Exhibit 10.27
EXECUTION COPY
SENIOR MANAGEMENT AGREEMENT
THIS SENIOR MANAGEMENT AGREEMENT (this "AGREEMENT") is made as of February
6, 2004 (the "EFFECTIVE DATE"), by and among Medtech/Denorex, LLC, a Delaware
limited liability company (the "COMPANY"), Medtech/Denorex Management, Inc., a
Delaware corporation ("EMPLOYER"), and Xxxxxxx X. Xxxx ("EXECUTIVE").
The Company and Executive desire to enter into an agreement pursuant to
which Executive will acquire from the Company, and the Company will issue to
Executive, Class B Preferred Units of the Company (the "CLASS B PREFERRED
UNITS") and Common Units of the Company (the "COMMON UNITS"). Certain
definitions are set forth in SECTION 11 of this Agreement.
Employer desires to employ Executive and Executive desires to be employed
by Employer upon the terms set forth herein.
The execution and delivery of this Agreement by the Company and Executive
is a condition to (A) the purchase of Class B Preferred Units and Common Units
by GTCR Fund VIII, L.P., a Delaware limited partnership ("GTCR FUND VIII"), GTCR
Fund VIII/B, L.P., a Delaware limited partnership ("GTCR FUND VIII/B"), GTCR
Co-Invest II, L.P., a Delaware limited partnership ("GTCR CO-INVEST") and the
TCW/Crescent Purchasers (as defined herein) pursuant to a Unit Purchase
Agreement among the Company and such Persons dated as of the date hereof (the
"PURCHASE AGREEMENT") and (B) the purchase of warrants to acquire Class B
Preferred Units and Common Units by GTCR Capital Partners, L.P., a Delaware
limited partnership ("GTCR CAPITAL PARTNERS") and the TCW/Crescent Lenders (as
defined herein) pursuant to a Warrant Agreement between the Company and such
Persons dated as of the date hereof. Each of GTCR Fund VIII, GTCR Fund VIII/B,
GTCR Co-Invest and the TCW/Crescent Purchasers is sometimes individually
referred to herein as an "EQUITY INVESTOR" and, collectively, as the "EQUITY
INVESTORS." Each of GTCR Capital Partners and the TCW/Crescent Lenders is
sometimes individually referred to herein as a "DEBT INVESTOR" and,
collectively, as the "DEBT INVESTORS." Each of the Equity Investors and the Debt
Investors is sometimes individually referred to herein as an "INVESTOR" and,
collectively, as the "INVESTORS." Certain provisions of this Agreement are
intended for the benefit of, and will be enforceable by, the Investors.
NOW, THEREFORE, in consideration of the mutual covenants contained herein
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties to this Agreement hereby agree as follows:
PROVISIONS RELATING TO EXECUTIVE SECURITIES
1. ACQUISITION AND ISSUANCE OF EXECUTIVE SECURITIES.
(a) Upon execution of this Agreement, Executive will acquire, and
the Company will issue, 609,746 Common Units at a price of $0.10 per unit
and
107.368 Class B Preferred Units at a price of $1,000 per unit, for an
aggregate purchase price of $168,343. Upon the execution of this Agreement,
the Company will deliver to Executive copies of the certificates
representing such Executive Securities (as defined below), and Executive
will contribute, assign, transfer, convey and deliver to the Company in
full consideration for such Executive Securities that number of shares of
Medtech Common Stock with an aggregate Medtech Common Stock Value,
determined as of the Closing Date, of $168,343.
If the Medtech Common Stock Value determined as of the Closing Date is
increased after the Closing Date pursuant to adjustments thereto contemplated by
the Stock Purchase Agreement, then the Company shall issue to Executive for no
additional consideration (I) the number of Co-Invest Common Units and Class B
Preferred Units (using the same ratio then in effect as between such units)
having an aggregate value equal to such increase (assuming a Class B Preferred
Unit value of $1,000 per unit and a Co-Invest Common Unit value of $0.10 per
unit) and (II) the number of Co-Invest Common Units and Class B Preferred Units
(using the same ratio then in effect as between such units) having an aggregate
value equal to the Class B Yield (as defined in the LLC Agreement) that would
have accrued on the Class B Preferred Units issued pursuant to the foregoing
clause (I) had such units been issued as of the Closing Date (assuming a Class B
Preferred Unit value of $1,000 per unit and a Co-Invest Common Unit value of
$0.10 per unit). If the Medtech Common Stock Value determined as of the Closing
Date is decreased after the Closing Date pursuant to adjustments thereto
contemplated by the Stock Purchase Agreement, then Executive shall forfeit to
the Company at no cost the number (using the same ratio then in effect as
between such units) of Co-Invest Common Units and Class B Preferred Units (and
the Class B Yield relating thereto) having an aggregate value equal to such
decrease (assuming a Class B Preferred Unit value of $1,000 per unit and a
Co-Invest Common Unit value of $0.10 per unit).
(b) 587,834 of the Common Units acquired pursuant to SECTION 1(a)
hereof are referred to herein as the "CARRIED COMMON UNITS." The remaining
Common Units that are acquired pursuant to SECTION 1(a) above are referred
to herein as the "CO-INVEST COMMON UNITS." All Class B Preferred Units and
the Co-Invest Common Units acquired by Executive hereunder are referred to
herein as the "CO-INVEST UNITS."
(c) Within 30 days after the acquisition of the Carried Common Units
hereunder, Executive will make an effective election with the Internal
Revenue Service under Section 83(b) of the Internal Revenue Code and the
regulations promulgated thereunder in the form of EXHIBIT A attached
hereto.
(d) 293,917 of the Carried Common Units are referred to herein as
the "STANDARD CARRIED COMMON UNITS."
(e) Until released upon the occurrence of a Sale of the Company or a
Public Offering as provided below, all certificates evidencing Executive
Securities shall be held by the Company for the benefit of Executive and
the other
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holder(s) of Executive Securities, if any. Upon the occurrence of a Sale of
the Company, the Company will return all certificates evidencing Executive
Securities to the record holders thereof. Upon the consummation of a Public
Offering, the Company will return to the record holders thereof
certificates evidencing the Co-Invest Units and the Vested Carried Common
Units.
(f) In connection with the acquisition and issuance of the Executive
Securities, Executive represents and warrants to the Company that:
(i) The Executive Securities to be acquired by Executive
pursuant to this Agreement will be acquired for Executive's own account and
not with a view to, or intention of, distribution thereof in violation of
the Securities Act, or any applicable state securities laws, and the
Executive Securities will not be disposed of in contravention of the
Securities Act or any applicable state securities laws.
(ii) Executive is an executive officer of the Company and
Employer, is sophisticated in financial matters and is able to evaluate the
risks and benefits of the investment in the Executive Securities.
(iii) Executive is able to bear the economic risk of his
investment in the Executive Securities for an indefinite period of time
because the Executive Securities have not been registered under the
Securities Act and, therefore, cannot be sold unless subsequently
registered under the Securities Act or an exemption from such registration
is available.
(iv) Executive has had an opportunity to ask questions and
receive answers concerning the terms and conditions of the offering of
Executive Securities and has had full access to such other information
concerning the Company and its Subsidiaries as he has requested.
(v) Executive has full legal capacity to execute and
deliver this Agreement and to perform his obligations hereunder. This
Agreement constitutes the legal, valid and binding obligation of Executive,
enforceable in accordance with its terms, and the execution, delivery and
performance of this Agreement by Executive, to the best of his knowledge,
does not and will not conflict with, violate or cause a breach of any
agreement, contract or instrument to which Executive is a party or any
judgment, order or decree to which Executive is subject.
(vi) Executive is neither party to, nor bound by, any
other employment agreement, consulting agreement, noncompete agreement,
non-solicitation agreement or confidentiality agreement.
(vii) Executive is a resident of the State of New Jersey.
(viii) As of the date of this Agreement, Executive is the
holder of record and owns beneficially the number of shares of Medtech
Common Stock
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being contributed to the Company by Executive pursuant to SECTION 1(a) of
this Agreement (the "CONTRIBUTED SHARES"). Other than the transfer
restrictions set forth in the Medtech Stockholders Agreement, Executive
owns the Contributed Shares free and clear of all liens, pledges, voting
agreements, voting trusts, proxy agreements, claims, security interests,
restrictions, mortgages, deeds of trust, tenancies, and other possessory
interests, conditional sale or other title retention agreements,
assessments, easements, rights of way, covenants, restrictions, rights of
first refusal, defects in title, encroachments, and other burdens, options
or encumbrances of any kind (collectively, "LIENS"). There are no
agreements, instruments or other arrangements restricting or otherwise
affecting the transfer of the Contributed Shares or the other transactions
contemplated by this SECTION 1. Upon the consummation of the transactions
contemplated by SECTION 1(a) of this Agreement, the Company will receive
good and valid title to the shares of Medtech Common Stock being
contributed to the Company by Executive pursuant to SECTION 1(a) of this
Agreement, free and clear of all Liens.
(g) As an inducement to the Company to issue the Executive
Securities to Executive, and as a condition thereto, Executive acknowledges
and agrees that neither the issuance of the Executive Securities to
Executive nor any provision contained herein shall entitle Executive to
remain in the employment of the Company, Employer or any of their
respective Subsidiaries or affect the right of the Company or Employer to
terminate Executive's employment at any time for any reason, subject to the
remaining terms of this Agreement and any other agreement between Executive
and any such parties.
2. VESTING OF CARRIED COMMON UNITS.
(a) The Co-Invest Units acquired by Executive shall be vested upon
the acquisition thereof. The Carried Common Units (including the Standard
Carried Common Units which shall vest on a basis proportionate to the total
number of Carried Common Units) shall be subject to vesting in the manner
specified in this SECTION 2.
(b) Except as otherwise provided in this SECTION 2, the Carried
Common Units shall become vested in accordance with the following schedule,
if and only if as of each such date provided below, Executive has been
continuously employed by the Company, Employer or any of their respective
Subsidiaries from the Effective Date through and including such date:
CUMULATIVE PERCENTAGE OF
DATE CARRIED COMMON UNITS VESTED
------------------------------------ ---------------------------
First Anniversary of Effective Date 20.00%
Second Anniversary of Effective Date 40.00%
Third Anniversary of Effective Date 60.00%
Fourth Anniversary of Effective Date 80.00%
Fifth Anniversary of Effective Date 100.00%
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(c) If Executive ceases to be employed by the Company, Employer and
their respective Subsidiaries on any date other than an anniversary date
specified in the schedule above, the cumulative percentage of Carried
Common Units to become vested shall be determined on a PRO RATA basis
according to the number of days elapsed since the Effective Date, or the
most recent anniversary date, as the case may be.
(d) Upon the occurrence of a Sale of the Company, all Carried Common
Units which have not yet become vested shall become vested at the time of
the consummation of the Sale of the Company, if, as of such time, Executive
has been continuously employed by the Company, Employer or any of their
respective Subsidiaries from the Effective Date through and including such
date.
(e) Carried Common Units that have become vested ("VESTED CARRIED
COMMON UNITS") and the Co-Invest Common Units are referred to herein as
"VESTED COMMON UNITS." The Vested Common Units and the Class B Preferred
Units are collectively referred to herein as "VESTED UNITS." All Carried
Common Units that have not vested are referred to herein as "UNVESTED
COMMON UNITS."
3. REPURCHASE OPTIONS.
(a) SEPARATION REPURCHASE OPTION.
(i) Subject to the terms and conditions set forth in this
SECTION 3(a) and SECTION 5 below, the Company and the Equity Investors will
have the right to repurchase (the "SEPARATION REPURCHASE OPTION") from
Executive and his transferees (other than the Company and the Equity
Investors) all or any portion of (A) the Unvested Common Units, in the
event Executive ceases to be employed by the Company, Employer and their
respective Subsidiaries for any reason, and (B) the Vested Carried Common
Units and the Co-Invest Units, in the event of Executive's (I) death, (II)
Disability, (III) resignation other than for Good Reason from Executive's
employment with the Company, Employer or any of their respective
Subsidiaries, (IV) employment termination with Cause by the Company,
Employer or any of their respective Subsidiaries or (V) employment
termination when there is Substantial Underperformance (each a "SEPARATION
REPURCHASE EVENT"). The Separation Repurchase Option with respect to Vested
Units under SECTIONS 3(a)(B)(I) and 3(a)(i)(B)(II) shall be valid only if
Executive fails to exercise the Separation Put Right (if applicable) within
the Put Election Period provided in SECTION 4(a)(i) below. The Company may
assign its repurchase rights set forth in this SECTION 3(a) to any Person.
(ii) For any Separation Repurchase Option, (A) the
purchase price for each Unvested Common Unit will be the lesser of (I)
Executive's Original Cost for such unit and (II) the Fair Market Value of
such unit as of the date of the Separation Repurchase Event, (B) the
purchase price for each Vested Common Unit will be the Fair Market Value of
such unit as of the date of the
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Separation Repurchase Event; PROVIDED THAT, if Executive's employment is
terminated with Cause, the purchase price for each Vested Common Unit will
be the lesser of (I) Executive's Original Cost for such unit and (II) the
Fair Market Value of such unit as of the effective date of Executive's
termination with Cause and (C) the purchase price for each Class B
Preferred Unit will be the Fair Market Value of such unit as of the date of
the Separation Repurchase Event; PROVIDED THAT, if Executive's employment
is terminated with Cause, the purchase price for each Class B Preferred
Unit will be the lesser of (I) Executive's Original Cost for such unit and
(II) the Fair Market Value of such unit as of the effective date of
Executive's termination with Cause.
(iii) The Company (with the approval of the Board) may
elect to purchase all or any portion of the Unvested Common Units and/or
the Vested Units by delivering written notice (the "SEPARATION REPURCHASE
NOTICE") to the holder or holders of such securities within ninety (90)
days after the Separation Repurchase Event. The Separation Repurchase
Notice will set forth the number of Unvested Common Units and Vested Units
to be acquired from each holder, the aggregate consideration to be paid for
such units and the time and place for the closing of the transaction. The
number of Executive Securities to be repurchased by the Company shall first
be satisfied to the extent possible from the Executive Securities held by
Executive at the time of delivery of the Separation Repurchase Notice. If
the number of Executive Securities then held by Executive is less than the
total number of Executive Securities that the Company has elected to
purchase, the Company shall purchase the remaining Executive Securities
elected to be purchased from the Permitted Transferee(s) of Executive
Securities under this Agreement, PRO RATA according to the number of
Executive Securities held by such Permitted Transferee(s) at the time of
delivery of such Separation Repurchase Notice (determined as nearly as
practicable to the nearest unit). The number of Unvested Common Units and
Vested Units to be repurchased hereunder will be allocated among Executive
and the Permitted Transferee(s) of Executive Securities (if any) PRO RATA
according to the number of Executive Securities to be purchased from such
Person.
(iv) If for any reason the Company does not elect to
purchase all of the Executive Securities pursuant to the Separation
Repurchase Option, the Equity Investors shall be entitled to exercise the
Separation Repurchase Option for all or any portion of the Executive
Securities the Company has not elected to purchase (the "AVAILABLE
SEPARATION SECURITIES"). As soon as practicable after the Company has
determined that there will be Available Separation Securities, but in any
event within four months after the Separation Repurchase Event, the Company
shall give written notice (the "SEPARATION OPTION NOTICE") to the Equity
Investors setting forth the number of Available Separation Securities and
the purchase price for the Available Separation Securities. The Equity
Investors may elect to purchase any or all of the Available Securities by
giving written notice to the Company within 30 days after the Separation
Option Notice has been given by the Company. If the Equity Investors elect
to purchase an aggregate number greater than the number of Available
Separation Securities, the Available
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Separation Securities shall be allocated among the Equity Investors based
upon the number of Common Units owned by each Equity Investor. As soon as
practicable, and in any event within ten days after the expiration of the
30-day period set forth above, the Company shall notify each holder of
Executive Securities under this Agreement as to the number of units being
purchased from such holder by the Equity Investors (the "SUPPLEMENTAL
SEPARATION REPURCHASE NOTICE"). At the time the Company delivers the
Supplemental Repurchase Notice to such holder(s) of Executive Securities,
the Company shall also deliver written notice to each Equity Investor
setting forth the number of units such Equity Investor is entitled to
purchase, the aggregate purchase price and the time and place of the
closing of the transaction.
(v) The closing of the purchase of the Executive
Securities pursuant to the Separation Repurchase Option shall take place on
the date designated by the Company in the Separation Repurchase Notice or
Supplemental Separation Repurchase Notice, which date shall not be more
than 30 days nor less than five days after the delivery of the later of
either such notice to be delivered. The Company will pay for the Executive
Securities to be purchased by it pursuant to the Separation Repurchase
Option by first offsetting amounts outstanding under any bona fide debts
owed by Executive to the Company and will pay the remainder of the purchase
price by, at its option, (A) a check or wire transfer of funds, (B) if the
purchase is being made by a corporate successor to the Company, the
issuance of a subordinated promissory note of such successor bearing
interest at a rate equal to the prime rate (as published in THE WALL STREET
JOURNAL from time to time) and having such maturity as the Company shall
determine in good faith, not to exceed three years, (C) issuing in exchange
for such securities a number of the Company's Class A Preferred Units
(having the rights and preferences set forth in the LLC Agreement) equal to
(I) the aggregate portion of the repurchase price for such Executive
Securities determined in accordance with this SECTION 3(a) paid by the
issuance of Class A Preferred Units DIVIDED BY (II) 1,000, and for purposes
of the LLC Agreement each such Class A Preferred Unit shall as of its
issuance be deemed to have Capital Contributions made with respect to such
Class A Preferred Unit equal to $1,000, or (D) any combination of clauses
(A), (B) and (C) as the Board may elect in its discretion. Each Equity
Investor will pay for the Executive Securities purchased by it by a check
or wire transfer of immediately available funds. The Company and the Equity
Investors will be entitled to receive customary representations and
warranties from the sellers regarding such sale and to require that all
sellers' signatures be guaranteed.
By way of example only for the purpose of clarifying the mechanics of
SECTION 3(a)(v)(C), if the Company intends to repurchase 20,025,000 Common
Units by issuance of Class A Preferred Units and the aggregate repurchase
price for such Common Units determined in accordance with this SECTION 3(a)
is $400,500, then the Company would issue to Executive 400.5 Class A
Preferred Units, and for purposes of the LLC Agreement each whole Class A
Preferred Unit issued to Executive would as of its issuance be deemed to
have Capital
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Contributions made for such Class A Preferred Unit of $1,000, and the
Capital Contributions made for the one-half Class A Preferred Unit would be
$500.
(vi) Notwithstanding anything to the contrary contained in
this Agreement, if the Fair Market Value of Executive Securities is finally
determined to be an amount at least 10% greater than the per unit
repurchase price for such unit of Executive Securities in the Separation
Repurchase Notice or in the Supplemental Separation Repurchase Notice, each
of the Company and the Equity Investors shall have the right to revoke its
exercise of the Separation Repurchase Option for all or any portion of the
Executive Securities elected to be repurchased by it by delivering notice
of such revocation in writing to the holders of Executive Securities during
the thirty-day period beginning on the date that the Company and/or the
Equity Investors are given written notice that the Fair Market Value of a
unit of Executive Securities was finally determined to be an amount at
least 10% greater than the per unit repurchase price for Executive
Securities set forth in the Separation Repurchase Notice or in the
Supplemental Separation Repurchase Notice.
(b) DILUTION REPURCHASE OPTION.
(i) Capitalized terms used in this SECTION 3(b) or
elsewhere in this Agreement but not otherwise defined herein shall have the
following meanings:
(A) "FOLLOW-ON PURCHASER EQUITY INVESTMENT" means
an investment as equity financing in the Company by one or
more Purchasers after the Effective Date pursuant to the
Purchase Agreement.
(B) "FOLLOW-ON PURCHASER EQUITY INVESTMENT AMOUNT"
means, with respect to any Follow-on Purchaser Equity
Investment, the aggregate dollar amount of such Follow-on
Purchaser Equity Investment.
(C) "FULLY-DILUTED EQUITY" means, at any time of
determination, the then outstanding Equity Securities plus
(without duplication) all shares or units (or other
denominations) of Equity Securities issuable, whether at such
time or upon the passage of time or the occurrence of future
events, upon the exercise, conversion or exchange of all the
then outstanding Equity Equivalents.
(D) "MAXIMUM NUMBER OF REPURCHASABLE STANDARD
CARRIED COMMON UNITS" means with respect to any Follow-on
Purchaser Equity Investment, the product of the Maximum
Percentage of Repurchaseable Standard Carried Common Units
MULTIPLIED BY the number of Standard Carried Common Units
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owned by Executive immediately prior to the Follow-on
Purchaser Equity Investment.
(E) "MAXIMUM PERCENTAGE OF REPURCHASEABLE STANDARD
CARRIED COMMON UNITS" means, with respect to any Follow-on
Purchaser Equity Investment, the sum, expressed as a
percentage and rounded to the nearest one-hundredth of a
percent, of the Purchaser Equity Fund Dilution Percentage PLUS
the Purchaser Mezzanine Fund Dilution Percentage.
(F) "POST-MONEY EQUITY VALUE" means, with respect
to any Follow-on Purchaser Equity Investment, the sum of the
Pre-Money Equity Value PLUS the Follow-on Purchaser Equity
Investment Amount.
(G) "PRE-MONEY EQUITY VALUE" means, with respect to
any Follow-on Purchaser Equity Investment, the Fair Market
Value of the Fully-Diluted Equity of the Company immediately
prior to the Follow-on Purchaser Equity Investment.
(H) "PURCHASER EQUITY FUND DILUTION PERCENTAGE"
means, with respect to any Follow-on Purchaser Equity
Investment, the quotient, expressed as a percentage and
rounded to the nearest one-hundredth of a percent, equal to
the Follow-on Purchaser Equity Investment Amount divided by
the Post-Money Equity Value.
(I) "PURCHASER MEZZANINE FUND DILUTION FACTOR"
means 5.53%.
(J) "PURCHASER MEZZANINE FUND DILUTION PERCENTAGE"
means, with respect to any Follow-on Purchaser Equity
Investment, the product, expressed as a percentage and rounded
to the nearest one-hundredth of a percent, of the Purchaser
Equity Fund Dilution Percentage MULTIPLIED BY the Purchaser
Mezzanine Fund Dilution Factor.
(ii) Subject to the terms and conditions set forth in this
SECTION 3(b), in the event of any Follow-on Purchaser Equity Investment,
the Investors will have the right to repurchase (the "DILUTION REPURCHASE
OPTION") from Executive and his transferees (including for this purpose the
Company and, with respect to any Standard Carried Common Units acquired
other than pursuant to the Dilution Repurchase Option, the Investors) all
or any portion of Executive's Maximum Number of Repurchasable Standard
Carried Common Units as of such Follow-on Purchaser Equity Investment.
(iii) For any Dilution Repurchase Option, the purchase
price for each Standard Carried Common Unit will be Executive's Original
Cost for such
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unit PLUS interest on such amount at a rate of 8% per annum from the date
hereof until the date of exercise of such Dilution Repurchase Option.
(iv) As soon as practicable after the Company has
determined the Maximum Number of Repurchasable Standard Carried Common
Units, the Company shall give written notice (the "DILUTION REPURCHASE
OPTION NOTICE") to the Investors setting forth the Maximum Number of
Repurchasable Standard Carried Common Units and the purchase price
therefor. The Investors may elect to purchase any or all of the Maximum
Number of Repurchasable Standard Carried Common Units by giving written
notice to the Company within 30 days after the Dilution Repurchase Option
Notice has been given by the Company. If the Investors elect to purchase an
aggregate number greater than the Maximum Number of Repurchasable Standard
Carried Common Units, the Maximum Number of Repurchasable Standard Carried
Common Units shall be allocated among the Investors based upon the number
of Common Units owned by each Investor. As soon as practicable, and in any
event within 10 days after the expiration of the 30-day period set forth
above, the Company shall notify each holder of the Standard Carried Common
Units as to the number of units being purchased from such holder by the
Investors, the aggregate consideration to be paid for such units and the
time and place for the closing of the transaction (the "DILUTION REPURCHASE
NOTICE"). At such time, the Company shall also deliver written notice to
each Investor setting forth the number of units such Investor is entitled
to purchase, the aggregate purchase price and the time and place of the
closing of the transaction.
(v) The number of Standard Carried Common Units to be
repurchased by the Investors shall first be satisfied to the extent
possible from the Standard Carried Common Units held by Executive at the
time of delivery of the Dilution Repurchase Notice. If the number of
Standard Carried Common Units then held by Executive is less than the total
number of Standard Carried Common Units that the Investors have elected to
purchase, the Investors shall purchase the remaining Standard Carried
Common Units elected to be purchased from the Permitted Transferee(s) of
Executive Securities under this Agreement, PRO RATA according to the number
of Executive Securities held by such Permitted Transferee(s) at the time of
delivery of such Dilution Repurchase Notice (determined as nearly as
practicable to the nearest unit). The number of Standard Carried Common
Units, vested and unvested, to be repurchased hereunder shall be allocated
among Executive and the Permitted Transferee(s) of Executive Securities (if
any), PRO RATA according to the number of Standard Carried Common Units to
be purchased from such Person.
(vi) The closing of the purchase of the Standard Carried
Common Units pursuant to the Dilution Repurchase Option shall take place on
the date designated in the Dilution Repurchase Notice, which date shall not
be more than 30 days nor less than five days after the delivery of such
notice. Each Investor will pay for the Executive Securities to be purchased
by it pursuant to the Dilution Repurchase Option by a check or wire
transfer of immediately available
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funds. The Investors will be entitled to receive customary representations
and warranties from the sellers regarding such sale and to require that all
sellers' signatures be guaranteed.
4. PUT RIGHTS.
(a) SEPARATION PUT RIGHT.
(i) In the event Executive ceases to be employed by the
Company, Employer and their respective Subsidiaries as a result of
Executive's (A) death, (B) Disability, (C) employment termination by the
Company, Employer or any of their respective Subsidiaries without Cause
when there is not Substantial Underperformance or (D) resignation from his
employment for Good Reason when there is not Substantial Underperformance
(each a "SEPARATION PUT EVENT"), Executive may elect (the "SEPARATION PUT
ELECTION"), subject to and in accordance with the terms of this SECTION
4(a) AND SECTION 5 below, to require the Company to purchase from Executive
and the other holders of Executive Securities under this Agreement all (but
not less than all) of the Vested Units held by Executive or such holders by
delivering written notice (the "SEPARATION PUT EXERCISE NOTICE") to the
Company before the expiration of the Put Election Period, specifying in
such Separation Put Exercise Notice the number and type of Vested Units
required to be purchased by the Company.
(ii) For any Separation Put Election, the purchase price
for each Vested Unit will be the Fair Market Value of such unit as of the
Put Event Date.
(iii) The closing of the purchase of the Vested Units
pursuant to the Separation Put Election shall take place on a date to be
designated by the Company in the Company Separation Purchase Price Notice,
which date shall not be more than 30 days nor less than five days after the
Separation Put Exercise Notice is received by the Company. The Company
shall specify in writing to Executive the aggregate consideration to be
paid for such units and the time and place for the closing of the
transaction within five days after receipt of the Separation Put Exercise
Notice (the "COMPANY SEPARATION PURCHASE PRICE NOTICE"). The Company will
pay for the Vested Units to be purchased by it pursuant to the Separation
Put Election by first offsetting amounts outstanding under any bona fide
debts owed by Executive to the Company and will pay the remainder of the
purchase price by a check or wire transfer of immediately available funds.
The Company will be entitled to receive customary representations and
warranties from the sellers regarding such sale and to require that all
sellers' signatures be guaranteed.
(iv) Notwithstanding anything herein to the contrary, the
purchase obligations of the Company pursuant to this SECTION 4(a) shall
terminate if, prior to the consummation of such purchase obligations, a
Public Offering or a
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Sale of the Company occurs (such termination effective as of the
consummation of the Public Offering or Sale of the Company, as the case may
be).
(b) CLASS B PREFERRED UNIT PUT RIGHT. (i) Upon the occurrence of a
Preferred Put Event described in clause (ii) or (iii) of the definition
thereof, the Company shall deliver to Executive a written notice notifying
Executive of the occurrence of the Preferred Put Event (each of such notice
and the acknowledgement contemplated by clause (i) of the definition of
"Preferred Put Event," a "PREFERRED PUT EVENT NOTICE").
(ii) In the event of a Preferred Put Event, Executive may
elect (the "PREFERRED PUT ELECTION"), subject to and in accordance with the
terms of this SECTION 4(b) and SECTION 5 below, to require the Company to
purchase from Executive and the Permitted Transferee(s) of Executive
Securities all or any portion of the Maximum Number of Put Class B
Preferred Units held by Executive or such Permitted Transferee(s) by
delivering written notice (the "PREFERRED PUT EXERCISE NOTICE") to the
Company before the expiration of the Put Election Period, specifying in
such Preferred Put Exercise Notice the number of Class B Preferred Units
required to be purchased by the Company.
(iii) For any Preferred Put Election, the purchase price
for each Class B Preferred Unit to be purchased (limited to the Maximum
Number of Put Class B Preferred Units) will be the Fair Market Value of
such unit as of the date of the Preferred Put Event.
(iv) The closing of the purchase of the Class B Preferred
Units pursuant to the Preferred Put Election shall take place on a date to
be designated by the Company in the Company Preferred Purchase Price
Notice, which date shall not be more than 30 days nor less than five days
after the Preferred Put Exercise Notice is received by the Company. The
Company shall specify in writing to Executive the aggregate consideration
to be paid for such units and the time and place for the closing of the
transaction within five days after receipt of the Preferred Put Exercise
Notice (the "COMPANY PREFERRED PURCHASE PRICE NOTICE"). The Company will
pay for the Class B Preferred Units to be purchased by it pursuant to the
Preferred Put Election by first offsetting amounts outstanding under any
bona fide debts owed by Executive to the Company and will pay the remainder
of the purchase price by a check or wire transfer of immediately available
funds. The Company will be entitled to receive customary representations
and warranties from the sellers regarding such sale and to require that all
sellers' signatures be guaranteed.
5. LIMITATIONS ON CERTAIN REPURCHASES. Notwithstanding anything to the
contrary contained in this Agreement, all repurchases of Executive Securities by
the Company pursuant to any of the Separation Repurchase Option, Separation Put
Election or Preferred Put Election shall be subject to the ability of the
Company to pay the purchase price from its readily available cash resources
(without imposing any obligation on the Company to raise financing to fund the
repurchases) and also subject to applicable
12
restrictions contained in the
Delaware Limited Liability Company Act, the
Delaware General Corporation Law or such other governing corporate or limited
liability company law, applicable federal and state securities laws, and in the
Company's and its Subsidiaries' debt and equity financing agreements. If any
such restrictions prohibit (A) the repurchase of Executive Securities hereunder
which the Company is otherwise entitled or required to make or (B) dividends or
other transfers of funds from one or more Subsidiaries to the Company to enable
such repurchases, then the Company may (in the case of the Separation Repurchase
Option), or shall (in the case of the Separation Put Election or Preferred Put
Election), make such repurchases as soon as it is permitted to make repurchases
or receive funds from Subsidiaries under such restrictions. Furthermore, in the
event of a disagreement in accordance with the terms herein relating to the
determination of the Fair Market Value of any Executive Securities, the time
periods described herein with respect to purchases of Executive Securities under
SECTIONS 3 and 4 herein shall be tolled until any such determination has been
made in accordance with the terms provided herein.
6. RESTRICTIONS ON TRANSFER OF EXECUTIVE SECURITIES.
(a) TRANSFER OF EXECUTIVE SECURITIES. The holders of Executive
Securities shall not Transfer any interest in any units of Executive
Securities, except pursuant to (i) the provisions of SECTIONS 3 or 4
hereof, (ii) the provisions of Section 1 of the Securityholders Agreement
(a "PARTICIPATING SALE"), (iii) an Approved Sale (as defined in Section 4
of the Securityholders Agreement) or (iv) the provisions of SECTION 6(b)
below.
(b) CERTAIN PERMITTED TRANSFERS. The restrictions in this SECTION 6
will not apply with respect to any Transfer of (i) Executive Securities
made pursuant to applicable laws of descent and distribution or to such
Person's legal guardian in the case of any mental incapacity or among such
Person's Family Group or (ii) Common Units at such time as the Investors
sell Common Units in a Public Sale, but in the case of this clause (ii)
only an amount of units (the "TRANSFER AMOUNT") equal to the lesser of (A)
the sum of the number of Vested Carried Common Units and Co-Invest Common
Units owned by Executive and (B) the result of the number of Common Units
owned by Executive multiplied by a fraction (the "TRANSFER FRACTION"), the
numerator of which is the number of Common Units sold by the Investors in
such Public Sale and the denominator of which is the total number of Common
Units held by the Investors prior to the Public Sale; PROVIDED that, if at
the time of a Public Sale of units by the Investors, Executive chooses not
to Transfer the Transfer Amount, Executive shall retain the right to
Transfer an amount of Common Units at a future date equal to the lesser of
(x) the sum of the number of Vested Carried Common Units and Co-Invest
Common Units owned by Executive at such future date and (y) the result of
the number of Common Units owned by Executive at such future date
multiplied by the Transfer Fraction; PROVIDED further that the restrictions
contained in this SECTION 6 will continue to be applicable to the Executive
Securities after any Transfer of the type referred to in clause (i) above
and the transferees of such Executive Securities must agree in writing to
be bound by the provisions of this Agreement and the LLC Agreement.
13
Any transferee of Executive Securities pursuant to a Transfer in accordance
with the provisions of clause (i) of this SECTION 6(b) is herein referred
to as a "PERMITTED TRANSFEREE." Upon the Transfer of Executive Securities
pursuant to this SECTION 6(b), the transferring holder of Executive
Securities will deliver a written notice (a "TRANSFER NOTICE") to the
Company. In the case of a Transfer pursuant to clause (i) hereof, the
Transfer Notice will disclose in reasonable detail the identity of the
Permitted Transferee(s).
(c) TERMINATION OF RESTRICTIONS. The restrictions set forth in this
SECTION 6 will continue with respect to each unit of Executive Securities
until the earlier of (i) the date on which such unit of Executive
Securities has been transferred in a Public Sale permitted by this SECTION
6, or (ii) the consummation of a Sale of the Company.
7. ADDITIONAL RESTRICTIONS ON TRANSFER OF EXECUTIVE SECURITIES.
(a) LEGEND. The certificates representing the Executive Securities
will bear a legend in substantially the following form:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ORIGINALLY
ISSUED AS OF FEBRUARY 6, 2004, HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND MAY NOT BE
SOLD OR TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE ACT OR AN EXEMPTION FROM REGISTRATION
THEREUNDER. THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE
ALSO SUBJECT TO ADDITIONAL RESTRICTIONS ON TRANSFER, CERTAIN
REPURCHASE OPTIONS AND CERTAIN OTHER AGREEMENTS SET FORTH IN A
SENIOR MANAGEMENT AGREEMENT BETWEEN THE COMPANY AND AN EXECUTIVE
OF THE COMPANY AND OTHER PARTIES, DATED AS OF FEBRUARY 6, 2004. A
COPY OF SUCH AGREEMENT MAY BE OBTAINED BY THE HOLDER HEREOF AT
THE COMPANY'S PRINCIPAL PLACE OF BUSINESS WITHOUT CHARGE."
(b) OPINION OF COUNSEL. No holder of Executive Securities may
Transfer any Executive Securities (except pursuant to SECTION 3, SECTION 4
or SECTION 6(b) of this Agreement, Section 4 of the Securityholders
Agreement or an effective registration statement under the Securities Act)
without first delivering to the Company a written notice describing in
reasonable detail the proposed Transfer, together with an opinion of
counsel (reasonably acceptable in form and substance to the Company) that
neither registration nor qualification under the Securities Act and
applicable state securities laws is required in connection with such
transfer. In addition, if the holder of the Executive Securities delivers
to the Company an opinion of counsel that no subsequent Transfer of such
Executive Securities shall require registration under the Securities Act,
the Company shall
14
promptly upon such contemplated Transfer deliver new certificates for such
Executive Securities that do not bear the Securities Act portion of the
legend set forth in SECTION 7(a). If the Company is not required to deliver
new certificates for such Executive Securities not bearing such legend, the
holder thereof shall not Transfer the same until the prospective transferee
has confirmed to the Company in writing its agreement to be bound by the
conditions contained in this SECTION 7.
PROVISIONS RELATING TO EMPLOYMENT
8. EMPLOYMENT. Employer agrees to employ Executive and Executive
accepts such employment for the period beginning as of the date hereof and
ending upon his separation pursuant to SECTION 8(c) hereof (the "EMPLOYMENT
PERIOD").
(a) POSITION AND DUTIES.
(i) During the Employment Period, Executive shall serve
as the Senior Vice President of Marketing of Employer and shall have the
normal duties, responsibilities and authority implied by such position,
subject to the power of the Chief Executive Officer of Employer and the
Board to expand or limit such duties, responsibilities and authority and to
override such actions.
(ii) Executive shall report to the Chief Executive Officer
of Employer, and Executive shall devote his best efforts and, except as
otherwise requested or directed by the Chief Executive Officer of Employer
with respect to services to be provided by the Company or any of its
Subsidiaries pursuant to the Transition Services Agreement, his full
business time and attention to the business and affairs of the Company,
Employer and their Subsidiaries.
(b) SALARY, BONUS AND BENEFITS. During the Employment Period,
Employer will pay Executive a base salary of $195,000 per annum (the
"ANNUAL BASE SALARY"). The existing Medtech/Denorex bonus program will
continue through the fiscal year ending March 31, 2004. Beginning with
fiscal year 2005, the Board shall develop a new bonus program which may
incorporate subjective and objective criteria for bonus achievement
different from the criteria contained in the existing Medtech/Denorex bonus
program; PROVIDED, HOWEVER, THAT the maximum bonus payment potentials to
Executive will not be decreased from those provided in the existing
Medtech/Denorex bonus program. In addition, during the Employment Period,
Executive will be entitled to such other benefits approved by the Board and
made available to the senior management of the Company, Employer and their
Subsidiaries, which shall include vacation time (in an amount consistent
with past practice) and medical, dental, life and disability insurance. The
Board, on a basis consistent with past practice, shall review the Annual
Base Salary of Executive and may increase the Annual Base Salary by such
amount as the Board, in its sole discretion, shall deem appropriate. The
term "Annual Base Salary" as used in this Agreement shall refer to the
Annual Base Salary as it may be so increased.
15
(c) SEPARATION. The Employment Period will continue until (i)
Executive's death, Disability or resignation from employment with the
Company, Employer and their respective Subsidiaries or (ii) the Company,
Employer and their respective Subsidiaries decide to terminate Executive's
employment with or without Cause. If (A) Executive's employment is
terminated without Cause pursuant to clause (ii) above or (B) Executive
resigns from employment with the Company, Employer or any of their
respective Subsidiaries for Good Reason, then during the period commencing
on the date of termination of the Employment Period and ending on the first
anniversary of the date of termination (the "SEVERANCE PERIOD"), Employer
shall pay to Executive, in equal installments on the Employer's regular
salary payment dates, an aggregate amount equal to (I) his Annual Base
Salary, plus (II) an amount equal to the annual bonus, if any, paid or
payable to Executive by Employer for the last fiscal year ended prior to
the date of termination. In addition, if Executive is entitled on the date
of termination to coverage under the medical and prescription portions of
the Welfare Plans, such coverage shall continue for Executive and
Executive's covered dependents for a period ending on the first anniversary
of the date of termination at the active employee cost payable by Executive
with respect to those costs paid by Executive prior to the date of
termination; PROVIDED, that this coverage will count towards the depletion
of any continued health care coverage rights that Executive and Executive's
dependents may have pursuant to the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended ("COBRA"); PROVIDED further, that
Executive's or Executive's covered dependents' rights to continued health
care coverage pursuant to this SECTION 8(c) shall terminate at the time
Executive or Executive's covered dependents become covered, as described in
COBRA, under another group health plan, and shall also terminate as of the
date Employer ceases to provide coverage to its senior executives generally
under any such Welfare Plan. Notwithstanding the foregoing, (I) Executive
shall not be entitled to receive any payments or benefits pursuant to this
SECTION 8(c) unless Executive has executed and delivered to Employer a
general release in form and substance satisfactory to Employer and (II)
Executive shall be entitled to receive such payments and benefits only so
long as Executive has not breached the provisions of SECTIONS 9 or 10
hereof. The release described in the foregoing sentence shall not require
Executive to release any claims for any vested employee benefits, workers
compensation benefits covered by insurance or self-insurance, claims to
indemnification to which Executive may be entitled under the Company's or
its Subsidiaries' certificate(s) of incorporation, by-laws or under any of
the Company's or its Subsidiaries' directors or officers insurance
policy(ies) or applicable law, or equity claims to contribution from the
Company or its Subsidiaries or any other Person to which Executive is
entitled as a matter of law in respect of any claim made against Executive
for an alleged act or omission in Executive's official capacity and within
the scope of Executive's duties as an officer, director or employee of the
Company or its Subsidiaries. Not later than eighteen (18) months following
the termination of Executive's employment, the Company and its Subsidiaries
for which the Executive has acted in the capacity of a senior manager,
shall sign and deliver to Executive a release of claims that the
16
Company or its Subsidiaries has against Executive; PROVIDED THAT, such
release shall not release any claims that the Company or its Subsidiaries
commenced prior to the date of the release(s), any claims relating to
matters actively concealed by Executive, any claims to contribution from
Executive to which the Company or its Subsidiaries are entitled as a matter
of law or any claims arising out of mistaken indemnification by the Company
or any of its Subsidiaries. Except as otherwise provided in this SECTION
8(c) or in the Employer's employee benefit plans or as otherwise required
by applicable law, Executive shall not be entitled to any other salary,
compensation or benefits after termination of Executive's employment with
Employer.
9. CONFIDENTIAL INFORMATION.
(a) OBLIGATION TO MAINTAIN CONFIDENTIALITY. Executive acknowledges
that the information, observations and data (including trade secrets)
obtained by him during the course of his performance under this Agreement
concerning the business or affairs of the Company, Employer and their
respective Subsidiaries and Affiliates ("CONFIDENTIAL INFORMATION") are the
property of the Company, Employer or such Subsidiaries and Affiliates,
including information concerning acquisition opportunities in or reasonably
related to the Company's and Employer's business or industry of which
Executive becomes aware during the Employment Period. Therefore, Executive
agrees that he will not disclose to any unauthorized Person or use for his
own account (for his commercial advantage or otherwise) any Confidential
Information without the Board's written consent, unless and to the extent
that the Confidential Information, (i) becomes generally known to and
available for use by the public other than as a result of Executive's acts
or omissions to act, (ii) was known to Executive prior to Executive's
employment with Employer, the Company or any of their Subsidiaries and
Affiliates or (iii) is required to be disclosed pursuant to any applicable
law, court order or other governmental decree. Executive shall deliver to
the Company at a Separation, or at any other time the Company may request,
all memoranda, notes, plans, records, reports, computer tapes, printouts
and software and other documents and data (and copies thereof) relating to
the Confidential Information, Work Product (as defined below) or the
business of the Company, Employer and their respective Subsidiaries and
Affiliates (including, without limitation, all acquisition prospects, lists
and contact information) which he may then possess or have under his
control.
(b) OWNERSHIP OF PROPERTY. Executive acknowledges that all
discoveries, concepts, ideas, inventions, innovations, improvements,
developments, methods, processes, programs, designs, analyses, drawings,
reports, patent applications, copyrightable work and mask work (whether or
not including any Confidential Information) and all registrations or
applications related thereto, all other proprietary information and all
similar or related information (whether or not patentable) that relate to
the Company's, Employer's or any of their respective Subsidiaries' or
Affiliates' actual or anticipated business, research and development, or
existing or future products or services and that are conceived,
17
developed, contributed to, made, or reduced to practice by Executive
(either solely or jointly with others) while employed by the Company,
Employer or any of their respective Subsidiaries or Affiliates (including
any of the foregoing that constitutes any proprietary information or
records) ("WORK PRODUCT") belong to the Company, Employer or such
Subsidiary or Affiliate and Executive hereby assigns, and agrees to assign,
all of the above Work Product to the Company, Employer or to such
Subsidiary or Affiliate. Any copyrightable work prepared in whole or in
part by Executive in the course of his work for any of the foregoing
entities shall be deemed a "work made for hire" under the copyright laws,
and the Company, Employer or such Subsidiary or Affiliate shall own all
rights therein. To the extent that any such copyrightable work is not a
"work made for hire," Executive hereby assigns and agrees to assign to the
Company, Employer or such Subsidiary or Affiliate all right, title, and
interest, including without limitation, copyright in and to such
copyrightable work. Executive shall promptly disclose such Work Product and
copyrightable work to the Board and perform all actions reasonably
requested by the Board (whether during or after the Employment Period) to
establish and confirm the Company's, Employer's or such Subsidiary's or
Affiliate's ownership (including, without limitation, assignments,
consents, powers of attorney, and other instruments).
(c) THIRD PARTY INFORMATION. Executive understands that the Company,
Employer and their respective Subsidiaries and Affiliates will receive from
third parties confidential or proprietary information ("THIRD PARTY
INFORMATION") subject to a duty on the Company's, Employer's and their
respective Subsidiaries' and Affiliates' part to maintain the
confidentiality of such information and to use it only for certain limited
purposes. During the Employment Period and thereafter, and without in any
way limiting the provisions of SECTION 9(a) above, Executive will hold
Third Party Information in the strictest confidence and will not disclose
to anyone (other than personnel and consultants of the Company, Employer or
their respective Subsidiaries and Affiliates who need to know such
information in connection with their work for the Company, Employer or any
of their respective Subsidiaries and Affiliates) or use, except in
connection with his work for the Company, Employer or any of their
respective Subsidiaries and Affiliates, Third Party Information unless
expressly authorized by a member of the Board (other than himself if
Executive is on the Board) in writing.
(d) USE OF INFORMATION OF PRIOR EMPLOYERS. During the Employment
Period and thereafter, Executive will not improperly use or disclose any
confidential information or trade secrets, if any, of any former employers
or any other Person to whom Executive has an obligation of confidentiality,
and will not bring onto the premises of the Company, Employer or any of
their respective Subsidiaries or Affiliates any unpublished documents or
any property belonging to any former employer or any other Person to whom
Executive has an obligation of confidentiality unless consented to in
writing by the former employer or Person. Executive will use in the
performance of his duties only information which is (i) generally known and
used by persons with training and experience comparable to Executive's and
which is (x) common knowledge in the industry or
18
(y) otherwise legally in the public domain, (ii) otherwise provided or
developed by the Company, Employer or any of their respective Subsidiaries
or Affiliates or (iii) in the case of materials, property or information
belonging to any former employer or other Person to whom Executive has an
obligation of confidentiality, approved for such use in writing by such
former employer or Person.
10. NONCOMPETITION AND NONSOLICITATION. Executive acknowledges that in
the course of his employment with Employer he will become familiar with the
Company's, Employer's and their respective Subsidiaries' trade secrets and with
other confidential information concerning the Company, Employer and such
Subsidiaries and that his services will be of special, unique and extraordinary
value to the Company, Employer and such Subsidiaries. Therefore, Executive
agrees that:
(a) NONCOMPETITION. During the Employment Period and also during the
period commencing on the date of termination of the Employment Period and
ending on the first anniversary of the date of termination, he shall not
anywhere in the United States, directly or indirectly, own, manage,
control, participate in, consult with, render services for, or in any
manner engage in any business (i) competing with a brand of the Company,
Employer, Medtech, Denorex, any business acquired by such Persons, or any
Subsidiaries of such Persons, representing 10% or more of the consolidated
revenues or EBITDA of the Company and its Subsidiaries for the trailing 12
months ending on the last day of the last completed calendar month
immediately preceding the date of termination of the Employment Period or
(ii) in which the Company, Employer Medtech, Denorex, any business acquired
by such Persons, or any Subsidiaries of such Persons has conducted
discussions or has requested and received information relating to the
acquisition of such business by such Person (x) within one year prior to
the Separation and (y) during the Severance Period, if any. Nothing herein
shall prohibit Executive from being a passive owner of not more than 2% of
the outstanding stock of any class of a corporation that is publicly
traded, so long as Executive has no active participation in the business of
such corporation.
(b) NONSOLICITATION. During the Employment Period and also during
the period commencing on the date of termination of the Employment Period
and ending on the first anniversary of the date of termination, Executive
shall not directly or indirectly through another entity (i) induce or
attempt to induce any employee of the Company, Employer or any of their
respective Subsidiaries to leave the employ of the Company, Employer or any
such Subsidiary, or in any way interfere with the relationship between the
Company, Employer and any of their respective Subsidiaries and any employee
thereof, (ii) hire any person who was an employee of the Company, Employer
or any of their respective Subsidiaries within 180 days after such person
ceased to be an employee of the Company, Employer or any of their
respective Subsidiaries (PROVIDED, HOWEVER, THAT such restriction shall not
apply for a particular employee if the Company has provided its written
consent to such hire, which consent, in the case of any person who was not
a key employee of the Company, Employer or any of their respective
Subsidiaries, shall not be unreasonably withheld), (iii) induce or attempt
to induce
19
any customer, supplier, licensee or other business relation of the Company,
Employer or any of their respective Subsidiaries to cease doing business
with the Company, Employer or any such Subsidiary or in any way interfere
with the relationship between any such customer, supplier, licensee or
business relation and the Company, Employer or any Subsidiary or (iv)
directly or indirectly acquire or attempt to acquire an interest in any
business relating to the business of the Company, Employer or any of their
respective Subsidiaries and with which the Company, Employer and any of
their respective Subsidiaries has conducted discussions or has requested
and received information relating to the acquisition of such business by
the Company, Employer or any of their respective Subsidiaries in the two
year period immediately preceding a Separation.
(c) ENFORCEMENT. If, at the time of enforcement of SECTION 9 or this
SECTION 10, a court holds that the restrictions stated herein are
unreasonable under circumstances then existing, the parties hereto agree
that the maximum duration, scope or geographical area reasonable under such
circumstances shall be substituted for the stated period, scope or area and
that the court shall be allowed to revise the restrictions contained herein
to cover the maximum duration, scope and area permitted by law. Because
Executive's services are unique and because Executive has access to
Confidential Information, the parties hereto agree that money damages would
be an inadequate remedy for any breach of this Agreement. Therefore, in the
event of a breach or threatened breach of this Agreement, the Company,
Employer, their respective Subsidiaries or their successors or assigns may,
in addition to other rights and remedies existing in their favor, apply to
any court of competent jurisdiction for specific performance and/or
injunctive or other relief in order to enforce, or prevent any violations
of, the provisions hereof (without posting a bond or other security).
(d) ADDITIONAL ACKNOWLEDGMENTS. Executive acknowledges that the
provisions of this SECTION 10 are in consideration of: (i) employment with
the Employer, (ii) the issuance of the Executive Securities by the Company
and (iii) additional good and valuable consideration as set forth in this
Agreement. In addition, Executive agrees and acknowledges that the
restrictions contained in SECTION 9 and this SECTION 10 do not preclude
Executive from earning a livelihood, nor do they unreasonably impose
limitations on Executive's ability to earn a living. In addition, Executive
acknowledges (i) that the business of the Company, Employer and their
respective Subsidiaries will be conducted throughout the United States,
(ii) notwithstanding the state of incorporation or principal office of the
Company, Employer or any of their respective Subsidiaries, or any of their
respective executives or employees (including the Executive), it is
expected that the Company and Employer will have business activities and
have valuable business relationships within its industry throughout the
United States and (iii) as part of his responsibilities, Executive will be
traveling throughout the United States in furtherance of Employer's
business and its relationships. Executive agrees and acknowledges that the
potential harm to the Company and Employer of the non-enforcement of
SECTION 9 and this SECTION 10 outweighs any potential harm to Executive of
its enforcement by injunction or otherwise.
20
Executive acknowledges that he has carefully read this Agreement and has
given careful consideration to the restraints imposed upon Executive by
this Agreement, and is in full accord as to their necessity for the
reasonable and proper protection of confidential and proprietary
information of the Company, Employer and their Subsidiaries now existing or
to be developed in the future. Executive expressly acknowledges and agrees
that each and every restraint imposed by this Agreement is reasonable with
respect to subject matter, time period and geographical area.
GENERAL PROVISIONS
11. DEFINITIONS.
"AFFILIATE" means, (i) with respect to any Person, any Person that
controls, is controlled by or is under common control with such Person or an
Affiliate of such Person, and (ii) with respect to any Investor, any general or
limited partner of such Investor, any employee or owner of any such partner, or
any other Person controlling, controlled by or under common control with such
Investor.
"BOARD" means the Company's board of managers (or its equivalent).
"CAUSE" means (i) the intentional or knowing commission of a felony or a
crime involving moral turpitude or the commission of any other act or omission
involving dishonesty or fraud with respect to the Company, Employer or any of
their respective Subsidiaries or any of their customers or suppliers, (ii)
substantial and repeated failure to perform duties of the office held by
Executive as reasonably directed by the Board, (iii) gross negligence or willful
misconduct with respect to the Company, Employer or any of their respective
Subsidiaries, (iv) conduct tending to bring the Company, Employer or any of
their respective Subsidiaries into substantial public disgrace or disrepute or
(v) any breach by Executive of SECTIONS 9 or 10 of this Agreement.
Notwithstanding the foregoing, if it is alleged or determined that actions taken
by Executive caused the Company, Employer or any of their respective
Subsidiaries to engage in illegal activities or operations, the taking of such
actions by Executive shall not constitute "Cause" hereunder if Executive had a
reasonable and good faith belief that such actions were not in violation of any
law, rule, regulation or court order, were in the best interests of the Company,
Employer and their respective Subsidiaries and were taken in the ordinary course
of business.
"CLASS A PREFERRED UNITS" means the Class A Preferred Units, as defined in
the LLC Agreement.
"CLOSING DATE" has the meaning set forth in the Stock Purchase Agreement.
"CREDIT AGREEMENT" means that certain Credit Agreement dated as of the date
hereof, by and among Medtech Acquisition, Inc., Denorex Acquisition, Inc.,
Xxxxxxx Xxxxx Capital, a division of Xxxxxxx Xxxxx Business Financial Services
Inc., the financial institutions parties thereto and the other parties named
therein, as the same may be amended, supplemented or otherwise modified from
time to time, at any renewal, extension, refunding, restructuring, replacement
or refinancing thereof (whether with the
21
original agent or lenders or another agent or agents or other lenders and
whether provided under the original Credit Agreement or any other credit
agreement).
"DEBT" has the meaning set forth in the Credit Agreement.
"DENOREX" means The Denorex Company, a
Delaware corporation.
"DENOREX STOCKHOLDERS AGREEMENT" means the Stockholders Agreement of The
Denorex Company, dated November 6, 2006, among Denorex and its stockholders.
"DISABILITY" means the disability of Executive caused by any physical or
mental injury, illness or incapacity as a result of which Executive is unable to
effectively perform the essential functions of Executive's duties as determined
by the Board in good faith.
"EBITDA" has the meaning set forth in the Credit Agreement.
"EQUITY EQUIVALENTS" means, at any time, without duplication with any other
Equity Securities or Equity Equivalents, any rights, warrants, options,
convertible securities or Debt, exchangeable securities or Debt, or other
rights, exercisable for or convertible or exchangeable into, directly or
indirectly, Equity Securities and securities convertible or exchangeable into
Equity Securities, whether at the time of issuance or upon the passage of time
or the occurrence of a future event.
"EQUITY SECURITIES" means all shares or units of Common Units, Class A
Preferred Units, Class B Preferred Units and other Units (as defined in the LLC
Agreement) or other equity interests in the Company (including other classes or
series thereof having different rights) as may be authorized for issuance by the
Company from time to time. Equity Securities will also include equity of the
Company (or a corporate successor to the Company or a Subsidiary of the Company)
issued with respect to Equity Securities (i) by way of a unit split, unit
dividend, conversion, or other recapitalization, (ii) by way of reorganization
or recapitalization of the Company in connection with the incorporation of a
corporate successor in accordance with Section 15.7 of the LLC Agreement, or
(iii) by way of a distribution of securities of a Subsidiary of the Company to
the members of the Company following or with respect to a Subsidiary Public
Offering.
"EXECUTIVE SECURITIES" means all Class B Preferred Units and Common Units
acquired by Executive hereunder. Executive Securities will continue to be
Executive Securities in the hands of any holder other than Executive (except for
the Company, the Investors and transferees in a Public Sale, which transferees,
other than as provided in SECTION 3(b)(ii) above, shall not be subject to the
provisions of this Agreement with respect to such securities), and except as
otherwise provided herein, each such other holder of Executive Securities will
succeed to all rights and obligations attributable to Executive as a holder of
Executive Securities hereunder. Executive Securities (or, individually, any
particular type of equity security included therein) will also include equity
securities of the Company (or a corporate successor to the Company or a
Subsidiary of the Company) issued with respect to Executive Securities (or,
individually, any particular type of equity security included therein) (i) by
way of a unit split, unit
22
dividend, conversion, or other recapitalization, (ii) by way of reorganization
or recapitalization of the Company in connection with the incorporation of a
corporate successor in accordance with Section 15.7 of the LLC Agreement or
(iii) by way of a distribution of securities of a Subsidiary of the Company to
the members of the Company following or with respect to a Subsidiary Public
Offering. For the avoidance of doubt, all Unvested Common Units shall remain
Unvested Common Units after a Transfer thereof, unless such Transfer is to the
Company, an Investor or a transferee in a Public Sale.
"FAIR MARKET VALUE" of each unit of Executive Securities or other Equity
Securities, as the case may be (as applicable, the "APPLICABLE SECURITIES"),
means the average of the closing prices of the sales of such Applicable
Securities on all securities exchanges on which such Applicable Securities may
at the time be listed, or, if there have been no sales on any such exchange on
any day, the average of the highest bid and lowest asked prices on all such
exchanges at the end of such day, or, if on any day such Applicable Securities
are not so listed, the average of the representative bid and asked prices quoted
in the NASDAQ System as of 4:00 P.M., New York time, or, if on any day such
Applicable Securities are not quoted in the NASDAQ System, the average of the
highest bid and lowest asked prices on such day in the domestic over-the-counter
market as reported by the National Quotation Bureau Incorporated, or any similar
successor organization, in each such case averaged over a period of 21 days
consisting of the day as of which the Fair Market Value is being determined and
the 20 consecutive business days prior to such day. If at any time such
Applicable Securities are not listed on any securities exchange or quoted in the
NASDAQ System or the over-the-counter market, the Fair Market Value will be the
fair value of such Applicable Securities as determined in good faith by the
Board. If Executive reasonably disagrees with such determination, Executive
shall deliver to the Board a written notice of objection (an "OBJECTION") within
thirty (30) days after delivery of the Separation Repurchase Notice (or if no
Separation Repurchase Notice is delivered, then within thirty (30) days after
delivery of the Supplemental Separation Repurchase Notice), the Dilution
Repurchase Notice, the Company Separation Purchase Price Notice or the Company
Preferred Purchase Price Notice, as applicable. Upon receipt of Executive's
Objection, the Board and Executive will negotiate in good faith to agree on such
Fair Market Value. If such agreement is not reached within 20 days after the
delivery of the Objection, Fair Market Value shall be determined by an appraiser
jointly selected by the Board and Executive, which appraiser shall submit to the
Board and Executive a report within 30 days of its engagement setting forth such
determination. If the parties are unable to agree on an appraiser within 25 days
after delivery of the Objection, within seven days, each party shall submit the
names of four nationally recognized firms that are engaged in the business of
valuing non-public securities, and each party shall be entitled to strike two
names from the other party's list of firms, and the appraiser shall be selected
by lot from the remaining four investment banking firms. The expenses of such
appraiser shall be borne equally by Executive and the Company. The determination
of such appraiser as to Fair Market Value shall be final and binding upon all
parties.
"FAMILY GROUP" means a Person's spouse and descendants (whether natural or
adopted), and any trust, family limited partnership, limited liability company
or other entity wholly owned, directly or indirectly, by such Person or such
Person's spouse
23
and/or descendants that is and remains solely for the benefit of such Person
and/or such Person's spouse and/or descendants and any retirement plan for such
Person.
"GOOD REASON" means (i) any material diminution in Executive's position,
title, authority, powers, functions, duties or responsibilities with Employer,
(ii) the permanent relocation or transfer of Employer's principal office outside
a 30 mile radius from Irvington, New York or (iii) any failure of Employer to
comply with the Annual Base Salary and bonus provisions of SECTION 8(b) hereof;
PROVIDED, HOWEVER, that either or both of clauses (i) or (ii) above shall be
disregarded for purposes of this definition if, Xxxxx Xxxx, as the Chief
Executive Officer of the Employer, consents to the circumstances described in
such clause(s).
"LLC AGREEMENT" means the Amended and Restated Limited Liability Company
Agreement of the Company, dated as of the date hereof, as amended from time to
time pursuant to its terms.
"MAXIMUM NUMBER OF PUT CLASS B PREFERRED UNITS" means the product of (i)
the number of Class B Preferred Units acquired by Executive hereunder and held
of record and beneficially by Executive as of the date of the Preferred Put
Event, multiplied by (ii) a fraction (A) the numerator of which is the number of
Class B Preferred Units that remain unpurchased by the Equity Investors on the
date of the Preferred Put Event pursuant to Section 1B of the Purchase Agreement
and (B) the denominator of which is the total number of Class B Preferred Units
to be purchased by the Equity Investors pursuant to Section 1B of the Purchase
Agreement.
"MEDTECH" means Medtech Holdings, Inc., a
Delaware corporation.
"MEDTECH COMMON STOCK" means the Class A-2 Common Stock, par value $0.01
per share, of Medtech.
"MEDTECH COMMON STOCK VALUE" means the portion of the Medtech Equity
Purchase Price allocable to each share of Medtech Common Stock.
"MEDTECH EQUITY PURCHASE PRICE" has the meaning set forth in the Stock
Purchase Agreement.
"MEDTECH STOCKHOLDERS AGREEMENT" means the Stockholders Agreement of
Medtech, dated March 1, 2001, among Medtech and its stockholders.
"ORIGINAL COST" means, with respect to each Common Unit purchased
hereunder, $0.10, and, with respect to each Class B Preferred Unit purchased
hereunder, $1,000 (each as proportionately adjusted for all subsequent unit
splits, unit dividends and other recapitalizations).
"PERSON" means an individual, a partnership, a limited liability company, a
corporation, an association, a joint stock company, a trust, a joint venture, an
unincorporated organization, investment fund, any other business entity and a
governmental entity or any department, agency or political subdivision thereof.
24
"PREFERRED PUT EVENT" means the first to occur of the following events: (i)
the receipt by Executive from the Equity Investors of an acknowledgment in
writing that the Equity Investors will not purchase all of the Class B Preferred
Units contemplated to be purchased by the Equity Investors pursuant to Section
1B of the Purchase Agreement, (ii) the execution and delivery of a definitive
agreement to consummate a Sale of the Company if at the time of such occurrence
the Equity Investors have not previously acquired all of the Class B Preferred
Units contemplated to be purchased by the Equity Investors pursuant to Section
1B of the Purchase Agreement or (iii) a Public Offering if at the time of such
occurrence the Equity Investors have not previously acquired all of the Class B
Preferred Units contemplated to be purchased by the Equity Investors pursuant to
Section 1B of the Purchase Agreement.
"PRO FORMA EBITDA" means, for each month during the applicable period, an
amount equal to (i) with respect to fiscal years 2004 through 2008, the monthly
EBITDA projections set forth on EXHIBIT B attached hereto, and (ii) with respect
to each fiscal year following fiscal year 2008, the monthly EBITDA projections
prepared by or on behalf of management of the Company and approved by the Board
or a committee thereof, as such EBITDA projections under clauses (i) and (ii)
above may subsequently be adjusted, with the approval of the Board, to reflect
subsequent acquisitions or dispositions of businesses or other events,
circumstances or occurrences that affect such projections. If EBITDA projections
are determined on an annual (and not a monthly) basis for any fiscal year, then
monthly EBITDA projections for each month during such fiscal year shall equal
the quotient of the annual EBITDA projection for such fiscal year divided by 12.
"PUBLIC OFFERING" means the sale in an underwritten public offering
registered under the Securities Act of equity securities of the Company or a
corporate successor to the Company.
"PUBLIC SALE" means (i) any sale pursuant to a registered public offering
under the Securities Act or (ii) any sale to the public pursuant to Rule 144
promulgated under the Securities Act effected through a broker, dealer or market
maker (other than pursuant to Rule 144(k) prior to a Public Offering).
"PURCHASER" has the meaning set forth in the Purchase Agreement.
"PUT ELECTION PERIOD" means the period of time commencing on the date, as
applicable, on which the Preferred Put Event Notice is received by Executive or
on which the Separation Put Event occurs and expiring at 5:00 p.m., Chicago,
Illinois time, on the 20th business day thereafter for all Separation Put Events
other than death and Disability. If the Separation Put Event is triggered by the
Executive's death or Disability, the Put Election Period will be extended to 45
business days.
"PUT EVENT DATE" means the date on which a Separation Put Event or a
Preferred Put Event, as applicable, occurs.
"SALE OF THE COMPANY" means any transaction or series of transactions
pursuant to which any Person or group of related Persons other than the
Investors or their Affiliates
25
in the aggregate acquire(s) (i) equity securities of the Company possessing the
voting power (other than voting rights accruing only in the event of a default,
breach or event of noncompliance) to elect a majority of the Board (whether by
merger, consolidation, reorganization, combination, sale or transfer of the
Company's equity, securityholder or voting agreement, proxy, power of attorney
or otherwise) or (ii) all or substantially all of the Company's assets
determined on a consolidated basis; PROVIDED that a Public Offering shall not
constitute a Sale of the Company.
"SECURITIES ACT" means the Securities Act of 1933, as amended from time to
time.
"SECURITYHOLDERS AGREEMENT" means the Securityholders Agreement, dated as
of even date herewith, among the Company and certain of its securityholders, as
amended from time to time pursuant to its terms.
"SEPARATION" means the cessation of employment of Executive with the
Company, Employer and their respective Subsidiaries for any reason.
"STOCK PURCHASE AGREEMENT" means that certain Stock Purchase Agreement,
made as of January 7, 2004, among Medtech, Denorex, each stockholder of Medtech,
each stockholder of Denorex, Medtech Acquisition, Inc., and Denorex Acquisition,
Inc.
"SUBSIDIARY" means, with respect to any Person, any corporation, limited
liability company, partnership, association, or business entity of which (i) if
a corporation, a majority of the total voting power of shares of stock entitled
(without regard to the occurrence of any contingency) to vote in the election of
directors, managers, or trustees thereof is at the time owned or controlled,
directly or indirectly, by that Person or one or more of the other Subsidiaries
of that Person or a combination thereof, or (ii) if a limited liability company,
partnership, association, or other business entity (other than a corporation), a
majority of partnership or other similar ownership interest thereof is at the
time owned or controlled, directly or indirectly, by that Person or one or more
Subsidiaries of that Person or a combination thereof. For purposes hereof, a
Person or Persons shall be deemed to have a majority ownership interest in a
limited liability company, partnership, association, or other business entity
(other than a corporation) if such Person or Persons shall be allocated a
majority of limited liability company, partnership, association, or other
business entity gains or losses or shall be or control any managing director or
general partner of such limited liability company, partnership, association, or
other business entity. For purposes hereof, references to a "SUBSIDIARY" of any
Person shall be given effect only at such times that such Person has one or more
Subsidiaries, and, unless otherwise indicated, the term "Subsidiary" refers to a
Subsidiary of the Company.
"SUBSIDIARY PUBLIC OFFERING" means the sale in an underwritten public
offering registered under the Securities Act of equity securities of Employer or
another Subsidiary of the Company.
"SUBSTANTIAL UNDERPERFORMANCE" means the occurrence or existence of either
or both of the following: (i) at any time during the 12-month period ending on
and
26
including the date of termination of the Employment Period (A) a default,
whether or not cured, caused by the failure to make any Material Payment of any
Debt (unless a clerical error caused such failure and such failure was cured
immediately upon discovery), (B) any other material event of default (after
giving effect to any applicable grace period) relating to any Material Debt the
effect of which default is to cause, or to permit the holder or holders of such
Material Debt (or a trustee or agent on behalf of such holder or holders) to
cause, any such Material Debt to become due prior to its stated maturity
(without regard to any subordination provisions relating thereto) or (C) any
Material Debt shall be declared to be due and payable, or required to be prepaid
other than by a regularly scheduled required prepayment, prior to the stated
maturity thereof or (ii) as of the date of the termination of the Employment
Period, EBITDA for the 12-month period ending on the last day of the last
completed calendar month immediately preceding the date of the termination of
the Employment Period equals an amount less than 85% of aggregate Pro Forma
EBITDA for the same 12-month period. For purposes of this definition, "Debt"
shall mean, as of any date of determination, any Debt of the Company, Employer
or any of their respective Subsidiaries; "Material Payment" shall mean any
payment equal to or greater than $100,000; and "Material Debt" shall mean any
Debt having an outstanding principal balance in excess of $3 million.
"TCW/CRESCENT LENDERS" means collectively, TCW/Crescent Mezzanine Partners
III, L.P., a Delaware limited partnership, TCW/Crescent Mezzanine Trust III, a
Delaware business trust, and TCW/Crescent Mezzanine Partners III Netherlands,
L.P., a Delaware limited partnership, any of their Affiliates or any investment
fund for whom Trust Company of the West or any Affiliate of Trust Company of the
West acts as an account manager.
"TCW/CRESCENT PURCHASERS" means collectively, TCW/Crescent Mezzanine
Partners III, L.P., a Delaware limited partnership, TCW/Crescent Mezzanine Trust
III, a Delaware business trust, and TCW/Crescent Mezzanine Partners III
Netherlands, L.P., a Delaware limited partnership, any of their Affiliates or
any investment fund for whom Trust Company of the West or any Affiliate of Trust
Company of the West acts as an account manager.
"TRANSFER" means to sell, transfer, assign, pledge or otherwise dispose of
(whether with or without consideration and whether voluntarily or involuntarily
or by operation of law).
"TRANSITION SERVICES AGREEMENT" means that certain Transition Services
Agreement, dated as of even date herewith, by and among The Spic and Span
Company, a Delaware corporation, and Medtech.
"WELFARE PLANS" mean the welfare benefit plans, practices, policies and
programs provided by Employer to the extent applicable generally to other senior
executives of the Company.
12. NOTICES. Any notice provided for in this Agreement must be in
writing and must be either personally delivered, mailed by first class mail
(postage prepaid and
27
return receipt requested) or sent by reputable overnight courier service
(charges prepaid) to the recipient at the address below indicated:
IF TO EMPLOYER:
Medtech/Denorex Management, Inc.
00 Xxxxx Xxxxxxxx
Xxxxxxxxx, Xxx Xxxx 00000
Attention: Chief Executive Officer
WITH COPIES TO:
GTCR Xxxxxx Xxxxxx XX, L.L.C.
0000 Xxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000-0000
Attention: Xxxxx X. Xxxxxxx and Xxxxxxx X. Xxxxxx
Xxxxxxxx & Xxxxx LLP
000 Xxxx Xxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxx, P.C.
IF TO THE COMPANY:
Medtech/Denorex, LLC
00 Xxxxx Xxxxxxxx
Xxxxxxxxx, Xxx Xxxx 00000
Attention: Chief Executive Officer
WITH COPIES TO:
GTCR Xxxxxx Xxxxxx XX, L.L.C.
0000 Xxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000-0000
Attention: Xxxxx X. Xxxxxxx and Xxxxxxx X. Xxxxxx
Xxxxxxxx & Xxxxx LLP
000 Xxxx Xxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxx, P.C.
IF TO EXECUTIVE:
Xxxxxxx X. Xxxx
00 Xxxx Xxxxxxxxxx
Xxxxxxxxxx, Xxx Xxxxxx 00000
28
WITH A COPY TO:
Ford Xxxxxx Xxxxxxxx Xxxxxxxx & Xxxxxx LLP
Xxxx Xxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: Xxxxx X. Xxxxxx
IF TO THE INVESTORS:
See the attached INVESTOR NOTICE SCHEDULE.
or such other address or to the attention of such other Person as the recipient
party shall have specified by prior written notice to the sending party. Any
notice under this Agreement will be deemed to have been given when so delivered
or sent or, if mailed, five days after deposit in the U.S. mail.
13. GENERAL PROVISIONS.
(a) TRANSFERS IN VIOLATION OF AGREEMENT. Any Transfer or attempted
Transfer of any Executive Securities in violation of any provision of this
Agreement shall be void, and the Company shall not record such Transfer on
its books or treat any purported transferee of such Executive Securities as
the owner of such equity for any purpose.
(b) SEVERABILITY. Whenever possible, each provision of this
Agreement will be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Agreement is held to be
invalid, illegal or unenforceable in any respect under any applicable law
or rule in any jurisdiction, such invalidity, illegality or
unenforceability will not affect any other provision or any other
jurisdiction, but this Agreement will be reformed, construed and enforced
in such jurisdiction as if such invalid, illegal or unenforceable provision
had never been contained herein.
(c) COMPLETE AGREEMENT. This Agreement, those documents expressly
referred to herein and other documents of even date herewith embody the
complete agreement and understanding among the parties and supersede and
preempt any prior understandings, agreements or representations by or among
the parties, written or oral, which may have related to the subject matter
hereof in any way.
(d) NO STRICT CONSTRUCTION. The language used in this Agreement
shall be deemed to be the language chosen by the parties hereto to express
their mutual intent, and no rule of strict construction shall be applied
against any party.
(e) COUNTERPARTS. This Agreement may be executed and delivered in
separate counterparts (including by means of facsimile), each of which is
deemed to be an original and all of which taken together constitute one and
the same agreement.
29
(f) SUCCESSORS AND ASSIGNS. Except as otherwise provided herein,
this Agreement shall bind and inure to the benefit of and be enforceable by
Executive, the Company, the Investors and their respective successors and
assigns (including subsequent holders of Executive Securities); provided
that the rights and obligations of Executive under this Agreement shall not
be assignable except in connection with a permitted transfer of Executive
Securities hereunder.
(g) CHOICE OF LAW. The law of the State of Delaware will govern all
questions concerning the relative rights of the Company, Employer and its
securityholders. All other questions concerning the construction, validity
and interpretation of this Agreement and the exhibits hereto will be
governed by and construed in accordance with the internal laws of the State
of Delaware, without giving effect to any choice of law or conflict of law
provision or rule (whether of the State of Delaware or any other
jurisdiction) that would cause the application of the laws of any
jurisdiction other than the State of Delaware.
(h) MUTUAL WAIVER OF JURY TRIAL. BECAUSE DISPUTES ARISING IN
CONNECTION WITH COMPLEX TRANSACTIONS ARE MOST QUICKLY AND ECONOMICALLY
RESOLVED BY AN EXPERIENCED AND EXPERT PERSON AND THE PARTIES WISH
APPLICABLE STATE AND FEDERAL LAWS TO APPLY (RATHER THAN ARBITRATION RULES),
THE PARTIES DESIRE THAT THEIR DISPUTES BE RESOLVED BY A JUDGE APPLYING SUCH
APPLICABLE LAWS. THEREFORE, TO ACHIEVE THE BEST COMBINATION OF THE BENEFITS
OF THE JUDICIAL SYSTEM AND OF ARBITRATION, EACH PARTY TO THIS AGREEMENT
HEREBY WAIVES ALL RIGHTS TO TRIAL BY JURY IN ANY ACTION, SUIT, OR
PROCEEDING BROUGHT TO RESOLVE ANY DISPUTE BETWEEN OR AMONG ANY OF THE
PARTIES HERETO, WHETHER ARISING IN CONTRACT, TORT, OR OTHERWISE, ARISING
OUT OF, CONNECTED WITH, RELATED OR INCIDENTAL TO THIS AGREEMENT, THE
TRANSACTIONS CONTEMPLATED HEREBY AND/OR THE RELATIONSHIP ESTABLISHED AMONG
THE PARTIES HEREUNDER.
(i) EXECUTIVE'S COOPERATION. During the Employment Period and
thereafter, Executive shall cooperate with the Company, Employer and their
respective Subsidiaries and Affiliates in any disputes with third parties,
internal investigation or administrative, regulatory or judicial proceeding
as reasonably requested by the Company (including, without limitation,
Executive being available to the Company upon reasonable notice for
interviews and factual investigations, appearing at the Company's request
to give testimony without requiring service of a subpoena or other legal
process, volunteering to the Company all pertinent information and turning
over to the Company all relevant documents which are or may come into
Executive's possession, all at times and on schedules that are reasonably
consistent with Executive's other permitted activities and commitments). In
the event the Company requires Executive's cooperation in accordance with
this paragraph after the Employment Period, the
30
Company shall reimburse Executive for reasonable travel expenses (including
lodging and meals, upon submission of receipts) and compensate Executive
for his time at a rate that is mutually agreeable to Executive and the
Company.
(j) REMEDIES. Each of the parties to this Agreement (and the
Investors as third-party beneficiaries) will be entitled to enforce its
rights under this Agreement specifically, to recover damages and costs
(including attorney's fees) caused by any breach of any provision of this
Agreement and to exercise all other rights existing in its favor. The
parties hereto agree and acknowledge that money damages may not be an
adequate remedy for any breach of the provisions of this Agreement and that
any party may in its sole discretion apply to any court of law or equity of
competent jurisdiction (without posting any bond or deposit) for specific
performance and/or other injunctive relief in order to enforce or prevent
any violations of the provisions of this Agreement.
(k) AMENDMENT AND WAIVER. The provisions of this Agreement may be
amended and waived only with the prior written consent of the Company,
Employer, Executive and the Majority Holders (as defined in the Purchase
Agreement).
(l) INSURANCE. The Company, at its discretion, may apply for and
procure in its own name and for its own benefit life and/or disability
insurance on Executive in any amount or amounts considered available.
Executive agrees to cooperate in any medical or other examination, supply
any information, and to execute and deliver any applications or other
instruments in writing as may be reasonably necessary to obtain and
constitute such insurance. Executive hereby represents that he has no
reason to believe that his life is not insurable at rates now prevailing
for healthy men of his age.
(m) BUSINESS DAYS. If any time period for giving notice or taking
action hereunder expires on a day which is a Saturday, Sunday or holiday in
the state in which the Company's chief executive office is located, the
time period shall be automatically extended to the business day immediately
following such Saturday, Sunday or holiday.
(n) INDEMNIFICATION AND REIMBURSEMENT OF PAYMENTS ON BEHALF OF
EXECUTIVE. The Company and its Subsidiaries shall be entitled to deduct or
withhold from any amounts owing from the Company or any of its Subsidiaries
to Executive any federal, state, local or foreign withholding taxes, excise
taxes, or employment taxes ("TAXES") imposed with respect to Executive's
compensation or other payments from the Company or any of its Subsidiaries
or Executive's ownership interest in the Company, including, without
limitation, wages, bonuses, dividends, the receipt or exercise of equity
options and/or the receipt or vesting of restricted equity. In the event
the Company or any of its Subsidiaries does not make such deductions or
withholdings, Executive shall indemnify the Company and its Subsidiaries
for any amounts paid with respect to any such Taxes, together with any
interest, penalties and related expenses thereto.
31
(o) REASONABLE EXPENSES. Employer agrees to pay the reasonable fees
and expenses of Executive's counsel arising in connection with the
negotiation and execution of this Agreement and the consummation of the
transactions contemplated by this Agreement.
(p) TERMINATION. This Agreement (except for the provisions of
SECTIONS 8(a) and (b)) shall survive a Separation and shall remain in full
force and effect after such Separation.
(q) ADJUSTMENTS OF NUMBERS. All numbers set forth herein that refer
to unit prices or amounts will be appropriately adjusted to reflect unit
splits, unit dividends, combinations of units and other recapitalizations
affecting the subject class of equity.
(r) DEEMED TRANSFER OF EXECUTIVE SECURITIES. If the Company (and/or
the Investors and/or any other Person acquiring securities) shall make
available, at the time and place and in the amount and form provided in
this Agreement, the consideration for the Executive Securities to be
repurchased in accordance with the provisions of this Agreement, then from
and after such time, the Person from whom such units are to be repurchased
shall no longer have any rights as a holder of such units (other than the
right to receive payment of such consideration in accordance with this
Agreement), and such units shall be deemed purchased in accordance with the
applicable provisions hereof and the Company (and/or the Investors and/or
any other Person acquiring securities) shall be deemed the owner and holder
of such units, whether or not the certificates therefor have been delivered
as required by this Agreement.
(s) NO PLEDGE OR SECURITY INTEREST. The purpose of the Company's
retention of Executive's certificates is solely to facilitate the
repurchase provisions set forth in SECTIONS 3 and 4 herein and Section 4 of
the Securityholders Agreement and does not constitute a pledge by Executive
of, or the granting of a security interest in, the underlying equity.
(t) RIGHTS GRANTED TO GTCR FUND VIII AND ITS AFFILIATES. Any rights
granted to GTCR Fund VIII, GTCR Fund VIII/B, GTCR Co-Invest and their
Affiliates hereunder may also be exercised (in whole or in part) by their
designees.
(u) SUBSIDIARY PUBLIC OFFERING. If, after consummation of a
Subsidiary Public Offering, the Company distributes securities of such
Subsidiary to members of the Company, then such securities will be treated
in the same manner as (but excluding any "preferred" features of the units
with respect to which they were distributed) the units with respect to
which they were distributed for purposes of SECTIONS 1(f), 2, 3, 4, 5, 6
and 7 hereof and, in connection therewith, such Subsidiary may be treated
as the Company for purposes of the Company's rights with respect to such
securities.
32
* * * * *
33
IN WITNESS WHEREOF, the parties hereto have executed this
Senior Management
Agreement on the date first written above.
MEDTECH/DENOREX, LLC
By: /S/ XXXXX X. XXXXX
--------------------------------------
Name: Xxxxx X. Xxxxx
------------------------------------
Title: Secretary
-----------------------------------
MEDTECH/DENOREX MANAGEMENT,
INC.
By: /S/ XXXXX X. XXXXXXXX
--------------------------------------
Name: Xxxxx X. Xxxxxxxx
------------------------------------
Title: Vice President
-----------------------------------
/S/ XXXXXXX X. XXXX
-----------------------------------------
XXXXXXX X. XXXX
Agreed and Accepted:
GTCR FUND VIII, L.P.
By: GTCR Partners VIII, L.P.
Its: General Partner
By: GTCR Xxxxxx Xxxxxx XX, L.L.C.
Its: General Partner
By: /S/ XXXXX X. XXXXXXX
------------------------------------
Name: Xxxxx X. Xxxxxxx
Its: Principal
GTCR FUND VIII/B, L.P.
By: GTCR Partners VIII, L.P.
Its: General Partner
By: GTCR Xxxxxx Xxxxxx XX, L.L.C.
Its: General Partner
By: /S/ XXXXX X. XXXXXXX
------------------------------------
Name: Xxxxx X. Xxxxxxx
Its: Principal
[MEDTECH/DENOREX: SIGNATURE PAGE TO
SENIOR MANAGEMENT AGREEMENT (XXXXXXX X.
XXXX)]
34
GTCR CO-INVEST II, L.P.
By: GTCR Xxxxxx Xxxxxx XX, L.L.C.
Its: General Partner
By: /S/ XXXXX X. XXXXXXX
------------------------------------
Name: Xxxxx X. Xxxxxxx
Its: Principal
GTCR CAPITAL PARTNERS, L.P.
By: GTCR Mezzanine Partners, L.P.
Its: General Partner
By: GTCR Partners VI, L.P.
Its: General Partner
By: GTCR Xxxxxx Xxxxxx, L.L.C.
Its: General Partner
By: /S/ XXXXX X. XXXXXXX
------------------------------------
Name: Xxxxx X. Xxxxxxx
Its: Principal
TCW/CRESCENT MEZZANINE PARTNERS III, L.P.
TCW/CRESCENT MEZZANINE TRUST III
TCW/CRESCENT MEZZANINE PARTNERS III
NETHERLANDS, L.P.
By: TCW/Crescent Mezzanine
Management III, L.L.C.,
its Investment Manager
By: TCW Asset Management Company,
its Sub-Advisor
By: /S/ XXXXXXX X. XXXXXXXX
------------------------------------
Name: Xxxxxxx X. Xxxxxxxx
Its: Managing Director
[MEDTECH/DENOREX: SIGNATURE PAGE TO
SENIOR MANAGEMENT AGREEMENT (XXXXXXX X.
XXXX)]
35
EXHIBIT A
__________, 2004
PROTECTIVE ELECTION TO INCLUDE MEMBERSHIP
INTEREST IN GROSS INCOME PURSUANT TO
SECTION 83(b) OF THE INTERNAL REVENUE CODE
On February [__], 2004, the undersigned acquired a limited liability
company membership interest (the "MEMBERSHIP INTEREST") in Medtech/Denorex, LLC,
a Delaware limited liability company (the "COMPANY"), for $[________]. Pursuant
to the Operating Agreement of the Company, the undersigned is entitled to an
interest in Company capital exactly equal to the amount paid therefor and an
interest in Company profits.
Based on current Treasury Regulation Section 1.721-1(b), Proposed Treasury
Regulation Section 1.721-1(b)(1), and Revenue Procedures 93-27 and 2001-43, the
undersigned does not believe that issuance of the Membership Interest to the
undersigned is subject to the provisions of Section 83 of the Internal Revenue
Code (the "CODE"). In the event that the sale is so treated, however, the
undersigned desires to make an election to have the receipt of the Membership
Interest taxed under the provisions of Code Section 83(b) at the time the
undersigned acquired the Membership Interest.
Therefore, pursuant to Code Section 83(b) and Treasury Regulation Section
1.83-2 promulgated thereunder, the undersigned hereby makes an election, with
respect to the Membership Interest, to report as taxable income for the calendar
year 2004 the excess (if any) of the value of the Membership Interest on
[_____], 2004 over the purchase price thereof.
The following information is supplied in accordance with Treasury
Regulation Section 1.83-2(e):
1. The name, address and social security number of the undersigned:
[NAME]
[ADDRESS]
[SSN]
2. A description of the property with respect to which the election is being
made: A membership interest in the Company entitling the undersigned to an
interest in the Company's capital exactly equal to the amount paid therefor and
___% of the Company's profits.
3. The date on which the Membership Interest was transferred: [_____],
2004. The taxable year for which such election is made: 2004.
4. The restrictions to which the property is subject: If the undersigned
ceases to be employed by the Company or any of its subsidiaries, the unvested
portion of the units will be subject to repurchase by the Company at the lower
of cost or market value.
A-1
5. The fair market value on [_____], 2004 of the property with respect to
which the election is being made, determined without regard to any lapse
restrictions and in accordance with Revenue Procedure 93-27: $[AMOUNT PAID OR TO
BE PAID].
6. The amount paid or to be paid for such property: $[AMOUNT PAID OR TO BE
PAID]
* * * * *
A copy of this election is being furnished to the Company pursuant to
Treasury Regulation Section 1.83-2(e)(7). A copy of this election will be
submitted with the 2003 federal income tax return of the undersigned pursuant to
Treasury Regulation Section 1.83-2(c).
Dated: [_____], 2004
-----------------------------------
[NAME]
A-2
EXHIBIT B
EBITDA
Fiscal Year Annual EBITDA
----------- -------------
2004 $ 30,665,000
2005 $ 34,722,000
2006 $ 38,468,000
2007 $ 42,547,000
2008 $ 46,626,000
B-1
INVESTOR NOTICE SCHEDULE
IF TO GTCR FUND VIII, L.P., GTCR FUND VIII/B, L.P. OR GTCR CO-INVEST II, L.P.:
c/o GTCR Xxxxxx Xxxxxx XX, L.L.C.
0000 Xxxxx Xxxxx
Xxxxxxx, XX 00000-0000
Attention: Xxxxx X. Xxxxxxx and Xxxxxxx X. Xxxxxx
WITH A COPY TO:
Xxxxxxxx & Xxxxx LLP
000 Xxxx Xxxxxxxx Xxxxx
Xxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxx, P.C.
IF TO GTCR CAPITAL PARTNERS:
GTCR Capital Partners, L.P.
0000 Xxxxx Xxxxx
Xxxxxxx, XX 00000-0000
Attention: Xxxxx Xxxx
WITH A COPY TO:
Xxxxxxxx & Xxxxx LLP
000 Xxxx Xxxxxxxx Xxxxx
Xxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxx, P.C.
IF TO THE TCW/CRESCENT LENDERS AND/OR TCW/CRESCENT PURCHASERS:
TCW/Crescent Mezzanine Partners III, L.P.
TCW/Crescent Mezzanine Trust III
TCW/Crescent Mezzanine Partners III Netherlands, L.P.
x/x XXX/Xxxxxxxx Xxxxxxxxx, X.X.X.
000 Xxxxxxxx Xxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: Xxxxxxx X. Xxxxxxxx
Telecopier No.: (000) 000-0000
WITH A COPY TO:
Gardere Xxxxx Xxxxxx LLP
3000 Thanksgiving Tower
0000 Xxx Xxxxxx
Xxxxxx, Xxxxx 00000
Attention: Xxxx X. Xxxxx
Telecopier No.: (000) 000-0000
