Exhibit 10.7
STOCKHOLDER'S AGREEMENT, dated as of [__________], 1999, between The
Yankee Candle Company, Inc., a Massachusetts corporation (the "Company"), and
< Name > (the "Employee").
WHEREAS, Forstmann Little & Co. Equity Partnership-V, L.P., a
Delaware limited partnership ("Equity-V"), and Forstmann Little & Co.
Subordinated Debt and Equity Management Buyout Partnership-V, L.P., a Delaware
limited partnership ("MBO-VI"), will own shares of Common Stock, par value $0.01
per share, of the Company.
WHEREAS, the Employee purchased shares of Class B Common Stock
("Class B Common Stock"), par value $0.01 per share, of Yankee Candle Holdings
Corp., a Delaware corporation ("Holdings"), on the terms and subject to the
conditions set forth in the Stockholder's Agreement, dated as of [_______,] 1998
(the "Old Stockholder's Agreement");
WHEREAS, in a reorganization that will occur in connection with the
initial public offering (the "Offering") of the Company, shares of Class B
Common Stock will be exchanged for shares of Common Stock, par value $0.01 per
share, of the Company;
WHEREAS, effective upon the closing of the Offering, the Employee
will own shares of Common Stock and the Old Stockholder's Agreement will be
cancelled (and all rights and obligations thereunder will be null and void); and
WHEREAS, the Employee and the Company wish to provide for certain
arrangements with respect to the Employee's rights to hold and dispose of the
shares of Common Stock.
NOW, THEREFORE, the parties hereto agree as follows:
1. DEFINITIONS
1.1 DEFINITIONS; RULES OF CONSTRUCTION.
(a) The following terms, as used herein, shall have the
following meanings:
"Act" shall mean the Securities Act of 1933, as amended.
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"Affiliate" shall mean, with respect to any Person, any other
Person which, directly or indirectly, is in control of, is controlled by, or is
under common control with, such Person.
"Affiliate Securities" shall mean any securities issued by
an Affiliate of the Company.
"Aggregate Number of Acquired Shares" shall mean the aggregate
number of shares of Common Stock acquired by the Employee pursuant hereto
(adjusted, where appropriate, to reflect any Capital Transaction).
"Aggregate Number of Shares Sold" shall mean, as at any date,
the aggregate number of shares sold by the Employee pursuant to Section 2.3, 2.4
or 2.5 hereof prior to such date, if any (adjusted, where appropriate, to
reflect any Capital Transaction effected after the date of any such sale).
"Agreement" shall mean this Stockholder's Agreement, as
amended, supplemented or modified from time to time.
"Book Value of the Company" shall mean the sum of (x) the
total assets minus the total liabilities of the Company on a consolidated basis,
plus (y) the amount of any reduction in stockholders' equity resulting from the
application of EITF Issue Summary No. 88-16, Basis in Leveraged Buyouts, as of
the Valuation Date, plus (z) the amount of accumulated amortization of that
portion of the purchase price paid for the Company by the FL & Co. Companies
that was allocated to goodwill, excluding other acquired identified intangible
assets. For purposes of calculating the Book Value of the Company and the Book
Value Per Share, (i) all options and other rights to acquire equity interests in
the Company outstanding immediately prior to the Delivery Date or exercised
between the Valuation Date and the Delivery Date shall be deemed to have been
exercised on the Valuation Date, and (ii) the number of outstanding shares on
the Valuation Date shall be increased by the number of shares subject to each
such option or other right and the assets of the Company shall be increased by
the aggregate exercise price payable in respect of the exercise of each such
option or other right (with respect to clauses (i) and (ii), in the case of any
such option or other right unless the effect thereof would be to increase the
Book Value Per Share).
"Book Value Per Share" shall mean the amount which would be
payable on the Valuation Date in respect of one share of Common Stock in the
event of a dissolution, liquidation or winding-up of the affairs of the Company
if the amount of assets available for distribution in the event of such
dissolution, liquidation or winding-up with respect to all shares of capital
stock of the Company outstanding (or deemed to be
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outstanding, as set forth above in the definition of "Book Value of the
Company") on the Valuation Date were equal to the Book Value of the Company. In
the event there has been a Stock Dividend after the Valuation Date and prior to
the Election Date, the number of shares outstanding for purposes of determining
Book Value Per Share shall be the number of shares that would have been
outstanding immediately after the Stock Dividend on the Valuation Date had the
Stock Dividend occurred on the Valuation Date.
"Call Shares" shall have the meaning ascribed to such term in
Section 2.2(d) hereof.
"Capital Transaction" shall mean any Stock Dividend,
recapitalization (including, without limitation, any special dividend or
distribution), reclassification, spin-off, partial liquidation or similar
capital adjustments (including, without limitation, through merger or
consolidation).
"Common Stock" shall mean the Common Stock, par value $0.01
per share, of the Company. There shall be included within the term Common Stock
any Common Stock now or hereafter authorized to be issued, and any and all
securities of any kind whatsoever of the Company which may be issued after the
date hereof in respect of, or in exchange for, shares of Common Stock pursuant
to a Capital Transaction or otherwise.
"Company" shall mean The Yankee Candle Company, Inc., a
Massachusetts corporation, and shall include any successor thereto by merger,
consolidation, acquisition of substantially all the assets thereof, or
otherwise.
"Competitive Activity" shall mean engaging in any of the
following activities: (i) serving as a director of any Competitor; (ii) directly
or indirectly (X) controlling any Competitor or (Y) owning any equity or debt
interests in any Competitor (other than equity or debt interests which are
publicly traded and do not exceed 2% of the particular class of interests then
outstanding) (it being understood that, if any such interests in any Competitor
are owned by an investment vehicle or other entity in which the Employee owns an
equity interest, a portion of the interests in such Competitor owned by such
entity shall be attributed to the Employee, such portion determined by applying
the percentage of the equity interest in such entity owned by the Employee to
the interests in such Competitor owned by such entity); (iii) directly or
indirectly soliciting, diverting, taking away, appropriating or otherwise
interfering with any of the customers or suppliers of the Company or any
Affiliate of the Company; or (iv) employment by (including serving as an officer
or director of), or providing consulting services to, any Competitor; provided,
however, that if the Competitor has more than one discrete and readily
distinguishable part of its business, employment by or
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providing consulting services to any Competitor shall be Competitive Activity
only if (1) his or her employment duties are at or involving the part of the
Competitor's business that competes with any of the businesses conducted by the
Company or any of its subsidiaries (the "Competing Operations"), including
serving in a capacity where any person at the Competing Operations reports to
the Employee, or (2) the consulting services are provided to or involve the
Competing Operations. For purposes of this definition, the term "control" means
the possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of any Competitor, whether through the
ownership of equity or debt interests, by contract or otherwise. Notwithstanding
the foregoing, the term "Competitive Activity" shall not include the direct or
indirect ownership or operation of, investment in, or employment or engagement
by a Person that is a Competitor solely because such Person is an independent
retail gift shop or retail garden shop, provided that (i) if such gift shop
sells candles or other home fragrancing products, such products must be
manufactured solely by the Company or its Affiliates, (ii) such gift shop is not
located within a 50 mile radius of any retail gift store owned by the Company or
its Affiliates, and (iii) such retail gift shop does not have revenues in excess
of $2 million per year.
"Competitor" shall mean any Person that competes either
directly or indirectly with any of the businesses in which, at the time the
Employee's employment is Terminated, the Company or any of its subsidiaries is
engaged.
"Delivery Date" shall have the meaning ascribed to such term
in Section 2.2(b) hereof.
"Election Date" shall have the meaning ascribed to such term
in Section 2.2(a) hereof.
"Equity-V" shall have the meaning ascribed to such term in the
first "Whereas" clause hereof.
"Expenses of Sale" shall mean all expenses incurred by the FL
& Co. Companies in connection with the sale of the shares of the selling
stockholders pursuant to Section 2.3, 2.4 or 2.5 hereof to the extent that such
expenses are not paid or reimbursed by the Company.
"FL & Co. Companies" shall mean the collective reference to
Equity-V and MBO-VI.
"Legal Representative" shall mean the guardian, executor,
administrator or other legal representative of the Employee. All references
herein to the
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Employee shall be deemed to include references to the Employee's Legal
Representative, if any, unless the context otherwise requires.
"Litigation" shall mean any actions, suits or proceedings
arising out of or relating to this Agreement and the transactions contemplated
hereby.
"MBO-VI" shall have the meaning ascribed to such term in the
first "Whereas" clause hereof.
"Permitted Transferee" shall have the meaning ascribed to such
term in Section 2.1 hereof.
"Person" shall mean an individual, a corporation, a
partnership, an association, a trust or any other entity or organization,
including a government or political subdivision or an agency or instrumentality
thereof.
"Prohibited Activity" shall have the meaning ascribed to such
term in Section 3.1 hereof.
"Purchase Price" shall have the meaning ascribed to such term
in Section 2.2(c) hereof.
"Purchase Price Certificate" shall have the meaning ascribed
to such term in Section 2.2(b) hereof.
"Release Date" shall mean the date on which the FL & Co.
Companies and their affiliates shall cease to own in the aggregate directly or
indirectly at least 20 percent of the then outstanding securities of the Company
having the power to vote in the election of directors of the Company.
"Representative" shall have the meaning ascribed to such term
in Section 5.13(b) hereof.
"Repurchase Notice" shall have the meaning ascribed to such
term in Section 4.2 hereof.
"Sale Obligations" shall mean any liabilities and obligations
(including liabilities and obligations for indemnification, amounts paid into
escrow and post-closing adjustments) incurred by the selling stockholders in
connection with the sale of their shares pursuant to Section 2.3, 2.4 or 2.5
hereof.
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"Scheduled Closing Date" shall have the meaning ascribed to
such term in Section 3.2(d) hereof.
"Section 2.3 Notice" shall have the meaning ascribed to such
term in Section 2.3 hereof.
"Section 2.4 Notice" shall have the meaning ascribed to such
term in Section 2.4 hereof.
"Stock Dividend" shall mean any stock split, stock dividend,
reverse stock split or similar transaction which changes the number of
outstanding shares of capital stock of the Company.
"Termination" or "Terminated" shall mean that the Employee's
employment on a full-time basis by the Company and its subsidiaries shall have
ceased for any reason whatsoever (including by reason of death, permanent
disability or adjudicated incompetency).
"Third Party" shall mean any Person other than any FL & Co.
Company or an Affiliate or a partner of any of the FL & Co. Companies or an
Affiliate of such partner.
"Transaction" shall mean any sale pursuant to Section 2.3,
2.4 or 2.5 hereof.
"Unvested Shares" shall mean, as at any date, all shares of
Common Stock owned by the Employee which are not Vested Shares as of such date.
"Valuation Date" shall mean the last day of the fiscal quarter
of the Company immediately preceding the fiscal year in which the Employee's
employment is Terminated.
"Vested Shares" shall mean the number of shares of Common
Stock determined as follows: (i) if the Employee is Terminated on or before
[______________], zero; (ii) if the Employee is Terminated after
[______________] but on or before [______________], (x) 20 percent of the
Aggregate Number of Acquired Shares minus (y) the Aggregate Number of Shares
Sold; (iii) if the Employee is Terminated after [______________] but on or
before [______________], (x) 40 percent of the Aggregate Number of Acquired
Shares minus (y) the Aggregate Number of Shares Sold; (iv) if the Employee is
Terminated after [______________] but on or before [______________], (x) 60
percent of the Aggregate Number of Acquired Shares minus
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(y) the Aggregate Number of Shares Sold; (iv) if the Employee is Terminated
after [______________] but on or before [______________], (x) 80 percent of the
Aggregate Number of Acquired Shares minus (y) the Aggregate Number of Shares
Sold; and (vi) if the Employee is Terminated after [______________], (x) the
Aggregate Number of Acquired Shares minus (y) the Aggregate Number of Shares
Sold.
(b) In this Agreement, unless the context otherwise requires,
words in the singular number or in the plural number shall each include the
singular number and the plural number.
2. RIGHTS AND RESTRICTIONS ON COMMON STOCK.
2.1 EFFECTIVENESS OF AGREEMENT; NO SALE OR TRANSFER.
(a) This Agreement shall become effective as of the closing of
the Offering and shall apply to shares of Common Stock acquired in exchange for
shares of Class B Common Stock (subject to the provisions of Section 5.1).
(b) The Employee shall not sell, transfer, assign, exchange,
pledge, encumber or otherwise dispose of any shares of Common Stock or grant any
option or right to purchase such shares or any legal or beneficial interest
therein, except in accordance with the provisions of this Agreement.
(c) The Employee may transfer any shares of Common Stock by
will, but only to:
(i) any spouse, parent, child (whether natural or adopted),
brother or sister of the Employee, or
(ii) any corporation or partnership which is controlled by any
spouse, parent, child (whether natural or adopted), brother or
sister of the Employee
(the person or persons to which shares of Common Stock are transferred in
accordance with this Section 2.1(c) being herein referred to as the "Permitted
Transferee"); provided, that, for any transfer to the Permitted Transferee to be
effective hereunder, the Permitted Transferee shall agree in writing to be bound
by all the terms of this Agreement applicable to the Employee (including,
without limitation, Article 3 and Section 5.13(b) hereof) as if the Permitted
Transferee originally had been a party hereto; and provided, further, that all
of the stockholders of any Permitted Transferee that is a corporation and all of
the partners of any Permitted Transferee that is a partnership shall agree in
writing
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not to transfer any shares they then own or may hereafter acquire in the
corporate Permitted Transferee or any partnership interests they then own or may
hereafter acquire in the partnership Permitted Transferee except to a person
described in paragraph (i) or (ii) above that has made the same agreement in
writing to the Company, so long as the corporate or partnership Permitted
Transferee shall own any shares of Common Stock. Any reference herein to the
Employee shall be to the Permitted Transferee from and after the date the
transfer is effected in accordance with this Section 2.1(c). Without limiting
the generality of the foregoing, the provisions of Section 3.2 hereof shall be
likewise applicable to any Permitted Transferee, commencing upon the date that
such Person becomes a Permitted Transferee, for the respective periods they
would have applied to the Employee.
2.2 EMPLOYMENT TERMINATION.
(a) If the Employee shall be Terminated, irrespective of
whether the Employee receives, in connection with such Termination, any
severance or other payment from the Company or any of its Affiliates under any
employment agreement or otherwise, the Company shall have the right, at its
option, exercisable by delivery of written notice to the Employee within 90 days
following the date of Termination (the date of delivery of such written notice
being referred to herein as the "Election Date"), to purchase all or any portion
of the Unvested Shares held by the Employee as of the date of such Termination.
Any Vested Shares and any Unvested Shares that the Company does not elect to
repurchase pursuant to the provisions of this Section 2.2(a) shall continue to
be subject to the provisions of this Agreement (including, without limitation,
Sections 2.3, 2.4 and 2.5 and Article 3 hereof) other than this Section 2.2.
(b) If the Company exercises its purchase right pursuant to
Section 2.2(a) hereof, then, within 15 days following the later of the Election
Date or the date the financial statements referred to below are available (such
date of delivery being referred to herein as the "Delivery Date"), the Company
shall deliver to the Terminated Employee a certificate of the chief financial
officer of the Company setting forth the Purchase Price and the calculation
thereof and the Book Value of the Company and stating that a copy of the
Company's financial statements as of the Valuation Date are available for review
at the principal office of the Company (the "Purchase Price Certificate"), and
shall make available to the Employee, for review at the principal office of the
Company, a copy of the Company's financial statements as of the Valuation Date.
The calculations as set forth on the Purchase Price Certificate shall be final
and binding on the Company and the Employee for purposes of this Agreement. The
Employee shall keep the Purchase Price Certificate, the financial statements and
any other documentation provided in connection therewith confidential, shall not
use any such material or any information contained therein for any purpose other
than to verify the amounts due the Employee in respect of
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any shares owned by the Employee being purchased by the Company, and shall not
disclose any such material or any information contained therein to anyone other
than the Employee's legal or financial advisers who have agreed in writing to
the equivalent confidentiality, non-use and non-disclosure provisions contained
in this paragraph.
(c) The purchase price per share of the shares of Common Stock
purchased pursuant to Section 2.2(a) hereof (the "Purchase Price") shall be
equal to the Book Value Per Share, adjusted to reflect any Capital Transaction
between the Valuation Date and the Election Date, as if such event had occurred
as of the Valuation Date.
(d) Subject to Section 2.2(e) hereof, the closing (the
"Closing") of any purchase of shares of Common Stock which the Company has
elected to purchase pursuant to Section 2.2(a) hereof (the "Call Shares") shall
take place at the principal office of the Company on the later of (i) 10 days
after the Delivery Date (or, in the case of a First-Year Termination, 10 days
after the Election Date) and (ii) (if applicable) 10 days after the appointment
of a Legal Representative (such later date, the "Scheduled Closing Date"). At
the Closing, the Employee shall sell, convey, transfer, assign and deliver to
the Company all right, title and interest in and to the Call Shares, which shall
constitute (and, at the Closing, the Employee shall certify the same to the
Company in writing) good and unencumbered title to such shares, free and clear
of all liens, security interests, encumbrances and adverse claims of any kind
and nature (other than those in favor of the Company and the FL & Co. Companies
pursuant to this Agreement), and shall deliver to the Company a certificate
representing the shares duly endorsed for transfer, or accompanied by
appropriate stock transfer powers duly executed, and with all necessary transfer
tax stamps affixed thereto at the expense of the Employee, and the Company shall
deliver to the Employee, in full payment of the purchase price for the Call
Shares, either a wire transfer to an account designated by the Employee or a
cashier's, certified or official bank check payable to the order of the Employee
(the method of payment to be at the option of the Company), in the amount equal
to the Purchase Price multiplied by the number of Call Shares. Notwithstanding
anything herein to the contrary, from and after the Election Date, the Employee
shall not have any rights with respect to any of the Call Shares (including any
rights pursuant to Sections 2.3 and 2.4 hereof), except to receive the Purchase
Price therefor.
(e) Notwithstanding the provisions of Section 2.2(d) hereof,
if the Company exercises its option to purchase Unvested Shares pursuant to
Section 2.2(a) hereof, but is prohibited from effecting the Closing on the
Scheduled Closing Date by any contractual obligation of the Company or any of
its Affiliates or by applicable law, then the Closing shall take place on the
first practicable date on which the Company is permitted to purchase such
shares, and, at the Closing, the Company shall pay to the Employee interest on
the unpaid Purchase Price from and including the Scheduled
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Closing Date to, but not including, the date of the Closing, at the rate (as of
the Scheduled Closing Date) for a six-month certificate of deposit at The Chase
Manhattan Bank or any successor bank thereto. If at any time the prohibition
shall cease to be applicable to any portion of the shares not repurchased, then
the Company shall purchase such portion on the first practicable date on which
the Company is permitted to do so. The Company shall not declare or pay any
dividend of cash or cash equivalents, or repurchase any shares of Common Stock
or Common Stock for cash or cash equivalents, until the purchase price for all
of the Call Shares has been paid in full.
2.3 PARTICIPATION IN SALE OF COMMON STOCK. The Employee, at the
Employee's option, may participate proportionately (and the FL & Co. Companies
shall allow the Employee to participate proportionately) in any sale (other than
a public offering, which shall be governed by Section 2.4 hereof) of all or a
portion of the shares of Common Stock owned by either of the FL & Co. Companies
to any Third Party by selling in such sale the same percentage of the Employee's
shares of Common Stock as the FL & Co. Companies propose to sell of their shares
of Common Stock to the Third Party (determined on the basis of the aggregate
number of shares of Common Stock owned, and the aggregate number of such shares
being sold, by the FL & Co. Companies). The Company shall notify the Employee in
writing of the FL & Co. Companies' intention to effect such a sale to a Third
Party and the nature and per share amount of consideration to be paid by such
Third Party at least 10 days, or such shorter time as the Company deems
practicable, before the closing of any such proposed sale of shares of Common
Stock (the "Section 2.3 Notice"), and the Employee shall notify the Company in
writing within 5 days after receipt of the Section 2.3 Notice of his or her
intention to participate in such sale, including the number of shares of Common
Stock with respect to which he or she will so participate. Any failure by the
Employee to so notify the Company within such 5 day period shall be deemed an
election by the Employee not to participate in such sale with respect to any of
his or her shares. Any sale of shares of Common Stock by the Employee pursuant
to this Section 2.3 shall be for the same consideration per share, on the same
terms and subject to the same conditions as the sale of shares of Common Stock
owned by the FL & Co. Companies. If the Employee sells any shares of Common
Stock pursuant to this Section 2.3, the Employee shall pay and be responsible
for the Employee's proportionate share of the Expenses of Sale and the Sale
Obligations.
2.4 PARTICIPATION IN PUBLIC OFFERING OF COMMON STOCK.
(a) If the FL & Co. Companies propose to sell all or any
portion of the shares of Common Stock owned by the FL & Co. Companies in a
public offering, the Employee shall be entitled and required to participate in
such public offering by selling in the public offering the same percentage of
the Employee's shares of Common Stock as
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the FL & Co. Companies propose to sell of their shares in the public offering
(determined on the basis of the aggregate number of shares of Common Stock
owned, and the aggregate number of such shares being sold, by the FL & Co.
Companies). The Company shall notify the Employee in writing of the FL & Co.
Companies' intention to effect such public offering at least 10 days, or such
shorter time as the Company deems practicable, before the filing with the
Securities and Exchange Commission of the registration statement relating to
such public offering (the "Section 2.4 Notice") and shall cause the Employee's
shares to be sold in such public offering to be included therein. If the
Employee sells any shares pursuant to this Section 2.4, the Employee shall pay
and be responsible for the Employee's proportionate share of the Expenses of
Sale and the Sale Obligations, including, without limitation, indemnifying the
underwriters of such public offering, on a proportionate basis, to the same
extent as the FL & Co. Companies are required to indemnify such underwriters.
(b) In connection with any proposed public offering of
securities of the Company, whether by any of the FL & Co. Companies or the
Company or otherwise, the Employee agrees (i) to supply any information
reasonably requested by the Company in connection with the preparation of a
registration statement and/or any other documents relating to such public
offering, and (ii) to execute and deliver any agreements and instruments
reasonably requested by the Company to effectuate such public offering,
including, without limitation, an underwriting agreement, a custody agreement
and a "hold back" agreement pursuant to which the Employee will agree not to
sell or purchase any securities of the Company (whether or not such securities
are otherwise governed by this Agreement) for the same period of time following
the public offering as is agreed to by the FL & Co. Companies with respect to
themselves. If the Company requests that the Employee take any of the actions
referred to in clause (i) or (ii) of the previous sentence, the Employee shall
take such action promptly but in any event within five days following the date
of such request.
2.5 REQUIRED PARTICIPATION IN SALE OF COMMON STOCK BY THE FL & CO.
COMPANIES. Notwithstanding any other provision of this Agreement to the
contrary, if the FL & Co. Companies shall propose to sell (including by
exchange, in a business combination or otherwise) all or any portion of their
shares of Common Stock in a bona fide arm's-length transaction, the FL & Co.
Companies, at their option, may require that the Employee sell the same
percentage of the Employee's shares of Common Stock as the FL & Co. Companies
propose to sell of their shares in the transaction (determined on the basis of
the aggregate number of shares of Common Stock owned, and the aggregate number
of such shares then being sold, by the FL & Co. Companies) for the same
consideration per share, on the same terms and subject to the same conditions in
the same transaction and, if stockholder approval of the transaction is required
and the Employee is entitled to vote thereon, that the Employee vote the
Employee's shares in
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favor thereof. If the Employee sells any shares pursuant to this Section 2.5,
the Employee shall pay and be responsible for the Employee's proportionate share
of the Expenses of Sale and the Sale Obligations.
2.6 TERMINATION OF RESTRICTIONS AND RIGHTS. Notwithstanding any
other provision of this Agreement to the contrary, but subject to the
restrictions of all applicable federal and state securities laws, including the
restrictions in this Agreement relating thereto, from and after the Release Date
any and all shares of Common Stock owned by the Employee (a) may be sold,
transferred, assigned, exchanged, pledged, encumbered or otherwise disposed of
(and the Employee may grant any option or right to purchase such shares or any
legal or beneficial interest therein, or may continue to hold such shares), free
of the restrictions contained in this Agreement and (b) shall no longer be
entitled to any of the rights contained in this Agreement. Without limiting the
generality of the foregoing, from and after the Release Date, the provisions of
Articles 2 and 3 hereof (other than this Section 2.6 and Sections 3.1(a), 3.1(b)
and 3.1(c) hereof) shall terminate and have no further force or effect.
3. PROHIBITED ACTIVITIES.
3.1 PROHIBITION AGAINST CERTAIN ACTIVITIES. The Employee agrees that
(a) the Employee will not at any time during the Employee's employment (other
than in the course of such employment) with the Company or any Affiliate
thereof, or after a Termination, directly or indirectly disclose or furnish to
any other Person or use for the Employee's own or any other Person's account any
confidential or proprietary knowledge or information or any other information
which is not a matter of public knowledge and which was obtained during the
Employee's employment with, or other performance of services for, the Company or
any Affiliate thereof or any predecessor of any of the foregoing, no matter from
where or in what manner the Employee may have acquired such knowledge or
information, and the Employee shall retain all such knowledge and information in
trust for the benefit of the Company, its Affiliates and the successors and
assigns of any of them, (b) if the Employee is Terminated, the Employee will not
for three years following such Termination directly or indirectly solicit for
employment, including without limitation recommending to any subsequent employer
the solicitation for employment of, any employee of the Company, (c) the
Employee will not, at any time during the Employee's employment with the Company
or any Affiliate thereof or after a Termination, publish any statement or make
any statement (under circumstances reasonably likely to become public or that
the Employee might reasonably expect to become public) critical of the Company
or any Affiliate of the Company, or in any way adversely affecting or otherwise
maligning the business or reputation of any of the foregoing entities, and (d)
the Employee will not breach the provisions of Section 2.1
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hereof (any activity prohibited by clause (a), (b), (c) or (d) of this Section
3.1 being referred to as a "Prohibited Activity").
3.2 RIGHT TO PURCHASE SHARES. The Employee understands and agrees
that Holdings and the Company have granted to the Employee the right to purchase
equity securities to reward the Employee for the Employee's future efforts and
loyalty to the Company and its Affiliates by giving the Employee the opportunity
to participate in the potential future appreciation of the Company. Accordingly,
(a) if the Employee engages in any Prohibited Activity, or (b) if, at any time
during the Employee's employment with the Company or any of its Affiliates or
during the three years following a Termination, the Employee engages in any
Competitive Activity, or (c) if, at any time (whether during the Employee's
employment or after any Termination thereof), the Employee is convicted of a
crime against the Company or any of its Affiliates, then, in addition to any
other rights and remedies available to the Company, the Company shall be
entitled, at its option, exercisable by written notice (the "Repurchase Notice")
to the Employee, to purchase all of the shares of Common Stock then held by the
Employee.
3.3 PURCHASE PRICE; CLOSING. The purchase price per share of the
shares of Common Stock purchased pursuant to this Article 3 shall be equal to
the lesser of (a) $[____] (adjusted to reflect any Capital Transaction effected
after the Closing Date and prior to the date of the Repurchase Notice) and (b)
the Book Value Per Share (except that any reference to the Delivery Date or
Election Date shall instead be a reference to the date of the Repurchase
Notice). If such purchase price is determined pursuant to clause (b) of the
preceding sentence, then the Company shall, within 15 days following the later
of receipt of the Employee's written request therefor (which request must be
made within eight days of the date of the Repurchase Notice) and the date the
relevant financial statements are available, provide the Employee with the same
purchase price certificate as is referred to in Section 2.2(b) hereof, and the
Employee hereby agrees to the same confidentiality, non-use and non-disclosure
provisions with respect thereto as are contained in Section 2.2(b) hereof. The
calculations as set forth on such certificate shall be final and binding on the
Company and the Employee for purposes of this Agreement. The closing of such
purchase shall take place at the principal office of the Company 10 days
following the date of the Repurchase Notice or, if a written request therefor
was timely made, 10 days following the date of delivery of the aforesaid
certificate, except that if the Company is prohibited from repurchasing any
shares of Common Stock pursuant to this Article 3 by any contractual obligation
of the Company or any of its Affiliates or by applicable law, the closing of
such purchase shall take place on the first practicable date on which the
Company is permitted to purchase such shares (and the provisions of the last two
sentences of Section 2.2(e) shall likewise apply to repurchases pursuant to this
Article 3). At such closing, the Employee shall sell, convey, transfer, assign
and deliver to the Company all right, title and interest in and to the shares of
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Common Stock being purchased by the Company, which shall constitute (and, at the
closing, the Employee shall certify the same to the Company in writing) good and
unencumbered title to such shares, free and clear of all liens, security
interests, encumbrances and adverse claims of any kind and nature (other than
those in favor of the Company and the FL & Co. Companies pursuant to this
Agreement), and shall deliver to the Company a certificate representing the
shares duly endorsed for transfer, or accompanied by appropriate stock transfer
powers duly executed, and with all necessary transfer tax stamps affixed thereto
at the expense of the Employee, and the Company shall deliver to the Employee,
in full payment of the purchase price payable pursuant to this Section 3.3 for
the shares of Common Stock purchased, a check payable to the order of the
Employee, in the amount of the aggregate purchase price for the shares
purchased. Notwithstanding anything herein to the contrary, from and after the
date of the Repurchase Notice, the Employee shall not have any rights with
respect to any shares of Common Stock which the Employee is required to sell to
the Company pursuant to this Article 3 (including any rights pursuant to Section
2.3 or 2.4 hereof), except to receive the purchase price therefor.
3.4 TRANSACTION PROCEEDS. Notwithstanding anything to the contrary
set forth in Sections 2.3, 2.4 or 2.5 hereof, if at the time of a Transaction in
which the Employee is participating, the Company is entitled to purchase the
Employee's shares of Common Stock pursuant to this Article 3, and if the
purchase price per share for a purchase pursuant to this Article 3 would be less
than the proceeds per share to the Employee from such Transaction, then the
Employee shall be entitled to receive only the aggregate purchase price payable
under this Article 3, with the balance of the proceeds of sale in the
Transaction being remitted to the other stockholders of the Company
participating in such Transaction pro rata in accordance with their respective
participation in such Transaction.
4. STOCK CERTIFICATE LEGEND AND INVESTMENT REPRESENTATIONS; OTHER
REPRESENTATIONS.
4.1 LEGEND. All certificates representing shares of Common Stock
acquired hereunder or hereafter by the Employee (unless registered under the
Act) shall bear the following legend:
"The shares represented by this certificate have not been
registered under the Securities Act of 1933, as amended, or any
securities regulatory authority of any state, and may not be sold,
transferred, assigned, exchanged, pledged, encumbered or otherwise
disposed of except in compliance with all applicable securities laws
and except in accordance with the provisions of a Stockholder's
Agreement with the
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Company, a copy of which is available for inspection at the offices
of the Company."
4.2 REPRESENTATIONS OF THE EMPLOYEE. The Employee represents and
warrants that: (a) the Employee understands that (i) the offer and sale of
shares of Common Stock in accordance with this Agreement have not been and will
not be registered under the Act, and it is the intention of the parties hereto
that the offer and sale of the securities be exempt from registration under the
Act and the rules promulgated thereunder by the Securities and Exchange
Commission; (ii) the shares of Common Stock being acquired hereunder cannot be
sold, transferred, assigned, exchanged, pledged, encumbered or otherwise
disposed of unless they are registered under the Act or an exemption from
registration is available; and (iii) the purchase of Common Stock hereunder does
not entitle the Employee to participate in any other equity program of the
Company, whether now existing or hereafter established; (b) the Employee is
acquiring the shares of Common Stock being acquired hereunder for investment for
the Employee's own account and not with a view to the distribution thereof; (c)
the Employee will not, directly or indirectly, sell, transfer, assign, exchange,
pledge, encumber or otherwise dispose of any shares of Common Stock being
acquired hereunder except in accordance with this Agreement; (d) the Employee
has, or the Employee together with the Employee's advisers, if any, have, such
knowledge and experience in financial and business matters that the Employee is,
or the Employee together with the Employee's advisers, if any, are, and will be
capable of evaluating the merits and risks relating to the Employee's purchase
of shares of Common Stock under this Agreement; (e) the Employee has been given
the opportunity to obtain information and documents relating to the Company and
to ask questions of and receive answers from representatives of the Company
concerning the Company and the Employee's investment in the Common Stock; (f)
the Employee's decision to invest in the Company has been based upon independent
investigations made by the Employee and the Employee's advisers, if any; (g) the
Employee is able to bear the economic risk of a total loss of the Employee's
investment in the Company; and (h) the Employee has adequate means of providing
for the Employee's current needs and foreseeable personal contingencies and has
no need for the Employee's investment in the Common Stock to be liquid.
5. MISCELLANEOUS.
5.1 DISTRIBUTIONS. In the event of any dividend, distribution or
exchange paid or made in respect of the Common Stock consisting of Affiliate
Securities, (a) the restrictions and rights with respect to the Common Stock
that are contained in this Agreement shall be applicable to the Affiliate
Securities without further action of the parties (with the references to Common
Stock being deemed references to the Affiliate
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Securities and the references to the Company being deemed references to the
Affiliate), and (b) as a condition precedent to the receipt of the Affiliate
Securities by the Employee, the Employee shall enter into a stockholder's
agreement containing substantially equivalent terms with respect to the
Affiliate Securities (but reflecting the economics of the dividend, distribution
or exchange and the capitalization of the Affiliate) as are contained herein.
The Board of Directors of the Company, in good faith, shall determine such terms
and its determination shall be final and binding on the Employee.
5.2 FURTHER ASSURANCES. Each party hereto shall do and perform or
cause to be done and performed all further acts and things and shall execute and
deliver all other agreements, certificates, instruments, and documents as any
other party hereto reasonably may request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.
5.3 GOVERNING LAW. This Agreement and the rights and obligations of
the parties hereto shall be governed by, and construed and enforced in
accordance with, the laws of the State of New York, without giving effect to the
principles of conflicts of law thereof.
5.4 SPECIFIC PERFORMANCE. The parties hereto acknowledge that there
will be no adequate remedy at law for a violation of any of the provisions of
this Agreement and that, in addition to any other remedies which may be
available, all of the provisions of this Agreement shall be specifically
enforceable in accordance with their respective terms.
5.5 INVALIDITY OF PROVISIONS. The invalidity or unenforceability of
any provision of this Agreement in any jurisdiction shall not affect the
validity or enforceability of the remainder of this Agreement in that
jurisdiction or the validity or enforceability of this Agreement, including that
provision, in any other jurisdiction. If any provision of this Agreement is held
unlawful or unenforceable in any respect, such provision shall be revised or
applied in a manner that renders it lawful and enforceable to the fullest extent
possible.
5.6 NOTICE. All notices and other communications hereunder shall be
in writing and, unless otherwise provided herein, shall be deemed to have been
given when received by the party to whom such notice is to be given at its
address set forth below, or such other address for the party as shall be
specified by notice given pursuant hereto:
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(a) If to the Company, to:
The Yankee Candle Company, Inc.
000 Xxxxxxxxx Xxxx
Xxxxxxx, XX 00000
Attention: President
(b) If to the Employee, to the address set forth below the
Employee's signature, and if to the Legal Representative, to
such Person at the address of which the Company is notified in
accordance with this Section 5.6.
5.7 BINDING EFFECT. This Agreement shall inure to the benefit of and
shall be binding upon the parties hereto and their respective heirs, legal
representatives, successors and assigns. In addition, each of the FL & Co.
Companies shall be a third party beneficiary of this Agreement and shall be
entitled to enforce this Agreement.
5.8 AMENDMENT AND MODIFICATION. This Agreement may be amended,
modified or supplemented only by written agreement of the party against whom
enforcement of such amendment, modification or supplement is sought.
5.9 HEADINGS; EXECUTION IN COUNTERPARTS. The headings and captions
contained herein are for convenience only and shall not control or affect the
meaning or construction of any provision hereof. This Agreement may be executed
in any number of counterparts, each of which shall be deemed to be an original
and which together shall constitute one and the same instrument.
5.10 ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement, and supersedes all prior agreements and understandings (including the
Old Stockholder's Agreement, which will be of no further force and effect from
and after the closing of the Offering), oral and written, between the parties
hereto with respect to the subject matter hereof.
5.11 WITHHOLDING. The Company shall have the right to deduct from
any amount payable under this Agreement any taxes or other amounts required by
applicable law to be withheld. The Employee agrees to indemnify the Company
against any Federal, state and local withholding taxes for which the Company may
be liable in connection with the Employee's acquisition, ownership or
disposition of any Common Stock.
5.12 NO RIGHT TO CONTINUED EMPLOYMENT. This Agreement shall not
confer upon the Employee any right with respect to continuance of employment by
the
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Company or any Affiliate thereof, nor shall it interfere in any way with the
right of the Company or any Affiliate thereof to terminate the Employee's
employment at any time.
5.13 POSSESSION OF CERTIFICATES; POWER OF ATTORNEY.
(a) In order to provide for the safekeeping of the
certificates representing the shares of Common Stock purchased by the Employee
and to facilitate the enforcement of the terms and conditions hereof, (i) the
Employee shall redeliver to the Company, and the Company shall retain physical
possession of, all certificates representing shares of Common Stock acquired by
the Employee and (ii) the Employee shall deliver to the Company an undated stock
power, duly executed in blank, for each such certificate. The Employee shall be
relieved of any obligation otherwise imposed by this Agreement to deliver
certificates representing shares of Common Stock if the same are in the custody
of the Company. After the Release Date, upon written request by the Employee
therefor, the Company shall deliver to the Employee any certificates in its
custody representing the Employee's shares of Common Stock.
(b) The Employee hereby irrevocably appoints the FL & Co.
Companies, and each of them (individually and collectively, the
"Representative"), the Employee's true and lawful agent and attorney-in-fact,
with full powers of substitution, to act in the Employee's name, place and
stead, to do or refrain from doing all such acts and things, and to execute and
deliver all such documents, as the Representative shall deem necessary or
appropriate in connection with a public offering of securities of the Company or
a sale pursuant to Section 2.3, 2.5 or 3.2 hereof, including, without in any way
limiting the generality of the foregoing, in the case of a sale pursuant to
Section 2.3 or 2.5 hereof, to execute and deliver on behalf of the Employee a
purchase and sale agreement and any other agreements and documents that the
Representative deems necessary in connection with any such sale, and in the case
of a public offering, to execute and deliver on behalf of the Employee an
underwriting agreement, a "hold back" agreement, a custody agreement, and any
other agreements and documents that the Representative deems necessary in
connection with any such public offering, and in the case of any sale pursuant
to Section 2.3 or 2.5 hereof and any public offering pursuant to Section 2.4(a)
hereof, to receive on behalf of the Employee the proceeds of the sale or public
offering of the Employee's shares, to hold back from any such proceeds any
amount that the Representative deems necessary to reserve against the Employee's
share of any Expenses of Sale and Sale Obligations and to pay such Expenses of
Sale and Sale Obligations. The Employee hereby ratifies and confirms all that
the Representative shall do or cause to be done by virtue of its appointment as
the Employee's agent and attorney-in-fact. In acting for the Employee pursuant
to the appointment set forth in this Section 5.13(b), the Representative shall
not be responsible to the Employee for any loss or damage the Employee may
suffer by reason of the performance by the Representative of
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its duties under this Agreement, except for loss or damage arising from willful
violation of law or gross negligence by the Representative in the performance of
its duties hereunder. The appointment of the Representative shall be deemed
coupled with an interest and as such shall be irrevocable and shall survive the
death, incompetency, mental illness or insanity of the Employee, and any person
dealing with the Representative may conclusively and absolutely rely, without
inquiry, upon any act of the Representative as the act of the Employee in all
matters referred to in this Section 5.13(b).
5.14 CONSENT TO JURISDICTION. Each party hereby irrevocably and
unconditionally consents to submit to the exclusive jurisdiction of the courts
of the State of New York and of the United States of America, in each case
located in the County of New York, for any Litigation (and agrees not to
commence any Litigation except in any such court), and further agrees that
service of process, summons, notice or document by U.S. registered mail to such
party's respective address set forth in Section 5.6 hereof shall be effective
service of process for any Litigation brought against such party in any such
court. Each party hereby irrevocably and unconditionally waives any objection to
the laying of venue of any Litigation in the courts of the State of New York or
of the United States of America, in each case located in the County of New York,
and hereby further irrevocably and unconditionally waives and agrees not to
plead or claim in any such court that any Litigation brought in any such court
has been brought in an inconvenient forum.
IN WITNESS WHEREOF, this Agreement has been signed by or on behalf
of each of the parties hereto, all as of the date first above written.
THE YANKEE CANDLE COMPANY, INC.
By:
-------------------------------
Name:
Title:
EMPLOYEE
----------------------------------
Name: < Name >
Address: < Address1 >
< Address2 >
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The undersigned hereby agree to be bound by the provisions of Sections 2.3 and
2.4 of the foregoing Stockholder's Agreement.
FORSTMANN LITTLE & CO. EQUITY PARTNERSHIP-V,
L.P.
By: FLC XXX Partnership,
its general partner
By: ______________________________
__________________,
a general partner
FORSTMANN LITTLE & CO. SUBORDINATED DEBT AND
EQUITY MANAGEMENT BUYOUT PARTNERSHIP-VI, L.P.
By: FLC XXIX Partnership,
its general partner
By: ______________________________
__________________,
a general partner
The undersigned acknowledges that the undersigned has read the
foregoing Agreement between The Yankee Candle Company, Inc. and the
undersigned's spouse, understands that the undersigned's spouse has purchased
shares of Common Stock as reflected in such Agreement and agrees to be bound by
the foregoing Agreement.
-------------------------
Employee's Spouse
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ANNEX A
Employee Number of Shares
-------- ----------------
< Name > < Shares >
-21-
