1
STOCKHOLDERS AGREEMENT
dated as of June 22, 1998
by and among
Schwinn Holdings Corporation,
GT Bicycles, Inc.
and
Each of the Individuals and Entities
Listed on the Signature Page Hereto
2
STOCKHOLDERS AGREEMENT
THIS STOCKHOLDERS AGREEMENT (this "Agreement") is made and entered
into as of June 22, 1998, by and among Schwinn Holdings Corporation, a Delaware
corporation ("Parent"), GT Bicycles, Inc., a Delaware corporation (the
"Company"), and the individuals and entities listed on Schedule A attached
hereto (each of such individuals and entities being a "Stockholder" and,
collectively, the "Stockholders").
WHEREAS, Parent, SPK Acquisition Corporation, a Delaware corporation
and a wholly-owned subsidiary of Parent ("Merger Subsidiary"), and the Company,
propose to enter into an Agreement and Plan of Merger dated as of the date
hereof (as the same may be amended, the "Merger Agreement") providing for the
merger of Merger Subsidiary with and into the Company (the "Merger"), upon the
terms and subject to the conditions set forth in the Merger Agreement and in
accordance with the General Corporation Law of the State of Delaware (the
"DGCL"); and
WHEREAS, as a condition and inducement to Parent's willingness to
enter into the Merger Agreement, Parent has requested that that each Stockholder
enter into this Agreement.
NOW, THEREFORE, to induce Parent to enter into, and in consideration
of its entering into, the Merger Agreement, and in consideration of the premises
and the representations, warranties and agreements contained herein, the
parties, intending to be legally bound, hereby agree as follows (capitalized
terms used but not defined herein shall have the meanings as set forth in the
Merger Agreement):
1. Covenants of each Stockholder. Each Stockholder, severally and not
jointly, agrees as follows:
(a) Vote for the Merger. At any meeting of stockholders of the
Company called to vote upon the Merger or the Merger Agreement or at any
adjournment thereof or in any other circumstances upon which a vote, consent or
other approval with respect to the Merger and the Merger Agreement is sought,
the Stockholder shall vote (or cause to be voted) all shares of Company Common
Stock beneficially owned by the Stockholder or over which the Stockholder has
any voting power (together with any other shares of Company Common Stock
acquired by the Stockholder or over which the Stockholder acquires voting power
after the date hereof, the "Subject Shares") in favor of the Merger, the
adoption by the Company of the Merger Agreement and the approval of the terms
thereof and, to the extent presented to the stockholders of the Company for a
vote, each of the other transactions contemplated by the Merger Agreement or
this Agreement. The Stockholder hereby waives any appraisal rights granted
pursuant to Section 262 of the DGCL (or any successor provision) to which it may
otherwise be entitled as a result of the Merger or the other transactions
contemplated by the Merger Agreement.
(b) Vote Against Acquisition Proposals. At any meeting of
stockholders of the Company or at any adjournment thereof or in any other
circumstances upon which a vote,
-1-
3
consent or other approval of the stockholders of the Company is sought, the
Stockholder shall vote (or cause to be voted) the Subject Shares against (i) any
merger or merger agreement (other than the Merger and the Merger Agreement),
consolidation, combination, sale of substantial assets, reorganization,
recapitalization, dissolution, liquidation or winding up of or by the Company or
any other Acquisition Proposal, (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 of the Company under the Merger Agreement, and
(iii) any amendment of the Company's certificate of incorporation or by-laws or
other proposal or transaction involving the Company or any of its subsidiaries,
which amendment or other proposal or transaction would in any manner impede,
frustrate, prevent or nullify the Merger, the Merger Agreement or any of the
other transactions contemplated by the Merger Agreement or change in any manner
the voting rights of any class of capital stock of the Company. Subject to
Section 9, the Stockholder shall not commit or agree to take any action
inconsistent with the foregoing.
(c) Transfer of Subject Shares, Options and Warrants. Except pursuant
to this Agreement, the Stockholder shall not, without the prior written consent
of Parent, (i) sell or otherwise transfer or dispose of the Subject Shares, any
options or warrants to purchase shares of Company Common Stock ("Options" and
"Warrants," respectively) or any shares of Company Common Stock subject to any
Option or Warrant to any person, other than pursuant to the terms of the Merger,
(ii) enter into any voting arrangement, whether by proxy, power-of-attorney,
voting agreement, voting trust or otherwise, in connection with, directly or
indirectly, any Acquisition Proposal, or (iii) commit or agree to take any of
the foregoing actions.
(d) No Solicitation. The Stockholder shall not, nor shall it permit
any of its affiliates or any director, officer, employee, investment banker,
attorney or other adviser or representative of any of the foregoing to, (i)
directly or indirectly, solicit, initiate or encourage the submission of, any
Acquisition Proposal, or (ii) subject to the terms of Section 9, directly or
indirectly participate in any discussions or negotiations regarding, or furnish
to any person any information with respect to, or take any other action to
facilitate any inquiries or the making of any proposal that constitutes, or may
reasonably be expected to lead to, any Acquisition Proposal.
(e) Stockholder Assistance. Subject to Section 9, the Stockholder
shall use its reasonable best efforts to assist and cooperate with the parties
to the Merger Agreement to consummate and make effective, in the most
expeditious manner practicable, the Merger and the other transactions
contemplated by the Merger Agreement, subject, in each case to the requirements
of applicable laws.
(f) Termination of Covenants. The covenants and agreements set forth
in this Section 1 shall terminate and be of no further force and effect upon the
earlier to occur of (i) the Effective Time of the Merger, or (ii) the date of
termination of the Merger Agreement.
2. Option to Purchase Subject Shares.
(a) Subject to the terms and conditions set forth herein, each
Stockholder hereby grants to Parent an irrevocable option (the "Parent Option")
to purchase all of such
-2-
4
Stockholder's Subject Shares at a price per share in cash (the "Purchase Price")
equal to $8.00 per Subject Share.
(b) Parent may exercise the Parent Option in whole but not in part,
at any time after the occurrence of a Purchase Event (as defined below);
provided, however, that, to the extent the Parent Option shall not have been
previously exercised, it shall terminate and be of no further force and effect
upon the earlier to occur of (i) the Effective Time of the Merger, (ii) the date
of termination of the Merger Agreement pursuant to Sections 9.1(a) and 9.1(d)
thereof, or (iii) six months from the date of termination of the Merger
Agreement pursuant to any other Section thereof (such date, the "Termination
Date"). Notwithstanding the foregoing, if the Parent Option cannot be exercised
before the Termination Date as a result of any injunction, order or similar
restraint issued by a court of competent jurisdiction, the Parent Option shall
expire (and the Termination Date shall be so extended until the earlier of) (i)
on the 30th business day after such injunction, order or restraint shall have
been dissolved, or (ii) when such injunction, order or restraint shall have
become permanent and no longer subject to appeal, as the case may be.
(c) As used herein, a "Purchase Event" shall mean any of the
following events:
(i) any person (other than Parent or any of its
subsidiaries) shall have commenced (as such term is defined in Rule 14d-2 under
the Securities Exchange Act of 1934, as amended (the "Exchange Act")), or shall
have filed a registration statement under the Securities Act of 1933, as amended
(the "Securities Act"), with respect to, a tender offer or exchange offer to
purchase any Company Common Stock such that, upon consummation of such offer,
such person would have Beneficial Ownership (as defined below) of 50% or more of
the then outstanding shares of Company Common Stock;
(ii) the Company or any of its subsidiaries shall or shall
have entered into, authorized, recommended, proposed or publicly announced an
intention to enter into, authorize, recommend, or propose, an agreement,
arrangement or understanding with any person (other than Parent or any of its
subsidiaries) to, or any person (other than Parent or any of its subsidiaries)
shall have publicly announced a bona fide intention to effect any Acquisition
Proposal with the Company;
(iii) any person (other than Parent or any of its
subsidiaries, and other than a Stockholder) shall have acquired Beneficial
Ownership or the right to acquire Beneficial Ownership of 50% or more of the
outstanding shares of the Company Common Stock;
(iv) the Company's Board of Directors (or any committee
thereof) (A) shall have withdrawn, modified or changed its recommendation
regarding the approval of the Merger or the Merger Agreement or the transactions
contemplated thereby in a manner adverse to Parent, (B) shall have recommended
to the stockholders of the Company any Acquisition Proposal, or (C) shall have
resolved, or entered into any agreement, to do any of the foregoing;
(v) with respect to a particular Stockholder, such
Stockholder shall have breached in any material respect any of its obligations
under this Agreement;
-3-
5
(vi) the Company shall have delivered a Superior Proposal
Notice.
(d) As used herein, the terms "Beneficial Ownership," "Beneficial
Owner" and "Beneficially Own" shall have the meanings ascribed to them in Rule
13d-3 under the Exchange Act. As used herein, "person" shall have the meaning
specified in Sections 3(a)(9) and 13(d)(3) of the Exchange Act.
(e) In the event Parent wishes to exercise the Parent Option, it
shall deliver to each Stockholder at the address set forth on Schedule A, a
written notice (the date of which being herein referred to as the "Notice Date")
specifying a place and date not earlier than two business days nor later than 30
calendar days from the Notice Date for the closing of such purchase; provided
that if the closing of the purchase and sale pursuant to the Parent Option (the
"Closing") cannot be consummated by reason of any applicable judgment, decree,
order, law or regulation, the period of time that otherwise would run pursuant
to this sentence shall run instead from the date on which such restriction on
consummation has expired or been terminated; and, provided further that, without
limiting the foregoing, if prior notification to or approval of any regulatory
authority is required in connection with such purchase, Parent and, if
applicable, each Stockholder, shall promptly file the required notice or
application for approval and shall expeditiously process the same (and each
Stockholder shall cooperate in a commercially reasonable manner with Parent in
the filing of any such notice or application and the obtaining of any such
approval), and the period of time that otherwise would run pursuant to this
sentence shall run instead from the date on which, as the case may be, (i) any
required notification period has expired or been terminated, or (ii) such
approval has been obtained, and in either event, any requisite waiting period
has passed.
(f) At the Closing, Parent shall pay to each Stockholder the
aggregate Purchase Price for the shares of Company Common Stock purchased from
such Stockholder pursuant to the exercise of the Parent Option. At such Closing,
simultaneously with the delivery of the Purchase Price, each Stockholder shall
transfer to Parent good, valid and marketable title to, and shall deliver to
Parent a certificate or certificates representing, the number of shares of
Company Common Stock purchased by Parent, registered in the name of Parent or a
nominee designated in writing by Parent (or if it is not possible to have such
registration completed prior to Closing, the certificates delivered shall be
accompanied by appropriate stock power(s) in form reasonably satisfactory to
Parent), which shares shall be fully paid and non-assessable and free and clear
of all Liens, rights of first refusal or offer, proxies, voting trusts or
agreements, understandings or arrangements or other encumbrances of any kind
whatsoever other than any restrictions under the Securities Act or the Exchange
Act.
(g) In the event of any change in Company Common Stock by reason of a
stock dividend, split-up, recapitalization, merger, consolidation,
reorganization, combination, exchange of shares or similar transaction, the type
and number of shares or securities subject to the Parent Option, and the
Purchase Price therefor, shall be adjusted appropriately so that Parent shall
receive upon exercise of the Parent Option the same class and number of
outstanding shares or other securities or property that Parent would have
received in respect of Company Common Stock if the Parent Option had been
exercised immediately prior to such event, or the record date therefor, as
applicable.
-4-
6
(h) In the event that Parent has purchased the Subject Shares
pursuant to the Parent Option and, within 180 days after the date of such
purchase, Parent or any affiliate thereof sells, transfers, exchanges or
disposes of any of the Subject Shares acquired upon exercise of the Parent
Option other than in connection with the consummation of an Acquisition Proposal
or a transaction with an affiliate of Parent (a "Disposition") then, within two
business days after the closing of such Disposition, Parent shall tender and pay
to each Stockholder, in immediately available funds, their respective pro rata
share (calculated based on the respective amount of the Subject Shares purchased
from each Stockholder pursuant to the Parent Option) of 50% of the Net Profit
realized by Parent in connection with such Disposition. As used in this Section
2(h), "Net Profit" shall mean an amount equal to the excess, if any, of (i) the
gross amount realized by Parent from a Disposition over (ii) the aggregate
purchase price paid by Parent with respect to the Subject Shares subject to such
Disposition, with such excess being reduced by the sum of (A) all reasonable
out-of-pocket fees, costs and expenses incurred by Parent and its affiliates in
connection with such Disposition (including, without limitation, all fees, costs
and expenses of counsel) and (B) all customary brokerage fees and commissions,
if any, incurred in connection with such Disposition.
3. Registration Rights. Upon exercise of the Parent Option, Parent shall
be entitled to have the Subject Shares purchased thereby registered under the
Securities Act of 1933, as amended, pursuant to the terms of Section 7 of the
Amendment and Restatement of Stockholders Agreement dated as of November 12,
1993 among GT Holdings, Inc., GT Acquisition Corporation, Xxxx Capital Fund IV,
L.P., Xxxx Capital Fund IV-B, L.P., BCIP Associates, BCIP Trust Associates,
L.P., Xxxxxxx National Life Insurance Company and each of the persons designated
as the Management Stockholders on the signature page of such agreement (the
"Stockholders Agreement"), which terms are incorporated herein by reference and
made a part hereof. For purposes of such registration rights, Parent shall be
deemed to own 100% of the Investor Shares (as defined in the Stockholders
Agreement).
4. Representations and Warranties of each Stockholder. Each Stockholder
hereby, severally and not jointly, represents and warrants to Parent as of the
date hereof as follows:
(a) Authority. The Stockholder has all requisite power and authority
to enter into this Agreement and to consummate the transactions contemplated
hereby. This Agreement has been duly authorized, executed and delivered by the
Stockholder (or in the case of any Stockholder which is a trust, by the trustee
on behalf of such trust, or in the case of any Stockholder which is a
partnership by a general partner on behalf of such partnership) and constitutes
a valid and binding obligation of the Stockholder enforceable against the
Stockholder in accordance with its terms. The execution and delivery of this
Agreement do not, and the consummation of the transactions contemplated hereby
and compliance with the terms hereof will not, conflict with or result in any
violation of or default (with or without notice or lapse of time or both) under
any provision of, any trust agreement, loan or credit agreement, note, bond,
mortgage, indenture, lease or other agreement, instrument, permit, concession,
franchise, license, judgment, order, notice, decree, statute, law, ordinance,
rule or regulation applicable to the
-5-
7
Stockholder. If the Stockholder is married and the Stockholder's Subject Shares,
Options or Warrants constitute community property, or the Stockholder otherwise
needs spousal approval for this Agreement to be legal, valid and binding, this
Agreement has been duly authorized, executed and delivered by, and constitutes a
valid and binding obligation of, the Stockholder's spouse, and is enforceable
against such spouse in accordance with its terms. No trust which is a
Stockholder requires the consent of any beneficiary to the execution and
delivery of this Agreement or to the consummation of the transactions
contemplated hereby.
(b) Shares, Options and Warrants. The Stockholder is the sole
beneficial and (except as set forth on Schedule A) record owner of, and has good
and marketable title to, the shares of Company Common Stock, Options and
Warrants set forth opposite such Stockholder's name on Schedule A, free and
clear of any Liens. The Stockholder does not own, of record or beneficially, any
shares of capital stock of the Company other than the shares of Company Common
Stock set forth opposite such Stockholder's name on Schedule A and the shares of
Company Common Stock subject to any Options or Warrants set forth opposite such
Stockholder's name on Schedule A. The Stockholder has the sole right to vote
such shares of Company Common Stock, and none of such shares of Company Common
Stock is subject to any voting trust or other agreement, arrangement or
restriction, except as contemplated by this Agreement or as otherwise set forth
on Schedule A. Except as set forth in Schedule A, the Stockholder does not own
or hold any rights to acquire any additional shares of capital stock of the
Company or any interest therein or any voting rights with respect to any
additional shares of Company Common Stock.
5. Representations and Warranties of Parent. Parent hereby represents
and warrants to each Stockholder that Parent has all requisite corporate power
and authority to enter into this Agreement and to consummate the transactions
contemplated hereby. This Agreement has been duly authorized, executed and
delivered by Parent and constitutes a valid and binding obligation of Parent
enforceable against Parent in accordance with its terms.
6. Further Assurances. Each Stockholder shall, from time to time,
execute and deliver, or cause to be executed and delivered, such additional or
further consents, documents and other instruments as Parent may reasonably
request for the purpose of effectively carrying out the transactions
contemplated by this Agreement.
7. Assignment. Neither this Agreement nor any of the rights, interests
or obligations hereunder shall be assigned by any of the parties without the
prior written consent of the other parties, except that Parent may assign, in
its sole discretion, any or all of its rights, interests and obligations
hereunder to any direct or indirect wholly-owned subsidiary of Parent; provided,
however, that no such assignment shall relieve Parent of its obligations
hereunder if such assignee does not perform such obligations. Subject to the
preceding sentence, this Agreement shall be binding upon, inure to the benefit
of and be enforceable by the parties and their respective heirs, successors and
assigns.
8. General Provisions.
(a) Expenses. Each of the parties hereto shall pay all costs and
expenses incurred by it or on its behalf in connection with the transactions
contemplated hereunder,
-6-
8
including fees and expenses of its own financial consultants, investment
bankers, accountants and counsel, except that the Company shall pay the
reasonable fees of Ropes & Xxxx incurred by the Stockholders in connection with
this Agreement.
(b) Amendments. This Agreement may not be amended except by an
instrument in writing signed by each of the parties hereto.
(c) Notice. All notices and other communications hereunder shall be
in writing and shall be deemed given if delivered personally, telecopied (which
is confirmed) or sent by overnight courier (providing proof of delivery) to
Parent and the Company in accordance with the notification provision contained
in the Merger Agreement and to the Stockholders at their respective addresses
set forth on Schedule A (or at such other address for a party as shall be
specified by like notice).
(d) Interpretation. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
(e) 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 of the counterparts have been signed by
each of the parties and delivered to the other party, it being understood that
each party need not sign the same counterpart.
(f) Entire Agreement; No Third-Party Beneficiaries. This Agreement
(including the documents and instruments referred to herein) (i) constitutes the
entire agreement and supersedes all prior agreements and understandings, both
written and oral, among the parties with respect to the subject matter hereof,
and (ii) is not intended to confer upon any person other than the parties hereto
and Merger Subsidiary, which is an express beneficiary of this Agreement, any
rights or remedies hereunder.
(g) 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 law.
(h) Public Announcements. The Stockholders and Parent shall consult
with each other and use reasonable efforts to agree upon the text of any press
release, before issuing any press release or otherwise making public statements
with respect to the transactions contemplated by this Agreement and the Merger
Agreement and shall not issue any such press release or make any such public
statement without the prior consent of the other parties hereto, which consent
shall not be unreasonably withheld or delayed, except as may be required by
applicable law (including requirements of stock exchanges and other similar
regulatory bodies).
(i) Severability. If any term, provision, covenant or restriction
herein, or the application thereof to any circumstance, shall, to any extent, be
held by a court of competent jurisdiction to be invalid, void or unenforceable,
the remainder of the terms, provisions, covenants and restrictions herein and
the application thereof to any other circumstances, shall remain in full force
and effect, shall not in any way be affected, impaired or invalidated, and shall
be enforced to the fullest extent permitted by law, and the parties hereto shall
negotiate in good faith
-7-
9
a substitute term or provision that comes as close as possible to the
invalidated and unenforceable term or provision, and that puts each party in a
position as nearly comparable as possible to the position each such party would
have been in but for the finding of invalidity or unenforceability, while
remaining valid and enforceable.
9. Stockholder Capacity. No person executing this Agreement who is or
becomes during the term hereof a director or officer of the Company makes any
agreement or understanding herein in his or her capacity as such director or
officer and nothing herein shall limit or affect any action taken by such person
in his or her capacity as a director or officer. Each Stockholder signs solely
in his or her capacity as the record holder and beneficial owner of, or the
trustee of a trust whose beneficiaries are the beneficial owners of, or the
general partner of a partnership which is the beneficial owner of such
Stockholder's Subject Shares, Options and Warrants and nothing herein shall
limit or affect any actions taken by a Stockholder in his or her capacity as an
officer or director of the Company. Nothing in this Agreement shall be deemed,
prior to exercise of the Parent Option, to constitute a transfer of the
beneficial ownership of the Subject Shares by any Stockholder.
10. Enforcement. The parties agree, and the beneficiaries of each trust
which is a party hereto have agreed, 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 a temporary restraining
order and preliminary and permanent injunctive relief to prevent breaches of
this Agreement and to enforce specifically the terms and provisions of this
Agreement in any court of the Untied States located in the State of Delaware or
in a Delaware state court, this being in addition to any other remedy to which
they are entitled at law or in equity. In addition, each of the parties hereto
(a) consents to submit to the personal jurisdiction of any United States court
located in the State of Delaware or any Delaware state court in the event any
dispute arises out of this Agreement or any of the transactions contemplated
hereby, (b) agrees that such party will not attempt to deny or defeat such
personal jurisdiction by motion or other request for leave from any such court,
(c) agrees that such party will not bring any action relating to this Agreement
or the transactions contemplated hereby in any court other than a United States
court sitting in the State of Delaware or a Delaware state court, and (d) waives
any right to trial by jury with respect to any claim or proceeding related to or
arising out of this Agreement or any of the transactions contemplated hereby.
-8-
10
IN WITNESS WHEREOF, Parent has caused this Agreement to be signed by
its officer thereunto duly authorized and each Stockholder has signed this
Agreement or has caused this Agreement to be signed by its officer thereunto
duly authorized, all as of the date first written above.
SCHWINN HOLDINGS CORPORATION GT BICYCLES, INC.
By: /s/ XXXXX X. XXXXXXX By: /s/ XXXXXXX XXXXXX
-------------------------------- --------------------------------
Name: Xxxxx X. Xxxxxxx Name: Xxxxxxx Xxxxxx
Title: Vice President and Treasurer Title: Chief Executive Officer
STOCKHOLDERS:
XXXX CAPITAL FUND IV, X.X. XXXX CAPITAL FUND IV-B, L.P.
By: Xxxx Capital Partners IV, L.P. By: Xxxx Capital Partners IV, L.P.
By: Xxxx Capital Investors, Inc. By: Xxxx Capital Investors, Inc.
By By:
-------------------------------- --------------------------------
Name: Name:
Title: Managing Director Title: Managing Director
BCIP ASSOCIATES BCIP TRUST ASSOCIATES, L.P.
By: By:
-------------------------------- --------------------------------
Name: Name:
Title: Authorized Partner Title: Authorized Partner
-9-
11
Schedule A - Stockholders
Number of Shares Number of Shares
Number of Shares of Company of Company
Name and of Company Common Stock Common Stock
Address Common Stock Underlying Options Underlying Warrants
Xxxx Capital Fund IV, L.P. 969,342 0 0
c/o Bain Capital, Inc.
Two Xxxxxx Xxxxx
Xxxxxx, XX 00000
Xxxx Capital Fund IV-B, L.P. 1,109,328 0 0
c/o Bain Capital, Inc.
Two Xxxxxx Xxxxx
Xxxxxx, XX 00000
BCIP Associates 102,388 0 0
c/o Bain Capital, Inc.
Two Xxxxxx Xxxxx
Xxxxxx, XX 00000
BCIP Trust Associates, L.P. 49,023 0 0
c/o Bain Capital, Inc.
Two Xxxxxx Xxxxx
Xxxxxx, XX 00000
-10-
