VOTING AGREEMENT
This AGREEMENT dated as of February 2, 1999, among Vestar Capital
Partners III, L.P., a Delaware limited partnership ("Vestar"), Vestar/▇▇▇▇
Investors LLC, a Delaware limited liability company ("Vestar/▇▇▇▇"), and the
parties listed on Schedule A hereto (each, a "Shareholder" and, collectively,
the "Shareholders").
WHEREAS, St. ▇▇▇▇ Knits, Inc. (the "Company"), St. ▇▇▇▇ Knits
Incorporated, International, a Delaware and Barbados corporation ("Parent"),
SJKAcquisition, Inc., a California corporation ("Merger Sub"), and Pearl
Acquisition Corp., a Delaware corporation ("Acquisition") propose to enter into
an Agreement and Plan of Merger dated as of the date hereof (the "Merger
Agreement"; capitalized terms used but not defined herein shall have the
meanings set forth in the Merger Agreement) providing for (i) a merger (the
"Reorganization Merger") of Merger Sub with and into the Company and (ii) as
promptly as practicable following the consummation of the Reorganization Merger,
a merger (the "Acquisition Merger" and, together with the Reorganization Merger,
the "Mergers") of Acquisition with and into Parent, both upon the terms and
subject to the conditions set forth in the Merger Agreement.
WHEREAS, each Shareholder owns the number of shares of Common Stock,
no par value, of the Company ("Company Common Stock") set forth opposite such
Shareholder's name on Schedule A hereto (such shares of Company Common Stock,
together with any other shares of Company Common Stock or shares of the Common
Stock, par value $.01 per share, of Parent (the "Parent Common Stock") of which
such Shareholder acquires beneficial ownership after the date hereof and during
the term of this Agreement (including, but not limited to, shares of Parent
Common Stock into which shares of Company Common Stock are converted pursuant
the Reorganization Merger) whether upon the exercise of options, warrants or
rights, the conversion or exchange of convertible or exchangeable securities, or
by means of purchase, dividend, distribution or otherwise, being collectively
referred to herein as the "Subject Shares"); and
WHEREAS, as a condition to its willingness to cause Acquisition to
enter into the Merger Agreement, Vestar/▇▇▇▇ has requested that the Shareholders
enter into this Agreement.
NOW, THEREFORE, to induce Vestar/▇▇▇▇ to cause Acquisition to enter
into, and in consideration of its entering into, the Merger Agreement, and in
consideration of the premises and the representations, warranties and agreements
contained herein, the parties agree as follows:
1. Representations and Warranties of the Shareholders.
(a) Representations and Warranties of the Shareholders. Each
Shareholder hereby represents and warrants to Vestar and Vestar/▇▇▇▇ as to
itself as of the date hereof as follows:
(i) Organization. The Shareholders that are entities are duly
organized, validly existing and in good standing under the laws of the
state of their incorporation, formation or organization.
(ii) Authority; No Conflicts. Each Shareholder has the legal
capacity (in the case of Shareholders that are natural persons), and all
requisite power and authority to enter into this Agreement, to perform its
obligations hereunder and to consummate the transactions contemplated
hereby. This Agreement has been duly authorized, executed and delivered by
each Shareholder and constitutes a valid and binding obligation of each
Shareholder enforceable in accordance with its terms. Except for filings
required under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976,
as amended (the "HSR Act"), the applicable requirements of the Securities
Act and the Exchange Act, and the applicable requirements of state
securities, blue sky or takeover or other corporate laws, (A) except as
set forth on Schedule A, no filing with, and no permit, authorization,
consent or approval of, any Governmental Entity or any other person is
necessary for the execution of this Agreement by the Shareholders and the
consummation by the Shareholders of the transactions contemplated hereby
and (B) except as set forth on Schedule A, none of the execution and
delivery of this Agreement by the Shareholders, the consummation of the
transactions contemplated hereby and compliance with the terms hereof by
the Shareholders will conflict with, or result in any violation of, or
default (with or without notice or lapse of time or both) under any
provision of, the certificate of incorporation, by-laws or analogous
documents of each Shareholder (other than Shareholders that are natural
persons) or any other agreement to which such Shareholder is a party,
including any voting agreement, stockholders agreement, voting trust,
trust agreement, pledge agreement, loan or credit agreement, note, bond,
mortgage, indenture, lease or other agreement, instrument, permit,
concession, franchise or license or violate any judgment, order, notice,
decree, statute, law, ordinance, rule or regulation applicable to the
Shareholders or to each of the Shareholders' property or assets.
(iii) The Subject Shares. Except as set forth on Schedule A, each
Shareholder is the record and beneficial owner of, and has good and
marketable title to, the number of Subject Shares set forth opposite such
Shareholder's name on Schedule A hereto, free and clear of any
encumbrances, agreements, adverse claims, liens or other arrangements with
respect to the ownership of or the right to vote or dispose of the Subject
Shares. None of the Shareholders beneficially or of record owns any shares
of capital stock of the Company or securities convertible or exchangeable
for shares of capital stock of the Company, other than as set forth
opposite such Shareholder's name on Schedule A hereto. Each Shareholder
has the sole right and power to vote and dispose of the Subject Shares.
None of such Subject Shares is subject to any voting trust or other
agreement, arrangement or restriction with respect to the voting or
transfer of any of the Subject Shares, except as contemplated by this
Agreement or as set forth on Schedule A.
2. Representations and Warranties of Vestar and Vestar/▇▇▇▇. Vestar
and Vestar/▇▇▇▇ hereby represent and warrant to the Shareholders that Vestar and
Vestar/▇▇▇▇ are duly organized, validly existing and in good standing under the
laws of the state of their formation. Vestar and Vestar/▇▇▇▇ have all requisite
power and authority to enter into this Agreement and to consummate the
transactions contemplated hereby. This Agreement has been duly authorized,
executed and delivered by Vestar and Vestar/▇▇▇▇ and constitutes a valid and
binding obligation of Vestar and Vestar/▇▇▇▇ enforceable in accordance with its
terms. Except for filings required under the HSR Act, the applicable
requirements of the Securities Act and the Exchange Act, and the applicable
requirements of state securities, blue sky or takeover laws, (i) no filing with,
and no permit, authorization, consent or approval of, any Governmental Entity or
any other person is necessary for the execution of this Agreement by Vestar and
Vestar/▇▇▇▇ and the consummation by Vestar and Vestar/▇▇▇▇ of the transactions
contemplated hereby and (ii) none of the execution and delivery of this
Agreement by Vestar and Vestar/▇▇▇▇, the consummation of the transactions
contemplated hereby nor the compliance with the terms hereof by Vestar and
Vestar/▇▇▇▇ will conflict with, or result in any violation of, or default (with
or without notice or lapse of time or both) under any provision of, the
certificate of incorporation, by-laws, limited liability company agreement,
certificate of formation or analogous documents of Vestar or Vestar/▇▇▇▇ or any
other agreement to which either of them is a party, including any voting
agreement, stockholders agreement, voting trust, trust agreement, pledge
agreement, loan or credit agreement, note, bond, mortgage, indenture, lease or
other agreement, instrument, permit, concession, franchise or license, or
violate any judgment, order, notice, decree, statute, law, ordinance, rule or
regulation applicable to Vestar or Vestar/▇▇▇▇ or to Vestar's or Vestar/▇▇▇▇'▇
property or assets.
3. Covenants of the Shareholders. Until the termination of this
Agreement in accordance with Section 8 hereof, each Shareholder agrees as
follows:
(a) Voting of Subject Shares. At any meeting of stockholders of the
Company or Parent or at any adjournment thereof or in any other
circumstances upon which any Shareholder's vote, consent or other approval
is sought, each such Shareholder shall vote all of the Subject Shares then
beneficially owned by such Shareholder (i) in favor of the Mergers and the
adoption and the approval of the principal terms of the Merger Agreement
and each of the other transactions contemplated by the Merger Agreement,
(ii) against any action or agreement that would result in a breach in any
material respect of any covenant, representation or warranty or any other
obligation or agreement of the Company or Parent under the Merger
Agreement and (iii) against any action or agreement that would impede,
interfere with, delay or postpone or that would reasonably be expected to
discourage the Mergers, including, but not limited to: (A) any
extraordinary corporate transactions (other than the Mergers), such as a
merger, consolidation or other business combination involving the Company
or Parent and their subsidiaries, a sale or transfer of a material amount
of assets of the Company or Parent and their subsidiaries or a
reorganization, recapitalization or liquidation of the Company or Parent
and their subsidiaries; (B) any amendment of the Company's or Parent's
articles or certificate of incorporation or by-laws or other proposal or
transaction involving the Company or Parent or any of their subsidiaries,
which amendment or other proposal or transaction
would in any manner impede, prevent or nullify the Mergers, the Merger
Agreement or any of the other transactions contemplated by the Merger
Agreement or change in any manner the voting rights of any class of the
Company's or Parent's capital stock; (C) any change in the management or
board of directors of the Company or Parent; (D) any material change in
the present capitalization or dividend policy of the Company or Parent; or
(E) any other material change in the Company's or Parent's corporate
structure or business; provided, however, that in the event the Board of
Directors of the Company shall have withdrawn, amended or modified its
recommendation in accordance with Section 8.1 of the Merger Agreement, the
Shareholders shall be permitted to vote the Subject Shares owned by them
in favor of any action described in clause (iii)(A) above which is a
Superior Proposal. Each Shareholder shall not hereafter, unless and until
this Agreement terminates pursuant to Section 8 hereof, purport to grant
(other than through the irrevocable proxy granted in Section 3(b)) any
proxy or power of attorney with respect to any of the Subject Shares,
deposit any of the Subject Shares into a voting trust or enter into any
agreement (other than this Agreement), arrangement or understanding with
any person, directly or indirectly, to vote, grant any proxy or give
instructions with respect to the voting of any of the Subject Shares. Each
Shareholder further agrees not to commit or agree to take any action
inconsistent with the foregoing.
(b) Proxies. Each Shareholder hereby grants to Vestar/▇▇▇▇ a proxy
to vote all of the Subject Shares then beneficially owned by such
Shareholder as indicated in Section 3(a) above. Each Shareholder agrees
that this proxy shall be irrevocable and coupled with an interest, agrees
to take such further action or execute such other instruments as may be
necessary to effectuate the intent of this proxy and hereby revokes any
proxy previously granted by such Shareholder with respect to any of the
Subject Shares.
(c) Transfer Restrictions. Each Shareholder agrees not to (i) sell,
transfer, pledge, encumber, assign or otherwise dispose of (including by
gift) (collectively, "Transfer"), or enter into any contract, option or
other arrangement or understanding (including any profit sharing
arrangement) with respect to the Transfer of, any of the Subject Shares to
any person other than pursuant to the terms of the Merger Agreement, (ii)
enter into any voting arrangement or understanding, whether by proxy,
voting agreement or otherwise, with respect to any of the Subject Shares
or (iii) take any action that would make any of its representations or
warranties contained herein untrue or incorrect or have the effect of
preventing or impeding such Shareholder from performing any of its
obligations under this Agreement.
(d) Appraisal Rights. Each Shareholder hereby irrevocably waives any
rights of appraisal with respect to the Mergers or rights to dissent from
the Mergers that such Shareholder may have.
(e) No Solicitation. Each of the Shareholders agrees that it shall
not, directly or indirectly, nor shall it authorize, instruct or, if asked
or notified, permit (to the extent feasible) any of its trustees,
advisors, agents, representatives or other intermediaries to, (i)
solicit, initiate, encourage or take any action to facilitate any
submission of inquiries, proposals or offers from any person relating to
(A) any acquisition or purchase of any or all of the Subject Shares or (B)
any Transaction Proposal or agree to or endorse any Transaction Proposal,
other than the transactions contemplated by the Merger Agreement, or (ii)
enter into or participate in any discussions or negotiations regarding any
of the foregoing or furnish to any other person any information with
respect to the Company's or Parent's business, properties or assets or any
of the foregoing, or otherwise cooperate in any way with, or assist or
participate in, facilitate or encourage, any effort or attempt by any
other person to do or seek any of the foregoing (other than in their
capacities as officers and directors of the Company in the event that the
Board of Directors of the Company has concluded in accordance with Section
8.4 of the Merger Agreement that similar actions on the part of the
Company are required in order for the Board of Directors to comply with
its fiduciary duties under applicable law). Notwithstanding anything in
this Agreement to the contrary, from and after the date hereof, each
Shareholder shall promptly advise Vestar/▇▇▇▇ orally and in writing of the
receipt by any of them (or any of the other entities or persons referred
to above) of any Transaction Proposal (it being understood that to the
extent received in their respective capacities as officer or director of
the Company, their obligation to so advise Vestar/▇▇▇▇ shall be governed
by the Merger Agreement) or any inquiry which is likely to lead to any
Transaction Proposal, the material terms and conditions of such
Transaction Proposal or inquiry, and the identity of the person making any
such Transaction Proposal or inquiry. Each Shareholder will keep
Vestar/▇▇▇▇ fully informed of the status and details of any such
Transaction Proposal or inquiry (it being understood that to the extent
such transaction proposal was received in their respective capacities as
officer or director of the Company, their obligation to so advise
Vestar/▇▇▇▇ shall be governed by the Merger Agreement).
(f) Affiliate Letter. Each Shareholder shall deliver to Vestar/▇▇▇▇
on or prior to the Closing Date a written agreement substantially in the
form attached as Exhibit C to the Merger Agreement.
(g) Consents. Each Shareholder agrees that to the extent that it is,
or that it controls, any party to any Lease or other agreement between the
Company or one of its subsidiaries and a third party set forth on Section
9.3 of the Disclosure Schedule, it will deliver, or cause to be delivered
any necessary approval or consent required in connection with the
consummation of the transactions contemplated by the Merger Agreement
without requiring the payment of or imposing any costs or obligations on
the Company or exercising any preemptive rights.
4. Contribution; LLC Agreement. (a) Each Shareholder hereby agrees
that, prior to the Effective Time of the Reorganization Merger, it shall
contribute all of the Subject Shares then beneficially owned by such Shareholder
to Vestar/▇▇▇▇, in exchange for (i) payment by Vestar/▇▇▇▇ of cash in
immediately available funds in the amount set forth opposite such Shareholder's
name on Schedule B hereto and (ii) the membership interest in Vestar/▇▇▇▇ set
forth opposite such Shareholder's name on Schedule B hereto.
(b) In connection with the undertakings contained in Section 4(a)
hereof, Vestar and each Shareholder hereby agree that concurrently with the
consummation of the transactions contemplated by Section 4(a) hereof, they will
enter into the Limited Liability Company Agreement of Vestar/▇▇▇▇ in
substantially the form attached hereto as Exhibit A.
5. Further Assurances. Each of the Shareholders, Vestar and
Vestar/▇▇▇▇ agrees that it will, from time to time, execute and deliver, or
cause to be executed and delivered, such additional or further consents,
documents and other instruments as any of the Shareholders, Vestar or
Vestar/▇▇▇▇ may reasonably request for the purpose of effectively carrying out
the transactions contemplated by this Agreement.
6. Stop Transfer Order. Each Shareholder hereby authorizes counsel
for the Company to notify the Company's transfer agent that there is a stop
transfer order with respect to all of the Subject Shares and that this Agreement
places limits on the voting of the Subject Shares.
7. Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder may be assigned by any of the parties hereto
without the prior written consent of the other parties hereto, except that
Vestar and Vestar/▇▇▇▇ may assign, in their sole discretion, any or all of their
rights, interests and obligations hereunder to any direct or indirect wholly
owned subsidiary of Vestar or Vestar/▇▇▇▇, respectively. Subject to the
preceding sentence, this Agreement will be binding upon, inure to the benefit of
and be enforceable by the parties hereto and their respective successors and
permitted assigns.
8. Termination. This Agreement shall terminate, and no party hereto
shall have any rights or obligations hereunder, upon the first to occur of (a)
the Effective Time of the Acquisition Merger and (b) the termination of the
Merger Agreement in accordance with its terms.
9. General Provisions.
(a) Amendments. This Agreement may not be amended except by an
instrument in writing signed by each of the parties hereto.
(b) Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall
be deemed to have been duly given upon receipt) by delivery in person, by
telecopy or by registered or certified mail (postage prepaid, return
receipt requested) to the respective parties at the following addresses
(or at such other address for a party as shall be specified by like
notice):
if to Vestar or Vestar/▇▇▇▇:
c/o Vestar Capital Partners III, L.P.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
if to any of the Shareholders:
c/o ▇▇▇▇▇▇ ▇. ▇▇▇▇
St. ▇▇▇▇ Knits, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, LLP
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
(c) Interpretation. When a reference is made in this Agreement to
Sections, such reference shall be to a Section of this Agreement unless
otherwise indicated. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Wherever the words "include", "includes"
or "including" are used in this Agreement, they shall be deemed to be
followed by the words "without limitation".
(d) Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement,
and shall become effective when one or more of the counterparts have been
signed by each of the parties and delivered to the other party, it being
understood that each party need not sign the same counterpart.
(e) Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of California
regardless of the laws that might otherwise govern under applicable
principles of conflicts of law.
10. Enforcement. The parties agree that irreparable damage would
occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached. It
is accordingly agreed that, in addition to any other remedy to which it may be
entitled, at law or in equity, the parties shall be entitled to the remedy of
specific performance of the covenants and agreements contained herein and
injunctive and other equitable relief.
11. No Termination or Closure of Trusts. Unless, in connection
therewith, the subject Shares held by any trust which are presently subject to
the terms of this Agreement are transferred upon termination to one or more
Shareholders and remain subject in all respects to the terms of this Agreement,
the Shareholders who are trustees shall not take any action to terminate, close
or liquidate any such trust and shall take all steps necessary to maintain the
existence thereof at least until the first to occur of (i) the Effective Time of
the Acquisition Merger and (ii) the termination of the Merger Agreement in
accordance with its terms.
12. Parties in Interest. This Agreement shall be binding upon and
inure solely to the benefit of each party hereto and, with respect to the
provisions of Section 4 also shall inure to the benefit of Parent and the
Company. Except as provided in the preceding sentence, nothing in this
Agreement, express or implied, is intended to or shall confer upon any other
person any rights, benefits or remedies or any nature whatsoever under or by
reason of this Agreement.
IN WITNESS WHEREOF, each of Vestar, Vestar/▇▇▇▇ and the Shareholders
have caused this Agreement to be signed by its signatory thereunto duly
authorized, as of the date first written above.
VESTAR CAPITAL PARTNERS III, L.P.
By: Vestar Associates III, L.P.,
its General Partner
By: Vestar Associates Corporation III,
its General Partner
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------
Name:
VESTAR/▇▇▇▇ INVESTORS LLC
By: VESTAR CAPITAL PARTNERS III, L.P.
Its: Managing Member
By: VESTAR ASSOCIATES III, L.P
Its: General Partner
By: VESTAR ASSOCIATES CORPORATION III
Its: General Partner
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------
Name:
Title:
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
-----------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇
/s/ ▇▇▇▇▇ ▇▇▇▇
-----------------------
▇▇▇▇▇ ▇▇▇▇
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇
-----------------------
▇▇▇▇▇ ▇. ▇▇▇▇
▇▇▇▇ FAMILY TRUST
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
-----------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇
By: /s/ ▇▇▇▇▇ ▇▇▇▇
-----------------------
Name: ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇ ▇▇▇▇ TRUST
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
-----------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇
By: /s/ ▇▇▇▇▇ ▇▇▇▇
-----------------------
Name: ▇▇▇▇▇ ▇▇▇▇
SCHEDULE A
Shareholder Shares
----------- ------
▇▇▇▇▇▇ ▇. ▇▇▇▇ 0
▇▇▇▇▇ ▇▇▇▇ 0
▇▇▇▇▇ ▇. ▇▇▇▇ 547,904
▇▇▇▇ Family Trust 603,439*
▇▇▇▇▇ ▇▇▇ ▇▇▇▇ Trust 54,640
Totals 1,205,983
* 59,425 of these shares are held in Street Name by ▇▇▇▇▇▇▇ ▇▇▇▇▇
Each of the Shareholders is a Reporting Person under the Schedule
13D dated December 8, 1998 which was initially filed with the Securities and
Exchange Commission on or about December 17, 1998, (as amended, the "Schedule
13D"). Each Shareholder's right to vote or dispose of the Subject Shares is as
set forth in the Schedule 13D.
Certain of the Shareholders are parties to zero-cost collar
arrangements with respect to certain of the Subject Shares, all as set forth in
the Schedule 13D. In connection with those zero cost collar arrangements, the
▇▇▇▇ Family Trust and ▇▇▇▇▇ ▇▇▇▇ have each granted ▇▇▇▇▇▇▇ ▇▇▇▇▇ a first
priority lien, charge and security interest in 70,700 and 80,700 shares,
respectively, as security for their respective obligations under the zero-cost
collar. The ▇▇▇▇ Family Trust and ▇▇▇▇▇ ▇▇▇▇ intend to have those shares
released from such pledge arrangements prior to the Effective Time of the
Acquisition Merger.
SCHEDULE B
Membership Interest in
Vestar/▇▇▇▇ Cash Payment
----------------------- ------------
Vestar 84.09% n/a
▇▇▇▇▇▇ ▇. ▇▇▇▇ 0% n/a
▇▇▇▇▇ ▇▇▇▇ 0% n/a
▇▇▇▇▇ ▇. ▇▇▇▇ 5.87% $5,709,990
▇▇▇▇ Family Trust 9.14% $1,400,010
▇▇▇▇▇ ▇▇▇ ▇▇▇▇ Trust .90% n/a
----- ----------
Total 100% $7,110,000