EXHIBIT 10.2
GOVERNANCE AGREEMENT
Agreement dated as of September 9, 1997 between Xxxx International
Holdings, Inc., a Delaware corporation (the "COMPANY"), and LIH Holdings, LLC, a
Delaware limited liability company (the "STOCKHOLDER").
WHEREAS, Xxxxx X. Xxxx ("XXXX") and the Stockholder propose to enter
into a stock purchase agreement (the "STOCK PURCHASE AGREEMENT") dated the date
hereof pursuant to which, among other things, subject to the terms and
conditions to be contained in the Stock Purchase Agreement, the Stockholder
would acquire 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
hereof; and
WHEREAS, Xxxx and the Stockholder have sought 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 have required that certain arrangements be put in place
relating to the acquisition and disposition of securities of the Company by the
Stockholder and related provisions concerning the Stockholder's relationship
with the Company, have negotiated the terms of this Agreement and have concluded
that, subject to execution and delivery of this Agreement, giving its approval
under
Section 203 of the Delaware General Corporation Law and implementing the
arrangements contemplated by this Agreement is in the best interests of the
Company and its stockholders; and
WHEREAS, in consideration of such approval, the Stockholder desires to
establish in this Agreement certain terms and conditions concerning the
acquisition and disposition of securities of the Company by the Stockholder and
its Affiliates and Associates, and related provisions concerning the
Stockholder's relationship with the Company;
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements contained herein, and intending to be legally bound
hereby, the Company and the Stockholder hereby agree as follows:
ARTICLE I
STANDSTILL AND VOTING
SECTION 1.01. Acquisition of Voting Securities.
(a) Until the Standstill Termination Date, the Stockholder covenants
and agrees that the Stockholder will not, and will not permit its Affiliates or
Associates to, Beneficially Own any Voting Securities in excess of 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 limitation, the acquisition of Voting Securities by any Stockholder
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, the Stockholder or an Affiliate or Associate of
the Stockholder, or any Person acting in concert with the Stockholder or any of
its 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 the Stockholder in order to permit the acquisition by
Stockholder 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 the Stockholder commencing a tender offer or exchange offer,
then the Stockholder may commence a tender or exchange offer for all Voting
Securities not owned by the Stockholder or its 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 Stockholder or its Affiliates and Associates Beneficially Own more than
the Permitted Shares, inadvertently or otherwise, then the Stockholder 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) The Stockholder shall not permit any Affiliate or Associate thereof
to Beneficially Own any Voting Securities unless such Person becomes a signatory
to this Agreement and a "STOCKHOLDER" hereunder.
SECTION 1.02. Limited Restrictions on Transfer. Prior to the Standstill
Termination Date, the Stockholder, and each Affiliate or Associate thereof which
acquires Voting Securities in accordance with the terms of this Agreement, will
not Transfer Beneficial Ownership of any Voting Securities to any of its
Affiliates or Associates unless each such Person becomes a signatory to this
Agreement and a "STOCKHOLDER" hereunder. The Stockholder agrees to inclusion of
the following legend on certificates representing its 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 Governance Agreement between the holder and the Company
dated as of September 9, 1997, 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 Stockholder during
the continuance of this Agreement.
SECTION 1.03. Voting. Until the Standstill Termination Date, all Voting
Securities Beneficially Owned by the Stockholder 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 the Stockholder, 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 and (b) for the Stockholder Directors.
SECTION 1.04. Further Restrictions on Conduct.
(a) Unless waived or approved in advance in accordance with Section
5.02(b) hereof, the Stockholder covenants and agrees that until the Standstill
Termination Date, neither the Stockholder nor any Affiliate or Associate thereof
shall:
(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, the
Stockholder 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 the Stockholder or any
Affiliate or Associate thereof 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 Securities by the Stockholder that is
reported in a statement on Schedule 13D filed with the Commission and delivered
to the Company by the Stockholder or any Affiliate or Associate thereof 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 after the
Closing under the Stock Purchase Agreement shall be seven.
(b) Prior to the Closing, the Board of Directors shall take such action
as is required under applicable law to cause to be elected to the Board of
Directors, effective upon the Closing, the two Stockholder Directors set forth
on Exhibit 1 hereto.
(c) A third director, the Third Independent Director, shall be proposed
by Stockholder, not less than ten business days following the date hereof and
submitted for approval by the Independent Directors serving on the Company's
Board of Directors prior to Closing. The Stockholder shall provide the
Independent Directors with such information as the Independent Directors may
reasonably request regarding the proposed Third Independent Director. Such
Independent Directors shall notify Stockholder of such approval or disapproval
within ten business days following receipt of notice of the proposed Third
Independent Director. Failure to so notify Stockholder within such ten business
day period shall be deemed disapproval of such proposed Third Independent
Director. Upon any such disapproval, the Stockholder may submit for approval
another proposed Third Independent Director in the manner of the original
proposal. The Board of Directors shall take such action as is required under
applicable law to cause to be elected by the Board of Directors, effective upon
Closing, the Third Independent Director.
(d) A fourth director, the Fourth Independent Director, shall be
proposed by the Independent Directors serving on the Company's Board of
Directors prior to Closing not less than ten business days following the date
hereof and submitted for approval by the Stockholder. The Independent Directors
shall provide the Stockholder with such information as the Stockholder may
reasonably request regarding the proposed Fourth Independent Director. The
Stockholder shall notify such Independent Directors of such approval or
disapproval within ten business days following receipt of notice of the proposed
Fourth Independent Director. Failure to so notify such Independent Directors
within such ten business day period shall be deemed disapproval of such proposed
Fourth Independent Director. Upon any such disapproval, such Independent
Directors may submit for approval another proposed Fourth Independent Director
in the manner of the original proposal. The Board of Directors shall take such
action as is required under applicable law to cause to be elected by the Board
of Directors, effective upon Closing, the Fourth Independent Director.
(e) The remaining directors comprising the Board of Directors,
effective upon the Closing, shall consist of the Company Director and the two
Independent Directors proposed by the Independent Directors serving on the
Company's Board of Directors prior to Closing and set forth on Exhibit 2 hereto.
(f) Notwithstanding paragraphs (c) and (d) above, if at the time of
Closing, both the Third Independent Director and the Fourth Independent Director
have not been approved in the manner contemplated by paragraphs (c) and (d),
then, at the time of the Closing, the Board of Directors of the Company shall be
comprised of the directors contemplated by paragraphs (b) and (e) above and, in
addition, the two other Independent Directors currently serving on the Board of
Directors and not named on Exhibit 2 hereto. Immediately following Closing, the
nominating committees of the Board of Directors set forth in Section 2.02 (a)
shall be formed and, consistent with Section 2.02(a), each of the Company and
Stockholder shall use its best efforts to cause the Third Independent Director
and Fourth Independent Director to be proposed by the Third Independent Director
Nominating Committee and the Fourth Independent Director Nominating Committee,
respectively, to the Board of Directors (i) for inclusion on the slate of
director nominees to be recommended to stockholders by the Board of Directors at
the 1997 Annual Meeting of Stockholders to serve upon the expiration of the term
of the two current Independent Directors not named on Exhibit 2 hereto, or (ii)
if earlier, to fill any vacancy resulting from the resignation of a current
Independent Director not named on Exhibit 2 hereto. The Company shall use its
best efforts to cause such resignations to occur as soon as practicable
following the proposal of director candidates by the Third Independent Director
and Fourth Independent Director Nominating Committees and concurrently with
election of the successor directors. In the event of any failure of either such
current Independent Director to resign concurrently with the proposed election
of the new Independent Director candidate to succeed such current Independent
Director, the Company and the Stockholder shall use their respective best
efforts, for the period until the 1997 Annual Meeting of Stockholders, to cause
the size of the Board of Directors to be increased to accommodate the proposed
election of such new Independent Director and to cause any such new Independent
Director candidate to be elected to the Board of Directors in the manner
contemplated in Section 2.02 hereof for the filling of vacancies.
SECTION 2.02. Proportional Representation.
(a) Following the Closing and until the Standstill Termination Date,
except as indicated in paragraph (b) below, each of the Company and Stockholder
shall use its best efforts to cause the composition of the Board to continue to
reflect, or if paragraph (f) of Section 2.01 is operative to fully implement,
the proportionate representation of Stockholder Directors, Company Director and
Independent Directors set forth in paragraph (a) to (d) of 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 that a vacancy of
an Independent Director on the Board of Directors is to be filled, the identity
of such 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, initially
proposed by the Stockholder and thereafter the Third Independent
Director Nominating Committee, 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) initially proposed by the Independent
Directors on the existing Board of Directors and thereafter by the
Independent Director Nominating Committee, 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,
initially proposed by the Independent Directors on the existing Board
of Directors and thereafter by the Fourth Independent Director
Nominating Committee, 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) The number of Stockholder Directors which the Stockholder shall be
entitled to designate shall be reduced to one if, at the date of determination,
the number of shares of Common Stock Beneficially Owned by Stockholder or any
Affiliate or Associate thereof which is a signatory to this Agreement is less
than 50% of the number of Shares acquired by the Stockholder at the Closing
pursuant to the Stock Purchase Agreement (as adjusted for stock dividends,
splits, recombinations and the like). In the event that the number of directors
which the Stockholder is entitled to designate is reduced, thereafter such
number of directors may not be increased. All rights of Stockholder and
obligations of the Company relative to Stockholder's designation of
representatives on the Board of Directors (including Stockholder, 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 Stockholder Director designated by the Stockholder 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 Stockholder Director, including soliciting proxies in
favor of the election of such persons, or, in the case of any vacancy affecting
any Stockholder Director, elect to the Board a Stockholder Director designated
by the remaining Stockholder Director, or if none, the Stockholder, 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.
(a) Until the first to occur of (i) the Standstill Termination Date,
(ii) the number of shares of Common Stock Beneficially Owned by Stockholder or
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 at least one Stockholder 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.
Stockholder agrees that Stockholder 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, Stockholder shall cause
the Stockholder Directors to not 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 the Stockholder, its Affiliates or Associates
or relating to this Agreement, including, without limitation, any amendment,
modification or waiver hereof or thereof.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.01. Representations and Warranties of the Company. The
Company represents and warrants to the Stockholder 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 the Stockholder, is enforceable
against the Company in accordance with its terms.
SECTION 3.02. Representations and Warranties of the Stockholder. The
Stockholder 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 the Stockholder and the consummation
by the Stockholder of the transactions contemplated hereby have been duly
authorized by all necessary corporate action on the part of the Stockholder and
no other corporate proceedings on the part of the Stockholder 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 Stockholder and
constitutes a valid and binding obligation of the Stockholder, and, assuming
this Agreement constitutes a valid and binding obligation of the Company, is
enforceable against the Stockholder 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.
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 2.01(d) and
Section 2.02(a)(iii).
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 one Stockholder 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 the Stockholder, the Company or their 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 the Stockholder, the
Company or their
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 comprised of the Independent Directors, other than the Third
Independent Director.
SECTION 4.11. "PERMITTED SHARES" shall mean 1,933,346 shares of Common
Stock of the Company (as adjusted for stock dividends, splits, recombinations
and the like).
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 the third
anniversary of the Closing.
SECTION 4.14. "STOCKHOLDER DIRECTOR" shall mean any person designated
by the Stockholder.
SECTION 4.15. "STOCKHOLDER INTERESTED TRANSACTION" shall have the
meaning set forth in Section 2.03(b).
SECTION 4.16. "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 Stockholder or its Affiliates and
Associates which are signatories to this Agreement.
SECTION 4.17. "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 4.18. "THIRD INDEPENDENT DIRECTOR" shall mean the Independent
Director nominated in accordance with the provisions of Section 2.01(c) and
Section 2.02(a)(i).
SECTION 4.19. "THIRD INDEPENDENT DIRECTOR NOMINATING COMMITTEE" shall
mean a committee of three directors, comprised of two Stockholder Directors and
one Independent Director, other than the Third Independent Director. Any action
of the Third Independent Director Nominating Committee shall be unanimous.
SECTION 4.20. "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 4.21. "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 4.22. "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 the Stockholder, to: LIH Holdings, LLC
c/o Harvest Partners, Inc.
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Telecopier: 000-000-0000
Attention: Xxx X. Xxxxxxxx, General Partner
with a copy to: Xxxx & Priest LLP
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Telecopier: 000-000-0000
Attention: Xxxxxxx Xxxxx, Esq.
if to the Company, to: Xxxx International Holdings, Inc.
000 Xxxx Xxxxxxxxx
Xxxxx, XX 00000
Attention: Chief Executive Officer
with a copy to: Xxxxxxx, Street and Deinard
000 Xxxxx Xxxxx Xxxxxx
Xxxxx 0000
Xxxxxxxxxxx, XX 00000
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 Stockholder 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 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.
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 and the Stockholder
each acknowledges and agrees 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 the Stockholder of the provisions
of this Agreement, in addition to any remedies at law, the Stockholder 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.
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.
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/ X. X. XxXxxxx
----------------------------------
Its Chief Executive Officer
-------------------------------
LIH HOLDINGS, LLC
By /s/ Xxx X. Xxxxxxxx
----------------------------------
Its Manager
-------------------------------
EXHIBIT 1
STOCKHOLDER DIRECTORS
Xxx Xxxxxxxx
Xxxxxx Xxxxxxxx
EXHIBIT 2
INDEPENDENT DIRECTORS
Xxxxxx Xxxxxxxxx
Xxxxx Xxxxxxxxx
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.
