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Exhibit 4.08
EMC HOLDINGS, INC.
EXCHANGE AND REPURCHASE AGREEMENT
As of _________________
To the Undersigned Holder of Shares
(as such term is hereinafter defined)
Dear Holder:
EMC Holdings, Inc., a Delaware corporation ("Holdings"), hereby agrees with
you as follows:
1. Certain Definitions and Conventions.
(a) For the purposes of this Agreement, unless otherwise defined herein or
the context in which any such term is used clearly requires otherwise, the
following terms have the following meanings, respectively:
"Act" means the Securities Act of 1933, as amended.
"Adjusted Consolidated EBIT" means the Consolidated EBIT calculated as of
the end of Holdings' most recent fiscal year, adjusted by adding thereto any
amounts deducted from Holdings' revenues in determining such Consolidated EBIT
in respect of (i) amortization of the Original Recapitalization Premium and the
Current Recapitalization Premium, (ii) contributions by Holdings to the ESOP
and/or payment by Holdings of dividends on Shares held by the ESOP and (iii)
stock options granted to any Holdings' employee under any Holdings
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employee Stock option or similar plan or to any member of the Compensation
Committee.
"Adjusted Purchase Price" of any Share owned by you means (i) $1.2899433 per
Share with respect to all Shares owned by you immediately following the Closing
or (ii) with respect to all Shares acquired by you thereafter, the original per
share purchase price paid by you for such Share, as appropriately adjusted to
reflect any stock dividends, stock splits, reverse stock splits,
recapitalizations or similar events occurring subsequent to the date of this
Agreement.
"Affiliate" with respect to any Person means any Person, directly or
indirectly controlling, controlled by, or under common control with, such
Person. For the purpose of this definition, "control" (including, with
correlative meanings, the term "controlling," "controlled by," and "under
common control with"), as used with respect to any Person, shall mean the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, whether through the
ownership of voting securities or by contract or otherwise.
"Business Day" means any day other than a Saturday, Sunday or other day on
which banks are authorized to be closed in New York City or Pittsburgh,
Pennsylvania.
"Cause" when used in connection with the termination of your employment with
Holdings or any subsidiary thereof means (i) your willful failure substantially
to perform and discharge
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your duties and responsibilities as an employee of Holdings or any subsidiary
thereof, other than by reason of your Incapacity or (ii) the engaging by you in
serious misconduct which is injurious to Holdings or any subsidiary thereof.
"Class A Shares" means Holdings' Class A Common Stock, without par value.
"Class B Shares" means Holdings' Class B Common Stock, without par value.
"Class C Shares" means Holdings' Class C Common Stock, par value $0.10 per
share.
"Closing" means the consummation of all transactions contemplated to occur
in connection with the Current Recapitalization.
"Closing Date" means October 26, 1989.
"Commission" means the U.S. Securities and Exchange Commission and any
successor federal agency having similar powers.
"Common Stock Subscription Agreement" means that Agreement, if any, pursuant
to which you subscribed for shares of Holdings in connection with the Original
Recapitalization.
"Compensation Committee" means the Compensation Committee of the Board of
Directors of Holdings.
"Compounded Adjusted Purchase Price" means, with respect to any Share, the
Adjusted Purchase Price of such Share as of the Date of Termination, plus
interest thereon from the date of acquisition of such shares by you to the Date
of
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Termination compounded annually on each July 1st at an interest rate per annum
equal to the Prime Rate in effect on each July 1st (or the next succeeding
Business Day if such day is not a Business Day).
"Consolidated" means the consolidation of the accounts of Holdings and its
subsidiaries in accordance with GAAP.
"Consolidated EBIT" means Holdings' Consolidated earnings before interest
and taxes determined with reference to Holdings' audited income statement for
the pertinent fiscal year.
"Consolidated Net Debt" means, for any period, on a Consolidated basis, the
difference between (a) Holdings' Indebtedness for Borrowed Money and (b) all
cash and cash equivalents held by Holdings and its subsidiaries, including any
amounts held in cash collateral or escrow accounts by another Person on behalf
of Holdings or any of its subsidiaries.
"Convertible Preferred Stock" means Holdings' 10.19% Convertible Preferred
Stock as authorized by the Second Restated Certificate of Incorporation and the
action of Holdings' Board of Directors.
"Current Recapitalization" means the Exchange Offer, the merger of Holdings
and EMC Recapitalization, Inc. and the concurrent restructuring of Holdings'
capital stock and the other transactions to be accomplished as described in the
Information Statement.
"Current Recapitalization Premium" means the excess of (a) the sum of (i)
the aggregate amount of (x) cash paid by the
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ESOP Trustee on the Closing Date for 170,075 shares of the Convertible
Preferred Stock and 3,685,604 Class A Shares, (y) cash and the value of the
Class B Shares distributed by Holdings to the holders of such stock in
connection with the Current Recapitalization and (z) cash paid by the
Institutional Investors for the Warrants and (ii) the aggregate amount of
expenses incurred by Holdings which are directly attributable to the Current
Recapitalization and related transactions over (b) the amount of stockholders'
equity and deferred taxes appearing on the Consolidated balance sheet of
Holdings at the time immediately preceding the Closing Date.
"Date of Termination," when used in connection with the termination of your
employment with Holdings or any subsidiary thereof, means, with respect to
termination of your employment (i) as a result of your death, the date of your
death, (ii) by Holdings or any subsidiary thereof, the date specified in a
written notice of termination to you or, if no date is specified therein, the
date on which such notice is given to you, (iii) by you, the date specified in
a written notice of termination to Holdings or any subsidiary thereof, or if no
date is specified therein, the date on which such notice is given to Holdings
or such subsidiary, (iv) as a result of your retirement at or after the Normal
Retirement Age, the date you cease your employment with Holdings or any
subsidiary thereof and (v) as a result of your Incapacity, on the date you
first become entitled to receive
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benefits under any long-term disability plan maintained by Holdings or its
subsidiaries.
"EMC" means Education Management Corporation, a Pennsylvania corporation.
"ESOP" means the EMC Holdings, Inc. Employee Stock ownership Plan.
"ESOP Trustee" means Marine Midland Bank, N.A., in its capacity as Trustee
of the ESOP.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Exchange Offer" means the offer made by Holdings pursuant to the
Information Statement to issue certain Class C Shares in exchange for surrender
of certain Class A Shares held by the Management Stockholders.
"Executive Officer of Holdings" means the Chairman, the President, any
Executive Vice President, any Senior Vice President, or any Vice President in
charge of a principal business unit, division or function (such as sales,
administration or finance) of Holdings, or any other officer who performs a
policymaking function. Executive officers of subsidiaries of Holdings may be
deemed to be Executive Officers of Holdings if they perform such policymaking
functions for Holdings.
"Fair Market Value" of any Share means (i) so long as the ESOP is in
existence and is required to obtain appraisals of its capital stock, the most
recent value of the Shares as
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determined by the most recent such appraisal or (ii) if there is no such
appraisal of the Shares, a price equal to the quotient obtained by dividing (a)
the difference between (1) the product of (A) the Adjusted Consolidated EBIT
and (B) seven and (2) the Consolidated Net Debt determined as of the end of
Holdings' most recent fiscal year by (b) the number of Shares (on a fully
diluted basis) as of the date of determination.
"GAAP" shall mean generally accepted accounting principles which shall
include, but not be limited to, the official interpretations thereof as defined
by the Financial Accounting Standards Board, its predecessors and its
successors.
"Holdings" has the meaning set forth in the introduction to this Agreement.
"Holdings Capital Stock" means the Class A Shares, the Class B Shares, the
Class C Shares, the Convertible Preferred Stock and any other shares of capital
stock of Holdings hereafter authorized.
"Holdings Common Stock" means the Class A Shares, the Class B Shares and the
Class C Shares and any other shares of capital stock of Holdings classified as
common stock hereafter authorized.
"Incapacity" as used herein refers to any disability that you may experience
that entitles you to benefits under any long-term disability plan maintained by
Holdings or any of its subsidiaries.
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"Indebtedness for Borrowed Money" as applied to any Person means the
liabilities of such Person for money borrowed or credit received (other than
trade accounts payable incurred in the ordinary course of business), direct or
contingent, whether evidenced by a bond, note, debenture, capitalized lease
obligation, deferred purchase price arrangement, title retention device,
reimbursement agreement, guarantee, book entry or otherwise.
"Information Statement" means Holdings' Proxy and Information Statement
delivered in connection with the Current Recapitalization.
"Management Holders" means the Management Stockholders and each of their
successors, assigns and transferees.
"Management Incentive Stock Option Agreement" means that Agreement, if any,
pursuant to which you were granted options with respect to certain capital
stock of Holdings in connection with the Original Recapitalization.
"Management Stockholders" is used herein as defined in the Stockholders
Agreement.
"Merger Agreement" means the Agreement of Merger and Plan of
Recapitalization between Holdings and EMC Recapitalization, Inc.
"Normal Retirement Age" means the attainment of age 65 while in the employ
of Holdings or any subsidiary thereof.
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"Original Recapitalization" means the purchase by Holdings of all the shares
of common stock of EMC and all related transactions.
"Original Recapitalization Premium" means the excess of (a) the total cash
and other consideration paid by Holdings for all of the shares of EMC common
stock, plus the total expenses incurred by Holdings in connection with the
Original Recapitalization, over (b) the net book value of the assets acquired,
as determined by procedures in accordance with GAAP consistently applied for
the application of "purchase accounting" to the Original Recapitalization.
"Permitted Transferee" with respect to you means (i) while you are living,
your spouse, parents or issue or a trust the beneficiaries of which are limited
to you, your estate, spouse, parents and/or issue and (ii) after your death,
your executors, administrators, testamentary trustees, legatees or
beneficiaries.
"Person" means an individual, a partnership, a joint venture, a corporation,
a trust, an unincorporated organization or a government or any department or
agency thereof.
"Prime Rate" means the rate of interest announced publicly by Pittsburgh
National Bank in Pittsburgh from time to time as its prime rate, corporate base
rate, or other designation announced in replacement of such rate.
"Public Distribution" means a Public Offering of Holdings Common Stock at
the conclusion of which (i) Holdings is
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required to register shares of Holdings Common Stock under Section 12(b) or (g)
of the Exchange Act and (ii) at least 25% of the outstanding Holdings Common
Stock shall have been sold to the public pursuant to one or more effective
registration statements under the Act.
"Public Offering" means a public offering of securities of Holdings pursuant
to an effective registration statement under the Act.
"Repurchase" means any repurchase of Shares by Holdings pursuant to Section
10 hereof.
"Second Restated Certificate of Incorporation" means the amended and
restated certificate of incorporation of Holdings that will, among other
things, authorize the issuance of (i) one or more series of preferred stock
upon such terms as may be established by Holding's Board of Directors from time
to time and (ii) a new class of common stock, designated as Class C Common
Stock.
"Senior Credit Agreement" means the $52,500,000 Credit Agreement among
Holdings, Pittsburgh National Bank and the other banks party thereto.
"Senior Indebtedness" means (i) indebtedness for borrowed money (including,
without limitation, that incurred pursuant to the Senior Credit Agreement and
the Subordinated Credit Agreement), (ii) the current portion of any deferred
purchase price of property or services, (iii) the current portion of
obligations for the payment of rent as lessee under leases
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which are or should be, in accordance with GAAP, recorded as capital leases,
(iv) current matured, non-contingent obligations under direct or indirect
guaranties in respect of, and obligations (contingent or otherwise) to purchase
or otherwise acquire, or otherwise to assure a creditor against loss in respect
of, indebtedness or obligations of others of the kinds referred to in clauses
(i), (ii) or (iii) above, and (v) obligations of the types referred to in
clauses (i), (ii), (iii) or (iv) above which are secured by any lien, security
interest or Other charge or encumbrance upon or in-property (including, Without
limitation, accounts and contract rights) owned by Holdings, even though
Holdings has not assumed or become liable for the payment of such Indebtedness.
"Shares" means, collectively, all shares of any class of Holdings Capital
Stock, including any shares of Holdings capital Stock which may have been
issued or distributed in respect of any shares of any class of Holdings Capital
Stock by way of stock dividend or stock split or other distribution,
recapitalization or reclassification.
"Stockholders Agreement" means the Stockholders Agreement among Holdings,
Xxxxxxx Xxxxx Interfunding, Inc., the ESOP and the Persons listed on the
Schedule of Stockholders attached thereto.
"Stockholder Designation" means the Stockholder Designation attached as
Exhibit A hereto.
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"Subordinated Credit Agreement" means the Note and Warrant Purchase
Agreement between Holdings, Northwestern Mutual Life Insurance Company and AIG
Global Investors, Inc.
"Third Party" means any Person other than (i) any party to this Agreement or
any Affiliate of any such party and (ii) any Permitted Transferee.
"Third Party Offer" has the meaning set forth in Section 9 hereof.
"Third Restated Certificate of Incorporation" means the Third Amended and
Restated Certificate of Incorporation of Holdings which, on or prior to the
Closing Date, in connection with the Current Recapitalization, shall have been
approved and adopted by the Board of Directors of Holdings and the requisite
percentage of the holders of Holdings' Capital Stock entitled to vote thereon
and filed with the Secretary of State of the State of Delaware.
"Transfer" has the meaning set forth in Section 8(b) hereof.
"Warrants" is used herein as defined in the subordinated Credit Agreement.
(b) Pursuant to the last sentence of Section 8(b) hereof, following any
valid Transfer to any Permitted Transferee, the terms "you" and "your", as used
herein, shall include or refer only to, as the case may be, such Permitted
Transferee.
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2. Representations, Warranties and Covenants of Holdings. Holdings
represents, warrants and covenants that:
(a) Holdings is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware; and Holdings has all
requisite corporate power and authority to enter into and perform all of its
obligations under this Agreement.
(b) Neither Holdings, nor any Person acting on its behalf, has taken or
will take any action that would make unavailable such exemptions from
registration under the Act on which Holdings is relying in connection with the
Current Recapitalization or the issuance or exchange on the Closing Date of any
Shares.
3. Investment Representations; Other Representations and Warranties by You.
You represent and warrant that:
(a) You have received and read the Information Statement. There has been
made available to you a reasonable time prior to your execution and delivery
hereof in order to provide an opportunity for you to ask questions and receive
answers concerning the terms and conditions of your participation in the
Current Recapitalization and to obtain any additional information which
Holdings or EMC possesses or can acquire without unreasonable effort or
expense. You have received all additional information that was requested.
(b) You have been advised that none of Holdings Common Stock has been
registered under the Act or any state securities
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or "blue sky" laws, and, therefore, cannot be resold unless (A) such stock is
registered under the Act or under any applicable state securities or "blue sky"
laws and/or (B) an exemption from registration thereunder is available.
(c) Your acquisition of Shares in connection with the Current
Recapitalization is for your own account, for investment only, and not with a
view to or for resale of any Holdings securities presently held or to be
exchanged or acquired by you in connection with the Current Recapitalization,
and you have no present intention of distributing or reselling any thereof,
except as otherwise provided herein and as described in the Information
Statement. In making the foregoing representation, you are aware that you must
bear the economic risk of such investment for an indefinite period of time.
(d) You have such knowledge and experience in financial and business
matters that you are capable of evaluating the merits and risks of your
participation in the Current Recapitalization.
(e) You are aware of and familiar with the prohibitions, restrictions and
limitations imposed on Holdings by the Senior Credit Agreement and the
Subordinated Credit Agreement, including, without limitation, those
prohibitions, restrictions and limitations which may prohibit, restrict or
limit Holdings' ability to repurchase any Shares, whether pursuant to this
Agreement or otherwise, or to waive, change, modify or discharge this
Agreement.
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(f) You are aware of and familiar with the restrictions imposed on the
transfer by you of any Shares, including, without limitation, the restrictions
contained in this Agreement and in the Stockholders Agreement, and the rights
of Holdings and others under this Agreement and under the Stockholders
Agreement in connection with transfers of Shares by you.
(g) You are aware of and familiar with the provisions of the Stockholders
Agreement and exhibits thereto relating to the management of Holdings and EMC.
(h) You acknowledge that Holdings is entering into this Agreement in
reliance upon your representations and warranties made in this Agreement,
including, without limitation, those set forth in this Section.
(i) You have full right, power and authority to execute and deliver this
Agreement and any and all other documents or instruments to be executed and
delivered by you in connection with the Current Recapitalization and this
Agreement and all such other documents and instruments are valid, binding and
enforceable against you in accordance with their terms, except that the
enforceability thereof may be limited by applicable bankruptcy, insolvency or
other similar laws relating to or affecting creditors' rights generally and by
general equitable principles, regardless of whether such enforceability is
considered in a proceeding in equity or at law.
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(j) You hereby confirm that the representations and warranties made by you
in your Common Stock Subscription and Repurchase Agreement, if any, and/or
Management Incentive Stock Option Agreement, if any, were true and correct as
of the date on which they were made.
4. Sale and/or Exchange of Shares and/or Options. Pursuant to the Second
Restated Certificate of Incorporation, the Information Statement, the Merger
Agreement and the Third Restated Certificate of Incorporation, all as described
in the Information Statement, at the Closing, you will have:
(a) received, in exchange for a like number of the Class A Shares set
forth at Item 2 of the Stockholder Designation, the number of Class C Shares
set forth at Item 3 of the Stockholder Designation;
(b) sold the number of Class A Shares set forth at Item 4 of the
Stockholder Designation to (i) Holdings for the cash consideration set forth at
Item 5 of the Stockholder Designation and (ii) the ESOP for the cash
consideration set forth at Item 6 of the Stockholder Designation;
(c) relinquished your rights to all or a portion of your options, if any,
to purchase Class B Shares to Holdings in exchange for the payment by Holdings
of the consideration set forth at Item 7 of the Stockholder Designation;
(d) (i) converted your options to purchase Class B Shares, if any, not
relinquished to Holdings as described in Section 4(c) into options to purchase
Class C Shares,
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(ii) exercised such options to purchase Class C Shares and (iii) received the
number of Class C Shares set forth at Item 8 of the Stockholder Designation;
and
(e) converted all Class C Shares set forth at Items 3 and 8 of the
Stockholder Designation into the number of Class B Shares and the amount of
cash set forth at Items 9 and 10, respectively, of the Stockholder Designation.
In consideration of payments to be received by you in connection with the
Current Recapitalization, and for other good and valuable consideration, you,
on behalf of yourself and your representatives, successors and assigns, do
hereby unconditionally release and discharge Holdings and each of its
Affiliates, stockholders, officers, employees and agents, of and from any and
all claims (whether for money, stock or otherwise), actions, demands, payments,
penalties, debts, damages or any other amounts arising out of or relating in
any way to your benefits under the EMC Holdings, Inc. Management Stock Option
Plan (adopted effective as of July 1, 1988).
5. Delivery of Documents. In connection with your participation in the
Current Recapitalization, on or prior to the Closing, you shall have delivered
all documents required to be delivered under the Information Statement in order
for you to accept the Exchange Offer and such other documents as Holdings
reasonably may request.
6. Conditions to Purchase and/or Exchange of Shares. Holdings' obligations
under the transactions described in
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Section 4 are subject to the fulfillment to Holdings' satisfaction at or prior
to the Closing of the following conditions:
(a) Your representations and warranties contained in this Agreement shall
be true and correct when made and at and as of the Closing Date.
(b) You shall have performed and complied with all agreements and
conditions contained in this Agreement required to be performed or complied
with by you on or prior to the Closing, including, without limitation, the
delivery of the documents and instruments described in Section S of this
Agreement.
(c) All of the conditions to the Closing under all agreements executed and
delivered in connection with the Current Recapitalization shall have been
satisfied or waived.
7. No Implied Right to Employment. Neither this Agreement nor any
provision hereof nor any action taken or omitted to be taken hereunder shall be
deemed to create or confer upon you any right to be retained in the employ of
Holdings or any subsidiary or other Affiliate thereof.
8. Transfer Restrictions.
(a) General. You hereby agree that any and all Shares held by you after
the Closing will be subject to the terms and conditions of this Agreement and
the Stockholders Agreement. You will not, directly or indirectly, offer, sell,
pledge, hypothecate, transfer, assign or otherwise dispose of or solicit any
offers to purchase, or otherwise acquire or take, or pledge
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(collectively for purposes of Sections 8 and 9 hereof only, "Transfer") any
Shares owned by you to any Person whom you know, or after reasonable inquiry
should know, has been convicted of a felony which, due to its nature or
notoriety, reflects or would reflect adversely upon Holdings or any subsidiary
thereof or which has resulted in the incarceration of such Person for 30 days
or more (unless such conviction is reversed in any final appeal thereof).
(b) Restrictions Prior to Public Distribution. Prior to a Public
Distribution, you may Transfer any Shares owned by you to Holdings or, if such
right is assigned to the ESOP pursuant to the Stockholders Agreement, to the
ESOP. In addition, you may at any time Transfer any of your Shares to a
Permitted Transferee, or otherwise in accordance with the provisions of the
Stockholders Agreement. Each Permitted Transferee may further Transfer any
Shares acquired by such Permitted Transferee to any other Permitted Transferee.
No Transfer to any Permitted Transferee hereunder shall be valid unless and
until such Permitted Transferee shall agree in writing, in form and substance
reasonably satisfactory to Holdings, to become bound, and becomes bound, by the
terms of this Agreement and the Stockholders Agreement applicable to you.
Following any Transfer to a Permitted Transferee, except as otherwise expressly
provided herein, such Permitted Transferee shall have all rights accorded to
and shall be subject to all obligations applicable to you
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hereunder, including without limitation rights and obligations attendant with
any Repurchase.
(c) Restrictions following Public Distribution. Subsequent to any Public
Distribution, any Shares owned by you may be Transferred subject, however, to
(i) all rights of Holdings hereunder and under the Stockholders Agreement and
(ii) compliance with Section 8(e) hereof.
(d) Legend. You agree that prior to any Public Distribution, the
certificate or certificates representing any Shares held by you shall bear the
following legend (with any blanks therein appropriately completed):
The securities represented by this certificate were issued without
registration under the Securities Act of 1933 and any applicable state
securities and "blue sky" laws, and in reliance upon the holder's
representation that such securities were being acquired for investment and
not for resale. No transfer of such securities may be made on the books of
the issuer unless accompanied by an opinion of counsel, satisfactory to the
issuer, that such transfer may properly be made without registration under
the Securities Act of 1933 or that such securities have been so registered
under a registration statement which is in effect at the date of such
transfer.
The securities represented by this certificate are also subject to the
restrictions on transfer contained in the Exchange and Repurchase Agreement,
dated as of , 1989, and in the Stockholders Agreement, dated as of
, 1989, copies of each of which may be obtained from the issuer, as well as
the rights of the issuer and certain of its stockholders under such
Stockholders Agreement. No transfer of such securities will be made on the
books of the issuer unless accompanied by evidence reasonably satisfactory
to the issuer of compliance with the terms of each of such Agreements.
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(e) Securities Law Compliance. Except for a Transfer effected pursuant to
a Public Offering of Holdings' Common Stock in accordance with the provisions
of the Stockholders Agreement and anything to the contrary herein contained
notwithstanding, no Transfer of any Shares held by you to a Person other than
Holdings or its designee pursuant to any Repurchase shall be effected unless
such Transfer may properly be made without registration because of the
availability of an exemption from registration under the Act and the rules and
regulations in effect thereunder and under any applicable state securities or
"blue sky" laws, and Holdings shall have been furnished with an opinion of
counsel, satisfactory in form and substance to Holdings, to that effect.
9. Right of Inclusion; Right of First Offer. Prior to the earlier to occur
of (i) the tenth anniversary of the Closing Date and (ii) a Public
Distribution, in the event that you (a) shall have received a bona fide offer
in writing from a third party (the "Third Party Offer") to purchase any Shares
owned by you, which offer you desire to accept, and (b) are otherwise permitted
to sell such Shares under applicable laws and contracts, then, in such event,
(unless such Transfer shall be in a Public Offering in accordance with Section
6 of the Stockholders Agreement) your right to accept the Third Party Offer and
to Transfer the Shares pursuant thereto shall be subject to the provisions of
Section 7 of the Stockholders Agreement regarding rights of inclusion and
rights of first
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offer; provided, that you may not Transfer any Shares to a Third Party pursuant
to Section 7 of the Stockholders Agreement other than in exchange for cash or
promissory notes or a combination of cash and promissory notes.
10. Rights with Respect to Shares Following Termination of Your
Employment.
(a) Termination Upon Death, Incapacity or Retirement.
(i) Holdings' Call. Upon your death, Incapacity or the termination of
your employment as a result of your retirement having attained Normal
Retirement Age, prior to a Public Distribution, then, in any such event,
Holdings shall have the right, upon delivery of notice to you, for a period of
90 calendar days after the Date of Termination, to repurchase any or all Shares
owned by you. If Holdings so notifies you in accordance with Section 11 hereof
of its determination to exercise such right, you shall have the obligation to
sell the relevant number of Shares on the terms and conditions set forth in
Section 12 hereof to Holdings at a price equal to the product of (i) the Fair
Market Value of each such Share as of the Date of Termination and (ii) the
number of Shares so purchased.
(ii) Your Put. In the event of the failure of Holdings to exercise its
right to repurchase all Shares owned by you pursuant to Section 10(a)(i) within
the period therein specified, then, in such event, you shall have the right,
upon delivery of notice to Holdings for a period of 90 calendar days (180
calendar days in the case of your death) commencing on the
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91st calendar day after the Date of Termination, to require Holdings to
repurchase in accordance with Section 11 hereof all (but not fewer than all)
Shares then owned by you. If you deliver such notice, you shall have the
obligation to sell to Holdings, and Holdings shall have the obligation to
purchase all of such Shares on the terms and conditions set forth in Section 12
hereof at the price set forth in Section 10(a)(i).
(b) Termination Upon Resignation of Employment; Holdings' Call. Upon
termination by you prior to a Public Distribution of your employment with
Holdings or any subsidiary thereof for any reason other than (i) your death,
(ii) Incapacity or (iii) retirement having attained Normal Retirement Age,
then, in such event, Holdings shall have the right, upon delivery of notice to
you, for a period of 90 calendar days after the Date of Termination, to
repurchase any and all Shares owned by you. If Holdings notifies you in
accordance with Section 11 hereof of its determination to exercise such right,
you shall have the obligation to sell the relevant number of Shares on the
terms and conditions set forth in Section 12 hereof to Holdings at a price
equal to the product of (i) the lesser of (A) the Fair Market Value of each
such Share on the Date of Termination and (B) the Compounded Adjusted Purchase
Price of each such Share and (ii) the number of Shares so purchased.
(c) Termination for Cause; Holdings' Call. Upon termination prior to a
Public Distribution of your employment with Holdings or any subsidiary thereof
for Cause, Holdings shall
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have the right, upon delivery of notice to you, for a period of 90 calendar
days after the Date of Termination, to repurchase any or all Shares owned by
you. If Holdings so notifies you in accordance with Section 11 hereof of its
determination to exercise such right, you shall have the obligation to sell the
relevant number of Shares on the terms and conditions set forth in Section 12
hereof to Holdings at a price equal to the product of (i) the lesser of (A) the
Fair Market Value of each such Share as of the Date of Termination or (B) the
Adjusted Purchase Price of such Share and (ii) the number of Shares so
purchased.
(d) Termination For Reason Other than Cause.
(i) Holdings' Call. Upon termination, prior to a Public Distribution, of
your employment with Holdings or any subsidiary thereof for any reason other
than as a result of (A) your death, (B) Incapacity, (C) retirement having
attained Normal Retirement Age, (D) your resignation or (E) a termination for
Cause, then, in such event, Holdings shall have the right, upon delivery of
notice to you, for a period of 90 calendar days after the Date of Termination,
to repurchase any or all Shares owned by you. If Holdings so notifies you in
accordance with Section 11 hereof of its determination to exercise such right,
you shall have the obligation to sell the relevant number of Shares on the
terms and conditions set forth in Section 12 hereof to Holdings at a price
equal to the product of (i) the lesser of (A) the Fair Market Value of each
such Share as of the Date of
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Termination or (B) the Compound Adjusted Purchase Price and (ii) the number of
Shares so purchased.
(ii) Your Put. In the event of the failure of Holdings to exercise its
right to repurchase all Shares owned by you pursuant to Section 10(d)(i) within
the period therein specified, then, in such event, you shall have the right,
upon delivery of notice to Holdings, for a period of 90 calendar days,
commencing on the 91st calendar day after the Date of Termination, to require
Holdings to repurchase in accordance with Section 11 hereof all (but not fewer
than all) Shares then owned by you. If you deliver such notice, you shall have
the obligation to sell to Holdings, and Holdings shall have the obligation to
purchase, all of such Shares on the terms and conditions set forth in Section
12 hereof at the price set forth in Section 10(d)(i).
11. Election Procedures.
(a) The parties shall exercise their respective rights under Section 10
hereof by sending a written notice by United States certified or registered
mail, return receipt requested, postage prepaid, addressed as follows:
(i) if to you at the address specified on the Stockholder Designation;
(ii) if to Holdings, to the attention of the President of Holdings, at
the address specified in Section 17 hereof, with copies to Xxxxxx Xxxxxxx
Xxxxxx & Xxxxxxx, at the address specified in Section 17 hereof; or
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(iii) to such other address as either party has furnished to the other in
writing, except that notices of change of address shall be effective only upon
receipt. Other notices pursuant to this Agreement shall be communicated in
the manner provided in Section 17, unless otherwise expressly provided herein.
(b) Holdings' notice of its determination to effect a call pursuant to
Section 10 shall be effective if deposited in the mail as specified in
subsection (a) of this Section 11, or hand delivered to you and/or any
Permitted Transferee within the applicable time period specified in Section 10
hereof and shall specify (i) the call repurchase price and (ii) the basis on
which such price was computed.
Any notice delivered by you to effect a put pursuant to Section 10 hereof
shall be effective if received by the President of Holdings within the
applicable time period specified in Section 10; and, within 45 calendar days
after the receipt by Holdings of any such notice, Holdings shall notify you of
(i) the number of Shares to be purchased by Holdings, and (ii) the applicable
put repurchase price (specifying in reasonable detail the basis on which such
price was computed).
(c) Any notice delivered in accordance with Section 10 and 11 hereof shall
specify the place, time and date for the delivery of and payment for Shares,
which shall be in the City of Pittsburgh, and during normal business hours on a
Business Day
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which shall not be less than 10 nor more than 30 calendar days after the
receipt of such notice.
12. Delivery and Payment Procedures.
(a) At the place, and at the time and date specified in any notice
delivered under Sections 10 and 11 hereof, you shall deliver to Holdings or its
designee, certificates for the Shares purchased by Holdings pursuant to any
Repurchase, duly endorsed, or accompanied by written instruments of transfer,
in form satisfactory to Holdings or its designee, duly executed on behalf of
such party, free and clear of any and all claims and encumbrances, against
payment of the aggregate purchase price for such Shares, which will be made by
the delivery of a certified or bank cashier's check or checks, payable to you
or upon your order, in an amount equal to such aggregate repurchase price.
(b) All transfer and documentary stamp taxes, if any, payable in respect
of the sale of Shares to Holdings pursuant to this Agreement shall be borne by
the party exercising its right to purchase or to sell Shares, as the case may
be, under Section 10 hereof.
(c) Notwithstanding anything herein contained to the contrary, if, in
connection with any purchase of Shares pursuant to Section 10(a)(ii) or Section
10(d)(ii), the purchase of such Shares would be in violation of, or result in a
default under, any agreement or instrument to which Holdings is a party or by
which it is bound (including, without limitation, the Senior Credit Agreement
and the Subordinated Credit Agreement, but
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excluding any agreement entered into in material part for the purpose of
avoiding Holdings' obligations hereunder), or violate Holdings' Certificate of
Incorporation or By-laws, as the same may be amended and/or restated (but
excluding any such amendment as may be effected in material part for the
purpose of avoiding Holdings' obligations hereunder) or any law, regulation or
order applicable to Holdings (each a "governing provision"), then Holdings may
issue a junior subordinated note in lieu of the cash consideration required by
subsection (a) of this Section 12. If Holdings does not have sufficient funds
legally available under each governing provision to make the cash payment
required by subsection (a) of this Section 12 and if Holdings is further
precluded by any governing provision from issuing a junior subordinated note,
Holdings shall not purchase any Shares, and Holdings shall have no further
obligations under any Repurchase with respect to any Shares not purchased by
Holdings because it does not have sufficient funds legally available therefor
under each governing provision, and in such event, the Compensation Committee
shall, within 180 days, recommend to you one or more of the then current
Management Stockholders or other persons who at such times are Executive
Officers of Holdings (collectively, the "Alternative Buyers") who are willing
to purchase, and who shall be entitled to purchase, from you at the applicable
purchase price specified in Section 10, any or all of the Shares which Holdings
was unable to purchase from you because of the foregoing restrictions. Any
Shares not purchased within 90 days from the
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date of the Compensation Committee's offer to the Alternative Buyers pursuant
to the preceding sentence shall be offered for sale and sold by you to the
Management Holders in the manner set forth in subsection (d) of this Section
12.
(d) Any offer to sell Shares to the Management Holders pursuant to
subsection (c) of this Section 12 shall be made by giving to each such
Management Holder written notice of your offer to sell those Shares to the
Management Holders at the purchase price which Holdings would have been
required to pay therefor pursuant to Sections 10. For a period of 90 calendar
days after the date of his or her receipt of such notice, each of the
Management Holders shall have the right to notify you in accordance with
Section 7.2 of the Stockholders Agreement that such Management Holder has
determined to accept such offer, and if one or more of the Management Holders
so notifies you of such Management Holder(s) acceptance, he or each of them may
purchase any of the Shares so offered which such Management Holder(s) is
entitled to purchase at the price specified in your notice. The number of
Shares which each Management Holder would be entitled to purchase is the
product of (x) the total number of Shares so offered for sale times (y) a
fraction, the numerator of which is the number of Shares held by such
Management Holder and the denominator of which is the total number of
outstanding Shares held by all of the Management Holders (other than by you).
Notwithstanding the foregoing, your notice shall also be deemed to constitute
an offer to sell to each Management Holder the
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Shares subject to your offer which any other Management Holder is entitled to
purchase and does not purchase. The additional number of shares which each
Management Holder would be entitled to purchase pursuant to the preceding
sentence is the product of (x) the total number of Shares so offered times (y)
a fraction, the numerator of which is the number of Shares held by such
Management Holder and the denominator of which is the total number of
outstanding Shares held by all of the Management Holders who have accepted the
Offer deemed to be made pursuant to the preceding sentence. In order for a
Management Holder to accept the offer to sell such additional number of Shares,
such Management Holder shall indicate his or her acceptance thereof in his or
her notice to you referred to above, and if a Management Holder so indicates
his or her acceptance, he or she may purchase any of the additional Shares
which he or she would be entitled to purchase at the price specified in your
notice.
(e) Any obligation of Holdings to purchase Shares pursuant to Section 10
hereof shall be subject to compliance with all applicable legal requirements.
13. Survival; Assignment. All covenants, agreements, representations and
warranties contained in this Agreement shall survive the execution and delivery
of this Agreement, any investigation at any time made by or on behalf of a
party hereto. Holdings' rights and obligations hereunder may be assigned by
Holdings in whole or in part. Except as otherwise provided herein, you may not
assign any of your rights hereunder other
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than to Permitted Transferees. Whenever in this Agreement reference is made to
any of the parties hereto, such reference shall be deemed to include the
successors, executors or administrators and permitted assigns of such party;
and all covenants, promises and agreements made in this Agreement by or on
behalf of Holdings, or by you, shall bind and inure to the benefit of and be
enforceable by the respective successors, executors or administrators and
permitted assigns of such parties hereto, whether so expressed or not.
14. Governing Law. This Agreement shall be construed and enforced in
accordance with the laws of the Commonwealth of Pennsylvania.
15. Entire Agreement; Headings. This Agreement and the agreements
referred to herein embody the entire agreement and understanding between you
and Holdings and supersede all prior agreements and understandings relating to
the subject matter hereof. The preceding sentence and any other provision of
this Agreement notwithstanding, this Agreement is not, and shall not be
construed to be, a novation of your Management Common Stock Subscription and
Repurchase Agreement, if any, and/or your Management Incentive Stock Option
Agreement, if any, and (a) you and Holdings shall remain liable for any breach
of such agreement(s) prior to the date hereof, and (b) the representations and
warranties contained in paragraph 3 of your Management Common Stock
Subscription and Repurchase Agreement, if any, will survive the execution and
delivery hereof. The
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headings in and date of this Agreement are for purposes of reference only and
shall not limit or otherwise affect the meaning hereof.
16. Amendments. This Agreement cannot be changed orally, and can be
changed only by an instrument in writing signed by the party against whom
enforcement of any waiver, change, modification or discharge is sought.
17. Notices. All communications provided for herein shall be in writing
and:
(a) if addressed to you, shall be delivered or mailed addressed to you at
your address specified in the books and records of Holdings, or
(b) if addressed to Holdings, shall be delivered or mailed addressed to it
as follows:
EMC Holdings, Inc.
Xxxxx 000
000 Xxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxxxxxx 00000
Attention: President
with a copy to:
Xxxxxx X. XxXxxxxxx, Esquire
Xxxxxx Xxxxxxx Xxxxxx & Xxxxxxx
42nd Floor
000 Xxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxxxxxx 00000
18. Execution in Counterparts. This Agreement may be executed in
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
If you are in agreement with the foregoing, please sign each counterpart of
this Agreement.
Very truly yours,
EMC HOLDINGS, INC.
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By:
-------------------------
Executive Vice President
The foregoing Agreement is hereby
agreed to as of the date first
above written, with the intent to
be legally bound thereby.
By:
-------------------------------
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Xxxxxxxx xxx Xxxxxxxxxx Agreements & Amendments
each dated as of October 21, 1989
as amended January 19, 1995
R. Xxxxxxxx Xxxxxx
C. Xxxxxx Xxxxxxx
Xxxxxx X. Xxxxxxx
Xxxx X. Xxxxxxxx
Xxxxx X. Graft
Xxxxxx Xxxxxxxxxx
Xxxxx X. Xxxxx, Xx.
Xxxxx X. Xxxxxx
Xxxx X. Xxxxxxx
Xxxxxx X. Xxxxx
Xxxx X. Xxxxxx
Xxxxxx X. Xxxxxxx
Xxxxxx X. Xxxxxxxx
Xxxxx X. Xxxxxxxx
Xxxxxxx X. Xxxxx
Xxxxxx X. Xxxxxxxx
Xxxxxx X. Xxxxxxxx
Xxxxxx X. Xxx
Xxxxxxx X. XxxXxxx
