As filed with the Securities and Exchange Commission on February 27, 1998
Registration No. 333-43195
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------
POST-EFFECTIVE
AMENDMENT NO. 1
TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------
SCOVILL FASTENERS INC.
SCOVILL HOLDINGS INC.
(Exact name of registrants as specified in their respective charters)
Delaware 3965 95-3959561
Delaware 6719 58-2365743
(State or other jurisdiciton (Primary Standard I.R.S. Employer
of incorporation or Industrial Identification
organization) Classification Code Number) Number)
SCOVILL FASTENERS INC.
SCOVILL HOLDINGS INC.
1802 Scovill Drive
Clarkesville, Georgia 30523
(706) 754-4181
(Name, address, including zip code, and telephone number, including
area code, of registrants' principal executive offices)
Martin A. Moore
Executive Vice President and Chief Financial Officer
Scovill Fasteners Inc.
Scovill Holdings Inc.
1802 Scovill Drive
Clarkesville, Georgia 30523
(706) 754-4181
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
With a copy to:
Jonathan I. Mark, Esq.
Cahill Gordon & Reindel
80 Pine Street
New York, New York 10005-1702
(212) 701-3000
Approximate date of commencement of proposed sale to public: As soon as
practicable after the effective date of this Registration Statement.
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box: /X/
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering./ /
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
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The Registrants hereby amend this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrants
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
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<PAGE>
EXPLANATORY NOTE
This Amendment is filed solely for the purpose of filing exhibits.
<PAGE>
PART II
Information Not Required in Prospectus
Item 16. Exhibits and Financial Schedule
(a) Exhibits:
No: Description
3.1 --Certificate of Incorporation of Scovill Holdings Inc.**
3.2 --By-laws of Scovill Holdings Inc.**
3.4 --Certificate of Designation, Preferences, and Relative, Participating,
Option and Other Special Rights of Series B Preferred Stock.**
3.5 --Certificate of Incorporation of AF Acquisition Corp.**
3.6 --Certificate of Amendment of Certificate of Incorporation of AF
Acquisition Corp.**
3.7 --Certificate of Amendment of Certificate of Incorporation of Scovill
Apparel Fasteners Inc.**
3.8 --Certificate of Amendment of Certificate of Incorporation of Scovill
Apparel Fasteners Inc.**
3.9 --Certificate of Change of Location of Registered Office and of Registered
Agent of Scovill Fasteners Inc.**
3.10 --Certificate of Ownership and Merger Merging KSCO New Co. into Scovill
Fasteners Inc.**
3.11 --Certificate of Amendment of Certificate of Incorporation of Scovill
Fasteners Inc.**
3.12 --By-laws of Scovill Fasteners Inc.**
4.1 --Indenture dated as of November 26, 1997 among Scovill Acquisition Inc.,
Scovill Holdings Inc., as Guarantor, and United States Trust Company of New
York as Trustee (including Form of Note).**
4.2 --Registration Rights Agreement dated as of November 26, 1997 among Scovill
Acquisition Inc., Scovill Holdings Inc. and SBC Warburg Dillon Read Inc.
and BT Alex. Brown Incorporated.**
5.1 --Opinion of Cahill Gordon & Reindel regarding legality of Exchange Notes
and Guarantee.**
10.1.1 --Management Services Agreement among Scovill Fasteners Inc. and Saratoga
Partners III, L.P.+
10.1.5 --Employment Agreement dated as of October 10, 1997 between David J.
Barrett and Scovill Acquisition Inc.**
10.1.6 --Employment Agreement dated as of October 10, 1997 between Martin A.
Moore and Scovill Acquisition Inc.**
10.1.7 --Employment Agreement dated as of October 10, 1997 between Robert Feltz
and Scovill Acquisition Inc.**
10.1.8 --Stock Purchase Agreement dated as of October 10, 1997 among SLF
Corporation, KSCO Acquisition Corporation, and the Stockholders of KSCO
Acquisition Corporation.**
10.1.10 --Tax Sharing Agreement dated as of November 26, 1997 by and among
Scovill Holdings Inc., Scovill Fasteners Inc., and the SFI Subgroup.**
10.1.11 --Stock Option Agreement dated as of November 26, 1997 between William
F. Andrews and Scovill Holdings Inc.**
10.1.12 --Stock Option Agreement dated as of November 26, 1997 between John
Champagne and Scovill Holdings Inc.**
10.1.13 --Stock Option Agreement dated as of November 26, 1997 between Michael
Baxley and Scovill Holdings Inc.**
10.1.14 --Stock Option Agreement dated as of November 26, 1997 between Robert W.
Feltz and Scovill Holdings Inc.**
10.1.15 --Stock Option Agreement dated as of November 26, 1997 between Martin A.
Moore and Scovill Holdings Inc.**
10.1.16 --Stock Option Agreement dated as of November 26, 1997 between David J.
Barrett and Scovill Holdings Inc.**
10.1.17 --Scovill Holdings Inc. Stockholders Agreement dated as of November 26,
1997.**
10.1.18 --Scovill Holdings Inc. Subscription Agreement dated as of November 26,
1997.**
<PAGE>
10.1.19 --Scovill Holdings Inc. Long-Term Incentive and Share Award Plan.**
10.1.21 --Credit Agreement dated as of November 26, 1997.**
10.1.22 --Scovill Holdings Inc. Amended and Restated Stockholders Agreement
dated as of February 20, 1998. +
10.1.23 --Joinder Agreement dated as of February 20, 1998. +
10.1.24 --Voting Agreement dated as of February 20, 1998 by and between Saratoga
Partners III, L.P., Scovill Holdings Inc., and Co-Investment Partners, L.P.
+
10.1.25 --Subscription Agreement dated as of February 20, 1998 by and between
Scovill Holdings Inc. and Co-Investment Partners, L.P. +
10.1.26 --Repurchase and Termination Agreement dated as of February 20, 1998 by
and between Scovill Holdings Inc., SBC Warburg Dillon Read Inc., BT Alex.
Brown Incorporated, and United States Trust Company of New York. +
16 --Letter of Deloitte & Touche LLP regarding change in certifying
accountant.** 12.1 --Statements re: Computation of Ratios.**
21.1 --List of Subsidiaries of Scovill Holdings Inc.**
21.2 --List of Subsidiaries of Scovill Fasteners Inc.**
23.1 --Consent of Arthur Andersen LLP.**
23.2 --Consent and Report of Schedule of Deloitte & Touche LLP.**
23.3 --Consent of Cahill Gordon & Reindel (included in Exhibit 5.1).**
24.1 --Powers of Attorney (included in signature pages).**
<PAGE>
25.1 --Statement of Eligibility of Trustee on Form T-1, regarding Scovill
Fasteners Inc. and Scovill Holdings Inc.**
27.1 --Financial Data Schedule.**
99.1 --Form of Letter of Transmittal.**
99.2 --Form of Notice of Guaranteed Delivery.**
- -------
** Previously filed.
+ Filed herewith.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrants
have duly caused this Post-Effective Amendment No. 1 to Registration Statement
to be signed on its behalf by the undersigned, thereunto duly authorized, in New
York, New York on February 27, 1998.
SCOVILL FASTENERS INC..
SCOVILL HOLDINGS INC..
By: /s/ DAVID J. BARRETT
-----------------------------------------
David J. Barrett
Chief Executive Officer, President and Director
Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment No. 1 to Registration Statement has been signed by the
following persons in the capacities and on the dates indicated.
Signature Title Date
/s/ DAVID J. BARRETT Chief Executive Officer, February 27, 1998
- ------------------------------- President and Director
David J. Barrett
/s/ MARTIN A. MOORE Executive Vice President, February 27, 1998
- ------------------------------- Chief Financial Officer,
Martin A. Moore and Principal Accounting
Officer
* Director February 27, 1998
- -------------------------------
William F. Andrews
* Director February 27, 1998
- -------------------------------
Christian L. Oberbeck
/s/ CHARLES P. DURKIN, JR. Director February 27, 1998
- -------------------------------
Charles P. Durkin, Jr.
*By: /s/ MARTIN A. MOORE February 27, 1998
-------------------
Martin A. Moore
Attoney-in-fact
MANAGEMENT SERVICES AGREEMENT
MANAGEMENT SERVICES AGREEMENT, dated as of November 26, 1997 among SCOVILL
HOLDINGS, INC., a Delaware corporation ("Parent"), SCOVILL FASTENERS INC., a
Delaware corporation (the "Company"), and SARATOGA PARTNERS III, L.P., a private
investment fund ("Saratoga").
Parent and the Company desire for Saratoga to provide certain ongoing
management and advisory services to the Company, and Saratoga is willing to
provide such services subject to the terms and conditions contained herein.
NOW, THEREFORE, for good and valuable consideration, the receipt of which
is hereby acknowledged, the parties hereto agree as follows:
Section 1. Services. During the term of this Agreement, Saratoga shall
provide such advisory and management services to Parent and its subsidiaries as
the Board of Directors of Parent or the Company shall reasonably request and
Saratoga shall agree to provide from time to time. Parent and the Company agree
that Saratoga shall have the right, but not the obligation, to act as sole
advisor to Parent and its subsidiaries with respect to significant business
transactions. Such services shall be performed at Saratoga's offices or at such
other locations as Saratoga shall reasonably determine.
Section 2. Compensation. In consideration of the services previously
provided and to be provided in accordance with Section 1, the Company agrees to
pay (or to distribute sufficient funds to Parent in order for Parent to pay),
and Parent agrees to pay, to Saratoga (i) an advisory fee of $1,750,000 by wire
transfer of immediately available funds on the date hereof, (ii) an annual
management fee of $600,000 accruing from the date hereof, payable quarterly in
arrears beginning on March 31, 1998 (it being understood that payment on March
31, 1998 shall include a prorated fee for the period from the date hereof to
December 31, 1997) (provided, however, that at the request of Saratoga, such fee
shall be paid quarterly in advance) and (iii) advisory and/or structuring fees
in connection with significant business transactions (including, without
limitation, acquisitions, investments and financings) in amounts comparable for
similarly situated companies.
Section 3. Reimbursement. Saratoga and its affiliates shall be entitled to
reimbursement of all reasonable out-of-pocket expenses (including travel
expenses) incurred in con-
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nection with the performance of this Agreement (other than salary expenses and
associated overhead charges). The Company agrees to pay (or to distribute
sufficient funds to Parent in order for Parent to pay), and Parent agrees to
pay, such amounts promptly upon request therefor.
Section 4. Indemnity; No Liability. In consideration of the execution and
delivery of this Agreement by Saratoga, the Company hereby agrees to indemnify,
exonerate and hold each of Saratoga and its affiliates, and each of their
respective partners, shareholders, affiliates, directors, officers, fiduciaries,
employees and agents and each of the partners, shareholders, affiliates,
directors, officers, fiduciaries, employees and agents of each of the foregoing
(collectively, the "Indemnitees") free and harmless from and against any and all
actions, causes of action, suits, losses, liabilities and damages, and expenses
in connection therewith, including without limitation reasonable attorneys' fees
and disbursements (collectively, the "Indemnified Liabilities"), incurred by the
Indemnitees or any of them as a result of, or arising out of, or relating to the
execution, delivery, performance, enforcement or existence of this Agreement or
the transactions contemplated hereby or thereby except for any such Indemnified
Liabilities arising solely on account of such Indemnitee's gross negligence or
willful misconduct, and if and to the extent that the foregoing undertaking may
be unenforceable for any reason, the Company hereby agrees to make the maximum
contribution to the payment and satisfaction of each of the Indemnified
Liabilities which is permissible under applicable law. None of the Indemnitees
shall be liable to the Company or any of its affiliates for any act or omission
suffered or taken by such Indemnitee that does not constitute gross negligence
or willful misconduct.
Section 5. Governing Law; Submission to Jurisdiction. This Agreement shall
be governed by, and construed in accordance with, the laws of the State of New
York, without regard to conflicts of law principles.
Section 6. Termination. This Agreement may be terminated by Saratoga at any
time by written notice to Parent and the Company. In addition, this Agreement
will terminate automatically as of the earlier of (i) the tenth anniversary of
this Agreement and (ii) the end of the fiscal year in which the percentage
interest of Saratoga and its affiliates in the outstanding common stock of
Parent falls below 20%. The provisions of Section 4 shall survive any
termination of this Agreement.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
date first written above.
SCOVILL FASTENERS INC.
By: /s/ Martin A. Moore
-------------------------------
Name: Martin A. Moore
Title: Executive Vice President
SCOVILL HOLDINGS, INC.
By: /s/ Martin A. Moore
-------------------------------
Name: Martin A. Moore
Title: Executive Vice President
SARATOGA PARTNERS III, L.P.
By: /s/ Christian L. Oberbeck
-------------------------------
Name: Christian L. Oberbeck
Title: Attorney-in-Fact
AMENDED AND RESTATED
STOCKHOLDERS AGREEMENT
STOCKHOLDERS AGREEMENT, dated as of November 26, 1997, as amended and
restated as of February 20, 1998 (the "Agreement"), by and among SCOVILL
HOLDINGS INC., a Delaware corporation (the "Company"), the parties identified as
"Non-Management Investors" on the signature pages hereof, the parties identified
as "Management Investors" on the signature pages hereof and any parties
identified on the signature pages of any joinder agreements executed and
delivered pursuant to Section 7.2 of this Agreement.
WHEREAS, pursuant to the Subscription Agreement, the Non-Management
Investors have purchased Common Stock and Preferred Stock;
WHEREAS, pursuant to the Option Agreements, the Management Investors have
rolled over their options to purchase common stock of KSCO into options to
purchase Common Stock and Preferred Stock;
WHEREAS, it is intended that, subject to attainment of certain performance
goals, certain management employees of the Company be granted options to
purchase Common Stock under a Long Term Incentive and Share Award Plan;
WHEREAS, the Company and the Investors desire to provide for certain
matters relating to the Capital Stock;
IN CONSIDERATION of the foregoing and of their mutual covenants set forth
in this Agreement, the parties hereby agree as follows:
ARTICLE I
DEFINITIONS
Definitions. The following terms, as used herein, have the following
meanings:
Affiliate means, as to any Person, any other Person directly or indirectly
Controlling, Controlled by or under direct or indirect common Control with such
Person.
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Board means the Board of Directors of the Company.
Buyer means a Person that is not an Investor or an Affiliate of an Investor
that has offered to purchase or otherwise acquire for value shares of Capital
Stock of the Company.
Cause, with respect to any Management Investor, has the meaning set forth
in the such Management Investor's Option Agreement.
Capital Stock means (i) the Common Stock and the Preferred Stock and (ii)
any securities into or for which the Common Stock or the Preferred Stock is
convertible, exchangeable or exercisable (including vested stock options but
excluding unvested stock options).
Class means all of the Common Stock considered as a whole or all of the
Preferred Stock considered as a whole.
Commission means the Securities and Exchange Commission.
Common Stock means the common stock, par value $0.0001 per share, of the
Company.
Control means the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of a Person,
whether through the ownership of securities, partnership interests or by
contract, assignment or otherwise. The terms "Controlling" and "Controlled"
shall have meanings correlative to the foregoing.
Credit Facility means the Credit Facility dated as of November 26, 1997,
among the Company, Scovill Fasteners Inc., various banks, Swiss Bank
Corporation, as documentation and syndication agent, and Credit Agricole
Indosuez, as administrative agent, as the same may be amended, supplemented,
replaced or refinanced, in whole or in part, from time to time.
Exchange Debenture Indenture means the indenture to be entered into by the
Company upon the exchange, if any, of the Senior Preferred Stock into
Subordinated Exchange Debentures due 2009 of the Company.
Fair Market Value means either (i) if the trading has already taken place,
the trading price of the shares, and (ii) otherwise, (a) for preferred stock,
the liquidation preference
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plus accrued and unpaid dividends and (b) for common stock and vested stock
options, the appraised value of such shares.
Immediate Family Members of a Person means the spouse and lineal
descendants (including legally adopted descendants) of such Person.
Indenture means the Indenture dated as of November 26, 1997 among Scovill
Acquisition Inc. (to be merged with and into Scovill Fasteners Inc.), the
Company, and United States Trust Company of New York relating to 11 1/4% Senior
Notes due 2007.
Investors means the Non-Management Investors, the Management Investors and
any Permitted Transferees of such Persons who are party (including by joinder)
to this Agreement.
KSCO means KSCO Acquisition Corporation.
1933 Act means the Securities Act of 1933, as amended.
1934 Act means the Securities Exchange Act of 1934, as amended.
Notice of Offer means any bona fide written offer from a Buyer to purchase
or otherwise acquire for value, issued and outstanding shares of Capital Stock
from Saratoga, which offer shall identify the proposed transferee or
transferees, the Capital Stock covered thereby, all terms and conditions of the
offer and, in the case of an offer pursuant to which the consideration consists
in whole or in part of consideration other than cash, a description of the
non-cash component of such consideration, together with Saratoga's reasonable
estimate of the fair market value of such non-cash component and any information
requested by the other Investors, to allow it to make its own judgment as to the
value of such noncash component.
Option Agreements means the Option Agreements dated as of even date
herewith between the Company, on the one hand, and each of the Management
Investors, on the other hand.
Permitted Transferee means any transferee of Capital Stock acquired from
any Investor, in a transaction that is not prohibited pursuant to Section 2.1.
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Person means an individual, a corporation, a partnership, an association, a
trust or any other entity or organization, including a government or political
subdivision or an agency or instrumentality thereof.
Preferred Stock means the Series B Preferred Stock, par value $0.0001 per
share, of the Company.
Public Stock means any Capital Stock within a class of Capital Stock that
is listed on a national securities exchange or that has been accepted for
inclusion in the Nasdaq National Market or any similar national
over-the-counter-market.
Registrable Securities means shares of Capital Stock now owned or hereafter
acquired by the Investors, but only so long as such shares are restricted
securities. A share of Capital Stock shall be deemed to be a restricted security
until such time as such share (i) has been effectively registered under the 1933
Act and disposed of in accordance with the registration statement covering it or
(ii) has been sold publicly pursuant to Rule 144 (or any similar provision then
in force) under the 1933 Act.
Rollover Equity means, as to any Management Investor, (i) the option
("Option") granted to such Management Investor under the Option Agreement to
which he is party in substitution for options to purchase common stock of KSCO
and (ii) any securities issued upon exercise of the Option.
Saratoga means Saratoga Partners, III, L.P., a Delaware limited
partnership, and its Affiliates.
Senior Preferred Stock means the Series A Cumulative Redeemable
Exchangeable Preferred Stock, par value $0.0001 per share, of the Company.
Subscription Agreement means the Subscription Agreement, dated as of even
date herewith, between the Company and each of the Non-Management Investors.
Transfer means any direct or indirect transfer, sale, conveyance, pledge,
hypothecation or other disposition.
Unit means one share of Common Stock and one share of Preferred Stock.
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Warrants means the warrants entitling the holders thereof to purchase
shares of Common Stock.
ARTICLE II
COVENANTS OF THE INVESTORS
SECTION 2.1. Transfers by Investors. (a) No Investor shall Transfer any
Capital Stock now or hereafter owned by such Investor except as expressly
permitted in this Section 2.1.
(b) Without the consent of the Company or any other Investor and without
first offering such Capital Stock to the Company or any other Investor, each
Investor, at any time, may (i) Transfer to any Person any Capital Stock that
constitutes Public Stock and (ii) without regard to whether such Capital Stock
is Public Stock at such time, (x) in the case of any Investor that is not a
natural Person, Transfer any Capital Stock that it may now or hereafter own to
any Affiliate of such Investor which is a not a natural Person, and (y) in the
case of any other Investor that is a natural Person, Transfer any Capital Stock
to any Immediate Family Member or any trust or custodian account for the sole
benefit of such Investor or his Immediate Family Members and in accordance with
applicable laws of descent and distribution; provided, however, that the
transferee of any such Investor pursuant to clause (x) or (y) above shall join
in this Agreement by executing a joinder agreement in the form attached hereto
as Exhibit A.
(c) In addition to Transfers permitted by paragraph (b) above, (i) an
Investor may Transfer any Capital Stock with the prior approval of the Board by
resolution of a majority of the Board (which approval may be withheld or given
at the discretion of the Board); provided, however, that any Transfers by
Saratoga shall be subject to section 2.2(a) if otherwise applicable; (ii) an
Investor may make any Transfer required or permitted to be made by such Investor
pursuant to the provisions of Section 2.2; and (iii) an Investor that is
principally engaged in the United States in a regulated industry may make any
Transfer that, in the judgment of such Investor, upon the written advice of
counsel, is required or advisable in order for such Investor to comply with any
United States law, regulation or guideline applicable to such Investor.
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SECTION 2.2. Tag-Along and Take-Along Provisions. (a) If Saratoga shall
receive and determine to accept a Notice of Offer from a Buyer to purchase or
otherwise acquire in a transaction or series of related transactions for value
in the aggregate more than 20% of the issued and outstanding shares of Capital
Stock, the other Investors owning any Capital Stock shall have the right to
participate in such transaction in the manner set forth in this Section.
Saratoga shall, promptly after its receipt of a Notice of Offer, send a copy
thereof to the Company and the other Investors owning any Capital Stock. Each
such Investor shall have the right to cause Saratoga to condition its sale to
the Buyer of any Capital Stock owned by Saratoga on the simultaneous purchase by
the Buyer of such amount of Capital Stock owned by such Investor as such
Investor (each, an "Electing Investor") may designate by written notice
delivered to Saratoga within 5 days following the date on which the Notice of
Offer is received; provided, however, that no Electing Investor may so designate
for purchase an amount of Capital Stock greater than that number owned by such
Electing Investor multiplied by a fraction the numerator of which is the amount
of Capital Stock being sold by Saratoga pursuant to the Notice of Offer and the
denominator of which is the total amount of Capital Stock then owned by
Saratoga. The purchase price for each share of the Capital Stock subject to the
Notice of Offer and the terms of such purchase shall be the same as are set
forth in such Notice of Offer. No seller shall receive, in connection with sales
pursuant to this subsection, any material consideration which is not shared with
each other seller in proportion to the number of shares sold by each, except
that Saratoga or an Affiliate may receive customary investment banking fees. If
a Notice of Offer is for two or more classes of Capital Stock, then the number
of shares of Common Stock and Preferred Stock that any Electing Investor shall
have the right to sell shall be determined separately as though separate offers
have been made for each of the securities. Immediately after such sale, all sale
proceeds relating to the securities of each Electing Investor shall be remitted
to such Electing Investor. If any potential Electing Investor shall not have
accepted the tag-along offer, Saratoga shall have 120 days after receipt of the
Notice of Offer in which to sell the securities to be sold pursuant to such
Notice of Offer at a price not higher than that contained in the Notice of Offer
and on terms no more favorable to Saratoga than that contained in the Notice of
Offer. If, at the end of such period the sale has not been completed, this
Section 2.2(a) shall again apply to offers and sales of Capital Stock by
Saratoga.
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(b) If Saratoga shall receive and determine to accept a Notice of Offer to
sell or otherwise purchase or acquire for value in the aggregate more than 50%
of the issued and outstanding shares of the Capital Stock, then, at the written
request of Saratoga, each other Investor shall agree to sell to the Buyer
Capital Stock (to the extent then owned by such Investor) constituting the same
proportionate share of the Capital Stock which such Investor owns as Saratoga
agrees to sell for an amount equal to the same per share purchase price, and on
the terms, as are applicable to Saratoga's sale. No seller shall receive, in
connection with sales pursuant to this subsection, any material consideration
which is not shared with each other seller in proportion to the amount sold by
each, except that Saratoga or an Affiliate may receive customary investment
banking fees. Immediately following such sale, all sale proceeds relating to the
securities sold by each Investor shall be remitted to such Investor. For the
purposes of determining if the offer of the Buyer is for more than 50% of the
Capital Stock, the percentage of the issued and outstanding shares of Capital
Stock offered to be purchased by the Buyer shall include all shares of Capital
Stock sold to the Buyer by Saratoga in the same or a series of related
transactions.
(c) The provisions of this Section 2.2 shall terminate with respect to any
Class the first time that at least 20% of such Class is Public Stock.
SECTION 2.3. Transfers to Comply with Laws. Notwithstanding any contrary
provision herein, no Investor may Transfer or offer to Transfer any shares of
Capital Stock (or solicit any offers to Transfer any shares of Capital Stock),
except in compliance with the 1933 Act and rules and regulations promulgated
thereunder and in compliance with any applicable state securities laws and rules
and regulations promulgated thereunder.
SECTION 2.4. Closing. The closing of any purchase of shares of Capital
Stock pursuant to Article II hereof shall take place at the offices of the
Company (or at such other location as to which the parties shall mutually agree)
concurrently with the closing of any sale to a Buyer but in no event more than
90 days after the date on which a Non-Management Investor shall accept the offer
of such Buyer as set forth in the Notice of Offer.
SECTION 2.5. Restrictive Legend. In addition to any legend required by the
Subscription Agreement, each certificate
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evidencing shares of Capital Stock shall contain the following restrictive
legend:
"THE SALE, ASSIGNMENT, TRANSFER, PLEDGE, ENCUMBRANCE, OR OTHER
DISPOSITION OF THE SHARES EVIDENCED BY THIS CERTIFICATE, OR ANY
INTEREST IN SUCH SHARES, IS RESTRICTED BY THE TERMS OF THE STOCKHOLDERS
AGREEMENT DATED AS OF NOVEMBER 26, 1997, TO WHICH THE CORPORATION IS A
PARTY, COPIES OF WHICH ARE ON FILE AT THE OFFICES OF THE CORPORATION
AND MAY BE OBTAINED ON REQUEST."
ARTICLE III
CERTAIN REPURCHASES OF STOCK
SECTION 3.1. Management Stock. The following repurchase arrangements are
subject to the terms of the Credit Facility, the Indenture and the Senior
Preferred Stock and to the provisions of Section 3.2.
(a) Termination for Cause. If the employment of any Management Investor is
terminated for Cause, the Company shall have the right to repurchase such
Management Investor's Capital Stock at Fair Market Value.
(b) Termination Other than for Cause. If the employment of any Management
Investor is terminated other than for Cause:
(i) the Company shall have the right to repurchase such Management
Investor's Capital Stock at Fair Market Value; and
(ii) such Management Investor shall have the right to require the Company
to repurchase, at Fair Market Value, such number of Units the Fair Market Value
of which is not greater than (i) the value of his Rollover Equity on November
26, 1997 ($10.00 per Unit) plus (ii) interest at the applicable federal rate (as
determined in the Internal Revenue Code).
(c) Resignation of Management Investor. If any Management Investor resigns
his employment with the Company within thirty (30) days following the second
anniversary of the date hereof:
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(i) such Management Investor may require the Company to repurchase his
Rollover Equity at Fair Market Value; and
(ii) the Company shall have the right to repurchase such Management
Investor's Capital Stock at Fair Market Value.
(d) Death or Disability of Management Investor. Upon the death or permanent
disability of any Management Investor:
(i) such Management Investor (or his estate) shall have the right to
require the Company to repurchase such Management Investor's Capital Stock; and
(ii) the Company shall have the right to repurchase such Management
Investor's Capital Stock at Fair Market Value.
SECTION 3.2. Method of Repurchase. If any Management Investor desires to
exercise his rights under Section 3.1, he shall give notice to the Company of
such exercise within 30 days of his termination or resignation, as the case may
be. If the Company desires to exercise its rights under Section 3.1, it shall
give notice of such exercise to the applicable Management Investor within 30
days of such Management Investor's termination, resignation, disability or
death, as the case may be. Any repurchase pursuant to Section 3.1 shall be
consummated on a business day selected by the Company not less than 30 and not
more than 60 days after the date of notice; provided, however, that if any
Capital Stock becomes subject to repurchase pursuant to Section 3.1(d) as the
result of the death of any Management Investor, such Shares may be repurchased
within 90 days of the date the will of such Management Investor is admitted to
probate or, in the event of intestacy, within 90 days of such death. On the
repurchase date, the Management Investor selling Capital Stock (the "Seller")
shall deliver to the Company the certificate or certificates representing the
Capital Stock owned by such Seller (and any option agreements evidencing any
options constituting Capital Stock) on such date against delivery by the Company
to such Seller of the repurchase price in cash. All certificates for Capital
Stock to be repurchased shall be duly endorsed in favor of the Company by the
Seller. If any Seller shall fail to deliver such duly endorsed certificate or
certificates to the Company within the time required, the Company shall cause
its books and records to show that the Capital Stock subject to repurchase are
bound by the provisions of this Section 3.2 and that such Capital Stock, until
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transferred to the Company, shall not be entitled to any proxy, dividend or
other rights from the date by which such certificate or certificates should have
been delivered to the Company.
SECTION 3.3. Right of the Company to Designate Third Parties.
Notwithstanding anything contained herein to the contrary, the Company shall
have the right (but not any obligation) to designate any other Person to
purchase Capital Stock in lieu of purchases by the Company under this Article
III; provided, however, that no such designation shall relieve the Company of
its obligations hereunder and if the Company so designates any other Investor to
purchase Capital Stock, each Non-Management Investor shall be entitled (but not
obligated) to purchase such Capital Stock in proportion to the amount of Capital
Stock owned by each.
SECTION 3.4. No Implied Right of Employment. For purposes of this
Agreement, any Management Investor's employment with the Company or any of its
subsidiaries shall be deemed to be terminated at such time as the Management
Investor ceases to be an officer or salaried employee of the Company or any such
subsidiary, as the case may be. Neither this Agreement nor any provision hereof
nor any action taken or omitted to be taken hereunder shall be deemed to create
or confer on any Management Investor any right to be retained in the employ of
the Company or any Affiliate thereof, or to interfere with or limit in any way
the right of the Company or any Affiliate thereof to terminate the employment of
any Management Investor at any time (subject to any employment agreement between
the Management Investor and the Company or any of its subsidiaries).
ARTICLE IV
VOTING AND DIRECTORS
SECTION 4.1. Voting and Election of Directors. From and after the date
hereof and until such time as 25% of the outstanding Common Stock is Public
Stock, each of the Investors severally agrees that in exercising its voting
rights on the election of directors, whether or not at an annual or special
meeting of the Company and whether or not at an adjourned meeting, such Investor
shall vote its shares of the voting Capital Stock for and will take all other
necessary actions within its control to cause the nomination and the election of
the following individuals to the Board:
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(a) David J. Barrett, but only for as long as he shall be an officer and an
employee of the Company or of a subsidiary of the Company;
(b) one director designated by Remington Investment Strategies, L.P. and
Moore Global Investments, Ltd. (together, "Moore") (acting together) so long as
they together own at least 50% of their original investment in the Company; and
(c) up to five directors (being all but two of the authorized number of
directors on the date hereof) designated by Saratoga;
Saratoga shall have the right to remove any or all of its designees at any
time and replace such designees. The initial designees as director by Saratoga
shall be Christian L. Oberbeck and William F. Andrews.
The initial designee as director by Moore shall be Alan Colner. Moore shall
have the right to remove, and replace, its designee at any time. If Moore does
not designate a director, it shall be entitled to have a representative observe
Board meetings.
SECTION 4.2. Observor Status. From and after the date hereof and until such
time as 25% of the outstanding Common Stock is Public Stock, so long as
Co-Investment Partners, L.P. ("Co-Investment") owns at least 50% of its original
investment in the Company, (i) the Company shall give notice of each meeting of
the Board to Co-Investment and (ii) Co-Investment shall be entitled to have a
representative of Co-Investment attend each such meeting.
SECTION 4.3. Directors' and Officers' Insurance. The Company shall use its
reasonable best efforts to obtain and maintain directors' and officers'
insurance on such terms and in such amounts as are customary for companies of
its type.
ARTICLE V
REGISTRATION AND RELATED RIGHTS
SECTION 5.1. Holdback Agreement. If any shares of Capital Stock (or
securities exchangeable or convertible into or exercisable for Capital Stock)
are offered to the public pursuant to an effective registration statement under
the 1933
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Act, no Investor shall, without the consent of the Company, offer, sell,
transfer or otherwise dispose of, including pursuant to Rule 144 under the
Securities Act, any of its Capital Stock (other than securities covered by such
registration statement) within 30 days prior to, or within 180 days after, the
effective date of such registration statement (the "Holdback Period").
SECTION 5.2. Piggyback Registration
(a) Right to Piggyback. Subject to the provisions of Section 5.1, if at any
time the Company proposes to register any of its Capital Stock (or any
securities convertible into or exchangeable or exercisable for Capital Stock)
under the 1933 Act in connection with the offering of such Capital Stock (except
pursuant to a registration statement filed on Form S-4 or on Form S-8 or such
other forms as shall be prescribed under the 1933 Act for the same purposes or
for any exchange offer) (a "Piggyback Registration"), the Company shall at such
time provide promptly to all Investors with written notice of its intention so
to do. Upon the written request of any Investor given within 15 days after the
providing of any such notice by the Company, the Company shall use reasonable
best efforts to cause to be registered under the 1933 Act all of the Registrable
Securities held by such Investor that have been so requested to be registered,
subject to the provisions of subsection 5.2(c).
(b) Selection of Underwriters. If the Company in its sole discretion
decides a Piggyback Registration shall be underwritten, the Company shall have
sole discretion in the selection of any underwriter or underwriters to manage
such Piggyback Registration.
(c) Priority on Piggyback Registrations. If the managing underwriter or
underwriters of a Piggyback Registration advise the Company in writing that in
its or their opinion the number of Registrable Securities proposed to be sold in
such Piggyback Registration exceeds the number which can be sold, or adversely
affects the price at which the securities are to be sold in such offering, the
Company will include in such registration only the number of Registrable
Securities, which, in the opinion of such underwriter or underwriters, can be
sold in such offering or which will not adversely affect the price thereof. In
the event that the contemplated distribution does not involve an underwritten
offering, the determination that the inclusion of such Registrable Securities
shall adversely affect the price or the number of securities which may
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be sold by the Company in such offering shall be made by the Company in its
reasonable discretion. The Registrable Securities so included in such Piggyback
Registration shall be apportioned (i) first, to any shares of Capital Stock that
the Company proposes to sell and (ii) second, pro rata among any shares of
Capital Stock that any Investors propose to sell, according to the total amount
of Capital Stock requested for inclusion by said Investors, or in such other
proportions as shall mutually be agreed to among such Investors.
SECTION 5.3. Demand Registration
(a) Right to Demand. Any time after the expiration of the Holdback Period,
each of Saratoga, Moore and Co-Investment may make a written request to the
Company for registration (a "Demand Registration"), under and in accordance with
the 1933 Act, of all or part of its Registrable Securities. Within 20 days after
receipt of such request, the Company will serve written notice (the "Written
Notice") of such registration request to all Investors who are holders of
Registrable Securities and the Company will include in such registration all
Registrable Securities of such Investors with respect to which the Company has
received written requests for inclusion therein within 15 business days after
receipt of the Written Notice. All requests made pursuant to this subsection
will specify the number of Registrable Securities to be registered and will also
specify the intended methods of disposition thereof; provided, however, that (x)
the Company need not effect any Demand Registration unless the Registrable
Securities requested to be registered pursuant to such Demand Registration shall
constitute at least 10% of the outstanding Capital Stock; and (y) the Company
may, if its Board of Directors so determines in the exercise of its reasonable
judgment, that due to a pending or contemplated acquisition or disposition it
would be inadvisable to effect such Demand Registration at such time, defer such
Demand Registration for a single period not to exceed 180 days.
(b) Number of Demand Registrations. Saratoga shall be entitled to three
Demand Registrations and the expenses of such registration will be borne by the
Company. Moore shall be entitled to one Demand Registration and the expenses of
such registration will be borne by the Company. Co-Investment shall be entitled
to one Demand Registration and the expenses of such registration will be borne
by the Company. A Demand Registration shall not be counted as a Demand
Registration hereunder until such Demand Registration has been declared
effective and maintained for a period of at least six months, or such shorter
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period if all Registrable Securities included therein have been sold.
(c) Selection of Underwriters. If the Company in its sole discretion
decides a Demand Registration shall be underwritten, the Company shall have sole
discretion in the selection of any underwriter or underwriters to manage such
Demand Registration.
(d) Priority on Demand Registrations. If the managing underwriter or
underwriters of a Demand Registration advise the Company in writing that in its
or their opinion the number of Registrable Securities proposed to be sold in
such Demand Registration exceeds the number which can be sold, or adversely
affects the price at which the securities are to be sold, in such offering, the
Company will include in such registration only the number of Registrable
Securities which, in the opinion of such underwriter or underwriters, can be
sold in such offering or which will not adversely affect the price thereof. In
the event that the contemplated distribution does not involve an underwritten
offering, the determination that the inclusion of such Registrable Securities
shall adversely affect the price or the number of securities which may be sold
by the Company in such offering shall be made by the Company in its reasonable
discretion. The Registrable Securities so included in such Demand Registration
shall be apportioned (i) first, to any shares of Capital Stock that the Person
who requested the Demand Registration pursuant to Section 5.3(a) proposes to
sell, and (ii) second, pro rata, among any shares of Capital Stock that any
other Investors propose to sell, according to the total amount of Capital Stock
requested for inclusion by said Investors, or in such other proportions as shall
mutually be agreed to among such Investors.
SECTION 5.4. Registration of Stock Option Shares
(a) Right to Demand Stock Option Registration. Any time after the
expiration of the Holdback Period, Management Investors may make a written
request to the Company for the registration of shares of Capital Stock received
pursuant to the Company's stock option plan (the "Stock Option Registration").
The filing of the Stock Option Registration will be on Form S-8 (or another
appropriate form) under the 1933 Act.
(b) Selection of Underwriters. If the Company in its sole discretion
decides a Stock Option Registration shall be underwritten, the Company shall
have sole discretion in the
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selection of any underwriter or underwriters to manage such Stock Option
Registration.
SECTION 5.5. Registration Procedures. It shall be a condition precedent to
the obligations of the Company and any underwriter or underwriters to take any
action pursuant to this Article V that the Investors requesting inclusion in any
Piggyback Registration, Demand Registration or Stock Option Registration (each,
a "Registration," and collectively, the "Registrations") shall furnish to the
Company such information regarding them, the Registrable Securities held by
them, the intended method of disposition of such Registrable Securities, and
such agreements regarding indemnification, disposition of such securities and
the other matters referred to in this Article V as the Company shall reasonably
request and as shall be required in connection with the action to be taken by
the Company. With respect to any Registration which includes Registrable
Securities held by an Investor, the Company shall, subject to the provisions of
Section 5.5, as expeditiously as practicable:
(a) prepare and file with the Commission a registration statement on the
appropriate form prescribed by the Commission and use its reasonable best
efforts to cause such registration statement to become effective;
(b) prepare and file with the Commission such amendments, post-effective
amendments and supplements, to such registration statement and any documents
required to be incorporated by reference therein as may be necessary to keep the
registration statement effective until the distribution of Registrable
Securities shall have been completed or until the expiration of 180 days after
the effective date, whichever is earlier; cause the prospectus to be
supplemented by any required prospectus supplement, and as so supplemented to be
filed pursuant to Rule 424 under the 1933 Act (or any successor rule); and
comply with the provisions of the 1933 Act applicable to it with respect to the
disposition of all Registrable Securities covered by such registration statement
during the applicable period in accordance with the intended methods of
disposition by the sellers thereof set forth in such registration statement or
supplement to the prospectus;
(c) furnish to such Investor at least one conformed copy of the
registration statement and any post-effective amendment thereto, upon request,
and such number of copies of the prospectus (including each preliminary
prospectus and any amendments or supplements thereto), and any exhibits or docu-
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ments incorporated by reference therein and such other documents as such as the
Investor or underwriter or underwriters, if any, may reasonably request in order
to facilitate the disposition of the securities being sold by the Investor;
(d) on or prior to the date on which the registration is declared
effective, use its reasonable best efforts to register or qualify, and cooperate
with such Investor, the underwriter or underwriters, if any, and their counsel
in connection with the registration or qualification of the Registrable
Securities covered by the registration statement for offer and sale under the
securities or blue sky laws of each state and other jurisdiction of the United
States as such Investor or managing underwriter or underwriters, if any, may
reasonably request (considering the nature or size of the offering and the
expense and time involved in such qualification or registration), and to do any
and all other reasonable acts or things which may be necessary or advisable to
enable the disposition in all such jurisdictions of the Registrable Securities
covered by the applicable registration statement; provided, however, that the
Company shall not be required to qualify generally to do business in any
jurisdiction where it is not then so qualified or to take any action which would
subject it to general service of process in any such jurisdiction where it is
not then so subject;
(e) use its reasonable best efforts to cause the Registrable Securities
covered by the registration statement to be registered with or approved by such
other governmental agencies or authorities within the United States, including,
without limitation, the National Association of Securities Dealers, Inc. (the
"NASD"), as may be necessary to enable the seller or sellers thereof or the
underwriter or underwriters, if any, to consummate the disposition of such
Registrable Securities;
(f) use its reasonable best efforts to cause the Registrable Securities
covered by the registration statement to be listed on any national securities
exchange on which the Capital Stock of the same class is listed;
(g) give the Investors who hold Registrable Securities registered under
such registration statement, the underwriters, if any, and their respective
counsel and accountants, the timely opportunity to participate in the
preparation of such registration statement, each prospectus included therein or
filed with the Commission, and each amendment thereof or supplement thereto, and
give each of them such access to its books and records and such opportunities to
discuss the busi-
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ness of the Company with its officers and the independent public accountants who
have certified its financial statements as shall be reasonably necessary or
advisable, in the opinion of each of such Investors and such underwriters'
respective counsel, to conduct appropriate due diligence as contemplated by the
1933 Act; and
(h) provide to the Investors and underwriters with legal opinions and "cold
comfort" letters in customary form and substance.
The Investors, upon receipt of any notice from the Company that the
prospectus prepared pursuant to subsection (b) above contains an untrue
statement of a material fact or omits to state a material fact necessary to make
the statements therein not misleading, will forthwith discontinue disposition of
the Registrable Securities until the Investors receive copies of a supplemented
or amended prospectus or until they are advised in writing (the "Advice") by the
Company that the use of the prospectus may be resumed, and have received copies
of any additional or supplemental filings which are incorporated by reference in
the prospectus, and, if so directed by the Company, each Investor shall, or
shall request the managing underwriter or underwriters, if any, to, deliver to
the Company all copies, other than permanent file copies then in such Investor's
possession, of the prospectus covering such Registrable Securities current at
the time of receipt of such notice. In the event the Company shall give any such
notice, the time periods mentioned in subsection (b) of this Section 5.5 shall
be extended by the number of days during the period from and including any date
of the giving of such notice to and including the date when each seller of
Registrable Securities covered by such registration statement shall have
received the copies of the supplemented or amended prospectus contemplated by
the immediately preceding sentence or the Advice.
SECTION 5.6. Registration Expenses. Except where this Agreement specifies
otherwise, in the case of any Registration, the Company shall bear all expenses
in connection with its obligations in connection therewith, including, without
limitation, the expenses of preparing any registration statement; commission and
state "blue sky" filing, registration and qualification fees and expenses
(including, without limitation, fees and expenses of counsel in connection with
blue sky surveys); fees and expenses associated with filings required to be made
with the NASD; fees and expenses of counsel for the Company, one firm of counsel
for all selling stockholders and independent public accountants (including,
without limitation,
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the cost of providing any legal opinions or "cold comfort" letters); and all
printing costs and expenses; provided, however, that the Company shall not be
responsible for the underwriting discounts and commissions or placement fees of
underwriters directly attributable to the Registrable Securities included in
such Registration.
SECTION 5.7. Participation in Registration. No Investor may participate in
any registration hereunder unless such Investor (a) agrees to sell its
securities on the basis provided in any underwriting arrangements approved by
the Company, and (b) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements and other documents reasonably
required under the terms of such underwriting arrangements. Nothing in this
Section 5.7 shall be construed to create any additional rights regarding the
registration of Registrable Securities in any Person otherwise than as set forth
in this Article V.
SECTION 5.8. Delay of Registration. No Investor shall have any right to
take any action to restrain, enjoin, or otherwise delay any registration as the
result of any controversy that might arise with respect to the interpretation or
implementation of this Agreement.
SECTION 5.9. Specific Performance. The parties agree that the recovery of
damages would not be an adequate remedy for the breach of the covenants of the
Company contained in this Article V and, accordingly, agree that the Investors
shall be entitled to specific performance of the obligations contained herein.
ARTICLE VI
INDEMNIFICATION AND CONTRIBUTION
SECTION 6.1. Indemnification by the Company. In connection with any
registration statement filed to effect a Registration pursuant to this
Agreement, the Company agrees to indemnify and hold harmless, to the fullest
extent permitted by law, each holder of Registrable Securities registered
pursuant to a Registration hereunder, its officers, directors and partners, each
underwriter of such Registrable Securities and each Person who controls (within
the meaning of the 1933 Act) such holder or underwriter against all losses,
claims, damages, liabilities and expenses (as incurred or suffered and
including,
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but not limited to, any and all expenses incurred in investigating, preparing or
defending any litigation or proceeding, whether commenced or threatened, or any
claim whatsoever) ("Losses") which arise out of or are based upon any untrue or
alleged untrue statement of a material fact contained in the registration
statement or any omission or alleged omission to state a material fact required
to be stated therein or necessary to make the statements therein not misleading,
or by any untrue or alleged untrue statement of a material fact included in any
prospectus forming a part of such registration statement or preliminary
prospectus or any omission or alleged omission to state a material fact
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading, except insofar as the same are
caused by or contained in any information furnished in writing to the Company by
such holder or underwriter or its representative expressly for use therein;
provided, however, that the Company shall not be liable in any such case where
any such Loss arises out of or is based upon an untrue statement or alleged
untrue statement or an omission or alleged omission in a prospectus, if such
untrue statement or alleged untrue statement, omission or alleged omission is
corrected in an amendment or supplement to the prospectus and the holder of
Registrable Securities thereafter fails to deliver such prospectus as amended or
supplement prior to or concurrently with the sale of the Registrable Securities
to the Person asserting such loss, claim, damage, liability or expense after the
Company had furnished such holder with the number of copies of such amended or
supplemented prospectus reasonably requested by the holder of Registrable
Securities.
SECTION 6.2. Indemnification by Holders of Registrable Securities. In
connection with any registration statement filed pursuant to this Agreement to
effect a Registration, each holder participating in such Registration agrees to
(and, as a condition precedent to the filing of such registration statement, the
Company may require an undertaking satisfactory to it from each such
participating holder and from any prospective underwriter therefor agreeing to)
indemnify, to the fullest extent permitted by law, the Company and its officers,
directors and agents and each Person who controls (within the meaning of the
1933 Act) the Company or such agents against any Losses which arise out of or
are based upon any untrue or alleged untrue statement of a material fact
contained in such registration statement or any omission or alleged omission to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading or by any untrue or alleged untrue statement
of a material fact included in any
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prospectus or preliminary prospectus or any omission or alleged omission to
state a material fact necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading, to the
extent, but only to the extent, that such untrue statement or omission is
contained in any information or affidavit with respect to such holder so
furnished in writing by such holder or its representatives to the Company
specifically for inclusion in such registration statement or prospectus;
provided, however, that no such holder shall be responsible for Losses in excess
of the proceeds to be received by such holder from the sale of Registrable
Securities covered by such registration statement. The Company shall be entitled
to receive indemnities from underwriters, selling brokers, dealer-managers and
similar securities industry professionals participating in the distribution, to
the same extent as provided above with respect to information with respect to
such Persons so furnished in writing by such Persons specifically for inclusion
in any prospectus or Registration.
SECTION 6.3. Conduct of Indemnification Proceedings. Each Person entitled
to indemnification hereunder will (i) give prompt written notice to the
indemnifying party of any claim with respect to which it seeks indemnification
or contribution pursuant to this Agreement and (ii) permit such indemnifying
party to assume the defense of such claim with counsel reasonably satisfactory
to the indemnified party; provided, however, that any Person entitled to
indemnification hereunder shall have the right to employ separate counsel and to
participate in the defense of such claim, but the fees and expenses of such
counsel shall be at the expense of such Person unless (x) the indemnifying party
has agreed in writing to pay such fees and expenses, (y) the indemnifying party
shall have failed to assume the defense of such claim and employ counsel
reasonably satisfactory to such Person or (z) in the reasonable judgment of any
such Person, based upon advice of its counsel, a conflict of interest may exist
between such Person and the indemnifying party with respect to such claims (in
which case, if the indemnified party notifies the indemnifying party in writing
that it elects to employ separate counsel at the expense of the indemnifying
party, the indemnifying party shall not have the right to assume the defense of
such claim on behalf of such Person); provided, further, that an indemnifying
party who is not entitled to, or elects not to, assume the defense of a claim on
behalf of all indemnified parties shall not be obligated to pay the fees and
expenses of more than one counsel (in addition to local counsel) for all
indemnified parties. If the indemnifying party assumes the defense, or is not
pursuant to
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clause (z) above entitled to assume the defense, it shall not be subject to any
liability for any settlement or compromise made by the indemnified party without
its consent (but such consent shall not be unreasonably withheld). No
indemnifying or indemnified party will be required to consent to entry of any
judgment or enter into any settlement which does not include as an unconditional
term thereof the giving by the claimant or plaintiff to the indemnified party of
a release from all liability in respect to such claim or litigation. In
addition, without the consent of the indemnified party (which consent will not
be unreasonably withheld), no indemnifying party will be permitted to consent to
entry of any judgment or enter into any settlement which provides for any action
on the part of the indemnified party other than the payment of money damages
which are to be paid in full by the indemnifying party. Likewise, no indemnified
party may enter into any settlement without the consent of the indemnifying
party (which consent may not be unreasonably withheld). If requested by the
indemnifying party, the indemnified party agrees to cooperate with the
indemnifying party and its counsel in contesting any claim which the
indemnifying party elects to contest.
SECTION 6.4. Contribution. If the indemnification provided for in this
Article VI from the indemnifying party is unavailable to an indemnified party
hereunder in respect of any Losses, then the indemnifying party, in lieu of
indemnifying such indemnified party, shall contribute to the amount paid or
payable by such indemnified party as a result of such Losses in such proportion
as is appropriate to reflect the relative fault of the indemnifying party and
indemnified parties in connection with the actions which resulted in such
Losses, as well as any other relevant equitable considerations. The relative
fault of such indemnifying party and indemnified parties shall be determined by
reference to, among other things, whether any action in question, including any
untrue or alleged untrue statement of a material fact or omission or alleged
omission to state a material fact, has been made by, or relates to information
supplied by, such indemnifying party or indemnified parties, and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such action. The amount paid or payable by a party as a result of the
Losses referred to above shall be deemed to include, without limitation, any
legal or other fees, costs or expenses reasonably incurred by such party in
connection with any investigation or proceeding. Notwithstanding anything to the
contrary in the foregoing, no holder shall be responsible for Losses in excess
of the proceeds to be received by such holder from the sale of Registrable
Securities covered by such registration statement.
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The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 6.4 were determined by pro rata allocation
or by any other method of allocation which does not take into account the
equitable considerations referred to in the immediately preceding paragraph. No
Person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the 1933 Act) shall be entitled to contribution from any Person who was
not guilty of such fraudulent misrepresentation.
ARTICLE VII
MISCELLANEOUS
SECTION 7.1. Inspection Rights. The Company shall permit any authorized
representatives designated by any Investor to visit and inspect any of the
properties of the Company and its subsidiaries, including its and their
financial and accounting records, and to discuss its and their affairs, finances
and accounts with its and their officers and independent public accountants, all
upon reasonable notice and at reasonable times during normal business hours.
Each Investor agrees that it shall treat as confidential all non-public
information that such Investor obtains pursuant to the foregoing.
SECTION 7.2. Notices. All notices, requests and other communications to any
party hereunder shall be in writing (including facsimile or similar writing) and
shall be given to such party at its address or facsimile number set forth on the
signature pages hereof (or in the case of any Management Investor, c/o the
Company at its address so set forth), or the signature page of any joinder
agreement executed and delivered pursuant to Section 7.2 of this Agreement or
such other address or facsimile number as such party may hereafter specify for
the purpose by notice to the party sending the communication. Each such notice,
request or other communication shall be effective (i) if given by facsimile,
when such facsimile is transmitted to the facsimile number specified in this
Section and receipt is confirmed, (ii) if given by mail, 72 hours after such
communication is deposited in the mail registered or certified, return receipt
requested, with postage prepaid, addressed as aforesaid, or (iii) if given by
any other means, when delivered at the address specified in this Section.
SECTION 7.3. Additional Parties. Only Persons (other than the initial
signatories hereto) that execute a
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joinder agreement in the form of Exhibit A shall be deemed to be Investors.
Except to the extent limited in any joinder agreement, each Person that so
becomes an Investor after the date hereof shall be entitled to all rights and
privileges of an Investor as if such Investor had been an original signatory to
this Agreement.
SECTION 7.4. Amendments and Waivers. Any provision of this Agreement may be
amended if, but only if, such amendment is in writing and is signed by the
Company and each Investor affected. Any provision of this Agreement may be
waived if, but only if, such waiver is in writing and is signed by the Company
and each Investor sought to be charged with such waiver.
SECTION 7.5. Successors and Assigns. The provisions of this Agreement shall
be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns; provided, however, that no assignment of
rights under this Agreement will be valid unless made in connection with a
contemporaneous Transfer of Capital Stock which is not prohibited by this
Agreement; and provided, further, that upon any such assignment, the assignee
shall comply with Section 6.2 hereof. The Company may not assign or otherwise
transfer any of its rights under this Agreement.
SECTION 7.6. Captions. The captions of this Agreement are included for
convenience of reference only, do not constitute a part hereof and shall be
disregarded in the construction hereof.
SECTION 7.7. Counterparts; Effectiveness. This Agreement may be signed in
any number of counterparts, each of which shall be an original, with the same
effect an if the signatures thereto and hereto were upon the same instrument.
SECTION 7.8. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO
THE PRINCIPLES OF CONFLICTS OF LAWS.
SECTION 7.9. Severability. Any term or provision of this Agreement which is
invalid or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement, or affecting the validity or enforceability of
<PAGE>
-24-
any of the terms or provisions of this Agreement in any other jurisdiction.
SECTION 7.10. Entire Agreement. This Agreement is intended by the parties
as a final expression of their agreement, and is intended to be a complete and
exclusive agreement and understanding of the parties hereto in respect of the
subject matter contained herein. Without limiting the foregoing, this Agreement
supersedes Sections 6 and 7 of the Subscription Agreement between the Company
and Co-Investment.
<PAGE>
-25-
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.
SCOVILL HOLDINGS INC.
By:_________________________________
Name: Martin A. Moore
Title: Executive Vice Presi-
dent
Scovill Holdings Inc.
c/o Scovill Fasteners
1802 Scovill drive
Clarkesville, Georgia 30523-0044
Attention: David J. Barrett
Telephone: (706) 754-0501
Telecopier: (706) 754-0570
<PAGE>
-26-
MANAGEMENT INVESTORS:
-----------------------------------
David J. Barrett
-----------------------------------
Martin A. Moore
-----------------------------------
Michael Baxley
-----------------------------------
John Champagne
-----------------------------------
Robert W. Feltz
-----------------------------------
William F. Andrews
<PAGE>
-27-
NON-MANAGEMENT INVESTORS:
SARATOGA PARTNERS III, L.P.
By: DR Associates IV, L.P.
its General Partner
By: Dillon, Read Inc.,
its General Partner
By:______________________________
Name: Christian L. Oberbeck
Title: Attorney-in-Fact
535 Madison Avenue
New York, New York 10022
Attention: Christian L. Oberbeck,
Managing Director
Telephone: (212) 906-7350
Telecopier: (212) 750-3343
<PAGE>
-28-
SARATOGA PARTNERS III, C.V.
By: Selinus Corporation III, N.V.,
its General Partner
By: Curacao Corporation Company
N.V., its Managing Director
By:________________________________
Name: J.F.M. Horsten
Title: Attorney-in-Fact
By:________________________________
Name: S.H.P. Crijns
Title: Managing Director
c/o Curacao International Trust
Company, N.V.
De Ruyterkade 62
P.O. Box 812
Curacao, Netherlands Antilles
Attention: J.F.M. Horsten
Telephone: 011-599-9-732-2555
Telecopier: 011-599-9-732-2500
<PAGE>
-29-
MOORE GLOBAL INVESTMENTS, LTD.
By: Moore Capital Advisors,
L.L.C., its general partner
By:________________________________
Name: Savvas Savvinidis
Title: Director of Operations
c/o Moore Capital Management Inc.
1251 Avenue of the Americas
53rd Floor
New York, New York 10020
Attention: Savvas Savvinidis
Telephone: (212) 782-7532
Telecopier: (212) 575-6832
<PAGE>
-30-
REMINGTON INVESTMENT STRATEGIES, L.P.
By: Moore Capital Advisors,
L.L.C., its general partner
By:_______________________________
Name: Savvas Savvinidis
Title: Director of Operations
c/o Moore Capital Management Inc.
1251 Avenue of the Americas
53rd Floor
New York, New York 10020
Attention: Savvas Savvinidis
Telephone: (212) 782-7532
Telecopier: (212) 575-6832
<PAGE>
-31-
WLD PARTNERS, LTD.
By: WLD Partners GP, Inc., its
general partner
By:________________________________
Name: David W. Horvitz
Title: Vice President
Las Olas Centre
450 East Las Olas Boulevard
Suite 900
Fort Lauderdale, FL 33301
Attention: Ron Adelhelm
Telephone: (954) 523-7771
Telecopier: (954) 760-9845
<PAGE>
-32-
BROWN UNIVERSITY THIRD CENTURY FUND
By: Saratoga Partners III, L.P.,
its Attorney-in-Fact
By: DR Associates IV, L.P., its
General Partner
By: Dillon, Read Inc., its
General Partner
By:________________________________
Name: Christian L. Oberbeck
Title: Attorney-in-Fact
c/o Saratoga Partners III, L.P.
535 Madison Avenue
New York, New York 10022
Attention: Christian L. Oberbeck
Telephone: (212) 906-7350
Telecopier: (212) 750-3343
<PAGE>
-33-
CO-INVESTMENT PARTNERS, L.P.
By: CIP Partners, LLC,
its general partner
By:______________________________
Name:
Title: Member
660 Madison Ave
New York, NY 10021
Attn: Christian A. Melhado
Telephone: (212) 754-0411
Telecopier: (212) 754-1494
<PAGE>
EXHIBIT A
JOINDER AGREEMENT
THIS JOINDER AGREEMENT is made and entered into by the undersigned with
reference to the following facts:
A. I am acquiring simultaneously with the execution of this Joinder
Agreement [ ] shares of the [Preferred Stock] and [ ] shares of the [Common
Stock] (the "Shares") of SCOVILL HOLDINGS INC., a Delaware corporation (the
"Company"); and
B. As a condition to the acquisition of the Shares I have agreed to join in
a stockholders agreement dated as of November 26, 1997 (the "Stockholders
Agreement"), a copy of which has been furnished to me, among the Company, the
Management Investors and the Non-Management Investors party thereto.
I therefore agree as follows:
1. I hereby join in the Stockholders Agreement and agree to be bound by all
of the terms and provisions thereof as though I were an original party thereto
and were included in the definition of [Management] [Non-Management] Investor,
as used therein.
2. I hereby consent that the certificate or certificates to be issued to me
representing the Shares shall bear the following legend in addition to any other
legend:
"THE SALE, ASSIGNMENT, TRANSFER, PLEDGE, ENCUMBRANCE, OR OTHER DISPOSITION
OF THE SHARES EVIDENCED BY THIS CERTIFICATE, OR ANY INTEREST IN SUCH
SHARES, IS RESTRICTED BY THE TERMS OF THE STOCKHOLDERS AGREEMENT DATED AS
OF NOVEMBER 26, 1997, TO WHICH THE COMPANY IS A PARTY, COPIES OF WHICH ARE
ON FILE AT THE OFFICES OF THE COMPANY AND MAY BE OBTAINED ON REQUEST."
IN WITNESS WHEREOF, the undersigned has executed this agreement
this day of , .
Name:____________________________________
Address for Notices: (1)
(i)
JOINDER AGREEMENT
THIS JOINDER AGREEMENT is made and entered into by the undersigned with
reference to the following facts:
A. I am acquiring simultaneously with the execution of this Joinder
Agreement 1,000,000 shares of Series B Preferred Stock and 1,000,000 shares of
Common Stock (the "Shares") of SCOVILL HOLDINGS INC., a Delaware corporation
(the "Company"); and
B. As a condition to the acquisition of the Shares I have agreed to join in
a stockholders agreement dated as of November 26, 1997 (the "Stockholders
Agreement"), a copy of which has been furnished to me, among the Company, the
Management Investors and the Non-Management Investors party thereto.
I therefore agree as follows:
1. I hereby join in the Stockholders Agreement and agree to be bound by all
of the terms and provisions thereof as though I were an original party thereto
and were included in the definition of Non-Management Investor, as used therein.
2. I hereby consent that the certificate or certificates to be issued to me
representing the Shares shall bear the following legend in addition to any other
legend:
"THE SALE, ASSIGNMENT, TRANSFER, PLEDGE, ENCUMBRANCE, OR OTHER DISPOSITION
OF THE SHARES EVIDENCED BY THIS CERTIFICATE, OR ANY INTEREST IN SUCH
SHARES, IS RESTRICTED BY THE TERMS OF THE STOCKHOLDERS AGREEMENT DATED AS
OF NOVEMBER 26, 1997, TO WHICH THE COMPANY IS A PARTY, COPIES OF WHICH ARE
ON FILE AT THE OFFICES OF THE COMPANY AND MAY BE OBTAINED ON REQUEST."
<PAGE>
-2-
IN WITNESS WHEREOF, the undersigned has executed this agreement this 20th
day of February, 1998.
CO-INVESTMENT PARTNERS, L.P.
By: CIP Partners, LLC,
its general partner
By: /s/ Christian A. Melhado
-------------------------------
Name: Christian A. Melhado
Title: Member
VOTING AGREEMENT
VOTING AGREEMENT, dated as of February 20, 1998 (the "Agreement"), by and
between Saratoga Partners III, L.P., a New York limited partnership
("Saratoga"), Scovill Holdings Inc., a Delaware corporation (the "Company"), and
Co-Investment Partners, L.P., a Delaware limited partnership ("Purchaser").
WHEREAS, Scovill Holdings Inc. (the "Company") proposes to enter into an
agreement (the "Subscription Agreement") with Purchaser providing for the sale
to Purchaser of 1,000,000 units, each unit consisting of one share of common
stock of the Company (the "Common Stock") and one share of Series B Preferred
Stock of the Company (the "Preferred Stock").
WHEREAS, in connection with Purchaser's purchase of Units, the Company,
Saratoga and Purchaser wish to set forth their understanding relating to the
voting of 672,000 of the shares of Common Stock to be purchased by the Purchaser
(the "Shares").
NOW, THEREFORE, the parties hereto hereby agree as follows:
1. Irrevocable Proxy. Purchaser hereby irrevocably appoints Saratoga, as
attorney-in-fact and proxy of Purchaser with respect to the Shares, at any
annual or special meeting of stockholders of the Company, and to execute, with
respect to the Shares, any written consent of stockholders with respect to any
and all matters on which holders of Common Stock of the Company are entitled to
vote. This power of attorney and proxy is irrevocable and coupled with an
interest.
2. Certain Representations and Warranties Purchaser represents and warrants
to the Company that upon consummation of the purchase under the Subscription
Agreement: (i) Purchaser is the record owner of the Shares and has full and
unrestricted power to vote the Shares; (ii) the execution, delivery and
performance by Purchaser of this Agreement have been duly authorized by all
necessary actions, if any; (iii) Purchaser has full power and authority to sign
this Agreement; and (iv) the execution, delivery and performance of this
Agreement do not and will not contravene or constitute a default under, or give
rise to a right of termination, cancellation or acceleration of any right or
obligation of Purchaser under, any provision of applicable law or regulation or
of any agreement, judgment, order, decree or other instrument binding on
Purchaser.
<PAGE>
-2-
3. Miscellaneous.
(a) Successors and Assigns. This Agreement will be binding upon and inure
to the benefit of the parties hereto and their respective heirs,
representatives, successors and assigns.
(b) Restrictions on Transfer. Purchaser understands that the Shares are
subject to restrictions on transfer pursuant to a Stockholders'
Agreement dated as of November 26, 1997 (the "Stockholders'
Agreement") among Saratoga, the Company, and certain other management
and non-management investors.
(c) Entire Agreement. This Agreement constitutes the entire agreement
between the parties with respect to the subject matter hereof.
(d) Amendment. This Agreement may not be amended except by an instrument
signed by the parties hereto.
(e) Termination. This Agreement will terminate upon at least 20% of the
outstanding Common Stock being offered and sold in a public offering
registered under the Securities Act of 1933.
(f) Governing Law. This Agreement will be governed by, and construed in
accordance with, the Laws of the State of New York, without giving
effect to the principles of conflict of laws of such State.
<PAGE>
-3-
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first above written.
CO-INVESTMENT PARTNERS, L.P.
By: CIP Partners, LLC, its
general partner
By: /s/ Christian A. Melhado
-------------------------------
Name: Christian A. Melhado
Title: Member
SCOVILL HOLDINGS INC.
By: /s/ Martin A. Moore
-------------------------------
Name: Martin A. Moore
Title: Executive Vice President
SARATOGA PARTNERS III, L.P.
By: DR Associates IV, L.P.,
its General Partner
By: Dillon, Read Inc.,
its General Partner
By: /s/ Charles P. Durkin, Jr.
-------------------------------
Name: Charles P. Durkin, Jr.
Title: Attorney-in-Fact
SUBSCRIPTION AGREEMENT
THIS SUBSCRIPTION AGREEMENT (the "Agreement"), dated as of February 20,
1998, is made and entered into by and between SCOVILL HOLDINGS INC., a Delaware
corporation (the "Company"), and CO-INVESTMENT PARTNERS, L.P. ("Purchaser").
Purchaser desires to subscribe for and purchase from the Company, and the
Company desires to sell to Purchaser, Preferred Stock and Common Stock of the
Company (as hereinafter defined).
IN CONSIDERATION of the foregoing and of their mutual covenants set forth
in this Agreement, the parties hereby agree as follows:
1. Definitions. As used in this Agreement, the following terms shall have
the meanings set forth below:
Affiliate has the meaning set forth in the Stockholders Agreement.
Common Stock means the common stock, par value $0.0001 per share, of the
Company.
Exchange Act means the Securities Exchange Act of 1934, as amended, and the
rules and regulations in effect from time to time thereunder.
Fasteners means Scovill Fasteners Inc., a Delaware corporation.
Investor has the meaning set forth in the Stockholders Agreement.
Permitted Transferee has the meaning set forth in the Stockholders
Agreement.
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 Series B Preferred Stock, par value $0.0001 per
share, of the Company.
<PAGE>
-2-
Purchased Shares has the meaning set forth in Section 2(a).
Purchase Price means $10,320,833.
Registrable Securities has the meaning set forth in the Stockholders
Agreement.
Securities Act means the Securities Act of 1933, as amended, and the rules
and regulations in effect from time to time thereunder.
SEC means the Securities and Exchange Commission.
Stockholders Agreement means the Stockholders Agreement dated as of
November 26, 1997 among the Company and the Investors (as defined therein) from
time to time.
Shares means the Purchased Shares and any and all shares of capital stock
of the Company or any successor or assign of the Company (whether by merger,
consolidation, sale of assets or otherwise) which may be issued in respect of,
in exchange for, or in substitution of the Purchased Shares, by reason of any
stock dividend, split, reverse split, combination, recapitalization,
reclassification, merger, consolidation or otherwise.
2. Subscription for and Acquisition of Purchased Shares. Purchaser and the
Company agree as follows:
(a) Subscription for Purchased Shares: Purchase Price. Upon the terms and
subject to the conditions hereinafter set forth, Purchaser hereby subscribes for
and shall purchase, and the Company shall issue and sell to Purchaser, the
number of shares of Preferred Stock and Common Stock set forth below Purchaser's
signature on the signature pages hereof (collectively, the "Purchased Shares")
at the Purchase Price in cash.
(b) Closing. The closing (the "Closing") of the purchase and sale of the
Purchased Shares shall take place on February 20, 1998 at the offices of Cahill
Gordon & Reindel, 80 Pine Street, New York, New York, or at such other place as
the parties hereto shall mutually agree. At the Closing, (i) the Company shall
deliver to Purchaser a certificate or certificates representing its Purchased
Shares, as subscribed for by Purchaser, (ii) Purchaser shall deliver or cause to
be delivered to the Company the Purchase Price in immediately available
<PAGE>
-3-
funds and (iii) Purchaser shall execute and deliver a joinder to the
Stockholders Agreement.
(c) Legend. Each certificate representing the Shares shall bear
substantially the following legend:
"THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE TRANSFERRED, SOLD,
ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF UNLESS SUCH
TRANSFER, SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER DISPOSITION
COMPLIES WITH THE PROVISIONS OF THE STOCKHOLDERS AGREEMENT DATED AS OF
NOVEMBER 26, 1997, A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF SCOVILL
HOLDINGS INC. (TOGETHER, WITH ITS SUCCESSORS, THE "COMPANY") AND MAY BE
OBTAINED FROM THE COMPANY WITHOUT CHARGE UPON REQUEST.
(d) Blue Sky Compliance. The Company shall comply with all state or foreign
securities or "blue sky" laws which might be applicable to the sale to Purchaser
of its Purchased Shares hereunder, and Purchaser agrees to provide the Company
with such information, and cooperate with such filings, as may be required in
connection with such compliance. In no event may Purchaser's Purchased Shares be
issued to Purchaser unless such laws have been complied with to the satisfaction
of counsel to the Company.
3. Representations and Warranties and Other Agreements of Purchaser.
(a) Representations and Warranties. Purchaser represents and warrants that:
(i) Purchaser is acquiring its Purchased Shares for investment for
Purchaser's own account and will not sell or otherwise dispose of any
Shares except in compliance with the Stockholders Agreement, the Securities
Act and any other applicable law.
(ii) Purchaser will not, directly or indirectly, offer, transfer,
sell, assign, pledge, hypothecate or otherwise dispose of any Shares unless
such transfer, sale, assignment, pledge, hypothecation or other disposition
complies with the provisions of this Agreement and the Stockholders
Agreement and (x) the transfer, sale, assignment, pledge, hypothecation or
other disposition is pursuant to an effective registration statement under
the Securities Act and under all applicable state or foreign securities
<PAGE>
-4-
or "blue sky" laws, or (y) Purchaser shall have furnished the Company with
an opinion of counsel, which opinion of counsel shall be reasonably
satisfactory to the Company, to the effect that no such registration is
required because of the availability of an exemption from registration
under the Securities Act and under all applicable state or foreign
securities or "blue sky" laws.
(iii) Purchaser has been advised by the Company that: (A) neither the
offer nor sale of any Purchased Shares has been registered under the
Securities Act or any state or foreign securities or "blue sky" laws; (B)
the Purchased Shares are characterized as "restricted securities" under the
Securities Act inasmuch as they are being acquired from the Company in a
transaction not involving a public offering and that the Purchased Shares
must be held indefinitely and Purchaser must continue to bear the economic
risk of the investment in its Purchased Shares unless the offer and sale of
its Purchased Shares is subsequently registered under the Securities Act
and all applicable state or foreign securities or "blue sky" laws or an
exemption from such registration is available; (C) it is not anticipated
that there will be any public market for the Shares in the foreseeable
future; (D) when and if the Shares may be disposed of without registration
under the Securities Act in reliance on Rule 144, such disposition can be
made only in limited amounts in accordance with the terms and conditions of
such Rule; (E) if the Rule 144 exemption is not available, public offer or
sale of any Shares without registration will require the availability of
another exemption under the Securities Act; (F) a restrictive legend in the
form heretofore set forth shall be placed on the certificates representing
the Shares; and (G) a notation shall be made in the appropriate records of
the Company indicating that the Shares are subject to restrictions on
transfer and, if the Company should at some time in the future engage the
services of a stock transfer agent, appropriate stop transfer restrictions
will be issued to such stock transfer agent.
(iv) Purchaser is not acquiring its Purchased Shares as an agent or
otherwise for any other Person.
(v) Purchaser is an "accredited investor" as defined in the Securities
Act and has such knowledge, skill and experience in business, financial and
investment matters so that Purchaser is capable of evaluating the merits,
risks and consequences of an investment in the Shares and
<PAGE>
-5-
is able to bear the economic risk of loss of this investment.
(vi) Purchaser has duly and validly executed and delivered this
Agreement.
(vii) This Agreement constitutes, and the Stockholders Agreement will,
when executed as contemplated herein, constitute, valid, binding and
enforceable agreements of Purchaser except as enforceability may be limited
by (x) applicable bankruptcy, insolvency, reorganization, moratorium or
other laws relating to or affecting creditor's rights generally and (y)
general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
(viii) The execution, delivery and performance by Purchaser of this
Agreement and the Stockholders Agreement do not and will not (a) constitute
or result in a breach of or default (or an event which, with notice or
lapse of time, or both, has the potential of constituting a default) under
any agreement to which Purchaser is a party, (b) violate any law binding
upon Purchaser or (c) require the consent of any third party.
(b) Dispositions. If any Shares are to be disposed of by Purchaser in
accordance with Rule 144 under the Securities Act or otherwise, Purchaser shall
promptly notify the Company of such intended disposition and shall deliver to
the Company, at or prior to the time of such disposition, such documentation as
the Company may reasonably request in connection with such disposition and, in
the case of a disposition pursuant to Rule 144, shall deliver to the Company an
executed copy of any notice on Form 144 required to be filed with the SEC.
(c) No Sale During Offering. If any shares of capital stock (or securities
exchangeable or convertible into or exercisable for capital stock) of the
Company are offered to the public pursuant to an effective registration
statement under the Securities Act, Purchaser may not, without the consent of
the Company, offer, sell, transfer or otherwise dispose of, including pursuant
to Rule 144 under the Securities Act, any of the Shares, and Purchaser shall use
his best efforts not to effect any such offer, sale, transfer or other
disposition of any other capital stock of the Company or of any security
exchangeable or convertible into or exercisable for any other capital stock of
the Company (in each case, other than securities covered by such registration
statement) within 30 days prior to,
<PAGE>
-6-
or within 180 days after, the effective date of such registration statement.
4. Representations and Warranties and Other Agreements of the Company.
(a) Representations and Warranties. The Company represents and warrants to
Purchaser that:
(i) Each of the Company and Fasteners is a corporation duly organized,
validly existing and in good standing under the laws of the State of
Delaware.
(ii) At the date hereof prior to the issuance of the Purchased Shares,
the authorized capital stock of the Company consists of (x) 6,000,000
shares of Common Stock, of which 3,655,500 shares are outstanding and
344,500 shares are reserved for issuance upon exercise of outstanding stock
options, and (y) 16,200,000 shares of preferred stock, par value $.0001 per
share, of which 3,655,500 shares are outstanding as Preferred Stock,
1,000,000 shares are outstanding as 13 3/4% Series A Cumulative Redeemable
Exchangeable Preferred Stock and 344,500 shares are reserved for issuance
as Preferred Stock upon exercise of outstanding stock options.
(iii) The Company has full corporate power and authority to execute
and deliver this Agreement and to perform its obligations hereunder. This
Agreement has been duly and validly executed and delivered by the Company.
(iv) This Agreement constitutes, and the Stockholders Agreement will,
when executed as contemplated herein, constitute, valid, binding and
enforceable agreements of the Company, except as such enforceability may be
limited by (x) applicable bankruptcy, insolvency, reorganization,
moratorium or other laws relating to or affecting creditors' rights
generally and (y) general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
(v) The execution, delivery and performance by the Company of this
Agreement and the Stockholders Agreement do not and will not (a) constitute
or result in a breach of or a default (or an event which, with notice or
lapse of time, or both, has the potential of constituting a default) under
any charter document or By-laws of the Company or Fasteners, as the case
may be, (b) violate any law
<PAGE>
-7-
binding upon the Company or Fasteners, as the case may be, or (c) require
the consent of any third party or governmental agency.
(vi) The Purchased Shares, upon issuance by the Company following
receipt of the consideration provided for herein, will be duly authorized,
validly issued, fully paid and non-assessable.
(vii) Assuming the accuracy of the representations set forth in
Section 3 hereof, the offer and sale of the Purchased Shares is exempt from
the registration requirements of the Securities Act.
(b) Exchange Act Reports. If the Company shall, at any time, file a
registration statement with respect to Common Stock or Preferred Stock or both
pursuant to the requirements of Section 12 of the Exchange Act or of the
requirements of the Securities Act, the Company will file the reports required
to be filed by it under the Securities Act and the Exchange Act, to the extent
required from time to time to enable Purchaser to sell Shares of Common Stock or
Preferred Stock or both, subject to the terms of the Stockholders Agreement,
without registration under the Securities Act within the limitation of the
exemptions provided by Rule 144 and Rule 144A under the Act, as such Rules may
be amended from time to time, or any similar rule or regulation hereafter
adopted by the SEC. Notwithstanding anything to the contrary contained in this
subsection 4(b), the Company may deregister Common Stock or Preferred Stock or
both under Section 12 of the Exchange Act if it then is permitted to do so
pursuant to the Exchange Act. The Company will, at the request of any holder of
Registrable Securities, upon receipt from such holder of a certificate
certifying (i) that such holder has held such Registrable Securities for a
period of not less than two (2) consecutive years, (ii) that such holder has not
been an affiliate (as defined in Rule 144) of the Company for more than the
ninety (90) preceding days, and (iii) as to such other matters as may be
appropriate in accordance with such Rule, remove from the stock certificates
representing such Registrable Securities that portion of any restrictive legend
which relates to the registration provisions of the Securities Act.
(c) Notification of Changes. Purchaser shall notify the Company upon the
occurrence of any event prior to Closing which would cause any representation or
warranty of Purchaser contained in this Agreement to be false or incorrect.
<PAGE>
-8-
5. Conditions to Performance.
(a) Conditions to the Company's Obligations. The Company's obligations to
issue to any Purchaser its Purchased Shares hereunder are subject to the
performance by Purchaser at or prior to the Closing of all of the agreements of
Purchaser contemplated to be performed hereunder at or prior to the Closing and
to the satisfaction at or prior to the Closing of the following further
condition that the representations and warranties of Purchaser contained in
Section 3 hereof shall be true and correct as of the Closing.
(b) Conditions to Purchaser's Obligations. The obligations of Purchaser to
deliver the purchase price for its Purchased Shares, as contemplated in
subsection 2(a) and subsection 2(b), and to execute and deliver the Stockholders
Agreement are subject to the performance by the Company at or prior to the
Closing of all of the agreements of the Company contemplated to be performed
hereunder at or prior to the Closing and to the satisfaction at or prior to the
Closing of the following further conditions that the representations and
warranties of the Company contained in Section 4 hereof shall be true and
correct as of the Closing.
6. Demand Registration. The Company agrees that Purchaser shall be entitled
to one Demand Registration at any time after the expiration of the Holdback
Period, and the expenses of such registration shall be borne by the Company.
Such Demand Registration shall be deemed to be (i) a "Demand Registration" under
Article V of the Stockholders Agreement, subject to the limitations, benefits,
procedures and priority therein; provided, however, that in the event of an
underwriters' cutback, Capital Stock of Purchaser shall have priority in the
Demand Registration requested by Purchaser, and (ii) a "Registration" under
Article VI of the Stockholders Agreement. Capitalized terms in this Section 6
shall have the meanings given to them in the Stockholders Agreement.
7. Observor Status. So long as Purchaser owns at least 50% of its original
investment in the Company, (i) the Company shall give notice of each meeting of
the Board of Directors to Purchaser and (ii) Purchaser shall be entitled to have
a representative of Purchaser attend each such meeting.
8. Survival. The representations and warranties of the parties set forth in
this Agreement shall survive the Closing.
<PAGE>
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9. Binding Effect. The provisions of this Agreement shall be binding upon
and shall inure to the benefit of the parties hereto and the heirs, successors
and assigns of the parties hereto.
10. Assignment. Purchaser shall not assign any rights under this Agreement
without the prior written consent of the Company. Any purported assignment of
rights hereunder by Purchaser which has not been consented to by the Company
shall be void.
11. Applicable Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES
OF CONFLICTS OF LAW.
12. Invalidi1y of Provisions. The invalidity or unenforceability of any
provision of this Agreement in any jurisdiction shall not affect the validity or
enforceability of the remainder of this Agreement in that jurisdiction or the
validity or enforceability of this Agreement, including that provision, in any
other jurisdiction.
13. Headings; Execution in Counterparts. The headings and captions
contained herein are for convenience of reference only and shall not control or
affect the meaning or construction of any provision hereof. This Agreement may
be executed in counterparts, each of which shall be deemed to be an original and
all of which together shall constitute but one and the same instrument.
14. Notices. All notices and other communications provided for herein shall
be dated and in writing and shall be deemed to have been duly given when
delivered, if delivered personally or sent by registered or certified mail,
return receipt requested, postage prepaid and when received if delivered
otherwise, to the party to whom it is directed:
(a) If to the Company, to it at the following address:
SCOVILL HOLDINGS INC.
c/o Saratoga Partners III, L.P.
535 Madison Avenue
New York, NY 10022
Attn: Christian L. Oberbeck
with a copy to:
<PAGE>
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Cahill Gordon & Reindel
80 Pine Street
New York, New York 10005-1702
Attn: Robert Usadi, Esq.
(b) If to Purchaser, to Purchaser at the address listed on the
signature page below Purchaser's name or at such other address as such
party shall have specified by notice in writing to the other party in
accordance with this Section 13.
15. Amendment. This Agreement may not be amended, modified or supplemented
and no waivers of or consents to departures from the provisions hereof may be
given unless consented to in writing by Purchaser affected, on the one hand, and
the Company on the other hand. Unless otherwise specified in such waiver or
consent, a waiver or consent given hereunder shall be effective only in the
specific instance and for the specific purpose for which given.
16. Integration. The parties agree that this Agreement and the Stockholders
Agreement contain the entire understanding among the parties hereto relating to
the matter hereof.
17. Third Party Beneficiaries. Nothing expressed or implied in
this Agreement is intended or shall be construed to confer upon or give to any
third party any rights or remedies against any party hereto.
<PAGE>
-11-
IN WITNESS WHEREOF, Purchaser and the Company have executed this Agreement
as of the date first above written.
SCOVILL HOLDINGS INC.
By: /s/ Martin A. Moore
-------------------------------
Name: Martin A. Moore
Title: Executive Vice President
<PAGE>
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CO-INVESTMENT PARTNERS, L.P.
By: CIP Partners, LLC,
its general partner
By: /s/ Christian A. Melhado
---------------------------
Name: Christian A. Melhado
Title: Member
Number of shares to be purchased by above
Purchaser:
Preferred Stock: 1,000,000
Common Stock: 1,000,000
Name in which shares should be
registered (if different from the
name of Purchaser)
Registered address:
660 Madison Ave
New York, NY 10021
Attn: Christian A. Melhado
Telephone: (212) 754-0411
Telecopier: (212) 754-1494
Repurchase and Termination Agreement
Repurchase and Termination Agreement dated as of February 20, 1998
("Agreement") by and among Scovill Holdings Inc. (the "Company"), SBC Warburg
Dillon Read Inc. ("SBCWDR"), BT Alex. Brown Incorporated ("BTAB," and together
with SBCWDR, the "Initial Purchasers"), and United States Trust Company of New
York ("U.S. Trust").
Reference is made to the following:
Amended and Restated Certificate of Designations, Preferences and Relative,
Participating, Option and Other Special Rights of 13 3/4% Series A Cumulative
Redeemable Exchangeable Preferred Stock of the Company (the "Certificate of
Designations");
Preferred Stock Registration Rights Agreement dated as of November 26, 1997
between the Company and the Initial Purchasers (the "Preferred Stock
Registration Rights Agreement");
One or more certificates (the "Preferred Stock Certificates") representing
100,000 shares of 13 3/4% Series A Cumulative Redeemable Exchangeable Preferred
Stock of the Company (collectively, the "Preferred Stock");
Warrant Agreement dated as of November 26, 1997 (the "Warrant Agreement")
between the Company and U.S. Trust, as warrant agent (the "Warrant Agent");
Warrant Registration Rights Agreement dated as of November 26, 1997 (the
"Warrant Registration Rights Agreement," and together with the Preferred Stock
Registration Rights Agreement, the "Registration Rights Agreements") between the
Company and the Warrant Agent; and
One or more certificates (the "Warrant Certificates," and together with the
Preferred Stock Certificates, the "Certificates") representing 100,000 warrants
(collectively, the "Warrants," and together with the Preferred Stock, the
"Securities"), each warrant to purchase 4 shares of common stock of the Company.
WHEREAS, on November 26, 1997 (the "Issue Date"), the Company sold to the
Initial Purchasers, and the Initial Purchasers purchased from the Company, the
Securities;
WHEREAS, the Company wishes to repurchase from the Initial Purchasers, and
the Initial Purchasers wish to sell to the Company, the Securities;
<PAGE>
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WHEREAS, holders of Preferred Stock are entitled to certain registration
rights under the Preferred Stock Registration Rights Agreement, and holders of
Warrants are entitled to certain registration rights under the Warrant
Registration Rights Agreement;
WHEREAS, upon consummation of the repurchase, U.S. Trust, on behalf of the
Company, will cancel the Securities, after which the Warrant Agreement and the
Registration Rights Agreements will terminate and no longer be in effect except
for provisions that expressly survive termination pursuant to their terms;
NOW, THEREFORE, for valid and full consideration, the receipt of which is
hereby acknowledged, the parties hereby agree as follows:
1. Representations and Warranties.
SBCWDR hereby represents and warrants that it is the sole beneficial owner
of 66,667 shares of Preferred Stock and 66,667 Warrants (collectively, the
"SBCWDR Securities"), with full power of disposition.
BTAB hereby represents and warrants that it is the sole beneficial owner of
33,333 shares Preferred Stock and 33,333 Warrants (collectively, the "BTAB
Securities"), with full power of disposition.
Neither the execution and delivery by the Company of this Agreement nor the
consummation of the repurchase of the Securities, as contemplated herein, does
or will violate, conflict with or constitute a breach of any of the terms or
provisions of, or result in a default under (or an event that with notice or the
lapse of time, or both, would constitute a default), or require consent under
(i) the charter or bylaws of the Company or any of the Company's subsidiaries,
or (ii) any obligation, agreement, covenant or condition contained in any bond,
debenture, note, indenture, mortgage, deed of trust, loan agreement, lease,
license, franchise agreement, authorization, permit, certificate or other
agreement or instrument to which any of them is a party or by which the Company
or any of its subsidiaries is bound or to which any of their assets or
properties is subject that, in the case of clause (ii), would have a material
adverse effect on the business, condition (financial or other), properties,
assets, liabilities or results of operations of the Company and its subsidiaries
taken as a whole.
Each party hereto represents and warrants that (i) the execution and
delivery of this Agreement and the performance of its obligations hereunder has
been duly authorized, (ii) this Agreement has been duly executed and delivered
and (iii) this Agreement constitutes the valid and legally binding agreement of
such party, enforceable in accordance with its terms, except as enforcement
thereof may be limited by bankruptcy, insolvency, reorganization, fraudulent
conveyance, moratorium or similar laws affecting the enforcement of creditors'
<PAGE>
-3-
rights generally and by general principles of equity and the discretion of the
court before which any proceedings therefor may be brought.
2. Purchase and Sale.
Subject to the condition in Section 3 hereof, the Company hereby agrees to
repurchase from SBCWDR, and SBCWDR agrees to sell to the Company, all of the
SBCWDR Securities at an aggregate purchase price of $6,880,556 in cash (the
"SBCWDR Securities Purchase Price").
Subject to the condition in Section 3 hereof, the Company hereby agrees to
repurchase from BTAB, and BTAB agrees to sell to the Company, all of the BTAB
Securities at an aggregate purchase price of $3,440,277 in cash (the "BTAB
Securities Purchase Price").
3. Condition.
The Company's obligation to repurchase the Securities shall be subject to
the prior or concurrent issuance and sale by the Company of 1,000,000 units,
each unit consisting of one share of common stock and one share of Series B
Preferred Stock of the Company, for aggregate gross proceeds of not less than
the sum of the SBCWDR Securities Purchase Price and BTAB Securities Purchase
Price pursuant to the Subscription Agreement dated as of February 20, 1998
between the Company and Co-Investment Partners, L.P.
4. Closing.
Subject to the satisfaction of the condition in Section 3, the closing of
the repurchases of Securities (the "Closing") shall take place on February 20,
1998 at 10:00 a.m., or such later date and time as the parties shall agree (such
date and time, the "Closing Date"), at the offices of Cahill Gordon & Reindel,
80 Pine Street, New York, New York, 10005. At the Closing, (i) the Company shall
wire transfer the SBCWDR Securities Purchase Price in immediately available
funds to an account specified in writing by SBCWDR, (ii) the Company shall wire
transfer the BTAB Securities Purchase Price in immediately available funds to an
account specified in writing by BTAB, (iii) the Initial Purchasers shall cause
the Securities to be withdrawn from The Depository Trust Company, (iv) U.S.
Trust, as registrar and transfer agent for the Preferred Stock, shall cancel the
Preferred Stock Certificates and deliver them to the Company on behalf of the
Initial Purchasers and (v) the Warrant Agent shall cancel the Warrant
Certificates and deliver them to the Company on behalf of the Initial
Purchasers.
5. Effect of Closing.
The parties hereto agree that, effective upon the Closing, (i) the Initial
Purchasers' rights as holders of Securities shall terminate, (ii) the Warrant
Agreement and the Registration Rights Agreements shall terminate and shall no
longer be in effect, except that provi-
<PAGE>
-4-
sions thereunder that specifically survive termination shall survive in
accordance with their terms, (iii) the Company shall be entitled to amend its
certificate of incorporation to remove the provisions incorporated therein under
the Certificate of Designations and (iv) the duties of U.S. Trust as registrar
and transfer agent for the Preferred Stock and as Warrant Agent shall cease.
6. Governing Law; Counterparts.
This Agreement shall be governed by and construed in accordance with the
laws of the State of New York, without regard to principles of conflicts of
laws. This Agreement may be executed in counterparts.
<PAGE>
-5-
IN WITNESS WHEREOF, each of the parties hereto has cause its duly
authorized officers to execute this Agreement as of the date first above
written.
SCOVILL HOLDINGS INC.
By: /s/ Martin A. Moore
----------------------------------
Name: Martin A. Moore
Title: Executive Vice President
SBC WARBURG DILLON READ INC.
By: /s/ Teresa Lin
----------------------------------
Name: Teresa Lin
Title: Executive Director
BT ALEX. BROWN INCORPORATED
By: /s/ Daniel D. McCready
----------------------------------
Name: Daniel D. McCready
Title: Managing Director
UNITED STATES TRUST COMPANY OF NEW YORK
By: /s/ James E. Logan
----------------------------------
Name: James E. Logan
Title: Vice President
