STOCK REPURCHASE AGREEMENT
AGREEMENT (the "Agreement"), dated as of August 3, 1998, by
and between Xxxxxx Natural Corporation, a Delaware corporation (the "Company"),
and Hilton X. Xxxxxxxxxx (the "Stockholder").
W I T N E S S E T H :
WHEREAS, on August 3, 1998, (i) the
Stockholder has exercised options to purchase a total of 337,500 shares (the
"Stockholder Option Shares") of common stock, par value $.005 per share, of the
Company (the "Common Stock") pursuant to the terms of certain stock option
agreements between the Stockholder and the Company, and (ii) Xxxxxx X. Xxxxx
("Sacks") has exercised options to purchase a total of 387,500 shares (the
"Sacks Option Shares") of Common Stock pursuant to the terms of certain stock
option agreements between Sacks and the Company;
WHEREAS, by reason of the positions of the Stockholder and
Sacks as the senior officers and as directors of the Company, their knowledge of
the day-to-day affairs of the Company, and the substantial number of Stockholder
Option Shares and Sacks Option Shares, the Stockholder recognizes that it would
be detrimental to the interests of the Company if the Stockholder disposed of
the Stockholder Option Shares or if Sacks disposed of the Sacks Option Shares;
WHEREAS, the Stockholder believes it would be detrimental to
the value of the Stockholder Option Shares and his other equity interests in the
Company if Sacks were to sell the Sacks Option Shares on the open market; and
WHEREAS, in order to induce Sacks to simultaneously herewith
enter into a Stock Repurchase Agreement with the Company subjecting the Sacks
Option Shares to restrictions on transfer (the "Sacks Stock Repurchase
Agreement"), the Stockholder is willing to subject the Stockholder Option Shares
to the restrictions on transfer set forth in this Agreement;
NOW, THEREFORE, in consideration of the premises and of the
mutual covenants and obligations set forth in this Agreement and in the Sacks
Stock Repurchase Agreement, the parties hereto hereby agree as follows:
1. (a) The Stockholder may not sell, transfer or otherwise dispose of (a
"Disposition") any of the Stockholder Option Shares except as provided in
this Agreement. Any purported Disposition in violation of this Agreement
shall be null and void ab initio, and the Company shall not recognize any
such Disposition or accord to any purported transferee any rights as a
stockholder of the Company.
(b) Subject to the provisions of paragraph 2 below, if the Stockholder
desires at any time on or before December 31, 2000 to effect a Disposition
of any of the Stockholder Option Shares, then the Stockholder shall give
written notice to the Company (the "Sale Notice") specifying the number of
Stockholder Option Shares that the Stockholder desires to Dispose of (the
"Offered Shares").
(c) Upon receipt of the Sale Notice, the Company shall have the right to
elect to purchase all or a portion of the Offered Shares at a purchase
price equal to $1.25 per share for the first 150,000 Offered Shares, $1.59
per share for the next 37,500 Offered Shares and $1.75 per share for the
next 150,000 Offered Shares. The determination of whether the Company shall
elect to purchase the Offered Shares shall be made by the Board of
Directors of the Company, without the participation of the Stockholder.
Such election is to be made by written notice ("Notice of Election") to the
Stockholder within 60 days after the Company's receipt of the Sale Notice
(the "Acceptance Period").
(d) If the Company gives a Notice of Election to the Stockholder within the
Acceptance Period, the Stockholder shall sell and the Company shall
purchase the Offered Shares pursuant to the Notice of Election. If the
Company does not give a Notice of Election to the Stockholder within the
Acceptance Period or if the Notice of Election does not cover all of the
Offered Shares, the Stockholder may Dispose of the Offered Shares, or a
portion thereof, as the case may be, free of the restrictions set forth in
this Agreement.
2. Upon a Change of Control, the restrictions on the transfer of the
Stockholder Option Shares pursuant to paragraph 1 of this Agreement shall
terminate. For purposes of this Agreement, "Change of Control" means (i)
any transaction or series of transactions in which the Stockholder and
Sacks together cease to be the beneficial owners (as such term is defined
in Rules 13d-3 and 13d-5 under the Securities Exchange Act of 1934, as
amended) of at least 10% of the outstanding Common Stock, (ii) the sale of
all or substantially all of the assets of the Company or any of its
subsidiaries, the operations of which would constitute a material part of
the business or operations of the Company and its subsidiaries, taken as a
whole, (iii) the liquidation of the Company or any of its subsidiaries, the
operations of which would constitute a material part of the business or
operations of the Company and its subsidiaries, taken as a whole, or (iv)
the combination of the Company or any of its subsidiaries, the operations
of which would constitute a material part of the business or operations of
the Company and it subsidiaries, taken as a whole, with another entity, as
a result of which (A) the shareholders of the Company hold less than 50% of
the total of all voting shares outstanding of the combined entity or (B)
the directors of the Company constitute less than a majority of the Board
of Directors of the combined entity.
3. (a) The certificate for the Stockholder Option Shares shall be deposited
in escrow with the Controller of Xxxxxx Beverage Company, the Company's
wholly-owned subsidiary, to be held in escrow in accordance with the
provisions of this paragraph 3. The deposited certificate shall be
accompanied by a duly executed Assignment Separate from Certificate in the
form of Exhibit A. The deposited certificate shall remain in escrow until
such time as the certificate is to be released in accordance with paragraph
3(b) below.
(b) If the Company exercises its right to purchase pursuant to paragraph
1(c) with respect to any Stockholder Option Shares, the escrowed
certificate for such Stockholder Option Shares shall be delivered to the
Company, concurrently with the payment to the Stockholder in cash of an
amount equal to the aggregate purchase price for such Stockholder Option
Shares, and the Stockholder shall have no further rights with respect to
such Stockholder Option Shares. The Stockholder shall be entitled to a
certificate for any Stockholder Option Shares which the Stockholder is
entitled to Dispose of free of restrictions in accordance with the
provisions of this Agreement.
4. Any notice required in connection with this Agreement shall be given in
writing and shall be deemed effective upon personal delivery, upon deposit
with a nationally recognized courier service, or upon deposit in the United
States mail, registered or certified, postage prepaid and addressed as
follows:
If to the Company:
Xxxxxx Natural Corporation
0000 Xxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxx 00000
Attention: Chairman
If to the Stockholder:
Hilton X. Xxxxxxxxxx
0 Xxxxxx
Xxxxxx, Xxxxxxxxxx 00000
or to any other address as either party may designate by written notice under
this paragraph 4 to the other party to this Agreement.
5. This Agreement constitutes the entire contract between the
parties with respect to the subject matter hereof.
6. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York, without regard to the
principles of conflicts of law of such State.
7. The provisions of this Agreement shall inure to the benefit
of, and be binding upon, the Company and its successors and assigns and the
Stockholder and his legal representatives, heirs, legatees, distributes, assigns
and transferees by operation of law, whether or not any such person shall have
become a party to this Agreement.
IN WITNESS WHEREOF, the parties have memorialized their Agreement on April
15, 1999, effective as of the date first indicated above.
XXXXXX NATURAL CORPORATION
By: /s/ Xxxxxx X. Xxxxx
Chairman
/s/ Hilton X. Xxxxxxxxxx
Hilton X. Xxxxxxxxxx
EXHIBIT A
Assignment Separate From Certificate
FOR VALUE RECEIVED Hilton X. Xxxxxxxxxx ("Stockholder") hereby
sells, assigns and transfers unto ____________________, ________ shares of
Common Stock of Xxxxxx Natural Corporation, a Delaware corporation (the
"Company") represented by Certificate No. ____ herewith and does hereby
irrevocably constitute and appoint ___________________ Attorney to transfer the
said stock on the books of the Company with full power of substitution in the
premises.
Dated:_______________________
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Signature
