UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
AMENDMENT NO. ___________*
THE YANKEE CANDLE COMPANY, INC.
- -----------------------------------------------------------------------------
(Name of Issuer)
COMMON STOCK, PAR VALUE $0.01 PER SHARE
- -----------------------------------------------------------------------------
(Title of Class of Securities)
984757104
-------------------------------------------------------
(CUSIP Number)
FRIED, FRANK, HARRIS, SHRIVER & JACOBSON FORSTMANN LITTLE & CO.
ONE NEW YORK PLAZA SUBORDINATED DEBT AND
NEW YORK, NY 10004 EQUITY MANAGEMENT BUYOUT
ATTN: LOIS HERZECA, ESQ. PARTNERSHIP-VI,L.P.
(212) 859-8000
FORSTMANN LITTLE & CO. EQUITY
PARTNERSHIP-V, L.P.
C/O FORSTMANN LITTLE & CO.
767 FIFTH AVENUE
NEW YORK, NY 10153
ATTN: WINSTON W. HUTCHINS
(212) 355-5656
- -----------------------------------------------------------------------------
(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications)
JULY 6, 1999
-------------------------------------------------------
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition which is the subject of this Schedule 13D, and is
filing this schedule because of ss. ss. 240.13d-1(e), 240.13d-1(f) or
240.13d-1(g), check the following box [ ].
NOTE: Schedules filed in paper format shall include a signed original and
five copies of the schedule, including all exhibits. See ss.240.13d-7 for
other parties to whom copies are to be sent.
*The remainder of this cover page shall be filled out for a reporting
person's initial filing on this form with respect to the subject class of
securities, and for any subsequent amendment containing information which
would alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities
Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of
that section of the Act but shall be subject to all other provisions of the
Act (however, see the Notes).
<PAGE>
13D
CUSIP No. 984757104
1 NAME OF REPORTING PERSON/
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS
FORSTMANN LITTLE & CO. SUBORDINATED DEBT AND EQUITY
MANAGEMENT BUYOUT PARTNERSHIP-VI, L.P.
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ]
(b) [X]
3 SEC USE ONLY
4 SOURCE OF FUNDS*
00
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) [ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
NEW YORK
NUMBER OF 7 SOLE VOTING POWER
SHARES 13,661,830
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY EACH 0
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON WITH 13,661,830
10 SHARED DISPOSITIVE POWER
0
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
13,661,830
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) [ ]
EXCLUDES CERTAIN SHARES*
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
25.1%
14 TYPE OF REPORTING PERSON*
PN
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
<PAGE>
13D
CUSIP No. 984757104
1 NAME OF REPORTING PERSON/
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS
FORSTMANN LITTLE & CO. EQUITY PARTNERSHIP-V, L.P.
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ]
(b) [X]
3 SEC USE ONLY
4 SOURCE OF FUNDS*
00
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) [ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
NEW YORK
NUMBER OF 7 SOLE VOTING POWER
SHARES 20,745,742
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY EACH 0
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON WITH 20,745,742
10 SHARED DISPOSITIVE POWER
0
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
20,745,742
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) [ ]
EXCLUDES CERTAIN SHARES*
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
38.1%
14 TYPE OF REPORTING PERSON*
PN
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
<PAGE>
ITEM 1. Security and Issuer
-------------------
This Statement on Schedule 13D relates to the common stock, par
value $0.01 per share ("Common Stock"), of The Yankee Candle Company, Inc.,
a Massachusetts corporation ("Yankee Candle"). The principal executive
offices of Yankee Candle are located at 102 Christian Lane, Whately,
Massachusetts 01093.
ITEM 2. Identity and Background
-----------------------
This statement is filed by Forstmann Little & Co. Equity
Partnership-V, L.P. ("Equity-V") and Forstmann Little & Co. Subordinated
Debt and Equity Management Buyout Partnership-VI, L.P. ("MBO-VI").
ITEM 2. (a), (b), (c)
-------------
Equity-V and MBO-VI are New York limited partnerships which are
private investment firms. Information with respect to the identity, address
and background of the general partners of each of Equity-V and MBO-VI is
set forth on Schedule I attached hereto.
The address of the principal office of each of MBO-VI and
Equity-V is c/o Forstmann Little & Co., 767 Fifth Avenue, New York, New
York 10153.
ITEM 2. (d), (e)
--------
During the last five years, neither MBO-VI nor Equity-V nor, to
the knowledge of MBO-VI and Equity-V, any person identified in Schedule I
has (i) been convicted in a criminal proceeding (excluding traffic
violations or similar misdemeanors) or (ii) been a party to a civil
proceeding of a judicial or administrative body of competent jurisdiction
and as a result of such proceeding was or is subject to a judgment, decree
or final order enjoining future violations of, or prohibiting or mandating
activities subject to, federal or state securities laws or finding any
violation with respect to such laws.
ITEM 3. Source and Amount of Funds or Other Consideration
-------------------------------------------------
On April 27, 1998, Yankee Candle Holdings Corp., a Delaware
corporation ("Yankee Candle Holdings"), which was newly formed by Equity-V,
MBO-VI and executives of Yankee Candle, purchased 449.9782 shares of Yankee
Candle common stock, no par value ("Old Yankee Candle Stock"), for $180
million from Michael Kittredge, the founder of Yankee Candle. On July 6,
1999, Yankee Candle was reorganized (the "Reorganization") pursuant to an
Agreement and Plan of Reorganization (the "Reorganization Agreement"), in
contemplation of an initial public offering, as follows: (i) Yankee Candle
Holdings transferred 449.9782 shares of Old Yankee Candle Stock to Yankee
Candle in exchange for 43,545,479 shares of Common Stock, and 554,521
options to purchase Common Stock; and (ii) Yankee Candle Holdings was
liquidated and all of the shares of Common Stock, and options to purchase
Common Stock, received from Yankee Candle were distributed to the Yankee
Candle Holdings stockholders.
Pursuant to the liquidation and distribution of the assets of
Yankee Candle Holdings, Equity-V received 25,038,949 shares of Common
Stock, and MBO-VI received 16,489,064 shares of Common Stock.
The foregoing description of the Reorganization Agreement is not
intended to be complete and is qualified in its entirety by the complete
text of such Reorganization Agreement which is incorporated herein by
reference. The Reorganization Agreement is filed as Exhibit 1 hereto.
ITEM 4. Purpose of Transaction
----------------------
Equity-V and MBO-VI acquired the shares of Common Stock in the
Reorganization, as more fully described in Item 3, in contemplation of an
initial public offering of Common Stock. On July 7, 1999, Equity-V sold
4,293,207 shares of Common Stock and MBO-VI sold 2,827,234 shares of Common
Stock in Yankee Candle's initial public offering of Common Stock, at the
initial public offering price of $18.00 per share.
Except as set forth above, neither Equity-V nor MBO-VI nor, to
the knowledge of Equity-V and MBO-VI, any person identified in Schedule I,
has any plans or proposals which relate to or would result in the types of
transactions set forth in subparagraphs (a) through (j) of Item 4 of
Schedule 13D.
ITEM 5. Interest in Securities of the Issuer
------------------------------------
The following information is as of July 7, 1999:
(i) Equity-V:
(a) Amount Beneficially Owned:
Equity-V directly owns 20,745,742 shares of Common Stock. FLC XXX
Partnership ("FLC XXX"), a New York general partnership having its
principal business office at the address set forth in response to Item 2(b)
of this statement, is the general partner of Equity-V. Theodore J.
Forstmann, Nicholas C. Forstmann, Steven B. Klinsky, Sandra J. Horbach,
Thomas Lister, Winston W. Hutchins and Erskine B. Bowles, each a United
States citizen with his or her principal place of business being at the
address set forth in response to Item 2(b) of this statement, are the
general partners of FLC XXX. Mr. Bowles does not have any voting or
investment power with respect to, or any economic interest in, the shares
of Common Stock held by Equity-V; and, accordingly, Mr. Bowles is not
deemed to be the beneficial owner of these shares.
The shares of Common Stock owned by Equity-V represent
approximately 38.1% of the Common Stock.
(b) Number of shares as to which such person has:
(i) sole power to vote or to direct the vote -- 20,745,742.
(ii) shared power to vote or to direct the vote -- None.
(iii) sole power to dispose or to direct the disposition of
-- 20,745,742
(iv) shared power to dispose or to direct the disposition
of -- None.
(ii) MBO-VI:
------
(a) Amount Beneficially Owned:
MBO-VI directly owns 13,661,830 shares of Common Stock. FLC XXIX
Partnership, L.P. ("FLC XXIX"), a New York limited partnership having its
principal business office at the address set forth in response to Item 2(b)
of this statement, is the general partner of MBO-VI. Theodore J. Forstmann,
Nicholas C. Forstmann, Steven B. Klinsky, Sandra J. Horbach, Thomas Lister,
Winston W. Hutchins and Erskine B. Bowles, each a United States citizen
with his or her principal place of business being at the address set forth
in response to Item 2(b) of this statement, are the general partners of FLC
XXIX. Mr. Lister and Mr. Bowles do not have any voting or investment power
with respect to, or any economic interest in, the shares of Common Stock
held by MBO-VI; and, accordingly, Mr. Lister and Mr. Bowles are not deemed
to be the beneficial owners of these shares.
The shares of Common Stock owned by MBO-VI represent
approximately 25.1% of the Common Stock.
(b) Number of shares as to which such person has:
(i) sole power to vote or to direct the vote -- 13,661,830
(ii) shared power to vote or to direct the vote -- None.
(iii) sole power to dispose or to direct the disposition of
-- 13,661,830.
(iv) shared power to dispose or to direct the disposition
of -- None.
(iii) Except as set forth in response to Item 4, neither Equity-V
nor MBO-VI nor, to the knowledge of Equity-V and MBO-VI, any person
identified in Schedule I, beneficially owns any shares of Common Stock or
has effected any transactions in shares of Common Stock during the
preceding 60 days.
ITEM 6. Contracts, Arrangements, Understandings or Relationships with
Respect to Securities of the Issuer
-------------------------------------------------------------
MBO-VI and Equity-V (the "Forstmann Little partnerships") have
entered into a Registration Rights Agreement with Yankee Candle, dated May
6, 1999 (the "Registration Rights Agreement"), pursuant to which Yankee
Candle has granted to the Forstmann Little partnerships six demand rights
to cause Yankee Candle to register under the Securities Act of 1933, as
amended (the "Securities Act"), all shares of Common Stock held by the
Forstmann Little partnerships.
Pursuant to stockholder's agreements ("Stockholder's Agreements")
between Yankee Candle and certain senior executive officers
("Stockholders") of Yankee Candle, the Stockholders may participate
proportionately in any sale by the Forstmann Little partnerships of all or
a portion of their shares of Common Stock to any person who is not a
partner or affiliate. In addition, the Stockholders are entitled to, and
may be required to, participate proportionately in a public offering of
shares of Common Stock by the Forstmann Little partnerships, by selling the
same percentage of their shares that the Forstmann Little partnerships are
selling of their shares. The sale of shares of Common Stock in this
transaction must be for the same price and otherwise on the same terms and
conditions as the sale by the Forstmann Little partnerships. If the
Forstmann Little partnerships sell or exchange all or a portion of their
Common Stock in a bona fide arm's-length transaction, the Forstmann Little
partnerships may require the Stockholders to sell a proportionate amount of
their shares for the same price and on the same terms and conditions as the
sale of Common Stock by the Forstmann Little partnerships and, if
stockholder approval of the transaction is required, to vote their shares
in favor of the sale or exchange.
Pursuant to a Stockholder's Agreement, dated as of April 27, 1998
(the "Kittredge Agreement"), between Yankee Candle and Michael Kittredge
("Kittredge"), Kittredge may participate proportionately in any sale by the
Forstmann Little partnerships of all or a portion of their shares of Common
Stock to any person who is not a partner or affiliate. In addition,
Kittredge is entitled and required to participate proportionately in a
public offering of shares of Common Stock by the Forstmann Little
partnerships, by selling the same percentage of his shares that the
Forstmann Little partnerships are selling of their shares. The sale of
shares of Common Stock in this transaction must be for the same price and
otherwise on the same terms and conditions as the sale by the Forstmann
Little partnerships. If the Forstmann Little partnerships sell or exchange
all or a portion of their Common Stock in a bona fide arm's-length
transaction, the Forstmann Little partnerships may require Kittredge to
sell a proportionate amount of his shares for the same price and on the
same terms and conditions as the sale of Common Stock by the Forstmann
Little partnerships and, if stockholder approval of the transaction is
required, to vote his shares in favor of the sale or exchange.
Each of the Forstmann Little partnerships has signed a Management
Rights Letter (the "Management Rights Letters") dated as of May 1, 1999,
whereby Yankee Candle has agreed to give the Forstmann Little partnerships
a contractual right to elect two directors of Yankee Candle so long as the
Forstmann Little partnerships own any voting securities of Yankee Candle.
The foregoing description of the Registration Rights Agreement,
the Stockholder's Agreements, the Kittredge Agreement and the Management
Rights Letters are not intended to be complete and is qualified in its
entirety by the complete text of such Registration Rights Agreement,
Stockholder's Agreements, the Kittredge Agreement and the Management Rights
Letters all of which are incorporated herein by reference. The Registration
Rights Agreement, a form of the Stockholder's Agreement, the Kittredge
Agreement and the Management Rights Letters are filed as Exhibits 2, 3, 4
and 5 hereto, respectively.
Except as set forth in Items 3 and 6 of this statement or
incorporated by reference herein, neither Equity-V nor MBO-VI, nor to the
knowledge of Equity-V and MBO-VI, any person identified in Schedule I, has
any contracts, arrangements, understandings or relationships (legal or
otherwise) with any person with respect to any securities of Yankee Candle.
ITEM 7. Material to be Filed as Exhibits
--------------------------------
1. Agreement and Plan of Reorganization, dated July 2, 1999, between
Yankee Candle and Yankee Candle Holdings, and the exhibits
thereto.
2. Registration Rights Agreement, dated as of May 6, 1999, among
Yankee Candle, Equity-V and MBO-VI.
3. Form of Stockholder's Agreement between Yankee Candle and
Stockholders.
4. Stockholder's Agreement, dated as of April 27, 1998, between
Yankee Candle and Kittredge. Filed as Exhibit 10.6 to Yankee
Candle's Registration Statement on Form S-1 (File No. 333-76397)
and incorporated herein by reference.
5. Management Rights Letters, each dated as of May 1, 1999, between
Yankee Candle and the Forstmann Little partnerships.
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of my knowledge and
belief, I certify that the information set forth in this statement is true,
complete and correct.
Dated: July 15, 1999 FORTSMANN LITTLE & CO. EQUITY
PARTNERSHIP-V, L.P.
By: FLC XXX Partnership,
its general partner
By: /s/ Winston W. Hutchins
---------------------------------
Winston W. Hutchins,
a general partner
FORTSMANN LITTLE & CO. SUBORDINATED DEBT AND
EQUITY MANAGEMENT BUYOUT PARTNERSHIP-VI, L.P.
By: FLC XXIX Partnership, L.P.
its general partner
By: /s/ Winston W. Hutchins
---------------------------------
Winston W. Hutchins,
a general partner
<PAGE>
Schedule I
----------
FLC XXX Partnership:
General Partner of
Equity-V
--------
FLC XXX Partnership, a New York general partnership ("FLC XXX"), is
the general partner of Equity-V. Its purpose is to act as general partner
of Equity-V and other limited partnerships affiliated with Equity-V. The
address of the principal office of Equity-V is c/o Forstmann Little & Co.,
767 Fifth Avenue, New York, NY 10153.
Partners of
FLC XXX
-------
The following are the general partners of FLC XXX, the general partner
of Equity-V. All of the following are general partners of partnerships
affiliated with Forstmann Little & Co., a private investment firm. The
business address of each of the following persons is 767 Fifth Avenue, New
York, NY 10153 and each is a citizen of the United States.
Theodore J. Forstmann
Nicholas C. Forstmann
Steven B. Klinsky
Sandra J. Horbach
Thomas H. Lister
Winston W. Hutchins
Erskine B. Bowles
FLC XXIX Partnership, L.P.:
General Partner of
MBO-VI
------
FLC XXIX Partnership, L.P., a New York limited partnership ("FLC
XXIX"), is the general partner of MBO-VI. Its purpose is to act as general
partner of MBO-VI and other limited partnerships affiliated with MBO-VI.
The address of the principal office of FLC XXIX is c/o Forstmann Little &
Co., 767 Fifth Avenue, New York, NY 10153.
Partners of
FLC XXIX
--------
The following are the general partners of FLC XXIX, the general
partner of MBO-VI. All of the following are general partners of
partnerships affiliated with Forstmann Little & Co., a private investment
firm. The business address of each of the following persons is 767 Fifth
Avenue, New York, NY 10153 and each is a citizen of the United States.
Theodore J. Forstmann
Nicholas C. Forstmann
Steven B. Klinsky
Sandra J. Horbach
Thomas H. Lister
Winston W. Hutchins
Erskine B. Bowles
Exhibit 1
AGREEMENT AND PLAN OF REORGANIZATION
AGREEMENT AND PLAN OF REORGANIZATION, dated as of July 2, 1999
(the "Reorganization Agreement"), between The Yankee Candle Company, Inc.,
a Massachusetts corporation (the "Company"), and Yankee Candle Holdings
Corp., a Delaware corporation ("Holdings").
WHEREAS, the Boards of Directors of each of the Company and
Holdings have determined that it is in the best interests of their
respective organizations that the Company and Holdings enter into an
exchange whereby the Company would issue shares of Common Stock (as defined
below) in exchange for the assets of Holdings on the terms and conditions
set forth herein (the "Exchange");
WHEREAS, in connection with the Exchange, the Company will cancel
its existing no par value common stock and authorize new common stock, par
value $.01 per share, of the Company ("Common Stock"); and
WHEREAS, the Company and Holdings desire to adopt this
Reorganization Agreement as a plan of reorganization in accordance with the
provisions of Section 368(a)(1)(D) of the Internal Revenue Code of 1986, as
amended;
NOW THEREFORE, in consideration of the premises, the mutual
benefits to be derived from this Reorganization Agreement and the
covenants, agreements and promises hereinafter set forth, the parties
hereto agree as follows:
1. The Exchange. On the business day immediately preceding the
day of the closing of the initial public offering (the "Offering") of
Common Stock registered under the Securities Act of 1933, as amended (the
"Effective Date"), on the terms and conditions set forth herein, Holdings
shall sell, transfer, convey and deliver to the Company all of its right,
title and interest in and to all of its properties and business as a going
concern and goodwill and assets of every kind, nature and description, as
the same may exist as of the Effective Date, wherever such assets are
located and whether real, personal or mixed, tangible or intangible, and
whether or not any of such assets have any value for accounting purposes or
are carried or reflected on or specifically referred to in its books or
financial statements (collectively, the "Assets"), including, without
limitation, the following:
(i) Certificates representing 449.9782 shares of common
stock, no par value, of the Company, duly endorsed in
blank or with stock powers attached;
(ii) All cash, including cash deposits and cash collateral,
and other cash equivalents; and
(iii) All books, records, files and data, in each case
however evidenced (including, without limitation, by
computer disk or tape);
in exchange for (i) 43,545,479 newly issued, fully paid and non-assessable
shares of Common Stock and (ii) the issuance of options to purchase 554,521
shares of Common Stock to persons with outstanding options to purchase
Holdings stock pursuant to the Holdings Employee Stock Option Plan or
director option agreements, in exchange for the cancellation of such
options. The options to purchase Common Stock shall have the same intrinsic
value as the cancelled options. In connection with the Exchange, Holdings
shall retain all of its liabilities and no such liabilities shall be
transferred to, assumed by or otherwise become liabilities of, the Company.
2. Restated Articles of Incorporation. In connection with the
Exchange, the Company will amend and restate its Articles of Organization
to authorize 300,000,000 shares of Common Stock, and 100,000,000 shares of
preferred stock, par value $.01 per share, of the Company.
3. Kittredge Shares. Simultaneously with the execution of this
Reorganization Agreement, the Company is entering into an agreement with
Michael Kittredge (the "Kittredge Agreement", attached hereto as Exhibit A)
pursuant to which Michael Kittredge will exchange his 49.9976 shares of
common stock, no par value, of the Company for 4,900,000 shares of Common
Stock, simultaneously with the Exchange.
4. Dissolution of Holdings. Immediately following the Exchange,
and as part of this Reorganization Agreement, Holdings shall dissolve in
accordance with Section 275 of the Delaware General Corporation Law. Upon
such dissolution, Holdings shall liquidate by distributing all of its
assets to its stockholders pursuant to a plan of dissolution and
liquidation (the "Plan of Dissolution", attached hereto as Exhibit B).
5. Termination. Notwithstanding approval and adoption of this
Reorganization Agreement by the stockholders of each of Holdings and the
Company, this Reorganization Agreement may be terminated, and the Exchange
abandoned, at any time prior to the Effective Date by mutual written
consent of the parties hereto.
6. Entire Agreement. This Reorganization Agreement, the Kittredge
Agreement and the Plan of Dissolution contain the entire agreement of the
parties with respect to the transactions contemplated hereby.
7. Modifications. No amendment or modification of this
Reorganization Agreement shall be valid unless it is in writing and signed
by or on behalf of each of the parties hereto.
8. Governing Law. This Reorganization Agreement shall be governed
by the laws of the State of New York, without regard to the principles of
conflict of laws.
9. Counterparts. This Reorganization Agreement may be executed in
one or more counterparts, each of which shall for all purposes be an
original and all of which shall constitute the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed this
Reorganization Agreement as of the date first above written.
THE YANKEE CANDLE COMPANY, INC.
By: /s/ Michael D. Parry
------------------------------------
Name: Michael D. Parry
Title: President and Chief Executive
Officer
YANKEE CANDLE HOLDINGS CORP.
By: /s/ Sandra J. Horbach
------------------------------------
Name: Sandra J. Horbach
Title: President
<PAGE>
Exhibit A to
Reorganization Agreement
SHARE EXCHANGE AGREEMENT
SHARE EXCHANGE AGREEMENT, dated as of July 2, 1999 (the
"Agreement"), by and between The Yankee Candle Company, Inc., a
Massachusetts corporation (the "Company"), and Michael J. Kittredge
("Kittredge").
WHEREAS, in connection with the initial public offering of the
Company's securities (the "Offering"), the Company and Yankee Candle
Holdings Corp., a Delaware corporation ("Holdings"), have entered into an
Agreement and Plan of Reorganization (the "Reorganization Agreement"),
dated as of the date hereof, providing for the issuance by the Company of
shares of new common stock, par value $.01 per share ("New Common Stock"),
of the Company to Holdings, in exchange for the transfer by Holdings of all
of its assets, including, without limitation, its existing shares of common
stock, no par value, of the Company ("Existing Common Stock");
WHEREAS, Kittredge is the owner of 49.9976 shares of Existing
Common Stock; and
WHEREAS, to carry out the intent of the Reorganization Agreement,
the parties hereto deem it desirable that Kittredge exchange his shares of
Existing Common Stock for shares of New Common Stock on the terms and
subject to the conditions set forth herein;
NOW THEREFORE, for good and valuable consideration, the receipt
and sufficiency of which is hereby acknowledged, the parties hereto agree
as follows:
1. The Kittredge Exchange. On the business day immediately
preceding the day of the closing of the Offering (the "Effective Date"), on
the terms and conditions set forth herein, Kittredge shall sell, transfer,
convey and deliver certificates representing his 49.9976 shares of Existing
Common Stock, duly endorsed in blank or with stock powers attached, to the
Company in exchange for certificates representing 4,900,000 newly issued,
fully paid and non-assessable shares of New Common Stock (the "Kittredge
Exchange"). Kittredge represents and warrants to the Company that his
shares of Existing Common Stock are on the date hereof, and will be on the
Effective Date, free of all liens, claims and encumbrances except those
created pursuant to agreements to which the Company is a party.
2. Termination. This Agreement shall automatically terminate, and
the Kittredge Exchange shall automatically be abandoned, upon the
termination of the Reorganization Agreement. This Agreement may not
otherwise be terminated without the written consent of the parties hereto
and Holdings.
3. Third Party Beneficiary. This Agreement shall inure to the
benefit of the parties hereto and Holdings which shall be a third party
beneficiary hereto.
4. Entire Agreement. This Agreement and the Reorganization
Agreement contain the entire agreement of the parties with respect to the
transactions contemplated hereby.
5. Modifications. No amendment or modification of this Agreement
shall be valid unless it is in writing and signed by or on behalf of each
of the Company and Kittredge.
6. Governing Law. This Agreement shall be governed by the laws of
the State of New York, without giving effect to the principles of conflict
of laws.
7. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall for all purposes be an original and all
of which shall constitute the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.
THE YANKEE CANDLE COMPANY, INC.
By:
------------------------------------
Name: Michael D. Parry
Title: President and Chief Executive
Officer
MICHAEL J. KITTREDGE
---------------------------------------
<PAGE>
Exhibit B to
Reorganization Agreement
YANKEE CANDLE HOLDINGS CORP.
PLAN OF DISSOLUTION AND LIQUIDATION
As part of the Plan of Reorganization (as defined below) and
following the adoption of this Plan of Dissolution and Liquidation (the
"Plan") by (i) holders of a majority of the outstanding stock entitled to
vote thereon and a majority of the Board of Directors of Yankee Candle
Holdings Corp., a Delaware corporation (the "Company"), or (ii) unanimous
consent of all stockholders entitled to vote thereon, and following the
exchange (the "Exchange") of all of the Company's assets for shares of
common stock, par value $.01 per share ("YCC Common Stock"), of The Yankee
Candle Company, Inc., a Massachusetts corporation ("YCC"), pursuant to that
certain Agreement and Plan of Reorganization dated as of July 2, 1999 (the
"Plan of Reorganization"), by and between YCC and the Company:
1. Dissolution. The appropriate officers of the Company will file
a Certificate of Dissolution with the Secretary of State of the State of
Delaware. The date of such filing shall be the effective date of
dissolution of the Company (the "Effective Date").
2. Cessation of Business. After the filing of the Certificate of
Dissolution, the Company will not carry on any business except as may be
necessary or incidental to the winding up of the Company's affairs.
3. Payment of Debts; Options. The Company will, pursuant to the
Delaware General Corporation Law ("DGCL"), (i) pay or make reasonable
provision to pay or otherwise satisfy all claims and obligations, including
any obligations pursuant to outstanding Company stock option agreements
("Stock Option Agreements"), and all other contingent, conditional, or
unmatured contractual claims known to the Company, (ii) make such provision
as will be reasonably likely to be sufficient to provide compensation for
any claim against the Company which is the subject of a pending action,
suit or proceeding to which the Company is a party, and (iii) make such
provision as will be reasonably likely to be sufficient to provide
compensation for claims that have not been made known to the Company or
that have not arisen but that, based on facts known to the Company, are
likely to arise or to become known to the Company within 10 years of the
date of dissolution. Such claims shall be paid in full and any such
provision for payment made shall be made in full if there are sufficient
funds. If there are insufficient funds, such claims and obligations shall
be paid or provided for according to their priority and, among claims of
equal priority, ratably to the extent of funds legally available therefor.
Any assets remaining following the establishment of such provisions shall
be distributed to the holders of Class A Stock (as defined below). The
Company will cause each Stock Option Agreement to be cancelled and in
exchange therefor shall cause to be delivered to each optionholder a stock
option agreement for options to purchase shares of YCC Common Stock having
the same intrinsic value as the cancelled options.
4. Liquidation of Assets; Cancellation of Shares. The sole assets
of the Company will be shares of YCC Common Stock and options to purchase
shares of YCC Common Stock which will have been received in exchange for
the cancellation of outstanding options under the Stock Option Agreements.
On the business day immediately preceding the day of the closing of the
initial public offering of YCC Common Stock and after the Exchange, the YCC
Common stock owned by the Company will be distributed to the holders of
Class A Stock as follows: (i) each outstanding share of the Company's Class
B Non-Voting Common Stock, par value $.01 per share ("Class B Stock"), will
be converted into shares of the Company's Class A Common Stock, par value
$.01 per share ("Class A Stock"), at the exchange rate set forth in Article
Fourth, Section A, Subsection 4(d) of the Company's Restated Certificate of
Incorporation (the "Restated Certificate") and (ii) immediately thereafter,
each share of Class A Stock shall be exchanged for shares of YCC Common
Stock, calculated in the manner set forth in Article Fourth, Section A,
Subsection 3 of the Restated Certificate. Following the Exchange, the
certificates representing Class A Stock and Class B Stock will be
cancelled. No interest shall accrue at any time on any assets held for
distribution. At the same time, YCC will deliver to each optionholder a
stock option agreement for options to purchase shares of YCC Common Stock,
which YCC options shall have the same intrinsic value as the cancelled
Company options.
5. Liability of Company Stockholders. After the dissolution of
the Company, Company stockholders will retain liability for claims against
the Company as provided in Section 282 of the DGCL.
6. Power of Officers. The officers of the Company shall have
authority to do or authorize any and all acts and things as provided for in
the Plan and any and all such further acts and things as they may consider
desirable to carry out the purposes of the Plan, including the execution
and filing of all such certificates, documents, information returns, tax
returns, and other documents which may be necessary or appropriate to
implement the Plan, as well as the distribution of assets to stockholders
of the Company.
Exhibit 2
REGISTRATION RIGHTS AGREEMENT
among
THE YANKEE CANDLE COMPANY, INC.
FORSTMANN LITTLE & CO. EQUITY PARTNERSHIP - V, L.P.,
and
FORSTMANN LITTLE & CO. SUBORDINATED DEBT
AND EQUITY MANAGEMENT BUYOUT PARTNERSHIP - VI, L.P.
May 6, 1999
<PAGE>
REGISTRATION RIGHTS AGREEMENT, dated as of May 6, 1999, among The
Yankee Candle Company, Inc., a Massachusetts corporation (the "Company"),
Forstmann Little & Co. Equity Partnership - V, L.P., a Delaware limited
partnership ("Equity-V"), and Forstmann Little & Co. Subordinated Debt and
Equity Management Buyout Partnership - VI, L.P. a Delaware limited
partnership ("MBO-VI") (Equity-V and MBO-VI are individually referred to as
a "Forstmann Little Partnership" and collectively referred to as the
"Forstmann Little Partnerships").
The Forstmann Little Partnerships currently own 170,000 shares of
Class A common stock of Yankee Candle Holdings Corp., a Delaware
corporation ("Holdings"). In connection with the proposed public offering
of Common Stock (as defined below), Holdings will exchange its assets for
new shares of the Company. In connection with that exchange the Company
hereby grants to the Forstmann Little Partnerships certain registration and
other rights with respect to their shares of Common Stock as more fully set
forth herein.
If either of the Forstmann Little Partnerships desires to sell
shares of Common Stock, it may be necessary to register such shares under
the Securities Act (as defined below).
Accordingly, the parties hereto agree as follows:
1. Definitions. As used herein, unless the context otherwise
requires, the following terms have the following respective meanings:
"Commission" means the Securities and Exchange Commission or any
other Federal agency at the time administering the Securities Act.
"Common Stock" means any shares of common stock, par value $.01
per share, of the Company, now or hereafter authorized to be issued, and
any and all securities of any kind whatsoever of the Company which may be
exchanged for or converted into Common Stock, any and all securities of any
kind whatsoever of the Company which may be issued on or after the date
hereof in respect of, in exchange for, or upon conversion of shares of
Common Stock pursuant to a merger, consolidation, stock split, stock
dividend, recapitalization of the Company or otherwise.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, or any similar Federal statute, and the rules and regulations of
the Commission thereunder, all as the same shall be in effect at the time.
Reference to a particular section of the Exchange Act shall include a
reference to the comparable section, if any, of any such similar Federal
statute.
"Other Investor" means each Person who, at the time of any
registration of Common Stock hereunder, has the right under a stockholder's
agreement or stock option agreement with the Company or any subsidiary
thereof to participate in any public offering in which all or a portion of
the shares of Common Stock owned by the Forstmann Little Partnerships are
registered under the Securities Act.
"Person" means a corporation, an association, a partnership, an
organization, a business, a trust, an individual, or any other entity or
organization, including a government or political subdivision or an
instrumentality or agency thereof.
"Registrable Securities" means (i) any shares of Common Stock now
or hereafter owned by the Forstmann Little Partnerships, (ii) any shares of
Common Stock held pursuant to the terms of a stockholder's agreement or
issuable upon exercise of an option pursuant to the terms of a stock option
agreement, as the case may be, between any Other Investor and the Company
or any subsidiary thereof, which agreement gives such Other Investor the
right to participate proportionately with the Forstmann Little Partnerships
in a public offering with respect to such shares, and (iii) any Common
Stock issued with respect to the Common Stock referred to in clauses (i) or
(ii) by way of a stock dividend, stock split or reverse stock split or in
connection with a combination of shares, recapitalization, merger,
consolidation or otherwise. As to any particular Registrable Securities,
such securities shall cease to be Registrable Securities (a) when a
registration statement with respect to the sale of such securities shall
have become effective under the Securities Act and such securities shall
have been disposed of in accordance with such registration statement, (b)
when such securities shall have been otherwise transferred, new
certificates for them not bearing a legend restricting further transfer
shall have been delivered by the Company and subsequent public distribution
of them shall not require registration of them under the Securities Act, or
(c) when such securities shall have been sold as permitted by, and in
compliance with, the Securities Act. Any certificate evidencing the
Registrable Securities shall bear a legend stating that the securities have
not been registered under the Securities Act and setting forth or referring
to the restrictions on transferability and sale of the securities.
"Registration Expenses" means all expenses incident to the
registration and disposition of the Registrable Securities pursuant to
Section 2 hereof, including, without limitation, all registration, filing
and applicable national securities exchange fees, all fees and expenses of
complying with state securities or blue sky laws (including fees and
disbursements of counsel to the underwriters or the Forstmann Little
Partnerships and the Other Investors in connection with "blue sky"
qualification of the Registrable Securities and determination of their
eligibility for investment under the laws of the various jurisdictions),
all word processing, duplicating and printing expenses, all messenger and
delivery expenses, the fees and disbursements of counsel for the Company
and of its independent public accountants, including the expenses of "cold
comfort" letters or any special audits required by, or incident to, such
registration, all fees and disbursements of underwriters (other than
underwriting discounts and commissions), all transfer taxes, and the fees
and expenses of counsel to the Forstmann Little Partnerships and the Other
Investors; provided, however, that Registration Expenses shall exclude, and
the Forstmann Little Partnerships and the Other Investors shall pay,
underwriting discounts and commissions in respect of the Registrable
Securities being registered.
"Securities Act" means the Securities Act of 1933, as amended, or
any similar Federal statute, and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at the time.
References to a particular section of the Securities Act shall include a
reference to the comparable section, if any, of any such similar Federal
statute.
2. Registration under the Securities Act, etc.
-------------------------------------------
2.1 Registration on Request.
-----------------------
(a) Request. At any time or from time to time, the
Forstmann Little Partnerships, individually or jointly, shall have the
right to require the Company to effect the registration under the
Securities Act of all or part of the Registrable Securities, by delivering
a written request therefor to the Company specifying the number of shares
of Registrable Securities and the intended method of distribution. The
Company shall, (i) as expeditiously as possible (but in any event within
120 days of receipt of a written request), use its best efforts to effect
the registration under the Securities Act (including by means of a shelf
registration pursuant to Rule 415 under the Securities Act if so requested
in such request and if the Company is then eligible to use such a
registration) of the Registrable Securities which the Company has been so
requested to register by the Forstmann Little Partnerships, for
distribution in accordance with the intended method of distribution set
forth in the written request delivered by the Forstmann Little
Partnerships, and (ii) if requested by the Forstmann Little Partnerships,
obtain acceleration of the effective date of then registration statement
relating to such registration.
(b) Registration of Other Securities. Whenever the
Company shall effect a registration pursuant to this Section 2.1 in
connection with an underwritten offering by any Forstmann Little
Partnership and any Other Investors of Registrable Securities, no
securities other than Registrable Securities shall be included among the
securities covered by such registration unless the Forstmann Little
Partnership or Partnerships so registering Registrable Securities (the
"Registering Forstmann Little Partnerships") shall have consented in
writing to the inclusion therein of such other securities, which consent
may be subject to terms and conditions determined by the Registering
Forstmann Little Partnerships in their sole discretion.
(c) Registration Statement Form. Registrations under
this Section 2.1 shall be on such appropriate registration form of the
Commission as shall be selected by the Company and as shall be reasonably
acceptable to the Registering Forstmann Little Partnerships. The Company
agrees to include in any such registration statement all information which,
in the opinion of counsel to the Registering Forstmann Little Partnerships
and counsel to the Company, is necessary or desirable to be included
therein.
(d) Expenses. The Company shall pay all Registration
Expenses in connection with any registration requested pursuant to this
Section 2.1.
(e) Effective Registration Statement. A registration
requested pursuant to this Section 2.1 shall not be deemed to have been
effected (including for purposes of paragraph (h) of this Section 2.1) (i)
unless a registration statement with respect thereto has become effective
and has been kept continuously effective for a period of at least 120 days
(or such shorter period which shall terminate when all the Registrable
Securities covered by such registration statement have been sold pursuant
thereto), (ii) if after it has become effective, such registration is
interfered with by any stop order, injunction or other order or requirement
of the Commission or other governmental agency or court for any reason not
attributable to the Registering Forstmann Little Partnerships and has not
thereafter become effective, or (iii) if the conditions to closing
specified in the underwriting agreement, if any, entered into in connection
with such registration are not satisfied or waived.
(f) Selection of Underwriters. The underwriters of each
underwritten offering of the Registrable Securities so to be registered
shall be selected by the Registering Forstmann Little Partnerships.
(g) Right to Withdraw. If the managing underwriter of
any underwritten offering shall advise the Registering Forstmann Little
Partnerships that the Registrable Securities covered by the registration
statement cannot be sold in such offering within a price range acceptable
to the Registering Forstmann Little Partnerships, then the Registering
Forstmann Little Partnerships shall have the right to notify the Company in
writing that they have determined that the registration statement be
abandoned or withdrawn, in which event the Company shall abandon or
withdraw such registration statement. In the event of such abandonment or
withdrawal, such request shall not be counted for purposes of the requests
for registration to which the Forstmann Little Partnerships are entitled
pursuant to this Section 2.1.
(h) Limitations on Registration on Request. The
Forstmann Little Partnerships shall be entitled to require the Company to
effect, and the Company shall be required to effect, six registrations in
the aggregate pursuant to this Section 2.1, provided, however, that the
aggregate offering value of the shares to be registered pursuant to any
such registration shall be at least $15,000,000 unless the Forstmann Little
Partnerships then own shares with an aggregate value less than $15,000,000
(in which case such lesser number of shares may be registered).
(i) Postponement. The Company shall be entitled once in
any six-month period to postpone for a reasonable period of time (but not
exceeding 90 days) (the "Postponement Period") the filing of any
registration statement required to be prepared and filed by it pursuant to
this Section 2.1 if the Company determines, in its reasonable judgment,
that such registration and offering would materially interfere with any
material financing, corporate reorganization or other material transaction
involving the Company or any subsidiary, or would require premature
disclosure thereof, and promptly gives the Registering Forstmann Little
Partnerships written notice of such determination, containing a general
statement of the reasons for such postponement and an approximation of the
anticipated delay. If the Company shall so postpone the filing of a
registration statement, the Forstmann Little Partnerships shall have the
right to withdraw the request for registration by giving written notice to
the Company at any time and, in the event of such withdrawal, such request
shall not be counted for purposes of the requests for registration to which
the Forstmann Little Partnerships are entitled pursuant to this Section
2.1.
2.2 Incidental Registration.
-----------------------
(a) Right to Include Registrable Securities. If the
Company at any time proposes to register any of its securities under the
Securities Act by registration on Form S-1, S-2 or S-3 or any successor or
similar form(s) (except registrations on any such Form or similar form(s)
solely for registration of securities in connection with an employee
benefit plan or dividend reinvestment plan or a merger or consolidation),
whether or not for sale for its own account, it will each such time give
prompt written notice to each of the Forstmann Little Partnerships of its
intention to do so and of the Forstmann Little Partnerships' rights under
this Section 2.2. Upon the written request of any of the Forstmann Little
Partnerships (which request shall specify the maximum number of Registrable
Securities intended to be disposed of by the Forstmann Little
Partnerships), made as promptly as practicable and in any event within 30
days after the receipt of any such notice (15 days if the Company states in
such written notice or gives telephonic notice to the Forstmann Little
Partnerships, with written confirmation to follow promptly thereafter,
stating that (i) such registration will be on Form S-3 and (ii) such
shorter period of time is required because of a planned filing date), the
Company shall use its best efforts to effect the registration under the
Securities Act of all Registrable Securities which the Company has been so
requested to register by the Forstmann Little Partnerships; provided,
however, that if, at any time after giving written notice of its intention
to register any securities and prior to the effective date of the
registration statement filed in connection with such registration, the
Company shall determine for any reason not to register or to delay
registration of such securities, the Company shall give written notice of
such determination and its reasons therefor to the Forstmann Little
Partnerships and (i) in the case of a determination not to register, shall
be relieved of its obligation to register any Registrable Securities in
connection with such registration (but not from any obligation of the
Company to pay the Registration Expenses in connection therewith), without
prejudice, however, to the rights of the Forstmann Little Partnerships to
request that such registration be effected as a registration under Section
2.1 and (ii) in the case of a determination to delay registering, shall be
permitted to delay registering any Registrable Securities, for the same
period as the delay in registering such other securities. No registration
effected under this Section 2.2 shall relieve the Company of its obligation
to effect any registration upon request under Section 2.1. The Company will
pay all Registration Expenses in connection with any registration of
Registrable Securities requested pursuant to this Section 2.2.
(b) Right to Withdraw. The Forstmann Little
Partnerships shall have the right to withdraw their request for inclusion
of its Registrable Securities in any registration statement pursuant to
this Section 2.2 at any time prior to the execution of an underwriting
agreement with respect thereto by giving written notice to the Company of
its request to withdraw.
(c) Priority in Incidental Registrations. If the
managing underwriter of any underwritten offering shall inform the Company
by letter of its belief that the number of Registrable Securities requested
to be included in such registration, when added to the number of other
securities to be offered in such registration, would materially adversely
affect such offering, then the Company shall include in such registration,
to the extent of the number and type which the Company is so advised can be
sold in (or during the time of) such offering without so materially
adversely affecting such offering (the "Section 2.2 Sale Amount"), (i) all
of the securities proposed by the Company to be sold for its own account;
(ii) thereafter, to the extent the Section 2.2 Sale Amount is not exceeded,
the Registrable Securities requested by the Forstmann Little Partnerships
to be included in such registration pursuant to Section 2.2(a) (including
Registrable Securities held by Other Investors); and (iii) thereafter, to
the extent the Section 2.2 Sale Amount is not exceeded, any other
securities of the Company requested to be included in such registration by
any holder thereof, including, in the case where such registration is to be
effected as a result of the exercise by a holder of the Company's
securities of such holder's right to cause such securities to be so
registered, the securities of such holder.
(d) Plan of Distribution. Any participation by holders
of Registrable Securities in a registration by the Company shall be in
accordance with the Company's plan of distribution, provided that the
Registering Forstmann Little Partnerships shall have the right to select
the co-managing underwriter.
2.3 Registration Procedures. If and whenever the Company is
required to use its best efforts to effect the registration of any
Registrable Securities under the Securities Act as provided in Sections 2.1
and 2.2 hereof, the Company shall as expeditiously as possible:
(a) prepare and file with the Commission as soon as
practicable the requisite registration statement to effect such
registration (and shall include all financial statements required by the
Commission to be filed therewith) and thereafter use its best efforts to
cause such registration statement to become effective; provided, however,
that before filing such registration statement (including all exhibits) or
any amendment or supplement thereto or comparable statements under
securities or blue sky laws of any jurisdiction, the Company shall furnish
such documents to the Registering Forstmann Little Partnerships and each
underwriter, if any, participating in the offering of the Registrable
Securities and their respective counsel, which documents will be subject to
the review and comments of the Registering Forstmann Little Partnerships,
each underwriter and their respective counsel; and provided, further,
however, that the Company may discontinue any registration of its
securities which are not Registrable Securities at any time prior to the
effective date of the registration statement relating thereto;
(b) notify the Registering Forstmann Little
Partnerships of the Commission's requests for amending or supplementing the
registration statement and the prospectus, and prepare and file with the
Commission 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 and to comply with the provisions of
the Securities Act with respect to the disposition of all Registrable
Securities covered by such registration statement for such period as shall
be required for the disposition of all of such Registrable Securities in
accordance with the intended method of distribution thereof; provided, that
except with respect to any such registration statement filed pursuant to
Rule 415 under the Securities Act, such period need not exceed 120 days;
(c) furnish, without charge, to the Registering
Forstmann Little Partnerships and each underwriter such number of conformed
copies of such registration statement and of each such amendment and
supplement thereto (in each case including all exhibits), such number of
copies of the prospectus contained in such registration statement
(including each preliminary prospectus and any summary prospectus) and any
other prospectus filed under Rule 424 under the Securities Act, in
conformity with the requirements of the Securities Act, and such other
documents, as the Registering Forstmann Little Partnerships and such
underwriters may reasonably request;
(d) use its best efforts (i) to register or qualify all
Registrable Securities and other securities covered by such registration
statement under such securities or blue sky laws of such States of the
United States of America where an exemption is not available and as the
Registering Forstmann Little Partnerships or any managing underwriter shall
reasonably request, (ii) to keep such registration or qualification in
effect for so long as such registration statement remains in effect, and
(iii) to take any other action which may be reasonably necessary or
advisable to enable the Registering Forstmann Little Partnerships to
consummate the disposition in such jurisdictions of the securities to be
sold by the Registering Forstmann Little Partnerships, except that the
Company shall not for any such purpose be required to qualify generally to
do business as a foreign corporation in any jurisdiction wherein it would
not but for the requirements of this subsection (d) be obligated to be so
qualified or to consent to general service of process in any such
jurisdiction;
(e) use its best efforts to cause all Registrable
Securities covered by such registration statement to be registered with or
approved by such other federal or state governmental agencies or
authorities as may be necessary in the opinion of counsel to the Company
and counsel to the Registering Forstmann Little Partnerships to consummate
the disposition of such Registrable Securities;
(f) furnish to the Registering Forstmann Little
Partnerships and each underwriter, if any, participating in the offering of
the securities covered by such registration statement, a signed counterpart
of (i) an opinion of counsel for the Company, and (ii) a "comfort" letter
signed by the independent public accountants who have certified the
Company's financial statements included or incorporated by reference in
such registration statement, covering substantially the same matters with
respect to such registration statement (and the prospectus included
therein) and, in the case of the accountants' comfort letter, with respect
to events subsequent to the date of such financial statements, as are
customarily covered in opinions of issuer's counsel and in accountants'
comfort letters delivered to the underwriters in underwritten public
offerings of securities (and dated the dates such opinions and comfort
letters are customarily dated) and, in the case of the legal opinion, such
other legal matters, and, in the case of the accountants' comfort letter,
such other financial matters, as the Registering Forstmann Little
Partnerships, or the underwriters, may reasonably request;
(g) promptly notify the Registering Forstmann Little
Partnerships and each managing underwriter, if any, participating in the
offering of the securities covered by such registration statement (i) when
such registration statement, any pre-effective amendment, the prospectus or
any prospectus supplement related thereto or post-effective amendment to
such registration statement has been filed, and, with respect to such
registration statement or any post-effective amendment, when the same has
become effective; (ii) of any request by the Commission for amendments or
supplements to such registration statement or the prospectus related
thereto or for additional information; (iii) of the issuance by the
Commission of any stop order suspending the effectiveness of such
registration statement or the initiation of any proceedings for that
purpose; (iv) of the receipt by the Company of any notification with
respect to the suspension of the qualification of any of the Registrable
Securities for sale under the securities or blue sky laws of any
jurisdiction or the initiation of any proceeding for such purpose; (v) at
any time when a prospectus relating thereto is required to be delivered
under the Securities Act, upon discovery that, or upon the happening of any
event as a result of which, the prospectus included in such registration
statement, as then in effect, includes an untrue statement of a material
fact or omits to state any material fact required to be stated therein or
necessary to make the statements therein not misleading, in the light of
the circumstances under which they were made, and in the case of this
clause (v), at the request of the Registering Forstmann Little Partnerships
promptly prepare and furnish to the Registering Forstmann Little
Partnerships and each managing underwriter, if any, participating in the
offering of the Registrable Securities, a reasonable number of copies of a
supplement to or an amendment of such prospectus as may be necessary so
that, as thereafter delivered to the purchasers of such securities, such
prospectus shall not include an untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to make
the statements therein not misleading in the light of the circumstances
under which they were made; and (vi) at any time when the representations
and warranties of the Company contemplated by Section 2.4(a) or (b) hereof
cease to be true and correct;
(h) otherwise comply with all applicable rules and
regulations of the Commission, and make available to its security holders,
as soon as reasonably practicable, an earnings statement covering the
period of at least twelve months beginning with the first full calendar
month after the effective date of such registration statement, which
earnings statement shall satisfy the provisions of Section 11(a) of the
Securities Act and Rule 158 promulgated thereunder, and promptly furnish to
the Registering Forstmann Little Partnerships a copy of any amendment or
supplement to such registration statement or prospectus;
(i) provide and cause to be maintained a transfer agent
and registrar (which, in each case, may be the Company) for all Registrable
Securities covered by such registration statement from and after a date not
later than the effective date of such registration;
(j) (i) use its best efforts to cause all Registrable
Securities covered by such registration statement to be listed on the
principal securities exchange on which similar securities issued by the
Company are then listed (if any), if the listing of such Registrable
Securities is then permitted under the rules of such exchange, or (ii) if
no similar securities are then so listed, use its best efforts to (x) cause
all such Registrable Securities to be listed on a national securities
exchange or (y) failing that, secure designation of all such Registrable
Securities as a NASDAQ "national market system security" within the meaning
of Rule 11Aa2-1 of the Commission or (z) failing that, to secure NASDAQ
authorization for such shares and, without limiting the generality of the
foregoing, to arrange for at least two market makers to register as such
with respect to such shares with the National Association of Securities
Dealers, Inc.;
(k) deliver promptly to counsel to the Registering
Forstmann Little Partnerships and each underwriter, if any, participating
in the offering of the Registrable Securities, copies of all correspondence
between the Commission and the Company, its counsel or auditors and all
memoranda relating to discussions with the Commission or its staff with
respect to such registration statement;
(l) use its best efforts to obtain the withdrawal of
any order suspending the effectiveness of the registration statement;
(m) provide a CUSIP number for all Registrable
Securities, no later than the effective date of the registration statement;
and
(n) make available its employees and personnel and
otherwise provide reasonable assistance to the underwriters (taking into
account the needs of the Company's business) in their marketing of
Registrable Securities.
The Company may require the Registering Forstmann Little
Partnerships to furnish the Company such information regarding the
Registering Forstmann Little Partnerships and the distribution of the
Registrable Securities as the Company may from time to time reasonably
request in writing.
The Forstmann Little Partnerships agree that upon receipt of any
notice from the Company of the happening of any event of the kind described
in paragraph (g)(iii) or (v) of this Section 2.3, each of the Registering
Forstmann Little Partnerships will, to the extent appropriate, discontinue
its disposition of Registrable Securities pursuant to the registration
statement relating to such Registrable Securities until, in the case of
paragraph (g)(v) of this Section 2.3, its receipt of the copies of the
supplemented or amended prospectus contemplated by paragraph (g)(v) of this
Section 2.3 and, if so directed by the Company, will deliver to the Company
(at the Company's expense) all copies, other than permanent file copies,
then in its possession, of the prospectus relating to such Registrable
Securities current at the time of receipt of such notice. If the
disposition by the Registering Forstmann Little Partnerships of their
securities is discontinued pursuant to the foregoing sentence, the Company
shall extend the period of effectiveness of the registration statement by
the number of days during the period from and including the date of the
giving of notice to and including the date when the Registering Forstmann
Little Partnerships shall have received copies of the supplemented or
amended prospectus contemplated by paragraph (g)(v) of this Section 2.3;
and, if the Company shall not so extend such period, the Registering
Forstmann Little Partnerships' request pursuant to which such registration
statement was filed shall not be counted for purposes of the requests for
registration to which the Forstmann Little Partnerships are entitled
pursuant to Section 2.1 hereof.
2.4 Underwritten Offerings.
----------------------
(a) Requested Underwritten Offerings. If requested by
the underwriters for any underwritten offering by the Registering Forstmann
Little Partnerships (and any Other Investors) pursuant to a registration
requested under Section 2.1, the Company shall enter into a customary
underwriting agreement with a managing underwriter or underwriters selected
by the Registering Forstmann Little Partnerships. Such underwriting
agreement shall be satisfactory in form and substance to the Registering
Forstmann Little Partnerships and shall contain such representations and
warranties by, and such other agreements on the part of, the Company and
such other terms as are generally prevailing in agreements of that type,
including, without limitation, customary provisions relating to
indemnification and contribution. The Registering Forstmann Little
Partnerships shall be parties to such underwriting agreement and may, at
their option, require that any or all of the representations and warranties
by, and the other agreements on the part of, the Company to and for the
benefit of such underwriters shall also be made to and for the benefit of
the Registering Forstmann Little Partnerships and that any or all of the
conditions precedent to the obligations of such underwriters under such
underwriting agreement be conditions precedent to the obligations of the
Registering Forstmann Little Partnerships. None of the Registering
Forstmann Little Partnerships shall be required to make any representations
or warranties to or agreements with the Company or the underwriters other
than representations, warranties or agreements regarding such Registering
Forstmann Little Partnership, its ownership of and title to the Registrable
Securities, and its intended method of distribution; and any liability of
any Registering Forstmann Little Partnership to any underwriter or other
person under such underwriting agreement shall be limited to liability
arising from breach of its representations and warranties and shall be
limited to an amount equal to the proceeds (net of expenses and
underwriting discounts and commissions) that it derives from such
registration.
(b) Incidental Underwritten Offerings. In the case of a
registration pursuant to Section 2.2 hereof, if the Company shall have
determined to enter into any underwriting agreements in connection
therewith, all of the Registrable Securities to be included in such
registration shall be subject to such underwriting agreements. The
Registering Forstmann Little Partnerships may, at their option, require
that any or all of the representations and warranties by, and the other
agreements on the part of, the Company to and for the benefit of such
underwriters shall also be made to and for the benefit of the Registering
Forstmann Little Partnerships and that any or all of the conditions
precedent to the obligations of such underwriters under such underwriting
agreement be conditions precedent to the obligations of the Registering
Forstmann Little Partnerships. None of the Registering Forstmann Little
Partnerships shall be required to make any representations or warranties to
or agreements with the Company or the underwriters other than
representations, warranties or agreements regarding such Registering
Forstmann Little Partnership, its ownership of and title to the Registrable
Securities, and its intended method of distribution; and any liability of
any Registering Forstmann Little Partnership to any underwriter or other
Person under such underwriting agreement shall be limited to liability
arising from breach of its representations and warranties and shall be
limited to an amount equal to the proceeds (net of expenses and
underwriting discounts and commissions) that it derives from such
registration.
2.5 Preparation; Reasonable Investigation. In connection
with the preparation and filing of each registration statement under the
Securities Act pursuant to this Agreement, the Company will give the
Registering Forstmann Little Partnerships, their underwriters, if any, and
their respective counsel, accountants and other representatives and agents
the opportunity to participate in the preparation of such registration
statement, each prospectus included therein or filed with the Commission,
and each amendment thereof or supplement thereto, and give each of them
such access to its books and records and such opportunities to discuss the
business of the Company with its officers and employees and the independent
public accountants who have certified its financial statements, and supply
all other information reasonably requested by each of them, as shall be
necessary or appropriate, in the opinion of the Registering Forstmann
Little Partnerships and such underwriters' respective counsel, to conduct a
reasonable investigation within the meaning of the Securities Act.
2.6 Indemnification.
---------------
(a) Indemnification by the Company. The Company agrees
that in the event of any registration of any securities of the Company
under the Securities Act, the Company shall, and hereby does, indemnify and
hold harmless each Forstmann Little Partnership, its respective directors,
officers, partners, agents and affiliates and each other Person who
participates as an underwriter in the offering or sale of such securities
and each other Person, if any, who controls such Forstmann Little
Partnership or any such underwriter within the meaning of the Securities
Act, against any losses, claims, damages, or liabilities, joint or several,
to which such Forstmann Little Partnership or any such director, officer,
partner, agent or affiliate or underwriter or controlling person may become
subject under the Securities Act or otherwise, insofar as such losses,
claims, damages or liabilities, joint or several (or actions or
proceedings, whether commenced or threatened, in respect thereof), arise
out of or are based upon (i) any untrue statement or alleged untrue
statement of any material fact contained in any registration statement
under which such securities were registered under the Securities Act, any
preliminary prospectus, final prospectus or summary prospectus contained
therein, or any amendment or supplement thereto, (ii) any omission or
alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein in light of the
circumstances in which they were made not misleading, or (iii) any
violation by the Company of any federal, state or common law rule or
regulation applicable to the Company and relating to action required of or
inaction by the Company in connection with any such registration, and the
Company shall reimburse such Forstmann Little Partnership and each such
director, officer, partner, agent or affiliate, underwriter and controlling
Person for any legal or any other expenses reasonably incurred by them in
connection with investigating or defending any such loss, claim, liability,
action or proceeding; provided that the Company shall not be liable in any
such case to the Forstmann Little Partnerships or any such director,
officer, partner, agent, affiliate, or controlling person to the extent
that any such loss, claim, damage, liability (or action or proceeding in
respect thereof) or expense arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged omission made
in such registration statement, any such preliminary prospectus, final
prospectus, summary prospectus, amendment or supplement in reliance upon
and in conformity with written information furnished to the Company through
an instrument duly executed by or on behalf of the Forstmann Little
Partnerships, specifically stating that it is for use in the preparation
thereof; and provided, further, that the Company shall not be liable to any
Person who participates as an underwriter in the offering or sale of
Registrable Securities or any other Person, if any, who controls such
underwriter within the meaning of the Securities Act, in any such case to
the extent that any such loss, claim, damage, liability (or action or
proceeding in respect thereof) or expense (i) arises out of or is based
upon an untrue statement or alleged untrue statement or omission or alleged
omission made in such registration statement, any such preliminary
prospectus, final prospectus, summary prospectus, amendment or supplement
in reliance upon and in conformity with written information furnished to
the Company through an instrument duly executed by or on behalf of such
Person or (ii) arises out of such Person's failure to send or give a copy
of the final prospectus, as the same may be then supplemented or amended,
to the Person asserting an untrue statement or alleged untrue statement or
omission or alleged omission at or prior to the written confirmation of the
sale of Registrable Securities to such Person if such statement or omission
was corrected in such final prospectus. Such indemnity shall remain in full
force regardless of any investigation made by or on behalf of any Forstmann
Little Partnership or any such director, officer, partner, agent,
affiliate, underwriter or controlling Person and shall survive the transfer
of such securities by such Forstmann Little Partnership.
(b) Indemnification by the Forstmann Little
Partnerships. As a condition to including any Registrable Securities in any
registration statement, the Company shall have received an undertaking
reasonably satisfactory to it from each Registering Forstmann Little
Partnership so including any Registrable Securities to indemnify and hold
harmless (in the same manner and to the same extent as set forth in
paragraph (a) of this Section 2.6) the Company, and each director of the
Company, each officer of the Company and each other Person, if any, who
controls the Company within the meaning of the Securities Act, with respect
to any statement or alleged statement in or omission or alleged omission
from such registration statement, any preliminary prospectus, final
prospectus or summary prospectus contained therein, or any amendment or
supplement thereto, but only to the extent such statement or alleged
statement or omission or alleged omission was made in reliance upon and in
conformity with written information furnished to the Company through an
instrument duly executed by such Registering Forstmann Little Partnership
specifically stating that it is for use in the preparation of such
registration statement, preliminary prospectus, final prospectus, summary
prospectus, amendment or supplement; provided, however, that the liability
of such indemnifying party under this Section 2.6(b) shall be limited to
the amount of proceeds (net of expenses and underwriting discounts and
commissions) received by such indemnifying party in the offering giving
rise to such liability. Such indemnity shall remain in full force and
effect, regardless of any investigation made by or on behalf of the Company
or any such director, officer or controlling Person and shall survive the
transfer of such securities by such Forstmann Little Partnership.
(c) Notices of Claims, etc. Promptly after receipt by
an indemnified party of notice of the commencement of any action or
proceeding involving a claim referred to in the preceding subsections of
this Section 2.6, such indemnified party shall, if a claim in respect
thereof is to be made against an indemnifying party, give written notice to
the latter of the commencement of such action or proceeding; provided,
however, that the failure of any indemnified party to give notice as
provided herein shall not relieve the indemnifying party of its obligations
under the preceding subsections of this Section 2.6, except to the extent
that the indemnifying party is actually prejudiced by such failure to give
notice, and shall not relieve the indemnifying party from any liability
which it may have to the indemnified party otherwise than under this
Section 2.6. In case any such action or proceeding is brought against an
indemnified party, the indemnifying party shall be entitled to participate
therein and, unless in the opinion of outside counsel to the indemnified
party a conflict of interest between such indemnified and indemnifying
parties may exist in respect of such claim, to assume the defense thereof,
jointly with any other indemnifying party similarly notified to the extent
that it may wish, with counsel reasonably satisfactory to such indemnified
party; provided, however, that if the defendants in any such action or
proceeding include both the indemnified party and the indemnifying party
and if in the opinion of outside counsel to the indemnified party there may
be legal defenses available to such indemnified party and/or other
indemnified parties which are different from or in addition to those
available to the indemnifying party, the indemnified party or parties shall
have the right to select separate counsel to defend such action or
proceeding on behalf of such indemnified party or parties, provided,
however, that the indemnifying party shall be obligated to pay for only one
counsel for all indemnified parties. After notice from the indemnifying
party to such indemnified party of its election so to assume the defense
thereof and approval by the indemnified party of such counsel, the
indemnifying party shall not be liable to such indemnified party for any
legal expenses subsequently incurred by the latter in connection with the
defense thereof other than reasonable costs of investigation (unless the
first proviso in the preceding sentence shall be applicable). No
indemnifying party shall be liable for any settlement of any action or
proceeding effected without its written consent. No indemnifying party
shall, without the consent of the indemnified party, consent to entry of
any judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
indemnified party of a release from all liability in respect to such claim
or litigation.
(d) Contribution. If the indemnification provided for
in this Section 2.6 shall for any reason be held by a court to be
unavailable to an indemnified party under subsection (a) or (b) hereof in
respect of any loss, claim, damage or liability, or any action in respect
thereof, then, in lieu of the amount paid or payable under subsection (a)
or (b) hereof, the indemnified party and the indemnifying party under
subsection (a) or (b) hereof shall contribute to the aggregate losses,
claims, damages and liabilities (including legal or other expenses
reasonably incurred in connection with investigating the same), (i) in such
proportion as is appropriate to reflect the relative fault of the
indemnifying party on the one hand, and the indemnified party on the other,
which resulted in such loss, claim, damage or liability, or action in
respect thereof, with respect to the statements or omissions which resulted
in such loss, claim, damage or liability, or action in respect thereof, as
well as any other relevant equitable considerations, or (ii) if the
allocation provided by clause (i) above is not permitted by applicable law
or if the allocation provided in this clause (ii) provides a greater amount
to the indemnified party than clause (i) above, in such proportion as shall
be appropriate to reflect not only the relative fault but also the relative
benefits received by the indemnifying party and the indemnified party from
the offering of the securities covered by such registration statement as
well as any other relevant equitable considerations. The parties hereto
agree that it would not be just and equitable if contributions pursuant to
this Section 2.6(d) were to be determined by pro rata allocation or by any
other method of allocation which does not take into account the equitable
considerations referred to in the preceding sentence of this Section
2.6(d). No Person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any Person who was not guilty of such fraudulent
misrepresentation. The Registering Forstmann Little Partnerships'
obligations to contribute as provided in this subsection (d) are several
and not joint and shall be in proportion to the relative value of their
respective Registrable Securities covered by such registration statement.
In addition, no Person shall be obligated to contribute hereunder any
amounts in payment for any settlement of any action or claim effected
without such Person's consent, which consent shall not be unreasonably
withheld. Notwithstanding anything in this subsection (d) to the contrary,
no indemnifying party (other than the Company) shall be required to
contribute any amount in excess of the proceeds (net of expenses and
underwriting discounts and commissions) received by such party from the
sale of the Registrable Securities in the offering to which the losses,
claims, damages or liabilities of the indemnified parties relate.
(e) Other Indemnification. Indemnification and
contribution similar to that specified in the preceding subsections of this
Section 2.6 (with appropriate modifications) shall be given by the Company
and the Registering Forstmann Little Partnerships with respect to any
required registration or other qualification of securities under any
federal, state or blue sky law or regulation of any governmental authority
other than the Securities Act. The indemnification agreements contained in
this Section 2.6 shall be in addition to any other rights to
indemnification or contribution which any indemnified party may have
pursuant to law or contract and shall remain operative and in full force
and effect regardless of any investigation made by or on behalf of any
indemnified party and shall survive the transfer of any of the Registrable
Securities by any of the Forstmann Little Partnerships.
(f) Indemnification Payments. The indemnification and
contribution required by this Section 2.6 shall be made by periodic
payments of the amount thereof during the course of the investigation or
defense, as and when bills are received or expense, loss, damage or
liability is incurred.
2.7 Unlegended Certificates. In connection with the offering
of any Registrable Securities registered pursuant to this Section 2, the
Company shall (i) facilitate the timely preparation and delivery to the
Forstmann Little Partnerships, the Other Investors and the underwriters, if
any, participating in such offering, of unlegended certificates
representing ownership of such Registrable Securities being sold in such
denominations and registered in such names as requested by the Forstmann
Little Partnerships, the Other Investors or such underwriters and (ii)
instruct any transfer agent and registrar of such Registrable Securities to
release any stop transfer orders with respect to any such Registrable
Securities.
2.8 Limitation on Sale of Securities. The Company hereby
agrees that if it shall previously have received a request for registration
pursuant to Section 2.1 or 2.2 hereof, and if such previous registration
shall not have been withdrawn or abandoned, (i) the Company shall not
effect any public or private offer, sale or distribution of its securities
or effect any registration of any of its equity securities under the
Securities Act (other than a registration on Form S-8 or any successor or
similar form which is then in effect), whether or not for sale for its own
account, until a period of 90 days (or such shorter period as the
Registering Forstmann Little Partnerships shall be advised by their
managing underwriter) shall have elapsed from the effective date of such
previous registration, and the Company shall so provide in any registration
rights agreements hereafter entered into with respect to any of its
securities; and (ii) the Company shall use its best efforts to cause each
holder of its equity securities purchased from the Company at any time
after the date of this Agreement to agree not to effect any public sale or
distribution of any such securities during such period, including a sale
pursuant to Rule 144 under the Securities Act.
2.9 No Required Sale. Nothing in this Agreement shall be
deemed to create an independent obligation on the part of any of the
Forstmann Little Partnerships to sell any Registrable Securities pursuant
to any effective registration statement.
3. Rule 144. The Company shall take all actions reasonably
necessary to enable holders of Registrable Securities to sell such
securities without registration under the Securities Act within the
limitation of the exemptions provided by (a) Rule 144, or (b) any similar
rule or regulation hereafter adopted by the Commission including, without
limiting the generality of the foregoing, filing on a timely basis all
reports required to be filed by the Exchange Act. Upon the request of a
Forstmann Little Partnership, the Company will deliver to such holder a
written statement as to whether it has complied with such requirements.
4. Amendments and Waivers. This Agreement may be amended,
modified or supplemented only by written agreement of the party against
whom enforcement of such amendment, modification or supplement is sought.
5. Other Investors. The parties hereto acknowledge and agree that
no Other Investor has any right to request registration of the Common Stock
held by such Other Investor or to participate in any registration of
securities by the Company, other than in accordance with the terms of the
stockholder's agreement or option agreement, as the case may be, between
such Other Investor and the Company or any of its subsidiaries, pursuant to
which such Other Investor generally may have the right or obligation to
participate in any public offering in which all or a portion of the shares
of Common Stock owned by the Forstmann Little Partnerships are registered
under the Securities Act.
6. Adjustments. In the event of any change in the capitalization
of the Company as a result of any stock split, stock dividend, reverse
split, combination, recapitalization, merger, consolidation, or otherwise,
the provisions of this Agreement shall be appropriately adjusted. The
Company agrees that it shall not effect or permit to occur any combination
or subdivision of shares which would adversely affect the ability of the
Forstmann Little Partnerships or the Other Investors to include any
Registrable Securities in any registration contemplated by this Agreement
or the marketability of such Registrable Securities in any such
registration. The Company agrees that it will take all reasonable steps
necessary to effect a combination or subdivision of shares if in the
reasonable judgment of the Forstmann Little Partnerships such combination
or subdivision would enhance the marketability of the Registrable
Securities.
7. Notice. All notices and other communications hereunder shall
be in writing and, unless otherwise provided herein, shall be deemed to
have been given when received by the party to whom such notice is to be
given at its address set forth below, or such other address for the party
as shall be specified by notice given pursuant hereto:
(a) If to any of the Forstmann Little Partnerships, to it:
c/o Forstmann Little & Co.
767 Fifth Avenue, 44th Floor
New York, New York 10153
Attention: Ms. Sandra J. Horbach
With a copy to:
Fried, Frank, Harris, Shriver
& Jacobson
One New York Plaza
New York, New York 10004
Attention: Lois Herzeca, Esq.
(b) If to the Company:
The Yankee Candle Company, Inc.
102 Christian Lane
Whately, Massachusetts 01093
Attention: Chief Financial Officer
8. Assignment; Third Party Beneficiaries. This Agreement shall be
binding upon and inure to the benefit of and be enforceable by the parties
hereto and their respective successors and permitted assigns; provided,
however, that the Other Investors shall have no rights under this
Agreement. This Agreement may not be assigned by the Company, without the
prior written consent of the Forstmann Little Partnerships. Any Forstmann
Little Partnership may, at its election, at any time or from time to time,
assign its rights under this Agreement, in whole or in part, to any
purchaser of shares of Common Stock held by it.
9. Remedies. The parties hereto agree that money damages or other
remedy at law would not be sufficient or adequate remedy for any breach or
violation of, or a default under, this Agreement by them and that, in
addition to all other remedies available to them, each of them shall be
entitled to an injunction restraining such breach, violation or default or
threatened breach, violation or default and to any other equitable relief,
including without limitation specific performance, without bond or other
security being required. In any action or proceeding brought to enforce any
provision of this Agreement (including the indemnification provisions
thereof), the successful party shall be entitled to recover reasonable
attorneys' fees in addition to its costs and expenses and any other
available remedy.
10. No Inconsistent Agreements. The Company will not, on or after
the date of this Agreement, enter into any agreement with respect to its
securities which is inconsistent with the rights granted to the Forstmann
Little Partnerships in this Agreement or otherwise conflicts with the
provisions hereof. The Company has not previously entered into any
agreement with respect to its securities granting any registration rights
to any Person. The rights granted to the Forstmann Little Partnerships
hereunder do not in any way conflict with and are not inconsistent with any
other agreements to which the Company is a party or by which it is bound.
The Company further agrees that if any other registration rights agreement
entered into after the date of this Agreement with respect to any of its
securities contains terms which are more favorable to, or less restrictive
on, the other party thereto than the terms and conditions contained in this
Agreement are (insofar as they are applicable) with respect to the
Forstmann Little Partnerships, then the terms and conditions of this
Agreement shall immediately be deemed to have been amended without further
action by the Company or the Forstmann Little Partnerships so that the
Forstmann Little Partnerships shall be entitled to the benefit of any such
more favorable or less restrictive terms or conditions.
11. Descriptive Headings. The descriptive headings of the several
sections and paragraphs of this Agreement are inserted for reference only
and shall not control or otherwise affect the meaning hereof.
12. Governing Law. This Agreement shall be construed and enforced
in accordance with, and the rights and obligations of the parties hereto
shall be governed by, the laws of the State of New York, without giving
effect to the conflicts of law principles thereof. Each of the parties
hereto hereby irrevocably and unconditionally consents to submit to the
exclusive jurisdiction of the courts of the State of New York and the
United States of America located in the County of New York for any action
or proceeding arising out of or relating to this Agreement and the
transactions contemplated hereby (and agrees not to commence any action or
proceeding relating thereto except in such courts), and further agrees that
service of any process, summons, notice or document by U.S. registered mail
to its respective address set forth in Section 7 hereof shall be effective
service of process for any action or proceeding brought against it in any
such court. Each of the parties hereto hereby irrevocably and
unconditionally waives any objection to the laying of venue of any action
or proceeding arising out of this Agreement or the transactions
contemplated hereby in the courts of the State of New York or the United
States of America located in the County of New York, and hereby further
irrevocably and unconditionally waives and agrees not to plead or claim in
any such court that any such action or proceeding brought in any such court
has been brought in an inconvenient forum.
13. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all such
counterparts shall together constitute one and the same instrument.
14. Invalidity of Provision. The invalidity or unenforceability
of any provision of this Agreement in any jurisdiction shall not affect the
validity or enforceability of the remainder of this Agreement in that
jurisdiction or the validity or enforceability of this Agreement, including
that provision, in any other jurisdiction. If any restriction or provision
of this Agreement is held unreasonable, unlawful or unenforceable in any
respect, such restriction or provision shall be interpreted, revised or
applied in a manner that renders it lawful and enforceable to the fullest
extent possible under law.
15. Further Assurances. Each party hereto shall do and perform or
cause to be done and performed all further acts and things and shall
execute and deliver all other agreements, certificates, instruments, and
documents as any other party hereto reasonably may request in order to
carry out the intent and accomplish the purposes of this Agreement and the
consummation of the transactions contemplated hereby.
16. Entire Agreement; Effectiveness. This Agreement constitutes
the entire agreement, and supersedes all prior agreements and
understandings, oral and written, between the parties hereto with respect
to the subject matter hereof.
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed and delivered by their respective officers thereunto duly
authorized.
THE YANKEE CANDLE COMPANY, INC.
By: /s/ Michael D. Parry
-----------------------------------
Name: Michael D. Parry
Title: President and
Chief Executive Officer
FORSTMANN LITTLE & CO. EQUITY
PARTNERSHIP - V, L.P.
By: FLC XXX Partnership,
its general partner
By: /s/ Sandra J. Horbach
-----------------------------------
Sandra J. Horbach,
a general partner
FORSTMANN LITTLE & CO. SUBORDINATED
DEBT AND EQUITY MANAGEMENT BUYOUT
PARTNERSHIP - VI, L.P.
By: FLC XXIX Partnership,
its general partner
By: /s/ Sandra J. Horbach
-----------------------------------
Sandra J. Horbach,
a general partner
Exhibit 3
STOCKHOLDER'S AGREEMENT, dated as of [__________], 1999, between
The Yankee Candle Company, Inc., a Massachusetts corporation (the
"Company"), and [Name] (the "Employee").
WHEREAS, Forstmann Little & Co. Equity Partnership-V, L.P., a
Delaware limited partnership ("Equity-V"), and Forstmann Little & Co.
Subordinated Debt and Equity Management Buyout Partnership-V, L.P., a
Delaware limited partnership ("MBO-VI"), will own shares of Common Stock,
par value $0.01 per share, of the Company;
WHEREAS, the Employee purchased shares of Class B Common Stock
("Class B Common Stock"), par value $0.01 per share, of Yankee Candle
Holdings Corp., a Delaware corporation ("Holdings"), on the terms and
subject to the conditions set forth in the Stockholder's Agreement, dated
as of [_______,] 1998 (the "Old Stockholder's Agreement");
WHEREAS, in a reorganization that will occur in connection with
the initial public offering (the "Offering") of the Company, shares of
Class B Common Stock will be exchanged for shares of Common Stock, par
value $0.01 per share, of the Company;
WHEREAS, effective upon the closing of the Offering, the Employee
will own shares of Common Stock and the Old Stockholder's Agreement will be
cancelled (and all rights and obligations thereunder will be null and
void); and
WHEREAS, the Employee and the Company wish to provide for certain
arrangements with respect to the Employee's rights to hold and dispose of
the shares of Common Stock.
NOW, THEREFORE, the parties hereto agree as follows:
1. Definitions
-----------
1.1 Definitions; Rules of Construction.
----------------------------------
(a) The following terms, as used herein, shall have the
following meanings:
"Act" shall mean the Securities Act of 1933, as amended.
"Affiliate" shall mean, with respect to any Person, any
other Person which, directly or indirectly, is in control of, is controlled
by, or is under common control with, such Person.
"Affiliate Securities" shall mean any securities issued by
an Affiliate of the Company.
"Aggregate Number of Acquired Shares" shall mean the
aggregate number of shares of Common Stock acquired by the Employee
pursuant hereto (adjusted, where appropriate, to reflect any Capital
Transaction).
"Aggregate Number of Shares Sold" shall mean, as at any
date, the aggregate number of shares sold by the Employee pursuant to
Section 2.3, 2.4 or 2.5 hereof prior to such date, if any (adjusted, where
appropriate, to reflect any Capital Transaction effected after the date of
any such sale).
"Agreement" shall mean this Stockholder's Agreement, as
amended, supplemented or modified from time to time.
"Book Value of the Company" shall mean the sum of (x) the
total assets minus the total liabilities of the Company on a consolidated
basis, plus (y) the amount of any reduction in stockholders' equity
resulting from the application of EITF Issue Summary No. 88-16, Basis in
Leveraged Buyouts, as of the Valuation Date, plus (z) the amount of
accumulated amortization of that portion of the purchase price paid for the
Company by the FL & Co. Companies that was allocated to goodwill, excluding
other acquired identified intangible assets. For purposes of calculating
the Book Value of the Company and the Book Value Per Share, (i) all options
and other rights to acquire equity interests in the Company outstanding
immediately prior to the Delivery Date or exercised between the Valuation
Date and the Delivery Date shall be deemed to have been exercised on the
Valuation Date, and (ii) the number of outstanding shares on the Valuation
Date shall be increased by the number of shares subject to each such option
or other right and the assets of the Company shall be increased by the
aggregate exercise price payable in respect of the exercise of each such
option or other right (with respect to clauses (i) and (ii), in the case of
any such option or other right unless the effect thereof would be to
increase the Book Value Per Share).
"Book Value Per Share" shall mean the amount which would be
payable on the Valuation Date in respect of one share of Common Stock in
the event of a dissolution, liquidation or winding-up of the affairs of the
Company if the amount of assets available for distribution in the event of
such dissolution, liquidation or winding-up with respect to all shares of
capital stock of the Company outstanding (or deemed to be outstanding, as
set forth above in the definition of "Book Value of the Company") on the
Valuation Date were equal to the Book Value of the Company. In the event
there has been a Stock Dividend after the Valuation Date and prior to the
Election Date, the number of shares outstanding for purposes of determining
Book Value Per Share shall be the number of shares that would have been
outstanding immediately after the Stock Dividend on the Valuation Date had
the Stock Dividend occurred on the Valuation Date.
"Call Shares" shall have the meaning ascribed to such term
in Section 2.2(d) hereof.
"Capital Transaction" shall mean any Stock Dividend,
recapitalization (including, without limitation, any special dividend or
distribution), reclassification, spin-off, partial liquidation or similar
capital adjustments (including, without limitation, through merger or
consolidation).
"Common Stock" shall mean the Common Stock, par value $0.01
per share, of the Company. There shall be included within the term Common
Stock any Common Stock now or hereafter authorized to be issued, and any
and all securities of any kind whatsoever of the Company which may be
issued after the date hereof in respect of, or in exchange for, shares of
Common Stock pursuant to a Capital Transaction or otherwise.
"Company" shall mean The Yankee Candle Company, Inc., a
Massachusetts corporation, and shall include any successor thereto by
merger, consolidation, acquisition of substantially all the assets thereof,
or otherwise.
"Competitive Activity" shall mean engaging in any of the
following activities: (i) serving as a director of any Competitor; (ii)
directly or indirectly (X) controlling any Competitor or (Y) owning any
equity or debt interests in any Competitor (other than equity or debt
interests which are publicly traded and do not exceed 2% of the particular
class of interests then outstanding) (it being understood that, if any such
interests in any Competitor are owned by an investment vehicle or other
entity in which the Employee owns an equity interest, a portion of the
interests in such Competitor owned by such entity shall be attributed to
the Employee, such portion determined by applying the percentage of the
equity interest in such entity owned by the Employee to the interests in
such Competitor owned by such entity); (iii) directly or indirectly
soliciting, diverting, taking away, appropriating or otherwise interfering
with any of the customers or suppliers of the Company or any Affiliate of
the Company; or (iv) employment by (including serving as an officer or
director of), or providing consulting services to, any Competitor;
provided, however, that if the Competitor has more than one discrete and
readily distinguishable part of its business, employment by or providing
consulting services to any Competitor shall be Competitive Activity only if
(1) his or her employment duties are at or involving the part of the
Competitor's business that competes with any of the businesses conducted by
the Company or any of its subsidiaries (the "Competing Operations"),
including serving in a capacity where any person at the Competing
Operations reports to the Employee, or (2) the consulting services are
provided to or involve the Competing Operations. For purposes of this
definition, the term "control" means the possession, directly or
indirectly, of the power to direct or cause the direction of the management
and policies of any Competitor, whether through the ownership of equity or
debt interests, by contract or otherwise. Notwithstanding the foregoing,
the term "Competitive Activity" shall not include the direct or indirect
ownership or operation of, investment in, or employment or engagement by a
Person that is a Competitor solely because such Person is an independent
retail gift shop or retail garden shop, provided that (i) if such gift shop
sells candles or other home fragrancing products, such products must be
manufactured solely by the Company or its Affiliates, (ii) such gift shop
is not located within a 50 mile radius of any retail gift store owned by
the Company or its Affiliates, and (iii) such retail gift shop does not
have revenues in excess of $2 million per year.
"Competitor" shall mean any Person that competes either
directly or indirectly with any of the businesses in which, at the time the
Employee's employment is Terminated, the Company or any of its subsidiaries
is engaged.
"Delivery Date" shall have the meaning ascribed to such term
in Section 2.2(b) hereof.
"Election Date" shall have the meaning ascribed to such term
in Section 2.2(a) hereof.
"Equity-V" shall have the meaning ascribed to such term in
the first "Whereas" clause hereof.
"Expenses of Sale" shall mean all expenses incurred by the
FL & Co. Companies in connection with the sale of the shares of the selling
stockholders pursuant to Section 2.3, 2.4 or 2.5 hereof to the extent that
such expenses are not paid or reimbursed by the Company.
"FL & Co. Companies" shall mean the collective reference to
Equity-V and MBO-VI.
"Legal Representative" shall mean the guardian, executor,
administrator or other legal representative of the Employee. All references
herein to the Employee shall be deemed to include references to the
Employee's Legal Representative, if any, unless the context otherwise
requires.
"Litigation" shall mean any actions, suits or proceedings
arising out of or relating to this Agreement and the transactions
contemplated hereby.
"MBO-VI" shall have the meaning ascribed to such term in the
first "Whereas" clause hereof.
"Permitted Transferee" shall have the meaning ascribed to
such term in Section 2.1 hereof.
"Person" shall mean an individual, a corporation, a
partnership, an association, a trust or any other entity or organization,
including a government or political subdivision or an agency or
instrumentality thereof.
"Prohibited Activity" shall have the meaning ascribed to
such term in Section 3.1 hereof.
"Purchase Price" shall have the meaning ascribed to such
term in Section 2.2(c) hereof.
"Purchase Price Certificate" shall have the meaning ascribed
to such term in Section 2.2(b) hereof.
"Release Date" shall mean the date on which the FL & Co.
Companies and their affiliates shall cease to own in the aggregate directly
or indirectly at least 20 percent of the then outstanding securities of the
Company having the power to vote in the election of directors of the
Company.
"Representative" shall have the meaning ascribed to such
term in Section 5.13(b) hereof.
"Repurchase Notice" shall have the meaning ascribed to such
term in Section 4.2 hereof.
"Sale Obligations" shall mean any liabilities and
obligations (including liabilities and obligations for indemnification,
amounts paid into escrow and post-closing adjustments) incurred by the
selling stockholders in connection with the sale of their shares pursuant
to Section 2.3, 2.4 or 2.5 hereof.
"Scheduled Closing Date" shall have the meaning ascribed to
such term in Section 3.2(d) hereof.
"Section 2.3 Notice" shall have the meaning ascribed to such
term in Section 2.3 hereof.
"Section 2.4 Notice" shall have the meaning ascribed to such
term in Section 2.4 hereof.
"Stock Dividend" shall mean any stock split, stock dividend,
reverse stock split or similar transaction which changes the number of
outstanding shares of capital stock of the Company.
"Termination" or "Terminated" shall mean that the Employee's
employment on a full-time basis by the Company and its subsidiaries shall
have ceased for any reason whatsoever (including by reason of death,
permanent disability or adjudicated incompetency).
"Third Party" shall mean any Person other than any FL & Co.
Company or an Affiliate or a partner of any of the FL & Co. Companies or an
Affiliate of such partner.
"Transaction" shall mean any sale pursuant to Section 2.3,
2.4 or 2.5 hereof.
"Unvested Shares" shall mean, as at any date, all shares of
Common Stock owned by the Employee which are not Vested Shares as of such
date.
"Valuation Date" shall mean the last day of the fiscal
quarter of the Company immediately preceding the fiscal year in which the
Employee's employment is Terminated.
"Vested Shares" shall mean the number of shares of Common
Stock determined as follows: (i) if the Employee is Terminated on or before
[______________], zero; (ii) if the Employee is Terminated after
[______________] but on or before [______________], (x) 20 percent of the
Aggregate Number of Acquired Shares minus (y) the Aggregate Number of
Shares Sold; (iii) if the Employee is Terminated after [______________] but
on or before [______________], (x) 40 percent of the Aggregate Number of
Acquired Shares minus (y) the Aggregate Number of Shares Sold; (iv) if the
Employee is Terminated after [______________] but on or before
[______________], (x) 60 percent of the Aggregate Number of Acquired Shares
minus (y) the Aggregate Number of Shares Sold; (iv) if the Employee is
Terminated after [______________] but on or before [______________], (x) 80
percent of the Aggregate Number of Acquired Shares minus (y) the Aggregate
Number of Shares Sold; and (vi) if the Employee is Terminated after
[______________], (x) the Aggregate Number of Acquired Shares minus (y) the
Aggregate Number of Shares Sold.
(b) In this Agreement, unless the context otherwise
requires, words in the singular number or in the plural number shall each
include the singular number and the plural number.
2. Rights and Restrictions on Common Stock.
----------------------------------------
2.1 Effectiveness of Agreement; No Sale or Transfer.
-----------------------------------------------
(a) This Agreement shall become effective as of the closing
of the Offering and shall apply to shares of Common Stock acquired in
exchange for shares of Class B Common Stock (subject to the provisions of
Section 5.1).
(b) The Employee shall not sell, transfer, assign, exchange,
pledge, encumber or otherwise dispose of any shares of Common Stock or
grant any option or right to purchase such shares or any legal or
beneficial interest therein, except in accordance with the provisions of
this Agreement.
(c) The Employee may transfer any shares of Common Stock by
will, but only to:
(i) any spouse, parent, child (whether natural or
adopted), brother or sister of the Employee, or
(ii) any corporation or partnership which is controlled
by any spouse, parent, child (whether natural or adopted),
brother or sister of the Employee
(the person or persons to which shares of Common Stock are transferred in
accordance with this Section 2.1(b) being herein referred to as the
"Permitted Transferee"); provided, that, for any transfer to the Permitted
Transferee to be effective hereunder, the Permitted Transferee shall agree
in writing to be bound by all the terms of this Agreement applicable to the
Employee (including, without limitation, Article 3 and Section 5.13(b)
hereof) as if the Permitted Transferee originally had been a party hereto;
and provided, further, that all of the stockholders of any Permitted
Transferee that is a corporation and all of the partners of any Permitted
Transferee that is a partnership shall agree in writing not to transfer any
shares they then own or may hereafter acquire in the corporate Permitted
Transferee or any partnership interests they then own or may hereafter
acquire in the partnership Permitted Transferee except to a person
described in paragraph (i) or (ii) above that has made the same agreement
in writing to the Company, so long as the corporate or partnership
Permitted Transferee shall own any shares of Common Stock. Any reference
herein to the Employee shall be to the Permitted Transferee from and after
the date the transfer is effected in accordance with this Section 2.1(b).
Without limiting the generality of the foregoing, the provisions of Section
3.2 hereof shall be likewise applicable to any Permitted Transferee,
commencing upon the date that such Person becomes a Permitted Transferee,
for the respective periods they would have applied to the Employee.
2.2 Employment Termination.
----------------------
(a) If the Employee shall be Terminated, irrespective of
whether the Employee receives, in connection with such Termination, any
severance or other payment from the Company or any of its Affiliates under
any employment agreement or otherwise, the Company shall have the right, at
its option, exercisable by delivery of written notice to the Employee
within 90 days following the date of Termination (the date of delivery of
such written notice being referred to herein as the "Election Date"), to
purchase all or any portion of the Unvested Shares held by the Employee as
of the date of such Termination. Any Vested Shares and any Unvested Shares
that the Company does not elect to repurchase pursuant to the provisions of
this Section 2.2(a) shall continue to be subject to the provisions of this
Agreement (including, without limitation, Sections 2.3, 2.4 and 2.5 and
Article 3 hereof) other than this Section 2.2.
(b) If the Company exercises its purchase right pursuant to
Section 2.2(a) hereof, then, within 15 days following the later of the
Election Date or the date the financial statements referred to below are
available (such date of delivery being referred to herein as the "Delivery
Date"), the Company shall deliver to the Terminated Employee a certificate
of the chief financial officer of the Company setting forth the Purchase
Price and the calculation thereof and the Book Value of the Company and
stating that a copy of the Company's financial statements as of the
Valuation Date are available for review at the principal office of the
Company (the "Purchase Price Certificate"), and shall make available to the
Employee, for review at the principal office of the Company, a copy of the
Company's financial statements as of the Valuation Date. The calculations
as set forth on the Purchase Price Certificate shall be final and binding
on the Company and the Employee for purposes of this Agreement. The
Employee shall keep the Purchase Price Certificate, the financial
statements and any other documentation provided in connection therewith
confidential, shall not use any such material or any information contained
therein for any purpose other than to verify the amounts due the Employee
in respect of any shares owned by the Employee being purchased by the
Company, and shall not disclose any such material or any information
contained therein to anyone other than the Employee's legal or financial
advisers who have agreed in writing to the equivalent confidentiality,
non-use and non-disclosure provisions contained in this paragraph.
(c) The purchase price per share of the shares of Common
Stock purchased pursuant to Section 2.2(a) hereof (the "Purchase Price")
shall be equal to the Book Value Per Share, adjusted to reflect any Capital
Transaction between the Valuation Date and the Election Date, as if such
event had occurred as of the Valuation Date.
(d) Subject to Section 2.2(e) hereof, the closing (the
"Closing") of any purchase of shares of Common Stock which the Company has
elected to purchase pursuant to Section 2.2(a) hereof (the "Call Shares")
shall take place at the principal office of the Company on the later of (i)
10 days after the Delivery Date (or, in the case of a First-Year
Termination, 10 days after the Election Date) and (ii) (if applicable) 10
days after the appointment of a Legal Representative (such later date, the
"Scheduled Closing Date"). At the Closing, the Employee shall sell, convey,
transfer, assign and deliver to the Company all right, title and interest
in and to the Call Shares, which shall constitute (and, at the Closing, the
Employee shall certify the same to the Company in writing) good and
unencumbered title to such shares, free and clear of all liens, security
interests, encumbrances and adverse claims of any kind and nature (other
than those in favor of the Company and the FL & Co. Companies pursuant to
this Agreement), and shall deliver to the Company a certificate
representing the shares duly endorsed for transfer, or accompanied by
appropriate stock transfer powers duly executed, and with all necessary
transfer tax stamps affixed thereto at the expense of the Employee, and the
Company shall deliver to the Employee, in full payment of the purchase
price for the Call Shares, either a wire transfer to an account designated
by the Employee or a cashier's, certified or official bank check payable to
the order of the Employee (the method of payment to be at the option of the
Company), in the amount equal to the Purchase Price multiplied by the
number of Call Shares. Notwithstanding anything herein to the contrary,
from and after the Election Date, the Employee shall not have any rights
with respect to any of the Call Shares (including any rights pursuant to
Sections 2.3 and 2.4 hereof), except to receive the Purchase Price
therefor.
(e) Notwithstanding the provisions of Section 2.2(d) hereof,
if the Company exercises its option to purchase Unvested Shares pursuant to
Section 2.2(a) hereof, but is prohibited from effecting the Closing on the
Scheduled Closing Date by any contractual obligation of the Company or any
of its Affiliates or by applicable law, then the Closing shall take place
on the first practicable date on which the Company is permitted to purchase
such shares, and, at the Closing, the Company shall pay to the Employee
interest on the unpaid Purchase Price from and including the Scheduled
Closing Date to, but not including, the date of the Closing, at the rate
(as of the Scheduled Closing Date) for a six-month certificate of deposit
at The Chase Manhattan Bank or any successor bank thereto. If at any time
the prohibition shall cease to be applicable to any portion of the shares
not repurchased, then the Company shall purchase such portion on the first
practicable date on which the Company is permitted to do so. The Company
shall not declare or pay any dividend of cash or cash equivalents, or
repurchase any shares of Common Stock or Common Stock for cash or cash
equivalents, until the purchase price for all of the Call Shares has been
paid in full.
2.3 Participation in Sale of Common Stock. The Employee, at the
Employee's option, may participate proportionately (and the FL & Co.
Companies shall allow the Employee to participate proportionately) in any
sale (other than a public offering, which shall be governed by Section 2.4
hereof) of all or a portion of the shares of Common Stock owned by either
of the FL & Co. Companies to any Third Party by selling in such sale the
same percentage of the Employee's shares of Common Stock as the FL & Co.
Companies propose to sell of their shares of Common Stock to the Third
Party (determined on the basis of the aggregate number of shares of Common
Stock owned, and the aggregate number of such shares being sold, by the FL
& Co. Companies). The Company shall notify the Employee in writing of the
FL & Co. Companies' intention to effect such a sale to a Third Party and
the nature and per share amount of consideration to be paid by such Third
Party at least 10 days, or such shorter time as the Company deems
practicable, before the closing of any such proposed sale of shares of
Common Stock (the "Section 2.3 Notice"), and the Employee shall notify the
Company in writing within 5 days after receipt of the Section 2.3 Notice of
his or her intention to participate in such sale, including the number of
shares of Common Stock with respect to which he or she will so participate.
Any failure by the Employee to so notify the Company within such 5 day
period shall be deemed an election by the Employee not to participate in
such sale with respect to any of his or her shares. Any sale of shares of
Common Stock by the Employee pursuant to this Section 2.3 shall be for the
same consideration per share, on the same terms and subject to the same
conditions as the sale of shares of Common Stock owned by the FL & Co.
Companies. If the Employee sells any shares of Common Stock pursuant to
this Section 2.3, the Employee shall pay and be responsible for the
Employee's proportionate share of the Expenses of Sale and the Sale
Obligations.
2.4 Participation in Public Offering of Common Stock.
------------------------------------------------
(a) If the FL & Co. Companies propose to sell all or any
portion of the shares of Common Stock owned by the FL & Co. Companies in a
public offering, the Employee shall be entitled and required to participate
in such public offering by selling in the public offering the same
percentage of the Employee's shares of Common Stock as the FL & Co.
Companies propose to sell of their shares in the public offering
(determined on the basis of the aggregate number of shares of Common Stock
owned, and the aggregate number of such shares being sold, by the FL & Co.
Companies). The Company shall notify the Employee in writing of the FL &
Co. Companies' intention to effect such public offering at least 10 days,
or such shorter time as the Company deems practicable, before the filing
with the Securities and Exchange Commission of the registration statement
relating to such public offering (the "Section 2.4 Notice") and shall cause
the Employee's shares to be sold in such public offering to be included
therein. If the Employee sells any shares pursuant to this Section 2.4, the
Employee shall pay and be responsible for the Employee's proportionate
share of the Expenses of Sale and the Sale Obligations, including, without
limitation, indemnifying the underwriters of such public offering, on a
proportionate basis, to the same extent as the FL & Co. Companies are
required to indemnify such underwriters.
(b) In connection with any proposed public offering of
securities of the Company, whether by any of the FL & Co. Companies or the
Company or otherwise, the Employee agrees (i) to supply any information
reasonably requested by the Company in connection with the preparation of a
registration statement and/or any other documents relating to such public
offering, and (ii) to execute and deliver any agreements and instruments
reasonably requested by the Company to effectuate such public offering,
including, without limitation, an underwriting agreement, a custody
agreement and a "hold back" agreement pursuant to which the Employee will
agree not to sell or purchase any securities of the Company (whether or not
such securities are otherwise governed by this Agreement) for the same
period of time following the public offering as is agreed to by the FL &
Co. Companies with respect to themselves. If the Company requests that the
Employee take any of the actions referred to in clause (i) or (ii) of the
previous sentence, the Employee shall take such action promptly but in any
event within five days following the date of such request.
2.5 Required Participation in Sale of Common Stock by the FL &
Co. Companies. Notwithstanding any other provision of this Agreement to the
contrary, if the FL & Co. Companies shall propose to sell (including by
exchange, in a business combination or otherwise) all or any portion of
their shares of Common Stock in a bona fide arm's-length transaction, the
FL & Co. Companies, at their option, may require that the Employee sell the
same percentage of the Employee's shares of Common Stock as the FL & Co.
Companies propose to sell of their shares in the transaction (determined on
the basis of the aggregate number of shares of Common Stock owned, and the
aggregate number of such shares then being sold, by the FL & Co. Companies)
for the same consideration per share, on the same terms and subject to the
same conditions in the same transaction and, if stockholder approval of the
transaction is required and the Employee is entitled to vote thereon, that
the Employee vote the Employee's shares in favor thereof. If the Employee
sells any shares pursuant to this Section 2.5, the Employee shall pay and
be responsible for the Employee's proportionate share of the Expenses of
Sale and the Sale Obligations.
2.6 Termination of Restrictions and Rights. Notwithstanding any
other provision of this Agreement to the contrary, but subject to the
restrictions of all applicable federal and state securities laws, including
the restrictions in this Agreement relating thereto, from and after the
Release Date any and all shares of Common Stock owned by the Employee (a)
may be sold, transferred, assigned, exchanged, pledged, encumbered or
otherwise disposed of (and the Employee may grant any option or right to
purchase such shares or any legal or beneficial interest therein, or may
continue to hold such shares), free of the restrictions contained in this
Agreement and (b) shall no longer be entitled to any of the rights
contained in this Agreement. Without limiting the generality of the
foregoing, from and after the Release Date, the provisions of Articles 2
and 3 hereof (other than this Section 2.6 and Sections 3.1(a), 3.1(b) and
3.1(c) hereof) shall terminate and have no further force or effect.
3. Prohibited Activities.
---------------------
3.1 Prohibition against Certain Activities. The Employee
agrees that (a) the Employee will not at any time during the Employee's
employment (other than in the course of such employment) with the Company
or any Affiliate thereof, or after a Termination, directly or indirectly
disclose or furnish to any other Person or use for the Employee's own or
any other Person's account any confidential or proprietary knowledge or
information or any other information which is not a matter of public
knowledge and which was obtained during the Employee's employment with, or
other performance of services for, the Company or any Affiliate thereof or
any predecessor of any of the foregoing, no matter from where or in what
manner the Employee may have acquired such knowledge or information, and
the Employee shall retain all such knowledge and information in trust for
the benefit of the Company, its Affiliates and the successors and assigns
of any of them, (b) if the Employee is Terminated, the Employee will not
for three years following such Termination directly or indirectly solicit
for employment, including without limitation recommending to any subsequent
employer the solicitation for employment of, any employee of the Company,
(c) the Employee will not, at any time during the Employee's employment
with the Company or any Affiliate thereof or after a Termination, publish
any statement or make any statement (under circumstances reasonably likely
to become public or that the Employee might reasonably expect to become
public) critical of the Company or any Affiliate of the Company, or in any
way adversely affecting or otherwise maligning the business or reputation
of any of the foregoing entities, and (d) the Employee will not breach the
provisions of Section 2.1 hereof (any activity prohibited by clause (a),
(b), (c) or (d) of this Section 3.1 being referred to as a "Prohibited
Activity").
3.2 Right to Purchase Shares. The Employee understands and
agrees that Holdings and the Company have granted to the Employee the right
to purchase equity securities to reward the Employee for the Employee's
future efforts and loyalty to the Company and its Affiliates by giving the
Employee the opportunity to participate in the potential future
appreciation of the Company. Accordingly, (a) if the Employee engages in
any Prohibited Activity, or (b) if, at any time during the Employee's
employment with the Company or any of its Affiliates or during the three
years following a Termination, the Employee engages in any Competitive
Activity, or (c) if, at any time (whether during the Employee's employment
or after any Termination thereof), the Employee is convicted of a crime
against the Company or any of its Affiliates, then, in addition to any
other rights and remedies available to the Company, the Company shall be
entitled, at its option, exercisable by written notice (the "Repurchase
Notice") to the Employee, to purchase all of the shares of Common Stock
then held by the Employee.
3.3 Purchase Price; Closing. The purchase price per share of
the shares of Common Stock purchased pursuant to this Article 3 shall be
equal to the lesser of (a) $[____] (adjusted to reflect any Capital
Transaction effected after the Closing Date and prior to the date of the
Repurchase Notice) and (b) the Book Value Per Share (except that any
reference to the Delivery Date or Election Date shall instead be a
reference to the date of the Repurchase Notice). If such purchase price is
determined pursuant to clause (b) of the preceding sentence, then the
Company shall, within 15 days following the later of receipt of the
Employee's written request therefor (which request must be made within
eight days of the date of the Repurchase Notice) and the date the relevant
financial statements are available, provide the Employee with the same
purchase price certificate as is referred to in Section 2.2(b) hereof, and
the Employee hereby agrees to the same confidentiality, non-use and
non-disclosure provisions with respect thereto as are contained in Section
2.2(b) hereof. The calculations as set forth on such certificate shall be
final and binding on the Company and the Employee for purposes of this
Agreement. The closing of such purchase shall take place at the principal
office of the Company 10 days following the date of the Repurchase Notice
or, if a written request therefor was timely made, 10 days following the
date of delivery of the aforesaid certificate, except that if the Company
is prohibited from repurchasing any shares of Common Stock pursuant to this
Article 3 by any contractual obligation of the Company or any of its
Affiliates or by applicable law, the closing of such purchase shall take
place on the first practicable date on which the Company is permitted to
purchase such shares (and the provisions of the last two sentences of
Section 2.2(e) shall likewise apply to repurchases pursuant to this Article
3). At such closing, the Employee shall sell, convey, transfer, assign and
deliver to the Company all right, title and interest in and to the shares
of Common Stock being purchased by the Company, which shall constitute
(and, at the closing, the Employee shall certify the same to the Company in
writing) good and unencumbered title to such shares, free and clear of all
liens, security interests, encumbrances and adverse claims of any kind and
nature (other than those in favor of the Company and the FL & Co. Companies
pursuant to this Agreement), and shall deliver to the Company a certificate
representing the shares duly endorsed for transfer, or accompanied by
appropriate stock transfer powers duly executed, and with all necessary
transfer tax stamps affixed thereto at the expense of the Employee, and the
Company shall deliver to the Employee, in full payment of the purchase
price payable pursuant to this Section 3.3 for the shares of Common Stock
purchased, a check payable to the order of the Employee, in the amount of
the aggregate purchase price for the shares purchased. Notwithstanding
anything herein to the contrary, from and after the date of the Repurchase
Notice, the Employee shall not have any rights with respect to any shares
of Common Stock which the Employee is required to sell to the Company
pursuant to this Article 3 (including any rights pursuant to Section 2.3 or
2.4 hereof), except to receive the purchase price therefor.
3.4 Transaction Proceeds. Notwithstanding anything to the
contrary set forth in Sections 2.3, 2.4 or 2.5 hereof, if at the time of a
Transaction in which the Employee is participating, the Company is entitled
to purchase the Employee's shares of Common Stock pursuant to this Article
3, and if the purchase price per share for a purchase pursuant to this
Article 3 would be less than the proceeds per share to the Employee from
such Transaction, then the Employee shall be entitled to receive only the
aggregate purchase price payable under this Article 3, with the balance of
the proceeds of sale in the Transaction being remitted to the other
stockholders of the Company participating in such Transaction pro rata in
accordance with their respective participation in such Transaction.
4. Stock Certificate Legend and Investment Representations; Other
Representations.
--------------------------------------------------------------
4.1 Legend. All certificates representing shares of Common Stock
acquired hereunder or hereafter by the Employee (unless registered under
the Act) shall bear the following legend:
"The shares represented by this certificate have
not been registered under the Securities Act of 1933,
as amended, or any securities regulatory authority of
any state, and may not be sold, transferred, assigned,
exchanged, pledged, encumbered or otherwise disposed of
except in compliance with all applicable securities
laws and except in accordance with the provisions of a
Stockholder's Agreement with the Company, a copy of
which is available for inspection at the offices of the
Company."
4.2 Representations of the Employee. The Employee represents and
warrants that: (a) the Employee understands that (i) the offer and sale of
shares of Common Stock in accordance with this Agreement have not been and
will not be registered under the Act, and it is the intention of the
parties hereto that the offer and sale of the securities be exempt from
registration under the Act and the rules promulgated thereunder by the
Securities and Exchange Commission; (ii) the shares of Common Stock being
acquired hereunder cannot be sold, transferred, assigned, exchanged,
pledged, encumbered or otherwise disposed of unless they are registered
under the Act or an exemption from registration is available; and (iii) the
purchase of Common Stock hereunder does not entitle the Employee to
participate in any other equity program of the Company, whether now
existing or hereafter established; (b) the Employee is acquiring the shares
of Common Stock being acquired hereunder for investment for the Employee's
own account and not with a view to the distribution thereof; (c) the
Employee will not, directly or indirectly, sell, transfer, assign,
exchange, pledge, encumber or otherwise dispose of any shares of Common
Stock being acquired hereunder except in accordance with this Agreement;
(d) the Employee has, or the Employee together with the Employee's
advisers, if any, have, such knowledge and experience in financial and
business matters that the Employee is, or the Employee together with the
Employee's advisers, if any, are, and will be capable of evaluating the
merits and risks relating to the Employee's purchase of shares of Common
Stock under this Agreement; (e) the Employee has been given the opportunity
to obtain information and documents relating to the Company and to ask
questions of and receive answers from representatives of the Company
concerning the Company and the Employee's investment in the Common Stock;
(f) the Employee's decision to invest in the Company has been based upon
independent investigations made by the Employee and the Employee's
advisers, if any; (g) the Employee is able to bear the economic risk of a
total loss of the Employee's investment in the Company; and (h) the
Employee has adequate means of providing for the Employee's current needs
and foreseeable personal contingencies and has no need for the Employee's
investment in the Common Stock to be liquid.
5. Miscellaneous.
--------------
5.1 Distributions. In the event of any dividend, distribution or
exchange paid or made in respect of the Common Stock consisting of
Affiliate Securities, (a) the restrictions and rights with respect to the
Common Stock that are contained in this Agreement shall be applicable to
the Affiliate Securities without further action of the parties (with the
references to Common Stock being deemed references to the Affiliate
Securities and the references to the Company being deemed references to the
Affiliate), and (b) as a condition precedent to the receipt of the
Affiliate Securities by the Employee, the Employee shall enter into a
stockholder's agreement containing substantially equivalent terms with
respect to the Affiliate Securities (but reflecting the economics of the
dividend, distribution or exchange and the capitalization of the Affiliate)
as are contained herein. The Board of Directors of the Company, in good
faith, shall determine such terms and its determination shall be final and
binding on the Employee.
5.2 Further Assurances. Each party hereto shall do and perform or
cause to be done and performed all further acts and things and shall
execute and deliver all other agreements, certificates, instruments, and
documents as any other party hereto reasonably may request in order to
carry out the intent and accomplish the purposes of this Agreement and the
consummation of the transactions contemplated hereby.
5.3 Governing Law. This Agreement and the rights and obligations
of the parties hereto shall be governed by, and construed and enforced in
accordance with, the laws of the State of New York, without giving effect
to the principles of conflicts of law thereof.
5.4 Specific Performance. The parties hereto acknowledge that
there will be no adequate remedy at law for a violation of any of the
provisions of this Agreement and that, in addition to any other remedies
which may be available, all of the provisions of this Agreement shall be
specifically enforceable in accordance with their respective terms.
5.5 Invalidity of Provisions. The invalidity or unenforceability
of any provision of this Agreement in any jurisdiction shall not affect the
validity or enforceability of the remainder of this Agreement in that
jurisdiction or the validity or enforceability of this Agreement, including
that provision, in any other jurisdiction. If any provision of this
Agreement is held unlawful or unenforceable in any respect, such provision
shall be revised or applied in a manner that renders it lawful and
enforceable to the fullest extent possible.
5.6 Notice. All notices and other communications hereunder shall
be in writing and, unless otherwise provided herein, shall be deemed to
have been given when received by the party to whom such notice is to be
given at its address set forth below, or such other address for the party
as shall be specified by notice given pursuant hereto:
(a) If to the Company, to:
The Yankee Candle Company, Inc.
102 Christian Lane
Whately, MA 01093
Attention: President
(b) If to the Employee, to the address set forth below the
Employee's signature, and if to the Legal Representative, to
such Person at the address of which the Company is notified
in accordance with this Section 5.6.
5.7 Binding Effect. This Agreement shall inure to the benefit of
and shall be binding upon the parties hereto and their respective heirs,
legal representatives, successors and assigns. In addition, each of the FL
& Co. Companies shall be a third party beneficiary of this Agreement and
shall be entitled to enforce this Agreement.
5.8 Amendment and Modification. This Agreement may be amended,
modified or supplemented only by written agreement of the party against
whom enforcement of such amendment, modification or supplement is sought.
5.9 Headings; Execution in Counterparts. The headings and
captions contained herein are for convenience only and shall not control or
affect the meaning or construction of any provision hereof. This Agreement
may be executed in any number of counterparts, each of which shall be
deemed to be an original and which together shall constitute one and the
same instrument.
5.10 Entire Agreement. This Agreement constitutes the entire
agreement, and supersedes all prior agreements and understandings
(including the Old Stockholder's Agreement, which will be of no further
force and effect from and after the closing of the Offering), oral and
written, between the parties hereto with respect to the subject matter
hereof.
5.11 Withholding. The Company shall have the right to deduct from
any amount payable under this Agreement any taxes or other amounts required
by applicable law to be withheld. The Employee agrees to indemnify the
Company against any Federal, state and local withholding taxes for which
the Company may be liable in connection with the Employee's acquisition,
ownership or disposition of any Common Stock.
5.12 No Right to Continued Employment. This Agreement shall not
confer upon the Employee any right with respect to continuance of
employment by the Company or any Affiliate thereof, nor shall it interfere
in any way with the right of the Company or any Affiliate thereof to
terminate the Employee's employment at any time.
5.13 Possession of Certificates; Power of Attorney.
---------------------------------------------
(a) In order to provide for the safekeeping of the
certificates representing the shares of Common Stock purchased by the
Employee and to facilitate the enforcement of the terms and conditions
hereof, (i) the Employee shall redeliver to the Company, and the Company
shall retain physical possession of, all certificates representing shares
of Common Stock acquired by the Employee and (ii) the Employee shall
deliver to the Company an undated stock power, duly executed in blank, for
each such certificate. The Employee shall be relieved of any obligation
otherwise imposed by this Agreement to deliver certificates representing
shares of Common Stock if the same are in the custody of the Company. After
the Release Date, upon written request by the Employee therefor, the
Company shall deliver to the Employee any certificates in its custody
representing the Employee's shares of Common Stock.
(b) The Employee hereby irrevocably appoints the FL & Co.
Companies, and each of them (individually and collectively, the
"Representative"), the Employee's true and lawful agent and
attorney-in-fact, with full powers of substitution, to act in the
Employee's name, place and stead, to do or refrain from doing all such acts
and things, and to execute and deliver all such documents, as the
Representative shall deem necessary or appropriate in connection with a
public offering of securities of the Company or a sale pursuant to Section
2.3, 2.5 or 3.2 hereof, including, without in any way limiting the
generality of the foregoing, in the case of a sale pursuant to Section 2.3
or 2.5 hereof, to execute and deliver on behalf of the Employee a purchase
and sale agreement and any other agreements and documents that the
Representative deems necessary in connection with any such sale, and in the
case of a public offering, to execute and deliver on behalf of the Employee
an underwriting agreement, a "hold back" agreement, a custody agreement,
and any other agreements and documents that the Representative deems
necessary in connection with any such public offering, and in the case of
any sale pursuant to Section 2.3 or 2.5 hereof and any public offering
pursuant to Section 2.4(a) hereof, to receive on behalf of the Employee the
proceeds of the sale or public offering of the Employee's shares, to hold
back from any such proceeds any amount that the Representative deems
necessary to reserve against the Employee's share of any Expenses of Sale
and Sale Obligations and to pay such Expenses of Sale and Sale Obligations.
The Employee hereby ratifies and confirms all that the Representative shall
do or cause to be done by virtue of its appointment as the Employee's agent
and attorney-in-fact. In acting for the Employee pursuant to the
appointment set forth in this Section 5.13(b), the Representative shall not
be responsible to the Employee for any loss or damage the Employee may
suffer by reason of the performance by the Representative of its duties
under this Agreement, except for loss or damage arising from willful
violation of law or gross negligence by the Representative in the
performance of its duties hereunder. The appointment of the Representative
shall be deemed coupled with an interest and as such shall be irrevocable
and shall survive the death, incompetency, mental illness or insanity of
the Employee, and any person dealing with the Representative may
conclusively and absolutely rely, without inquiry, upon any act of the
Representative as the act of the Employee in all matters referred to in
this Section 5.13(b).
5.14 Consent to Jurisdiction. Each party hereby irrevocably and
unconditionally consents to submit to the exclusive jurisdiction of the
courts of the State of New York and of the United States of America, in
each case located in the County of New York, for any Litigation (and agrees
not to commence any Litigation except in any such court), and further
agrees that service of process, summons, notice or document by U.S.
registered mail to such party's respective address set forth in Section 5.6
hereof shall be effective service of process for any Litigation brought
against such party in any such court. Each party hereby irrevocably and
unconditionally waives any objection to the laying of venue of any
Litigation in the courts of the State of New York or of the United States
of America, in each case located in the County of New York, and hereby
further irrevocably and unconditionally waives and agrees not to plead or
claim in any such court that any Litigation brought in any such court has
been brought in an inconvenient forum.
<PAGE>
IN WITNESS WHEREOF, this Agreement has been signed by or on
behalf of each of the parties hereto, all as of the date first above
written.
THE YANKEE CANDLE COMPANY, INC.
By:
---------------------------------------
Name:
Title:
EMPLOYEE
By:
---------------------------------------
Robert R. Spellman, as Attorney-in-Fact
for the Employee
Name:
Address:
<PAGE>
The undersigned hereby agree to be bound by the provisions of Sections 2.3
and 2.4 of the foregoing Stockholder's Agreement.
FORSTMANN LITTLE & CO. EQUITY
PARTNERSHIP-V, L.P.
By: FLC XXX Partnership, L.P.
its general partner
By:
-----------------------------------
Sandra J. Horbach,
a general partner
FORSTMANN LITTLE & CO. SUBORDINATED
DEBT AND EQUITY MANAGEMENT BUYOUT
PARTNERSHIP-VI, L.P.
By: FLC XXIX Partnership, L.P.
its general partner
By:
-----------------------------------
Sandra J. Horbach,
a general partner
<PAGE>
The undersigned acknowledges that the undersigned has read the
foregoing Agreement between The Yankee Candle Company, Inc. and the
undersigned's spouse, understands that the undersigned's spouse has
purchased shares of Common Stock as reflected in such Agreement and agrees
to be bound by the foregoing Agreement.
--------------------------------
Employee's Spouse
<PAGE>
ANNEX A
-------
Employee Number of Shares
-------- ----------------
[Name] [Shares]
Exhibit 5
May 1, 1999
Forstmann Little & Co. Subordinated Debt and Equity
Management Buyout Partnership - VI, L.P.
767 Fifth Avenue, 44th Floor
New York, New York 10153
Dear Sirs:
This letter will confirm our agreement that in connection with and in
consideration for your participation in the proposed liquidation of Yankee
Candle Holdings Corp. and public offering of common stock of The Yankee
Candle Company, Inc. (the "Company"), Forstmann Little & Co. Subordinated
Debt and Equity Management Buyout Partnership - VI, L.P. ("Investor"), will
be entitled to the following contractual management rights relating to the
Company so long as Investor shall own any voting securities of the Company
(collectively, the "Management Rights"):
(1) Investor shall be entitled to consult with and advise management of
the Company on significant business issues, including management's
proposed annual operating plans, and management will meet with
representatives of Investor (the "Representatives") at the Company's
facilities at mutually agreeable times for such consultation and
advice, including to review progress in achieving said plans. The
Company shall give Investor reasonable advance written notice of any
significant new initiatives or material changes to existing operating
plans and shall afford Investor adequate time to meet with management
to consult on such initiatives or changes prior to implementation. The
Company agrees to give due consideration to the advice given and any
proposals made by Investor;
(2) Investor may inspect all contracts, books, records, personnel, offices
and other facilities and properties of the Company and, to the extent
available to the Company after the Company uses reasonable efforts to
obtain them, the records of its legal advisors and accountants,
including the accountants' work papers, and Investor may make such
copies and inspections thereof as Investor may reasonably request. The
Company shall furnish Investor with such financial and operating data
and other information with respect to the business and properties of
the Company as the Investor may request. The Company shall permit the
Representatives to discuss the affairs, finances and accounts of the
Company with, and to make proposals and furnish advice with respect
thereto, the principal officers of the Company;
(3) Investor shall have the following rights regarding the appointment of
a representative to the Company's Board of Directors (the "Board").
Investor shall provide to the Board, a reasonable period of time
before the Board or the Company distributes to stockholders a proxy
statement or other materials in connection with the election of
directors, the name of Investor's nominee as director (the "Nominee"),
as well as any other information regarding the Nominee as the Company
may reasonably request. The selection by Investor of the Nominee shall
be made after consultation with the Company, and Investor shall not
designate a Nominee who is unsatisfactory to the existing directors.
The Board and/or the Company shall include the Nominee as one of the
persons recommended by the Board for election as a director of the
Company, solicit proxies from stockholders in favor of the election of
the Nominee as a director, and otherwise use all reasonable efforts to
cause the Nominee to be elected as a director of the Company. In the
event the Nominee elected to the Board shall cease to serve as a
director for any reason, the Board shall fill the vacancy resulting
therefrom with another Nominee. If the Company has a classified Board
of Directors, Investor shall only be required to designate a Nominee,
and the Company shall only be required to take steps to cause the
Nominee to be elected, in the year in which the Nominee's class of
directors is up for election. The Board shall not be required to
fulfill its obligations under this paragraph to the extent that doing
so would be in contravention of its fiduciary duties to the Company's
stockholders; and
(4) At any time during which Investor does not have a representative on
the Board, the Company shall, after receiving notice from Investor as
to the identity of any Representative, (i) permit a Representative to
attend all Board meetings and all committees thereof as an observer;
(ii) provide the Representative advance notice of each such meeting,
including such meeting's time and place, at the same time and in the
same manner as such notice is provided to the members of the Board (or
such committee thereof) and copies of all materials distributed to the
members of the Board (or such committee thereof) at the same time as
such materials are distributed to such Board (or such committee
thereof) and shall permit the Representative to have the same access
to information concerning the business and operations of the Company;
and (iii) permit the Representative to discuss the affairs, finances
and accounts of the Company with, and to make proposals and furnish
advice with respect thereto to, the Board, without voting, and the
Board and the Company's officers shall take such proposals or advice
seriously and give due consideration thereto. Reasonable costs and
expenses incurred by the Representative for the purposes of attending
Board (or committee) meetings and conducting other Company business
will be paid by the Company.
Investor agrees, and shall cause each of its Representatives to agree,
to hold in confidence and trust and not use or disclose any confidential
information provided to or learned by it in connection with the exercise of
Investor's Management Rights under this letter agreement, unless otherwise
required by law or unless such confidential information otherwise becomes
publicly available or available to it other than through this letter
agreement.
Very truly yours,
THE YANKEE CANDLE COMPANY, INC.
By: /s/ Michael D. Parry
------------------------------------
Name: Michael D. Parry
Title: President and
Chief Executive Officer
AGREED AND ACCEPTED THIS
1st day of May, 1999
FORSTMANN LITTLE & CO. SUBORDINATED DEBT AND EQUITY
MANAGEMENT BUYOUT PARTNERSHIP - VI, L.P.
By: FLC XXIX Partnership, L.P.
its General Partner
By: /s/ Sandra J. Horbach
--------------------------------------
Sandra J. Horbach, a General Partner
<PAGE>
May 1, 1999
Forstmann Little & Co. Equity Partnership - V, L.P.
767 Fifth Avenue, 44th Floor
New York, New York 10153
Dear Sirs:
This letter will confirm our agreement that in connection with and in
consideration for your participation in the proposed liquidation of Yankee
Candle Holdings Corp. and public offering of common stock of The Yankee
Candle Company, Inc. (the "Company"), Forstmann Little & Co. Equity
Partnership - V, L.P. ("Investor"), will be entitled to the following
contractual management rights relating to the Company so long as Investor
shall own any voting securities of the Company (collectively, the
"Management Rights"):
(1) Investor shall be entitled to consult with and advise management of
the Company on significant business issues, including management's
proposed annual operating plans, and management will meet with
representatives of Investor (the "Representatives") at the Company's
facilities at mutually agreeable times for such consultation and
advice, including to review progress in achieving said plans. The
Company shall give Investor reasonable advance written notice of any
significant new initiatives or material changes to existing operating
plans and shall afford Investor adequate time to meet with management
to consult on such initiatives or changes prior to implementation. The
Company agrees to give due consideration to the advice given and any
proposals made by Investor;
(2) Investor may inspect all contracts, books, records, personnel, offices
and other facilities and properties of the Company and, to the extent
available to the Company after the Company uses reasonable efforts to
obtain them, the records of its legal advisors and accountants,
including the accountants' work papers, and Investor may make such
copies and inspections thereof as Investor may reasonably request. The
Company shall furnish Investor with such financial and operating data
and other information with respect to the business and properties of
the Company as the Investor may request. The Company shall permit the
Representatives to discuss the affairs, finances and accounts of the
Company with, and to make proposals and furnish advice with respect
thereto, the principal officers of the Company;
(3) Investor shall have the following rights regarding the appointment of
a representative to the Company's Board of Directors (the "Board").
Investor shall provide to the Board, a reasonable period of time
before the Board or the Company distributes to stockholders a proxy
statement or other materials in connection with the election of
directors, the name of Investor's nominee as director (the "Nominee"),
as well as any other information regarding the Nominee as the Company
may reasonably request. The selection by Investor of the Nominee shall
be made after consultation with the Company, and Investor shall not
designate a Nominee who is unsatisfactory to the existing directors.
The Board and/or the Company shall include the Nominee as one of the
persons recommended by the Board for election as a director of the
Company, solicit proxies from stockholders in favor of the election of
the Nominee as a director, and otherwise use all reasonable efforts to
cause the Nominee to be elected as a director of the Company. In the
event the Nominee elected to the Board shall cease to serve as a
director for any reason, the Board shall fill the vacancy resulting
therefrom with another Nominee. If the Company has a classified Board
of Directors, Investor shall only be required to designate a Nominee,
and the Company shall only be required to take steps to cause the
Nominee to be elected, in the year in which the Nominee's class of
directors is up for election. The Board shall not be required to
fulfill its obligations under this paragraph to the extent that doing
so would be in contravention of its fiduciary duties to the Company's
stockholders; and
(4) At any time during which Investor does not have a representative on
the Board, the Company shall, after receiving notice from Investor as
to the identity of any Representative, (i) permit a Representative to
attend all Board meetings and all committees thereof as an observer;
(ii) provide the Representative advance notice of each such meeting,
including such meeting's time and place, at the same time and in the
same manner as such notice is provided to the members of the Board (or
such committee thereof) and copies of all materials distributed to the
members of the Board (or such committee thereof) at the same time as
such materials are distributed to such Board (or such committee
thereof) and shall permit the Representative to have the same access
to information concerning the business and operations of the Company;
and (iii) permit the Representative to discuss the affairs, finances
and accounts of the Company with, and to make proposals and furnish
advice with respect thereto to, the Board, without voting, and the
Board and the Company's officers shall take such proposals or advice
seriously and give due consideration thereto. Reasonable costs and
expenses incurred by the Representative for the purposes of attending
Board (or committee) meetings and conducting other Company business
will be paid by the Company.
Investor agrees, and shall cause each of its Representatives to agree,
to hold in confidence and trust and not use or disclose any confidential
information provided to or learned by it in connection with the exercise of
Investor's Management Rights under this letter agreement, unless otherwise
required by law or unless such confidential information otherwise becomes
publicly available or available to it other than through this letter
agreement.
Very truly yours,
THE YANKEE CANDLE COMPANY, INC.
By: /s/ Michael D. Parry
------------------------------------
Name: Michael D. Parry
Title: President and
Chief Executive Officer
AGREED AND ACCEPTED THIS
1st day of May, 1999
FORSTMANN LITTLE & CO. EQUITY PARTNERSHIP - V, L.P.
By: FLC XXX Partnership,
its General Partner
By: /s/ Sandra J. Horbach
--------------------------------------
Sandra J. Horbach, a General Partner
