STOCK EXCHANGE AGREEMENT dated as of
September 25, 1997 among THE WARNACO GROUP,
INC., a Delaware corporation ("Parent"), NEW
RIO, L.L.C., a Delaware limited liability
company (the "Stockholder"), and each of the
members of Stockholder signatory hereto (each a
"Member").
WHEREAS, concurrently herewith, Parent, WAC
Acquisition Corporation, a Delaware corporation and a
wholly owned subsidiary of Parent ("Sub"), and Designer
Holdings Ltd., a Delaware corporation (the "Company"),
are entering into an Agreement and Plan of Merger (as
such agreement may be amended from time to time and
whether or not such agreement has been terminated, the
"Merger Agreement"; capitalized terms used but not
defined herein shall have the meanings set forth in the
Merger Agreement) pursuant to which Sub or, at the
election of Parent, a direct wholly owned subsidiary of
Parent other than Sub will be merged with and into the
Company (the "Merger"), whereby each share of Common
Stock, each having a par value of one cent ($0.01), of
the Company ("Company Common Stock") issued and
outstanding immediately prior to the Effective Time of
the Merger will be converted into the right to receive a
fraction of a share of Class A Common Stock, par value
$0.01 per share, of Parent ("Parent Class A Common
Stock"), other than shares of Company Common Stock owned,
directly or indirectly, by the Company or any subsidiary
of the Company or by Parent, Sub or any other subsidiary
of Parent.
WHEREAS, as a condition to their willingness to
enter into the Merger Agreement, Parent and Sub have
required that the Stockholder and the Members
(collectively, the "Sellers") enter into, and the
Stockholder and the Members have agreed to enter into,
this Agreement pursuant to which, among other things,
regardless of any termination of the Merger Agreement,
Parent and the Sellers have agreed to exchange shares of
Parent Class A Common Stock for all the shares of Company
Common Stock owned by the Sellers on the terms herein set
forth, which in the aggregate constitute a majority of
the outstanding Company Common Stock.
WHEREAS, for Federal income tax purposes, it is
intended that, so long as the Merger occurs, the exchange
of Parent Class A Common Stock for Company Common Stock
pursuant to this Agreement and the Merger pursuant to the
Merger Agreement qualify as a reorganization under the
provisions of Section 368 of the Internal Revenue Code of
1986, as amended.
NOW, THEREFORE, in consideration of the
representations, warranties, covenants and agreements
contained in this Agreement, the parties agree as
follows:
1. Exchange Transaction.
1.1 Exchange. On the terms and subject to the
conditions set forth in this Agreement, the Stockholder
agrees to transfer 16,483,868 shares of Company Common
Stock, all of which are owned by the Stockholder and
which represent all of the shares of Company Common Stock
owned by the Sellers (the "Shares"), to Parent, free and
clear of any mortgage, pledge, lien, security interest,
claim or other encumbrance (each, a "Lien") or
Restriction created by any Member or by the Stockholder
or otherwise binding upon the Shares, and Parent agrees
to issue to the Stockholder, in exchange for the Shares,
shares of Parent Class A Common Stock in accordance with
Section 1.2 below, free and clear of any Lien or
Restriction except as contemplated by this Agreement or
any letter entered into for tax purposes relating to
restrictions on selling Exchange Shares (a "Lock-Up
Letter"). For purposes of this Agreement, "Restriction"
means, when used with respect to any specified security,
any stockholders or other trust agreement, option,
warrant, escrow, proxy, buy-sell agreement, power of
attorney or other contract, agreement or arrangement
which (i) grants to any person the right to sell or
otherwise dispose of or vote such specified security or
any interest therein, or (ii) restricts the transfer of,
or the exercise of any rights or the enjoyment of any
benefits arising by reason of, the ownership of such
specified security.
1.2 Exchange Ratio. For each Share
transferred to Parent pursuant to this Agreement, the
Stockholder shall receive .324 of a fully paid and
nonassessable share of Parent Class A Common Stock (the
"Exchange Ratio"). In the event that the aggregate
number of shares of Parent Class A Common Stock to be
issued to the Stockholder, based on the Exchange Ratio,
would result in the issuance by Parent of a fractional
share of Parent Class A Common Stock, such fractional
share shall be rounded to the nearest whole share. The
total number of shares of Parent Class A Common Stock to
be issued to the Stockholder hereunder are referred to
herein as the "Exchange Shares".
2. Closing. The closing (the "Closing") of
the Exchange shall take place on the second business day
following satisfaction or waiver of the conditions set
forth in Sections 6 and 7, or such other date and time as
the parties shall otherwise agree to. The date of the
Closing is referred to herein as the "Closing Date". The
Closing will take place at 10:00 a.m. on the Closing
Date, at the offices of Xxxxxxx Xxxxxxx & Xxxxxxxx,
000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000. At the
Closing, (i) the Stockholder shall deliver to Parent
certificate(s) representing all of the Shares, duly
endorsed for transfer to Parent, and (ii) Parent shall
deliver to the Stockholder a stock certificate
representing the Exchange Shares.
3. Representations and Warranties of the
Members. Each Member, severally with respect to himself,
herself or itself (as the case may be) and the Shares
which are "Allocated Shares" of such Member under the
Third Amended and Restated Limited Liability Company
Agreement of the Stockholder (the "LLC Agreement") makes
the following representations and warranties to Parent.
3.1 Power; Binding Agreement. Such Member has
the legal capacity (in the case of individual Members),
power and authority to enter into and perform all of such
Member's obligations under this Agreement. Such Member
is the legal and valid owner of, and has good and valid
title to, its interest in the Stockholder. Such Member's
allocable interest in the total number of shares of
Company Common Stock owned by the Stockholder is set
forth on Schedule 3.2. The execution, delivery and
performance of this Agreement by such Member will not
violate any other agreement to which such Member is a
party (including any trust agreement, voting agreement,
stockholders agreement or voting trust) except to the
extent that any such violations, individually or in the
aggregate, could not reasonably be expected to have a
material adverse effect on Parent or to prevent or
materially delay the consummation of the transactions
contemplated hereby. This Agreement has been duly and
validly executed and delivered by such Member and
constitutes a valid and binding agreement of such Member,
enforceable against such Member in accordance with its
terms. There is no beneficiary or holder of a voting
trust certificate or other interest of any trust of which
a Member is Trustee whose consent is required for the
execution and delivery of this Agreement or the
consummation of the transactions contemplated hereby. If
such Member is married and such Member's Allocated Shares
constitute community property, this Agreement has been
duly authorized, executed and delivered by, and
constitutes a valid and binding agreement of, such
Member's spouse, enforceable against such person in
accordance with its terms.
3.2 No Conflict. Other than filings required
under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, as amended (the "HSR Act"), and the filing of Forms
4 and Schedules 13D under the Securities and Exchange Act
of 1934, as amended, and the rules and regulations
thereunder (the "Exchange Act"), no filing with, and no
permit, authorization, consent or approval of, any state
or federal public body or authority is necessary for the
execution of this Agreement by such Member and the
consummation by such Member of the transactions
contemplated hereby, except for such filings the failure
of which to be made, individually or in the aggregate,
could not reasonably be expected to have a material
adverse effect on Parent or to prevent or materially
delay the consummation of the transactions contemplated
hereby. Neither the execution and delivery of this
Agreement by such Member nor the consummation by such
Member of the transactions contemplated hereby nor
compliance by such Member with any of the provisions
hereof shall (x) conflict with or result in any breach of
any applicable trust or other organizational documents
applicable to such Member, (y) result in a violation or
breach of, or constitute (with or without notice or lapse
of time or both) a default (or give rise to any third
party right of termination, cancellation, material
modification or acceleration) under any of the terms,
conditions or provisions of any note, bond, mortgage,
indenture, license, contract, commitment, arrangement,
understanding, agreement or other instrument or
obligation of any kind to which such Member is a party or
by which such Member or any of such Member's properties
or assets may be bound or (z) violate any order, writ,
injunction, decree, judgment, order, statute, rule or
regulation applicable to such Member or any of such
Member's properties or assets, except to the extent any
of the foregoing, individually or in the aggregate, could
not reasonably be expected to have a material adverse
effect on Parent or to prevent or materially delay the
consummation of the transactions contemplated hereby.
3.3 Reliance. Such Member understands and
acknowledges that Parent is entering into, and causing
Sub to enter into, the Merger Agreement in reliance upon
such Member's execution and delivery of this Agreement.
3.4 No Broker. Such Member has not employed
any investment banker, broker, finder, consultant or
intermediary in connection with the transactions
contemplated by this Agreement which would be entitled to
any investment banking, brokerage, finder's or similar
fee or commission in connection with this Agreement or
the transactions contemplated hereby.
3.5 Transfer Instruction. Each Member has
instructed the Stockholder, in accordance with Section
11.1(c) of the LLC Agreement, to transfer its Allocated
Shares to Parent and the Stockholder has provided Parent
with true and accurate proof thereof.
3.6 Voting Instruction. Each of the Member
Managers (as defined in the LLC Agreement) has determined
and advised the Stockholder, in accordance with Section
4.2(b) of the LLC Agreement, that in the event the
Exchange has not occurred by the time of the Company
Stockholder Meeting, the Stockholder shall vote the
Shares in favor of the Merger as set forth in Section
9.4.
4. Representations and Warranties of the
Stockholder. The Stockholder makes the following
representations and warranties to the Parent:
4.1 Power; Binding Agreement. The Stockholder
has the power and authority to enter into and perform all
of its obligations under this Agreement (including the
power and authority without further action on the part of
the Members to consummate the Exchange and comply with
the voting requirements of Section 9.4). The execution,
delivery and performance of this Agreement by the
Stockholder will not violate any other agreement to which
the Stockholder is a party (including any trust
agreement, voting agreement, stockholders agreement or
voting trust), except to the extent any such violations,
individually or in the aggregate, could not reasonably be
expected to have a material adverse effect on Parent or
to prevent or materially delay the consummation of the
transactions contemplated hereby. This Agreement has
been duly and validly authorized, executed and delivered
by the Stockholder and constitutes a valid and binding
agreement of the Stockholder, enforceable against it in
accordance with its terms. The Members constitute all
the members of the Stockholder.
4.2 No Conflict. Other than filings required
under the HSR Act, and the filing of Forms 4 and
Schedules 13D under the Exchange Act, no filing with, and
no permit, authorization, consent or approval of, any
state or federal public body or authority is necessary
for the execution of this Agreement by the Stockholder
and the consummation by the Stockholder of the
transactions contemplated hereby, except for any such
filings the failure of which to be made, individually or
in the aggregate, could not reasonably be expected to
have a material adverse effect on Parent or to prevent or
materially delay the consummation of the transactions
contemplated hereby. Neither the execution and delivery
of this Agreement by the Stockholder nor the consummation
by the Stockholder of the transactions contemplated
hereby nor compliance by the Stockholder with any of the
provisions hereof shall (x) conflict with or result in
any breach of the LLC Agreement, (y) result in a
violation or breach of, or constitute (with or without
notice or lapse of time or both) a default (or give rise
to any third party right of termination, cancellation,
material modification or acceleration) under any of the
terms, conditions or provisions of any note, bond,
mortgage, indenture, license, contract, commitment,
arrangement, understanding, agreement or other instrument
or obligation of any kind to which the Stockholder is a
party or by which the Stockholder or any of the
Stockholder's properties or assets may be bound or (z)
violate any order, writ, injunction, decree, judgment,
order, statute, rule or regulation applicable to the
Stockholder or any of the Stockholder's properties or
assets, except to the extent any of the foregoing,
individually or in the aggregate, could not reasonably be
expected to have a material adverse effect on Parent or
to prevent or materially delay the consummation of the
transactions contemplated hereby.
4.3 Reliance. The Stockholder understands and
acknowledges that Parent is entering into, and causing
Sub to enter into, the Merger Agreement in reliance upon
the Stockholder's execution and delivery of this
Agreement.
4.4 Ownership of Shares. The Stockholder is
the record owner of 16,483,868 Shares, which constitute a
majority of the outstanding shares of Company Common
Stock. The Stockholder has, and at the Closing will
have, good and valid title to the Shares, free and clear
of any Liens or Restrictions and it has the full legal
right, power and authority to assign, transfer and
deliver such Shares to Parent pursuant hereto. The Stock
holder has sole voting power, and sole power of
disposition, with respect to all of the Shares.
4.5 No Broker. The Stockholder has not
employed any investment banker, broker, finder,
consultant or intermediary in connection with the
transactions contemplated by this Agreement or the Merger
Agreement which would be entitled to any investment
banking, brokerage, finder's or similar fee or commission
in connection with this Agreement or the transactions
contemplated hereby.
4.6 Purchase for Investment. The Stockholder
is acquiring the Exchange Shares for its own account as
principal for investment and not with a view to resale or
distribution or with any present intention of
distribution or selling the same. The Stockholder is
fully aware that such shares of Parent Class A Common
Stock have not been registered under the Securities Act
or under any applicable state securities laws, and are
being offered and sold in reliance on exemptions from the
registration requirements of the Securities Act and all
such laws. The undersigned is an "accredited investor"
as such term is defined in Regulation D promulgated under
the Securities Act. The Stockholder is able to bear the
economic risk of the investment in such shares of Parent
Class A Common Stock and has such knowledge and
experience in financial and business matters, and
knowledge of the business of Parent, as to be capable of
evaluating the merits and risks of a prospective
investment. The Stockholder acknowledges that it has
received or been given access to financial information
and other documents and records necessary to make a well-
informed investment decision and has had an opportunity
to discuss Parent's business, management and financial
affairs with Parent's management.
4.7 Limitations on Transferability. In
addition to the restrictions set forth in Section 9.7 and
in the Lock-Up Letter, the Stockholder acknowledges that
it may not transfer any of the shares of Parent Class A
Common Stock in the Exchange unless and until the same
are registered under the Securities Act and any
applicable state securities laws, or unless an exemption
from such registration is available and that it may
transfer such shares of Parent Class A Common Stock only
in accordance with this Agreement.
4.8 Legend. Each document or certificate
evidencing any shares of Parent Class A Common Stock
issued in the Exchange shall be stamped or imprinted with
legends substantially as follows:
(a) "The shares of Common Stock, par value $0.01
per share, of The Warnaco Group, Inc. (the
"Company") represented by this certificate have
not been registered under the Securities Act of
1933, as amended, or under the securities laws
of any state; and may not be sold, assigned,
transferred, pledged or otherwise disposed of
except in compliance with, or pursuant to an
exemption from, the requirements of such Act or
such laws."
(b) "The shares of Common Stock, par value $0.01
per share, of The Warnaco Group, Inc. (the
"Company") represented by this certificate are
subject to restrictions on transfer contained
in a Stock Exchange Agreement dated as of
September 25, 1997, as amended from time to
time, a copy of which is on file at the
principal office of the Company."
Parent will exchange certificates without one or both of
the foregoing legends for certificates with one or both
of the foregoing legends upon the request of the
Stockholder as follows: (i) in the case of clause (a),
upon such time as the holder thereof may sell such shares
without registration of such sale under the Securities
Act, as evidenced by an opinion of counsel to such
holder; and (ii) in the case of clause (b), upon the
later to occur of (x) upon the termination of the
restricted period contained in any Lock-Up Letter to
which the holder of such Shares is subject and (y)
otherwise, upon the Release Date.
5. Representations and Warranties of Parent.
Parent hereby represents and warrants to the Stockholder
as follows:
5.1 Power; Binding Agreement. Parent has the
power and authority to enter into and perform all of its
obligations under this Agreement. The execution,
delivery and performance of this Agreement by Parent will
not violate any other agreement to which Parent is a
party (including any trust agreement, voting agreement,
stockholders agreement or voting trust), except to the
extent that any such violations, individually or in the
aggregate, could not reasonably be expected to have a
material adverse effect on Parent or to prevent or
materially delay the consummation of the transactions
contemplated hereby. This Agreement has been duly and
validly executed and delivered by Parent and constitutes
a valid and binding agreement of Parent, enforceable
against Parent in accordance with its terms.
5.2 No Conflict. Other than filings required
under the HSR Act, the filing of a Form 3 and Schedule
13D under the Exchange Act and the filing of a
registration statement under the Securities Act, no
filing with, and no permit, authorization, consent or
approval of, any state or federal public body or
authority is necessary for the execution of this
Agreement by Parent and the consummation by Parent of the
transactions contemplated hereby, except in each case for
such filings the failure of which to be made,
individually or in the aggregate, could not reasonably be
expected to have a material adverse effect on Parent or
to prevent or materially delay the consummation of the
transactions contemplated hereby. Neither the execution
and delivery of this Agreement by Parent nor the
consummation by Parent of the transactions contemplated
hereby nor compliance by Parent with any of the
provisions hereof shall (x) conflict with or result in
any breach of any applicable organizational documents
applicable to Parent, (y) result in a violation or breach
of, or constitute (with or without notice or lapse of
time or both) a default (or give rise to any third party
right of termination, cancellation, material modification
or acceleration) under any of the terms, conditions or
provisions of any note, bond, mortgage, indenture,
license, contract, commitment, arrangement,
understanding, agreement or other instrument or
obligation of any kind to which Parent is a party or by
which Parent or any of Parent's properties or assets may
be bound or (z) violate any order, writ, injunction,
decree, judgment, order, statute, rule or regulation
applicable to Parent or any of Parent's properties or
assets, except to the extent that any of the foregoing,
individually or in the aggregate, could not reasonably be
expected to have a material adverse effect on Parent or
to prevent or materially delay the consummation of the
transactions contemplated hereby.
6. Conditions to Obligations of Parent.
Unless waived, in whole or in part, in writing by Parent,
the obligations of Parent to consummate the Exchange and
to perform any and all of its postclosing obligations
shall be subject to the satisfaction at or prior to the
Closing Date of each of the following conditions (it
being understood that any termination of the Merger
Agreement, including pursuant to Sections 7.01(f), (g) or
(j) shall not, in and of itself, constitute a failure of
a condition hereunder or give rise to any right to
terminate this Agreement):
6.1 Accuracy of Representations and
Warranties. All representations and warranties of each
of the Members and the Stockholder contained herein shall
be true and correct in all material respects when made
and on and as of the Closing Date, with the same force
and effect as though made on and as of the Closing Date,
except for changes permitted or contemplated by this
Agreement.
6.2 Performance of Agreements. Each of the
Members and the Stockholder shall have performed in all
material respects all obligations and agreements
contained in this Agreement to be performed or complied
with by it prior to or at the Closing Date.
6.3 Majority Ownership. The Shares,
immediately following consummation of the Exchange, shall
constitute a majority of the issued and outstanding
Company Common Stock.
6.4 Merger Agreement Matters. (a) No
temporary restraining order, preliminary or permanent
injunction or other order issued by any court of
competent jurisdiction or other legal restraint or
prohibition enjoining or preventing the consummation of
the Merger or the other transactions pursuant to the
Merger Agreement shall be in effect.
(b) The representations and warranties of the
Company set forth in the Merger Agreement shall be true
and correct in all material respects when made and as of
the Closing Date as though made on and as of the Closing
Date, except for those representations and warranties
which address matters only as of a particular date (which
shall have been true and correct in all material respects
as of such date).
(c) The Company shall have performed in all
material respects the obligations required to be
performed by it under the Merger Agreement at or prior to
the Closing Date.
(d) The Company shall have satisfied, or
simultaneous with the Exchange shall satisfy, its
obligations to Parent pursuant to Section 5.14 of the
Merger Agreement.
(e) There shall not be pending or threatened
by any Governmental Entity any suit, action or proceeding
(or by any other person any suit, action or proceeding
which has a reasonable likelihood of success), (i)
challenging or seeking to restrain or prohibit the
consummation of the Merger or the Exchange or any of the
other transactions contemplated by this Agreement or the
Merger Agreement or seeking to obtain from Parent, the
Stockholder or any member of the Board of Directors of
the Company or any of their respective subsidiaries any
damages that are material in relation to Parent and its
subsidiaries taken as a whole, (ii) seeking to prohibit
or limit the ownership or operation by the Company,
Parent or any of their respective subsidiaries of any
material portion of the business or assets of the
Company, Parent or any of their respective subsidiaries,
to dispose of or hold separate any material portion of
the business or assets of the Company, Parent or any of
their respective subsidiaries, as a result of the Merger
or any of the other transactions contemplated by this
Agreement or the Merger Agreement, (iii) seeking to
impose limitations on the ability of Parent or Sub to
acquire or hold, or exercise full rights of ownership of,
any shares of Company Common Stock or Common Stock of the
Surviving Corporation, including the right to vote the
Company Common Stock or common stock of the Surviving
Corporation on all matters properly presented to the
stockholders of the Company or the Surviving Corporation,
respectively, or (iv) seeking to prohibit Parent or any
of its subsidiaries from effectively controlling in any
material respect the business or operations of the
Company or its subsidiaries.
(f) Parent shall have received evidence, in
form and substance reasonably satisfactory to it, that
such licenses, permits, consents, approvals,
authorizations, qualifications and orders of governmental
authorities and other third parties as are necessary in
connection with the transactions contemplated hereby have
been obtained, except such licenses, permits, consents,
approvals, authorizations, qualifications and orders
which are not, individually or in the aggregate, material
to Parent or the Company or the failure of which to have
received would not materially dilute the aggregate
benefits to Parent of the transactions reasonably
contemplated hereby; provided that the receipt of all
required consents of the holders of Company Stock Options
as contemplated by Section 2.02 of the Merger Agreement
shall be considered material.
6.5 No Injunctions. No temporary restraining
order, preliminary or permanent injunction or other order
issued by any court of competent jurisdiction or other
legal restraint or prohibition enjoining or preventing
the consummation of the Exchange shall be in effect.
6.6 No Adverse Enactments. There shall not
have been any statute, rule, regulation or order
promulgated, enacted or issued by any Government Entity
or court of competent jurisdiction which would make the
consummation of the Exchange hereunder or of the Merger
under the Merger Agreement illegal.
6.7 HSR. The waiting period (and any
extension thereof) under the HSR Act applicable to the Ex
change and the Merger shall have been terminated or shall
have expired.
6.8 Company Certificate. Parent shall have
received a certificate executed by the chief executive
officer and the chief financial officer of the Company to
the effect that the conditions set forth in Section 6.4
shall have been satisfied.
6.9 Members Certificate. Parent shall have
received certificates of the Stockholder and of the
Members that (i) the representations and warranties made
by each of them, severally, are true and correct in all
material respects (other than Sections 3.1, 3.5, 4.1, 4.4
and 4.6, which shall be true and correct), in each case
on and as of the date of this Agreement and on and as of
the Closing Date as though made on the Closing Date,
except for those representations and warranties which
address matters only as of a particular date (which shall
have been true and correct as of such date) and (ii) each
of them has no actual knowledge that the conditions set
forth in Section 6.4 (including that the representations
and warranties of the Company are true and correct in all
material respects), shall not have been satisfied,
provided, however, that such certificate shall terminate
at the Effective Time of the Merger other than with
respect to the representations and warranties set forth
in Sections 3.1, 3.5, 4.1, 4.4 and 4.6.
7. Conditions to Obligations of the
Stockholder and the Members. Unless waived, in whole or
in part, in writing by the Stockholder, the obligations
of the Stockholder and the Members to consummate the
Exchange as contemplated by this Agreement shall be
subject to the fulfillment prior to or on the Closing
Date of each of the following conditions (it being
understood that any termination of the Merger Agreement,
including pursuant to Sections 7.01(f), (g) or (j) shall
not, in and of itself, constitute a failure of a
condition hereunder or give rise to any right to
terminate this Agreement):
7.1 Accuracy of Representations and
Warranties. All representations and warranties of Parent
contained herein shall be true and correct in all
material respects when made and on and as of the Closing
Date, with the same effect as though made on and as of
the Closing Date, except for changes permitted or
contemplated by this Agreement.
7.2 Performance of Agreements. Parent shall
have performed in all material respects all obligations
and agreements contained in this Agreement to be
performed or complied with by it prior to or at the
Closing Date.
7.3 No Adverse Enactments. There shall not
have been any statute, rule, regulation or order
promulgated, enacted or issued by any Government Entity
or court of competent jurisdiction which would make the
consummation of the Exchange hereunder illegal.
7.4 No Injunctions. No temporary restraining
order, preliminary or permanent injunction or other order
issued by any court of competent jurisdiction or other
legal restraint or prohibition enjoining or preventing
the consummation of the Exchange shall be in effect.
7.5 HSR Act. The waiting period (and any
extension thereof) under the HSR Act applicable to the
Exchange shall have been terminated or shall have
expired.
7.6 NYSE Listing. The shares of Parent Class
A Common Stock issuable to the Stockholder pursuant to
this Agreement shall have been approved for listing on
the NYSE, subject to official notice of issuance.
7.7 Merger Agreement Matters. (a) The
representations and warranties of Parent set forth in the
Merger Agreement shall be true and correct in all
material respects when made and as of the Closing Date as
though made on and as of the Closing Date, except for
those representations and warranties which address
matters only as of a particular date (which shall have
been true and correct in all material respects as of such
date).
(b) Parent shall have performed in all
material respects the obligations required to be
performed by it under the Merger Agreement at or prior to
the Closing Date.
8. Covenants of Parent. Parent hereby
covenants and agrees as follows:
8.1 Filings and Other Actions. As promptly as
practicable after the execution of this Agreement, Parent
shall file notification reports under the HSR Act and
shall request early termination of the waiting period
under the HSR Act and use its reasonable best efforts to
obtain clearance or authorization under the HSR Act for
the Merger and the Exchange at the earliest practicable
time. Parent agrees to cooperate fully with the
Stockholder to promptly effectuate the filing of any
notification required under the HSR Act.
8.2 Reasonable Best Efforts. Subject to the
terms and conditions of this Agreement and the Merger
Agreement, Parent agrees to use its reasonable best
efforts to take, or cause to be taken, all actions, and
to do, or cause to be done, all things necessary, proper
or advisable to consummate and make effective the
transactions contemplated by this Agreement and the
Merger Agreement. Parent hereby agrees, while this
Agreement is in effect, and except as contemplated
hereby, not to intentionally and knowingly take any
action with the intention and knowledge that such action
would make any of its representations or warranties
contained herein untrue or incorrect in any material
respect or have the effect of preventing or disabling it
from performing its obligations under this Agreement.
8.3 Registration Statement. (a) Shelf
Registration. Parent will use its reasonable best
efforts to file and have declared effective as promptly
as practicable following the Release Date a registration
statement (a "Shelf Registration") under the Securities
Act, on an appropriate form, for the resale of the shares
of Parent Class A Common Stock issued to the Stockholder
in the Exchange and not subject to a Lock-Up Letter. In
connection therewith Parent agrees to use its reasonable
best efforts to make such other filings as are necessary
for sales under such Shelf Registration to be made in
accordance with any state securities or "blue sky" laws,
provided, however, that Parent shall not be required to
consent to service of process in any jurisdiction in
which it is not now subject in connection therewith.
Such registration statement shall include all shares of
Parent Class A Common Stock issued to the Stockholder and
not subject to a Lock-Up Letter, and may include
securities of Parent for sale for Parent's own account.
Upon the request of the Stockholder, following the
termination of any Lock-Up Letter, Parent will use its
reasonable best efforts to add to the Shelf Registration
Exchange Shares that had been subject to any such Lock-Up
Letter. The Stockholder shall promptly provide Parent
with such information as it reasonably requests to
include in such registration statement with respect to
the Stockholder and the Members. Notwithstanding
anything else contained in this agreement, Parent shall
be obligated to keep such Registration Statement
effective only until the earliest of (i) 24 months after
the closing date for the Merger, (ii) such time as all
shares of Parent Class A Common Stock covered by such
Registration Statement have been sold or disposed of and
(iii) such time as all such securities are freely
tradeable. (such date the "Shelf Termination Date")
(b) Delays. Notwithstanding any another
provision of this Agreement to the contrary, if at any
time while the Shelf Registration is effective Parent
provides written notice to the Stockholder that in its
good faith and reasonable judgment it would be materially
disadvantageous to Parent (because the sale of shares of
Parent Class A Common Stock covered by such registration
statement ("Registrable Securities") or the disclosure of
information therein or in any related prospectus or
prospectus supplement would materially interfere with any
acquisition, financing or other material event or
transaction in connection with which a registration of
securities under the Securities Act for the account of
Parent is then intended or the public disclosure of which
at the time would be materially prejudicial to Parent) (a
"Disadvantageous Condition") for sales of Registrable
Securities thereunder to then be permitted, and setting
forth the general reasons for such judgment, Parent may
refrain from maintaining current the prospectus contained
in the Shelf Registration until such Disadvantageous
Condition no longer exists (notice of which Parent shall
promptly deliver to the Stockholder); provided, however,
that (i) upon delivery by the Stockholder of a
certificate stating that any Seller desires to sell
Registrable Securities in order for the Stockholder, its
Members or the direct or indirect owners of its Members
to pay taxes due as a result of the failure of the
Exchange to be treated as a tax-free reorganization, so
long as, in the good faith judgment of Parent, the sale
of Registrable Securities at such time would not be
reasonably likely to cause Parent to be in violation of
Federal securities laws absent additional disclosure by
Parent, Parent shall forgo or rescind its delivery of a
notice of Disadvantageous Condition in such instance and
shall use its reasonable best efforts to ensure that a
prospectus is available for such sales; and (ii) in the
event such notice of Disadvantageous Condition is in
connection with an offering of securities in connection
with which Parent has retained an investment bank, Parent
shall certify to the Stockholder that such investment
bank has advised Parent that such notice is reasonably
necessary in connection with such offering. Upon the
receipt by the Stockholder of any such notice of a
Disadvantageous Condition (i) the Stockholder shall
notify the Members and the Sellers shall forthwith
discontinue use of the prospectus and any prospectus
supplement under such registration statement and shall
suspend sales of Registrable Securities until such
Disadvantageous Condition no longer exists and (ii) if so
directed by Parent by notice as aforesaid the Stockholder
will deliver to Parent all copies, other than permanent
file copies then in the Stockholder's possession, of the
prospectus and prospectus supplements then covering such
Registrable Securities at the time of receipt of such
notice as aforesaid. Notwithstanding anything else
contained in this Agreement, the maintaining current of a
prospectus (and the suspension of sales of Registrable
Securities) in connection with the Shelf Registration may
not be delayed under this paragraph (b) for more than a
total of 60 days in any six-month period.
(c) Expenses. Except as provided herein,
Parent shall pay all registration expenses with respect
to the Shelf Registration. Notwithstanding the
foregoing, (i) the Sellers and Parent shall each be
responsible for their own internal administrative and
similar costs, (ii) the Sellers shall be responsible for
the legal fees and expenses of their own counsel and
(iii) the Sellers shall be responsible for all
underwriting discounts and commissions, selling or
placement agent or broker fees and commissions, and
transfer taxes, if any, in connection with the sale of
securities by the Sellers.
(d) Indemnification and Contribution.
(i) Parent agrees to indemnify and hold harmless each of
the Sellers and each person, if any, who controls each
Seller within the meaning of either Section 15 of the
Securities Act or Section 20 of the Exchange Act from and
against any and all losses, claims, damages and
liabilities (including, without limitation, any legal or
other expenses reasonably incurred in connection with
defending or investigating any such action or claim)
insofar as such losses, claims, damages or liabilities
are caused by any untrue statement or alleged untrue
statement of a material fact contained in any
registration statement or any amendment thereof, any
preliminary prospectus or prospectus (as amended or
supplemented if Parent shall have furnished any
amendments or supplements thereto) relating to the
Registrable Securities, or caused by any omission or
alleged omission to state therein a material fact
required to be stated therein or necessary to make the
statements therein not misleading, except insofar as such
losses, claims, damages or liabilities are caused by any
such untrue statement or omission or alleged untrue
statement or omission based upon information furnished to
Parent in writing by the Sellers expressly for use
therein. Parent also agrees to indemnify any underwriter
of the Registrable Securities so offered and each person,
if any, who controls such underwriter on substantially
the same basis as that of the indemnification by Parent
of the Sellers provided in this Section 8.3(d).
(ii) Each Seller agrees to indemnify and hold
harmless Parent, its directors, the officers who sign any
registration statement and each person, if any who
controls Parent within the meaning of either Section 15
of the Securities Act or Section 20 of the Exchange Act,
from and against any and all losses, claims, damages and
liabilities (including, without limitation, any legal or
other expenses reasonably incurred in connection with
defending or investigation any such action or claim)
insofar as such losses, claims, damages or liabilities
are caused by any untrue statement or alleged untrue
statement of a material fact contained in any
registration statement or any amendment thereof, any
preliminary prospectus or prospectus (as amended or
supplemented if Parent shall have furnished any
amendments or supplements thereto) relating to the
Registrable Securities, or caused by any omission or
alleged omission to state therein a material fact
required to be stated therein or necessary to make the
statements therein not misleading, but only with
reference to information furnished in writing by such
Seller (or any representative thereof) expressly for use
in a registration statement, any preliminary prospectus,
prospectus or any amendments or supplements thereto.
Each Seller also agrees to indemnify any underwriter of
the Registrable Securities so offered and each person, if
any, who controls such underwriter on substantially the
same basis as that of the indemnification by the Sellers
of Parent provided in this Section 8.3(d).
(iii) Each party indemnified under paragraph (i)
or (ii) above shall, promptly after receipt of notice of
a claim or action against such indemnified party in
respect of which indemnity may be sought thereunder,
notify the indemnifying party in writing of the claim or
action, provided that the failure to notify the
indemnifying party shall not relieve it from any
liability that it may have to an indemnified party on
account of the indemnity agreement contained in paragraph
(i) or (ii) above except to the extent that the
indemnifying party was actually prejudiced by such
failure, and in no event shall such failure relieve the
indemnifying party from any other liability that it may
have to such indemnified party. If any such claim or
action shall be brought against an indemnified party, and
it shall have notified the indemnifying party thereof,
unless based on the written advice of counsel to such
indemnified party of conflict of interest between such
indemnified party and indemnifying parties may exist in
respect of such claim, the indemnifying party shall be
entitled to participate therein, and, to the extent that
it wishes, jointly with any other similarly notified
indemnifying party, to assume the defense thereof. After
notice from the indemnifying party to the indemnified
party of its election to assume the defense of such claim
or action, the indemnifying party shall not be liable to
the indemnified party under this section 8.3(d)(iii) for
any legal or other expenses subsequently incurred by the
indemnified party in connection with defense thereof.
Any indemnifying party against whom indemnity may be
sought under this Section 8.3 shall not be liable to
indemnify an indemnified party if such indemnified party
settles such claim or action without the consent of the
indemnifying party. The indemnifying party may not agree
to any settlement of any such claim or action, other than
solely for monetary damages for which the indemnifying
party shall be responsible hereunder, the result of which
any remedy or relief shall be applied to or against the
indemnified party, without the prior written consent of
the indemnified party, which consent shall not be
unreasonably withheld. In any action hereunder as to
which the indemnifying party has assumed the defense
thereof, the indemnified party shall continue to be
entitled to participate in the defense thereof, with
counsel of its own choice, but the indemnifying party
shall not be obligated hereunder to reimburse the
indemnified party of the costs thereof.
(iv) If the indemnification provided for in
this Section 8.3(d) shall for any reason be unavailable
(other than in accordance with its terms) to an
indemnified party in respect of any loss, liability,
cost, claim, or damage referred to therein, then each
indemnifying party shall, in lieu of indemnifying such
indemnified party, contribute to the amount paid or
payable by such indemnified party as a result such loss,
liability, cost, claim or damage (A) in such proportion
as is appropriate to reflect the relative benefits
received by Parent on the one hand and the Sellers on the
other hand from the offering of the Registrable
Securities or (B) if such proportion as is appropriate to
reflect not only the relative benefits referred to in
clause (A) above but also the relative fault of the
indemnifying party or parties on the one hand and of the
indemnified party or parties on the other hand in damages
or liabilities, as well as any other relevant equitable
considerations. The relative benefits received by Parent
on the one hand and the Sellers on the other hand in
connection with the offering of the Registrable
Securities shall be deemed to be in the same respective
proportions as the net proceeds from the offering of the
Registrable Securities (before deducing expenses)
received by Parent and the Sellers, respectively, bear to
the aggregate public offering price of the Registrable
Securities. The relative fault of Parent on the one hand
and the Sellers on the other hand shall be determined by
reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact
relates to intent, knowledge, access to information and
opportunity to correct or prevent such statement or
omission. The amount paid or payable by an indemnified
party as a result of the loss, cost, claim, damage or
liability, or action in respect thereof, referred to
above in this paragraph (iv) shall be deemed to include,
for purposes of this paragraph (iv), any legal or other
expenses reasonably incurred by such indemnified party in
connection with investigating or defending any such
action or claim. Parent and the Stockholder agree that
it would not be just and equitable if contribution
pursuant to this Section 8.3(d)(iv) were determined by
pro rata allocation or by any other method of allocation
which does not take account of the equitable
considerations referred to in this paragraph.
Notwithstanding any other provision of this Section 8.3,
the Stockholder shall not be required to contribute any
amount in excess of the amount by which the total price
at which the Registrable Securities of the Sellers were
offered to the public exceeds the amount of any damages
which the Stockholder has otherwise been required to pay
by reason of such untrue or alleged untrue statement or
omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such
fraudulent misrepresentation.
(e) Material Misstatements. Parent shall
promptly notify the Stockholder in writing (i) at any
time when a prospectus relating to a registration
pursuant to Section 8.3(a) is required to be delivered
under the Securities Act of the happening of any event as
a result of which the prospectus included in such
registration statement, as then in effect, includes an
untrue statement of a material fact or omits to state any
material fact required to be stated therein or necessary
to make the statements therein, in light of the
circumstances under which they were made, not misleading,
and (ii) of any request by the SEC or any other
regulatory body or other body having jurisdiction for any
amendment of or supplement to any registration statement
or other document relating to such offering, and in
either such case, at the request of the Stockholder
prepare and furnish to the Stockholder a reasonable
number of copies of a supplement to or an amendment of
such prospectus as may be necessary so that, as
thereafter delivered to the purchasers of Registrable
Securities, such prospectus shall not include an untrue
statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances
under which they are made, not misleading.
9. Covenants of the Stockholder and the
Members. The Sellers, jointly and severally, hereby
covenant and agree as follows:
9.1 Cooperation in Filing Notification under
Xxxx-Xxxxx-Xxxxxx. The Sellers agree to cooperate fully
with Parent to promptly effectuate the filing of any
notification required under the HSR Act.
9.2 Reasonable Best Efforts. Subject to the
terms and conditions of this Agreement, the Sellers each
agree to use all reasonable best efforts to take, or
cause to be taken, all actions, and to do, or cause to be
done, all things necessary, proper or advisable to
consummate and make effective the transactions provided
for by this Agreement. Each Seller hereby agrees, while
this Agreement is in effect, and except as contemplated
hereby, not to intentionally and knowingly take any
action with the intention and knowledge that such action
would make any of its representations or warranties
contained herein untrue or incorrect in any material
respect or have the effect of preventing or disabling it
from performing its obligations under this Agreement.
9.3 Voting. The Stockholder hereby agrees
that, during the time this Agreement is in effect, at any
meeting of the stockholders of the Company (or at any
adjournments or postponements thereof), however called,
or in any other circumstances upon which the
Stockholder's vote, consent or other approval is sought,
the Stockholder shall vote (or cause to be voted) the
Shares (i) in favor of the Merger, the adoption of the
Merger Agreement and the approval of the terms thereof
and each of the other transactions and other matters
contemplated by the Merger Agreement and this Agreement
and any actions required in furtherance hereof and
thereof; (ii) against any action or agreement that would
result in a breach in any material respect of any
covenant, representation or warranty or any other
obligation or agreement of the Company under the Merger
Agreement; (iii) except as otherwise agreed to in writing
in advance by Parent, against the following actions
(other than the Merger and the transactions and other
matters contemplated by the Merger Agreement): (1) any
extraordinary corporate transaction, such as a merger,
consolidation or other business combination involving the
Company or its subsidiaries; (2) a sale, lease or
transfer of a material amount of assets of the Company or
its subsidiaries or a reorganization, recapitalization,
dissolution or liquidation of the Company or its
subsidiaries; (3) (a) any change in the majority of the
board of directors of the Company; (b) any material
change in the present capitalization of the Company or
any amendment of the Company's Certificate of
Incorporation or By-laws; (c) any other material change
in the Company's corporate structure or business; or (d)
any other action; which, in the case of each of the
matters referred to in clauses 3(a), (b), (c) or (d), is
intended, or could reasonably be expected, to impede,
frustrate, prevent, interfere with, delay, postpone,
discourage or materially adversely affect the
contemplated economic benefits to Parent of the Exchange
or the Merger or the transactions contemplated by the
Merger Agreement and this Agreement or change in any
manner the voting rights of the Company Common Stock.
The Stockholder shall not enter into any agreement or
understanding with any person or entity prior to the
termination of this Agreement to vote or give
instructions after such termination in a manner
inconsistent with clauses (i), (ii) or (iii) of the
preceding sentence.
9.4 Proxy. The Stockholder hereby grants to,
and appoints, Parent and Xxxxx X. Xxxxxxx, Chief
Executive Officer of Parent, Xxxxxxx X. Xxxxxxxxxxx,
Chief Financial Officer of Parent, and Xxxxxxx X.
Xxxxxxxxxxx, Vice President, General Counsel and
Secretary of Parent, in their respective capacities as
officers of Parent, and any individual who shall
hereafter succeed to any such office of Parent, and any
other designee of Parent, each of them individually, its
irrevocable proxy and attorney-in-fact (with full power
of substitution) to vote the Shares as indicated in
Section 9.4. The Stockholder intends this proxy to be
irrevocable and coupled with an interest and will take
such further action and execute such other instruments as
may be necessary to effectuate the intent of this proxy
and hereby revokes any proxy previously granted by it
with respect to its Shares.
9.5 No Solicitation. During the term of this
Agreement, the Sellers shall not, directly or indirectly,
through any officer, director, employee, representative
or agent of the Sellers or any of its subsidiaries or
otherwise, (i) solicit, initiate or encourage any
inquiries, offers or proposals, or any indications of
interest, regarding any merger, sale of substantial
assets, sale of shares of capital stock (including by way
of a tender offer) or similar transactions involving the
Sellers or any significant subsidiary of the Sellers
other than the Merger or (ii) participate in negotiations
or discussions concerning, or provide any nonpublic
information to any person relating to, any Acquisition
Proposal. If any of the Sellers receives any such
inquiry or proposal, then such Seller shall promptly
inform Parent of the terms and conditions, if any, of
such inquiry or proposal and the identity of the person
making it. Each Seller will immediately cease and cause
to be terminated any existing activities, discussions or
negotiations with any parties conducted heretofore with
respect to any of the foregoing.
9.6 Restriction on Transfer of Shares, Proxies
and Non-Interference; Restriction on Withdrawal. No
Seller shall, directly or indirectly: (i) except
pursuant to or as contemplated hereby by the terms of
this Agreement or the Merger Agreement, offer for sale,
sell (including short sales), transfer, tender, pledge,
encumber, assign or otherwise dispose of (including by
gift) or enter into any contract, option or other
arrangement or understanding (including any profit-
sharing arrangement) with respect to or consent to the
offer for sale, sale, transfer, tender, pledge,
encumbrance, assignment or other disposition of, any or
all of the Shares or any interest therein; (ii) except as
contemplated hereby, grant any proxies or powers of
attorney, deposit any Shares into a voting trust or enter
into any other voting arrangement with respect to any
Shares; or (iii) take any action that would make any
representation or warranty of the Sellers contained
herein untrue or incorrect or have the effect of
preventing or disabling the Sellers from performing their
obligations under this Agreement; or commit or agree to
take any of the foregoing actions.
9.7 Transfer of Shares of Parent Class A
Common Stock. The Sellers agree that they shall not,
directly or indirectly, offer, sell, transfer, tender,
pledge or encumber, assign or otherwise dispose of any
shares of Parent Class A Common Stock (a) until the
earlier of (i) such time at or after the Effective Time
of the Merger that is no earlier than the time when
holders of Company Common Stock can sell the shares of
Parent Class A Common Stock issued pursuant to the Merger
(without giving effect to any restrictions under
applicable securities laws) and (ii) the termination of
the Merger Agreement in accordance with its terms (the
date on which such earlier time occurs, the "Release
Date"), (b) other than in accordance with Section 4.7 and
(c) other than in accordance with the terms of any Lock-
Up Letter.
9.8 Transfer Taxes. All transfer,
documentary, sales, use, registration, stock transfer
Taxes and other such Taxes (including all applicable real
estate transfer or gains Taxes) and related fees
(including any penalties, interest and additions to Tax)
incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by the
Stockholder and the Stockholder shall timely make all
filings, returns, reports and forms as may be required to
comply with the provisions of such Tax laws.
9.9 Waiver of Dividend. The Sellers hereby
irrevocably waive their right to receive with respect to
the Exchange Shares, and hereby instruct Parent not to
pay to the Sellers in respect of the Exchange Shares, any
dividend declared by the Board of Directors of Parent
payable to holders of record of Parent as of a record
date prior to the Release Date.
9.10 Standstill. Each Seller agrees that such
Seller shall not (a) acting alone or in concert with
others, seek to affect or influence the control of the
management or board of directors of Parent or the
business, operations or policies of Parent; (b) deposit
any shares of Parent Class A Common Stock or securities
exercisable or exchangeable or convertible into shares of
Parent Class A Common Stock, or other securities having
the right to vote generally with shares of Parent Class A
Common Stock (collectively "Parent Voting Securities") in
a voting trust or subject any Parent Voting Securities to
any proxy, arrangement or agreement with respect to the
voting of such Parent Voting Securities or other
agreement having similar effect; (c) initiate or propose
any stockholder proposal or make, or in any way,
participate in, directly or indirectly, any
"solicitation" of "proxies" to vote, other than in
connection with the Merger and the Merger Agreement, or
intentionally seek in an organized fashion to influence
any person with respect to the voting of, any Parent
Voting Securities in a manner inconsistent with the
position of the board of directors of Parent or become
"participant" in a "solicitation" (as such terms are
defined in Regulation 14A under the Exchange Act, as in
effect on the date hereof) in opposition to the
recommendation of the majority of the directors of Parent
with respect to any matter; (d) join a partnership,
limited partnership, syndicate or other group, or
otherwise act in concert with any other person, for the
purpose of acquiring, holding, voting or disposing of
Parent Voting Securities, or, otherwise become a "person"
within the meaning of Section 13(d)(3) of the Exchange
Act relating to any of the matters set forth in clauses
(a), (b) or (c); or (e) take any other action
inconsistent with this Section 9.10. The provisions of
this Section 9.10 shall not apply to any Seller following
such time after the Exchange as such Seller cease to
beneficially own at least 25% of the Exchange Shares
acquired by such Seller in the Exchange.
9.11 Amendment of LLC Agreement. By the
execution and delivery of this Agreement, each Member
hereby agrees that, effective as of the Closing Date,
Sections 11.2 and 11.3 of the LLC Agreement shall be
deemed amended to delete the terms thereof in their
entirety. To the extent any provision of Article XI of
the LLC Agreement conflicts with the terms of this
Agreement, the terms of this Agreement shall be
controlling.
9.12 Transfer of Shares to Xxxxxxx X. Xxxxxx.
Notwithstanding anything to the contrary contained in
this Agreement, simultaneously with or promptly following
the execution hereof by Xxxxxxx X. Xxxxxx ("Xxxxxx"), the
Stockholder shall transfer (the "Xxxxxx Transfer") the
225,374 Shares (the "Xxxxxx Shares") which are the
"Allocated Shares" of Xxxxxx to Xxxxxx. From and after
such time as the Xxxxxx Transfer shall have been
completed, (i) Xxxxxx shall, with respect to the Xxxxxx
Shares, be fully subject to and shall comply with and be
entitled to the benefits of all of the covenants and
agreements contained herein and applicable to the
Stockholder, including, without limitation, the
representations set forth in Sections 4.4 and 4.6, the
requirement to exchange the Xxxxxx Shares at Closing,
free and clear of Liens or Restrictions, in accordance
with Section 1 and to comply with the voting and proxy
requirements of Sections 9.3 and 9.4, respectively; (ii)
no representation of the Members shall be deemed to be
breached to the extent it is no longer true solely as a
result of the Xxxxxx Transfer; (iii) Xxxxxx shall make
the representation in the last sentence of Section 3.1 in
his capacity as "Stockholder"; and (iv) in order to
effectuate the foregoing, references herein and in the
Merger Agreement to the "Stockholder" shall be deemed to
refer to Xxxxxx and the Stockholder. Xxxxxx shall,
notwithstanding the Xxxxxx Transfer, continue to be
treated as a Member for purposes of the representations
and warranties of the Members set forth in Section 3
(other than Section 3.5) and as a Seller for all purposes
hereof.
10. Further Assurances. From time to time, at
the other party's request and without further
consideration, each party hereto shall execute and
deliver such additional documents and take all such
further action as may be necessary or desirable to
consummate and make effective, in the most expeditious
manner practicable, the transactions contemplated by this
Agreement.
11. Certain Events. The Stockholder agrees
that this Agreement and the obligations hereunder shall
attach to the Stockholder's Shares and shall be binding
upon any person or entity to which legal or beneficial
ownership of such Shares shall pass, whether by operation
of law or otherwise, including without limitation the
Stockholder's administrators, successors or receivers.
12. Stop Transfer. The Stockholder agrees
with, and covenants to, Parent that it shall not request
that the Company register the transfer (book-entry or
otherwise) of any certificate or uncertificated interest
representing any of the Shares, unless such transfer is
made in compliance with this Agreement and the Lock-Up
Letter. The Stockholder agrees, with respect to any
Shares in certificated form, that immediately following
the execution hereof, it will present to the Company, the
certificates representing the Shares and the Company will
inscribe upon such certificates the following legend:
"The shares of Common Stock, par value $.01 per share, of
Designer Holdings Ltd. (the "Company") represented by
this certificate are subject to a Stock Exchange
Agreement dated as of September 25, 1997, and may not be
sold or otherwise transferred, except in accordance
therewith. Copies of such Agreement may be obtained at
the principal executive offices of the Company." The
Stockholder agrees that it will no longer hold any
Shares, whether certificated or uncertificated, in
"street name" or in the name of any nominee. Pursuant to
the Merger Agreement, the Company has agreed to notify
the transfer agent for any Shares in uncertificated form
of the provisions set forth in this Section 12 and has
agreed to, and the Stockholder agrees to, provide such
documentation and to do such other things as may be
required to give effect to such provisions with respect
to such uncertificated Shares. Following the Closing for
the Exchange, Parent will not register the transfer
(book-entry or otherwise) of any certificate or
uncertificated interest representing the Stockholder's
Parent Class A Common Stock, unless such transfer is made
in compliance with this Agreement.
13. Post-Closing Covenants; Termination.
13.1 Termination. If the Closing of the
Exchange shall not have occurred on or prior to June 30,
1998, other than as a result of a material breach of this
Agreement by any party hereto, any party may terminate
this Agreement without liability. If the Closing Date
shall not have occurred on or prior to such date as a
result of material breach of any representation,
warranty, covenant or obligation by the Sellers (or any
of them), on the one hand, or Parent on the other, the
non-breaching party shall have the right to terminate
this Agreement without liability. Except for Sections
3.1, 3.5, 4.1, 4.4 and 4.6, the representations and
warranties of the parties set forth herein shall
terminate upon the Closing of the Exchange.
13.2 Noncompetition. (a) Each of Charterhouse
Equity Partners II, L.P. ("CEP") and Xxxxxx X. Xxxxx (the
"Partners") severally agrees that, commencing on the
Closing Date until the second anniversary of the Closing
Date, it will not, and, as to Xx. Xxxxx, he will cause
his affiliates not to, in North America, South America
and Central America, directly or indirectly, invest in
(other than a passive equity investment constituting no
more than 5% of the equity of the subject company),
engage in, become financially interested in, or be
employed by, whether as an employee, consultant, partner,
principal, agent, representative or Stockholder or in any
other corporate or representative capacity, if it
involves engaging in, or rendering services that are inte
gral to the business of or advice pertaining to, any
lines of business Parent was actively conducting on the
date of this Agreement or the date of consummation of the
Exchange, except in connection with an agreement
consented to in writing by Parent, or, in the case of
CEP, in connection with its investments existing on the
date of this Agreement, nor will the Partners solicit any
business of the type conducted by the Company from any
customer of the Company or hire any employee of the
Company or any of its subsidiaries (or any of their
successors) except, as to Xx. Xxxxx, as he is permitted
under his letter agreement of employment between him and
Parent and any subsequent letter agreement or arrangement
approved in writing by Parent; provided, however, that
the foregoing shall not prohibit Xxxxx Xxxxx from being
employed by, whether as an employee, consultant or
representative, or acting in any other corporate or
representative capacity to, any entity involved in any of
such lines of business.
(b) It is the intention of the parties that if
any of the restrictions or covenants contained herein is
held to cover a geographic area or to be for a length of
time that is not permitted by applicable law, or in any
way construed to be too broad or to any extent invalid,
such provision shall not be construed to be null, void
and of no effect, but to the extent such provision would
be valid or enforceable under applicable law, a court of
competent jurisdiction shall construe and interpret or
reform this Section 13.2 to provide for a covenant having
the maximum enforceable geographic area, time period and
other provisions (not greater than those contained
herein) as shall be valid and enforceable under such
applicable law. Each of the Partners acknowledges that
any breach of the terms, conditions or covenants set
forth in this Section 13.2 shall be competitively unfair
and may cause irreparable damage to Parent because of the
special, unique, unusual, extraordinary and intellectual
character of the Company's business, and Parent's
recovery of damages at law will not be an adequate
remedy. Accordingly, each of the Partners agrees that
for any breach of the terms, covenants or agreements of
this Section 13.2, a restraining order or an injunction
or both may be issued against such person, in addition to
any other rights or remedies Parent may have.
(c) Each Seller agrees to hold in strict
confidence all data and information relating to the
business of the Company and its subsidiaries (the
"Proprietary Information") obtained in the course of its
ownership of shares or participation in the management of
the Company or any of its subsidiaries or otherwise which
is either non-public, confidential or proprietary in
nature. Each Seller agrees that subject to any
requirement of law or tribunal order, it will keep such
Proprietary Information confidential and will not,
without the prior written consent of Parent, be disclosed
by any Seller to any person. This Agreement shall be
inoperative as to such portions of the Proprietary
Information which (i) are or become generally available
to the public other than as a result of a disclosure by
Parent or any of its Representatives, (ii) become
available to any Seller or one of its Representatives on
a nonconfidential basis from a source other than any of
Parent or any of its Representatives, which has not
advised such Seller that it is bound by a confidentiality
agreement with, or other contractual, legal or fiduciary
obligation of confidentiality to, any of Parent or any of
its subsidiaries or affiliates with respect to such
portions of the Proprietary Information, or (iii) were
known by any Seller on a nonconfidential basis prior to
its commencement of employment with, or ownership of, the
Company or one of its subsidiaries. The Sellers agree
that Parent shall be entitled to equitable relief,
including injunction and specific performance, in the
event of any breach of the provisions of this Section
13.2. Such remedies shall not be deemed to be the
exclusive remedies for a breach of this Section 13.2 by
any Seller but shall be in addition to all other remedies
available at law or equity. It is further understood and
agreed that failure or delay by Parent in exercising any
right, power or privilege under this Section 13.2 shall
not operate as a waiver thereof nor shall any single or
partial exercise thereof preclude and other or further
exercise of any right, power or privilege under this
Agreement.
14. Survival of Representations and Warranties.
The representations and warranties of the parties
contained herein shall survive the Closing and the
consummation of the transactions contemplated hereby.
15. Miscellaneous.
15.1 Successors and Assigns. This Agreement
shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and
assigns. Other than as set forth in the immediately
succeeding sentence, no party may assign any of its
rights, or delegate any of its duties or obligations,
hereunder without the prior written consent of the other
party, and any such purported assignment or delegation
shall be void ab initio. Notwithstanding the foregoing,
Parent, its affiliates, and its successors and assigns,
may assign their rights and delegate their duties (i) to
any successor entity resulting from any liquidation,
merger, consolidation' reorganization, or transfer of all
or substantially all of the assets or stock of Parent, or
(ii) to any affiliate of Parent; provided, that in either
case, any such assignee shall expressly assume all of the
obligations Parent hereunder.
15.2 Notices. All notices, demands and other
communications (collectively, "Notices") given or made
pursuant to this Agreement shall be in writing and shall
be deemed to have been duly given if sent by registered
or certified mail, return receipt requested, postage and
fees prepaid, by overnight service with a nationally
recognized "next day" delivery company such as Federal
Express or United Parcel Service, by facsimile
transmission, or otherwise actually delivered to the
following addresses:
(a) If to Parent:
The Warnaco Group, Inc.
00 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxx X. Xxxxxxx
Fax: 000-000-0000
with a copy to:
The Warnaco Group, Inc.
00 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxxx X. Xxxxxxxxxxx
Fax: 000-000-0000
(b) If to the Sellers:
c/o Charterhouse Equity Partners II, L.P.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: A. Xxxxxxxx Xxxxx
Fax: (000) 000-0000
with copies to:
Proskauer Rose LLP
0000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxx X. Xxxx
Fax: (000) 000-0000
Xxxxxx X. Xxxxx
Designer Holdings Ltd.
0000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Fax: (000) 000-0000
Any Notice shall be deemed duly given when
received by the addressee thereof. Any of the parties to
this Agreement may from time to time change its address
for receiving notices by giving written notice thereof in
the manner set forth above.
15.3 Amendment: Waiver. No provision of this
Agreement may be waived unless in writing signed by all
of the parties to this Agreement, and the waiver of any
one provision of this Agreement shall not be deemed to be
a waiver of any other provision. This Agreement may be
amended, supplemented or otherwise modified only by a
written agreement executed by all of the parties to this
Agreement.
15.4 Enforcement; Jurisdiction. The parties
agree that irreparable damage would occur in the event
that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that the
parties shall be entitled to an injunction or injunctions
to prevent breaches of this Agreement and to enforce
specifically the terms and provisions of this Agreement
in any Federal court located in the State of Delaware or
any Delaware state court, this being in addition to any
other remedy to which they are entitled at law or in
equity. Any suit, action or proceeding seeking to
enforce any provision of, or based on any matter arising
out of or in connection with, this Agreement or the
transactions contemplated by this Agreement may be
brought against any of the parties in any Federal court
located in the State of Delaware or any Delaware state
court, and each of the parties hereto hereby consents to
the exclusive jurisdiction of such courts (and of the
appropriate appellate courts therefrom) in any such suit,
action or proceeding and waives any objection to venue
laid therein. Process in any such suit, action or
proceeding may be served on any party anywhere in the
world, whether within or without the State of Delaware.
Without limiting the generality of the foregoing, each
party hereto agrees that service of process upon such
party at the address referred to in Section 13.2,
together with written notice of such service to such
party, shall be deemed effective service of process upon
such party.
15.5 Severability. Whenever possible, each
provision or portion of any provision of this Agreement
will be interpreted in such manner as to be effective and
valid under applicable law but if any provision or
portion of any provision of this Agreement is held to be
invalid, illegal or unenforceable in any respect under
any applicable law or rule in any jurisdiction, such
invalidity, illegality or unenforceability will not
affect any other provision or portion of any provision in
such jurisdiction, and this Agreement will be reformed,
construed and enforced in such jurisdiction as if such
invalid, illegal or unenforceable provision or portion of
any provision had never been contained herein.
15.6 Counterparts. This Agreement may be
executed in one or more counterparts, all of which shall
be considered one and the same agreement and shall become
effective when one or more counterparts have been signed
by each of the parties and delivered to the other
parties.
15.7 Entire Agreement; No Third-Party
Beneficiaries. This Agreement and the other agreements
referred to herein constitute the entire agreement, and
supersede all prior agreements and understandings, both
written and oral, among the parties with respect to the
subject matter of this Agreement. This Agreement is not
intended to confer upon any person other than the parties
any rights or remedies.
15.8 Governing Law. This Agreement shall be
governed by, and construed in accordance with, the laws
of the State of Delaware, regardless of the laws that
might otherwise govern under applicable principles of
conflicts of laws thereof.
15.9 Headings. The section and subsection
headings contained in this Agreement are included for
convenience only and form no part of the agreement
between the parties.
15.10 Expenses. Each party shall pay its own
costs, expenses, including without limitation, the fees
and expenses of their respective counsel and financial
advisors.
15.11 Publicity. The initial press release
relating to this Agreement shall be a joint press
release, and Parent and the Sellers shall use reasonable
efforts to agree upon the text of any other press release
before issuing any such press release.
15.12 Specific Performance. Each of the
parties hereto recognizes and acknowledges that a breach
by it of any covenants or agreements contained in this
Agreement will cause the other parties to sustain damages
for which they would not have an adequate remedy at law
for money damages, and therefore each of the parties
hereto agrees that in the event of any such breach the
aggrieved party or parties shall be entitled to the
remedy of specific performance of such covenants and
agreements and injunctive and other equitable relief,
without the posting of bond or other security, in
addition to any other remedy to which it or they may be
entitled, at law or in equity.
IN WITNESS WHEREOF, the parties have executed
this Agreement as of the date first above written.
THE WARNACO GROUP, INC.
By: /s/ Xxxxx X. Xxxxxxx
Title: Chairman and Chief
Executive Officer
/s/ Xxxxxx X. Xxxxx
Xxxxxx X. Xxxxx
CHARTERHOUSE EQUITY PARTNERS II, L.P.
By: CHUSA EQUITY INVESTORS II, L.P.,
General Partner
By: CHARTERHOUSE EQUITY II, INC.,
General Partner
/s/ Xxxxxx X. Xxxxxxx
Attorney-in-Fact
CHEF NOMINEES LIMITED
/s/ Xxxxxx X. Xxxxxxx
Name: Xxxxxx X. Xxxxxxx
Title:
A.S. ENTERPRISES, L.L.C.
By: /s/ Xxxxxx X. Xxxxx
Name: Xxxxxx X. Xxxxx
Title:
/s/ Xxxxxx X. Xxxxxx
Xxxxxx X. Xxxxxx
/s/ Xxxxxxx Xxxx Xxxxxx
Xxxxxxx West Xxxxxx
/s/ Xxxxxx X. Xxxxxx
Xxxxxx X. Xxxxxx
/s/ Xxxx X. Xxxxxx
Xxxx X. Xxxxxx as Trustee f/b/o
Xxxxxx X. Xxxxxx and Xxxx X. Xxxxxx
/s/ Xxxxxxx X. Xxxxxx
Xxxxxxx X. Xxxxxx
Schedule 3.2
SHARES OF
COMMON STOCK
BENEFICIALLY OWNED
--------------------
NAME OF BENEFICIAL OWNER NUMBER PERCENTAGE
------------------------ ------ ----------
NEW RIO, L.L.C.:
Charterhouse Equity Partners
II, L.P. . . . . . . . . . . . 8,033,800 25.0%
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Xxxxxx X. Xxxxx(1) . . . . . . 7,805,813 24.3%
0000 Xxxxxxxx
Xxx Xxxx, XX 00000
Xxxxxx X. Xxxxxx . . . . . . . 141,146 *
Xxxxxx X. Xxxxxx . . . . . . . 52,272 *
Xxxxxxx Xxxx Xxxxxx . . . . . . 51,084 *
Trust for the benefit of
Xxxx X. Xxxxxx and Xxxxxxx X.
Xxxxxx . . . . . . . . . . . . 167,445 *
Xxxxxxx X. Xxxxxxx . . . . . . 125,374 *
Chef Nominees Limited . . . . . 15,934 *
NEW RIO, L.L. TOTAL . . . . . . . . 16,493,868 51.3%
-------------------
* Less than one percent.
(1) Includes 302,924 shares owned by AS Enterprises LLC, a
company owned by Mr. and Xxx. Xxxxx.