EXHIBIT 10.18
IA HOLDINGS CORP.
IAH ACQUISITION CORP.
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SECURITIES PURCHASE AGREEMENT
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February 26, 1997
TABLE OF CONTENTS
ARTICLE I. DEFINITIONS...................................................................5
Section 1.01 Definitions.....................................................5
ARTICLE II. PURCHASE AND SALE OF SHARES..................................................11
Section 2.01 Description of Securities......................................11
Section 2.02 Purchase and Sale..............................................11
Section 2.03 Closing........................................................11
ARTICLE III. REPRESENTATIONS AND WARRANTIES................................................11
Section 3.01 Representations and Warranties..................................12
ARTICLE IV. REPRESENTATIONS AND WARRANTIES
OF THE MEZZANINE INVESTORS.........................16
Section 4.01 Making of Representations and Warranties.......................16
Section 4.02 Organization and Good Standing.................................16
Section 4.03 Authorization and Non-Contravention............................16
Section 4.04 Knowledge and Experience.......................................17
Section 4.05 Investment Intent..............................................17
Section 4.06 Unregistered Securities Legend.................................17
Section 4.07 Source of Funds................................................18
Section 4.08 Investment Banking; Brokerage Fees.............................19
ARTICLE V. COVENANTS OF THE COMPANIES......................................................19
Section 5.01 Distributions or Redemptions...................................20
Section 5.02 Financial Statements and Reports...............................20
Section 5.03 Notice of Defaults.............................................21
Section 5.04 Notice of Litigation...........................................21
Section 5.05 Communications with Independent Public Accountants.............21
Section 5.06 Miscellaneous..................................................22
Section 5.07 Existence and Business.........................................22
Section 5.08 Taxes and Other Obligations....................................22
Section 5.09 Insurance......................................................22
Section 5.10 Records and Accounts...........................................23
Section 5.11 Inspection.....................................................23
Section 5.12 Transactions with Affiliates...................................23
Section 5.13 Board Observation Rights.......................................23
ARTICLE VI. CONDITIONS.....................................................................23
Section 6.01 Conditions to the Obligations of the Mezzanine Investors.......23
Section 6.02 Conditions to the Obligations of IA Holdings...................25
ARTICLE VII. MISCELLANEOUS.................................................................26
Section 7.01 Confidentiality Covenant.......................................26
Section 7.02 Indemnities....................................................27
Section 7.03 Governing Law..................................................27
Section 7.04 Notices........................................................27
Section 7.05 Merger.........................................................29
Section 7.06 Successor and Assigns..........................................29
Section 7.07 Fees and Expenses..............................................29
Section 7.08 Publicity and Disclosures......................................30
Section 7.09 Captions and Gender............................................30
Section 7.10 Counterparts...................................................30
Section 7.11 Certain Remedies; Severability.................................30
Section 7.12 Amendments; Waivers............................................31
Section 7.13 Further Assurances.............................................31
Section 7.14 Consent to Jurisdiction........................................31
Section 7.15 Waiver of Jury Trial...........................................31
Exhibit List
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Exhibit A - List of Mezzanine Investors Purchasing Securities
Exhibit B - Certificate of Designations for Series A Preferred Stock
Exhibit C - Form of Warrant
Exhibit D - Form of Stockholders' Agreement
Schedules
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Schedule 3.01(a) Capitalization
Schedule 3.01(b) Subsidiaries
Schedule 3.01(d) Authorizations, Actions, Notices, Approvals, and Filings
Schedule 3.01(m) Open Years
SECURITIES PURCHASE AGREEMENT
This SECURITIES PURCHASE AGREEMENT is made as of this 26th day of
February, 1997, by and among IA Holdings Corp., a Delaware corporation ("IA
Holdings"), IAH Acquisition Corp., a Delaware corporation ("IAH Acquisition"),
and the investors named herein and appearing under the heading of "Mezzanine
Investors" on Exhibit A hereto (each, a "Mezzanine Investor" and, collectively,
the "Mezzanine Investors").
WHEREAS, IAH Acquisition has entered into a Stock Purchase Agreement,
dated December 26, 1996, by and among IAH Acquisition, Iron Age Holdings
Corporation, a Delaware corporation ("Iron Age Holdings"), and the stockholders
of Iron Age named therein, as amended by Amendment No. 1 to the Purchase
Agreement, dated February 26, 1997 (as amended, the "Purchase Agreement"),
pursuant to which IAH Acquisition has agreed to purchase all of the issued and
outstanding capital stock of Iron Age from its stockholders;
WHEREAS, as a condition to the closing of the Purchase Agreement, IAH
Acquisition, as Borrower, and IA Holdings, as Parent Guarantor, must enter into
a Senior Credit Agreement (as defined below);
WHEREAS, the Purchase Agreement and the Senior Credit Agreement
contemplate that the Company will also enter into a subordinated debt financing
and obtain additional financing pursuant to the issuance of certain equity
securities; and
WHEREAS, IA Holdings has agreed to sell to the Mezzanine Investors and
the Mezzanine Investors have agreed to purchase from IA Holdings certain shares
of IA Holdings' preferred stock and common stock, as well as warrants to
purchase additional shares of common stock, on the terms and subject to the
conditions set forth herein.
NOW, THEREFORE, in consideration of the covenants and conditions herein
contained and other good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, the parties hereto hereby agree as follows:
ARTICLE I. DEFINITIONS
Section 1.01 Definitions. In addition to any terms defined elsewhere in
this Agreement, unless otherwise specifically provided herein, the following
terms shall have the following meanings for all purposes when used in this
Agreement, and in any agreement, certificate, report, or other document made or
delivered in connection with this Agreement.
"Affiliate" shall mean (i) any director or officer of IA Holdings
or any of its Subsidiaries and (ii) any Person that controls, is
controlled by, or is under common control with IA Holdings or any of its
Subsidiaries. For purposes of this definition,
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"control" of a Person shall mean the possession, directly or indirectly,
of the power to direct or cause the direction of its management and
policies, whether through the ownership of voting securities, by
contract, or otherwise.
"Agreement" shall mean this Securities Purchase Agreement, as
amended or supplemented from time to time. References to Articles,
Sections, Exhibits, Schedules, and the like refer to the Articles,
Sections, Exhibits, Schedules, and the like of this Agreement unless
otherwise indicated, as amended and supplemented from time to time.
"CERCLIS" shall mean the Comprehensive Environmental Response
Compensation and Liability Information System maintained by the U.S.
Environmental
Protection Agency.
"Certificate of Designations" shall mean the Certificate of
Designations for the Series A Preferred Stock, as the same may be
amended from time to time.
"Closing" shall mean the sale, delivery, and purchase of the
Securities pursuant to this Agreement.
"Closing Date" shall mean February 26, 1997, or such other date
as mutually agreed between IA Holdings and the Mezzanine Investors,
provided that on such date all of the conditions specified in Article VI
have been satisfied or waived.
"Common Shares" shall mean the shares of Common Stock of IA
Holdings issued to the Mezzanine Investors pursuant to this Agreement.
"Common Stock" shall mean the common stock, par value $.01 per
share, of IA Holdings.
"Companies" shall mean IA Holdings and IAH Acquisition.
"Confidential Information" shall have the meaning set forth in
Section 7.01.
"Consolidated" and "Consolidating," and "consolidated" and
"consolidating" when used with reference to any term shall mean that
term (or the terms "combined" and "combining", as the case may be, in
the case of partnerships, joint ventures, and Affiliates that are not
Subsidiaries) as applied to the accounts of IA Holdings (or other
specified Person) and all of its Subsidiaries (or other specified
Persons), or such of its Subsidiaries as may be specified, consolidated
(or combined) in accordance with generally accepted accounting
principles and with appropriate deductions for minority interests in
Subsidiaries, as required by generally accepted accounting principles.
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"EBITDA" means, for any period, the sum, determined on a
Consolidated basis, of (a) net income (or net loss) measured on a
first-in, first-out method of accounting, (b) interest expense, (c)
income tax expense, (d) depreciation expense, (e) amortization expense
and (f) extraordinary or unusual losses deducted in calculating net
income less extraordinary or unusual gains added in calculating net
income and, to the extent deducted in calculating net income (or net
loss), non-cash expenses associated with any variable stock plan plus
the management fee paid under the Management Agreement, in each case
determined in accordance with GAAP for such period.
"Environmental Action" shall mean any action, suit, demand,
demand letter, claim, notice of non-compliance or violation, notice of
liability or potential liability, investigation, proceeding, consent
order or consent agreement relating in any way to any Environmental Law,
any Environmental Permit or Hazardous Material or arising from alleged
injury or threat to health, safety or the environment, including,
without limitation, (a) by any governmental or regulatory authority for
enforcement, cleanup, removal, response, remedial or other actions or
damages and (b) by any governmental or regulatory authority or third
party for damages, contribution, indemnification, cost recovery,
compensation or injunctive relief.
"Environmental Law" means any federal, state, local or foreign
statute, law, ordinance, rule, regulation, code, order, writ, judgment,
injunction, decree or judicial or agency interpretation, policy or
guidance relating to pollution or protection of the environment, health,
safety or natural resources, including, without limitation, those
relating to the use, handling, transportation, treatment, storage,
disposal, release or discharge of Hazardous Materials.
"Environmental Permit" shall mean any permit, approval,
identification number, license, or other authorization required under
any Environmental Law.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Fenway" shall mean Fenway Partners Capital Fund, L.P., a
Delaware limited partnership.
"Fiscal Year" shall mean a fiscal year of IA Holdings and its
Consolidated Subsidiaries ending on the last Saturday in January of any
calendar year.
"Generally accepted accounting principles" or "GAAP" shall mean
generally accepted accounting principles as defined by controlling
pronouncements of the
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Financial Accounting Standards Board consistent with those applied in
preparation of the financial statements referred to in Section 5.02.
"Hazardous Materials" shall mean (a) petroleum or petroleum
products, by-products or breakdown products, radioactive materials,
asbestos-containing materials, polychlorinated biphenyls and radon gas
and (b) any other chemicals, materials or substances designated,
classified or regulated as hazardous or toxic or as a pollutant or
contaminant under any Environmental Law.
"IA Holdings" shall mean IA Holdings Corp., a Delaware
corporation, and any successor thereto.
"IAH Acquisition" shall mean IAH Acquisition Corp., a Delaware
corporation and a wholly owned Subsidiary of IA Holdings, and any
successor thereto.
"IPO" shall mean any initial offering by IA Holdings or IAH
Acquisition of its capital stock or equity securities pursuant to an
effective registration statement under the Securities Act.
"Iron Age" shall mean Iron Age Holdings Corporation, a Delaware
corporation and any successor thereto.
"Junior Securities" shall mean any Preferred Stock, Common Stock
or any other equity securities of IA Holdings which rank junior as to
liquidation rights, dividend rights, and redemption rights to the Series
A Preferred Stock.
"Lien" means any lien, security interest, or other charge or
encumbrance of any kind, or any type of preferential arrangement,
including, without limitation, the lien or retained security title of a
conditional vendor and any easement, right of way, or other encumbrance
on title to real property.
"Majority Holder" shall mean the holder of a combined majority of
the Securities issued pursuant to this Agreement and the senior
subordinated notes issued pursuant to the Note Purchase Agreement, as
measured by the purchase price at the Closing of this Agreement and the
Note Purchase Agreement for such Securities and senior subordinated
notes.
"Management Agreement" shall mean that certain Management
Agreement, dated as of February 26, 1997, by and between IAH Acquisition
and Fenway Partners, Inc., as amended or supplemented from time to time.
"Margin Stock" shall mean "margin" stock as defined in Regulation
G of the Board of Governor's of The Federal Reserve System.
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"Material Adverse Effect" means a material adverse effect on the
business, condition (financial or otherwise), operations, performance,
properties or prospects of IA Holdings and its Subsidiaries on a
consolidated basis taken as a whole.
"Mezzanine Investors" shall mean the initial holders of the
Securities and (the "Initial Mezzanine Investors") and any other Person
which, from time to time, acquires Securities and becomes a party to the
Stockholders' Agreement by executing and delivering to IA Holdings an
instrument in form satisfactory to IA Holdings pursuant to which such
Person agrees to be bound by the terms of the Stockholders' Agreements
to the same extent as the Initial Mezzanine Investors.
"Note Purchase Agreement" shall mean that certain Note Purchase
Agreement dated as of February 26, 1997, by and among IAH Acquisition
and the Mezzanine Investors, as amended or supplemented from time to
time.
"NYL" shall mean New York Life Insurance Company and its
Affiliates, successors, and assigns.
"Officer's Certificate" shall mean a certificate signed in the
name of the Company by its Chief Executive Officer or its Chief
Financial Officer.
"Pension Plan" shall mean an employee benefit plan or other plan
maintained for the employees of IA Holdings or any of its Subsidiaries
as described in Section 4021(a) of ERISA.
"Person" shall mean an individual, corporation, partnership,
joint venture, association, estate, joint stock company, trust,
organization, business, or a government or agency or political
subdivision thereof.
"Preferred Stock" shall mean, with respect to any corporation,
capital stock issued by such corporation that is entitled to a
preference or priority over any other capital stock issued by such
corporation upon any distribution of such corporation's assets, whether
by dividend or upon liquidation.
"Purchase Agreement" shall have the meaning set forth in the
recitals hereof.
"Related Agreements" shall mean this Agreement, the Warrants, and
the Stockholders Agreement, each as from time to time amended or
supplemented.
"Required Holders" shall mean the holder or holders of 51% of the
Series A Preferred Shares from time to time outstanding.
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"Securities" shall mean the Series A Preferred Shares, the Common
Shares, and the Warrants originally issued to (or issuable upon
conversion or exercise of, or otherwise with respect to, Series A
Preferred Shares, Common Shares, and Warrants originally issued to) the
Mezzanine Investors pursuant to this Agreement.
"Securities Act" shall mean the Securities Act of 1933, as
amended.
"Senior Credit Agreement" shall mean that certain Credit
Agreement dated as of February 26, 1997 by and among IAH Acquisition, as
Borrower, IA Holdings, as Parent Guarantor, Banque Nationale de Paris,
as Agent, and the other lenders from time to time party thereto, as
lenders, as amended, modified, or supplemented from time to time,
together with any such agreement which refinances, extends, or refunds
the debt thereunder.
"Series A Preferred Shares" shall mean the shares of Series A
Preferred Stock of IA Holdings issued to the Mezzanine Investors
pursuant to this Agreement.
"Series A Preferred Stock" shall mean the Series A Preferred
Stock, par value $.01 per share, of IA Holdings having the rights,
preferences, privileges, and other terms set forth in the Certificate of
Designations.
"Significant Subsidiary" shall mean any Subsidiary (a) whose
assets constituted greater than 10% of the consolidated assets of IA
Holdings and its Subsidiaries as reflected in the most recent audited
consolidated and unaudited consolidating financial statements of the
same date of IA Holdings and its Subsidiaries delivered pursuant to
Section 5.02(b), or (b) whose EBITDA for the most recent fiscal year for
which audited financial statements of IA Holdings and its Subsidiaries
have been delivered pursuant to Section 5.02(c) constituted greater than
10% of the consolidated EBITDA of IA Holdings and its Subsidiaries for
such fiscal year or (c) which is otherwise designated by IA Holdings as
a Significant Subsidiary in an Officer's Certificate delivered to the
Mezzanine Investors; provided, however, that until the financial
statements for the fiscal year ending January, 1998 are delivered,
Significant Subsidiary shall mean Falcon Shoe Mfg. Co.
"Stockholders Agreement" shall mean the Stockholders Agreement,
dated as of February 26, 1997, among IA Holdings and the other Persons
from time to time party thereto.
"Subsidiary" of any Person means any corporation, partnership,
joint venture, limited liability company, trust, or estate of which (or
in which) more than 50% of (a) the issued and outstanding capital stock
having ordinary voting power to elect a majority of the Board of
Directors of such corporation (irrespective of whether at the time
capital stock of any other class or classes of such corporation shall or
might have
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voting power upon the occurrence of any contingency), (b) the interest
in the capital or profits of such limited liability company,
partnership, or joint venture or (c) the beneficial interest in such
trust or estate is at the time directly or indirectly owned or
controlled by such Person, by such Person and one or more of its other
Subsidiaries, or by one or more of such Person's other Subsidiaries.
"Warrants" shall mean the warrants of IA Holdings issued pursuant
to this Agreement representing the right to purchase additional shares
of Common Stock at the exercise price set forth therein.
ARTICLE II. PURCHASE AND SALE OF SHARES
Section 2.01 Description of Securities. IA Holdings has authorized the
issuance and sale to the Mezzanine Investors of: (i) 1,500 Series A Preferred
Shares having the rights, preferences, and other terms set forth in the
Certificate of Designations for the Series A Preferred Shares attached hereto as
Exhibit B; (ii) 8,333.34 Common Shares; and (iii) Warrants to purchase an
aggregate of 6,962.49 additional shares of Common Stock, in the form attached
hereto as Exhibit C.
Section 2.02 Purchase and Sale. Subject to the terms and conditions of
this Agreement and in reliance upon the representations, warranties, and
covenants herein set forth, at the Closing, IA Holdings shall issue and sell to
the Mezzanine Investors, and the Mezzanine Investors shall purchase from IA
Holdings, (i) the number of Series A Preferred Shares set forth opposite the
name of each such Mezzanine Investor in Exhibit A hereto for the purchase price
of $9,933.33 for each Series A Preferred Share; (ii) the number of Common Shares
set forth opposite the name of each such Mezzanine Investor in Exhibit A hereto
for the purchase price of $363.64 for each Common Share; and (iii) Warrants to
purchase the number of Common Shares set forth opposite the name of such
Mezzanine Investor in Exhibit A hereto for the purchase price set forth on
Exhibit A hereto.
Section 2.03 Closing. The Closing shall take place at the offices of
Shearman & Sterling, ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ concurrently with
the closing of the transactions contemplated by the Senior Credit Agreement and
the Note Purchase Agreement, subject to the satisfaction or waiver of all of the
conditions to Closing set forth herein or therein. At the Closing, IA Holdings
shall deliver to each Mezzanine Investor a certificate or instrument, as
appropriate, representing the Securities being acquired by such Mezzanine
Investor in such Mezzanine Investor's name or in the name of its nominee against
payment of the purchase price therefor to IA Holdings by wire transfer in
immediately available funds.
ARTICLE III. REPRESENTATIONS AND WARRANTIES
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Section 3.01 Representations and Warranties. In order to induce the
Mezzanine Investors to enter into this Agreement and purchase the Securities as
contemplated hereby, IA Holdings and IA Acquisition hereby make the following
representations and warranties:
(a) IA Holdings and each of its Significant Subsidiaries (i) is a
corporation duly organized, validly existing and in good standing under
the laws of the jurisdiction of its incorporation, (ii) is duly
qualified and in good standing as a foreign corporation in each other
jurisdiction in which it owns or leases property or in which the conduct
of its business requires it to so qualify or be licensed except where
the failure to so qualify or be licensed could not reasonably be
expected to have a Material Adverse Effect and (iii) has all requisite
corporate power and authority to own or lease and operate its properties
and to carry on its business as now conducted and as proposed to be
conducted. All of the outstanding capital stock of IA Holdings has been
duly authorized and validly issued and is fully paid and non-assessable
and is owned as of the Closing Date in the amounts and types specified
in Schedule 3.01(a). All of the outstanding capital stock of IAH
Acquisition has been duly authorized and validly issued and is fully
paid and non-assessable and is owned as of the Closing Date by IA
Holdings.
(b) Set forth on Schedule 3.01(b) hereto is a complete and
accurate list of all Subsidiaries of IA Holdings, showing as of the
Closing Date (as to each such Subsidiary) the jurisdiction of its
incorporation, the number of shares of each class of capital stock
authorized, and the number outstanding, on the Closing Date and the
percentage of the outstanding shares of each such class owned (directly
or indirectly) by IA Holdings and each of its Subsidiaries and the
number of shares covered by all outstanding options, warrants, rights of
conversion or purchase and similar rights at the Closing Date. All of
the outstanding capital stock of all of such Subsidiaries is owned by IA
Holdings or one or more of its Subsidiaries. Each Subsidiary has all
requisite corporate power and authority (including, without limitation,
all governmental licenses, permits and other approvals) to execute and
deliver any Related Agreements to which it is a party.
(c) The execution, delivery and performance by IA Holdings of
this Agreement, and each other Related Agreement to which it is or is to
be a party, and the consummation of the Acquisition and the other
transactions contemplated hereby and thereby, are within IA Holdings
corporate powers, having been duly authorized by all necessary corporate
action, and do not (i) contravene IA Holdings' charter or bylaws, (ii)
violate any law (including, without limitation, the Securities Exchange
Act of 1934 and the Racketeer Influenced and Corrupt Organizations
Chapter of the Organized Crime Control Act of 1970), rule, regulation
(including, without limitation, Regulation X of the Board of Governors
of the Federal Reserve System), order, writ, judgment, injunction,
decree, determination or award, (iii) conflict with or result in the
breach of, or constitute a default under, any contract, loan agreement,
indenture, mortgage, deed
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of trust, lease or other instrument binding on or affecting IA Holdings
or any of its properties or (iv) result in or require the creation or
imposition of any Lien upon or with respect to any of the properties of
IA Holdings. IA Holdings is not in violation of any such law, rule,
regulation, order, writ, judgment, injunction, decree, determination or
award or in breach of any such contract, loan agreement, indenture,
mortgage, deed of trust, lease or other instrument, the violation or
breach of which could reasonably be expected to have a Material Adverse
Effect.
(d) No authorization or approval or other action by, and no
notice to or filing with, any governmental authority or regulatory body
or any other third party is required for the due execution, delivery, or
performance by IA Holdings of this Agreement, or any other Related
Agreement to which it is or is to be a party, or for the consummation of
the Acquisition or the other transactions contemplated hereby or
thereby, except for the authorizations, approvals, actions, notices, and
filings listed on Schedule 3.01(d), all of which have been duly
obtained, taken, given, or made and are in full force and effect. All
applicable waiting periods in connection with the Acquisition and the
other transactions contemplated hereby and thereby have expired without
any action having been taken by any competent authority restraining,
preventing or imposing materially adverse conditions upon the
Acquisition or the rights of IA Holdings and its Subsidiaries freely to
transfer or otherwise dispose of, or to create any Lien on, any
properties now owned or hereafter acquired by any of them.
(e) This Agreement has been, and each other Related Agreement
when delivered hereunder will have been, duly executed and delivered by
IA Holdings. This Agreement is, and each other Related Agreement when
delivered hereunder will be, the legal, valid and binding obligation of
IA Holdings, enforceable against IA Holdings in accordance with its
terms, except as enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium or other laws relating to or
limiting creditors' rights or by equitable principles generally.
(f) The Consolidated balance sheets of Iron Age and its
Subsidiaries as at January 27, 1996 and the related statements of income
and cash flows of Iron Age Holdings Corporation and its Subsidiaries for
the fiscal year then ended, accompanied by an opinion acceptable to the
Mezzanine Investors of Ernst & Young LLP, independent public
accountants, and the Consolidated balance sheets of Iron Age Holdings
Corporation and its Subsidiaries as at December 28, 1996, and the
related statements of income and cash flows of Iron Age and its
Subsidiaries for the 11 months then ended, duly certified by the chief
financial officer of Iron Age, copies of which have been furnished to IA
Holdings, fairly present, subject, in the case of said balance sheet as
at December 28, 1996, and said statements of income and cash flows for
the 11 months then ended, to year-end audit adjustments, the
Consolidated financial condition of Iron Age as at such dates and the
results of the operations of Iron Age and its Subsidiaries for the
periods ended on such dates, all in accordance with generally
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accepted accounting principles applied on a consistent basis. Since
January 27, 1996 and October 31, 1996 there has been no event,
development or circumstance that has had, or could be reasonably
expected to have, a material adverse effect on the business, condition
(financial or otherwise), operations or performance of Iron Age and its
Subsidiaries taken as a whole.
(g) There is no action, suit, investigation, litigation or
proceeding affecting IA Holdings or any of its Subsidiaries, including
any Environmental Action, pending or, to the know of IA Holdings,
threatened before any court, governmental agency or arbitrator that (i)
could reasonably be expected to have a Material Adverse Effect or (ii)
purports to affect the legality, validity or enforceability of the
Acquisition, this Agreement, or any other Related Agreement or the
consummation of the transactions contemplated hereby.
(h) Neither IA Holdings nor any of its Subsidiaries is engaged in
the business of extending credit for the purpose of purchasing or
carrying Margin Stock, and no proceeds of the purchase of any of the
Securities will be used to purchase or carry any Margin Stock or to
extend credit to others for the purpose of purchasing or carrying any
Margin Stock.
(i) The operations and properties of IA Holdings and each of its
Subsidiaries comply in all material respects with all applicable
Environmental Laws and Environmental Permits, all past claims of
non-compliance with such Environmental Laws and Environmental Permits
have been resolved without ongoing obligations or costs, and no
circumstances exist that could form the basis of an Environmental Action
against IA Holdings or any of its Significant Subsidiaries or any of
their respective properties that could reasonably be expected to have a
Material Adverse Effect.
(j) None of the properties currently or, to the knowledge of IA
Holdings and its Significant Subsidiaries, formerly owned or operated by
IA Holdings or any of its Significant Subsidiaries is listed or proposed
for listing on the NPL or on the CERCLIS or any analogous foreign, state
or local list or is adjacent to any such property; there are no and
never have been any underground or aboveground storage tanks or any
surface impoundments, septic tanks, pits, sumps or lagoons in which
Hazardous Materials are being or have been treated, stored or disposed
on any property currently owned or operated by IA Holdings or any of its
Significant Subsidiaries or, to the best of its knowledge, on any
property formally owned or operated by IA Holdings or any of its
Significant Subsidiaries; there is no asbestos or asbestos-containing
material on any property currently owned or operated by IA Holdings or
any of its Significant Subsidiaries; and Hazardous Materials have not
been released, discharged or disposed of on any property currently or
formerly owned or operated by IA Holdings or any of its Significant
Subsidiaries, in each case where any such event could reasonably be
expected to have a Material Adverse Effect.
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(k) Neither IA Holdings nor any of its Significant Subsidiaries
is undertaking, and has not completed, either individually or together
with other potentially responsible parties, any investigation or
assessment or remedial or response action relating to any actual or
threatened release, discharge or disposal of Hazardous Materials at any
site, location or operation, either voluntarily or pursuant to the order
of any governmental or regulatory authority or the requirements of any
Environmental Law; and all Hazardous Materials generated, used, treated,
handled or stored at, or transported to or from, any property currently
or formerly owned or operated by IA Holdings or any of its Significant
Subsidiaries have been disposed of in a manner not reasonably expected
to result in material liability to IA Holdings or any of its Significant
Subsidiaries, in each case where any such event could reasonably be
expected to have a Material Adverse Effect.
(l) IA Holdings and each of its Significant Subsidiaries and
Affiliates has filed, has caused to be filed or has been included in all
tax returns (Federal, state, material local and foreign) required to be
filed and has paid all taxes shown thereon to be due (other than as
permitted under Section 5.08), together with applicable interest and
penalties, except where the failure to so file could not reasonably be
expected to have a Material Adverse Effect.
(m) Set forth on Schedule 3.01(m) hereto is a complete and
accurate list, as of the Closing Date, of each taxable year of IA
Holdings and each of its Significant Subsidiaries and Affiliates for
which Federal income tax returns have been filed and for which the
expiration of the applicable statute of limitations for assessment or
collection has not occurred by reason of extension or otherwise (an
"Open Year").
(n) There is no unpaid amount, as of the Closing Date, of
adjustments to the Federal income tax liability of IA Holdings and each
of its Significant Subsidiaries and Affiliates proposed by the Internal
Revenue Service with respect to Open Years that could reasonably be
expected to have a Material Adverse Effect. No issues have been raised
by the Internal Revenue Service in respect to Open Years that, in the
aggregate, could reasonably be expected to have a Material Adverse
Effect.
(o) There is no unpaid amount, as of the Closing Date, of
adjustments to the state, local and foreign tax liability of IA Holdings
and its Significant Subsidiaries and Affiliates proposed by all state,
local and foreign taxing authorities (other than amounts arising from
adjustments to Federal income tax returns, if any, or adjustments being
contested in good faith) that could reasonably be expected to have a
Material Adverse Effect. No issues have been raised by such taxing
authorities that, in the aggregate, could reasonably be expected to have
a Material Adverse Effect.
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(p) Neither IA Holdings nor any of its Subsidiaries is an
"investment company," or an "affiliated person" of, or "promoter" or
"principal underwriter" for, an "investment company," as such terms are
defined in the Investment Company Act of 1940, as amended. Neither the
sale of the Securities nor the application of the proceeds or repayment
thereof by IA Holdings, nor the consummation of the other transactions
contemplated hereby, will violate any provision of such Act or any rule,
regulation or order of the Securities and Exchange Commission
thereunder.
(q) IA Holdings and its Subsidiaries on a consolidated basis are
Solvent.
ARTICLE IV. REPRESENTATIONS AND WARRANTIES
OF THE MEZZANINE INVESTORS
Section 4.01 Making of Representations and Warranties. AS a material
inducement to IA Holdings and IAH Acquisition to enter into this Agreement and
consummate the transactions contemplated hereby, each of the Mezzanine Investors
hereby makes to IA Holdings and IAH Acquisition, severally and not jointly, the
representations and warranties contained in this Article IV.
Section 4.02 Organization and Good Standing. The Mezzanine Investor is
duly organized, validly existing, and in good standing under the laws of its
jurisdiction of organization, and such Mezzanine Investor has all requisite
power and authority to enter into this Agreement and to consummate the
transactions contemplated hereby.
Section 4.03 Authorization and Non-Contravention. The execution,
delivery, and performance of this Agreement and all agreements, documents, and
instruments contemplated hereby have been duly authorized by all necessary
corporate or other action of the Mezzanine Investor. This Agreement and all
documents executed by the Mezzanine Investor and (assuming the due
authorization, execution, and delivery by the other parties hereto and thereto)
are the valid and binding obligations of such Mezzanine Investor, enforceable in
accordance with their terms, except as enforceability thereof may be subject to
the laws of general application relating to bankruptcy, insolvency, and the
relief of debtors and rules and laws governing specific performance, injunctive
relief, and other equitable remedies. The execution by the Mezzanine Investor of
this Agreement and the performance by the Mezzanine Investor of any transaction
contemplated hereby will not: (i) violate, conflict with, or result in a default
under any material contract or obligation to which such Mezzanine Investor is a
party or by which it or its assets are bound, or any provision of the
organizational documents of such Mezzanine Investor, or cause the creation of
any encumbrance upon any of the material assets of such Mezzanine Investor; (ii)
violate or result in a violation of, or constitute a default (whether after the
giving of notice, lapse of time, or both) under, any provision of any law,
regulation, or rule, or any order of, or any restriction imposed by, any court
or other governmental agency applicable to such Mezzanine Investor; (iii)
require from such Mezzanine Investor any notice to, declaration or filing with,
or consent or approval of any governmental
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authority or other third party; or (iv) accelerate any obligation under, or give
rise to a right of termination of, any material agreement, permit, license, or
authorization to which such Mezzanine Investor is a party or by which such
Mezzanine Investor is bound.
Section 4.04 Knowledge and Experience. The Mezzanine Investor represents
that it (i) has such knowledge and experience in financial and business matters
that it is capable of evaluating the merits and risks of the investment
contemplated by this Agreement and making an informed investment decision with
respect thereto, and (ii) is an "accredited investor" as such term is defined in
Rule 501(a) under the Securities Act. The Mezzanine Investor understandings,
agrees, and acknowledges that the Securities have not been and are not being
registered under the Securities Act or under the "blue sky" laws of any
jurisdiction and that IA Holdings, in issuing the Securities, is relying upon,
among other things, the representations of such Mezzanine Investor contained in
this Article IV.
Section 4.05 Investment Intent. The Mezzanine Investor is acquiring the
Securities for its own account for investment, and not with a present view to,
or for resale in connection with, any "distribution" thereof within the meaning
of the Securities Act. The Mezzanine Investor was not formed or organized for
the purpose of acquiring the Securities.
Section 4.06 Unregistered Securities Legend. The Mezzanine Investor
understands that (i) because the Securities have not been registered under the
Securities Act, it cannot dispose of any or all of the Securities unless such
Securities are subsequently registered under the Securities Act or exemptions
from such registration are available, and (ii) the Securities are subject to the
terms of the Stockholders Agreement. The Mezzanine Investor understands that
each instrument or certificate representing the Securities issuable hereunder
will bear the following restrictive legend or one substantially similar thereto:
"The securities represented by this certificate were issued in a
private placement, without registration under the Securities Act
of 1933, as amended (the "Act"), and may not be sold, assigned,
pledged, or otherwise transferred in the absence of an effective
registration under the Act covering the transfer or pursuant to
an exemption therefrom."
"The securities represented by this certificate are subject to
restrictions on voting and transfer and requirements of sale as
set forth in the Stockholders Agreement, dated as of February 26,
1997, as amended and in effect from time to time, and constitute
Securities as defined in such Stockholders Agreement. IA Holdings
will furnish a copy of such agreement to the holder of this
certificate without charge upon written request."
"The securities represented by this certificate were originally
issued to, or issued with respect to securities originally issued
to, the following
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Mezzanine Investor on or about February 26, 1997:
-----------------------.
Section 4.07 Source of Funds. Each Mezzanine Investor individually (but
not on behalf of any other Mezzanine Investor) represents that at least one of
the following statements is an accurate representation as to each source of
funds (a "Source") to be used by such Mezzanine Investor to pay the purchase
price of the Securities to be purchased by such Mezzanine Investor hereunder:
(a) the Source is an "insurance company general account" as such
term is used in Prohibited Transaction Exemption ("PTE") 95-60 issued by
the United States Department of Labor and the amount of reserves and
liabilities (as defined in the annual statement for life insurance
companies approved by the National Association of Insurance
Commissioners (the "NAIC Annual Statement") and before reduction for
credits on account of any reinsurance ceded on the coinsurance basis)
(the "Reserves and Liabilities") for the general account contracts held
by or on behalf of any employee benefit plan, together with the amount
of the Reserves and Liabilities for the general account contracts held
by or on behalf of any other employee benefit plans maintained by the
same employer (or any "affiliate" thereof within the meaning of Section
V(a)(1) of PTE 95-60), doe snot exceed 10% of the total Reserves and
Liabilities of such general account plus surplus, as set forth in the
NAIC Annual Statement filed with the state of domicile of the insurance
company maintaining such general account; or
(b) the Source is a separate account that is maintained solely in
connection with such Purchaser's fixed contractual obligations under
which the amounts payable, or credited, to any employee benefit plan (or
its related trust) that has any interest in such separate account (or to
any participant or beneficiary of such plan (including any annuitant))
are not affected in any manner by the investment performance of the
separate account; or
(c) the Source does not include assets allocated to any separate
account maintained by such Mezzanine Investor in which any employee
benefit plan (or its related trust) has any interest, other than a
separate account that is maintained solely in connection with such
Mezzanine Investor's fixed contractual obligations under which the
amounts payable, or credited, to such plan and to any participant or
beneficiary of such plan (including any annuitant) are not affected in
any manner by the investment performance of the separate account; of
(d) the Source is either (i) an insurance companies pooled
separate account, within the meaning of Prohibited Transaction Exemption
("PTE") ▇▇-▇ (▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇, ▇▇▇▇), ▇▇ (▇▇) a bank collective
investment fund, within the meaning of the PTE 91- 38 (issued July 12,
1991) and, except as such Mezzanine Investor has disclosed to IA
Holdings in writing pursuant to this Section 4.07, no employee benefit
plan or group of
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plans maintained by the same employer or employee organization
beneficially owns more than 10% of all assets allocated to such pooled
separate account or collective investment fund; or
(e) the Source constitutes assets of an "investment fund" (within
the meaning of Part V of the QPAM Exemption) managed by a "qualified
professional asset manager" or "QPAM" (within the meaning of Part V of
the QPAM Exemption), no employee benefit plan's asset that are included
in such investment fund, when combined with the assets of all other
employee benefit plans established or maintained by the same employer or
by an affiliate (within the meaning of Section V(c)(1) of the QPAM
Exemption) of such employer or by the same employee organization and
managed by such QPAM, the conditions of Part I(c) and (g) of the QPAM
Exemption are satisfied, neither the QPAM nor a person controlling or
controlled by the QPAM (applying the definition of "control" in Section
V(e) of the QPAM Exemption) owns a 5% or more interest in IA Holdings
and (1) the identity of such QPAM and (2) the names of all employee
benefit plans whose assets are included in such investment fund have
been disclosed to the Company in writing pursuant to this Section 4.07;
or
(f) the Source is a governmental plan; or
(g) the Source is one or more employee benefit plans, or a
separate account or trust fund comprised of one or more employee benefit
plans, each of which has been identified to the Company in writing
pursuant to this Section 4.07; or
(h) the Source does not include assets of any employee benefit
plan, within the meaning of U.S. Department of Labor Regulation Section
2510.03-101, other than a plan exempt from the coverage of ERISA or of
Section 4975 of the Code.
As used in this Section 4.07, the terms "employee benefit plan", "governmental
plan", "party in interest" and "separate account" shall have the respective
meanings assigned to such terms in Section 3 of ERISA.
Section 4.08 Investment Banking; Brokerage Fees. No Mezzanine Investor
has incurred or become liable for any broker's or finder's fee, banking fees, or
similar compensation relating to or in connection with the transactions
contemplated hereby.
ARTICLE V. COVENANTS OF THE COMPANIES
Other than with the consent of Mezzanine Investors holding a majority of
the Series A Preferred Shares and except as set forth in Section 5.09 below. IA
Holdings and each of its Subsidiaries (which term shall be deemed to include,
for purposes of this Article V, any subsidiary or subsidiaries of IA Holdings
formed after the date of this Agreement) shall
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comply with the following covenants, from and after the date hereof, until no
Series A Preferred Shares remain outstanding.
Section 5.01 Distributions or Redemptions. Except as otherwise expressly
provided in the Certificate of Designations attached as Exhibit B hereto, so
long as any Series A Preferred Shares remain outstanding, without the prior
written consent of the Required Holders. IA Holdings shall not, nor shall it
permit any Subsidiary to, redeem, purchase, or otherwise acquire directly or
indirectly any Junior Securities, nor shall IA Holdings directly or indirectly
declare or pay any dividend or make any distribution upon any Junior Securities.
Section 5.02 Financial Statements and Reports. From time to time prior
to an IP, IA Holdings shall furnish to each holder of Series A Preferred Shares:
(a) As soon as available in any event within 45 days after the
end of each quarter of each Fiscal Year, consolidated and consolidating
balance sheets of IA Holdings and its Subsidiaries as of the end of such
quarter, and consolidated and consolidating statements of income and a
consolidated statement of cash flows of IA Holdings and its Subsidiaries
for the period commencing at the end of the previous Fiscal Quarter and
ending with the end of such fiscal quarter and consolidated and
consolidating statements of income and a consolidated statement of cash
flows of IA Holdings and its Subsidiaries for the period commencing at
the end of the previous Fiscal Year and ending with the end of such
quarter, setting forth in each case in comparative form the
corresponding figures for the corresponding period of the preceding
Fiscal Year, all in reasonable detail and duly certified (subject to
year-end audit adjustments) by IA Holdings' chief financial officer as
having been prepared in accordance with generally accepted accounting
principles consistent with those applied in the most recent annual
audit, together with (i) an Officer's Certificate stating that no
default under the Senior Credit Agreement or the Note Purchase Agreement
has occurred or is continuing or, if such a default has occurred or is
continuing, a statement as to the nature thereof and the action that IA
Holdings and its Subsidiaries have taken and propose to take with
respect thereto, and (ii) in the event of any change from GAAP in the
accounting principles used in the preparation of such financial
statements, a statement of reconciliation conforming such financial
statements to GAAP;
(b) As soon as available and in any event within 90 days after
the end of each Fiscal Year, a copy of the annual audit report for such
year for IA Holdings and its Subsidiaries, including therein
consolidated (and IA Holdings' prepared unaudited consolidating) balance
sheets of IA Holdings and its Subsidiaries as of the end of such Fiscal
Year and consolidated (and IA Holdings' prepared unaudited
consolidating) statements of income and a consolidated (and IA Holdings'
prepared unaudited consolidating) statement of cash flows of IA Holdings
and its Subsidiaries for such Fiscal Year, accompanied as to such
consolidated statements, by an opinion of Ernst & Young LLP or other
independent public accountants of recognized standing, together
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with (i) an Officer's Certificate stating that no default under the
Senior Credit Agreement or Note Purchase Agreement has occurred or is
continuing or, if such a default has occurred or is continuing, a
statement as to the nature thereof and the action that IA Holdings and
its Subsidiaries have taken and propose to take with respect thereto,
and (ii) in the event of any change from GAAP in the accounting
principles used in the preparation of such financial statements, a
statement of reconciliation conforming such financial statements to
GAAP;
(c) As soon as available and in any event no later than (i) at
all times when the Senior Credit Agreement is outstanding, five days
after delivery to the Agent under the Senior Credit Agreement or (ii) at
any time when the Senior Credit Agreement is no longer outstanding, 30
days prior to the end of each Fiscal Year, forecasts prepared by the
management of IA Holdings, in form reasonably acceptable to the
Mezzanine Investors, of balance sheets, income statements, and cash flow
statements on a monthly basis for the Fiscal Year following such Fiscal
Year then ended and on an annual basis for each Fiscal Year thereafter
until February 2005.
Section 5.03 Notice of Defaults. As soon as possible, and in any event
within five (5) days after becoming aware of any default under the Senior Credit
Agreement or the Note Purchase Agreement, IA Holdings shall furnish to each
holder of Series A Preferred Shares an Officer's Certificate setting forth the
details of such default and the action which IA Holdings has taken or proposes
to take with respect thereto.
Section 5.04 Notice of Litigation. From time to time prior to an IPO,
promptly after the commencement thereof, IA Holdings shall furnish each holder
of Series A Preferred Shares written notice of all actions, suits, and
proceedings before any court or government department, commission, board,
bureau, agency, or instrumentality, domestic or foreign, affecting IA Holdings
or any of its Subsidiaries, which (i) if adversely determined would have a
Material Adverse Effect, or (ii) purports to affect the legality, validity, or
enforceability of this Agreement, or any Related Agreement or consummation of
the transactions contemplated hereby or thereby.
Section 5.05 Communications with Independent Public Accountants. At any
reasonable time and from time to time upon request and prior to an IPO, IA
Holdings shall provide each Mezzanine Investor and any of its agents or
representatives reasonable access to the independent public accountants of IA
Holdings and its Subsidiaries to discuss the financial condition of IA Holdings
or such Subsidiary, including, without limitation, any recommendations of such
independent public accountants concerning the management, finances, financial
controls or operations of IA Holdings or such Subsidiary. Such access shall
include, without limitation, upon request copies of any written recommendations
concerning the management, finances, financial controls, or operations of IA
Holdings or such Subsidiary received from such independent public accountants.
-21-
Section 5.06 Miscellaneous. Subject to the provisions of Section 7.01,
IA Holdings shall provide each Mezzanine Investor with such other information as
the Mezzanine Investors may from time to time reasonably request respecting the
business, properties, prospects, condition or operations, financial or
otherwise, of IA Holdings or any of its Subsidiaries.
Section 5.07 Existence and Business. IA Holdings and each of its
Significant Subsidiaries will (i) except as permitted pursuant to Section 8.1
and Section 9.5 of the Note Purchase Agreement, preserve and maintain its
corporate existence and qualify and remain qualified as a foreign corporation in
each jurisdiction in which the failure to be so qualified would have a Material
Adverse Effect, (ii) preserve and maintain in full force and effect all rights,
licenses, patents, and franchises, to the extent the failure to maintain the
same would have a Material Adverse Effect (iii) comply in all material respects
with all valid and applicable statutes, rules and regulations necessary for the
conduct of business, to the extent the failure to comply with the same would
have a Material Adverse Effect, and (iv) engage only in the businesses which IA
Holdings and its Subsidiaries are conducting on the date of this Agreement and
other businesses related thereto.
Section 5.08 Taxes and Other Obligations. IA Holdings and each of its
Subsidiaries (a) will duly pay and discharge, or cause to be paid and
discharged, before the same shall become in arrears, all taxes, assessments, and
other governmental charges, imposed upon it and its properties, sales, and
activities, or upon the income or profits therefrom, as well as the claims for
labor, materials, or supplies, to the extent the failure to pay and discharge
the same would have a Material Adverse Effect; provided, however, that IA
Holdings and any Significant Subsidiary may contest any such charges or claims
in good faith so long as an adequate reserve therefor has been established and
is maintained if and as required by generally accepted accounting principles,
and (b) will promptly pay or cause to be paid when due, or in conformance with
customary trade terms, all lease obligations, trade debt, and all other
indebtedness incident to its operations, as to which its failure to pay would
have a Material Adverse Effect.
Section 5.09 Insurance. IA Holdings and each of its Significant
Subsidiaries (i) will keep its principal assets which are of an insurable
character insured by financially sound and reputable insurers against loss or
damage by fire, explosion or hazards to the extent and in a manner customary for
companies in similar businesses similarly situated, and (ii) will maintain with
financially sound and reputable insurers insurance against other hazards and
risks and liability to persons and property to the extent and in a manner
customary for companies in similar businesses similarly situated; provided,
however, that it may effect workmen's compensation insurance through an
insurance fund operated by such state or jurisdiction and may also be a
self-insurer with respect to workmen's compensation and with respect to group
medical benefits under any medical benefit plan. On request of the Required
Holders from time to time, IA Holdings will render to the Mezzanine Investors a
statement in reasonable details as to all insurance coverage required by this
Section.
-22-
Section 5.10 Records and Accounts. IA Holdings shall maintain
comprehensive and accurate records and accounts in accordance with generally
accepted accounting principles consistently applied. IA Holdings shall maintain
reserves in accordance with generally accepted accounting principles.
Section 5.11 Inspection. Subject to the provisions of Section 7.01
hereof, at any reasonable time and from time to time prior to an IPO, IA
Holdings shall permit each Mezzanine Investor and any of its agents or
representatives reasonable access to examine and make copies of and abstracts
from the records and books of account of, and visit the properties of, IA
Holdings and its Subsidiaries and to discuss the affairs, finances, and accounts
of IA Holdings and its Subsidiaries with any of their respective officers or
directors and with IA Holdings' independent accountants.
Section 5.12 Transactions with Affiliates. IA Holdings shall conduct,
and cause each of its Subsidiaries to conduct, all transactions otherwise
permitted hereunder and under the other Related Agreements with any of their
Affiliates on terms that are fair and reasonable and no less favorable to such
person than it would obtain in a comparable arm's-length transaction with a
person not an Affiliate. Nothing herein is intended or shall be construed to
limit the performance by IA Holdings or any of its Affiliates of obligations
under the Management Agreement, a copy of which has been made available to the
Mezzanine Investors on or before the date hereof, or (b) to restrict the ability
of IA Holdings or any Significant Subsidiary to enter into any transaction not
expressly prohibited herein in the ordinary course of business and which would
not reasonably be expected to have a Material Adverse Effect.
Section 5.13 Board Observation Rights. The Majority Holder shall have
the right to designate one individual to attend all meetings of the Board of
Directors of IA Holdings and each of its Subsidiaries as an observer (the "Board
Observer"). The Board Observer will have the right to receive notice of all
meetings of the Board of Directors of IA Holdings and each of such meetings and
to attend and observe all such meetings, but will have no voting rights as a
Board member or otherwise. The Board Observer shall be entitled to reimbursement
of all travel expenses incurred in connection with attending such Board
meetings. The right of the Person who is the Majority Holder to designate the
Board Observer shall terminate upon the earlier of: (i) the effective date of
the IPO; or (ii) the date at which such Person is no longer the Majority Holder.
ARTICLE VI. CONDITIONS
Section 6.01 Conditions to the Obligations of the Mezzanine Investors.
The obligations of the Mezzanine Investors to consummate the transactions
contemplated by this Agreement are subject to the fulfillment, prior to or at
the Closing, of the following conditions precedent:
-23-
(a) Representations; Warranties; Covenants. Each of the
representations and warranties of IA Holdings and its Subsidiaries made
pursuant to this Agreement shall be true and correct in all material
respects on and as of the Closing Date (it being understood that
representations and warranties made "as of the date hereof" shall also
be deemed to have been made as of the Closing Date); IA Holdings and its
Subsidiaries shall, on or before the Closing Date, have performed and
satisfied all of its covenants and agreements set forth herein which by
the terms hereof are to be performed and satisfied on or before the
Closing Date; and IA Holdings shall have delivered to the Mezzanine
Investors an Officer's Certificate dated as of the Closing Date
certifying to the foregoing effect.
(b) Opinion of Counsel and Other Documents. On the Closing Date,
the Mezzanine Investors shall have received (i) an opinion of Ropes &
▇▇▇▇, counsel for IA Holdings and its Subsidiaries, dated as of the
Closing Date, such opinion to be reasonably satisfactory to the legal
counsel for the Mezzanine Investors, and (ii) such other certificates
and documents with respect to IA Holdings and its Subsidiaries as
counsel for the Mezzanine Investors shall have reasonably requested.
(c) No Actions or Proceedings. There shall exist no action, suit,
investigation, litigation, or proceeding affecting IA Holdings or any of
its Subsidiaries pending or threatened before any court, governmental
agency, or arbitrator that (i) could reasonably be expected to have a
Material Adverse Effect or (ii) purports to affect the legality,
validity, or enforceability of this Agreement or the consummation of the
transactions contemplated by this Agreement, and which would be in the
reasonable judgment of the Mezzanine Investors make it inadvisable to
consummate such transactions. No law or regulation shall be in effect
and no court order shall have been entered in any action or proceeding
instituted by any party which enjoins, restrains, or prohibits this
Agreement or the consummation of the transactions contemplated hereby.
(d) Approvals and Consents. IA Holdings and its Subsidiaries
shall have made all filings with and notifications of governmental
authorities, regulatory agencies, and other entities required to be made
by it in connection with the execution and delivery of this Agreement
and the performance by it of the transactions contemplated hereby, and
the Mezzanine Investors shall have received copies of all required
authorizations, waivers, consents, and permits necessary for the
consummation of the transactions contemplated by this Agreement, in form
and substance reasonably satisfactory to the Mezzanine Investors, from
all third parties.
(e) Other Agreements and Deliveries. IA Holdings and its
Subsidiaries shall have delivered and entered into the Senior Credit
Agreement, the Note Purchase Agreement, and all other documents and
instruments to be delivered or entered into in connection therewith or
in connection with this Agreement, all in form and substance
satisfactory to the Mezzanine Investors and their counsel, and all
conditions precedent
-24-
to the initial extension of credit under the Senior Credit Agreement and
the purchase of the notes under the Note Purchase Agreement shall have
been satisfied.
(f) Material Adverse Changes. There shall not have been any
change or series of changes since the date of the most recent balance
sheet of IA Holdings and its Subsidiaries delivered to the Mezzanine
Investors that, in the reasonable business judgment of the Mezzanine
Investors acting in good faith, have had a Material Adverse Effect or
could reasonably be anticipated to have a Material Adverse Effect on the
Companies.
(g) Expenses. All expenses incurred in connection with the
transactions contemplated by this Agreement shall have been paid in
accordance with Section 7.06.
(h) Certificate of Designations. The Certificate of Designations
shall have been filed with the Secretary of State of Delaware and shall
have become effective prior to Closing to effect the rights,
preferences, and privileges of the Mezzanine Investors contemplated by
this Agreement, including without limitation the rights, preferences,
and privileges in the form set forth in Exhibit B attached hereto.
(i) Warrant. IA Holdings shall have executed and delivered the
Warrants in substantially the form attached hereto as Exhibit C.
(j) Stockholders' Agreement. IA Holdings, the Mezzanine
Investors, and Fenway shall have entered into a Stockholders' Agreement
in substantially the form attached hereto as Exhibit D.
Section 6.02 Conditions to the Obligations of IA Holdings. The
obligation of IA Holdings to consummate the transactions contemplated by this
Agreement is subject to the fulfillment, prior to or at the Closing, of the
following additional conditions precedent:
(a) Representations; Warranties; Covenants. Each of the
representations and warranties of the Mezzanine Investors contained in
this Agreement shall be true and correct in all material respects on and
as of the Closing Date, with the same effect as though made on and as of
the Closing Date (it being understood that representations and
warranties made "as of the date hereof" shall also be deemed to have
been made as of the Closing Date), and the Mezzanine Investors shall, on
or before the Closing Date, have performed and satisfied all of their
covenants and agreements set forth herein which by the terms hereof are
to be performed and satisfied by the Mezzanine Investors on or before
the Closing Date.
(b) No Actions or Proceedings. There shall exist no action, suit,
investigation, litigation, or proceeding affecting the Mezzanine
Investors pending or threatened before any court, governmental agency,
or arbitrator that purports to affect
-25-
the legality, validity, or enforceability of this Agreement or the
consummation of the transactions contemplated by this Agreement. No law
or regulation shall be in effect and no court order shall have been
entered in any action or proceeding instituted by any party which
enjoins, restrains, or prohibits this Agreement or the consummation of
the transactions contemplated hereby.
(c) Approvals and Consents. IA Holdings shall have made all
filings with an notifications of governmental authorities, regulatory
agencies, and other entities required to be made by it in connection
with the execution and delivery of this Agreement and the performance of
the transactions contemplated hereby, and IA Holdings shall have
received all required authorizations, waivers, consents, and permits
necessary for the consummation of the transactions contemplated by this
Agreement, in form and substance reasonable satisfactory to IA Holdings,
from all third parties.
ARTICLE VII. MISCELLANEOUS.
Section 7.01 Confidentiality Covenant. Each of the Mezzanine Investors
will not, and will not permit any of its respective directors, officers,
employees, agents or representatives (collective, "Representatives") to disclose
any confidential or proprietary information relating to the Company that is
conspicuously labeled "CONFIDENTIAL" furnished to the Mezzanine Investors by or
on behalf of IA Holdings or any of its Affiliates or Representatives
("Confidential Information") or use any Confidential Information for any purpose
other than in evaluating IA Holdings and its Subsidiaries in connection with its
investment in the Securities and its evaluation of such investment; provided,
however, that:
(a) Confidential Information may be disclosed to any of the
Representatives of a Mezzanine Investor who have a need to know such
information in connection with the transactions contemplated hereby and
the monitoring of such investment and who are directed, and agree, to
comply with the provisions of this Section 7.01 that apply to the
Mezzanine Investors;
(b) Confidential Information may be disclosed to any Permitted
Transferee (as such term is defined in the Stockholders' Agreement) to
which any Mezzanine Investor sells or offers to sell any Securities (or
any interest in Securities) and who agrees to comply with the provisions
of this Section 7.01 that apply to the Mezzanine Investors; and
(c) As used herein, the term "Confidential Information" shall not
include any information that is or becomes generally available to the
public (other than as a result of disclosure in violation hereof) or any
information received by a Mezzanine Investor or any of its
Representatives from a third party not bound by a duty of
confidentiality to IA Holdings or any of its Affiliates.
-26-
In addition, Confidential Information may be disclosed if required by legal
process or by applicable law (including, without limitation, as may be required
in any report, statement, or testimony required to be submitted to any
municipal, state, provincial, or federal regulatory body having or claiming to
have jurisdiction over any party or any of such party's affiliates or to the
United States National Association of Insurance Commissioners or similar
organizations or their successors).
Section 7.02 Indemnities.
(a) IAH Acquisition will indemnify, exonerate and hold each
Mezzanine Investor and each of the respective partners, shareholders,
Affiliates, directors, officers, fiduciaries, employees and agents and
each of the partners, shareholders, affiliates, directors, officers,
fiduciaries, employee and agents of each of the foregoing (collectively,
the "Indemnitees") free and harmless from and against any and all
actions, causes of action, suits, losses, liabilities and damages, and
expenses in connection therewith, including without limitation
reasonably attorneys' fees and disbursements (collectively, the
"Indemnified Liabilities"), incurred by the Indemnities or any of them
as a result of, arising out of, or relating to any breach of any
representation, warranty or agreement by IA Holdings or IAH Acquisition
or any misrepresentation by IA Holdings or IAH Acquisition set forth in
Section 3.01(a), (b), or (e) of this Agreement except for any such
Indemnified Liabilities that arise on account of such Indemnitees, gross
negligence or willful misconduct as determined by a court of competent
jurisdiction in a final judgment. If and to the extent that the
foregoing undertaking may be unenforceable for any reason, IA Holdings
hereby agrees to make the maximum contribution to the payment and
satisfaction of each of the Indemnified Liabilities which is permissible
under applicable law. None of the Indemnitees shall be liable to IA
Holdings or any of its Subsidiaries or Affiliates for any act or
omission suffered or taken by such Indemnitee that does not constitute
either breach of this Agreement or gross negligence or willful
misconduct.
(b) Each Mezzanine Investor agrees to indemnify and hold harmless
IA Holdings from and against all losses, damages, liabilities and
expenses (including without limitation reasonable attorneys fees and
charges) resulting from any breach of any representation, warranty or
agreement of such indemnifying party or any misrepresentation by such
indemnifying party in this Agreement.
Section 7.03 Governing Law. This Agreement shall be construed under and
governed by the internal laws of the State of New York without regard to its
conflict of laws provisions.
Section 7.04 Notices. Any notice, request, demand, or other
communication required or permitted hereunder shall be in writing and shall be
deemed to have been duly given upon receipt, or if delivered or sent by
facsimile transmission, upon confirmation or transmission, or if sent by
overnight courier, the second day after deposit, in each case to the appropriate
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addresses and facsimile numbers set forth below (or to such other addresses or
facsimile numbers as a party may designate as to itself by notice to the other
parties).
To the Mezzanine Investors: New York Life Insurance Company
-------------------------- ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Investment Department-Private
Finance Group ▇▇▇▇ ▇▇▇
Fax Number: (▇▇▇) ▇▇▇-▇▇▇▇
with copies to: New York Life Insurance company
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Office of the General Counsel,
Room 1104
Fax Number: (▇▇▇) ▇▇▇-▇▇▇▇
and
▇▇▇▇▇▇▇, Procter & ▇▇▇▇ LLP
Exchange Place
Boston, MA 02109-2881
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Fax Number: (▇▇▇) ▇▇▇-▇▇▇▇
To IA Holdings: Iron Age Holdings Corporation
------------- ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: President
with copies to: IA Holdings Corp.
c/o Fenway Partners, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Fax Number: (▇▇▇) ▇▇▇-▇▇▇▇
and
Ropes & ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇, Esq. and ▇▇▇▇▇▇▇ ▇▇▇▇,
Esq.
Fax Number: (▇▇▇) ▇▇▇-▇▇▇▇
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Section 7.05 Merger. This Agreement and the other Related Agreements
contemplated hereby constitute the entire agreement of IA Holdings and its
Subsidiaries and the Mezzanine Investors and express the entire understanding of
IA Holdings and its Subsidiaries and the Mezzanine Investors with respect to the
Securities.
Section 7.06 Successor and Assigns.
(a) This Agreement shall bind and shall be enforceable by the
respective successors and assigns of the parties hereto. The
representations and warranties made by the Companies in this Agreement
shall bind the Companies' successors and assigns.
(b) Subject to the terms of the Related Agreements, each
Mezzanine Investor shall have the right from time to time and at any
time to sell, assign, transfer, negotiate, and grant participation
interests in all or any part of the Securities and its rights under this
Agreement or any other Related Agreement to one or more Permitted
Transferees (as such term is defined in the Stockholders' Agreement);
provided, however, that (i) each such transfer complies in all material
respects with all applicable securities laws and with the applicable
terms of the Related Agreements, and (ii) each such Permitted Transferee
by acceptance of any Securities or any interest therein confirms for
itself the representations and warranties set forth in Article IV with
respect to itself and its purchase of Securities. In the case of any
such sale, assignment, transfer, negotiation, or participation in all or
any portion of the Securities and its rights under any other Related
Agreement, the assignee, transferee, or recipient thereof shall have, to
the extent of such sale, assignment, transfer, negotiation, or
participation, the same rights, benefits, and obligations as such
Mezzanine Investor hereunder. IA Holdings hereby acknowledges and agrees
that any such sale, assignment, or other disposition described in this
Section 7.06(b) (other than participations) will give rise to direct
obligations of IA Holdings to the buyer, assignee, or transferee, as the
case may be, as if such buyer, assignee, or transferee were an original
signatory to this Agreement.
Section 7.07 Fees and Expenses. All of the fees and expenses of IA
Holdings and its Subsidiaries incurred in connection with or relating to or
arising out of the negotiation and preparation of this Agreement and the
consummation of the transactions contemplated hereby shall be paid by IA
Holdings and no expenses of IA Holdings and its Subsidiaries relating in any way
to the transactions contemplated hereby (including without limitation
consulting, accounting, or other professional expenses of the Companies) shall
be charged to or paid by the Mezzanine Investors. IA Holdings agrees to pay on
demand all of the Mezzanine Investors' reasonable expenses in preparing,
executing, delivering, and administering the Related Agreements, all amendments
thereto, and all related documents and instruments, including, without
limitation, the reasonable fees and out-of-pocket expenses of the Mezzanine
Investors' special counsel, ▇▇▇▇▇▇▇, Procter & ▇▇▇▇ LLP. IA Holdings also agrees
to pay all stamp and other taxes in connection with the execution and delivery
of the Related Agreements and related instruments and documents.
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Section 7.08 Publicity and Disclosures. None of the parties hereto nor
any of their respective stockholders, subsidiaries, affiliates, officers,
directors, or employees shall issue or cause the publication of any press
release or other announcement with respect to this Agreement or the other
transactions contemplated hereby without the prior written consent of the other
parties hereto, which consent shall not be unreasonably withheld, except (i) to
the extent disclosure is required by any applicable law or regulation or by any
court or authorized administrative or governmental agency, and (ii) IA Holdings
may issue or cause the publication of press releases or other announcements with
respect to this Agreement or the other transactions contemplated hereby,
provided that any such press release or announcement shall not mention NYL's
participation with respect to this Agreement or the other transactions
contemplated hereby without NYL's prior written consent which may be withheld in
its sole discretion.
Section 7.09 Captions and Gender. The captions in this Agreement are for
convenience only and shall not affect the construction or interpretation of any
term or provision hereof. The use in this Agreement of the masculine pronoun in
reference to a party hereto shall be deemed to include the feminine or neuter
pronoun, as the context may require.
Section 7.10 Counterparts. This Agreement and all amendments to this
Agreement may be executed in several counterparts, each of which shall be an
original. The several counterparts shall constitute a single Agreement.
Section 7.11 Certain Remedies; Severability. It is specifically
understood and agreed that (i) any breach of this Agreement by any of the
parties hereto will result in irreparable injury to IA Holdings and the
Mezzanine Investors, as applicable, that the remedy at law alone will be an
inadequate remedy for such breach and that, without limitation of any other
remedy for such breach and that, in addition to any other remedy it may have,
the aggrieved party shall be entitled to enforce the specific performance of
this Agreement by the breaching party and to seek both temporary and permanent
injunctive relief, without the necessity of proving actual damages, but without
limitation of their rights to recover such damages, and (ii) the sole remedy for
any breach of a covenant contained in Article V hereof shall be specific
performance and no Person shall seek any other remedy in connection with any
such breach. In case any of the provisions contained in this Agreement shall for
any reason be held to be invalid, illegal, or unenforceable in any respect, any
such invalidity, illegality, or unenforceability shall not affect any other
provision of this Agreement, but this Agreement shall be construed as if such
invalid, illegal, or unenforceable provision had been limited or modified
(consistent with its general intent) to the extent necessary to make it valid,
legal, and enforceable, or if it shall not be possible to so limit or modify
such invalid, illegal, or unenforceable provision or part of a provision, this
Agreement shall be construed as if such invalid, illegal, or unenforceable
provision or part of a provision had never been contained in this Agreement.
-30-
Section 7.12 Amendments; Waivers. Any party may waive any provision,
covenant, or condition intended for its benefit in its discretion, but delay on
the part of any party in exercising any right, power, or privilege hereunder
shall not operate as a waiver thereof, nor shall any waiver on the part of any
party of any such right, power, or privilege preclude any further exercise
thereof or the exercise of any other such right, power, or privilege. This
Agreement may be amended only upon the prior written consent of IA Holdings and
the Mezzanine Investors.
Section 7.13 Further Assurances. In addition to the actions, contracts,
and other agreements and documents specifically required to be taken or
delivered pursuant to this Agreement, each of the parties hereto shall execute
such contracts and other agreements and documents and other papers and take such
further actions as may be reasonably required or desirable to carry out the
provisions hereof and the transactions contemplated hereby.
Section 7.14 Consent to Jurisdiction. Each of the parties hereto hereby
agrees that all actions, suits, and proceedings arising out of or based upon
this Agreement or the subject matter hereof may be brought and maintained in the
federal and state courts of the State of New York. Each of the parties hereto by
execution hereof: (i) hereby irrevocably submits to the jurisdiction of the
federal and state courts in the State of New York for the purpose of any action,
suit, or proceeding arising out of or based upon this Agreement or the subject
matter hereof; and (ii) hereby waives to the extent not prohibited by applicable
law, and agrees not to assert, by way of motion, as a defense or otherwise, in
any such action, suit, or proceeding, any claim that he or it is not subject
personally to the jurisdiction of the above-named courts, that he or it is
immune from extraterritorial injunctive relief or other injunctive relief, that
his or its property is exempt or immune from attachment or execution, that any
such action, suit, or proceeding may not be brought or maintained in one of the
above-named courts, that any such action, suit, or proceeding brought or
maintained in one of the above-named courts should be dismissed on the grounds
of forum non conveniens, should be transferred to any court other than one of
the above-named courts, should be stayed by virtue of the pendency of any other
action, suit, or proceeding in any court other than one of the above-named
courts, or that this Agreement or the subject matter hereof may not be enforced
in or by any of the above-named courts. Each of the parties hereto hereby
consents to service of process in any such action, suit, or proceeding in any
manner permitted by the laws of the State of New York, agrees that service of
process by registered or certified mail, return receipt requested, to the
persons and at the addresses set forth in Section 7.04 above, is reasonably
calculated to give actual notice, and waives and agrees not to assert by way of
motion, as a defense or otherwise, in any such action, suit, or proceeding any
claim that such service of process does not constitute good and sufficient
service of process.
Section 7.15 Waiver of Jury Trial. TO THE EXTENT NOT PROHIBITED BY
APPLICABLE LAW WHICH CANNOT BE WAIVED, EACH OF THE PARTIES HERETO HEREBY WAIVES,
AND COVENANTS THAT NEITHER HE OR IT, NOR ANY ASSIGNEE OR SUCCESSOR THERETO, WILL
ASSERT (WHETHER AS A PLAINTIFF,
-31-
DEFENDANT, OR OTHERWISE) ANY RIGHT TO (i) A JURY TRIAL IN ANY FORUM IN RESPECT
OF ANY ISSUE, CLAIM, DEMAND, CAUSE OF ACTION, ACTION, SUIT, OR PROCEEDING
ARISING OUT OF OR BASED UPON THIS AGREEMENT OR THE SUBJECT MATTER HEREOF, IN
EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING AND WHETHER IN CONTRACT OR
TORT OR OTHERWISE, OR (ii) CONSOLIDATE ANY SUCH ACTION WITH ANY OTHER ACTION IN
WHICH A JURY TRIAL CANNOT BE OR HAS NOT BEEN WAIVED. THE PROVISIONS OF THIS
SECTION 7.15 HAVE BEEN FULLY DISCUSSED BY EACH OF THE PARTIES HERETO, AND THESE
PROVISIONS SHALL BE SUBJECT TO NO EXCEPTIONS. NONE OF THE PARTIES HERETO HAS
AGREED WITH OR REPRESENTED TO ANY OTHER PARTY HERETO THAT THE PROVISIONS OF THIS
SECTION 7.15 WILL NOT BE FULLY ENFORCED IN ALL INSTANCES. ANY OF THE PARTIES
HERETO MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION 7.15 WITH ANY
COURT AS WRITTEN EVIDENCE OF THE CONSENT OF EACH OF THE PARTIES HERETO TO THE
WAIVER OF HIS OR ITS RIGHT TO A JURY TRIAL.
IN WITNESS WHEREOF, the parties hereto have executed or caused this
Securities Purchase Agreement to be executed as of the date set forth above.
MEZZANINE INVESTORS:
NEW YORK LIFE INSURANCE COMPANY, a
New York corporation
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
---------------------------------
Title: Assistant Vice President
---------------------------------
FENWAY PARTNERS CAPITAL FUND, L.P., a
Delaware limited partnership
By: Fenway Partners L.P., its general
partner
By: Fenway Partners Management, Inc.,
its general partner
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
-----------------------
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COMPANIES:
IA HOLDINGS CORP., a Delaware corporation
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
----------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
----------------------------
Title: Vice President
----------------------------
IAH ACQUISITION CORP., a Delaware corporation
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
----------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
----------------------------
Title: Vice President
----------------------------
-33-
EXHIBIT A
TO
SECURITIES PURCHASE AGREEMENT
LIST OF MEZZANINE INVESTORS
AND SECURITIES PURCHASED
------------------------------------------------------------------------------------------------
Number of
Number of Common
Series A Number of Shares
Name and Preferred Shares Common Shares Underlying Aggregate
Address Purchased Purchased Warrants Payment
Purchased
------------------------------------------------------------------------------------------------
New York Life 1,000 5,555.56 4,641.66 $12,020,203
Insurance Co.
▇▇ ▇▇▇▇▇▇▇ ▇▇▇.
▇▇▇ ▇▇▇▇, ▇▇
▇▇▇▇▇
------------------------------------------------------------------------------------------------
Fenway Partners 500 2,777.78 2,320.83 $ 6,010,100
Capital Fund L.P.
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇.
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇
▇▇▇▇▇
------------------------------------------------------------------------------------------------
Total 1,500 8,333.34 6,962.49 $18,030,303
------------------------------------------------------------------------------------------------
-34-
EXHIBIT B
---------
Certificate of Designation, Preferences And Rights
of the
SERIES A PREFERRED STOCK
of
IA HOLDINGS CORP.
Pursuant to Section 151 of the General Corporation
Law of the State of Delaware
I, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Vice President, of IA Holdings Corp., a corporation
organized and existing under the laws of the State of Delaware (the
"Corporation"), in accordance with Section 151 of the Delaware General
Corporation Law, certify:
FIRST: The Certificate of Incorporation of the Corporation authorizes the
issuance of up to 15,000 shares of preferred stock, par value $.01 per share, in
one or more series, with such voting powers, designations, preferences and
relative, participating, optional or other special rights, and qualifications,
limitations or restrictions thereof, as may be stated and expressed in a
resolution or resolutions providing for the creation and issuance of any such
series adopted by the Board of Directors of the Corporation (the "Board of
Directors") prior to the issuance of any shares of such series, pursuant to
authority expressly vested in the Board of Directors by the Certificate of
Incorporation of the Corporation.
SECOND: The Board of Directors, by unanimous written consent dated
February 25, 1997, duly adopted the following resolution authorizing the
creation of a new series of such preferred stock, to be known as "Series A
Preferred Stock," stating that 10,000 shares of the authorized and unissued
preferred stock shall constitute such series, and setting forth a statement of
the voting powers, designation, preferences and relative, participating,
optional or other special rights, and the qualifications, limitations and
restrictions thereof as follows:
BE IT RESOLVED, that the terms of the Series A Preferred Stock shall be as
follows:
Section 1. Designation and Number. The designation of the first series of
the authorized preferred stock, par value $.01 per share, of the Corporation
shall be Series A Preferred Stock (the "Series A Preferred Stock"). The number
of shares initially constituting the Series A Preferred Stock shall be 10,000.
Section 2. Dividends.
---------
2A. General Obligation. When, as and if declared by the Board of
Directors and to the extent permitted by law, the Corporation shall pay
preferential dividends to the holders of the Series A Preferred Stock as
provided in this Section 2. Dividends on each share of the Series A Preferred
Stock (a "Class A Preferred Share") shall accrue from the date of issuance of
such Class A Preferred Share at the rate of fifteen and one-half percent (15-
1/2%) per annum of the Liquidation Value thereof; provided, however, that such
dividend rate shall be subject to increase in the following circumstances and
manner:
(i) In the event that any Class A Preferred Shares are not
redeemed on or before February 26, 2007 (as contemplated by Section 5A)
then the dividend rate applicable on such shares shall thereafter accrue
until redemption of such shares at the following rates for the following
periods:
Period Rate
February 27, 2007 to March 26, 2007 15- 1/2%
March 27, 2007 to September 26, 2007 16- 1/2%
September 27, 2007 to March 26, 2008 17- 1/2%
March 27, 2008 to September 26, 2008 18- 1/2%
September 27, 2008 to March 26, 2009 19- 1/2%
Thereafter until redeemed 20%
(ii) From and after any Change in Ownership Triggering Event, in
the event that any Class A Preferred Shares with respect to which the
holder thereof has requested redemption and complied with the notice and
other delivery requirements of Section 5E are not so redeemed on the Change
in Ownership Redemption Date then (subject to the provisions of Section 5E
regarding rescission of redemption requests) the dividend rate applicable
to such shares shall thereafter accrue from the Change in Ownership
Redemption Date with respect to such shares until redemption of such shares
at the rate of: seventeen and one-half percent (17- 1/2%) per annum for
the six-month period commencing on such Change in Ownership Redemption
Date, eighteen and one-half percent (18- 1/2%) for the next succeeding six-
month period, nineteen and one-half percent (19- 1/2%) for the next
succeeding six-month period and 20% thereafter until redeemed.
All such dividends shall accrue whether or not they have been declared and
whether or not there are profits, surplus or other funds of the Corporation
legally available for the payment of dividends, and such dividends shall be
cumulative such that all accrued and unpaid dividends shall be fully paid, or
shall be declared with funds irrevocably set apart for payment or shall be paid
through issuance of additional Class A Preferred Shares (as hereinafter
provided), before any cash dividends may be paid with respect to any Junior
Securities. The date on which the Corporation initially issues any Class A
Preferred Share shall be deemed to be its "date of
-2-
issuance" regardless of the number of times transfer of such Class A Preferred
Share is made on the stock records maintained by or for the Corporation and
regardless of the number of certificates which may be issued to evidence such
Class A Preferred Share.
2B. Dividend Payments. Subject to the limitations set forth in Section
2A, dividends on the Series A Preferred Stock shall be payable in cash or, at
the option of the Corporation, in whole or in part in additional Class A
Preferred Shares (including fractional shares) on the last day of January of
each year (each such date a "Dividend Payment Date") beginning in January 1998.
In the event the Corporation elects to pay such dividends in the form of
additional Class A Preferred Shares, the Corporation may, but shall not be
obligated to, pay cash in lieu of any fractional shares issuable in connection
with such dividends.
2C. Distribution of Partial Dividend Payments. Except as otherwise
provided herein, if at any time the Corporation pays less than the total amount
of dividends then accrued with respect to the Series A Preferred Stock, such
payment shall be distributed pro rata among the holders thereof based upon the
aggregate accrued but unpaid dividends on the Class A Preferred Shares held by
each such holder.
Section 3. Liquidation. Upon any liquidation, dissolution or winding up
of the Corporation (whether voluntary or involuntary), each holder of Series A
Preferred Stock shall be entitled to be paid, before any distribution or payment
is made upon any Junior Securities, an amount in cash equal to the aggregate
Liquidation Value of all Class A Preferred Shares held by such holder (plus all
accrued and unpaid dividends thereon), and the holders of Series A Preferred
Stock shall not be entitled to any further payment. If upon any such
liquidation, dissolution or winding up of the Corporation the Corporation's
assets to be distributed among the holders of the Series A Preferred Stock are
insufficient to permit payment to such holders of the aggregate amount which
they are entitled to be paid under this Section 3, then the entire assets
available to be distributed to the holders of the Series A Preferred Stock shall
be distributed pro rata among such holders based upon the aggregate Liquidation
Value (plus all accrued and unpaid dividends) of the Series A Preferred Stock
held by each such holder. Prior to the liquidation, dissolution or winding up
of the Corporation, the Corporation shall declare for payment all accrued and
unpaid dividends with respect to the Series A Preferred Stock, but only to the
extent of funds of the Corporation legally available for the payment of
dividends. Not less than 20 days prior to the payment date stated therein, the
Corporation shall mail written notice of any such liquidation, dissolution or
winding up to each record holder of Series A Preferred Stock, setting forth in
reasonable detail the amount of proceeds to be paid with respect to each Class A
Preferred Share, each share of Common Stock and each other equity security of
the Corporation in connection with such liquidation, dissolution or winding up.
Whenever the distribution provided for in this Section 3 shall be payable in
property other than cash, the value of such distribution shall be the Fair
Market Value of such property.
Section 4. Priority of Series A Preferred Stock on Dividends and
Redemptions. So long as any Series A Preferred Stock remains outstanding,
without the prior written consent of the holders of two thirds (66-2/3%) of the
Class A Preferred Shares then outstanding, the
-3-
Corporation shall not, nor shall it permit any Subsidiary to, redeem, purchase
or otherwise acquire directly or indirectly any Junior Securities, nor shall the
Corporation directly or indirectly pay or declare any dividend or make any
distribution upon any Junior Securities; provided, however, that (i) the
Corporation may repurchase or redeem any Junior Securities from any Mezzanine
Investor pursuant to the provisions of Section 3.1.7 of the Stockholders
Agreement as in effect on the date hereof, (ii) the Corporation may repurchase
or redeem any Junior Securities held by any officers, directors or employees of
the Corporation or its Subsidiaries (or by any Member of the Immediate Family
(as defined in the Stockholders Agreement) of any such officer, director or
employee, or, after the death of any such holder, by any such holder's estate,
executors, administrators and personal representatives or any such holder's
heirs, legatees or distributees) and (iii) the Corporation may declare and pay
any dividend and make any distributions which are payable solely in the form of
additional Junior Securities.
Section 5. Redemptions.
5A. Mandatory and Optional Redemption. On February 26, 2007, the
Corporation shall redeem each Class A Preferred Share then outstanding (the
"Mandatory Redemption"), subject to the limitations set forth in Section 5B
below. In addition, the Corporation may, at its option, at any time and from
time to time, redeem all or any portion of the Class A Preferred Shares then
outstanding (each an "Optional Redemption"). Upon either a Mandatory Redemption
or an Optional Redemption, the Corporation shall pay out of funds legally
available therefor a price per Class A Preferred Share equal to the Redemption
Price.
5B. Redemption Payments. For each Class A Preferred Share which is to be
redeemed hereunder, the Corporation shall be obligated on the Redemption Date to
pay out of funds legally available therefor to the holder of such Class A
Preferred Share (upon surrender by such holder at the Corporation's principal
office of the certificate representing such Class A Preferred Share) an amount
equal to the Redemption Price; provided, however, that Mandatory Redemptions
shall only be made to the extent that funds of the Corporation are legally
available for such purposes after: (i) all obligations under the Senior Credit
Agreement and all other Designated Senior Debt (collectively, the "Senior Credit
Obligations") have been paid in full and all commitments to lend additional
amounts thereunder or under any other agreement with respect to Designated
Senior Debt shall have been canceled (or such redemption has been consented to
by the lenders under the Senior Credit Agreement and any other holders of
Designated Senior Debt to the extent required thereunder) and (ii) the
Subordinated Notes have been paid in full (or such redemption has been consented
to by the holders thereof). If the funds of the Corporation available, after
fulfillment of the conditions set forth in clauses (i) and (ii) of the
immediately preceding sentence (such fulfillment being referred to herein as the
"Satisfaction of the Specified Credit Obligations"), for redemption of Class A
Preferred Shares on any Redemption Date are insufficient to redeem the total
number of Class A Preferred Shares to be redeemed on such date, those funds
which are available after the Satisfaction of the Specified Credit Obligations
shall be used to redeem the maximum possible number of Class A Preferred Shares
pro rata among the holders of the Class A Preferred Shares to be redeemed
-4-
based upon the aggregate Redemption Price of such Class A Preferred Shares held
by each such holder. At any time thereafter when additional funds of the
Corporation are available (after Satisfaction of the Specified Credit
Obligations) for the redemption of Class A Preferred Shares, such funds shall
thereafter be used to redeem the balance of the Class A Preferred Shares which
the Corporation has become obligated to redeem on any Redemption Date but which
it has not redeemed.
5C. Notice of Redemption. Except as otherwise provided herein, the
Corporation shall mail written notice of each redemption of any Series A
Preferred Stock to each record holder thereof not more than 60 nor less than 10
days prior to the date on which such redemption is to be made. In case fewer
than the total number of Class A Preferred Shares represented by any certificate
are redeemed, a new certificate representing the number of unredeemed Class A
Preferred Shares shall be issued to the holder thereof without cost to such
holder within five business days after surrender of the certificate representing
the redeemed Class A Preferred Shares.
5D. Dividends After Redemption Date. No Class A Preferred Shares shall be
entitled to any dividends accruing after the date on which the Redemption Price
of such Class A Preferred Share is paid (or made available for payment to) to
the holder of such Class A Preferred Share. On such date, all rights of the
holder of such Class A Preferred Share shall cease, and such Class A Preferred
Share shall no longer be deemed to be issued and outstanding.
5E. Special Redemptions. If a Change in Ownership Triggering Event has
occurred or the Corporation obtains knowledge that a Change in Ownership
Triggering Event is likely to occur, the Corporation shall give prompt written
notice of such Change in Ownership Triggering Event describing in reasonable
detail the material terms and date of consummation thereof to each holder of
Series A Preferred Stock, provided that: (i) at any time prior to an initial
Public Offering such notice shall be given at least five days prior to the
occurrence of such Change in Ownership Triggering Event and (ii) at any time
after an initial Public Offering such notice shall be given within ten days
after the occurrence of such Change in Ownership Triggering Event. The holders
of the Series A Preferred Stock then outstanding may require the Corporation to
redeem all or any portion of the Series A Preferred Stock owned by such holders
at a price per Class A Preferred Share (payable from funds legally available
therefor after Satisfaction of the Specified Credit Obligations) equal to the
Redemption Price by giving written notice to the Corporation of such election
prior to the later of: (a) 21 days after receipt of the Corporation's notice
and (b) five days prior to the consummation of the Change in Ownership
Triggering Event (the "Expiration Date").
Upon receipt of such election(s), the Corporation shall be obligated to
redeem the aggregate number of Class A Preferred Shares specified therein on the
later of: (a) the Business Day upon which the Change in Ownership Triggering
Event occurs or (b) the fifth Business Day after the Corporation's receipt of
such election(s) (the later of such dates being referred to herein as the
"Change in Ownership Redemption Date"); provided, however, that the Corporation
shall not be obligated to consummate such redemption except to the extent that
funds of the
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Corporation are legally available for such purpose after Satisfaction of the
Specified Credit Obligations. If any proposed Change in Ownership Triggering
Event does not occur, all requests for redemption in connection therewith shall
be automatically rescinded, or if there has been a material change in the terms
or the timing of the transaction, any holder of Series A Preferred Stock may
rescind such holder's request for redemption by delivering written notice
thereof to the Corporation prior to the consummation of the transaction. The
Company will give prompt notice to all holders of Class A Preferred Shares of
any material change in the terms or timing of any proposed Change in Ownership
Triggering Event. In the event of any such automatic or volitional rescission,
the increase in dividend rate contemplated by Section 2A(ii) shall not apply to
any Series A Preferred Shares the subject of such rescission.
5F. No Reissuance of Series A Preferred Stock. No share or shares of the
Series A Preferred Stock acquired by the Corporation by reason of redemption,
purchase or otherwise shall be reissued, and all such shares shall be canceled,
retired and eliminated from the shares which the Corporation shall be authorized
to issue.
Section 6. Voting and Other Rights.
6A. Voting. Except as otherwise provided herein and as otherwise required
by applicable law, the Series A Preferred Stock shall have no voting rights.
The number of Class A Preferred Shares entitled to vote on any matter shall be
determined as of the record date for the determination of shareholders entitled
to vote on such matter or, if no such record date is established, at the date
such vote is taken or any written consent of shareholders is solicited. Except
to the extent otherwise required by law, the holders of Series A Preferred Stock
shall vote together as a single class on all matters.
6B. Other Rights. In addition to any rights provided by law, without the
written consent of the holders of two thirds (66-2/3%) of the Class A Preferred
Shares then outstanding, the Corporation shall not:
(i) authorize any proposed amendment to the Corporation's
Certificate of Incorporation (including this Certificate of Designation)
that would increase or decrease the aggregate number of authorized shares
of Series A Preferred Stock, increase or decrease the par value of any
shares of Series A Preferred Stock, or alter or change the powers,
preferences or special rights of the Series A Preferred Stock so as to
adversely affect them; or
(ii) authorize, issue or sell, or obligate itself to authorize,
issue or sell, any class or series of preferred stock that is senior to or
pari passu with the Series A Preferred Stock with respect to dividends,
liquidation preferences or redemption rights (other than additional shares
of Series A Preferred Stock which are issued in lieu of cash dividends
pursuant to Section 2).
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Section 7. Registration of Transfer. The Corporation shall keep at its
principal office a register for the registration of Series A Preferred Stock.
Upon the surrender of any certificate representing Series A Preferred Stock at
such place, the Corporation shall, at the request of the record holder of such
certificate, execute and deliver (at the Corporation's expense) a new
certificate or certificates in exchange therefor representing in the aggregate
the number of Class A Preferred Shares represented by the surrendered
certificate. Subject to any stockholder or other agreements between the
Corporation and the holders of Series A Preferred Stock, each such new
certificate shall be registered in such name and shall represent such number of
Class A Preferred Shares as is requested by the holder of the surrendered
certificate and shall be substantially identical in form to the surrendered
certificate, and dividends shall accrue on the Series A Preferred Stock
represented by such new certificate from the date to which dividends have been
fully paid on such Series A Preferred Stock represented by the surrendered
certificate.
Section 8. Replacement. Upon receipt of evidence reasonably satisfactory
-----------
to the Corporation of the ownership and the loss, theft, destruction or
mutilation of any certificate evidencing Series A Preferred Stock, and in the
case of any such loss, theft or destruction, upon receipt of indemnity
reasonably satisfactory to the Corporation, or, in the case of any such
mutilation upon surrender of such certificate, the Corporation shall (at its
expense) execute and deliver in lieu of such certificate a new certificate of
like kind representing the number of Class A Preferred Shares of such class
represented by such lost, stolen, destroyed or mutilated certificate and dated
the date of such lost, stolen, destroyed or mutilated certificate, and dividends
shall accrue on the Series A Preferred Stock represented by such new certificate
from the date to which dividends have been fully paid on such lost, stolen,
destroyed or mutilated certificate.
Section 9. Definitions. As used in this Certificate, the following terms
are used with the meanings ascribed thereto in this Section 9.
"Change in Ownership Triggering Event" means, for purposes of Section 5E,
any of the following: (i) at any time prior to a Public Offering Fenway and its
affiliates shall cease to retain the right to elect a majority of the Board of
Directors, (ii) at any time after a Public Offering Fenway, the Mezzanine
Investors and the respective affiliates of Fenway and the various Mezzanine
Investors shall cease to have the power to elect a majority of the Board of
Directors or (iii) at any time the Corporation sells all or substantially all of
its assets (including through sale of all or substantially all of the stock of
its Subsidiaries or sale of all or substantially all of the assets of the
Corporation and its Subsidiaries, taken as a whole).
"Closing Date" means the first day on which any shares of Class A Preferred
Stock are issued and sold pursuant to the Securities Purchase Agreement.
"Common Stock" means, collectively, the Corporation's Common Stock and any
capital stock of any class of the Corporation hereafter authorized which is not
limited to a fixed sum or percentage of par or stated value in respect to the
rights of the holders thereof to participate
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in dividends or in the distribution of assets upon any liquidation, dissolution
or winding up of the Corporation.
"Designated Senior Debt" shall have the meaning set forth in the Note
Purchase Agreement.
"Fair Market Value" means the fair market value determined (i) in the case
of any property to be valued where the value of such property is reasonably
likely to exceed $5,000,000 in the aggregate, absent any agreement between the
Corporation and the holders of two-thirds (66-2/3%) of the Preferred Stock then
outstanding, by an Independent Investment Banking Firm retained by the
Corporation (the fees and expenses of which shall be the responsibility of the
Corporation) selected as set forth below and (ii) in all other cases, in good
faith by the Board of Directors. In the circumstances identified in clause (i)
of the immediately preceding sentence, the Board of Directors shall provide to
each holder of the Preferred Stock subject to such distribution a list of three
Independent Investment Banking Firms none of whom shall be an Affiliate of the
Corporation, and within 15 days of receipt of such list, the holders of a
majority of the Preferred Stock subject to such distribution shall select from
such list the Independent Investment Banking Firm to perform the calculation;
provided, however, that in the event an Independent Investment Banking Firm is
not selected within such 15 day period, the Board of Directors shall make such
selection.
"Fenway" means Fenway Partners Capital Fund., L.P., a Delaware limited
partnership.
"IAH" means IAH Acquisition Corp.,a Delaware corporation and a subsidiary
of the Corporation.
"Independent Investment Banking Firm" means any investment banking firm
which is not the beneficial owner of any equity interest in the Company or any
shareholder of the Company.
"Junior Securities" means any Common Stock or any other equity securities
of the Corporation which rank junior as to liquidation rights, dividend rights
and redemption rights to the Series A Preferred Stock.
"Liquidation Value" of any Class A Preferred Share as of any particular
date shall be equal to $10,000.
"Mezzanine Investors" shall have the meaning set forth in the Stockholders
Agreement.
"Note Purchase Agreement" means the Note Purchase Agreement dated on or
about February 26, 1997 among IAH, New York Life Insurance Company and Fenway
(as amended and in effect from time to time), a copy of which is maintained at
the Corporation's headquarters and is available to holders of Series A Preferred
Shares upon request.
-8-
"Person" means an individual, a partnership, a corporation, a limited
liability company, an association, a joint stock company, a trust, a joint
venture, an unincorporated organization and a governmental entity or any
department, agency or political subdivision thereof.
"Public Offering" means any offering by the Corporation of its capital
stock or equity securities to the public pursuant to an effective registration
statement under the Securities Act of 1933, as then in effect, or any comparable
statement under any similar federal statute then in force.
"Redemption Date" as to any Class A Preferred Share means the date
specified in the notice of any redemption at the Corporation's option or at the
holder's option; provided that no such date shall be a Redemption Date unless
the Redemption Price of such Class A Preferred Share is actually paid (or made
available for payment) in full on such date, and if not so paid in full, the
Redemption Date shall be the date on which such amount is fully paid (or made
available for payment).
"Redemption Price" means, for each Class A Preferred Share, the Liquidation
Value thereof (plus all accrued and unpaid dividends thereon).
"Securities Purchase Agreement" means the Securities Purchase Agreement
dated on or about February 26, 1997 among the Corporation, IAH, New York Life
Insurance Company and Fenway (as amended and in effect from time to time), a
copy of which is maintained at the Corporation's headquarters and is available
to holders of Series A Preferred Shares upon request.
"Senior Credit Agreement" shall have the meaning provided in the Note
Purchase Agreement.
"Stockholders Agreement" means the Stockholders Agreement dated on or about
February 26, 1997 among the Corporation and the stockholders named therein, as
amended and in effect from time to time, a copy of which is maintained at the
Corporation's headquarters and is available to holders of Series A Preferred
Shares upon request.
"Subordinated Notes" means the 12.5% Subordinated Notes of IAH issued
pursuant to the Securities Purchase Agreement.
"Subsidiary" means, with respect to any Person, any corporation, limited
liability company, partnership, association or other business entity of which
(i) if a corporation, a majority of the total voting power of shares of stock
entitled (without regard to the occurrence of any contingency) to vote in the
election of directors, managers or trustees thereof is at the time owned or
controlled, directly or indirectly, by that Person or one or more of the other
Subsidiaries of that Person or a combination thereof, or (ii) if a limited
liability company, partnership, association or other business entity, a majority
of the partnership or other similar ownership interest thereof is at the time
owned or controlled, directly or indirectly, by any
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Person or one or more Subsidiaries of that person or a combination thereof. For
purposes hereof, a Person or Persons shall be deemed to have a majority
ownership interest in a limited liability company, partnership, association or
other business entity if such Person or Persons shall be allocated a majority of
limited liability company, partnership, association or other business entity
gains or losses or shall be or control the managing general partner of such
limited liability company, partnership, association or other business entity.
Section 10. Amendment and Waiver. No amendment, modification or waiver
shall be binding or effective with respect to any provision hereof without the
prior written consent of the holders of a majority of the Series A Preferred
Stock outstanding at the time such action is taken; provided that no such action
shall change (a) the rate at which or the manner in which dividends on the
Series A Preferred Stock accrue or the times at which such dividends become
payable or the amount payable on redemption of the Series A Preferred Stock or
the times at which redemption of Series A Preferred Stock is to occur or (b) the
percentage required to approve any change described in clause (a) above, without
the prior written consent of the holders of one hundred percent (100%) of the
Series A Preferred Stock then outstanding; and provided further that no change
in the terms hereof may be accomplished by merger or consolidation of the
Corporation with another corporation or entity unless the Corporation has
obtained the prior written consent of the holders of the applicable percentage
of the Series A Preferred Stock then outstanding.
Section 11. Notices. Any notice or other communication referred to herein
shall be in writing, addressed as hereinafter provided, and shall be deemed
effective (x) when delivered or (y) if sent by overnight courier, two Business
Days after the same shall have been deposited with such courier, or (z) if
delivered or sent by facsimile transmission, upon confirmation of transmission.
Such notices or other communication shall be addressed as follows: (i) if to
the Corporation, at its principal executive offices and (ii) if to any
stockholder, at such holder's address as it appears in the stock records of the
Corporation (unless otherwise indicated by any such holder).
Section 12. Adjustment. All numbers and amounts set forth herein which
refer to share prices or amounts or liquidation preference related amounts,
shall be appropriately adjusted (as determined by the Board of Directors) to
reflect any stock splits, stock dividends, combinations of shares and other
recapitalizations affecting the Series A Preferred Stock.
-10-
In witness whereof, said IA Holdings Corp. has caused this Certificate of
Designation, Preferences and Rights to be executed by an officer of said
Corporation thereunto duly authorized, this 25 day of February 1997.
IA HOLDINGS CORP.
By /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
----------------------------------
Title: Vice President
-11-
Exhibit C to
Securities Purchase Agreement
THIS WARRANT AND THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE TRANSFERRED,
SOLD OR OTHERWISE DISPOSED OF EXCEPT WHILE SUCH A REGISTRATION IS IN EFFECT
OR PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT.
THE SECURITIES REPRESENTED BY THIS INSTRUMENT ARE SUBJECT TO THE PROVISIONS
OF A STOCKHOLDERS AGREEMENT DATED AS OF FEBRUARY 26, 1997 (THE
"STOCKHOLDERS AGREEMENT") WHICH, AMONG OTHER THINGS, RESTRICTS THE TRANSFER
OF THIS WARRANT OR ANY SHARES ACQUIRED UPON THE EXERCISE OF THIS WARRANT
AND REQUIRES THE SALE OF THIS WARRANT OR SUCH SHARES IN CERTAIN
CIRCUMSTANCES. THE ISSUER WILL FURNISH A COPY OF THE STOCKHOLDERS
AGREEMENT TO THE HOLDER OF THIS INSTRUMENT WITHOUT CHARGE UPON WRITTEN
REQUEST.
IA HOLDINGS CORP.
COMMON STOCK PURCHASE WARRANT
No. R-001 February 26, 1997
THIS IS TO CERTIFY THAT _____________, a ___________, or registered
assigns (the "Holder") is entitled, at any time prior to the Expiration Time (as
hereinafter defined), to purchase from IA HOLDINGS CORP., a Delaware corporation
(the "Company"), the name of which on or about the date hereof will be changed
to "Iron Age Holdings Corporation," _____ duly authorized, validly issued, fully
paid and nonassessable shares of the Common Stock, par value $.01 per share, of
the Company, at a purchase price equal to three hundred sixty-three and 64/100
dollars ($363.64) per Original Share, all subject to the terms, conditions and
adjustments set forth below in this Common Stock Purchase Warrant (this
"Warrant", such term to include any such warrants issued in substitution
therefor). This Warrant was originally issued pursuant to the 1997 Mezzanine
Securities Purchase Agreement.
1. EXERCISE OF WARRANT.
1.1. Manner of Exercise; Payment. This Warrant may be exercised by
the Holder, in whole or in part during normal business hours on any Business Day
on or prior to the Expiration Time, by surrender of this Warrant to the Company
at its office maintained pursuant to Section 7.2(a), accompanied by a
subscription in substantially the form attached to this Warrant as Exhibit A
duly executed by the Holder and accompanied by payment by certified or official
bank check payable to the order of the Company in the amount obtained by
multiplying (a) the sum of (i) the number of Original Shares designated in such
subscription, and (ii) the cumulative increase in the number of shares
obtainable upon exercise of this warrant as provided in Section
2.4 by (b) the Exercise Price; and the Holder shall thereupon be entitled to
receive the number of duly authorized, validly issued, fully paid and
nonassessable shares of Common Stock specified in said subscription, subject to
adjustment in accordance with Section 2. In lieu of payment of the exercise
price by certified or official bank check as provided above, the Holder may
elect a cashless exercise. In the case of such cashless exercise, the Holder
shall surrender this Warrant for cancellation and receive in exchange therefor
the full number of duly authorized, validly issued, fully paid and nonassessable
shares of Common Stock specified in its subscription, subject to adjustment in
accordance with Section 2, less the number of shares with an aggregate Fair
Market Price equal to the aggregate Exercise Price that would have been payable
upon such exercise absent election of the cashless exercise alternative. Any
such cashless exercise election shall be indicated by checking the appropriate
box on the subscription.
1.2. When Exercise Effective. Each exercise of this Warrant shall be
deemed to have been effected on the next Business Day after this Warrant shall
have been surrendered to the Company as provided in Section 1.1, and at such
time the Person or Persons in whose name or names any certificate or
certificates for shares of Common Stock shall be issuable upon such exercise as
provided in Section 1.3 shall be deemed to have become the holder or holders of
record thereof.
1.3. Delivery of Stock Certificates, etc. As soon as practicable
after each exercise of this Warrant, in whole or in part, and in any event
within five (5) Business Days thereafter (or, in the case of a cashless exercise
as contemplated by Section 1.1 within five (5) Business Days of the final
determination of Fair Market Price of shares issuable upon exercise thereof),
the Company at its expense will cause to be issued in the name of and delivered
to the Holder or, subject to Section 7, as the Holder (upon payment by the
Holder of any applicable transfer taxes) may direct:
(a) a certificate or certificates representing the aggregate number
of duly authorized, validly issued, fully paid and nonassessable shares of
Common Stock to which the Holder shall be entitled upon such exercise plus,
in lieu of any fractional share to which the Holder would otherwise be
entitled, cash in an amount equal to the same fraction of the Fair Market
Price per share on the Business Day next preceding the date of such
exercise; and
(b) in case such exercise is in part only, a new Warrant or Warrants
of like tenor, dated the date hereof and calling in the aggregate on the
face or faces thereof for the number of Original Shares equal to the number
of Original Shares called for in the introductory paragraph of this Warrant
minus the number of Original Shares designated by the Holder upon such
exercise as provided in Section 1.1.
2. ADJUSTMENT OF EXERCISE PRICE AND/OR NUMBER OF SHARES. In order to protect
the rights granted under this Warrant, the Exercise Price shall be subject to
adjustment from time to time as provided in this Section 2, and the number of
Warrant Shares obtainable
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upon exercise of this Warrant shall be subject to adjustment from time to time
as provided in this Section 2.
2.1. Subdivision or Combination of Common Stock. If the Company at any
time subdivides (by any stock split, stock dividend, recapitalization or
otherwise) its outstanding shares of Common Stock into a greater number of
shares, or combines (by reverse stock split or otherwise) its outstanding share
of Common Stock into a smaller number of shares, the number of Warrant Shares
obtainable upon exercise of this Warrant shall be proportionately adjusted so
that the number of shares of Common Stock for which this Warrant is exercisable
immediately after the occurrence of such subdivision or combination shall become
equal to the number of shares of Common Stock which a record holder of the same
number of shares of Common Stock for which this Warrant is exercisable
immediately prior to such event would own or be entitled to receive in respect
of such shares upon the happening of such event.
2.2. Reorganization, Reclassification, Consolidation, Merger or Sale. In
the event of any reorganization, reclassification, consolidation or merger of
the Company with or into another corporation where the Company is not the
surviving corporation or where there is a conversion of or distribution with
respect to the Common Stock outstanding immediately prior to such consolidation
or merger, sale or other disposition of all or substantially all of the
Company's assets to another Person or other similar transaction which is
effected in such a way that holders of Common Stock are entitled to receive
(either directly or upon subsequent liquidation) stock, securities or assets
("Other Property") with respect to or in exchange for Common Stock (any such
transaction being referred to herein as an "Organic Change"), prior to the
consummation of such Organic Change, the Company shall make appropriate
provision to insure that the Holder shall thereafter have the right to receive,
upon exercise of this Warrant, in lieu of the Warrant Shares immediately
theretofore acquirable and receivable upon the exercise of this Warrant, only
such Other Property as may be issuable or payable with respect to or in exchange
for the number of Warrant Shares immediately theretofore acquirable and
receivable upon exercise of this Warrant (and payment or satisfaction of the
Exercise Price) in connection with such Organic Change. In any such case, the
Company shall make appropriate provision with respect to the Holders' rights and
interests to insure that the provisions of this Section 2 and Section 3 shall
thereafter continue to be applicable to this Warrant. The Company shall not
effect any such Organic Change unless prior to the consummation thereof, the
successor entity (if other than the Company) resulting from consolidation or
merger or the entity acquiring such assets assumes by written instrument the
obligation to deliver to the Holder such shares of stock, securities or assets
as, in accordance with the foregoing provisions, the Holder may be entitled to
acquire.
2.3. Certain Other Distributions. If at any time after the date hereof the
Company shall pay any dividend or otherwise distribute in respect of the Common
Stock any:
(a) cash;
(b) evidences of indebtedness, shares of stock or other securities or
property of any nature whatsoever, or
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(c) other warrants or rights to subscribe for or purchase any evidences of
indebtedness, shares of stock or other securities or property of any nature
whatsoever,
then, to the extent that such dividend or distribution does not result in any
adjustment pursuant to Sections 2.1 and 2.2:
(i) in the case of a distribution of cash, the Exercise Price shall
be reduced by an amount equal to the per share amount of the cash dividend;
an d
(ii) in the case of any other distribution, the Company shall provide
the holder with ten (10) Business Days' prior written notice of such
distribution and make appropriate provisions to insure that the Holder
shall thereafter have the right to receive, upon exercise of this Warrant
(and payment or satisfaction of the Exercise Price), in addition to the
Warrant Shares immediately theretofore acquirable and recoverable upon
exercise of this Warrant, either (A) such evidences of indebtedness, shares
of stock, warrants, rights to subscribe or other property as would have
been receivable by the Holder had this Warrant been exercised prior to the
time the Company took a record of holders of Common Stock for purposes of
entitling them to receive such dividend or distribution, or (b) an amount
of cash equal to the fair market value of the property described in clause
(A) as of the date of such distribution, calculated in the same manner as
Fair Market Price.
The adjustment provided for in this Section 2.3 shall under no
circumstances reduce the aggregate Exercise Price payable in connection with any
exercise of this Warrant below the aggregate par value of shares issuable upon
such exercise.
2.4. Exercise of Certain Management Stock Options. Whenever options
granted by the Company under Sections 6(c)(1)(ii)(A) of the 1997 Stock Option
Plan of the Company become exercisable pursuant to the terms of such plan, the
number of Warrant Shares obtainable upon exercise of this Warrant shall be
increased by a number equal to the product of (a) 6.95% of the number of shares
that become issuable as a result of such vesting, and (b) a fraction, the
numerator of which is the number of shares listed in the introductory paragraph
of this Warrant, and the denominator of which is 6,962.49.
2.5. Continuing Effect. The provisions of Section 2.1, 2.2, 2.3, and 2.4
shall similarly apply to successive transactions or events of the types
specified therein.
2.6. Computation of Adjustments. In each case of any adjustment or
readjustment of the Exercise Price or in the number of Warrant Shares issuable
upon the exercise of this Warrant, the Company will promptly compute such
adjustment or readjustment in accordance with the terms of this Warrant, such
computation to be determined in good faith by the Board of Directors of the
Company, and furnish a certificate showing such computations in reasonable
detail to the Holder.
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3. RESTRICTIONS ON CORPORATE ACTION; NOTICE OF CERTAIN EVENTS.
3.1. Restrictions on Corporate Action. The Company will not, by amendment
of its certificate of incorporation or through any transfer of assets,
dissolution, or other voluntary action, avoid or seek to avoid the observance or
performance of any of the terms of this Warrant, but will at all times in good
faith assist in the carrying out of all such terms. Without limiting the
generality of the foregoing, the Company will at all times reserve and keep
available, solely for issuance and delivery upon exercise of the Warrants, the
number of shares of Common Stock necessary to satisfy the rights of the holders
of the Warrants to purchase Warrant Shares. All shares of Common Stock issuable
upon exercise of any Warrants shall be duly authorized and, when issued upon
such exercise (and payment or satisfaction of the Exercise Price), shall be
validly issued and, in the case of shares, fully paid and nonassessable with no
liability on the part of the holders thereof.
3.2. Notice of Certain Events. The Company will notify the Holder, in
accordance with the provisions of Section 9 below, at least twenty (20) days
prior to any of the following events: (i) any Initial Public Offering or any
sale or other disposition (including, without limitation, by merger or
consolidation) of a majority of the capital stock or assets of the Company to
any Person that is not an Affiliate of the Company, (ii) the date on which the
Company closes its books or takes a record (A) with respect to any pro rata
dividend, distribution or subscription offer to holders of Common Stock, or (B)
for determining rights to vote with respect to, or participate in, any Organic
Change, dissolution or liquidation.
The Company's obligations under this Section 3 shall terminate at the
Expiration Time.
4. NO RIGHTS OR LIABILITIES AS STOCKHOLDER. Nothing contained in this Warrant
shall be construed as conferring upon the Holder any rights as a stockholder of
the Company or as imposing any obligation on the Holder to purchase any
securities or as imposing any liabilities on the Holder as a stockholder of the
Company, whether such obligation or liabilities are asserted by the Company or
by creditors of the Company.
5. RESTRICTIONS ON TRANSFER.
5.1. Restrictive Legends. Except as otherwise permitted by this Section
5, each certificate for Warrant Shares issued upon the exercise of any Warrant,
each certificate issued upon the direct or indirect transfer of any such
securities, and each Warrant issued upon direct or indirect transfer or in
substitution for this Warrant pursuant to Section 7 shall be transferable only
upon satisfaction of the conditions specified in the Stockholders Agreement and
in this Section 5 and shall be stamped or otherwise imprinted with legends in
substantially the form appearing at the beginning of this Warrant or as required
by the Stockholders Agreement.
5.2. Notice of Proposed Transfer. Prior to any transfer of any Restricted
Securities which are not registered under an effective registration statement
under the Securities Act, the holder thereof will give written notice to the
Company of such holder's intention to effect such
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transfer and to comply in all other respects with this Section 5.2. Each such
notice shall describe the manner and circumstances of the proposed transfer.
The holder giving such notice will submit a copy thereof to the counsel
designated in such notice. The Company shall provide such notice to its own
counsel. The following provisions shall then apply:
(i) If the proposed transfer may be effected without registration of
such Restricted Securities under the Securities Act, such holder shall
thereupon be entitled (subject to compliance with the transfer restrictions
of the Stockholders Agreement) to transfer such Restricted Securities in
accordance with the terms of the notice delivered by such holder to the
Company. Each certificate representing such Restricted Securities issued
upon or in connection with such transfer shall bear the restrictive legends
required by Section 5.1, unless the applicable restrictions on transfer
shall have ceased and terminated as to such Restricted Securities pursuant
to Section 5.3.
(ii) If the proposed transfer may not legally be effected without
registration of such Restricted Securities under the Securities Act, the
Company will promptly so notify the holder thereof and thereafter such
holder shall not be entitled to transfer such Restricted Securities until
either (x) receipt by the Company of a further notice from such holder
pursuant to the foregoing provisions of this Section 5.2 and fulfillment of
the provisions of clause (i) above or (y) such Restricted Securities have
been effectively registered under the Securities Act.
5.3. Termination of Restrictions. Subject to any transfer restrictions in
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the Stockholders Agreement, the restrictions imposed by this Section 5 hereof
upon the transferability of Restricted Securities shall cease and terminate as
to any particular Restricted Securities (a) when such Restricted Securities
shall have been effectively registered under the Securities Act, or (b) when
such restrictions are no longer required in order to insure compliance with the
Securities Act or Sections 3 and 11 of the Stockholders Agreement. Whenever
such restrictions shall cease and terminate as to any Restricted Securities, the
holder thereof shall be entitled to receive from the Company, without expense
(other than applicable transfer taxes, if any), new securities of like tenor not
bearing the applicable legends required by Section 5.1.
6. AVAILABILITY OF INFORMATION. From such time, if any, as the Company may
have filed a registration statement pursuant to the requirements of Section 12
of the Exchange Act or a registration statement pursuant to the requirements of
the Securities Act until such time as the Company may have terminated
registration of its securities by filing a certificate on Form 15 or otherwise
in accordance with applicable law, the Company will comply with the reporting
requirements of Sections 13 and 15(d) of the Exchange Act and with all other
public information reporting requirements of the Commission (including Rule 144
promulgated by the Commission under the Securities Act) from time to time in
effect and relating to the availability of an exemption from the Securities Act
for the sale of any Restricted Securities. The Company will also cooperate with
all reasonable requests by holders of any Restricted Securities for such
information as may be necessary for such holders to complete and file any
information reporting forms presently or hereafter required by the Commission as
a condition to the availability of an
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exemption from the Securities Act for the sale of any Restricted Securities.
The Company will furnish to each holder of any Warrants, promptly upon request
by the Holder, copies of all financial statements, reports, notices and proxy
statements, sent or made available generally by the Company to its stockholders,
and copies of all regular and periodic reports and all registration statements
and prospectuses filed by the Company with any securities exchange or with the
Commission.
7. OWNERSHIP, TRANSFER AND SUBSTITUTION OF WARRANTS.
7.1. Ownership of Warrants. The Company may treat the person in whose
name this Warrant is registered on the register kept at the office of the
Company maintained pursuant to Section 7.2(a) as the owner and holder thereof
for all purposes, notwithstanding any notice to the contrary, except that, if
and when this Warrant is properly assigned in compliance with the provisions of
Section 5 hereof and any applicable provisions contained in the Stockholders
Agreement, the Company shall register such transfer on the books of the Company
referred to in Section 7.2 and provided, however, that if this Warrant is
assigned in blank, the Company may (but shall not be obligated to) treat the
bearer thereof as the owner of such Warrant for all purposes, notwithstanding
any notice to the contrary. Subject to Section 5 hereof and to the provisions
of the Stockholders Agreement, a Warrant, if properly assigned, may be exercised
by a new holder without a new Warrant first having been issued.
7.2. Office; Transfer and Exchange of Warrants.
(a) The Company will maintain an office (which may be an agency
maintained at a bank) in the United States of America where notices,
presentations and demands in respect of this Warrant may be made upon it.
Such office shall be maintained at ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇,
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ until such time as the Company shall notify the
holders of the Warrants of any change of location of such office within the
United States of America.
(b) The Company shall cause to be kept at its office maintained
pursuant to Section 7.2(a) a register for the registration and transfer of
the Warrants. The names and addresses of holders of Warrants, the
transfers thereof and the names and addresses of transferees of Warrants
shall be registered in such register. The Person in whose name any Warrant
shall be so registered shall be deemed and treated as the owner and holder
thereof for all purposes of this Warrant, and the Company shall not be
affected by any notice or knowledge to the contrary.
(c) Upon the surrender of this Warrant, properly endorsed, for
registration of transfer or for exchange at the office of the Company
maintained pursuant to Section 7.2(a), the Company at its expense will
(subject to compliance with the provisions of the Stockholders Agreement
and Section 5 hereof, if applicable) execute and deliver to or upon the
order of the Holder a new Warrant or Warrants of like tenor, in the name of
such holder or as the Holder (upon payment by the Holder of any
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applicable transfer taxes) may direct, calling in the aggregate on the face
or faces thereof for the number of shares of Common Stock called for on the
face or faces of the Warrant or Warrants so surrendered.
7.3. Replacement of Warrants. Upon receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of any
Warrant and upon delivery of indemnity reasonably satisfactory to the Company in
form and amount or, in the case of any such mutilation, upon surrender of such
Warrant for cancellation at the office of the Company maintained pursuant to
Section 7.2(a), the Company at its expense will execute and deliver, in lieu
thereof, a new Warrant of like tenor and dated the date hereof.
8. DEFINITIONS. As used herein, unless the context otherwise requires, the
following terms have the following respective meanings:
Affiliate: With respect to any Person, any other Person directly or
indirectly controlling, controlled by or under common control with such Person
(it being understood that for purposes of the above definition, the term
"control" (including with correlative meaning the terms "controlling",
"controlled by" and "under common control with"), as used with respect to any
Person, shall mean the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of such Person,
whether through the ownership of voting securities or by contract or otherwise).
Business Day: Any day other than a Saturday or a Sunday or a day on which
commercial banking institutions are required or permitted to be closed in New
York, New York or Pittsburgh, Pennsylvania. Any reference to "days" (unless
Business Days are specified) shall mean calendar days.
Closing Date: February 26, 1997.
Commission: The Securities and Exchange Commission or any other federal
agency then administering the Securities Act and other federal securities laws.
Common Stock: The Common Stock, par value $.01 per share, of the Company
as constituted on the Closing Date, and any stock into which such Common Stock
may thereafter be changed, and shall also include (i) any capital stock of the
Company of any class (regardless how denominated) issued to holders of shares of
Common Stock upon any reclassification of such Common Stock which is not
preferred as to dividends or assets over any other class of stock of the Company
and which is not subject to redemption and (ii) shares of common stock of any
successor or acquiring corporation following an Organic Change received by or
distributed to the holders of Common Stock in the circumstances contemplated by
Section 2.2.
Company: As defined in the introduction to this Warrant, such term to
include any corporation which shall succeed to or assume the obligations of the
Company hereunder in compliance with Section 3.
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Exchange Act: The U.S. Securities Exchange Act of 1934, 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.
Exercise Price: An amount equal to $363.64 per Original Share, subject to
adjustment pursuant to Section 2.3.
Expiration Date: The date on which the Expiration Time occurs.
Expiration Time: 5:00 P.M., Pittsburgh, Pennsylvania time, on February 26,
2007
Fair Market Price: On any date specified herein, either (a) if the shares
of Common Stock are publicly traded on such date, the average of the daily
closing prices of such Common Stock for the twenty (20) consecutive trading days
ending on such date, or (b) the amount per share of Common Stock equal to the
fair value thereof determined either by agreement between the Company and the
Required Holders or absent such agreement in good faith by the Board of
Directors of the Company as of a date which is within fifteen (15) days of the
date as of which the determination is to be made; provided that the Company
shall send notice of such determination to all Holders affected directly thereby
within five (5) Business Days after such determination by the Board. If the
Required Holders disagree in writing with a determination made under clause (b)
by the Board of Directors of the Company within ten (10) Business Days of notice
thereof, and the amount in dispute is reasonably likely to exceed $5,000,000,
the Fair Market Price shall be determined by an Independent Investment Banking
Firm retained by the Company (the fees and expenses of which shall be the
responsibility of the Company) selected as set forth in the immediately
following sentence. The Company shall select three Independent Investment
Banking Firms none of which shall be an Affiliate of the Company, and within ten
(10) Business Days of the receipt of such list, the holders of a majority of the
Warrants disputing such Fair Market Price determination shall choose one of the
listed firms to make such valuation. If such holders do not make a selection
within such ten (10) Business Day period, the Board of Directors of the Company
shall make such selection.
Holder: As defined in the introduction to this Warrant.
Independent Investment Banking Firm: Any investment banking firm which is
not the beneficial owner of any equity interest in the Company or any
shareholder of the Company.
Initial Public Offering: The Company's initial sale of Common Stock in an
underwritten public offering registered under the Securities Act.
1997 Mezzanine Securities Purchase Agreement: The Securities Purchase
Agreement dated as of February 26, 1997 among the Company, IAH Holdings Corp.,
New York Life Insurance Company, and Fenway Partners Capital Fund, L.P.
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Original Share: A share of Common Stock as constituted on the Closing Date
before giving effect to the adjustments in Section 2.
Organic Change: As defined in Section 2.2.
Other Property: As defined in Section 2.2.
Person: A corporation, an association, a partnership, a business trust, an
organization, a business, an individual, a government or political subdivision
thereof or a governmental agency.
Required Holders: The Holders of Warrants exercisable for in excess of
two-thirds (66-2/3%) of the aggregate number of Warrant Shares then purchasable
upon exercise of this Warrant and all other warrants issued pursuant to the 1997
Mezzanine Securities Purchase Agreement and then outstanding.
Restricted Securities: All of the following: (a) any Warrants bearing the
applicable legend or legends referred to in Section 5.1, (b) any shares of
Common Stock which have been issued upon the exercise of Warrants and which are
evidenced by a certificate or certificates bearing the applicable legend or
legends referred to in such Section, (c) unless the context otherwise requires,
any shares of Common Stock which are at the time issuable upon the exercise of
Warrants and which, when so issued, will be evidenced by a certificate or
certificates bearing the applicable legend or legends referred to in such
Section.
Securities Act: The Securities Act of 1933, as amended, or any successor
federal statute, and the rules and regulations of the Commission thereunder, all
as the same shall be in effect at the time.
Warrant Shares: The shares of Common Stock issuable upon exercise of the
Warrants.
Warrants: As defined in the introduction to this Warrant.
9. NOTICES. Any notice or other communication in connection with this Warrant
shall be in writing, addressed as hereinafter provided, and shall be deemed
effective (x) when delivered, or (y) if sent by overnight courier, two (2)
Business Days after the same shall have been deposited with such courier, or (z)
if delivered or sent by facsimile transmission, upon confirmation of
transmission. Such notices or other communications shall be addressed as
follows: (a) if to any holder of any Warrant, at the registered address of such
holder as set forth in the register kept at the office of the Company maintained
pursuant to Section 7.2(a); or (b) if to the Company, to the attention of its
President at its office maintained pursuant to Section 7.2(a); provided,
however, that the exercise of any Warrant shall be effective in the manner
provided in Section 1.
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10. AMENDMENT, ETC. This Warrant and all other warrants issued pursuant to the
1997 Mezzanine Securities Purchase Agreement may be modified or amended or the
provisions hereby waived with the written consent of the Company and the
Required Holders, provided that no such Warrant may be modified or amended to
reduce the number of shares of Common Stock for which such Warrant is
exercisable or to increase the price at which such shares may be purchased upon
exercise of such Warrant (before giving effect to any adjustment as provided
therein) without the prior written consent of the Holder thereof.
11. MISCELLANEOUS. This Warrant shall be construed and enforced in accordance
with and governed by the laws of State of Delaware. The section headings in
this Warrant are for purposes of convenience only and shall not constitute a
part hereof.
IN WITNESS WHEREOF, the Company has caused this Common Stock Purchase
Warrant to be signed by its duly authorized office under its corporate seal.
IA HOLDINGS CORP.
By:_______________________________
Title:
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Exhibit A to Warrant
--------------------
FORM OF SUBSCRIPTION
[To be executed only upon exercise of Warrant]
To IRON AGE HOLDINGS CORPORATION
(formerly known as IA Holdings Corp.)
The undersigned registered holder of the within Warrant hereby irrevocably
exercises such Warrant for, and purchases thereunder, __________/1/ shares of
the Common Stock covered by the within Warrant and requests that the
certificates for such shares be issued in the name of, and delivered to,
________________ whose address is _________________________.
_____ The undersigned herewith makes payment in full therefor of
the Exercise Price therefor (or $_______ in the aggregate);
or
_____ The undersigned hereby elects to effect a cashless exercise
as contemplated by Section 1.1 of the Warrant and instructs
the Company to reduce the number of shares issuable upon
exercise as provided in the penultimate sentence of Section
1.1.
(check only one of the spaces provided above)
Dated: __________________________________________
(Signature must conform in all respects to name of
holder as specified on the face of Warrant)
__________________________________________
(Street Address)
__________________________________________
(City) (State) (Zip Code)
-----------------------------
/1/ Insert here the number of shares called for in the introductory
paragraph of this Warrant (or, in the case of a partial exercise, the portion
thereof as to which this Warrant is being exercised), in either case without
making any adjustment for additional shares of Common Stock or any other stock
or other securities or property or cash which, pursuant to the adjustment
provisions of this Warrant, may be delivered upon exercise. In the case of a
partial exercise, a new Warrant or Warrants will be issued and delivered,
representing the unexercised portion of the Warrant, to the holder surrendering
the Warrant.
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Exhibit B to Warrant
--------------------
FORM OF ASSIGNMENT
[To be executed only upon transfer of Warrant]
For value received, the undersigned registered holder of the within Warrant
hereby sells, assigns and transfers unto ____________________ the right
represented by such Warrant to purchase _______/1/ Original Shares of Common
Stock of IRON AGE HOLDINGS CORPORATION, a Delaware corporation formerly known as
IA Holdings Corp. (the "Company") to which such Warrant relates (or such other
shares of Common Stock purchasable upon exercise of such Warrant in respect of
such Original Shares), and appoints _________________________ Attorney to make
such transfer on the books of the Company maintained for such purpose, with full
power of substitution in the premises.
Dated: _________________________________________
(Signature must conform in all respects to name of
holder as specified on the face of Warrant)
_________________________________________
(Street Address)
_________________________________________
(City) (State) (Zip Code)
Signed in the presence of:
_________________________
/1/ Insert here the number of shares called for in the introductory
paragraph of this Warrant (or, in the case of a partial assignment, the portion
thereof as to which this Warrant is being assigned), in either case without
making any adjustment for additional shares of Common Stock or any other stock
or other securities or property or cash which, pursuant to the adjustment
provisions of this Warrant, may be delivered upon exercise. In the case of a
partial assignment, a new Warrant or Warrants will be issued and delivered,
representing the unassigned portion of the Warrant, to the holder surrendering
the Warrant.
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SCHEDULES TO THE SECURITIES PURCHASE AGREEMENT DATED AS OF FEBRUARY 26, 1997.
---------
SCHEDULE 3.01(A)
----------------
CAPITALIZATION
--------------
IA HOLDINGS CORP. INVESTOR GROUP*
--------------------------------
A. Primary Investments
--------------------
Number of Outstanding Shares of
-------------------------------
Owner Common Stock Preferred Stock
----- ------------ ---------------
Fenway Partners Capital Fund, L.P. 80,291.66 0
B. Mezzanine Investments
---------------------
Owner Number of Outstanding Shares of
----- -------------------------------
Common Stock Preferred Stock
------------ ---------------
Fenway Partners Capital Fund, L.P. 2,777.78 500
New York Life Insurance Company 5,555.56 1,000
Total Outstanding 88,625.00 1,500
_____________________________
* All of the stockholders of IA Holdings Corp. have entered into a Stockholders'
Agreement dated February 26, 1997 ("Agreement") and the shares listed below are
subject to the terms of that Agreement.
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SCHEDULE 3.01(B)
----------------
IA HOLDINGS CORP. SUBSIDIARIES
------------------------------
===================================================================================
TYPE OF # OF SHARES # OF OWNED
CORPORATION OUTSTANDING STOCK OUTSTANDING SHARES BY
----------- ----------------- ----------- ISSUED --
----------------------------------------------------------------------------------
IAH Acquisition Corp. Common Stock 3000 100 IA
(a Delaware corporation) Holdings
Corp.
(100%)
===================================================================================
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SCHEDULE 3.01(D)
----------------
AUTHORIZATIONS, ACTIONS, NOTICES, APPROVALS, AND FILINGS
--------------------------------------------------------
Termination of the Amended and Restated Credit Agreement dated January 27, 1995
by and between Iron Age Corporation and PNC Bank N.A. as Agent.
Termination of indebtedness owed to ▇▇▇▇▇▇ Capital Corporation under the
Acquisition Financing Agreement dated January 29, 1990 and as restated effective
through November 20, 1995.
Consent of ▇▇▇▇ relating to the Falcon/▇▇▇▇ License Agreement dated July 24,
1994 between Falcon Shoe Mfg. Co. and ▇.▇. ▇▇▇▇ & Associates, Inc.
Consent of ▇▇▇▇ relating to the Iron Age/▇▇▇▇ License Agreement dated August 15,
1994 between Iron Age Corporation and ▇.▇. ▇▇▇▇ & Associates, Inc.
Consent of ▇▇▇▇ relating to the Manufacturing Certification Agreement dated July
24, 1994 (the "Falcon/▇▇▇▇ Manufacturing Agreement") between Falcon Shoe Mfg.
Co. and ▇.▇. ▇▇▇▇ & Associates, Inc.
Consent of CIT Group/Amplicon Leasing relating to the CIT Group/Amplicon Leasing
Security Agreement coverning equipment relating to the Mobile Point of Sale
Agreement.
Consent of Amplicon Financial relating to the Master Lease Agreement by and
between Amplicon, Inc. and Iron Age Corporation.
Consent of Von-Land Corporation Limited under a lease dated June 11, 1991 and a
renewal lease dated November 23, 1995 between Von-Land Corporation Limited and
Iron Age Canada Ltd. for office space located at ▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ LYK3RZ.
Consent of ▇▇▇ Continental, landlord of the Lewiston, Maine property at ▇ ▇▇▇▇▇
▇▇▇▇▇▇.
Authorization under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as
amended.
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SCHEDULE 3.01(M)
----------------
OPEN YEARS
----------
January 25, 1997
January 27, 1996
January 28, 1995
January 29, 1994
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