EXHIBIT 2
INVESTOR'S AGREEMENT
This Investor's Agreement (the "Agreement") is made and entered
into on July 16, 1998, by and between Xxxxxxx-Xxxxxx, Inc., a Delaware
corporation (the "Company"), and Colony Investors III, L.P., a Delaware
limited partnership (the "Purchaser").
RECITALS
The Purchaser has, upon the terms and subject to the conditions
of a Stock Purchase Agreement, dated the date hereof (the "Stock Purchase
Agreement"), by and between the Company and the Purchaser, agreed to
acquire 440,085shares of Common Stock, $0.01 par value per share, of the
Company ("Common Stock"), and warrants (the "Warrants") to purchase an
additional 132,026 shares of Common Stock.
The Purchaser and the Company each desire to enter into this
Agreement for the purpose of regulating certain aspects of their
relationship with regard to the Company.
AGREEMENT
NOW THEREFORE, in consideration of the mutual covenants herein
contained and for other good and valuable consideration, the Purchaser and
the Company agree as follows:
ARTICLE I
DEFINITIONS
As used herein, the terms below shall have the following meanings.
Any such term, unless the context otherwise requires, may be used in the
singular or plural, depending upon reference.
"Affiliate" shall mean, with respect to any Person, (i) any Person or
entity directly or indirectly controlling or controlled by or under direct
or indirect common control with such Person, (ii) any spouse or non-adult
child (including by adoption) of any natural person described in clause (i)
above, (iii) any relative other than a spouse or non-adult child (including
by adoption) who has the same principal residence of any natural person
described in clause (i) above, (iv) any trust in which any such Persons
described in clause (i), (ii) or (iii) above has a beneficial interest and
(v) any corporation, partnership, limited liability company or other
organization of which any such Persons described in clause (i), (ii) or
(iii) above collectively own more than fifty percent (50%) of the equity of
such entity. For purposes of this definition, beneficial ownership of more
than ten percent (10%) of the voting common equity of a Person shall be
deemed to be control of such Person.
"Fully Diluted Common Stock" shall mean all of the Common Stock of the
Company, assuming conversion, exercise or exchange of all outstanding
convertible or exchangeable securities, options, rights, warrants and
similar instruments into or for Common Stock (regardless of whether such
convertible securities, options, warrants or similar securities are then
convertible or exercisable), except for compensatory stock options which
shall not be deemed outstanding unless they have vested. As provided in
Section 4.4, all such calculations shall be appropriately adjusted for
stock splits, stock dividends and other similar events as described
therein.
"Person" shall mean an individual, partnership, limited liability
company, joint venture, corporation, trust or unincorporated organization
or any other similar entity.
"Restricted Securities" shall mean any securities of the Company issued
and sold to the Purchaser pursuant to the Stock Purchase Agreement.
ARTICLE II
CORPORATE GOVERNANCE
2.1 Board of Directors. Upon the execution of this Agreement, and
until such time as the Purchaser and its Affiliates no longer collectively
beneficially own at least 50% of the Restricted Securities, the Company
hereby agrees (a) to take all action necessary such that from and after the
date hereof until the regularly scheduled 2001 annual meeting of the
Company's stockholders, the Board of Directors of the Company (the "Board")
shall include one Class III director designated by the Purchaser, and (b)
thereafter to use its best efforts to cause a person designated by the
Purchaser to be included in each slate of proposed Class III directors put
forth by the Company to its stockholders and recommended for election in
any proxy solicitation materials disseminated by the Company; provided,
however, that the identity of any nominee so designated by the Purchaser
other than Xxxxxx X. Xxxxxxx, Xx. and Xxxxxx X. Xxxxx shall be reasonably
acceptable to the Company; and provided, further, that if at any time the
nominee so designated by the Purchaser shall not be serving on the Board,
(i) the Purchaser shall have the continuing right to receive copies of all
materials distributed to members of the Board, (ii) the nominee designated
by the Purchaser shall have the right to participate substantially in all
meetings of the Board on a non-voting basis, and (iii) the Company shall
grant the Purchaser such other rights as may be necessary for the
Purchaser's investment in the Restricted Securities to continue to qualify
as a "venture capital investment" within the meaning of 29 C.F.R.
section 2510.3-101(d). The Company further agrees to cause the nominee
designated by the Purchaser in accordance with the foregoing to serve on
the Board of Directors of each subsidiary of the Company as the Purchaser
may from time to time request. Upon the death, resignation or removal of a
nominee designated by the Purchaser, the Company will use its best efforts
to have the vacancy filled by a person designated by the Purchaser. Board
members designated by the Purchaser shall be fully covered by any
directors' and officers' liability insurance maintained from time to time
on the same terms as the other members, shall be entitled to the benefit of
any indemnification arrangements applicable to the other members and shall
have the right to receive all fees paid and options and other awards
granted and expenses reimbursed to non-employee directors generally.
ARTICLE III
CERTAIN PURCHASE RIGHTS AND RESTRICTIONS
3.1 General. If, at any time when the Purchaser and its
Affiliates collectively own in excess of 5% of the Fully Diluted Common
Stock, the Company proposes to issue for cash any of its Common Stock or
other securities exercisable for, or convertible or exchangeable into,
Common Stock (collectively, the "Securities"), other than as provided in
Section 3.2, then the Company shall, no later than 30 days prior to the
consummation of such issuance, give written notice to the Purchaser of such
proposed issuance. Such notice shall describe the proposed issuance, and
contain an offer to sell to the Purchaser, at the same price and for the
same consideration to be paid by the proposed purchasers (but net of any
underwriting or similar fees, discounts or commissions), up to the
Purchaser's pro rata portion (which shall be a percentage equal to the
percentage of the Fully Diluted Common Stock held by the Purchaser and its
Affiliates) of the Securities to be sold. Subject to the foregoing, if
Common Stock is being issued with other Securities as a unit and such
Common Stock may only be purchased in connection therewith as a part of
such unit, the Purchaser must purchase such unit in order for such
acceptance to be valid. If the Purchaser fails to accept such offer by
written notice within 20 days after its receipt of the Company's notice,
the Company may proceed with such proposed issuance, free of any right on
the part of the Purchaser under this Section 3.1 in respect thereof.
3.2 Exceptions. The purchase right granted by Section 3.1 shall
not apply to: (i) compensatory issuances to employees, directors or
consultants or pursuant to related employee benefit or stock option plans
approved by the Board of Directors; (ii) Securities distributed or set
aside to all holders of Common Stock on a per share equivalent basis; (iii)
derivative securities (e.g., warrants) issued as customary "yield
enhancement" in connection with (a) the arrangement of bank credit or (b)
the issuance of debt securities or redeemable, non-convertible preferred
stock; (iv) any issuance of Securities upon the conversion, exercise or
exchange of derivative equity securities contemplated by or issued in
accordance with this Agreement; and (v) any issuance of Common Stock to the
Purchaser on the date hereof and any subsequent issuance of Additional
Warrants (as hereinafter defined).
3.3 Warrant Adjustment. In the event that, prior to January 16,
1999, (a) the Company completes an offering of its Common Stock or (b)
announces (by the filing of any registration statement with the Securities
and Exchange Commission, by press release or otherwise) an offering of its
Common Stock and completes such an offering prior to July 16, 1999 (any
such offering a "Subsequent Equity Offering"), the Company shall, upon each
Subsequent Equity Offering, issue warrants to the Purchaser (the
"Additional Warrants") initially exercisable for the number of shares
necessary to maintain the aggregate amount of Common Stock issuable
pursuant to the Warrants and the Additional Warrants at 3.0% of the Fully
Diluted Common Stock. The Additional Warrants shall have terms
substantially identical to the Warrants and shall have the same
registration rights.
3.4 Standstill Agreement. After acquiring the Restricted
Securities and except as further permitted under Section 3.1 or 3.3, the
Purchaser agrees not to acquire beneficial ownership of any other
Securities prior to July 15, 2001, without the prior written consent of the
Company, unless (after giving effect to such additional beneficial
ownership) Purchaser and its Affiliates do not collectively own in excess
of 20% of the Fully Diluted Common Stock.
ARTICLE IV
MISCELLANEOUS
4.1 Transfer Restrictions. The Purchaser agrees that it will not
transfer, sell or assign (other than transfers, sales or assignments to an
Affiliate of the Purchaser) any of the Restricted Securities prior to July
15, 1999 without the express written consent of the Company. Restricted
Securities sold to the public pursuant to an effective registration
statement or pursuant to Rule 144 promulgated under the Securities Act of
1933 shall no longer be subject to any of the provisions of this Agreement.
4.2 Successors, Assigns and Transferees. This Agreement shall be
binding upon and all rights hereto shall inure to the benefit of the
parties hereto and their respective legal representatives, heirs, legatees,
successors and permitted assigns subject to the terms of this Agreement.
4.3 Notices. Any notice, request, instruction or other document
to be given hereunder by any party hereto to another party hereto shall be
in writing, shall be deemed to have been duly given or delivered when
delivered personally or telecopied (receipt confirmed, with a copy sent by
reputable overnight courier), or one business day after delivery to a
reputable overnight courier, postage prepaid, to the address of the party
set forth below such person's signature on this Agreement or to such
address as the party to whom notice is to be given may provide in a written
notice to each of the other parties to this Agreement, a copy of which
written notice shall be on file with the Secretary of the Company.
4.4 Recapitalizations, etc. The provisions of this Agreement
(including any calculation of share ownership) shall apply, except to the
extent specifically set forth herein with respect to the Restricted
Securities, to any and all shares of capital stock of the Company or any
capital stock, partnership units or any other security evidencing ownership
interests in any successor or assign of the Company (whether by merger,
consolidation, sale of assets or otherwise) that may be issued in respect
of, in exchange for, or in substitution of the Common Stock by reason of
any stock dividend, split, reverse split, combination, recapitalization,
liquidation, reclassification, merger, consolidation or otherwise.
4.5 Inspection and Compliance with Law. Copies of this Agreement
will be available for inspection or copying by any holder of Restricted
Securities at the offices of the Company through the Secretary of the
Company. The Company shall take all reasonable action to insure that the
provisions of Delaware law relating to agreements similar to this Agreement
are promptly complied with.
4.6 Choice of Law. THIS AGREEMENT SHALL BE CONSTRUED, INTERPRETED
AND THE RIGHTS OF THE PARTIES DETERMINED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF DELAWARE (WITHOUT REGARD TO THE CONFLICT OF LAWS PROVISIONS
THEREOF).
4.7 Entire Agreement; Amendments and Waivers. This Agreement and
the Other Documents (as defined in the Stock Purchase Agreement) embody the
entire agreement and understanding of the parties hereto pertaining to the
subject matter hereof. This Agreement may not be amended except by an
instrument in writing signed by the parties hereto.
4.8 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
4.9 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 to the fullest extent permitted by law.
4.10 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.
4.11 Cumulative Remedies. All rights and remedies of either party
hereto are cumulative of each other and of every other right or remedy such
party may otherwise have at law or in equity, and the exercise of one or
more rights or remedies shall not prejudice or impair the concurrent or
subsequent exercise of other rights or remedies.
4.12 Term. Unless earlier terminated by an instrument in writing
amending this Agreement pursuant to Section 4.7, this Agreement shall
terminate upon the tenth anniversary of the effective date of this
Agreement. Notwithstanding the foregoing, this Agreement shall in any
event terminate with respect to the Purchaser when the Purchaser and its
Affiliates no longer own any shares of Restricted Securities.
IN WITNESS WHEREOF, the parties hereto have caused this Investor's
Agreement to be duly executed as of the date first above written.
XXXXXXX-XXXXXX, INC.
By: /s/ Xxxxxxx X. XxXxxxxx
________________________________
Name: Xxxxxxx X. XxXxxxxx
Title: CEO
Address: 000 Xxxxxxxx Xxxx., #000
Xxxxx Xxxxxx, Xxxxxxxxxx 00000
Telecopy: (000) 000-0000
COLONY INVESTORS III, L.P.
By: Colony Capital III, L.P.
By: ColonyGP III, Inc.
By: /s/ Xxxx X. Xxxxxxxx
________________________________
Name: Xxxx X. Xxxxxxxx
Title: Vice President
Address: c/o Colony Capital, Inc.
000 Xxxx Xxxxxx, Xxxxx 0000
Xxxx Xxxxx, Xxxxx 00000
Telecopy: (000) 000-0000
