EXHIBIT 10.16
REDEMPTION AGREEMENT
THIS AGREEMENT is made as of the 18th day of September, 1997, between The
Children's Place Retail Stores, Inc., a Delaware corporation (the "Company"),
and Xxxx Xxxxx Xxxx Xxxxxx, Incorporated, a Maryland corporation ("Xxxx Xxxxx").
RECITALS
WHEREAS, the Company expects to undertake an initial public offering (the
"IPO") of its Common Stock in September 1997 or as soon thereafter as
practicable;
WHEREAS, the Company issued to Xxxx Xxxxx that certain warrant (the
"Original Warrant"), dated June 28, 1996, entitling Xxxx Xxxxx to purchase up to
6,225.8 shares of the Company's Series A Common Stock, par value $0.10 per share
(the "Series A Common Stock"), at an exercise price of $321.24 per share;
WHEREAS, the Original Warrant has been cancelled and reissued by the
Company to Xxxx Xxxxx as two separate warrants, each dated September 18, 1997,
with one such warrant (the "Redemption Warrant") entitling Xxxx Xxxxx to
purchase up to 4,150.5333 shares of Series A Common Stock and the other such
warrant (the "Exercise Warrant") entitling Xxxx Xxxxx to purchase up to
2,075.2667 shares of Series A Common Stock, in each case at an exercise price of
$321.24 per share and, otherwise, upon the same terms and conditions as the
Original Warrant;
WHEREAS, prior to the consummation of the IPO, the Company expects to
effect a 120-for-one stock split (the "Stock Split") of the Series A Common
Stock and to redesignate (the "Reclassification") the Series A Common Stock as
Common Stock (the "Common Stock");
WHEREAS, after giving effect to the Stock Split and Reclassification, the
Redemption Warrant will be exercisable for 498,064 shares of Common Stock and
the Exercise Warrant will be exercisable for 249,032 shares of Common Stock, in
each case at an exercise price of $2.677 per share;
WHEREAS, as set forth in Section 1.1 hereof, the Company desires to
purchase and redeem from Xxxx Xxxxx, and Xxxx Xxxxx desires to sell to the
Company, concurrently with the consummation of the IPO, the Redemption Warrant;
and
WHEREAS, Xxxx Xxxxx desires to exercise the Exercise Warrant concurrently
with the consummation of the IPO.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements of the parties contained herein, the sufficiency of which is
hereby acknowledged, and intending to be legally bound, the Company and Xxxx
Xxxxx agree as follows:
I. PURCHASE AND SALE; REDEMPTION; CLOSING
1.1. Redemption of Warrant. On the terms and subject to the
conditions set forth in this Agreement, concurrently with the consummation of
the IPO (the date of such consummation, the "IPO Closing Date"), the Company
will purchase and redeem (such purchase and redemption, the "Warrant
Redemption"), and Xxxx Xxxxx will sell and transfer to the Company, the
Redemption Warrant (in its entirety) for an aggregate purchase price (the
"Redemption Price"), payable in immediately available funds, which shall equal
(after giving effect to the Stock Split and the Reclassification) the product of
(x) the IPO price per share of Common Stock minus the IPO underwriting discount
per share of Common Stock minus the $2.677 exercise price per share of Common
Stock subject to the Redemption Warrant multiplied by (y) the 498,064 shares of
Common Stock subject to the Redemption Warrant.
1.2. Closing. The closing (the "Closing") of the Warrant Redemption
contemplated hereunder will take place at the offices of Stroock & Stroock &
Xxxxx LLP, 000 Xxxxxx Xxxx, Xxx Xxxx, Xxx Xxxx (or such other location in the
City of New York as the Company may designate), immediately following the
consummation of the IPO and concurrently with the exercise by Xxxx Xxxxx of the
Exercise Warrant on the IPO Closing Date or on such later date as the parties
may agree (the date on which the Closing occurs is herein referred to as the
"Closing Date"). At the Closing:
(a) Xxxx Xxxxx will deliver to the Company the certificate or
certificates representing the Redemption Warrant, together with an instrument of
assignment duly executed in blank and such other documents as the Company may
reasonably request to transfer record ownership of the Redemption Warrant to the
Company; and
(b) The Company will deliver to Xxxx Xxxxx the Redemption Price in
immediately available funds by wire transfer to an account designated by Xxxx
Xxxxx by notice to the Company in accordance with this Agreement not later than
two business days prior to the Closing Date.
1.3. Proceedings. Except as otherwise specifically provided for in
this Agreement, all proceedings that will be taken and all documents that will
be executed and delivered by the parties hereto on the Closing Date will be
deemed to have been taken and executed simultaneously and no proceeding will be
deemed taken nor any document executed and delivered until all have been taken,
executed and delivered.
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II. REPRESENTATIONS AND WARRANTIES OF XXXX XXXXX
2.1. Xxxx Xxxxx represents and warrants to the Company, as follows:
2.1.1. Authority; Enforceability. The execution, delivery and
performance by Xxxx Xxxxx of this Agreement is within Xxxx Xxxxx'x corporate
powers and has been duly authorized by all necessary corporate action on the
part of Xxxx Xxxxx. This Agreement constitutes a valid and binding agreement of
Xxxx Xxxxx, enforceable against Xxxx Xxxxx in accordance with its terms, except
as enforceability may be affected by bankruptcy, insolvency, moratorium or other
similar laws.
2.1.2. No Conflicts. The execution and delivery of this Agreement
does not, and the consummation of the transactions contemplated hereby and
compliance with the terms hereof will not, violate or conflict with in any
respect or result in a breach under any contract, license, judgment, order,
decree, statute, law, ordinance, rule or regulation applicable to Xxxx Xxxxx or
its property or assets.
2.1.3. No Consents. No consent of, approval or filing with, any
court or other governmental authority is required to be obtained or made by or
with respect to Xxxx Xxxxx in connection with the execution and delivery of this
Agreement or the consummation by Xxxx Xxxxx of the transactions contemplated
hereby.
2.1.4. Ownership of Warrant. Each of the Redemption Warrant and
Exercise Warrant is owned, lawfully of record and beneficially, by Xxxx Xxxxx,
free and clear of any Liens (as defined). The Redemption Warrant and the
Exercise Warrant are the only warrants for capital stock of the Company or other
equity interest in the Company owned by Xxxx Xxxxx.
As used herein, "Lien" means, with respect to any property or asset,
any mortgage, lien, pledge, charge, security interest, encumbrance or other
adverse claim of any kind in respect of such property or asset but shall not
include the right of any Xxxx Xxxxx officer or employee to any portion of the
net proceeds received by Xxxx Xxxxx from the exercise or other disposition of
either the Redemption Warrant or the Exercise Warrant or any portion thereof.
For purposes of this Agreement, a person will be deemed to own subject to a Lien
any property or asset which it has acquired or holds subject to the interest of
a vendor or lessor under any conditional sale agreement, capital lease or other
title retention agreement relating to such property or asset.
III. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
3.1. The Company represents and warrants to Xxxx Xxxxx as follows:
3.1.1. Corporate Authorization; Enforceability. The execution,
delivery and performance by the Company of this Agreement is within the
Company's corporate powers and has been duly authorized by all necessary
corporate action on the part of the Company. This Agreement constitutes a valid
and binding agreement of the Company, enforceable against the
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Company in accordance with its terms, except as enforceability may be affected
by bankruptcy, insolvency, moratorium or other similar laws.
3.1.2. No Conflicts. The execution and delivery of this Agreement
does not, and the consummation of the transactions contemplated hereby and
compliance with the terms hereof will not, violate or conflict with in any
respect or result in a breach under any contract, license, judgment, order,
decree, statute, law, ordinance, rule or regulation applicable to the Company or
its property or assets.
3.1.3. No Consents. No consent of, approval or filing with, any
court or other governmental authority is required to be obtained or made by or
with respect to the Company in connection with the execution and delivery of
this Agreement or the consummation by the Company of the transactions
contemplated hereby.
3.1.4. Notice of Adjustment. The certificate of the Chief Financial
Officer of the Company, to be dated as of the effective date of the Stock Split,
prepared in accordance with Section 5 of the Original Warrant and delivered to
Xxxx Xxxxx (the "Notice of Adjustment"), will properly give effect to the Stock
Split and the Reclassification. All adjustments and calculations set forth in
the Notice of Adjustment will be made by the Company in good faith and will be
accurate and correct as of the effective date of the Stock Split. Each
assumption underlying any such calculation will be reasonable at the time of its
determination.
IV. CONDITIONS TO CLOSING
4.1. Conditions to Obligations of Xxxx Xxxxx. The obligations of
Xxxx Xxxxx to consummate the Closing are subject to the satisfaction of the
following conditions:
4.1.1. Representations, Warranties and Covenants of the Company. (a)
The representations and warranties of the Company made in this Agreement shall
be true and correct as of the date hereof and as of the Closing, as though made
as of the Closing, and (b) the Company shall have performed and complied with
all terms, agreements and covenants contained in this Agreement required to be
performed or complied with by the Company on or before the Closing Date.
4.1.2. IPO. The IPO shall have been consummated and the IPO price
per share of Common Stock (without deducting the IPO underwriting discount per
share of Common Stock) shall have been at least $13.00.
4.2. Conditions to Obligations of the Company. The obligations of
the Company to consummate the Closing are subject to the satisfaction of the
following conditions:
4.2.1. Representations, Warranties and Covenants of Xxxx Xxxxx. (a)
The representations and warranties of Xxxx Xxxxx made in this Agreement shall be
true and correct as of the date hereof and as of the Closing, as though made as
of the Closing, and (b) Xxxx Xxxxx
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shall have performed and complied with all terms, agreements and covenants
contained in this Agreement required to be performed or complied with by Xxxx
Xxxxx on or before the Closing Date.
4.2.2. IPO. The IPO shall have been consummated.
V. PROVISIONS CONCERNING CERTAIN RIGHTS OF XXXX XXXXX
5.1 Waiver of Registration Rights. In accordance with Section 4.8 of
that certain Registration Rights Agreement, dated as of June 28, 1996 (the
"Registration Rights Agreement"), by and among the Company, Xxxx Xxxxx and
certain stockholders of the Company, Xxxx Xxxxx hereby waives the following:
(a) any requirement set forth in the Registration Rights Agreement
that the Company provide Xxxx Xxxxx with notice of the filing of a registration
statement under the Securities Act of 1933, as amended, with respect to the IPO;
and
(b) any rights Xxxx Xxxxx may have under the Registration Rights
Agreement to request that the Company include in the IPO any Registrable
Securities (as defined in the Registration Rights Agreement) held by Xxxx Xxxxx.
VI. EXERCISE OF EXERCISE WARRANT
6.1. Exercise Warrant to be Exercised Upon Consummation of the IPO.
Subject to the conditions set forth in Section 4.1 hereof, Xxxx Xxxxx agrees to
exercise the Exercise Warrant in full in accordance with its terms not later
than concurrently with the consummation of the IPO on the IPO Closing Date. The
Company acknowledges that, as provided in the Exercise Warrant, Xxxx Xxxxx shall
have the right to pay the $666,658.66 aggregate exercise price payable in
respect of the Exercise Warrant by surrendering the right to receive a portion
of the 249,032 shares with respect to which the Exercise Warrant is exercisable
(after giving effect to the Stock Split) equal to the product obtained by
multiplying 249,032 by a fraction, the numerator of which is $2.677 and the
denominator of which is the IPO price per share of Common Stock.
VII. SURVIVAL; INDEMNIFICATION
7.1. Survival. The representations and warranties of the parties
contained in this Agreement or in any certificate or other writing delivered
pursuant hereto or in connection herewith will survive the Closing until 18
months after the Closing Date. All covenants and agreements of the parties
contained in this Agreement will survive the Closing indefinitely.
7.2. Indemnification. (a) Xxxx Xxxxx will indemnify the Company and
hold it harmless from any and all losses, liabilities and expenses (including,
without limitation, expenses
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of investigation and attorneys' fees and expenses) incurred or suffered by the
Company and resulting or arising from: (i) any misrepresentation or breach of
any representation or warranty by Xxxx Xxxxx contained in this Agreement or (ii)
any breach by Xxxx Xxxxx of any covenant or undertaking made or to be performed
by Xxxx Xxxxx pursuant to this Agreement.
(b) The Company will indemnify Xxxx Xxxxx and hold it harmless from
any and all losses, liabilities and expenses (including, without limitation,
expenses of investigation and attorneys' fees and expenses) incurred or suffered
by Xxxx Xxxxx and resulting or arising from: (i) any misrepresentation or breach
of any representation or warranty by the Company contained in this Agreement or
(ii) any breach by the Company of any covenant or undertaking made or to be
performed by the Company pursuant to this Agreement. In addition, the Company
will indemnify Xxxx Xxxxx in accordance with, and to the extent of, the
indemnification provisions set forth in the Registration Rights Agreement, all
as if Xxxx Xxxxx were a Registering Stockholder (as defined in the Registration
Rights Agreement) with respect to the IPO.
7.3 Limitation of Indemnification. The indemnification obligations
of Xxxx Xxxxx will not exceed the amount of the Redemption Price.
VIII. MISCELLANEOUS
8.1. Termination. (a) This Agreement shall automatically terminate
and be null, void and of no further effect if the IPO Closing has not occurred
by October 31, 1997 for any reason.
(b) If this Agreement is terminated by reason of a willful and
intentional breach of any provision hereof by any party, the breaching party
will be liable for damages incurred by the nonbreaching party as a result of
such breach, which damages will include, without limitation, any out-of-pocket
costs and expenses incurred by the nonbreaching party in connection with the
enforcement of its rights hereunder (including reasonable fees and disbursements
of counsel).
8.2. Notices. All notices, requests, consents and other
communications hereunder shall be in writing, shall be mailed postage prepaid by
first-class registered or certified airmail, or sent by nationally recognized
overnight express courier service, or transmitted by telecopier, and shall be
deemed given when so mailed or sent, or, if telecopied, when receipt of
transmission is acknowledged, and shall be delivered as addressed as follows:
(a) If to the Company, to:
The Children's Place
0 Xxxxx Xxxxx
Xxxx Xxxxxxxx, XX 00000
Telecopier: (000) 000-0000
Attn: Xxxxxx Xxxxxxxxx, Esq.
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or to such other person or place as the Company shall designate to
Xxxx Xxxxx in writing; and
(b) If to Xxxx Xxxxx, to:
Xxxx Xxxxx Xxxx Xxxxxx, Incorporated
0000 Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxxxxx, XX 00000
Telecopier: (000) 000-0000
Attn: Xxxx X. Xxxx, or his authorized representative
or to such other person or place as Xxxx Xxxxx shall designate to
the Company in writing;
provided, however, that any notice of change of address shall be effective only
upon receipt.
8.3. Amendments. This Agreement may not be modified or amended
except pursuant to an instrument in writing signed by the Company and Xxxx
Xxxxx.
8.4. Successors and Assigns. The provisions of this Agreement will
be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns; provided, however, that neither party may
assign, delegate or otherwise transfer any of its rights or obligations under
this Agreement without the consent of the other party hereto.
8.5. No Third Party Beneficiaries. Except as provided in Article
VII, this Agreement is for the sole benefit of the parties hereto and their
permitted assigns and nothing herein, expressed or implied, will give or be
construed to give to any person or entity, other than the parties hereto and
such permitted assigns, any legal or equitable rights hereunder.
8.6. Counterparts. This Agreement may be signed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
8.7. Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
8.8. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REFERENCE
TO ITS RULES AS TO CONFLICTS OF LAW.
8.9. Severability. In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstance, is
held invalid, illegal or unenforceable, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions contained herein shall not be affected or impaired thereby.
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8.10. Entire Agreement. This Agreement is intended by the parties as
a final expression of their agreement and intended to be a complete and
exclusive statement of the agreement and understanding of the parties hereto in
respect of the subject matter contained herein. This Agreement supersedes all
prior agreements and understandings between the parties with respect to such
subject matter.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their respective authorized officers as of the day and year
first above written.
THE CHILDREN'S PLACE RETAIL STORES, INC.
By: /s/ Xxxxxx Xxxxxxxxx
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Name: Xxxxxx Xxxxxxxxx
Title: Secretary
XXXX XXXXX XXXX XXXXXX, INCORPORATED
By:
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Name:
Title:
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