4, is the ratio of the number of shares of Common Stock owned by such
Stockholder immediately prior to such issuance, assuming conversion and exercise
of all convertible securities, rights and warrants, to the total number of
shares of Common Stock outstanding immediately prior to such issuance, assuming
full conversion of any preferred stock of the Company and exercise of all
outstanding convertible securities, rights, options and warrants to acquire
Common Stock of the Company.
(b) Written notice specifying the contemplated date the new
shares of stock or securities subject to the equity purchase rights described in
PARAGRAPH (a) above are to be sold and the offering terms thereof shall be
delivered by the Company to each of the Stockholders no later than fifteen (15)
days or earlier than sixty (60) days prior to such contemplated sale date of
such stock or securities, and each such Stockholder shall have until ten (10)
days prior to the contemplated sale date specified in such notice to inform the
Company of its intentions as to the exercise of the equity purchase right
provided hereunder. If no written
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reply is received by the Company prior to the tenth (10th) day before the
contemplated sale date specified in such notice, the Company may treat the
equity purchase right of such non-responding holder of the stock to have been
waived for that, but only for that, transaction, PROVIDED the referenced sale
takes place no later than fifteen (15) days after the contemplated sale date
specified in such notice. Any stock or securities sold by the Company after such
fifteen (15) day period must be reoffered to the Stockholders pursuant to the
terms of this paragraph. If all of the stock and securities offered to the
Stockholders is not fully subscribed by such Stockholders, the remaining stock
and securities shall be reoffered by the Company to the Stockholders that
purchased their full allotment upon the terms set forth in this paragraph except
that such Stockholders must exercise their purchase rights within seven (7) days
of receipt of such reoffer.
(c) The Company covenants that prior to the sending of the
notice of proposed sale pursuant to this SECTION 5.4, the Company will have
sufficient authorized and unissued stock to meet all possible equity purchase
requests as may be forthcoming based on such notice.
5.5 PROHIBITED ACTIONS. At any time (i) the Major Stockholders
collectively beneficially own more than a majority of the outstanding Voting
Stock of the Company or (ii) the directors appointed by the Major Stockholders
pursuant to CLAUSES (A), (B) and (C) of SECTION 2.2(b)(i) constitute a majority
of the Board of Directors, the Company shall not, without the prior approval of
a majority of the Independent directors of the Company (a) declare or pay
dividends in cash on the Preferred Stock at any time prior to the fifth
anniversary of the issuance thereof or (b) issue, repurchase, make any
distribution or action in respect of any securities of the Company or permit any
other action if such issuance, repurchase, distribution or action would result
in an adjustment to the conversion price of the Preferred Stock pursuant to
paragraph (g)(iii)(A), (C) or (E) of the Certificate of Designation.
5.6 FIDUCIARY DUTIES. Notwithstanding the foregoing, the
obligations of the Company under SECTION 5.1 shall be subject to Applicable Law
and the ability of the Board of Directors to properly discharge its fiduciary
duties.
5.7 STANDSTILL. Except pursuant to SECTIONS 4.2, 5.1(c) and
5.4, following such time as the Major Stockholders and their Affiliates, in the
aggregate, beneficially own Securities, other than Securities held by the Other
Stockholder at any time after the application of the provisions of this
Agreement to the Other Stockholder shall have been terminated pursuant to
SECTION 6.12, representing greater than 70% of the Voting Stock of the Company
none of the Major Stockholders shall acquire beneficial ownership of any Equity
Interest of the Company without the consent of a majority of the Independent
directors of the Company, except that each of the Major Stockholders may acquire
Equity Interests of the Company (i) to the extent that the aggregate beneficial
ownership by such Major Stockholder of Voting Stock of the Company does not
increase by more than 1.0% or (ii) if such Major Stockholder shall have
commenced a tender offer for all of the outstanding Common Stock of the Company.
Any such Equity Interests so acquired shall be subject to the terms of this
Agreement.
ARTICLE VI
MISCELLANEOUS
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6.1 RULES OF CONSTRUCTION. The term "this Agreement" means this
agreement together with all schedules and exhibits hereto, as the same may from
time to time be amended, modified, supplemented or restated in accordance with
the terms hereof. The use in this Agreement of the term "including" means
"including, without limitation." The words "herein," "hereof," "hereunder" and
other words of similar import refer to this Agreement as a whole, including the
schedules and exhibits, as the same may from time to time be amended, modified,
supplemented or restated, and not to any particular section, subsection,
paragraph, subparagraph or clause contained in this Agreement. All references to
sections, schedules and exhibits mean the sections of this Agreement and the
schedules and exhibits attached to this Agreement, except where otherwise
stated. The title of and the section and paragraph headings in this Agreement
are for convenience of reference only and shall not govern or affect the
interpretation of any of the terms or provisions of this Agreement. The use
herein of the masculine, feminine or neuter forms shall also denote the other
forms, as in each case the context may require or permit. Where specific
language is used to clarify by example a general statement contained herein,
such specific language shall not be deemed to modify, limit or restrict in any
manner the construction of the general statement to which it relates. The
language used in this Agreement has been chosen by the parties to express their
mutual intent, and no rule of strict construction shall be applied against any
party.
6.2 SUCCESSORS AND ASSIGNS. Whether or not an express assignment
has been made pursuant to the terms of this Agreement, the terms and conditions
of this Agreement shall inure to the benefit of, and be binding upon, the
respective successors and permitted assigns of the Company and each Stockholder,
except that rights granted to any Major Stockholder and specific to such Major
Stockholder pursuant to ARTICLE II and SECTIONS 3.1, 3.2, 4.2, 4.3, 5.1, 5.2 and
5.5 shall not be assignable either directly or indirectly, PROVIDED that the
rights granted pursuant to SECTIONS 3.1, 3.2, 4.2, 4.3, 5.1, 5.2 and 5.5 may be
assigned (a) to an Affiliate of such Major Stockholder, (b) with the approval of
each other Major Stockholder or (c) in the case of SECTIONS 3.1 and 3.2, to a
transferee of Securities in excess of 50% of such Major Stockholder's Original
Ownership.
6.3 TERMINATION.
(a) Any party to, or Person who is subject to, this Agreement
who ceases to own any Securities or any interest therein in accordance with the
terms of this Agreement shall cease to be a party to, or Person who is subject
to, this Agreement and thereafter shall have no rights or obligations hereunder,
PROVIDED that any Transfer of Securities by any Stockholder in breach of this
Agreement shall not relieve such Stockholder of liability for any such breach.
(b) All rights and obligations pursuant to this Agreement
shall terminate and be of no further force or effect upon the consummation of a
Sale.
6.4 RESTRUCTURING, EXCHANGES, ETC., AFFECTING THE SECURITIES.
Except as expressly provided herein, the provisions of this Agreement shall
apply to any and all Securities of the Company or any successor or assignee of
the Company (whether by merger, consolidation, sale of assets or otherwise)
which may be issued in respect of, in exchange for, or in substitution for the
Securities, by reason of any stock dividend, split, reverse split, combination,
restructuring, reclassification, merger, consolidation, or otherwise in such a
manner as to reflect
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the intent and meaning of the provisions hereof. Upon the occurrence of any of
such events, numbers of shares and amounts hereunder and any other appropriate
terms shall be appropriately adjusted, as determined in good faith by the Board
of Directors.
6.5 CONFLICT WITH BYLAWS. The Stockholders agree that in the
event any term or provision of the Bylaws conflict with this Agreement, this
Agreement shall control and all Stockholders shall take all action reasonably
necessary to amend the Bylaws so that they shall not conflict, including voting
in favor of such amendments thereto as shall be reasonably necessary to conform
the Bylaws to the provisions of this Agreement.
6.6 NO THIRD PARTY BENEFICIARIES. Except as otherwise provided
herein, this Agreement is not intended to confer upon any Person, except for the
parties hereto, any rights or remedies hereunder.
6.7 GOVERNING LAW; JURISDICTION. This Agreement shall be governed
by and construed under the laws of the State of Delaware.
6.8 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
6.9 TITLES AND SUBTITLES. The titles and subtitles used in this
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
6.10 NOTICES. Unless otherwise provided, any notice required or
permitted under this Agreement shall be given in writing and shall be deemed
effectively given upon personal delivery to the party to be notified or upon
delivery by confirmed facsimile transmission or nationally recognized overnight
courier service and addressed to the party to be notified at the address
indicated for such party on the signature page hereof, or at such other address
as such party may designate by ten (10) days' advance written notice to the
other parties; PROVIDED, that:
(i) unless otherwise specified by Ares in a notice delivered by Ares
in accordance with this SECTION 6.10, any notice required to be
delivered to Ares shall be properly delivered if delivered to:
ACOF Management, L.P.
c/o Ares Management, L.P.
1999 Avenue of the Xxxxx
Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxx Xxxxxxx
with a copy to:
Milbank, Tweed, Xxxxxx & XxXxxx, LLP
000 Xxxxx Xxxxxxxx Xxxxxx
-00-
00xx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxxxx Xxxxxx
(ii) unless otherwise specified by Bain in a notice delivered by Bain
in accordance with this SECTION 6.10, any notice required to be
delivered to Bain shall be properly delivered if delivered to:
Xxxx Capital (Europe) LLC
c/x Xxxx Capital, Ltd.
Xxxxxxxxxx Xxxxx
Xxxxxxx Xxxxx
Xxxxxx, X0X 0XX
XXXXXXX
Facsimile: x00-(0)00-0000-0000
Attn: Xxxxxxxxxx Xxxxxxxx
Xxxxxxx Xxxx
with a copy to:
Xxxxxxxx & Xxxxx International
Tower 42, 00 Xxx Xxxxx Xxxxxx
Xxxxxx, XX0X 0XX
XXXXXXX
Facsimile: x00-(0)00-0000-0000
Attention: Xxxxx Learner
Xxxxx Xxxxxxx Xxxx
(iii) unless otherwise specified by OTPP in a notice delivered by OTPP
in accordance with this SECTION 6.10, any notice required to be
delivered to OTPP shall be properly delivered if delivered to:
Ontario Teachers Pension Plan Board
0000 Xxxxx Xxxxxx
Xxxxxxx, Xxxxxxx X0X 0X0
Facsimile: (000) 000-0000
Attn: Xxx Sienna
Xxxxxxx Xxxxxxxx
with a copy to:
Xxxxx, Xxxxxxx & Xxxxxxxxx, LLP
000 Xxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Facsimile: (000) 000-0000
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Attention: F. Xxxxxx Xxxxxx
Xxxxx Xxxxxx
(iv) unless otherwise specified by the Other Stockholder in a notice
delivered by the Other Stockholder in accordance with this SECTION
6.10, any notice required to be delivered to the Other Stockholder
shall be properly delivered if delivered to:
Ares Leveraged Investment Fund, L.P.
c/o Ares Management, L.P.
1999 Avenue of the Xxxxx
Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxx Xxxxxxx
with a copy to:
Milbank, Tweed, Xxxxxx & XxXxxx, LLP
000 Xxxxx Xxxxxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxxxx Xxxxxx
(v) unless otherwise specified by the Company in a notice delivered by
the Company in accordance with this SECTION 6.10, any notice required
to be delivered to the Company shall be properly delivered if
delivered to:
Samsonite Corporation
00000 Xxxx 00xx Xxxxxx
Xxxxxx, Xxxxxxxx 00000
Facsimile: (000) 000-0000
Attn: General Counsel
with a copy to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
Xxxx Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxxxxx
Xxx X. Xxxxx
6.11 EXPENSES. If any action at law or in equity is necessary to
enforce or interpret the terms of this Agreement, the prevailing party shall be
entitled to reasonable attorneys' fees, costs and necessary disbursements in
addition to any other relief to which such party may be entitled.
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6.12 ENTIRE AGREEMENT; AMENDMENTS AND WAIVERS. This Agreement
constitutes the full and entire understanding and agreement among the parties
with regard to the subject matter hereof. Any term of this Agreement may be
amended only with the written consent of: (a) if each Major Stockholder
beneficially owns Securities constituting more than 33% of the Original
Ownership of such Major Stockholder, each Major Stockholder, the Company and, if
such amendment would materially and adversely affect the rights or materially
increase the obligations of any other Stockholder set forth in this Agreement in
a manner materially different from the effect on the rights and obligations of
the Major Stockholders, such other Stockholder; (b) if each of only two (2)
Major Stockholders (together with their respective Affiliates) beneficially owns
Securities constituting more than 33% of the Original Ownership of such Major
Stockholder, such Major Stockholders, the Company and, if such amendment would
adversely affect the rights or increase the obligations of any other Stockholder
set forth in this Agreement in a manner materially different from the effect on
the rights and obligations of the Major Stockholders, such other Stockholder;
(c) if only one (1) Major Stockholder beneficially owns Securities constituting
more than 33% of the Original Ownership of such Major Stockholder, such Major
Stockholder, the Company and, if such amendment would adversely affect the
rights or increase the obligations of any other Stockholder set forth in this
Agreement in a manner materially different from the effect on the rights and
obligations of the Major Stockholders, such other Stockholder; and (d)
otherwise, the Company and the holders of a majority of the Securities held by
all Stockholders party to this Agreement; PROVIDED, HOWEVER, that the definition
of "Fair Market Value," the definition of "Independent," SECTION 2.3(c), SECTION
5.5, SECTION 5.6, SECTION 5.7 and this proviso to this SECTION 6.12 may not be
amended, nor any waiver of compliance therewith may occur, without the approval
of a majority of the Independent directors of the Company; PROVIDED, FURTHER,
that (x) SECTION 2.6(a) and Part I of SCHEDULE 2 may not be amended, nor any
waiver of compliance therewith may occur, without the written consent of the
Company and each Major Stockholder that beneficially owns Securities
constituting at least 33% of the Original Ownership of such Major Stockholder,
(y) SECTION 2.6(b) and Part II of SCHEDULE 2 may not be amended, nor any waiver
of compliance therewith may occur, without the written consent of the Company
and the Major Stockholders required to approve at such time a Significant Action
pursuant to SECTION 2.6(b) and (z) notwithstanding anything to the contrary
contained herein, this Agreement may be amended to terminate the application of
the provisions of this Agreement to any Stockholder with the written consent of
each Major Stockholder that at such time beneficially owns not less than 33% of
the Original Ownership of such Major Stockholder and the affected Stockholder.
Any amendment or waiver effected in accordance with this SECTION 6.12 shall be
binding upon each Stockholder. The observance of any term of this Agreement may
be waived (either generally or in a particular instance and either retroactively
or prospectively) only with the written consent of the party against whom
enforcement of any such waiver is sought. No amendment to or waiver under this
Agreement that increases the obligations of the Company, reduces or waives any
rights of the Company or modifies or changes the limitations and obligations
that are subject to the fiduciary duties of the Board of Directors shall be
effective unless the same shall have been duly authorized by the consent of a
majority of the Independent directors of the Company.
6.13 SEVERABILITY. If one or more provisions of this Agreement
are held to be unenforceable under Applicable Law, such provision shall be
excluded from this Agreement and the balance of the Agreement shall be
interpreted as if such provision were so excluded and shall be enforceable in
accordance with its terms.
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-40-
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
COMPANY:
SAMSONITE CORPORATION,
a Delaware corporation
By:
-----------------------------------------
Name:
Title:
SIGNATURE PAGE
TO STOCKHOLDERS AGREEMENT
STOCKHOLDERS:
ACOF MANAGEMENT, L.P.
By:
-----------------------------------------
Name:
Title:
SIGNATURE PAGE
TO STOCKHOLDERS AGREEMENT
XXXX CAPITAL (EUROPE) LLC
By: Xxxx Capital, Ltd.
Its: Managing Member
By:
-----------------------------------------
Its: Managing Director
SIGNATURE PAGE
TO STOCKHOLDERS AGREEMENT
ONTARIO TEACHERS PENSION PLAN BOARD
By:
-----------------------------------------
Name:
Title:
SIGNATURE PAGE
TO STOCKHOLDERS AGREEMENT
ARES LEVERAGED INVESTMENT FUND, L.P.
By:
-----------------------------------------
Name:
Title:
SIGNATURE PAGE
TO STOCKHOLDERS AGREEMENT
SCHEDULE 1 - OWNERSHIP
Number of Shares of Common Stock
Name of Stockholder (on an as-converted basis)
------------------- --------------------------------
SCHEDULE 1
TO STOCKHOLDERS AGREEMENT
SCHEDULE 2 - PART I
PRIMARY ACTIONS
The following actions constitute Primary Actions:
(i) the amendment to or waiver of any of the
provisions of the Certificate or Bylaws or the organizational
documents of the Company or any Subsidiary;
(ii) the commencement of any liquidation,
dissolution or voluntary bankruptcy, administration, recapitalization
or reorganization of the Company or any Subsidiary in any form of
transaction, make any arrangements with creditors, or consent to the
entry of an order for relief in an involuntary case, or take the
conversion of an involuntary case to a voluntary case, or consent to
the appointment or taking possession by a receiver, trustee or other
custodian for all or substantially all of its property, or otherwise
seek the protection of any applicable bankruptcy or insolvency law,
other than any such actions with respect to a non-Material Subsidiary
where, in the good faith judgment of the Board of Directors, the
maintenance or preservation of such Subsidiary is no longer desirable
in the conduct of the business of the Company or any Material
Subsidiary; or
(iii) the entering into of any agreement to do
any of the foregoing.
SCHEDULE 2
TO STOCKHOLDERS AGREEMENT
PAGE 1
SCHEDULE 2 - PART II
SIGNIFICANT ACTIONS
(a) The following actions constitute Significant Actions:
(i) the merger or consolidation of the Company
or any of its Subsidiaries (other than a merger or consolidation of
the Company with any of its Subsidiaries or of any of the Company's
Subsidiaries with any other of the Company's Subsidiaries), whether to
effect an acquisition or a divestiture;
(ii) entering into any corporate transactions,
including any joint venture, investment (other than an investment in,
contract with or acquisition of any securities or assets of any of the
Company's wholly-owned Subsidiaries), recapitalization, reorganization
or contract with any other Person or acquisition of any securities or
assets of another Person, whether in a single transaction or series of
related transactions, in excess of $15 million;
(iii) any sale, lease or other conveyance of
assets of the Company or its Subsidiaries in any transaction or series
of related transactions (other than any sale, lease or other
conveyance of assets of any wholly-owned Subsidiary of the Company to
the Company or any of the Company's other wholly-owned Subsidiaries),
in each case outside the ordinary course of business or any assets
(other than inventory sold in the ordinary course of business), except
for sales, leases or other conveyances of assets in a single
transaction or series of related transactions with a Fair Market Value
of less than or equal to $15 million;
(iv) the issuance of any Company Preferred
Stock;
(v) the issuance of any other Equity Interests
by the Company in any 12-month period (other than in connection with
the Approved IPO or in connection with a Management Incentive Plan
that has previously been provided to and agreed to by the Major
Stockholders prior to the date hereof and any other management
incentive plan approved in accordance with the terms of SECTION 2.6)
with a Fair Market Value at the time of issuance in excess of $10
million, other than pursuant to the exercise of any options to
purchase Company Equity Interests that are outstanding as of the date
of this Agreement;
(vi) the issuance of any Equity Interests by any
of the Company's Subsidiaries, other than the issuance of Equity
Interests to the Company or to any of the Company's wholly-owned
Subsidiaries;
(vii) the guarantee, assumption or incurrence of
indebtedness for borrowed money by the Company or any of its
Subsidiaries (including indebtedness of any other Person existing at
the time such other Person is merged with or into or became a
Subsidiary of, or substantially all of its business and assets were
acquired by, the Company or such Subsidiary and indebtedness
SCHEDULE 2
TO STOCKHOLDERS AGREEMENT
PAGE 2
secured by a lien encumbering any asset acquired by the Company or
such Subsidiary) in excess of $20 million in any 12-month period
(other than (x) Intercompany Indebtedness (as defined in the
Recapitalization Agreement), (y) indebtedness incurred in the ordinary
course of business under the Company's revolving credit facilities the
terms of which have been previously approved pursuant to SECTION 2.6
and (z) trade indebtedness incurred in the ordinary course of business
by the Company and its Subsidiaries);
(viii) the declaration or payment of dividends or
the making of other distributions with respect to Equity Interests of
the Company (other than (x) dividends or distributions from any
Subsidiary of the Company and (y) the accrual and payment of dividends
in respect of the Preferred Stock in accordance with the terms of the
Preferred Stock);
(ix) the repurchase, redemption or other
retirement of any Equity Interests of the Company or any of its
Subsidiaries or, prior to its stated maturity, any indebtedness for
borrowed money, of the Company or its Subsidiaries, other than (x)
repayments or redemptions of indebtedness expressly permitted or
required by the Recapitalization Agreement or that has been previously
approved pursuant to SECTION 2.6 in accordance with the terms of such
indebtedness or (y) repurchases of securities held by employees of the
Company or its Subsidiaries upon termination of employment pursuant to
the terms of a Management Incentive Plan that has previously been
provided to and agreed to by the Major Stockholders prior to the date
hereof and any other management incentive plan that has previously
been approved in accordance with the terms of SECTION 2.6;
(x) other than transactions expressly
contemplated by this Agreement, the Recapitalization Agreement and the
Fee Letter, entering into any transactions between the Company or any
Subsidiary of the Company, on the one hand, and any Major Stockholder
or any Affiliate of a Major Stockholder (other than the Company and
its Subsidiaries), on the other;
(xi) any capital expenditure or purchase, lease
or other acquisition of assets by the Company or its Subsidiaries that
would cause the aggregate amount of all such capital expenditures
purchases, leases and other acquisitions to exceed $15 million in any
12-month period;
(xii) any change in the Company's independent
auditors;
(xiii) material changes to the scope or nature of
the Company's and any of its Subsidiaries' business and operations;
(xiv) entering into any agreement to register
equity securities of any other security holder of the Company (other
than registrations on Form S-8 under the Securities Act);
SCHEDULE 2
TO STOCKHOLDERS AGREEMENT
PAGE 3
(xv) entering into any arrangement, contract or
order which by its terms would restrict the Company from complying
with its obligations under this Agreement and/or the Recapitalization
Agreement; and
(xvi) the entering into of any agreement to do
any of the foregoing.
(b) For so long as the Corporate Therapeutics remain in
effect, the following actions shall also constitute Significant Actions:
(i) entering into any corporate transactions,
including any joint venture, investment (other than an investment in,
contract with or acquisition of any securities or assets of any of the
Company's wholly-owned Subsidiaries), recapitalization, reorganization
or contract with any other Person or acquisition of any securities or
assets of another Person whether in a single transaction or series of
related transactions involving in excess of $10 million;
(ii) any sale, lease or other conveyance of
assets of the Company or its Subsidiaries in any transaction or series
of related transactions (other than any sale, lease or other
conveyance of assets of any wholly-owned Subsidiary of the Company to
the Company or any of the Company's other wholly-owned Subsidiaries),
in each case outside the ordinary course of business or any assets
(other than inventory sold in the ordinary course of business), except
for sales, leases or other conveyances of assets in a single
transaction or series of related transactions with a Fair Market Value
of less than or equal to $10 million;
(iii) the guarantee, assumption or incurrence of
indebtedness for borrowed money by the Company or any of its
Subsidiaries (including indebtedness of any other Person existing at
the time such other Person is merged with or into or became a
Subsidiary of, or substantially all of its business and assets were
acquired by, the Company or such Subsidiary and indebtedness secured
by a lien encumbering any asset acquired by the Company or such
Subsidiary) in excess of $15 million in any 12-month period (other
than (x) Intercompany Indebtedness (as defined in the Recapitalization
Agreement), (y) indebtedness incurred in the ordinary course of
business under the Company's revolving credit facilities the terms of
which have been previously approved pursuant to SECTION 2.6 and (z)
trade indebtedness incurred in the ordinary course of business by the
Company and its Subsidiaries);
(iv) the declaration or payment of dividends or
the making of other distributions with respect to Equity Interests of
any non-wholly-owned Subsidiary of the Company (other than dividends
or distributions from any such Subsidiary that are required pursuant
to the organizational documents of such Subsidiary as in effect on the
date of the Recapitalization Agreement or, if later, the date of
formation of such Subsidiary);
SCHEDULE 2
TO STOCKHOLDERS AGREEMENT
PAGE 4
(v) other than transactions expressly
contemplated by this Agreement, the Recapitalization Agreement and the
Fee Letter, entering into any direct or indirect transactions between
the Company or any Subsidiary of the Company, on the one hand, and any
Affiliate of the Company or any stockholder, director, officer or
employee of the Company or an Affiliate of the Company, on the other
(including, without limitation, the purchase, sale, lease or exchange
of any property, or rendering of any service or modification or
amendment of any existing agreement or arrangement);
(vi) the establishment, adoption, entering into,
amendment or modification to or termination of any employee benefit
plan;
(vii) the approval of the Budget and Business
Plan for any fiscal year of the Company (each such Budget and Business
Plan approved for any fiscal year of the Company pursuant to SECTION
2.6, the "APPROVED BUDGET AND BUSINESS PLAN" for such fiscal year);
(viii) any capital expenditure or purchase, lease
or other acquisition of assets by the Company or its Subsidiaries,
other than (a) capital expenditures, purchases, leases and other
acquisitions contemplated in the Approved Budget and Business Plan for
the applicable fiscal year of the Company and (b) capital
expenditures, purchases, leases and other acquisitions not
contemplated in the Approved Budget and Business Plan for the
applicable fiscal year that would cause the aggregate amount of all
such capital expenditures, purchases, leases and other acquisitions
not contemplated in the Approved Budget and Business Plan for the
applicable fiscal year to exceed $5 million in any 12-month period;
(ix) entering into any arrangement, instrument,
contract or order, or any amendment or modification thereof, which by
its terms could (A) restrict the right of any Subsidiary to make loans
or advances or pay dividends to, transfer property to, or repay any
indebtedness owed to, any of the Company and its Subsidiaries or (B)
otherwise restrict any Subsidiary of the Company from making payments
or transfers to any of the Company or any other Subsidiary of the
Company, other than, in each case, in the ordinary course of the
Company's business;
(x) any change to senior management of the
Company or any Material Subsidiary;
(xi) with respect to any officer, director or
employee of the Company or any of its Subsidiaries: (a) the entering
into of any employment agreement or other compensation arrangement
with such person or (b) the amendment or other modification of any
employment agreement or other compensation arrangement entered into
with such person (in each case, other than pursuant to a management
incentive plan approved pursuant to SECTION 2.6), except where such
agreement, arrangement, amendment or modification would
SCHEDULE 2
TO STOCKHOLDERS AGREEMENT
PAGE 5
not result in the payment of compensation to such person in excess of
$500,000 in any 12-month period;
(xii) the grant of any severance or termination
payment to any present or former officer, director or employee of the
Company or any of its Subsidiaries other than pursuant to a management
incentive plan approved pursuant to SECTION 2.6;
(xiii) any change to (A) the Company's accounting
reference date or (B) the Company's accounting policies, bases or
methods (other than as recommended by the auditors of the Company);
(xiv) any loans or advances to or guarantees for
the benefit of any officers or directors of the Company or any
Subsidiary, other than in the ordinary course of business as part of
travel advances, relocation advances or salary;
(xv) the payment of or pledge to make any
charitable contribution, except in the ordinary course of business, in
compliance with all applicable laws and not in excess of $1 million in
the aggregate in any 12-month period;
(xvi) the creation of any mortgage or charge or
permitting the creation of or suffering to exist any mortgage or fixed
or floating charge, lien (other than a lien arising by operation of
law) or other encumbrance over the whole or any part of the
undertaking, property or assets of the Company or any Subsidiary other
than any mortgage, charge, lien or other encumbrance securing
obligations (A) not in excess of $1 million and (B) when taken
together with all such mortgages, charges, liens and other
encumbrances created within the preceding 12-months, would not result
in the obligations underlying such mortgages, charges, liens and other
encumbrances to exceed $10 million in the aggregate;
(xvii) commencing, entering into any settlement
discussions, entering into any settlement agreement or arrangement or
filing or responding to dispositive motions (including but not limited
to any motion to dismiss, motion for summary judgment, motion for
summary adjudication or demurrer) with respect to any litigation
material to the business of the Company;
(xviii) transferring or permanently disposing of
any Intellectual Property of the Company or its Subsidiaries in excess
of $2 million in the aggregate in any 12-month period;
(xix) increasing the number of Directors above
nine;
SCHEDULE 2
TO STOCKHOLDERS AGREEMENT
PAGE 6
(xx) the application for registration, listing
or qualification of any securities on any securities exchange other
than pursuant to the terms of this Agreement; and
(xxi) the entering into of any agreement to do
any of the foregoing.
SCHEDULE 2
TO STOCKHOLDERS AGREEMENT
PAGE 7
EXHIBIT C
FORM OF AMENDMENT TO CERTIFICATE OF DESIGNATION OF EXISTING PREFERRED STOCK
EXHIBIT C
CERTIFICATE OF AMENDMENT
TO
CERTIFICATE OF DESIGNATION OF THE POWERS,
PREFERENCES AND RELATIVE, PARTICIPATING,
OPTIONAL AND OTHER SPECIAL RIGHTS OF 13-7/8%
SENIOR REDEEMABLE EXCHANGEABLE PREFERRED
STOCK AND QUALIFICATIONS, LIMITATIONS AND
RESTRICTIONS THEREOF
(PURSUANT TO SECTION 242 OF THE GENERAL CORPORATION LAW OF
THE STATE OF DELAWARE)
Samsonite Corporation (the "CORPORATION"), a corporation organized and
existing under and by virtue of the General Corporation Law of the State of
Delaware, does hereby certify:
FIRST: That the original Certificate of Designation (the "CERTIFICATE
OF DESIGNATION") of the Powers, Preferences and Relative, Participating,
Optional and Other Special Rights of 13-7/8% Senior Redeemable Exchangeable
Preferred Stock (the "SENIOR PREFERRED STOCK") and Qualifications, Limitations
and Restrictions Thereof was originally filed with the Secretary of State of
Delaware on June 23, 1998.
SECOND: That the Board of Directors of the Corporation, at a meeting
duly held on April 29, 2003, filed with the minutes of the Board of Directors,
duly adopted a resolution authorizing and directing that the Certificate of
Designation be amended, and declaring said amendment to be advisable, which
resolution is as follows:
RESOLVED: Paragraph (i) of the Certificate of Designation is hereby
amended and restated in its entirety to read as follows:
"(i) CONVERSION.
(i) CONVERSION OR EXCHANGE AT THE OPTION OF THE HOLDERS. The Holders
of shares of Senior Preferred Stock shall not have any rights hereunder to
convert such shares into or exchange such shares for shares of any other
class or classes or any other series of any class or classes of Capital
Stock of the Corporation other than as provided in the Registration Rights
Agreement.
(ii) AUTOMATIC CONVERSION. As of the date of the filing of this
Certificate of Amendment (the "CONVERSION DATE"), all of the outstanding
shares of Senior Preferred Stock and all rights in respect of all accrued
and unpaid dividends thereon (which shall be eliminated and cease on the
Conversion Date) are hereby converted as follows:
(A) DEFINITIONS. As used in this PARAGRAPH (i)(ii), the
following terms shall have the following meanings (with terms defined in the
singular having comparable meanings when used in the plural and vice versa),
unless the context otherwise requires:
"CONSENT SOLICITATION STATEMENT" means the 13-7/8% Senior
Redeemable Exchangeable Preferred Stock Consent Solicitation Statement.
"NEW PREFERRED STOCK" means the Corporation's 2003 Convertible
Preferred Stock.
"PREFERRED CONVERSION SHARES" means, with respect to each
Preferred Electing Holder, a number of shares of such Holder's Senior Preferred
Stock equal to (i) the number of shares of Senior Preferred Stock held by such
Holder MULTIPLIED BY (ii) a fraction, the numerator of which is 108,417 and the
denominator of which is 224,905.
"RECAPITALIZATION AGREEMENT" means the Recapitalization
Agreement, dated as of May 1, 2003, by and among the Corporation, ACOF
Management, L.P., a Delaware limited partnership, Xxxx Capital (Europe) LLC, a
Delaware limited liability company, and Ontario Teachers Pension Plan Board, a
non-share capital corporation established under the laws of Ontario.
"WARRANT" means a Warrant to purchase Common Stock of the
Corporation in substantially the form attached to the Recapitalization Agreement
as Exhibit H.
(B) COMMON STOCK AND WARRANT CONVERSION. With respect to each
Holder that shall have elected, in accordance with the Consent Solicitation
Statement, to receive shares of Common Stock of the Corporation and a Warrant
upon conversion of the shares of Senior Preferred Stock held by such Holder,
each share of Senior Preferred Stock held by such Holder, and all rights in
respect of all accrued and unpaid dividends thereon, is hereby automatically
converted into (x) 1,185.89 shares of Common Stock of the Corporation and (y) a
Warrant to purchase 276 shares of Common Stock without further action by the
Holders thereof and whether or not the certificates representing such shares are
surrendered to the Corporation or its transfer agent.
(C) NEW PREFERRED STOCK AND COMMON STOCK CONVERSION. With
respect to (x) each Holder that shall have elected, in accordance with the
Consent Solicitation Statement, to receive shares of New Preferred Stock upon
conversion of the shares of Senior Preferred Stock held by such Holder and (y)
each Holder that shall have failed to make an election in accordance with the
Consent Solicitation Statement (collectively, the "PREFERRED ELECTING HOLDERS"):
(1) each Preferred Conversion Share held by such Holder, and all
rights in respect of all accrued and unpaid dividends thereon, is
hereby automatically converted into 0.498 shares of New Preferred
Stock without further action by the
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Holders thereof and whether or not the certificates representing such
shares are surrendered to the Corporation or its transfer agent; and
(2) each share of Senior Preferred Stock held by such Holder
other than the Preferred Conversion Shares, and all rights in respect
of all accrued and unpaid dividends thereon, is hereby automatically
converted into 1,185.89 shares of Common Stock of the Corporation
without further action by the Holders thereof and whether or not the
certificates representing such shares are surrendered to the
Corporation or its transfer agent.
(D) CONVERSION MECHANICS.
(1) The Corporation shall make no payment for accrued and unpaid
dividends on shares of Senior Preferred Stock, whether or not in
arrears, on conversion of such shares.
(2) Shares of Senior Preferred Stock shall be deemed to have
been converted on the Conversion Date and, at such time, the rights of
the Holders of such shares of Senior Preferred Stock as Holders shall
cease, and the person or persons entitled to receive the shares of
Common Stock, Warrants and/or shares of New Preferred Stock issuable
upon conversion shall be treated for all purposes as the record holder
or holders of such shares of Common Stock, Warrants and/or shares of
New Preferred Stock at such time. Promptly following the Conversion
Date, the Corporation will deliver such shares of Common Stock,
Warrants and/or shares of New Preferred Stock to the office or address
of each Holder, as it appears on the stock books of the Corporation,
upon surrender of the certificates for the Senior Preferred Stock
being converted.
(3) In connection with the conversion of any shares of Senior
Preferred Stock, (I) no fractions of shares of New Preferred Stock
shall be issued, but in lieu thereof the Corporation shall issue a
number of shares of Common Stock of the Corporation equal to (x) such
fraction MULTIPLIED BY (y) 2,381 and (II) no fractions of shares of
Common Stock shall be issued, but in lieu thereof the Corporation
shall round such shares up to the nearest whole number.
(4) No shares of Senior Preferred Stock may be issued by the
Corporation on and after the Conversion Date."
THIRD: That the Preferred Stockholders of the Corporation approved
said proposed amendment by written consent in accordance with Sections 228 and
242 of the General Corporation Law of the State of Delaware, and notice of such
consent has been given, as provided in Section 228 of the General Corporation
Law of the State of Delaware. Accordingly, said proposed amendment has been duly
adopted by the Preferred Stockholders in accordance with Section 242 of the
General Corporation Law of the State of Delaware.
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FOURTH: That the 2003 annual meeting of the Corporation was duly held
in accordance with the By-laws of the Corporation and the General Corporation
Law of the State of Delaware, at which meeting the necessary number of shares of
common stock as required by statute and the Certificate of Incorporation were
voted in favor of said proposed amendment. Accordingly, said proposed amendment
has been duly adopted by the common stockholders in accordance with Section 242
of the General Corporation Law of the State of Delaware.
IN WITNESS WHEREOF, said Samsonite Corporation, has caused this
Certificate of Designation to be signed by ___________________, its
______________, this ___ day of ________, 2003.
SAMSONITE CORPORATION
By:
-------------------------------
Name:
Title:
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EXHIBIT D
VOTING AGREEMENT WITH HOLDERS OF
EXISTING PREFERRED STOCK
EXHIBIT D
LOCK-UP, SUPPORT AND VOTING AGREEMENT
This Lock-Up, Support and Voting Agreement (this "AGREEMENT") is made and
entered into as of _______ __, 2003, by and among ACOF Management, L.P., a
Delaware limited partnership ("ARES"); Xxxx Capital (Europe) LLC, a Delaware
limited liability company ("BAIN"); and Ontario Teachers Pension Plan Board, a
non-share capital corporation established under the laws of Ontario ("OTPP" and,
together with Ares and Bain, the "INVESTORS"), and the entities listed on the
signature pages hereto under the caption "EXISTING PREFERRED STOCK HOLDERS"
(each a "HOLDER"). The Investors and the Holders are collectively referred to
herein as the "PARTIES" and individually as a "PARTY."
RECITALS
WHEREAS, each Holder is a holder of existing 13 7/8% Senior Redeemable
Exchangeable Preferred Stock (the "EXISTING PREFERRED STOCK") of Samsonite
Corporation (the "COMPANY"), and may also own one or more of the following as
indicated on the signature pages hereto: (a) Common Stock of the Company (the
"COMMON STOCK"), (b) warrants to purchase Common Stock of the Company (the
"WARRANTS") issued pursuant to the Warrant Agreement, dated as of June 24, 1998,
between the Company and BankBoston, N.A., as amended (the "WARRANT AGREEMENT"),
or (c) 10-3/4% Senior Subordinated Notes due 2008 of the Company (the "NOTES")
issued pursuant to the Indenture, dated as of June 24, 1998, between the Company
and United States Trust Company of New York;
WHEREAS, the Investors have jointly proposed to recapitalize the Company
(as more fully described in the Recapitalization Agreement to be entered into by
the Company and the Investors in substantially the form attached hereto as
EXHIBIT A (the "RECAPITALIZATION AGREEMENT") and as may be modified in
accordance with the terms of this Agreement, the "RECAPITALIZATION"), which
Recapitalization will be accomplished through the following series of
transactions (collectively, as modified in accordance with the terms of this
Agreement, the "RECAPITALIZATION STEPS"):
(a) The Investors will enter into the Recapitalization Agreement with
the Company pursuant to which the Investors will agree to
purchase shares of a new series of voting convertible preferred
stock of the Company (the "NEW PREFERRED STOCK") with an
aggregate liquidation preference of $106 million for an aggregate
purchase price of $106 million, the principal terms of which New
Preferred Stock are set forth in the Form of Certificate of
Designation of 2003 Convertible Preferred Stock attached as
Exhibit A to the Recapitalization Agreement;
(b) The Company will commence a solicitation of consents from the
holders of the Notes to the Indenture Amendment (as defined in
the Recapitalization Agreement);
(c) The amended and restated certificate of incorporation of the
Company (the "CHARTER") will be amended by filing an amendment to
the Existing Preferred Stock certificate of designation, which
amendment will be substantially in the form attached as Exhibit C
to the Recapitalization Agreement, to provide that all of the
outstanding shares of Existing Preferred Stock, and all rights in
respect of all accrued and unpaid dividends thereon (which shall
be eliminated and cease upon the Conversion), will be
automatically converted (the "CONVERSION") into shares of New
Preferred Stock, Common Stock and warrants to purchase Common
Stock at an exercise price of $0.75 per share, which warrants
will be substantially in the form attached as Exhibit H to the
Recapitalization Agreement (each, a "WARRANT"), as described in
CLAUSE (d), (e) and (f) below;
(d) Prior to the filing of the amendment to the Existing Preferred
Stock certificate of designation, each holder of the Existing
Preferred Stock will have the option to elect to receive in the
Conversion with respect to all shares of Existing Preferred Stock
held by such holder either (A) shares of Common Stock and a
Warrant (the "COMMON STOCK AND WARRANT OPTION") or (B) shares of
New Preferred Stock (the "NEW PREFERRED OPTION"), PROVIDED that
an affiliate of Ares will agree to elect the Common Stock and
Warrant Option with respect to its 56,226 shares of Existing
Preferred Stock, PROVIDED, FURTHER, that any holders of Existing
Preferred Stock failing to make an election will be deemed to
have elected the New Preferred Option;
(e) Each holder of Existing Preferred Stock that elected the Common
Stock and Warrant Option will receive in the Conversion with
respect to each share of Existing Preferred Stock held by such
Holder (x) 1,185.89 shares of Common Stock and (y) a Warrant to
purchase 276 shares of Common Stock;
(f) Each holder of Existing Preferred Stock that elected the New
Preferred Option or failed to make an election will receive the
following in the Conversion: such Holder will receive in the
Conversion (A) with respect to a number of shares of such
Holder's Existing Preferred Stock equal to (x) the number of
shares of Existing Preferred Stock held by such Holder MULTIPLIED
BY (y) a fraction, the numerator of which is 108,417 and the
denominator of which is 224,905, 0.498 shares of New Preferred
Stock for each such share of Existing Preferred Stock and (B)
with respect to each other share of Existing Preferred Stock held
by such Holder, 1,185.89 shares of Common Stock; and
(g) In connection with the foregoing Recapitalization Steps, and to
induce the Company to offer the New Preferred Option and the
Common Stock and Warrant Option, each Holder will return the
Warrants held by such Holder to the Company for cancellation,
without any additional consideration being paid in respect of
such cancellation, and execute such documents as shall be
reasonably requested by the Investors or the Company to evidence
the termination of all such Holder's rights with respect to such
Warrants; and
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WHEREAS, in order to facilitate the implementation of the Recapitalization,
and as an inducement to the Investors to participate in the Recapitalization,
each Holder is prepared, subject to the terms and conditions of this Agreement,
to vote its shares of Existing Preferred Stock, shares of Common Stock, Notes,
Warrants and any and all other shares or securities issued or issuable in
respect thereof on or after the date hereof but prior to the consummation of the
Recapitalization (collectively, the "SUBJECT SECURITIES") and/or otherwise
consent to amend the Charter, effect the Indenture Amendment, submit the
Warrants for cancellation and do all other things necessary to implement the
Recapitalization and each of the Recapitalization Steps.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements set forth herein, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the Parties hereby
agree as follows:
1. VOTING; PROXY.
(a) AGREEMENT TO VOTE. So long as this Agreement has not been
terminated pursuant to SECTION 6 hereof, each Holder hereby agrees that it
(i) shall timely vote in any meeting or in response to any request or
solicitation of consents by the Company (including by execution and
delivery of written consents with respect to) its Subject Securities (or
shall cause or instruct any custodial agent to so vote and execute and
deliver such written consents) to (A) amend the Charter by filing an
amendment to the Existing Preferred Stock certificate of designation
substantially in the form attached as Exhibit C to the Recapitalization
Agreement, (B) effect the Indenture Amendment and (C) do all other things
necessary or desirable to otherwise approve, permit and facilitate the
Recapitalization and the transactions contemplated by the Recapitalization,
including without limitation each of the Recapitalization Steps, (ii) shall
not revoke or withdraw any such vote or written consent and (iii) waives
notice to any meeting of securityholders held for the purpose of submitting
the foregoing for the consideration of the securityholders of the Company.
(b) PROXY. From the date hereof until the earlier of (i) the date on
which all of the transactions contemplated by the Recapitalization shall
have been consummated and (ii) the termination of this Agreement pursuant
to SECTION 6, each Holder hereby grants an irrevocable proxy, coupled with
an interest, to each of Xxxx Xxxxxxx (as officer of ACOF Management, L.P.)
and Xxxxxxx Xxxx (as employee of Xxxx Capital (Europe) LLC) (each, the
"PROXY"), with full power of substitution and resubstitution, and hereby
authorizes the Proxy to represent and vote (including by execution and
delivery of written consents with respect to) the Subject Securities of
such Holder in accordance with SECTION 1(a) above. The Proxy is hereby
empowered to exercise in its own discretion all voting rights (including,
without limitation, the power to execute and deliver written consents with
respect to the Subject Securities) of such Holder in accordance with
SECTION 1(a) above at any meeting or at any other time chosen by the Proxy,
and on every action or approval by written consent in lieu of any such
meeting. Each Holder hereby ratifies and approves of each and every action
taken by the Proxy pursuant to and subject
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to the foregoing. Upon the execution of this Agreement, all prior proxies
given by the undersigned with respect to the Subject Securities are hereby
revoked and no subsequent proxies will be given prior to the termination of
this Agreement. If requested by the Proxy, each Holder agrees to execute
and deliver applicable proxy material in furtherance of the provisions of
SECTION 1(a) and this SECTION 1(b).
(c) MODIFICATIONS. Notwithstanding any other provision of this
Agreement, the Investors, acting as a group, and the Company may make such
changes and modifications to the Recapitalization as the Investors and the
Company deem necessary and appropriate in order to have the
Recapitalization approved and/or implemented; PROVIDED, HOWEVER, that no
Holder will be required to support any such restructuring that deviates
from the Recapitalization Steps described above in a manner that is
materially adverse to such Holder.
2. RESTRICTIONS ON TRANSFER. Each Holder agrees that, so long as this
Agreement has not been terminated in accordance with SECTION 6 hereof, it shall
not sell, transfer or assign any of its Subject Securities or any option thereon
or any right or interest (voting or otherwise and including any participation
interest) therein (a "TRANSFER"), unless the transferee thereof agrees in
writing to be bound by all the terms of this Agreement by executing a
counterpart signature page to this Agreement, and the transferor provides the
Investors with a copy thereof.
3. SUPPORT OF THE RECAPITALIZATION.
As long as this Agreement remains in effect, no Holder shall (i)
commence any proceeding to oppose or alter the Recapitalization, (ii) vote
for, consent to, support or participate in the formulation of any other
plan, sale, proposal or offer for dissolution, winding up, liquidation,
reorganization, restructuring, recapitalization, merger or combination,
(iii) directly or indirectly seek, solicit, support or encourage any plan,
sale, proposal or offer of dissolution, winding up, liquidation,
reorganization, recapitalization, merger, combination or restructuring of
the Company that could reasonably be expected to prevent, delay or impede
the Recapitalization or any of the Recapitalization Steps or (iv) take any
other action that is inconsistent with the Recapitalization or any of the
Recapitalization Steps.
4. CANCELLATION OF WARRANTS.
(a) Promptly following the date hereof, each Holder shall deliver the
certificates representing all Warrants (if any) held by such Holder and
duly executed assignment documents in form and substance satisfactory to
the Investors to an escrow agent (the "ESCROW AGENT") reasonably acceptable
to the Investors and the Holders (which acceptance may not be unreasonably
withheld or delayed), pursuant to the terms of an Escrow Agreement in
substantially the form attached hereto as EXHIBIT B. On the closing date of
the Recapitalization, the Escrow Agent shall be authorized and directed to
release such certificates to the Company for cancellation. In the event
that the Recapitalization is not consummated and this Agreement is
terminated pursuant to SECTION 6 hereof, the Escrow Agent shall be
authorized and directed to release such certificates to such Holder.
4
(b) In connection with the Recapitalization, and effective only upon
the closing date of the Recapitalization, each Holder agrees to do all
other things necessary to cause its Warrants to be terminated and to
execute such documents as shall be reasonably requested by the Investors or
the Company to evidence the termination of such Warrants.
5. EXISTING PREFERRED STOCK ELECTIONS. Each Holder has indicated whether
it intends to elect the New Preferred Option or the Common Stock and Warrant
Option below its name on the signature pages hereto.
6. TERMINATION OF AGREEMENT. Any Holder may terminate its obligations
hereunder by giving written notice thereof to the other Parties at any time
after the earliest of (a) September 30, 2003 (the "OUTSIDE DATE"), (b) the date
of any breach of the material terms of this Agreement by any Investor that is
incurable by the Outside Date or, (c) the date of any modification to the terms
of the Recapitalization and the Recapitalization Steps, taken as a whole, that
deviates from the Recapitalization Steps described above in a manner that is
materially adverse to the Holder, or (d) the date of termination of the
Recapitalization Agreement.
7. REPRESENTATIONS, WARRANTIES AND COVENANTS. Each Holder represents,
warrants and covenants as follows:
(a) CORPORATE POWER AND AUTHORITY. It is duly organized, validly
existing, and in good standing under the laws of the state of its
organization, and has all requisite corporate, partnership or limited
liability company power and authority to enter into this Agreement and to
carry out the transactions contemplated by, and perform its respective
obligations under, this Agreement.
(b) AUTHORIZATION. The execution and delivery of this Agreement and
the consummation of the transactions contemplated hereby have been duly and
validly authorized by all required actions on the part of such Holder and
no other proceedings on the part of such Holder are necessary to authorize
this Agreement or to consummate the transactions contemplated hereby. This
Agreement has been duly and validly executed and delivered by such Holder
and, assuming this Agreement has been duly authorized, executed and
delivered by the Investors, constitutes a valid and binding agreement of
such Holder.
(c) NO CONFLICTS. Neither the execution and delivery of this
Agreement by such Holder nor the consummation by such Holder of the
transactions contemplated hereby nor compliance by such Holder with any of
the provisions hereof will (a) conflict with or result in any breach of any
provision of the charter or by-laws or similar organization documents of
such Holder, (b) result in a violation or breach of, or constitute (with or
without due notice or lapse of time or both) a default (or give rise to any
right of termination, cancellation or acceleration) under, any of the
terms, conditions or provisions of any material note, bond, mortgage,
indenture, license, contract, agreement or other instrument or obligation
to which such Holder or any of its subsidiaries is a party or by which any
of them or any of their properties or assets may be bound or (c) violate
any material order, writ, injunction, decree, statute, rule or regulation
applicable to such
5
Holder, any of its subsidiaries or any of their properties or assets.
(d) GOVERNMENTAL CONSENTS. The execution, delivery and performance by
it of this Agreement do not and shall not require any registration or
filing with consent or approval of, or notice to, or other action to, with
or by, any federal, state or other governmental authority or regulatory
body.
(e) OWNER OF EXISTING SUBJECT SECURITIES. It is the beneficial owner
of, or holder of investment authority over, the shares of Existing
Preferred Stock, Common Stock, Notes and Warrants set forth on its
signature page hereto, and beneficially owns, or has investment authority
over, no other shares of Existing Preferred Stock, Common Stock, Notes or
Warrants of the Company.
(f) RIGHT TO VOTE. As of the date hereof and so long as this
Agreement has not been terminated in accordance with SECTION 6 hereof, and
except as provided in this Agreement, it has full legal power, authority
and right to vote all of its Subject Securities in accordance with this
Agreement without the consent or approval of, or any other action on the
part of, any other person or entity. Without limiting the generality of the
foregoing, it has not entered into any voting agreement (other than this
Agreement) with any person or entity with respect to any of its Subject
Securities, deposited any of its Subject Securities in a voting trust or
entered into any arrangement or agreement with any person or entity
limiting or affecting its legal power, authority or right to vote its
Subject Securities on any matter.
(g) NO LIENS. Its Subject Securities are held free and clear of all
mortgages, pledges, assessments, security interests, leases, liens, adverse
claims, levies, charges and other encumbrances of any kind.
(h) ACKNOWLEDGMENT OF EFFECTS AND RISKS. It acknowledges that it has
received and carefully reviewed with its counsel this Agreement and all
schedules and exhibits hereto (including EXHIBIT C hereto which sets forth
a summary of the terms of the Recapitalization and the consequences of the
stockholders agreement to be entered into by the Company and the Investors
in connection with the Recapitalization on the corporate governance of the
Company following the Recapitalization, including the control rights and
veto rights of the Investors). It acknowledges that it has been invited to
participate in the purchase of New Preferred Stock with the Investors and
it has declined such opportunity. It further acknowledges that following
the consummation of the Recapitalization, the board of directors of the
Company may be constituted in a manner that is not consistent with the
requirements set forth in the Samsonite Corporate Therapeutics attached as
Exhibit C to that certain Stipulation of Settlement dated April 28, 2000
(the "CORPORATE THERAPEUTICS") and may take other actions that are not
compliant with the Corporate Therapeutics. It hereby waives any objections
that it may have with respect to any such failure to comply with the
Corporate Therapeutics.
(i) ACCREDITED INVESTOR. It is an institutional "accredited investor"
as defined in Rule 501(a)(1), (2), (3) or (7) under the Securities Act of
1933, as amended (the "SECURITIES ACT").
6
(j) INVESTMENT REPRESENTATIONS.
(i) Such Holder understands that none of the Common Stock
Conversion Shares, the New Preferred Conversion Shares or any
Common Stock issuable upon conversion of the New Preferred
Conversion Shares (collectively, the "SECURITIES") has been, or
shall upon delivery be, registered under the Securities Act and
that the certificates evidencing such Securities shall bear a
legend to that effect. Such Holder also understands that such
Securities are being offered and sold to it pursuant to an
exemption from the registration provisions of the Securities Act,
based in part upon its representations contained in this
Agreement.
(ii) Such Holder is acquiring the Securities for its own
account solely for the purpose of investment and not with a view
to, or for offer or sale in connection with, any distribution
thereof except in accordance with applicable securities laws.
Such Holder represents that by reason of its business and
financial experience, and the business and financial experience
of its management, such Holder has the capacity to protect its
own interests in connection with the transactions contemplated by
this Agreement. Such Holder is not an entity formed for the
specific purpose of consummating the transactions contemplated
hereby. Such Holder further represents that it is able to bear
the economic risk of an investment in the Securities and has an
adequate income independent of any income produced from an
investment in such Securities and has sufficient net worth to
sustain a loss of all of its investment in such Securities
without economic hardship if such a loss should occur.
(iii) Such Holder has been given access to Company
documents, records and other information, has received physical
delivery of all such documents, records and information that it
has requested.
(iv) Such Holder acknowledges that it is a sophisticated
investor, is able to fend for itself, can bear the economic risk
of its purchase of the Securities and has such knowledge and
experience in financial or business matters that it is capable of
evaluating the merits and risks of the Recapitalization and has
independently and without reliance upon the Investors or any of
their agents or representatives (the "INVESTOR GROUP") and based
on such investigation, including with respect to business, legal
and tax matters, and other information as such Holder has deemed
appropriate in its independent judgment, made its own analysis
and decision to enter into this Agreement and acquire the
Securities. Such Holder has not relied upon the Investor Group to
make any investigation of, and the Investor Group has not made
any representations or warranties to such Holder with respect to,
the Company or the Securities. Such Holder believes it has
received all the information it considers necessary or
appropriate for deciding whether to enter into this Agreement and
acquire the Securities. Such Holder further represents that it
has had an
7
opportunity to ask questions and receive answers from the Company
regarding the Securities and the business of the Company, and to
obtain any additional information that such Holder deems
necessary for purposes of its analysis and decision to enter into
this Agreement and acquire the Securities. Such Holder
acknowledges that the Investor Group may possess material,
non-public information concerning the Company and the Securities;
the Investor Group has not disclosed any such information to such
Holder and such Holder has not requested that the Investor Group
disclose any such information to such Holder. Such Holder
recognizes that the Investor Group will rely upon the truth and
accuracy of the statements contained in this SECTION 7(j)(iv) and
hereby consents to such reliance and agrees that such reliance
and consent shall survive the Recapitalization and such Holder's
acquisition of the Securities.
8. AMENDMENTS AND WAIVERS. This Agreement may not be modified, amended or
supplemented without the prior written consent of the Company, each Investor and
each Holder.
9. DEFINITIVE AGREEMENTS. No Investor shall have any obligation to engage
in or consummate the Recapitalization unless and until the Investors enter into
definitive agreements relating thereto, and no Investor shall have any liability
for failure to enter into any such definitive agreements.
10. GOVERNING LAW; JURISDICTION. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of Delaware, without
regard to any conflicts of law provision which would require the application of
the law of any other jurisdiction.
11. SPECIFIC PERFORMANCE. It is understood and agreed by each Holder that
money damages may not be a sufficient remedy for any breach of this Agreement by
any Holder and the Investors and the Company shall be entitled to seek specific
performance and injunctive or other equitable relief as a remedy of any such
breach.
12. HEADINGS. The headings of the sections, paragraphs and subsections of
this Agreement are inserted for convenience only and shall not affect the
interpretation hereof.
13. SUCCESSORS AND ASSIGNS. This Agreement is intended to bind and inure
to the benefit of the Parties and their respective successors, assigns, heirs,
executors, administrators and representatives. The Parties agree that the
Investors may assign all or any portion of their rights hereunder to any of
their affiliates or the Company.
14. PRIOR NEGOTIATIONS. This Agreement, including the exhibits and
schedules hereto, supersedes all prior negotiations with respect to the subject
matter hereof.
15. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original and all of which shall
constitute one and the same Agreement.
8
16. NO THIRD-PARTY BENEFICIARIES. The Company shall be a third party
beneficiary of, and shall be entitled to enforce the rights and remedies of the
Investors and the Holders under, this Agreement to the same extent as if the
Company were a party hereto. Except as provided in the immediately preceding
sentence, this Agreement shall be solely for the benefit of the Parties hereto,
and no other person or entity shall be a third-party beneficiary hereof.
17. NOTICES. All notices and other communications required or permitted
hereunder shall be in writing and shall be delivered by courier service,
overnight mail, facsimile or personally by hand to the address or facsimile
number set forth below each Party's name on the signature pages hereto or such
other address as provided by such Party to the other Parties hereto. All such
notices and other written communications shall be effective one business day
following the date of mailing or upon receipt of confirmed facsimile transfer.
18. WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO
TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
19. CONSENT TO JURISDICTION AND VENUE. Each of the parties hereto hereby
irrevocably submits to the exclusive jurisdiction of the United States District
Court for the Southern District of New York or any court of the State of New
York located in New York, New York in any action, suit or proceeding arising out
of or relating to this Agreement or any of the transactions contemplated hereby,
and agrees that any such action, suit or proceeding shall be brought only in
such court; PROVIDED, HOWEVER, that such consent to jurisdiction is solely for
the purpose referred to in this SECTION 19 and shall not be deemed to be a
general submission to the jurisdiction of said courts or in the State of New
York other than for such purpose. Each party hereby irrevocably waives, to the
fullest extent permitted by law, any objection that it may now or hereafter have
to the laying of the venue of any such action, suit or proceeding brought in
such a court. Each party further irrevocably waives and agrees not to plead or
claim that any such action, suit or proceeding brought in such a court has been
brought in an inconvenient forum.
9
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be executed and delivered by its duly authorized officer as of the date first
above written.
ACOF MANAGEMENT, L.P.
By:
-----------------------------------
Name:
Title:
ADDRESS FOR NOTICES:
ACOF Management, L.P.
c/o Ares Management, L.P.
1999 Avenue of the Xxxxx
Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxx Xxxxxxx
with a copy to:
Milbank, Tweed, Xxxxxx & XxXxxx, LLP
000 Xxxxx Xxxxxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxxxx Xxxxxx
SIGNATURE PAGE TO THE LOCK-UP,
SUPPORT AND VOTING AGREEMENT
XXXX CAPITAL (EUROPE) LLC
By: Xxxx Capital, Ltd.
Its: Managing Member
By:
-----------------------------------
Its: Managing Director
ADDRESS FOR NOTICES:
Xxxx Capital (Europe) LLC
c/o Bain Capital, Ltd.
Xxxxxxxxxx Xxxxx,
Xxxxxxx Xxxxx
Xxxxxx, X0X 0XX
XXXXXXX
Facsimile: x00-(0)00-0000-0000
Attn: Xxxxxxxxxx Xxxxxxxx
Xxxxxxx Xxxx
with a copy to:
Xxxxxxxx & Xxxxx International
Tower 42, 00 Xxx Xxxxx Xxxxxx
Xxxxxx, XX0X 0XX
XXXXXXX
Facsimile: x00-(0)00-0000-0000
Attention: Xxxxx Learner
Xxxxx Xxxxxxx Xxxx
SIGNATURE PAGE TO THE LOCK-UP,
SUPPORT AND VOTING AGREEMENT
ONTARIO TEACHERS PENSION PLAN BOARD
By:
-----------------------------------
Name:
Title:
ADDRESS FOR NOTICES:
Ontario Teachers Pension Plan Board
0000 Xxxxx Xxxxxx
Xxxxxxx, Xxxxxxx X0X 0X0
Facsimile: (000) 000-0000
Attn: Xxx Sienna
Xxxxxxx Xxxxxxxx
with a copy to:
Xxxxx, Xxxxxxx & Xxxxxxxxx, LLP
000 Xxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: F. Xxxxxx Xxxxxx
Xxxxx Xxxxxx
SIGNATURE PAGE TO THE LOCK-UP,
SUPPORT AND VOTING AGREEMENT
For purposes of SECTION 4(a):
[ESCROW AGENT]
By:
-----------------------------------
Name:
Title:
ADDRESS FOR NOTICES:
______________________
______________________
______________________
Facsimile: ___________
SIGNATURE PAGE TO THE LOCK-UP,
SUPPORT AND VOTING AGREEMENT
EXISTING PREFERRED STOCK HOLDER:
---------------------------------------
By:
-----------------------------------
Name:
Title:
ADDRESS FOR NOTICES:
______________________
______________________
______________________
Facsimile: ___________
Total Shares of Existing
Preferred Stock Owned: _________
Total Warrants Owned: _________
Total Shares of
Common Stock Owned: _________
Total Principal Amount
of Notes Owned: _________
Check one: / / New Preferred Option
/ / Common Stock and
Warrant Option:
EXHIBIT E
PBGC PROPOSAL
Intentionally Omitted
EXHIBIT F
COMMITMENT LETTER
[Intentionally Omitted]
EXHIBIT G
COMMON STOCK VOTING AGREEMENTS
EXHIBIT G
VOTING AGREEMENT
This VOTING AGREEMENT (this "AGREEMENT"), dated as of __________,
2003, is entered into by and among ACOF Management, L.P., a Delaware limited
partnership ("ARES"); Xxxx Capital (Europe) LLC, a Delaware limited liability
company ("BAIN"); and Ontario Teachers Pension Plan Board, a non-share capital
corporation established under the laws of Ontario ("OTPP" and, together with
Ares and Bain, the "INVESTORS"), and [NAME OF STOCKHOLDER], a __________ (the
"STOCKHOLDER").
WHEREAS, the Stockholder is a holder of Common Stock (the "COMMON
STOCK") of Samsonite Corporation (the "Company");
WHEREAS, the Investors have jointly proposed to recapitalize the
Company (as more fully described in the Recapitalization Agreement to be entered
into by the Company and the Investors in substantially the form attached hereto
as Exhibit A (the "RECAPITALIZATION AGREEMENT") and as may be modified in
accordance with the terms of this Agreement, the "RECAPITALIZATION"), which
Recapitalization will be accomplished through the following series of
transactions (collectively, as modified in accordance with the terms of this
Agreement, the "RECAPITALIZATION STEPS"):
(a) The Investors will enter into the Recapitalization Agreement with
the Company pursuant to which the Investors will agree to purchase
shares of a new series of voting convertible preferred stock of
the Company (the "NEW PREFERRED STOCK") with an aggregate
liquidation preference of $106 million for an aggregate purchase
price of $106 million, the principal terms of which New Preferred
Stock are set forth in the Form of Certificate of Designation of
2003 Convertible Preferred Stock attached as Exhibit A to the
Recapitalization Agreement;
(b) The amended and restated certificate of incorporation of the
Company (the "CHARTER") will be amended by filing an amendment to
the certificate of designation for its 13 7/8% Senior Redeemable
Exchangeable Preferred Stock (the "EXISTING PREFERRED STOCK"),
which amendment will be substantially in the form attached as
Exhibit C to the Recapitalization Agreement to provide that the
Company shall immediately following or concurrently with the
consummation of the other Recapitalization Steps, (x) exchange or
convert up to 108,417 of its 281,131 outstanding shares of
Existing Preferred Stock (such 108,417 shares, the "NEW PREFERRED
CONVERSION SHARES") and all rights in respect of all accrued and
unpaid dividends thereon (which shall be eliminated and cease upon
such exchange or conversion) for or into an aggregate of up to
54,000 shares of New Preferred Stock or approximately 0.5 shares
of New Preferred Stock per share of Existing Preferred Stock and
(y) exchange or convert the remaining 172,714 of its 281,131
outstanding shares of its Existing Preferred Stock (such
approximately 172,714 shares, the "COMMON STOCK CONVERSION
SHARES") and all rights in respect of all accrued and unpaid
dividends thereon (which shall be eliminated and cease upon such
exchange or conversion) for or into an aggregate of 204,820,049
shares of Common Stock or approximately 1,185.89 shares of Common
Stock per share of Existing Preferred Stock, and the Company will
issue a warrant to purchase Common Stock in accordance with the
terms of the Recapitalization Agreement to each holder of Existing
Preferred Stock that elects to receive Common Stock and a warrant
instead of New Preferred Stock and Common Stock in such
conversion;
WHEREAS, the number of shares of Common Stock of the Company
authorized pursuant to the Company's existing Charter is not sufficient to
permit the conversion of Existing Preferred Stock into Common Stock and the
conversion of the New Preferred Stock into Common Stock in accordance with its
terms;
WHEREAS, to facilitate the implementation of the Recapitalization and
to permit the Company to issue additional shares of capital stock as may be
appropriate in the future, it is necessary and desirable to amend the Charter to
increase the authorized number of shares of Common Stock to 1,000,000,000 (the
"CHARTER AMENDMENT"); and
WHEREAS, in order to facilitate the implementation of the
Recapitalization, and as an inducement to the Investors to participate in the
Recapitalization, the Stockholder is prepared, subject to the terms and
conditions of this Agreement, to vote its shares of Common Stock and any and all
other shares or securities issued or issuable in respect thereof on or after the
date hereof but prior to the consummation of the Recapitalization (collectively,
the "SUBJECT SHARES") and/or otherwise consent to amend the Charter and do all
other things necessary to implement the Recapitalization and each of the
Recapitalization Steps.
NOW, THEREFORE, for good and valuable consideration, the receipt,
sufficiency and adequacy of which are hereby acknowledged, the parties hereto
agree as follows:
1. AGREEMENT TO VOTE SHARES.
(a) AGREEMENT TO VOTE. So long as this Agreement has not been
terminated pursuant to SECTION 4 hereof, the Stockholder hereby agrees that
it (i) shall timely vote in any meeting or in response to any request or
solicitation of consents by the Company (including by execution and
delivery of written consents with respect to) its Subject Shares (or shall
cause or instruct any custodial agent to so vote and execute and deliver
such written consents) to (A) approve the Charter Amendment and (B) do all
other things necessary or desirable to otherwise approve, permit and
facilitate the Recapitalization and the transactions contemplated by the
Recapitalization, including without limitation each of the Recapitalization
Steps, (ii) shall not revoke or withdraw any such vote or written consent
and (iii) waives notice to any meeting of securityholders held for the
purpose of submitting the foregoing for the consideration of the
securityholders of the Company.
(b) PROXY. From the date hereof until the earlier of (i) the date on
which all of the transactions contemplated by the Recapitalization shall
have been consummated and (ii) the termination of this Agreement pursuant
to SECTION 4, the Stockholder hereby
2
grants an irrevocable proxy, coupled with an interest, to each of
_____________________ (each, the "Proxy"), with full power of substitution
and resubstitution, and hereby authorizes the Proxy to represent and vote
(including by execution and delivery of written consents with respect to)
the Subject Shares of the Stockholder in accordance with SECTION 1(a)
above. The Proxy is hereby empowered to exercise in its own discretion all
voting rights (including, without limitation, the power to execute and
deliver written consents with respect to the Subject Shares) of the
Stockholder in accordance with SECTION 1(a) above at any meeting or at any
other time chosen by the Proxy, and on every action or approval by written
consent in lieu of any such meeting. The Stockholder hereby ratifies and
approves of each and every action taken by the Proxy pursuant to and
subject to the foregoing. Upon the execution of this Agreement, all prior
proxies given by the undersigned with respect to the Subject Shares are
hereby revoked and no subsequent proxies will be given prior to the
termination of this Agreement. If requested by the Proxy, the Stockholder
agrees to execute and deliver applicable proxy material in furtherance of
the provisions of SECTION 1(a) and this SECTION 1(b).
(c) MODIFICATIONS. Notwithstanding any other provision of this
Agreement, the Investors, acting as a group, and the Company may make such
changes and modifications to the Recapitalization as the Investors and the
Company deem necessary and appropriate in order to have the
Recapitalization approved and/or implemented; PROVIDED, HOWEVER, that the
Stockholder will not be required to support any such restructuring that
deviates from the Recapitalization Steps described above in a manner that
is materially adverse to the Stockholder.
2. RESTRICTIONS ON TRANSFER. The Stockholder agrees that, so long as this
Agreement has not been terminated in accordance with SECTION 4 hereof, it shall
not sell, transfer or assign any of its Subject Shares or any option thereon or
any right or interest (voting or otherwise and including any participation
interest) therein (a "TRANSFER"), unless the transferee thereof agrees in
writing to be bound by all the terms of this Agreement by executing a
counterpart signature page of this Agreement, and the transferor provides the
Investors with a copy thereof.
3. SUPPORT OF THE RECAPITALIZATION. As long as this Agreement remains in
effect, the Stockholder shall not (i) commence any proceeding to oppose or alter
the Recapitalization, (ii) vote for, consent to, support or participate in the
formulation of any other plan, sale, proposal or offer for dissolution, winding
up, liquidation, reorganization, restructuring, recapitalization, merger or
combination, (iii) directly or indirectly seek, solicit, support or encourage
any plan, sale, proposal or offer of dissolution, winding up, liquidation,
reorganization, recapitalization, merger, combination or restructuring of the
Company that could reasonably be expected to prevent, delay or impede the
Recapitalization or any of the Recapitalization Steps or (iv) take any other
action that is inconsistent with the Recapitalization or any of the
Recapitalization Steps.
4. TERMINATION OF AGREEMENT. The Stockholder may terminate its
obligations hereunder by giving written notice thereof to the other parties
hereto at any time after the earlier of (a) September 30, 2003 (the "OUTSIDE
DATE"), or (b) the date of termination of the Recapitalization Agreement.
3
5. REPRESENTATIONS, WARRANTIES AND COVENANTS. The Stockholder represents,
warrants and covenants as follows:
(a) CORPORATE POWER AND AUTHORITY. If such Stockholder is not a
natural person, it is duly organized, validly existing, and in good
standing under the laws of the state of its organization, and has all
requisite corporate, partnership or limited liability company power and
authority to enter into this Agreement and to carry out the transactions
contemplated by, and perform its respective obligations under, this
Agreement.
(b) AUTHORIZATION. If such Stockholder is not a natural person, the
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly authorized by
all required actions on the part of the Stockholder and no other
proceedings on the part of the Stockholder are necessary to authorize this
Agreement or to consummate the transactions contemplated hereby. This
Agreement has been duly and validly executed and delivered by the
Stockholder and, assuming this Agreement has been duly authorized, executed
and delivered by the other parties hereto, constitutes a valid and binding
agreement of the Stockholder.
(c) NO CONFLICTS. 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 will (a) if the Stockholder is not a natural
person, conflict with or result in any breach of any provision of the
charter or by-laws or similar organization documents of the Stockholder,
(b) result in a violation or breach of, or constitute (with or without due
notice or lapse of time or both) a default (or give rise to any right of
termination, cancellation or acceleration) under, any of the terms,
conditions or provisions of any material note, bond, mortgage, indenture,
license, contract, agreement or other instrument or obligation to which the
Stockholder or any of its subsidiaries is a party or by which any of them
or any of their properties or assets may be bound or (c) violate any
material order, writ, injunction, decree, statute, rule or regulation
applicable to the Stockholder, any of its subsidiaries or any of their
properties or assets.
(d) GOVERNMENTAL CONSENTS. The execution, delivery and performance
by it of this Agreement do not and shall not require any registration or
filing with consent or approval of, or notice to, or other action to, with
or by, any federal, state or other governmental authority or regulatory
body.
(e) OWNER OF COMMON STOCK. It is the beneficial owner of, or holder
of investment authority over, the shares of Common Stock set forth on
SCHEDULE A hereto, and beneficially owns, or has investment authority over,
no other shares of capital stock of the Company.
(f) RIGHT TO VOTE. As of the date hereof and so long as this
Agreement has not been terminated in accordance with SECTION 4 hereof, and
except as provided in this Agreement, it has full legal power, authority
and right to vote all of the Subject Shares in accordance with this
Agreement without the consent or approval of, or any other action
4
on the part of, any other person or entity. Without limiting the generality
of the foregoing, it has not entered into any voting agreement (other than
this Agreement) with any person or entity with respect to any of its
Subject Shares, deposited any of its Subject Shares in a voting trust or
entered into any arrangement or agreement with any person or entity
limiting or affecting its legal power, authority or right to vote its
Subject Shares on any matter.
(g) NO LIENS. Its Subject Shares are held free and clear of all
mortgages, pledges, assessments, security interests, leases, liens, adverse
claims, levies, charges and other encumbrances of any kind.
(h) ACKNOWLEDGMENT OF EFFECTS AND RISKS. It has received and
carefully reviewed with its counsel this Agreement and all schedules and
exhibits hereto (including EXHIBIT B hereto which sets forth a summary of
the terms of the Recapitalization and the consequences of the stockholders
agreement to be entered into by the Company and the Investors in connection
with the Recapitalization on the corporate governance of the Company
following the Recapitalization, including the control rights and veto
rights of the Investors) and has received all such information as it deems
necessary and appropriate to enable it to evaluate the effects of, and the
financial risk inherent in, the Recapitalization and each of the
Recapitalization Steps. It further acknowledges that following the
consummation of the Recapitalization, the board of directors of the Company
may be constituted in a manner that is not consistent with the requirements
set forth in the Samsonite Corporate Therapeutics attached as Exhibit C to
that certain Stipulation of Settlement dated April 28, 2000 (the "CORPORATE
THERAPEUTICS") and may take other actions that are not compliant with the
Corporate Therapeutics. It hereby waives any objections that it may have
with respect to any such failure to comply with the Corporate Therapeutics
and releases any and all claims with respect thereto that it has or may
have in the future, whether known or unknown. With respect to the releases
contained in this SECTION 5(h), the parties expressly waive any and all
rights that they may have pursuant to Section 1542 of the Civil Code of the
State of California or under any other similar state or federal statute or
under any common law principle of similar effect. The consequences of such
waiver have been explained to each party hereto and each party represents
that it fully understands the consequences of such waiver. California Civil
Code Section 1542 states as follows:
"A general release does not extend to claims which the creditor does
not know or suspect to exist in his favor at the time of executing the
release, which if known by him must have materially affected his
settlement with the debtor."
6. AMENDMENTS AND WAIVERS. This Agreement may not be modified, amended or
supplemented without the prior written consent of the Company, each Investor and
the Stockholder.
7. DEFINITIVE AGREEMENTS. No Investor shall have any obligation to engage
in or consummate the Recapitalization unless and until the Investors enter into
definitive agreements relating thereto, and no Investor shall have any liability
for failure to enter into any such definitive agreements.
5
8. GOVERNING LAW; JURISDICTION. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of Delaware, without
regard to any conflicts of law provision which would require the application of
the law of any other jurisdiction.
9. SPECIFIC PERFORMANCE. It is understood and agreed by the Stockholder
that money damages may not be a sufficient remedy for any breach of this
Agreement by the Stockholder and the Investors and the Company shall be entitled
to seek specific performance and injunctive or other equitable relief as a
remedy of any such breach.
10. HEADINGS. The headings of the sections, paragraphs and subsections of
this Agreement are inserted for convenience only and shall not affect the
interpretation hereof.
11. SUCCESSORS AND ASSIGNS. This Agreement is intended to bind and inure
to the benefit of the parties and their respective successors, assigns, heirs,
executors, administrators and representatives. The parties agree that the
Investors may assign all or any portion of their rights hereunder to any of
their affiliates or the Company.
12. PRIOR NEGOTIATIONS. This Agreement, including the exhibits and
schedules hereto, supersedes all prior negotiations with respect to the subject
matter hereof.
13. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original and all of which shall
constitute one and the same Agreement.
14. NO THIRD-PARTY BENEFICIARIES. The Company shall be a third party
beneficiary of, and shall be entitled to enforce the rights and remedies of the
Investors and the Stockholder under, this Agreement to the same extent as if the
Company were a party hereto. Except as provided in the immediately preceding
sentence, this Agreement shall be solely for the benefit of the parties hereto,
and no other person or entity shall be a third-party beneficiary hereof.
15. NOTICES. All notices and other communications required or permitted
hereunder shall be in writing and shall be delivered by courier service,
overnight mail, facsimile or personally by hand to the address or facsimile
number set forth below each party's name on the signature pages hereto or such
other address as provided by such party to the other parties hereto. All such
notices and other written communications shall be effective one business day
following the date of mailing or upon receipt of confirmed facsimile transfer.
16. WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO
TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
17. CONSENT TO JURISDICTION AND VENUE. Each of the parties hereto hereby
irrevocably submits to the exclusive jurisdiction of the United States District
Court for the Southern District of New York or any court of the State of New
York located in New York, New York in any action, suit or proceeding arising out
of or relating to this Agreement or any of the transactions
6
contemplated hereby, and agrees that any such action, suit or proceeding shall
be brought only in such court; PROVIDED, HOWEVER, that such consent to
jurisdiction is solely for the purpose referred to in this SECTION 17 and shall
not be deemed to be a general submission to the jurisdiction of said courts or
in the State of New York other than for such purpose. Each party hereby
irrevocably waives, to the fullest extent permitted by law, any objection that
it may now or hereafter have to the laying of the venue of any such action, suit
or proceeding brought in such a court. Each party further irrevocably waives and
agrees not to plead or claim that any such action, suit or proceeding brought in
such a court has been brought in an inconvenient forum.
7
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be executed and delivered by its duly authorized officer as of the date first
above written.
ACOF MANAGEMENT, L.P.
By:
-------------------------------
Name:
Title:
ADDRESS FOR NOTICES:
ACOF Management, L.P.
c/o Ares Management, L.P.
1999 Avenue of the Xxxxx
Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxx Xxxxxxx
with a copy to:
Milbank, Tweed, Xxxxxx & XxXxxx, LLP
000 Xxxxx Xxxxxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxxxx Xxxxxx
SIGNATURE PAGE TO THE LOCK-UP,
SUPPORT AND VOTING AGREEMENT
XXXX CAPITAL (EUROPE) LLC
By: Xxxx Capital, Ltd.
Its: Managing Member
By:
---------------------------------
Its: Managing Director
ADDRESS FOR NOTICES:
Xxxx Capital (Europe) LLC
c/x Xxxx Capital, Ltd.
Xxxxxxxxxx Xxxxx,
Xxxxxxx Xxxxx
Xxxxxx, X0X 0XX
XXXXXXX
Facsimile: x00-(0)00-0000-0000
Attn: Xxxxxxxxxx Xxxxxxxx
Xxxxxxx Xxxx
with a copy to:
Xxxxxxxx & Xxxxx International
Tower 42, 00 Xxx Xxxxx Xxxxxx
Xxxxxx, XX0X 0XX
XXXXXXX
Facsimile: x00-(0)00-0000-0000
Attention: Xxxxx Learner
Xxxxx Xxxxxxx Xxxx
SIGNATURE PAGE TO THE LOCK-UP,
SUPPORT AND VOTING AGREEMENT
ONTARIO TEACHERS PENSION PLAN BOARD
By:
-------------------------------
Name:
Title:
ADDRESS FOR NOTICES:
Ontario Teachers Pension Plan Board
0000 Xxxxx Xxxxxx
Xxxxxxx, Xxxxxxx X0X 0X0
Facsimile: (000) 000-0000
Attn: Xxx Sienna
Xxxxxxx Xxxxxxxx
with a copy to:
Xxxxx, Xxxxxxx & Xxxxxxxxx, LLP
000 Xxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: F. Xxxxxx Xxxxxx
Xxxxx Xxxxxx
SIGNATURE PAGE TO THE LOCK-UP,
SUPPORT AND VOTING AGREEMENT
[NAME OF STOCKHOLDER]
By:
-------------------------------
Name:
Title:
ADDRESS FOR NOTICES:
______________________
______________________
______________________
Facsimile: ___________
SIGNATURE PAGE TO THE LOCK-UP,
SUPPORT AND VOTING AGREEMENT
EXHIBIT H
NO. OF STOCK UNITS: ____________ WARRANT NO. ___
WARRANT
TO PURCHASE COMMON STOCK OF
SAMSONITE CORPORATION
THIS IS TO CERTIFY THAT _____________________, or registered assigns, is
entitled to purchase from Samsonite Corporation, a Delaware corporation (the
"COMPANY"), at any time on and after the Original Issue Date, but not later than
5:00 p.m., Eastern Standard time, on the date that is ten years after Original
Issue Date (the "EXPIRATION DATE"), ________________ (_______) Stock Units, in
whole or in part, at a purchase price per Stock Unit of $0.75, adjusted as
provided below, all on the terms and conditions set forth herein.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE AND ANY SHARES OF COMMON STOCK
ISSUABLE UPON CONVERSION OF ANY SUCH SECURITIES HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933 AND MAY NOT BE TRANSFERRED IN THE ABSENCE OF SUCH
REGISTRATION OR AN EXEMPTION THEREFROM UNDER SUCH ACT.
Section 1. CERTAIN DEFINITIONS. As used in this Warrant, unless the
context otherwise requires:
"AFFILIATE" means, of any Person, a Person who, directly or
indirectly, through one or more intermediaries controls, or is controlled by, or
is under common control with, such other Person. The term "control" means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a Person, whether through the
ownership of voting securities, by contract or otherwise; PROVIDED, HOWEVER,
that the ownership of 10% or more of the voting power of the common stock of a
Person, either directly or indirectly, shall be deemed control.
"BOARD OF DIRECTORS" shall mean either the board of directors of the
Company or any duly authorized committee of that board.
"BUSINESS COMBINATION" means (i) any reorganization, consolidation,
merger, share exchange or similar business combination transaction involving the
Company with any Person or (ii) the sale, assignment, conveyance, transfer,
lease or other disposition by the
1
Company of all or substantially all of its assets or by the Company and/or any
of its subsidiaries of assets constituting all or substantially all of the
assets of the Company and its subsidiaries on a consolidated basis.
"BUSINESS DAY" means any day except a Saturday, a Sunday, or any day
on which banking institutions in New York, New York are required or authorized
by law or other governmental action to be closed.
"CAPITAL STOCK" means (i) with respect to any Person that is a
corporation, any and all shares, interests, participations or other equivalents
(however designated) of capital stock, including each class of common stock and
preferred stock of such Person and warrants or options to purchase any of the
foregoing and (ii) with respect to any Person that is not a corporation, any and
all partnership, limited liability company or other equity interests of such
Person.
"CERTIFICATE OF INCORPORATION" shall mean the certificate or articles
of incorporation of the Company, as in effect on the Original Issue Date and as
at any time amended or otherwise modified.
"COMMISSION" shall mean the Securities and Exchange Commission and any
other similar or successor agency of the federal government administering the
Securities Act and the Exchange Act.
"COMMON STOCK" shall mean the Company's authorized Common Stock, $0.01
par value per share, irrespective of class unless otherwise specified, as
constituted on the date of original issuance of this Warrant, and any stock into
which such Common Stock may thereafter be changed, and shall also include stock
of the Company of any other class, which is not preferred as to dividends or
assets over any other class of stock of the Company issued to the holders of
shares of Common Stock upon any reclassification thereof.
"COMPANY" shall mean Samsonite Corporation, a Delaware corporation.
"CURRENT WARRANT PRICE" per share of Common Stock, for the purpose of
any provision of this Warrant at the date herein specified, shall mean the
amount equal to the quotient resulting from dividing the Exercise Price in
effect on such date by the number of shares (including any fractional share) of
Common Stock comprising a Stock Unit on such date.
"EXCHANGE ACT" shall mean the Securities and Exchange Act of 1934, as
amended.
"EXCLUDED STOCK" means (i) shares of Common Stock issued by the
Company as a stock dividend payable in shares of Common Stock, or upon any
subdivision or split-up of the outstanding shares of Capital Stock, in each case
which is subject to the provisions of SECTION 4.1 hereof, or upon conversion of
shares of Capital Stock of the Company (but not the issuance of such convertible
Capital Stock of the Company which will be subject to the provisions of SECTION
4.3 hereof), (ii) the issuance of shares of Common Stock in any bona fide
underwritten public
2
offering, (iii) the issuance of Common Stock in connection with any debt
financing from or with one or more unaffiliated third parties approved by the
Board of Directors (including upon the exercise of any warrants issued in
connection with such financings), (iv) the issuance of shares of Common Stock
(including upon exercise of options) to directors, advisors, employees or
consultants of the Company pursuant to a stock option plan, restricted stock
plan or other agreement approved by the Board of Directors, including any
management performance options, PROVIDED, that such shares of Common Stock, when
taken together with all other issuances of Common Stock excepted from SECTION
4.3 pursuant to this CLAUSE (iv), do not constitute more than [__]% of the
outstanding shares of Common Stock (calculated at the time of issuance on an
as-converted basis), (v) the issuance of shares of Common Stock in connection
with an arms-length acquisition approved by the Board of Directors of assets or
securities of another Person (other than issuances to Affiliates of the
Company), (vi) the issuance of Warrants and Common Stock pursuant to the
conversion of the Company's 13-7/8% Senior Redeemable Exchangeable Preferred
Stock and shares of Common Stock issuable upon exercise of such Warrants and
(vii) the issuance of Common Stock upon the conversion of shares of the
Company's 2003 Convertible Preferred Stock outstanding on the date hereof.
"EXERCISE PRICE" shall mean the purchase price per Stock Unit as set
forth on the first page of this Warrant on the Original Issue Date and
thereafter shall mean such dollar amount as shall result from the adjustments
specified in SECTION 4.
"FAIR MARKET VALUE" means the average of the closing prices of Common
Stock on the NASDAQ (or other securities exchange on which Common Stock is
listed or to which shares of Common Stock are admitted for trading, or on a
quotation system on which Common Stock is then listed) for the 20 consecutive
trading days prior to the date as of which such value is to be determined, or,
if no such trading market exists, as determined by a nationally recognized
independent investment bank chosen by the Board of Directors or by the good
faith determination of the Board of Directors.
"HOLDER" means, initially, __________________________ and thereafter
any Person that is the registered Holder of this Warrant as registered on the
books of the Company.
"MEASUREMENT PRICE" means the greater of (x) the Exercise Price and
(y) the Fair Market Value per share of Common Stock.
"NASDAQ" means the National Association of Securities Dealers
Automated Quotations system.
"ORIGINAL ISSUE DATE" means ___________, 2003.
"PERSON" shall mean an individual, partnership, corporation,
unincorporated organization, joint stock company, limited liability company,
trust or joint venture, or a governmental agency or political subdivision
thereof.
"PRO RATA REPURCHASE" means any purchase of shares of Common Stock by
the Company or any corporation or other entity directly or indirectly controlled
by the Company
3
pursuant to any tender offer or exchange offer subject to Section 13(e) of the
Exchange Act, or pursuant to any other offer available to all or substantially
all holders of Common Stock, whether for cash, shares of Capital Stock of the
Company, other securities of the Company, evidences of indebtedness of the
Company or any other Person or any other property (including, without
limitation, shares of Capital Stock, other securities or evidences of
indebtedness of a Subsidiary of the Company), or any combination thereof,
effected while this Warrant is outstanding. The "effective date" of a Pro Rata
Repurchase shall mean the date of acceptance of shares for purchase or exchange
under any tender or exchange offer which is a Pro Rata Repurchase or the date of
purchase with respect to any Pro Rata Repurchase that is not a tender or
exchange offer.
"RESTRICTED CERTIFICATE" shall mean a certificate for Common Stock or
a Warrant bearing the restrictive legend set forth in SECTION 6.1.
"RESTRICTED SECURITIES" shall mean Restricted Stock and Restricted
Warrants.
"RESTRICTED STOCK" shall mean Common Stock evidenced by a Restricted
Certificate.
"RESTRICTED WARRANT" shall mean a Warrant evidenced by a Restricted
Certificate.
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended,
and any similar or successor federal statute, and the rules and regulations of
the Commission thereunder, all as the same shall be in effect at any applicable
time.
"STOCK UNIT" shall constitute one share of Common Stock, as such
Common Stock was constituted on the Original Issue Date and thereafter shall
constitute such number of shares (including any fractional shares) of Common
Stock as shall result from the adjustments specified in SECTION 4.
"WARRANT" shall mean this Warrant to purchase up to an aggregate of
_______ Stock Units.
"WARRANTS" shall mean the Warrant issued to _____________________
evidencing rights to purchase up to an aggregate of ________ Stock Units, and
all Warrants issued upon transfer, division or combination of, or in
substitution for, any thereof. All Warrants shall at all times be identical as
to terms and conditions and date, except as to the number of Stock Units for
which they may be exercised.
"WARRANT STOCK" shall mean the shares of Common Stock purchasable by
the Holder upon the exercise of this Warrant.
4
Section 2. EXERCISE OF WARRANT. The Holder may, at any time on and
after the Original Issue Date, but not later than the Expiration Date, exercise
this Warrant in whole at any time or in part from time to time for the number of
Stock Units which such Holder is then entitled to purchase hereunder. The Holder
may exercise this Warrant, in whole or in part, by either of the following
methods:
(a) The Holder may deliver to the Company at its office
maintained pursuant to SECTION 12 for such purpose (i) a written notice of
the Holder's election to exercise this Warrant, which notice shall specify
the number of Stock Units to be purchased, (ii) this Warrant and (iii) a
sum equal to the aggregate Exercise Price therefor in immediately available
funds; or
(b) The Holder may also exercise this Warrant, in whole or in
part, in a "cashless" or "net-issue" exercise by delivering to the Company
at its office maintained pursuant to SECTION 12 for such purpose (i) a
written notice of the Holder's election to exercise this Warrant, which
notice shall specify the number of Stock Units to be delivered to the
Holder and the number of Stock Units with respect to which this Warrant is
being surrendered in payment of the aggregate Exercise Price for the Stock
Units to be delivered to the Holder, and (ii) this Warrant. For purposes of
this PARAGRAPH (b), each Stock Unit as to which this Warrant is surrendered
will be attributed a value equal to the product of (x) the Fair Market
Value per share of Common Stock MINUS the Current Warrant Price per share
of Common Stock, MULTIPLIED BY (y) the number of shares of Common Stock
then comprising a Stock Unit.
Any notice required under this SECTION 2 shall be substantially in the
form of the subscription form attached to this Warrant. Upon delivery thereof,
the Company shall as promptly as practicable, and in any event within five
Business Days thereafter, cause to be executed and delivered to the Holder a
certificate or certificates representing the aggregate number of fully-paid and
nonassessable shares of Common Stock issuable upon such exercise.
The stock certificate or certificates for Warrant Stock so delivered
shall be in such denominations as may be specified in said notice and shall be
registered in the name of the Holder or, subject to SECTION 6, such other name
or names as shall be designated in said notice. Such certificate or certificates
shall be deemed to have been issued and the Holder or any other Person so
designated to be named therein shall be deemed to have become a holder of record
of such shares, including to the extent permitted by law the right to vote such
shares or to consent or to receive notice as a stockholder, as of the time said
notice is delivered to the Company as aforesaid. If this Warrant shall have been
exercised only in part, the Company shall, at the time of delivery of said
certificate or certificates, deliver to the Holder a new Warrant dated the date
it is issued, evidencing the rights of such Holder to purchase the remaining
Stock Units called for by this Warrant, which new Warrant shall in all other
respects be identical with this Warrant, or, at the request of the Holder,
appropriate notation may be made on this Warrant and this Warrant shall be
returned to the Holder.
The Company shall pay all expenses, taxes and other charges payable in
connection with the preparation, issue and delivery of stock certificates under
this SECTION 2.
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All shares of Common Stock issuable upon the exercise of this Warrant
shall be validly issued, fully paid and nonassessable, and free from all liens
and other encumbrances thereon.
Except as may otherwise be required by law, the Company will not close
its books against the transfer of this Warrant or of any share of Warrant Stock
in any manner which interferes with the timely exercise of this Warrant. The
Company will from time to time take all such action as may be necessary to
assure that the par value per share of the unissued Common Stock acquirable upon
exercise of this Warrant is at all times equal to or less than the Exercise
Price then in effect.
The Company shall not issue certificates for fractional shares of
stock upon any exercise of this Warrant whenever, in order to implement the
provisions of this Warrant, the issuance of such fractional shares is required.
Instead, the Company shall round up the number of shares of stock issuable upon
exercise of this Warrant to the nearest whole number.
Section 3. TRANSFER, DIVISION AND COMBINATION. Subject to SECTION 6,
this Warrant and all rights hereunder are transferable, in whole or in part, on
the books of the Company to be maintained for such purpose, upon surrender of
this Warrant at the office of the Company maintained for such purpose pursuant
to SECTION 12, together with a written assignment substantially in the form of
the assignment form attached to this Warrant duly executed by the Holder hereof
or its agent or attorney and payment of funds sufficient to pay any stock
transfer taxes payable upon the making of such transfer. Upon such surrender and
payment the Company shall, subject to SECTION 6, execute and deliver a new
Warrant or Warrants in the name of the assignee or assignees and in the
denominations specified in such instrument of assignment, and this Warrant shall
promptly be canceled. If and when this Warrant is assigned in blank (in case the
restrictions on transferability in SECTION 6 shall have been terminated), the
Company may (but shall not be obliged to) treat the bearer hereof as the
absolute owner of this Warrant for all purposes and the Company shall not be
affected by any notice to the contrary. This Warrant, if properly assigned in
compliance with this SECTION 3 and SECTION 6, may be exercised by an assignee
for the purchase of shares of Common Stock without having a new Warrant issued.
This Warrant may, subject to SECTION 6, be divided or combined with
other Warrants upon presentation at the aforesaid office of the Company,
together with a written notice specifying the names and denominations in which
new Warrants are to be issued, signed by the Holder or its agent or attorney.
Subject to compliance with the preceding paragraph and with SECTION 6, as to any
transfer which may be involved in such division or combination, the Company
shall execute and deliver a new Warrant or Warrants in exchange for the Warrant
or Warrants to be divided or combined in accordance with such notice.
Except as otherwise provided in this SECTION 3 or SECTION 6, the
Company shall pay all expenses, taxes and other charges incurred by the Company
in the performance of its obligations in connection with the preparation,
issuance and delivery of Warrants under this SECTION 3.
6
The Company agrees to maintain at its aforesaid office books for the
registration and transfer of the Warrants.
Section 4. ADJUSTMENT OF STOCK UNIT OR EXERCISE PRICE. From and
after the Original Issue Date, the number of shares of Common Stock comprising a
Stock Unit, and the Exercise Price per Stock Unit, shall be subject to
adjustment from time to time as set forth in this SECTION 4.
4.1 STOCK SPLITS, SUBDIVISIONS, RECLASSIFICATIONS OR COMBINATIONS. If
the Company shall (a) declare a dividend or make a distribution on its Common
Stock in shares of Common Stock, (b) subdivide or reclassify the outstanding
shares of Common Stock into a greater number of shares, or (c) combine or
reclassify the outstanding Common Stock into a smaller number of shares, then
the number of shares of Common Stock comprising a Stock Unit immediately after
the happening of any such event shall be adjusted so as to consist of the number
of shares of Common Stock which a record holder of the number of shares of
Common Stock comprising a Stock Unit immediately prior to the happening of such
event would own or be entitled to receive immediately following such event.
4.2 MERGER, CONSOLIDATION OR DISPOSITION OF ASSETS. In case of any
Business Combination or reclassification of Common Stock (other than a
reclassification of Common Stock referred to in SECTION 4.1 hereof), lawful
provision shall be made as part of the terms of such Business Combination or
reclassification whereby the Holder of this Warrant shall have the right
thereafter to receive, upon exercise of this Warrant, Stock Units each
comprising the number of shares of common stock of the successor or acquiring
corporation receivable upon or as a result of such Business Combination or
reclassification by a holder of the number of shares of Common Stock comprising
a Stock Unit immediately prior to such Business Combination or reclassification.
If, pursuant to the terms of such Business Combination or reclassification, any
cash, shares of stock or other securities or property of any nature whatsoever
(including warrants or other subscription or purchase rights) are to be received
by or distributed to the holders of Common Stock of the Company, the Holder
shall have the right to receive, upon exercise of this Warrant, such cash,
shares of stock or other securities or property of any nature as a holder of the
number of shares of Common Stock underlying a Stock Unit would have been
entitled to receive upon the occurrence of such Business Combination or
reclassification. In case of any such Business Combination or reclassification,
the successor acquiring corporation shall expressly assume the due and punctual
observance and performance of each and every covenant and condition of this
Warrant to be performed and observed by the Company and all of the obligations
and liabilities hereunder, subject to such modification as shall be necessary to
provide for adjustments of Stock Units which shall be as nearly equivalent as
practicable to the adjustments provided for in this SECTION 4.
4.3 COMMON STOCK ISSUED AT LESS THAN THE MEASUREMENT PRICE. If the
Company issues or sells any Common Stock (including Common Stock deemed issued
in accordance with PARAGRAPH (c) below), other than Excluded Stock, without
consideration or for consideration per share less than the Measurement Price
immediately prior to each such issuance or sale, as of the day of such issuance
or sale, the Exercise Price shall immediately (except as provided below) be
reduced to the price determined by multiplying the Exercise Price in effect
7
immediately prior to such issuance or sale by a fraction, the numerator of which
shall be the sum of (x) the number of shares of Common Stock (including Common
Stock deemed issued in accordance with PARAGRAPH (c) below) outstanding
immediately prior to such issuance or sale and (y) the number of additional
shares of Common Stock (including Common Stock deemed issued in accordance with
PARAGRAPH (c) below) that the aggregate consideration received by the Company
for the number of shares of Common Stock so offered would purchase at a price
per share of Common Stock equal to the Measurement Price immediately prior to
each such issuance or sale, and the denominator of which shall be the number of
shares of Common Stock (including Common Stock deemed issued in accordance with
PARAGRAPH (c) below) outstanding immediately after such issuance or sale. For
the purposes of any adjustment of the Exercise Price pursuant to this SECTION
4.3, the following provisions shall be applicable:
(a) In the case of the issuance of Common Stock for cash, the
amount of the consideration received by the Company shall be deemed to be
the amount of the cash proceeds received by the Company for such Common
Stock before deducting therefrom any discounts or commissions allowed, paid
or incurred by the Company for any underwriting or otherwise in connection
with the issuance and sale thereof.
(b) In the case of the issuance of Common Stock (otherwise than
upon the conversion of shares of Capital Stock or other securities of the
Company) for a consideration in whole or in part other than cash, including
securities acquired in exchange therefor (other than securities by their
terms so exchangeable), the consideration other than cash shall be deemed
to be the fair value thereof as determined in good faith by the Board of
Directors.
(c) In the case of the issuance of (x) options, warrants or
other rights to purchase or acquire Common Stock (whether or not at the
time exercisable) or (y) securities by their terms convertible into or
exchangeable for Common Stock (whether or not at the time so convertible or
exchangeable) or options, warrants or rights to purchase such convertible
or exchangeable securities (whether or not at the time exercisable):
(i) the aggregate maximum number of shares of Common Stock
deliverable upon conversion of or in exchange for any such convertible
or exchangeable securities, or upon the exercise of options, warrants
or other rights to purchase or acquire such convertible or
exchangeable securities or Common Stock, and the subsequent conversion
or exchange thereof, shall be deemed to have been issued at the time
such securities were issued or such options, warrants or rights were
issued and for a consideration equal to the consideration, if any,
received by the Company for any such securities and related options,
warrants or rights, plus the additional consideration (determined in
the manner provided in PARAGRAPH (a) and (b) of this SECTION 4.3), if
any, to be received by the Company upon the conversion or exchange of
such securities, or upon the exercise of any related options, warrants
or rights to purchase or acquire such convertible or exchangeable
securities and the subsequent conversion or exchange thereof;
8
(ii) on any change in the number of shares of Common Stock
deliverable upon exercise of any such options, warrants or rights or
conversion or exchange of such convertible or exchangeable securities
or any change in the consideration to be received by the Company upon
such exercise, conversion or exchange, but excluding changes resulting
from the anti-dilution provisions thereof (to the extent comparable to
the anti-dilution provisions contained herein), the Exercise Price as
then in effect shall forthwith be readjusted to such Exercise Price as
would have been obtained had an adjustment been made upon the issuance
of such options, warrants or rights not exercised prior to such
change, or of such convertible or exchangeable securities not
converted or exchanged prior to such change, upon the basis of such
change;
(iii) on the expiration or cancellation of any such options,
warrants or rights (without exercise), or the termination of the right
to convert or exchange such convertible or exchangeable securities
(without exercise), if the Exercise Price shall have been adjusted
upon the issuance thereof, the Exercise Price shall forthwith be
readjusted to such Exercise Price as would have been obtained had an
adjustment not been made with respect to such expired, cancelled, or
terminated options, warrants, rights or such convertible or
exchangeable securities; and
(iv) if the Exercise Price shall have been adjusted upon
the issuance of any such options, warrants, rights or convertible or
exchangeable securities, no further adjustment of the Exercise Price
shall be made for the actual issuance of Common Stock upon the
exercise, conversion or exchange thereof.
4.4 CERTAIN REPURCHASES OF COMMON STOCK. In case the Company effects
a Pro Rata Repurchase of Common Stock, then the Exercise Price shall be reduced
to the price determined by multiplying the Exercise Price in effect immediately
prior to the effective date of such Pro Rata Repurchase by a fraction, the
numerator of which shall be (x) the number of shares of Common Stock outstanding
(including any tendered or exchanged shares) at such effective date MULTIPLIED
by (y) the lesser of the Exercise Price and the Fair Market Value per share
immediately prior to such Pro Rata Repurchase, and the denominator of which
shall be the sum of (x) the fair market value of the aggregate consideration
payable to stockholders based upon the acceptance (up to any maximum specified
in the terms of the tender or exchange offer) of all shares validly tendered or
exchanged and not withdrawn as of such effective date (the shares deemed so
accepted, up to any maximum, being referred to as the "PURCHASED SHARES") and
(y) the product of the number of shares of Common Stock outstanding (less any
Purchased Shares) at such effective date and the lesser of the Exercise Price
and the Fair Market Value per share immediately prior to such Pro Rata
Repurchase, such reduction to become effective immediately prior to the opening
of business on the day following such effective date. The foregoing
notwithstanding, no increase in the Exercise Price shall be made pursuant to
this SECTION 4.4.
4.5 OTHER DIVIDENDS AND DISTRIBUTIONS. In case the Company shall, by
dividend or otherwise, distribute to all holders of record of Common Stock
evidences of its indebtedness, shares of any class or series of Capital Stock of
the Company other than Common
9
Stock, cash (including in connection with regular periodic dividends) or assets
(including securities, but excluding any securities referred to in SECTION 4.1
or 4.3 hereof), the Exercise Price shall be reduced to the price determined by
multiplying the Exercise Price in effect immediately prior to such distribution
or dividend by a fraction, the numerator of which shall be the Measurement Price
in effect immediately prior to the record date for such distribution or dividend
LESS the fair market value on the date of the distribution or dividend (as
determined in good faith by the Board of Directors) of such number or amount of
the evidences of indebtedness, shares of Capital Stock of the Company, cash and
assets that is so distributed to a holder of one share of Common Stock and the
denominator of which shall be the Measurement Price in effect immediately prior
to the record date for such distribution or dividend. The foregoing
notwithstanding, no adjustment shall be made pursuant to this SECTION 4.5 with
respect to any particular dividend or distribution if the numerator of the
fraction referred to in the preceding sentence is zero or less than zero.
4.6 MECHANICS OF ADJUSTMENTS.
(a) SUCCESSIVE ADJUSTMENTS. Successive adjustments in the
Exercise Price and number of shares of Common Stock comprising a Stock Unit
shall be made, without duplication, whenever any event specified in SECTION
4 hereof shall occur.
(b) ROUNDING OF CALCULATIONS; MINIMUM ADJUSTMENTS. All
calculations of Exercise Price under this SECTION 4 shall be made to the
nearest 1/10th of a cent. No adjustment in the Exercise Price is required
if the amount of such adjustment would be less than $0.01; PROVIDED,
HOWEVER, that any adjustments which by reason of this PARAGRAPH (b) are not
required to be made will be carried forward and given effect in any
subsequent adjustment.
(c) STATEMENT REGARDING ADJUSTMENTS. Whenever the Exercise Price
or the number of shares of Common Stock comprising a Stock Unit shall be
adjusted as provided in this SECTION 4, the Company shall forthwith file,
at the principal office of the Company, a statement showing in reasonable
detail the facts requiring such adjustment and the Exercise Price and the
number of shares of Common Stock comprising a Stock Unit that shall be in
effect after such adjustment and the Company shall also cause a copy of
such statement to be sent by mail, first class postage prepaid, to the
Holder at the address appearing in the Company's records.
(d) NOTICES. In the event that the Company shall give notice or
make a public announcement to the holders of Common Stock of any action of
the type described in this SECTION 4 (but only if the action of the type
described in this SECTION 4 would result in an adjustment in the Exercise
Price or the number of shares of Common Stock comprising a Stock Unit or a
change in the type of securities or property to be delivered upon exercise
of this Warrant), the Company shall, at the time of such notice or
announcement, and in the case of any action which would require the fixing
of a record date, at least 10 days prior to such record date, give notice
to the Holder, in the manner set forth in SECTION 12 hereof, which notice
shall specify the record date, if any, with respect to any such action and
the approximate date on which such action is to take place.
10
Such notice shall also set forth the facts with respect thereto as shall be
reasonably necessary to indicate the effect on the Exercise Price, the
number of shares of Common Stock comprising a Stock Unit and the number,
kind or class of shares or other securities or property which shall be
deliverable upon exercise of this Warrant, as applicable. Failure to give
such notice, or any defect therein, shall not affect the legality or
validity of any such action.
Reservation and Authorization of Common Stock. The Company shall at all times
reserve and keep available for issue upon the exercise of the Warrants such
number of its authorized but unissued shares of Common Stock as will be
sufficient to permit the exercise in full of the Warrants. All shares of Common
Stock which shall be so issuable, when issued upon exercise of this Warrant,
shall be duly and validly issued and fully-paid and nonassessable.
Before taking any action which would cause an adjustment reducing the
Current Warrant Price per share of Common Stock below the then par value, if
any, of the shares of Common Stock issuable upon exercise of the Warrants, the
Company shall take any corporate action which may, in the opinion of its
counsel, be necessary in order that the Company may validly and legally issue
fully-paid and nonassessable shares of Common Stock at such adjusted Current
Warrant Price.
Section 5. TAXES. The Company will pay all taxes (other than
federal, state, local or foreign income taxes) which may be payable in
connection with the execution and delivery of this Warrant or the issuance and
sale of the Restricted Securities hereunder or in connection with any
modification of the Restricted Securities and will save the Holder harmless
without limitation as to time against any and all liabilities with respect to or
resulting from any delay in paying, or omission to pay, such taxes. The
obligations of the Company under this SECTION 6 shall survive any redemption,
repurchase or acquisition of Restricted Securities by the Company.
Section 6. RESTRICTIONS ON TRANSFERABILITY. Except for transfers
pursuant to the provisions of this SECTION 6, no Holder will transfer any
Restricted Securities. Any Transfer of Restricted Securities by a Holder which
is not made in accordance with, or which violates any of, the provisions of this
SECTION 6, will be null and void and have no effect and the Company will not
recognize any such transfer or recognize the transferee as a holder of such
Restricted Securities for any purpose.
6.1 RESTRICTIVE LEGEND. The Company may in its discretion imprint any
or all certificates representing Restricted Securities now or hereafter owned by
any Holder with the following legend, such imprinting to be without prejudice,
however, to the rights of such Holder at all times to sell or otherwise dispose
of all or any part of such Restricted Securities, subject to the terms of this
Warrant, under an effective registration statement or under an exemption from
the registration requirement available under the Securities Act:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE AND ANY SHARES OF
COMMON STOCK ISSUABLE UPON CONVERSION OF ANY SUCH SECURITIES HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AND MAY
11
NOT BE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION
THEREFROM UNDER SUCH ACT.
After such time as the legend described by this SECTION 6.1 is no longer
required on any certificate or certificates representing the Restricted
Securities and such Restricted Securities are no longer Restricted Securities,
upon the request of any Holder, the Company shall cause such certificate or
certificates to be exchanged for a certificate or certificates that do not bear
such legend.
6.2 SECURITIES LAWS RESTRICTIONS. Notwithstanding any other provision
in this Warrant, but subject to express written waiver by the Company in the
exercise of its good faith and reasonable judgment, no Holder shall transfer any
Restricted Securities without the registration of the transfer of such
Restricted Securities under the Securities Act, unless such transfer is exempt
from the registration requirements under the Securities Act and applicable state
securities laws as the Company in its good faith and reasonable discretion deems
appropriate in light of the facts and circumstances relating to such proposed
transfer. Prior to any transfer of any Restricted Securities which is not the
subject of an effective registration statement under the Securities Act and in
accordance with the plan of distribution described in such registration
statement, the applicable Holder will give written notice to the Company of such
Holder's intention to effect such transfer and to comply in all other respects
with this SECTION 6. Each such notice shall describe the manner and
circumstances of the proposed transfer. If within five (5) business days after
receipt by the Company of such notice, the Company requests an opinion of
counsel to such Holder that the proposed transfer may be effected without
registration of such Restricted Securities under the Securities Act, then,
subject to the other terms of this Warrant, the Company shall not be required to
register such transfer, and the Holder shall not be entitled to effect such
transfer, unless and until the Company receives such an opinion (which opinion
shall be reasonably satisfactory to the Company). Only after compliance with
this SECTION 6 shall such Holder be entitled to transfer such Restricted
Securities in accordance with the terms of the notice delivered by such Holder
to the Company. Each certificate representing such Restricted Securities issued
upon or in connection with such transfer shall bear the restrictive legends
required by SECTION 6.1.
Section 7. LIMITATION OF LIABILITY. No provision hereof, in the
absence of affirmative action by the holder hereof to purchase shares of Common
Stock, and no mere enumeration herein of the rights or privileges of the holder
hereof, shall give rise to any liability of such holder for the purchase price
of the Warrant Stock or as a stockholder of the Company, whether such liability
is asserted by the Company or by creditors of the Company.
Section 8. LOSS OR DESTRUCTION OF WARRANT CERTIFICATES. Upon receipt
of evidence satisfactory to the Company of the loss, theft, destruction or
mutilation of any Warrant and, in the case of any such loss, theft or
destruction, upon receipt of indemnity or security satisfactory to the Company
(the original Warrant holder's or any other institutional Warrant holder's
indemnity being satisfactory indemnity in the event of loss, theft or
destruction of any Warrant owned by such institutional holder), or, in the case
of any such mutilation, upon surrender and cancellation of such Warrant, the
Company will make and deliver, in lieu of such
12
lost, stolen, destroyed or mutilated Warrant, a new Warrant of like tenor and
representing the right to purchase the same aggregate number of shares of Common
Stock.
Section 9. FURNISH INFORMATION. The Company agrees that it shall
deliver to the holder of record hereof promptly after their becoming available
copies of all financial statements, reports and proxy statements which the
Company shall have sent to its stockholders generally.
Section 10. AMENDMENTS. The terms of this Warrant and all other
Warrants may be amended, and the observance of any term therein may be waived,
but only with the written consent of the holders of Warrants evidencing a
majority in number of the total number of Stock Units at the time purchasable
upon the exercise of all then outstanding Warrants, PROVIDED that no such action
may change the number of shares of stock comprising a Stock Unit or the Exercise
Price, without the written consent of the holders of Warrants evidencing 100% in
number of the total number of Stock Units at the time purchasable upon the
exercise of all then outstanding Warrants.
Section 11. OFFICE OF THE COMPANY. So long as this Warrant remains
outstanding, the Company shall maintain an office where this Warrant may be
presented for exercise, transfer, division or combination. Such office shall be
at Samsonite Corporation, 00000 Xxxx 00xx Xxxxxx, Xxxxxx, Xxxxxxxx 00000, unless
and until the Company shall designate and maintain some other office for such
purposes and deliver written notice thereof to the Holder.
Section 12. NOTICES GENERALLY.
12.1 All communications (including all required or permitted notices)
pursuant to the provisions hereof shall be in writing and shall be sent to the
address of the Holder as it appears in the warrant ledger of the Company.
12.2 Any notice shall be deemed to have been duly delivered when
delivered by hand, if personally delivered, and if sent by mail to a party whose
address is in the same country as the sender, two Business Days after being
deposited in the mail, postage prepaid, and if sent by recognized international
courier, freight prepaid, with a copy sent by telecopier, to a party whose
address is not in the same country as the sender, three Business Days after the
later of (a) being telecopied and (b) delivery to such courier.
SECTION 13. GOVERNING LAW. THIS WARRANT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE.
13
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed
in its name by one of its duly authorized officers and attested by its Secretary
or an Assistant Secretary.
Dated: _______, 2003
SAMSONITE CORPORATION,
a Delaware corporation
By:
----------------------------------
Name:
Title:
ATTEST:
--------------------------
Name:
1
SUBSCRIPTION FORM
(to be executed only upon exercise of Warrant)
The undersigned registered owner of this Warrant irrevocably exercises
this Warrant for and purchases Stock Units of Samsonite Corporation, a Delaware
corporation, purchasable with this Warrant, and herewith makes payment therefor
(by check in the amount of $_____), or hereby tenders _______________ Stock
Units as payment therefor, all at the price and on the terms and conditions
specified in this Warrant and requests that certificates for the shares of
Common Stock hereby purchased (and any securities or other property issuable
upon such exercise) be issued in the name of and delivered to
_________________________ whose address is _____ and, if such Stock Units shall
not include all of the Stock Units issuable as provided in this Warrant that a
new Warrant of like tenor and date for the balance of the Stock Units issuable
thereunder be delivered to the undersigned.
Dated:
-----------------------------------
(Signature of Registered Owner)
-----------------------------------
(Street Address)
-----------------------------------
(City) (State) (Zip Code)
2
ASSIGNMENT FORM
FOR VALUE RECEIVED the undersigned registered owner of this Warrant
hereby sells, assigns and transfers unto the Assignee named below all of the
rights of the undersigned under this Warrant, with respect to the number of
Stock Units set forth below:
Number of Stock Units Name and Address of Assignee
--------------------- ----------------------------
and does hereby irrevocably constitute and appoint ___________________________
Attorney to make sure transfer on the books of Samsonite Corporation, a Delaware
corporation, maintained for the purpose, with full power of substitution in the
premises.
Dated:
---------------------------
Signature
---------------------------
Witness
NOTICE: The signature to the assignment must correspond with the name as
written upon the face of the Warrant in every particular, without
alteration or enlargement or any change whatever.
3
ANNEX 1
Name of Major Investor Number of Shares
---------------------- ----------------
ACOF Management, L.P. 35,333.34
Xxxx Capital (Europe) LLC 35,333.33
Ontario Teachers Pension Plan Board 35,333.33
ANNEX 1 TO
RECAPITALIZATION AGREEMENT
