<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended April 30, 1996
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _____________________ to_______________________
Commission File Number: 0-23214
---------------------
SAMSONITE CORPORATION
----------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 36-3511556
- ------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
11200 East 45th Avenue, Denver, CO 80239
- ---------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
(303) 373-2000
--------------------------------------------------
(Registrant's telephone number, including area code)
-----------------------------------------
(Former name, if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months and (2) has been subject to such filing
requirements for the past 90 days.
X Yes No
--- ---
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Section 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.
X Yes No
--- ---
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date. 16,004,450 shares of common
stock, par value $0.01 per share, as of June 7, 1996.
<PAGE>
FORM 10-Q
CONTENTS
Page Number
-----------
PART I - FINANCIAL INFORMATION
Unaudited Consolidated Balance Sheets as of April 30, 1996
and January 31, 1996 . . . . . . . . . . . . . . . . . . . . . . 1
Unaudited Consolidated Statements of Operations for the three months
ended April 30, 1996 and 1995. . . . . . . . . . . . . . . . . . 3
Unaudited Consolidated Statements of Cash Flows for the three months
ended April 30, 1996 and 1995. . . . . . . . . . . . . . . . . . 4
Unaudited Notes to Consolidated Financial Statements . . . . . . 6
Management's Discussion and Analysis of Financial Condition
and Results of Operations. . . . . . . . . . . . . . . . . . . . 12
PART II - OTHER INFORMATION
Item 1: Legal Proceedings . . . . . . . . . . . . . . . . . . . 18
Item 2: Changes in Securities . . . . . . . . . . . . . . . . . 18
Item 3: Defaults upon Senior Securities . . . . . . . . . . . . 18
Item 4: Submission of Matters to a Vote of Security Holders . . 18
Item 5: Other Information . . . . . . . . . . . . . . . . . . . 18
Item 6: Exhibits and Reports on Form 8-K. . . . . . . . . . . . 18
Signature. . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Index to Exhibits. . . . . . . . . . . . . . . . . . . . . . . . 20
<PAGE>
SAMSONITE CORPORATION AND SUBSIDIARIES
UNAUDITED CONSOLIDATED BALANCE SHEETS
AS OF APRIL 30, 1996 AND JANUARY 31, 1996
(IN THOUSANDS)
<TABLE>
<CAPTION>
April 30, January 31,
1996 1996
--------- ---------
<S> <C> <C>
ASSETS:
Current assets:
Cash and cash equivalents. . . . . . . . . . . . . . $ 4,482 15,179
Trade receivables, net of allowances for
doubtful accounts of $8,357 and $8,152 . . . . . . 85,002 73,513
Notes and other receivables. . . . . . . . . . . . . 18,869 17,711
Inventories (Note 2) . . . . . . . . . . . . . . . . 123,432 115,736
Deferred income tax assets . . . . . . . . . . . . . 38,701 38,760
Prepaid expenses and other current assets. . . . . . 16,697 15,990
Assets held for sale . . . . . . . . . . . . . . . . 9,385 9,455
--------- ---------
Total current assets . . . . . . . . . . . . . . . 296,568 286,344
Property, plant and equipment - net (Note 3) . . . . . 139,571 140,912
Intangible assets, less accumulated amortization
of $187,247 and $171,278 (Note 4). . . . . . . . . . 143,473 159,492
Other assets and long-term receivables,
net of allowances for doubtful accounts
of $10,099 and $10,104 . . . . . . . . . . . . . . . 33,283 34,695
--------- ---------
$ 612,895 621,443
--------- ---------
--------- ---------
</TABLE>
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1
<PAGE>
SAMSONITE CORPORATION AND SUBSIDIARIES
UNAUDITED CONSOLIDATED BALANCE SHEETS
AS OF APRIL 30, 1996 AND JANUARY 31, 1996
(IN THOUSANDS, EXCEPT SHARE DATA)
(CONTINUED)
<TABLE>
<CAPTION>
April 30, January 31,
1996 1996
---------- ----------
LIABILITIES AND STOCKHOLDERS' EQUITY
<S> <C> <C>
Current liabilities:
Short-term debt (Note 5) . . . . . . . . . . . . . . . . . $ 21,225 23,487
Current installments of long-term obligations
(Note 5) . . . . . . . . . . . . . . . . . . . . . . . . 18,448 16,306
Accounts payable . . . . . . . . . . . . . . . . . . . . . 39,606 33,520
Other accrued liabilities. . . . . . . . . . . . . . . . . 110,891 113,512
---------- ----------
Total current liabilities. . . . . . . . . . . . . . . . 190,170 186,825
Long-term obligations, less current installments
(Note 5) . . . . . . . . . . . . . . . . . . . . . . . . . 285,008 294,653
Deferred income tax liabilities. . . . . . . . . . . . . . . 32,782 33,038
Other noncurrent liabilities . . . . . . . . . . . . . . . . 88,514 79,672
Minority interests . . . . . . . . . . . . . . . . . . . . . 3,138 2,139
---------- ----------
Total liabilities. . . . . . . . . . . . . . . . . . . . 599,612 596,327
---------- ----------
Stockholders' equity (Notes 7, 8 and 9):
Preferred stock ($.01 par value; 2,000,000
shares authorized; no shares issued) . . . . . . . . . . -- --
Common stock ($.01 par value; 60,000,000
shares authorized; 15,889,450 shares
issued and outstanding). . . . . . . . . . . . . . . . . 159 159
Additional paid-in capital . . . . . . . . . . . . . . . . 261,842 261,842
Accumulated deficit. . . . . . . . . . . . . . . . . . . . (235,349) (224,547)
Foreign currency translation equity adjustment . . . . . . (3,369) (2,338)
Note receivable. . . . . . . . . . . . . . . . . . . . . . (10,000) (10,000)
---------- ----------
Total stockholders' equity . . . . . . . . . . . . . . . 13,283 25,116
---------- ----------
Commitments and contingencies (Note 1C)
$ 612,895 $ 621,443
---------- ----------
---------- ----------
</TABLE>
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
2
<PAGE>
SAMSONITE CORPORATION AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED APRIL 30, 1996 AND 1995
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
Three Months Ended April 30,
----------------------------
1996 1995
--------- ---------
<S> <C> <C>
Net sales (Note 1F). . . . . . . . . . . . . . . . . . . . . $ 169,867 157,753
Cost of goods sold . . . . . . . . . . . . . . . . . . . . . 101,202 93,788
--------- ---------
Gross profit . . . . . . . . . . . . . . . . . . . . . . . 68,665 63,965
Selling, general and administrative expenses . . . . . . . . 53,405 50,461
Amortization of intangible assets. . . . . . . . . . . . . . 15,998 15,762
--------- ---------
Operating income (loss). . . . . . . . . . . . . . . . . . (738) (2,258)
Other income (expense):
Interest income. . . . . . . . . . . . . . . . . . . . . . 542 572
Interest expense and amortization of
issue costs of debt and premium. . . . . . . . . . . . . (9,110) (9,623)
Other - net (Note 6) . . . . . . . . . . . . . . . . . . . 1,792 (2,017)
--------- ---------
Loss before income taxes and minority
interest . . . . . . . . . . . . . . . . . . . . . . . . (7,514) (13,326)
Income tax benefit (expense) . . . . . . . . . . . . . . . . (2,997) 106
Minority interest in earnings of subsidiaries. . . . . . . . (291) (137)
--------- ---------
Net loss . . . . . . . . . . . . . . . . . . . . . . . . . (10,802) (13,357)
--------- ---------
--------- ---------
Net loss per share . . . . . . . . . . . . . . . . . . . . $ (.68) (.86)
--------- ---------
--------- ---------
</TABLE>
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
3
<PAGE>
SAMSONITE CORPORATION AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED APRIL 30, 1996 AND 1995
(IN THOUSANDS)
<TABLE>
<CAPTION>
Three Months Ended April 30,
----------------------------
1996 1995
--------- ---------
<S> <C> <C>
Cash flows from (used by) operating activities:
Net loss . . . . . . . . . . . . . . . . . . . . . . . . . $ (10,802) (13,357)
Adjustments to reconcile net loss to net cash
provided (used) by operating activities:
Loss (gain) on disposition of fixed assets . . . . . . . (14) (12)
Depreciation and amortization of property,
plant and equipment. . . . . . . . . . . . . . . . . . 5,170 5,133
Amortization of intangible assets. . . . . . . . . . . . 15,998 15,762
Amortization of debt issue costs and premium . . . . . . 483 (138)
Provision for doubtful accounts. . . . . . . . . . . . . 676 206
Changes in operating assets and liabilities:
Trade and other receivables. . . . . . . . . . . . . . (13,293) (7,801)
Inventories. . . . . . . . . . . . . . . . . . . . . . (7,696) (14,915)
Prepaid expenses and other current assets. . . . . . . (637) 420
Accounts payable . . . . . . . . . . . . . . . . . . . 6,086 (1,187)
Accrued expenses . . . . . . . . . . . . . . . . . . . (2,621) 6,938
Other - net. . . . . . . . . . . . . . . . . . . . . . 2,701 (231)
--------- ---------
Net cash provided (used) by operating
activities before reorganization items . . . . . . . . . (3,949) (9,182)
Operating cash flows from (used for)
reorganization items:
Professional fees paid for services. . . . . . . . . . . -- (10)
Other reorganization items . . . . . . . . . . . . . . . -- (595)
--------- ---------
Net cash provided (used) by operating
activities . . . . . . . . . . . . . . . . . . . . . . $ (3,949) (9,787)
--------- ---------
--------- ---------
</TABLE>
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
4
<PAGE>
SAMSONITE CORPORATION AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED APRIL 30, 1996 AND 1995
(IN THOUSANDS)
(CONTINUED)
<TABLE>
<CAPTION>
Three Months Ended April 30,
----------------------------
1996 1995
------- -------
<S> <C> <C>
Cash flows from (used by) investing activities:
Purchases of property, plant and equipment . . . . . . . . $(6,259) (6,171)
Net cash from (used by) discontinued operations. . . . . . 7,176 (5,971)
Proceeds received from sales of property,
plant and equipment. . . . . . . . . . . . . . . . . . . 144 35
------- -------
Net cash provided (used) by investing activities . . . . 1,061 (12,107)
------- -------
Cash flows from financing activities:
Net proceeds from (repayment of) short-term debt . . . . . (2,262) 6,054
Payments on long-term debt . . . . . . . . . . . . . . . . (5,716) (20,120)
Other. . . . . . . . . . . . . . . . . . . . . . . . . . . 1,016 --
------- -------
Net cash used in financing activities. . . . . . . . . . (6,962) (14,066)
------- -------
Effect of exchange rate changes on cash
and cash equivalents . . . . . . . . . . . . . . . . . . . (847) 986
------- -------
Net increase (decrease) in cash and
cash equivalents . . . . . . . . . . . . . . . . . . . (10,697) (34,974)
Cash and cash equivalents, beginning of period . . . . . . . 15,179 49,814
------- -------
Cash and cash equivalents, end of period . . . . . . . . . . $ 4,482 14,840
------- -------
------- -------
Supplemental disclosures of cash flow information:
Cash paid during the period for interest . . . . . . . . . $ 2,136 4,468
------- -------
------- -------
Cash paid during the period for income taxes . . . . . . . $ 3,732 3,880
------- -------
------- -------
</TABLE>
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
5
<PAGE>
SAMSONITE CORPORATION AND SUBSIDIARIES
UNAUDITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. GENERAL
A. BUSINESS
Samsonite Corporation and Subsidiaries (the "Company") was formerly known as
Astrum International Corp. ("Astrum"). On July 14, 1995, Astrum merged with
its wholly-owned subsidiary, Samsonite Corporation, and changed its name to
Samsonite Corporation. The Company is engaged in the manufacture and sale
of luggage and related products throughout the world, primarily under the
Samsonite, American Tourister, and Lark brand names. The principal
customers of the Company are department/specialty retail stores, mass
merchants, catalog showrooms and warehouse clubs. The Company's retail
sales consist primarily of American Tourister products sold through Company
owned stores.
B. BASIS OF PRESENTATION
On May 25, 1993, the United States Bankruptcy Court for the Southern
District of New York confirmed the Amended Plan of Reorganization (the
"Plan"), for Astrum. Pursuant to the terms of the Plan, which became
effective on June 8, 1993, Astrum completed a comprehensive financial
reorganization which reduced debt and annual interest expense (the
"Restructuring").
The Restructuring has been accounted for pursuant to the American Institute
of Certified Public Accountants Statement of Position 90-7, entitled
"Financial Reporting by Entities in Reorganization Under the Bankruptcy
Code" ("SOP 90-7"). SOP 90-7 requires that assets and liabilities be
adjusted to their fair values ("fresh-start" values) and that a new
reporting entity be created. On June 30, 1993, for accounting purposes, the
Plan was consummated and SOP 90-7 was adopted. The consolidated financial
statements include the ongoing impact of fresh-start reporting.
C. INTERIM FINANCIAL STATEMENTS
The accompanying unaudited consolidated financial statements reflect all
adjustments, which are normal and recurring in nature, and which, in the
opinion of management, are necessary to a fair statement of the financial
position and results of operations as of and for the three months ended
April 30, 1996 and 1995. These consolidated financial statements and
related footnotes should be read in conjunction with the consolidated
financial statements and related footnotes included in the Company's Annual
Report on Form 10-K for the fiscal year ended January 31, 1996.
See Note 14 to the aforementioned consolidated financial statements included
in the 1996 Form 10-K for a description of litigation, commitments and
contingencies.
D. USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amount of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
E. PER SHARE DATA
Loss per share is calculated based on the weighted average number of shares
outstanding during the period. The weighted average number of shares
outstanding during the three months ended April 30, 1996 and 1995 was
15,889,450 and 15,549,981, respectively.
6
<PAGE>
SAMSONITE CORPORATION AND SUBSIDIARIES
UNAUDITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
F. ROYALTY REVENUES
The Company licenses its brand names to certain unrelated third parties as
well as certain foreign subsidiaries and joint ventures. Net sales include
royalties earned of $8,329,000 and $4,695,000 for the three months ended
April 30, 1996 and 1995, respectively. Included in royalties for the three
months ended April 30, 1996 is $3.9 million from the sale of apparel
tradename licenses in certain Pacific Rim countries.
<TABLE>
<CAPTION>
2. INVENTORIES
Inventories consisted of the following :
April 30, January 31,
1996 1996
-------- ----------
(In thousands)
<S> <C> <C>
Raw Materials. . . . . . . . . . . . $ 35,089 35,827
Work in Process. . . . . . . . . . . 11,020 10,959
Finished Goods . . . . . . . . . . . 77,323 68,950
-------- -------
$123,432 115,736
-------- -------
-------- -------
3. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consisted of the following:
April 30, January 31,
1996 1996
-------- ----------
(In thousands)
Land . . . . . . . . . . . . . . . . $ 14,181 14,172
Buildings. . . . . . . . . . . . . . 61,707 62,281
Machinery, equipment and other . . . 108,838 106,511
-------- -------
184,726 182,964
Less accumulated amortization and. . (45,155) (42,052)
-------- -------
$139,571 140,912
-------- -------
-------- -------
</TABLE>
Depreciation included in cost of goods sold and selling, general and
administrative expenses related to adjustments of assets and liabilities
to fair value in connection with the adoption of SOP 90-7 consisted of
the following (in thousands):
<TABLE>
<CAPTION>
Three months ended
April 30, 1996
------------------
<S> <C>
"Fresh Start" Depreciation in Cost of Goods Sold. . . . $ 737
"Fresh Start" Depreciation in Selling, General and
Administrative Expenses . . . . . . . . . . . . . . . 163
----
Total "Fresh Start" Depreciation . . . . . . . . . $ 900
----
----
</TABLE>
Property and equipment revalued in connection with the adoption of SOP 90-7
are being depreciated over their respective estimated useful lives,
primarily ranging from two to six years.
7
<PAGE>
SAMSONITE CORPORATION AND SUBSIDIARIES
UNAUDITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
<TABLE>
<CAPTION>
4. INTANGIBLE ASSETS
Intangible assets, net of accumulated amortization, consisted of the
following:
April 30, January 31,
1996 1996
-------- ----------
(In thousands)
<S> <C> <C>
Reorganization value in excess of identifiable
assets . . . . . . . . . . . . . . . . . . . . . $ 9,179 22,947
Trademarks . . . . . . . . . . . . . . . . . . . . 118,622 119,549
Licenses, Patents and Other. . . . . . . . . . . . 15,672 16,996
-------- --------
$143,473 159,492
-------- --------
-------- --------
</TABLE>
<TABLE>
<CAPTION>
Amortization of intangible assets consisted of the following
(in thousands):
Three Months Ended
April 30, 1996
------------------
<S> <C>
Amortization of Reorganization Value in
Excess of Identifiable Assets. . . . . . . . . . $ 13,768
Amortization of Licenses, Patents and Other. . . . 1,302
Amortization of Trademarks . . . . . . . . . . . . 928
--------
$ 15,998
--------
--------
</TABLE>
"Fresh Start" amortization represents the expense arising from the adoption
of "fresh start" accounting in accordance with SOP 90-7. The
reorganization value in excess of identifiable assets is amortized over a
three year period; licenses, patents and other are amortized over a period
ranging from one to twenty-three years, and trademarks are amortized over a
period ranging from five to forty years.
<TABLE>
<CAPTION>
5. DEBT
Debt consisted of the following:
April 30, January 31,
1996 1996
-------- ----------
(In thousands)
<S> <C> <C>
Series B Senior Subordinated Notes (a) . . . . . . $190,000 190,000
Senior Credit Facility (b) . . . . . . . . . . . . 60,000 58,000
Short-term obligations expected to be
refinanced . . . . . . . . . . . . . . . . . . . 11,419 11,394
Capital lease obligations. . . . . . . . . . . . . 4,932 4,665
Other (c). . . . . . . . . . . . . . . . . . . . . 58,330 70,387
-------- --------
Total debt . . . . . . . . . . . . . . . . . . . 324,681 334,446
Less short-term debt and current installments
of long-term obligations . . . . . . . . . . . . (39,673) (39,793)
-------- --------
$285,008 294,653
-------- --------
-------- --------
</TABLE>
8
<PAGE>
SAMSONITE CORPORATION AND SUBSIDIARIES
UNAUDITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(a) The Series B Senior Subordinated Notes bear interest at 11 1/8% and
have a maturity date of July 15, 2005.
(b) The Senior Credit Facility provides for a $50 million term loan and a
$175 million revolving credit facility. The credit facility matures
July 14, 2000.
The following amounts were outstanding at April 30, 1996 under the
Senior Credit Facility:
Term Loan $50 million
Revolving Credit Borrowings $10 million
Letters of Credit $60.8 million
Available borrowings were $104.2 million at April 30, 1996.
The Senior Credit Facility is secured by substantially all the
Company's U.S. assets, the capital stock of its principal domestic
subsidiaries, and 66% of the stock of its principal foreign
subsidiaries. The agreement contains financial covenants which
require the Company to maintain certain financial ratios and minimum
amounts of earnings, exclusive of interest, taxes, and non-cash
charges. The agreement also contains covenants limiting the amount of
capital expenditures, investments in certain subsidiaries, and
dividends, among other restrictions. Under the agreement, the Company
has no amount available for the payment of dividends at April 30,
1996. The Company is in compliance with the terms of such covenants
at April 30, 1996.
(c) Other obligations consist of various notes payable to banks by foreign
subsidiaries aggregating $52.7 million and a $5.6 secured financing
arrangement with a foreign bank. Included in letters of credit
outstanding is a $50.3 million standby letter of credit issued to
secure the debt of foreign subsidiaries.
6. OTHER INCOME (EXPENSE) - NET
Other income (expense) - net consisted of the following:
<TABLE>
<CAPTION>
Three Months Ended April 30,
---------------------------
1996 1995
---------------------------
(In thousands)
<S> <C> <C>
Foreign currency transaction income (losses). . . . . . $1,455 (2,283)
Rental income . . . . . . . . . . . . . . . . . . . . . 394 384
Other . . . . . . . . . . . . . . . . . . . . . . . . . (57) (118)
------ ------
$1,792 (2,017)
------ ------
------ ------
</TABLE>
Foreign currency transaction income for the three months ended April 30,
1996 includes $1,132,000 of unrealized exchange gains related to open
forward exchange contracts entered into to reduce foreign currency exposure
on certain foreign operations.
7. NOTE RECEIVABLE
The note receivable deducted from stockholders' equity at April 30, 1996
arises from the sale of 425,532 shares of the Company's common stock to the
Company's former Chairman and Chief Executive Officer in April 1995 for
$23.50 per share. The note bears interest at 8 1/8% per annum. The note
is due April 13, 2000.
9
<PAGE>
SAMSONITE CORPORATION AND SUBSIDIARIES
UNAUDITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
8. 1995 STOCK OPTION AND INCENTIVE AWARD PLAN
During the three months ended April 30, 1996, options for 541,152 shares
were granted under the 1995 Stock Option and Incentive Award Plan at option
prices ranging from $10.875 to $13.875 per share, which prices were at or
above market value at the date of the grant. The options have a six-year
term and vest over a four-year period from the date of the grant.
9. SUBSEQUENT EVENTS
Effective May 15, 1996, the employment of Mr. Green as Chairman of the
Board, Chief Executive Officer and President ceased, and he was succeeded
as Chief Executive Officer and President by Richard R. Nicolosi. Mr. Green
resigned as a Director of the Company effective May 21, 1996. The Company
will charge to expense in the second quarter of fiscal 1997 approximately
$2.6 million related to the cessation of Mr. Green's employment and
retention of Mr. Nicolosi.
The Company has granted Mr. Nicolosi options to purchase 425,532 shares of
Common Stock at an exercise price of $18.25 per share (subject to customary
antidilution adjustments). Options to purchase 186,170 shares of Common
Stock (the "Series A Options") are time-vesting options and options to
purchase 239,362 shares of Common Stock (the "Series B Options") are
subject to certain performance requirements with respect to vesting. The
options have a five year term. Fifty percent (50%) of the Series A Options
will vest on May 15, 1997 and the remaining fifty percent (50%) will vest
on May 15, 1998, so long as Mr. Nicolosi remains continually employed by
the Company through such date. All of the Series B Options shall vest on
April 15, 2001, so long as he remains continually employed by the Company
through April 15, 2001, subject to accelerated, performance-based vesting
as follows. The Series B Options will vest on May 15, 1998 if Mr. Nicolosi
remains continually employed by the Company through such date and the
average fair market value of the Common Stock equals or exceeds $30.00 per
share in any period of 30 consecutive days prior to May 15, 1998.
Notwithstanding the foregoing, if a change of control event occurs prior to
May 15, 1998, (i) all of the Series A Options will automatically vest and
(ii) all of the Series B Options will vest if Mr. Nicolosi remains
continually employed by the Company through the date of such event and
either the average fair market value of the Common Stock in any period of
30 consecutive days prior to such event or the fair market value of the
Common Stock as of the date of such event, equals or exceeds $30.00 per
share.
Also in connection with the performance by Mr. Nicolosi of services
pursuant to his employment, the Company issued to Mr. Nicolosi 60,000
shares of restricted Common Stock (the "Restricted Shares"). Fifty percent
(50%) of the Restricted Shares will vest on May 15, 1997 and the remaining
fifty percent (50%) will vest on May 15, 1998; PROVIDED that if a change of
control event occurs and Mr. Nicolosi remains continually employed by the
Company through the date of such event, then all Restricted Shares that
have not vested will become vested as of the date of such event. The
Company will recognize compensation expense for the fair market value of
the shares at the date of grant over the two-year vesting period.
On June 6, 1996, the Company sold and issued to Mr. Nicolosi 55,000 shares
of Common Stock at a purchase price of $18.25 per share, or an aggregate
purchase price of $1,003,750.
Effective as of May 15, 1996, the Company entered into agreements with
three executive officers to provide stock bonuses to each of them of 38,889
shares of common stock, payable if the executive remains continually
employed by the Company through the earlier of May 15, 1999 or one year
after a change of control event. The Company will recognize compensation
expense equal to the fair market value of the shares at May 15, 1996
($18.25 per share) over the three year vesting period.
10
<PAGE>
SAMSONITE CORPORATION AND SUBSIDIARIES
UNAUDITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
10. ADOPTION OF RECENTLY ISSUED ACCOUNTING STANDARDS
In March 1995, the Financial Accounting Standards Board ("FASB") issued
Statement No. 121, ACCOUNTING FOR THE IMPAIRMENT OF LONG-LIVED ASSETS AND
FOR LONG-LIVED ASSETS TO BE DISPOSED OF ("Statement 121"), which requires
impairment losses to be recorded on long-lived assets used in operations
when indicators of impairment are present and the undiscounted cash flows
estimated to be generated by those assets are less than the assets'
carrying amount. Statement 121 also addresses the accounting for long-
lived assets that are expected to be disposed of. The Company adopted
Statement 121 in the first quarter of fiscal 1997. Such adoption had no
effect on the consolidated financial statements.
In October 1995, the FASB issued Statement No. 123, ACCOUNTING FOR STOCK-
BASED COMPENSATION ("Statement 123"), which provides an alternative to APB
Opinion No. 25, ACCOUNTING FOR STOCK ISSUED TO EMPLOYEES, in accounting for
stock-based compensation issued to employees. The Statement allows for a
fair value based method of accounting for employee stock options and
similar equity instruments. However, for companies that continue to
account for stock-based compensation arrangements under Opinion No. 25,
Statement 123 requires disclosure of the pro forma effect on net income and
earnings per share of its fair value based accounting for those
arrangements. The Company has elected not to adopt the recognition and
measurement provisions of the Statement; however, the required disclosures
will be provided for its fiscal year ended January 31, 1997.
11
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
EFFECTS OF REORGANIZATION AND RESTRUCTURING ON RESULTS OF OPERATIONS
Included in the Company's statements of operations are amortization and
depreciation expenses related to adjustments of assets and liabilities to fair
value in connection with the adoption of SOP 90-7. As a result of the
bankruptcy reorganization of the Company's predecessor in 1993, the Company was
required to adjust its assets and liabilities to their fair ("fresh start")
values and create a new entity for financial reporting purposes. The most
significant fresh start adjustment relates to recording Reorganization Value in
Excess of Identifiable Assets, which is being amortized over a three year period
ending in June of 1996. In addition, the Company recorded fresh start
adjustments to reflect trade names, licenses, patents and other intangibles at
their fair values, which are being amortized over periods ranging from one to
forty years. Property and equipment adjusted to fair values in connection with
the adoption of SOP 90-7 is being depreciated over their respective estimated
useful lives, primarily ranging from two to six years.
The effects of the amortization and depreciation of the fresh start adjustments
("Fresh Start Amortization and Depreciation") on the operating loss is
summarized as follows:
<TABLE>
<CAPTION>
THREE MONTHS ENDED APRIL 30,
----------------------------
1996 1995
---- ----
(In thousands)
<S> <C> <C>
Operating loss . . . . . . . . . . . . . . . . . . . . . . . $ (738) (2,258)
Fresh Start Amortization and Depreciation. . . . . . . . . . 16,662 16,609
-------- --------
Operating income before Fresh Start
Amortization and Depreciation. . . . . . . . . . . . . . . $ 15,924 14,351
-------- --------
-------- --------
</TABLE>
Fresh Start Amortization and Depreciation consisted of the following:
<TABLE>
<CAPTION>
THREE MONTHS ENDED APRIL 30,
----------------------------
1996 1995
---- ----
(In thousands)
<S> <C> <C>
Fresh Start Amortization:
Amortization of Reorganization Value in
Excess of Identifiable Assets. . . . . . . . . . . . . . $ 13,768 13,768
Amortization of Licenses, Patents, and Other . . . . . . . 1,224 1,316
Amortization of Trademarks . . . . . . . . . . . . . . . . 770 640
-------- --------
Total Fresh Start Amortization . . . . . . . . . . . . . 15,762 15,724
-------- --------
Fresh Start Depreciation:
Fresh Start Depreciation in Cost of Goods Sold . . . . . . 737 724
Fresh Start Depreciation in Selling, General
and Administrative Expenses. . . . . . . . . . . . . . . 163 161
-------- --------
Total Fresh Start Depreciation . . . . . . . . . . . . . 900 885
-------- --------
Fresh Start Amortization and Depreciation. . . . . . . . . . $ 16,662 16,609
-------- --------
-------- --------
</TABLE>
12
<PAGE>
The impact of the Fresh Start amortization and depreciation on Net Loss and Net
Loss Per Share are summarized as follows:
<TABLE>
<CAPTION>
THREE MONTHS ENDED APRIL 30,
---------------------------
1996 1995
---- ----
(In thousands)
<S> <C> <C>
Fresh Start Amortization and Depreciation. . . . . . . . . . $ 16,662 16,609
Tax Benefit. . . . . . . . . . . . . . . . . . . . . . . . . (1,187) (1,165)
-------- --------
After-Tax Impact on Net Loss . . . . . . . . . . . . . . . . 15,475 15,444
-------- --------
-------- --------
Impact on Net Loss Per Share . . . . . . . . . . . . . . . . $ .97 .99
-------- --------
-------- --------
</TABLE>
RESULTS OF OPERATIONS
THREE MONTHS ENDED APRIL 30, 1996 ("FIRST QUARTER OF FISCAL 1997" OR "CURRENT
YEAR") COMPARED TO THREE MONTHS ENDED APRIL 30, 1995 ("FIRST QUARTER OF FISCAL
1996" OR "LAST YEAR")
GENERAL. The Company analyzes its sales and operations by the following
categories: (1) "European operations" which consist of its western European
manufacturing and distribution operations whose functional currency is the
Belgian franc, (2) "U.S. operations" which includes sales within the U.S. from
the Samsonite and American Tourister manufacturing and distribution operations
and (3) "International operations" which include exports from the U.S.,
manufacturing and distribution operations in countries with operations which are
smaller in size compared to the U.S. and Europe (primarily Canada and Mexico),
and global licensing operations.
Results of European operations were translated from Belgian francs to U.S.
dollars for the three months ended March 31, 1996 and 1995 at average rates of
approximately 30.24 and 30.35 francs to the U.S. dollar, respectively. Thus,
the effect of exchange rate changes from the first quarter of fiscal 1996 to the
first quarter of fiscal 1997 did not result in significant changes in reported
sales, cost of sales, and other expenses resulting from the effect of changes in
the exchange rate from one year to the next.
NET SALES. Total net sales increased to $169.9 million for the first quarter of
fiscal 1997 from $157.8 million for the first quarter of fiscal 1996, an
increase of $12.1 million or 7.7%.
Sales from the European operations increased from $64.3 million last year to
$67.3 million in the current year, an increase of $3.0 million or 4.7%. The
increase in sales is attributable to what the Company believes is increased
market share despite a generally weak level of consumer demand throughout
Europe.
U.S. operations sales increased from $73.8 million last year to $79.3 million in
the current year, an increase of $5.5 million or 7.5%. The increase is due to
continued market acceptance of new product lines introduced in the last six
months of fiscal 1996 and a $2.7 million increase in American Tourister retail
sales. Additionally, sales for the first quarter of last year were depressed
because of delays in product introductions and competition from low priced
foreign products.
Sales from the International operations increased from $19.7 million last year
to $23.2 million in the current year, an increase of $3.5 million or 17.8%. Of
the change in revenues from last year, $3.9 million is due to revenue from the
sale of McGregor apparel tradenames in certain Pacific Rim countries in the
first quarter of fiscal 1997.
GROSS PROFIT. Overall gross profit for the first quarter of 1997 increased from
last year by $4.7 million. Gross margin decreased by 0.1 percentage point from
the same period last year.
13
<PAGE>
Gross margins from European operations increased from last year due to price
increases in selected product lines, declining materials costs, and negative
productivity variances last year.
Margins from U.S. operations decreased from last year primarily due to lower
margins on certain fast selling new product lines, an increase in sales of
obsolete goods at low margins, negative productivity variances caused by the
startup of production of new hardside products in Denver, and a $0.7 million
customer credit given on certain American Tourister export sales which were
defective.
Gross margin percentages from International operations, excluding the effect of
the aforementioned sale of licenses, decreased from the first quarter of 1996
for the same reasons given for the decline in U.S. margins.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES ("SG&A"). Consolidated SG&A
increased by $2.9 million from the first quarter of fiscal 1996 to the first
quarter of fiscal 1997. As a percent of sales, SG&A was 31.44% in the current
year and 31.99% last year.
European operations SG&A increased due to increases in advertising expenses;
increases in salaries and employee benefits due to staff additions and increases
in group insurance premiums and the impact of credits in the prior year of a
reversal of termination benefits accruals; an increase in the provision for
doubtful accounts due to financial difficulties of certain customers and a
reversal of certain bad debt accruals made in the first quarter of last year;
and changes in several other expense categories.
U.S. advertising expenses decreased from last year. Other selling and
administrative expenses increased from last year, primarily due to increases in
American Tourister expenses from additional retail store openings and sales
volume growth.
SG&A for the International operations increased primarily due to the expenses
incurred in new foreign operations in Singapore and India.
AMORTIZATION OF INTANGIBLES. The Company has recorded significant intangible
assets as a result of the reorganization in 1993. See the comparative analysis
of amortization of intangibles included elsewhere herein.
The reorganization value in excess of identifiable assets recorded upon the
reorganization has a remaining recorded amount of $9.2 million at April 30,
1996, which will be fully amortized by June 30, 1996.
OPERATING LOSS. The operating loss decreased by $1.5 million from last year
primarily as a result of the increases in revenues and resulting increase in
gross profit of $4.7 million which was offset by increases in SG&A and
amortization of intangible assets of $3.2 million.
INTEREST INCOME. Interest income results from temporary investments of cash on
hand and is consistent with last year.
INTEREST EXPENSE AND AMORTIZATION OF PREMIUM AND DEBT ISSUE COSTS. Interest
expense decreased from $9.6 million last year to $9.1 million this year due to
lower levels of outstanding indebtedness in the first quarter of fiscal 1997.
OTHER-NET. See Note 6 to the consolidated financial statements for a
comparative analysis of other income (expense). The Company has entered into
certain forward exchange contracts to hedge its exposure to changes in exchange
rates. Other income for the three months ended April 30, 1996 includes income
from foreign currency transactions of $1.5 million, $1.1 million of which is
unrealized at April 30, 1996. The realization of such income is subject to
changes in exchange rates until the settlement dates of the forward exchange
contracts. In the first quarter of fiscal 1996, such foreign exchange
transactions resulted in a loss of $2.3 million.
14
<PAGE>
INCOME TAX EXPENSE. Income taxes increased from a benefit of $0.1 million last
year to an expense of $3.0 million in the current year. The increase in tax
expense is due to the decrease in the pre-tax loss of $5.8 million and the
amounts of pre-tax earnings from European operations in the current year versus
last year. Although the Company incurred losses in both the current and prior
fiscal years, the relationship between income tax expense or benefit differs
from that expected by applying the U.S. statutory tax rate to pre-tax losses
because of (i) the nondeductibility for tax purposes of amortization of
reorganization value in excess of identifiable assets, (ii) foreign income tax
expense provided on foreign earnings, and (iii) state income taxes.
NET LOSS. The net loss decreased from $13.4 million last year to $10.8 million
this year, a decrease of $2.6 million. The decrease in the net loss is caused
by the total of the decreases in operating losses, interest expense, and other
expenses, which were partly offset by the increase in income tax expense.
15
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
One measure of liquidity is commonly referred to as Operating Cash Flow.
Operating Cash Flow is defined as operating income adjusted for noncash
operating expenses, including amortization and depreciation. The Company
believes that Operating Cash Flow provides useful information regarding the
Company's ability to incur and service debt, but that it should not be
considered a substitute for operating income or cash flow from operations
determined in accordance with generally accepted accounting principles.
Operating Cash Flow does not take into consideration substantial costs of doing
business, such as interest expense, and should not be considered in isolation to
other measures of performance. Operating Cash Flow for the first quarters of
fiscal 1997 and 1996 was computed as follows:
<TABLE>
<CAPTION>
THREE MONTHS ENDED APRIL 30,
---------------------------
1996 1995
---- ----
(In thousands)
<S> <C> <C>
Operating loss . . . . . . . . . . . . . . . . . . . . . . . $ (738) (2,258)
Fresh Start Amortization and Depreciation. . . . . . . . . . 16,662 16,609
------- -------
Operating income before Fresh Start Amortization
and Depreciation . . . . . . . . . . . . . . . . . . . . . 15,924 14,351
Other Amortization and Depreciation. . . . . . . . . . . . . 4,506 4,286
------- -------
Operating Cash Flow. . . . . . . . . . . . . . . . . . . . . $20,430 18,637
------- -------
------- -------
</TABLE>
Operating cash flow increased by $1.8 million from last year, primarily as a
result of the decrease in operating losses discussed elsewhere herein. The
Company believes that the current level of Operating Cash Flow is adequate to
support its existing credit facilities and service the Company's Series B Senior
Subordinated Notes and other long-term obligations.
Another measure of liquidity is net cash provided by operating activities, as
reflected in the Consolidated Statements of Cash Flows included elsewhere
herein. Net cash used by operating activities of $3.9 million in the first
quarter 1997 and $9.8 million in the first quarter of 1996, reflects net cash
used by operations of the Company after taking into consideration the
substantial costs of doing business not reflected in Operating Cash Flow.
Cash flows used in operations decreased from $9.8 million in the first quarter
of fiscal 1996 to $3.9 million in the first quarter of fiscal 1997, a decrease
of $5.9 million. Of this amount, $2.7 million resulted from a reduction of cash
flow applied to increase working capital and other operating assets, while cash
flows provided by operations, adjusted for nonoperating and noncash charges,
increased by $3.1 million from last year.
Cash flow provided by (used in) investing activities increased by $13.2 million,
from $(12.1) million last year to $1.1 million in the current year, primarily
because of an increase in cash provided by discontinued operations of $13.1
million. Cash flow provided from discontinued operations in the current year
resulted from the collection of accounts receivable related to the discontinued
apparel business. Capital expenditures were $6.3 million and $6.2 million in
the first quarter of fiscal 1997 and the first quarter of fiscal 1996,
respectively. Capital expenditures are made to improve facilities and equipment
in order to manufacture new product lines, increase manufacturing efficiencies,
and enhance the Company's competitiveness and profitability on a worldwide
basis.
Cash flows used in financing activities decreased from $14.1 million in the
first quarter of fiscal 1996 to $7.0 million in the first quarter of fiscal
1997, a decrease of $7.1 million. Net short and long-term borrowings were
reduced by $8.0 million in the current year compared to a reduction last year of
$14.1 million.
16
<PAGE>
At April 30, 1996, the Company had working capital of $106.4 million compared to
$99.5 million at January 31, 1996, an increase of $6.9 million. Current assets
increased by $10.2 million due to an increase of $19.2 million in accounts
receivable and inventory and a net decrease in cash and other current assets of
$9.0 million. The increase in accounts receivable and inventories is cyclical
due to spring and summer sales.
The Company's cash flow from operations together with amounts available under
its credit facilities were sufficient to fund its first quarter 1997 operations,
scheduled payments of principal and interest on indebtedness, and capital
expenditures. At April 30, 1996, the Company had $104.2 million available under
its Senior Credit Facility. Management of the Company believes that cash flow
from operations and available borrowings under its credit facilities and new
credit facilities in emerging markets will be adequate to fund operating
requirements and expansion plans during the next 12 months. In addition,
management currently believes the Company will be able to meet long-term cash
flow obligations from cash provided by operations and other existing resources.
The Company's principal foreign operations are located in Western Europe, the
economies of which are not considered to be highly inflationary. When
appropriate, the Company will enter into foreign exchange contracts in order to
hedge its exposure on certain foreign operations primarily through the use of
forward delivery commitments. During the past several years, the Company's most
effective hedge against foreign currency changes has been the foreign currency
denominated debt balances maintained in respect to its foreign operations.
Geographic concentrations of credit risk with respect to trade receivables are
not significant as a result of the diverse geographic areas covered by the
Company's operations.
17
<PAGE>
SAMSONITE CORPORATION
PART II - OTHER INFORMATION
Item I - LEGAL PROCEEDINGS
Reference is made to Note 14 to the Consolidated Financial Statements included
in the Company's Form 10-K Annual Report for the fiscal year ended January 31,
1996 which describes litigation, commitments, and contingencies.
The Company and certain of its subsidiaries are subject to or are defendants in
various other claims and actions arising in the ordinary course of business.
While it is not possible to predict the outcome of such other claims or actions,
it is management's opinion that, after discussion with counsel, the ultimate
disposition of these other claims and actions will not have a material adverse
effect on the Company's consolidated financial position.
Item 2 - CHANGES IN SECURITIES
None.
Item 3 - DEFAULTS UPON SENIOR SECURITIES
None.
Item 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
Item 5 - OTHER INFORMATION
None.
Item 6 - EXHIBITS AND REPORTS ON FORM 8-K
(a) See Exhibit Index.
(b) Form 8-K dated February 5, 1996.
Item 5. Other Events - Restructuring of American Tourister division.
18
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
SAMSONITE CORPORATION
(REGISTRANT)
BY /s/ Thomas R. Sandler
------------------------------------------
Name: Thomas R. Sandler
Title: Chief Financial Officer, Secretary
and Treasurer
Date: June 13, 1996
------------------------
19
<PAGE>
INDEX TO EXHIBITS
EXHIBIT DESCRIPTION
- ------- -----------
3.1 Amended and Restated Certificate of Incorporation of the Company.(1)
3.2 Certificate of Ownership and Merger dated July 14, 1995.(2)
3.3 By-Laws of the Company.(1)
4.1 Indenture, dated as of July 14, 1995, between the Company and United
States Trust Company of New York.(2)
4.2 Registration Rights Agreement dated July 14, 1995, by and among the
Company, Donaldson, Lufkin & Jenrette Securities Corporation, and
Bear, Sterns & Co., Inc.(2)
4.3 Specimen of Notes described in the Indenture.(2)
10.1 Second Amendment, dated as of April 30, 1996, to Credit Agreement,
dated July 14, 1995, among the Company and the Banks named therein
(excluding schedules and exhibits thereto).
10.2 Employment Agreement, dated as of May 15, 1996, between the Company
and Richard R. Nicolosi.
10.3 Registration Rights Agreement, dated as of May 15, 1996, between the
Company and Richard R. Nicolosi.
10.4 Stock Sale Agreement, dated as of May 16, 1996, between the Company
and Richard R. Nicolosi.
10.5 Form of agreement made as of May 15, 1996, between the Company and
each of Tom Leonard, Luc Van Nevel, and Tom Sandler, each agreement
with respect to 38,889 shares of the Common Stock of the Company, par
value $.01 per share.
10.6 Form of Option Agreement for awards under the Samsonite Corporation
1995 Stock Option and Incentive Award Plan (as amended in 1996).(3)
10.7 Stock Option Agreement, dated as of February 20, 1996, between the
Company and Thomas J. Leonard.(4)
10.8 Stock Option Agreement, dated as of February 20, 1996, between the
Company and Thomas R. Sandler.(4)
10.9 Stock Option Agreement, dated as of February 20, 1996, between the
Company and Frank D. Steed.(4)
10.10 Stock Option Agreement, dated as of February 20, 1996, between the
Company and Luc Van Nevel.(4)
20
<PAGE>
INDEX TO EXHIBITS
EXHIBIT DESCRIPTION
- ------- -----------
10.11 Stock Option Agreement, dated as of February 20, 1996, between the
Company and Karlheinz Tretter.(4)
10.12 Stock Option Agreement, dated as of May 15, 1996, between the Company
and Richard R. Nicolosi.(3)
21 Subsidiaries of the Company.
- ---------------
(1) Incorporated by reference from the Company's Annual Report on Form 10-K for
the fiscal year ended January 31, 1996 (File No. 0-23214).
(2) Incorporated by reference from the Registration Statement on Form S-4
(Registration No. 33-95642).
(3) Incorporated by reference from the Company's Registration Statement on Form
S-8 filed June 7, 1996 (File No. 0-23214).
(4) Incorporated by reference from the Company's Annual Report on Form 10-K for
the fiscal year ended January 31, 1996 (File No. 0-23214).
21
<PAGE>
-1-
EXHIBIT 10.1
SECOND AMENDMENT
TO REVOLVING CREDIT AND TERM LOAN AGREEMENT
Second Amendment dated as of April 30, 1996 to Revolving Credit and Term
Loan Agreement (this "Amendment"), by and among SAMSONITE CORPORATION, a
Delaware corporation (the "Company") and THE FIRST NATIONAL BANK OF BOSTON, BANK
OF AMERICA ILLINOIS and the other lending institutions listed on SCHEDULE 1 to
the Credit Agreement (as hereinafter defined) (collectively, the "Lenders"),
amending certain provisions of the Revolving Credit and Term Loan Agreement
dated as of July 14, 1995 (as amended by the First Amendment thereto dated as of
December 27, 1995 and as the same may be further amended, modified,
supplemented, and in effect from time to time, the "Credit Agreement") by and
among the Company, the Lenders, THE FIRST NATIONAL BANK OF BOSTON and BANK OF
AMERICA ILLINOIS as managing agents for the Lenders (in such capacity, the
"Managing Agents"), BANK OF AMERICA ILLINOIS as documentation agent for the
Managing Agents and the Lenders and THE FIRST NATIONAL BANK OF BOSTON as
administrative agent for the Managing Agents and the Lenders. Terms not
otherwise defined herein which are defined in the Credit Agreement shall have
the same respective meanings herein as therein.
WHEREAS, the Company and the Lenders have agreed to modify certain terms
and conditions of the Credit Agreement as specifically set forth in this
Amendment;
NOW, THEREFORE, in consideration of the premises and the mutual agreements
contained herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:
SECTION 1. AMENDMENTS TO THE CREDIT AGREEMENT. Subject to the
satisfaction of the applicable conditions precedent set forth in Section 3
hereof, the Credit Agreement is hereby amended as follows:
SECTION 1.1 APPLICABLE MARGIN: Effective as of April 30,
1996, the definition of Applicable Margin is hereby amended to read as follows:
"APPLICABLE MARGIN. For each period
commencing on an Adjustment Date (or, as applicable, the
Closing Date) through the date immediately preceding the
next (or, as applicable, the first) Adjustment Date (each a
"Rate Adjustment Period"), the Leverage Ratio shall be
determined for the applicable fiscal period ending on the
fiscal quarter end date occurring on or about the date fifty
(50) days before the applicable Adjustment Date, and the
resulting margin shall be as set forth below. The pricing
tier applicable for the
<PAGE>
-2-
Leverage Ratio applicable for such period as set forth below shall then be
the Applicable Margin for such Rate Adjustment Period.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
Documentary
Pricing Eurodollar Letter of Base Commitment
Tier Leverage Ratio Rate Loans Credit Rate Fee
Fee Rate Loans Rate
- -------------------------------------------------------------------------------------------------------
(basis points) (basis points) (basis points) (BASIS POINTS)
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Tier 6 Greater than or 250 168 100 50
equal to 4.90:1.00
Tier 5 Less than 4.90:1.00, 225 151 75 50
but greater than or
equal to 4.50:1.00
Tier 4 Less than 4.50:1.00 200 134 50 50
but greater than or
equal to 4.00:1.00
Tier 3 Less than 4:00 but 162.5 118 12.5 37.5
greater than or equal
to 3.25:1.00
Tier 2 Less than 3.25 but 125 83 0 37.5
greater than or equal
to 2.50:1.00
Tier 1 Less than 2.50:1.00 75 50 0 25
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
</TABLE>
Notwithstanding the foregoing,
(a) for purposes of interest on Loans outstanding, Commitment Fee Rate and
Documentary Letter of Credit Fee Rate with respect to the period commencing on
April 30, 1996 through the date immediately preceding the Adjustment Date
occurring on June 19, 1996, the Applicable Margin shall be the Applicable Margin
set forth in Tier 4 above;
(b) in the event the Borrowers' estimates of the Leverage Ratio based on
the Borrowers' fourth quarter performance in any fiscal year pursuant to Section
9.4(d) hereof proves to be inaccurate after final calculations of fourth quarter
financial statements pursuant to the audited financial statements for such
fiscal year and the result of such inaccuracy was such that the Applicable
Margin applied for any applicable such rate adjustment period was (i) too low,
the borrowers shall, within five (5) Business Days upon becoming aware of (or
receiving notice from the administrative agent in reasonable detail, requesting
an adjustment hereunder with respect to) such inaccuracy, pay to the
administrative agent for the respective ratable accounts of the Lenders the
difference between the interest, Commitment Fees, and Shared Documentary Letter
of Credit Fees the Borrowers should have paid with respect to such rate
adjustment period and what was actually paid or (ii) too high, the Lenders
severally, on a ratable basis, shall (within five (5) Business Days after
receiving notice thereof from the Company, in reasonable detail, requesting an
adjustment hereunder with respect thereto) credit to the next interest payment,
payment of commitment fees, or payment of shared documentary letter of Credit
Fees (but not the documentary letter of credit fronting fee) due by the
Borrowers with (or if no obligations are owing hereunder, severally, on a
ratable basis, shall refund to the borrowers) the difference between the
interest, Commitment Fees, and Shared Documentary Letter of Credit Fees (but not
the Documentary Letter of Credit Fronting Fee) the Borrowers actually paid with
respect to such Rate Adjustment Period and what should have been paid; and
<PAGE>
-3-
(c) if the Borrowers fail to deliver any quarterly financial statements or
quarterly Compliance Certificate when required by Section 9.4(b) or Section
9.4(d) hereof then, for the period commencing on the Adjustment Date immediately
following the period for which such quarterly financial statements or quarterly
Compliance Certificates are delinquent and continuing through the next
Adjustment Date, the Applicable Margin shall be the Applicable Margin set forth
in Tier 6 above."
SECTION 1.2. ADDITIONAL DEFINITIONS: Section 1.1 of the Credit Agreement
is further amended by inserting the following definitions in the appropriate
alphabetical order:
WELLS FARGO HSBC. Wells Fargo HSBC Trade Bank, N.A., a
national banking association.
WELLS FARGO FACTORING AGREEMENTS. Collectively, (a)
the Draft Discount Facility Agreement dated as of April 1, 1996
by and between the Company and Wells Fargo HSBC, (b) the Draft
Discount Facility Agreement dated as of April 1, 1996 by and
between the Company and Wells Fargo HSBC, and (c) the Draft
Discount Facility Agreement dated as of April 1, 1996 by and
between the Company and Wells Fargo HSBC, in the respective forms
thereof delivered to the Managing Agents prior to the
effectiveness of the Second Amendment to this Credit Agreement.
SECTION 1.3. SWING LINE LOANS. Section 3.1.2 of the Credit Agreement is
hereby amended by deleting the word "seventh" and inserting in its place the
phrase "fourteenth (14th)".
SECTION 1.4. INTEREST MARGIN TEST COMPUTATIONS. Section 9.4(d) of the
Credit Agreement is hereby amended by deleting the words "and Interest Margin
Test" which appears in Section 9.4(d).
SECTION 1.5. CERTAIN INDEBTEDNESS. Section 10.1(k) of the Credit
Agreement is hereby amended by deleting Section 10.1(k) in its entirety and
restating it as follows:
(k) Indebtedness of the Borrowers or any Non-Excluded
Subsidiaries in a principal amount which does not exceed, in the
aggregate, $30,000,000 less, at the time of determination, the
amount of the Company's accounts receivable, customer drafts and
similar rights of payments from customers of the Company sold to
Wells Fargo HSBC pursuant to the Wells Fargo Factoring Agreements
which have not yet been collected as of such time by Wells Fargo
HSBC;
SECTION 1.6. CERTAIN LIENS. Section 10.2(j) of the Credit Agreement is
hereby amended by deleting the amount "$6,000,000" and inserting in its place
the amount "$10,000,000".
<PAGE>
-4-
SECTION 1.7. DISPOSITION OF ASSETS. Section 10.5.2(e) of the Credit
Agreement is hereby amended by deleting Section 10.5.2(e) in its entirety and
inserting in place thereof the following:
(e) the sale of certain accounts receivable, customer
drafts and similar rights of payment from (i) customers of
McGregor in the ordinary course of business pursuant to the terms
of the McGregor Factoring Agreement (as in effect on the date
hereof) and (ii) customers of the Company in the ordinary course
of business on a non-recourse basis pursuant to the terms of the
Wells Fargo Factoring Agreements (as in effect on the effective
date of the Second Amendment to this Credit Agreement), to the
extent such sales are permitted by subparagraph (ii) of the first
paragraph of Section 14.4(a) of the Subordinated Indenture.
SECTION 1.8. INTEREST COVERAGE RATIO. Section 11.2 of the Credit
Agreement is hereby amended by deleting the table from Section 11.2 and
inserting in its place the following table:
PERIOD RATIO
------ -----
Closing Date - January 30, 1997 1.30:1
January 31, 1997 - January 30, 1998 1.40:1
January 31, 1998 - January 30, 1999 1.60:1
January 31, 1999 - January 30, 2000 1.75:1
Thereafter 2.00:1
SECTION 1.9. MINIMUM EBITDA. Section 11.3 of the Credit Agreement is
hereby amended by deleting the table from Section 11.3 and inserting in its
place the following table:
PERIOD AMOUNT
------ ------
Closing Date - January 30, 1997 $75,000,000
January 31, 1997 - January 30, 1998 $78,500,000
January 31, 1998 - January 30, 1999 $80,000,000
January 31, 1999 - January 30, 2000 $85,000,000
Thereafter $90,000,000
<PAGE>
-5-
SECTION 1.10. CAPITAL EXPENDITURES. The text of Section 11.4 of the
Credit Agreement is hereby amended to read as follows:
"The Borrowers will not make, or permit any Non-Excluded Subsidiary of such
Borrower to make, Capital Expenditures (a) in the last three (3) fiscal quarters
of the fiscal year ending January 31, 1996, that exceed, in the aggregate
$23,000,000 for such period, (b) in the fiscal year ending January 31, 1997 that
exceed, in the aggregate, $25,000,000 for such fiscal year, or (c) in any fiscal
year thereafter that exceed, in the aggregate, (i) $25,000,000 if EBITDA for
such fiscal year does not exceed $90,000,000 or (ii) $30,000,000 if EBITDA for
such fiscal year exceeds $90,000,000; PROVIDED, HOWEVER, (1) for the period from
December 27, 1995 through January 31, 1997, the Company shall be permitted to
make, in addition to those Capital Expenditures permitted by clauses (a), (b),
and (c) of this Section 11.4, additional Capital Expenditures in such period in
an amount not to exceed, in the aggregate, $3,000,000 provided such Capital
Expenditures are made for the sole purpose of repairing the roof and making
other repairs to the building located on the Company's real property in
Murfreesboro, Tennessee; (2) if during any such fiscal year or fiscal period the
amount of Capital Expenditures permitted for that fiscal year or fiscal period
is not so utilized (other than those Capital Expenditures permitted to be used
solely for the repair of the Murfreesboro, Tennessee property), up to $5,000,000
in the aggregate of such unutilized amount may be utilized in the next
succeeding fiscal year or fiscal period (but not in any subsequent fiscal year)
for Capital Expenditures associated with projects which are included within the
capital budget approved by the Company's Board of Directors and commenced but
not completed in the prior fiscal year; and (3) notwithstanding the foregoing
PROVISO clauses (1) and (2), in no event shall the aggregate Capital
Expenditures of the Borrowers and their Non- Excluded Subsidiaries for any
reason exceed $30,000,000 in any fiscal year."
SECTION 1.11. AMERICAN TOURISTER RESTRUCTURING CHARGES. The Company has
advised the Agents and the Lenders that the Company incurred certain
restructuring charges, not exceeding $2,400,000 in the aggregate, accrued solely
during the fiscal quarter ended January 31, 1996, in respect of the closing of
the American Tourister plant located in Jacksonville, Florida and certain
expenses and other accruals of liabilities relating thereto (such specific
restructuring charges being referred to as the "American Tourister Restructuring
Charges"). Any provisions of the Loan Documents to the contrary
notwithstanding,
(a) the American Tourister Restructuring Charges shall be
excluded from the applicable computations of Adjusted Consolidated Net
Income, EBITDA, and Adjusted EBITDA for applicable fiscal periods that
include the fiscal quarter ended January 31, 1996; and
(b) the reference to "restructuring charges" in the definition of
Consolidated Working Capital shall be deemed NOT to apply to the
American Tourister Restructuring Charges.
<PAGE>
-6-
SECTION 1.12. MISCELLANEOUS MODIFICATIONS, ETC.
(a) The word "or" is hereby deleted from line 7 of Section 14.1(r)(i) of
the Credit Agreement, in order to correct an inadvertent typographical error.
(b) The form of Compliance Certificate set forth as EXHIBIT E to the
Credit Agreement is hereby modified by:
(i) deleting the words "and Interest Margin Test" which appear
immediately after the words "Leverage Ratio" in the third paragraph of
EXHIBIT E;
(ii) replacing the table relating to determining compliance with
Section 11.2 of the Credit Agreement (with respect to the required
minimum Interest Coverage Ratio) with the table provided for in
Section 11.2 as amended hereby;
(iii) replacing the table relating to determining compliance
with Section 11.3 of the Credit Agreement (with respect to required
levels of Minimum EBITDA) with the table provided for in Section 11.3
as amended hereby;
(iv) replacing the specified amounts of Capital Expenditures
relating to determining compliance with Section 11.4 of the Credit
Agreement (with respect to permitted amounts of Capital Expenditures)
with the relevant maximum amounts provided for in Section 11.4 as
amended hereby;
(v) reflecting the treatment of the American Tourister
Restructuring Charges pursuant to, and in accordance with, the Credit
Agreement so as to give effect appropriately to the proper application
of the provisions of this Amendment relating thereto; and
(vi) properly and appropriately reflecting the applicable
provisions of this Amendment relating to the periodic determination of
the Applicable Margin so as to delete all references to the
calculation of the Interest Margin Test in the determination of the
Applicable Margin.
SECTION 2. AMENDMENT FEES. The Company shall pay amendment fees,
subject to and simultaneously with the effectiveness of this Section 2 of this
Amendment, on the Amendment Date (as defined in Section 3 hereof below) as
follows:
(a) The Company shall pay to each of the Lenders, upon
receipt by the Administrative Agent of the signature page of each Lender
hereof indicating its consent and agreement to Sections 1.1, 1.3, 1.4,
1.12(b)(i), and 1.12(b)(vi) hereof (the "Special Approval Provisions") and
the satisfaction of the conditions precedent set forth in Section 3(a)
hereof, an amendment fee equal to
<PAGE>
-7-
8 basis points (0.08%) as applied to the total of such Lender's Commitment
and such Lender's ratable portion of the Term Loan outstanding;
(b) The Company shall pay to each Lender who has signed and delivered
to the Administrative Agent pursuant to Section 3 hereof the applicable
signature pages hereto indicating its consent and agreement to the
remaining provisions of this Amendment OTHER THAN the Special Approval
Provisions (the "Majority Approval Provisions"), an amendment fee equal to
2 basis points (0.02%) as applied to the total of such Lender's Commitment
and such Lender's ratable portion of the Term Loan outstanding, such
amendment fee to be due and payable upon the effectiveness of the Majority
Approval Provisions pursuant to Section 3(b) hereof;
(c) The provisions of the foregoing clauses (a) and (b) of this
Section 2 of this Amendment shall be cumulative, and not exclusive of each
other.
SECTION 3. CONDITIONS TO EFFECTIVENESS. This Amendment shall become
effective on April 30, 1996 (the "Amendment Date") in the manner, and to the
extent, provided below, subject to the satisfaction of the following applicable
conditions precedent on or prior to such date:
(a) The effectiveness of the Special Approval Provisions
shall be subject to the receipt, on or prior to the Amendment Date, by the
Administrative Agent of:
(i) one or more counterparts of this Amendment
with the applicable signature pages indicating consent and agreement to the
Special Approval Provisions signed by each of the Obligors and each of the
Lenders, the Issuing Banks, the Swing Line Lenders, and the Agents; and
(ii) the applicable amendment fees provided for
in Section 2(a) of this Amendment, for the respective accounts of the
applicable Lenders entitled thereto, in immediately available funds.
(b) The effectiveness of the Majority Approval Provisions
(including, without limitation, Sections 2 and 3 of this Amendment) shall
be subject to the receipt, on or prior to the Amendment Date, by the
Administrative Agent of:
(i) one or more counterparts of this Amendment
with the applicable signature pages indicating consent and agreement to
the Majority Approval Provisions signed by each of the Obligors and the
Majority Lenders;
(ii) the applicable amendment fees provided for
in Section 2(b) of this Amendment, for the respective accounts of the
applicable Lenders entitled thereto, in immediately available funds; and
<PAGE>
-8-
(iii) evidence provided by the Company, in
reasonable detail and reasonably satisfactory in form and substance to the
Managing Agents that the Wells Fargo Factoring Agreements and the
transactions contemplated thereby are permitted transactions treated as
asset dispositions under subparagraph (ii) of the first paragraph of
Section 14.4(a) of the Subordinated Indenture.
SECTION 4. REPRESENTATIONS AND WARRANTIES. The Company hereby repeats,
on and as of the date hereof and the Amendment Date, each of the representations
and warranties made by it in Section 8 of the Credit Agreement (except to the
extent of changes resulting from matters contemplated or permitted by the Credit
Agreement and the other Loan Documents, changes occurring in the ordinary course
of business that singly or in the aggregate are not materially adverse, and to
the extent that such representations and warranties relate expressly to an
earlier date), PROVIDED, that all references therein to the Credit Agreement
shall refer to such Credit Agreement as amended hereby. In addition, the
Company hereby represents and warrants that the execution and delivery by the
Company of this Amendment and the performance by the Company of all of its
agreements and obligations under this Amendment and the Credit Agreement as
amended hereby are within the corporate power and authority of the Company and
have been duly authorized by all necessary corporate action on the part of the
Company, and further represents and warrants that the execution and delivery by
the Company of this Amendment and the performance by the Company of the
transactions contemplated hereby will not contravene any term or condition set
forth in any agreement or instrument to which the Company is a party or by which
the Company is bound, including but not limited to the Subordinated Indenture.
SECTION 5. RATIFICATION, ETC. Except as expressly amended hereby, the
Credit Agreement and all documents, instruments and agreements related thereto,
including, but not limited to the Security Documents, are hereby ratified and
confirmed in all respects and shall continue in full force and effect. The
Credit Agreement and this Amendment shall be read and construed as a single
agreement. This Amendment shall constitute one of the Loan Documents, and the
obligations of the Obligors under this Amendment shall constitute Obligations
for all purposes of the Loan Documents. All references in the Credit Agreement,
the Loan Documents or any related agreement or instrument to the Credit
Agreement shall hereafter refer to the Credit Agreement as amended hereby.
SECTION 6. NO WAIVER. Nothing contained herein shall constitute a
waiver of, impair or otherwise adversely affect any Obligations, any other
obligation of the Company or any rights of the Agents or the Lenders consequent
thereon.
SECTION 7. COUNTERPARTS. This Amendment may be executed in one or more
counterparts, each of which shall be deemed an original but which together shall
constitute one and the same instrument.
SECTION 8. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK (WITHOUT
REFERENCE TO CONFLICT OF LAWS).
<PAGE>
-9-
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
-10-
IN WITNESS WHEREOF, the parties hereto have executed this Amendment under
seal by their respective officers thereunto duly authorized.
[Signature Pages Follow]
<PAGE>
-11-
SIGNATURE PAGES FOR BORROWERS AND GUARANTORS
The undersigned Borrower hereby consents and agrees to all of the
provisions of the foregoing Amendment:
THE COMPANY: SAMSONITE CORPORATION
By: /S/ THOMAS R. SANDLER
----------------------------------------
Name: THOMAS R. SANDLER
----------------------------------------
Title: CHIEF FINANCIAL OFFICER & TREASURER
----------------------------------------
Each of the undersigned Guarantors hereby acknowledges and consents to all
of the provisions of the foregoing Amendment and agrees that its Guarantee dated
as of July 14, 1995, in favor of the Lenders and the Agents, and all other Loan
Documents to which such Guarantor is a party, remain in full force and effect,
and each of the undersigned Guarantors confirms and ratifies all of its
obligations thereunder.
THE GUARANTORS: A.T. RETAIL, INC.
By: /S/ D. MICHAEL CLAYTON
----------------------------------------
Name: D. MICHAEL CLAYTON
----------------------------------------
Title: VICE PRESIDENT AND SECRETARY
----------------------------------------
MCGREGOR CORPORATION
By: /S/ D. MICHAEL CLAYTON
----------------------------------------
Name: D. MICHAEL CLAYTON
----------------------------------------
Title: VICE PRESIDENT & ASSISTANT SECRETARY
----------------------------------------
<PAGE>
-12-
SIGNATURE PAGES FOR LENDERS
The undersigned Lender hereby consents and agrees to the Special Approval
Provisions of the foregoing Amendment:
THE FIRST NATIONAL BANK OF BOSTON, as
Lender, Issuing Bank, Swing Line Lender,
Administrative Agent, and Managing Agent
By: /S/ RICHARD D. HILL, JR.
----------------------------------------
Name: RICHARD D. HILL, JR.
----------------------------------------
Title: DIRECTOR
----------------------------------------
The undersigned Lender hereby consents and agrees to the Majority Approval
Provisions of the foregoing Amendment:
THE FIRST NATIONAL BANK OF BOSTON, as
Lender, Issuing Bank, Swing Line Lender,
Administrative Agent, and Managing Agent
By: /S/ RICHARD D. HILL, JR.
----------------------------------------
Name: RICHARD D. HILL
----------------------------------------
Title: DIRECTOR
----------------------------------------
<PAGE>
-13-
SIGNATURE PAGES FOR LENDERS
The undersigned Lender hereby consents and agrees to the Special Approval
Provisions of the foregoing Amendment:
BANK OF AMERICA ILLINOIS, as Lender, Issuing
Bank, Swing Line Lender, Documentation Agent,
and Managing Agent
By: /S/ LINDA A. CARPER
----------------------------------------
Name: LINDA A. CARPER
----------------------------------------
Title: MANAGING DIRECTOR
----------------------------------------
The undersigned Lender hereby consents and agrees to the Majority Approval
Provisions of the foregoing Amendment:
BANK OF AMERICA ILLINOIS, as Lender, Issuing
Bank, Swing Line Lender, Documentation Agent,
and Managing Agent
By: /S/ LINDA A. CARPER
----------------------------------------
Name: LINDA A. CARPER
----------------------------------------
Title: MANAGING DIRECTOR
----------------------------------------
<PAGE>
-14-
SIGNATURE PAGES FOR LENDERS
The undersigned Lender hereby consents and agrees to the Special Approval
Provisions of the foregoing Amendment:
BHF-BANK AKTIENGESELLSCHAFT
NEW YORK BRANCH
By: /S/ EVON M. CONTOS
----------------------------------------
Name: EVON M. CONTOS
----------------------------------------
Title: VICE PRESIDENT
----------------------------------------
By: /S/ DAN DOBRJANSKYJ
----------------------------------------
Name: DAN DOBRJANSKYJ
----------------------------------------
Title: ASSISTANT TREASURER
----------------------------------------
The undersigned Lender hereby consents and agrees to the Majority Approval
Provisions of the foregoing Amendment:
:
BHF-BANK AKTIENGESELLSCHAFT
NEW YORK BRANCH
By: /S/ EVON M. CONTOS
----------------------------------------
Name: EVON M. CONTOS
----------------------------------------
Title: VICE PRESIDENT
----------------------------------------
By: /S/ DAN DOBRJANSKYJ
----------------------------------------
Name: DAN DOBRJANSKYJ
----------------------------------------
Title: ASSISTANT TREASURER
----------------------------------------
<PAGE>
-15-
SIGNATURE PAGES FOR LENDERS
The undersigned Lender hereby consents and agrees to the Special Approval
Provisions of the foregoing Amendment:
THE LONG-TERM CREDIT BANK OF
JAPAN, LTD.
By: /S/ PAUL CLIFFORD
----------------------------------------
Name: PAUL CLIFFORD
----------------------------------------
Title: DEPUTY GENERAL MANAGER
----------------------------------------
The undersigned Lender hereby consents and agrees to the Majority Approval
Provisions of the foregoing Amendment:
THE LONG-TERM CREDIT BANK OF
JAPAN, LTD.
By: /S/ PAUL CLIFFORD
----------------------------------------
Name: PAUL CLIFFORD
----------------------------------------
Title: DEPUTY GENERAL MANAGER
----------------------------------------
<PAGE>
-16-
SIGNATURE PAGES FOR LENDERS
The undersigned Lender hereby consents and agrees to the Special Approval
Provisions of the foregoing Amendment:
THE MITSUBISHI TRUST AND
BANKING CORPORATION, LOS
ANGELES AGENCY
By: /S/ HIROAKI KOSEKI
----------------------------------------
Name: HIROAKI KOSEKI
----------------------------------------
Title: SR. VICE PRESIDENT & CHIEF MANAGER
----------------------------------------
The undersigned Lender hereby consents and agrees to the Majority Approval
Provisions of the foregoing Amendment:
THE MITSUBISHI TRUST AND
BANKING CORPORATION, LOS
ANGELES AGENCY
By: /S/ HIROAKI KOSEKI
-------------------------------------
Name: HIROAKI KOSEKI
----------------------------------------
Title: SR. VICE PRESIDENT & CHIEF MANAGER
---------------------------------------
<PAGE>
-17-
SIGNATURE PAGES FOR LENDERS
The undersigned Lender hereby consents and agrees to the Special Approval
Provisions of the foregoing Amendment:
SOCIETE GENERALE
By: /S/ JOHN M. STACK
-------------------------------------
Name: JOHN M. STACK
----------------------------------------
Title: VICE PRESIDENT
---------------------------------------
The undersigned Lender hereby consents and agrees to the Majority Approval
Provisions of the foregoing Amendment:
SOCIETE GENERALE
By: /S/ JOHN M. STACK
-------------------------------------
Name: JOHN M. STACK
----------------------------------------
Title: VICE PRESIDENT
---------------------------------------
<PAGE>
-18-
SIGNATURE PAGES FOR LENDERS
The undersigned Lender hereby consents and agrees to the Special Approval
Provisions of the foregoing Amendment:
THE BANK OF NEW YORK
By: /S/ ROBERT LOUK
-------------------------------------
Name: ROBERT LOUK
----------------------------------------
Title: VICE PRESIDENT
---------------------------------------
The undersigned Lender hereby consents and agrees to the Majority Approval
Provisions of the foregoing Amendment:
THE BANK OF NEW YORK
By: /S/ ROBERT LOUK
-------------------------------------
Name: ROBERT LOUK
----------------------------------------
Title: VICE PRESIDENT
---------------------------------------
<PAGE>
-19-
SIGNATURE PAGES FOR LENDERS
The undersigned Lender hereby consents and agrees to the Special Approval
Provisions of the foregoing Amendment:
BANQUE FRANCAISE DU COMMERCE
EXTERIEUR
By: /S/ DANIEL TOUFFU
-------------------------------------
Name: DANIEL TOUFFU
----------------------------------------
Title: FIRST VP AND REGIONAL MANAGER
---------------------------------------
By: /S/ IAIN A. WHYTE
-------------------------------------
Name: IAIN A. WHYTE
----------------------------------------
Title: VICE PRESIDENT
---------------------------------------
The undersigned Lender hereby consents and agrees to the Majority Approval
Provisions of the foregoing Amendment:
BANQUE FRANCAISE DU COMMERCE
EXTERIEUR
By: /S/ DANIEL TOUFFU
-------------------------------------
Name: DANIEL TOUFFU
----------------------------------------
Title: FIRST VP AND REGIONAL MANAGER
---------------------------------------
By: /S/ IAIN A. WHYTE
-------------------------------------
Name: IAIN A. WHYTE
----------------------------------------
Title: VICE PRESIDENT
---------------------------------------
<PAGE>
-20-
SIGNATURE PAGES FOR LENDERS
The undersigned Lender hereby consents and agrees to the Special Approval
Provisions of the foregoing Amendment:
BANQUE PARIBAS
By: /S/ MARK S. BLACK
-------------------------------------
Name: MARK S. BLACK
----------------------------------------
Title: ASSISTANT VICE PRESIDENT
---------------------------------------
By: /S/ MARY T. FINNEGAN
-------------------------------------
Name: MARY T. FINNEGAN
----------------------------------------
Title: GROUP VICE PRESIDENT
---------------------------------------
The undersigned Lender hereby consents and agrees to the Majority Approval
Provisions of the foregoing Amendment:
BANQUE PARIBAS
By: /S/ MARK S. BLACK
-------------------------------------
Name: MARK S. BLACK
----------------------------------------
Title: ASSISTANT VICE PRESIDENT
---------------------------------------
By: /S/ MARY T. FINNEGAN
-------------------------------------
Name: MARY T. FINNEGAN
----------------------------------------
Title: GROUP VICE PRESIDENT
---------------------------------------
<PAGE>
-21-
SIGNATURE PAGES FOR LENDERS
The undersigned Lender hereby consents and agrees to the Special Approval
Provisions of the foregoing Amendment:
CITICORP USA, INC.
By: /s/ ROBERT A. KOSEN
-------------------------------------
Name: Robert A. Kosen
----------------------------------------
Title: Attorney-in-Fact
---------------------------------------
The undersigned Lender hereby consents and agrees to the Majority Approval
Provisions of the foregoing Amendment:
CITICORP USA, INC.
By: /s/ ROBERT A. KOSEN
----------------------------------------
Name: Robert A. Kosen
----------------------------------------
Title: Attorney-in-Fact
---------------------------------------
<PAGE>
-22-
SIGNATURE PAGES FOR LENDERS
The undersigned Lender hereby consents and agrees to the Special Approval
Provisions of the foregoing Amendment:
CREDIT LYONNAIS NEW YORK
BRANCH
By: /s/ FREDERICK HADDAD
-------------------------------------
Name: Frederick Haddad
----------------------------------------
Title: Senior Vice President
---------------------------------------
The undersigned Lender hereby consents and agrees to the Majority Approval
Provisions of the foregoing Amendment:
CREDIT LYONNAIS NEW YORK
BRANCH
By: /s/ FREDERICK HADDAD
-------------------------------------
Name: Frederick Haddad
----------------------------------------
Title: Senior Vice President
---------------------------------------
<PAGE>
-23-
SIGNATURE PAGES FOR LENDERS
The undersigned Lender hereby consents and agrees to the Special Approval
Provisions of the foregoing Amendment:
CREDIT LYONNAIS CAYMAN
ISLAND BRANCH
By: /s/ FREDERICK HADDAD
-------------------------------------
Name: Frederick Haddad
----------------------------------------
Title: Authorized Signature
---------------------------------------
The undersigned Lender hereby consents and agrees to the Majority Approval
Provisions of the foregoing Amendment:
CREDIT LYONNAIS CAYMAN
ISLAND BRANCH
By: /s/ FREDERICK HADDAD
-------------------------------------
Name: Frederick Haddad
----------------------------------------
Title: Authorized Signature
---------------------------------------
<PAGE>
-24-
SIGNATURE PAGES FOR LENDERS
The undersigned Lender hereby consents and agrees to the Special Approval
Provisions of the foregoing Amendment:
DRESDNER BANK AG, LOS ANGELES
AGENCY
By:
----------------------------------------
Name:
----------------------------------------
Title:
----------------------------------------
By:
----------------------------------------
Name:
----------------------------------------
Title:
----------------------------------------
The undersigned Lender hereby consents and agrees to the Majority Approval
Provisions of the foregoing Amendment:
DRESDNER BANK AG, LOS ANGELES
AGENCY
By: /s/ JON M. BLAND
-------------------------------------
Name: Jon M. Bland
----------------------------------------
Title: Sen. Vice Pres.
---------------------------------------
By: /s/ VITOL WIACEK
-------------------------------------
Name: Vitol Wiacek
----------------------------------------
Title: Asst. Vice Pres.
---------------------------------------
<PAGE>
-25-
SIGNATURE PAGES FOR LENDERS
The undersigned Lender hereby consents and agrees to the Special Approval
Provisions of the foregoing Amendment:
FLEET BANK OF MASSACHUSETTS, N.A.
By:
----------------------------------------
Name:
----------------------------------------
Title:
----------------------------------------
The undersigned Lender hereby consents and agrees to the Majority
Approval Provisions of the foregoing Amendment:
FLEET BANK OF MASSACHUSETTS, N.A.
By: /s/ MARYANN S. SMITH
----------------------------------------
Name: Maryann S. Smith
----------------------------------------
Title: Vice President
----------------------------------------
<PAGE>
-26-
SIGNATURE PAGES FOR LENDERS
The undersigned Lender hereby consents and agrees to the Special Approval
Provisions of the foregoing Amendment:
GENERALE BANK
By: /s/ ALAIN VERSCHUEREN /s/ SIMON DEL ROSARIO
---------------------- ---------------------
Name: Alain Verschueren Simon Del Rosario
---------------------- ---------------------
Title: SVP SVP
---------------------- ---------------------
The undersigned Lender hereby consents and agrees to the Majority Approval
Provisions of the foregoing Amendment:
GENERALE BANK
By: /s/ ALAIN VERSCHUEREN /s/ SIMON DEL ROSARIO
---------------------- ---------------------
Name: Alain Verschueren Simon Del Rosario
---------------------- ---------------------
Title: SVP SVP
---------------------- ---------------------
<PAGE>
-27-
SIGNATURE PAGES FOR LENDERS
The undersigned Lender hereby consents and agrees to the Special Approval
Provisions of the foregoing Amendment:
KREDIETBANK NV
By: /s/ ROBERT SNAUFFER
--------------------------------------
Name: Robert Snauffer
----------------------------------------
Title: Vice President
--------------------------------------
By: /s/ TOD R. ANGUS
--------------------------------------
Name: Tod R. Angus
--------------------------------------
Title: Vice President
--------------------------------------
The undersigned Lender hereby consents and agrees to the Majority Approval
Provisions of the foregoing Amendment:
KREDIETBANK NV
By: /s/ ROBERT SNAUFFER
--------------------------------------
Name: Robert Snauffer
----------------------------------------
Title: VICE PRESIDENT
--------------------------------------
By: /s/ TOD R. ANGUS
--------------------------------------
Name: Tod R. Angus
--------------------------------------
Title: Vice President
--------------------------------------
<PAGE>
-28-
SIGNATURE PAGES FOR LENDERS
The undersigned Lender hereby consents and agrees to the Special Approval
Provisions of the foregoing Amendment:
NATIONAL CITY BANK
By: /s/ BARRY C. ROBINSON
--------------------------------------
Name: Barry C. Robinson
--------------------------------------
Title: Vice President
--------------------------------------
The undersigned Lender hereby consents and agrees to the Majority Approval
Provisions of the foregoing Amendment:
NATIONAL CITY BANK
By: /s/ BARRY C. ROBINSON
--------------------------------------
Name: Barry C. Robinson
--------------------------------------
Title: Vice President
--------------------------------------
<PAGE>
-29-
SIGNATURE PAGES FOR LENDERS
The undersigned Lender hereby consents and agrees to the Special Approval
Provisions of the foregoing Amendment:
THE NIPPON CREDIT BANK,
LOS ANGELES AGENCY
By: /s/ YOSHINOBU FUKUSHIMA
--------------------------------------
Name: Yoshinobu Fukushima
--------------------------------------
Title: General Manager
--------------------------------------
The undersigned Lender hereby consents and agrees to the Majority Approval
Provisions of the foregoing Amendment:
THE NIPPON CREDIT BANK,
LOS ANGELES AGENCY
By: /s/ YOSHINOBU FUKUSHIMA
--------------------------------------
Name: Yoshinobu Fukushima
--------------------------------------
Title: General Manager
--------------------------------------
<PAGE>
-30-
SIGNATURE PAGES FOR LENDERS
The undersigned Lender hereby consents and agrees to the Special Approval
Provisions of the foregoing Amendment:
NORWEST BANK COLORADO,
NATIONAL ASSOCIATION
By: /s/ SANDRA A. SAUER
--------------------------------------
Name: Sandra A. Sauer
--------------------------------------
Title: Vice President
--------------------------------------
The undersigned Lender hereby consents and agrees to the Majority Approval
Provisions of the foregoing Amendment:
NORWEST BANK COLORADO,
NATIONAL ASSOCIATION
By: /s/ SANDRA A. SAUER
--------------------------------------
Name: Sandra A. Sauer
--------------------------------------
Title: Vice President
--------------------------------------
<PAGE>
-31-
SIGNATURE PAGES FOR LENDERS
The undersigned Lender hereby consents and agrees to the Special Approval
Provisions of the foregoing Amendment:
UNION BANK OF CALIFORNIA, N.A.
(AS SUCCESSOR BY MERGER TO UNION BANK)
By: /s/ ANTHONY B. KWEE
--------------------------------------
Name: Anthony B. Kwee
--------------------------------------
Title: Vice President
--------------------------------------
The undersigned Lender hereby consents and agrees to the Majority Approval
Provisions of the foregoing Amendment:
UNION BANK OF CALIFORNIA, N.A.
(AS SUCCESSOR BY MERGER TO UNION BANK)
By: /s/ ANTHONY B. KWEE
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Name: Anthony B. Kwee
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Title: Vice President
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<PAGE>
-32-
SIGNATURE PAGES FOR LENDERS
The undersigned Lender hereby consents and agrees to the Special Approval
Provisions of the foregoing Amendment:
WELLS FARGO BANK, N.A.
By:
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Name:
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Title:
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The undersigned Lender hereby consents and agrees to the Majority Approval
Provisions of the foregoing Amendment:
WELLS FARGO BANK, N.A.
By: /s/ BRIAN MCDONALD
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Name: Brian McDonald
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Title: Assistant Vice President
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<PAGE>
-33-
SIGNATURE PAGES FOR LENDERS
The undersigned Lender hereby consents and agrees to the Special Approval
Provisions of the foregoing Amendment:
VAN KAMPEN AMERICAN CAPITAL PRIME
RATE INCOME TRUST
By: /s/ JEFFREY W. MAILLETT
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Name: Jeffrey W. Mailett
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Title: Sr. Vice Pres. - Portfolio Mgr.
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The undersigned Lender hereby consents and agrees to the Majority Approval
Provisions of the foregoing Amendment:
VAN KAMPEN AMERICAN CAPITAL PRIME
RATE INCOME TRUST
By: /s/ JEFFREY W. MAILLETT
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Name: Jeffrey W. Mailett
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Title: Sr. Vice Pres. - Portfolio Mgr.
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<PAGE>
EMPLOYMENT AGREEMENT EXHIBIT 10.2
EMPLOYMENT AGREEMENT (this "Agreement"), effective as of May 15, 1996
(the "Effective Date"), by and between SAMSONITE CORPORATION, a Delaware
corporation (the "Company"), and RICHARD R. NICOLOSI (the "Executive").
W I T N E S S E T H:
WHEREAS, the Company desires to retain the services of the Executive
and to enter into this Agreement as of the Effective Date.
WHEREAS, the Executive is willing to serve the Company on the terms
and conditions herein provided.
NOW, THEREFORE, in consideration of the foregoing and of the premises
and covenants herein contained, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. EMPLOYMENT
The Company agrees to employ the Executive and the Executive agrees to
serve the Company on the terms and conditions set forth herein.
2. TERM
This Agreement shall have a term (the "Term") beginning on the
Effective Date and expiring on the second anniversary of the Effective Date.
3. POSITION AND DUTIES
(a) The Executive shall serve as President and Chief Executive
Officer of the Company and shall perform such duties and exercise such
supervision and powers over and with regard to the business of the Company
customarily associated with his position, as well as such duties and services
prescribed herein and as may be prescribed from time to time by the Board of
Directors of the Company or any duly authorized committee thereof (the "Board").
The Executive shall perform such duties, under the supervision and direction of
the Board, to the best of his ability and in a diligent and proper manner. The
Executive shall report directly to the Board.
<PAGE>
(b) Except during customary vacation periods and periods of illness,
the Executive shall, during his employment hereunder, devote his full business
time and attention to the performance of services for the Company, and as
determined by the Board. Notwithstanding the foregoing sentence, nothing in
this Agreement shall preclude the Executive from (i) serving on the board of
directors of up to two business corporations (other than the Company and its
subsidiaries) and (ii) managing his personal investments, as long as such
activities do not interfere with the Executive's performance of his duties
hereunder.
(c) Nothing in this Agreement shall affect the Executive's duty of
loyalty and duty of care to the Company and its subsidiaries as provided under
applicable state laws.
(d) The Company shall nominate the Executive to serve as a director
of the Company and use its best efforts to cause the Executive to be elected
(and re-elected) to such position during his employment hereunder. The
Executive agrees to resign as a director of the Company upon his termination of
employment with the Company.
4. COMPENSATION AND RELATED MATTERS
(a) SALARY. During the Executive's employment hereunder, the Company
shall pay to the Executive a salary ("Base Salary") in equal installments in
accordance with normal payroll practices of the Company but not less frequently
than monthly. The Base Salary shall be payable at the rate of $600,000 per
annum, starting as of the Effective Date. The payments of Base Salary hereunder
shall not in any way limit or reduce any other obligation of the Company
hereunder, and no other compensation, benefit or payment hereunder shall in any
way limit or reduce the obligation of the Company to pay the Executive's Base
Salary hereunder.
(b) RELOCATION. It is contemplated that the Executive's office shall
be in the Company's executive offices in Denver, Colorado, unless, subsequently
during the Term, the Board and the Executive agree that it would be desirable
for the Executive's office to be located elsewhere. Accordingly, the Executive
shall promptly
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relocate to the Denver metropolitan area and shall own or lease a residence
in the Denver metropolitan area so long as he shall be headquartered there.
To defray the cost of owning or leasing a residence proximate to the Executive's
office, the Company shall pay the Executive an allowance of $150,000 per annum,
payable monthly during the Executive's employment hereunder. In addition, to
defray the cost of relocating to the Denver metropolitan area, the Company
shall make a lump sum payment of $100,000 to the Executive, payable within
45 days after the date hereof, and except for such lump sum payment, the
Company shall have no obligation to reimburse the Executive for any costs and
expenses incurred in connection with the relocation of the Executive and his
family to the Denver metropolitan area.
(c) EXPENSES. (i) The Executive shall be entitled to receive prompt
reimbursement from the Company of all reasonable expenses incurred by the
Executive in performing services hereunder, in accordance with the policies and
procedures established by the Company from time to time. In light of the fact
that the Executive may be required to travel for extended periods of time, such
expenses shall include all reasonable expenses of the Executive's wife for
travel with the Executive in the service of the Company. The Executive shall
furnish the Company with evidence that such expenses were incurred as the
Company may from time to time reasonably request.
(ii) In the event that the Company relocates its executive offices
from Denver, Colorado to a location outside a 30 mile radius from Denver, the
Company shall reimburse the Executive for all reasonable relocation and moving
expenses incurred by him in connection with relocating his residence. The
Executive shall furnish the Company with evidence that such expenses were
incurred as the Company may from time to time reasonably request. The Company
shall reimburse the Executive on a grossed-up basis (taking into account any
deductions available to the Executive in respect of such expenses) in the event
that any incremental taxes are incurred by him solely by reason of such
reimbursement of such relocation and moving expenses.
(d) STOCK OPTION AGREEMENT. As an inducement to the Executive to
enter into this Agreement and solely in connection with the performance of
services by the
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Executive pursuant to this Agreement, the Executive shall receive a grant of
stock options (the "Options") to purchase 425,532 shares of the common stock,
par value $.01 per share ("Common Stock"), of the Company pursuant to and
subject to the terms and conditions of the Stock Option Agreement, dated as
of the date hereof, by and between the Company and the Executive (the "Stock
Option Agreement"). The Stock Option Agreement shall be executed
concurrently with this Agreement.
(e) OTHER BENEFITS. From and after the Effective Date, the Executive
shall be entitled to participate in all of the Company's employee pension plans,
welfare benefit plans, tax-deferred savings plans, or other benefit arrangements
(including any insurance or trust arrangements maintained generally for the
benefit of the Company's directors and officers) and in which the senior
executives of the Company who receive equity-based compensation are entitled to
participate (collectively, the "Company Plans"), on the same basis as other
senior executives of the Company who receive equity-based compensation;
PROVIDED, HOWEVER, that the Company shall waive, or obtain the waiver of, any
waiting period or other eligibility requirements of such plans or other benefit
arrangements to the maximum extent permitted under such plans and arrangements,
but only to the extent that the same does not result in any additional cost or
obligation to the Company (other than costs and obligations arising solely as a
result of the addition of the Executive as a participant therein), so as to
provide such benefits to the Executive (and to commence accruing such benefits,
as the case may be, for the account of the Executive) immediately on and after
the Effective Date. Without limiting the generality of the foregoing, from and
after the Effective Date, the Executive shall be provided with the use of a
Company provided automobile in accordance with the Company's current policy for
executive officers. Without limiting the generality of the foregoing, the
Executive shall be entitled to participate in any supplemental executive
retirement plan or excess benefit plan (a "SERP") that the Company may maintain
from time to time for the benefit of its senior executive officers on the same
terms and conditions as are applicable to other senior executive officers of the
Company who receive equity-based compensation, provided that the amount of
compensation with respect to which benefits are determined under such plan shall
be limited as determined
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by the Board. The Company and the Executive agree that nothing in this
Agreement shall preclude the Company from amending or terminating any such
employee benefit plan, policy or practice, whether now or hereinafter in
effect, so long as such amendment or termination applies substantially
equally to all other senior executive officers of the Company who receive
equity-based compensation.
(f) INCENTIVE BONUS. The Executive shall be eligible to receive an
annual incentive bonus (the "Incentive Bonus") in respect of each fiscal year of
the Company that ends during the Term, starting with the fiscal year ending
January 31, 1997. The Incentive Bonus in respect of each fiscal year that ends
during the Term (each, a "Reference Year") shall be calculated on the terms
hereafter set forth in this Section 4(f). The Incentive Bonus may, subject to
the conditions set forth below, equal up to $500,000 with respect to each
Reference Year. The Executive's Incentive Bonus shall consist of a Target Bonus
and a Project Bonus (each as defined below), determined as follows:
(i) A portion of the Incentive Bonus (the "Target Bonus") in an
amount equal to the EBIT Attainment Percentage (as defined below)
multiplied by $250,000 shall be payable to the Executive with respect to
each Reference Year, provided that the Target Bonus shall not be paid with
respect to any Reference Year if the EBIT Attainment Percentage with
respect to such Reference Year is less than eighty percent (80%). The
"EBIT Attainment Percentage" with respect to any Reference Year shall mean
the percentage that is established as follows: if the EBIT (as defined
below) of the Company with respect to the Reference Year is
(A) less than the Minimum EBIT Target (as defined below) for such
Reference Year, then the EBIT Attainment Percentage shall equal zero
percent (0%);
(B) equal to the Minimum EBIT Target for such Reference Year, the
EBIT Attainment Percentage shall equal eighty percent (80%);
(C) greater than the Minimum EBIT Target but less than the Annual
EBIT Target (as de-
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fined below) for such Reference Year, the EBIT Attainment Percentage
shall equal the sum of (x) eighty percent (80%) plus (y) the product
of twenty percent (20%) multiplied by a fraction, the numerator of
which shall be the excess of (I) the EBIT of the Company over (II)
the Minimum EBIT Target for such Reference Year and the denominator
of which shall be the excess of the Annual EBIT Target over the
Minimum EBIT Target; or
(D) equal to or greater than the Annual EBIT Target for such
Reference Year, the EBIT Attainment Percentage shall equal one hundred
percent (100%).
(ii) The Board, in consultation with the Executive, shall determine
the "Annual EBIT Target" and the "Minimum EBIT Target" for the Reference
Years ending January 31, 1997 and January 31, 1998, on or before June 30,
1996 and March 15, 1997, respectively, and promptly after such targets have
been determined, the Board shall give the Executive written notice thereof.
The Annual EBIT Targets and Minimum EBIT Targets determined by the Board
shall be reasonably achievable in the good faith judgment of the Board.
The Board, in consultation with the Executive, shall have the right, acting
in good faith, to adjust the Annual EBIT Target and the Minimum EBIT Target
upon the occurrence of any acquisition, disposition or other significant
event that occurs after such targets have been determined. For purposes of
this Section 4(f), "EBIT" shall mean, for any period, the Company's
consolidated earnings (excluding extraordinary gains and losses and gains
or losses from the sale of fixed assets outside of the ordinary course of
business) from continuing operations before interest and taxes for such
period, and EBIT shall be determined on the same basis of the Annual EBIT
Target and the Minimum EBIT Target. Notwithstanding the foregoing, EBIT
for any Reference Year shall be equitably adjusted by the Board, in
consultation with the Executive and acting in good faith (solely for the
purposes of Section 4(f)(i)) to the extent that the Company's business was
not conducted in the ordinary course in accordance with past practices.
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(iii) A portion of the Incentive Bonus in a target amount equal to a
maximum of $250,000 (the "Project Bonus") shall be payable to the Executive
to the extent that the Board determines that the Executive has
satisfactorily completed certain projects (the "Annual Projects")
established by the Board with respect to such Reference Year in accordance
with this subparagraph (iii), provided that the Board may award a Project
Bonus of between eighty percent (80%) and one hundred percent (100%) of the
target amount based upon its evaluation of the manner in which the
Executive completes the Annual Projects. The Board, in consultation with
the Executive, shall determine the Annual Projects for the Reference Years
ending January 31, 1997 and January 31, 1998, on or before June 30, 1996
and March 15, 1997, respectively, and promptly after such projects have
been determined, the Board shall give the Executive written notice thereof.
The Annual Projects determined by the Board shall be reasonably achievable
in the good faith judgment of the Board. The Executive acknowledges that
the Annual Projects established by the Board may not be measured by
financial results or other quantifiable standards and may depend on
subjective judgments by the Board, and the Executive agrees that the
determination of the Board as to the extent to which such Annual Projects
have been satisfactorily completed shall be conclusive for all purposes,
provided that such determination shall be made in good faith.
(iv) Each Incentive Bonus (including the Target Bonus and the Project
Bonus) shall be paid not more than 30 days after a determination by the
Board that an applicable performance goals have been met, and such
determination shall be made not later than 10 days following the filing of
a Form 10-K for the Company, or if the Company is not required to file a
Form 10-K, not later than 10 days following the date upon which the
Company's audited financial statements first become available.
(v) The Executive shall be entitled to receive an Incentive Bonus for
the full Reference Year ending January 31, 1997 as if he had been employed
for the entire fiscal year then ending, provided that the Executive shall
be entitled to receive at
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<PAGE>
least eighty percent (80%) of the maximum Incentive Bonus for such
Reference Year ($400,000), regardless of whether or not the Minimum EBIT
Target or Annual Projects for such Reference Year shall have been achieved.
The Executive shall not be entitled to an Incentive Bonus with respect to
the fiscal year ending January 31 1999 or any portion thereof.
(g) VACATION AND OTHER ABSENCES. The Executives shall be entitled to
paid vacation and such other paid absences whether for holidays, illness,
personal time or any similar purposes, in accordance with the plans, policies,
programs and practices of the Company in effect from time to time, at least
comparable to those received by other senior executives of the Company;
PROVIDED, HOWEVER, that the Executive shall always be entitled to at least four
weeks of paid vacation in each calendar year and pro rata for part of a year.
(h) SERVICES FURNISHED. The Company shall furnish the Executive with
office space, secretarial assistance and such other facilities and services as
shall be suitable to the Executive's position and adequate for the performance
of his duties hereunder.
5. TERMINATION
The Executive's employment hereunder may be terminated under the
following circumstances:
(a) DEATH. The Executive's employment hereunder shall terminate upon
his death.
(b) DISABILITY. If the Board determines in good faith, based on
medical evidence acceptable to it, that the Executive has become physically or
mentally disabled or incapacitated during his employment hereunder for a
continuous period of ninety (90) days to such an extent that he shall be unable
to perform his duties hereunder then, notwithstanding the provisions of Section
2, the Company may, after the expiration of said ninety (90) day period and
during the continuance of such disability or incapacity, give to the Executive a
Notice of Termination (as defined in Section 5(e) hereof) of the Executive's
employment hereunder and such employment shall terminate on the date provided in
Section 5(f) hereof.
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(c) TERMINATION BY THE COMPANY. The Company may terminate the
Executive's employment hereunder at any time with or without Cause. For
purposes of this Agreement, the Company shall have "Cause" to terminate the
Executive's employment hereunder upon (A) the engaging by the Executive in
willful misconduct that is materially injurious to the Company, (B) the
embezzlement or misappropriation of funds or property of the Company by the
Executive or the conviction of the Executive of a felony or the entrance of a
plea of guilty by the Executive to a felony or (C) the failure or refusal by
the Executive to devote his full business time and attention (as described in
Section 2(b) of this Agreement) to the performance of his duties and
responsibilities hereunder or any other breach by the Executive of this
Agreement in any material respect if such breach has not been cured by the
Executive within thirty (30) days after the Preliminary Notice (as defined
below) has been given to the Executive. For purposes of this paragraph, no
act, or failure to act, on the Executive's part shall be considered "willful"
unless done, or omitted to be done, by him not in good faith and without
reasonable belief that his action or omission was in the best interest of the
Company. The Executive shall not be deemed to have been terminated for
Cause, unless the Company shall have given the Executive (i) notice (the
"Preliminary Notice") setting forth, in reasonable detail the facts and
circumstances claimed to provide a basis for termination for Cause, (ii) a
reasonable opportunity for the Executive, together with his counsel, to be
heard before the Board and (iii) a Notice of Termination stating that, in the
good faith judgement of the Board, the Executive was guilty of conduct set
forth in clauses (A), (B) or (C) above, and specifying the particulars
thereof in reasonable detail. Upon receipt of the Preliminary Notice, the
Executive shall have thirty (30) days in which to appear before the Board
with counsel, or take such other action as he may deem appropriate, and such
thirty (30) day period is hereby agreed to as a reasonable opportunity for
the Executive to be heard.
(d) TERMINATION BY THE EXECUTIVE. The Executive may voluntarily
terminate his employment hereunder at any time with or without Good Reason.
For purposes of this Agreement, "Good Reason" shall mean, so long as the
Executive has not been guilty of the conduct set forth in clauses (A), (B) or
(C) of Section 5(c) hereof, (i) a failure by the Company to comply with any
material provi-
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sion of this Agreement that has not been cured within thirty (30) days after
written notice of such noncompliance has been given by the Executive to the
Company or (ii) the assignment to the Executive by the Company of duties
inconsistent with the Executive's position, duties or responsibilities as
President and Chief Executive Officer of the Company including, but not
limited to, any material reduction in such position, duties or
responsibilities or material change in his title, (iii) a relocation by the
Company of the Executive's office to a location outside a 30 mile radius from
Denver, Colorado, which relocation is made not as part of a relocation of the
Company's executive offices (in the case of each of clauses (ii) and (iii)
above, without the consent of the Executive) or (iv) the occurrence of a
Change of Control (as defined in the Stock Option Agreement). The
Executive's election to terminate under this Section 5(d) shall be made by
giving Notice of Termination not later than 60 days from, as applicable, the
date that the Company fails to cure under (i) above, the assignment of duties
under (ii) above, the date that the Executive is advised of the proposed
relocation under (iii) above and the date of the Change of Control described
under (iv) above.
(e) NOTICE OF TERMINATION. Any termination of the Executive's
employment by the Company or by the Executive (other than termination
pursuant to Section 5(a) hereof) shall be communicated by written Notice of
Termination to the other party hereto. For purposes of this Agreement, a
"Notice of Termination" shall mean a notice that shall indicate the specific
termination provision in this Agreement relied upon and shall set forth in
reasonable detail the facts and circumstances, if any, claimed to provide a
basis for termination of the Executive's employment under the provision so
indicated.
(f) DATE OF TERMINATION. Except to the extent otherwise herein
provided, "Date of Termination" shall mean (i) if the Executive's employment
is terminated pursuant to Section 5(a), the date of his death, (ii) if the
Executive's employment is terminated pursuant to Section 5(b) or (c), the
date of or a later date specified in the Notice of Termination, (iii) if the
Executive's employment is terminated pursuant to Section 5(d), the date on
which the Notice of Termination is given and (iv) in the case of a failure by
the Company to
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offer to extend this Agreement as described in Section 5(c) hereof, the last
day of the Term. Except as provided in and subject to Section 6 hereof, the
Company shall not have any obligation to Executive for salary continuation,
severance or termination pay upon termination of this Agreement.
6. COMPENSATION UPON TERMINATION
(a) If the Executive's employment is terminated (i) by the Company
for Cause, (ii) by the Executive other than for Good Reason, or (iii) by
reason of the Executive's death or disability (pursuant to Section 5(b)
hereof), then the Company shall pay the Executive his full Base Salary
through the Date of Termination (to the extent not otherwise paid through the
Date of Termination) at the rate in effect immediately prior to the Date of
Termination, provided that if the Executive's employment hereunder terminates
by reason of his death, the Company shall continue to make salary payments at
the rate of the Base Salary then in effect in respect of the month following
the date of death. In addition, notwithstanding any provision to the
contrary in this Agreement, the Executive shall continue to participate in,
and shall receive all accrued benefits to which the Executive is entitled
under, all of the Company Plans, through the Date of Termination, provided
that the Executive shall not be entitled to any portion of the Incentive
Bonus unless such bonus shall be payable pursuant to Section 4(f) with
respect to a Reference Year ending on or before the Date of Termination.
With respect to the Incentive Bonus, if the Date of Termination occurs after
the end of a Reference Year and prior to the determination of whether the
performance goals for such Reference Year were met, such Incentive Bonus
shall be payable, if it is determined that such goals were met, in accordance
with the provisions of Section 4(f) hereof.
(b) If the Executive's employment is terminated (i) by the Company
without Cause (other than for disability pursuant to Section 5(b) hereof), or
(ii) by the Executive for Good Reason, then the Company shall pay to the
Executive, as severance pay, the following amounts, which shall not be
discounted to take into account present value:
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(A) to the extent not otherwise paid through the Date of Termination,
the Executive's full Base Salary through the Date of Termination at the
rate in effect at the time Notice of Termination is given; and
(B) in lieu of any further salary and bonus or other incentive
compensation payments to the Executive for periods subsequent to the Date
of Termination, the sum of $1,000,000.
Such amounts shall be payable in two equal installments on the 5th
day following the Date of Termination and the 180th day following the Date of
Termination, respectively. In addition to the foregoing, until such time
that the Executive becomes eligible for coverage under a program maintained
or sponsored by a subsequent employer of the Executive (not including
self-employment), the Company shall, at the Company's expense, allow the
Executive to continue to participate, for the number of years (including
partial years) then remaining in the Term, to the same extent and upon the
same terms as the Executive participated in such plans immediately prior to
the termination of his employment, in the Company's medical reimbursement and
other welfare benefit plans in which the Executive was entitled to
participate immediately prior to the Date of Termination; provided that the
Executive's continued participation in such plan shall be continued pursuant
to this sentence only to the extent permissible under the general terms and
provisions of such plans and applicable law.
7. RESTRICTED STOCK
(a) ISSUANCE OF COMMON STOCK. As an essential inducement to the
Executive's entering into this Agreement, the Company hereby agrees to issue
to the Executive, without cost to the Executive, 60,000 shares of Common
Stock of the Company (the "Restricted Shares"), on the terms and conditions
set forth herein. The Restricted Shares shall be registered in the
Executive's name, but the certificates evidencing the Restricted Shares shall
be retained by the Company until such shares become vested and the
restrictions thereon lapse in accordance with Section 7(d) hereof. The
period prior to the time that any particular Restricted Shares become vested
and the restrictions thereon lapse is hereinafter referred to
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as the "Restricted Period" with respect to such shares. The Executive shall
execute a stock power, in blank, with respect to such Restricted Shares and
deliver the same to the Company.
(b) RIGHTS AS A SHAREHOLDER. Except as provided in Sections 7(c)
and 7(d) hereof, during the Restricted Period, the Executive shall have all
the rights of a shareholder with respect to Restricted Shares, including the
right to receive dividends or other distributions and the right to vote such
shares; provided that any such dividends or other distributions shall be
retained by the Company unless and until the Restricted Shares in respect of
which such dividends or other distributions were paid shall vest pursuant to
Section 7(d) hereof.
(c) NON-TRANSFERABILITY. During the Restricted Period, the
Executive may not sell, transfer, pledge, or otherwise encumber or dispose of
the Restricted Shares, and any attempted sale, transfer, pledge or other
encumbrance or disposition (whether voluntary or involuntary) in violation of
this Section 7(c) shall be null and void.
(d) VESTING; LAPSE OF RESTRICTIONS; FORFEITURE. Except as
otherwise provided in this Section 7(d), the Restricted Shares shall vest,
and the restrictions imposed thereon shall lapse, as to 50% of such shares on
the first anniversary of the Effective Date, and as to the remaining 50% of
such shares on the second anniversary of the Effective Date; PROVIDED that if
a Change of Control occurs during the Term and the Executive remains
continually employed by the Company from the date hereof to the Change of
Control Date (as defined in the Stock Option Agreement), then all of the
Restricted Shares that have not theretofore vested shall become vested as of
the Change of Control Date. If the Executive's employment with the Company
is terminated prior to the second anniversary of the Effective Date, the
Executive's rights with respect to the Restricted Shares shall be as follows:
(i) If the Executive's employment with the Company is terminated (A)
by the Company without Cause, other than for disability, or (B)
by the Executive for Good Reason,
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then, as of the Date of Termination, (X) fifty percent (50%)
of the Restricted Shares shall become vested, if the Date of
Termination is on or before the first anniversary of the
Effective Date, or (Y) all of the Restricted Shares that have
not vested as of the Date of Termination shall become vested,
if the Date of Termination is after the first anniversary of
the Effective Date. Notwithstanding the foregoing, if a Change
of Control occurs within 180 days after the Date of
Termination, and either (x) the arithmetic average of the Fair
Market Values per share of Common Stock as of each day in any
period of 30 consecutive days prior to the Change of Control
Date or (y) the Fair Market Value per share of Common Stock as
of the Change of Control Date, shall equal or exceed the
Target Price Per Share, then all of the Restricted Shares that
have not become vested pursuant to the preceding sentence of
this Section 4(d)(i) shall become vested as of the Change of
Control Date. Any Restricted Shares that do not become vested
pursuant to the immediately preceding two sentences of this
Section 4(d)(i) shall be forfeited to the Company (without any
action on the part of the Company or the Executive) on the
180th day following the Date of Termination, and the Executive
shall have no further rights with respect to such Restricted
Shares.
(ii) If the Executive's employment with the Company is terminated by
reason of death or disability as provided in Section 5(b) hereof,
then, as of the Date of Termination, the portion of the
Restricted Shares that have not vested at the Date of Termination
equal to the number of such unvested Restricted Shares multiplied
by a fraction, the numerator of which is 24 minus the number of
full months remaining in the Term after the Date of Termination
and denominator of which is 24, shall become vested, and the
restrictions im-
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posed thereon shall lapse. The balance of such unvested
Restricted Shares shall be forfeited to the Company (without
further action on the part of the Company or the Executive) as
of the Date of Termination, and the Executive shall have no
further rights with respect to such balance.
(iii) If the Executive's employment with the Company is terminated (A)
by the Executive without Good Reason, or (B) by the Company for
Cause, then, as of the Date of Termination, all of the Restricted
Shares that have not vested as of the Date of Termination shall
be forfeited to the Company (without any further action on the
part of the Company and the Executive), and the Executive shall
have no further rights with respect to such Restricted Shares.
(e) DELIVERY OF SHARE CERTIFICATES. Upon the vesting of any
Restricted Shares, the certificates evidencing such Restricted Shares shall
be delivered promptly to the Executive. In the case of Executive's death,
such certificates will be delivered to the beneficiary designated in writing
by the Executive pursuant to a form of designation provided by the Company,
to the Executive's legatee or legatees, or to his personal representatives or
distributees, as the case may be. Unless registered under the Securities Act
of 1933, as amended, certificates evidencing the Restricted Shares shall bear
the following legend:
THE SHARES EVIDENCED BY THIS CERTIFICATE MAY NOT BE SOLD, TRANSFERRED,
PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF UNLESS REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR UNLESS, IN THE OPINION OF COUNSEL
FOR THE COMPANY, SUCH REGISTRATION IS NOT REQUIRED.
15
<PAGE>
8. LEGAL FEES; REIMBURSEMENT OF CERTAIN EXPENSES
The Company shall promptly reimburse the Executive for the
reasonable legal fees and expenses incurred by the Executive in connection
with (i) the negotiation, preparation and implementation of this Agreement,
the Stock Option Agreement, the Registration Rights Agreement, dated the date
hereof, between the Company and the Executive (the "Registration Rights
Agreement") and any additional documents or instruments related thereto, and
any transactions contemplated thereby and (ii) enforcing or defending any
right or benefit of the Executive pursuant to this Agreement, the Stock
Option Agreement, the Registration Rights Agreement or any additional
documents or instruments related thereto, or any transaction contemplated
thereby; provided that the Company shall have no obligation to reimburse the
Executive for any fees and expenses described in clause (ii) above unless the
resolution of any action taken by the Executive to enforce or defend such
right or benefit is in favor of the Executive. In addition, the Company
hereby agrees that the amount of any such legal fees and expenses reimbursed
to the Executive under clauses (i) and (ii) above shall not be taken into
account by the Company in determining the aggregate compensation paid or
payable to the Executive under this Agreement.
9. INDEMNIFICATION
The Company shall indemnify the Executive (and his legal
representatives), unless expressly prohibited by applicable law, against all
losses, claims, damages, liabilities, costs, charges and expenses incurred or
sustained by him or his legal representatives in connection with any action,
suit or proceeding to which he (or his legal representatives) may be made a
party by reason of his being or having been a director, officer or employee
of the Company (including payment of expenses in advance of the final
disposition of the proceeding). The Company further agrees, upon demand by
the Executive, promptly to reimburse the Executive for, or pay, any loss,
claim, damage, liability or expense, unless expressly prohibited by
applicable law, to which the Company has agreed to indemnify the Executive
pursuant to Sections 8 and 9 hereof. If any action, suit or proceeding is
brought or threatened against the Executive in
16
<PAGE>
respect of which indemnity may be sought against the Company pursuant to the
foregoing, the Executive shall notify the Company promptly in writing of the
institution of such action, suit or proceeding. Such action, suit or
proceeding shall be defended by and be under the exclusive control of the
Company and its counsel; except that the Executive shall have the right to
designate separate counsel, acceptable to the Executive in his sole
discretion, and, to the extent of a conflict of interest with the Company,
the right to direct, control and supervise the Executive's defense of such
action, suit or proceeding.
10. TAXES
The Company shall deduct from all amounts payable under this
Agreement all federal, state, local and other taxes required by law to be
withheld with respect to such payments.
11. CONFIDENTIALITY AND NONCOMPETITION
(a) Unless otherwise required by law or judicial process, the
Executive shall keep confidential all confidential information known to the
Executive concerning the Company and its businesses during his employment
with the Company and for the shorter of three (3) years following the
termination of the Executive's employment with the Company or until such
information is publicly disclosed by the Company or otherwise becomes
publicly disclosed other than through the Executive's actions; provided, that
the Executive shall provide notice to the Company in advance of any
disclosure required by law or judicial process in a timely manner to permit
the Company to oppose such compelled disclosure.
(b) The Executive agrees that during his employment with the
Company and for a period of two (2) years thereafter, he shall not, directly
or indirectly, as a principal, officer, director, employee or in any other
capacity whatsoever, without the prior written consent of the Company, engage
in, or be or become interested or acquire any ownership of any kind in, or
become associated with, or make loans or advance property to any person
engaged in or about to engage in, any business activity that is competitive
with any of the businesses engaged in by the Company during the Term in any
of the
17
<PAGE>
geographic areas in which such businesses are then conducted by the Company
or have been conducted by the Company during the twelve months preceding the
termination of the Executive's employment. Nothing in this Agreement shall
prevent the Executive from making or holding any investment in any amount in
securities traded on any national securities exchange or traded in the over
the counter market, provided said investments do not exceed one percent (1%)
of the issued and outstanding stock of any one such corporation. The
Executive agrees that during his employment and for an additional period of
two (2) years thereafter, the Executive shall not, directly or indirectly,
employ or seek to employ any employee of the Company or any of its
subsidiaries or affiliates or otherwise cause or induce any employee of the
Company or any of its subsidiaries or affiliates to terminate such employee's
employment with the Company or such subsidiary or affiliate for the
employment of another company. Notwithstanding the preceding sentence, the
Executive may employ any employee of the Company or any of its subsidiaries
or affiliates if (i) such employee was not an employee of the Company or any
of its subsidiaries or affiliates on the date hereof, (ii) the employment of
such employee by the Executive does not cause an early termination by such
employee of any written agreement that such employee may have with the
Company or any of its subsidiaries or affiliates and (iii) the Executive
shall not have directly or indirectly solicited or induced such employee to
terminate such employee's employment with the Company or any of its
subsidiaries or affiliates.
12. STANDSTILL PROVISIONS
(a) The Executive agrees that during the Standstill Period (as
defined below), without the prior approval of a majority of the Board of
Directors of the Company (excluding the Executive), the Executive shall not,
and the Executive shall cause each of his Affiliates (as defined below) not
to, directly or indirectly:
(i) acquire, offer or propose to acquire, or agree to acquire
(except, in any case, by way of stock dividends or other distributions or
offerings made available to holders of any Voting Securities (as defined
below) generally, provided that any such distributed securities shall be
subject to the
18
<PAGE>
provisions hereof), directly or indirectly, whether by purchase, tender
or exchange offer, through the acquisition of control of another Person
(as defined below), by joining a partnership, limited partnership,
syndicate or other "group" (within the meaning of Section 13(d)(3) of
the Securities Exchange Act of 1934 (the "Exchange Act") or otherwise,
any Voting Securities, provided that the Executive and his Affiliates
may acquire additional Voting Securities through open market or
privately negotiated purchases so long as the effect of such acquisition
would not cause the Executive and his Affiliates to beneficially own
more than an aggregate of five percent (5%) of the outstanding Voting
Securities, provided that any Affiliate of the Executive that owns or
acquires any Voting Securities shall agree in writing to be bound by the
provisions of this Section 12 with respect to such Voting Securities,
and provided further that nothing in this Section 12 shall prevent the
exercise of options that the Executive has acquired as permitted by this
Section 12(a)(i);
(ii) make, or in any way participate, directly or indirectly, in any
"solicitation" (as such term is used in the proxy rules (the "Proxy Rules")
of the Securities and Exchange Commission as in effect on the date hereof)
of proxies or consents (whether or not relating to the election or removal
of directors), seek to advise, encourage or influence any Person with
respect to the voting of any Voting Securities, initiate, propose or
otherwise "solicit" (as such term is used in the Proxy Rules) shareholders
of the Company, or otherwise communicate with shareholders or others
pursuant to Rule 14a-1(1)(2)(iv) of the Proxy Rules in respect of any proxy
or consent solicitation, in each case other than on behalf of the Company
or the Board, provided that nothing herein shall limit the right of the
Executive to vote any Voting Securities owned by him;
(iii) seek, propose or make any public statement with respect to any
merger, business combination tender or exchange offer, sale or purchase of
assets, sale or purchase of securities (except with respect to the Voting
Securities owned by the Execu-
19
<PAGE>
tive), dissolution, liquidation, restructuring, recapitalization or
similar transaction of or involving the Company or any of its
Affiliates, except in a manner that is consistent with the Executive's
capacity as an officer and member of the Board of Directors of the
Company or as a holder of Voting Securities; and
(iv) form, join or in any way participate in a "group" (within the
meaning of Section 13(d)(3) of the Exchange Act) with respect to any Voting
Securities, other than groups consisting solely of the Executive and his
Affiliates.
(b) Nothing contained in this Section 12 shall be deemed in any
way to prohibit or limit the lawful activities of the Executive in his
capacity as a director of the Company, regardless of whether such actions are
taken at a meeting of the Board of Directors (or any committee thereof) or
otherwise.
(c) The Executive shall not be in breach of or in default under
the provisions of Section 12(a)(i) hereof, and shall not be required to
dispose of any Voting Securities, if the aggregate Voting Securities
beneficially owned by the Executive and his Affiliates is increased to more
than five percent (5%) of the outstanding Voting Securities solely as a
result of a recapitalization of the Company or a repurchase of securities by
the Company or any other action taken by the Company or its Affiliates.
(d) "Affiliate" shall have the meaning provided in Rule 12b-2,
promulgated under the Exchange Act, and shall include "Associates" as defined
in Rule 12b-2, provided that the Company shall not be deemed to be an
Affiliate of the Executive.
(e) "Person" shall mean any individual, group, corporation,
partnership, firm, government or agency or political subdivision thereof or
other entity of whatever nature.
(f) "Standstill Period" shall mean the period commencing on the
first day of the Term and ending on the second anniversary of the last day of
the Term.
20
<PAGE>
(g) "Voting Securities" shall mean the shares of Common Stock and
any other securities of the Company that are entitled to vote generally in
the election of directors or any other securities (including, without
limitation, rights and options) convertible into, exchangeable for or
exercisable for, any of the foregoing (whether or not presently convertible,
exchangeable or exercisable) (any such other securities being "Convertible
Securities"). For the purpose of calculating the percentage of Voting
Securities beneficially owned by a Person, Convertible Securities
beneficially owned by any such Person shall be deemed to be converted,
exchanged or exercised and shall represent the number of shares of Common
Stock (or other securities of the Company entitled to vote generally in the
election of directors) into which such Convertible Securities (disregarding
for such purposes any restrictions on conversion, exchange or exercise) are
then convertible, exchangeable or exercisable. All Voting Securities at any
time beneficially owned by the Executive and his Affiliates during the
Standstill Period shall be subject to all terms, provisions and restrictions
contained in this Section 12.
13. SUCCESSORS; BINDING AGREEMENT
(a) This Agreement shall be binding upon and inure to the benefit
of the Company and any successor of the Company, including, without
limitation, any corporation or corporations acquiring directly or indirectly
all or a substantial portion of the stock, business or assets of the Company,
whether by merger, consolidation, sale or otherwise (and such successor shall
thereafter be deemed the "Company" for the purposes of this Agreement).
(b) This Agreement and all rights of the Executive hereunder shall
inure to the benefit of and be enforceable by the Executive's personal or
legal representatives, executors, administrators, successors, heirs,
distributees, devisees and legatees. If the Executive should die while any
amounts would be still payable to him hereunder if he had continued to live,
all such amounts, unless otherwise provided hereunder, shall be paid in
accordance with the terms of this Agreement to the Executive's devisee,
legatee, or other beneficiary or, if there be no such beneficiary, to the
Executive's estate.
21
<PAGE>
14. NOTICE
For purposes of this Agreement, notices, demands and all other
communications provided for in the Agreement shall be in writing and shall be
deemed to have been duly given (i) when hand delivered, (ii) when sent if
sent by overnight mail, overnight courier or facsimile transmission or (iii)
when mailed by United States certified mail, return receipt requested,
postage prepaid, addressed as follows:
IF TO THE EXECUTIVE:
Richard R. Nicolosi
4408 Intracoastal Drive
Highland Beach, Florida 33487
IF TO THE COMPANY:
Samsonite Corporation
11200 East Forty-Fifth Avenue
Denver, Colorado 80239
Attention: Board of Directors
c/o Corporate Secretary
(with a copy to the attention of General
Counsel at the same address)
(in each case with a copy to Gregory A. Fernicola, Esq., at Skadden, Arps,
Slate, Meagher & Flom, 919 Third Avenue, New York, New York 10022 and Howard
G. Kristol, Esq., at Reboul, MacMurray, Hewitt, Maynard & Kristol, 45
Rockefeller Plaza, New York, New York 10111) or to such other address as any
party may have furnished to the others in writing in accordance herewith,
except that notices of change of address shall be effective only upon receipt.
15. SURVIVORSHIP
The respective rights and obligations of the parties hereunder set
forth in Sections 4, 6, 7, 8, 9, 10 and 11 of this Agreement shall survive
any termination of this Agreement to the extent necessary to the intended
preservation of such rights and obligations.
16. REPRESENTATIONS AND WARRANTIES
The Company represents and warrants that (a) it is fully authorized
and empowered to enter into this
22
<PAGE>
Agreement and that its Board has approved the terms of this Agreement, (b)
the execution of this Agreement and the performance of its obligations under
this Agreement shall not violate or result in a breach of the terms of any
material agreement to which the Company is a party or by which it is bound,
(c) no approval by any governmental authority or body is required for it to
enter into this Agreement, (d) this Agreement is valid, binding and
enforceable against the Company in accordance with its terms, except to the
extent affected or limited by applicable bankruptcy laws or other statutes
governing the rights of creditors generally and any regulations or
interpretations thereof, and (e) the Restricted Shares upon their issuance to
the Executive as provided herein, will constitute duly authorized, validly
issued, fully paid and nonassessable shares of Common Stock of the Company,
subject only to the rights of the Company specified in Section 7 hereof. The
Executive represents and warrants that his execution of this Agreement and
his performance of his duties and responsibilities under this Agreement shall
not violate or result in a breach of the terms of any material agreement to
which he is a party or by which he is bound.
17. MISCELLANEOUS
(a) ENTIRE AGREEMENT. The parties hereto agree that this
Agreement and the Stock Option Agreement referred to in Section 4(d) hereof
contain the entire understanding and agreement between them, and supersedes
all prior understandings and agreements between the parties respecting the
employment by the Company of the Executive, and that the provisions of this
Agreement may not be modified, waived or discharged unless such waiver,
modification or discharge is agreed to in writing signed by the parties
hereto. Nothing contained herein shall supersede or otherwise modify the
rights and obligations of the Company or the Executive under the Stock Option
Agreement. No waiver by either party hereto at any time of any breach by the
other party hereto of, or compliance with, any condition or provision of this
Agreement to be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at any prior or
subsequent time. No agreements or representations, oral or otherwise,
express or implied, with respect to the subject matter hereof have
23
<PAGE>
been made by either party which are not set forth expressly in this Agreement.
(b) WAIVER. No waiver by either party hereto at any time of any
breach by the other party hereto of, or compliance with, any condition or
provision of this Agreement to be performed by such other party shall be
deemed a waiver of similar or dissimilar provisions or conditions at the same
or at any prior or subsequent time.
(c) CHOICE OF LAW. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the State of
New York without giving effect to the conflict of laws principles thereof.
18. VALIDITY
The invalidity or unenforceability of any provision or provisions
of this Agreement shall not affect the validity or enforceability of any
other provision or provisions of this Agreement, which shall remain in full
force and effect.
19. COUNTERPARTS
This Agreement may be executed in one or more counterparts, each of
which shall be deemed to be an original but all of which together shall
constitute one and the same instrument.
24
<PAGE>
IN WITNESS WHEREOF, the Company has caused its name to be
subscribed to this Agreement by its duly authorized representative and the
Executive has executed this Agreement as of the date and the year first above
written.
SAMSONITE CORPORATION
By: /s/ Robert H. Falk
------------------------------------
Name: Robert H. Falk
Title: Asst. Secretary
/s/ Richard R. Nicolosi
---------------------------------------
Richard R. Nicolosi
May 15, 1996
25
<PAGE>
EXHIBIT 10.3
REGISTRATION RIGHTS AGREEMENT
AGREEMENT made as of this 15th day of May, 1996, by and between
SAMSONITE CORPORATION, a Delaware corporation (the "Company"), and RICHARD R.
NICOLOSI (the "Executive").
W I T N E S S E T H :
WHEREAS, in connection with the employment of the Executive pursuant
to the Employment Agreement (the "Employment Agreement"), dated as of the date
hereof, by and between the Company and the Executive, the Executive desires to
obtain registration rights with respect to certain shares of common stock, par
value $0.01 per share ("Common Stock"), of the Company.
WHEREAS, the Company desires to establish the terms and conditions of
such registration rights.
NOW, THEREFORE, in consideration of the premises and mutual covenants
set forth herein and in the Employment Agreement and other good and valuable
consideration, the Company and the Executive hereby agree as follows:
1. DEMAND AND PIGGYBACK REGISTRATIONS. The Company and the Executive
agree that, subject to the next succeeding sentence, the Executive shall have
the same registration rights, and shall be subject to the same obligations and
limitations in the exercise of such rights, as are provided to the "Holders" who
have complied with the provisions of the Astrum International Corp. Registration
Rights Agreement (the "Old Registration Rights Agreement"), dated as of June 1,
1993 (regardless of whether the Old Registration Rights Agreement remains in
effect), with respect to any shares of Common Stock purchased by the Executive
in the public markets or otherwise within 90 days after the date hereof
(collectively, the "Registrable Shares"), PROVIDED that notwithstanding Section
3(b) of the Old Registration Rights Agreement, the Company shall be required to
provide, subject to the other terms and provisions of the Old Registration
Rights Agreement, up to two Demand Registrations (as defined in the Old
Registration Rights Agreement) upon the request of the Executive with respect to
the Registrable Shares regardless of any requests made by
<PAGE>
the Holders under the Old Registration Rights Agreement. Notwithstanding the
foregoing, the Executive shall not be entitled to have the Registrable Shares
so registered pursuant to this Section 1:
(a) in the case of both Demand and Piggyback Registrations (as defined
in the Old Registration Rights Agreement), prior to the earlier of (i) the
90th day after the second anniversary of the date of this Agreement or (ii)
180 days after the first underwritten primary offering of Common Stock to
occur after the date of this Agreement, PROVIDED that if the Executive's
employment is terminated by the Company for Cause (as defined in the
Employment Agreement) or by the Executive other than for Good Reason (as
defined in the Employment Agreement), (1) the Executive shall not be
entitled to have the Registrable Shares registered in any Piggyback
Registration prior to the earlier to occur of (x) the first anniversary of
the Date of Termination (as defined in the Employment Agreement) or (y) 180
days after the first underwritten primary offering of Common Stock to occur
after the date of this Agreement and (2) the Executive shall not be
entitled to any Demand Registrations;
(b) unless, in the case of the second of such two Demand
Registrations, the Executive pays all the out-of-pocket and incremental
costs incurred by the Company and the Executive in connection with such
Demand Registration;
(c) unless, in the case of any Demand Registration, the aggregate Fair
Market Value (as defined in the Stock Option Agreement, dated as of the
date hereof, by and between the Executive and the Company) of the
Registrable Shares requested to be registered shall be at least $1 million
as of the date of the Executive's request for registration; and
(d) in the case of both Demand and Piggyback Registrations, to the
extent that registration is not then required, in the opinion of counsel to
the Company experienced in securities laws matters, for the public sale by
the Executive of the Registrable Shares requested to be so registered.
2
<PAGE>
2. REGISTRATION. Not later than the first anniversary of the date of
this Agreement, the Company shall file a registration statement on Form S-8 (or
any successor form for the registration under the Securities Act of securities
to be offered pursuant to employee benefit plans) registering the Restricted
Shares (as defined in the Employment Agreement) under the Securities Act,
subject to then applicable rules and regulations, in order to permit the public
resale thereof by the Executive. This Section 2 shall apply only to the extent
that an effective registration statement is then required for the public sale by
the Executive of the Restricted Shares.
3. HOLDBACK AGREEMENT. The Executive agrees not to offer for sale,
sell, contract to sell or otherwise dispose of any shares of Common Stock or any
securities that represent the right to receive shares of Common Stock during the
10 days prior to and the 180 days beginning on the effective date of any
underwritten primary or secondary offering of equity securities of the Company
(including, but not limited to, any underwritten Demand Registration or any
underwritten Piggyback Registration whether or not Registrable Shares are
included (except as part of such underwritten registration)) unless the
underwriters managing the offering otherwise agree, in each case to the extent
timely notified of such offering in writing by the Company or by the managing
underwriter or underwriters. The Company and the Executive agree that the
provisions of this Section 3 shall be enforceable by such underwriter(s) against
the Executive, it being understood that such underwriter(s) are intended third
party beneficiaries hereof and, if so requested by such underwriter(s), the
Executive agrees to execute and deliver to such underwriter(s) such agreements
and instruments, in form and substance reasonably satisfactory to such
underwriter(s), further evidencing such Holder's agreement not to sell such
securities during such period.
4. NOTICES. Notices, demands and all other communications provided
for in this agreement (together with the Old Registration Rights Agreement to
the extent that the terms thereof are incorporated herein, this "Agreement")
shall be writing and shall be deemed to have been duly given (i) when hand
delivered, (ii) when sent if sent by overnight mail, overnight courier or
facsimile transmission or (iii) when mailed by United States regis-
3
<PAGE>
tered mail, return receipt requested, postage prepaid, addressed, as follows:
If to the Company:
Samsonite Corporation
11200 East Forty-Fifth Avenue
Denver, Colorado 80239-3018
Attention: Board of Directors
c/o Corporate Secretary
` (with a copy to the attention of General
Counsel at the same address)
If to the Executive:
Richard R. Nicolosi
4408 Intracoastal Drive
Highland Beach, Florida 33487
(in each case with a copy to Gregory A. Fernicola, Esq., at Skadden, Arps,
Slate, Meagher & Flom, 919 Third Avenue, New York, New York 10022 and Howard G.
Kristol, Esq., at Reboul, MacMurray, Hewitt, Maynard & Kristol, 45 Rockefeller
Plaza, New York, New York 10111) or to such other address as any party may have
furnished to the others in writing in accordance herewith, except that notices
of change of address shall be effective only upon receipt.
5. BENEFITS OF AGREEMENT. This Agreement shall inure to the benefit
of and be binding upon each successor and assign of the Company. All
obligations imposed upon the Executive and all rights granted to the Company
under this Agreement shall be binding upon the Executive. No other person shall
have any rights under this Agreement.
6. SEVERABILITY. In the event that any one or more provisions of
this Agreement shall be deemed to be illegal or unenforceable, such illegality
or unenforceability shall not affect the validity and enforceability of the
remaining legal and enforceable provisions herein, which shall be construed as
if such illegal or unenforceable provision or provisions had not been inserted.
4
<PAGE>
7. ENTIRE AGREEMENT. The parties hereto agree that this Agreement
contains the entire understanding and agreement between them with respect to the
subject matter hereof and that the provisions of this Agreement may not be
modified, waived or discharged unless such waiver, modification or discharge is
agreed to in writing signed by the parties hereto.
8. WAIVER. No waiver by either party hereto at any time of any
breach by the other party hereto of, or compliance with, any condition or
provision of this Agreement to be performed by such other party shall be deemed
a waiver of similar or dissimilar provisions or conditions at the same or at any
prior or subsequent time.
9. GOVERNING LAW. This Agreement shall be construed and governed in
accordance with the laws of the State of New York, without regard to the
conflicts of law principles thereof.
10. INCORPORATION BY REFERENCE. The incorporation herein of any
terms by reference to another document shall not be affected by the amendment,
modification or termination of any agreement set forth in such other document or
the invalidity of any provision thereof.
11. TIME PERIODS. Any action required to be taken under this
Agreement within a certain number of days shall be taken within that number of
calendar days; provided that if the last day for taking such action falls on a
weekend or a holiday, the period during which such action may be taken shall be
automatically extended to the next business day.
12. COUNTERPARTS. This Agreement may be executed in counterparts,
each of which shall be deemed to be an original but both of which together shall
constitute one and the same instrument.
5
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed by an authorized officer and the Executive has hereunto set his hand
all as of the day, month and year first above written.
SAMSONITE CORPORATION
By: /s/ Robert H. Falk
-----------------------------------
Name: Robert H. Falk
Title: Asst. Secretary
Executive:
/s/ Richard R. Nicolosi
---------------------------------------
Richard R. Nicolosi
May 15, 1996
6
<PAGE>
EXHIBIT 10.4
Richard R. Nicolosi
4408 Intracoastal Drive
Highland Beach, FL 33487
(407) 274-6046 phone
(407) 274-6047 fax
May 16, 1996
Samsonite Corporation
11200 East Forty-Fifth Avenue
Denver, Colorado 80239
Dear Sirs:
1. PURCHASE OF COMMON STOCK FOR CASH. (a) Pursuant to the terms and
subject to the conditions set forth in this Letter Agreement, the undersigned
purchaser (the "Purchaser"), in reliance upon the representations, warranties
and agreements of Samsonite Corporation, a Delaware corporation (the "Company"),
contained herein, hereby subscribes for and agrees to purchase, and the Company,
in reliance upon the representations, warranties and agreements of the Purchaser
contained herein, hereby agrees to issue and sell to the Purchaser at the
Closing (as defined below), 55,000 shares (the "Shares") of Common Stock, par
value $.01 per share, of the Company at a price of $18.25 per share, or an
aggregate purchase price of $1,003,750.00 (the "Purchase Price").
(b) At the Closing, in consideration of the sale of the Shares to the
Purchaser, and against delivery to the Purchaser of a certificate representing
the Shares, the Purchaser shall deliver to the Company the Purchase Price, by
check payable to the Company or its order or by wire transfer of funds to an
account designated by the Company at least 24 hours prior to the Closing.
2. THE CLOSING. (a) The closing (the "Closing") of the purchase of the
Shares shall occur on June 15, 1996 or any other earlier date mutually
acceptable to the Company and the Purchaser.
(b) The Closing shall occur at the offices of Skadden, Arps, Slate,
Meagher & Flom, 919 Third Avenue, New York, New York 10022, or at such other
place as the Company and the Purchaser may mutually agree.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company represents
and warrants to the Purchaser as follows:
(a) the Company has full corporate power and authority to execute and
deliver this Letter Agreement and to perform its obligations hereunder, and this
Letter Agreement has been duly authorized, executed and delivered by the Company
and is a valid and binding agreement of the Company, enforceable against the
Company in accordance with its terms;
(b) the Shares to be issued to the Purchaser pursuant to this Letter
Agreement, when issued, delivered and paid for in accordance
<PAGE>
with the terms hereof, will be duly and validly issued and fully paid and
nonassessable; and
(c) none of the execution, delivery or performance of this Letter
Agreement by the Company will conflict with the Company's Certificate of
Incorporation or By-Laws or result in any breach of any terms or provisions of,
or constitute a default under, any contract, agreement or instrument to which
the Company is a party or by which the Company or its property is bound.
4. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER. The Purchaser
represents and warrants to the Company as follows:
(a) The Purchaser is authorized to enter into this Agreement, to perform
his obligations hereunder and to consummate the transactions contemplated
hereby.
(b) The Purchaser is purchasing the Shares for the Purchaser's own account
and with no intention of distributing or reselling the Shares in any transaction
which would be in violation of the securities laws of the United States of
America or any state thereof, or in any transaction that would subject the
issuance and sale of the Shares pursuant to this Letter Agreement to the
registration requirements of the Securities Act of 1933 (the "Securities Act")
and applicable state securities laws. The Purchaser understands that the Shares
have not been registered under the Securities Act or the securities laws of any
state by reason of a specific exemption from the registration or qualification
provisions of the Securities Act or said securities laws, the availability of
which depends upon, among other things, the bona fide nature of the investment
intent and the accuracy of the representations as expressed herein. The
Purchaser understands that, except to the extent set forth in the Registration
Rights Agreement, dated as of May 15, 1996, by and between the Company and the
Purchaser, the Company has no obligation to register the Shares under the
Securities Act or any state securities laws.
(c) The Purchaser acknowledges that the Shares must be held indefinitely
unless the Shares are so registered or an exemption from such registration is
available.
(d) The Purchaser understands that the Company has made no assurances with
respect to any secondary market for the Shares.
(e) The Purchaser has had an opportunity to discuss the business,
management and financial affairs of the Company and the terms and conditions of
an investment in the Shares with, and has had access to, the management of the
Company and he has had the opportunity to review the information set forth in
the Company's public filings and any other information requested by the
Purchaser.
(f) The Purchaser understands and acknowledges that the Company will be
relying upon the Purchaser's representations and warranties set forth herein in
offering and selling the Shares to him.
2
<PAGE>
(g) The Purchaser represents that the offering to him of the Shares was
made only through direct, personal communication between the undersigned
Purchaser and a representative of the Company and not through public
solicitation or advertising.
(h) The Purchaser did not retain or consult any "Purchaser
Representative," as such term is defined in Rule 501 of Regulation D promulgated
under the Securities Act.
(i) The Purchaser has such knowledge, experience and skill in evaluating
and investing in securities, based on actual participation in financial,
investment and business matters such that he is capable of evaluating the merits
and risks of an investment in the Shares, and has such knowledge, experience and
skill in financial and business matters that he is capable of evaluating the
merits and risks of the prospective investment in the Company and the
suitability of the Shares as an investment for himself.
(j) The Purchaser has not received, and is not relying on, any
representations or warranties from the Company or any other person, other than
those contained in this Letter Agreement.
(k) The Purchaser is able to bear the economic risk of an investment in
the Shares and has an adequate income independent of any income produced from an
investment in the Shares and has sufficient net worth to sustain a loss of all
of his investment in the Shares without economic hardship if such a loss should
occur.
5. RESTRICTIONS ON TRANSFERS; CERTAIN PERMITTED TRANSFERS. (a) The
Purchaser agrees that he will not sell, transfer, assign, pledge, hypothecate or
otherwise dispose of (each, a "transfer") the Shares, except:
(i) a transfer pursuant to an effective registration statement under
Securities Act; or
(ii) a transfer upon the death of the Purchaser or any Permitted
Transferee (as hereinafter defined) to his respective executors,
administrators, testamentary trustees, legatees or beneficiaries (the
"Purchaser's Estate"); or
(iii) a transfer made in compliance with the federal and all
applicable state securities laws to the Purchaser's spouse, parents or
direct lineal descendants or to a trust, the beneficiaries of which, or to
a corporation or partnership, the stockholders or limited or general
partners of which, include only the Purchaser and the Purchaser's spouse,
parents and/or direct lineal descendants (a "Purchaser's Trust"), or a
transfer made by such a Purchaser's Trust to the Purchaser; PROVIDED that
no transfer pursuant to subsection (a)(iii) of this Section 5 shall be
given effect on the books of the Company unless and until the transferee
shall agree in writing, in form and substance satisfactory to the Company,
to become, and becomes, bound by the representations and warranties and
restrictions on transfer applicable to a Purchaser contained in this Letter
Agreement. The Purchaser's Estate,
3
<PAGE>
any Purchaser's Trust and each person to whom the Shares may be transferred
pursuant to this Section 5 is hereinafter sometimes referred to as a
"Permitted Transferee"; or
(iv) a transfer to a person other than a Permitted Transferee;
PROVIDED that (A) such transfer is exempt from the registration
requirements of the Securities Act and any applicable state securities
laws, (B) if the Company so requests, the Company receives from the
transferor an unqualified opinion of counsel that such transfer may be
effected without registration under the Securities Act and any applicable
state securities laws, and (C) the Company consents to such transfer (which
consent shall not be unreasonably withheld) and the transferee shall agree
in writing, in form and substance satisfactory to the Company, to become,
and becomes, bound by the representations and warranties and restrictions
on transfer applicable to a Purchaser contained in this Letter Agreement;
PROVIDED, FURTHER, that this clause (C) shall not apply to any such
transfer pursuant to Rule 144 under the Securities Act; or
(v) a transfer to the Company.
(b) Each certificate representing the Shares issued to the Purchaser or to
a subsequent transferee shall include a legend in substantially the following
form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 OR UNDER STATE SECURITIES
LAWS. THE TRANSFER OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE
IS SUBJECT TO THE CONDITIONS SPECIFIED IN A LETTER AGREEMENT BETWEEN
THE COMPANY AND THE ORIGINAL PURCHASER OF THE SECURITIES EVIDENCED
HEREBY. A COPY OF SUCH CONDITIONS WILL BE FURNISHED BY THE COMPANY
TO THE HOLDER HEREOF UPON WRITTEN REQUEST AND WITHOUT CHARGE. THESE
SECURITIES MAY NOT BE RESOLD OR TRANSFERRED UNLESS SUCH CONDITIONS ARE
COMPLIED WITH AND UNLESS REGISTERED OR EXEMPT FROM REGISTRATION UNDER
THE SECURITIES ACT OF 1933 AND APPLICABLE STATE SECURITIES LAWS.
(c) Any purported transfer in violation of this Section 5 shall be null
and void and of no force or effect.
6. AMENDMENT. This Letter Agreement may be amended only by a written
instrument signed by the Company and the Purchaser.
7. 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
sent by registered or certified mail, return receipt requested, postage prepaid
and when received, if delivered personally, by facsimile or otherwise, to the
party to whom it is directed:
(a) If to the Company, to it at the following address:
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Samsonite Corporation
11200 East Forty-Fifth Avenue
Denver, Colorado 80239
Attention: General Counsel
Facsimile No.: (303) 373-6300
(b) If to the Purchaser or any of the Purchaser's Permitted Transferees,
to the Purchaser at the address set forth above (or in the agreement signed by
such other person in accordance with Section 5 hereof),
(in each case, with a copy to Gregory A. Fernicola, Esq., at Skadden, Arps,
Slate, Meagher & Flom, 919 Third Avenue, New York, New York 10022 and to Howard
G. Kristol, Esq., at Reboul, MacMurray, Hewitt, Maynard & Kristol, 45
Rockefeller Plaza, New York, New York 10111) or at such other address as the
parties hereto shall have specified by notice in writing to the other parties
(PROVIDED, that such notice of change of address shall be deemed to have been
duly given only when actually received).
8. APPLICABLE LAW. THE LAWS OF THE STATE OF NEW YORK SHALL GOVERN THE
INTERPRETATION, VALIDITY AND PERFORMANCE OF THE TERMS OF THIS AGREEMENT,
REGARDLESS OF THE LAW THAT MIGHT BE APPLIED UNDER PRINCIPLES OF CONFLICTS OF
LAW.
IN WITNESS WHEREOF, the parties have executed this Letter Agreement
effective as of the date first above written.
PURCHASER:
/s/ Richard R. Nicolosi
------------------------------------
Richard R. Nicolosi
SAMSONITE CORPORATION
By: /s/ D. Michael Clayton
--------------------------------
Name: D. Michael Clayton
Title: Vice President - Legal
5
<PAGE>
EXHIBIT A
Richard R. Nicolosi (the "Purchaser") hereby represents and warrants to
the Company as follows:
(a) The Purchaser is authorized to enter into this Agreement, to
perform his obligations hereunder and to consummate the transactions
contemplated hereby.
(b) The Purchaser is purchasing the Shares for the Purchaser's own
account and with no intention of distributing or reselling the Shares in any
transaction which would be in violation of the securities laws of the United
States of America or any state thereof, or in any transaction that would
subject the issuance and sale of the Shares pursuant to this Letter Agreement
to the registration requirements of the Securities Act of 1933 (the
"Securities Act") and applicable state securities laws. The Purchaser
understands that the Shares have not been registered under the Securities Act
or the securities laws of any state by reason of a specific exemption from
the registration or qualification provisions of the Securities Act or said
securities laws, the availability of which depends upon, among other things,
the bona fide nature of the investment intent and the accuracy of the
representations as expressed herein. The Purchaser understands that, except
to the extent set forth in the Registration Rights Agreement, dated as of May
16, 1996, by and between the Company and the Purchaser, the Company has no
obligation to register the Shares under the Securities Act or any state
securities laws.
(c) The Purchaser acknowledges that the Shares must be held
indefinitely unless the Shares are so registered or an exemption from such
registration is available.
(d) The Purchaser understands that the Company has made no assurances
with respect to any secondary market for the Shares.
(e) The Purchaser has had an opportunity to discuss the business,
management and financial affairs of the Company and the terms and conditions
of an investment in the Shares with, and has had access to, the management of
the Company and he has had the opportunity to review the information set
forth in the Company's public filings and any other information requested by
the Purchaser.
(f) The Purchaser understands and acknowledges that the Company will be
relying upon the Purchaser's representations and warranties set forth herein
in offering and selling the Shares to him.
(g) The Purchaser represents that the offering to him of the Shares was
made only through direct, personal communication between the undersigned
Purchaser and a representative of the Company and not through public
solicitation or advertising.
(h) The Purchaser did not retain or consult any "Purchaser
Representative," as such term is defined in Rule 501 of Regulation D
promulgated under the Securities Act.
(i) The Purchaser has such knowledge, experience and skill in
evaluating and investing in securities, based on actual participation in
financial, investment and business matters such that he is capable of
evaluating the merits and risks of an investment in the Shares, and has such
knowledge, experience and skill in financial and business matters that he is
capable of evaluating the merits and risks of the prospective investment in
the Company and the suitability of the Shares as an investment for himself.
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<PAGE>
(j) The Purchaser has not received, and is not relying on, any
representations or warranties from the Company or any other person, other
than those contained in this Letter Agreement.
(k) The Purchaser is able to bear the economic risk of an investment in
the Shares and has an adequate income independent of any income produced from
an investment in the Shares and has sufficient net worth to sustain a loss of
all of his investment in the Shares without economic hardship if such a loss
should occur.
(l) The Purchaser acknowledges that the certificates evidencing the
Shares will bear such restrictive legends deemed appropriate by the Company
based upon the advice of counsel.
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<PAGE>
EXHIBIT 10.5
AGREEMENT (this "Agreement") made as of May , 1996, by and
between SAMSONITE CORPORATION, a Delaware corporation (the "Company"), and
[ ] (the "Executive").
W I T N E S S E T H:
WHEREAS, the Board of Directors of the Company (the "Board")
recognizes that assuring the continuity of senior management, including the
Executive, is important to the continued success of the Company; and
WHEREAS, the Board desires to provide additional incentives to
assure that the Executive will remain employed by the Company for at least
three (3) years from the date hereof and to provide for certain other
contingencies.
NOW, THEREFORE, in consideration of the foregoing and of the
covenants herein contained, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. STAY BONUS. (a) If the Executive remains continually employed
by the Company or its subsidiaries from the date hereof through the date (the
"Stay Date") which is the earlier of the third anniversary of the date hereof
and the first anniversary of a Change of Control (as defined below), then the
Company shall issue to the Executive not later than the thirtieth (30th) day
following the Stay Date, as a one-time bonus (the "Stay Bonus"), 38,889
shares (the "Bonus Shares") of the Company's common stock, par value $.01 per
share ("Common Stock"); PROVIDED that if the Executive's employment with the
Company is terminated prior to the Stay Date (i) by reason of death or (ii)
by the Executive for Good Reason or (iii) by the Company other than for Cause
or Disability, then notwithstanding such termination of employment, the
Company shall pay the Stay Bonus to the Executive not later than the
thirtieth (30th) day following such termination of employment. If the
Executive's employment is terminated pursuant to the foregoing proviso, the
Stay Bonus shall be payable, at the option of the Company, either in the form
of (x) the Bonus Shares or (y) cash in an amount equal to the aggregate Fair
Market Value (as
<PAGE>
defined below) of the Bonus Shares as of the Date of Termination (as defined
in the Employment Agreement (the "Employment Agreement"), effective as of May
1, 1995, between the Company and the Executive). For all purposes hereof,
the Bonus Shares shall include the amount of Common Stock issuable pursuant
to this Section 1, as adjusted or changed pursuant to Section 4 hereof.
(b) As used herein, the terms "Good Reason" and "Cause" have the
respective meanings given to such terms in the Employment Agreement,
"Disability" means a determination of the Board (or any duly authorized
committee thereof) described in Section 5(b) of the Employment Agreement and
the "Fair Market Value" of the Common Stock (or other securities or property
then constituting the Bonus Shares), as of the Date of Termination, (i) in
the case of Common Stock or any other security, shall be determined with
reference to (1) the closing sales price of such security on the national
securities exchange on which such security is principally traded, on the next
preceding date on which there was a sale of such stock on such exchange, or
(2) if such security is not listed or admitted to trading on any such
exchange, the closing price as reported by the Nasdaq Stock Market for the
last preceding date on which there was a sale of such security on such
exchange, or (3) if such security is not then listed on a national securities
exchange or on the Nasdaq Stock Market, the average of the highest reported
bid and lowest reported asked prices for such security as reported by the
National Association of Securities Dealers, Inc. Automated Quotations
("NASDAQ") system for the last preceding date on which such bid and asked
prices were reported, and (ii) in the case of a security that is not then
listed on any securities exchange or prices therefor are not then quoted in
the NASDAQ system and in the case of any other property, such value shall be
determined in good faith by the Board (or any duly authorized committee
thereof).
2. ACCELERATED VESTING OF STOCK OPTIONS. If a Change of Control
occurs, then all options to purchase common stock of the Company granted to
the Executive by the Company prior to the date hereof shall vest on the first
anniversary of the date on which such Change of Control occurs (to the extent
such options shall not have otherwise vested as of such accelerated vesting
date), notwithstanding anything to the contrary contained in the
2
<PAGE>
Company's 1995 Stock Option Plan (the "Plan") or in any agreement (the "Stock
Option Agreement") between the Company and the Executive governing such
options, provided that the Executive remains continually employed by the
Company or its subsidiaries from the date hereof through such first
anniversary date. The term of such options and all other provisions of such
options (including, but not limited to, provisions governing vesting (to the
extent such provisions would result in earlier vesting), expiration,
termination and exercisability) as set forth in the Plan and the Stock Option
Agreement shall remain in full force and effect.
As used herein, "Change of Control" means (a) any sale, transfer or
other conveyance (whether directly, or indirectly through a merger,
consolidation or similar transaction), or series of related sales, transfers
or other conveyances, of the outstanding capital stock of the Company
pursuant to which any person (or group of affiliated persons) other than an
Excluded Person, becomes the beneficial owner of more than 50% of the
outstanding common stock of the Company or (b) any sale, transfer or other
conveyance of all or substantially all of the Company's assets to any person
(or group of affiliated persons) other than to an Excluded Person. For
purposes of the foregoing definition, "Excluded Person" means and includes
(i) Apollo Investment Fund, L.P. ("Apollo"), any of its affiliates, and, so
long as Apollo or an affiliate of Apollo controls the right to vote the
securities in question, any partner, shareholder or trustee of any of them,
(ii) any corporation owned, directly or indirectly, by the stockholders of
the Company in substantially the same proportions as their ownership of stock
of the Company and (iii) the Company or any subsidiary of the Company.
3. NO RIGHT TO CONTINUED EMPLOYMENT. Nothing contained in this
Agreement shall confer upon the Executive the right to continue in the employ
of the Company or to be entitled to any right or benefit not set forth in
this Agreement or to interfere with or limit in any way the right of the
Company to terminate the Executive's employment with the Company.
4. CERTAIN ADJUSTMENTS. The amount of Common Stock comprising the
Bonus Shares shall be adjusted, and the Bonus Shares shall be changed into
the kind and
3
<PAGE>
amount of capital stock, other securities, money and/or property in lieu of
Common Stock, upon the occurrence of certain events in accordance with the
provisions of paragraphs (a), (b) and (c) below.
(a) In case of any recapitalization or capital reorganization of
the Company or any reclassification of the outstanding Common Stock (other
than a change in par value, or from par value to no par value, or from no par
value to par value or as a result of a subdivision or combination), or in
case of any consolidation or merger of the Company with or into another
corporation (other than a merger with another corporation in which the
Company is the surviving corporation and that does not result in any
reclassification of or change in the outstanding Common Stock (other than a
change in par value, or from par value to no par value, or from no par value
to par value, or as a result of a subdivision or combination)), or in case of
any sale or transfer to another corporation of the property of the Company as
an entirety or substantially as an entirety, then the kind and amount of
shares of capital stock, other securities, money and/or property (the
"Transaction Consideration") receivable in respect of each share of Common
Stock upon such recapitalization, reorganization, reclassification,
consolidation, merger, sale or transfer shall thereafter be deliverable in
lieu of each Bonus Share theretofore issuable in payment of the Stay Bonus.
The intent of this paragraph is that the kind and amount of capital stock,
other securities, money and/or property deliverable pursuant to this
paragraph shall be the same as if the Bonus Shares were outstanding
immediately prior to the transaction giving rise to the payment of the
Transaction Consideration and such Transaction Consideration were deposited
in trust for the ratable benefit of the Executive and other employees of the
Company with which the Company has entered into agreements similar to this
Agreement; PROVIDED that no interest shall be deemed to have been paid in
respect of any cash constituting a part of the Transaction Consideration or
any cash, income or profits received in respect of any Transaction
Consideration. The provisions of this paragraph (a) shall similarly apply to
successive recapitalizations, reorganizations, reclassifications,
consolidations, mergers, sales and transfers.
4
<PAGE>
(b) If the Company shall subdivide or combine its outstanding
shares of Common Stock, (i) in the case of a subdivision of shares, the
number of Bonus Shares issuable in payment of the Stay Bonus shall be
proportionately increased (as at the effective date of such subdivision or,
if the Company shall take a record of holders of its Common Stock for the
purpose of so subdividing, as at the applicable record date, whichever is
earlier) to reflect the increase in the total number of shares of Common
Stock outstanding as a result of such subdivision, or (ii) in the case of a
combination of shares, the number of Bonus Shares issuable in payment of the
Stay Bonus shall be proportionately reduced (as at the effective date of such
combination or, if the Company shall take a record of holders of its Common
Stock for the purpose of so combining, as at the applicable record date,
whichever is earlier) to reflect the reduction in the total number of shares
of Common Stock outstanding as a result of such combination. In the event
that an adjustment pursuant to this paragraph (b) is made as of the record
date for purposes of any subdivision or combination and such subdivision or
combination is not so made, the number of Bonus Shares issuable in payment of
the Stay Bonus shall again be adjusted to be the number of Bonus Shares that
would then be issuable in payment of the Stay Bonus if such record date had
not been fixed.
(c) If the Company shall pay a dividend on, or make any other
distribution to the holders of, its outstanding Common Stock in shares of its
Common Stock, the number of Bonus Shares issuable in payment of the Stay
Bonus shall be adjusted, as of the date the Company shall take a record of
the holders of Common Stock for the purpose of receiving such dividend or
other distribution (or if no such record is taken, as of the date of such
payment or other distribution), to that number determined by multiplying the
number of Bonus Shares issuable in payment of the Stay Bonus in effect
immediately prior to such record date (or if no such record is taken,
immediately prior to such payment or other distribution), by a fraction (i)
the numerator of which shall be the total number of shares of Common Stock
outstanding immediately after such dividend or distribution, and (ii) the
denominator of which shall be the total number of shares of Common Stock
outstanding immediately prior to such dividend or distribution; PROVIDED that
if the foregoing adjustment is as of a record date for such dividend or
5
<PAGE>
other distribution and such dividend or distribution is not so paid or made,
the number of Bonus Shares issuable in payment of the Stay Bonus shall again
be adjusted to be the number of Bonus Shares issuable in payment of the Stay
Bonus that would then be in effect if such record date had not been fixed.
5. REGISTRATION RIGHTS. If the Stay Bonus is paid in the form of
Common Stock and the Company has not filed and caused to be effective a
registration statement on Form S-8 with respect to such shares of Common
Stock, then at the request of the Executive, the Company shall promptly file
and cause to be effective a registration statement on an appropriate form
selected by the Company (which may include Form S-8) in order to permit the
public resale of such shares of Common Stock by the Executive; PROVIDED that
the Company shall have no such obligation to file and cause such registration
statement to become effective if in the opinion of counsel to the Company
registration under the Securities Act of 1933 is not then required in order
to permit the public sale of such shares by the Executive.
6. TAXES. The Company shall deduct from all amounts payable
under this Agreement all federal, state, local and other taxes required by
law to be withheld with respect to such payments. In addition, the Company
shall have the right to require the Executive to pay to the Company in cash
the amount of any federal, state, local and foreign income and other taxes
that the Company may be required to withhold before delivering to the
Executive a certificate or certificates representing the Bonus Shares.
7. SUCCESSORS; BINDING AGREEMENT. (a) This Agreement shall be
binding upon and inure to the benefit of the Company and any successor of the
Company, including, without limitation, any person acquiring directly or
indirectly all or substantially all of the assets of the Company, whether by
merger, consolidation, sale or otherwise (and such successor shall thereafter
be deemed the "Company" for the purposes of this Agreement).
(b) This Agreement and all rights of the Executive hereunder shall
inure to the benefit of and be enforceable by the Executive's personal or
legal repre-
6
<PAGE>
sentatives, executors, administrators, successors, heirs, distributees,
devisees and legatees.
8. NOTICE. For purposes of this Agreement, notices, demands and
all other communications provided for in the Agreement shall be in writing
and shall be deemed to have been duly given (i) when hand delivered, (ii)
when sent if sent by overnight mail, overnight courier or facsimile
transmission or (iii) when mailed by United States certified mail, return
receipt requested, postage prepaid, addressed as follows: (a) if to the
Executive, to the then current address set forth in the employee payroll
records of the Company and (b) if to the Company, to Samsonite Corporation,
12000 East Forty-Fifth Avenue, Denver, Colorado 80239-3018, Attention: Board
of Directors c/o Corporate Secretary (in each case, with a copy to: Gregory
A. Fernicola, Esq., Skadden, Arps, Slate, Meagher & Flom, 919 Third Avenue,
New York, NY 10022) or to such other address as any party may have furnished
to the other in writing in accordance herewith, except that notices of change
of address shall be effective only upon receipt.
9. MISCELLANEOUS. (a) The parties hereto agree that this
Agreement contains the entire understanding and agreement between them with
respect to the subject matter hereof, and supersedes all prior understandings
and agreements between the parties respecting such subject matter, and that
the provisions of this Agreement may not be modified, waived or discharged
unless such waiver, modification or discharge is agreed to in writing signed
by the parties hereto. No agreements or representations, oral or otherwise,
express or implied, with respect to the subject matter hereof have been made
by either party which are not set forth expressly in this Agreement. The
descriptive headings of the several sections and paragraphs contained herein
have been inserted for convenience of reference only and shall in no way
limit or otherwise affect the meaning hereof.
(b) No waiver by either party hereto at any time of any breach by
the other party hereto of, or compliance with, any condition or provision of
this Agreement to be performed by such other party shall be deemed a waiver
of similar or dissimilar provisions or conditions at the same or at any prior
or subsequent time.
7
<PAGE>
(c) Except as expressly provided in Section 2 hereof, nothing
contained in this Agreement shall in any way affect the respective rights and
obligations of the parties hereto contained in any other agreement between
the parties hereto, including, but not limited to, the Employment Agreement
or any future employment agreement between the Company and the Executive.
Any Stay Bonus to which the Executive is entitled hereunder is not in lieu of
salary or other compensation for services rendered by the Executive to the
Company.
(d) The validity, interpretation, construction and performance of
this Agreement shall be governed by the laws of the State of New York without
giving effect to the conflict of laws principles thereof.
(e) Any action required to be taken under this Agreement within a
certain number of days shall be taken within that number of calendar days;
PROVIDED that if the last day for taking such action falls on a weekend or a
holiday, the period during which such action may be taken shall be
automatically extended to the next business day.
(f) The invalidity or unenforceability of any provision or
provisions of this Agreement shall not affect the validity or enforceability
of any other provision or provisions of this Agreement, which shall remain in
full force and effect.
(g) This Agreement may be executed in more than one counterpart,
each of which shall be deemed to be an original but both of which together
shall constitute one and the same instrument.
8
<PAGE>
IN WITNESS WHEREOF, the Company has caused its name to be
subscribed to this Agreement by its duly authorized representative and the
Executive has executed this Agreement as of the date and the year first above
written.
SAMSONITE CORPORATION
By:
---------------------------------
Name:
Title:
------------------------------------
[ ]
9
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EXHIBIT 21
SUBSIDIARIES OF SAMSONITE CORPORATION (Delaware)
Samsonite Europe N.V. Belgium
Samsonite S.A. France
Samsonite Limited United Kingdom
Samsonite B.V. Netherlands
Samsonite Ges.m.b.H. Austria
Samsonite GmbH Germany
Samsonite-Hungaria Luggage Ltd. Hungary
Samsonite Finanziaria S.r.l. Italy
Samsonite Italia S.r.l. Italy
Saturn & Saturn S.r.l. Italy
Bogey S.r.l. Italy
Samsonite Espana S.A. Spain
Samsonite AB (Aktiebolag) Sweden
Samsonite A/S Denmark
Samsonite AG Switzerland
Samsonite Mexico, S.A. de C.V. Mexico
Samsonite Comercio E Participacoes Ltda. Brazil
Samsonite Industrial E Comercial Ltda. Brazil
Samsonite Canada Inc. Canada
Samson S.A. de C.V. Mexico
Samsonite Mauritius Limited Mauritius
Samsonite India Private Limited India
Samsonite Singapore Pte Ltd Singapore
Samsonite Asia Services Limited Hong Kong
A.T. Retail, Inc. Indiana
Samsonite Outlet Stores, Inc. Colorado
Samsonite Pacific Ltd. Colorado
Direct Marketing Ventures, Inc. Colorado
Legacy Luggage Inc. Colorado
Samsonite Service Corporation Colorado
Samsonite Financial Co. Delaware
Samsonite Realty Inc. Delaware
Global Licensing Company Colorado
Samsonite TPA III, Inc. Delaware
Samsonite TPA IV, Inc. Delaware
<PAGE>
Astrum R.E. Corp. Delaware
Astrum Food Specialties Company, Inc. Delaware
Astrum Management Corp. Delaware
Astrum Service Corp. Delaware
KBBL Inc. Delaware
LA 30, Inc. Delaware
Sandino Telecasters, Inc. Delaware
McGregor Corporation New York
Five Hundred Fashion International, Inc. Delaware
FHF Apparel Corp. Delaware
Hortex Incorporated Texas
BTK Sales Co. Texas
Gilead Manufacturing Corporation Rhode Island
Jody Apparel, Inc. New York
WMI, Inc. Delaware
Wonderknit Corporation New York
McGregor China Corp. Delaware
Bernhard Altmann (CA) Ltd. Canada
