Exhibit 10.6
STOCKHOLDER'S AGREEMENT, dated as of April 27, 1998, between Yankee
Candle Company, Inc. and the undersigned (the "Stockholder").
WHEREAS, the Stockholder is a party to a Recapitalization Agreement,
dated March 25, 1998, by and among the Stockholder, Yankee Candle Holdings Corp.
and Forstmann Little & Co. Subordinated Debt and Equity Management Buyout
Partnership-VI, L.P., a Delaware limited partnership ("MBO-VI"), and the
Company, as amended (the "Recapitalization Agreement"); and
WHEREAS, the execution and delivery of this Agreement is a condition
precedent to the closing of the transactions contemplated by the
Recapitalization Agreement.
NOW, THEREFORE, the parties hereto agree as follows:
1. Definitions.
1.1 Definitions; Rules of Construction.
(a) The following terms, as used herein, shall have the
following meanings:
"Act" shall mean the Securities Act of 1933, as amended.
"Affiliate" shall mean, with respect to any Person, any other
Person which, directly or indirectly, is in control of, is controlled by, or is
under common control with, such Person.
"Affiliate Securities" shall mean any securities issued by an
Affiliate of the Company.
"Agreement" shall mean this Stockholder's Agreement, as
amended, supplemented or modified from time to time in accordance with the terms
hereof.
"Book Value of Parent" shall mean the sum of (x) the total
assets minus the total liabilities of Parent on a consolidated basis, plus
(y) the amount of any reduction in stockholders' equity resulting from the
application of EITF Issue Summary No. 88-16, Basis in Leveraged Buyouts, as
of the Valuation Date, plus (z) the amount of accumulated amortization of
that portion of the purchase price paid for Parent by Equity-V and MBO-VI
that was allocated to goodwill, excluding other acquired identified
intangible assets. For purposes of calculating the Book Value of Parent and
the Book Value Per Share, (i) all options and other rights to acquire equity
interests in Parent outstanding immediately prior to the date of the
Repurchase Notice or exercised between the Valuation Date and the date of the
Repurchase Notice shall be deemed to
have been exercised on the Valuation Date, and (ii) the number of outstanding
shares on the Valuation Date shall be increased by the number of shares
subject to each such option or other right and the assets of Parent shall be
increased by the aggregate exercise price payable in respect of the exercise
of each such option or other right (with respect to clauses (i) and (ii), in
the case of any such option or other right, unless the effect thereof would
be to increase the Book Value Per Share).
"Book Value Per Share" shall mean the amount which would be
payable on the Valuation Date in respect of one share of Class C Common Stock in
the event of a dissolution, liquidation or winding-up of the affairs of the
Company if the amount of assets available for distribution in the event of such
dissolution, liquidation or winding-up with respect to all shares of capital
stock of the Company outstanding (or deemed to be outstanding, as set forth
above in the definition of "Book Value of Parent") on the Valuation Date were
equal to the Book Value of Parent. In the event there has been a Stock Dividend
of Parent after the Valuation Date and prior to the Election Date, the number of
shares outstanding for purposes of determining Book Value Per Share shall be the
number of shares that would have been outstanding immediately after the Stock
Dividend on the Valuation Date had the Stock Dividend occurred on the Valuation
Date.
"Capital Transaction" shall mean, with respect to any
corporation or other entity, any Stock Dividend, recapitalization (including,
without limitation, any special dividend or distribution), reclassification,
spin-off, partial liquidation or similar capital adjustments (including, without
limitation, through merger or consolidation) of such corporation or other
entity.
"Class A Common Stock" shall mean the Class A Common Stock,
par value $0.01 per share, of Parent. There shall be included within the term
Class A Common Stock any Class A Common Stock now or hereafter authorized to be
issued, and any and all securities of any kind whatsoever of the Company which
may be issued after the date hereof in respect of, or in exchange for, shares of
Class A Common Stock pursuant to a Capital Transaction of Parent or otherwise
"Class C Common Stock" shall mean the Class C Common Stock,
par value $0.01 per share, of Parent. There shall be included within the term
Class C Common Stock any Class C Common Stock now or hereafter authorized to be
issued, and any and all securities of any kind whatsoever of the Company which
may be issued after the date hereof in respect of, or in exchange for, shares of
Class C Common Stock pursuant to a Capital Transaction of Parent or otherwise.
Without limiting the generality of the foregoing, all references herein to the
Class C Common Stock shall include, and the provisions hereof (including,
without limitation, Sections 3 and 4 hereof) shall also
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be applicable to, the Class A Common Stock for which the Class C Common Stock
shall be exchanged pursuant to the Parent Certificate of Incorporation.
"Common Stock" shall mean the Common Stock, par value $0.01
per share, of the Company. There shall be included within the term Common Stock
any Common Stock now or hereafter authorized to be issued, and any and all
securities of any kind whatsoever of the Company which may be issued after the
date hereof in respect of, or in exchange for, shares of Common Stock pursuant
to a Capital Transaction of the Company or otherwise. Without limiting the
generality of the foregoing, all references herein to Common Stock shall
include, and the provisions hereof (including, without limitation, Section 3
hereof) shall also be applicable to, the Class C Common Stock for which the
Common Stock may be exchanged pursuant hereto.
"Company" shall mean Yankee Candle Company, Inc., a
Massachusetts corporation, and shall include any successor thereto by merger,
consolidation, acquisition of substantially all the assets thereof, or
otherwise.
"Competitive Activity" shall mean engaging in any of the
following activities: (i) serving as a director of any Competitor; (ii) directly
or indirectly (X) controlling any Competitor or (Y) owning any equity or debt
interests in any Competitor (other than equity or debt interests which are
publicly traded and do not exceed 5% of the particular class of interests then
outstanding) (it being understood that, if any such interests in any Competitor
are owned by an investment vehicle or other entity in which the Stockholder owns
an equity interest, a portion of the interests in such Competitor owned by such
entity shall be attributed to the Stockholder, such portion determined by
applying the percentage of the equity interest in such entity owned by the
Stockholder to the interests in such Competitor owned by such entity); (iii)
directly or indirectly soliciting, diverting, taking away, appropriating or
otherwise interfering with any of the customers or suppliers of the Company or
any Affiliate of the Company; or (iv) employment by (including serving as an
officer or director of), or providing consulting services to, any Competitor.
For purposes of this definition, the term "control" means the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of any Competitor, whether through the ownership of
equity or debt interests, by contract or otherwise. Notwithstanding the
foregoing, the term "Competitive Activity" shall not include the direct or
indirect ownership or operation of, investment in, or employment or engagement
by a Person that is a Competitor solely because such Person is a luxury
automobile dealership, winery and/or vineyard, and/or a retail gift shop
ancillary to any of the foregoing, provided that if such gift shop sells candles
or other home fragrancing products, such products are manufactured solely by the
Company or its Affiliates.
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"Competitor" shall mean any Person that is engaged in a
business similar to the Business (as defined in the Recapitalization
Agreement), without regard to size (including giftware and related
merchandise) or is engaged in owning, operating or acquiring directly or
indirectly (through a corporation, trust, partnership or other Person) one or
more entities engaged in a business similar to the Business, without regard
to size (including giftware and related merchandise).
"Equity-V" shall mean Forstmann Little & Co. Equity
Partnership-V, L.P., a Delaware limited partnership.
"Expenses of Sale" shall mean all expenses incurred by the
Parent Companies in connection with the sale of the shares of the selling
stockholders pursuant to Section 3.2, 3.3, 3.4, 3.5, 3.6 or 3.7 hereof to the
extent that such expenses are not paid or reimbursed by the Company.
"Legal Representative" shall mean the guardian, executor,
administrator or other legal representative of the Stockholder. All references
herein to the Stockholder shall be deemed to include references to the
Stockholder's Legal Representative, if any, unless the context otherwise
requires.
"Litigation" shall mean any actions, suits or proceedings
arising out of or relating to this Agreement and the transactions contemplated
hereby.
"Parent Certificate of Incorporation" shall mean the Restated
Certificate of Incorporation of Parent, as in effect from time to time.
"Parent" shall mean Yankee Candle Holdings Corp., a Delaware
corporation, and shall include any successor thereto by merger, consolidation,
acquisition of substantially all the assets thereof, or otherwise.
"Parent Companies" shall mean the collective reference to
Parent, Equity-V, MBO-VI and their respective successors and assigns.
"Permitted Transferee" shall have the meaning ascribed to such
term in Section 3.1(b) hereof.
"Person" shall mean an individual, a corporation, a
partnership, an association, a trust or any other entity or organization,
including a government or political subdivision or an agency or instrumentality
thereof.
"Prohibited Activity" shall have the meaning ascribed to such
term in Section 4.1 hereof.
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"Release Date" shall mean the date on which Parent and its
Affiliates shall cease to own in the aggregate directly or indirectly at least
20 percent of the then outstanding securities of the Company having the power to
vote in the election of directors of the Company.
"Representative" shall have the meaning ascribed to such term
in Section 6.13(b) hereof.
"Repurchase Notice" shall have the meaning ascribed to such
term in Section 4.2 hereof.
"Sale Obligations" shall mean any liabilities and obligations
(including liabilities and obligations for indemnification, amounts paid into
escrow and post-closing adjustments) incurred by the selling stockholders in
connection with the sale of their shares pursuant to Section 3.2, 3.3, 3.4, 3.5,
3.6 or 3.7 hereof.
"Section 3.2 Notice" shall have the meaning ascribed to such
term in Section 3.2(a) hereof.
"Section 3.3 Notice" shall have the meaning ascribed to such
term in Section 3.3(a) hereof.
"Stock Dividend" shall mean, with respect to any corporation
or other entity, any stock split, stock dividend, reverse stock split or similar
transaction which changes the number of outstanding shares of capital stock of
such corporation or other entity.
"Third Party" shall mean any Person other than any Parent
Company or any Affiliate or partner or stockholder of any Parent Company or any
Affiliate of such partner or stockholder.
"Transaction" shall mean any sale pursuant to Section 3.2,
3.3, 3.4, 3.5, 3.6 or 3.7 hereof.
"Valuation Date" shall mean the last day of the fiscal year of
Parent immediately preceding the fiscal year in which Parent is repurchasing
shares of Common Stock from the Stockholder pursuant to Section 4.2 hereof.
(b) In this Agreement, unless the context otherwise requires,
words in the singular number or in the plural number shall each include the
singular number and the plural number.
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2. Scope of Agreement. The provisions of this Agreement shall apply to any and
all shares of Common Stock currently owned and owned in the future by the
Stockholder.
3. Rights and Restrictions on Common Stock.
3.1 No Sale or Transfer.
(a) The Stockholder shall not sell, transfer, assign,
exchange, pledge, encumber or otherwise dispose of any shares of Common Stock
or grant any option or right to purchase such shares or any legal or
beneficial interest therein, except in accordance with the provisions of this
Agreement.
(b) The Stockholder may transfer any shares of Common Stock by
will, but only to:
(i) any spouse, parent, child (whether natural or
adopted), brother or sister of the Stockholder, or
(ii) any corporation or partnership which is controlled
by any spouse, parent, child (whether natural or
adopted), brother or sister of the Stockholder
(the person or persons to which shares of Common Stock are transferred in
accordance with this Section 3.1(b) being herein referred to as the "Permitted
Transferee"); provided, that, for any transfer to the Permitted Transferee to be
effective hereunder, the Permitted Transferee shall agree in writing to be bound
by all the terms of this Agreement applicable to the Stockholder (including,
without limitation, Sections 3 and 6.13(b) hereof) as if the Permitted
Transferee originally had been a party hereto; and provided, further, that all
of the stockholders of any Permitted Transferee that is a corporation and all of
the partners of any Permitted Transferee that is a partnership shall agree in
writing not to transfer any shares they then own or may hereafter acquire in the
corporate Permitted Transferee or any partnership interests they then own or may
hereafter acquire in the partnership Permitted Transferee except to a person
described in paragraph (i) or (ii) above that has made the same agreement in
writing to the Company, so long as the corporate or partnership Permitted
Transferee shall own any shares of Common Stock. Any reference herein to the
Stockholder shall be to the Permitted Transferee from and after the date the
transfer is effected in accordance with this Section 3.1(b). Without limiting
the generality of the foregoing, the provisions of Section 4.2 hereof shall be
likewise applicable to any Permitted Transferee, commencing upon the date that
such Person becomes a Permitted Transferee, for the respective periods they
would have applied to the Stockholder.
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3.2 Participation in Sale of Common Stock. The Stockholder, at
the Stockholder's option, may participate proportionately (and the Parent
Companies shall allow the Stockholder to participate proportionately) in any
sale (other than a public offering of Common Stock, which shall be governed
by Section 3.3 hereof) of all or a portion of the shares of Common Stock
owned by the Parent Companies to any Third Party. The Company shall notify
the Stockholder in writing of the Parent Companies' intention to effect such
a sale to a Third Party and the nature and per share amount of consideration
to be paid by such Third Party, at least 10 days, or such shorter time as the
Company deems practicable, before the closing of any such proposed sale of
shares of Common Stock (the "Section 3.2 Notice"), and the Stockholder shall
notify the Company in writing within five days after receipt of the Section
3.2 Notice of his intention to participate in such sale, including the number
of shares of Common Stock with respect to which he will so participate. Any
failure by the Stockholder to so notify the Company within such five-day
period shall be deemed an election by the Stockholder not to participate in
such sale with respect to any of his shares. Any sale of shares of Common
Stock by the Stockholder pursuant to this Section 3.2 shall be for the same
consideration per share, on the same terms and subject to the same conditions
as the sale of shares of Common Stock owned by the Parent Companies. If the
Stockholder sells any shares of Common Stock pursuant to this Section 3.2,
the Stockholder shall pay and be responsible for the Stockholder's
proportionate share of the Expenses of Sale and the Sale Obligations.
3.3 Public Offering of Common Stock.
(a) If the Parent Companies propose to sell all or any portion
of the shares of Common Stock owned by the Parent Companies in a public
offering, the Stockholder shall be entitled and required to participate in such
public offering by selling in the public offering the same percentage of the
Stockholder's shares of Common Stock as the Parent Companies propose to sell of
their shares in the public offering (determined on the basis of the aggregate
number of shares of Common Stock owned, and the aggregate number of such shares
being sold, by the Parent Companies). The Company shall notify the Stockholder
in writing of the Parent Companies' intention to effect such public offering at
least 10 days, or such shorter time as the Company deems practicable, before the
filing with the Securities and Exchange Commission of the registration statement
relating to such public offering (the "Section 3.3 Notice") and shall cause the
Stockholder's shares to be sold in such public offering to be included therein.
The Stockholder shall pay and be responsible for the Stockholder's proportionate
share of the Expenses of Sale and the Sale Obligations, including, without
limitation, indemnifying the underwriters of such public offering, on a
proportionate basis, to the same extent as the Parent Companies are required to
indemnify such underwriters. In connection with any such public offering, the
Company shall furnish to the Stockholder such number of copies of any
registration statement, and the prospectus
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included in such registration statement, opinions of the Company's counsel
and "cold comfort" letters from the Company's independent public accountants
as the Stockholder may reasonably request.
(b) In connection with any proposed public offering of
securities of the Company, whether by the Parent Companies or the Company or
otherwise, the Stockholder agrees (i) to supply any information reasonably
requested by the Company in connection with the preparation of a registration
statement and/or any other documents relating to such public offering, and
(ii) to execute and deliver any agreements and instruments reasonably
requested by the Company to effectuate such public offering, including,
without limitation, an underwriting agreement, a custody agreement and a
"hold back" agreement pursuant to which the Stockholder will agree not to
sell or purchase any securities of the Company (whether or not such
securities are otherwise governed by this Agreement) for such period of time
following the public offering as is requested by the Parent Companies or the
underwriters for such public offering. If the Company requests that the
Stockholder take any of the actions referred to in clause (i) or (ii) of the
previous sentence, the Stockholder shall take such action promptly but in any
event within five days following the date of such request.
3.4 Required Participation in Sale of Common Stock by the Parent
Companies. Notwithstanding any other provision of this Agreement to the
contrary, if any of the Parent Companies shall propose to sell (including by
exchange, in a business combination or otherwise) all or any portion of their
shares of Common Stock in a bona fide arm's-length transaction, the Parent
Companies, at their option, may require that the Stockholder sell the same
percentage of the Stockholder's shares of Common Stock as the Parent Companies
propose to sell of their shares in the transaction (determined on the basis of
the aggregate number of shares of Common Stock owned, and the aggregate number
of such shares then being sold, by the Parent Companies) on the same terms and
subject to the same conditions in the same transaction and, if stockholder
approval of the transaction is required and the Stockholder is entitled to vote
thereon, that the Stockholder vote the Stockholder's shares in favor thereof. If
the Stockholder sells any shares pursuant to this Section 3.4, the Stockholder
shall pay and be responsible for the Stockholder's proportionate share of the
Expenses of Sale and the Sale Obligations.
3.5 Participation in Sale of Class A Common Stock. The Stockholder,
at the Stockholder's option, may participate proportionately (and the Parent
Companies shall allow the Stockholder to participate proportionately) in any
sale (other than a public offering of Class A Common Stock, which shall be
governed by Section 3.6 hereof) of all or a portion of the shares of Class A
Common Stock owned by any of the Parent Companies to any Third Party by (a)
exchanging the Stockholder's shares of Common Stock for shares of Class C Common
Stock (if such exchange has not already been made) on a one-for-one basis, (b)
exchanging the same percentage of the Stockholder's shares of
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Class C Common Stock (such shares of Class C Common Stock having been
received in exchange for the Stockholder's Common Stock) as the Parent
Companies propose to sell of their shares to the Third Party (determined on
the basis of the aggregate number of such shares of Class A Common Stock
owned, and the aggregate number of such shares being sold, by the Parent
Companies) for shares of Class A Common Stock in accordance with the Class C
Exchange Rate, as defined in Subsection 5(d) of Section A of Article Fourth
of the Parent Certificate of Incorporation (the "Exchange Rate"), and (c)
selling the Class A Common Stock received in such exchange to the Third
Party. Parent shall notify the Stockholder in writing of the Parent
Companies' intention to effect such a sale to a Third Party, the identity of
the Third Party and the nature and per share amount of consideration to be
paid by the Third Party, and shall set forth its calculation of the Exchange
Rate, at least 10 days, or such shorter time as Parent deems practicable,
before the closing of any such proposed sale of shares of Class A Common
Stock. Any sale of shares of Class A Common Stock by the Stockholder pursuant
to this Section 3.5 shall be for the same consideration per share, on the
same terms and subject to the same conditions as the sale of shares of Class
A Common Stock owned by the Parent Companies. Parent shall, immediately prior
to, and contingent upon, the consummation of such sale, exchange such shares
of Class C Common Stock for Class A Common Stock in accordance with the
Exchange Rate. If the Stockholder sells any shares pursuant to this Section
3.5, the Stockholder shall pay and be responsible for the Stockholder's
proportionate share of the Expenses of Sale and the Sale Obligations.
3.6 Participation in Public Offering of Class A Common Stock.
(a) If the Parent Companies propose to sell all or any portion
of the shares of Class A Common Stock owned by the Parent Companies in a public
offering, the Stockholder shall be entitled and required to participate in such
public offering in the manner specified by the investment banking firm engaged
to manage the underwriting of such public offering, including (i) by exchanging
(directly or indirectly) the Stockholder's shares of Common Stock for shares of
Class A Common Stock, provided that after such exchange the Stockholder shall
hold an equity interest in Parent equal to the Stockholder's equity interest in
the Company immediately prior to such exchange, and selling in the public
offering the same percentage of the Stockholder's shares of Class A Common Stock
as the Parent Companies propose to sell of their shares in the public offering
(determined on the basis of the aggregate number of shares of Class A Common
Stock owned, and the aggregate number of such shares being sold, by the Parent
Companies), or (ii) by selling in the public offering the same percentage of the
Stockholder's shares of Common Stock as the Parent Companies propose to sell of
their shares of Class A Common Stock in the public offering (determined on the
basis of the aggregate number of shares of Class A Common Stock owned, and the
aggregate number of such shares being sold, by the Parent Companies). Parent
shall notify the Stockholder in writing of the Parent Companies' intention to
effect such public offering at least 10
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days, or such shorter time as Parent deems practicable, before the filing
with the Securities and Exchange Commission of the registration statement
relating to such public offering and shall cause the Stockholder's shares to
be sold in such public offering to be included therein. If the Stockholder
sells any shares pursuant to this Section 3.6, the Stockholder shall pay and
be responsible for the Stockholder's proportionate share of the Expenses of
Sale and the Sale Obligations, including, without limitation, indemnifying
the underwriters of such public offering, on a proportionate basis, to the
same extent as the Parent Companies are required to indemnify such
underwriters. In connection with any such public offering, the Parent
Companies shall furnish to the Stockholder such number of copies of any
registration statement, and the prospectus included in such registration
statement, opinions of the Parent Companies' counsel and "cold comfort"
letters from the Parent Companies' public accountants as the Stockholder may
reasonably request.
(b) In connection with any proposed public offering of
securities of Parent, whether by any of the Parent Companies (including Parent)
or otherwise, the Stockholder agrees (i) to supply any information reasonably
requested by Parent in connection with the preparation of a registration
statement and/or any other documents relating to such public offering, and (ii)
to execute and deliver any agreements and instruments reasonably requested by
Parent to effectuate such public offering, including, without limitation, an
underwriting agreement, a custody agreement and a "hold back" agreement pursuant
to which the Stockholder will agree not to sell or purchase any securities of
Parent (whether or not such securities are otherwise governed by this Agreement)
for the same period of time following the public offering as is agreed to by the
Parent Companies with respect to themselves. If Parent requests that the
Stockholder take any of the actions referred to in clause (i) or (ii) of the
previous sentence, the Stockholder shall take such action promptly but in any
event within five days following the date of such request.
3.7 Required Participation in Sale of Class A Common Stock by the
Parent Companies. Notwithstanding any other provision of this Agreement to the
contrary, if the Parent Companies shall propose to sell (including by exchange,
in a business combination or otherwise) all or any portion of their shares of
Class A Common Stock in a bona fide arm's-length transaction, and if the
investment banking firm advising the Parent Companies on such sale advises the
Parent Companies to do so, the Parent Companies may require that the Stockholder
(a) exchange the Stockholder's shares of Common Stock for shares of Class C
Common Stock (if such exchange has not already been made) on a one-for-one
basis, (b) exchange the same percentage of the Stockholder's shares of Class C
Common Stock as the Parent Companies propose to sell of their shares in the
transaction (determined on the basis of the aggregate number of shares of Class
A Common Stock owned, and the aggregate number of such shares being sold, by the
Parent Companies) for shares of Class A Common Stock in accordance with
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the Exchange Rate, and (c) sell all the Class A Common Stock received in such
exchange for the same consideration per share, on the same terms and subject
to the same conditions in the same transaction. If stockholder approval of
the transaction is required and the Stockholder is entitled to vote thereon,
the Stockholder shall vote the Stockholder's shares in favor thereof. Parent
shall calculate the Exchange Rate and shall, immediately prior to, and
contingent upon, the consummation of the transaction exchange such shares of
Class C Common Stock for Class A Common Stock in accordance with the Exchange
Rate. If the Stockholder sells any shares pursuant to this Section 3.7, the
Stockholder shall pay and be responsible for the Stockholder's proportionate
share of the Expenses of Sale and the Sale Obligations.
3.8 Termination of Restrictions and Rights. Notwithstanding any
other provision of this Agreement to the contrary, but subject to the
restrictions of all applicable federal and state securities laws, including the
restrictions in this Agreement relating thereto, from and after the Release Date
any and all shares of Common Stock owned by the Stockholder (a) may be sold,
transferred, assigned, exchanged, pledged, encumbered or otherwise disposed of
(and the Stockholder may grant any option or right to purchase such shares or
any legal or beneficial interest therein, or may continue to hold such shares),
free of the restrictions contained in this Agreement and (b) shall no longer be
entitled to any of the rights contained in this Agreement. Without limiting the
generality of the foregoing, from and after the Release Date, the provisions of
Sections 3 and 4 hereof (other than this Section 3.8 and Sections 4.1(a), 4.1(b)
and 4.1(c) hereof) shall terminate and have no further force or effect.
4. Prohibited Activities.
4.1 Prohibition Against Certain Activities. The Stockholder agrees
that (a) the Stockholder will not disclose or furnish to any other Person or use
for the Stockholder's own or any other Person's account any confidential or
proprietary knowledge or information or any other information which is not a
matter of public knowledge and which was obtained during the Stockholder's
employment with, or other performance of services for, the Company or any
Affiliate thereof or any predecessor of any of the foregoing, no matter from
where or in what manner the Stockholder may have acquired such knowledge or
information, and the Stockholder shall retain all such knowledge and information
in trust for the benefit of the Company, its Affiliates and the successors and
assigns of any of them, (b) the Stockholder will not directly or indirectly
solicit for employment, including without limitation recommending to any Third
Party the solicitation for employment of, any employee of the Company or any
Affiliate of the Company, (c) the Stockholder will not publish any statement or
make any statement (under circumstances reasonably likely to become public or
that the Stockholder might reasonably expect to become public) critical of the
Company or any Affiliate of the Company, or in any way adversely affecting or
otherwise maligning the business or
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reputation of any of the foregoing entities, and (d) the Stockholder will not
breach the provisions of Section 3.1 hereof (any activity prohibited by
clause (a), (b), (c) or (d) of this Section 4.1 being referred to as a
"Prohibited Activity").
4.2 Right to Purchase Shares. The Stockholder understands and
agrees that (a) if the Stockholder engages in any Prohibited Activity, or (b)
if, at any time, the Stockholder engages in any Competitive Activity, or (c)
if, at any time, the Stockholder is convicted of a crime against the Company
or any of its Affiliates, then, in addition to any other rights and remedies
available to the Company and its Affiliates, Parent shall be entitled, at its
option, exercisable by written notice (the "Repurchase Notice") to the
Stockholder, to purchase all of the shares of Common Stock then held by the
Stockholder.
4.3 Purchase Price; Closing. Upon receipt of the Repurchase Notice,
the Stockholder shall exchange all of the Stockholder's shares of Common Stock
for shares of Class C Common Stock (if such exchange has not already been made)
on a one-for-one basis. The purchase price per share of the shares of Class C
Common Stock purchased pursuant to this Article 4 shall be equal to the lesser
of (a) $519,999.17 (adjusted to reflect any Capital Transaction of the Company
effected after the date hereof and prior to the date of the exchange of the
Stockholder's Common Stock for Class C Common Stock, and further adjusted to
reflect any Capital Transaction of Parent effected after the date of such
exchange and prior to the date of the Repurchase Notice) and (b) the Book Value
Per Share. The closing of such purchase shall take place at the principal office
of Parent 10 days following the date of the Repurchase Notice, except that if
Parent is prohibited from repurchasing any shares of Common Stock pursuant to
this Article 4 by any contractual obligation of the Company or any of its
Affiliates or by applicable law, the closing of such purchase shall take place
on the first practicable date on which Parent is permitted to purchase such
shares. At such closing, the Stockholder shall sell, convey, transfer, assign
and deliver to Parent all right, title and interest in and to the shares of
Class C Common Stock being purchased by Parent, which shall constitute (and, at
the closing, the Stockholder shall certify the same to Parent in writing) good
and unencumbered title to such shares, free and clear of all liens, security
interests, encumbrances and adverse claims of any kind and nature (other than
those in favor of the Company and the Parent Companies pursuant to this
Agreement), and shall deliver to Parent the certificates representing the shares
duly endorsed for transfer, or accompanied by appropriate stock transfer powers
duly executed, and with all necessary transfer tax stamps affixed thereto at the
expense of the Stockholder, and Parent shall deliver to the Stockholder, in full
payment of the purchase price payable pursuant to this Section 4.3 for the
shares of Common Stock purchased, a check payable to the order of the
Stockholder in the amount of the aggregate purchase price for the shares
purchased. Notwithstanding anything herein to the contrary, from and after the
date of the Repurchase Notice, the Stockholder shall not have any rights
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with respect to any shares of Class C Common Stock which the Stockholder is
required to sell to Parent pursuant to this Section 4 (including any rights
pursuant to Section 3.2, 3.3, 3.5 or 3.6 hereof), except to receive the
purchase price therefor.
4.4 Transaction Proceeds. Notwithstanding anything to the
contrary set forth in Section 3.2, 3.3, 3.4, 3.5, 3.6 or 3.7 hereof, if at
the time of a Transaction in which the Stockholder is participating, Parent
is entitled to purchase the Stockholder's shares of Common Stock pursuant to
this Article 4, and if the purchase price per share for a purchase pursuant
to this Article 4 would be less than the proceeds per share to the
Stockholder from such Transaction, then the Stockholder shall be entitled to
receive only the aggregate purchase price payable under this Article 4, with
the balance of the proceeds of sale in the Transaction being remitted to the
other stockholders of the Company or Parent, as the case may be,
participating in such Transaction pro rata in accordance with their
respective participation in such Transaction.
5. Stock Certificate Legend and Investment Representations; Other
Representations.
5.1 Legend. All certificates representing shares of Common Stock
acquired hereunder or hereafter by the Stockholder (unless registered under the
Act) shall bear the following legend:
"The shares represented by this certificate have not been
registered under the Securities Act of 1933, as amended, or any
securities regulatory authority of any state, and may not be sold,
transferred, assigned, exchanged, pledged, encumbered or otherwise
disposed of except in compliance with all applicable securities laws
and except in accordance with the provisions of a Stockholder's
Agreement with the Company, a copy of which is available for
inspection at the offices of the Company."
5.2 Representations of the Stockholder. The Stockholder represents
and warrants that: (a) the Stockholder understands that (i) the shares of Common
Stock have not been and will not be registered under the Act; (ii) the shares of
Common Stock cannot be sold, transferred, assigned, exchanged, pledged,
encumbered or otherwise disposed of unless they are registered under the Act or
an exemption from registration is available; and (iii) the ownership of Common
Stock hereunder does not entitle the Stockholder to participate in any other
equity program of the Company, whether now existing or hereafter established;
(b) the Stockholder has acquired the shares of Common Stock for investment for
the Stockholder's own account and not with a view to the distribution thereof;
(c) the Stockholder will not, directly or indirectly, sell, transfer, assign,
exchange, pledge, encumber or otherwise dispose of any shares of Common
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Stock except in accordance with this Agreement; (d) the Stockholder has, or
the Stockholder together with the Stockholder's advisers, if any, have, such
knowledge and experience in financial and business matters that the
Stockholder is, or the Stockholder together with the Stockholder's advisers,
if any, are, and will be capable of evaluating the merits and risks relating
to owning shares of Common Stock; (e) the Stockholder is able to bear the
economic risk of a total loss of the Stockholder's investment in the Company;
and (f) the Stockholder has adequate means of providing for the Stockholder's
current needs and foreseeable personal contingencies and has no need for the
Stockholder's investment in the Common Stock to be liquid.
6. Miscellaneous.
6.1 Distributions. In the event of any dividend, distribution or
exchange paid or made in respect of the Common Stock consisting of Affiliate
Securities, (a) the restrictions and rights with respect to the Common Stock
that are contained in this Agreement shall be applicable to the Affiliate
Securities without further action of the parties (with the references to Common
Stock being deemed references to the Affiliate Securities and the references to
the Company being deemed references to the Affiliate), and (b) as a condition
precedent to the receipt of the Affiliate Securities by the Stockholder, the
Stockholder shall enter into a stockholder's agreement containing substantially
equivalent terms with respect to the Affiliate Securities (but reflecting the
economics of the dividend, distribution or exchange and the capitalization of
the Affiliate) as are contained herein. The Board of Directors of the Company,
in good faith, shall determine such terms and its determination shall be final
and binding on the Stockholder.
6.2 Further Assurances. Each party hereto shall do and perform or
cause to be done and performed all further acts and things and shall execute and
deliver all other agreements, certificates, instruments, and documents as any
other party hereto reasonably may request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.
6.3 Governing Law. This Agreement and the rights and obligations of
the parties hereto shall be governed by, and construed and enforced in
accordance with, the laws of the State of New York, without giving effect to the
principles of conflicts of law thereof.
6.4 Specific Performance. The parties hereto acknowledge that there
will be no adequate remedy at law for a violation of any of the provisions of
this Agreement and that, in addition to any other remedies which may be
available, all of the provisions of this Agreement shall be specifically
enforceable in accordance with their respective terms.
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6.5 Invalidity of Provisions. The invalidity or unenforceability
of any provision of this Agreement in any jurisdiction shall not affect the
validity or enforceability of the remainder of this Agreement in that
jurisdiction or the validity or enforceability of this Agreement, including
that provision, in any other jurisdiction. If any provision of this Agreement
is held unlawful or unenforceable in any respect, such provision shall be
revised or applied in a manner that renders it lawful and enforceable to the
fullest extent possible.
6.6 Notice. All notices and other communications hereunder shall be
in writing and, unless otherwise provided herein, shall be deemed to have been
given when received by the party to whom such notice is to be given at its
address set forth below, or such other address for the party as shall be
specified by notice given pursuant hereto:
(a) If to the Company, to:
Yankee Candle Company, Inc.
c/o Forstmann Little & Co.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
with a copy to:
Fried, Frank, Harris, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
(b) If to the Stockholder, to the address set forth below
the Stockholder's signature, and if to the Legal
Representative, to such Person at the address of which
the Company is notified in accordance with this Section
6.6.
6.7 Binding Effect. This Agreement shall inure to the benefit of and
shall be binding upon the parties hereto and their respective heirs, legal
representatives, successors and assigns. In addition, each of the Parent
Companies shall be a third party beneficiary of this Agreement and shall be
entitled to enforce this Agreement.
6.8 Amendment and Modification. This Agreement may be amended,
modified or supplemented only by written agreement of the party against whom
enforcement of such amendment, modification or supplement is sought.
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6.9 Headings; Execution in Counterparts. The headings and captions
contained herein are for convenience only and shall not control or affect the
meaning or construction of any provision hereof. This Agreement may be executed
in any number of counterparts, each of which shall be deemed to be an original
and which together shall constitute one and the same instrument.
6.10 Entire Agreement. This Agreement constitutes the entire
agreement, and supersedes all prior agreements and understandings, oral and
written, between the parties hereto with respect to the subject matter hereof.
6.11 Withholding. The Company shall have the right to deduct from
any amount payable under this Agreement any taxes or other amounts required by
applicable law to be withheld. The Stockholder agrees to indemnify the Company
against any Federal, state and local withholding taxes for which the Company may
be liable in connection with the Stockholder's ownership or disposition of any
Common Stock.
6.12 No Right to Continued Employment. This Agreement shall not
confer upon the Stockholder any right with respect to continuance of employment
by the Company or any Affiliate thereof, nor shall it interfere in any way with
the right of the Company or any Affiliate thereof to terminate the Stockholder's
employment at any time.
6.13 Possession of Certificates; Power of Attorney.
(a) In order to provide for the safekeeping of the
certificates representing the shares of Common Stock held by the Stockholder and
to facilitate the enforcement of the terms and conditions hereof, (i) the
Company shall retain physical possession of all certificates representing shares
of Common Stock issued to the Stockholder, and (ii) concurrently with the
Stockholder's execution and delivery to the Company of this Agreement, the
Stockholder shall deliver to the Company an undated stock power, duly executed
in blank, for each such certificate. The Stockholder shall be relieved of any
obligation otherwise imposed by this Agreement to deliver certificates
representing shares of Common Stock if the same are in the custody of the
Company. After the Release Date, upon written request by the Stockholder
therefor, the Company shall deliver to the Stockholder any certificates in the
Company's custody representing the Stockholder's shares of Common Stock.
(b) The Stockholder hereby irrevocably appoints the Parent
Companies and each of them (individually and collectively, the "Representative")
the Stockholder's true and lawful agent and attorney-in-fact, with full powers
of substitution, to act in the Stockholder's name, place and stead, to do or
refrain from
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doing all such acts and things, and to execute and deliver all such
documents, as the Representative shall deem necessary or appropriate in
connection with a public offering of securities of the Company or Parent, or
the exchange of Common Stock for Class C Common Stock pursuant hereto, or a
sale pursuant to Section 3.2, 3.4, 3.5, 3.7 or 4.2 hereof, including, without
in any way limiting the generality of the foregoing, in the case of a sale
pursuant to Section 3.2, 3.4, 3.5 or 3.7 hereof, to execute and deliver on
behalf of the Stockholder a purchase and sale agreement and any other
agreements and documents that the Representative deems necessary in
connection with any such sale, and in the case of a public offering, to
execute and deliver on behalf of the Stockholder an underwriting agreement, a
"hold back" agreement, a custody agreement, and any other agreements and
documents that the Representative deems necessary in connection with any such
public offering, and in the case of any sale pursuant to Section 3.2, 3.4,
3.5 or 3.7 hereof and any public offering pursuant to Section 3.3(a) or
3.6(a) hereof, to receive on behalf of the Stockholder the proceeds of the
sale or public offering of the Stockholder's shares, to hold back from any
such proceeds any amount that the Representative deems necessary to reserve
against the Stockholder's share of any Expenses of Sale and Sale Obligations
and to pay such Expenses of Sale and Sale Obligations. The Stockholder hereby
ratifies and confirms all that the Representative shall do or cause to be
done by virtue of its appointment as the Stockholder's agent and
attorney-in-fact. In acting for the Stockholder pursuant to the appointment
set forth in this Section 6.13(b), the Representative shall not be
responsible to the Stockholder for any loss or damage the Stockholder may
suffer by reason of the performance by the Representative of its duties under
this Agreement, except for loss or damage arising from willful violation of
law or gross negligence by the Representative in the performance of its
duties hereunder. The appointment of the Representative shall be deemed
coupled with an interest and as such shall be irrevocable and shall survive
the death, incompetency, mental illness or insanity of the Stockholder, and
any person dealing with the Representative may conclusively and absolutely
rely, without inquiry, upon any act of the Representative as the act of the
Stockholder in all matters referred to in this Section 6.13(b).
6.14 Consent to Jurisdiction. Each party hereby irrevocably and
unconditionally consents to submit to the exclusive jurisdiction of the courts
of the State of New York and of the United States of America, in each case
located in the County of New York, for any Litigation (and agrees not to
commence any Litigation except in any such court), and further agrees that
service of process, summons, notice or document by U.S. registered mail to such
party's respective address set forth in Section 6.6 hereof shall be effective
service of process for any Litigation brought against such party in any such
court. Each party hereby irrevocably and unconditionally waives any objection to
the laying of venue of any Litigation in the courts of the State of New York or
of the United States of America, in each case located in the County of New York,
and hereby further irrevocably and unconditionally waives and agrees not to
plead or claim in any such court that any Litigation brought in any
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such court has been brought in an inconvenient forum.
6.15 Amendments to Parent Certificate of Incorporation. For as
long as the Stockholder owns any shares of Common Stock or Class C Common
Stock, Parent shall not amend or repeal, and shall not take any action in
furtherance of amending or repealing, Section A of Article Fourth of the
Parent Certificate of Incorporation in any manner that adversely affects the
rights of the Class C Common Stock without the Stockholder's prior written
consent. For purposes of this Section 4 only, the terms "Common Stock" and
"Class C Common Stock" shall mean, respectively, the Common Stock, par value
$0.01 per share, of the Company and the Class C Common Stock, par value $0.01
per share, of Parent, and such terms shall not include, for purposes of this
Section 4 only, securities issued in respect of, or in exchange for, the
Common Stock or Class C Common Stock.
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IN WITNESS WHEREOF, this Agreement has been signed by or on behalf
of each of the parties hereto, all as of the date first above written.
STOCKHOLDER YANKEE CANDLE COMPANY, INC.
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------- -----------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Address: ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ Title: Treasurer
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
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The undersigned hereby agree to be bound by the provisions of Sections 3.2
through 3.7 and Section 6.15 of the foregoing Agreement.
YANKEE CANDLE HOLDINGS CORP.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Vice President
The undersigned hereby agree to be bound by the provisions of Sections 3.5, 3.6,
3.7 of the foregoing Agreement.
FORSTMANN LITTLE & CO. EQUITY PARTNERSHIP-V,
L.P.
By: FLC XXX Partnership,
its general partner
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇,
a general partner
FORSTMANN LITTLE & CO. SUBORDINATED DEBT AND
EQUITY MANAGEMENT BUYOUT PARTNERSHIP-VI, L.P.
By: FLC XXIX Partnership,
its general partner
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇,
a general partner
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