Stock and Note Purchase Agreement - Footwear Acquisition Inc., Cre-8-Net Ventures LLC, Union Overseas Holdings Ltd. and Perseus Acquisition/Recapitalization Fund LLC
STOCK AND NOTE PURCHASE AGREEMENT
This STOCK AND NOTE PURCHASE AGREEMENT (this "Agreement") is entered into
as of April 5, 2001, by and among (i) Footwear Acquisition, Inc., a Delaware
corporation (the "Company"), and (ii) the Persons listed on Schedule A hereto
(each a "Purchaser" and collectively, the "Purchasers"). Certain capitalized
terms used in this Agreement are defined in Exhibit A attached hereto.
RECITAL
The Company desires to raise capital to finance its (i) acquisition of
certain assets of Converse, Inc. (the "Acquisition") pursuant to the terms of a
certain Asset Purchase Agreement by and between the Company and Converse, Inc.
dated April [ ], 2001 (the "APA") and (ii) ongoing business operations, and in
furtherance thereof desires to issue and sell to the Purchasers the Securities
(as defined below), and the Purchasers are willing to acquire the Securities,
all on the terms and subject to the conditions set forth in this Agreement.
AGREEMENT
In consideration of the mutual promises, covenants and conditions
hereinafter set forth, the parties hereto mutually agree as follows:
1. Authorization and Sale of the Preferred Shares, Common Shares and
Senior Notes.
1.1. Authorization. The Company has authorized the issuance and sale
pursuant to the terms and conditions hereof of (i) 563,160 shares of its Series
A Preferred Stock (the "Preferred Stock"), having the rights, restrictions,
privileges and preferences set forth in the Certificate of Designations attached
hereto as Exhibit B (the "Certificate of Designations"), (ii) 8,691,925 shares
of its Common Stock (the "Common Stock") and (iii) Senior Notes in the amounts
set forth on Schedule A (the "Senior Notes", and together with the Preferred
Stock and Common Stock, the "Securities"), substantially in accordance with the
form of Note set forth as Exhibit C.
1.2. Issuance and Sale. On the terms and subject to the conditions
hereof, at the Closing, the Company will issue and sell to each Purchaser, and
each Purchaser will purchase from the Company, the Securities specified adjacent
to such Purchaser's name on Schedule A hereto for the Purchase Price (as defined
in Section 2). The Company's agreement with each of the Purchasers hereunder is
a separate agreement and the sale of Securities to each of the Purchasers is a
separate sale.
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1.3. Stockholder Rights. The Purchasers shall, upon execution
thereof by each Purchaser and the Company, have the rights specified in the
Investors Rights Agreement attached as Exhibit D hereto.
2. Closing.
2.1. Closing. The sale and purchase of the Securities under this
Agreement shall take place at a closing (a "Closing") to be held at the offices
of Arnold & Porter, 399 Park Avenue, New York, New York 10022, or at such other
location or by such other means (i.e. facsimile) as the Company and the
Purchasers acquiring Securities shall agree. The Closing shall be held at 10
a.m. on the Closing Date as defined in the APA (the "Closing Date").
2.2. Deliveries. At the Closing, the Company will deliver the
appropriate Purchaser (i) certificates registered in the Purchasers' respective
names representing the aggregate number of shares of Common Stock and Preferred
Stock, and (ii) Senior Notes made in favor of the Purchaser purchasing such
Note, in each case in the amounts set forth on Schedule A. Two days prior to the
Closing, each Purchaser acquiring Securities at Closing will deliver to the an
independent escrow agent (the "Agent") for each of the Purchasers, acting
pursuant to the terms of an escrow agreement reasonably acceptable to the
Purchasers, the purchase price set forth on opposite such Purchaser's name on
Schedule A hereto (the "Purchase Price") for such Securities by wire transfer
thereof to the account designated by the Agent. There shall be credited against
such Purchaser's Purchase Price any amount previously paid by such Purchaser
towards a deposit on the purchase price under the APA, as reflected on Schedule
A. Notwithstanding the foregoing, certain purchasers, as identified on Schedule
A, may pay for the purchase of Securities by executing a note in favor of the
Company, in form and substance agreed to by the other Purchasers and the Company
prior to Closing, which such purchaser shall deliver at Closing. Such note shall
be secured by a pledge of the Securities acquired thereby. The Agent shall hold
the Purchase Price in a segregated account in escrow to be released in
accordance with Section 2.4, below. The parties shall also deliver all documents
required to be delivered at such Closing pursuant to Section 2.3 hereof.
2.3. Conditions to Closing.
(a) Conditions to Obligations of the Purchasers. The
obligations of each Purchaser to purchase Securities at Closing are subject to
the fulfillment on or prior to the Closing Date of the following conditions, any
of which may be waived in writing by such Purchaser:
(i) Representations and Warranties Correct; Performance
of Obligations. The representations and warranties made by the Company in
Section 3 hereof shall be true and correct in all material respects on such
Closing Date with the same force and effect as if they had been made on and as
of such date, and the Company shall have performed all obligations, covenants
and agreements herein required to be performed by it on or prior to the Closing.
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(ii) Consents and Waivers. The Company shall have
obtained any and all consents (including all governmental or regulatory
consents, approvals or authorizations required in connection with the valid
execution, delivery and performance of this Agreement and the Related
Agreements), permits and waivers necessary or appropriate for consummation of
the transactions contemplated by this Agreement or any Related Agreement.
(iii) Related Agreements. Each of the Related Agreements
shall have been executed and delivered by the parties thereto other than such
Purchaser.
(iv) Certificate of Designations. The Certificate of
Designations shall have been filed with the Delaware Secretary of State and a
certified copy thereof shall have been delivered to each Purchaser.
(v) Compliance Certificate. The Company shall have
delivered to each Purchaser a certificate, executed by the President of the
Company, dated as of the Closing Date, certifying the fulfillment of the
conditions specified in subsections (a)(i) and (ii) of this Section 2.3.
(vi) Secretary's Certificate. The Company shall have
delivered to each Purchaser a certificate, executed by the Secretary of the
Company, dated as of the Closing Date, certifying the authenticity of attached
copies of the Company's restated certificate of incorporation, Certificate of
Designations, Bylaws and resolutions of the Board of the Company approving the
transactions contemplated hereby.
(vii) Asset Purchase Agreement. The APA shall (i) be in
full force and effect, (ii) be substantially in the form attached hereto as
Exhibit E, and (iii) shall have been approved by the Bankruptcy Court (as
defined in the APA) and the parties thereto shall be closing the Acquisition
thereunder, it being the intent of the Purchasers and the Company that the
transactions contemplated herein occur simultaneously with the consummation of
the Acquisition under the APA.
(viii) Certificate of Good Standing. The Company shall
have delivered a long-form certificate of good standing from the Secretary of
State of the State of Delaware and from each jurisdiction in which the Company
is qualified to do business.
(ix) Election of Directors. The number of directors
constituting the Board shall have been fixed at seven and five of the directors
shall have been elected in accordance with Sections 1.01(a)(i) through (iii) of
Investors Rights Agreement.
(x) Other Purchasers. All of the Purchasers set forth on
Schedule A shall have duly executed and delivered this Agreement.
(xi) Strategic Investor. The Strategic Investor shall
have entered into appropriate Agreements joining it as a party to this Agreement
and to the
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Investors Rights Agreement in connection with its purchase of 5% of the Common
Stock of the Company as of the Closing Date hereunder. The terms of the
Trademark Agreement and the Cooperative Marketing Agreement between the Company
and the Strategic Investor shall be in full force and effect and the Strategic
Investor shall have made payments to Footwear as required therein in connection
with the Acquisition. The closing under the Trademark Agreement shall occur
substantially simultaneously with the Closing hereunder.
(xii) Japanese Sourcing Agreement. The Agreement dated
April 4, 2001 between the Strategic Investor and Footwear relating to Japanese
sourcing rights shall be in full force and effect.
(xiii) Opinion of Counsel. The Purchasers shall have
received an opinion of counsel to the Company as to (i) due organization,
existence and good standing (in Delaware), ( (ii) corporate power and authority
to enter into this Agreement, the Investor Rights Agreement , the Note and the
APA, (iii) due authorization to enter into this Agreement, the Investor Rights
Agreement, the Note and the APA, (iv) enforceability as to the Company of this
Agreement, the Investor Rights Agreement, the Note and the APA, (subject to
customary exceptions) (v) no conflict with laws and agreements to which the
Company is a party and (vi) authorized capital stock of the Company. Such
opinion may expressly rely, where appropriate, upon certificates of officers of
the Company and shall be subject to standard exceptions.
(xiii) Security Agreement. In connection with the Senior
Notes, the Company shall have delivered and executed a security agreement (and
related UCC financing statements) substantially in the form attached hereto as
Exhibit H, with such modifications as may in good faith be required to implement
the purpose and intent of the parties thereto, to be held in escrow on behalf of
the holders of the Senior Notes pending the Trigger Date specified (and as
defined) in 9(h) of the Senior Notes. On the Trigger Date, the Purchasers of the
Senior Notes shall receive an opinion from counsel to the Company, in customary
form and with standard exceptions, in form reasonably acceptable to the
Purchasers of the Senior Notes with respect thereto. Such opinion may expressly
rely, where appropriate, upon certificates of officers of the Company.
(b) Conditions to Obligations of the Company. The Company's
obligation to issue and sell the Securities at the Closing is subject to the
fulfillment on or prior to such Closing Date of the following conditions, any of
which may be waived by the Company:
(i) Representations and Warranties. The representations
and warranties made by each Purchaser in Section 4 hereof shall have been true
and correct when made, and shall be true and correct on such Closing Date with
the same force and effect as if they had been made on and as of such date.
(ii) Related Agreements. Each of the Related Agreements
shall have been executed and delivered by the parties thereto other than the
Company.
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2.4. Release from Escrow
(a) Upon the closing under the APA, the parties shall direct
the Agent to release (i) the purchase price for the Acquisition to the Seller
(as defined in the APA) and (ii) the balance of the Purchase Price for purchase
of the Securities to the Company.
(b) If the closing of the Acquisition under the APA fails to
occur by June 30, 2001, the Agent shall return the Purchase Price to the
Purchasers.
2.5. Default by Certain Purchasers. In the event of a default by
either UOHL (as defined on Schedule A) or Perseus (as defined on Schedule A) of
its obligation to purchase the Securities that such Purchaser is required to
purchase hereunder, the other Purchaser shall have the right, but not the
obligation, to purchase the Securities from the Company under the same terms as
such securities would have been purchased by the defaulting Purchaser, provided
that if the non-defaulting Purchaser elects to purchase a defaulting Purchaser's
Securities, it must purchase all such Securities.
Notwithstanding the foregoing, the defaulting Purchaser shall not be
absolved from its obligations hereunder and shall remain fully liable to the
Company and to each of the other Purchasers for any and all liabilities arising
out of or relating to such default. No third party shall have any rights under
this provision or to the enforcement thereof.
3. Representations and Warranties Relating to the Company. Except as
otherwise set forth in the Disclosure Schedule attached hereto (the "Company
Disclosure Schedule"), the Company represents and warrants to the Purchasers, as
of the Closing Date, as set forth below.
3.1. Organization and Good Standing. The Company is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware. The Company has all requisite corporate power and authority
to carry on its business as now conducted and as it is proposed to be conducted,
and is duly qualified or licensed to do business and in good standing in each
jurisdiction in which the nature of its business or properties makes such
qualification or licensing necessary, except where the failure to so qualify or
be licensed would not have a Material Adverse Effect.
3.2. Capital Structure. As of the date hereof, the authorized
capital stock of the Company consists, or as of the Closing Date will consist
of, of the following shares, and all of the issued and outstanding shares as
hereinafter set forth have been, or upon the Closing, will be, duly authorized
and validly issued, and are, or upon the Closing will be, fully paid and
nonassessable:
(a) Preferred Stock. A total of 10 million authorized shares
of Preferred Stock, $0.01 par value, consisting of 900,000 shares designated as
Series A Preferred Stock, none of which are issued and outstanding prior to the
consummation of the transactions contemplated hereby.
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(b) Common Stock. A total of 20 million authorized shares of
Common Stock, par value $0.01, none of which are issued and outstanding prior to
the consummation of the transactions contemplated hereby.
(c) Option Plan. The Company has reserved, or intends to
reserve, 1,000,000 shares of Common Stock for issuance to officers, directors,
employees and consultants of the Company pursuant to its 2001 Long Term
Incentive Plan duly adopted, or to be adopted, by the Board of Directors and
approved by the stockholders (the "Stock Option Plan"). Of such reserved shares
of Common Stock, no shares have been issued pursuant to restricted stock
purchase agreements, no options to purchase shares have been granted or are
currently outstanding, and all such shares of Common Stock remain available for
issuance to officers, directors, employees and consultants pursuant to the Stock
Option Plan in the discretion of the Company's Board of Directors and subject
only to the terms of the Stock Option Plan, which terms shall provide for 25%
vesting on the first anniversary of the grant date and monthly vesting
thereafter over the next 36 months.
(d) Options, Warrants, Reserved Shares, Treasury Stock. Except
as set forth in the Related Agreements, there are no outstanding options,
warrants, rights (including conversion or preemptive rights) or agreements for
the purchase or acquisition from the Company of any shares of the Company's
capital stock or any securities convertible into or ultimately exchangeable or
exercisable for any shares of the Company's capital stock, nor is the Company
obligated in any manner to issue any shares of its capital stock or other
securities. None of the Company's outstanding capital stock, or stock issuable
upon exercise or exchange of any outstanding options, warrants or rights, is
subject to any preemptive rights, rights of first refusal or other rights to
purchase such stock (whether in favor of the Company or any other person),
pursuant to any agreement or commitment of the Company. The Company holds no
shares of its capital stock in its treasury.
3.3. Power, Authorization and Validity. The Company has the
corporate power, legal capacity and corporate authority to enter into and
perform its obligations under this Agreement and each of the Related Agreements
to which it is a party. The execution, delivery and performance by the Company
of this Agreement and each of the Related Agreements to which it is a party have
been duly and validly approved and authorized by all necessary corporate action
on its part. No authorization, consent, or approval, governmental or otherwise,
is necessary to enable the Company to enter into this Agreement or any Related
Agreement to which it is a party and to perform its obligations hereunder or
thereunder. This Agreement is, and each of the Related Agreements to which it is
a party when executed and delivered by the Company will be, the valid and
binding obligations of the Company, enforceable in accordance with their
respective terms, except (i) as limited by applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance, and other laws of general
application affecting enforcement of creditors' rights generally, as limited by
laws relating to the availability of specific performance, injunctive relief, or
other equitable remedies, or (ii) to the extent the indemnification provisions
contained in the Investors Rights Agreement may be limited by applicable federal
or state securities laws.
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3.4. No Violation of Existing Agreements. Neither the execution and
delivery of this Agreement or any Related Agreement to which it is a party nor
the consummation of the transactions or performance of the Company's obligations
contemplated hereby or thereby will conflict with, result in a material breach
or violation of, or cause a default under any provision of the Company's
Certificate of Incorporation or Bylaws, each as is currently in effect, any
instrument, contract or agreement that is material to the business of the
Company or any judgment, writ, decree, order, law, statute, ordinance, rule or
regulation applicable to the Company.
3.5. Representations Regarding the Securities. All corporate action
has been taken on the part of the Company, its officers, directors and
shareholders necessary for the authorization and creation, issuance and delivery
of the Securities. The Preferred Stock and Common Stock, when issued in
compliance with the provisions of this Agreement and, in the case of the
Preferred Stock, the Certificate of Designations, will be validly issued, fully
paid and nonassessable and, assuming the accuracy of each of the Purchasers'
representations in Section 4 of this Agreement, issued in compliance with all
applicable federal and state securities laws. None of the Securities issued
pursuant to this Agreement are subject to any preemptive rights, rights of first
refusal, or other rights to purchase such stock (whether in favor of the Company
or any other person), pursuant to any agreement or commitment of the Company.
3.6. No Subsidiaries. The Company does not own of record or
beneficially any capital stock or equity interest or investment in any
corporation, association, partnership, limited partnership, limited liability
company, trust or other entity.
3.7. Absence of Certain Changes and Events. Since the date of its
formation, the Company has not:
(a) suffered any Material Adverse Change;
(b) suffered any damage, destruction or loss, whether or not
covered by insurance, in an amount in excess of $50,000;
(c) declared, set aside or paid any dividend or made any other
distribution on or in respect of the shares of capital stock of the Company or
declared or agreed to any direct or indirect redemption, retirement, purchase or
other acquisition by the Company of such shares;
(d) issued any shares of capital stock of the Company or any
warrants, rights or options or entered into any commitment relating to the
shares of capital stock of the Company;
(e) incurred any material liabilities, contingent or
otherwise, either matured or unmatured, except for those that have been incurred
by the Company in the ordinary course of business and for its obligations under
the APA;
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(f) permitted or allowed any of its material property or
assets to be subjected to any mortgage, deed of trust, pledge, lien, security
interest or other encumbrance of any kind;
(g) made any capital expenditure or commitment for additions
to property, plant or equipment individually in excess of $500,000, or in the
aggregate, in excess of $1,000,000;
(h) paid, loaned or advanced any amount to, or sold,
transferred or leased any properties or assets to, or entered into any agreement
or arrangement with any of its affiliates within the meaning of the rules and
regulations promulgated under the Securities Act ("Affiliates"), officers,
directors or shareholders;
(i) made any amendment to or terminated any agreement that, if
not so amended or terminated, would have a Material Adverse Effect;
3.8. Registration Rights. Except as provided in the Investor Rights
Agreement, the Company has not granted or agreed to grant to any person or
entity any rights (including piggyback registration rights) to have any
securities of the Company registered with the U.S. Securities and Exchange
Commission ("SEC") or any other governmental authority.
3.9. Compliance With Corporate Instruments and Laws. The Company is
not in violation of any provisions of its Certificate of Incorporation or Bylaws
as currently in effect. The Company is in compliance in all material respects
with all applicable laws, statutes, rules, and regulations of all governmental
and regulatory authorities which are applicable. The Company has or will have,
as of the Closing Date, all necessary permits, licenses and other authorizations
required to conduct its business as conducted and or proposed to be conducted,
except where the failure to obtain such permits, licenses and authorizations
would not have a Material Adverse Effect.
3.10. Litigation. There is no suit, action, proceeding, claim or
investigation pending or, to the Company's knowledge, currently threatened
against the Company before any court or administrative agency which could have a
Material Adverse Effect or which questions or challenges the validity of this
Agreement or any Related Agreement and the consummation of the transactions
contemplated hereby and thereby. There is no judgment, decree, injunction, rule
or order of any court, governmental department, commission, agency,
instrumentality or arbitrator outstanding against the Company.
3.11. Corporate Documents. The Company has furnished or made
available to the Purchasers or their counsel for their examination true and
complete copies of the following documents: (i) copies of its Certificate of
Incorporation and Bylaws, each as currently in effect and (ii) minute books
containing required records setting forth proceedings, consents, actions and
meetings of its shareholders, board of directors and any committees thereof. The
corporate minute books, stock certificate books, stock registers and other
corporate records of the Company are complete and
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accurate in all material respects, and the signatures appearing on all documents
contained therein are the true signatures of the persons purporting to have
signed the same.
3.12. Disclosure. The Company has fully provided the Purchasers with
all the information that the Purchasers have requested for deciding whether to
acquire the Securities and all information that the Company believes is
reasonably necessary to enable the Purchasers to make such a decision. To the
Company's knowledge, no representation or warranty of the Company contained in
this Agreement and the exhibits attached hereto, any certificate furnished or to
be furnished to Purchasers at the Closing, contains any untrue statement of a
material fact or omits to state a material fact necessary in order to make the
statements contained herein or therein not misleading in light of the
circumstances under which they were made.
3.13. Securities Act. Subject to the accuracy of the Purchasers'
representations in Section 4 hereof, the offer, sale and issuance of the
Securities in conformity with the terms of this Agreement constitute or will
constitute transactions exempt from the registration requirements of Section 5
of the Securities Act and the qualification or registration requirements of any
applicable state securities laws as such laws exist on the date hereof.
3.14. Brokers. Other than as provided for in Section 7.8 below,
neither the Company nor, to the Company's knowledge, any Company shareholder is
obligated for the payment of fees or expenses of any broker or finder in
connection with the origin, negotiation or execution of this Agreement or any
Related Agreement or in connection with any transaction contemplated hereby or
thereby.
3.15. Acquisition. The Company has executed and delivered the APA,
and such execution and delivery has been duly and validly approved and
authorized by all necessary corporate action on its part. Except for such
authorizations, consents, or approvals, governmental or otherwise ("Consents")
that the Company shall have obtained before the Closing Date, there are no
Consents necessary for the Company to enter into the APA and to perform its
obligations thereunder, except where the failure to obtain such Consents would
not have a Material Adverse Effect. The APA is a valid and binding obligation of
the Company, enforceable in accordance with its terms, except as limited by
applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance, and other laws of general application affecting enforcement of
creditors' rights generally, as limited by laws relating to the availability of
specific performance, injunctive relief, or other equitable remedies. The
Company has delivered to the Purchasers an executed copy of the APA, in final
form.
3.16. Use of Proceeds. The Company will use the Purchase Price paid
for the Securities pursuant to this Agreement to pay the purchase price for the
assets purchased pursuant to the APA and for operating capital, fees and
expenses.
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4. Representations and Warranties of Purchasers and Restrictions on
Transfer Imposed by the Securities Act and Applicable State Securities Laws.
4.1. Representations and Warranties by Each Purchaser. Each
Purchaser, severally and not jointly, represents and warrants to the Company as
follows:
(a) The Securities are being or will be acquired for such
Purchaser's own account, for investment and not with a view to, or for resale in
connection with, any distribution or public offering thereof within the meaning
of the Securities Act or applicable state securities laws.
(b) Such Purchaser understands that (i) the Securities have
not been registered under the Securities Act by reason of their issuance in a
transaction exempt from the registration and prospectus delivery requirements of
the Securities Act pursuant to Section 4(2) thereof and have not been qualified
under any state securities laws on the grounds that the offering and sale of
securities contemplated by this Agreement are exempt from registration
thereunder, and (ii) the Company's reliance on such exemptions is predicated on
such Purchaser's representations set forth herein. Such Purchaser understands
that the resale of the Securities may be restricted indefinitely, unless a
subsequent disposition thereof is registered under the Securities Act and
registered under any state securities law or is exempt from such registration.
(c) Such Purchaser is an "Accredited Investor" as that term is
defined in Rule 501 of Regulation D promulgated under the Securities Act. Such
Purchaser is able to bear the economic risk of the purchase of the Securities
pursuant to the terms of this Agreement, including a complete loss of such
Purchaser's investment in the Securities.
(d) Such Purchaser has the full right, power and authority to
enter into and perform such Purchaser's obligations under this Agreement and
each Related Agreement to which it is a party, and this Agreement and each
Related Agreement to which it is a party constitute valid and binding
obligations of such Purchaser enforceable in accordance with their terms.
(e) No consent, approval or authorization of or designation,
declaration or filing with any Governmental Body on the part of such Purchaser
is required in connection with the valid execution and delivery of this
Agreement or any Related Agreement to which it is a party, except to the extent
any local governmental authority requires such declaration under state
"Blue-Sky" laws, which shall be filed, if necessary.
4.2. Legend. Each certificate representing the Securities may be
endorsed with the following legends:
(a) THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND
ARE "RESTRICTED SECURITIES" AS DEFINED IN RULE 144 PROMULGATED UNDER THE ACT.
THE
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SECURITIES MAY NOT BE SOLD OR OFFERED FOR SALE OR OTHERWISE DISTRIBUTED EXCEPT
(I) IN CONJUNCTION WITH AN EFFECTIVE REGISTRATION STATEMENT FOR THE SHARES UNDER
THE ACT, OR (II) IN COMPLIANCE WITH RULE 144 OR (III) OTHERWISE PURSUANT TO AN
EXEMPTION FROM THE REGISTRATION REQUIREMENTS UNDER THE ACT.
(b) Any other legends required by applicable securities laws
and/or by the Investor Rights Agreement.
The Company may instruct its transfer agent, if any, not to register the
transfer of the Securities, unless the conditions specified in the foregoing
legends are satisfied.
4.3. Removal of Legend and Transfer Restrictions. Any legend
endorsed on a certificate pursuant to Section 4.2(a) and the stop transfer
instructions with respect to such Securities shall be removed and the Company
shall issue a certificate without such legend to the holder thereof (1) if such
Securities are registered under the Securities Act and a prospectus meeting the
requirements of Section 10 of the Securities Act is available, (2) if such
legend may be properly removed under the terms of Rule 144 promulgated under the
Securities Act, or (3) if such holder provides the Company with an opinion of
counsel for such holder, reasonably satisfactory to legal counsel for the
Company, to the effect that a sale, transfer or assignment of such Securities
may be made without registration.
4.4. Disclosure of Information; Economic Risk. The Purchaser has had
an opportunity to discuss the Company's business, management, financial affairs
and the terms and conditions of the offering of the Securities with the
Company's management. The Purchaser has also had the opportunity to ask
questions of and receive answers from, the Company and its management regarding
the terms and conditions of this investment. The Purchaser has substantial
experience in evaluating and investing in private placement transactions of
securities in companies similar to the Company so that it is capable of
evaluating the merits and risks of its investment in the Company and has the
capacity to protect its own interests, and can bear the risk of loss of its
entire investment.
4.5. No Public Market. The Purchaser understands that no public
market now exists for any of the Securities, and that the Company has made no
assurances that a public market will ever exist for such securities.
4.6. Foreign Investors. If the Purchaser is not a United States
person (as defined by Section 7701(a)(30) of the Internal Revenue Code of 1986,
as amended), such Purchaser hereby represents that it has satisfied itself as to
the full observance of the laws of its jurisdiction in connection with any
invitation to purchase the Securities or any use of this Agreement, including
(i) the legal requirements within its jurisdiction for the purchase of the
Securities, (ii) any foreign exchange restrictions applicable to such purchase,
(iii) any governmental or other consents that may need to be obtained, and (iv)
the income tax and other tax consequences, if any, that may be relevant to the
purchase, holding, redemption, sale, or transfer of the Securities. Such
Purchaser's subscription
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and payment for and continued beneficial ownership of the Securities, will not
violate any applicable securities or other laws of the Purchaser's jurisdiction.
5. Miscellaneous.
5.1. Waivers and Amendments. Any term of this Agreement may be
amended or waived only with the written consent of the Company and the
Purchasers of the Common Stock issued. Any amendment or waiver effected in
accordance with this Section 5.1 shall be binding upon the Purchasers and each
transferee of the Securities, each future holder of all such securities, and the
Company.
5.2. Governing Law. This Agreement shall be governed by the laws of
the State of New York.
5.3. Survival. The representations and warranties made herein shall
survive until eighteen months after the Closing Date.
5.4. Successors and Assigns. Except as otherwise expressly provided
herein and subject to the Related Agreements and applicable law, the provisions
hereof shall inure to the benefit of, and be binding upon, the successors,
assigns, heirs, executors and administrators of the parties hereto.
5.5. Entire Agreement. This Agreement, the Related Agreements and
other exhibits to this Agreement and the other documents delivered pursuant
hereto constitute the full and entire understanding and agreement between the
parties with regard to the subjects hereof and thereof.
5.6. Notices, etc. All notices, requests and other communications
hereunder shall be in writing and shall be deemed to have been duly given at the
time of receipt if delivered by hand or by facsimile transmission or five
Business Days after being mailed, registered or certified mail, return receipt
requested, with postage prepaid, to the address or facsimile number (as the case
may be) listed for each such party below such party's signature page hereto or,
if any party shall have designated a different address or facsimile number by
notice to the other parties given as provided above, then to the last address or
facsimile number so designated.
5.7. Separability. In case any provision of this Agreement shall be
declared invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.
5.8. Expenses. The Company shall be responsible for the fees and
expenses of the Company (legal, accounting, or otherwise). If the transactions
contemplated hereby and in the APA are consummated, the Company shall reimburse
the Purchasers, as described on Schedule G, for their actual and reasonable
fees, costs and expenses (legal, accounting or otherwise) in connection with
this transaction, any bid made to acquire the assets of Converse, Inc., and the
negotiation and drafting of the APA, in each case as described on Exhibit G.
Payment of such amount shall be conditioned upon the provision to the Company by
such Purchaser of a statement setting forth in
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reasonable detail such fees and expenses. Notwithstanding the foregoing, Union
Overseas Holding Limited shall not be entitled to recover any such fees and
expenses in excess of $750,000.
5.9. Titles and Subtitles. The titles of the paragraphs and
subparagraphs of this Agreement are for convenience of reference only and are
not to be considered in construing this Agreement.
5.10. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument. This Agreement, the agreements referred to
herein, and each other agreement or instrument entered into in connection
herewith or therewith or contemplated hereby or thereby, and any amendments
hereto or thereto, to the extent signed and delivered by means of a facsimile
machine, shall be treated in all manners and respects as an original agreement
or instrument and shall be considered to have the same binding legal effect as
if it were the original signed version thereof delivered in person. At the
request of any party hereto or to any such agreement or instrument, each other
party hereto or thereto shall re-execute original forms thereof and deliver them
to all other parties. No party hereto or to any such agreement or instrument
shall raise the use of a facsimile machine to deliver a signature or the fact
that any signature or agreement or instrument was transmitted or communicated
through the use of a facsimile machine as a defense to the formation or
enforceability of a contract and each such party forever waives any such
defense.
5.11. Publicity. None of the parties to this Agreement, nor any of
their affiliates, shall issue any press release or otherwise make any public
announcement or disclosure with respect to this Agreement, any of the Related
Agreements or any of the transactions contemplated hereby or thereby without the
prior written consent of the Company, unless such disclosure is required by
applicable law or regulation.
5.12. No Strict Construction. The parties hereto have participated
jointly in the negotiation and drafting of this Agreement. In the event an
ambiguity or question of intent or interpretation arises, this Agreement shall
be construed as if drafted jointly by the parties hereto, and no presumption or
burden of proof shall arise favoring or disfavoring any party by virtue of the
authorship of any of the provisions of this Agreement.
5.13. Confidentiality. The Purchasers agree that any information
obtained by the Purchasers pursuant to the Investor Rights Agreement, or
otherwise in connection with the Purchasers' performance of due diligence in
connection with the transactions contemplated under this Agreement, which is
proprietary to the Company or otherwise confidential, or any written information
that is or was provided to a Purchaser and marked by the Company as
confidential, will not be disclosed (other than to a Purchaser's employees or
agents having a need to know the contents of such information, a Purchaser's
attorneys or accountants or to any person who provides financing to a Purchaser;
provided, however, that such person or entity holds such information on a
confidential basis) without the prior consent of the Company, unless the
information is
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available to the public generally or a Purchaser is required to disclose such
information by a governmental body or under federal securities laws. The
provisions of this Section 5.13 shall be in addition to, and not in substitution
for, the provisions of any separate nondisclosure agreement executed by the
parties hereto with respect to the transactions contemplated hereby.
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<PAGE>
[Company Stock Purchase Agreement Signature page]
IN WITNESS WHEREOF, the undersigned has executed this Agreement as of the
day and year first above written.
FOOTWEAR ACQUISITION, INC.
By: /s/ William N. Simon
------------------------------
Name: William N. Simon
-----------------------------
Title: Executive Director
---------------------------
ADDRESS FOR NOTICE:
c/o cre-8-net ventures
----------------------
541 Redwood Highway
Suite 2180
Mill Valley, California 94941
Phone: 415-383-7698
Fax: 415-383-7405
Attn: William N. Simon
With a copy to:
-----------------------------------
-----------------------------------
-----------------------------------
Facsimile No. :
-------------------
Attn:
-----------------------------
<PAGE>
[cre-8-net Stock Purchase Agreement Signature page]
IN WITNESS WHEREOF, the undersigned has executed this Agreement as of the
day and year first above written.
CRE-8-NET VENTURES L.L.C.
BY: /s/ William N. Simon
--------------------------------
NAME: William N. Simon
TITLE: Managing Member
ADDRESS FOR NOTICE:
541 Redwood Highway
Suite 2180
Mill Valley, California 94941
Phone: 415-383-7698
Fax: 415-383-7405
Attn: William N. Simon
With a copy to:
WILSON SONSINI GOODRICH & ROSATI, P.C.
650 Page Mill Road
Palo Alto, California 94304
Facsimile: (650) 496-408
Attn: Kurt Berney, Esq.
2
<PAGE>
[UOHL Stock Purchase Agreement Signature page]
IN WITNESS WHEREOF, the undersigned has executed this Agreement as of the
day and year first above written.
UNION OVERSEAS HOLDINGS LIMITED
BY: /s/ Edward D. Sy
------------------------------
NAME: Edward D. Sy
TITLE: Director
ADDRESS FOR NOTICE:
Suite 306
Third Floor
Island Place Tower
No. 510 King's Road, North Point
Hong Kong
Facsimile No. 852-2907-8118
Attn: Mr. Ed Sy
With a copy to:
Mintz, Levin, Cohn, Ferris, Glovsky
and Popeo
One Financial Center
Boston, Massachusetts 02111
Facsimile: (617) 542-2241
Attention: Mary Laura Greely, Esq. and
George Hofmann, Esq.
<PAGE>
[Perseus Investors Stock Purchase Agreement Signature page]
IN WITNESS WHEREOF, the undersigned Perseus Stockholder has executed this
Agreement as of the day and year first above written.
PERSEUS ACQUISITION/RECAPITALIZATION
FUND, L.L.C.
By: /s/ Curtis A. Glovier
------------------------------
Name: Curtis A. Glovier
-----------------------------
Title: Managing Director
---------------------------
ADDRESS FOR NOTICE:
888 Seventh Avenue, 29th Fl.
New York, NY 10106
Facsimile No.: (212) 245-1852
Attn: Ray E. Newton, III
With a copy to:
Arnold & Porter
555 Twelfth Street N.W.
Washington, D.C. 20004-1206
Facsimile: (202) 942-5999
Attention: Robert Ott, Esq.
2
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EXHIBIT A
CERTAIN DEFINITIONS
For purposes of the Agreement to which this Exhibit A is attached, the
following terms have the following meanings:
"Affiliates" has the meaning set forth in Section 3.7(h).
"Business Day" means any day other than a Saturday, Sunday or other day on
which the national or state banks located in the State of New York or Washington
D.C. are authorized to be closed.
"Certificate of Designation" shall have the meaning set forth in Section
1.1.
"Common Stock" means the common stock, par value $0.01 per share, of the
Company.
"Company" shall have the meaning set forth in the first paragraph of this
Agreement.
"Company Account" means an account of the Company designated in a written
notice delivered to the Purchasers at least two Business Days prior to the date
of any required payment by the Purchasers to the Company under the Agreement.
"Company Disclosure Schedule" shall have the meaning set forth in Section
3.
"Control" and derivatives thereof mean the power to control the management
and policies of the Controlled Person where by ownership of voting securities,
contract or otherwise.
"GAAP" means United States generally accepted accounting principles
consistently applied.
"Governmental Body" means any: (a) nation, state, commonwealth, province,
territory, county, municipality, district or other jurisdiction of any nature;
(b) federal, state, local, municipal, foreign or other government; or (c)
governmental or quasi-governmental authority of any nature (including any
governmental division, department, agency, commission, instrumentality,
official, organization, unit, body or entity and any court or other tribunal).
"knowledge" or "to the Company's knowledge" shall refer to the actual
knowledge after reasonable inquiry of the relevant responsible officers of the
Company.
"Material Adverse Change" means a change which would have a Material
Adverse Effect.
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"Material Adverse Effect" An event, violation or other matter will be
deemed to have a "Material Adverse Effect" on the Company if such event,
violation or other matter would be materially adverse in impact or amount to the
Company, intellectual property rights or condition, assets, liabilities,
operations or financial performance or prospects, taken as a whole.
"Purchaser" shall have the meaning set forth in the first paragraph of
this Agreement.
"Person" means any individual, entity or Governmental Body.
"Related Agreements" means (a) the Investor Rights Agreement
substantially in the form attached as Exhibit C to this Agreement, (b) a
Sourcing Rights Letter Agreement (the "Sourcing Rights Letter Agreement")
between the Company and UOHL in the form set forth as Exhibit G, (c) a
management agreement between the Company and cre-8-net (as defined on Schedule
A) (the "Management Agreement") and (d) any other agreement or document entered
into by any of the parties in connection with this Agreement or any of the
transactions contemplated hereby.
"Securities Act" means the United States Securities Act of 1933.
"Strategic Investor" means [to be inserted prior to Closing]
4