INVESTOR RIGHTS AGREEMENT
THIS INVESTOR RIGHTS AGREEMENT (this "Agreement") is made as of June 16,
2000, by and among Meridian USA Holdings, Inc., a Florida corporation (the
"Company"), and those certain purchasers of the Company's Convertible Notes (as
defined below) signatory hereto (collectively the "Purchasers", and each
individually, a "Purchaser").
RECITALS
WHEREAS, the Company and the Purchasers have entered into that certain
Securities Purchase Agreement dated as of June 2000 (the "Purchase
Agreement");
WHEREAS, the Purchase Agreement provides for, among other things, the sale
by the Company and the purchase by the Purchasers of $8,000,000 aggregate
principal amount of the Company's Series A Convertible Notes due 2010
(the "Convertible Notes"); and
WHEREAS, the sale of the Convertible Notes to the Purchasers is
conditioned Upon the extension of the rights set forth herein, and the
Company desires to extend such rights herein.
NOW THEREFORE, in consideration of the foregoing, the parties agree as follows:
1. Definitions.
1.1 Certain Definitions. As used in this Agreement, the following
terms shall have the following respective meanings:
"Affiliate" of any Person means any other Person that, directly or
indirectly, controls, is controlled by or is under common control with such
Person.
"Common Stock" means the Common Stock, $.001 par value per share, of the
Company.
"Common Stock Equivalents means the Common Stock, the Preferred Stock and all
other shares, options, warrants and other rights exercisable or exchangeable
for, or convertible into, shares of Common Stock.
"Holders" means the Purchasers and any assignees or transferees acquiring
Convertible Notes or shares of Series II Preferred.
"Person" means an individual, corporation, partnership, limited liability
company, business trust or other form of entity.
"Preferred Stock" means the Preferred Stock, $1.00 par value per share, of the
Company.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations of the Securities and Exchange Commission thereunder, or
any similar United States federal statute.
"Series II Preferred" means the Series II Convertible Preferred Stock, $.01 par
value per share, of the Company.
"Series II Securities" means, as of any time, the shares of Common Stock
theretofore issued or then issuable on conversion of the Convertible Notes and
the Series II Preferred.
2. Information Rights.
2.1 Financial Information. So long as any Convertible Notes or shares
of Series II Preferred remains outstanding, the Company will provide to each
holder of such notes or shares the following information (unless such Holder
requests in writing that the Company not provide such information):
(a) within seventy-five (75) days after the end of each fiscal year of
the Company, (i) an audited consolidated balance sheet of the Company as of the
end of such fiscal year, together with audited consolidated statements of income
and cash flows of the Company for such fiscal year, prepared in accordance with
generally accepted accounting principles ("GAAP"), together with (ii) a report
on such financial statements prepared by the Company's existing independent
certified public accountants, a "Big Five" accounting firm or other accounting
firm reasonably acceptable to the Holders;
(b) within forty-five (45) days after the end of each fiscal quarter, an
unaudited balance sheet of the Company as of the end of such fiscal quarter, and
unaudited statements of income and cash flow of the Company for such fiscal year
and the fiscal year to date, prepared in accordance with GAAP (other than for
accompanying notes, and subject to changes resulting from year-end audit
adjustments), all in reasonable detail and all certified by the Chief Financial
Officer of the Company;
(c) within thirty (30) days after the end of each fiscal month, an unaudited
balance sheet of the Company as of the end of such fiscal month, and unaudited
statements of income and cash flow of the Company for such fiscal month and the
fiscal year to date, prepared in accordance with GAAP (other than for
accompanying notes, and subject to changes resulting from year-end audit
adjustments), all in reasonable detail and all certified by the Chief Financial
Officer of the Company;
(d) within three (3) business days after the end of each week, an unaudited
consolidated statement of revenues for such week and the fiscal year to date,
prepared in accordance with GAAP (other than for accompanying notes, and subject
to changes resulting from year-end audit adjustments), all in reasonable detail
and all certified by the Chief Financial Officer of the Company;
(e) together with each of the financial statements described in paragraphs
2.1(a), 2.1(b) and 2.1(c), a corresponding narrative statement describing the
Company's operations on (i) a division or operating unit basis and (ii) a
consolidated basis and setting forth in comparative form such operations
relative to (i) the comparable period or periods for the prior year and (ii) the
budgeted figures for such period or periods;
(f) at least thirty (30) days prior to the commencement of each fiscal year
of the Company, a budget for such fiscal year, including a projected balance
sheet as of the end of such year and projected statements of income and cash
flow for such period; and
(g) within thirty (30) days after the end of each calendar month, a letter
from the Chief Executive Officer of the Company identifying key Company
operational and financial events that occurred during such month.
2.2
Inspection; Additional Information. So long as any Convertible Notes or shares
of Series II Preferred remains outstanding, the Company shall allow each Holder
of Convertible Notes or Series II Preferred to visit and inspect any of the
properties of the Company (upon reasonable advance notice, and during normal
business hours) and shall deliver or provide to each such Holder with reasonable
promptness such information and data, including access to books, records,
officers and accountants, with respect to the Company and its subsidiaries as
such Holder may from time to time reasonably request; provided, however, that
the Company shall not be obligated to so provide any information that the
Company considers in good faith to be a trade secret or to contain confidential
information.
3. Termination.
This Agreement shall terminate automatically upon the date on which neither
Convertible Notes nor shares of Series II Preferred are issued and outstanding.
4. Miscellaneous.
4.1 Waivers and Amendments. With the written consent of the Company
and the Holders who hold not less than one-half (1/2) of the Convertible Notes
and Series II Preferred then held by all Holders, voting together on the basis
of aggregate principal amount and liquidation value, the obligations of the
Company and the rights of the Holders under this Agreement may be waived (either
generally or in a particular instance, either retroactively or prospectively and
either for a specified period of time or indefinitely), and with the same
consent, the Company and the Holders may amend or otherwise modify, extend or
terminate this Agreement or enter into a supplemental agreement for the purpose
of adding any one or more provisions to this Agreement. Neither this Agreement
nor any provision hereof may be changed, waived, or terminated orally, but only
by a signed statement in writing. Any modification, waiver or supplementary
agreement effected in accordance with this Section 4.1 shall be binding upon
each Purchaser, each future Holder of any Convertible Notes or Series II
Preferred and the Company.
4.2 Assignment of Rights; Right to Enforce Agreement. The rights to which a
Holder is entitled hereunder may be assigned or otherwise transferred only to a
Person who holds $1,000,000 aggregate principal amount of Convertible
Notes, 1,000 shares of Series II Preferred or any combination thereof;
provided, however,that with respect to each such assignment or other transfer,
the Company shall be given written notice of the transfer, the transferee shall
agree in writing to be bound by the provisions of this Agreement, and
such transfer shall otherwise be effected in accordance with all applicable
securities laws and all other applicable agreements, if any, between the
Company and such Holder.
4.3 Notices. All notices and ther communications required or permitted
hereunder shall be in writing (or in the form of a telecopy (confirmed in
writing) to be given only during the recipient's normal business hours unless
arrangements have otherwise been made to receive such notice by telecopy outside
of normal business hours) and shall be mailed by registered or certified mail,
postage prepaid, or otherwise delivered by hand, messenger, or telecopy (as
provided above) addressed (a) if to any Purchaser, at the address for such
Purchaser set forth on the signature pages hereto or at such other address as
such Purchaser shall have furnished to the Company in writing, (b) if to any
Holder, at the address for such Holder in the records of the Company or such
other address as such Holder shall have furnished to the Company in writing, or
(c) if to the Company, to 3350 N.W. 2nd Avenue, Boca Raton, Florida 33431,
addressed to the attention of the Corporate Secretary (or at such other address
as the Company shall have furnished in writing to the Purchasers and Holders).
4.4 Descriptive Headings. The descriptive headings herein have been
inserted for convenience only and shall not be deemed to limit or otherwise
affect the construction of any provisions hereof.
4.5 Governing Law. This Agreement shall be governed by and interpreted
under the laws of the State of New York as applied to agreements among New York
residents, made and to be performed entirely within the State of New York.
4.6 Consent to Jurisdiction and Venue. EACH OF THE PARTIES HERETO HEREBY
IRREVOCABLY AND UNCONDITIONALLY CONSENTS TO SUBMIT TO THE EXCLUSIVE JURISDICTION
OF THE COURTS OF THE STATE OF NEW YORK AND OF THE UNITED STATES OF AMERICA, IN
EACH CASE LOCATED IN THE COUNTY OF NEW YORK, FOR ANY ACTION, PROCEEDING OR
INVESTIGATION IN ANY COURT OR BEFORE ANY GOVERNMENTAL AUTHORITY ("LITIGATION")
ARISING OUT OF OR RELATING TO THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED
HEREBY (AND AGREES NOT TO COMMENCE ANY LITIGATION RELATING THERETO EXCEPT IN
SUCH COURTS), AND FURTHER AGREES THAT SERVICE OF ANY PROCESS, SUMMONS, NOTICE OR
DOCUMENT BY REGISTERED MAIL TO ITS RESPECTIVE ADDRESS SET FORTH IN THIS
AGREEMENT SHALL BE EFFECTIVE SERVICE OF PROCESS FOR ANY LITIGATION BROUGHT
AGAINST IT IN ANY SUCH COURT. Each of the parties hereto hereby irrevocably and
unconditionally waives any objection to the laying of venue of any Litigation
arising out of this Agreement or the transactions contemplated hereby in the
courts of the State of New York or the United States of America, in each case
located in the County of New York, and hereby further irrevocably and
unconditionally waives and agrees not to plead or claim in any such court that
any such Litigation brought in any such court has been brought in an
inconvenient forum. EACH OF THE PARTIES IRREVOCABLY AND UNCONDITIONALLY WAIVES,
TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHTS TO TRIAL
BY JURY IN CONNECTION WITH ANY LITIGATION ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
4.7 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall for all purposes be deemed to be an original
and all of which shall constitute the same instrument, but only one of which
need be produced.
4.8 Facsimile Signatures. Any signature page delivered by a fax machine or
telecopy machine shall be binding to the same extent as an original signature
page, with regard to any agreement subject to the terms hereof or any amendment
thereto. Any party who delivers such a signature page agrees to later deliver
an original counterpart to any party that requires such delivery.
4.9 Expenses. If any action at law or in equity is necessary to enforce or
interpret the terms of this Agreement, the prevailing party shall be entitled to
reasonable attorney's fees, costs and necessary disbursements in addition to any
other relief to which such party may be entitled.
4.10 Successors and Assigns. Except as otherwise expressly provided in this
Agreement, this Agreement shall benefit and bind the successors, permitted
assigns, heirs, executors and administrators of the parties to this Agreement.
4.11 Entire Agreement. This Agreement constitutes the full and entire
understanding and agreement among the parties with regard to the subject matter
of this Agreement, and supersedes all prior understandings and agreements with
respect to such subject matters.
4.12 Separability; Severability. Unless expressly provided in this
Agreement, the rights of each Holder under this Agreement are several rights,
not rights jointly held with any other Holder. Any invalidity, illegality or
limitation on the enforceability of this Agreement with respect to any Holder
shall not affect the validity, legality or enforceability of this Agreement with
respect to the other Holder. If any provision of this Agreement is judicially
determined to be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not be affected or impaired.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
COMPANY: MERIDIAN USA HOLDINGS, INC.,
a Florida corporation
By: /s/ Mark Streisfeld
-----------------------
Name: Mark Streisfeld
Title: President
PURCHASERS: U.S. BANCORP INVESTMENTS, INC.
By: /s/ Jess M. Ravich
Name: Jess M. Ravich
Title: Chairman
Address: 11766 Wilshire Boulevard
Suite 870
Los Angeles, CA 90025
Attention: General Counsel
Facsimile: (310) 312-5640