================================================================================
STOCK PURCHASE AGREEMENT
By and between
FIFTH AVENUE GROUP, LLC
A New York limited liability company
and
XXXXXX XXXXXX INTERNATIONAL INC.
A Delaware corporation
Dated: as of January 18, 2002
================================================================================
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (this "AGREEMENT") is made and entered
into on and as of this 18th day of January 2002, by and between FIFTH AVENUE
GROUP, LLC, a New York limited liability company ("PURCHASER"), and XXXXXX
XXXXXX INTERNATIONAL INC., a Delaware corporation ("SELLER").
RECITALS:
WHEREAS, Seller is a corporation, the Common Stock of which is
registered under the Securities Exchange Act of 1934 (the "EXCHANGE ACT") and
admitted for trading on the American Stock Exchange (the "AMEX"); and
WHEREAS, Purchaser wishes to purchase and Seller wishes to sell
1,180,000 shares of Common Stock issued and held in Seller's treasury (the
"TREASURY SHARES") on the terms set forth in this Agreement; and
WHEREAS, Purchaser also wishes to purchase and Seller also wishes to
sell an additional 125,000 authorized but unissued shares of Common Stock (the
"ADDITIONAL SHARES") on the terms and conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the mutual promises contained
herein and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, Purchaser and Seller hereby agree as follows:
ARTICLE I
DEFINITIONS AND INTERPRETATION
Section 1.1 Defined Terms Certain. capitalized terms used herein shall
have the meaning assigned to such terms in this Section 1.1.
"ACCREDITED INVESTOR" has the meaning assigned to such term in Rule
501(a) promulgated under the Securities Act.
"ACQUIRING PERSON" has the meaning assigned to such term in the Rights
Agreement, as amended by the Rights Agreement Amendment, whether or not the
Rights Agreement or the Rights issued pursuant thereto have expired or otherwise
ceased to be in full force and effect.
"ADDITIONAL SHARES" has the meaning set forth in the Recitals to this
Agreement.
"AFFILIATE" means an "affiliate" as such term is defined in Rule 12b-2
promulgated under the Exchange Act.
"AGREEMENT" has the meaning assigned to such term in the Introduction
to this Agreement.
"AMEX" has the meaning set forth in the Recitals to this Agreement.
"BENEFICIAL OWNER" means a "beneficial owner" within the meaning of
Rule 13d-3 promulgated under the Exchange Act.
"BENEFICIAL OWNERSHIP" means the interest of a Beneficial Owner in
Common Stock.
"BLOCK" means a number of shares of Common Stock equal to or greater
than 5% of the number of shares of Common Stock outstanding at the time the size
of the Block is being determined.
"BOARD OF DIRECTORS" means the Board of Directors of Seller.
"BUSINESS DAY" means any day other than a day on which banks in New
York City are required or authorized by Law to be closed.
"CLOSING" has the meaning assigned to such term in Section 3.1 hereof.
"CLOSING DATE" has the meaning assigned to such term in Section 2.1
hereof.
"COMMON STOCK" means the Common Stock, par value $1.00 per share, of
Seller.
"EQUITY SECURITIES" means any (i) Common Stock, (ii) securities of
Seller convertible or exchangeable for Common Stock and (iii) options, rights,
warrants and similar securities issued by Seller to acquire Common Stock.
"EXCHANGE ACT" has the meaning set forth in the Recitals to this
Agreement.
"FIRST INSTALLMENT PERCENTAGE" has the meaning set forth in Section
6.4(b) hereof.
"GAAP" mean United States generally accepted accounting principles, as
currently in effect.
"LAW" means any national, federal, state, municipal, local, foreign or
other statute, law, ordinance, regulation, rule, code, order, injunction,
judgment, decree, ruling or other requirements or rule of law.
"MAXIMUM ALLOCATION" has the meaning assigned to such term in Section
6.3 hereof.
"NOTICES" has the meaning assigned to such term in Section 8.1 hereof.
"OTHER SHARES" means any Equity Securities, other than the Treasury
Shares, of which Purchaser is the Beneficial Owner.
"PARTIES" shall mean, collectively, Purchaser and Seller, and each
individually a "PARTY."
"PER SHARE PURCHASE PRICE" has the meaning assigned to such term in
Section 2.2 hereof.
"PERSON" means any individual, partnership, firm, corporation, limited
liability company, joint venture, trust, unincorporated organization or
association or other entity.
-2-
"PURCHASED SHARES" means the Treasury Shares and the Additional Shares.
"PURCHASE PRICE" has the meaning assigned to such term in Section 2.2
hereof.
"PURCHASER" has the meaning assigned to such term in the Introduction
to this Agreement.
"PURCHASER BLOCK SALE NOTICE" has the meaning assigned to such term in
Section 6.4(a) hereof.
"PURCHASER INTEREST" means the number or percentage (depending upon the
context) of outstanding Common Stock that is controlled directly or indirectly
by Purchaser, including the Treasury Shares subject to the Purchaser Proxy.
"PURCHASER PROXY" means the irrevocable proxy to be dated the Closing
Date and delivered by Purchaser pursuant to the Shareholders Agreement.
"RESTRICTED SECURITIES" has the meaning assigned to such term in Rule
144(a)(3) promulgated under the Securities Act.
"RIGHTS AGENT" means ChaseMellon Shareholder Services, LLC, in the case
of the Rights Agreement and Mellon Investor Services LLC, in the case of the
Rights Agreement Amendment.
"RIGHTS AGREEMENT" means the Rights Agreement dated as of July 31, 1997
between Seller and the Rights Agent.
"RIGHTS AGREEMENT AMENDMENT" means the Amendment to Rights Agreement
dated as January 17, 2002 between Seller and the Rights Agent, which, among
other things, amends the definition of "Acquiring Person" in the Rights
Agreement, as it applies only to Purchaser, by changing "15%" wherever it
appears in such definition to "24.9%".
"SEC" means the Securities and Exchange Commission.
"SECURITIES ACT" means the Securities Act of 1933.
"SELLER" has the meaning assigned to such term in the Introduction to
this Agreement.
"SELLER BLOCK SALE RESPONSE" has the meaning assigned to such term in
Section 6.4(b) hereof.
"SELLER'S BY-LAWS" means the By-laws, as amended, of Seller in the form
filed by Seller under the Exchange Act.
"SELLER'S CERTIFICATE OF INCORPORATION" means the Certificate of
Incorporation, as amended, of Seller in the form filed by Seller under the
Exchange Act.
"SELLER'S FINANCIAL STATEMENTS" means the consolidated balance sheets
(including the related notes and schedules) of Seller as of May 31 and November
30, 2001, and the consolidated statements of income and of cash flows for the
periods then ended (including the
-3-
related notes and schedules) included in Seller's Form 10-K and Form 10-Q filed
under the Exchange Act for the periods then ended.
"SHAREHOLDERS AGREEMENT" means the Shareholders Agreement dated the
date of this Agreement among Purchaser, Xxxx Xxxxxxxxxx and Xxxxxxx Xxxxxxxxxx.
"STANDSTILL PERIOD" means the period of time commencing on the Closing
Date and terminating on the ten year anniversary of such date.
"TEMPELSMAN INTEREST" means the number or percentage (depending upon
the context) of outstanding Common Stock that is controlled directly or
indirectly by Xxxx Xxxxxxxxxx or Xxxxxxx Xxxxxxxxxx other than any shares of
Common Stock included in the Purchaser Interest.
"TRANSACTION" has the meaning assigned to such term in Section 2.1
hereof.
"TRANSACTION DOCUMENTS" means this Agreement, the Shareholders
Agreement, the Purchaser Proxy, the Rights Agreement Amendment and each other
certificate, instrument or document contemplated hereby or delivered hereunder.
"TREASURY SHARES" has the meaning set forth in the Recitals to this
Agreement.
Section 1.2 Singular and Plural; Gender. Whenever appropriate in the
context, terms used in the Transaction Documents in the singular also include
the plural, and vice versa, and each masculine, feminine or neuter pronoun shall
also include the other genders.
Section 1.3 Meaning of "INCLUDING". As used herein, the word
"INCLUDING" shall be deemed to mean "including, without limitation," unless
otherwise expressly provided in any instance.
Section 1.4 Headings. The article, section and other headings in the
Transaction Documents are for convenience of reference only and shall not be
deemed to alter or affect the meaning or interpretation of any provisions of the
Transaction Documents.
Section 1.5 Drafting. The Parties have participated jointly in the
negotiation and drafting of the Transaction Documents, and they agree that any
ambiguity or question of intent or interpretation that may arise shall be
construed as if drafted jointly by the Parties, and no presumption or burden of
proof shall arise favoring or disfavoring any Party by virtue of the authorship
of any provisions of the Transaction Documents.
ARTICLE II
PURCHASE AND SALE OF THE PURCHASED SHARES
Section 2.1 Purchase and Sale of the Purchased Shares. On February 11,
2002 (the "CLOSING DATE"), Seller shall sell, convey, assign, transfer and
deliver to Purchaser, and
-4-
Purchaser shall purchase, acquire and accept from Seller, the Purchased Shares
(the "TRANSACTION").
Section 2.2 Purchase Price of the Purchased Shares. The purchase price
for each of the Purchased Shares (the "PER SHARE PURCHASE PRICE") shall be
$9.00, and the aggregate purchase price for the Purchased Shares (the "PURCHASE
PRICE") shall be the Per Share Purchase Price multiplied by the number of
Purchased Shares being purchased and sold pursuant to Section 2.1 hereof, for an
aggregate Purchase Price of $11,745,000.
Section 2.3 Nature of the Obligation to Purchase and Sell the Purchased
Shares. The obligations of Purchaser to purchase and Seller to sell the
Purchased Shares on the Closing Date at the Purchase Price shall be irrevocable
and shall be subject only to the respective conditions precedent set forth in
Article VII hereof and no other conditions precedent of any kind or character,
including any changes or absence of changes in the financial condition, results
of operations or prospects of any Party, the price at which Seller's Common
Stock trades on the Amex or any force majeure or terrorist event.
Notwithstanding the foregoing, the Closing Date shall be postponed during the
continuation of any bank holiday in New York City that prevents the Purchase
Price from being paid by wire transfer.
ARTICLE III
CLOSING
Section 3.1 Closing. The Closing of the transactions contemplated by
this Agreement (the "Closing") shall take place at the offices of Xxxxxxx
Xxxxxxxx Xxxxx Xxxxxxxxxxx & Kuh, LLP, 000 Xxxxx Xxxxxx, Xxx Xxxx, XX 00000
commencing at 10:00 a.m. local time on the Closing Date.
Section 3.2 Deliveries of Seller. At the Closing, Seller shall deliver
or cause to be delivered to Purchaser:
(a) two stock certificates evidencing the Treasury Shares and the
Additional Shares, respectively, in each case registered in the name of
Purchaser and bearing the legends referred to in Section 5.3 hereof; and
(b) a copy of resolutions duly adopted by the Board of Directors
authorizing and approving the execution and delivery of the Transaction
Documents to which it is a party, and the performance of the transactions
contemplated hereby and thereby, certified by the Secretary or other appropriate
officer of Seller as correct and complete and in full force and effect as of the
Closing.
Section 3.3 Deliveries of Purchaser. At the Closing, Purchaser shall
deliver or cause to be delivered to Seller:
-5-
(a) the Purchase Price by wire transfer pursuant to the
instructions annexed hereto as Annex A;
(b) a copy of resolutions duly adopted by the members of
Purchaser authorizing and approving the execution and delivery of the
Transaction Documents, and the performance of the transactions contemplated
thereby, certified by a member or by the Secretary or other appropriate officer
of Purchaser as correct and complete and in full force and effect as of the
Closing;
(c) a copy of Purchaser's operating agreement and any and all
amendments thereto, certified by a member or by the Secretary or other
appropriate officer of Purchaser as correct and complete and in full force and
effect as of the Closing; and
(d) a receipt for the Treasury Shares and the Additional Shares.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLER
As an inducement for Purchaser to enter into the Transaction Documents,
Seller represents and warrants to Purchaser as follows:
Section 4.1 Organization, Good Standing, Power. Seller is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware and is qualified to do business as a foreign corporation and
is in good standing in the State of New York.
Section 4.2 Treasury Shares. All of the Treasury Shares have been
validly issued and are fully paid and non-assessable.
Section 4.3 Additional Shares. Upon payment therefor at the Closing,
all of the Additional Shares will be validly issued, fully paid and
non-assessable.
Section 4.4 Seller's By-laws and Certificate of Incorporation. The
copies of Seller's By-laws and Seller's Certificate of Incorporation delivered
by Seller to Purchaser are correct and complete and in full force and effect.
Section 4.5 Authorization, Execution and Delivery of Transaction
Documents. Seller has all requisite corporate power and authority to execute and
deliver the Transaction Documents to which it is a party and to perform its
obligations thereunder. Seller has taken all necessary corporate action to
authorize the execution, delivery and performance of the Transaction Documents
that are to be executed by it and the consummation of the transactions
contemplated thereby. The Transaction Documents to which Seller is a party have
been duly and validly executed and delivered by Seller and, assuming the due
authorization, execution and delivery by Purchaser, constitute the valid and
binding obligation of Seller, enforceable in accordance with their terms except
as such enforcement may be limited by bankruptcy, insolvency, moratorium or
other similar Laws presently or hereafter in effect affecting the enforcement of
creditors' rights generally and general equitable principles. Seller's execution
and delivery of the Transaction
-6-
Documents to which it is a party do not, and Seller's performance of the
transactions contemplated thereby, will not violate or conflict with any
provision of applicable Law, Seller's By-laws, Seller's Certificate of
Incorporation or any agreement to which Seller is a party or by which Seller's
property is bound.
Section 4.6 Seller's Financial Statements. Each of the consolidated
balance sheets included in Seller's Financial Statements fairly presented, in
all material respects, the consolidated financial position of Seller as of the
dates set forth in those consolidated balance sheets. Each of the consolidated
statements of income and of cash flows included in Seller's Financial
Statements, fairly presented, in all material respects, the consolidated results
of operations and cash flows, as the case may be, of Seller for the periods set
forth in those consolidated statements of income and of cash flows (except for,
in the case of unaudited quarterly statements, the omission of certain notes,
and normal year-end audit adjustments that in the opinion of Seller's management
were not, at the time, material in amount or effect to the financial statements
taken as a whole), in each case prepared in conformity with GAAP (except, in the
case of unaudited quarterly statements, as permitted by Form 10-Q of the SEC)
consistently applied throughout the periods indicated.
Section 4.7 No Brokers or Finders. No agent, broker, finder or
investment or commercial banker, or other Person engaged by or acting on behalf
of Seller in connection with the negotiation, execution or performance of this
Agreement or the Transaction, is or will be entitled to any broker's or finder's
or similar fee or other commission as a result of this Agreement or the
Transaction.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PURCHASER
As an inducement for Seller to enter into the Transaction Documents to
which it is a party, Purchaser represents and warrants to Seller as follows:
Section 5.1 Organization, Good Standing, Power. Purchaser is a limited
liability company duly organized, validly existing and in good standing under
the laws of the State of New York.
Section 5.2 Authorization, Execution and Delivery of the Transaction
Documents. Purchaser has all requisite power and authority to execute and
deliver the Transaction Documents and to perform its obligations thereunder.
Purchaser has taken all necessary action to authorize the execution, delivery
and performance of the Transaction Documents and the consummation of the
transactions contemplated thereby. The Transaction Documents have been duly and
validly executed and delivered by Purchaser and, assuming the due authorization,
execution and delivery by Seller of the Transaction documents to which it is a
party, constitute the valid and binding obligation of Purchaser, enforceable in
accordance with their terms except as such enforcement may be limited by
bankruptcy, insolvency, moratorium or other similar Laws presently or hereafter
in effect affecting the enforcement of creditors' rights generally and general
equitable principles. Purchaser's execution and delivery of the Transaction
Documents do not, and Purchaser's performance of the transactions contemplated
thereby will not, violate or
-7-
conflict with any provision of applicable Law, Purchaser's operating agreement,
as amended, or any agreement to which Purchaser is a party or by which
Purchaser's property is bound.
Section 5.3 Purchased Shares and Other Matters. Purchaser acknowledges
and agrees that (i) Seller has made no representations or warranties concerning
the Purchased Shares or Seller except as expressly set forth in Article IV
hereof; (ii) the Purchased Shares are Restricted Securities and will not be
transferable absent registration under the Securities Act or exemption
therefrom; (iii) the stock certificates to be issued to Purchaser pursuant to
Section 3.2(a) hereof will include legends to reflect the fact that the
Purchased Shares are Restricted Securities and are subject to restrictions
contained in this Agreement and the Shareholders Agreement; (iv) except as set
forth in Section 6.3 hereof, Seller does not have any obligation to register the
Purchased Shares under the Securities Act or any other federal or state
securities law or to make available any exemption from such registration; (v)
Purchaser has been given the opportunity to discuss with officers of Seller the
business, prospects, affairs and condition of Seller; (vi) Purchaser has
knowledge and experience in financial business matters and is familiar with the
business of Seller; (vii) Purchaser is an Accredited Investor capable of
evaluating the merits and risks of its purchase and ownership of the Purchased
Shares; (viii) Purchaser is purchasing the Purchased Shares for its own account,
for investment, and not with a view to the resale or distribution thereof; and
(ix) Purchaser has been furnished with copies of the Rights Agreement and the
Rights Agreement Amendment.
Section 5.4 Liquidity. On the Closing Date Purchaser will have
available to it immediately available funds in an aggregate amount not less than
the Purchase Price.
Section 5.5 Schedule 13D. The Schedule 13D filed with the SEC by
Purchaser on January 14, 2002 with respect to its Beneficial Ownership of Common
Stock does not, and the amendment to such Schedule 13D to be filed by Purchaser
to reflect the transactions contemplated by the Transaction Documents will not,
contain any untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements made, in light of the circumstances
under which they were made, not misleading.
Section 5.6 No Brokers or Finders. No agent, broker, finder or
investment or commercial banker, or other Person engaged by or acting on behalf
of Purchaser in connection with the negotiation, execution or performance of
this Agreement or the Transaction, is or will be entitled to any broker's or
finder's or similar fee or other commission as a result of this Agreement or the
Transaction.
ARTICLE VI
COVENANTS OF PURCHASER AND SELLER
Section 6.1 Limitation on Beneficial Ownership of Common Stock and
Other Matters.
(a) During the Standstill Period, Purchaser shall not directly or
indirectly, purchase or otherwise acquire, or propose or offer to purchase or
otherwise acquire, any Equity Securities, whether by tender offer, market
purchase, privately negotiated purchase or otherwise, if, after such purchase or
acquisition, Purchaser would become an Acquiring Person after giving
-8-
effect to such purchase or acquisition. During the Standstill Period, Purchaser
and its Affiliates shall not make any public announcement with respect to the
transactions prohibited by this Section 6.1(a).
(b) During the Standstill Period, all Common Stock beneficially
owned by Purchaser and its Affiliates shall be owned of record by Purchaser;
(c) During the Standstill Period, Purchaser shall not sell or
transfer any of the Treasury Shares to any Person, including without limitation,
the financial institution referred to in Section 6.1(d) hereof, unless such
Person agrees in writing to be bound by all of the terms and provisions of the
Transaction Documents to the same extent as Purchaser is bound; provided,
however, Treasury Shares may be sold pursuant to Rule 144 promulgated under the
Securities Act or pursuant to Section 6.3 hereof without requiring the purchaser
of such Treasury Shares to be bound by the Transaction Documents; provided,
further, however, that Purchaser shall not sell any Treasury Shares pursuant to
the previous proviso until it has first sold all of its Other Shares;
(d) During the Standstill Period, Purchaser shall not pledge or
encumber any of the Treasury Shares to any Person other than, if required, a
financial institution consented to by Seller (such consent not to be
unreasonable withheld) in connection with financing that portion of the Purchase
Price allocable to the Treasury Shares;
(e) During the Standstill Period, Purchaser and its Affiliates
shall not seek to advise, encourage or influence any Person with respect to the
voting of any Equity Securities, initiate, propose or otherwise solicit
stockholders of Seller for the approval of one or more stockholder proposals or
induce or attempt to induce any other Person to initiate any stockholder
proposal;
(f) During the Standstill Period, Purchaser and its Affiliates
shall not, other than as a consequence of the Shareholders Agreement, deposit
any Treasury Shares into a voting trust or subject any Treasury Shares to any
arrangement or agreement with respect to the voting of such securities or form,
join or in any way participate in a "group" (within the meaning of Section
13(d)(3) of the Exchange Act) with respect to any Equity Securities;
(g) During the Standstill Period, Purchaser shall not permit its
members to grant to any Person other than a member of Purchaser any voting
rights with respect to any membership interest in Purchaser;
(h) During the Standstill Period, Purchaser and its Affiliates
shall not sell or transfer any of the membership interests in Purchaser, except
to a family member (by blood, marriage or adoption) of an existing member of
Purchaser or to a trust for the benefit of such a family member;
(i) During the Standstill Period, Purchaser shall not merge or
consolidate with any Person other than on the following terms and conditions,
all of which terms and conditions shall continue in their entirety during the
Standstill Period: (A) the surviving entity to such merger or consolidation
shall be, and shall continue to be, controlled by one or more existing members
of Purchaser; (B) not less than 85% of the economic and voting interests in such
surviving entity shall be owned both of record and beneficially by one or more
existing members
-9-
of Purchaser and/or by a family member (by blood, marriage or adoption) of one
or more existing members of Purchaser or a trust for the benefit of such a
family member; and (C) no such merger or consolidation shall become effective
unless the surviving entity to such merger or consolidation agrees in writing to
be bound by all of the terms and provisions of the Transaction Documents to the
same extent as Purchaser is bound; and
(j) During the Standstill Period, Purchaser shall not liquidate
and distribute its assets to any Person other than a member or members of
Purchaser.
Section 6.2. Seller's Fiduciary Duties. The Board of Directors will
discharge its fiduciary duties to the stockholders of Seller by considering, in
good faith, when and under what circumstances to waive the limitations on
Purchaser and its Affiliates set forth in Section 6.1 hereof.
Section 6.3 Piggyback Registration. During the Standstill Period, if
any shares of Common Stock included in the Tempelsman Interest are included in a
registration statement (other than on Form S-8) filed by Seller under the
Securities Act, Seller will give Purchaser the opportunity to include its shares
of Common Stock in such registration statement on the same terms and conditions
as the shares of Common Stock included in the Tempelsman Interest are included,
subject to the following conditions: (i) the maximum number of shares to be
included in such registration statement from the Tempelsman Interest and the
Purchaser Interest shall first be determined by Seller (the "MAXIMUM
ALLOCATION"); and then (ii) the maximum number of shares to be included from the
Purchaser Interest shall be determined by multiplying the Maximum Allocation by
a fraction, the numerator of which shall be the then current Purchaser Interest
and the denominator of which shall be the sum of the then current Purchaser
Interest and the then current Tempelsman Interest; provided, however, that such
fraction, expressed as a percentage, shall never exceed 50%.
Section 6.4 Proposed Block Sales by Purchaser.
(a) During the Standstill Period, if Purchaser proposes to sell
in a single transaction or in a series of related transactions a Block of Other
Shares, before consummating the proposed sale, Purchaser shall deliver to Seller
a written notice (a "PURCHASER BLOCK SALE NOTICE") setting forth with respect to
the proposed Block sale: (i) the number of shares of Common Stock; (ii) the
price per share of Common Stock; (iii) the payment and other terms of the
proposed Block sale; (iv) the identity of the proposed purchaser in sufficient
detail to permit Seller to know the ultimate beneficial owner of the proposed
purchaser; and (v) whether Purchaser has previously sold or transferred any
shares of Common Stock to the proposed purchaser, and, if so, the dates, amounts
and prices at which such shares were previously sold or transferred to the
proposed purchaser.
(b) Within seven Business Days of receiving a Purchaser Block
Sale Notice, Seller shall deliver to Purchaser a written notice (a "SELLER BLOCK
SALE RESPONSE") as follows: (i) if Seller has a good business reason for the
proposed purchaser not to purchase the Block, Seller shall set forth in
reasonable detail its good business reason, in which event, Purchaser shall not
sell the Block to such proposed purchaser; (ii) if Seller has no objection to
the proposed purchaser and no interest in acquiring the Block, it shall so
state, in which event Purchaser shall
-10-
be free to consummate the Block sale to the proposed purchaser at the price per
share and on the other terms and conditions set forth in the Purchaser Block
Sale Notice but only during the 20 Business Days following Purchaser's receipt
of the Seller Block Sale Response; (iii) if Seller wishes to purchase the Block
at the same price per share set forth in the Purchaser Block Sale Notice, it
shall irrevocably agree to purchase the Block and shall agree either: (A) to
accept the payment terms described in the Purchaser Block Sale Notice; or (B)
(1) to wire transfer to Purchaser pursuant to the wire transfer instructions set
forth in Annex B annexed hereto, at least 25% of the aggregate purchase price
(the "FIRST INSTALLMENT PERCENTAGE") for the Block, against receipt of a
certificate for the First Installment Percentage of the Block, endorsed in blank
or accompanied by a stock power endorsed in blank, and (2) to wire transfer to
Purchaser pursuant to such wire transfer instructions, within 45 calendar days
of the date of the Seller Block Sale Response, any portion of such aggregate
purchase price not included in the First Installment Percentage, against receipt
of a certificate for the remainder of the Block, endorsed in blank or
accompanied by a stock power endorsed in blank, in which event Purchaser shall
sell the Block to Seller on the payment terms elected by Seller.
(c) If the proposed purchaser of any Block changes the terms of
its proposed purchase after Purchaser has delivered its Purchaser Block Sale
Notice to Seller but before Seller has delivered its Seller Block Sale Response
to Purchaser, Purchaser shall deliver to Seller a revised Purchaser Block Sale
Notice that describes the revised terms. In such event, Seller shall have seven
Business Days from its receipt of the revised Purchaser Block Sale Notice to
deliver its Seller Block Sale Response to Purchaser and otherwise comply with
the provisions of Section 6.4(b) hereof, and the other time provisions set forth
in this Section 6.4 shall be correspondingly extended.
(d) If Seller fails to deliver a Seller Block Sale Response to
Purchaser within seven Business Days of Seller's receipt of a Purchaser Block
Sale Notice, Purchaser may conclusively presume that Seller has no objection to
the proposed purchaser and no interest in acquiring the Block, in which event
Purchaser shall be free to consummate the Block sale to the proposed purchaser
at the price per share and on the other terms and conditions set forth in the
Purchaser Block Sale Notice but only during the 20 Business Days following the
expiration of such seven Business Days.
(e) If Seller fails to consummate the purchase of a Block within
45 calendar days of the date of the Seller Block Sale Response, Purchaser shall
be free to sell the portion of the Block not paid for by Seller, but only during
the 20 Business Days following the expiration of such 45 calendar day period.
If, on a per share basis, Purchaser receives less than the price per share of
Common Stock set forth in the applicable Purchaser Block Sale Notice, Seller
shall promptly reimburse Purchaser for an amount equal to the difference between
(i) the proceeds received by Purchaser from the sale during such 20 Business Day
period of any of the Block shares not purchased by Seller and (ii) the proceeds
Purchaser would have received from Seller for such portion of the Block had
Seller consummated the purchase thereof within such 45 calendar day period.
-11-
ARTICLE VII
CONDITIONS TO CLOSING
Section 7.1 Conditions to Obligation of Purchaser. The obligation of
Purchaser to consummate the Transaction is subject to satisfaction of the
following conditions at the Closing, unless waived by Purchaser:
(a) there shall not be any Law in effect preventing consummation
of the Transaction;
(b) the Rights Agreement Amendment shall be in effect; and
(c) the representations and warranties of Seller set forth in
Article IV hereof shall be true and correct on and as of the Closing Date.
Section 7.2 Conditions to Obligation of Seller. The obligation of
Seller to consummate the Transaction is subject to satisfaction of the following
conditions at the Closing, unless waived by Seller:
(a) there shall not be any Law in effect preventing consummation
of the Transaction;
(b) the representations and warranties of Purchaser set forth in
Article V hereof shall be true and correct on and as of the Closing Date; and
(c) Purchaser shall have delivered the duly executed and
notarized Purchaser Proxy at the Closing pursuant to the Shareholders Agreement.
ARTICLE VIII
MISCELLANEOUS
Section 8.1 Notices. All notices, requests, claims, demands and other
communications ("NOTICES") given under this Agreement shall be effective if in
writing and sent to the Party to whom notice is intended to be given at the
address(es) specified on the signature page hereto (or at such other address as
a Party may hereafter designate by notice to the other Party as provided herein)
by: (i) United States registered or certified mail, return receipt requested;
(ii) a nationally recognized overnight courier service; (iii) hand delivery; or
(iv) facsimile transmission confirmed by U.S. mail. Notice given by mail shall
be effective on the date of delivery or refused delivery indicated on the return
receipt. Notice given by overnight courier shall be effective on the next
Business Day after delivery thereof to an authorized representative of the
courier service in a properly addressed and prepaid enclosure marked for next
day delivery. Notice given by hand delivery shall be effective when delivered to
the Party to whom it is addressed or to an actual or apparent officer, director,
employee or agent of such party at the address set forth above. Notice given by
facsimile transmission shall be effective when received, and if not during a
Business Day, the next Business Day after receipt, at the facsimile machine at
the fax number specified on the signature page hereto (or at such other fax
number as a Party may hereafter designate by notice to the other Party as
provided herein), as evidenced by the
-12-
sender's failure to receive an electronic error message on the sending facsimile
machine that the facsimile was not received.
Section 8.2 Amendment; Termination; Waiver. The Transaction Documents
may not be amended, terminated, changed, modified or discharged, in whole or in
part, nor may any of their provisions be waived, except by a written instrument
that expressly refers to the Transaction Documents and that is executed by all
of the parties thereto and express third party beneficiaries thereof. Any waiver
by any Party of a breach of any provision of the Transaction Documents shall not
operate as, or be construed to be a waiver of, any other breach of such
provision or of any breach of any other provision of the Transaction Documents.
The failure of any Party to assert any of its rights under the Transaction
Documents shall not constitute a waiver of any of such rights.
Section 8.3 Entire Agreement. The Transaction Documents contain the
entire agreement between the Parties with respect to the subject matter hereof
and the Transaction, and all prior negotiations, agreements and undertakings,
both written and oral, with respect thereto are merged into the Transaction
Documents. Each Party expressly acknowledges that in executing and delivering
the Transaction Documents to which it is a party, it is not relying upon any
warranties, representations, promises or statements, except to the extent that
the same are expressly set forth in the Transaction Documents. Any
confidentiality agreement between any of the Parties or their Affiliates that
may now exist shall remain in effect in accordance with its terms and shall not
be superseded or merged into this Agreement.
Section 8.4 Successors and Assigns. The Transaction Documents shall
inure to the benefit of and be binding upon the Parties hereto, and their
respective successors and permitted assigns. Nothing in the Transaction
Documents, express or implied, shall be deemed to confer upon any Person or
entity, other than the parties thereto and their respective successors and
permitted assigns any right, benefit or remedy of any nature whatsoever under or
by reason of the Transaction Documents, including, without limitation, the right
to insist upon or enforce against any Party the performance of such Party's
obligations under the Transaction Documents. For purposes of this Agreement,
Xxxx Xxxxxxxxxx and Xxxxxxx Xxxxxxxxxx shall be deemed to be express third party
beneficiaries of the Purchaser Proxy.
Section 8.5 Governing Law and Jurisdiction. The Transaction Documents
are entered into in the State of New York and shall be construed in accordance
with the laws of New York applicable to contracts entered into and to be wholly
performed therein without regard to conflict of law principles. The Parties
agree that any action, suit or proceeding based upon any matter, claim or
controversy arising hereunder or relating hereto shall be brought solely in the
State Courts of or the Federal Court in the State and County of New York, and
each Party represents and warrants that such Party shall submit to the personal
jurisdiction of any such court or tribunal and agrees that legal process may be
served on such Party by delivery or mail in the same matter as Notices
hereunder.
Section 8.6 Severability. Any provision of the Transaction Documents
which may be determined by competent authority to be prohibited or unenforceable
in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent
of such prohibition or unenforceability without invalidating the remaining
provisions of the Transaction Documents, and any such prohibition or
-13-
unenforceability in such jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction. Moreover, if any one or
more provisions contained in the Transaction Documents shall for any reason be
held by any court of competent jurisdiction to be excessively broad as to
duration, activity or subject, it shall be construed, by limiting and reducing
it, so as to be enforceable to the extent compatible with the applicable Law as
it shall then appear.
Section 8.7 Survival. The representations, warranties and covenants of
the Parties contained in the Transaction Documents, and all statements contained
in the Transaction Documents, shall be deemed to be material and to have been
relied upon by the parties thereto notwithstanding any investigation or due
diligence performed in connection with the Transaction Documents and shall
survive the Closing Date.
Section 8.8 Fees and Expenses. All costs and expenses (including legal
and financial advisory fees and expenses) incurred in connection with, or in
anticipation of, the Transaction Documents and the Transaction shall be paid by
the Party incurring such expenses.
Section 8.9 Counterparts. The Transaction Documents may be executed in
any number of counterparts, each of which shall be deemed to be an original
instrument and all of which together shall constitute a single agreement.
Section 8.10 Waiver of Trial by Jury. EACH OF THE PARTIES HEREBY
KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHTS IT MAY HAVE TO A
TRIAL BY JURY IN RESPECT OF ANY ACTION BASED ON THE TRANSACTION DOCUMENTS, OR
ARISING OUT OF, UNDER OR IN CONNECTION WITH, THE TRANSACTION DOCUMENTS OR THE
TRANSACTION, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER
VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY TO THE TRANSACTION DOCUMENTS. THIS
PROVISION IS A MATERIAL INDUCEMENT FOR EACH OF THE PARTIES ENTERING INTO THE
TRANSACTION DOCUMENTS.
Section 8.11 Specific Performance. Each Party recognizes and agrees
that a breach by such Party of any of the covenants set forth in this Agreement
could cause irreparable harm to one or more other Parties, that such other
Party's or Parties' remedies at law in the event of such breach would be
inadequate, and that, accordingly, in the event of such breach a restraining
order or injunction or both may be issued against such Party, in addition to any
other rights and remedies which are available to such other Party or Parties. If
this Section 8.11 is more restrictive than permitted by the laws of the State of
New York, this Section 8.11 will be limited to the extent required to permit
enforcement under the laws of the State of New York.
Section 8.12 Public Announcement. No Party to the Transaction Documents
shall make, or cause to be made, any press release or other public announcement
or communication in respect of the Transaction Documents or the Transaction
without the prior written consent of the other Party, which consent shall not be
unreasonably withheld. Upon execution and delivery of this Agreement, Seller
shall promptly issue a press release after consultation with Purchaser
concerning its contents.
-14-
Section 8.13 Attorneys' Fees. Notwithstanding Section 8.8, in the event
of any action for breach of this Agreement or any other claim arising out of the
Transaction Documents or the Transaction, the prevailing party shall be entitled
to reasonable attorneys' fees, costs and expenses incurred in such action.
Attorneys' fees incurred in enforcing any judgment in respect of the Transaction
Documents are recoverable as a separate item. The provisions of this Section
8.13 are intended to be severable from the other provisions of this Agreement
and to survive any judgment and, to the maximum extent permitted by Law, shall
not be deemed merged into any such judgment.
IN WITNESS WHEREOF, the Parties have duly executed this Agreement as of
the date first stated above.
FIFTH AVENUE GROUP, LLC XXXXXX XXXXXX INTERNATIONAL INC.
By: /s/ Xxxxxxx Xxxxxxxx By: /s/ Xxxx Xxxxxxxxxx
-------------------- -------------------
Name: Xxxxxxx Xxxxxxxx Name: Xxxx Xxxxxxxxxx
Title: Member Title: President
Address: 0 Xxxxxxxxxxx Xxxxx Address: 000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000 New York, New York
Fax Number: (000) 000-0000 Fax Number (000) 000-0000
-15-
ANNEX A
Wire Transfer Instructions to Seller
FLEET BANK
000 XXXXX XXXXXX
XXX XXXX, XXX XXXX 00000
X.X.X.
FOR CREDIT TO THE ACCOUNT OF
XXXXXX XXXXXX
ACCT. NO. 2538006163
ABA #000000000
-16-
ANNEX B
Wire Transfer Instructions to Purchaser
-17-
