Investment Agreement

EXHIBIT 10.2


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INVESTMENT AGREEMENT


DATED AS OF DECEMBER 22, 1998


AMONG


LIH HOLDINGS III, LLC
BANCBOSTON CAPITAL INC.
LIBERTY MUTUAL INSURANCE COMPANY
MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY
MASSMUTUAL CORPORATE INVESTORS
MASSMUTUAL PARTICIPATION INVESTORS
MASSMUTUAL CORPORATE VALUE PARTNERS LIMITED


AND


LUND INTERNATIONAL HOLDINGS, INC.


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TABLE OF CONTENTS


Page ARTICLE I DEFINITIONS..........................................................2
1.1 Definitions........................................................2
1.2 Certain Conventions................................................7


ARTICLE II SALE OF SHARES; CLOSING.............................................7
2.1 Purchase and Sale..................................................7
2.2 Closing............................................................8
2.3 Obligations of Purchasers Several and Not Joint....................8


ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY......................8
3.1 Organization of the Company.......................................9
3.2 Power and Authority................................................9
3.3 Capital............................................................9
3.4 Subsidiaries......................................................11
3.5 No Conflicts......................................................11
3.6 Governmental Approvals and Filings................................12
3.7 SEC Documents; Financial Statements...............................12
3.8 Absence of Changes................................................12
3.9 Legal Proceedings.................................................12
3.10 Other Negotiations; Brokers.......................................13
3.11 Exemption from Registration; Restrictions on Offer and Sale
of Same or Similar Securities.....................................13
3.12 Other Agreements..................................................14
3.13 Holding Company Act and Investment Company Act Status.............14
3.14 Stock Purchase Agreement..........................................14
3.15 Disclosure........................................................14


ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS...................14
4.1 Organization; Power and Authority.................................15
4.2 No Conflicts......................................................15
4.3 Purchase for Investment...........................................15
4.4 Brokers...........................................................16 ARTICLE V COVENANTS OF THE COMPANY............................................16
5.1 Regulatory and Other Approvals....................................16
5.2 Reservation of Shares.............................................16
5.3 Use of Proceeds...................................................17
5.4 Stockholders' Meeting.............................................17


Page
5.5 Nasdaq National Market............................................17
5.6 Notice and Cure...................................................17
5.7 Fulfillment of Conditions.........................................18


ARTICLE VI CONDITIONS TO OBLIGATIONS OF THE PURCHASERS........................18
6.1 Representations and Warranties....................................18
6.2 Performance.......................................................18
6.3 Officers' Certificates............................................18
6.4 Orders and Laws...................................................18
6.5 Regulatory Consents and Approvals.................................18
6.6 Third Party Consents..............................................19
6.7 Opinion of Counsel................................................19
6.8 Certificate of Designation........................................19
6.9 Transaction Documents.............................................19
6.10 Delivery of Certificates..........................................19
6.11 Financing.........................................................19
6.12 Consummation of the Acquisition...................................20
6.13 Nasdaq National Market............................................20
6.14 Consummation of the "closing" under the AVS Investment Agreement..20
6.15 Proceedings.......................................................20


ARTICLE VII CONDITIONS TO OBLIGATIONS OF THE COMPANY.........................20
7.1 Representations and Warranties....................................20
7.2 Performance.......................................................21
7.3 Certificate.......................................................21
7.4 Orders and Laws...................................................21
7.5 Transaction Documents.............................................21
7.6 Financing.........................................................21


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Page ARTICLE VIII SURVIVAL OF REPRESENTATIONS, WARRANTIES, COVENANTS AND
AGREEMENTS.......................................................21


ARTICLE IX INDEMNIFICATION....................................................22
9.1 Indemnification...................................................22
9.2 Method of Asserting Claims........................................22


ARTICLE X TERMINATION.........................................................24
10.1 Termination.......................................................24
10.2 Effect of Termination.............................................25


ARTICLE XI MISCELLANEOUS......................................................25
11.1 Notices...........................................................25
11.2 Entire Agreement..................................................26
11.3 Fees and Expenses.................................................26
11.4 Public Announcements..............................................27
11.5 Further Assurances................................................27
11.6 Waiver............................................................27
11.7 Amendment.........................................................27
11.8 Third Party Beneficiaries.........................................27
11.9 No Assignment; Binding Effect.....................................27
11.10 Headings; Construction............................................28
11.11 Invalid Provisions................................................28
11.12 Governing Law.....................................................28
11.13 Counterparts......................................................28
11.14 Limited Recourse..................................................29
11.15 Consent to Jurisdiction and Service of Process....................29


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EXHIBITS


Exhibit A -- Form of Second Amended and Restated Governance Agreement Exhibit B -- Form of Rights Agreement Exhibit C -- Form of Series B Certificate of Designation Exhibit D-1 -- Form of Company Officer's Certificate Exhibit D-2 -- Form of Company Secretary's Certificate Exhibit E -- Form of Opinion of Leonard, Street and Deinard Exhibit F -- Form of Closing Certificate for each Purchaser


SCHEDULES


Schedule I -- Purchased Securities; Purchase Price; Address for Notices Schedule 3.3 -- Capital of Company Schedule 3.5 -- No Conflicts Schedule 3.8 -- Absence of Changes Schedule 4.1 -- Purchaser's Entity and Jurisdiction


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INVESTMENT AGREEMENT dated as of December 22, 1998, among LIH HOLDINGS III, LLC, a Delaware limited liability company ("LIH Holdings III"), MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY, a Massachusetts corporation ("MassMutual"), MASSMUTUAL CORPORATE INVESTORS, a Massachusetts business trust ("MMCI"), MASSMUTUAL PARTICIPATION INVESTORS, a Massachusetts business trust ("MMPI") and MASSMUTUAL CORPORATE VALUE PARTNERS LIMITED, a Cayman Islands corporation ("MMCVP"; MassMutual, MMCI, MMPI and MMCVP being hereinafter collectively referred to as the "MassMutual Entities"), Liberty Mutual Insurance Company, a Massachusetts corporation ("Liberty Mutual"), and BancBoston Capital Inc., a Massachusetts corporation ("BancBoston"; LIH Holdings III, the MassMutual Entities, Liberty Mutual and BancBoston being hereinafter collectively referred to as the "Purchasers"), and LUND INTERNATIONAL HOLDINGS, INC., a Delaware corporation (the "Company").


WHEREAS, (a) LIH Holdings, LLC, a Delaware limited liability company ("LIH Holdings I"), is presently an Affiliate of LIH Holdings III and the owner of 1,686,893 shares of the Common Stock, par value $0.10 per share (the "Common Stock"), of the Company and (ii) LIH Holdings II, LLC, a Delaware limited liability company ("LIH Holdings II"), is presently an Affiliate of LIH Holdings III and the owner of 874,400 shares of Common Stock and 1,493,398 shares of the Class B-1 Common Stock (the "Class B-1 Common Stock"), of the Company;


WHEREAS, the Company anticipates entering into a Stock Purchase Agreement (as the same may be amended, supplemented or otherwise modified from time to time in accordance with the provisions thereof, the "Stock Purchase Agreement"), whereby the Company agrees, subject to the conditions therein contained, to acquire (the "Acquisition"), all the outstanding capital stock of SmittyBilt, Inc. (the "Target") for a cash purchase price equal to $18 million;


WHEREAS, in order to provide a portion of the funds required for the Acquisition, on the terms and subject to the conditions set forth herein, the Company desires to sell to the Purchasers, and each of the Purchasers desires to purchase from the Company, in the aggregate, 316,056 shares of Common Stock and 39,822.9 shares of Series B Preferred Stock, par value $.01 per share (the "Series B Preferred Stock"), of the Company, all for an aggregate purchase price equal to $5,000,000 (the "Aggregate Purchase Price");


WHEREAS, in order to provide the balance of the funds required for the Acquisition, the Company has entered into (i) the Heller Credit Agreement dated as of December __, 1998 between the Company and Heller Financial, Inc. (as the same may be amended, supplemented or otherwise modified from time to time in accordance with the provisions thereof, the "Heller Credit Agreement") and (ii) each of the Securities Purchase Agreements dated as of December __, 1998 between the Company, certain of its subsidiaries, each of the MassMutual Entities and National City Venture Corporation, a Delaware corporation (as the same may be amended, supplemented or otherwise modified from time to time in accordance with the provisions thereof, collectively, the "Securities Purchase Agreements"); and


WHEREAS, the amount of the aforementioned securities to be purchased by each Purchaser pursuant hereto and the portion of the Aggregate Purchase Price to be paid by such Purchaser therefor are as set forth opposite such Purchaser's name in Schedule I.


NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth in this Agreement, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:


ARTICLE I


DEFINITIONS


1.1 Definitions. As used in this Agreement, the following defined terms shall have the respective meanings indicated below:


"Acquisition" has the meaning ascribed to it in the recitals hereto.


"Actions or Proceeding" means any action, suit, proceeding, arbitration or Governmental or Regulatory Authority investigation or audit.


"Aggregate Purchase Price" has the meaning ascribed to it in the recitals hereto.


"Affiliate" means, as applied to any Person, (i) any other Person directly or indirectly controlling, controlled by or under common control with that Person, (ii) any other Person that owns or controls 5% or more of any class of equity securities (including any equity securities issuable upon the exercise of any Option) of that Person or any of its Affiliates, or (iii) any member, director, partner, officer, agent, employee or relative of that Person. For the purposes of this definition, "control" (including with correlative meanings, the terms "controlling", "controlled by", and "under common control with"), as applied to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of that Person, whether through ownership of voting securities or by Contract or otherwise. For the purpose of this Agreement, (i) none of the Purchasers, LIH Holdings I, LIH Holdings II or any of their respective Affiliates (other than the Company and its Subsidiaries) shall be deemed to be "Affiliates" of the Company or any Subsidiary and (ii) neither the Company nor any Subsidiary shall be deemed to be an "Affiliate" of any Purchaser, LIH Holdings I, LIH Holdings II or any of their respective Affiliates (other than the Company and its Subsidiaries).


"Agreement" means this Investment Agreement and the Schedules and Exhibits hereto and the certificates delivered in connection herewith, as the same may be amended, supplemented or otherwise modified from time to time in accordance with the provisions hereof.


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"Amended and Restated Governance Agreement" means the Second Amended and Restated Governance Agreement, dated as of the date hereof, among the LIH Entities and the Company, substantially in the form of Exhibit A, as the same may be amended, supplemented or otherwise modified from time to time in accordance with the provisions thereof.


"Assets and Properties" of any Person means all assets and properties of every kind, nature, character and description (whether real, personal or mixed, whether tangible or intangible, whether absolute, accrued, contingent, fixed or otherwise and wherever situated), including the goodwill related thereto, operated, owned or leased by such Person, including cash, cash equivalents, accounts and notes receivable, chattel paper, documents, instruments, general intangibles, real estate, equipment, inventory, goods and intellectual property.


"AVS Investment Agreement" means the Investment Agreement, dated as of December 22, 1998, among the Company and the Purchasers, as the same may be amended, supplemented or otherwise modified from time to time in accordance with the provisions thereof.


"BancBoston" has the meaning ascribed to it in the introductory paragraph hereto.


"Business Day" means a day other than Saturday, Sunday or any day on which banks located in the State of New York or the State of Minnesota are authorized or obligated to close.


"Business or Condition of the Company" means the business, condition (financial or otherwise), results of operations, and Assets and Properties of the Company and the Subsidiaries, taken as a whole.


"Charter" means the Certificate of Incorporation of the Company, as amended, after giving effect to the filing of the Series B Certificate of Designation with the Secretary of State of the State of Delaware.


"Claim Notice" has the meaning ascribed to it in Section 9.2(a).


"Class B Common Stock" has the meaning ascribed to it in Section 3.3.


"Class B-1 Common Stock" has the meaning ascribed to it in the recitals hereto.


"Closing" means the closing of the transactions contemplated by Section 2.2.


"Closing Date" means the date on which the Closing actually occurs.


"Common Stock" has the meaning ascribed to it in the recitals hereto.


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"Company" has the meaning ascribed to it in the introductory paragraph hereto.


"Contract" means any agreement, lease, debenture, note, evidence of Indebtedness, mortgage, indenture, security agreement or other contract or commitment (whether written or oral).


"Dispute Period" means the period ending 30 calendar days following receipt by an Indemnifying Party of an Indemnity Notice.


"Exchange Act" means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated by the SEC thereunder.


"Financial Statement Date" means June 30, 1998.


"Financing Agreements" means the Heller Credit Agreement and the Securities Purchase Agreements.


"GAAP" means United States generally accepted accounting principles, consistently applied throughout the specified period and all prior comparable periods.


"Governmental or Regulatory Authority" means any court, tribunal, authority, agency, commission, official or other instrumentality of the United States, any foreign country or any domestic or foreign state, county, city or other political subdivision, any arbitrator or panel of arbitrators, any stock exchange or quotation service, and the National Association of Securities Dealers.


"Heller Credit Agreement" has the meaning ascribed to it in the recitals hereto.


"HSR Act" means the Hart-Scott-Rodino Antitrust Improvement Act of 1976, as amended, and the rules and regulations promulgated thereunder.


"Indebtedness" of any Person means all obligations of such Person (i) for borrowed money, (ii) evidenced by notes, bonds, debentures or similar instruments, (iii) for the deferred purchase price of goods or services (other than trade payables or accruals incurred in the ordinary course of business), (iv) under capital leases, (v) as an account party in respect of letters of credit and similar instruments and (vi) in the nature of guarantees of the obligations described in clauses (i) through (v) above of any other Person.


"Indemnified Party" has the meaning ascribed to it in Section 9.1.


"Indemnifying Party" has the meaning ascribed to it in Section 9.1.


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"Indemnity Notice" has the meaning ascribed to it in Section 9.2(c).


"Laws" means all laws, statutes, rules, regulations, ordinances and other pronouncements having the effect of law of the United States, any foreign country or any domestic or foreign state, county, city or other political subdivision or of any Governmental or Regulatory Authority.


"Liberty Mutual" has the meaning ascribed to it in the introductory paragraph hereto.


"Liens" means any mortgage, pledge, assessment, security interest, lease, lien, adverse claim, levy, charge or other encumbrance of any kind, or any conditional sale Contract, title retention Contract or Contract committing to grant any of the foregoing.


"LIH Entities" means LIH Holdings I, LIH Holdings II and LIH Holdings III, collectively.


"LIH Holdings I" has the meaning ascribed to it in the recitals hereto.


"LIH Holdings II" has the meaning ascribed to it in the recitals hereto.


"LIH Holdings III" has the meaning ascribed to it in the introductory paragraph hereto.


"Loss" means any and all damages, fines, fees, penalties, deficiencies, losses and expenses, including interest, reasonable expenses of investigation, court costs, reasonable fees and expenses of attorneys, accountants and other experts and other expenses associated with litigation or other proceedings or with any claim, default or assessment (such fees and expenses to include all fees and expenses, including the reasonable fees and expenses of attorneys, incurred in connection with (i) the investigation or defense of any Third Party Claims or (ii) asserting or disputing any rights under this Agreement or any Transaction Document against the Company and any party hereto or otherwise). As applied to any Purchaser, "Loss" shall also be deemed to include any indemnifiable claim of any Purchaser hereunder and any diminution in the value of the Purchased Securities being purchased by such Purchaser hereunder (or any successor securities).


"MassMutual" has the meaning ascribed to it in the introductory paragraph hereto.


"MassMutual Entities" has the meaning ascribed to it in the introductory paragraph hereto.


"MMCI" has the meaning ascribed to it in the introductory paragraph hereto.


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"MMCVP" has the meaning ascribed to it in the introductory paragraph hereto.


"MMPI" has the meaning ascribed to it in the introductory paragraph hereto.


"Option" with respect to any Person means any security, right, subscription, warrant, option, "phantom" stock right or other Contract that gives the right to (i) purchase or otherwise receive or be issued any shares of capital stock or other equity interests of such Person or any security of any kind convertible into or exchangeable or exercisable for any shares of capital stock or other equity interests of such Person or (ii) receive any benefits or rights similar to any rights enjoyed by or accruing to the holder of shares of capital stock or other equity interests of such Person, including any rights to participate in the equity, income or election of directors, management committee members or officers of such Person.


"Order" means any writ, judgment, decree, injunction or similar order of any Governmental or Regulatory Authority (in each case whether preliminary or final).


"Person" or "person" means any individual, corporation, joint stock corporation, limited liability company or partnership, general partnership, limited partnership, proprietorship, joint venture, other business organization, trust, union, association, Governmental or Regulatory Authority or other entity of any kind.


"Preferred Stock" has the meaning ascribed to it in Section 3.3.


"Purchase Price" means, with respect to each Purchaser, the dollar amount (representing a portion of the Aggregate Purchase Price) set forth opposite such Purchaser's name in Schedule I.


"Purchased Securities" means, with respect to each Purchaser, the shares of Common Stock and Series B Preferred Stock to be purchased by such Purchaser pursuant to Section 2.1.


"Purchasers" has the meaning ascribed to it in the introductory paragraph hereto.


"Resolution Period" means the period ending 30 calendar days following receipt by an Indemnified Party of a Dispute Notice.


"Rights Agreement" means the Rights Agreement to be entered into as of the Closing Date by LIH Holdings I, LIH Holdings II, the Purchasers, the Company and the other parties thereto substantially in the form of Exhibit B, as the same may be amended, supplemented or otherwise modified from time to time in accordance with the provisions thereof.


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"SEC" means the Securities and Exchange Commission.


"SEC Document" has the meaning ascribed to it in Section 3.7.


"Securities Act" means the Securities Act of 1933, as amended, and the rules and regulations promulgated by the SEC thereunder.


"Securities Purchase Agreements" has the meaning ascribed to it in the recitals hereto.


"Series B Preferred Stock" has the meaning ascribed to it in the recitals hereto.


"Series B Certificate of Designation" means the Certificate of Designation with respect to the Series B Preferred Stock, substantially in the form of Exhibit C, to be filed with the Secretary of State of the State of Delaware prior to the Closing.


"Stock Purchase Agreement" has the meaning ascribed to it in the recitals hereto.


"Subsidiary" means any Person in which the Company, directly or indirectly through one or more Subsidiaries or otherwise, beneficially owns more than 50% of either the equity interests in, or the voting control of, such Person.


"Target" has the meaning ascribed to it in the recitals hereto.


"Third Party Claim" has the meaning ascribed to it in Section 9.2(a).


"Transaction Documents" means the Amended and Restated Governance Agreement, the Rights Agreement and any support or other agreement to be entered into by two or more of the parties hereto in connection with the transactions contemplated by this Agreement.


1.2 Certain Conventions. Unless the context of this Agreement otherwise requires, (i) words of any gender include the other gender, (ii) words (other than Purchaser) using the singular or plural number also include the plural or singular number, respectively, (iii) the terms "hereof," "herein," "hereby" and derivative or similar words refer to this entire Agreement, (iv) the terms "Article" and "Section" refer to the specified Article or Section of this Agreement, (v) the words "include", "includes" and "including" shall be deemed to be followed by the phrase "without limitation", and (vi) the phrases "ordinary course of business" and "ordinary course of business consistent with past practice" refer to the business and practice of the Company or a Subsidiary. All accounting terms used herein and not expressly defined herein shall have the respective meanings given to them under GAAP.


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ARTICLE II


SALE OF SHARES; CLOSING


2.1 Purchase and Sale. At the Closing, on the terms and subject to the conditions of this Agreement, the Company shall issue and sell to each Purchaser, and each Purchaser shall purchase from the Company, the shares of Common Stock and Series B Preferred Stock set forth opposite such Purchaser's name in Schedule I, free and clear of all Liens, for an aggregate purchase price (payable in cash in the manner provided in Section 2.2) equal to the Purchase Price with respect to such Purchaser.


2.2 Closing. The Closing will take place at such location as LIH Holdings III and the Company mutually agree on the first Business Day as of which each of the conditions precedent set forth in Article VI and Article VII shall have been satisfied or waived as ...