EXHIBIT 10.59
I.C. ISAACS & COMPANY, INC.
SECOND AMENDED AND RESTATED SHAREHOLDERS' AGREEMENT
This SECOND AMENDED AND RESTATED SHAREHOLDERS' AGREEMENT (the
"Agreement") dated June __, 1999 is by and among I.C. Isaacs & Company, Inc., a
Delaware corporation having its principal office and place of business at 3840
Bank Street, Baltimore, Maryland 21224-2522 (the "Corporation"), and the
shareholders listed on SCHEDULE A hereto (each a "Shareholder" and,
collectively, the "Shareholders").
WHEREAS, the Corporation and the Shareholders are parties to an Amended
and Restated Shareholders' Agreement dated May 15, 1997, as amended by an
Amendment No. 1 to Amended and Restated Shareholders' Agreement dated December
20, 1997 (collectively, the "Restated Agreement"); and
WHEREAS, the Corporation and the Shareholders wish to amend and restate
the Restated Amendment in its entirety as set forth below.
NOW, THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the receipt and sufficiency of which the parties hereby
acknowledge, the parties hereto hereby agree that the Restated Agreement shall
be amended and restated in its entirety as follows:
1. DEFINITIONS
The following terms shall have the meanings set forth in this Section 1:
A. BENEFICIAL OWNER; BENEFICIALLY OWNED. The terms "Beneficial Owner"
and "Beneficially Owned" shall have the meaning set forth in Rule 13d-3 of the
Securities Exchange Act of 1934, as amended.
B. CHANGE OF CONTROL. Change of Control shall mean (i) the sale of all
or substantially all of the assets of the Company, (ii) the sale of more than
fifty percent (50%) of the outstanding Common Stock in a non-public sale, (iii)
the dissolution or liquidation of the Company, or (iv) any merger or
consolidation of the Company, if immediately after any such transaction either
(A) persons who were directors of the Company immediately prior to such
transaction do not constitute at least a majority of the directors of the
surviving entity or (B) persons who hold a majority of the voting stock of the
surviving entity are not persons who held a majority of the Common Stock of the
Company immediately prior to such transaction.
C. COMMON STOCK. Common Stock shall mean the issued and outstanding
common stock of the Corporation.
D. CORPORATION FIRST REFUSAL PERIOD. Corporation First Refusal Period
shall mean the period within which the Corporation may exercise its Right of
First Refusal.
The Corporation First Refusal Period shall be the ten (10) days following the
last day of the Shareholder First Refusal Period.
E. INVOLUNTARY TRANSFER. Involuntary Transfer shall mean any transfer,
proceeding or action by or in which a Shareholder shall be deprived or divested
of any right, title or interest in or to any of the Stock, including, without
limitation, any seizure under levy of attachment or execution, any transfer in
connection with bankruptcy (whether pursuant to the filing of a voluntary or an
involuntary petition under the United States Bankruptcy Code, as amended, or any
modifications or revisions thereto) or other court proceeding to a debtor in
possession, trustee in bankruptcy or receiver or other officer or agency, any
transfer to a state or to a public officer or agency pursuant to any statute
pertaining to escheat or abandoned property, any transfer pursuant to a divorce
or separation agreement or a final decree of a court in a divorce action, and
any transfer by operation of a will or the laws of intestacy.
F. MARKET VALUE. Market Value shall have the following meaning:
(i) In the event that, as of the date of the Transfer Notice,
the Corporation is a Reporting Company, the Market Value of the Common Stock for
any purpose shall mean the last reported sale price per share of Common Stock,
on the date of the Transfer Notice or, in case no such sale takes place on such
date, the average of the closing bid and asked prices in either case as reported
in the principal consolidated transaction reporting system with respect to
securities listed or admitted to trading on a national securities exchange or
included for quotation on the Nasdaq-National Market, or if the Common Stock is
not so listed or admitted to trading or included for quotation, the last quoted
price, or if the Common Stock is not so quoted, the average of the high bid and
low asked prices, in the over-the-counter market, as reported by the National
Association of Securities Dealers, Inc. Automated Quotation System or, if such
system is no longer in use, the principal other automated quotations system that
may then be in use or, if the Common Stock is not quoted by any such
organization, the average of the closing bid and asked prices, as furnished by a
professional market maker making a market in the Common Stock as selected in
good faith by the Board or by such other source or sources as shall be selected
in good faith by the Board. If, as the case may be, the relevant date is not a
trading day, the determination shall be made as of the next preceding trading
day. As used herein, the term "trading day" shall mean a day on which public
trading of securities occurs and is reported in the principal consolidated
reporting system referred to above, or if the Common Stock is not listed or
admitted to trading on a national securities exchange or included for quotation
on the Nasdaq-National Market, any business day.
(ii) If, as of the date of the Transfer Notice, the
Corporation is not a Reporting Company, the Market Value shall be the appraised
market value as of the date of the Transfer Notice, as determined by an
independent appraiser of recognized standing selected by the Corporation.
G. NON-ELECTED SHARES. Non-Elected Shares shall mean Stock which has
not been, or will not be, purchased pursuant to a Right of First Refusal.
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H. REPORTING COMPANY. Reporting Company shall mean a company the common
stock of which is registered under Section 12 of the Securities Exchange Act of
1934, as amended.
I. RIGHT OF FIRST REFUSAL; RIGHTS OF FIRST REFUSAL. Right of First
Refusal and Rights of First Refusal shall refer to the rights of first refusal
set forth in Section 4.C. hereof.
J. STOCK. Stock shall mean the Common Stock that was subject to the
Restated Agreement immediately prior to the effectiveness of this Agreement.
2. [Intentionally Omitted].
3. LEGENDS ON CERTIFICATES
The certificates evidencing the Stock held by the Shareholders shall bear any
legends required by federal or state securities law and the following legend
required by Section 202 (a) of the Delaware General Corporation Law (the
"DGCL"):
"The shares represented by this Certificate are subject to a
Shareholders' Agreement dated as of December 20, 1984, as
amended, a copy of which is on file at the office of the
Corporation and will be furnished to any prospective purchaser
on request. Such Shareholders' Agreement provides, among other
things, for certain restrictions on the sale, transfer,
pledge, hypothecation or disposition of the Shares represented
by this Certificate."
4. RESTRICTIONS ON DISPOSITION
A. LIMITATIONS ON TRANSFERS. Subject to Subsection F. of this Section
4, no Shareholder shall voluntarily transfer, sell, assign, pledge, encumber,
grant any option with respect to, or otherwise create any legal or equitable
interest in any Stock Beneficially Owned by such Shareholder except pursuant to
a sale of all or any part of such Stock made in accordance with Subsection C.
below.
B. [Intentionally Omitted].
C. RIGHTS OF FIRST REFUSAL. (i) Except as otherwise provided in
Subsection F. below or unless this Subsection C. is waived by Robert J. Arnot or
Shareholders Beneficially Owning two-thirds (2/3) of the total amount of Stock
Beneficially Owned by the Shareholders, before any Stock may be voluntarily sold
or transferred by a Shareholder Beneficially Owning, at the time of such
contemplated transfer, in excess of one half of one percent (.5%) of the
outstanding Common Stock of the Corporation (a "Transferring Shareholder"), such
Transferring Shareholder shall first provide written notice of the proposed sale
or transfer to each of the other Shareholders and the Corporation, which notice
shall include the number of shares of Stock proposed for
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transfer (the "Offered Shares"), the price per share of Stock to be transferred,
(the "Offer Price"), the name of the proposed transferee or, if the shares are
proposed to be transferred on the stock market, the name of the proposed broker
(the "Proposed Transferee"), a representation that the agreement to sell or
transfer constitutes a bona-fide offer to purchase and all other terms and
conditions of the transfer (the "Transfer Notice").
(ii) The other Shareholders shall then have the right to
purchase the Offered Shares at the lesser of the Offer Price or Market Value.
Such Rights of First Refusal shall be exercisable upon written notice to the
Transferring Shareholder within fifteen (15) days following the date of the
Transfer Notice (the "Shareholder First Refusal Period"), which notice shall
specify the number of Offered Shares to be purchased by the Shareholder. Each
Shareholder electing to exercise the Rights of First Refusal (an "Electing
Shareholder") may purchase a number of Offered Shares equal to the total number
of Offered Shares multiplied by a fraction, the numerator of which is equal to
the number of shares of Stock directly owned by such Shareholder and the
denominator of which is equal to the total number of shares of Stock
Beneficially Owned by all Shareholders (other than the Transferring
Shareholder). Any Shareholder who elects not to purchase the full number of
Offered Shares to which such Shareholder is entitled shall, within five (5) days
prior to the expiration of the Shareholder First Refusal Period, notify the
other Shareholders (other than the Transferring Shareholder), each of whom shall
then be entitled to purchase that number of Non-Elected Shares equal to the
number of Non-Elected Shares multiplied by a fraction, the numerator of which is
the number of shares of Stock directly owned by such Shareholder and the
denominator of which is the total number of shares of Stock Beneficially Owned
by all Electing Shareholders who wish to purchase Non-Elected Shares.
(iii) If, upon termination of the Shareholder First Refusal
Period, the Shareholders have not exercised their Rights of First Refusal with
respect to some or all of the Offered Shares, the Corporation shall have a Right
of First Refusal with respect to some or all of such Non-Elected Shares,
exercisable upon written notice to the Transferring Shareholder within the
Corporation First Refusal Period.
(iv) If, upon termination of the Corporation First Refusal
Period, the Shareholders and the Corporation have not exercised their Rights of
First Refusal with respect to some or all of the Offered Shares, the
Transferring Shareholder may sell such Non-Elected Shares to the Proposed
Transferee at any time within three months after the termination of the
Corporation First Refusal Period without again complying with this Section 4.
D. INVOLUNTARY TRANSFERS. Any Involuntary Transfer by a Shareholder (an
"Involuntary Transferor") shall be subject to the Rights of First Refusal set
forth in Section 4.C. as if the Involuntary Transfer had been a proposed
voluntary transfer except that:
(i) the provisions of Subsection 4.C.(i) shall not apply, but
the Involuntary Transferor or the Involuntary Transferor's estate shall notify
the Shareholders
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and the Corporation as soon as practicable upon obtaining knowledge of the
Involuntary Transfer;
(ii) the Shareholder First Refusal Period shall run from the
date of receipt by the Corporation of the notice of Involuntary Transfer;
(iii) such Rights of First Refusal shall be exercised by
notice to the Involuntary Transferee rather than to the Shareholders who
suffered or will suffer the Involuntary Transfer; and
(iv) The purchase price per Offered Share shall be Market
Value.
E. SETTLEMENT. If the non-Transferring Shareholders or the Corporation
elect to exercise their Rights of First Refusal to acquire all or any portion of
the Offered Shares, settlement shall be made as follows:
(i) If, at the time of the Transfer Notice, the Corporation is
a Reporting Company, within the Shareholder First Refusal Period or Corporation
First Refusal Period, as applicable; or
(ii) If, at the time of the Transfer Notice, the Corporation
is not a Reporting Company, within 30 days of the Transfer Notice.
F. PERMITTED TRANSFERS. Nothing in this Section shall prohibit the
transfer (i) by a Shareholder during any three month period of Stock amounting,
in the aggregate, to less than two percent (2%) of the Stock Beneficially Owned
by such Shareholder or (ii) by any Shareholder of all or any portion of Stock
Beneficially Owned by a Shareholder (a) to the spouse or any one or more of the
lineal descendants of such Shareholder; (b) to any trust, partnership or limited
liability company established solely for estate and gift planning purposes and
solely for the benefit of such Shareholder, his or her spouse and/or lineal
descendants (transferees described under subparagraphs (a) and (b) shall be
deemed "Permitted Transferees"); (c) to the Corporation; or (d) in connection
with a registered offering of Stock as provided under Section 6 below. Any
successor or transferee who receives Stock pursuant to an event described in
clauses (a) or (b) above shall, as a condition of such transfer, enter into an
agreement to be bound by the provisions of this Agreement in its entirety and
shall be deemed to be a "Shareholder" hereunder.
5. "DRAG-ALONG" RIGHTS
If a majority of the Shareholders (the "Selling Shareholders") enter into a
transaction with a third party for the sale or tender of Stock Beneficially
Owned by the Shareholders (including, without limitation, a Change of Control
transaction), the Rights of First Refusal set forth in Section 4 above shall not
apply and the Corporation and/or the Selling Shareholders may require the other
Shareholders to participate in such transaction on the same terms and conditions
as the Selling Shareholders by giving the other Shareholders written notice
thereof at least 30 days in advance of the date of closing of the transaction.
Upon receipt of such notice, each of the other Shareholders shall tender the
same
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proportion of Stock Beneficially Owned by him or her as the Selling Shareholders
propose to sell on the same terms and conditions applicable to the Stock of the
Selling Shareholders in the transaction.
6. REGISTRATION RIGHTS
To the extent that the Corporation grants registration rights to one or more of
the Shareholders (the "Participating Shareholders") under a registration
statement filed with the Securities and Exchange Commission (a "Registration
Statement"), each of the other Shareholders shall have the right to sell a
number of shares of Stock to be registered under the Registration Statement
equal to the number of shares directly owned by such Shareholder multiplied by a
fraction, the numerator of which is equal to the number of shares of Stock
Beneficially Owned by Participating Shareholders that are to be registered
pursuant to the Registration Statement and the denominator of which is equal to
the total number of shares of Stock Beneficially Owned by the Participating
Shareholders.
7. ARBITRATION OF DISPUTES
Any dispute regarding any aspect of this Agreement or any act which allegedly
has or would violate any provision of this Agreement will be submitted to
binding arbitration. Such arbitration shall be conducted before an arbitrator
sitting in Baltimore, Maryland or in such other location as may be agreed upon
by the Corporation and the Shareholder, in accordance with the rules of the
American Arbitration Association then in effect. Judgment may be entered on the
award of the arbitrator in any court having competent jurisdiction.
8. BENEFIT
Except upon the occurrence of a termination event as provided in Section 16,
this Agreement shall be binding upon and shall operate for the benefit of the
parties hereto, their respective successors and assigns.
9. INVALIDITY OF ANY PROVISION
The invalidity or unenforceability of any provision of this Agreement shall not
affect the other provisions hereof, and the Agreement shall be construed in all
respects as if such invalid or unenforceable provisions were omitted, provided
that the parties shall negotiate in good faith to replace the invalid provision
with a valid provision reflecting the same balance of economic interests.
10. MODIFICATION OF AGREEMENT
No modification, amendment or waiver of any of the provisions of this Agreement
shall be valid unless made in writing and signed by the Corporation and
Shareholders owning, in the aggregate, a majority of the Stock subject to this
Agreement.
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11. FURTHER ACTION
A. The Corporation shall not register, and shall instruct any transfer
agent for the Common Stock not to register, on the books of the Corporation any
transfer, pledge or encumbrance of any Stock subject to this Agreement, unless
such transfer, pledge or encumbrance complies with terms of this Agreement and
the Shareholders agree to provide the Corporation (or any such transfer agent)
with such documents, including an opinion of counsel as to compliance with the
terms of this Agreement, as the Corporation (or any such transfer agent) may
reasonably request.
B. A copy of this Agreement shall be made a part of the minutes of the
Corporation.
12. ATTORNEY'S FEES AND COSTS
If any action at law or in equity (including any arbitration proceeding under
Section 7 above) is necessary to enforce or interpret the terms of this
Agreement, the prevailing party shall be entitled to reasonable attorneys' fees,
costs, and necessary disbursements, in addition to any other relief to which he
may be entitled.
13. APPLICABLE LAW
This Agreement shall be construed in accordance with the laws of the State of
Delaware.
14. ENTIRE AGREEMENT
This Agreement supersedes all agreements as to the subject matter hereof among
the Shareholders and the Corporation including in each case amendments thereto,
previously executed by the Shareholders and the Corporation. This Agreement sets
forth all of the provisions, covenants, agreements, conditions and undertakings
between the parties hereto with respect to the subject matter hereof, and
superseded all prior and contemporaneous agreements and understandings express
or implied, oral or written as to the subject matter hereof.
15. NOTICES
Unless otherwise specified herein, all notices, requests, demands and other
communications to be given under this Agreement shall be in writing and shall be
deemed given if (i) delivered in person, or by United States mail, certified or
registered, with return receipt requested, (ii) if sent by telex or facsimile
transmission, with a copy mailed on the same day in the manner provided in (i)
above, when transmitted and receipt is confirmed by telephone, or (iii) if
otherwise actually delivered:
TO THE CORPORATION: 3840 Bank Street, Baltimore, MD 21224-2522;
TO ANY SHAREHOLDER: As the name and address of such Shareholder
appears on the records of the Corporation;
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or at such other address as may have been furnished by such person in writing to
the other parties. Any such notice, demand or other communication shall be
deemed to have been given on the date actually delivered or as of the date
mailed, as the case may be.
16. TERM OF AGREEMENT
This Agreement shall be effective
(i) With respect to Section 4.C., from the date of hereof
until the earlier to occur of (A) May 15, 2001 and (B) the
Shareholders' ceasing to be the Beneficial Owners of more than 30% of
the Common Stock; provided that a Shareholder shall be deemed to be the
Beneficial Owner of Stock held by a family trust established by such
Shareholder.
(ii) With respect to all other Sections of this Agreement,
from the date hereof until the earlier to occur of (A) May 15, 2003 or
(B) the Shareholders' ceasing to be the Beneficial Owners of more than
30% of the Common Stock; provided that a Shareholder shall be deemed to
be the Beneficial Owner of Stock held by a family trust established by
such Shareholder.
I.C. ISAACS & COMPANY, INC.
By: /s/ ROBERT J. ARNOT
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Robert J. Arnot, Chief Executive Officer
SHAREHOLDERS:
/s/ GERALD W. LEAR
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Gerald W. Lear
/s/ THOMAS P. ORMANDY
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Thomas P. Ormandy
/s/ EUGENE C. WIELEPSKI
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Eugene C. Wielepski
/s/ JON HECHLER
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Jon Hechler
ESTATE OF IRA J. HECHLER
By: /s/ JON HECHLER
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Jon Hechler, Executor
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SCHEDULE A
Andrew Joe Adkinson
Estate of Julian Adler
Robert J. Arnot
Charles Boutwell
Charles M. Chamblee
Marion Felton
Hillary Figinski-Spieker
Robert Flynn, Jr.
Madlyn Goldman
David Hechler
Estate of Ira J. Hechler
Jon Hechler
Richard Hechler
Robin Hechler
Steven Hechler
Stanley Keller Irrevocable Trust
Joyce Kingsley
Gerald W. Lear
Susan Mark
William Myatt
Thomas Ormandy
Eugene C. Wielepski
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