-----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, FMAz+Lh6abe35j+SMxuCILo8BQETVVT81b0gKKl3XIk4MPO9dsXfj88b/0xyC0e7 yP6CIjosgcNWi/WVOLqiKQ== 0000895345-99-000412.txt : 19990716 0000895345-99-000412.hdr.sgml : 19990716 ACCESSION NUMBER: 0000895345-99-000412 CONFORMED SUBMISSION TYPE: SC 13D PUBLIC DOCUMENT COUNT: 5 FILED AS OF DATE: 19990715 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: YANKEE CANDLE CO INC CENTRAL INDEX KEY: 0001084242 STANDARD INDUSTRIAL CLASSIFICATION: MISCELLANEOUS MANUFACTURING INDUSTRIES [3990] IRS NUMBER: 042591416 FILING VALUES: FORM TYPE: SC 13D SEC ACT: SEC FILE NUMBER: 005-56541 FILM NUMBER: 99665020 BUSINESS ADDRESS: STREET 1: PO BOX 110 CITY: SOUTH DEERFIELD STATE: MA ZIP: 01373 BUSINESS PHONE: 4136658306 MAIL ADDRESS: STREET 1: PO BOX 110 CITY: S DEERFIELD STATE: MA ZIP: 01373 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: FORSTMANN LITTLE & CO SUB DEBT & EQU MGMT BUYOUT PART VI LP CENTRAL INDEX KEY: 0000947053 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 133810288 STATE OF INCORPORATION: NY FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D BUSINESS ADDRESS: STREET 1: 767 FIFTH AVE 44TH FL CITY: NEW YORK STATE: NY ZIP: 10153 BUSINESS PHONE: 2123555656 MAIL ADDRESS: STREET 1: C/O FORSTMANN LITTLE & CO. STREET 2: 767 FIFTH AVENUE CITY: NEW YORK STATE: NY ZIP: 10153 SC 13D 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D. C. 20549 SCHEDULE 13D UNDER THE SECURITIES EXCHANGE ACT OF 1934 AMENDMENT NO. ___________* THE YANKEE CANDLE COMPANY, INC. - ----------------------------------------------------------------------------- (Name of Issuer) COMMON STOCK, PAR VALUE $0.01 PER SHARE - ----------------------------------------------------------------------------- (Title of Class of Securities) 984757104 ------------------------------------------------------- (CUSIP Number) FRIED, FRANK, HARRIS, SHRIVER & JACOBSON FORSTMANN LITTLE & CO. ONE NEW YORK PLAZA SUBORDINATED DEBT AND NEW YORK, NY 10004 EQUITY MANAGEMENT BUYOUT ATTN: LOIS HERZECA, ESQ. PARTNERSHIP-VI,L.P. (212) 859-8000 FORSTMANN LITTLE & CO. EQUITY PARTNERSHIP-V, L.P. C/O FORSTMANN LITTLE & CO. 767 FIFTH AVENUE NEW YORK, NY 10153 ATTN: WINSTON W. HUTCHINS (212) 355-5656 - ----------------------------------------------------------------------------- (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) JULY 6, 1999 ------------------------------------------------------- (Date of Event which Requires Filing of this Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition which is the subject of this Schedule 13D, and is filing this schedule because of ss. ss. 240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following box [ ]. NOTE: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See ss.240.13d-7 for other parties to whom copies are to be sent. *The remainder of this cover page shall be filled out for a reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page. The information required on the remainder of this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes). 13D CUSIP No. 984757104 1 NAME OF REPORTING PERSON/ S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS FORSTMANN LITTLE & CO. SUBORDINATED DEBT AND EQUITY MANAGEMENT BUYOUT PARTNERSHIP-VI, L.P. 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ] (b) [X] 3 SEC USE ONLY 4 SOURCE OF FUNDS* 00 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) [ ] 6 CITIZENSHIP OR PLACE OF ORGANIZATION NEW YORK NUMBER OF 7 SOLE VOTING POWER SHARES 13,661,830 BENEFICIALLY 8 SHARED VOTING POWER OWNED BY EACH 0 REPORTING 9 SOLE DISPOSITIVE POWER PERSON WITH 13,661,830 10 SHARED DISPOSITIVE POWER 0 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 13,661,830 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) [ ] EXCLUDES CERTAIN SHARES* 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 25.1% 14 TYPE OF REPORTING PERSON* PN *SEE INSTRUCTIONS BEFORE FILLING OUT! INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7 (INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION. 13D CUSIP No. 984757104 1 NAME OF REPORTING PERSON/ S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS FORSTMANN LITTLE & CO. EQUITY PARTNERSHIP-V, L.P. 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ] (b) [X] 3 SEC USE ONLY 4 SOURCE OF FUNDS* 00 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) [ ] 6 CITIZENSHIP OR PLACE OF ORGANIZATION NEW YORK NUMBER OF 7 SOLE VOTING POWER SHARES 20,745,742 BENEFICIALLY 8 SHARED VOTING POWER OWNED BY EACH 0 REPORTING 9 SOLE DISPOSITIVE POWER PERSON WITH 20,745,742 10 SHARED DISPOSITIVE POWER 0 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 20,745,742 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) [ ] EXCLUDES CERTAIN SHARES* 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 38.1% 14 TYPE OF REPORTING PERSON* PN *SEE INSTRUCTIONS BEFORE FILLING OUT! INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7 (INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION. ITEM 1. Security and Issuer ------------------- This Statement on Schedule 13D relates to the common stock, par value $0.01 per share ("Common Stock"), of The Yankee Candle Company, Inc., a Massachusetts corporation ("Yankee Candle"). The principal executive offices of Yankee Candle are located at 102 Christian Lane, Whately, Massachusetts 01093. ITEM 2. Identity and Background ----------------------- This statement is filed by Forstmann Little & Co. Equity Partnership-V, L.P. ("Equity-V") and Forstmann Little & Co. Subordinated Debt and Equity Management Buyout Partnership-VI, L.P. ("MBO-VI"). ITEM 2. (a), (b), (c) ------------- Equity-V and MBO-VI are New York limited partnerships which are private investment firms. Information with respect to the identity, address and background of the general partners of each of Equity-V and MBO-VI is set forth on Schedule I attached hereto. The address of the principal office of each of MBO-VI and Equity-V is c/o Forstmann Little & Co., 767 Fifth Avenue, New York, New York 10153. ITEM 2. (d), (e) -------- During the last five years, neither MBO-VI nor Equity-V nor, to the knowledge of MBO-VI and Equity-V, any person identified in Schedule I has (i) been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) or (ii) been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws. ITEM 3. Source and Amount of Funds or Other Consideration ------------------------------------------------- On April 27, 1998, Yankee Candle Holdings Corp., a Delaware corporation ("Yankee Candle Holdings"), which was newly formed by Equity-V, MBO-VI and executives of Yankee Candle, purchased 449.9782 shares of Yankee Candle common stock, no par value ("Old Yankee Candle Stock"), for $180 million from Michael Kittredge, the founder of Yankee Candle. On July 6, 1999, Yankee Candle was reorganized (the "Reorganization") pursuant to an Agreement and Plan of Reorganization (the "Reorganization Agreement"), in contemplation of an initial public offering, as follows: (i) Yankee Candle Holdings transferred 449.9782 shares of Old Yankee Candle Stock to Yankee Candle in exchange for 43,545,479 shares of Common Stock, and 554,521 options to purchase Common Stock; and (ii) Yankee Candle Holdings was liquidated and all of the shares of Common Stock, and options to purchase Common Stock, received from Yankee Candle were distributed to the Yankee Candle Holdings stockholders. Pursuant to the liquidation and distribution of the assets of Yankee Candle Holdings, Equity-V received 25,038,949 shares of Common Stock, and MBO-VI received 16,489,064 shares of Common Stock. The foregoing description of the Reorganization Agreement is not intended to be complete and is qualified in its entirety by the complete text of such Reorganization Agreement which is incorporated herein by reference. The Reorganization Agreement is filed as Exhibit 1 hereto. ITEM 4. Purpose of Transaction ---------------------- Equity-V and MBO-VI acquired the shares of Common Stock in the Reorganization, as more fully described in Item 3, in contemplation of an initial public offering of Common Stock. On July 7, 1999, Equity-V sold 4,293,207 shares of Common Stock and MBO-VI sold 2,827,234 shares of Common Stock in Yankee Candle's initial public offering of Common Stock, at the initial public offering price of $18.00 per share. Except as set forth above, neither Equity-V nor MBO-VI nor, to the knowledge of Equity-V and MBO-VI, any person identified in Schedule I, has any plans or proposals which relate to or would result in the types of transactions set forth in subparagraphs (a) through (j) of Item 4 of Schedule 13D. ITEM 5. Interest in Securities of the Issuer ------------------------------------ The following information is as of July 7, 1999: (i) Equity-V: (a) Amount Beneficially Owned: Equity-V directly owns 20,745,742 shares of Common Stock. FLC XXX Partnership ("FLC XXX"), a New York general partnership having its principal business office at the address set forth in response to Item 2(b) of this statement, is the general partner of Equity-V. Theodore J. Forstmann, Nicholas C. Forstmann, Steven B. Klinsky, Sandra J. Horbach, Thomas Lister, Winston W. Hutchins and Erskine B. Bowles, each a United States citizen with his or her principal place of business being at the address set forth in response to Item 2(b) of this statement, are the general partners of FLC XXX. Mr. Bowles does not have any voting or investment power with respect to, or any economic interest in, the shares of Common Stock held by Equity-V; and, accordingly, Mr. Bowles is not deemed to be the beneficial owner of these shares. The shares of Common Stock owned by Equity-V represent approximately 38.1% of the Common Stock. (b) Number of shares as to which such person has: (i) sole power to vote or to direct the vote -- 20,745,742. (ii) shared power to vote or to direct the vote -- None. (iii) sole power to dispose or to direct the disposition of -- 20,745,742 (iv) shared power to dispose or to direct the disposition of -- None. (ii) MBO-VI: ------ (a) Amount Beneficially Owned: MBO-VI directly owns 13,661,830 shares of Common Stock. FLC XXIX Partnership, L.P. ("FLC XXIX"), a New York limited partnership having its principal business office at the address set forth in response to Item 2(b) of this statement, is the general partner of MBO-VI. Theodore J. Forstmann, Nicholas C. Forstmann, Steven B. Klinsky, Sandra J. Horbach, Thomas Lister, Winston W. Hutchins and Erskine B. Bowles, each a United States citizen with his or her principal place of business being at the address set forth in response to Item 2(b) of this statement, are the general partners of FLC XXIX. Mr. Lister and Mr. Bowles do not have any voting or investment power with respect to, or any economic interest in, the shares of Common Stock held by MBO-VI; and, accordingly, Mr. Lister and Mr. Bowles are not deemed to be the beneficial owners of these shares. The shares of Common Stock owned by MBO-VI represent approximately 25.1% of the Common Stock. (b) Number of shares as to which such person has: (i) sole power to vote or to direct the vote -- 13,661,830 (ii) shared power to vote or to direct the vote -- None. (iii) sole power to dispose or to direct the disposition of -- 13,661,830. (iv) shared power to dispose or to direct the disposition of -- None. (iii) Except as set forth in response to Item 4, neither Equity-V nor MBO-VI nor, to the knowledge of Equity-V and MBO-VI, any person identified in Schedule I, beneficially owns any shares of Common Stock or has effected any transactions in shares of Common Stock during the preceding 60 days. ITEM 6. Contracts, Arrangements, Understandings or Relationships with Respect to Securities of the Issuer ------------------------------------------------------------- MBO-VI and Equity-V (the "Forstmann Little partnerships") have entered into a Registration Rights Agreement with Yankee Candle, dated May 6, 1999 (the "Registration Rights Agreement"), pursuant to which Yankee Candle has granted to the Forstmann Little partnerships six demand rights to cause Yankee Candle to register under the Securities Act of 1933, as amended (the "Securities Act"), all shares of Common Stock held by the Forstmann Little partnerships. Pursuant to stockholder's agreements ("Stockholder's Agreements") between Yankee Candle and certain senior executive officers ("Stockholders") of Yankee Candle, the Stockholders may participate proportionately in any sale by the Forstmann Little partnerships of all or a portion of their shares of Common Stock to any person who is not a partner or affiliate. In addition, the Stockholders are entitled to, and may be required to, participate proportionately in a public offering of shares of Common Stock by the Forstmann Little partnerships, by selling the same percentage of their shares that the Forstmann Little partnerships are selling of their shares. The sale of shares of Common Stock in this transaction must be for the same price and otherwise on the same terms and conditions as the sale by the Forstmann Little partnerships. If the Forstmann Little partnerships sell or exchange all or a portion of their Common Stock in a bona fide arm's-length transaction, the Forstmann Little partnerships may require the Stockholders to sell a proportionate amount of their shares for the same price and on the same terms and conditions as the sale of Common Stock by the Forstmann Little partnerships and, if stockholder approval of the transaction is required, to vote their shares in favor of the sale or exchange. Pursuant to a Stockholder's Agreement, dated as of April 27, 1998 (the "Kittredge Agreement"), between Yankee Candle and Michael Kittredge ("Kittredge"), Kittredge may participate proportionately in any sale by the Forstmann Little partnerships of all or a portion of their shares of Common Stock to any person who is not a partner or affiliate. In addition, Kittredge is entitled and required to participate proportionately in a public offering of shares of Common Stock by the Forstmann Little partnerships, by selling the same percentage of his shares that the Forstmann Little partnerships are selling of their shares. The sale of shares of Common Stock in this transaction must be for the same price and otherwise on the same terms and conditions as the sale by the Forstmann Little partnerships. If the Forstmann Little partnerships sell or exchange all or a portion of their Common Stock in a bona fide arm's-length transaction, the Forstmann Little partnerships may require Kittredge to sell a proportionate amount of his shares for the same price and on the same terms and conditions as the sale of Common Stock by the Forstmann Little partnerships and, if stockholder approval of the transaction is required, to vote his shares in favor of the sale or exchange. Each of the Forstmann Little partnerships has signed a Management Rights Letter (the "Management Rights Letters") dated as of May 1, 1999, whereby Yankee Candle has agreed to give the Forstmann Little partnerships a contractual right to elect two directors of Yankee Candle so long as the Forstmann Little partnerships own any voting securities of Yankee Candle. The foregoing description of the Registration Rights Agreement, the Stockholder's Agreements, the Kittredge Agreement and the Management Rights Letters are not intended to be complete and is qualified in its entirety by the complete text of such Registration Rights Agreement, Stockholder's Agreements, the Kittredge Agreement and the Management Rights Letters all of which are incorporated herein by reference. The Registration Rights Agreement, a form of the Stockholder's Agreement, the Kittredge Agreement and the Management Rights Letters are filed as Exhibits 2, 3, 4 and 5 hereto, respectively. Except as set forth in Items 3 and 6 of this statement or incorporated by reference herein, neither Equity-V nor MBO-VI, nor to the knowledge of Equity-V and MBO-VI, any person identified in Schedule I, has any contracts, arrangements, understandings or relationships (legal or otherwise) with any person with respect to any securities of Yankee Candle. ITEM 7. Material to be Filed as Exhibits -------------------------------- 1. Agreement and Plan of Reorganization, dated July 2, 1999, between Yankee Candle and Yankee Candle Holdings, and the exhibits thereto. 2. Registration Rights Agreement, dated as of May 6, 1999, among Yankee Candle, Equity-V and MBO-VI. 3. Form of Stockholder's Agreement between Yankee Candle and Stockholders. 4. Stockholder's Agreement, dated as of April 27, 1998, between Yankee Candle and Kittredge. Filed as Exhibit 10.6 to Yankee Candle's Registration Statement on Form S-1 (File No. 333-76397) and incorporated herein by reference. 5. Management Rights Letters, each dated as of May 1, 1999, between Yankee Candle and the Forstmann Little partnerships. SIGNATURE After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. Dated: July 15, 1999 FORTSMANN LITTLE & CO. EQUITY PARTNERSHIP-V, L.P. By: FLC XXX Partnership, its general partner By: /s/ Winston W. Hutchins --------------------------------- Winston W. Hutchins, a general partner FORTSMANN LITTLE & CO. SUBORDINATED DEBT AND EQUITY MANAGEMENT BUYOUT PARTNERSHIP-VI, L.P. By: FLC XXIX Partnership, L.P. its general partner By: /s/ Winston W. Hutchins --------------------------------- Winston W. Hutchins, a general partner Schedule I ---------- FLC XXX Partnership: General Partner of Equity-V -------- FLC XXX Partnership, a New York general partnership ("FLC XXX"), is the general partner of Equity-V. Its purpose is to act as general partner of Equity-V and other limited partnerships affiliated with Equity-V. The address of the principal office of Equity-V is c/o Forstmann Little & Co., 767 Fifth Avenue, New York, NY 10153. Partners of FLC XXX ------- The following are the general partners of FLC XXX, the general partner of Equity-V. All of the following are general partners of partnerships affiliated with Forstmann Little & Co., a private investment firm. The business address of each of the following persons is 767 Fifth Avenue, New York, NY 10153 and each is a citizen of the United States. Theodore J. Forstmann Nicholas C. Forstmann Steven B. Klinsky Sandra J. Horbach Thomas H. Lister Winston W. Hutchins Erskine B. Bowles FLC XXIX Partnership, L.P.: General Partner of MBO-VI ------ FLC XXIX Partnership, L.P., a New York limited partnership ("FLC XXIX"), is the general partner of MBO-VI. Its purpose is to act as general partner of MBO-VI and other limited partnerships affiliated with MBO-VI. The address of the principal office of FLC XXIX is c/o Forstmann Little & Co., 767 Fifth Avenue, New York, NY 10153. Partners of FLC XXIX -------- The following are the general partners of FLC XXIX, the general partner of MBO-VI. All of the following are general partners of partnerships affiliated with Forstmann Little & Co., a private investment firm. The business address of each of the following persons is 767 Fifth Avenue, New York, NY 10153 and each is a citizen of the United States. Theodore J. Forstmann Nicholas C. Forstmann Steven B. Klinsky Sandra J. Horbach Thomas H. Lister Winston W. Hutchins Erskine B. Bowles EX-1 2 Exhibit 1 AGREEMENT AND PLAN OF REORGANIZATION AGREEMENT AND PLAN OF REORGANIZATION, dated as of July 2, 1999 (the "Reorganization Agreement"), between The Yankee Candle Company, Inc., a Massachusetts corporation (the "Company"), and Yankee Candle Holdings Corp., a Delaware corporation ("Holdings"). WHEREAS, the Boards of Directors of each of the Company and Holdings have determined that it is in the best interests of their respective organizations that the Company and Holdings enter into an exchange whereby the Company would issue shares of Common Stock (as defined below) in exchange for the assets of Holdings on the terms and conditions set forth herein (the "Exchange"); WHEREAS, in connection with the Exchange, the Company will cancel its existing no par value common stock and authorize new common stock, par value $.01 per share, of the Company ("Common Stock"); and WHEREAS, the Company and Holdings desire to adopt this Reorganization Agreement as a plan of reorganization in accordance with the provisions of Section 368(a)(1)(D) of the Internal Revenue Code of 1986, as amended; NOW THEREFORE, in consideration of the premises, the mutual benefits to be derived from this Reorganization Agreement and the covenants, agreements and promises hereinafter set forth, the parties hereto agree as follows: 1. The Exchange. On the business day immediately preceding the day of the closing of the initial public offering (the "Offering") of Common Stock registered under the Securities Act of 1933, as amended (the "Effective Date"), on the terms and conditions set forth herein, Holdings shall sell, transfer, convey and deliver to the Company all of its right, title and interest in and to all of its properties and business as a going concern and goodwill and assets of every kind, nature and description, as the same may exist as of the Effective Date, wherever such assets are located and whether real, personal or mixed, tangible or intangible, and whether or not any of such assets have any value for accounting purposes or are carried or reflected on or specifically referred to in its books or financial statements (collectively, the "Assets"), including, without limitation, the following: (i) Certificates representing 449.9782 shares of common stock, no par value, of the Company, duly endorsed in blank or with stock powers attached; (ii) All cash, including cash deposits and cash collateral, and other cash equivalents; and (iii) All books, records, files and data, in each case however evidenced (including, without limitation, by computer disk or tape); in exchange for (i) 43,545,479 newly issued, fully paid and non-assessable shares of Common Stock and (ii) the issuance of options to purchase 554,521 shares of Common Stock to persons with outstanding options to purchase Holdings stock pursuant to the Holdings Employee Stock Option Plan or director option agreements, in exchange for the cancellation of such options. The options to purchase Common Stock shall have the same intrinsic value as the cancelled options. In connection with the Exchange, Holdings shall retain all of its liabilities and no such liabilities shall be transferred to, assumed by or otherwise become liabilities of, the Company. 2. Restated Articles of Incorporation. In connection with the Exchange, the Company will amend and restate its Articles of Organization to authorize 300,000,000 shares of Common Stock, and 100,000,000 shares of preferred stock, par value $.01 per share, of the Company. 3. Kittredge Shares. Simultaneously with the execution of this Reorganization Agreement, the Company is entering into an agreement with Michael Kittredge (the "Kittredge Agreement", attached hereto as Exhibit A) pursuant to which Michael Kittredge will exchange his 49.9976 shares of common stock, no par value, of the Company for 4,900,000 shares of Common Stock, simultaneously with the Exchange. 4. Dissolution of Holdings. Immediately following the Exchange, and as part of this Reorganization Agreement, Holdings shall dissolve in accordance with Section 275 of the Delaware General Corporation Law. Upon such dissolution, Holdings shall liquidate by distributing all of its assets to its stockholders pursuant to a plan of dissolution and liquidation (the "Plan of Dissolution", attached hereto as Exhibit B). 5. Termination. Notwithstanding approval and adoption of this Reorganization Agreement by the stockholders of each of Holdings and the Company, this Reorganization Agreement may be terminated, and the Exchange abandoned, at any time prior to the Effective Date by mutual written consent of the parties hereto. 6. Entire Agreement. This Reorganization Agreement, the Kittredge Agreement and the Plan of Dissolution contain the entire agreement of the parties with respect to the transactions contemplated hereby. 7. Modifications. No amendment or modification of this Reorganization Agreement shall be valid unless it is in writing and signed by or on behalf of each of the parties hereto. 8. Governing Law. This Reorganization Agreement shall be governed by the laws of the State of New York, without regard to the principles of conflict of laws. 9. Counterparts. This Reorganization Agreement may be executed in one or more counterparts, each of which shall for all purposes be an original and all of which shall constitute the same instrument. IN WITNESS WHEREOF, the parties hereto have executed this Reorganization Agreement as of the date first above written. THE YANKEE CANDLE COMPANY, INC. By: /s/ Michael D. Parry ------------------------------------ Name: Michael D. Parry Title: President and Chief Executive Officer YANKEE CANDLE HOLDINGS CORP. By: /s/ Sandra J. Horbach ------------------------------------ Name: Sandra J. Horbach Title: President Exhibit A to Reorganization Agreement SHARE EXCHANGE AGREEMENT SHARE EXCHANGE AGREEMENT, dated as of July 2, 1999 (the "Agreement"), by and between The Yankee Candle Company, Inc., a Massachusetts corporation (the "Company"), and Michael J. Kittredge ("Kittredge"). WHEREAS, in connection with the initial public offering of the Company's securities (the "Offering"), the Company and Yankee Candle Holdings Corp., a Delaware corporation ("Holdings"), have entered into an Agreement and Plan of Reorganization (the "Reorganization Agreement"), dated as of the date hereof, providing for the issuance by the Company of shares of new common stock, par value $.01 per share ("New Common Stock"), of the Company to Holdings, in exchange for the transfer by Holdings of all of its assets, including, without limitation, its existing shares of common stock, no par value, of the Company ("Existing Common Stock"); WHEREAS, Kittredge is the owner of 49.9976 shares of Existing Common Stock; and WHEREAS, to carry out the intent of the Reorganization Agreement, the parties hereto deem it desirable that Kittredge exchange his shares of Existing Common Stock for shares of New Common Stock on the terms and subject to the conditions set forth herein; NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows: 1. The Kittredge Exchange. On the business day immediately preceding the day of the closing of the Offering (the "Effective Date"), on the terms and conditions set forth herein, Kittredge shall sell, transfer, convey and deliver certificates representing his 49.9976 shares of Existing Common Stock, duly endorsed in blank or with stock powers attached, to the Company in exchange for certificates representing 4,900,000 newly issued, fully paid and non-assessable shares of New Common Stock (the "Kittredge Exchange"). Kittredge represents and warrants to the Company that his shares of Existing Common Stock are on the date hereof, and will be on the Effective Date, free of all liens, claims and encumbrances except those created pursuant to agreements to which the Company is a party. 2. Termination. This Agreement shall automatically terminate, and the Kittredge Exchange shall automatically be abandoned, upon the termination of the Reorganization Agreement. This Agreement may not otherwise be terminated without the written consent of the parties hereto and Holdings. 3. Third Party Beneficiary. This Agreement shall inure to the benefit of the parties hereto and Holdings which shall be a third party beneficiary hereto. 4. Entire Agreement. This Agreement and the Reorganization Agreement contain the entire agreement of the parties with respect to the transactions contemplated hereby. 5. Modifications. No amendment or modification of this Agreement shall be valid unless it is in writing and signed by or on behalf of each of the Company and Kittredge. 6. Governing Law. This Agreement shall be governed by the laws of the State of New York, without giving effect to the principles of conflict of laws. 7. Counterparts. This Agreement may be executed in one or more counterparts, each of which shall for all purposes be an original and all of which shall constitute the same instrument. IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written. THE YANKEE CANDLE COMPANY, INC. By: ------------------------------------ Name: Michael D. Parry Title: President and Chief Executive Officer MICHAEL J. KITTREDGE --------------------------------------- Exhibit B to Reorganization Agreement YANKEE CANDLE HOLDINGS CORP. PLAN OF DISSOLUTION AND LIQUIDATION As part of the Plan of Reorganization (as defined below) and following the adoption of this Plan of Dissolution and Liquidation (the "Plan") by (i) holders of a majority of the outstanding stock entitled to vote thereon and a majority of the Board of Directors of Yankee Candle Holdings Corp., a Delaware corporation (the "Company"), or (ii) unanimous consent of all stockholders entitled to vote thereon, and following the exchange (the "Exchange") of all of the Company's assets for shares of common stock, par value $.01 per share ("YCC Common Stock"), of The Yankee Candle Company, Inc., a Massachusetts corporation ("YCC"), pursuant to that certain Agreement and Plan of Reorganization dated as of July 2, 1999 (the "Plan of Reorganization"), by and between YCC and the Company: 1. Dissolution. The appropriate officers of the Company will file a Certificate of Dissolution with the Secretary of State of the State of Delaware. The date of such filing shall be the effective date of dissolution of the Company (the "Effective Date"). 2. Cessation of Business. After the filing of the Certificate of Dissolution, the Company will not carry on any business except as may be necessary or incidental to the winding up of the Company's affairs. 3. Payment of Debts; Options. The Company will, pursuant to the Delaware General Corporation Law ("DGCL"), (i) pay or make reasonable provision to pay or otherwise satisfy all claims and obligations, including any obligations pursuant to outstanding Company stock option agreements ("Stock Option Agreements"), and all other contingent, conditional, or unmatured contractual claims known to the Company, (ii) make such provision as will be reasonably likely to be sufficient to provide compensation for any claim against the Company which is the subject of a pending action, suit or proceeding to which the Company is a party, and (iii) make such provision as will be reasonably likely to be sufficient to provide compensation for claims that have not been made known to the Company or that have not arisen but that, based on facts known to the Company, are likely to arise or to become known to the Company within 10 years of the date of dissolution. Such claims shall be paid in full and any such provision for payment made shall be made in full if there are sufficient funds. If there are insufficient funds, such claims and obligations shall be paid or provided for according to their priority and, among claims of equal priority, ratably to the extent of funds legally available therefor. Any assets remaining following the establishment of such provisions shall be distributed to the holders of Class A Stock (as defined below). The Company will cause each Stock Option Agreement to be cancelled and in exchange therefor shall cause to be delivered to each optionholder a stock option agreement for options to purchase shares of YCC Common Stock having the same intrinsic value as the cancelled options. 4. Liquidation of Assets; Cancellation of Shares. The sole assets of the Company will be shares of YCC Common Stock and options to purchase shares of YCC Common Stock which will have been received in exchange for the cancellation of outstanding options under the Stock Option Agreements. On the business day immediately preceding the day of the closing of the initial public offering of YCC Common Stock and after the Exchange, the YCC Common stock owned by the Company will be distributed to the holders of Class A Stock as follows: (i) each outstanding share of the Company's Class B Non-Voting Common Stock, par value $.01 per share ("Class B Stock"), will be converted into shares of the Company's Class A Common Stock, par value $.01 per share ("Class A Stock"), at the exchange rate set forth in Article Fourth, Section A, Subsection 4(d) of the Company's Restated Certificate of Incorporation (the "Restated Certificate") and (ii) immediately thereafter, each share of Class A Stock shall be exchanged for shares of YCC Common Stock, calculated in the manner set forth in Article Fourth, Section A, Subsection 3 of the Restated Certificate. Following the Exchange, the certificates representing Class A Stock and Class B Stock will be cancelled. No interest shall accrue at any time on any assets held for distribution. At the same time, YCC will deliver to each optionholder a stock option agreement for options to purchase shares of YCC Common Stock, which YCC options shall have the same intrinsic value as the cancelled Company options. 5. Liability of Company Stockholders. After the dissolution of the Company, Company stockholders will retain liability for claims against the Company as provided in Section 282 of the DGCL. 6. Power of Officers. The officers of the Company shall have authority to do or authorize any and all acts and things as provided for in the Plan and any and all such further acts and things as they may consider desirable to carry out the purposes of the Plan, including the execution and filing of all such certificates, documents, information returns, tax returns, and other documents which may be necessary or appropriate to implement the Plan, as well as the distribution of assets to stockholders of the Company. EX-2 3 Exhibit 2 REGISTRATION RIGHTS AGREEMENT among THE YANKEE CANDLE COMPANY, INC. FORSTMANN LITTLE & CO. EQUITY PARTNERSHIP - V, L.P., and FORSTMANN LITTLE & CO. SUBORDINATED DEBT AND EQUITY MANAGEMENT BUYOUT PARTNERSHIP - VI, L.P. May 6, 1999 REGISTRATION RIGHTS AGREEMENT, dated as of May 6, 1999, among The Yankee Candle Company, Inc., a Massachusetts corporation (the "Company"), Forstmann Little & Co. Equity Partnership - V, L.P., a Delaware limited partnership ("Equity-V"), and Forstmann Little & Co. Subordinated Debt and Equity Management Buyout Partnership - VI, L.P. a Delaware limited partnership ("MBO-VI") (Equity-V and MBO-VI are individually referred to as a "Forstmann Little Partnership" and collectively referred to as the "Forstmann Little Partnerships"). The Forstmann Little Partnerships currently own 170,000 shares of Class A common stock of Yankee Candle Holdings Corp., a Delaware corporation ("Holdings"). In connection with the proposed public offering of Common Stock (as defined below), Holdings will exchange its assets for new shares of the Company. In connection with that exchange the Company hereby grants to the Forstmann Little Partnerships certain registration and other rights with respect to their shares of Common Stock as more fully set forth herein. If either of the Forstmann Little Partnerships desires to sell shares of Common Stock, it may be necessary to register such shares under the Securities Act (as defined below). Accordingly, the parties hereto agree as follows: 1. Definitions. As used herein, unless the context otherwise requires, the following terms have the following respective meanings: "Commission" means the Securities and Exchange Commission or any other Federal agency at the time administering the Securities Act. "Common Stock" means any shares of common stock, par value $.01 per share, of the Company, now or hereafter authorized to be issued, and any and all securities of any kind whatsoever of the Company which may be exchanged for or converted into Common Stock, any and all securities of any kind whatsoever of the Company which may be issued on or after the date hereof in respect of, in exchange for, or upon conversion of shares of Common Stock pursuant to a merger, consolidation, stock split, stock dividend, recapitalization of the Company or otherwise. "Exchange Act" means the Securities Exchange Act of 1934, as amended, or any similar Federal statute, and the rules and regulations of the Commission thereunder, all as the same shall be in effect at the time. Reference to a particular section of the Exchange Act shall include a reference to the comparable section, if any, of any such similar Federal statute. "Other Investor" means each Person who, at the time of any registration of Common Stock hereunder, has the right under a stockholder's agreement or stock option agreement with the Company or any subsidiary thereof to participate in any public offering in which all or a portion of the shares of Common Stock owned by the Forstmann Little Partnerships are registered under the Securities Act. "Person" means a corporation, an association, a partnership, an organization, a business, a trust, an individual, or any other entity or organization, including a government or political subdivision or an instrumentality or agency thereof. "Registrable Securities" means (i) any shares of Common Stock now or hereafter owned by the Forstmann Little Partnerships, (ii) any shares of Common Stock held pursuant to the terms of a stockholder's agreement or issuable upon exercise of an option pursuant to the terms of a stock option agreement, as the case may be, between any Other Investor and the Company or any subsidiary thereof, which agreement gives such Other Investor the right to participate proportionately with the Forstmann Little Partnerships in a public offering with respect to such shares, and (iii) any Common Stock issued with respect to the Common Stock referred to in clauses (i) or (ii) by way of a stock dividend, stock split or reverse stock split or in connection with a combination of shares, recapitalization, merger, consolidation or otherwise. As to any particular Registrable Securities, such securities shall cease to be Registrable Securities (a) when a registration statement with respect to the sale of such securities shall have become effective under the Securities Act and such securities shall have been disposed of in accordance with such registration statement, (b) when such securities shall have been otherwise transferred, new certificates for them not bearing a legend restricting further transfer shall have been delivered by the Company and subsequent public distribution of them shall not require registration of them under the Securities Act, or (c) when such securities shall have been sold as permitted by, and in compliance with, the Securities Act. Any certificate evidencing the Registrable Securities shall bear a legend stating that the securities have not been registered under the Securities Act and setting forth or referring to the restrictions on transferability and sale of the securities. "Registration Expenses" means all expenses incident to the registration and disposition of the Registrable Securities pursuant to Section 2 hereof, including, without limitation, all registration, filing and applicable national securities exchange fees, all fees and expenses of complying with state securities or blue sky laws (including fees and disbursements of counsel to the underwriters or the Forstmann Little Partnerships and the Other Investors in connection with "blue sky" qualification of the Registrable Securities and determination of their eligibility for investment under the laws of the various jurisdictions), all word processing, duplicating and printing expenses, all messenger and delivery expenses, the fees and disbursements of counsel for the Company and of its independent public accountants, including the expenses of "cold comfort" letters or any special audits required by, or incident to, such registration, all fees and disbursements of underwriters (other than underwriting discounts and commissions), all transfer taxes, and the fees and expenses of counsel to the Forstmann Little Partnerships and the Other Investors; provided, however, that Registration Expenses shall exclude, and the Forstmann Little Partnerships and the Other Investors shall pay, underwriting discounts and commissions in respect of the Registrable Securities being registered. "Securities Act" means the Securities Act of 1933, as amended, or any similar Federal statute, and the rules and regulations of the Commission thereunder, all as the same shall be in effect at the time. References to a particular section of the Securities Act shall include a reference to the comparable section, if any, of any such similar Federal statute. 2. Registration under the Securities Act, etc. ------------------------------------------- 2.1 Registration on Request. ----------------------- (a) Request. At any time or from time to time, the Forstmann Little Partnerships, individually or jointly, shall have the right to require the Company to effect the registration under the Securities Act of all or part of the Registrable Securities, by delivering a written request therefor to the Company specifying the number of shares of Registrable Securities and the intended method of distribution. The Company shall, (i) as expeditiously as possible (but in any event within 120 days of receipt of a written request), use its best efforts to effect the registration under the Securities Act (including by means of a shelf registration pursuant to Rule 415 under the Securities Act if so requested in such request and if the Company is then eligible to use such a registration) of the Registrable Securities which the Company has been so requested to register by the Forstmann Little Partnerships, for distribution in accordance with the intended method of distribution set forth in the written request delivered by the Forstmann Little Partnerships, and (ii) if requested by the Forstmann Little Partnerships, obtain acceleration of the effective date of then registration statement relating to such registration. (b) Registration of Other Securities. Whenever the Company shall effect a registration pursuant to this Section 2.1 in connection with an underwritten offering by any Forstmann Little Partnership and any Other Investors of Registrable Securities, no securities other than Registrable Securities shall be included among the securities covered by such registration unless the Forstmann Little Partnership or Partnerships so registering Registrable Securities (the "Registering Forstmann Little Partnerships") shall have consented in writing to the inclusion therein of such other securities, which consent may be subject to terms and conditions determined by the Registering Forstmann Little Partnerships in their sole discretion. (c) Registration Statement Form. Registrations under this Section 2.1 shall be on such appropriate registration form of the Commission as shall be selected by the Company and as shall be reasonably acceptable to the Registering Forstmann Little Partnerships. The Company agrees to include in any such registration statement all information which, in the opinion of counsel to the Registering Forstmann Little Partnerships and counsel to the Company, is necessary or desirable to be included therein. (d) Expenses. The Company shall pay all Registration Expenses in connection with any registration requested pursuant to this Section 2.1. (e) Effective Registration Statement. A registration requested pursuant to this Section 2.1 shall not be deemed to have been effected (including for purposes of paragraph (h) of this Section 2.1) (i) unless a registration statement with respect thereto has become effective and has been kept continuously effective for a period of at least 120 days (or such shorter period which shall terminate when all the Registrable Securities covered by such registration statement have been sold pursuant thereto), (ii) if after it has become effective, such registration is interfered with by any stop order, injunction or other order or requirement of the Commission or other governmental agency or court for any reason not attributable to the Registering Forstmann Little Partnerships and has not thereafter become effective, or (iii) if the conditions to closing specified in the underwriting agreement, if any, entered into in connection with such registration are not satisfied or waived. (f) Selection of Underwriters. The underwriters of each underwritten offering of the Registrable Securities so to be registered shall be selected by the Registering Forstmann Little Partnerships. (g) Right to Withdraw. If the managing underwriter of any underwritten offering shall advise the Registering Forstmann Little Partnerships that the Registrable Securities covered by the registration statement cannot be sold in such offering within a price range acceptable to the Registering Forstmann Little Partnerships, then the Registering Forstmann Little Partnerships shall have the right to notify the Company in writing that they have determined that the registration statement be abandoned or withdrawn, in which event the Company shall abandon or withdraw such registration statement. In the event of such abandonment or withdrawal, such request shall not be counted for purposes of the requests for registration to which the Forstmann Little Partnerships are entitled pursuant to this Section 2.1. (h) Limitations on Registration on Request. The Forstmann Little Partnerships shall be entitled to require the Company to effect, and the Company shall be required to effect, six registrations in the aggregate pursuant to this Section 2.1, provided, however, that the aggregate offering value of the shares to be registered pursuant to any such registration shall be at least $15,000,000 unless the Forstmann Little Partnerships then own shares with an aggregate value less than $15,000,000 (in which case such lesser number of shares may be registered). (i) Postponement. The Company shall be entitled once in any six-month period to postpone for a reasonable period of time (but not exceeding 90 days) (the "Postponement Period") the filing of any registration statement required to be prepared and filed by it pursuant to this Section 2.1 if the Company determines, in its reasonable judgment, that such registration and offering would materially interfere with any material financing, corporate reorganization or other material transaction involving the Company or any subsidiary, or would require premature disclosure thereof, and promptly gives the Registering Forstmann Little Partnerships written notice of such determination, containing a general statement of the reasons for such postponement and an approximation of the anticipated delay. If the Company shall so postpone the filing of a registration statement, the Forstmann Little Partnerships shall have the right to withdraw the request for registration by giving written notice to the Company at any time and, in the event of such withdrawal, such request shall not be counted for purposes of the requests for registration to which the Forstmann Little Partnerships are entitled pursuant to this Section 2.1. 2.2 Incidental Registration. ----------------------- (a) Right to Include Registrable Securities. If the Company at any time proposes to register any of its securities under the Securities Act by registration on Form S-1, S-2 or S-3 or any successor or similar form(s) (except registrations on any such Form or similar form(s) solely for registration of securities in connection with an employee benefit plan or dividend reinvestment plan or a merger or consolidation), whether or not for sale for its own account, it will each such time give prompt written notice to each of the Forstmann Little Partnerships of its intention to do so and of the Forstmann Little Partnerships' rights under this Section 2.2. Upon the written request of any of the Forstmann Little Partnerships (which request shall specify the maximum number of Registrable Securities intended to be disposed of by the Forstmann Little Partnerships), made as promptly as practicable and in any event within 30 days after the receipt of any such notice (15 days if the Company states in such written notice or gives telephonic notice to the Forstmann Little Partnerships, with written confirmation to follow promptly thereafter, stating that (i) such registration will be on Form S-3 and (ii) such shorter period of time is required because of a planned filing date), the Company shall use its best efforts to effect the registration under the Securities Act of all Registrable Securities which the Company has been so requested to register by the Forstmann Little Partnerships; provided, however, that if, at any time after giving written notice of its intention to register any securities and prior to the effective date of the registration statement filed in connection with such registration, the Company shall determine for any reason not to register or to delay registration of such securities, the Company shall give written notice of such determination and its reasons therefor to the Forstmann Little Partnerships and (i) in the case of a determination not to register, shall be relieved of its obligation to register any Registrable Securities in connection with such registration (but not from any obligation of the Company to pay the Registration Expenses in connection therewith), without prejudice, however, to the rights of the Forstmann Little Partnerships to request that such registration be effected as a registration under Section 2.1 and (ii) in the case of a determination to delay registering, shall be permitted to delay registering any Registrable Securities, for the same period as the delay in registering such other securities. No registration effected under this Section 2.2 shall relieve the Company of its obligation to effect any registration upon request under Section 2.1. The Company will pay all Registration Expenses in connection with any registration of Registrable Securities requested pursuant to this Section 2.2. (b) Right to Withdraw. The Forstmann Little Partnerships shall have the right to withdraw their request for inclusion of its Registrable Securities in any registration statement pursuant to this Section 2.2 at any time prior to the execution of an underwriting agreement with respect thereto by giving written notice to the Company of its request to withdraw. (c) Priority in Incidental Registrations. If the managing underwriter of any underwritten offering shall inform the Company by letter of its belief that the number of Registrable Securities requested to be included in such registration, when added to the number of other securities to be offered in such registration, would materially adversely affect such offering, then the Company shall include in such registration, to the extent of the number and type which the Company is so advised can be sold in (or during the time of) such offering without so materially adversely affecting such offering (the "Section 2.2 Sale Amount"), (i) all of the securities proposed by the Company to be sold for its own account; (ii) thereafter, to the extent the Section 2.2 Sale Amount is not exceeded, the Registrable Securities requested by the Forstmann Little Partnerships to be included in such registration pursuant to Section 2.2(a) (including Registrable Securities held by Other Investors); and (iii) thereafter, to the extent the Section 2.2 Sale Amount is not exceeded, any other securities of the Company requested to be included in such registration by any holder thereof, including, in the case where such registration is to be effected as a result of the exercise by a holder of the Company's securities of such holder's right to cause such securities to be so registered, the securities of such holder. (d) Plan of Distribution. Any participation by holders of Registrable Securities in a registration by the Company shall be in accordance with the Company's plan of distribution, provided that the Registering Forstmann Little Partnerships shall have the right to select the co-managing underwriter. 2.3 Registration Procedures. If and whenever the Company is required to use its best efforts to effect the registration of any Registrable Securities under the Securities Act as provided in Sections 2.1 and 2.2 hereof, the Company shall as expeditiously as possible: (a) prepare and file with the Commission as soon as practicable the requisite registration statement to effect such registration (and shall include all financial statements required by the Commission to be filed therewith) and thereafter use its best efforts to cause such registration statement to become effective; provided, however, that before filing such registration statement (including all exhibits) or any amendment or supplement thereto or comparable statements under securities or blue sky laws of any jurisdiction, the Company shall furnish such documents to the Registering Forstmann Little Partnerships and each underwriter, if any, participating in the offering of the Registrable Securities and their respective counsel, which documents will be subject to the review and comments of the Registering Forstmann Little Partnerships, each underwriter and their respective counsel; and provided, further, however, that the Company may discontinue any registration of its securities which are not Registrable Securities at any time prior to the effective date of the registration statement relating thereto; (b) notify the Registering Forstmann Little Partnerships of the Commission's requests for amending or supplementing the registration statement and the prospectus, and prepare and file with the Commission such amendments and supplements to such registration statement and the prospectus used in connection therewith as may be necessary to keep such registration statement effective and to comply with the provisions of the Securities Act with respect to the disposition of all Registrable Securities covered by such registration statement for such period as shall be required for the disposition of all of such Registrable Securities in accordance with the intended method of distribution thereof; provided, that except with respect to any such registration statement filed pursuant to Rule 415 under the Securities Act, such period need not exceed 120 days; (c) furnish, without charge, to the Registering Forstmann Little Partnerships and each underwriter such number of conformed copies of such registration statement and of each such amendment and supplement thereto (in each case including all exhibits), such number of copies of the prospectus contained in such registration statement (including each preliminary prospectus and any summary prospectus) and any other prospectus filed under Rule 424 under the Securities Act, in conformity with the requirements of the Securities Act, and such other documents, as the Registering Forstmann Little Partnerships and such underwriters may reasonably request; (d) use its best efforts (i) to register or qualify all Registrable Securities and other securities covered by such registration statement under such securities or blue sky laws of such States of the United States of America where an exemption is not available and as the Registering Forstmann Little Partnerships or any managing underwriter shall reasonably request, (ii) to keep such registration or qualification in effect for so long as such registration statement remains in effect, and (iii) to take any other action which may be reasonably necessary or advisable to enable the Registering Forstmann Little Partnerships to consummate the disposition in such jurisdictions of the securities to be sold by the Registering Forstmann Little Partnerships, except that the Company shall not for any such purpose be required to qualify generally to do business as a foreign corporation in any jurisdiction wherein it would not but for the requirements of this subsection (d) be obligated to be so qualified or to consent to general service of process in any such jurisdiction; (e) use its best efforts to cause all Registrable Securities covered by such registration statement to be registered with or approved by such other federal or state governmental agencies or authorities as may be necessary in the opinion of counsel to the Company and counsel to the Registering Forstmann Little Partnerships to consummate the disposition of such Registrable Securities; (f) furnish to the Registering Forstmann Little Partnerships and each underwriter, if any, participating in the offering of the securities covered by such registration statement, a signed counterpart of (i) an opinion of counsel for the Company, and (ii) a "comfort" letter signed by the independent public accountants who have certified the Company's financial statements included or incorporated by reference in such registration statement, covering substantially the same matters with respect to such registration statement (and the prospectus included therein) and, in the case of the accountants' comfort letter, with respect to events subsequent to the date of such financial statements, as are customarily covered in opinions of issuer's counsel and in accountants' comfort letters delivered to the underwriters in underwritten public offerings of securities (and dated the dates such opinions and comfort letters are customarily dated) and, in the case of the legal opinion, such other legal matters, and, in the case of the accountants' comfort letter, such other financial matters, as the Registering Forstmann Little Partnerships, or the underwriters, may reasonably request; (g) promptly notify the Registering Forstmann Little Partnerships and each managing underwriter, if any, participating in the offering of the securities covered by such registration statement (i) when such registration statement, any pre-effective amendment, the prospectus or any prospectus supplement related thereto or post-effective amendment to such registration statement has been filed, and, with respect to such registration statement or any post-effective amendment, when the same has become effective; (ii) of any request by the Commission for amendments or supplements to such registration statement or the prospectus related thereto or for additional information; (iii) of the issuance by the Commission of any stop order suspending the effectiveness of such registration statement or the initiation of any proceedings for that purpose; (iv) of the receipt by the Company of any notification with respect to the suspension of the qualification of any of the Registrable Securities for sale under the securities or blue sky laws of any jurisdiction or the initiation of any proceeding for such purpose; (v) at any time when a prospectus relating thereto is required to be delivered under the Securities Act, upon discovery that, or upon the happening of any event as a result of which, the prospectus included in such registration statement, as then in effect, includes an untrue statement of a material fact or omits to state any material fact required to be stated therein or necessary to make the statements therein not misleading, in the light of the circumstances under which they were made, and in the case of this clause (v), at the request of the Registering Forstmann Little Partnerships promptly prepare and furnish to the Registering Forstmann Little Partnerships and each managing underwriter, if any, participating in the offering of the Registrable Securities, a reasonable number of copies of a supplement to or an amendment of such prospectus as may be necessary so that, as thereafter delivered to the purchasers of such securities, such prospectus shall not include 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 in the light of the circumstances under which they were made; and (vi) at any time when the representations and warranties of the Company contemplated by Section 2.4(a) or (b) hereof cease to be true and correct; (h) otherwise comply with all applicable rules and regulations of the Commission, and make available to its security holders, as soon as reasonably practicable, an earnings statement covering the period of at least twelve months beginning with the first full calendar month after the effective date of such registration statement, which earnings statement shall satisfy the provisions of Section 11(a) of the Securities Act and Rule 158 promulgated thereunder, and promptly furnish to the Registering Forstmann Little Partnerships a copy of any amendment or supplement to such registration statement or prospectus; (i) provide and cause to be maintained a transfer agent and registrar (which, in each case, may be the Company) for all Registrable Securities covered by such registration statement from and after a date not later than the effective date of such registration; (j) (i) use its best efforts to cause all Registrable Securities covered by such registration statement to be listed on the principal securities exchange on which similar securities issued by the Company are then listed (if any), if the listing of such Registrable Securities is then permitted under the rules of such exchange, or (ii) if no similar securities are then so listed, use its best efforts to (x) cause all such Registrable Securities to be listed on a national securities exchange or (y) failing that, secure designation of all such Registrable Securities as a NASDAQ "national market system security" within the meaning of Rule 11Aa2-1 of the Commission or (z) failing that, to secure NASDAQ authorization for such shares and, without limiting the generality of the foregoing, to arrange for at least two market makers to register as such with respect to such shares with the National Association of Securities Dealers, Inc.; (k) deliver promptly to counsel to the Registering Forstmann Little Partnerships and each underwriter, if any, participating in the offering of the Registrable Securities, copies of all correspondence between the Commission and the Company, its counsel or auditors and all memoranda relating to discussions with the Commission or its staff with respect to such registration statement; (l) use its best efforts to obtain the withdrawal of any order suspending the effectiveness of the registration statement; (m) provide a CUSIP number for all Registrable Securities, no later than the effective date of the registration statement; and (n) make available its employees and personnel and otherwise provide reasonable assistance to the underwriters (taking into account the needs of the Company's business) in their marketing of Registrable Securities. The Company may require the Registering Forstmann Little Partnerships to furnish the Company such information regarding the Registering Forstmann Little Partnerships and the distribution of the Registrable Securities as the Company may from time to time reasonably request in writing. The Forstmann Little Partnerships agree that upon receipt of any notice from the Company of the happening of any event of the kind described in paragraph (g)(iii) or (v) of this Section 2.3, each of the Registering Forstmann Little Partnerships will, to the extent appropriate, discontinue its disposition of Registrable Securities pursuant to the registration statement relating to such Registrable Securities until, in the case of paragraph (g)(v) of this Section 2.3, its receipt of the copies of the supplemented or amended prospectus contemplated by paragraph (g)(v) of this Section 2.3 and, if so directed by the Company, will deliver to the Company (at the Company's expense) all copies, other than permanent file copies, then in its possession, of the prospectus relating to such Registrable Securities current at the time of receipt of such notice. If the disposition by the Registering Forstmann Little Partnerships of their securities is discontinued pursuant to the foregoing sentence, the Company shall extend the period of effectiveness of the registration statement by the number of days during the period from and including the date of the giving of notice to and including the date when the Registering Forstmann Little Partnerships shall have received copies of the supplemented or amended prospectus contemplated by paragraph (g)(v) of this Section 2.3; and, if the Company shall not so extend such period, the Registering Forstmann Little Partnerships' request pursuant to which such registration statement was filed shall not be counted for purposes of the requests for registration to which the Forstmann Little Partnerships are entitled pursuant to Section 2.1 hereof. 2.4 Underwritten Offerings. ---------------------- (a) Requested Underwritten Offerings. If requested by the underwriters for any underwritten offering by the Registering Forstmann Little Partnerships (and any Other Investors) pursuant to a registration requested under Section 2.1, the Company shall enter into a customary underwriting agreement with a managing underwriter or underwriters selected by the Registering Forstmann Little Partnerships. Such underwriting agreement shall be satisfactory in form and substance to the Registering Forstmann Little Partnerships and shall contain such representations and warranties by, and such other agreements on the part of, the Company and such other terms as are generally prevailing in agreements of that type, including, without limitation, customary provisions relating to indemnification and contribution. The Registering Forstmann Little Partnerships shall be parties to such underwriting agreement and may, at their option, require that any or all of the representations and warranties by, and the other agreements on the part of, the Company to and for the benefit of such underwriters shall also be made to and for the benefit of the Registering Forstmann Little Partnerships and that any or all of the conditions precedent to the obligations of such underwriters under such underwriting agreement be conditions precedent to the obligations of the Registering Forstmann Little Partnerships. None of the Registering Forstmann Little Partnerships shall be required to make any representations or warranties to or agreements with the Company or the underwriters other than representations, warranties or agreements regarding such Registering Forstmann Little Partnership, its ownership of and title to the Registrable Securities, and its intended method of distribution; and any liability of any Registering Forstmann Little Partnership to any underwriter or other person under such underwriting agreement shall be limited to liability arising from breach of its representations and warranties and shall be limited to an amount equal to the proceeds (net of expenses and underwriting discounts and commissions) that it derives from such registration. (b) Incidental Underwritten Offerings. In the case of a registration pursuant to Section 2.2 hereof, if the Company shall have determined to enter into any underwriting agreements in connection therewith, all of the Registrable Securities to be included in such registration shall be subject to such underwriting agreements. The Registering Forstmann Little Partnerships may, at their option, require that any or all of the representations and warranties by, and the other agreements on the part of, the Company to and for the benefit of such underwriters shall also be made to and for the benefit of the Registering Forstmann Little Partnerships and that any or all of the conditions precedent to the obligations of such underwriters under such underwriting agreement be conditions precedent to the obligations of the Registering Forstmann Little Partnerships. None of the Registering Forstmann Little Partnerships shall be required to make any representations or warranties to or agreements with the Company or the underwriters other than representations, warranties or agreements regarding such Registering Forstmann Little Partnership, its ownership of and title to the Registrable Securities, and its intended method of distribution; and any liability of any Registering Forstmann Little Partnership to any underwriter or other Person under such underwriting agreement shall be limited to liability arising from breach of its representations and warranties and shall be limited to an amount equal to the proceeds (net of expenses and underwriting discounts and commissions) that it derives from such registration. 2.5 Preparation; Reasonable Investigation. In connection with the preparation and filing of each registration statement under the Securities Act pursuant to this Agreement, the Company will give the Registering Forstmann Little Partnerships, their underwriters, if any, and their respective counsel, accountants and other representatives and agents the opportunity to participate in the preparation of such registration statement, each prospectus included therein or filed with the Commission, and each amendment thereof or supplement thereto, and give each of them such access to its books and records and such opportunities to discuss the business of the Company with its officers and employees and the independent public accountants who have certified its financial statements, and supply all other information reasonably requested by each of them, as shall be necessary or appropriate, in the opinion of the Registering Forstmann Little Partnerships and such underwriters' respective counsel, to conduct a reasonable investigation within the meaning of the Securities Act. 2.6 Indemnification. --------------- (a) Indemnification by the Company. The Company agrees that in the event of any registration of any securities of the Company under the Securities Act, the Company shall, and hereby does, indemnify and hold harmless each Forstmann Little Partnership, its respective directors, officers, partners, agents and affiliates and each other Person who participates as an underwriter in the offering or sale of such securities and each other Person, if any, who controls such Forstmann Little Partnership or any such underwriter within the meaning of the Securities Act, against any losses, claims, damages, or liabilities, joint or several, to which such Forstmann Little Partnership or any such director, officer, partner, agent or affiliate or underwriter or controlling person may become subject under the Securities Act or otherwise, insofar as such losses, claims, damages or liabilities, joint or several (or actions or proceedings, whether commenced or threatened, in respect thereof), arise out of or are based upon (i) any untrue statement or alleged untrue statement of any material fact contained in any registration statement under which such securities were registered under the Securities Act, any preliminary prospectus, final prospectus or summary prospectus contained therein, or any amendment or supplement thereto, (ii) any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein in light of the circumstances in which they were made not misleading, or (iii) any violation by the Company of any federal, state or common law rule or regulation applicable to the Company and relating to action required of or inaction by the Company in connection with any such registration, and the Company shall reimburse such Forstmann Little Partnership and each such director, officer, partner, agent or affiliate, underwriter and controlling Person for any legal or any other expenses reasonably incurred by them in connection with investigating or defending any such loss, claim, liability, action or proceeding; provided that the Company shall not be liable in any such case to the Forstmann Little Partnerships or any such director, officer, partner, agent, affiliate, or controlling person to the extent that any such loss, claim, damage, liability (or action or proceeding in respect thereof) or expense arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission made in such registration statement, any such preliminary prospectus, final prospectus, summary prospectus, amendment or supplement in reliance upon and in conformity with written information furnished to the Company through an instrument duly executed by or on behalf of the Forstmann Little Partnerships, specifically stating that it is for use in the preparation thereof; and provided, further, that the Company shall not be liable to any Person who participates as an underwriter in the offering or sale of Registrable Securities or any other Person, if any, who controls such underwriter within the meaning of the Securities Act, in any such case to the extent that any such loss, claim, damage, liability (or action or proceeding in respect thereof) or expense (i) arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission made in such registration statement, any such preliminary prospectus, final prospectus, summary prospectus, amendment or supplement in reliance upon and in conformity with written information furnished to the Company through an instrument duly executed by or on behalf of such Person or (ii) arises out of such Person's failure to send or give a copy of the final prospectus, as the same may be then supplemented or amended, to the Person asserting an untrue statement or alleged untrue statement or omission or alleged omission at or prior to the written confirmation of the sale of Registrable Securities to such Person if such statement or omission was corrected in such final prospectus. Such indemnity shall remain in full force regardless of any investigation made by or on behalf of any Forstmann Little Partnership or any such director, officer, partner, agent, affiliate, underwriter or controlling Person and shall survive the transfer of such securities by such Forstmann Little Partnership. (b) Indemnification by the Forstmann Little Partnerships. As a condition to including any Registrable Securities in any registration statement, the Company shall have received an undertaking reasonably satisfactory to it from each Registering Forstmann Little Partnership so including any Registrable Securities to indemnify and hold harmless (in the same manner and to the same extent as set forth in paragraph (a) of this Section 2.6) the Company, and each director of the Company, each officer of the Company and each other Person, if any, who controls the Company within the meaning of the Securities Act, with respect to any statement or alleged statement in or omission or alleged omission from such registration statement, any preliminary prospectus, final prospectus or summary prospectus contained therein, or any amendment or supplement thereto, but only to the extent such statement or alleged statement or omission or alleged omission was made in reliance upon and in conformity with written information furnished to the Company through an instrument duly executed by such Registering Forstmann Little Partnership specifically stating that it is for use in the preparation of such registration statement, preliminary prospectus, final prospectus, summary prospectus, amendment or supplement; provided, however, that the liability of such indemnifying party under this Section 2.6(b) shall be limited to the amount of proceeds (net of expenses and underwriting discounts and commissions) received by such indemnifying party in the offering giving rise to such liability. Such indemnity shall remain in full force and effect, regardless of any investigation made by or on behalf of the Company or any such director, officer or controlling Person and shall survive the transfer of such securities by such Forstmann Little Partnership. (c) Notices of Claims, etc. Promptly after receipt by an indemnified party of notice of the commencement of any action or proceeding involving a claim referred to in the preceding subsections of this Section 2.6, such indemnified party shall, if a claim in respect thereof is to be made against an indemnifying party, give written notice to the latter of the commencement of such action or proceeding; provided, however, that the failure of any indemnified party to give notice as provided herein shall not relieve the indemnifying party of its obligations under the preceding subsections of this Section 2.6, except to the extent that the indemnifying party is actually prejudiced by such failure to give notice, and shall not relieve the indemnifying party from any liability which it may have to the indemnified party otherwise than under this Section 2.6. In case any such action or proceeding is brought against an indemnified party, the indemnifying party shall be entitled to participate therein and, unless in the opinion of outside counsel to the indemnified party a conflict of interest between such indemnified and indemnifying parties may exist in respect of such claim, to assume the defense thereof, jointly with any other indemnifying party similarly notified to the extent that it may wish, with counsel reasonably satisfactory to such indemnified party; provided, however, that if the defendants in any such action or proceeding include both the indemnified party and the indemnifying party and if in the opinion of outside counsel to the indemnified party there may be legal defenses available to such indemnified party and/or other indemnified parties which are different from or in addition to those available to the indemnifying party, the indemnified party or parties shall have the right to select separate counsel to defend such action or proceeding on behalf of such indemnified party or parties, provided, however, that the indemnifying party shall be obligated to pay for only one counsel for all indemnified parties. After notice from the indemnifying party to such indemnified party of its election so to assume the defense thereof and approval by the indemnified party of such counsel, the indemnifying party shall not be liable to such indemnified party for any legal expenses subsequently incurred by the latter in connection with the defense thereof other than reasonable costs of investigation (unless the first proviso in the preceding sentence shall be applicable). No indemnifying party shall be liable for any settlement of any action or proceeding effected without its written consent. No indemnifying party shall, without the consent of the indemnified party, consent to entry of any judgment or enter into any settlement which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such indemnified party of a release from all liability in respect to such claim or litigation. (d) Contribution. If the indemnification provided for in this Section 2.6 shall for any reason be held by a court to be unavailable to an indemnified party under subsection (a) or (b) hereof in respect of any loss, claim, damage or liability, or any action in respect thereof, then, in lieu of the amount paid or payable under subsection (a) or (b) hereof, the indemnified party and the indemnifying party under subsection (a) or (b) hereof shall contribute to the aggregate losses, claims, damages and liabilities (including legal or other expenses reasonably incurred in connection with investigating the same), (i) in such proportion as is appropriate to reflect the relative fault of the indemnifying party on the one hand, and the indemnified party on the other, which resulted in such loss, claim, damage or liability, or action in respect thereof, with respect to the statements or omissions which resulted in such loss, claim, damage or liability, or action in respect thereof, as well as any other relevant equitable considerations, or (ii) if the allocation provided by clause (i) above is not permitted by applicable law or if the allocation provided in this clause (ii) provides a greater amount to the indemnified party than clause (i) above, in such proportion as shall be appropriate to reflect not only the relative fault but also the relative benefits received by the indemnifying party and the indemnified party from the offering of the securities covered by such registration statement as well as any other relevant equitable considerations. The parties hereto agree that it would not be just and equitable if contributions pursuant to this Section 2.6(d) were to be determined by pro rata allocation or by any other method of allocation which does not take into account the equitable considerations referred to in the preceding sentence of this Section 2.6(d). 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 who was not guilty of such fraudulent misrepresentation. The Registering Forstmann Little Partnerships' obligations to contribute as provided in this subsection (d) are several and not joint and shall be in proportion to the relative value of their respective Registrable Securities covered by such registration statement. In addition, no Person shall be obligated to contribute hereunder any amounts in payment for any settlement of any action or claim effected without such Person's consent, which consent shall not be unreasonably withheld. Notwithstanding anything in this subsection (d) to the contrary, no indemnifying party (other than the Company) shall be required to contribute any amount in excess of the proceeds (net of expenses and underwriting discounts and commissions) received by such party from the sale of the Registrable Securities in the offering to which the losses, claims, damages or liabilities of the indemnified parties relate. (e) Other Indemnification. Indemnification and contribution similar to that specified in the preceding subsections of this Section 2.6 (with appropriate modifications) shall be given by the Company and the Registering Forstmann Little Partnerships with respect to any required registration or other qualification of securities under any federal, state or blue sky law or regulation of any governmental authority other than the Securities Act. The indemnification agreements contained in this Section 2.6 shall be in addition to any other rights to indemnification or contribution which any indemnified party may have pursuant to law or contract and shall remain operative and in full force and effect regardless of any investigation made by or on behalf of any indemnified party and shall survive the transfer of any of the Registrable Securities by any of the Forstmann Little Partnerships. (f) Indemnification Payments. The indemnification and contribution required by this Section 2.6 shall be made by periodic payments of the amount thereof during the course of the investigation or defense, as and when bills are received or expense, loss, damage or liability is incurred. 2.7 Unlegended Certificates. In connection with the offering of any Registrable Securities registered pursuant to this Section 2, the Company shall (i) facilitate the timely preparation and delivery to the Forstmann Little Partnerships, the Other Investors and the underwriters, if any, participating in such offering, of unlegended certificates representing ownership of such Registrable Securities being sold in such denominations and registered in such names as requested by the Forstmann Little Partnerships, the Other Investors or such underwriters and (ii) instruct any transfer agent and registrar of such Registrable Securities to release any stop transfer orders with respect to any such Registrable Securities. 2.8 Limitation on Sale of Securities. The Company hereby agrees that if it shall previously have received a request for registration pursuant to Section 2.1 or 2.2 hereof, and if such previous registration shall not have been withdrawn or abandoned, (i) the Company shall not effect any public or private offer, sale or distribution of its securities or effect any registration of any of its equity securities under the Securities Act (other than a registration on Form S-8 or any successor or similar form which is then in effect), whether or not for sale for its own account, until a period of 90 days (or such shorter period as the Registering Forstmann Little Partnerships shall be advised by their managing underwriter) shall have elapsed from the effective date of such previous registration, and the Company shall so provide in any registration rights agreements hereafter entered into with respect to any of its securities; and (ii) the Company shall use its best efforts to cause each holder of its equity securities purchased from the Company at any time after the date of this Agreement to agree not to effect any public sale or distribution of any such securities during such period, including a sale pursuant to Rule 144 under the Securities Act. 2.9 No Required Sale. Nothing in this Agreement shall be deemed to create an independent obligation on the part of any of the Forstmann Little Partnerships to sell any Registrable Securities pursuant to any effective registration statement. 3. Rule 144. The Company shall take all actions reasonably necessary to enable holders of Registrable Securities to sell such securities without registration under the Securities Act within the limitation of the exemptions provided by (a) Rule 144, or (b) any similar rule or regulation hereafter adopted by the Commission including, without limiting the generality of the foregoing, filing on a timely basis all reports required to be filed by the Exchange Act. Upon the request of a Forstmann Little Partnership, the Company will deliver to such holder a written statement as to whether it has complied with such requirements. 4. Amendments and Waivers. This Agreement may be amended, modified or supplemented only by written agreement of the party against whom enforcement of such amendment, modification or supplement is sought. 5. Other Investors. The parties hereto acknowledge and agree that no Other Investor has any right to request registration of the Common Stock held by such Other Investor or to participate in any registration of securities by the Company, other than in accordance with the terms of the stockholder's agreement or option agreement, as the case may be, between such Other Investor and the Company or any of its subsidiaries, pursuant to which such Other Investor generally may have the right or obligation to participate in any public offering in which all or a portion of the shares of Common Stock owned by the Forstmann Little Partnerships are registered under the Securities Act. 6. Adjustments. In the event of any change in the capitalization of the Company as a result of any stock split, stock dividend, reverse split, combination, recapitalization, merger, consolidation, or otherwise, the provisions of this Agreement shall be appropriately adjusted. The Company agrees that it shall not effect or permit to occur any combination or subdivision of shares which would adversely affect the ability of the Forstmann Little Partnerships or the Other Investors to include any Registrable Securities in any registration contemplated by this Agreement or the marketability of such Registrable Securities in any such registration. The Company agrees that it will take all reasonable steps necessary to effect a combination or subdivision of shares if in the reasonable judgment of the Forstmann Little Partnerships such combination or subdivision would enhance the marketability of the Registrable Securities. 7. Notice. All notices and other communications hereunder shall be in writing and, unless otherwise provided herein, shall be deemed to have been given when received by the party to whom such notice is to be given at its address set forth below, or such other address for the party as shall be specified by notice given pursuant hereto: (a) If to any of the Forstmann Little Partnerships, to it: c/o Forstmann Little & Co. 767 Fifth Avenue, 44th Floor New York, New York 10153 Attention: Ms. Sandra J. Horbach With a copy to: Fried, Frank, Harris, Shriver & Jacobson One New York Plaza New York, New York 10004 Attention: Lois Herzeca, Esq. (b) If to the Company: The Yankee Candle Company, Inc. 102 Christian Lane Whately, Massachusetts 01093 Attention: Chief Financial Officer 8. Assignment; Third Party Beneficiaries. This Agreement shall be binding upon and inure to the benefit of and be enforceable by the parties hereto and their respective successors and permitted assigns; provided, however, that the Other Investors shall have no rights under this Agreement. This Agreement may not be assigned by the Company, without the prior written consent of the Forstmann Little Partnerships. Any Forstmann Little Partnership may, at its election, at any time or from time to time, assign its rights under this Agreement, in whole or in part, to any purchaser of shares of Common Stock held by it. 9. Remedies. The parties hereto agree that money damages or other remedy at law would not be sufficient or adequate remedy for any breach or violation of, or a default under, this Agreement by them and that, in addition to all other remedies available to them, each of them shall be entitled to an injunction restraining such breach, violation or default or threatened breach, violation or default and to any other equitable relief, including without limitation specific performance, without bond or other security being required. In any action or proceeding brought to enforce any provision of this Agreement (including the indemnification provisions thereof), the successful party shall be entitled to recover reasonable attorneys' fees in addition to its costs and expenses and any other available remedy. 10. No Inconsistent Agreements. The Company will not, on or after the date of this Agreement, enter into any agreement with respect to its securities which is inconsistent with the rights granted to the Forstmann Little Partnerships in this Agreement or otherwise conflicts with the provisions hereof. The Company has not previously entered into any agreement with respect to its securities granting any registration rights to any Person. The rights granted to the Forstmann Little Partnerships hereunder do not in any way conflict with and are not inconsistent with any other agreements to which the Company is a party or by which it is bound. The Company further agrees that if any other registration rights agreement entered into after the date of this Agreement with respect to any of its securities contains terms which are more favorable to, or less restrictive on, the other party thereto than the terms and conditions contained in this Agreement are (insofar as they are applicable) with respect to the Forstmann Little Partnerships, then the terms and conditions of this Agreement shall immediately be deemed to have been amended without further action by the Company or the Forstmann Little Partnerships so that the Forstmann Little Partnerships shall be entitled to the benefit of any such more favorable or less restrictive terms or conditions. 11. Descriptive Headings. The descriptive headings of the several sections and paragraphs of this Agreement are inserted for reference only and shall not control or otherwise affect the meaning hereof. 12. Governing Law. This Agreement shall be construed and enforced in accordance with, and the rights and obligations of the parties hereto shall be governed by, the laws of the State of New York, without giving effect to the conflicts of law principles thereof. Each of the parties hereto hereby irrevocably and unconditionally consents to submit to the exclusive jurisdiction of the courts of the State of New York and the United States of America located in the County of New York for any action or proceeding arising out of or relating to this Agreement and the transactions contemplated hereby (and agrees not to commence any action or proceeding relating thereto except in such courts), and further agrees that service of any process, summons, notice or document by U.S. registered mail to its respective address set forth in Section 7 hereof shall be effective service of process for any action or proceeding brought against it in any such court. Each of the parties hereto hereby irrevocably and unconditionally waives any objection to the laying of venue of any action or proceeding arising out of this Agreement or the transactions contemplated hereby in the courts of the State of New York or the United States of America located in the County of New York, and hereby further irrevocably and unconditionally waives and agrees not to plead or claim in any such court that any such action or proceeding brought in any such court has been brought in an inconvenient forum. 13. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original, but all such counterparts shall together constitute one and the same instrument. 14. Invalidity of Provision. The invalidity or unenforceability of any provision of this Agreement in any jurisdiction shall not affect the validity or enforceability of the remainder of this Agreement in that jurisdiction or the validity or enforceability of this Agreement, including that provision, in any other jurisdiction. If any restriction or provision of this Agreement is held unreasonable, unlawful or unenforceable in any respect, such restriction or provision shall be interpreted, revised or applied in a manner that renders it lawful and enforceable to the fullest extent possible under law. 15. Further Assurances. Each party hereto shall do and perform or cause to be done and performed all further acts and things and shall execute and deliver all other agreements, certificates, instruments, and documents as any other party hereto reasonably may request in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated hereby. 16. Entire Agreement; Effectiveness. This Agreement constitutes the entire agreement, and supersedes all prior agreements and understandings, oral and written, between the parties hereto with respect to the subject matter hereof. IN WITNESS WHEREOF, the parties have caused this Agreement to be executed and delivered by their respective officers thereunto duly authorized. THE YANKEE CANDLE COMPANY, INC. By: /s/ Michael D. Parry ----------------------------------- Name: Michael D. Parry Title: President and Chief Executive Officer FORSTMANN LITTLE & CO. EQUITY PARTNERSHIP - V, L.P. By: FLC XXX Partnership, its general partner By: /s/ Sandra J. Horbach ----------------------------------- Sandra J. Horbach, a general partner FORSTMANN LITTLE & CO. SUBORDINATED DEBT AND EQUITY MANAGEMENT BUYOUT PARTNERSHIP - VI, L.P. By: FLC XXIX Partnership, its general partner By: /s/ Sandra J. Horbach ----------------------------------- Sandra J. Horbach, a general partner EX-3 4 Exhibit 3 STOCKHOLDER'S AGREEMENT, dated as of [__________], 1999, between The Yankee Candle Company, Inc., a Massachusetts corporation (the "Company"), and [Name] (the "Employee"). WHEREAS, Forstmann Little & Co. Equity Partnership-V, L.P., a Delaware limited partnership ("Equity-V"), and Forstmann Little & Co. Subordinated Debt and Equity Management Buyout Partnership-V, L.P., a Delaware limited partnership ("MBO-VI"), will own shares of Common Stock, par value $0.01 per share, of the Company; WHEREAS, the Employee purchased shares of Class B Common Stock ("Class B Common Stock"), par value $0.01 per share, of Yankee Candle Holdings Corp., a Delaware corporation ("Holdings"), on the terms and subject to the conditions set forth in the Stockholder's Agreement, dated as of [_______,] 1998 (the "Old Stockholder's Agreement"); WHEREAS, in a reorganization that will occur in connection with the initial public offering (the "Offering") of the Company, shares of Class B Common Stock will be exchanged for shares of Common Stock, par value $0.01 per share, of the Company; WHEREAS, effective upon the closing of the Offering, the Employee will own shares of Common Stock and the Old Stockholder's Agreement will be cancelled (and all rights and obligations thereunder will be null and void); and WHEREAS, the Employee and the Company wish to provide for certain arrangements with respect to the Employee's rights to hold and dispose of the shares of Common Stock. NOW, THEREFORE, the parties hereto agree as follows: 1. Definitions ----------- 1.1 Definitions; Rules of Construction. ---------------------------------- (a) The following terms, as used herein, shall have the following meanings: "Act" shall mean the Securities Act of 1933, as amended. "Affiliate" shall mean, with respect to any Person, any other Person which, directly or indirectly, is in control of, is controlled by, or is under common control with, such Person. "Affiliate Securities" shall mean any securities issued by an Affiliate of the Company. "Aggregate Number of Acquired Shares" shall mean the aggregate number of shares of Common Stock acquired by the Employee pursuant hereto (adjusted, where appropriate, to reflect any Capital Transaction). "Aggregate Number of Shares Sold" shall mean, as at any date, the aggregate number of shares sold by the Employee pursuant to Section 2.3, 2.4 or 2.5 hereof prior to such date, if any (adjusted, where appropriate, to reflect any Capital Transaction effected after the date of any such sale). "Agreement" shall mean this Stockholder's Agreement, as amended, supplemented or modified from time to time. "Book Value of the Company" shall mean the sum of (x) the total assets minus the total liabilities of the Company on a consolidated basis, plus (y) the amount of any reduction in stockholders' equity resulting from the application of EITF Issue Summary No. 88-16, Basis in Leveraged Buyouts, as of the Valuation Date, plus (z) the amount of accumulated amortization of that portion of the purchase price paid for the Company by the FL & Co. Companies that was allocated to goodwill, excluding other acquired identified intangible assets. For purposes of calculating the Book Value of the Company and the Book Value Per Share, (i) all options and other rights to acquire equity interests in the Company outstanding immediately prior to the Delivery Date or exercised between the Valuation Date and the Delivery Date shall be deemed to have been exercised on the Valuation Date, and (ii) the number of outstanding shares on the Valuation Date shall be increased by the number of shares subject to each such option or other right and the assets of the Company shall be increased by the aggregate exercise price payable in respect of the exercise of each such option or other right (with respect to clauses (i) and (ii), in the case of any such option or other right unless the effect thereof would be to increase the Book Value Per Share). "Book Value Per Share" shall mean the amount which would be payable on the Valuation Date in respect of one share of Common Stock in the event of a dissolution, liquidation or winding-up of the affairs of the Company if the amount of assets available for distribution in the event of such dissolution, liquidation or winding-up with respect to all shares of capital stock of the Company outstanding (or deemed to be outstanding, as set forth above in the definition of "Book Value of the Company") on the Valuation Date were equal to the Book Value of the Company. In the event there has been a Stock Dividend after the Valuation Date and prior to the Election Date, the number of shares outstanding for purposes of determining Book Value Per Share shall be the number of shares that would have been outstanding immediately after the Stock Dividend on the Valuation Date had the Stock Dividend occurred on the Valuation Date. "Call Shares" shall have the meaning ascribed to such term in Section 2.2(d) hereof. "Capital Transaction" shall mean any Stock Dividend, recapitalization (including, without limitation, any special dividend or distribution), reclassification, spin-off, partial liquidation or similar capital adjustments (including, without limitation, through merger or consolidation). "Common Stock" shall mean the Common Stock, par value $0.01 per share, of the Company. There shall be included within the term Common Stock any Common Stock now or hereafter authorized to be issued, and any and all securities of any kind whatsoever of the Company which may be issued after the date hereof in respect of, or in exchange for, shares of Common Stock pursuant to a Capital Transaction or otherwise. "Company" shall mean The Yankee Candle Company, Inc., a Massachusetts corporation, and shall include any successor thereto by merger, consolidation, acquisition of substantially all the assets thereof, or otherwise. "Competitive Activity" shall mean engaging in any of the following activities: (i) serving as a director of any Competitor; (ii) directly or indirectly (X) controlling any Competitor or (Y) owning any equity or debt interests in any Competitor (other than equity or debt interests which are publicly traded and do not exceed 2% of the particular class of interests then outstanding) (it being understood that, if any such interests in any Competitor are owned by an investment vehicle or other entity in which the Employee owns an equity interest, a portion of the interests in such Competitor owned by such entity shall be attributed to the Employee, such portion determined by applying the percentage of the equity interest in such entity owned by the Employee to the interests in such Competitor owned by such entity); (iii) directly or indirectly soliciting, diverting, taking away, appropriating or otherwise interfering with any of the customers or suppliers of the Company or any Affiliate of the Company; or (iv) employment by (including serving as an officer or director of), or providing consulting services to, any Competitor; provided, however, that if the Competitor has more than one discrete and readily distinguishable part of its business, employment by or providing consulting services to any Competitor shall be Competitive Activity only if (1) his or her employment duties are at or involving the part of the Competitor's business that competes with any of the businesses conducted by the Company or any of its subsidiaries (the "Competing Operations"), including serving in a capacity where any person at the Competing Operations reports to the Employee, or (2) the consulting services are provided to or involve the Competing Operations. For purposes of this definition, the term "control" means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of any Competitor, whether through the ownership of equity or debt interests, by contract or otherwise. Notwithstanding the foregoing, the term "Competitive Activity" shall not include the direct or indirect ownership or operation of, investment in, or employment or engagement by a Person that is a Competitor solely because such Person is an independent retail gift shop or retail garden shop, provided that (i) if such gift shop sells candles or other home fragrancing products, such products must be manufactured solely by the Company or its Affiliates, (ii) such gift shop is not located within a 50 mile radius of any retail gift store owned by the Company or its Affiliates, and (iii) such retail gift shop does not have revenues in excess of $2 million per year. "Competitor" shall mean any Person that competes either directly or indirectly with any of the businesses in which, at the time the Employee's employment is Terminated, the Company or any of its subsidiaries is engaged. "Delivery Date" shall have the meaning ascribed to such term in Section 2.2(b) hereof. "Election Date" shall have the meaning ascribed to such term in Section 2.2(a) hereof. "Equity-V" shall have the meaning ascribed to such term in the first "Whereas" clause hereof. "Expenses of Sale" shall mean all expenses incurred by the FL & Co. Companies in connection with the sale of the shares of the selling stockholders pursuant to Section 2.3, 2.4 or 2.5 hereof to the extent that such expenses are not paid or reimbursed by the Company. "FL & Co. Companies" shall mean the collective reference to Equity-V and MBO-VI. "Legal Representative" shall mean the guardian, executor, administrator or other legal representative of the Employee. All references herein to the Employee shall be deemed to include references to the Employee's Legal Representative, if any, unless the context otherwise requires. "Litigation" shall mean any actions, suits or proceedings arising out of or relating to this Agreement and the transactions contemplated hereby. "MBO-VI" shall have the meaning ascribed to such term in the first "Whereas" clause hereof. "Permitted Transferee" shall have the meaning ascribed to such term in Section 2.1 hereof. "Person" shall mean an individual, a corporation, a partnership, an association, a trust or any other entity or organization, including a government or political subdivision or an agency or instrumentality thereof. "Prohibited Activity" shall have the meaning ascribed to such term in Section 3.1 hereof. "Purchase Price" shall have the meaning ascribed to such term in Section 2.2(c) hereof. "Purchase Price Certificate" shall have the meaning ascribed to such term in Section 2.2(b) hereof. "Release Date" shall mean the date on which the FL & Co. Companies and their affiliates shall cease to own in the aggregate directly or indirectly at least 20 percent of the then outstanding securities of the Company having the power to vote in the election of directors of the Company. "Representative" shall have the meaning ascribed to such term in Section 5.13(b) hereof. "Repurchase Notice" shall have the meaning ascribed to such term in Section 4.2 hereof. "Sale Obligations" shall mean any liabilities and obligations (including liabilities and obligations for indemnification, amounts paid into escrow and post-closing adjustments) incurred by the selling stockholders in connection with the sale of their shares pursuant to Section 2.3, 2.4 or 2.5 hereof. "Scheduled Closing Date" shall have the meaning ascribed to such term in Section 3.2(d) hereof. "Section 2.3 Notice" shall have the meaning ascribed to such term in Section 2.3 hereof. "Section 2.4 Notice" shall have the meaning ascribed to such term in Section 2.4 hereof. "Stock Dividend" shall mean any stock split, stock dividend, reverse stock split or similar transaction which changes the number of outstanding shares of capital stock of the Company. "Termination" or "Terminated" shall mean that the Employee's employment on a full-time basis by the Company and its subsidiaries shall have ceased for any reason whatsoever (including by reason of death, permanent disability or adjudicated incompetency). "Third Party" shall mean any Person other than any FL & Co. Company or an Affiliate or a partner of any of the FL & Co. Companies or an Affiliate of such partner. "Transaction" shall mean any sale pursuant to Section 2.3, 2.4 or 2.5 hereof. "Unvested Shares" shall mean, as at any date, all shares of Common Stock owned by the Employee which are not Vested Shares as of such date. "Valuation Date" shall mean the last day of the fiscal quarter of the Company immediately preceding the fiscal year in which the Employee's employment is Terminated. "Vested Shares" shall mean the number of shares of Common Stock determined as follows: (i) if the Employee is Terminated on or before [______________], zero; (ii) if the Employee is Terminated after [______________] but on or before [______________], (x) 20 percent of the Aggregate Number of Acquired Shares minus (y) the Aggregate Number of Shares Sold; (iii) if the Employee is Terminated after [______________] but on or before [______________], (x) 40 percent of the Aggregate Number of Acquired Shares minus (y) the Aggregate Number of Shares Sold; (iv) if the Employee is Terminated after [______________] but on or before [______________], (x) 60 percent of the Aggregate Number of Acquired Shares minus (y) the Aggregate Number of Shares Sold; (iv) if the Employee is Terminated after [______________] but on or before [______________], (x) 80 percent of the Aggregate Number of Acquired Shares minus (y) the Aggregate Number of Shares Sold; and (vi) if the Employee is Terminated after [______________], (x) the Aggregate Number of Acquired Shares minus (y) the Aggregate Number of Shares Sold. (b) In this Agreement, unless the context otherwise requires, words in the singular number or in the plural number shall each include the singular number and the plural number. 2. Rights and Restrictions on Common Stock. ---------------------------------------- 2.1 Effectiveness of Agreement; No Sale or Transfer. ----------------------------------------------- (a) This Agreement shall become effective as of the closing of the Offering and shall apply to shares of Common Stock acquired in exchange for shares of Class B Common Stock (subject to the provisions of Section 5.1). (b) The Employee shall not sell, transfer, assign, exchange, pledge, encumber or otherwise dispose of any shares of Common Stock or grant any option or right to purchase such shares or any legal or beneficial interest therein, except in accordance with the provisions of this Agreement. (c) The Employee may transfer any shares of Common Stock by will, but only to: (i) any spouse, parent, child (whether natural or adopted), brother or sister of the Employee, or (ii) any corporation or partnership which is controlled by any spouse, parent, child (whether natural or adopted), brother or sister of the Employee (the person or persons to which shares of Common Stock are transferred in accordance with this Section 2.1(b) being herein referred to as the "Permitted Transferee"); provided, that, for any transfer to the Permitted Transferee to be effective hereunder, the Permitted Transferee shall agree in writing to be bound by all the terms of this Agreement applicable to the Employee (including, without limitation, Article 3 and Section 5.13(b) hereof) as if the Permitted Transferee originally had been a party hereto; and provided, further, that all of the stockholders of any Permitted Transferee that is a corporation and all of the partners of any Permitted Transferee that is a partnership shall agree in writing not to transfer any shares they then own or may hereafter acquire in the corporate Permitted Transferee or any partnership interests they then own or may hereafter acquire in the partnership Permitted Transferee except to a person described in paragraph (i) or (ii) above that has made the same agreement in writing to the Company, so long as the corporate or partnership Permitted Transferee shall own any shares of Common Stock. Any reference herein to the Employee shall be to the Permitted Transferee from and after the date the transfer is effected in accordance with this Section 2.1(b). Without limiting the generality of the foregoing, the provisions of Section 3.2 hereof shall be likewise applicable to any Permitted Transferee, commencing upon the date that such Person becomes a Permitted Transferee, for the respective periods they would have applied to the Employee. 2.2 Employment Termination. ---------------------- (a) If the Employee shall be Terminated, irrespective of whether the Employee receives, in connection with such Termination, any severance or other payment from the Company or any of its Affiliates under any employment agreement or otherwise, the Company shall have the right, at its option, exercisable by delivery of written notice to the Employee within 90 days following the date of Termination (the date of delivery of such written notice being referred to herein as the "Election Date"), to purchase all or any portion of the Unvested Shares held by the Employee as of the date of such Termination. Any Vested Shares and any Unvested Shares that the Company does not elect to repurchase pursuant to the provisions of this Section 2.2(a) shall continue to be subject to the provisions of this Agreement (including, without limitation, Sections 2.3, 2.4 and 2.5 and Article 3 hereof) other than this Section 2.2. (b) If the Company exercises its purchase right pursuant to Section 2.2(a) hereof, then, within 15 days following the later of the Election Date or the date the financial statements referred to below are available (such date of delivery being referred to herein as the "Delivery Date"), the Company shall deliver to the Terminated Employee a certificate of the chief financial officer of the Company setting forth the Purchase Price and the calculation thereof and the Book Value of the Company and stating that a copy of the Company's financial statements as of the Valuation Date are available for review at the principal office of the Company (the "Purchase Price Certificate"), and shall make available to the Employee, for review at the principal office of the Company, a copy of the Company's financial statements as of the Valuation Date. The calculations as set forth on the Purchase Price Certificate shall be final and binding on the Company and the Employee for purposes of this Agreement. The Employee shall keep the Purchase Price Certificate, the financial statements and any other documentation provided in connection therewith confidential, shall not use any such material or any information contained therein for any purpose other than to verify the amounts due the Employee in respect of any shares owned by the Employee being purchased by the Company, and shall not disclose any such material or any information contained therein to anyone other than the Employee's legal or financial advisers who have agreed in writing to the equivalent confidentiality, non-use and non-disclosure provisions contained in this paragraph. (c) The purchase price per share of the shares of Common Stock purchased pursuant to Section 2.2(a) hereof (the "Purchase Price") shall be equal to the Book Value Per Share, adjusted to reflect any Capital Transaction between the Valuation Date and the Election Date, as if such event had occurred as of the Valuation Date. (d) Subject to Section 2.2(e) hereof, the closing (the "Closing") of any purchase of shares of Common Stock which the Company has elected to purchase pursuant to Section 2.2(a) hereof (the "Call Shares") shall take place at the principal office of the Company on the later of (i) 10 days after the Delivery Date (or, in the case of a First-Year Termination, 10 days after the Election Date) and (ii) (if applicable) 10 days after the appointment of a Legal Representative (such later date, the "Scheduled Closing Date"). At the Closing, the Employee shall sell, convey, transfer, assign and deliver to the Company all right, title and interest in and to the Call Shares, which shall constitute (and, at the Closing, the Employee shall certify the same to the Company in writing) good and unencumbered title to such shares, free and clear of all liens, security interests, encumbrances and adverse claims of any kind and nature (other than those in favor of the Company and the FL & Co. Companies pursuant to this Agreement), and shall deliver to the Company a certificate representing the shares duly endorsed for transfer, or accompanied by appropriate stock transfer powers duly executed, and with all necessary transfer tax stamps affixed thereto at the expense of the Employee, and the Company shall deliver to the Employee, in full payment of the purchase price for the Call Shares, either a wire transfer to an account designated by the Employee or a cashier's, certified or official bank check payable to the order of the Employee (the method of payment to be at the option of the Company), in the amount equal to the Purchase Price multiplied by the number of Call Shares. Notwithstanding anything herein to the contrary, from and after the Election Date, the Employee shall not have any rights with respect to any of the Call Shares (including any rights pursuant to Sections 2.3 and 2.4 hereof), except to receive the Purchase Price therefor. (e) Notwithstanding the provisions of Section 2.2(d) hereof, if the Company exercises its option to purchase Unvested Shares pursuant to Section 2.2(a) hereof, but is prohibited from effecting the Closing on the Scheduled Closing Date by any contractual obligation of the Company or any of its Affiliates or by applicable law, then the Closing shall take place on the first practicable date on which the Company is permitted to purchase such shares, and, at the Closing, the Company shall pay to the Employee interest on the unpaid Purchase Price from and including the Scheduled Closing Date to, but not including, the date of the Closing, at the rate (as of the Scheduled Closing Date) for a six-month certificate of deposit at The Chase Manhattan Bank or any successor bank thereto. If at any time the prohibition shall cease to be applicable to any portion of the shares not repurchased, then the Company shall purchase such portion on the first practicable date on which the Company is permitted to do so. The Company shall not declare or pay any dividend of cash or cash equivalents, or repurchase any shares of Common Stock or Common Stock for cash or cash equivalents, until the purchase price for all of the Call Shares has been paid in full. 2.3 Participation in Sale of Common Stock. The Employee, at the Employee's option, may participate proportionately (and the FL & Co. Companies shall allow the Employee to participate proportionately) in any sale (other than a public offering, which shall be governed by Section 2.4 hereof) of all or a portion of the shares of Common Stock owned by either of the FL & Co. Companies to any Third Party by selling in such sale the same percentage of the Employee's shares of Common Stock as the FL & Co. Companies propose to sell of their shares of Common Stock to the Third Party (determined on the basis of the aggregate number of shares of Common Stock owned, and the aggregate number of such shares being sold, by the FL & Co. Companies). The Company shall notify the Employee in writing of the FL & Co. Companies' intention to effect such a sale to a Third Party and the nature and per share amount of consideration to be paid by such Third Party at least 10 days, or such shorter time as the Company deems practicable, before the closing of any such proposed sale of shares of Common Stock (the "Section 2.3 Notice"), and the Employee shall notify the Company in writing within 5 days after receipt of the Section 2.3 Notice of his or her intention to participate in such sale, including the number of shares of Common Stock with respect to which he or she will so participate. Any failure by the Employee to so notify the Company within such 5 day period shall be deemed an election by the Employee not to participate in such sale with respect to any of his or her shares. Any sale of shares of Common Stock by the Employee pursuant to this Section 2.3 shall be for the same consideration per share, on the same terms and subject to the same conditions as the sale of shares of Common Stock owned by the FL & Co. Companies. If the Employee sells any shares of Common Stock pursuant to this Section 2.3, the Employee shall pay and be responsible for the Employee's proportionate share of the Expenses of Sale and the Sale Obligations. 2.4 Participation in Public Offering of Common Stock. ------------------------------------------------ (a) If the FL & Co. Companies propose to sell all or any portion of the shares of Common Stock owned by the FL & Co. Companies in a public offering, the Employee shall be entitled and required to participate in such public offering by selling in the public offering the same percentage of the Employee's shares of Common Stock as the FL & Co. Companies propose to sell of their shares in the public offering (determined on the basis of the aggregate number of shares of Common Stock owned, and the aggregate number of such shares being sold, by the FL & Co. Companies). The Company shall notify the Employee in writing of the FL & Co. Companies' intention to effect such public offering at least 10 days, or such shorter time as the Company deems practicable, before the filing with the Securities and Exchange Commission of the registration statement relating to such public offering (the "Section 2.4 Notice") and shall cause the Employee's shares to be sold in such public offering to be included therein. If the Employee sells any shares pursuant to this Section 2.4, the Employee shall pay and be responsible for the Employee's proportionate share of the Expenses of Sale and the Sale Obligations, including, without limitation, indemnifying the underwriters of such public offering, on a proportionate basis, to the same extent as the FL & Co. Companies are required to indemnify such underwriters. (b) In connection with any proposed public offering of securities of the Company, whether by any of the FL & Co. Companies or the Company or otherwise, the Employee agrees (i) to supply any information reasonably requested by the Company in connection with the preparation of a registration statement and/or any other documents relating to such public offering, and (ii) to execute and deliver any agreements and instruments reasonably requested by the Company to effectuate such public offering, including, without limitation, an underwriting agreement, a custody agreement and a "hold back" agreement pursuant to which the Employee will agree not to sell or purchase any securities of the Company (whether or not such securities are otherwise governed by this Agreement) for the same period of time following the public offering as is agreed to by the FL & Co. Companies with respect to themselves. If the Company requests that the Employee take any of the actions referred to in clause (i) or (ii) of the previous sentence, the Employee shall take such action promptly but in any event within five days following the date of such request. 2.5 Required Participation in Sale of Common Stock by the FL & Co. Companies. Notwithstanding any other provision of this Agreement to the contrary, if the FL & Co. Companies shall propose to sell (including by exchange, in a business combination or otherwise) all or any portion of their shares of Common Stock in a bona fide arm's-length transaction, the FL & Co. Companies, at their option, may require that the Employee sell the same percentage of the Employee's shares of Common Stock as the FL & Co. Companies propose to sell of their shares in the transaction (determined on the basis of the aggregate number of shares of Common Stock owned, and the aggregate number of such shares then being sold, by the FL & Co. Companies) for the same consideration per share, on the same terms and subject to the same conditions in the same transaction and, if stockholder approval of the transaction is required and the Employee is entitled to vote thereon, that the Employee vote the Employee's shares in favor thereof. If the Employee sells any shares pursuant to this Section 2.5, the Employee shall pay and be responsible for the Employee's proportionate share of the Expenses of Sale and the Sale Obligations. 2.6 Termination of Restrictions and Rights. Notwithstanding any other provision of this Agreement to the contrary, but subject to the restrictions of all applicable federal and state securities laws, including the restrictions in this Agreement relating thereto, from and after the Release Date any and all shares of Common Stock owned by the Employee (a) may be sold, transferred, assigned, exchanged, pledged, encumbered or otherwise disposed of (and the Employee may grant any option or right to purchase such shares or any legal or beneficial interest therein, or may continue to hold such shares), free of the restrictions contained in this Agreement and (b) shall no longer be entitled to any of the rights contained in this Agreement. Without limiting the generality of the foregoing, from and after the Release Date, the provisions of Articles 2 and 3 hereof (other than this Section 2.6 and Sections 3.1(a), 3.1(b) and 3.1(c) hereof) shall terminate and have no further force or effect. 3. Prohibited Activities. --------------------- 3.1 Prohibition against Certain Activities. The Employee agrees that (a) the Employee will not at any time during the Employee's employment (other than in the course of such employment) with the Company or any Affiliate thereof, or after a Termination, directly or indirectly disclose or furnish to any other Person or use for the Employee's own or any other Person's account any confidential or proprietary knowledge or information or any other information which is not a matter of public knowledge and which was obtained during the Employee's employment with, or other performance of services for, the Company or any Affiliate thereof or any predecessor of any of the foregoing, no matter from where or in what manner the Employee may have acquired such knowledge or information, and the Employee shall retain all such knowledge and information in trust for the benefit of the Company, its Affiliates and the successors and assigns of any of them, (b) if the Employee is Terminated, the Employee will not for three years following such Termination directly or indirectly solicit for employment, including without limitation recommending to any subsequent employer the solicitation for employment of, any employee of the Company, (c) the Employee will not, at any time during the Employee's employment with the Company or any Affiliate thereof or after a Termination, publish any statement or make any statement (under circumstances reasonably likely to become public or that the Employee might reasonably expect to become public) critical of the Company or any Affiliate of the Company, or in any way adversely affecting or otherwise maligning the business or reputation of any of the foregoing entities, and (d) the Employee will not breach the provisions of Section 2.1 hereof (any activity prohibited by clause (a), (b), (c) or (d) of this Section 3.1 being referred to as a "Prohibited Activity"). 3.2 Right to Purchase Shares. The Employee understands and agrees that Holdings and the Company have granted to the Employee the right to purchase equity securities to reward the Employee for the Employee's future efforts and loyalty to the Company and its Affiliates by giving the Employee the opportunity to participate in the potential future appreciation of the Company. Accordingly, (a) if the Employee engages in any Prohibited Activity, or (b) if, at any time during the Employee's employment with the Company or any of its Affiliates or during the three years following a Termination, the Employee engages in any Competitive Activity, or (c) if, at any time (whether during the Employee's employment or after any Termination thereof), the Employee is convicted of a crime against the Company or any of its Affiliates, then, in addition to any other rights and remedies available to the Company, the Company shall be entitled, at its option, exercisable by written notice (the "Repurchase Notice") to the Employee, to purchase all of the shares of Common Stock then held by the Employee. 3.3 Purchase Price; Closing. The purchase price per share of the shares of Common Stock purchased pursuant to this Article 3 shall be equal to the lesser of (a) $[____] (adjusted to reflect any Capital Transaction effected after the Closing Date and prior to the date of the Repurchase Notice) and (b) the Book Value Per Share (except that any reference to the Delivery Date or Election Date shall instead be a reference to the date of the Repurchase Notice). If such purchase price is determined pursuant to clause (b) of the preceding sentence, then the Company shall, within 15 days following the later of receipt of the Employee's written request therefor (which request must be made within eight days of the date of the Repurchase Notice) and the date the relevant financial statements are available, provide the Employee with the same purchase price certificate as is referred to in Section 2.2(b) hereof, and the Employee hereby agrees to the same confidentiality, non-use and non-disclosure provisions with respect thereto as are contained in Section 2.2(b) hereof. The calculations as set forth on such certificate shall be final and binding on the Company and the Employee for purposes of this Agreement. The closing of such purchase shall take place at the principal office of the Company 10 days following the date of the Repurchase Notice or, if a written request therefor was timely made, 10 days following the date of delivery of the aforesaid certificate, except that if the Company is prohibited from repurchasing any shares of Common Stock pursuant to this Article 3 by any contractual obligation of the Company or any of its Affiliates or by applicable law, the closing of such purchase shall take place on the first practicable date on which the Company is permitted to purchase such shares (and the provisions of the last two sentences of Section 2.2(e) shall likewise apply to repurchases pursuant to this Article 3). At such closing, the Employee shall sell, convey, transfer, assign and deliver to the Company all right, title and interest in and to the shares of Common Stock being purchased by the Company, which shall constitute (and, at the closing, the Employee shall certify the same to the Company in writing) good and unencumbered title to such shares, free and clear of all liens, security interests, encumbrances and adverse claims of any kind and nature (other than those in favor of the Company and the FL & Co. Companies pursuant to this Agreement), and shall deliver to the Company a certificate representing the shares duly endorsed for transfer, or accompanied by appropriate stock transfer powers duly executed, and with all necessary transfer tax stamps affixed thereto at the expense of the Employee, and the Company shall deliver to the Employee, in full payment of the purchase price payable pursuant to this Section 3.3 for the shares of Common Stock purchased, a check payable to the order of the Employee, in the amount of the aggregate purchase price for the shares purchased. Notwithstanding anything herein to the contrary, from and after the date of the Repurchase Notice, the Employee shall not have any rights with respect to any shares of Common Stock which the Employee is required to sell to the Company pursuant to this Article 3 (including any rights pursuant to Section 2.3 or 2.4 hereof), except to receive the purchase price therefor. 3.4 Transaction Proceeds. Notwithstanding anything to the contrary set forth in Sections 2.3, 2.4 or 2.5 hereof, if at the time of a Transaction in which the Employee is participating, the Company is entitled to purchase the Employee's shares of Common Stock pursuant to this Article 3, and if the purchase price per share for a purchase pursuant to this Article 3 would be less than the proceeds per share to the Employee from such Transaction, then the Employee shall be entitled to receive only the aggregate purchase price payable under this Article 3, with the balance of the proceeds of sale in the Transaction being remitted to the other stockholders of the Company participating in such Transaction pro rata in accordance with their respective participation in such Transaction. 4. Stock Certificate Legend and Investment Representations; Other Representations. -------------------------------------------------------------- 4.1 Legend. All certificates representing shares of Common Stock acquired hereunder or hereafter by the Employee (unless registered under the Act) shall bear the following legend: "The shares represented by this certificate have not been registered under the Securities Act of 1933, as amended, or any securities regulatory authority of any state, and may not be sold, transferred, assigned, exchanged, pledged, encumbered or otherwise disposed of except in compliance with all applicable securities laws and except in accordance with the provisions of a Stockholder's Agreement with the Company, a copy of which is available for inspection at the offices of the Company." 4.2 Representations of the Employee. The Employee represents and warrants that: (a) the Employee understands that (i) the offer and sale of shares of Common Stock in accordance with this Agreement have not been and will not be registered under the Act, and it is the intention of the parties hereto that the offer and sale of the securities be exempt from registration under the Act and the rules promulgated thereunder by the Securities and Exchange Commission; (ii) the shares of Common Stock being acquired hereunder cannot be sold, transferred, assigned, exchanged, pledged, encumbered or otherwise disposed of unless they are registered under the Act or an exemption from registration is available; and (iii) the purchase of Common Stock hereunder does not entitle the Employee to participate in any other equity program of the Company, whether now existing or hereafter established; (b) the Employee is acquiring the shares of Common Stock being acquired hereunder for investment for the Employee's own account and not with a view to the distribution thereof; (c) the Employee will not, directly or indirectly, sell, transfer, assign, exchange, pledge, encumber or otherwise dispose of any shares of Common Stock being acquired hereunder except in accordance with this Agreement; (d) the Employee has, or the Employee together with the Employee's advisers, if any, have, such knowledge and experience in financial and business matters that the Employee is, or the Employee together with the Employee's advisers, if any, are, and will be capable of evaluating the merits and risks relating to the Employee's purchase of shares of Common Stock under this Agreement; (e) the Employee has been given the opportunity to obtain information and documents relating to the Company and to ask questions of and receive answers from representatives of the Company concerning the Company and the Employee's investment in the Common Stock; (f) the Employee's decision to invest in the Company has been based upon independent investigations made by the Employee and the Employee's advisers, if any; (g) the Employee is able to bear the economic risk of a total loss of the Employee's investment in the Company; and (h) the Employee has adequate means of providing for the Employee's current needs and foreseeable personal contingencies and has no need for the Employee's investment in the Common Stock to be liquid. 5. Miscellaneous. -------------- 5.1 Distributions. In the event of any dividend, distribution or exchange paid or made in respect of the Common Stock consisting of Affiliate Securities, (a) the restrictions and rights with respect to the Common Stock that are contained in this Agreement shall be applicable to the Affiliate Securities without further action of the parties (with the references to Common Stock being deemed references to the Affiliate Securities and the references to the Company being deemed references to the Affiliate), and (b) as a condition precedent to the receipt of the Affiliate Securities by the Employee, the Employee shall enter into a stockholder's agreement containing substantially equivalent terms with respect to the Affiliate Securities (but reflecting the economics of the dividend, distribution or exchange and the capitalization of the Affiliate) as are contained herein. The Board of Directors of the Company, in good faith, shall determine such terms and its determination shall be final and binding on the Employee. 5.2 Further Assurances. Each party hereto shall do and perform or cause to be done and performed all further acts and things and shall execute and deliver all other agreements, certificates, instruments, and documents as any other party hereto reasonably may request in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated hereby. 5.3 Governing Law. This Agreement and the rights and obligations of the parties hereto shall be governed by, and construed and enforced in accordance with, the laws of the State of New York, without giving effect to the principles of conflicts of law thereof. 5.4 Specific Performance. The parties hereto acknowledge that there will be no adequate remedy at law for a violation of any of the provisions of this Agreement and that, in addition to any other remedies which may be available, all of the provisions of this Agreement shall be specifically enforceable in accordance with their respective terms. 5.5 Invalidity of Provisions. The invalidity or unenforceability of any provision of this Agreement in any jurisdiction shall not affect the validity or enforceability of the remainder of this Agreement in that jurisdiction or the validity or enforceability of this Agreement, including that provision, in any other jurisdiction. If any provision of this Agreement is held unlawful or unenforceable in any respect, such provision shall be revised or applied in a manner that renders it lawful and enforceable to the fullest extent possible. 5.6 Notice. All notices and other communications hereunder shall be in writing and, unless otherwise provided herein, shall be deemed to have been given when received by the party to whom such notice is to be given at its address set forth below, or such other address for the party as shall be specified by notice given pursuant hereto: (a) If to the Company, to: The Yankee Candle Company, Inc. 102 Christian Lane Whately, MA 01093 Attention: President (b) If to the Employee, to the address set forth below the Employee's signature, and if to the Legal Representative, to such Person at the address of which the Company is notified in accordance with this Section 5.6. 5.7 Binding Effect. This Agreement shall inure to the benefit of and shall be binding upon the parties hereto and their respective heirs, legal representatives, successors and assigns. In addition, each of the FL & Co. Companies shall be a third party beneficiary of this Agreement and shall be entitled to enforce this Agreement. 5.8 Amendment and Modification. This Agreement may be amended, modified or supplemented only by written agreement of the party against whom enforcement of such amendment, modification or supplement is sought. 5.9 Headings; Execution in Counterparts. The headings and captions contained herein are for convenience only and shall not control or affect the meaning or construction of any provision hereof. This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original and which together shall constitute one and the same instrument. 5.10 Entire Agreement. This Agreement constitutes the entire agreement, and supersedes all prior agreements and understandings (including the Old Stockholder's Agreement, which will be of no further force and effect from and after the closing of the Offering), oral and written, between the parties hereto with respect to the subject matter hereof. 5.11 Withholding. The Company shall have the right to deduct from any amount payable under this Agreement any taxes or other amounts required by applicable law to be withheld. The Employee agrees to indemnify the Company against any Federal, state and local withholding taxes for which the Company may be liable in connection with the Employee's acquisition, ownership or disposition of any Common Stock. 5.12 No Right to Continued Employment. This Agreement shall not confer upon the Employee any right with respect to continuance of employment by the Company or any Affiliate thereof, nor shall it interfere in any way with the right of the Company or any Affiliate thereof to terminate the Employee's employment at any time. 5.13 Possession of Certificates; Power of Attorney. --------------------------------------------- (a) In order to provide for the safekeeping of the certificates representing the shares of Common Stock purchased by the Employee and to facilitate the enforcement of the terms and conditions hereof, (i) the Employee shall redeliver to the Company, and the Company shall retain physical possession of, all certificates representing shares of Common Stock acquired by the Employee and (ii) the Employee shall deliver to the Company an undated stock power, duly executed in blank, for each such certificate. The Employee shall be relieved of any obligation otherwise imposed by this Agreement to deliver certificates representing shares of Common Stock if the same are in the custody of the Company. After the Release Date, upon written request by the Employee therefor, the Company shall deliver to the Employee any certificates in its custody representing the Employee's shares of Common Stock. (b) The Employee hereby irrevocably appoints the FL & Co. Companies, and each of them (individually and collectively, the "Representative"), the Employee's true and lawful agent and attorney-in-fact, with full powers of substitution, to act in the Employee's name, place and stead, to do or refrain from doing all such acts and things, and to execute and deliver all such documents, as the Representative shall deem necessary or appropriate in connection with a public offering of securities of the Company or a sale pursuant to Section 2.3, 2.5 or 3.2 hereof, including, without in any way limiting the generality of the foregoing, in the case of a sale pursuant to Section 2.3 or 2.5 hereof, to execute and deliver on behalf of the Employee a purchase and sale agreement and any other agreements and documents that the Representative deems necessary in connection with any such sale, and in the case of a public offering, to execute and deliver on behalf of the Employee an underwriting agreement, a "hold back" agreement, a custody agreement, and any other agreements and documents that the Representative deems necessary in connection with any such public offering, and in the case of any sale pursuant to Section 2.3 or 2.5 hereof and any public offering pursuant to Section 2.4(a) hereof, to receive on behalf of the Employee the proceeds of the sale or public offering of the Employee's shares, to hold back from any such proceeds any amount that the Representative deems necessary to reserve against the Employee's share of any Expenses of Sale and Sale Obligations and to pay such Expenses of Sale and Sale Obligations. The Employee hereby ratifies and confirms all that the Representative shall do or cause to be done by virtue of its appointment as the Employee's agent and attorney-in-fact. In acting for the Employee pursuant to the appointment set forth in this Section 5.13(b), the Representative shall not be responsible to the Employee for any loss or damage the Employee may suffer by reason of the performance by the Representative of its duties under this Agreement, except for loss or damage arising from willful violation of law or gross negligence by the Representative in the performance of its duties hereunder. The appointment of the Representative shall be deemed coupled with an interest and as such shall be irrevocable and shall survive the death, incompetency, mental illness or insanity of the Employee, and any person dealing with the Representative may conclusively and absolutely rely, without inquiry, upon any act of the Representative as the act of the Employee in all matters referred to in this Section 5.13(b). 5.14 Consent to Jurisdiction. Each party hereby irrevocably and unconditionally consents to submit to the exclusive jurisdiction of the courts of the State of New York and of the United States of America, in each case located in the County of New York, for any Litigation (and agrees not to commence any Litigation except in any such court), and further agrees that service of process, summons, notice or document by U.S. registered mail to such party's respective address set forth in Section 5.6 hereof shall be effective service of process for any Litigation brought against such party in any such court. Each party hereby irrevocably and unconditionally waives any objection to the laying of venue of any Litigation in the courts of the State of New York or of the United States of America, in each case located in the County of New York, and hereby further irrevocably and unconditionally waives and agrees not to plead or claim in any such court that any Litigation brought in any such court has been brought in an inconvenient forum. IN WITNESS WHEREOF, this Agreement has been signed by or on behalf of each of the parties hereto, all as of the date first above written. THE YANKEE CANDLE COMPANY, INC. By: --------------------------------------- Name: Title: EMPLOYEE By: --------------------------------------- Robert R. Spellman, as Attorney-in-Fact for the Employee Name: Address: The undersigned hereby agree to be bound by the provisions of Sections 2.3 and 2.4 of the foregoing Stockholder's Agreement. FORSTMANN LITTLE & CO. EQUITY PARTNERSHIP-V, L.P. By: FLC XXX Partnership, L.P. its general partner By: ----------------------------------- Sandra J. Horbach, a general partner FORSTMANN LITTLE & CO. SUBORDINATED DEBT AND EQUITY MANAGEMENT BUYOUT PARTNERSHIP-VI, L.P. By: FLC XXIX Partnership, L.P. its general partner By: ----------------------------------- Sandra J. Horbach, a general partner The undersigned acknowledges that the undersigned has read the foregoing Agreement between The Yankee Candle Company, Inc. and the undersigned's spouse, understands that the undersigned's spouse has purchased shares of Common Stock as reflected in such Agreement and agrees to be bound by the foregoing Agreement. -------------------------------- Employee's Spouse ANNEX A ------- Employee Number of Shares -------- ---------------- [Name] [Shares] EX-5 5 Exhibit 5 May 1, 1999 Forstmann Little & Co. Subordinated Debt and Equity Management Buyout Partnership - VI, L.P. 767 Fifth Avenue, 44th Floor New York, New York 10153 Dear Sirs: This letter will confirm our agreement that in connection with and in consideration for your participation in the proposed liquidation of Yankee Candle Holdings Corp. and public offering of common stock of The Yankee Candle Company, Inc. (the "Company"), Forstmann Little & Co. Subordinated Debt and Equity Management Buyout Partnership - VI, L.P. ("Investor"), will be entitled to the following contractual management rights relating to the Company so long as Investor shall own any voting securities of the Company (collectively, the "Management Rights"): (1) Investor shall be entitled to consult with and advise management of the Company on significant business issues, including management's proposed annual operating plans, and management will meet with representatives of Investor (the "Representatives") at the Company's facilities at mutually agreeable times for such consultation and advice, including to review progress in achieving said plans. The Company shall give Investor reasonable advance written notice of any significant new initiatives or material changes to existing operating plans and shall afford Investor adequate time to meet with management to consult on such initiatives or changes prior to implementation. The Company agrees to give due consideration to the advice given and any proposals made by Investor; (2) Investor may inspect all contracts, books, records, personnel, offices and other facilities and properties of the Company and, to the extent available to the Company after the Company uses reasonable efforts to obtain them, the records of its legal advisors and accountants, including the accountants' work papers, and Investor may make such copies and inspections thereof as Investor may reasonably request. The Company shall furnish Investor with such financial and operating data and other information with respect to the business and properties of the Company as the Investor may request. The Company shall permit the Representatives to discuss the affairs, finances and accounts of the Company with, and to make proposals and furnish advice with respect thereto, the principal officers of the Company; (3) Investor shall have the following rights regarding the appointment of a representative to the Company's Board of Directors (the "Board"). Investor shall provide to the Board, a reasonable period of time before the Board or the Company distributes to stockholders a proxy statement or other materials in connection with the election of directors, the name of Investor's nominee as director (the "Nominee"), as well as any other information regarding the Nominee as the Company may reasonably request. The selection by Investor of the Nominee shall be made after consultation with the Company, and Investor shall not designate a Nominee who is unsatisfactory to the existing directors. The Board and/or the Company shall include the Nominee as one of the persons recommended by the Board for election as a director of the Company, solicit proxies from stockholders in favor of the election of the Nominee as a director, and otherwise use all reasonable efforts to cause the Nominee to be elected as a director of the Company. In the event the Nominee elected to the Board shall cease to serve as a director for any reason, the Board shall fill the vacancy resulting therefrom with another Nominee. If the Company has a classified Board of Directors, Investor shall only be required to designate a Nominee, and the Company shall only be required to take steps to cause the Nominee to be elected, in the year in which the Nominee's class of directors is up for election. The Board shall not be required to fulfill its obligations under this paragraph to the extent that doing so would be in contravention of its fiduciary duties to the Company's stockholders; and (4) At any time during which Investor does not have a representative on the Board, the Company shall, after receiving notice from Investor as to the identity of any Representative, (i) permit a Representative to attend all Board meetings and all committees thereof as an observer; (ii) provide the Representative advance notice of each such meeting, including such meeting's time and place, at the same time and in the same manner as such notice is provided to the members of the Board (or such committee thereof) and copies of all materials distributed to the members of the Board (or such committee thereof) at the same time as such materials are distributed to such Board (or such committee thereof) and shall permit the Representative to have the same access to information concerning the business and operations of the Company; and (iii) permit the Representative to discuss the affairs, finances and accounts of the Company with, and to make proposals and furnish advice with respect thereto to, the Board, without voting, and the Board and the Company's officers shall take such proposals or advice seriously and give due consideration thereto. Reasonable costs and expenses incurred by the Representative for the purposes of attending Board (or committee) meetings and conducting other Company business will be paid by the Company. Investor agrees, and shall cause each of its Representatives to agree, to hold in confidence and trust and not use or disclose any confidential information provided to or learned by it in connection with the exercise of Investor's Management Rights under this letter agreement, unless otherwise required by law or unless such confidential information otherwise becomes publicly available or available to it other than through this letter agreement. Very truly yours, THE YANKEE CANDLE COMPANY, INC. By: /s/ Michael D. Parry ------------------------------------ Name: Michael D. Parry Title: President and Chief Executive Officer AGREED AND ACCEPTED THIS 1st day of May, 1999 FORSTMANN LITTLE & CO. SUBORDINATED DEBT AND EQUITY MANAGEMENT BUYOUT PARTNERSHIP - VI, L.P. By: FLC XXIX Partnership, L.P. its General Partner By: /s/ Sandra J. Horbach -------------------------------------- Sandra J. Horbach, a General Partner May 1, 1999 Forstmann Little & Co. Equity Partnership - V, L.P. 767 Fifth Avenue, 44th Floor New York, New York 10153 Dear Sirs: This letter will confirm our agreement that in connection with and in consideration for your participation in the proposed liquidation of Yankee Candle Holdings Corp. and public offering of common stock of The Yankee Candle Company, Inc. (the "Company"), Forstmann Little & Co. Equity Partnership - V, L.P. ("Investor"), will be entitled to the following contractual management rights relating to the Company so long as Investor shall own any voting securities of the Company (collectively, the "Management Rights"): (1) Investor shall be entitled to consult with and advise management of the Company on significant business issues, including management's proposed annual operating plans, and management will meet with representatives of Investor (the "Representatives") at the Company's facilities at mutually agreeable times for such consultation and advice, including to review progress in achieving said plans. The Company shall give Investor reasonable advance written notice of any significant new initiatives or material changes to existing operating plans and shall afford Investor adequate time to meet with management to consult on such initiatives or changes prior to implementation. The Company agrees to give due consideration to the advice given and any proposals made by Investor; (2) Investor may inspect all contracts, books, records, personnel, offices and other facilities and properties of the Company and, to the extent available to the Company after the Company uses reasonable efforts to obtain them, the records of its legal advisors and accountants, including the accountants' work papers, and Investor may make such copies and inspections thereof as Investor may reasonably request. The Company shall furnish Investor with such financial and operating data and other information with respect to the business and properties of the Company as the Investor may request. The Company shall permit the Representatives to discuss the affairs, finances and accounts of the Company with, and to make proposals and furnish advice with respect thereto, the principal officers of the Company; (3) Investor shall have the following rights regarding the appointment of a representative to the Company's Board of Directors (the "Board"). Investor shall provide to the Board, a reasonable period of time before the Board or the Company distributes to stockholders a proxy statement or other materials in connection with the election of directors, the name of Investor's nominee as director (the "Nominee"), as well as any other information regarding the Nominee as the Company may reasonably request. The selection by Investor of the Nominee shall be made after consultation with the Company, and Investor shall not designate a Nominee who is unsatisfactory to the existing directors. The Board and/or the Company shall include the Nominee as one of the persons recommended by the Board for election as a director of the Company, solicit proxies from stockholders in favor of the election of the Nominee as a director, and otherwise use all reasonable efforts to cause the Nominee to be elected as a director of the Company. In the event the Nominee elected to the Board shall cease to serve as a director for any reason, the Board shall fill the vacancy resulting therefrom with another Nominee. If the Company has a classified Board of Directors, Investor shall only be required to designate a Nominee, and the Company shall only be required to take steps to cause the Nominee to be elected, in the year in which the Nominee's class of directors is up for election. The Board shall not be required to fulfill its obligations under this paragraph to the extent that doing so would be in contravention of its fiduciary duties to the Company's stockholders; and (4) At any time during which Investor does not have a representative on the Board, the Company shall, after receiving notice from Investor as to the identity of any Representative, (i) permit a Representative to attend all Board meetings and all committees thereof as an observer; (ii) provide the Representative advance notice of each such meeting, including such meeting's time and place, at the same time and in the same manner as such notice is provided to the members of the Board (or such committee thereof) and copies of all materials distributed to the members of the Board (or such committee thereof) at the same time as such materials are distributed to such Board (or such committee thereof) and shall permit the Representative to have the same access to information concerning the business and operations of the Company; and (iii) permit the Representative to discuss the affairs, finances and accounts of the Company with, and to make proposals and furnish advice with respect thereto to, the Board, without voting, and the Board and the Company's officers shall take such proposals or advice seriously and give due consideration thereto. Reasonable costs and expenses incurred by the Representative for the purposes of attending Board (or committee) meetings and conducting other Company business will be paid by the Company. Investor agrees, and shall cause each of its Representatives to agree, to hold in confidence and trust and not use or disclose any confidential information provided to or learned by it in connection with the exercise of Investor's Management Rights under this letter agreement, unless otherwise required by law or unless such confidential information otherwise becomes publicly available or available to it other than through this letter agreement. Very truly yours, THE YANKEE CANDLE COMPANY, INC. By: /s/ Michael D. Parry ------------------------------------ Name: Michael D. Parry Title: President and Chief Executive Officer AGREED AND ACCEPTED THIS 1st day of May, 1999 FORSTMANN LITTLE & CO. EQUITY PARTNERSHIP - V, L.P. By: FLC XXX Partnership, its General Partner By: /s/ Sandra J. Horbach -------------------------------------- Sandra J. Horbach, a General Partner -----END PRIVACY-ENHANCED MESSAGE-----