-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Sk6lktaSaklz1vNICt2jEsUr3w8cE6ZwX5trQrZZfqypBQZsJhzn+O5VbKJWG6kB 3MM6eWGm/45iwF1bTp/dHg== 0000950117-96-000827.txt : 19960808 0000950117-96-000827.hdr.sgml : 19960808 ACCESSION NUMBER: 0000950117-96-000827 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 19960806 ITEM INFORMATION: Other events ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 19960807 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: DANSKIN INC CENTRAL INDEX KEY: 0000889299 STANDARD INDUSTRIAL CLASSIFICATION: WOMEN'S, MISSES', AND JUNIORS OUTERWEAR [2330] IRS NUMBER: 621284179 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-20382 FILM NUMBER: 96605351 BUSINESS ADDRESS: STREET 1: 111 W 40TH ST CITY: NEW YORK STATE: NY ZIP: 10018 BUSINESS PHONE: 2127644630 MAIL ADDRESS: STREET 1: 111 W 40TH ST CITY: NEW YORK STATE: NY ZIP: 10018 8-K 1 DANSKIN, INC. SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 DANSKIN, INC. (Exact name of registrant as specified in its charter) August 6, 1996 Date of Report (Date of earliest event reported) Delaware 0-20382 62-1284179 (State or other juris- (Commission File (I.R.S. Employer diction of incorporation) Number) Identification No.) 111 West 40th Street, New York, New York 10018 (Address of principal executive offices) (Zip Code) (212) 764-4630 (Registrant's telephone number, including area code) Item 5. Other Events. Danskin, Inc. announced that it had completed the sale of $5,000,000 (liquidation value) of 10% Convertible Preferred Stock to The Oppenheimer Bond Fund For Growth, and that Howard D. Cooley, Chairman of the Board, had purchased 100,000 shares of the Company's common stock through exercise of an option at $3.00 per share. The new Convertible Preferred Stock is perpetual, with an initial conversion price of $2.76 per share, and was issued in exchange for $5,000,000 principal amount of 8% Subordinated Convertible Debentures. The Company also announced that it had received notification from The Nasdaq Stock Market, Inc. that its request to have its common stock listed on the Nasdaq Small Cap Market had been approved. Pursuant to a letter from the NASDAQ Stock Market Inc. regarding the capital maintenance requirements of the Nasdaq Small Cap Market, attached hereto is the unaudited pro forma balance sheet giving effect to the issuance of the Convertible Preferred Stock in exchange for the Convertible Subordinated Debentures. Item 7. Exhibits. 4.1 Certificate of Designations of the Company dated August 5, 1996 4.2 Exchange Agreement dated as of August 6, 1996 between the Company and Oppenheimer Bond Fund For Growth 4.3 Registration Rights Agreement dated as of August 6, 1996 between the Company and Oppenheimer Bond Fund For Growth 99.1 Press Release dated August 6, 1996 -2- Signature Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. DANSKIN, INC. (Registrant) Dated: August 6, 1996 By: /s/ Edwin W. Dean ------------------------------------ Edwin W. Dean Vice Chairman of the Board Attachment Danskin, Inc. Proforma Balance Sheet
Proforma June 29, 1996 June 29, 1996 (Unaudited) (Unaudited) ----------- ------------- ASSETS Current assets: Cash and cash equivalents .................................... $ 1,337,000 $ 1,337,000 Accounts receivable, less allowance for doubtful accounts of $1,414,000 at June 1996 ....................... 16,614,000 16,614,000 Inventories .................................................. 32,171,000 32,171,000 Prepaid expenses and other current assets .................... 3,509,000 3,509,000 ------------ ------------ Total current assets ...................................... 53,631,000 53,631,000 ------------ ------------ Property, plant and equipment - net of accumulated depreciation and amortization of $6,704,000 at June 1996 ...................................... 9,993,000 9,993,000 Deferred income tax benefits .................................... 3,900,000 3,900,000 Other assets .................................................... 3,030,000 3,030,000 ------------ ------------ Total Assets .................................................... $ 70,554,000 $ 70,554,000 ------------ ------------ ------------ ------------ LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Revolving loan payable ....................................... $ 9,683,000 $ 9,683,000 Current portion of long-term debt ............................ 1,002,000 1,002,000 Accounts payable ............................................. 9,390,000 9,390,000 Accrued expenses ............................................. 9,910,000 9,910,000 ------------ ------------ Total current liabilities ................................. 29,985,000 29,985,000 ------------ ------------ Subordinated convertible debentures ............................. 5,000,000 -- Long-term debt, net of current maturities ....................... 30,971,000 30,971,000 Accrued pension costs ........................................... 5,183,000 5,183,000 ------------ ------------ 41,154,000 36,154,000 ------------ ------------ Total Liabilities ............................................... 71,139,000 66,139,000 ------------ ------------ Commitments and contingencies Stockholders' (deficiency) equity: Preferred Stock, $.01 par value, 10,000 shares authorized 10% Convertible Preferred Stock (liquidation value $5,000 per share), 1,000 shares issued and outstanding .............................. -- 5,000,000 Common Stock, $.01 par value, 20,000,000 shares authorized, 6,062,018 shares issued at June 1996, less 1,000 shares held by subsidiary ......... 60,610 60,610 Additional paid-in capital ................................... 14,212,390 14,212,390 Warrants outstanding ......................................... 764,000 764,000 Accumulated deficit .......................................... (13,622,000) (13,622,000) Minimum pension liability adjustment ......................... (2,000,000) (2,000,000) ------------ ------------ Total Stockholders' (Deficiency) Equity ....... (585,000) 4,415,000 ------------ ------------ Total Liabilities and Stockholders' Equity ...................... $ 70,554,000 $ 70,554,000 ------------ ------------ ------------ ------------
Index to Exhibits Exhibit No. 4.1 Certificate of Designations of the Company dated August 5, 1996 4.2 Exchange Agreement dated as of August 6, 1996 between the Company and Oppenheimer Bond Fund For Growth 4.3 Registration Rights Agreement dated as of August 6, 1996 between the Company and Oppenheimer Bond Fund For Growth 99.1 Press Release dated August 6, 1996 -4- EX-4.1 2 EXHIBIT 4.1 CERTIFICATE OF DESIGNATIONS OF 10% CUMULATIVE CONVERTIBLE PREFERRED STOCK ($5,000 Liquidation Preference) OF DANSKIN, INC. ---------------------------- Pursuant to Section 151(g) of the General Corporation Law of the State of Delaware ---------------------------- The undersigned duly authorized officer of DANSKIN, INC., a Delaware corporation (the "Corporation"), HEREBY CERTIFIES that the following resolution was duly adopted on July 31, 1996, by the Board of Directors of the Corporation pursuant to authority conferred on the Board of Directors by the provisions of the Certificate of Incorporation of the Corporation (as amended) and in accordance with the provisions of the Delaware General Corporation Law, with certain of the designations and the preferences, rights and other terms relating to dividends, redemption, dissolution, any distribution of assets of the Corporation and the conversion into shares of another class of securities of the Corporation: RESOLVED, that, pursuant to the authority conferred upon the Board of Directors by the Amended and Restated Certificate of Incorporation of the Corporation, as amended (the "Certificate of Incorporation"), 1,000 of the authorized shares of preferred stock of the Corporation, liquidation preference $5,000, are hereby designated "10 % Cumulative Convertible Preferred Stock", of which the voting powers, designations, preferences and relative, participating, optional or other special rights, and the qualifications, limitations or restrictions thereof, shall be as follows: 1. Number of Shares and Designation. 1,000 shares of the preferred stock, liquidation preference $5,000.00 per share, of the Corporation are hereby constituted as a series of the preferred stock designated as 10% Cumulative Convertible Preferred Stock (the "Convertible Preferred Stock") in the form substantially as that given in Exhibit A to this Certificate of Designations. 2. Definitions. For purposes of the Convertible Preferred Stock, the following terms shall have the meanings indicated: "Board of Directors" shall mean the board of directors of the Corporation or any committee authorized by such Board of Directors to perform any of its responsibilities with respect to the Convertible Preferred Stock. "Business Day" shall mean any day other than a Saturday, Sunday or a day on which banking institutions in the City of New York are authorized or obligated by law or executive order to close. "Closing Price" of the Common Stock on any day shall mean on such day the reported last sales price, regular way, for the Common Stock or, in case no sale takes place on such day, the average of the reported closing bid and asked prices, regular way, for the Common Stock in either case as reported on the principal national securities exchange on which the Common Stock is listed or admitted to trading or, if not listed or admitted to trading on any national securities exchange, on the National Market System of the National Association of Securities Dealers, Inc. Automated Quotation System (the "Nasdaq National Market") or, if the Common Stock is not quoted on the Nasdaq National Market, the average of the closing bid and asked prices for the Common Stock on such day in the over-the-counter market as reported by Nasdaq or, if bid and asked prices for the Common Stock on each such date shall not have been reported by Nasdaq, the average of the bid and asked prices of the Common Stock for such day as furnished by any New York Stock Exchange member firm regularly making a market in the Common Stock selected for such purpose by the Board of Directors or, if no such quotations are available, the fair market value of the Common Stock furnished by any New York Stock Exchange member firm selected from time to time by the Board of Directors for that purpose. "Common Stock" shall mean the Common Stock of the Corporation, par value $.01 per share. -2- "Conversion Price" shall mean the conversion price per share of Common Stock into which the Convertible Preferred Stock is convertible, as such Conversion Price may be adjusted pursuant to Section 8 hereof. The initial Conversion Price will be $2.76. On August 6, 1997 and August 6, 1998 (each a "Reset Date"), the Conversion Price will be adjusted (the "Conversion Reset") to equal (x) the product of (i) the average of the high and low prices on the Nasdaq National Market, or the consolidated transaction reporting tape in the event that the Common Stock of the Company is not then traded on the Nasdaq National Market, and (ii) the number of shares of Common Stock of the Company reported as being traded on that day, for each Trading Day of the 10 calendar days preceding the Reset Date (the "Conversion Reset Period"), divided by the total number of shares of Common Stock of the Company traded over the Conversion Reset Period, then multiplied by (y) 110% (the "Conversion Reset Price"), if such Conversion Reset Price shall be lower than the Conversion Price before such calculation. In the event that the Conversion Price before such calculation shall be equal to or less than the Conversion Reset Price, then no adjustment to the Conversion Price shall be made. "Corporate Change" shall have the meaning set forth in Section 8 hereof. "Current Market Price" per share of Common Stock on any date shall mean the average of the daily Closing Prices for the 30 consecutive Trading Dates commencing 45 Trading Dates before the date of determination. "dividend payment date" shall have the meaning set forth in paragraph (a) of Section 3 hereof. "dividend payment record date" shall have the meaning set forth in paragraph (a) of Section 3 hereof. "Dividend Periods" shall mean quarterly dividend periods commencing on the first day of March, June, September and December of each year and ending on and including the day preceding the first day of the next succeeding Dividend Period (other than the initial Dividend Period which shall commence on the Issue Date and end on and include August 31, 1996). "Issue Date" shall mean the first date on which shares of Convertible Preferred Stock are issued. "Ownership Change" shall have the meaning set forth in Section 8 hereof. "Person" shall mean any individual, firm, partnership, corporation or other entity, and shall include any successor (by merger or otherwise) of such entity. -3- "Securities" shall have the meaning set forth in paragraph (d) (iii) of Section 7 hereof. "Securities Act" means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder. "Trading Date" or "Trading Day" with respect to Common Stock means (i) if the Common Stock is listed or admitted for trading on the New York Stock Exchange or another national securities exchange, a day on which the New York Stock Exchange or such other national securities exchange is open for business, (ii) if the Common Stock is quoted on the Nasdaq National Market, or any similar system of automated dissemination of quotations of securities prices, a day on which trades may be made on such system, (iii) if not quoted as described in clause (ii), days on which quotations are reported by the National Quotation Bureau Incorporated or (iv) otherwise, any Business Day. "Transaction" shall have the meaning set forth in paragraph (e) of Section 7 hereof. 3. Dividends. A. The holders of shares of the Convertible Preferred Stock shall be entitled to receive, when, as and if declared by the Board of Directors out of assets legally available therefor, at the option of the Company, either (i) cumulative cash dividends at an annual rate of 10% of the liquidation preference per share (an amount equivalent to $500 per annum per share) of Convertible Preferred Stock or (ii) that number of shares of Common Stock that could be purchased at 90% of the closing bid price averaged over the ten trading days preceding the dividend payment date (as defined below). Such dividends shall be cumulative from the Issue Date, whether or not in any Dividend Period or Periods there shall be assets of the Corporation legally available for the payment of such dividends and whether or not such dividends are declared, and shall be payable quarterly, when, as and if declared by the Board of Directors, on March 1, June 1, September 1, and December 1 in each year (each a "dividend payment date"), commencing on September 1, 1996. If September 1, 1996 or any other dividend payment date shall be on a day other than a Business Day, then the dividend payment date shall be on the next succeeding Business Day. Each such dividend shall be payable in arrears to the holders of record of shares of the Convertible Preferred Stock, as they appear on the stock records of the Corporation at the close of business on those dates (each such date, a "dividend payment record date"), not less than 10 days nor more than 60 days preceding the dividend payment dates thereof, as shall be fixed by the Board of Directors. Dividends on the Convertible Preferred Stock shall accrue (whether or not declared) on a daily basis from the Issue Date and accrued dividends for each Dividend Period shall accumulate to the extent not paid on the dividend payment date first following the -4- Dividend Period for which they accrue. As used herein, the term "accrued" with respect to dividends includes both accrued and accumulated dividends. Accrued and unpaid dividends for any past Dividend Periods may be declared and paid at any time, without reference to any regular dividend payment date, to holders of record on such date, not exceeding 45 days preceding the payment date thereof, as may be fixed by the Board of Directors. B. The amount of dividends payable for each full Dividend Period for the Convertible Preferred Stock shall be computed by dividing the annual dividend rate by four (rounded down to the nearest cent). The amount of dividends payable for the initial Dividend Period on the Convertible Preferred Stock, or any other period shorter or longer than a full Dividend Period on the Convertible Preferred Stock, shall be computed on the basis of a 360-day year consisting of twelve 30-day months. Holders of shares of Convertible Preferred Stock called for redemption on a redemption date falling between the close of business on a dividend payment record date and the opening of business on the corresponding dividend payment date shall, in lieu of receiving such dividend on the dividend payment date fixed therefor, receive such dividend payment together with all other accrued and unpaid dividends on the date fixed for redemption (unless such holder converts such shares in accordance with Section 7 hereof). Holders of shares of Convertible Preferred Stock shall not be entitled to any dividends, whether payable in cash, property or securities, in excess of cumulative dividends, as herein provided, on the Convertible Preferred Stock. No interest, or sum of money in lieu of interest, shall be payable in respect of any dividend payment or payments on the Convertible Preferred Stock which be in arrears. C. So long as any shares of the Convertible Preferred Stock are outstanding, no dividends, except as described in the next succeeding sentence, shall be declared or paid or set apart for payment on any class or series of stock of the Corporation ranking, as to dividends, on a parity with the Convertible Preferred Stock, for any period unless full cumulative dividends have been or contemporaneously are declared and paid or declared and a sum sufficient for the payment thereof set apart for such payment on the Convertible Preferred Stock for all Dividend Periods terminating on or prior to the date of payment, or setting apart for payment, of such full cumulative dividends on such parity stock. When dividends are not paid in full or a sum sufficient for such payment is not set apart, as aforesaid, upon the shares of the Convertible Preferred Stock and any other class or series of stock ranking on a parity as to dividends with the Convertible Preferred Stock, all dividends declared upon shares of the Convertible Preferred Stock and all dividends declared upon such other stock shall be declared pro rata so that the amounts of dividends per share declared on the Convertible Preferred Stock and such other stock shall in all cases bear to each other the same ratio that accrued dividends per share on the shares of the Convertible Preferred Stock and on such other stock bear to each other. -5- D. So long as any shares of the Convertible Preferred Stock are outstanding, no other stock of the Corporation ranking on a parity with the Convertible Preferred Stock as to dividends or upon liquidation, dissolution or winding up shall be redeemed, purchased or otherwise acquired for any consideration (or any moneys be paid to or made available for a sinking fund or otherwise for the purchase or redemption of any shares of any such stock) by the Corporation (except by conversion into or exchange for stock of the Corporation ranking junior to the Convertible Preferred Stock as to dividends and upon liquidation, dissolution or winding up) unless (i) the full cumulative dividends, if any, accrued on all outstanding shares of the Convertible Preferred Stock shall have been paid or set apart for payment for all past Dividend Periods and (ii) sufficient funds shall have been set apart for the payment of the dividend for the current Dividend Period with respect to the Convertible Preferred Stock. E. So long as any shares of the Convertible Preferred Stock are outstanding, no dividends (other than dividends or distributions paid in shares of, or options, warrants or rights to subscribe for or purchase shares of, Common Stock or other stock ranking junior to the Convertible Preferred Stock as to dividends and upon liquidation, dissolution or winding up) shall be declared or paid or set apart for payment and no other distribution shall be declared or made or set apart for payment, in each case upon the Common Stock nor any other stock of the Corporation ranking junior to the Convertible Preferred Stock as to dividends or upon liquidation, dissolution or winding up, nor shall any Common Stock nor any other such stock of the Corporation ranking junior to the Convertible Preferred Stock as to dividends or upon liquidation, dissolution or winding up be redeemed, purchased or otherwise acquired for any consideration (or any moneys be paid to or made available for a sinking fund or otherwise for the purchase or redemption of any shares of any such stock) by the Corporation (except by conversion into or exchange for stock of the Corporation ranking junior to the Convertible Preferred Stock as to dividends and upon liquidation, dissolution or winding up) unless, in each case (i) the full cumulative dividends, if any, accrued on all outstanding shares of the Convertible Preferred Stock and any other stock of the Corporation ranking on a parity with the Convertible Preferred Stock as to dividends shall have been paid or set apart for payment for all past Dividend Periods and all past dividend periods with respect to such other stock and (ii) sufficient funds shall have been set apart for the payment of the dividend for the current Dividend Period with respect to the Convertible Preferred Stock and for the current dividend period with respect to any other stock of the Corporation ranking on a parity with the Convertible Preferred Stock as to dividends. 4. Liquidation Preference. A. In the event of any liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary, before any payment or distribution of the assets of the Corporation (whether capital or surplus) shall be made to or set apart for the holders of Common Stock or any other series or class or classes of stock of the -6- Corporation ranking junior to the Convertible Preferred Stock upon liquidation, dissolution or winding up, the holders of the shares of Convertible Preferred Stock shall be entitled to receive $5,000 per share plus an amount per share equal to all dividends (whether or not earned or declared) accrued and unpaid thereon to the date of final distribution to such holders; but such holders shall not be entitled to any further payment. No payment on account of any liquidation, dissolution or winding up of the Corporation shall be made to the holders of any class or series of stock ranking on a parity with the Convertible Preferred Stock in respect of the distribution of assets upon dissolution, liquidation or winding up unless there shall likewise be paid at the same time to the holders of the Convertible Preferred Stock like proportionate amounts determined ratably in proportion to the full amounts to which the holders of all outstanding shares of Convertible Preferred Stock and the holders of all outstanding shares of such parity stock are respectively entitled with respect to such distribution. If, upon any liquidation, dissolution or winding up of the Corporation, the assets of the Corporation, or proceeds thereof, distributable among the holders of the shares of Convertible Preferred Stock shall be insufficient to pay in full the preferential amount aforesaid and liquidating payments on any other shares of stock ranking, as to liquidation, dissolution or winding up, on a parity with the Convertible Preferred Stock, then such assets, or the proceeds thereof, shall be distributed among the holders of shares of Convertible Preferred Stock and any such other stock ratably in accordance with the respective amounts which would be payable on such shares of Convertible Preferred Stock and any such other stock if all amounts payable thereon were paid in full. For the purposes of this Section 4, (i) a consolidation or merger of the Corporation with one or more corporations or other entities, (ii) a sale, lease, exchange or transfer of all or any part of the Corporation assets or (iii) a statutory share exchange shall not be deemed to be a liquidation, dissolution or winding up, voluntary or involuntary. B. Subject to the rights of the holders of shares of any series or class or classes of stock ranking on a parity with or prior to the Convertible Preferred Stock upon liquidation, dissolution or winding up, upon any liquidation, dissolution or winding up of the Corporation, after payment shall have been made in full to the holders of Convertible Preferred Stock, as provided in this Section 4, any other series or class or classes of stock ranking junior to the Convertible Preferred Stock upon liquidation, dissolution or winding up shall, subject to the respective terms and provisions (if any) applying thereto, be entitled to receive any and all assets remaining to be paid or distributed, and the holders of Convertible Preferred Stock shall not be entitled to share therein. C. Written notice of any liquidation, dissolution or winding up of the Corporation, stating the payment date or dates when and the place or places where the amounts distributable in such circumstances shall be payable, shall be given by first class mail, postage prepaid, not less than 30 days prior to any payment date stated therein, to the holders of record of the Convertible Preferred Stock at their respective addresses as -7- the same shall appear on the books of the Corporation. 5. Transfers. A. Each certificate of Convertible Preferred Stock shall bear the legend substantially in the form of that given in Exhibit A, describing the transfer restrictions to which it is subject. B. Each certificate of Convertible Preferred Stock presented for transfer, exchange or conversion: 1. shall be duly endorsed or accompanied by a written instruction of transfer in form satisfactory to the Registrar duly executed by such Holder or its attorney, duly authorized in writing; and 2. shall be accompanied by a Transferor Certificate in the form of Exhibit B. 6. Redemption at the Option of the Corporation. A. Convertible Preferred Stock may not be redeemed by the Corporation prior toAugust 6, 1997, on or after which the Corporation, at its option, may redeem the shares of Convertible Preferred Stock, in whole or in part, out of funds legally available therefor, at any time or from time to time, subject to the notice provisions and provisions for partial redemption described below, at an amount equal to the liquidation preference of such shares of Convertible Preferred Stock plus an amount equal to accrued and unpaid dividends, if any, to (and including) the date fixed for redemption, whether or not earned or declared; provided, however, that the Corporation may not redeem the Convertible Preferred Stock unless the closing price of the Common Stock on the principal stock exchange or market on which the Common Stock is then quoted or admitted to trading equals or exceeds 150% of the Conversion Price for at least 20 trading days within a period of 30 consecutive trading days, provided, further, that if a redemption date is a dividend payment date, the quarterly payment becoming due on such date shall be payable to the holder of record as of the relevant record date. B. In the event the Corporation shall redeem shares of Convertible Preferred Stock, notice of such redemption shall be given by first class mail, postage prepaid, mailed not less than 30 nor more than 60 days prior to the redemption date, to each holder of record of the shares to be redeemed, at such holder's address as the same appears on the stock records of the Corporation. Each such notice shall state: (i) the redemption date; (ii) the number of shares of Convertible Preferred Stock to be redeemed and, if less than all the shares held by such holder are to be redeemed, the number of such -8- shares to be redeemed from such holder; (iii) the redemption price; (iv) the place or places where certificates for such shares are to be surrendered for payment of the redemption price; (v) the then current conversion price; (vi) the date five days prior to the redemption date on which the right to convert the Convertible Preferred Stock terminates; and (vii) that dividends on the shares to be redeemed shall cease to accrue on such redemption date. Notice having been mailed as aforesaid, from and after the redemption date, unless the Corporation shall be in default in providing money for the payment of the redemption price (including any accrued and unpaid dividends to (and including) the date fixed for redemption), (i) dividends on the shares of the Convertible Preferred Stock so called for redemption shall cease to accrue, (ii) said shares shall be deemed no longer outstanding, and (iii) all rights of the holders thereof as stockholders of the Corporation (except the right to receive from the Corporation the moneys payable upon redemption without interest thereon) shall cease. The Corporation's obligation to provide moneys in accordance with the preceding sentence shall be deemed fulfilled if, on or before the redemption date, the Corporation shall deposit with a bank or trust company having an office in the Borough of Manhattan, City of New York, and having a capital and surplus of at least $50,000,000, funds necessary for such redemption, in trust for the account of the holders of the shares to be redeemed (and so as to be and continue to be available therefor), with irrevocable instructions and authority to such bank or trust company that such funds be applied to the redemption of the shares of Convertible Preferred Stock so called for redemption. Any interest accrued on such funds shall be paid to the Corporation from time to time. Any funds so deposited and unclaimed at the end of three years from such redemption date shall be released or repaid to the Corporation, after which, subject to any applicable laws relating to escheat or unclaimed property, the holder or holders of such shares of Convertible Preferred Stock so called for redemption shall look only to the Corporation for payment of the redemption price. Upon surrender in accordance with said notice of the certificates for any such shares so redeemed (properly endorsed or assigned for transfer, if the Board of Directors shall so require and the notice shall so state), such shares shall be redeemed by the Corporation at the applicable redemption price aforesaid. If fewer than all the outstanding shares of Convertible Preferred Stock are to be redeemed, shares to be redeemed shall be selected by the Corporation from outstanding shares of Convertible Preferred Stock not previously called for redemption by lot or pro rata (as near as may be) or by any other method determined by the Corporation in its sole discretion to be equitable. If fewer than all the shares represented by any certificate are redeemed, a new certificate shall be issued representing the unredeemed shares without cost to the holder thereof. Notwithstanding the foregoing, if notice of redemption has been given pursuant to this Section 5 and any holder of shares of Convertible Preferred Stock shall, prior to the close of business on (i) the date which is five days prior to the redemption date, or (ii) if the Corporation shall so elect and state in the notice of -9- redemption, the date (which date shall be the date five days prior to the date fixed for redemption or an earlier date not less than 30 days after the date of mailing of the redemption notice) on which the Corporation irrevocably deposits with a designated bank or trust company as paying agent, money sufficient to pay, on the redemption date, the redemption price, give written notice to the Corporation pursuant to Section 7(b) hereof of the conversion of any or all of the shares to be redeemed held by such holder (accompanied by a certificate or certificates for such shares, duly endorsed or assigned to the Corporation), then the conversion of such shares to be redeemed shall become effective as provided in Section 7. 7. Shares to be Retired. All shares of Convertible Preferred Stock purchased, redeemed, exchanged or converted by the Corporation shall be retired and cancelled and shall be restored to the status of authorized but unissued shares of Preferred Stock, without designation as to series and may thereafter be reissued. 8. Conversion. Holders of shares of Convertible Preferred Stock shall have the right to convert all or a portion of such shares (including fractions of such shares) into shares of Common Stock, as follows: A. Subject to and upon compliance with the provisions of this Section 8, a holder of shares of Convertible Preferred Stock shall have the right, at such holder's option, at any time to convert any of such shares (or fractions thereof) into the number of fully paid and nonassessable shares of Common Stock (calculated as to each conversion to the nearest 1/100th of a share) obtained by dividing the aggregate liquidation preference of the shares to be converted by the Conversion Price and by surrender of such shares, such surrender to be made in the manner provided in paragraph (b) of this Section 8; provided, however, that the right to convert shares called for redemption pursuant to Section 5 hereof shall terminate at the close of business on (i) the date five days prior to the date fixed for redemption or exchange, or (ii) if the Corporation shall so elect and state in the notice of redemption, the date (which date shall be the date five days prior to the date fixed for redemption or an earlier date not less than 30 days after the date of mailing of the redemption notice) on which the Corporation irrevocably deposits with a designated bank or trust company as paying agent, money sufficient to pay, on the redemption date, the redemption price. No fractional shares or securities representing fractional shares of Common Stock will be issued upon conversion, and instead such amounts as would have been paid in fractional shares will be paid in cash as provided in Section 8(c). B. In order to exercise the conversion right, the holder of each share of Convertible Preferred Stock (or fraction thereof) to be converted shall surrender the certificate representing such share, duly endorsed or assigned to the Corporation or in blank, at the office of the Corporation, accompanied by written notice to the Corporation that the holder thereof elects to convert Convertible Preferred Stock or a specified portion -10- thereof. Unless the shares issuable on conversion are to be issued in the same name as the name in which such share of Convertible Preferred Stock is registered, each share surrendered for conversion shall be accompanied by instruments of transfer, in form satisfactory to the Corporation, duly executed by the holder or such holder's duly authorized attorney and an amount sufficient to pay any transfer or similar tax (or evidence reasonably satisfactory to the Corporation demonstrating that such taxes have been paid or are not required to be paid). Holders of shares of Convertible Preferred Stock at the close of business on a dividend payment record date shall be entitled to receive the dividend payable on such shares on the corresponding dividend payment date (except that holders of shares called for redemption on a redemption date falling between the close of business on such dividend payment record date and the opening of business on the corresponding dividend payment date shall, in lieu of receiving such dividend on the dividend payment date fixed therefor, receive such dividend payment together with all other accrued and unpaid dividends on the date fixed for redemption, unless such holder converts such shares called for redemption pursuant to the provisions of this Section 8) notwithstanding the conversion thereof following such dividend payment record date and prior to such dividend payment date. However, shares of Convertible Preferred Stock surrendered for conversion during the period between the close of business on any dividend payment record date and the opening of business on the corresponding dividend payment date (except shares called for redemption or exchange on a redemption date or exchange date during such period) must be accompanied by payment of an amount equal to the dividend payment with respect to such shares of Convertible Preferred Stock presented for conversion on such dividend payment date. A holder of shares of Convertible Preferred Stock on a dividend payment record date who (or whose transferee) tenders any such shares for conversion into shares of Common Stock on the corresponding dividend payment date will receive the dividend payable by the Corporation on such shares of Convertible Preferred Stock on such date and the converting holder need not include payment in the amount of such dividend upon surrender of shares of Convertible Preferred Stock for conversion on the dividend payment date. Except as provided above, the Corporation shall make no payment or allowance for unpaid dividends, whether or not in arrears, on converted shares or for dividends on the shares of Common Stock issued upon such conversion. As promptly as practicable after the surrender of certificates for shares of Convertible Preferred Stock as aforesaid, the Corporation shall issue and shall deliver at such office to such holder, or on such holder's written order, a certificate or certificates for the number of shares of Common Stock issuable upon the conversion of such shares in accordance with the provisions of this Section 8, and any fractional interest in respect of a share of Common Stock arising upon such conversion shall be settled as provided in paragraph (c) of this Section 8. -11- Each conversion shall be deemed to have been effected immediately prior to the close of business on the date on which the certificates for shares of Convertible Preferred Stock shall have been surrendered and such notice received by the Corporation as aforesaid, and the person or persons in whose name or names any certificate or certificates for shares of Common Stock shall be issuable upon such conversion shall be deemed to have become the holder or holders of record of the shares represented thereby at such time on such date and such conversion shall be at the Conversion Price in effect at such time on such date, unless the stock transfer books of the Corporation shall be closed on that date, in which event such person or persons shall be deemed to have become such holder or holders of record at the close of business on the next succeeding day on which such stock transfer books are open, but such conversion shall be at the Conversion Price in effect on the date upon which such shares shall have been surrendered and such notice received by the Corporation. All shares of Common Stock delivered upon conversion of the Convertible Preferred Stock will upon delivery be duly and validly issued and fully paid and nonassessable. C. Instead of any fractional interest in a share of Common Stock which would otherwise be deliverable upon the conversion of a share of Convertible Preferred Stock (or fraction thereof), the Corporation shall pay to the holder of such share an amount in cash equal to the Closing Price of Common Stock on the Trading Date immediately preceding the date of conversion multiplied by the fraction of a share of Common Stock represented by such fractional interest. If more than one share shall be surrendered for conversion at one time by the same holder, the number of full shares of Common Stock issuable upon conversion thereof shall be computed on the basis of the aggregate number of shares of Convertible Preferred Stock so surrendered. D. The Conversion Price shall be adjusted from time to time as follows: 1. In case the Corporation shall after the Issue Date (A) pay a dividend or make a distribution on its Common Stock in shares of its Common Stock, (B) subdivide or split its outstanding Common Stock into a greater number of shares, (C) combine its outstanding Common Stock into a smaller number of shares or (D) issue any shares of capital stock by reclassification of its Common Stock, the Conversion Price in effect immediately prior thereto shall be adjusted so that the holder of any share of Convertible Preferred Stock thereafter surrendered for conversion shall be entitled to receive the number of shares of Common Stock of the Corporation which such holder would have owned or have been entitled to receive after the occurrence of any of the events described above had such share been surrendered for conversion immediately prior to the occurrence of such event or the record date therefor, whichever is earlier. An adjustment made pursuant to this subparagraph (i) shall become effective immediately after the close of business on the record date for determination of -12- stockholders entitled to receive such dividend or distribution in the case of a dividend or distribution (except as provided in paragraph (h) below) and shall become effective immediately after the close of business on the effective date in the case of a subdivision, split, combination or reclassification. Any shares of Common Stock issuable in payment of a dividend shall be deemed to have been issued immediately prior to the close of business on the record date for such dividend for purposes of calculating the number of outstanding shares of Common Stock under clauses (ii) and (iii) below. 2. In case the Corporation shall issue after the Issue Date rights or warrants to all holders of Common Stock entitling them (for a period expiring within 45 days after the issuance date) to subscribe for or purchase Common Stock at a price per share less than the Current Market Price per share of Common Stock at the record date for the determination of stockholders entitled to receive such rights or warrants, then the Conversion Price in effect immediately prior thereto shall be adjusted to equal the price determined by multiplying (A) the Conversion Price in effect immediately prior to the date of issuance of such rights or warrants by (B) a fraction, the numerator of which shall be the sum of (1) the number of shares of Common Stock outstanding on the date of issuance of such rights or warrants (without giving effect to any such issuance) and (2) the number of shares which the aggregate proceeds from the exercise of such rights or warrants for Common Stock would purchase at such Current Market Price, and the denominator of which shall be the sum of (1) the number of shares of Common Stock outstanding on the date of issuance of such rights or warrants (without giving effect to any such issuance) and (2) the number of additional shares of Common Stock offered for subscription or purchase. Such adjustment shall be made successively whenever any such rights or warrants are issued, and shall become effective immediately after such record date. In determining whether any rights or warrants entitle the holders of Common Stock to subscribe for or purchase shares of Common Stock at less than such Current Market Price, there shall be taken into account any consideration received by the Corporation upon issuance and upon exercise of such rights or warrants, the value of such consideration, if other than cash, to be determined by the Board of Directors. 3. In case the Corporation shall make a distribution to all holders of its Common Stock after the Issue Date of any Shares of capital stock of the Corporation or its subsidiaries (other than Common Stock) or evidences of its indebtedness or assets (excluding cash dividends payable solely in cash that may from time to time be fixed by the Board of Directors, or dividends or distributions in connection with the liquidation, dissolution or winding up of the Corporation) or rights or warrants to subscribe for or purchase any of its securities or those of its subsidiaries (excluding those referred to in subparagraph (ii) above) (any of the foregoing being hereinafter in this subparagraph (iii) called the "Securities"), then -13- in each such case, the Conversion Price shall be adjusted so that it shall equal the price determined by multiplying (A) the Conversion Price in effect on the record date mentioned below by (B) a fraction, the numerator of which shall be the Current Market Price per share of the Common Stock on the record date mentioned below less the then fair market value (as determined by the Board of Directors, whose determination shall, if made in good faith, be conclusive) as of such record date of the portion of the capital stock or assets or evidences of indebtedness so distributed or of such rights or warrants applicable to one share of Common Stock, and the denominator of which shall be the Current Market Price per share of the Common Stock on such record date; provided, however, that in the event the then fair market value (as so determined) of the portion of Securities so distributed applicable to one share of Common Stock is equal to or greater than the Current Market Price per share of Common Stock on the record date mentioned above, in lieu of the foregoing adjustment, adequate provision shall be made so that each holder of shares of Convertible Preferred Stock shall have the right to receive the amount and kind of Securities such holder would have received had such holder converted each such share of Convertible Preferred Stock immediately prior to the record date for the distribution of the Securities. Such adjustment shall become effective immediately, except as provided in paragraph (h) below, after the record date for the determination of stockholders entitled to receive such distribution; provided, further, that any such Securities consisting of rights or warrants shall, notwithstanding paragraphs (ii) or (iii) above, by their terms provide for an increase or increases with the passage of time or otherwise in the price payable to the Corporation upon the exercise thereof, the Conversion Price upon any such increase becoming effective shall forthwith be readjusted (but to no greater extent than originally adjusted by reason of such issuance or sale) to reflect the same. Upon the expiration or termination of such rights or warrants, if any such rights or warrants shall not have been exercised, then the Conversion Price shall forthwith be readjusted and thereafter be the rate which it would have been had an adjustment been made on the basis that (A) the only rights or warrants so issued or sold were those so exercised and they were issued or sold for the consideration actually received by the Corporation upon such exercise plus the consideration, if any, actually received by the Corporation for the granting of all such options, rights or warrants whether or not exercised and (B) the Corporation issued and sold a number of shares of Common Stock equal to those actually issued upon exercise of such rights, and such shares were issued and sold for a consideration equal to the aggregate exercise price in effect under the exercise rights actually exercised at the respective dates of their exercise. For purposes of subparagraphs (ii) and (iii), the aggregate consideration received by the Corporation in connection with the issuance of shares of Common Stock or of rights or warrants shall be deemed to be equal to the sum of the aggregate offering price (before deduction of underwriting discounts or commissions and expenses payable to third parties) of all such securities plus the -14- minimum aggregate amount, if any, payable upon the exercise of such rights or warrants into shares of Common Stock. 4. In case the Corporation shall, by dividend or otherwise, at any time distribute to all holders of the Common Stock cash (excluding any cash that is distributed as part of a distribution referred to in subparagraph (iii) above or in connection with a transaction to which paragraph (e) of this Section 8 applies) in an aggregate amount that, together with (A) the aggregate amount of any other distributions to all holders of the Common Stock made exclusively in cash within the 12 months preceding the date fixed for the determination of stockholders entitled to such distribution and in respect of which no Conversion Price adjustment pursuant to subparagraph (iii) above or this subparagraph (iv) has been made previously and (B) the aggregate of any cash plus the fair market value (as determined by the Board of Directors, whose determination shall, if made in good faith, be conclusive) as of such date of determination of consideration payable in respect of any tender or exchange offer by the Corporation or a Subsidiary for all or any portion of the Common Stock consummated within 12 months preceding such date of determination and in respect of which no Conversion Price adjustment pursuant to subparagraph (v) below has been made previously, exceeds 20% of the product of the Current Market Price per share of Common Stock on such date of determination times the number of shares of Common Stock outstanding on such date, then in each such case the Conversion Price shall be reduced so that it shall equal the price obtained by multiplying the Conversion Price in effect immediately prior to the close of business on such date of determination by a fraction of which the numerator shall be (x) the Current Market Price per share of Common Stock on such date less the amount of cash to be distributed at such time applicable to one share of Common Stock and the denominator shall be (y) such Current Market Price, such reduction to become effective immediately prior to the opening of business on the day after such date; provided, however, that in the event the portion of the cash so distributed applicable to one share of Common Stock is equal to or greater than the Current Market Price per share of Common Stock on the record date mentioned above, in lieu of the foregoing adjustment, adequate provision shall be made so that each holder of shares of Convertible Preferred Stock shall have the right to receive the amount of cash such holder would have received had such holder converted each such share of Convertible Preferred Stock immediately prior to the record date for such distribution. 5. In case a tender or exchange offer made by the Corporation or any Subsidiary for all or any portion of the Common Stock shall be consummated and such tender or exchange offer shall involve an aggregate consideration having a fair market value (as determined by the Board of Directors, whose determination shall, if made in good faith, be conclusive) as of the last time -15- (the "Expiration Time") that tenders or exchanges may be made pursuant to such tender or exchange offer (as it shall have been amended) that, together with (A) the aggregate of the cash plus the fair market value (as determined by the Board of Directors, whose determination shall, if made in good faith, be conclusive) as of the Expiration Time of the other consideration paid in respect of any other tender or exchange offer by the Corporation or a Subsidiary for all or any portion of the Common Stock consummated within the 12 months preceding the Expiration Time and in respect of which no Conversion Price adjustment pursuant to this subparagraph (v) has been made previously and (B) the aggregate amount of any distributions to all holders of the Common Stock made exclusively in cash within the 12 months preceding the Expiration Time and in respect of which no Conversion Price adjustment pursuant to subparagraph (iii) or (iv) above has been made previously, exceeds 20% of the product of the Current Market Price per share of Common Stock immediately prior to the Expiration Time times the number of shares of Common Stock outstanding (including any tendered or exchanged shares) at the Expiration Time, then in each such case the Conversion Price shall be reduced so that it shall equal the price obtained by multiplying the Conversion Price in effect immediately prior to the Expiration Time by a fraction of which the numerator shall be (x) the product of the Current Market Price per share of Common Stock immediately prior to the Expiration Time times the number of shares of Common Stock outstanding (including any tendered or exchanged shares) at the Expiration Time minus the fair market value (determined as aforesaid) of the aggregate consideration payable to stockholders upon consummation of such tender or exchange offer and the denominator shall be (y) the product of such Current Market Price times such number of outstanding shares at the Expiration Time minus the number of shares accepted for payment in such tender or exchange offer (the "Purchased Shares"), such reduction to become effective immediately prior to the opening of business on the day following the Expiration Time; provided, however, that if the number of Purchased Shares or the aggregate consideration payable therefor have not been finally determined by such opening of business, the adjustment required by this subparagraph (v) shall, pending such final determination, be made based upon the preliminarily announced results of such tender or exchange offer, and, after such final determination shall have been made, the adjustment required by this subparagraph (v) shall be made based upon the number of Purchased Shares and the aggregate consideration payable therefor as so finally determined. 6. Except as provided in subparagraph (v) above, no adjustment of the conversion price will be made for cases dividends to the extent they are paid from retained earnings and no adjustment in the Conversion Price, in any event, shall be required unless such adjustment would require an increase or decrease of at least 1% in such price; provided, however, that any adjustments which by reason of this subparagraph (vi) are not required to be made shall be -16- carried forward and taken into account in any subsequent adjustment; and provided, however, that any adjustment shall be required and shall be made in accordance with the provisions of this Section 8 (other than this subparagraph (vi)) not later than such time as may be required in order to preserve the tax-free nature of a distribution to the holder of shares of Common Stock. All calculations under this Section 8 shall be made to the nearest cent (with $.005 being rounded upward) or to the nearest 1/100th of a share (with .005 of a share being rounded-upward), as the case may be. Anything in this Section 8(d) to the contrary notwithstanding, the Corporation shall be entitled, to the extent permitted by law, to make such reductions in the Conversion Price, in addition to those required by this Section 8(d), as it in its discretion shall determine to be advisable in order that any stock dividends, subdivision of shares, distribution of rights or warrants to purchase stock or securities, or a distribution of other assets or any other transaction which could be treated as any of the foregoing transactions pursuant to Section 305 of the Internal Revenue Code of 1986, as amended, hereafter made by the Corporation to its stockholders shall not be taxable for such stockholders. E. In case the Corporation shall be a party to any transaction (including without limitation a merger, consolidation, sale of all or substantially all of the Corporation's assets or recapitalization of the Common Stock and excluding any transaction as to which Section 8(d)(i) applies) (each of the foregoing being referred to as a "Transaction"), in each case as a result of which shares of Common Stock shall be converted into the right to receive stock, securities or other property (including cash or any combination thereof), then the Convertible Preferred Stock will thereafter no longer be subject to conversion into Common Stock pursuant to Section 8, but instead shall be convertible into the kind and amount of shares of stock and other securities and property receivable (including cash) upon the consummation of such Transaction by a holder of that number of shares of Common Stock into which one share of Convertible Preferred Stock was convertible immediately prior to such Transaction. The Corporation shall not be a party to any Transaction unless the terms of such Transaction are consistent with the provisions of this paragraph (e) and it shall not consent or agree to the occurrence of any Transaction until the Corporation has entered into an agreement with the successor or purchasing entity, as the case may be, for the benefit of the holders of the Convertible Preferred Stock which will contain provisions enabling the holders of the Convertible Preferred Stock which remains outstanding after such Transaction to convert into the consideration received by holders of Common Stock at the Conversion Price immediately after such Transaction. In the event that at any time, as a result of an adjustment made pursuant to this Section 8, the Convertible Preferred Stock shall become subject to conversion into any securities other than shares of Common Stock, thereafter the number of such other securities so issuable upon conversion of the shares of Convertible Preferred Stock shall be subject to adjustment from time to time in a manner and on terms as nearly equivalent as practicable to the provisions with respect to the shares of Convertible Preferred Stock contained in this Section 8. The provisions of this Section -17- 8(e) shall similarly apply to successive Transactions. F. If: 1. the Corporation shall declare a dividend (or any other distribution) on the Common Stock that would cause an adjustment to the Conversion Price of the Convertible Preferred Stock pursuant to the terms of any of the paragraphs above (including such an adjustment that would occur but for the terms of the first sentence of subparagraph (d)(vii) above); or 2. the Corporation shall authorize the granting to the holders of the Common Stock of rights or warrants to subscribe for or purchase any shares of any class or any other rights or warrants; or 3. there shall be any reclassification or change of the Common Stock (other than an event to which paragraph (d)(i) of this Section 8 applies) or any consolidation, merger or statutory share exchange to which the Corporation is a party and for which approval of any stockholders of the Corporation is required, or the sale or transfer of all or substantially all of the assets of the Corporation or any Change in Control (as defined in Section 9 below); or 4. there shall be a voluntary or involuntary dissolution, liquidation or winding up of the Corporation; then, except as provided otherwise in Section 9, the Corporation shall cause to be mailed to the holders of shares of the Convertible Preferred Stock at their addresses as shown on the stock records of the Corporation, as promptly as possible, but at least 30 days prior to the applicable date hereinafter specified, a notice stating (A) the date on which a record is to be taken for the purpose of such dividend, distribution or granting of rights or warrants, or, if a record is not to be taken, the date as of which the holders of Common Stock of record to be entitled to such dividend, distribution or rights or warrants are to be determined or (B) the date on which such reclassification, change, consolidation, merger, statutory share exchange, sale, transfer, dissolution, liquidation or winding up is expected to become effective or occur, and the date as of which it is expected that holders of Common Stock of record shall be entitled to exchange their shares of Common Stock for securities or other property deliverable upon such reclassification, change, consolidation, merger, statutory share exchange, sale, transfer, dissolution, liquidation or winding up. Failure to give such notice or any defect -18- therein shall not affect the legality or validity of the proceedings described in this Section 8. G. Whenever the Conversion Price is adjusted as herein provided, the Corporation shall prepare a notice of such adjustment of the Conversion Price setting forth the adjusted Conversion Price, the facts requiring such adjustment and upon which such adjustments are based and the date on which such adjustment becomes effective and shall mail such notice of such adjustment of the Conversion Price to the holder of each share of Convertible Preferred Stock at such holder's last address as shown on the stock records of the Corporation. H. In any case in which paragraph (d) of this Section 8 provides that an adjustment shall become effective immediately after a record date for an event and the date fixed for conversion pursuant to Section 8 occurs after such record date but before the occurrence of such event, the Corporation may defer until the actual occurrence of such event (i) issuing to the holder of any share of Convertible Preferred Stock surrendered for conversion the additional shares of Common Stock issuable upon such conversion by reason of the adjustment required by such event over and above the Common Stock issuable upon such conversion before giving effect to such adjustment and (ii) paying to such holder any amount in cash in lieu of any fraction pursuant to paragraph (c) of this Section 8. I. For purposes of this Section 8, the number of shares of Common Stock at any time outstanding shall not include any shares of Common Stock then owned or held by or for the account of the Corporation or any corporation controlled by the Corporation. J. Notwithstanding any other provision herein to the contrary, the issuance of any shares of Common Stock pursuant to any plan providing for the reinvestment of dividends or interest payable on securities of the Corporation and the investment of additional optional amounts in shares of Common Stock under any such plan shall not be deemed to constitute an issuance of Common Stock. There shall be no adjustment of the Conversion Price in case of the issuance of any stock of the Corporation in a reorganization, acquisition or other similar transaction except as specifically set forth in this Section 8. If any action or transaction would require adjustment of the Conversion Price pursuant to more than one paragraph of this Section 8, only one adjustment shall be made and such adjustment shall be the amount of adjustment which has the highest absolute value. K. In case the Corporation shall take any action affecting the Common Stock, other than action described in this Section 8, which in the -19- opinion of the Board of Directors would materially adversely affect the conversion rights of the holders of the shares of Convertible Preferred Stock, the Conversion Price for the Convertible Preferred Stock may be adjusted, to the extent permitted by law, in such manner, if any, and at such time, as the Board of Directors may determine to be equitable in the circumstances. L. The Corporation covenants that it will at all times reserve and keep available, free from preemptive rights, out of the aggregate of its authorized but unissued shares of Common Stock or its issued shares of Common Stock held in its treasury, or both, for the purpose of effecting conversion of the Convertible Preferred Stock, the full number of shares of Common Stock deliverable upon the conversion of all outstanding shares of Convertible Preferred Stock not theretofore converted. For purposes of this paragraph (1), the number of shares of Common Stock which shall be deliverable upon the conversion of all outstanding shares of Convertible Preferred Stock shall be computed as if at the time of computation all such outstanding shares were held by a single holder. Before taking any action which would cause an adjustment reducing the Conversion Price below the then par value of the shares of Common Stock deliverable upon conversion of the Convertible Preferred Stock, the Corporation will take any corporate action which may, in the opinion of its counsel, be necessary in order that the Corporation may validly and legally issue fully paid and nonassessable shares of Common Stock at such adjusted Conversion Price. The Corporation will endeavor to make the shares of Common Stock required to be delivered upon conversion of the Convertible Preferred Stock eligible for trading upon the Nasdaq National Market or upon any national securities exchange upon which the Common Stock shall then be traded, prior to such delivery. Prior to the delivery of any securities which the Corporation shall be obligated to deliver upon conversion of the Convertible Preferred Stock, the Corporation will endeavor to comply with all federal and state laws and regulations thereunder requiring the registration of such securities with, or any approval of or consent to the delivery thereof by, any governmental authority. M. The Corporation will pay any and all documentary stamp or similar issue or transfer taxes payable in respect of the issue or delivery of the shares of Convertible Preferred Stock (or any other securities issued on account of the Convertible Preferred Stock pursuant hereto) or shares of Common Stock on conversion of the Convertible Preferred Stock pursuant hereto; provided, however, that the Corporation shall not be required to pay any tax which may be -20- payable in respect of any transfer involved in the issue or delivery of shares of Convertible Preferred Stock (or any other securities issued on account of the Convertible Preferred Stock pursuant hereto) or shares of Common Stock in a name other than the name in which the shares of Convertible Preferred Stock with respect to which such Common Stock shares are issued were registered and the Corporation shall not be required to make any issue or delivery unless and until the person requesting such issue or delivery has paid to the Corporation the amount of any such tax or has established, to the reasonable satisfaction of the Corporation, that such tax has been paid or is not required to be paid. N. The Corporation shall not take any action which results in adjustment of the number of shares of Common Stock issuable upon conversion of a share of Convertible Preferred Stock if the total number of shares of Common Stock issuable after such action upon conversion of the Convertible Preferred Stock then outstanding, together with the total number of shares of Common Stock then outstanding, would exceed the total number of shares of Common Stock then authorized under the Corporation's Certificate of Incorporation. Subject to the foregoing, the Corporation shall take all such actions as it may deem reasonable under the circumstances to provide for the issuance of such number of shares of Common Stock as would be necessary to allow for the conversion from time to time, and taking into account adjustments as herein provided, of outstanding shares of the Convertible Preferred Stock in accordance with the terms and provisions of the Corporation's Certificate of Incorporation. 9. Special Right of Redemption Upon Change in Control. A. If a Change in Control (as defined below) should occur with respect to the Corporation, each holder of shares of the Convertible Preferred Stock shall have the right, at the holder's option, for a period of 45 days after the mailing of a notice by the Corporation that a Change in Control has occurred, to require the Corporation to repurchase all, or any portion, of such holder's shares of the Convertible Preferred Stock for a price equal to 100% of the liquidation preference amount of such Convertible Preferred Stock, plus an amount equal to all dividends (whether or not earned or declared), accrued and unpaid to the date fixed for repurchase (the "Repurchase Price"). B. If a Change in Control shall occur, then, as soon as practicable and in any event within 30 days after the occurrence of such Change in Control, the Corporation shall mail to each registered holder of a share of Convertible Preferred Stock a notice setting forth details regarding the special right of the holders to have their shares of Convertible Preferred Stock repurchased as a result of such Change in Control. A holder of a share of Convertible Preferred Stock must exercise such repurchased right within the 45-day period after the mailing of the Special Right Notice by the Corporation or such special right shall expire. The repurchase date for shares so repurchased shall be -21- the 45th day after the mailing of the Special Right Notice. Exercise of such repurchase right shall be irrevocable and no dividend on the shares of Convertible Preferred Stock tendered for repurchase shall accrue from and after the repurchase date. C. The Special Right Notice shall state: 1. the event constituting the Change in Control; 2. the last date upon which holders may submit shares of Convertible Preferred Stock for repurchase; 3. the Repurchase Price; 4. the Conversion Price then in effect under Section 8 and the continuing conversion rights, if any, under Section 8(e); 5. the name and address of any paying agent and conversion agent; 6. that exercise of such conversion right shall be irrevocable and no dividends on shares of Convertible Preferred Stock tendered for conversion shall accrue from and after the conversion date; 7. that the consideration to be received shall be delivered within five Business Days after the last date upon which holders may submit Convertible Preferred Stock for conversion. D. As used herein, a "Change in Control" means (i) the acquisition by any person, entity or "group", within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934 (the "Exchange Act") (excluding, for this purpose, the Company or its subsidiaries, or any employee benefit plan of the Company or its subsidiaries which acquires beneficial ownership of voting securities of the Company) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 50% or more of either the then outstanding shares of Common Stock or the combined voting power of the Company's then outstanding voting securities entitled to vote generally in the election of directors; or (ii) individuals, who, as of the date of original issuance of the Convertible Preferred Stock, constitute the Board (as of the date hereof the "Incumbent Board") cease for any reason to constitute at least a majority of the Board, provided that any person becoming a director subsequent to the date of original issuance of the Convertible Preferred Stock whose election, or nomination for election by the Company's stockholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be, for purposes of this definition, considered as though such person were a member of the Incumbent Board; or (iii) approval by the -22- stockholders of the Company of a reorganization, merger or consolidation, in each case, with respect to which persons who were stockholders of the Company prior to such reorganization, merger or consolidation do not, immediately thereafter, own more than 50% of the combined voting power entitled to vote generally in the election of directors of the reorganized, merged or consolidated company's then outstanding voting securities; or (iv) a liquidation or dissolution of the company (other than pursuant to the United States Bankruptcy Code) or of the sale of all or substantially all of the assets of the Company. 10. Ranking. Any class or classes of stock of the Corporation shall be deemed to rank: A. prior to the Convertible Preferred Stock, as to dividends or as to the distribution of assets upon liquidation, dissolution or winding up, if the holders of such class shall be entitled to the receipt of dividends or of amounts distributable upon liquidation, dissolution or winding up, as the case may be, in preference or priority to the holders of Convertible Preferred Stock. B. on a parity with the Convertible Preferred Stock, as to dividends or as to the distribution of assets upon liquidation, dissolution or winding up, whether or not the dividend rates, dividend payment dates or redemption or liquidation prices per share thereof be different from those of the Convertible Preferred Stock, if the holders of such class of stock and the Convertible Preferred Stock shall be entitled to the receipt of dividends or of amounts distributable upon liquidation, dissolution or winding up, as the case may be, in proportion to their respective amounts of accrued and unpaid dividends per share or liquidation prices, without preference or priority of one over the other; and C. junior to the Convertible Preferred Stock, as to dividends or as to the distribution of assets upon liquidation, dissolution or winding up, if such stock shall be Common Stock or if the holders of Convertible Preferred Stock shall be entitled to receipt of dividends or of amounts distributable upon liquidation, dissolution or winding up, as the case may be, in preference or priority to the holders of shares of such stock. 11. Voting. A. Except as described below or as required by law, holders of Convertible Preferred Stock shall be entitled to the number of votes equal to the number of shares of Common Stock of the Company into which such Convertible Preferred Stock could be converted and shall have the voting rights and powers equal to the voting rights and powers of the Common Stock (voting together with the Common Stock as a single class) and shall be entitled to notice of any stockholders' meeting in accordance with the By-Laws, of the Company. With respect to matters affecting only the Convertible Preferred Stock, each outstanding share of Preferred Stock will be entitled to one vote. In -23- either case described in this paragraph, shares held by the Company or any entity controlled by the Company shall be excluded and shall have no voting rights. B. Upon issuance of the Convertible Preferred Stock, the number of directors of the Company will be increased by one, and the holders of the Convertible Preferred Stock (voting separately as a class with one vote per share of Convertible Preferred Stock) will be entitled to elect such one additional director to the Board of Directors at any meeting of stockholders of the Company at which directors are to be elected. C. So long as any shares of the Convertible Preferred Stock remain outstanding, the consent of the holders of at least two-thirds of the shares of Convertible Preferred Stock outstanding at the time given in person or by proxy either in writing (as permitted by law and the Certificate of Incorporation and By-laws of the Corporation) or at any special or annual meeting, shall be necessary to permit, effect or validate any one or more of the following: 1. the authorization, creation or issuance, or any increase in the authorized or issued amount, of any class or series of stock, or any security convertible into stock of such class or series, ranking prior to, or pari passu with, the Convertible Preferred Stock as to dividends or the distribution of assets upon liquidation, dissolution or winding up; 2. the amendment, alteration or repeal, whether by merger, consolidation or otherwise, of any of the provisions of the Certificate of Incorporation of the Corporation (including this Certificate) which would adversely affect any right, preference, privilege or, voting power of the Convertible Preferred Stock or of the holders thereof; provided, however, that any increase in the amount of authorized preferred stock or the creation and issuance of other series of preferred stock, or any increase in the amount of authorized shares of such series or of any other series of preferred stock, in each case ranking junior to the Convertible Preferred Stock with respect to the payment of dividends and the distribution of assets upon liquidation, dissolution or winding up, shall not be deemed to adversely affect such rights, preferences, privileges or voting powers; or 3. the authorization of any reclassification of the Convertible Preferred Stock. The foregoing voting provisions shall not apply if, at or prior to the time when the act with respect to which such vote would otherwise be required shall be effected, all outstanding shares of Convertible Preferred Stock shall have been redeemed or sufficient funds shall have been deposited in trust to effect such redemption, scheduled -24- to be consummated within three months after such time. 12. Exchange of the Convertible Preferred Stock. (a) Each holder of the Convertible Preferred Stock may at any time, at its option elect to have all (but not less than all) of its outstanding shares of Convertible Preferred Stock exchanged for any other securities issued by the Corporation within 180 days of the Issue Date (the "Exchange Securities"). The amount of each Exchange Security of which a holder of Convertible Preferred Stock is entitled to receive shall be equal to the liquidation preference of each share of the Convertible Preferred Stock then held by such holder). (b) The Corporation shall provide each holder of Convertible Preferred Stock with a written notice at least 30 and not more than 60 days prior to any offering of Exchange Securities (provided that it may legally do so at such time), which written notice shall (A) specify the date on which the holder may exchange its Convertible Preferred Securities, (B) specify the amount of Exchange Securities to be issued on the date of such exchange, (C) indicate the amount of full cumulative dividends to be paid to such holder on such exchange date, and (D) include a copy of the form of Exchange Security proposed to be issued on such date. (c) Each holder of Convertible Preferred Stock shall provide the Corporation with written notice of its intention to exchange such shares of Convertible Preferred Stock at least 20 days prior to the date specified for such exchange in the written notice provided for in paragraph (b) above. 13. Record Holders. The Corporation may deem and treat the record holder of any shares of Convertible Preferred Stock as the true and lawful owner thereof for all purposes, and the Corporation shall not be affected by any notice to the contrary. 14. Notice. Except as may otherwise be provided for herein, all notices referred to herein shall be in writing, and all notices hereunder shall be deemed to have been given upon receipt. In the case of a notice of conversion given to the Corporation as contemplated in Section 8(b) hereof, or, in all other cases, upon the earlier of receipt of such notice or three Business Days after the mailing of such notice if sent by registered mail (unless first-class mail shall be specifically permitted for such notice under the terms of this Certificate) with postage prepaid, addressed: if to the Corporation, to its offices at 111 West 40th Street, New York, NY 10018 (Attention: Edwin W. Dean, Esq.) or other agent of the Corporation designated as permitted by this Certificate, or, if to any holder of the Convertible Preferred Stock, to such holder at the address of such holder of the Convertible Preferred Stock as listed in the stock record books of the Corporation; or to such other address as the Corporation or holder, as the case may be, shall have designated by notice similarly given. -25- IN WITNESS WHEREOF, this Certificate has been executed on behalf of the Corporation by the undersigned on the 5th day of August, 1996. DANSKIN, INC. By:/s/ Edwin W. Dean ------------------------------------ Edwin W. Dean Vice Chairman of the Board -26- Exhibit A THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, REGISTRATION AND SUBJECT TO COMPLIANCE WITH OTHER APPLICABLE LAWS. THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE DATE WHICH IS THREE YEARS AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH THE COMPANY OR ANY AFFILIATE OF THE COMPANY WAS THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF THIS SECURITY) (THE "RESALE RESTRICTION TERMINATION DATE"), ONLY (A) TO THE COMPANY, (B) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THIS SECURITY IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT ("RULE 144A"), TO A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS AND SALES TO NON-U.S. PERSONS THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT, (E) TO AN INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN THE MEANING OF SUBPARAGRAPH (a)(1), (2), (3) OR (7) OF RULE 501 UNDER THE SECURITIES ACT THAT IS ACQUIRING THE SECURITY FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL "ACCREDITED INVESTOR" FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO, OR FOR OFFER OR SALE IN CONNECTION WITH, ANY DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT, OR (F) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND OTHERWISE IN COMPLIANCE WITH OTHER APPLICABLE LAWS, SUBJECT TO THE COMPANY'S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO CLAUSE (D), (E) OR (F) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM. THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF A HOLDER AFTER THE RESALE RESTRICTION TERMINATION DATE. Certificate Number 1 Preferred Stock Preferred Stock of Danskin, Inc. 10% Convertible Preferred Stock (liquidation amount $5,000 per Share) Danskin, Inc., a Delaware corporation (the "Company"), hereby certifies that Oppenheimer Bond Fund For Growth (the "Holder") is the registered owner of preferred stock of the Company designated the 10% Convertible Preferred Stock (liquidation amount $5,000 per Preferred Stock) (the "Preferred Stock"). The Preferred Stock is transferable on the books and records of the Company, in person or by a duly authorized attorney, upon surrender of this certificate duly endorsed and in proper form for transfer, accompanied by a Transferor Certificate. The designation, rights, privileges, restrictions, preferences and other terms and provisions of the Preferred Stock represented hereby and shall in all respects be subject to the provisions of the Certificate of Designations dated as of August __, 1996, as the same may be amended from time to time (the "Certificate of Designations"). Capitalized terms used herein but not defined shall have the meaning given them in the Certificate of Designations. The Corporation will provide a copy of the Certificate of Designations to a Holder without charge upon written request to the Company at its principal place of business. Reference is hereby made to select provisions of the Preferred Stock set forth on the following pages, which select provisions shall for all purposes have the same effect as if set forth at this place. Upon receipt of this certificate, the Holder is bound by the Certificate of Designations and is entitled to the benefits thereunder. Distributions payable on the Preferred Stock will be fixed at a rate per annum of 10% (the "Coupon Rate") of the stated liquidation amount of $5,000 per Preferred Stock. The term "Distributions" as used herein includes such cash and Common Stock distributions unless otherwise stated. The amount of Distributions payable for any period will be computed for any full quarterly Distribution period on the basis of a 360-day year of twelve 30-day months, and for any period shorter than a full quarterly Distribution period for which Distributions are computed, Distributions will be computed on the basis of the actual number of days elapsed per 30-day month. Except as otherwise described below, distributions on the Preferred Stock will be cumulative, will accrue from the date of original issuance and will be repayable quarterly in arrears, on March 1, June 1, September 1, and December 1 of each year, commencing on ____________, 1996, to Holders of record on the Business Day next preceding such payment dates, except as otherwise provided in the Certificate of Designations. The Preferred Stock shall be redeemable as provided in the Certificate of Designations. The Preferred Stock shall be convertible into the Common Stock of Danskin, Inc. in the manner and according to the terms set forth in the Certificate of Designations. By acceptance of this Preferred Stock, the Holder agrees to be bound by the terms of the Registration Rights Agreement relating to the Common Stock issuable upon conversion thereof. IN WITNESS WHEREOF, the Company has executed this certificate this ______ day of August, 1996. DANSKIN, INC. By:________________________ Edwin W. Dean Vice Chairman of the Board Exhibit B [FORM OF TRANSFEROR CERTIFICATE] [Letterhead of Selling Holder or U.S. Registered Broker-Dealer Acting in Such Person's Behalf] Date:___________________ Dear Ladies and Gentlemen: This certificate relates to the 10% Cumulative Convertible Preferred Stock (Liquidation Preference $5,000) of Danskin, Inc., a Delaware corporation (the "Company"), held in definitive form (the "Security") by ________________ (the "Transferor"). The Transferor has requested the Corporation written order to register the transfer of a Security. In connection with such request and in respect of each such Security, the Transferor does hereby certify that the Transferor is familiar with the Certificate of Designations relating to the above captioned Security and the transfer of this Security does not require registration under the Securities Act (as defined below) because:(1) [ ] Such Security is being transferred to the Company pursuant to an exchange, conversion or redemption. [ ] Such Security is being transferred pursuant to a Registration Statement which has been declared effective under the Securities Act. [ ] Such Security is being transferred to a "qualified institutional buyer" (as defined in Rule 144A under the Securities Act of 1933, as amended (the "Securities Act")) in reliance on Rule 144A. An Opinion of Counsel to the effect that such transfer does not require registration under the Securities Act accompanies this Certificate. [ ] Such Security is being transferred pursuant to an offer and sale to a non-U.S. Person outside the United States within the meaning of Regulation S under the Securities Act. An Opinion of Counsel to the effect that such transfer does not require registration under the Securities Act accompanies this Certificate. - ---------- (1) Check applicable box. [ ] Such Security is being transferred to an institutional "Accredited Investor" within the meaning of Subparagraph (a)(1), (2), (3) or (7) of Rule 501 under the Securities Act. An Opinion of Counsel to the effect that such transfer does not require registration under the Securities Act accompanies this Certificate. [ ] Such Security is being transferred in reliance on and in compliance with another available exemption from the registration requirements of the Securities Act. An Opinion of Counsel to the effect that such transfer does not require registration under the Securities Act accompanies this Certificate. -------------------------- [INSERT NAME OF TRANSFEROR] By:_______________________ Dated: _________________ EX-4.2 3 EXHIBIT 4.2 EXECUTION COPY ================================================================================ DANSKIN, INC. 1,000 Shares of 10 % Cumulative Convertible Preferred Stock (Liquidation Preference Equivalent to $5,000 per Share) EXCHANGE AGREEMENT Dated August 6, 1996 ================================================================================ TABLE OF CONTENTS ARTICLE 1. DEFINITIONS ............................................................. 1 ARTICLE 2. THE EXCHANGE ............................................................ 3 Section 2.1. Exchange of the Debenture and the Preferred Stock; the Closing.. 3 Section 2.2. Further Action ................................................. 4 ARTICLE 3. CLOSING CONDITIONS ...................................................... 4 Section 3.1 Conditions to Obligations of the Purchaser ..................... 4 Section 3.1.1. Opinion of Counsel ............................................. 4 Section 3.1.2. Company's Representations and Warranties True. ................. 5 Section 3.1.3. Officers' Certificates ......................................... 5 Section 3.1.4. Completion of Other Transactions ............................... 5 Section 3.1.5. Consents; Permits .............................................. 5 Section 3.1.6. Exchange Permitted by Applicable Laws; Legal Investment ........ 6 Section 3.2. Conditions to Obligations of the Company ....................... 6 Section 3.2.1. Sale of Shares of Preferred Stock .............................. 6 Section 3.2.2. Purchaser's Representation and Warranties True ................. 6 Section 3.2.3. Exchange Not Enjoined .......................................... 6 ARTICLE 4. REPRESENTATIONS AND WARRANTIES .......................................... 6 Section 4.1. Representations and Warranties by the Company. ................. 6 Section 4.1.2. Subsidiaries ................................................... 7 Section 4.1.3. Capitalization ................................................. 7 Section 4.1.4. No Violation ................................................... 7 Section 4.1.5. Due Execution, etc. ............................................ 8 Section 4.1.6. Governmental Consents .......................................... 8 Section 4.1.7. No Material Adverse Change ..................................... 8 Section 4.1.8. Full Disclosure ................................................ 8 Section 4.1.9. Private Offering ............................................... 9 Section 4.1.10. Brokers ........................................................ 9 Section 4.2. Purchaser Representations and Warranties .. .................... 9
i ARTICLE 5. COMPLIANCE WITH THE SECURITIES ACT .................................... 12 Section 5.1. Compliance with the Securities Act ............................. 12 Section 5.2. Certificates Representing the Shares ........................... 12 Section 5.3. Information .................................................... 12 ARTICLE 6. COVENANTS OF THE COMPANY .............................................. 12 Section 6.1. Financial Statements ........................................... 12 Section 6.2. Payment of Taxes ............................................... 13 Section 6.3. Maintenance of Properties; Insurance ........................... 13 Section 6.4. Conduct of Business and Maintenance of Existence ............... 13 Section 6.5. Commission Filings ............................................. 13 Section 6.6. Press Releases ................................................. 13 ARTICLE 7. MISCELLANEOUS ......................................................... 13 Section 7.1. Access to Information .......................................... 13 Section 7.2. Notices ........................................................ 14 Section 7.3. Dividend Payments .............................................. 14 Section 7.4. Termination .................................................... 14 Section 7.5. Survival of Representations and Warranties ..................... 14 Section 7.6. Assignments .................................................... 15 Section 7.7. No Waiver; Modifications in Writing ............................ 15 Section 7.8. Counterparts ................................................... 15 Section 7.9. Headings ....................................................... 15 Section 7.10. Consent to Jurisdiction and Service of Process ................. 15 Section 7.11. GOVERNING LAW .................................................. 16 Section 7.12. Entire Agreement ............................................... 16 Section 7.13. Severability ................................................... 16
ii ------------------------- EXCHANGE AGREEMENT ------------------------- August 6, 1996 Oppenheimer Bond Fund For Growth 350 Linden Oaks Rochester, New York 14625 Ladies and Gentlemen: The Board of Directors of Danskin, Inc., a Delaware corporation (the "Company"), has authorized the issuance to you (the "Purchaser") of 1,000 shares of the Company's 10% Cumulative Convertible Preferred Stock (the "Preferred Stock") in exchange for the Company's 8% Convertible Subordinated Debenture due 2002 (the "Debenture") owned by the Purchaser (the "Exchange"). The shares of Preferred Stock issued in the Exchange will be offered and sold to the Purchaser pursuant to an exemption from the registration requirements under the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder (the "Securities Act"). The Company and the Purchaser hereby agree as set forth below. ARTICLE 1. DEFINITIONS As used in this Agreement, the following terms shall have the meanings indicated below: "Agreement" means this Exchange Agreement, as the same may be supplemented, amended or modified in accordance with the terms hereof. "Business Day" means each Monday, Tuesday, Wednesday, Thursday and Friday which is not a day in which banking institutions in The City of New York, State of New York, are authorized or obligated by law or executive order to close. "Capital Stock" means, with respect to any Person, any and all shares, interests, participations, rights in or other equivalents (however designated) of such Person's capital stock, and any rights (other than debt securities convertible into capital stock), warrants or options exchangeable for or convertible into such capital stock. "Certificate of Designations" means the Certificate of Designations with respect to the Preferred Stock, adopted pursuant to resolutions of the Board of Directors of the Company adopted on July 31, 1996. "Charter Documents" means, with respect to any Person, the Certificate or Articles of Incorporation and the By-laws, as amended or restated to the date hereof or the Closing Date, as applicable, of such Person. "Closing" shall have the meaning specified in Section 2.1 of this Agreement. "Closing Date" shall have the meaning specified in Section 2.1 of this Agreement. "Commission" means the United States Securities and Exchange Commission, as from time to time constituted, and any body or bodies hereafter performing any of the duties performed by the Commission. "Common Stock" shall mean any common stock of the Company issuable upon conversion of the Preferred Stock. "Contract Default" shall have the meaning specified in Section 4.1.4 of this Agreement. "Debenture" has the meaning set forth in the first paragraph of this Agreement. "Documents" means this Agreement, the Certificate of Designations and the Registration Rights Agreement, collectively, together with any exhibits, schedules or other attachments hereto or thereto, as they may be amended or supplemented from time to time in accordance with the respective terms hereof and thereof. "Exchange" has the meaning set forth in the first paragraph of this Agreement. "Exchange Act" means the Securities Exchange Act of 1934, as amended. "Lien" means any mortgage, charge, pledge, lien (statutory or other), privilege, security interest, hypothecation, cessation and transfer, lease of real property, assignment for security, claim, deposit arrangement or preference or priority or other encumbrance upon or with respect to any property of any kind, real or personal, movable or immovable, now owned or hereafter acquired. A Person shall be deemed to own subject to a Lien any property which such Person has acquired or holds subject to the interest of a lender or lessor under any conditional sale agreement, capital lease or other title retention agreement. 2 "Material Adverse Effect" means a material adverse effect on the business, condition (financial or otherwise), results of operations or properties of the Company and its Subsidiaries, taken as a whole. "Person" means an individual, partnership, corporation, trust or unincorporated organization or a government or agency or political subdivision thereof. "Preferred Stock" shall have the meaning specified in the first paragraph of this Agreement. "Public Filings" means all periodic reports and other filings made by the Company under the Exchange Act or the Securities Act, and all press releases issued by the Company for general distribution. "Purchaser" has the meaning specified in the first paragraph of this Agreement. "Registration Rights Agreement" means the Registration Rights Agreement dated as of the Closing Date among the Company and the Purchaser substantially in the form of Exhibit A hereto, as amended and supplemented from time to time in accordance with the terms thereof. "Securities Act" shall have the meaning specified in the second paragraph of this Agreement. "Shares" means the shares of Preferred Stock purchased by the Purchaser hereunder and having the terms, conditions and rights set forth in the Certificate of Designations. "Subsidiary" means with respect to any Person, any other Person of which a majority of the equity ownership or the voting securities is at the time owned, directly or indirectly, by such Person or by one or more other Subsidiaries of such Person, or by such Person and one or more other Subsidiaries of such Person. ARTICLE 2. THE EXCHANGE Section 2.1. Exchange of the Debenture and the Preferred Stock; the Closing. (a) The Exchange. In reliance upon the representations and warranties made herein and subject to the satisfaction or waiver of the terms and conditions set forth herein, (i) the Company hereby agrees to issue and exchange the Shares to the Purchaser for the Debenture held by such Purchaser, and (ii) the Purchaser hereby agrees to deliver to the Company the Debenture in exchange for the Shares from the Company at the Closing on the Closing Date. 3 (b) Registration Rights. The Purchaser will have the registration rights set forth in the Registration Rights Agreement with respect to the Conversion Shares (as defined in the Registration Rights Agreement). Pursuant to the Registration Rights Agreement, the Company will agree to file with the Commission, under the circumstances set forth therein, a registration statement under the Securities Act relating to the Conversion Shares. (c) Closing. The closing of the Exchange (the "Closing") shall take place at the offices of Morgan, Lewis & Bockius LLP, 101 Park Avenue, New York, New York 10178, at 10:00 a.m. on August 6, 1996 or at such other time or on such other date as the Company and the Purchaser shall agree (the "Closing Date"). At the Closing, the Company shall deliver to the Purchaser certificates for the Shares, duly executed by the Company and registered in the name of the Purchaser, and the Purchaser shall deliver to the Company the Debenture, duly assigned to the Company and marked "Cancelled." The Company shall pay to the Purchaser on the Closing date, by certified or bank check, all accrued but unpaid interest on the Debenture to the Closing Date. As of the Closing date, the Purchaser shall have no further rights as a holder of the Debenture. Section 2.2. Further Action. During the period from the date hereof to the Closing Date, (a) the Company shall use its reasonable best efforts and take all action reasonably necessary or appropriate to cause its representations and warranties contained in Section 4.1 to be true and correct as of the Closing Date after giving effect to the transactions contemplated by this Agreement and the other Documents, as if made at and as of such time, and (b) the Purchaser shall use its reasonable best efforts and take all action reasonably necessary in this Agreement and the other Documents that are required to be performed or complied with by it on or before the Closing Date. ARTICLE 3. CLOSING CONDITIONS Section 3.1 Conditions to Obligations of the Purchaser. The obligation of the Purchaser to exchange the Debentures for the Shares pursuant to this Agreement shall be subject to the satisfaction or waiver of each of the following conditions on or before the Closing Date: Section 3.1.1. Opinion of Counsel. The Purchaser shall have received from Morgan Lewis & Bockius, counsel for the Company, an opinion, dated the date of the Closing to the effect that: (a) The Company has been duly incorporated and organized and is a validly existing corporation in good standing under the laws of the State of Delaware and has the requisite corporate power to own its property and assets and to conduct its business as it is currently being conducted. 4 (b) This Agreement and the Registration Rights Agreement have been duly and validly authorized, executed and delivered by the Company and constitute valid and binding agreements of the Company. (c) The Certificate of Designations has been filed with the Secretary of State of the State of Delaware. (d) The execution, delivery and performance of this Agreement and the Registration Rights Agreement by the Company on or prior to the Closing and the issuance of the shares of Convertible Preferred Stock pursuant thereto do not violate any provision of the Company's Certificate of Incorporation, as amended to date, or Bylaws. Section 3.1.2. Company's Representations and Warranties True. The representations and warranties of the Company contained in Section 4.2 of this Agreement shall have been true and correct in all material respects when made and shall be true and correct in all material respects on and as of the Closing Date, after giving effect to the transactions contemplated by the Documents, as if made on and as of such time. Section 3.1.3. Officers' Certificates. The Purchaser shall have received certificates, dated the Closing Date and signed by the Vice Chairman or the President and attested by the Secretary or any Assistant Secretary of the Company, certifying (a) that the conditions set forth in Sections 3.1.2, 3.1.4, 3.1.5 and 3.1.6 of this Agreement have been satisfied on and as of such date and (b) as to such other matters as the Purchaser may reasonably request. Section 3.1.4. Completion of Other Transactions. (a) Each of the Documents shall have `been duly authorized, executed and delivered by the respective parties thereto, shall not have been terminated and shall be in full force and effect. The Purchaser shall have received an original copy of this Agreement and the Registration Rights Agreement. (b) Certificates representing the Shares shall have been duly executed by the Company, registered in the name of the Purchaser and delivered to the Purchaser. Section 3.1.5. Consents; Permits. Substantially simultaneously with the Closing hereunder, all consents, permits, agreements, approvals and other authorizations that may be required from, and all such filings and declarations that may be required with, any Person pursuant to any law, statute, regulation or rule (federal, provincial, state, local or foreign) or pursuant to any order, decree or other agreement to which the Company is a party or by which it is bound, in connection with this Agreement and the other Documents and the transactions contemplated hereby and thereby shall have been obtained or made, as the case may be, except such consents, permits, agreements, approvals and other authorizations which, if not obtained or made, will not have a Material Adverse Effect. 5 Section 3.1.6. Exchange Permitted by Applicable Laws; Legal Investment. The Exchange (a) shall not be prohibited by any applicable law, court order or injunction (temporary or permanent) or governmental regulation, release, interpretation or opinion, whether domestic or foreign, and (b) shall not, in the Purchaser's reasonable judgment, subject it to any penalty, tax, liability or other material adverse effect (other than income taxes payable on the dividends paid on Capital gains, if any, on the exchange of the Debenture and the Shares). Section 3.2. Conditions to Obligations of the Company. The obligation of the Company to issue and sell the Shares pursuant to this Agreement shall be subject to the satisfaction or waiver of each of the following conditions on or before the Closing Date: Section 3.2.1. Sale of Shares of Preferred Stock. The Purchaser shall have delivered the Debenture to the Company, duly assigned to the Company by the Purchaser and marked "Cancelled." Section 3.2.2. Purchaser's Representation and Warranties True. The representations and warranties of the Purchaser contained in Section 4.2 of this Agreement shall have been true and correct in all material respects when made and shall be true and correct in all material respects on and as of the Closing Date, after giving effect to the transactions contemplated by the Documents, as if made on and as of such time. Section 3.2.3. Exchange Not Enjoined. The Exchange and the consummation of the transactions contemplated by the Documents shall not have been enjoined (temporarily or permanently) at the time of the Closing or be prohibited by any applicable law or governmental regulation, release, interpretation or opinion whether domestic or foreign. ARTICLE 4. REPRESENTATIONS AND WARRANTIES Section 4.1. Representations and Warranties by the Company. The Company represents and warrants to the Purchaser as follows: Section 4.1.1. Organization, Standing and Qualification; Requisite Corporate Power. The Company (i) is a corporation duly organized, validly existing and in good standing under the laws of its jurisdiction of incorporation; (ii) has all requisite corporate power and authority to own or lease and operate its properties and to carry on its business as now conducted and as proposed to be conducted; and (iii) is duly qualified or licensed and, if applicable, in good standing as a foreign corporation, and is authorized to do business, in each jurisdiction in which the ownership or leasing of any property or the character of its operations makes such qualification, license or authorization necessary, except for such jurisdictions where the failure to be so qualified, licensed or authorized will not have a Material Adverse Effect. The Company has all requisite corporate power and authority (i) to execute, deliver and perform its obligations under each of the Documents and (ii) to issue the shares of Preferred Stock in the manner contemplated by this Agreement. 6 Section 4.1.2. Subsidiaries. (a) The Company has only the Subsidiaries listed on Schedule 4.1.2 and all of the outstanding shares of Capital Stock of the Company and each of its Subsidiaries have been duly authorized and validly issued and are fully paid and nonassessable. (b) Set forth in Schedule 4.1.2 is a true and complete schedule setting forth (i) the name and jurisdiction of incorporation of each Subsidiary of the Company and (ii) the number of shares of Capital Stock and other equity securities and the percentage of the issued and outstanding Capital Stock and other equity securities of the Company's Subsidiaries held by the Company, both directly and indirectly, each as will exist immediately after the Closing, after giving effect to the transactions contemplated by this Agreement and the other Documents. All of the outstanding shares of Capital Stock of each of the Company's Subsidiaries will have been duly authorized and validly issued, will be fully paid and nonassessable and such shares of Capital Stock of the Company's Subsidiaries shown to be beneficially owned by the Company in such Schedule are owned free and clear of any Lien. Section 4.1.3. Capitalization. Except as disclosed in the Public Filings, after giving effect of the transactions contemplated by this Agreement and the other Documents, there are: (i) no outstanding subscriptions, warrants, options, calls or commitments of any character relating to or entitling any Person to purchase or otherwise acquire any stock of the Company or any of its Subsidiaries; (ii) no obligations or securities convertible into or exchangeable for shares of any Capital Stock of the Company or any of its Subsidiaries, or any commitments of any character relating to or entitling any Person to purchase or otherwise acquire any such obligations or securities, other than the shares of Preferred Stock; and (iii) no preemptive or similar rights to subscribe for or to purchase any Capital Stock of the Company or any of its Subsidiaries. After giving effect to the transactions contemplated by this Agreement and the other Documents except as set forth herein, in the Registration Rights Agreement and in the Public Filings, none of the Company or any of its Subsidiaries has entered into any agreement to register its equity or debt securities under the Securities Act and there are no understandings or agreements with respect to the voting of any of the Capital Stock of the Company or its Subsidiaries. Section 4.1.4. No Violation. (a) The Company and its Subsidiaries are not in (i) violation of their respective Charter Documents or (ii) default or breach (with or without notice or lapse of time or both) in the performance or observance of any material obligation, agreement, covenant or condition contained in any material contract indenture, mortgage, loan agreement, deed of trust, note, lease or other agreement or instrument to which it is a party or by which it may be bound or to which any of its properties may be subject (any such default or breach being hereafter referred to as a "Contract Default"), except for such Contract Defaults which will not have a Material Adverse Effect. (b) The execution and delivery by the Company of this Agreement or any of the other Documents to which it is a party, the performance of its obligations hereunder and thereunder, the consummation of the transactions contemplated hereby and thereby, including, without limitation, the issuance, sale and delivery of the shares of Preferred Stock, do not and will not (i) 7 violate any provision of the Charter Documents of the Company, or (ii) violate or conflict with any statute, law, rule or regulation or any judgment, decree or order of any court or governmental authority, domestic or foreign, to which the Company or any of its properties may be subject, (iii) constitute a Contract Default or (iv) result in or require the imposition of any Lien upon or with respect to any of the properties now or hereafter owned by the Company, except in the case of clauses (ii), (iii) and (iv) above, for conflicts, Contract Defaults or Liens, as the case may be, that, individually or in the aggregate, will not have a Material Adverse Effect. Section 4.1.5. Due Execution, etc. This Agreement and each other Document have been duly authorized by all necessary corporate action by the Company, and assuming due authorization and execution by the other party or parties hereto or thereto, each Document constitutes the legal, valid and binding obligation of the Company, enforceable against it in accordance with the respective terms hereof and thereof, except (i) as enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or other laws now or hereafter in effect relating to or generally affecting creditors' rights and general principles of equity, (ii) that the remedies of specific performance and injunctive and other forms of equitable relief are subject to certain equitable defenses and to the discretion of the court before which any proceeding therefor may be brought and (iii) as rights to indemnity and contribution thereunder may be limited by applicable laws. Section 4.1.6. Governmental Consents. Based upon and assuming the accuracy of the representations and warranties of the Purchaser set forth herein, no consent, order, approval or authorization of, or filing, registration or qualification with, any court, governmental, administrative or judicial authority or regulatory body (domestic foreign) (other than any filings, consents, approvals, registrations or qualifications (i) that have been previously obtained, (ii) that are required under state securities or "blue sky" laws or, in the case of the shares of Preferred Stock, the Securities Act and (iii) the failure of which to obtain will not have a Material Adverse Effect or any adverse effect on the ability of the Company to perform any of its material obligations under any of the Documents to which it is a party or any material adverse effect on the legality, validity or enforceability of any of the Documents) is required on the part of the Company as a condition to the valid (a) authorization, issuance, sale and delivery of the shares of Preferred Stock, (b) execution, delivery and performance of this Agreement or any of the other Documents or (c) consummation of the transactions contemplated hereby and thereby. Section 4.1.7. No Material Adverse Change. Other than as described in the Public Filings, since December 30, 1995 up to and including the Closing Date, there has not been any material adverse change in the business, condition (financial or otherwise), results of operations or properties of the Company and its Subsidiaries. Section 4.1.8. Full Disclosure. As of the respective dates thereof, the Company's Form 10-K and Form 10-K/A for the transition period ended December 30, 1995, its Form 10-Q for the fiscal quarter ended March 30, 1996 and all other Public Filings made by the Company since March 30, 1996 did not contain any untrue statement of a material fact or omit to state any 8 material fact required to be stated therein or necessary to make the statements contained therein, in the light of the circumstances under which they were made, not misleading. Section 4.1.9. Private Offering. Based upon and assuming the accuracy of the representations and warranties of the Purchaser set forth herein the issuance and sale of the shares of Preferred Stock hereunder are exempt from the registration and prospectus delivery requirements under the Securities Act. Section 4.1.10. Brokers. Neither the Company nor any of its Subsidiaries has employed any broker, finder, commission agent or other Person in connection with the Exchange and the transactions contemplated by the Documents, and (b) neither the Company nor any of its Subsidiaries is under an obligation to pay any broker's fee or commission in connection with such transactions. Section 4.2. Purchaser Representations and Warranties. The Purchaser represents and warrants to, and agrees with, the Company as follows: (a) The Purchaser owns of record the Debenture, free and clear of all liens, claims, charges, encumbrances and rights of any other person, and has the right to exchange the same with the Company for the Shares. Upon such exchange in accordance with the terms hereof, the Company will acquire the Debenture, free and clear of all liens, claims, charges, encumbrances and rights of any other person. (b) The Purchaser understands and acknowledges that the Shares and the Common Stock have not been registered under the Securities Act or any other applicable securities law, are being offered for sale in transactions not requiring registration under the Securities Act or any other securities laws and may not be offered, sold or otherwise transferred except in compliance with the registration requirements of the Securities Act and any other applicable securities law, pursuant to an exemption (including pursuant to Rule 144A) therefrom or in a transaction not subject thereto and in each case in compliance with the conditions for transfer set forth in paragraph (c) below. (c) The Purchaser is not an "affiliate" (as defined in Rule 144 under the Securities Act) of the Company acting on behalf of the Company and it is an institutional "accredited investor" within the meaning of subparagraph (a) (1), 2 or 3 or (7) of Rule 501 under the Securities Act in the normal course of its business, it invests in or purchases securities similar to the Shares and it has such knowledge and experience in financial and business matters that it is capable of evaluating the merits and risks of purchasing any of the Shares; it is aware that it may be required to bear the economic risk of an investment in the Shares; it is aware that it may be required to bear the economic risk of an investment in the Shares for an indefinite period of time and it is able to bear such risk for an indefinite period of time. 9 (d) The Purchaser has had access to such financial and other information concerning the Company, the Shares and the Common Stock as it has deemed necessary in connection with its decision to purchase any of the Shares, including an opportunity to ask questions of and request information from the Company and the Placement Agent. The Purchaser is purchasing the Shares for its own account for investment and not with a view to, or for offer or sale in connection with, any distribution thereof in violation of the Securities Act, subject to any requirement of law that the disposition of its property or the property of such investor account or accounts be at all times within its or their control and subject to its or their ability to resell the Shares pursuant to Rule 144A, Regulation S or any exemption from registration available under the Securities Act. The Purchaser agrees, and each subsequent Purchaser of the Shares by its acceptance thereof will agree, to offer, sell or otherwise transfer the Shares prior to the date which is three years after the later of the original issue date of the Shares and the last date on which the Company or any affiliate of the Company was the owner of the Shares (or any predecessor thereto) (the "Resale Restriction Termination Date") only (a) to the Company, (b) pursuant to a registration statement which has been declared effective under the Securities Act, (c) for so long as the Shares are eligible for resale pursuant to Rule 144A, to a Person it reasonably believes is a Qualified Institutional Buyer to whom notice is given that the transfer is being made in reliance on Rule 144A, (d) pursuant to offers and sales to non-U.S. persons that occur outside the United States within the meaning of Regulation S under the Securities Act, (e) to an institutional "accredited investor" for investment purposes and not with a view to, or for offer or sale in connection with, any distribution in violation of the Securities Act or (f) pursuant to any other available exemption from the registration requirements of the Securities Act, subject in each of the foregoing cases to any requirement of law that the disposition of its property shall be at all times within its or their control and to compliance with any applicable state securities laws. The foregoing restrictions on resale will not apply subsequent to the Resale Restriction Termination Date. If any resale or other transfer of the Shares is proposed to be made pursuant to clause (e) above prior to the Resale Restriction Termination Date, the transferor shall deliver a letter from the transferee which shall state, among other things, that the transferee is an institutional "accredited investor" within the meaning of subparagraph (a) (1), (2), (3) or (7) of Rule 501 under the Securities Act and that it is acquiring the Shares for investment purposes and not for distribution in violation of the Securities Act. The Purchaser acknowledges that the Company reserves the right prior to any offer, sale or other transfer prior to the Resale Restriction Termination Date of the Shares or the Common Stock pursuant to clause (d), (e) or (f) above to require the delivery of an opinion of counsel, certifications and/or other information satisfactory to the Company. The Purchaser acknowledges that each Share will contain a legend substantially to the following effect: THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN 10 THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, REGISTRATION AND SUBJECT TO COMPLIANCE WITH OTHER APPLICABLE LAWS. THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO OFFER, SELL OR OTHERWISE TRANSFER THIS SECURITY, PRIOR TO THE DATE WHICH IS THREE YEARS AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH THE COMPANY OR ANY AFFILIATE OF THE COMPANY WAS THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF THIS SECURITY) (THE "RESALE RESTRICTION TERMINATION DATE"), ONLY (A) TO THE COMPANY, (B) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THIS SECURITY IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT ("RULE 144A"), TO A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS AND SALES TO NON-U.S. PERSONS THAT OCCUR OUTSIDE THE UNITED STATES WITHIN, THE MEANING OF REGULATION S UNDER THE SECURITIES ACT, (E) TO AN INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN THE MEANING OF SUBPARAGRAPH (a) (1), (2), (3) OR (7) OF RULE 501 UNDER THE SECURITIES ACT THAT IS ACQUIRING THIS SECURITY FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL "ACCREDITED INVESTOR" FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO, OR FOR OFFER OR SALE IN CONNECTION WITH, ANY DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT, OR (F) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND OTHERWISE IN COMPLIANCE WITH THE OTHER APPLICABLE LAWS, SUBJECT TO THE COMPANY'S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO CLAUSE (D), (E) OR (F) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO IT. THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF A HOLDER AFTER THE RESALE RESTRICTION TERMINATION DATE. (f) The Purchaser acknowledges that the Company will rely upon the truth and accuracy of the foregoing acknowledgments, representations, warranties and agreements and agrees that, if any of the acknowledgments, representations, warranties and agreements deemed to have been made by its purchase of the Shares are no longer accurate, it shall promptly notify the Company. 11 ARTICLE 5. COMPLIANCE WITH THE SECURITIES ACT Section 5.1. Compliance with the Securities Act. None of the Shares may be sold, transferred or otherwise disposed of (any such sale, transfer or other disposition, a "sale"), except in compliance with this Section 5 and at all times in compliance with the requirements of applicable state and federal securities laws. Section 5.2 . Certificates Representing the Shares. (a) Upon original issuance thereof, and until such time as the same is no longer required under the applicable requirements of the Securities Act or applicable state securities or "blue sky" laws, the certificates representing the Shares (and all securities issued in exchange therefor or substitution thereof) shall bear the legend set forth in Section 4.2 (e) of this Agreement. (b) The Certificates representing the Shares shall also bear any legend required under any applicable state securities or "blue sky" laws. (c) The Purchaser consents to the Company making a notation on its records or giving instructions to any transfer agent of the Shares in order to implement the restrictions on transfer mentioned in this Section 5. Section 5.3. Information. (a) The Company hereby agrees that it will provide the information as required pursuant to Rule 144A(d)(4) under the Securities Act to the Purchaser or any subsequent holder of any Shares or, upon the request of the Purchaser or the request of any such subsequent holder, to any prospective Purchaser designated by the Purchaser or such subsequent holder. (b) Upon the request of the holder of any Shares, the Company will inform such holder if such Shares were held during the three year period preceding such request by the Company or, to the best knowledge of the Company, by a Person who was an affiliate of the Company at the time of the sale of the Shares by such Person. ARTICLE 6. COVENANTS OF THE COMPANY The Company covenants to the Purchaser as follows: Section 6.1. Financial Statements. The Company will furnish to the Purchaser, as soon as available, but in any event not later than ninety (90) days after the close of each fiscal year of the Company, a copy of the annual financial statements for such year for the Company, prepared on no less than an audited basis, including a balance sheet, and related statements of income (loss) and retained earnings and cash flows, all in reasonable detail, prepared in accordance with generally accepted accounting principles, except as otherwise stated therein, on a basis consistently maintained throughout the period involved and with prior periods, such financial statements being prepared by a certified public accountant of recognized standing selected by the 12 Company and acceptable to the Purchaser; provided that any of the "Big 6" accounting firms or their successors shall be deemed acceptable to the Purchaser. Section 6.2. Payment of Taxes. The Company will pay and discharge, at or before maturity or the termination of any duly granted extension thereof, all of the Company's payroll tax and all of its other tax liabilities as shown on its tax returns to be due and payable, except where the same may be contested in good faith by appropriate proceedings, and will maintain, in accordance with generally accepted accounting principles, appropriate reserves, if required by law, rule or regulation, for the accrual of any of the same which are being contested. Section 6.3. Maintenance of Properties; Insurance. The Company will keep all material properties used or useful in the business of the Company in working order and condition (normal wear and tear excepted); maintain or have maintained with financially sound and reputable insurance companies, insurance on all properties in such amounts as the Company deems proper in accordance with sound business practices against such risks as are usually insured against in the same general area, and by companies engaged in the same or similar business and furnish to the Purchaser full information as to the insurance carried and certificates thereof. Such information and certificates shall be furnished to the Purchaser within ten (10) business days from the date hereof and on the renewal date(s) of any and all such policies of insurance. Section 6.4. Conduct of Business and Maintenance of Existence. The Company will continue to engage in business of substantially the same general type as now conducted by the Company and preserve, renew and keep in full force and effect its corporate existence and take all reasonable action to maintain its rights, patents, trademarks, privileges and franchises necessary or desirable in the normal conduct of business, provided that the Company retains the right to merge any Subsidiary of the Company into the Company or into another Subsidiary of the Company. Section 6.5. Commission Filings. Within fifteen (15) days after it files them with the Commission, send to the Purchaser copies of (i) the annual, quarterly and other reports that the Company files with the Commission pursuant to Section 13 or 15(d) of the Exchange Act, and (ii) copies of all materials sent to the holders of the Company's common stock; and the Company shall also timely comply with its reporting and filing obligations under the applicable federal securities laws. Section 6.6. Press Releases. The Company shall fax copies of all press releases to the Purchaser on the date of release of such press releases. ARTICLE 7. MISCELLANEOUS Section 7.1. Access to Information. The Company shall, from time to time, prior to the Closing Date, provide to you upon request, during normal business hours, such other information with respect to the offering of the Shares and the operations, business, assets, properties or financial condition of the Company as you may reasonably request. 13 Section 7.2. Notices. Prior to the Closing, and thereafter with respect to matters pertaining to this Agreement only, all notices and other communications provided for or permitted hereunder shall be made by hand delivery, first-class mail (registered or certified, return receipt requested), telecopier or commercial courier guaranteeing next day delivery: (a) if to the Purchaser, to Oppenheimer Bond Fund For Growth, 350 Linden Oaks, Rochester, New York 14625, Attention: Mr. Michael Rosen, facsimile number (716) 383-9178 or at such other address and facsimile number as the Purchaser may have furnished in writing to the Company; and (b) if to the Company, at 111 West 40th Street, New York, New York 10018 (facsimile number (212) 764-7265), Attention: President, or at such other address as the Company may have furnished in writing to you, with copies to Morgan, Lewis & Bockius LLP, 101 Park Avenue, New York, New York 10178, Attention: Christopher T. Jensen, Esq. (facsimile number (212) 309-6273). All such notices and communications shall be deemed to have been duly given: at the time delivered by hand, if personally delivered; five business days after being deposited in the mail, postage prepaid, if mailed; when receipt acknowledged, if sent by fax; and the next business day after timely delivery to the courier, if sent by commercial courier guaranteeing next day delivery. Section 7.3. Dividend Payments. Payment of dividends on all or any portion of the stated liquidation preference and premium, if any, on Shares shall be made by wire transfer to such account at such bank as the Purchaser shall inform the Company from time to time in writing. Section 7.4. Termination. This Agreement may be terminated (as to the party electing to so terminate it) at any time prior to the Closing Date: (a) by the Company if any of the conditions specified in Section 3.2 hereof have not been satisfied or waived by the Company pursuant to the terms of this Agreement by 12:00 midnight, New York City time, on August 16, 1996 or at such earlier date that it becomes no longer reasonably possible that any such condition can be satisfied; or (b) by the Purchaser if any of the conditions specified in Section 3.1 hereof have not been satisfied or waived pursuant to the terms of this Agreement by 12:00 midnight, New York City time, on August 16, 1996 or at such earlier date that it becomes no longer reasonably possible that any such condition can be satisfied. Section 7.5. Survival of Representations and Warranties. All representations and warranties contained herein will survive the execution and delivery of this Agreement, regardless of (a) any investigation made by any other party, (b) acceptance of any of the Shares or any payment there or (c) payment or prepayment of the Shares upon redemption or otherwise. 14 Section 7.6. Assignments. This Agreement shall be binding upon the Company and the Purchaser and each of their respective successors and permitted assigns. The rights of the Purchaser under this Agreement shall not be assigned, and the duties of the Purchaser under this Agreement shall not be delegated, without the written consent of the Company (which consent shall not be unreasonably withheld) except to a wholly owned Subsidiary of the Purchaser. Notwithstanding the foregoing, nothing contained in this Section 7.7 shall prohibit transfers of Shares in accordance with the terms of this Agreement and the rights and interests of the Purchaser hereunder may be assigned to and shall inure to the benefit of any transferee of the Shares pursuant to Section 5 hereof until the date of the sale of the Conversion Shares under a Registration Statement (as defined in the Registration Rights Agreement). Section 7.7. No Waiver; Modifications in Writing. No failure or delay on the part of the Company or the Purchaser in exercising any right, power or remedy hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right, power or remedy preclude any other or further exercise thereof or the exercise of any other right, power or remedy. The remedies provided for herein are cumulative and are not exclusive of any remedies that may be available to the Company or the Purchaser at law or in equity or otherwise. No waiver of or consent to any departure by the Company from any provision of this Agreement shall be effective unless signed in writing by the parties; entitled to the benefit thereof; provided that notice of any such waiver shall be given to each party hereto as set forth above. Except as otherwise provided herein, no amendment, modification or, termination of any provision of this Agreement shall be effective unless signed in writing by or on behalf of the Purchaser. Any amendment, supplement or modification of or to any provision of this Agreement, any waiver of any provision of this Agreement, and any consent to any departure by the Company from the terms of any provision of this Agreement shall be effective only in the specific instance and for the specific purpose for which made or given. Except where notice is specifically required by this Agreement, no notice to or demand on the Company in any case shall entitle the Company to any other or further notice or demand in similar or other circumstances. Section 7.8. Counterparts. This Agreement may be executed in counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. Section 7.9. Headings. The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof. Section 7.10. Consent to Jurisdiction and Service of Process. The Company hereby agrees that any legal situation or proceeding brought by any of the other parties to enforce any rights under or with respect to the Shares, this Agreement or the transactions contemplated hereby may be instituted in any state or federal court in The City of New York, State of New York, and waives to the fullest extent permitted by law any objection which it may now or hereafter have to the laying of venue of any such suit, action or proceeding and irrevocably submits to the non-exclusive jurisdiction of any such court in any such suit, action or proceeding. 15 Section 7.11. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK (WITHOUT GIVING EFFECT TO THE CONFLICTS OF LAW PRINCIPLES THEREOF). Section 7.12. Entire Agreement. This Agreement, together with the other Documents, is intended by the parties hereto to constitute the final expression of their agreement and to be a complete and exclusive statement of the agreement and understanding of the parties hereto in respect of the subject matter contained herein and therein. There are no restrictions, promises, warranties or undertakings other than those set forth or referred to herein and therein. This Agreement, together with the other Documents, supersedes all prior agreements and understandings between the parties with respect to such subject matter. Section 7.13. Severability. In the event that any one or more of the provisions contained herein, or the application thereof in any circumstances, is held to be invalid, illegal or unenforceable in any respect for any reason, the validity, legality and unenforceability of any such provision in every other respect and of the remaining provisions hereof shall not be in any way impaired or affected. 16 IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date first set forth above. DANSKIN, INC. By:/s/ Edwin W. Dean ------------------------------- Edwin W. Dean Vice Chairman of the Board OPPENHEIMER BOND FUND FOR GROWTH By: /s/ Michael S. Rosen ------------------------------- Michael S. Rosen Vice President 17 EX-4.3 4 EXHIBIT 4.3 EXECUTION COPY ================================================================================ REGISTRATION RIGHTS AGREEMENT Dated as of August 6, 1996 by and among DANSKIN, INC. and OPPENHEIMER BOND FUND FOR GROWTH ================================================================================ This Registration Rights Agreement (this "Agreement") is made and entered into as of August 6, 1996 by and among DANSKIN, INC., a Delaware corporation (the "Company"), and OPPENHEIMER BOND FUND FOR GROWTH (the "Purchaser"). The execution and delivery of this Agreement is a condition to the obligations of the Purchaser to purchase the Company's 10% Cumulative Convertible Preferred Stock (with a Liquidation Preference equivalent to $5,000 per share) under the Exchange Agreement dated as of August 6, 1996 (the "Exchange Agreement") by and among the Company and the Purchaser, and relates to the shares of Common Stock issuable upon conversion of the Preferred Stock (the "Conversion Shares"). The Company and the Purchaser hereby agree as follows: 1. DEFINITIONS. Capitalized terms used herein without definition shall have their respective meanings set forth in or pursuant to the Exchange Agreement As used in this Agreement, the following capitalized defined terms shall have the following meanings: "Act" or "Securities Act" means the Securities Act of 1933, as amended. "Affiliate" of any specified person means any other person which, directly or indirectly, is in control of, is controlled by, or is under common control with such specified person. For purposes of this definition, control of a person means the power, direct or indirect, to direct or cause the direction of the management and policies of such person whether by contract or otherwise; and the terms "controlling" and "controlled" have meanings correlative to the foregoing. "Commission" means the Securities and Exchange Commission. "DTC" means The Depository Trust Company. "Effectiveness Period" has the meaning set forth in Section 2(b) hereof. "Exchange Act" means the Securities Exchange Act of 1934, as amended. "Holder" or "Holders" means any Person or Persons holding the Preferred Stock or the Conversion Shares. "Managing Underwriters" means the investment banker or investment bankers and manager or managers that shall administer an underwritten offering, if any, as set forth in Section 6 hereof. "Person" shall mean an individual, partnership, corporation, trust or unincorporated organization, or a government or agency or political subdivision thereof. "Prospectus" means the prospectus included in any Shelf Registration Statement (including, without limitation, a prospectus that discloses information previously omitted from a prospectus filed as part of an effective registration statement in reliance upon Rule 430A under the Act), as amended or supplemented by any prospectus supplement, with respect to the terms of the offering of any portion of the Conversion Shares. "Shelf Registration" means a registration effected pursuant to Section 2 hereof. "Shelf Registration Statement" means a "shelf" registration statement of the Company pursuant to the provisions of Section 2 hereof filed with the Commission which covers the Conversion Shares, on an appropriate form under Rule 415 under the Act, or any similar rule that may be adopted by the Commission, amendments and supplements to such registration statement, including post-effective amendments, in each case including the Prospectus contained therein, all exhibits thereto and all material incorporated by reference therein. "Underwriter" means any underwriter of Conversion Shares in connection with an offering thereof under a Shelf Registration Statement. 2. SHELF REGISTRATION. (a) The Company shall, within 120 days following the date of original issuance (the "Issue Date") of the shares of Preferred Stock, file with the Commission a Shelf Registration Statement relating to the offer and sale of the Conversion Shares by the Holders from time to time in accordance with the methods of distribution elected by such Holders and set forth in such Shelf Registration Statement and, thereafter, shall use all reasonable efforts to cause such Shelf Registration Statement to be declared effective under the Act as promptly as practicable after the date of filing of such Shelf Registration Statement; provided, however, that no Holder shall be entitled to have the Conversion Shares held by it covered by such Shelf Registration unless such Holder is in compliance with Section 3(k) hereof. (b) Subject to Section 2(c), the Company shall use all reasonable efforts (i) to keep the Shelf Registration Statement continuously effective in order to permit the Prospectus forming a part thereof to be usable by Holders for a period of three years from the date of the last issuance of the shares of Preferred Stock pursuant to the Exchange Agreement or such shorter period that will terminate upon the earlier of the following: (A) when all Conversion Shares issued upon conversion of the Preferred Stock have been sold pursuant to the Shelf Registration Statement or (B) when, in the written opinion of counsel to the Company, all outstanding Conversion Shares held by persons that are not affiliates of the Company may be resold without registration under the Act pursuant to Rule 144(k) under the Act or any successor provision thereto (in either such case, such period being called the "Effectiveness Period") and (ii) after the effectiveness of the Shelf Registration Statement, promptly upon the request of any Holder to take any action reasonably necessary to register the sale of any Conversion Shares of such Holder and to identify such Holder as a selling security holder. The Company shall be deemed not to have used all reasonable efforts to keep the Shelf Registration Statement effective during the requisite period if the Company voluntarily takes any action that would result in Holders of Conversion Shares covered thereby not being able to offer and sell any such Conversion Shares during that period, unless (i) such action is required by applicable law, or (ii) upon the occurrence of any event contemplated by paragraph 3(c)(2)(iii) below, and such action is taken by the Company in good faith and for valid business reasons, and the Company thereafter promptly complies with the requirements of paragraph 3(i) below. (c) The Purchaser shall not effect any sale, including by way of Rule 144 or Rule 144A, or other distribution of the Preferred Stock or the Conversion Shares during the 14 days prior to, and during the 180-day period (or such other period as the Company and the managing underwriter or -2- underwriters of an underwritten public offering by the Company may agree) beginning on the effective date of a registration statement covering an underwritten public offering of the Common Stock of the Company. 3. REGISTRATION PROCEDURES. In connection with any Shelf Registration Statement, the following provisions shall apply: (a) The Company shall furnish to each Holder prior to the filing thereof with the Commission, a copy of any Shelf Registration Statement, and each amendment thereof and each amendment or supplement if any, to the Prospectus included therein and shall use its best efforts to reflect in each such document, when so filed with the Commission, such comments as the Purchaser reasonably may propose. (b) The Company shall take such action as may be necessary so that (i) any Shelf Registration Statement and any amendment thereto and any Prospectus forming part thereof and any amendment or supplement thereto (and each report or other document incorporated therein by reference in each case) complies in all material respects with the Securities Act and the Exchange Act and the respective rules and regulations thereunder, (ii) any Shelf Registration Statement and any amendment thereto does not, when it becomes effective, contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading and (iii) any Prospectus forming part of any Shelf Registration Statement, and an amendment or supplement to such Prospectus, does not include an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements, in the light of the circumstances under which they were made, not misleading. (c) (1) The Company shall advise the Purchaser and the Holders and, if requested by the Purchaser or any such Holder, confirm such advice in writing: (i) when a Shelf Registration Statement and any amendment thereto has been filed with the Commission and when the Shelf Registration Statement or any post-effective amendment thereto has become effective; and (ii) of any request by the Commission for amendments or supplements to the Shelf Registration Statement or the Prospectus included therein or for additional information. (2) The Company shall advise the Purchaser and the Holders and, if requested by the Purchaser or any such Holder, confirm such advice in writing of: (i) the issuance by the Commission of any stop order suspending effectiveness of the Shelf Registration Statement or the initiation of any proceedings for that purpose; -3- (ii) the receipt by the Company of any notification with respect to the suspension of the qualification of the securities included therein for sale in any jurisdiction or the initiation of any proceeding for such purpose; and (iii) the happening of any event that requires the making of any changes in the Shelf Registration Statement or the Prospectus so that, as of such date, the Shelf Registration Statement and the Prospectus do not contain an untrue statement of a material fact and do not omit to state a material fact required to be stated therein or necessary to make the statements therein (in the case of the Prospectus, in light of the circumstances under which they were made) not misleading (which advice shall be accompanied by an instruction to suspend the use of the Prospectus until the requisite changes have been made). (d) The Company shall use all reasonable efforts to prevent the issuance, and, if issued, to obtain the withdrawal, of any order suspending the effectiveness of any Shelf Registration Statement at the earliest possible time. (e) The Company shall furnish to each Holder included within the coverage of any Shelf Registration Statement, without charge, at least one copy of such Shelf Registration Statement and any post-effective amendment thereto, including financial statements and schedules, and, if the Holder so requests in writing, all reports, other documents and exhibits (including those incorporated by reference). (f) The Company shall, during the Effectiveness Period, deliver to each Holder included within the coverage of any Shelf Registration Statement, without charge, as many copies of the Prospectus (including each preliminary Prospectus) included in such Shelf Registration Statement and any amendment or supplement thereto as such Holder may reasonably request; and the Company consents (except upon and during the continuance of any event described in paragraph 3(c)(2)(iii) above) to the use of the Prospectus or any amendment or supplement thereto by each of the selling Holders of Conversion Shares in connection with the offering and sale of the Conversion Shares covered by the Prospectus or any amendment or supplement thereto during the Shelf Registration Period. (g) Prior to any offering of Conversion Shares pursuant to any Shelf Registration Statement, the Company shall register or qualify or cooperate with the Holders included therein and their respective counsel in connection with the registration or qualification of such Conversion Shares for offer and sale under the securities or blue sky laws of such jurisdictions as any such Holders reasonably request in writing and do any and all other acts or things necessary or advisable to enable the offer and sale in such jurisdictions of the Conversion Shares covered by such Shelf Registration Statement; provided, however, that in no event shall the Company be obligated to (i) qualify as a foreign corporation or as a dealer in securities in any jurisdiction where it would not otherwise be required to so qualify but for this Section 3(g), (ii) file any general consent to service of process in any jurisdiction where it is not as of the date hereof then so subject or (iii) subject itself to taxation in any such jurisdiction if it is not so subject. -4- (h) Unless any Conversion Shares shall be in book-entry only form, the Company shall cooperate with the Holders of Conversion Shares to facilitate the timely preparation and delivery of certificates representing Conversion Shares to be sold pursuant to any Shelf Registration Statement, free of any restrictive legends and in such permitted denominations and registered in such names as Holders may request in connection with the sale of Conversion Shares pursuant to such Shelf Registration Statement. (i) Upon the occurrence of any event contemplated by paragraph 3(c)(2)(iii) above, the Company shall promptly prepare a post-effective amendment to any Shelf Registration Statement or an amendment or supplement to the related Prospectus or file any other required document so that, as thereafter delivered to purchasers of the Conversion Shares included therein, the Prospectus will not include an untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. If the Company notifies the Holders of the occurrence of any event contemplated by paragraph 3(c)(2)(iii) above, the Holders shall suspend the use of the Prospectus until the requisite changes to the Prospectus have been made. (j) The Company shall use its best efforts to comply with all applicable rules and regulations of the Commission and shall make generally available to its security holders or otherwise provide in accordance with Section 11(a) of the Securities Act as soon as practicable after the effective date of the applicable Shelf Registration Statement an earnings statement satisfying the provisions of Section 11(a) of the Securities Act. (k) The Company may require each Holder of Conversion Shares to be sold pursuant to any Shelf Registration Statement to furnish to the Company such information regarding the Holder and the distribution of such Conversion Shares as the Company may from time to time reasonably require for inclusion in such Shelf Registration Statement and the Company may exclude from such registration the Conversion Shares of any Holder that fails to furnish such information within a reasonable time after receiving such request. (1) The Company shall, if requested, promptly include or incorporate in a Prospectus supplement or post-effective amendment to a Shelf Registration Statement, such information as the Managing Underwriters reasonably agree should be included therein and to which the Company does not reasonably object and shall make all required filings of such Prospectus supplement or post-effective amendment as soon as practicable after it is notified of the matters to be included or incorporated in such Prospectus supplement or post-effective amendment. (m) The Company shall enter into such customary agreements (including underwriting agreements in customary form) to take all other appropriate actions in order to expedite or facilitate the registration or the disposition of the Conversion Shares, and in connection therewith, if an underwriting agreement is entered into, cause the same to contain indemnification provisions and procedures substantially identical to those set forth in Section 5 (or such other provisions and procedures acceptable to the Managing Underwriters, if any) with respect to all parties to be indemnified pursuant to Section 5. -5- (n) The Company shall (i) make reasonably available for inspection by the Holders of Conversion Shares to be registered thereunder, any underwriter participating in any disposition pursuant to such Shelf Registration Statement, and any attorney, accountant or other agent retained by such Holders or any such underwriter all relevant financial and other records, pertinent corporate documents and properties of the Company and its subsidiaries; (ii) cause the Company's officers, directors and employees to make reasonably available for inspection all relevant information reasonably requested by such Holders or any such underwriter, attorney, accountant or agent in connection with any such Shelf Registration Statement, in each case as is customary for similar due diligence examinations; provided, however, that any information that is designated in writing by the Company, in good faith, as confidential at the time of delivery of such information shall be kept confidential by such Holders or any such underwriter, attorney, accountant or agent, unless such disclosure is made in connection with a court proceeding or required by law, or such information becomes available to the public generally or through a third party without an accompanying obligation of confidentiality; and provided further that the foregoing inspection and information gathering shall, to the greatest extent possible, be coordinated on behalf of the Holders and the other parties entitled thereto by one counsel designated by and on behalf of such Holders and other parties; (iii) make such representations and warranties to the Holders of Conversion Shares registered thereunder and the underwriters, if any, in form, substance and scope as are customarily made by the Company to underwriters in primary underwritten offerings and covering matters including, but not limited to, those set forth in the Exchange Agreement; (iv) obtain opinions of counsel to the Company (who may be the general counsel of Company) and updates thereof (which counsel and opinions (in form, scope and substance) must be reasonably satisfactory to the Managing Underwriters, if any) in customary form addressed to each selling Holder and the underwriters, if any, covering such matters as are customarily covered in opinions requested in underwritten offerings and such other matters as may be reasonably requested by such Holders and underwriters (it being agreed that the matters to be covered by such opinions or a written statement by such counsel delivered in connection with such opinions shall include, without limitation, as of the date of the opinion and as of the effective date of the Shelf Registration Statement or most recent post-effective amendment thereto, as the case may be, the absence from such Shelf Registration Statement and the prospectus included therein, as then amended or supplemented, including the documents incorporated by reference therein, of an untrue statement of a material fact or the omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading; (v) obtain "cold comfort" letters and updates thereof from the independent public accountants of the Company, addressed to each such Holder of Conversion Shares registered thereunder and the underwriters, if any, in customary form and covering matters of the type customarily covered in "cold comfort" letters in connection with primary underwritten offerings; and (vi) deliver such other customary documents and certificates as may be reasonably requested by any such Holders and the Managing Underwriters, if any, including those to evidence compliance with Section 3(i) and with any customary conditions contained in the underwriting agreement or other agreement entered into by the Company. The foregoing actions set forth in clauses (iii), (iv), (v) and (vi) of this Section 3(n) shall be performed at each closing under any underwritten offering to the extent required thereunder. -6- (o) The Company will use its best efforts to cause the Conversion Shares to be approved for quotation on the Nasdaq National Market, or listed upon any other national securities exchange upon which its Common Stock is listed. (p) In the event that any broker-dealer registered under the Exchange Act shall underwrite any Conversion Shares or participate as a member of an underwriting syndicate or selling group or "assist in the distribution" (within the meaning of the Conduct Rules and the By-Laws of the National Association of Securities Dealers, Inc. (the "NASD")) thereof, whether as a Holder of such Conversion Shares or as an underwriter, a placement or sales agent or a broker or dealer in respect thereof, or otherwise, the Company shall assist such broker-dealer in complying with the requirements of such Rules and By-Laws, including, without limitation, by (A) if such Rules or By-Laws, including Rule 2720, shall so require, engaging a "qualified independent underwriter" (as defined in Rule 2720) to participate in the preparation of the Shelf Registration Statement relating to such Conversion Shares and to exercise usual standards of due diligence in respect thereto, (B) indemnifying any such qualified independent underwriter to the extent of the indemnification of underwriters provided in section 5 hereof and (C) providing such information to such broker-dealer as may be required in order for such broker-dealer to comply with the requirements of the Conduct Rules of the NASD. (q) The Company shall use its best efforts to take all other steps necessary to effect the registration, offering and sale of the Conversion Shares covered by the Shelf Registration Statement contemplated hereby. 4. REGISTRATION EXPENSES. Except as otherwise provided in Section 6, the Company shall bear all fees and expenses incurred in connection with the performance of its obligations under Sections 2 and 3 hereof and shall bear or reimburse the Holders for the reasonable fees and disbursements of one firm of counsel designated by the Company and reasonably acceptable to the Holders of a majority of the Conversion Shares covered by the Shelf Registration Statement to act as counsel therefor in connection therewith. 5. INDEMNIFICATION AND CONTRIBUTION. (a) In connection with any Shelf Registration Statement, the Company shall indemnify and hold harmless the Purchaser, each Holder, each underwriter who participates in an offering of Conversion Shares, each person, if any, who controls any of such parties within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act and each of their respective directors, officers, employees, trustees and agents, as follows: (i) against any and all loss, liability, claim, damage and expense whatsoever, including any amounts paid in settlement of any investigation, litigation, proceeding or claim, joint or several, as incurred, arising out of any untrue statement or alleged untrue statement of a material fact contained in any Shelf Registration Statement (or any amendment thereto) covering Conversion Shares, including all documents incorporated therein by reference, or the omission or alleged omission therefrom of a material fact required to be stated therein or necessary to make the statements therein not misleading or arising out of any untrue statement or alleged untrue statement of a material fact -7- contained in any Prospectus (or any amendment or supplement thereto) or the omission or alleged therefrom of a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided, that the Company shall not be liable under this clause (i) for any settlement of any action effected without its written consent, which consent shall not be unreasonably withheld; and (ii) against any and all expenses whatsoever, as incurred (including reasonable fees and disbursements of counsel chosen by the Holders or any underwriter (except to the extent otherwise expressly provided in Section 5(c) hereof)), reasonably incurred in investigating, preparing or defending against any litigation, or any investigation or proceeding by any court or governmental agency or body, commenced or threatened, or any claim whatsoever based upon any such untrue statement or omission, or any such alleged untrue statement or omission, to the extent that any such expense is not paid under subparagraph (i) of this Section 5(a); provided that this indemnity shall not apply to any loss, liability, claim, damage or expense to the extent arising out of an untrue statement or omission or alleged untrue statement or omission (i) made in reliance upon and in conformity with written information furnished to the Company by the Purchaser, such Holder or any underwriter in writing expressly for use in the Shelf Registration Statement (or any amendment thereto) or any Prospectus (or any amendment or supplement thereto) or (ii) contained in any preliminary prospectus if the Purchaser, such Holder or such underwriter failed to send or deliver a copy of the Prospectus (or any amendment or supplement thereto) to the Person asserting such losses, claims, damages or liabilities on or prior to the delivery of written confirmation of any sale of securities covered thereby to such Person in any case where such Prospectus (or any amendment or supplement thereto) corrected such untrue statement or omission. Any amounts advanced by the Company to an indemnified party pursuant to this Section 5 as a result of such losses shall be returned to the Company if it shall be finally determined by such court or governmental agency or body in a judgment not subject to appeal or final review that such indemnified party was not entitled to indemnification by the Company. (b) Each Holder agrees, severally and not jointly, to indemnify and hold harmless the Company, the Purchaser, each underwriter who participates in an offering of Conversion Shares and the other selling Holders and each of their respective directors, officers (including each officer of the Company who signed the Shelf Registration Statement), employees, trustees and agents and each Person, if any, who controls the Company, the Purchaser, any underwriter or any other selling Holder within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act, from and against any and all loss, liability, claim, damage and expense whatsoever described in the indemnity contained in Section 5(a) hereof, as incurred, but only with respect to untrue statements or omissions, or alleged untrue statements or omissions, made in the Shelf Registration Statement (or any amendment thereto) or any Prospectus (or any amendment or supplement thereto) in reliance upon and in conformity with written information furnished to the Company by such selling Holder expressly for use in the Shelf Registration Statement (or any amendment thereto) or any Prospectus (or any amendment or supplement thereto); provided, however, that, no such Holder shall be liable for any claims hereunder -8- in excess of the amount of net proceeds received by such Holder from the sale of Conversion Shares pursuant to the Shelf Registration Statement. (c) Each indemnified party shall give prompt notice to each indemnifying party of any action commenced against it in respect of which indemnity may be sought hereunder, enclosing a copy of all papers served on such indemnified party, but failure to so notify an indemnifying party shall not relieve such indemnifying party from any liability which it may have other than on account of this indemnity agreement. An indemnifying party may participate at its own expense in the defense of any such action. If an indemnifying party so elects within a reasonable time after receipt of such notice, such indemnifying party, jointly with any other indemnifying party, may assume the defense of such action with counsel chosen by it and approved by the indemnified party or parties defendant in such action, provided that if any such indemnified party reasonably determines that there may be legal defenses available to such indemnified party which are different from or in addition to those available to such indemnifying party or that representation of such indemnifying party and any indemnified party by the same counsel would present a conflict of interest, then such indemnifying party or parties shall not be entitled to assume such defense. If an indemnifying party is not entitled to assume the defense of such action as a result of the proviso to the preceding sentence, counsel for such indemnifying party shall be entitled to conduct the defense of such indemnifying party and counsel for each indemnified party or parties shall be entitled to conduct the defense of such indemnified party or parties. If an indemnifying party assumes the defense of an action in accordance with and as permitted by the provisions of this paragraph, such indemnifying party shall not be liable for any fees and expenses of counsel for the indemnified parties incurred thereafter in connection with such action. In no event shall the indemnifying party or parties be liable for the fees and expenses of more than one counsel (in addition to any local counsel) separate from its own counsel for all indemnified parties in connection with any one action or separate but similar or related actions in the same jurisdiction arising out of the same general allegations or circumstances. (d) In order to provide for just and equitable contribution in circumstances in which the indemnity provision agreement provided for in this Section 5 is for any reason held to be unavailable to the indemnified parties although applicable in accordance with its terms, the Company, the Purchaser and the Holders shall contribute to the aggregate losses, liabilities, claims, damages and expenses of the nature contemplated by said indemnity agreement incurred by the Company, the Purchaser and the Holders, as incurred; provided that no Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any Person that was not guilty of such fraudulent misrepresentation. As between the Company, the Purchaser and the Holders, such parties shall contribute to such aggregate losses, liabilities, claims, damages and expenses of the nature contemplated by such indemnity agreement in such proportion as shall be appropriate to reflect the relative fault of the Company, on the one hand, and the Purchaser and the Holders, on the other hand, with respect to the statements or omissions which resulted in such loss, liability, claim, damage or expense, or action in respect thereof, as well as any other relevant equitable considerations. The relative fault of the Company, on the one hand, and of the Purchaser and the Holders, on the other hand, shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company, on the one hand, or by or on behalf of the Purchaser or the Holders, on the other, and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such -9- statement or omission. The Company, the Purchaser and the Holders of the Conversion Shares agree that it would not be just and equitable if contribution pursuant to this Section 5 were to be determined by pro rata allocation or by any other method of allocation that does not take into account the relevant equitable considerations. For purposes of this Section 5(d), each director, officer, employee, trustee, agent and Person, if any, who controls the Purchaser or a Holder within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act shall have the same rights to contribution as such Purchaser or Holder, and each director, officer, employee, trustee and agent of the Company, and each Person, if any, who controls the Company within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act shall have the same rights to contribution as the Company. No party shall be liable for contribution with respect to any action, suit, proceeding or claim settled without its written consent. 6. UNDERWRITTEN OFFERING. The Holders of Conversion Shares covered by the Shelf Registration Statement who desire to do so may sell such Conversion Shares in an underwritten offering. In any such underwritten offering, the investment banker or bankers and manager or managers that will administer the offering will be selected by, and the underwriting arrangements with respect thereto will be approved by, the Holders of a majority of the Conversion Shares to be included in such offering; provided, however, that (i) such investment bankers and managers and underwriting arrangements must be reasonably satisfactory to the Company and (ii) the Company shall not be obligated to arrange for more than one underwritten offering during the Effectiveness Period. No Holder may participate in any underwritten offering contemplated hereby unless such Holder (a) agrees to sell such Holder's Conversion Shares in accordance with any approved underwriting arrangements, (b) completes and executes all reasonable questionnaires, powers of attorney, indemnities, underwriting agreements, lock-up letters and other documents required under the terms of such approved underwriting arrangements and (c) at least 20% of the outstanding Conversion Shares are included in such underwritten offering. The Holders participating in any underwritten offering shall be responsible for any expenses customarily borne by selling securityholders, including underwriting discounts and commissions and fees and expenses of counsel to the selling securityholders. Notwithstanding the foregoing or the provisions of Section 3(l) hereof, upon receipt of a request from the Managing Underwriter or a representative of Holders of a majority of the Conversion Shares outstanding to prepare and file an amendment or supplement to the Shelf Registration Statement and Prospectus in connection with an underwritten offering, the Company may delay the filing of any such amendment or supplement for up to 90 days if the Company in good faith has a valid business reason for such delay. 7. MISCELLANEOUS. (a) AMENDMENTS AND WAIVERS. The provision of this Agreement, including the provisions of this sentence, may not be amended, qualified, modified or supplemented, and waivers or consents to departures from the provisions hereof may not be given, unless the Company has obtained the written consent of the Purchaser. (b) NOTICES. All notices and other communications provided for or permitted hereunder shall be made in writing by hand-delivery, first-class mail, telex, telecopier, or air courier guaranteeing overnight delivery: -10- 1. if to a Holder, at the most current address given by such Holder to the Company in accordance with the provisions of this Section 6(b); 2. if to the Purchaser, initially at the address set forth in the Exchange Agreement; and 3. if to the Company, initially at its address set forth in the Exchange Agreement. All such notices and communications shall be deemed to have duly given when received. The Purchaser or the Company by notice to the other may designate an additional or different address for subsequent notices or communications. (c) SUCCESSORS AND ASSIGNS. This Agreement shall inure to the benefit of and be binding upon the successors and assigns of each of the parties and the Holders, including, without the need for an express assignment or any consent by the Company thereto, subsequent Holders of Conversion Shares. The Company hereby agrees to extend the benefits of this Agreement to any Holder of Conversion Shares and any such Holder may specifically enforce the provisions of this Agreement as if an original party hereto. (d) COUNTERPARTS. This Agreement may be executed in any number of counterparts and by the parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. (e) HEADINGS. The headings in this agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof. (f) GOVERNING LAW. This agreement shall be governed by and construed in accordance with the laws of the State of New York, without giving effect to any provisions relating to conflicts of laws. (g) SEVERABILITY. In the event that any one of more of the provisions contained herein, or the application thereof in any circumstances, held invalid, illegal or unenforceable in any respect for any reason, the validity, legality and enforceability of any such provision in every other respect and of the remaining provisions hereof shall not be in any way impaired or affected thereby, it being intended that all of the rights and privileges of the parties shall be enforceable to the fullest extent permitted by law. -11- IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date first set forth above. DANSKIN, INC. By: /s/ Edwin W. Dean ----------------------------------- Edwin W. Dean Vice Chairman of the Board OPPENHEIMER BOND FUND FOR GROWTH By: /s/ Michael S. Rosen ----------------------------------- Michael S. Rosen Vice President -12- EX-99.1 5 EXHIBIT 99.1 NEWS FROM DANSKIN, INC.'r' DANKSIN, INC. COMPLETES INCREASE IN EQUITY OF $5.3 MILLION AND RECEIVES APPROVAL OF NASDAQ SMALL CAP LISTING. NEW YORK, NY, August 6, 1996 -- Danksin, Inc. (NASDAQ:DANS) today announced that it had completed the sale of $5,000,000 (liquidation value) of 10% Convertible Preferred Stock to The Oppenheimer Bond Fund For Growth, and that Howard D. Cooley, Chairman of the Board, had purchased 100,000 shares of the Company's common stock through exercise of an option at $3.00 per share. The new Convertible Preferred Stock is perpetual, with an initial conversion price of $2.76 per share, and was issued in exchange for $5,000,000 principal amount of 8% Subordinated Convertible Debentures. The Company also announced that it had received notification from The Nasdaq Stock Market, Inc. that its request to have its common stock listed on the Nasdaq Small Cap Market had been approved. Danskin, Inc. markets and manufactures women's activewear and dancewear under the Dakskin'r', Shape'r', and Dance France'r' trademarks and legwear under the Danskin'r', Anne Klein'r', Givenchy'r', Round-The-Clock'r' and Christian Dior'r' trademarks. Danskin's Pennaco Hosiery Division is the largest manufacturer of private label hosiery sold in department stores and fine specialty stores nationwide. Contact: Beverly Eichel Chief Financial Officer (212) 930-9157 111 West 40th Street New York, NY 10018 Tel 212 764 4630 Fax 212 764 7265 [Danskin Logo] [Round-the-Clock Logo] [Dance France Logo] [Anne Klein Logo] [ChristianDior Logo] [Givenchy Logo] [Custom Collection Logo] [Shape Active Wear Logo] STATEMENT OF DIFFERENCES The registered trademark symbol shall be expressed as 'r'. -----END PRIVACY-ENHANCED MESSAGE-----