<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
---------
( X ) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended April 30, 1999
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _________________ to _______________
Commission File Number: 0-23214
---------------------
SAMSONITE CORPORATION
------------------------------
(Exact name of registrant as specified in its charter)
Delaware 36-3511556
- -------------------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
11200 East 45th Avenue, Denver, CO 80239
- ----------------------------------- ----------
(Address of principal executive offices) (Zip Code)
(303) 373-2000
-------------------------------------------
(Registrant's telephone number, including area code)
------------------------------------
(Former name, if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months and (2) has been subject to such filing
requirements for the past 90 days.
X Yes No
------ ------
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Section 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.
X Yes No
------ ------
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date. 10,513,612 shares of common
stock, par value $.01 per share, as of June 11, 1999.
<PAGE>
FORM 10-Q
---------
CONTENTS
--------
<TABLE>
<CAPTION>
Page Number
-----------
PART I - FINANCIAL INFORMATION
- -------- ---------------------
<S> <C>
Unaudited Consolidated Balance Sheets as of April 30, 1999
and January 31, 1999.................................................... 1
Unaudited Consolidated Statements of Operations for the three months
ended April 30, 1999 and 1998........................................... 3
Unaudited Consolidated Statement of Stockholders' Equity (Deficit)
for the three months ended April 30, 1999............................... 4
Unaudited Consolidated Statements of Cash Flows for the three months
ended April 30, 1999 and 1998........................................... 5
Unaudited Notes to Consolidated Financial Statements.................... 7
Management's Discussion and Analysis of Financial Condition
and Results of Operations............................................... 14
PART II - OTHER INFORMATION
-----------------
Item 1: Legal Proceedings............................................... 22
Item 2: Changes in Securities........................................... 22
Item 3: Defaults upon Senior Securities................................. 22
Item 4: Submission of Matters to a Vote of Security Holders............. 22
Item 5: Other Information............................................... 22
Item 6: Exhibits and Reports on Form 8-K................................ 23
Signature............................................................... 24
Index to Exhibits....................................................... 25
</TABLE>
<PAGE>
PART I - FINANCIAL INFORMATION
- ------------------------------
SAMSONITE CORPORATION AND SUBSIDIARIES
Unaudited Consolidated Balance Sheets
as of April 30, 1999 and January 31, 1999
(In thousands)
<TABLE>
<CAPTION>
April 30, January 31,
Assets 1999 1999
- ------ --------- -----------
<S> <C> <C>
Current assets:
Cash and cash equivalents........................................... $ 35,202 41,932
Trade receivables, net of allowances for doubtful accounts.......... 78,782 78,329
of $7,465 and $7,065
Notes and other receivables......................................... 15,926 11,614
Inventories (Note 2)................................................ 174,174 187,567
Deferred income tax assets.......................................... 2,491 2,491
Prepaid expenses and other current assets........................... 17,526 14,452
Assets held for sale................................................ 112 112
--------- --------
Total current assets.............................................. 324,213 336,497
Investments in affiliates................................................. 479 518
Property, plant and equipment, net (Note 3)............................... 144,901 149,641
Intangible assets, less accumulated amortization of $47,937 and
$46,786 (Note 4).................................................... 112,807 114,248
Other assets and long-term receivables, net of allowances
for doubtful accounts of $521....................................... 19,385 20,531
--------- --------
$ 601,785 621,435
========= ========
</TABLE>
(Continued)
See accompanying notes to consolidated financial statements
1
<PAGE>
SAMSONITE CORPORATION AND SUBSIDIARIES
Unaudited Consolidated Balance Sheets
as of April 30, 1999 and January 31, 1999
(In thousands, except share data)
<TABLE>
<CAPTION>
April 30, January 31,
Liabilities and Stockholders' Equity (Deficit) 1999 1999
- ---------------------------------------------- ---------- -----------
<S> <C> <C>
Current liabilities:
Short-term debt (Note 5)......................................................... $ 8,412 8,409
Current installments of long-term obligations (Note 5)........................... 6,436 6,923
Accounts payable................................................................. 42,259 48,375
Accrued liabilities.............................................................. 92,684 98,541
---------- ----------
Total current liabilities...................................................... 149,791 162,248
Long-term obligations, less current installments (Note 5).............................. 476,045 496,173
Deferred income tax liabilities........................................................ 15,893 17,046
Other noncurrent liabilities........................................................... 52,578 53,919
---------- ----------
Total liabilities.............................................................. 694,307 729,386
---------- ----------
Minority interests in consolidated subsidiaries........................................ 8,816 9,166
Senior redeemable preferred stock, aggregate liquidation preference of
$193,200 and $186,723, 193,200 and 186,723 shares issued and outstanding............. 185,177 178,329
Stockholders' equity (deficit) (Note 7):
Preferred stock ($.01 par value; 2,000,000 shares authorized):
Series Z preferred stock, convertible; authorized 2,000 shares; issued and
outstanding 1,000 shares (Note 1C)............................................... 24,410 --
Common stock ($.01 par value; 60,000,000 shares authorized;
21,008,457 and 21,000,039 shares issued; 10,508,457 and
10,500,039 shares outstanding)................................................... 210 210
Additional paid-in capital.......................................................... 436,678 436,351
Accumulated other comprehensive income.............................................. (17,452) (12,426)
Accumulated deficit................................................................. (310,361) (299,581)
---------- ----------
133,485 124,554
Treasury stock, at cost (10,500,000 shares)......................................... (420,000) (420,000)
---------- ----------
Total stockholders' equity (deficit)........................................... (286,515) (295,446)
---------- ----------
Commitments and contingencies (Notes 1C, 5, 7 and 9)
$ 601,785 621,435
========== ==========
</TABLE>
See accompanying notes to consolidated financial statements
2
<PAGE>
SAMSONITE CORPORATION AND SUBSIDIARIES
Unaudited Consolidated Statements of Operations
for the three months ended April 30, 1999 and 1998
(In thousands, except per share data)
<TABLE>
<CAPTION>
Three Months Ended April 30,
----------------------------
1999 1998
---- ----
<S> <C> <C>
Net sales (Note 1G)......................................................... $ 175,876 156,676
Cost of goods sold.......................................................... 101,217 97,273
--------- ---------
Gross profit.............................................................. 74,659 59,403
Selling, general and administrative expenses................................ 63,254 59,621
Provision for restructuring operations...................................... -- 2,608
Amortization of intangible assets........................................... 1,391 1,526
--------- ---------
Operating income (loss)................................................... 10,014 (4,352)
Other income (expense):
Interest income........................................................... 586 791
Interest expense and amortization of debt issue costs
and premium........................................................... (13,585) (4,808)
Other income - net (Note 6)............................................... 2,217 998
--------- ---------
Loss before income taxes, minority interest,
and extraordinary item................................................ (768) (7,371)
Income tax benefit (expense)................................................ (3,054) 2,924
Minority interest in earnings of subsidiaries............................... (110) (256)
--------- ---------
Loss before extraordinary item............................................ (3,932) (4,703)
Extraordinary item - loss on extinguishment of debt,
net of income tax benefit of $3,815 (Note 5).............................. -- (6,224)
--------- ---------
Net loss.............................................................. (3,932) (10,927)
Senior redeemable preferred stock dividends and accretion
of senior redeemable preferred stock discount............................. (6,848) --
--------- ---------
Net loss to common stockholders....................................... $ (10,780) (10,927)
========= =========
Income (loss) per common share - basic and diluted:
Loss before extraordinary item...................................... (1.03) (0.23)
Extraordinary loss.................................................. -- (0.31)
--------- ---------
Net loss per share................................................ (1.03) (0.54)
========= =========
</TABLE>
See accompanying notes to consolidated financial statements
3
<PAGE>
SAMSONITE CORPORATION AND SUBSIDIARIES
Unaudited Consolidated Statement of Stockholders' Equity (Deficit)
for the three months ended April 30, 1999
(In thousands, except share amounts)
<TABLE>
<CAPTION>
Accumulated
Additional Other
Preferred Common Paid-In Comprehensive Accumulated Treasury
Stock Stock Capital Income Deficit Stock
----- ----- ------- ------ ------- -----
<S> <C> <C> <C> <C> <C> <C>
Balance, February 1, 1999 $ -- 210 436,351 (12,426) (299,581) (420,000)
Issuance of 6,060 shares
to directors for services -- -- 37 -- -- --
Compensation expense
accrued for stock bonus
awards -- -- 118 -- -- --
Issuance of preferred
stock (Note 1C) 24,410 -- -- -- -- --
Exercise of employee
stock options and issuance
of stock award shares -- -- 172 -- -- --
Foreign currency
translation adjustment -- -- -- (5,026) -- --
Senior redeemable
preferred stock dividends
and accretion of senior
redeemable preferred
stock discount -- -- -- -- (6,848) --
Net income (loss) -- -- -- -- (3,932) --
-------- ------ ------- -------- --------- --------
Balance, April 30, 1999 $ 24,410 210 436,678 (17,452) (310,361) (420,000)
======== ====== ======= ======== ========= ========
</TABLE>
See accompanying notes to consolidated financial statements
4
<PAGE>
SAMSONITE CORPORATION AND SUBSIDIARIES
Unaudited Consolidated Statements of Cash Flows
for the three months ended April 30, 1999 and 1998
(In thousands)
<TABLE>
<CAPTION>
Three Months Ended April 30,
----------------------------
1999 1998
---- ----
<S> <C> <C>
Cash flows provided by (used in) operating activities:
Net income (loss)................................................... $ (3,932) (10,927)
Adjustments to reconcile net income (loss) to net cash provided by
(used in) operating activities:
Loss on extinguishment of debt.................................... -- 6,224
Loss (gain) on disposition of fixed assets........................ 94 (737)
Depreciation and amortization of property,
plant and equipment............................................. 5,604 5,417
Amortization of intangible assets................................. 1,391 1,526
Amortization of debt issue costs and premium...................... 655 76
Provision for doubtful accounts................................... 843 459
Amortization of stock awards and stock issued for services........ 155 299
Compensation expense for adjustment of stock options.............. 166 --
Provision for restructuring operations............................ -- 2,608
Changes in operating assets and liabilities:
Trade and other receivables..................................... (5,384) 6,231
Inventories..................................................... 13,393 (13,682)
Prepaid expenses and other current assets....................... (3,386) (2,026)
Accounts payable and accrued liabilities........................ (12,383) (9,489)
Other adjustments - net........................................... 57 (3,378)
--------- ---------
Net cash used in operating activities............................... $ (2,727) (17,399)
--------- ---------
(Continued)
</TABLE>
See accompanying notes to consolidated financial statements
5
<PAGE>
SAMSONITE CORPORATION AND SUBSIDIARIES
Unaudited Consolidated Statements of Cash Flows
for the three months ended April 30, 1999 and 1998
(In thousands)
<TABLE>
<CAPTION>
Three Monthes Ended April 30,
----------------------------
1999 1998
---- ----
<S> <C> <C>
Cash flows provided by (used in) investing activities:
Purchases of property, plant and equipment............................... $ (7,046) (7,433)
Proceeds from sale of assets held for sale and property and equipment.... 251 5,250
Other, net............................................................... (698) (894)
--------- ---------
Net cash used in investing activities.................................. (7,493) (3,077)
--------- ---------
Cash flows provided by (used in) financing activities:
Proceeds from sale of preferred stock.................................... 25,410 --
Net borrowings (payments) of short-term obligations...................... 3 3,344
Net borrowings (payments) on long-term obligations....................... (15,782) 82,520
Retirement of subordinated notes......................................... -- (52,269)
Redemption premium and expenses of retirement of subordinated notes...... -- (8,512)
Other, net............................................................... (323) 239
--------- ---------
Net cash provided by financing activities.............................. 9,308 25,322
--------- ---------
Effect of exchange rate changes on cash and cash equivalents................... (5,818) (1,069)
--------- ---------
Net increase (decrease) in cash and cash equivalents................... (6,730) 3,777
Cash and cash equivalents, beginning of period................................. 41,932 3,134
--------- ---------
Cash and cash equivalents, end of period....................................... $ 35,202 6,911
========= =========
Supplemental disclosures of cash flow information:
Cash paid during the period for interest................................. $ 3,918 5,000
========= =========
Cash paid during the period for income taxes............................. $ 904 479
========= =========
</TABLE>
See accompanying notes to consolidated financial statements
6
<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. 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
"Reorganization").
The Reorganization has been accounted for pursuant to the American
Institute of Certified Public Accountants Statement of Position 90-7,
entitled "Financial Reporting by Entities in Reorganization Under the
Bankruptcy Code" ("SOP 90-7"). SOP 90-7 requires that assets and
liabilities be adjusted to their fair values ("fresh-start" values) and
that a new reporting entity be created. On June 30, 1993, for accounting
purposes, the Plan was consummated and SOP 90-7 was adopted. The
consolidated financial statements include the ongoing impact of fresh-
start reporting.
C. Proposed Rights Offering and Sale of Preferred Stock
----------------------------------------------------
The Company has announced that it plans to commence a $75 million rights
offering to its stockholders. Under the terms of the rights offering,
the Company plans to distribute on a pro rata basis, to all of its
common stockholders of record as of a date to be determined,
transferable rights to purchase additional shares of common stock. On
April 7, 1999, the Company entered into an agreement with Apollo
Investment Fund, L.P. ("Apollo"), together with its affiliates,
Samsonite's largest stockholder, pursuant to which Apollo agreed to make
a "bridge" investment equal to the aggregate subscription price of the
rights distributable to Apollo and its affiliates in the rights offering
and to "back-stop" the rights offering by purchasing additional shares
not subscribed for by other stockholders, subject to a maximum total
investment by Apollo of $37.5 million. In consideration of its agreement
to make the bridge investment and to back-stop the rights offering, the
Company agreed to pay Apollo a fee of $1.0 million.
During the three months ended April 30, 1999, Apollo made its bridge
investment of $25.4 million by purchasing 1,000 shares of Series Z
Convertible Preferred Stock ("Series Z Preferred Stock") which is
initially convertible into the Company's common stock at a rate of $6.00
per common share for a total of 4,235,000 shares. The Series Z Preferred
Stock has a nominal liquidation preference, and is entitled to receive
dividends equal to the dividends payable on the shares of common stock
into which it is convertible. Part of the proceeds from Apollo's bridge
investment were used to pay the cash premium for an insurance policy
covering various lawsuits filed against the Company and related parties
between March 13, 1998 and March 9, 1999 and to pay certain costs
incurred to defend these lawsuits (see Note 9). The $1.0 million fee
payable to Apollo was recorded as a reduction of the stated value of the
Series Z Preferred Stock.
7
<PAGE>
SAMSONITE CORPORATION AND SUBSIDIARIES
Unaudited Notes to Consolidated Financial Statements (continued)
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 April 30, 1999 and results of operations for
the three months ended April 30, 1999 and 1998. 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, 1999.
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 computes earnings (loss) per share in accordance with the
requirements of Statement of Financial Accounting Standards No. 128,
Earnings Per Share ("SFAS 128"). 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 outstanding increased for potentially dilutive common
shares outstanding during the period. The dilutive effect of stock
options, warrants, convertible preferred stock 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 months ended April 30, 1999 and 1998 is
computed based on a weighted average number of shares of common stock
outstanding during the period of 10,505,702 and 20,413,536,
respectively. Basic earnings per share and earnings per share - assuming
dilution are the same for the three months ended April 30, 1999 and 1998
because of the antidilutive effect of stock options and awards when
there is a net loss to common stockholders.
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 $4,546,000 and $3,777,000 for the three
months ended April 30, 1999 and 1998, respectively.
8
<PAGE>
SAMSONITE CORPORATION AND SUBSIDIARIES
Unaudited Notes to Consolidated Financial Statements (continued)
2. Inventories
Inventories consisted of the following :
<TABLE>
<CAPTION>
April 30, January 31,
1999 1999
---------- -----------
(In thousands)
<S> <C> <C>
Raw Materials....................................... $ 36,003 47,014
Work in Process..................................... 8,807 8,059
Finished Goods...................................... 129,364 132,494
--------- -------
$ 174,174 187,567
========= =======
</TABLE>
3. Property, Plant and Equipment
Property, plant and equipment consisted of the following:
<TABLE>
<CAPTION>
April 30, January 31,
1999 1999
---------- ----------
(In thousands)
<S> <C> <C>
Land................................................ $ 12,057 12,555
Buildings........................................... 67,804 71,517
Machinery, equipment and other...................... 141,098 141,306
--------- -------
220,959 225,378
Less accumulated amortization and depreciation...... (76,058) (75,737)
--------- -------
$ 144,901 149,641
========= =======
</TABLE>
Depreciation included in cost of goods sold and selling, general and
administrative expenses related to adjustments of assets and liabilities
to fair value in connection with the adoption of SOP 90-7 consisted of the
following (in thousands):
<TABLE>
<CAPTION>
Three months ended April 30,
----------------------------
1999 1998
----------- ----------
(In thousands)
<S> <C> <C>
"Fresh Start" Depreciation in Cost of Goods Sold.... $203 411
"Fresh Start" Depreciation in Selling, General and
Administrative Expenses......................... 44 90
---- ----
Total "Fresh Start" Depreciation.............. $247 501
==== ====
</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>
April 30, January 31,
1999 1999
---------- ----------
(In thousands)
<S> <C> <C>
Trademarks.......................................... $104,184 105,059
Licenses, Patents and Other......................... 8,623 9,189
-------- --------
$112,807 114,248
======== ========
</TABLE>
9
<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 (in thousands)
<TABLE>
<CAPTION>
Three months ended April 30,
----------------------------
1999 1998
----------- ----------
(In thousands)
<S> <C> <C>
"Fresh Start" Amortization of Tradenames, Licenses, Patents
and Other................................................... $1,259 1,432
Other............................................................. 132 94
------ ------
$1,391 1,526
====== ======
</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>
April 30, January 31,
1999 1999
---------- ----------
(In thousands)
<S> <C> <C>
Senior Credit Facility (a)........................... $116,060 135,074
Senior Subordinated Notes (b)........................ 350,000 350,000
Other obligations (c)................................ 19,186 20,097
Capital lease obligations............................ 5,115 5,802
Series B Senior Subordinated Notes (d)............... 532 532
-------- --------
Total debt....................................... 490,893 511,505
Less short-term debt and current installments of
long-term obligations............................ (14,848) (15,332)
-------- --------
Long-term obligations less current installments...... $476,045 496,173
======== ========
</TABLE>
(a) 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 term loan facility in the aggregate principal
amount of Belgian francs 1,853,750,000, (equivalent to $50 million on the
closing date of the 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 partners to the Senior
Credit Facility in order to increase the Revolving Credit Facility by up
to an additional $50 million.
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, 66% of the stock of Samsonite Europe N.V. and other major
non-domestic subsidiaries and a mortgage on the Company's real estate in
Denver, Colorado.
The Senior Credit Facility contains financial covenants which require the
Company to maintain certain debt to earnings and interest coverage ratios
and limitations on capital expenditures. The Senior Credit Facility also
contains 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
10
<PAGE>
SAMSONITE CORPORATION AND SUBSIDIARIES
Unaudited Notes to Consolidated Financial Statements (continued)
investments, prepay or purchase subordinate indebtedness and preferred
stock, make distributions and dividend payments to its stockholders,
engage in affiliate transactions, make certain asset dispositions, make
acquisitions, and participate in certain mergers.
(b) The Senior Subordinated Notes (the "Notes") bear interest at 10% and
mature on June 15, 2008. The Notes are redeemable at the option of the
Company at various redemption prices as specified in the Notes. 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 (including short-term
notes) to banks by foreign subsidiaries aggregating $14.9 million and $4.3
million of secured financing arrangements with foreign banks.
(d) The Series B Senior Subordinated Notes (the "Notes") bear interest at
11 1/8% and have a maturity date of July 15, 2005. During the three months
ended April 30, 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 statement of
operations for the three months ended April 30, 1998.
6. Other Income (Expense) - Net
Other income (expense) - net consisted of the following:
<TABLE>
<CAPTION>
Three months ended April 30,
----------------------------
1999 1998
----------- ----------
(In thousands)
<S> <C> <C>
Net realized gain from foreign currency forward delivery contracts... $ 404 676
Unrealized gain from foreign currency forward delivery contracts..... 3,924 752
Equity in loss of unconsolidated affiliate........................... (37) (235)
Gain (loss) on disposition of fixed assets, net...................... (94) 737
Other, net........................................................... (1,980) (932)
-------- ------
$ 2,217 998
======== ======
</TABLE>
7. Employee Stock Options
The Company has authorized 2,550,000 shares for the granting of options under
the 1995 Stock Option and Award Plan and 750,000 shares for the granting of
options under the FY 1999 Stock Option and Incentive Award Plan. See Note 11
to the consolidated financial statements included in the 1999 Form 10-K for a
description of such plan. In addition, the Company has outstanding options
and stock bonus awards to current and past executives in connection with
employment agreements.
At April 30, 1999, the Company had outstanding options for a total of
1,828,223 shares at options prices ranging from $2.50 to $16.00 per share.
Options for 971,951 shares were exercisable at April 30, 1999 at a weighted
average exercise price of $6.39 per share. Options for 2,358 shares under the
1995 Stock Option and Award Plan were exercised at an average exercise price
of $2.50 per share during the three months ended April 30, 1999.
11
<PAGE>
SAMSONITE CORPORATION AND SUBSIDIARIES
Unaudited Notes to Consolidated Financial Statements (continued)
In May 1996, the Company entered into agreements with three executive
officers to provide stock bonuses to each of them of 38,889 shares of common
stock ("Bonus Shares"), 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. Bonus
Shares vested and were issued to one executive subsequent to his termination
of employment on February 1, 1998 and the remaining compensation expense
related to his shares was recognized during the three months ended April 30,
1998. 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 for the two remaining executives. In connection with the completion of
the recapitalization in fiscal 1999, the Share Bonus Agreements for the two
remaining executives were amended to permit the tender of Bonus Shares to the
Company. As a result, during fiscal 1999 the Company purchased 20,026 of the
Bonus Shares from each of the two executive officers, representing the same
percentage of shares accepted in the recapitalization from other
stockholders. The remaining outstanding Bonus Shares vested in May 1999.
8. Segment Information
Effective for the year ended January 31, 1999, the Company adopted SFAS No.
131, Disclosure About Segments of an Enterprise and Related Information,
which changes the way the Company reports information about its operating
segments. Certain information for April 30, 1998 has been reclassified from
the prior year's presentation in order to conform to the April 30, 1999
presentation.
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 primarily along geographic lines
dividing responsibility for the Company's operations as follows: The
Americas, which include the United States comprised of wholesale and retail
operations, Canada, Latin America, and South America; Europe; Asia, which
includes India, China, Singapore, South Korea, Taiwan and Hong Kong; and
Other which primarily includes licensing revenues from non-luggage brand
names owned by the Company, royalties from the Japanese luggage licensee and
corporate overhead.
The Company evaluates the performance of its segments based on operating
income of the respective business units. Intersegment sales prices are market
based.
12
<PAGE>
SAMSONITE CORPORATION AND SUBSIDIARIES
Unaudited Notes to Consolidated Financial Statements (continued)
Segment information for the three months ended April 30, 1999 and 1998 is as
follows:
<TABLE>
<CAPTION>
U.S. U.S. Other Other
----- ---- ---- -----
1999 Europe Wholesale Retail Americas Asia Operations Eliminations Totals
- ---- -------- --------- ------ -------- ------ ---------- ------------ ------
(In thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues from external customers... $ 79,203 47,149 28,221 9,986 7,033 4,284 -- 175,876
Intersegment revenues.............. $ 669 17,168 -- 695 2,192 -- (20,724) --
Operating income (loss) (a)........ $ 11,200 (811) 275 (131) 770 (2,390) 1,101 10,014
Total assets....................... $185,296 153,520 34,006 45,772 26,503 246,955 (90,267) 601,785
1998
- ----
Revenues from external customers... $ 71,949 39,972 25,782 10,429 4,889 3,655 -- 156,676
Intersegment revenues.............. $ 616 12,525 -- 1,829 750 -- (15,720) --
Operating income (loss) (a)........ $ 5,426 (9,444) 697 67 (41) (1,164) 107 (4,352)
Total assets....................... $153,247 150,435 50,056 40,440 30,040 766,308 (572,768) 617,758
</TABLE>
- ----------------
(a) Operating income (loss) represents net sales less operating expenses. In
computing operating income (loss) none of the following items have been
added or deducted: interest income, interest expense, other income - net,
income taxes, minority interest and extraordinary items. General corporate
expenses and amortization of intangibles are included in other operations.
The Company enters into foreign exchange contracts in order to reduce its
exposure to fluctuations in currency exchange rates (primarily the Belgian
franc) on certain foreign operations and royalty agreements through the use
of forward delivery commitments. For the three months ended April 30, 1999
and 1998, the Company had net gains (losses) from such transactions of
$4,328,000 and $1,428,000, respectively, which are included in nonoperating
income (see Note 6).
9. Litigation, Commitments and Contingencies
The Company and certain related parties have been the subject of various
purported shareholder class action lawsuits and a purported derivative
action filed between March 13, 1998 and March 9, 1999 in various courts,
including Colorado State District Court, City and County of Denver; United
States District Court for the District of Colorado; and the Delaware Court
of Chancery (together, the "Shareholder Litigation"). In April 1999, the
Company entered into an insurance agreement with a major insurance carrier
whereby the carrier assumed responsibility for the defense and ultimate
resolution of the Shareholder Litigation and any other actions asserted at
any time that involve essentially the same or similar allegations, facts or
circumstances as these in the Shareholder Litigation. In connection with the
insurance agreement, the Company entered into certain agreements and
releases and agreed to make a cash premium payment, net of potential future
reimbursements, to the insurer ranging from an estimated minimum payment of
$7.0 million to a maximum payment of $17.5 million depending on the ultimate
cost to defend and resolve the pending litigation. The Company is
responsible for paying all legal defense costs prior to the effective date
of the insurance agreement. However, the Company expects that substantially
all costs incurred subsequent to the effective date to defend and resolve
the Shareholder Litigation will be covered by the insurance agreement. The
Company believes that its consolidated statements of operations for the
fiscal year ended January 31, 1999 reflect the accrual of substantially all
costs incurred and expected to be incurred in connection with these
lawsuits.
In addition, the Company is a party to various other legal proceedings and
claims in the ordinary course of business; the Company believes that the
outcome of these other pending matters will not have a material adverse
affect on its consolidated financial position, results of operations or
liquidity.
13
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Results of Operations
- ---------------------
Three Months Ended April 30, 1999 ("fiscal 2000" or "current year") Compared to
Three Months Ended April 30, 1998 ("fiscal 1999" or "prior year")
General. The Company analyzes its net sales and operations by the following
categories: (i) "European operations" which include 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 and
Latin America; (iii) "Asian operations" which include the sales, manufacturing
and distribution operations in India, China, Singapore, South Korea, Hong Kong
and Taiwan; and (iv) licensing operations and corporate overhead.
Results of European operations were translated from Belgian francs to U.S.
dollars in fiscal 2000 and fiscal 1999 at average rates of approximately 36.09
and 37.60 francs to the U.S. dollar, respectively. This increase in the value
of the Belgian franc of approximately 4% resulted in increases in reported
sales, cost of sales and other expenses in fiscal 2000 compared to fiscal 1999.
The most significant effects from the difference in exchange rates from last
year to this year are noted in the following analysis and are 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 2000, the Company had net gains from such instruments of $4.3 million
($3.9 million of which was unrealized); during fiscal 1999, the Company had net
gains on such instruments of $1.4 million ($0.8 million of which was
unrealized). The Company estimates the increase/(decrease) in operating income
from the weakening (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
$(0.7) million for the three months ended April 30, 1999 and 1998, respectively.
Net Sales. Consolidated net sales increased from $156.7 million in fiscal 1999
to $175.9 million in fiscal 2000, an increase of $19.2 million or 12.3%. Fiscal
2000 sales were favorably impacted by the increase in the value of the Belgian
franc compared to the U.S. dollar. Without the effect of the exchange rate
difference, fiscal 2000 sales would have increased by $16.0 million or
approximately 10.2%.
Sales from European operations increased from $71.9 million in fiscal 1999 to
$79.2 million in fiscal 2000, an increase of $7.3 million. Expressed in the
local European reporting currency (Belgian francs), fiscal 2000 sales increased
by 5.6%, or the U.S. constant dollar equivalent of $4.1 million, compared to
fiscal 1999. Sales of softside product improved by approximately 15% from prior
year while hardside product sales decreased by approximately 5%. The
significant increase in softside sales is due in part to the success of the
Spark, Accent, Base Hits and Blokker lines. Sales of footwear in Europe
increased 15% compared to the prior year to $6.9 million.
Sales from the Americas operations increased from $76.2 million in fiscal 1999
to $85.4 million in fiscal 2000, an increase of $9.2 million or 12.0%. U.S.
Wholesale sales for the first quarter increased by $7.2 million from the prior
year, retail sales increased by $2.4 million, and sales in the other Americas
operations decreased by $0.4 million from the prior year. U.S. Wholesale sales
showed strong improvements primarily in the exclusive label, catalog showroom
and Legacy channels during fiscal 2000. First quarter sales were fueled by the
introduction of two new American Tourister product lines and the new Lark Lite
product line. Additionally, sales returns and sales allowances during the first
quarter of fiscal 2000 declined by $4.1 million and $1.2 million, respectively,
compared to the prior year. U.S. Retail sales continued to improve, increasing
from $25.8 million in the prior year to $28.2 million in the first quarter of
fiscal 2000, an increase of 9.5%. Comparable store sales were unchanged from
the same quarter in the prior year.
14
<PAGE>
First quarter sales from Asian operations were $2.0 million higher than the
prior year sales, a 43.9% increase, as a result of increased sales in all Asian
countries. The most significant increase occurred in Korea with a $1.2 million
increase over the prior year's sales. The economic situation in Asia appears to
have stabilized somewhat, contributing to the improvement in sales of the
Company's Asian subsidiaries.
Revenues from U.S. licensing operations increased $0.7 million, or 21% over the
prior year to $4.3 million in fiscal 2000. Samsonite and American Tourister
label licensing revenues increased $0.4 million, Global Licensing revenues
increased $0.2 million and, despite a weaker currency, revenues from the
Japanese licensee increased $0.1 million compared to the prior year.
Gross profit. Consolidated gross profit for fiscal 2000 increased from fiscal
1999 by $15.3 million. Consolidated gross margin increased by 4.5 margin
points, from 37.9% in fiscal 1999 to 42.4% in fiscal 2000.
Gross margins from European operations increased 1.8 percentage points from the
prior year to 40.1% in fiscal 2000. The increase in gross profit margins is due
to selective price increases effective in the European markets beginning in
fiscal 2000, stronger sales of higher margin products, and reduced product and
production costs.
Gross margins for the Americas increased by 6.6 percentage points, from 35.0% in
fiscal 1999 to 41.6% in fiscal 2000. U.S. Wholesale gross profit margins
increased from 25.7% in the prior year to 38.2% in the current year due to
improved sales volume, reduced sales returns and allowances, lower plant
production variances and lower period manufacturing costs.
U.S. Retail gross profit margins decreased from 52.5% in fiscal 1999 to 50.9% in
fiscal 2000 due primarily to a higher sales mix of discontinued and obsolete
product at lower gross profit margins. Part of the Company's strategy to reduce
excess inventories in the U.S. is to sell such products through the retail
stores.
Selling, General and Administrative Expenses ("SG&A"). Consolidated SG&A
increased by $3.6 million from fiscal 1999 to fiscal 2000. As a percent of
sales, SG&A was 36.0% in fiscal 2000 and 38.1% in fiscal 1999.
The increase in SG&A is due primarily to increased SG&A for Europe of $1.0
million, $0.8 million due to the exchange rate effect, and increased SG&A for
the Americas, of $2.6 million. Within the Americas, SG&A increased for U.S.
Retail by $1.3 million primarily due to an increase in the number of retail
stores. SG&A for Corporate and U.S. Wholesale combined increased $1.0 million
due primarily to higher dealer advertising costs and performance incentive
compensation accruals which were partially offset by lower freight to customers,
warranty, national advertising and sales and marketing costs compared to the
prior year. SG&A for other Americas operations increased by $0.3 million. SG&A
for Asia was approximately equal to the prior year.
Provision for restructuring operations. The provision for restructuring
operations in the first quarter of the prior year results from the restructuring
of its Torhout, Belgium manufacturing operations. The restructuring provision
is primarily related to termination and severance costs for the elimination of
approximately 111 positions.
Amortization of intangible assets. Amortization of intangible assets decreased
from $1.5 million in fiscal 1999 to $1.4 million in fiscal 2000 due primarily to
certain McGregor licenses which became fully amortized in fiscal 1999.
Operating income (loss). Operating income (loss) increased from an operating
loss of $4.4 million in fiscal 1999 to operating income in fiscal 2000 of $10.0
million, an increase of $14.4 million. The increase is a result of the
increased sales volume and resulting increase in gross profit of $15.3 million,
the reduction in the restructuring provision of $2.6 million, and the decrease
in amortization of intangibles of $0.1 million, net of an increase in SG&A of
$3.6 million.
Interest income. Interest income decreased by $0.2 million compared to the
prior year due primarily to interest income received on a refund of state income
taxes during the prior year.
15
<PAGE>
Interest expense and amortization of debt issue costs. Interest expense and
amortization of debt issue costs increased from $4.8 million in fiscal 1999 to
$13.6 million in fiscal 2000. The increase is due primarily to increased
interest expense and issuance cost amortization as a result of the
Recapitalization in fiscal 1999 (see Note 2 to the consolidated financial
statements included in the Company's Annual Report on Form 10-K for the fiscal
year ended January 31, 1999).
Other income - net. See Note 6 to the consolidated financial statements
included elsewhere herein for a comparative analysis of other income - net.
Other income - net increased by $1.2 million from $1.0 million in fiscal 1999 to
$2.2 million in fiscal 2000. The increase is due primarily to an increase in
hedge gains of $2.9 million, partially offset by a reduction in the gain on sale
of fixed assets of $0.8 million, a foreign currency transaction loss in fiscal
2000 compared to a gain in the prior year and an increase in the foreign
currency exchange loss of $0.3 million.
The Company has entered into certain forward exchange contracts to hedge its
exposures to changes in exchange rates. The Company estimates the increase
(reduction) in operating income from the strengthening of the Belgian franc
versus the U.S. dollar from the same quarter in the prior year to be
approximately $0.5 million and $(0.7) million for the three months ended April
30, 1999 and 1998, respectively. Other income for the first quarter of fiscal
2000 includes income from forward exchange contracts of $4.3 million, $3.9
million of which was unrealized. In the first quarter of fiscal 1999, such
transactions resulted in income of $1.4 million, $0.8 million of which was
unrealized. The income recorded for the three months ended April 30, 1999
results primarily from forward exchange contracts entered to reduce economic
exposure to fluctuations in currency exchange rates for the Belgian franc. The
ultimate realization of this amount is subject to fluctuations in the exchange
rate of the U.S. dollar against the Belgian franc.
Income tax benefit (expense). Income tax expense increased from an income tax
benefit of $2.9 million in fiscal 1999 to income tax expense of $3.1 million in
fiscal 2000. The increase in income tax expense is due primarily to the
increase in taxable income compared to the prior year, the effect of not
providing a benefit for U.S. losses in fiscal 2000, and the receipt of $0.8
million in fiscal 1999 of state income tax refunds which related to taxes
accrued and paid in prior years. A benefit has not been provided for U.S.
operating losses based on an assessment of the likelihood of the realization of
such benefit in view of the Company's forecasts of future taxable income taking
into account the increased level of interest expense as a result of the
Recapitalization. The relationship between the expected income tax benefit
computed by applying the U.S. statutory rate to the pretax loss and actual
income tax expense recognized results primarily because of (i) foreign income
tax expense provided on foreign earnings, (ii) valuation allowances provided on
deferred tax assets, and (iii) state and local income taxes.
Extraordinary loss. The extraordinary loss for the three months ended April 30,
1998 resulted from the completion of a tender offer for the Company's 11%
Series B Subordinated Notes. The Company retired $52,269,000 principal amount
of the 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 three months ended April 30,
1998.
Net loss. The Company had a net loss in fiscal 2000 of $3.9 million compared to
a net loss in fiscal 1999 of $10.9 million. The decrease in the net loss from
the prior year of $7.0 million is caused by the effect of the increases in
operating and other income and a decrease in extraordinary loss, offset by the
decrease in interest income and the increase in interest expense and income
taxes during fiscal 2000.
Senior redeemable preferred stock dividends and accretion of preferred stock
discount. In fiscal 2000, this item represents the accrual of cumulative
dividends on the Senior Redeemable Preferred Stock issued in connection with the
Recapitalization (see Note 2 to the consolidated financial statements included
in the Company's Annual Report on Form 10-K for the fiscal year ended January
31, 1999) and the accretion of the discount over the twelve-year term of the
Senior Redeemable Preferred Stock.
Net loss to common stockholders. This amount represents net loss reduced for
dividends payable and the accretion of discount on the Senior Redeemable
Preferred Stock and is the amount used to calculate net loss per common share.
16
<PAGE>
Liquidity and Capital Resources
- -------------------------------
For the three months ended April 30, 1999, cash used in operations as reflected
on the Consolidated Statements of Cash Flows included elsewhere herein was $2.7
million; primarily as a result of the loss from operations for the first
quarter, increases in trade and other receivables, increases in prepaid expenses
and other current assets, and decreases in accounts payable and accrued
liabilities, net of the decrease in inventories since January 31, 1999. At
April 30, 1999, the Company had working capital of $174.4 million compared to
$174.2 million at January 31, 1999, an increase of $0.2 million. Current assets
decreased by $12.3 million primarily due to decreases in inventories of $13.4
million and cash of $6.7 million, net of increases in trade and other
receivables of $4.7 million and increases in prepaid expenses and other current
assets of $3.1 million.
Long-term obligations decreased from $496.2 million at January 31, 1999 to
$476.0 million at April 30, 1999, a decrease of $20.2 million. At April 30,
1999, the Company had used $14.6 million of availability under the $100 million
revolving credit portion of its Senior Credit Facility. Additional borrowings
under the Senior Credit Facility could be limited by the Company's ability to
meet and maintain the financial ratios required under the Senior Credit Facility
after giving effect to any additional borrowings.
The Company's cash flow from operations together with amounts available under
its credit facilities were sufficient to fund first quarter fiscal 2000
operations, scheduled payments of principal and interest on indebtedness and
capital expenditures. Management of the Company believes that cash flow from
future operations and amounts available under its credit facilities, including
emerging market credit facilities, and equity financing will be adequate to fund
operating requirements and expansion plans during the next 12 months.
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. The Company's foreign operations in Asia
consist primarily of distributorships organized as joint venture subsidiaries.
Economies and local currencies throughout much of Asia entered a tumultuous
period beginning in fiscal 1998 as a result of political turmoil and general
economic problems with principal industries. The Company believes the situation
has stabilized to some degree and has experienced some improvement towards the
end of fiscal 1999 and in the first quarter of fiscal 2000 in the operations of
the Company's Asian subsidiaries. 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.
The Company believes that disclosure of its Earnings Before Interest, Taxes,
Depreciation and Amortization ("EBITDA") provides useful information regarding
the Company's ability to incur and service debt, but that it should not be
considered a substitute for operating income or cash flow from operations
determined in accordance with generally accepted accounting principles. Other
companies may calculate EBITDA in a different manner than the Company. EBITDA
does not take into consideration substantial costs and cash flows of doing
business, such as interest expense, income taxes, depreciation, and
amortization, and should not be considered in isolation to or as a substitute
for other measures of performance. EBITDA does not represent funds available for
discretionary use by the Company because those funds are required for debt
service, capital expenditures to replace fixed assets, working capital, and
other commitments and contingencies. EBITDA is not an accounting term and is not
used in generally accepted accounting principles. EBITDA, as calculated by the
Company, also excludes extraordinary items, discontinued operations, and
minority interest in earnings of subsidiaries. The Company's EBITDA for three
months ended April 30, 1999 and 1998 was $19.2 million and $3.6 million,
respectively. However, these amounts include various items of income (expense)
including (i) restructuring provisions; and (ii) expenses of the
Recapitalization, gain (loss) on disposition of fixed assets, net, and other
items, net, which items together aggregate $(1.6) million and $2.3 million for
the three months ended April 30, 1999 and 1998, respectively, which management
believes should be added to (deducted from) the calculation of EBITDA. As
adjusted for the aggregate of these items of other income (expense), EBITDA for
the three months ended April 30, 1999 and 1998 is $17.6 million and $5.9
million, respectively.
17
<PAGE>
Effect of Year 2000 Issue on Company Operations
The Year 2000 Issue is the result of computer programs being written using two
digits rather than four to define the applicable year. Any of the Company's
computer programs that have date sensitive software may recognize a date using
"00" as the year 1900 rather than the year 2000. This could result in a system
failure or miscalculations causing disruptions of operations, including, among
other things, a temporary inability to process transactions, send invoices or
engage in normal business activities. Following is a report on the status of the
Company's actions being taken to address the Year 2000 Issue.
United States Operations. In the United States, the Company has installed in
fiscal years 1998 and 1999 new financial manufacturing and distribution software
developed by J.D. Edwards in response to general needs of the business as well
as the Year 2000 Issue. This software system comprises the majority of the
information technology used in the U.S. operations. Based on documents provided
by the developer of the software, the Company believes the software is Year 2000
compliant. The Company has incurred costs to purchase and implement this
software through April 30, 1999 of approximately $10.4 million and expects to
incur additional costs of approximately $0.6 million to fully implement such
software, train personnel, and modify business processes. Additionally, the
Company has obtained system upgrades from the provider of the information system
software used in its retail operations in order to make it Year 2000 compliant.
Based on documents provided by the developer of the software, the Company
believes the software is Year 2000 compliant. The aforementioned cost estimates
do not include significant costs of existing internal staff who have devoted
significant resources to resolving Year 2000 issues.
In order to identify and remediate Year 2000 issues associated with other
information systems used by the Company, non-information technology systems, and
third party organizations, the Company contracted with a third party consultant
in November 1998 to coordinate the Company's Year 2000 project efforts ("the
Y2K Project"). The Y2K Project scope includes an inventory of non-information
technology automated systems with potential Year 2000 issues, evaluation of
suspect systems, and development of a project plan schedule and budget for
remediation or replacement of non-compliant systems. The Y2K Project includes
identifying any Year 2000 risks associated with key business partners, product
purchasers, materials suppliers, public utility providers, and other
organizations with which the Company has a material relationship. Non-
information technology systems being evaluated include systems using embedded
chip technology (i.e. telecommunications, heating and air conditioning,
manufacturing process control). The Y2K Project includes five phases as follows:
. Phase 1--System level inventory and business risk assessment.
. Phase 2--Detailed inventory and evaluation to identify non-compliant
systems.
. Phase 3--Remediation of non-compliant systems.
. Phase 4--Acceptance testing of remediated systems in a production
environment.
. Phase 5--Implementation of remediated systems in a production environment.
As of April 30, 1999, Phases 1 and 2 have been completed. Phases 3 through 5 are
projected to be completed at various dates through September 30, 1999 and
remediation of identified non-compliant systems has been initiated throughout
Phases 1 and 2. As of April 30, 1999, the Company has not identified or become
aware of any Year 2000 problem specific to its major customers, vendors or
suppliers, municipalities, public utilities, or other service providers which
could have a material effect on Company operations. The Company has incurred
consulting expenses for the Y2K Project management through April 30, 1999 of
approximately $500,000 and expects total costs of the consulting project will be
approximately $1.2 million. The Company has not completed a detailed estimate of
costs to remediate Year 2000 problems identified as a result of the Y2K Project;
however, based on preliminary evaluations, the Company does not expect such
costs to be substantial.
18
<PAGE>
For the U.S. operations, the Company has not developed a likely worst case Year
2000 scenario; however, the Company has begun to develop comprehensive
contingency plans that consider internal systems as well as potential impacts
from third party organizations. The contingency plans are expected to be
substantially completed by July 31, 1999, but will continue to evolve as new
information becomes available.
Europe. The Company's European subsidiary ("Samsonite Europe") generally uses
information technology systems which have been developed internally over many
years. The Company began evaluating and remediating such systems for Year 2000
problems in calendar year 1997 and believes that all necessary modifications
have been completed as of April 30, 1999 and will be implemented and tested by
midyear 1999. Similarly, the Company believes that it has identified all Year
2000 issues pertaining to information technology equipment acquired from third
parties and that the required corrective actions will be implemented and tested
by midyear 1999.
In January 1998, Samsonite Europe formed a Year 2000 compliance task force to
survey and remediate non-information technology systems using embedded chip
technology and to survey customers and suppliers for Year 2000 compliance. As
of May 31, 1999 Samsonite Europe believes that it has identified critical non-
compliance issues with respect to non-information technology systems and has
scheduled remediation through equipment upgrades or replacements by midyear
1999. The Company expects its survey of customers and suppliers inclusive
corrective actions to be completed by the same date.
Through April 30, 1999 Samsonite Europe has incurred incremental costs related
to the Year 2000 issue of approximately $50,000 and estimates that the total
costs will not exceed $100,000. Such cost estimates do not include significant
costs of internal staff who have devoted important resources to resolving Year
2000 issues.
Samsonite Europe is developing a likely worst case scenario and contingency
plans to handle such a scenario for potential Year 2000 problems with its
critical non-information technology systems, critical customers, critical
suppliers and critical service providers. It expects this plan to be completed
by approximately midyear 1999.
Other International Operations. The Company's other operations throughout the
world outside of Europe and the U.S. are generally using recently purchased and
installed information software which the Company currently believes is Year 2000
compliant. The same third party consultants who evaluated Year 2000 issues in
the U.S. are also surveying major systems in Canada and Latin America to
identify areas requiring remediation. The Company expects this evaluation to be
completed by September 30, 1999.
The aforementioned cost data related to costs incurred to acquire and install
software and to identify and remediate other Year 2000 issues does not include
substantial internal costs which have been incurred. Such internal costs are
principally payroll costs for information systems personnel and are not tracked
separately as they relate to Year 2000 issues.
No assurance can be given that the Company can identify all Year 2000 issues
which may have a material adverse effect on Company operations in the U.S.,
Europe, or elsewhere, or that it can correct identified issues before a Year
2000 problem occurs. Additionally, no assurances can be given that the Company's
customers, vendors or suppliers, municipalities, public utilities, or other
third party organizations will not experience Year 2000 issues which may have a
material adverse impact on the Company's operations.
Conversion to the Euro
On January 1, 1999, eleven countries in Europe adopted a common currency, the
"euro" and exchange rates between the currencies of the eleven countries were
fixed against the new euro. The former currencies of those eleven countries will
remain legal tender as denominations of the euro until January 1, 2002 and goods
and services may be paid for using either the euro or the former currency until
that time. Approximately 75% of the Company's European subsidiary's ("Samsonite
Europe") sales are within these eleven countries. The euro conversion has a
significant impact on the
19
<PAGE>
Company's operations in terms of pricing policies, currency risk and exchange,
information systems, and financial reporting. Samsonite Europe has been
addressing euro implementation issues since fiscal 1998 and has formed two
different project teams to address euro issues: one to address competitive and
marketing issues and another to address administrative, financial and computer
systems issues.
The Company believes the adoption of the euro will have a positive effect on
Samsonite Europe's operations. Having a common currency among many of the
countries that Samsonite Europe sells into will reduce the administrative burden
of multiple currencies as well as reduce the costs of hedging and exchanging
currencies and resulting exchange gains and losses. Additionally, if the euro
becomes accepted in the international money markets, Samsonite Europe may also
reduce its currency risk against the U.S. dollar for purchases of goods in the
Far East by using the euro to pay for such purchases rather than the U.S.
dollar, which is currently the primary currency used in international trade. At
present, the euro is under pressure and Samsonite Europe will not seek to use
the euro in international trade unless the euro strengthens against the U.S.
dollar.
Samsonite Europe has adjusted its wholesale pricing to reduce product pricing
differences between countries which have existed historically; however, price
variations between countries will continue to exist at the retail level due to
differences in transportation costs, value added tax rates, and dealer margins
in the various European countries. Because of Samsonite Europe's strong
competitive position throughout the countries participating in the euro
conversion and significant economic barriers to entry, the Company does not
believe that potential increased competition and price transparency as a result
of the euro will have an adverse effect on the Company's sales or results of
operations.
Samsonite Europe currently intends to continue using the Belgian franc as its
functional currency for financial reporting purposes until its fiscal year
beginning January 1, 2001. As of December 31, 1998, Samsonite Europe's
information systems have been modified such that order entry, customer
invoicing, and payment processing can be accomplished in the former currency or
the euro, while converting financial reporting to the functional currency (the
Belgian franc). Additional extensive system modifications are necessary to
convert the functional currency to the euro. The target completion date for such
modifications, which are being accomplished using existing internal staffing, is
December 31, 1999. Most system modifications to date have also been accomplished
using internal staffing with minimal incremental costs incurred to date. The
Company estimates that it has incurred incremental costs through May 31, 1999 of
approximately $40,000 to implement the euro conversion and estimates that it
will spend a total of approximately $100,000 to fully implement its euro
conversion. All costs related to the Euro conversion have been charged to
expense.
Effect of Recently Issued Accounting Standards
In June 1998, the Financial Accounting Standards Board issued Statement No. 133,
Accounting for Derivative Instruments and Hedging Activities ("FAS 133"),
which was originally effective for fiscal quarters beginning after June 15,
1999. The Financial Accounting Standards Board has delayed the effective date
for FAS 133 to fiscal quarters beginning after June 15, 2000. FAS No. 133
requires companies to record derivatives on the balance sheet as assets or
liabilities, measured at fair value. Gains or losses resulting from changes in
the values of those derivatives would be accounted for depending on the use of
the derivative and whether it qualifies under the standard for hedge accounting.
The Company does not anticipate a material impact on its financial condition or
results of operations as a result of implementing this standard.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Market Risk
The Company's primary market risks include changes in foreign currency exchange
rates and interest rates. Market risk is the potential loss arising from
adverse changes in market rates and prices, such as foreign currency exchange
and interest rates. The Company's strategies to address market risks and the
types of financial instruments entered into to hedge market risks have not
changed from those described in the Company's Annual Report on Form 10-K for the
fiscal year ended January 31, 1999.
20
<PAGE>
At April 30, 1999, the Company and its European subsidiary had forward foreign
exchange contracts outstanding having a total contract amount of approximately
$59.2 million compared to approximately $74.0 million at January 31, 1999.
At April 30, 1999, the Company had recorded unrealized gains from forward
foreign exchange contracts to hedge translated earnings of foreign subsidiaries
(primarily the translated earnings of European operations which report earnings
in Belgian francs) and intercompany royalty payments of $3.9 million. The
ultimate realization of such amount is subject to fluctuations in the exchange
rate of the U.S. dollar against the Belgian franc.
If there were a ten percent adverse change in foreign currency exchange rates
relative to all outstanding forward exchange contracts, the loss in earnings
from the amount included in results of operations for the three months ended
April 30, 1999 would be approximately $5.7 million, before the effect of income
taxes. Any hypothetical loss in earnings would be offset by changes in the
underlying value of translated earnings or royalty income, to the extent such
earnings or income is equal to the amount hedged, or for product purchases by
exchange gains.
The amount of fixed rate long-term debt outstanding has not changed materially
from the amount outstanding at January 31, 1999 and continues to be comprised
primarily of the Company's outstanding publicly traded senior subordinated notes
having a face amount of $350.0 million. At January 31, 1999, the quoted market
price of these notes was $80 per $100 of principal; at April 30, 1999, the
quoted market price of these notes was $74 per $100 of principal.
21
<PAGE>
SAMSONITE CORPORATION
PART II - OTHER INFORMATION
- ---------------------------
Item 1 - Legal Proceedings
-----------------
The Company and certain related parties have been the subject of various
purported shareholder class action lawsuits and a purported derivative action
filed between March 13, 1998 and March 9, 1999 in various courts, including
Colorado State District Court, City and County of Denver; United States District
Court for the District of Colorado; and the Delaware Court of Chancery
(together, the "Shareholder Litigation"). In April 1999, the Company entered
into an insurance agreement with a major insurance carrier whereby the carrier
assumed responsibility for the defense and ultimate resolution of the
Shareholder Litigation and any other actions asserted at any time that involve
essentially the same or similar allegations, facts or circumstances as these in
the Shareholder Litigation. In connection with the insurance agreement, the
Company entered into certain agreements and releases and agreed to make a cash
premium payment, net of potential future reimbursements, to the insurer ranging
from an estimated minimum payment of $7.0 million to a maximum payment of $17.5
million depending on the ultimate cost to defend and resolve the pending
litigation. The Company is responsible for paying all legal defense costs prior
to the effective date of the insurance agreement. However, the Company expects
that substantially all costs incurred subsequent to the effective date to defend
and resolve the Shareholder Litigation will be covered by the insurance
agreement. The Company believes that its consolidated statements of operations
for the fiscal year ended January 31, 1999 reflect the accrual of substantially
all costs incurred and expected to be incurred in connection with these
lawsuits.
In addition, the Company is a party to various other legal proceedings and
claims in the ordinary course of business; the Company believes that the outcome
of these other pending matters will not have a material adverse affect on its
consolidated financial position, results of operations or liquidity. Refer to
Note 15 to the consolidated financial statements included in the Company's
Annual Report on Form 10-K for the fiscal year ended January 31, 1999 which
describes other commitments and contingencies.
Item 2 - Changes in Securities
---------------------
In April 1999, the Company issued and sold to Apollo Investment Fund, L.P.
("Apollo") an aggregate of 1,000 shares of non-voting Series Z Convertible
Preferred Stock ("Series Z Preferred Stock") for a total purchase price of
$25,410,000. The sale of the Series Z Preferred Stock was made in reliance on
the exemption from registration contained in Section 4(2) of the Securities Act
of 1933 (the "Securities Act"). The Series Z Preferred Stock is initially
convertible into common stock at a rate of $6 per common share for a total of
4,235,000 shares and is intended to be the economic equivalent of common stock.
It has a nominal liquidation preference, and is entitled to receive dividends
equal to the dividends payable on the shares of common stock into which it is
convertible.
Item 3 - Defaults Upon Senior Securities
-------------------------------
None.
Item 4 - Submission of Matters to a Vote of Security Holders
---------------------------------------------------
None.
Item 5 - Other Information
-----------------
None.
22
<PAGE>
Item 6 - Exhibits and Reports on Form 8-K
--------------------------------
(a) See Exhibit Index.
(b) Reports on Form 8-K.
Report dated April 22, 1999.
Item 5. Other Events
23
<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: Chief Financial Officer, Treasurer
and Secretary
Date: June 14, 1999
---------------
24
<PAGE>
<TABLE>
<CAPTION>
INDEX TO EXHIBITS
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 of New
York./3/
4.2 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/
4.3 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/
4.4 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/
4.5 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/
4.6 Description of the Company's common stock, par value $.01 per share, and the associated preferred
stock purchase rights./5/
4.7 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/
4.8 First Amendment, dated as of April 7, 1999, to Rights Agreement, dated as of May 12, 1998, between Samsonite and
BankBoston, N.A., as Rights Agent.
10.1 Third Amendment to Second Amended and Restated Multicurrency Revolving Credit and Term Loan Agreement, dated as of
March 19, 1999, between the Company, Samsonite Europe N.V. and Bank of American National Trust and Savings
Association, BankBoston, N.A. and various other lending institutions.
10.2 Investment Agreement between Samsonite Corporation and Apollo Investment Fund, L.P., dated as of April 7, 1999.
10.3 Certificate of the Designations, Powers, Preferences and Rights of Series Z Convertible Preferred Stock of Samsonite
Corporation.
10.4 Registration Rights Agreement, dated as of April 7, 1999, between Samsonite and Apollo Investment Fund, L.P.
</TABLE>
25
<PAGE>
Exhibit Description
- ------- -----------
27 Financial Data Schedule.
- ------------------
/1/ Incorporated by reference from the Company's Annual Report on Form 10-K for
the fiscal year ended January 31, 1997 (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 No. 333-61521).
/4/ Incorporated by reference from the Registration Statement on form S-4
(Registration No. 333-61519).
/5/ Incorporated by reference from the Company's Registration Statement on Form
8-A filed June 14, 1994 under the Exchange Act and the Company's
Registration Statement on Form 8-A filed May 13, 1998 under the Exchange
Act (File No. 0-23214).
26
<PAGE>
Exhibit 4.8
FIRST AMENDMENT OF
THE RIGHTS AGREEMENT
This FIRST AMENDMENT OF THE RIGHTS AGREEMENT (the "Agreement") is
entered into as of April 7, 1999, by and between Samsonite Corporation, a
Delaware corporation (the "Company") and BankBoston, N.A., a national banking
association (the "Rights Agent").
BACKGROUND
WHEREAS, the Company and the Rights Agent are parties to the Rights
Agreement, dated as of May 12, 1998 (the "Original Agreement");
WHEREAS, pursuant to Section 26 of the Original Agreement, the parties
hereto have agreed to amend certain provisions of the Original Agreement as
set forth herein;
NOW, THEREFORE, in consideration of the premises and the mutual agreements
contained herein and intending to be legally bound, the parties hereto agree
that the Original Agreement is hereby amended as follows:
SECTION 1. Defined Terms. Capitalized terms used and not defined herein
-------------
shall have the meanings assigned to such terms in the Original Agreement.
SECTION 2. Amendments. The parties hereto hereby consent and agree to
----------
amend the Original Agreement as follows:
(a) Section 1 of the Original Agreement is hereby
amended by deleting paragraph (a) in its entirety and inserting in lieu thereof
the following:
"(a) "Acquiring Person" shall mean any Person who or which, together with
all Affiliates and Associates of such Person shall be the Beneficial Owner of
fifteen percent (15%) or more of the shares of Common Stock then outstanding,
but shall not include (i) the Company, (ii) any Subsidiary of the Company, (iii)
any employee benefit plan of the Company or of any Subsidiary of the Company,
<PAGE>
(iv) any Person or entity organized, appointed or established by the Company
for or pursuant to the terms of any such plan, (v) any Exempted Person or (vi)
any Person, together with such Person's Affiliates and Associates, whose
percentage beneficial ownership of the outstanding shares of Common Stock of the
Company is increased by reason of any repurchase of Common Stock by the Company;
provided that, in the case of clause (vi), such Person, together with such
- --------
Person's Affiliates and Associates, does not, following the public announcement
of any such repurchase, acquire in excess of one percent (1%) of the then
outstanding shares of Common Stock."
(b) Section 1 of the Original Agreement is hereby amended by deleting
paragraph (g) in its entirety and inserting in lieu thereof the following:
"(g) "Exempted Person" shall mean any of the following Persons, so long
as such Person, together with all Affiliates and Associates of such Person,
shall not become the Beneficial Owner of shares of Common Stock then outstanding
in excess of such Person's Applicable Percentage; provided, however, that from
-------- -------
and after such time as any such Person, who or which, together with all
Affiliates and Associates of such Person, shall be the Beneficial Owner of
shares of Common Stock then outstanding in excess of such Person's Applicable
Percentage, such person shall be deemed an "Acquiring Person". For purposes of
the foregoing, with respect to Apollo Advisors, L.P., and its Affiliates and
Associates, including Lion Advisors, L.P. (collectively, "Apollo"), (i) from
and after the execution of the Investment Agreement, dated as of April 7, 1999,
between the Company and Apollo Investment Fund, L.P. (the "Investment
Agreement"), and prior to the Back-stop Closing (as such term is defined in the
Investment Agreement), the term "Applicable Percentage" shall mean two percent
(2%) plus the percentage of the outstanding shares of Common Stock beneficially
owned by Apollo at the time of any calculation to determine whether Apollo is an
Acquiring Person (treating for this purpose the shares to be purchased at the
Back-stop Closing as not beneficially owned by Apollo) and (ii) after the Back-
stop Closing, the term "Applicable Percentage" shall mean two percent (2%) plus
the percentage of the outstanding shares of Common Stock beneficially owned by
Apollo immediately after such closing; provided that, in
--------
2
<PAGE>
the case of clauses (i) and (ii) above, Apollo's Applicable Percentage shall
include those shares of Common Stock beneficially owned by Apollo as of the date
hereof, whether or not such shares are subsequently distributed to any of the
partners of any Affiliates or Associates of Apollo or to Artemis America
Partnership or any of its Affiliates or Associates. For purposes of the
foregoing, with respect to Artemis America Partnership ("Artemis"), the term
"Applicable Percentage" shall mean two percent (2%) plus the quotient obtained
by dividing (A) the number of shares of Common Stock which Artemis or any of its
Affiliates or Associates has the right to acquire, or acquires, at any time or
which otherwise may be distributed to Artemis or to any of its Affiliates or
Associates, in either case by reason of or pursuant to (x) the termination of
the managed account between Artemis and Lion Advisors, L.P. or (y) the terms of
any partnership agreement or other agreement between Artemis or any of its
Affiliates and Associates and Apollo or any of its Affiliates or Associates,
including the agreement, dated as of April 5, 1999, between Artemis America
Partnership and Apollo Investment Fund, L.P., by (B) the number of shares of
Common Stock outstanding at the time of any calculation to determine whether
Artemis is an Acquiring Person.
(c) Section 7(a) of the Original Agreement is hereby amended by deleting
the phrase "May 31, 2000" appearing in the seventh line from the end thereof and
inserting in lieu thereof the phrase "May 31, 2002".
(d) Exhibits B and C of the Original Agreement are hereby amended by
deleting all references to the phrase "May 31, 2000" appearing therein and
inserting in lieu thereof the phrase "May 31, 2002".
Except as otherwise specified above, there is no amendment of any other
term, condition or provision of the Original Agreement all of which are hereby
ratified and confirmed by the Company.
SECTION 3. Counterparts. This Agreement (a) may be executed in two or
------------
more counterparts, each of which shall be deemed an original, but all of which
taken together shall constitute one and the same instrument, (b) shall be
effective only in this specific instance
3
<PAGE>
for the specific purpose set forth herein, and (c) does not allow any other or
further departure from the terms of the Original Agreement, which terms shall
continue in full force and effect. All of such counterparts shall constitute one
and the same agreement and shall become effective when one or more counterparts
have been signed by each party and delivered to the other parties.
SECTION 4. Applicable Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND
--------------
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF DELAWARE WITHOUT GIVING
EFFECT TO THE CHOICE OF LAW PRINCIPLES THEREOF.
<PAGE>
IN WITNESS WHEREOF, this Agreement has been duly executed by each of
the parties hereto as of the date first written above.
SAMSONITE CORPORATION
By: /s/ Steve Armstrong
Name: Steve Armstong
Title: General Counsel
BANKBOSTON, N.A.
By: /s/ Carol Mulvey-Eori
Name: Carol Mulvey-Eori
Title: Administration Manager
<PAGE>
Exhibit 10.1
THIRD AMENDMENT
TO SECOND AMENDED AND RESTATED
MULTICURRENCY REVOLVING CREDIT AND
TERM LOAN AGREEMENT
Third Amendment, dated as of March_22, 1999 (the "Effective Date"), to
Second Amended and Restated Multicurrency Revolving Credit and Term Loan
Agreement (this "Amendment"), by and among (a) SAMSONITE CORPORATION, a Delaware
corporation (the "Company"), (b) SAMSONITE EUROPE N.V., a corporation organized
under the laws of Belgium ("Samsonite Europe") and (c) BANK OF AMERICA NATIONAL
TRUST AND SAVINGS ASSOCIATION, BANKBOSTON, N.A. and the other lending
institutions from time to time listed on Schedule_1 to the Credit Agreement (as
----------
hereinafter defined) (collectively, the "Lenders"), amending certain provisions
of the Second Amended and Restated Multicurrency Revolving Credit and Term Loan
Agreement dated as of June_24, 1998, as amended by the First Amendment thereto,
dated as of October_1, 1998, and the Second Amendment and Waiver thereto, dated
as of January_29, 1999, and as the same may be further amended, modified,
supplemented, and in effect from time to time (the "Credit Agreement"), by and
among the Company, Samsonite Europe, the Lenders, BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION, as administrative agent for the Agents and the Lenders
(the "Administrative Agent"), BANKBOSTON, N.A., as syndication agent for the
Agents and the Lenders (the "Syndication Agent"), GENERALE BANK N.V., as foreign
agent for the Agents and the Lenders (the "Foreign Agent"), and as fronting bank
(the "Fronting Bank"), CANADIAN IMPERIAL BANK OF COMMERCE, as documentation
agent for the Agents and the Lenders (the "Documentation Agent"), and the other
parties thereto. Terms not otherwise defined herein which are defined in the
Credit Agreement shall have the same respective meanings herein as therein.
WHEREAS, the Borrowers and the Lenders have agreed to modify certain terms
and conditions of the Credit Agreement as specifically set forth in this
Amendment;
NOW, THEREFORE, in consideration of the premises and the mutual agreements
contained herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:
(S)1. Amendments to the Credit Agreement.__Subject to the satisfaction
---------- -- --- ------ ---------
of the applicable conditions precedent set forth in Section 3 hereof, the Credit
Agreement is hereby amended as follows:
<PAGE>
2
(S)1.1. Applicable Margin.__(a) Effective as of the Effective Date, the
-----------------
table contained in the definition of Applicable Margin in Section 1.1 of the
Credit Agreement is hereby amended by substituting the following replacement
table for the existing table:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
Eurodollar
Rate Loans Documentary
(other than Letter of
the Domestic Credit Fee
Term Loan), Eurodollar Rate and
Multicurrency Rate Foreign Base Rate Base Rate
Loans, and Loans that Documentary Loans Loans that
Multicurrency are the Letter of (other than are the
Pricing Leverage Swing Line Domestic Credit Fee Domestic Domestic Commitment
Tier Ratio Loans Term Rate Term Term Fee Rate
Loan Loan) Loan
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Tier 5 Greater 3.25% 3.75% 2.25% 2.25% 2.75% 0.625%
than or
equal to
6.50:1.00
- ---------------------------------------------------------------------------------------------------------------------
Tier 4 Less than 3.00% 3.50% 2.00% 2.00% 2.50% 0.625%
6.50:1.00,
but
greater
than or
equal to
5.50:1.00
- ---------------------------------------------------------------------------------------------------------------------
Tier 3 Less than 2.50% 3.00% 1.80% 1.50% 2.00% 0.500%
5.50:1.00,
but
greater
than or
equal to
4.50:1.00
- ---------------------------------------------------------------------------------------------------------------------
Tier 2 Less than 2.00% 2.50% 1.50% 1.00% 1.50% 0.500%
4.50:1.00,
but
greater
than or
equal to
3.50:1.00
- ---------------------------------------------------------------------------------------------------------------------
Tier 1 Less than 1.50% 2.00% 1.00% 0.50% 1.00% 0.500%
3.50:1.00
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
(b) Paragraph (a) of the definition of Applicable Margin is hereby amended
by substituting the phrase "the highest pricing tier" for the phrase "Tier 7" in
such paragraph (a) of such definition.
(c) Paragraph (c) of the definition of Applicable Margin is hereby amended
by substituting the phrase "the highest pricing tier" for the phrase "Tier 7" in
such paragraph (c) of such definition.
<PAGE>
3
(S)1.2. Subordinated Note Purchases.__The definition of Subordinated Note
---------------------------
Purchases (as added by the First Amendment to the Credit Agreement) is hereby
amended by inserting into clause (a) thereof, immediately after the word
"consideration" the phrase "(excluding consideration consisting of common stock
of the Company or rights to acquire such stock)" and immediately after the word
"purchases", the phrase "and for Preferred Stock Purchases, taken together, in
each case" in such clause (a) of such definition, and by inserting into clause
(c) thereof, immediately after the word "consideration" the phrase "(excluding
consideration consisting of common stock of the Company or rights to acquire
such stock)".
(S)1.3. Preferred Stock Purchases.__The following new definitions are
-------------------------
hereby added to Section 1.1 of the Credit Agreement, in the appropriate
respective locations in the alphabetical sequence:
"Preferred Stock Purchases. The purchase by the Company of shares
-------------------------
of 1998 Preferred Stock from the holders thereof, provided that (a) the
-------------
total cumulative amount of the consideration (excluding consideration
consisting of common stock of the Company or rights to acquire such stock)
paid for all such purchases and for Subordinated Note Purchases, taken
together, in each case from after the Closing Date does not exceed, in the
aggregate, the sum of the Available Net Equity Issuance Proceeds, as
determined for each Specified Equity Issuance, on a cumulative basis, (b)
the shares of 1998 Preferred Stock so purchased are promptly cancelled by
the Company, (c) no Default or Event of Default exists and none would exist
after giving effect thereto, and (d) such purchases are in each case
permitted by the 1998 Preferred Stock Documents and Subordinated Debt
Documents."
"Securities Purchases. Collectively, Subordinated Note Purchases
--------------------
and Preferred Stock Purchases."
(S)1.4. Certain EBITDA Calculations.__The third paragraph of the
---------------------------
definition of EBITDA (as added by the First Amendment to the Credit Agreement)
is hereby amended by inserting the phrase "and also as utilized in the
determination of compliance with (S)11.5 and (S)11.6 hereof," immediately after
the phrase "(S)11.1.1 and (S)11.2.1 hereof," in the fourth line of such third
paragraph. Such third paragraph is further amended by inserting the words "and
related legal fees" after the word "liabilities" in the eighth line thereof,
replacing the word "certain" in such eighth line with the word "the", deleting
the phrase "class action" in the ninth line thereof, replacing the phrase "and
the related legal fees, net of and after giving effect to all applicable
insurance coverage" beginning in the ninth line thereof with the phrase ", its
officers, directors and certain of its security holders as referred to in the
last five paragraphs of Schedule 8.7", and by inserting the following phrase
------------
immediately after the word "payments" in the fourteenth line thereof: "(other
than any such cash payments made from Net Equity Issuance Proceeds)". The
following new text is hereby added to such third paragraph, at the end thereof:
<PAGE>
4
"Solely for the purpose of the calculation of EBITDA as utilized in the
determination of the Senior Leverage Ratio and the Interest Coverage Ratio,
and as utilized in the determination of compliance with (S)11.1.1 and
(S)11.2.1 hereof, and also as utilized in the determination of compliance
with (S)11.5 and (S)11.6 hereof, the determination of EBITDA for any
relevant fiscal period shall, without duplication, be made without regard
to (a) applicable restructuring charges (and onetime charges or costs
associated with the relevant restructuring giving rise to the restructuring
charges) relating to Italian operations, of not more than $1,000,000 in the
aggregate that may be incurred during the fiscal year ending January_31,
2000, (b) applicable noncash charges incurred during the fiscal year ending
January_31, 2000 and the fiscal year ending January_31, 2001 relating to
the writedown of inventory, of not more than $5,000,000 in the aggregate,
(c) applicable restructuring charges (and onetime charges or costs
associated with the relevant restructuring giving rise to the restructuring
charges) relating to U.S. Wholesale operations, that may be incurred during
the fiscal year ending January 31, 2000, provided that any amounts of such
-------------
applicable U.S. Wholesale restructuring charges to be so excluded under
this clause which consists of cash charges shall not exceed $1,750,000 in
the aggregate, and (d) the costs and expenses of the consultant/advisor
referred to in (S)9.26 hereof."
(S)1.5. Certain Interest Expense Calculations.__The definition of
-------------------------------------
Consolidated Total Interest Expense contained in Section 1.1 of the Credit
Agreement is hereby amended by adding the following new text at the end of such
definition:
"The calculation of Consolidated Total Interest Expense shall exclude the
"amendment fees" provided for in the Third Amendment to this Credit
Agreement."
(S)1.6. Revolving Credit Facility.__(a) Section 2.4 of the Credit
-------------------------
Agreement is hereby amended by adding the following new subsection 2.4.3 at the
end of Section 2.4:
"2.4.3. Required Reduction of Total Revolving Commitment.__In the
------------------------------------------------
event that, as of December 31, 1999, there shall not have occurred
Specified Equity Issuances generating a total of at least $37,500,000 of
Net Equity Issuance Proceeds (as determined on a cumulative, aggregate
basis, and, for this purpose only, disregarding transaction expenses that
would otherwise be deducted in computing Net Equity Issuance Proceeds),
then on such date the Total Revolving Commitment shall be automatically and
permanently reduced by the Pro Rata Reduction Percentage (as determined for
the Total Revolving Commitment) of the amount of $10,000,000, whereupon the
Revolving Commitments of the Lenders shall be reduced pro rata in
--------
accordance with their respective Revolving Commitment Percentages of the
applicable amount of such required reduction."
<PAGE>
5
(b) Section 4.4 of the Credit Agreement is hereby amended by adding the
following new subsection 4.4.3 at the end of Section 4.4:
"4.4.3. Required Reduction of Total Revolving Multicurrency
---------------------------------------------------
Commitment.__In the event that, as of December 31, 1999, there shall not
----------
have occurred Specified Equity Issuances generating a total of at least
$37,500,000 of Net Equity Issuance Proceeds (as determined on a cumulative,
aggregate basis and, for this purpose only, disregarding transaction
expenses that would otherwise be deducted in computing Net Equity Issuance
Proceeds), then on such date the Total Revolving Multicurrency Commitment
shall be automatically and permanently reduced by the Pro Rata Reduction
Percentage (as determined for the Total Revolving Multicurrency Commitment)
of the amount of $10,000,000, whereupon the Revolving Multicurrency
Commitments of the Lenders shall be reduced pro rata in accordance with
--------
their respective Revolving Multicurrency Commitment Percentages of the
applicable amount of such required reduction."
(S)1.7. Investments in Securities Purchases.__Clause (y) of Section 10.3
-----------------------------------
of the Credit Agreement is hereby amended by substituting the phrase "Securities
Purchases" for the phrase "Subordinated Note Purchases" (which phrase was added
thereto by the First Amendment to the Credit Agreement).
(S)1.8. Distributions.__(a) Section 10.4 of the Credit Agreement is
-------------
hereby amended by deleting the word "and" from the end of clause (f) thereof and
adding the following new clause (h) immediately after clause (g) thereof, before
the period at the end of the first paragraph of Section 10.4:
", and (h) Preferred Stock Purchases by the Company (as provided in the
definition of such term)"
(b) The phrase "clauses (f) and (g)" appearing in the second paragraph of
Section 10.4 is hereby deleted and replaced by the phrase "clauses (f), (g) and
(h)" which shall be inserted in place of such deleted phrase.
(S)1.9. Regarding Preferred Stock.__Section 10.22 of the Credit Agreement
-------------------------
is hereby amended by deleting the word "The" from the beginning of the text of
Section 10.22 and inserting in its place the phrase "Except for Preferred Stock
Purchases made pursuant to the provisions of (S)10.4(h) hereof, the" at the
beginning of the text of Section 10.22. Section 14.1(j) of the Credit Agreement
is hereby amended by inserting the phrase "and other Securities Purchases
otherwise expressly permitted pursuant to the provisions" immediately before the
word "hereof" in line 7 of Section 14.1(j).
(S)1.10. Restriction on Investments.__Section 10.3(h) of the Credit
--------------------------
Agreement is hereby amended by substituting the figure "$3,500,000" for the
figure "$5,000,000" where such figure appears in the text added to Section
10.3(h) of the Credit Agreement by the First Amendment thereto.
<PAGE>
6
(S)1.11. Cash Holding Limitation.__Section 11.4 of the Credit
-----------------------
Agreement (as added by the First Amendment thereto) is hereby amended by
deleting the phrase "$50,000,000" and inserting the phrase "the Applicable Cash
Holding Amount" in place of the deleted language. The following additional text
is hereby added at the end of Section 11.4:
"The Applicable Cash Holding Amount shall be determined as follows: (a) until
such time as the Company shall have fully resolved the outstanding residual
claim relating to the obligation to pay or otherwise fund any interest on
overdue interest accruing prior to the Reorganization relating to certain
preReorganization debt securities of EII Holdings (the "Resolution of the
InterestonInterest Claim"), the Applicable Cash Holding Amount shall be
$50,000,000; or (b) at all times from and after the time of the Resolution of
the InterestonInterest Claim, the Applicable Cash Holding Amount shall be
$40,000,000. The Company shall notify the Administrative Agent immediately in
writing, in reasonable detail, of the Resolution of the InterestonInterest
Claim and the amount and terms thereof, upon the occurrence thereof."
(S)1.12. Reporting Requirements.__Section 9.4 of the Credit Agreement
----------------------
is hereby amended by substituting a semicolon for the period at the end of
paragraph (l) thereof (as added by the First Amendment to the Credit Agreement)
and adding the following additional provisions to Section 9.4 after paragraph
(l) thereof:
"(m) as soon as practicable, but in any event not later than
thirty (30) days (or forty-five (45) days in the case of clause (i) below)
after the end of each month of each fiscal year of the Company (except for
months contained in any fiscal quarter immediately following a fiscal
quarter at the end of which the Leverage Ratio was less than 5.00 to 1.00)
the following, each in reasonable detail: (i) a consolidated cash flow
forecast for the following three (3) months, on a monthbymonth basis; (ii)
a breakdown of U.S. Wholesale sales by product line and distribution
channel for the month then ended; (iii) a summary aging report of accounts
receivable of the U.S. Wholesale Business; (iv) a progress report on the
workthrough of discontinued and obsolete inventory of the U.S. Wholesale
Business; and (v) a copy of the monthly internal management letter and
report, to include (without limitation) a discussion of the financial
results of the month then ended and a comparison to the Company's prior
forecast and plan with respect to such month then ended."
(S)1.13. Disposition of Assets.__Section 10.5.2(c)(v) of the Credit
---------------------
Agreement is hereby amended by deleting the phrase "$10,000,000" and inserting
in its place the phrase "the Applicable Retention Amount". The following new
text shall be added to Section 10.5.2(c)(v) immediately after the semicolon at
the end thereof:
<PAGE>
7
"the Applicable Retention Amount referred to above shall be (I) $5,000,000
(exclusive of Net Asset Sale Proceeds from Asset Sales of the Canadian
molding business) plus the Net Asset Sale Proceeds from such Asset Sales of
----
the Canadian molding business (but such resulting sum shall not be greater
than a total of $10,000,000, in any event), at all times through the end of
the second of two consecutive fiscal quarters at the end of both of which
-------------
fiscal quarters the Leverage Ratio was less than 5.00 to 1.00, and (II) at
all times thereafter, $10,000,000;"
(S)1.14. Capital Expenditures.__Section 11.3 of the Credit Agreement
--------------------
is hereby amended by substituting the figure "$30,000,000" for the figure
"$35,000,000" in each location where such figure appears in Section 11.3, and by
adding the following additional text to Section 11.3 at the end thereof:
"Notwithstanding the foregoing, however, the Capital Expenditures of the
Borrowers and all NonExcluded Subsidiaries in the aggregate for any fiscal
year shall not in any event exceed $25,000,000 (with no increase in such
------------
maximum amount from the carryover of Unspent Amounts) unless and until
there shall have also occurred (on or prior to the end of such fiscal year)
the completion of two consecutive fiscal quarters (whether or not either or
both were contained in such fiscal year) at the end of both of which fiscal
-------------
quarters the Leverage Ratio was less than 5.00 to 1.00 (after which
completion, such $25,000,000 limitation shall no longer apply)."
(S)1.15. Certain Consultant Arrangements and Examinations. Section
------------------------------------------------
9.26 of the Credit Agreement is hereby amended by adding the following text at
the end thereof (after the text added thereto by the First Amendment to the
Credit Agreement):
"Upon the periodic request of any of the Agents made from time to
time, at reasonable intervals as determined by the Agents, the Company
shall cause (or permit) to be carried out such further examinations of
accounts receivable and inventory as shall be so requested, with the
examinations to be done by examiners chosen by the Agents. The Company
shall provide the examiners with access to the relevant information and
otherwise cooperate with such examinations, and shall pay the reasonable
costs and expenses of such examinations.
The Company shall keep the Agents informed on a timely basis and
in reasonable detail with respect to the status and results of the
implementation of the Company's proposed restructuring of its U.S.
Wholesale Business. Upon the request of any of the Agents (based upon such
information as is provided to the Agents pursuant to the foregoing status
reports and such other factors, events, circumstances, and data as they
reasonably deem relevant) made to the Company at any time during the
sixmonth period commencing on August_31, 1999, the Company shall be
required, on a prompt and expeditious basis (and in any event within thirty
(30) days after such request by any of the Agents), to select (subject
<PAGE>
8
to approval by the Agents) and engage a consulting firm and/or other
appropriate advisor(s) to evaluate, and to make recommendations for
improving, the sales, marketing, and financial performance of the Company's
U.S. Wholesale Business. Such applicable selected consultant/advisor will
be retained by, and work directly with, the Company; and the Company shall
cause such applicable consultant/advisor (A) to be available to the Agents
for periodic status reports from time to time, (B) to keep the Agents
informed on a timely basis and in reasonable detail with respect to such
evaluation, and (C) to prepare a report summarizing the findings of such
evaluation and any relevant recommendations, with such report to be
completed and delivered to the Company, the Agents, and the Lenders within
ninety (90) days after the engagement of the consultant/advisor (and, in
any event, not later than one hundred twenty (120) days after such request
by any of the Agents is initially made to the Company). The Company shall
provide the consultant/advisor with access to the relevant information and
otherwise cooperate with such evaluation, and shall pay the reasonable
costs and expenses thereof."
(S)1.16. Regarding Acquisitions.__Section 10.5.1 of the Credit
----------------------
Agreement is hereby amended by adding the following text at the end of Section
10.5.1:
"Notwithstanding the foregoing, unless and until there shall have
previously occurred the completion of two consecutive fiscal quarters at
the end of both of which fiscal quarters the Leverage Ratio was less than
-------------
5.00 to 1.00, no acquisition otherwise permitted under either (S)10.5.1(c)
or (S)10.5.1(f) which involves any cash Investments or other monetary
purchase consideration (including for this purpose, without limitation,
cash purchase price payments, deferred cash purchase price obligations, any
applicable Indebtedness to be acquired or assumed from the business
proposed to be acquired, and any applicable Indebtedness of any Person to
be acquired as an entity (all of the foregoing several categories of
applicable Indebtedness being referred to as "Acquired Indebtedness"))
shall be permitted to be carried out, provided, however, the foregoing
--------
prohibition shall not apply if the Leverage Ratio at the most recent fiscal
quarter end date immediately preceding the proposed transaction would have
been less than 5.00 to 1.00, on a pro forma basis, had such proposed
---------
transaction been completed as of such fiscal quarter end date; and
provided, further, however, if the foregoing prohibition would otherwise
-------- ------- -------
apply to a proposed acquisition solely by reason of the fact that such
acquisition would involve Acquired Indebtedness, then (notwithstanding the
foregoing) such prohibition shall not apply to such acquisition so long as
the aggregate amount of Acquired Indebtedness with respect to all such
excluded acquisitions shall not exceed $2,000,000 in the aggregate at any
one time outstanding. Further, notwithstanding the provisions of (S)10.1
hereof, any and all Indebtedness (other than Acquired Indebtedness)
incurred or proposed to be incurred in connection with, or
<PAGE>
9
for the purpose of, any acquisition effected under (S)10.5.1(c) or
(S)10.5.1(f) (whether such Indebtedness is incurred pursuant to (S)10.1(k),
(S)10.1(l), or otherwise) in circumstances where there shall not have
previously occurred the completion of two consecutive fiscal quarters at
the end of both of which fiscal quarters the Leverage Ratio was less than
-------------
5.00 to 1.00, must be subordinated to the Obligations in a manner no less
favorable to the Lenders than the subordination provisions set forth in the
Subordinated Indenture, and in such case the terms and conditions of all
such Indebtedness shall be subject to the prior written approval of the
Agents with respect thereto; provided that the requirements of this
--------
sentence shall not apply in the case of an acquisition effected pursuant to
the first proviso clause of the immediately preceding sentence."
-------
(S)1.17. Certain Adjustments.__Notwithstanding any provisions of the
-------------------
First Amendment to the Credit Agreement with respect thereto, no EBITDA Credit
shall be available or applicable for any purposes under the Credit Agreement.
(S)1.18. Senior Leverage Ratio Definition.__The definition of Senior
--------------------------------
Leverage Ratio in Section 1.1 of the Credit Agreement is hereby amended by
inserting the following new phrase into clause (b) of such definition,
immediately before the period at the end of such definition:
"(or, if such date of determination is not a fiscal quarter, for the
Reference Period then most recently ended)"
(S)1.19. Senior Leverage Ratio Covenant in (S)11.1.1.__Sections
-------------------------------------------
11.1.1(c) and (d) of the Credit Agreement are hereby deleted and replaced by the
following Sections 11.1.1(c), (d), and (e):
"(c) As of February_1, 1999, and at all times thereafter through
April 30, 1999, the Borrowers will not permit the ratio of (i) Total Funded
Indebtedness of the Company and its NonExcluded Subsidiaries outstanding on
the date of determination minus Subordinated Debt outstanding on the date
of determination to (ii) EBITDA of the Company and its NonExcluded
Subsidiaries for the period of two (2) consecutive fiscal quarters ending
on January_31, 1999, treated as a single accounting period, multiplied by
-------------
two (2), to be greater than 2.95:1.00.
(d) As of May_1, 1999, and at all times thereafter through July_31,
1999, the Borrowers will not permit the ratio of (i) Total Funded
Indebtedness of the Company and its NonExcluded Subsidiaries outstanding on
the date of determination minus Subordinated Debt outstanding on the date
-----
of determination to (ii) EBITDA of the Company and its NonExcluded
Subsidiaries for the period of three (3) consecutive fiscal quarters ending
on April_30, 1999, treated as a single accounting period, multiplied by a
-------------
fraction whose numerator is four (4) and whose denominator is three (3), to
be greater than 2.85:1.00.
<PAGE>
10
(e) As of August_1, 1999, and at all times thereafter through
October_31, 1999, the Borrowers will not permit the ratio of (i) Total
Funded Indebtedness of the Company and its NonExcluded Subsidiaries
outstanding on the date of determination minus Subordinated Debt
-----
outstanding on the date of determination to (ii) EBITDA of the Company and
its NonExcluded Subsidiaries for the period of four (4) consecutive fiscal
quarters ending on July_31, 1999, treated as a single accounting period, to
be greater than 2.85:1.00."
(S)1.20. Senior Leverage Ratio Covenant in (S)11.1.2.__The text of
Section 11.1.2 of the Credit Agreement is hereby amended to read as follows:
"The Borrowers will not permit the Senior Leverage Ratio as determined on
any date of determination during any period of time described in the table
below to be greater than the ratio set forth below in such table opposite
the period of time containing such date of determination:
<TABLE>
<CAPTION>
Time Period in Which Date of Maximum Ratio
Determination Occurs Permitted
-------------------- ---------
<S> <C>
November_1, 1999 January 31, 2000 2.60 to 1.00
February_1, 2000 and thereafter 2.50 to 1.00"
</TABLE>
(S)1.21. Interest Coverage Ratio Covenant in (S)11.2.1.__Section
---------------------------------------------
11.2.1(c) of the Credit Agreement is hereby amended by deleting the phrase
"1.55:1.00" and replacing it with "1.20:1.00". Section 11.2.1(d) of the Credit
Agreement is hereby amended by deleting the phrase "1.55:1.00" and replacing it
with "1.20:1.00". The following new paragraph (e) is hereby added to Section
11.2.1 immediately after paragraph (d) thereof:
"(e) For purposes of this (S)11.2.1, computations of
Consolidated Total Interest Expense shall be made as provided in the
definition of such term and in the applicable provisions of the definition
of Interest Coverage Ratio relating to the computation of Consolidated
Total Interest Expense hereunder."
(S)1.22. Interest Coverage Ratio Covenant in (S)11.2.2.__(a) The
---------------------------------------------
definition of Interest Coverage Ratio in Section 1.1 of the Credit Agreement is
hereby amended by inserting the following phrase at the end of clause (ii) of
the final sentence of such definition, immediately before the period at the end
of such definition:
"(other than Distributions consisting of Preferred Stock Purchases made
pursuant to the provisions of (S)10.4(h) hereof)"
<PAGE>
11
(b) Section 11.2.2 of the Credit Agreement is hereby amended by deleting
the table from Section 11.2.2 and replacing it with the following amended table:
<TABLE>
<CAPTION>
"Period Minimum Ratio
-------- -------------
<S> <C>
October 31, 1999 January 30, 2000 1.10:1.00
January 31, 2000 April 29, 2000 1.25:1.00
April 30, 2000 July 30, 2000 1.35:1.00
July 31, 2000 October 30, 2000 1.40:1.00
October 31, 2000 January 30, 2001 1.50:1.00
January 31, 2001 April 29, 2001 1.60:1.00
April 30, 2001 and thereafter 2.50:1.00"
</TABLE>
(S)1.23. Consolidated EBITDA.__Section 11 of the Credit Agreement is
-------------------
hereby amended by adding the following new Section 11.5 after Section 11.4
thereof (as added by the First Amendment to the Credit Agreement):
"11.5. Consolidated YeartoDate Cumulative EBITDA.__As of any fiscal
quarter end date set forth in the table below, EBITDA determined on a
consolidated, cumulative basis for the portion of the then applicable
fiscal year (containing such fiscal quarter) then elapsed (from the
beginning of such fiscal year through such fiscal quarter end date),
treated as a single accounting period, shall not be less than the figure
set forth in the table below opposite such fiscal quarter end date:
<TABLE>
<CAPTION>
Minimum Cumulative
Fiscal Quarter End Date Consolidated EBITDA
-------------------------- -------------------
<S> <C>
April 30, 1999 $ 12,000,000
July 31, 1999 $ 26,000,000
October 31, 1999 $ 47,000,000
January 31, 2000 $ 70,000,000
April 30, 2000 $ 15,000,000
July 31, 2000 $ 12,000,000
October 31, 2000 $ 57,000,000
January 31, 2001 $ 83,000,000"
</TABLE>
(S)1.24. U.S. Wholesale Business EBITDA.__(a) The following new definitions
------------------------------
are hereby added to Section 1.1 of the Credit Agreement, in the appropriate
respective locations in the alphabetical sequence:
<PAGE>
12
"U.S. Wholesale Business. The Company's U.S. Wholesale business as
-----------------------
identified in the books and records of the Company consistent with past
accounting practices and policies."
"U.S. Wholesale Business EBITDA. For any fiscal period, EBITDA as
------------------------------
determined for this purpose for such period with respect only to the Company's
U.S. Wholesale Business, taken separately without regard to (and excluding) any
other portion of the consolidated business of the Company and its NonExcluded
Subsidiaries, calculated in accordance with generally accepted accounting
principles and in accordance with the Company's past accounting policies and
practices for making calculations of the U.S. Wholesale Business EBITDA (as such
existing accounting policies and practices for making such calculations are in
effect on the effective date of the Third Amendment to this Credit Agreement and
as previously described to the Agents by the Company prior to such effective
date)."
(b) Section 11 of the Credit Agreement is hereby amended by adding the
following new Section 11.6 after Section 11.5 thereof (as added by this
Amendment):
"11.6. U.S. Wholesale Business YeartoDate Cumulative EBITDA.__As of any
----------------------------------------------------
fiscal quarter end date set forth in the table below, the U.S. Wholesale
Business EBITDA determined on a cumulative basis for the portion of the then
applicable fiscal year (containing such fiscal quarter) then elapsed (from the
beginning of such fiscal year through such fiscal quarter end date), treated as
a single accounting period, shall not be less than the figure set forth in the
table below opposite such fiscal quarter end date (with any applicable figures
set forth in parentheses in such table representing negative numbers):
<TABLE>
<CAPTION>
Minimum Cumulative U.S.
Fiscal Quarter End Date Wholesale Business EBITDA
-------------------------- -------------------------
<S> <C>
April 30, 1999 ($1,780,000)
July 31, 1999 ($5,200,000)
October 31, 1999 ($4,150,000)
January 31, 2000 ($3,940,000)
April 30, 2000 ($330,000)
July 31, 2000 ($2,400,000)
October 31, 2000 $130,000
January 31, 2001 $1,765,000"
</TABLE>
(S)1.25. Certain Definitions.__(a) The definition of Pro Rata
-------------------
Reduction Percentage in Section 1.1 of the Credit Agreement is hereby amended by
<PAGE>
13
deleting the phrase "in (S)3.3.3", from the first line thereof and inserting in
its place the phrase "in this Credit Agreement" in such first line of such
definition.
(b) The definition of Total Revolving Multicurrency Commitment in Section
1.1 of the Credit Agreement is hereby amended by deleting the phrase "to
(S)4.4.3" from the third line thereof and inserting in its place the phrase "to
(S)4.4.2" in such third line of such definition.
(S)1.26. Litigation Schedule.__The text of Schedule_8.7 to the Credit
------------------- ------------
Agreement is hereby amended by adding thereto the additional paragraphs of text
set forth on Schedule_8.7A attached to this Amendment.
-------------
(S)1.27. Change in Circumstances.__(a) Section 8.4.2 of the Credit
-----------------------
Agreement is hereby amended by deleting the second sentence from such Section
8.4.2.
(b) Section 8.5 of the Credit Agreement is hereby amended by
adding the following phrase at the end of the first sentence immediately before
the period:
"and except for such matters as have in each case been disclosed in writing by
the Company to the Lenders and the Agents prior to the effective date of the
Third Amendment to this Credit Agreement"
(S)2. Certain Amendments Relating to Proceeds of Equity
-------------------------------------------------
Issuances.__Subject to the satisfaction of the applicable conditions precedent
set forth in Section 3 hereof, the Credit Agreement is hereby further amended as
follows:
(S)2.1. Certain Definitions.__(a) The definition of Required Prepayment
------- -----------
Amount of Net Equity Issuance Proceeds is hereby amended to read as follows:
"Required Prepayment Amount of Net Equity Issuance Proceeds. With
----------------------------------------------------------
respect to Specified Equity Issuances, means (a) as applied to the first
$75,000,000 of the Net Equity Issuance Proceeds of such Specified Equity
Issuances, a portion thereof equal to the lesser of (i) 40% of such first
$75,000,000 of Net Equity Issuance Proceeds of Specified Equity Issuances
and (ii) the amount (if any) of such first $75,000,000 of Net Equity
Issuance Proceeds of Specified Equity Issuances remaining after reducing
such first $75,000,000 of Net Equity Issuance Proceeds by the applicable
amount of such first $75,000,000 of Net Equity Issuance Proceeds actually
used within ninety (90) days following the time of receipt thereof to
resolve Specified Litigation Obligations; provided, however, that the
-------- -------
temporary reservation by the Company of amounts of such Net Equity Issuance
Proceeds for application to the resolution of Specified Litigation
Obligations during such ninety (90) day period following receipt thereof
shall be permissible for purposes of this clause (ii) but only for so long
--------
as the Company reasonably believes that such a
<PAGE>
14
resolution actually will occur in such period and only to the extent of
the amounts thereof the Company reasonably believes will actually be so
utilized for such resolution in such period, it being understood that, in
any event, any such amounts so reserved but not actually so utilized
during such period or no longer eligible to be so reserved shall then
(after such period, or, if earlier, such earlier time as such amounts are
not eligible to be so reserved) be deemed to constitute Net Equity
Issuance Proceeds of Specified Equity Issuances remaining on hand under
this clause (ii); and (b) as applied to the Net Equity Issuance Proceeds
of Specified Equity Issuances in excess of the first $75,000,000 thereof,
50% thereof."
(b) The following new definition is hereby added to Section 1.1 of the
Credit Agreement, in the appropriate location in the alphabetical sequence:
"Specified Litigation Obligations. See the definition of such term as it
--------------------------------
appears in the definition of EBITDA contained herein."
(c) The definition of Available Net Equity Issuance Proceeds is hereby
amended to read as follows:
"Available Net Equity Issuance Proceeds. With respect to Specified Equity
--------------------------------------
Issuances, means (a) as applied to the first $75,000,000 of Net Equity
Issuance Proceeds of Specified Equity Issuances, the portion (if any)
thereof which neither constitutes Required Prepayment Amounts of Net
Equity Issuance Proceeds under clause (a) of the definition of such term
nor is used to resolve Specified Litigation Obligations; and (b) as
applied to the Net Equity Issuance Proceeds of Specified Equity Issuances
in excess of the first $75,000,000 thereof, 50% thereof."
(d) The definition of Net Equity Issuance Proceeds is hereby amended by
adding the following phrase at the end of such definition, immediately before
the period:
"; provided that insurance proceeds which represent a reimbursement to the
--------
Company of amounts previously paid by the Company in respect of Specified
Litigation Obligations from Net Equity Issuance Proceeds shall be deemed
to be Net Equity Issuance Proceeds for all purposes"
(e) The definition of Specified Equity Issuance is hereby amended to read as
follows:
"Specified Equity Issuance. Each Equity Issuance generating positive Net
-------------------------
Equity Issuance Proceeds (in a single transaction or in a series of
related transactions), other than any such Equity Issuance consisting of
the exercise of stock options granted to employees and directors or the
exercise of warrants issued prior to January_31, 1999
<PAGE>
15
generating (in the case of any such Equity Issuance) Net Equity Issuance
Proceeds not exceeding $2,500,000 (as determined with respect to a single
transaction or a series of related transactions)."
(S)2.2. Related Reporting Provisions.__Section 3.3.3(e) of the Credit
----------------------------
Agreement is hereby amended by adding the following new text at the end thereof:
"Concurrently with each Specified Equity Issuance, the Company shall
deliver to the Administrative Agent written notice thereof showing the
calculation, in reasonable detail, of the Net Equity Issuance Proceeds, the
Available Net Equity Issuance Proceeds (and the proposed and actual
utilization thereof), and the Required Prepayment Amount of Net Equity
Issuance Proceeds, in each case after giving effect to such Specified
Equity Issuance, all to be certified by the Company in such notice."
(S)3. Conditions to Effectiveness.__This Amendment shall be deemed to be,
---------------------------
and shall become, effective as of the Effective Date referred to above, in the
manner, and to the extent, provided below, subject to the satisfaction of the
following applicable conditions precedent on or prior to such date:
(a) The effectiveness of all provisions of this Amendment except for
----------
Section 2 hereof (all such provisions, excluding Section 2 hereof, being
referred to as the "Majority Lender Approval Provisions") shall be subject to
the receipt, on or prior to the Effective Date, by the Administrative Agent of
(i) one or more counterparts of this Amendment duly executed and delivered by
the Company, Samsonite Europe, and the Majority Lenders, and (ii) the applicable
amendment fees provided for in paragraph (c) below, for the respective accounts
of the applicable Lenders signatory hereto entitled thereto, in immediately
available funds;
(b) The effectiveness of Section 2 hereof (the "Special Approval
Provisions") shall be subject to the receipt, on or prior to the Effective Date,
by the Administrative Agent of (i) one or more counterparts of this Amendment
duly executed by the Company, Samsonite Europe, the Majority Lenders, the
Majority Domestic Term Loan Lenders, the Majority Foreign Term Loan Lenders, and
the Majority Revolving Lenders, and (ii) the applicable amendment fees provided
for in paragraph (c) below, for the respective accounts of the applicable
Lenders signatory hereto entitled thereto, in immediately available funds;
(c) The Company shall have paid (and the Company hereby covenants and
agrees to pay, subject to and simultaneously with the effectiveness of the
applicable provisions of this Amendment) to the Administrative Agent on the
Effective Date, for the respective accounts of those Lenders that, as of the
Effective Date, have duly executed and delivered counterparts of this Amendment
to the Administrative Agent, an amendment fee (the "Amendment Fee") in
immediately available funds, which shall be equal to the Applicable Fee
<PAGE>
16
Percentage (as defined below) of the sum of (i) such Lender's Domestic Term Loan
Commitment Percentage of the then outstanding principal amount of the Domestic
Term Loan and such Lender's Foreign Term Loan Commitment Percentage of the then
outstanding principal amount (expressed as a Dollar Equivalent amount) of the
Foreign Term Loan, in each case if applicable, and (ii) the aggregate amount of
such Lender's Commitments, if applicable. For purposes of determining the
Amendment Fee, the Applicable Fee Percentage shall be (x) 25 basis points
(0.25%) in the event that, as of the Effective Date, the Administrative Agent
shall have received counterparts of this Amendment duly executed and delivered
by the Borrowers and the Majority Lenders, as contemplated by clause (i) of
paragraph (a) of this Section 3 (but not by all those additional Lenders
required by clause (i) of paragraph (b) of this Section 3), or, alternatively,
(y) 35 basis points (0.35%) in the event that, as of the Effective Date, the
Administrative Agent shall have received counterparts of this Amendment duly
executed and delivered by the Borrowers and all those Lenders required by clause
(i) of paragraph (b) of this Section 3.
(S)4. Representations and Warranties.__Each of the Company and
------------------------------
Samsonite Europe hereby repeats, on and as of the date of the execution and
delivery hereof and the Effective Date, each of the representations and
warranties made by it in Section 8 of the Credit Agreement after giving effect
to this Amendment (except to the extent of changes resulting from transactions
contemplated or permitted by the Credit Agreement and the other Loan Documents,
changes occurring in the ordinary course of business that singly or in the
aggregate are not materially adverse, and to the extent that such
representations and warranties relate expressly to an earlier date), provided,
--------
that all references therein to the Credit Agreement shall refer to such Credit
Agreement as amended hereby. In addition, each of the Company and Samsonite
Europe hereby represents and warrants that the execution and delivery by such
Borrower of this Amendment and the performance by such Borrower of all of its
respective agreements and obligations under this Amendment and the Credit
Agreement as amended hereby are within the corporate power and authority of such
Borrower, and have been duly authorized by all necessary corporate action on the
part of such Borrower, and each further represents and warrants that the
execution and delivery by such Borrower, of this Amendment and the performance
by it of the transactions contemplated hereby (including, without limitation,
any Securities Purchases) will not contravene any term or condition set forth in
any agreement or instrument to which it is a party or by which it is bound,
including, in the case of the Company, but not limited to, the Subordinated Debt
Documents and the 1998 Preferred Stock Documents.
(S)5. Ratification, Etc.__Except as expressly provided for herein, the
------------ ---
Credit Agreement and all documents, instruments and agreements related thereto,
including, but not limited to, the Security Documents, are hereby ratified and
confirmed in all respects and shall continue in full force and effect. The
Credit Agreement and this Amendment shall be read and construed as a single
agreement. This Amendment shall constitute one of the Loan Documents,
<PAGE>
17
and the obligations of the Borrowers under this Amendment shall constitute
Obligations for all purposes of the Loan Documents. All references in the
Credit Agreement, the Loan Documents or any related agreement or instrument to
the Credit Agreement shall hereafter refer to the Credit Agreement as amended
hereby.
(S)6. No Waiver.__Nothing contained herein shall constitute a waiver
---------
of, impair or otherwise adversely affect any Obligations, any other obligation
of the Company or Samsonite Europe or any rights of the Agents or the Lenders
consequent thereon.
(S)7. Counterparts.__This Amendment may be executed in one or more
------------
counterparts, each of which shall be deemed an original but which together shall
constitute one and the same instrument.
(S)8. Governing Law.__THIS AMENDMENT SHALL BE GOVERNED BY, AND
-------------
CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK,
APPLICABLE TO TRANSACTIONS TO BE PERFORMED WHOLLY WITHIN SUCH STATE (WITHOUT
REFERENCE TO CONFLICT OF LAWS).
IN WITNESS WHEREOF, the parties hereto have executed this Amendment under
seal by their respective officers thereunto duly authorized.
[Signature Pages Follow]
<PAGE>
18
Signature Pages for Borrowers
--------- ----- --- ---------
Each of the undersigned Borrowers hereby consents and agrees to all of the
provisions of the foregoing Amendment:
The Company:SAMSONITE CORPORATION
-----------
By: /s/ Richard H. Wiley .......................
Name: Richard H. Wiley..........................
Title: Chief Financial Officer..................
Samsonite Europe:SAMSONITE EUROPE N.V.
----------------
By: /s/ Luc Van Nevel...........................
Name: Luc Van Nevel.............................
Title: Managing Director........................
<PAGE>
19
Signature Pages for Lenders
---------------------------
The undersigned Lender hereby consents and agrees to all of the provisions
of the foregoing Amendment:
BANK OF AMERICA NATIONAL
TRUST AND SAVINGS ASSOCIATION
By: /s/ Peter D. Griffith......................
Name: Peter D. Griffith........................
Title: Senior Vice President...................
<PAGE>
20
Signature Pages for Lenders
---------------------------
The undersigned Lender hereby consents and agrees to all of the provisions
of the foregoing Amendment:
BANKBOSTON, N.A.
By: /s/ Gretchen Troiano......................
Name: Gretchen Troiano........................
Title: Vice President.........................
<PAGE>
21
Signature Pages for Lenders
---------------------------
The undersigned Lender hereby consents and agrees to all of the provisions
of the foregoing Amendment:
CIBC INC.
By: /s/ Gerald Girardi.........................
Name: Gerald Girardi...........................
Title: Executive Director......................
CIBC Oppenheimer Corp., AS AGENT
<PAGE>
22
Signature Pages for Lenders
---------------------------
The undersigned Lender hereby consents and agrees to all of the provisions
of the foregoing Amendment:
GENERALE BANK N.V.
By: /s/ E. Matthews /s/ David Snyder.....
Name: E. Matthews David Snyder.....
Title: Senior Vice President Senior Vice President
By: ........................................
Name:.......................................
Title:......................................
<PAGE>
23
Signature Pages for Lenders
---------------------------
The undersigned Lender hereby consents and agrees to all of the provisions
of the foregoing Amendment:
THE BANK OF NEW YORK
By: /s/ Michael B. Scaduto..................
Name: Michael B. Scaduto....................
Title: Vice President.......................
<PAGE>
24
Signature Pages for Lenders
---------------------------
The undersigned Lender hereby consents and agrees to all of the provisions
of the foregoing Amendment:
GENERAL ELECTRIC CAPITAL
CORPORATION
By: /s/ Peter DiBiasi.......................
Name: Peter DiBiasi.........................
Title: Senior Risk Manager..................
<PAGE>
25
Signature Pages for Lenders
---------------------------
The undersigned Lender hereby consents and agrees to all of the provisions
of the foregoing Amendment:
NATIONAL BANK OF CANADA
By:/s/ Raymond L. Yager......................
Name: Raymond L. Yager.......................
Title: Vice President........................
<PAGE>
26
Signature Pages for Lenders
---------------------------
The undersigned Lender hereby consents and agrees to all of the provisions
of the foregoing Amendment:
NORWEST BANK COLORADO,
NATIONAL ASSOCIATION
By: /s/ Randall Schmidt......................
Name: Randall Schmidt........................
Title: Vice President........................
<PAGE>
27
Signature Pages for Lenders
---------------------------
The undersigned Lender hereby consents and agrees to all of the provisions
of the foregoing Amendment:
SENIOR DEBT PORTFOLIO
By:
Boston Management and Research,
as Investment Advisor
By: .......................................
Name: .....................................
Title: ....................................
<PAGE>
28
Signature Pages for Lenders
---------------------------
The undersigned Lender hereby consents and agrees to all of the provisions
of the foregoing Amendment:
OXFORD STRATEGIC INCOME FUND
By:
Eaton Vance Management, as
Investment Advisor
By: .......................................
Name: .....................................
Title: ....................................
<PAGE>
29
Signature Pages for Lenders
---------------------------
The undersigned Lender hereby consents and agrees to all of the provisions
of the foregoing Amendment:
MERRILL LYNCH SENIOR FLOATING
RATE FUND, INC.
By: /s/ Gilles Marchand, CFA................
Name: Gilles Marchand, CFA..................
Title: Authorized Signatory.................
<PAGE>
30
Signature Pages for Lenders
---------------------------
The undersigned Lender hereby consents and agrees to all of the provisions
of the foregoing Amendment:
SENIOR HIGH INCOME PORTFOLIO,
INC.
By: /s/ Gilles Marchand, CFA................
Name: Gilles Marchand, CFA..................
Title: Authorized Signatory.................
<PAGE>
31
Signature Pages for Lenders
---------------------------
The undersigned Lender hereby consents and agrees to all of the provisions
of the foregoing Amendment:
ML CLO XX PILGRIM AMERICA
(CAYMAN) LTD.
By:
Pilgrim Investments, Inc.,
its investment manager
By: /s/ Robert L. Wilson...................
Name: Robert L. Wilson.....................
Title: Vice President......................
<PAGE>
32
Signature Pages for Lenders
---------------------------
The undersigned Lender hereby consents and agrees to all of the provisions
of the foregoing Amendment:
CYPRESSTREE INVESTMENT FUND, LLC
By:
CypressTree Investment
Management Company, Inc.,
its Managing Member
By: /s/ Peter K. Merrill...................
Name: Peter K. Merrill.....................
Title: Managing Director...................
<PAGE>
33
Signature Pages for Lenders
---------------------------
The undersigned Lender hereby consents and agrees to all of the provisions
of the foregoing Amendment:
CYPRESSTREE INSTITUTIONAL
FUND, LLC
By:
CypressTree Investment
Management Company, Inc.,
its Managing Member
By: /s/ Peter K. Merrill...................
Name: Peter K. Merrill.....................
Title: Managing Director...................
<PAGE>
34
Signature Pages for Lenders
---------------------------
The undersigned Lender hereby consents and agrees to all of the provisions
of the foregoing Amendment:
KZH CYPRESSTREE-1 LLC
By: /s/ James Westerhaus...................
Name: James Westerhaus.....................
Title: Authorized Agent....................
<PAGE>
35
Signature Pages for Lenders
---------------------------
The undersigned Lender hereby consents and agrees to all of the provisions
of the foregoing Amendment:
KZH ING-2 LLC
By: /s/ James Westerhaus..................
Name: James Westerhaus....................
Title: Authorized Agent...................
<PAGE>
36
Signature Pages for Lenders
---------------------------
The undersigned Lender hereby consents and agrees to all of the provisions
of the foregoing Amendment:
ING HIGH INCOME PRINCIPAL
PRESERVATION FUND HOLDINGS, LDC
By:
ING Capital Advisors, Inc.,
as Investment Advisor
By: /s/ Jane M. Nelson......................
Name: Jane M. Nelson........................
Title: Senior Vice President................
<PAGE>
37
Signature Pages for Lenders
---------------------------
The undersigned Lender hereby consents and agrees to all of the provisions
of the foregoing Amendment:
CYPRESSTREE INVESTMENT
PARTNERS II, LTD.
By: CypressTree Investment Management
Company, Inc.,
as Portfolio Manager
By:/s/ Peter K. Merrill....................
Name: Peter K. Merrill.....................
Title: Managing Director...................
<PAGE>
38
Signature Pages for Lenders
---------------------------
The undersigned Lender hereby consents and agrees to all of the provisions
of the foregoing Amendment:
ML CBO IV (CAYMAN) LTD.
By:
Highland Capital Management, L.P.,
as Collateral Manager
By: /s/ James Bondero, CFA, CPA.............
Name: James Bondero, CFA, CPA...............
Title: President, Highland Capital
Management L.P.
<PAGE>
Exhibit 10.2
===============================================
INVESTMENT AGREEMENT
between
SAMSONITE CORPORATION
and
APOLLO INVESTMENT FUND, L.P.
-------------------
Dated as of April 7, 1999
===============================================
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS Page
- ----------------- ----
<S> <C>
1.Authorization of Preferred Shares................................................ 1
2.Sale and Purchase of Preferred Shares............................................ 2
3.Closing; Payment of Purchase Price............................................... 3
3.1 Closing Date.................................................................. 3
3.2 Deliveries at Closing......................................................... 3
4.Conditions to Closing............................................................ 4
4.1 Representations and Warranties................................................ 4
4.2 Performance; No Default....................................................... 4
4.3 Certificate of Designation.................................................... 4
4.4 Registration Rights Agreement................................................. 4
4.5 No Actions Pending............................................................ 4
4.6 Compliance with Securities Laws............................................... 5
4.7 Reservation of Common Stock................................................... 5
5. Back-stop Closing; Payment of Back-stop
Purchase Price..................................................... 5
5.1 Back-stop Closing Date........................................................ 5
5.2 Deliveries at Back-stop Closing............................................... 6
6. Conditions to Back-stop Closing............................................... 6
6.1 No Actions Pending............................................................ 6
6.2 Compliance with Securities Laws............................................... 7
7. Representations and Warranties of the Company................................. 7
7.1 Organization, Standing, etc................................................... 7
7.2 Capital Stock and Related Matters............................................. 7
7.3 Compliance with Other Instruments, etc........................................ 7
7.4 Governmental Consents, etc.................................................... 8
7.5 Offering of Securities........................................................ 9
7.6 Disclosure.................................................................... 9
7.7 Enforceability................................................................ 10
7.8 Integration................................................................... 10
8. Representations and Warranties of the
Purchaser..................................................................... 10
8.1 Investment Representations.................................................... 10
8.2 Acquisition for Own Account................................................... 11
8.3 Ability to Protect Its Own Interests and
Bear Economic Risks............................................................... 11
</TABLE>
1
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
8.4 Accredited Investor........................................................... 11
8.5 Access to Information......................................................... 11
8.6 No Brokers.................................................................... 11
9. Covenants of the Company...................................................... 12
9.1 Filing of Registration Statement.............................................. 12
9.2 Pricing of the Rights Offering................................................ 12
9.3 Use of Proceeds............................................................... 12
9.4 Bridge Fee.................................................................... 13
10. Covenants of the Purchaser.................................................... 13
10.1 Compliance with Laws.......................................................... 13
10.2 Pro Rata Voting and Related
Matters....................................................................... 13
10.3 Third Party Transfers......................................................... 14
11. Registration, Transfer and Substitution of Certificates for Preferred
Shares.......................................................................... 14
11.1 Stock Register; Ownership of Preferred Shares................................. 14
11.2 Replacement of Certificates................................................... 15
11.3 Restrictive Legends........................................................... 15
11.4 Notice of Proposed Transfer; Opinions of Counsel.............................. 16
12. Definitions................................................................... 17
12.1 Certain Defined Terms......................................................... 17
13. Survival of Representations and Warranties and
Indemnification; Certain Limitations
14. Amendments and Waivers........................................................ 20
15. Notices, etc.................................................................. 20
16. Miscellaneous................................................................. 21
Exhibit A Form of Certificate of Designations
Exhibit B Form of Registration Rights Agreement
</TABLE>
2
<PAGE>
Samsonite Corporation
11200 East 45/th/ Avenue
Denver, Colorado 80239
April 7, 1999
Apollo Investment Fund, L.P.
c/o Apollo Advisors, L.P.
2 Manhattan Road
Purchase, New York 10577
Dear Sirs:
Samsonite Corporation, a Delaware corporation (the "Company"), has for
the past few months contemplated raising additional equity capital through a
rights offering pursuant to which the Company would distribute to its common
stockholders transferable rights to purchase up to $75,000,000 of its Common
Stock on a pro rata basis and has had discussions with Apollo Investment Fund,
L.P., a Delaware limited partnership (the "Purchaser"), regarding the
Purchaser's willingness to back-stop a portion of such rights offering. The
Purchaser has indicated a willingness to do so. In addition, the Company has an
immediate need for a portion of such additional equity capital and has requested
the Purchaser to supply such equity capital in the form of a bridge investment
equal to its pro rata share of the shares offered in the rights offering.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements contained herein and intending to be legally bound the Company hereby
agrees with the Purchaser, as follows:
1. Authorization of Preferred Shares. The Company has authorized
---------------------------------
and provided for the issuance of 2,000 shares of its Series Z Convertible
Preferred Stock, $.01 par value, to be designated as its "Series Z Convertible
Preferred Stock" (the "Preferred Shares"). The Preferred Shares shall have the
relative rights, preferences and limitations, including, without limitation,
<PAGE>
the right to convert the Preferred Shares into shares of the Company's common
stock, par value $.01 per share (the "Common Stock"), as set forth in the form
of the Certificate of Designations attached as Exhibit A hereto (the
"Certificate of Designation"). Certain capitalized terms used in this Agreement
are defined in Section 12; references to an "Exhibit" are, unless otherwise
specified, to an Exhibit attached to this Agreement and references to a
"section" are, unless otherwise specified, to one of the sections of this
Agreement.
2. Sale and Purchase of Preferred Shares. On the basis of the
-------------------------------------
representations and warranties and subject to the terms and conditions set forth
herein:
(a) At the option of the Company, which shall be exercisable by
notice to the Purchaser at any time prior to 5:00 p.m., New York City time, on
April 14, 1999,the Purchaser agrees to purchase, at the Closing provided for in
Section 3, 1,000 Preferred Shares (the "Initial Preferred Shares"), at a
purchase price of $25,410 per Initial Preferred Share, for an aggregate purchase
price of $25,410,000.
(b) If the Company exercises its option pursuant to Section 2(a)
above, the Purchaser also agrees in connection with the Rights Offering that (i)
the Purchaser shall not, and shall cause all of its Affiliates (other than
individuals to whom Rights are distributed in their individual capacities as
stockholders of the Company) and all of its and their direct and indirect
transferees and assigns (and subsequent transferees and assigns) of Common Stock
and/or Rights not to, with respect to Rights distributed to the Purchaser, all
such Affiliates and all such transferees and assigns pursuant to their
subscription privileges, exercise or transfer such Rights (or exercise any over-
subscription privilege) and shall hold such Rights until such time as they
expire without value and (ii) to the extent that the Rights Offering is not
fully subscribed by stockholders of the Company (other than in respect of Rights
issued to the Purchaser and to Lion Advisors, L.P. for the benefit of an account
under management, as described in Section 5.1 hereof), the Purchaser shall
purchase additional shares of Common Stock (the "Back-stop Common Shares"), at
the same per share price at which shares are offered for purchase in the Rights
Offering, up to, but not exceeding, an aggregate investment by the
2
<PAGE>
Purchaser pursuant to this Section 2(b)(ii) of $12,090,000 (the "Back-stop
Arrangement"); provided, however, that the Purchaser may permit or cause one or
-------- -------
more of its designees to satisfy, in whole or in part, Purchaser's obligations
under the Back-stop Arrangement; provided, further, that, notwithstanding the
-------- -------
foregoing, the Purchaser shall remain obligated to ensure that the full amount
of the aggregate investment set forth above is invested pursuant to the Back-
stop Arrangement and, in the event such purchase is not permitted under the HSR
Act at the time the Rights Offering expires or is terminated, the Back-stop
Arrangement shall be effected as a purchase of a number of additional Preferred
Shares (the "Back-stop Preferred Shares") which are, in the aggregate,
convertible into a number of shares of Common Stock equal to the number of the
Back-stop Common Shares.
3. Closing; Payment of Purchase Price.
----------------------------------
3.1 Closing Date. If the Company exercises its option pursuant to
------------
Section 2(a), the sale of the Initial Preferred Shares to the Purchaser shall
take place at a closing (the "Closing") which shall occur at 12:00 noon, New
York City time, on April 15, 1999 or such earlier date as may be agreed upon by
the Company and the Purchaser.
3.2 Deliveries at Closing. At the Closing, the Company shall deliver
---------------------
to the Purchaser a certificate evidencing the Initial Preferred Shares in the
form of a single certificate (or such greater number of certificates
representing such Initial Preferred Shares as the Purchaser may reasonably
request) dated the date of the Closing and registered in the name of the
Purchaser, and the Purchaser agrees to deliver to the Company or its order funds
in the amount of the aggregate purchase price for such Initial Preferred Shares.
If at the Closing the Company shall fail to tender to the Purchaser duly
executed certificates evidencing the Initial Preferred Shares, as provided above
in this Section 3, or any of the conditions specified in Section 4 shall not
have been fulfilled to the Purchaser's reasonable satisfaction, the Purchaser
shall, at its election, be relieved of all further obligations under this
Agreement, without thereby waiving any other rights the Purchaser may have by
reason of such failure or such nonfulfillment. If at the Closing, the Purchaser
shall fail to tender to the Company the purchase price for the Initial Preferred
Shares, as provided above in this Section 3,
3
<PAGE>
other than on account of any of the conditions specified in Section 4 not having
been fulfilled to the Purchaser's reasonable satisfaction or on account of the
breach by the Company of any of its obligations under this Agreement, the
Company shall, at its election, be relieved of all further obligations under
this Agreement, without thereby waiving any other rights the Company may have by
reason of such failure.
4. Conditions to Closing. The Purchaser's obligation and, with
---------------------
respect to Sections 4.5 and 4.8 hereof, the Company's obligation, to consummate
the purchase and sale of the Initial Preferred Shares at the Closing is subject
to the fulfillment to its reasonable satisfaction, prior to or concurrently with
the Closing, of the following conditions:
4.1 Representations and Warranties. The representations and
------------------------------
warranties of the Company contained in this Agreement shall be in all material
respects correct when made and at the time of the Closing, except as affected by
the consummation of the transactions contemplated by this Agreement.
4.2 Performance; No Default. The Company shall have performed and
-----------------------
complied in all material respects with all agreements and conditions contained
in this Agreement required to be performed or complied with by it prior to or at
the Closing.
4.3 Certificate of Designation. The Certificate of Designation shall
--------------------------
have been duly filed with the Secretary of State of the State of Delaware, and
the Restated Certificate of Incorporation of the Company, as amended by the
Certificate of Designation, shall be in full force and effect, and shall not
have been otherwise amended or modified.
4.4 Registration Rights Agreement. The Purchaser shall have received
-----------------------------
a fully executed counterpart of the Registration Rights Agreement substantially
in the form attached as Exhibit B hereto (the "Registration Rights Agreement").
4.5 No Actions Pending. There shall be no suit, action,
------------------
investigation, inquiry or other proceeding by any Governmental Authority or any
other Person or any other
4
<PAGE>
legal or administrative proceeding pending or to the knowledge of the Company
threatened which questions the validity or legality of the transactions
contemplated by this Agreement, or seeks damages in connection therewith.
4.6 Compliance with Securities Laws. The offering and sale by the
-------------------------------
Company of the Initial Preferred Shares pursuant to this Agreement shall have
been made in compliance with all applicable requirements of federal and state
securities laws.
4.7 Reservation of Common Stock. The shares of Common Stock
---------------------------
initially issuable upon conversion of the Initial Preferred Shares shall have
been duly authorized and reserved for issuance upon due conversion of the
Initial Preferred Shares.
4.8 Fairness Opinion. The Company shall have received the written
----------------
opinion of Bear Stearns & Co., Inc., its financial advisor in connection with
the transactions contemplated by this Agreement, to the effect that the sale of
the Preferred Shares and the Back-stop Shares pursuant hereto (and the other
financial terms contained herein), taken as a whole, are fair to the Company
from a financial point of view.
5. Back-stop Closing; Payment of Back-stop Purchase Price.
------------------------------------------------------
5.1 Back-stop Closing Date. In the event that the Rights Offering is
----------------------
not fully subscribed by stockholders of the Company (other than in respect of
Rights issued to the Purchaser and to Lion Advisors, L.P., in respect of an
aggregate of 3,557,757 shares of Common Stock owned by them on the date hereof),
the sale of the Back-stop Shares (as such term is defined in Section 12 hereof)
to the Purchaser pursuant to the Back-stop Arrangement shall take place at a
closing (the "Back-stop Closing") which shall occur promptly following the
expiration or termination of the Rights Offering and the satisfaction or waiver
of the conditions to closing set forth in Section 6 by the party entitled to
waive such conditions or following such time as agreed upon by the Company and
the Purchaser at the offices of Skadden, Arps, Slate, Meagher & Flom LLP, 919
Third Avenue, New York, New York 10022.
5
<PAGE>
5.2 Deliveries at Back-stop Closing. At the Back-stop Closing, the
-------------------------------
Company shall deliver to the Purchaser a certificate evidencing the Back-stop
Shares in the form of a single certificate (or such greater number of
certificates representing such Back-stop Shares as the Purchaser may reasonably
request) dated the date of the Back-stop Closing and registered in the name of
the Purchaser, and the Purchaser agrees to deliver to the Company or its order
immediately available funds in the amount of the aggregate purchase price for
such Back-stop Shares. If at the Back-stop Closing the Company shall fail to
tender to the Purchaser duly executed certificates evidencing the Back-stop
Shares, as provided above in this Section 5, or any of the conditions specified
in Section 6 shall not have been fulfilled to the Purchaser's reasonable
satisfaction, the Purchaser shall, at its election, be relieved of all further
obligations under the Back-stop Arrangement, without thereby waiving any other
rights the Purchaser may have by reason of such failure or such nonfulfillment.
If at the Back-stop Closing, the Purchaser shall fail to tender to the Company
the full amount of the purchase price for the Back-stop Shares, as provided
above in this Section 5, other than on account of any of the conditions
specified in Section 6 not having been fulfilled to the Purchaser's reasonable
satisfaction or on account of the breach by the Company of any of its
obligations under the Back-stop Agreement, the Company shall, at its election,
be relieved of all further obligations under the Back-stop Arrangement, without
thereby waiving any other rights the Company may have by reason of such failure.
6. Conditions to Back-stop Closing. The Purchaser's obligation to
-------------------------------
purchase and pay for the Back-stop Shares to be sold to the Purchaser at the
Back-stop Closing is subject to the fulfillment to its reasonable satisfaction,
prior to or concurrently with the Back-stop Closing, of the following
conditions:
6.1 No Actions Pending. There shall be no suit, action,
------------------
investigation, inquiry or other proceeding by any Governmental Authority or any
other Person or any other legal or administrative proceeding pending or to the
knowledge of the Company threatened which questions the validity or legality of
the transactions contemplated by the Back-stop Arrangement, or seeks damages in
connection therewith.
6
<PAGE>
6.2 Compliance with Securities Laws. The offering and sale by the
-------------------------------
Company, at or prior to the Back-stop Closing, of the Back-stop Shares pursuant
to this Agreement shall have been made in compliance with all applicable
requirements of federal and state securities laws.
7. Representations and Warranties of the Company. The Company
---------------------------------------------
represents and warrants that:
7.1 Organization, Standing, etc. The Company has been duly
----------------------------
incorporated and is validly existing and in good standing under the laws of the
State of Delaware and has all requisite corporate power and authority to own and
operate its properties, to carry on its business as now conducted, to enter into
and perform all of its obligations under this Agreement, the Certificate of
Designation and the Registration Rights Agreement, to issue and sell the Initial
Preferred Shares and the Back-stop Shares (and the shares of Common Stock
issuable upon the conversion of the Preferred Shares) and to consummate the
transactions contemplated hereby.
7.2 Capital Stock and Related Matters. At the time of the Closing
---------------------------------
and after giving effect to the transactions contemplated by this Agreement, the
authorized capital stock of the Company will consist of (a) 60,000,000 shares of
Common Stock, of which 10,500,039 shares will be outstanding, (b) 2,000,000
shares of preferred stock, of which approximately 193,200 shares of 13 7/8%
senior redeemable exchangeable preferred stock will be outstanding, and (c)
2,000 shares of Series Z Convertible Preferred Stock, of which 1,000 will be
outstanding. All of the outstanding shares of the Company's capital stock are,
and at the Closing will be, validly issued and outstanding, fully paid and non-
assessable.
7.3 Compliance with Other Instruments, etc. Neither the Company nor
---------------------------------------
any of its Significant Subsidiaries (within the meaning of Regulation S-X under
the Securities Act) is in violation of any term of its certificate or articles
of incorporation or by-laws, and neither the Company nor any of its Significant
Subsidiaries is in violation of any term of any material agreement or instrument
to which it is a party or by which it is bound or any term of any applicable
law, ordinance, rule or regulation of any Governmental Authority or any term of
any
7
<PAGE>
applicable order, judgment or decree of any court, arbitrator or Governmental
Authority, the consequences of which violation could reasonably be expected to
have a Material Adverse Effect. The compliance by the Company with all of the
provisions of this Agreement and the Registration Rights Agreement, the
execution, delivery and performance by the Company of this Agreement and the
Registration Rights Agreement, the issuance by the Company of shares of Common
Stock upon the conversion of the Preferred Shares, and the compliance by the
Company with the terms of the Certificate of Designation will not conflict with
or result in a breach or violation of any of the terms and provisions of, or
constitute a default under, any indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument to which the Company or any of its
subsidiaries is a party or by which the Company or any of its subsidiaries is
bound or to which any of the property or assets of the Company or any of the its
subsidiaries is subject, or constitute a Repayment Event thereunder, nor will
such actions result in any violation of the provisions of the certificate or
articles of incorporation or by-laws of the Company or any of its subsidiaries
or, assuming the obtaining of the consents and approvals and the making of the
filings and declarations referred to in Section 7.4 below, any statute or any
order, rule or regulation of any court or governmental agency or body (or any
self-regulatory organization (including but not limited to, the National
Association of Securities Dealers, Inc. (the "NASD"))) having jurisdiction over
the Company or any of its subsidiaries or any of their properties, except in
each case as would not, individually or in the aggregate have a Material Adverse
Effect.
7.4 Governmental Consents, etc. Except as may be required under the
---------------------------
HSR Act and filings and approvals under foreign antitrust, investment or similar
statutes, no consent, approval or authorization of, or declaration or filing
with, any Governmental Authority on the part of the Company is required for the
valid execution and delivery of this Agreement, the valid offer, issue, sale and
delivery of the Preferred Shares or the Back-stop Common Shares pursuant to this
Agreement or the valid issue and delivery of shares of Common Stock issuable
upon conversion of the Preferred Shares. Except for (a) the requirements of
applicable state securities or blue sky laws, (b) consents, approvals, filings
or notices that will be given or made at or prior to the time of the Closing,
(c) filings and
8
<PAGE>
approvals required in connection with the compliance by the Company with its
registration obligations pursuant to the Registration Rights Agreement or (d)
filings under the HSR Act and filings and approvals under foreign antitrust,
investment or similar statutes, neither the Company nor any of its Subsidiaries
is required to obtain any consent, approval or authorization of, or to make any
declaration or filing with, any Governmental Authority as a condition to the
valid execution, delivery or performance of the Registration Rights Agreement or
the consummation of the transactions contemplated thereby.
7.5 Offering of Securities. Neither the Company nor any Person
----------------------
acting on its behalf has offered the Preferred Shares, the Back-stop Common
Shares or any similar securities of the Company to, or solicited any offers to
buy any thereof from, or otherwise approached or negotiated with respect thereto
with, any Person or Persons by any form of general solicitation or general
advertising or in any other manner as would subject the offering, issuance or
sale of any of the Preferred Shares or any of the Back-stop Common Shares to the
provisions of Section 5 of the Securities Act. Neither the Company nor any
Person acting on behalf of the Company has taken or will take any action which
would subject the offering, issuance or sale of any of the Preferred Shares or
the Back-stop Common Shares to the provisions of Section 5 of the Securities
Act.
7.6 Disclosure. Each document filed by the Company with the
----------
Securities and Exchange Commission pursuant to the Exchange Act since the filing
of the Company's Annual Report on Form 10-K for the fiscal year ended January
31, 1997 (together, the "SEC Documents"), when they were filed with the
Commission, conformed in all material respects to the requirements of the
Exchange Act and the rules and regulations of the Securities and Exchange
Commission thereunder. None of the SEC Documents (as of the respective dates
they were filed with the Securities and Exchange Commission) contained any
untrue statement of a material fact or omits to state a material fact necessary
in order to make the statements contained herein or therein, in light of the
circumstances under which they are made, not misleading. Since the respective
dates as of which information is provided in the SEC Documents, unless otherwise
specified in any SEC Document or otherwise disclosed to the Purchaser, there has
not been
9
<PAGE>
any material transaction not in the ordinary course of business entered into by
the Company, or any Material Adverse Effect.
7.7 Enforceability. This Agreement and the Registration Rights
--------------
Agreement have been duly authorized, and executed and delivered by the Company
(assuming the due authorization, execution and delivery thereof by the
Purchaser) and constitute the valid and binding obligations of the Company,
enforceable in accordance with their respective terms, except as the enforcement
thereof may be limited by bankruptcy, insolvency (including, without limitation,
all laws relating to fraudulent transfers), reorganization, moratorium or other
similar laws relating to or affecting enforcement of creditors' rights
generally, or by general principles of equity (regardless of whether enforcement
is considered in a proceeding in equity or at law), or, in the case of the
Registration Rights Agreement, the rights to indemnification and contribution
contained therein may be limited by applicable state or federal securities laws
or the public policy underlying such laws.
7.8 Integration. Neither the Company nor any Affiliate of the
-----------
Company has, directly or through any agent, sold, offered for sale, solicited
offers to buy or otherwise negotiated in respect of, any security (as defined in
the Securities Act) which is or will be integrated with the sale of the
Preferred Shares and/or the Back-stop Common Shares, in a manner that would
require the registration of the Preferred Shares and/or the Back-stop Common
Shares under the Securities Act.
8. Representations and Warranties of the Purchaser. The Purchaser
-----------------------------------------------
hereby represents and warrants as follows:
8.1 Investment Representations. The Purchaser understands that
--------------------------
neither the Preferred Shares nor the Back-stop Common Shares or any Common Stock
issuable upon conversion of the Preferred Shares has been, or shall upon
delivery be, registered under the Securities Act and that the certificates
evidencing the Preferred Shares, the Back-stop Common Shares and such Common
Stock shall bear a legend to that effect. The Purchaser also understands that
the Preferred Shares and the Back-stop Common Shares are being offered and sold
to it pursuant to an exemption from
10
<PAGE>
registration contained in the Securities Act, based in part upon its
representations contained in this Agreement.
8.2 Acquisition for Own Account. The Purchaser is acquiring the
---------------------------
Preferred Shares, any shares of Common Stock issued upon conversion thereof and
the Back-stop Common Shares for its own account for investment and not with a
view toward distribution in a manner which would violate the Securities Act.
8.3 Ability to Protect Its Own Interests and Bear Economic Risks. The
------------------------------------------------------------
Purchaser represents that by reason of its business and financial experience,
and the business and financial experience of its management, the Purchaser has
the capacity to protect its own interests in connection with the transactions
contemplated by this Agreement. The Purchaser is not an entity formed for the
specific purpose of consummating the transactions contemplated hereby. The
Purchaser further represents that the Purchaser is able to bear the economic
risk of an investment in the Preferred Shares, the Back-stop Common Shares and
the Common Stock to be issued upon conversion of the Preferred Shares and has an
adequate income independent of any income produced from an investment in the
Preferred Shares, the Back-stop Common Shares and such Common Stock and has
sufficient net worth to sustain a loss of all of its investment in the Preferred
Shares, the Back-stop Common Shares and such Common Stock without economic
hardship if such a loss should occur.
8.4 Accredited Investor. The Purchaser represents that it is an
-------------------
"accredited investor" as that term is defined in Regulation D promulgated under
the Securities Act.
8.5 Access to Information. The Purchaser has been given access to
---------------------
all Company documents, records, and other information, has received physical
delivery of all such documents, records and information which the Purchaser has
requested, and has had adequate opportunity to ask questions of, and receive
answers from, the Company's officers, employees, agents, accountants, and
representatives concerning the Company's business, operations, financial
condition, assets, liabilities, and all other matters relevant to its investment
in the Preferred Shares and the Back-stop Common Shares.
11
<PAGE>
8.6 No Brokers. No broker's or finder's fees or commissions will be
----------
payable by the Purchaser with respect to the transactions contemplated by this
Agreement, and the Purchaser hereby indemnifies and holds the Company harmless
from any claim, demand or liability for broker's or finder's fees alleged to
have been incurred at the instance of the Purchaser, its Affiliates or agents or
any Person acting on behalf of or at the request of the Purchaser, its
Affiliates or agents.
9. Covenants of the Company. The Company covenants that:
------------------------
9.1 Filing of Registration Statement. The Company shall use its
--------------------------------
commercially reasonable best efforts (i) to file a registration statement with
the Securities and Exchange Commission in respect of the Rights to be offered in
the Rights Offering, and the shares of Common Stock underlying such Rights, as
soon as reasonably practicable following the filing of the Company's Annual
Report on Form 10-K for its fiscal year ended January 31, 1999 and (ii) to cause
such registration statement to become effective, and to commence the Rights
Offering, as promptly as practicable thereafter.
9.2 Pricing of the Rights Offering. The Company shall commence the
------------------------------
Rights Offering at a price not more than $1.00 above, nor less than $1.00 below,
the initial conversion price of the Initial Preferred Shares as set forth in the
Certificate of Designation; provided however that the price offered in the
-------- -------
Rights Offering shall be equal to such initial conversion price (and no
adjustment of the conversion price shall be made pursuant to the second
paragraph of Section 2(i) of the Certificate of Designation) unless, prior to
commencement of the Rights Offering, the Company receives confirmation from the
NASD that a downward adjustment of such conversion price will not conflict with
the NASD' shareholder approval policy for Nasdaq Stock Market issuers. The
Rights Offering shall be made on customary terms and conditions.
9.3 Use of Proceeds. The Company will use such amount of the net
---------------
proceeds from the sale of the Initial Preferred Shares as is required to fund
the premium payment under the Insurance Agreement and the balance of such
proceeds for general corporate purposes.
12
<PAGE>
9.4 Bridge Fee. The Company will pay to the Purchaser promptly
----------
following the Closing a fee in the amount of $1,000,000.
10. Covenants of the Purchaser. The Purchaser covenants that:
--------------------------
10.1 Compliance with Laws. The Purchaser and its transferees shall
--------------------
comply with all filing and other reporting obligations under all Requirements of
Law, including, but not limited to, the HSR Act, which may be applicable to the
Purchaser with respect to the Preferred Shares, the Back-stop Common Shares and
shares of Common Stock issuable upon conversion of the Preferred Shares.
10.2 Pro Rata Voting and Related Matters.
-----------------------------------
(a) The Purchaser hereby agrees to vote, and shall cause its
Affiliates to vote, the Back-stop Common Shares, shares of Common Stock issued
upon conversion of the Preferred Shares and any shares of Common stock acquired
upon exercise of Rights acquired in the open maket pro rata with all other
shares of Common Stock outstanding so that the number of shares that the
Purchaser and its Affiliates are entitled to vote in their sole discretion and
not pro rata does not exceed the Applicable Percentage. The term "Applicable
Percentage" means the percentage of the outstanding Common Stock beneficially
owned by the Purchaser and its Affiliates (including Lion Advisors, L.P.)
immediately prior to the issuance and sale of the Initial Preferred Shares
hereunder, as such ownership may be increased by any shares purchased after the
date hereof (other than shares of Common Stock purchased in connection with the
Rights Offering (including any Back-stop Common Shares purchased pursuant to the
Back-stop Arrangement) and shares of Common Stock issuable upon conversion of
the Preferred Shares). For purposes of the foregoing, shares beneficially owned
by (i) any individual director of the Company and (ii) Artemis America
Partnership and its Affiliates (collectively, "Artemis") shall not be deemed to
be owned by an Affiliate of the Purchaser.
(b) Purchaser also agrees that it shall cause its designees on the
Board of Directors of the Company to abstain from voting on the determination of
the
13
<PAGE>
subscription price in respect of the Rights to be issued in the Rights Offering.
10.3 Third Party Transfers.
---------------------
(a) Subject to filings required under the HSR Act and filings and
approvals required under foreign antitrust, investment or similar statutes, the
Preferred Shares shall automatically convert into shares of Common Stock upon
transfer by the Purchaser (other than any transfer to any Affiliate of the
Purchaser).
(b) Each certificate evidencing the Preferred Shares (including each
certificate evidencing Preferred Shares issued upon any transfer of Preferred
Shares) and each certificate evidencing shares of Common Stock issued upon
conversion of any Preferred Shares shall be stamped or otherwise imprinted with
a legend (in addition to any restrictive legend set forth in Section 11.3
hereof) in substantially the following form:
"The shares represented by this Certificate are subject to the
limitations contained in the Certificate of Designation, dated as of
April __, 1999, filed by Samsonite Corporation with the Secretary of
State of the State of Delaware, and such shares and any shares of
Common Stock issued upon conversion of any such shares may be
transferred only in compliance with the conditions contained therein
and in the Investment Agreement, dated as of April 7, 1999, between
Samsonite Corporation and Apollo Investment Fund, L.P. (the
"Investment Agreement"), and are otherwise subject to the limitations
contained in such Investment Agreement."
11. Registration, Transfer and Substitution of Certificates for
-----------------------------------------------------------
Preferred Shares.
- ----------------
11.1 Stock Register; Ownership of Preferred Shares.
---------------------------------------------
(a) The Company will keep at its principal office a register in which
the Company will provide for the registration of transfers or conversion of the
Preferred
14
<PAGE>
Shares. The Company may treat the Person in whose name any of the Preferred
Shares or shares issued upon conversion of any such Preferred Shares are
registered on such register as the owner thereof and the Company shall not be
affected by any notice to the contrary. All references in this Agreement to a
"holder" of any Preferred Shares or shares issued upon conversion of any such
Preferred Shares shall mean the Person in whose name such Preferred Shares or
shares issued upon conversion of any such Preferred Shares are at the time
registered on such register.
(b) Upon the surrender of any certificate evidencing Preferred
Shares, properly endorsed, for registration of transfer or for conversion at the
office of the Company maintained pursuant to subdivision (a) of this Section
11.1, the Company at its expense will (subject to compliance with Section 11.2
hereof, if applicable) execute and deliver to or upon the order of the holder
thereof (i) a new certificate or certificates for the same aggregate number of
shares of Preferred Shares less the number of Preferred Shares being converted,
if any, in the name of such holder or as such holder (upon payment by such
holder of any applicable transfer taxes) may direct, and (ii) a certificate or
certificates evidencing the number of shares of Common Stock to be issued upon
conversion of the Preferred Shares so surrendered.
11.2 Replacement of Certificates. Upon receipt of evidence reasonably
---------------------------
satisfactory to the Company of the loss, theft, destruction or mutilation of any
certificate representing Preferred Shares, the Back-stop Common Shares or shares
of Common Stock issued upon the conversion of Preferred Shares and, in the case
of any such loss, theft or destruction, upon delivery of indemnity reasonably
satisfactory to the Company in form and amount or, in the case of any such
mutilation, upon surrender of such certificate for cancellation at the office of
the Company maintained pursuant to subdivision (a) of Section 11.1 hereof, the
Company at its expense will execute and deliver, in lieu thereof, a new
certificate representing Preferred Shares or shares of Common Stock, as the case
may be, of like tenor.
11.3 Restrictive Legends. Each certificate evidencing Preferred
-------------------
Shares (including each certificate evidencing Preferred Shares issued upon the
transfer of any
15
<PAGE>
Preferred Shares) shall be stamped or otherwise imprinted with a legend in
substantially the following form:
"The shares represented by this Certificate and any shares of
Common Stock issuable upon conversion of any such shares have not been
registered under the Securities Act of 1933 and may not be transferred
in the absence of such registration or an exemption therefrom under
such Act."
Each certificate evidencing shares of Common Stock issued upon the conversion of
any of the Preferred Shares and Back-stop Common Shares, and each certificate
issued upon the transfer of any such Common Stock and Back-stop Common Shares,
shall be stamped or otherwise imprinted with a legend in substantially the
following form:
"The shares represented by this certificate have not been
registered under the Securities Act of 1933 and may not be transferred
in the absence of such registration or an exemption therefrom under
such Act."
11.4 Notice of Proposed Transfer; Opinions of Counsel. Prior to any
------------------------------------------------
transfer of any Restricted Securities which is not the subject of an effective
registration statement under the Securities Act and in accordance with the plan
of distribution described in such registration statement, the holder thereof
will give written notice to the Company of such holder's intention to effect
such transfer and to comply in all other respects with this Section 11.4. Each
such notice shall describe the manner and circumstances of the proposed
transfer. If within 5 Business Days after receipt by the Company of such
notice, the Company requests an opinion of counsel for such holder that the
proposed transfer may be effected without registration of such Restricted
Securities under the Securities Act, then the Company shall not be required to
register such transfer, and the Purchaser shall not be entitled to effect such
transfer, unless and until the Company receives such an opinion (which counsel
and opinion shall each be reasonably satisfactory to the Company). Such holder
shall thereupon be entitled to transfer such shares in accordance with the terms
of the notice delivered by such holder to the Company. Each certificate
representing such shares issued upon or in connection with
16
<PAGE>
such transfer shall bear the restrictive legends required by Section 11.3.
12. Definitions.
-----------
12.1 Certain Defined Terms. As used in this Agreement the following
---------------------
terms have the following respective meanings:
Affiliate: With reference to any Person, a spouse of such Person, any
relative (by blood, adoption or marriage) of such Person within the second
degree, any director, officer or employee of such Person, any other Person of
which such Person is a member, director, officer or employee, and any other
Person directly or indirectly controlling or controlled by or under direct or
indirect common control with such Person.
Back-stop Shares: The Back-stop Common Shares or the Back-stop
Preferred Shares, as the case may be.
Business Day: 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.
Certificate of Designation: As defined in Section 1 of this
Agreement.
Closing: As defined in Section 3 of this Agreement.
Closing Date: The date of the Closing.
Common Stock: As defined in Section 1 of this Agreement.
Company: As defined in the introduction to this Agreement.
Exchange Act: At any time, the Securities Exchange Act of 1934 as then
in effect or any similar federal statute then in effect, and any reference to a
particular section of such Act shall be deemed to include a reference to the
comparable section, if any, in any such similar federal statute.
17
<PAGE>
Governmental Authority: Any nation or government, any state or other
political subdivision thereof and any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government.
HSR Act: The Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended.
Insurance Agreement: The insurance agreement, dated as of April 7,
1999, among the Company, Apollo Investment Fund, L.P. and Illinois National
Insurance Company.
Material Adverse Effect: Any effect that is materially adverse to the
properties, business, results of operations or financial condition of the
Company and its subsidiaries, taken as a whole.
Person: An individual, a partnership, a joint venture, a corporation,
a limited liability company, a trust, an unincorporated organization or a
government or any department or agency thereof.
Preferred Shares: As defined in Section 1 of this Agreement.
Registration Rights Agreement: As defined in Section 4.4 of this
Agreement.
Repayment Event: Any event or condition which gives the holder of any
note, debenture or other evidence of indebtedness (or any Person acting on such
holder's behalf) the right to require the repurchase, redemption or repayment of
all or a portion of such indebtedness by the Company or any of its subsidiaries.
Requirement of Law: As to any Person, the certificate of
incorporation and by-laws or other organizational or governing documents of such
Person, and any law, treaty, rule or regulation, or determination of an
arbitrator or a court or other Governmental Authority, in each case applicable
to or binding upon such Person or any of its property or to which such Person or
any of its property is subject.
18
<PAGE>
Restricted Securities: All of the following: (a) any certificates for
Preferred Shares bearing the applicable legend or legends referred to in Section
11.3 hereof, (b) any shares of Common Stock which have been issued upon the
conversion of any of the Preferred Shares and any Back-stop Common Shares which
are evidenced by a certificate or certificates bearing the applicable legend or
legends referred to in such section and (c) unless the context otherwise
requires, any shares of Common Stock which are at the time issuable upon the
conversion of Preferred Shares and which, when so issued, will be evidenced by a
certificate or certificates bearing the applicable legend or legends referred to
in such section.
Rights: The transferable subscription rights distributed in the
Rights Offering.
Rights Offering: The Company's proposed rights offering, pursuant to
which the Company proposes to distribute pro rata, based on their ownership of
outstanding shares of Common Stock, to all of its common stockholders
transferable subscription rights to purchase shares of Common Stock for an
aggregate purchase price of $75,000,000 (including the Common Stock issuable
upon conversion of the Initial Preferred Shares). In the event that the
aggregate subscription price for shares of Common Stock offered for purchase in
the Rights Offering is more than $75,000,000 (including the Common Stock
issuable upon conversion of the Initial Preferred Shares), the limitations
contained in Section 2(b) hereof regarding the exercise of Rights will be
appropriately adjusted. For purposes of the foregoing sentence, the gross
purchase price for the Initial Preferred Shares shall be treated as part of the
Rights Offering.
Securities Act: At any time, the Securities Act of 1933 as then in
effect or any similar federal statute then in effect, and any reference to a
particular section of such Act shall be deemed to include a reference to the
comparable section, if any, in any such similar federal statute.
Securities and Exchange Commission: The U.S. Securities and Exchange
Commission, or any other federal agency at the time administering the Securities
Act or the Exchange Act, whichever is the relevant statute for the particular
purpose.
19
<PAGE>
Any of the above-defined terms may, unless the context otherwise
requires, be used in the singular or plural depending on the reference.
13. Survival of Representations and Warranties and Indemnification;
---------------------------------------------------------------
Certain Limitations. All representations and warranties contained in this
- -------------------
Agreement shall survive the execution and delivery of this Agreement, any
investigation at any time made by the Purchaser or on its behalf, and the
purchase of the Preferred Shares and any Back-stop Common Shares by the
Purchaser under this Agreement and any conversion of any of the Preferred
Shares, or any disposition of any shares of Common Stock issued upon conversion
of any of the Preferred Shares or any Back-stop Common Shares. No written
(except as explicitly stated therein) or oral statements made by or on behalf of
the Company, other than in this Agreement and the Registration Rights Agreement,
shall constitute representations or warranties.
14. Amendments and Waivers. Any term of this Agreement may be
----------------------
amended or modified and the observance of any term of this Agreement may be
waived (either generally or in a particular instance and either retroactively or
prospectively) only with the written consent of the Company and the Purchaser.
15. Notices, etc. All notices and other communications under this
-------------
Agreement shall be in writing and, unless otherwise provided herein, shall be
deemed duly given if delivered personally, by facsimile transmission (receipt of
which is confirmed) or sent by registered or certified mail (first-class mail,
postage pre-paid, return receipt requested) or by overnight courier or similar
courier service, addressed, (a) if to the Purchaser, at the address set forth at
the beginning of this Agreement (or if by facsimile transmission to (212) 261-
4070) attention: Michael Weiner, or at such other address as the Purchaser shall
have furnished to the Company in writing, or (b) if to any other holder of any
Preferred Shares, Back-stop Common Shares or shares of Common Stock into which
any of the Preferred Shares have been converted, at such address (and/or
facsimile number) as such other holder shall have furnished to the Company in
writing, or, until any such other holder so furnishes to the Company an address
(and/or facsimile number), then to and at the address (and/or facsimile number)
of the last holder of such Preferred
20
<PAGE>
Shares, Back-stop Common Shares or shares of Common Stock into which such
Preferred Shares have been converted who has furnished an address (and/or
facsimile number) to the Company, or (c) if to the Company at the address of the
Company set forth at the beginning of this Agreement (or if by facsimile to
(303) 373-6406 attention: General Counsel), to the attention of its General
Counsel, or at such other address (and/or facsimile number), or to the attention
of such other officer, as the Company shall have furnished to the Purchasers and
each such other holder in writing, in each case with a copy to the attention of
Gregory A. Fernicola at the following address: Skadden, Arps, Slate, Meagher &
Flom LLP, 919 Third Avenue, New York, New York 10022 (or if by facsimile to
(212) 735-2000).
16. Miscellaneous. This Agreement shall be binding upon and inure to
-------------
the benefit of and be enforceable by the respective successors and permitted
assigns of the parties hereto. This Agreement shall not inure to the benefit of
any other third party. This Agreement embodies the entire agreement and
understanding between the Purchaser and the Company and supersedes all prior
agreements and understandings relating to the subject matter hereof. This
Agreement shall be construed and enforced in accordance with and governed by the
law of the State of New York without regard to the principles regarding
conflicts of laws. The headings in this Agreement are for purposes of reference
only and shall not limit or otherwise affect the meaning hereof. This Agreement
may be executed in counterparts, each of which shall be an original, but both of
which together shall constitute one instrument.
21
<PAGE>
If the Purchaser is in agreement with the foregoing, please sign this
letter and the accompanying counterpart and return one of the same to the
Company, whereupon this letter shall become a binding agreement between the
Purchaser and the Company.
Very truly yours,
SAMSONITE CORPORATION
By: Steve Armstrong
---------------
Name: Steve Armstrong
Title: General Counsel
The foregoing Agreement is hereby
agreed to as of the date first
written above.
APOLLO INVESTMENT FUND, L.P.
By: Apollo Advisors, L.P.,
Its General Partner
By: Apollo Capital Management, Inc.,
Its General partner
By: Robert H. Falk
Name: Robert H. Falk
Title: Vice President
<PAGE>
EXHIBIT A
CERTIFICATE OF THE DESIGNATIONS,
POWERS, PREFERENCES AND RIGHTS
OF
SERIES Z CONVERTIBLE PREFERRED STOCK
OF
SAMSONITE CORPORATION
________________________
Pursuant to Section 151 of the
General Corporation Law of the State of Delaware
________________________
Samsonite Corporation, a Delaware corporation (the "Company"),
certifies that pursuant to the authority contained in Article IV of its Restated
Certificate of Incorporation, as amended (the "Certificate of Incorporation"),
and in accordance with the provisions of Section 151 of the General Corporation
Law of the State of Delaware, the Board of Directors of the Company at a meeting
duly called and held on April 7, 1999, duly approved and adopted the following
resolution which resolution remains in full force and effect on the date hereof:
RESOLVED, that pursuant to the authority vested in the Board of
Directors by the Certificate of Incorporation, the Board of Directors does
hereby designate, create, authorize and provide for the issue of a series of
preferred stock having a par value of $0.01 per share, which shall be designated
as "Series Z Convertible Preferred Stock" (the "Convertible Preferred Stock")
consisting of 2,000 shares, having the following powers,
i
<PAGE>
preferences and rights, and qualifications, limitations and restrictions
thereof, as follows (certain capitalized terms used herein are defined in
Section 13 hereof):
ii
<PAGE>
1. Dividends.
---------
(i). Holders of shares of the Convertible Preferred Stock shall be
entitled to receive, when, as and if dividends are declared by the Board of
Directors out of funds of the Company legally available therefor, if such shares
of Convertible Preferred Stock are held of record at the close of business on
any record date (each, a "Record Date") with respect to payment of dividends on
the Common Stock, the amount of dividends as set forth below. The amount of
dividends payable in respect of each share of Convertible Preferred Stock shall
be equal to the result obtained by multiplying (a) the number of shares
(including fractions) of Common Stock into which such share of Convertible
Preferred Stock is (or, but for the proviso to the first sentence of Section
2(i) below, would be) convertible on the Record Date by (b) the amount of
dividends declared and paid on each share of Common Stock; provided, however,
-------- -------
that if the Company declares and pays a dividend on the Common Stock consisting
in whole or in part of Common Stock, then no such dividend shall be payable in
respect of the Convertible Preferred Stock on account of the portion of such
dividend on the Common Stock payable in Common Stock and in lieu thereof the
anti-dilution adjustment in Section 3(i) below shall apply and; provided
--------
further, that holders of shares of Convertible Preferred Stock shall not be
- -------
entitled to receive, and shall not participate in the distribution of, the
transferable subscription rights to be distributed to holders of the Company's
Common Stock in connection with the Company's proposed rights offering referred
to in the Investment Agreement (the "Rights Offering"). No dividend shall be
paid or declared on any share of Common Stock (other than dividends payable in
Common Stock and other than pursuant to the Rights Offering), unless a dividend,
payable in the same consideration and manner, is simultaneously paid or
declared, as the case may be, on each share of Convertible Preferred Stock in an
amount determined as set forth above. For purposes hereof, the term "dividends"
shall include any pro rata distribution by the Company, out of funds of the
--- ----
Company legally available therefor, of cash, property, securities (including,
but not limited to, rights, warrants or options) or other property or assets to
the holders of the Common Stock, whether or not paid out of capital, surplus or
earnings.
<PAGE>
(ii) Notwithstanding the foregoing, if dividends are declared in
respect of the Common Stock that are payable in rights, options, warrants or
other convertible or exchangeable securities (collectively, "Rights") that
entitle the holders thereof to acquire shares of Common Stock (other than
pursuant to the Rights Offering), the dividends payable in respect of the
Convertible Preferred Stock shall consist of substantially identical Rights that
instead are convertible into or exercisable or exchangeable for (as the case may
be) shares of convertible preferred stock that have substantially identical
terms and provisions (determined by the Company in good faith) as the
Convertible Preferred Stock (the "New Convertible Preferred Stock") and the
amount of such dividend payable in respect of each share of Convertible
Preferred Stock shall be such that the number of shares of New Convertible
Preferred Stock (and/or fraction(s) thereof) into which or for which such Rights
are convertible, exchangeable or exercisable shall equal that number of shares
of New Convertible Preferred Stock which, if fully converted, would be
convertible into the number of shares of Common Stock into which or for which
the Rights would have been convertible, exchangeable or exercisable had such
dividend been payable to the holders of the Convertible Preferred Stock in
accordance with paragraph (i) above without regard to this paragraph, and the
conversion price, exercise price and/or exchange rate thereof shall be
determined in a similar manner (determined by the Company in good faith).
(iii) Prior to declaring any dividend on shares of Common Stock, the
Company shall take all prior corporate action necessary to authorize the
issuance of any securities payable as a dividend in respect of the Convertible
Preferred Stock.
2. Conversion Rights.
-----------------
(i) Each share of Convertible Preferred Stock shall be convertible
at any time, or from time to time, unless previously redeemed by the Company
pursuant to Section 5 hereof, at the option of the holder thereof, into such
number of shares of Common Stock as described below; provided, however, that a
-------- -------
holder of Convertible Preferred Stock may not convert its shares of Convertible
Preferred Stock into shares of Common Stock prior to the later of (x) expiration
or termination of any waiting period (and any extension thereof) under (1) the
Hart-Scott-Rodino
<PAGE>
Antitrust Improvements Act of 1976, as amended (the "HSR Act") and (2) any
similar period (as determined by the Company in good faith) under the
regulations and decisions of the Commission of the European Communities ("EC
Rules"), applicable to such holder's acquisition of the Convertible Preferred
Stock, the Common Stock underlying the Convertible Preferred Stock, the Rights
Offering or any of the transactions contemplated thereby, to the extent that the
Company determines in good faith such filing and waiting period under such EC
Rules are in the best interests of the Company and (y) the completion,
termination or abandonment (as determined by the Company in good faith) of the
Rights Offering. The number of shares of Common Stock issuable upon conversion
of each share of Convertible Preferred Stock shall be equal to the result
obtained by dividing (a) $25,410 by (b) the Conversion Price then in effect and
(c) in the case of any fraction of a share of Convertible Preferred Stock, by
multiplying such result by such fraction.
If the Company issues subscription rights in the Rights Offering with a per
share subscription price for Common Stock that is different than the Conversion
Price, the Conversion Price in effect immediately prior to the date of
commencement of the Rights Offering shall automatically be adjusted, effective
as of the date of commencement of the Rights Offering, to equal such per share
subscription price.
(ii) To convert shares of Convertible Preferred Stock, a holder must
(A) surrender the certificate or certificates evidencing such holder's shares of
Convertible Preferred Stock to be converted, duly endorsed in a form
satisfactory to the Company, at the office of the Company or transfer agent for
the Convertible Preferred Stock, if any, (B) notify the Company at such office
that such holder elects to convert Convertible Preferred Stock and the number of
shares such holder wishes to convert, (C) state in writing the name or names in
which such holder wishes the certificate or certificates for shares of Common
Stock to be issued, and (D) pay any transfer or similar tax, if required. Such
notice referred to in clause (B) above shall be delivered substantially in the
following form:
"NOTICE TO EXERCISE CONVERSION RIGHT
v
<PAGE>
The undersigned, being a holder of the Series Z Convertible Preferred Stock
of Samsonite Corporation (the "Convertible Preferred Stock") irrevocably
exercises the right to convert ____________ outstanding shares of Convertible
Preferred Stock on ___________, ____, into shares of Common Stock of Samsonite
Corporation in accordance with the terms of the shares of Convertible Preferred
Stock, and directs that the shares issuable and deliverable upon the conversion,
together with any check in payment for fractional shares, be issued and
delivered in the denominations indicated below to the registered holder hereof
unless a different name has been indicated below. If shares are to be issued in
the name of a person other than the undersigned, the undersigned will pay all
transfer taxes payable with respect thereto.
Dated: [At least one Business Day prior to the date fixed for conversion]
Fill in for registration of
shares of Common Stock
if to be issued otherwise
than to the registered
holder:
- -------------------------------------
Name
- -------------------------------------
Address
- ----------------- ----------------------------
Please print name and (Signature)
address, including postal
code number
Denominations:__________________"
(iii) Shares of the Convertible Preferred Stock shall be deemed to have
been converted immediately prior to the close of business on the day of the
surrender of such shares for conversion in accordance with the foregoing
<PAGE>
provisions, and the person or persons entitled to receive the Common Stock
issuable upon such conversion shall be treated for all purposes as the record
holder or holders of such Common Stock at such time. As promptly as practicable
on or after the conversion date, the Company shall issue and shall deliver at
such office a certificate or certificates for the number of full shares of
Common Stock issuable upon such conversion, together with payment in lieu of any
fraction of a share, as hereinafter provided, to the person or persons entitled
to receive the same.
(iv) The Company shall at all times reserve and keep available, free from
pre-emptive rights, out of its authorized but unissued Common Stock, for the
purpose of effecting the conversion of the Convertible Preferred Stock, the full
number of shares of Common Stock then issuable upon the conversion of all shares
of Convertible Preferred Stock then outstanding and shall take all such action
and obtain all such permits or orders as may be necessary to enable the Company
lawfully to issue such Common Stock upon such conversion.
(v) No fractional shares of Common Stock shall be issued upon conversion,
but, instead of any fraction of a share which would otherwise be issuable, the
Company shall pay a cash adjustment in respect of such fraction in an amount
equal to the Market Price of such fraction as of the close of business on the
day of conversion.
(vi) The Company will pay any and all taxes that may be payable in respect
of the issue or delivery of shares of Common Stock on conversion of the
Convertible Preferred Stock pursuant hereto. The Company shall not, however, be
required to pay any tax which may be payable in respect of any transfer involved
in the issue and delivery of shares of Common Stock in a name other than that in
which the shares of Convertible Preferred Stock so converted were registered,
and no such issue or delivery shall be made unless and until the person
requesting such issue has paid to the Company the amount of any such tax, or has
established to the satisfaction of the Company that such tax has been paid.
3. Anti-dilution Adjustments.
-------------------------
(i) If the Company (a) pays a dividend or makes any other
distribution on or in respect of the Common Stock
<PAGE>
payable in Common Stock, (b) subdivides or combines its outstanding shares of
Common Stock into a greater or smaller number of shares, or (c) issues or
distributes any equity securities by reclassification of its Common Stock (other
than any issuance constituting a dividend in which the holders of the
Convertible Preferred Stock participate in accordance with Section 1 above), the
Conversion Price shall be adjusted as of the opening of business on the day
following the date fixed for the determination of stockholders entitled to
receive such dividend or distribution or at the opening of business on the day
following the day on which such subdivision, combination or reclassification
becomes effective, as the case may be, so that the holders of the Convertible
Preferred Stock shall, upon surrender thereafter of any shares of Convertible
Preferred Stock for conversion, be entitled to receive the number of shares of
Common Stock that such holder would have owned or have been entitled to receive
after the happening of any of the events described above had such Convertible
Preferred Stock been converted immediately prior to the record date in the case
of a dividend or distribution or the effective date in the case of a
subdivision, combination or reclassification.
(ii) In the case of any consolidation or merger of the Company with
another entity, as a result of which shares of Common Stock shall be changed
into the same or a different number of shares of the same or another class or
classes of stock or securities of the Company or another entity or any other
property or assets, then the holders of Convertible Preferred Stock shall
thereafter have the right to receive upon surrender thereafter of their shares
of Convertible Preferred Stock for conversion, such shares of common stock
and/or securities and/or other property or assets as may be issued or payable
with respect to or in exchange for the number of shares of Common Stock that
would otherwise have been received by such holders had they converted the
Convertible Preferred Stock immediately prior to the effective date of such
merger or consolidation.
(iii) Upon the occurrence of any event described in paragraphs (i) or
(ii) above, the Company shall promptly mail to each holder of Convertible
Preferred Stock, first class, postage prepaid, a notice which shall describe
such event and the change in the number of shares or other assets or securities
issuable upon conversion of the Convertible Preferred Stock, setting forth in
reasonable
<PAGE>
detail the method of calculation thereof and the facts upon which such
calculation is based.
(iv) If:
(a) the Company takes any action which would require an adjustment
pursuant to paragraphs (i) or (ii) above;
(b) the Company consolidates or merges with, or transfers all or
substantially all of its assets to, another corporation, and stockholders of the
Company must approve the transaction; or
(c) there is a dissolution or liquidation of the Company;
the Company shall mail to holders of the Convertible Preferred Stock, first
class, postage prepaid, a notice stating the proposed record or effective date,
as the case may be. The Company shall mail the notice at least 10 days before
such date. However, failure to mail the notice or any defect in it shall not
affect the validity of any transaction referred to in clause (A), (B) or (C) of
this paragraph.
4. Liquidation Preference. In the event of any voluntary or
----------------------
involuntary liquidation, winding-up or dissolution of the Company or reduction
or decrease in its capital stock resulting in a distribution of assets to the
holders of any class or series of the Company's capital stock, after there shall
have been paid, or set apart for payment, to the holders of the outstanding
shares of any class having preference over the Convertible Preferred Stock the
preferential amounts as to which they are respectively entitled, the holders of
the Convertible Preferred Stock shall be entitled to share ratably with the
holders of the Common Stock (and all other classes and series of stock entitled
to participate with the Common Stock) in the remaining assets of the Company on
the basis that such holders would share if all outstanding shares of Convertible
Preferred Stock were then converted into Common Stock; provided, that in the
--------
event that such payment would be less than $0.01 per share of Convertible
Preferred Stock, the holders of the Convertible Preferred Stock shall instead be
entitled to receive out of the assets of the Company available for distribution
to its stockholders,
<PAGE>
whether from capital, surplus or earnings, an amount per share of Convertible
Preferred Stock equal to $0.01 per share (or if less than $0.01 per share is
available for distribution in respect of the Convertible Preferred Stock, then
all such remaining funds shall be distributed pro rata in respect of the
--- ----
Convertible Preferred Stock), before any payment or distribution shall be made
to the holders of the Common Stock (or any other class or series of stock
entitled to participate with the Common Stock). If, upon any liquidation,
winding-up or dissolution of the Company, the assets of the Company, or proceeds
thereof, distributable among the holders of shares of Convertible Preferred
Stock or any capital stock ranking on a parity with the Convertible Preferred
Stock upon liquidation, winding-up or dissolution of the Company, shall be
insufficient to pay in full the preferential amounts to which such stock would
be entitled, then such assets, or the proceeds thereof, shall be distributable
among such holders ratably in accordance with the respective amounts which would
be payable on such shares if all amounts payable thereon were payable in full.
For the purposes hereof, neither a consolidation nor merger of the Company with
one or more other corporations, nor a sale or a transfer of all or substantially
all of the assets of the Company, shall be deemed to be a liquidation, winding-
up or dissolution, voluntary or involuntary, of the Company.
5. Mandatory Redemption.
--------------------
(i) Subject to prior compliance with the HSR Act, and subject to
compliance with any applicable EC Rules to the extent that the Company
determines in good faith that such compliance is in the best interests of the
Company, the Company may, at its option, redeem the shares of Convertible
Preferred Stock, in whole or in part, at any time subsequent to the completion,
termination or abandonment (as determined by the Company in good faith) of the
Rights Offering, or from time to time thereafter, in exchange for Common Stock.
The number of shares of Common Stock so issuable upon redemption of each share
of Convertible Preferred Stock shall be equal to the result obtained by dividing
(a) $25,410 by (b) the Conversion Price in effect on the Redemption Date (as
defined below) and (c) in the case of any fraction of a share of Convertible
Preferred Stock, by multiplying such result by such fraction.
<PAGE>
(ii) At least 10 and not more than 60 days prior to the date fixed for
any redemption (the "Redemption Date"), the Company shall provide written notice
by first class mail, postage prepaid, to each holder of record of the
Convertible Preferred Stock on the record date fixed for such redemption of the
Convertible Preferred Stock at their last address as it shall appear on the
books of the Company; provided, however, that no failure to give such notice or
-------- -------
any defect therein or in the mailing thereof shall affect the validity of the
procedure for the redemption of any shares of Convertible Preferred Stock except
as to the holder to whom the Company has failed to give notice or except as to
the holder to whom notice was defective. In addition to any information
required by law or by the applicable rules of any exchange upon which
Convertible Preferred Stock may be listed or admitted to trading, such notice
shall state:
(1) that such redemption is being made pursuant to the mandatory
redemption provisions of Section 5(i) hereof;
(2) the Redemption Date;
(3) the number of shares of Convertible Preferred Stock to be
redeemed and, if less than all shares held by such holder are to be redeemed,
the number of such shares to be redeemed;
(4) the Conversion Price then in effect;
(5) the number of shares of Common Stock to be received by such
holder in exchange for such holder's shares of Convertible Preferred Stock which
are to be redeemed and the method of calculation thereof; and
(6) the place or places where certificates for such shares are to
be surrendered for exchange, including any procedures applicable to redemptions
to be accomplished through book-entry transfers.
Upon the mailing of any such notice of redemption, the Company shall become
obligated to redeem at the time of redemption specified thereon all shares
called for redemption.
<PAGE>
(iii) If notice has been mailed in accordance with Section 5(ii) above
and provided, that at all times prior to the Redemption Date specified in such
--------
notice, the Company shall reserve and keep available, free from pre-emptive
rights, out of its authorized but unissued Common Stock, for the purpose of
effecting the redemption of the Convertible Preferred Stock, the full number of
shares of Common Stock issuable upon the exchange of the Convertible Preferred
Stock, then, from and after the Redemption Date, said shares shall no longer be
deemed to be outstanding and shall not have the status of shares of Convertible
Preferred Stock. Upon surrender, in accordance with said notice, of the
certificates for any shares so redeemed (properly endorsed or assigned for
transfer, if the Company shall so require and the notice shall so state), such
shares shall be redeemed by the Company in exchange for the applicable number of
shares of Common Stock determined in accordance with Section 5(i) above. In
case fewer than all the shares represented by any such certificate are redeemed,
a new certificate or certificates shall be issued representing the unredeemed
shares without cost to the holder thereof.
6. Mandatory Conversion. Subject to prior compliance with the HSR
--------------------
Act, and subject to compliance with any applicable EC Rules to the extent that
the Company determines in good faith that such compliance is in the best
interests of the Company, in the event that, at any time subsequent to the
completion, termination or abandonment (as determined by the Company in good
faith) of the Rights Offering, any holder of Convertible Preferred Stock
transfers beneficial ownership of any of such holder's shares of Convertible
Preferred Stock to any third party not affiliated with such holder, all such
shares of Convertible Preferred Stock so transferred shall be automatically
deemed converted into Common Stock (at the conversion rate set forth in Section
2(i) hereof) upon any such transfer, without any action on the part of the
Company, such holder or the transferee.
7. Voting Rights.
-------------
(i) The holders of record of shares of the Preferred Stock shall
have no voting rights, except as required by law or by the applicable rules of
any securities exchange or automated quotation system upon
<PAGE>
which Convertible Preferred Stock may be listed or admitted to trading and as
hereinafter provided in this Section 7.
(ii) Upon any consolidation, merger, reclassification or similar
transaction, as a result of which:
(a) the Convertible Preferred Stock would be converted into
anything other than the underlying Common Stock into
which such Convertible Preferred Stock would have been
converted had such conversion taken place prior to the
effective date of such consolidation, merger,
reclassification or similar transaction or
(b) the terms of the Common Stock underlying the
Convertible Preferred Stock would be amended or altered
(each of the events described in clause (a) above and
this clause (b) is referred to herein as a "Voting
Rights Triggering Event"));
then the holders of a majority of the outstanding shares of Convertible
Preferred Stock, voting as a separate single class, shall have the right to
approve any such consolidation, merger, reclassification or similar transaction.
(iii) Whenever such voting right shall have vested by virtue of a
Voting Rights Triggering Event, such right may be exercised initially either at
a special meeting of the holders of Convertible Preferred Stock, called as
hereinafter provided, or at any annual meeting of stockholders or by the written
consent of the holders of Convertible Preferred Stock.
(iv) At any time when such voting right shall have vested in the
holders of Convertible Preferred Stock and if such right shall not already have
been initially exercised, a proper officer of the Company shall, upon the
written request of holders of record of 10% or more of the Convertible Preferred
Stock then outstanding, addressed to the Secretary of the Company, call a
special meeting of holders of Convertible Preferred Stock. Such meeting shall
<PAGE>
be held at the earliest practicable date upon the notice required for annual
meetings of stockholders at the place for holding annual meetings of
stockholders of the Company or, if none, at a place designated by the Secretary
of the Company. If such meeting shall not be called by the proper officers of
the Company within 30 days after the personal service of such written request
upon the Secretary of the Company, or within 30 days after mailing the same
within the United States, by registered mail, addressed to the Secretary of the
Company at its principal office (such mailing to be evidenced by the registry
receipt issued by the postal authorities), then the holders of record of 10% of
the shares of the Convertible Preferred Stock then outstanding may designate in
writing a holder of Convertible Preferred Stock to call such meeting at the
expense of the Company, and such meeting may be called by such person so
designated upon the notice required for annual meetings of stockholders and
shall be held at the place for holding annual meetings of the Company or, if
none, at a place designated by such holder. Any holder of Convertible Preferred
Stock that would be entitled to vote at such meeting shall have access to the
stock books of the Company for the purpose of causing a meeting of stockholders
to be called pursuant to the provisions of this Section 7. Notwithstanding the
provisions of this paragraph, however, no such special meeting shall be called
if any such request is received less than 90 days before the date fixed for the
next ensuing annual or special meeting of stockholders.
(v) The Company shall not, without the affirmative vote or consent of
the holders of at least 66 2/3% of the shares of Convertible Preferred Stock
then outstanding (with shares held by the Company not being considered to be
outstanding for this purpose) voting or consenting as the case may be, as one
class:
(a) amend or otherwise alter this Certificate of
Designations (including the provisions of Section 7
hereof) in any manner, either directly or indirectly,
including, without limitation, through merger or
consolidation with another entity, that adversely
affects the specified rights, preferences, privileges
or voting rights of holders of
<PAGE>
Convertible Preferred Stock; provided that no merger or
--------
consolidation pursuant to which the Convertible
Preferred Stock is converted into or exchanged for
securities or assets that are the same as the holders
of Convertible Preferred Stock would have received had
they converted such Convertible Preferred Stock
immediately prior thereto (whether or not such
conversion was then permitted pursuant to the proviso
to the first sentence of paragraph 2(i) hereof) shall
be deemed to have adversely affected the specified
rights, preferences, privileges or voting rights of the
holders of Convertible Preferred Stock;
(b) alter the voting rights with respect to the Convertible
Preferred Stock or reduce the number of shares of
Convertible Preferred Stock whose holders must consent
to an amendment, supplement or waiver;
(c) reduce the liquidation preference of or alter the
number of shares of Common Stock issuable upon
redemption of the Convertible Preferred Stock in
accordance with the second sentence of Section 5(i)
hereof;
(d) reduce the rate of or change the time for payment of
dividends on any share of Convertible Preferred Stock;
(e) waive the consequences of any failure to pay dividends
on the Convertible Preferred Stock;
(f) make any share of Convertible Preferred Stock payable
in any form other than that stated in this Certificate
of Designations;
<PAGE>
(g) make any change in the provisions of this Certificate
of Designations relating to waivers of the rights of
holders of Convertible Preferred Stock to receive the
liquidation preference and dividends on the Convertible
Preferred Stock; or
(h) make any change in the foregoing amendment and waiver
provisions.
(vi) The Company in its sole discretion may without the vote or
consent of any holders of the Convertible Preferred Stock amend or supplement
this Certificate of Designations:
(a) to cure any ambiguity, defect or inconsistency;
(b) to provide for uncertificated Convertible Preferred
Stock in addition to or in place of certificated
Convertible Preferred Stock; or
(c) to make any change that would provide any additional
rights or benefits to the holders of the Convertible
Preferred Stock or that does not adversely affect the
legal rights under this Certificate of Designations of
any such holder.
(vii) The consent of the holders of the Convertible Preferred Stock
will not be required for the Company to increase or decrease the amount of
authorized capital stock of any class, including any preferred stock, and such
increase or decrease in the amount of such authorized capital stock shall not be
deemed to affect adversely the rights, preferences, privileges, special rights
or voting rights of holders of shares of Convertible Preferred Stock.
8. Exclusion of Other Rights. Except as may otherwise be required
-------------------------
by law, the shares of Convertible Preferred Stock shall not have any voting
powers, preferences and relative, participating, optional or other
<PAGE>
special rights, other than those specifically set forth in this resolution (as
such resolution may be amended from time to time) and in the Certificate of
Incorporation. The shares of Convertible Preferred Stock shall have no
preemptive or subscription rights.
9. Headings of Subdivisions. The headings of the various
------------------------
subdivisions hereof are for convenience of reference only and shall not affect
the interpretation of any of the provisions hereof.
10. Severability of Provisions. If any voting powers, preferences
--------------------------
and relative, participating, optional and other special rights of the
Convertible Preferred Stock and qualifications, limitations and restrictions
thereof set forth in this Certificate of Designations (as such Certificate of
Designations may be amended from time to time) is invalid, unlawful or incapable
of being enforced by reason of any rule of law or public policy, all other
voting powers, preferences and relative, participating, optional and other
special rights of Convertible Preferred Stock and qualifications, limitations
and restrictions thereof set forth in this Certificate of Designations (as so
amended) which can be given effect without the invalid, unlawful or
unenforceable voting powers, preferences and relative, participating, optional
or other special rights of Convertible Preferred Stock and qualifications,
limitations and restrictions thereof shall, nevertheless, remain in full force
and effect, and no voting powers, preferences and relative, participating,
optional or other special rights of Convertible Preferred Stock and
qualifications, limitations and restrictions thereof herein set forth shall be
deemed dependent upon any other such voting powers, preferences and relative,
participating, optional or other special rights of Convertible Preferred Stock
and qualifications, limitations and restrictions thereof unless so expressed
herein.
11. Re-issuance of Convertible Preferred Stock. Shares of Convertible
------------------------------------------
Preferred Stock that have been issued and reacquired in any manner, including
shares purchased or redeemed or exchanged or converted, shall (upon compliance
with any applicable provisions of the laws of Delaware) have the status of
authorized but unissued shares of preferred stock of the Company undesignated as
to series and may be designated or re-designated and issued or reissued, as the
case may be, as part of any series of
<PAGE>
preferred stock of the Company; provided, that any issuance of such shares as
--------
Convertible Preferred Stock must be in compliance with the terms hereof.
12. Mutilated or Missing Preferred Stock Certificates. If any of the
-------------------------------------------------
Convertible Preferred Stock certificates shall be mutilated, lost, stolen or
destroyed, the Company shall issue, in exchange and in substitution for and upon
cancellation of the mutilated Convertible Preferred Stock certificate, or in
lieu of and substitution for the Convertible Preferred Stock certificate lost,
stolen or destroyed, a new Convertible Preferred Stock certificate of like tenor
and representing an equivalent amount of shares of Convertible Preferred Stock,
but only upon receipt of evidence of such loss, theft or destruction of such
Convertible Preferred Stock certificate and indemnity, if requested,
satisfactory to the Company and the transfer agent (if other than the Company).
13. Certain Definitions. As used in this Certificate of
-------------------
Designations, the following terms shall have the following meanings (with terms
defined in the singular having comparable meanings when used in the plural and
vice versa), unless the context otherwise requires:
"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.
"Closing Price" means, for any Trading Day, the closing bid price for the
-------------
Common Stock on the Nasdaq Stock Market or, if the Common Stock is not quoted on
the Nasdaq Stock Market, the closing bid price in the over-the-counter market as
furnished by any New York Stock Exchange member firm selected from time to time
by the Company for that purpose.
"Commission" means the Securities and Exchange Commission.
----------
"Common Stock" means the common stock, par value $0.01 per share, of the
------------
Company.
"Conversion Price" shall initially mean $6.00 per share of Convertible
----------------
Preferred Stock and thereafter shall be subject to adjustment from time to time
pursuant to the
<PAGE>
terms of the second paragraph of Section 2(i) hereof and Section 3 hereof.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
------------
"Investment Agreement" means the Investment Agreement, dated as of April 7,
--------------------
1999, between the Company and Apollo Investment Fund, L.P.
"Market Price", per share of Common Stock, on any date, shall mean the
------------
previous Trading Day's Closing Price.
"Person" means any individual, corporation, partnership, joint venture,
------
association, joint stock company, trust, limited liability company,
unincorporated organization, government or any agency or political subdivision
thereof or any other entity.
"Trading Day" means any day on which the Nasdaq Stock Market or other
-----------
applicable stock exchange or market is open for business.
IN WITNESS WHEREOF, the Company has caused this certificate to be duly
executed by, Richard H. Wiley, Chief Financial Officer of the Company, and
attested by Steve Armstrong, Assistant Secretary of the Company, this 9th day of
April, 1999.
SAMSONITE CORPORATION
By: /s/ RICHARD H. WILEY
------------------------------
Name: Richard H. Wiley
Title: Chief Financial Officer
ATTEST:
By: /s/ STEVE ARMSTRONG
---------------------------
Name: Steve Armstrong
Title: Assistant Secretary
xix
<PAGE>
EXHIBIT B
===============================================
REGISTRATION RIGHTS AGREEMENT
between
SAMSONITE CORPORATION
and
APOLLO INVESTMENT FUND, L.P.
___________________
Dated as of April 7, 1999
===============================================
ii
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
1. Certain Definitions................................... 1
2. Demand Registrations.................................. 2
(a) Right to Request Registration................... 2
(b) Number of Demand Registrations.................. 3
(c) Priority on Demand Registrations................ 3
(d) Restrictions on Demand Registrations............ 4
(e) Selection of Underwriters....................... 4
(f) Other Registration Rights....................... 5
(g) Pre-emption of Demand Registration.............. 5
(h) Effective Period of Demand Registrations........ 6
3. Piggyback Registrations............................... 6
(a) Right to Piggyback.............................. 6
(b) Priority on Primary Registrations............... 7
(c) Priority on Secondary Registrations............. 7
(d) Selection of Underwriters....................... 8
(e) Other Registrations............................. 8
4. Holdback Agreements................................... 8
5. Registration Procedures............................... 9
6. Registration Expenses................................. 13
7. Indemnification....................................... 14
8. Participation in Underwritten Registrations........... 17
9. Rule 144.............................................. 17
10. Miscellaneous........................................ 17
(a) No Inconsistent Agreements...................... 17
(b) Remedies........................................ 17
(c) Amendments and Waivers.......................... 18
(d) Successors and Assigns.......................... 18
(e) Severability.................................... 18
(f) Counterparts.................................... 18
(g) Descriptive Headings............................ 18
(h) Governing Law................................... 18
(i) Notices......................................... 18
</TABLE>
iii
<PAGE>
REGISTRATION RIGHTS AGREEMENT dated as of April 7, 1999, between Samsonite
Corporation, a Delaware corporation (the "Company"), and Apollo Investment Fund,
L.P., a Delaware limited partnership ("Apollo").
In consideration of the mutual covenants and agreements herein contained
and other good and valid consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties to this Agreement hereby agree as follows:
1. Certain Definitions.
In addition to the terms defined elsewhere in this Agreement, the following
terms shall have the following meanings:
"Agreement" means this Registration Rights Agreement, including all
---------
amendments, modifications and supplements and any exhibits or schedules to any
of the foregoing, and shall refer to this Registration Rights Agreement as the
same may be in effect at the time such reference becomes operative.
"Business Day" means any day on which commercial banks are open for
------------
business in New York, New York.
"Common Stock" means the Company's common stock, par value $0.01 per share.
------------
"Convertible Preferred Stock" means the Company's Series Z Convertible
---------------------------
Preferred Stock, par value $0.01 per share.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
------------
"Holder" means Apollo, its affiliates, accounts managed by Apollo or any
------
such affiliate and any successors or assigns of Apollo, any such affiliate or
any such account who acquires Registrable Common Stock, directly or indirectly,
from Apollo, such affiliate, such account or such transferee or assignee. For
purposes of this Agreement, the Company may deem and treat the registered holder
of Registrable Common Stock as the Holder and absolute owner thereof, and the
Company shall not be affected by any notice to the contrary.
<PAGE>
"Person" means an individual, partnership, corporation, trust, limited
------
liability company, or unincorporated organization, or a government or agency or
political subdivision thereof.
"Prospectus" means the prospectus or prospectuses included in any
----------
Registration Statement, as amended or supplemented by any prospectus supplement
with respect to the terms of the offering of any portion of the Registrable
Common Stock covered by such Registration Statement and by all other amendments
and supplements in the prospectus, including post-effective amendments and all
material incorporated by reference in such prospectus or prospectuses.
"Registrable Common Stock" means (a) any of the Common Stock or (b) any of
------------------------
the Convertible Preferred Stock, in each case, held by the Holders from time to
time as to which registration pursuant to the Securities Act is required for a
public sale, including, in the case of Convertible Preferred Stock, the Common
Stock issued or issuable upon conversion of the Convertible Preferred Stock.
"Registration Statement" means any registration statement of the Company
----------------------
which covers any of the Registrable Common Stock 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 materials incorporated by reference in such Registration Statement.
"SEC" means the Securities and Exchange Commission.
---
"Securities Act" means the Securities Act of 1933, as amended.
--------------
"underwritten registration or underwritten offering" means a registration
--------------------------------------------------
in which securities of the Company are sold to underwriters for reoffering to
the public.
2. Demand Registrations.
(a) Right to Request Registration. Any time after the date of this
-----------------------------
Agreement, Apollo, its affiliates or any Person designated by Apollo or its
affiliates (so long as the Person making such demand is a Holder of Registrable
Common Stock) may request registration under the Securities Act of
<PAGE>
all or part of the Registrable Common Stock ("Demand Registrations").
Within 10 days after receipt of any such request for Demand Registration,
the Company shall give written notice of such request to all other Holders of
Registrable Common Stock and shall, subject to the provisions of Section 2(d)
hereof, include in such registration all such Registrable Common Stock with
respect to which the Company has received written requests for inclusion therein
within 15 days after the receipt of the Company's notice.
For purposes of determining the number of shares of Registrable Common
stock held by a Holder, for purposes of this Agreement but not for any other
purpose, any holder of record of such Convertible Preferred Stock shall be
deemed to be a Holder of the number of shares of Common Stock issuable upon
conversion of such Convertible Preferred Stock.
(b) Number of Demand Registrations. Subject to the provisions of Section
------------------------------
2(a), the Holders of Registrable Common Stock shall be entitled to request an
aggregate of three Demand Registrations; provided the Holders shall not be
--------
entitled to request more than one Demand Registration during any 12-month
period. A registration shall not count as one of the permitted Demand
Registration (i) until it has become effective, (ii) if the Holders initiating
the request for such registration are not able to register and sell at least 50%
of the Registrable Common Stock requested by such Holders to be included in such
registration or (iii) in the case of a Demand Registration that would be the
last permitted Demand Registration requested hereunder, if the Holders
requesting such registration are not able to register and sell all of the
Registrable Common Stock requested to be included by such Holders in such
registration.
(c) Priority on Demand Registrations. Except as provided in Section
--------------------------------
2(g), the Company shall not include in any Demand Registration any securities
which are not Registrable Common Stock without the written consent of the
Holders of a majority of the shares of Registrable Common Stock to be included
in such registration, or, if such Demand Registration is an underwritten
offering, without the written consent of the managing underwriters. If the
managing underwriters of the requested Demand Registration advise the Company in
writing that in their opinion the number of
<PAGE>
shares of Registrable Common Stock proposed to be included in any such
registration exceeds the number of securities which can be sold in such
offering, the Company shall include in such registration only the number of
shares of Registrable Common Stock which in the opinion of such managing
underwriters can be sold. If the number of shares which can be sold is less than
the number of shares of Registrable Common Stock proposed to be registered, the
amount of Registrable Common Stock to be so sold shall be allocated pro rata
among the Holders of Registrable Common Stock desiring to participate in such
registration on the basis of the amount of such Registrable Common Stock
initially proposed to be registered by such Holders. If the number of shares
which can be sold exceeds the number of shares of Registrable Common Stock
proposed to be sold, such excess shall be allocated pro rata among the other
holders of securities, if any, desiring to participate in such registration
based on the amount of such securities initially requested to be registered by
such holders.
(d) Restrictions on Demand Registrations. The Company shall not be
------------------------------------
obligated to effect any Demand Registration within three months after the
effective date of a previous Demand Registration or a previous registration
under which the Holders had piggyback rights pursuant to Section 3 hereof
(irrespective of whether such rights were exercised). The Company may (i)
postpone for up to six months the filing or the effectiveness of a registration
statement for a Demand Registration if, based on the good faith judgment of the
Company's Board of Directors, such postponement or withdrawal is necessary in
order to avoid premature disclosure of a matter the Board has determined would
not be in the best interest of the Company to be disclosed at such time or (ii)
postpone the filing of a Demand Registration in the event the Company shall be
required to prepare audited financial statements as of a date other than its
fiscal year end (unless the stockholders requesting such registration agree to
pay the expenses of such an audit); provided, however, that in no event shall
--------
the Company withdraw a registration statement under clause (i) after such
registration statement has been declared effective; and provided, further,
--------
however, that in any of the events described in clause (i) or (ii) above, the
Holders initiating the request for such Demand Registration shall be entitled to
withdraw such request and, if such request is withdrawn, such Demand
Registration shall not count as one of the permitted Demand Registrations. The
Company shall provide written notice to
4
<PAGE>
the Holders of Registrable Common Stock initiating the request for such Demand
Registration of (x) any postponement or withdrawal of the filing or
effectiveness of a registration statement pursuant to this paragraph (d), (y)
the Company's decision to file or seek effectiveness of such registration
statement following such withdrawal or postponement and (z) the effectiveness
of such registration statement.
(e) Selection of Underwriters. If any of the Registrable Common Stock
-------------------------
covered by a Demand Registration are to be sold in an underwritten offering, the
Company shall have the right to select the managing underwriter(s) to
administer the offering.
(f) Other Registration Rights. The Company shall not grant to any Person
-------------------------
the right, other than as set forth herein and except to employees of the Company
with respect to registrations on Form S-8 (or any successor forms thereto), to
request the Company to register any securities of the Company except such rights
as are not more favorable than or inconsistent with the rights granted to the
Holders herein, without the written consent of the Holders of a majority of the
number of shares of Registrable Common Stock then outstanding.
(g) Pre-emption of Demand Registration. Notwithstanding anything to the
----------------------------------
contrary contained herein, if at any time a Holder shall request a Demand
Registration pursuant to this Section 2, the Company may elect at that time to
effect an underwritten primary registration if, based on the good faith judgment
of the Company's Board of Directors, it would be in the best interests of the
Company to access the public market to raise equity capital in order to (i)
finance an acquisition that is the subject of a letter intent or acquisition
agreement at the time of such request for a Demand Registration or (ii)
deleverage the Company to deal with potential covenant or other defaults under
any material contract. If the Company elects to effect a primary registration
after receiving such a request for a Demand Registration, the Company will give
prompt written notice (and in any event within 45 days after receiving such a
request for a Demand Registration) to all Holders of its intention to effect
such a registration and shall afford the Holders rights to Piggyback
Registrations contained in Section 3 hereof, except that if the managing
underwriters of such offering advise the Company in writing
5
<PAGE>
that in their opinion the number of securities requested to be included in such
registration exceeds the number which can be sold in such offering, the
provisions of Section 3(b) hereof shall not apply to such offering, and instead
the Company shall include in such registration the maximum number of securities
which such underwriters advise can be sold in such offering allocated (x) first,
equally among the Company, on the one hand, and the Holders as a group, on the
other hand (allocated among such Holders pro rata on the basis of the number of
shares requested to be registered by such Holders), so as to include in such
registration up to the full number of securities requested to be included
therein by each of the Company and the Holders, (y) second, if the number of
shares included therein pursuant to the foregoing clause (x) equals the total
number of shares requested to be included therein by the Holders as a group or
the Company, such additional number of shares requested to be included therein
by the Company or the Holders (allocated among such holders pro rata on the
basis of the number of shares requested to be registered by such holders),
respectively, and (z) third, other securities requested to be included in such
registration pro rata among the holders of such securities on the basis of the
number of shares re quested to be registered by such holders. In the event that
the Company so elects to effect such a primary registration after receiving a
request for such a Demand Registration, such registration shall not count as one
of the permitted Demand Registrations of the Holders who requested such
registration.
(h) Effective Period of Demand Registrations. After any Demand
----------------------------------------
Registration filed pursuant to this Agreement has become effective, the Company
shall use its best efforts to keep such Demand Registration effective for a
period equal to 90 days from the date on which the SEC declares such Demand
Registration effective (or if such Demand Registration is not effective during
any period within such 90 days, such 90-day period shall be extended by the
number of days during such period when such Demand Registration is not
effective), or such shorter period which shall terminate when all of the
Registrable Common Stock covered by such Demand Registration has been sold
pursuant to such Demand Registration. If the Company shall withdraw any Demand
Registration pursuant to subsection (d) of this Section 2 (a "Withdrawn Demand
Registration"), the Holders of the Registrable Common Stock remaining unsold and
originally covered by such Withdrawn Demand Registration shall be
6
<PAGE>
entitled to a replacement Demand Registration which (subject to the provisions
of this Section 2) the Company shall use its best efforts to keep effective for
a period commencing on the effective date of such Demand Registration and ending
on the earlier to occur of the date (i) which is 90 days from the effective date
of such Demand Registration and (ii) on which all of the Registrable Common
Stock covered by such Demand Registration has been sold. Such additional Demand
Registration otherwise shall be subject to all of the provisions of this
Agreement.
3. Piggyback Registrations.
(a) Right to Piggyback. Whenever the Company proposes to register any of
------------------
its equity securities (other than Registrable Common Stock) under the Securities
Act (other than a registration statement on Form S-8 or on Form S-4 or any
successor forms thereto), whether for its own account or for the account of one
or more securityholders of the Company, and the registration form to be used may
be used for any registration of Registrable Common Stock (a "Piggyback
Registration"), the Company shall give prompt written notice (in any event
within 10 business days after its receipt of notice of any exercise of other
demand registration rights) to all Holders of its intention to effect such a
registration and, subject to Sections 3(b) and 3(c), shall include in such
registration all Registrable Common Stock with respect to which the Company has
received written requests for inclusion therein within 15 days after the receipt
of the Company's notice. The Company may postpone or withdraw the filing or the
effectiveness of a Piggyback Registration at any time in its sole discretion.
(b) Priority on Primary Registrations. If a Piggyback Registration is an
---------------------------------
underwritten primary registration on behalf of the Company, and the managing
underwriters advise the Company in writing that in their opinion the number of
securities requested to be included in such registration exceeds the number
which can be sold in such offering, the Company shall include in such
registration (i) first, the securities the Company proposes to sell, (ii)
second, the Registrable Common Stock pro rata among the Holders of such
Registrable Common Stock on the basis of the number of shares requested to be
registered by such Holders, and (iii) third, other securities requested to be
included in such registration pro rata among the holders of such securities
7
<PAGE>
on the basis of the number of shares requested to be registered by such holders.
(c) Priority on Secondary Registrations. If a Piggyback Registration is
-----------------------------------
an underwritten secondary registration on behalf of a holder of the Company's
securities other than Registrable Common Stock, and the managing underwriters
advise the Company in writing that in their opinion the number of securities
requested to be included in such registration exceeds the number which can be
sold in such offering, the Company shall include in such registration (i)
first the securities requested to be included therein by the holders requesting
such registration and the Registrable Common Stock requested to be included in
such registration, pro rata among the holders of such securities on the basis of
the number of shares requested to be registered by such holders, and (ii)
second, other securities requested to be included in such registration pro rata
among the holders of such securities on the basis of the number of shares
requested to be registered by such holders.
(d) Selection of Underwriters. If any Piggyback Registration is an
-------------------------
underwritten primary offering, the Company shall have the right to select the
managing underwriter or underwriters to administer any such offering.
(e) Other Registrations. If the Company has previously filed a
-------------------
registration statement with respect to Registrable Common Stock pursuant to
Section 2 hereof or pursuant to this Section 3, and if such previous
registration has not been withdrawn or abandoned, the Company shall not be
obligated to cause to become effective any other registration of any of its
securities under the Securities Act, whether on its own behalf or at the request
of any holder or holders of such securities, until a period of at least three
months has elapsed from the effective date of such previous registration.
4. Holdback Agreements.
(a) Each Holder agrees not to offer, sell, contract to sell or otherwise
dispose of any shares of Common Stock, shares of Convertible Preferred Stock or
any securities that represent the right to receive shares of Common Stock or
Convertible Preferred Stock during the 10 days prior to and the 90 days
beginning on the effective date of any underwritten primary or secondary
offering of equity securities
8
<PAGE>
of the Company (including, but not limited to, any underwritten Demand
Registration or any underwritten Piggyback Registration whether or not shares of
Registrable Common Stock are included (except as part of such underwritten
registration)) unless the underwriters managing the offering otherwise agree, in
each case to the extent timely notified of such offering in writing by the
Company or by the managing underwriter or underwriters. The Company and the
Holders agree that the provisions of this Section 4(a) shall be enforceable by
such underwriter(s) against any Holder, it being understood that such
underwriter(s) are intended third party beneficiaries hereof and, if so
requested by such underwriter(s), each Holder agrees to execute and deliver to
such underwriter(s) such agreements and instruments, in form and substance
reasonably satisfactory to such underwriter(s), further evidencing such
Holder's agreement not to sell such securities during such period.
The foregoing paragraph shall not apply to (i) any Holder to the extent
such Holder is prohibited by applicable law from agreeing to withhold its
securities from sale, (ii) any transfer by a Holder to an affiliate of such
Holder or to any other transferee in a private transaction not requiring
registration under the Securities Act provided, that such affiliate or other
--------
transferee acknowledges in writing that it is bound by the provisions of this
Section 4(a) or (iii) any Holder, with respect to any offering, if such Holder,
immediately prior to the effective date of such offering, beneficially owns
together with all of its affiliates less than 3.0% of the amount of Common Stock
(including shares of Common Stock issuable upon conversion of the Convertible
Preferred Stock) being sold in such offering.
(b) Subject to Section 2(g) hereof, the Company agrees not to effect any
registration with respect to any public offer, sale or distribution of any of
its equity securities during the 10 days prior to and during the 90 days
beginning on the effective date of any underwritten Demand Registration or any
underwritten Piggyback Registration (except as part of such underwritten
registration or pursuant to registrations on Form S-8 or S-4 or any successor
forms thereto) unless the underwriters managing the registered public offering
otherwise agree.
5. Registration Procedures.
9
<PAGE>
Whenever the Holders request that any Registrable Common Stock be
registered pursuant to this Agreement, the Company shall use its best efforts to
effect the registration and the sale of such Registrable Common Stock in
accordance with the intended methods of disposition thereof, and pursuant
thereto the Company shall as expeditiously as possible:
(a) prepare and file with the SEC a Registration Statement with respect to
such Registrable Common Stock and use its best efforts to cause such
Registration Statement to become effective as soon as practicable thereafter;
and before filing a Registration Statement or Prospectus or any amendments or
supplements thereto, furnish to the Holders of Registrable Common Stock covered
by such Registration Statement and the underwriter or underwriters, if any,
copies of all such documents proposed to be filed, including documents
incorporated by reference in the Prospectus and, if requested by such Holders,
the exhibits incorporated by reference, and such Holders shall have the
opportunity to object to any information pertaining solely to such Holders that
is contained therein and the Company will make the corrections reasonably
requested by such Holders with respect to such information prior to filing any
Registration Statement or amendment thereto or any Prospectus or any supplement
thereto;
(b) prepare and file with the SEC such amendments and supplements to such
Registration Statement and the Prospectus used in connection therewith as may
be necessary to keep such Registration Statement effective for a period of not
less than 90 days, in the case of a Demand Registration, or such shorter period
as is necessary to complete the distribution of the securities covered by such
Registration Statement and comply with the provisions of the Securities Act
with respect to the disposition of all securities covered by such Registration
Statement during such period in accordance with the intended methods of
disposition by the sellers thereof set forth in such Registration Statement;
(c) furnish to each seller of Registrable Common Stock such number of
copies of such Registration Statement, each amendment and supplement thereto,
the prospectus included in such Registration Statement (including each
preliminary prospectus) and such other documents as such seller may reasonably
request in order to facilitate the disposition of the Registrable Common Stock
owned by such seller;
10
<PAGE>
(d) use its best efforts to register or qualify such Registrable Common
Stock under such other securities or blue sky laws of such jurisdictions as any
seller reasonably requests and do any and all other acts and things which may be
reasonably necessary or advisable to enable such seller to consummate the
disposition in such jurisdictions of the Registrable Common Stock owned by such
seller (provided, that the Company will not be required to (i) qualify generally
--------
to do business in any jurisdiction where it would not otherwise be required to
qualify but for this subparagraph (d), (ii) subject itself to taxation in any
such jurisdiction or (iii) consent to general service of process in any such
jurisdiction);
(e) notify each seller of such Registrable Common Stock, at any time when
a Prospectus relating thereto is required to be delivered under the Securities
Act, of the occurrence of any event as a result of which the prospectus included
in such Registration Statement contains an untrue statement of a material fact
or omits any fact necessary to make the statements therein not misleading, and,
at the request of any such seller, the Company shall prepare a supplement or
amendment to such Prospectus so that, as thereafter delivered to the purchasers
of such Registrable Common Stock, such Prospectus shall not contain an untrue
statement of a material fact or omit to state any fact necessary to make the
statements therein not misleading;
(f) in the case of an underwritten offering, enter into such customary
agreements (including underwriting agreements in customary form) and take all
such other actions as the Holders of a majority of number of shares of the
Registrable Common Stock being sold or the underwriters, if any, reasonably
request in order to expedite or facilitate the disposition of such Registrable
Common Stock (including, without limitation, effecting a stock split or a
combination of shares and using its best efforts to cause members of management
of the Company to participate on a reasonable basis in customary "road-show"
activities to the extent required by the underwriters consistent with the
Company's most recent experience in connection with an offering of its equity
securities and with a view to maximizing the price of the Common Stock sold in
such offering) and cause to be delivered to the underwriters and the sellers, if
any, opinions of counsel to the Company in customary form, covering such matters
as are customarily covered by opinions for an underwritten public offering as
11
<PAGE>
the underwriters may request and addressed to the underwriters and the sellers;
(g) make available, for inspection by any seller of Registrable Common
Stock, any underwriter participating in any disposition pursuant to such
Registration Statement, and any attorney, accountant or other agent retained by
any such seller or underwriter, all financial and other records, pertinent
corporate documents and properties of the Company, and cause the Company's
officers, directors, employees and independent accountants to supply all
information reasonably requested by any such seller, underwriter, attorney,
accountant or agent in connection with such Registration Statement;
(h) use its best efforts to cause all such Registrable Common Stock to be
listed on each securities exchange on which securities of the same class issued
by the Company are then listed or, if no such similar securities are then
listed, on the Nasdaq Stock Market or a national securities exchange selected by
the Company;
(i) provide a transfer agent and registrar for all such Registrable Common
Stock not later than the effective date of such Registration Statement;
(j) cause to be delivered, immediately prior to the effectiveness of the
Registration Statement (and, in the case of an underwritten offering, at the
time of delivery of any Registrable Common Stock sold pursuant thereto), letters
from the Company's independent certified public accountants addressed to each
selling Holder and each underwriter, if any, stating that such accountants are
independent public accountants within the meaning of the Securities Act and the
applicable rules and regulations adopted by the SEC thereunder, and otherwise in
customary form and covering such financial and accounting matters as are
customarily covered by letters of the independent certified public accountants
delivered in connection with primary or secondary underwritten public offerings,
as the case may be;
(k) make generally available to the Holders a consolidated earnings
statement (which need not be audited) for the 12 months beginning after the
effective date of a registration statement as soon as reasonably practicable
after the end of such period, which earnings statement shall satisfy
12
<PAGE>
the requirements of an earning statement under Section 11(a) of the Securities
Act;
(l) promptly notify each seller of Registrable Common Stock and the
underwriter or underwriters, if any:
(i) when the Registration Statement, any pre-effective
amendment, the Prospectus or any Prospectus supplement or post-effective
amendment to the Registration Statement has been filed and, with respect to
the Registration Statement or any post-effective amendment, when the same
has become effective;
(ii) of any written request by the SEC for amendments or
supplements to the Registration Statement or Prospectus;
(iii) of the notification to the Company by the SEC of its
initiation of any proceeding with respect to the issuance by the SEC of
any stop order suspending the effectiveness of the Registration Statement;
and
(iv) of the receipt by the Company of any notification with
respect to the suspension of the qualification of any Registrable Common
Stock for sale under the applicable securities or blue sky laws of any
jurisdiction.
At all times after the Company has filed a registration statement with the
SEC pursuant to the requirements of either the Securities Act or the Exchange
Act, the Company shall file all 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, and take such further action as any Holder or Holders may
reasonably request, all to the extent required to enable such Holders to be
eligible to sell Registrable Common Stock pursuant to Rule 144 (or any similar
rule then in effect).
The Company may require each seller of Registrable Common Stock as to which
any registration is being effected to furnish to the Company any other
information regarding such seller and the distribution of such securities as the
Company may from time to time reasonably request in writing.
13
<PAGE>
Each seller of Registrable Common Stock agrees by having its stock treated
as Registrable Common Stock hereunder that, upon notice of the happening of
any event as a result of which the Prospectus included in such Registration
Statement contains an untrue statement of a material fact or omits any fact
necessary to make the statements therein not misleading, such seller will
forthwith discontinue disposition of Registrable Common Stock until such seller
is advised in writing by the Company that the use of the Prospectus may be
resumed and is furnished with a supplemented or amended Prospectus as
contemplated by Section 5(e) hereof, and, if so directed by the Company, such
seller will deliver to the Company (at the Company's expense) all copies,
other than permanent file copies then in such seller's possession, of the
Prospectus covering such Registrable Common Stock current at the time of receipt
of such notice. If the Company shall give any notice to suspend the
disposition of Registrable Common Stock pursuant to a Prospectus, the Company
shall extend the period of time during which the Company is required to maintain
the Registration Statement effective pursuant to this Agreement by the number of
days during the period from and including the date of the giving of such notice
to and including the date such seller either is advised by the Company that the
use of the Prospectus may be resumed or receives the copies of the supplemented
or amended Prospectus contemplated by Section 5(e).
6. Registration Expenses.
(a) All expenses incident to the Company's performance of or compliance
with this Agreement, including, without limitation, all registration and filing
fees, fees and expenses of compliance with securities or blue sky laws, listing
application fees, printing expenses, transfer agent's and registrar's fees, cost
of distributing prospectuses in preliminary and final form as well as any
supple ments thereto, and fees and disbursements of counsel for the Company and
all independent certified public accountants and other Persons retained by the
Company (all such expenses being herein called "Registration Expenses") (but not
including any underwriting discounts or commissions attributable to the sale
of Registrable Common Stock or fees and expenses of more than one counsel
representing the Holders of Registrable Common Stock or any other selling
expenses incurred in connection with the sale of Registrable Common Stock),
shall be borne by the Company. In addition, the Company shall pay its internal
expenses (including, without
14
<PAGE>
limitation, all salaries and expenses of its officers and employees performing
legal or accounting duties), the expense of any annual audit or quarterly
review, the expense of any liability insurance and the expenses and fees for
listing the securities to be registered on each securities exchange on which
they are to be listed.
(b) In connection with each registration initiated hereunder (whether a
Demand Registration or a Piggyback Registration), the Company shall reimburse
the Holders covered by such registration or sale for the reasonable fees and
disbursements of one law firm chosen by the Holders of a majority of the number
of shares of Registrable Common Stock included in such registration or sale.
(c) The obligation of the Company to bear the expenses described in
Section 6(a) and to reimburse the Holders for the expenses described in Section
6(b) shall apply irrespective of whether a registration, once properly
demanded, if applicable, becomes effective, is withdrawn or suspended, is
converted to another form of registration and irrespective of when any of the
foregoing shall occur; provided, however, that Registration Expenses for any
--------
registration statement withdrawn solely at the request of a Holder of
Registrable Common Stock (unless withdrawn following postponement of filing by
the Company in accordance with Section 2(e)(i) or (ii)) or any supplements or
amendments to a registration statement or prospectus resulting from a
misstatement furnished to the Company by a Holder shall be borne by such
Holder.
7. Indemnification.
(a) The Company agrees to indemnify, to the fullest extent permitted by
law, each Holder, its officers, directors and affiliates and each Person who
controls such Holder (within the meaning of the Securities Act) against all
losses, claims, damages, liabilities and expenses caused by any untrue or
alleged untrue statement of material fact contained in any Registration
Statement, Prospectus or preliminary prospectus or any amendment thereof or
supplement thereto or any omission or alleged omission of a material fact
required to be stated therein or necessary to make the statements therein not
misleading, except insofar as the same are caused by or contained in any
information furnished in writing to the Company by such Holder expressly for use
therein or by such Holder's failure to deliver a copy of the
15
<PAGE>
Registration Statement or Prospectus or any amendments or supplements thereto
after the Company has furnished such Holder with a sufficient number of copies
of the same. In connection with an underwritten offering, the Company shall
indemnify such underwriters, their officers and directors and each Person who
controls such underwriters (within the meaning of the Securities Act) to the
same extent as provided above with respect to the indemnification of the
Holders.
(b) In connection with any Registration Statement in which a Holder of
Registrable Common Stock is participating, each such Holder shall furnish to the
Company in writing such information and affidavits as the Company reasonably
requests for use in connection with any such Registration Statement or
Prospectus and, to the extent permitted by law, shall indemnify the Company, its
directors and officers and each Person who controls the Company (within the
meaning of the Securities Act) against any losses, claims, damages, liabilities
and expenses resulting from any untrue or alleged untrue statement of material
fact contained in the Registration Statement, Prospectus or preliminary
prospectus or any amendment thereof or supplement thereto or any omission or
alleged omission of a material fact required to be stated therein or necessary
to make the statements therein not misleading, but only to the extent that such
untrue statement or omission is contained in any information or affidavit so
furnished in writing by such Holder expressly for use in the Registration
Statement; provided, however, that the obligation to indemnify shall be several,
--------
not joint and several, among such Holders and the liability of each such Holder
shall be in proportion to and limited to the net amount received by such Holder
from the sale of Registrable Common Stock pursuant to such Registration
Statement.
(c) Any Person entitled to indemnification hereunder shall (i) give prompt
written notice to the indemnifying party of any claim with respect to which it
seeks indemnification and (ii) unless in such indemnified party's reasonable
judgment a conflict of interest between such indemnified and indemnifying
parties may exist with respect to such claim, permit such indemnifying party to
assume the defense of such claim with counsel reasonably satisfactory to the
indemnified party. If such defense is assumed, the indemnifying party shall not
be subject to any liability for any settlement made by the indemnified party
without its consent (but such consent will not be unreasonably withheld). An
indemnifying party who is not entitled to, or
16
<PAGE>
elects not to, assume the defense of a claim shall not be obligated to pay the
fees and expenses of more than one counsel for all parties indemnified by such
indemnifying party with respect to such claim, unless in the reasonable judgment
of any indemnified party a conflict of interest may exist between such
indemnified party and any other of such indemnified parties with respect to such
claim. Failure to give prompt written notice shall not release the indemni fying
party from its obligations thereunder.
(d) The indemnification provided for under this Agreement shall remain
in full force and effect regardless of any investigation made by or on behalf of
the indemnified party or any officer, director or controlling Person of such
indemnified party and shall survive the transfer of securities.
(e) If the indemnification provided for in or pursuant to this Section 7
is due in accordance with the terms hereof, but is held by a court to be
unavailable or unenforceable in respect of any losses, claims, damages,
liabilities or expenses referred to herein, then each applicable indemnifying
party, in lieu of indemnifying such indemnified party, shall contribute to the
amount paid or payable by such indemnified person as a result of such losses,
claims, damages, liabilities or expenses in such proportion as is appropriate to
reflect the relative fault of the indemnifying party on the one hand and of
the indemnified party on the other in connection with the statements or
omissions which result in such losses, claims, damages, liabilities or expenses
as well as any other relevant equitable considerations. The relative fault of
the indemnifying party on the one hand and of the indemnified person on the
other 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
indemnifying party or by the indemnified party, and by such party's relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission. In no event shall the liability of any selling
Holder be greater in amount than the amount of net proceeds received by such
Holder upon such sale or the amount for which such indemnifying party would
have been obligated to pay by way of indemnification if the indemnification
provided for under Section 7(a) or 7(b) hereof had been available under the
circumstances.
17
<PAGE>
8. Participation in Underwritten Registrations.
No Person may participate in any registration hereunder which is
underwritten unless such Person (a) agrees to sell such Person's securities on
the basis provided in any underwriting arrangements approved by the Person or
Persons entitled hereunder to approve such arrangements and (b) completes and
executes all questionnaires, powers of attorney, indemnities, underwriting
agreements and other documents required under the terms of such underwriting
arrangements.
9. Rule 144.
The Company covenants that it will 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 (or, if the Company is not required to file such
reports, it will, upon the request of any holder of Registrable Common Stock,
make publicly available such information as necessary to permit sales pursuant
to Rule 144 under the Securities Act), and it will take such further action as
any Holder may reasonably request, to the extent required to enable such Holder
to sell Registrable Common Stock without registration under the Securities Act
within the limitation of the exemptions provided by (i) Rule 144 under the
Securities Act, as such Rule may be amended from time to time, or (ii) any
similar rule or regulation hereafter adopted by the SEC. Upon the request of
any Holder, the Company will deliver to such Holder a written statement as to
whether it has complied with such information and requirements.
10. Miscellaneous.
(a) No Inconsistent Agreements. The Company shall not hereafter enter
--------------------------
into any agreement with respect to its securities which is inconsistent with the
rights granted to the Holders in this Agreement.
(b) Remedies. The parties agree and acknowledge that the rights granted
--------
to the parties hereunder are valuable and unique and that any Person having
rights under any provision of this Agreement shall be entitled to enforce such
rights specifically (without the posting of any bond or other security), to
recover damages caused by reason of any breach
18
<PAGE>
of any provision of this Agreement and to exercise all other rights granted by
law.
(c) Amendments and Waivers. Except as otherwise provided herein, the
----------------------
provisions of this Agreement may be amended and the Company may take any action
herein prohibited, or omit to perform any act herein required to be
performed by it, only if the Company has obtained the written consent of Holders
of a majority of the number of shares of Registrable Common Stock then
outstanding; provided, however, that if such prohibited action or omission does
- --------
not adversely affect the rights of all of the Holders, the Company shall not be
required to obtain the consent of any such Holder not adversely affected
thereby.
(d) Successors and Assigns. All covenants and agreements in this
----------------------
Agreement by or on behalf of any of the parties hereto shall bind and inure to
the benefit of the respective successors and assigns of the parties hereto
(including any Person to whom Registrable Common Stock are transferred) and all
of the Holders whether so expressed or not.
(e) Severability. Whenever possible, each provision of this Agreement
------------
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be prohibited
by or invalid under applicable law, such provision will be ineffective only to
the extent of such prohibition or invalidity, without invalidating the
remainder of such provision or this Agreement.
(f) Counterparts. This Agreement may be executed simultaneously in
------------
counterparts, each of which shall constitute an original, but both of which
taken together shall constitute one and the same Agreement.
(g) Descriptive Headings. The descriptive headings of this Agreement are
--------------------
inserted for convenience only and do not constitute a part of this Agreement.
(h) Governing Law. This Agreement shall be governed by and construed in
-------------
accordance with the laws of the State of New York, without giving effect to
conflict of laws rules.
(i) Notices. All notices, demands or other communications to be given
-------
or delivered under or by reason of the
19
<PAGE>
provisions of this Agreement shall be in writing and shall be deemed to have
been given (i) when delivered personally or by overnight courier or similar
courier to the recipient, (ii) by facsimile transmission (receipt of which is
confirmed) or (iii) three business days after being mailed by certified or
registered mail, return receipt requested and postage prepaid, properly
addressed, to the recipient. Such notices, demands and other communications
shall be sent as follows:
(1) If to the Company:
Samsonite Corporation
11200 East 45th Avenue
Denver, CO 80239
Attention: General Counsel
Facsimile No.: (303) 373-6406
with a copy to:
Skadden, Arps, Slate, Meagher & Flom LLP
919 Third Avenue
New York, New York 10022
Attention: Gregory A. Fernicola, Esq.
Facsimile No.: (212) 735-2000
(2) If to Apollo:
Apollo Advisors, L.P.
2 Manhattanville Road
Purchase, New York 10577
Facsimile No.: (212) 261-4070
(3) If to any other Holder:
at the address or facsimile number indicated on the books of the
Company
or to such other address or to the attention of such other person as the
recipient party has specified by prior written notice to the sending party.
20
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this Agreement, effective
as of April 7, 1999.
SAMSONITE CORPORATION
By: Steve Armstrong
----------------
Name: Steve Armstrong
Title: General Counsel
APOLLO INVESTMENT FUND, L.P.
By: Apollo Advisors, L.P.,
Its General Partner
By: Apollo Capital Management, Inc.,
Its General Partner
By: Robert H. Falk
---------------
Name: Robert H. Falk
Title: Vice President
22
<PAGE>
Exhibit 10.3
CERTIFICATE OF THE DESIGNATIONS,
POWERS, PREFERENCES AND RIGHTS
OF
SERIES Z CONVERTIBLE PREFERRED STOCK
OF
SAMSONITE CORPORATION
________________________
Pursuant to Section 151 of the
General Corporation Law of the State of Delaware
________________________
Samsonite Corporation, a Delaware corporation (the "Company"),
certifies that pursuant to the authority contained in Article IV of its Restated
Certificate of Incorporation, as amended (the "Certificate of Incorporation"),
and in accordance with the provisions of Section 151 of the General Corporation
Law of the State of Delaware, the Board of Directors of the Company at a meeting
duly called and held on April 7, 1999, duly approved and adopted the following
resolution which resolution remains in full force and effect on the date hereof:
RESOLVED, that pursuant to the authority vested in the Board of
Directors by the Certificate of Incorporation, the Board of Directors does
hereby designate, create, authorize and provide for the issue of a series of
preferred stock having a par value of $0.01 per share, which shall be designated
as "Series Z Convertible Preferred Stock" (the "Convertible Preferred Stock")
consisting of 2,000 shares, having the following powers, preferences and rights,
and qualifications, limitations and restrictions thereof, as follows (certain
capitalized terms used herein are defined in Section 13 hereof):
<PAGE>
1. Dividends.
---------
(i) Holders of shares of the Convertible Preferred Stock shall be entitled
to receive, when, as and if dividends are declared by the Board of Directors out
of funds of the Company legally available therefor, if such shares of
Convertible Preferred Stock are held of record at the close of business on any
record date (each, a "Record Date") with respect to payment of dividends on the
Common Stock, the amount of dividends as set forth below. The amount of
dividends payable in respect of each share of Convertible Preferred Stock shall
be equal to the result obtained by multiplying (a) the number of shares
(including fractions) of Common Stock into which such share of Convertible
Preferred Stock is (or, but for the proviso to the first sentence of Section
2(i) below, would be) convertible on the Record Date by (b) the amount of
dividends declared and paid on each share of Common Stock; provided, however,
-------- -------
that if the Company declares and pays a dividend on the Common Stock consisting
in whole or in part of Common Stock, then no such dividend shall be payable in
respect of the Convertible Preferred Stock on account of the portion of such
dividend on the Common Stock payable in Common Stock and in lieu thereof the
anti-dilution adjustment in Section 3(i) below shall apply and; provided
--------
further, that holders of shares of Convertible Preferred Stock shall not be
- -------
entitled to receive, and shall not participate in the distribution of, the
transferable subscription rights to be distributed to holders of the Company's
Common Stock in connection with the Company's proposed rights offering referred
to in the Investment Agreement (the "Rights Offering"). No dividend shall be
paid or declared on any share of Common Stock (other than dividends payable in
Common Stock and other than pursuant to the Rights Offering), unless a dividend,
payable in the same consideration and manner, is simultaneously paid or
declared, as the case may be, on each share of Convertible Preferred Stock in an
amount determined as set forth above. For purposes hereof, the term "dividends"
shall include any pro rata distribution by the Company, out of funds of the
--- ----
Company legally available therefor, of cash, property, securities (including,
but not limited to, rights, warrants or options) or other property or assets to
the holders of the Common Stock, whether or not paid out of capital, surplus or
earnings.
(ii) Notwithstanding the foregoing, if dividends are declared in respect
of the Common Stock that are payable in rights, options, warrants or other
convertible or
2
<PAGE>
exchangeable securities (collectively, "Rights") that entitle the holders
thereof to acquire shares of Common Stock (other than pursuant to the Rights
Offering), the dividends payable in respect of the Convertible Preferred Stock
shall consist of substantially identical Rights that instead are convertible
into or exercisable or exchangeable for (as the case may be) shares of
convertible preferred stock that have substantially identical terms and
provisions (determined by the Company in good faith) as the Convertible
Preferred Stock (the "New Convertible Preferred Stock") and the amount of such
dividend payable in respect of each share of Convertible Preferred Stock shall
be such that the number of shares of New Convertible Preferred Stock (and/or
fraction(s) thereof) into which or for which such Rights are convertible,
exchangeable or exercisable shall equal that number of shares of New Convertible
Preferred Stock which, if fully converted, would be convertible into the number
of shares of Common Stock into which or for which the Rights would have been
convertible, exchangeable or exercisable had such dividend been payable to the
holders of the Convertible Preferred Stock in accordance with paragraph (i)
above without regard to this paragraph, and the conversion price, exercise price
and/or exchange rate thereof shall be determined in a similar manner (determined
by the Company in good faith).
(iii) Prior to declaring any dividend on shares of Common Stock, the
Company shall take all prior corporate action necessary to authorize the
issuance of any securities payable as a dividend in respect of the Convertible
Preferred Stock.
1. Conversion Rights.
-----------------
(i) Each share of Convertible Preferred Stock shall be convertible at any
time, or from time to time, unless previously redeemed by the Company pursuant
to Section 5 hereof, at the option of the holder thereof, into such number of
shares of Common Stock as described below; provided, however, that a holder of
-------- -------
Convertible Preferred Stock may not convert its shares of Convertible Preferred
Stock into shares of Common Stock prior to the later of (x) expiration or
termination of any waiting period (and any extension thereof) under (1) the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act")
and (2) any similar period (as determined by the Company in good faith) under
the regulations and decisions of the Commission of the European Communities ("EC
Rules"), applicable to such holder's acquisition of the Convertible
3
<PAGE>
Preferred Stock, the Common Stock underlying the Convertible Preferred Stock,
the Rights Offering or any of the transactions contemplated thereby, to the
extent that the Company determines in good faith such filing and waiting period
under such EC Rules are in the best interests of the Company and (y) the
completion, termination or abandonment (as determined by the Company in good
faith) of the Rights Offering. The number of shares of Common Stock issuable
upon conversion of each share of Convertible Preferred Stock shall be equal to
the result obtained by dividing (a) $25,410 by (b) the Conversion Price then in
effect and (c) in the case of any fraction of a share of Convertible Preferred
Stock, by multiplying such result by such fraction.
If the Company issues subscription rights in the Rights Offering with a per
share subscription price for Common Stock that is different than the Conversion
Price, the Conversion Price in effect immediately prior to the date of
commencement of the Rights Offering shall automatically be adjusted, effective
as of the date of commencement of the Rights Offering, to equal such per share
subscription price.
(ii) To convert shares of Convertible Preferred Stock, a holder must (A)
surrender the certificate or certificates evidencing such holder's shares of
Convertible Preferred Stock to be converted, duly endorsed in a form
satisfactory to the Company, at the office of the Company or transfer agent for
the Convertible Preferred Stock, if any, (B) notify the Company at such office
that such holder elects to convert Convertible Preferred Stock and the number of
shares such holder wishes to convert, (C) state in writing the name or names in
which such holder wishes the certificate or certificates for shares of Common
Stock to be issued, and (D) pay any transfer or similar tax, if required. Such
notice referred to in clause (B) above shall be delivered substantially in the
following form:
"NOTICE TO EXERCISE CONVERSION RIGHT
The undersigned, being a holder of the Series Z Convertible Preferred Stock
of Samsonite Corporation (the "Convertible Preferred Stock") irrevocably
exercises the right to convert ____________ outstanding shares of Convertible
Preferred Stock on ___________, ____, into shares of Common Stock of Samsonite
Corporation in accordance with the terms of the shares of Convertible Preferred
Stock, and directs that the shares issuable and
4
<PAGE>
deliverable upon the conversion, together with any check in payment for
fractional shares, be issued and delivered in the denominations indicated below
to the registered holder hereof unless a different name has been indicated
below. If shares are to be issued in the name of a person other than the
undersigned, the undersigned will pay all transfer taxes payable with respect
thereto.
Dated: [At least one Business Day prior to the date fixed for conversion]
Fill in for registration of
shares of Common Stock
if to be issued otherwise
than to the registered
holder:
- -------------------------------------
Name
- -------------------------------------
Address
- ------------------ --------------------------
Please print name and (Signature)
address, including postal
code number
Denominations:__________________"
(iii) Shares of the Convertible Preferred Stock shall be deemed to have
been converted immediately prior to the close of business on the day of the
surrender of such shares for conversion in accordance with the foregoing
provisions, and the person or persons entitled to receive the Common Stock
issuable upon such conversion shall be treated for all purposes as the record
holder or holders of such Common Stock at such time. As promptly as practicable
on or after the conversion date, the Company shall issue and shall deliver at
such office a certificate or certificates for the number of full shares of
Common Stock issuable upon such conversion, together with payment in lieu of any
fraction of a share, as hereinafter provided, to the person or persons entitled
to receive the same.
5
<PAGE>
(iv) The Company shall at all times reserve and keep available, free from
pre-emptive rights, out of its authorized but unissued Common Stock, for the
purpose of effecting the conversion of the Convertible Preferred Stock, the full
number of shares of Common Stock then issuable upon the conversion of all shares
of Convertible Preferred Stock then outstanding and shall take all such action
and obtain all such permits or orders as may be necessary to enable the Company
lawfully to issue such Common Stock upon such conversion.
(v) No fractional shares of Common Stock shall be issued upon conversion,
but, instead of any fraction of a share which would otherwise be issuable, the
Company shall pay a cash adjustment in respect of such fraction in an amount
equal to the Market Price of such fraction as of the close of business on the
day of conversion.
(vi) The Company will pay any and all taxes that may be payable in respect
of the issue or delivery of shares of Common Stock on conversion of the
Convertible Preferred Stock pursuant hereto. The Company shall not, however, be
required to pay any tax which may be payable in respect of any transfer involved
in the issue and delivery of shares of Common Stock in a name other than that in
which the shares of Convertible Preferred Stock so converted were registered,
and no such issue or delivery shall be made unless and until the person
requesting such issue has paid to the Company the amount of any such tax, or has
established to the satisfaction of the Company that such tax has been paid.
3. Anti-dilution Adjustments.
-------------------------
(i) If the Company (a) pays a dividend or makes any other distribution on
or in respect of the Common Stock payable in Common Stock, (b) subdivides or
combines its outstanding shares of Common Stock into a greater or smaller number
of shares, or (c) issues or distributes any equity securities by
reclassification of its Common Stock (other than any issuance constituting a
dividend in which the holders of the Convertible Preferred Stock participate in
accordance with Section 1 above), the Conversion Price shall be adjusted as of
the opening of business on the day following the date fixed for the
determination of stockholders entitled to receive such dividend or distribution
or at the opening of business on the day following the day on which such
subdivision, combination or reclassification becomes effective, as the case may
be, so
6
<PAGE>
that the holders of the Convertible Preferred Stock shall, upon surrender
thereafter of any shares of Convertible Preferred Stock for conversion, be
entitled to receive the number of shares of Common Stock that such holder would
have owned or have been entitled to receive after the happening of any of the
events described above had such Convertible Preferred Stock been converted
immediately prior to the record date in the case of a dividend or distribution
or the effective date in the case of a subdivision, combination or
reclassification.
(ii) In the case of any consolidation or merger of the Company with
another entity, as a result of which shares of Common Stock shall be changed
into the same or a different number of shares of the same or another class or
classes of stock or securities of the Company or another entity or any other
property or assets, then the holders of Convertible Preferred Stock shall
thereafter have the right to receive upon surrender thereafter of their shares
of Convertible Preferred Stock for conversion, such shares of common stock
and/or securities and/or other property or assets as may be issued or payable
with respect to or in exchange for the number of shares of Common Stock that
would otherwise have been received by such holders had they converted the
Convertible Preferred Stock immediately prior to the effective date of such
merger or consolidation.
(iii) Upon the occurrence of any event described in paragraphs (i) or (ii)
above, the Company shall promptly mail to each holder of Convertible Preferred
Stock, first class, postage prepaid, a notice which shall describe such event
and the change in the number of shares or other assets or securities issuable
upon conversion of the Convertible Preferred Stock, setting forth in reasonable
detail the method of calculation thereof and the facts upon which such
calculation is based.
(iv) If:
(A) the Company takes any action which would require an adjustment
pursuant to paragraphs (i) or (ii) above;
(B) the Company consolidates or merges with, or transfers all or
substantially all of its assets to, another corporation, and stockholders of the
Company must approve the transaction; or
7
<PAGE>
(C) there is a dissolution or liquidation of the Company;
the Company shall mail to holders of the Convertible Preferred Stock, first
class, postage prepaid, a notice stating the proposed record or effective date,
as the case may be. The Company shall mail the notice at least 10 days before
such date. However, failure to mail the notice or any defect in it shall not
affect the validity of any transaction referred to in clause (A), (B) or (C) of
this paragraph.
4. Liquidation Preference. In the event of any voluntary or involuntary
----------------------
liquidation, winding-up or dissolution of the Company or reduction or decrease
in its capital stock resulting in a distribution of assets to the holders of any
class or series of the Company's capital stock, after there shall have been
paid, or set apart for payment, to the holders of the outstanding shares of any
class having preference over the Convertible Preferred Stock the preferential
amounts as to which they are respectively entitled, the holders of the
Convertible Preferred Stock shall be entitled to share ratably with the holders
of the Common Stock (and all other classes and series of stock entitled to
participate with the Common Stock) in the remaining assets of the Company on the
basis that such holders would share if all outstanding shares of Convertible
Preferred Stock were then converted into Common Stock; provided, that in the
--------
event that such payment would be less than $0.01 per share of Convertible
Preferred Stock, the holders of the Convertible Preferred Stock shall instead be
entitled to receive out of the assets of the Company available for distribution
to its stockholders, whether from capital, surplus or earnings, an amount per
share of Convertible Preferred Stock equal to $0.01 per share (or if less than
$0.01 per share is available for distribution in respect of the Convertible
Preferred Stock, then all such remaining funds shall be distributed pro rata in
--- ----
respect of the Convertible Preferred Stock), before any payment or distribution
shall be made to the holders of the Common Stock (or any other class or series
of stock entitled to participate with the Common Stock). If, upon any
liquidation, winding-up or dissolution of the Company, the assets of the
Company, or proceeds thereof, distributable among the holders of shares of
Convertible Preferred Stock or any capital stock ranking on a parity with the
Convertible Preferred Stock upon liquidation, winding-up or dissolution of the
Company, shall be insufficient to pay in full the preferential amounts to
8
<PAGE>
which such stock would be entitled, then such assets, or the proceeds thereof,
shall be distributable among such holders ratably in accordance with the
respective amounts which would be payable on such shares if all amounts payable
thereon were payable in full. For the purposes hereof, neither a consolidation
nor merger of the Company with one or more other corporations, nor a sale or a
transfer of all or substantially all of the assets of the Company, shall be
deemed to be a liquidation, winding-up or dissolution, voluntary or involuntary,
of the Company.
5. Mandatory Redemption.
--------------------
(i) Subject to prior compliance with the HSR Act, and subject to
compliance with any applicable EC Rules to the extent that the Company
determines in good faith that such compliance is in the best interests of the
Company, the Company may, at its option, redeem the shares of Convertible
Preferred Stock, in whole or in part, at any time subsequent to the completion,
termination or abandonment (as determined by the Company in good faith) of the
Rights Offering, or from time to time thereafter, in exchange for Common Stock.
The number of shares of Common Stock so issuable upon redemption of each share
of Convertible Preferred Stock shall be equal to the result obtained by dividing
(a) $25,410 by (b) the Conversion Price in effect on the Redemption Date (as
defined below) and (c) in the case of any fraction of a share of Convertible
Preferred Stock, by multiplying such result by such fraction.
(ii) At least 10 and not more than 60 days prior to the date fixed for any
redemption (the "Redemption Date"), the Company shall provide written notice by
first class mail, postage prepaid, to each holder of record of the Convertible
Preferred Stock on the record date fixed for such redemption of the Convertible
Preferred Stock at their last address as it shall appear on the books of the
Company; provided, however, that no failure to give such notice or any defect
-------- -------
therein or in the mailing thereof shall affect the validity of the procedure for
the redemption of any shares of Convertible Preferred Stock except as to the
holder to whom the Company has failed to give notice or except as to the holder
to whom notice was defective. In addition to any information required by law or
by the applicable rules of any exchange upon which Convertible Preferred Stock
may be listed or admitted to trading, such notice shall state:
9
<PAGE>
(1) that such redemption is being made pursuant to the mandatory
redemption provisions of Section 5(i) hereof;
(2) the Redemption Date;
(3) the number of shares of Convertible Preferred Stock to be
redeemed and, if less than all shares held by such holder are to be
redeemed, the number of such shares to be redeemed;
(4) the Conversion Price then in effect;
(5) the number of shares of Common Stock to be received by such
holder in exchange for such holder's shares of Convertible Preferred Stock
which are to be redeemed and the method of calculation thereof; and
(6) the place or places where certificates for such shares are to be
surrendered for exchange, including any procedures applicable to
redemptions to be accomplished through book-entry transfers.
Upon the mailing of any such notice of redemption, the Company shall become
obligated to redeem at the time of redemption specified thereon all shares
called for redemption.
(iii) If notice has been mailed in accordance with Section 5(ii) above and
provided, that at all times prior to the Redemption Date specified in such
- --------
notice, the Company shall reserve and keep available, free from pre-emptive
rights, out of its authorized but unissued Common Stock, for the purpose of
effecting the redemption of the Convertible Preferred Stock, the full number of
shares of Common Stock issuable upon the exchange of the Convertible Preferred
Stock, then, from and after the Redemption Date, said shares shall no longer be
deemed to be outstanding and shall not have the status of shares of Convertible
Preferred Stock. Upon surrender, in accordance with said notice, of the
certificates for any shares so redeemed (properly endorsed or assigned for
transfer, if the Company shall so require and the notice shall so state), such
shares shall be redeemed by the Company in exchange for the applicable number of
shares of Common Stock determined in accordance with Section 5(i) above. In
case fewer than all the shares represented by any such certificate are redeemed,
a new certificate or certificates shall be issued
10
<PAGE>
representing the unredeemed shares without cost to the holder thereof.
6. Mandatory Conversion. Subject to prior compliance with the HSR Act,
--------------------
and subject to compliance with any applicable EC Rules to the extent that the
Company determines in good faith that such compliance is in the best interests
of the Company, in the event that, at any time subsequent to the completion,
termination or abandonment (as determined by the Company in good faith) of the
Rights Offering, any holder of Convertible Preferred Stock transfers beneficial
ownership of any of such holder's shares of Convertible Preferred Stock to any
third party not affiliated with such holder, all such shares of Convertible
Preferred Stock so transferred shall be automatically deemed converted into
Common Stock (at the conversion rate set forth in Section 2(i) hereof) upon any
such transfer, without any action on the part of the Company, such holder or the
transferee.
7. Voting Rights.
-------------
(i) The holders of record of shares of the Preferred Stock shall have no
voting rights, except as required by law or by the applicable rules of any
securities exchange or automated quotation system upon which Convertible
Preferred Stock may be listed or admitted to trading and as hereinafter provided
in this Section 7.
(ii) Upon any consolidation, merger, reclassification or similar
transaction, as a result of which:
(a) the Convertible Preferred Stock would be converted into anything
other than the underlying Common Stock into which such Convertible
Preferred Stock would have been converted had such conversion taken place
prior to the effective date of such consolidation, merger, reclassification
or similar transaction or
(b) the terms of the Common Stock underlying the Convertible
Preferred Stock would be amended or altered (each of the events described
in clause (a) above and this clause (b) is referred to herein as a "Voting
Rights Triggering Event"));
then the holders of a majority of the outstanding shares of Convertible
Preferred Stock, voting as a separate single class, shall have the right to
approve any such
11
<PAGE>
consolidation, merger, reclassification or similar transaction.
(iii) Whenever such voting right shall have vested by virtue of a Voting
Rights Triggering Event, such right may be exercised initially either at a
special meeting of the holders of Convertible Preferred Stock, called as
hereinafter provided, or at any annual meeting of stockholders or by the written
consent of the holders of Convertible Preferred Stock.
(iv) At any time when such voting right shall have vested in the holders
of Convertible Preferred Stock and if such right shall not already have been
initially exercised, a proper officer of the Company shall, upon the written
request of holders of record of 10% or more of the Convertible Preferred Stock
then outstanding, addressed to the Secretary of the Company, call a special
meeting of holders of Convertible Preferred Stock. Such meeting shall be held at
the earliest practicable date upon the notice required for annual meetings of
stockholders at the place for holding annual meetings of stockholders of the
Company or, if none, at a place designated by the Secretary of the Company. If
such meeting shall not be called by the proper officers of the Company within 30
days after the personal service of such written request upon the Secretary of
the Company, or within 30 days after mailing the same within the United States,
by registered mail, addressed to the Secretary of the Company at its principal
office (such mailing to be evidenced by the registry receipt issued by the
postal authorities), then the holders of record of 10% of the shares of the
Convertible Preferred Stock then outstanding may designate in writing a holder
of Convertible Preferred Stock to call such meeting at the expense of the
Company, and such meeting may be called by such person so designated upon the
notice required for annual meetings of stockholders and shall be held at the
place for holding annual meetings of the Company or, if none, at a place
designated by such holder. Any holder of Convertible Preferred Stock that would
be entitled to vote at such meeting shall have access to the stock books of the
Company for the purpose of causing a meeting of stockholders to be called
pursuant to the provisions of this Section 7. Notwithstanding the provisions of
this paragraph, however, no such special meeting shall be called if any such
request is received less than 90 days before the date fixed for the next ensuing
annual or special meeting of stockholders.
12
<PAGE>
(v) The Company shall not, without the affirmative vote or consent of the
holders of at least 66 2/3% of the shares of Convertible Preferred Stock then
outstanding (with shares held by the Company not being considered to be
outstanding for this purpose) voting or consenting as the case may be, as one
class:
(a) amend or otherwise alter this Certificate of Designations
(including the provisions of Section 7 hereof) in any manner, either
directly or indirectly, including, without limitation, through merger or
consolidation with another entity, that adversely affects the specified
rights, preferences, privileges or voting rights of holders of Convertible
Preferred Stock; provided that no merger or consolidation pursuant to which
--------
the Convertible Preferred Stock is converted into or exchanged for
securities or assets that are the same as the holders of Convertible
Preferred Stock would have received had they converted such Convertible
Preferred Stock immediately prior thereto (whether or not such conversion
was then permitted pursuant to the proviso to the first sentence of
paragraph 2(i) hereof) shall be deemed to have adversely affected the
specified rights, preferences, privileges or voting rights of the holders
of Convertible Preferred Stock;
(b) alter the voting rights with respect to the Convertible Preferred
Stock or reduce the number of shares of Convertible Preferred Stock whose
holders must consent to an amendment, supplement or waiver;
(c) reduce the liquidation preference of or alter the number of
shares of Common Stock issuable upon redemption of the Convertible
Preferred Stock in accordance with the second sentence of Section 5(i)
hereof;
(d) reduce the rate of or change the time for payment of dividends on
any share of Convertible Preferred Stock;
(e) waive the consequences of any failure to pay dividends on the
Convertible Preferred Stock;
(f) make any share of Convertible Preferred Stock payable in any form
other than that stated in this Certificate of Designations;
13
<PAGE>
(g) make any change in the provisions of this Certificate of
Designations relating to waivers of the rights of holders of Convertible
Preferred Stock to receive the liquidation preference and dividends on the
Convertible Preferred Stock; or
(h) make any change in the foregoing amendment and waiver provisions.
(vii) The Company in its sole discretion may without the vote or consent of
any holders of the Convertible Preferred Stock amend or supplement this
Certificate of Designations:
(a) to cure any ambiguity, defect or inconsistency;
(b) to provide for uncertificated Convertible Preferred Stock in
addition to or in place of certificated Convertible Preferred Stock; or
(c) to make any change that would provide any additional rights or
benefits to the holders of the Convertible Preferred Stock or that does not
adversely affect the legal rights under this Certificate of Designations of
any such holder.
(vii) The consent of the holders of the Convertible Preferred Stock will
not be required for the Company to increase or decrease the amount of authorized
capital stock of any class, including any preferred stock, and such increase or
decrease in the amount of such authorized capital stock shall not be deemed to
affect adversely the rights, preferences, privileges, special rights or voting
rights of holders of shares of Convertible Preferred Stock.
8. Exclusion of Other Rights. Except as may otherwise be required by
-------------------------
law, the shares of Convertible Preferred Stock shall not have any voting powers,
preferences and relative, participating, optional or other special rights, other
than those specifically set forth in this resolution (as such resolution may be
amended from time to time) and in the Certificate of Incorporation. The shares
of Convertible Preferred Stock shall have no preemptive or subscription rights.
14
<PAGE>
9. Headings of Subdivisions. The headings of the various subdivisions
------------------------
hereof are for convenience of reference only and shall not affect the
interpretation of any of the provisions hereof.
10. Severability of Provisions. If any voting powers, preferences and
--------------------------
relative, participating, optional and other special rights of the Convertible
Preferred Stock and qualifications, limitations and restrictions thereof set
forth in this Certificate of Designations (as such Certificate of Designations
may be amended from time to time) is invalid, unlawful or incapable of being
enforced by reason of any rule of law or public policy, all other voting powers,
preferences and relative, participating, optional and other special rights of
Convertible Preferred Stock and qualifications, limitations and restrictions
thereof set forth in this Certificate of Designations (as so amended) which can
be given effect without the invalid, unlawful or unenforceable voting powers,
preferences and relative, participating, optional or other special rights of
Convertible Preferred Stock and qualifications, limitations and restrictions
thereof shall, nevertheless, remain in full force and effect, and no voting
powers, preferences and relative, participating, optional or other special
rights of Convertible Preferred Stock and qualifications, limitations and
restrictions thereof herein set forth shall be deemed dependent upon any other
such voting powers, preferences and relative, participating, optional or other
special rights of Convertible Preferred Stock and qualifications, limitations
and restrictions thereof unless so expressed herein.
11. Re-issuance of Convertible Preferred Stock. Shares of Convertible
------------------------------------------
Preferred Stock that have been issued and reacquired in any manner, including
shares purchased or redeemed or exchanged or converted, shall (upon compliance
with any applicable provisions of the laws of Delaware) have the status of
authorized but unissued shares of preferred stock of the Company undesignated as
to series and may be designated or re-designated and issued or reissued, as the
case may be, as part of any series of preferred stock of the Company; provided,
--------
that any issuance of such shares as Convertible Preferred Stock must be in
compliance with the terms hereof.
12. Mutilated or Missing Preferred Stock Certificates. If any of the
-------------------------------------------------
Convertible Preferred Stock certificates shall be mutilated, lost, stolen or
destroyed, the Company shall issue, in exchange and in substitution
15
<PAGE>
for and upon cancellation of the mutilated Convertible Preferred Stock
certificate, or in lieu of and substitution for the Convertible Preferred Stock
certificate lost, stolen or destroyed, a new Convertible Preferred Stock
certificate of like tenor and representing an equivalent amount of shares of
Convertible Preferred Stock, but only upon receipt of evidence of such loss,
theft or destruction of such Convertible Preferred Stock certificate and
indemnity, if requested, satisfactory to the Company and the transfer agent (if
other than the Company).
13. Certain Definitions. As used in this Certificate of Designations,
-------------------
the following terms shall have the following meanings (with terms defined in the
singular having comparable meanings when used in the plural and vice versa),
unless the context otherwise requires:
"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.
"Closing Price" means, for any Trading Day, the closing bid price for the
-------------
Common Stock on the Nasdaq Stock Market or, if the Common Stock is not quoted on
the Nasdaq Stock Market, the closing bid price in the over-the-counter market as
furnished by any New York Stock Exchange member firm selected from time to time
by the Company for that purpose.
"Commission" means the Securities and Exchange Commission.
----------
"Common Stock" means the common stock, par value $0.01 per share, of the
------------
Company.
"Conversion Price" shall initially mean $6.00 per share of Convertible
----------------
Preferred Stock and thereafter shall be subject to adjustment from time to time
pursuant to the terms of the second paragraph of Section 2(i) hereof and Section
3 hereof.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
------------
"Investment Agreement" means the Investment Agreement, dated as of April 7,
--------------------
1999, between the Company and Apollo Investment Fund, L.P.
16
<PAGE>
"Market Price", per share of Common Stock, on any date, shall mean the
------------
previous Trading Day's Closing Price.
"Person" means any individual, corporation, partnership, joint venture,
------
association, joint stock company, trust, limited liability company,
unincorporated organization, government or any agency or political subdivision
thereof or any other entity.
"Trading Day" means any day on which the Nasdaq Stock Market or other
-----------
applicable stock exchange or market is open for business.
IN WITNESS WHEREOF, the Company has caused this certificate to be duly
executed by, Richard H. Wiley, Chief Financial Officer of the Company, and
attested by Steve Armstrong, Assistant Secretary of the Company, this 9th day of
April, 1999.
SAMSONITE CORPORATION
By: /s/ RICHARD H. WILEY
------------------------------
Name: Richard H. Wiley
Title: Chief Financial Officer
ATTEST:
By: /s/ STEVE ARMSTRONG
---------------------------
Name: Steve Armstrong
Title: Assistant Secretary
17
<PAGE>
Exhibit 10.4
================================================================================
REGISTRATION RIGHTS AGREEMENT
between
SAMSONITE CORPORATION
and
APOLLO INVESTMENT FUND, L.P.
___________________
Dated as of April 7, 1999
================================================================================
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
1. Certain Definitions................................................... 1
2. Demand Registrations.................................................. 2
(a) Right to Request Registration.................................... 2
(b) Number of Demand Registrations................................... 3
(c) Priority on Demand Registrations................................. 3
(d) Restrictions on Demand Registrations............................. 4
(e) Selection of Underwriters........................................ 4
(f) Other Registration Rights........................................ 5
(g) Pre-emption of Demand Registration............................... 5
(h) Effective Period of Demand Registrations......................... 6
3. Piggyback Registrations............................................... 6
(a) Right to Piggyback............................................... 6
(b) Priority on Primary Registrations................................ 7
(c) Priority on Secondary Registrations.............................. 7
(d) Selection of Underwriters........................................ 8
(e) Other Registrations.............................................. 8
4. Holdback Agreements................................................... 8
5. Registration Procedures............................................... 9
6. Registration Expenses................................................. 13
7. Indemnification....................................................... 14
8. Participation in Underwritten Registrations........................... 17
9. Rule 144.............................................................. 17
10. Miscellaneous......................................................... 17
(a) No Inconsistent Agreements....................................... 17
(b) Remedies......................................................... 17
(c) Amendments and Waivers........................................... 18
(d) Successors and Assigns........................................... 18
(e) Severability..................................................... 18
(f) Counterparts..................................................... 18
(g) Descriptive Headings............................................. 18
(h) Governing Law.................................................... 18
(i) Notices.......................................................... 18
</TABLE>
ii
<PAGE>
REGISTRATION RIGHTS AGREEMENT dated as of April 7, 1999, between Samsonite
Corporation, a Delaware corporation (the "Company"), and Apollo Investment Fund,
L.P., a Delaware limited partnership ("Apollo").
In consideration of the mutual covenants and agreements herein
contained and other good and valid consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties to this Agreement hereby agree as
follows:
1. Certain Definitions.
In addition to the terms defined elsewhere in this Agreement, the following
terms shall have the following meanings:
"Agreement" means this Registration Rights Agreement, including all
---------
amendments, modifications and supplements and any exhibits or schedules to any
of the foregoing, and shall refer to this Registration Rights Agreement as the
same may be in effect at the time such reference becomes operative.
"Business Day" means any day on which commercial banks are open for
------------
business in New York, New York.
"Common Stock" means the Company's common stock, par value $0.01 per share.
------------
"Convertible Preferred Stock" means the Company's Series Z Convertible
---------------------------
Preferred Stock, par value $0.01 per share.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
------------
"Holder" means Apollo, its affiliates, accounts managed by Apollo or any
------
such affiliate and any successors or as-signs of Apollo, any such affiliate or
any such account who acquires Registrable Common Stock, directly or indirectly,
from Apollo, such affiliate, such account or such transferee or assignee. For
purposes of this Agreement, the Company may deem and treat the registered holder
of Registrable Common Stock as the Holder and absolute owner thereof, and the
Company shall not be affected by any notice to the contrary.
"Person" means an individual, partnership, corporation, trust, limited
------
liability company, or unincorporated organi-
<PAGE>
zation, or a government or agency or political subdivision thereof.
"Prospectus" means the prospectus or prospectuses included in any
----------
Registration Statement, as amended or supplemented by any prospectus
supplement with respect to the terms of the offering of any portion of the
Registrable Common Stock covered by such Registration Statement and by all other
amendments and supplements in the prospectus, including post-effective
amendments and all material incorporated by reference in such prospectus or
prospectuses.
"Registrable Common Stock" means (a) any of the Common Stock or (b) any of
------------------------
the Convertible Preferred Stock, in each case, held by the Holders from time to
time as to which registration pursuant to the Securities Act is required for a
public sale, including, in the case of Convertible Preferred Stock, the Common
Stock issued or issuable upon conversion of the Convertible Preferred Stock.
"Registration Statement" means any registration statement of the Company
----------------------
which covers any of the Registrable Common Stock 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 materials incorporated by reference in such Registration Statement.
"SEC" means the Securities and Exchange Commission.
---
"Securities Act" means the Securities Act of 1933, as amended.
--------------
"underwritten registration or underwritten offering" means a registration
--------------------------------------------------
in which securities of the Company are sold to underwriters for reoffering to
the public.
2. Demand Registrations.
(a) Right to Request Registration. Any time after the date of this
-----------------------------
Agreement, Apollo, its affiliates or any Person designated by Apollo or its
affiliates (so long as the Person making such demand is a Holder of Registrable
Common Stock) may request registration under the Securities Act of all or part
of the Registrable Common Stock ("Demand Registrations").
Within 10 days after receipt of any such request for Demand Registration,
the Company shall give written notice
2
<PAGE>
of such request to all other Holders of Registrable Common Stock and shall,
subject to the provisions of Section 2(d) hereof, include in such registration
all such Registrable Common Stock with respect to which the Company has received
written requests for inclusion therein within 15 days after the receipt of the
Company's notice.
For purposes of determining the number of shares of Registrable Common
stock held by a Holder, for purposes of this Agreement but not for any other
purpose, any holder of record of such Convertible Preferred Stock shall be
deemed to be a Holder of the number of shares of Common Stock issuable upon
conversion of such Convertible Preferred Stock.
(b) Number of Demand Registrations. Subject to the provisions of Section
------------------------------
2(a), the Holders of Registrable Common Stock shall be entitled to request an
aggregate of three Demand Registrations; provided the Holders shall not be
--------
entitled to request more than one Demand Registration during any 12-month
period. A registration shall not count as one of the permitted Demand
Registration (i) until it has become effective, (ii) if the Holders initiating
the request for such registration are not able to register and sell at least 50%
of the Registrable Common Stock requested by such Holders to be included in such
registration or (iii) in the case of a Demand Registration that would be the
last permitted Demand Registration requested hereunder, if the Holders
requesting such registration are not able to register and sell all of the
Registrable Common Stock requested to be included by such Holders in such
registration.
(c) Priority on Demand Registrations. Except as provided in Section
--------------------------------
2(g), the Company shall not include in any Demand Registration any securities
which are not Registrable Common Stock without the written consent of the
Holders of a majority of the shares of Registrable Common Stock to be included
in such registration, or, if such Demand Registration is an underwritten
offering, without the written consent of the managing underwriters. If the
managing underwriters of the requested Demand Registration advise the Company in
writing that in their opinion the number of shares of Registrable Common Stock
proposed to be included in any such registration exceeds the number of
securities which can be sold in such offering, the Company shall include in such
registration only the number of shares of Registrable Common Stock which in the
opinion of such managing underwriters can be sold. If the number of shares which
can be sold is less than the number of shares of Registrable Common Stock
proposed to be registered, the amount of Regis-
3
<PAGE>
trable Common Stock to be so sold shall be allocated pro rata among the Holders
of Registrable Common Stock desiring to participate in such registration on the
basis of the amount of such Registrable Common Stock initially proposed to be
registered by such Holders. If the number of shares which can be sold exceeds
the number of shares of Registrable Common Stock proposed to be sold, such
excess shall be allocated pro rata among the other holders of securities, if
any, desiring to participate in such registration based on the amount of such
securities initially requested to be registered by such holders.
(d) Restrictions on Demand Registrations. The Company shall not be
------------------------------------
obligated to effect any Demand Registration within three months after the
effective date of a previous Demand Registration or a previous registration
under which the Holders had piggyback rights pursuant to Section 3 hereof
(irrespective of whether such rights were exercised). The Company may (i)
postpone for up to six months the filing or the effectiveness of a registration
statement for a Demand Registration if, based on the good faith judgment of the
Company's Board of Directors, such postponement or withdrawal is necessary in
order to avoid premature disclosure of a matter the Board has determined would
not be in the best interest of the Company to be disclosed at such time or (ii)
postpone the filing of a Demand Registration in the event the Company shall be
required to prepare audited financial statements as of a date other than its
fiscal year end (unless the stockholders requesting such registration agree to
pay the expenses of such an audit); provided, however, that in no event shall
--------
the Company withdraw a registration statement under clause (i) after such
registration statement has been declared effective; and provided, further,
--------
however, that in any of the events described in clause (i) or (ii) above, the
Holders initiating the request for such Demand Registration shall be entitled to
withdraw such request and, if such request is withdrawn, such Demand
Registration shall not count as one of the permitted Demand Registrations. The
Company shall provide written notice to the Holders of Registrable Common Stock
initiating the request for such Demand Registration of (x) any postponement or
withdrawal of the filing or effectiveness of a registration statement pursuant
to this paragraph (d), (y) the Company's decision to file or seek effectiveness
of such registration statement following such withdrawal or postponement and (z)
the effectiveness of such registration statement.
(e) Selection of Underwriters. If any of the Registrable Common Stock
-------------------------
covered by a Demand Registration are to
4
<PAGE>
be sold in an underwritten offering, the Company shall have the right to select
the managing underwriter(s) to administer the offering.
(f) Other Registration Rights. The Company shall not grant to any Person
-------------------------
the right, other than as set forth herein and except to employees of the Company
with respect to registrations on Form S-8 (or any successor forms thereto), to
request the Company to register any securities of the Company except such rights
as are not more favorable than or inconsistent with the rights granted to the
Holders herein, without the written consent of the Holders of a majority of the
number of shares of Registrable Common Stock then outstanding.
(g) Pre-emption of Demand Registration. Notwithstanding anything to the
----------------------------------
contrary contained herein, if at any time a Holder shall request a Demand
Registration pursuant to this Section 2, the Company may elect at that time to
effect an underwritten primary registration if, based on the good faith judgment
of the Company's Board of Directors, it would be in the best interests of the
Company to access the public market to raise equity capital in order to (i)
finance an acquisition that is the subject of a letter intent or acquisition
agreement at the time of such request for a Demand Registration or (ii)
deleverage the Company to deal with potential covenant or other defaults under
any material contract. If the Company elects to effect a primary registration
after receiving such a request for a Demand Registration, the Company will give
prompt written notice (and in any event within 45 days after receiving such a
request for a Demand Registration) to all Holders of its intention to effect
such a registration and shall afford the Holders rights to Piggyback
Registrations contained in Section 3 hereof, except that if the managing
underwriters of such offering advise the Company in writing that in their
opinion the number of securities requested to be included in such registration
exceeds the number which can be sold in such offering, the provisions of Section
3(b) hereof shall not apply to such offering, and instead the Company shall
include in such registration the maximum number of securities which such
underwriters advise can be sold in such offering allocated (x) first, equally
among the Company, on the one hand, and the Holders as a group, on the other
hand (allocated among such Holders pro rata on the basis of the number of shares
requested to be registered by such Holders), so as to include in such
registration up to the full number of securities requested to be included
therein by each of the Company and the Holders, (y) second, if the number of
shares included therein pursuant to the
5
<PAGE>
foregoing clause (x) equals the total number of shares requested to be included
therein by the Holders as a group or the Company, such additional number of
shares requested to be included therein by the Company or the Holders (allocated
among such holders pro rata on the basis of the number of shares requested to be
registered by such holders), respectively, and (z) third, other securities
requested to be included in such registration pro rata among the holders of such
securities on the basis of the number of shares requested to be registered by
such holders. In the event that the Company so elects to effect such a primary
registration after receiving a request for such a Demand Registration, such
registration shall not count as one of the permitted Demand Registrations of the
Holders who requested such registration.
(h) Effective Period of Demand Registrations. After any Demand
----------------------------------------
Registration filed pursuant to this Agreement has become effective, the Company
shall use its best efforts to keep such Demand Registration effective for a
period equal to 90 days from the date on which the SEC declares such Demand
Registration effective (or if such Demand Registration is not effective during
any period within such 90 days, such 90-day period shall be extended by the
number of days during such period when such Demand Registration is not
effective), or such shorter period which shall terminate when all of the
Registrable Common Stock covered by such Demand Registration has been sold
pursuant to such Demand Registration. If the Company shall withdraw any Demand
Registration pursuant to subsection (d) of this Section 2 (a "Withdrawn Demand
Registration"), the Holders of the Registrable Common Stock remaining unsold and
originally covered by such Withdrawn Demand Registration shall be entitled to a
replacement Demand Registration which (subject to the provisions of this Section
2) the Company shall use its best efforts to keep effective for a period
commencing on the effective date of such Demand Registration and ending on the
earlier to occur of the date (i) which is 90 days from the effective date of
such Demand Registration and (ii) on which all of the Registrable Common Stock
covered by such Demand Registration has been sold. Such additional Demand
Registration otherwise shall be subject to all of the provisions of this
Agreement.
3. Piggyback Registrations.
(a) Right to Piggyback. Whenever the Company proposes to register any of
------------------
its equity securities (other than Registrable Common Stock) under the Securities
Act (other than a registration statement on Form S-8 or on Form S-4 or
6
<PAGE>
any successor forms thereto), whether for its own account or for the account of
one or more securityholders of the Company, and the registration form to be used
may be used for any registration of Registrable Common Stock (a "Piggyback
Registration"), the Company shall give prompt written notice (in any event
within 10 business days after its receipt of notice of any exercise of other
demand registration rights) to all Holders of its intention to effect such a
registration and, subject to Sections 3(b) and 3(c), shall include in such
registration all Registrable Common Stock with respect to which the Company has
received written requests for inclusion therein within 15 days after the receipt
of the Company's notice. The Company may postpone or withdraw the filing or the
effectiveness of a Piggyback Registration at any time in its sole discretion.
(b) Priority on Primary Registrations. If a Piggyback Registration is an
---------------------------------
underwritten primary registration on behalf of the Company, and the managing
underwriters advise the Company in writing that in their opinion the number of
securities requested to be included in such registration exceeds the number
which can be sold in such offering, the Company shall include in such
registration (i) first, the securities the Company proposes to sell, (ii)
second, the Registrable Common Stock pro rata among the Holders of such
Registrable Common Stock on the basis of the number of shares requested to be
registered by such Holders, and (iii) third, other securities requested to be
included in such registration pro rata among the holders of such securities on
the basis of the number of shares requested to be registered by such holders.
(c) Priority on Secondary Registrations. If a Piggyback Registration is
-----------------------------------
an underwritten secondary registration on behalf of a holder of the Company's
securities other than Registrable Common Stock, and the managing underwriters
advise the Company in writing that in their opinion the number of securities
requested to be included in such registration exceeds the number which can be
sold in such offering, the Company shall include in such registration (i) first
the securities requested to be included therein by the holders requesting such
registration and the Registrable Common Stock requested to be included in such
registration, pro rata among the holders of such securities on the basis of the
number of shares requested to be registered by such holders, and (ii) second,
other securities requested to be included in such registration pro rata among
the holders of such securities on the basis of the number of shares requested to
be registered by such holders.
7
<PAGE>
(d) Selection of Underwriters. If any Piggyback Registration is an
-------------------------
underwritten primary offering, the Company shall have the right to select the
managing underwriter or underwriters to administer any such offering.
(e) Other Registrations. If the Company has previously filed a
-------------------
registration statement with respect to Registrable Common Stock pursuant to
Section 2 hereof or pursuant to this Section 3, and if such previous
registration has not been withdrawn or abandoned, the Company shall not be
obligated to cause to become effective any other registration of any of its
securities under the Securities Act, whether on its own behalf or at the request
of any holder or holders of such securities, until a period of at least three
months has elapsed from the effective date of such previous registration.
4. Holdback Agreements.
(a) Each Holder agrees not to offer, sell, contract to sell or otherwise
dispose of any shares of Common Stock, shares of Convertible Preferred Stock or
any securities that represent the right to receive shares of Common Stock or
Convertible Preferred Stock during the 10 days prior to and the 90 days
beginning on the effective date of any underwritten primary or secondary
offering of equity securities of the Company (including, but not limited to, any
underwritten Demand Registration or any underwritten Piggyback Registration
whether or not shares of Registrable Common Stock are included (except as part
of such underwritten registration)) unless the underwriters managing the
offering otherwise agree, in each case to the extent timely notified of such
offering in writing by the Company or by the managing underwriter or
underwriters. The Company and the Holders agree that the provisions of this
Section 4(a) shall be enforceable by such underwriter(s) against any Holder, it
being understood that such underwriter(s) are intended third party beneficiaries
hereof and, if so requested by such underwriter(s), each Holder agrees to
execute and deliver to such underwriter(s) such agreements and instruments, in
form and substance reasonably satisfactory to such underwriter(s), further
evidencing such Holder's agreement not to sell such securities during such
period.
The foregoing paragraph shall not apply to (i) any Holder to the extent
such Holder is prohibited by applicable law from agreeing to withhold its
securities from sale, (ii) any transfer by a Holder to an affiliate of such
Holder or to any other transferee in a private transaction not requiring
registration under the Securities Act provided,
--------
8
<PAGE>
that such affiliate or other transferee acknowledges in writing that it is bound
by the provisions of this Section 4(a) or (iii) any Holder, with respect to any
offering, if such Holder, immediately prior to the effective date of such
offering, beneficially owns together with all of its affiliates less than 3.0%
of the amount of Common Stock (including shares of Common Stock issuable upon
conversion of the Convertible Preferred Stock) being sold in such offering.
(b) Subject to Section 2(g) hereof, the Company agrees not to effect any
registration with respect to any public offer, sale or distribution of any of
its equity securities during the 10 days prior to and during the 90 days
beginning on the effective date of any underwritten Demand Registration or any
underwritten Piggyback Registration (except as part of such underwritten
registration or pursuant to registrations on Form S-8 or S-4 or any successor
forms thereto) unless the underwriters managing the registered public offering
otherwise agree.
5. Registration Procedures.
Whenever the Holders request that any Registrable Common Stock be
registered pursuant to this Agreement, the Company shall use its best efforts to
effect the registration and the sale of such Registrable Common Stock in
accordance with the intended methods of disposition thereof, and pursuant
thereto the Company shall as expeditiously as possible:
(a) prepare and file with the SEC a Registration Statement with respect to
such Registrable Common Stock and use its best efforts to cause such
Registration Statement to become effective as soon as practicable thereafter;
and before filing a Registration Statement or Prospectus or any amendments or
supplements thereto, furnish to the Holders of Registrable Common Stock covered
by such Registration Statement and the underwriter or underwriters, if any,
copies of all such documents proposed to be filed, including documents
incorporated by reference in the Prospectus and, if requested by such Holders,
the exhibits incorporated by reference, and such Holders shall have the
opportunity to object to any information pertaining solely to such Holders that
is contained therein and the Company will make the corrections reasonably
requested by such Holders with respect to such information prior to filing any
Registration Statement or amendment thereto or any Prospectus or any supplement
thereto;
9
<PAGE>
(b) prepare and file with the SEC such amendments and supplements to such
Registration Statement and the Prospectus used in connection therewith as may be
necessary to keep such Registration Statement effective for a period of not less
than 90 days, in the case of a Demand Registration, or such shorter period as is
necessary to complete the distribution of the securities covered by such
Registration Statement and comply with the provisions of the Securities Act with
respect to the disposition of all securities covered by such Registration
Statement during such period in accordance with the intended methods of
disposition by the sellers thereof set forth in such Registration Statement;
(c) furnish to each seller of Registrable Common Stock such number of
copies of such Registration Statement, each amendment and supplement thereto,
the prospectus included in such Registration Statement (including each
preliminary prospectus) and such other documents as such seller may reasonably
request in order to facilitate the disposition of the Registrable Common Stock
owned by such seller;
(d) use its best efforts to register or qualify such Registrable Common
Stock under such other securities or blue sky laws of such jurisdictions as any
seller reasonably requests and do any and all other acts and things which may be
reasonably necessary or advisable to enable such seller to consummate the
disposition in such jurisdictions of the Registrable Common Stock owned by such
seller (provided, that the Company will not be required to (i) qualify generally
--------
to do business in any jurisdiction where it would not otherwise be required to
qualify but for this subparagraph (d), (ii) subject itself to taxation in any
such jurisdiction or (iii) consent to general service of process in any such
jurisdiction);
(e) notify each seller of such Registrable Common Stock, at any time when
a Prospectus relating thereto is required to be delivered under the Securities
Act, of the occurrence of any event as a result of which the prospectus included
in such Registration Statement contains an untrue statement of a material fact
or omits any fact necessary to make the statements therein not misleading, and,
at the request of any such seller, the Company shall prepare a supplement or
amendment to such Prospectus so that, as thereafter delivered to the purchasers
of such Registrable Common Stock, such Prospectus shall not contain an untrue
statement of a material fact or omit to state any fact necessary to make the
statements therein not misleading;
10
<PAGE>
(f) in the case of an underwritten offering, enter into such customary
agreements (including underwriting agreements in customary form) and take all
such other actions as the Holders of a majority of number of shares of the
Registrable Common Stock being sold or the underwriters, if any, reasonably
request in order to expedite or facilitate the disposition of such Registrable
Common Stock (including, without limitation, effecting a stock split or a
combination of shares and using its best efforts to cause members of management
of the Company to participate on a reasonable basis in customary "road-show"
activities to the extent required by the underwriters consistent with the
Company's most recent experience in connection with an offering of its equity
securities and with a view to maximizing the price of the Common Stock sold in
such offering) and cause to be delivered to the underwriters and the sellers, if
any, opinions of counsel to the Company in customary form, covering such matters
as are customarily covered by opinions for an underwritten public offering as
the underwriters may request and addressed to the underwriters and the sellers;
(g) make available, for inspection by any seller of Registrable Common
Stock, any underwriter participating in any disposition pursuant to such
Registration Statement, and any attorney, accountant or other agent retained by
any such seller or underwriter, all financial and other records, pertinent
corporate documents and properties of the Company, and cause the Company's
officers, directors, employees and independent accountants to supply all
information reasonably requested by any such seller, underwriter, attorney,
accountant or agent in connection with such Registration Statement;
(h) use its best efforts to cause all such Registrable Common Stock to be
listed on each securities exchange on which securities of the same class issued
by the Company are then listed or, if no such similar securities are then
listed, on the Nasdaq Stock Market or a national securities exchange selected by
the Company;
(i) provide a transfer agent and registrar for all such Registrable Common
Stock not later than the effective date of such Registration Statement;
(j) cause to be delivered, immediately prior to the effectiveness of the
Registration Statement (and, in the case of an underwritten offering, at the
time of delivery of any Registrable Common Stock sold pursuant thereto), letters
from the Company's independent certified public accountants
11
<PAGE>
addressed to each selling Holder and each underwriter, if any, stating that such
accountants are independent public accountants within the meaning of the
Securities Act and the applicable rules and regulations adopted by the SEC
thereunder, and otherwise in customary form and covering such financial and
accounting matters as are customarily covered by letters of the independent
certified public accountants delivered in connection with primary or secondary
underwritten public offerings, as the case may be;
(k) make generally available to the Holders a consolidated earnings
statement (which need not be audited) for the 12 months beginning after the
effective date of a registration statement as soon as reasonably practicable
after the end of such period, which earnings statement shall satisfy the
requirements of an earning statement under Section 11(a) of the Securities Act;
(l) promptly notify each seller of Registrable Common Stock and the
underwriter or underwriters, if any:
(i) when the Registration Statement, any pre-effective
amendment, the Prospectus or any Prospectus supplement or post-effective
amendment to the Registration Statement has been filed and, with respect to
the Registration Statement or any post-effective amendment, when the same
has become effective;
(ii) of any written request by the SEC for amendments or
supplements to the Registration Statement or Prospectus;
(iii) of the notification to the Company by the SEC of its
initiation of any proceeding with respect to the issuance by the SEC of any
stop order suspending the effectiveness of the Registration Statement; and
(iv) of the receipt by the Company of any notification with
respect to the suspension of the qualification of any Registrable Common
Stock for sale under the applicable securities or blue sky laws of any
jurisdiction.
At all times after the Company has filed a registration statement with the
SEC pursuant to the requirements of either the Securities Act or the Exchange
Act, the Company shall file all reports required to be filed by it under the
Securities Act and the Exchange Act and the rules and regu-
12
<PAGE>
lations adopted by the SEC thereunder, and take such further action as any
Holder or Holders may reasonably request, all to the extent required to enable
such Holders to be eligible to sell Registrable Common Stock pursuant to Rule
144 (or any similar rule then in effect).
The Company may require each seller of Registrable Common Stock as to which
any registration is being effected to furnish to the Company any other
information regarding such seller and the distribution of such securities as the
Company may from time to time reasonably request in writing.
Each seller of Registrable Common Stock agrees by having its stock treated
as Registrable Common Stock hereunder that, upon notice of the happening of
any event as a result of which the Prospectus included in such Registration
Statement contains an untrue statement of a material fact or omits any fact
necessary to make the statements therein not misleading, such seller will
forthwith discontinue disposition of Registrable Common Stock until such seller
is advised in writing by the Company that the use of the Prospectus may be
resumed and is furnished with a supplemented or amended Prospectus as
contemplated by Section 5(e) hereof, and, if so directed by the Company, such
seller will deliver to the Company (at the Company's expense) all copies, other
than permanent file copies then in such seller's possession, of the Prospectus
covering such Registrable Common Stock current at the time of receipt of such
notice. If the Company shall give any notice to suspend the disposition of
Registrable Common Stock pursuant to a Prospectus, the Company shall extend the
period of time during which the Company is required to maintain the Registration
Statement effective pursuant to this Agreement by the number of days during the
period from and including the date of the giving of such notice to and including
the date such seller either is advised by the Company that the use of the
Prospectus may be resumed or receives the copies of the supplemented or amended
Prospectus contemplated by Section 5(e).
6. Registration Expenses.
(a) All expenses incident to the Company's performance of or compliance
with this Agreement, including, without limitation, all registration and filing
fees, fees and expenses of compliance with securities or blue sky laws, listing
application fees, printing expenses, transfer agent's and registrar's fees, cost
of distributing prospectuses in preliminary and final form as well as any
supplements thereto, and fees and disbursements of counsel for the Company and
all independent certified public accountants and
13
<PAGE>
other Persons retained by the Company (all such expenses being herein called
"Registration Expenses") (but not including any underwriting discounts or
commissions attributable to the sale of Registrable Common Stock or fees and
expenses of more than one counsel representing the Holders of Registrable Common
Stock or any other selling expenses incurred in connection with the sale of
Registrable Common Stock), shall be borne by the Company. In addition, the
Company shall pay its internal expenses (including, without limitation, all
salaries and expenses of its officers and employees performing legal or
accounting duties), the expense of any annual audit or quarterly review, the
expense of any liability insurance and the expenses and fees for listing the
securities to be registered on each securities exchange on which they are to be
listed.
(b) In connection with each registration initiated hereunder (whether a
Demand Registration or a Piggyback Registration), the Company shall reimburse
the Holders covered by such registration or sale for the reasonable fees and
disbursements of one law firm chosen by the Holders of a majority of the number
of shares of Registrable Common Stock included in such registration or sale.
(c) The obligation of the Company to bear the expenses described in
Section 6(a) and to reimburse the Holders for the expenses described in Section
6(b) shall apply irrespective of whether a registration, once properly demanded,
if applicable, becomes effective, is withdrawn or suspended, is converted to
another form of registration and irrespective of when any of the foregoing shall
occur; provided, however, that Registration Expenses for any registration
--------
statement withdrawn solely at the request of a Holder of Registrable Common
Stock (unless withdrawn following postponement of filing by the Company in
accordance with Section 2(e)(i) or (ii)) or any supplements or amendments to a
registration statement or prospectus resulting from a misstatement furnished to
the Company by a Holder shall be borne by such Holder.
7. Indemnification.
(a) The Company agrees to indemnify, to the fullest extent permitted by
law, each Holder, its officers, directors and affiliates and each Person who
controls such Holder (within the meaning of the Securities Act) against all
losses, claims, damages, liabilities and expenses caused by any untrue or
alleged untrue statement of material fact contained in any Registration
Statement, Prospectus or preliminary prospectus or any amendment thereof or
supple-
14
<PAGE>
ment thereto or any omission or alleged omission of a material fact required to
be stated therein or necessary to make the statements therein not misleading,
except insofar as the same are caused by or contained in any information
furnished in writing to the Company by such Holder expressly for use therein or
by such Holder's failure to deliver a copy of the Registration Statement or
Prospectus or any amendments or supplements thereto after the Company has
furnished such Holder with a sufficient number of copies of the same. In
connection with an underwritten offering, the Company shall indemnify such
underwriters, their officers and directors and each Person who controls such
underwriters (within the meaning of the Securities Act) to the same extent as
provided above with respect to the indemnification of the Holders.
(b) In connection with any Registration Statement in which a Holder of
Registrable Common Stock is participating, each such Holder shall furnish to the
Company in writing such information and affidavits as the Company reasonably
requests for use in connection with any such Registration Statement or
Prospectus and, to the extent permitted by law, shall indemnify the Company, its
directors and officers and each Person who controls the Company (within the
meaning of the Securities Act) against any losses, claims, damages, liabilities
and expenses resulting from any untrue or alleged untrue statement of material
fact contained in the Registration Statement, Prospectus or preliminary
prospectus or any amendment thereof or supplement thereto or any omission or
alleged omission of a material fact required to be stated therein or necessary
to make the statements therein not misleading, but only to the extent that such
untrue statement or omission is contained in any information or affidavit so
furnished in writing by such Holder expressly for use in the Registration
Statement; provided, however, that the obligation to indemnify shall be several,
--------
not joint and several, among such Holders and the liability of each such Holder
shall be in proportion to and limited to the net amount received by such Holder
from the sale of Registrable Common Stock pursuant to such Registration
Statement.
(c) Any Person entitled to indemnification hereunder shall (i) give prompt
written notice to the indemnifying party of any claim with respect to which it
seeks indemnification and (ii) unless in such indemnified party's reasonable
judgment a conflict of interest between such indemnified and indemnifying
parties may exist with respect to such claim, permit such indemnifying party to
assume the defense of such claim with counsel reasonably satisfactory to the
indemnified party. If such defense is assumed, the indemnifying party shall not
be subject to any liability for
15
<PAGE>
any settlement made by the indemnified party without its consent (but such
consent will not be unreasonably withheld). An indemnifying party who is not
entitled to, or elects not to, assume the defense of a claim shall not be
obligated to pay the fees and expenses of more than one counsel for all parties
indemnified by such indemnifying party with respect to such claim, unless in the
reasonable judgment of any indemnified party a conflict of interest may exist
between such indemnified party and any other of such indemnified parties with
respect to such claim. Failure to give prompt written notice shall not release
the indemnifying party from its obligations thereunder.
(d) The indemnification provided for under this Agreement shall remain in
full force and effect regardless of any investigation made by or on behalf of
the indemnified party or any officer, director or controlling Person of such
indemnified party and shall survive the transfer of securities.
(e) If the indemnification provided for in or pursuant to this Section 7
is due in accordance with the terms hereof, but is held by a court to be
unavailable or unenforceable in respect of any losses, claims, damages,
liabilities or expenses referred to herein, then each applicable indemnifying
party, in lieu of indemnifying such indemnified party, shall contribute to the
amount paid or payable by such indemnified person as a result of such losses,
claims, damages, liabilities or expenses in such proportion as is appropriate to
reflect the relative fault of the indemnifying party on the one hand and of the
indemnified party on the other in connection with the statements or omissions
which result in such losses, claims, damages, liabilities or expenses as well as
any other relevant equitable considerations. The relative fault of the
indemnifying party on the one hand and of the indemnified person on the other
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 indemnifying
party or by the indemnified party, and by such party's relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. In no event shall the liability of any selling Holder be
greater in amount than the amount of net proceeds received by such Holder upon
such sale or the amount for which such indemnifying party would have been
obligated to pay by way of indemnification if the indemnification provided for
under Section 7(a) or 7(b) hereof had been available under the circumstances.
16
<PAGE>
8. Participation in Underwritten Registrations.
No Person may participate in any registration hereunder which is
underwritten unless such Person (a) agrees to sell such Person's securities on
the basis provided in any underwriting arrangements approved by the Person or
Persons entitled hereunder to approve such arrangements and (b) completes and
executes all questionnaires, powers of attorney, indemnities, underwriting
agreements and other documents required under the terms of such underwriting
arrangements.
9. Rule 144.
The Company covenants that it will 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 (or, if the Company is not required to file such
reports, it will, upon the request of any holder of Registrable Common Stock,
make publicly available such information as necessary to permit sales pursuant
to Rule 144 under the Securities Act), and it will take such further action as
any Holder may reasonably request, to the extent required to enable such Holder
to sell Registrable Common Stock without registration under the Securities Act
within the limitation of the exemptions provided by (i) Rule 144 under the
Securities Act, as such Rule may be amended from time to time, or (ii) any
similar rule or regulation hereafter adopted by the SEC. Upon the request of
any Holder, the Company will deliver to such Holder a written statement as to
whether it has complied with such information and requirements.
10. Miscellaneous.
(a) No Inconsistent Agreements. The Company shall not hereafter enter
--------------------------
into any agreement with respect to its securities which is inconsistent with the
rights granted to the Holders in this Agreement.
(b) Remedies. The parties agree and acknowledge that the rights granted
--------
to the parties hereunder are valuable and unique and that any Person having
rights under any provision of this Agreement shall be entitled to enforce such
rights specifically (without the posting of any bond or other security), to
recover damages caused by reason of any breach of any provision of this
Agreement and to exercise all other rights granted by law.
17
<PAGE>
(c) Amendments and Waivers. Except as otherwise provided herein, the
----------------------
provisions of this Agreement may be amended and the Company may take any action
herein prohibited, or omit to perform any act herein required to be performed by
it, only if the Company has obtained the written consent of Holders of a
majority of the number of shares of Registrable Common Stock then outstanding;
provided, however, that if such prohibited action or omission does not
- --------
adversely affect the rights of all of the Holders, the Company shall not be
required to obtain the consent of any such Holder not adversely affected
thereby.
(d) Successors and Assigns. All covenants and agreements in this
----------------------
Agreement by or on behalf of any of the parties hereto shall bind and inure to
the benefit of the respective successors and assigns of the parties hereto
(including any Person to whom Registrable Common Stock are transferred) and all
of the Holders whether so expressed or not.
(e) Severability. Whenever possible, each provision of this Agreement
------------
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be prohibited
by or invalid under applicable law, such provision will be ineffective only to
the extent of such prohibition or invalidity, without invalidating the remainder
of such provision or this Agreement.
(f) Counterparts. This Agreement may be executed simultaneously in
------------
counterparts, each of which shall constitute an original, but both of which
taken together shall constitute one and the same Agreement.
(g) Descriptive Headings. The descriptive headings of this Agreement are
--------------------
inserted for convenience only and do not constitute a part of this Agreement.
(h) Governing Law. This Agreement shall be governed by and construed in
-------------
accordance with the laws of the State of New York, without giving effect to
conflict of laws rules.
(i) Notices. All notices, demands or other communications to be given
-------
or delivered under or by reason of the provisions of this Agreement shall be in
writing and shall be deemed to have been given (i) when delivered personally or
by overnight courier or similar courier to the recipient, (ii) by facsimile
transmission (receipt of which is confirmed) or (iii) three business days after
being mailed by certified or registered mail, return receipt requested
18
<PAGE>
and postage prepaid, properly addressed, to the recipient. Such notices, demands
and other communications shall be sent as follows:
(1) If to the Company:
Samsonite Corporation
11200 East 45th Avenue
Denver, CO 80239
Attention: General Counsel
Facsimile No.: (303) 373-6406
with a copy to:
Skadden, Arps, Slate, Meagher & Flom LLP
919 Third Avenue
New York, New York 10022
Attention: Gregory A. Fernicola, Esq.
Facsimile No.: (212) 735-2000
(2) If to Apollo:
Apollo Advisors, L.P.
2 Manhattanville Road
Purchase, New York 10577
Facsimile No.: (212) 261-4070
(3) If to any other Holder:
at the address or facsimile number indicated on the books of the
Company
or to such other address or to the attention of such other person as the
recipient party has specified by prior written notice to the sending party.
19
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this Agreement, effective
as of April 7, 1999.
SAMSONITE CORPORATION
By: Steve Armstrong
----------------
Name: Steve Armstrong
Title: General Counsel
APOLLO INVESTMENT FUND, L.P.
By: Apollo Advisors, L.P.,
Its General Partner
By: Apollo Capital Management, Inc.,
Its General Partner
By: Robert H. Falk
---------------
Name: Robert H. Falk
Title: Vice President
20
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE THREE MONTHS ENDED APRIL 30,
1999 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JAN-31-2000
<PERIOD-START> FEB-01-1999
<PERIOD-END> APR-30-1999
<CASH> 35,202
<SECURITIES> 0
<RECEIVABLES> 86,247
<ALLOWANCES> 7,465
<INVENTORY> 174,174
<CURRENT-ASSETS> 324,213
<PP&E> 220,959
<DEPRECIATION> 76,058
<TOTAL-ASSETS> 601,785
<CURRENT-LIABILITIES> 149,791
<BONDS> 476,045
185,177
24,410
<COMMON> 210
<OTHER-SE> (311,135)
<TOTAL-LIABILITY-AND-EQUITY> 601,785
<SALES> 175,876
<TOTAL-REVENUES> 175,876
<CGS> 101,217
<TOTAL-COSTS> 101,217
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 843
<INTEREST-EXPENSE> 13,585
<INCOME-PRETAX> (768)
<INCOME-TAX> 3,054
<INCOME-CONTINUING> (3,932)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (3,932)
<EPS-BASIC> (1.03)
<EPS-DILUTED> (1.03)
<FN>
<FI>
NET INCOME (LOSS) IS SHOWN BEFORE REDEEMABLE PREFERRED STOCK DIVIDENDS AND
ACCRETION OF PREFERRED STOCK DISCOUNT OF $6,848.
</FN>
</TABLE>
