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
9.3.
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 9.3). 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 Stockholder
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
Stockholder 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 Exchange 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.
(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
o 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 9.3. 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 Effective Time of the
Merger.
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, the Stockholder or Parent 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 integral 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 15.2, 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: President and
Chief Executive Officer
/s/ Xxxxxx X. Xxxxx
Xxxxxx X. Xxxxx
NEW RIO, L.L.C.
By: /s/ Xxxxxx X. Xxxxx
Title: Chief Executive Officer
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
By: /s/ Xxxxxx X. Xxxxxxx
Attorney-in-Fact
A.S. ENTERPRISES, L.L.C.
By: /s/ Xxxxxx X. Xxxxx
Title: Chief Executive Officer
/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.: 00,000,000 00.0
Charterhouse Equity Partners II, L.P. 8,033,800 25.0%
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Xxxxxx X. Xxxxx (1)
0000 Xxxxxxxx
Xxx Xxxx, XX 00000 7,805,813 24.3%
Xxxxxx X. Xxxxxx 141,146 *
Xxxxxx X. Xxxxxx 53,272 *
Xxxxxxx Xxxx Xxxxxx 51,084 *
Trust for the benefit of Xxxx X. Xxxxxx
and Xxxxxxx X. Xxxxxx 167,445 *
Xxxxxxx X. Xxxxxx 225,374 *
Chef Nominees Limited 15,934 *
__________ ________
NEW RIO, L.L.C. TOTAL 16,483,868 51.3%
____________________
* Less than one percent.
(1) Includes 302,924 shares owned by A.S. Enterprises, L.L.C., a
company owned by Mr. and Xxx. Xxxxx.
