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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported)
February 23, 1999
LITTLE SWITZERLAND, INC.
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(Exact name of registrant as specified in charter)
Delaware 0-19369 66-0476514
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(State or other (Commission (IRS employer
jurisdiction of file number) identification no.)
incorporation)
161-B Crown Bay Cruise Ship Port, St. Thomas, U.S.V.I. 00802
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(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (340) 776-2010
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Item 5 - Other Events
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Little Switzerland, Inc. (the "Company") issued a press release on
February 23, 1999 announcing settlement of a potential proxy contest with its
two largest stockholders, the rescheduling of the annual meeting of stockholders
for April 7, 1999, the restructuring of the Board of Directors of the Company
and the resignation of its Acting Chief Executive Officer and appointment of a
new Acting Chief Executive Officer. In connection with the annual meeting, the
Board of Directors will nominate Adriane J. Dudley and Seymour Holtzman for
election as Class I Directors, each with a term expiring at the 2001 annual
meeting, and Melanie Sturm and Richard C. Hunter for election as Class III
Directors, each with a term expiring at the 2000 annual meeting. The Company has
been informed that Melanie Sturm and Richard C. Hunter intend to nominate
Seymour Holtzman for the position of Chairman of the Board of Directors, if all
nominees are elected at the annual meeting. A copy of the Company's press
release is attached hereto and incorporated herein in its entirety.
The Company is also filing herewith a copy of the Settlement Agreement,
dated as of February 23, 1999, by and among the Company, Jewelcor Management,
Inc., Seymour Holtzman, Donald L. Sturm, ValueVest Partners, L.P. and C. William
Carey. A copy of this Settlement Agreement, together with each of the schedules
thereto, is incorporated herein in its entirety.
In connection with this Settlement Agreement, the Company has entered into
a Severance Agreement, a Consulting Agreement and an Amended and Restated
Success Fee Agreement with C. William Carey. Copies of these agreements are
attached hereto and incorporated herein in their entirety. Additionally, the
Company has amended its Shareholder Rights Agreement and amended and restated
its By-laws. Copies of these documents are attached hereto and incorporated
herein in their entirety.
Item 7 - Financial Statements, Pro Forma Financial Information and Exhibits
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(c) Exhibits
Exhibit 3.3 - Amended and Restated By-Laws of the Company effective as of
February 23, 1999.
Exhibit 10.32 - Settlement Agreement, dated as of February 23, 1999, by and
among the Company, Jewelcor Management, Inc., Seymour
Holtzman, Donald L. Sturm, ValueVest Partners, L.P. and
C. William Carey.
Exhibit 10.33 - Severance Agreement, dated as of February 23, 1999, between
the Company and C. William Carey.
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Exhibit 10.34 - Consulting Agreement, dated as of February 23, 1999,
between the Company and C. William Carey.
Exhibit 10.35 - Amended and Restated Success Fee Agreement, dated as of
February 23, 1999, between the Company and C. William
Carey.
Exhibit 10.36 - Fourth Amendment to Shareholder Rights Agreement, dated as
of February 23, 1999, between the Company and State Street
Bank and Trust Company, as Rights Agent.
Exhibit 99.1 - Press Release of Little Switzerland, Inc., dated
February 23, 1999.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
LITTLE SWITZERLAND, INC.
Date: February 24, 1999 By: /s/ C. William Carey
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Name: C. William Carey
Title: Acting Chief Executive Officer and
President
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EXHIBIT INDEX
Exhibit No. Description
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Exhibit 3.3 - Amended and Restated By-Laws of the Company effective as of
February 23, 1999.
Exhibit 10.32 - Settlement Agreement, dated as of February 23, 1999, by and
among the Company, Jewelcor Management, Inc., Seymour
Holtzman, Donald L. Sturm, ValueVest Partners, L.P. and C.
William Carey.
Exhibit 10.33 - Severance Agreement, dated as of February 23, 1999, between
the Company and C. William Carey.
Exhibit 10.34 - Consulting Agreement, dated as of February 23, 1999, between
the Company and C. William Carey.
Exhibit 10.35 - Amended and Restated Success Fee Agreement, dated as of
February 23, 1999, between the Company and C. William Carey.
Exhibit 10.36 - Fourth Amendment to Shareholder Rights Agreement, dated as
of February 23, 1999, between the Company and State Street
Bank and Trust Company, as Rights Agent.
Exhibit 99.1 - Press Release of Little Switzerland, Inc., dated
February 23, 1999.
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Exhibit 3.3
AMENDED AND RESTATED
BY-LAWS
OF
LITTLE SWITZERLAND, INC.
(as of February 23, 1999)
ARTICLE I
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Stockholders
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SECTION 1. Annual Meeting. The annual meeting of stockholders shall be held
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at the hour, date and place within or without the United States which is fixed
by the Board of Directors, which time, date and place may subsequently be
changed at any time by vote of the Board of Directors. If no annual meeting has
been held for a period of thirteen months after the Corporation's last annual
meeting of stockholders, a special meeting in lieu thereof may be held, and such
special meeting shall have, for the purposes of these By-Laws or otherwise, all
the force and effect of an annual meeting. Any and all references hereafter in
these By-Laws to an annual meeting or annual meetings also shall be deemed to
refer to any special meeting(s) in lieu thereof.
SECTION 2. Matters to be Considered at Annual Meeting. At an annual meeting
------------------------------------------
of stockholders, only such business shall be conducted, and only such proposals
shall be acted upon, as shall have been properly brought before the annual
meeting (a) by, or at the direction of, the Board of Directors or a designated
committee thereof or (b) by any holder of record (both as of the time notice of
such proposal is given by the stockholder as set forth below and as of the
record date for the annual meeting in question) of any shares of capital stock
of the Corporation entitled to vote at such annual meeting who complies with the
procedures set forth in this Section. In addition to any other applicable
requirements, for business to be properly brought before an annual meeting by a
holder of record of any shares of capital stock entitled to vote at such annual
meeting, the stockholder must have given timely notice thereof in writing to the
Secretary of the Corporation as set forth in this Section and such stockholder
or his representative must be present at the annual meeting. To be timely, a
stockholder's notice must be delivered to, or mailed and received at, the
principal executive offices of the Corporation (a) not less than 75 days nor
more than 120 days prior to the anniversary date of the immediately preceding
annual meeting of stockholders (the "Anniversary Date") or (b) in the event that
the annual meeting of stockholders is called for a date more than seven days
prior to the Anniversary Date, not later than the close of business on (i) the
20th day (or if that day is not a business day of the Corporation, on the next
succeeding business day) following the first date on which the date of such
meeting was publicly disclosed or (ii) if such date of
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public disclosure occurs more than 75 days prior to such scheduled date of such
meeting, then the later of (1) the 20th day (or if that day is not a business
day for the Corporation, on the next succeeding business day) following the
first date of public disclosure or (2) the 75th day prior to such scheduled date
of such meeting (or if that day is not a business day for the Corporation, on
the next succeeding business day). Any public disclosure of the scheduled date
of the meeting made by the Corporation by means of a press release, a report or
other document filed with the Securities and Exchange Commission, or a letter or
report sent to stockholders of record of the Corporation, shall be deemed to be
sufficient public disclosure of the date of such meeting for purposes of these
By-Laws. A stockholder's notice to the Secretary shall set forth as to each
matter the stockholder proposes to bring before the annual meeting (a) a brief
description of the proposal desired to be brought before the annual meeting and
the reasons for conducting such business at the annual meeting, (b) the name and
address, as they appear on the Corporation's stock transfer books, of the
stockholder proposing such business and of the beneficial owners (if any) of the
stock registered in such stockholder's name and the name and address of other
stockholders known by such stockholder to be supporting such proposal on the
date of the stockholder notice, (c) the class and number of shares of the
Corporation's capital stock which are held of record, beneficially owned or
represented by proxy by the stockholder and by any other stockholders known by
such stockholder to be supporting such proposal on the record date for the
annual meeting in question (if such date shall then have been made publicly
available) and on the date of such stockholder's notice, and (d) any material
interest of the stockholder in such proposal.
If the Board of Directors, or a designated committee thereof, determines that
any stockholder proposal was not timely made in accordance with the provisions
of this Section, or that the information provided in a stockholder's notice does
not satisfy the informational requirements of this Section in any material
respect, then such proposal shall not be presented for action at the annual
meeting in question. If neither the Board of Directors nor such committee makes
a determination as to the validity of any stockholder proposal, the presiding
officer of the annual meeting shall determine and declare at the annual meeting
whether the stockholder proposal was made in accordance with the terms of this
Section. If the presiding officer determines that a stockholder proposal was
made in accordance with the terms of this Section, he shall so declare at the
annual meeting and ballots shall be provided for use at the meeting with respect
to any such proposal. If the presiding officer determines that a stockholder
proposal was not made in accordance with the terms of this Section, he shall so
declare at the annual meeting and any such proposal shall not be acted upon at
the annual meeting.
The provisions of this By-Law shall not prevent the consideration and
approval or disapproval at the annual meeting of reports of officers, Directors
and committees of the Board of Directors, but in connection with such reports,
no new business shall be acted upon at such annual meeting unless stated, filed
and received as herein provided.
Notwithstanding the foregoing provisions of this By-Law, a stockholder shall
also comply with all applicable requirements of the Securities Exchange Act of
1934, as amended (the "Exchange Act") and the rules and regulations thereunder
with respect to the matters set forth
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in this By-Law. Nothing in this By-Law shall be deemed to affect any rights of
stockholders to request inclusion of proposals in the Corporation's proxy
statement pursuant to Rule 14a-8 under the Exchange Act.
SECTION 3. Special Meetings. Except as otherwise required by law and
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subject to the rights of the holders of any class or series of preferred stock,
special meetings of the stockholders of the Corporation may be called only by
the Board of Directors pursuant to a resolution approved by the affirmative vote
of a majority of the Directors then in office; provided, however, that if at the
time of such call there is an Interested Stockholder, any such call shall also
require the affirmative vote of a majority of the Continuing Directors then in
office.
SECTION 4. Matters to be Considered at Special Meetings. Only those matters
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set forth in the notice of the special meeting may be considered or acted upon
at a special meeting of stockholders of the Corporation, unless otherwise
provided by law.
SECTION 5. Notice of Meetings; Adjournments. A written notice of all annual
--------------------------------
meetings of stockholders stating the hour, date and place of such annual
meetings shall be given by the Secretary or an Assistant Secretary (or other
person authorized by these By-Laws or by law) not less than 10 days nor more
than 60 days before the meeting, to each stockholder entitled to vote thereat
and to each stockholder who, by law or under the Certificate of Incorporation or
under these By-Laws, is entitled to such notice, by delivering such notice to
him or by mailing it, postage prepaid, addressed to such stockholder at the
address of such stockholder as it appears on the Corporation's stock transfer
books. Such notice shall be deemed to be delivered when hand delivered to such
address or deposited in the mail so addressed, with postage prepaid.
Notice of all special meetings of stockholders shall be given in the same
manner as provided for annual meetings of the stockholders, except that the
written notice of all special meetings shall state the purpose or purposes for
which the meeting has been called.
Notice of an annual or special meeting of stockholders need not be given to a
stockholder if a written waiver of notice is executed before or after such
meeting by such stockholder or such stockholder's authorized attorney, if
communication with such stockholder is unlawful, or if such stockholder attends
such meeting, unless such attendance was for the express purpose of objecting at
the beginning of the meeting to the transaction of any business because the
meeting was not lawfully called or convened. Neither the business to be
transacted at, nor the purpose of, any annual or special meeting of stockholders
need be specified in any written waiver of notice.
The Board of Directors may postpone and reschedule any previously scheduled
annual or special meeting of stockholders and any record date with respect
thereto, regardless of whether any notice or public disclosure with respect to
any such meeting has been sent or made pursuant to Section 2 of this Article I
or Section 3 of Article II hereof or otherwise. When any meeting is convened,
the presiding officer may adjourn the meeting if (a) no quorum is present
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for the transaction of business, (b) the Board of Directors determines that
adjournment is necessary or appropriate to enable the stockholders to consider
fully information which the Board of Directors determines has not been made
sufficiently or timely available to stockholders, or (c) the Board of Directors
determines that adjournment is otherwise in the best interests of the
Corporation. When any annual or special meeting of stockholders is adjourned to
another hour, date or place, notice need not be given of the adjourned meeting
other than an announcement at the meeting at which the adjournment is taken of
the hour, date and place to which the meeting is adjourned; provided, however,
that if the adjournment is for more than 30 days, or if after the adjournment a
new record date is fixed for the adjourned meeting, notice of the adjourned
meeting shall be given to each stockholder of record entitled to vote thereat
and each stockholder who, by law or under the Certificate of Incorporation or
these By-Laws, is entitled to such notice.
SECTION 6. Quorum. The holders of a majority in interest of all stock
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issued, outstanding and entitled to vote, represented in person or by proxy,
shall constitute a quorum at any annual or special meeting of stockholders; but
if less than a quorum is present at a meeting, a majority in interest of the
stockholders present or the presiding officer may adjourn the meeting from time
to time, and the meeting may be held as adjourned without further notice, except
as provided in Section 5 of this Article I. At such adjourned meeting at which
a quorum is present, any business may be transacted which might have been
transacted at the meeting as originally noticed. The stockholders present at a
duly constituted meeting may continue to transact business until adjournment,
notwithstanding the withdrawal of enough stockholders to leave less than a
quorum.
SECTION 7. Voting and Proxies. Stockholders shall have one vote for each
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share of stock entitled to vote owned by them of record according to the books
of the Corporation, unless otherwise provided by law or by the Certificate of
Incorporation. Stockholders may vote either in person or by written proxy, but
no proxy shall be voted or acted upon after three years from its date, unless
the proxy provides for a longer period. Proxies shall be filed with the
Secretary of the meeting before being voted. Except as otherwise limited
therein or as otherwise provided by law, proxies shall entitle the persons
authorized thereby to vote at any adjournment of such meeting, but they shall
not be valid after final adjournment of such meeting. A proxy with respect to
stock held in the name of two or more persons shall be valid if executed by or
on behalf of any one of them unless at or prior to the exercise of the proxy the
Corporation receives a specific written notice to the contrary from any one of
them. A proxy purporting to be executed by or on behalf of a stockholder shall
be deemed valid, and the burden of proving invalidity shall rest on the
challenger.
SECTION 8. Action at Meeting. When a quorum is present, any matter before
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any annual or special meeting of stockholders shall be decided by vote of the
holders of a majority of the shares of stock voting on such matter, except where
a larger vote is required by law, by the Certificate of Incorporation or by
these By-Laws. Any election by stockholders shall be determined by a plurality
of the votes cast, except where a larger vote is required by law, by the
Certificate of Incorporation or by these By-Laws. The Corporation shall not
directly or
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indirectly vote any shares of its own stock; provided, however, that the
Corporation may vote shares which it holds in a fiduciary capacity to the extent
permitted by law.
SECTION 9. Action by Consent. Any action required or permitted to be taken
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by the stockholders of the Corporation must be effected at a duly constituted
annual or special meeting of such holders or by a consent in writing signed by
the holders of all of the outstanding shares authorized to vote at such meeting.
SECTION 10. Stockholder Lists. The Secretary or an Assistant Secretary (or
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the Corporation's transfer agent or other person authorized by these By-Laws or
by law) shall prepare and make, at least 10 days before every annual or special
meeting of stockholders, a complete list of the stockholders entitled to vote at
the meeting, arranged in alphabetical order, and showing the address of each
stockholder and the number of shares registered in the name of each stockholder.
Such list shall be open to the examination of any stockholder, for any purpose
germane to the meeting, during ordinary business hours, for a period of at least
10 days prior to the meeting, either at a place within the city where the
meeting is to be held, which place shall be specified in the notice of the
meeting, or, if not so specified, at the place where the meeting is to be held.
The list shall also be produced and kept at the hour, date and place of the
meeting during the whole time thereof, and may be inspected by any stockholder
who is present.
SECTION 11. Presiding Officer. The Chairman of the Board, if one is
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elected, or if not elected or in his absence, such other person who is chosen by
the Board of Directors, shall preside at all annual or special meetings of
stockholders and shall have the power, among other things, to adjourn such
meeting at any time and from time to time, subject to Sections 5 and 6 of this
Article I. The order of business and all other matters of procedure at any
meeting of the stockholders shall be determined by the presiding officer.
SECTION 12. Voting Procedures and Inspectors of Elections. The Corporation
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shall, in advance of any meeting of stockholders, appoint one or more inspectors
to act at the meeting and make a written report thereof. The Corporation may
designate one or more persons as alternate inspectors to replace any inspector
who fails to act. If no inspector or alternate is able to act at a meeting of
stockholders, the presiding officer shall appoint one or more inspectors to act
at the meeting. Any inspector may, but need not, be an officer, employee or
agent of the Corporation. Each inspector, before entering upon the discharge of
his duties, shall take and sign an oath faithfully to execute the duties of
inspector with strict impartiality and according to the best of his ability.
The inspectors shall perform such duties as are required by the Delaware General
Corporation Law, as amended from time to time, including the counting of all
votes and ballots. The inspectors may appoint or retain other persons or
entities to assist the inspectors in the performance of the duties of the
inspectors. The presiding officer may review all determinations made by the
inspector(s), and in so doing the presiding officer shall be entitled to
exercise his sole judgment and discretion and he shall not be bound by any
determinations made by the inspector(s). All determinations by the inspector(s)
and, if applicable, the presiding officer shall be subject to further review by
any court of competent jurisdiction.
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ARTICLE II
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Directors
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SECTION 1. Powers. All the power of the Corporation shall be exercised by
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or under the direction of the Board of Directors except as otherwise provided by
the Certificate of Incorporation or required by law. In the event of a vacancy
in the Board of Directors, the remaining Directors, except as otherwise provided
by law, may exercise the powers of the full Board until the vacancy is filled.
SECTION 2. Number and Terms. Except as otherwise fixed pursuant to the
----------------
provisions of Article IV of the Certificate of Incorporation relating to the
rights of the holders of any class or series of preferred stock to elect
Directors, the number of Directors of the Corporation shall be fixed by
resolution duly adopted from time to time by the Board of Directors. The
Directors, other than those who may be elected by the holders of any class or
series of preferred stock, shall be classified, with respect to the time for
which they severally hold office, into three classes, as nearly equal in number
as possible as determined by the Board of Directors, with one class to be
elected annually.
The initial Directors of the Corporation shall hold office as follows: the
first class of Directors shall hold office initially for a term expiring at the
annual meeting of stockholders to be held in l992, the second class of Directors
shall hold office initially for a term expiring at the annual meeting of
stockholders to be held in l993, and the third class of Directors shall hold
office initially for a term expiring at the annual meeting of stockholders to be
held in l994, with the members of each class to hold office until their
respective successors are duly elected and qualified. At each annual meeting of
the stockholders of the Corporation, Directors elected to succeed those whose
terms are expiring at that meeting shall be elected to hold office for a term
expiring at the annual meeting of stockholders held in the third year following
the year of their election and until their respective successors are duly
elected and qualified.
SECTION 3. Director Nominations. Nominations of candidates for election as
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Directors of the Corporation at any annual meeting of stockholders may be made
(a) by, or at the direction of, a majority of the Board of Directors or a
designated committee thereof, or (b) by any holder of record (both as of the
time notice of such nomination is given by the stockholder as set forth below
and as of the record date for the annual meeting in question) of any shares of
the capital stock of the Corporation entitled to vote at such annual meeting who
complies with the procedures set forth in this Section. Any stockholder who
seeks to make such a nomination, or his representative, must be present in
person at the annual meeting. Only persons nominated in accordance with the
procedures set forth in this Section shall be eligible for election as Directors
at an annual meeting of stockholders.
Nominations, other than those made by, or at the direction of, the Board of
Directors or a designated committee thereof shall be made pursuant to timely
notice in writing to the
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Secretary of the Corporation as set forth in this Section. To be timely, a
stockholder's notice shall be delivered to, or mailed and received, at the
principal executive offices of the Corporation (a) not less than 75 days nor
more than 120 days prior to the Anniversary Date or (b) in the event that the
annual meeting of stockholders is called for a date more than seven days prior
to the Anniversary Date, not later than the close of business on (i) the 20th
day (or if that day is not a business day for the Corporation, on the next
succeeding business day) following the first date on which the date of such
meeting was publicly disclosed or (ii) if such date of public disclosure occurs
more than 75 days prior to such scheduled date of such meeting, then the later
of (1) the 20th day (or if that day is not a business day for the Corporation,
on the next succeeding business day) following the first date of public
disclosure of the date of such meeting or (2) the 75th day prior to such
scheduled date of such meeting (or if that day is not a business day for the
Corporation, on the next succeeding business day). Any public disclosure of the
scheduled date of the meeting made by the Corporation by means of a press
release, a report or other document filed with the Securities and Exchange
Commission, or a letter or report sent to stockholders of record of the
Corporation, shall be deemed to be sufficient public disclosure of the date of
such meeting for purposes of these By-Laws. Such stockholder's notice shall set
forth (a) as to each person whom the stockholder proposes to nominate for
election or re-election as a director (i) the name, age, business address and
residence address of such person, (ii) the principal occupation or employment of
such person during the past five years, (iii) the class and number of shares of
the Corporation's capital stock which are beneficially owned by such person on
the date of such stockholder notice, (iv) a description of any of the following
events that has occurred within the last five years and that is material to the
evaluation of the ability or integrity of such proposed nominee: (1) a petition
under Federal bankruptcy laws or any state insolvency laws was filed by or
against such person, (2) such person was convicted in a criminal proceeding or
was a named subject of a criminal proceeding (excluding traffic violations and
other minor offenses), (3) such person was found by any court of competent
jurisdiction to have violated any Federal or state securities law or Federal
commodities law, which judgment or finding has not been subsequently reversed,
suspended or vacated, or (4) such person was the subject of any order, judgment
or decree, not subsequently reversed, suspended or vacated, of any court of
competent jurisdiction or of any Federal or state governmental or quasi-
governmental agency, authority or commission enjoining him or otherwise limiting
him from engaging in any type of business practice or in any activity in
connection with the purchase or sale of any security or commodity, (v) the
consent of each nominee to serve as a Director if so elected, and (vi) a
representation that such person qualifies as a nominee for election as a
Director of the Corporation under Section 17 of this Article II, and (b) as to
the stockholder giving the notice (i) the name and address, as they appear on
the Corporation's stock transfer books, of such stockholder and of the
beneficial owners (if any) of the stock registered in such stockholder's name
and the name and address of other stockholders known by such stockholder to be
supporting such nominees, (ii) the class and number of shares of the
Corporation's capital stock which are beneficially owned by such stockholder and
such beneficial owners (if any) on the date of such stockholder notice and by
any other stockholders known by such stockholder to be supporting such nominees
on the date of such stockholder notice, (iii) a representation that the
stockholder or his representative intends to appear in person at the meeting to
nominate the person or persons specified in the notice, (iv) a description of
all arrangements or
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understandings between such stockholder and each nominee and any other person or
persons (naming such person or persons) pursuant to which the nomination or
nominations are to be made by such stockholders; provided, that nothing in
subsection (a) or (b) of this Section shall require the stockholder giving such
notice to provide to the Corporation copies of such stockholder's preliminary or
definitive proxy, proxy statement, or other soliciting material filed with the
Securities and Exchange Commission. At the request of the Board of Directors,
any person nominated by, or at the direction of, the Board of Directors for
election as a Director at an annual meeting shall furnish to the Secretary of
the Corporation that information required to be set forth in a stockholder's
notice of nomination which pertains to such nominee.
No person shall be elected by the stockholders as a Director of the
Corporation unless nominated in accordance with the procedures set forth in this
Section. Election of Directors at the annual meeting need not be by written
ballot, unless otherwise provided by the Board of Directors or presiding officer
at such annual meeting. If written ballots are to be used, ballots bearing the
names of all the persons who have been nominated for election as Directors at
the annual meeting in accordance with the procedures set forth in this Section
shall be provided for use at the annual meeting.
If the Board of Directors, or a designated committee thereof, determines that
any stockholder nomination was not timely made in accordance with the terms of
this Section or that the information provided in a stockholder's notice does not
satisfy the informational requirements of this Section in any material respect,
then such nomination shall not be considered at the annual meeting in question.
If neither the Board of Directors nor such committee makes a determination as to
the validity of any nominations by a stockholder as set forth above, the
presiding officer of the annual meeting shall determine and declare at the
annual meeting whether a nomination was made in accordance with the terms of
this Section. If the presiding officer determines that a nomination was made in
accordance with the terms of this Section, he shall so declare at the annual
meeting and ballots shall be provided for use at the meeting with respect to
such nomination. If the presiding officer determines that a nomination was not
made in accordance with the terms of this Section, he shall so declare at the
annual meeting and such nomination shall be disregarded.
SECTION 4. Qualification. No Director need be a stockholder of the
-------------
Corporation. Unless waived by a vote of the Board of Directors, no individual
may be elected as a Director of the Corporation if he has reached the age of 72
years at the time of election.
SECTION 5. Vacancies. Except as otherwise fixed pursuant to the provisions
---------
of Article IV of the Certificate of Incorporation relating to the rights of the
holders of any class or series of preferred stock to elect Directors, any
vacancy occurring on the Board of Directors, including any vacancy created by
reason of an increase in the number of Directors or resulting from death,
resignation, disqualification, removal or other causes, shall be filled solely
by the affirmative vote of a majority of the remaining Directors then in office,
even if less than a quorum of the Board of Directors; provided, however, that,
if there is an Interested Stockholder at the time of such vote, the filling of
such vacancy shall also require the
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affirmative vote of a majority of the Continuing Directors then in office. Any
Director appointed in accordance with the preceding sentence shall hold office
for the remainder of the full term of the class of Directors in which the new
directorship was created or the vacancy occurred and until such Director's
successor shall have been duly elected and qualified. When the number of
Directors is increased or decreased, the Board of Directors shall determine the
class or classes to which the increased or decreased number of Directors shall
be apportioned; provided, however, that no decrease in the number of Directors
shall shorten the term of any incumbent Director. In the event of a vacancy in
the Board of Directors, the remaining Directors, except as otherwise provided by
law, may exercise the powers of the full Board of Directors until the vacancy is
filled.
SECTION 6. Removal. Subject to the rights of any class or series of
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preferred stock to elect Directors, any Director (including persons elected by
Directors to fill vacancies in the Board of Directors) may be removed from
office only with cause and by the affirmative vote of at least two-thirds of the
total votes eligible to be cast by stockholders at a duly constituted meeting of
stockholders called expressly for such purpose. A Director may not be removed
from office without cause. At least 30 days prior to any meeting of
stockholders at which it is proposed that any Director be removed from office,
written notice shall be sent to the Director whose removal will be considered at
the meeting.
SECTION 7. Resignation. A Director may resign at any time by giving written
-----------
notice to the Chairman of the Board, if one is elected, the President or the
Secretary. A resignation shall be effective upon receipt, unless the
resignation otherwise provides.
SECTION 8. Regular Meetings. The regular annual meeting of the Board of
----------------
Directors shall be held, without other notice than this By-Law, on the same date
and at the same place as the annual meeting of stockholders following the close
of such meeting of stockholders. Other regular meetings of the Board of
Directors may be held at such hour, date and place as the Board of Directors may
by resolution from time to time determine without other notice than such
resolution.
SECTION 9. Special Meetings. Special meetings of the Board of Directors may
----------------
be called, orally or in writing, by or at the request of any two Directors. The
person calling any such special meeting of the Board of Directors may fix the
hour, date and place thereof.
SECTION 10. Notice of Meetings. Notice of the hour, date and place of all
------------------
special meetings of the Board of Directors shall be given to each Director by
the persons calling the special meeting in accordance with Section 9 of this
Article II. Notice of any special meeting of the Board of Directors shall be
given to each Director in person or by telephone, telex, telecopy or other
written form of electronic communication, or by telegram sent to his business or
home address at least 24 hours in advance of the meeting. Such notice shall be
deemed to be delivered when hand delivered to such address, read to such
Director by telephone, deposited in the mail so addressed, with postage thereon
prepaid if mailed, dispatched or transmitted if telexed or telecopied, or when
delivered to the telegraph company if sent by telegram.
9
<PAGE>
When any Board of Directors meeting, either regular or special, is adjourned
for 30 days or more, notice of the adjourned meeting shall be given as in the
case of an original meeting. It shall not be necessary to give any notice of the
hour, date or place of any meeting adjourned for less than 30 days or of the
business to be transacted thereat, other than an announcement at the meeting at
which such adjournment is taken of the hour, date and place to which the meeting
is adjourned.
A written waiver of notice executed before or after a meeting by a Director
and filed with the records of the meeting shall be deemed to be equivalent to
notice of the meeting. The attendance of a Director at a meeting shall
constitute a waiver of notice of such meeting, except where a Director attends a
meeting for the express purpose of objecting to the transaction of any business
because such meeting is not lawfully called or convened. Except as otherwise
required by law, by the Certificate of Incorporation or by these By-Laws,
neither the business to be transacted at, nor the purpose of, any meeting of the
Board of Directors need be specified in the notice or waiver of notice of such
meeting.
SECTION 11. Quorum. At any meeting of the Board of Directors, a majority of
------
the Directors then in office shall constitute a quorum for the transaction of
business, but if less than a quorum is present at a meeting, a majority of the
Directors present may adjourn the meeting from time to time, and the meeting may
be held as adjourned without further notice, except as provided in Section 10 of
this Article II. Any business which might have been transacted at the meeting
as originally noticed may be transacted at such adjourned meeting at which a
quorum is present.
SECTION 12. Action at Meeting. At any meeting of the Board of Directors at
-----------------
which a quorum is present, a majority of the Directors present may take any
action on behalf of the Board of Directors, unless otherwise required by law, by
the Certificate of Incorporation or by these By-Laws.
SECTION 13. Action by Consent. Any action required or permitted to be taken
-----------------
at any meeting of the Board of Directors may be taken without a meeting if all
members of the Board of Directors consent thereto in writing. Such written
consent shall be filed with the records of the meetings of the Board of
Directors and shall be treated for all purposes as a vote at a meeting of the
Board of Directors.
SECTION 14. Manner of Participation. Directors may participate in meetings
-----------------------
of the Board of Directors by means of conference telephone or similar
communications equipment by means of which all Directors participating in the
meeting can hear each other, and participation in a meeting in accordance
herewith shall constitute presence in person at such meeting for purposes of
these By-Laws.
SECTION 15. Committees. The Board of Directors, by vote of a majority of
----------
the Directors then in office, may elect from its number one or more committees,
including an Executive Committee and an Audit Committee, and may delegate
thereto some or all of its powers except those which by law, by the Certificate
of Incorporation or by these By-Laws
10
<PAGE>
may not be delegated. Except as the Board of Directors may otherwise determine,
any such committee may make rules for the conduct of its business, but unless
otherwise provided by the Board of Directors or in such rules, its business
shall be conducted so far as possible in the same manner as is provided by these
By-Laws for the Board of Directors. All members of such committees shall hold
such offices at the pleasure of the Board of Directors. The Board of Directors
may abolish any such committee at any time. Any committee to which the Board of
Directors delegates any of its powers or duties shall keep records of its
meetings and shall report its action to the Board of Directors. The Board of
Directors shall have power to rescind any action of any committee, but no such
rescission shall have retroactive effect. With approval of the Board of
Directors, the Chief Executive Officer may appoint such other committees
consisting of such Directors as the Chief Executive Officer shall select. Any
recommendations of such committees appointed by the Chief Executive Officer
shall be submitted to the Board of Directors.
SECTION 16. Compensation of Directors. Directors shall receive such
-------------------------
compensation for their services as shall be determined by a majority of the
Board of Directors provided that Directors who are serving the Corporation as
officers or employees and who receive compensation for their services as such,
shall not receive any salary or other compensation for their services as
Directors of the Corporation.
SECTION 17. Additional Director Qualifications-Prohibition on Competitive
-------------------------------------------------------------
Activities. In order to protect the best interests of the shareholders of the
- ----------
Corporation, no person shall be qualified to be elected as a Director of the
Corporation or be qualified to continue to serve as such if it is determined in
accordance with this Section that such person is an owner, part-owner,
shareholder, partner, member, officer, manager or employee of any business
organization (whether a corporation, partnership, limited liability company,
proprietorship or any other form) whose activities, products or services are
competitive with those of the Corporation or its subsidiaries; except that any
such person may make passive investments in a competitive enterprise the shares
of which are publicly traded if such investment constitutes less than five (5)
percent of the equity of such enterprise. In furtherance of the foregoing, each
person elected as a Director of the Corporation shall enter into a
confidentiality agreement with the Corporation in the form provided by the
Company.
(a) Any person who, at the time of his/her election as Director of the
Corporation, fails to qualify under the provisions of this Section 17 or to
enter into or comply with the terms of such confidentiality agreement, as
determined by a majority of the Directors in office immediately prior to any
such election (exclusive of any Director under consideration), shall no longer
qualify as a nominee for Director and shall not be elected as a Director of the
Corporation, irrespective of any vote of the stockholders of the Corporation.
(b) Any Director of the Corporation who, at any time during his/her term
of office, fails to qualify under the provisions of this Section 17 or to enter
into or comply with the terms of such confidentiality agreement, as determined
by a majority of the Directors (exclusive of any Director under consideration),
shall automatically cease to be a Director of the Corporation, without any vote
of the stockholders of the Corporation.
11
<PAGE>
ARTICLE III
-----------
Officers
--------
SECTION 1. Enumeration. The officers of the Corporation shall consist of a
-----------
President, a Treasurer, a Secretary and such other officers, including without
limitation a Chairman of the Board, one or more Vice-Presidents (including
Executive Vice Presidents or Senior Vice Presidents), Assistant Vice Presidents,
Assistant Treasurers and Assistant Secretaries, as the Board of Directors may
determine.
SECTION 2. Election. At the regular annual meeting of the Board following
--------
the annual meeting of stockholders, the Board of Directors shall elect the
President, the Treasurer and the Secretary. Other officers may be elected by
the Board of Directors at such regular annual meeting of the Board of Directors
or at any other regular or special meeting.
SECTION 3. Qualification. No officer need be a stockholder or a Director.
-------------
Any person may occupy more than one office of the Corporation at any time. Any
officer may be required by the Board of Directors to give bond for the faithful
performance of his duties in such amount and with such sureties as the Board of
Directors may determine.
SECTION 4. Tenure. Except as otherwise provided by the Certificate of
------
Incorporation or by these By-Laws, each of the officers of the Corporation shall
hold office until the regular annual meeting of the Board of Directors following
the next annual meeting of stockholders and until his successor is elected and
qualified or until his earlier resignation or removal.
SECTION 5. Resignation. Any officer may resign by delivering his written
-----------
resignation to the Corporation addressed to the President or the Secretary, and
such resignation shall be effective upon receipt unless it is specified to be
effective at some other time or upon the happening of some other event.
SECTION 6. Removal. Except as otherwise provided by law, the Board of
-------
Directors may remove any officer with or without cause by the affirmative vote
of a majority of the Directors then in office; provided, however, that if an
officer is to be removed for cause, he may only be removed after reasonable
notice and an opportunity to be heard by the Board of Directors.
SECTION 7. Absence or Disability. In the event of the absence or disability
---------------------
of any officer, the Board of Directors may designate another officer to act
temporarily in place of such absent or disabled officer.
SECTION 8. Vacancies. Any vacancy in any office may be filled for the
---------
unexpired portion of the term by the Board of Directors.
12
<PAGE>
SECTION 9. President. Unless otherwise provided by the Board of Directors
---------
or the Certificate of Incorporation, the President shall be the Chief Executive
Officer of the Corporation and shall, subject to the direction of the Board of
Directors, have general supervision and control of the Corporation's business.
The President shall have such other powers and perform such other duties as the
Board of Directors may from time to time designate.
SECTION 10. Chairman of the Board. The Chairman of the Board, if one is
---------------------
elected, shall preside, when present, at all meetings of the stockholders and of
the Board of Directors. The Chairman of the Board shall have such other powers
and shall perform such other duties as the Board of Directors may from time to
time designate.
SECTION 11. Vice Presidents and Assistant Vice Presidents. Any Vice
---------------------------------------------
President (including any Executive Vice President or Senior Vice President) and
any Assistant Vice President shall have such powers and shall perform such
duties as the Board of Directors or the Chief Executive Officer may from time to
time designate.
SECTION 12. Treasurer and Assistant Treasurers. The Treasurer shall,
----------------------------------
subject to the direction of the Board of Directors and except as the Board of
Directors or the Chief
Executive Officer may otherwise provide, have general charge of the financial
affairs of the Corporation and shall cause to be kept accurate books of account.
He shall have custody of all funds, securities, and valuable documents of the
Corporation. He shall have such other duties and powers as may be designated
from time to time by the Board of Directors or the Chief Executive Officer.
Any Assistant Treasurer shall have such powers and perform such duties as the
Board of Directors or the Chief Executive Officer may from time to time
designate.
SECTION 13. Secretary and Assistant Secretaries. The Secretary shall record
-----------------------------------
all the proceedings of the meetings of the stockholders and the Board of
Directors (including committees of the Board) in books kept for that purpose.
In his absence from any such meeting, a temporary secretary chosen at the
meeting shall record the proceedings thereof. The Secretary shall have charge of
the stock ledger (which may, however, be kept by any transfer or other agent of
the Corporation). He shall have custody of the seal of the Corporation, and he,
or an Assistant Secretary, shall have authority to affix it to any instrument
requiring it, and, when so affixed, the seal may be attested by his signature or
that of an Assistant Secretary. He shall have such other duties and powers as
may be designated from time to time by the Board of Directors or the Chief
Executive Officer. In the absence of the Secretary, any Assistant Secretary may
perform his duties and responsibilities.
Any Assistant Secretary shall have such powers and perform such duties as the
Board of Directors or the Chief Executive Officer may from time to time
designate.
SECTION 14. Other Powers and Duties. Subject to these By-Laws and to such
-----------------------
limitations as the Board of Directors may from time to time prescribe, the
officers of the
13
<PAGE>
Corporation shall each have such powers and duties as generally pertain to their
respective offices, as well as such powers and duties as from time to time may
be conferred by the Board of Directors or the Chief Executive Officer.
ARTICLE IV
----------
Capital Stock
-------------
SECTION 1. Certificates of Stock. Each stockholder shall be entitled to a
---------------------
certificate of the capital stock of the Corporation in such form as may from
time to time be prescribed by the Board of Directors. Such certificate shall
bear the Corporation seal and shall be signed by the President or a Vice
President and by the Treasurer or an Assistant Treasurer, or the Secretary or an
Assistant Secretary. The Corporation seal and the signatures by Corporation
officers may be facsimiles if the certificate is manually countersigned by an
authorized person on behalf of a transfer agent or registrar other than the
Corporation or its employee. In case any officer, transfer agent or registrar
who has signed or whose facsimile signature has been placed on such certificate
shall have ceased to be such officer, transfer agent or registrar before such
certificate is issued, it may be issued by the Corporation with the same effect
as if he were such officer, transfer agent or registrar at the time of its
issue. Every certificate for shares of stock which are subject to any
restriction on transfer and every certificate issued when the Corporation is
authorized to issue more than one class or series of stock shall contain such
legend with respect thereto as is required by law.
SECTION 2. Transfers. Subject to any restrictions on transfer and unless
---------
otherwise provided by the Board of Directors, shares of stock may be transferred
only on the books of the Corporation by the surrender to the Corporation or its
transfer agent of the certificate theretofore properly endorsed or accompanied
by a written assignment or power of attorney properly executed, with transfer
stamps (if necessary) affixed, and with such proof of the authenticity of
signature as the Corporation or its transfer agent may reasonably require.
SECTION 3. Record Holders. Except as may otherwise be required by law, by
--------------
the Certificate of Incorporation or by these By-Laws, the Corporation shall be
entitled to treat the record holder of stock as shown on its books as the owner
of such stock for all purposes, including the payment of dividends and the right
to vote with respect thereto, regardless of any transfer, pledge or other
disposition of such stock, until the shares have been transferred on the books
of the Corporation in accordance with the requirements of these By-Laws.
It shall be the duty of each stockholder to notify the Corporation of his
post office address and any changes thereto.
SECTION 4. Record Date. In order that the Corporation may determine the
-----------
stockholders entitled to receive notice of or to vote at any meeting of
stockholders or any adjournments thereof, or entitled to receive payment of any
dividend or other distribution or allotment of any rights, or entitled to
exercise any rights in respect of any change, conversion or exchange of
14
<PAGE>
stock or for the purpose of any other lawful action, the Board of Directors may
fix, in advance, a record date, which shall not be more than 60 days nor less
than 10 days before the date of such meeting, nor more than 60 days prior to any
other action. In such case, only stockholders of record on such record date
shall be so entitled, notwithstanding any transfer of stock on the stock
transfer books of the Corporation after the record date.
If no record date is fixed: (a) the record date for determining stockholders
entitled to receive notice of or to vote at a meeting of stockholders shall be
at the close of business on the day next preceding the day on which notice is
given, or, if notice is waived, at the close of business on the day next
preceding the day on which the meeting is held; and (b) the record date for
determining stockholders for any other purpose shall be at the close of business
on the day on which the Board of Directors adopts the resolution relating
thereto.
SECTION 5. Replacement of Certificates. In case of the alleged loss,
---------------------------
destruction or mutilation of a certificate of stock, a duplicate certificate may
be issued in place thereof, upon such terms as the Board of Directors may
prescribe.
ARTICLE V
---------
Indemnification
---------------
SECTION 1. Definitions. For purposes of this Article: (a) "Officer" means
-----------
any person who serves or has served as a Director of the Corporation or in any
other office filled by election or appointment by the stockholders or the Board
of Directors and any heirs or personal representatives of such person; (b) "Non-
Officer Employee" means any person who serves or has served as an employee of
the Corporation, but who is not or was not an Officer, and any heirs or personal
representatives of such person; (c) "Proceeding" means any action, suit or
proceeding, civil or criminal, administrative or investigative, brought or
threatened in or before any court, tribunal, administrative or legislative body
or agency and any claim which could be the subject of a Proceeding; and
(d) "Expenses" means any liability fixed by a judgment, order, decree or award
in a Proceeding, any amount reasonably paid in settlement of a Proceeding and
any professional fees or other disbursements reasonably incurred in a Proceeding
or in settlement of a Proceeding, including fines, ERISA excise taxes or
penalties.
SECTION 2. Officers. Except as provided in Sections 4 and 5 of this
--------
Article V, each Officer of the Corporation shall be indemnified and held
harmless by the Corporation to the fullest extent authorized by the General
Corporation Law of Delaware, as the same exists or may hereafter be amended
(but, in the case of any such amendment, only to the extent that such amendment
permits the Corporation to provide broader indemnification rights than said law
permitted the Corporation to provide prior to such amendment) against any and
all Expenses incurred by such Officer in connection with any Proceeding in which
such Officer is involved as a result of serving or having served (a) as an
Officer or employee of the Corporation, (b) as a director, officer or employee
of any wholly-owned subsidiary of the Corporation, or (c) in any capacity with
any other corporation, organization, partnership, joint
15
<PAGE>
venture, trust or other entity at the request or direction of the Corporation,
including service with respect to employee or other benefit plans, and shall
continue as to an Officer who has ceased to be an Officer and shall inure to the
benefit of his heirs, executors and administrators; provided, however, that the
Corporation shall indemnify any such Officer seeking indemnification in
connection with a Proceeding initiated by such Officer only if such Proceeding
was authorized by the Board of Directors of the Corporation.
SECTION 3. Non-Officer Employees. Except as provided in Sections 4 and 5 of
---------------------
this Article V, each Non-Officer Employee of the Corporation may, in the
discretion of the Board of Directors, be indemnified by the Corporation to the
fullest extent authorized by the General Corporation Law of Delaware, as the
same exists or may hereafter be amended (but, in the case of any such amendment,
only to the extent that such amendment permits the Corporation to provide
broader indemnification rights than said law permitted the Corporation to
provide prior to such amendment) against any or all Expenses incurred by such
Non-Officer Employee in connection with any Proceeding in which such Non-Officer
Employee is involved as a result of serving or having served (a) as a Non-
Officer Employee of the Corporation, (b) as a director, officer or employee of
any wholly-owned subsidiary of the Corporation, or (c) in any capacity with any
other corporation, organization, partnership, joint venture, trust or other
entity at the request or direction of the Corporation, including service with
respect to employee or other benefit plans, and shall continue as to a Non-
Officer Employee who has ceased to be a Non-Officer Employee and shall inure to
the benefit of his heirs, executors and administrators; provided, however, that
the Corporation shall indemnify any such Non-Officer Employee seeking
indemnification in connection with a Proceeding initiated by such Non-Officer
Employee only if such Proceeding was authorized by the Board of Directors of the
Corporation.
SECTION 4. Service at the Request or Direction of the Corporation. No
------------------------------------------------------
indemnification shall be provided to an Officer or Non-Officer Employee with
respect to serving or having served in any of the capacities described in
Section 2(c) or 3(c) above unless the following two conditions are met:
(a) such service was requested or directed in each specific case by vote of the
Board of Directors prior to the occurrence of the event to which the
indemnification relates, and (b) the Corporation maintains insurance coverage
for the type of indemnification sought. In no event shall the Corporation be
liable for indemnification under Section 2(c) or 3(c) above for any amount in
excess of the proceeds of insurance received with respect to such coverage as
the Corporation in its discretion may elect to carry. The Corporation may but
shall not be required to maintain insurance coverage with respect to
indemnification under Section 2(c) or 3(c) above. Notwithstanding any other
provision of this Section 4 but subject to Section 5 of this Article V, the
Board of Directors may provide an Officer or Non-Officer Employee with
indemnification under Section 2(c) or 3(c) above as to a specific Proceeding
even if one or both of the two conditions specified in this Section 4 have not
been met and even if the amount of the indemnification exceeds the amount of the
proceeds of any insurance which the Corporation may have elected to carry,
provided that the Board of Directors in its discretion determines it to be in
the best interests of the Corporation to do so.
16
<PAGE>
SECTION 5. Good Faith. No indemnification shall be provided to an Officer
----------
or to a Non-Officer Employee with respect to a matter as to which such person
shall have been adjudicated in any Proceeding not to have acted in good faith in
the reasonable belief that the action of such person was in the best interests
of the Corporation. In the event that a Proceeding is compromised or settled so
as to impose any liability or obligation upon an Officer or Non-Officer
Employee, no indemnification shall be provided to said Officer or Non-Officer
Employee with respect to a matter if there be a determination that with respect
to such matter such person did not act in good faith in the reasonable belief
that the action of such person was in the best interests of the Corporation.
The determination shall be made by a majority vote of those Directors who are
not involved in such Proceeding. However, if more than half of the Directors
are involved in such Proceeding, the determination shall be made by a majority
vote of a committee of three disinterested Directors chosen by the disinterested
Directors at a regular or special meeting. If there are fewer than three
disinterested Directors, the determination shall be based upon the opinion of
the Corporation's regular outside counsel.
SECTION 6. Prior to Final Disposition. Unless otherwise provided by the
--------------------------
Board of Directors or by the committee pursuant to the procedure specified in
Section 5 of this Article V, any indemnification provided for under this Article
V shall include payment by the Corporation of Expenses incurred in defending a
Proceeding in advance of the final disposition of such Proceeding upon receipt
of an undertaking by the Officer or Non-Officer Employee seeking indemnification
to repay such payment if such Officer or Non-Officer Employee shall be
adjudicated or determined not to be entitled to indemnification under this
Article V.
SECTION 7. Contractual Nature of Rights. The foregoing provisions of this
----------------------------
Article V shall be deemed to be a contract between the Corporation and each
Officer and Non-Officer Employee who serves in such capacity at any time while
this Article V is in effect, and any repeal or modification thereof shall not
affect any rights or obligations then existing with respect to any state of
facts then or theretofore existing or any action, suit or proceeding theretofore
or thereafter brought based in whole or in part upon any such state of facts.
SECTION 8. Non-Exclusivity of Rights. The right to indemnification and the
-------------------------
payment of expenses incurred in defending a Proceeding in advance of its final
disposition conferred in this Article V shall not be exclusive of any other
right which any person may have or hereafter acquire under any statute,
provision of the Certificate of Incorporation or these By-Laws, agreement, vote
of stockholders or disinterested directors or otherwise.
SECTION 9. Insurance. The Corporation may maintain insurance, at its
---------
expense, to protect itself and any Officer or Non-Officer Employee against any
liability of any character asserted against or incurred by the Corporation or
any such Officer or Non-Officer Employee, or arising out of any such status,
whether or not the Corporation would have the power to indemnify such person
against such liability under the General Corporation Law of Delaware or the
provisions of this Article V.
17
<PAGE>
ARTICLE VI
----------
Miscellaneous Provisions
------------------------
SECTION 1. Fiscal Year. The fiscal year of the Corporation shall end on the
-----------
last Saturday of May of each year.
SECTION 2. Seal. The Board of Directors shall have power to adopt and alter
----
the seal of the Corporation.
SECTION 3. Execution of Instruments. All deeds, leases, transfers,
------------------------
contracts, bonds, notes and other obligations to be entered into by the
Corporation in the ordinary course of its business without Director action may
be executed on behalf of the Corporation by the Chairman of the Board, if one is
elected, the President or the Treasurer or any other officer, employee or agent
of the Bank as the Board of Directors or Executive Committee may authorize.
SECTION 4. Voting of Securities. Unless the Board of Directors otherwise
--------------------
provides, the Chairman of the Board, if one is elected, the President or the
Treasurer may waive notice of and act on behalf of this Corporation, or appoint
another person or persons to act as proxy or attorney in fact for this
Corporation with or without discretionary power and/or power of substitution, at
any meeting of stockholders or shareholders of any other corporation or
organization, any of whose securities are held by this Corporation.
SECTION 5. Resident Agent. The Board of Directors may appoint a resident
--------------
agent upon whom legal process may be served in any action or proceeding against
the Corporation.
SECTION 6. Corporate Records. The original or attested copies of the
-----------------
Certificate of Incorporation, By-Laws and records of all meetings of the
incorporators, stockholders and the Board of Directors and the stock transfer
books, which shall contain the names of all stockholders, their record addresses
and the amount of stock held by each, may be kept outside the State of Delaware
and shall be kept at the principal office of the Corporation, at the office of
its counsel or at an office of its transfer agent or at such other place or
places as may be designated from time to time by the Board of Directors.
SECTION 7. Definitions. As used in these By-Laws, the terms "Interested
-----------
Stockholder" and "Continuing Director" shall have the same respective meanings
assigned to them in the Certificate of Incorporation. Any determination of
beneficial ownership of securities under these By-Laws shall be made in the
manner specified in the Certificate of Incorporation.
SECTION 8. Certificate of Incorporation. All references in these By-Laws to
----------------------------
the Certificate of Incorporation shall be deemed to refer to the Certificate of
Incorporation of the Corporation, as amended and in effect from time to time.
18
<PAGE>
SECTION 9. Amendments. The Board of Directors shall have the power to
----------
adopt, alter, amend and repeal these By-Laws. Any By-Laws adopted by the
Directors under the powers conferred hereby may be altered, amended or repealed
by the Directors or by the stockholders. Notwithstanding the foregoing or any
other provisions of the Certificate of Incorporation or these By-Laws to the
contrary, such action by the Board of Directors shall require the affirmative
vote of at least two-thirds of the Directors then in office. Notwithstanding
the foregoing or any other provisions of the Certificate of Incorporation or
these By-Laws to the contrary, any action by the stockholders to alter, amend or
repeal these By-Laws of the Corporation shall require the affirmative vote of at
least two-thirds of the total votes eligible to be cast by stockholders with
respect to such alteration, amendment or repeal, voting together as a single
class, at a duly constituted meeting of stockholders called expressly for such
purpose.
19
<PAGE>
Exhibit 10.32
LITTLE SWITZERLAND, INC.
161-B Crown Bay Cruise Ship Port
St. Thomas, U.S.V.I. 00804
February 23, 1999
PRIVATE AND CONFIDENTIAL
Seymour Holtzman
Jewelcor Management, Inc.
100 N. Wilkes-Barre Blvd.
Wilkes-Barre, Pennsylvania 18702
ValueVest Partners L.P.
1 Sansome Street, 39th Floor
San Francisco, CA 94104
Donald L. Sturm
3033 East First Avenue, Suite 200
Denver, CO 80206
C. William Carey
c/o Little Switzerland, Inc.
161-B Crown Bay Cruise Ship Port
St. Thomas, U.S.V.I. 00804
Ladies and Gentlemen:
This letter agreement confirms our mutual understanding concerning certain
matters related to (i) the ownership of common stock, par value $.01 per share
(the "Common Stock"), of Little Switzerland, Inc., a Delaware corporation (the
"Company"), by Jewelcor Management, Inc. ("JMI"), Seymour Holtzman, Steven
Holtzman, the Trust f/b/o Allison Holtzman Garcia and the Custodial Account
f/b/o Chelsea Holtzman (JMI together with Seymour Holtzman, the "Holtzman
Stockholders") as set forth in Amendment No. 4 to Schedule 13D attached hereto
as Schedule A and ValueVest Partners L.P. and Donald L. Sturm (collectively, the
----------
"Sturm Stockholders," and together with the Holtzman Stockholders, the
"Stockholders") and (ii) the scheduling of the Company's 1998 Annual Meeting of
Stockholders (the "1998 Annual Meeting"). Although Steven Holtzman, the Trust
f/b/o Allison Holtzman Garcia and the Custodial Account f/b/o Chelsea Holtzman
are not signatories to this letter agreement, each of the Holtzman Stockholders
hereby agrees that he or it will be responsible for any and all actions that are
inconsistent with or otherwise violate the provisions of this letter agreement
by any of Steven Holtzman, the Trust f/b/o Allison Holtzman Garcia and the
Custodial Account f/b/o Chelsea Holtzman.
<PAGE>
In consideration of the mutual covenants and agreements herein contained and
for other good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, the parties hereto agree as follows:
1. Representations and Warranties.
------------------------------
(a) Each of the Stockholders hereby represents and warrants with respect
to himself or itself that this letter agreement has been duly executed and
delivered by such Stockholder and that this letter agreement is a valid and
binding obligation of such Stockholder enforceable against such Stockholder in
accordance with its terms.
(b) The Company hereby represents and warrants that this letter agreement
has been duly executed and delivered by the Company and that this letter
agreement is a valid and binding obligation of the Company enforceable against
the Company in accordance with its terms.
(c) The Holtzman Stockholders hereby represent and warrant that as of the
date hereof and as of the Record Date (as defined in Section 6 hereof): (i) they
are, and will be, the beneficial owners (as determined in accordance with the
Rule 13d-3 promulgated under the Securities Exchange Act of 1934 (the "1934
Act")) of the aggregate number of shares of the Company's Common Stock as set
forth opposite their names in Amendment No. 4 to Schedule 13D attached hereto as
Schedule A; and (ii) except for such shares, neither the Holtzman Stockholders
- ----------
nor any of their affiliates beneficially own any voting securities, or any
securities convertible into or exchangeable for any voting securities, or
options, warrants, contractual rights or other rights of any kind to acquire or
vote any voting securities or any securities convertible into or exchangeable
for any voting securities of the Company.
(d) The Holtzman Stockholders hereby represent and warrant that as of the
date hereof: (i) Steven Holtzman, the Trust f/b/o Allison Holtzman Garcia and
the Custodial Account f/b/o Chelsea Holtzman are the beneficial owners (as
determined in accordance with the Rule 13d-3 promulgated under the 1934 Act) of
the aggregate number of shares of the Company's Common Stock as set forth
opposite their names in Amendment No. 4 to Schedule 13D attached hereto as
Schedule A; (ii) except for such shares, neither Steven Holtzman, the Trust
- ----------
f/b/o Allison Holtzman Garcia, the Custodial Account f/b/o Chelsea Holtzman nor
any of their affiliates beneficially own any voting securities, or any
securities convertible into or exchangeable for any voting securities, or
options, warrants, contractual rights or other rights of any kind to acquire or
vote any voting securities or any securities convertible into or exchangeable
for any voting securities of the Company and (iii) to the best of their
knowledge, neither Steven Holtzman, the Trust f/b/o Allison Holtzman Garcia nor
the Custodial Account f/b/o Chelsea Holtzman intend to transfer, sell or
otherwise dispose of such shares on or before the Record Date (as defined in
Section 6 hereof).
(e) The Sturm Stockholders hereby represent and warrant that as of the
date hereof and as of the Record Date (as defined in Section 6 hereof): (i) they
are, and will be, the beneficial owners (as determined in accordance with the
Rule 13d-3 promulgated under the
2
<PAGE>
1934 Act) of an aggregate of 1,177,400 shares of the Company's Common Stock; and
(ii) except for such shares, neither the Sturm Stockholders nor any of their
affiliates beneficially own any voting securities, or any securities convertible
into or exchangeable for any voting securities, or options, warrants,
contractual rights or other rights of any kind to acquire or vote any voting
securities or any securities convertible into or exchangeable for any voting
securities of the Company.
(f) C. William Carey hereby represents and warrants that as of the date
hereof and as of the Record Date (as defined in Section 6 hereof): (i) he is,
and will be, the beneficial owner (as determined in accordance with the
Rule 13d-3 promulgated under the 1934 Act) of an aggregate of 278,000 shares of
the Company's Common Stock; and (ii) except for such shares and an unvested
option to purchase an aggregate of 120,000 shares of the Company's Common Stock,
he does not beneficially own any voting securities, or any securities
convertible into or exchangeable for any voting securities, or options,
warrants, contractual rights or other rights of any kind to acquire or vote any
voting securities or any securities convertible into or exchangeable for any
voting securities of the Company.
2. Composition of Board of Directors.
---------------------------------
(a) The Company hereby agrees that, in connection with the 1998 Annual
Meeting, it will fix the size of its Board of Directors at six (6) members,
divided into three (3) classes and comprised of the persons set forth on
Schedule B attached hereto.
- ----------
(b) C. William Carey hereby agrees to resign as a Class III Director of
the Company, effective as of the date of the 1998 Annual Meeting. Mr. Carey
hereby agrees that he will not stand for re-election as a Class III Director at
the 1998 Annual Meeting.
(c) Timothy B. Donaldson hereby agrees to resign as a Class II Director
of the Company, effective as of the date of the 1998 Annual Meeting. Pursuant
to the terms of the Amended and Restated By-laws of the Company, as in effect on
the date hereof, the Board of Directors hereby agrees to appoint, on the date of
the 1998 Annual Meeting, Peter R. McMullin as a Class II Director to serve for a
term expiring at the 1999 Annual Meeting of Stockholders to fill the vacancy to
be caused by Mr. Donaldson's resignation.
(d) The Board of Directors of the Company hereby agrees to nominate as
its candidates for election to the Board of Directors at the 1998 Annual Meeting
the following persons: (i) Seymour Holtzman and Adriane J. Dudley for election
as Class I Directors with terms expiring at the 2001 Annual Meeting of the
Stockholders and (ii) Melanie Sturm and Richard C. Hunter for election as Class
III Directors with terms expiring at the 2000 Annual Meeting of Stockholders.
(e) Each of Messrs. Holtzman, McMullin and Hunter and Ms. Sturm hereby
agrees (i) to cooperate with the Company in the preparation of its proxy
statement relating to the 1998 Annual Meeting in accordance with the 1934 Act
and the rules and regulations under
3
<PAGE>
the 1934 Act and (ii) promptly to provide the Company with any and all
information required or necessary pursuant to Schedule 14A of Rule 14a-101
promulgated under the 1934 Act.
3. Observation of Meetings of the Board of Directors. So long as the Sturm
-------------------------------------------------
Stockholders beneficially own (as determined in accordance with Rule 13d-3
promulgated under the 1934 Act) at least 5% of the outstanding shares of Common
Stock of Little Switzerland, the Company shall give Donald L. Sturm written
notice of each meeting of its Board of Directors at the same time and in the
same manner as notice is given to the directors of the Company, and the Company
shall permit Mr. Sturm to attend as an observer all meetings of its Board of
Directors, provided that in the case of telephonic meetings conducted in
accordance with the Company's Amended and Restated By-Laws and applicable law,
Mr. Sturm shall be given the opportunity to participate in such telephonic
meetings. Mr. Sturm shall bear all costs associated with his attending or
otherwise participating in any meeting of the Board of Directors. Mr. Sturm
shall be entitled to receive all written materials and other information given
to the directors of the Company in connection with such meetings at the same
time such materials and information are given to the directors; provided that
the Company may withhold from Mr. Sturm information that is subject to an
existing attorney-client privilege.
4. Stockholder Nominations. The Stockholders hereby withdraw any and all
-----------------------
nominations of candidates for election as Directors of the Company at the 1998
Annual Meeting previously submitted to the Company. The Stockholders and
C. William Carey agree not to submit or cause the submission of any proposals or
nominations of candidates for election as Directors of the Company at the 1998
Annual Meeting, and no nominees thereof shall be placed on the ballot or
otherwise considered at the 1998 Annual Meeting unless such nominees are
otherwise nominated by the Board of Directors of the Company as set forth in
Section 2(d) hereof. Effective immediately, each of the Stockholders shall
terminate any "solicitation" (as such term is defined in the proxy rules of the
Securities and Exchange Commission) of proxies with respect to the 1998 Annual
Meeting. With respect to all proxies solicited to date by any of the
Stockholders, the Stockholders agree not to vote, deliver or otherwise use, or
attempt to vote, deliver or use, such proxies. The Stockholders and C. William
Carey hereby agree not to solicit any proxies from the date hereof with respect
to the 1998 Annual Meeting, except on behalf of the Company.
5. Submission of Stockholder Nominations. The parties hereto agree that the
-------------------------------------
stockholders of the Company, other than the Stockholders and C. William Carey,
may submit director nominations to be presented at the 1998 Annual Meeting until
the close of business on the date that is seven (7) calendar days (the
"Nomination Date") following public announcement of this letter agreement.
6. Rescheduling of 1998 Annual Meeting; Record Date. In light of the
------------------------------------------------
provisions of this letter agreement, the changed Nomination Date and the
necessity to file and clear the Company's proxy materials with the Securities
and Exchange Commission, the parties hereto agree that the 1998 Annual Meeting
will be rescheduled for April 7, 1999 and will be held in
4
<PAGE>
New York City, New York. The parties hereto also agree that the record date for
the 1998 Annual Meeting shall be changed to February 24, 1998 (the "Record
Date").
7. Agreement Not to Sue. JMI, Mr. Holtzman, Mr. Carey and each of the other
--------------------
Stockholders hereby agree to waive his, her or its right to challenge (i) the
change in the date of the 1998 Annual Meeting as set forth herein, (ii) the
change in the Nomination Date as set forth herein, (iii) the change in the
Record Date as set forth herein and (iv) the change in the number and the
identity of directors to be nominated at the 1998 Annual Meeting as set forth
herein. JMI, Mr. Holtzman, Mr. Carey and each of the other Stockholders further
hereby agree to forbear from commencing any and all civil litigation against the
Company relating to the changes listed in clauses (i) through (iv) in the
preceding sentence. Notwithstanding the foregoing and subject to Section 15
hereof, the terms of this Section shall not limit the right of the parties
hereto to enforce their respective rights under this letter agreement.
8. Voting. Each of the Stockholders and C. William Carey hereby agree that
------
he or it will (i) vote or cause to be voted all shares of the Company's Common
Stock beneficially owned by him or it or over which he or it exercises voting
control for the election of the nominees designated by the Board of Directors in
Section 2(d) hereof; and (ii) if requested by the Company, take all reasonable
actions to ensure that he or it carries out his or its obligations under this
Section 8 including, without limitation, delivering signed proxies for all
shares of Common Stock owned beneficially by the Stockholders or Mr. Carey to
the Company's designees to be voted by such designees in accordance with the
terms of clause (i) of this Section 8 at the 1998 Annual Meeting and/or execute
such other documents as the Company may reasonably request in order to confirm
that he or its has complied with his or its obligations under this Section 8.
9. Acting Chief Executive Officer and President of the Company.
-----------------------------------------------------------
(a) C. William Carey hereby agrees to resign as the Acting Chief
Executive Officer and President of the Company effective as of April 7, 1999,
the date of the rescheduled 1998 Annual Meeting. This resignation is a
termination of employment by Mr. Carey without cause pursuant to Section 5(e) of
his Employment Agreement, effective as of September 1, 1998, by and among Mr.
Carey, the Company and L.S. Wholesale, Inc.
(b) The Board of Directors hereby agrees to appoint Kenneth W. Watson as
Acting Chief Executive Officer and President of the Company effective as of
April 7, 1999 to serve substantially on the terms set forth in the term sheet
attached hereto as Schedule C. Kenneth W. Watson hereby agrees to serve as the
----------
Acting Chief Executive Officer and President of the Company on substantially the
terms set forth in Schedule C.
----------
10. Agreements with C. William Carey.
--------------------------------
(a) The Company will enter into a severance agreement with C. William
Carey, dated as of the date hereof, substantially in the form attached hereto as
Schedule D.
- ----------
5
<PAGE>
(b) The Company will enter into a consulting agreement with C. William
Carey, to be dated as of the date hereof, substantially in the form attached
hereto as Schedule E.
----------
(c) The Success Fee Agreement, dated as of January 15, 1999, between the
Company and C. William Carey will be amended and restated as of the date hereof,
substantially in the form attached hereto as Schedule F.
----------
11. Public Announcement; Publicity. Each of the Company, a representative
------------------------------
appointed the Holtzman Stockholders, a representative appointed by the Sturm
Stockholders and C. William Carey shall consult with each other before issuing
any press release or otherwise making any public statements or making any filing
with the Securities and Exchange Commission, including, without limitation, a
Current Report on Form 8-K or a Schedule 13D, with respect to this letter
agreement and the matters contemplated herein and shall not issue any such press
release or make any such public statement or filing with the Securities and
Exchange Commission with respect to this letter agreement and the matters
contemplated herein without the prior consent of the Directors of the Company, a
representative appointed by the Holtzman Stockholders, a representative
appointed by the Sturm Stockholders and Mr. Carey, which consents shall not be
unreasonably withheld; provided, however, that either the Company, a
representative appointed by the Holtzman Stockholders or a representative
appointed by the Sturm Stockholders may, without the prior consent of the other
persons, as the case may be, issue such press release or make such public
statement or filing with the Securities Exchange Commission with respect to this
letter agreement and the matters contemplated herein as may be required by law
or the applicable rules of Nasdaq if it has used its best efforts to consult
with such other persons and to obtain such other persons' consent but has been
unable to do so in a timely manner. In this regard, the parties shall make a
combined public announcement of the matters contemplated by this letter
agreement no later than (i) the close of trading on the Nasdaq Stock Market on
the day this letter agreement is signed, if such signing occurs during the
business day or (ii) the opening of trading on the Nasdaq Stock Market on the
business day following the date on which this Agreement is signed, if such
signing does not occur during the business day.
12. Shareholder Rights Agreement. The Board of Directors of the Company has
----------------------------
adopted an amendment to the Shareholder Rights Agreement, dated as of July 25,
1991, between the Company and State Street Bank and Trust Company, a
Massachusetts trust company, as amended, substantially as set forth in
Schedule G attached hereto.
- ----------
13. Amended and Restated By-laws. The Board of Directors of the Company has
----------------------------
adopted the Amended and Restated By-laws of the Company, substantially as set
forth in Schedule H attached hereto.
----------
14. Cooperation. Each of the Stockholders hereby acknowledges that this
-----------
letter agreement and the matters contemplated herein may raise certain issues
with respect to the Company's lending arrangements. The Company hereby agrees
promptly to address these issues. Each of the Stockholders hereby agrees to use
reasonable efforts to cooperate with the Company in its efforts to ensure the
retention by the Company of relationships with entities
6
<PAGE>
with whom the Company has material commercial relationships, including, without
limitation, its lenders. Each of the Stockholders acknowledges that such
cooperation may take the form of attending meetings with such entities.
15. Resolutions. The Company hereby represents and warrants that the Board
-----------
of Directors of the Company have duly adopted prior to the execution of this
letter agreement the resolutions set forth in Schedule I attached hereto.
----------
16. Effectiveness. Each of the parties hereto hereby agrees that the matters
-------------
contemplated by Sections 2(c), 3, 9 and 10 hereof shall only be effective if the
Board of Directors' nominees for directors of the Company as set forth in
Section 2(d) hereof are elected at the 1998 Annual Meeting.
17. Remedies. It is understood and agreed that money damages would not be a
--------
sufficient remedy for any breach of this letter agreement by any of the parties
hereto or any of their respective affiliates or representatives, and that in
addition to all other remedies available at law or equity, all of the parties
hereto shall be entitled to equitable relief, including injunction and specific
performance, as a remedy for any such breach by any of the other parties hereto
or their respective affiliates or representatives, and each of the parties
hereto further agrees to waive any requirement for the securing or posting of
any bond in connection with such remedy. In the event of litigation relating to
this letter agreement, if a court of competent jurisdiction enters judgment for
any party hereto, the non-prevailing party or parties, as the case may be, shall
be liable for and pay to the prevailing party or parties, as the case may be, on
demand the legal fees and expenses of any kind or character incurred by such
prevailing party or parties, as the case may be, in connection with such
litigation, including any appeal therefrom.
18. Arbitration of Disputes. Any controversy or claim arising out of or
-----------------------
relating to this letter agreement or the breach thereof or otherwise arising out
of the matters contemplated by this letter agreement shall, to the fullest
extent permitted by law, be settled by arbitration in any forum and form agreed
upon by the parties or, in the absence of such an agreement, under the auspices
of the American Arbitration Association ("AAA") in Boston, Massachusetts in
accordance with the rules of the AAA, including, but not limited to, the rules
and procedures applicable to the selection of arbitrators. Judgment upon the
award rendered by the arbitrator may be entered in any court having jurisdiction
thereof. This Section 18 shall be specifically enforceable. Notwithstanding the
foregoing, this Section 18 shall not preclude either party from pursuing a court
action for the sole purpose of obtaining a temporary restraining order or a
preliminary injunction in circumstances in which such relief is appropriate;
provided, however, that any other relief shall be pursued through an arbitration
proceeding pursuant to this Section 18.
7
<PAGE>
19. Waivers; Amendment. No failure or delay by any party hereto 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
future exercise thereof or the exercise of any other right, power or privilege
hereunder. No provision of this letter agreement can be amended without the
specific written consent of the Company and the Stockholders.
20. Notices. For purposes of this letter agreement, notices and all other
-------
communications to any party hereunder shall be in writing and shall be deemed to
have been duly given when delivered or mailed by United States certified or
registered mail, return receipt requested, postage prepaid, to the respective
addresses of the Company and each of the Stockholders set forth on page one of
this letter agreement, or to such other address as any party shall designate by
giving written notice of such change to the other parties hereto.
21. Governing Law. This letter agreement shall be governed and construed in
-------------
accordance with the laws of the State of Delaware without regard to any
applicable principles of conflicts of law. Each of the parties hereto
irrevocably and unconditionally consents to the sole and exclusive jurisdiction
of the courts of the State of Delaware and the United States District Court for
the District of Delaware for any action, suit or proceeding arising out of or
relating to this letter agreement or the terms thereof, and agrees not to
commence any action, suit or proceeding related thereto except in such courts.
Each of the parties hereto further hereby irrevocably and unconditionally waives
any objection to the laying of venue of any lawsuit, claim or other proceeding
arising out of or relating to this letter agreement in the courts of the State
of Delaware or the United States District Court for the District of Delaware,
and hereby further irrevocably and unconditionally waive and agree not to plead
or claim in any such court that any such lawsuit, claim or other proceeding
brought in any such court has been brought in an inconvenient forum. Each of
the parties hereto further agrees that service of any process, summons, notice
or document by U.S. registered mail to its address set forth above (with a copy
to the persons at the addresses listed below) shall be effective service of
process for any action, suit or proceeding brought against it in any such court.
The Company: Goodwin, Procter & Hoar LLP
Exchange Place
Boston, Massachusetts 02109
Attn: Kevin M. Dennis, Esq. and
Joseph L. Johnson III, P.C.
Seymour Holtzman: Elliott Reihner Siedzikowski & Egan, P.C.
Mellon Bank Building, Suite 300
400 Spruce Street
Scranton, PA 18503
Attn: George Reihner, Esq.
8
<PAGE>
JMI: Jewelcor Management, Inc.
100 N. Wilkes-Barre Blvd.
Wilkes-Barre, Pennsylvania 18702
Attn: General Counsel
and
Elliott Reihner Siedzikowski & Egan, P.C.
Mellon Bank Building, Suite 300
400 Spruce Street
Scranton, PA 18503
Attn: George Reihner, Esq.
The Sturm Stockholders: Rogers & Wells, LLP
200 Park Avenue
New York, NY 10166
Attn: David T. Moldenhauer, Esq.
C. William Carey: Cooke, Clancy & Gruenthal, LLP
150 Federal Street
Boston, MA 02110
Attn: Marjorie Sommer Cooke, Esq.
22. Enforceability. This letter agreement shall inure to the benefit of and
--------------
be enforceable by each of the parties hereto and their respective successors.
23. Severability. In case provisions of this letter agreement shall be
------------
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions of the letter agreement shall not in any way be
affected or impaired thereby.
24. Counterparts; Facsimile Signature. This letter agreement may be executed
---------------------------------
in two or more counterparts, each of which shall be deemed an original, but all
of which shall constitute the same agreement. This letter agreement may be
executed by facsimile signature, which shall be deemed an original.
25. Headings. The descriptive headings herein are inserted for convenience
--------
only and are not intended to be part of or to affect the meaning or
interpretation of this letter agreement.
26. Entire Agreement. This letter agreement and the schedules hereto contain
----------------
the entire understanding of the parties with respect to the subject matter
hereof and may be amended only by an agreement in writing executed by the
parties.
9
<PAGE>
Please confirm your agreement with the foregoing by signing and returning one
copy of this letter agreement to the undersigned, whereupon this letter
agreement shall become a binding agreement among all of the parties hereto upon
receipt of the signatures of all of the parties hereto.
Very truly yours,
LITTLE SWITZERLAND, INC.
By: /s/ Adriane J. Dudley
----------------------------------
Name: Adriane J. Dudley
Title: Director
Accepted and agreed as of the 23rd
day of February, 1999.
/s/ Seymour Holtzman
- -------------------------------
Seymour Holtzman
JEWELCOR MANAGEMENT, INC.
By: /s/ Seymour Holtzman
---------------------------
Seymour Holtzman, President
VALUEVEST PARTNERS L.P.
By: Valuevest Management Company, LLC,
its General Partner
By: /s/ Mark B. Bakar
---------------------------
Mark B. Bakar, President
/s/ Donald L. Sturm
- ---------------------------
Donald L. Sturm
/s/ C. William Carey
- ---------------------------
C. William Carey
10
<PAGE>
Solely for the purposes of Section 2(c)
/s/ Timothy B. Donaldson
- ---------------------------
Timothy B. Donaldson
Solely for the purposes of Section 2(e)
/s/ Richard C. Hunter
- ---------------------------
Richard C. Hunter
/s/ Melanie Sturm
- ---------------------------
Melanie Sturm
/s/ Peter R. McMullin
- ---------------------------
Peter R. McMullin
Solely for the purposes of Section 9(b)
/s/ Kenneth W. Watson
- ---------------------------
Kenneth W. Watson
11
<PAGE>
Exhibit 10.33
LITTLE SWITZERLAND, INC.
161-B Crown Bay Cruise Ship Port
St. Thomas, U.S.V.I. 00804
February 23, 1999
C. William Carey
c/o Little Switzerland, Inc.
161-B Crown Bay Cruise Ship Port
St. Thomas, U.S.V.I. 00804
Reference is hereby made to your Employment Agreement (the "Employment
Agreement"), effective as of September 1, 1998, with Little Switzerland, Inc.
(the "Company") and L.S. Wholesale, Inc. ("L.S. Wholesale"). You and the
Company have agreed that you shall resign as the Acting Chief Executive Officer
and President of the Company effective as of April 7, 1999 (the effective date
of your resignation being hereinafter referred to as the "Resignation Date") on
the following terms and conditions:
1. Resignation. You shall continue your service to the Company as
-----------
Acting Chief Executive Officer and President pursuant to the terms and
conditions set forth in your Employment Agreement through the end of business on
the Resignation Date, at which time, your resignation shall become effective.
Your resignation is a termination of employment by you without cause pursuant to
Section 5(e) of the Employment Agreement. On the Resignation Date, you shall
also resign as an officer and/or director of any and all of the subsidiaries of
the Company. The resignations referred to in this Section 1 are hereby accepted
by the Company and on behalf of its subsidiaries effective as of the Resignation
Date.
2. Base Salary. The Company will pay you your Base Salary (as defined
-----------
in the Employment Agreement) from the date hereof through the Resignation Date,
which amount shall be equal to an aggregate of $42,192. In addition, the
Company hereby agrees to pay you, on the Resignation Date, one month of Base
Salary, or $29,167.
3. Quarterly Bonus. The Company hereby agrees to pay you, on the
---------------
Resignation Date, $50,000 as a bonus for the Company's third quarter ending on
February 27, 1999.
4. Merchandise Purchase. The Company hereby grants you the right to
--------------------
purchase any and all of the Company's merchandise, at Company's cost, for a
period of three (3) years ending on the third anniversary of the Resignation
Date; provided, however that such purchases by you shall only be for your
-------- -------
personal use or personal gifts and not for resale.
<PAGE>
5. Medical Insurance. You acknowledge that after your resignation you
-----------------
will not be entitled to be maintained by the Company on the Company's medical
insurance plan and you have informed the Company that you intend to apply for
continuation of medical coverage under COBRA. Upon your election to seek
coverage under COBRA, the Company hereby agrees to reimburse you for premiums
associated with such COBRA coverage for a period of one (1) year ending on the
first anniversary of the Resignation Date; provided, however, if you become
-------- -------
employed during such one-year period and can obtain similar medical insurance
coverage at comparable costs through such employment, all obligations of the
Company under this Section 5 will terminate as of the date of your new
employment.
6. Return of Personal Property. Except as expressly provided herein,
---------------------------
you will return any and all of the Company's property or proprietary
information, if any, on the Resignation Date. The Company hereby agrees that you
may keep, as your sole and personal property, the personal computer that you are
currently using; provided, however, that you shall turn over to the Company, or
-------- -------
at the Company's request delete or destroy, all proprietary information of the
Company contained on such personal computer before the Resignation Date.
7. Non-Qualified Stock Option. The Company hereby acknowledges and
--------------------------
agrees that all 150,000 outstanding stock options granted pursuant to the Non-
Qualified Stock Option Agreement (the "Stock Option Agreement"), dated as of
September 1, 1998, between the Company and you will become fully vested and
immediately exercisable on the Resignation Date pursuant to Section 1(c) of the
Stock Option Agreement and will be exercisable for a period of two years from
the Resignation Date pursuant to Section 3(b) of the Stock Option Agreement.
8. Entire Payments; Withholding. Other than the payments or other
----------------------------
benefits described herein, you shall not be entitled to any additional payments
or benefits from the Company relating to your employment with the Company, or
termination thereof. All payments made by the Company under this letter
agreement shall be net of any tax or other amounts required to be withheld by
the Company under applicable law.
9. Transition. You agree to assist the Company during the period
----------
commencing on the date hereof and ending on the Resignation Date to ensure the
smooth transition of your duties as Acting Chief Executive Officer and President
of the Company. You further agree to fully and accurately disclose to the
Company any significant matters or issues, whether completed or pending, about
which you have knowledge or information and (i) which require action or
attention by the Company to avoid or address any potential violation of any
statute, regulation or other legal requirement of which you are aware or (ii)
which, to the best of your knowledge, could have a material effect on the
Company's business or operations.
10. Release of Claims
-----------------
a. You voluntarily and irrevocably release and discharge the Company
and any of its subsidiaries, and each of their current and former officers,
directors, shareholders, employees, and agents (any and all of which are
referred to as "Releasees") generally from all
2
<PAGE>
charges, complaints, claims, promises, agreements, causes of action, damages,
and debts, known or unknown, that relate in any manner to your employment with
or services for the Company or any of its subsidiaries through the Resignation
Date. This general release includes all claims relating to your resignations as
described in Section 1 and your activities on behalf of the Company, and also
includes claims of breach of contract or breach of an implied covenant of good
faith and fair dealing, intentional or negligent misrepresentation, and unlawful
discrimination under the common law or any statute (including, without
limitation, Title VII of the Civil Rights Act of 1964, 42 U.S.C. (S) 2000e, et
seq., the Age Discrimination in Employment Act of 1967, 29 U.S.C. (S)621, et
seq., the Employee Retirement Income Security Act, 29 U.S.C. (S)1001, et seq.,
and the Americans with Disabilities Act of 1990, 42 U.S.C. (S) 12101, et seq.).
You agree that you will not hereafter pursue any such claims against any
Releasee, by filing a lawsuit in any local, state, federal or international
court or filing an administrative or other proceeding for or on account of
anything which has occurred up to the present time as a result of your
employment, and you will not seek reinstatement with, or damages of any nature,
severance pay, attorney's fees, or costs from, the Company, any of its
subsidiaries or any of the other Releasees. Your release does not limit your
rights to indemnification under the terms of the Amended and Restated By-Laws of
the Company, as in effect on the date hereof, to enforce your rights to receive
certain payments pursuant to Sections 3(c), 3(d), 3(e) and 3(f) (only with
respect to reimbursement of business expenses) of the Employment Agreement or to
enforce your rights under this letter agreement
b. The Company voluntarily and irrevocably releases and discharges
you and your successors, assigns, heirs and survivors from any and all charges,
complaints, claims, promises, agreements, causes of action, damages and debts,
(including attorney's fees and costs actually incurred) which relate to acts or
omissions by you during the course of your employment, unless such acts or
omissions by you during the course of your employment constituted gross
negligence or fraud. This release does not limit the Company's right to enforce
its rights under this letter agreement.
11. Litigation Cooperation. You agree to cooperate fully with the
----------------------
Company in (i) the defense, prosecution or investigation of any claims or
actions which already have been brought or threatened and of which you have
knowledge, or which may be brought or threatened in the future against or on
behalf of the Company or actions which already have been brought or which may be
brought in the future against or on behalf of the Company relating to a period
in which you were either a director or an employee of the Company and
(ii) responding to, cooperating with, or contesting any governmental audit,
inspection, inquiry or investigation, in either case that relate to events or
occurrences that transpired during your membership on the Board of Directors of
the Company or your employment with the Company. Your full cooperation in
connection with such claims or actions shall include, without implication of
limitation: being available to meet with counsel to prepare for discovery or
trial; to attend trial and testify truthfully as a witness when reasonably
requested and at reasonable times designated by the Company; and to meet with
counsel or other designated representative of the Company to prepare responses
to and to cooperate with the Company's
3
<PAGE>
processing of governmental audits, inspections, inquiries or investigations. The
Company shall pay you such per diem fee for such cooperation as is mutually
agreed to by the Company and you. In addition, you will be reimbursed by the
Company only for any reasonable out-of-pocket expenses that you reasonably incur
in connection with such cooperation, subject to reasonable and satisfactory
documentation. The Company will not exercise their rights under this paragraph
so as to unreasonably interfere with your ability to engage in gainful
employment and shall endeavor to schedule your responsibilities hereunder so as
not to interfere with your schedule so long as you promptly provide timely
alternative dates on which you can fulfill your obligations hereunder.
12. Public Announcement. The Company and you shall consult with each
-------------------
other before issuing any press release or otherwise making any public statements
with respect to this letter agreement and shall not issue any such press release
or make any such public statement without your prior consent or the consent of
the Company, which consent shall not be unreasonably withheld; provided,
--------
however, that the Company may, without your prior consent, issue such press
- -------
release or make such public statement or filing as may be required by law or the
applicable rules of Nasdaq if it has used its best efforts to consult with you
and to obtain your consent but has been unable to do so in a timely manner.
The Company and each of its officers, directors and nominees for directors
hereby agrees not to issue any press release or otherwise make any public
statement relating to your service as a director, employee or consultant of the
Company prior to the Resignation Date which portrays you in an unfavorable
light, except as may otherwise be required by law. You hereby agree not to
issue any press release or otherwise make any public statement relating to the
Company, its business or any of its officers, directors or nominees for
directors which portrays any of the foregoing in an unfavorable light.
13. Arbitration of Disputes. Any controversy or claim arising out of
------------------------
or relating to this letter agreement or the breach thereof shall, to the fullest
extent permitted by law, be settled by arbitration in any forum and form agreed
upon by the parties or, in the absence of such an agreement, under the auspices
of the American Arbitration Association ("AAA") in Boston, Massachusetts in
accordance with the rules of the AAA, including, but not limited to, the rules
and procedures applicable to the selection of arbitrators. Judgment upon the
award rendered by the arbitrator may be entered in any court having jurisdiction
thereof. This Section 13 shall be specifically enforceable. Notwithstanding the
foregoing, this Section 13 shall not preclude either party from pursuing a court
action for the sole purpose of obtaining a temporary restraining order or a
preliminary injunction in circumstances in which such relief is appropriate;
provided, however, that any other relief shall be pursued through an arbitration
proceeding pursuant to this Section 13.
4
<PAGE>
14. Legal Fees. If legal action is commenced by either party hereto to
----------
enforce his or its respective rights under this letter agreement and a court of
competent jurisdiction enters a judgment for such party, then the prevailing
party shall be entitled to recover any and all costs incurred in connection with
the enforcement of his or its, as the case may be, rights hereunder, including,
without limitation, reasonable attorney's fees, in addition to any other relief
granted.
15. Notices. Any notices, requests, demands, and other communications
-------
provided for by this letter agreement shall be sufficient if in writing and
delivered in person or sent by registered or certified mail, postage prepaid, to
you at the last address you have filed in writing with the Company or to the
Company at its main office, attention of the President.
16. Entire Agreement. This letter agreement is the entire agreement
----------------
between you and the Company, and all previous agreements, or promises between
you and the Company relating to the subject matter of this letter agreement are
superseded, null, and void. Notwithstanding the foregoing, the parties hereto
acknowledge that they are simultaneously herewith entering into or are parties
to a Consulting Agreement, an Amended and Restated Success Fee Agreement and a
Settlement Agreement.
17. Effectiveness. Except with respect to Section 7 hereof, the
-------------
effectiveness of this letter agreement is contingent on the election of Adriane
J. Dudley, Seymour Holtzman, Melanie Sturm and Richard C. Hunter, the Board of
Directors' nominees for directors of the Company, at the Company's 1998 Annual
Meeting of Stockholders, as set forth in a settlement agreement, dated as of the
date hereof, entered into by the Company, you and the other parties identified
therein. In the event such election does not occur, this Agreement shall
forthwith become null and void and have no effect, without any liability on the
part of any party hereto; provided, however, that this provision shall not apply
with respect to Section 7 hereof.
18. Acknowledgment. You acknowledge that you have been given a
--------------
reasonable period of time in which to consider this letter agreement before
executing it. You further acknowledge that you have consulted with your
personal attorney before executing this letter agreement. By signing this
letter agreement, you acknowledge that you are doing so knowingly, voluntarily
and fully intending to be bound hereby. You also acknowledge that you are not
relying on any representations by the Company or any of its representatives
concerning the meaning of any aspect of this letter agreement.
19. Binding Effect. This letter agreement shall inure to the benefit of
--------------
and be binding upon the Company and you, their respective successors, executors,
administrators, heirs and permitted assigns.
20. Amendment. This letter agreement may be amended or modified only by
---------
a written instrument signed by you and a duly authorized representative of the
Company.
21. Counterparts. This letter agreement may be executed in one or more
------------
counterparts, all of which documents shall be considered one and the same
document.
5
<PAGE>
22. Governing Law; Consent to Jurisdiction. It is the parties'
--------------------------------------
intention that this letter agreement shall be construed under and be governed in
all respects by the laws of the State of Delaware. Each of the Company and you
hereby irrevocably and unconditionally consent to the sole and exclusive
jurisdiction of the courts of the State of Delaware and the United States
District Court for the District of Delaware for any action, suit or proceeding
arising out of or relating to this letter agreement, and agrees not to commence
any action, suit or proceeding related thereto except in such courts. Each of
the Company and you further hereby irrevocably and unconditionally waive any
objection to the laying of venue of any lawsuit, claim or other proceeding
arising out of or relating to this letter agreement in the courts of the State
of Delaware or the United States District Court for the District of Delaware,
and hereby further irrevocably and unconditionally waive and agree not to plead
or claim in any such court that any such lawsuit, claim or other proceeding
brought in any such court has been brought in an inconvenient forum. The Company
agrees that service of any process, summons, notice or document by U.S.
registered mail to its address set forth above (with a copy to the persons at
the address listed below) shall be effective service of process for any action,
suit or proceeding brought against it in any such court. You agree that service
of any process, summons, notice or document by U.S. registered mail to the last
address you filed in writing with the Company (with a copy to the person at the
address listed below) shall be effective service of process for any action, suit
or proceeding brought against you in any such court.
The Company: Goodwin, Procter & Hoar LLP
Exchange Place
Boston, Massachusetts 02109
Attn: Kevin M. Dennis, Esq. and
Joseph L. Johnson III, P.C.
C. William Carey: Cooke, Clancy & Gruenthal, LLP
150 Federal Street
Boston, MA 02110
Attn: Marjorie Sommer Cooke, Esq.
23. Severability. In case provisions of this Agreement shall be
------------
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions of this Agreement shall not in any way be affected or
impaired thereby.
6
<PAGE>
If you agree to these terms, please sign and date below and return this
letter agreement to the Company.
Very truly yours,
LITTLE SWITZERLAND, INC.
By: /s/ Adriane J. Dudley
-----------------------
Name: Adriane J. Dudley
Title: Director
Accepted and agreed as of the 23rd
day of February, 1999.
/s/ C. William Carey
----------------------------
C. William Carey
7
<PAGE>
Exhibit 10.34
CONSULTING AGREEMENT
--------------------
AGREEMENT made as of February 23,1999 by and between Little Switzerland,
Inc., a Delaware corporation (the "Company"), and C. William Carey (the
"Consultant").
WITNESSETH
In consideration of the Consultant's past experience with and advice to the
Company, this engagement by the Company of the Consultant and of other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Consultant represents and warrants to, and agrees with, the
Company as follows:
1. ENGAGEMENT. The Company hereby agrees to engage the Consultant and
----------
the Consultant hereby agrees to accept such engagement by the Company on the
terms and conditions set forth herein.
2. CONSULTATION AND TERM. For a period of six (6) months commencing on
---------------------
the effective date hereof, the Consultant shall make himself available to the
Company to provide consulting services to the Company, and shall provide such
consulting services to the Company as it may reasonably request during the term
of this Agreement, which shall include, but shall not be limited to, providing
advice with respect to the operations, business and marketing and strategic
development of the Company, attending meetings and participating on telephone
conferences. The Consultant agrees to serve the Company faithfully and to the
best of his ability and to use his best efforts in the promotion and advancement
of the Company and its welfare. The Consultant's consultation hereunder shall
be performed at such locations and during such time periods as shall be
reasonably requested by the Company.
3. CONSULTING FEES AND FRINGE BENEFITS.
-----------------------------------
(a) Salary and Consulting Fee. The Company agrees to pay the
-------------------------
Consultant for the services to be rendered by him hereunder a consulting fee at
the monthly rate of $30,000, payable in one installment of $180,000 (the
"Consulting Fee") to be paid on the effective date hereof.
(b) Expenses. During the term of his engagement hereunder, the
--------
Consultant shall be entitled to receive reimbursement for all reasonable
expenses incurred by him on behalf of the Company in connection with the
performance of his obligations hereunder in accordance with the usual practice
of the Company; provided, however, that the Consultant shall comply with such
reasonable policies and procedures relating to expenses as may be established
from time by time by the Company; and provided, further, that any travel
expenses must be pre-approved by the Company.
<PAGE>
4. TERMINATION. Notwithstanding the provisions of Sections 1 and 2
-----------
hereof, the Consultant's engagement hereunder shall terminate under the
following circumstances:
(a) Death. The Consultant's engagement hereunder shall terminate
-----
upon his death.
(b) Termination by the Company. The Company may terminate the
--------------------------
Consultant's engagement hereunder with or without cause upon thirty (30) days'
prior written notice to the Consultant.
Notwithstanding anything to the contrary contained herein, upon termination
of the Consultant's engagement hereunder pursuant to either clause (a) or (b)
above, the Consultant or his estate, as the case may be, shall be entitled to
retain the entire Consulting Fee as set forth in Section 3(a) hereof.
5. GENERAL RELATIONSHIP. The Consultant shall, in all matters relating
--------------------
to this Agreement, act as an independent contractor. In all such matters, the
Consultant shall not act as an employee of the Company.
6. CONFLICTING AGREEMENTS. The Consultant hereby represents and
----------------------
warrants that the execution of this Agreement and the performance of his duties
and obligations hereunder will not breach or be in conflict with any other
agreement to which he is a party or is bound, and that he is not now subject to
any covenants against competition or similar covenants which would affect the
performance of his obligations hereunder. Consultant agrees not to enter into
any such agreement during the term of this Agreement.
7. CONFIDENTIALITY. The Consultant will not disclose to any person
---------------
(except as required by applicable law or in connection with the performance of
his duties and responsibilities hereunder), or use for his own benefit or gain,
any confidential information of the Company obtained by him during the course of
his prior employment with the Company, his prior service as a member of the
Board of Directors of the Company or as a result of his consultation with the
Company. The term "confidential information" includes, without limitation,
financial information, business plans, prospects and opportunities (such as
lending relationships, financial product developments, or possible acquisitions
or dispositions of businesses or facilities) of the Company but does not include
any information which has become part of the public domain by means other than
the Consultant's non-observance of his obligations hereunder.
8. EFFECTIVENESS. This Agreement shall be effective as of April 7,
-------------
1999; provided, however, that Adriane J. Dudley, Seymour Holtzman, Melanie Sturm
-------- -------
and Richard C. Hunter, the Board of Directors' nominees for directors of the
Company as set forth in a settlement agreement, dated as of the date hereof,
entered into by the Company, the Consultant and the other parties identified
therein, are elected at the Company's 1998 Annual Meeting of Stockholders. In
the event such election does not occur, this Agreement shall forthwith become
null and void and have no effect, without any liability on the part of any party
hereto.
2
<PAGE>
9. NONCOMPETITION; NONSOLICITATION. During the period of the
-------------------------------
Consultant's engagement hereunder, the Consultant will not, directly or
indirectly, whether as owner, partner, shareholder, consultant, agent, employee,
co-venturer or otherwise, or through any person, compete in the Company's market
area (defined as any country or other jurisdiction in which the Company or any
of its subsidiaries conducts business as of the effective date of this
Agreement) with the business conducted by the Company, nor will the Consultant
attempt to hire any employee of the Company or any of its subsidiaries, assist
in such hiring by any other person or entity, encourage any such employee to
terminate his or her relationship with the Company, or solicit or encourage any
customer of the Company to terminate its relationship with the Company or to
conduct with any other person any business or activity which such customer
conducts or could conduct with the Company. For purposes of this Section 9, the
term "person" shall mean an individual, a corporation, an association, a
partnership, an estate, a trust and any other entity or organization
10. ARBITRATION OF DISPUTES. Any controversy or claim arising out of or
-----------------------
relating to this Agreement or the breach thereof or otherwise arising out of the
Consultant's engagement hereunder or the termination of that engagement shall,
to the fullest extent permitted by law, be settled by arbitration in any forum
and form agreed upon by the parties or, in the absence of such an agreement,
under the auspices of the American Arbitration Association ("AAA") in Boston,
Massachusetts in accordance with the rules of the AAA, including, but not
limited to, the rules and procedures applicable to the selection of arbitrators.
Judgment upon the award rendered by the arbitrator may be entered in any court
having jurisdiction thereof. This Section 10 shall be specifically enforceable.
Notwithstanding the foregoing, this Section 10 shall not preclude either party
from pursuing a court action for the sole purpose of obtaining a temporary
restraining order or a preliminary injunction in circumstances in which such
relief is appropriate; provided, however, that any other relief shall be pursued
through an arbitration proceeding pursuant to this Section 10.
11. LEGAL FEES. If legal action is commenced by either party hereto to
----------
enforce his or its respective rights under this Agreement and a court of
competent jurisdiction enters a judgment for such party, then the prevailing
party shall be entitled to recover any and all costs incurred in connection with
the enforcement of his or its, as the case may be, rights hereunder, including,
without limitation, reasonable attorney's fees, in addition to any other relief
granted.
12. ASSIGNMENT. The Consultant may not make any assignment of this
----------
Agreement or any interest herein, by operation of law or otherwise. The Company
may assign its rights under this Agreement with the prior written consent of the
Consultant.
13. NOTICES. For purposes of this Agreement, notices and all other
-------
communications to either party hereunder shall be in writing and shall be deemed
to have been duly given when delivered or mailed by United States certified or
registered mail, return receipt requested, postage prepaid, to the respective
addresses of the Company and the Consultant set forth below, or to such other
address as either party shall designate by giving written notice of such change
to the other party.
3
<PAGE>
In the case of the Company, to: Little Switzerland, Inc.
161-B Crown Bay Cruise Ship Port
P.O. Box 930
St. Thomas, U.S.V.I. 00804
Attention: Chief Executive Officer
or Chief Financial Officer
In the case of the Consultant, to: C. William Carey
c/o Carey Associates, Inc.
150 Federal Street, 12th Floor
Boston, MA 02110
14. AMENDMENTS. This Agreement shall not be modified or discharged in
----------
whole or in part except by an agreement in writing signed by the parties hereto.
15. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
----------------
among the parties with respect to the subject matter hereof and supersedes all
prior agreements and understandings between them as to such subject matter.
Notwithstanding the foregoing, the parties hereto acknowledge that they are
simultaneously herewith entering into or are parties to an Amended and Restated
Success Fee Agreement, a Severance Agreement and a Settlement Agreement.
16. WAIVERS AND FURTHER AGREEMENTS. The failure of the Company to
------------------------------
require the performance of any term or obligation provided for hereunder, or the
waiver by the Company of a breach of any provision of this Agreement shall not
prevent enforcement of such term or obligation or operate or be construed as a
waiver of any subsequent breach of that provision or of any other provision
hereof. Each of the parties hereto agrees to execute all such further
instruments and documents and to take all such further action as the other party
may reasonably require in order to effectuate the terms and purposes of this
Agreement.
17. COUNTERPARTS. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
18. SECTION HEADINGS. The headings contained in this Agreement are for
----------------
reference purposes only and shall not in any way affect the meaning or
interpretation of this Agreement.
19. GOVERNING LAW; CONSENT TO JURISDICTION. It is the parties'
--------------------------------------
intention that this Agreement shall be construed under and be governed in all
respects by the laws of the State of Delaware. Each of the Company and the
Consultant hereby irrevocably and unconditionally consent to the sole and
exclusive jurisdiction of
4
<PAGE>
the courts of the State of Delaware and the United States District Court for the
District of Delaware for any action, suit or proceeding arising out of or
relating to this Agreement, and agrees not to commence any action, suit or
proceeding related thereto except in such courts. Each of the Company and the
Consultant further hereby irrevocably and unconditionally waive any objection to
the laying of venue of any lawsuit, claim or other proceeding arising out of or
relating to this Agreement in the courts of the State of Delaware or the United
States District Court for the District of Delaware, and hereby further
irrevocably and unconditionally waive and agree not to plead or claim in any
such court that any such lawsuit, claim or other proceeding brought in any such
court has been brought in an inconvenient forum. The Company agrees that service
of any process, summons, notice or document by U.S. registered mail to its
address at 161-B Crown Bay Cruise Ship Port, St. Thomas, U.S.V.I. 00804 (with a
copy to the persons at the address listed below) shall be effective service of
process for any action, suit or proceeding brought against it in any such court.
The Consultant agrees that service of any process, summons, notice or document
by U.S. registered mail to the last address he filed in writing with the Company
(with a copy to the person at the address listed below) shall be effective
service of process for any action, suit or proceeding brought against him in any
such court.
The Company: Goodwin, Procter & Hoar LLP
Exchange Place
Boston, Massachusetts 02109
Attn: Kevin M. Dennis, Esq. and
Joseph L. Johnson III, P.C.
Consultant: Cooke, Clancy & Gruenthal, LLP
150 Federal Street
Boston, MA 02110
Attn: Marjorie Sommer Cooke, Esq.
20. VALIDITY. The invalidity or unenforceability of any provision or
--------
provisions of this Agreement shall not affect the validity or enforceability of
any other provisions of this Agreement, which shall remain in full force and
effect.
21. SEVERABILITY. In case provisions of this Agreement shall be
------------
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions of this Agreement shall not in any way be affected or
impaired thereby.
[END OF TEXT]
5
<PAGE>
IN WITNESS WHEREOF, this Agreement has been executed as a sealed instrument by
the Company, by its duly authorized officer, and by the Consultant as of the
date and year first above written.
COMPANY:
LITTLE SWITZERLAND, INC.
By: /s/ Adriane J. Dudley
-----------------------
Name: Adriane J. Dudley
Title: Director
CONSULTANT:
/s/ C. William Carey
---------------------------
C. William Carey
6
<PAGE>
Exhibit 10.35
AMENDED AND RESTATED
SUCCESS FEE AGREEMENT
---------------------
This SUCCESS FEE AGREEMENT, made as of February 23, 1999 (this
"Agreement"), by and between Little Switzerland, Inc., a Delaware corporation
with its main office in St. Thomas, U.S.V.I. (the "Company"), and C. William
Carey ("CWC").
WITNESSETH
WHEREAS, the parties hereto entered into a Success Fee Agreement on
January 15, 1999 (the "Original Agreement"), relating to a success fee for
certain transactions entered into and completed by the Company;
WHEREAS, CWC has informed the Company that he will not stand for re-
election as a director of the Company at the Company's 1998 Annual Meeting of
Stockholders;
WHEREAS, CWC has agreed to resign as the Acting Chief Executive Officer and
President of the Company effective as of the close of business on April 7, 1999;
and
WHEREAS, the parties hereto now desire to amend and restate the Original
Agreement.
NOW, THEREFORE, in consideration of the foregoing premises and the mutual
covenants contained herein, the Company and CWC mutually agree as follows:
1. Payment of Success Fee. CWC hereby agrees that, if requested in
----------------------
writing by the Board of Directors of the Company, he shall actively participate,
through duties and responsibilities assigned to CWC by the Board of Directors of
the Company, in the negotiation, structuring and/or closing of a transaction or
a series of related transactions, if any, approved by the Board of Directors of
the Company which are a tender or exchange offer, merger, reorganization,
consolidation or other business combination that directly result in the sale or
other disposition of all or substantially all of the assets of the Company or a
sale of all or substantially all of the issued and outstanding stock of the
Company (a "Transaction"). If the Board of Directors of the Company requests in
writing that CWC participate in the Transaction and subject to Section 3 hereof,
for compensation for all of such services rendered by CWC in connection with
such Transaction, the Company shall pay CWC an amount equal to eighty three and
one-third percent (83 1/3%) of two-thirds of one percent (1%) of the Aggregate
Value (as defined in Section 2 hereof) of the Transaction (the "Success Fee") by
wire transfer of immediately available funds to an account designated by CWC on
the closing date (the "Effective Time") of such Transaction.
2. Aggregate Value. For purposes of this Agreement, the term
---------------
"Aggregate Value" shall mean the total amount of cash and the fair market value
(on the date of payment) of all other property paid or payable, directly or
indirectly, by the acquiring party (the "Acquiror") to the acquired party or the
seller of the acquired business (the "Acquired"), or to the Acquired's security
<PAGE>
holders or its employees, or by the Acquired to the Acquired's security holders,
in connection with a Transaction (including, without limitation, amounts paid by
the Acquiror to holders of any warrants, stock purchase rights, convertible
securities or similar rights of the Company and to holders of any options or
stock appreciation rights issued by the Company, whether or not vested).
Aggregate Value shall also include the value of any long-term liabilities
(including the short-term portion thereof) of the Company (including the
principal amount of any indebtedness for borrowed money) indirectly or directly
assumed or acquired by the Acquiror, or otherwise repaid or retired, in
connection with or in anticipation of a Transaction. In the event the
Transaction takes the form of a recapitalization or restructuring of the Company
(including, without limitation, through negotiated repurchases of its
securities, an issuer tender offer, an extraordinary dividend, a spin-off,
split-off or similar transaction), Aggregate Value shall also include the fair
market value of (i) the equity securities of the Company retained by the
Company's security holders following such Transaction and (ii) any cash,
securities (including securities of subsidiaries) or other consideration
received by the Company's security holders in exchange for or in respect of
securities of the Company in connection with such Transaction (all such cash,
securities or other consideration received by such security holders being deemed
to have been paid to such security holders in such Transaction). If a
Transaction takes the form of a sale of assets, Aggregate Value shall also
include (i) the value of any current assets not sold, minus (ii) the value of
any current liabilities not assumed by the Acquiror. In the event that any part
of the consideration in connection with a transaction will be payable (whether
in one payment or a series of two or more payments) at any time following the
consummation thereof, the term Aggregate Value shall include the present value
of such future payment of payments. As used in this Agreement, the terms
"payment," "paid" or "payable" shall be deemed to include, as applicable, the
issuance or delivery of securities or other property other than cash.
3. Director Sponsored Transaction. Notwithstanding anything to the
------------------------------
contrary contained herein, the Company shall not be obligated to pay the Success
Fee to CWC if the Transaction involves any person, company or entity (i) that is
operated by CWC, (ii) for which CWC is performing or has performed, in the
twelve (12) months preceding the execution of the definitive documents relating
to the Transaction, any material advisory or consulting services, (iii) that
employs CWC or (iv) in which CWC owns or has an agreement to own more than an
one percent (1%) equity interest in a privately-held corporation or a five
percent (5%) equity interest in a publicly-held corporation.
4. Satisfaction of the Company's Obligations; Interest. The Company
---------------------------------------------------
and CWC agree that the payment provided for in Section 1 hereof shall satisfy in
full the Company's obligation to pay the Success Fee to CWC with respect to the
services rendered by CWC in connection with this Agreement. Notwithstanding the
foregoing, in the event that the Company shall fail to pay the Success Fee when
due, the term "Success Fee" shall be deemed to include interest on such unpaid
Success Fee, commencing on the Effective Time, at a rate per annum equal to the
rate of interest publicly announced by Citibank, N.A., from time to time, in the
City of New York, as such bank's Prime Rate.
5. Legal Fees. If legal action is commenced by either party hereto to
----------
enforce his or its respective rights under this Agreement and a court of
competent jurisdiction enters a judgment for such party, then the prevailing
party shall be entitled to recover any and all costs incurred in connection with
the enforcement of his or its, as the case may be, rights hereunder, including,
without limitation, reasonable attorney's fees, in addition to any other relief
granted.
2
<PAGE>
6. Arbitration of Disputes. Any controversy or claim arising out of
------------------------
or relating to this Agreement or the breach thereof shall, to the fullest extent
permitted by law, be settled by arbitration in any forum and form agreed upon by
the parties or, in the absence of such an agreement, under the auspices of the
American Arbitration Association ("AAA") in Boston, Massachusetts in accordance
with the rules of the AAA, including, but not limited to, the rules and
procedures applicable to the selection of arbitrators. Judgment upon the award
rendered by the arbitrator may be entered in any court having jurisdiction
thereof. This Section 6 shall be specifically enforceable. Notwithstanding the
foregoing, this Section 6 shall not preclude either party from pursuing a court
action for the sole purpose of obtaining a temporary restraining order or a
preliminary injunction in circumstances in which such relief is appropriate;
provided, however, that any other relief shall be pursued through an arbitration
proceeding pursuant to this Section 6.
7. Binding Effect; Assignment. This Agreement shall inure to the
--------------------------
benefit of and be binding upon the Company and CWC, their respective successors,
executors, administrators, heirs and permitted assigns. CWC shall have no right
to assign this Agreement. The Company may assign this Agreement only with the
consent of CWC.
8. Amendment. This Agreement may be amended or modified only by a
---------
written instrument signed by CWC or a duly authorized representative of CWC and
the Company.
9. Termination. If the Effective Time has not occurred by January 15,
-----------
2000 (the "Termination Date"), regardless of the reason therefor, then this
Agreement shall automatically terminate on such Termination Date and all of the
Company's obligations hereunder shall cease as of such Termination Date.
10. Counterparts. This Agreement may be executed in one or more
------------
counterparts, all of which documents shall be considered one and the same
document.
11. Governing Law; Consent to Jurisdiction. It is the parties'
--------------------------------------
intention that this Agreement shall be construed under and be governed in all
respects by the laws of the State of Delaware. Each of the Company and CWC
hereby irrevocably and unconditionally consent to the sole and exclusive
jurisdiction of the courts of the State of Delaware and the United States
District Court for the District of Delaware for any action, suit or proceeding
arising out of or relating to this Agreement, and agrees not to commence any
action, suit or proceeding related thereto except in such courts. Each of the
Company and CWC further hereby irrevocably and unconditionally waive any
objection to the laying of venue of any lawsuit, claim or other proceeding
arising out of or relating to this Agreement in the courts of the State of
Delaware or the United States District Court for the District of Delaware, and
hereby further irrevocably and unconditionally waive and agree not to plead or
claim in any such court that any such lawsuit, claim or other proceeding brought
in any such court has been brought in an inconvenient forum.
3
<PAGE>
12. Effectiveness. The effectiveness of this Agreement is contingent on
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the election of Adriane J. Dudley, Seymour Holtzman, Melanie Sturm and Richard
C. Hunter, the Board of Directors' nominees for directors of the Company, at the
Company's 1998 Annual Meeting of Stockholders, as set forth in a settlement
agreement, dated as of the date hereof, entered into by the Company, CWC and the
other parties identified therein. In the event such election does not occur,
this Agreement shall forthwith become null and void and have no effect, without
any liability on the part of any party hereto.
13. Severability. In case provisions of this Agreement shall be
------------
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions of this Agreement shall not in any way be affected or
impaired thereby.
14. Entire Agreement. This Agreement is the entire agreement between
----------------
CWC and the Company, and all previous agreements, or promises between CWC and
the Company relating to the subject matter of this Agreement are superseded,
null, and void. Notwithstanding the foregoing, the parties hereto acknowledge
that they are simultaneously herewith entering into or are parties to a
Consulting Agreement, a Severance Agreement and a Settlement Agreement.
[END OF TEXT]
4
<PAGE>
IN WITNESS WHEREOF, this Agreement has been executed by the Company, by its
duly authorized directors, and by CWC, as of the date first above written.
LITTLE SWITZERLAND, INC.
By: /s/ Adriane J. Dudley
-----------------------
Name: Adriane J. Dudley
Title: Director
CWC:
/s/ C. William Carey
---------------------------
C. William Carey
5
<PAGE>
Exhibit 10.36
FOURTH AMENDMENT TO
SHAREHOLDER RIGHTS AGREEMENT
----------------------------
Fourth Amendment, dated as of February 23, 1999 (this "Fourth Amendment"),
to the Shareholder Rights Agreement, dated as of July 25, 1991, between Little
Switzerland, Inc., a Delaware corporation (the "Company"), and State Street Bank
and Trust Company, a Massachusetts trust company (the "Rights Agent"), as
amended by the First Amendment to Shareholder Rights Agreement, dated as of
November 8, 1991, between the Company and the Rights Agent, the Second Amendment
to Shareholder Rights Agreement, dated as of April 6, 1993, between the Company
and the Rights Agent and the Third Amendment to Shareholder Rights Agreement,
dated as of February 4, 1998, between the Company and the Rights Agent (the
"Rights Agreement").
W I T N E S S E T H
- - - - - - - - - -
WHEREAS, in accordance with the terms of the Rights Agreement, the Company
deems it desirable to make certain amendments to the Rights Agreement; and
WHEREAS, Section 27 of the Rights Agreement provides that prior to the
Distribution Date (as defined therein), the Company and the Rights Agent shall,
if the Company so directs, amend or supplement any provision of the Rights
Agreement as the Company may deem necessary or desirable without the approval of
holders of the Company's common stock, par value $.01 per share (the "Common
Stock");
WHEREAS, the Company intends to enter into a Settlement Agreement (the
"Settlement Agreement") with Jewelcor Management, Inc., Seymour Holtzman,
ValueVest Partners, L.P., Donald L. Sturm, C. William Carey (collectively, the
"Stockholders") and certain other parties identified therein, pursuant to which,
among other things, the Stockholders will agree to vote or cause to be voted all
shares of the Common Stock beneficially owned by such Stockholders or over which
such Stockholders exercise voting control for the election of the nominees
designated by the Board of Directors at the Company's 1998 Annual Meeting of
Stockholders as set forth in such Settlement Agreement;
WHEREAS, prior to entering into the Settlement Agreement, the Company
desires to amend certain provisions of the Rights Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual agreements
herein set forth, the parties hereby agree that the Rights Agreement is hereby
amended as follows:
1. Section 1(a) of the Rights Agreement is amended by adding at the end
of Section 1(a) a new paragraph which provides as follows:
<PAGE>
Notwithstanding anything in this Agreement to the contrary, neither
Jewelcor Management, Inc. ("JMI"), Seymour Holtzman, ValueVest Partners, L.P.
("ValueVest"), Donald L. Sturm, C. William Carey, nor any of their Affiliates or
Associates, shall be deemed to be an Acquiring Person or an Adverse Person, and
no Stock Acquisition Date or Distribution Date shall occur, as a result of
(i) the negotiation, execution and delivery of the Settlement Agreement, dated
as of February 23, 1999, by and among JMI, Seymour Holtzman, ValueVest,
C. William Carey, the Company and the other parties identified therein (the
"Settlement Agreement"); or (ii) any action taken by JMI, Seymour Holtzman,
ValueVest, Donald L. Sturm, C. William Carey or any of their Affiliates or
Associates in accordance with the provisions of the Settlement Agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Fourth Amendment to
be duly executed as of the day and year first above written. This Fourth
Amendment may be executed in one or more counterparts all of which shall be
considered one and the same amendment and each of which shall be deemed to be an
original.
LITTLE SWITZERLAND, INC.
By: /s/ Adriane J. Dudley
-----------------------
Name: Adriane J. Dudley
Title: Director
STATE STREET BANK AND TRUST
COMPANY, as Rights Agent
By: /s/ Charles Rossi
-----------------------
Name: Charles Rossi
Title: President
<PAGE>
Exhibit 99.1
PRESS RELEASE
-------------
CONTACTS:
C. William Carey Mary Ellen Goodall
Little Switzerland, Inc. Walter Denby
340/776-2010 D.F. King & Co., Inc.
212/269-5550
FOR IMMEDIATE RELEASE
- ---------------------
LITTLE SWITZERLAND SETTLES POTENTIAL PROXY CONTEST;
---------------------------------------------------
ANNUAL MEETING RESCHEDULED;
---------------------------
NEW ACTING CEO NAMED
--------------------
ST. THOMAS, U.S. VIRGIN ISLANDS, February 23, 1999 . . . Little
Switzerland, Inc. (NASDAQ:LSVI), announced today that it has reached a
comprehensive settlement agreement in connection with a potential proxy contest
with two of the Company's largest stockholders: Donald L. Sturm and ValueVest
Partners L.P.; and Jewelcor Management, Inc. and Seymour Holtzman, owners of
13.7% and 12.5% respectively, of the Company's common stock.
The agreement provides that the composition of the Board of Directors will
be restructured and the annual meeting will be rescheduled for April 7, 1999.
Further, C. William Carey has announced his resignation as Acting CEO and
President and retirement from the Board, effective April 7, 1999. Thereafter,
Mr. Carey will serve as a consultant to the Company. Kenneth W. Watson, a
continuing Director of the Company, will serve as Acting CEO and President until
a permanent successor is found. These resignations and appointments are
contingent upon the election of the Board of Directors' candidates at the
Company's annual meeting.
The settlement agreement provides that the Company's annual meeting of
stockholders, originally scheduled for February 25, 1999, will be held on
Wednesday, April 7, 1999, with a record date of February 24, 1999. At the
annual meeting, stockholders will elect two Class I Directors, each with a term
expiring at the 2001 annual meeting and two Class III Directors, each with a
term expiring at the 2000 annual meeting. All record stockholders, other than
those part
<PAGE>
of the settlement agreement, may submit nominations to the Company for the
annual meeting by the close of business on March 2, 1999.
The settlement agreement also provides that the Board of Directors will
nominate the following persons as its candidates for election at the annual
meeting: Adriane J. Dudley and Seymour Holtzman for election as Class I
Directors; and Melanie Sturm and Richard C. Hunter for election as Class III
Directors. Mr. Timothy B. Donaldson will also retire from the Board effective
as of the annual meeting. To fill this vacancy, the Board has agreed, on April
7, 1999, to appoint Peter R. McMullin as a Class II Director to serve until the
1999 annual meeting. In addition, the Company has been informed that Ms. Sturm
and Mr. Hunter currently intend to nominate Mr. Holtzman for the position of
Chairman of the Board of Directors, if all parties are elected at the annual
meeting. Proxy materials for the annual meeting will be circulated in the near
future.
In announcing these developments, C. William Carey issued the following
statement: "I am proud of my nearly 20 year association with Little Switzerland
and will look back with pride on its growth and many achievements. It is truly
a world-class franchise. The time is right, however, for me to focus on my
other business interests. I eagerly anticipate returning to the States and
spending more time with my family. I also look forward to contributing to
Little Switzerland's future success as a consultant."
Kenneth W. Watson commented on behalf of the Board of Directors: "Bill
Carey's resignation was accepted with great personal and professional regret
given his significant contributions over the many years. We face the future
with a renewed sense of commitment and we will be aided by our new Board members
as we seek to rebuild the Company's business."
Little Switzerland, Inc. is a leading specialty retailer of brand name
watches, jewelry, crystal, china, fragrances and accessories, operating 21
stores on nine Caribbean islands, and two stores in Alaska cruise ship
destinations. The Company's primary market consists of vacationing tourists
attracted by free-port pricing, duty-free allowances and a wide variety of high
quality merchandise.
