Exhibit 99
INVESTOR'S RIGHTS AGREEMENT
This INVESTOR'S RIGHTS AGREEMENT (this "Agreement") is made as of
May 1, 2001 between Little Switzerland, a Delaware corporation
(the "Company"), and Jewelcor Management, Inc., a Nevada corporation
(the "Stockholder").
RECITALS:
WHEREAS, concurrently with the execution of this Agreement, the Company
is agreeing to sell forty-five percent of its Common Stock, par value
$.01 per share, to Xxxxxxx & Co. International, Inc., a Delaware
corporation ("Tiffany"), pursuant to the certain Stock Purchase
Agreement, dated of even date herewith (the "Stock Purchase Agreement"),
between the Company and Tiffany;
WHEREAS, the Stock Purchase Agreement provides, among other things, that
Tiffany will have the right to subscribe to certain issuances of the
Company's capital stock (and rights to acquire such capital stock); and
WHEREAS, in order to induce the Stockholder to relinquish certain of
its rights to facilitate the transactions contemplated by the Stock
Purchase Agreement, the Company has agreed to grant the Stockholder
the right to subscribe to certain issuances of the Company's capital stock
(and rights to acquire such capital stock);
NOW, THEREFORE, in consideration of the foregoing, the parties hereto agree
as follows:
1. Definitions. For purposes of this Agreement:
1.1 "Affiliate" means, as to a Person, any other Person that directly or
indirectly, through one or more intermediaries controls, is controlled by or
is under common control with the first-mentioned Person.
1.2 "Common Share Equivalents" means Common Stock at the time outstanding
or issuable upon conversion of shares of Preferred Stock at the time
outstanding, or issuable upon exercise of warrants or options to purchase
Common Stock or upon conversion or exercise of any other security.
1.3 "Common Stock" means shares of Common Stock, par value $.01, of the
Company.
1.4 "Person" means an individual, corporation, partnership, limited
liability company, association, trust, unincorporated organization or
other legal entity.
1.5 "Preferred Stock" means shares of Preferred Stock, par value $.01,
of the Company.
1.6 "Stockholder" means Jewelcor Management, Inc., its Affiliates and,
for purposes of Section 2 of this Agreement, shall include Xxxxxxx Xxxxxxxx,
his siblings, spouse, lineal descendants and any trusts for the benefit of
the foregoing; provided, however, that the foregoing definition shall not
be deemed to constitute an admission that the foregoing persons are
includable in any "group" as such term is defined in Rule 13d-3 promulgated
under Section 13 of the Securities Exchange Act of 1934, as amended.
"Stockholder" shall not include Xxxx Xxxxxxxx, Xxxxxx Xxxxxxxx or Xxxxxxx
Xxxxxxxx Xxxxxx.
2. Subscription Rights.
2.1 The Company shall not issue, sell or exchange, agree to issue,
sell or exchange, or reserve or set aside for issuance, sale or exchange,
(i) any Common Stock, (ii) any other equity securities of the Company,
including, without limitation, shares of Preferred Stock, (iii) any
option, warrant or other right to subscribe for, purchase or otherwise
acquire any equity securities of the Company, or (iv) any debt or other
securities directly or indirectly convertible into capital stock of the
Company (collectively, the "Offered Securities"), unless in each such case
the Company shall have first complied with this Section 2. The Company
shall deliver to the Stockholder a written notice of any proposed or
intended issuance, sale or exchange of Offered Securities (the "Offer"),
which Offer shall (i) identify and describe the Offered Securities,
(ii) describe the price and other terms upon which they are to be issued,
sold or exchanged, and the number or amount of the Offered Securities to
be issued, sold or exchanged, (iii) identify the persons or entities
(if known) to which or with which the Offered Securities are to be offered,
issued, sold or exchanged and (iv) offer to issue and sell to or exchange
with such Stockholder (A) a portion of the Offered Securities determined
by dividing the aggregate number of shares of Common Stock then held by
such Stockholder (giving effect to the conversion or exercise of all
Common Share Equivalents then held by such Stockholder) by the total number
of shares of Common Stock then outstanding (giving effect to the conversion
or exercise of all Common Share Equivalents then outstanding (other than
those owned by such Stockholder)) (the "Basic Amount"); provided, however,
that the Stockholder, in its discretion, may subscribe for less than the
Basic Amount.
2.2 To accept an Offer, in whole or in part, the Stockholder must deliver
a written notice to the Company prior to the end of the five (5) day
period following the Stockholder's receipt of the Offer, setting forth
the portion of the Stockholder's Basic Amount that such Stockholder elects
to purchase (the "Notice of Acceptance").
2.3 The Company shall have 90 days from the expiration of the period set
forth in Section 2.2 above to issue, sell or exchange all or any part of
such Offered Securities as to which a Notice of Acceptance has not been given
by the Stockholder (the "Refused Securities"), but only to the offerees
described in the Offer (if so described therein) and only upon terms and
conditions (including, without limitation, unit prices and interest rates)
that are not more favorable to the acquiring person or persons or less
favorable to the Company than those set forth in the Offer.
2.4 In the event the Company shall propose to sell less than all the
Refused Securities (any such sale to be in the manner and on the terms
specified in Section 2.3 above), then the Stockholder may, at its sole
option and in its sole discretion, reduce the number or amount of the
Offered Securities specified in its Notice of Acceptance to an amount
that shall be not less than the number or amount of the Offered Securities
that the Stockholder elected to purchase pursuant to Section 2.2 above
multiplied by a fraction, (i) the numerator of which shall be the number or
amount of Offered Securities the Company actually proposes to issue, sell or
exchange (including Offered Securities to be issued or sold to the
Stockholder pursuant to Section 2.2 above prior to such reduction) and
(ii) the denominator of which shall be the original amount of the Offered
Securities. In the event that the Stockholder so elects to reduce the number
or amount of Offered Securities specified in its Notice of Acceptance, the
Company may not issue, sell or exchange more than the reduced number or
amount of the Offered Securities unless and until such securities have
again been offered to the Stockholder in accordance with Section 2.1 above.
2.5 Upon the closing of the issuance, sale or exchange of all or less than
all of the Refused Securities, the Stockholder shall acquire from the Company,
and the Company shall issue to the Stockholder, the number or amount of
Offered Securities specified in the Notice of Acceptance, as reduced pursuant
to Section 2.4 above if the Stockholders have so elected, upon the terms and
conditions specified in the Offer. The purchase by the Stockholder of any
Offered Securities is subject in all cases to the preparation, execution and
delivery by the Company and the Stockholder of a purchase agreement relating
to such Offered Securities reasonably satisfactory in form and substance to
the Stockholder and its counsel.
2.6 Any Offered Securities not acquired by the Stockholder or other persons
in accordance with Section 2.3 above may not be issued, sold or exchanged
until they are again offered to the Stockholder under the procedures specified
in this Agreement.
2.7 The term "Offered Securities" shall not include:
(a) Common Stock issued as a stock dividend to holders of Common Stock or
upon any subdivision or combination of Common Stock; and
(b) shares of Common Stock issued or issuable pursuant to any Company
employee stock option, employee purchase or similar plan.
2.8 Business Opportunities.
2.9 In the event that (a) the Stockholder or any of its Affiliates or (b)
any officer, director or employee of the Company or any subsidiary of the
Company who is also an officer, director or employee of the Stockholder or
an Affiliate thereof, acquires knowledge of a potential transaction which may
be a business opportunity for both the Company and the Stockholder or any of
its Affiliates, such business opportunity shall belong to the Stockholder and
not to the Company, and any such officer, director of employee of the Company
shall treat such business opportunity as belonging only to the Stockholder and
not the Company, provided, however, with respect to clause (b) of this
sentence, the Stockholder shall determine in good faith whether, based on
the circumstances under which such officer, director or employee acquired
his knowledge, such business opportunity was offered to such person solely
in his capacity as an officer, director or employee of the Company ("Company
Capacity"). For the purposes of the foregoing determination, there shall be
a presumption that such opportunity was offered to such person in his
capacity as an officer, director or employee of the Stockholder or an
Affiliate thereof. In the event that the Stockholder determines that it was
so offered to such person in his Company Capacity, such business opportunity
shall belong only to the Company and not to the Stockholder and such officer,
director or employee shall treat such business opportunity as belonging only
to the Company and not to the Stockholder. With respect to any business
opportunity belonging to the Stockholder pursuant to this Section 3.1, the
Stockholder shall decide how to allocate and pursue such business
opportunity based on its sole determination of what is the b est interests
of the Stockholder's stockholders. The good faith determination of the
allocation of business opportunities pursuant to the Section 3.1 shall be
conclusive and binding for all purposes.
2.10 Miscellaneous.
2.11 Successors and Assigns. The Stockholder may assign its rights under
this Agreement, in whole or in part, to any Affiliate, and the terms and
conditions of this Agreement shall inure to the benefit of and be binding
upon the respective successors and assigns of the parties. Except as
provided in the immediately preceding sentence, no party may assign its
rights or delegate its duties or obligations hereunder without the prior
written consent of the other party hereto. Nothing in this Agreement,
express or implied, is intended to confer upon any party other than the
parties hereto or their respective successors and assigns any rights,
remedies, obligations, or liabilities under or by reason of this Agreement,
except as expressly provided in this Agreement.
2.12 Governing Law; Jurisdiction; Waiver of Jury Trial.
(a) This Agreement shall be governed by and construed under the laws of
the State of New York as applied to agreements among New York residents
entered into and to be performed entirely within New York.
(b) The jurisdiction and venue in any action brought by any party hereto
pursuant to this Agreement shall properly (but not exclusively) lie in any
federal or state court located in the State of New York. By execution and
delivery of this Agreement, each party hereto irrevocably submits to the
jurisdiction of such courts for himself or itself and in respect of his or
its property with respect to such action. The parties irrevocably agree that
venue would be proper in such court, and hereby waive any objection that such
court is an improper or inconvenient forum for the resolution of such action.
The parties further agree that the mailing by certified or registered mail,
return receipt requested, of any process required by any such court shall
constitute valid and lawful service of process against them, without necessity
for service by any other means provided by statute or rule of court.
(c) BECAUSE DISPUTES ARISING IN CONNECTION WITH COMPLEX FINANCIAL
TRANSACTIONS ARE MOST QUICKLY AND ECONOMICALLY RESOLVED BY AN EXPERIENCED
AND EXPERT PERSON AND THE PARTIES WISH APPLICABLE LAWS TO APPLY (RATHER
THAN ARBITRATION RULES), THE PARTIES DESIRE THAT THEIR DISPUTES BE RESOLVED BY
A JUDGE APPLYING SUCH APPLICABLE LAWS. THEREFORE, TO ACHIEVE THE BEST
COMBINATION OF THE BENEFITS OF THE JUDICIAL SYSTEM AND OF ARBITRATION,
THE PARTIES HERETO WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT
OR PROCEEDING BROUGHT TO ENFORCE OR DEFEND ANY RIGHTS OR REMEDIES UNDER
THIS AGREEMENT OR ANY DOCUMENTS RELATED HERETO.
2.13 Counterparts; Facsimile Signatures. This Agreement may be executed in
any number of counterparts, each of which shall be deemed to be an original,
and all of which together shall constitute one and the same document.
This Agreement may be executed by facsimile signatures.
2.14 Titles and Subtitles. The titles and subtitles used in this Agreement
are used for convenience only and are not to be considered in construing or
interpreting this Agreement.
2.15 Notices. Unless otherwise provided, any notice required or permitted
under this Agreement shall be given in writing and shall be deemed
effectively given upon receipt by the party to be notified or five (5)
days after deposit with the United States Post Office, by registered or
certified mail, postage prepaid and addressed to the party to be notified
(a) if to the Company, at the following address:
000-X Xxxxx Xxx
X.X. Xxx 000
Xx. Xxxxxx, X.X. V. I. 00804
Attention: Xxxxxx X. Xxxxxxxxxxx
with a copy to:
Proskauer Rose LLP
0000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attn: Xxxx X. Xxxxxxx, Esq.
(b) if to the Stockholder, at the address set forth opposite the
Stockholder's name on the signature pages hereto or at such other address as
any of the parties may designate by ten (10) days' advance written notice to
the other parties.
2.16 Amendments and Waivers. Any term of this Agreement may be amended and
the observance of any term of this Agreement (including, without limitation,
Section 3) may be waived (either generally or in a particular instance and
either retroactively or prospectively), only with the written consent of
the Company and the Stockholder.
2.17 Termination. This Agreement shall terminate and be of no further force
on the first day that the Stockholder ceases to own at least 50% of the
number of shares of Common Stock owned by the Stockholder as of the date
such Stockholder became a party to this Agreement (as adjusted for any stock
splits, stock dividends or stock combinations).
2.18 Severability. If one or more provisions of this Agreement are held to
be unenforceable under applicable law, such provision shall be excluded from
this Agreement and the balance of the Agreement shall be interpreted as if
such provision were so excluded and shall be enforceable in accordance with
its terms.
2.19 Specific Performance. In addition to any and all other remedies that
may be available at law in the event of any breach of this Agreement, the
Stockholder shall be entitled to specific performance of the agreements and
obligations of the Company hereunder and to such other injunctive or other
equitable relief as may be granted by a court of competent jurisdiction.
2.20 Complete Agreement. This Agreement constitutes the entire agreement
and understanding of the parties hereto with respect to the subject matter
hereof and supersedes all prior agreements and understandings relating to
such subject matter (including, without limitation, that certain letter of
intent, dated as of March 5, 2001, by and among the Company, the Stockholder,
Xxxxxxx Xxxxxxxx and Xxxxxxx and Company) and negotiations and oral
understandings, if any, with respect thereto.
2.21 Pronouns. Whenever the context may require, any pronouns used in this
Agreement shall include the corresponding masculine, feminine or neuter
forms, and the singular form of nouns and pronouns shall include the plural,
and vice versa.
IN WITNESS WHEREOF, the parties have executed this Investor's Rights
Agreement as of the date first above written.
THE COMPANY:
LITTLE SWITZERLAND, INC.
By: /s/ Xxxxxx X. Xxxxxxxxxxx
Name: Xxxxxx X. Xxxxxxxxxxx
Title: President
INVESTOR:
JEWELCOR MANAGEMENT, INC.
By: /s/ Xxxxxxx Xxxxxxxx
Name: Xxxxxxx Xxxxxxxx
Title: President
