<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 July 31, 1998
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 the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date. 10,433,756 shares of common
stock, par value $0.01 per share, as of September 1, 1998.
- --------------------------------------------------------------------------------
<PAGE>
FORM 10-Q
---------
CONTENTS
--------
<TABLE>
<CAPTION>
Page Number
-----------
PART I FINANCIAL INFORMATION
---------------------
<S> <C> <C>
Item 1. Financial Statements
Unaudited Consolidated Balance Sheets as of July 31, 1998
and January 31, 1998.................................................................. 1
Unaudited Consolidated Statements of Operations for the three months
ended July 31, 1998 and 1997.......................................................... 3
Unaudited Consolidated Statements of Operations for the six months
ended July 31, 1998 and 1997.......................................................... 4
Unaudited Consolidated Statement of Stockholders' Equity
for the six months ended July 31, 1998................................................ 5
Unaudited Consolidated Statements of Cash Flows for the six months
ended July 31, 1998 and 1997.......................................................... 6
Unaudited Notes to Consolidated Financial Statements.................................. 8
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations............................................................. 19
Item 3. Quantitative and Qualitative Disclosures About Market Risks........................... 27
PART II OTHER INFORMATION
-----------------
<CAPTION>
<S> <C> <C>
Item 1. Legal Proceedings..................................................................... 28
Item 2. Changes in Securities................................................................. 28
Item 3. Defaults Upon Senior Securities....................................................... 28
Item 4. Submission of Matters to a Vote of Security Holders................................... 29
Item 5. Other Information..................................................................... 29
Item 6. Exhibits and Reports on Form 8-K...................................................... 29
Signature.......................................................................................... 30
Index to Exhibits.................................................................................. 31
</TABLE>
<PAGE>
PART I - FINANCIAL INFORMATION
- ------------------------------
ITEM 1. FINANCIAL STATEMENTS
SAMSONITE CORPORATION AND SUBSIDIARIES
UNAUDITED CONSOLIDATED BALANCE SHEETS
AS OF JULY 31, 1998 AND JANUARY 31, 1998
(IN THOUSANDS)
<TABLE>
<CAPTION>
July 31, January 31,
Assets 1998 1998
- ------ --------- -----------
<S> <C> <C>
Current assets:
Cash and cash equivalents.................................................. $ 20,957 3,134
Trade receivables, net of allowances for doubtful accounts
of $8,089 and $8,766..................................................... 77,055 99,620
Notes and other receivables.................................................. 12,315 10,129
Inventories (Note 2)......................................................... 193,534 172,665
Deferred income tax assets................................................... 31,335 31,623
Prepaid expenses and other current assets.................................... 17,072 13,873
Assets held for sale......................................................... 112 11,471
-------- -------
Total current assets....................................................... 352,380 342,515
Investments in affiliates.................................................... 1,593 2,425
Property, plant and equipment, net (Note 3).................................. 141,076 142,351
Intangible assets, less accumulated amortization of $209,295 and
$206,260 (Note 4).......................................................... 116,466 116,908
Other assets and long-term receivables, net of allowances
for doubtful accounts of $706.............................................. 19,338 5,850
-------- -------
$630,853 610,049
======== =======
(Continued)
</TABLE>
See accompanying notes to consolidated financial statements.
1
<PAGE>
SAMSONITE CORPORATION AND SUBSIDIARIES
UNAUDITED CONSOLIDATED BALANCE SHEETS
AS OF JULY 31, 1998 AND JANUARY 31, 1998
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION> July 31, January 31,
Liabilities and Stockholders' Equity 1998 1998
- ------------------------------------ ---------- ------------
Current liabilities:
<S> <C> <C>
Short-term debt (Note 5)....................................................... $ 9,079 5,640
Current installments of long-term obligations (Note 5)......................... 5,738 6,977
Accounts payable............................................................... 40,552 49,221
Accrued liabilities............................................................ 82,272 85,368
--------- --------
Total current liabilities.................................................... 137,641 147,206
Long-term obligations, less current installments (Note 5)........................ 475,146 172,246
Deferred income tax liabilities.................................................. 17,121 15,730
Other noncurrent liabilities..................................................... 58,223 59,838
--------- --------
Total liabilities............................................................ 688,131 395,020
--------- --------
Minority interests in consolidated subsidiaries.................................. 8,687 6,143
Redeemable preferred stock (175,000 shares issued and outstanding) (Note 6)...... 165,659 --
Stockholders' equity (deficit) (Notes 1B, 1C, 5, 6 and 8):
Preferred stock ($.01 par value; 2,000,000 shares authorized;
175,000 redeemable shares issued)............................................ -- --
Common stock ($.01 par value; 60,000,000 shares authorized;
20,933,756 and 20,371,068 shares issued; 10,433,756 and 20,371,068 shares
outstanding)................................................................. 209 204
Additional paid-in capital..................................................... 438,139 418,462
Accumulated other comprehensive income......................................... (13,964) (14,449)
Accumulated deficit............................................................ (236,008) (195,171)
Unearned compensation - restricted shares...................................... -- (160)
--------- --------
188,376 208,886
Treasury stock, at cost (10,500,000 shares) (Note 1B).......................... (420,000) --
--------- --------
Total stockholders' equity (deficit)......................................... (231,624) 208,886
--------- --------
Commitments and contingencies (Notes 1D and 10)
$ 630,853 610,049
========= ========
</TABLE>
See accompanying notes to consolidated financial statements.
2
<PAGE>
SAMSONITE CORPORATION AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED JULY 31, 1998 AND 1997
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
Three Months Ended July 31,
-----------------------------
1998 1997
---- ----
<S> <C> <C>
Net sales (Note 1G)...................................................... $163,662 179,545
Cost of goods sold (Note 3)............................................. 99,534 101,317
-------- -------
Gross profit........................................................... 64,128 78,228
Selling, general and administrative expenses (Notes 1B, 3 and 8)......... 70,828 57,179
Provision for restructuring operations (Note 1B)......................... 5,606 --
Amortization of intangible assets (Note 4)............................... 1,512 1,830
-------- -------
Operating income (loss)................................................ (13,818) 19,219
Other income (expense):
Interest income........................................................ 755 138
Interest expense and amortization of debt issue costs.................. (7,532) (4,898)
Other - net (Note 7)................................................... 1,798 8,970
-------- -------
Income (loss) before income taxes, minority interest,
and extraordinary item............................................. (18,797) 23,429
Income tax expense....................................................... (8,136) (3,242)
Minority interest in loss (earnings) of subsidiaries..................... (165) 104
-------- -------
Income (loss) before extraordinary item................................ (27,098) 20,291
Extraordinary item - loss on extinguishment of debt,
net of income tax benefit of $144 and $1,289 (Notes 1B and 5).......... (235) (2,990)
-------- -------
Net income (loss)..................................................... $(27,333) 17,301
Redeemable preferred stock dividends and accretion
of preferred stock discount............................................ (2,579) --
-------- -------
Net income (loss) available to common stockholders..................... $(29,912) 17,301
======== =======
Income (loss) per share - basic (Note 1F):
Continuing operations before extraordinary item...................... $ (1.81) 1.00
Extraordinary loss................................................... (.01) (.15)
-------- -------
Net income (loss) per share........................................ $ (1.82) .85
======== =======
Income (loss) per share - assuming dilution (Note 1F):
Continuing operations before extraordinary item...................... $ (1.81) .96
Extraordinary loss................................................... (.01) (.14)
-------- -------
Net income (loss) per share........................................ $ (1.82) .82
======== =======
</TABLE>
See accompanying notes to consolidated financial statements.
3
<PAGE>
SAMSONITE CORPORATION AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED JULY 31, 1998 AND 1997
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
Six Months Ended July 31,
---------------------------
1998 1997
---- ----
<S> <C> <C>
Net sales (Note 1G)..................................................... $320,338 349,106
Cost of goods sold (Note 3)............................................. 196,805 200,610
-------- -------
Gross profit.......................................................... 123,533 148,496
Selling, general and administrative expenses (Notes 1B, 3 and 8)........ 130,448 111,834
Provision for restructuring operations (Note 1B)........................ 8,214 (600)
Amortization of intangible assets (Note 4).............................. 3,038 3,654
-------- -------
Operating income (loss)............................................... (18,167) 33,608
Other income (expense):
Interest income....................................................... 1,547 603
Interest expense and amortization of debt issue costs................. (12,341) (11,105)
Other - net (Note 7).................................................. 2,796 15,869
-------- -------
Income (loss) before income taxes, minority interest
and extraordinary item.............................................. (26,165) 38,975
Income tax expense...................................................... (5,213) (10,071)
Minority interest in earnings of subsidiaries........................... (420) (114)
-------- -------
Income (loss) before extraordinary item............................... (31,798) 28,790
Extraordinary item - loss on extinguishments of debt,
net of income tax benefit of $3,959 and $5,898 (Notes 1B and 5)....... (6,460) (9,623)
-------- -------
Net income (loss)..................................................... $(38,258) 19,167
Redeemable preferred stock dividends and accretion of
preferred stock discount.............................................. (2,579) --
-------- -------
Net income (loss) available to common stockholders.................... $(40,837) 19,167
======== =======
Net income (loss) per share - basic (Note 1F):
Continuing operations before extraordinary item..................... $ (1.87) 1.43
Extraordinary loss.................................................. (.35) (.48)
-------- -------
Net income (loss) per share....................................... $ (2.22) .95
======== =======
Income (loss) per share - assuming dilution (Note 1F):
Continuing operations before extraordinary item..................... $ (1.87) 1.38
Extraordinary loss.................................................. (.35) (.46)
-------- -------
Net income (loss) per share....................................... $ (2.22) .92
======== =======
</TABLE>
See accompanying notes to consolidated financial statements.
4
<PAGE>
SAMSONITE CORPORATION AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE SIX MONTHS ENDED JULY 31, 1998
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)
<TABLE>
<CAPTION>
ACCUMULATED UNEARNED
ADDITIONAL OTHER COMPENSATION -
PREFERRED COMMON PAID-IN COMPREHENSIVE ACCUMULATED RESTRICTED TREASURY
STOCK STOCK CAPITAL INCOME DEFICIT SHARES STOCK
--------- ------ ---------- -------------- ------------ --------------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, February 1, 1998 $ -- 204 418,462 (14,449) (195,171) (160) --
Issuance of 1,372 shares to
directors for services -- -- 44 -- -- -- --
Amortization of restricted stock
award to compensation expense -- -- -- -- -- 160 --
Compensation expense accrued for
stock bonus awards -- -- 236 -- -- -- --
Non-cash compensation expense
for stock options (Note 8) -- -- 3,722 -- -- -- --
Exercise of employee stock
options, issuance of stock award
shares, and related income tax
benefits -- 5 9,855 -- -- -- --
Foreign currency translation
adjustment -- -- -- 485 -- -- --
Common stock warrants issued
with redeemable preferred stock
(Note 6) -- -- 5,820 -- -- -- --
Preferred stock dividends (Note 6) -- -- -- -- (2,496) -- --
Accretion of redeemable preferred
stock discount (Note 6) -- -- -- -- (83) -- --
Purchase of 10,500,000 shares for
treasury (Note 1B) -- -- -- -- -- -- (420,000)
Net loss -- -- -- -- (38,258) -- --
--------- ---- ------- ------- -------- -------- --------
Balance, July 31, 1998 $ -- 209 438,139 (13,964) (236,008) -- (420,000)
========= ==== ======= ======= ======== ======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
5
<PAGE>
SAMSONITE CORPORATION AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JULY 31, 1998 AND 1997
(IN THOUSANDS)
<TABLE>
<CAPTION>
Six Months Ended July 31,
---------------------------
1998 1997
---- ----
<S> <C> <C>
Cash flows provided by (used in) operating activities:
Net income (loss)................................................... $(38,258) 19,167
Adjustments to reconcile net income (loss) to net cash provided by
(used in) operating activities:
Loss on extinguishment of debt.................................... 6,460 9,623
Depreciation and amortization of property,
plant and equipment............................................. 10,579 10,601
Amortization of intangible assets................................. 3,038 3,654
Amortization of debt issue costs.................................. 183 813
Provision for doubtful accounts................................... 682 1,552
Amortization of stock awards and stock issued for services........ 750 716
Adjustment of reserve for discontinued operations................. -- (1,458)
Compensation expense for adjustment of stock options.............. 3,722 --
Provision (adjustment) to restructuring reserve................... 5,606 (600)
Changes in operating assets and liabilities:
Trade and other receivables..................................... 19,716 (14,902)
Inventories..................................................... (20,869) (9,258)
Prepaid expenses and other current assets....................... (3,199) (2,223)
Accounts payable................................................ (8,669) 12,770
Accrued liabilities............................................. (3,033) (23,991)
Other adjustments - net........................................... 633 (1,992)
-------- -------
Net cash provided by (used in) operating activities................. $(22,659) 4,472
-------- -------
(Continued)
</TABLE>
See accompanying notes to consolidated financial statements.
6
<PAGE>
SAMSONITE CORPORATION AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JULY 31, 1998 AND 1997
(IN THOUSANDS)
<TABLE>
<CAPTION>
Six Months Ended July 31,
-------------------------
1998 1997
---- ----
<S> <C> <C>
Cash flows provided by (used in) investing activities:
Purchases of property, plant and equipment............................... $ (12,946) (16,435)
Net cash received from (used in) operations discontinued
and sold............................................................... (1,905) (3,671)
Proceeds from sale of assets held for sale and property and equipment.... 14,744 681
Excess of purchase price over net assets acquired of
South American distributorships........................................ (2,574) --
--------- -------
Net cash provided by (used in) investing activities.................... (2,681) (19,425)
--------- -------
Cash flows provided by (used in) financing activities:
Proceeds from public stock offering, net of offering costs............... -- 130,244
Proceeds from exercise of employee stock options......................... 7,114 7,419
Proceeds from issuance of senior subordinated notes...................... 350,000 --
Proceeds from issuance of senior preferred stock......................... 175,000 --
Issuance costs of senior subordinated notes, senior preferred
stock, and new senior credit facility.................................. (20,712) --
Purchase of treasury stock............................................... (420,000) --
Retirement of subordinated notes......................................... (52,269) (80,800)
Redemption premium and expenses on retirement of long-term
obligations........................................................... (8,512) (8,974)
Net borrowings (payments) of short-term obligations...................... 3,439 2,041
Net borrowings (payments) on long-term obligations....................... 4,592 (32,176)
Other, net............................................................... 3,463 1,940
--------- -------
Net cash provided by (used in) financing activities.................... 42,115 19,694
--------- -------
Effect of exchange rate changes on cash and cash equivalents............... 1,048 (6,724)
--------- -------
Net increase (decrease) in cash and cash equivalents................... 17,823 (1,983)
Cash and cash equivalents, beginning of period............................. 3,134 9,343
--------- -------
Cash and cash equivalents, end of period................................... $ 20,957 7,360
========= =======
Supplemental disclosures of cash flow information:
Cash paid during the period for interest................................. $ 8,446 11,315
========= =======
Cash paid during the period for income taxes, net........................ $ 2,208 2,576
========= =======
</TABLE>
See accompanying notes to consolidated financial statements.
7
<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 also sells its luggage
and other travel related products through its Company-owned stores.
B. RECENT EVENTS AND RECAPITALIZATION
----------------------------------
On June 24, 1998, the Company completed a recapitalization of the Company
(the "Recapitalization") involving the repurchase pursuant to a tender offer
(the "Tender Offer") of 10.5 million shares of the Company's common stock at
a purchase price of $40.00 per share ($420 million in the aggregate) and the
refinancing of certain existing indebtedness. The Company financed the
Recapitalization through the sale of $350 million of 10 3/4% senior
subordinated notes, $175 million of 13 7/8% redeemable senior preferred
stock, and a new senior credit facility.
On January 7, 1998, the Company announced it had engaged Goldman, Sachs &
Co. as financial advisor to assist in the process of exploring various
strategic alternatives designed to enhance shareholder value. This process
ultimately resulted in the Recapitalization plan. In addition to the
charges discussed below, the Company recorded charges of approximately $4.8
million during the three months ended July 31, 1998 for financial, legal and
other expenses associated with the Tender Offer and the process of exploring
alternative plans which were not ultimately consummated.
During the six months ended July 31, 1998, the Company completed a Tender
Offer for the 11 1/8% Series B Subordinated Notes (the "Series B Notes") and
retired $52,269,000 principal amount of the Series B Notes and paid
redemption premiums and other expenses of the tender offer totaling
approximately $8,512,000. These costs, along with $1,527,000 of deferred
financing costs, were charged to expense and classified as an extraordinary
item, net of tax effects, in the accompanying statement of operations for
the six months ended July 31, 1998. Also, in connection with the
Recapitalization, deferred financing costs related to the refinanced senior
credit facility of $380,000 were charged to expense and classified as an
extraordinary item, net of tax effects, in the accompanying statements of
operations for the three-month and six-month periods ended July 31, 1998.
On March 23, 1998, the Company announced a restructuring of its Torhout,
Belgium manufacturing operations. The Company recorded a pre-tax charge of
approximately $2.6 million during the six months ended July 31, 1998 in
connection with the restructuring. The restructuring provision is primarily
related to termination and severance costs for the elimination of
approximately 111 positions.
On May 14, 1998, the Company approved a plan to further restructure its U.S.
production operations to bring the unit volume and workforce in the Denver
plant into line with expected sales and to achieve a better balance between
fixed and variable costs with respect to this facility. The restructuring
plan calls for a substantial reduction in workforce, as well as the disposal
of certain molding and other equipment that represents excess capacity. As
a result, during the three months ended July 31, 1998, the Company recorded
a restructuring charge of approximately $5.6 million (of which approximately
$2.2 million is non-cash). The restructuring was substantially completed by
July 31, 1998.
8
<PAGE>
SAMSONITE CORPORATION AND SUBSIDIARIES
UNAUDITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
C. 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. The most
significant fresh start adjustment relates to recording Reorganization Value
in Excess of Identifiable Assets. In addition, the Company recorded fresh
start adjustments to reflect tradenames, licenses, patents and other
intangibles at their fair values.
Effective February 1, 1998, the Company adopted Statement of Financial
Accounting Standards (SFAS) No. 130, Reporting Comprehensive Income. SFAS
No. 130 requires that, as part of a full set of financial statements,
entities must present other comprehensive income, which represents total
non-stockholder changes in equity. Comprehensive loss [net income (loss)
adjusted for foreign currency translation adjustments] for the three and six
month periods ended July 31, 1998 was $25,440,000 and $37,773,000,
respectively. Comprehensive income for the three and six month periods
ended July 31, 1997 was $13,456,000 and $10,401,000, respectively. The
accumulated balance of foreign currency translation adjustments, excluded
from net income, is presented in the consolidated balance sheet as
"accumulated other comprehensive income."
D. 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 as of July 31, 1998 and results of operations for the three-month
and six-month periods ended July 31, 1998 and 1997. These unaudited
consolidated financial statements and related notes should be read in
conjunction with the consolidated financial statements and related notes
included in the Company's Annual Report on Form 10-K for the fiscal year
ended January 31, 1998.
A discussion of the effect of Year 2000 issues on the Company's operations
is included in the 1998 Form 10-K under Item 7., Management's Discussion and
Analysis of Financial Conditions and Results of Operations.
E. 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 significantly from those
estimates.
F. PER SHARE DATA
--------------
The Company has adopted and retroactively applied the requirements of
Statement of Financial Account Standards No. 128, Earnings Per Share ("SFAS
128") to all periods presented. This change does not have a material impact
on the computation of the earnings per share data. SFAS 128 requires the
disclosure of "basic" earnings per share and "diluted" earnings per share.
Basic earnings per share is computed by dividing income available to common
stockholders by the weighted average number of common shares outstanding.
Diluted earnings per share is computed by dividing income available to
common stockholders by the weighted average number of common shares
9
<PAGE>
SAMSONITE CORPORATION AND SUBSIDIARIES
UNAUDITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
outstanding increased for potentially dilutive common shares outstanding
during the period. The dilutive effect of stock options, warrants, and
their equivalents is calculated using the treasury stock method.
Loss from continuing operations before extraordinary item per share and net
loss per share for the three-month and six-month periods ended July 31, 1998
is computed based on a weighted average number of shares of common stock
outstanding during the period of 16,402,301 and 18,407,919, respectively.
Basic earnings per share and earnings per share - assuming dilution are the
same for the three-month and six-month periods ended July 31, 1998 because
of the antidilutive effect of stock options and awards when there is a loss
from continuing operations.
The following table presents a reconciliation of the numerators and
denominators of basic earnings per share and the earnings per share -
assuming dilution for the three and six month periods ended July 31, 1997:
<TABLE>
<CAPTION>
Income from
Continuing Per-Share
Operations Shares Amount
--------------- ---------- ----------
<S> <C> <C> <C>
THREE MONTHS ENDED JULY 31, 1997:
Basic Earnings per Share:
Income before extraordinary item....................... $20,291,000 20,357,000 $1.00
=====
Added dilutive effect of stock options and awards...... -- 800,000
----------- ----------
Earnings per Share-Assuming Dilution:
Income before extraordinary item available to
common stockholders and shares including assumed
conversions.......................................... $20,291,000 21,157,000 $ .96
=========== ========== =====
SIX MONTHS ENDED JULY 31, 1997:
Basic Earnings per Share:
Income before extraordinary item....................... $28,790,000 20,103,000 $1.43
=====
Added dilutive effect of stock options and awards...... -- 821,000
----------- ----------
Earnings per Share-Assuming Dilution:
Income before extraordinary item available to
common stockholders and shares including assumed
conversions.......................................... $28,790,000 20,924,000 $1.38
=========== ========== =====
</TABLE>
G. 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 $7,349,000 and $8,578,000 for the six months ended July
31, 1998 and 1997, respectively, and $3,572,000 and $3,815,000 for the three
months ended July 31, 1998 and 1997, respectively.
H. RECLASSIFICATIONS
-----------------
Certain items previously reported in specific financial statement captions
have been reclassified to conform with the fiscal 1999 presentation.
10
<PAGE>
SAMSONITE CORPORATION AND SUBSIDIARIES
UNAUDITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
2. INVENTORIES
Inventories consisted of the following:
<TABLE>
<CAPTION>
July 31, January 31,
1998 1998
----------- --------------
(In thousands)
<S> <C> <C>
Raw Materials...................................... $ 48,893 47,814
Work in Process.................................... 8,332 10,476
Finished Goods..................................... 136,309 114,375
-------- -------
$193,534 172,665
======== =======
</TABLE>
3. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consisted of the following:
<TABLE>
<CAPTION>
July 31, January 31,
1998 1998
----------- --------------
(In thousands)
<S> <C> <C>
Land............................................... $ 12,144 12,266
Buildings.......................................... 66,192 60,524
Machinery, equipment and other..................... 131,187 133,778
-------- -------
209,523 206,568
Less accumulated amortization and depreciation..... (68,447) (64,217)
-------- -------
$141,076 142,351
======== =======
</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:
<TABLE>
<CAPTION>
Three months ended July 31, Six months ended July 31,
--------------------------- -------------------------
1998 1997 1998 1997
----- ---- ---- ----
(In thousands)
<S> <C> <C> <C> <C>
"Fresh Start" Depreciation in Cost of Goods
Sold.................................. $ 137 586 723 1,271
"Fresh Start" Depreciation in Selling,
General and Administrative Expenses... 31 130 161 281
----- ---- ---- -----
Total "Fresh Start" Depreciation...... $ 168 716 884 1,552
===== ==== ==== =====
</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.
4. INTANGIBLE ASSETS
Intangible assets, net of accumulated amortization, consisted of the
following:
<TABLE>
<CAPTION>
July 31, January 31,
1998 1998
---- ----
(In thousands)
<S> <C> <C>
Trademarks................................ 106,807 108,556
Licenses, Patents and Other............... 9,659 8,352
-------- -------
$116,466 116,908
======== =======
</TABLE>
11
<PAGE>
SAMSONITE CORPORATION AND SUBSIDIARIES
UNAUDITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Amortization of intangible assets, including amortization related to the
adjustments of assets and liabilities to fair value in connection with the
adoption of SOP 90-7, consisted of the following:
<TABLE>
<CAPTION>
Three Months Ended July 31, Six Months Ended July 31,
-------------------------- --------------------------
1998 1997 1998 1997
---- ----- ---- ----
(In thousands)
<S> <C> <C> <C> <C>
"Fresh Start" Amortization of Tradenames,
Licenses, Patents and Other................ $1,431 1,606 2,863 3,213
Other........................................ 81 224 175 441
------ ----- ----- -----
$1,512 1,830 3,038 3,654
====== ===== ===== =====
</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 was amortized over a three-year
period ending June 1996; licenses, patents and other are amortized over a
period ranging from one to twenty-three years, and tradenames are amortized
primarily over a period of forty years.
5. DEBT
Debt consisted of the following:
<TABLE>
<CAPTION>
July 31, January 31,
1998 1998
-------- -----------
(In thousands)
<S> <C> <C>
Senior Credit Facility (a).......................... $109,847 102,533
Senior Subordinated Notes (b)....................... 350,000 --
Other (c)........................................... 23,434 25,227
Capital lease obligations........................... 6,150 4,302
Series B Senior Subordinated Notes (d).............. 532 52,801
-------- -------
Total debt....................................... 489,963 184,863
Less short-term debt and current installments of
long-term obligations............................ (14,817) (12,617)
-------- -------
$475,146 172,246
======== =======
</TABLE>
(a) On June 24, 1998, the Company entered into a new senior credit facility (the
"Senior Credit Facility"). The Senior Credit Facility provides for a $100
million credit facility (the "Revolving Credit Facility"), a term loan
facility in the amount of $60 million (the "U.S. Term Loan Facility") which
was borrowed by Samsonite Corporation, and a $50 million term loan facility
(the "European Term Loan Facility") which was borrowed by Samsonite Europe
N.V. The Company has the option in certain circumstances to add additional
lenders as parties to the Senior Credit Facility in order to increase the
Revolving Credit Facility by up to an additional $50 million. The Revolving
Credit Facility and the European Term Loan Facility mature on June 24, 2003.
The U.S. Term Loan Facility requires principal repayments in each of the
first five years of 1.0% of the original principal balance and principal
repayments in each of the sixth and seventh years of 47.5% of the original
principal balance. Borrowings under the Senior Credit Facility accrue
interest at rates adjusted periodically depending on the Company's financial
performance as measured each fiscal quarter and interest rate market
conditions. In addition, the Company is required to pay a commitment fee on
the unused portion of the Revolving Credit Facility.
The obligations under the U.S. Term Loan Facility and the Revolving Credit
Facility are secured by inventory, accounts receivable, personal property,
intellectual property and other intangibles of Samsonite Corporation, 100%
of the capital stock of Samsonite Corporation's major domestic subsidiaries,
and 66% of the capital stock of Samsonite Europe N.V. and other major non-
domestic subsidiaries.
12
<PAGE>
SAMSONITE CORPORATION AND SUBSIDIARIES
UNAUDITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
The Senior Credit Facility contains financial and other covenants that,
among other things, limit the ability of the Company (subject to negotiated
exceptions) to incur additional liens, incur additional indebtedness, make
certain kinds of investments, prepay subordinate indebtedness, make
distributions and dividend payments to its stockholders, engage in affiliate
transactions, make certain asset dispositions, make acquisitions, and
participate in certain mergers.
(b) On June 24, 1998, the Company issued and sold $350,000,000 principal amount
of 10 3/4% Senior Subordinated Notes due 2008 (the "Old Notes"). The Old
Notes were issued as part of the financing necessary to effect the
Recapitalization described in Note 1B. On August 26, 1998, the Company
commenced an exchange offer to exchange up to $350,000,000 principal amount
of 10 3/4% Senior Subordinated Notes due 2008, registered under the
Securities Act of 1933, as amended (the "New Notes" and, together with the
Old Notes, the "Notes") for a like principal amount of the Old Notes. The
terms of the New Notes are identical in all material respects to the Old
Notes. The exchange offer expires on September 28, 1998.
Interest on the Notes is payable in cash semiannually in arrears on June 15
and December 15 of each year, commencing December 15, 1998. The Notes will
mature on June 15, 2008. The Notes will be redeemable at the option of the
Company in whole or in part, at any time on or after June 15, 2003, at
redemption prices ranging from 100.00% to 105.375% of the principal amount
depending on the redemption date, plus accrued interest. In addition, the
Company, at its option, may redeem in the aggregate up to 40% of the
principal amount of the Notes originally issued at any time and from time to
time prior to June 15, 2001, at a redemption price equal to 110.75% of the
principal amount thereof, plus accrued interest, with the proceeds of one or
more equity offerings, provided that at least $210 million aggregate
principal amount of Notes remains outstanding immediately after the
occurrence of any such redemption.
The indenture under which the Notes were issued contains certain covenants
that, among other things, restrict the ability of the Company and its
restricted subsidiaries (as defined in the indenture) to incur additional
indebtedness, pay dividends and make certain other distributions, issue
capital stock of restricted subsidiaries, make certain investments,
repurchase stock, create liens, enter into transactions with affiliates,
create dividend or other payment restrictions affecting restricted
subsidiaries, merge or consolidate, and transfer or sell assets. The
covenants are subject to a number of important exceptions.
(c) Other obligations consist of various notes payable to banks by foreign
subsidiaries aggregating $18.5 million and $4.7 million of secured financing
arrangements with foreign banks.
(d) The Series B Notes bear interest at 11 1/8% and have a maturity date of July
15, 2005. During the six months ended July 31, 1998, the Company completed a
tender offer for the Series B Notes and retired $52,269,000 principal amount
of the Notes and paid redemption premium and other expenses of the tender
offer totaling approximately $8,512,000. These costs, along with $1,527,000
of deferred financing costs, were charged to expense and classified as an
extraordinary item, net of tax effects, in the accompanying unaudited
statement of operations for the six months ended July 31, 1998.
6. REDEEMABLE SENIOR PREFERRED STOCK
On June 24, 1998, the Company issued and sold 175,000 units consisting of
$175,000,000 aggregate liquidation preference of its 13 7/8% Senior
Redeemable Exchangeable Preferred Stock, liquidation preference $1,000 per
share (the "Old Senior Preferred Stock") and warrants to acquire an
aggregate of 1,959,000 shares of the Company's common stock at an exercise
price of $13.02 per share, subject to antidilution adjustments.
13
<PAGE>
SAMSONITE CORPORATION AND SUBSIDIARIES
UNAUDITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
On August 26, 1998, the Company commenced an exchange offer to exchange up
to 175,000 shares of its 13 7/8% Senior Redeemable Exchangeable Preferred
Stock, liquidation preference $1,000 per share, which has been registered
under the Securities Act of 1933, as amended (the "New Senior Preferred
Stock" and, together with the Old Senior Preferred Stock, the "Senior
Preferred Stock"), for a like number of shares of the Old Senior Preferred
Stock. The terms of the New Senior Preferred Stock are identical in all
material respects to the Old Senior Preferred Stock. The exchange offer
expires on September 28, 1998.
The Old Senior Preferred Stock was issued as part of the financing necessary
to effect the Recapitalization described in Note 1B. The Senior Preferred
Stock is recorded at its liquidation preference discounted for estimated
issuance costs of $6,100,000 and the value assigned to the warrants of
$5,820,000. The preferred stock discount is being accreted by charging
accumulated deficit over the twelve-year term of the Senior Preferred Stock.
Holders of the Senior Preferred Stock are entitled to receive, when, as and
if declared by the Board of Directors of the Company out of funds legally
available therefor, dividends on the Senior Preferred stock at a rate per
annum of 13 7/8% of the liquidation preference per share of Senior Preferred
Stock, payable quarterly in arrears on each March 15, June 15, September 15
and December 15 commencing September 15, 1998. All dividends are cumulative,
whether or not earned or declared, on a daily basis from June 24, 1998 and
compound on a quarterly basis. Dividends may be paid, at the Company's
option, on any dividend payment date occurring on or prior to June 15, 2003,
either in cash or by the issuance of additional shares of Senior Preferred
Stock with a liquidation preference equal to the amount of such dividends;
thereafter, dividends will be payable in cash. Dividends on the Senior
Preferred Stock are accrued monthly to the liquidation preference amount by
charges to accumulated deficit for dividends expected to be paid by issuing
additional shares of Senior Preferred Stock. The dividend rate on the Senior
Preferred Stock is subject to increase by 2% upon the occurrence of certain
events including the failure to pay dividends in cash after June 15, 2003
and failure to comply with certain covenants and conditions. The Company's
Senior Credit Facility and the indenture under its Notes contain limitations
on the Company's ability to pay cash dividends on the Senior Preferred
Stock.
The Company is required to redeem all of the Senior Preferred Stock
outstanding on June 15, 2010, at a redemption price equal to 100% of the
liquidation preference thereof, plus, without duplication, all accumulated
and unpaid dividends to the redemption date. The Senior Preferred Stock is
redeemable at the option of the Company in whole or in part, at any time and
from time to time on or after June 15, 2001, at redemption prices ranging
from 110% of the liquidation preference to 100% of the liquidation
preference depending on the redemption date.
The Senior Preferred Stock is exchangeable at the option of the Company at
any time for junior subordinated debentures of the Company or, at the option
of the Company, debentures of a holding company of the Company (in either
case, the "Exchange Debentures"), with an interest rate equal to the
dividend rate on the Senior Preferred Stock, payable in cash or in
additional Exchange Debentures at the option of the issuer thereof until the
fifth anniversary of the issuance of the Senior Preferred Stock and in cash
thereafter. The Senior Preferred Stock and the Exchange Debentures, if
issued, will be redeemable at the option of the holders thereof upon a
change of control of the Company at a redemption price of 101% of
liquidation preference or principal amount as the case may be, plus all
accumulated and unpaid dividends or interest thereon, as the case may be, to
the redemption date. The Senior Preferred Stock contains, and the Exchange
Debentures, if issued, will contain, certain covenants that, among other
things, limit the Company's ability to incur additional indebtedness, pay
dividends and make certain other distributions, enter into transactions with
affiliates or merge or consolidate.
14
<PAGE>
SAMSONITE CORPORATION AND SUBSIDIARIES
UNAUDITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
7. OTHER INCOME (EXPENSE) - NET
Other income (expense) - net consisted of the following:
<TABLE>
<CAPTION>
Three Months Ended July 31, Six Months ended July 31,
----------------------------- -------------------------
1998 1997 1998 1997
---- ---- ---- ----
(In thousands)
<S> <C> <C> <C> <C>
Net realized gains from foreign currency
forward delivery contracts................... $ 749 1,459 1,425 2,521
Rental income................................... 113 544 365 1,066
Equity in loss of unconsolidated affiliate...... (638) (102) (873) (163)
Pension expense related to merged plans......... -- (350) -- (350)
Foreign currency transaction income, net........ 93 289 16 (80)
Unrealized gain (loss) from foreign
currency forward delivery contracts........... (562) 170 190 2,754
Gain (loss) on disposition of assets held for
sale and fixed assets, net.................... 3,578 -- 772 --
Favorable settlement of claims (a).............. -- -- -- 2,128
Adjustment of allowances relating to previous
operations (b)................................ -- -- -- 1,458
Adjustment of contingent tax accrual (c)........ -- 7,700 -- 7,700
Other, net...................................... (1,535) (740) 901 (1,165)
------- ----- ----- ------
$ 1,798 8,970 2,796 15,869
======= ===== ===== ======
</TABLE>
(a) Other income of $2,128,000 for the six months ended July 31, 1997 resulted
from the favorable settlement for approximately $11,000, including legal
expenses, of claims against the Company. The Company had previously accrued
$2,139,000 for such claims as part of its reorganization in bankruptcy. The
claims are part of the Contingent Liability with Respect to the Old Notes
described in Note 14 to the consolidated financial statements in the 1998
Form 10-K and relate to interest on overdue installments of interest
occurring prior to the bankruptcy of the Company's predecessor in 1993.
(b) During the six months ended July 31, 1997, the Company recorded other income
of $1,458,000 for the reversal of allowances for factored receivables from
previous operations which were no longer necessary upon the favorable
settlement of receivables for which such allowances were established.
(c) During the three and six-month periods ended July 31, 1997, certain
contingencies related to tax matters arising prior to and accrued in
conjunction with the Restructuring were resolved; as a result, the Company
reduced the related accrual by $7,700,000. The resolution of such matters
did not result in any cash payment or additional liability for taxes.
8. EMPLOYEE STOCK OPTIONS
The Company has authorized 2,550,000 shares for the granting of options under
the 1995 Stock Option and Incentive Award Plan. See Note 10 to the
consolidated financial statements included in the 1998 Form 10-K for a
description of such plan. The Company also has outstanding options and stock
bonus awards to current executives in connection with employment agreements.
On July 15, 1998, the Board of Directors of the Company adopted the FY 1999
Stock Option and Incentive Award Plan (the "1999 Plan"), which was approved
by the Company's stockholders on August 28, 1998. The 1999 Plan has 750,000
shares reserved
15
<PAGE>
SAMSONITE CORPORATION AND SUBSIDIARIES
UNAUDITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
for the issuance of a variety of awards, including tax qualified incentive
stock options, nonqualified stock options, stock appreciation rights,
restricted stock awards or other forms of awards consistent with the purposes
of the 1999 Plan. As of July 31, 1998, no awards have been made under the
1999 Plan.
In connection with the Tender Offer, the Company determined to adjust all
options that remained unexercised after the Tender Offer by reducing the
exercise price of each option by $12.50, but not to less than 25% of the
average trading price of the Company's common stock for a specified period
following the completion of the Tender Offer. If the $12.50 adjustment
resulted in the exercise price of an option being reduced to less than 25% of
such average trading price, the option holder has the right to receive cash
in lieu of further reduction of the option price when such options become
exercisable. As an alternative to accepting a $12.50 reduction in option
price, the Company allowed holders of options to voluntarily surrender their
options to the Company and in exchange receive new options to purchase a
reduced number of shares of Company common stock at $10.00 per share and with
the same proportional vesting schedule and performance criteria, if any, as
the options surrendered. As a result of the $12.50 reduction in option prices
for certain of the outstanding options, the Company recorded a charge to
compensation expense during the three months ended July 31, 1998 of
approximately $4.3 million for the difference between the aggregate adjusted
option prices and the post-Tender Offer trading price of $10.00 per share.
Approximately $0.6 million of such compensation expense is payable in cash to
option holders in lieu of reducing option prices to less than 25% of the
post-Tender Offer trading price.
As adjusted to reflect the aforementioned reduction in exercise prices and
number of shares subject to options, at July 31, 1998, the Company had
outstanding options for a total of 1,739,054 shares at options prices ranging
from $2.50 to $25.875 per share. Options for 829,518 shares were exercisable
at July 31, 1998 at a weighted average exercise price of $6.35 per share.
Options for 444,649 shares under the 1995 Stock Option and Incentive Award
Plan were exercised at an average exercise price of $16.01 per share during
the six months ended July 31, 1998.
In May 1996, the Company granted stock bonuses for a total of 116,667 shares
to certain officers payable if the officer remains continually employed by
the Company through the earlier of May 15, 1999 or one year after a change of
control event or in the event of certain types of termination. The Company is
recognizing compensation expense equal to the fair market value at the date
of the grant ($18.25 per share) over the vesting period. Upon the termination
of one of the executive's employment with the Company, 38,889 of such shares
vested and were issued to the executive during the six months ended July 31,
1998. In connection with the Tender Offer, the Company determined to permit
the holders of the 77,778 outstanding shares of restricted stock to tender
such shares. As a result, 40,052 of such restricted shares were purchased in
the Tender Offer and the remaining 37,726 shares remain subject to the
original vesting requirements.
9. SEGMENT INFORMATION
The Company has one line of business: the manufacture and distribution of
luggage and other travel-related products. Management of the business and
evaluation of operating results is organized along geographic lines dividing
responsibility for the Company's operations as follows: The Americas, which
include the United States, Canada, Latin America, and South America; Europe;
Asia, which includes India, China, Singapore, South Korea, and Hong Kong; and
Other which primarily includes licensing revenues from non-luggage brand
names owned by the Company and royalties from the Japanese luggage licensee,
and corporate overhead. Net outside sales and operating income (loss) by
segment for the three-month and six-month periods ended July 31, 1998 and
1997 are as follows:
16
<PAGE>
SAMSONITE CORPORATION AND SUBSIDIARIES
UNAUDITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
<TABLE>
<CAPTION>
Three Months Ended July 31, Six Months Ended July 31,
--------------------------- -------------------------
1998 1997 1998 1997
---- ---- ---- ----
(In thousands)
<S> <C> <C> <C> <C>
Net outside sales:
Europe (a).............. $ 72,628 64,786 144,577 130,486
Americas................ 81,032 105,849 158,502 201,145
Asia.................... 5,230 5,094 10,119 10,129
Other................... 4,772 3,816 7,140 7,346
------- ------- ------- -------
$ 163,662 179,545 320,338 349,106
======= ======= ======= =======
Operating income (loss):
Europe (a).............. $ 11,436 10,586 17,308 19,150
Americas (b)............ (16,160) 9,675 (24,290) 17,168
Asia.................... 163 2,531 82 2,618
Other................... (9,257) (2,852) (10,507) (3,070)
Eliminations............ -- (721) (760) (2,258)
------- ------- ------- -------
$ (13,818) 19,219 (18,167) 33,608
======= ======= ======= =======
</TABLE>
(a) Without the effect of the provision for restructuring operations, Europe's
operating income would have been approximately $11.2 and $19.7 million for
the three and six month periods ended July 31, 1998, respectively.
Additionally, the adverse effects of the strengthened U.S. dollar versus the
Belgian franc causes reported sales for the three and six month periods
ended July 31, 1998 to be reduced by approximately $3.7 million and $11.6
million, respectively. The adverse effects of the strengthened U.S. dollar
versus the Belgian franc causes operating income for the three and six month
periods ended July 31, 1998 to be reduced by approximately $0.5 million and
$1.3 million, respectively.
(b) Without the effect of the provision for restructuring operations, the
Americas operating loss would have been approximately $10.4 million and
$18.6 million for the three and six month periods ended July 31, 1998,
respectively.
10. LITIGATION, COMMITMENTS AND CONTINGENCIES
On March 13, 1998, a complaint was filed in Colorado State District Court,
County of Denver, against the Company, certain current and former directors
of the Company, Apollo Investment Fund, L.P. and Apollo Advisors, L.P. The
purported class action brought on behalf of an alleged class of purchasers
of Samsonite common stock during the period from September 10, 1996 to
December 1, 1997, alleges, among other things, that certain statements and
earnings forecasts made in the last 18 months were misleading and/or
misrepresented material facts and that the Company is also liable for
certain allegedly misleading statements contained in various analysts'
reports. In addition, on or about August 18, 1998, a complaint making
substantially similar claims and seeking substantially similar relief as the
above complaint was filed by a different purported class of purchasers of
Samsonite common stock during the same alleged class period. The Company
believes that these complaints are without merit and intends to contest them
vigorously. These class actions seek, among other things, unspecified
compensatory and rescissory damages, as well as pre-judgment and post-
judgment interest, attorney's fees, expert witness fees and other costs.
On July 1, 1998, a complaint was filed in Delaware Court of Chancery against
the Company and certain members of its Board of Directors. The purported
class action brought on behalf of holders of Samsonite common stock
challenges the Tender Offer. The purported class action initially sought an
order temporarily restraining consummation of the Tender Offer but that
application was subsequently withdrawn. The
17
<PAGE>
SAMSONITE CORPORATION AND SUBSIDIARIES
UNAUDITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Company believes that the complaint is without merit and intends to contest
it vigorously. The complaint, which seeks compensatory and/or rescissory
damages as well as other relief, alleges disclosure violations with respect
to the Tender Offer and that the Tender Offer was coercive, the product of
unfair dealing and violated the directors' duties.
Between August 28, 1998 and September 4, 1998, four complaints were filed in
United States District Court for the District of Colorado against the
Company, certain officers and directors of the Company, and Apollo Advisors,
L.P. Each of the purported class actions seeks to maintain an action on
behalf of a class consisting of purchasers of Samsonite common stock during
the period from June 4, 1997 to August 11, 1998. Each complaint seeks
unspecified damages and alleges, among other things, that the Company made
materially false and misleading announcements concerning the financial
condition of the Company and reported materially overstated revenues and net
income throughout the class period. The Company believes that it has
meritorious defenses to each of the complaints and intends to contest each
of them vigorously.
In addition, the Company is a party to various other legal proceedings and
claims in the ordinary course of business. The Company does not believe that
the outcome of any pending matters will have a material adverse affect on
its consolidated financial position, results of operations or liquidity.
Refer to Note 14 to the consolidated financial statements included in the
Company's Annual Report on Form 10-K for the fiscal year ended January 31,
1998 which describes other contingencies and commitments.
18
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
- ---------------------
THREE MONTHS ENDED JULY 31, 1998 ("FISCAL 1999" OR "CURRENT YEAR") COMPARED TO
THREE MONTHS ENDED JULY 31, 1997 ("FISCAL 1998" OR "PRIOR YEAR")
General. The following discussion analyzes the Company's results of operations
along the lines of the Company's organizational structure as disclosed in Note 9
to the consolidated financial statements included elsewhere herein as follows:
(i) "European operations" which consist of its European sales manufacturing and
distribution operations whose reporting currency is the Belgian franc, (ii) "the
Americas operations" which include sales, manufacturing, and distribution
operations in the United States, Canada, Latin America, Mexico, Argentina and
Uruguay, (iii) "Asian operations" which include the sales, manufacturing and
distribution operations in India, China, Singapore, South Korea and Hong Kong,
and (iv) non-luggage licensing operations and corporate overhead.
Results of European operations were translated from Belgian francs to U.S.
dollars in fiscal 1999 and fiscal 1998 at average rates of approximately 37.15
and 35.33 francs to the U.S. dollar, respectively. This decrease in the value
of the Belgian franc of approximately 4.9% resulted in decreases in reported
sales, cost of sales and other expenses in fiscal 1999 compared to fiscal 1998.
The most significant effects from the difference in exchange rates from last
year to the current year are noted in the following analysis and referred to as
an "exchange rate difference." The Company enters into forward foreign exchange
contracts and option contracts to reduce its economic exposure to fluctuations
in currency exchange rates for the Belgian franc and other foreign currencies.
Such instruments are marked to market at the end of each accounting period;
realized and unrealized gains and losses are recorded in other income. During
the three months ended July 31, 1998, the Company had net gains from such
instruments of $0.2 million (including a loss of $0.6 million which was
unrealized); during the three months ended July 31, 1997, the Company had net
gains on such instruments of $1.6 million ($0.2 million of which was
unrealized). The Company estimates the reduction in reported operating income
because of translation from the strengthening of the U.S. dollar versus the
Belgian franc from the same quarter in the prior year to be approximately $0.5
million and $1.2 million for the three months ended July 31, 1998 and 1997,
respectively.
Net Sales. Consolidated net sales decreased from $179.5 million in fiscal 1998
to $163.7 million in fiscal 1999, a decrease of $15.8 million. Fiscal 1999
sales were adversely affected by depressed U.S. wholesale sales and the
strengthening of the U.S. dollar versus the Belgian franc.
Sales from European operations increased from $64.8 million in fiscal 1998 to
$72.6 million in fiscal 1999, an increase of $7.8 million. Expressed in the
local European reporting currency (Belgian francs), fiscal 1999 sales increased
by 17.9%, or the U.S. constant dollar equivalent of $11.5 million, from fiscal
1998; however, the increase was offset by a $3.7 million exchange rate
difference. Sales of hardside product were increased by approximately 16.1%
from prior year while softside product sales were increased by approximately
13.2%. Sales in almost all the European countries showed significant
improvement from the prior year.
Sales from the Americas operations declined from $105.8 million in fiscal 1998
to $82.3 million in fiscal 1999, a decrease of $23.5 million or 22.2%. U.S.
wholesale sales for the second quarter decreased by $30.8 million from the prior
year, retail sales increased by $6.3 million, and sales in the other Americas
operations increased by $1.0 million from the prior year.
19
<PAGE>
U.S. Wholesale sales were negatively impacted in fiscal 1999 by a computer
conversion problem which virtually halted shipments to customers during the
first 20 days of July and disrupted all aspects of the distribution process in
the U.S., including invoicing. In addition, computer problems caused the U.S.
Wholesale business to suspend processing through Electronic Data Interchange
(EDI) with its customers and normal sales efforts, and caused inventory
stockouts in the U.S. Retail store division resulting in additional lost sales.
Shipments were resumed during the remainder of the month, but at less than full
capacity and through means of circumventing certain aspects of the computer
system. Conversion of the U.S. distribution system was the last phase of the
project to upgrade computer systems in the United States, which included the
installation of the new financial, manufacturing and distribution software. The
sales decline in the U.S. Wholesale business was also attributable to a number
of industry factors affecting the U.S. luggage market in general, including
weaker than anticipated demand, numerous discount luggage promotions and excess
inventory levels at retail industry-wide. These factors contributed to higher
than expected returns and put pressure on the U.S. Wholesale business to offer
additional markdowns and advertising allowances to move excess inventory through
the system and clear space on customer shelves for the introduction of new
product in the third fiscal quarter.
U.S. Retail sales continued to improve, increasing from $27.8 million in the
prior year to $34.1 million in the second quarter of fiscal 1999, an increase of
22.8%. Comparable store sales increased by approximately $0.4 million or 1.6%
from the same quarter in the prior year.
Second quarter sales from Asian operations, including India, increased from $5.0
million in fiscal 1998 to $5.2 million in fiscal 1999. Sales in the Pacific Rim
operations decreased by approximately $0.9 million or 19.7% from the prior year
due to the effect of the Asian economic difficulties. This decrease was offset
by increased sales from the new manufacturing and distribution facility in India
of approximately $1.1 million.
Revenues from licensing declined $0.3 million due to a decline in revenues from
aging non-luggage McGregor brands and reduced revenues from the Japanese
licensee due largely to the effects of the strengthening U.S. dollar on currency
translation rates.
Gross profit. Consolidated gross profit for fiscal 1999 declined from fiscal
1998 by $14.1 million. Consolidated gross margin decreased by 4.4 margin
points, from 43.6% in fiscal 1998 to 39.2% in fiscal 1999.
Gross margins from European operations declined 1.2 margin points, from 41.9% in
fiscal 1998 to 40.7% in fiscal 1999. The decrease in gross profit margins is
due to a higher sales mix of lower gross profit margin on mass merchant sales as
European sales grow in this marketing channel.
Gross margins for the Americas declined from 43.8% in fiscal 1998 to 34.8% in
fiscal 1999. Margins decreased primarily because of U.S. Wholesale operations
and is due to lower absorption of manufacturing overhead due to the decrease in
sales, discounting on slow moving and obsolete product lines, price reductions
on certain product lines, price markdowns given to customers for existing
inventories, and unfavorable plant production variances.
Selling, General and Administrative Expenses ("SG&A"). Consolidated SG&A
increased by $13.6 million from fiscal 1998 to fiscal 1999. As a percent of
sales, SG&A was 43.3% in fiscal 1999 and 31.8% in fiscal 1998.
On a U.S. dollar basis, SG&A for European operations increased by $1.8 million
from fiscal 1998 to fiscal 1999. The exchange rate difference caused SG&A to
decrease by $0.9 million. The remainder, an increase of $2.7 million, resulted
from an increase in SG&A expressed in Belgian francs of 16.8%. The increase in
SG&A was primarily to support the increased sales levels in fiscal 1999. As a
percent of sales, Europe's SG&A was 24.6% in fiscal 1999 versus 24.9% in fiscal
1998.
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Combined SG&A for the Americas increased by $2.4 million due primarily to an
increase of $3.0 million in the retail division related to the increase in the
number of stores over the prior year and an increase in SG&A relating to the
Latin American operations of $1.0 million, offset by a $1.6 million decrease in
SG&A for U.S. Wholesale operations.
SG&A for Asia remained consistent with the prior year expense.
SG&A for the licensing business declined by $0.1 million. Corporate overhead
increased by $9.5 million due primarily to expenses totaling $9.1 million
associated with the stock tender offer in the second quarter of fiscal 1999
including expenses associated with adjustments to employee stock options.
Provision for restructuring operations. The provision for restructuring
operations in the second quarter of fiscal 1999 of $5.6 million results
primarily from the restructuring of the U.S. Wholesale business. The
restructuring provision is primarily related to termination and severance costs
for the elimination of approximately 227 positions and costs related to the
disposal of molding and other equipment representing excess capacity. See also
Note 1B to the consolidated financial statements included elsewhere herein.
Amortization of intangible assets. Amortization of intangible assets decreased
from $1.8 million in fiscal 1998 to $1.5 million in fiscal 1999 primarily
because the cost of intangibles was reduced in fiscal 1998 as a result of the
sale of certain trademarks.
Operating income (loss). Operating income decreased from $19.2 million in fiscal
1998 to an operating loss in fiscal 1999 of $13.8 million, a decrease of $33.0
million. This decrease is a result of the decline in sales and resulting
reduction of gross profit of $14.1 million, the increase in SG&A of $13.6
million, the increase in the restructuring provision of $5.6 million, net of the
decrease in amortization of intangibles of $0.3 million.
Interest income. Interest income increased by $0.6 million due primarily to
interest income received on temporary investment of funds from proceeds of the
Recapitalization financing until the Tender Offer was completed. See Note 1B to
the consolidated financial statements includes elsewhere herein.
Interest expense and amortization of debt issue costs. Interest expense and
amortization of debt issue costs increased from $4.9 million in fiscal 1998 to
$7.5 million in fiscal 1999. The increase was caused primarily by an increase
in interest related to debt incurred on June 24, 1998 to finance the
Recapitalization described in Note 1B to the consolidated financial statements
included elsewhere herein.
Other, net. See Note 7 to the consolidated financial statements included
elsewhere herein for a comparative analysis of other income (expense). The
Company has entered into certain forward exchange contracts to hedge its
exposures to changes in exchange rates. The Company estimates the reduction in
operating income from the strengthening of the U.S. dollar versus the Belgian
franc to be approximately $0.5 million and $1.2 million for the three months
ended July 31, 1998 and 1997, respectively. Other income for the second quarter
of fiscal 1999 includes income from forward exchange contracts of $0.2 million
including a loss of $0.6 million which was unrealized. In the second quarter of
fiscal 1998, such transactions resulted in income of $1.6 million, $0.2 million
of which was unrealized. The income recorded for the three months ended July
31, 1998 results primarily from forward exchange contracts selling forward the
Belgian franc which has declined against the U.S. dollar since the contracts
were executed.
Other income for fiscal 1998 includes an adjustment for $7.7 million to reduce
the accrual for certain tax contingencies established in conjunction with the
June 30, 1993 Restructuring (see Note 1C of the consolidated financial
statements included elsewhere herein). The adjustment was made upon the
resolution of these contingencies. The resolution did not result in any cash
payment or additional liability for taxes.
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Income tax benefit (expense). Income tax expense increased from $3.2 million in
fiscal 1998 to $8.1 million in fiscal 1999. The increase in income tax expense
is due primarily to the tax effect in the U.S. of a $30 million dividend
received from Samsonite Europe N.V. ("Samsonite Europe") in connection with the
sale and transfer of certain Asian subsidiaries to Samsonite Europe. Deferred
taxes had not been previously provided on these European earnings. The
relationship between the expected income tax benefit computed by applying the
U.S. statutory rate to pretax income (loss) and income tax expense recognized
results primarily because of (i) foreign income tax expense provided on foreign
earnings, (ii) the effect of the dividend from Samsonite Europe, and (iii) state
and local income taxes.
Extraordinary loss. In connection with the Recapitalization described in Note
1B to the consolidated financial statements included elsewhere herein, deferred
financing costs related to the refinanced senior credit facility of $379,000
were charged to expense and classified as an extraordinary item for the three
months ended July 31, 1998, net of tax effects. The extraordinary loss for the
three months ended July 31, 1997 resulted from the write-off of the balance of
deferred financing costs related to the previous bank credit facility of
$4,279,000, net of tax effects, which was refinanced on June 12, 1997.
Earnings Before Interest and Taxes. The Company's EBIT [income (loss) before
income taxes, minority interest and extraordinary item plus net interest
expense] was $(12.0) million and $28.2 million for the three months ended July
31, 1998 and 1997, respectively. The Company's adjusted EBITDA (earnings before
interest, taxes, depreciation, amortization and minority interest adjusted for
certain items management believes should be excluded in order to reflect
recurring operating performance) was $7.8 million and $27.8 million for the
three months ended July 31, 1998 and 1997, respectively. Items excluded in the
calculation of adjusted EBITDA include (i) other income (expense) - net, except
for certain recurring transactions including net realized gains from foreign
currency forward delivery contracts, rental income, equity in loss of
unconsolidated affiliate, and pension expense related to merged plans (which are
reflected in the first four line items in Note 7 to the consolidated financial
statements included elsewhere herein), (ii) the provision for restructuring
operations of $5.6 million in fiscal 1999, and (iii) expenses of $9.1 million in
fiscal 1999 related to the Recapitalization including compensation expense
recorded as a result of adjusting the terms of outstanding stock options for the
Recapitalization. Other companies may calculate EBIT and EBITDA in a different
manner than the Company. EBIT or EBITDA do not take into consideration
substantial costs and cash flows of doing business such as interest expense,
income taxes, extraordinary items, restructuring provisions, depreciation and
amortization and should not be considered in isolation to or as a substitute for
other measures of performance. EBIT and EBITDA are not accounting terms and
are not used in generally accepted accounting principles.
Net income (loss). The Company had net income in fiscal 1998 of $17.3 million
and a net loss in fiscal 1999 of $27.3 million. The decrease in the net income
from the prior year of $44.6 million is caused by the effect of the decreases in
operating and other income and the increase in income taxes and interest
expense, offset by the decrease in extraordinary loss.
Redeemable preferred stock dividends and accretion of preferred stock discount.
In fiscal 1999, this item represents the accrual of cumulative dividends on the
Senior Preferred Stock issued in connection with the Recapitalization on June
24, 1998 and the accretion of the discount over the twelve-year term of the
Senior Preferred Stock.
Net income (loss) available to common stockholders. This amount represents net
income (loss) reduced for dividends payable and the accretion of discount on the
Senior Preferred Stock and is the amount used to calculate net income (loss) per
share.
22
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RESULTS OF OPERATIONS
- ---------------------
SIX MONTHS ENDED JULY 31, 1998 ("FISCAL 1999" OR "CURRENT YEAR") COMPARED TO SIX
MONTHS ENDED JULY 31, 1997 ("FISCAL 1998" OR "PRIOR YEAR")
General. Results of European operations were translated from Belgian francs to
U.S. dollars in fiscal 1999 and fiscal 1998 at average rates of approximately
37.38 and 34.59 francs to the U.S. dollar, respectively. This decrease in the
value of the Belgian franc of approximately 7.5% resulted in decreases in
reported sales, cost of sales and other expenses in fiscal 1999 compared to
fiscal 1998. The most significant effects from the difference in exchange rates
from last year to the current year are noted in the following analysis and
referred to as an "exchange rate difference". The Company enters into forward
foreign exchange contracts and option contracts to reduce its economic exposure
to fluctuations in currency exchange rates for the Belgian franc and other
foreign currencies. Such instruments are marked to market at the end of each
accounting period; realized and unrealized gains and losses are recorded in
other income. During fiscal 1999, the Company had net gains from such
instruments of $1.6 million ($0.2 million of which was unrealized); during
fiscal 1998, the Company had net gains on such instruments of $5.3 million ($2.8
million of which was unrealized). The Company estimates the reduction in
reported operating income because of translation from the strengthening of the
U.S. dollar versus the Belgian franc from the same period in the prior year to
be approximately $1.3 million and $2.4 million for the six months ended July 31,
1998 and 1997, respectively.
Net Sales. Consolidated net sales decreased from $349.1 million in fiscal 1998
to $320.3 million in fiscal 1999, a decrease of $28.8 million. Fiscal 1999
sales were adversely affected by depressed U.S. wholesale sales and the
strengthening of the U.S. dollar versus the Belgian franc as well as the
economic difficulties in Asia.
Sales from European operations increased from $130.5 million in fiscal 1998 to
$144.5 million in fiscal 1999, an increase of $14.0 million. Expressed in the
local European reporting currency (Belgian francs), fiscal 1999 sales increased
by 19.7%, or the U.S. constant dollar equivalent of $25.7 million, from fiscal
1998; however, the increase was offset by an $11.7 million exchange rate
difference. Sales of hardside product increased by approximately 16.9% from
prior year while softside product sales increased by approximately 15.0%. Sales
in almost all the European countries showed significant improvement from the
prior year.
Sales from the Americas operations decreased from $200.3 million in fiscal 1998
to $158.5 million in fiscal 1999, a decrease of $41.8 million or 20.9%. U.S.
wholesale sales for the period decreased by $56.7 million from the prior year,
retail sales increased by $12.0 million, and sales in the other Americas
operations increased by $2.9 million from the prior year.
U.S. Wholesale sales in fiscal 1999 were adversely affected by the impact of
price increases and other pricing strategies instituted during fiscal 1998, and
forecasting and production errors which occurred in fiscal 1998. Sales were
also negatively impacted by a computer conversion problem in the second quarter
of fiscal 1999 which virtually halted shipments to customers during the first 20
days of July and disrupted all aspects of the distribution process in the U.S.,
including invoicing. In addition, computer problems caused the U.S. Wholesale
business to suspend processing through Electronic Data Interchange (EDI) with
its customers and normal sales efforts, and caused inventory stockouts in the
U.S. Retail store division resulting in additional lost sales. Shipments were
resumed during the remainder of the month, but at less than full capacity and
through means of circumventing certain aspects of the computer system.
Conversion of the U.S. distribution system was the last phase of the project to
upgrade computer systems in the United States, which included the installation
of the new financial, manufacturing and distribution software. The sales
decline in the U.S. Wholesale business was also attributable to a number of
industry factors affecting the U.S. luggage market in general, including weaker
than anticipated demand, numerous discount luggage promotions and excess
inventory levels at retail industry-wide. These factors contributed to higher
than expected returns and put pressure on the U.S. Wholesale business to offer
additional markdowns and advertising allowances to move excess inventory through
the system and clear space on customer shelves for the introduction of new
product in the third fiscal quarter.
23
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U.S. Retail sales continued to improve, increasing from $48.0 million in the
prior year to $60.0 million in fiscal 1999, an increase of 25%. Comparable
store sales increased by approximately $1.3 million or 3.0% from sales in the
prior year.
Sales in fiscal 1999 from Asian operations, including India, of $10.1 million
were approximately equal to the prior year sales. Sales in the Pacific Rim
operations decreased by approximately $2.7 million or 27.8% from the prior year
due to the effect of the Asian economic difficulties. This decrease was offset
by increased sales from the new manufacturing and distribution facility in India
of approximately $2.7 million.
Revenues from licensing during fiscal 1999 declined $1.0 million compared to
revenues in the prior year because of a decline in revenues from aging non-
luggage McGregor brands and reduced revenues from the Japanese licensee due to
Asian economic difficulties.
Gross profit. Consolidated gross profit for fiscal 1999 declined from fiscal
1998 by $25.0 million. Consolidated gross margin decreased by 3.9 margin
points, from 42.5% in fiscal 1998 to 38.6% in fiscal 1999.
Gross margins from European operations declined 2.2 margin points, from 41.7% in
fiscal 1998 to 39.5% in fiscal 1999. The decrease in gross profit margins is
due to a higher sales mix of lower gross profit margin mass merchant sales and
obsolescence reserves.
Gross margins for the Americas declined from 42.6% in fiscal 1998 to 34.9% in
fiscal 1999. Margins decreased primarily because of the U.S. Wholesale business
and is due to lower absorption of manufacturing overhead due to the decrease in
sales, discounting on slow moving and obsolete product lines, price reductions
on certain product lines, and price markdowns given to customers for existing
inventories.
Selling, General and Administrative Expenses ("SG&A"). Consolidated SG&A
increased by $18.6 million from fiscal 1998 to fiscal 1999. As a percent of
sales, SG&A was 40.7% in fiscal 1999 and 32.0% in fiscal 1998.
On an absolute basis, SG&A for European operations increased by $2.2 million
from fiscal 1998 to fiscal 1999. The exchange rate difference caused SG&A to
decrease by $2.9 million. The remainder, an increase of $5.1 million, resulted
from an increase in SG&A expressed in Belgian francs of 15.2%. The increase in
SG&A was primarily to support the increased sales levels in fiscal 1999. As a
percent of sales, Europe's SG&A was 25.2% in fiscal 1999 versus 26.3% in fiscal
1998.
SG&A for the Americas increased by $6.9 million due primarily to an increase of
$6.7 million in the retail division related to the increase in the number of
stores over the prior year and an increase in SG&A for operations in Latin
America of $1.6 million due to increased sales and higher SG&A expense as a
percent of sales for Latin America, offset by a decrease in SG&A of $1.4 million
from U.S. Wholesale operations.
SG&A for Asia increased by $0.7 million from the prior year primarily due to
operations of the new India manufacturing plant.
SG&A for the licensing business declined by $0.4 million. Corporate overhead
SG&A increased by $9.2 million primarily due to expenses associated with the
Tender Offer in the second quarter of fiscal 1999, including expenses associated
with adjustments to employee stock options.
24
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Provision for restructuring operations. The provision for restructuring
operations in fiscal 1999 results primarily from the restructuring of the U.S.
Wholesale operations and the restructuring of the Torhout, Belgium manufacturing
operations. The U.S. Wholesale restructuring provision of $5.6 million is
primarily related to termination and severance costs for the elimination of
approximately 227 positions and costs related to the disposal of molding and
other equipment representing excess capacity. The Torhout, Belgium
restructuring provision of $2.6 million is primarily related to termination and
severance costs for the elimination of approximately 111 positions. In fiscal
1998, certain excess restructuring reserves of $0.6 million were reversed.
Amortization of intangible assets. Amortization of intangible assets decreased
by $0.6 million in fiscal 1999 from fiscal 1998 primarily because the cost of
intangibles was reduced in fiscal 1998 as a result of the sale of certain
trademarks.
Operating income (loss). Operating income decreased from $33.6 million in fiscal
1998 to an operating loss in fiscal 1999 of $18.2 million, a decrease of $51.8
million. This decrease is a result of the decline in sales and resulting
reduction of gross profit of $25.0 million, the increase in SG&A of $18.6
million, the increase in the restructuring provision of $8.8 million, net of the
decrease in amortization of intangibles of $0.6 million.
Interest income. Interest income increased by $0.9 million due primarily to
interest income received from temporary investment of funds from proceeds of the
Recapitalization financing until the Tender Offer was completed and interest
income received on a refund of state income taxes.
Interest expense and amortization of debt issue costs. Interest expense and
amortization of debt issue costs increased from $11.1 million in fiscal 1998 to
$12.3 million in fiscal 1999. The increase was caused primarily by an increase
in interest expense related to debt incurred on June 24, 1998 to finance the
Recapitalization described in Note 1B to the consolidated financial statements
included elsewhere herein.
Other, net. See Note 7 to the consolidated financial statements included
elsewhere herein for a comparative analysis of other income (expense). The
Company has entered into certain forward exchange contracts to hedge its
exposures to changes in exchange rates. The Company estimates the reduction in
operating income from the strengthening of the U.S. dollar versus the Belgian
franc from the same period in the prior year to be approximately $1.3 million
and $2.4 million for the six months ended July 31, 1998 and 1997, respectively.
Other income for the first half of fiscal 1999 includes income from forward
exchange contracts of $1.6 million, $0.2 million of which was unrealized. In
fiscal 1998, such transactions resulted in income of $5.3 million, $2.8 million
of which was unrealized. The income recorded for the six months ended July 31,
1998 results primarily from forward exchange contracts selling forward the
Belgian franc which has declined against the U.S. dollar since the contracts
were executed. Income recorded through July 31, 1998, includes an unrealized
gain of approximately $0.2 million; the ultimate realization of this amount is
subject to fluctuations in the exchange rate of the U.S. dollar against the
Belgian franc.
Other income for the six months ended July 31, 1997 includes $2.1 million from
favorable settlement of claims for interest on overdue installments of interest
accruing prior to the commencement of the bankruptcy of the Company's
predecessor in 1993. Other income for the six months ended July 31, 1997 also
includes income of approximately $1.5 million for the reversal of allowances for
factored receivables from previous operations which were no longer necessary
upon the favorable settlement of the receivables for which such allowances were
established. See Note 7 to the consolidated financial statements included
elsewhere herein for further discussion of these items.
Income tax benefit (expense). Income tax expense decreased from $10.1 million
in fiscal 1998 to $5.2 million in fiscal 1999. The decrease in tax expense is
due primarily to the consolidated pretax loss in fiscal 1999 and the receipt of
$0.8 million of state income tax refunds which related to taxes accrued and paid
in prior years, offset by income tax expense related to the tax effect in the
U.S. of a $30 million dividend received from Samsonite Europe in connection with
the sale and transfer of certain Asian subsidiaries to Samsonite Europe.
Deferred taxes
25
<PAGE>
for the distribution of these earnings to the U.S. had not been previously
provided. The relationship between the expected income tax benefit computed by
applying the U.S. statutory rate to pretax income (loss) and income tax expense
recognized results primarily because of (i) foreign income tax expense provided
on foreign earnings, (ii) the tax effect of the dividend from Samsonite Europe,
and (iii) state and local income taxes.
Extraordinary loss. During the six months ended July 31, 1998 the Company
completed a tender offer for the Company's Series B Notes. The Company retired
$52,269,000 principal amount of the Series B Notes and paid redemption premiums
and other expenses of the tender offer totaling approximately $8,512,000. These
costs along with $1,527,000 of deferred financing costs were charged to expense
and classified as an extraordinary item, net of tax effects, for the six months
ended July 31, 1998. On June 24, 1998, the Company completed the
Recapitalization. In connection with the Recapitalization, deferred financing
costs related to the refinanced senior credit facility of $380,000 were charged
to expense and classified as an extraordinary item, net of tax effects.
Earnings Before Interest and Taxes. The Company's EBIT [income (loss) before
income taxes, minority interest and extraordinary item plus net interest
expense] was $(15.4) million and $49.5 million for the six months ended July 31,
1998 and 1997, respectively. The Company's adjusted EBITDA (earnings before
interest, taxes, depreciation, amortization and minority interest adjusted for
certain items management believes should be excluded in order to reflect
recurring operating performance) was $13.7 million and $50.9 million for the six
months ended July 31, 1998 and 1997, respectively. Items excluded in the
calculation of adjusted EBITDA include (i) other income (expense) - net, except
for certain recurring transactions including net realized gains from foreign
currency forward delivery contracts, rental income, equity in loss of
unconsolidated affiliate, and pension expense related to merged plans (which are
reflected in the first four line items in Note 7 to the consolidated financial
statements included elsewhere herein), (ii) the provision for restructuring
operations of $8.2 million in fiscal 1999, and (iii) expenses of $9.1 million in
fiscal 1999 related to the Recapitalization including compensation expense
recorded as a result of adjusting the terms of outstanding stock options for the
Recapitalization. Other companies may calculate EBIT and EBITDA in a different
manner than the Company. EBIT or EBITDA do not take into consideration
substantial costs and cash flows of doing business such as interest expense,
income taxes, extraordinary items, restructuring provisions, depreciation and
amortization and should not be considered in isolation to or as a substitute for
other measures of performance. EBIT and EBITDA are not accounting terms and
are not used in generally accepted accounting principles.
Net income (loss). The Company had net income in fiscal 1998 of $19.2 million
and a net loss in fiscal 1999 of $38.3 million. The decrease in the net income
from the prior year of $57.5 million is caused by the effect of the decreases in
operating and other income and the increase in interest expense, offset by the
decrease in income taxes, and extraordinary loss.
Redeemable preferred stock dividends and accretion of preferred stock
discount. In fiscal 1999, this item represents the accrual of cumulative
dividends on the Senior Preferred Stock issued in connection with the
Recapitalization on June 24, 1998 and the accretion of the discount over the
twelve-year term of the Senior Preferred Stock.
Net income (loss) available to common stockholders. This amount represents net
income (loss) reduced for dividends payable and the accretion of discount on the
Senior Preferred Stock and is the amount used to calculate net income (loss) per
share.
26
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LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
For the six months ended July 31, 1998, cash used in operations as reflected on
the Consolidated Statements of Cash Flows included elsewhere herein was $22.7
million, primarily as a result of the loss from operations for the first six
months of fiscal 1999, increases in inventory, and decreases in accrued
liabilities and accounts payable, net of the decrease in accounts receivable,
since January 31, 1998. At July 31, 1998, the Company had working capital of
$214.8 million compared to $195.3 million at January 31, 1998, an increase of
$19.5 million. Current assets increased by $9.9 million primarily due to an
increase in inventory of $20.8 million, an increase in cash of $17.9 million,
increases in other current assets of $2.9 million, net of the decrease in
receivables of $20.4 million and the decrease in assets held for sale of $11.3
million. Inventories increased primarily because of sales forecasting issues
which caused excess production and purchases of finished goods in the U.S.
wholesale division and depressed U.S. wholesale sales as discussed elsewhere
herein. Accounts receivable decreased from January 31, 1998 because of seasonal
fluctuations and the decrease in U.S. Wholesale sales. Assets held for sale
decreased as a result of the sale of the Company's Murfreesboro, Tennessee
building which had previously been leased to third parties. Current liabilities
decreased from $147.2 million at January 31, 1998 to $137.6 million at July 31,
1998, a decrease of $9.6 million, caused primarily by a decline in accounts
payable of $8.7 million from seasonal fluctuations.
Long-term obligations increased from $172.2 million at January 31, 1998 to
$475.1 million at July 31, 1998, an increase of $302.9 million as a result of
the Recapitalization discussed in Note 1B to the consolidated financial
statements included elsewhere herein. At July 31, 1998, the Company had
available borrowings on its Senior Credit Facility of approximately $87.5
million and $21.0 million in cash.
The Company's cash flow from operations together with amounts available under
its credit facilities were sufficient to fund operations for the first half of
fiscal 1999, payments of principal and interest on indebtedness and capital
expenditures. 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. The Company
enters into foreign exchange contracts in order to hedge its exposure on certain
foreign operations 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. As discussed in the
Company's Annual Report on Form 10-K under Liquidity and Capital Resources for
the year ended January 31, 1998, part of the Company's foreign operations are in
Asia where many of the local economies and currencies are depressed. Because of
the relatively small part of the Company's revenues and assets related to Asia,
the Company does not believe the Asian economic difficulties will have a
material impact on the Company's overall Company operations or financial
position. However, if such conditions continue, the Company's expected growth
in this area of the world could be adversely affected.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS.
Not applicable.
27
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SAMSONITE CORPORATION
PART II - OTHER INFORMATION
- ---------------------------
Item 1. Legal Proceedings
-----------------
On March 13, 1998, a complaint was filed in Colorado State District Court,
County of Denver, against the Company, certain current and former directors of
the Company, Apollo Investment Fund, L.P. and Apollo Advisors, L.P. The
purported class action brought on behalf of an alleged class of purchasers of
Samsonite common stock during the period from September 10, 1996 to December 1,
1997, alleges, among other things, that certain statements and earnings
forecasts made in the last 18 months were misleading and/or misrepresented
material facts and that the Company is also liable for certain allegedly
misleading statements contained in various analysts' reports. In addition, on
or about August 18, 1998, a complaint making substantially similar claims and
seeking substantially similar relief as the above complaint was filed by a
different purported class of purchasers of Samsonite common stock during the
same alleged class period. The Company believes that these complaints are
without merit and intends to contest them vigorously. These class actions seek,
among other things, unspecified compensatory and rescissory damages, as well as
pre-judgment and post-judgment interest, attorney's fees, expert witness fees
and other costs.
On July 1, 1998, a complaint was filed in Delaware Court of Chancery against the
Company and certain members of its Board of Directors. The purported class
action brought on behalf of holders of Samsonite common stock challenges the
Tender Offer. The purported class action initially sought an order temporarily
restraining consummation of the Tender Offer but that application was
subsequently withdrawn. The Company believes that the complaint is without
merit and intends to contest it vigorously. The complaint, which seeks
compensatory and/or rescissory damages as well as other relief, alleges
disclosure violations with respect to the Tender Offer and that the Tender Offer
was coercive, the product of unfair dealing and violated the directors' duties.
Between August 28, 1998 and September 4, 1998, four complaints were filed in
United States District Court for the District of Colorado against the Company,
certain officers and directors of the Company, and Apollo Advisors, L.P. Each
of the purported class actions seeks to maintain an action on behalf of a class
consisting of purchasers of Samsonite common stock during the period from June
4, 1997 to August 11, 1998. Each complaint seeks unspecified damages and
alleges, among other things, that the Company made materially false and
misleading announcements concerning the financial condition of the Company and
reported materially overstated revenues and net income throughout the class
period. The Company believes that it has meritorious defenses to each of the
complaints and intends to contest each of them vigorously.
In addition, the Company is a party to various other legal proceedings and
claims in the ordinary course of business. The Company does not believe that
the outcome of any pending matters will have a material adverse affect on its
consolidated financial position, results of operations or liquidity. Refer to
Note 14 to the consolidated financial statements included in the Company's
Annual Report on Form 10-K for the fiscal year ended January 31, 1998 which
describes other contingencies and commitments.
Item 2 Changes in Securities
---------------------
None.
Item 3 Defaults Upon Senior Securities
-------------------------------
None.
28
<PAGE>
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) Reports on Form 8-K.
Reports dated March 24, 1998; May 13, 1998; May 20, 1998; June 17, 1998;
June 19, 1998; July 7, 1998; August 12, 1998; and September 4, 1998.
Item 5. Other Events
29
<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/ Richard H. Wiley
---------------------------------------------------------
Name: Richard H. Wiley
Title: Senior Vice President, Chief Financial Officer,
Treasurer, and Secretary
Date: September 14, 1998
-----------------------
30
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
- ------- -----------
<S> <C>
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 June 24, 1998, between the Company and United States Trust
Company./(3)/
4.2 Registration Rights Agreement, dated as of June 24, 1998, by and among the Company,
CIBC Oppenheimer Corp., BancAmerica Robertson Stephens, BancBoston Securities Inc.
and Goldman, Sachs & Co./(3)/
4.3 Certificate of Designation of the Powers, Preferences and Relative, Participating, Option and
other Special Rights of 13 7/8% Senior Redeemable Exchangeable Preferred Stock and
Qualifications, Limitations and Restrictions thereof./(4)/
4.4 Certificate of Correction to the Certificate of Designation of the Powers, Preferences and
Relative, Participating, Option and other Special Rights of 13 7/8% Senior Redeemable
Exchangeable Preferred Stock and Qualifications, Limitations and Restrictions thereof./(4)/
4.5 Indenture, in respect of the 13 7/8% Junior Subordinated Debentures due 2010 of the
Company, dated as of June 24, 1998, between the Company and United States Trust
Company of New York./(4)/
4.6 Form of Indenture, in respect of the 13 7/8% Senior Debentures due 2010 of Holdings, to be
dated as of the Exchange Date, between Samsonite Holdings Inc. and United States Trust
Company of New York./(4)/
4.7 Registration Rights Agreement, in respect of the 13 7/8% Senior Redeemable Exchangeable
Preferred Stock, dated as of June 24, 1998, between the Company and CIBC Oppenheimer
Corp./(4)/
10.1 Second Amended and Restated Multicurrency Revolving Credit and Term Loan Agreement,
dated as of June 24, 1998, between the Company, Samsonite Europe N.V. and Bank of
America National Trust and Savings Association, BankBoston N.A. and various other
lending institutions, Bank of America National Trust and Savings Association, as
Administrative Agent, BankBoston, N.A., as Syndication Agent, Canadian Imperial Bank of
Commerce, as Documentation Agent and BancAmerica Robertson Stephens and BancBoston
Securities Inc., as Arrangers./(3)/
10.2 Nonqualified Stock Option Agreement dated as of July 15, 1998 between the Company and
Luc Van Nevel.
10.3 Nonqualified Stock Option Agreement dated as of July 15, 1998 between the Company and
Thomas R. Sandler.
10.4 Nonqualified Stock Option Agreement dated as of July 15, 1998 between the Company and
Karlheinz Tretter.
10.5 Nonqualified Stock Option Agreement dated as of July 15, 1998 between the Company and
Richard H. Wiley.
</TABLE>
31
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
- ------- -----------
<S> <C>
10.6 Nonqualified Stock Option Agreement dated as of July 15, 1998 between the Company and
D. Michael Clayton.
10.7 Rights Agreement, dated as of May 12, 1998, between the Company and BankBoston, N.A.
as Rights Agent, including the Form of Certificate of Designation, Preferences and Rights
setting forth the terms of the Series B Junior Participating Preferred Stock, par value $0.01
per share, as Exhibit A, the Form of Rights Certificate as Exhibit B and the Summary of
Rights to Purchase Series B Junior Participating Preferred Stock as Exhibit C./(5)/
10.8 Agreement, made as of June 11, 1998, between the Company and Luc Van Nevel./(3)/
10.9 Agreement, made as of June 11, 1998, between the Company and Thomas R. Sandler./(3)/
10.10 Warrant Agreement, dated as of June 24, 1998, between the Company and BankBoston,
N.A.
10.11 Common Stock Registration Rights Agreement, dated as of June 24, 1998, between the
Company and CIBC Oppenheimer Corp.
10.12 First amendment to Warrant Agreement, dated as of August 17, 1998, between the Company
and BankBoston, N.A.
27 Financial Data Schedule.
</TABLE>
- ---------------
(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 Registration Statement on Form S-4
(Registration Statement No. 333-61521).
(4) Incorporated by reference from the Registration Statement on Form S-4
(Registration Statement No. 333-61519).
(5) Incorporated by reference from the Company's Registration Statement on
Form 8-A filed May 13, 1998 (File No. 0-23214).
32
<PAGE>
EXHIBIT 10.2
------------
NONQUALIFIED
STOCK OPTION AGREEMENT
----------------------
This Agreement, effective as of the 15th day of July, 1998 is made by
and between Samsonite Corporation, a Delaware corporation (the "Company"), and
Luc Van Nevel (the "Employee").
The Company desires to grant to the Employee the right to acquire
shares of common stock, par value $.01 per share of the Company ("Common
Stock"), according to the terms and conditions provided herein, and thereby
provide additional incentives to the Employee to increase the long-term value of
the Company, and to further align the Employee's interests with those of the
stockholders of the Company.
This stock option is being awarded pursuant to the Company's FY 1999
Stock Award Program (the "Award Program"). It is contemplated that, under the
Award Program, in addition to the present grant of stock options, certain
additional target grants may be made in subsequent years. The stock options
awarded in FY 1999 under the Award Program (including this stock option) are
granted pursuant to the Company's 1995 Stock Option and Incentive Award Plan and
future stock option grants, if any, will be made pursuant to the Company's FY
1999 Stock Option and Incentive Award Plan.
In consideration of the promises and covenants contained in this
Agreement, and other good valuable consideration, the Company and the Employee
hereby agrees as follows:
1. CONFIRMATION OF GRANT OF OPTION. Pursuant to a determination by
-------------------------------
the compensation committee of the Board of Directors of the Company (the
"Committee"), on July 15, 1998, and pursuant to the Company's 1995 Stock Option
and Incentive Award Plan (the "1995 Plan"), the Company, subject to the terms
and conditions of this Agreement and the 1995 Plan, hereby confirms that the
Employee has been granted, effective July 15, 1998 (the "Date of Grant"), as a
separate inducement and Agreement, and in addition to and not in lieu of salary
or other compensation for services, the right to purchase from the Company an
aggregate of 40,000 shares of Common Stock (the "Options"). The Options shall
vest as provided in Section 4 hereof and shall be subject to adjustment as
provided in Section 6 hereof.
<PAGE>
2. EXERCISE PRICE. The initial exercise price per share (the
--------------
"Exercise Price") for the Options shall be $9.375.
3. NON-TRANSFERABILITY OF OPTIONS. The Options may not be
-------------------------------
assigned, transferred or otherwise disposed of, or pledged or hypothecated in
any way, and shall not be subject to execution, attachment or other process
otherwise than by will or by the laws of descent and distribution. The Options
may be exercised during the lifetime of the Employee only by the Employee.
4. TERM AND EXERCISE OF OPTIONS. The Options shall remain
----------------------------
outstanding (subject to the vesting and exercisability provisions provided
herein) for a period of ten (10) years beginning on the Date of Grant (the
"Option Term"). Twenty percent (20.0%) of the Options shall vest on the Date of
Grant and an additional twenty percent (20.0%) shall vest on each of the first,
second, third and fourth anniversaries of the Date of Grant, so long as the
Employee remains continually employed by the Company from the effective date of
this Agreement through such date of vesting.
Notwithstanding the above, the Options shall become fully vested and
exercisable upon a Change in Control. Change of Control means (i) any sale,
transfer or other conveyance (whether directly, or 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,
(ii) any sale, transfer or other conveyance of all or substantially all of the
Company assets to any person (or group of affiliated persons) other than to an
Excluded Person or (iii) during any period of two consecutive years, individuals
who at the beginning of such period constituted the Board of Directors of the
Company (together with any new directors whose election by such Board of
Directors or nomination for election by the shareholders of the Company has been
approved by a majority of the directors then still in office who either were
directors at the beginning of such period or whose election or recommendation
for election was previously so approved) cease to constitute a majority of the
Board of Directors of the Company. For the purposes of the foregoing
definition, "Excluded Person" means and includes (A) 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, (B) 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 (C) the Company or
any subsidiary of the Company.
2
<PAGE>
Except as otherwise provided in Section 5 hereof, Options that have
vested shall be exercisable in whole or in part at any time, and from time to
time, until the earlier to occur of the expiration of the Option Term and the
expiration of ninety (90) days after the date of the termination of the
Employee's employment with the Company. The Employee shall not have any right to
dividends or any other rights of a stockholder of the Company with respect to
any shares of Common Stock underlying the Options until such shares have been
issued to him or her upon the exercise of the Options.
5. TERMINATION. The Employee's rights with respect to the Options
-----------
upon termination of his or her employment with the Company or death are as
follows:
(a) Cause. If the Employee is terminated from employment with the
-----
Company or a subsidiary for Cause (as defined below), then all the Options
(whether vested or unvested) shall automatically terminate and be cancelled
(without any action on the part of the Company) on the date of termination of
employment.
For purposes of this Agreement, the Company shall have "Cause" to
terminate the Employee's employment upon (A) the engaging by the Employee in
willful misconduct that is injurious to the Company or its subsidiaries, (B) the
embezzlement or misappropriation of funds or property of the Company or its
subsidiaries by the Employee or the conviction of the Employee of a felony or
the entrance of a plea of guilty or nolo contendere by the Employee to a felony
or (C) the willful failure or refusal by the Employee to substantially perform
his or her duties or responsibilities that continues after being brought to the
attention of the Employee (other than any such failure resulting from the
Employee's incapacity due to disability). For purposes of this paragraph, no
act, or failure to act, on the Employee's part shall be considered "willful"
unless done, or omitted to be done, by him or her, not in good faith, and
without reasonable belief that his action or omission was in the best interest
of the Company. Determination of Cause shall be made by the Committee
established to administer the Plan in its sole discretion. Any such
determination shall be final and binding on the Employee. The Employee will be
provided promptly with the facts and circumstances which form the basis for
termination for Cause, set forth in reasonable detail, in writing.
(b) Disability. If the Employee is terminated from his or her employ
----------
ment with the Company or a subsidiary by reason of disability (as defined
below), then all unvested Options shall automatically terminate and be canceled
(without any action on the part of the Company) on the date of such termination.
All Options that have vested prior to such date shall remain exercisable for a
period of one year following such date.
3
<PAGE>
For the purposes of this Agreement, "disability" shall mean a
disability that would qualify as such under the Company's then current long-term
disability plan.
(c) Death. If the Employee dies while employed by the Company or a
-----
subsidiary, then all unvested Options shall automatically terminate and be
cancelled (without any action on the part of the Company) on the date of death.
Following the Employee's death, his executors, administrators, legatees or
distributees may exercise the Options that have vested prior to the date of
death for a period of one year following the date of death.
(d) Termination After Certain Consolidations or Mergers. If there
---------------------------------------------------
shall be consummated any consolidation or merger of the Company in which the
Company is not the continuing or surviving corporation or pursuant to which the
Common Stock of the Company would be converted into cash, securities or other
property, other than a consolidation or merger of the Company in which the
holders of the Common Stock of the Company outstanding immediately prior to the
consolidation or merger hold, directly or indirectly, at least a majority of the
voting power of the common stock of the surviving corporation immediately after
such consolidation or merger, and the Employee's employment is terminated by the
Company other than for Cause or by the Employee for Good Reason, then all
unvested Options shall automatically vest (without any action on the part of the
Company) on the date of such termination.
For purposes of this Agreement, Good Reason means, so long as the
Employee has not been guilty of conduct constituting Cause, (i) failure by the
Company or the surviving corporation to comply with or honor any material
provisions of any employment agreement then in effect between the Company and
the Employee or to continue to offer the Employee employment on terms and
conditions no less favorable to the Employee than those in effect immediately
prior to such consolidation or merger and such failure shall not have been cured
within thirty (30) days after written notice of such failure has been given by
the Employee to the Company or the surviving corporation, (ii) the assignment to
the Employee by the Company or the surviving corporation of material duties
inconsistent with the Employee's position, duties and responsibilities as in
effect immediately prior to the date of such consolidation or merger, including,
but not limited to, any material reduction in such position, duties or
responsibilities or material change in title or (iii) a relocation by the
Company or the surviving corporation of the Employee's office to a location
which is outside of a 30 mile radius of the Executive's office immediately prior
to the date of such consolidation or merger. Notwithstanding the foregoing, the
Employee's termination shall not be deemed to be for Good Reason, unless the
Employee gives written notice of termination to the Company or the surviving
corporation no later than sixty (60) days from, as applicable, the date that the
Company or the surviving corporation fails to cure under
4
<PAGE>
(i) above, the assignment of duties under (ii) above and the date that the
Employee is advised of the proposed relocation under (iii) above.
(e) Other Terminations of Employment. If the Employee's employment
--------------------------------
is terminated for any reason other than as set forth in Sections 5(a), (b), (c)
and (d) all unvested Options shall automatically terminate and be cancelled
(without any action on the part of the Company) on the date of such termination.
6. CERTAIN ADJUSTMENTS. In the event that the Committee shall
-------------------
determine that any dividend or other distribution (whether in the form of cash,
Stock or other property), recapitalization, Stock split, reverse Stock split,
reorganization, merger, consolidation, spin-off, combination, repurchase, share
exchange or other corporate transaction or event affects the Common Stock such
that an adjustment is appropriate in order to prevent dilution or enlargement of
the rights of the Employee with respect to the Options, then the Committee shall
make such equitable changes or adjustments as it deems necessary or appropriate
to any or all of (i) the number and kind of shares of Common Stock or other
property (including cash) that may thereafter be issued in connection with the
Options, and (ii) the Exercise Price.
7. METHOD OF EXERCISE OF OPTIONS. Subject to the terms and
-----------------------------
conditions of this Agreement, the Options shall be exercisable by notice (an
"Exercise Notice") and payment to the Company in accordance with the procedure
set forth herein; provided, that the aggregate Exercise Price with respect to
--------
any one such exercise shall not be less than $10,000, unless such exercise
represents an exercise of all Options that are vested and exercisable as of the
date of such exercise. Partial shares may not be exercised. If the Employee
fails to accept delivery of and pay for all or any part of the number of shares
specified in the Exercise Notice upon tender or delivery thereof, his or her
right to exercise the Options with respect to such undelivered shares may be
terminated, in the sole discretion of the Committee.
(a) Each Exercise Notice shall: (i) state the number of shares in
respect of which the Options are being exercised, (ii) be accompanied by
payment as provided in paragraph (c) below, and (iii) be signed by the person or
persons entitled to exercise such Options. If such Options are being exercised
by any person or persons other than the Employee, the Exercise Notice shall be
accompanied by proof, satisfactory to the Company and its counsel, of the right
of such person or persons to exercise such Options.
(b) Payment of the Exercise Price and estimated taxes and fees shall
be made by delivering to the Company any one, or a combination of, the
following: (i) a certified or bank cashier's check payable to the Company or
its order, or a wire transfer
5
<PAGE>
directly to an account specified by the Company, (ii) one or more certificates
evidencing shares of Common Stock owned by the Employee immediately prior to
such exercise, together with a duly executed stock power, having an aggregate
Fair Market Value (as defined in the Plan) on the date on which the Exercise
Notice is given equal to the aggregate Exercise Price and estimated taxes and
fees or (iii) a copy of irrevocable instructions to a registered broker/dealer
(which shall have been countersigned and agreed to by such registered
broker/dealer) to promptly deliver to the Company an amount of proceeds from the
sale of shares of Common Stock to be issued pursuant to the Options being
exercised or of a loan made with respect to shares of Common Stock to be issued
pursuant to the Options being exercised sufficient, in either case, to pay the
Exercise Price ("Cashless Exercise"). All exercise instructions must be
submitted by the Employee on designated Company forms or through designated
Company computer programs (Company intranet processes).
(c) The certificate or certificates representing shares of Common
Stock to be issued upon exercise of the Options shall be registered in the name
of the person or persons exercising such Options (or, if such Options are
exercised by the Employee and if the Employee so requests in the applicable
Exercise Notice, shall be registered in the name of the Employee and his or her
spouse jointly, with the right of survivorship) but only upon compliance with
all the provisions of this Agreement, and such certificate(s) shall be delivered
within 10 days after receipt of payment and completion by the Employee;
provided, that in case of clause (iii) of the first sentence of Section 7(c),
- --------
the Company shall not be required to make delivery of the certificate(s) until
payment is actually received from such broker/dealer.
(d) The Company shall have no obligation to issue or deliver
fractional shares of Common Stock upon exercise of the Options but may, in its
sole discretion, elect to do so. In lieu of issuing any such fractional share,
the Company shall pay to the person exercising the Options, promptly following
such exercise, an amount in cash equal to the Fair Market Value of such fraction
of a share on the date of exercise.
8. NO RIGHT TO CONTINUED EMPLOYMENT. Nothing in this Agreement
--------------------------------
shall confer upon the Employee 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 Employee's employment.
9. WITHHOLDING TAXES. The Company shall have the right to require
-----------------
the Employee (or such other person, if any, who has the right to exercise the
Options) 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
6
<PAGE>
delivering to the Employee (or such other person) a certificate or certificates
represent ing shares of Common Stock issuable hereunder.
10. APPROVAL OF COUNSEL. Any exercise of the Options and the
-------------------
issuance and delivery of shares of Common Stock pursuant thereto shall be
subject to approval, by the Company's counsel, of all legal matters in
connection therewith, including compliance with the requirements of the
Securities Act of 1933, as amended (the "Securities Act"), and the Securities
Exchange Act of 1934, as amended, and the rules and regulations thereunder, the
requirements of any stock exchange upon which the Common Stock may then be
listed and any applicable state securities or "blue sky" laws.
11. NON-COMPETITION. Employee agrees that during employment with the
---------------
Company, and for a period of one year thereafter, Employee shall not, directly
or indirectly, as a principal, officer, director, employee, or in any other
capacity whatsoever, without prior written consent of the Company, engage in any
activity with, or provide services to, any person or entity engaged in, or about
to engage in, any business activity that is competitive with the business then
engaged in by the Company, in the geographic areas within which Employee's work
has been concerned during the twelve months preceding the termination Employee's
employment with the Company.
However, nothing in this Agreement shall prevent Employee from making
or holding any investment in any amount in securities of a competitive business
traded on a 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 such competitive business.
Employee acknowledges and agrees that (1) breach of this Section 11 is
appropriately remedied by injunctive relief, including interim or temporary
relief, and Employee hereby consents thereto; and (2) the Company may refuse to
allow the exercise of any otherwise vested Options in the event of an alleged
breach of Employee of this Section 11, and such Options shall be terminated and
canceled upon determina tion of such breach; and (3) the Company is not liable
for the gain or loss by the Employee due to the increase or decrease of the Fair
Market Value of the Company stock during period in which the Company may have
refused to accept exercise instructions pending final determination of the
Employee's breach of this Agreement.
12. NOTICES. For the purposes of this Agreement, notices, demands
-------
and all other communications provided for in this 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) (unless otherwise
7
<PAGE>
specified) when mailed by United States registered mail, return receipt
requested, postage prepaid, addressed as follows:
Samsonite Corporation
11200 East Forty-Fifth Avenue
Denver, Colorado 80239-3018
c/o General Counsel
with a copy to each member of the Committee who is not an officer or an employee
of the Company, at the Company's address, 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.
All notices to the Employee or other person or persons then entitled
to exercise the Options shall be addressed to the Employee or such other person
or persons at the then current address of the Employee contained in the employee
payroll records of the Company.
Anyone to whom a notice may be given under this Agreement may
designate a new address by notice to that effect.
13. 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 Employee and all rights granted to the Company
under this Agreement shall be binding upon the Employee and, to the limited
extent set forth herein, the Employee's heirs, legal representatives and
successors. No other person shall have any rights under this Agreement.
14. SEVERABILITY. If any one or more provisions of this Agreement is
------------
deemed to be illegal or unenforceable, such illegality or un-enforceability
shall not affect the validity or 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.
15. ENTIRE AGREEMENT. This Agreement contains the entire
----------------
understanding and agreement between the parties hereto, and supersedes all prior
understandings and agreements between them respecting the subject matter hereof.
The provisions of this Agreement may not be modified, waived nor discharged
unless such waiver, modification or discharge is agreed to in writing, signed by
the parties hereto.
8
<PAGE>
16. WAIVER. No waiver by either party hereto, at any time, of any
------
breach by the other party 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.
17. GOVERNING LAW. This Agreement shall be construed and governed in
-------------
accordance with the laws of the State of Delaware without regard to the
conflicts of law principles thereof.
18. INCORPORATION BY REFERENCE. The incorporation herein of any
--------------------------
terms, by reference to another document, shall not be affected by the
termination of any agreement contained in such other document, nor by the
invalidity of any provision hereof.
19. 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.
20. 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.
9
<PAGE>
21. MISCELLANEOUS. Employee agrees to abide by the laws and
-------------
regulations governing Insider Trading, the terms of this Stock Option Agreement,
and the policies and decisions of the management of the Company in all matters
concerning this stock option grant July 15, 1998 and acknowledges receipt of the
following documents:
Received Documents:
a. Stock Option Agreement
b. Stock Option Questions & Answers
c. Avoiding Insider Trading Brochure
UNDERSTOOD AND AGREED TO:
Employee:
/s/ Luc Van Nevel
- -----------------
(Signature)
SAMSONITE CORPORATION
By: /s/ Thomas R. Sandler
---------------------
Name: Thomas R. Sandler
Title: President, Samsonite-The Americas
10
<PAGE>
Exhibit 10.3
------------
NONQUALIFIED
STOCK OPTION AGREEMENT
----------------------
This Agreement, effective as of the 15th day of July, 1998 is made by
and between Samsonite Corporation, a Delaware corporation (the "Company"), and
Thomas R. Sandler (the "Employee").
The Company desires to grant to the Employee the right to acquire
shares of common stock, par value $.01 per share of the Company ("Common
Stock"), according to the terms and conditions provided herein, and thereby
provide additional incentives to the Employee to increase the long-term value of
the Company, and to further align the Employee's interests with those of the
stockholders of the Company.
This stock option is being awarded pursuant to the Company's FY 1999
Stock Award Program (the "Award Program"). It is contemplated that, under the
Award Program, in addition to the present grant of stock options, certain
additional target grants may be made in subsequent years. The stock options
awarded in FY 1999 under the Award Program (including this stock option) are
granted pursuant to the Company's 1995 Stock Option and Incentive Award Plan and
future stock option grants, if any, will be made pursuant to the Company's FY
1999 Stock Option and Incentive Award Plan.
In consideration of the promises and covenants contained in this
Agreement, and other good valuable consideration, the Company and the Employee
hereby agrees as follows:
1. CONFIRMATION OF GRANT OF OPTION. Pursuant to a determination by
-------------------------------
the compensation committee of the Board of Directors of the Company (the
"Committee"), on July 15, 1998, and pursuant to the Company's 1995 Stock Option
and Incentive Award Plan (the "1995 Plan"), the Company, subject to the terms
and conditions of this Agreement and the 1995 Plan, hereby confirms that the
Employee has been granted, effective July 15, 1998 (the "Date of Grant"), as a
separate inducement and Agreement, and in addition to and not in lieu of salary
or other compensation for services, the right to purchase from the Company an
aggregate of 20,000 shares of Common Stock (the "Options"). The Options shall
vest as provided in Section 4 hereof and shall be subject to adjustment as
provided in Section 6 hereof.
<PAGE>
2. EXERCISE PRICE. The initial exercise price per share (the
--------------
"Exercise Price") for the Options shall be $9.375.
3. NON-TRANSFERABILITY OF OPTIONS. The Options may not be
-------------------------------
assigned, transferred or otherwise disposed of, or pledged or hypothecated in
any way, and shall not be subject to execution, attachment or other process
otherwise than by will or by the laws of descent and distribution. The Options
may be exercised during the lifetime of the Employee only by the Employee.
4. TERM AND EXERCISE OF OPTIONS. The Options shall remain
----------------------------
outstanding (subject to the vesting and exercisability provisions provided
herein) for a period of ten (10) years beginning on the Date of Grant (the
"Option Term"). Twenty percent (20.0%) of the Options shall vest on the Date of
Grant and an additional twenty percent (20.0%) shall vest on each of the first,
second, third and fourth anniversaries of the Date of Grant, so long as the
Employee remains continually employed by the Company from the effective date of
this Agreement through such date of vesting.
Notwithstanding the above, the Options shall become fully vested and
exercisable upon a Change in Control. Change of Control means (i) any sale,
transfer or other conveyance (whether directly, or 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,
(ii) any sale, transfer or other conveyance of all or substantially all of the
Company assets to any person (or group of affiliated persons) other than to an
Excluded Person or (iii) during any period of two consecutive years, individuals
who at the beginning of such period constituted the Board of Directors of the
Company (together with any new directors whose election by such Board of
Directors or nomination for election by the shareholders of the Company has been
approved by a majority of the directors then still in office who either were
directors at the beginning of such period or whose election or recommendation
for election was previously so approved) cease to constitute a majority of the
Board of Directors of the Company. For the purposes of the foregoing
definition, "Excluded Person" means and includes (A) 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, (B) 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 (C) the Company or
any subsidiary of the Company.
2
<PAGE>
Except as otherwise provided in Section 5 hereof, Options that have
vested shall be exercisable in whole or in part at any time, and from time to
time, until the earlier to occur of the expiration of the Option Term and the
expiration of ninety (90) days after the date of the termination of the
Employee's employment with the Company. The Employee shall not have any right to
dividends or any other rights of a stockholder of the Company with respect to
any shares of Common Stock underlying the Options until such shares have been
issued to him or her upon the exercise of the Options.
5. TERMINATION. The Employee's rights with respect to the Options
-----------
upon termination of his or her employment with the Company or death are as
follows:
(a) Cause. If the Employee is terminated from employment with the
-----
Company or a subsidiary for Cause (as defined below), then all the Options
(whether vested or unvested) shall automatically terminate and be cancelled
(without any action on the part of the Company) on the date of termination of
employment.
For purposes of this Agreement, the Company shall have "Cause" to
terminate the Employee's employment upon (A) the engaging by the Employee in
willful misconduct that is injurious to the Company or its subsidiaries, (B) the
embezzlement or misappropriation of funds or property of the Company or its
subsidiaries by the Employee or the conviction of the Employee of a felony or
the entrance of a plea of guilty or nolo contendere by the Employee to a felony
or (C) the willful failure or refusal by the Employee to substantially perform
his or her duties or responsibilities that continues after being brought to the
attention of the Employee (other than any such failure resulting from the
Employee's incapacity due to disability). For purposes of this paragraph, no
act, or failure to act, on the Employee's part shall be considered "willful"
unless done, or omitted to be done, by him or her, not in good faith, and
without reasonable belief that his action or omission was in the best interest
of the Company. Determination of Cause shall be made by the Committee
established to administer the Plan in its sole discretion. Any such
determination shall be final and binding on the Employee. The Employee will be
provided promptly with the facts and circumstances which form the basis for
termination for Cause, set forth in reasonable detail, in writing.
(b) Disability. If the Employee is terminated from his or her
----------
employment with the Company or a subsidiary by reason of disability (as defined
below), then all unvested Options shall automatically terminate and be canceled
(without any action on the part of the Company) on the date of such termination.
All Options that have vested prior to such date shall remain exercisable for a
period of one year following such date.
3
<PAGE>
For the purposes of this Agreement, "disability" shall mean a
disability that would qualify as such under the Company's then current long-term
disability plan.
(c) Death. If the Employee dies while employed by the Company or a
-----
subsidiary, then all unvested Options shall automatically terminate and be
cancelled (without any action on the part of the Company) on the date of death.
Following the Employee's death, his executors, administrators, legatees or
distributees may exercise the Options that have vested prior to the date of
death for a period of one year following the date of death.
(d) Termination After Certain Consolidations or Mergers. If there
---------------------------------------------------
shall be consummated any consolidation or merger of the Company in which the
Company is not the continuing or surviving corporation or pursuant to which the
Common Stock of the Company would be converted into cash, securities or other
property, other than a consolidation or merger of the Company in which the
holders of the Common Stock of the Company outstanding immediately prior to the
consolidation or merger hold, directly or indirectly, at least a majority of the
voting power of the common stock of the surviving corporation immediately after
such consolidation or merger, and the Employee's employment is terminated by the
Company other than for Cause or by the Employee for Good Reason, then all
unvested Options shall automatically vest (without any action on the part of the
Company) on the date of such termination.
For purposes of this Agreement, Good Reason means, so long as the
Employee has not been guilty of conduct constituting Cause, (i) failure by the
Company or the surviving corporation to comply with or honor any material
provisions of any employment agreement then in effect between the Company and
the Employee or to continue to offer the Employee employment on terms and
conditions no less favorable to the Employee than those in effect immediately
prior to such consolidation or merger and such failure shall not have been cured
within thirty (30) days after written notice of such failure has been given by
the Employee to the Company or the surviving corporation, (ii) the assignment to
the Employee by the Company or the surviving corporation of material duties
inconsistent with the Employee's position, duties and responsibilities as in
effect immediately prior to the date of such consolidation or merger, including,
but not limited to, any material reduction in such position, duties or
responsibilities or material change in title or (iii) a relocation by the
Company or the surviving corporation of the Employee's office to a location
which is outside of a 30 mile radius of the Executive's office immediately prior
to the date of such consolidation or merger. Notwithstanding the foregoing, the
Employee's termination shall not be deemed to be for Good Reason, unless the
Employee gives written notice of termination to the Company or the surviving
corporation no later than sixty (60) days from, as applicable, the date that the
Company or the surviving corporation fails to cure under
4
<PAGE>
(i) above, the assignment of duties under (ii) above and the date that the
Employee is advised of the proposed relocation under (iii) above.
(e) Other Terminations of Employment. If the Employee's employment
--------------------------------
is terminated for any reason other than as set forth in Sections 5(a), (b), (c)
and (d) all unvested Options shall automatically terminate and be cancelled
(without any action on the part of the Company) on the date of such termination.
6. CERTAIN ADJUSTMENTS. In the event that the Committee shall
-------------------
determine that any dividend or other distribution (whether in the form of cash,
Stock or other property), recapitalization, Stock split, reverse Stock split,
reorganization, merger, consolidation, spin-off, combination, repurchase, share
exchange or other corporate transaction or event affects the Common Stock such
that an adjustment is appropriate in order to prevent dilution or enlargement of
the rights of the Employee with respect to the Options, then the Committee shall
make such equitable changes or adjustments as it deems necessary or appropriate
to any or all of (i) the number and kind of shares of Common Stock or other
property (including cash) that may thereafter be issued in connection with the
Options, and (ii) the Exercise Price.
7. METHOD OF EXERCISE OF OPTIONS. Subject to the terms and
-----------------------------
conditions of this Agreement, the Options shall be exercisable by notice (an
"Exercise Notice") and payment to the Company in accordance with the procedure
set forth herein; provided, that the aggregate Exercise Price with respect to
--------
any one such exercise shall not be less than $10,000, unless such exercise
represents an exercise of all Options that are vested and exercisable as of the
date of such exercise. Partial shares may not be exercised. If the Employee
fails to accept delivery of and pay for all or any part of the number of shares
specified in the Exercise Notice upon tender or delivery thereof, his or her
right to exercise the Options with respect to such undelivered shares may be
terminated, in the sole discretion of the Committee.
(a) Each Exercise Notice shall: (i) state the number of shares in
respect of which the Options are being exercised, (ii) be accompanied by
payment as provided in paragraph (c) below, and (iii) be signed by the person or
persons entitled to exercise such Options. If such Options are being exercised
by any person or persons other than the Employee, the Exercise Notice shall be
accompanied by proof, satisfactory to the Company and its counsel, of the right
of such person or persons to exercise such Options.
(b) Payment of the Exercise Price and estimated taxes and fees shall
be made by delivering to the Company any one, or a combination of, the
following: (i) a certified or bank cashier's check payable to the Company or
its order, or a wire transfer
5
<PAGE>
directly to an account specified by the Company, (ii) one or more certificates
evidencing shares of Common Stock owned by the Employee immediately prior to
such exercise, together with a duly executed stock power, having an aggregate
Fair Market Value (as defined in the Plan) on the date on which the Exercise
Notice is given equal to the aggregate Exercise Price and estimated taxes and
fees or (iii) a copy of irrevocable instructions to a registered broker/dealer
(which shall have been countersigned and agreed to by such registered
broker/dealer) to promptly deliver to the Company an amount of proceeds from the
sale of shares of Common Stock to be issued pursuant to the Options being
exercised or of a loan made with respect to shares of Common Stock to be issued
pursuant to the Options being exercised sufficient, in either case, to pay the
Exercise Price ("Cashless Exercise"). All exercise instructions must be
submitted by the Employee on designated Company forms or through designated
Company computer programs (Company intranet processes).
(c) The certificate or certificates representing shares of Common
Stock to be issued upon exercise of the Options shall be registered in the name
of the person or persons exercising such Options (or, if such Options are
exercised by the Employee and if the Employee so requests in the applicable
Exercise Notice, shall be registered in the name of the Employee and his or her
spouse jointly, with the right of survivorship) but only upon compliance with
all the provisions of this Agreement, and such certificate(s) shall be delivered
within 10 days after receipt of payment and completion by the Employee;
provided, that in case of clause (iii) of the first sentence of Section 7(c),
- --------
the Company shall not be required to make delivery of the certificate(s) until
payment is actually received from such broker/dealer.
(d) The Company shall have no obligation to issue or deliver
fractional shares of Common Stock upon exercise of the Options but may, in its
sole discretion, elect to do so. In lieu of issuing any such fractional share,
the Company shall pay to the person exercising the Options, promptly following
such exercise, an amount in cash equal to the Fair Market Value of such fraction
of a share on the date of exercise.
8. NO RIGHT TO CONTINUED EMPLOYMENT. Nothing in this Agreement
--------------------------------
shall confer upon the Employee 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 Employee's employment.
9. WITHHOLDING TAXES. The Company shall have the right to require
-----------------
the Employee (or such other person, if any, who has the right to exercise the
Options) 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
6
<PAGE>
delivering to the Employee (or such other person) a certificate or certificates
representing shares of Common Stock issuable hereunder.
10. APPROVAL OF COUNSEL. Any exercise of the Options and the
-------------------
issuance and delivery of shares of Common Stock pursuant thereto shall be
subject to approval, by the Company's counsel, of all legal matters in
connection therewith, including compliance with the requirements of the
Securities Act of 1933, as amended (the "Securities Act"), and the Securities
Exchange Act of 1934, as amended, and the rules and regulations thereunder, the
requirements of any stock exchange upon which the Common Stock may then be
listed and any applicable state securities or "blue sky" laws.
11. NON-COMPETITION. Employee agrees that during employment with the
---------------
Company, and for a period of one year thereafter, Employee shall not, directly
or indirectly, as a principal, officer, director, employee, or in any other
capacity whatsoever, without prior written consent of the Company, engage in any
activity with, or provide services to, any person or entity engaged in, or about
to engage in, any business activity that is competitive with the business then
engaged in by the Company, in the geographic areas within which Employee's work
has been concerned during the twelve months preceding the termination Employee's
employment with the Company.
However, nothing in this Agreement shall prevent Employee from making
or holding any investment in any amount in securities of a competitive business
traded on a 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 such competitive business.
Employee acknowledges and agrees that (1) breach of this Section 11 is
appropriately remedied by injunctive relief, including interim or temporary
relief, and Employee hereby consents thereto; and (2) the Company may refuse to
allow the exercise of any otherwise vested Options in the event of an alleged
breach of Employee of this Section 11, and such Options shall be terminated and
canceled upon determination of such breach; and (3) the Company is not liable
for the gain or loss by the Employee due to the increase or decrease of the Fair
Market Value of the Company stock during period in which the Company may have
refused to accept exercise instructions pending final determination of the
Employee's breach of this Agreement.
12. NOTICES. For the purposes of this Agreement, notices, demands
-------
and all other communications provided for in this 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) (unless otherwise
7
<PAGE>
specified) when mailed by United States registered mail, return receipt
requested, postage prepaid, addressed as follows:
Samsonite Corporation
11200 East Forty-Fifth Avenue
Denver, Colorado 80239-3018
c/o General Counsel
with a copy to each member of the Committee who is not an officer or an employee
of the Company, at the Company's address, 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.
All notices to the Employee or other person or persons then entitled
to exercise the Options shall be addressed to the Employee or such other person
or persons at the then current address of the Employee contained in the employee
payroll records of the Company.
Anyone to whom a notice may be given under this Agreement may
designate a new address by notice to that effect.
13. 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 Employee and all rights granted to the Company
under this Agreement shall be binding upon the Employee and, to the limited
extent set forth herein, the Employee's heirs, legal representatives and
successors. No other person shall have any rights under this Agreement.
14. SEVERABILITY. If any one or more provisions of this Agreement is
------------
deemed to be illegal or unenforceable, such illegality or un-enforceability
shall not affect the validity or 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.
15. ENTIRE AGREEMENT. This Agreement contains the entire
----------------
understanding and agreement between the parties hereto, and supersedes all prior
understandings and agreements between them respecting the subject matter hereof.
The provisions of this Agreement may not be modified, waived nor discharged
unless such waiver, modification or discharge is agreed to in writing, signed by
the parties hereto.
8
<PAGE>
16. WAIVER. No waiver by either party hereto, at any time, of any
------
breach by the other party 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.
17. GOVERNING LAW. This Agreement shall be construed and governed in
-------------
accordance with the laws of the State of Delaware without regard to the
conflicts of law principles thereof.
18. INCORPORATION BY REFERENCE. The incorporation herein of any
--------------------------
terms, by reference to another document, shall not be affected by the
termination of any agreement contained in such other document, nor by the
invalidity of any provision hereof.
19. 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.
20. 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.
9
<PAGE>
21. MISCELLANEOUS. Employee agrees to abide by the laws and
-------------
regulations governing Insider Trading, the terms of this Stock Option Agreement,
and the policies and decisions of the management of the Company in all matters
concerning this stock option grant July 15, 1998 and acknowledges receipt of the
following documents:
Received Documents:
a. Stock Option Agreement
b. Stock Option Questions & Answers
c. Avoiding Insider Trading Brochure
UNDERSTOOD AND AGREED TO:
Employee:
/s/Thomas R. Sandler
- --------------------
(Signature)
SAMSONITE CORPORATION
By: /s/ Luc Van Nevel
-----------------
Name: Luc Van Nevel
Title: Chief Executive Officer, President
10
<PAGE>
EXHIBIT 10.4
------------
NONQUALIFIED
STOCK OPTION AGREEMENT
----------------------
This Agreement, effective as of the 15th day of July, 1998 is made by
and between Samsonite Corporation, a Delaware corporation (the "Company"), and
Karlheinz Tretter (the "Employee").
The Company desires to grant to the Employee the right to acquire
shares of common stock, par value $.01 per share of the Company ("Common
Stock"), according to the terms and conditions provided herein, and thereby
provide additional incentives to the Employee to increase the long-term value of
the Company, and to further align the Employee's interests with those of the
stockholders of the Company.
This stock option is being awarded pursuant to the Company's FY 1999
Stock Award Program (the "Award Program"). It is contemplated that, under the
Award Program, in addition to the present grant of stock options, certain
additional target grants may be made in subsequent years. The stock options
awarded in FY 1999 under the Award Program (including this stock option) are
granted pursuant to the Company's 1995 Stock Option and Incentive Award Plan and
future stock option grants, if any, will be made pursuant to the Company's FY
1999 Stock Option and Incentive Award Plan.
In consideration of the promises and covenants contained in this
Agreement, and other good valuable consideration, the Company and the Employee
hereby agrees as follows:
1. CONFIRMATION OF GRANT OF OPTION. Pursuant to a determination by
-------------------------------
the compensation committee of the Board of Directors of the Company (the
"Committee"), on July 15, 1998, and pursuant to the Company's 1995 Stock Option
and Incentive Award Plan (the "1995 Plan"), the Company, subject to the terms
and conditions of this Agreement and the 1995 Plan, hereby confirms that the
Employee has been granted, effective July 15, 1998 (the "Date of Grant"), as a
separate inducement and Agreement, and in addition to and not in lieu of salary
or other compensation for services, the right to purchase from the Company an
aggregate of 20,000 shares of Common Stock (the "Options"). The Options shall
vest as provided in Section 4 hereof and shall be subject to adjustment as
provided in Section 6 hereof.
<PAGE>
2. EXERCISE PRICE. The initial exercise price per share (the
--------------
"Exercise Price") for the Options shall be $9.375.
3. NON-TRANSFERABILITY OF OPTIONS. The Options may not be
-------------------------------
assigned, transferred or otherwise disposed of, or pledged or hypothecated in
any way, and shall not be subject to execution, attachment or other process
otherwise than by will or by the laws of descent and distribution. The Options
may be exercised during the lifetime of the Employee only by the Employee.
4. TERM AND EXERCISE OF OPTIONS. The Options shall remain
----------------------------
outstanding (subject to the vesting and exercisability provisions provided
herein) for a period of ten (10) years beginning on the Date of Grant (the
"Option Term"). Twenty percent (20.0%) of the Options shall vest on the Date of
Grant and an additional twenty percent (20.0%) shall vest on each of the first,
second, third and fourth anniversaries of the Date of Grant, so long as the
Employee remains continually employed by the Company from the effective date of
this Agreement through such date of vesting.
Notwithstanding the above, the Options shall become fully vested and
exercisable upon a Change in Control. Change of Control means (i) any sale,
transfer or other conveyance (whether directly, or 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,
(ii) any sale, transfer or other conveyance of all or substantially all of the
Company assets to any person (or group of affiliated persons) other than to an
Excluded Person or (iii) during any period of two consecutive years, individuals
who at the beginning of such period constituted the Board of Directors of the
Company (together with any new directors whose election by such Board of
Directors or nomination for election by the shareholders of the Company has been
approved by a majority of the directors then still in office who either were
directors at the beginning of such period or whose election or recommendation
for election was previously so approved) cease to constitute a majority of the
Board of Directors of the Company. For the purposes of the foregoing
definition, "Excluded Person" means and includes (A) 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, (B) 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 (C) the Company or
any subsidiary of the Company.
2
<PAGE>
Except as otherwise provided in Section 5 hereof, Options that have
vested shall be exercisable in whole or in part at any time, and from time to
time, until the earlier to occur of the expiration of the Option Term and the
expiration of ninety (90) days after the date of the termination of the
Employee's employment with the Company. The Employee shall not have any right to
dividends or any other rights of a stockholder of the Company with respect to
any shares of Common Stock underlying the Options until such shares have been
issued to him or her upon the exercise of the Options.
5. TERMINATION. The Employee's rights with respect to the Options
-----------
upon termination of his or her employment with the Company or death are as
follows:
(a) Cause. If the Employee is terminated from employment with the
-----
Company or a subsidiary for Cause (as defined below), then all the Options
(whether vested or unvested) shall automatically terminate and be cancelled
(without any action on the part of the Company) on the date of termination of
employment.
For purposes of this Agreement, the Company shall have "Cause" to
terminate the Employee's employment upon (A) the engaging by the Employee in
willful misconduct that is injurious to the Company or its subsidiaries, (B) the
embezzlement or misappropriation of funds or property of the Company or its
subsidiaries by the Employee or the conviction of the Employee of a felony or
the entrance of a plea of guilty or nolo contendere by the Employee to a felony
or (C) the willful failure or refusal by the Employee to substantially perform
his or her duties or responsibilities that continues after being brought to the
attention of the Employee (other than any such failure resulting from the
Employee's incapacity due to disability). For purposes of this paragraph, no
act, or failure to act, on the Employee's part shall be considered "willful"
unless done, or omitted to be done, by him or her, not in good faith, and
without reasonable belief that his action or omission was in the best interest
of the Company. Determination of Cause shall be made by the Committee
established to administer the Plan in its sole discretion. Any such
determination shall be final and binding on the Employee. The Employee will be
provided promptly with the facts and circumstances which form the basis for
termination for Cause, set forth in reasonable detail, in writing.
(b) Disability. If the Employee is terminated from his or her
----------
employment with the Company or a subsidiary by reason of disability (as defined
below), then all unvested Options shall automatically terminate and be canceled
(without any action on the part of the Company) on the date of such termination.
All Options that have vested prior to such date shall remain exercisable for a
period of one year following such date.
3
<PAGE>
For the purposes of this Agreement, "disability" shall mean a
disability that would qualify as such under the Company's then current long-term
disability plan.
(c) Death. If the Employee dies while employed by the Company or a
-----
subsidiary, then all unvested Options shall automatically terminate and be
cancelled (without any action on the part of the Company) on the date of death.
Following the Employee's death, his executors, administrators, legatees or
distributees may exercise the Options that have vested prior to the date of
death for a period of one year following the date of death.
(d) Termination After Certain Consolidations or Mergers. If there
---------------------------------------------------
shall be consummated any consolidation or merger of the Company in which the
Company is not the continuing or surviving corporation or pursuant to which the
Common Stock of the Company would be converted into cash, securities or other
property, other than a consolidation or merger of the Company in which the
holders of the Common Stock of the Company outstanding immediately prior to the
consolidation or merger hold, directly or indirectly, at least a majority of the
voting power of the common stock of the surviving corporation immediately after
such consolidation or merger, and the Employee's employment is terminated by the
Company other than for Cause or by the Employee for Good Reason, then all
unvested Options shall automatically vest (without any action on the part of the
Company) on the date of such termination.
For purposes of this Agreement, Good Reason means, so long as the
Employee has not been guilty of conduct constituting Cause, (i) failure by the
Company or the surviving corporation to comply with or honor any material
provisions of any employment agreement then in effect between the Company and
the Employee or to continue to offer the Employee employment on terms and
conditions no less favorable to the Employee than those in effect immediately
prior to such consolidation or merger and such failure shall not have been cured
within thirty (30) days after written notice of such failure has been given by
the Employee to the Company or the surviving corporation, (ii) the assignment to
the Employee by the Company or the surviving corporation of material duties
inconsistent with the Employee's position, duties and responsibilities as in
effect immediately prior to the date of such consolidation or merger, including,
but not limited to, any material reduction in such position, duties or
responsibilities or material change in title or (iii) a relocation by the
Company or the surviving corporation of the Employee's office to a location
which is outside of a 30 mile radius of the Executive's office immediately prior
to the date of such consolidation or merger. Notwithstanding the foregoing, the
Employee's termination shall not be deemed to be for Good Reason, unless the
Employee gives written notice of termination to the Company or the surviving
corporation no later than sixty (60) days from, as applicable, the date that the
Company or the surviving corporation fails to cure under
4
<PAGE>
(i) above, the assignment of duties under (ii) above and the date that the
Employee is advised of the proposed relocation under (iii) above.
(e) Other Terminations of Employment. If the Employee's employment
--------------------------------
is terminated for any reason other than as set forth in Sections 5(a), (b), (c)
and (d) all unvested Options shall automatically terminate and be cancelled
(without any action on the part of the Company) on the date of such termination.
6. CERTAIN ADJUSTMENTS. In the event that the Committee shall
-------------------
determine that any dividend or other distribution (whether in the form of cash,
Stock or other property), recapitalization, Stock split, reverse Stock split,
reorganization, merger, consolidation, spin-off, combination, repurchase, share
exchange or other corporate transaction or event affects the Common Stock such
that an adjustment is appropriate in order to prevent dilution or enlargement of
the rights of the Employee with respect to the Options, then the Committee shall
make such equitable changes or adjustments as it deems necessary or appropriate
to any or all of (i) the number and kind of shares of Common Stock or other
property (including cash) that may thereafter be issued in connection with the
Options, and (ii) the Exercise Price.
7. METHOD OF EXERCISE OF OPTIONS. Subject to the terms and
-----------------------------
conditions of this Agreement, the Options shall be exercisable by notice (an
"Exercise Notice") and payment to the Company in accordance with the procedure
set forth herein; provided, that the aggregate Exercise Price with respect to
--------
any one such exercise shall not be less than $10,000, unless such exercise
represents an exercise of all Options that are vested and exercisable as of the
date of such exercise. Partial shares may not be exercised. If the Employee
fails to accept delivery of and pay for all or any part of the number of shares
specified in the Exercise Notice upon tender or delivery thereof, his or her
right to exercise the Options with respect to such undelivered shares may be
terminated, in the sole discretion of the Committee.
(a) Each Exercise Notice shall: (i) state the number of shares in
respect of which the Options are being exercised, (ii) be accompanied by
payment as provided in paragraph (c) below, and (iii) be signed by the person or
persons entitled to exercise such Options. If such Options are being exercised
by any person or persons other than the Employee, the Exercise Notice shall be
accompanied by proof, satisfactory to the Company and its counsel, of the right
of such person or persons to exercise such Options.
(b) Payment of the Exercise Price and estimated taxes and fees shall
be made by delivering to the Company any one, or a combination of, the
following: (i) a certified or bank cashier's check payable to the Company or
its order, or a wire transfer
5
<PAGE>
directly to an account specified by the Company, (ii) one or more certificates
evidencing shares of Common Stock owned by the Employee immediately prior to
such exercise, together with a duly executed stock power, having an aggregate
Fair Market Value (as defined in the Plan) on the date on which the Exercise
Notice is given equal to the aggregate Exercise Price and estimated taxes and
fees or (iii) a copy of irrevocable instructions to a registered broker/dealer
(which shall have been countersigned and agreed to by such registered
broker/dealer) to promptly deliver to the Company an amount of proceeds from the
sale of shares of Common Stock to be issued pursuant to the Options being
exercised or of a loan made with respect to shares of Common Stock to be issued
pursuant to the Options being exercised sufficient, in either case, to pay the
Exercise Price ("Cashless Exercise"). All exercise instructions must be
submitted by the Employee on designated Company forms or through designated
Company computer programs (Company intranet processes).
(c) The certificate or certificates representing shares of Common
Stock to be issued upon exercise of the Options shall be registered in the name
of the person or persons exercising such Options (or, if such Options are
exercised by the Employee and if the Employee so requests in the applicable
Exercise Notice, shall be registered in the name of the Employee and his or her
spouse jointly, with the right of survivorship) but only upon compliance with
all the provisions of this Agreement, and such certificate(s) shall be delivered
within 10 days after receipt of payment and completion by the Employee;
provided, that in case of clause (iii) of the first sentence of Section 7(c),
- --------
the Company shall not be required to make delivery of the certificate(s) until
payment is actually received from such broker/dealer.
(d) The Company shall have no obligation to issue or deliver
fractional shares of Common Stock upon exercise of the Options but may, in its
sole discretion, elect to do so. In lieu of issuing any such fractional share,
the Company shall pay to the person exercising the Options, promptly following
such exercise, an amount in cash equal to the Fair Market Value of such fraction
of a share on the date of exercise.
8. NO RIGHT TO CONTINUED EMPLOYMENT. Nothing in this Agreement
--------------------------------
shall confer upon the Employee 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 Employee's employment.
9. WITHHOLDING TAXES. The Company shall have the right to require
-----------------
the Employee (or such other person, if any, who has the right to exercise the
Options) 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
6
<PAGE>
delivering to the Employee (or such other person) a certificate or certificates
representing shares of Common Stock issuable hereunder.
10. APPROVAL OF COUNSEL. Any exercise of the Options and the
-------------------
issuance and delivery of shares of Common Stock pursuant thereto shall be
subject to approval, by the Company's counsel, of all legal matters in
connection therewith, including compliance with the requirements of the
Securities Act of 1933, as amended (the "Securities Act"), and the Securities
Exchange Act of 1934, as amended, and the rules and regulations thereunder, the
requirements of any stock exchange upon which the Common Stock may then be
listed and any applicable state securities or "blue sky" laws.
11. NON-COMPETITION. Employee agrees that during employment with the
---------------
Company, and for a period of one year thereafter, Employee shall not, directly
or indirectly, as a principal, officer, director, employee, or in any other
capacity whatsoever, without prior written consent of the Company, engage in any
activity with, or provide services to, any person or entity engaged in, or about
to engage in, any business activity that is competitive with the business then
engaged in by the Company, in the geographic areas within which Employee's work
has been concerned during the twelve months preceding the termination Employee's
employment with the Company.
However, nothing in this Agreement shall prevent Employee from making
or holding any investment in any amount in securities of a competitive business
traded on a 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 such competitive business.
Employee acknowledges and agrees that (1) breach of this Section 11 is
appropriately remedied by injunctive relief, including interim or temporary
relief, and Employee hereby consents thereto; and (2) the Company may refuse to
allow the exercise of any otherwise vested Options in the event of an alleged
breach of Employee of this Section 11, and such Options shall be terminated and
canceled upon determination of such breach; and (3) the Company is not liable
for the gain or loss by the Employee due to the increase or decrease of the Fair
Market Value of the Company stock during period in which the Company may have
refused to accept exercise instructions pending final determination of the
Employee's breach of this Agreement.
12. NOTICES. For the purposes of this Agreement, notices, demands
-------
and all other communications provided for in this 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) (unless otherwise
7
<PAGE>
specified) when mailed by United States registered mail, return receipt
requested, postage prepaid, addressed as follows:
Samsonite Corporation
11200 East Forty-Fifth Avenue
Denver, Colorado 80239-3018
c/o General Counsel
with a copy to each member of the Committee who is not an officer or an employee
of the Company, at the Company's address, 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.
All notices to the Employee or other person or persons then entitled
to exercise the Options shall be addressed to the Employee or such other person
or persons at the then current address of the Employee contained in the employee
payroll records of the Company.
Anyone to whom a notice may be given under this Agreement may
designate a new address by notice to that effect.
13. 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 Employee and all rights granted to the Company
under this Agreement shall be binding upon the Employee and, to the limited
extent set forth herein, the Employee's heirs, legal representatives and
successors. No other person shall have any rights under this Agreement.
14. SEVERABILITY. If any one or more provisions of this Agreement is
------------
deemed to be illegal or unenforceable, such illegality or un-enforceability
shall not affect the validity or 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.
15. ENTIRE AGREEMENT. This Agreement contains the entire
----------------
understanding and agreement between the parties hereto, and supersedes all prior
understandings and agreements between them respecting the subject matter hereof.
The provisions of this Agreement may not be modified, waived nor discharged
unless such waiver, modification or discharge is agreed to in writing, signed by
the parties hereto.
8
<PAGE>
16. WAIVER. No waiver by either party hereto, at any time, of any
------
breach by the other party 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.
17. GOVERNING LAW. This Agreement shall be construed and governed in
-------------
accordance with the laws of the State of Delaware without regard to the
conflicts of law principles thereof.
18. INCORPORATION BY REFERENCE. The incorporation herein of any
--------------------------
terms, by reference to another document, shall not be affected by the
termination of any agreement contained in such other document, nor by the
invalidity of any provision hereof.
19. 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.
20. 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.
9
<PAGE>
21. MISCELLANEOUS. Employee agrees to abide by the laws and
-------------
regulations governing Insider Trading, the terms of this Stock Option Agreement,
and the policies and decisions of the management of the Company in all matters
concerning this stock option grant July 15, 1998 and acknowledges receipt of the
following documents:
Received Documents:
a. Stock Option Agreement
b. Stock Option Questions & Answers
c. Avoiding Insider Trading Brochure
UNDERSTOOD AND AGREED TO:
Employee:
/s/ Karheinz Tretter
- --------------------
(Signature)
SAMSONITE CORPORATION
By: /s/ Luc Van Nevel
-----------------
Name: Luc Van Nevel
Title: Chief Executive Officer, President
10
<PAGE>
Exhibit 10.5
------------
NONQUALIFIED
STOCK OPTION AGREEMENT
----------------------
This Agreement, effective as of the 15th day of July, 1998 is made by
and between Samsonite Corporation, a Delaware corporation (the "Company"), and
Richard H. Wiley (the "Employee").
The Company desires to grant to the Employee the right to acquire
shares of common stock, par value $.01 per share of the Company ("Common
Stock"), according to the terms and conditions provided herein, and thereby
provide additional incentives to the Employee to increase the long-term value of
the Company, and to further align the Employee's interests with those of the
stockholders of the Company.
This stock option is being awarded pursuant to the Company's FY 1999
Stock Award Program (the "Award Program"). It is contemplated that, under the
Award Program, in addition to the present grant of stock options, certain
additional target grants may be made in subsequent years. The stock options
awarded in FY 1999 under the Award Program (including this stock option) are
granted pursuant to the Company's 1995 Stock Option and Incentive Award Plan and
future stock option grants, if any, will be made pursuant to the Company's FY
1999 Stock Option and Incentive Award Plan.
In consideration of the promises and covenants contained in this
Agreement, and other good valuable consideration, the Company and the Employee
hereby agrees as follows:
1. CONFIRMATION OF GRANT OF OPTION. Pursuant to a determination by
-------------------------------
the compensation committee of the Board of Directors of the Company (the
"Committee"), on July 15, 1998, and pursuant to the Company's 1995 Stock Option
and Incentive Award Plan (the "1995 Plan"), the Company, subject to the terms
and conditions of this Agreement and the 1995 Plan, hereby confirms that the
Employee has been granted, effective July 15, 1998 (the "Date of Grant"), as a
separate inducement and Agreement, and in addition to and not in lieu of salary
or other compensation for services, the right to purchase from the Company an
aggregate of 15,000 shares of Common Stock (the "Options"). The Options shall
vest as provided in Section 4 hereof and shall be subject to adjustment as
provided in Section 6 hereof.
<PAGE>
2. EXERCISE PRICE. The initial exercise price per share (the
--------------
"Exercise Price") for the Options shall be $9.375.
3. NON-TRANSFERABILITY OF OPTIONS. The Options may not be
-------------------------------
assigned, transferred or otherwise disposed of, or pledged or hypothecated in
any way, and shall not be subject to execution, attachment or other process
otherwise than by will or by the laws of descent and distribution. The Options
may be exercised during the lifetime of the Employee only by the Employee.
4. TERM AND EXERCISE OF OPTIONS. The Options shall remain
----------------------------
outstanding (subject to the vesting and exercisability provisions provided
herein) for a period of ten (10) years beginning on the Date of Grant (the
"Option Term"). Twenty percent (20.0%) of the Options shall vest on the Date of
Grant and an additional twenty percent (20.0%) shall vest on each of the first,
second, third and fourth anniversaries of the Date of Grant, so long as the
Employee remains continually employed by the Company from the effective date of
this Agreement through such date of vesting.
Notwithstanding the above, the Options shall become fully vested and
exercisable upon a Change in Control. Change of Control means (i) any sale,
transfer or other conveyance (whether directly, or 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,
(ii) any sale, transfer or other conveyance of all or substantially all of the
Company assets to any person (or group of affiliated persons) other than to an
Excluded Person or (iii) during any period of two consecutive years, individuals
who at the beginning of such period constituted the Board of Directors of the
Company (together with any new directors whose election by such Board of
Directors or nomination for election by the shareholders of the Company has been
approved by a majority of the directors then still in office who either were
directors at the beginning of such period or whose election or recommendation
for election was previously so approved) cease to constitute a majority of the
Board of Directors of the Company. For the purposes of the foregoing
definition, "Excluded Person" means and includes (A) 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, (B) 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 (C) the Company or
any subsidiary of the Company.
2
<PAGE>
Except as otherwise provided in Section 5 hereof, Options that have
vested shall be exercisable in whole or in part at any time, and from time to
time, until the earlier to occur of the expiration of the Option Term and the
expiration of ninety (90) days after the date of the termination of the
Employee's employment with the Company. The Employee shall not have any right to
dividends or any other rights of a stockholder of the Company with respect to
any shares of Common Stock underlying the Options until such shares have been
issued to him or her upon the exercise of the Options.
5. TERMINATION. The Employee's rights with respect to the Options
-----------
upon termination of his or her employment with the Company or death are as
follows:
(a) Cause. If the Employee is terminated from employment with the
-----
Company or a subsidiary for Cause (as defined below), then all the Options
(whether vested or unvested) shall automatically terminate and be cancelled
(without any action on the part of the Company) on the date of termination of
employment.
For purposes of this Agreement, the Company shall have "Cause" to
terminate the Employee's employment upon (A) the engaging by the Employee in
willful misconduct that is injurious to the Company or its subsidiaries, (B) the
embezzlement or misappropriation of funds or property of the Company or its
subsidiaries by the Employee or the conviction of the Employee of a felony or
the entrance of a plea of guilty or nolo contendere by the Employee to a felony
or (C) the willful failure or refusal by the Employee to substantially perform
his or her duties or responsibilities that continues after being brought to the
attention of the Employee (other than any such failure resulting from the
Employee's incapacity due to disability). For purposes of this paragraph, no
act, or failure to act, on the Employee's part shall be considered "willful"
unless done, or omitted to be done, by him or her, not in good faith, and
without reasonable belief that his action or omission was in the best interest
of the Company. Determination of Cause shall be made by the Committee
established to administer the Plan in its sole discretion. Any such
determination shall be final and binding on the Employee. The Employee will be
provided promptly with the facts and circumstances which form the basis for
termination for Cause, set forth in reasonable detail, in writing.
(b) Disability. If the Employee is terminated from his or her
----------
employment with the Company or a subsidiary by reason of disability (as defined
below), then all unvested Options shall automatically terminate and be canceled
(without any action on the part of the Company) on the date of such termination.
All Options that have vested prior to such date shall remain exercisable for a
period of one year following such date.
3
<PAGE>
For the purposes of this Agreement, "disability" shall mean a
disability that would qualify as such under the Company's then current long-term
disability plan.
(c) Death. If the Employee dies while employed by the Company or a
-----
subsidiary, then all unvested Options shall automatically terminate and be
cancelled (without any action on the part of the Company) on the date of death.
Following the Employee's death, his executors, administrators, legatees or
distributees may exercise the Options that have vested prior to the date of
death for a period of one year following the date of death.
(d) Termination After Certain Consolidations or Mergers. If there
---------------------------------------------------
shall be consummated any consolidation or merger of the Company in which the
Company is not the continuing or surviving corporation or pursuant to which the
Common Stock of the Company would be converted into cash, securities or other
property, other than a consolidation or merger of the Company in which the
holders of the Common Stock of the Company outstanding immediately prior to the
consolidation or merger hold, directly or indirectly, at least a majority of the
voting power of the common stock of the surviving corporation immediately after
such consolidation or merger, and the Employee's employment is terminated by the
Company other than for Cause or by the Employee for Good Reason, then all
unvested Options shall automatically vest (without any action on the part of the
Company) on the date of such termination.
For purposes of this Agreement, Good Reason means, so long as the
Employee has not been guilty of conduct constituting Cause, (i) failure by the
Company or the surviving corporation to comply with or honor any material
provisions of any employment agreement then in effect between the Company and
the Employee or to continue to offer the Employee employment on terms and
conditions no less favorable to the Employee than those in effect immediately
prior to such consolidation or merger and such failure shall not have been cured
within thirty (30) days after written notice of such failure has been given by
the Employee to the Company or the surviving corporation, (ii) the assignment to
the Employee by the Company or the surviving corporation of material duties
inconsistent with the Employee's position, duties and responsibilities as in
effect immediately prior to the date of such consolidation or merger, including,
but not limited to, any material reduction in such position, duties or
responsibilities or material change in title or (iii) a relocation by the
Company or the surviving corporation of the Employee's office to a location
which is outside of a 30 mile radius of the Executive's office immediately prior
to the date of such consolidation or merger. Notwithstanding the foregoing, the
Employee's termination shall not be deemed to be for Good Reason, unless the
Employee gives written notice of termination to the Company or the surviving
corporation no later than sixty (60) days from, as applicable, the date that the
Company or the surviving corporation fails to cure under
4
<PAGE>
(i) above, the assignment of duties under (ii) above and the date that the
Employee is advised of the proposed relocation under (iii) above.
(e) Other Terminations of Employment. If the Employee's employment
--------------------------------
is terminated for any reason other than as set forth in Sections 5(a), (b), (c)
and (d) all unvested Options shall automatically terminate and be cancelled
(without any action on the part of the Company) on the date of such termination.
6. CERTAIN ADJUSTMENTS. In the event that the Committee shall
-------------------
determine that any dividend or other distribution (whether in the form of cash,
Stock or other property), recapitalization, Stock split, reverse Stock split,
reorganization, merger, consolidation, spin-off, combination, repurchase, share
exchange or other corporate transaction or event affects the Common Stock such
that an adjustment is appropriate in order to prevent dilution or enlargement of
the rights of the Employee with respect to the Options, then the Committee shall
make such equitable changes or adjustments as it deems necessary or appropriate
to any or all of (i) the number and kind of shares of Common Stock or other
property (including cash) that may thereafter be issued in connection with the
Options, and (ii) the Exercise Price.
7. METHOD OF EXERCISE OF OPTIONS. Subject to the terms and
-----------------------------
conditions of this Agreement, the Options shall be exercisable by notice (an
"Exercise Notice") and payment to the Company in accordance with the procedure
set forth herein; provided, that the aggregate Exercise Price with respect to
--------
any one such exercise shall not be less than $10,000, unless such exercise
represents an exercise of all Options that are vested and exercisable as of the
date of such exercise. Partial shares may not be exercised. If the Employee
fails to accept delivery of and pay for all or any part of the number of shares
specified in the Exercise Notice upon tender or delivery thereof, his or her
right to exercise the Options with respect to such undelivered shares may be
terminated, in the sole discretion of the Committee.
(a) Each Exercise Notice shall: (i) state the number of shares in
respect of which the Options are being exercised, (ii) be accompanied by
payment as provided in paragraph (c) below, and (iii) be signed by the person or
persons entitled to exercise such Options. If such Options are being exercised
by any person or persons other than the Employee, the Exercise Notice shall be
accompanied by proof, satisfactory to the Company and its counsel, of the right
of such person or persons to exercise such Options.
(b) Payment of the Exercise Price and estimated taxes and fees shall
be made by delivering to the Company any one, or a combination of, the
following: (i) a certified or bank cashier's check payable to the Company or
its order, or a wire transfer
5
<PAGE>
directly to an account specified by the Company, (ii) one or more certificates
evidencing shares of Common Stock owned by the Employee immediately prior to
such exercise, together with a duly executed stock power, having an aggregate
Fair Market Value (as defined in the Plan) on the date on which the Exercise
Notice is given equal to the aggregate Exercise Price and estimated taxes and
fees or (iii) a copy of irrevocable instructions to a registered broker/dealer
(which shall have been countersigned and agreed to by such registered
broker/dealer) to promptly deliver to the Company an amount of proceeds from the
sale of shares of Common Stock to be issued pursuant to the Options being
exercised or of a loan made with respect to shares of Common Stock to be issued
pursuant to the Options being exercised sufficient, in either case, to pay the
Exercise Price ("Cashless Exercise"). All exercise instructions must be
submitted by the Employee on designated Company forms or through designated
Company computer programs (Company intranet processes).
(c) The certificate or certificates representing shares of Common
Stock to be issued upon exercise of the Options shall be registered in the name
of the person or persons exercising such Options (or, if such Options are
exercised by the Employee and if the Employee so requests in the applicable
Exercise Notice, shall be registered in the name of the Employee and his or her
spouse jointly, with the right of survivorship) but only upon compliance with
all the provisions of this Agreement, and such certificate(s) shall be delivered
within 10 days after receipt of payment and completion by the Employee;
provided, that in case of clause (iii) of the first sentence of Section 7(c),
- --------
the Company shall not be required to make delivery of the certificate(s) until
payment is actually received from such broker/dealer.
(d) The Company shall have no obligation to issue or deliver
fractional shares of Common Stock upon exercise of the Options but may, in its
sole discretion, elect to do so. In lieu of issuing any such fractional share,
the Company shall pay to the person exercising the Options, promptly following
such exercise, an amount in cash equal to the Fair Market Value of such fraction
of a share on the date of exercise.
8. NO RIGHT TO CONTINUED EMPLOYMENT. Nothing in this Agreement
--------------------------------
shall confer upon the Employee 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 Employee's employment.
9. WITHHOLDING TAXES. The Company shall have the right to require
-----------------
the Employee (or such other person, if any, who has the right to exercise the
Options) 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
6
<PAGE>
delivering to the Employee (or such other person) a certificate or certificates
representing shares of Common Stock issuable hereunder.
10. APPROVAL OF COUNSEL. Any exercise of the Options and the
-------------------
issuance and delivery of shares of Common Stock pursuant thereto shall be
subject to approval, by the Company's counsel, of all legal matters in
connection therewith, including compliance with the requirements of the
Securities Act of 1933, as amended (the "Securities Act"), and the Securities
Exchange Act of 1934, as amended, and the rules and regulations thereunder, the
requirements of any stock exchange upon which the Common Stock may then be
listed and any applicable state securities or "blue sky" laws.
11. NON-COMPETITION. Employee agrees that during employment with the
---------------
Company, and for a period of one year thereafter, Employee shall not, directly
or indirectly, as a principal, officer, director, employee, or in any other
capacity whatsoever, without prior written consent of the Company, engage in any
activity with, or provide services to, any person or entity engaged in, or about
to engage in, any business activity that is competitive with the business then
engaged in by the Company, in the geographic areas within which Employee's work
has been concerned during the twelve months preceding the termination Employee's
employment with the Company.
However, nothing in this Agreement shall prevent Employee from making
or holding any investment in any amount in securities of a competitive business
traded on a 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 such competitive business.
Employee acknowledges and agrees that (1) breach of this Section 11 is
appropriately remedied by injunctive relief, including interim or temporary
relief, and Employee hereby consents thereto; and (2) the Company may refuse to
allow the exercise of any otherwise vested Options in the event of an alleged
breach of Employee of this Section 11, and such Options shall be terminated and
canceled upon determination of such breach; and (3) the Company is not liable
for the gain or loss by the Employee due to the increase or decrease of the Fair
Market Value of the Company stock during period in which the Company may have
refused to accept exercise instructions pending final determination of the
Employee's breach of this Agreement.
12. NOTICES. For the purposes of this Agreement, notices, demands
-------
and all other communications provided for in this 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) (unless otherwise
7
<PAGE>
specified) when mailed by United States registered mail, return receipt
requested, postage prepaid, addressed as follows:
Samsonite Corporation
11200 East Forty-Fifth Avenue
Denver, Colorado 80239-3018
c/o General Counsel
with a copy to each member of the Committee who is not an officer or an employee
of the Company, at the Company's address, 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.
All notices to the Employee or other person or persons then entitled
to exercise the Options shall be addressed to the Employee or such other person
or persons at the then current address of the Employee contained in the employee
payroll records of the Company.
Anyone to whom a notice may be given under this Agreement may
designate a new address by notice to that effect.
13. 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 Employee and all rights granted to the Company
under this Agreement shall be binding upon the Employee and, to the limited
extent set forth herein, the Employee's heirs, legal representatives and
successors. No other person shall have any rights under this Agreement.
14. SEVERABILITY. If any one or more provisions of this Agreement is
------------
deemed to be illegal or unenforceable, such illegality or un-enforceability
shall not affect the validity or 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.
15. ENTIRE AGREEMENT. This Agreement contains the entire
----------------
understanding and agreement between the parties hereto, and supersedes all prior
understandings and agreements between them respecting the subject matter hereof.
The provisions of this Agreement may not be modified, waived nor discharged
unless such waiver, modification or discharge is agreed to in writing, signed by
the parties hereto.
8
<PAGE>
16. WAIVER. No waiver by either party hereto, at any time, of any
------
breach by the other party 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.
17. GOVERNING LAW. This Agreement shall be construed and governed in
-------------
accordance with the laws of the State of Delaware without regard to the
conflicts of law principles thereof.
18. INCORPORATION BY REFERENCE. The incorporation herein of any
--------------------------
terms, by reference to another document, shall not be affected by the
termination of any agreement contained in such other document, nor by the
invalidity of any provision hereof.
19. 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.
20. 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.
9
<PAGE>
21. MISCELLANEOUS. Employee agrees to abide by the laws and
-------------
regulations governing Insider Trading, the terms of this Stock Option Agreement,
and the policies and decisions of the management of the Company in all matters
concerning this stock option grant July 15, 1998 and acknowledges receipt of the
following documents:
Received Documents:
a. Stock Option Agreement
b. Stock Option Questions & Answers
c. Avoiding Insider Trading Brochure
UNDERSTOOD AND AGREED TO:
Employee:
/s/ Richard H. Wiley
- --------------------
(Signature)
SAMSONITE CORPORATION
By: /s/ Luc Van Nevel
-----------------
Name: Luc Van Nevel
Title: Chief Executive Officer, President
10
<PAGE>
EXHIBIT 10.6
------------
NONQUALIFIED
STOCK OPTION AGREEMENT
----------------------
This Agreement, effective as of the 15th day of July, 1998 is made by
and between Samsonite Corporation, a Delaware corporation (the "Company"), and
D. Michael Clayton (the "Employee").
The Company desires to grant to the Employee the right to acquire
shares of common stock, par value $.01 per share of the Company ("Common
Stock"), according to the terms and conditions provided herein, and thereby
provide additional incentives to the Employee to increase the long-term value of
the Company, and to further align the Employee's interests with those of the
stockholders of the Company.
This stock option is being awarded pursuant to the Company's FY 1999
Stock Award Program (the "Award Program"). It is contemplated that, under the
Award Program, in addition to the present grant of stock options, certain
additional target grants may be made in subsequent years. The stock options
awarded in FY 1999 under the Award Program (including this stock option) are
granted pursuant to the Company's 1995 Stock Option and Incentive Award Plan and
future stock option grants, if any, will be made pursuant to the Company's FY
1999 Stock Option and Incentive Award Plan.
In consideration of the promises and covenants contained in this
Agreement, and other good valuable consideration, the Company and the Employee
hereby agrees as follows:
1. CONFIRMATION OF GRANT OF OPTION. Pursuant to a determination by
-------------------------------
the compensation committee of the Board of Directors of the Company (the
"Committee"), on July 15, 1998, and pursuant to the Company's 1995 Stock Option
and Incentive Award Plan (the "1995 Plan"), the Company, subject to the terms
and conditions of this Agreement and the 1995 Plan, hereby confirms that the
Employee has been granted, effective July 15, 1998 (the "Date of Grant"), as a
separate inducement and Agreement, and in addition to and not in lieu of salary
or other compensation for services, the right to purchase from the Company an
aggregate of 3,000 shares of Common Stock (the "Options"). The Options shall
vest as provided in Section 4 hereof and shall be subject to adjustment as
provided in Section 6 hereof.
<PAGE>
2. EXERCISE PRICE. The initial exercise price per share (the
--------------
"Exercise Price") for the Options shall be $9.375.
3. NON-TRANSFERABILITY OF OPTIONS. The Options may not be
-------------------------------
assigned, transferred or otherwise disposed of, or pledged or hypothecated in
any way, and shall not be subject to execution, attachment or other process
otherwise than by will or by the laws of descent and distribution. The Options
may be exercised during the lifetime of the Employee only by the Employee.
4. TERM AND EXERCISE OF OPTIONS. The Options shall remain
----------------------------
outstanding (subject to the vesting and exercisability provisions provided
herein) for a period of ten (10) years beginning on the Date of Grant (the
"Option Term"). Twenty percent (20.0%) of the Options shall vest on the Date of
Grant and an additional twenty percent (20.0%) shall vest on each of the first,
second, third and fourth anniversaries of the Date of Grant, so long as the
Employee remains continually employed by the Company from the effective date of
this Agreement through such date of vesting. Except as otherwise provided in
Section 5 hereof, Options that have vested shall be exercisable in whole or in
part at any time, and from time to time, until the earlier to occur of the
expiration of the Option Term and the expiration of ninety (90) days after the
date of the termination of the Employee's employment with the Company. The
Employee shall not have any right to dividends or any other rights of a
stockholder of the Company with respect to any shares of Common Stock underlying
the Options until such shares have been issued to him or her upon the exercise
of the Options.
5. TERMINATION. The Employee's rights with respect to the Options
-----------
upon termination of his or her employment with the Company or death are as
follows:
(a) Cause. If the Employee is terminated from employment with the
-----
Company or a subsidiary for Cause (as defined below), then all the Options
(whether vested or unvested) shall automatically terminate and be cancelled
(without any action on the part of the Company) on the date of termination of
employment.
For purposes of this Agreement, the Company shall have "Cause" to
terminate the Employee's employment upon (A) the engaging by the Employee in
willful misconduct that is injurious to the Company or its subsidiaries, (B)
the embezzlement or misappropriation of funds or property of the
2
<PAGE>
Company or its subsidiaries by the Employee or the conviction of the Employee of
a felony or the entrance of a plea of guilty or nolo contendere by the Employee
to a felony or (C) the willful failure or refusal by the Employee to
substantially perform his or her duties or responsibilities that continues after
being brought to the attention of the Employee (other than any such failure
resulting from the Employee's incapacity due to disability). For purposes of
this paragraph, no act, or failure to act, on the Employee's part shall be
considered "willful" unless done, or omitted to be done, by him or her, not in
good faith, and without reasonable belief that his action or omission was in the
best interest of the Company. Determination of Cause shall be made by the
Committee established to administer the Plan in its sole discretion. Any such
determination shall be final and binding on the Employee. The Employee will be
provided promptly with the facts and circumstances which form the basis for
termination for Cause, set forth in reasonable detail, in writing.
(b) Disability. If the Employee is terminated from his or her
----------
employment with the Company or a subsidiary by reason of disability (as defined
below), then all unvested Options shall automatically terminate and be canceled
(without any action on the part of the Company) on the date of such termination.
All Options that have vested prior to such date shall remain exercisable for a
period of one year following such date.
For the purposes of this Agreement, "disability" shall mean a
disability that would qualify as such under the Company's then current long-term
disability plan.
(c) Death. If the Employee dies while employed by the Company or a
-----
subsidiary, then all unvested Options shall automatically terminate and be
cancelled (without any action on the part of the Company) on the date of death.
Following the Employee's death, his executors, administrators, legatees or
distributees may exercise the Options that have vested prior to the date of
death for a period of one year following the date of death.
(d) Other Terminations of Employment. If the Employee's employment
--------------------------------
is terminated for any reason other than as set forth in Sections 5(a), (b) and
(c), all unvested Options shall automatically terminate and be cancelled
(without any action on the part of the Company) on the date of such termination.
6. CERTAIN ADJUSTMENTS. In the event that the Committee shall
-------------------
determine that any dividend or other distribution (whether in the form of cash,
Stock or other property), recapitalization, Stock split, reverse Stock split,
3
<PAGE>
reorganization, merger, consolidation, spin-off, combination, repurchase, share
exchange or other corporate transaction or event affects the Common Stock such
that an adjustment is appropriate in order to prevent dilution or enlargement
of the rights of the Employee with respect to the Options, then the Committee
shall make such equitable changes or adjustments as it deems necessary or
appropriate to any or all of (i) the number and kind of shares of Common Stock
or other property (including cash) that may thereafter be issued in connection
with the Options, and (ii) the Exercise Price.
7. METHOD OF EXERCISE OF OPTIONS. Subject to the terms and
-----------------------------
conditions of this Agreement, the Options shall be exercisable by notice (an
"Exercise Notice") and payment to the Company in accordance with the procedure
set forth herein; provided, that the aggregate Exercise Price with respect to
--------
any one such exercise shall not be less than $10,000, unless such exercise
represents an exercise of all Options that are vested and exercisable as of the
date of such exercise. Partial shares may not be exercised. If the Employee
fails to accept delivery of and pay for all or any part of the number of shares
specified in the Exercise Notice upon tender or delivery thereof, his or her
right to exercise the Options with respect to such undelivered shares may be
terminated, in the sole discretion of the Committee.
(a) Each Exercise Notice shall: (i) state the number of shares in
respect of which the Options are being exercised, (ii) be accompanied by
payment as provided in paragraph (c) below, and (iii) be signed by the person or
persons entitled to exercise such Options. If such Options are being exercised
by any person or persons other than the Employee, the Exercise Notice shall be
accompanied by proof, satisfactory to the Company and its counsel, of the right
of such person or persons to exercise such Options.
(b) Payment of the Exercise Price and estimated taxes and fees shall
be made by delivering to the Company any one, or a combination of, the
following: (i) a certified or bank cashier's check payable to the Company or
its order, or a wire transfer directly to an account specified by the Company,
(ii) one or more certificates evidencing shares of Common Stock owned by the
Employee immediately prior to such exercise, together with a duly executed stock
power, having an aggregate Fair Market Value (as defined in the Plan) on the
date on which the Exercise Notice is given equal to the aggregate Exercise Price
and estimated taxes and fees or (iii) a copy of irrevocable instructions to a
registered broker/dealer (which shall have been countersigned and agreed to by
such registered broker/dealer) to promptly deliver to the Company an amount of
proceeds from the sale of shares of Common Stock to be issued pursuant to the
Options being exercised or of a loan made with respect to
4
<PAGE>
shares of Common Stock to be issued pursuant to the Options being exercised
sufficient, in either case, to pay the Exercise Price ("Cashless Exercise"). All
exercise instructions must be submitted by the Employee on designated Company
forms or through designated Company computer programs (Company intranet
processes).
(c) The certificate or certificates representing shares of Common
Stock to be issued upon exercise of the Options shall be registered in the name
of the person or persons exercising such Options (or, if such Options are
exercised by the Employee and if the Employee so requests in the applicable
Exercise Notice, shall be registered in the name of the Employee and his or her
spouse jointly, with the right of survivorship) but only upon compliance with
all the provisions of this Agreement, and such certificate(s) shall be delivered
within 10 days after receipt of payment and completion by the Employee;
provided, that in case of clause (iii) of the first sentence of Section 7(c),
- --------
the Company shall not be required to make delivery of the certificate(s) until
payment is actually received from such broker/dealer.
(d) The Company shall have no obligation to issue or deliver
fractional shares of Common Stock upon exercise of the Options but may, in its
sole discretion, elect to do so. In lieu of issuing any such fractional share,
the Company shall pay to the person exercising the Options, promptly following
such exercise, an amount in cash equal to the Fair Market Value of such fraction
of a share on the date of exercise.
8. NO RIGHT TO CONTINUED EMPLOYMENT. Nothing in this Agreement
--------------------------------
shall confer upon the Employee 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 Employee's employment.
9. WITHHOLDING TAXES. The Company shall have the right to require
-----------------
the Employee (or such other person, if any, who has the right to exercise the
Options) 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 Employee (or such other person) a certificate or
certificates representing shares of Common Stock issuable hereunder.
10. APPROVAL OF COUNSEL. Any exercise of the Options and the
-------------------
issuance and delivery of shares of Common Stock pursuant thereto shall be
subject to approval, by the Company's counsel, of all legal matters in
5
<PAGE>
connection therewith, including compliance with the requirements of the
Securities Act of 1933, as amended (the "Securities Act"), and the Securities
Exchange Act of 1934, as amended, and the rules and regulations thereunder, the
requirements of any stock exchange upon which the Common Stock may then be
listed and any applicable state securities or "blue sky" laws.
11. NON-COMPETITION. Employee agrees that during employment with the
---------------
Company, and for a period of one year thereafter, Employee shall not, directly
or indirectly, as a principal, officer, director, employee, or in any other
capacity whatsoever, without prior written consent of the Company, engage in any
activity with, or provide services to, any person or entity engaged in, or about
to engage in, any business activity that is competitive with the business then
engaged in by the Company, in the geographic areas within which Employee's work
has been concerned during the twelve months preceding the termination Employee's
employment with the Company.
However, nothing in this Agreement shall prevent Employee from making
or holding any investment in any amount in securities of a competitive business
traded on a 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 such competitive business.
Employee acknowledges and agrees that (1) breach of this Section 11 is
appropriately remedied by injunctive relief, including interim or temporary
relief, and Employee hereby consents thereto; and (2) the Company may refuse to
allow the exercise of any otherwise vested Options in the event of an alleged
breach of Employee of this Section 11, and such Options shall be terminated and
canceled upon determination of such breach; and (3) the Company is not liable
for the gain or loss by the Employee due to the increase or decrease of the Fair
Market Value of the Company stock during period in which the Company may have
refused to accept exercise instructions pending final determination of the
Employee's breach of this Agreement.
12. NOTICES. For the purposes of this Agreement, notices, demands
-------
and all other communications provided for in this 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) (unless otherwise specified) when mailed by United States registered mail,
return receipt requested, postage prepaid, addressed as follows:
Samsonite Corporation
6
<PAGE>
11200 East Forty-Fifth Avenue
Denver, Colorado 80239-3018
c/o General Counsel
with a copy to each member of the Committee who is not an officer or an employee
of the Company, at the Company's address, 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.
All notices to the Employee or other person or persons then entitled
to exercise the Options shall be addressed to the Employee or such other person
or persons at the then current address of the Employee contained in the employee
payroll records of the Company.
Anyone to whom a notice may be given under this Agreement may
designate a new address by notice to that effect.
13. 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 Employee and all rights granted to the Company
under this Agreement shall be binding upon the Employee and, to the limited
extent set forth herein, the Employee's heirs, legal representatives and
successors. No other person shall have any rights under this Agreement.
14. SEVERABILITY. If any one or more provisions of this Agreement is
------------
deemed to be illegal or unenforceable, such illegality or un-enforceability
shall not affect the validity or 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.
15. ENTIRE AGREEMENT. This Agreement contains the entire
----------------
understanding and agreement between the parties hereto, and supersedes all prior
understandings and agreements between them respecting the subject matter hereof.
The provisions of this Agreement may not be modified, waived nor discharged
unless such waiver, modification or discharge is agreed to in writing, signed by
the parties hereto.
16. WAIVER. No waiver by either party hereto, at any time, of any
------
breach by the other party 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>
17. GOVERNING LAW. This Agreement shall be construed and governed in
-------------
accordance with the laws of the State of Delaware without regard to the
conflicts of law principles thereof.
18. INCORPORATION BY REFERENCE. The incorporation herein of any
--------------------------
terms, by reference to another document, shall not be affected by the
termination of any agreement contained in such other document, nor by the
invalidity of any provision hereof.
19. 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.
20. 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.
21. MISCELLANEOUS. Employee agrees to abide by the laws and
-------------
regulations governing Insider Trading, the terms of this Stock Option Agreement,
and the policies and decisions of the management of the Company
8
<PAGE>
in all matters concerning this stock option grant July 15, 1998 and acknowl
edges receipt of the following documents:
Received Documents:
a. Stock Option Agreement
b. Stock Option Questions & Answers
c. Avoiding Insider Trading Brochure
UNDERSTOOD AND AGREED TO:
Employee:
/s/ D. Michael Clayton
- ----------------------
(Signature)
SAMSONITE CORPORATION
By: /s/ Luc Van Nevel
- ---------------------
Name: Luc Van Nevel
Title: Chief Executive Officer, President
9
<PAGE>
Exhibit 10.10
-------------
WARRANT AGREEMENT
BETWEEN
SAMSONITE CORPORATION
AND
BANKBOSTON, N.A.
AS
WARRANT AGENT
_________________________
DATED AS OF JUNE 24, 1998
TABLE OF CONTENTS
-----------------
Page
----
SECTION 1. Appointment of Warrant Agent
SECTION 2. Warrant Certificates
SECTION 3. Execution of Warrant Certificates
SECTION 4. Registration and Countersignature
SECTION 5. Transfer and Exchange of Warrants
SECTION 6. Registration of Transfers and Exchanges
SECTION 7. Terms of Warrants; Exercise of Warrants
SECTION 8. Payment of Taxes
SECTION 9. Mutilated or Missing Warrant Certificates
SECTION 10. Reservation of Warrant Shares
SECTION 11. [RESERVED]
SECTION 12. Adjustment of Exercise Price and Number of Warrant Shares
Issuable
SECTION 13. Fractional Interests
SECTION 14. Notices to Warrant Holders
SECTION 15. Notices to the Company and Warrant Agent
SECTION 16. Supplements and Amendments
SECTION 17. Concerning the Warrant Agent
SECTION 18. Change of Warrant Agent
<PAGE>
SECTION 19. [RESERVED]
SECTION 20. Registration Rights
SECTION 21. Successors
SECTION 22. Termination
SECTION 23. GOVERNING LAW
SECTION 24. Benefits of This Agreement
SECTION 25. Counterparts
SECTION 26. Headings
Exhibit A. Form of Warrant Certificate
A-1
Exhibit B. Certificate
B-2
Exhibit C. Legends
C-1
Exhibit D. Transferee Letter
D-1
WARRANT AGREEMENT (the "Agreement"), dated as of June24, 1998, between Samsonite
Corporation, a Delaware corporation (together with any successors and assigns,
the "Company"), and BANKBOSTON, N.A., a national banking association, as Warrant
Agent (the "Warrant Agent").
WHEREAS, the Company proposes to issue and sell pursuant to a Purchase
Agreement, dated as of June18, 1998, between the Company and CIBC Oppenheimer
Corp., as initial purchaser (the "Initial Purchaser") (the "Purchase Agreement),
175,000 shares of 137/8% Senior Redeemable Exchangeable Preferred Stock, $1,000
liquidation preference per share (the "Senior Preferred Stock"), along with
Warrants (each a "Warrant," and collectively, the "Warrants") for the purchase
of an aggregate of 1,959,000 shares of its Common Stock, par value $.01 per
share (the "Common Stock," and the shares of Common Stock issuable upon exercise
of the Warrants being referred to herein as the "Warrant Shares"). The Notes
and Warrants will be sold in units (the "Units"), each Unit consisting of one
share of Senior Preferred Stock and one Warrant, each such Warrant entitling the
holder thereof to purchase 11.194 shares of Common Stock;
WHEREAS, the Company desires the Warrant Agent to act on behalf of the Company
and the Warrant Agent is willing to act in connection with the issuance,
transfer, exchange and exercise of Warrants as provided herein; and
WHEREAS, the holders of Warrants and Warrant
<PAGE>
Shares shall, from time to time, have certain rights and obligations with
respect thereto as set forth in the Common Stock Registration Rights Agreement,
dated as of June24, 1998, between the Company and the Initial Purchaser;
NOW, THEREFORE, in consideration of the premises and mutual agreements herein,
the Company and the Warrant Agent hereby agree as follows:
SECTION 1. Appointment of Warrant Agent. The Company hereby appoints the
----------------------------
Warrant Agent to act as agent for the Company in accordance with the
instructions hereinafter set forth in this Agreement, and the Warrant Agent
hereby accepts such appointment.
SECTION 2. Warrant Certificates. The Warrants will initially be issued in
--------------------
global form (the "Global Warrants"), substantially in the form of Exhibit A
hereto (including footnote 1 thereto). Any certificates (the "Warrant
Certificates") evidencing the Global Warrants to be delivered pursuant to this
Agreement shall be substantially in the form set forth in Exhibit A hereto.
Such Global Warrants shall represent such of the outstanding Warrants as shall
be specified therein and each shall provide that it shall represent the
aggregate amount of outstanding Warrants from time to time endorsed thereon and
that the aggregate amount of outstanding Warrants represented thereby may from
time to time be reduced or increased, as appropriate. Any endorsement of a
Global Warrant to reflect the amount of any increase or decrease in the amount
of outstanding Warrants represented thereby shall be made by the Warrant Agent
and Depositary (as defined below) in accordance with instructions given by the
holder thereof. The Depository Trust Company shall act as the Depositary with
respect to the Global Warrants until a successor shall be appointed by the
Company. Upon written request, a Warrant holder may receive from the Depositary
and Warrant Agent Warrants in registered form as definitive Warrant Certificates
(the "Definitive Warrants") as set forth in Section 6 below.
SECTION 3. Execution of Warrant Certificates. Warrant Certificates shall be
---------------------------------
signed on behalf of the Company by its Chairman of the Board, its President,
Chief Executive Officer, Chief Operating Officer or Chief Financial Officer or
Treasurer or a Vice President and by its Secretary or an Assistant Secretary.
Each such signature upon the Warrant Certificates may be in the form of a
facsimile signature of the present or any future Chairman of the Board,
President, Chief Executive Officer, Chief Operating Officer, Chief
<PAGE>
Financial Officer, a Vice President, Secretary or Assistant Secretary and may be
imprinted or otherwise reproduced on the Warrant Certificates and for that
purpose the Company may adopt and use the facsimile signature of any person who
shall have been Chairman of the Board, President, Chief Executive Officer, Chief
Operating Officer, Chief Financial Officer, Treasurer, a Vice President,
Secretary or an Assistant Secretary, notwithstanding the fact that at the time
the Warrant Certificates shall be countersigned and delivered or disposed of
such person shall have ceased to hold such office.
In case any officer of the Company who shall have signed any of the Warrant
Certificates shall cease to be such officer before the Warrant Certificates so
signed shall have been countersigned by the Warrant Agent, or disposed of by the
Company, such Warrant Certificates nevertheless may be countersigned and
delivered or disposed of as though such person had not ceased to be such officer
of the Company; and any Warrant Certificate may be signed on behalf of the
Company by any person who, at the actual date of the execution of such Warrant
Certificate, shall be a proper officer of the Company to sign such Warrant
Certificate, although at the date of the execution of this Warrant Agreement any
such person was not such officer.
Warrant Certificates shall be dated the date of countersignature by the Warrant
Agent.
SECTION 4. Registration and Countersignature. The Warrants shall be numbered
---------------------------------
and shall be registered on the books of the Company maintained at the principal
office of the Warrant Agent in the Borough of Manhattan, City of New York (the
"Warrant Register") as they are issued.
Warrant Certificates shall be manually countersigned by the Warrant Agent and
shall not be valid for any purpose unless so countersigned. The Warrant Agent
shall, upon written instructions of the Chairman of the Board, the President,
Chief Executive Officer, Chief Operating Officer, Chief Financial Officer, a
Vice President, the Secretary or an Assistant Secretary of the Company,
initially countersign and deliver Warrants entitling the holders thereof to
purchase not more than the number of Warrant Shares referred to above in the
first recital hereof and shall thereafter countersign and deliver Warrants as
otherwise provided in this Agreement.
The Company and the Warrant Agent may deem and treat the registered holders (the
"Holders") of the Warrant Certificates as the absolute owners
<PAGE>
thereof (notwithstanding any notation of ownership or other writing thereon made
by anyone) for all purposes, and neither the Company nor the Warrant Agent shall
be affected by any notice to the contrary.
SECTION 5. Transfer and Exchange of Warrants. The Warrant Agent shall from time
---------------------------------
to time, subject to the limitations of Section6, register the transfer of any
outstanding Warrants upon the records to be maintained by it for that purpose,
upon surrender thereof duly endorsed or accompanied (if so required by it) by a
written instrument or instruments of transfer in form satisfactory to the
Warrant Agent, duly executed by the registered Holder or Holders thereof or by
the duly appointed legal representative thereof or by a duly authorized
attorney. Subject to the terms of this Agreement, each Warrant Certificate may
be exchanged for another certificate or certificates entitling the Holder
thereof to purchase a like aggregate number of Warrant Shares as the certificate
or certificates surrendered then entitle each Holder to purchase. Any Holder
desiring to exchange a Warrant Certificate or Certificates shall make such
request in writing delivered to the Warrant Agent, and shall surrender, duly
endorsed or accompanied (if so required by the Warrant Agent) by a written
instrument or instruments of transfer in form satisfactory to the Warrant Agent,
the Warrant Certificate or Certificates to be so exchanged.
Upon registration of transfer, the Warrant Agent shall countersign and deliver
by certified or first class mail a new Warrant Certificate or Certificates to
the persons entitled thereto. The Warrant Certificates may be exchanged at the
option of the Holder thereof, when surrendered at the office or agency of the
Company maintained for such purpose, which initially will be the corporate trust
office of the Warrant Agent in New York, New York, for another Warrant
Certificate, or other Warrant Certificates of different denominations, of like
tenor and representing in the aggregate the right to purchase a like number of
Warrant Shares.
No service charge shall be made for any exchange or registration of transfer of
Warrant Certificates, but the Company may require payment of a sum sufficient to
cover any stamp or other tax or other governmental charge that is imposed in
connection with any such exchange or registration of transfer.
SECTION 6. Registration of Transfers and Exchanges.
---------------------------------------
<PAGE>
(a) Transfer and Exchange of Definitive Warrants. When Definitive Warrants are
--------------------------------------------
presented to the Warrant Agent with a request:
(i) to register the transfer of the Definitive Warrants; or
(ii) to exchange such Definitive Warrants for an equal number of Definitive
Warrants of other authorized denominations, the Warrant Agent shall register the
transfer or make the exchange as requested if its requirements under this
Agreement are met; provided, however, that the Definitive Warrants presented
-------- -------
or surrendered for registration of transfer or exchange:
(x) shall be duly endorsed or accompanied by a written instruction of transfer
in form satisfactory to the Warrant Agent, duly executed by the Holder
thereof or by such Holder's attorney, duly authorized in writing; and
(y) in the case of Warrants (the "Restricted Warrants") which constitute
Restricted Securities (as such term is defined in Rule 144(a)(3) of the
Securities Act of 1933, as amended (the "Securities Act")), such Warrants shall
be accompanied, in the sole discretion of the Company, by the following
additional information and documents, as applicable, however, it being
understood that the Warrant Agent need not determine which clause (A) through
(C) below is applicable:
(A) if such Restricted Warrant is being delivered to the Warrant Agent by a
Holder for registration in the name of such Holder, without transfer, a
certification from such holder to that effect (in substantially the form of
Exhibit B hereto); or
(B) if such Restricted Warrant is being transferred to a qualified institutional
buyer (as defined in Rule 144A under the Securities Act, a "QIB") in accordance
with Rule 144A under the Securities Act or pursuant to an exemption from
registration in accordance with Rule 144 under the Securities Act or Regulation
S under the Securities Act or pursuant to an effective registration statement
under the Securities Act, a certification to that effect (in substantially the
form of Exhibit B hereto) and, with respect to transfers pursuant to Rule 144 or
Regulation S, an opinion of counsel reasonably acceptable to the Company and the
Warrant Agent to the effect that such transfer does not require registration
under the Securities Act; or
(C) if such Restricted Warrant is being
<PAGE>
transferred in reliance on another exemption from the registration requirements
of the Securities Act, a certification to that effect (in substantially the form
of Exhibit B hereto) and an opinion of counsel reasonably acceptable to the
Company and to the Warrant Agent to the effect that such transfer does not
require registration under the Securities Act and/or other information
reasonably satisfactory to the Company and the Warrant Agent.
(b) Restrictions on Transfer of a Definitive Warrant for a Beneficial Interest
--------------------------------------------------------------------------
in a Global Warrant. A Definitive Warrant may not be exchanged for a beneficial
- -------------------
interest in a Global Warrant except upon satisfaction of the requirements set
forth below. Upon receipt by the Warrant Agent of a Definitive Warrant, duly
endorsed or accompanied by appropriate instruments of transfer, in form
satisfactory to the Warrant Agent, together with:
(A) if such Definitive Warrant constitutes a Restricted Warrant, certification,
substantially in the form of Exhibit B hereto, that such Definitive Warrant is
being transferred to a QIB in accordance with Rule 144A under the Securities Act
or pursuant to Regulation S under the Securities Act; and
(B) written instructions directing the Warrant Agent to make, or to direct the
Depositary to make, an endorsement on the Global Warrant to reflect an increase
in the aggregate amount of the Warrants represented by the Global Warrant,
then the Warrant Agent shall cancel such Definitive Warrant and cause, or direct
the Depositary to cause, in accordance with the standing instructions and
procedures existing between the Depositary and the Warrant Agent, the number of
Warrant Shares represented by the Global Warrant to be increased accordingly.
If no Global Warrant is then outstanding, the Company shall issue and the
Warrant Agent shall countersign a new Global Warrant in the appropriate amount.
(c) Transfer and Exchange of Global Warrants. The transfer and exchange of
----------------------------------------
Global Warrants or beneficial interests therein shall be effected through the
Depositary, in accordance with this Warrant Agreement (including the
restrictions on transfer set forth herein) and the procedures of the Depositary
therefor.
(d) Transfer of a Beneficial Interest in a Global Warrant for a Definitive
----------------------------------------------------------------------
Warrant.
- -------
(i) Any person having a beneficial interest
<PAGE>
in a Global Warrant may upon request exchange such beneficial interest for a
Definitive Warrant. Upon receipt by the Warrant Agent of written instructions or
such other form of instructions as is customary for the Depositary from the
Depositary or its nominee on behalf of any person having a beneficial interest
in a Global Warrant and upon receipt by the Warrant Agent of a written order or
such other form of instructions as is customary for the Depositary or the person
designated by the Depositary as having such a beneficial interest containing
registration instructions and, in the case of a beneficial interest in
Restricted Warrants, the following additional information and documents,
however, it being understood that the Warrant Agent need not determine which
clause (A) through (C) below is applicable:
(A) If such beneficial interest is being transferred to the person designated
by the Depositary as being the beneficial owner, a certification from such
person to that effect (in substantially the form of Exhibit B hereto); or
(B) if such beneficial interest is being transferred to a QIB in accordance
with Rule 144A under the Securities Act or pursuant to an exemption from
registration in accordance with Rule 144 or Regulation S under the Securities
Act or pursuant to an effective registration statement under the Securities Act,
a certification to that effect from the transferee or transferor (in
substantially the form of Exhibit B hereto) and, with respect to transfers
pursuant to Rule 144 or Regulation S, an opinion of counsel reasonably
acceptable to the Company and the Warrant Agent to the effect that such transfer
does not require registration under the Securities Act; or
(C) if such beneficial interest is being transferred in reliance on another
exemption from the registration requirements of the Securities Act, a
certification to that effect from the transferee or transferor (in substantially
the form of Exhibit B hereto) and an opinion of counsel from the transferee or
transferor reasonably acceptable to the Company and to the Warrant Agent to the
effect that such transfer does not require registration under the Securities Act
and/or other information reasonably satisfactory to the Company and the Warrant
Agent,
<PAGE>
then the Warrant Agent will cause, in accordance with the standing instructions
and procedures existing between the Depositary and the Warrant Agent, the
aggregate amount of the Global Warrant to be reduced and, following such
reduction, the Company will execute and, upon receipt of a countersignature, the
Warrant Agent will countersign and deliver to the transferee a Definitive
Warrant.
(ii) Definitive Warrants issued in exchange for a beneficial interest in a
Global Warrant pursuant to this Section 6(d) shall be registered in such names
and in such authorized denominations as the Depositary, pursuant to instructions
from its direct or indirect participants or otherwise, shall instruct the
Warrant Agent in writing, provided such designation is in accordance with this
Section 6(d). The Warrant Agent shall deliver such Definitive Warrants to the
persons in whose names such Definitive Warrants are registered.
(e) Restrictions on Transfer and Exchange of Global Warrants. Notwithstanding
--------------------------------------------------------
any other provisions of this Warrant Agreement (other than the provisions set
forth in subsection (f) of this Section 6), a Global Warrant may not be
transferred as a whole except by the Depositary to a nominee of the Depositary
or by a nominee of the Depositary to the Depositary or another nominee of the
Depositary or by the Depositary or any such nominee to a successor Depositary or
a nominee of such successor Depositary.
(f) Authentication of Definitive Warrants in Absence of Depositary. If at any
--------------------------------------------------------------
time:
(i) the Depositary for the Global Warrants notifies the Company that the
Depositary is unwilling or unable to continue as Depositary for the Global
Warrant and a successor Depositary for the Global Warrant is not appointed by
the Company within 90 days after delivery of such notice; or
(ii) the Company, at its sole discretion, notifies the Warrant Agent in writing
that it elects to cause the issuance of Definitive Warrants under this Warrant
Agreement, then the Company will execute, and the Warrant Agent, upon receipt of
an Officers' Certificate (as defined in the Indenture) requesting the
countersignature and delivery of Definitive Warrants, will countersign and
deliver Definitive Warrants, in an aggregate number equal to the aggregate
number of Warrants represented by the Global Warrant, in exchange for such
Global Warrant.
(g) Legends.
-------
(i) Except as permitted by the following paragraph (ii), each Warrant
Certificate evidencing the Global Warrants and the Definitive Warrants (and all
Warrants issued in exchange
<PAGE>
therefor or substitution thereof) shall bear a legend substantially as set forth
in ExhibitC.
(ii) Upon any sale or transfer of a Warrant pursuant to Rule 144 under the
Securities Act or an effective registration statement under the Securities
Act:
(A) in the case of any Warrant that is a Definitive Warrant, the Warrant Agent
shall permit the Holder thereof to exchange such Restricted Warrant for a
Definitive Warrant that does not bear the first paragraph of the legend set
forth in ExhibitC and rescind any related restriction on the transfer of such
Warrant; and
(B) any such Warrant represented by a Global Warrant shall not be subject to the
provisions set forth in (i) above (such sales or transfers being subject only to
the provisions of Section 6(c) hereof); provided, however, that with respect to
-------- -------
any request for an exchange of a Warrant that is represented by a Global Warrant
for a Definitive Warrant that does not bear the first paragraph of the legend
set forth in Exhibit C, which request is made in reliance upon Rule 144, the
Holder thereof shall certify in writing to the Warrant Agent that such request
is being made pursuant to Rule 144 (such certification to be substantially in
the form of Exhibit B hereto) and shall obtain an opinion of counsel, reasonably
acceptable to the Company and the Warrant Agent, to the effect that such
transfer does not require registration under the Securities Act.
(h) Cancellation and/or Adjustment of a Global Warrant. At such time as all
--------------------------------------------------
beneficial interests in a Global Warrant have either been exchanged for
Definitive Warrants, redeemed, repurchased or cancelled, such Global Warrant
shall be returned to or retained and cancelled by the Warrant Agent. At any time
prior to such cancellation, if any beneficial interest in a Global Warrant is
exchanged for Definitive Warrants, redeemed, repurchased or cancelled, the
number of Warrants represented by such Global Warrant shall be reduced and an
endorsement shall be made on such Global Warrant, by the Warrant Agent to
reflect such reduction.
(i) Obligations with Respect to Transfers and Exchanges of Definitive Warrants.
--------------------------------------------------------------------------
(i) To permit registrations of transfers and exchanges in accordance with the
terms of this Agreement, the Company shall execute, and the Warrant Agent shall
countersign Definitive
<PAGE>
Warrants and Global Warrants.
(ii) All Definitive Warrants and Global Warrants issued upon any registration,
transfer or exchange of Definitive Warrants or Global Warrants shall be the
valid obligations of the Company, entitled to the same benefits under this
Warrant Agreement as the Definitive Warrants or Global Warrants surrendered upon
the registration of transfer or exchange.
(iii) Prior to due presentment for registration of transfer of any Warrant, the
Warrant Agent and the Company may deem and treat the person in whose name any
Warrant is registered as the absolute owner of such Warrant, and neither the
Warrant Agent nor the Company shall be affected by notice to the contrary.
SECTION 7. Terms of Warrants; Exercise of Warrants. Subject to the terms of
---------------------------------------
this Agreement, each Warrant Holder shall have the right, which may be exercised
commencing on or after the Exercisability Date (as defined below) and until 5:00
p.m., New York City time, on June15, 2010 (the "Expiration Date"), to receive
from the Company the number of fully paid and nonassessable Warrant Shares which
the Holder may at the time be entitled to receive on exercise of such Warrants
and payment of the Exercise Price (as defined below) then in effect for such
Warrant Shares. Subject to the next paragraph of this Section, each Warrant not
exercised prior to the Expiration Date shall become void and all rights
thereunder and all rights in respect thereof under this Agreement shall cease as
of such time. No adjustments as to dividends will be made upon exercise of the
Warrants.
"Exercisability Date" shall mean the date beginning on the Business Day
following the first date on which the Exercise Price can be determined and
ending on the Expiration Date.
The initial price per share at which Warrant Shares shall be purchasable upon
exercise of Warrants (the "Exercise Price") shall equal 110% of the average of
the closing prices of the Company's Common Stock on the five consecutive trading
days commencing with the trading day immediately following the closing of the
Tender Offer (as defined in the Offering Memorandum dated June 18, 1998 pursuant
to which the Warrants were offered) as reported by the Nasdaq National Market,
subject to adjustment as provided below. A Warrant may be exercised upon
surrender at the office or agency of the Company maintained for such purpose,
which initially will be the corporate trust office of the Warrant Agent or its
<PAGE>
agents in New York, New York, of the certificate or certificates evidencing the
Warrants to be exercised with the form of election to purchase on the reverse
thereof duly filled in and signed, which signature shall be guaranteed by a
participant in a recognized Signature Guarantee Medallion Program, and upon
payment to the Warrant Agent for the account of the Company of the Exercise
Price, as adjusted as herein provided, for the number of Warrant Shares in
respect of which such Warrants are then exercised. Payment of the Exercise
Price may be made (a) in the form of cash or by certified or official bank check
payable to the order of the Company in New York Clearing House Funds, (b) by
tendering shares of Senior Preferred Stock with an aggregate liquidation
preference equal to the aggregate Exercise Price, (c) by delivering to the
Company a copy of irrevocable instructions to a registered broker/dealer (which
shall have been countersigned and agreed to by such registered broker/dealer) to
promptly deliver to the Company (but in no event later than the third business
day following the sale referred to below) an amount of the proceeds from the
sale of Warrant Shares to be issued upon exercise of the Warrants being
exercised sufficient to pay the Exercise Price ("Cashless Exercise") or (d) any
combination of (a), (b) or (c) above.
Subject to the provisions of Section 6 hereof, upon such surrender of Warrants
and payment of the Exercise Price, the Company shall issue and cause to be
delivered with all reasonable dispatch to or upon the written order of the
Holder and in such name or names as the Warrant Holder may designate a
certificate or certificates for the number of full Warrant Shares issuable upon
the exercise of such Warrants together with cash as provided in Section 13.
Such certificate or certificates shall be deemed to have been issued and any
person so named therein shall be deemed to have become a holder of record of
such Warrant Shares as of the date of the surrender of such Warrants and payment
of the Exercise Price.
The Warrants shall be exercisable, at the election of the Holders thereof,
either in full or from time to time in part and, in the event that a certificate
evidencing Warrants is exercised in respect of fewer than all of the Warrant
Shares issuable on such exercise at any time prior to the date of expiration of
the Warrants, a new certificate evidencing the remaining Warrant or Warrants
will be issued, and the Warrant Agent is hereby irrevocably authorized to
countersign and
<PAGE>
to deliver the required new Warrant Certificate or Certificates pursuant to the
provisions of this Section 7 and of Section 3 hereof, and the Company, whenever
required by the Warrant Agent, will promptly supply the Warrant Agent with
Warrant Certificates duly executed on behalf of the Company for such purpose.
All Warrant Certificates surrendered upon exercise of Warrants shall be
cancelled by the Warrant Agent. Such cancelled Warrant Certificates shall then
be either delivered to the Company or disposed of by the Warrant Agent in a
manner consistent with the Warrant Agent's customary procedure for such disposal
and in a manner reasonably satisfactory to the Company. The Warrant Agent shall
account promptly to the Company with respect to Warrants exercised and
concurrently pay to the Company all monies received by the Warrant Agent for the
purchase of the Warrant Shares through the exercise of such Warrants.
The Warrant Agent shall keep copies of this Agreement available for inspection
by the Holders during normal business hours at its office. The Company shall
supply the Warrant Agent from time to time with such numbers of copies of this
Agreement as the Warrant Agent may request.
SECTION 8. Payment of Taxes. The Company will pay all documentary stamp taxes
----------------
attributable to the initial issuance of Warrant Shares upon the exercise of
Warrants; provided, however, that the Company shall not be required to pay any
-------- -------
tax or taxes which may be payable in respect of any transfer involved in the
issue of any Warrant Certificates or any certificates for Warrant Shares in a
name other than that of the registered Holder of a Warrant Certificate
surrendered upon the exercise of a Warrant, and the Company shall not be
required to issue or deliver such Warrant Certificates unless or until the
person or persons requesting the issuance thereof shall have paid to the Company
the amount of such tax or shall have established to the satisfaction of the
Company that such tax has been paid.
SECTION 9. Mutilated or Missing Warrant Certificates. In case any of the
-----------------------------------------
Warrant Certificates shall be mutilated, lost, stolen or destroyed, the Company
may in its discretion issue and the Warrant Agent may countersign, in exchange
and substitution for and upon cancellation of the mutilated Warrant Certificate,
or in lieu of and substitution for the Warrant Certificate lost, stolen or
destroyed, a new Warrant Certificate of like tenor and representing an
equivalent number
<PAGE>
of Warrants, but only upon receipt of evidence satisfactory to the Company and
the Warrant Agent of such loss, theft or destruction of such Warrant Certificate
and indemnity, if requested, also satisfactory to them. Applicants for such
substitute Warrant Certificates shall also comply with such other reasonable
regulations and pay such other reasonable charges as the Company or the Warrant
Agent may prescribe.
SECTION 10. Reservation of Warrant Shares. The Company will at all times
-----------------------------
reserve and keep available, free from preemptive rights, out of the aggregate of
its authorized but unissued Common Stock or its authorized and issued Common
Stock held in its treasury, for the purpose of enabling it to satisfy any
obligation to issue Warrant Shares upon exercise of Warrants, the maximum number
of shares of Common Stock which may then be deliverable upon the exercise of all
outstanding Warrants.
The Company will keep a copy of this Agreement on file with the transfer agent
for the Common Stock (the "Transfer Agent") and with every subsequent transfer
agent for any shares of the Company's capital stock issuable upon the exercise
of the rights of purchase represented by the Warrants. The Warrant Agent is
hereby irrevocably authorized to requisition from time to time from such
Transfer Agent the stock certificates required to honor outstanding Warrants
upon exercise thereof in accordance with the terms of this Agreement. The
Company will supply such Transfer Agent with duly executed certificates for such
purposes and will provide or otherwise make available any cash which may be
payable as provided in Section13. The Company will furnish such Transfer Agent a
copy of all notices of adjustments and certificates related thereto transmitted
to each Holder pursuant to Section 14 hereof.
The Company covenants that all Warrant Shares which may be issued upon exercise
of Warrants will, upon payment of the Exercise Price therefor and issue, be
validly authorized and issued, fully paid, nonassessable, free of preemptive
rights and free from all taxes, liens, charges and security interests with
respect to the issuance thereof. The Company will not enter into any agreements
inconsistent in any material respect with the rights of Holders hereunder. The
Company will use its reasonable best efforts to obtain all such authorizations,
exemptions or consents from any public regulatory body having jurisdiction
thereof as may be necessary to enable the Company to perform its obligations
under this Agreement.
<PAGE>
SECTION 11. [RESERVED].
SECTION 12. Adjustment of Exercise Price and Number of Warrant Shares Issuable.
------------------------------------------------------------------
The Exercise Price and the number of shares of Common Stock issuable upon the
exercise of each Warrant (the "Exercise Rate") is subject to adjustment from
time to time upon the occurrence of the events enumerated in this Section 12.
(a) Adjustment for Change in Capital Stock. If the Company:
--------------------------------------
(1) pays a dividend or makes a distribution on its Common Stock in shares of
its Common Stock or other capital stock of the Company; or
(2) subdivides, combines or reclassifies its outstanding shares of Common
Stock, then the Exercise Rate in effect immediately prior to such action shall
be proportionately adjusted so that the Holder of any Warrant thereafter
exercised may receive the aggregate number and kind of shares of capital stock
of the Company which such Holder would have owned immediately following such
action if such Warrant had been exercised immediately prior to such action and
the Exercise Price in effect immediately prior to such action shall be adjusted
to a price determined by multiplying the Exercise Price in effect immediately
prior to such action by a fraction, the numerator of which shall be the number
of shares of Common Stock outstanding before giving effect to such action and
the denominator of which shall be the number of shares of Common Stock and/or
such other capital stock outstanding referred to in the foregoing clause (a)(1)
after giving effect to such action.
The adjustment shall become effective immediately after the record date in the
case of a dividend or distribution and immediately after the effective date in
the case of a subdivision, combination or reclassification.
If after an adjustment a Holder of a Warrant upon exercise of it may receive
shares of two or more classes of capital stock of the Company, the board of
directors of the Company shall determine the allocation of the adjusted Exercise
Price between the classes of capital stock. After such allocation, the exercise
privilege and the Exercise Price of each class of capital stock shall thereafter
be subject to adjustment on terms comparable to those applicable to Common Stock
in this Section 12.
Such adjustment shall be made successively whenever any event listed above shall
occur.
(b) Adjustment for Certain Issuances of Common Stock. If the Company issues or
------------------------------------------------
sells to all holders of its Common Stock shares of its Common Stock or
distributes to all holders of its Common Stock any rights, options or warrants
entitling
<PAGE>
them to purchase shares of Common Stock, or securities convertible into or
exchangeable for Common Stock, in each case, at a price per share less than the
Current Market Value on the record date for determining entitlements of holders
of Common Stock to participate in such issuance, sale or distribution (the "Time
of Determination"), the Exercise Rate shall be adjusted in accordance with the
formula:
E' = E x O + N
------
O + N x P
-----
M
and the Exercise Price shall be adjusted in accordance with the following
formula:
EP' = EP x E
-
E'
where:
E' = the adjusted Exercise Rate.
E = the Exercise Rate immediately prior to the Time of Determination for
any such issuance, sale or distribution.
EP'= the Adjusted Exercise Price.
EP = the Exercise Price immediately prior to the Time of Determination for
any such issuance, sale or distribution.
O = the number of Fully Diluted Shares (as defined below) outstanding
immediately prior to the Time of Determination for any such issuance,
sale or distribution.
N = the number of additional shares of Common Stock issued, sold or
issuable upon exercise of such rights, options or warrants.
P = the per share price received and receivable by the Company in the case
of any issuance or sale of Common Stock or rights, options or warrants
inclusive of the exercise price per share of Common Stock payable upon
exercise of such rights, options or warrants.
M = the Current Market Value per share of Common Stock on the Time of
Determination for any such issuance, sale or distribution.
For purposes of this Section12 the term "Fully Diluted Shares" shall mean (i)
the shares of Common Stock outstanding as of a specified date, and (ii) the
shares of Common Stock into or for which rights, options, warrants or other
securities outstanding as of such date are exercisable or convertible (other
than the Warrants).
The adjustments shall be made successively whenever any such rights, options or
warrants are issued and shall become effective immediately after the relevant
Time of Determination.
<PAGE>
Notwithstanding the foregoing, the Exercise Rate and the Exercise Price shall
not be subject to adjustment in connection with (i)the issuance of any shares of
Common Stock upon exercise of any such rights, options or warrants which have
previously been the subject of an adjustment under this Agreement for which the
required adjustment has been made and (ii) any exercise of the Warrants. If at
the end of the period during which any such rights, options or warrants are
exercisable, not all rights, options or warrants shall have been exercised, the
Warrant shall be immediately readjusted to what it would have been if "N" in
each of the above formulas had been the number of shares actually issued.
(c) Adjustment for Other Distributions. If the Company distributes to all
----------------------------------
holders of its Common Stock (i)any evidences of indebtedness of the Company or
any of its subsidiaries, (ii)any assets of the Company or any of its
subsidiaries (other than cash dividends or other cash distributions that
constitute an Ordinary Cash Distribution and other than any dividend or
distribution to all holders of Common Stock in connection with the liquidation,
dissolution or winding-up of the Company), or (iii)any rights, options or
warrants to acquire any of the foregoing or to acquire any other securities of
the Company, the Exercise Rate shall be adjusted in accordance with the formula:
E' = E x M
---
M - F
and the Exercise Price shall be decreased (but not increased) in accordance with
the following formula:
EP' = EP x E
-
E'
where:
E' = the adjusted Exercise Rate.
E = the current Exercise Rate on the record date referred to in this
paragraph (c) below.
EP'= the Adjusted Exercise Price.
EP = the current Exercise Price on the record date referred to in this
paragraph (c) below.
M = the Current Market Value per share of Common Stock on the record date
referred to in this paragraph (c) below.
F = the fair market value (as determined in good faith by the Company's
board of directors) on the record date referred to in this paragraph
(c) below of the indebtedness, assets, rights, options or warrants
distributable in respect of one share of Common Stock.
<PAGE>
The adjustments shall be made successively whenever any such distribution is
made and shall become effective immediately after the record date for the
determination of stockholders entitled to receive the distribution. If any
adjustment is made pursuant to clause(iii) above of this subsection(c) as a
result of the issuance of rights, options or warrants and at the end of the
period during which any such rights, options or warrants are exercisable, not
all such rights, options or warrants shall have been exercised, the Warrant
shall be immediately readjusted as if "F" in the above formula was the fair
market value on the record date of the indebtedness or assets actually
distributed upon exercise of such rights, options or warrants divided by the
number of shares of Common Stock outstanding on the record date.
Notwithstanding anything to the contrary contained in this subsection (c), if
"M-F" in the above formula is less than $1.00 (or is a negative number) then in
lieu of the adjustment otherwise required by this subsection (c), the Company
may elect to distribute to the holders of the Warrants, upon exercise thereof,
the evidences of indebtedness, assets, rights, options or warrants which would
have been distributed to such holders had such warrants been exercised
immediately prior to the record date for such distribution.
This subsection does not apply to rights, options or warrants referred to in
subsection(b) of this Section12.
(d) Current Market Value. "Current Market Value" per share of Common Stock or
--------------------
of any other security (herein collectively referred to as a "Security") at any
date shall be:
(1) if the Security is not registered under the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), (i)the value of the Security determined in good
faith by the board of directors of the Company and certified in a board
resolution, based on the most recently completed arm's length transaction
between the Company and a person other than an Affiliate of the Company and the
closing of which occurs on such date or shall have occurred within the six
months preceding such date or (ii)if no such transaction shall have occurred on
such date or within such six-month period, the value of the Security determined
as of a date within 30 days preceding such date by an Independent Financial
Expert, or
(2) if the Security is registered under the Exchange Act, the average
of the daily closing bid prices of such Security for 30 consecutive Business
Days selected by the Company from the
<PAGE>
period of 45 Business Days preceding such date, but only if such Security shall
have been listed on a national securities exchange or the Nasdaq National Market
or traded through an automated quotation system during such entire 45 Business
Day period.
The "closing bid price" for any Security on each Business Day means the closing
price, regular way, on such day on the principal exchange on which such Security
is traded, or if no sale takes place on such day, the average of the closing bid
and asked prices on such day.
"Independent Financial Expert" shall mean any nationally recognized investment
banking firm that is not an Affiliate of the Company. Any such person may
receive customary compensation and indemnification by the Company for opinions
or services it provides as an Independent Financial Expert.
"Affiliate" of any specified person means any other person which directly or
indirectly through one or more intermediaries controls or is controlled by, or
is under common control with, such specified person. For the purposes of this
definition, "control" (including with correlative meanings, the terms
"controlling," "controlled by" and "under common control with") as used with
respect to any person, means the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies of such
person, whether through the ownership of voting securities, by agreement or
otherwise; provided, however, that beneficial ownership of at least 10% of the
-------- -------
voting securities of a person shall be deemed to be control.
A "Business Day" is a day that is not a Legal Holiday. A "Legal Holiday" is a
Saturday, a Sunday, a federally-recognized holiday or a day on which banking
institutions are not required to be open in the State of New York.
"Ordinary Cash Distribution" means any quarterly cash dividend on the Common
Stock to the extent that the aggregate cash dividend per share of Common Stock
in any calendar quarter does not exceed the greater of (x) the amount per share
of Common Stock of the next preceding quarterly cash dividend on the Common
Stock to the extent that such preceding quarterly dividend did not require an
adjustment to the Exercise Price pursuant to paragraph (c)(ii) of this Section12
(as adjusted to reflect subdivisions or combinations of the Common Stock) and
(y) 3.0% of the average of the last reported sales prices of the Common Stock
during the ten trading days immediately prior to
<PAGE>
the date of declaration of such dividend.
(e) When De Minimis Adjustment May Be Deferred. No adjustment in the Exercise
------------------------------------------
Rate and Exercise Price need be made unless the adjustment would require an
increase or decrease of at least 1% in the Exercise Rate and Exercise Price.
Notwithstanding the foregoing, any adjustments that are not made shall be
carried forward and taken into account in any subsequent adjustment, provided
that no such adjustment shall be deferred beyond the date on which a Warrant is
exercised. All calculations under this Section12 shall be made to the nearest
cent or to the nearest 1/100th of a share, as the case may be.
(f) When No Adjustment Required. If an adjustment is made upon the
---------------------------
establishment of a record date for an issuance, sale or distribution subject to
subsection(a), (b) or (c) hereof and such issuance, sale or distribution is
subsequently cancelled or is not otherwise made, the Exercise Rate and Exercise
Price then in effect shall be readjusted, effective as of the date when the
board of directors determines to cancel such issuance, sale or distribution or
when it is otherwise evident that such issuance, sale or distribution will not
be so made, to that which would have been in effect if such record date had not
been fixed. If an adjustment would be required under two or more of
subsections(a), (b) and (c), such adjustments will be determined without
duplication.
To the extent the Warrants become convertible into cash, no adjustment need be
made thereafter as to the amount of cash into which such Warrants are
exercisable. Interest will not accrue on the cash.
(g) Notice of Adjustment. Whenever the Exercise Rate or Exercise Price is
--------------------
adjusted, the Company shall provide the notices required by Section14 hereof.
(h) Voluntary Reduction. The Company from time to time may increase the
-------------------
Exercise Rate or reduce the Exercise Price by any amount for any period of time
(including, without limitation, permanently) if the period is at least 20
Business Days.
An increase of the Exercise Rate or reduction in the Exercise Price under this
subsection(h) (other than a permanent increase) does not change or adjust the
Exercise Rate otherwise in effect for purposes of subsections(a), (b) or (c) of
this Section 12.
(i) When Issuance or Payment May Be Deferred. In any case in which this
----------------------------------------
Section12 shall require that an adjustment in the Exercise Rate or
<PAGE>
Exercise Price be made effective as of a record date for a specified event, the
Company may elect to defer until the occurrence of such event (i)issuing to the
Holder of any Warrant exercised after such record date the Warrant Shares and
other capital stock of the Company, if any, issuable upon such exercise over and
above the Warrant Shares and other capital stock of the Company, if any,
issuable upon such exercise on the basis of the Exercise Rate prior to such
adjustment, and (ii)paying to such Holder any amount in cash in lieu of a
fractional share pursuant to Section13; provided, however, that the Company
-------- -------
shall deliver to the Warrant Agent and shall cause the Warrant Agent, on behalf
of and at the expense of the Company, to deliver to such Holder a due bill or
other appropriate instrument evidencing such Holder's right to receive such
additional Warrant Shares, other capital stock and cash upon the occurrence of
the event requiring such adjustment.
(j) Reorganizations. In case of any capital reorganization, other than in the
---------------
cases referred to in Section12(a), (b) or (c) hereof and other than any capital
reorganization that does not result in any reclassification of the outstanding
shares of Common Stock into shares of other stock or other securities or
property, or the consolidation or merger of the Company with or into another
corporation (other than a merger or consolidation in which the Company is the
continuing corporation and which does not result in any reclassification of the
outstanding shares of Common Stock into shares of other stock or other
securities or property), or the sale of all or substantially all of the assets
of the Company (collectively such actions being hereinafter referred to as
"Reorganizations"), there shall thereafter be deliverable upon exercise of any
Warrant (in lieu of the number of shares of Common Stock theretofore
deliverable) the number of shares of stock or other securities or property to
which a holder of the number of shares of Common Stock that would otherwise have
been deliverable upon the exercise of such Warrant would have been entitled upon
such Reorganization if such Warrant had been exercised in full immediately prior
to such Reorganization. In case of any Reorganization, appropriate adjustment,
as determined in good faith by the board of directors of the Company, whose
determination shall be described in a duly adopted resolution certified by the
Company's Secretary or Assistant Secretary, shall be made in the application of
the provisions
<PAGE>
herein set forth with respect to the rights and interests of Holders so that the
provisions set forth herein shall thereafter be applicable, as nearly as
possible, in relation to any such shares or other securities or property
thereafter deliverable upon exercise of Warrants.
The Company shall not effect any such Reorganization unless prior to or
simultaneously with the consummation thereof the successor corporation (if other
than the Company) resulting from such Reorganization or the corporation or other
entity purchasing such assets shall (i)expressly assume, by a supplemental
warrant agreement or other acknowledgment executed and delivered to the Warrant
Agent the obligation to deliver to the Warrant Agent and to cause the Warrant
Agent to deliver to each such Holder such shares of stock, securities or assets
as, in accordance with the foregoing provisions, such Holder may be entitled to
purchase, and the due and punctual performance and observance of each and every
covenant, condition, obligation and liability under this Agreement to be
performed and observed by the Company in the manner prescribed herein and (ii)if
such Reorganization takes place prior to consummation by the Company of all of
its registration obligations under the Common Stock Registration Rights
Agreement, enter into an agreement providing to the Holders rights and benefits
substantially similar to those enjoyed by the Holders under the Common Stock
Registration Rights Agreement of even date herewith.
The foregoing provisions of this Section12(j) shall apply to successive
Reorganization transactions.
(k) Form of Warrants. Irrespective of any adjustments in the number or kind of
----------------
shares purchasable upon the exercise of the Warrants, Warrants theretofore or
thereafter issued may continue to express the same price and number and kind of
shares as are stated in the Warrants initially issuable pursuant to this
Agreement.
(l) Warrant Agent's Disclaimer. The Warrant Agent has no duty to determine
--------------------------
when an adjustment under this Section12 should be made, how it should be made or
what it should be. The Warrant Agent has no duty to determine whether any
provisions of a supplemental warrant agreement under subsection (j) of this
Section12 are correct. The Warrant Agent makes no representation as to the
validity or value of any securities or assets issued upon exercise of Warrants.
The Warrant Agent shall not be responsible for the Company's failure to comply
with this Section 12.
<PAGE>
(m) Miscellaneous. For purpose of this Section12 the term "shares of Common
-------------
Stock" shall mean (i)shares of the class of stock designated as the Common
Stock, par value $.01 per share, of the Company (the "Common Stock") as of the
date of this Agreement, and (ii)shares of any other class of stock resulting
from successive changes or reclassification of such shares consisting solely of
changes in par value, or from par value to no par value, or from no par value to
par value. In the event that at any time, as a result of an adjustment made
pursuant to this Section12, the Holders of Warrants shall become entitled to
purchase any securities of the Company other than, or in addition to, shares of
Common Stock, thereafter the number or amount of such other securities so
purchasable upon exercise of each Warrant shall be subject to adjustment from
time to time in a manner and on terms as nearly equivalent as practicable to the
provisions with respect to the Warrant Shares contained in subsections(a)
through (m) of this Section12, inclusive, and the provisions of Sections7, 8, 10
and 13 with respect to the Warrant Shares or the Common Stock shall apply on
like terms to any such other securities.
SECTION 13. Fractional Interests. The Company shall not be required to issue
--------------------
fractional Warrant Shares on the exercise of Warrants. If more than one Warrant
shall be presented for exercise in full at the same time by the same Holder, the
number of full Warrant Shares which shall be issuable upon the exercise thereof
shall be computed on the basis of the aggregate number of Warrant Shares
purchasable on exercise of the Warrants so presented. If any fraction of a
Warrant Share would, except for the provisions of this Section 13, be issuable
on the exercise of any Warrants (or specified portion thereof), the Company
shall pay an amount in cash equal to the excess of the value (as determined by
the Board of Directors in good faith) of a Warrant Share over the Exercise Price
on the day immediately preceding the date the Warrant is presented for exercise,
multiplied by such fraction.
SECTION 14. Notices to Warrant Holders. Upon any adjustment pursuant to
--------------------------
Section 12 hereof, the Company shall give prompt written notice of such
adjustment to the Warrant Agent and shall cause the Warrant Agent, on behalf of
and at the expense of the Company, within 10 days after notification is received
by the Warrant Agent of such adjustment, to mail by first class mail, postage
prepaid, to each Holder a notice of such
<PAGE>
adjustment(s) and shall deliver to the Warrant Agent a certificate of the Chief
Financial Officer of the Company, setting forth in reasonable detail (i)the
number of Warrant Shares purchasable upon the exercise of each Warrant and the
Exercise Price of such Warrant after such adjustment(s), (ii)a brief statement
of the facts requiring such adjustment(s) and (iii)the computation by which such
adjustment(s) was made. Where appropriate, such notice may be given in advance
and included as a part of the notice required under the other provisions of this
Section14.
In case:
(a) the Company shall authorize the issuance to all holders of shares of Common
Stock of rights, options or warrants to subscribe for or purchase shares of
Common Stock or of any other subscription rights or warrants; or
(b) the Company shall authorize the distribution to all holders of shares of
Common Stock of evidences of its indebtedness or assets; or
(c) of any consolidation or merger to which the Company is a party and for
which approval of any stockholders of the Company is required, or of the
conveyance or transfer of the properties and assets of the Company substantially
as an entirety, or of any reclassification or change of Common Stock issuable
upon exercise of the Warrants (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 a tender offer or exchange offer for shares of
Common Stock; or
(d) of the voluntary or involuntary dissolution, liquidation or winding up of
the Company; or
(e) the Company proposes to take any action that would require an adjustment to
the Exercise Rate pursuant to Section12; then the Company shall give prompt
written notice to the Warrant Agent and shall cause the Warrant Agent, on behalf
of and at the expense of the Company to give to each of the registered holders
of the Warrant Certificates at his or its address appearing on the Warrant
Register, at least 30 days (or 20 days in any case specified in clauses(a) or
(b) above) prior to the applicable record date hereinafter specified, or the
date of the event in the case of events for which there is no record date, by
first-class mail, postage prepaid, a written notice stating (i)the date as of
which the holders of record of shares of Common Stock to be entitled to receive
any such rights, options, warrants or distribution are to be determined, or
(ii)the initial expiration date set forth in any tender offer or exchange offer
for shares of Common Stock, or (iii)the date on which any such consolidation,
merger, conveyance, transfer,
<PAGE>
dissolution, liquidation or winding up is expected to become effective or
consummated, and the date as of which it is expected that holders of record of
shares of Common Stock shall be entitled to exchange such shares for securities
or other property, if any, deliverable upon such reclassification,
consolidation, merger, conveyance, transfer, dissolution, liquidation or winding
up. The failure by the Company or the Warrant Agent to give such notice or any
defect therein shall not affect the legality or validity of any distribution,
right, option, warrant, consolidation, merger, conveyance, transfer,
dissolution, liquidation or winding up, or the vote upon any action.
The Company shall give prompt written notice to the Warrant Agent and shall
cause the Warrant Agent, on behalf of and at the expense of the Company to give
to each Holder written notice of any determination to make a distribution or
dividend to the holders of its Common Stock of any assets (including cash (other
than any Ordinary Cash Distribution)), debt securities, preferred stock, or any
rights or warrants to purchase debt securities, preferred stock, assets or other
securities (other than Common Stock, or rights, options, or warrants to purchase
Common Stock) of the Company, which notice shall state the nature and amount of
such planned dividend or distribution and the record date therefor, and shall be
given by the Company at least 20 days prior to such record date therefor.
Nothing contained in this Agreement or in any Warrant Certificate shall be
construed as conferring upon the Holders the right to vote or to consent or to
receive notice as stockholders in respect of the meetings of stockholders or the
election of directors of the Company or any other matter, or any rights
whatsoever as stockholders of the Company.
SECTION 15. Notices to the Company and Warrant Agent. Any notice or demand
----------------------------------------
authorized by this Agreement to be given or made by the Warrant Agent or by any
Holder to or on the Company shall be sufficiently given or made when received at
the office of the Company expressly designated by the Company as its office for
purposes of this Agreement (until the Warrant Agent is otherwise notified in
accordance with this Section15 by the Company), as follows:
Samsonite Corporation
11200 East 45th Avenue
Denver, Colorado 80239
Attention: Chief Financial Officer
with copy to General Counsel
<PAGE>
with a copy to:
Skadden, Arps, Slate, Meagher & Flom LLP
919 Third Avenue
New York, New York 10022-3897
Attention: Gregory A. Fernicola, Esq.
Any notice pursuant to this Agreement to be given by the Company or by any
Holder(s) to the Warrant Agent shall be sufficiently given when received by the
Warrant Agent at the address appearing below (until the Company is otherwise
notified in accordance with this Section by the Warrant Agent).
BankBoston, N.A.
c/o Boston EquiServe, L.P.
150 Royall Street
Canton, Massachusetts
Attention: Margaret Dunn
SECTION 16. Supplements and Amendments. The Company and the Warrant Agent may
--------------------------
from time to time supplement or amend this Agreement without the approval of any
holders of Warrants in order to cure any ambiguity or to correct or supplement
any provision contained herein which may be defective or inconsistent with any
other provision herein, or to make any other provisions in regard to matters or
questions arising hereunder which the Company and the Warrant Agent may deem
necessary or desirable and which shall not in any way adversely affect the
rights of any holder of Warrants hereunder. Any amendment or supplement to this
Agreement that has a material adverse effect on the rights of holders hereunder
shall require the written consent of registered holders of a majority of the
then outstanding Warrants. The consent of each holder of a Warrant affected
shall be required for any amendment pursuant to which the Exercise Price would
be increased or the number of Warrant Shares purchasable upon exercise of
Warrants would be decreased (not including adjustments contemplated hereunder).
The Warrant Agent shall be entitled to receive and shall be fully protected in
relying upon an officers' certificate and opinion of counsel as conclusive
evidence that any such amendment or supplement is authorized or permitted
hereunder, that it is not inconsistent herewith, and that it will be valid and
binding upon the Company in accordance with its terms.
SECTION 17. Concerning the Warrant Agent. The Warrant Agent undertakes the
----------------------------
duties and obligations imposed by this Agreement upon the
<PAGE>
following terms and conditions, by all of which the Company and the Holders, by
their acceptance of Warrants, shall be bound:
(a) The statements contained herein and in the Warrant Certificate shall be
taken as statements of the Company, and the Warrant Agent assumes no
responsibility for the correctness of any of the same except such as describe
the Warrant Agent or any action taken by it. The Warrant Agent assumes no
responsibility with respect to the distribution of the Warrants except as herein
otherwise provided.
(b) The Warrant Agent shall not be responsible for any failure of the Company
to comply with the covenants contained in this Agreement or in the Warrants to
be complied with by the Company.
(c) The Warrant Agent may execute and exercise any of the rights or powers
hereby vested in it or perform any duty hereunder either itself (through its
employees) or by or through its attorneys or agents (which shall not include its
employees) and shall not be responsible for the misconduct of any agent
appointed with due care.
(d) The Warrant Agent may consult at any time with legal counsel satisfactory
to it (who may be counsel for the Company), and the Warrant Agent shall incur no
liability or responsibility to the Company or to any Holder in respect of any
action taken, suffered or omitted by it hereunder in good faith and in
accordance with the opinion or the advice of such counsel.
(e) Whenever in the performance of its duties under this Agreement the Warrant
Agent shall deem it necessary or desirable that any fact or matter be proved or
established by the Company prior to taking or suffering any action hereunder,
such fact or matter (unless such evidence in respect thereof be herein
specifically prescribed) may be deemed to be conclusively proved and established
by a certificate signed by the Chairman of the Board, the President, Chief
Financial Officer, one of the Vice Presidents, the Treasurer or the Secretary of
the Company and delivered to the Warrant Agent; and such certificate shall be
full authorization to the Warrant Agent for any action taken or suffered in good
faith by it under the provisions of this Agreement in reliance upon such
certificate.
(f) The Company agrees to pay the Warrant Agent reasonable compensation for all
services rendered by the Warrant Agent in the performance of its duties under
this Agreement, to reimburse the Warrant Agent for all expenses, taxes and
governmental charges and other charges of any kind
<PAGE>
and nature incurred by the Warrant Agent (including reasonable fees and expenses
of the Warrant Agent's counsel and agents) in the performance of its duties
under this Agreement, and to indemnify the Warrant Agent and save it harmless
against any and all liabilities, including judgments, costs and counsel fees,
for anything done or omitted by the Warrant Agent in the performance of its
duties under this Agreement, except as a result of the Warrant Agent's
negligence or bad faith.
(g) The Warrant Agent shall be under no obligation to institute any action,
suit or legal proceeding or to take any other action likely to involve expense
unless the Company or one or more Holders shall furnish the Warrant Agent with
reasonable security and indemnity satisfactory to the Warrant Agent for any
costs and expenses which may be incurred, but this provision shall not affect
the power of the Warrant Agent to take such action as the Warrant Agent may
consider proper, whether with or without any such security or indemnity. All
rights of action under this Agreement or under any of the Warrants may be
enforced by the Warrant Agent without the possession of any of the Warrants or
the production thereof at any trial or other proceeding relative thereto, and
any such action, suit or proceeding instituted by the Warrant Agent shall be
brought in its name as Warrant Agent, and any recovery of judgment shall be for
the ratable benefit of the Holders, as their respective rights or interests may
appear.
(h) The Warrant Agent and any stockholder, director, officer or employee of the
Warrant Agent may buy, sell or deal in any of the Warrants or other securities
of the Company or become pecuniarily interested in any transactions in which the
Company may be interested, or contract with or lend money to the Company or
otherwise act as fully and freely as though it were not Warrant Agent under this
Agreement or such director, officer or employee. Nothing herein shall preclude
the Warrant Agent from acting in any other capacity for the Company or for any
other legal entity including, without limitation, acting as Transfer Agent or as
a lender to the Company or an affiliate thereof.
(i) The Warrant Agent shall act hereunder solely as agent, and its duties shall
be determined solely by the provisions hereof. The Warrant Agent shall not be
liable for anything which it may do or refrain from doing in connection with
this Agreement except for its own negligence or
<PAGE>
bad faith.
(j) The Warrant Agent will not incur any liability or responsibility to the
Company or to any Holder for any action taken in reliance on any notice,
resolution, waiver, consent, order, certificate, or other paper, document or
instrument reasonably believed by it to be genuine and to have been signed, sent
or presented by the proper party or parties.
(k) The Warrant Agent shall not be under any responsibility in respect of the
validity of this Agreement or the execution and delivery hereof (except the due
execution hereof by the Warrant Agent) or in respect of the validity or
execution of any Warrant (except its countersignature thereof); nor shall the
Warrant Agent by any act hereunder be deemed to make any representation or
warranty as to the authorization or reservation of any Warrant Shares (or other
stock) to be issued pursuant to this Agreement or any Warrant, or as to whether
any Warrant Shares (or other stock) will, when issued, be validly issued, fully
paid and nonassessable, or as to the Exercise Price or the number or amount of
Warrant Shares or other securities or other property issuable upon exercise of
any Warrant.
(l) The Warrant Agent is hereby authorized and directed to accept instructions
with respect to the performance of its duties hereunder from the Chairman of the
Board, the President, any Vice President or the Secretary of the Company, and to
apply to such officers for advice or instructions in connection with its duties,
and shall not be liable for any action taken or suffered to be taken by it in
good faith and without negligence in accordance with instructions of any such
officer or officers.
SECTION 18. Change of Warrant Agent. The Warrant Agent may resign at any time
-----------------------
and be discharged from its duties under this Agreement by giving to the Company
30 days' notice in writing. The Warrant Agent may be removed by like notice to
the Warrant Agent from the Company. If the Warrant Agent shall resign or be
removed or shall otherwise become incapable of acting, the Company shall appoint
a successor to the Warrant Agent. If the Company shall fail to make such
appointment within a period of 30 days after such removal or after it has been
notified in writing of such resignation or incapacity by the resigning or
incapacitated Warrant Agent or by any Holder (who shall with such notice submit
his Warrant for inspection by the Company), then any Holder may apply to any
court of competent jurisdiction for
<PAGE>
the appointment of a successor to the Warrant Agent. Pending appointment of a
successor warrant agent, either by the Company or by such court, the duties of
the Warrant Agent shall be carried out by the Company. Any successor warrant
agent, whether appointed by the Company or such a court, shall be a bank or
trust company in good standing, incorporated under the laws of the United States
of America or any State thereof or the District of Columbia and having at the
time of its appointment as warrant agent a combined capital and surplus of at
least $10,000,000. After appointment, the successor warrant agent shall be
vested with the same powers, rights, duties and responsibilities as if it had
been originally named as Warrant Agent without further act or deed; but the
former Warrant Agent shall deliver and transfer to the successor warrant agent
any property at the time held by it hereunder, and execute and deliver any
further assurance, conveyance, act or deed necessary for such purpose. Failure
to file any notice provided for in this Section 18, however, or any defect
therein, shall not affect the legality or validity of the resignation or removal
of the Warrant Agent or the appointment of the successor warrant agent, as the
case may be. In the event of such resignation or removal, the Company or the
successor warrant agent shall mail by first class mail, postage prepaid, to each
Holder, written notice of such removal or resignation and the name and address
of such successor warrant agent.
SECTION 19. [RESERVED]
SECTION 20. Registration Rights. The Holders shall be entitled to all of the
-------------------
benefits of that certain Common Stock Registration Rights Agreement between the
Company and the Initial Purchasers dated the date hereof, in connection with the
Common Stock to be issued in connection with the exercise of the Warrants.
SECTION 21. Successors. All the covenants and provisions of this Agreement by
----------
or for the benefit of the Company, the Warrant Agent or any holder of Warrants
shall bind and inure to the benefit of their respective successors and assigns
hereunder.
SECTION 22. Termination. This Agreement shall terminate at 5:00p.m. New York
-----------
City time on June15, 2010. Notwithstanding the foregoing, this Agreement will
terminate on any earlier date if all Warrants have been exercised or redeemed
pursuant to this Agreement.
SECTION 23. GOVERNING LAW. THIS AGREEMENT AND EACH WARRANT CERTIFICATE ISSUED
-------------
HEREUNDER SHALL BE
<PAGE>
DEEMED TO BE A CONTRACT MADE UNDER THE LAWS OF THE STATE OF NEW YORK AND SHALL
BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF SAID STATE, WITHOUT
REGARD TO THE CONFLICT OF LAW RULES THEREOF.
SECTION 24. Benefits of This Agreement. Nothing in this Agreement shall be
--------------------------
construed to give to any person or corporation other than the Company, the
Warrant Agent and the registered Holders of the Warrant Certificates any legal
or equitable right, remedy or claim under this Agreement; but this Agreement
shall be for the sole and exclusive benefit of the Company, the Warrant Agent
and the registered Holders of the Warrant Certificates.
SECTION 25. Counterparts. This Agreement may be executed in any number of
------------
counterparts and each of such counterparts shall for all purposes be deemed to
be an original, and all such counterparts shall together constitute but one and
the same instrument.
SECTION 26. Headings. The headings in this Agreement are for convenience of
--------
reference only and shall not limit or otherwise affect the meaning hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed, as of the day and year first above written.
SAMSONITE CORPORATION
By: /s/ Scott Kleinman
---------------------------------
Name: Scott Kleinman
Title: Assistant Secretary
BANKBOSTON, N.A.
as Warrant Agent
By: /s/ Tyler Haynes
--------------------------------
================================
Name: Tyler Haynes
Title: Administration Secretary
EXHIBIT A
[Form of Warrant Certificate]
[Face]
[THIS SECURITY IS A GLOBAL CERTIFICATE AND IS REGISTERED IN THE NAME OF A
DEPOSITARY OR A NOMINEE OF A DEPOSITORY OR A SUCCESSOR DEPOSITORY. THIS SECURITY
IS NOT EXCHANGEABLE FOR SECURITIES REGISTERED IN THE NAME OF A PERSON OTHER THAN
THE DEPOSITORY OR ITS NOMINEE EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN
THE WARRANT AGREEMENT DATED AS OF JUNE24, 1998 BETWEEN THE COMPANY AND
<PAGE>
THE WARRANT AGENT (THE "WARRANT AGREEMENT"), AND NO TRANSFER OF THIS SECURITY
(OTHER THAN A TRANSFER OF THIS SECURITY AS A WHOLE BY THE DEPOSITORY TO A
NOMINEE OF THE DEPOSITORY OR BY A NOMINEE OF THE DEPOSITORY TO THE DEPOSITORY OR
ANOTHER NOMINEE OF THE DEPOSITORY) MAY BE REGISTERED EXCEPT IN THE LIMITED
CIRCUMSTANCES DESCRIBED IN THE WARRANT AGREEMENT. UNLESS THIS CERTIFICATE IS
PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (A NEW
YORK CORPORATION) ("DTC"), TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF
TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE
NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR SUCH OTHER
ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER,
PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.]
EXERCISABLE ON OR AFTER THE EXERCISABILITY DATE
AND ON OR BEFORE JUNE15, 2010
No. _______
_______ Warrants
Warrant Certificate
SAMSONITE CORPORATION
This Warrant Certificate certifies that ______, or registered assigns, is the
registered holder of Warrants expiring June15, 2010 (the "Warrants") to purchase
shares of Common Stock, par value $.01 per share (the "Common Stock"), of
Samsonite Corporation, a Delaware corporation (the "Company"). Each Warrant
entitles the holder upon exercise to receive from the Company on or after the
Exercisability Date and on or before 5:00 p.m. New York City Time on June15,
2010, 11.194 fully paid and nonassessable shares of Common Stock (each such
share a "Warrant Share") at the initial exercise price (the "Exercise Price")
equal to 110% of the average of the closing prices of the Company's Common Stock
on the five consecutive trading days commencing the trading day immediately
following the closing of the tender offer by the Company for up to 10.5 million
shares of Common Stock pursuant to an offer to purchase dated May 20, 1998, as
supplemented by a supplement dated June 9, 1998 as reported on the Nasdaq
National Market payable upon surrender of this Warrant Certificate and payment
of the Exercise Price in the manner set forth in the Warrant Agreement, subject
only to the conditions set forth herein and in the Warrant Agreement
<PAGE>
referred to on the reverse hereof. The Exercise Price and number of Warrant
Shares issuable upon exercise of the Warrants are subject to adjustment upon the
occurrence of certain events as set forth in the Warrant Agreement.
No Warrant may be exercised before the Exercisability Date or after 5:00 p.m.,
New York City Time, on June15, 2010 and to the extent not exercised by such time
such Warrants shall become void.
This Warrant Certificate shall not be valid unless countersigned by the Warrant
Agent, as such term is used in the Warrant Agreement.
This Warrant Certificate shall be governed and construed in accordance with the
internal laws of the State of New York.
IN WITNESS WHEREOF, Samsonite Corporation has caused this Warrant Certificate to
be signed by its and by its Secretary, each by a facsimile of his signature,
and has caused a facsimile of its corporate seal to be affixed hereunto or
imprinted hereon.
Dated: , 1998
SAMSONITE CORPORATION
By: _________________________
[]
By: _________________________
Secretary
Countersigned:
BANKBOSTON, N.A.,
as Warrant Agent
By: _________________________
Authorized Signature
[Form of Warrant Certificate]
[Reverse]
The Warrants evidenced by this Warrant Certificate are part of a duly authorized
issue of Warrants expiring June15, 2010, entitling the holder on exercise to
receive shares of Common Stock, par value $.01 per share, of the Company (the
"Common Stock"), and are issued or to be issued pursuant to a Warrant Agreement
dated as of June24, 1998 (the "Warrant Agreement"), duly executed and delivered
by the Company to BankBoston, N.A., a national banking association corporation,
as warrant agent (the "Warrant Agent"), which Warrant Agreement is hereby
incorporated by reference in and made a part of this instrument and is hereby
referred to for a description of the rights, limitation of rights, obligations,
duties and immunities thereunder of the Warrant Agent, the Company and the
holders (the words "holders" or
<PAGE>
"holder" meaning the registered holders or registered holder) of the Warrants. A
copy of the Warrant Agreement may be obtained by the holder hereof upon written
request to the Company.
Warrants may be exercised at any time on or after the "Exercisability Date" and
on or before June15, 2010, subject to extension as provided in the Warrant
Agreement. The holder of Warrants evidenced by this Warrant Certificate may
exercise them by surrendering this Warrant Certificate, with the form of
election to purchase set forth hereon properly completed and executed, together
with payment in the manner provided for in the Warrant Agreement at the office
of the Warrant Agent. In the event that upon any exercise of Warrants evidenced
hereby the number of Warrants exercised shall be less than the total number of
Warrants evidenced hereby, there shall be issued to the holder hereof or his
assignee a new Warrant Certificate evidencing the number of Warrants not
exercised.
The Warrant Agreement provides that upon the occurrence of certain events the
number of Warrants set forth on the face hereof and the Exercise Price may,
subject to certain conditions, be adjusted. No fractions of a share of Common
Stock will be issued upon the exercise of any Warrant, but the Company will pay
the cash value thereof determined as provided in the Warrant Agreement.
The holders of the Warrants are entitled to certain registration rights with
respect to the Common Stock purchasable upon exercise thereof. Such registration
rights are set forth in the Common Stock Registration Rights Agreement, dated as
of June24, 1998, between the Company and the Initial Purchaser.
Warrant Certificates, when surrendered at the office of the Warrant Agent by the
registered holder thereof in person or by legal representative or attorney duly
authorized in writing, may be exchanged, in the manner and subject to the
limitations provided in the Warrant Agreement, but without payment of any
service charge, for another Warrant Certificate or Warrant Certificates of like
tenor evidencing in the aggregate a like number of Warrants.
Upon due presentation for registration of transfer of this Warrant Certificate
at the office of the Warrant Agent a new Warrant Certificate or Warrant
Certificates of like tenor and evidencing in the aggregate a like number of
Warrants shall be issued to the transferee(s) in exchange for this Warrant
Certificate, subject to the limitations
<PAGE>
provided in the Warrant Agreement, without charge except for any tax or other
governmental charge imposed in connection therewith.
The Company and the Warrant Agent may deem and treat the registered holder(s)
thereof as the absolute owner(s) of this Warrant Certificate (notwithstanding
any notation of ownership or other writing hereon made by anyone), for the
purpose of any exercise hereof, of any distribution to the holder(s) hereof, and
for all other purposes, and neither the Company nor the Warrant Agent shall be
affected by any notice to the contrary. Neither the Warrants nor this Warrant
Certificate entitles any holder hereof to any rights of a stockholder of the
Company.
[Form of Election to Purchase]
(To Be Executed upon Exercise of Warrant)
The undersigned hereby irrevocably elects to exercise the right, represented by
this Warrant Certificate, to receive _____ shares of Common Stock and herewith
tenders payment for such shares to the order of Samsonite Corporation in the
amount of $_____ payable in (select one or more: (i) cash, (ii) shares of Senior
Preferred Stock and/or (iii) pursuant to a Cashless Exercise) in accordance with
the terms hereof and of the Warrant Agreement. The undersigned requests that a
certificate for such shares be registered in the name of ______________, whose
address is __________ and that such shares be delivered to _________ whose
address is ______________. If said number of shares is less than all of the
shares of Common Stock purchasable hereunder, the undersigned requests that a
new Warrant Certificate representing the remaining balance of such shares be
registered in the name of _____________, whose address is ________, and that
such Warrant Certificate be delivered to ___________, whose address is
________________.
Date: Signature:
Signature Guaranteed:
SCHEDULE OF EXCHANGES OF CERTIFICATED WARRANTS
----------------------------------------------
The following exchanges of a part of this Global Warrant for certificated
Warrants have been made:
Date of Exchange
Amount of decrease in Number of Warrants of this Global Warrant
Amount of increase in Number of Warrants of this Global Warrant
Number of Warrants of this Global Warrant following such decrease (or increase)
Signature of authorized officer of Warrant Agent
EXHIBIT B
CERTIFICATE TO BE DELIVERED UPON EXCHANGE
OR REGISTRATION OF TRANSFER OF WARRANTS
Re: Warrants to Purchase Common Stock (the "Warrants")
<PAGE>
of Samsonite Corporation
This Certificate relates to ____ Warrants held in* ___ book-entry or* _______
certificated form by ______ (the "Transferor").
The Transferor:*
[_] has requested the Warrant Agent by written order to deliver in
exchange for its beneficial interest in the Global Warrant held by the
depository a Warrant or Warrants in definitive, registered form equal to its
beneficial interest in Warrants represented by such Global Warrant (or the
portion thereof indicated above); or
[_] has requested the Warrant Agent by written order to exchange or
register the transfer of a Warrant or Warrants.
In connection with such request, the Transferor does hereby certify that
Transferor is familiar with the Warrant Agreement (the "Agreement") relating to
the Warrants and the restrictions on transfers thereof as provided in Section 6
of such Agreement, and that the transfer of this Warrant requested hereby does
not require registration under the Securities Act (as defined below) because[*]:
[_] Such Warrant is being acquired for the Transferor's own account,
without transfer (in satisfaction of Section 6(a)(y)(A) or Section 6(d)(i)(A) of
the Agreement).
[_] Such Warrant is being transferred to a qualified institutional buyer
(as defined in Rule 144A under the Securities Act of 1933, as amended (the
"Securities Act")), in reliance on Rule 144A or in accordance with Regulation S
under the 1933 Act. If such transfer is in accordance with Regulation S, an
opinion of counsel to the effect that such transfer does not require
registration under the Securities Act accompanies this Certificate.
[_] Such Warrant is being transferred in accordance with Rule 144 under
the Securities Act. An opinion of counsel to the effect that such transfer does
not require registration under the Securities Act accompanies this Certificate.
[_] Such Warrant is being transferred in reliance on and in compliance
with an exemption from the registration requirements of the Securities Act,
other than Rule 144A or Rule 144 or Regulation S under the Securities Act. An
opinion of counsel to the effect that such transfer does not require
registration under the Securities Act accompanies this Certificate.
<PAGE>
______________________________
[INSERT NAME OF TRANSFEROR]
By: _________________________
Date: _____________
*Check applicable box.
EXHIBIT C
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS. NEITHER THIS
SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD,
ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT
SUBJECT TO, REGISTRATION AND SUBJECT TO COMPLIANCE WITH OTHER APPLICABLE LAWS.
THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO OFFER, SELL OR
OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE DATE WHICH IS TWO YEARS (OR SUCH
SHORTER PERIOD THAT MAY HEREAFTER BE PROVIDED UNDER RULE 144(K) (OR ANY
SUCCESSOR PROVISION THEREOF) AS PERMITTING THE RESALE BY NON-AFFILIATES OF
RESTRICTED SECURITIES WITHOUT RESTRICTION) AFTER THE LATER OF THE ORIGINAL ISSUE
DATE HEREOF AND THE LAST DATE ON WHICH THE COMPANY OR ANY AFFILIATE OF THE
COMPANY WAS THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF THIS SECURITY)
(THE "RESALE RESTRICTION TERMINATION DATE"), ONLY (A) TO THE COMPANY, (B)
PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE
SECURITIES ACT, (C) FOR SO LONG AS THIS SECURITY IS ELIGIBLE FOR RESALE PURSUANT
TO RULE 144A UNDER THE SECURITIES ACT ("RULE 144A"), TO A PERSON IT REASONABLY
BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A THAT
PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL
BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON
RULE 144A, (D) PURSUANT TO OFFERS AND SALES TO NON-U.S. PERSONS THAT OCCUR
OUTSIDE THE UNITED STATES WITHIN THE MEANING OF REGULATION S UNDER THE
SECURITIES ACT, OR (E) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND OTHERWISE IN COMPLIANCE WITH
OTHER APPLICABLE LAWS. THE HOLDER MUST FURNISH TO THE COMPANY AND THE WARRANT
AGENT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO CLAUSE (D) OR (E)
ABOVE, AN OPINION OF COUNSEL, CERTIFICATIONS AND/OR OTHER INFORMATION
SATISFACTORY TO EACH OF THEM. THE LEGEND WILL BE REMOVED UPON THE REQUEST OF A
HOLDER AFTER THE RESALE RESTRICTION TERMINATION DATE.
<PAGE>
Exhibit 10.11
-------------
COMMON STOCK REGISTRATION RIGHTS AGREEMENT
Dated as of June 24, 1998
between
SAMSONITE CORPORATION
and
CIBC OPPENHEIMER CORP.
TABLE OF CONTENTS
-----------------
Page
----
1. Definitions
2. Registration Rights
2.1 Demand Registration
2.2 Piggy-Back Registration
2.3 Reduction of Offering
2.4 Limitations, Conditions and
Qualifications to Obligations Under
Registration Covenants
3. Registration Procedures
4. Indemnification and Contribution
5. Miscellaneous
(a) No Inconsistent Agreements
(b) Amendments and Waivers
(c) Notices
(d) Successors and Assigns
(e) Rules 144 and 144A
(f) Counterparts
(g) Headings
(h) Governing Law
(i) Severability
(j) Entire Agreement
<PAGE>
Exhibit A
THIS COMMON STOCK REGISTRATION RIGHTS AGREEMENT (this "Agreement") is
made and entered into as of June24, 1998, between Samsonite
Corporation, a Delaware corporation (the "Company"), and CIBC
Oppenheimer Corp., a Delaware corporation (the "Initial Purchaser").
This Agreement is made pursuant to the Purchase Agreement, dated as of
June18, 1998, between the Company and the Initial Purchaser (the
"Purchase Agreement"), relating to the sale by the Company to the
Initial Purchaser of up to $175,000,000 in aggregate liquidation value
of its Senior Redeemable Exchangeable Preferred Stock, SeriesA, par
value $.01 per share (the "Preferred Stock"), along with Warrants
(each a "Warrant," and collectively, the "Warrants") for the purchase
of an aggregate of 1,959,000 shares of its Common Stock, par value
$0.01 per share (the "Common Stock"). In order to induce the Initial
Purchaser to enter into the Purchase Agreement, the Company has agreed
to provide to the Initial Purchaser and its direct and indirect
transferees (the "Holders"), among other things, the registration
rights for the Common Stock set forth in this Agreement and the piggy-
back rights for the Common Stock set forth herein. The execution of
this Agreement is a condition to the obligations of the Initial
Purchaser to purchase the Preferred Stock and Warrants under the
Purchase Agreement.
In consideration of the foregoing, the parties hereto agree as
follows:
1. Definitions. As used in this Agreement, the following
-----------
capitalized defined terms shall have the following meanings:
"Affiliate" shall mean, of any Person, a Person who, directly or
---------
indirectly, through one or more intermediaries, controls, or is
controlled by, or is under common control with, such other Person. The
term "control" (including, with correlative meanings, the terms
"controlling," "controlled by" and "under common control with") means
the possession, directly or indirectly, of the power to direct or
cause the direction of the management or policies of a Person, whether
through the ownership of voting securities, by contract or otherwise;
provided, however, that beneficial ownership of at least 10% of the
-------- -------
voting securities of a Person shall be deemed to be control.
"Business Day" means any day except a Saturday, a Sunday, or any day
-----------
on which banking institutions in New York, New York are required or
authorized by law or other governmental action to be closed and other
than a Legal Holiday.
<PAGE>
"Common Stock" shall mean the Common Stock, par value $0.01 per share,
------------
of the Company.
"Company" shall have the meaning set forth in the preamble and shall
-------
also include the Company's successors.
"Demand Registration" shall have the meaning set forth in Section
--------------------
2.1(a).
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
------------
amended from time to time.
"Holder" shall mean the Initial Purchaser, for so long as the Initial
------
Purchaser owns any Common Stock, and each of its successors, assigns
and direct and indirect transferees who become registered owners of
Common Stock, as reflected in the stock books of the Company.
"Included Shares" shall have the meaning set forth in Section2.1(a).
---------------
"indemnified party" shall have the meaning set forth in Section 4(c).
-----------------
"indemnifying party" shall have the meaning set forth in Section 4(c).
------------------
"Initial Purchaser" shall have the meaning set forth in the preamble.
-----------------
"Legal Holiday" shall mean a Saturday, a Sunday or a day on which
-------------
banking institutions in New York, New York are required by law,
regulation or executive order to remain closed. If a payment date is a
Legal Holiday, payment may be made on the next succeeding day that is
not a Legal Holiday.
"Person" shall mean an individual, corporation, partnership, joint
------
venture, association, joint stock company, trust, unincorporated
organization, or other legal entity.
"Piggy-Back Registration" shall have the meaning set forth in Section
-----------------------
2.2.
"Preferred Stock" shall have the meaning set forth in the preamble.
---------------
"Prospectus" means a prospectus which meets the requirements of
----------
Section10 of the Securities Act.
"Purchase Agreement" shall have the meaning set forth in the preamble.
------------------
"Purchase Election" shall have the meaning set forth in Section
-----------------
2.1(b).
"Purchase Offer" shall have the meaning set forth in Section 2.1(b).
--------------
"Purchase Offer Payment Date" shall have the meaning set forth in
---------------------------
Section 2.1(b).
"Registrable Securities" shall mean the shares of Common Stock
----------------------
issuable upon exercise of the Warrants. As to any particular
Registrable Securities, such securities shall cease to be Registrable
Securities when (i)a Registration Statement with respect to such
securities shall
<PAGE>
have been declared effective under the Securities Act and such
securities shall have been disposed of pursuant to such Registration
Statement, (ii)such securities have been or could be sold to the
public pursuant to Rule 144(k) (or any similar provision then in
force, but not Rule 144A) under the Securities Act, (iii)such
securities shall have been otherwise transferred by such Holder and
new certificates for such securities not bearing a legend restricting
further transfer shall have been delivered by the Company or its
transfer agent and subsequent disposition of such securities shall not
require registration or qualification under the Securities Act or any
similar state law then in force or (iv)such securities shall have
ceased to be outstanding.
"Registration Expenses" shall mean all expenses incident to the
---------------------
Company's performance of or compliance with this Agreement, including,
without limitation, all SEC and stock exchange or National Association
of Securities Dealers, Inc. registration and filing fees and expenses,
fees and expenses of compliance with securities or blue sky laws
(including, without limitation, reasonable fees and disbursements of
counsel for the underwriters in connection with blue sky
qualifications of the Registrable Securities), rating agency fees,
printing expenses, messenger, telephone and delivery expenses, fees
and disbursements of counsel for the Company and all independent
certified public accountants (but not including any underwriting
discounts or commissions or transfer taxes, if any, attributable to
the sale of Registrable Securities by Holders of such Registrable
Securities).
"Registration Obligation" shall have the meaning set forth in Section
-----------------------
2.4.
"Registration Statement" shall mean any registration statement of the
----------------------
Company which covers any of the Warrant Shares pursuant to the
provisions of this Agreement, including the Prospectus, amendments and
supplements to such Registration Statement, including post-effective
amendments, all exhibits and all material incorporated by reference or
deemed to be incorporated by reference in such Registration Statement.
"Requisite Shares" shall mean a number of Registrable Securities equal
----------------
to not less than 25% of the Registrable Securities held in the
aggregate by all Holders.
"Rule 144" shall mean Rule 144 under the Securities Act, as such Rule
--------
may be amended from time to time, or any similar rule (other than
<PAGE>
Rule144A) or regulation hereafter adopted by the SEC providing for
offers and sales of securities made in compliance therewith resulting
in offers and sales by subsequent holders that are not affiliates of
an issuer of such securities being free of the registration and
prospectus delivery requirements of the Securities Act.
"Rule 144A" shall mean Rule 144A under the Securities Act, as such
---------
Rule may be amended from time to time, or any similar rule (other than
Rule144) or regulation hereafter adopted by the SEC providing that a
holder of securities other than an issuer making offers and sales of
securities in compliance therewith will not be an underwriter for
purposes of the Securities Act.
"SEC" shall mean the Securities and Exchange Commission.
---
"Securities Act" shall mean the Securities Act of 1933, as amended.
--------------
"Selling Holder" shall mean a Holder who is selling Warrant Shares in
--------------
accordance with the provisions of Section 2.1 or 2.2 hereof.
"Transfer Agent" means any transfer agent or registrar appointed by
--------------
the Company for the Common Stock.
"Warrant Shares" means the shares of Common Stock issued and issuable
--------------
upon exercise of the Warrants.
"Withdrawal Election" shall have the meaning set forth in Section 2.3.
-------------------
2. Registration Rights.
-------------------
2.1 Demand Registration.
-------------------
(a) Request for Registration. At any time and from time to time on or
------------------------
after December21, 1998, Holders owning, individually or in the
aggregate, at least the Requisite Shares may make a written request
for a shelf registration under the Securities Act of their Registrable
Securities (a "Demand Registration"). Any such request will specify
the number of Registrable Securities proposed to be sold and will also
specify the intended method of disposition thereof. Subject to the
conditions set forth in Section 2.4 hereof, upon a demand, the Company
will prepare, file and use its best efforts to cause to be effective
within 150 days of such demand a Registration Statement in respect of
such Registrable Securities. The Company shall give written notice of
such registration request within 10 days after the receipt thereof to
all other Holders. Within 20 days after receipt of such notice by any
Holder, such Holder may request in writing that Registrable Securities
be included in such registration and the Company shall include in the
Demand Registration the Registrable Securities of
<PAGE>
any such Selling Holder requested to be so included (the "Included
Shares"). Each such request by such other Selling Holders shall
specify the number of Included Shares proposed to be sold and the
intended method of disposition thereof. Subject to Section2.1(c), in
no event shall the Company be required to register Registrable
Securities pursuant to this Section2.1 more than a maximum of two
separate occasions.
(b) Repurchase Election. (i) Notwithstanding the foregoing
-------------------
provisions of Section 2.1(a), the Company shall not be obligated to
effect a Demand Registration if the Company elects to make an offer to
repurchase (a "Purchase Offer") all of the Registrable Securities (a
"Purchase Election") by mailing notice of such Purchase Offer to all
Holders of Registrable Securities on a date (the "Purchase Election
Date") not more than 30 days after the receipt of any request for a
Demand Registration and indicating in such Purchase Offer that the
Purchase Election will be consummated on a Business Day (the "Purchase
Offer Payment Date") not more than 60 days after the Purchase Election
Date at a price per share of Common Stock equal to (i)the average of
the closing market prices of the Common Stock for 30 consecutive
Business Days selected by the Company from the period of 45 Business
Days preceding the date of receipt by the Company of the applicable
Demand Registration request if the Common Stock shall have been listed
on a national securities exchange or the Nasdaq National Market or
traded through an automated quotation system during such entire 45
Business Day period, or (ii)if the Common Stock shall not have been so
listed or traded during such entire 45 Business Day period, the fair
market value per share of Company Common Stock (without any discount
for lack of liquidity, the amount of Company Common Stock proposed to
be sold or the fact that the Warrants and shares of Company Common
Stock held by the holders thereof may represent a minority interest in
a private company (if the Company is a private company at the time))
determined by an independent nationally recognized investment banking
firm selected by the Company.
(ii) Notice of a Purchase Offer shall be mailed by the Company (or
caused to be mailed by the Company), not less than 30 days nor more
than 60 days before the Purchase Offer Payment Date, to each Holder of
Registrable Securities at its last registered address. The Purchase
Offer shall remain open from the time of mailing for at least 20
Business Days and until 5:00 p.m. New York City time on the Business
Day next preceding the Purchase Offer Payment Date. The notice,
<PAGE>
which shall govern the terms of the Purchase Offer, shall include such
disclosures as are required by law and shall state:
(1) that the Purchase Offer is being made pursuant to this
Section2.1(b) and that all Registrable Securities tendered for
repurchase will be accepted for payment;
(2) the purchase price per share of Common Stock calculated as set
forth above and the Purchase Offer Payment Date;
(3) that any Registrable Securities accepted for payment pursuant
to the Purchase Offer shall cease to be outstanding after the Purchase
Offer Payment Date unless the Company defaults in making payment
therefor of the purchase price;
(4) that Holders electing to have Registrable Securities purchased
pursuant to a Purchase Offer will be required to surrender such
Warrant Shares, together with a completed letter of transmittal, to
the Company (or its agent as designated by the Company in such notice)
at the address specified in the notice no later than 5:00p.m. New York
City time on the Business Day prior to the Purchase Offer Payment
Date;
(5) that Holders will be entitled to withdraw their election if
the Company (or such designated agent) receives, not later than
5:00p.m. New York City time on the Business Day prior to the Purchase
Offer Payment Date, a telegram, telex, facsimile transmission or
letter setting forth the name of the Holder, the number of Warrant
Shares delivered for purchase and a statement that such Holder is
withdrawing its election to have such Warrant Shares purchased and
promptly thereafter the Company (or such designated agent) shall
redeliver the withdrawn Warrant Shares to the Holder;
(6) that a Holder electing not to tender such Holder's Registrable
Securities for purchase pursuant to such Purchase Offer by 5:00p.m.
New York City time on the Business Day prior to the Purchase Offer
Payment Date will have no continuing right to require the Company to
repurchase such Holder's Registrable Securities; and
(7) that Holders whose Warrant Shares are tendered for purchase in
part only will be issued new certificates representing the number of
the unpurchased Warrant Shares surrendered. On the Purchase Offer
Payment Date, the Company shall (i)accept for payment Registrable
Securities or portions thereof tendered pursuant to the Purchase
Offer, (ii)promptly deliver to Holders of Warrant Shares so accepted
payment of the purchase
<PAGE>
price therefor and (iii)issue and mail or deliver to such Holders new
certificates representing a number of shares of Common Stock equal to
the unpurchased portion of the Warrant Shares surrendered. Upon
payment for all Registrable Securities tendered pursuant to a Purchase
Offer the Company shall be deemed to have effected the Demand
Registration.
The Company shall comply, to the extent applicable, with the
requirements of Sections13 and 14 of the Exchange Act, and any other
securities laws or regulations in connection with the repurchase of
Registrable Securities pursuant to a Purchase Offer. To the extent
that the provisions of any securities laws or regulations conflict
with the provisions of this Section2.1(b), the Company shall comply
with the applicable securities laws and regulations and shall not be
deemed to have breached its obligations under this Section2.1(b) by
virtue thereof.
(c) Effective Registration. A registration will not be deemed to have
----------------------
been effected as a Demand Registration unless it has been declared
effective by the SEC and the Company has complied in all material
respects with its obligations under this Agreement with respect
thereto; provided that if, after it has become effective, the offering
of Registrable Securities pursuant to such registration is or becomes
the subject of any stop order, injunction or other order or
requirement of the SEC or any other governmental or administrative
agency, or if any court prevents or otherwise limits the sale of
Registrable Securities pursuant to the registration (for any reason
other than the act or omissions of the Selling Holders), in each case
prior to the sale of all Registrable Securities thereunder such
registration will be deemed not to have been effected. If (i)a
registration requested pursuant to this Section2.1 is deemed not to
have been effected or (ii)the registration requested pursuant to this
Section2.1 does not remain effective for a period equal to the lesser
of (a)six months (which shall not be required to be consecutive)
beyond the effective date thereof and (b)the consummation of the
distribution by the Selling Holders of the Included Shares, then the
Company shall continue to be obligated to effect an additional
registration pursuant to this Section 2.1. The Selling Holders of
Registrable Securities shall be permitted to withdraw all or any part
of the Included Shares from a Demand Registration at any time prior to
the effective
<PAGE>
date of such Demand Registration. If at any time a Registration
Statement is filed pursuant to a Demand Registration, and subsequently
a sufficient number of Included Shares are withdrawn from the Demand
Registration so that such Registration Statement does not cover at
least 25% of the Registrable Securities held by all Holders, the
Selling Holders who have not withdrawn their Included Shares shall
have the opportunity to include an additional number of Registrable
Securities in the Demand Registration so that such Registration
Statement covers at least 25% of the Registrable Securities held by
all Holders. If an additional number of Registrable Securities is not
so included so that such Registration Statement does not cover at
least 25% of the Registrable Securities held by all Holders, the
Company may withdraw the Registration Statement. In the event that a
Registration Statement has been filed and the Company withdraws the
Registration Statement solely due to the occurrence of the events
specified in the prior two sentences, such withdrawn Registration
Statement will count as a Demand Registration; otherwise such
withdrawn Registration Statement will not count as a Demand
Registration and the Company shall continue to be obligated to effect
a registration pursuant to this Section2.1.
(d) Expenses. The Company will pay all Registration Expenses in
--------
connection with the registrations requested pursuant to Section2.1(a).
Each Holder shall pay all underwriting discounts and commissions and
transfer taxes, if any, relating to the sale or disposition of such
Holder's Registrable Securities pursuant to a registration statement
requested pursuant to this Section2.1.
(e) No Entitlement to Underwritten Offering. No request by a holder
---------------------------------------
of Registrable Securities for a Demand Registration shall entitle such
holder to have such Registrable Securities sold pursuant to an
underwritten offering pursuant to such Demand Registration, it being
also understood that the Company will not be required to include
information in any Demand Registration beyond that then required by
the rules and regulations under the Securities Act.
2.2 Piggy-Back Registration. If at any time the Company proposes
-----------------------
to file a Registration Statement under the Securities Act with respect
to an offering by the Company for its own account or for the account
of any of its respective securityholders of any class of its common
equity securities (other than (i)a Registration Statement
<PAGE>
on Form S-4 or S-8 (or any successor form having similar effect) or
(ii)a Registration Statement filed in connection with an offer or
offering of securities solely to the Company's existing
securityholders) for sale on the same terms and conditions as the
securities of the Company or any other selling securityholder included
therein, then the Company shall give written notice of such proposed
filing to the Holders of Registrable Securities as soon as practicable
(but in no event less than 20 Business Days before the anticipated
filing date), and such notice shall offer such Holders the opportunity
to register such number of shares of Registrable Securities as each
such Holder may request (which request shall specify the Registrable
Securities intended to be disposed of by such Selling Holder and the
intended method of distribution thereof), subject to reduction as
hereinafter set forth (a "Piggy-Back Registration"). The Company shall
use its best efforts to cause the managing underwriter or underwriters
(if any) of such proposed underwritten offering to permit the
Registrable Securities requested to be included in a Piggy-Back
Registration to be included on the same terms and conditions as any
similar securities of the Company or any other securityholder included
therein and to permit the sale or other disposition of such
Registrable Securities in accordance with the intended method of
distribution thereof except as otherwise provided in Section 2.3. Any
Selling Holder shall have the right to withdraw its request for
inclusion of its Registrable Securities in any Registration Statement
pursuant to this Section2.2 by giving written notice to the Company of
its request to withdraw no later than 5 Business Days before such
Registration Statement becomes effective. The Company may withdraw a
Piggy-Back Registration at any time prior to the time it becomes
effective; provided that the Company shall give prompt notice thereof
--------
to participating Selling Holders. The Company will pay all
Registration Expenses in connection with each registration of
Registrable Securities requested pursuant to this Section2.2, and each
Holder shall pay all underwriting discounts and commissions and
transfer taxes, if any, relating to the sale or disposition of such
Holder's Registrable Securities pursuant to a registration statement
effected pursuant to this Section2.2.
No registration effected under this Section2.2, and no failure to
effect a registration under this Section2.2, shall relieve the Company
of its
<PAGE>
obligation to effect a registration upon the request of Holders
pursuant to Section2.1, and no failure to effect a registration under
this Section2.2 and to complete the sale of shares of Common Stock in
connection therewith shall relieve the Company of any other obligation
under this Agreement.
2.3 Reduction of Offering.
---------------------
(a) Piggy-Back Registration. (i) If the managing underwriter(s) of
-----------------------
any underwritten offering described in Section2.2 have advised the
Company that it is their opinion that the total number of shares which
the Company, the Selling Holders and any other Persons desiring to
participate in such registration intend to include in such offering is
such as to materially and adversely affect the success of such
offering, including the price at which such securities can be sold,
then the number of shares to be offered for the account of the Selling
Holders and all such other Persons (other than the Company)
participating in such registration shall be eliminated or reduced pro
rata in proportion to the respective number of shares requested to be
registered to the extent necessary to reduce the total number of
shares requested to be included in such offering to the number of
shares, if any, recommended by such managing underwriters; provided,
--------
however, that if such offering is effected for the account of any
-------
securityholder of the Company other than the Selling Holders, pursuant
to the demand registration rights of any such securityholder, then the
number of shares to be offered for the account of the Selling Holders
and all other Persons (other than the Company) participating in such
registration (but not such securityholders who have exercised their
demand registration rights) shall be eliminated or reduced pro rata in
--- ----
proportion to the respective number of shares requested to be
registered to the extent necessary to reduce the total number of
shares requested to be included in such offering to the number of
shares, if any, recommended by such managing underwriters.
(ii) If the managing underwriter or underwriters of any underwritten
offering described in Section2.2 notify the Selling Holders requesting
inclusion of Registrable Securities in such offering, that the kind of
securities that the Selling Holders, the Company and any other Persons
desiring to participate in such registration intend to include in such
offering is such as to adversely affect the success of such offering,
(x)the Registrable Securities to be included in such offering shall be
reduced as
<PAGE>
described in clause (i)above or (y)if a reduction in the Registrable
Securities pursuant to clause (i) above would, in the judgment of the
managing underwriter(s) or underwriters, be insufficient to
substantially eliminate such adverse effect that inclusion of the
Registrable Securities requested to be included would have on such
offering, such Registrable Securities will be excluded from such
offering.
(b) If, as a result of the pro ration provisions of this Section2.3,
any Selling Holder shall not be entitled to include all Registrable
Securities in a Piggy-Back Registration that such Selling Holder has
requested to be included, such Selling Holder may elect to withdraw
his request to include Registrable Securities in such registration (a
"Withdrawal Election"); provided, however, that a Withdrawal Election
-------- -------
shall be irrevocable and, after making a Withdrawal Election, a
Selling Holder shall no longer have any right to include Registrable
Securities in the registration as to which such Withdrawal Election
was made.
2.4 Limitations, Conditions and Qualifications to Obligations
---------------------------------------------------------
Under Registration Covenants. The obligations of the Company set forth
----------------------------
in Sections 2.1 and 2.2 hereof are subject to each of the following
limitations, conditions and qualifications:
(a) Subject to the next sentence of this paragraph, the Company shall
be entitled to postpone, for a reasonable period of time, the filing
or effectiveness of, or suspend the rights of any Holders to make
sales pursuant to, any Registration Statement otherwise required to be
prepared, filed and made and kept effective by it hereunder; provided,
--------
however, that the duration of such postponement or suspension may not
-------
exceed the earlier to occur of (A)15 days after the cessation of the
circumstances described in the next sentence of this paragraph on
which such postponement or suspension is based or (B)120 days after
the date of the determination of the Board of Directors referred to in
the next sentence, and the duration of such postponement or suspension
shall be excluded from the calculation of the six-month period
described in Section 2.1(c) hereof. Such postponement or suspension
may only be effected if the Board of Directors of the Company
determines in good faith that the filing or effectiveness of, or sales
pursuant to, such Registration Statement would materially impede,
delay or interfere with any financing, offer or sale of securities,
acquisition, corporate reorganization or other significant transaction
<PAGE>
involving the Company or any of its Affiliates or require disclosure
of material information which the Company has a bona fide business
---- ----
purpose for preserving as confidential. If the Company shall so
postpone the filing or effectiveness of, or suspend the rights of any
Holders to make sales pursuant to, a Registration Statement it shall,
as promptly as possible, notify any Selling Holders of such
determination, and the Selling Holders shall (y)have the right, in the
case of a postponement of the filing or effectiveness of a
Registration Statement, upon the affirmative vote of the Selling
Holders of not less than a majority of the Registrable Securities to
be included in such Registration Statement, to withdraw the request
for registration by giving written notice to the Company within 10
days after receipt of such notice or (z)in the case of a suspension of
the right to make sales, receive an extension of the registration
period equal to the number of days of the suspension. Any Demand
Registration as to which the withdrawal election referred to in the
preceding sentence has been effected shall not be counted for purposes
of the two Demand Registrations the Company is required to effect
pursuant to Section 2.1 hereof.
(b) The Company shall not be required by this Agreement to include
securities in a Registration Statement pursuant to Section 2.2 hereof
if (i)in the written opinion of counsel to the Company, addressed to
the Holders and delivered to them, the Holders of such securities
seeking registration would be free to sell all such securities within
the current calendar quarter without registration under Rule 144 under
the Securities Act, which opinion may be based in part upon the
representation by the Holders of such securities seeking registration,
which representation shall not be unreasonably withheld, or upon
representation by the Company that each such Holder is not an
Affiliate of the Company within the meaning of the Securities Act, and
(ii)all requirements under the Securities Act for effecting such sales
are satisfied at such time.
(c) The Company's obligations shall be subject to the obligations of
the Selling Holders, which the Selling Holders acknowledge, to furnish
all information and materials and to take any and all actions as may
be required under applicable federal and state securities laws and
regulations to permit the Company to comply with all applicable
requirements of the SEC and to obtain any acceleration of the
effective date of such Registration Statement.
<PAGE>
(d) The Company shall not be obligated to cause any special audit to
be undertaken in connection with any registration pursuant to this
Agreement unless such audit is requested by the underwriters with
respect to such registration.
3. Registration Procedures. In connection with the obligations
-----------------------
of the Company with respect to any Registration Statement pursuant to
Sections2.1 and 2.2 hereof, the Company shall:
(a) prepare and file with the SEC a Registration Statement on the
appropriate form under the Securities Act, which form (i) shall be
selected by the Company and (ii) shall comply as to form in all
material respects with the requirements of the applicable form and
include all financial statements required by the SEC to be filed
therewith, and the Company shall use its best efforts to cause such
Registration Statement to become effective and remain effective in
accordance with Section2 hereof;
(b) prepare and file with the SEC such amendments and post-effective
amendments to each Registration Statement as may be necessary to keep
such Registration Statement effective for the applicable period, cause
each Prospectus to be supplemented by any required prospectus
supplement and, as so supplemented, to be filed pursuant to Rule 424
under the Securities Act;
(c) furnish to each Holder of Registrable Securities and to each
underwriter of an underwritten offering of Registrable Securities, if
any, without charge, as many copies of each Prospectus, including each
preliminary Prospectus, and any amendment or supplement thereto and
such other documents as such Holder or underwriter may reasonably
request, in order to facilitate the public sale or other disposition
of the Registrable Securities;
(d) use its best efforts to register or qualify the Registrable
Securities under all applicable state securities or "blue sky" laws of
such jurisdictions as any Holder thereof covered by a Registration
Statement shall reasonably request in writing by the time the
applicable Registration Statement is declared effective by the SEC,
and do any and all other acts and things which may be reasonably
necessary or advisable to enable such Holder to consummate the
disposition in each such jurisdiction of such Registrable Securities
owned by such Holder; provided, however, that the Company shall not be
-------- -------
required to (i) qualify generally to do business in any jurisdiction
where it is not then so qualified, (ii)take any action that would
subject it to general service of
<PAGE>
process in any jurisdiction in which it is not then so subject or
(iii)subject itself to taxation in any such jurisdiction;
(e) notify each Holder of Registrable Securities promptly and, if
requested by such Holder, confirm such advice in writing (i) when a
Registration Statement has become effective and when any post-
effective amendments and supplements thereto become effective, (ii)of
any request by the SEC or any state securities authority for
amendments and supplements to a Registration Statement and Prospectus
or for additional information after the Registration Statement has
become effective, (iii)of the issuance by the SEC or any state
securities authority of any stop order suspending the effectiveness of
a Registration Statement or the initiation of any proceedings for that
purpose, (iv)if, between the effective date of a Registration
Statement and the closing of any sale of Registrable Securities
covered thereby, the representations and warranties of the Company
contained in any underwriting agreement, securities sales agreement or
other similar agreement, if any, relating to the offering cease to be
true and correct in all material respects or if the Company receives
any notification with respect to the suspension of the qualification
of the Registrable Securities for sale in any jurisdiction or the
initiation of any proceeding for such purpose and (v) of the happening
of any event during the period a Registration Statement is effective
which makes any statement made in such Registration Statement or the
related Prospectus untrue in any material respect or which requires
the making of any changes in such Registration Statement or Prospectus
in order to make the statements therein not misleading;
(f) make every reasonable effort to obtain the withdrawal of any
order suspending the effectiveness of a Registration Statement at the
earliest possible moment;
(g) furnish to each Holder of Registrable Securities and to the
Initial Purchasers, without charge, at least one conformed copy of
each Registration Statement and any post-effective amendment thereto
(with documents incorporated therein by reference or exhibits
thereto);
(h) cooperate with the Selling Holders of Registrable Securities to
facilitate the timely preparation and delivery of certificates
representing Registrable Securities to be sold and not bearing any
restrictive legends and registered in such names as the Selling
Holders may reasonably request at least two Business Days
<PAGE>
prior to the closing of any sale of Registrable Securities;
(i) upon the occurrence of any event contemplated by Section3(e)(v)
hereof, use reasonable efforts to prepare a supplement or post-
effective amendment to a Statement or the related Prospectus or any
document incorporated therein by reference or file any other required
document so that, as thereafter delivered to the purchasers of the
Registrable Securities, such Prospectus will not contain any untrue
statement of a material fact or omit to state a material fact
necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading; provided,
--------
however, that the Company shall not be required to amend or supplement
-------
a Registration Statement, any related Prospectus or any document
incorporated therein by reference in the event that, and for so long
as, an event occurs and is continuing as a result of which the
Registration Statement, any related Prospectus or any document
incorporated therein by reference as then amended or supplemented
would, in the Company's good faith judgment, contain an untrue
statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading. The Company
agrees to notify each Holder to suspend use of the Prospectus as
promptly as practicable after the occurrence of such an event, and
each Holder hereby agrees to suspend use of the Prospectus until the
Company has amended or supplemented the Prospectus to correct such
misstatement or omission. At such time as such public disclosure is
otherwise made or the Company determines in good faith that such
disclosure is not necessary, the Company agrees promptly to notify
each Holder of such determination, to amend or supplement the
Prospectus if necessary to correct any untrue statement or omission
therein and to furnish each Holder such numbers of copies of the
Prospectus as so amended or supplemented as each Holder may reasonably
request;
(j) a reasonable time prior to the filing of any Registration
Statement, any Prospectus, any amendment to a Registration Statement
or amendment or supplement to a Prospectus or any document which is to
be incorporated by reference into a Registration Statement or a
Prospectus after initial filing of a Registration Statement, provide
copies of such document to the Holders and make available for
discussion of such document the
<PAGE>
representatives of the Company as shall be reasonably requested by the
Holders of Registrable Securities;
(k) obtain a CUSIP number for the Common Stock if one has not already
been obtained;
(l) (i)make reasonably available for inspection by a representative
of, and counsel for, any managing underwriter participating in any
disposition pursuant to a Registration Statement, all relevant
financial and other records, pertinent corporate documents and
properties of the Company and (ii)cause the Company's officers,
directors and employees to supply all relevant information reasonably
requested by such representative, counsel or any such managing
underwriter in connection with any such Registration Statement; and
(m) take all action necessary so that the Warrant Shares will be
listed on the principal securities exchanges and markets within the
United States of America (including the NASDAQ National Market
System), if any, on which other shares of Common Stock are then
listed.
The Company may, as a condition to such Holder's participation in any
Registration Statement, require each Holder of Registrable Securities
to (i)furnish to the Company such information regarding the Holder and
the proposed distribution by such Holder of such Registrable
Securities as the Company may from time to time reasonably request in
writing and (ii)agree in writing to be bound by this Agreement.
4. Indemnification and Contribution. (a)The Company agrees to
--------------------------------
indemnify and hold harmless each Holder and each person, if any, who
controls such Holder within the meaning of either Section 15 of the
Securities Act or Section 20 of the Exchange Act, from and against all
losses, claims, damages and liabilities (including, without
limitation, any reasonable legal fees or other expenses actually
incurred by any Holder or any such controlling or affiliated person in
connection with defending or investigating any such action or claim)
caused by any untrue statement or alleged untrue statement of a
material fact contained in any Registration Statement, and any
underwriter with respect thereto (or any amendment thereto), pursuant
to which Registrable Securities were registered under the Securities
Act, or caused by any omission or alleged omission to state therein a
material fact necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading, or
caused by any untrue statement
<PAGE>
or alleged untrue statement of a material fact contained in any
Prospectus (as amended or supplemented if the Company shall have
furnished any amendments or supplements thereto), or caused by any
omission or alleged omission to state therein a material fact
necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, except
insofar as such losses, claims, damages or liabilities are caused by
any such untrue statement or omission or alleged untrue statement or
omission made in reliance upon and in conformity with information
relating to any Holder furnished to the Company in writing by such
Holder expressly for use in any such Registration Statement or
Prospectus; provided that the foregoing indemnity with respect to any
--------
preliminary prospectus shall not inure to the benefit of any Holder
(or to the benefit of any person controlling such Holder) from whom
the person asserting any such losses, claims, damages or liabilities
purchased Registrable Securities if such untrue statement or omission
or alleged untrue statement or omission made in such preliminary
prospectus is eliminated or remedied in the related Prospectus (as
amended or supplemented if the Company shall have furnished any
amendments or supplements thereto) and a copy of the related
Prospectus (as so amended or supplemented) shall have been furnished
to such Holder at or prior to the sale of such Registrable Securities,
as the case may be, to such person.
(b) Each Holder agrees, severally and not jointly, to indemnify and
hold harmless the Company, its directors, its officers and each
person, if any, who controls the Company within the meaning of either
Section 15 of the Securities Act or Section 20 of the Exchange Act to
the same extent as the foregoing indemnity from the Company to such
Holder, but only with reference to information relating to such Holder
furnished to the Company in writing by such Holder expressly for use
in any Registration Statement (or any amendment thereto), any
Prospectus (or any amendment or supplement thereto) or any preliminary
prospectus. The liability of any Holder under this paragraph(b) shall
in no event exceed the proceeds received by such Holder from sales of
Registrable Securities giving rise to such obligations.
(c) Promptly after receipt by an indemnified party under this
Section4 of notice of the commencement of any action, such indemnified
party will, if a claim in respect thereof is to be made
<PAGE>
against the indemnifying party under this Section4, notify the
indemnifying party of the commencement thereof; but the omission so to
notify the indemnifying party will not relieve it from any liability
that it may have to any indemnified party except to the extent that
such omission materially prejudices the indemnifying party. In case
any such action is brought against any indemnified party, and such
indemnified party notifies the indemnifying party of the commencement
thereof, the indemnifying party will be entitled to participate
therein and, to the extent that it may wish, jointly with any other
indemnifying party similarly notified, to assume the defense thereof,
with counsel reasonably satisfactory to such indemnified party;
provided, however, that if the named parties in any such action
-------- -------
(including any impleaded parties) include both the indemnified party
and the indemnifying party and the indemnified party shall have
reasonably concluded that there may be one or more legal defenses
available to it and/or other indemnified parties that are different
from or additional to those available to any such indemnifying party,
then the indemnifying parties shall not have the right to direct the
defense of such action on behalf of such indemnified party or parties
and such indemnified party or parties shall have the right to select
separate counsel to defend such action on behalf of such indemnified
party or parties. After notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof and
approval by such indemnified party of counsel appointed to defend such
action, the indemnifying party will not be liable to such indemnified
party under this Section4 for any legal or other expenses, other than
reasonable out-of-pocket costs of investigation, incurred by such
indemnified party in connection with the defense thereof, unless
(i)the indemnified party shall have employed separate counsel in
accordance with the proviso to the immediately preceding sentence (it
being understood, however, that in connection with such action the
indemnifying party shall not be liable for the expenses of more than
one separate counsel (in addition to local counsel) in any one action
or separate but substantially similar actions in the same jurisdiction
arising out of the same general allegations or circumstances,
representing the indemnified parties under such paragraph(a) or
paragraph(b), as the case may be, who are parties to such action or
actions); (ii)the indemnifying party has
<PAGE>
authorized in writing the employment of counsel for the indemnified
party at the expense of the indemnifying parties; or (iii)the
indemnifying party shall have failed to assume the defense or retain
counsel reasonably satisfactory to the indemnified party. After such
notice from the indemnifying parties to such indemnified party (so
long as the indemnified party shall have informed the indemnifying
parties of such action in accordance with this Section4 on a timely
basis prior to the indemnified party seeking indemnification
hereunder), the indemnifying parties will not be liable under this
Section4 for the costs and expenses of any settlement of such action
effected by such indemnified party without the consent of the
indemnifying party, unless such indemnified party waived its rights
under this Section4, in which case the indemnified party may effect
such a settlement without such consent.
(d) To the extent the indemnification provided for in paragraph (a)
or (b) of this Section4 is unavailable to an indemnified party in
respect of any losses, claims, damages or liabilities, then each
indemnifying party under such paragraph, in lieu of indemnifying such
indemnified party thereunder, shall contribute to the amount paid or
payable by such indemnified party as a result of such losses, claims,
damages or liabilities in such proportion as is appropriate to reflect
the relative fault of the Company on the one hand and the Holders on
the other hand in connection with the statements or omissions that
resulted in such losses, claims, damages or liabilities, as well as
any other relevant equitable considerations. The relative fault of the
Company on the one hand and the Holders on the other hand shall be
determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by
the Company or by the Holders and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent
such statement or omission.
(e) The Company and each Holder agrees that it would not be just or
equitable if contribution pursuant to this Section4 were determined by
pro rata allocation or by any other method of allocation that does not
--------
take account of the equitable considerations referred to in
paragraph(d) above. The amount paid or payable by an indemnified party
as a result of the losses, claims, damages and liabilities referred to
in paragraph(d) above shall be deemed to include,
<PAGE>
subject to the limitations set forth above, any legal or other
expenses reasonably incurred (and not otherwise reimbursed) by such
indemnified party in connection with investigating or defending any
such action or claim. Notwithstanding the provisions of this Section4,
in no event shall a Selling Holder be required to contribute any
amount in excess of the amount by which proceeds received by such
Selling Holder from sales of Registrable Securities exceeds the amount
of damages that such Selling Holder has otherwise been required to pay
by reason of such untrue or allegedly untrue statement or omission or
alleged omission. No person guilty of fraudulent misrepresentation
(within the meaning of Section11(f) of the Securities Act) shall be
entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The remedies provided for in this
Section4 are not exclusive and shall not limit any rights or remedies
which may otherwise be available to any indemnified party at law or in
equity.
5. Miscellaneous.
-------------
(a) No Inconsistent Agreements. The Company has not entered into nor
--------------------------
will the Company on or after the date of this Agreement enter into any
agreement which is inconsistent with the rights granted to the Holders
of Registrable Securities in this Agreement or otherwise conflicts
with the provisions hereof. The rights granted to the Holders
hereunder do not in any way conflict with and are not inconsistent
with the rights granted to the holders of the Company's other issued
and outstanding securities, if any, under any such agreements.
(b) Amendments and Waivers. The provisions of this Agreement,
----------------------
including the provisions of this sentence, may not be amended,
modified or supplemented, and waivers or consents to departures from
the provisions hereof may not be given unless the Company has obtained
the written consent of Holders of at least a majority in aggregate
number of the outstanding Registrable Securities affected by such
amendment, modification, supplement, waiver or consent; provided,
--------
however, a waiver or consent to departure from the provisions hereof
-------
that relates exclusively to the rights of Holders of Registrable
Securities whose securities are being sold pursuant to a Registration
Statement and that does not directly or indirectly affect the rights
of other Holders of Registrable Securities may be given by the Holders
of a majority of the Registrable Securities proposed to be sold.
<PAGE>
(c) Notices. All notices and other communications provided for or
-------
permitted hereunder shall be made in writing by hand delivery,
registered first-class mail, telex, telecopier, or any courier
guaranteeing overnight delivery (i)if to a Holder, at the most current
address given by such Holder to the Company by means of a notice given
in accordance with the provisions of this Section5(c), which address
initially is, with respect to the Initial Purchaser, the address set
forth in the Purchase Agreement, with a copy to: Cahill Gordon &
Reindel, 80 Pine Street, New York, New York 10005, Attention: Roger
Meltzer, Esq.; and (ii)if to the Company, initially at the Company's
address set forth in the Purchase Agreement and thereafter at such
other address, notice of which is given in accordance with the
provisions of this Section5(c), with a copy to: Skadden, Arps, Slate,
Meagher & Flom LLP, 919 Third Avenue, New York, New York 10022-3897,
Attention: GregoryA. Fernicola, Esq.
All such notices and communications shall be deemed to have been duly
given: (i)at the time delivered by hand, if personally delivered, five
Business Days after being deposited in the mail, postage prepaid, if
mailed; (ii)when answered back, if telexed; (iii)when receipt is
acknowledged, if telecopied; and (iv)on the next Business Day, if
timely delivered to an air courier guaranteeing overnight delivery.
(d) Successors and Assigns. This Agreement shall inure to the benefit
----------------------
of and be binding upon the successors, assigns and transferees of each
of the parties, including, without limitation and without the need for
an express assignment, subsequent Holders; provided, however, that
-------- -------
nothing herein shall be deemed to permit any assignment, transfer or
other disposition of Registrable Securities in violation of the terms
of this Agreement or the Purchase Agreement. If any transferee of any
Holder shall acquire Registrable Securities, in any manner, whether by
operation of law or otherwise, such Registrable Securities shall be
held subject to all of the terms of this Agreement, and by taking and
holding such Registrable Securities such person shall be conclusively
deemed to have agreed to be bound by and to perform all of the terms
and provisions of this Agreement and such person shall be entitled to
receive the benefits hereof.
(e) Rules 144 and 144A. For so long as the Company is subject to the
------------------
reporting requirements of Section13 or 15 of the Exchange Act and any
Registrable Securities remain outstanding the
<PAGE>
Company will use its best efforts to file the reports required to be
filed by it under the Securities Act and the Exchange Act and the
rules and regulations adopted by the SEC thereunder in a timely manner
and, if at any time the Company is not required to file such reports,
it will, upon the request of any Holder of Registrable Securities,
make publicly available other information of a like nature so long as
necessary to permit sales pursuant to Rule 144 or Rule 144A under the
Securities Act. The Company further covenants that so long as any
Registrable Securities remain outstanding to make available to any
Holder of Registrable Securities in connection with any sale thereof,
the information required by Rule144A(d)(4) under the Securities Act in
order to permit resales of such Registrable Securities pursuant to
(a)such Rule 144A, or (b) any similar rule or regulation hereafter
adopted by the SEC.
(f) Counterparts. This Agreement may be executed in any number of
------------
counterparts and by the parties hereto in separate counterparts, each
of which when so executed shall be deemed to be an original and all of
which taken together shall constitute one and the same agreement.
(g) Headings. The headings in this Agreement are for convenience of
--------
reference only and shall not limit or otherwise affect the meaning
hereof.
(h) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
-------------
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED
TO CONTRACTS MADE AND PERFORMED WITHIN THE STATE OF NEW YORK,
WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW. EACH OF THE
PARTIES HERETO AGREES TO SUBMIT TO THE JURISDICTION OF THE COURTS
OF THE STATE OF NEW YORK IN ANY ACTION OR PROCEEDING ARISING OUT
OF OR RELATING TO THIS AGREEMENT.
(i) Severability. In the event that any one or more of the provisions
------------
contained herein, or the application thereof in any circumstance, is
held invalid, illegal or unenforceable, the validity, legality and
enforceability of any such provision in every other respect and of the
remaining provisions contained herein shall not be affected or
impaired thereby.
(j) Entire Agreement. This Agreement, together with the Purchase
----------------
Agreement, is intended by the parties as a final expression of their
agreement, and is intended to be a complete and exclusive statement of
the agreement and understanding of the parties hereto in respect of
the subject
<PAGE>
matter contained herein and therein.
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date first written above.
SAMSONITE CORPORATION
By: /s/ Thomas R. Sandler
-----------------------------
Name: Thomas R. Sandler
Title: Senior Vice President
Samsonite Corporation
CIBC OPPENHEIMER CORP.
By: /s/ Bruce Raben
-----------------------------
Name: Bruce Raben
Title: Managing Director
<PAGE>
Exhibit 10.12
-------------
FIRST AMENDMENT TO WARRANT AGREEMENT AMENDMENT, dated as of August 17, 1998
(this "Amendment"), to the Warrant Agreement dated as of June 24, 1998 (the
"Warrant Agreement"), by and between Samsonite Corporation, a Delaware
corporation (the "Company") and BankBoston, N.A., a national banking association
(the "Warrant Agent").
WHEREAS, the Company and the Warrant Agent have entered into the Warrant
Agreement, providing for, among other things, the issuance of the Warrants; and
WHEREAS, the Company and the Warrant Agent wish to amend certain provisions of
the Warrant Agreement as set forth herein;
NOW, THEREFORE, in consideration of the mutual agreements, representations and
warranties contained herein and in the Warrant Agreement the parties hereto,
intending to be legally bound hereby, agree that the Warrant Agreement shall be
amended as follows:
Section 7 of the Warrant Agreement is hereby amended by adding to the end of
such Section the following:
"Notwithstanding anything to the contrary contained herein, if at any time CIBC
Oppenheimer Corp. or any of its Affiliates (collectively, "CIBC") notifies the
Company of its election to exercise Warrants which, together with all other
Warrants previously exercised by CIBC, would cause CIBC to hold Warrant Shares
exceeding five percent of the voting shares (as defined in the Bank Holding
Company Act of 1956, as amended, and the related published rules and regulations
of the Federal Reserve Board promulgated thereunder (the "BHCA")) (or such
different applicable percentage of voting shares under Section 4 of the BHCA as
may be in effect at the time of such exercise) of the Company, the Company shall
not permit the exercise of any such Warrants held by CIBC unless the Company
shall have received an opinion of counsel reasonably satisfactory to the Company
to the effect that such issuance to CIBC of such additional Warrant Shares would
not constitute a violation of the voting share ownership limitations contained
in Section 4 of the BHCA. It is hereby expressly agreed to that in giving such
opinion, such counsel may among other things rely as to matters of fact upon one
or more certificates of officers of the Company and/or CIBC and may include in
such opinion customary qualifications and limitations."
Capitalized terms not otherwise defined herein have the meanings assigned to
such terms in the Warrant Agreement.
Except as herein specifically amended or supplemented, the Warrant Agreement
shall continue in full force and effect in accordance with its terms.
This Amendment may be executed and delivered in one or more counterparts, all of
which shall be considered one and the same agreement
<PAGE>
and shall become effective when one or more counterparts have been signed by
each of the parties and delivered to the other parties.IN WITNESS THEREOF, the
Company and the Warrant Agent have duly executed this Amendment as of the date
first written above.
SAMSONITE CORPORATION
By: /s/ D. Michael Clayton
-----------------------------
Name: D. Michael Clayton
Title: Vice President - Legal
BANKBOSTON, N.A., as Warrant Agent
By: /s/ Carol Mulvey - Eori
-----------------------------
Name: Carol Mulvey - Eori
Title: Administration Manager
The undersigned hereby consents to the foregoing Amendment as of the date
thereof.
CIBC OPPENHEIMER CORP.
By: /s/ Neal Thomas
-----------------------------
Name: Neal Thomas
Title: Managing Director
High Yield Division
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE SIX MONTHS ENDED JULY 31,
1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JAN-31-1998
<PERIOD-START> FEB-01-1998
<PERIOD-END> JUL-31-1998
<CASH> 20,957
<SECURITIES> 0
<RECEIVABLES> 85,144
<ALLOWANCES> 8,089
<INVENTORY> 193,534
<CURRENT-ASSETS> 352,380
<PP&E> 209,523
<DEPRECIATION> 68,447
<TOTAL-ASSETS> 630,853
<CURRENT-LIABILITIES> 137,641
<BONDS> 475,146
165,659
0
<COMMON> 209
<OTHER-SE> (231,833)
<TOTAL-LIABILITY-AND-EQUITY> 630,853
<SALES> 320,338
<TOTAL-REVENUES> 320,338
<CGS> 196,805
<TOTAL-COSTS> 196,805
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</TABLE>
