Exhibit 99.2
LITTLE SWITZERLAND, INC.
INVESTOR'S RIGHTS AGREEMENT
May 1, 2001
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INVESTOR'S RIGHTS AGREEMENT
This INVESTOR'S RIGHTS AGREEMENT (this "Agreement") is made
as of May 1, 2001 between Little Switzerland, a Delaware corporation (the
Company"), and Jewelcor Management, Inc., a Nevada corporation (the
"Stockholder").
RECITALS:
WHEREAS, concurrently with the execution of this Agreement, the Company
is agreeing to sell forty-five percent of its Common Stock, par value $.01 per
share, to Xxxxxxx & Co. International, Inc., a Delaware corporation
"Tiffany"), pursuant to the certain Stock Purchase Agreement, dated of even
date herewith (the "Stock Purchase Agreement"), between the Company and Tiffany;
WHEREAS, the Stock Purchase Agreement provides, among other things, that
Tiffany will have the right to subscribe to certain issuances of the Company's
capital stock (and rights to acquire such capital stock); and
WHEREAS, in order to induce the Stockholder to relinquish certain of its
rights to facilitate the transactions contemplated by the
Stock Purchase Agreement, the Company has agreed to grant the Stockholder the
right to subscribe to certain issuances of the Company's capital stock (and
rights to acquire such capital stock);
NOW, THEREFORE, in consideration of the foregoing, the
parties hereto agree as follows:
1. DEFINITIONS. For purposes of this Agreement:
1.1 "AFFILIATE" means, as to a Person, any other Person that
directly or indirectly, through one or more intermediaries
controls, is controlled by or is under common control with the
first-mentioned Person.
1.2 "COMMON SHARE EQUIVALENTS" means Common Stock at the time
outstanding or issuable upon conversion of shares of Preferred
Stock at the time outstanding, or issuable upon exercise of
warrants or options to purchase Common Stock or upon conversion
or exercise of any other security.
1.3 "COMMON STOCK" means shares of Common Stock, par value $.01, of
the Company.
1.4 "PERSON" means an individual, corporation, partnership, limited
liability company, association, trust, unincorporated
organization or other legal entity.
1.5 "PREFERRED STOCK" means shares of Preferred Stock, par value
$.01, of the Company."STOCKHOLDER" means Jewelcor Management, Inc., its
Affiliates "Stockholder" shall not include Xxxx Xxxxxxxx, Xxxxxx Xxxxxxxx
or Xxxxxxx Xxxxxxxx Xxxxxx.
2. SUBSCRIPTION RIGHTS.
2.1 The Company shall not issue, sell or exchange, agree to issue, sell
or exchange, or reserve or set aside for issuance, sale or exchange, (i) any
Common Stock, (ii) any other equity securities of the Company, including,
without limitation, shares of Preferred Stock, (iii) any option, warrant or
other right to subscribe for, purchase or otherwise acquire any equity
securities of the Company, or (iv) any debt or other securities directly
or indirectly convertible into capital stock of the Company (collectively, the
"Offered Securities"), unless in each such case the Company shall have first
complied with this Section 2. The Company shall deliver to the Stockholder a
written notice of any proposed or intended issuance, sale or exchange of
Offered Securities (the "Offer"), which Offer shall (i) identify and describe
the Offered Securities, (ii) describe the price and other terms upon which
they are to be issued, sold or exchanged, and the number or amount of the
Offered Securities to be issued, sold or exchanged, (iii) identify the persons
or entities (if known) to which or with which the Offered Securities are to be
offered, issued, sold or exchanged and (iv) offer to issue and sell to or
exchange with such Stockholder (A) a portion of the Offered Securities
determined by dividing the aggregate number of shares of Common Stock then held
by such Stockholder (giving effect to the conversion or exercise of all Common
Share Equivalents then held by such Stockholder) by the total number of shares
of Common Stock then outstanding (giving effect to the conversion or exercise
of all Common Share Equivalents then outstanding (other than those owned by such
Stockholder)) (the "Basic Amount"); PROVIDED, HOWEVER, that the Stockholder,
in its discretion, may subscribe for less than the Basic Amount.
2.2 To accept an Offer, in whole or in part, the Stockholder
must deliver a written notice to the Company prior to the end of the five
(5)day period following the Stockholder's receipt of the Offer, setting forth
the portion of the Stockholder's Basic Amount that such Stockholder elects to
purchase (the "Notice of Acceptance").
2.3 The Company shall have 90 days from the expiration of the
period set forth in Section 2.2 above to issue, sell or exchange all or any
part of such Offered Securities as to which a Notice of Acceptance has not
been given by the Stockholder (the "Refused Securities"), but only to the
offerees described in the Offer (if so described therein) and only upon terms
and conditions (including, without limitation, unit prices and interest rates)
that are not more favorable to the acquiring person or persons or less
favorable to the Company than those set forth in the Offer.
2.4 In the event the Company shall propose to sell less than
all the Refused Securities (any such sale to be in the manner and on the terms
specified in Section 2.3 above), then the Stockholder may, at its sole option
and in its sole discretion, reduce the number or amount of the Offered
Securities specified in its Notice of Acceptance to an amount that shall be not
less than the number or amount of the Offered Securities that the Stockholder
elected to purchase pursuant to Section 2.2 above multiplied by a fraction, (i)
the numerator of which shall be the number or amount of Offered Securities the
Company actually proposes to issue, sell or exchange (including Offered
Securities to be issued or sold to the Stockholder pursuant to Section 2.2
above prior to such reduction) and (ii) the denominator of which shall be the
original amount of the Offered Securities. In the event that the Stockholder so
elects toreduce the number or amount of Offered Securities specified in its
Notice of Acceptance, the Company may not issue, sell or exchange more than the
reduced number or amount of the Offered Securities unless and until such
securities have again been offered to the Stockholder in accordance with
Section 2.1 above.
2.5 Upon the closing of the issuance, sale or exchange of all
or less than all of the Refused Securities, the Stockholder shall acquire from
the Company, and the Company shall issue to the Stockholder, the number or
amount of Offered Securities specified in the Notice of Acceptance, as reduced
pursuant to Section 2.4 above if the Stockholders have so elected, upon the
terms and conditions specified in the Offer. The purchase by the Stockholder of
any Offered Securities is subject in all cases to the preparation, execution
and delivery by the Company and the Stockholder of a purchase agreement
relating to such Offered Securities reasonably satisfactory in form and
substance to the Stockholder and its counsel.
2.6 Any Offered Securities not acquired by the Stockholder or
other persons in accordance with Section 2.3 above may not be issued, sold or
exchanged until they are again offered to the Stockholder under the procedures
specified in this Agreement.
2.7 The term "Offered Securities" shall NOT include:
(a) Common Stock issued as a stock dividend to
holders of Common Stock or upon any
subdivision or combination of Common Stock;
and
(b) shares of Common Stock issued or issuable
pursuant to any Company employee stock
option, employee purchase or similar plan.
3. BUSINESS OPPORTUNITIES.
3.1 In the event that (a) the Stockholder or any of its
Affiliates or (b) any officer, director or employee of the Company or any
subsidiary of the Company who is also an officer, director or employee of the
Stockholder or an Affiliate thereof, acquires knowledge of a potential
transaction which may be a business opportunity for both the Company and the
Stockholder or any of its Affiliates, such business opportunity shall belong
to the Stockholder and not to the Company, and any such officer, director of
employee of the Company shall treat such business opportunity as belonging
only to the Stockholder and not the Company, PROVIDED, HOWEVER, with respect
to clause (b) of this sentence, the Stockholder shall determine in good faith
whether, based on the circumstances under which such officer, director or
employee acquired his knowledge, such business opportunity was offered to such
person solely in his capacity as an officer, director or employee of the
Company ("Company Capacity"). For the purposes of the foregoing determination,
there shall be a presumption that such opportunity was offered to such person
in his capacity as an officer, director or employee of the Stockholder or an
Affiliate thereof. In the event that the Stockholder determines that it was so
offered to such person in his Company Capacity, such business opportunity shall
belong only to the Company and not to the Stockholder and such officer,
director or employee shall treat such business opportunity as belonging only to
the Company and not to the Stockholder. With respect to any business opportunity
belonging to the Stockholder pursuant to this Section 3.1, the Stockholder
shall decide how to allocate and pursue such business opportunity based on its
sole determination of what is the best interests of the Stockholder's
stockholders. The good faith determination of the allocation of business
opportunities pursuant to the Section 3.1 shall be conclusive and binding for
all purposes.
4. MISCELLANEOUS.
4.1 SUCCESSORS AND ASSIGNS. The Stockholder may assign its
rights under this Agreement, in whole or in part, to any Affiliate, and the
terms and conditions of this Agreement shall inure to the benefit of and be
binding upon the respective successors and assigns of the parties. Except as
provided in the immediately preceding sentence, no party may assign its rights
or delegate its duties or obligations hereunder without the prior written
consent of the other party hereto. Nothing in this Agreement, express or
implied, is intended to confer upon any party other than the parties hereto or
their respective successors and assigns any rights, remedies, obligations, or
liabilities under or by reason of this Agreement, except as expressly provided
in this Agreement.
4.2 GOVERNING LAW; JURISDICTION; WAIVER OF JURY TRIAL.
(a) This Agreement shall be governed by and
construed under the laws of the State of New York as
applied to agreements among New York residents
entered into and to be performed entirely within New
York.
(b) The jurisdiction and venue in any action
brought by any party hereto pursuant to this
Agreement shall properly (but not exclusively) lie in
any federal or state court located in the State of
New York. By execution and delivery of this
Agreement, each party hereto irrevocably submits to
the jurisdiction of such courts for himself or itself
and in respect of his or its property with respect to
such action. The parties irrevocably agree that venue
would be proper in such court, and hereby waive any
objection that such court is an improper or
inconvenient forum for the resolution of such
action. The parties further agree that the mailing by
certified or registered mail, return receipt
requested, of any process required by any such court
shall constitute valid and lawful service of process
against them, without necessity for service by any
other means provided by statute or rule of court.
(c) BECAUSE DISPUTES ARISING IN CONNECTION WITH
COMPLEX FINANCIAL TRANSACTIONS ARE MOST QUICKLY AND
ECONOMICALLY RESOLVED BY AN EXPERIENCED AND EXPERT
PERSON AND THE PARTIES WISH APPLICABLE LAWS TO APPLY
(RATHER THAN ARBITRATION RULES), THE PARTIES DESIRE
THAT THEIR DISPUTES BE RESOLVED BY A JUDGE APPLYING
SUCH APPLICABLE LAWS. THEREFORE, TO ACHIEVE THE BEST
COMBINATION OF THE BENEFITS OF THE JUDICIAL SYSTEM
AND OF ARBITRATION, THE PARTIES HERETO WAIVE ALL
RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT OR
PROCEEDING BROUGHT TO ENFORCE OR DEFEND ANY RIGHTS OR
REMEDIES UNDER THISAGREEMENT OR ANY DOCUMENTS RELATED
HERETO.
4.3 COUNTERPARTS; FACSIMILE SIGNATURES. This Agreement may be
executed in any number of counterparts, each of which shall be deemed to be an
original, and all of which together shall constitute one and the same document.
This Agreement may be executed by facsimile signatures.
4.4 TITLES AND SUBTITLES. The titles and subtitles used in
this Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
4.5 NOTICES. Unless otherwise provided, any notice required
or permitted under this Agreement shall be given in writing and shall be
deemed effectively given upon receipt by the party to be notified or five
(5) days after deposit with the United States Post Office, by registered or
certified mail, postage prepaid and addressed to the party to be notified
(a) if to the Company, at the following address:
000-X Xxxxx Xxx
X.X. Xxx 000
Xx. Xxxxxx, X.X. V. I. 00804
Attention: Xxxxxx X. Xxxxxxxxxxx
Fax: (000) 000-0000
with a copy to:
Proskauer Rose LLP
0000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attn: Xxxx X. Xxxxxxx, Esq.
Fax: (000) 000-0000
(c) if to the Stockholder, at the address set
forth opposite the Stockholder's name on the signature pages hereto
or at such other address as any of the parties may designate by ten
(10) days' advance written notice to the other parties.
4.6 AMENDMENTS AND WAIVERS. Any term of this Agreement may be
amended and the observance of any term of this Agreement (including, without
limitation, Section 3) may be waived (either generally or in a particular
instance and either retroactively or prospectively), only with the written
consent of the Company and the Stockholder.
4.7 TERMINATION. This Agreement shall terminate and be of no
further force on the first day that the Stockholder ceases to own at least 50%
of the number of shares of Common Stock owned by the Stockholder as of the date
such Stockholder became a party to this Agreement (as adjusted for any stock
splits, stock dividends or stock combinations).
4.8 SEVERABILITY. If one or more provisions of this Agreement
are held to be unenforceable under applicable law, such provision shall be
excluded from this Agreement and the balance of the Agreement shall be
interpreted as if such provision were so excluded and shall be enforceable in
accordance with its terms.
4.9 SPECIFIC PERFORMANCE. In addition to any and all other
remedies that may be available at law in the event of any breach of this
Agreement, the Stockholder shall be entitled to specific performance of the
agreements and obligations of the Company hereunder and to such other
injunctive or other equitable relief as may be granted by a court of
competent jurisdiction.
4.10 COMPLETE AGREEMENT. This Agreement constitutes the
entire agreement and understanding of the parties hereto with respect to the
subject matter hereof and supersedes all prior agreements and understandings
relating to such subject matter (including, without limitation, that certain
letter of intent, dated as of March 5, 2001, by and among the Company, the
Stockholder, Xxxxxxx Xxxxxxxx and Xxxxxxx and Company) and negotiations and
oral understandings, if any, with respect thereto.
4.11 PRONOUNS. Whenever the context may require, any pronouns
used in this Agreement shall include the corresponding masculine, feminine or
neuter forms, and the singular form of nouns and pronouns shall include the
plural, and vice versa.
IN WITNESS WHEREOF, the parties have executed this Investor's
Rights Agreement as of the date first above written.
THE COMPANY:
LITTLE SWITZERLAND, INC.
By: /s/ Xxxxxx X. Xxxxxxxxxxx
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Name: Xxxxxx X. Xxxxxxxxxxx
Title: President
INVESTOR:
ADDRESS: JEWELCOR MANAGEMENT, INC.
000 Xxxxx Xxxx Xxxxxx Xxxxxxxxx
Xxxx Xxxxx, XX 00000 By: /s/ Xxxxxxx Xxxxxxxx
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Attention: Xxxxxxx Xxxxxxxx Name: Xxxxxxx Xxxxxxxx
Fax: (000) 000-0000 Title: President
