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Exhibit
10.27
EXECUTION
VERSION
PUT/CALL AGREEMENT
by and among
H-LINES HOLDING
CORP.
and the
OPTIONHOLDERS
signatory hereto
Dated as of July 7,
2004.
PUT/CALL
AGREEMENT
PUT/CALL AGREEMENT, dated as
of July 7, 2004 (this “ Agreement ”), by and
among H-LINES HOLDING CORP., a Delaware corporation (“
H-Lines ”) and each of the optionholders signatory
hereto (each, an “ Optionholder ”). H-Lines and
the Optionholders are each individually referred to herein as a
“ Party ” and together collectively referred to
herein as the “ Parties ”.
WHEREAS, reference is made to
that certain Agreement and Plan of Merger, dated May 22, 2004, by
and among H-Lines, H-Lines Subcorp., a Delaware corporation and a
wholly-owned subsidiary of H-Lines, Horizon Lines Holding Corp.
(“Horizon”), and TC Group, L.L.C., a Delaware limited
liability company (such agreement, as amended or modified, the
“ Merger Agreement ”);
WHEREAS, reference is made to
that certain voting trust agreement, dated as of July 7, 2004, by
and among Horizon and the Optionholders (such agreement, as amended
or modified, the “ Horizon Voting Trust Agreement
”).
WHEREAS, pursuant to the
Merger Agreement, as a condition to any right to elect to retain
all or any portion of such Optionholder’s options to purchase
shares of common stock, par value $.01, of Horizon (the “
Rollover Options ”) in lieu of such
Optionholder’s right to receive a portion of the Merger
Consideration, such Optionholder shall agree to enter into this
Agreement;
WHEREAS, the Rollover Options
provide for the Optionholder to purchase shares of common stock,
par value $.01, of Horizon (the “ Horizon Common Stock
”) at the exercise price stated therein (the “
Exercise Price ”).
NOW, THEREFORE, the parties
hereto hereby agree as follows:
1. Definitions .
Capitalized terms used in this Agreement and not otherwise defined
herein shall have their respective meanings set forth in the Merger
Agreement.
2. Put Right; Call
Right .
(a) Put Right .
H-Lines hereby grants to each Optionholder, individually, the right
and option (but not the obligation) to require H-Lines to exchange,
at any time and from time to time, all or any portion of the shares
of Horizon Common Stock issued upon exercise of the Rollover
Options (such shares issued upon exercise, the “ Horizon
Shares ”) held by such Optionholder for shares of
redeemable preferred stock, par value $0.01 per share, of H-Lines
(the “ H-Lines Preferred Stock ”) and shares of
common stock, par value $0.01 per share, of H-Lines (the “
H-Lines Common Stock ”) (such shares of H-Lines
Preferred Stock and H-Lines Common Stock together, the “
H-Lines Shares ”) in the ratio determined in
accordance with Section 2(e) (such right of Optionholder, the
“ Put Right ”).
(b) Call Right . Each
Optionholder, on behalf of itself only, hereby grants to H-Lines
the right and option (but not the obligation) to require such
Optionholder to surrender, at
any time and from time to time, all or
any portion of the Horizon Shares held by such Optionholder in
exchange for H-Lines Shares in the ratio determined in accordance
with Section 2(e) (such right and option of H-Lines, the “
Call Right ”).
(c) Dividend Payments
. Upon exercise of the Put Right or Call Right, in addition to the
H-Lines Shares to be received by the Optionholder in exchange for
Horizon Shares, such Optionholder shall receive from H-Lines any
dividends or distributions that would have been received by such
Optionholder if such Optionholder owned the H-Lines Shares being
received pursuant to the exercise of the Put Right or Call Right on
the date hereof (the “ Past Dividend Payments
”).
(d) Notice . (i) An
Optionholder may exercise its Put Right by providing written notice
to H-Lines indicating the number of Horizon Shares which are to be
exchanged and the effective date of such exercise; provided
, that such effective date shall not be less than one business day
after the date of receipt of the written notice.
(ii) H-Lines may exercise its
Call Right with respect to any Optionholder by providing written
notice to such Optionholder indicating the number of Horizon Shares
which are to be exchanged and the effective date of such exercise;
provided , that such effective date shall not be less than
one business day after the date of receipt of the written
notice.
(e) Exchange Ratio .
Upon exercise of either the Put Right or the Call Right, the number
of H-Lines Shares which the applicable Optionholder shall receive
in exchange for the Horizon Shares shall be determined in the
following manner. The value attributable to each share of H-Lines
Common Stock and H-Lines Preferred Stock shall be $8 and $10,
respectively. The ratio of shares of H-Lines Common Stock and
H-Lines Preferred Stock to be received by such Optionholder shall
equal 1 share of H-Lines Common Stock to 15 shares of H-Lines
Preferred Stock (together, a “ Unit ”). The
value attributable to each Horizon Share (the “
Horizon Common Stock Value ”) being exchanged
shall equal the Cash Per Fully Diluted Share (as defined in the
Merger Agreement). Each Horizon Share shall be exchangeable into a
number of Units equal to the Horizon Common Stock Value divided by
$158.
(f) Reservation of Shares
and Agreement to be Bound . H-Lines shall at all times keep
reserved such number of H-Lines Common Stock H-Lines Preferred
Stock into which all the Horizon Shares held by the Optionholders
at such time could be exchanged if all the Roll-Over Options were
exercised and the Put Rights or the Call Rights are exercised in
full.
(e) Closing . (i) The
closing of the redemption and exchange of Horizon Shares for
H-Lines Shares pursuant to exercise of the Put Right or Call Right
as set forth in this Section (the “ Closing ”)
shall take place at the offices of Schulte Roth & Zabel LLP,
919 Third Avenue, New York, New York 10022, on the Business Day
(the “ Closing Date ”) set forth in the written
notice.
(ii) At the Closing, (A)
H-Lines shall issue and deliver to the applicable Optionholder,
certificates representing the Units to be issued by it pursuant to
this Agreement and cash representing the Past Dividend Payments
(without any interest therefor), (B) the applicable Optionholder
shall deliver to H-Lines certificates representing the Horizon
Shares
2
to be exchanged therefor, (C) such
Optionholder shall deliver duly executed copies of each of the
Stockholders Agreement and the Voting Trust Agreement, dated July 7
2004, by and among H-Lines and the stockholders listed on the
signature pages thereto (as amended or modified, the “
H-Lines Voting Trust Agreement ” and together with the
Horizon Voting Trust Agreement, the “ Voting Trust
Agreements ”), and (D) each party to this Agreement shall
deliver to the other such other documents, instruments and writings
as may be required to be delivered in accordance with this
Agreement or as may be reasonably requested by such other
party.
3. Representations and
Warranties of Optionholder . Each Optionholder, on behalf of
itself only, makes the following representations and
warranties.
(a) Such Optionholder is, and
will be, acquiring Horizon Shares and H-Lines Shares for investment
for its own account and not with a view to, or for resale in
connection with, the distribution or other disposition thereof in
violation of the Securities Act. Such Optionholder agrees that it
will not, directly or indirectly, offer, transfer, sell, pledge,
hypothecate or otherwise dispose of any Horizon Shares or H-Lines
Shares (or solicit any offers to buy, purchase, or otherwise
acquire or take a pledge of any Horizon Shares or H-Lines Shares),
except in compliance with the Securities Act, the rules and
regulations promulgated thereunder, applicable state securities
laws, the provisions of this Agreement, the Stockholders Agreement
and the Voting Trust Agreements. Such Optionholder represents and
warrants that no other person or entity will have any interest,
beneficial or otherwise, in the Horizon Shares or H-Lines Shares
acquired by such Optionholder except as provided under the
Stockholders Agreement and the Voting Trust Agreements.
(b) Such Optionholder
acknowledges that it has been advised that (i) neither the Horizon
Shares nor the H-Lines Shares are registered under the Securities
Act, and neither Horizon nor H-Lines has any obligation to
effectuate any such registration, (ii) the Horizon Shares and
H-Lines Shares must be held indefinitely and Optionholder must
continue to bear the economic risk of the investment in the Horizon
Shares and H-Lines Shares unless they are subsequently registered
under the Securities Act or an exemption from such registration is
available, (iii) Rule 144 promulgated under the Securities Act is
not presently available with respect to the sale of any securities
of Horizon or H-Lines, and neither Horizon nor H-Lines has no
obligation nor any intention to make such Rule available, (iv) when
and if any Horizon Shares or H-Lines Shares may be disposed of
without registration in reliance on Rule 144, the amounts that may
be disposed of may be limited in accordance with the terms and
conditions of such Rule, (v) if the Rule 144 exemption is not
available, public sale without registration will require compliance
with Regulation D or some other exemption under the Securities Act,
(vi) restrictive legends will be placed on the certificates
representing the Horizon Shares and H-Lines Shares and (vii) a
notation will be made in the appropriate records of Horizon and
H-Lines indicating that the Horizon Sha
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