EXECUTION COPY
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INVESTMENT AGREEMENT
DATED AS OF NOVEMBER 25, 1997
BETWEEN
LIH HOLDINGS II, LLC
AND
XXXX INTERNATIONAL HOLDINGS, INC.
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INVESTMENT AGREEMENT, dated as of November 25, 1997, between LIH
HOLDINGS II, LLC, a Delaware limited liability company (the "PURCHASER"), and
XXXX INTERNATIONAL HOLDINGS, INC., a Delaware corporation (the "COMPANY").
WHEREAS, LIH Holdings, LLC, a Delaware limited liability company ("LIH
HOLDINGS I"), and an Affiliate of the Purchaser, is presently the owner of
1,686,893 shares of Common Stock, par value $0.10 per share (the "COMMON
STOCK"), of the Company.
WHEREAS, pursuant to an Offer to Purchase dated the date hereof (the
"OFFER TO PURCHASE"), Xxxx Acquisition Corp., a Delaware corporation ("XXXX
ACQUISITION"), and a wholly-owned subsidiary of the Company intends to make a
tender offer to purchase for cash (the "TENDER OFFER") all of the issued and
outstanding shares of common stock, par value $.01 per share (the "TARGET COMMON
STOCK"), of Deflecta-Shield Corporation, a Delaware corporation ("TARGET"), at a
price of $16.00 per share of Target Common Stock (the "OFFER PRICE").
WHEREAS, pursuant to the Tender Offer, and subject to the terms and
conditions set forth in the Offer to Purchase, Xxxx Acquisition intends to
purchase not less than such number of shares of Target Common Stock which shall
constitute at least a majority of the issued and outstanding Target Common Stock
on a fully diluted basis (the "MINIMUM AMOUNT OF TARGET SHARES").
WHEREAS, as soon as practicable following the consummation of the
Tender Offer, the Company intends to effect a merger of Xxxx Acquisition with
and into Target (the "MERGER").
WHEREAS, in order to provide a portion of the funds required for the
consummation of the Tender Offer, Xxxx Acquisition has received a Commitment
Letter, dated the date hereof (the "COMMITMENT LETTER"), from Xxxxxx Financial,
Inc. in favor of Xxxx Acquisition.
WHEREAS, in order to provide a portion of the funds required for the
consummation of the Tender Offer, the Company desires to sell to the Purchaser,
and the Purchaser desires to purchase from the Company, 874,400 shares of Common
Stock and 1,493,398 shares of Series A Preferred Stock, par value $0.01 per
share (the "Series A Preferred Stock"), of the Company.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth in this Agreement, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto hereby agree as follows:
ARTICLE I
DEFINITION
I.1 DEFINITIONS. As used in this Agreement, the following defined
terms shall have the meanings indicated below:
"ACTIONS OR PROCEEDINGS" means any action, suit, proceeding,
arbitration or Governmental or Regulatory Authority investigation or audit.
"AFFILIATE" means, as applied to any Person, (i) any other Person
directly or indirectly controlling, controlled by or under common control with
that Person, (ii) any other Person that owns or controls 5% or more of any class
of equity securities (including any equity securities issuable upon the exercise
of any Option) of that Person or any of its Affiliates, or (iii) any member,
director, partner, officer, agent, employee or relative of such Person. For the
purposes of this definition, "control" (including with correlative meanings, the
terms "controlling", "controlled by", and "under common control with") as
applied to any Person, means the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies of that
Person, whether through ownership of voting securities or by contract or
otherwise. For the purpose of this Agreement, (i) neither the Purchaser, LIH
Holdings I, nor any of their respective Affiliates shall be deemed to be
"Affiliates" of the Company or any Subsidiary and (ii) neither the Company, any
Subsidiary, nor any of their respective Affiliates shall be deemed to be
"Affiliates" of the Purchaser or LIH Holdings I.
"AGREEMENT" means this Investment Agreement and the schedules hereto
and the certificates delivered in connection herewith, as the same may be
amended, modified or restated from time to time in accordance with the terms
hereof.
"AMENDED AND RESTATED GOVERNANCE AGREEMENT" means the Amended and
Restated Governance Agreement, dated as of the date hereof, among LIH Holdings
I, the Purchaser and the Company, in the form attached as EXHIBIT C.
"ASSETS AND PROPERTIES" of any Person means all assets and properties
of every kind, nature, character and description (whether real, personal or
mixed, whether tangible or intangible, whether absolute, accrued, contingent,
fixed or otherwise and wherever situated), including the goodwill related
thereto, operated, owned or leased by such Person, including without limitation
cash, cash equivalents, accounts and notes receivable, chattel paper, documents,
instruments, general intangibles, real estate, equipment, inventory, goods and
intellectual property.
"BUSINESS DAY" means a day other than Saturday, Sunday or any day on
which banks located in the State of New York or the State of Minnesota are
authorized or obligated to close.
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"BUSINESS OR CONDITION OF THE COMPANY" means the business, condition
(financial or otherwise), results of operations, and Assets and Properties of
the Company and the Subsidiaries taken as a whole.
"CHARTER" means the Certificate of Incorporation of the Company, as
amended, after giving effect to the filing of the Class B-1 Certificate of
Designation and the Series A Certificate of Designation with the Secretary of
State of the State of Delaware.
"CLAIM NOTICE" has the meaning ascribed to it in Section 9.2(a).
"CLASS B COMMON STOCK" has the meaning ascribed to it in Section 3.3.
"CLASS B-1 CERTIFICATE OF DESIGNATION" means the Certificate of
Designation with respect to the Class B-1 Common Stock in the form attached as
EXHIBIT A, to be filed with the Secretary of State of the State of Delaware
prior to the Closing.
"CLASS B-1 COMMON STOCK" has the meaning ascribed to it in
introductory paragraphs of this Agreement.
"CLOSING" means the closing of the transactions contemplated by
Section 2.2.
"CLOSING DATE" means the date on which the Closing actually occurs.
"COMMITMENT LETTER" has the meaning ascribed to it in the introductory
paragraphs of this Agreement.
"COMMON STOCK" has the meaning ascribed to it in introductory
paragraphs of this Agreement.
"COMPANY" has the meaning ascribed to it in the introductory
paragraphs of this Agreement.
"CONTRACT" means any agreement, lease, debenture, note, evidence of
Indebtedness, mortgage, indenture, security agreement or other contract or other
commitment (whether written or oral).
"CREDIT AGREEMENT" means the Credit Agreement to be entered into
between Xxxxxx Financial, Inc. and Xxxx Acquisition on or prior to the Closing
Date pursuant to the terms of the Commitment Letter.
"DISPUTE PERIOD" means the period ending thirty (30) calendar days
following receipt by an Indemnifying Party of an Indemnity Notice.
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"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated thereunder.
"FINANCIAL STATEMENT DATE" means June 30, 1997.
"GAAP" means United States generally accepted accounting principles,
consistently applied throughout the specified period and in all prior comparable
periods.
"GOVERNMENTAL OR REGULATORY AUTHORITY" means any court, tribunal,
arbitrator, authority, agency, commission, official or other instrumentality of
the United States, any foreign country or any domestic or foreign state, county,
city or other political subdivision, any arbitrator, tribunal or panel of
arbitrators and, shall include any stock exchange, quotation service and the
National Association of Securities Dealers.
"HSR ACT" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvement Act of
1976, as amended, and the rules and regulations promulgated thereunder.
"INDEBTEDNESS" of any Person means all obligations of such Person (i)
for borrowed money, (ii) evidenced by notes, bonds, debentures or similar
instruments, (iii) for the deferred purchase price of goods or services (other
than trade payables or accruals incurred in the ordinary course of business),
(iv) under capital leases and (v) in the nature of guarantees of the obligations
described in clauses (i) through (iv) above of any other Person.
"INDEMNIFIED PARTY" has the meaning ascribed to it in Section 9.1.
"INDEMNIFYING PARTY" has the meaning ascribed to it in Section 9.1.
"INDEMNITY NOTICE" has the meaning ascribed to it in Section 9.2(c).
"LAWS" means all laws, statutes, rules, regulations, ordinances and
other pronouncements having the effect of law of the United States, any foreign
country or any domestic or foreign state, county, city or other political
subdivision or of any Governmental or Regulatory Authority.
"LIENS" means any mortgage, pledge, assessment, security interest,
lease, lien, adverse claim, levy, charge or other encumbrance of any kind, or
any conditional sale Contract, title retention Contract or Contract committing
to grant any of the foregoing.
"LIH HOLDINGS I" has the meaning ascribed to it in the introductory
paragraphs of this Agreement.
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"LOSS" means any and all damages, fines, fees, penalties,
deficiencies, losses and expenses, including interest, reasonable expenses of
investigation, court costs, reasonable fees and expenses of attorneys,
accountants and other experts or other expenses of litigation or other
proceedings or of any claim, default or assessment (such fees and expenses to
include all fees and expenses, including, without limitation reasonable fees and
expenses of attorneys, incurred in connection with (i) the investigation or
defense of any Third Party Claims or (ii) asserting or disputing any rights
under this Agreement or any Transaction Document, against the Company and,
including as to any indemnifiable claim of the Purchaser, any diminution in the
value of the Shares.
"MERGER" has the meaning ascribed to it in the introductory paragraphs
of this Agreement.
"MERGER AGREEMENT" means the Agreement and Plan of Merger, dated as of
the date hereof, among the Company, Xxxx Acquisition and Target.
"MINIMUM AMOUNT OF TARGET SHARES" has the meaning ascribed to it in
the introductory paragraphs of this Agreement.
"OFFER PRICE" has the meaning ascribed to it in the introductory
paragraphs of this Agreement.
"OFFER TO PURCHASE" has the meaning ascribed to it in the introductory
paragraphs of this Agreement.
"OPTION" with respect to any Person means any security, right,
subscription, warrant, option, "phantom" stock right or other Contract that
gives the right to (i) purchase or otherwise receive or be issued any shares of
capital stock or other equity interests of such Person or any security of any
kind convertible into or exchangeable or exercisable for any shares of capital
stock or other equity interest of such Person or (ii) receive any benefits or
rights similar to any rights enjoyed by or accruing to the holder of shares of
capital stock or other equity interests of such Person, including without
limitation any rights to participate in the equity, income or election of
directors, management committee members or officers of such Person.
"ORDER" means any writ, judgment, decree, injunction or similar order
of any Governmental or Regulatory Authority (in each such case whether
preliminary or final).
"PERSON" or "PERSON" means any individual, corporation, joint stock
corporation, limited liability company or partnership, general partnership,
limited partnership, proprietorship, joint venture, other business organization,
trust, union, association, Governmental or Regulatory Authority or other entity
of any kind.
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"PREFERRED STOCK" has the meaning ascribed to it in Section 3.3.
"PURCHASE PRICE" has the meaning ascribed to it in Section 2.1.
"PURCHASER" has the meaning ascribed to it in the introductory
paragraphs of this Agreement.
"RESOLUTION PERIOD" means the period ending thirty (30) calendar days
following receipt by an Indemnified Party of a Dispute Notice.
"SECURITIES ACT" means the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.
"SERIES A CERTIFICATE OF DESIGNATION" means the Certificate of
Designation with respect to the Series A Preferred Stock in the form attached as
EXHIBIT B, to be filed with the Secretary of State of the State of Delaware
prior to the Closing.
"SERIES A PREFERRED STOCK" has the meaning ascribed to it in the
introductory paragraphs of this Agreement.
"SHARES" has the meaning ascribed to it in Section 2.1.
"SUBSIDIARY" means any Person in which the Company, directly or
indirectly through Subsidiaries or otherwise, beneficially owns more than fifty
percent (50%) of either the equity interests in, or the voting control of, such
Person.
"TARGET" has the meaning ascribed to it in the introductory paragraphs
of this Agreement.
"TARGET COMMON STOCK" has the meaning ascribed to it in the
introductory paragraphs of this Agreement.
"TENDER OFFER" has the meaning ascribed to it in the introductory
paragraphs of this Agreement.
"TENDER OFFER MATERIALS" means the Tender Offer Statement on Schedule
14D-1 to be filed by the Company and Xxxx Acquisition with the SEC pursuant to
Section 14(d)(1) of the Exchange Act, together with all exhibits thereto,
including the form of Offer to Purchase, as amended or supplemented from time to
time, in connection with the Tender Offer.
"THIRD PARTY CLAIM" has the meaning ascribed to it in Section 9.2(a).
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"TRANSACTION DOCUMENTS" means the Amended and Restated Governance
Agreement and any support or other agreement to be entered into between the
parties hereto in connection with the transactions contemplated by this
Agreement.
"VCOC" has the meaning ascribed to it in Section 5.3.
I.2 CERTAIN CONVENTIONS. Unless the context of this Agreement
otherwise requires, (i) words of any gender include each other gender, (ii)
words using the singular or plural number also include the plural or singular
number, respectively, (iii) the terms "hereof," "herein," "hereby" and
derivative or similar words refer to this entire Agreement, (iv) the terms
"Article" or "Section" refer to the specified Article or Section of this
Agreement, and (v) the phrases "ordinary course of business" and "ordinary
course of business consistent with past practice" refer to the business and
practice of the Company or a Subsidiary. All accounting terms used herein and
not expressly defined herein shall have the meanings given to them under GAAP.
ARTICLE II
SALE OF SHARES; CLOSING
II.1 PURCHASE AND SALE. On the terms and subject to the conditions of
this Agreement, at the Closing, the Company shall issue and sell to the
Purchaser, and the Purchaser shall purchase from the Company, 874,400 shares of
Common Stock and 1,493,398 shares of Series A Preferred Stock (together, the
"Shares"), free and clear of all Liens, for an aggregate purchase price (payable
in cash in the manner provided in Section 2.2) equal to $30,000,000 (the
"PURCHASE PRICE").
II.2 CLOSING. The Closing will take place at such location as the
parties mutually agree on the date on which each of the conditions precedent set
forth in Article VI and Article VII shall have been satisfied or waived as
provided therein. At the Closing, the Purchaser shall pay the Purchase Price by
wire transfer of immediately available funds to the account specified by the
Company by written notice delivered to the Purchaser at least two (2) Business
Days before the Closing Date. Simultaneously, the Company shall deliver to the
Purchaser certificates, registered in the name of the Purchaser, representing
the Shares. At the Closing, there shall also be delivered to the Company and
the Purchaser the opinions, certificates and other Contracts, documents and
instruments to be delivered under Articles VI and VII.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
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The Company represents and warrants to the Purchaser that the
statements contained in this Article III are true and correct as of the date of
this Agreement and will be true and correct as of the Closing Date (as though
made then and as though the Closing Date were substituted for the date of this
Agreement throughout this Article III).
III.1 ORGANIZATION OF THE COMPANY. The Company is a corporation
duly organized, validly existing and in good standing under the Laws of the
State of Delaware, is duly qualified, licensed or admitted to do business and is
in good standing in those jurisdictions in which the ownership, use or leasing
of its Assets and Properties or the conduct or nature of its business, makes
such qualification, licensing or admission necessary, except where the failure
to be so qualified, licensed, admitted or in good standing will not,
individually or in the aggregate, have a material adverse effect on the Business
or Condition of the Company.
III.2 POWER AND AUTHORITY. The Company has the requisite power
and authority to execute and deliver this Agreement and the Transaction
Documents to which it is a party, to perform its obligations hereunder and
thereunder, to consummate the transactions contemplated hereby and thereby and
to consummate the transactions contemplated by the Tender Offer Materials, the
Merger Agreement, the Commitment Letter and the Credit Agreement. The execution
and delivery by the Company of this Agreement and the Transaction Documents to
which it is a party, the performance by the Company of its obligations hereunder
and thereunder, the consummation of the transactions contemplated hereby and
thereby and the consummation of the transactions contemplated by the Tender
Offer Materials, the Merger Agreement, the Commitment Letter and the Credit
Agreement, have been duly and validly authorized by all necessary action on the
part of the Board of Directors of the Company, which action of the Board of
Directors is the only corporate action necessary therefor. This Agreement has
been duly and validly executed and delivered by the Company and constitutes, and
upon the execution and delivery by the Company of each Transaction Document to
which it is a party, each such Transaction Document will constitute, a legal,
valid and binding obligation of the Company, in each case enforceable against
the Company in accordance with its terms, except as the enforceability thereof
may be limited by bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium or other similar laws relating to the enforcement of creditors'
rights generally and by general principles of equity.
III.3 CAPITAL. As of the date hereof and prior to the
transactions contemplated by this Agreement, the Transaction Documents, the
Tender Offer Materials and the Credit Agreement, the authorized capital stock of
the Company consists of 25,000,000 shares of Common Stock, 3,000,000 shares of
Class B Common Stock, par value $0.01 (the "CLASS B COMMON STOCK"), and
2,000,000 shares of Preferred Stock, par value $0.01 (the "PREFERRED STOCK"), of
which (i) 4,393,970 shares of Common Stock are outstanding, all of which are
validly issued, fully paid and non-assessable, and have been issued in
compliance with all applicable federal and state securities laws, (ii) no shares
of Class B Common Stock are outstanding and (iii) no shares of Preferred Stock
are outstanding. Immediately after giving
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effect to the Closing and the other transactions contemplated by this Agreement,
the Transaction Documents, the Tender Offer Materials and the Credit Agreement
to occur on the Closing Date, (i) the authorized capital stock of the Company
will consist of 25,000,000 shares of Common Stock, 3,000,000 shares of Class B
Common Stock, of which 1,493,398 shares shall be designated Class B-1 Common
Stock, and 2,000,000 shares of Preferred Stock, of which 1,493,398 shares shall
be designated Series A Preferred Stock, in each case having the terms and
conditions specified in the Charter, and (ii) the outstanding capital stock of
the Company will consist of 5,268,370 shares of Common Stock and 1,493,398
shares of Series A Preferred Stock. Except for the Class B-1 Common Stock, the
Series A Preferred Stock or as set forth in SCHEDULE I hereto, there are no, and
immediately after giving effect to the Closing and the other transactions
contemplated by this Agreement, the Transaction Documents, the Tender Offer
Materials and the Credit Agreement to occur on the Closing Date, there will not
be any, outstanding Options with respect to the Company, no agreements,
arrangements or understandings to issue Options with respect to the Company and
no preemptive rights or agreements, arrangements or understandings to issue
preemptive rights with respect to the issuance or sale of the Company's capital
stock. Upon issuance at the Closing, the certificate or certificates
representing the Shares purchased hereunder to the Purchaser will grant the
Purchaser good and valid title to the Shares free and clear of all Liens, and
all the Shares will have been duly authorized, validly issued and fully paid and
will be nonassessable. The Company has taken all necessary corporate action to
reserve the full number of shares of Common Stock issuable upon conversion of
the Class B-1 Common Stock issuable upon conversion of the Series A Preferred
Stock included in the Shares, and the full number of shares of Class B-1 Common
Stock issuable upon conversion of the Series A Preferred Stock included in the
Shares. The Common Stock issuable upon conversion of the Class B-1 Common Stock
issuable upon conversion of the Series A Preferred Stock included in the Shares
and the Class B-1 Common Stock issuable upon conversion of the Series A
Preferred Stock included in the Shares, when issued upon such conversion, will
be duly authorized, validly issued, fully paid and nonassessable. Neither the
execution, delivery or performance by the Company of this Agreement or the
Transaction Documents to which it is a party, the issuance of the Shares as
contemplated hereby, the issuance of shares of Common Stock upon conversion of
the Class B-1 Common Stock issuable upon conversion of the Series A Preferred
Stock included in the Shares, the issuance of shares of Class B-1 Common Stock
issuable upon conversion of the Series A Preferred Stock included in the Shares,
nor the consummation of the transactions contemplated by this Agreement, the
Transaction Documents, the Tender Offer Materials, the Merger Agreement and the
Credit Agreement, will give rise to or result in (with or without notice, lapse
of time or both) any antidilution adjustment, acceleration of vesting or other
change under or to any Option, except as set forth in SCHEDULE I hereto.
III.4 SUBSIDIARIES. Each Subsidiary is a corporation duly
organized, validly existing and in good standing under the Laws of its
jurisdiction of incorporation and has full corporate power and authority to
conduct its business as and to the extent now conducted and to own, use and
lease its Assets and Properties. Each Subsidiary is duly qualified, licensed or
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admitted to do business and is in good standing in those jurisdictions in which
the ownership, use or leasing of such Subsidiary's Assets and Properties, or the
conduct or nature of its business, makes such qualification, licensing or
admission necessary, except where the failure to be so qualified, licensed,
admitted or in good standing will not, individually or in the aggregate, have a
material adverse effect on the Business or Condition of the Company. All of the
outstanding shares of capital stock of each Subsidiary have been duly authorized
and validly issued, are fully paid and nonassessable, and are owned,
beneficially and of record, by the Company or Subsidiaries wholly owned by the
Company, free and clear of all Liens. There are no outstanding Options with
respect to any Subsidiary. Except for the Subsidiaries, the Company holds no
equity, partnership, joint venture or other interest in any Person.
III.5 NO CONFLICTS. The execution and delivery by the Company of
this Agreement and the Transaction Documents to which it is a party, the
performance by the Company of its respective obligations hereunder and
thereunder, the consummation of the transactions contemplated hereby and thereby
(including, without limitation, the filing of the Class B-1 Certificate of
Designation and the Series A Certificate of Designation, the issuance of the
Shares, the issuance of the Common Stock upon conversion of the Class B-1 Common
Stock issuable upon conversion of the Series A Preferred Stock included in the
Shares, and the issuance of the Class B-1 Common Stock issuable upon conversion
of the Series A Preferred Stock included in the Shares), and the consummation of
the transactions contemplated by the Tender Offer Materials, the Merger
Agreement, the Commitment Letter and the Credit Agreement does not and will
not: (a) conflict with or result in a violation or breach of any of the terms,
conditions or provisions of the Company's certificate of incorporation or
by-laws; (b) conflict with or result in a violation or breach of any term or
provision of any Law or Order applicable to the Company or any Subsidiary or any
of their respective Assets and Properties; or (c) except as set forth on
SCHEDULE II hereto, (i) conflict with or result in a violation or breach of,
(ii) constitute (with or without notice or lapse of time or both) a default
under, (iii) require the Company or any Subsidiary to obtain any consent,
approval or action of, make any filing with or give any notice to any Person as
a result or under the terms of, (iv) result in any termination, cancellation,
acceleration or modification of, or give to any Person any right of termination,
cancellation, acceleration or modification in or with respect to, (v) give to
any Person any additional rights or entitlement to increased, additional,
accelerated or guaranteed payments under, (vi) other than liabilities under this
Agreement, the Transaction Documents and the transactions contemplated by this
Agreement, the Transaction Documents, the Tender Offer Materials, the Merger
Agreement, the Commitment Letter and the Credit Agreement, result in the
creation of any new, additional or increased liability of the Company or any
Subsidiary under or (vii) result in the creation or imposition of any Lien upon
the Company or any Subsidiary or any of their respective Assets and Properties
under, any Contract to which the Company or any Subsidiary is a party or by
which any of their respective Assets and Properties are bound.
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III.6 GOVERNMENTAL APPROVALS AND FILINGS. No consent, approval or
action of, filing with or notice to any Governmental or Regulatory Authority on
the part of the Company (other than as may be required under the HSR Act or the
Exchange Act and other than the filing of the Class B-1 Certificate of
Designation and the Series A Certificate of Designation with the Secretary of
State of the State of Delaware) is required in connection with the execution,
delivery and performance of this Agreement and the Transaction Documents, the
consummation of the transactions contemplated hereby and thereby or the
consummation of the transactions contemplated by the Tender Offer Materials, the
Merger Agreement, the Commitment Letter or the Credit Agreement.
III.7 SEC DOCUMENTS; FINANCIAL STATEMENTS. Each report, schedule,
form, statement and other document required to be filed by the Company with the
SEC, including, without limitation, the Tender Offer Materials (each an "SEC
DOCUMENT", and collectively, the "SEC DOCUMENTS") has been filed. As of its
filing date, each SEC Document complied in all material respects with the
applicable requirements of the Securities Act and the Exchange Act and none of
the SEC Documents, except to the extent that information contained in any SEC
Document has been revised or superseded by a later-filed or later declared
effective, as the case may be, SEC Document, contained any untrue statement of a
material fact or omitted to state a material fact (x) necessary in order to make
the statements therein, in light of the circumstances under which they were
made, not misleading or (y) required to be stated therein or necessary to make
the statements therein not misleading. The financial statements of the Company
included in the SEC Documents comply in all material respects with applicable
accounting requirements and the published rules and regulations of the SEC with
respect thereto, have been prepared in accordance with GAAP (except as may be
indicated in the notes thereto) and fairly present the consolidated financial
position of the Company and its consolidated Subsidiaries as of the dates
thereof and the consolidated results of their operations and cash flows for the
periods then ended (subject, in the case of unaudited statements, to normal
year-end audit adjustments which will not have or reflect a material adverse
effect on the Business or Condition of the Company).
III.8 ABSENCE OF CHANGES. Since the Financial Statement Date,
except as set forth in SCHEDULE III hereto or as disclosed in the SEC Documents
filed prior to the execution and delivery hereof, there has not been any event
or development which, individually or together with other such events, did have
or could reasonably be expected to have a material adverse effect on the
Business or Condition of the Company. None of the other representations or
warranties in this Agreement shall be deemed to limit the foregoing.
III.9 LEGAL PROCEEDINGS. There are no Actions or Proceedings
pending or, to the knowledge of the Company, overtly threatened against,
relating to or affecting the Company or any Subsidiary or any of their
respective Assets and Properties, which (i) could reasonably be expected to
result in the issuance of an Order restraining, enjoining or otherwise
prohibiting or making illegal the consummation of any of the transactions
contemplated by this Agreement, the Transaction Documents, the Tender Offer
Materials, the Merger Agreement, the Commitment
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Letter or the Credit Agreement, or (ii) if determined adversely to the Company
or such Subsidiary, could reasonably be expected to, individually or in the
aggregate, have a material adverse effect on the Business or Condition of the
Company.
III.10 OTHER NEGOTIATIONS; BROKERS. Neither the Company, any
Subsidiary, nor any of their respective Affiliates (nor any investment banker,
financial advisor, attorney, accountant or other Person retained by or acting
for or on behalf of the Company, any Subsidiary or any such Affiliate) (i) has
entered into any agreement that conflicts with any of the transactions
contemplated by this Agreement, the Transaction Documents, the Tender Offer
Materials, the Merger Agreement or the Credit Agreement or (ii) has entered into
any agreement or had any discussions with any third party regarding any
transaction involving the Company or any Subsidiary which could result in the
Purchaser, their respective members, or the general or limited partners,
members, officers, directors, employees, agents or Affiliates of any of them
being subject to any claim for liability to said third party in connection with
this Agreement, the Transaction Documents or the consummation of any of the
transactions contemplated hereby, thereby, by the Tender Offer Materials, by the
Merger Agreement or by the Credit Agreement. Other than Xxxxx Xxxxxxx Inc., the
fees and expenses of which will be paid by the Company, no agent, broker,
finder, investment banker, financial advisor or other similar Person will be
entitled to any fee, commission or other compensation in connection with any of
the transactions contemplated by this Agreement, the Transaction Documents, the
Tender Offer Materials, the Merger Agreement or the Credit Agreement on the
basis of any act or statement made or alleged to have been made by the Company,
any Subsidiary, any of their respective Affiliates, or any investment banker,
financial advisor, attorney, accountant or other Person retained by or acting
for or on behalf of the Company, any Subsidiary or any such Affiliate.
III.11 EXEMPTION FROM REGISTRATION; RESTRICTIONS ON OFFER AND SALE
OF SAME OR SIMILAR SECURITIES. Assuming the representations and warranties of
the Purchaser set forth in Section 4.3 are true and correct in all material
respects, the offer and sale of the Shares made pursuant to this Agreement is
exempt from the registration requirements of the Securities Act. Neither the
Company nor any Person (other than the Purchaser and its Affiliates as to which
no representation is made) authorized to act on its behalf has, in connection
with the offering of the Shares, engaged in (i) any form of general solicitation
or general advertising (as those terms are used within the meaning of Rule
502(c) under the Securities Act), (ii) any action involving a public offering
within the meaning of Section 4(2) of the Securities Act, or (iii) any action
that would require the registration under the Securities Act of the offering and
sale of the Shares pursuant to this Agreement or that would violate applicable
state securities or "blue sky" laws. Neither the Company nor any Person (other
than the Purchaser and its Affiliates as to which no representation is made)
authorized to act on its behalf has made, directly or indirectly, any offer or
sale of the Shares or of securities of the same or a similar class as the Shares
that could cause the offer and sale of the Shares contemplated hereby to fail
to be entitled to exemption from the registration requirements of the Securities
Act. As used herein, the terms "offer" and "sale" have the meanings specified
in Section 2(3) of the Securities Act.
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III.12 OTHER AGREEMENTS. Each of the representations and
warranties of the Company and Xxxx Acquisition contained in the Merger Agreement
are true and correct in all material respects (if not qualified by materiality)
and in all respects (if qualified by materiality) on and as of the date hereof.
Each of the representations and warranties to be contained in the Credit
Agreement shall be true and correct in all material respects (if not qualified
by materiality) and in all respects (if qualified by materiality) on and as of
the Closing Date.
III.13 DISCLOSURE. No representation or warranty contained in this
Agreement, and no statement contained in any Schedule or in any certificate,
list or other writing furnished to the Purchaser pursuant to any provision of
this Agreement, including, without limitation, pursuant to Article VI, contains
any untrue statement of a material fact or omits to state a material fact
necessary in order to make the statements herein or therein, in the light of the
circumstances under which they were made, not misleading.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser hereby represents and warrants to the Company that the
statements contained in this Article IV are true and correct as of the date of
this Agreement, and will be true and correct as of the Closing Date (as though
made then and as though the Closing Date was substituted for the date of this
Agreement throughout this Article IV).
IV.1 ORGANIZATION; POWER AND AUTHORITY. The Purchaser is a limited
liability company duly organized, validly existing and in good standing under
the Laws of the State of Delaware. The Purchaser has the requisite power and
authority to execute and deliver this Agreement, to perform its obligations
hereunder and to consummate the transactions contemplated hereby. The execution
and delivery by the Purchaser of this Agreement, the performance by the
Purchaser of its obligations hereunder and the consummation of the transactions
contemplated hereby have been duly and validly authorized by the Purchaser.
This Agreement has been duly and validly executed and delivered by the Purchaser
and constitutes the legal, valid and binding obligation of the Purchaser
enforceable against the Purchaser in accordance with its terms, except as the
enforceability hereof may be limited by bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium or other similar laws relating to the
enforcement of creditors' rights generally and by general principles of equity.
IV.2 NO CONFLICTS. The execution, delivery and performance of this
Agreement and the consummation by the Purchaser of the transactions contemplated
hereby will not conflict with, or constitute a default under, any agreement,
indenture or instrument to which the Purchaser is a party, or result in a
violation of the Purchaser's operating agreement or any order,
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judgment or decree of any court or Governmental or Regulatory Authority having
jurisdiction over the Purchaser or any of its properties, and, except for such
filings as may be required by the Exchange Act, no consent, authorization or
order of, or filing or registration with, any court or Governmental or
Regulatory Authority is required by the Purchaser for the execution, delivery
and performance of this Agreement.
IV.3 PURCHASE FOR INVESTMENT. The Shares will be acquired by the
Purchaser for its own account for the purpose of investment and not with a view
to the resale or distribution of all or any part of the Shares in violation of
the Securities Act, it being understood that the right to dispose of the Shares
shall, subject to the Amended and Restated Governance Agreement, be entirely
within the discretion of the Purchaser. The Purchaser is an "accredited
investor" (as such term is defined in Rule 501(a) of Regulation D under the
Securities Act). Purchaser has such knowledge and experience in financial and
business matters as to be able to evaluate the merits and risks of an investment
in the Shares and is able to bear the economic risk of its investment in the
Shares (including a complete loss of its investment). Purchaser understands
that the Shares have not been registered under the Securities Act or any state
securities laws by reason of an exemption from the registration requirements of
the Securities Act and such state securities laws, which depend upon, among
other things, the accuracy of the representations set forth herein.
IV.4 BROKERS. Other than Xxxxx Xxxxxxx Inc., the fees and expenses of
which will be paid by the Company, no agent, broker, finder, investment banker,
financial advisor or other similar Person will be entitled to any fee,
commission or other compensation in connection with any of the transactions
contemplated by this Agreement on the basis of any act or statement made by the
Purchaser.
ARTICLE V
COVENANTS OF THE COMPANY
V.1 REGULATORY AND OTHER APPROVALS. The Company shall and shall
cause each Subsidiary to (a) take all necessary or desirable steps and proceed
diligently and in good faith and use its best efforts, as promptly as
practicable, to obtain all consents, approvals or actions of, to make all
filings with and to give all notices to, Governmental or Regulatory Authorities
or any other Person required of the Company or any Subsidiary to consummate the
transactions contemplated by this Agreement, the Transaction Documents, the
Tender Offer Materials, the Merger Agreement, the Commitment Letter and the
Credit Agreement, (b) provide such other information and communications to such
Governmental or Regulatory Authorities or other Persons as the Purchaser or such
Governmental or Regulatory Authorities or other Persons may reasonably request
and (c) cooperate with the Purchaser as promptly as practicable in obtaining all
consents, approvals or actions of, making all filings with and giving all
notices to, Governmental or Regulatory Authorities or other Persons required of
the Purchaser to
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consummate the transactions contemplated by this Agreement, the Transaction
Documents, the Tender Offer Materials, the Merger Agreement, the Commitment
Letter and the Credit Agreement. The Company will provide prompt notification
to the Purchaser when any such consent, approval, action, filing or notice
referred to in clause (a) above is obtained, taken, made or given, as
applicable, and will advise the Purchaser of any communications (and, unless
precluded by Law, provide the Purchaser with copies of any such communications
that are in writing) with any Governmental or Regulatory Authority or other
Person regarding any of the transactions contemplated by this Agreement, the
Transaction Documents, the Tender Offer Materials, the Merger Agreement or the
Credit Agreement.
V.2 RESERVATION OF SHARES. The Company will, at all times that the
shares of Series A Preferred Stock included in the Shares are outstanding, keep
reserved (i) the full number of shares of Class B-1 Common Stock issuable upon
conversion of the shares of Series A Preferred Stock included in the Shares and
(ii) the full number of shares of Common Stock issuable upon conversion of the
shares of Class B-1 Common Stock issuable upon conversion of the Series A
Preferred Stock included in the Shares.
V.3 VENTURE CAPITAL OPERATING COMPANY STATUS. In the event that (i)
at any time the Purchaser is not entitled to designate at least one member for
election to the board of directors of the Company, or (ii) the United States
Department of Labor through formal or informal rules, regulations or
interpretations provides, or it is otherwise established through governmental or
court action, that such representation does not constitute the exercise of
management rights of the kind necessary to enable Harvest Partners III, L.P. to
continue to qualify as a "venture capital operating company" within the meaning
of Section 2510.3-101 of the plan asset regulations promulgated by the United
States Department of Labor (a "VCOC"), then the Company shall, acting through
its Board of Directors in a manner consistent with its fiduciary obligations and
the terms of the Amended and Restated Governance Agreement, grant to the
Purchaser such management rights as the Company shall determine, the exercise of
which would, in the opinion of counsel to the Purchaser, enable Harvest Partners
III, L.P. to continue to qualify as a VCOC.
V.4 TENDER OFFER MATERIALS. As soon as practicable after the
execution and delivery of this Agreement, the Company shall prepare the Tender
Offer Materials. The Company shall incorporate into the Tender Offer Materials
all revisions thereto with respect to descriptions of and references to the
Purchaser or any of its Affiliates and the terms of this Agreement, the
Transaction Documents and the transactions contemplated hereby or thereby
reasonably requested by the Purchaser, and the Company shall file the Tender
Offer Materials with the SEC as promptly as practicable after the execution and
delivery of this Agreement, and in any event within the time periods required by
the SEC. The Company shall promptly deliver to the Purchaser all Tender Offer
Materials and all other documents and materials filed with the SEC by the
Company, Xxxx Acquisition or Target in connection with the transactions
contemplated by this Agreement, the Transaction Documents, the Tender Offer
Materials, the
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Merger Agreement and the Credit Agreement. The Company shall promptly forward
to the Purchaser copies of any comments of the staff of the SEC to the Tender
Offer Materials and will incorporate into its reply and any revised Tender Offer
Materials all revisions thereto with respect to descriptions of and references
to the Purchaser or any of its Affiliates and the terms of this Agreement, the
Transaction Documents and the transactions contemplated hereby or thereby
reasonably requested by the Purchaser.
V.5 USE OF PROCEEDS. The Company shall use the proceeds from (i) the
purchase and sale of the Shares hereunder and (ii) the Credit Agreement in order
to consummate the Offer to Purchase and the Merger.
V.6 STOCKHOLDER CONSENT. The Company shall promptly (and, if
necessary, from time to time as requested by the Purchaser) call a stockholders
meeting for the purpose of approving the terms of the Class B-1 Common Stock and
the conversion of the Series A Preferred Stock into Class B-1 Common Stock
pursuant to the terms of the Series A Certificate of Designation.
V.7 NASDAQ NATIONAL MARKET. Prior to the Closing, the Company shall
cause the shares of Common Stock included in the Shares to be approved for
listing, subject to notice of issuance, by the Nasdaq National Market. As soon
as practicable after the approval of the stockholders of the Company of the
terms of the Class B-1 Common Stock and the conversion of the Series A Preferred
Stock into Class B-1 Common Stock pursuant to the terms of the Series A
Certificate of Designation, the Company shall cause the shares of Common Stock
issuable upon conversion of the Class B-1 Common Stock issuable upon conversion
of the Series A Preferred Stock included in the Shares to be approved for
listing, subject to notice of issuance, by the Nasdaq National Market.
V.8 NOTICE AND CURE. The Company shall notify the Purchaser promptly
in writing of, and contemporaneously shall provide the Purchaser with true and
complete copies of any and all information or documents relating to, and the
Company shall use its best efforts to cure before the Closing, any event,
transaction or circumstance that causes or shall cause any covenant or agreement
of the Company under this Agreement to be materially breached (if not qualified
by materiality or material adverse effect) or breached (if qualified by
materiality or material adverse effect) or that renders or shall render
materially untrue (if not qualified by materiality or material adverse effect)
or untrue (if qualified by materiality or material adverse effect) any
representation or warranty of the Company contained in this Agreement as if the
same were made on or as of the date of such event, transaction or circumstance.
The Company also shall notify the Purchaser promptly in writing of, and the
Company shall use its best efforts to cure, before the Closing, any material
violation or material breach (in each case, if not qualified by materiality or
material adverse effect) or any violation or breach (in each case, if qualified
by materiality or material adverse effect) of any representation, warranty,
covenant or agreement made by the Company in this Agreement, whether occurring
or arising before, on or
-16-
after the date of this Agreement. No notice given pursuant to this Section
shall have any effect on the representations, warranties, covenants or
agreements contained in this Agreement for purposes of determining satisfaction
of any condition contained herein or shall in any way limit the Purchaser's
right to seek indemnity under Article IX.
V.9 FULFILLMENT OF CONDITIONS. The Company shall take all steps
necessary or desirable and use its best efforts to satisfy each condition to the
obligations of the Purchaser contained in this Agreement and shall not take or
fail to take any action that could reasonably be expected to result in the
nonfulfillment of any such condition.
ARTICLE VI
CONDITIONS TO OBLIGATIONS OF THE PURCHASER
The obligations of the Purchaser hereunder are subject to the
fulfillment, at or before the Closing, of each of the following conditions (all
or any of which may be waived in whole or in part by the Purchaser in its sole
discretion):
VI.1 REPRESENTATIONS AND WARRANTIES. Each of the representations and
warranties made by the Company in this Agreement shall be true and correct in
all material respects (if not qualified by materiality or material adverse
effect) and in all respects (if qualified by materiality or material adverse
effect) on and as of the Closing Date as though such representation or warranty
was made on and as of the Closing Date.
VI.2 PERFORMANCE. The Company shall have performed and complied with
each agreement, covenant and obligation required by this Agreement to be so
performed or complied with by the Company at or before the Closing.
VI.3 OFFICERS' CERTIFICATES. The Company shall have delivered to the
Purchaser a closing certificate, dated the Closing Date and executed by the
President or any Vice President of the Company, substantially in the form and to
the effect of EXHIBIT D-1 hereto, and a certificate, dated the Closing Date and
executed by the Secretary or any Assistant Secretary of the Company,
substantially in the form and to the effect of EXHIBIT D-2 hereto.
VI.4 ORDERS AND LAWS. There shall not be in effect on the Closing
Date any Order or Law restraining, enjoining or otherwise prohibiting or making
illegal the consummation of any of the transactions contemplated by this
Agreement, the Transaction Documents, the Tender Offer Materials, the Merger
Agreement or the Credit Agreement.
VI.5 REGULATORY CONSENTS AND APPROVALS. All consents, approvals and
actions of, filings with and notices to any Governmental or Regulatory Authority
necessary to permit the
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Purchaser and the Company to perform their obligations under this Agreement and
the Transaction Documents and to consummate the transactions contemplated by
this Agreement, the Transaction Documents, the Tender Offer Materials, the
Merger Agreement and the Credit Agreement (i) shall have been duly obtained,
made or given, (ii) shall be in form and substance reasonably satisfactory to
the Purchaser, (iii) shall not be subject to the satisfaction of any condition
that has not been satisfied or waived and (iv) shall be in full force and
effect, and all terminations or expirations of waiting periods imposed by any
Governmental or Regulatory Authority necessary for the consummation of the
transactions contemplated by this Agreement, the Transaction Documents, the
Tender Offer Materials, the Merger Agreement and the Credit Agreement shall have
occurred.
VI.6 THIRD PARTY CONSENTS. All consents (or in lieu thereof waivers)
to the performance by the Purchaser and the Company of their obligations under
this Agreement and the Transaction Documents or to the consummation of the
transactions contemplated by this Agreement, the Transaction Documents, the
Tender Offer Materials, the Merger Agreement and the Credit Agreement as are
required under any Contract to which the Purchaser or the Company or any
Subsidiary is a party or by which any of their respective Assets and Properties
are bound and where the failure to obtain any such consent (or in lieu thereof
waiver) could reasonably be expected, individually or in the aggregate with
other such failures, to materially adversely affect the Purchaser or the
Business or Condition of the Company or otherwise result in a material
diminution of the benefits of the transactions contemplated by this Agreement,
the Transaction Documents, the Tender Offer Materials, the Merger Agreement or
the Credit Agreement to the Purchaser in its sole discretion, (i) shall have
been obtained, (ii) shall be in form and substance reasonably satisfactory to
the Purchaser, (iii) shall not be subject to the satisfaction of any condition
that has not been satisfied or waived and (iv) shall be in full force and
effect.
VI.7 OPINION OF COUNSEL. The Purchaser shall have received the
opinion of Xxxxxxx, Street and Deinard, counsel to the Company, dated the
Closing Date, in the form and to the effect reasonably satisfactory to the
Purchaser.
VI.8 CERTIFICATES OF DESIGNATION. The Purchaser shall have received
evidence satisfactory to it that the Class B-1 Certificate of Designation,
substantially in the form of EXHIBIT A hereto, and the Series A Certificate of
Designation, substantially in the form of EXHIBIT B hereto, shall each have been
duly filed with the Office of the Secretary of State of the State of Delaware
and become effective in accordance with their respective terms.
VI.9 TRANSACTION DOCUMENTS. Each of the Transaction Documents shall
have been duly executed and delivered by the respective parties thereto other
than the Purchaser and LIH Holdings I and shall be in full force and effect.
VI.10 DELIVERY OF CERTIFICATES. Duly executed certificates
representing the Shares shall have been delivered to the Purchaser.
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VI.11 [INTENTIONALLY OMITTED].
VI.12 MERGER AGREEMENT. The Purchaser shall have received an
executed copy of the Merger Agreement, and all amendments, waivers,
modifications and supplements thereto, which shall be in full force and effect
and which shall not impose any limitations on the exercise by any holder of
Class B-1 Common Stock or Series A Preferred Stock of any of its rights
(including without limitation rights of conversion or redemption under the Class
B-1 Common Stock or the Series A Preferred Stock, respectively).
VI.13 CREDIT AGREEMENT. The Purchaser shall have received an
executed copy of the Credit Agreement, and all amendments, waivers,
modifications and supplements thereto, which shall be in full force and effect
and which shall not impose any limitations on the exercise by any holder of
Class B-1 Common Stock or Series A Preferred Stock of any of its rights
(including without limitation rights of conversion or redemption under the Class
B-1 Common Stock or the Series A Preferred Stock, respectively).
VI.14 MINIMUM AMOUNT OF TARGET SHARES; OFFER PRICE. The Company
shall have acquired concurrently with the purchase and sale of the Shares
hereunder at least the Minimum Amount of Target Shares at a price per share
equal to the Offer Price, and there shall not have been any material change in
the number of shares of Target Common Stock outstanding since the date of the
execution and delivery of this Agreement.
VI.15 CONDITIONS TO RELATED TRANSACTIONS. Each of the conditions
precedent to the consummation of the transactions contemplated by the Tender
Offer Materials, the Merger Agreement and the Credit Agreement shall have been
satisfied in all material respects.
VI.16 NASDAQ NATIONAL MARKET. The Common Stock included in the
Shares shall have been approved for listing, subject to notice of issuance, by
the Nasdaq National Market.
VI.17 PROCEEDINGS. All proceedings to be taken on the part of the
Company in connection with the transactions contemplated by this Agreement and
all documents incident thereto shall be reasonably satisfactory in form and
substance to Purchaser and its legal counsel, and Purchaser shall have received
copies of all such documents and other evidence as Purchaser may reasonably
request in order to establish the consummation of such transactions and the
taking of all proceedings in connection therewith.
ARTICLE VII
CONDITIONS TO OBLIGATIONS OF THE COMPANY
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The obligations of the Company hereunder are subject to the
fulfillment, at or before the Closing, of each of the following conditions (all
or any of which may be waived in whole or in part by the Company in its sole
discretion):
VII.1 REPRESENTATIONS AND WARRANTIES. Each of the representations
and warranties made by the Purchaser in this Agreement shall be true and correct
in all material respects on and as of the Closing Date as though such
representation or warranty was made on and as of the Closing Date.
VII.2 PERFORMANCE. The Purchaser shall have performed and
complied with, in all material respects, each agreement, covenant and obligation
required by this Agreement to be so performed or complied with by the Purchaser
at or before the Closing.
VII.3 CERTIFICATE. The Purchaser shall have delivered to the
Company a certificate, dated the Closing Date and executed by a Manager of the
Purchaser, substantially in the form and to the effect of EXHIBIT E attached
hereto.
VII.4 ORDERS AND LAWS. There shall not be in effect on the
Closing Date any Orders or Laws that became effective after the execution and
delivery of this Agreement restraining, enjoining or otherwise prohibiting or
making illegal the consummation of any of the transactions contemplated by this
Agreement, the Transaction Documents, the Tender Offer Materials, the Merger
Agreement or the Credit Agreement.
VII.5 TRANSACTION DOCUMENTS. The Transaction Documents shall have
been duly executed and delivered by the respective parties thereto other than
the Company, and shall be in full force and effect.
VII.6 TENDER OFFER. At least the Minimum Amount of Target Shares
shall have been tendered to the Company at the Offer Price by the holders
thereof.
ARTICLE VIII
SURVIVAL OF REPRESENTATIONS, WARRANTIES,
COVENANTS AND AGREEMENTS
Notwithstanding any right of the Purchaser (whether or not exercised)
to investigate the affairs of the Company or any right of any party (whether or
not exercised) to investigate the accuracy of the representations and warranties
of another party contained in this Agreement or the waiver of any condition to
Closing, the Company, on the one hand, and the Purchaser, on the other hand,
have the right to rely fully upon the representations, warranties, covenants and
agreements of the other contained in this Agreement. The representations,
-20-
warranties, covenants and agreements of the Company and the Purchaser contained
in this Agreement will survive the Closing (a) indefinitely with respect to the
covenants and agreements herein and the representations and warranties contained
in Sections 3.1, 3.2, 3.3, 3.4 and 3.10 and 4.1 and 4.4 and (b) until the third
anniversary of the Closing Date with respect to all other representations and
warranties, except that any representation or warranty that would otherwise
terminate in accordance with clause (b) above will continue to survive if a
Claim Notice (as defined below) or Indemnity Notice (as defined below), as
applicable, shall have been timely given under Article IX on or prior to such
termination date, until the related claim for indemnification has been satisfied
or otherwise resolved as provided in Article IX, but only with respect to
matters described in such Claim Notice or Indemnity Notice.
ARTICLE IX
INDEMNIFICATION
IX.1 INDEMNIFICATION. Whether or not the transactions contemplated by
this Agreement are consummated, the Company (the "INDEMNIFYING PARTY") shall
indemnify the Purchaser and its Affiliates, and each of their respective
officers, directors, managers, partners, employees, agents, members and
stockholders (the "INDEMNIFIED PARTIES") in respect of, and hold each of them
harmless from and against, any and all Losses suffered, incurred or sustained by
any of them or to which any of them becomes subject, resulting from, arising out
of or relating to (i) any misrepresentation or breach of warranty or
nonfulfillment of or failure to perform any covenant or agreement on the part of
the Company contained in this Agreement, (ii) the assertion by any Person not a
party to this Agreement of any claim against an Indemnified Party in connection
with the matters or transactions that are the subject of or contemplated by this
Agreement, any of the Transaction Documents, the Tender Offer Materials, the
Merger Agreement or the Credit Agreement (including without limitation any claim
asserted in any actual or threatened Action or Proceeding with respect to (x)
any use made or proposed to be made of the proceeds from the issuance or sale of
the Shares or (y) the purchase of the Shares), (iii) violations of applicable
securities laws by the Company in connection with the offering of the Shares;
PROVIDED, HOWEVER, that no Indemnifying Party shall be obligated pursuant to
clause (ii) of this Section 9.1 to the extent that a Loss claimed thereunder is
finally adjudicated by a court of competent jurisdiction to have resulted
primarily from the negligence or wilful misconduct of the Indemnified Party
making such claim. The Company shall reimburse each Indemnified Party (whether
or not such Indemnified Party is a party to this Agreement) for all expenses
(including counsel fees and disbursements) as they are incurred by such
Indemnified Party in connection with investigating and preparing or defending
any Action or Proceeding referred to above (whether or not such Indemnified
Party is a formal party to any such Action or Proceeding). If and to the extent
that the indemnification set forth herein is finally determined by a court of
competent jurisdiction to be unenforceable, the Company shall make the maximum
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contribution to the payment and satisfaction of the indemnified Losses as shall
be permissible under applicable laws.
IX.2 METHOD OF ASSERTING CLAIMS. All claims for indemnification by
any Indemnified Party under Section 9.1 will be asserted and resolved as
follows:
(a) In order for an Indemnified Party to be entitled to any
indemnification provided for under Section 9.1 in respect of, arising out of or
involving a claim or demand made by any Person not a party to this Agreement
against the Indemnified Party (a "THIRD PARTY CLAIM"), the Indemnified Party
must deliver a claim notice (a "CLAIM NOTICE") to the Indemnifying Party within
thirty (30) Business Days after receipt by such Indemnified Party of written
notice of the Third Party Claim; PROVIDED, HOWEVER, that failure to give such
Claim Notice shall not affect the indemnification provided hereunder except to
the extent the Indemnifying Party shall have been actually prejudiced as a
result of such failure.
(b) If a Third Party Claim is made against an Indemnified Party, the
Indemnifying Party shall be entitled to participate in the defense thereof and,
if it so chooses, to assume the defense thereof with counsel selected by the
Indemnifying Party, which counsel must be reasonably satisfactory to the
Indemnified Party. Subject to the next sentence, should the Indemnifying Party
so elect to assume the defense of a Third Party Claim, the Indemnifying Party
shall not be liable to the Indemnified Party for legal expenses subsequently
incurred by the Indemnified Party in connection with the defense thereof, but
shall continue to pay for any expenses of investigation or any Loss suffered;
and if the Indemnifying Party assumes such defense, the Indemnified Party shall
have the right to participate in such defense and to employ counsel, at its own
expense, separate from the counsel employed by the Indemnifying Party. If (i)
the Indemnifying Party shall not assume the defense of a Third Party Claim with
counsel satisfactory to the Indemnified Party within twenty Business Days of any
Claim Notice, or (ii) legal counsel for the Indemnified Party notifies the
Indemnifying Party in writing that there are or may be legal defenses available
to the Indemnified Party or to other Indemnified Parties which are different
from or additional to those available to the Indemnifying Party, which, if the
Indemnified Party and the Indemnifying Party were to be represented by the same
counsel, would constitute a conflict of interest for such counsel or prejudice
prosecution of the defenses available to such Indemnified Party, or (iii) the
Indemnifying Party shall assume the defense of a Third Party Claim and fail to
diligently prosecute such defense, then in each such case the Indemnified Party,
by notice to the Indemnifying Party, may employ its own counsel and control the
defense of the Third Party Claim and the Indemnifying Party shall be liable for
the reasonable fees, charges and disbursements of counsel employed by the
Indemnified Party; ad the Indemnified Party shall be promptly reimbursed for any
such fees, charges and disbursements, as and when incurred. Whether the
Indemnifying Party or the Indemnified Party controls the defense of any Third
Party Claim, the parties hereto shall cooperate in the defense thereof. Such
cooperation shall include the retention and provision to the counsel of the
controlling party of records and information which are reasonably relevant to
such Third Party
-22-
Claim, and making employees available on a mutually convenient basis to provide
additional information and explanation of any material provided hereunder. The
Indemnifying Party shall have the right to settle, compromise or discharge a
Third Party Claim (other than any such Third Party Claim in which criminal
conduct is alleged) without the Indemnified Party's consent if such settlement,
compromise or discharge (i) constitutes a complete and unconditional discharge
and release of the Indemnified Party, and (ii) provides for no relief other than
the payment of monetary damages and such monetary damages are paid in full by
the Indemnifying Party. Any amounts reimbursed to any Indemnified Party
hereunder with respect to a particular Third Party Claim shall be repaid to the
Indemnifying Party in the event that it is finally adjudicated by a court of
competent jurisdiction that such Indemnified Party is not entitled to
indemnification by the Indemnifying Party with respect to such Third Party
Claim.
(c) In the event any Indemnified Party shall have a claim under
Section 9.1 against any Indemnifying Party that does not involve a Third Party
Claim, the Indemnified Party shall deliver an indemnity notice (an "INDEMNITY
NOTICE") with reasonable promptness to the Indemnifying Party. The failure by
any Indemnified Party to give the Indemnity Notice shall not impair such party's
rights hereunder except to the extent that an Indemnifying Party demonstrates
that it has been materially prejudiced thereby. If the Indemnifying Party
notifies the Indemnified Party that it does not dispute the claim described in
such Indemnity Notice or fails to notify the Indemnified Party within the
Dispute Period whether the Indemnifying Party disputes the claim described in
such Indemnity Notice, the Loss in the amount specified in the Indemnity Notice
will be conclusively deemed a liability of the Indemnifying Party under Section
9.1 and the Indemnifying Party shall pay the amount of such Loss to the
Indemnified Party on demand. If the Indemnifying Party has timely disputed its
liability with respect to such claim, the Indemnifying Party and the Indemnified
Party will proceed in good faith to negotiate a resolution of such dispute, and
if not resolved through negotiations within the Resolution Period, such dispute
shall be resolved by litigation in a court of competent jurisdiction.
(d) The rights accorded to Indemnified Parties hereunder shall be in
addition to any rights that any Indemnified Party may have at law or in equity,
under federal and state securities laws by separate agreement or otherwise.
ARTICLE X
TERMINATION
X.1 TERMINATION. This Agreement may be terminated, and the
transactions contemplated hereby may be abandoned:
(a) at any time before the Closing, by mutual written agreement of
the Company and the Purchaser;
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(b) at any time before the Closing, by the Company or the Purchaser
in the event (i) of a material breach hereof by the non-terminating party if
such non-terminating party fails to cure such breach within five (5) Business
Days following notification thereof by the terminating party or (ii) upon
notification of the non-terminating party by the terminating party that the
satisfaction of any condition to the terminating party's obligations under this
Agreement becomes impossible or impracticable with the use of commercially
reasonable efforts if the failure of such condition to be satisfied is not
caused by a breach hereof by the terminating party; and
(c) at any time after June 30, 1998 by the Company or the Purchaser,
upon notification of the non-terminating party by the terminating party, if the
Closing shall not have occurred on or before such date and such failure to
consummate is not caused by a breach of this Agreement by the terminating party.
X.2 EFFECT OF TERMINATION. If this Agreement is validly terminated
pursuant to Section 10.1, this Agreement will forthwith become null and void,
and there will be no liability or obligation on the part of the Company or the
Purchaser, except as provided in the next two (2) succeeding sentences and
except that the provisions with respect to expenses in Section 11.3 will
continue to apply following any such termination. Notwithstanding any other
provision in this Agreement to the contrary, upon termination of this Agreement
pursuant to Section 10.1(b) or (c), the Company will remain liable to the
Purchaser for any misrepresentation or breach of warranty or nonfulfillment of
or failure to perform any covenant or agreement of the Company existing at the
time of such termination, and the Purchaser will remain liable to the Company
for any misrepresentation or breach of warranty or nonfulfillment of or failure
to perform any covenant or agreement of the Purchaser existing at the time of
such termination. Each of the Company and the Purchaser may seek such remedies,
including damages and reimbursement for fees and expenses of attorneys, against
the other with respect to any misrepresentation, breach, nonfulfillment or
failure referred to above as provided under this Agreement, including, its
remedies under Article IX with respect thereto, or as are otherwise available at
Law or in equity.
ARTICLE XI
MISCELLANEOUS
XI.1 NOTICES. All notices, requests and other communications
hereunder must be in writing and will be deemed to have been duly given only if
delivered personally against written receipt or by facsimile transmission or
mailed by prepaid first class certified mail, return receipt requested, or
mailed by overnight courier prepaid, to the parties at the following addresses
or facsimile numbers:
-24-
(a) If to the Purchaser, to:
LIH Holdings II, LLC
c/o Harvest Partners, Inc.
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile No: (000) 000-0000
Attn: Xxx X. Xxxxxxxx
with a copy (which shall not constitute notice) to:
Xxxxxx, Xxxxx & Bockius LLP
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile No: (000) 000-0000
Attn: Xxxxxx Xxxxxx, Esq.
(b) If to the Company, to:
Xxxx International Holdings, Inc.
000 Xxxx Xxxxxxxxx
Xxxxx, Xxxxxxxxx 00000
Facsimile No:
Attn: Chief Executive Officer
with a copy (which shall not constitute notice) to:
Xxxxxxx, Street and Deinard
000 Xxxxx Xxxxx Xxxxxx
Xxxxx 0000
Xxxxxxxxxxx, Xxxxxxxxx 00000
Facsimile No: (000) 000-0000
Attn: Xxxx Xxxxx, Esq.
All such notices, requests and other communications will (i) if delivered
personally to the address as provided in this Section, be deemed given upon
delivery, (ii) if delivered by facsimile transmission to the facsimile number as
provided in this Section, be deemed given upon receipt, (iii) if delivered by
mail in the manner described above to the address as provided in this Section,
be deemed given on the earlier of the third Business Day following mailing or
upon receipt and (iv) if delivered by overnight courier to the address as
provided in this Section, be deemed given on the earlier of the first Business
Day following the date sent by such overnight courier or upon receipt (in each
case regardless of whether such notice, request or other
-25-
communication is received by any other Person to whom a copy of such notice is
to be delivered pursuant to this Section). Any party from time to time may
change its address, facsimile number or other information for the purpose of
notices to that party by giving notice specifying such change to the other party
hereto.
XI.2 ENTIRE AGREEMENT. This Agreement and the Transaction Documents
supersede all prior discussions and agreements between the parties with respect
to the subject matter hereof and thereof and contain the sole and entire
agreement between the parties hereto with respect to the subject matter hereof
and thereof.
XI.3 FEES AND EXPENSES. In the event that (i) the transactions
contemplated by this Agreement are consummated or (ii) this Agreement is
terminated other than pursuant to Section 10.1(b) by reason of a material breach
by Purchaser, the Company shall reimburse the Purchaser for all the reasonable
fees and expenses (including the fees and expenses of counsel, consultants and
accountants), incurred by the Purchaser prior to the Closing in connection with
this Agreement, the other Transaction Documents and the transactions
contemplated hereby or thereby.
XI.4 FURTHER ASSURANCES At any time and from time to time after the
Closing, the Company shall execute and deliver to the Purchaser such other
documents and instruments, provide such materials and information and take such
other actions as the Purchaser may reasonably request more effectively to vest
title to the Shares in the Purchaser and to otherwise cause the Company to
fulfill its other obligations under this Agreement and the Transaction
Documents.
XI.5 WAIVER. Any term or condition of this Agreement may be waived at
any time by the party that is entitled to the benefit thereof, but no such
waiver shall be effective unless set forth in a written instrument duly executed
by or on behalf of the party waiving such term or condition. No waiver by any
party of any term or condition of this Agreement, in any one or more instances,
shall be deemed to be or construed as a waiver of the same or any other term or
condition of this Agreement on any future occasion. All remedies, either under
this Agreement or by Law or otherwise afforded, will be cumulative and not
alternative.
XI.6 AMENDMENT. This Agreement may be amended, supplemented or
modified only by a written instrument duly executed by or on behalf of each
party hereto.
XI.7 THIRD PARTY BENEFICIARIES. The terms and provisions of this
Agreement are intended solely for the benefit of each party hereto and their
respective successors and permitted assigns, and it is not the intention of the
parties to confer third-party beneficiary rights, and this Agreement does not
confer any such rights, upon any other Person other than any Person entitled to
indemnity under Article IX.
-26-
XI.8 NO ASSIGNMENT; BINDING EFFECT. Neither this Agreement nor any
right, interest or obligation hereunder may be assigned (by operation of Law or
otherwise) by the Company without the prior written consent of the Purchaser and
any attempt to do so will be void AB INITIO. Neither this Agreement nor any
right, interest or obligation hereunder may be assigned by the Purchaser without
the prior written consent of the Company and any attempt to do so will be void
AB INITIO; PROVIDED, HOWEVER, that the Purchaser may, to the extent applicable,
assign any or all of such right, interest or obligation in connection with a
transfer of all or any part of the Purchaser's interests in the Company
permitted under the Amended and Restated Governance Agreement. Subject to the
preceding sentence, this Agreement shall bind and inure to the benefit of and be
enforceable by the parties hereto and their respective successors and assigns,
including, without limitation, any holder of the Shares.
XI.9 HEADINGS; CONSTRUCTION. The headings used in this Agreement have
been inserted for convenience of reference only and do not define or limit the
provisions hereof. The parties hereto agree that this Agreement is the product
of negotiation between sophisticated parties and individuals, all of whom were
represented by counsel, and each of whom had an opportunity to participate in
and did participate in, the drafting of each provision hereof. Accordingly,
ambiguities in this Agreement, if any, shall not be construed strictly or in
favor of or against any party hereto but rather shall be given a fair and
reasonable construction without regard to the rule of CONTRA PROFERENTUM. The
words "include," "includes" and "including" shall be deemed to be followed by
the phrase "without limitation."
XI.10 INVALID PROVISIONS. If any provision of this Agreement is
held to be illegal, invalid or unenforceable under any present or future Law,
and if the rights or obligations of any party hereto under this Agreement
will not be materially and adversely affected thereby, (i) such provision
will be fully severable, (ii) this Agreement will be construed and enforced
as if such illegal, invalid or unenforceable provision had never comprised a
part hereof, (iii) the remaining provisions of this Agreement will remain in
full force and effect and will not be affected by the illegal, invalid or
unenforceable provision or by its severance here from and (iv) in lieu of
such illegal, invalid or unenforceable provision, there will be added
automatically as a part of this Agreement a legal, valid and enforceable
provision as similar in terms to such illegal, invalid or unenforceable
provision as may be possible.
XI.11 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York, without
giving effect to any choice of law or conflict of law provision or rule
(whether of the State of New York or any other jurisdiction) that would cause
the application of the laws of any jurisdiction other than the State of New
York.
XI.12 COUNTERPARTS. This Agreement may be executed in any number
of counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same instrument.
-27-
XI.13 LIMITED RECOURSE. Notwithstanding anything in this
Agreement, any Transaction Document or any other document, agreement or
instrument contemplated hereby to the contrary, the obligations of the Purchaser
hereunder shall be without recourse to any Affiliate of the Purchaser or any
stockholder, partner, member, officer, director, manager, employee or agent of
Purchaser or such Affiliates, and shall be limited to the assets of the
Purchaser.
XI.14 CONSENT TO JURISDICTION AND SERVICE OF PROCESS. EACH OF THE
COMPANY AND THE PURCHASER CONSENTS TO THE JURISDICTION OF ANY STATE OR FEDERAL
COURT LOCATED WITHIN THE COUNTY OF NEW YORK, STATE OF NEW YORK AND IRREVOCABLY
AGREES THAT ALL ACTIONS OR PROCEEDINGS RELATING TO THIS AGREEMENT OR THE
TRANSACTION DOCUMENTS MAY BE LITIGATED IN SUCH COURTS. EACH OF THE COMPANY AND
THE PURCHASER ACCEPTS FOR ITSELF AND IN CONNECTION WITH ITS RESPECTIVE
PROPERTIES, GENERALLY AND UNCONDITIONALLY, THE NONEXCLUSIVE JURISDICTION OF THE
AFORESAID COURTS AND WAIVES ANY DEFENSE OF FORUM NON CONVENIENS, AND IRREVOCABLY
AGREES TO BE BOUND BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION WITH THIS
AGREEMENT OR THE TRANSACTION DOCUMENTS. EACH OF THE COMPANY AND THE PURCHASER
FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OUT OF ANY OF THE
AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES
THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO THE PARTY AT THE
ADDRESS SPECIFIED IN THIS AGREEMENT, SUCH SERVICE TO BECOME EFFECTIVE FIFTEEN
(15) DAYS AFTER SUCH MAILING. NOTHING HEREIN SHALL IN ANY WAY BE DEEMED TO
LIMIT THE ABILITY OF ANY PARTY HERETO TO SERVE ANY SUCH LEGAL PROCESS, SUMMONS,
NOTICES AND DOCUMENTS IN ANY OTHER MANNER PERMITTED BY APPLICABLE LAW OR TO
OBTAIN JURISDICTION OVER OR TO BRING ACTIONS, SUITS OR PROCEEDINGS AGAINST ANY
OF THE OTHER PARTIES HERETO IN SUCH OTHER JURISDICTIONS, AND IN SUCH MANNER, AS
MAY BE PERMITTED BY ANY APPLICABLE LAW.
[SIGNATURE PAGE TO FOLLOW]
-28-
IN WITNESS WHEREOF, this Agreement has been duly executed and
delivered by the duly authorized officer of each party hereto as of the date
first above written.
LIH HOLDINGS II, LLC
By: /s/ Xxx Xxxxxxxx
--------------------------------
Name: Xxx Xxxxxxxx
Title: Manager
XXXX INTERNATIONAL HOLDINGS, INC.
By: /s/ Xxxxxxx XxXxxxx
--------------------------------
Name: Xxxxxxx X. XxXxxxx
Title: President
[SIGNATURE PAGE TO INVESTMENT AGREEMENT]
SCHEDULE I
(Section 3.3)
None
SCHEDULE II
(Section 3.5)
None
SCHEDULE III
(Section 3.8)
None
TABLE OF CONTENTS
ARTICLE I DEFINITION
1.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
1.2 Certain Conventions . . . . . . . . . . . . . . . . . . . . . . . . .7
ARTICLE II SALE OF SHARES; CLOSING
2.1 Purchase and Sale. . . . . . . . . . . . . . . . . . . . . . . . . . .7
2.2 Closing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY
3.1 Organization of the Company.. . . . . . . . . . . . . . . . . . . . .7
3.2 Power and Authority. . . . . . . . . . . . . . . . . . . . . . . . . .8
3.3 Capital. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8
3.4 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9
3.5 No Conflicts . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.6 Governmental Approvals and Filings . . . . . . . . . . . . . . . . . 10
3.7 SEC Documents; Financial Statements. . . . . . . . . . . . . . . . . 10
3.8 Absence of Changes . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.9 Legal Proceedings. . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.10 Other Negotiations; Brokers. . . . . . . . . . . . . . . . . . . . . 11
3.11 Exemption from Registration; Restrictions on Offer and Sale of Same
or Similar Securities. . . . . . . . . . . . . . . . . . . . . . . . 12
3.12 Other Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.13 Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
4.1 Organization; Power and Authority. . . . . . . . . . . . . . . . . . 13
4.2 No Conflicts . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
4.3 Purchase for Investment. . . . . . . . . . . . . . . . . . . . . . . 13
4.4 Brokers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
ARTICLE V COVENANTS OF THE COMPANY
5.1 Regulatory and Other Approvals . . . . . . . . . . . . . . . . . . . 14
5.2 Reservation of Shares. . . . . . . . . . . . . . . . . . . . . . . . 14
5.3 Venture Capital Operating Company Status . . . . . . . . . . . . . . 14
5.4 Tender Offer Materials . . . . . . . . . . . . . . . . . . . . . . . 15
5.5 Use of Proceeds. . . . . . . . . . . . . . . . . . . . . . . . . . . 15
5.6 Stockholder Consent. . . . . . . . . . . . . . . . . . . . . . . . . 15
5.7 Nasdaq National Market . . . . . . . . . . . . . . . . . . . . . . . 15
5.8 Notice and Cure. . . . . . . . . . . . . . . . . . . . . . . . . . . 16
5.9 Fulfillment of Conditions. . . . . . . . . . . . . . . . . . . . . . 16
i
ARTICLE VI CONDITIONS TO OBLIGATIONS OF THE PURCHASER
6.1 Representations and Warranties . . . . . . . . . . . . . . . . . . . 16
6.2 Performance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
6.3 Officers' Certificates . . . . . . . . . . . . . . . . . . . . . . . 17
6.4 Orders and Laws. . . . . . . . . . . . . . . . . . . . . . . . . . . 17
6.5 Regulatory Consents and Approvals. . . . . . . . . . . . . . . . . . 17
6.6 Third Party Consents . . . . . . . . . . . . . . . . . . . . . . . . 17
6.7 Opinion of Counsel . . . . . . . . . . . . . . . . . . . . . . . . . 18
6.8 Certificates of Designation. . . . . . . . . . . . . . . . . . . . . 18
6.9 Transaction Documents. . . . . . . . . . . . . . . . . . . . . . . . 18
6.10 Delivery of Certificates . . . . . . . . . . . . . . . . . . . . . . 18
6.11 [Intentionally Omitted]. . . . . . . . . . . . . . . . . . . . . . . 18
6.12 Merger Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . 18
6.13 Credit Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . 18
6.14 Minimum Amount of Target Shares; Offer Price . . . . . . . . . . . . 18
6.15 Conditions to Related Transactions . . . . . . . . . . . . . . . . . 18
6.16 Nasdaq National Market . . . . . . . . . . . . . . . . . . . . . . . 19
6.17 Proceedings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
ARTICLE VII CONDITIONS TO OBLIGATIONS OF THE COMPANY
7.1 Representations and Warranties . . . . . . . . . . . . . . . . . . . 19
7.2 Performance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
7.3 Certificate. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
7.4 Orders and Laws. . . . . . . . . . . . . . . . . . . . . . . . . . . 19
7.5 Transaction Documents. . . . . . . . . . . . . . . . . . . . . . . . 19
7.6 Tender Offer.. . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
ARTICLE VIII SURVIVAL OF REPRESENTATIONS, WARRANTIES,COVENANTS AND AGREEMENTS
ARTICLE IX INDEMNIFICATION
9.1 Indemnification. . . . . . . . . . . . . . . . . . . . . . . . . . . 20
9.2 Method of Asserting Claims . . . . . . . . . . . . . . . . . . . . . 21
ARTICLE X TERMINATION
10.1 Termination. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
10.2 Effect of Termination. . . . . . . . . . . . . . . . . . . . . . . . 23
ARTICLE XI MISCELLANEOUS
11.1 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
11.2 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . 25
11.3 Fees and Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . 25
11.4 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . 25
ii
11.5 Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
11.6 Amendment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
11.7 Third Party Beneficiaries. . . . . . . . . . . . . . . . . . . . . . 26
11.8 No Assignment; Binding Effect. . . . . . . . . . . . . . . . . . . . 26
11.9 Headings; Construction . . . . . . . . . . . . . . . . . . . . . . . 26
11.10 Invalid Provisions . . . . . . . . . . . . . . . . . . . . . . . . . 26
11.11 Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
11.12 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
11.13 Limited Recourse . . . . . . . . . . . . . . . . . . . . . . . . . . 27
11.14 Consent to Jurisdiction and Service of Process.. . . . . . . . . . . 27
iii
EXHIBITS
EXHIBIT A FORM OF CLASS B-1 CERTIFICATE OF DESIGNATION
EXHIBIT B EXHIBIT B FORM OF SERIES A CERTIFICATE OF DESIGNATION
EXHIBIT C FORM OF AMENDED AND RESTATED GOVERNANCE AGREEMENT
EXHIBIT D-1 FORM OF COMPANY'S OFFICER'S CERTIFICATE
EXHIBIT D-2 FORM OF COMPANY'S SECRETARY'S CERTIFICATE
EXHIBIT E FORM OF PURCHASER'S OFFICER'S CERTIFICATE
SCHEDULES
SCHEDULE I - SECTION 3.3
SCHEDULE II - SECTION 3.5
SCHEDULE III -
iv
Exhibit A to
Investment Agreement
CERTIFICATE OF DESIGNATION, PREFERENCES AND RIGHTS
OF CLASS B-1 COMMON STOCK
XXXX INTERNATIONAL HOLDINGS, INC.
Pursuant to Section 151 of the General Corporation Law
of the State of Delaware
The undersigned, _________________________, hereby certifies that:
A. He is the duly elected and acting _________________________ of XXXX
INTERNATIONAL HOLDINGS, INC., Inc., a Delaware corporation (the "Corporation").
B. Pursuant to authority given by the Corporation's Certificate of
Incorporation, as amended through the date hereof (the "Certificate of
Incorporation"), the Board of Directors of the Corporation duly adopted the
following resolutions on __________________ , 1997, creating a new series of
_______ shares of Class 13 Common Stock designated as "Class B- I Common Stock".
C. The resolutions contained herein have not been modified, altered or
amended and are presently in full force and effect.
RESOLVED, that pursuant to the authority expressly vested in the Board of
Directors of the Corporation by Article Fourth of the Certificate of
Incorporation, the Board of Directors hereby fixes and determines the powers,
preferences, rights and limitations of a series of the Class B Common Stock,
which shall consist of _______ shares and shall be designated as Class B-1
Common Stock (the "Class X-x Common Stock"), as follows:
4C. CLASS B-1 COMMON STOCK.
(i) DESIGNATION. There shall be a series of Class B Common Stock
designated as the Class B-1 Common Stock (the "Class B-1 Common Stock").
The number of shares initially constituting the Class B-1 Common Stock
shall be __________________.
(ii) VOTING RIGHTS.
(a) Except as expressly provided herein or as required under the
Delaware General Corporation Law, on all matters to be voted on by the
Corporation's stockholders, holders of shares of Class X-x Common
Stock will be entitled to no voting rights.
(b) Except as expressly provided herein or as expressly required
under the Delaware General Corporation Law, on any matter on which
holders of Class B-1 Common Stock shall be entitled to vote, they
shall be entitled to one vote per share and shall. vote together as a
single class with the holders of the Common Stock.
(iii) DIVIDENDS. In the event that the Corporation shall at any
time or from time to time declare, order, pay or make a dividend or other
distribution (whether in cash, securities or other property) on its Common.
Stock, the holders of shares of the Class B- 1 Common Stock shall be
entitled to receive from the Corporation, with respect to each share of
Class B-1 Common Stock held, a dividend or distribution that is the same
dividend or distribution that would be received by a holder of the number
of shares of Common Stock into which such share of Class B-1 Common Stock
is convertible pursuant to the provisions of Section 4C(vi) hereof on the
record date for such dividend or distribution, provided that (a) if a
dividend or distribution is declared in shares of Common Stock, such
dividend will be declared and paid on the Class B-1 Common Stock in shares
of Class X-x Common Stock at the same rate per share as the Common Stock,
and (b) if a dividend or distribution consists of voting securities of the
Corporation other than the Common Stock, the Corporation will make
available to each holder of Class X-x Common Stock, a dividend or
distribution consisting of non-voting securities of the Corporation which
are otherwise identical to such voting securities and which are convertible
into or exchangeable for such voting securities on the same terms as the
Class B-1 Common Stock is convertible into the Common Stock. Any such
dividend or distribution shall be declared, ordered, paid or made on the
Class B-1 Common Stock at the same time such dividend or distribution is
declared, ordered, paid or made on the Common Stock.
(iv) STOCK SPLITS: COMBINATIONS. If the Corporation, in any manner,
subdivides or combines the outstanding shares of Common Stock, the
outstanding shares of Class B-1 Common Stock will be proportionately
subdivided or combined.
(v) LIQUIDATION, ETC. The holders of the Class B-1 Common Stock will
be entitled to share ratably with the holders of Common Stock, based upon
the aggregate number of outstanding shares of Common Stock and Class B-1
Common Stock and upon the number of shares of Class B-1 Common Stock then
held by each holder of Class X-x Common Stock, in all distributions to the
holders of the Common Stock in any liquidation, dissolution or winding up
of the Corporation.
(vi) CONVERSION OF CLASS B-1 COMMON STOCK. On the Conversion Date,
each share of Class X-x Common Stock shall automatically convert into one
share of Common Stock, and such conversion shall be effective without any
further action on the part of the Corporation, such holder of Class B-1
Common Stock or any other person or entity. In addition, each holder of
Class B-1 Common Stock is entitled to convert all or any of such holder's
shares into an equivalent number of shares of Common Stock (x) with the
2
affirmative vote of a majority of the Independent Directors, (y) upon any
transfer of such holder's shares of Class X-x Common Stock:, other than any
such transfer (A) by LIH Holdings, LLC, LIH Holdings II, LLC or any of
their respective Affiliates or Associates to any person or entity if,
immediately after giving effect to such transfer and conversion, the
transferee and its Affiliates and Associates would hold more than 49% of
the Common Stock on a Fully-Diluted Basis, or (B) to LIH Holdings, LLC, LIH
Holdings II, LLC or any of their respective Affiliates or Associates, or
(z) at any time on or after the first date as of which LIH Holdings, LLC,
LIH Holdings II, LLC and their respective Affiliates and Associates own
(beneficially and of record), in the aggregate, more than 50% of the
outstanding shares of Common Stock in a transaction that is permitted by,
or is effected in accordance with the terms of the Amended and Restated
Governance Agreement.
As used in this Section 4C(vi), the following capitalized terms shall
have the following meanings:
"AFFILIATE" or "ASSOCIATE" means an affiliate or associate of a person
or entity, as such terms are defined in Section 203 of the Delaware
General Corporation Law.
"AMENDED AND RESTATED GOVERNANCE AGREEMENT" means the Amended and
Restated Governance Agreement, dated November 25, 1997, among LIH
Holdings, LLC, LIH Holdings II, LLC, Harvest Partners III, L.P. and
the Corporation, as amended, supplemented or otherwise modified from
time to time in accordance with its terms.
"CONVERSION DATE" means the earlier of (a) September 9, 2000 and (b)
the first date as of which any person or entity or group (as such term
is defined in Rule 13d-3 under the Securities Exchange Act of 1934, as
amended) other than LIH Holdings, LLC, LIH Holdings II, LLC, or any of
their respective Affiliates or Associates owns, beneficially and of
record, securities representing at least 50% of the Common Stock on a
Fully-Diluted Basis, excluding any securities acquired by such person,
entity, or group from LIH Holdings, LLC, LIH Holdings II, LLC, or any
of their respective Affiliates or Associates.
"EQUITY EQUIVALENTS" means (a) the Class X-x Common Stock and (b) any
other securities which, by their terms, are or may be exercisable,
convertible or exchangeable for or into Common Stock at the election
of the holder thereof.
"FULLY-DILUTED BASIS" means, with respect to the calculation of the
number of shares of Common Stock,, (i) all shares of Common Stock
outstanding at the time of determination and (ii) all shares of Common
Stock issuable upon the exercise, conversion or exchange of any Equity
Equivalents outstanding at the time of determination
3
"INDEPENDENT DIRECTOR" means any person who is a director of the
Corporation who is independent of and otherwise unaffiliated with LIH
Holdings, LLC, LIH Holdings II, LLC, the Corporation or any of their
respective Affiliates or Associates (other than as a director, or
holder of beneficial ownership of less than 5% of the voting
securities of the Corporation), and shall not be an officer or an
employee, agent, consultant or advisor (financial, legal or other) of
LIH Holdings, LLC, or their respective Affiliates or Associates, or
any person who shall have served in any such capacity within the
three-year period immediately preceding the date such determination is
made.
(vii) CONVERSION PROCEDURE.
(a) Each conversion of shares of Class B-1 Common Stock into
shares of Common Stock will be effected by the surrender of the
certificate or certificates representing the shares to be converted at
the principal office of the Corporation (or such other office or
agency of the Corporation as the Corporation may designate in writing
to the holders of the Common Stock and the Class X-x Common Stock) at
any time during normal business hours. Each conversion will be deemed
to have been effected as of the close of business on the date on which
such certificate or certificates were surrendered. At such time, the
rights of the holder of the converted Class B-1 Common Stock (in its
capacity as such) will cease and the person or persons or entity or
entities in whose name or names the certificate or certificates for
shares of Common Stock are to be issued upon such conversion will be
deemed to have become the holder or holders of record of the shares of
Common Stock represented thereby.
(b) Following each surrender of certificates pursuant to
paragraph (a) above, the Corporation will issue and deliver, in
accordance with the surrendering holder's instructions, (x) the
certificate or certificates for the Common Stock issuable upon such
conversion and (y) a certificate representing any shares of Class X-x
Common Stock which were represented by the certificate or certificates
delivered to the Corporation in connection with such conversion but
which were not converted.
(c) The issuance of certificates representing shares of Common
Stock upon conversion of any shares of Class B-1 Common Stock will be
made without charge to the holders of such converted or newly issued
shares for any issuance tax in respect thereof or other cost incurred
by the Corporation in connection with such conversion and the related
issuance of shares of Common Stock.
(d) The Corporation will at all times reserve and keep available
out of its authorized but unissued shares of Common Stock the number
of such shares sufficient for issuance upon conversions of the Class
X-x Common Stock hereunder.
4
(e) The Corporation will not close its books against the
transfer of Common Stock in any manner which would interfere with the
timely conversion of Class B-1 Common Stock.
(viii) MERGER; ETC. In connection with any merger, consolidation,
recapitalization reorganization or similar transaction in which holders of
Common Stock generally receive, or are given the opportunity to receive,
consideration for their shares, then, in all such circumstances, unless
otherwise approved by the holders of a majority of the then outstanding
shares of Class B-1 Common Stock voting as a separate class, all holders of
Class B-1 Common Stock shall he given the opportunity to receive the same
consideration per share for their shares as is received by holders of
Common Stock, including, but not limited to, form, amount and timing of
payment.
RESOLVED, that the Board of Directors hereby authorizes and directs the
officers of the Corporation, in the name and on behalf of the Corporation, and
to the extent required under its corporate seal, to execute and deliver any and
all other instruments, certificates and other documents, and to do any and all
other acts and things, including the expenditure of corporate funds, that said
officers shall deem necessary or appropriate in order to fully carry out the
intent and accomplish the purposes of the resolutions adopted hereby.
IN WITNESS WHEREOF, the Corporation has caused its corporate seal to be
hereunto affixed and this Certificate to be signed by _________________________,
its _________________________, and attested by _____________________________,
its _________________________, this _____ day of __________________, 1997.
XXXX INTERNATIONAL HOLDINGS, INC.
By:
-----------------------------------------
Name:
Title:
Attest:
-----------------------------
Name:
Title:
5
Exhibit B to
Investment Agreement
CERTIFICATE OF DESIGNATION, PREFERENCES AND RIGHTS
OF SERIES A PREFERRED STOCK
XXXX INTERNATIONAL HOLDINGS, INC.
Pursuant to Section 151 of the General Corporation Law
of the State of Delaware
The undersigned, _________________________, hereby certifies that:
A. He is the duly elected and acting _________________________ of XXXX
INTERNATIONAL HOLDINGS, INC., Inc., a Delaware corporation (the "Corporation").
B. Pursuant to authority given by the Corporation's Certificate of
Incorporation, as amended through the date hereof (the "Certificate of
Incorporation"), the Board of Directors of the Corporation duly adopted the
following resolutions on __________________ , 1997, creating a new series of
_______ shares of Preferred Stock designated as "Series A Preferred Stock".
C. The resolutions contained herein have not been modified, altered or
amended and are presently in full force and effect.
RESOLVED, that pursuant to the authority expressly vested in the Board of
Directors of the Corporation by Article Fourth of the Certificate of
Incorporation, the Board of Directors hereby fixes and determines the powers,
preferences, rights and limitations of a series of Preferred Stock, which shall
consist of _______ shares and shall be designated as Series A Preferred Stock
(the "Series A Preferred Stock"), as follows:
4B. SERIES A PREFERRED STOCK.
(i) DESIGNATION: STATED VALUE. There shall be a series of Preferred
Stock designated as "Series A Preferred Stock." The number of shares initially
constituting such series shall be __________________. The Series A Preferred
Stock shall have a stated value of [________](1) per share (the "Series A Stated
Value").
--------------------------
(1) To be based upon the average NASDAQ closing price of Common Stock over the
20-day period ending on the date immediately prior to the date of this
Agreement.
(ii) RANK. The Series A Preferred Stock shall, with respect to dividend and
other distribution rights, and rights on liquidation, dissolution and winding
up, rank (i) PARI PASSU with any class of capital stock or series of Preferred
Stock hereafter created which expressly provides that it ranks PARI PASSU with
the Series A Preferred Stock as to dividends, other distributions, liquidation
preference and/or otherwise (collectively, the "Parity Securities"), and (ii)
senior to (x) the Common Stock, the Class B Common Stock and all other
securities of any class or classes (however designated) of the Corporation
(other than the Series A Preferred Stock) the holders of which have the right,
without limitation as to amount, after payment on any securities entitled to a
preference on dividends or other distributions upon any dissolution, liquidation
or winding up, either to all or to a share of the balance of payments upon such
dissolution, liquidation or winding up (collectively, the "Common Stock
Instruments") and (y) any other class of capital stock or series of Preferred
Stock hereafter created which does not expressly provide that it ranks PARI
PASSU with the Series A Preferred Stock as to dividends, other distributions,
liquidation preference and/or otherwise (collectively, the "Junior Securities").
The terms "Parity Securities" and "Junior Securities" as used herein with
respect to any class or series of capital stock shall only be deemed to refer to
such class or series to the extent it ranks (i) PARI PASSU with or (ii) not PARI
PASSU with, as applicable, the Series A Preferred Stock with respect to
dividends, other distributions, liquidation preference or otherwise. The
Corporation shall not issue any securities ranking senior to the Parity
Securities with respect to dividends, distributions, liquidation preference or
otherwise.
(iii) DIVIDENDS.
(a) The holders of shares of Series A Preferred Stock shall be
entitled to receive, when, as and if declared by the Board of Directors, to
the extent funds are legally available therefor in accordance with the
Delaware General Corporation Law, a dividend for each such share, payable
quarterly, as provided below, on the last day of each January, April, July
and October, commencing on July 31, 1998 (each such date hereinafter
referred to as a "Series A Dividend Payment Date"), except that if such
date is not a Business Day, then such dividend shall be payable on the next
succeeding Business Day, to the holders of record as they appear on the
register of the Corporation for the Series A Preferred Stock of the
Corporation five Business Days prior to such Dividend Payment Date (the
"Series A Dividend Record Date").
Dividends on the Series A Preferred Stock shall accrue and be paid at
a rate per annum equal to 15.0 percent of the Stated Value of each share of
Series A Preferred Stock outstanding on the Series A Dividend Record Date
with respect to a Series A Dividend Payment Date.
(b) Dividends on the Series A Preferred Stock shall be cumulative and
shall accrue from April 30, 18 whether or not such dividends have been
declared. Unpaid dividends, whether or not declared. shall compound
quarterly at a rate per annum equal to 15.0% of the aggregate amount
thereof' from the Series A Dividend Payment Date on which such dividend was
payable as herein provided until payment of such dividend.
2
(c) For so long as any shares of Series A Preferred Stock shall be
outstanding, no dividend or distribution, whether in cash, stock or other
property, shall be paid, declared and set apart for payment or made on any
date on or in respect to any Junior Securities and no payment on account of
the redemption, purchase or other acquisition or retirement for value by
the Corporation shall be made on any date of shares of Junior Securities
unless, in each case, the full amount of unpaid dividends accrued on all
outstanding shares of Series A Preferred Stock shall have been paid or
contemporaneously are declared and paid; PROVIDED, HOWEVER, that the
foregoing provisions of this sentence shall not prohibit (i) a dividend
payable solely in shares of Common Stock Instruments or any other Junior
Securities, or (ii) the acquisition of any shares of any Common Stock
Instruments or any other Junior Securities upon conversion or exchange
thereof into or for any shares of any other class of Common Stock
Instruments or other Junior Securities.
In the event that the dividend to be paid to any holder of shares of Series
A Preferred Stock shall be a fractional interest in a share of Series A
Preferred Stock then a fractional share of Series A Preferred Stock shall be
issued to such holder of shares of Series A Preferred Stock.
(iv) REDEMPTION.
(a) REDEMPTION BY CORPORATION. To the extent funds are legally
available therefor, the Company may, at any time on or after _____________,
200__(2) redeem for the Series A Redemption Price each share of Series A
Preferred Stock then outstanding. To the extent finds are legally available
therefor, the Company shall, at the request of a majority of the holders of
shares of Series A Preferred Stock then outstanding given at any time on
and after the Put Date, redeem for the Series A Redemption Price each share
of Series A Preferred Stock then outstanding. The date on which shares are
redeemed pursuant to this Part iv(a) of Section 4B is referred to herein as
the "Series A Redemption Date." If on the Series A Redemption Date there
shall be insufficient funds of the Corporation legally available for such
redemption, such amount of the funds as is legally available shall be used
for the redemption requirement. Such redemption requirement shall be
cumulative so that if such requirement shall not be fully discharged for
any reason, finds legally available therefor shall immediately be applied
thereto upon receipt by the Corporation until such requirement is
discharged. The redemption price (the "Series A Redemption Price") for each
outstanding share of Series A Preferred Stock to be redeemed pursuant to
this Part (iv)(a) of Section 4B shall be the sum (payable in cash) of (x)
the Series A Stated Value plus I v) an amount equal to all accrued and
unpaid dividends thereon to the Series A Redemption Date.
--------------------------
(2) Insert the seventh anniversary of the date on which this Certificate is
filed with the Office of the Secretary of State of Delaware.
3
(b) PAYMENT OF SERIES A REDEMPTION PRICE. On the Series A Redemption
Date, the Corporation shall pay to the holder of each share of Series A
Preferred Stock being redeemed, upon surrender by such holder at the
Corporation's principal executive office of the certificate representing
such share, duly endorsed in blank or accompanied by an appropriate form of
assignment, the Series A Redemption Price.
(c) REDEEMED OR OTHERWISE ACQUIRED SHARES NOT TO BE REISSUED. All
shares of Series A Preferred Stock redeemed pursuant to this Part (iv) of
Section 4B or otherwise acquired by the Corporation shall be retired and
shall not thereafter be reissued.
(d) DETERMINATION OF NUMBER OF EACH HOLDER'S SHARES TO BE REDEEMED.
If, for any reason, less than all of the outstanding shares of Series A
Preferred Stock are to be redeemed pursuant to Part (iv)(a) of this Section
4B, the Corporation shall determine the shares held by each holder of
Series A Preferred Stock to be redeemed as hereinafter provided. The number
of shares to be redeemed from each holder thereof shall be the number of
shares determined by multiplying the total number of shares to be redeemed
times a fraction, the numerator of which shall be the total number of
shares of Series A Preferred Stock then held by such holder and the
denominator of which shall be the total number of shares of Series A
Preferred Stock then outstanding.
(e) NOTICE OF REDEMPTION. Notice of any redemption of Series A
Preferred Stock pursuant to Part (iv)(a) of this Section 4B, specifying the
time and place of redemption and the Series A Redemption' Price shall be
mailed by certified or registered mail, return receipt requested, to each
holder of record of shares to be redeemed, at the address for such holder
shown on the Corporation's records, not less than 15 days prior to the date
on which such redemption is to be made; provided, that neither failure to
give such notice nor any defect therein shall affect the validity of the
proceeding for the redemption of any shares of Series A Preferred Stock to
be redeemed. Such notice shall also specify the number of shares of each
holder thereof and the certificate numbers thereof which are to be
redeemed. In case less than all the shares represented by any certificate
are redeemed, a new certificate representing the unredeemed shares shall be
issued to the holder thereof without cost to such holder.
(f) DIVIDENDS AFTER REDEMPTION DATE. Unless the Series A Redemption
Price in respect of a share of Series A Preferred Stock is not made
available in full to the holder thereof, from and after the Series A
Redemption Date, such share of Series A Preferred Stock shall not be
entitled to any dividends accruing after such date, all rights of the
holder of such share, as a stockholder of the Corporation by reason of the
ownership of such share, shall cease, except the right to receive the
Series A Redemption Price of such share upon the presentation and surrender
of the certificate representing such share, and such share shall not after
such date be deemed to be outstanding for any purpose.
4
(v) LIQUIDATION RIGHTS.
(a) Upon the dissolution liquidation or winding up of the
Corporation, whether voluntary or involuntary, the holders of outstanding
shares of Series A Preferred Stock shall be entitled to receive for each
such share, out of the assets of the Corporation available for distribution
to stockholders, before any payment or distribution to stockholders and
before any payment or distribution shall be made to the holders of Common
Stock or any other Junior Securities upon liquidation, an amount in cash
equal to the sum of (x) the Series A Stated Value, plus (y) all accrued and
unpaid dividends in respect of such share to the date of final distribution
(the "Series A Liquidation Value").
(b) After the payment to the holders of the Series A Preferred Stock
of the full preferential amounts provided for in this Part (v) of Section
4B, the holders of the Series A Preferred Stock as such shall have no right
or claim to any of the remaining assets of the Corporation.
(c) If, upon any such liquidation, dissolution or other winding up of
the affairs of the Corporation, the assets of the Corporation are
insufficient to permit the payment in full of the Series A Liquidation
Preference for each share of Series A Preferred Stock then outstanding and
the full liquidating payment on all Parity Securities, then the assets of
the Corporation remaining shall be ratably distributed among the holders of
Series A Preferred Stock and of any Parity Securities in proportion to the
full amounts to which they would otherwise be respectively entitled if all
amounts thereon were paid in full.
(d) Neither the voluntary sale, conveyance, exchange or transfer (for
cash, shares of stock, securities or other consideration) of all or
substantially all the property or assets of the Corporation nor the
consolidation, merger or other business combination of the Corporation with
or into one or more corporations shall be deemed to be a liquidation,
dissolution or winding-up voluntary or involuntary. of the Corporation.
(vi) CONVERSION.
(a) Immediately upon Stockholder Approval, each share of Series A
Preferred Stock shall automatically convert into one share of Class B-1
Common Stock (the "Series A Conversion Ratio") and such conversion shall be
effective without any further action on the part of the Corporation, such
holder of Series A Preferred Stock or any other person or entity; provided,
however, that in the event that Stockholder Approval occurs after April 30,
1998, in addition to the shares of Class B-1 Common Stock to be received by
the holders of the Series A Preferred Stock, each holder of Series A
Preferred Stock shall receive a cash payment of all accrued and unpaid
dividends on the shares of Series A Preferred Stock then held by it.
5
(b) Each conversion of shares of Series A Preferred Stock into shares
of Class B-1 Common Stock will be effected by the surrender of the
certificate or certificates representing the shares to be converted at the
principal office of the Corporation (or such other office or agency of the
Corporation as the Corporation may designate in writing to the holders of
the Series A Preferred Stock) at any time during normal business hours.
Each conversion will be deemed to have been effected as of the close of
business on the date on which such certificate or certificates were
surrendered. At such time, the rights of the holder of the converted Series
A Preferred Stock (in its capacity as such) will cease and the person or
persons or entity or entities in whose name or names the certificate or
certificates for shares of Class B- 1 Common Stock are to be issued upon
such conversion will be deemed to have become the holder or holders of
record of the shares of Class B-1 Common Stock represented thereby.
(c) Following each surrender of certificates pursuant to paragraph
(b) above, the Corporation will issue and deliver, in accordance with the
surrendering holder's instructions, (x) the certificate or certificates for
the Class B-1 Common Stock issuable upon such conversion, and (y) any cash
payment required to be made pursuant to Part (vi)(a) of Section 4B.
(d) The issuance of certificates representing shares of Class B-1
Common Stock upon conversion of any shares of Series A Preferred Stock will
be made without charge to the holders of such converted or newly issued
shares for any issuance tax in respect thereof or other cost incurred. by
the Corporation in connection with such conversion and the related issuance
of shares of Class X-x Common Stock.
(e) The Corporation will at all times reserve and keep available out
of its authorized but unissued shares of Class B-1 Common Stock the number
of such shares sufficient for issuance upon conversions of the Series A
Preferred Stock hereunder.
(f) The Corporation will not close its books against the transfer of
Class B-1 Common Stock in any manner which would interfere with the timely
conversion of Series A Preferred Stock.
(g) If the Corporation at any time or from time to time after the
Issue Date effects a subdivision of the outstanding Class B-1 Common Stock
or combines the outstanding shares of the Class B-1 Common Stock, then, in
each such case, the Series A Conversion Ratio in effect immediately prior
to such event shall be adjusted so that each holder of shares of Series A
Preferred Stock shall have the right to convert its shares of Series A
Preferred Stock into the number of shares of the Class B- I Common Stock
which it would have owned after the event had such shares of Series A
Preferred Stock been converted immediately before the happening of such
event. Any adjustment under this Part (vi)(g) of Section 4B shall become
effective as of the date and time the subdivision or combination becomes
effective.
6
(h) In connection with any merger, consolidation, recapitalization,
reorganization or similar transactions in which holders of Class B-1 Common
Stock generally receive, or are given the opportunity to receive,
consideration for their shares, then, in all such circumstances, unless
otherwise approved by a majority of the holders of the then outstanding
shares of Series A Preferred Stock voting as a separate class, all holders
of Series A Preferred Stock shall be given the opportunity to receive (x)
the same consideration per share for their shares (calculated as if such
shares of Series A Preferred Stock had been converted into shares of Class
X-x Common Stock at the Series A Conversion Rate then in effect) as is
received by the holders of Class X-x Common Stock, including, but not
limited to, form, amount and timing of payment, a (y) if such event occurs
after April 30, 1998, all accrued and unpaid dividends with respect to such
shares of Series A Preferred Stock.
(vii) VOTING RIGHTS. Except as expressly provided herein or as
required under the Delaware General Corporation Law, on all matters to be voted
on by the Corporation's stockholders, holders of shares of Series A Preferred
Stock will be entitled to no voting rights.
As used in Part 4B, the following capitalized terms shall have the
following meanings:
"AFFILIATE" or "ASSOCIATE" means an affiliate or associate of a person
or entity, as such terms are defined in Section 203 of the Delaware
General Corporation Law.
"EQUITY EQUIVALENTS" means (a) the Class X-x Common Stock and (b) any
other securities which, by their terms, are or may be exercisable,
convertible or exchangeable for or into Common Stock at the election
of the holder thereof.
"FULLY-DILUTED BASIS" means, with respect to the calculation of the
number of shares of Common Stock, (i) all shares of Common Stock
outstanding at the time of determination and (ii) all shares of Common
Stock issuable upon the exercise, conversion or exchange of any Equity
Equivalents outstanding at the time of determination.
"ISSUE DATE" means, as to any share of Series A Preferred Stock, the
date of original issuance thereof by the Corporation.
"PUT DATE" means the earlier of (a) __________________ 200__(3), (b)
the first date as of which any person or entity or group (as such term
is defined in Rule 13d-3 under the Securities Exchange Act of 1934, as
amended) other than LIH Holdings, LLC, LIH Holdings II, LLC, or any of
their respective Affiliates or Associates owns, beneficially and of
record, securities representing at least 50% of the Common Stock on a
Fully-Diluted Basis, excluding any securities acquired by such person,
entity, or group from LIH Holdings LLC, LIH Holdings II, LLC,
--------------------------
(3) Insert the seventh anniversary of the date on which this Certificate is
filed with the Office of the Secretary of State of the State of Delaware.
7
or any of their respective Affiliates or Associates, and (c) the first
date as of which (and immediately prior to) the occurrence of any of
the events described in Part (vi)(h) of Section 4B.
"STOCKHOLDER APPROVAL" means the approval of at least a majority of
the holders of the then outstanding shares of Common Stock present at
a meeting called to approve the terms of the Class B-1 Common Stock
and the conversion of the Series A Preferred Stock into shares of
Class B-1 Common Stock as provided herein.
RESOLVED, that the Board of Directors hereby authorizes and directs the
officers of the Corporation, in the name of and on behalf of the Corporation,
and to the extent required under its corporate seal, to execute and deliver any
and all other instruments, certificates and other documents, and to do any and
all other acts and things, including the expenditure of corporate funds, that
said officers shall deem necessary or appropriate in order to fully carry out
the intent and accomplish the purposes of the resolutions adopted hereby.
IN WITNESS WHEREOF, the Corporation has caused its corporate seal to be
hereunto affixed and this Certificate to be signed by _________________________,
its _________________________, and attested by _____________________________,
its _________________________, this _____ day of __________________, 1997.
XXXX INTERNATIONAL HOLDINGS, INC.
By:
-------------------------------
Name:
Title:
Attest:
-------------------------------
Name:
Title:
8
