Exhibit 10.31
SUCCESS FEE AGREEMENT
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This SUCCESS FEE AGREEMENT, made as of January 15, 1999 (this "Agreement"),
by and between Little Switzerland, Inc., a Delaware corporation with its main
office in St. Xxxxxx, U.S.V.I. (the "Company"), and C. Xxxxxxx Xxxxx (the
"Director").
WITNESSETH
WHEREAS, the Board of Directors of the Company has terminated the
Investment Banking Committee of the Board of Directors of the Company (the
"Committee"), of which the Director was a member;
WHEREAS, the parties hereto entered into a Success Fee Agreement on
February 4, 1998 (the "Original Agreement"), relating to a success fee equal to
two-thirds of one percent (1%) of the aggregate value of certain transactions
entered into and completed by the Company;
WHEREAS, the parties hereto previously determined that the Original
Agreement has been terminated; and
WHEREAS, the parties hereto now desire to enter into a new arrangement with
respect to the Success Fee.
NOW, THEREFORE, in consideration of the foregoing premises and the mutual
covenants contained herein, the Company and the Director mutually agree as
follows:
1. Payment of Success Fee. The Director hereby agrees to actively
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participate, through duties and responsibilities assigned to the Director by the
Board of Directors of the Company, in the negotiation, structuring and closing
of a transaction or a series of related transactions, if any, approved by the
Board of Directors of the Company which are a tender or exchange offer, merger,
reorganization, consolidation or other business combination that directly result
in the sale or other disposition of all or substantially all of the assets of
the Company or a sale of all or substantially all of the issued and outstanding
stock of the Company (a "Transaction"). Subject to Section 3 hereof, for
compensation for all of such services rendered by the Director in connection
with such Transaction, the Company shall pay the Director an amount equal to
eighty three and one-third percent (83 1/3%) of two-thirds of one percent (1%)
of the Aggregate Value (as defined in Section 2 hereof) of the Transaction (the
"Success Fee") by wire transfer of immediately available funds to an account
designated by the Director on the closing date (the "Effective Time") of such
Transaction. Notwithstanding anything to the contrary contained herein, the
Company shall be obligated to pay such Success Fee only if the Director is
either employed by the Company or is a member of the Board of Directors of the
Company at the Effective Time of a Transaction; provided, however, that the
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Company shall be obligated to make such payment to the Director if the Effective
Time occurs within three (3) months of the date on which the Director ceases to
neither be an employee nor a Director of the Company, unless such occurrence is
due to the Director's resignation as an employee or member of the Board of
Directors of the Company, as applicable, in which case no payment hereunder
shall be due the Director.
2. Aggregate Value. For purposes of this Agreement, the term "Aggregate
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Value" shall mean the total amount of cash and the fair market value (on the
date of payment) of all other property paid or payable, directly or indirectly,
by the acquiring party (the "Acquiror") to the acquired party or the seller of
the acquired business (the "Acquired"), or to the Acquired's security holders or
its employees, or by the Acquired to the Acquired's security holders, in
connection with a Transaction (including, without limitation, amounts paid by
the Acquiror to holders of any warrants, stock purchase rights, convertible
securities or similar rights of the Company and to holders of any options or
stock appreciation rights issued by the Company, whether or not vested).
Aggregate Value shall also include the value of any long-term liabilities
(including the short-term portion thereof) of the Company (including the
principal amount of any indebtedness for borrowed money) indirectly or directly
assumed or acquired by the Acquiror, or otherwise repaid or retired, in
connection with or in anticipation of a Transaction. In the event the
Transaction takes the form of a recapitalization or restructuring of the Company
(including, without limitation, through negotiated repurchases of its
securities, an issuer tender offer, an extraordinary dividend, a spin-off,
split-off or similar transaction), Aggregate Value shall also include the fair
market value of (i) the equity securities of the Company retained by the
Company's security holders following such Transaction and (ii) any cash,
securities (including securities of subsidiaries) or other consideration
received by the Company's security holders in exchange for or in respect of
securities of the Company in connection with such Transaction (all such cash,
securities or other consideration received by such security holders being deemed
to have been paid to such security holders in such Transaction). If a
Transaction takes the form of a sale of assets, Aggregate Value shall also
include (i) the value of any current assets not sold, minus (ii) the value of
any current liabilities not assumed by the Acquiror. In the event that any part
of the consideration in connection with a transaction will be payable (whether
in one payment or a series of two or more payments) at any time following the
consummation thereof, the term Aggregate Value shall include the present value
of such future payment of payments. As used in this Agreement, the terms
"payment," "paid" or "payable" shall be deemed to include, as applicable, the
issuance or delivery of securities or other property other than cash.
3. Director Sponsored Transaction. Notwithstanding anything to the
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contrary contained herein, the Company shall not be obligated to pay the Success
Fee to the Director if the Transaction involves any person, company or entity
(i) that is operated by the Director, (ii) for which the Director is performing
or has performed, in the twelve (12) months preceding the execution of the
definitive documents relating to the Transaction, any material advisory or
consulting services, (iii) that employs the Director or (iv) in which the
Director owns or has an
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agreement to own more than an one percent (1%) equity interest in a privately-
held corporation or a five percent (5%) equity interest in a publicly-held
corporation.
4. Satisfaction of the Company's Obligations; Interest. The Company and
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the Director agree that the payment provided for in Section 1 hereof shall
satisfy in full the Company's obligation to pay the Success Fee to the Director
with respect to the services rendered by the Director in connection with this
Agreement. Notwithstanding the foregoing, in the event that the Company shall
fail to pay the Success Fee when due, the term "Success Fee" shall be deemed to
include interest on such unpaid Success Fee, commencing on the Effective Time,
at a rate per annum equal to the rate of interest publicly announced by
Citibank, N.A., from time to time, in the City of New York, as such bank's Prime
Rate.
5. Legal Fees. If legal action is commenced by the Director to enforce
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his rights under this Agreement, the Director shall be entitled to recover any
and all costs incurred in connection with the enforcement of his rights
hereunder or the collection of the Success Fee, including, without limitation,
reasonable attorney's fees, in addition to any other relief granted.
6. Binding Effect; Assignment. This Agreement shall inure to the benefit
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of and be binding upon the Company and the Director, their respective
successors, executors, administrators, heirs and permitted assigns. The
Director shall have no right to assign this Agreement. The Company may assign
this Agreement only with the consent of the Director.
7. Amendment. This Agreement may be amended or modified only by a
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written instrument signed by the Director or a duly authorized representative of
the Director and the Company.
8. Termination. If the Effective Time has not occurred by the first
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anniversary of the date first written above (the "Termination Date"), then this
Agreement shall automatically terminate on such Termination Date and all of the
Company's obligations hereunder shall cease as of such Termination Date.
9. Counterparts. This Agreement may be executed in one or more
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counterparts, all of which documents shall be considered one and the same
document.
10. Governing Law; Consent to Jurisdiction. It is the parties' intention
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that this Agreement shall be construed under and be governed in all respects by
the laws of the State of Delaware. Each of the Company and the Director hereby
irrevocably and unconditionally consent to the jurisdiction of the courts of the
State of Delaware and the United States District Court for the District of
Delaware for any action, suit or proceeding arising out of or relating to this
Agreement, and agrees not to commence any action, suit or proceeding related
thereto except in such courts. Each of the Company and the Director further
hereby irrevocably and unconditionally waive any objection to the laying of
venue of any lawsuit, claim or other proceeding arising out of or relating to
this Agreement in the courts of the State of Delaware or the United States
District Court for the District of Delaware, and hereby further irrevocably and
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unconditionally waive and agree not to plead or claim in any such court that any
such lawsuit, claim or other proceeding brought in any such court has been
brought in an inconvenient forum.
IN WITNESS WHEREOF, this Agreement has been executed by the Company, by its
duly authorized directors, and by the Director, as of the date first above
written.
LITTLE SWITZERLAND, INC.
By: /s/ Xxxxxxx X. Xxxxxx
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Name: Xxxxxxx X. Xxxxxx
Title: Director
By: /s/ Xxxx X. Xxxxx, Xx.
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Name: Xxxx X. Xxxxx, Xx.
Title: Director
By: /s/ Xxxxxxx X. Xxxxxxxxx
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Name: Xxxxxxx X. Xxxxxxxxx
Title: Director
By: /s/ Xxxxxxx X. Xxxxxx
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Name: Xxxxxxx X. Xxxxxx
Title: Director
DIRECTOR:
/s/ C. Xxxxxxx Xxxxx
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C. Xxxxxxx Xxxxx
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