Exhibit 10.17
TRAVELSMITH OUTFITTERS, INC.
0000 XXXXXX XXXXXXXXX
XXX XXXXXX, XX 00000
__________________________________
COMMON STOCK PURCHASE AGREEMENT
June 30, 1996
__________________________________
TABLE OF CONTENTS
Page
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SECTION 1 - Authorization and Sale of Common Shares by the Company........... 1
1.1 Authorization of Common Shares............................. 1
1.2 Sale of Common Stock....................................... 1
1.3 Partial Payment of the Purchase Price...................... 1
SECTION 2 - Closing Date; Delivery........................................... 1
2.1 Closing Date............................................... 1
2.2 Delivery................................................... 2
SECTION 3 - Representations and Warranties of the Company.................... 2
3.1 Corporate Power............................................ 2
3.2 Authorization.............................................. 2
3.3 No Conflicts............................................... 2
3.4 Governmental Consents, etc................................. 3
3.5 Offering................................................... 3
3.6 Brokers or Finders......................................... 3
SECTION 4 - Representations, Warranties and Covenants of the Purchaser....... 3
4.1 Accredited Investor........................................ 3
4.2 Institutional Buyer........................................ 3
4.3 Experience; Risk........................................... 3
4.4 Investment................................................. 3
4.5 Restricted Securities; Rule 144............................ 4
4.6 No Public Market........................................... 4
4.7 Access to Data............................................. 4
4.8 Authorization.............................................. 4
4.9 Government Consents........................................ 4
4.10 Further Limitations on Disposition......................... 5
SECTION 5 - Conditions to Closing of Purchaser............................... 5
5.1 Representations and Warranties Correct..................... 5
5.2 Covenants.................................................. 5
5.3 Compliance Certificate..................................... 5
5.4 BlueSky.................................................... 5
5.5 Stockholder Rights Agreement............................... 5
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TABLE OF CONTENTS
(continued)
Page
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5.6 Xxxxx X. Xxxxxxxxx Stock Purchase Agreement................ 5
5.7 Xxxx Xxxxxxx Stock Purchase Agreement...................... 5
5.8 Employment Agreements...................................... 5
5.9 Board of Directors......................................... 6
5.10 Conversion of Convertible Notes............................ 6
5.11 Amended Articles of Incorporation.......................... 6
5.12 Amended Bylaws............................................. 6
SECTION 6 - Conditions to Closing of the Company....................... 6
6.1 Representations............................................. 6
6.2 Covenants................................................... 6
6.3 BlueSky..................................................... 6
6.4 Stockholder Rights Agreement................................ 6
6.6 Xxxxx X. Xxxxxxxxx Stock Purchase Agreement................. 6
6.7 Xxxx Xxxxxxx Stock Purchase Agreement....................... 7
6.8 Board of Directors.......................................... 7
6.9 Conversion of Convertible Notes............................. 7
6.10 Amended Articles of Incorporation........................... 7
SECTION 7 - Affirmative Covenants of the Company........................ 7
7.1 Financial Information....................................... 7
7.2 Inspection.................................................. 8
7.3 Confidentiality of Information.............................. 8
7.4 Termination of Covenants.................................... 8
7.5 Assignability............................................... 8
7.6 Sale of Additional Shares of Common Stock................... 8
7.7 Future Business Relationship................................ 10
7.8 Failure by Purchaser to Purchase Shares..................... 12
7.9 Use of Services of Banker and/or Independent Appraiser...... 12
7.10 Cinmar Agreement............................................ 12
7.11 Purchaser Obligations under Employment Agreements........... 13
SECTION 8 - Miscellaneous............................................... 13
8.1 Governing Law............................................... 13
8.2 Survival.................................................... 13
8.3 Entire Agreement; Amendment................................. 13
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TABLE OF CONTENTS
(continued)
Page
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8.4 Successors and Assigns....................................... 13
8.5 Notices, etc................................................. 13
8.6 Delays or Omissions.......................................... 14
8.7 Expenses..................................................... 14
8.8 Severability................................................. 14
8.9 Counterparts................................................. 14
8.10 Specific Performance......................................... 15
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Exhibits
A - Form of Promissory Note
B - Stockholder Rights' Agreement
C - Form of Employment Agreement
D - Form of Xxxxxxxxx Stock Purchase Agreement
E - Form of Xxxxxxx Stock Purchase Agreement
F - Form of Amended Articles of Incorporation
G - Form of Amended Bylaws
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TRAVELSMITH OUTFITTERS, INC.
COMMON STOCK PURCHASE AGREEMENT
This Agreement is made as of June 30, 1996, among TravelSmith Outfitters,
Inc. a California corporation (the "Company"), Xxxxxxx X. Xxxxxxxxx
("Xxxxxxxxx") and Xxxxx Xxxxx ("Xxxxx" and together with Xxxxxxxxx, the
"Management") and The International Cornerstone Group, Inc., a Delaware
corporation (the "Purchaser").
SECTION 1
Authorization and Sale of Common Shares by the Company
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1.1 Authorization of Common Shares. The Company has authorized the sale
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and issuance of Seventeen Thousand Three Hundred Ninety (17,390) shares (the
"Shares") of its Common Stock (the Common Stock"), having the rights,
preferences, privileges and restrictions set forth in the Company's Amended and
Restated Articles of Incorporation (the "Restated Articles").
1.2 Sale of Common Stock. Subject to the terms and conditions hereof, the
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Company will issue and sell to the Purchaser, and the Purchaser agrees to
purchase from the Company, at a purchase price of $14 per share, the Shares.
1.3 Partial Payment of the Purchase Price. Notwithstanding anything
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contained herein to the contrary, at the Closing (as hereinafter defined)
payment of the purchase price by the Purchaser shall be made (i) by delivery of
50% of the purchase price in cash and (ii) by delivery of a promissory note (the
"Note") in the aggregate principal amount of the remaining 50% of the purchase
price, with the terms and conditions as set forth in and substantially in the
form of Exhibit A hereto.
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SECTION 2
Closing Date: Delivery
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2.1 Closing Date. The closing of the purchase and sale of the Shares
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hereunder (the "Closing") shall be held at the offices of Wilson, Sonsini,
Xxxxxxxx & Xxxxxx, 000 Xxxx Xxxx Xxxx, Xxxx Xxxx, Xxxxxxxxxx 00000, at 10:00
a.m. on July 17, 1996, or at such other time and place upon which the Company
and the Purchaser shall agree (the date of the Closing is hereinafter referred
to as the "Closing Date").
2.2 Delivery. At the Closing, the Company will deliver to the Purchaser a
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certificate or certificates representing the Shares against payment of the
purchase price therefor, by check payable to the Company in the amount of 50% of
the purchase price therefor and by delivery of the Note.
SECTION 3
Representations and Warranties of the Company
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The Company hereby represents and warrants to the Purchasers as follows:
3.1 Corporate Power. The Company will have prior to the Closing Date all
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requisite legal and corporate power to execute and deliver this Agreement, the
Stockholder Rights Agreement substantially in the form attached hereto as
Exhibit B (the "Stockholder Rights Agreement") and the Employment Agreements, to
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be entered into with each of Xxxxxxxxx and Xxxxx, substantially in the form
attached hereto as Exhibit C (the "Employment Agreements"), to sell and issue
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the Shares hereunder and to carry out and perform its obligations under the
terms of this Agreement, the Stockholder Rights Agreement and the Employment
Agreements and the transactions contemplated hereby and thereby. The Company is
a corporation duly organized and validly existing under, and by virtue of, the
laws of the State of California and is in good standing under such laws.
3.2 Authorization. All corporate action on the part of the Company, its
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officers, directors and shareholders necessary for the authorization, execution,
delivery and performance of this Agreement, the Stockholder Rights Agreement and
the Employment Agreements by the Company, the authorization, sale, issuance and
delivery of the Shares and the performance of the Company's obligations
hereunder and thereunder has been taken or will be taken prior to the Closing.
This Agreement, the Stockholder Rights Agreement and the Employment Agreements,
when executed and delivered by the Company, shall constitute the valid and
binding obligations of the Company, enforceable against the Company in
accordance with their respective terms, subject to laws of general application
relating to bankruptcy, insolvency and the relief of debtors and rules of law
governing specific performance, injunctive relief or other equitable remedies.
The Shares are duly authorized and, when issued, sold and delivered in
compliance with the provisions of this Agreement, will be duly and validly
issued and will be fully paid and nonassessable and free and clear of all liens
and encumbrances, provided, however, that the Shares may be subject to
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restrictions on transfer under state and/or federal securities laws as set forth
herein. All preemptive rights and rights of first refusal relating to the
issuance of the Shares have been waived.
3.3 No Conflicts. The execution, delivery and performance of and
------------
compliance with this Agreement, the Stockholder Rights Agreement and the
Employment Agreements and the issuance of the Shares, have not resulted and will
not result in any violation of, or conflict with, or constitute a default under
its Articles of Incorporation or Bylaws, or in any material respect, any
mortgage, indenture, contract, agreement, instrument, judgment or decree, and to
its knowledge, any order, statute, rule or regulation applicable to the Company,
or result in the creation of any mortgage, pledge, lien, encumbrance or charge
upon any of the properties or assets of the Company.
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3.4 Governmental Consents, etc. No consent, approval, order or
--------------------------
authorization of or designation, declaration or filing with any state or federal
governmental authority on the part of the Company is required in connection with
the valid execution and delivery of this Agreement, the Stockholder Rights
Agreement or the Employment Agreements, or the offer, sale or issuance of the
Shares, or the consummation of any other transaction contemplated hereby, except
qualification (or taking such action as may be necessary to secure an exemption
from qualification, if available) under the California Corporate Securities Law
and other applicable Blue Sky laws, of the offer and sale of the Shares, which
filing and qualification, if required, will be accomplished in a timely manner
prior to or promptly upon completion of the Closing.
3.5 Offering. Subject to the accuracy of the Purchaser's representations
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in Section 4 hereof, the offer, sale and issuance of the Shares to be issued in
conformity with the terms of this Agreement constitute transactions exempt from
the registration requirements of Section 5 of the Securities Act of 1933, as
amended (the "Securities Act").
3.6 Brokers or Finders. The Company has not incurred, and will not incur,
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directly or indirectly, any liability for brokerage or finders' fees or agents'
commissions or any similar charges in connection with this Agreement or any
transaction contemplated hereby.
SECTION 4
Representations, Warranties and Covenants of the Purchaser
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The Purchaser hereby represents, warrants and covenants to the Company with
respect to the purchase of the Shares as follows:
4.1 Accredited Investor. The Purchaser qualifies as an "accredited
-------------------
investor" as such term is defined in the Securities Act.
4.2 Institutional Buyer. The Purchaser qualifies as an "institutional
-------------------
buyer" as such term is defined in the Massachusetts Uniform Securities Act.
4.3 Experience; Risk. The Purchaser has such knowledge and experience in
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financial and business matters that such Purchaser is capable of evaluating the
merits and risks of the purchase of the Shares pursuant to the Agreement and of
protecting the Purchaser's interests in connection therewith. The Purchaser is
able to fend for itself in the transactions contemplated by this Agreement and
has the ability to bear the economic risk of the investment, including complete
loss of the investment. The Purchaser is experienced in evaluating and investing
in companies such as the Company.
4.4 Investment. The Purchaser is acquiring the Shares for investment for
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its own account, not as a nominee or agent, and not with a view to, or for
resale in connection with, any distribution thereof, and the Purchaser has no
present intention of selling, granting any participation in, or
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otherwise distributing the same. The Purchaser understands that the Shares to be
purchased have not been registered under the Securities Act by reason of a
specific exemption from the registration provisions of the Securities Act which
depends upon, among other things, the bona fide nature of the investment intent
and the accuracy of such Purchaser's representations as expressed herein.
4.5 Restricted Securities: Rule 144. The Purchaser understands that the
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Shares, will be "restricted securities" under the federal securities laws
inasmuch as they are being acquired from the Company in a transaction not
involving a public offering and that under such laws and applicable regulations
the Shares may be resold without registration under the Securities Act only in
certain limited circumstances. The Purchaser acknowledges that the Shares must
be held indefinitely unless subsequently registered under the Securities Act or
an exemption from such registration is available. The Purchaser is aware of the
provisions of Rule 144 promulgated under the Securities Act which permit
limited resale of shares purchased in a private placement subject to the
satisfaction of certain conditions, including, among other things, the
existence of a public market for the shares, the availability of certain
current public information about the Company, the resale occurring not less
than two years after a party has purchased and paid for the security to be
sold, the sale being effected through a "broker's transaction" or in
transactions directly with a "market maker" (as provided by, Rule 144(f)) and
the number of shares being sold during any three-month period not exceeding
specified limitations.
4.6 No Public Market. The Purchaser understands that no public market now
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exists for any of the securities issued by the Company and that there is no
assurance that a public market will ever exist for the Shares.
4.7 Access to Data. The Purchaser has had an opportunity to discuss the
--------------
Company's business, management and financial affairs with the Company's
management and the opportunity to review the Company's facilities and has
received all information requested from the Company regarding the investment in
the Company.
4.8 Authorization. The Purchaser represents that it has the full right,
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power and authority to enter into and perform the Purchaser's obligations under
this Agreement, the Stockholder Rights Agreement and the Employment Agreements,
and this Agreement, the Stockholder Rights Agreement and the Employment
Agreements when executed and delivered by the Purchaser will constitute valid
and binding obligations of the Purchaser, enforceable in accordance with their
respective terms, subject to the laws of general application relating to
bankruptcy, insolvency and the relief of debtors, rules of law governing
specific performance, injunctive relief or other equitable remedies.
4.9 Government Consents. No consent, approval or authorization of or
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designation, declaration or filing with any state, federal, or foreign
governmental authority on the part of the Purchaser is required in connection
with the valid execution and delivery of this Agreement, the Stockholder Rights
Agreement and the Employment Agreements by the Purchaser, and the consummation
by the Purchaser of the transactions contemplated hereby.
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4.10 Further Limitations on Disposition. Without in any way limiting the
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representations set forth above, the Purchaser further agrees not to make any
disposition of all or any portion of the Shares except in compliance with
Section 8 of the Stockholder Rights Agreement.
SECTION 5
Conditions to Closing of Purchaser
----------------------------------
The Purchaser's obligation to purchase the Shares at the Closing is, at the
option of the Purchasers, subject to the fulfillment on or prior to the Closing
Date of the following conditions:
5.1 Representations and Warranties Correct. The representations and
--------------------------------------
warranties made by the Company in Section 3 hereof shall be true and correct
when made, and shall be true and correct on the Closing Date with the same force
and effect as if they had been made on and as of said date.
5.2 Covenants. All covenants, agreements and conditions contained in this
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Agreement to be performed by the Company on or prior to the Closing Date shall
have been performed or complied with in all material respects.
5.3 Compliance Certificate. The Company shall have delivered to the
----------------------
Purchasers a certificate executed by the President of the Company, dated the
Closing Date and certifying to the fulfillment of the conditions specified in
Sections 5.1, 5.2, 5.4, 5.9, 5.11 and 5.12 of this Agreement.
5.4 Blue Sky. The Company shall have obtained all necessary Blue Sky law
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permits and qualifications, or secured an exemption therefrom, required by any
state for the offer and sale of the Shares.
5.5 Stockholder Rights Agreement. The Company and each other holder of the
----------------------------
Company's capital stock shall have executed and delivered the Stockholder Rights
Agreement.
5.6 Xxxxx X. Xxxxxxxxx Stock Purchase Agreement. Xxxxx X. Xxxxxxxxx shall
-------------------------------------------
have executed and delivered to the Purchaser the Stock Purchase Agreement
substantially in the form attached hereto as Exhibit D (the "Xxxxxxxxx Stock
---------
Purchase Agreement").
5.7 Xxxx Xxxxxxx Stock Purchase Agreement. Xxxx Xxxxxxx shall have
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executed and delivered to the Purchaser the Stock Purchase Agreement
substantially in the form attached hereto as Exhibit E (the "Xxxxxxx Stock
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Purchase Agreement").
5.8 Employment Agreements. The Company and each of Xxxxxxxxx and Xxxxx
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shall have executed and delivered the Employment Agreement.
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5.9 Board of Directors. Effective as of the Closing Date, the Company's
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Board of Directors shall include Xxxxxxx X. Xxxxxxxxx, Xxxxx Xxxxx, Xxxxx X.
Xxxxxxxxx, Xxxxxx X. Xxxxxxx, Xxxxxxx End, and Xxxxx Xxxxxxxxxx.
5.10 Conversion of Convertible Notes. Each of Xxxxxxxxx and Xxxxx shall
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have exercised his respective right to convert his respective Subordinated
Convertible Note, dated February 7, 1996 ("Convertible Note"), into Common
Stock pursuant to Section 4 of such Convertible Note.
5.11 Amended Articles of Incorporation. The Amended Articles of
---------------------------------
Incorporation substantially in the form of Exhibit F ("Amended Articles") shall
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have been filed with the Secretary of State of California.
5.12 Amended Bylaws. The Bylaws substantially in the form of Exhibit G
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shall have been approved by the Board of Directors of the Company.
SECTION 6
Conditions to Closing of the Company
------------------------------------
The Company's obligation to sell and issue the Company Shares at the
Closing is, at the option of the Company, subject to the fulfillment of the
following conditions:
6.1 Representations. The representations made by the Purchaser in Section
---------------
4 hereof shall be true and correct when made, and shall be true and correct on
the Closing Date with the same force and effect as if they had been made on and
as of said date.
6.2 Covenants. All covenants, agreements and conditions contained in this
---------
Agreement to be performed by the Purchaser on or prior to the Closing Date shall
have been performed or complied with in all material respects.
6.3 Blue Sky. The Company shall have obtained all necessary Blue Sky law
---------
permits and qualifications, or secured an exemption therefrom, required by any
state for the offer and sale of the Shares.
6.4 Stockholder Rights Agreement. The Purchaser shall have executed and
----------------------------
delivered to the Company the Stockholder Rights Agreement.
6.5 Employment Agreements. The Purchaser shall have executed and delivered
---------------------
the Employment Agreement.
6.6 Xxxxx X. Xxxxxxxxx Stock Purchase Agreement. The Purchaser shall have
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executed and delivered to Xxxxx X. Xxxxxxxxx the Xxxxxxxxx Stock Purchase
Agreement.
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6.7 Xxxx Xxxxxxx Stock Purchase Agreement. The Purchaser shall have
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executed and delivered to Xxxx Xxxxxxx the Xxxxxxx Stock Purchase Agreement.
6.8 Board of Directors. Effective as of the Closing Date, the Company's
------------------
Board of Directors shall include Xxxxxxx X. Xxxxxxxxx, Xxxxx Xxxxx, Xxxxx X.
Xxxxxxxxx, Xxxxxx X. Xxxxxxx, Xxxxxxx End, and Xxxxx Xxxxxxxxxx.
6.9 Conversion of Convertible Notes. The Purchaser shall have exercised
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its right to convert its Convertible Note into Common Stock pursuant to Section
4 of such Convertible Note.
6.10 Amended Articles of Incorporation. The Amended Articles shall have
------------------- -------------
been filed with the Secretary of State of California.
SECTION 7
Affirmative Covenants of the Company
------------------------------------
The Company hereby covenants and agrees as follows:
7.1 Financial Information.
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(a) As soon as practicable after the end of each fiscal year, and in
any event within sixty (60) days thereafter, the Company will furnish to
Purchaser consolidated balance sheets of the Company and its subsidiaries, if
any, as of the end of such fiscal year and consolidated statements of income and
cash flows for the Company and its subsidiaries, if any, for such year, prepared
in accordance with generally accepted accounting principles with a written
explanation of any changes in the application of such principles and setting
forth in each case in comparative form the figures for the previous fiscal year,
all in reasonable detail. In addition, the Company agrees to cause such annual
financial statements to be audited by independent public accountants engaged by
the Company and to deliver such audited financial statements, together with the
auditor's report thereon, to the Purchaser within ninety (90) days after the
Company's fiscal year end.
(b) As soon as practicable after the end of each calendar month and
fiscal quarter, and in any event within thirty (30) days and forty-five (45)
days, respectively, thereafter, the Company will furnish to Purchaser its
consolidated balance sheets as of the end of such period and its consolidated
statements of income and cash flows for the period then ended and for the
current fiscal year to date, together with comparisons of such statements to the
Company's operating results in the prior year period and to the Company's
operating plan then in effect. Such monthly and quarterly financial statements
shall be prepared in accordance with generally accepted accounting principles
applied on a consistent basis, except as noted and except for normal recurring
year-end adjustments and for the absence of footnotes.
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(c) As soon as practicable after its adoption by the Board of
Directors, the Company shall furnish to the Purchaser an annual budget. Such
budget shall include, among other things, revenues and profit or loss
projections, cash flow from operations, capital requirements and operating
expense budgets, manpower projections and projected balance sheets for each
month of such year and for the end of such year.
7.2 Inspection. The Company shall permit the Purchaser to visit and
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inspect the Company's properties, to examine its books of account and records
and to discuss the Company's affairs, finances and accounts with the Company and
its officers and, in the presence of representatives of the Company, its
accountants, all at such reasonable times as may be reasonably requested by
Purchaser.
7.3 Confidentiality of Information. The Purchaser agrees that any
------------------------------
information obtained by Purchaser pursuant to Sections 7.1 and 7.2 is
proprietary to the Company or confidential and will not be disclosed without the
prior written consent of the Company or used for any purpose other than in
Purchaser's capacity as a shareholder of the Company. The Purchaser further
acknowledges and understands that any information so obtained which may be
considered "inside" non-public information will not be utilized by such
Purchaser in connection with purchases or sales of the Company's securities
except in compliance with applicable state and federal anti-fraud statutes.
7.4 Termination of Covenants. The covenants of the Company in Sections
------------------------
7.1, 7.2 and 7.3 shall terminate and be of no further force or effect at such
time as the Company is required to file reports with the Securities and Exchange
Commission pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934, as amended.
7.5 Assignability. The rights granted pursuant to Sections 7.1 and 7.2 may
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not be assigned by the Purchaser except to (a) an entity controlling, controlled
by or under common control with Purchaser or (b) to a purchaser or transferee
from Purchaser which acquires at least 15,000 shares of Common Stock or Series A
Preferred Stock of the Company (appropriately adjusted for any stock split,
reverse stock split, stock dividend or similar recapitalization occurring after
the date hereof), provided that written notice of any such sale or transfer is
given to the Company.
7.6 Sale of Additional Shares of Common Stock. (a) The Company shall, by
-----------------------------------------
written notice to the Purchaser, sell to the Purchaser and the Purchaser shall
purchase up to an additional number of shares of Common Stock ("Additional
Shares") equal to the quotient of (i) an amount determined by the Board of
Directors, in its sole discretion, which amount shall not be less than $1
million and not more than $2 million, divided by (ii) the Fair Market Value (as
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defined below), and the Purchaser shall purchase from the Company such
Additional Shares provided that it receives notice in accordance herewith and
subject to the conditions set forth in Section 7.6(c). Such sale and purchase
shall occur not sooner than January 1, 1997 and not later than December 31,
1997. Notice to the Purchaser of its intent to sell the Additional Shares shall
be given at least thirty (30) days prior to the proposed sale. The closing of
the purchase and sale of the Additional Shares ("Additional Shares Closing")
shall be held at such place, time and date as shall be specified in the
Company's notice. At such closing, (i) the Company shall deliver to the
Purchaser (A) a certificate or certificates
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representing the Additional Shares and (B) a certificate executed by a Co-
President of the Company, dated the date of the Additional Shares Closing,
containing the representations and warranties set forth in Section 3 (with such
adjustments as are appropriate to reflect the fact that such representations and
warranties relate to the Additional Shares Closing rather than the Closing) and
(ii) the Purchaser shall deliver to the Company (A) a check payable to the
Company in the amount of the purchase price for the Additional Shares and (B) a
certificate executed by an officer of the Purchaser, dated the date of the
Additional Shares Closing, containing the representations and warranties set
forth in Section 4 (with such adjustments as are appropriate to reflect the fact
that such representations and warranties relate to the Additional Shares Closing
rather than the Closing).
(b) Fair Market Value. The per share Fair Market Value shall be a
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value determined by and agreed upon by a Super-Majority (as such term is defined
in the Stockholder Rights Agreement) of the Board of Directors. If a Super-
Majority of the Board of Directors cannot agree upon a value within seven days
after the receipt of the notice pursuant to Section 7.6(a) or 7.7(c), the
Management and the Purchaser shall jointly retain, within thirty days from the
end of such seven day period, an independent broker, dealer or investment banker
who shall be acceptable, in the exercise of its sole discretion, to each of the
Management and the Purchaser (an "Independent Appraiser") for the purpose of
determining the per share fair market value ("Fair Market Value") of the
outstanding shares of capital stock of the Company. The Independent Appraiser
shall determine a per share value based on the sale of the Company in its
entirety or the registration of substantially all of the shares of the Company.
The Independent Appraiser shall (i) consider the valuations of comparable
privately or publicly held companies and (ii) consider the valuation of the
Company in both a private sale scenario and an IPO scenario and shall assign to
each such scenario relative weights based on its sole opinion of the suitability
of an IPO for the Company (including the possibility that the Company is not
suitable for an IPO) and the suitability of a private sale of the Company.
Notwithstanding the foregoing, the Independent Appraiser shall base the Fair
Market Value determination on its determination of the most appropriate
methodology for valuing the Company. Upon its determination of Fair Market
Value, the Independent Appraiser shall prepare and deliver to each of the
Management and the Purchaser a report (the "Appraisal Report") stating its
determination of the Fair Market Value and setting forth in reasonable detail
the method by which the same was determined. As a condition to its selection,
the Independent Appraiser shall submit the Appraisal Report within 30 business
days after its appointment.
Unless within five days after receipt of the Appraisal Report, the
Management or the Purchaser (any such person being hereinafter referred to as
the "Objecting Party" and the non-objecting party being hereinafter referred to
as the "Non-Objecting Party") delivers a written notice to the Company stating
that it objects to the Fair Market Value set forth in such Appraisal Report
(such notice being hereinafter referred to as the "Objection Notice"), the Fair
Market Value set forth therein shall be final and binding on all parties. The
Objection Notice shall set forth in reasonable detail the reasons for the
Objecting Party's objections. If the Objecting Party and the Non-Objecting Party
do not agree on the determination of the Fair Market Value within five days
after receipt of an Objection Notice, the Objecting Party and the Non-Objecting
Party shall select another Independent Appraiser to review the determination of
Fair Market Value and to determine such amount independently in accordance with
the provisions of this Section 7.6(b). Such Independent Appraiser's
determination of
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Fair Market Value shall be final and binding on all parties. The fees and
expenses of the second Independent Appraiser shall be borne by the Objecting
Party.
For purposes of the Fair Market Value determination for purposes of Section
7.6(a), an Independent Appraiser shall exclude any effects of the purchase of
the Additional Shares by the Purchaser. For all Fair Market Value
determinations, an Independent Appraiser shall assume the total number of
outstanding shares of capital stock of the Company to be the number actually
outstanding plus shares issuable with respect to any outstanding options or
other securities convertible into or exercisable for capital stock of the
Company.
(c) Notwithstanding any provision of Section 7.6(a) to the contrary,
the Purchaser shall not have any obligation to purchase the Additional Shares
if, on the closing date scheduled therefor, the sale and purchase of the
Additional Shares shall have resulted or will result in a violation of, or
conflict with any order, statute, rule or regulation applicable to the Company.
7.7 Future Business Relationship. (a) Subsequent to the Closing, the
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Management and the Purchaser will discuss, in good faith, any proposals by the
Purchaser to reach a mutually acceptable arrangement enabling the Purchaser to
acquire 80% of the Company's capital stock on or prior to February 1, 2000.
Notwithstanding the foregoing, each party shall have sole discretion in
determining whether to consummate any proposed arrangement. At no time will the
Purchaser have an obligation to sell any of its voting securities of the Company
to any person unless the Purchaser shall have failed to fulfill its contractual
obligation to purchase the Additional Shares pursuant to Section 7.6(a) above or
the Management's shares of capital stock pursuant to Section 7.7(c) below, in
which case Section 7.8 shall apply.
(b) If the Company and the Purchaser fail to reach an arrangement
enabling the Purchaser to acquire 80% of the Company's capital stock by February
1, 2000, the Board of Directors shall seek alternatives for achieving liquidity
at the highest possible value for the shareholders of the Company ("Liquidity
Process"). At the option of the Board of Directors, such alternatives may
include the engagement of an independent broker, agent or investment banker who
shall be acceptable, in the exercise of its sole discretion, to each of the
Management and the Purchaser (the "Banker") to pursue (i) a private sale of the
Company by merger, consolidation, or sale of all or substantially all of the
assets of the Company, or by any other means to an independent third party or
(ii) an underwritten public offering of capital stock of the Company pursuant to
an effective registration statement under the Securities Act of 1933 for the
account of the Company ("IPO"). Such Banker shall evaluate any such alternatives
against any existing or newly proposed offer from the Purchaser. Such sale or
IPO must be acceptable to each of the Management and the Purchaser. Neither the
Management nor the Purchaser shall be obligated to sell any of its shares of
capital stock of the Company as a result of such Process.
(c) (i) Each of Xxxxxxxxx, Xxxxx and Xxxxxx Xxxxx Xxxxxxxxx may,
by written notice (the "Put Notice") to the Purchaser at least sixty (60) days
prior to the proposed sale, require the Purchaser to purchase any or all of the
capital stock of the Company held by him at a purchase price equal to Fair
Market Value (the "Put Right"), and the Purchaser agrees to purchase from him
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such shares provided that it receives a Put Notice in accordance herewith. Such
sale and purchase shall occur not sooner than February 1, 2000 and not later
than February 1, 2003 (the "Put Period"), provided, however, that if the
Purchaser fails to purchase such shares in accordance with this Section
7.7(c)(i), the Purchaser's obligation to purchase such shares shall continue
indefinitely beyond February 1, 2003. If each of Xxxxxxxxx, Xxxxx and/or Xxxxxx
Xxxxx Xxxxxxxxx gives a Put Notice to the Purchaser, the closing (a "Put
Closing") of the purchase and sale of such shares shall be held at such place,
time and date as shall be specified in each of Xxxxxxxxx'x, Xxxxx'x and/or
Xxxxxx Xxxxx Xxxxxxxxx'x Put Notice.
(ii) At a Put Closing, if it so elects by written notice to
Xxxxxxxxx, Xxxxx and/or Xxxxxx Xxxxx Xxxxxxxxx, as the case may be, the
Purchaser may pay (A) up to 25% of the purchase price for such shares in the
form of common stock of the Purchaser ("Purchaser Stock"), provided, that (I)
the Purchaser Stock is then listed on a national securities exchange or the
Nasdaq National Market (for purposes of determining the number of shares to be
issued in payment of such portion of the purchase price, the value of Purchaser
Stock shall equal the average of the closing sale price thereon over the 20
trading days immediately preceding the closing of such purchase and sale) and
(II) Slaughter, Sklar, and/or Xxxxxx Xxxxx Xxxxxxxxx, as the case may be, are
not prevented under any federal securities laws, California Corporate Securities
Law or any other applicable Blue Sky laws from freely offering, selling,
exchanging, transferring or otherwise disposing of any Purchaser Stock and (B)
up to 50% of the purchase price in the form of a full recourse promissory note,
the principal of such shall bear interest at an annual rate equal to the "prime"
rate of interest offered by The First National Bank of Boston as of the date of
such Put Closing plus 2% and be payable one year from the date of such Put
Closing and which shall provide, among other things, that (i) no pre-payment
penalty shall be imposed, (ii) the Purchaser shall be required to use its best
efforts to pre-pay the principal in full as soon as the Purchaser has adequate
resources to do so, and (iii) 50% of such shares shall be pledged as security
for such promissory note. Any portion of the purchase price not paid in the form
of Purchaser Stock or promissory note shall be paid in cash at such Put Closing.
(iii) At a Put Closing, (I) each of Xxxxxxxxx, Xxxxx and/or
Xxxxxx Xxxxx Xxxxxxxxx shall deliver to the Purchaser (A) a certificate or
certificates representing the shares to be sold by him and (B) a certificate,
dated the date of such Put Closing, containing the representations and
warranties set forth in Section 1 of the Xxxxxxx Stock Purchase Agreement and
(II) the Purchaser shall deliver to each of Xxxxxxxxx, Xxxxx and/or Xxxxxx Xxxxx
Xxxxxxxxx, (A) a check payable to him, a promissory note and/or Purchaser Stock
in accordance with Section 7.7.(c)(ii) in an aggregate amount equal to the
purchase price for such shares, and (B) a certificate executed by an officer of
the Purchaser, dated the date of such Put Closing, containing the
representations and warranties set forth in Section 2 of the Xxxxxxx Stock
Purchase Agreement.
(iv) If Xxxxxxxxx, Xxxxx and/or Xxxxxx Xxxxx Xxxxxxxxx elects
to exercise his Put Right as to only a portion of his shares, Slaughter, Sklar,
and/or Xxxxxx Xxxxx Xxxxxxxxx, as the case may be, may not elect to exercise his
Put Right as to the rest of such shares at any time.
(v) From and after the date Purchaser Stock is listed on a
national securities exchange or the Nasdaq National Market, any person other
than Xxxxxxxxx, Xxxxx and/or
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Xxxxxx Xxxxx Xxxxxxxxx holding shares of the capital stock the Company
("Minority Holders"), may require the Purchaser to purchase any or all of the
----------------
capital stock of the Company held by such Minority Holder at a purchase price
equal to fair market value as determined by a majority of the Board of
Directors, and the Purchaser agrees to purchase from such Minority Holder such
shares, provided, that such Minority Holder gives notice to the Purchaser of his
intent to sell such shares at least sixty (60) days prior to the proposed sale.
If any Minority Holder gives such notice to the Purchaser, the closing of the
purchase and sale of such shares shall be held at such place, time and date as
shall be specified in such Minority Holder's notice. At such closing, (I) the
Minority Holder shall deliver to the Purchaser (A) a certificate or certificates
representing the shares to be sold by him and (B) a certificate, dated the date
of the closing, containing the representations and warranties set forth in
Section 1 of the Xxxxxxx Stock Purchase Agreement and (II) the Purchaser shall
deliver to such Minority Holder (A) the number of shares of Purchaser Stock
equal to (a) the number of shares specified in such Minority Holder's notice
multiplied by the fair market value divided by (b) the average of the closing
sale price on a national securities exchange or the Nasdaq National Market, as
the case may be, over the 20 trading days immediately preceding the closing of
such purchase and sale, and (B) a certificate executed by an officer of the
Purchaser, dated the date of the closing, containing the representations and
warranties set forth in Section 2 of the Xxxxxxx Stock Purchase Agreement.
7.8 Failure by Purchaser to Purchase Shares. If the Purchaser fails to
---------------------------------------
fulfill its contractual obligation to purchase any or all of the Additional
Shares pursuant to Section 7.6(a) above or any or all of the shares of capital
stock pursuant to Section 7.7(c) above, (i) the Management, if it so elects by
written notice to the Purchaser, may pursue (A) a private sale of the Company by
merger, consolidation, or sale of all or substantially all of the assets of the
Company, or by any other means to a third party or (B) an IPO and the Purchaser
shall vote all of its shares of capital stock in the Company to approve such a
transaction and shall take any action required to consummate such a transaction
on terms and conditions to be determined solely by the Management and the third
party or underwriter, as the case may be, including the sale of all of the
shares of capital stock of the Company held by the Purchaser and (ii) the
Purchaser shall no longer be entitled to board representation and rights related
thereto pursuant to Section 6.3 of the Stockholder Rights Agreement. The
foregoing remedy shall be in addition to and not in lieu of any and all legal
and equitable remedies of Management and the Company for Purchaser's failure to
fulfill its contractual obligations set forth in Sections 7.6(a) and 7.7(c).
7.9 Use of Services of Banker and/or Independent Appraiser. None of the
------------------------------------------------------
Company, the Management nor the Purchaser shall engage or receive any services
from a Banker or an Independent Appraiser for a period of five years from the
date of conclusion of the Liquidity Process, in the case of Banker, and from the
date of the Appraisal Report, in the case of an Independent Appraiser; provided,
that such Banker or Independent Appraiser may again be selected as a Banker or
Independent Appraiser pursuant to the provisions of this Agreement.
7.10 Cinmar Agreement. The Company shall execute and deliver a Distribution
----------------
Agreement with Cinmar, Inc. within ninety (90) days of the date hereof.
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7.11 Purchaser Obligations under Employment Agreements. The Purchaser
-------------------------------------------------
acknowledges and agrees to fulfill its obligations under Section 10(a)(i) and
10(d)(ii) of each of the Employment Agreements.
SECTION 8
Miscellaneous
-------------
8.1 Governing Law. This Agreement shall be governed in all respects by the
-------------
laws of the State of California as applied to contracts made and to be fully
performed entirely within that state between residents of that state. All
disputes arising out of this Agreement shall be subject to the exclusive
jurisdiction and venue of the California state courts of Santa Xxxxx County,
California, (or, if there is exclusive federal jurisdiction, the United States
District Court for the Northern District of California) and the parties consent
to the personal and exclusive jurisdiction and venue of these courts.
8.2 Survival. The representations, warranties, covenants and agreements
--------
made herein shall survive any investigation made by the Purchaser and the
closing of the transactions contemplated hereby.
8.3 Entire Agreement; Amendment. This Agreement and the other documents
---------------------------
delivered pursuant hereto constitute the full and entire understanding and
agreement between the parties with regard to the subjects hereof and thereof
Neither this Agreement nor any term hereof may be amended, waived, discharged or
terminated other than by a written instrument signed by the parties hereto.
8.4 Successors and Assigns. Except as otherwise provided herein, the
----------------------
provisions hereof shall inure to the benefit of, and be binding upon, the
successors, assigns, heirs, executors and administrators of the parties hereto,
provided, however, that the rights of the Purchasers to purchase the Shares and
the Additional Shares shall not be assignable without the consent of the
Company.
8.5 Notices, etc. All notices and other communications required or
------------
permitted hereunder shall be in writing and shall be mailed by registered or
certified mail, postage prepaid, or otherwise delivered by hand or by messenger,
addressed (a) if to the Purchaser, at the address set forth on the signature
page hereto and with a copy to Xxxx and Xxxx, 00 Xxxxx Xxxxxx, Xxxxxx,
Xxxxxxxxxxxxx 00000, Attention: Xxxxxxx X. Xxxxxxx, Esq., or at such other
address as shall have furnished to the Company upon not less than 10 days notice
in writing, or (b) if to the Company, at its address as set forth on the cover
page of this Agreement and addressed to the attention of the President and with
a copy to Wilson, Sonsini, Xxxxxxxx & Xxxxxx, 000 Xxxx Xxxx Xxxx, Xxxx Xxxx,
Xxxxxxxxxx 00000, Attention: Xxxx X. Xxxx, Esq. or at such other address as the
Company shall have furnished to the Purchasers upon not less than 10 days notice
in writing.
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8.6 Delays or Omissions. No delay or omission to exercise any right, power
-------------------
or remedy accruing to any party, upon any breach or default of any other party
under this Agreement, shall impair any such right, power or remedy of such party
nor shall it be construed to be a waiver of any such breach or default, or an
acquiescence therein, or of or in any similar breach or default thereafter
occurring; nor shall any waiver of any single breach or default be deemed a
waiver of any other breach or default theretofore or thereafter occurring. Any
waiver, permit, consent or approval of any kind or character on the part of any
party of any breach or default under this Agreement, or any waiver on the part
of any party of any provisions or conditions of this Agreement, must be in
writing and shall be effective only to the extent specifically set forth in such
writing. All remedies, either under this Agreement or by law or otherwise
afforded to any party, shall be cumulative and not alternative.
8.7 Expenses. Each party will pay its own costs and expenses in connection
--------
with the transactions contemplated hereby; provided, that the Company agrees to
reimburse the Purchaser following the Closing for the reasonable fees and
expenses of Purchaser's counsel as well as Purchaser's reasonable out-of-pocket
expenses incurred in performing its due diligence investigation, not to exceed
$10,000 in aggregate.
8.8 Severability. In the event that any provision of this Agreement
------------
becomes or is declared by a court of competent jurisdiction to be illegal,
unenforceable or void, this Agreement shall continue in full force and effect
without said provision; provided that no such severability shall be effective if
it materially changes the economic benefit of this Agreement to any party.
8.9 Third Party Beneficiaries. The Minority Holders shall be considered
-------------------------
third party beneficiaries under this Agreement.
8.10 Counterparts. This Agreement may be executed in any number of
------------
counterparts, each of which shall be enforceable against the parties actually
executing such counterparts, and all of which together shall constitute one
instrument.
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8.10 Specific Performance. The parties hereto agree that irreparable damage
-------------------
would occur in the event any provision of this Agreement was not performed in
accordance with the terms hereof and that the parties shall be entitled to
specific performance of the terms hereof; in addition to any other remedy at law
or in equity.
"COMPANY" TRAVELSMITH OUTFITTERS, INC.
a California corporation
/s/ Xxxxxxx X. Xxxxxxxxx
------------------------------------------
By: Xxxxxxx X. Xxxxxxxxx
Title: Co-President
"PURCHASER" THE INTERNATIONAL CORNERSTONE GROUP
__________________________________________
By:
Title:
Address: 000 Xxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx,XX 02210
"MANAGEMENT"
/s/ Xxxxxxx X. Xxxxxxxxx
------------------------------------------
Xxxxxxx X. Xxxxxxxxx
/s/ Xxxxx Xxxxx
-------------------------------------------
Xxxxx Xxxxx
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8.10 Specific Performance. The parties hereto agree that irreparable damage
--------------------
would occur in the event any provision of this Agreement was not performed in
accordance with the terms hereof and that the parties shall be entitled to
specific performance of the terms hereof; in addition to any other remedy at law
or in equity.
"COMPANY" TRAVELSMITH OUTFITTERS, INC.
a California corporation
__________________________________________
By: Xxxxxxx X. Xxxxxxxxx
Title: Co-President
"PURCHASER" THE INTERNATIONAL CORNERSTONE GROUP
/s/ Xxxxxx X. Xxxxxxx
------------------------------------------
By:
Title:
Address: 000 Xxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, XX 00000
"MANAGEMENT"
__________________________________________
Xxxxxxx X. Xxxxxxxxx
__________________________________________
Xxxxx Xxxxx
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