<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
SCHEDULE 13D
(Rule 13d-101)
INFORMATION TO BE INCLUDED
IN STATEMENTS FILED PURSUANT
TO RULE 13d-1(a) AND AMENDMENTS
THERETO FILED PURSUANT TO RULE 13d-2(a)
(Amendment No. 3)(1)
LUND INTERNATIONAL HOLDINGS, INC.
- --------------------------------------------------------------------------------
(Name of Issuer)
Common Stock, par value $.10 per share.
- --------------------------------------------------------------------------------
(Title of Class of Securities)
550 368 104
- --------------------------------------------------------------------------------
(CUSIP Number)
Ira D. Kleinman
c/o Harvest Partners, Inc.
280 Park Avenue, 33rd Floor
New York, New York 10017
(212) 599-6300
- --------------------------------------------------------------------------------
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
With Copies To:
Philip H. Werner, Esq.
Morgan, Lewis & Bockius LLP
101 Park Avenue
New York, New York 10178
(212) 309-6000
December 23, 1998
- --------------------------------------------------------------------------------
(Date of Event Which Requires Filing of This Statement)
If the filing person has previously filed a statement on Schedule 13G
to report the acquisition that is the subject of this Schedule 13D, and is
filing this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the
following box / /.
NOTE: Schedules filed in paper format shall include a signed original
and five copies of the schedule, including all exhibits. See Rule 13d-7(b) for
other parties to whom copies are to be sent.
(Continued on following pages)
(Page 1 of 33 Pages)
(1)The remainder of this cover page shall be filled out for a reporting
person's initial filing on this form with respect to the subject class of
securities, and for any subsequent amendment containing information which would
alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not
be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
<PAGE> 2
- -------------------- ----------------------------
CUSIP No. 550368104 13D Page 2 of 33 Pages
- -------------------- ----------------------------
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
LIH HOLDINGS, LLC EIN: 13-3961151
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) /X/
(b) / /
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
WC
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEM 2(d) or 2(e) / /
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
DELAWARE
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
0
---------------------------------------------------------
NUMBER OF 8 SHARED VOTING POWER
SHARES
BENEFICIALLY 3,149,080
OWNED BY ---------------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER
REPORTING
PERSON WITH 0
---------------------------------------------------------
10 SHARED DISPOSITIVE POWER
3,149,080
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
3,149,080
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* / /
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
49.9%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
CO
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
-2-
<PAGE> 3
- -------------------- ----------------------------
CUSIP No. 550368104 13D Page 3 of 33 Pages
- -------------------- ----------------------------
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
LIH INVESTORS, L.P.
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) /X/
(b) / /
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
AF
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEM 2(d) or 2(e) / /
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
DELAWARE
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
0
----------------------------------------------------------
NUMBER OF 8 SHARED VOTING POWER
SHARES
BENEFICIALLY 3,149,080
OWNED BY ----------------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER
REPORTING
PERSON WITH 0
----------------------------------------------------------
10 SHARED DISPOSITIVE POWER
3,149,080
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
3,149,080
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* / /
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
49.9%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
PN
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
-3-
<PAGE> 4
- -------------------- ----------------------------
CUSIP No. 550368104 13D Page 4 of 33 Pages
- -------------------- ----------------------------
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
LIH MANAGEMENT, L.P.
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) /X/
(b) / /
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
AF
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEM 2(d) or 2(e) / /
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
DELAWARE
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
0
----------------------------------------------------------
NUMBER OF 8 SHARED VOTING POWER
SHARES
BENEFICIALLY 3,149,080
OWNED BY ----------------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER
REPORTING
PERSON WITH 0
----------------------------------------------------------
10 SHARED DISPOSITIVE POWER
3,149,080
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
3,149,080
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* / /
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
49.9%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
PN
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
-4-
<PAGE> 5
- -------------------- ----------------------------
CUSIP No. 550368104 13D Page 5 of 33 Pages
- -------------------- ----------------------------
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
LIH, INC.
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) /X/
(b) / /
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
AF
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEM 2(d) or 2(e) / /
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
DELAWARE
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
0
----------------------------------------------------------
NUMBER OF 8 SHARED VOTING POWER
SHARES
BENEFICIALLY 3,149,080
OWNED BY ----------------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER
REPORTING
PERSON WITH 0
----------------------------------------------------------
10 SHARED DISPOSITIVE POWER
3,149,080
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
3,149,080
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* / /
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
49.9%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
CO
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
-5-
<PAGE> 6
- -------------------- ----------------------------
CUSIP No. 550368104 13D Page 6 of 33 Pages
- -------------------- ----------------------------
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
LIH HOLDINGS II, LLC EIN: 13-3979586
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) /X/
(b) / /
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
WC
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEM 2(d) or 2(e) / /
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
DELAWARE
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
NUMBER OF 0
SHARES ----------------------------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY
EACH 3,149,080
REPORTING ----------------------------------------------------------
PERSON WITH 9 SOLE DISPOSITIVE POWER
0
----------------------------------------------------------
10 SHARED DISPOSITIVE POWER
3,149,080
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
3,149,080
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* / /
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
49.9%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
CO
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
-6-
<PAGE> 7
- -------------------- ----------------------------
CUSIP No. 550368104 13D Page 7 of 33 Pages
- -------------------- ----------------------------
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
LIH INVESTORS II, L.P.
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) /X/
(b) / /
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
AF
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEM 2(d) or 2(e) / /
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
DELAWARE
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
NUMBER OF 0
SHARES ----------------------------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY
EACH 3,149,080
REPORTING ----------------------------------------------------------
PERSON WITH 9 SOLE DISPOSITIVE POWER
0
----------------------------------------------------------
10 SHARED DISPOSITIVE POWER
3,149,080
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
3,149,080
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* / /
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
49.9%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
PN
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
-7-
<PAGE> 8
- -------------------- ----------------------------
CUSIP No. 550368104 13D Page 8 of 33 Pages
- -------------------- ----------------------------
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
LIH MANAGEMENT II, L.P.
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) /X/
(b) / /
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
AF
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEM 2(d) or 2(e) / /
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
DELAWARE
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
NUMBER OF 0
SHARES ----------------------------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY
EACH 3,149,080
REPORTING ----------------------------------------------------------
PERSON WITH 9 SOLE DISPOSITIVE POWER
0
----------------------------------------------------------
10 SHARED DISPOSITIVE POWER
3,149,080
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
3,149,080
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* / /
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
49.9%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
PN
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
-8-
<PAGE> 9
- -------------------- ----------------------------
CUSIP No. 550368104 13D Page 9 of 33 Pages
- -------------------- ----------------------------
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
HARVEST PARTNERS III, L.P.
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) /X/
(b) / /
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
AF
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEM 2(d) or 2(e) / /
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
DELAWARE
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
NUMBER OF 0
SHARES ----------------------------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY
EACH 3,149,08
REPORTING ----------------------------------------------------------
PERSON WITH 9 SOLE DISPOSITIVE POWER
0
----------------------------------------------------------
10 SHARED DISPOSITIVE POWER
3,149,080
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
3,149,080
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* / /
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
49.9%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
PN
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
-9-
<PAGE> 10
- -------------------- ----------------------------
CUSIP No. 550368104 13D Page 10 of 33 Pages
- -------------------- ----------------------------
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
HARVEST PARTNERS III BETEILIGUNGSGESELLSCHAFT BURGERLICHEN
RECHTS (MIT HAFTUNGSBESCHRANKUNG)
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) /X/
(b) / /
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
AF
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEM 2(d) or 2(e) / /
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
GERMANY
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
NUMBER OF 0
SHARES ----------------------------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY
EACH 3,149,080
REPORTING ----------------------------------------------------------
PERSON WITH 9 SOLE DISPOSITIVE POWER
0
----------------------------------------------------------
10 SHARED DISPOSITIVE POWER
3,149,080
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
3,149,080
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* / /
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
49.9%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
PN
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
-10-
<PAGE> 11
- -------------------- ----------------------------
CUSIP No. 550368104 13D Page 11 of 33 Pages
- -------------------- ----------------------------
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
HARVEST ASSOCIATES III, LLC
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) /X/
(b) / /
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
AF
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEM 2(d) or 2(e) / /
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
DELAWARE
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
NUMBER OF 0
SHARES ----------------------------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY
EACH 3,149,080
REPORTING ----------------------------------------------------------
PERSON WITH 9 SOLE DISPOSITIVE POWER
0
----------------------------------------------------------
10 SHARED DISPOSITIVE POWER
3,149,080
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
3,149,080
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* / /
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
49.9%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
CO
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
-11-
<PAGE> 12
- -------------------- -----------------------------
CUSIP No. 550368104 13D Page 12 of 33 Pages
- -------------------- -----------------------------
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
LIH HOLDINGS III, LLC
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) /X/
(b) / /
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
WC
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEM 2(d) or 2(e) / /
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
DELAWARE
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
0
NUMBER OF ----------------------------------------------------------
SHARES 8 SHARED VOTING POWER
BENEFICIALLY
OWNED BY 3,149,080
EACH ----------------------------------------------------------
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON WITH
0
----------------------------------------------------------
10 SHARED DISPOSITIVE POWER
3,149,080
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
3,149,080
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* / /
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
49.9%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
CO
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
-12-
<PAGE> 13
- -------------------- ----------------------------
CUSIP No. 550368104 13D Page 13 of 33 Pages
- -------------------- ----------------------------
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
LIH INVESTORS III, L.P.
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) /X/
(b) / /
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
AF
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEM 2(d) or 2(e) / /
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
DELAWARE
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
NUMBER OF 0
SHARES ----------------------------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY
EACH 3,149,080
REPORTING ----------------------------------------------------------
PERSON WITH 9 SOLE DISPOSITIVE POWER
0
----------------------------------------------------------
10 SHARED DISPOSITIVE POWER
3,149,080
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
3,149,080
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* / /
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
49.9%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
PN
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
-13-
<PAGE> 14
- -------------------- ----------------------------
CUSIP No. 550368104 13D Page 14 of 33 Pages
- -------------------- ----------------------------
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
LIH MANAGEMENT III, L.P.
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) /X/
(b) / /
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
AF
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEM 2(d) or 2(e) / /
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
DELAWARE
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
NUMBER OF 0
SHARES ----------------------------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY
EACH 3,149,080
REPORTING ----------------------------------------------------------
PERSON WITH 9 SOLE DISPOSITIVE POWER
EACH
0
----------------------------------------------------------
10 SHARED DISPOSITIVE POWER
3,149,080
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
3,149,080
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* / /
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
49.9%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
PN
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
-14-
<PAGE> 15
This Amendment (the "Third Amendment") to the Statement on Schedule 13D
originally filed on September 18, 1997 (the "Original Statement"), as amended by
the First Amendment to the Original Statement filed on November 26, 1997 and by
the Second Amendment to the Original Statement filed on January 7, 1998 (as so
amended, the "Statement"), amends and restates Items 2 and 5 and amends Items 3,
4, 6 and 7 of the Statement. Capitalized terms used but not defined in this
Third Amendment shall have the respective meanings ascribed to them in the
Statement.
Item 2. Identity and Background
Item 2 as set forth in the Statement is amended and restated to read in
its entirety as follows:
(a) This Statement is being filed by each of the following persons
pursuant to Rule 13d-2(a) promulgated by the Securities and Exchange Commission
(the "Commission"): (i) LIH Holdings, LLC, a Delaware limited liability company
("LIH Holdings"); (ii) LIH Investors, L.P., a Delaware limited partnership ("LIH
Investors"); (iii) LIH Management, L.P., a Delaware limited partnership ("LIH
Management"); (iv) LIH, Inc., a Delaware corporation ("LIH, Inc."); (v) LIH
Holdings II, LLC, a Delaware limited liability company ("LIH Holdings II"); (vi)
LIH Investors II, L.P., a Delaware limited partnership ("LIH Investors II");
(vii) LIH Management II, L.P., a Delaware limited partnership ("LIH Management
II"); (viii) Harvest Partners III, L.P., a Delaware limited partnership ("HP
III"); (ix) Harvest Partners III Beteiligungsgesellschaft burgerlichen Rechts
(mit Haftungsbeschrankung), a German civil law partnership (the "German Fund");
(x) Harvest Associates III, LLC, a Delaware limited liability company ("Harvest
Associates III"); (xi) LIH Holdings III, LLC, a Delaware limited liability
company ("LIH Holdings III"); (xii) LIH Investors III, L.P., a Delaware limited
partnership ("LIH Investors III"); and (xiii) LIH Management III, L.P., a
Delaware limited partnership ("LIH Management III" and, collectively with LIH
Holdings, LIH Investors, LIH Management, LIH, Inc., LIH Holdings II, LIH
Investors II, LIH Management II, HP III, the German Fund, Harvest Associates
III, LIH Holdings III and LIH Investors III, the "Reporting Persons").
LIH Holdings was organized solely for the purpose of acquiring shares
of Common Stock of the Company pursuant to the Stock Purchase Agreement (as
defined in Item 3) and has not engaged in any business other than in connection
with the acquisition of such shares of Common Stock. LIH Investors is an
investment partnership that owns a majority of the membership interests of LIH
Holdings. LIH Management serves as the general partner of LIH Investors and LIH,
Inc. serves as the general partner of LIH Management (and of LIH Management II
and LIH Management III).
LIH Holdings II was organized for the purpose of acquiring the Shares
(as defined in Item 3) pursuant to the Investment Agreement (as defined in Item
3) and has not engaged in any business other than in connection with the
acquisition of the Shares. LIH Investors II is an investment partnership that
owns a minority of the membership interests of LIH Holdings II. LIH Management
II serves as the general partner of LIH Investors II. LIH, Inc. serves as the
general partner of LIH Management II (and of LIH Management and LIH Management
III). HP III and the German Fund are investment partnerships that, taken
together, own a majority of the membership interests in LIH Holdings II.
Pursuant to their respective partnership agreements, HP III and the German Fund
are generally required to invest on a "parallel" basis--that is, to purchase and
sell the same securities (allocated between them on a pro rata basis) at the
same time and on the same terms. Harvest Associates III serves as the General
Partner of HP III and the Verwaltende Gesellschafter (Administrative Partner) of
the German Fund.
LIH Holdings III recently was organized for the purpose of acquiring
the 1998 Shares (as defined below) pursuant to the AVS Investment Agreement (as
defined below) and has not engaged in any business other
-15-
<PAGE> 16
than in connection with the acquisition of the 1998 Shares. LIH Investors III is
an investment partnership that owns a minority of the membership interests of
LIH Holdings III. LIH Management III serves as the general partner of LIH
Investors III. LIH, Inc. serves as the general partner of LIH Management III
(and of LIH Management and LIH Management II). HP III and the German Fund, taken
together, own a majority of the membership interests in LIH Holdings III.
(b) The address of the principal offices of each of the Reporting
Persons is c/o Harvest Partners, Inc. ("Harvest"), 280 Park Avenue, 33rd Floor,
New York, New York 10017.
(c) Attached as Schedule A is the name and principal occupation (where
applicable) of each manager, general partner, executive officer and/or director
of each of the Reporting Persons. The business address of each such person is
c/o Harvest Partners, Inc., 280 Park Avenue, 33rd Floor, New York, New York
10017. Schedule A is incorporated into and made a part of this Statement on
Schedule 13D.
(d) During the last five years, none of the Reporting Persons nor any
person listed on Schedule A has been convicted in a criminal proceeding
(excluding traffic violations or similar misdemeanors).
(e) During the last five years, none of the Reporting Persons nor any
person listed on Schedule A has been a party to a civil proceeding of a judicial
or administrative body of competent jurisdiction and as a result of such
proceeding was or is subject to a judgment, decree or final order enjoining
future violations of, or prohibiting or mandating activities subject to, federal
or state securities laws or finding any violation with respect to such laws.
Item 3. Source and Amount of Funds or Other Considerations
Item 3 as set forth in the Statement is amended by adding the following
language at the end thereof:
On April 21, 1998, at a meeting of the holders of the Common Stock,
approval was obtained for the conversion of the Series A Preferred Stock into
shares of Class B-1 Common Stock, which is non-voting. Accordingly, on such
date, the 1,493,398 shares of Series A Preferred Stock then held by LIH Holdings
II were automatically converted into an equal number of shares of Class B-1
Common Stock.
LIH Holdings III has entered into an Investment Agreement dated as of
December 22, 1998 (the "AVS Investment Agreement") with the Company, BancBoston
Capital Inc., a Massachusetts corporation ("BancBoston"), Liberty Mutual
Insurance Company, a Massachusetts corporation ("Liberty Mutual"), Massachusetts
Mutual Life Insurance Company, a Massachusetts corporation ("MassMutual"),
MassMutual Corporate Investors, a Massachusetts business trust ("MMCI"),
MassMutual Participation Investors, a Massachusetts business trust ("MMPI"), and
MassMutual Corporate Value Partners Limited, a Cayman Islands corporation
("MMCVP"). Each of BancBoston, Liberty Mutual, MassMutual and/or certain of
their respective affiliates is a limited partner of HP III.
On December 23, 1998, pursuant to the terms of the AVS Investment
Agreement, LIH Holdings III purchased from the Company 587,787 shares of Common
Stock and 179,316.6 shares of Series B Preferred Stock, par value $.01 per share
(the "Series B Preferred Stock"; the shares of Common Stock and Series B
Preferred Stock purchased by LIH Holdings III under the AVS Investment Agreement
being collectively referred to as the "1998 Shares") for an aggregate purchase
price of $16,666,667 in cash. LIH Holdings III obtained the funds to pay the
purchase price of the 1998 Shares from its working capital.
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<PAGE> 17
The Series B Preferred Stock entitles the holder thereof to cumulative
quarterly cash dividends, when, as and if declared by the Company's Board of
Directors, at a rate of 15.0 percent of stated value per annum, beginning on
April 30, 1999. The Series B Preferred Stock has a stated value of $70.00 per
share, may be redeemed by the Company at any time on or after December 29, 2007
and must be redeemed by the Company at the request of a majority of the holders
of the shares of Series B Preferred Stock then outstanding given at any time on
and after the earliest of: (i) December 29, 2007; (ii) the first date on which
any person or group (as such term is defined for purposes of Rule 13d-3 under
the Securities Exchange Act of 1934, as amended) other than LIH Holdings, LIH
Holdings II, LIH Holdings III or any of their respective affiliates or
associates owns, beneficially and of record, securities representing at least
50% of the Common Stock, excluding any securities acquired by such person or
group from LIH Holdings, LIH Holdings II, LIH Holdings III or any of their
respective affiliates or associates (a "Change of Control") and (iii) a merger,
consolidation, recapitalization, reorganization or similar transaction in which
holders of Common Stock are given the opportunity to receive consideration for
their shares. Following the approval of a majority of the holders of the
then-outstanding Common Stock present at a meeting called to approve the
conversion of shares of Series B Preferred Stock into shares of Common Stock,
each share of Series B Preferred Stock may be converted into 10 shares of Common
Stock (as adjusted from time to time), in each case at the option of the holder
thereof, subject to the terms of the Certificate of Designation, Preferences and
Rights of Series B Preferred Stock (the "Series B Preferred Certificate of
Designation"). Pursuant to the terms of the AVS Investment Agreement, the
Company has undertaken to seek such stockholder approval on or before April 30,
1999. Pursuant to the terms of the Series B Preferred Certificate of
Designation, none of LIH Holdings III, any affiliate or associate thereof
(including, without limitation, LIH Holdings and LIH Holdings II) or their
respective transferees may convert shares of Series B Preferred Stock into
shares of Common Stock until the earliest to occur of: (a) September 9, 2000;
(b) the date as of which a Change of Control occurs; (c) the date on which, by
the affirmative vote of a majority of the Company's Independent Directors, such
conversion is approved; (d) the date of any transfer of shares of Series B
Preferred Stock by LIH Holdings III or any of its affiliates or associates (but
the conversion right described in this clause (d) shall apply only with respect
to the shares transferred) other than any such transfer (A) by LIH Holdings III
or any of its affiliates or associates to any person if, immediately after
giving effect to such transfer and conversion, the transferee and such
transferee's affiliates and associates would hold more than 49% of the
outstanding Common Stock, or (B) to LIH Holdings, LIH Holdings II, LIH Holdings
III or any of their respective affiliates or associates; and (e) the first date
as of which LIH Holdings, LIH Holdings II, LIH Holdings III 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 Second Amended
and Restated Governance Agreement (as defined below); provided, however, that
LIH Holdings III and its affiliates and associates may, at any time after the
above-described stockholder approval has been obtained, convert shares of Series
B Preferred Stock into Common Stock, at their option, in order to attain or
maintain a percentage of outstanding shares of Common Stock held in the
aggregate by LIH Holdings, LIH Holdings II, LIH Holdings III and their
respective affiliates and associates that does not exceed 49.9%.
Pursuant to the AVS Investment Agreement, the Company makes certain
representations, warranties and covenants and agrees to indemnify LIH Holdings
III and its affiliates and associates.
The foregoing descriptions of the AVS Investment Agreement and the
Series B Preferred Stock are qualified in their entirety by reference to the AVS
Investment Agreement and the Series B Preferred Certificate of Designation,
respectively, copies of which have been filed as exhibits hereto.
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<PAGE> 18
Item 4. Purposes of Transactions
Item 4 as set forth in the Statement is amended by adding the
following language at the end thereof:
LIH Holdings III has acquired the 1998 Shares in order to provide a
portion of the funds required for the consummation by the Company on December
23, 1998, of its purchase, for cash, of all the issued and outstanding shares of
capital stock of Auto Ventshade Company ("Auto Ventshade").
As a condition to the consummation of the transactions contemplated
thereby, the AVS Investment Agreement required that the Amended and Restated
Governance Agreement be further amended and restated (as so further amended and
restated, the "Second Amended and Restated Governance Agreement"). Accordingly,
LIH Holdings, LIH Holdings II and LIH Holdings III (collectively, the "LIH
Parties") and the Company have entered into such Second Amended and Restated
Governance Agreement, which became effective upon the closing under the AVS
Investment Agreement and replaces in its entirety the Amended and Restated
Governance Agreement which is of no further force and effect.
Pursuant to the Second Amended and Restated Governance Agreement, each
of the LIH Parties severally agrees that until the Standstill Termination Date
(September 9, 2000) it will not take any action or omit to take any action to
allow the aggregate number of voting securities of the Company beneficially
owned (as determined pursuant to Section 13d-3 of the Securities Exchange Act of
1934, as amended) by the LIH Parties and their affiliates and associates to
exceed 3,306,792 shares of Common Stock (or 3,149,080 shares, if the closing
under the SB Investment Agreement (as defined below) does not occur), 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) (the
"Permitted Shares"), except for: (i) the acquisition of voting securities from
the Company which has been approved by the vote of a majority of the Company's
Independent Directors; and (ii) the acquisition of voting securities pursuant to
a tender or exchange offer made by any LIH Party for all voting securities not
owned by it after a third party (other than the Company) has made a bona fide
tender or exchange offer to purchase 50% or more of the Company's voting
securities. In addition, until the Standstill Termination Date, each of the LIH
Parties severally agrees that it will not: (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 of the Second Amended and Restated Governance
Agreement), in any election contest with respect to the election or removal of
the Company's Independent Directors proposed in accordance with the Second
Amended and Restated Governance Agreement; or (ii) other than as contemplated by
Section 1.01(a) of the Second Amended and Restated Governance Agreement,
solicit, offer or propose to any person any form of merger with the Company, any
tender or exchange offer for securities of the Company, or any sale or
liquidation of the Company's assets.
Pursuant to the Second Amended and Restated Governance Agreement, the
Company and the LIH Parties agree that the Company's Board of Directors will
consist of seven directors, including (i) one director designated by LIH
Holdings, (ii) one director designated by LIH Holdings II, (iii) four
Independent Directors and (iv) the Company's Chief Executive Officer. At any
time when the LIH Parties and their respective affiliates and associates own
less than 50% of the shares of Common Stock purchased by LIH Holdings on the
closing date under the Stock Purchase Agreement, each of LIH Holdings and LIH
Holdings II will lose its right to designate a director. The Second Amended and
Restated Governance Agreement provides that until the Standstill
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<PAGE> 19
Termination Date, each of the LIH Parties will vote its securities of the
Company for the election of the two Independent Directors proposed by the
Independent Director Nominating Committee.
Pursuant to the Second Amended and Restated Governance Agreement, LIH
Holdings II has assigned its rights to designate an LIH Holdings II
representative on the Board of Directors to HP III, which holds a majority of
the membership interests in LIH Holdings II. The Company also agrees, acting
through its Board of Directors in a manner consistent with its fiduciary
obligations and the Second Amended and Restated Governance Agreement, to grant
to LIH Holdings II such additional management rights as may be necessary to
allow 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.
The Second Amended and Restated Governance Agreement also provides that
until the first to occur of: (a) the Standstill Termination Date, (b) the
aggregate number of shares of Common Stock beneficially owned by the LIH Parties
and their respective affiliates and associates is less than 50% of the Permitted
Shares, or (c) the voting power in the general election of directors of all
voting securities then beneficially owned by the LIH Parties and their
respective affiliates or associates decreasing to 5% or less of the total
combined voting power in the general election of directors of all voting
securities then outstanding, the Company may not take identified corporate
actions without the affirmation vote of a majority of the Company's Board of
Directors, which majority includes the director designated by LIH Holdings II.
These actions are: (i) any amendment to the Certificate of Incorporation or
By-Laws of the Company; (ii) any reclassification, combination, split,
subdivision, redemption, purchase or other acquisition, directly or indirectly,
or any debt or equity security of the Company or any subsidiary; (iii) 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 the consolidated assets of the
Company and its subsidiaries; (iv) any merger, consolidation, liquidation or
dissolution of the Company or any subsidiary, other than with or into the
Company or another wholly-owned subsidiary; (v) any acquisition of any other
business; (vi) 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 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; (vii) any acquisition by the Company
or any subsidiary of assets, other than investment or loan assets, not in the
ordinary course of business; (viii) the issuance or sale of any capital stock of
the Company or any subsidiary, other than (a) issuances of capital stock of the
Company authorized for issuance pursuant to stock plans or agreements in effect
at the date of the original Governance Agreement, and (b) the 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; (ix) any declaration or payment of any dividend or distribution
with respect to shares of the Company's capital stock; (x) 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 and (xi) the establishment of, or continued existence of, any
committee of the Company's Board of Directors with the power to approve any of
the foregoing.
The Second Amended and Restated Governance Agreement also provides that
the Company may not take any action with respect to a Stockholder Interested
Transaction (as defined below) unless such transaction has been approved by a
majority of the Independent Directors. A "Stockholder Interested Transaction" is
defined to mean any transaction with the Company, on the one hand, and any of
the LIH Parties or
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<PAGE> 20
their respective affiliates or associates, on the other hand, or relating to the
Second Amended and Restated Governance Agreement, including, without limitation,
any amendment, modification or waiver of the Second Amended and Restated
Governance Agreement.
The foregoing description of the Second Amended and Restated Governance
Agreement is qualified in its entirety by reference to such agreement, a copy of
which has been filed as an exhibit hereto.
Subject to the terms and provisions of the Second Amended and Restated
Governance Agreement, each of the Reporting Persons reserves the right to
acquire, as it deems appropriate, additional shares of Common Stock, through
open market and privately negotiated transactions, by tender offer or otherwise,
and to seek control of the Company. Subject to the terms and provisions of the
Rights Agreement (as defined below), each of LIH Holdings, LIH Holdings II and
LIH Holdings III also reserves the right to dispose of some or all of its shares
of Common Stock, and, in the case of LIH Holdings II, Class B-1 Common Stock,
and, in the case of LIH Holdings III, Series B Preferred Stock, in the open
market or in privately negotiated transactions with third parties or otherwise.
Each of LIH Holdings, LIH Holdings II and LIH Holdings III anticipates
that, from time to time, it, directly through directors that it designates for
election to the Company's Board of Directors or through affiliates or
associates, including Harvest, may identify to the Company businesses to be
considered for acquisition by the Company that are related or complementary to
the Company's current lines of business. In that connection, each of LIH
Holdings, LIH Holdings II and LIH Holdings III also may propose, propose to
arrange, or identify to the Company sources of equity or debt financing.
Other than as set forth in the Statement as amended by this Third
Amendment, in the Second Amended and Restated Governance Agreement, in the AVS
Investment Agreement, in the Rights Agreement, in the Services Agreement and in
the SB Investment Agreement, none of the Reporting Persons has any current plans
or proposals which relate to or would result in any of the results specified in
paragraphs (a) through (j) of Item 4 of Schedule 13D.
Item 5. Interest in Securities of the Issuer
Item 5 as set forth in the Statement is amended and restated in its
entirety to read as follows:
(a) In the aggregate, the Reporting Persons beneficially own 3,149,080
shares of Common Stock, representing approximately 49.9% of the issued and
outstanding shares of Common Stock. LIH Holdings directly beneficially owns
1,686,893 shares of Common Stock, representing approximately 26.7% of the issued
and outstanding shares of Common Stock. LIH Holdings II directly beneficially
owns 874,400 shares of Common Stock, representing approximately 13.9% of the
issued and outstanding shares of Common Stock. LIH Holdings III directly
beneficially owns 587,787 shares of Common Stock, representing approximately
9.3% of the issued and outstanding shares of Common Stock. The percentage
ownership of LIH Holdings, LIH Holdings II and LIH Holdings III in the Company's
Common Stock is based on 6,310,782 issued and outstanding shares of Common Stock
as represented by the Company to LIH Holdings III in the AVS Investment
Agreement. As disclosed on the respective Statements of Beneficial Ownership of
Securities on Form 3 filed with the Commission on September 18, 1997, each of
Harvey J. Wertheim and Ira D. Kleinman, directors of the Company, has been
granted options to purchase 2,000 shares of Common Stock (which are not included
in the beneficial ownership reported by the Reporting Persons).
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<PAGE> 21
As described in Item 2, LIH Investors, LIH Management and LIH, Inc. may
each be deemed to control, directly or indirectly, LIH Holdings. Therefore, each
of LIH Investors, LIH Management and LIH, Inc. may be deemed to have the power
to direct the vote or disposition of the shares of Common Stock directly
beneficially owned by LIH Holdings and, accordingly, may be deemed, for purposes
of determining beneficial ownership pursuant to Rule 13d-3 under the Securities
Exchange Act of 1934, as amended (the "1934 Act"), to beneficially own the
shares of Common Stock held by LIH Holdings.
As described in Item 2, the German Fund and HP III together own a
majority interest in LIH Holdings II and LIH Holdings III, and Harvest
Associates III is the General Partner of HP III and the Administrative Partner
of the German Fund. Additionally, pursuant to their respective partnership
agreements, HP III and the German Fund are generally required to invest on a
"parallel" basis--that is, to purchase and sell the same securities (allocated
between them on a pro rata basis) at the same time and on the same terms.
Therefore, any of the German Fund, HP III and Harvest Associates III may be
deemed to have the power to direct the vote or disposition of the shares of
Common Stock directly beneficially owned by LIH Holdings II and LIH Holdings III
and, accordingly, may be deemed, for purposes of determining beneficial
ownership pursuant to Rule 13d-3 under the 1934 Act, to beneficially own the
shares of Common Stock held by LIH Holdings II and LIH Holdings III.
As disclosed on Schedule A, certain of the principals of LIH, Inc. and
Harvest Associates III are the same individuals. The officers and directors of
LIH, Inc. (Messrs. Mallement, Wertheim, Kane and Kleinman) constitute four of
the five principals of Harvest Associates III. Therefore, the Reporting Persons
could be deemed to be under common control. In addition, it is anticipated that
LIH Holdings, LIH Holdings II and LIH Holdings III will exercise their voting
rights with respect to the Company in a consistent manner and that any
disposition of Common Stock held by any of them will be made by all of them on a
pro rata basis. Therefore, each of the Reporting Persons may be deemed to have
the power to direct the vote or disposition of the shares of Common Stock
directly beneficially owned by each of LIH Holdings, LIH Holdings II and LIH
Holdings III and, accordingly, may be deemed, for purposes of determining
beneficial ownership pursuant to Rule 13d-3 of the 1934 Act, to beneficially own
all the shares of Common Stock held by LIH Holdings, LIH Holdings II and LIH
Holdings III.
(b) The responses of the Reporting Persons to Items (7) through (11) of
the portions of pages 2 through 14 hereto which relate to shares of Common Stock
beneficially owned are incorporated herein by reference.
(c) Except as set forth in Item 3 and pursuant to the AVS Investment
Agreement, there have been no transactions in the shares of Common Stock during
the past sixty days by any Reporting Person or any other person listed on
Schedule A.
(d) No person is known to have the right to receive or the power to
direct the receipt of dividends from, or the proceeds from the sale of, the
shares of Common Stock held by LIH Holdings, LIH Holdings II or LIH Holdings III
other than LIH Holdings, LIH Holdings II or LIH Holdings III, respectively (and
control persons thereof, as described herein).
(e) Not applicable.
Except as described in this Item 5, none of the persons listed on
Schedule A beneficially own any shares of Common Stock.
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<PAGE> 22
Item 6. Contracts, Arrangements, Understandings or Relationships with Respect
to Securities of the Issuer
Item 6 as set forth in the Statement is amended by deleting the last
two paragraphs thereof and adding the following language at the end thereof:
As a condition to the closing of the transactions contemplated by the
AVS Investment Agreement, LIH Holdings III, the other purchasers of Common Stock
and Series B Preferred Stock under the AVS Investment Agreement, LIH Holdings,
LIH Holdings II, National City Venture Corporation, a Delaware corporation
("NCVC"), and the Company have entered into a Rights Agreement dated as of
December 22, 1998 (the "Rights Agreement"). A summary of certain provisions
contained in the Rights Agreement is set forth below:
a) Long-Form Demand Registrations. At any time after September 9, 2000,
if the holders party to the Rights Agreement so request, the Company must
use its best efforts to effect the registration of all Common Stock which
all holders party to the Rights Agreement request to be registered, pro
rata with the other holders party to the Rights Agreement. At its option,
the Company may also register any shares of Common Stock which it desires
to register, but priority will be given to the holders party to the Rights
Agreement if the underwriter determines that market factors require a
limitation on the number of shares to be sold. The Company is obligated to
effect, in the aggregate, five long-form demand registrations, of which the
LIH Parties are entitled to request one such registration, BancBoston is
entitled to request one such registration, Liberty Mutual is entitled to
request one such registration and MassMutual, MMCI, MMPI, MMCVP and NCVC
(taken together) are entitled to request two such registrations. However,
the Company will not be obligated to effect any long-form demand
registration unless the requesting party(ies) request the registration of
at least 450,000 shares of Common Stock (which number of shares will be
appropriately adjusted for any stock splits and the like).
b) Short-Form Demand Registrations. The Company is obligated to effect
an unlimited number of short-form demand registrations on Form S-3 or any
similar or successor form at the request of holders party to the Rights
Agreement and who hold the requisite amount of Common Stock on a
fully-diluted basis. However, the Company will not be obligated to effect
any short-form registration unless the requesting party(ies) request the
registration of at least 200,000 shares of Common Stock (which number of
shares will be appropriately adjusted for any stock splits and the like).
In addition, the Company will not be required to effect more than two
short-form demand registrations in any rolling 12-month period.
c) Piggy-back Registration. If the Company proposes to register any of
its securities (or register its securities for any other person that is not
a party to the Rights Agreement) in connection with the public offering of
such securities, the Company must provide each holder of registrable Common
Stock which is party to the Rights Agreement with written notice thereof.
Upon the written request of any such holder given within 30 days after the
receipt of such notice, the Company will use its best efforts to register
all the shares of Common Stock that such holder requests to be registered;
provided, however, that the shares which the Company proposes to sell will
be given priority over the shares of Common Stock owned by the parties to
the Rights Agreement if the underwriter determines that market factors
require a limitation on the number of shares to be sold.
d) Payment of Expenses. All expenses incurred in connection with any
registration covered by the Rights Agreement will be borne by the Company,
including the fees of one counsel for the parties to the Rights Agreement
participating in the offering; provided, however, that if LIH Holdings, LIH
Holdings II or LIH Holdings III has requested a long-form or short-form
demand registration, it will pay the expenses associated with any special
audit required in connection therewith.
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<PAGE> 23
e) Transfer Restrictions. Each of LIH Holdings, LIH Holdings II, LIH
Holdings III and the other holders party to the Rights Agreement have
agreed, severally and not jointly, not to transfer any shares of Common
Stock or other equity securities of the Company for a period of 180 days
from the closing date (as defined in the SB Investment Agreement) or if the
closing under the SB Investment Agreement does not occur, within 180 days
from September 23, 1998, other than transfers (i) pursuant to transactions
which constitute a "sale of the company" or (ii) to a "permitted
transferee" (generally speaking, an affiliate or other related person) of
such holder which has become a party to the Rights Agreement.
f) Rights of Inclusion. For so long as each of LIH Holdings, LIH
Holdings II, LIH Holdings III and each of their respective permitted
transferees collectively own at least 20% of the shares of Common Stock (on
a fully-diluted basis) owned by LIH Holdings, LIH Holdings II and LIH
Holdings III on the first day of the 180-day period described in paragraph
(e) above, the other holders party to the Rights Agreement (and their
respective permitted transferees who have become parties to the Rights
Agreement) will have the right to participate, pro rata and on the same
terms and conditions, in any sale to any third party of shares of Common
Stock, Class B-1 Common Stock or Series B Preferred Stock by LIH Holdings,
LIH Holdings II, LIH Holdings III or any of their respective permitted
transferees; provided, however, that this "tag-along" right will not apply
to transfers by LIH Holdings, LIH Holdings II, LIH Holdings III or their
respective permitted transferees (i) to a permitted transferee thereof,
(ii) pursuant to a demand registration or a piggy-back registration or
(iii) which, in the aggregate with other transfers (other than transfers
described in clauses (i) and (ii) above or transfers as to which this
"tag-along" right applies), comprise less than 20% of the shares of Common
Stock owned by LIH Holdings, LIH Holdings II and LIH Holdings III (on a
fully-diluted basis) on the first day of the 180-day period described in
paragraph (e) above.
LIH Holdings III has entered into an Investment Agreement dated
December 22, 1998 (the "SB Investment Agreement") with the Company, BancBoston,
Liberty Mutual, MassMutual, MMCI, MMPI and MMCVP in connection with the proposed
acquisition by the Company of all the outstanding capital stock of SmittyBilt,
Inc. ("SmittyBilt"). The SB Investment Agreement provides for the purchase by
LIH Holdings III of 157,712 shares of Common Stock and 31,847.8 shares of Series
B Preferred Stock for an aggregate purchase price of $3,333,333. The closing
under the SB Investment Agreement is conditioned upon the execution of a
satisfactory acquisition agreement between the Company and the current
stockholders of SmittyBilt. Pursuant to the SB Investment Agreement, the Company
makes certain representations, warranties and covenants and agrees to indemnify
LIH Holdings III and its affiliates and associates.
Pursuant to the Services Agreement, the Company has (i) paid to Harvest
fees of $1,337,500, plus reimbursement of expenses, for its services in
connection with Company's acquisition of Auto Ventshade and (ii) has agreed to
pay to Harvest $360,000, plus expenses, for its services in connection with the
Company's proposed acquisition of SmittyBilt, contingent upon the closing of
such acquisition.
Except as otherwise disclosed in the Statement as amended by this Third
Amendment, none of the Reporting Persons, nor, to the best of their knowledge,
any persons listed on Schedule A hereto has any contracts, arrangements,
understandings or relationships (legal or otherwise) with any person with
respect to the securities of the Company.
Other than the Stock Purchase Agreement, the Investment Agreement, the
Second Amended and Restated Governance Agreement, the Services Agreement, the
AVS Investment Agreement, the Rights
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<PAGE> 24
Agreement and the SB Investment Agreement, there are no contracts, arrangements,
understandings or relationships (legal or otherwise) among the Reporting Persons
and between such persons and any other person with respect to any securities of
the Company, including, but not limited to, transfer or voting of any of the
securities, finder's fees, joint ventures, loan or option arrangements, put or
calls, guarantees of profits, division of profits or losses, or the giving or
withholding of proxies.
Item 7. Materials to Be Filed as Exhibits
The Governance Agreement dated as of September 9, 1997 between LIH Holdings and
the Company (formerly Exhibit F) and the Amended and Restated Governance
Agreement dated as of November 25, 1997 among LIH Holdings, LIH Holdings II, HP
III, and the Company (formerly Exhibit H) have been superseded by the Second
Amended and Restated Governance Agreement dated as of December 22, 1998 (Exhibit
K).
The following materials are filed as Exhibits to the Statement, as
amended by this Third Amendment:
A. Information with respect to officers and directors of LIH Holdings,
LLC*+
B. Information with respect to Partners of LIH Investors, L.P.*+
C. Information with respect to Partners of LIH Management, L.P.*+
D. Information with respect to officers and directors of LIH, Inc.*+
E. Stock Purchase Agreement dated as of September 9, 1997 by and among LIH
Holdings, LLC, Allan W. Lund, the Lund Family Limited Partnership, the
Lois and Allan Lund Family Foundation and certain Lund Family Members.*
F. Services Agreement dated as of September 9, 1997 between Harvest
Partners, Inc. and Lund International Holdings, Inc.*
G. Investment Agreement dated as of November 25, 1997 between LIH Holdings
II, LLC and Lund International Holdings, Inc.*
H. Series A Preferred Stock Certificate of Designation.*
I. Class B-1 Common Stock Certificate of Designation.*
J. Investment Agreement dated as of December 22, 1998 among LIH Holdings
III, LLC, BancBoston Capital Inc., Liberty Mutual Insurance Company,
Massachusetts Mutual Life Insurance Company, MassMutual Corporate
Investors, MassMutual Participation Investors, MassMutual Corporate
Value Partners Limited and Lund International Holdings, Inc. (the AVS
Investment Agreement).
K. Second Amended and Restated Governance Agreement dated as of December
22, 1998 among LIH Holdings, LLC, LIH Holdings II, LLC, LIH Holdings
III, LLC, Harvest Partners III, L.P. and Lund International Holdings,
Inc.
-24-
<PAGE> 25
L. Rights Agreement dated as of December 22, 1998 among Lund International
Holdings, Inc. and the participating stockholders party thereto.
M. Series B Preferred Stock Certificate of Designation.
N. Investment Agreement dated as of December 22, 1998 among LIH Holdings
III, LLC, BancBoston Capital Inc., Liberty Mutual Insurance Company,
Massachusetts Mutual Life Insurance Company, MassMutual Corporate
Investors, MassMutual Participation Investors, MassMutual Corporate
Value Partners Limited and Lund International Holdings, Inc. (the SB
Investment Agreement).
- ----------------
* Previously filed
+ Superseded by Schedule A
-25-
<PAGE> 26
SIGNATURE
After reasonable inquiry and to the best of the knowledge and
belief of each of the undersigned, each of the undersigned certifies that the
information set forth in this Third Amendment with respect to the undersigned is
true, complete and correct and each of the undersigned agrees that this Third
Amendment may be filed jointly.
Dated: December , 1998
---
LIH Holdings, LLC
By: /s/ Harvey J. Wertheim
------------------------------------
Name: Harvey J. Wertheim
Title: Manager
LIH Investors, L.P.
By: LIH Management, L.P.,
its General Partner
By: LIH, Inc.
its General Partner
By: /s/ Harvey J. Wertheim
------------------------------------
Name: Harvey J. Wertheim
Title: Chairman and Chief Executive Officer
LIH Management, L.P.
By: LIH, Inc.,
its General Partner
By: /s/ Harvey J. Wertheim
------------------------------------
Name: Harvey J. Wertheim
Title: Chairman and Chief Executive Officer
LIH, Inc.
By: /s/ Harvey J. Wertheim
------------------------------------
Name: Harvey J. Wertheim
Title: Chairman and Chief Executive Officer
-26-
<PAGE> 27
LIH Holdings II, LLC
By: /s/ Ira D. Kleinman
------------------------------------
Name: Ira D. Kleinman
Title: Authorized Person
LIH Investors II, L.P.
By: LIH Management II, L.P.,
its General Partner
By: LIH, Inc.,
its General Partner
By: /s/ Harvey J. Wertheim
------------------------------------
Name: Harvey J. Wertheim
Title: Chairman and Chief Executive Officer
LIH Management II, L.P.
By: LIH, Inc.,
its General Partner
By: /s/ Harvey J. Wertheim
------------------------------------
Name: Harvey J. Wertheim
Title: Chairman and Chief Executive Officer
Harvest Partners III, L.P.
By: Harvest Associates III, LLC,
its General Partner
By: /s/ Harvey J. Wertheim
------------------------------------
Name: Harvey J. Wertheim
Title: Manager
-27-
<PAGE> 28
Harvest Partners III Beteiligungsgesellschaft
burgerlichen Rechts (mit Haftungsbeschrankung)
By: Harvest Associates III, LLC,
its Administrative Partner
By: /s/ Harvey J. Wertheim
------------------------------------
Name: Harvey J. Wertheim
Title: Manager
Harvest Associates III, LLC
By: /s/ Harvey J. Wertheim
------------------------------------
Name: Harvey J. Wertheim
Title: Manager
LIH Holdings III, LLC
By: /s/ Ira D. Kleinman
------------------------------------
Name: Ira D. Kleinman
Title: Authorized Person
LIH Investors III, L.P.
By: LIH Management III, L.P.,
its General Partner
By: LIH, Inc.,
its General Partner
By: /s/ Harvey J. Wertheim
------------------------------------
Name: Harvey J. Wertheim
Title: Chairman and Chief Executive Officer
-28-
<PAGE> 29
LIH Management III, L.P.
By: LIH, Inc.,
its General Partner
By: /s/ Harvey J. Wertheim
------------------------------------
Name: Harvey J. Wertheim
Title: Chairman and Chief Executive Officer
-29-
<PAGE> 30
SCHEDULE A
LIH HOLDINGS, LLC
<TABLE>
<CAPTION>
Name Position Principal Occupation
- -----------------------------------------------------------------------------------------
<S> <C> <C>
Harvey J. Wertheim Manager and President Managing General Partner of Harvest
Partners, Inc., a private equity
investment firm ("Harvest")
Ira D. Kleinman Manager and Secretary General Partner of Harvest
William J. Kane Manager and Treasurer General Partner of Harvest
</TABLE>
LIH INVESTORS, L.P.
The General Partner of LIH Investors, L.P. is LIH Management, L.P., a Delaware
limited partnership.
LIH MANAGEMENT, L.P.
The General Partner of LIH Management, L.P. is LIH, Inc., a Delaware
corporation.
LIH, INC.
<TABLE>
<CAPTION>
Name Position Principal Occupation
- --------------------------------------------------------------------------------------------------------
<S> <C> <C>
Harvey P. Mallement Director and President Managing General Partner of Harvest
Harvey J. Wertheim Director, Chairman and Managing General Partner of Harvest
Chief Executive Officer
Ira D. Kleinman Secretary and Assistant Treasurer General Partner of Harvest
William J. Kane Treasurer and Assistant Secretary General Partner of Harvest
</TABLE>
LIH HOLDINGS II, LLC
The Manager of LIH Holdings II, LLC is Harvest Partners III, L.P., a Delaware
limited partnership.
LIH INVESTORS II, L.P.
The General Partner of LIH Investors II, L.P. is LIH Management II, L.P., a
Delaware limited partnership.
-30-
<PAGE> 31
LIH MANAGEMENT II, L.P.
The General Partner of LIH Management II, L.P. is LIH, Inc., a Delaware
corporation.
HARVEST PARTNERS III, L.P.
The General Partner of Harvest Partners III, L.P. is Harvest Associates III,
LLC, a Delaware limited liability company.
HARVEST PARTNERS III BETEILIGUNGSGESELLSCHAFT BURGERLICHEN RECHTS
(MIT HAFTUNGSBESCHRANKUNG)
The Administrative Partner of Harvest Partners III Beteiligungsgesellschaft
burgerlichen Rechts (mit Haftungsbeschrankung) is Harvest Associates III, LLC, a
Delaware limited liability company.
HARVEST ASSOCIATES III, LLC
<TABLE>
<CAPTION>
Name Position Principal Occupation
- --------------------------------------------------------------------------------
<S> <C> <C>
Harvey J. Wertheim Manager Managing General Partner of Harvest
Harvey P. Mallement Manager Managing General Partner of Harvest
</TABLE>
LIH HOLDINGS III, LLC
The Manager of LIH Holdings III, LLC is Harvest Partners III, L.P., a Delaware
limited partnership.
LIH INVESTORS III, L.P.
The General Partner of LIH Investors III, L.P. is LIH Management III, L.P., a
Delaware limited partnership.
LIH MANAGEMENT III, L.P.
The General Partner of LIH Management III, L.P. is LIH, Inc., a Delaware
corporation.
-31-
<PAGE> 32
EXHIBIT INDEX
The Governance Agreement dated as of September 9, 1997 between LIH
Holdings and the Company (formerly Exhibit F) and the Amended and Restated
Governance Agreement dated as of November 25, 1997 among LIH Holdings, LIH
Holdings II, HP III, and the Company (formerly Exhibit H) have been superseded
by the Second Amended and Restated Governance Agreement dated as of December 22,
1998 (Exhibit K).
The following materials are filed as Exhibits to the Statement, as
amended by this Third Amendment:
A. Information with respect to officers and directors of LIH Holdings,
LLC*+
B. Information with respect to Partners of LIH Investors, L.P.*+
C. Information with respect to Partners of LIH Management, L.P.*+
D. Information with respect to officers and directors of LIH, Inc.*+
E. Stock Purchase Agreement dated as of September 9, 1997 by and among LIH
Holdings, LLC, Allan W. Lund, the Lund Family Limited Partnership, the
Lois and Allan Lund Family Foundation and certain Lund Family Members.*
F. Services Agreement dated as of September 9, 1997 between Harvest
Partners, Inc. and Lund International Holdings, Inc.*
G. Investment Agreement dated as of November 25, 1997 between LIH Holdings
II, LLC and Lund International Holdings, Inc.*
H. Series A Preferred Stock Certificate of Designation.*
I. Class B-1 Common Stock Certificate of Designation.*
J. Investment Agreement dated as of December 22, 1998 among LIH Holdings
III, LLC, BancBoston Capital Inc., Liberty Mutual Insurance Company,
Massachusetts Mutual Life Insurance Company, MassMutual Corporate
Investors, MassMutual Participation Investors, MassMutual Corporate
Value Partners Limited and Lund International Holdings, Inc. (the AVS
Investment Agreement).
K. Second Amended and Restated Governance Agreement dated as of December
22, 1998 among LIH Holdings, LLC, LIH Holdings II, LLC, LIH Holdings
III, LLC, Harvest Partners III, L.P. and Lund International Holdings,
Inc.
L. Rights Agreement dated as of December 22, 1998 among Lund International
Holdings, Inc. and the participating stockholders party thereto.
M. Series B Preferred Stock Certificate of Designation.
N. Investment Agreement dated as of December 22, 1998 among LIH Holdings
III, LLC, BancBoston Capital Inc., Liberty Mutual Insurance Company,
Massachusetts Mutual Life Insurance Company,
-32-
<PAGE> 33
MassMutual Corporate Investors, MassMutual Participation Investors,
MassMutual Corporate Value Partners Limited and Lund International
Holdings, Inc. (the SB Investment Agreement).
- ----------------
* Previously filed
+ Superseded by Schedule A
-33-
<PAGE> 1
EXHIBIT J
================================================================================
INVESTMENT AGREEMENT
DATED AS OF DECEMBER 22, 1998
AMONG
LIH HOLDINGS III, LLC
BANCBOSTON CAPITAL INC.
LIBERTY MUTUAL INSURANCE COMPANY
MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY
MASSMUTUAL CORPORATE INVESTORS
MASSMUTUAL PARTICIPATION INVESTORS
MASSMUTUAL CORPORATE VALUE PARTNERS LIMITED
AND
LUND INTERNATIONAL HOLDINGS, INC.
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
ARTICLE I
DEFINITIONS....................................................................... 2
1.1 Definitions.................................................... 2
1.2 Certain Conventions............................................ 7
ARTICLE II
SALE OF SHARES; CLOSING........................................................... 7
2.1 Purchase and Sale............................................... 7
2.2 Closing......................................................... 7
2.3 Obligations of Purchasers Several and Not Joint................. 8
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY..................................... 8
3.1 Organization of the Company.................................... 8
3.2 Power and Authority............................................. 8
3.3 Capital......................................................... 9
3.4 Subsidiaries.................................................... 10
3.5 No Conflicts.................................................... 10
3.6 Governmental Approvals and Filings.............................. 11
3.7 SEC Documents; Financial Statements............................. 11
3.8 Absence of Changes.............................................. 12
3.9 Legal Proceedings............................................... 12
3.10 Other Negotiations; Brokers..................................... 12
3.11 Exemption from Registration; Restrictions on Offer and Sale
of Same or Similar Securities................................... 12
3.12 Other Agreements................................................ 13
3.13 Holding Company Act and Investment Company Act Status........... 13
3.14 Stock Purchase Agreement........................................ 13
3.15 Disclosure...................................................... 13
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS.................................. 14
4.1 Organization; Power and Authority............................... 14
4.2 No Conflicts.................................................... 14
4.3 Purchase for Investment......................................... 14
4.4 Brokers......................................................... 15
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C>
ARTICLE V
COVENANTS OF THE COMPANY.......................................................... 15
5.1 Regulatory and Other Approvals.................................. 15
5.2 Reservation of Shares........................................... 16
5.3 Use of Proceeds................................................. 16
5.4 Stockholders' Meeting........................................... 16
5.5 Nasdaq National Market.......................................... 16
5.6 Notice and Cure................................................. 16
5.7 Fulfillment of Conditions....................................... 17
ARTICLE VI
CONDITIONS TO OBLIGATIONS OF THE PURCHASERS....................................... 17
6.1 Representations and Warranties.................................. 17
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............................................ 18
6.7 Opinion of Counsel.............................................. 18
6.8 Certificate of Designation...................................... 18
6.9 Transaction Documents........................................... 18
6.10 Delivery of Certificates........................................ 18
6.11 Financing....................................................... 18
6.12 Consummation of the Acquisition................................. 19
6.13 Nasdaq National Market.......................................... 19
6.14 Proceedings..................................................... 19
ARTICLE VII
CONDITIONS TO OBLIGATIONS OF THE COMPANY.......................................... 19
7.1 Representations and Warranties.................................. 19
7.2 Performance..................................................... 19
7.3 Certificate..................................................... 19
7.4 Orders and Laws................................................. 20
7.5 Transaction Documents........................................... 20
7.6 Financing....................................................... 20
</TABLE>
ii
<PAGE> 4
<TABLE>
<S> <C>
ARTICLE VIII
SURVIVAL OF REPRESENTATIONS, WARRANTIES,
COVENANTS AND AGREEMENTS.......................................................... 20
ARTICLE IX
INDEMNIFICATION................................................................... 21
9.1 Indemnification................................................. 21
9.2 Method of Asserting Claims...................................... 21
ARTICLE X
TERMINATION....................................................................... 23
10.1 Termination..................................................... 23
10.2 Effect of Termination........................................... 24
ARTICLE XI
MISCELLANEOUS..................................................................... 24
11.1 Notices......................................................... 24
11.2 Entire Agreement................................................ 25
11.3 Fees and Expenses............................................... 25
11.4 Public Announcements............................................ 25
11.5 Further Assurances.............................................. 26
11.6 Waiver.......................................................... 26
11.7 Amendment....................................................... 26
11.8 Third Party Beneficiaries....................................... 26
11.9 No Assignment; Binding Effect................................... 26
11.10 Headings; Construction.......................................... 27
11.11 Invalid Provisions.............................................. 27
11.12 Governing Law................................................... 27
11.13 Counterparts.................................................... 27
11.14 Limited Recourse................................................ 27
11.15 Consent to Jurisdiction and Service of Process.................. 27
</TABLE>
iii
<PAGE> 5
EXHIBITS
Exhibit A -- Form of Second Amended and Restated Governance Agreement
Exhibit B -- Form of Rights Agreement
Exhibit C -- Form of Series B Certificate of Designation
Exhibit D-1 -- Form of Company Officer's Certificate
Exhibit D-2 -- Form of Company Secretary's Certificate
Exhibit E -- Form of Opinion of Leonard, Street and Deinard
Exhibit F -- Form of Closing Certificate for each Purchaser
SCHEDULES
Schedule I -- Purchased Securities; Purchase Price; Address for Notices
Schedule 3.3 -- Capital of Company
Schedule 3.5 -- No Conflicts
Schedule 3.8 -- Absence of Changes
Schedule 4.1 -- Purchaser's Entity and Jurisdiction
iv
<PAGE> 6
INVESTMENT AGREEMENT dated as of December 22, 1998, among LIH HOLDINGS
III, LLC, a Delaware limited liability company ("LIH Holdings III"),
MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY, a Massachusetts corporation
("MassMutual"), MASSMUTUAL CORPORATE INVESTORS, a Massachusetts business trust
("MMCI"), MASSMUTUAL PARTICIPATION INVESTORS, a Massachusetts business trust
("MMPI") and MASSMUTUAL CORPORATE VALUE PARTNERS LIMITED, a Cayman Islands
corporation ("MMCVP"; MassMutual, MMCI, MMPI and MMCVP being hereinafter
collectively referred to as the "MassMutual Entities"), Liberty Mutual Insurance
Company, a Massachusetts corporation ("Liberty Mutual"), and BancBoston Capital
Inc., a Massachusetts corporation ("BancBoston"; LIH Holdings III, the
MassMutual Entities, Liberty Mutual and BancBoston being hereinafter
collectively referred to as the "Purchasers"), and LUND INTERNATIONAL HOLDINGS,
INC., a Delaware corporation (the "Company").
WHEREAS, (a) LIH Holdings, LLC, a Delaware limited liability company ("LIH
Holdings I"), is presently an Affiliate of LIH Holdings III and the owner of
1,686,893 shares of the Common Stock, par value $0.10 per share (the "Common
Stock"), of the Company and (ii) LIH Holdings II, LLC, a Delaware limited
liability company ("LIH Holdings II"), is presently an Affiliate of LIH Holdings
III and the owner of 874,400 shares of Common Stock and 1,493,398 shares of the
Class B-1 Common Stock (the "Class B-1 Common Stock"), of the Company;
WHEREAS, pursuant to the Stock Purchase Agreement dated as of December __,
1998 (as the same may be amended, supplemented or otherwise modified from time
to time in accordance with the provisions thereof, the "Stock Purchase
Agreement"), the Company agreed, subject to the conditions therein contained, to
acquire (the "Acquisition"), all the outstanding capital stock of Auto Ventshade
Company (the "Target") for a cash purchase price equal to $66 million;
WHEREAS, in order to provide a portion of the funds required for the
Acquisition, on the terms and subject to the conditions set forth herein, the
Company desires to sell to the Purchasers, and each of the Purchasers desires to
purchase from the Company, in the aggregate, 1,047,412 shares of Common Stock
and 252,401.8 shares of Series B Preferred Stock, par value $.01 per share (the
"Series B Preferred Stock"), of the Company, all for an aggregate purchase price
equal to $25,000,000 (the "Aggregate Purchase Price");
WHEREAS, in order to provide the balance of the funds required for the
Acquisition, the Company has entered into (i) the Heller Credit Agreement dated
as of December __, 1998 between the Company and Heller Financial, Inc. (as the
same may be amended, supplemented or otherwise modified from time to time in
accordance with the provisions thereof, the "Heller Credit Agreement") and (ii)
each of the Securities Purchase Agreements dated as of December __, 1998 between
the Company, certain of its subsidiaries, each of the MassMutual Entities and
National City Venture Corporation, a Delaware corporation (as the same may be
amended, supplemented or otherwise modified from time to time in accordance with
the provisions thereof, collectively, the "Securities Purchase Agreements"); and
<PAGE> 7
WHEREAS, the amount of the aforementioned securities to be purchased by
each Purchaser pursuant hereto and the portion of the Aggregate Purchase Price
to be paid by such Purchaser therefor are as set forth opposite such Purchaser's
name in Schedule I.
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
DEFINITIONS
1.1 Definitions. As used in this Agreement, the following defined terms
shall have the respective meanings indicated below:
"Acquisition" has the meaning ascribed to it in the recitals hereto.
"Actions or Proceeding" means any action, suit, proceeding, arbitration or
Governmental or Regulatory Authority investigation or audit.
"Aggregate Purchase Price" has the meaning ascribed to it in the recitals
hereto.
"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 that 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) none of the Purchasers, LIH
Holdings I, LIH Holdings II or any of their respective Affiliates (other than
the Company and its Subsidiaries) shall be deemed to be "Affiliates" of the
Company or any Subsidiary and (ii) neither the Company nor any Subsidiary shall
be deemed to be an "Affiliate" of any Purchaser, LIH Holdings I, LIH Holdings II
or any of their respective Affiliates (other than the Company and its
Subsidiaries).
"Agreement" means this Investment Agreement and the Schedules and Exhibits
hereto and the certificates delivered in connection herewith, as the same may be
amended, supplemented or otherwise modified from time to time in accordance with
the provisions hereof.
-2-
<PAGE> 8
"Amended and Restated Governance Agreement" means the Second Amended and
Restated Governance Agreement, dated as of the date hereof, among the LIH
Entities and the Company, substantially in the form of Exhibit A, as the same
may be amended, supplemented or otherwise modified from time to time in
accordance with the provisions thereof.
"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 cash, cash equivalents,
accounts and notes receivable, chattel paper, documents, instruments, general
intangibles, real estate, equipment, inventory, goods and intellectual property.
"BancBoston" has the meaning ascribed to it in the introductory paragraph
hereto.
"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.
"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 Series B 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 Common Stock" has the meaning ascribed to it in the recitals
hereto.
"Closing" means the closing of the transactions contemplated by Section
2.2.
"Closing Date" means the date on which the Closing actually occurs.
"Common Stock" has the meaning ascribed to it in the recitals hereto.
"Company" has the meaning ascribed to it in the introductory paragraph
hereto.
"Contract" means any agreement, lease, debenture, note, evidence of
Indebtedness, mortgage, indenture, security agreement or other contract or
commitment (whether written or oral).
-3-
<PAGE> 9
"Dispute Period" means the period ending 30 calendar days following
receipt by an Indemnifying Party of an Indemnity Notice.
"Exchange Act" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations promulgated by the SEC thereunder.
"Financial Statement Date" means June 30, 1998.
"Financing Agreements" means the Heller Credit Agreement and the
Securities Purchase Agreements.
"GAAP" means United States generally accepted accounting principles,
consistently applied throughout the specified period and all prior comparable
periods.
"Governmental or Regulatory Authority" means any court, tribunal,
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 or panel of arbitrators, any stock
exchange or quotation service, and the National Association of Securities
Dealers.
"Heller Credit Agreement" has the meaning ascribed to it in the recitals
hereto.
"HSR Act" means the Hart-Scott-Rodino 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, (v) as an account party in respect of letters of
credit and similar instruments and (vi) in the nature of guarantees of the
obligations described in clauses (i) through (v) 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.
-4-
<PAGE> 10
"Liberty Mutual" has the meaning ascribed to it in the introductory
paragraph hereto.
"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 Entities" means LIH Holdings I, LIH Holdings II and LIH Holdings III,
collectively.
"LIH Holdings I" has the meaning ascribed to it in the recitals hereto.
"LIH Holdings II" has the meaning ascribed to it in the recitals hereto.
"LIH Holdings III" has the meaning ascribed to it in the introductory
paragraph hereto.
"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 and other expenses associated with litigation or other proceedings or
with any claim, default or assessment (such fees and expenses to include all
fees and expenses, including the 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 any party hereto or otherwise). As
applied to any Purchaser, "Loss" shall also be deemed to include any
indemnifiable claim of any Purchaser hereunder and any diminution in the value
of the Purchased Securities being purchased by such Purchaser hereunder (or any
successor securities).
"MassMutual" has the meaning ascribed to it in the introductory paragraph
hereto.
"MassMutual Entities" has the meaning ascribed to it in the introductory
paragraph hereto.
"MMCI" has the meaning ascribed to it in the introductory paragraph
hereto.
"MMCVP" has the meaning ascribed to it in the introductory paragraph
hereto.
"MMPI" has the meaning ascribed to it in the introductory paragraph
hereto.
"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 interests of such Person or (ii) receive any benefits or
rights similar to any rights
-5-
<PAGE> 11
enjoyed by or accruing to the holder of shares of capital stock or other equity
interests of such Person, including 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 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.
"Preferred Stock" has the meaning ascribed to it in Section 3.3.
"Purchase Price" means, with respect to each Purchaser, the dollar amount
(representing a portion of the Aggregate Purchase Price) set forth opposite such
Purchaser's name in Schedule I.
"Purchased Securities" means, with respect to each Purchaser, the shares
of Common Stock and Series B Preferred Stock to be purchased by such Purchaser
pursuant to Section 2.1.
"Purchasers" has the meaning ascribed to it in the introductory paragraph
hereto.
"Resolution Period" means the period ending 30 calendar days following
receipt by an Indemnified Party of a Dispute Notice.
"Rights Agreement" means the Rights Agreement to be entered into as of the
Closing Date by LIH Holdings I, LIH Holdings II, the Purchasers, the Company and
the other parties thereto substantially in the form of Exhibit B, as the same
may be amended, supplemented or otherwise modified from time to time in
accordance with the provisions thereof.
"SEC" means the Securities and Exchange Commission.
"SEC Document" has the meaning ascribed to it in Section 3.7.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations promulgated by the SEC thereunder.
"Securities Purchase Agreements" has the meaning ascribed to it in the
recitals hereto.
"Series B Preferred Stock" has the meaning ascribed to it in the recitals
hereto.
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<PAGE> 12
"Series B Certificate of Designation" means the Certificate of Designation
with respect to the Series B Preferred Stock, substantially in the form of
Exhibit C, to be filed with the Secretary of State of the State of Delaware
prior to the Closing.
"Stock Purchase Agreement" has the meaning ascribed to it in the recitals
hereto.
"Subsidiary" means any Person in which the Company, directly or indirectly
through one or more Subsidiaries or otherwise, beneficially owns more than 50%
of either the equity interests in, or the voting control of, such Person.
"Target" has the meaning ascribed to it in the recitals hereto.
"Third Party Claim" has the meaning ascribed to it in Section 9.2(a).
"Transaction Documents" means the Amended and Restated Governance
Agreement, the Rights Agreement and any support or other agreement to be entered
into by two or more of the parties hereto in connection with the transactions
contemplated by this Agreement.
1.2 Certain Conventions. Unless the context of this Agreement otherwise
requires, (i) words of any gender include the other gender, (ii) words (other
than Purchaser) 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" and "Section" refer to the specified Article or Section of this
Agreement, (v) the words "include", "includes" and "including" shall be deemed
to be followed by the phrase "without limitation", and (vi) 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 respective meanings given to them under GAAP.
ARTICLE II
SALE OF SHARES; CLOSING
2.1 Purchase and Sale. At the Closing, on the terms and subject to the
conditions of this Agreement, the Company shall issue and sell to each
Purchaser, and each Purchaser shall purchase from the Company, the shares of
Common Stock and Series B Preferred Stock set forth opposite such Purchaser's
name in Schedule I, free and clear of all Liens, for an aggregate purchase price
(payable in cash in the manner provided in Section 2.2) equal to the Purchase
Price with respect to such Purchaser.
2.2 Closing. The Closing will take place at such location as LIH Holdings
III and the Company mutually agree on the first Business Day as of which each of
the conditions precedent
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set forth in Article VI and Article VII shall have been satisfied or waived as
provided therein, or on such other date as the Company and LIH Holdings III
shall mutually agree. At the Closing, each Purchaser shall pay the Purchase
Price with respect to such Purchaser by wire transfer of immediately available
funds to the account specified by the Company by written notice delivered to the
Purchasers at least two Business Days before the Closing Date. Simultaneously,
the Company shall deliver to each Purchaser certificates, registered in the name
of such Purchaser, representing such Purchaser's Purchased Securities. At the
Closing, there shall also be delivered to the Company and the Purchasers the
opinions, certificates and other Contracts, documents and instruments to be
delivered under Articles VI and VII.
2.3 Obligations of Purchasers Several and Not Joint. Notwithstanding
anything herein to the contrary (other than the proviso contained in this
Section 2.3), the obligations of each Purchaser under this Agreement are
separate from the obligations of each other Purchaser under this Agreement, and
no Purchaser shall be liable or otherwise responsible in any manner for any
obligation of any other Purchaser under this Agreement; provided, however, that
each obligation of a MassMutual Entity hereunder shall be the joint and several
obligation of all of the MassMutual Entities.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to each 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). In the case of all representations and
warranties that expressly relate or are deemed to be made as of the Closing Date
pursuant to this Article III, the Acquisition is deemed to have occurred and the
Target is deemed to be a Subsidiary of the Company.
3.1 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, and is duly qualified, licensed or admitted to do business and 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 for such failures to be
so qualified, licensed, admitted or in good standing which will not,
individually or in the aggregate, have a material adverse effect on the Business
or Condition of the Company.
3.2 Power and Authority. The Company has the requisite power and authority
to execute and deliver this Agreement, the Transaction Documents to which it is
a party, the Stock Purchase Agreement and the Financing Agreements, to perform
its obligations hereunder and thereunder, and to consummate the transactions
contemplated hereby and thereby. The execution and delivery by the Company of
this Agreement, the Transaction Documents to which it is a party,
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the Stock Purchase Agreement and the Financing Agreements, the performance by
the Company of its obligations hereunder and thereunder, and the consummation of
the transactions contemplated hereby and thereby, 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 action necessary to
authorize the execution, delivery and performance by the Company of this
Agreement, the Transaction Documents to which it is a party, the Stock Purchase
Agreement and the Financing Agreements. 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 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.
3.3 Capital. As of the date hereof and as of the Closing Date immediately
before giving effect to the Closing, 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 per share (the "Class B Common Stock"), and
2,000,000 shares of preferred stock, par value $0.01 per share (the "Preferred
Stock"), of which (a) 5,263,370 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, (b) 1,493,398
shares of Class B Common Stock (designated as Class B-1 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, and (c) no shares of Preferred Stock are outstanding. On December 30,
1997, the Company validly issued 1,493,398 shares of Preferred Stock (designated
as Series A Preferred Stock) to LIH Holdings II in compliance with all
applicable federal and state securities laws, which shares were duly converted
into an equal number of shares of Class B-1 Common Stock on April 21, 1998.
Immediately after giving effect to the Closing and the other transactions
contemplated by this Agreement, the Transaction Documents, the Stock Purchase
Agreement or the Financing Agreements to occur as of 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 have been designated as Class B-1 Common Stock, 2,000,000 shares of
Preferred Stock, of which 1,493,398 shares have previously been designated as
Series A Preferred Stock and 292,225 shares shall have been designated as Series
B Preferred Stock, and (ii) the outstanding capital stock of the Company will
consist of 6,310,782 shares of Common Stock, 1,493,398 shares of Class B-1
Common Stock and 252,401.8 shares of Series B Preferred Stock. Except for the
Class B-1 Common Stock and the Series B Preferred Stock, or as set forth in
Schedule 3.3, there are no, and immediately after giving effect to the Closing
and the other transactions contemplated by this Agreement, the Transaction
Documents, the Stock Purchase Agreement or the Financing Agreements to occur on
the Closing Date, there will not be any, (x) outstanding Options with respect to
the Company, (y) agreements, arrangements or understandings to issue Options
with respect to the Company or (z) 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
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issuance at the Closing, the certificates representing the Purchased Securities
of each Purchaser will grant to such Purchaser good and valid title to its
Purchased Securities free and clear of all Liens, and each Purchaser's Purchased
Securities 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 the conversion of all the shares of
Series B Preferred Stock being purchased by the Purchasers hereunder. The shares
of Common Stock referred to above when issued upon conversion, will be duly
authorized, validly issued, fully paid and nonassessable.
Neither the execution, delivery or performance by the Company of this Agreement,
the Transaction Documents to which it is a party, the Stock Purchase Agreement
or the Financing Agreements, nor the issuance of the Purchased Securities of
each Purchaser as contemplated hereby, nor the issuance of shares of Common
Stock upon the conversion of any shares of Class B-1 Common Stock currently
outstanding, nor the issuance of shares of Common Stock upon the conversion of
any shares of Series B Preferred Stock being purchased by any Purchaser
hereunder, nor the consummation of the transactions contemplated by this
Agreement, the Transaction Documents, the Stock Purchase Agreement and the
Financing Agreements, 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 3.3.
3.4 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 admitted to do
business and 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 for such failures to be so qualified, licensed, admitted or in good
standing which 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 and no agreements, arrangements or understandings to
issue Options with respect to any Subsidiary. Except for the capital stock of
the Subsidiaries, neither the Company nor any Subsidiary holds any equity,
partnership, limited liability company, joint venture or other interest in any
Person.
3.5 No Conflicts. The execution and delivery by the Company of this
Agreement, the Transaction Documents to which it is a party, the Stock Purchase
Agreement and the Financing Agreements, the performance by the Company of its
respective obligations hereunder and thereunder, and the consummation of the
transactions contemplated hereby and thereby (including, the filing of the
Series B Certificate of Designation, the issuance of the Purchased Securities of
each Purchaser, the issuance of Common Stock upon the conversion of the shares
of Class B-1 Common
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Stock currently outstanding, the issuance of Common Stock upon the conversion of
the shares of Series B Preferred Stock being purchased by the Purchasers
hereunder), 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 in Schedule 3.5 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, the Stock
Purchase Agreement and the Financing Agreements, 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 is bound.
3.6 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 (a) as may be required under the Exchange Act or, solely
by reason of the Company's acquisition of Target, the HSR Act and (b) the filing
of the Series B 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, the Transaction Documents, the Stock Purchase
Agreement or the Financing Documents or the consummation of the transactions
contemplated hereby or thereby.
3.7 SEC Documents; Financial Statements. Each report, schedule, form,
statement and other document required to be filed by the Company with the SEC
(each an "SEC Document", and collectively, the "SEC Documents") has been so
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. None of the SEC Documents, except to the extent that information contained
therein has been revised or superseded by an SEC Document subsequently filed
with the SEC, contains any untrue statement of a material fact or omits 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 and its Subsidiaries included in the SEC
Documents comply in all material respects with applicable requirements under the
Securities Act and the Exchange Act and any other published rules and
regulations of the SEC with respect to accounting requirements, 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 respective dates thereof and the
consolidated results of their operations and cash flows for the respective
periods then ended (subject, in the case of unaudited
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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).
3.8 Absence of Changes. Since the Financial Statement Date, except as set
forth in Schedule 3.8 hereto or as disclosed in the SEC Documents filed prior to
the date 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.
3.9 Legal Proceedings. There are no Actions or Proceedings pending or, to
the knowledge of the Company, threatened overtly 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 Stock Purchase Agreement or the Financing Agreements,
or (ii) if determined adversely to the Company or such Subsidiary, could
reasonably be expected to, individually or in the aggregate with other such
Actions or Proceedings, have a material adverse effect on the Business or
Condition of the Company.
3.10 Other Negotiations; Brokers. None of the Company, any Subsidiary or
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 Contract that conflicts with any of the transactions contemplated by
this Agreement, the Transaction Documents, the Stock Purchase Agreement or the
Financing Agreements or (ii) has entered into any Contract or had any
discussions with any third party regarding any transaction involving the Company
or any Subsidiary which could result in any Purchaser, any of its stockholders,
members, general or limited partners, or any officer, director, employee, agent
or Affiliate of any Purchaser or any such stockholder, member or partner being
subject to any claim for liability to said third party in connection with this
Agreement, the Transaction Documents, the Stock Purchase Agreement or the
Financing Agreements or the consummation of any of the transactions contemplated
hereby or thereby. Other than Piper Jaffray 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 Stock Purchase
Agreement or the Financing Agreements 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.
3.11 Exemption from Registration; Restrictions on Offer and Sale of Same
or Similar Securities. Assuming the representations and warranties of each
Purchaser set forth in
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Section 4.3 are true and correct in all material respects, the offer and sale of
the Purchased Securities made to each Purchaser pursuant to this Agreement is
exempt from the registration requirements of the Securities Act. Neither the
Company nor any Person authorized to act on its behalf has, in connection with
the offering of the Purchased Securities of any Purchaser, 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 any Purchased Securities pursuant to
this Agreement or that would violate applicable state securities or "blue sky"
laws. Neither the Company nor any Person authorized to act on its behalf has
made, directly or indirectly, any offer or sale of any Purchased Securities or
of securities of the same or a similar class as any Purchased Securities that
could cause any offer or sale of any Purchased Securities 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.
3.12 Other Agreements. Each of the representations and warranties of the
Company contained in the Stock Purchase Agreement are or will 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 each of the date hereof, and
the Closing Date, as though made on and as of such dates. Each of the
representations and warranties of the Company contained in any Financing
Agreement will be true and correct in all material respects (if not qualified by
materiality) or in all respects (if qualified by materiality) on and as of the
Closing Date as though made on and as of such date.
3.13 Holding Company Act and Investment Company Act Status. Neither the
Company nor any Subsidiary is a "holding company" or a "public utility company",
as such terms are defined in the Public Utility Holding Company Act of 1935, as
amended. Neither the Company nor any Subsidiary is an "investment company", or a
company "controlled" by an "investment company", within the meaning of the
Investment Company Act of 1940, as amended.
3.14 Stock Purchase Agreement. The Company has delivered to each Purchaser
a true and complete copy of the Stock Purchase Agreement. The Stock Purchase
Agreement has not been terminated or amended, supplemented or otherwise modified
in any respect, and no party thereto has granted any waiver of any of the terms
or conditions thereof.
3.15 Disclosure. No representation or warranty on the part of the Company
contained in this Agreement, and no statement contained in any schedule or in
any certificate, list or other writing furnished to the Purchasers pursuant to
any provision of this Agreement, including 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.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS
Each Purchaser, severally and not jointly, hereby represents and warrants
to the Company, with respect to such Purchaser only, 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).
4.1 Organization; Power and Authority. Such Purchaser is the type of
business entity set forth opposite its name in Schedule 4.1 hereto, and has been
duly organized and is validly existing and in good standing under the Laws of
the jurisdiction set forth opposite its name in Schedule 4.1 hereto. Such
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 such Purchaser
of this Agreement, the performance by such Purchaser of its obligations
hereunder and the consummation of the transactions contemplated hereby have been
duly and validly authorized by all requisite action on the part of such
Purchaser. This Agreement has been duly and validly executed and delivered by
such Purchaser and constitutes the legal, valid and binding obligation of such
Purchaser enforceable against such 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.
4.2 No Conflicts. The execution, delivery and performance by such
Purchaser of this Agreement, and the consummation by such Purchaser of the
transactions contemplated hereby, will not conflict with, or constitute a
default under, any agreement, indenture or instrument to which such Purchaser is
a party, or result in a violation of (a) such Purchaser's constitutive documents
or (b) any Order of any Governmental or Regulatory Authority having jurisdiction
over such Purchaser or any of its properties. Except for such filings as may be
required by the Exchange Act, no consent, approval or action of, or filing or
registration with, any Governmental or Regulatory Authority is required on the
part of such Purchaser for its execution, delivery and performance of this
Agreement.
4.3 Purchase for Investment. The Purchased Securities being purchased by
such Purchaser hereunder will be purchased by such 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 such Purchased Securities in violation of the Securities
Act, it being understood that the right to dispose of such Purchased Securities
shall (subject to the Amended and Restated Governance Agreement, in the case of
LIH Holdings III) be entirely within the discretion of such Purchaser. Such
Purchaser is an "accredited investor" (as such term is defined in Rule 501(a) of
Regulation D under the Securities
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Act). Such Purchaser has such knowledge and experience in financial and business
matters as to be able to evaluate the merits and risks of its investment in
Purchased Securities pursuant to this Agreement and is able to bear the economic
risk of such investment (including a complete loss of such investment). Such
Purchaser understands that the Purchased Securities being purchased by it
hereunder have not been registered under the Securities Act or any state
securities laws in reliance on exemptions from the registration requirements of
the Securities Act and such state securities laws, which depend upon, among
other things, the accuracy of the representations of such Purchaser set forth in
this Section 4.3.
4.4 Brokers. Other than Piper Jaffray 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 any
Purchaser.
ARTICLE V
COVENANTS OF THE COMPANY
The Company covenants and agrees with each Purchaser that, at all times
from and after the date hereof and until the Closing and, with respect to any
covenant or agreement by its terms to be performed in whole or in part after the
Closing, for the period specified herein or, if no period is specified herein,
indefinitely, the Company will comply with all the covenants and provisions
contained in this Article V, except to the extent that the Purchasers may
otherwise consent in writing.
5.1 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 and other Persons
required of the Company or any Subsidiary to consummate the transactions
contemplated by this Agreement, the Transaction Documents, the Stock Purchase
Agreement and the Financing Agreements, (b) provide such other information and
communications to such Governmental or Regulatory Authorities and other Persons
as any Purchaser or any such Governmental or Regulatory Authorities and other
Person may reasonably request and (c) cooperate with each 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
and other Persons required of such Purchaser to consummate the transactions
contemplated by this Agreement and the Transaction Documents. The Company shall
provide prompt notification to each 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 each Purchaser of any
communications (and, unless precluded by Law, provide each Purchaser with copies
of any such communications that are in writing) with any Governmental or
Regulatory Authority regarding any of the transactions contemplated by this
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Agreement, the Transaction Documents, the Stock Purchase Agreement or the
Financing Agreements.
5.2 Reservation of Shares. The Company shall (a) at all times that the
shares of Series B Preferred Stock being purchased by the Purchasers hereunder
are outstanding, keep reserved the full number of shares of Common Stock
issuable upon conversion of such shares of Series B Preferred Stock and (b) at
all times that the currently outstanding shares of Class B-1 Common Stock are
outstanding, keep reserved the full number of shares of Common Stock issuable
upon conversion of such currently outstanding shares of Class B-1 Common Stock.
5.3 Use of Proceeds. The Company shall use the proceeds from each purchase
and sale of the Purchased Securities hereunder in order to consummate the
Acquisition.
5.4 Stockholders' Meeting. The Company shall on or before April 30, 1999
(and, if necessary, from time to time as requested by any Purchaser thereafter)
call a stockholders meeting for the purpose of approving the conversion of the
Series B Preferred Stock into Common Stock pursuant to the terms of the Series B
Certificate of Designation. The Company shall promptly (and, if necessary, from
time to time as requested by LIH Holdings III) call a stockholders meeting for
the purpose of approving the terms of the Class B-1 Common Stock.
5.5 Nasdaq National Market. Prior to the Closing, the Company shall cause
the shares of Common Stock included in the Purchased Securities to be approved
for listing, subject to notice of issuance, by the Nasdaq National Market. As
soon as practicable after the conversion of the Series B Preferred Stock, the
Company shall cause the shares of Common Stock issuable upon conversion of the
Series B Preferred Stock to be approved for listing, subject to notice of
issuance, by the Nasdaq National Market. The Company shall cause the shares of
Common Stock issuable upon conversion of the currently outstanding Class B-1
Common Stock to be approved for listing, subject to notice of issuance, by the
Nasdaq National Market.
5.6 Notice and Cure. The Company shall notify each Purchaser promptly in
writing of, and contemporaneously shall provide each Purchaser with true and
complete copies of any and all information or documents relating to, and the
Company shall use all commercially reasonable best efforts to cure before the
Closing, any event, transaction or circumstance that causes or will cause any
covenant or agreement of the Company under this Agreement to be materially
breached (if not qualified by materiality) or breached (if qualified by
materiality) or that renders or shall render materially untrue (if not qualified
by materiality) or untrue (if qualified by materiality) 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 each Purchaser promptly in writing of, and the Company shall use
all commercially reasonable best efforts to cure, before the Closing, any
material violation or material breach (in each case, if not qualified by
materiality) or any violation or breach (in each case, if qualified by
materiality) of any representation, warranty, covenant or agreement made by the
Company in this Agreement, whether occurring or arising before, on or after the
date of this Agreement. No notice given pursuant to this
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Section 5.6, and no representation made by any Purchaser contained in Section
4.3, shall have any effect on the representations, warranties, covenants and
agreements contained in this Agreement for purposes of determining satisfaction
of any condition contained herein or shall in any way limit any Purchaser's
right to seek indemnity under Article IX.
5.7 Fulfillment of Conditions. The Company shall take all steps necessary
or desirable and use all commercially reasonable efforts to satisfy each
condition to the obligations of the Purchasers contained in this Agreement and
shall not take or fail to take any action if such action or failure to act could
reasonably be expected to result in the nonfulfillment of any such condition.
ARTICLE VI
CONDITIONS TO OBLIGATIONS OF THE PURCHASERS
The obligations of each 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 (as to such Purchaser) by such
Purchaser in its sole discretion):
6.1 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) and in all respects (if
qualified by materiality) on and as of the Closing Date as though such
representation or warranty was made on and as of the Closing Date.
6.2 Performance. The Company shall have performed and complied with each
agreement, covenant and obligation required by this Agreement to be performed or
complied with by the Company at or before the Closing.
6.3 Officers' Certificates. The Company shall have delivered to the
Purchasers a 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.
6.4 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 Stock Purchase Agreement or the Financing Agreements.
6.5 Regulatory Consents and Approvals. All consents, approvals and actions
of, filings with and notices to any Governmental or Regulatory Authority
necessary to permit each of the Purchasers and the Company to perform their
respective obligations under this Agreement and the Transaction Documents and to
consummate the transactions contemplated by this Agreement,
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the Transaction Documents, the Stock Purchase Agreement and the Financing
Agreements (i) shall have been duly obtained, made or given, (ii) shall be in
form and substance reasonably satisfactory to each 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 Stock Purchase Agreement and the
Financing Agreements shall have occurred.
6.6 Third Party Consents. All consents (or in lieu thereof waivers) to the
performance by the Purchasers and the Company of their respective obligations
under this Agreement and the Transaction Documents or to the consummation of the
transactions contemplated by this Agreement, the Transaction Documents, the
Stock Purchase Agreement or the Financing Agreements, as are required under any
Contract to which any Purchaser, 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 any 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
Stock Purchase Agreement or the Financing Agreements to any Purchaser in its
sole discretion, (i) shall have been obtained, (ii) shall be in form and
substance reasonably satisfactory to each Purchaser in its sole discretion,
(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.
6.7 Opinion of Counsel. Each Purchaser shall have received the opinion of
Leonard, Street and Deinard, counsel to the Company, dated the Closing Date, in
substantially the form of Exhibit E hereto.
6.8 Certificate of Designation. LIH Holdings III shall have received
evidence satisfactory to it that the Series B Certificate of Designation shall
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.
6.9 Transaction Documents. Each of the Transaction Documents shall have
been duly executed and delivered by the respective parties thereto (other than
the relevant Purchaser and, in the case of LIH Holdings III, the other LIH
Entities) and shall be in full force and effect.
6.10 Delivery of Certificates. Duly executed certificates representing
each Purchaser's Purchased Securities shall have been delivered to such
Purchaser.
6.11 Financing. The Company shall have entered into the Financing
Agreements with the other parties thereto, and the terms of each Financing
Agreement shall be reasonably satisfactory to each Purchaser. Simultaneously
with the Closing, the Company shall have received proceeds from borrowings under
the Financing Agreements and from the sale of Purchased
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Securities pursuant hereto in an aggregate amount sufficient to pay the purchase
price under the Stock Purchase Agreement, together with all fees and expenses
required to be paid by the Company in connection with the closing of the
transactions contemplated hereby (including the Acquisition and the financing
thereof).
6.12 Consummation of the Acquisition. Simultaneously with the Closing, all
the conditions set forth in Section 6.3 of the Stock Purchase Agreement shall
have been satisfied and the Acquisition shall have been consummated on the terms
set forth in the Stock Purchase Agreement. None of the terms or conditions of
the Stock Purchase Agreement shall have been amended, supplemented or otherwise
modified, or waived or terminated, in any respect.
6.13 Nasdaq National Market. The Common Stock included in each Purchaser's
Purchased Securities shall have been approved for listing, subject to notice of
issuance, by the Nasdaq National Market.
6.14 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 each Purchaser, in its sole discretion, and its legal counsel, and
each Purchaser shall have received copies of all such documents and other
evidence as such 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
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):
7.1 Representations and Warranties. Each of the representations and
warranties made by any 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.
7.2 Performance. Each 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 such Purchaser at or before the
Closing.
7.3 Certificate. Each Purchaser shall have delivered to the Company a
certificate, dated the Closing Date and executed by a duly authorized
representative of such Purchaser, substantially in the form and to the effect of
Exhibit F attached hereto.
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7.4 Orders and Laws. There shall not be in effect on the Closing Date any
Orders or Laws that became effective after the date 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 Stock Purchase Agreement or the Financing Agreements.
7.5 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.
7.6 Financing. Simultaneously with the Closing, the Company shall have
received proceeds from borrowings under the Financing Agreements and from the
sale of Purchased Securities pursuant hereto in an aggregate amount sufficient
to pay the purchase price under the Stock Purchase Agreement, together with all
fees and expenses required to be paid by the Company in connection with the
closing of the transactions contemplated hereby (including the Acquisition and
the financing thereof).
ARTICLE VIII
SURVIVAL OF REPRESENTATIONS, WARRANTIES,
COVENANTS AND AGREEMENTS
Notwithstanding any right of any 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, each of the Company and the Purchasers has the right to rely fully upon
the representations, warranties, covenants and agreements of the others
contained in this Agreement. The representations, warranties, covenants and
agreements of the Company and each Purchaser contained in this Agreement will
survive the Closing (a) indefinitely with respect to the covenants and
agreements contained herein and the representations and warranties contained in
Sections 3.1, 3.2, 3.3, 3.4, 3.10, 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 or Indemnity Notice (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.
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ARTICLE IX
INDEMNIFICATION
9.1 Indemnification. Whether or not the transactions contemplated by this
Agreement are consummated, the Company (the "Indemnifying Party") shall
indemnify each Purchaser and its Affiliates, and each of their respective
officers, directors, managers, partners, employees, agents, members, authorized
representatives and stockholders (collectively, the "Indemnified Parties", and
each, an "Indemnified Party"), 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 any
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 Stock
Purchase Agreement or any of the Financing Agreements (including 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
any Purchased Securities or (y) the purchase of any Purchased Securities) and
(iii) violations of applicable securities laws by the Company in connection with
the offering of any Purchased Securities; provided, however, that the
Indemnifying Party shall not have any obligations hereunder to an Indemnified
Party in respect of clause (ii) of this Section 9.1 to the extent that a Loss
claimed by such Indemnified Party thereunder is finally adjudicated by a court
of competent jurisdiction to have resulted primarily from the negligence or
wilful misconduct of such Indemnified Party. Except as otherwise provided in
Section 9.2(b), 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
contribution to the payment and satisfaction of the indemnified Losses as shall
be permissible under applicable laws.
9.2 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
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
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provided hereunder except to the extent that 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 succeeding 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 reasonably satisfactory to the Indemnified
Party within 20 Business Days after the delivery to the Indemnifying Party of
the related 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; and 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 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 the Indemnifying Party that does not involve a Third Party Claim,
the Indemnified Party
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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 the 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 as to
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 (including under
the Transaction Documents) or otherwise.
ARTICLE X
TERMINATION
10.1 Termination. This Agreement may be terminated, and the transactions
contemplated hereby may be abandoned:
(a) at any time before the Closing, by written agreement of the Company
and the Purchasers;
(b) at any time before the Closing, by the Company, on the one hand, or
any Purchaser, on the other hand, (i) in the event of a material breach hereof
by any non-terminating party if such non-terminating party fails to cure such
breach within five Business Days following notification thereof by the
terminating party or (ii) upon notification of the non-terminating parties 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 or any
of its Affiliates; and
(c) at any time after June 30, 1999, by the Company, on the one hand, or
any Purchaser, on the other hand, upon notification of the non-terminating
parties 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.
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10.2 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 any
Purchaser, except as provided in the next two 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), (i) the Company will remain liable to each of the
Purchasers for any misrepresentation or breach of warranty, or any
nonfulfillment of or failure to perform any covenant or agreement, on the part
of the Company existing at the time of such termination, and (ii) each of the
Purchasers will remain liable to the other parties hereto for any
misrepresentation or breach of warranty, or any nonfulfillment of or failure to
perform any covenant or agreement, on the part of such Purchaser existing at the
time of such termination. Each of the Company and the Purchasers may seek such
remedies, including damages and reimbursement for fees and expenses of
attorneys, against the others with respect to any misrepresentation, breach,
nonfulfillment or failure referred to in clause (i) or (ii) above as are
provided under this Agreement, including its remedies (if any) under Article IX
with respect thereto, or as are otherwise available at Law or in equity.
ARTICLE XI
MISCELLANEOUS
11.1 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:
(a) if to any Purchaser, to address for notices set forth opposite its
name in Schedule I; and
(b) if to the Company, to:
Lund International Holdings, Inc.
911 Lund Boulevard
Anoka, Minnesota 55303
Facsimile No: (612) 576-4297
Attn: Chief Executive Officer
with copies (which shall not constitute notice) to
the other Purchasers and to:
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Leonard, Street and Deinard
150 South Fifth Avenue
Suite 2300
Minneapolis, Minnesota 55402
Facsimile No: (612) 335-1657
Attn: Mark Weitz, Esq.
All such notices, requests and other communications to any party hereto will (i)
if delivered personally to such party at its address as provided in this Section
11.1, be deemed given upon delivery, (ii) if delivered by facsimile transmission
to such party at its facsimile number as provided in this Section 11.1, be
deemed given upon receipt, (iii) if delivered by mail in the manner described
above to such party at its address as provided in this Section 11.1, be deemed
given on the earlier of the third Business Day following mailing or upon receipt
and (iv) if delivered by overnight courier to such party at its address as
provided in this Section 11.1, 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 communication
is received by any other Person to whom a copy of such notice is to be delivered
pursuant to this Section 11.1). 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 parties hereto.
11.2 Entire Agreement. This Agreement and the Transaction Documents
supersede all prior discussions and agreements between the parties hereto 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.
11.3 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 any Purchaser, the Company shall reimburse each Purchaser for all the
reasonable fees and expenses (including the fees and expenses of counsel,
consultants and accountants), incurred by such Purchaser prior to the Closing in
connection with this Agreement, the Transaction Documents and the transactions
contemplated hereby or thereby.
11.4 Public Announcements. At all times at or before the Closing, none of
the Purchasers will issue or make any statements or releases to the public with
respect to this Agreement or the transactions contemplated hereby without the
consent of the Company, which consent shall not be unreasonably withheld. If any
Purchaser is unable to obtain the approval of its public statement or release
from the Company and such statement or release is, in the opinion of legal
counsel to such Purchaser, required by Law in order to discharge such
Purchaser's disclosure obligations, then such Purchaser may make or issue the
legally required statement or release and promptly furnish the other parties
hereto with a copy thereof. Each of the Purchasers will also obtain the
Company's prior approval of any press release to be issued by or on behalf of
such
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Purchaser following the Closing announcing the consummation of the transactions
contemplated by this Agreement.
11.5 Further Assurances At any time and from time to time after the
Closing, the Company shall execute and deliver to each Purchaser such other
documents and instruments, provide such materials and information and take such
other actions as any Purchaser may reasonably request more effectively to vest
title in such Purchaser to the Purchased Securities being purchased by such
Purchaser hereunder and otherwise to cause the Company to fulfill its
obligations under this Agreement and the Transaction Documents.
11.6 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 (and no such waiver shall
in any event be binding on any other party hereto that is entitled to the
benefits of such term or provision). No waiver by any party hereto 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.
11.7 Amendment. This Agreement may be amended, supplemented or modified
only by a written instrument duly executed by or on behalf of each party hereto.
11.8 Third Party Beneficiaries. The terms and provisions of this Agreement
are intended solely for the benefit of the parties 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.
11.9 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 Purchasers,
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 any Purchaser without
the prior written consent of the other parties hereto, and any attempt to do so
will be void ab initio; provided, however, that (a) LIH Holdings III 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 its interests in the Company
permitted under the Amended and Restated Governance Agreement and (b) each
Purchaser may, to the extent applicable, assign any or all of such right,
interest or obligation in connection with a transfer by it of shares of Common
Stock pursuant to Section 10.2 of the Rights Agreement. Subject to the
immediately 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 any holder of Purchased Securities (or any
successor securities).
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<PAGE> 32
11.10 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.
11.11 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 herefrom 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.
11.12 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.
11.13 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.
11.14 Limited Recourse. Notwithstanding anything in this Agreement (other
than the proviso contained in this Section 11.14), any Transaction Document or
any other document, agreement or instrument contemplated hereby to the contrary,
the obligations of any Purchaser hereunder shall be without recourse to any
Affiliate of such Purchaser or any stockholder, partner, member, officer,
director, manager, employee or agent of such Purchaser or any such Affiliate,
and shall be limited to the assets of such Purchaser; provided, however, that
each obligation of a MassMutual Entity hereunder shall be the joint and several
obligation of all the MassMutual Entities.
11.15 Consent to Jurisdiction and Service of Process. EACH OF THE COMPANY
AND THE PURCHASERS 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
PURCHASERS
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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 PURCHASERS 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 IT AT THE ADDRESS SPECIFIED IN
THIS AGREEMENT, SUCH SERVICE TO BECOME EFFECTIVE 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-
<PAGE> 34
IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by
the duly authorized officer or other representative of each party hereto as of
the date first above written.
LUND INTERNATIONAL HOLDINGS, INC.
By: /s/ Dennis Vollmershausen
---------------------------------
Name: Dennis Vollmershausen
Title: President
LIH HOLDINGS III, LLC
By: /s/ Ira D. Kleinman
---------------------------------
Name: Ira D. Kleinman
Title: Authorized Person
LIBERTY MUTUAL INSURANCE COMPANY
By: /s/ A. Alex Fontanes
---------------------------------
Name: A. Alex Fontanes
Title: Senior Vice President &
Chief Investment Officer
BANCBOSTON CAPITAL INC.
By: /s/ Timothy H. Robinson
---------------------------------
Name: Timothy H. Robinson
Title: Vice President
[SIGNATURE PAGE TO INVESTMENT AGREEMENT]
<PAGE> 35
MASSACHUSETTS MUTUAL LIFE
INSURANCE COMPANY
By: /s/ Michael L. Klofas
----------------------------
Name: Michael L. Klofas
Title: Managing Director
MASSMUTUAL CORPORATE INVESTORS
By: /s/ Michael L. Klofas
----------------------------
Name: Michael L. Klofas
Title: Vice President
The foregoing is executed on behalf of
MassMutual Corporate Investors,
organized under a Declaration of Trust,
dated September 13, 1985, as amended
from time to time. The obligations of
such Trust are not personally binding
upon, nor shall resort be had to the
property of, any of the Trustees,
shareholders, officers, employees or
agents of such Trust, but the Trust's
property only shall be bound.
MASSMUTUAL PARTICIPATION INVESTORS
By: /s/ Michael L. Klofas
----------------------------
Name: Michael L. Klofas
Title: Vice President
The foregoing is executed on behalf of
MassMutual Participation Investors,
organized under a Declaration of Trust,
dated April 7, 1988, as amended from
time to time. The obligations of such
Trust are not personally binding upon,
nor shall resort be had to the property
of, any of the Trustees, shareholders,
officers, employees or agents of such
Trust, but the Trust's property only
shall be bound.
[SIGNATURE PAGE TO INVESTMENT AGREEMENT]
<PAGE> 36
MASSMUTUAL CORPORATE VALUE
PARTNERS LIMITED
By Massachusetts Mutual Life Insurance
Company, as Investment Advisor
By: /s/ Michael L. Klofas
------------------------------------
Name: Michael L. Klofas
Title: Managing Director
[SIGNATURE PAGE TO INVESTMENT AGREEMENT]
<PAGE> 37
[Exhibits and Schedules
Intentionally Omitted]
<PAGE> 1
EXHIBIT K
SECOND AMENDED AND RESTATED GOVERNANCE AGREEMENT
This Second Amended and Restated Governance Agreement, dated as of
December 22, 1998, among Lund 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, Allen W. Lund ("Lund") 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 LIH from Lund, 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, Lund 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
<PAGE> 2
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, 1997 (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-I 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
2
<PAGE> 3
Restated Governance Agreement, dated November 25, 1997 (the "First Amendment"),
which was executed by the Company, LIH and LIH II; and
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 22, 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 22,
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,
3
<PAGE> 4
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 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
commencing 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
4
<PAGE> 5
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.
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 22,
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
5
<PAGE> 6
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:
(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
6
<PAGE> 7
(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 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.
7
<PAGE> 8
(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
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
8
<PAGE> 9
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 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
9
<PAGE> 10
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
(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
10
<PAGE> 11
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.
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
11
<PAGE> 12
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.
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
12
<PAGE> 13
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 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
13
<PAGE> 14
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 l3d-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).
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
14
<PAGE> 15
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- I Common Stock and the Series B Preferred Stock is
convertible, once the Class B-I 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 4.1
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.
15
<PAGE> 16
Section 4.14. "LIH Director" shall mean any person designated by LIH.
Section 4.15. "LIH II Director" shall mean any person designated by LIH
II.
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 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
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<PAGE> 17
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.
280 Park Avenue
New York, NY 10017 Telecopier: 212-812-0100
Attention: Ira D. Kleinman
with a copy to:
Thelen Reid & Priest LLP
40 West 57th Street
New York, NY 10019
Telecopier: 212-603-2001
Attention: Leonard Gubar, Esq.
if to LIH II or LIH III to:
LIH Holdings II, LLC
c/o Harvest Partners, Inc.
280 Park Avenue
17
<PAGE> 18
New York, NY 10017
Telecopier: 212-812-0100
Attention: Ira D. Kleinman
with a copy to:
Morgan, Lewis & Bockius LLP
101 Park Avenue
New York, NY 10178
Telecopier: 212-309-6273
Attention: James A. Mercadante, Esq.
if to the Company, to:
Lund International Holdings, Inc.
911 Lund Boulevard
Anoka, MN 55303
Telecopier: 612-576-4299
Attention: Dennis Vollmershausen, Chief Executive Officer
with a copy to:
Leonard, Street and Deinard
150 South Fifth Street
Suite 2300
Minneapolis, MN 55402
Telecopier: 612-335-1657
Attention: Mark Weitz, 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
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<PAGE> 19
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 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
19
<PAGE> 20
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.
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.
20
<PAGE> 21
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first referred to above.
LUND INTERNATIONAL HOLDINGS, INC.
By
/s/ Dennis Vollmershausen
--------------------------------
LIH HOLDINGS, LLC
By
/s/ Ira D. Kleinman
--------------------------------
LIH HOLDINGS II, LLC
By
/s/ Ira D. Kleinman
--------------------------------
LIH HOLDINGS III, LLC
By
/s/ Ira D. Kleinman
--------------------------------
ACCEPTED AND AGREED
(as to Sections 2.04 and 2.05)
HARVEST PARTNERS III, L.P.
By Harvest Associates III, LLC
By /s/ Ira D. Kleinman
---------------------
Name: Ira D. Kleinman
Authorized Person
21
<PAGE> 22
Exhibit 1
LIH DIRECTOR
Ira Kleinman
LIH II DIRECTOR
Harvey Wertheim
22
<PAGE> 23
Exhibit 2
INDEPENDENT DIRECTORS
Robert Schoeberl
David Dovenberg
THIRD INDEPENDENT DIRECTOR
Vacant
FOURTH INDEPENDENT DIRECTOR
Lawrence Day
23
<PAGE> 24
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
24
<PAGE> 25
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.
25
<PAGE> 1
EXHIBIT L
- --------------------------------------------------------------------------------
RIGHTS AGREEMENT
BETWEEN
LUND INTERNATIONAL HOLDINGS, INC.
AND
THE PARTICIPATING STOCKHOLDERS PARTY HERETO
December 22, 1998
- --------------------------------------------------------------------------------
<PAGE> 2
TABLE OF CONTENTS
Page
ARTICLE I
DEMAND REGISTRATIONS.................................................2
1.1 REQUESTS FOR REGISTRATION........................2
1.2 LONG-FORM REGISTRATIONS..........................3
1.3 SHORT-FORM REGISTRATIONS.........................4
1.4 EFFECTIVE REGISTRATION STATEMENT.................4
1.5 PRIORITY ON DEMAND REGISTRATIONS.................5
1.6 SELECTION OF UNDERWRITERS........................6
1.7 OTHER REGISTRATION RIGHTS........................6
1.8 BLACK-OUT RIGHTS AND POSTPONEMENT................6
ARTICLE II
PIGGYBACK REGISTRATIONS..............................................7
2.1 RIGHT TO PIGGYBACK...............................7
2.2 PIGGYBACK EXPENSES...............................7
2.3 PRIORITY ON PRIMARY REGISTRATIONS................7
2.4 PRIORITY ON SECONDARY REGISTRATIONS..............8
ARTICLE III
HOLDBACK AGREEMENTS..................................................8
3.1 HOLDER'S HOLDBACK OBLIGATIONS....................8
3.2 COMPANY'S HOLDBACK OBLIGATIONS...................8
ARTICLE IV
REGISTRATION PROCEDURES..............................................9
ARTICLE V
REGISTRATION EXPENSES...............................................13
5.1 FEES AND EXPENSES GENERALLY.....................13
5.2 COUNSEL FEES....................................14
ARTICLE VI
UNDERWRITTEN OFFERINGS..............................................14
6.1 DEMAND UNDERWRITTEN OFFERINGS...................14
6.2 INCIDENTAL UNDERWRITTEN OFFERINGS...............14
i
<PAGE> 3
Page
ARTICLE VII
INDEMNIFICATION.....................................................15
7.1 INDEMNIFICATION BY THE COMPANY..................15
7.2 INDEMNIFICATION BY A SELLING SHAREHOLDER........16
7.3 INDEMNIFICATION PROCEDURE. ....................17
7.4 UNDERWRITING AGREEMENT..........................18
7.5 CONTRIBUTION. .................................18
7.6 PERIODIC PAYMENTS...............................19
ARTICLE VIII
RULE 144............................................................20
ARTICLE IX
PARTICIPATION IN UNDERWRITTEN REGISTRATIONS.........................20
ARTICLE X
TRANSFER RESTRICTIONS; RIGHTS OF
INCLUSION; DUTY OF FIRST OFFER......................................21
10.1 TRANSFER RESTRICTIONS...........................21
10.2 RIGHTS OF INCLUSION.............................22
ARTICLE XI
DEFINITIONS.........................................................25
11.1 TERMS...........................................25
11.2 OTHER DEFINED TERMS.............................30
11.3 DEFINED TERMS IN CORRESPONDING SECTIONS.........30
ARTICLE XII
MISCELLANEOUS.......................................................31
12.1 NO INCONSISTENT AGREEMENTS......................31
12.2 SPECIFIC PERFORMANCE............................31
12.3 AMENDMENTS AND WAIVERS..........................31
12.4 SUCCESSORS AND ASSIGNS..........................32
12.5 NOTICES.........................................32
12.6 HEADINGS, CERTAIN CONVENTIONS...................33
12.7 GENDER..........................................33
12.8 INVALID PROVISIONS..............................34
12.9 GOVERNING LAW...................................34
12.10 CONSENT TO JURISDICTION AND SERVICE OF PROCESS..34
ii
<PAGE> 4
Page
12.11 WAIVER OF JURY TRIAL............................34
12.12 COUNTERPARTS....................................35
SCHEDULE I Addresses for Notices to Participating Stockholders
EXHIBIT A-1 Form of Joinder Agreement For Permitted Transferees
EXHIBIT A-2 Form of Joinder Agreement For Additional
Stockholders
iii
<PAGE> 5
RIGHTS AGREEMENT dated as of December 22, 1998, by and among
Lund International Holdings, Inc., a Delaware corporation (the "Company"), LIH
Holdings, LLC, a Delaware limited liability company ("LIH Holdings I"), LIH
Holdings II, LLC, a Delaware limited liability company ("LIH Holdings II"), LIH
Holdings III, LLC, a Delaware limited liability company ("LIH Holdings III"; LIH
Holdings I, LIH Holdings II and LIH Holdings III being hereinafter collectively
referred to as the "LIH Entities"), BancBoston Capital Inc., a Massachusetts
corporation ("BancBoston"), Liberty Mutual Insurance Company, a Massachusetts
corporation ("Liberty Mutual"), Massachusetts Mutual Life Insurance Company, a
Massachusetts corporation ("MMLIC"), MassMutual Corporate Value Partners
Limited, a company organized under the laws of the Cayman Islands ("MMCVP"),
MassMutual Corporate Investors, a Massachusetts business trust ("MMCI"),
MassMutual Participation Investors, a Massachusetts business trust ("MMPI";
MMLIC, MMCVP, MMCI and MMPI being hereinafter collectively referred to as the
"MassMutual Entities"), and National City Venture Corporation, a Delaware
corporation ("NCVC"; NCVC and the MassMutual Entities being hereinafter
collectively referred to as the "Mezzanine Entities"). Capitalized terms are
used as defined in Article XI hereto.
RECITALS
WHEREAS, on the date hereof, LIH Holdings I is the owner of
1,686,893 shares of Common Stock, and LIH Holdings II is the owner of 874,400
shares of Common Stock and 1,493,398 shares of the Class B-1 Common Stock, par
value $0.01 per share (the "Class B-1 Common Stock"), of the Company;
WHEREAS, in connection with the Company's acquisition on the
date hereof of all the outstanding capital stock of Auto Ventshade Corporation,
the Company, LIH Holdings III, BancBoston, Liberty Mutual and the MassMutual
Entities have entered into that certain Investment Agreement (as the same may be
amended, supplemented or otherwise modified from time to time, the "AVS
Investment Agreement") dated as of December 22, 1998, whereby the Company
desires to sell and LIH Holdings III, BancBoston, Liberty Mutual and the
MassMutual Entities desire to purchase, in the aggregate, 1,047,412 shares of
Common Stock and 252,401.8 shares of the Series B Preferred Stock, par value
$.01 per share (the "Series B Preferred Stock"), of the Company, all for an
aggregate purchase price equal to $25,000,000;
WHEREAS, in connection with the proposed acquisition by the
Company of all the outstanding capital stock of Smitty Bilt, Inc., the Company,
LIH Holdings III, BancBoston, Liberty Mutual and the MassMutual Entities have
entered into that certain Investment Agreement (as the same may be amended,
supplemented or otherwise modified from time to time, the "SB Investment
Agreement"; the AVS Investment Agreement and the SB Investment Agreement being
hereinafter collectively referred to as the "Investment Agreements") dated as of
December 22, 1998, whereby the Company desires to sell and LIH Holdings III,
BancBoston, Liberty Mutual and the MassMutual
<PAGE> 6
Entities desire to purchase, in the aggregate, 316,056 shares of Common Stock
and 39,822.9 shares of Series B Preferred Stock, all for an aggregate purchase
price equal to $5,000,000;
WHEREAS, the Company, certain of its subsidiaries and each of
the Mezzanine Entities, in connection with the issuance to the Mezzanine
Entities of subordinated notes in an aggregate principal amount equal to
$25,000,000, are entering into those certain Securities Purchase Agreements (as
each may be amended, supplemented or otherwise modified from time to time,
collectively, the "Securities Purchase Agreements") dated December 23, 1998,
whereby, among other things, the Company desires to sell and the Mezzanine
Entities desire to purchase, in the aggregate, Warrants (including any
securities (other than any shares of Common Stock or Series B Preferred Stock)
issued in exchange therefor or replacement thereof, in each case as the same may
be amended, supplemented or otherwise modified from time to time, the
"Warrants") to purchase up to either 70,484 shares of Series B Preferred Stock
or 704,839 shares of Common Stock;
WHEREAS, each of the LIH Entities, BancBoston, Liberty Mutual,
the Mezzanine Entities and the Company desires to enter into this Agreement to
provide for, among other things, registration rights with respect to the Common
Stock and to impose restrictions on, and conditions to, certain transfers of
equity securities of the Company;
WHEREAS, each Investment Agreement, among other things,
provides that the execution and delivery of an agreement in substantially the
form hereof is a condition to the consummation of the other transactions
contemplated by such Investment Agreement; and
WHEREAS, each Securities Purchase Agreement, among other
things, provides that the execution and delivery of an agreement in
substantially the form hereof is a condition to the consummation of the other
transactions contemplated by such Securities Purchase Agreement.
NOW THEREFORE, in connection with the Investment Agreements
and the Securities Purchase 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
DEMAND REGISTRATIONS
1.1 REQUESTS FOR REGISTRATION. (a) Subject to Sections 1.2,
1.3 and 1.8, at any time after September 9, 2000, any or all of the Required LIH
Stockholders, the Required BancBoston Stockholders, the Required Liberty Mutual
Stockholders and the Required Mezzanine Stockholders may request in writing
registration under the Securities Act of all or part of their Registrable
Securities (i) on Form S-1 or Form S-2 or any similar or successor long-form
registration statement (any such registration, a "Long-Form Registration") or
(ii) on Form S-3 or any similar or successor short-form registration statement
(any such registration, a "Short-Form Registration") if the
2
<PAGE> 7
Company qualifies to use such short form. Within 10 days after its receipt of
any such request, the Company will give written notice of such request to all
other Participating Stockholders. Thereafter, the Company will use all
reasonable efforts to effect the registration under the Securities Act on the
form requested by the Requesting Investors, and to include in such registration,
(i) all Registrable Securities which the Requesting Investors have so requested
to be included therein, and (ii) all other Registrable Securities with respect
to which the Company has received written requests for inclusion therein by the
Participating Stockholders within 30 days after their receipt of the Company's
notice, subject in each case to the provisions of Section 1.5. Each Long-Form
Registration or Short-Form Registration requested in accordance with this
Section 1.1 is referred to herein as a "Demand Registration."
(b) The Requesting Investors which request a Demand
Registration pursuant to this Section 1.1 may, at any time prior to the
effective date of the registration statement relating to such Demand
Registration, revoke such request by providing written notice to the Company;
provided, however, that notwithstanding such revocation, such Demand
Registration shall be deemed a request for purposes of Section 1.2 unless, after
consultation with the Company and any proposed underwriter, the Requesting
Investors in good faith determine that more than 25% of the amount of
Registrable Securities which they have requested to be registered (before giving
effect to any cutback pursuant to Section 1.5) would not be sold pursuant to
such Demand Registration within a reasonable amount of time or at a price
reasonably acceptable to such Requesting Investors.
(c) Any request for a Demand Registration pursuant to Section
1.1 shall specify the number of Registrable Securities proposed to be sold by
the Requesting Investors and the intended method of disposition thereof.
1.2 LONG-FORM REGISTRATIONS. (a) The Required LIH Stockholders
will be entitled to request pursuant to Section 1.1 one Long-Form Registration,
(b) the Required BancBoston Stockholders will be entitled to request pursuant to
Section 1.1 one Long-Form Registration, (c) the Required Liberty Mutual
Stockholders will be entitled to request pursuant to Section 1.1 one Long- Form
Registration, and (d) the Required Mezzanine Stockholders will be entitled to
request pursuant to Section 1.1 up to two Long-Form Registrations; provided,
however, that no such request for a Long-Form Registration shall be made unless
such request is for the registration of at least 450,000 shares of Common Stock
(which number of shares shall be appropriately adjusted for any stock dividend,
stock split, combination of shares or other similar event that occurs after the
date hereof). The Company will pay all Registration Expenses in connection with
any such Long-Form Registration; provided, however, that in the case of any
Long-Form Registration as to which LIH Stockholders comprise the Requesting
Investors, such LIH Stockholders will pay for any special audits required to be
undertaken by the Company in connection therewith. All Long-Form Registrations
(unless otherwise requested by the Requisite Registration Participants) shall be
underwritten registrations.
3
<PAGE> 8
1.3 SHORT-FORM REGISTRATIONS. In addition to the Long-Form
Registrations contemplated by Section 1.2, the Required LIH Stockholders, the
Required BancBoston Stockholders, the Required Liberty Mutual Stockholders, and
the Required Mezzanine Stockholders will each be entitled to request an
unlimited number of Short-Form Registrations in which the Company will pay all
Registration Expenses; provided, however, that (a) in the case of any Short-
Form Registration as to which LIH Stockholders comprise the Requesting
Investors, such LIH Stockholders will pay for any special audits required to be
undertaken by the Company in connection therewith, (b) no such request for a
Short-Form Registration shall be made unless such request is for the
registration of at least 200,000 shares of Common Stock (which number of shares
shall be appropriately adjusted for any stock dividend, stock split, combination
of shares or other similar event that occurs after the date hereof) and (c) in
any 12-month period, the Company shall not be obligated to effect more than two
Short-Form Registrations pursuant to this Agreement.
1.4 EFFECTIVE REGISTRATION STATEMENT. No Demand Registration
shall be deemed to have been requested or effected for purposes of Section
1.1(a) or 1.2:
(i) unless a registration statement with respect
thereto has been declared effective by the Commission (other
than in connection with a revocation notice delivered pursuant
to Section 1.1(b)) and the Company has complied in all
material respects with all obligations required to be
performed by it on or prior to the date of such declaration in
connection with such Demand Registration;
(ii) if after such registration statement has become
effective, any stop order, injunction or other order or
requirement of the Commission or any other Governmental or
Regulatory Authority affecting any of the Registrable
Securities covered by such registration statement, is for any
reason threatened in writing or issued by the Commission or
such other Governmental or Regulatory Authority and, as a
result thereof, none of the Registrable Securities covered
thereby have been sold;
(iii) if the conditions to closing specified in the
purchase agreement or underwriting agreement entered into in
connection with such Demand Registration are not satisfied by
reason of a failure by or inability of the Company to satisfy
any of such conditions to closing;
(iv) if the Company declines to effect such Demand
Registration pursuant to Section 1.8(a) or delivers a
Black-Out Notice with respect to such Demand Registration;
(v) if the Requesting Investors have made the
determination contemplated by the proviso to Section 1.1(b)
with respect to such Demand Registration and have notified the
Company of such determination in accordance with Section
1.1(b);
4
<PAGE> 9
(vi) if the Requesting Investors are not able to
register and sell at least 75% of the amount of Registrable
Securities which they requested (before giving effect to any
cutback effected pursuant to Section 1.5) to be included in
such registration; or
(vii) if the registration statement with respect to
such Demand Registration does not remain effective for a
period of at least 180 days beyond the effective date thereof
or, in the case of any Demand Registration that constitutes an
underwritten offering of Registrable Securities, until 45 days
after the commencement of the distribution by the holders of
the Registrable Securities included in such Demand
Registration, in each case unless all of the Registrable
Securities included in such Demand Registration have been sold
to the public prior thereto in accordance with the plan of
distribution specified in such registration statement.
If a Demand Registration requested pursuant to this Article I
is deemed not to have been requested or effected as provided in this Section
1.4, then the Company shall continue to be obligated to effect the number of
Demand Registrations set forth in Section 1.2 without giving effect to such
requested Demand Registration and will pay all Registration Expenses in
connection with such Demand Registration.
1.5 PRIORITY ON DEMAND REGISTRATIONS. The Company will not
include in any Demand Registration any securities which are not Registrable
Securities of the Participating Stockholders without the written consent of the
Requisite Registration Participants. If the Requesting Investors and other
holders of Registrable Securities request Registrable Securities to be included
in a Demand Registration which is an underwritten offering and the managing
underwriter advises the Company in writing that in its opinion the number of
Registrable Securities requested to be included exceeds the number of
Registrable Securities which can be sold in such offering within a price range
acceptable to the Requisite Requesting Investors, the Company will include any
securities to be sold in such Demand Registration in the following order: (i)
(x) first, the Registrable Securities requested to be included in such
registration by the Requesting Investors or by other Participating Stockholders
in accordance with Section 1.1(a), provided that if the managing underwriter
determines in good faith that a lower number of Registrable Securities should be
included, then only that lower number of Registrable Securities requested to be
included by the Requesting Investors and such other Participating Stockholders
shall be included in such registration, and the Requesting Investors and such
other Participating Stockholders shall participate in such registration on a pro
rata basis in accordance with the number of Registrable Securities requested to
be included in such registration by each of them; (y) second, the securities
which the Company proposes to sell; and (z) third, any securities other than
Registrable Securities to be sold by persons other than the Company included in
such registration in compliance with Section 1.7.
5
<PAGE> 10
1.6 SELECTION OF UNDERWRITERS. The Requisite Registration
Participants with respect to any Demand Registration will have the right to
select the underwriters and the managing underwriter to administer such Demand
Registration (which underwriters and managing underwriters shall be reasonably
acceptable to the Company).
1.7 OTHER REGISTRATION RIGHTS. Except as provided in this
Agreement, without the written consent of the Participating Stockholders which
then hold Registrable Securities representing at least a majority (by number of
shares) of the Registrable Securities (on a Fully- Diluted Basis) then held by
all Participating Stockholders, the Company will not grant to any Person the
right to request the Company to register any equity securities of the Company,
or any securities convertible, exchangeable or exercisable for or into such
securities, other than piggyback registration rights entitling the holder
thereof to participate in Company-initiated registrations, subject to the prior
rights of Participating Stockholders to include their Registrable Securities in
Company-initiated registrations in accordance with Section 2.3.
1.8 BLACK-OUT RIGHTS AND POSTPONEMENT. (a) The Company shall
not be required to effect a Demand Registration if the Company, within the
120-day period preceding the date of a request for a Demand Registration, has
effected a registration of securities in which the Participating Stockholders
were able to register and sell at least 75% of the amount of Registrable
Securities which they requested (before giving effect to any cutback effected
pursuant to Section 1.5, 2.3 or 2.4) to be included in such registration
pursuant to Demand Registration rights under Article I or Piggyback Registration
rights under Article II.
(b) The Company may, upon written notice (a "Black-Out
Notice") to the Requesting Investors requesting a Demand Registration, require
such Requesting Investors to withdraw such Demand Registration upon the good
faith determination by the Company that such postponement is necessary (i) to
avoid disclosure of material non-public information or (ii) as a result of a
pending material financing or acquisition transaction, and in each case, each of
the LIH Stockholders, the BancBoston Stockholders, the Liberty Mutual
Stockholders and the Mezzanine Stockholders may not request another Demand
Registration for a period of up to 120 days, as specified by the Company in such
Black-Out Notice. The Company may only give a Black-Out Notice where the giving
of such notice has been specifically approved by the Board of Directors of the
Company. Upon receipt of a Black-Out Notice, the related Demand Registration
shall be deemed to be rescinded and retracted and shall not be counted as a
Demand Registration for any purpose hereunder. The Company may not deliver more
than three Black-Out Notices in any 12-month period; provided, however, that the
aggregate number of days covered by Black-Out Notices in any 12-month period
shall not under any circumstances exceed 180.
6
<PAGE> 11
ARTICLE II
PIGGYBACK REGISTRATIONS
2.1 RIGHT TO PIGGYBACK. Whenever the Company proposes to
register any of its equity securities under the Securities Act (other than
pursuant to a Demand Registration and other than on Forms S-4 or S-8 or any
successor forms), whether for the Company's own account or for the account of
any other Person, and the registration form to be used may be used for the
registration of Registrable Securities (a "Piggyback Registration"), the Company
will give prompt written notice (in any event within 10 days after its receipt
of notice of any exercise of other demand registration rights) to all
Participating Stockholders of its intention to effect such a registration. Such
notice shall offer each Participating Stockholder the opportunity to register,
on the same terms and conditions, such number of such Participating
Stockholder's Registrable Securities as such Participating Stockholder may
request. The Company will include in such registration all Registrable
Securities with respect to which the Company has received written requests for
inclusion therein by Participating Stockholders within 30 days after their
receipt of the Company's notice, subject to the provisions of Sections 2.3 and
2.4. Such requests for inclusion shall specify the number of Registrable
Securities intended to be disposed of and the intended method of distribution
thereof.
2.2 PIGGYBACK EXPENSES. The Registration Expenses of the
Participating Stockholders will be paid by the Company in all Piggyback
Registrations.
2.3 PRIORITY ON PRIMARY REGISTRATIONS. If a Piggyback
Registration is an underwritten primary registration on behalf of the Company,
and the managing underwriter advises the Company in writing that in its opinion
the number of securities requested to be included in such registration is such
that the success of the Company's offering will be materially and adversely
affected, then the Company will include any securities to be sold in such
Piggyback Registration in the following order: (i) first, the securities the
Company proposes to sell; (ii) second, the Registrable Securities requested to
be included in such registration by the Participating Stockholders in accordance
with Section 2.1, provided that if the managing underwriter in good faith
determines that a lower number of Registrable Securities of the Participating
Stockholders should be included, then the Company shall be required to include
in such registration only that lower number of Registrable Securities, and the
Participating Stockholders shall participate in such registration on a pro rata
basis in accordance with the number of Registrable Securities requested to be
included in such registration by each Participating Stockholder; and (iii)
third, if all Registrable Securities requested to be included in such
registration by the Participating Stockholders in accordance with Section 2.1
are included in such registration, any other securities requested to be included
in such registration in compliance with Section 1.7.
7
<PAGE> 12
2.4 PRIORITY ON SECONDARY REGISTRATIONS. If a Piggyback
Registration is an underwritten secondary registration on behalf of holders of
the Company's securities, and the managing underwriter advises the Company in
writing that in its opinion the number of securities requested to be included in
such registration is such that the success of such holders' offering would be
materially and adversely affected, then the Company will include any securities
to be sold in such Piggyback Registration in the following order: (i) first, the
securities which such holders propose to sell in compliance with Section 1.7;
(ii) second, the Registrable Securities requested to be included in such
registration by the Participating Stockholders in accordance with Section 2.1,
provided that if the managing underwriter determines in good faith that a lower
number of Registrable Securities of the Participating Stockholders should be
included, then the Company shall be required to include in such registration
only that lower number of Registrable Securities, and the Participating
Stockholders shall participate in such registration on a pro rata basis in
accordance with the number of Registrable Securities requested to be included in
such registration by each; and (iii) third, any other securities proposed to be
included in such registration in compliance with Section 1.7.
ARTICLE III
HOLDBACK AGREEMENTS
3.1 HOLDER'S HOLDBACK OBLIGATIONS. Each Participating
Stockholder agrees not to effect any public sale or distribution of Registrable
Securities, or any securities convertible, exchangeable or exercisable for or
into Registrable Securities during the seven days prior to, and the 180-day
period beginning on, the effective date of any underwritten Demand Registration
or any underwritten Piggyback Registration in which such Participating
Stockholder had an opportunity to participate without cutback under Article II
hereof (in each case except as part of such underwritten registration), unless
the managing underwriter of such underwritten registration otherwise agrees.
3.2 COMPANY'S HOLDBACK OBLIGATIONS. Unless the managing
underwriter of the relevant underwritten Demand Registration or an underwritten
Piggyback Registration otherwise agrees, the Company agrees (i) not to effect
any public sale or distribution of its equity securities, or any securities
convertible, exchangeable or exercisable for or into such securities, during the
14 days prior to, and during the 90-day period beginning on, the effective date
of any underwritten Demand Registration or any underwritten Piggyback
Registration in which holders of Registrable Securities are selling stockholders
(except as part of such underwritten registration or pursuant to registrations
on Form S-4 or S-8 or any successor forms), and (ii) to use all reasonable
efforts to cause each holder of at least 5% (on a Fully-Diluted Basis) of its
equity securities to agree not to effect any public sale or distribution of any
such equity securities or any securities convertible, exchangeable or
exercisable for into such equity securities during the 180-day period beginning
on the effective date of any underwritten Demand Registration or any
underwritten Piggyback
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Registration in which holders of Registrable Securities are selling stockholders
(except as part of such underwritten registration, if otherwise permitted).
ARTICLE IV
REGISTRATION PROCEDURES
Whenever Participating Stockholders have requested that any
Registrable Securities be registered in accordance with Article I or II, the
Company will use all reasonable efforts to effect the registration and the sale
of such Registrable Securities in accordance with the intended method of
disposition thereof, and pursuant thereto the Company will as reasonably
expeditiously as possible (or, in the case of clause (p) below, will not):
(a) promptly prepare and file with the Commission a
registration statement with respect to such Registrable Securities (such
registration statement to include all information which the Participating
Stockholders holding the Registrable Securities to be registered thereby shall
reasonably request) and use all reasonable efforts to cause such registration
statement to become effective, provided, that as promptly as practicable before
filing a registration statement or prospectus or any amendments or supplements
thereto, the Company will (i) furnish to one counsel selected by the Requisite
Registration Participants copies of all such documents proposed to be filed, and
the Company shall not file any such document to which such counsel shall have
reasonably objected on the grounds that such document does not comply in all
material respects with the requirements of the Securities Act, and (ii) notify
each Participating Stockholder holding Registrable Securities covered by such
registration statement of (x) any request by the Commission to amend such
registration statement or amend or supplement any prospectus, or (y) any stop
order issued or threatened by the Commission, and take all reasonable actions
required to prevent the entry of such stop order or to promptly remove it if
entered;
(b) (i) prepare and file with the Commission such amendments
and supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to keep such registration statement
effective at all times during the period commencing on the effective date of
such registration statement and ending on the first date as of which all
Registrable Securities of the Participating Stockholders covered by such
registration statement are sold in accordance with the intended plan of
distribution set forth in such registration statement and (ii) comply with the
provisions of the Securities Act with respect to the disposition of all
securities covered by such registration statement during such period in
accordance with the intended methods of disposition by the sellers thereof set
forth in such registration statement;
(c) furnish to each Participating Stockholder holding
Registrable Securities covered by such registration statement, without charge,
such number of conformed copies of such registration statement, each amendment
and supplement thereto, the prospectus included in such registration statement
(including each preliminary prospectus and, in each case, including all exhibits
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thereto and documents incorporated by reference therein) and such other
documents as such Participating Stockholder may reasonably request in order to
facilitate the disposition of the Registrable Securities covered thereby that
are held by such Participating Stockholder;
(d) use its best efforts to register or qualify the
Registrable Securities covered by such registration statement under such other
securities or blue sky laws of such jurisdictions in the United States as any
Participating Stockholder holding any such Registrable Securities shall
reasonably request, to keep such registration or qualification in effect for so
long as such registration statement remains in effect and to do any and all
other acts and things which may be reasonably necessary or advisable to enable
such Participating Stockholder to consummate the disposition in such
jurisdictions of any such Registrable Securities held by such Participating
Stockholder; provided, however, that the Company will not be required to (i)
qualify generally to do business in any jurisdiction where it would not
otherwise be required to qualify but for this clause (d), (ii) subject itself to
taxation in any such jurisdiction or (iii) consent to general service of process
in any such jurisdiction;
(e) furnish to each Participating Stockholder holding
Registrable Securities covered by such registration statement a signed copy,
addressed to such Participating Stockholder (and the underwriters, if any) of an
opinion of counsel for the Company or special counsel to such Participating
Stockholder dated the effective date of such registration statement (and, if
such registration statement includes an underwritten public offering, dated the
date of the closing under the underwriting agreement), reasonably satisfactory
in form and substance to the Requisite Registration Participants, covering
substantially the same matters with respect to such registration statement (and
the prospectus included therein) as are customarily covered in opinions of
issuer's counsel delivered to the underwriters in underwritten public offerings,
and such other legal matters as the Requisite Registration Participants (or the
underwriters, if any) may reasonably request;
(f) notify each Participating Stockholder holding Registrable
Securities covered by such registration statement, at a time when a prospectus
relating to such Registrable Securities is required to be delivered under the
Securities Act, of the occurrence of any event known to the Company as a result
of which the prospectus included in such registration statement, as then in
effect, contains an untrue statement of a material fact or omits to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading in light of the circumstances under which they were made,
and, at the request of any such Participating Stockholder, (i) the Company will
prepare and furnish such Participating Stockholder a reasonable number of copies
of a supplement to or an amendment of such prospectus as may be necessary so
that, as thereafter delivered to the purchasers of such Registrable Securities,
such prospectus shall not include an untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances under which
they were made and (ii) the Company shall extend the period during which such
registration statement shall be maintained effective by the number of days
during the period from and including the date of the giving of such notice to
such Participating Stockholder to the date when
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the Company made available to such Participating Stockholder an appropriately
amended or supplemented prospectus;
(g) cause all Registrable Securities of the Participating
Stockholders covered by such registration statement to be listed on each
securities exchange and quotation system on which similar securities issued by
the Company are then listed and to enter into such customary agreements as may
be required in furtherance thereof, including listing applications and
indemnification agreements in customary form;
(h) provide a transfer agent and registrar for the Registrable
Securities of the Participating Stockholders covered by such registration
statement not later than the effective date of such registration statement;
(i) enter into such customary arrangements and take all such
other actions as the Requisite Registration Participants or the underwriters, if
any, for the offering of the Registered Securities covered by such registration
statement reasonably request in order to expedite or facilitate the disposition
of such Registrable Securities (including using its best efforts to effect a
stock split or combination of shares) and, in connection with an underwritten
offering, participate, to the extent reasonably requested by the managing
underwriter for the offering, in customary efforts to sell the securities in the
offering, including participating in "road shows";
(j) make available for inspection by any Participating
Stockholder holding Registrable Securities covered by such registration
statement, any underwriter participating in any disposition of securities
pursuant to such registration statement and any attorney, accountant or other
agent retained by any such Participating Stockholder or underwriter, all
financial and other records, pertinent corporate documents and properties of the
Company and all correspondence between the Commission and the Company or its
counsel or auditors and all memoranda relating to discussions with the
Commission or its staff in connection with such registration statement, and
cause the Company's officers, directors, employees and independent accountants
to supply all information reasonably requested by any such Participating
Stockholder, underwriter, attorney, accountant or agent in connection with such
registration statement;
(k) subject to other provisions hereof, use all reasonable
efforts to cause the Registrable Securities of the Participating Stockholders
covered by such registration statement to be registered with or approved by such
Governmental or Regulatory Authorities or self-regulatory organizations as may
be necessary to enable such Participating Stockholders thereof to consummate the
disposition of such Registrable Securities;
(l) use all reasonable efforts to obtain a "cold comfort"
letter, dated the effective date of such registration statement (and, if such
registration includes an underwritten offering, dated the date of the closing
under the underwriting agreement), signed by the independent public accountants
who have certified the Company's financial statements included in such
registration statement, addressed to the Company, to each Participating
Stockholder holding Registrable
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Securities covered by such registration statement, and to the underwriters, if
any, covering substantially the same matters with respect to such registration
statement (and the prospectus included therein) and with respect to events
subsequent to the date of such financial statements, as are customarily covered
in accountants' letters delivered to the underwriters in underwritten public
offerings of securities and such other financial matters as the Requisite
Registration Participants (or the underwriters, if any) may reasonably request;
(m) otherwise use all reasonable efforts to comply with all
applicable rules and regulations of the Commission and make available to its
security holders, in each case as soon as practicable, an earnings statement
covering a period of at least 12 months, beginning with the first month after
the effective date of such registration statement, which earnings statement
shall satisfy the provisions of Section 11(a) of the Securities Act;
(n) permit any Participating Stockholder holding Registrable
Securities covered by such registration statement, which Participating
Stockholder, in its sole judgment exercised in good faith, might be deemed to be
a controlling person of the Company (within the meaning of the Securities Act or
the Exchange Act) to participate in the preparation of such registration
statement and to include therein material, furnished to the Company in writing,
which in the reasonable judgment of such Participating Stockholder should be
included and which is reasonably acceptable to the Company;
(o) promptly notify the Participating Stockholders holding the
Registrable Securities covered by such registration statement of the issuance by
any state securities commission or other Governmental or Regulatory Authority of
any order suspending the qualification or exemption from qualification of any
such Registrable Securities under any state securities or "blue sky" law, and
use every reasonable effort to obtain the lifting at the earliest possible time
of any stop order (whether issued by the Commission or otherwise) suspending the
effectiveness of such registration statement or of any order preventing or
suspending the use of any preliminary prospectus included therein;
(p) at any time file or make any amendment to such
registration statement, or any amendment of or supplement to the prospectus
included therein (including amendments of the documents incorporated by
reference into the prospectus), (i) of which each Participating Stockholder
holding Registrable Securities covered by such registration statement or the
managing underwriter, if any, shall not have previously been advised and
furnished a copy or (ii) to which the Requisite Registration Participants, the
managing underwriter (if any) or counsel for the Requisite Registration
Participants or any such managing underwriter shall reasonably object;
(q) make such representations and warranties (subject to
appropriate disclosure schedule exceptions) to the Participating Stockholders
holding Registrable Securities covered by such registration statement and the
underwriters, if any, in form, substance and scope as are customarily made by
issuers to underwriters and selling holders, as the case may be, in underwritten
public offerings of substantially the same type;
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(r) during the period when the prospectus included in such
registration statement is required to be delivered under the Securities Act,
promptly file all documents required to be filed with the Commission pursuant to
Section 13(a), 13(c), 14 or 15(d) of the Exchange Act; and
(s) if such registration statement refers to any Participating
Stockholder holding Registrable Securities covered thereby by name or otherwise
as the holder of any securities of the Company, then (whether or not, in the
sole judgment, exercised in good faith, of such Participating Stockholder, such
Participating Stockholder is or might be deemed to be a controlling person of
the Company), (i) at the request of such Participating Stockholder, insert
therein language, in form and substance reasonably satisfactory to such
Participating Stockholder, the Company and the managing underwriter (if any), to
the effect that the holding by such Participating Stockholder of such securities
is not to be construed as a recommendation by such Participating Stockholder of
the investment quality of the Company's Registrable Securities or the Company's
other securities covered thereby and that such holding does not imply that such
Participating Stockholder will assist in meeting any future financial
requirements of the Company, or (ii) in the event that such reference to such
Participating Stockholder by name or otherwise is not required by the Securities
Act, any similar Federal or state statute, or any rule or regulation of any
Governmental or Regulatory Authority having jurisdiction over the offering, then
in force, the Company shall be required at the request of such Participating
Stockholder to delete the reference to such Participating Stockholder.
ARTICLE V
REGISTRATION EXPENSES
5.1 FEES AND EXPENSES GENERALLY. Subject to the next
succeeding sentence, all expenses incident to the Company's performance of or
compliance with this Agreement, including internal expenses (including all
salaries and expenses of its officers and employees performing legal or
accounting duties), the expense of any annual or special audit or quarterly
review, the expense of any liability insurance, the expenses and fees for
listing securities on one or more securities exchanges or quotation systems
pursuant to clause (g) of Article IV, all registration and filing fees, fees and
expenses of compliance with securities or blue sky laws (including reasonable
fees and disbursements of counsel in connection with blue sky qualifications of
the Registrable Securities), printing expenses, messenger and delivery expenses,
and fees and disbursements of counsel for the Company and all independent
certified public accountants, underwriters (excluding underwriting fees,
discounts and commissions) and other Persons retained by the Company (all such
expenses being herein called "Registration Expenses"), will be borne by the
Company. Notwithstanding anything in this Agreement to the contrary, (a) each
Participating Stockholder shall pay any underwriting fees, discounts or
commissions attributable to the sale of its Registrable Securities and (b) in
the case of any Demand Registration as to which LIH Stockholders comprise the
Requesting Investors, such LIH Stockholders shall pay for any special audits
required to be undertaken by the Company in connection therewith.
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5.2 COUNSEL FEES. In connection with each Demand Registration,
the Company will reimburse the Participating Stockholders for the reasonable
fees and disbursements of one counsel selected by the Requisite Registration
Participants.
ARTICLE VI
UNDERWRITTEN OFFERINGS
6.1 DEMAND UNDERWRITTEN OFFERINGS. If requested by the
underwriters for any underwritten offering of Registrable Securities pursuant to
a Demand Registration, the Company will enter into an underwriting agreement
with such underwriters for such offering, such agreement to be consistent with
the terms hereof, to contain such representations and warranties by the Company
and such other terms as are generally included in agreements of this type,
including indemnities customarily included in such agreements, and to be
otherwise reasonably satisfactory in form and substance to the Requisite
Registration Participants, the Company and the underwriters. The Participating
Stockholders holding the Registrable Securities to be distributed by such
underwriters will cooperate in good faith with the Company in the negotiation of
the underwriting agreement. The Participating Stockholders holding the
Registrable Securities to be distributed by such underwriters shall be parties
to such underwriting agreement and may, at the option of the Requisite
Registration Participants, require that any or all of the representations and
warranties by, and the other agreements on the part of, the Company to and for
the benefit of such underwriters shall also be made to and for the benefit of
such Participating Stockholders and that any or all of the conditions precedent
to the obligations of such underwriters under such underwriting agreement also
be conditions precedent to the obligations of such Participating Stockholders.
The Company shall cooperate as reasonably requested by any such Participating
Stockholder in order to limit (a) any representations or warranties to, or
agreements with, the Company or the underwriters to be made by such
Participating Stockholder only to representations, warranties or agreements
regarding such Participating Stockholder, such Participating Stockholder's
Registrable Securities and such Participating Stockholder's intended method of
distribution and any other representation required by applicable law and (b)
such Participating Stockholder's maximum liability in respect of its
indemnification and contribution obligations under such underwriting agreement
to an amount equal to the net proceeds actually received by such Participating
Stockholder (after deducting any underwriting fees, discounts and expenses) from
the sale of Registrable Securities pursuant to such Demand Registration.
6.2 INCIDENTAL UNDERWRITTEN OFFERINGS. If the Company at any
time proposes to register any of its equity securities under the Securities Act
as contemplated by Article II and such equity securities are to be distributed
by or through one or more underwriters, the Company will, if requested by any
Participating Stockholder as provided in Article II, arrange for such
underwriters to include all the Registrable Securities to be offered and sold by
such Participating Stockholder,
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subject to the limitations set forth in Article II, among the securities to be
distributed by such underwriters. The Participating Stockholders holding
Registrable Securities to be distributed by such underwriters shall be parties
to the underwriting agreement between the Company and such underwriters
(provided that such underwriting agreement is consistent with the terms hereof),
and may, at their option, require that any or all of the representations and
warranties by, and the other agreements on the part of, the Company to and for
the benefit of such underwriters shall also be made to and for the benefit of
such Participating Stockholders and that any or all of the conditions precedent
to the obligations of such underwriters under such underwriting agreement also
be conditions precedent to the obligations of such Participating Stockholders.
The Company shall cooperate as reasonably requested by any such Participating
Stockholder in order to limit (a) any representations or warranties to, or
agreements with, the Company or the underwriters to be made by such
Participating Stockholder only to representations, warranties or agreements
regarding such Participating Stockholder, such Participating Stockholder's
Registrable Securities and such Participating Stockholder's intended method of
distribution and any other representation required by applicable law and (b)
such Participating Stockholder's maximum liability in respect of its
indemnification and contribution obligations under such underwriting agreement
to an amount equal to the net proceeds actually received by such Participating
Stockholder (after deducting any underwriting fees, discounts and expenses) from
the sale of Registrable Securities pursuant to the applicable Piggyback
Registration.
ARTICLE VII
INDEMNIFICATION
7.1 INDEMNIFICATION BY THE COMPANY. The Company agrees to
indemnify and hold harmless, to the fullest extent permitted by law, each of the
Participating Stockholders holding any Registrable Securities covered by a
registration statement that has been filed with the Commission pursuant to this
Agreement, each underwriter for such Participating Stockholder in connection
therewith, each other Person, if any, who controls such Participating
Stockholder or any such underwriter within the meaning of the Securities Act or
the Exchange Act, and each of their respective managers, partners, officers,
directors, employees and general partners, as follows:
(i) against any and all loss, liability, claim,
damage or expense (other than amounts paid in settlement)
incurred by such Person arising out of or based upon an untrue
statement or alleged untrue statement of a material fact
contained in such registration statement (or any amendment or
supplement thereto), including all documents incorporated
therein by reference, or in any preliminary prospectus or
prospectus included therein (or any amendment or supplement
thereto) or the omission or alleged omission therefrom of a
material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances
under which they were made, not misleading;
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(ii) against any and all loss, liability, claim,
damage and expense incurred by such Person to the extent of
the aggregate amount paid in settlement of any litigation,
investigation or proceeding by any Governmental or Regulatory
Authority, in each case whether commenced or threatened, or of
any claim whatsoever, that is based upon any such untrue
statement or omission or any such alleged untrue statement or
omission, if such settlement is effected with the written
consent of the Company (which consent shall not be
unreasonably withheld or delayed); and
(iii) against any and all expense incurred by such
Person in connection with investigating, preparing or
defending against any litigation or any investigation or
proceeding by any Governmental or Regulatory Authority, in
each case whether commenced or threatened in writing, or
against any claim whatsoever, that is based upon any such
untrue statement or omission or any such alleged untrue
statement or omission, to the extent that any such expense is
not paid under clause (i) or (ii) above;
provided, however, that this indemnity does not apply to any loss, liability,
claim, damage or expense to the extent arising out of or based upon an untrue
statement or alleged untrue statement or omission or alleged omission made in
reliance upon and in conformity with written information furnished to the
Company by or on behalf of such Participating Stockholder expressly for use in
the preparation of such registration statement (or any amendment or supplement
thereto), including all documents incorporated therein by reference, or in any
preliminary prospectus or prospectus included therein (or any amendment or
supplement thereto); and provided further, however, that the Company will not be
liable to any Participating Stockholder (or any other indemnified Person) under
the indemnity agreement in this Section 7.1, with respect to any preliminary
prospectus or the final prospectus or the final prospectus as amended or
supplemented, as the case may be, to the extent that any such loss, liability,
claim, damage or expense of such Participating Stockholder (or other indemnified
Person) results from the fact that such Participating Stockholder sold
Registrable Securities to a Person to whom there was not sent or given, at or
prior to the written confirmation of such sale, a copy of the final prospectus
or of the final prospectus as then amended or supplemented, whichever is most
recent, if the Company has previously and timely furnished copies thereof to
such Participating Stockholder. Such indemnity shall remain in full force and
effect regardless of any investigation made by or on behalf of such any
Participating Stockholder or any other Person eligible for indemnification under
this Section 7.1, and shall survive the transfer of the relevant Registrable
Securities by the Participating Stockholder who theretofore held them.
7.2 INDEMNIFICATION BY A SELLING SHAREHOLDER. In connection
with any registration statement which covers Registrable Securities of a
Participating Stockholder pursuant to this Agreement, each such Participating
Stockholder agrees to indemnify and hold harmless (in the same manner and to the
same extent as set forth in Section 7.1 of this Agreement), to the extent
permitted by law, the Company and each underwriter for the Company or any such
Participating Stockholder in connection therewith, each other Person who
controls the Company or any such
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underwriter within the meaning of the Securities Act or the Exchange Act, and
each of their respective managers, officers, directors and general partners,
with respect to any statement or alleged statement in or omission or alleged
omission from such registration statement, any preliminary, final or summary
prospectus contained therein, or any amendment or supplement thereto or to any
such prospectus, if such statement or alleged statement or omission or alleged
omission was made in reliance upon and in conformity with written information
that relates only to such Participating Stockholder and its affiliates or the
plan of distribution and that is furnished to the Company by or on behalf of
such Participating Stockholder expressly for use in the preparation of such
registration statement, preliminary, final or summary prospectus or amendment or
supplement. Such indemnity shall remain in full force and effect regardless of
any investigation made by or on behalf of the Company or any other Person
eligible under this Section 7.2, and shall survive the transfer of Registrable
Securities by such Participating Stockholder. The obligations of each
Participating Stockholder pursuant to this Section 7.2 are to be several and not
joint. Additionally, with respect to each claim pursuant to this Section 7.2 and
each corresponding claim for contribution under Section 7.5, each such
Participating Stockholder's maximum aggregate liability under this Section 7.2
and Section 7.5 shall be limited to an amount equal to the net proceeds actually
received by such Participating Stockholder (after deducting any underwriting
fees, discounts and expenses) from the sale of Registrable Securities being sold
pursuant to such registration statement or prospectus by such Participating
Stockholder.
7.3 INDEMNIFICATION PROCEDURE. Within 10 days after receipt by
an indemnified party hereunder of written notice of the commencement of any
action or proceeding involving a claim referred to in Section 7.1 or 7.2, such
indemnified party will, if a claim in respect thereof is to be made against an
indemnifying party, give written notice to the latter of the commencement of
such action; provided, however, that the failure of any indemnified party to
give notice as provided herein shall not relieve the indemnifying party of its
obligations under Section 7.1 or 7.2, except to the extent that the indemnifying
party is actually prejudiced by such failure to give notice. In case any such
action or proceeding is brought against an indemnified party, the indemnifying
party will be entitled to participate in and to assume the defense thereof,
jointly with any other indemnifying party similarly notified, it may, with
counsel reasonably satisfactory to such indemnified party; and after notice from
the indemnifying party to such indemnified party of its election so to assume
the defense thereof, the indemnifying party will not be liable to such
indemnified party for any legal fees and expenses subsequently incurred by the
latter in connection with the defense thereof, unless in such indemnified
party's reasonable judgment an actual or potential conflict of interest between
such indemnified and indemnifying parties may exist in respect of such claim, in
which case the indemnifying party shall not assume the defense of such claim but
also shall not be liable for the fees and expenses of (i) in the case of a claim
referred to in Section 7.1, more than one counsel (in addition to any local
counsel) for all indemnified parties selected by the holders of a majority (by
number of shares) of the Registrable Securities held by such indemnified
parties, or (ii) in the case of a claim referred to in Section 7.2, more than
one counsel (in addition to any local counsel) for the Company, in each case in
connection with any one action or separate but similar or related actions or
proceedings. An indemnifying party who is not entitled to (pursuant to the
immediately preceding
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sentence), or elects not to, assume the defense of a claim will not be obligated
to pay the fees and expenses of more than one counsel (in addition to any local
counsel) for all parties indemnified by such indemnifying party with respect to
such claim, unless in the reasonable judgment of any indemnified party an actual
or potential conflict of interest may exist between such indemnified party and
any other of such indemnified parties with respect to such claim, in which event
the indemnifying party shall be obligated to pay the fees and expenses of such
additional counsel or counsels as may be reasonable in light of such conflict.
The indemnifying party will not, without the prior written consent of each
indemnified party, settle or compromise or consent to the entry of any judgment
in any pending or threatened claim, action, suit, investigation or proceeding in
respect of which indemnification may be sought hereunder (whether or not such
indemnified party or any Person who controls such indemnified party is a party
to such claim, action, suit, investigation or proceeding), unless such
settlement, compromise or consent includes an unconditional release of such
indemnified party from all liability arising out of such claim, action, suit,
investigation or proceeding. An indemnified party will not settle or compromise
or consent to the entry of any judgment in any pending or threatened claim,
action, suit, investigation or proceeding in respect of which it is then seeking
(or thereafter seeks) indemnification hereunder, in each case without the prior
written consent of the indemnifying party (which consent shall not be
unreasonably withheld or delayed). Notwithstanding anything to the contrary set
forth herein, and without limiting any of the rights set forth above, an
indemnified party hereunder will have the right to retain, at its own expense,
counsel with respect to the defense of a claim.
7.4 UNDERWRITING AGREEMENT. The Company and each Participating
Stockholder requesting registration of all or any part of its Registrable
Securities pursuant to Article I or II, shall provide for the foregoing
indemnity (with appropriate modifications) in any underwriting agreement entered
into in connection with a Demand Registration or a Piggyback Registration with
respect to any required registration or other qualification of Registrable
Securities under any Federal or state law or regulation of any Governmental or
Regulatory Authority.
7.5 CONTRIBUTION. If the indemnification provided for in
Sections 7.1 and 7.2 of this Agreement is unavailable to hold harmless an
indemnified party under such Section, then each indemnifying party shall
contribute to the amount paid or payable by such indemnified party as a result
of the losses, claims, damages, liabilities and expenses referred to in Section
7.1 or 7.2, as the case may be, in such proportion as is appropriate to reflect
the relative fault of such indemnifying party, on the one hand, and such
indemnified party, on the other hand, in connection with statements or omissions
which resulted in such losses, liabilities, claims, damages or expenses, as well
as any other relevant equitable considerations, including the relative benefits
received by each party from the offering of the securities covered by the
relevant registration statement, the parties' relative knowledge and access to
information concerning the matter with respect to which the relevant claim was
asserted and the parties' relative opportunities to correct and prevent any
relevant statement or omission. Without limiting the generality of the
foregoing, the parties' relative fault shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of
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a material fact or the omission or alleged omission to state a material fact
relates to information supplied by the indemnifying party or the indemnified
party and the parties' relative intent, knowledge, access to relevant
information and opportunity to correct or prevent such alleged untrue or untrue
statement or omission. The parties hereto agree that it would not be just and
equitable if contributions pursuant to this Section 7.5 were to be determined by
pro rata or per capita allocation (even if the underwriters were treated as one
entity for such purpose) or by any other method of allocation which does not
take account of the equitable considerations referred to in the first and second
sentences of this Section 7.5. The amount paid by an indemnified party as a
result of the losses, claims, damages, liabilities or expenses referred to in
the first sentence of this Section 7.5 shall be deemed to include any legal or
other expenses reasonably incurred by such indemnified party in connection with
investigating or defending the relevant action or proceeding and shall be
limited as provided in Section 7.3 if the indemnifying party has assumed the
defense of the relevant action or proceeding in accordance with the provisions
of Section 7.3. Promptly after receipt by an indemnified party under this
Section 7.5 of notice of the commencement of any action or proceeding against
such party in respect of which a claim for contribution may be made against an
indemnifying party under this Section 7.5, such indemnified party shall notify
the indemnifying party in writing of the commencement thereof if the notice
specified in Section 7.3 has not been given with respect to such action or
proceeding; provided, however, that the omission to so notify the indemnifying
party shall not relieve the indemnifying party from any liability which it may
otherwise have to any indemnified party under this Section 7.5, except to the
extent that the indemnifying party is actually prejudiced by such failure to
give notice. The Company and the Participating Stockholders agree with each
other, and will agree with and the underwriters of Registrable Securities
registered pursuant to Article I or II, if requested by such underwriters, that
(i) the underwriters' portion of the contribution paid to the Participating
Stockholders pursuant to this Section 7.5 shall not exceed the total
underwriting fees, discounts and commissions in connection with the relevant
offering of Registrable Securities and (ii) the total amount of such
Participating Stockholder's contributions under this Section 7.5 and any amounts
paid by such Participating Stockholder in respect of corresponding claims for
indemnification under Section 7.2 shall not exceed an amount equal to the net
proceeds actually received by such Participating Stockholder from the sale of
Registrable Securities in the offering to which the losses, liabilities, claims,
damages or expenses of the indemnified parties relate. No Person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any Person who was not
guilty of such fraudulent misrepresentation.
7.6 PERIODIC PAYMENTS. The indemnification required by this
Article VII shall be made by periodic payments of the amount thereof during the
course of the relevant investigation or defense, as and when bills are received
or expense, loss, damage or liability is incurred; provided, however, that if it
is finally determined by a court of competent jurisdiction that the relevant
indemnified party was not entitled to indemnification hereunder in respect of
such investigation or defense, such indemnified party shall repay to the
indemnifying party, on demand, all amounts received by it in respect of such
investigation or defense pursuant to this Section 7.6, together with interest
thereon at a rate per annum equal to the "prime rate" (as published from time to
time in the
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Wall Street Journal) for the period from and including the date on which the
indemnified party received the relevant amount to but excluding the date on
which it repaid such amount to the indemnifying party.
ARTICLE VIII
RULE 144
If the Company shall have filed a registration statement
pursuant to the requirements of Section 12 of the Exchange Act or pursuant to
the requirements of the Securities Act, the Company covenants that it will file
the reports required to be filed by it under the Securities Act and the Exchange
Act and the rules and regulations adopted by the Commission thereunder (or, if
the Company is not required to file such reports, it will, upon the request of
any Participating Stockholder, make publicly available other information), and
it will take such further action as any Participating Stockholder may reasonably
request, all to the extent required from time to time to enable such
Participating Stockholder to sell shares of Registrable Securities without
registration under the Securities Act in compliance with (i) Rule 144 under the
Securities Act, as such Rule may be amended from time to time, or (ii) any
similar rule or regulation hereafter adopted by the Commission. Upon the request
of any Participating Stockholder, the Company will deliver to such Participating
Stockholder a written statement as to whether it has complied with such
requirements.
ARTICLE IX
PARTICIPATION IN UNDERWRITTEN REGISTRATIONS
No Participating Stockholder may participate in any
underwritten registration hereunder unless such Participating Stockholder (i)
agrees to sell its Registrable Securities on the basis provided in any
underwriting arrangements approved by the Person or Persons entitled hereunder
to approve such arrangements and (ii) completes and executes all questionnaires,
powers of attorney, indemnities, underwriting agreements, escrow agreements and
other documents reasonably required under the terms of such underwriting
arrangements and consistent with the provisions of this Agreement. If the
Requesting Investors with respect to any Long-Form Demand Registration are
subsequently not entitled to participate in such Demand Registration solely by
reason of their failure to comply with any material requirement of this Article
IX then, notwithstanding anything in Section 1.1(b) or 1.4 to the contrary, the
request by such Requesting Investors for such Long-Form Registration shall
continue to be counted for purposes of Section 1.2.
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ARTICLE X
TRANSFER RESTRICTIONS; RIGHTS OF
INCLUSION; DUTY OF FIRST OFFER
10.1 TRANSFER RESTRICTIONS. (a) Each of the LIH Stockholders,
the BancBoston Stockholders, the Liberty Mutual Stockholders and the Mezzanine
Stockholders, severally and not jointly, agrees that it will not, for a period
of 180 days after the Closing Date (as defined in the SB Investment Agreement
or, if the closing under the SB Investment Agreement does not occur, as defined
in the AVS Investment Agreement), Transfer any Restricted Securities other than
(i) to a Permitted Transferee, who shall have executed a Joinder Agreement in
substantially the form of Exhibit A-1, and thereby become a party to this
Agreement, (ii) in the case of the BancBoston Stockholders, the Liberty Mutual
Stockholders and the Mezzanine Stockholders, to any LIH Stockholder (unless such
Transfer would result in a breach of the Amended and Restated Governance
Agreement), (iii) pursuant to Section 10.2 or (iv) pursuant to a transaction
that constitutes a Sale of the Company.
(b) Until the first date as of which (i) the market value of
publicly held shares of Common Stock calculated in accordance with Rules 4310
and 4450 under the Manual of the National Association of Securities Dealers,
Inc. (the "Manual"), as in effect from time to time (or any successor listing
requirements for NASDAQ)) has exceeded the minimum market value then required
therefor by Rule 4450(b)(3) under the Manual (or any successor listing
requirement for NASDAQ) by at least $15 million for a period of 90 consecutive
trading days, (ii) the number of shares of Common Stock that are publicly held
(as so calculated) exceeds the minimum number of shares required to be publicly
held by Rule 4450(b)(2) under the Manual (or any successor listing requirement
for NASDAQ) and (iii) the Company has issued the officer's certificate described
in the next succeeding sentence, each of the BancBoston Stockholders, the
Liberty Mutual Stockholders and the Mezzanine Stockholders agrees, severally and
not jointly, that it shall not, without the prior written consent of the
independent directors of the Company, (x) Transfer any Common Stock or Equity
Equivalents to any person or "group" (as defined for purposes of Rule 13d under
the Exchange Act) if, after giving effect to such Transfer, any of the shares of
Common Stock directly or indirectly beneficially owned by such person or any
member of such group would not be deemed to be publicly held for purposes of
Rule 4450(b)(2) or 4450(b)(3) under the Manual (or any successor listing
requirement for NASDAQ) or (y) be a Transferee (or permit any person included in
any group in which such BancBoston Stockholder, Liberty Mutual Stockholder or
Mezzanine Stockholder is included to be a Transferee) of any Common Stock or
Equity Equivalents if, after giving effect to such Transfer, any of the shares
of Common Stock directly or indirectly beneficially owned by such Transferee (or
by any member of any such group) would not be deemed to be publicly held for
purposes of Rule 4450(b)(2) or 4450(b)(3) under the Manual (or any successor
listing requirement for NASDAQ); provided, however, that this Section 10.1(b)
shall not apply to any Transfer of Common Stock or Equity Equivalents (A)
pursuant to Section 10.2, (B) to any LIH Stockholder (unless such Transfer would
result in a breach of the Amended and Restated Governance Agreement), or (C)
pursuant to a transaction that constitutes a Sale of the Company.
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Within 10 Business Days following the first date as of which the requirements
set forth in clauses (i) and (ii) above have been satisfied, the Company shall
provide each of the BancBoston Stockholders, the Liberty Mutual Stockholders and
the Mezzanine Stockholders with an officer's certificate certifying as to, and
setting forth calculations demonstrating in reasonable detail, the satisfaction
of such requirements.
(c) Each of the Participating Stockholders that is then a Bank
Entity agrees, severally and not jointly, that it will not effect any Transfer
of Restricted Securities to any other Person, unless such Participating
Stockholder determines in good faith that such Transfer would not cause such
Participating Stockholder or any of its Affiliates to be in violation of the
Bank Holding Company Act.
10.2 RIGHTS OF INCLUSION. (a) Except for (i) any Transfer of
Restricted Securities to a Permitted Transferee, (ii) any Transfer of Restricted
Securities pursuant to a Demand Registration, a Piggyback Registration or a Rule
144 Transaction, and (iii) other Transfers of Restricted Securities (other than
Transfers in respect of which an Inclusion Notice is delivered pursuant to this
Section 10.2(a)) which, in the aggregate, comprise less than 20% of the LIH
Stockholders' Original Ownership Level, and subject to paragraph (f) below, if
any or all of the LIH Stockholders (the "Transferors") propose to Transfer any
Restricted Securities (the "Transferor Shares") to one or more persons (the
"Buyer"), then as a condition of such Transfer, the Transferors shall cause the
Buyer to include a written offer (the "Section 10.2 Offer") to each of the
BancBoston Stockholders, Liberty Mutual Stockholders and Mezzanine Stockholders
(collectively, the "Offerees"), to sell to the Buyer, at the option of each
Offeree, that number of shares of Restricted Securities determined in accordance
with Section 10.2(b), on the same terms and conditions as are applicable to the
Transferor Shares, all of which terms shall be specified in the Section 10.2
Offer. The terms of the Section 10.2 Offer shall not require any Offeree (i) to
provide any representation, warranty or covenant other than representations,
warranties and covenants which relate specifically to such Offeree or its
Restricted Securities, such as representations regarding such Offeree's power
and authority to effect a sale of its Restricted Securities pursuant to the
Section 10.2 Offer and such Offeree's title to and ownership of its Restricted
Securities, (ii) other than in connection with the representations, warranties
and covenants which such Offeree may be required to provide under clause (i)
above, to join in any indemnification obligations that are not allocated
severally (as opposed to jointly and severally) among the Transferors and the
Offerees on a pro rata basis (based on the Transferors' and each Offeree's
respective amounts of the aggregate consideration paid to them in connection
with the Transfer contemplated by the Section 10.2 Offer) or (iii) to indemnify
the Buyer with respect to an amount in excess of the net cash proceeds paid to
such Offeree in connection with such Transfer. The Transferors shall provide a
written notice (the "Inclusion Notice") of the Section 10.2 Offer to each
Offeree, which may accept the Section 10.2 Offer by providing a written notice
of acceptance of the Section 10.2 Offer to the Transferors within 10 Business
Days of delivery of the Inclusion Notice.
(b) Each Offeree shall have the right (an "Inclusion Right")
to sell pursuant to the
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Section 10.2 Offer the same percentage of its Restricted Securities (calculated
on a Fully-Diluted Basis) as the percentage of the Transferors' Restricted
Securities to be sold by the Transferors to the Buyer. Any Offeree which owns
Equity Equivalents may sell pursuant to the Section 10.2 Offer, in lieu of
shares of Restricted Securities, Equity Equivalents representing that number of
shares of Restricted Securities which it could sell pursuant to its Inclusion
Right, and the purchase price therefor shall equal the aggregate price that
would be paid for the shares of Restricted Securities issuable upon the
exercise, exchange or conversion thereof minus the aggregate exercise, exchange
or conversion price under such Equity Equivalents for such shares of Restricted
Securities. If any Offeree exercises its Inclusion Right on a timely basis
pursuant to Section 10.2(a) with respect to any Inclusion Notice, then prior to
the expiration of the applicable 120-day period referred to in Section 10.2(c),
none of the Transferors shall consummate any sale to the Buyer of any of the
Transferor Shares covered by such Inclusion Notice unless such Offeree is
permitted to participate in such Transfer as provided in this Section 10.2 (it
being understood that any Transfer of any such Transferor Shares after the
expiration of such 120-day period must comply with this Section 10.2).
(c) With reasonable promptness following its exercise of an
Inclusion Right, each Offeree shall deliver to the Transferors a certificate or
certificates representing the Restricted Securities to be Transferred pursuant
to the Section 10.2 Offer by such Offeree, free and clear of all Liens (other
than Liens which the Buyer permits to exist with respect to the Transferor
Shares at the time of its acquisition thereof), and a limited power-of-attorney
authorizing the Transferors to sell or otherwise dispose of such Restricted
Securities pursuant to the terms of the Section 10.2 Offer. The Transferors
shall have 120 days, commencing on the expiration of the 10-Business Day period
referred to in Section 10.2(a), in which to Transfer to the Buyer, on behalf of
itself and the Offerees, up to the number of Restricted Securities equal to the
sum of (i) the number of Restricted Securities covered by the Section 10.2 Offer
as to which Offerees shall have exercised their Inclusion Rights on a timely
basis pursuant to Section 10.2(a) plus (ii) the number of Transferor Shares. If
all such Restricted Securities and Transferor Shares are not sold to the Buyer,
the Transferors, at their option, may elect to sell, on behalf of themselves and
the Offerees that have exercised their Inclusion Rights on a timely basis
pursuant to Section 10.2(a), such number thereof as the Buyer will purchase,
allocated Pro Rata (as nearly as practicable) among the Transferors and such
Offerees. The material terms of any Transfer referred to in the two immediately
preceding sentences, including price and form of consideration, shall be as set
forth in the Inclusion Notice. If at the end of such 120-day period the
Transferors have not completed the Transfer of all the Transferor Shares and all
such Offerees' Restricted Securities (if any) proposed to be sold, the
Transferors shall return to each of the Offerees its respective certificates, if
any, representing Restricted Securities which the Offerees delivered for
Transfer pursuant to this Section 10.2 and which were not sold pursuant to the
Section 10.2 Offer, and the provisions of this Section 10.2 shall continue to be
in effect.
(d) Promptly after the Transfer of the Transferor Shares and
Restricted Securities (if any) of the Offerees to the Buyer pursuant to the
Section 10.2 Offer, the Transferors shall notify the Offerees thereof. To the
extent within their control and at the expense of the requesting Offeree, the
Transferors shall furnish such evidence of the completion of such Transfer and
the terms thereof as may be reasonably requested by any Offerees that
participated in such Transfer.
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(e) Notwithstanding anything to the contrary contained in this
Section 10.2, (i) except for the Transferors' obligation to return to each
Offeree any certificates representing the Offerees' Restricted Securities there
shall be no liability on the part of any Transferor to any Participating
Stockholder in the event that any proposed Transfer pursuant to this Section
10.2 is not consummated for any reason, and (ii) whether or not any sale of
Restricted Securities is effected pursuant to this Section 10.2 shall be in the
sole and absolute discretion of the Transferors.
(f) The provisions of paragraphs (a) through (e) above shall
not apply to any Transfer of Restricted Securities by any LIH Stockholder which
occurs following the first date as of which the LIH Stockholders, taken
together, cease to beneficially own Restricted Securities which comprise at
least 20% of the LIH Stockholders' Original Ownership Level.
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ARTICLE XI
DEFINITIONS
11.1 TERMS. As used in this Agreement, the following defined
terms shall have the meanings set forth below:
"ADDITIONAL STOCKHOLDER" means any person to whom the Company
has granted registration rights in compliance with Section 1.7 and who has
executed a Joinder Agreement in substantially the form of Exhibit A-2, and its
direct and indirect Permitted Transferees, so long as any such Person shall hold
Registrable Securities.
"BANCBOSTON STOCKHOLDERS" means BancBoston, and its direct and
indirect Permitted Transferees, in each case so long as any such Person shall
hold Registrable Securities or Restricted Securities.
"BANK ENTITY" means, at any time of determination, any Person
that is then subject to regulation under Section 4 of the Bank Holding Company
Act.
"BANK HOLDING COMPANY ACT" means the Bank Holding Company Act
of 1956, as amended, and the rules and regulations thereunder.
"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.
"COMMISSION" means the U.S. Securities and Exchange
Commission.
"COMMON STOCK" means the Common Stock, par value $.10 per
share, of the Company, any securities into which such Common Stock shall have
been changed and any securities resulting from any reclassification or
recapitalization of such Common Stock, and all other securities of any class or
classes (however designated) of the Company 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.
"EQUITY EQUIVALENTS" means (a) the Warrants, (b) any other
securities (other than employee options) which, by their terms, are or may be
exercisable, convertible or exchangeable for or into Common Stock at the
election of the holder thereof, (c) the shares of Class B-1 Common Stock and (d)
the shares of Series B Preferred Stock.
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"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended, or any similar Federal statute then in effect, and any reference to a
particular section thereof shall include a reference to a comparable section, if
any, of any such similar Federal statute, and the rules and regulations
thereunder.
"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, (ii) all shares of Common Stock issuable upon the
exercise, conversion or exchange of any Equity Equivalents outstanding at the
time of determination and (iii) all shares of Common Stock issuable upon the
exercise, conversion or exchange of any securities that are issuable upon the
exercise, conversion or exchange of any Equity Equivalents outstanding at the
time of determination.
"JOINDER AGREEMENT" means a Joinder Agreement substantially in
the form attached hereto as Exhibit A-1 or A-2.
"LIBERTY MUTUAL STOCKHOLDERS" means Liberty Mutual, and its
direct and indirect Permitted Transferees, in each case so long as any such
Person shall hold Registrable Securities or Restricted Securities.
"LIH STOCKHOLDERS" means the LIH Entities, and their
respective direct and indirect Permitted Transferees, in each case so long as
any such Person shall hold Registrable Securities or Restricted Securities.
"MEZZANINE STOCKHOLDERS" means the Mezzanine Entities, and
their respective direct and indirect Permitted Transferees, in each case so long
as any such Person shall hold Registrable Securities or Restricted Securities.
"ORIGINAL OWNERSHIP LEVEL" means, with respect to the
BancBoston Stockholders, the LIH Stockholders, the Liberty Mutual Stockholders
or the Mezzanine Stockholders (as applicable), the number of shares of Common
Stock, on a Fully Diluted Basis, as adjusted for any stock splits, stock
dividends or reclassifications or other similar events, held by them in the
aggregate on the Closing Date immediately after the Closing (as such terms are
defined in the SB Investment Agreement or, if the Closing thereunder does not
occur, as such terms are defined in the AVS Investment Agreement).
"PARTICIPATING STOCKHOLDERS" means the LIH Stockholders, the
BancBoston Stockholders, the Liberty Mutual Stockholders, the Mezzanine
Stockholders and any Additional Stockholders or transferee of any of the
foregoing persons who has acquired Registrable Securities and who has executed a
Joinder Agreement.
"PERMITTED TRANSFEREE" means:
(i) with respect to any Participating Stockholder who is a
natural person, the
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spouse or any lineal descendant (including by adoption and
stepchildren) of such Participating Stockholder or any trust
of which such Participating Stockholder is the trustee and
which is established solely for the benefit of any of the
foregoing individuals and whose terms are not inconsistent
with the terms of Article X; and
(ii) with respect to any Participating Stockholder who is not
a natural person, (A) any Affiliate of such Participating
Stockholder and any officer or director of such Participating
Stockholder or any such Affiliate, (B) any spouse or lineal
descendant (including by adoption and stepchildren) of the
officers and directors referred to in clause (A) above, and
any trust in which all the beneficiaries thereof are one or
more of the persons described in this clause (B) and the
officers and directors described in clause (A) above and whose
terms are not inconsistent with the terms of Article X; and
(iii) as to any LIH Stockholder, (w) any other LIH
Stockholder, (x) any member or manager of such LIH
Stockholder, (y) any partner, officer or employee of any such
manager or member, (z) any Affiliate of such LIH Stockholder
or of any such member, manager, partner, officer or employee,
and (xx) any liquidating trust or similar entity established
by such LIH Stockholder or any of the foregoing entities for
the benefit of its members, partners or other interest holders
and their Permitted Transferees for the purpose of holding
Registrable Securities;
(iv) as to any Mezzanine Stockholder, (w) any other Mezzanine
Stockholder, (x) any liquidating trust or similar entity
established by any Mezzanine Stockholder for the benefit of
its Permitted Transferees for the purpose of holding
Registrable Securities, (y) with respect to the MassMutual
Entities only, any person (excluding individuals) that is an
investment fund for whom a MassMutual Entity (or any Affiliate
thereof) is the sole investment manager or investment advisor,
and (z) with respect to NCVC only, Great Lakes Capital
Investments I, LLC, or any other entity that is formed and
controlled by and for the benefit of the executive officers of
NCVC; and
(v) as to any Liberty Mutual Stockholder, Liberty Mutual Fire
Insurance Company, Liberty Life Assurance Company of Boston
and Liberty Insurance Corporation, in each case so long as
such Person is an Affiliate of such Liberty Mutual Stockholder
at the time of the relevant Transfer;
provided, however, that notwithstanding anything in paragraphs
(i) through (v) above to the contrary, for the purposes of
Article X only, (w) the "Permitted Transferees" of the LIH
Stockholders at any time of determination shall not include
any Person who is then a BancBoston Stockholder, a Liberty
Mutual Stockholder, a Mezzanine Stockholder or a Permitted
Transferee of a BancBoston Stockholder, Liberty Mutual
Stockholder or Mezzanine Stockholder, (x) the "Permitted
Transferees" of the
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BancBoston Stockholders at any time of determination shall not
include any Person who is then an LIH Stockholder, a Liberty
Mutual Stockholder, a Mezzanine Stockholder or a Permitted
Transferee of an LIH Stockholder, Liberty Mutual Stockholder
or Mezzanine Stockholder, (y) the "Permitted Transferees" of
the Liberty Mutual Stockholders at any time of determination
shall not include any Person who is then a BancBoston
Stockholder, an LIH Stockholder, a Mezzanine Stockholder or a
Permitted Transferee of a BancBoston Stockholder, LIH
Stockholder or Mezzanine Stockholder and (z) the "Permitted
Transferees" of the Mezzanine Stockholders at any time of
determination shall not include any Person who is then a
Liberty Mutual Stockholder, a BancBoston Stockholder, an LIH
Stockholder or a Permitted Transferee of a Liberty Mutual
Stockholder, BancBoston Stockholder or LIH Stockholder.
"PRO RATA" means, with respect to one or more Stockholders, in
proportion to the number of shares of Common Stock on a Fully-Diluted Basis
owned by such Stockholder or Stockholders or which may be acquired by any such
Stockholder or Stockholders upon exercising any rights under any Equity
Equivalent owned by such Stockholder or Stockholders.
"REGISTRABLE SECURITIES" means, at any time of determination,
(i) the shares of Common Stock then issued and outstanding or which are issuable
upon the conversion, exercise or exchange of Equity Equivalents, (ii) any then
outstanding securities into which shares of Common Stock shall have been changed
and (iii) any then outstanding securities resulting from any reclassification or
recapitalization of Common Stock; provided, however, that "Registrable
Securities" shall not include any shares of Common Stock or other securities
obtained or transferred pursuant to an effective registration statement under
the Securities Act or in a Rule 144 Transaction; and provided further, however,
that "Registrable Securities" shall not include any shares of Common Stock or
other securities which are held by a Person who is not a Participating
Stockholder.
"REQUESTING INVESTORS" means, with respect to any Demand
Registration, the Required LIH Stockholders, the Required BancBoston
Stockholders, the Required Liberty Mutual Stockholders or the Required Mezzanine
Stockholders (as the case may be) that have requested such Demand Registration
in accordance with Section 1.1.
"REQUIRED BANCBOSTON STOCKHOLDERS" means, as of the date of
any determination thereof, BancBoston Stockholders which then hold Registrable
Securities representing at least a majority (by number of shares) of the
Registrable Securities (or, for purposes of any amendment, modification or
waiver of any provision of Article X, the Restricted Securities), on a
Fully-Diluted Basis, then held by all BancBoston Stockholders.
"REQUIRED LIBERTY MUTUAL STOCKHOLDERS" means, as of the date
of any determination thereof, Liberty Mutual Stockholders which then hold
Registrable Securities representing at least a majority (by number of shares) of
the Registrable Securities (or, for purposes of any amendment, modification or
waiver of any provision of Article X, the Restricted Securities),
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on a Fully-Diluted Basis, then held by all Liberty Mutual Stockholders.
"REQUIRED LIH STOCKHOLDERS" means, as of the date of any
determination thereof, LIH Stockholders which then hold Registrable Securities
representing at least a majority (by number of shares) of the Registrable
Securities (or, for purposes of any amendment, modification or waiver of any
provision of Article X, the Restricted Securities), on a Fully-Diluted Basis,
then held by all LIH Stockholders.
"REQUIRED MEZZANINE STOCKHOLDERS" means, as of the date of any
determination thereof, Mezzanine Stockholders which then hold Registrable
Securities representing at least a majority (by number of shares) of the
Registrable Securities (or, for purposes of any amendment, modification or
waiver of any provision of Article X, the Restricted Securities), on a
Fully-Diluted Basis, then held by all Mezzanine Stockholders.
"REQUISITE REGISTRATION PARTICIPANTS" means, with respect to
any Demand Registration or Piggyback Registration, Participating Stockholders
which then hold Registrable Securities representing at least a majority (by
number of shares) of the Registrable Securities requested to be included in such
Demand Registration (whether as Requesting Investors or otherwise) or Piggyback
Registration pursuant to Section 1.1 or 2.1, as applicable.
"REQUISITE REQUESTING INVESTORS" means, as of the date of any
determination thereof with respect to any Demand Registration, Requesting
Investors which then hold a majority (by number of shares) of the Registrable
Securities, on a Fully-Diluted Basis, then held by all Requesting Investors of
such Demand Registration.
"RESTRICTED SECURITIES" means the Series B Preferred Stock,
the Common Stock, any Equity Equivalents and any securities issued with respect
to any of the foregoing as a result of any stock dividend, stock split,
reclassification, recapitalization, reorganization, merger, consolidation or
similar event or upon the conversion, exchange or exercise thereof.
"RULE 144 TRANSACTION" means a transfer of Common Stock (a)
complying with Rule 144 under the Securities Act (or any successor statute or
rule) as such Rule (or such successor statute or rule, as the case may be) is in
effect on the date of such transfer (but not including a sale other than
pursuant to a "brokers transaction" as defined in clauses (1) and (2) of
paragraph (g) of such Rule as in effect on the date hereof) and (b) occurring at
a time when shares of Common Stock are registered pursuant to Section 12 of the
Exchange Act (or any successor to such Section).
"SALE OF THE COMPANY" means the sale of the Company (whether
by merger, consolidation, recapitalization, reorganization, sale of securities
of the Company or sale of all or substantially all the assets of the Company) to
one or more Persons (other than the LIH Stockholders and their respective
Affiliates) who acquire securities representing 50% or more of the total voting
power of and equity interest in the Company, in each case on a Fully-Diluted
Basis.
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"SECURITIES ACT" means the Securities Act of 1933, as amended,
or any similar Federal statute then in effect, and any reference to a particular
section thereof shall include a reference to a comparable section, if any, of
any such similar Federal statute, and the rules and regulations thereunder.
"TRANSFER" means any direct or indirect sale, transfer,
assignment, grant of a participation in, gift, hypothecation, pledge or other
disposition of any Restricted Security or any interest therein or, as the
context may require, to sell, transfer, assign, grant a participation in, give
as a gift, hypothecate, pledge or otherwise dispose of, directly or indirectly,
any Restricted Security or any interest therein; provided, however, that the
exercise of any purchase, conversion or exchangeability right provided for in
the terms of the Series B Preferred Stock or any Equity Equivalent shall not be
deemed a "Transfer."
11.2 OTHER DEFINED TERMS. Unless otherwise defined herein,
capitalized terms used in this Agreement shall have the respective meanings
assigned to them in the AVS Investment Agreement.
11.3 DEFINED TERMS IN CORRESPONDING SECTIONS. The following
defined terms, when used in this Agreement, shall have the meaning ascribed to
them in the corresponding Sections of this Agreement listed below:
"AVS Investment Agreement" -- Recitals
"BancBoston" -- Preamble
"Black-Out Notice" -- Section 1.8(b)
"Buyer" -- Section 10.2(a)
"Class B-1 Common Stock" -- Recitals
"Company" -- Preamble
"Demand Registration" -- Section 1.1
"Inclusion Notice" -- Section 10.2(a)
"Inclusion Right" -- Section 10.2(b)
"Investment Agreements" -- Recitals
"Liberty Mutual" -- Preamble
"LIH Holdings I" -- Preamble
"LIH Holdings II" -- Preamble
"LIH Holdings III" -- Preamble
"LIH Entities" -- Preamble
"Long-Form Registration" -- Section 1.1(a)
"MassMutual Entities" -- Preamble
"Mezzanine Entities" -- Preamble
"MMCI" -- Preamble
"MMCVP" -- Preamble
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<PAGE> 35
"MMLIC" -- Preamble
"MMPI" -- Preamble
"NCVC" -- Preamble
"Offerees" -- Section 10.2(a)
"Piggyback Registration" -- Section 2.1
"Registration Expenses" -- Section 5.1
"SB Investment Agreement" -- Recitals
"Section 10.2 Offer" -- Section 10.2(a)
"Securities Purchase Agreements" -- Recitals
"Series B Preferred Stock" -- Recitals
"Short-Form Registration" -- Section 1.1(a)
"Transferors" -- Section 10.2(a)
"Transferor Shares" -- Section 10.2(a)
"Warrants" -- Recitals
ARTICLE XII
MISCELLANEOUS
12.1 NO INCONSISTENT AGREEMENTS. The Company represents and
warrants that it does not currently have, and covenants that it will not
hereafter enter into any Contract which is inconsistent with, or would otherwise
restrict the performance by the Company of, its obligations hereunder.
12.2 SPECIFIC PERFORMANCE. The parties hereto agree that
irreparable damage would occur in the event any provision of this Agreement was
not performed in accordance with the terms hereof and that the parties hereto
shall be entitled to specific performance of the terms hereof, in addition to
any other remedy that may be available to any of them at law or equity;
provided, however, that each of the parties hereto agrees to provide the other
parties hereto with written notice at least two Business Days prior to filing
any motion or other pleading seeking a temporary restraining order, a temporary
or permanent injunction, specific performance, or any other equitable remedy and
to give the other parties hereto and their counsel a reasonable opportunity to
attend and participate in any judicial or administrative hearing or other
proceeding held to adjudicate or rule upon any such motion or pleading.
12.3 AMENDMENTS AND WAIVERS. Except as otherwise provided
herein, no modification, amendment or waiver of any provision of this Agreement
will be effective against the Company or any holder of Registrable Securities or
Restricted Securities, unless such modification, amendment or waiver is approved
in writing by the Company, the Required LIH Stockholders, the Required
BancBoston Stockholders, the Required Liberty Mutual Stockholders and the
Required
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<PAGE> 36
Mezzanine Stockholders. Each of the Participating Stockholders and the Company
shall be bound by each modification, amendment or waiver authorized in
accordance with this Section 12.3, regardless of whether the certificates
evidencing the Registrable Securities or the Restricted Securities shall have
been marked to indicate such modification, amendment or waiver. The failure of
any party hereto to enforce any of the provisions of this Agreement will in no
way be construed as a waiver of such provisions and will not affect the right of
such party thereafter to enforce each and every provision of this Agreement in
accordance with its terms.
12.4 SUCCESSORS AND ASSIGNS. This Agreement shall be binding
upon and inure to the benefit of and be enforceable by the parties hereto and
their respective successors and permitted assigns. Each of the Participating
Stockholders hereby agrees that it shall not Transfer any Restricted Securities
to any of its Permitted Transferees, unless such Permitted Transferee shall have
executed a Joinder Agreement, substantially in the form of Exhibit A-1, and
thereby become a party to this Agreement. In addition, whether or not any
express assignment has been made, the provisions of this Agreement which are for
the benefit of purchasers or holders of Registrable Securities are also for the
benefit of, and enforceable by, any subsequent holder of Registrable Securities,
except to the extent reserved to or by the Transferor in connection with any
such Transfer; provided, however, that the benefits of this Agreement shall
inure to and be enforceable by any Transferee of Registrable Securities only if
such Transferee acquired such Registrable Securities in accordance with the
terms of Article X and shall have executed a Joinder Agreement. Notwithstanding
the immediately preceding sentence, (a) nothing contained herein shall be
construed as granting any Participating Stockholder the right to Transfer any of
its Restricted Securities except in accordance with this Agreement and (b)
unless otherwise expressly contemplated by this Agreement, none of the
provisions of Article X shall apply to any Transfer of Restricted Securities (or
to the Transferee thereof) subsequent to a Transfer of those securities pursuant
to Section 10.2.
12.5 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 reputable overnight courier, fee prepaid, to the parties at the following
addresses or facsimile numbers:
(a) if to the Company, to:
Lund International Holdings, Inc.
911 Lund Boulevard
Anoka, Minnesota 55303
Facsimile No: (612) 576-4297
Attn: Chief Executive Officer
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<PAGE> 37
with copies (which shall not constitute notice) to
the other holders of Registrable Securities or
Restricted Securities and to:
Leonard, Street and Deinard
150 South Fifth Avenue
Suite 2300
Minneapolis, Minnesota 55402
Facsimile No: (612) 335-1657
Attn: Mark Weitz, Esq.; and
(b) if to any Participating Stockholder, to the address for
notices set forth opposite its name in Schedule I.
All such notices, requests and other communications will (i) if delivered
personally to the address as provided in this Section 12.5, be deemed given upon
delivery, (ii) if delivered by facsimile transmission to the facsimile number as
provided in this Section 12.5, be deemed given upon receipt, (iii) if delivered
by mail in the manner described above to the address as provided in this Section
12.5, be deemed given on the earlier of the third full Business Day following
the day of mailing or upon receipt, and (iv) if delivered by overnight courier
to the address provided in this Section 12.5, 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
communication is received by any other Person to whom a copy of such notice is
to be delivered pursuant to this Section 12.5). 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
parties hereto.
12.6 HEADINGS, CERTAIN CONVENTIONS. The headings used in this
Agreement have been inserted for convenience of reference only and do not define
or limit any terms or provisions hereof. Unless the context otherwise expressly
requires, all references herein to Articles, Sections and Exhibits are to
Articles and Sections of, and Exhibits to, this Agreement. The words "herein,"
"hereunder" and "hereof" and words of similar import refer to this Agreement as
a whole and not to any particular Section or provision. The words "include,"
"includes" and "including" shall be deemed to be followed by the phrase "without
limitation."
12.7 GENDER. Whenever the pronouns "he" or "his" are used
herein they shall also be deemed to mean "she" or "hers" or "it" or "its"
whenever applicable. Words in the singular shall be read and construed as though
in the plural and words in the plural shall be construed as though in the
singular in all cases where they would so apply.
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<PAGE> 38
12.8 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 herefrom 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.
12.9 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the domestic 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.
12.10 CONSENT TO JURISDICTION AND SERVICE OF PROCESS. EACH OF
THE PARTIES HERETO 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 MAY BE LITIGATED IN
SUCH COURTS. EACH OF THE PARTIES HERETO ACCEPTS FOR ITSELF AND IN CONNECTION
WITH ITS 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. EACH OF THE PARTIES HERETO 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 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.
12.11 WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY
WAIVES ITS RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF
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<PAGE> 39
ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT. EACH OF THE PARTIES HERETO
ALSO WAIVES ANY BOND OR SURETY OR SECURITY UPON SUCH BOND WHICH MIGHT, BUT FOR
THIS WAIVER, BE REQUIRED OF SUCH PARTY. THE SCOPE OF THIS WAIVER IS INTENDED TO
BE ALL-ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT AND
THAT RELATE TO THE SUBJECT MATTER OF THIS AGREEMENT, INCLUDING WITHOUT
LIMITATION CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER
COMMON LAW AND STATUTORY CLAIMS. EACH OF THE PARTIES HERETO FURTHER WARRANTS AND
REPRESENTS THAT IT HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL, AND THAT IT
KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION
WITH LEGAL COUNSEL. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE
MODIFIED EITHER ORALLY OR IN WRITING, AND THIS WAIVER SHALL APPLY TO ANY
SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT.
IN THE EVENT OF LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO
A TRIAL BY THE COURT.
12.12 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.
[Signature Page to Follow]
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<PAGE> 40
IN WITNESS WHEREOF, the parties hereto have executed and
delivered this Agreement as of the date first above written.
LUND INTERNATIONAL HOLDINGS, INC.
By: /s/ Dennis Vollmershausen
-----------------------------------
Name: Dennis Vollmershausen
Title: President
LIH HOLDINGS, LLC
By: /s/ Ira D. Kleinman
-----------------------------------
Name: Ira D. Kleinman
Title: Authorized Person
LIH HOLDINGS II, LLC
By: /s/ Ira D. Kleinman
-----------------------------------
Name: Ira D. Kleinman
Title: Authorized Person
LIH HOLDINGS III, LLC
By: /s/ Ira D. Kleinman
-----------------------------------
Name: Ira D. Kleinman
Title: Authorized Person
LIBERTY MUTUAL INSURANCE COMPANY
By: /s/ A. Alexander Fontanes
-----------------------------------
Name: A. Alexander Fontanes
Title: Senior Vice President &
Chief Investment Officer
[Signature Page to Rights Agreement]
<PAGE> 41
BANCBOSTON CAPITAL INC.
By: /s/ Timothy H. Robinson
-----------------------------------
Name: Timothy H. Robinson
Title: Vice President
MASSACHUSETTS MUTUAL LIFE INSURANCE
COMPANY
By: /s/ Michael L. Klofas
-----------------------------------
Name: Michael L. Klofas
Title: Managing Director
MASSMUTUAL CORPORATE VALUE PARTNERS
LIMITED
By: Massachusetts Mutual Life Insurance
Company, as Investment Advisor
By: /s/ Michael L. Klofas
------------------------------------
Name: Michael L. Klofas
Title: Managing Director
MASSMUTUAL CORPORATE INVESTORS
By: /s/ Michael L. Klofas
-----------------------------------
Name: Michael L. Klofas
Title: Vice President
The foregoing is executed on behalf
of MassMutual Corporate Investors,
organized under a Declaration of
Trust, dated September 13, 1985, as
amended from time to time. The
obligations of such Trust are not
personally binding upon, nor shall
resort be had to the property of,
any of the Trustees, shareholders,
officers, employees or agents of
such Trust, but the Trust's property
only shall be bound.
[Signature Page to Rights Agreement]
<PAGE> 42
MASSMUTUAL PARTICIPATION INVESTORS
By: /s/ Michael L. Klofas
---------------------------------
Name: Michael L. Klofas
Title: Vice President
The foregoing is executed on behalf
of MassMutual Participation
Investors, organized under a
Declaration of Trust, dated April 7,
1988, as amended from time to time.
The obligations of such Trust are
not personally binding upon, nor
shall resort be had to the property
of, any of the Trustees,
shareholders, officers, employees or
agents of such Trust, but the
Trust's property only shall be
bound.
NATIONAL CITY VENTURE CORPORATION
By: /s/ Christopher P. Dowd
---------------------------------
Name: Christopher P. Dowd
Title: Vice President
[Signature Page to Rights Agreement]
<PAGE> 43
Exhibit A-1
Form of Joinder Agreement
For Permitted Transferees
LUND INTERNATIONAL HOLDINGS, INC.
911 Lund Boulevard
Anoka, Minnesota 55303
Attention: Chief Executive Officer
Ladies & Gentlemen:
In consideration of the transfer to the undersigned of
[DESCRIBE SECURITY BEING TRANSFERRED] of LUND INTERNATIONAL HOLDINGS, INC., a
Delaware corporation (the "Company"), the undersigned represents that it is a
Permitted Transferee of [INSERT NAME OF TRANSFEROR] and agrees that, as of the
date written below, [HE][SHE][IT] shall become a party to, and a Permitted
Transferee as defined in, that certain Rights Agreement dated as of December 22,
1998, as such agreement may have been amended from time to time (the
"Agreement"), among the Company and the persons named therein, and as a
Permitted Transferee shall be fully bound by, and subject to, all of the
covenants, terms and conditions of the Agreement that were applicable to the
undersigned's transferor, as though an original party thereto, and shall be
deemed a [LIH STOCKHOLDER] [BANCBOSTON STOCKHOLDER] [LIBERTY MUTUAL STOCKHOLDER]
[MEZZANINE STOCKHOLDER] [ADDITIONAL STOCKHOLDER] for all purposes thereof.
Executed as of the day of , .
SIGNATORY: _____________________________
Address: _____________________________
ACKNOWLEDGED AND ACCEPTED:
LUND INTERNATIONAL HOLDINGS, INC.
By ___________________________
Name:
Title:
<PAGE> 44
Exhibit A-2
Form of Joinder Agreement
For Additional Stockholders
LUND INTERNATIONAL HOLDINGS, INC.
911 Lund Boulevard
Anoka, Minnesota 55303
Attention: Chief Executive Officer
Ladies & Gentlemen:
In consideration of the issuance to the undersigned of
[DESCRIBE SECURITY BEING ISSUED] of LUND INTERNATIONAL HOLDINGS, INC., a
Delaware corporation (the "Company"), the undersigned agrees that, as of the
date written below, [HE][SHE][IT] shall become a party to and an Additional
Stockholder under that certain Rights Agreement dated as of December 22, 1998,
as such agreement may have been amended from time to time (the "Agreement"),
among the Company and the persons named therein, and shall be fully bound by,
and subject to, the covenants, terms and conditions of the Agreement as provided
under Section 12.4 of the Agreement as though an original party thereto.
Executed as of the day of , .
SIGNATORY: _____________________________
Address: _____________________________
ACKNOWLEDGED AND ACCEPTED:
LUND INTERNATIONAL HOLDINGS, INC.
By ___________________________
Name:
Title:
<PAGE> 45
Schedule I
Names and Addresses
LIH Holdings III, LLC
c/o Harvest Partners, Inc.
280 Park Avenue
33rd Floor
New York, NY 10017
Attn: Ira D. Kleinman
Facsimile No.: (212) 812-0100
Liberty Mutual Insurance Company
175 Berkeley Street
Boston, MA 02117
Attn: Jeffrey Moy
Facsimile No.: (617) 574-6971
BancBoston Capital Inc.
17 Federal Street
Mail Stop 75-10-01
Boston, MA 02110
Attn: Timothy Robinson
Facsimile No.: (617) 434-1153
Massachusetts Mutual Life Insurance Company
1295 State Street
Springfield, MA 01111
Attn: Michael L. Klofas
Facsimile No.: (413) 846-5035
MassMutual Corporate Value Partners Limited
c/o Massachusetts Mutual Life Insurance Company
1295 State Street
Springfield, MA 01111
Attn: Michael L. Klofas
Facsimile No.: (413) 846-5035
MassMutual Corporate Investors
c/o Massachusetts Mutual Life Insurance Company
1295 State Street
Springfield, MA 01111
Attn: Michael L. Klofas
Facsimile No.: (413) 846-5035
<PAGE> 46
Schedule I cont'd
Names and Addresses
MassMutual Participation Investors
c/o Massachusetts Mutual Life Insurance Company
1295 State Street
Springfield, MA 01111
Attn: Michael L. Klofas
Facsimile No.: (413) 846-5035
National City Venture Corporation
1965 East Sixth Street, Suite 1010
Cleveland, OH 44114
Attn: Christopher P. Dowd
Facsimile No.: (216) 575-9965
<PAGE> 1
EXHIBIT M
CERTIFICATE OF DESIGNATION, PREFERENCES AND RIGHTS
OF SERIES B PREFERRED STOCK
LUND INTERNATIONAL HOLDINGS, INC.
Pursuant to Section 151 of the General Corporation Law
of the State of Delaware
The undersigned, Dennis W. Vollmershausen, hereby certifies that:
A. He is the duly elected and acting Chief Executive Officer of LUND
INTERNATIONAL HOLDINGS, 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 December 18, 1998, creating a new series of 362,709
shares of Preferred Stock designated as "Series B 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 362,709 shares and shall be designated as Series B Preferred Stock
(the "Series B Preferred Stock"), as follows:
4D. Series B Preferred Stock
(i) Designation: Stated Value. There shall be a series of Preferred
Stock designated as "Series B Preferred Stock." The number of shares initially
constituting such series shall be 362,709. The Series B Preferred Stock shall
have a stated value of $70.00 per share (the "Stated Value").
(ii) Rank. The Series B Preferred Stock shall, with respect to dividend
and other distribution rights, and rights on liquidation, dissolution and
winding up, rank (a) prior to the Trigger Date (as defined in Part
(vi)(a)(below), (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 B Preferred Stock as to dividends, other distributions,
liquidation preference and/or otherwise (collectively, the "Party 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 B Preferred Stock) the holders of which have the right,
<PAGE> 2
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 or series of Preferred Stock hereafter
created which does not expressly provide that it ranks pari passu with the
Series B Preferred Stock as to dividends, other distributions, liquidation
preference and/or otherwise (collectively, the "Junior Securities"), and (b)
from and after the Trigger Date, (i) pari passu with the Parity Securities, and
senior to the common Stock Instruments and the Junior Securities, but only in
the case of dividends accrued pursuant to Part (iii) hereof, and (ii) in all
other cases pari passu with the Common Stock Instruments, provided that, for
purposes of this clause (b)(ii), each share of Series B Preferred Stock shall be
deemed to constitute the equivalent of the number of shares of Common Stock
which the holder of such share would receive if such share were converted into
shares of Common Stock at the Series B Conversion Ratio as then in effect. 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 that it ranks (i) pari passu with or (ii) not pari passu
with, as applicable, the Series B Preferred Stock with respect to dividends,
other distributions, liquidation preference or otherwise. Prior to the Trigger
Date, the Corporation shall not issue any capital stock or other equity
securities ranking senior to the Parity Securities with respect to dividends,
distributions, liquidation preference or otherwise.
(iii) Dividends.
(a) Subject to Part (vi)(a) hereof:
(x) The holders of shares of Series B 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, 1999 (each such date hereinafter referred
to as 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 B Preferred
Stock of the Corporation five Business Days prior to such
Dividend Payment Date (the "Dividend Record Date").
(y) Dividends on the Series B Preferred Stock shall
accrue and be paid at a rate per annum equal to 15% of the Stated
Value of each share of Series B Preferred Stock outstanding on
the Dividend Record Date with respect to a Dividend Payment Date.
(b) Dividends on the Series B Preferred Stock shall be
cumulative and shall accrue from (and including) April 30, 1999, to but
excluding the Trigger Date, whether or
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<PAGE> 3
not such dividends have been declared. Accrued but unpaid dividends,
whether or not declared, shall compound quarterly at a rate per annum
equal to 15% of the aggregate amount thereof from the Dividend Payment
Date on which such dividend was payable as herein provided until
payment of such dividend. Notwithstanding anything to the contrary
contained herein, dividends shall cease to accrue on the Trigger Date,
and the Corporation shall have no obligation to pay any dividends
subsequent to the Trigger Date, except as provided for herein with
respect to dividends which accrued prior to the Trigger Date.
(c) For so long as any shares of Series B 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 of any Common Stock
Instruments or Junior Securities and no payment on account of the
redemption, purchase or other acquisition or retirement for value by
the Corporation of any Common Stock Instruments or Junior Securities
shall be made on any date unless, in each case, the full amount of
unpaid dividends accrued on all outstanding shares of Series B
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 Common
Stock Instruments or Junior Securities, or (ii) the acquisition of any
Common Stock Instruments or Junior Securities upon conversion or
exchange thereof into or for any shares or units of any other class of
Common Stock Instruments or Junior Securities.
In the event that the dividend to be paid to any holder of shares of
Series B Preferred Stock shall be a fractional interest in a share of Series B
Preferred Stock then a fractional share of Series B Preferred Stock shall be
issued to such holder of shares of Series B Preferred Stock.
(iv) Redemption. Subject to Part (vi)(a) hereof:
(a) Redemption by Corporation. To the extent funds are legally
available therefor, the Corporation may, at any time on or after
December 29, 2007 redeem for the Redemption Price each share of Series
B Preferred Stock then outstanding; provided, however, that the
Corporation may not redeem any shares of Series B Preferred Stock as to
which the holder thereof, prior to the expiration of the relevant
30-day notice period, has advised the Corporation that the conversion
of such shares into shares of Common Stock would result in such holder
or any of its Affiliates being subject to a Regulatory Problem. To the
extent funds are legally available therefor, the Corporation shall, at
the request of a majority of the holders of shares of Series B
Preferred Stock then outstanding given at any time on and after the Put
Date, redeem for the Series Redemption Price each share of Series B
Preferred Stock then outstanding. The date on which shares are redeemed
pursuant to this Part (iv)(a) of Section 4D is referred to herein as
the "Series Redemption Date." If on the Series Redemption Date there
shall be insufficient funds of the Corporation legally available for
such redemption, such amount of funds as is legally
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<PAGE> 4
available shall be used to discharge the redemption requirement. Such
redemption requirement shall be cumulative so that if such requirement
shall not be fully discharged for any reason, funds legally available
therefor shall immediately be applied thereto upon receipt by the
Corporation until such requirement is discharged in full. The
redemption price (the "Series Redemption Price") for each outstanding
share of Series B Preferred Stock to be redeemed pursuant to this Part
(iv)(a) of Section 4D shall be the sum (payable in cash) of (x) the
Stated Value plus (y) an amount equal to all accrued and unpaid
dividends thereon to the Series Redemption Date.
(b) Payment of Series Redemption Price. On the Series
Redemption Date, the Corporation shall pay to the holder of each share
of Series B 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 Redemption
Price.
(c) Redeemed or Otherwise Acquired Shares Not to be Reissued.
All shares of Series B Preferred Stock redeemed pursuant to this Part
(iv) of Section 4D 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 B Preferred Stock are to be redeemed pursuant to Part (iv)(a)
of this Section 4D, the Corporation shall determine the shares held by
each holder of Series B 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 of Series B Preferred Stock then held by such holder
and the denominator of which shall be the total number of shares of
Series B Preferred Stock then outstanding.
(e) Notice of Redemption. Notice of any redemption of Series B
Preferred Stock pursuant to Part (iv)(a) of this Section 4D, specifying
the time and place of redemption and the Series 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 30 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 B 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
Redemption Price in respect of a share of Series B Preferred Stock is
not paid in full to the holder thereof,
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<PAGE> 5
from and after the Series Redemption Date, such share of Series B
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 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.
(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 B 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 Instruments or any Junior
Securities upon liquidation, an amount in cash equal to the sum of (x)
in the event that such liquidation, dissolution or winding up occurs on
or prior to the Trigger Date, the Stated Value, plus (y) all accrued
and unpaid dividends in respect of such share to the date of final
distribution (the "Liquidation Preference"). If the holders are not
entitled to receive the Stated Value on a preferential basis because
the liquidation, dissolution or winding up of the Corporation occurs on
or after the Trigger Date, then such holders shall continue to have a
right and claim to the remaining assets of the Corporation on a pari
passu basis with the holders of the Common Stock Instruments, as
contemplated by clause (b)(ii) of Part (ii) above.
(b) Subject to paragraph (a) above, after the payment to the
holders of the Series B Preferred Stock of the full preferential
amounts provided for in this Part (v) of Section 4D, the holders of the
Series B Preferred Stock as such shall have no right or claim to any of
the remaining assets of the Corporation.
(c) If, upon 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 Liquidation
Preference for each share of Series B Preferred Stock then outstanding,
then the assets of the Corporation remaining shall be ratably
distributed among the holders of Series B Preferred Stock 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.
5
<PAGE> 6
(vi) Conversion.
(a) At any time after the Stockholder Approval has been
obtained, each share of Series B Preferred Stock shall be convertible
into 10 shares of Common Stock (as adjusted from time to time pursuant
to paragraph (g) below, the "Series B Conversion Ratio"), in each case
at the option of the holder thereof, so long as none of it or its
Affiliates will be subject to a Regulatory Problem as a result of such
conversion; provided, however, that in the event that Stockholder
Approval occurs after April 30, 1999, upon the conversion of any shares
of Series B Preferred Stock pursuant to this Part (vi)(a), in addition
to the shares of Common Stock to be received by the holder of such
shares of Series B Preferred Stock, such holder shall receive a cash
payment of all accrued and unpaid dividends on the shares of Series B
Preferred Stock then being converted by it; and provided, further, that
from and after the earlier of (x) the date on which Stockholder
Approval is received, and (y) the date on which a stockholders' meeting
is held but Stockholder Approval is not received due to the fact that
any of LIH Holdings, LLC, LIH Holdings II, LLC, LIH Holdings III, LLC,
or their respective Associates, cast votes in opposition to or abstain
from voting on the conversion of the Series B Preferred Stock (such
earlier date, the "Trigger Date"), (i) the provisions of Article Four,
Section 4D, Part (iv) shall be null and void and of no further force
and effect and (ii)) dividends on the Series B Preferred Stock shall
cease to accrue pursuant to Part (iii)(a)(y) above, it being understood
that the holders of shares of Series B Preferred Stock shall continue
to be entitled to receive accrued but unpaid dividends as contemplated
by Part (iii)(b) above. Except for its right to receive such accrued
but unpaid dividends, from and after the Trigger Date, each holder of
shares of Series B Preferred Stock shall, with respect to dividends and
liquidation, be treated as if such holder held the number of shares of
Common Stock into which such shares of Series B Preferred Stock are
then convertible.
(b) Each conversion of shares of Series B Preferred 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 Series B 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 tie, the rights of the holder of
the converted Series B Preferred Stock (in its capacity as such) will
cease and the person or persons 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.
(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 Common Stock issuable upon such
6
<PAGE> 7
conversion, and (y) any cash payment required to be made pursuant to
Part (iv)(a) of Section 4D.
(d) The issuance of certificates representing shares of Common
Stock upon conversion of any shares of Series B 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 Common Stock.
(e) 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 the conversion
hereunder, at the Series B Conversion Ratio as then in effect, of all
the shares of Series B Preferred Stock then outstanding.
(f) The Corporation will not close its books against the
transfer of Common Stock in any manner which would interfere with the
timely conversion of any shares of Series B Preferred Stock.
(g) If the Corporation at any time or from time to time after
the Issue Date declares any dividend payable in shares of Common Stock
or effects a subdivision of the outstanding Common Stock or combines
the outstanding shares of the Common Stock, then, in each such case,
the Series B Conversion Ratio in effect immediately prior to such event
shall be adjusted so that each holder of shares of Series B Preferred
Stock shall have the right to convert its shares of Series B Preferred
Stock into the number of shares of the Common Stock which it would have
owned after the event had such shares of Series B Preferred Stock been
converted immediately before the happening of such event. Any
adjustment under this Part (vi)(g) of Section 4D shall become effective
as of the date and time the subdivision or combination becomes
effective.
(h) 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 a majority of the holders
of the then outstanding shares of Series B Preferred Stock voting as a
separate class, all holders of Series B 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 B Preferred Stock
had been converted into shares of Common Stock at the Series B
Conversion Ratio then in effect) as is received by the holders of
Common Stock, including, but not limited to, form, amount and timing of
payment, plus (y) if such event occurs after April 30, 1999, all
accrued and unpaid dividends with respect to such shares of Series B
Preferred Stock.
7
<PAGE> 8
(i) Notwithstanding the provision of Part (vi)(a) hereof, but
provided that the Stockholder Approval has been received, none of LIH
Holdings III, LLC, nor any Associate thereof, or their respective
transferees may convert shares of Series B Preferred Stock into shares
of Common Stock until the earliest to occur of (a) September 9, 2000;
(b) the first date as of which any person 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, LIH
Holdings III, LLC or any of their respective 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 or group from LIH Holdings, LLC, LIH Holdings
II, LLC, LIH Holdings III, LLC, or any of their respective Associates;
(c) the date on which, by the affirmative vote of a majority of the
Independent Directors, such conversion is approved; (d) the date of any
transfer of shares of Series B Preferred Stock by LIH Holdings III, LLC
or any of its Associates (but the conversion right provided by this
clause (d) shall apply only with respect to the shares transferred)
other than any such transfer (A) by LIH Holdings III, LLC or any of its
Associates to any person if, immediately after giving effect to such
transfer and conversion, the transferee and such transferee's
Associates would hold more than 49% of the outstanding Common Stock, or
(B) to LIH Holdings, LLC, LIH Holdings II, LLC, LIH Holdings III, LLC
or any of their respective Associates; and (e) the first date as of
which LIH Holdings, LLC, LIH Holdings II, LLC, LIH Holdings III, LLC
and their respective 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 Second Amended and Restated Governance
Agreement; provided, however, that LIH Holdings III, LLC and its
Associates may, at any time after the Stockholder Approval has been
obtained, convert shares of Series B Preferred Stock into Common Stock,
at their option, in order to attain or maintain a percentage of
outstanding shares of Common Stock held in the aggregate by LIH
Holdings, LLC, LIH Holdings II, LLC, LIH Holdings III, LLC and their
respective Associates that does not exceed 49.9%.
(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 B Preferred Stock will
be entitled to no voting rights.
(viii) Certain Defined Terms. As used in Section 4D, the following
capitalized terms shall have the following meanings:
"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 right to acquire securities) of that person or
any of its Affiliates, or (iii) any member, director, partner,
officer, agent, employee or relative of that person. For the
purposes of this definition, "control" (including with
correlative meanings, the
8
<PAGE> 9
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.
"Associate" means an affiliate or associate of a person, as such
terms are defined in Section 203 of the Delaware General
Corporation Law.
"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.
"Equity Equivalent" means (a) the Class B-1 Common Stock, (b)
the Series B Preferred Stock and (c) 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.
"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, LIH Holdings III,
LLC, the Corporation or any of their respective 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, LIH
Holdings II, LLC, LIH Holdings III, LLC, or their respective
Associates, or any person who shall have served in any such
capacity within the three-year period immediately preceding the
date such determination made.
"Issue Date" means, as to any share of Series B Preferred Stock,
the date of original issuance thereof by the Corporation.
"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 authority or other entity of any kind.
9
<PAGE> 10
"Put Date" means the earlier of (a) December 29, 2007, (b) the
first date as of which any person 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,
LIH Holdings III, LLC or any of their respective Associates
owns, beneficially and of record, securities representing at
least 50% of the Common Stock, excluding any securities acquired
by such person or group from LIH Holdings, LLC, LIH Holdings II,
LLC, LIH Holdings III, LLC, or any of their respective
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 4D.
"Regulatory Problem" means, with respect to any holder of shares
of Series B Preferred Stock, any set of facts or circumstances
wherein such holder has made a good faith determination that
such holder or such holder's Affiliates own, control or have
power over a quantity of securities of any kind issued by the
Corporation which exceeds any limitation to which it is (or they
are) subject, or which is otherwise not permitted, under any
law, rule or regulation of any governmental authority (including
any position to that effect taken by such governmental
authority).
"Second Amended and Restated Governance Agreement" means the
Second Amended and Restated Governance Agreement, dated as of
December 22, 1998, among LIH Holdings, LLC, LIH Holdings II,
LLC, LIH Holdings III, LLC, and the Corporation, as amended,
supplemented or otherwise modified from time to time in
accordance with its terms.
"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 conversion of shares
of Series B Preferred Stock into shares of Common Stock as
provided herein.
10
<PAGE> 11
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 Dennis W. Vollmershausen,
its Chief Executive Officer, and attested by Ron Fox, its Assistant Secretary,
this 22nd day of December, 1998.
LUND INTERNATIONAL HOLDINGS, INC.
By: /s/ Dennis W. Vollmershausen
-------------------------------
Name: Dennis W. Vollmershausen
Title: Chief Executive Officer
Attest:
/s/ Ron Fox
- --------------------------
Name: Ron Fox
Title: Assistant Secretary
11
<PAGE> 1
EXHIBIT N
INVESTMENT AGREEMENT
DATED AS OF DECEMBER 22, 1998
AMONG
LIH HOLDINGS III, LLC
BANCBOSTON CAPITAL INC.
LIBERTY MUTUAL INSURANCE COMPANY
MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY
MASSMUTUAL CORPORATE INVESTORS
MASSMUTUAL PARTICIPATION INVESTORS
MASSMUTUAL CORPORATE VALUE PARTNERS LIMITED
AND
LUND INTERNATIONAL HOLDINGS, INC.
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
ARTICLE I
DEFINITIONS...................................................................................................... 2
1.1 Definitions................................................................................... 2
1.2 Certain Conventions........................................................................... 7
ARTICLE II
SALE OF SHARES; CLOSING........................................................................................ 7
2.1 Purchase and Sale.............................................................................. 7
2.2 Closing........................................................................................ 8
2.3 Obligations of Purchasers Several and Not Joint................................................ 8
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY.................................................................... 8
3.1 Organization of the Company................................................................... 8
3.2 Power and Authority............................................................................ 8
3.3 Capital........................................................................................ 9
3.4 Subsidiaries................................................................................... 10
3.5 No Conflicts................................................................................... 10
3.6 Governmental Approvals and Filings............................................................. 11
3.7 SEC Documents; Financial Statements............................................................ 11
3.8 Absence of Changes............................................................................. 12
3.9 Legal Proceedings.............................................................................. 12
3.10 Other Negotiations; Brokers.................................................................... 12
3.11 Exemption from Registration; Restrictions on Offer and Sale
of Same or Similar Securities.................................................................. 13
3.12 Other Agreements............................................................................... 13
3.13 Holding Company Act and Investment Company Act Status.......................................... 13
3.14 Stock Purchase Agreement....................................................................... 13
3.15 Disclosure..................................................................................... 13
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS................................................................. 14
4.1 Organization; Power and Authority.............................................................. 14
4.2 No Conflicts................................................................................... 14
4.3 Purchase for Investment........................................................................ 14
4.4 Brokers........................................................................................ 15
</TABLE>
i
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<TABLE>
<S> <C>
ARTICLE V
COVENANTS OF THE COMPANY......................................................................................... 15
5.1 Regulatory and Other Approvals................................................................. 15
5.2 Reservation of Shares.......................................................................... 16
5.3 Use of Proceeds................................................................................ 16
5.4 Stockholders' Meeting.......................................................................... 16
5.5 Nasdaq National Market......................................................................... 16
5.6 Notice and Cure................................................................................ 16
5.7 Fulfillment of Conditions...................................................................... 17
ARTICLE VI
CONDITIONS TO OBLIGATIONS OF THE PURCHASERS...................................................................... 17
6.1 Representations and Warranties................................................................. 17
6.2 Performance.................................................................................... 17
6.3 Officers' Certificates......................................................................... 17
6.4 Orders and Laws................................................................................ 17
6.5 Regulatory Consents and Approvals.............................................................. 18
6.6 Third Party Consents........................................................................... 18
6.7 Opinion of Counsel............................................................................. 18
6.8 Certificate of Designation..................................................................... 18
6.9 Transaction Documents.......................................................................... 18
6.10 Delivery of Certificates....................................................................... 18
6.11 Financing...................................................................................... 19
6.12 Consummation of the Acquisition................................................................ 19
6.13 Nasdaq National Market......................................................................... 19
6.14 Consummation of the "closing" under the AVS Investment Agreement............................... 19
6.15 Proceedings.................................................................................... 19
ARTICLE VII
CONDITIONS TO OBLIGATIONS OF THE COMPANY......................................................................... 19
7.1 Representations and Warranties................................................................. 19
7.2 Performance.................................................................................... 20
7.3 Certificate.................................................................................... 20
7.4 Orders and Laws................................................................................ 20
7.5 Transaction Documents.......................................................................... 20
7.6 Financing...................................................................................... 20
</TABLE>
ii
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<TABLE>
<S> <C>
ARTICLE VIII
SURVIVAL OF REPRESENTATIONS, WARRANTIES,
COVENANTS AND AGREEMENTS......................................................................................... 20
ARTICLE IX
INDEMNIFICATION.................................................................................................. 21
9.1 Indemnification................................................................................ 21
9.2 Method of Asserting Claims..................................................................... 21
ARTICLE X
TERMINATION...................................................................................................... 23
10.1 Termination.................................................................................... 23
10.2 Effect of Termination.......................................................................... 24
ARTICLE XI
MISCELLANEOUS.................................................................................................... 24
11.1 Notices........................................................................................ 24
11.2 Entire Agreement............................................................................... 25
11.3 Fees and Expenses.............................................................................. 25
11.4 Public Announcements........................................................................... 25
11.5 Further Assurances............................................................................. 26
11.6 Waiver......................................................................................... 26
11.7 Amendment...................................................................................... 26
11.8 Third Party Beneficiaries...................................................................... 26
11.9 No Assignment; Binding Effect.................................................................. 26
11.10 Headings; Construction......................................................................... 27
11.11 Invalid Provisions............................................................................. 27
11.12 Governing Law.................................................................................. 27
11.13 Counterparts................................................................................... 27
11.14 Limited Recourse............................................................................... 27
11.15 Consent to Jurisdiction and Service of Process................................................. 27
</TABLE>
iii
<PAGE> 5
EXHIBITS
Exhibit A -- Form of Second Amended and Restated Governance
Agreement
Exhibit B -- Form of Rights Agreement
Exhibit C -- Form of Series B Certificate of Designation
Exhibit D-1 -- Form of Company Officer's Certificate
Exhibit D-2 -- Form of Company Secretary's Certificate
Exhibit E -- Form of Opinion of Leonard, Street and Deinard
Exhibit F -- Form of Closing Certificate for each Purchaser
SCHEDULES
Schedule I -- Purchased Securities; Purchase Price; Address for
Notices
Schedule 3.3 -- Capital of Company
Schedule 3.5 -- No Conflicts
Schedule 3.8 -- Absence of Changes
Schedule 4.1 -- Purchaser's Entity and Jurisdiction
iv
<PAGE> 6
INVESTMENT AGREEMENT dated as of December 22, 1998, among LIH
HOLDINGS III, LLC, a Delaware limited liability company ("LIH Holdings III"),
MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY, a Massachusetts corporation
("MassMutual"), MASSMUTUAL CORPORATE INVESTORS, a Massachusetts business trust
("MMCI"), MASSMUTUAL PARTICIPATION INVESTORS, a Massachusetts business trust
("MMPI") and MASSMUTUAL CORPORATE VALUE PARTNERS LIMITED, a Cayman Islands
corporation ("MMCVP"; MassMutual, MMCI, MMPI and MMCVP being hereinafter
collectively referred to as the "MassMutual Entities"), Liberty Mutual Insurance
Company, a Massachusetts corporation ("Liberty Mutual"), and BancBoston Capital
Inc., a Massachusetts corporation ("BancBoston"; LIH Holdings III, the
MassMutual Entities, Liberty Mutual and BancBoston being hereinafter
collectively referred to as the "Purchasers"), and LUND INTERNATIONAL HOLDINGS,
INC., a Delaware corporation (the "Company").
WHEREAS, (a) LIH Holdings, LLC, a Delaware limited liability
company ("LIH Holdings I"), is presently an Affiliate of LIH Holdings III and
the owner of 1,686,893 shares of the Common Stock, par value $0.10 per share
(the "Common Stock"), of the Company and (ii) LIH Holdings II, LLC, a Delaware
limited liability company ("LIH Holdings II"), is presently an Affiliate of LIH
Holdings III and the owner of 874,400 shares of Common Stock and 1,493,398
shares of the Class B-1 Common Stock (the "Class B-1 Common Stock"), of the
Company;
WHEREAS, the Company anticipates entering into a Stock
Purchase Agreement (as the same may be amended, supplemented or otherwise
modified from time to time in accordance with the provisions thereof, the "Stock
Purchase Agreement"), whereby the Company agrees, subject to the conditions
therein contained, to acquire (the "Acquisition"), all the outstanding capital
stock of SmittyBilt, Inc. (the "Target") for a cash purchase price equal to $18
million;
WHEREAS, in order to provide a portion of the funds required
for the Acquisition, on the terms and subject to the conditions set forth
herein, the Company desires to sell to the Purchasers, and each of the
Purchasers desires to purchase from the Company, in the aggregate, 316,056
shares of Common Stock and 39,822.9 shares of Series B Preferred Stock, par
value $.01 per share (the "Series B Preferred Stock"), of the Company, all for
an aggregate purchase price equal to $5,000,000 (the "Aggregate Purchase
Price");
WHEREAS, in order to provide the balance of the funds required
for the Acquisition, the Company has entered into (i) the Heller Credit
Agreement dated as of December __, 1998 between the Company and Heller
Financial, Inc. (as the same may be amended, supplemented or otherwise modified
from time to time in accordance with the provisions thereof, the "Heller Credit
Agreement") and (ii) each of the Securities Purchase Agreements dated as of
December __, 1998 between the Company, certain of its subsidiaries, each of the
MassMutual Entities and National City Venture Corporation, a Delaware
corporation (as the same may be amended, supplemented or otherwise modified from
time to time in accordance with the provisions thereof, collectively, the
"Securities Purchase Agreements"); and
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<PAGE> 7
WHEREAS, the amount of the aforementioned securities to be
purchased by each Purchaser pursuant hereto and the portion of the Aggregate
Purchase Price to be paid by such Purchaser therefor are as set forth opposite
such Purchaser's name in Schedule I.
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
DEFINITIONS
1.1 Definitions. As used in this Agreement, the following
defined terms shall have the respective meanings indicated below:
"Acquisition" has the meaning ascribed to it in the recitals
hereto.
"Actions or Proceeding" means any action, suit, proceeding,
arbitration or Governmental or Regulatory Authority investigation or audit.
"Aggregate Purchase Price" has the meaning ascribed to it in
the recitals hereto.
"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 that 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) none of the Purchasers, LIH
Holdings I, LIH Holdings II or any of their respective Affiliates (other than
the Company and its Subsidiaries) shall be deemed to be "Affiliates" of the
Company or any Subsidiary and (ii) neither the Company nor any Subsidiary shall
be deemed to be an "Affiliate" of any Purchaser, LIH Holdings I, LIH Holdings II
or any of their respective Affiliates (other than the Company and its
Subsidiaries).
"Agreement" means this Investment Agreement and the Schedules
and Exhibits hereto and the certificates delivered in connection herewith, as
the same may be amended, supplemented or otherwise modified from time to time in
accordance with the provisions hereof.
-2-
<PAGE> 8
"Amended and Restated Governance Agreement" means the Second
Amended and Restated Governance Agreement, dated as of the date hereof, among
the LIH Entities and the Company, substantially in the form of Exhibit A, as the
same may be amended, supplemented or otherwise modified from time to time in
accordance with the provisions thereof.
"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 cash, cash
equivalents, accounts and notes receivable, chattel paper, documents,
instruments, general intangibles, real estate, equipment, inventory, goods and
intellectual property.
"AVS Investment Agreement" means the Investment Agreement,
dated as of December 22, 1998, among the Company and the Purchasers, as the same
may be amended, supplemented or otherwise modified from time to time in
accordance with the provisions thereof.
"BancBoston" has the meaning ascribed to it in the
introductory paragraph hereto.
"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.
"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 Series B
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 Common Stock" has the meaning ascribed to it in the
recitals hereto.
"Closing" means the closing of the transactions contemplated
by Section 2.2.
"Closing Date" means the date on which the Closing actually
occurs.
"Common Stock" has the meaning ascribed to it in the recitals
hereto.
"Company" has the meaning ascribed to it in the introductory
paragraph hereto.
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"Contract" means any agreement, lease, debenture, note,
evidence of Indebtedness, mortgage, indenture, security agreement or other
contract or commitment (whether written or oral).
"Dispute Period" means the period ending 30 calendar days
following receipt by an Indemnifying Party of an Indemnity Notice.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated by the SEC thereunder.
"Financial Statement Date" means June 30, 1998.
"Financing Agreements" means the Heller Credit Agreement and
the Securities Purchase Agreements.
"GAAP" means United States generally accepted accounting
principles, consistently applied throughout the specified period and all prior
comparable periods.
"Governmental or Regulatory Authority" means any court,
tribunal, 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 or panel of arbitrators, any
stock exchange or quotation service, and the National Association of Securities
Dealers.
"Heller Credit Agreement" has the meaning ascribed to it in
the recitals hereto.
"HSR Act" means the Hart-Scott-Rodino 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, (v) as an account party in respect of
letters of credit and similar instruments and (vi) in the nature of guarantees
of the obligations described in clauses (i) through (v) 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
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<PAGE> 10
or foreign state, county, city or other political subdivision or of any
Governmental or Regulatory Authority.
"Liberty Mutual" has the meaning ascribed to it in the
introductory paragraph hereto.
"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 Entities" means LIH Holdings I, LIH Holdings II and LIH
Holdings III, collectively.
"LIH Holdings I" has the meaning ascribed to it in the
recitals hereto.
"LIH Holdings II" has the meaning ascribed to it in the
recitals hereto.
"LIH Holdings III" has the meaning ascribed to it in the
introductory paragraph hereto.
"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 and other expenses associated with litigation or
other proceedings or with any claim, default or assessment (such fees and
expenses to include all fees and expenses, including the 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 any
party hereto or otherwise). As applied to any Purchaser, "Loss" shall also be
deemed to include any indemnifiable claim of any Purchaser hereunder and any
diminution in the value of the Purchased Securities being purchased by such
Purchaser hereunder (or any successor securities).
"MassMutual" has the meaning ascribed to it in the
introductory paragraph hereto.
"MassMutual Entities" has the meaning ascribed to it in the
introductory paragraph hereto.
"MMCI" has the meaning ascribed to it in the introductory
paragraph hereto.
"MMCVP" has the meaning ascribed to it in the introductory
paragraph hereto.
"MMPI" has the meaning ascribed to it in the introductory
paragraph hereto.
"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
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<PAGE> 11
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 interests 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 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 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.
"Preferred Stock" has the meaning ascribed to it in Section
3.3.
"Purchase Price" means, with respect to each Purchaser, the
dollar amount (representing a portion of the Aggregate Purchase Price) set forth
opposite such Purchaser's name in Schedule I.
"Purchased Securities" means, with respect to each Purchaser,
the shares of Common Stock and Series B Preferred Stock to be purchased by such
Purchaser pursuant to Section 2.1.
"Purchasers" has the meaning ascribed to it in the
introductory paragraph hereto.
"Resolution Period" means the period ending 30 calendar days
following receipt by an Indemnified Party of a Dispute Notice.
"Rights Agreement" means the Rights Agreement to be entered
into as of the Closing Date by LIH Holdings I, LIH Holdings II, the Purchasers,
the Company and the other parties thereto substantially in the form of Exhibit
B, as the same may be amended, supplemented or otherwise modified from time to
time in accordance with the provisions thereof.
"SEC" means the Securities and Exchange Commission.
"SEC Document" has the meaning ascribed to it in Section 3.7.
"Securities Act" means the Securities Act of 1933, as amended,
and the rules and regulations promulgated by the SEC thereunder.
"Securities Purchase Agreements" has the meaning ascribed to
it in the recitals hereto.
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"Series B Preferred Stock" has the meaning ascribed to it in
the recitals hereto.
"Series B Certificate of Designation" means the Certificate of
Designation with respect to the Series B Preferred Stock, substantially in the
form of Exhibit C, to be filed with the Secretary of State of the State of
Delaware prior to the Closing.
"Stock Purchase Agreement" has the meaning ascribed to it in
the recitals hereto.
"Subsidiary" means any Person in which the Company, directly
or indirectly through one or more Subsidiaries or otherwise, beneficially owns
more than 50% of either the equity interests in, or the voting control of, such
Person.
"Target" has the meaning ascribed to it in the recitals
hereto.
"Third Party Claim" has the meaning ascribed to it in Section
9.2(a).
"Transaction Documents" means the Amended and Restated
Governance Agreement, the Rights Agreement and any support or other agreement to
be entered into by two or more of the parties hereto in connection with the
transactions contemplated by this Agreement.
1.2 Certain Conventions. Unless the context of this Agreement
otherwise requires, (i) words of any gender include the other gender, (ii) words
(other than Purchaser) 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" and "Section" refer to the specified Article or Section of
this Agreement, (v) the words "include", "includes" and "including" shall be
deemed to be followed by the phrase "without limitation", and (vi) 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 respective meanings given to them under GAAP.
ARTICLE II
SALE OF SHARES; CLOSING
2.1 Purchase and Sale. At the Closing, on the terms and
subject to the conditions of this Agreement, the Company shall issue and sell to
each Purchaser, and each Purchaser shall purchase from the Company, the shares
of Common Stock and Series B Preferred Stock set forth opposite such Purchaser's
name in Schedule I, free and clear of all Liens, for an aggregate purchase price
(payable in cash in the manner provided in Section 2.2) equal to the Purchase
Price with respect to such Purchaser.
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2.2 Closing. The Closing will take place at such location as
LIH Holdings III and the Company mutually agree on the first Business Day as of
which each of the conditions precedent set forth in Article VI and Article VII
shall have been satisfied or waived as provided therein, or on such other date
as the Company and LIH Holdings III shall mutually agree. At the Closing, each
Purchaser shall pay the Purchase Price with respect to such Purchaser by wire
transfer of immediately available funds to the account specified by the Company
by written notice delivered to the Purchasers at least two Business Days before
the Closing Date. Simultaneously, the Company shall deliver to each Purchaser
certificates, registered in the name of such Purchaser, representing such
Purchaser's Purchased Securities. At the Closing, there shall also be delivered
to the Company and the Purchasers the opinions, certificates and other
Contracts, documents and instruments to be delivered under Articles VI and VII.
2.3 Obligations of Purchasers Several and Not Joint.
Notwithstanding anything herein to the contrary (other than the proviso
contained in this Section 2.3), the obligations of each Purchaser under this
Agreement are separate from the obligations of each other Purchaser under this
Agreement, and no Purchaser shall be liable or otherwise responsible in any
manner for any obligation of any other Purchaser under this Agreement; provided,
however, that each obligation of a MassMutual Entity hereunder shall be the
joint and several obligation of all of the MassMutual Entities.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to each 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). In the case of all representations and
warranties that expressly relate or are deemed to be made as of the Closing Date
pursuant to this Article III, the Acquisition is deemed to have occurred and the
Target is deemed to be a Subsidiary of the Company.
3.1 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, and is duly qualified, licensed or admitted to do business
and 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 for such
failures to be so qualified, licensed, admitted or in good standing which will
not, individually or in the aggregate, have a material adverse effect on the
Business or Condition of the Company.
3.2 Power and Authority. The Company has the requisite power
and authority to execute and deliver this Agreement, the Transaction Documents
to which it is a party, the Stock Purchase Agreement and the Financing
Agreements, to perform its obligations hereunder and
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thereunder, and to consummate the transactions contemplated hereby and thereby.
The execution and delivery by the Company of this Agreement, the Transaction
Documents to which it is a party, the Stock Purchase Agreement and the Financing
Agreements, the performance by the Company of its obligations hereunder and
thereunder, and the consummation of the transactions contemplated hereby and
thereby, 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 action necessary to authorize the execution, delivery and
performance by the Company of this Agreement, the Transaction Documents to which
it is a party, the Stock Purchase Agreement and the Financing Agreements. 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 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.
3.3 Capital. As of the date hereof and as of the Closing Date
immediately before giving effect to the Closing and the "closing" as defined in
the AVS Investment 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 per share (the "Class B Common Stock"), and
2,000,000 shares of preferred stock, par value $0.01 per share (the "Preferred
Stock"), of which (a) 5,263,270 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, (b) 1,493,398
shares of Class B Common Stock (designated as Class B-1 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, and (c) no shares of Preferred Stock are outstanding. On December 30,
1997, the Company validly issued 1,493,398 shares of Preferred Stock (designated
as Series A Preferred Stock) to LIH Holdings II in compliance with all
applicable federal and state securities laws, which shares were duly converted
into an equal number of shares of Class B-1 Common Stock on April 21, 1998.
Immediately after giving effect to the Closing and the other transactions
contemplated by this Agreement, and assuming that the "closing" as defined in
the AVS Investment Agreement shall have occurred in accordance with the
provisions thereof and after giving effect to the other transactions
contemplated thereby, the Transaction Documents, the Stock Purchase Agreement or
the Financing Agreements to occur as of 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 have
been designated as Class B-1 Common Stock, 2,000,000 shares of Preferred Stock,
of which 1,493,398 shares have previously been designated as Series A Preferred
Stock and 292,225 shares shall have been designated as Series B Preferred Stock,
and (ii) the outstanding capital stock of the Company will consist of 6,626,838
shares of Common Stock, 1,493,398 shares of Class B-1 Common Stock and 292,224.7
shares of Series B Preferred Stock. Except for the Class B-1 Common Stock and
the Series B Preferred Stock, or as set forth in Schedule 3.3, there are no, and
immediately after giving effect to the Closing and the other transactions
contemplated by this Agreement, the Transaction
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Documents, the Stock Purchase Agreement or the Financing Agreements to occur on
the Closing Date, there will not be any, (x) outstanding Options with respect to
the Company, (y) agreements, arrangements or understandings to issue Options
with respect to the Company or (z) 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
certificates representing the Purchased Securities of each Purchaser will grant
to such Purchaser good and valid title to its Purchased Securities free and
clear of all Liens, and each Purchaser's Purchased Securities 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 the conversion of all the shares of
Series B Preferred Stock being purchased by the Purchasers hereunder. The shares
of Common Stock referred to above when issued upon conversion, will be duly
authorized, validly issued, fully paid and nonassessable.
Neither the execution, delivery or performance by the Company of this Agreement,
the Transaction Documents to which it is a party, the Stock Purchase Agreement
or the Financing Agreements, nor the issuance of the Purchased Securities of
each Purchaser as contemplated hereby, nor the issuance of shares of Common
Stock upon the conversion of any shares of Class B-1 Common Stock currently
outstanding, nor the issuance of shares of Common Stock upon the conversion of
any shares of Series B Preferred Stock being purchased by any Purchaser
hereunder, nor the consummation of the transactions contemplated by this
Agreement, the Transaction Documents, the Stock Purchase Agreement and the
Financing Agreements, 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 3.3.
3.4 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
admitted to do business and 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 for such failures to be so qualified, licensed,
admitted or in good standing which 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 and no agreements, arrangements or understandings to
issue Options with respect to any Subsidiary. Except for the capital stock of
the Subsidiaries, neither the Company nor any Subsidiary holds any equity,
partnership, limited liability company, joint venture or other interest in any
Person.
3.5 No Conflicts. The execution and delivery by the Company of
this Agreement, the Transaction Documents to which it is a party, the Stock
Purchase Agreement and the Financing
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Agreements, the performance by the Company of its respective obligations
hereunder and thereunder, and the consummation of the transactions contemplated
hereby and thereby (including, the filing of the Series B Certificate of
Designation, the issuance of the Purchased Securities of each Purchaser, the
issuance of Common Stock upon the conversion of the shares of Class B-1 Common
Stock currently outstanding, the issuance of Common Stock upon the conversion of
the shares of Series B Preferred Stock being purchased by the Purchasers
hereunder), 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 in Schedule 3.5 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, the Stock
Purchase Agreement and the Financing Agreements, 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 is bound.
3.6 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 (a) as may be required under the Exchange
Act or, solely by reason of the Company's acquisition of Target, the HSR Act and
(b) the filing of the Series B 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, the Transaction Documents, the Stock
Purchase Agreement or the Financing Documents or the consummation of the
transactions contemplated hereby or thereby.
3.7 SEC Documents; Financial Statements. Each report,
schedule, form, statement and other document required to be filed by the Company
with the SEC (each an "SEC Document", and collectively, the "SEC Documents") has
been so 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. None of the SEC Documents, except to the extent that information contained
therein has been revised or superseded by an SEC Document subsequently filed
with the SEC, contains any untrue statement of a material fact or omits 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 and its Subsidiaries included in the SEC
Documents comply in all material respects with applicable requirements under the
Securities Act and the Exchange Act and any other published rules and
regulations of the SEC with respect to
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accounting requirements, 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
respective dates thereof and the consolidated results of their operations and
cash flows for the respective 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).
3.8 Absence of Changes. Since the Financial Statement Date,
except as set forth in Schedule 3.8 hereto or as disclosed in the SEC Documents
filed prior to the date 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.
3.9 Legal Proceedings. There are no Actions or Proceedings
pending or, to the knowledge of the Company, threatened overtly 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 Stock Purchase
Agreement or the Financing Agreements, or (ii) if determined adversely to the
Company or such Subsidiary, could reasonably be expected to, individually or in
the aggregate with other such Actions or Proceedings, have a material adverse
effect on the Business or Condition of the Company.
3.10 Other Negotiations; Brokers. None of the Company, any
Subsidiary or 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 Contract that conflicts with any of the transactions
contemplated by this Agreement, the Transaction Documents, the Stock Purchase
Agreement or the Financing Agreements or (ii) has entered into any Contract or
had any discussions with any third party regarding any transaction involving the
Company or any Subsidiary which could result in any Purchaser, any of its
stockholders, members, general or limited partners, or any officer, director,
employee, agent or Affiliate of any Purchaser or any such stockholder, member or
partner being subject to any claim for liability to said third party in
connection with this Agreement, the Transaction Documents, the Stock Purchase
Agreement or the Financing Agreements or the consummation of any of the
transactions contemplated hereby or thereby. Other than Piper Jaffray 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
Stock Purchase Agreement or the Financing Agreements 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
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or other Person retained by or acting for or on behalf of the Company, any
Subsidiary or any such Affiliate.
3.11 Exemption from Registration; Restrictions on Offer and
Sale of Same or Similar Securities. Assuming the representations and warranties
of each Purchaser set forth in Section 4.3 are true and correct in all material
respects, the offer and sale of the Purchased Securities made to each Purchaser
pursuant to this Agreement is exempt from the registration requirements of the
Securities Act. Neither the Company nor any Person authorized to act on its
behalf has, in connection with the offering of the Purchased Securities of any
Purchaser, 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 any
Purchased Securities pursuant to this Agreement or that would violate applicable
state securities or "blue sky" laws. Neither the Company nor any Person
authorized to act on its behalf has made, directly or indirectly, any offer or
sale of any Purchased Securities or of securities of the same or a similar class
as any Purchased Securities that could cause any offer or sale of any Purchased
Securities 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.
3.12 Other Agreements. Each of the representations and
warranties of the Company contained in the Stock Purchase Agreement are or will
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 each of the date
on which the Stock Purchase Agreement is entered into, and the Closing Date, as
though made on and as of such dates. Each of the representations and warranties
of the Company contained in any Financing Agreement will be true and correct in
all material respects (if not qualified by materiality) or in all respects (if
qualified by materiality) on and as of the Closing Date as though made on and as
of such date.
3.13 Holding Company Act and Investment Company Act Status.
Neither the Company nor any Subsidiary is a "holding company" or a "public
utility company", as such terms are defined in the Public Utility Holding
Company Act of 1935, as amended. Neither the Company nor any Subsidiary is an
"investment company", or a company "controlled" by an "investment company",
within the meaning of the Investment Company Act of 1940, as amended.
3.14 Stock Purchase Agreement. On the Closing Date, the
Company will have delivered to each Purchaser a true and complete copy of the
Stock Purchase Agreement. As of the Closing Date, the Stock Purchase Agreement
will not have been terminated or amended, supplemented or otherwise modified in
any respect, and no party thereto will have granted any waiver of any of the
terms or conditions thereof.
3.15 Disclosure. No representation or warranty on the part of
the Company contained in this Agreement, and no statement contained in any
schedule or in any certificate, list
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or other writing furnished to the Purchasers pursuant to any provision of this
Agreement, including 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 PURCHASERS
Each Purchaser, severally and not jointly, hereby represents
and warrants to the Company, with respect to such Purchaser only, 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).
4.1 Organization; Power and Authority. Such Purchaser is the
type of business entity set forth opposite its name in Schedule 4.1 hereto, and
has been duly organized and is validly existing and in good standing under the
Laws of the jurisdiction set forth opposite its name in Schedule 4.1 hereto.
Such 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 such Purchaser
of this Agreement, the performance by such Purchaser of its obligations
hereunder and the consummation of the transactions contemplated hereby have been
duly and validly authorized by all requisite action on the part of such
Purchaser. This Agreement has been duly and validly executed and delivered by
such Purchaser and constitutes the legal, valid and binding obligation of such
Purchaser enforceable against such 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.
4.2 No Conflicts. The execution, delivery and performance by
such Purchaser of this Agreement, and the consummation by such Purchaser of the
transactions contemplated hereby, will not conflict with, or constitute a
default under, any agreement, indenture or instrument to which such Purchaser is
a party, or result in a violation of (a) such Purchaser's constitutive documents
or (b) any Order of any Governmental or Regulatory Authority having jurisdiction
over such Purchaser or any of its properties. Except for such filings as may be
required by the Exchange Act, no consent, approval or action of, or filing or
registration with, any Governmental or Regulatory Authority is required on the
part of such Purchaser for its execution, delivery and performance of this
Agreement.
4.3 Purchase for Investment. The Purchased Securities being
purchased by such Purchaser hereunder will be purchased by such Purchaser for
its own account for the purpose of
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investment and not with a view to the resale or distribution of all or any part
of such Purchased Securities in violation of the Securities Act, it being
understood that the right to dispose of such Purchased Securities shall (subject
to the Amended and Restated Governance Agreement, in the case of LIH Holdings
III) be entirely within the discretion of such Purchaser. Such Purchaser is an
"accredited investor" (as such term is defined in Rule 501(a) of Regulation D
under the Securities Act). Such Purchaser has such knowledge and experience in
financial and business matters as to be able to evaluate the merits and risks of
its investment in Purchased Securities pursuant to this Agreement and is able to
bear the economic risk of such investment (including a complete loss of such
investment). Such Purchaser understands that the Purchased Securities being
purchased by it hereunder have not been registered under the Securities Act or
any state securities laws in reliance on exemptions from the registration
requirements of the Securities Act and such state securities laws, which depend
upon, among other things, the accuracy of the representations of such Purchaser
set forth in this Section 4.3.
4.4 Brokers. Other than Piper Jaffray 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 any Purchaser.
ARTICLE V
COVENANTS OF THE COMPANY
The Company covenants and agrees with each Purchaser that, at
all times from and after the date hereof and until the Closing and, with respect
to any covenant or agreement by its terms to be performed in whole or in part
after the Closing, for the period specified herein or, if no period is specified
herein, indefinitely, the Company will comply with all the covenants and
provisions contained in this Article V, except to the extent that the Purchasers
may otherwise consent in writing.
5.1 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
and other Persons required of the Company or any Subsidiary to consummate the
transactions contemplated by this Agreement, the Transaction Documents, the
Stock Purchase Agreement and the Financing Agreements, (b) provide such other
information and communications to such Governmental or Regulatory Authorities
and other Persons as any Purchaser or any such Governmental or Regulatory
Authorities and other Person may reasonably request and (c) cooperate with each
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 and other Persons required of such Purchaser to
consummate the transactions contemplated by this Agreement and the Transaction
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<PAGE> 21
Documents. The Company shall provide prompt notification to each 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 each
Purchaser of any communications (and, unless precluded by Law, provide each
Purchaser with copies of any such communications that are in writing) with any
Governmental or Regulatory Authority regarding any of the transactions
contemplated by this Agreement, the Transaction Documents, the Stock Purchase
Agreement or the Financing Agreements.
5.2 Reservation of Shares. The Company shall (a) at all times
that the shares of Series B Preferred Stock being purchased by the Purchasers
hereunder are outstanding, keep reserved the full number of shares of Common
Stock issuable upon conversion of such shares of Series B Preferred Stock and
(b) at all times that the currently outstanding shares of Class B-1 Common Stock
are outstanding, keep reserved the full number of shares of Common Stock
issuable upon conversion of such currently outstanding shares of Class B-1
Common Stock.
5.3 Use of Proceeds. The Company shall use the proceeds from
each purchase and sale of the Purchased Securities hereunder in order to
consummate the Acquisition.
5.4 Stockholders' Meeting. The Company shall on or before
April 30, 1999 (and, if necessary, from time to time as requested by any
Purchaser thereafter) call a stockholders meeting for the purpose of approving
the conversion of the Series B Preferred Stock into Common Stock pursuant to the
terms of the Series B Certificate of Designation. The Company shall promptly
(and, if necessary, from time to time as requested by LIH Holdings III) call a
stockholders meeting for the purpose of approving the terms of the Class B-1
Common Stock.
5.5 Nasdaq National Market. Prior to the Closing, the Company
shall cause the shares of Common Stock included in the Purchased Securities to
be approved for listing, subject to notice of issuance, by the Nasdaq National
Market. As soon as practicable after the conversion of the Series B Preferred
Stock, the Company shall cause the shares of Common Stock issuable upon
conversion of the Series B Preferred Stock to be approved for listing, subject
to notice of issuance, by the Nasdaq National Market. The Company shall cause
the shares of Common Stock issuable upon conversion of the currently outstanding
Class B-1 Common Stock to be approved for listing, subject to notice of
issuance, by the Nasdaq National Market.
5.6 Notice and Cure. The Company shall notify each Purchaser
promptly in writing of, and contemporaneously shall provide each Purchaser with
true and complete copies of any and all information or documents relating to,
and the Company shall use all commercially reasonable best efforts to cure
before the Closing, any event, transaction or circumstance that causes or will
cause any covenant or agreement of the Company under this Agreement to be
materially breached (if not qualified by materiality) or breached (if qualified
by materiality) or that renders or shall render materially untrue (if not
qualified by materiality) or untrue (if qualified by materiality) 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
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each Purchaser promptly in writing of, and the Company shall use all
commercially reasonable best efforts to cure, before the Closing, any material
violation or material breach (in each case, if not qualified by materiality) or
any violation or breach (in each case, if qualified by materiality) of any
representation, warranty, covenant or agreement made by the Company in this
Agreement, whether occurring or arising before, on or after the date of this
Agreement. No notice given pursuant to this Section 5.6, and no representation
made by any Purchaser contained in Section 4.3, shall have any effect on the
representations, warranties, covenants and agreements contained in this
Agreement for purposes of determining satisfaction of any condition contained
herein or shall in any way limit any Purchaser's right to seek indemnity under
Article IX.
5.7 Fulfillment of Conditions. The Company shall take all
steps necessary or desirable and use all commercially reasonable efforts to
satisfy each condition to the obligations of the Purchasers contained in this
Agreement and shall not take or fail to take any action if such action or
failure to act could reasonably be expected to result in the nonfulfillment of
any such condition.
ARTICLE VI
CONDITIONS TO OBLIGATIONS OF THE PURCHASERS
The obligations of each 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 (as to such Purchaser) by such
Purchaser in its sole discretion):
6.1 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) and
in all respects (if qualified by materiality) on and as of the Closing Date as
though such representation or warranty was made on and as of the Closing Date.
6.2 Performance. The Company shall have performed and complied
with each agreement, covenant and obligation required by this Agreement to be
performed or complied with by the Company at or before the Closing.
6.3 Officers' Certificates. The Company shall have delivered
to the Purchasers a 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.
6.4 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 Stock Purchase Agreement or the
Financing Agreements.
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<PAGE> 23
6.5 Regulatory Consents and Approvals. All consents, approvals
and actions of, filings with and notices to any Governmental or Regulatory
Authority necessary to permit each of the Purchasers and the Company to perform
their respective obligations under this Agreement and the Transaction Documents
and to consummate the transactions contemplated by this Agreement, the
Transaction Documents, the Stock Purchase Agreement and the Financing Agreements
(i) shall have been duly obtained, made or given, (ii) shall be in form and
substance reasonably satisfactory to each 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 Stock Purchase Agreement and the Financing Agreements
shall have occurred.
6.6 Third Party Consents. All consents (or in lieu thereof
waivers) to the performance by the Purchasers and the Company of their
respective obligations under this Agreement and the Transaction Documents or to
the consummation of the transactions contemplated by this Agreement, the
Transaction Documents, the Stock Purchase Agreement or the Financing Agreements,
as are required under any Contract to which any Purchaser, 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 any 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 Stock Purchase Agreement or the Financing
Agreements to any Purchaser in its sole discretion, (i) shall have been
obtained, (ii) shall be in form and substance reasonably satisfactory to each
Purchaser in its sole discretion, (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.
6.7 Opinion of Counsel. Each Purchaser shall have received the
opinion of Leonard, Street and Deinard, counsel to the Company, dated the
Closing Date, in substantially the form of Exhibit E hereto.
6.8 Certificate of Designation. LIH Holdings III shall have
received evidence satisfactory to it that the Series B Certificate of
Designation shall 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.
6.9 Transaction Documents. Each of the Transaction Documents
shall have been duly executed and delivered by the respective parties thereto
(other than the relevant Purchaser and, in the case of LIH Holdings III, the
other LIH Entities) and shall be in full force and effect.
6.10 Delivery of Certificates. Duly executed certificates
representing each Purchaser's Purchased Securities shall have been delivered to
such Purchaser.
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<PAGE> 24
6.11 Financing. The Company shall have entered into the
Financing Agreements with the other parties thereto, and the terms of each
Financing Agreement shall be reasonably satisfactory to each Purchaser.
Simultaneously with the Closing, the Company shall have received proceeds from
borrowings under the Financing Agreements and from the sale of Purchased
Securities pursuant hereto in an aggregate amount sufficient to pay the purchase
price under the Stock Purchase Agreement, together with all fees and expenses
required to be paid by the Company in connection with the closing of the
transactions contemplated hereby (including the Acquisition and the financing
thereof).
6.12 Consummation of the Acquisition. Simultaneously with the
Closing, all the conditions set forth in Article IX of the Stock Purchase
Agreement shall have been satisfied and the Acquisition shall have been
consummated on the terms set forth in the Stock Purchase Agreement. The Stock
Purchase Agreement shall be in form and substance reasonably satisfactory to
each of the Purchasers.
6.13 Nasdaq National Market. The Common Stock included in each
Purchaser's Purchased Securities shall have been approved for listing, subject
to notice of issuance, by the Nasdaq National Market.
6.14 Consummation of the "closing" under the AVS Investment
Agreement. Prior to the Closing, the "closing" as defined in the AVS Investment
Agreement shall have occurred.
6.15 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 each Purchaser, in its sole discretion, and its legal counsel, and
each Purchaser shall have received copies of all such documents and other
evidence as such 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
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):
7.1 Representations and Warranties. Each of the
representations and warranties made by any 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.
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7.2 Performance. Each 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 such Purchaser
at or before the Closing.
7.3 Certificate. Each Purchaser shall have delivered to the
Company a certificate, dated the Closing Date and executed by a duly authorized
representative of such Purchaser, substantially in the form and to the effect of
Exhibit F attached hereto.
7.4 Orders and Laws. There shall not be in effect on the
Closing Date any Orders or Laws that became effective after the date 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 Stock Purchase Agreement or the Financing Agreements.
7.5 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.
7.6 Financing. Simultaneously with the Closing, the Company
shall have received proceeds from borrowings under the Financing Agreements and
from the sale of Purchased Securities pursuant hereto in an aggregate amount
sufficient to pay the purchase price under the Stock Purchase Agreement,
together with all fees and expenses required to be paid by the Company in
connection with the closing of the transactions contemplated hereby (including
the Acquisition and the financing thereof).
ARTICLE VIII
SURVIVAL OF REPRESENTATIONS, WARRANTIES,
COVENANTS AND AGREEMENTS
Notwithstanding any right of any 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, each of the Company and the Purchasers has the right to
rely fully upon the representations, warranties, covenants and agreements of the
others contained in this Agreement. The representations, warranties, covenants
and agreements of the Company and each Purchaser contained in this Agreement
will survive the Closing (a) indefinitely with respect to the covenants and
agreements contained herein and the representations and warranties contained in
Sections 3.1, 3.2, 3.3, 3.4, 3.10, 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 or Indemnity Notice (as applicable) shall have been timely given
under Article IX on
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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
9.1 Indemnification. Whether or not the transactions
contemplated by this Agreement are consummated, the Company (the "Indemnifying
Party") shall indemnify each Purchaser and its Affiliates, and each of their
respective officers, directors, managers, partners, employees, agents, members,
authorized representatives and stockholders (collectively, the "Indemnified
Parties", and each, an "Indemnified Party"), 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 any 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 Stock Purchase Agreement or any of the Financing Agreements (including 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 any Purchased Securities or (y) the purchase of any Purchased
Securities) and (iii) violations of applicable securities laws by the Company in
connection with the offering of any Purchased Securities; provided, however,
that the Indemnifying Party shall not have any obligations hereunder to an
Indemnified Party in respect of clause (ii) of this Section 9.1 to the extent
that a Loss claimed by such Indemnified Party thereunder is finally adjudicated
by a court of competent jurisdiction to have resulted primarily from the
negligence or wilful misconduct of such Indemnified Party. Except as otherwise
provided in Section 9.2(b), 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
contribution to the payment and satisfaction of the indemnified Losses as shall
be permissible under applicable laws.
9.2 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
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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 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 that 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 succeeding 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 reasonably satisfactory to the Indemnified
Party within 20 Business Days after the delivery to the Indemnifying Party of
the related 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; and 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 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
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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 the 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 the 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 as to 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
(including under the Transaction Documents) or otherwise.
ARTICLE X
TERMINATION
10.1 Termination. This Agreement may be terminated, and the
transactions contemplated hereby may be abandoned:
(a) at any time before the Closing, by written agreement of
the Company and the Purchasers;
(b) at any time before the Closing, by the Company, on the one
hand, or any Purchaser, on the other hand, (i) in the event of a material breach
hereof by any non-terminating party if such non-terminating party fails to cure
such breach within five Business Days following notification thereof by the
terminating party or (ii) upon notification of the non-terminating parties 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 or any
of its Affiliates; and
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(c) at any time after June 30, 1999, by the Company, on the
one hand, or any Purchaser, on the other hand, upon notification of the
non-terminating parties 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.
10.2 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 any Purchaser, except as provided in the next two 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), (i) the Company will remain liable
to each of the Purchasers for any misrepresentation or breach of warranty, or
any nonfulfillment of or failure to perform any covenant or agreement, on the
part of the Company existing at the time of such termination, and (ii) each of
the Purchasers will remain liable to the other parties hereto for any
misrepresentation or breach of warranty, or any nonfulfillment of or failure to
perform any covenant or agreement, on the part of such Purchaser existing at the
time of such termination. Each of the Company and the Purchasers may seek such
remedies, including damages and reimbursement for fees and expenses of
attorneys, against the others with respect to any misrepresentation, breach,
nonfulfillment or failure referred to in clause (i) or (ii) above as are
provided under this Agreement, including its remedies (if any) under Article IX
with respect thereto, or as are otherwise available at Law or in equity.
ARTICLE XI
MISCELLANEOUS
11.1 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:
(a) if to any Purchaser, to address for notices set forth
opposite its name in Schedule I; and
(b) if to the Company, to:
Lund International Holdings, Inc.
911 Lund Boulevard
Anoka, Minnesota 55303
Facsimile No: (612) 576-4297
Attn: Chief Executive Officer
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with copies (which shall not constitute notice) to
the other Purchasers and to:
Leonard, Street and Deinard
150 South Fifth Avenue
Suite 2300
Minneapolis, Minnesota 55402
Facsimile No: (612) 335-1657
Attn: Mark Weitz, Esq.
All such notices, requests and other communications to any party hereto will (i)
if delivered personally to such party at its address as provided in this Section
11.1, be deemed given upon delivery, (ii) if delivered by facsimile transmission
to such party at its facsimile number as provided in this Section 11.1, be
deemed given upon receipt, (iii) if delivered by mail in the manner described
above to such party at its address as provided in this Section 11.1, be deemed
given on the earlier of the third Business Day following mailing or upon receipt
and (iv) if delivered by overnight courier to such party at its address as
provided in this Section 11.1, 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 communication
is received by any other Person to whom a copy of such notice is to be delivered
pursuant to this Section 11.1). 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 parties hereto.
11.2 Entire Agreement. This Agreement and the Transaction
Documents supersede all prior discussions and agreements between the parties
hereto 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.
11.3 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 any Purchaser, the Company shall reimburse each Purchaser for all the
reasonable fees and expenses (including the fees and expenses of counsel,
consultants and accountants), incurred by such Purchaser prior to the Closing in
connection with this Agreement, the Transaction Documents and the transactions
contemplated hereby or thereby.
11.4 Public Announcements. At all times at or before the
Closing, none of the Purchasers will issue or make any statements or releases to
the public with respect to this Agreement or the transactions contemplated
hereby without the consent of the Company, which consent shall not be
unreasonably withheld. If any Purchaser is unable to obtain the approval of its
public statement or release from the Company and such statement or release is,
in the opinion of legal counsel to such Purchaser, required by Law in order to
discharge such Purchaser's disclosure obligations, then such Purchaser may make
or issue the legally required statement or release and promptly furnish the
other parties hereto with a copy thereof. Each of the Purchasers will also
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<PAGE> 31
obtain the Company's prior approval of any press release to be issued by or on
behalf of such Purchaser following the Closing announcing the consummation of
the transactions contemplated by this Agreement.
11.5 Further Assurances At any time and from time to time
after the Closing, the Company shall execute and deliver to each Purchaser such
other documents and instruments, provide such materials and information and take
such other actions as any Purchaser may reasonably request more effectively to
vest title in such Purchaser to the Purchased Securities being purchased by such
Purchaser hereunder and otherwise to cause the Company to fulfill its
obligations under this Agreement and the Transaction Documents.
11.6 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 (and no
such waiver shall in any event be binding on any other party hereto that is
entitled to the benefits of such term or provision). No waiver by any party
hereto 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.
11.7 Amendment. This Agreement may be amended, supplemented or
modified only by a written instrument duly executed by or on behalf of each
party hereto.
11.8 Third Party Beneficiaries. The terms and provisions of
this Agreement are intended solely for the benefit of the parties 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.
11.9 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
Purchasers, 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 any
Purchaser without the prior written consent of the other parties hereto, and any
attempt to do so will be void ab initio; provided, however, that (a) LIH
Holdings III 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 its
interests in the Company permitted under the Amended and Restated Governance
Agreement and (b) each Purchaser may, to the extent applicable, assign any or
all of such right, interest or obligation in connection with a transfer by it of
shares of Common Stock pursuant to Section 10.2 of the Rights Agreement. Subject
to the immediately 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 any holder of Purchased Securities (or any
successor securities).
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<PAGE> 32
11.10 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.
11.11 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 herefrom 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.
11.12 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.
11.13 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.
11.14 Limited Recourse. Notwithstanding anything in this
Agreement (other than the proviso contained in this Section 11.14), any
Transaction Document or any other document, agreement or instrument contemplated
hereby to the contrary, the obligations of any Purchaser hereunder shall be
without recourse to any Affiliate of such Purchaser or any stockholder, partner,
member, officer, director, manager, employee or agent of such Purchaser or any
such Affiliate, and shall be limited to the assets of such Purchaser; provided,
however, that each obligation of a MassMutual Entity hereunder shall be the
joint and several obligation of all the MassMutual Entities.
11.15 Consent to Jurisdiction and Service of Process. EACH OF
THE COMPANY AND THE PURCHASERS 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 PURCHASERS
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<PAGE> 33
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 PURCHASERS 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 IT AT THE ADDRESS SPECIFIED IN
THIS AGREEMENT, SUCH SERVICE TO BECOME EFFECTIVE 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]
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<PAGE> 34
IN WITNESS WHEREOF, this Agreement has been duly executed and
delivered by the duly authorized officer or other representative of each party
hereto as of the date first above written.
LUND INTERNATIONAL HOLDINGS, INC.
By: /s/ Dennis Vollmershausen
-------------------------------------------
Name: Dennis Vollmershausen
Title: President
LIH HOLDINGS III, LLC
By: /s/ Ira D. Kleinman
-------------------------------------------
Name: Ira D. Kleinman
Title: Authorized Person
LIBERTY MUTUAL INSURANCE COMPANY
By: /s/ A. Alex Fontanes
-------------------------------------------
Name: A. Alex Fontanes
Title: Senior Vice President &
Chief Investment Officer
BANCBOSTON CAPITAL INC.
By: /s/ Timothy H. Robinson
-------------------------------------------
Name: Timothy H. Robinson
Title: Vice President
[SIGNATURE PAGE TO INVESTMENT AGREEMENT]
<PAGE> 35
MASSACHUSETTS MUTUAL LIFE
INSURANCE COMPANY
By: /s/ Michael L. Klofas
___________________________________________
Name: Michael L. Klofas
Title: Managing Director
MASSMUTUAL CORPORATE INVESTORS
By: /s/ Michael L. Klofas
___________________________________________
Name: Michael L. Klofas
Title: Vice President
The foregoing is executed on behalf of
MassMutual Corporate Investors, organized
under a Declaration of Trust, dated
September 13, 1985, as amended from time to
time. The obligations of such Trust are not
personally binding upon, nor shall resort be
had to the property of, any of the Trustees,
shareholders, officers, employees or agents
of such Trust, but the Trust's property only
shall be bound.
MASSMUTUAL PARTICIPATION INVESTORS
By: /s/ Michael L. Klofas
___________________________________________
Name: Michael L. Klofas
Title: Vice President
The foregoing is executed on behalf of
MassMutual Participation Investors,
organized under a Declaration of Trust,
dated April 7, 1988, as amended from time to
time. The obligations of such Trust are not
personally binding upon, nor shall resort be
had to the property of, any of the Trustees,
shareholders, officers, employees or agents
of such Trust, but the Trust's property only
shall be bound.
[SIGNATURE PAGE TO INVESTMENT AGREEMENT]
<PAGE> 36
MASSMUTUAL CORPORATE VALUE
PARTNERS LIMITED
By Massachusetts Mutual Life Insurance
Company, as Investment Advisor
By: /s/ Michael L. Klofas
-------------------------------------------
Name: Michael L. Klofas
Title: Managing Director
[SIGNATURE PAGE TO INVESTMENT AGREEMENT]
<PAGE> 37
[Exhibits and Schedules Intentionally Omitted]
