INTERIM INVESTORS AGREEMENT
This Interim Investors Agreement is made as of June 1, 2007 (this
"AGREEMENT") by and among Xxxxxx Group Acquisitions, LLC, a Delaware limited
liability company ("PARENT"), and the other parties appearing on the signature
pages hereto (the "INVESTORS").
RECITALS
1. On the date hereof, Parent, Xxxxxx Group Acquisitions, Inc., a
Delaware corporation ("MERGER SUB") and Everlast Worldwide, Inc., a Delaware
corporation (the "COMPANY") have executed an Agreement and Plan of Merger (the
"MERGER AGREEMENT") pursuant to which Merger Sub will be merged with and into
the Company (the "MERGER").
2. Each of the Investors has, on or after the date hereof, executed a
letter agreement in favor of Parent in which each such Investor has agreed,
subject to the terms and conditions set forth therein, to make a cash equity or
rollover equity investment in Parent at the Closing (as hereinafter defined)
(each, an "EQUITY COMMITMENT LETTER").
3. Each of the Investors has, on or after the date hereof, executed a
limited guarantee in favor of the Company (each, a "GUARANTEE").
4. The Investors and Parent wish to agree to certain terms and
conditions that will govern the actions of Parent and the relationship among the
Investors with respect to the Merger Agreement and the Equity Commitment Letter
in connection with the Merger Agreement, and the transactions contemplated by
each.
AGREEMENT
Therefore, the parties hereto hereby agree as follows:
1. EFFECTIVENESS; DEFINITIONS.
1.1 EFFECTIVENESS. This Agreement shall become effective on the date
hereof and shall terminate (except with respect to SECTIONS 1.1, 1.2, 2.6, 2.8,
the proviso of SECTION 2.9(B), SECTIONS 3 and 4 (other than SECTION 4.9)) upon
the earliest of (i) the closing of the Merger under the Merger Agreement (the
"CLOSING") and (ii) the termination of the Merger Agreement in accordance with
its terms; PROVIDED, THAT any liability for failure to comply with the terms of
this Agreement shall survive such termination.
1.2 DEFINITIONS. Capitalized terms used herein but not defined shall
have the meanings given to them in the Merger Agreement.
2. AGREEMENTS AMONG THE INVESTORS.
2.1 AUTHORITY OF PARENT. Xxxxxx may cause Parent to take any action,
subject to compliance with this Agreement, permitted under this Agreement, and,
except as otherwise set forth herein, Parent shall take only those actions
approved by Xxxxxx.
2.2 ACTIONS UNDER THE MERGER AGREEMENT. Xxxxxx may cause Parent to take
any action or refrain from taking any action in order for Parent to comply with
its obligations, satisfy its closing conditions or exercise its rights under the
Merger Agreement, including determining that the conditions to closing specified
in SECTIONS 8.01 and 8.03 of the Merger Agreement (the "CLOSING CONDITIONS")
have been satisfied, waiving compliance with any agreements and conditions
contained in the Merger Agreement, including any Closing Condition, amending or
modifying the Merger Agreement and determining to close the Merger; PROVIDED,
HOWEVER, that Xxxxxx may not cause Parent to amend the Merger Agreement in a way
that has an effect on any Investor that is different from the effect on the
other Investors in a manner that is materially adverse to such Investor without
such Investor's consent. Parent shall not, and the Investors shall not permit
Parent to, determine that the Closing Conditions have been satisfied, waive
compliance with any agreements and conditions contained in the Merger Agreement,
including any Closing Condition, amend or modify the Merger Agreement or
determine to close the Merger, or take any other action with respect to the
Merger Agreement unless such action has been approved by Xxxxxx. If the Closing
Conditions are satisfied or validly waived (subject to the approval requirements
in this SECTION 2.2), Parent, by action of Xxxxxx, may, in its discretion,
terminate the participation in the transaction of any Investor that does not
fund its Commitment or that asserts in writing its unwillingness to fund its
Commitment; PROVIDED, THAT such termination shall not affect Parent's rights
against such Investor under such Investor's Equity Commitment Letter with
respect to such failure to fund, which rights shall be as provided in SECTIONS
2.5, 4.3 and 4.4.
2.3 DEBT FINANCING. Xxxxxx shall seek to cause Parent to negotiate,
enter into and borrow under definitive agreements relating to debt financing to
be provided at the Closing on the terms set forth in the debt commitment letters
attached as EXHIBIT A (the "DEBT COMMITMENT LETTERS") and/or on such additional
or modified terms as Xxxxxx shall approve.
2.4 INVESTORS AGREEMENT. Each Investor agrees to enter into,
concurrently with the Closing, one or more definitive agreements with respect to
such matters and on the terms as are set forth on SCHEDULE I and/or such
additional or modified terms as the Requisite Investors shall approve; PROVIDED,
THAT if any such additional or modified terms affect any Investor in a manner
that is different from and materially adverse to the effect on the other
Investors (taking into account, among other things, the size of such Investor's
investment), the Investor shall be required to approve such terms to the extent
they apply to such Investor.
2.5 EQUITY COMMITMENTS.
2.5.1 Each Investor hereby affirms and agrees that Parent, acting
at the direction of the Requisite Investors, shall be entitled to
enforce the provisions of the Equity Commitment Letter attached hereto
as EXHIBIT B. Parent shall not attempt to enforce the Equity Commitment
Letter until Xxxxxx has determined that the Closing Conditions have
been satisfied or validly waived as permitted hereunder. Parent shall
have no right to enforce the Equity Commitment Letter unless acting at
the direction of Xxxxxx and no other Investor shall have any right to
enforce the Equity Commitment Letter.
2.5.2 All securities issued by Parent and its subsidiaries at the
Closing shall be issued to the Investors pro rata in class, series and
amount proportionate to the relative
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total amounts purchased and rolled-over by all Investors in accordance with each
Investor's Commitment.
2.5.3 Prior to the Closing, no Investor shall transfer, directly or
indirectly, its obligations and rights under the Equity Commitment
Letter, other than a transfer to one or more affiliated funds or
affiliated entities (other than portfolio companies) or as approved by
non-transferring Investors whose Commitments equal at least two-thirds
of the aggregate amount of the Commitments of all the non-transferring
Investors.
2.6 TERMINATION FEE. Parent shall, and the Requisite Investors shall
cause Parent to, arrange that any Termination Fee expense reimbursement paid by
the Company or any of its affiliates pursuant to the Merger Agreement shall be
promptly paid as directed by Parent to the Investors or their designees in
proportion to their respective Commitments at the time of such termination,
after first reimbursing Xxxxxx for its out-of pocket expenses, including the
reasonable fees, expenses and disbursements of financing sources, investment
bankers, lawyers, accountants, consultants and other advisors retained by Xxxxxx
in connection with or related to the preparation, negotiation, execution or
performance of this Agreement, the Merger Agreement or the transactions
contemplated hereby or thereby, and shall make adequate provisions for any
expenses which are to be borne by Parent or the Investors proportionately
pursuant to SECTION 2.9.
2.7 NOTICE OF CLOSING. Parent will use its reasonable best efforts to
provide each Investor with at least 15 days prior notice of the Closing Date
under the Merger Agreement; PROVIDED, that the failure to provide such notice
will not relieve an Investor of its obligations under SECTION 2.5 of this
Agreement. Any notices or correspondence received by Parent under, in connection
with, or related to the Merger Agreement shall be promptly provided to each
Investor at the address set forth in the Equity Commitment Letters, or any other
address designated by such Investor in writing to Parent.
2.8 EXPENSE SHARING. Each Investor agrees that it shall be responsible
for its proportionate share of the out-of-pocket expenses incurred by Xxxxxx,
including the reasonable fees, expenses and disbursements of financing sources,
investment bankers, lawyers, accountants, consultants and other advisors
retained by Xxxxxx and Parent. The obligations under this SECTION 2.8 shall
exist whether or not the Merger is consummated and shall survive any termination
of the other terms of this Agreement, to the extent that such fees and expenses
are not paid by the Company or Parent. If the Merger is consummated, Xxxxxx'x
out-of-pocket expenses described in this SECTION 2.8 shall be paid from the
proceeds of the Financing, to the extent sufficient funds are available from
such proceeds.
2.9 REPRESENTATIONS AND WARRANTIES; COVENANT.
(a) Each Investor hereby represents, warrants and covenants to the
other Investors that none of the information supplied in writing by such
Investor for inclusion or incorporation by reference in the Proxy Statement will
cause a breach of the representations and warranties of Parent and Merger Sub
set forth in SECTION 5.04 of the Merger Agreement. Each Investor hereby
represents, warrants and covenants to the other Investors that it has not
entered, and will not enter, into any agreement, arrangement or understanding
with any other Investor, any other
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potential investor or acquiror or group of potential investors or acquirors or
the Company with respect to the subject matter of this Agreement and the Merger
Agreement, other than the agreements expressly contemplated by this Agreement
and other than any debt financing agreements and arrangements between Affiliates
of the Investors. Each Investor who is contributing Rollover Contribution Shares
(as defined in such Investor's Equity Commitment Letter) hereby represents and
warrants to the other Investors that it will not transfer, and will have at the
Closing, the Rollover Contribution Shares.
(b) Until this Agreement is terminated pursuant to SECTION 1.1, subject
to SECTION 4.10, no Investor shall enter into any agreement, arrangement or
understanding or have discussions with any other potential investor or acquiror
or group of investors or acquirors or the Company or any of its representatives
with respect to the subject matter of this Agreement and/or the Merger Agreement
or any other similar transaction involving the Company without the prior
approval of Xxxxxx PROVIDED, THAT this SECTION 2.9(B) shall continue to apply to
an Investor that is a Defaulting Investor for a period of one year following
such release.
2.10 ADDITIONAL INVESTORS; REDUCTION OF COMMITMENTS. Notwithstanding
anything to the contrary in this Agreement, the Equity Commitment Letters or the
Guarantees, Xxxxxx shall have the right to cause Parent to enter into equity
commitment letters with additional investors and to execute joinders to this
Agreement with any such investors. Prior to the Closing, Xxxxxx shall also have
the right to reduce the amount of any Investor's cash equity Commitment (but not
any Investor's rollover equity Commitment) by up to 50 percent, without the
consent of such Investor.
3. DEFINITIONS. For purposes of this Agreement, the following terms shall
have the following meanings:
"COMMITMENTS" shall, for each Investor (or any other person providing
an equity commitment letter to Parent), mean the amount of cash equity or the
value of the Rollover Contribution Shares (based on the Merger Consideration)
set forth in the Equity Commitment Letters delivered by such Investor or other
person to Parent.
"XXXXXX" means The Xxxxxx Group, LLC, a New York limited liability
company.
"REQUISITE INVESTORS" means Investors whose Commitments equal at least
a majority of the aggregate amount of all Commitments.
4. MISCELLANEOUS.
4.1 AMENDMENT. This Agreement may be amended or modified and the
provisions hereof may be waived, only by an agreement in writing signed by the
Requisite Investors; PROVIDED, that no provision of this Agreement (excluding
exhibits) may be amended in a manner that disproportionately materially
adversely affects an Investor without such Investor's consent.
4.2 SEVERABILITY. In the event that any provision hereof would, under
applicable Law, be invalid or unenforceable in any respect, such provision shall
be construed by modifying or
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limiting it so as to be valid and enforceable to the maximum extent compatible
with, and possible under, applicable Law. The provisions hereof are severable,
and in the event any provision hereof should be held invalid or unenforceable in
any respect, it shall not invalidate, render unenforceable or otherwise affect
any other provision hereof.
4.3 REMEDIES. The parties hereto agree that, except as provided herein,
this Agreement shall be enforceable by all available remedies at law or in
equity (including specific performance). If Parent determines to enforce the
provisions of the Equity Commitment Letters in accordance with this Agreement,
and Xxxxxx is prepared to cause Parent to consummate the Merger in accordance
with SECTION 2.2 of this Agreement and to fund the Commitments upon consummation
of the Merger, as evidenced in writing to the other Investors (the Investors who
are so prepared, the "CLOSING INVESTORS"), but one or more Investors fails to
fund its Commitment or provides written notice that it will not fund its
Commitment (each such Investor, a "DEFAULTING INVESTOR"), the parties agree that
Parent, acting at the direction of the Closing Investors (which, pursuant to
SECTION 2.1, must include Xxxxxx), shall be entitled, at its discretion, to
either (a) specific performance of the terms of this Agreement, whether before
or after the Closing, together with any costs of enforcement incurred by the
Closing Investors in seeking to enforce such remedy, (b) payment by the
Defaulting Investors in an amount equal to the out-of-pocket damages incurred by
such Closing Investors (including amounts paid under any such Investor's
Guarantee) in an amount not to exceed such Defaulting Investor's Commitment, or
(c) such other remedies as may be available to Parent at law or in equity. If
the Closing Investors determine to cause Parent to enforce the remedy described
in the preceding sentence against any Defaulting Investor, they must do so
against all Defaulting Investors and, prior to doing so, the Closing Investors
must affirm their willingness to fund their Commitments. If Parent, acting at
the direction of the Investors entitled to enforce this Agreement in respect of
any provision hereof, elects to do so against another Investor, it must do so
against any other Investor that has similarly failed to perform with respect to
the same provision hereof. If there are multiple Defaulting Investors, each
Defaulting Investor's portion of the total obligations hereunder shall be the
amount equal to the product of (a) the amounts due from all Defaulting Investors
hereunder multiplied by (b) a fraction of which the numerator is the amount of
such Defaulting Investor's Commitment and the denominator is the sum of all
Defaulting Investors' Commitments. In no event shall any Investor be liable
under this Agreement in an amount that exceeds the amount of such Investor's
Commitment less the amounts previously funded by such Investor pursuant to the
Equity Commitment Letters and Guarantees, regardless of the form of action
(including breach of warranty, breach of contract, tort, negligence, strict
liability or statutory) or type of damages. If any Investor for any reason pays
damages to the Company and/or Parent in an amount greater than the amount of its
Commitment, to the extent that Parent receives any such amount, Parent shall
promptly return to such Investor the amount received from such Investor in
excess of its Commitment.
4.4 NO RECOURSE. Notwithstanding anything that may be expressed or
implied in this Agreement, and notwithstanding the fact that certain of the
Investors may be partnerships or limited liability companies, Parent and each
Investor covenants, agrees and acknowledges that no recourse under this
Agreement or any documents or instruments delivered in connection with this
Agreement shall be had against any former, current or future directors,
officers, agents, affiliates, general or limited partners, members, managers or
stockholders of any Investor or any former, current or future directors,
officers, agents, affiliates, employees, general or limited
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partners, members, managers or stockholders of any of the foregoing, as
such, whether by the enforcement of any assessment or by any legal or equitable
proceeding, or by virtue of any statute, regulation or other applicable Law, it
being expressly agreed and acknowledged that no personal liability whatsoever
shall attach to, be imposed on or otherwise be incurred by any current or future
director, officer, employee, general or limited partner or member or manager of
any Investor or of any partner, member, manager or affiliate thereof, as such,
for any obligation of any Investor under this Agreement or any documents or
instruments delivered in connection with this Agreement for any claim based on,
in respect of or by reason of such obligations or their creation.
4.5 GOVERNING LAW; CONSENT TO JURISDICTION. This Agreement, and any
disputes hereunder, shall be governed by, construed and enforced in accordance
with the laws of the State of New York, without regard to principles of conflict
of laws thereof. In addition, each party (a) irrevocably and unconditionally
consents and submits to the personal jurisdiction of the state and federal
courts of the United States of America located in the City and State of New York
solely for the purposes of any suit, action or other proceeding between any of
the parties hereto arising out of this Agreement, (b) agrees that it will not
attempt to deny or defeat such personal jurisdiction by motion or other request
for leave from such court, (c) waives any claim of improper venue or any claim
that the courts of the City and State of New York are an inconvenient forum for
any action, suit or proceeding between any of the parties hereto arising out of
this Agreement or any transaction contemplated hereby, (d) agrees that it will
not bring any action relating to this Agreement in any court other than the
courts of the City and State of New York and (e) to the fullest extent permitted
by Law, consents to service being made through the notice procedures set forth
in SECTION 10.02 of the Merger Agreement.
4.6 WAIVER OF JURY TRIAL. EACH PARTY HERETO ACKNOWLEDGES AND AGREES
THAT ANY PROCEEDING, CONTROVERSY OR CLAIM WHICH MAY ARISE UNDER THIS LETTER
AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE
EACH SUCH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT SUCH
PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR
INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT, OR THE TRANSACTIONS
CONTEMPLATED HEREBY.
4.7 EXERCISE OF RIGHTS AND REMEDIES. No delay of or omission in the
exercise of any right, power or remedy accruing to any party as a result of any
breach or default by any other party under this Agreement shall impair any such
right, power or remedy, nor shall it be construed as a waiver of or acquiescence
in any such breach or default, or of any similar breach or default occurring
later, nor shall any such delay, omission or waiver of any single breach or
default be deemed a waiver of any other breach or default occurring before or
after that waiver.
4.8 OTHER AGREEMENTS; ASSIGNMENT. This Agreement, together with the
agreements referenced herein, constitutes the entire agreement, and supersedes
all prior agreements, understandings, negotiations and statements, both written
and oral, among the parties or any of their Affiliates with respect to the
subject matter contained herein except for such other agreements as are
referenced herein which shall continue in full force and effect in accordance
with their terms. Except as provided herein, this Agreement shall not be
assigned without the
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prior written consent of the parties hereto and any assignment without such
consent shall be null and void.
4.9 CONSULTATION. Each party shall keep the other parties informed of
its expectations and intentions regarding the Merger and the transactions
contemplated hereby and will notify the other parties hereto promptly of any
changes therein. Each party shall promptly notify Parent of any contact or
discussion with any other potential investor or acquirer or group of investors
or acquirers or the Company or any of its Representatives (as defined below)
with respect to the subject matter of this Agreement and/or the Merger Agreement
or any other similar transaction involving the Company.
4.10 CONFIDENTIALITY. Each party hereto agrees to, and shall cause its
Affiliates, directors, officers, employees, agents, advisors and representatives
(collectively, "REPRESENTATIVES") to, keep any information supplied by or on
behalf of any of the other parties to this Agreement, confidential
("CONFIDENTIAL INFORMATION") and to use, and cause its Representatives to use,
the Confidential Information only in connection with the Merger, the Merger
Agreement and the transactions contemplated hereby and thereby; PROVIDED,
HOWEVER, that the term "CONFIDENTIAL INFORMATION" does not include information
that (a) as documented in writing, was in such party's possession prior to the
date hereof; PROVIDED, that such information is not subject to another
confidentiality agreement with or other obligation of secrecy to any person,
(b) is or becomes generally available to the public other than as a result of a
disclosure, directly or indirectly, by such party or such party's
Representatives, or (c) is or becomes available to such party on a
non-confidential basis from a source other than any of the parties hereto or any
of their respective Representatives; PROVIDED, that such source is not known by
such party after reasonable inquiry to be bound by a confidentiality agreement
with or other obligation of secrecy to any person; PROVIDED, FURTHER, however,
that that nothing herein shall prevent any party hereto from disclosing
Confidential Information (i) upon the order of any court or administrative
agency, (ii) upon the request or demand of any regulatory agency or authority
having jurisdiction over such party, (iii) to the extent required by Law,
(iv) to the extent necessary in connection with the exercise of any remedy
hereunder, and (v) to such party's Representatives that need to know such
information (it being understood and agreed that, in the case of clause (i),
(ii) or (iii), such disclosing party shall notify the other parties hereto of
the proposed disclosure as far in advance of such disclosure as practicable and
use reasonable efforts to obtain a protective order and to ensure that any
information so disclosed is accorded confidential treatment, when and if
available).
4.11 INTERPRETATION. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Whenever the words "include", "includes" or
"including" are used in this Agreement, they shall be deemed to be followed by
the words "without limitation". The words "hereof", "herein", "hereby" and
"hereunder" and words of similar import when used in this Agreement shall refer
to this Agreement as a whole and not to any particular provision of this
Agreement.
4.12 PR COORDINATION. Each party hereto shall coordinate in good faith
any and all press releases and other public relations matters with respect to
the Merger, the Merger Agreement and the transactions contemplated hereby and
thereby. Unless otherwise required by Law or the rules of any stock exchange or
regulatory authority, no party hereto may issue any
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press release or otherwise make any public announcement or comment on the
Merger, the Merger Agreement and the transactions contemplated hereby and
thereby without prior consent of Xxxxxx.
4.13 NON-CIRCUMVENTION. Each party hereto agrees that it shall not
indirectly accomplish or attempt to accomplish that which it is not permitted to
accomplish directly under this Agreement.
4.14 GENERAL. Nothing in this Agreement shall be deemed to constitute a
partnership between any of the parties, nor constitute any party the agent of
any other party for any purpose.
[Signature pages follow.]
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IN WITNESS WHEREOF, each of the undersigned has duly executed this
Agreement (or caused this Agreement to be executed on its behalf by its officer
or representative thereunto duly authorized) as of the date first above written.
XXXXXX GROUP ACQUISITIONS, LLC
By: The Xxxxxx Group LLC,
its member
By: /s/ Xxxx X. Xxxxxx
--------------------------------------------
Name: Xxxx X. Xxxxxx
Title: Managing Member
SENECA CAPITAL INVESTMENTS LLC
By: /s/ Xxxxx Xxxxx
--------------------------------------------
Name: Xxxxx Xxxxx
Title: Chief Operating Officer
AQUAMARINE MASTER FUND, L.P.
By: Aquamarine GP Ltd.,
its general partner
By: /s/ Xxx Xxxxx
---------------------------------------
Name: Xxx Xxxxx
Title: Managing Member
BURLINGAME ASSET MANAGEMENT, LLC,
for itself and on behalf of its funds and managed
accounts
By: /s/ Xxxxx X. Xxxxxxx
--------------------------------------------
Name: Xxxxx X. Xxxxxxx
Title: Managing Member
BOXING 2000 LLC
By: /s/ Xxx Xxxxx
--------------------------------------------
Name: Xxx Xxxxx
Title: Member
MIDDLEGATE SECURITIES LTD.
By: /s/
--------------------------------------------
Name:
Title:
CRYSTAL CAPITAL FUND MANAGEMENT, LLC
By: /s/ Xxxxxxx X. Xxxxxxxxx
--------------------------------------------
Name: Xxxxxxx X. Xxxxxxxxx
Title: Managing Director
THE XXXXXX GROUP LLC
By: /s/ Xxxx X. Xxxxxx
--------------------------------------------
Name: Xxxx X. Xxxxxx
Title: Managing Member
