Exhibit 4.5
SUBSCRIPTION AGREEMENT
SUBSCRIPTION AGREEMENT, dated as of July 7, 1999 (this
"Agreement"), between St. Xxxx Knits International, Incorporated, a Delaware
corporation ("SJKI"), and Vestar/SJK Investors LLC, a Delaware limited liability
company ("Vestar/SJK").
WHEREAS, Vestar/SJK is subscribing for an aggregate of 250,000
shares of 153% Exchangeable Preferred Stock due 2010 of SJKI (the "Shares")
pursuant to this Agreement, such that, upon consummation of such subscription,
all of the issued and outstanding Shares will be held by Vestar/SJK.
NOW, THEREFORE, in consideration of the mutual covenants and
conditions as hereinafter set forth, the parties hereto do hereby agree as
follows:
I. PURCHASE OF SHARES
I.1 PURCHASE AND SALE OF PREFERRED STOCK. On the terms and
subject to the conditions of this Agreement, Vestar/SJK hereby subscribes for
and agrees to purchase from SJKI, and SJKI agrees to issue and sell to
Vestar/SJK, the Shares at a purchase price of $100.00 per share, equal to an
aggregate purchase price of $25,000,000.
I.2 DELIVERY OF FUNDS AND CERTIFICATES. Subject to Section V,
the closing of the purchase and sale of the Shares (the "Closing") shall take
place on or as soon as practicable after the date hereof at the offices of
Xxxxxxx Xxxxxxx & Xxxxxxxx, 000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx. At the
Closing, SJKI will deliver to Vestar/SJK duly executed certificates, registered
in Vestar/SJK's name and representing the Shares purchased by Vestar/SJK,
against Vestar/SJK's payment of the purchase price therefor.
II. REPRESENTATIONS AND WARRANTIES
II.1 REPRESENTATIONS AND WARRANTIES OF SJKI. SJKI represents
and warrants to Vestar/SJK as follows:
(a) SJKI is a corporation duly incorporated, validly existing
and in good standing under the laws of the State of Delaware and has all
requisite corporate power and authority to execute and deliver this Agreement
and to perform its obligations hereunder. The execution and delivery by SJKI of
this Agreement, the performance by SJKI of its obligations hereunder, and the
consummation by SJKI of the transactions contemplated hereby have been duly
authorized by all requisite corporate action. This Agreement has been duly
executed and delivered by SJKI and, assuming the due authorization, execution
and delivery thereof by Vestar/SJK, constitutes a legal, valid and binding
obligation of SJKI, enforceable against SJKI in accordance with its terms;
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(b) the Shares, when issued and delivered in accordance with
the terms hereof, will be duly authorized, validly issued, fully paid and
nonassessable;
(c) the execution, delivery and performance by SJKI of this
Agreement and the consummation by SJKI of the transactions contemplated hereby
do not and will not, with or without the giving of notice or the passage of time
or both, (i) violate the provisions of any law, rule or regulation applicable to
SJKI or its properties or assets; (ii) violate the provisions of the certificate
of incorporation or bylaws of SJKI; or (iii) violate any judgment, decree, order
or award of any court, governmental or quasi-governmental agency or arbitrator
applicable to SJKI or its properties or assets; and
(d) no consent, approval, exemption or authorization is
required to be obtained from, no notice is required to be given to and no filing
is required to be obtained from any third party (including, without limitation,
governmental and quasi-governmental agencies, authorities and instrumentalities
of competent jurisdiction) by SJKI, in order (i) for this Agreement to
constitute a legal, valid and binding obligation of SJKI or (ii) to authorize or
permit the consummation by SJKI of the issuance of the Shares.
II.2 REPRESENTATIONS AND WARRANTIES OF VESTAR/SJK. Vestar/SJK
represents and warrants to SJKI as follows:
(a) the execution and delivery of this Agreement, the
performance by Vestar/SJK of its obligations hereunder and the consummation by
Vestar/SJK of the transactions contemplated hereby have been duly authorized by
all requisite action on the part of Vestar/SJK. This Agreement has been duly
executed and delivered by Vestar/SJK and, assuming the due authorization,
execution and delivery thereof by SJKI, constitutes a legal, valid and binding
obligation of Vestar/SJK, enforceable against Vestar/SJK in accordance with its
terms;
(b) the execution, delivery and performance by Vestar/SJK of
this Agreement and the consummation by Vestar/SJK of the transactions
contemplated hereby do not and will not, with or without the giving of notice or
the passage of time or both, (i) violate the provisions of any law, rule or
regulation applicable to Vestar/SJK or its properties or assets; (ii) violate
the provisions of the constituent organizational documents or other governing
instruments of Vestar/SJK; or (iii) violate any judgment, decree, order or award
of any court, governmental or quasi-governmental agency or arbitrator applicable
to Vestar/SJK or its properties or assets;
(c) no consent, approval, exemption or authorization is
required to be obtained from, no notice is required to be given to, and no
filing is required to be obtained from, any third party (including, without
limitation, governmental and quasi-governmental agencies, authorities and
instrumentalities of competent jurisdiction) by Vestar/SJK, in order (i) for
this Agreement to constitute a legal, valid and binding obligation of Vestar/SJK
or (ii) to authorize or permit the consummation by Vestar/SJK of the purchase of
the Shares.
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(d) the certificate (or certificates) representing the Shares
shall bear the following legend (until such time as subsequent transfers thereof
are no longer restricted in accordance with the Securities Act of 1933, as
amended (the "Securities Act")):
"THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
THE SECURITIES LAWS OF ANY STATE, AND MAY NOT BE TRANSFERRED
IN VIOLATION OF SUCH ACT OR LAWS OR THE RULES AND REGULATIONS
THEREUNDER";
(e) if any Shares are disposed of in accordance with Rule 144
under the Securities Act, Vestar/SJK shall deliver to SJKI at or prior to the
time of such disposition an executed copy of Form 144 (if required by Rule 144)
and such other documentation as SJKI may reasonably require in connection with
such sale; and
(f) (i) the financial situation of Vestar/SJK is such that it
can afford to bear the economic risk of holding the unregistered Shares for an
indefinite period and (ii) it can afford to suffer the complete loss of its
investment in the Shares.
III. RULE 144
SJKI agrees that after it has filed a registration statement
pursuant to the requirements of Section 12 of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), relating to any class of equity
securities of SJKI, it will use its best efforts to file in a timely manner all
reports required to be filed by it pursuant to the Exchange Act and, upon
request of Vestar/SJK or a transferee of Shares, will furnish Vestar/SJK with
such information as may be necessary to enable Vestar/SJK to effect routine
sales pursuant to Rule 144 under the Securities Act.
IV. REGISTRATION RIGHTS
IV.1 DEMAND REGISTRATION.
(a) REQUEST FOR REGISTRATION. Upon the written request of
Vestar/SJK or its subsequent transferees (each a "Requesting Stockholder"), at
any time after the Closing, that SJKI effect the registration under the
Securities Act of all or part of the Shares owned, SJKI will use its best
efforts to effect the registration under the Securities Act of such Shares;
PROVIDED that (i) the Requesting Stockholders shall be entitled to no more than
five demands in the aggregate, (ii) such Requesting Stockholder shall have
proposed to register, together with all other Shares proposed to be registered
at such time by any other Requesting Stockholder, Shares having an aggregate
fair market value of at least $5 million and (iii) SJKI shall not be obligated
to effect more than one registration pursuant to this Section 4.1(a) in any 180
day period;
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(b) REGISTRATION STATEMENT FORM. Registrations under this
Section 4.1 shall be on such appropriate registration form of the Securities and
Exchange Commission (the "SEC") (i) as shall be selected by SJKI and (ii) as
shall permit the disposition of the Shares being registered in accordance with
the intended method or methods of disposition specified in the request for such
registration. SJKI agrees to include in any such registration statement all
information which, in the opinion of counsel to the underwriters, the Requesting
Stockholder and SJKI, is required to be included.
(c) EFFECTIVE REGISTRATION STATEMENT. A registration requested
pursuant to this Section 4.1 shall not be deemed to have been effected (i)
unless a registration statement with respect thereto has become effective, or
(i) if after it has become effective, such registration is interfered with by
any stop order, injunction or other order or requirement of the SEC or other
governmental authority for any reason not attributable to the Requesting
Stockholder or any of its affiliates and has not thereafter become effective.
IV.2 INCIDENTAL REGISTRATION.
(a) RIGHT TO INCLUDE SHARES. If SJKI at any time proposes to
register any Shares under the Securities Act (except registrations on such
form(s) solely for registration of a business combination transaction,
recapitalization or exchange offer), including registrations pursuant to Section
4.1(a), whether or not for sale for its own account, it will each such time as
soon as practicable give written notice of its intention to do so to all holders
of Shares and their subsequent transferees. Upon the written request (which
request shall specify the total number of Shares intended to be disposed of by
such holders of Shares and their subsequent transferees) of any holder of Shares
made within 30 days after the receipt of any such notice (15 days if SJKI gives
telephonic notice with written confirmation to follow promptly thereafter,
stating that (i) such registration will be on Form S-3 and (ii) such shorter
period of time is required because of a planned filing date), SJKI will use all
reasonable efforts to include in such registration all the Shares held by
holders of Shares which SJKI has been so requested to register for sale in the
manner initially proposed by SJKI; PROVIDED that SJKI shall not be obliged to
register any Shares which are not of the same class, series and form as the
Shares proposed to be registered by SJKI. If SJKI thereafter determines for any
reason not to register or to delay registration of Shares (provided, however,
that in the case of any registration pursuant to Section 4.1(a), such
determination shall not violate any of SJKI's obligations under Section 4.1 or
any other provision of this Agreement), SJKI may, at its election, give written
notice of such determination to the holders of Shares and their subsequent
transferees and (i) in the case of a determination not to register, shall be
relieved of the obligation to register such Shares in connection with such
registration, without prejudice, however, to any right the Requesting
Stockholder may have to request that such registration be effected as a
registration under Section 4.1(a) and (ii) in the case of a determination to
delay registering, shall be permitted to delay registering any Shares for the
same period as the delay in registration of such other securities. No
registration effected under
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this Section 4.2(a) shall relieve SJKI of any obligation to effect a
registration upon a request for registration under Section 4.1(a).
(b) PRIORITY IN INCIDENTAL REGISTRATION. If a registration
pursuant to this Section 4.2 involves an underwritten offering, SJKI shall not
be required to cause the registration of any Shares of any stockholder (or its
subsequent transferee) unless such stockholder (or subsequent transferee)
accepts the terms of the underwriting agreement, to the extent applicable to
such stockholder (or subsequent transferee), and then only in such quantity as
shall not, in the written opinion of the managing underwriter, exceed the
maximum number of Shares (or other securities) that can be marketed without
materially and adversely affecting the offering, if any, by SJKI or the
stockholder of SJKI, as the case may be. If the managing underwriter advises
SJKI in good faith that in its opinion the number of Shares, exceeds the number
that can be sold in such offering without having an adverse effect on such
offering, including the price at which such shares can be sold, then SJKI shall
include in such registration the maximum number of Shares that such underwriter
advises can be so sold, allocated as follows: (i) first, among the Shares
requested to be included in such registration by such Requesting Stockholder and
(ii) second, to any Shares Vestar/SJK proposes to sell.
(c) CUSTODY AGREEMENT AND POWER OF ATTORNEY. Upon delivering a
request under this Section 4.2, a stockholder or its subsequent transferee will,
if requested by SJKI, execute and deliver a custody agreement and power of
attorney in form and substance reasonably satisfactory to SJKI with respect to
such stockholder's or subsequent transferee's Shares to be registered pursuant
to this Section 4.2 (a "Custody AGREEMENT AND POWER OF ATTORNEY"). The Custody
Agreement and Power of Attorney will provide, among other things, that the
stockholder or its subsequent transferee will deliver to and deposit in custody
with the custodian and attorney-in-fact named therein a certificate or
certificates representing such Shares (duly endorsed in blank by the registered
owner or owners thereof or accompanied by duly executed stock powers in blank)
and irrevocably appoint said custodian and attorney-in-fact as such
stockholder's or subsequent transferee's agent and attorney-in-fact with full
power and authority to act under the Custody Agreement and Power of Attorney on
such stockholder's or subsequent transferee's behalf with respect to the matters
specified therein. Such stockholder or subsequent transferee's also agrees to
execute such other agreements as SJKI may reasonably request to further evidence
the provisions of this Section 4.2.
IV.3 REGISTRATION PROCEDURES. In connection with SJKI's
obligations pursuant to Sections 4.1 and 4.2 hereof, SJKI will use all
reasonable efforts to effect such registration and SJKI will promptly:
(a) prepare and file with the SEC as soon as practicable after
request for registration hereunder the requisite registration statement to
effect such registration and use all reasonable efforts to cause such
registration statement to become effective and to remain continuously effective
until the earlier to occur of (x) 180 days following the date on which such
registration statement is declared effective or (y) the termination of the
offering being made thereunder;
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(b) prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in connection
therewith as may be necessary to keep such registration statement effective and
to comply with the provisions of the Securities Act with respect to the
disposition of all Shares, as the case may be, covered by such registration
statement until such Shares have been sold or such lesser period of time as
SJKI, any seller of Shares, or any underwriter is required under the Securities
Act to deliver a prospectus in accordance with the intended methods of
disposition by the sellers of such Shares set forth in such registration
statement or supplement to such prospectus;
(c) furnish to Vestar/SJK and its subsequent transferee which
owns the Shares covered by such registration statement (the "Selling
Stockholders") and the managing underwriter, if any, at least one executed
original of the registration statement and such number of conformed copies of
such registration statement and of each such amendment and supplement thereto
(in each case including all exhibits), such number of copies of the prospectus
contained in such registration statement (including each preliminary prospectus
and any summary prospectus) and any other prospectus filed under Rule 424 under
the Securities Act as may reasonably be requested by such Selling Stockholder;
(d) use all reasonable efforts (i) to register or qualify all
Shares covered by such registration statement under the securities or "blue sky"
laws of such jurisdictions where an exemption is not available as the Selling
Stockholders shall reasonably request, (ii) to keep such registration or
qualification in effect for so long as such registration statement remains in
effect and (iii) to take any other action which may be reasonably necessary or
advisable to enable the Selling Stockholders to consummate the disposition in
such jurisdictions of such Shares; PROVIDED that SJKI will not be required to
qualify generally to do business in any jurisdiction where it is not then so
qualified, subject itself to taxation in any such jurisdiction or take any
action which would subject it to general service of process in any such
jurisdiction;
(e) notify the Selling Stockholders and the managing
underwriter, if any, promptly, and confirm such advice in writing (i) when a
prospectus or any prospectus supplement or post-effective amendment has been
filed, and, with respect to a registration statement or any post-effective
amendment, when the same has become effective, (ii) of any request by the SEC
for amendments or supplements to a registration statement or related prospectus
or for additional information, (iii) of the issuance by the SEC of any stop
order suspending the effectiveness of a registration statement or the initiation
of any proceedings for that purpose, (iv) of the receipt by SJKI of any
notification with respect to the suspension of the qualification of any of the
registered securities for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose, (v) of the happening of any
event or information becoming known which requires the making of any changes in
a registration statement or related prospectus so that such documents will not
contain 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
not misleading and (vi) of SJKI's reasonable determination that a post-effective
amendment to a registration statement would be appropriate;
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(f) make every reasonable effort to obtain the withdrawal of
any order suspending the effectiveness of a registration statement, or the
lifting of any suspension of the qualification of any of the registered
securities for sale in any jurisdiction, at the earliest possible moment;
(g) upon the occurrence of any event contemplated by clause
(e)(v) above, prepare a supplement or post-effective amendment to the applicable
registration statement or related prospectus or any document incorporated
therein by reference or file any other required document so that, as thereafter
delivered to the purchasers of the securities being sold thereunder, such
prospectus will not contain any untrue statement of a material fact or omit to
state any material fact necessary to make the statements therein not misleading;
(h) use its best efforts to furnish to the Selling
Stockholders a signed counterpart, addressed to the Selling Stockholders and the
underwriters, if any, of (A) an opinion of counsel for SJKI, and (B) a "comfort"
letter, signed by the independent public accountants who have certified SJKI's
financial statements included or incorporated by reference in such registration
statement, covering substantially the same matters with respect to such
registration statement (and the prospectus included therein) and, in the case of
the accountant's letter, with respect to events subsequent to the date of such
financial statements, as are customarily covered in opinions of issuer's counsel
and in accountants' letters delivered to underwriters in underwritten public
offerings of securities (and dated the dates such opinions and comfort letters
are customarily dated) and, in the case of the accountant's letter, such other
financial matters, and in the case of the legal opinion, such other legal
matters, as the Selling Stockholders or the underwriters may reasonably request;
(i) otherwise use its best efforts to comply with all
applicable rules and regulations of the SEC, and make available to the Selling
Stockholders an earnings statement satisfying the provisions of Section 11(a) of
the Securities Act and Rule 158 promulgated thereunder no later than 90 days
after the end of any 12-month period beginning after the effective date of a
registration statement pursuant to which Shares are sold, which statement shall
cover such 12-month period;
(j) cooperate with the Selling Stockholders and the managing
underwriters, if any, to facilitate the timely preparation and delivery of
certificates representing Shares to be sold; and enable such Shares to be in
such denominations and registered in such names as the Selling Stockholders or
the managing underwriters, if any, may request at least two business days prior
to any sale of Shares to the underwriters;
(k) use its best efforts to cause the Shares covered by the
applicable registration statement to be registered with or approved by such
other governmental agencies or authorities as may be necessary to enable the
Selling Stockholder(s) or the underwriters, if any, to consummate the
disposition of such Shares;
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(l) cause all Shares covered by the registration statement to
be listed on each securities exchange, if any, on which securities of such
class, series and form issued by SJKI, if any, are then listed if requested by
the managing underwriters, if any, or the holders of a majority of the Shares
covered by the registration statement and entitled hereunder to be so listed;
(m) cooperate and assist in any filings required to be made
with the New York Stock Exchange, Inc. or the NASD and in the performance of any
due diligence investigation by any underwriter (including any "qualified
independent underwriter" that is required to be retained in accordance with the
rules and regulations of the NASD); and
(n) as soon as practicable prior to the filing of any document
which is to be incorporated by reference into the registration statement or the
prospectus (after initial filing of the registration statement) provide copies
of such document to counsel to the Selling Stockholders and to the managing
underwriters, if any, and make SJKI's representatives available for discussion
of such document and consider in good faith making such changes in such document
prior to the filing thereof as counsel for such Selling Stockholders or
underwriters may reasonably request.
SJKI may require each Selling Stockholder to furnish to SJKI
such information regarding such Selling Stockholder and the distribution of such
securities by such Selling Stockholder as SJKI may from time to time reasonably
request in writing in order to comply with the Securities Act.
The Selling Stockholders severally agree that, upon receipt of
any notice from SJKI of the happening of any event of the kind described in
Section 4.3(e)(ii), (iii), (iv), (v) or (vi) hereof, they will forthwith
discontinue disposition pursuant to such registration statement of any Shares
covered by such registration statement or prospectus until their receipt of the
copies of the supplemented or amended prospectus relating to such registration
statement or prospectus or until they are advised in writing by SJKI that the
use of the applicable prospectus may be resumed (and the period of such
discontinuance shall be excluded from the calculation of the period specified in
clause (x) of Section 4.3(a)) and, if so directed by SJKI, will deliver to SJKI
(at SJKI's expense, except as otherwise provided in Section 4.1(c)) all copies,
other than permanent file copies then in their possession, of the prospectus
covering such securities in effect at the time of receipt of such notice. The
Selling Stockholders agree to furnish SJKI a signed counterpart, addressed to
SJKI and the underwriters, if any, of an opinion of counsel for the Selling
Stockholders covering substantially the same matters with respect to such
registration statement (and the prospectus included therein) as are customarily
covered in opinions of the Selling Stockholders' counsel delivered to the
underwriters in underwritten public offerings of securities (and dated the dates
such opinions are customarily dated) and such other legal matters as SJKI or the
underwriters may reasonably request.
IV.4 UNDERWRITTEN OFFERINGS.
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(a) DEMAND UNDERWRITTEN OFFERINGS. In any underwritten
offering pursuant to a registration requested under Section 4.1, SJKI will use
its best efforts to enter into an underwriting agreement for such offering with
the underwriters selected by SJKI, such underwriter or underwriters to be
nationally recognized and reasonably acceptable to the Requesting Stockholders
and such agreement to be reasonably satisfactory in form and substance to SJKI,
the Requesting Stockholder and the underwriters and to contain such
representations and warranties by SJKI and such other terms as are generally
prevailing in agreements of that type. The Selling Stockholders who hold Shares
to be distributed by such underwriters shall be parties to such underwriting
agreement and may, at their option, require that any or all of the
representations and warranties by, and the other agreements on the part of, SJKI
to and for the benefit of such underwriters shall also be made to and for the
benefit of them and that any or all of the conditions precedent to the
obligations of such underwriters under such underwriting agreement be conditions
precedent to their obligations. SJKI may, at its option, require that any or all
of the representations and warranties by, and the other agreements on the part
of, the Selling Stockholders to and for the benefit of such underwriters shall
also be made to and for the benefit of SJKI with due regard to the amount of
securities being sold by such Selling Stockholder and the nature of such
representations, warranties and agreements and the underwriting.
(b) INCIDENTAL UNDERWRITTEN OFFERINGS. If SJKI at any time
proposes to register any Shares under the Securities Act as contemplated by
Section 4.2 and such Shares are to be distributed by or through one or more
underwriters, SJKI and the Selling Stockholders who hold Shares to be
distributed by such underwriters in accordance with Section 4.2 hereof shall be
parties to the underwriting agreement between SJKI and such underwriters and
may, at their option, require that any or all of the representations and
warranties by, and the other agreements on the part of, SJKI to and for the
benefit of such underwriters shall also be made to and for the benefit of them
and that any or all of the conditions precedent to the obligations of such
underwriters under such underwriting agreement be conditions precedent to their
obligations. SJKI may, at its option, require that any or all of the
representations and warranties by, and the other agreements on the part of, the
Selling Stockholders to and for the benefit of such underwriters shall also be
made to and for the benefit of SJKI with due regard to the amount of Securities
being sold by such Selling Stockholder and the nature of such representations,
warranties and agreements and the underwriting.
IV.5 PREPARATION; REASONABLE INVESTIGATION. In connection with
the preparation and filing of each registration statement under the Securities
Act pursuant to this Agreement, SJKI will give the Selling Stockholders, the
underwriters and their respective counsel and accountants a reasonable
opportunity (but such persons shall not have the obligation) to participate in
the preparation of such registration statement, each prospectus included therein
or filed with the SEC, and, to the extent practicable, each amendment thereof or
supplement thereto, and, subject to the execution and delivery of a customary
confidentiality agreement, will give each of them such access to its books and
records and such opportunities to discuss the business of SJKI with its officers
and the independent public accountants who have certified its financial
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statements as shall be necessary to conduct a reasonable investigation within
the meaning of the Securities Act.
IV.6 LIMITATIONS, CONDITIONS AND QUALIFICATIONS TO OBLIGATIONS
UNDER REGISTRATION COVENANTS. The obligations of SJKI to use its reasonable
efforts to cause Shares to be registered under the Securities Act are subject to
each of the following limitations, conditions and qualifications:
(a) SJKI shall be entitled to postpone for a reasonable period
of time the filing or effectiveness of, or suspend the rights of Selling
Stockholders to make sales pursuant to, any registration statement otherwise
required to be prepared, filed and made and kept effective by it hereunder (but
the duration of such postponement or suspension may not exceed the earlier to
occur of (w) 30 days after the cessation of the circumstances described in
clauses (i) and (ii) below or (x) 180 days after the date of the determination
of the board of directors referred to below, and the duration of such
postponement or suspension shall be excluded from the calculation of the period
specified in clause (x) of Section 4.3(a)) if the board of directors of SJKI
determines in good faith that (i) there is a material undisclosed development in
the business or affairs of SJKI (including any pending or proposed financing,
recapitalization, acquisition or disposition), the disclosure of which at such
time could be adverse to SJKI's interests or (ii) SJKI has filed a registration
statement with the SEC, such registration statement has not yet been declared
effective, SJKI is using its reasonable best efforts to have such registration
statement declared effective, and the underwriters with respect to such
registration advise that such registration would be adversely affected. If SJKI
shall so delay the filing of a registration statement, it shall, as promptly as
possible, notify the Selling Stockholders of such determination, and the Selling
Stockholders shall have the right (y) in the case of a postponement of the
filing or effectiveness of a registration statement, to withdraw the request for
registration by giving written notice to SJKI within 10 business days after
receipt of SJKI's notice or (z) in the case of a suspension of the right to make
sales, to receive an extension of the registration period equal to the number of
days of the suspension;
(b) SJKI shall not be required hereby to include Shares in a
registration statement if, in the written opinion of outside counsel to SJKI of
recognized standing in securities law matters, the beneficial owners of such
Shares seeking registration would be free to sell all of such Shares within the
current calendar quarter without registration under Rule 144 under the
Securities Act;
(c) SJKI's obligations shall be subject to the obligations of
the Selling Stockholders, which the Selling Stockholders acknowledge, to furnish
all information and materials and to take any and all actions as may be required
under applicable federal and state securities laws and regulations to permit
SJKI to comply with all applicable requirements of the SEC and to obtain any
acceleration of the effective date of such registration statement; and
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(d) SJKI shall not be obligated to cause any special audit to
be undertaken in connection with any registration pursuant hereto unless such
audit is requested by the underwriters with respect to such registration.
IV.7 EXPENSES. SJKI will pay all reasonable out-of-pocket
costs and expenses incurred in connection with each registration of any Shares
pursuant to this Agreement, including, without limitation, the reasonable fees
and disbursements of a single firm of outside counsel retained on behalf of all
Selling Stockholders by Selling Stockholders which beneficially own a majority
of the total number of shares or units of Shares being registered by Selling
Stockholders (the "Majority Selling Stockholders"), and any and all filing fees
payable to the SEC, fees with respect to filings required to be made with stock
exchanges, the NASDAQ and the NASD, fees and expenses of compliance with state
securities or blue sky laws (including reasonable fees and disbursements of a
single firm of outside counsel for the underwriters or the Selling Stockholders
in connection with blue sky qualifications of the Shares being registered and
determination of its eligibility for investment under the laws of such
jurisdictions as the Selling Stockholders may designate), printing expenses,
fees and disbursements of counsel and accountants of SJKI, including costs
associated with comfort letters, and fees and expenses of other persons retained
by SJKI, but excluding underwriters' expenses (including discounts, commissions
or fees of underwriters and expenses included therein, selling brokers, dealer
managers or similar securities industry professionals relating to the
distribution of the securities being registered or legal expenses of any person
other than SJKI and the Selling Stockholders) but including the fees and
expenses of any qualified independent underwriter required to participate in
such registration pursuant to applicable law or the requirements of the NASD.
SJKI shall, in any event in all cases, pay its internal expenses (including,
without limitation, all salaries and expenses of its officers and employees
performing legal or accounting duties), and the expense of securities law
liability insurance and rating agency fees, if any.
IV.8 INDEMNIFICATION.
(a) INDEMNIFICATION BY SJKI. In connection with any
registration pursuant hereto in which Shares are to be disposed of, SJKI shall
indemnify and hold harmless, to the full extent permitted by law, each holder of
such Shares to be disposed of and, when applicable, its officers, directors,
agents and employees and each person who controls such holder (within the
meaning of the Securities Act or the Exchange Act) against all losses, claims,
damages, liabilities and expenses caused by any untrue or alleged untrue
statement of a material fact contained in any registration statement, prospectus
or preliminary prospectus or any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, including, without limitation, any loss, claim, damage,
liability or expense resulting from the failure to keep a prospectus current,
except insofar as the same (i) are caused by or contained in any information
relating to such holder furnished in writing to SJKI by such holder expressly
for use therein or (ii) are caused by such holder's failure to deliver a copy of
the current prospectus simultaneously with or prior to such sale after SJKI has
furnished such holder with a sufficient number of copies of such prospectus
correcting such material misstatement or omission or (iii) arise in respect of
any offers to sell or sales made during any
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period when a holder is required to discontinue sales under Section 4.3(e) (and
after such holder has received the notice contemplated by Section 4.3(e)). SJKI
shall also indemnify underwriters, selling brokers, dealer managers and similar
securities industry professionals participating in the distribution, their
officers and directors and each person who controls such persons (within the
meaning of the Securities Act) to the same extent as provided above with respect
to the indemnification of the holders of such Shares to be disposed of, and
shall enter into an indemnification agreement with such persons containing such
terms, if requested.
(b) INDEMNIFICATION BY SELLING STOCKHOLDERS. In connection
with each registration statement effected pursuant hereto in which Shares are to
be disposed of, each Selling Stockholder shall, severally but not jointly,
indemnify and hold harmless, to the full extent permitted by law, SJKI, each
other Selling Stockholder and their respective directors, officers, agents and
employees and each person who controls SJKI and each other Selling Stockholder
(within the meaning of the Securities Act or the Exchange Act) against any
losses, claims, damages, liabilities and expenses resulting from any untrue
statement of a material fact or any omission of a material fact required to be
stated in such registration statement or prospectus or preliminary prospectus or
necessary to make the statements therein not misleading, to the extent, but only
to the extent, that such untrue statement or omission relates to such Selling
Stockholder and is contained in any information furnished in writing by such
Selling Stockholder or any of its affiliates to SJKI expressly for inclusion in
such registration statement or prospectus. In no event shall the liability of
any Selling Stockholder hereunder be greater in amount than the dollar amount of
the proceeds actually received by such Selling Stockholder upon the sale of the
securities giving rise to such indemnification obligation.
(c) CONDUCT OF INDEMNIFICATION PROCEEDINGS. Any person
entitled to indemnification hereunder shall give prompt notice to the
indemnifying party of any claim with respect to which it shall seek
indemnification and shall permit such indemnifying party to assume the defense
of such claim with counsel reasonably satisfactory to the indemnified party;
PROVIDED, HOWEVER, that any person entitled to indemnification hereunder shall
have the right to employ separate counsel and to participate in the defense of
such claim, but the fees and expenses of such counsel shall be at the expense of
such person unless (i) the indemnifying party shall have agreed to pay such fees
or expenses, or (ii) the indemnifying party shall have failed to assume the
defense of such claim and employ counsel reasonably satisfactory to such person
or (iii) in the opinion of outside counsel to such person there may be one or
more legal defenses available to such person which are different from or in
addition to those available to the indemnifying party with respect to such
claims (in which case, if the person notifies the indemnifying party in writing
that such person elects to employ separate counsel at the expense of the
indemnifying party, the indemnifying party shall not have the right to assume
the defense of such claim on behalf of such person). If such defense is not
assumed by the indemnifying party, the indemnifying party shall not be subject
to any liability for any settlement made without its consent (but such consent
shall not be unreasonably withheld). No indemnified party shall be required to
consent to entry of any judgment or enter into any settlement that does not
include as an unconditional term thereof the giving by the claimant or plaintiff
to such indemnified party of a written release in form and substance reasonably
satisfactory to such indemnified party from all
13
liability in respect of such claim or litigation. An indemnifying party who is
not entitled to, or elects not to, assume the defense of a claim shall not be
obligated to pay the fees and expenses of more than one firm of counsel (and, if
necessary, local counsel) for all parties indemnified by such indemnifying party
with respect to such claim, unless in the written opinion of outside counsel to
an indemnified party a conflict of interest as to the subject matter exists
between such indemnified party and another indemnified party with respect to
such claim, in which event the indemnifying party shall be obligated to pay the
fees and expenses of additional counsel for such indemnified party.
(d) CONTRIBUTION. If for any reason the indemnification
provided for herein is unavailable to an indemnified party or is insufficient to
hold it harmless as contemplated hereby, then the indemnifying party shall
contribute to the amount paid or payable by the indemnified party as a result of
such loss, claim, damage or liability in such proportion as is appropriate to
reflect not only the relative benefits received by the indemnified party and the
indemnifying party, but also the relative fault of the indemnified party and the
indemnifying party, as well as any other relevant equitable considerations,
provided that in no event shall the liability of any Selling Stockholder for
such contribution and indemnification exceed, in the aggregate, the dollar
amount of the proceeds received by such Selling Stockholder upon the sale of
securities giving rise to such indemnification and contribution obligation.
IV.9 PARTICIPATION IN UNDERWRITTEN REGISTRATIONS. Vestar/SJK
or its subsequent transferees may not participate in any underwritten
registration hereunder unless Vestar/SJK or any of its subsequent transferees
(a) agrees to sell its Shares on the basis provided in and in compliance with
any underwriting arrangements approved by the persons entitled hereunder to
approve such arrangements and to comply with Regulation M under the Exchange
Act, and (b) completes and executes all questionnaires, appropriate and limited
powers of attorney, escrow agreements, indemnities, underwriting agreements and
other documents reasonably required under the terms of such underwriting
arrangements; PROVIDED that all such documents shall be consistent with the
provisions hereof.
IV.10 RULE 144. SJKI hereby covenants that after it has filed
(and such registration statement has become effective) a registration statement
pursuant to the requirements of Section 12 of the Exchange Act or a registration
statement pursuant to the requirements of the Securities Act in respect of
Shares, SJKI will file in a timely manner all reports required to be filed by it
under the Securities Act and the Exchange Act and the rules and regulations
adopted by the SEC thereunder (or, if SJKI is not required to file such reports,
it will, upon the request of Vestar/SJK or any of its subsequent transferees,
make publicly available other information so long as necessary to permit sales
by Vestar/SJK or such subsequent transferee under Rule 144 under the Securities
Act) and will take such further action as Vestar/SJK or any of its subsequent
transferee may reasonably request to the extent required from time to time to
enable Vestar/SJK or such subsequent transferee to sell Shares under Rule 144
under the Securities Act.
V. CLOSING CONDITION
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The parties' obligations under Section I shall be subject to
and conditioned on the consummation of the Acquisition Merger (as defined in the
Agreement and Plan of Merger dated as of February 2, 1999 among St. Xxxx Knits,
Inc., SJKI, SJKAcquisition, Inc. and Pearl Acquisition Corp.).
VI. MISCELLANEOUS
VI.1 NOTICES. All notices and other communications required or
permitted to be given under this Agreement shall be in writing and shall be
deemed to have been given if delivered personally or sent by certified mail,
return receipt requested, postage prepaid, to the parties to this Agreement at
the following addresses or to such other address as either party to this
Agreement shall specify by notice to the other:
if to SJKI:
St. Xxxx Knits International, Incorporated
00000 Xxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxx
if to Vestar/SJK:
Vestar/SJK Investors LLC
c/o Vestar Capital Partners III, L.P.
0000 00xx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxxxx
All such notices and communications shall be deemed to have been received on the
date of delivery or on the third business day after the mailing thereof.
VI.2 BINDING EFFECT; BENEFITS. This Agreement shall be binding
upon and inure to the benefit of the parties to this Agreement and their
respective successors and assigns. Nothing in this Agreement, express or
implied, is intended or shall be construed to give any person other than the
parties to this Agreement or their respective successors or assigns any legal or
equitable right, remedy or claim under or in respect of any agreement or any
provision contained herein.
VI.3 WAIVER. Each party hereto may, by written notice to the
others, (a) extend the time for the performance of any of the obligations or
other actions of the other under this Agreement; (b) waive compliance with any
of the conditions or covenants of the other contained in this Agreement; and (c)
waive or modify performance of any of the obligations of the others
15
under this Agreement. Except as provided in the preceding sentence, no action
taken pursuant to this Agreement, including, without limitation, any
investigation by or on behalf of any party, shall be deemed to constitute a
waiver by the party taking such action of compliance with any representations,
warranties, covenants or agreements contained herein. The waiver by any party
hereto of a breach of any provision of this Agreement shall not operate or be
construed as a waiver of any preceding or succeeding breach and no failure by
any party to exercise any right or privilege hereunder shall be deemed a waiver
of such party's rights or privileges hereunder or shall be deemed a waiver of
such party's rights to exercise the same at any subsequent time or times
hereunder.
VI.4 GOVERNING LAW. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of New York.
VI.5 NO ASSIGNMENT. Vestar/SJK may assign its rights and
delegate its obligations hereunder to subsequent holders of Shares. Any such
delegation shall relieve Vestar/SJK of liability hereunder. SJKI may not assign
its rights nor delegate its obligations hereunder without the prior consent of
the other party hereto.
VI.6 COUNTERPARTS. This Agreement may be executed in two or
more counterparts, and by the parties on separate counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same instrument.
VI.7 INTEGRATION. This Agreement contains the entire
understanding of the parties with respect to the subject matter hereof. There
are no agreements, representations, warranties, covenants or undertakings with
respect to the subject matter hereof other than those expressly set forth
herein. This Agreement supersedes all prior agreements and understandings
between the parties with respect to this subject matter.
VI.8 EXPENSES. SJKI agrees that, whether or not the
transactions contemplated by this Agreement are consummated, SJKI will pay or
cause to be paid all costs and expenses arising in connection with the
preparation, execution, administration and enforcement of, and the preservation
of rights under, this Agreement, and all taxes (other than taxes based on
income), fees or other charges that may be payable in connection with the
transactions contemplated hereby.
VI.9 INDEMNIFICATION. Except as provided in Section 4.8(b),
whether or not the transactions contemplated hereby are consummated, SJKI agrees
to indemnify and hold harmless Vestar/SJK (or any member, employee, affiliate
and agent) from and against any liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, claims, costs, attorneys' fees, expenses
and disbursements of any kind which may be imposed upon, incurred by or asserted
against Vestar/SJK (or any member, employee, affiliate and agent) in any manner
relating to or arising out of (i) Vestar/SJK's purchase and/or ownership of the
Shares or (ii) any litigation to which Vestar/SJK (or any member, employee,
affiliate and agent) is made a party in its capacity as a stockholder or owner
of securities of SJKI.
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the day and year first above written.
ST. XXXX KNITS INTERNATIONAL,
INCORPORATED
By:
--------------------------------
Name:
Title:
VESTAR/SJK INVESTORS LLC
By: Vestar Capital Partners III, L.P.,
its Managing Member
By: Vestar Associates III, L.P.,
its General Partner
By: Vestar Associates Corporation III,
its General Partner
By:
--------------------------------
Name:
Title:
