EXHIBIT 2
STANDSTILL AGREEMENT
Standstill Agreement (this "AGREEMENT"), dated as of November
22, 1999, by and between XXXX NATIONAL CORPORATION, a Delaware corporation (the
"COMPANY"), and HAL INTERNATIONAL N.V., a Netherlands Antilles Company, for
itself and its Affiliates (as defined below; collectively, HAL International
N.V. and its Affiliates are "STOCKHOLDER").
RECITALS
A. As of the date of this Agreement, Stockholder
beneficially owns approximately 14.2% of the outstanding shares of common stock,
$.001 par value per share (the "COMMON SHARES"), of the Company. Stockholder has
expressed its desire to increase its ownership above the 15.0% threshold through
open-market purchases. This increase would trigger the rights granted to the
Company's stockholders under the Rights Agreement, dated as of August 22, 1995,
by and between the Company and National City Bank, as rights agent, as amended
(the "EXISTING RIGHTS AGREEMENT"), and would also trigger the provisions of
ss.203 of the Delaware General Corporation Law ("ss.203") and Article Tenth of
the Company's amended and restated Certificate of Incorporation ("ARTICLE
TENTH").
B. The Company is willing, contemporaneously with the
effectiveness of this Agreement, to cause the rights under the Existing Rights
Agreement to be redeemed and adopt a new rights agreement (the "NEW RIGHTS
AGREEMENT") that permits Stockholder to increase its ownership above the 15.0%
threshold to 25.0% of the Common Shares outstanding at any time, and the
Company's Directors will also approve Stockholder's increased ownership for
purposes of ss.203 and Article Tenth.
C. As a result of the anticipated increase in
Stockholder's ownership of the Common Shares, the parties desire to provide for
certain agreements with respect to the ownership and voting by Stockholder of
the Common Shares and other matters.
AGREEMENT
NOW, THEREFORE, in consideration of the agreements, rights,
obligations and covenants contained herein and other good and valuable
consideration, the sufficiency and receipt of which is hereby acknowledged, the
Company and Stockholder hereby agree as follows:
SECTION 1. DEFINITIONS
1.1 CERTAIN DEFINITIONS. In addition to the other terms
defined in this Agreement, for purposes of this Agreement, the following terms
have the following meanings:
(a) A Person is deemed to be an "AFFILIATE" of
another Person in accordance with the term "Affiliate" as defined in Rule 12d-2
under the Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT"), as
in effect on the date of this Agreement.
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(b) A Person is deemed a "BENEFICIAL OWNER" of
or to "BENEFICIALLY OWN" any Common Shares in accordance with the term
"beneficial ownership" as defined in Rule 13d-3 under the Exchange Act as in
effect on the date of this Agreement, and also includes Common Shares that such
Person or any Affiliate of such Person has the right to acquire (whether such
right is exercisable immediately or only after the passage of time) pursuant to
any agreement, arrangement or understanding or upon the exercise of conversion
rights, exchange rights, warrants or options, or otherwise.
(c) "CLAIM" means any action, claim, complaint,
cause of action, debt, demand or suit.
(d) "DEMAND REGISTRATION RIGHTS" means the right
of Stockholder to have a registration statement filed by the Company and
declared effective with respect to the Common Shares held by Stockholder in
accordance with the provisions of Section 3.1.
(e) "PERCENTAGE LIMITATION" means 25.0% of the
Total Voting Power outstanding as of the date of measurement. If, on June 30,
2001, Stockholder is the beneficial owner of less than 20.0% of the Total Voting
Power outstanding at that date, the Percentage Limitation for the period
following that date will be reduced to the greater of (i) the Total Voting Power
Beneficially Owned by Stockholder or (ii) 15.0%; provided, however, that if the
percentage ownership limitations (i) that would trigger the effects of the
rights issued under the New Rights Agreement (or any successor rights agreement)
with respect to any third party and (ii) that are contained in the definitions
of "interested stockholder" in ss.203 and Article Tenth, are hereafter modified
to a number that is higher than 15.0%, the Percentage Limitation will be equal
to such higher limit.
(f) "REGISTRATION PERIOD" means the period
commencing on the 270th day following the date of this Agreement and ending on
the earlier of the termination of the Standstill Period or such time as
Stockholder owns less than 10.0% of the Restricted Securities.
(g) "SEC" means the Securities and Exchange
Commission.
(h) "SECURITIES ACT" means the Securities Act of
1933, as amended.
(i) "SPECIFIED MATTERS" means:
(i) mergers and consolidations in which
the holders of Common Shares do not
retain a majority of the outstanding
voting power of the surviving
corporation;
(ii) any proposed liquidation of the
Company or sale of all or
substantially all of its assets
(other than to an entity or entities
in which the holders of Common
Shares own the majority of votes
that the holders of the surviving
corporation are entitled to vote
generally in the election of
directors);
(iii) any amendment of the Company's
certificate of incorporation that
would increase the authorized number
of
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Common Shares or shares senior to
common stock, unless the amendment
is solely to permit or to reflect a
stock split or increase in Common
Shares through a stock dividend; or
(iv) any amendment of the Company's
certificate of incorporation that
would impose limitations on the
rights of Stockholder in its
capacity as a stockholder, other
than those (x) agreed to by
Stockholder in this Agreement or
otherwise or (y) that are applicable
to all stockholders equally.
(j) "STANDSTILL PERIOD" means the period
commencing on the date of this Agreement and ending on the fifth anniversary of
the date of this Agreement.
(k) "UNDERWRITER(S)" means any one or more
investment banking or brokerage firms to or through whom Stockholder may offer
and sell Common Shares pursuant to a transaction requiring the filing of a
registration statement under the Securities Act, including one or more of such
firms who manage such public offering through such Underwriters.
(l) "TOTAL VOTING POWER" means the maximum
number of votes that the holders of the Company's capital stock are entitled to
vote generally in the election of directors.
(m) "TRANSFER" means offer, sale, disposition,
transfer or hypothecation of Common Shares.
SECTION 2. STANDSTILL ARRANGEMENTS
2.1 ACQUISITION OF SECURITIES. (a) During the Standstill
Period, Stockholder shall not, directly or indirectly, acquire any Common Shares
or securities convertible, exchangeable or otherwise exercisable for Common
Shares or other securities that are entitled to vote generally in the election
of Directors of the Company, in each case now or hereafter outstanding
(collectively, "SECURITIES," and all Securities Beneficially Owned by
Stockholder being referred to herein as "RESTRICTED SECURITIES"), if the effect
of the acquisition would be to increase Stockholder's aggregate Beneficial
Ownership of Restricted Securities to greater than the Percentage Limitation,
unless the acquisition of shares in excess of the Percentage Limitation has been
approved in advance by a majority of the Company's Directors excluding any
designee of the Stockholder pursuant to Section 2.11 of this Agreement.
(b) Following the Standstill Period, Stockholder
shall not, directly or indirectly, acquire any Securities, if the effect of the
acquisition would be to increase Stockholder's aggregate Beneficial Ownership of
Restricted Securities to greater than the Percentage Limitation, unless the
acquisition of shares in excess of the Percentage Limitation has been approved
in advance by a majority of the Company's Directors excluding any designee of
the Stockholder pursuant to Section 2.11 of this Agreement.
(c) Notwithstanding the foregoing, if
Stockholder inadvertently acquires a non-material amount of Securities in excess
of the limitations set forth in this Section 2.1, and disposes of the excess
amount of Securities within 10 days after the Stockholder
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becomes aware of such breach (it being deemed to have notice of the number of
Securities reported by the Company as outstanding in any periodic report filed
with the SEC), then no breach of this Section 2.1 will be deemed to have
occurred. If any action of the Company or any of its Affiliates, including a buy
back of capital stock of the Company, increases the Total Voting Power
Beneficially Owned by Stockholder above 25.0% of the Total Voting Power
outstanding at the time of measurement, Stockholder shall be deemed to own no
more than the Percentage Limitation applicable at such time and shall not be
required to dispose of any of its Restricted Securities.
2.2 VOTING. Commencing on the date of this Agreement and
through the Company's annual meeting of stockholders for and during 2001,
Stockholder shall take such action as may be required so that all Common Shares
that Stockholder Beneficially Owns and that are entitled to vote are voted (or
in the case of action by written consent, consents are given with respect to
such shares):
(a) FOR the election of the slate of nominees
for election to the Board of Directors of the Company (the "BOARD") selected by
a majority of the members of the Board (the "Directors"); and
(b) except with respect to Specified Matters,
FOR the approval of all matters recommended by a majority of the Directors, if
any recommendation is made.
Notwithstanding the foregoing, Stockholder shall not be under any limitation
regarding the voting of the Common Shares that Stockholder Beneficially Owns if
the Company fails to fulfill its obligations under this Agreement.
2.3 VOTING TRUST OR ARRANGEMENT. During the Standstill
Period, Stockholder shall not deposit any Restricted Securities in a voting
trust or subject any Restricted Securities to any arrangement or agreement with
respect to the voting of such Restricted Securities.
2.4 QUORUM. During the Standstill Period, Stockholder, as
holder of Restricted Securities, shall be present, in person or by proxy, at any
meeting of stockholders of the Company so that all Restricted Securities may be
counted for the purpose of determining the existence of a quorum at such
meeting.
2.5 PROXY SOLICITATIONS. During the Standstill Period,
without the express prior written approval of the Company, Stockholder shall
not:
(a) solicit proxies or initiate, propose or
become a "participant" in a "solicitation" (as such terms are defined in
Regulation 14A under the Exchange Act), in opposition to any matter that has
been recommended by a majority of the Directors or seek to advise, encourage or
influence any individual, firm, corporation, partnership or other entity (a
"PERSON") with respect to the voting of or giving of consent with respect to
Securities in such manner, or induce or attempt to induce any Person to initiate
any stockholder proposal. Notwithstanding the foregoing, and except for any
matter governed by Section 2.2 of this Agreement, Stockholder has the right to
solicit proxies, propose or become a "participant" in a "solicitation" (as such
terms are defined in Regulation 14A under the Exchange Act) in opposition to the
solicitation by any third party on any matter (an "OPPOSITION SOLICITATION");
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(b) execute any written consent in lieu of a
meeting of holders of the Common Shares except a written consent solicited by or
on behalf of the Board; or
(c) induce any other Person to initiate, propose
or become a "participant" in a "solicitation" in opposition to any matter that
has been recommended by a majority of the Directors or in support of any
stockholder proposal relating to the Company, as described in Rule 14a-8 under
the Exchange Act.
2.6 STOCKHOLDER MEETINGS. During the Standstill Period,
without the express prior written approval of the Company, Stockholder shall not
call or seek to have called, or assist, directly or indirectly, any other Person
in calling or seeking to call, any special meeting of Stockholders of the
Company for any reason.
2.7 STOCKHOLDER LISTS. During the Standstill Period,
without the express prior written approval of the Company or in connection with
an Opposition Solicitation, Stockholder shall not seek, request to obtain, or
assist, directly or indirectly, any other Person in seeking, requesting or
obtaining, any list of security holders of the Company.
2.8 GROUP PARTICIPATION. During the Standstill Period,
without the express prior written approval of the Company, Stockholder shall not
join a partnership, limited partnership, syndicate or other group, or otherwise
act in concert with any Person (other than an Affiliate of Stockholder), for the
purpose of acquiring, holding, voting or, except as contemplated pursuant to
this Agreement, disposing of Restricted Securities.
2.9 SOLICITATIONS OF OFFERS. During the Standstill
Period, without the express prior written approval of the Company, Stockholder
shall not, and shall cause its directors, officers, employees, agents (including
investment bankers), partners and Affiliates not to, directly or indirectly,
engage in negotiations with, provide any information to, induce or attempt to
induce or give encouragement to, any Person (other than to the Company's chief
executive officer or, with respect to the Director designated by Stockholder
pursuant to Section 2.11 of this Agreement, pursuant to that Director's
fiduciary duties to the Company), in furtherance of any change in control of the
Company (whether pursuant to a tender or exchange offer, a stock or asset sale
or a merger, consolidation, amalgamation, plan of arrangement or any other form
of transaction) or for any sale of any assets of the Company (other than where
there is a shared ownership by Stockholder and the Company or its subsidiaries
of the assets or of the entity, other than the Company or any of its
subsidiaries, that owns the assets), or any other transaction that would be
inconsistent with or frustrate the purpose of this Agreement.
2.10 Legends and Stop Transfer Orders.
(a) Stockholder shall cause the certificate or
other instrument representing Restricted Securities to have the following
legend:
The securities represented by this certificate are subject to
the provisions of the Standstill Agreement, dated as of
November 22, 1999, a copy of which is on file at the office of
the Secretary of Xxxx National Corporation.
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(b) Stockholder agrees to the entry of stop
transfer orders with the transfer agent (or agents) and the registrar (or
registrars) of the Company against the Transfer other than in compliance with
the requirements of this Agreement or legended securities of which Stockholder
from time to time is the Beneficial Owner.
(c) The Company agrees to the removal of the
legend required by Section 2.10(a) and the stop transfer orders in Section
2.10(b) on expiration of the Standstill Period or upon notice of a Transfer
permitted pursuant to this Agreement to a Person that is not an Affiliate of
Stockholder.
2.11 DIRECTOR NOMINEES. (a) If, prior to June 30, 2001,
Stockholder acquires 20.0% or more of the Total Voting Power outstanding at the
date of acquisition, then, until the earlier of (i) the expiration of the
Standstill Period, and (ii) the date on which Stockholder owns less than 10.0%
of the Total Voting Power, Stockholder may deliver to Company a notice stating
that it desires to implement this Section 2.11 and designating one person (who
either will be (x) Xxxx Xxxxxx or (y) any other person designated by Stockholder
and approved by a majority of the Directors, which approval may not be
unreasonably withheld) as a nominee for election to the Board. Promptly after
receiving the foregoing notice from Stockholder, the Company shall cause (A) the
total number of members of the Board to be increased by one member over the
number authorized as of the date of such notice, and (B) the vacancy so created
to be filled with the Stockholder's designee. Thereafter, with respect to each
annual meeting of stockholders of the Company until the earlier of (i) the
expiration of the Standstill Period, and (ii) the date on which Stockholder owns
less than 10.0% of the Total Voting Power, Company shall use its best efforts to
cause its Directors to solicit proxies for, and recommend that the Company's
stockholders vote in favor of, the Stockholder's designee.
(b) If during the Standstill Period a designee
of Stockholder ceases to be a Director for any reason other than expiration of
the designee's term, the Company shall promptly, upon the request of
Stockholder, use its reasonable best efforts to cause the election or
appointment of a person selected by Stockholder (who will be any person approved
by a majority of the Directors, which approval may not be unreasonably withheld)
to replace such designee. The right to designate a Director pursuant to this
Section 2.11 is personal to Stockholder and may not be transferred in any manner
except to a wholly owned Affiliate of Stockholder.
(c) Prior to the Company's Annual General
Meeting of Stockholders in 2000, the Company shall cause the size of the Board
to be increased as necessary to give effect to the rights of Stockholder under
Section 2.11(a), and decreased, at the Company's discretion, at such time(s) as
Stockholder's Beneficial Ownership falls below 10.0% of the Total Voting Power.
(d) Upon expiration of the Standstill Period or
the date on which Stockholder Beneficially Owns less than 10.0% of the Total
Voting Power, Stockholder shall cause its designee as Director immediately to
resign from the Board.
2.12 REPORTS. Stockholder shall promptly provide to the
Company copies of any reports or schedules filed by Stockholder with the SEC
pursuant to Regulation 13D-G (or any successor provision) promulgated under the
Exchange Act within one business day of filing.
2.13 [INTENTIONALLY OMITTED]
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2.14 CONTROL. Except as otherwise required by law, during
the Standstill Period Stockholder shall not, without the prior written consent
of the chief executive officer or majority of independent Directors of the
Company, (a) make any public announcement with respect to, or submit any
proposal for, the acquisition of Beneficial Ownership of any Securities if the
effect of such acquisition would be to cause the Beneficial Ownership of
Stockholder to exceed the Percentage Limitation, or for or with respect to any
extraordinary transaction or merger, consolidation, sale of substantial assets
or business combination involving the Company or any of its Affiliates, whether
or not any Persons other than Stockholder are involved and whether or not such
proposal might require the making of a public announcement by the Company, (b)
propose any individual for election to the Board other than as permitted by
Section 2.11, (c) seek the removal of any Director other than the Director
designated by Stockholder pursuant to Section 2.11, or (d) otherwise seek to
control the management or policies of the Company or any of its Affiliates,
including, without limitation, taking any action to seek to obtain
representation on the Board or the board of directors of any Affiliate of the
Company other than as permitted by Section 2.11.
2.15 COMMUNICATIONS. (a) Regardless of any dispute that
may arise in the future between Stockholder and the Company, Stockholder shall
not, and shall cause its Affiliates not to, during the Standstill Period, (i)
disparage or criticize the Company or its Affiliates, or their respective
current or former officers, directors or employees, to competitors, current
employees, vendors, customers or any other Person or (ii) make or solicit any
comments, statements or the like to the media or to others that may be
considered derogatory or detrimental to the good name or business reputation of
the Company or any of the aforementioned individuals; provided, however, that
the foregoing does not limit Stockholder from responding to legal process or
governmental inquiry or otherwise complying with applicable laws or regulations.
(b) Regardless of any dispute that may arise in
the future between Stockholder and the Company, Company shall not, and shall
cause its Affiliates not to, during the Standstill Period, (i) disparage or
criticize the Stockholder or its Affiliates, or their respective current or
former officers, directors or employees, to competitors, current employees,
vendors, customers or any other Person or (ii) make or solicit any comments,
statements or the like to the media or to others that may be considered
derogatory or detrimental to the good name or business reputation of Stockholder
or any of the aforementioned individuals; provided, however, that the foregoing
does not limit the Company from responding to legal process or governmental
inquiry or otherwise complying with applicable laws or regulations.
2.16 LITIGATION. During the Standstill Period, Stockholder
shall not institute, prosecute or pursue against the Company (or any of its
officers, Directors, representatives, trustees, employees, attorneys, advisors,
agents, Affiliates or associates) (a) any Claim with respect to any action
hereafter approved by a majority of the Directors that is only properly
assertable derivatively in the right of the Company or (b) any Claim on behalf
of a class of the Company's security holders; provided, however, that the
foregoing does not limit the Company or Stockholder from enforcing this
Agreement or from pursuing Claims not relating to or arising under this
Agreement.
2.17 [INTENTIONALLY OMITTED]
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2.18 RIGHT OF FIRST OFFER. During the Standstill Period
Stockholder shall not Transfer, whether in one or in more than one transaction,
Restricted Securities that constitute 10.0% or more of the Company's Total
Voting Power to a single purchaser or to purchasers who are Affiliates of one
another or who are part of a group (a "THIRD PARTY PURCHASER"), unless it first
follows the practice set forth in this Section 2.18:
(a) Prior to making any offer to Transfer to a
Third Party Purchaser, Restricted Securities that constitute 10.0% or more of
the Company's Total Voting Power, Stockholder shall first offer such Restricted
Securities to the Company by sending written notice (a "BID REQUEST NOTICE") to
the Company that states the number of Restricted Securities proposed to be sold
(the OFFERED SECURITIES").
(b) For a period of 30 business days following
the delivery of the Bid Request Notice, the Company will have the right to offer
to purchase the Offered Securities at a price per share that the Company
communicates to Stockholder in a written notice (the "OFFER NOTICE"). The
Company's offer will be irrevocable for 10 business days after its delivery to
Stockholder. The failure of the Company to respond to a Bid Request Notice
within the 30 business day period will be deemed to be a waiver by the Company
of any right to purchase the Offered Securities.
(c) For a period of 10 business days after the
delivery of the Offer Notice, Stockholder may accept the Company's offer and
sell the Offered Securities to the Company. Stockholder's acceptance of the
offer must be in writing and delivered to the Company on or before the tenth
business day following receipt of the Offer Notice.
(d) Stockholder's acceptance of the Company's
offer will be irrevocable. The closing of the sale will take place no later than
10 business days following Stockholder's acceptance. The Company shall pay for
the Restricted Securities in cash by wire transfer to an account specified by
Stockholder in writing and Stockholder shall deliver certificates representing
the Offered Securities. Stockholder shall make representations and warranties to
the Company that Stockholder owns the Offered Securities, free and clear of any
liens, encumbrances or restrictions, and that Stockholder has full power and
authority to deliver the Offered Securities to the Company.
(e) If the Company delivers an Offer Notice to
Stockholder within the period specified in Section 2.18(b), and Stockholder does
not accept the Company's offer, then for a period of 120 days following the date
of the Offer Notice, Stockholder may sell all, but not less than all, of the
Offered Securities to a Third Party Purchaser at a price that is at least 105%
of the price set forth in the Company's Offer Notice. If the Company does not
deliver an Offer Notice within the period specified in Section 2.18(b), then for
a period of 150 days following the date of the Bid Request Notice, Stockholder
may sell all, but not less than all, of the Offered Securities to a Third Party
Purchaser. If the Offered Securities have not been sold within such 120-day
period (as extended, if necessary, pursuant to the preceding sentence), then
Stockholder has no right to sell any Offered Securities unless it provides the
Company with a new Offer pursuant to clause (a) of this Section 2.18.
(f) Unless Stockholder has accepted the
Company's offer to purchase the Offered Securities, Stockholder may Transfer the
Offered Securities at any price to any Third Party Purchaser so long as the
aggregate amount of Restricted Securities Transferred to the Third
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Party Purchaser is less than 10.0% of the Total Voting Power outstanding at the
time of each Transfer.
(g) The Company may assign its rights under this
Section 2.18 to other persons who will then be entitled to purchase such
securities.
SECTION 3. REGISTRATION RIGHTS
3.1 DEMAND REGISTRATION RIGHTS. (a) At any time during
the Registration Period, Stockholder may deliver to the Company a written
request (a "DEMAND REGISTRATION REQUEST") that the Company register any or all
of the Restricted Securities. The Company shall, as soon as practicable
following the Demand Registration Request, prepare and file a registration
statement (on a then appropriate form) with the SEC under the Securities Act,
covering such number of the Restricted Securities as Stockholder requests to be
included in such registration statement and to take all necessary steps to have
such Restricted Securities qualified for sale under state securities or blue sky
laws. The Company shall use its commercially reasonable efforts to have such
registration statement declared effective by the SEC (within the meaning of the
Securities Act) as soon as practicable thereafter and shall take all necessary
action (including, if required, the filing of any supplements or post-effective
amendments to such registration statement) to keep such registration statement
effective to permit the lawful sale of such Restricted Securities included
thereunder for a period of 90 days, subject, however, to the further terms and
conditions set forth in Sections 3.1(b) through (e) and Section 3.2 through 3.7.
(b) If the Company is eligible to register the
Stockholder's Restricted Securities for resale on a Form S-3 Registration, or
any successor short-form registration statement, Stockholder may exercise the
Demand Registration Rights more than one time, but cannot request registration
for less than 5% of the Total Voting Power outstanding at the time the request
is made. If the Company is not eligible to register the Stockholder's Restricted
Securities for resale on a Form S-3 Registration Statement, or any successor
short-form registration statement, Stockholder may exercise the Demand
Registration Rights only one time on a Form S-1 Registration Statement (or
successor form), and cannot request registration for less than 5% of the Total
Voting Power outstanding at the time the request is made.
(c) If preparation of a registration statement
is commenced by the Company in response to the exercise by Stockholder of the
Demand Registration Right, but that registration statement is not filed with the
SEC at the instance or request of the Company for any reason, Stockholder will
not be deemed to have exercised the Demand Registration Right.
(d) If any registration statement filed by the
Company with the SEC pursuant to the provisions of this Section 3.1 is withdrawn
prior to the completion of the sale or other disposition of the Restricted
Securities included thereunder, then the following provisions, whichever
applicable, will govern:
(i) If the withdrawal is effected at the
instance or upon the request of the Company for any reason other than the
failure of Stockholder to comply with its obligations hereunder with respect to
such registration, then the filing thereof by the Company will be excluded in
determining whether Stockholder has exercised any of its Demand Registration
Rights hereunder with respect to the filing of such registration statement.
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(ii) If the withdrawal is effected at the
instance or upon the request of Stockholder, then the filing thereof by the
Company will be deemed an exercise of the Demand Registration Right with respect
to the filing of such registration statement.
(e) The Company may delay the filing of any
registration statement, delay the effectiveness of any registration statement
once filed, or suspend the use of a prospectus forming a part of a registration
statement, for up to 90 days if the Company determines that it is in possession
of material non-public information the disclosure of which would, in the
reasonable judgment of the Company, have a material adverse effect on a pending
acquisition, disposition or financing transaction that is material to the
Company or would provide premature disclosure of information not otherwise
required to have been disclosed. The Company will not be required to maintain
the effectiveness of any Registration Statement on Form S-1 (or any successor
form) for more than 180 days. The Company shall provide notice to the
Stockholder of any delay or suspension, or termination of effectiveness under
this Section 3.1(e).
3.2 EXPENSES. Unless otherwise required by law, rule or
regulations, Stockholder shall bear and pay all fees, costs and expenses
incident to registration statements filed pursuant to Section 3.1 and incident
to keeping them effective and in compliance with all federal and state
securities laws, rules and regulations (including, without limitation,
registration fees, blue sky qualification fees and expenses, exchange listing
fees and expenses, reasonable legal fees and expenses (including the reasonable
legal fees and expenses of one law firm selected by Company and for all fees and
expenses of counsel to Stockholder), printing costs, costs of any special audits
or accounting fees), as well as underwriting discounts and commissions with
respect to its Restricted Securities included therein. Notwithstanding the
foregoing, the Company shall be responsible for its own legal fees and expenses,
the cost of obtaining its independent accountant's consent, and the costs of
preparing and filing the first two registration statements pursuant to Demand
Registration Rights, if the prospectus contained in the registration statements
are "non-marketing prospectuses;" that is, containing information required by
SEC rules but not lengthy business descriptions. A prospectus will be deemed to
be a "non-marketing prospectus" if it is of fewer than 10 pages in length. In
addition, if the Company is not eligible to register the Stockholder's
Restricted Securities for resale on a Form S-3 Registration Statement because
the Company, through its own actions or omissions, fails to meet the "Registrant
Requirements" set forth in General Instructions I.A of current Form S-3 (or
equivalent provisions of any successor form, but excluding limitations based on
market capitalization or similar concepts), the Company shall be responsible for
its own legal fees and expenses, the cost of obtaining its independent
accountant's consent, and the costs of preparing and filing one registration
statements on Form S-1 or any successor form, regardless of the length of the
prospectus. Stockholder has the right to select the Underwriter and selling
agents, subject to the Company's approval (which may not be unreasonably
withheld), in connection with registration relating to the exercise of its
Demand Registration Rights.
3.3 INFORMATION TO BE FURNISHED. If any of the Restricted
Securities are to be included in a registration statement under Section 3.1,
Stockholder and the Company shall furnish the following information and
documents:
(a) Stockholder shall furnish to the Company all
information required by the Securities Act to be furnished by sellers of
securities for inclusion in the registration statement, together with all such
information that Stockholder has or can reasonably obtain and
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that may reasonably be required by the Company in order to have such
registration statement become effective and such Restricted Securities qualified
for sale under applicable state securities laws.
(b) The Company shall make reasonably available
for inspection by Stockholder or by any Underwriter, attorney or other agent of
any Stockholder or Underwriter all information reasonably requested by such
Persons.
(c) The Company shall use its reasonable best
efforts to obtain, at Stockholder's expense except as provided in Section 3.2,
all legal opinions, auditors' consents, comfort letters and expert cooperation
necessary or deemed desirable by Stockholder to complete the registration
process.
3.4 REGISTRATION TO BE KEPT EFFECTIVE. In connection with
any registration of the Restricted Securities pursuant to this Agreement, the
Company shall, at Stockholder's expense, (a) keep effective and maintain such
registration and any related qualifications of the Restricted Securities under
state securities laws for such period as may be necessary for Stockholder, the
Underwriters and selling agents to dispose of such shares, from time to time to
amend or supplement the prospectus used in connection therewith to the extent
necessary to comply with applicable laws, and (b) furnish to Stockholder such
number of copies of the registration statement, the prospectus constituting a
part thereof, and any amendment or supplement thereto as Stockholder requests in
order to facilitate the disposition of the registered Restricted Securities.
3.5 CONDITIONS TO THE COMPANY'S OBLIGATIONS. The
obligations of the Company to cause the Restricted Securities owned by
Stockholder to be registered under the Securities Act are subject to each of the
following limitations, conditions and qualifications:
(a) The Company may require, as a condition to
fulfilling its obligations to register the Restricted Securities under Section
3.1, that Stockholder execute reasonable and customary indemnification
agreements for the benefit of the Underwriters of the registration; PROVIDED,
HOWEVER, that a Stockholder may not be required as such a condition to indemnify
the Underwriters except with respect to information furnished by Stockholder for
use in such registration statement.
(b) The Company will not be required to fulfill
any registration obligations under this Agreement if the Company provides
Stockholder with an opinion of counsel reasonably acceptable to Stockholder
stating that Stockholder is free to sell in the manner proposed by it the
Restricted Securities that Stockholder desires to register without registering
such Restricted Securities.
3.6 REGISTRATION UNDER STATE SECURITIES LAWS. The Company
shall use its best efforts, at Stockholder's expense, to register or qualify any
Restricted Securities included in a registration statement pursuant to Section
3.1 under state "blue sky" or similar securities laws in such jurisdictions as
Stockholder reasonably requests and to take such other action as may be
reasonably necessary to enable Stockholder to sell its Restricted Securities in
the jurisdiction where such registration or qualification was made, PROVIDED,
HOWEVER, that the Company will not be required to qualify to do business in any
jurisdiction in which it is not so qualified or to
12
execute a general consent to service of process in any jurisdiction in which it
has not executed such a consent.
3.7 RULE 144. The Company shall file any and all reports
required to be filed by it under the Exchange Act and the rules and regulations
adopted by the SEC thereunder, and shall take such further action as Stockholder
may request, all to the extent required from time to time to enable Stockholder
to sell the Restricted Securities without registration under the Securities Act
within the limitation of the exemptions provided by (a) Rule 144 under the
Securities Act, as such rule may be amended from time to time, or (b) any
similar rule or regulation hereafter adopted by the SEC.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Stockholder as follows:
4.1 CORPORATE EXISTENCE, DUE AUTHORIZATION AND EXECUTION
OF THE COMPANY. The Company is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware, with full
corporate power and authority to execute and deliver this Agreement, to perform
its obligations hereunder, and to consummate the transactions contemplated
hereby. This Agreement and the consummation of the transactions contemplated
hereby have been duly authorized by all necessary corporate action of the
Company. This Agreement has been duly executed and delivered by the Company and
constitutes a legal, valid and binding obligation of the Company, enforceable
against the Company in accordance with its terms.
4.2 NO CONFLICTS. The execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby does not
conflict with, or result in any violation of or default under, any provision of
the Certificate of Incorporation or Bylaws of the Company.
SECTION 5. REPRESENTATIONS AND WARRANTIES OF STOCKHOLDER
Stockholder represents and warrants to the Company as follows:
5.1 CORPORATE EXISTENCE, DUE AUTHORIZATION AND EXECUTION
OF STOCKHOLDER. Stockholder is a company duly formed, validly existing, and in
good standing under the laws of The Netherlands, with full power and authority
to execute and deliver this Agreement, to perform its obligations hereunder, and
to consummate the transactions contemplated hereby. This Agreement and the
consummation of the transactions contemplated hereby have been duly authorized
by all necessary action of Stockholder. This Agreement has been duly executed
and delivered by Stockholder and constitutes a legal, valid and binding
obligation of Stockholder, enforceable against Stockholder in accordance with
its terms.
5.2 NO CONFLICTS. The execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby does not
conflict with, or result in any violation of or default under, any provision of
the charter documents of Stockholder or of any agreement or instrument binding
upon Stockholder.
13
5.3 OWNERSHIP OF COMMON SHARES. As of the date of this
Agreement (a) Stockholder Beneficially Owns 2,102,100 Common Shares and (b)
neither Stockholder nor any Affiliate of Stockholder Beneficially Owns any other
Securities.
SECTION 6. OPTICAL INDUSTRY
6.1 NON-COMPETITION BY STOCKHOLDER. Commencing November
15, 2001, if and for so long as Stockholder has a right to designate a person to
be a Director of the Company pursuant to Section 2.11 of this Agreement,
Stockholder shall not, directly or indirectly through franchisees or otherwise,
engage in the ownership, operation or management of retail stores offering eye
care products in North America or the Carribean other than through the
participation by Stockholder in the Company or the Company's Affiliates.
6.2 NO CHANGE TO EXISTING NON-COMPETITION AGREEMENTS.
Nothing in this Agreement modifies or otherwise affects the existing covenants
not-to-compete contained in Article 6 of the Purchase Agreement dated as of 24
September, 1996 between the Company and HAL Investments B.V.
SECTION 7. MISCELLANEOUS
7.1 SPECIFIC ENFORCEMENT. The parties acknowledge and
agree that the Company or Stockholder would be irreparably damaged in the event
any provision of this Agreement were not performed in accordance with its
specific terms or were otherwise breached. It is accordingly agreed that the
Company or Stockholder will be entitled to an injunction or injunctions to
prevent breaches of this Agreement and to specifically enforce this Agreement
and the terms and provisions thereof in any action instituted in any court of
the United States or any state thereof having subject matter jurisdiction, in
addition to any other remedy to which the Company or Stockholder may be
entitled, at law or in equity.
7.2 MODIFICATION; WAIVER. (a) This Agreement may be
modified in any manner and at any time by written instrument executed by
Stockholder and the Company and (b) any of the terms, covenants, and conditions
of this Agreement may be waived at any time by the party entitled to the benefit
of such term, covenant or condition.
7.3 NOTICES. All notices, requests, demands, claims, and
other communications hereunder must be in writing and be delivered by certified
or registered mail (first class postage pre-paid), guaranteed overnight delivery
or facsimile transmission:
(a) if to the Company to:
Xxxx National Corporation
0000 Xxxxxxxxxxx Xxxxx
Xxxxxxxx Xxxxxxx, Xxxx 00000
ATTENTION: Chief Executive Officer
facsimile: 000-000-0000
with a copy to:
14
Xxxxx, Day, Xxxxxx & Xxxxx
000 Xxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxx 00000
ATTENTION: Xxxxx X. Xxxxxx
facsimile: 216-579-0212
(b) if to Stockholder to:
HAL International N.V.
0 Xxxxxx xxx Xxxxxxxxxxx
XX 00000 Xxxxxx
ATTENTION: Arie van't Hof
facsimile: 000-000-00000000
with a copy to:
HAL Investments Inc.
000 Xxxxxx Xxxxxx
Xxxxx 000
Xxxx Xxxx, Xxxxxxxxxx 00000
ATTENTION: Xxxx Xxxxxx
facsimile: 000-000-0000
and a copy to:
Xxxx, Weiss, Rifkind, Xxxxxxx & Xxxxxxxx
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
ATTENTION: Xxxxxxx Xxxxxx
facsimile: 212-757-3990
(c) or, in each case, at such other address or
to such other Person as may be specified in writing to the other party.
Any notice given by mail or guaranteed overnight delivery will be deemed
delivered, if sent in accordance with this Section 7.3, five business days after
the date of mailing, one business day after the date sent by guaranteed
overnight delivery, and immediately after a notice is given by facsimile if an
appropriate confirming receipt is received.
7.4 PARTIES IN INTEREST; ASSIGNMENT. This Agreement and
all the provisions hereof are binding upon and inure to the benefit of the
parties hereto and their respective successors and permitted assigns, but,
except as otherwise provided for in this Agreement, neither this Agreement nor
any of the rights, interests and obligations hereunder may be assigned by any
party hereto without the prior written consent of the other parties hereto.
Nothing in this Agreement, whether expressed or implied, is to be construed to
give any Person other than the parties hereto any legal or equitable right,
remedy or claim under or in respect of this Agreement.
7.5 COUNTERPARTS. This Agreement may be executed in one
or more counterparts, all of which constitute one and the same instrument.
15
7.6 HEADINGS; REFERENCES. The article and section
headings of this Agreement are for convenience of reference only and are not to
be deemed to alter or affect the meaning or interpretation of any provisions
hereof. Unless otherwise specified, references to "Articles", "Sections" and
"Schedules" are to Articles and Sections of, and Schedules to, this Agreement.
7.7 GOVERNING LAW; JURISDICTION; VENUE. This Agreement is
to be governed by and construed in accordance with the internal laws of the
State of Delaware applicable to contracts made and to be performed therein,
without regard to the conflicts of laws rules of such state. The parties agree
that the state and federal courts located in Cuyahoga County, Ohio, being the
county in which the Company currently has its principal headquarters, will have
exclusive jurisdiction in any action, suit or proceeding based on or arising out
of this Agreement and the parties hereby: (a) submit to the personal
jurisdiction of such courts; (b) consent to service of process in connection
with any action, suit or proceeding based on or arising out of this Agreement;
and (c) waive any requirement (whether imposed by statute, rule of court or
otherwise) with respect to personal jurisdiction, venue or service of process.
7.8 SEVERABILITY. If one or more of the provisions of
this Agreement are held by a court of competent jurisdiction to be invalid, void
or unenforceable, the remainder of the provisions of this Agreement will remain
in full force and effect.
7.9 TERMINATION. If at June 30, 2001, Stockholder
Beneficially Owns less than 20.0% of the Total Voting Power and thereafter
Stockholder's Beneficial Ownership drops to less than 15.0% of the Total Voting
Power, Sections 2, 3 and 6 of this Agreement will terminate and cease to be of
any further force or effect. Thereafter, Stockholder shall not purchase
Securities in excess of 15.0% of the Total Voting Power; provided, however, that
if the percentage ownership limitations (i) that would trigger the effects of
the rights issued under the New Rights Agreement (or any successor rights
agreement) with respect to any third party and (ii) that are contained in the
definitions of "interested stockholder" in ss.203 and Article Tenth, are
hereafter modified to a number that is higher than 15.0%, the 15.0% limitation
will increase to such higher limit.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the Company and Stockholder have caused their duly
authorized representatives to execute this Agreement as of the date first above
written.
XXXX NATIONAL CORPORATION
By: /s/ Xxxxxxx X. Xxxx
---------------------------------------
Name: Xxxxxxx X. Xxxx
Title: Chairman
HAL INTERNATIONAL N.V.
By: /s/ M. Van Der Vorm
---------------------------------------
Name: M. Van Der Vorm
Title: Managing Director
