EXCHANGE AGREEMENT by and among QUIKSILVER, INC., QUIKSILVER AMERICAS, INC., MOUNTAIN & WAVE S.À R.L., THE LENDERS PARTY HERETO and RHÔNE GROUP L.L.C. Dated as of June 24, 2010
Exhibit 10.1
by and among
QUIKSILVER, INC.,
QUIKSILVER AMERICAS, INC.,
MOUNTAIN & WAVE S.À X.X.,
THE LENDERS PARTY HERETO
and
RHÔNE GROUP L.L.C.
Dated as of June 24, 2010
TABLE
OF CONTENT
| Page | ||||||||||
| 1. | DEFINITIONS. | A-1 | ||||||||
| 2. | THE EXCHANGES | A-4 | ||||||||
| 2.1 | The First Exchange | A-4 | ||||||||
| 2.2 | The Standby Exchange | A-4 | ||||||||
| 2.3 | Closing Dates of the Exchanges | A-5 | ||||||||
| 2.4 | Exchange Fee | A-5 | ||||||||
| 2.5 | Delivery of the Common Stock | A-5 | ||||||||
| 2.6 | Delivery of the Stockholders Agreement | A-5 | ||||||||
| 2.7 | Replacement Notes | A-5 | ||||||||
| 3. | STOCKHOLDER APPROVAL. | A-6 | ||||||||
| 3.1 | Stockholders’ Meeting | A-6 | ||||||||
| 3.2 | Preparation of Proxy Statement and Board and Stockholder Action | A-6 | ||||||||
| 4. | REPRESENTATIONS AND WARRANTIES. | A-7 | ||||||||
| 4.1 | Representations and Warranties of the Company and the Borrowers | A-7 | ||||||||
| 4.2 | Representations and Warranties of Rhône and the Lenders | A-9 | ||||||||
| 5. | COVENANTS | A-10 | ||||||||
| 5.1 | Modification of Credit Agreements | A-10 | ||||||||
| 5.2 | Beneficial Ownership | A-10 | ||||||||
| 5.3 | Preemptive Rights | A-10 | ||||||||
| 6. | CONDITIONS PRECEDENT TO THE EXCHANGES. | A-11 | ||||||||
| 6.1 | Conditions Precedent to each of the First Exchange and the Standby Exchange | A-11 | ||||||||
| 6.2 | Conditions Precedent to the Standby Exchange | A-13 | ||||||||
| 7. | TERMINATION; FEES AND EXPENSES. | A-13 | ||||||||
| 7.1 | Termination | A-13 | ||||||||
| 7.2 | Termination Fee | A-13 | ||||||||
| 7.3 | Expenses | A-13 | ||||||||
| 8. | MISCELLANEOUS | A-14 | ||||||||
| 8.1 | Payment of Taxes | A-14 | ||||||||
| 8.2 | Notices | A-14 | ||||||||
| 8.3 | Agent | A-14 | ||||||||
| 8.4 | Governing Law | A-14 | ||||||||
| 8.5 | Submission to Jurisdiction | A-15 | ||||||||
| 8.6 | Service of Process | A-15 | ||||||||
| 8.7 | Waiver of Venue | A-15 | ||||||||
| 8.8 | Persons Benefiting | A-15 | ||||||||
| 8.9 | Indemnification | A-15 | ||||||||
| 8.10 | Counterparts | A-16 | ||||||||
| 8.11 | Further Assurances | A-16 | ||||||||
| 8.12 | Successors and Assigns | A-16 | ||||||||
| 8.13 | Survival | A-16 | ||||||||
| 8.14 | Publicity | A-16 | ||||||||
| 8.15 | Exchange Rate | A-16 | ||||||||
| 8.16 | Severability | A-16 | ||||||||
| 8.17 | Headings | A-16 | ||||||||
| 8.18 | Entire Agreement | A-16 | ||||||||
| 8.19 | Limitation of Liability | A-16 | ||||||||
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SIGNATURES
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Schedules and Exhibits
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Schedule 2.1(a)
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A-19 | |||
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Schedule 4.2(g)
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A-20 | |||
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EXHIBIT 2.6 — Form of Stockholders Agreement
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This EXCHANGE AGREEMENT (the “Agreement”) is
entered into as of June 24, 2010, among Rhône Group
L.L.C. (“Rhône”), Xxxxxx Holdings C.V.,
Triton SPV L.P., Triton Onshore SPV L.P., Triton Offshore SPV
L.P. and Triton Coinvestment SPV L.P. (each, a
“Lender”, and collectively, the
“Lenders”); Quiksilver, Inc. (the
“Company”); Quiksilver Americas, Inc. (the
“US Borrower”); and Mountain & Wave
S.à x.x. (the “European Borrower” and,
together with the US Borrower, the “Borrowers”).
WHEREAS, the Lenders have made term loans to the US Borrower
with an original principal amount of $125,000,000 (the
“US Term Loans”) pursuant to the Credit
Agreement, dated as of July 31, 2009, among the Company,
the US Borrower, Rhône, as administrative agent, and the
Lenders (the “US Credit Agreement”);
WHEREAS, the Lenders have made term loans to the European
Borrower with an original principal amount of €20,000,000
(the “European Term Loans” and, together with
the US Term Loans, the “Term Loans”) pursuant
to the Credit Agreement, dated as of July 31, 2009, among
the Company, the European Borrower, Rhône, as
administrative agent, and the Lenders (the “European
Credit Agreement” and, together with the US Credit
Agreement, the “Credit Agreements”);
WHEREAS, the Company, the Borrowers, Rhône and the Lenders
have entered into a letter agreement, dated as of June 14,
2010 (the “Letter Agreement”), providing that,
subject to satisfaction of the conditions set forth therein,
(i) $75,000,000 principal amount of the Term Loans shall be
exchanged for shares of Common Stock; (ii) up to the total
remaining principal amount outstanding under the Term Loans may,
at the option of the Borrowers, be exchanged for shares of
Common Stock; (iii) the terms of the Credit Agreements
shall be amended; and (iv) the Company, the Lenders and
Rhône Capital III L.P. shall, at the closing of the
transactions contemplated therein, enter into a stockholders
agreement (the “Stockholders
Agreement”); and
WHEREAS, the Company, the Borrowers, Rhône and the Lenders
have determined to enter into this Agreement to give effect to
the terms of the Letter Agreement and to terminate the Letter
Agreement.
NOW THEREFORE, in consideration of the mutual covenants and
conditions set forth herein, the sufficiency of which is hereby
acknowledged, the parties hereby agree as follows:
| 1. | DEFINITIONS. |
As used in this Agreement, the following terms shall have the
following meanings:
“Affiliate” means with respect to any
Person, a Person that directly or indirectly controls, is
controlled by or is under direct or indirect common control with
such Person. For purposes of this definition,
“control” when used with respect to any Person means
the power to direct the management and policies of such Person,
directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise, and the terms
“controlling” and “controlled” have meanings
correlative to the foregoing.
“Agreement” has the meaning set forth in
the preamble to this Agreement.
“Board” means the Board of Directors of
the Company.
“Borrowers” has the meaning set forth in
the preamble to this Agreement and their successors and assigns.
“Business Day” means any day that is not
a day on which banking institutions are authorized or required
to be closed in the State of New York.
“Bylaws” means the Company’s
Amended and Restated Bylaws, as amended from time to time.
“Capital Stock” means any and all
shares, interests, rights to purchase, warrants, options,
participations or other equivalents of or interests in (however
designated) equity of the Company, including any preferred stock
but excluding any debt securities convertible into such equity.
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“Certificate of Incorporation” means the
Company’s Restated Certificate of Incorporation, as amended
from time to time.
“Common Stock” means the common stock,
par value $0.01 per share, of the Company.
“Common Stock Equivalent” means any
warrant, right or option to acquire any shares of Common Stock
or any security convertible or exchangeable into shares of
Common Stock.
“Company” has the meaning set forth in
the preamble to this Agreement and shall be deemed to include
its successors and assigns.
“Credit Agreements” has the meaning set
forth in the recitals to this Agreement.
“DGCL” means the Delaware General
Corporation Law.
“Dollars” and
“$” mean lawful money of the United
States.
“European Borrower” has the meaning set
forth in the recitals to this Agreement and its successors and
assigns.
“European Credit Agreement” has the
meaning set forth in the recitals to this Agreement.
“European Term Loans” has the meaning
set forth in the recitals to this Agreement.
“Euros” and
“€” mean the single currency of the
member states of the European Communities that adopt or have
adopted the Euro as their lawful currency in accordance with the
legislation of the European Union relating to European Monetary
Union.
“Exchanges” means the First Exchange and
the Standby Exchange.
“Exchange Act” means the Securities
Exchange Act of 1934, as amended.
“Exchange Fee” has the meaning set forth
in Section 2.4.
“Exchange Ratio” means $4.50 per share
of Common Stock.
“First Exchange” has the meaning set
forth in Section 2.1(a).
“First Exchange Closing Date” has the
meaning set forth in Section 2.3(a).
“HSR Act” means the
Xxxx-Xxxxx-Xxxxxx
Antitrust Improvements Act of 1976, as amended, and the rules
and regulations promulgated thereunder.
“Lenders” has the meaning set forth in
the preamble to this Agreement.
“Letter Agreement” has the meaning set
forth in the recitals to this Agreement.
“Material Adverse Effect” means
(a) a material adverse change in, or a material adverse
effect upon, the operations, business, properties, liabilities,
or condition (financial or otherwise) of the Company and the
Borrowers taken as a whole; (b) a material impairment of
the ability of the Company or either Borrower to perform its
obligations under this Agreement or, solely with respect to the
Company, the Stockholders Agreement; or (c) a material
impairment of the rights and remedies of Rhône, the Lenders
and/or
Rhône Capital III L.P., as applicable, under the
Credit Agreements (for so long as the Credit Agreements will
remain outstanding after giving effect to the Exchanges), the
Warrant Agreement, this Agreement or the Stockholders Agreement.
“Note” means a promissory note made by
either of the Borrowers in favor of any Lender pursuant to the
US Credit Agreement
and/or the
European Credit Agreement.
“NYSE” means the New York Stock Exchange.
“Permitted Transaction” means any
acquisition of any Common Stock or Common Stock Equivalent
(i) by Rhône or any of its Affiliates (including, for
the avoidance of doubt, any partner or employee of
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Rhône then serving on the Board) directly from the Company
or (ii) made pursuant to a tender or exchange offer made to
all stockholders of the Company.
“Person” means any individual,
corporation, partnership, joint venture, association, joint
stock company, trust, unincorporated organization or government
or any agency or political subdivision thereof.
“Preferred Stock” means the preferred
stock, par value $0.01 per share, of the Company.
“Proxy Statement” means the proxy
statement, together with any amendments or supplements thereto
and any other related proxy materials, including, without
limitation, any preliminary proxy materials, relating to the
Stockholder Approval of the Exchanges.
“Rhône” has the meaning set forth
in the preamble to this Agreement.
“Rhône Directors” means any
director of the Board that is appointed pursuant to
Section 9.4 of the Warrant Agreement or Section 6.2 of
the Stockholders Agreement.
“Rhône Material Adverse Effect”
means (a) a material adverse change in, or a material
adverse effect upon, the operations, business, properties,
liabilities, or condition (financial or otherwise) of Rhône
taken as a whole; (b) a material impairment of the ability
of Rhône or Rhône Capital III L.P., as
applicable, to perform its obligations under this Agreement or
the Stockholders Agreement; or (c) a material impairment of
the rights and remedies of the Company or the Borrowers under
the Credit Agreements (for so long as the Credit Agreements will
remain outstanding after giving effect to the Exchanges), the
Warrant Agreement, this Agreement or the Stockholders Agreement.
“SEC” means the United States Securities
and Exchange Commission.
“Securities Act” means the Securities
Act of 1933, as amended.
“Series A Preferred Stock” means
the convertible non-voting preferred stock, par value $0.01 per
share, of the Company on the terms set forth in Exhibit C
of the Warrant Agreement.
“Special Meeting” has the meaning set
forth in Section 3.1(a).
“Standby Exchange” has the meaning set
forth in Section 2.2(a).
“Standby Exchange Closing Date” has the
meaning set forth in Section 2.3(b).
“Standby Exchange Exercise Date” has the
meaning set forth in Section 2.2(a).
“Standby Shares” has the meaning set
forth in Section 2.2(a).
“Stockholder Approval” has the meaning
set forth in Section 3.1(a).
“Stockholders Agreement” has the meaning
set forth in the recitals to this Agreement.
“Termination Fee” has the meaning set
forth in Section 7.2.
“Term Loans” has the meaning set forth
in the recitals to this Agreement.
“US Borrower” has the meaning set forth
in the recitals to this Agreement.
“US Credit Agreement” has the meaning
set forth in the recitals to this Agreement.
“US Term Loans” has the meaning set
forth in the recitals to this Agreement.
“Voting Stock” means all classes of
Capital Stock of the Company then outstanding and normally
entitled to vote in the election of directors.
“Warrant Agreement” means the Warrant
and Registration Rights Agreement, dated as of July 31,
2009, by and among the Company, Rhône Capital III L.P.
and the initial Warrant holders party thereto.
“Warrants” means the warrants issued by
the Company from time to time pursuant to the Warrant Agreement.
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| 2. | THE EXCHANGES. |
2.1 The First Exchange.
(a) Subject to the terms and conditions hereof, on the
First Exchange Closing Date, the Company shall issue to the
Lenders the number of shares of Common Stock set forth opposite
such Lender’s name on Schedule 2.1(a) attached hereto
in redemption and prepayment of $75,000,000 of the aggregate
principal amount of the Term Loans (such redemption and
prepayment to be applied on a pro rata basis against the
principal amounts outstanding under the US Term Loans and the
European Term Loans and such issuance and redemption and
prepayment being referred to herein as the “First
Exchange”), and the principal amounts of the US Terms
Loans and the European Term Loans shall be, without any further
action, permanently reduced by such amounts. The reduction of
the principal amounts outstanding under the Term Loans upon
completion of the First Exchange shall be permanent and will
constitute a “prepayment” for purposes of
Section 2.05 of each of the US Credit Agreement and the
European Credit Agreement, and at the closing of the First
Exchange, the US Borrower shall make payment of all amounts due
under Section 2.09(a) of the US Credit Agreement in
connection with such prepayment. Each Lender hereby
(i) waives the provisions of Section 2.05(a)(ii) of
each of the US Credit Agreement and the European Credit
Agreement in connection with the prepayments of the Terms Loans
described in this Section 2.1(a), and (ii) consents to
any Investment (as defined in the applicable Credit Agreement)
deemed to be made by the Company or any of its subsidiaries
pursuant to or otherwise resulting from the First Exchange.
(b) Upon the closing of the First Exchange, the Company
shall make a payment to the Lenders for any interest accrued
(which payment may be made in cash or as a PIK Amount (as
defined in the applicable Credit Agreement) to the extent
permitted under the applicable Credit Agreement) on the
principal amounts of the Term Loans that are subject to the
First Exchange.
2.2 The Standby Exchange.
(a) The Borrowers shall have the right, exercisable in the
sole discretion of the Borrowers, by delivering notice in
accordance with Section 2.2(b) hereof on or prior to
August 23, 2010 (the “Standby Exchange Exercise
Date”), to require the Lenders to exchange, on a pro
rata basis calculated based on each Lender’s interest in
the Term Loans, all or a portion of the remaining principal
amount of the Term Loans for a number of shares of Common Stock
issued by the Company equal to the portion of such remaining
principal amount of the Term Loans that the Borrowers elect to
exchange pursuant to this Section 2.2(a) divided by
the Exchange Ratio (subject to the following proviso, the
“Standby Shares”) (such issuance and exchange
and related redemption and prepayment of the Term Loans are
referred to herein as the “Standby Exchange”);
provided that the Borrowers may only exercise their
option under this Section 2.2(a) to such extent that the
number of shares of Common Stock issued to the Lenders in the
Standby Exchange (taking into account all shares of Common Stock
and Warrants then held by the Lenders and their Affiliates)
shall not result in a “change in control”,
“change of control” or similar concept occurring under
any indenture, loan agreement, mortgage, deed of trust, contract
or other agreement or instrument to which the Company or any of
its subsidiaries is a party or by which the Company or any of
its subsidiaries or any of their properties may be bound.
(b) In the event the Borrowers exercise their option with
respect to the Standby Exchange, the Borrowers shall provide to
the Lenders an irrevocable, written notice, in accordance with
Section 8.2, of such election, and such notice shall be
delivered to the Lenders no later than 5:00 pm, New York time,
on the Standby Exchange Exercise Date and shall specify the
aggregate principal amount of Term Loans subject to the Standby
Exchange. The Borrowers may provide notice under this
Section 2.2(b) one time only.
(c) On the Standby Exchange Closing Date, the Company shall
issue to the Lenders, on a pro rata basis consistent with each
Lender’s interest in the Term Loans the Standby Shares in
redemption and prepayment of an aggregate of such principal
amount, which shall be applied on a pro rata basis against the
principal amounts outstanding under the US Term Loans and the
European Term Loans, and the principal amounts of the US Term
Loans and the European Term Loans shall be, without any further
action, permanently reduced by such amounts. The reduction of
the principal amounts outstanding under the Term Loans upon
completion of the
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Standby Exchange will constitute a “prepayment” for
purposes of Section 2.05 of each of the US Credit Agreement
and the European Credit Agreement, and at the closing of the
Standby Exchange, the US Borrower shall make payment of all
amounts due under Section 2.09 of the US Credit Agreement
in connection with such prepayment (including, without
limitation, any obligations under Section 2.09(b) of the US
Credit Agreement arising from the full repayment of the Term
Loans, if applicable). Each Lender hereby (i) waives the
provisions of Section 2.05(a)(ii) of each of the US Credit
Agreement and the European Credit Agreement in connection with
the prepayments of the Term Loans described in this
Section 2.2(c), and (ii) consents to any Investment
(as defined in the applicable Credit Agreement) deemed to be
made by the Company or any of its subsidiaries pursuant to or
otherwise resulting from the Standby Exchange.
(d) Upon the closing of the Standby Exchange, the Company
shall make a payment to the Lenders for any interest accrued
(which payment may be in cash or as a PIK Amount (as defined in
the applicable Credit Agreement) to the extent permitted under
the applicable Credit Agreement) on the principal amounts of the
Term Loans that are subject to the Standby Exchange.
2.3 Closing Dates of the Exchanges.
(a) The closing of the First Exchange shall occur on the
later of (i) August 1, 2010 and (ii) one Business
Day following satisfaction of the conditions precedent to
closing of the First Exchange set forth under Section 6.1
(the “First Exchange Closing Date”).
(b) The closing of the Standby Exchange shall occur on
(i) the latest of (A) Xxxxxx 0, 0000,
(X) one Business Day following satisfaction of the
conditions to closing of the Standby Exchange set forth under
Sections 6.1 and 6.2 and (C) five Business Days
following delivery of a notice by the Borrowers to the Lenders,
in accordance with Section 2.2(a), that the Borrowers are
exercising their option with respect to the Standby Exchange or
(ii) such other date as mutually agreed by the Lenders and
the Borrowers (the “Standby Exchange Closing
Date”), it being agreed that, if feasible, the First
Exchange and the Standby Exchange will close simultaneously.
2.4 Exchange Fee. Upon the closing
of each of the First Exchange and the Standby Exchange, the
Company shall pay to Rhône, as agent for the Lenders, on
the First Exchange Closing Date and the Standby Exchange Closing
Date, each as applicable, an exchange fee equal to 4.75% of the
value of the principal amount of the Term Loans subject to such
Exchange (an “Exchange Fee”). For the avoidance
of doubt, the Company’s payment of the Exchange Fees shall
not relieve the obligations of the US Borrower under
Sections 2.05(a), 2.09(a) and 2.09(b) of the US Credit
Agreement to pay all fees due to the Lenders in connection with
the partial or full prepayment of the principal amounts of the
US Term Loans.
2.5 Delivery of the Common
Stock. At the closing of each of the First
Exchange and the Standby Exchange, the Company shall deliver, or
cause to be delivered, to the Lenders certificates (bearing the
legend substantially in the form set forth in
Section 2.2(e) of the Stockholders Agreement) representing
the Common Stock issued in such Exchange.
2.6 Delivery of the Stockholders
Agreement. At the closing of the First
Exchange, the Company, the Lenders and Rhône
Capital III L.P. shall execute and deliver the Stockholders
Agreement substantially in the form set forth in
Exhibit 2.6.
2.7 Replacement Notes. At the
closing of each of the First Exchange and the Standby Exchange,
to the extent that as of such closing the Term Loans shall not
have been repaid in full, at the request of any applicable
Lender, each applicable Borrower shall replace any Note
previously issued to a Lender pursuant to either Credit
Agreement with a new Note, substantially in the form of such
previously issued Note, which shall evidence such Lender’s
outstanding loans under the applicable Credit Agreement after
giving effect to such Exchange.
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| 3. | STOCKHOLDER APPROVAL. |
3.1 Stockholders’ Meeting.
(a) As soon as practicable, but no later than 90 days
after the date hereof, the Company shall hold a special meeting
of its stockholders (the “Special Meeting”) for
the purpose of obtaining stockholder approval of the Exchanges
(the “Stockholder Approval”) in accordance with
the stockholder approval requirements set forth in
Section 312.03 of the NYSE Listed Company Manual.
(b) The Company shall use its reasonable best efforts to
(i) solicit from its stockholders proxies in favor of the
approval of the Exchanges and (ii) take any and all other
actions reasonably necessary or advisable to secure the
affirmative vote of its stockholders required by the DGCL, the
Certificate of Incorporation, the Bylaws, this Agreement, the
Stockholders Agreement and the rules and regulations of the
NYSE, to obtain the Stockholder Approval.
(c) Nothing in this Section 3.1 shall prevent the
Board from acting in accordance with its fiduciary duties or
applicable law or from acting in good faith in accordance with
the Certificate of Incorporation and the Bylaws, while giving
due consideration to the intent of this Agreement.
3.2 Preparation of Proxy Statement and Board and
Stockholder Action.
(a) The Company shall use its reasonable best efforts to,
promptly after the date hereof, in cooperation with Rhône
and its advisors, prepare and file with the SEC the Proxy
Statement. The Proxy Statement shall comply as to form and
substance in all material respects with the applicable
provisions of the Exchange Act. The Company shall use its
reasonable best efforts to respond as promptly as reasonably
practicable to any comments of the SEC with respect to the Proxy
Statement and to cause the definitive Proxy Statement to be
filed with the SEC and to be mailed to its stockholders as
promptly as reasonably practicable following the date of this
Agreement or, if applicable, following confirmation by the SEC
or its staff that it has no further comments on the Proxy
Statement. The Company shall promptly notify Rhône upon the
receipt of any written or oral comments from the SEC or its
staff or any written or oral request from the SEC or its staff
for amendments or supplements to the Proxy Statement and shall
provide Rhône with copies of all correspondence between the
Company and its representatives, on the one hand, and the SEC
and its staff, on the other hand, with respect thereto. Prior to
filing or mailing the Proxy Statement (or any amendment or
supplement thereto) or responding to any comments of the SEC
with respect thereto (orally or in writing), the Company shall
(i) provide Rhône and its counsel an opportunity to
review and comment on such document or response and
(ii) give reasonable consideration to all comments proposed
by Rhône or its counsel.
(b) The Company shall use its reasonable best efforts to
promptly and duly call, give notice of, convene and hold, the
Special Meeting and take all other necessary actions so that, as
promptly as reasonably practicable following the mailing of the
Proxy Statement, the Special Meeting for the purpose of
obtaining the Stockholder Approval is held. Subject to
Section 3.1(c), the Company shall include in the Proxy
Statement the unanimous recommendation of the Board (with the
Rhône Directors taking no part in such recommendation) that
the stockholders of the Company approve the issuance and sale of
the shares of Common Stock in the Exchanges and vote in favor of
such issuance.
(c) The information supplied by the Company for inclusion
in the Proxy Statement shall not, at (i) the time the Proxy
Statement (or any amendment thereof or supplement thereto) is
first mailed to the stockholders and (ii) the time of the
Special Meeting, contain any untrue statement of a material fact
or fail to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light
of the circumstances under which they were made, not misleading.
If, at any time prior to the Special Meeting, any event or
circumstance relating to the Company, or its officers or
directors, should be discovered by the Company which should be
set forth in an amendment or a supplement to the Proxy
Statement, the Company shall promptly inform Rhône.
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| 4. | REPRESENTATIONS AND WARRANTIES. |
4.1 Representations and Warranties of the Company and
the Borrowers. The Company and the Borrowers,
jointly and severally, represent and warrant to Rhône and
each of the Lenders that:
(a) Existence, Power and
Ownership. The Company is a corporation duly
organized, validly existing and in good standing under the laws
of the State of Delaware. Each of the Borrowers is a corporation
or a private limited liability company, duly organized or
formed, validly existing, and, where applicable, in good
standing under the laws of the jurisdiction of its incorporation
or organization.
(b) Authorization. The Company and
each of the Borrowers has the corporate or other requisite power
and authority to enter into this Agreement and to perform its
obligations under, and consummate the transactions contemplated
by, this Agreement and, solely with respect to the Company, the
Stockholders Agreement, and has by proper action duly authorized
the execution and delivery of this Agreement and, solely with
respect to the Company, the Stockholders Agreement.
(c) No Conflicts. None of the
execution and delivery of this Agreement by the Company or the
Borrowers, or, solely with respect to the Company, the
Stockholders Agreement by the Company, or the consummation of
the transactions contemplated herein or therein or the
performance of and compliance with the terms and provisions
hereof or thereof will: (i) violate or conflict with any
provision of the Certificate of Incorporation or the Bylaws, or
any of the Borrowers’ certificate of incorporation, bylaws
or other constituent documents; (ii) violate any law,
regulation, order, writ, judgment, injunction, decree or permit
applicable to the Company or any of the Borrowers;
(iii) violate or materially conflict with any contractual
provisions of, or cause an event of default under, any material
indenture, loan agreement, mortgage, deed of trust, contract or
other agreement or instrument to which the Company or any of the
Borrowers is a party or by which the Company or any of the
Borrowers or any of their properties may be bound; or
(iv) result in or require the creation of any lien,
security interest or other charge or encumbrance upon or with
respect to their properties, except in the case of clauses (ii),
(iii) and (iv), for such violations, conflicts or defaults,
or liens, security interests or encumbrances that would not,
individually or in the aggregate, result in a Material Adverse
Effect.
(d) Consents. Subject to
(i) the filing of a notification under the HSR Act and the
expiration or termination of the waiting period required
thereunder, (ii) receipt of the Stockholder Approval,
(iii) the accuracy of the representations and warranties of
Rhône and the Lenders set forth in Section 4.2 hereof,
(iv) the filing of a supplemental listing application in
accordance with the NYSE Listed Company Manual and (v) any
consents, approvals or authorizations already obtained on or
prior to the date hereof and in full force and effect, no
consent, approval, authorization or order of, or filing,
registration or qualification with, any court or governmental
authority or other Person is required in connection with the
execution, delivery or performance of this Agreement.
(e) Enforceable Obligations. This
Agreement has been, and at the closing of the First Exchange,
the Stockholders Agreement will be, duly executed and delivered
by the Company and, solely with respect to this Agreement, each
of the Borrowers and assuming due authorization, execution and
delivery hereof by Rhône and each of the Lenders, this
Agreement constitutes and, at the closing of the First Exchange,
the Stockholders Agreement will constitute, a legal, valid and
binding obligation of the Company and, solely with respect to
this Agreement, each of the Borrowers, enforceable in accordance
with their terms subject, as to enforcement, to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability relating to or affecting
creditors’ rights and to general equity principles.
(f) Capitalization. As of the date
hereof, the Company’s authorized capital stock consists of
(i) 285,000,000 shares of Common Stock of which
132,596,464 shares of Common Stock were issued and
outstanding and (ii) 5,000,000 shares of Preferred
Stock, including, without limitation, 1,000,000 shares of
Series A Preferred Stock of which no shares were issued and
outstanding. As of the date hereof, 2,885,200 shares of
Common Stock are held in treasury, 13,269,447 shares of
Common Stock are reserved for issuance upon exercise of
outstanding stock options, 1,693,227 shares of Common Stock
A-7
are reserved for future issuance under the Company’s equity
compensation plans, and 25,653,831 shares of Common Stock
are reserved for issuance upon exercise of the Warrants. As of
the date hereof, 1,000,000 shares of Series A
Preferred Stock are reserved for issuance upon exercise of the
Warrants. There are no authorized or outstanding securities of
the Company of any kind or class having power generally to vote
in the election of directors other than the Common Stock. There
are no other classes of capital stock of the Company authorized
or outstanding. The outstanding shares of Common Stock are duly
authorized, validly issued, fully paid and non-assessable. As of
the date hereof, there are no preemptive rights (other than as
set forth in Section 6.5 of the Stockholders Agreement and
Section 5.6 of the Warrant Agreement) or other outstanding
rights, options, warrants, conversion rights or agreements or
commitments of any character relating to the Company’s
authorized and issued, unissued or treasury shares of capital
stock, and the Company has not issued any debt securities, other
securities, rights or obligations that are currently outstanding
and convertible into or exchangeable for, or giving any Person a
right to subscribe for or acquire, capital stock of the Company.
(g) Board Approvals. (i) The
Board has taken all corporate actions necessary under the
Certificate of Incorporation, the Bylaws and the DGCL,
including, without limitation, for purposes of Section 203
thereunder, to approve the transactions contemplated herein, and
(ii) other than the Rhône Directors who abstained from
all discussion and voting with respect to the Exchanges, the
Board resolved to recommend that stockholders of the Company
approve the issuance and sale of the shares of Common Stock in
the Exchanges and vote in favor of such issuance (the
“Recommendation”), and no such approval or
recommendation has been withdrawn; provided,
however, that nothing in this Section 4.1(g) shall
prevent the Board from acting in accordance with its fiduciary
duties or applicable law or from acting in good faith in
accordance with the Certificate of Incorporation and the Bylaws.
(h) Issuance of Common Stock. The
Common Stock to be issued pursuant to the Exchanges against
payment therefor, when so issued and delivered by the Company,
will have been (i) duly and validly authorized, issued,
fully paid and nonassessable, free and clear of any mortgage,
pledge, lien, security interest, claim, voting agreement,
conditional sale agreement, title retention agreement,
restriction, option or encumbrance of any kind, character or
description whatsoever, other than those contained in the
Stockholders Agreement, and no Person (other than each of the
Lenders) will have any preemptive right of subscription,
purchase or share issuance in respect thereof, (ii) free of
any restrictions on transfer other than restrictions on transfer
under applicable federal and state securities laws and
restrictions provided under Section 2.1 of the Stockholders
Agreement, and (iii) assuming the accuracy of the
representations and warranties of Rhône and the Lenders set
forth in Section 4.2 hereof, issued in compliance with all
applicable federal and state securities laws. The Company has
duly authorized and reserved a sufficient number of shares of
Common Stock for issuance upon the completion of the Exchanges
pursuant to the terms of this Agreement.
(i) State Takeover Statutes
Inapplicable. The Board has taken all
corporate actions necessary so that Section 203 of the DGCL
is inapplicable to the issuance of shares of Common Stock
pursuant to the Exchanges. No other “fair price,”
“moratorium,” “control share acquisition” or
other similar anti-takeover statute or regulation is applicable
to the issuance of shares of Common Stock pursuant to the
Exchanges.
(j) No Registration
Requirement. None of the Company or any of
its subsidiaries has directly, or through any agent,
(i) sold, offered for sale, solicited offers to buy or
otherwise negotiated in respect of, any “security” (as
defined in the Securities Act) that is or would be integrated
with the issuance of the Common Stock pursuant to the Exchanges
in a manner that would require the registration under the
Securities Act of the Common Stock issued pursuant to the
Exchanges or (ii) engaged in any form of general
solicitation or general advertising (as those terms are used in
Regulation D under the Securities Act) in connection with
the offering of the Common Stock issued pursuant to the
Exchanges or in any manner involving a public offering within
the meaning of Section 4(2) of the Securities Act. Assuming
the accuracy of the representations and warranties of Rhône
and the Lenders in Section 4.2 hereof, it is not necessary
in connection with the offer, sale and delivery of the Common
Stock issuable in connection with the Exchanges in the manner
contemplated herein to register any of such Common Stock under
the Securities Act.
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(k) Proxy Statement. The Proxy
Statement filed with the SEC shall not contain any untrue
statement of a material fact or omit to state a material fact
necessary in order to make the statements contained therein, in
light of the circumstances under which they were made, not
misleading at the time of (i) the mailing of the definitive
Proxy Statement to the Company’s stockholders, and
(ii) the Special Meeting. Notwithstanding the foregoing,
the representation and warranty made in this Section 4.1(k)
does not apply to statements made or statements omitted in
reliance upon and in conformity with written information
furnished to the Company by Rhône with respect to
Rhône and the Lenders expressly for use in the Proxy
Statement or any amendment thereof.
4.2 Representations and Warranties of Rhône and
the Lenders. Rhône and each of the
Lenders, severally and not jointly, hereby represents and
warrants that:
(a) Authorization. Rhône and
each of the Lenders has the corporate or limited liability
company, as the case may be, power and authority to enter into
this Agreement and the Stockholders Agreement and to perform its
obligations under, and consummate the transactions contemplated
by, this Agreement and the Stockholders Agreement and has by
proper action duly authorized the execution and delivery of this
Agreement and the Stockholders Agreement.
(b) No Conflicts. None of the
execution and delivery of this Agreement and the Stockholders
Agreement by Rhône and each of the Lenders and the
consummation of the transactions contemplated herein or therein
or the performance of and compliance with the terms and
provisions hereof or thereof will: (i) violate or conflict
with any provision of the constituent documents of Rhône or
any of the Lenders; or (ii) violate any law, regulation,
order, writ, judgment, injunction, decree or permit applicable
to Rhône or any of the Lenders, except in the case of
clause (ii), for such violations that would not, individually or
in the aggregate, result in a Rhône Material Adverse
Effect.
(c) Enforceable Obligations. This
Agreement has been, and at the closing of the First Exchange,
the Stockholders Agreement will be, duly executed and delivered
by Rhône and each of the Lenders and assuming due
authorization, execution and delivery hereof by the Company and
each of the Borrowers, this Agreement constitutes, and, at the
closing of the First Exchange, the Stockholders Agreement will
constitute, a legal, valid and binding obligation of Rhône
and each of the Lenders, enforceable in accordance with their
terms subject, as to enforcement, to bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and similar laws
of general applicability relating to or affecting
creditors’ rights and to general equity principles.
(d) Investment Intent. Each Lender
acknowledges that the Common Stock issued pursuant to the
Exchanges will not have been, at the time of issuance,
registered under the Securities Act or under any state
securities laws. Each Lender (i) is acquiring the Common
Stock issuable pursuant to the Exchanges pursuant to an
exemption from registration under the Securities Act and solely
for investment with no present intention to distribute any of
the securities to any Person in violation of the Securities Act
or any other applicable securities laws and (ii) will not
sell or otherwise dispose of any of such Common Stock, except in
compliance with the registration requirements or exemption
provisions of the Securities Act and any other applicable
securities laws.
(e) Accredited Investor
Status. (i) Each Lender is an
“accredited investor” as such term is defined in
Rule 501(a) promulgated under the Securities Act whose
knowledge and experience in financial and business matters are
such that each Lender is capable of evaluating the merits and
risks of its investment in the shares of Common Stock issuable
pursuant to the Exchanges and (ii)(A) each Lender’s
financial situation is such that each Lender can afford to bear
the economic risk of holding the shares of Common Stock issuable
pursuant to the Exchanges for an indefinite period of time,
(B) each Lender can afford to suffer complete loss of its
investment in shares of Common Stock issuable pursuant to the
Exchanges, (C) the Company has made available to each
Lender all documents and information that each Lender has
requested relating to an investment in the Company, and
(D) each Lender has had adequate opportunity to ask
questions of, and receive answers from, the Company as well as
the Company’s officers, employees, agents and other
representatives concerning the Company’s business,
operations, financial condition,
A-9
assets, liabilities and all other matters relevant to each
Lender’s investment in the shares of Common Stock issuable
pursuant to the Exchanges.
(f) Restricted Securities. Each of
the Lenders agree that, at the time of issuance, the Common
Stock issuable pursuant to the Exchanges will not be registered
under the Securities Act or qualified under any state securities
laws. Such securities are being issued on the basis that the
Exchanges and the issuance by the Company in connection
therewith of its Common Stock to the Lenders are exempt from
registration under the Securities Act and from applicable state
securities laws. Rhône and each of the Lenders agree that
the reliance by the Company on such exemptions is predicated, in
part, on the representations and warranties and other agreements
of Rhône and each of the Lenders set forth in this
Agreement. Rhône and each of the Lenders acknowledge and
agree that each certificate representing the Common Stock issued
in the Exchange shall bear the legend substantially in the form
set forth in Section 2.2(e) of the Stockholders Agreement.
(g) Beneficial Ownership. As of
the date hereof, Rhône and its Affiliates, including the
Lenders, collectively, beneficially own, or have the right to
acquire, whether such right is exercisable immediately or only
after the passage of time, 25,758,831 shares of Common
Stock.
(h) Term Loans. As of the date
hereof, the principal amount of US Term Loans held by each
Lender under the US Credit Agreement and the principal amount of
European Term Loans held by each Lender under the European
Credit Agreement are set forth on Schedule 4.2(g) attached
hereto.
| 5. | COVENANTS |
5.1 Modification of Credit
Agreements. In the event that immediately
following the closing of the Exchanges, $30,000,000 or less in
aggregate principal amount of the Term Loans remains
outstanding, Section 7.14(a) of each of the US Credit
Agreement and the European Credit Agreement shall be modified,
automatically and without any further action, so as to replace
the tables therein with the following:
|
Americas Consolidated |
||||
|
Measurement Period Ending
|
EBITDA | |||
|
January 31, 2010
|
$ | 20,000,000 | ||
|
April 30, 2010
|
$ | 20,000,000 | ||
|
July 31, 2010
|
$ | 18,000,000 | ||
|
October 31, 2010
|
$ | 24,000,000 | ||
|
January 31, 2011
|
$ | 27,000,000 | ||
|
April 30, 2011
|
$ | 30,000,000 | ||
|
July 31, 2011
|
$ | 33,000,000 | ||
|
October 31, 2011
|
$ | 39,000,000 | ||
|
January 31, 2012
|
$ | 42,000,000 | ||
|
April 30, 2012
|
$ | 45,000,000 | ||
|
July 31, 2012
|
$ | 48,000,000 | ||
|
October 31, 2012 and the last day of each Fiscal Quarter
thereafter
|
$ | 51,000,000 | ||
5.2 Beneficial Ownership. Prior to
the Standby Exchange Exercise Date, other than pursuant to a
Permitted Transaction or as a result of the exercise of any
preemptive rights under Section 5.6 of the Warrant
Agreement, Rhône and its Affiliates, including the Lenders,
shall not, increase their aggregate beneficial ownership of
Common Stock (including, for the avoidance of doubt, any shares
of Common Stock that Rhône and its Affiliates have the
right to acquire) from the amount set forth in
Section 4.2(g) hereof.
5.3 Preemptive Rights. The Lenders
hereby waive their respective preemptive rights under
Section 5.6 of the Warrant Agreement with respect to
(i) the first underwritten public offering of Common Stock,
if any, occurring prior to September 30, 2010 with gross
proceeds of no more than $115 million and a public offering
price of no less than $4.50 per share of Common Stock and
(ii) the shares of Common Stock issuable in the Exchanges.
In the event that the gross proceeds of such offering exceed
$115 million
and/or the
public
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offering price is less than $4.50 per share of Common Stock, the
Lenders shall deliver notice to the Company within 10 days
following the pricing date relating to such offering, of their
intention to exercise their preemptive rights to purchase at the
public offering price an additional number of shares of Common
Stock to maintain their respective proportionate,
as-if-exercised ownership interest in the Company based on the
number of shares of Common Stock outstanding immediately prior
to such offering. If the Lenders fail to deliver such notice
within such
10-day
period, the Lenders shall be deemed to have waived their
respective preemptive rights with respect to such offering. If
the Lenders elect to exercise their preemptive rights with
respect to such offering, the closing of the exercise of such
preemptive rights shall occur as soon as reasonably practicable
following the consummation of such offering or, if applicable,
the expiration of the over-allotment option, subject to
obtaining stockholder approval if required and regulatory
approvals. For the avoidance of doubt, the preemptive rights set
forth in Section 5.6 of the Warrant Agreement shall
otherwise remain in effect.
5.4 Term Loans. Prior to the
Standby Exchange Exercise Date, each Lender shall not sell,
transfer, assign, encumber, grant a participation in or
otherwise dispose of the Term Loans held by such Lender or their
rights in respect thereof.
| 6. | CONDITIONS PRECEDENT TO THE EXCHANGES. |
6.1 Conditions Precedent to each of the First
Exchange and the Standby Exchange.
(a) Notwithstanding any other provision of this Agreement,
none of Rhône or any of the Lenders will be obligated to
complete the First Exchange and, if applicable, the Standby
Exchange, or fulfill any other obligations arising hereunder,
unless the following conditions precedent have been (or,
substantially contemporaneously with the applicable Exchange,
will be) satisfied in full:
(i) Receipt within ninety (90) days of the date of
this Agreement of the Stockholder Approval;
(ii) The Company and the Borrowers having performed in all
material respects each of the obligations required by this
Agreement to be performed or complied with by the Company at or
prior to the closing date of such Exchange;
(iii) If required, the filing of a notification under the
HSR Act and the expiration or termination of the waiting period
and any extension of such period under the HSR Act as applicable
to the Exchanges;
(iv) Execution and delivery by the Company of the
Stockholders Agreement;
(v) Delivery to the Lenders of the certificates
representing the shares of Common Stock issuable pursuant to
such Exchange;
(vi) Delivery to Rhône and the Lenders of a legal
opinion, dated as of the closing date of such Exchange, by
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP, the
Company’s outside legal counsel, such opinion, subject to
customary limitations, exceptions, assumptions and
qualifications, to be limited to the following matters:
(A) each of this Agreement and the Stockholders Agreement
has been duly authorized, executed and delivered by the Company;
(B) each of this Agreement and the Stockholders Agreement
is a valid and binding agreement of the Company, enforceable
against the Company in accordance with its terms; (C) the
Common Stock issuable to the Lenders pursuant to such Exchange,
when issued to the Lenders in accordance with the terms of this
Agreement, will have been validly issued, fully paid and
nonassessable; (D) the Company is validly existing in good
standing under the laws of the State of Delaware; and
(E) the execution and delivery by the Company of this
Agreement and the Stockholders Agreement and the consummation of
the applicable transactions contemplated herein or therein do
not: (x) constitute a violation of, or a default under, the
material contracts filed as Exhibits 4.1, 10.11, 10.12,
10.13 and 10.16 to the Company’s
Form 10-K
for the fiscal year ended October 31, 2009, (y) result
in a “change of control” under the material contracts
filed as Exhibits 4.1 and 10.13 to the Company’s
Form 10-K
for the fiscal year ended October 31, 2009 (subject to
(a) the accuracy of the representation and warranty made by
Rhône and the Lenders in Section 4.2(g) hereof and
(b) an officer’s certificate from the Company as to
the beneficial ownership of Rhône and its Affiliates
(including the Lenders)
A-11
(expressed as a percentage) based on the information provided in
clause (a) and in the case of Exhibit 4.1 to the
Company’s
Form 10-K
for the fiscal year ended October 31, 2009, the number of
outstanding shares of Voting Stock of the Company and in the
case of Exhibit 10.13 to the Company’s
Form 10-K
for the fiscal year ended October 31, 2009, based on the
number of outstanding equity interests of the Company entitled
to vote for members of the Board on a fully-diluted basis (as
determined in accordance with and as defined in the agreement
filed as such Exhibit 10.13), in each case, such
outstanding number to be provided by the Company), or
(z) violate or conflict with, or result in any
contravention of, the DGCL, the laws of the State of New York or
the laws of the State of California;
(vii) As of the closing date of such Exchange (except for
any representation or warranty that is expressly made as of a
specified date, in which case as of such specified date), each
representation or warranty of the Company or the Borrowers
contained in this Agreement shall be true and correct in all
material respects (except for such representations and
warranties as are qualified by materiality or Material Adverse
Effect, which representations and warranties shall be true and
correct in all respects);
(viii) Execution and delivery to Rhône of a
certificate, dated as of the closing date of such Exchange, from
the Chief Executive Officer or the Chief Financial Officer of
the Company confirming that (i) the representations and
warranties of the Company contained in this Agreement are true
and correct in all material respects (except for such
representations and warranties as are qualified by materiality
or Material Adverse Effect, which representations and warranties
shall be true and correct in all respects) on and as of such
closing date with the same force and effect as though such
representations and warranties had been made on and as of such
closing date, other than those representations and warranties
that are made as of another date, in which case such
representations and warranties shall be true and correct as of
such other date, and (ii) all agreements, covenants,
obligations and conditions required by this Agreement to be
performed or complied with by the Company at or prior to such
closing date have been performed and complied with in all
material respects; and
(ix) The Company shall have paid to Rhône
and/or each
of the Lenders all amounts due under (i) this Agreement,
including, without limitation, the Exchange Fee and all expenses
provided for in Section 7.3 and (ii) the Credit
Agreements as provided in Section 2.1(a) and, if
applicable, Section 2.2(c).
(x) No temporary restraining order, preliminary or
permanent injunction or other judgment or order issued by any
governmental authority shall be in effect which prohibits,
restrains or renders illegal the consummation of the
transactions contemplated by this Agreement.
(b) Notwithstanding any other provision of this Agreement,
none of the Company or the Borrowers will be obligated to
complete the First Exchange and, if applicable, the Standby
Exchange, or fulfill any other obligations arising hereunder,
unless the following conditions precedent have been (or,
substantially contemporaneously with the applicable Exchange,
will be) satisfied in full:
(i) Receipt within ninety (90) days of the date of
this Agreement of the Stockholder Approval;
(ii) Rhône and the Lenders having performed in all
material respects each of the obligations required by this
Agreement to be performed or complied with by Rhône and the
Lenders at or prior to the closing date of such Exchange;
(iii) If required, the filing of a notification under the
HSR Act and the expiration or termination of the waiting period
and any extension of such period under the HSR Act as applicable
to the Exchanges;
(iv) Execution and delivery by Rhône Capital III
L.P. and each Lender of the Stockholders Agreement; and
(v) As of the closing date of such Exchange (except for any
representation or warranty that is expressly made as of a
specified date, in which case as of such specified date), each
representation or warranty of Rhône and the Lenders
contained in this Agreement shall be true and correct in all
material respects (except for such representations and
warranties as are qualified by materiality or Rhône
Material Adverse Effect, which representations and warranties
shall be true and correct in all respects).
A-12
(vi) No temporary restraining order, preliminary or
permanent injunction or other judgment or order issued by any
governmental authority shall be in effect which prohibits,
restrains or renders illegal the consummation of the
transactions contemplated by this Agreement.
6.2 Conditions Precedent to the Standby
Exchange. Notwithstanding any other provision
of this Agreement, none of Rhône or any of the Lenders will
be obligated to complete the Standby Exchange if the Company
fails to provide to Rhône, pursuant to Section 2.2(a),
an irrevocable, written notice on or prior to the Standby
Exchange Exercise Date.
| 7. | TERMINATION; FEES AND EXPENSES. |
7.1 Termination.
(a) Subject to Section 7.1(c), in the event that
Company or the Borrowers are not obligated to complete the First
Exchange due to the failure to satisfy the conditions precedent
to the closing of the Exchanges provided for in
Section 6.1(b), the Company may terminate this Agreement by
delivering notice to Rhône of such termination;
provided that, notwithstanding the foregoing, the Company
may not terminate this Agreement at any time where it is in
material breach of any of its obligations under this Agreement.
(b) Subject to Section 7.1(c), in the event that
Rhône or any of the Lenders are not obligated to complete
the First Exchange due to the failure to satisfy the conditions
precedent to the closing of the Exchanges provided for in
Section 6.1(a), Rhône and the Lenders may terminate
this Agreement by delivering notice to the Company of such
termination; provided that, notwithstanding the
foregoing, Rhône and the Lenders may not terminate this
Agreement at any time where they are in material breach of any
of their obligations under this Agreement.
(c) In the event of termination of this Agreement in
accordance with Section 7.1(a) or Section 7.1(b), this
Agreement shall become void and of no effect, with no liability
to any Person on the part of any party hereto (or of any of its
representatives or Affiliates); provided, however,
that (i) no such termination shall relieve any party hereto
of any liability or damages to the other party hereto resulting
from any material breach of this Agreement occurring prior to
such termination and (ii) the provisions set forth in
Sections 7.2 and 7.3 and Article 8 (other than
Sections 8.11 and 8.13), and all related definitions, shall
survive the termination of this Agreement.
7.2 Termination Fee. In the event
the First Exchange fails to close due to (i) the failure by
the Company to obtain the Stockholder Approval on or prior to
September 22, 2010, and the Company prepays any portion of
the outstanding principal amount of the Term Loans within six
(6) months immediately following the earlier of
(A) the date of the Special Meeting (or, if adjourned, the
date of the reconvened Special Meeting) at which the Exchanges
are not approved as a result of the negative vote of the
Company’s stockholders or (B) September 22, 2010,
(ii) the Board changing the Recommendation, or (iii) a
material breach by the Company of its obligations hereunder, the
Company shall pay a termination fee to Rhône, as agent for
the Lenders, in an aggregate amount equal to $10,000,000 (the
“Termination Fee”). Notwithstanding anything
contained herein to the contrary, Rhône, as agent for the
Lenders, will not be entitled to receive the Termination Fee
under any other circumstances and the Termination Fee shall be
the sole and exclusive remedy of Rhône and the Lenders as a
result of a termination of this Agreement by the Company
pursuant to Section 7.1(a) or by Rhône and the Lenders
pursuant to Section 7.1(b). Upon the payment of the
Termination Fee pursuant to this Section 7.2, none of the
Company and the Borrowers shall have any further liability or
obligation relating to or arising out of this Agreement or the
transactions contemplated by this Agreement (other than
indemnification obligations under Section 8.9 and any
expense reimbursement obligations under Section 7.3).
7.3 Expenses. All reasonable and
documented
out-of-pocket
costs and expenses incurred by Rhône or the Lenders in
connection with the Exchanges, including, without limitation,
reasonable counsel fees and the filing fees in connection with
all necessary notifications and other filings under the HSR Act
shall be borne by the Company and shall be payable by the
Company no later than ten (10) days following receipt by
the Company of (i) a written notice from Rhône or the
Lenders indicating any payments due pursuant to this
A-13
Section 7.3, and (ii) reasonably detailed
documentation of the expenses for which reimbursement is sought.
For the avoidance of doubt, nothing under this Section 7.3
or Section 2.4 shall amend the expense reimbursement
obligations of the Company under the Credit Agreements.
| 8. | MISCELLANEOUS. |
8.1 Payment of Taxes. The Company
shall pay all transfer, stamp and other similar taxes that may
be imposed in respect of the issuance or delivery of the Common
Stock pursuant to the Exchanges.
8.2 Notices. Any notice, demand or
delivery to the Company or Rhône or the Lenders authorized
by this Agreement shall be sufficiently given or made when
mailed if sent by first-class mail, postage prepaid, addressed
to the Company or Rhône, as applicable, as follows:
If to the Company:
Quiksilver, Inc.
00000 Xxxxxx Xx.
Xxxxxxxxxx Xxxxx, XX 00000
Fax: (000) 000-0000
Attention: General Counsel
With a copy to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
000 Xxxxx Xxxxx Xxxxxx
Xxx Xxxxxxx, XX 00000-0000
Fax: (000) 000-0000
Attention: Xxxxx X. XxXxxxxx and K. Xxxxxxxx Xxxx
If to Rhône:
Rhône Group L.L.C.
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Fax: (000) 000-0000
Attention: Xxxxxxx Xxxxxx and M. Xxxxxxx Xxxxxxx
With a copy to:
Xxxxxxxx & Xxxxxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Fax: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxxx
or such other address as shall have been furnished to the party
giving or making such notice, demand or delivery.
Any notice required to be given by the Company to the Lenders
pursuant to this Agreement shall be made by mailing by
registered mail, return receipt requested, to the Lenders at
their respective addresses shown on Schedule 2.1(a)
attached hereto. Any notice that is mailed in the manner herein
provided shall be conclusively presumed to have been duly given
when mailed, whether or not the Lender receives the notice.
8.3 Agent. The Lenders appoint
Rhône as their agent and authorize Rhône to bind, and
take all actions in connection with this Agreement on behalf of,
the Lenders. The Company shall be entitled to rely on direction
by Rhône on behalf of any Lender for all purposes hereunder.
8.4 Governing Law. THIS
AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK, INCLUDING, WITHOUT
A-14
LIMITATION,
SECTIONS 5-1401
AND 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW AND THE NEW
YORK CIVIL PRACTICE LAWS AND RULES 327(B).
8.5 Submission to
Jurisdiction. EACH OF THE BORROWERS AND THE
COMPANY IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF AND
ITS PROPERTY, TO THE NONEXCLUSIVE JURISDICTION OF THE COURTS OF
THE STATE OF NEW YORK SITTING IN NEW YORK COUNTY AND OF THE
UNITED STATES DISTRICT COURT OF THE SOUTHERN DISTRICT OF NEW
YORK, AND ANY APPELLATE COURT FROM ANY THEREOF, IN ANY ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
STOCKHOLDERS AGREEMENT, OR FOR RECOGNITION OR ENFORCEMENT OF ANY
JUDGMENT, AND EACH OF THE BORROWERS AND THE COMPANY IRREVOCABLY
AND UNCONDITIONALLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY
SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH
NEW YORK STATE COURT OR, TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, IN SUCH FEDERAL COURT. EACH OF THE BORROWERS AND
THE COMPANY AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR
PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER
JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER
PROVIDED BY LAW. NOTHING IN THIS AGREEMENT SHALL AFFECT ANY
RIGHT THAT ANY OF THE LENDERS OR RHôNE MAY OTHERWISE HAVE
TO BRING ANY ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR
THE STOCKHOLDERS AGREEMENT AGAINST ANY OF THE COMPANY OR THE
BORROWERS OR THEIR PROPERTIES IN THE COURTS OF ANY JURISDICTION.
8.6 Service of Process. EACH OF
THE BORROWERS AND THE COMPANY IRREVOCABLY CONSENTS TO SERVICE OF
PROCESS IN THE MANNER PROVIDED FOR NOTICES IN
SECTION 8.2. NOTHING IN THIS AGREEMENT
WILL AFFECT THE RIGHT OF ANY PARTY HERETO TO SERVE PROCESS IN
ANY OTHER MANNER PERMITTED BY APPLICABLE LAW.
8.7 Waiver of Venue. EACH OF THE
BORROWERS AND THE COMPANY IRREVOCABLY AND UNCONDITIONALLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY
OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF
VENUE OF ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO
THIS AGREEMENT IN ANY COURT REFERRED TO IN SECTION 8.5 OF
THIS AGREEMENT. EACH OF THE BORROWERS AND THE COMPANY HEREBY
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE
MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH COURT.
8.8 Persons Benefiting. This
Agreement shall be binding upon and inure to the benefit of the
Company, the Borrowers and Rhône, and their successors,
assigns, beneficiaries, executors and administrators, and the
Lenders. Nothing in this Agreement is intended or shall be
construed to confer upon any Person, other than the Company, the
Borrowers, Rhône and the Lenders, any right, remedy or
claim under or by reason of this Agreement or any part hereof.
8.9 Indemnification. The Company
and the Borrowers shall, jointly and severally, indemnify
Rhône, the Lenders and each of their respective agents,
attorneys, accountants, advisors, consultants, directors,
officers, employees, partners, stockholders, Affiliates and
other representatives (each such Person an
“Indemnitee”) against, and hold each Indemnitee
harmless from, any and all losses, claims, causes of action,
damages, liabilities, settlement payments, costs and related
expenses (including the reasonable fees, charges and
disbursements of counsel (it being understood that the Company
shall not be liable for the fees and expenses of more than one
counsel)), incurred by any Indemnitee or asserted against any
Indemnitee by any third party or by the Company or the Borrowers
arising out of, in connection with, or as a result of
(i) the execution or delivery of this Agreement or any
agreement or instrument contemplated hereby, the performance by
the parties hereto of their respective obligations hereunder or
the consummation of the transactions contemplated hereby or
(ii) any actual or prospective claim, litigation,
investigation or proceeding relating to any of the foregoing,
whether based on contract, tort or any other theory, whether
brought by a third party or by the Company or the Borrowers or
any of their directors, shareholders or creditors, and
regardless of whether any Indemnitee is a party thereto, in all
cases, whether or not caused by or arising, in whole or in part,
out of the
A-15
comparative, contributory or sole negligence of the Indemnitee;
provided that such indemnity shall not, as to any
Indemnitee, be available to the extent that such losses, claims,
damages, liabilities or related expenses are determined by a
court of competent jurisdiction by final and nonappealable
judgment to have resulted from the gross negligence, willful
misconduct or bad faith of such Indemnitee.
8.10 Counterparts. This Agreement
may be executed in any number of counterparts, each of which
shall be deemed an original, but all of which together
constitute one and the same instrument.
8.11 Further Assurances. Each
party shall do and perform, or cause to be done and performed,
all such further acts and things, and shall execute and deliver
all such other agreements, certificates, instruments and
documents, as the other party may reasonably request in order to
carry out the intent and accomplish the purposes of this
Agreement and the consummation of the transactions contemplated
hereby.
8.12 Successors and Assigns. This
Agreement shall be binding upon and inure to the benefit of the
parties and their successors and permitted assigns. No party
shall assign this Agreement or any rights or obligations
hereunder.
8.13 Survival. The parties agree
that the covenants and agreements contained in this Agreement
and the representations and warranties of the parties contained
in Article 4 shall survive indefinitely, notwithstanding
any due diligence investigation conducted by or on behalf of
Rhône or the Lenders.
8.14 Publicity. The Company and
Rhône each shall consult with each other prior to issuing
any press releases or making any public statement with respect
to this Agreement or the Stockholders Agreement and the
transactions contemplated hereby and thereby, and shall not
issue any such press release or make any such public statement
with respect thereto unless the text of the statement shall
first have been agreed to by the parties hereto;
provided, however, that Rhône and the Lenders may
make customary communications with their limited partners and
other co-investors without consulting the Company.
Notwithstanding the foregoing, Rhône, the Lenders and the
Company acknowledge and agree that (i) the Company will
file a Current Report on
Form 8-K
with the SEC that will describe the terms of this Agreement and
the transactions contemplated hereby, (ii) Rhône, the
Lenders and certain of their Affiliates will file one or more
amendments to their Schedule 13D and a Form 4 with
respect to the Exchanges that will describe the terms of this
Agreement, the transactions contemplated hereby and the results
of the Exchanges and (iii) nothing contained in this
Section 8.14 shall prohibit the Company, Rhône or the
Lenders from complying with its obligations under the federal
securities laws or the rules and regulations of the NYSE.
8.15 Exchange Rate. For purposes
of this Agreement, with respect to the First Exchange Closing
Date, the Standby Exchange Closing Date or the date immediately
following the closing of the Exchanges, as applicable, the
Dollar equivalent of any Euro-denominated principal amount
outstanding under the European Term Loans on such date shall be
equal to the product of (i) the applicable Euro-denominated
principal amount multiplied by (ii) the Dollar to
Euro exchange rate published in The Wall Street Journal
on the day immediately prior to such date.
8.16 Severability. In case any
provision of this Agreement is declared invalid, illegal or
unenforceable, the validity, legality and enforceability of the
remaining provisions shall not in any way be affected or
impaired thereby.
8.17 Headings. The descriptive
headings of the several Sections and
Sub-Sections
of this Agreement are inserted for convenience and shall not
control or affect the meaning or construction of any of the
provisions hereof.
8.18 Entire Agreement. The Letter
Agreement is hereby terminated and replaced by this Agreement.
This Agreement and the other agreements referred to herein
constitute the entire agreement and supersede all prior
agreements, including the Letter Agreement, and understandings,
both written and oral, between the parties with respect to the
subject matter hereof.
8.19 Limitation of Liability. No
party to this Agreement shall be liable to any other party for
any consequential, indirect, special or incidental damages under
any provision of this Agreement or for any consequential,
indirect, penal, special or incidental damages arising out of
any act or failure to act hereunder even if that party has been
advised of or has foreseen the possibility of such damages.
A-16
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed, as of the day and year first
above written.
QUIKSILVER, INC.
| By: |
|
Name:
Title:
QUIKSILVER AMERICAS, INC.
| By: |
|
Name:
Title:
MOUNTAIN & WAVE S.À X.X.
| By: |
|
Name:
Title:
XXXXXX HOLDINGS C.V.
| By: |
|
Name:
Title:
TRITON SPV L.P.
| By: |
|
Name:
Title:
X-00
XXXXXX XXXXXXX SPV L.P.
| By: |
|
Name:
Title:
TRITON OFFSHORE SPV L.P.
| By: |
|
Name:
Title:
TRITON COINVESTMENT SPV L.P.
| By: |
|
Name:
Title:
RHÔNE GROUP L.L.C.
| By: |
|
Name:
Title:
[Signature
Page to Exchange Agreement]
A-18
Schedule 2.1(a)
|
Number of Shares of |
||||
|
Common Stock to be |
||||
|
Lender
|
Issued in the First Exchange | |||
|
Xxxxxx Holdings C.V.
c/o Numitor Governance S.à x.x. c/o Rhône Group L.L.C. 000 0xx Xxxxxx, 00xx Xxxxx Xxx Xxxx, XX 00000 |
1,040,634 | |||
|
Triton SPV L.P.
x/x Xxxxxx XX XXX XXX x/x Xxxxx Xxxxxxx XXX L.P. 000 0xx Xxxxxx, 00xx Xxxxx Xxx Xxxx, XX 00000 |
2,081,477 | |||
|
Triton Onshore SPV L.P.
x/x Xxxxxx XX XXX XXX x/x Xxxxx Xxxxxxx XXX L.P. 000 0xx Xxxxxx, 00xx Xxxxx Xxx Xxxx, XX 00000 |
6,719,935 | |||
|
Triton Offshore SPV L.P.
c/o Triton GP SPV LLC c/o Rhône Capital III L.P. 000 0xx Xxxxxx, 00xx Xxxxx Xxx Xxxx, XX 00000 |
5,600,700 | |||
|
Triton Coinvestment SPV L.P.
c/o Triton GP SPV LLC c/o Rhône Capital III L.P. 000 0xx Xxxxxx, 00xx Xxxxx Xxx Xxxx, XX 00000 |
1,223,921 | |||
|
TOTAL
|
16,666,667 | |||
A-19
Schedule 4.2(g)
|
Aggregate |
Aggregate |
|||||||
|
Principal Amount of |
Principal Amount of |
|||||||
|
Lender
|
US Term Loans | European Term Loans | ||||||
|
Xxxxxx Holdings C.V.
|
$ | 8,125,072.18 | € | 1,379,446.19 | ||||
|
Triton SPV L.P.
|
$ | 16,251,768.97 | € | 2,759,168.20 | ||||
|
Triton Onshore SPV L.P.
|
$ | 52,467,943.21 | € | 8,907,822.94 | ||||
|
Triton Offshore SPV L.P.
|
$ | 43,729,172.47 | € | 7,424,185.16 | ||||
|
Triton Coinvestment SPV L.P.
|
$ | 9,556,134.08 | € | 1,622,406.85 | ||||
|
TOTAL
|
$ | 130,130,090.91 | € | 22,093,029.34 | ||||
A-20
Exhibit 2.6
STOCKHOLDERS
AGREEMENT
by and among
QUIKSILVER, INC.,
THE INITIAL HOLDERS
and
RHÔNE CAPITAL III L.P.
Dated as of • , 2010
by and among
QUIKSILVER, INC.,
THE INITIAL HOLDERS
and
RHÔNE CAPITAL III L.P.
Dated as of • , 2010
TABLE OF
CONTENTS
| Page | ||||||||||
| 1. | DEFINITIONS | 1 | ||||||||
| 2. | TRANSFER RESTRICTIONS; COMPLIANCE WITH THE SECURITIES ACT | 4 | ||||||||
| 2.1. | Transferability of the Exchange Stock | 4 | ||||||||
| 2.2. | Compliance with the Securities Act | 4 | ||||||||
| 3. | AMENDMENT TO WARRANT AGREEMENT | 5 | ||||||||
| 3.1. | Amendment to Warrant Agreement | 5 | ||||||||
| 4. | [RESERVED] | 6 | ||||||||
| 5. | REPRESENTATIONS AND WARRANTIES | 6 | ||||||||
| 5.1. | Representations and Warranties of the Company | 6 | ||||||||
| 5.2. | Representations and Warranties of Rhône, Rhône Capital and each of the Initial Holders | 6 | ||||||||
| 6. | COVENANTS | 7 | ||||||||
| 6.1. | Standstill | 7 | ||||||||
| 6.2. | Board Representation | 8 | ||||||||
| 6.3. | Financial Statements | 9 | ||||||||
| 6.4. | Rule 144 Reporting | 9 | ||||||||
| 6.5. | Preemptive Rights | 10 | ||||||||
| 6.6. | Consent Upon Certain Issuances | 10 | ||||||||
| 6.7. | Affiliate Transactions | 10 | ||||||||
| 7. | MISCELLANEOUS | 10 | ||||||||
| 7.1. | Agent | 10 | ||||||||
| 7.2. | Removal of Legends | 10 | ||||||||
| 7.3. | Notices | 10 | ||||||||
| 7.4. | Applicable Law | 11 | ||||||||
| 7.5. | Persons Benefiting | 11 | ||||||||
| 7.6. | Counterparts | 11 | ||||||||
| 7.7. | Amendments | 11 | ||||||||
| 7.8. | Headings | 12 | ||||||||
| 7.9. | Entire Agreement | 12 | ||||||||
| 7.10. | Limitation of Liability | 12 | ||||||||
i
STOCKHOLDERS
AGREEMENT
This STOCKHOLDERS AGREEMENT (the “Agreement”)
is entered into as of • , 2010 by and among
Quiksilver, Inc., a Delaware corporation (the
“Company”), the Initial Holders and Rhône
Capital III L.P. (“Rhône”).
WITNESSETH:
WHEREAS, the Company, the Initial Holders and Rhône Group
L.L.C. are party to the Exchange Agreement, dated as of
June • , 2010 (the “Exchange
Agreement”), pursuant to which the Initial Holders are
exchanging (i) pursuant to the First Exchange (as defined
in the Exchange Agreement), on a pro rata basis, $75,000,000 of
the principal amount outstanding under the Term Loans (as
defined in the Exchange Agreement) for an aggregate of
16,666,667 shares of Common Stock and (ii) if the
Borrowers (as defined in the Exchange Agreement) have exercised
their option in respect of the Standby Exchange (as defined in
the Exchange Agreement), an additional portion of the
outstanding principal amount of the Term Loans for such
additional number of shares of Common Stock as determined under
the Exchange Agreement;
WHEREAS, in connection with the consummation of the transactions
contemplated by the Exchange Agreement, the parties desire to
enter into this Agreement in order to create certain rights for
Rhône Capital III L.P. and the Initial
Holders; and
WHEREAS, the execution of this Agreement is an inducement and a
condition precedent to the obligations of the parties to the
Exchange Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and
undertakings contained herein and in the Exchange Agreement, as
an inducement to Rhône and the Initial Holders to
consummate the transactions contemplated by the Exchange
Agreement, and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the
parties agree as follows:
| 1. | DEFINITIONS. |
As used in this Agreement, the following terms shall have the
following meanings:
“ABL Agent” means Bank of America, N.A.,
in its capacity as administrative agent for the lenders under
the ABL Credit Agreement, together with any successor agent.
“ABL Credit Agreement” means the Credit
Agreement, dated as of July 31, 2009 among Quiksilver
Americas, Inc., the other borrowers party thereto, the Company,
the other guarantors party thereto, the lenders party thereto,
the ABL Agent, Bank of America, N.A. and General Electric
Capital Corporation, as co-collateral agents, and the other
agents party thereto, and any refinancings, refundings, renewals
or extensions thereof permitted hereunder.
“Affiliate” means with respect to any
Person, a Person that directly or indirectly controls, is
controlled by or is under direct or indirect common control with
such Person. For purposes of this definition,
“control” when used with respect to any Person means
the power to direct the management and policies of such Person,
directly or indirectly, whether through the ownership of Voting
Stock, by contract or otherwise, and the terms
“controlling” and “controlled” have meanings
correlative to the foregoing.
“Appointing Funds” means Triton Onshore
SPV L.P. and Triton Coinvestment SPV L.P.
“Board” means the board of directors of
the Company.
“Bylaws” means the Company’s
Amended and Restated Bylaws, as amended from time to time.
“Capital Stock” means any and all
shares, interests, rights to purchase, warrants, options,
participations or other equivalents of or interests in (however
designated) equity of the Company, including any preferred stock
but excluding any debt securities convertible into such equity.
“Certificate of Incorporation” means the
Company’s Restated Certificate of Incorporation, as amended
from time to time.
“Common Stock” means the common stock,
par value $0.01 per share, of the Company.
“Common Stock Equivalent” means any
warrant, right or option to acquire any shares of Common Stock
or any security convertible or exchangeable into shares of
Common Stock.
“Company” has the meaning set forth in
the recitals to this Agreement and its successors and assigns.
“Consolidated” means, when used to
modify a financial term, test, statement, or report of a Person,
the application or preparation of such term, test, statement or
report (as applicable) based upon the consolidation, in
accordance with GAAP, of the financial condition or operating
results of such Person and its Subsidiaries.
“DGCL” means the Delaware General
Corporation Law.
“Equity Interests” means with respect to
any Person, all of the shares of capital stock of (or other
ownership or profit interests in) such Person, and all of the
warrants or options for the purchase or acquisition from such
Person of shares of capital stock of (or other ownership or
profit interests in) such Person (including partnership, member
or trust interests therein), whether voting or nonvoting.
“Exchanges” means the First Exchange and
the Standby Exchange, each as defined in the recitals to this
Agreement.
“Exchange Act” means the Securities
Exchange Act of 1934, as amended.
“Exchange Agreement” has the meaning set
forth in the recitals to this Agreement.
“Exchange Stock” means the Common Stock
issued to the Holders under the Exchange Agreement at any time
during the term of this Agreement and any securities issued or
issuable with respect to any such Common Stock by way of stock
dividend or stock split or in connection with a combination of
shares, recapitalization, merger, consolidation or other
reorganization, the exercise of any preemptive rights under
Section 6.5 of this Agreement or otherwise.
“Excluded Securities” means (i) the
Qualifying Employee Stock, (ii) the Exchange Stock,
(iii) the shares of Common Stock or Series A Preferred
Stock issuable or issued upon the exercise of the Warrants,
(iv) any shares of Common Stock or Common Stock Equivalents
issued for non-cash consideration in connection with any merger,
consolidation, acquisition or similar business combination,
(v) any shares of Common Stock issued pursuant to the
commitments disclosed on Schedule 8.1 of the Warrant
Agreement and (vi) any shares of Common Stock or Common
Stock Equivalents issued in connection with any joint venture,
licensing, development or sponsorship activities in the ordinary
course of business.
“French Credit Agreement” means the
Facilities Agreement, dated as of July 31, 2009, among,
inter alia, Pilot SAS, a Société par Actions
Simplifiée, and Na Pali, a Société par
Actions Simplifiée, as borrowers, the Parent and Pilot
SAS, as original guarantors, and Crédit Lyonnais, BNP
Paribas and Société Générale
Corporate & Investment Banking, as mandated lead
arrangers, as amended, restated, amended and restated,
supplemented or otherwise modified from time to time.
“Fiscal Month” means any fiscal month of
any Fiscal Year, which month shall generally end on the last day
of each calendar month in accordance with the fiscal accounting
calendar of the Company.
“Fiscal Quarter” means any fiscal
quarter of any Fiscal Year, which quarters shall generally end
on the last day of each January, April, July and October of such
Fiscal Year in accordance with the fiscal accounting calendar of
the Company.
“Fiscal Year” means any period of 12
consecutive months ending on October 31st of any
calendar year.
2
“GAAP” means generally accepted
accounting principles in the United States set forth in the
opinions and pronouncements of the Accounting Principles Board
and the American Institute of Certified Public Accountants and
statements and pronouncements of the Financial Accounting
Standards Board or such other principles as may be approved by a
significant segment of the accounting profession in the United
States, that are applicable to the circumstances as of the date
of determination, consistently applied.
“Holders” means the Initial Holders and
any assignee or transferee of such Initial Holders and, unless
otherwise provided or indicated herein, the holders of the
Exchange Stock.
“HSR Act” means the
Xxxx-Xxxxx-Xxxxxx
Antitrust Improvements Act of 1976, as amended, and the rules
and regulations promulgated thereunder.
“Initial Holders” means each of
(i) Xxxxxx Holdings C.V., (ii) Triton SPV L.P.,
(iii) Triton Onshore SPV L.P., (iv) Triton Offshore
SPV L.P. and (v) Triton Coinvestment SPV L.P.
“Material Adverse Effect” means
(a) a material adverse change in, or a material adverse
effect upon, the operations, business, properties, liabilities,
or condition (financial or otherwise) of the Company taken as a
whole; (b) a material impairment of the ability of the
Company to perform its obligations under this Agreement; or
(c) a material impairment of the rights and remedies of
Rhône, the Initial Holders
and/or
Rhône Group L.L.C., as applicable, under the Credit
Agreements (for so long as the Credit Agreements will remain
outstanding after giving effect to the Exchanges), the Warrant
Agreement, this Agreement or the Exchange Agreement.
“Permitted Transaction” means any
acquisition of any Common Stock or Common Stock Equivalent
(i) by Rhône or any of its Affiliates (including, for
the avoidance of doubt, any partner or employee of Rhône
then serving on the Board) directly from the Company or
(ii) made pursuant to a tender or exchange offer made to
all stockholders of the Company.
“Permitted Transfer” means any transfer
(i) to any Affiliate of Rhône or Rhône Group
L.L.C. (including, for the avoidance of doubt, any entity
controlled by Rhône or Rhône Group L.L.C.) or in a pro
rata distribution to the partners of a fund controlled by
Rhône or Rhône Group L.L.C., (ii) in an
underwritten public offering, other broad distribution sale
(including, without limitation, a sale pursuant to
Rule 144) or open-market transaction, (iii) to
any Person in connection with an offer by such Person to
purchase 100% of the Common Stock then outstanding or
(iv) to any Person of a number of shares of the Exchange
Stock representing no greater than 15% of the then-outstanding
number of shares of Common Stock.
“Person” means any individual,
corporation, partnership, joint venture, association, joint
stock company, trust, unincorporated organization or government
or any agency or political subdivision thereof.
“Qualifying Employee Stock” has the
meaning set forth in the Warrant Agreement.
“Rhône” has the meaning set forth
in the recitals to this Agreement.
“Rhône Director” means a director
nominated by an Appointing Fund.
“Rule 144, Rule 405 and
Rule 415” mean, in each case, such rule
promulgated under the Securities Act (or any successor
provision), as the same shall be amended from time to time.
“SEC” means the United States Securities
and Exchange Commission.
“Securities Act” means the Securities
Act of 1933, as amended.
“Series A Preferred Stock” means
the convertible non-voting preferred stock, par value $0.01 per
share, of the Company on the terms set forth in Exhibit C
of the Warrant Agreement.
“Standstill Period” means the period
commencing on the date hereof and continuing until such time as
the restrictions set forth in Section 6.1(a) terminate in
accordance with the terms of Section 6.1(c).
“Stockholder Approval” has the meaning
set forth in the Exchange Agreement.
3
“Subsidiary” of a Person means a
corporation, partnership, joint venture, limited liability
company or other business entity of which a majority of the
Equity Interests having ordinary voting power for the election
of directors or other governing body are at the time
beneficially owned, or the management of which is otherwise
controlled, directly, or indirectly through one or more
intermediaries, or both, by such Person.
“Voting Stock” means all classes of
Capital Stock of the Company then outstanding and normally
entitled to vote in the election of directors.
“Warrant Agreement” means the Warrant
and Registration Rights Agreement, dated as of July 31,
2009, by and among the Company, Rhône and the initial
Warrant holders party thereto.
“Warrants” means the warrants issued by
the Company from time to time pursuant to the Warrant Agreement.
| 2. | TRANSFER RESTRICTIONS; COMPLIANCE WITH THE SECURITIES ACT. |
2.1 Transferability of the Exchange
Stock. The Exchange Stock may not be
transferred to any Person, other than (i) with the prior
written consent of the Company or (ii) pursuant to a
Permitted Transfer (subject, in the case of a Permitted
Transfer, to compliance with Section 2.2).
2.2 Compliance with the Securities Act.
(a) The Exchange Stock may be transferred to any Person
pursuant to a Permitted Transfer, provided that such transfer
shall be in compliance with this Section 2.2.
(b) A Holder may sell its Exchange Stock to a transferee
that is an “accredited investor” as such term is
defined in Regulation D under the Securities Act,
provided that each of the following conditions is
satisfied:
(i) with respect to any “accredited investor”
that is not an institution, such transferee, as the case may be,
provides certification establishing to the reasonable
satisfaction of the Company that it is an “accredited
investor”;
(ii) such transferee represents that it is acquiring the
Exchange Stock for its own account and that it is not acquiring
such Exchange Stock with a view to, or for offer or sale in
connection with, any distribution thereof (within the meaning of
the Securities Act) that would be in violation of the securities
laws of the United States or any applicable state thereof, but
subject, nevertheless, to the disposition of its property being
at all times within its control; and
(iii) such Holder or transferee agrees to be bound by the
provisions of this Section 2 with respect to any sale of
the Exchange Stock.
(c) A Holder may sell its Exchange Stock in accordance with
Regulation S under the Securities Act.
(d) A Holder may sell its Exchange Stock to a transferee if:
(i) such Holder gives written notice to the Company of its
intention to effect such sale, which notice shall describe the
manner and circumstances of the proposed transaction in
reasonable detail;
(ii) such notice includes a certification by the Holder to
the effect that such proposed sale may be effected without
registration under the Securities Act or under applicable Blue
Sky laws; and
(iii) such transferee complies with
Sections 2.2(b)(ii) and 2.2(b)(iii).
(e) Except for a sale in accordance with
Section 2.2(f) and subject to Section 7.2, each
certificate representing the Exchange Stock held by any Holder
shall be stamped or otherwise imprinted with a legend
substantially in the following form (in addition to any legend
required under applicable law or other agreement):
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
QUALIFIED UNDER
4
APPLICABLE STATE SECURITIES LAWS. SUCH SHARES MAY BE
OFFERED, SOLD OR TRANSFERRED ONLY IN COMPLIANCE WITH THE
REQUIREMENTS OF SUCH ACT AND OF ANY APPLICABLE STATE SECURITIES
LAWS AND SUBJECT TO THE PROVISIONS OF THE STOCKHOLDERS AGREEMENT
DATED AS OF [ • ], 2010 BY AND AMONG THE COMPANY,
RHôNE CAPITAL III L.P. AND THE INITIAL HOLDERS PARTY
THERETO. A COPY OF THE STOCKHOLDERS AGREEMENT IS AVAILABLE AT
THE OFFICES OF THE COMPANY.
(f) A Holder may sell its Exchange Stock in a transaction
that is registered under the Securities Act.
| 3. | AMENDMENT TO WARRANT AGREEMENT |
3.1 Amendment to Warrant
Agreement. The Warrant Agreement is hereby
amended as follows:
(a) Article I of the Warrant Agreement is hereby
amended by inserting the following two defined terms between the
defined terms “Exchange Act” and “Excluded
Securities”:
“Exchange Agreement: the Exchange
Agreement, dated as of June 24, 2010, by and among the
Company, Quiksilver Americas, Inc., Mountain & Wave
S.à x.x., Xxxxx Group L.L.C. and the Initial Warrant
Holders.
Exchange Stock: the Common Stock issued
to the Holders under the Exchange Agreement at any time during
the term of the Stockholders Agreement and any securities issued
or issuable with respect to any such Common Stock by way of
stock dividend or stock split or in connection with a
combination of shares, recapitalization, merger, consolidation
or other reorganization, the exercise of any preemptive rights
under Section 6.5 of the Stockholders Agreement or
otherwise.”
(b) Only with respect to Article 4 of the Warrant
Agreement, but excluding Section 4.11 thereof, the
definition of “Registrable Securities” as set
forth in Article I of the Warrant Agreement is hereby
amended in its entirety to read as follows:
“Registrable Securities: Any
(i) Common Stock, Series A Preferred Stock or other
securities issuable under the Warrants to the Initial Warrant
Holders on the Issuance Date and at any time during the term of
this Agreement, including, without limitation, (x) any
shares of Common Stock issued in connection with the exercise of
any preemptive rights under Section 5.6 of this Agreement
and (y) any securities issued with respect to the Common
Stock, Series A Preferred Stock or other securities
issuable under the Warrants in connection with a combination of
shares, recapitalization, merger, consolidation or other
reorganization, (ii) Exchange Stock issued pursuant to the
Exchange Agreement, and (iii) Qualifying Employee Stock
issued to the Rhône Directors. Registrable Securities shall
continue to be Registrable Securities until (x) they are
sold pursuant to an effective Registration Statement under the
Securities Act, (y) they may be sold by their holder
pursuant to Rule 144 without limitation thereunder on
volume or manner of sale, or (z) they shall have otherwise
been transferred and new securities not subject to transfer
restrictions under any federal securities laws and not bearing
any legend restricting further transfer shall have been
delivered by the Company, all applicable holding periods shall
have expired, and no other applicable and legally binding
restriction on transfer by the Holder thereof shall exist.”
(c) Article I of the Warrant Agreement is hereby
amended by inserting the following defined term between the
defined terms “Series A Preferred Stock” and
“Total Cap”:
“Stockholders Agreement: the
Stockholders Agreement, dated as of [ • ], 2010,
by and among the Company, Rhône Capital III and the
Initial Holders.”
(d) The first sentence of Section 4.01(b) of the
Warrant Agreement is hereby amended in its entirety to read as
follows:
“Rhône Capital III shall be entitled to request,
in the aggregate, five Demand Registrations; provided that
if at any time during the term of the Stockholders Agreement
(i) the Company fails to
5
nominate any Rhône Director (as defined in the Stockholders
Agreement) or to vote any of its proxies in favor of any
Rhône Director (as defined in the Stockholders Agreement)
or (ii) the stockholders of the Company fail to elect any
Rhône Director (as defined in the Stockholders Agreement),
then Rhône Capital III shall be entitled to request,
in the aggregate, seven Demand Registrations.”
| 4. | [RESERVED] |
| 5. | REPRESENTATIONS AND WARRANTIES. |
5.1 Representations and Warranties of the
Company. The Company hereby represents and
warrants that:
(a) Existence, Power and
Ownership. It is a corporation duly
organized, validly existing and in good standing under the laws
of the State of Delaware.
(b) Authorization. It has the
corporate power and authority to enter into this Agreement and
to perform its obligations under, and consummate the
transactions contemplated by, this Agreement and has by proper
action duly authorized the execution and delivery of this
Agreement.
(c) No Conflicts. None of the
execution and delivery of this Agreement by the Company, the
consummation of the transactions contemplated herein or the
performance of and compliance with the terms and provisions
hereof will: (i) violate or conflict with any provision of
the Certificate of Incorporation or the Bylaws;
(ii) violate any law, regulation, order, writ, judgment,
injunction, decree or permit applicable to it;
(iii) violate or materially conflict with any contractual
provisions of, or cause an event of default under, any material
indenture, loan agreement, mortgage, deed of trust, contract or
other agreement or instrument to which it is a party or by which
it or any of its properties may be bound; or (iv) result in
or require the creation of any lien, security interest or other
charge or encumbrance (other than those contemplated in or in
connection with this Agreement) upon or with respect to its
properties, except in the case of clauses (ii), (iii) and
(iv), for such violations, conflicts, defaults, or liens,
security interests or encumbrances that would not, individually
or in the aggregate, result in a Material Adverse Effect.
(d) Consents. Except as otherwise
provided or contemplated by this Agreement, and subject to the
accuracy of the representations and warranties of Rhône and
the Initial Holders, no consent, approval, authorization or
order of, or filing, registration or qualification with, any
court or governmental authority or other Person is required in
connection with the execution, delivery or performance of this
Agreement.
(e) Enforceable Obligations. This
Agreement has been duly executed and delivered by the Company
and, assuming due authorization, execution and delivery hereof
by the Initial Holders and Rhône, constitutes a legal,
valid and binding obligation of the Company, enforceable against
the Company in accordance with its terms subject, as to
enforcement, to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general
applicability relating to or affecting creditors’ rights
and to general equity principles.
5.2 Representations and Warranties of Rhône,
Rhône Capital and each of the Initial
Holders. Rhône and each of the Initial
Holders, severally and not jointly, hereby represents and
warrants that:
(a) Authorization. Rhône and
each of the Initial Holders has the corporate, limited
partnership or limited liability company, as the case may be,
power and authority to enter into this Agreement and to perform
its obligations under, and consummate the transactions
contemplated by, this Agreement and has by proper action duly
authorized the execution and delivery of this Agreement.
(b) Enforceable Obligations. This
Agreement has been duly executed and delivered by Rhône and
each of the Initial Holders and assuming due authorization,
execution and delivery hereof by the Company, this Agreement
constitutes a legal, valid and binding obligation of Rhône
and each of the Initial Holders, enforceable in accordance with
its terms subject, as to enforcement, to bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and similar laws
of general applicability relating to or affecting
creditors’ rights and to general equity principles.
6
(c) Investment Intent. Each
Initial Holder acknowledges that the Exchange Stock will not
have been, at the time of issuance, registered under the
Securities Act or under any state securities laws. Each Initial
Holder (i) is acquiring the Exchange Stock pursuant to an
exemption from registration under the Securities Act and solely
for investment with no present intention to distribute any of
the securities to any Person in violation of the Securities Act
or any other applicable securities laws and (ii) will not
sell or otherwise dispose of any of such Exchange Stock, except
in compliance with the registration requirements or exemption
provisions of the Securities Act and any other applicable
securities laws.
(d) Accredited Investor
Status. (i) Each Initial Holder is an
“accredited investor” as such term is defined in
Rule 501(a) promulgated under the Securities Act whose
knowledge and experience in financial and business matters are
such that each Initial Holder is capable of evaluating the
merits and risks of its investment in the shares of Exchange
Stock and (ii)(A) each Initial Holder’s financial situation
is such that each Initial Holder can afford to bear the economic
risk of holding the shares of Exchange Stock for an indefinite
period of time, (B) each Initial Holder can afford to
suffer complete loss of its investment in shares of Exchange
Stock, (C) the Company has made available to each Initial
Holder all documents and information that each Initial Holder
has requested relating to an investment in the Company and
(D) each Initial Holder has had adequate opportunity to ask
questions of, and receive answers from, the Company as well as
the Company’s officers, employees, agents and other
representatives concerning the Company’s business,
operations, financial condition, assets, liabilities and all
other matters relevant to each Initial Holder’s investment
in the shares of Exchange Stock.
| 6. | COVENANTS. |
6.1 Standstill.
(a) Except as provided in Section 6.1(b), and subject
to Section 6.1(c), during the Standstill Period, none of
Rhône or its Affiliates (including, for the avoidance of
doubt, the Initial Holders) shall, without the prior written
consent of the Board (excluding the Rhône Directors),
directly or indirectly:
(i) effect or seek, offer or propose (whether publicly or
otherwise) to effect or announce any intention to effect or
cause or participate in, (A) any acquisition of Common
Stock or Common Stock Equivalents if, as a result of any such
acquisition, any of Rhône or its Affiliates (including, for
the avoidance of doubt, the Initial Holders), individually or as
part of a “group” (within the meaning of
Section 13(d) of the Exchange Act), would become the
beneficial owner (as defined in Rule 13(d) of the Exchange
Act, except that the applicable Person(s) or group shall be
deemed to have “beneficial ownership” of all shares
that such Person(s) or group has the right to acquire, whether
such right is exercisable immediately or only after the passage
of time), of more than 34.99% of the total voting power of the
Voting Stock, (B) any tender or exchange offer or merger
involving the Company or (C) any “solicitation”
of “proxies” (as such terms are used in the proxy
rules of the SEC) or written consents with respect to any Voting
Stock of the Company, in each case in order to elect directors
to the Board (other than any solicitation of proxies to elect
any Rhône Director who has not been nominated by the Board
and/or
elected by the stockholders of the Company), or
(ii) join, form or participate in any “group”
(within the meaning of Section 13(d) of the Exchange Act),
if such group would, as a result, become the beneficial owner
(as defined in Rule 13(d) of the Exchange Act, except that
such group shall be deemed to have “beneficial
ownership” of all shares that such group has the right to
acquire, whether such right is exercisable immediately or only
after the passage of time), of more than 34.99% of the total
voting power of the Voting Stock.
(b) Section 6.1(a) shall not prevent any direct or
indirect acquisition (or participation in a “group”
consisting solely of Rhône and any of its Affiliates with
resulting beneficial ownership of more than 34.99% of the total
voting power of the Voting Stock (determined in accordance with
Section 6.1(a)(ii)) by Rhône or any of its Affiliates
during the Standstill Period of (i) the Exchange Stock,
(ii) the shares of Common Stock or Series A Preferred
Stock issuable or issued upon the exercise of the Warrants or in
connection with the exercise of any preemptive rights under
Section 5.6 of the Warrant Agreement, (iii) any
Qualifying Employee
7
Stock issued to the Rhône Directors or (iv) any Common
Stock or Common Stock Equivalents acquired pursuant to a
Permitted Transaction.
(c) If at any time during the term of this Agreement
(i) the Company fails to nominate any Rhône Director
or to vote any of its proxies in favor of any Rhône
Director, (ii) the stockholders of the Company fail to
elect any Rhône Director, (iii) a “change in
control”, “change of control” or similar concept
shall have occurred under any indenture, loan agreement,
mortgage, deed of trust, contract or other agreement or
instrument to which the Company or any of its subsidiaries is a
party or by which the Company or any of its subsidiaries or any
of their properties may be bound (other than as a result of
Rhône breaching its obligations under Section 6.1(a))
or (iv) Rhône and its Affiliates (including, for the
avoidance of doubt, the Initial Holders), individually or as
part of a “group” (within the meaning of
Section 13(d) of the Exchange Act), are the beneficial
owner (as defined in Rule 13(d) of the Exchange Act, except
that the applicable Person(s) or group shall be deemed to have
“beneficial ownership” of all shares that such
Person(s) or group has the right to acquire, whether such right
is exercisable immediately or only after the passage of time) of
less than 20% of the outstanding Common Stock of the Company on
a fully-diluted basis, then the restrictions set forth in
Section 6.1(a) shall permanently terminate.
6.2 Board Representation.
(a) Subject to Section 6.2(c) and Section 6.2(e),
in connection with each meeting of stockholders at which
directors are to be elected to serve on the Board, the Company
shall take all necessary steps to nominate each Rhône
Director (or such alternative persons who are proposed by the
Appointing Funds and notified to the Company on or prior to any
date set forth in the Company’s constituent documents or
applicable law for stockholder nominees) and to use its
reasonable best efforts to cause the Board unanimously to
recommend that the stockholders of the Company vote in favor of
each Rhône Director for election to the Board. If, for any
reason, a candidate designated as a Rhône Director is
determined to be unqualified to serve on the Board, the
Appointing Fund shall have the right to designate an alternative
Rhône Director to be so nominated.
(b) Each elected Rhône Director will hold his or her
office as a director of the Company for such term as is provided
in the Company’s constituent documents or until his or her
death, resignation or removal from the Board or until his or her
successor has been duly elected and qualified in accordance with
the provisions of this Agreement, the Company’s constituent
documents and applicable law. If any Rhône Director ceases
to serve as a director of the Company for any reason during his
or her term, the Company will use its reasonable best efforts to
cause the Board to fill the vacancy created thereby with a
replacement designated by the applicable Appointing Fund.
(c) The Appointing Funds shall each have the right to
designate a Rhône Director pursuant to Section 6.2(a)
until such time as the Initial Holders have sold
331/3%
of the Exchange Stock to any Person or Persons other than
Affiliates of Rhône or other Initial Holders. Thereafter,
Triton Onshore SPV L.P. shall have the right to designate one
Rhône Director pursuant to Section 6.2(a) until such
time as the Initial Holders have sold
662/3%
of the Exchange Stock to any Person or Persons other than
Affiliates of Rhône or other Initial Holders. Thereafter,
the right of Triton Onshore SPV L.P. to designate a Rhône
Director hereunder shall terminate.
(d) The Company shall provide the same compensation and
rights and benefits of indemnity to the Rhône Directors as
are provided to other non-employee directors.
(e) Nothing in this Section 6.2 shall prevent the
Board from acting in accordance with its fiduciary duties or
applicable law or from acting in good faith in accordance with
its constituent documents, while giving due consideration to the
intent of this Agreement. The Board shall have no obligation to
appoint or nominate any Rhône Director upon written notice
that such appointment or nomination would violate applicable law
or result in a breach by the Board of its fiduciary duties to
its stockholders; provided, however, that the foregoing
shall not affect the right of the Appointing Funds to designate
an alternate Rhône Director.
8
(f) For so long as any directors designated by the
Appointing Funds (or an Affiliate of an Appointing Fund)
pursuant to Section 9.4 of the Warrant Agreement have been
appointed to, and serve on, the Board, then such directors shall
be considered “Rhône Directors” for purposes of
this Agreement.
6.3 Financial Statements. For so
long as Rhône and any of its Affiliates collectively own at
least 8,333,334 shares of the Exchange Stock, the Company
shall deliver to Rhône (for distribution to each Holder):
(a) within ninety (90) days after the end of each
Fiscal Year of the Company, a Consolidated balance sheet of the
Company and its Subsidiaries as at the end of such Fiscal Year,
and the related Consolidated statements of income or operations
and cash flows for such Fiscal Year, setting forth in each case
in comparative form the figures for the previous Fiscal Year,
all prepared in accordance with GAAP, such Consolidated
statements to be audited and accompanied by a report and opinion
of a registered public accounting firm of nationally recognized
standing or otherwise reasonably acceptable to Rhône, which
report and opinion shall be prepared in accordance with
generally accepted auditing standards and shall not be subject
to any “going concern” or like qualification or
exception or any qualification or exception as to the scope of
such audit;
(b) within forty-five (45) days after the end of each
of the first three Fiscal Quarters of each Fiscal Year of the
Company, a Consolidated balance sheet of the Company and its
Subsidiaries as at the end of such Fiscal Quarter, and the
related Consolidated statements of income or operations and cash
flows for such Fiscal Quarter and for the portion of the
Company’s Fiscal Year then ended, setting forth in each
case in comparative form the figures for (i) such period
set forth in the projections delivered pursuant to
Section 6.3(d) hereof (if applicable), (ii) the
corresponding Fiscal Quarter of the previous Fiscal Year and
(iii) the corresponding portion of the previous Fiscal
Year, such Consolidated statements to be certified by a
responsible officer of the Company as fairly presenting the
financial condition, results of operations and cash flows of the
Company and its Subsidiaries as of the end of such Fiscal
Quarter in accordance with GAAP, subject only to normal year-end
audit adjustments and the absence of footnotes;
(c) within thirty (30) days after the end of each of
the first two Fiscal Months of each Fiscal Quarter of the
Company, a financial report for the immediately preceding Fiscal
Month in a format reasonably satisfactory to Rhône;
(d) no later than within thirty (30) days prior to the
end of each Fiscal Year, a copy of the approved annual budget of
the Company and its Subsidiaries for the immediately following
Fiscal Year; and
(e) (i) copies of any reports and other written
information delivered to the administrative agent under the ABL
Credit Agreement and any agent under the French Credit Agreement
and (ii) upon the request of Rhône, copies of any
reports and other written information delivered to the lenders
or their respective agents under the credit facilities of
certain Subsidiaries of the Company organized in Japan and
Australia.
6.4 Rule 144 Reporting. With
a view to making available to the Holders the benefits of
certain rules and regulations of the SEC which may permit the
sale of the Exchange Stock to the public without registration,
the Company agrees, so long as it is subject to the periodic
reporting requirements of the Exchange Act, to use commercially
reasonable efforts to:
(a) make and keep public information available, as those
terms are understood and defined in Rule 144(c)(1) or any
similar or analogous rule promulgated under the Securities Act,
at all times after the effective date of this Agreement;
(b) file with the SEC, in a timely manner, all reports and
other documents required of the Company under the Exchange
Act; and
(c) so long as Rhône and any of its Affiliates
collectively own at least 8,333,334 shares of the Exchange
Stock, furnish to such Holders forthwith upon request:
(i) in the event the Company is no longer subject to the
reporting requirements of Section 13 or 15(d) of the
Exchange Act, a written statement by the Company as to its
compliance with the reporting requirements of Rule 144
under the Securities Act and of the Exchange Act; (ii) in
the event the Company is subject to the reporting
9
requirements of Section 13 or 15(d) of the Exchange Act, a
copy of the most recent annual or quarterly report of the
Company; and (iii) such other reports and documents as the
Holders may reasonably request in availing themselves of any
rule or regulation of the SEC allowing them to sell any such
securities without registration.
6.5 Preemptive Rights. So long as
Rhône and any of its Affiliates collectively own at least
8,333,334 shares of the Exchange Stock, upon any issuance
for cash of any shares of Common Stock, rights or options to
acquire Common Stock or securities convertible or exchangeable
into Common Stock for cash, any Initial Holder or any of their
Affiliates shall have additional subscription rights allowing
such Initial Holder or Affiliate to maintain its proportionate
ownership interest in the Company based on the ratio of
(i) the Exchange Stock issued to or transferred to, and
owned by, such Initial Holder or Affiliate (which, for this
purpose, shall be calculated taking into account any Exchange
Stock subsequently transferred to such Initial Holder or
Affiliate by another Initial Holder or Affiliate) and
(ii) the number of shares of Common Stock outstanding
immediately prior to such issuance, without giving effect to any
Warrants or the shares of Common Stock held by the Initial
Holders or any of their Affiliates. The foregoing shall not
apply to any issuance of Excluded Securities. For the avoidance
of doubt, notwithstanding this Section 6.5, the preemptive
rights set forth in Section 5.6 of the Warrant Agreement
shall remain in effect.
6.6 Consent Upon Certain
Issuances. So long as Rhône and any of
its Affiliates collectively own at least 8,333,334 shares
of the Exchange Stock, the Company shall not, without the prior
written consent of Rhône in its sole discretion, issue
shares of Common Stock (other than (i) issuances of
Excluded Securities or (ii) issuances of Common Stock that
are contemporaneously being sold pursuant to a bona fide
underwritten public offering), at a price less than the lesser
of (A) $4.50 per share of Common Stock and (B) the
fair market value of the Common Stock.
6.7 Affiliate Transactions. So
long as Rhône and any of its Affiliates collectively own at
least 8,333,334 shares of the Exchange Stock, any issuance
by the Company of any shares of Common Stock to, or repurchase
by the Company of any shares of Common Stock from, any
Affiliate, other than Excluded Securities, shall be on terms no
less favorable to the Company than those obtainable by a party
who is not an Affiliate.
| 7. | MISCELLANEOUS. |
7.1 Agent. The Holders appoint
Rhône as their agent and authorize Rhône to bind, and
take all actions in connection with this Agreement on behalf of,
the Holders, including agreeing to amendments of this Agreement
pursuant to Section 7.7 herein. The Company shall be
entitled to rely on direction by Rhône on behalf of any
Holder for all purposes hereunder.
7.2 Removal of Legends. In the
event (i) the Exchange Stock is registered under the
Securities Act or (ii) the Company is presented with an
opinion of counsel reasonably satisfactory to the Company that
transfers of the Exchange Stock do not require registration
under the Securities Act, the Company shall direct its transfer
agent, and the transfer agent shall, upon surrender by a Holder
of its certificates evidencing such Exchange Stock, exchange
such certificates for certificates without the legends referred
to in Section 2.2(e).
7.3 Notices. Any notice, demand or
delivery to the Company or Rhône authorized by this
Agreement shall be sufficiently given or made when mailed if
sent by first-class mail, postage prepaid, addressed to the
Company or Rhône, as applicable, as follows:
If to the Company:
Quiksilver, Inc.
00000 Xxxxxx Xx.
Xxxxxxxxxx Xxxxx, XX 00000
Fax: (000) 000-0000
Attention: General Counsel
10
With a copy to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
000 Xxxxx Xxxxx Xxxxxx
Xxx Xxxxxxx, XX 00000-0000
Fax: (000) 000-0000
Attention: Xxxxx X. XxXxxxxx and K. Xxxxxxxx Xxxx
If to Rhône:
Rhône Capital III L.P.
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Fax: (000) 000-0000
Attention: Xxxxxxx Xxxxxx and M. Xxxxxxx Xxxxxxx
With a copy to:
Xxxxxxxx & Xxxxxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Fax: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxxx
or such other address as shall have been furnished to the party
giving or making such notice, demand or delivery.
Any notice required to be given by the Company to the Holders
pursuant to this Agreement shall be made by mailing by
registered mail, return receipt requested, to the Holders at
their respective addresses shown on the register of the Company
or, if any such Holder is an Initial Holder, to its respective
address shown on Schedule I attached hereto. Any notice
that is mailed in the manner herein provided shall be
conclusively presumed to have been duly given when mailed,
whether or not the Holder receives the notice.
7.4 Applicable Law. This Agreement
shall be governed by, and construed in accordance with, the laws
of the State of New York, including, without limitation,
Section 5-1401
of the New York General Obligations Law.
7.5 Persons Benefiting. This
Agreement shall be binding upon and inure to the benefit of the
Company and Rhône, and their successors, assigns,
beneficiaries, executors and administrators, and the Holders
from time to time. Nothing in this Agreement is intended or
shall be construed to confer upon any Person, other than the
Company, Rhône and the Holders, any right, remedy or claim
under or by reason of this Agreement or any part hereof.
7.6 Counterparts. This Agreement
may be executed in any number of counterparts, each of which
shall be deemed an original, but all of which together
constitute one and the same instrument.
7.7 Amendments.
(a) Neither this Agreement nor any provisions hereof shall
be waived, modified, changed, discharged or terminated other
than in accordance with Section 7.7(b).
(b) With the consent of Rhône, the Company may from
time to time (i) supplement or amend this Agreement to cure
any ambiguity, to correct or supplement any provision contained
herein which may be defective or inconsistent with any other
provisions herein, or to make any other provisions with regard
to matters or questions arising hereunder and (ii) modify
the Agreement for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of
this Agreement or modifying in any manner the rights of the
Holders hereunder.
11
7.8 Headings. The descriptive
headings of the several Articles and Sections of this Agreement
are inserted for convenience and shall not control or affect the
meaning or construction of any of the provisions hereof.
7.9 Entire Agreement. This
Agreement and the other agreements referred to herein constitute
the entire agreement and supersede all prior agreements and
understandings, both written and oral, between the parties with
respect to the subject matter hereof.
7.10 Limitation of Liability. No
party to this Agreement shall be liable to any other party for
any consequential, indirect, special or incidental damages under
any provision of this Agreement or for any consequential,
indirect, penal, special or incidental damages arising out of
any act or failure to act hereunder even if that party has been
advised of or has foreseen the possibility of such damages.
12
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed, as of the day and year first
above written.
QUIKSILVER, INC.
| By: |
|
Name:
Title:
XXXXXX HOLDINGS C.V.
| By: |
|
Name:
Title:
TRITON SPV L.P.
| By: |
|
Name:
Title:
TRITON ONSHORE SPV L.P.
| By: |
|
Name:
Title:
TRITON OFFSHORE SPV L.P.
| By: |
|
Name:
Title:
13
TRITON COINVESTMENT SPV L.P.
| By: |
|
Name:
Title:
RHÔNE CAPITAL III L.P.
| By: |
|
Name:
Title:
[Signature Page to Stockholder Agreement]
14
Schedule I
Notice
Addresses of Initial Holders
Xxxxxx Holdings C.V.
c/o Numitor
Governance S.à x.x.
c/o Rhône
Group L.L.C.
000 0xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Triton SPV L.P.
x/x Xxxxxx
XX XXX XXX
x/x Xxxxx
Xxxxxxx XXX L.P.
000 0xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Triton Onshore SPV L.P.
x/x Xxxxxx
XX XXX XXX
x/x Xxxxx
Xxxxxxx XXX L.P.
000 0xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Triton Offshore SPV L.P.
c/o Triton
GP SPV LLC
c/o Rhône
Capital III L.P.
000 0xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Triton Coinvestment SPV L.P.
c/o Triton
GP SPV LLC
c/o Rhône
Capital III L.P.
000 0xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
15
