EXHIBIT 10.6
SECOND AMENDED AND RESTATED GOVERNANCE AGREEMENT
This Second Amended and Restated Governance Agreement, dated as of
December 22, 1998, among Xxxx International Holdings, Inc., a Delaware
corporation (the "Company"), LIH Holdings, LLC, a Delaware limited liability
company ("LIH"), LIH Holdings II, LLC, a Delaware limited liability company
("LIH II"), and LIH Holdings III, LLC, a Delaware limited liability company
("LIH III"; LIH, LIH II and LIH III are referred to collectively herein as the
"LIH Entities");
WITNESSETH:
WHEREAS, Xxxxx X. Xxxx ("Xxxx") and LIH entered into a stock purchase
agreement (the "Stock Purchase Agreement"), dated September 9, 1997, pursuant to
which, among other things, subject to the terms and conditions contained in the
Stock Purchase Agreement, LIH acquired from Xxxx, his family and certain
entities related thereto, at the closing of such purchase and sale (the
"Closing"), Beneficial Ownership of shares of common stock, par value $.10 per
share, of the Company ("Common Stock"), aggregating 1,686,893 shares of Common
Stock (the "Shares"), constituting approximately 38.4% of the Common Stock
outstanding as of the date thereof; and
WHEREAS, Xxxx and LIH received Board approval of the acquisition of
Shares for purposes of Section 203 of the Delaware General Corporation Law; and
WHEREAS, as a condition to such approval, a special committee formed by
the Board and the Board required that certain arrangements be put in place
relating to the acquisition and disposition of securities of the Company by LIH
and its Affiliates and related provisions concerning LIH's relationship with the
Company, negotiated the terms of that certain Governance
Agreement, dated September 9, 1997 (the "Initial Governance Agreement") and,
subject to execution and delivery of the Initial Governance Agreement, gave its
approval under Section 203 of the Delaware General Corporation Law and
implemented the arrangements contemplated by the Initial Governance Agreement;
and
WHEREAS, the Company and LIH entered, executed and delivered the
Initial Governance Agreement and the Initial Governance Agreement has been in
effect since September 9, 1997 as amended, supplemented and modified to the date
hereof; and
WHEREAS, pursuant to the provisions of Section 1.01(a)(i) of the
Initial Governance Agreement, LIH or its Affiliates or Associates may acquire
securities from the Company, provided that such acquisition is approved by the
affirmative vote of a majority of the Independent Directors; and
WHEREAS, LIH II and the Company entered into an Investment Agreement,
dated November 25, l997 (the "LIH II Investment Agreement"), providing for the
purchase from the Company by LIH II of 874,400 shares of Common Stock and
1,493,398 shares of the Company's Series A Preferred Stock, par value $.01 per
share (the "Preferred Shares"), which Preferred Shares were subsequently
converted into shares of the Company's Class B-1 Common Stock (the "Class
B-1 Common Stock"; and such shares of Class B-1 Common Stock together with
874,400 shares of Common Stock are collectively referred to as the "LIH II
Shares"); and
WHEREAS, as a condition to approval of the LIH II Investment Agreement
by the Independent Directors, the Independent Directors approved the Amended and
Restated Governance Agreement, dated November 25, l997 (the "First Amendment"),
which was executed by the Company, LIH and LIH II; and
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WHEREAS, (x) LIH III desires to purchase additional shares of capital
stock from the Company (the "LIH III Shares") as more fully set forth in (i)
that certain Investment Agreement, dated as of December __, 1998, relating to
the acquisition of the Ventshade Holdings, Inc. (the "Auto Ventshade Investment
Agreement") and (ii) that certain Investment Agreement dated as of December
_____, 1998 relating to the acquisition of the Smittybilt, Inc. (the "Smittybilt
Investment Agreement;" and together with the Auto Ventshade Investment
Agreement, the "1998 Investment Agreements") and the Company desires to sell
such shares of capital stock to LIH III and, as a condition thereto, the
Company, LIH, LIH II and LIH III desire to enter into this Second Amended and
Restated Governance Agreement which amends and restates the First Amendment;
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements contained herein and intending to be legally bound
hereby, the Company, LIH, LIH II and LIH III hereby agree as follows:
ARTICLE I
STANDSTILL AND VOTING
Section 1.01. Acquisition of Voting Securities.
(a) Until the Standstill Termination Date, each of the LIH Entities
severally covenants and agrees that it will not take any action or omit to take
any action to allow the aggregate number of Voting Securities Beneficially Owned
by the LIH Entities and their respective Affiliates and Associates to exceed the
number of Permitted Shares; provided that, (i) this Agreement shall not restrict
any acquisition of Voting Securities in a transaction directly with the Company
and approved in accordance with the provisions of Section 2.03(b) hereof
(including, without
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limitation, the acquisition of Voting Securities by any LIH Director or any LIH
II Director by reason of the grant of stock options by the Company to all
directors); and (ii) if a bona fide tender or exchange offer is made by any
Person (other than the Company, any of the LIH Entities or an Affiliate or
Associate of any of the LIH Entities, or any Person acting in concert with any
of the LIH Entities or any of their respective Affiliates or Associates, and
other than any acquisition or proposed acquisition of Voting Securities that
intentionally has been induced, in whole or in part and directly or indirectly
by any LIH Entity in order to permit the acquisition by an LIH Entity or its
Affiliates and Associates of Voting Securities under this paragraph (a)) to
purchase outstanding shares of Voting Securities representing 50% or more of the
Total Voting Power and such offer is not withdrawn or terminated prior to any
LIH Entity commencing a tender offer or exchange offer, then any LIH Entity may
commence a tender or exchange offer for all Voting Securities not owned by the
LIH Entities and their Affiliates and Associates, and this Agreement shall not
prohibit the acquisition of Voting Securities pursuant to such tender or
exchange offer.
(b) Subject to the proviso in Section 1.01(a) hereof and any waiver or
approval in accordance with the provisions of Section 5.02(a) hereof, if at any
time the LIH Entities and their Affiliates and Associates Beneficially Own more
than the Permitted Shares, inadvertently or otherwise, then each LIH Entity
shall promptly take all action necessary to reduce the amount of Voting
Securities Beneficially Owned by such Persons to an amount not greater than the
Permitted Shares.
(c) No LIH Entity shall permit any of its Affiliates or Associates to
Beneficially Own any Voting Securities unless such Person becomes a signatory to
this Agreement and a party hereunder.
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Section 1.02. Limited Restrictions on Transfer. Prior to the Standstill
Termination Date, no LIH Entity, nor any Affiliate or Associate thereof which
acquires Voting Securities in accordance with the terms of this Agreement, will
Transfer Beneficial Ownership of any Voting Securities to any of their
respective Affiliates or Associates unless each such Person becomes a signatory
to this Agreement and a party hereunder. Each LIH Entity agrees to inclusion of
the following legend on certificates representing the Shares, the LIH II Shares
and the LIH III Shares:
The shares represented by this certificate and any transfer
thereof are subject to a restriction on transfer to any Affiliate or
Associate of the holder hereof as set forth in a Second Amended and
Restated Governance Agreement between the holder and the Company dated
as of December __, 1998, a copy of which is on file at the principal
executive office of the Company.
Such legend shall be placed on all certificates held by the LIH
Entities during the continuance of this Agreement.
Section 1.03. Voting. Until the Standstill Termination Date, all Voting
Securities Beneficially Owned by the LIH Entities or any Affiliate or Associate
thereof shall be voted in the election of directors, (a) in the case of election
of Independent Directors at the option of any LIH Entity, either (1) for the
election of the Independent Directors proposed by the specified committees in
accordance with Article II, or (2) in the same proportion as the votes cast by
other holders of Voting Securities, (b) in the case of LIH, for the LIH
Director, and (c) in the case of LIH II, for the LIH II Director.
Section 1.04. Further Restrictions on Conduct.
(a) Unless waived or approved in advance in accordance with Section
5.02(b) hereof, each of the LIH Entities severally covenants and agrees that
until the Standstill Termination Date, neither it nor any of its Affiliates or
Associates shall:
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(i) initiate, propose, make, or in any way participate in, directly or
indirectly, any "solicitation" of "proxies" to vote, or seek to influence any
Person with respect to the voting of, any Voting Securities, or become a
"participant" in a "solicitation" or "election contest" (as such terms are
defined or used in Regulation 14A under the Exchange Act, as in effect on the
date hereof), in any election contest with respect to the election or removal of
the Independent Directors proposed by the specified committees in accordance
with Article II;
(ii) other than as contemplated by Section 1.01(a) solicit, offer, seek
or propose to any other Person (including without limitation the Company) any
form of merger with, tender or exchange offer for securities of, sale or
liquidation of assets of, or similar business combination transaction with or
involving the Company or its Affiliates or Associates; provided, however, the
foregoing shall not restrict any such action relating to a merger or similar
business combination with the purpose and effect of the Company or its
Affiliates and Associates acquiring the business, voting securities or assets of
another Person; or
(iii) take any other action inconsistent with the foregoing.
Section 1.05. Reports. Until the Standstill Termination Date, each of
the LIH Entities shall deliver to the Company, promptly after any acquisition or
Transfer of Voting Securities, an accurate written report specifying the amount
and class of Voting Securities acquired or Transferred in such transaction and
the amount of each class of Voting Securities owned by it or any of its
Affiliates or Associates after giving effect to such transaction; provided,
however, that no such report need be delivered with respect to any such
acquisition or Transfer of Voting
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Securities by the LIH Entities that is reported in a statement on Schedule 13D
filed with the Commission and delivered to the Company by the LIH Entities or
any of their respective Affiliates or Associates in accordance with Section
13(d) of the Exchange Act and the rules thereunder. The Company shall be
entitled to rely on such reports and statements on Schedule 13D for all purposes
of this Agreement.
ARTICLE II
BOARD OF DIRECTORS
Section 2.01. Initial Composition of Board of Directors.
(a) The number of directors comprising the Board of Directors shall be
seven.
(b) As of the date hereof, the Board of Directors shall consist of the
LIH Director set forth on Exhibit 1 hereto, the LIH II Director set forth on
Exhibit I hereto and the Company Director, two Independent Directors, the Third
Independent Director and the Fourth Independent Director, all as set forth on
Exhibit 2 hereto.
Section 2.02 Proportional Representation.
(a) Until the Standstill Termination Date, except as indicated in
paragraph (b) below, the Company and each LIH Entity shall use their respective
best efforts to cause the composition of the Board to continue to reflect, or to
fully implement, the proportionate representation of the LIH Director, the LIH
II Director, Company Director and Independent Directors set forth in Section
2.01. At each annual meeting of stockholders following the Closing at which the
term of any Independent Director is to expire, unless such annual meeting shall
be scheduled to occur after the Standstill Termination Date, or at any time
prior to the Standstill Termination Date that a vacancy of an Independent
Director on the Board of Directors is to be filled, the identity of such
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Independent Director to stand for election to the Board of Directors or to fill
the vacancy on the Board, as the case may be, shall be determined in the
following manner:
(i) If the term of any Third Independent Director expires or
such position on the Board becomes vacant, the Third Independent
Director Nominating Committee shall propose to the Board of Directors a
person to serve as the Third Independent Director on the slate to be
recommended by the Board of Directors or to fill such vacancy.
(ii) If the term of any Independent Director (excluding the
Fourth Independent Director) expires or such position on the Board
becomes vacant, the Independent Director Nominating Committee shall
propose to the Board of Directors a person to serve as an Independent
Director on the slate to be recommended by the Board of Directors or to
fill such vacancy.
(iii) If the term of the Fourth Independent Director expires
or such position on the Board becomes vacant, the Fourth Independent
Director Nominating Committee shall propose to the Board of Directors a
person to serve as the Fourth Independent Director on the slate to be
recommended by the Board of Directors or to fill such vacancy.
(iv) The Board of Directors shall recommend to stockholders
the Independent Directors proposed in accordance with the foregoing
provisions and include such Independent Directors on their slate of
directors or, in the case of any vacancy elect such Independent
Directors to the Board, unless the Board determines that to do so would
constitute a breach of its fiduciary obligations to the Company's
stockholders.
(b) All rights of LIH and obligations of the Company relative to LIH's
designation of representatives on the Board of Directors (including the LIH, LIH
II, Company and Independent
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Directors) shall terminate if, at the date of determination, the aggregate
number of shares of Common Stock Beneficially Owned by the LIH Entities and any
Affiliate or Associate thereof which is a signatory to this Agreement is less
than 50% of the number of Shares acquired by LIH at the Closing pursuant to the
Stock Purchase Agreement (as adjusted for stock dividends, splits,
recombinations and the like). All rights of the LIH Entities and obligations of
the Company relative to the designation of representatives on the Board of
Directors (including LIH, LIH II, Company and Independent Directors) shall
terminate if at any time Stockholder Voting Power shall be 5% or less of Total
Voting Power. In such event, references in Section 2.02(i) and (iii) to the
Third Independent Director Nominating Committee and Fourth Independent Director
Nominating Committee shall be deemed references to the Independent Director
Nominating Committee.
(c) Other than as set forth in paragraph (b) above, the Company shall
cause each of the LIH Director and the LIH II Director designated by LIH and LIH
II, respectively, to be included in the slate of nominees recommended by the
Board of Directors to the Company's stockholders for election as directors at
each annual meeting of the stockholders of the Company and shall use all
reasonable efforts to cause the election of each such LIH Director and LIH II
Director, including soliciting proxies in favor of the election of such persons,
or, in the case of any vacancy affecting any LIH Director or LIH II Director,
elect to the Board an LIH Director designated by LIH or an LIH II Director
designated by LIH II, unless the Board of Directors determines that to do so
would constitute a breach of its fiduciary obligations to the Company's
stockholders.
Section 2.03. Voting
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(a) Until the first to occur of (i) the Standstill Termination Date,
(ii) the aggregate number of shares of Common Stock Beneficially Owned by the
LIH Entities and any Affiliate or Associate thereof which is a signatory to this
Agreement decreasing to less than 50% of the number of Permitted Shares, or
(iii) the Stockholder Voting Power decreasing to 5% or less of Total Voting
Power, except in the case of a Stockholder Interested Transaction (as defined
below), the Company shall not take any action described in Exhibit 3 hereto
without the affirmative vote of a majority of the entire Board of Directors,
which majority includes the LIH II Director.
(b) The Company shall not take any action relating to a Stockholder
Interested Transaction, unless such Stockholder Interested Transaction has been
approved by the affirmative vote of a majority of the Independent Directors.
Each of LIH, LIH II and LIH III severally agrees that it shall not, and shall
not take any action which would cause the Company or its Board of Directors to,
enter into or participate in any Stockholder Interested Transaction which has
not been approved by the affirmative vote of a majority of the Independent
Directors. If requested by a majority of the Independent Directors, each of LIH,
LIH II and LIH III severally agrees to cause the LIH Director or the LIH II
Director, as the case may be, not to vote upon or consent to any Stockholder
Interested Transaction, but such directors may be counted for purposes of any
quorum necessary to such action. "STOCKHOLDER INTERESTED TRANSACTION" shall mean
any transaction with or involving an LIH Entity, its respective Affiliates or
Associates or relating to this Agreement, including, without limitation, any
amendment, modification or waiver hereof or thereof.
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Section 2.04 Assignment of Certain Rights. LIH II hereby assigns to
Harvest Partners III, L.P., a Delaware limited partnership ("HP III"), all of
its rights under this Agreement relative to (i) LIH II's designation of an LIH
II representative on the Board of Directors, and (ii) any management rights to
which it may be entitled pursuant to Section 2.05 below. The Company hereby
expressly consents to such assignment and agrees that all of its obligations
with respect to such designation and management rights shall be enforceable
against the Company by HP III. HP III hereby expressly agrees to be bound by the
provisions of this Agreement and that this Agreement is enforceable against it.
Section 2.05 Venture Capital Operating Company Status. In the event
that (i) at any time LIH II is not entitled to designate at least one member for
election to the Board of Directors, 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 HP III 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 consistent with the terms hereof,
grant to LIH II such management rights as the Company shall determine, the
exercise of which would (after taking into account the assignment pursuant to
Section 2.04 above), in the opinion of counsel to the HP III, enable HP III to
continue to qualify as a VCOC.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES
Section 3.01 Representations and Warranties of the Company. The Company
represents and warrants to each LIH Entity that (a) the Company is a corporation
duly incorporated, validly existing and in good standing under the laws of the
state of Delaware and has the corporate power and authority to enter into this
Agreement and to carry out its obligations hereunder, (b) the execution and
delivery of this Agreement by the Company and the consummation by the Company of
the transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of the Company and no other corporate proceedings
on the part of the Company are necessary to authorize this Agreement or any of
the transactions contemplated hereby, and (c) this Agreement has been duly
executed and delivered by the Company and constitutes a valid and binding
obligation of the Company, and, assuming this Agreement constitutes a valid and
binding obligation of each LIH Entity, is enforceable against the Company in
accordance with its terms.
Section 3.02. Representations and Warranties of the LIH Entities. Each
of LIH, LIH II and LIH III severally represents and warrants to the Company that
(a) it is a limited liability company duly organized, validly existing and in
good standing under the laws of the state of Delaware and has the corporate
power and authority to enter into this Agreement and to carry out its
obligations hereunder, (b) the execution and delivery of this Agreement by such
LIH Entity and the consummation by such LIH Entity of the transactions
contemplated hereby have been duly authorized by all necessary corporate action
on the part of such LIH Entity and no other corporate proceedings on the part of
such LIH Entity are necessary to authorize this Agreement
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or any of the transactions contemplated hereby, and (c) this Agreement has been
duly executed and delivered by such LIH Entity and constitutes a valid and
binding obligation of such LIH Entity, and, assuming this Agreement constitutes
a valid and binding obligation of the Company, is enforceable against such LIH
Entity in accordance with its terms.
ARTICLE IV
DEFINITIONS
For purposes of this Agreement, the following terms shall have the
following meanings:
Section 4.01. "AFFILIATE" or "ASSOCIATE" shall mean an affiliate or
associate of a person, as such terms are defined in Section 203 of the Delaware
General Corporation Law; provided, however, that an LIH Entity shall not be
deemed an "Affiliate" of any other LIH Entity for the purposes of LIH, LIH II,
or LIH III, as the case may be, causing any of the "Affiliates" of the other LIH
Entities from taking, or refraining from taking, any action under this
Agreement.
Section 4.02. "BENEFICIALLY OWN" or "BENEFICIAL OWNERSHIP" with respect
to any securities shall mean having "beneficial ownership" of such securities
(as determined pursuant to Rule 13d-3 under the Exchange Act), including
pursuant to any agreement, arrangement or understanding, whether or not in
writing.
Section 4.03. "CLOSING" shall have the meaning specified in the
recitals to this Agreement.
Section 4.04. "COMMISSION" shall mean the Securities and Exchange
Commission.
Section 4.05. "COMPANY DIRECTOR" shall mean the Company's Chief
Executive Officer.
Section 4.06. "EXCHANGE ACT" shall mean the Securities Exchange Act of
1934.
Section 4.07. "FOURTH INDEPENDENT DIRECTOR" shall mean the Independent
Director nominated in accordance with the provisions of Section 2.02(a)(iii).
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Section 4.08. "FOURTH INDEPENDENT DIRECTOR NOMINATING COMMITTEE" shall
mean a committee of three directors, comprised of two Independent Directors
other than the Third Independent Director and the LIH II Director. Any action of
the Fourth Independent Director Nominating Committee shall be unanimous.
Section 4.09. "INDEPENDENT DIRECTOR" shall mean any person who is a
director of the Company and who is independent of and otherwise unaffiliated
with any of the LIH Entities, the Company or their respective Affiliates or
Associates (other than as a director, or holder with Beneficial Ownership of
less than 5% of the Voting Securities, of the Company), and shall not be an
officer or an employee, agent, consultant or advisor (financial, legal or other)
of any of the LIH Entities, the Company 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.
Section 4.10. "INDEPENDENT DIRECTOR NOMINATING COMMITTEE" shall mean a
committee composed of the Independent Directors, other than the Third
Independent Director.
Section 4.11. "PERMITTED SHARES" shall mean 3,306,792 shares of Common
Stock, which number shall increase to include the number of shares of Common
Stock into which the Class B-1 Common Stock and the Series B Preferred Stock is
convertible, once the Class B-1 Common Stock and the Series B Preferred Stock is
converted (as adjusted for stock dividends, splits, recombinations and the
like); provided, however, until the Company consummates or if the Company does
not consummate the transactions contemplated by the Smittybilt Investment
Agreement, 3,306,792 shall be replaced by 3,149,080 in this Section 4.11.
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Section 4.12. "PERSON" shall mean any individual, partnership, joint
venture, corporation, trust, unincorporated organization, government or
department or agency of a government.
Section 4.13. "STANDSTILL TERMINATION DATE" shall mean September 9,
2000.
Section 4.14. "LIH DIRECTOR" shall mean any person designated by LIH.
Section 4.15. "LIH II DIRECTOR" shall mean any person designated by XXX
XX.
Section 4.16. "STOCKHOLDER INTERESTED TRANSACTION" shall have the
meaning set forth in Section 2.03(b).
Section 4.17. "STOCKHOLDER VOTING POWER" at any time shall mean the
aggregate voting power in the general election of directors of all Voting
Securities then Beneficially Owned by the LIH Entities and their respective
Affiliates and Associates which are signatories to this Agreement.
Section 4.18. "SUBSIDIARY" shall mean, as to any Person, any
corporation at least a majority of the shares of stock of which having general
voting power under ordinary circumstances to elect a majority of the Board of
Directors of such corporation (irrespective of whether or not at the time stock
of any other class or classes shall have or might have voting power by reason of
the happening of any contingency) is, at the time as of which the determination
is being made, owned by such Person, or one or more of its Subsidiaries or by
such Person and one or more of its Subsidiaries.
Section 4.19. "THIRD INDEPENDENT DIRECTOR" shall mean the Independent
Director nominated in accordance with the provisions of Section 2.02(a)(i).
Section 4.20. "THIRD INDEPENDENT DIRECTOR NOMINATING COMMITTEE" shall
mean a committee of three directors, comprised of the LIH Director, the LIH II
Director, and one
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Independent Director, other than the Third Independent Director. Any action of
the Third Independent Director Nominating Committee shall be unanimous.
Section 4.21. "TOTAL VOTING POWER" at any time shall mean the total
combined voting power in the general election of directors of all the Voting
Securities then outstanding.
Section 4.22. "TRANSFER" shall mean any sale, transfer, pledge,
encumbrance or other disposition, and to "TRANSFER" shall mean to sell,
transfer, pledge, encumber or otherwise dispose of.
Section 4.23. "VOTING SECURITIES" shall mean at any time shares of any
class of capital stock of the Company which are then entitled to vote generally
in the election of directors.
ARTICLE V
MISCELLANEOUS
Section 5.01. Notices. All notices, requests and other communications
to any party hereunder shall be in writing (including telecopy) and shall be
given,
if to LIH to: LIH Holdings, LLC
c/o Harvest Partners, Inc.
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Telecopier: 000-000-0000
Attention: Xxx X. Xxxxxxxx
with a copy to: Xxxxxx Xxxx & Priest LLP
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Telecopier: 000-000-0000
Attention: Xxxxxxx Xxxxx, Esq.
if to LIH II or LIH III to: LIH Holdings II, LLC
c/o Harvest Partners, Inc.
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Telecopier: 000-000-0000
Attention: Xxx X. Xxxxxxxx
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with a copy to: Xxxxxx, Xxxxx & Bockius LLP
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Telecopier: 000-000-0000
Attention: Xxxxx X. Xxxxxxxxxx, Esq.
if to the Company, to: Xxxx International Holdings, Inc.
000 Xxxx Xxxxxxxxx
Xxxxx, XX 00000
Telecopier: 000-000-0000
Attention: Xxxxxx Vollmershausen,
Chief Executive Officer
with a copy to: Xxxxxxx, Street and Deinard
000 Xxxxx Xxxxx Xxxxxx
Xxxxx 0000
Xxxxxxxxxxx, XX 00000
Telecopier: 000-000-0000
Attention: Xxxx Xxxxx, Esq.
or such address or telecopy number as such party may hereafter specify for the
purpose by notice to the other parties hereto. Each such notice, request or
other communication shall be effective when delivered personally, telegraphed or
telecopied, or, if mailed, five business days after the date of the mailing.
Section 5.02. Amendments; No Waivers.
(a) Any provision of this Agreement may be amended or waived if, and
only if, such amendment or waiver is in writing and signed, in the case of an
amendment, by the LIH Entities and the Company, or in the case of a waiver, by
the party against whom the waiver is to be effective. No amendment or waiver by
the Company shall be effective unless approved by a majority of the Independent
Directors.
(b) No failure or delay by any party in exercising any right, power or
privilege hereunder shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude
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any other or further exercise thereof or the exercise of any other right, power
or privilege. The rights and remedies herein provided shall be cumulative and
not exclusive of any rights or remedies provided by law.
Section 5.03. Successors and Assigns. The provisions of this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns; provided, however, that no party
may assign this Agreement without the other party's prior written consent of the
parties hereto.
Section 5.04. Governing Law. This Agreement shall be construed in
accordance with and governed by the internal laws of the State of Delaware.
Section 5.05. Counterparts; Effectiveness. This Agreement may be signed
in any number of counterparts, each of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument.
This Agreement shall become effective when each party hereto shall have received
counterparts thereof signed by the other party hereto.
Section 5.06. Specific Performance. The Company, LIH, LIH II and LIH
III each acknowledge and agree that the parties' respective remedies at law for
a breach or threatened breach of any of the provisions of this Agreement would
be inadequate and, in recognition of that fact, agrees that, in the event of a
breach or threatened breach by the Company or an LIH Entity of the provisions of
this Agreement, in addition to any remedies at law, each LIH Entity and the
Company, respectively, without posting any bond shall be entitled to obtain
equitable relief in the form of specific performance, a temporary restraining
order, a temporary or permanent injunction or any other equitable remedy which
may then be available.
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Section 5.07. Termination. This Agreement shall terminate on the
Standstill Termination Date.
Section 5.08. Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction to be
invalid, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions of this Agreement shall remain in full force and
effect and shall in no way be affected, impaired or invalidated, provided that
the parties hereto shall negotiate in good faith to attempt to place the parties
in the same position as they would have been in had such provision not been held
to be invalid, void or unenforceable.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first referred to above.
XXXX INTERNATIONAL HOLDINGS, INC.
By /s/ Xxxxxx Vollmershausen
------------------------------------
Its President
------------------------------------
LIH HOLDINGS, LLC
By /s/ Xxx Xxxxxxxx
------------------------------------
Its Manager
------------------------------------
LIH HOLDINGS II, LLC
By /s/ Xxx Xxxxxxxx
------------------------------------
Its Manager
------------------------------------
LIH HOLDINGS III, LLC
By /s/ Xxx Xxxxxxxx
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Its Manager
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ACCEPTED AND AGREED
(as to Sections 2.04 and 2.05)
HARVEST PARTNERS III, L.P.
By Harvest Associates III, LLC
By /s/ Xxx Xxxxxxxx
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Name: Xxx Xxxxxxxx
Authorized Person
Exhibit 1
LIH DIRECTOR
Xxx Xxxxxxxx
LIH II DIRECTOR
Xxxxxx Xxxxxxxx
Exhibit 2
INDEPENDENT DIRECTORS
Xxxxxx Xxxxxxxxx
Xxxxx Xxxxxxxxx
THIRD INDEPENDENT DIRECTOR
Vacant
FOURTH INDEPENDENT DIRECTOR
Xxxxxxxx Xxx
Exhibit 3
1. Any amendment to the Certificate of Incorporation or By-Laws of the
Company;
2. any reclassification, combination, split, subdivision, redemption,
purchase or other acquisition, directly or indirectly, of any debt or
equity security of the Company or any Subsidiary;
3. any sale, lease, transfer or other disposition (other than in the
ordinary course of business and other than to the Company or another
wholly owned Subsidiary), in one or more related transactions, of the
assets of the Company or any Subsidiary the book value of which assets
exceeds 2% of consolidated assets of the Company and its Subsidiaries;
4. any merger, consolidation, liquidation or dissolution of the Company or
any Subsidiary, other than with or into the Company or another wholly
owned Subsidiary;
5. any acquisition of any other business;
6. any investment by the Company or any Subsidiary in or loans, advances
or extensions of credit by the Company or any Subsidiary to, any Person
(other than (i) the Company or a Subsidiary, (ii) short term
investments in the ordinary course of business, or (iii) loans, or
advances to customers, officers, employees and suppliers in the
ordinary course of business (collectively the "EXCEPTED INVESTMENTS AND
LOANS")), which together with all such other investments, loans and
advances at the time owned by the Company and its Subsidiaries
(exclusive of the Excepted Investments and Loans) would exceed an
amount equal to 2% of consolidated assets;
7. any acquisition by the Company or any Subsidiary of assets, other than
investment or loan assets, not in the ordinary course of business;
8. issue or sell any capital stock of the Company or any Subsidiary, other
than (i) issuance of capital stock of the Company authorized for
issuance pursuant to stock plans or agreements in effect at the date
hereof, and (ii) issuance of shares of capital stock of the Company or
any Subsidiary, in one or more related transactions, the amount of
which does not exceed at the date of issuance or sale of such shares
(or the date of issuance or grant of any related right to acquire such
shares) in excess of 2% of the outstanding shares of capital stock of
such class;
9. any declaration or payment of any dividend or distribution with respect
to shares of the Company's capital stock; and
10. any incurrence, assumption or issuance by the Company or its
Subsidiaries of any indebtedness for money borrowed, not in the
ordinary course of business, if, immediately
after giving effect thereto and the application of proceeds therefrom
the aggregate amount of such indebtedness of the Company and its
Subsidiaries would exceed $5,000,000.
11. establishment of, or continued existence of, any committee of the Board
of Directors with the power to approve any of the foregoing.
