AGREEMENT
AGREEMENT (this "Agreement") is made as of February 22, 1993, by and
between Xxxxx Xxxxx Holding Corp., a Delaware corporation (the "Company"), and
Xxxx Xxxxxxxxxx ("Executive").
The Company and Executive desire to enter into an agreement pursuant to
which (i) Executive's salary and bonus will be established and (ii) Executive
will purchase, and the Company will sell, 2,777.775 shares of the Company's
Class P Common Stock, par value $.01 per share (the "Class P Common") and
25,000 shares of the Company's Common Stock, par value $.01 per share (the
"Common," and, together with the Class P Common, the "Common Stock"). All of
such shares of Common Stock and all shares of Common Stock hereafter acquired
by Executive are referred to herein as "Executive Stock". Certain capitalized
terms used herein are defined in Section 9 below.
The parties hereto agree as follows:
PROVISIONS RELATING TO SALARY, BONUS AND CERTAIN BENEFITS
1. Base Salary. During each year Executive is employed by Xxxxx Xxxxx, a
New York general partnership ("Xxxxx Xxxxx"), Executive shall serve as Xxxxx
Xxxxx'x Senior Vice President Sales and Merchandising and shall have a base
salary of $220,000 per annum or such higher rate as the general partners may
designate from time to time (the "Base Salary"), which salary shall be payable
in regular installments in accordance with Xxxxx Xxxxx'x general payroll
practices.
2. Bonus. For each complete fiscal year (each, a "Fiscal Year") for which
Executive is employed by Xxxxx Xxxxx, Executive shall be entitled to receive
a bonus (the "Bonus") within 90 days after the end of each such Fiscal Year
based upon Xxxxx Xxxxx'x EBIT for each such Fiscal Year. For purposes of this
paragraph "EBIT" shall mean, consolidated earnings of the Company and its
Subsidiaries before interest, taxes and amortization and before extraordinary
gains and losses, calculated in accordance with generally accepted accounting
principles and determined from Holding's annual financial statements audited by
an independent "big six" accounting firm. For purposes of this paragraph 2,
"EBIT" shall mean, consolidated earnings of Holding and its Subsidiaries before
interest, taxes and amortization and before extraordinary gains and losses,
calculated through the month end closest to the termination date in accordance
with generally accepted accounting principles. For each Fiscal Year, the Bonus
shall be calculated as follows:
(i) if EBIT is less than or equal to the EDIT Floor, the Bonus shall be
zero;
(ii) if EDIT is greater than the EBIT Floor but less than the EBIT
Target, the Bonus shall be equal to (x) the quotient of (I) the amount by
which EDIT exceeds the EDIT Floor, divided by (11) the amount by which the
EDIT Target exceeds the EBIT Floor, multiplied by (y) the amount (the
"Target Amount") equal to the product of (A) Executive's Base Salary for
such Fiscal Year less $20,000, multiplied by (B) 50%; and
(iii) if EDIT is equal to the EDIT Target, the Bonus shall be the Target
Amount.
(b) With respect to all Bonuses payable to Executive under paragraph 2(a)
above, up to twenty percent (20%) of the gross amount of any such Bonus may
be withheld from each such Bonus by Xxxxx Xxxxx to reduce the amount then
outstanding under the Executive Note (as defined below).
(c) For purposes of calculating the Bonus under paragraph 2(b) above,
"EDIT Floor," and "EDIT Target" shall mean the amounts set forth in the
following table:
FISCAL YEAR EDIT FLOOR EDIT TARGET
------------- ------------- -------------
1993 $28,500,000 $29,200,000
1994 29,800,000 32,400,000
1995 32,100,000 37,100,000
1996 34,900,000 43,300,000
1997 38,000,000 50,300,000
3. Other Benefits. In addition to the Base Salary and the Bonuses payable'
to Executive pursuant to paragraphs 1 and 2 above, for so long as Executive is
employed by the Company, Executive shall be entitled to the following
benefits:
(i) a bonus in the amount of $40,000, payable upon Executive's relocation
to the New York metropolitan area; Executive agrees that such amount is
sufficient to reimburse Executive for all moving and relocation expenses
to be incurred by Executive in connection with such relocation, including,
without limitation, all expenses incurred by Executive in connection with
the sale of his current home and the purchase of a new home (including
attorneys' fees and brokers' commissions);
(ii) reimbursement of housing expenses incurred by Executive through
September 30, 1993 if Executive pursues one of the following three
alternatives: (a) use of the Company's Manhattan apartment, (b) rental of
an alternative apartment in the New York metropolitan area acceptable to
the Company, or (c) use of Executive's Connecticut house after termination
of
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the current lease with respect to such house (the Company agreeing to pay
the costs of termination of such lease which are approved in writing by the
Company).
(iii) reimbursement of up to $40,000 for the current value of all stock
options and bonuses forfeited by Executive in connection with the
termination of Executive's employment with Melville Corp. ("Melville");
provided that Executive shall use reasonable efforts to cause Melville to
pay the full amount which Executive would have been entitled to receive
pursuant to such stock options and bonus programs had Executive remained in
the employ of Melville through the end of Melville's current fiscal year.
(iv) reimbursement of all reasonable expenses incurred by Executive which
are related to Xxxxx Xxxxx'x business, including, without limitation,
charges incurred in connection with the use of a car phone.
4. No Employment Agreement. Nothing in this Agreement shall (i) interfere
with or limit in any way your right or the right of Xxxxx Xxxxx to terminate
your employment at any time, (ii) confer upon you any right to continue, or
confer upon Xxxxx Xxxxx any right to cause you to continue, in the employ of
Xxxxx Xxxxx for any period of time, or (iii) confer upon you any right to
receive any payment (including, without limitation, the Base Salary and the
Bonus) on or after the termination of your employment with Xxxxx Xxxxx, except
for payment of your Base Salary through the termination date.
PROVISIONS RELATING TO EXECUTIVE STOCK
1. Purchase and Sale of Executive Stock.
(a) As soon after the execution of this Agreement that Executive is able to
make the cash payment required under this Section 1(a) (but not later than 90
days after the date hereof), the Company will offer to sell to Executive, and
Executive will purchase from the Company, 2,777.775 shares of Class P Common
at a price of $162.00 per share and 25,000 shares of Common at a price of
$2.00 per share; provided that the obligations of the Company to offer and sell
the Class P Common and the Common to Executive, and the obligations of the
Executive to purchase the Class P Common and the Common from the Company,
pursuant to this Section 1(a) shall terminate in event Executive ceases to be
employed by the Company and its Subsidiaries prior to the time such
transactions are consummated. Upon the consummation of such transactions, the
Company will deliver to Executive a copy of, and a receipt for, the
certificate representing such Class P Common and such Common, and Executive
will deliver to the Company (i) cash in the amount of $250,000 and (ii) a
promissory note in the form of Exhibit A attached hereto in the aggregate
principal amount of $250,000 (the "Executive Note"). Executive's obligations
under the Executive
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Note will be secured by a pledge of all of the shares of Executive Stock to
the Company and in connection therewith Executive shall enter into a pledge
agreement in the form of Exhibit B attached hereto.
(b) Within 30 days after Executive purchases any Executive Stock from the
Company, 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 C attached hereto.
(c) In connection with the purchase and sale of the Executive Stock
hereunder, Executive represents and warrants to the Company that:
(i) The Executive Stock 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 1933 Act, or
any applicable state securities laws, and the Executive Stock will not be
disposed of in contravention of the 1933 Act or any applicable state
securities laws.
(ii) Executive is an executive officer of the Company, is sophisticated in
financial matters and is able to evaluate the risks and benefits of the
investment in the Executive Stock.
(iii) Executive is able to bear the economic risk of his investment in the
Executive Stock for an indefinite period of time because the Executive
Stock has not been registered under the 1933 Act and, therefore, cannot be
sold unless subsequently registered under the 1933 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 Stock and
has had full access to such other information concerning the Company and
its Subsidiaries as he has requested.
(v) 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 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.
(d) As an inducement to the Company to issue the Executive Stock to
Executive, as a condition thereto, Executive
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acknowledges and agrees that neither the issuance of the Executive Stock to
Executive nor any provision contained herein shall entitle Executive to remain
in the employment of the Company and its Subsidiaries or affect the right of
the Company to terminate Executive's employment at any time for any reason.
2. Repurchase Option.
(a) In the event Executive ceases to be employed by the Company and its
Subsidiaries, the Executive Stock (whether held by Executive or one or more of
Executive's transferees) will be subject to repurchase by the Company and the
Investors pursuant to the terms and conditions set forth in this paragraph 2
(the "Repurchase Option").
(b) If Executive's employment is terminated by the Company with Cause or as
a result of Executive's resignation, the purchase price for each share of
Executive Stock will be the lower of Executive's Original Cost of such share
and the Fair Market Value of such share. If Executive's employment is
terminated for any other reason, the purchase price for each share of Executive
Stock will be the Fair Market Value of such share.
(c) The Company's board of directors (the "Board") may elect to purchase all
or any portion of the Executive Stock by delivering written notice (the
"Repurchase Notice") to the holder or holders of the Executive Stock within
90 days after the date of Executive's termination. The Repurchase Notice will
set forth the number of shares of Executive Stock to be acquired from each
holder, the aggregate consideration to be paid for such shares and the time and
place for the closing of the transaction. The number of shares to be
repurchased by the Company shall first be satisfied to the extent possible from
the shares of Executive Stock held by Executive at the time of delivery of the
Repurchase Notice. If the number of shares of Executive Stock then held by
Executive is less than the total number of shares of Executive Stock the
Company has elected to purchase, the Company shall purchase the remaining
shares elected to be purchased from the other holder(s) of Executive Stock
under this Agreement, pro rata according to the number of shares of Executive
Stock held by such other holder(s) at the time of delivery of such Repurchase
Notice (determined as nearly as practicable to the nearest share). The number
of shares of Executive Stock to be repurchased hereunder will be allocated
among Executive and the other holders of Executive Stock (if any) pro rata
according to the number of shares of Executive Stock to be purchased from such
persons.
(d) If for any reason the Company does not elect to purchase all of the
Executive Stock pursuant to the Repurchase Option, the Investors shall be
entitled to exercise the Xxxxxxxxxx
0
Option for the shares of Executive Stock the Company has not elected to
purchase (the "Available Shares"). As soon as practicable after the Company
has determined that there will be Available Shares, but in any event within
45 days after the date of Executive's termination, the Company shall give
written notice (the "Option Notice") to the Investors setting forth the number
of Available Shares and the purchase price for the Available Shares. The
Investors may elect to purchase any or all of the Available Shares by giving
written notice to the Company within 30 days after the Option Notice has been
given by the Company. If the Investors elect to purchase an aggregate number
of shares greater than the number of Available Shares, the Available Shares
shall be allocated among the Investors based upon the number of shares of
Common Stock owned by each Investor on a fully-diluted basis. 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 Stock as to the number of shares being purchased from such holder
by the Investors (the "Supplemental Repurchase Notice"). At the time the
Company delivers the Supplemental Repurchase Notice to the holder(s) of
Executive Stock, the Company shall also deliver written notice to each
Investor setting forth the number of shares such Investor is entitled to
purchase, the aggregate purchase price and the time and place of the closing
of the transaction.
(e) The closing of the purchase of the Executive Stock pursuant to the
Repurchase Option shall take place on the date designated by the Company in
the Repurchase Notice or Supplemental Repurchase Notice, which date shall not
be more than 60 days nor less than five days after the delivery of the later
of either such notice to be delivered. The Company and/or the Investors will
pay for the Executive Stock to be purchased pursuant to the Repurchase Option
by delivery of, in the case of each Investor, a check or wire transfer of funds
and, in the case of the Company, (i) a check or wire transfer of funds, (ii) a
subordinated note or notes payable in up to, three equal annual installments
beginning on the first anniversary of the closing of such purchase and bearing
interest (payable quarterly) at a rate per annum equal to the prime rate
announced from time to time by Bankers Trust Company or (iii) both (i) and
(ii), in the aggregate amount of the purchase price for such shares; provided
that if Executive Stock is being repurchased by the Company under this
paragraph 2 in connection with a termination of Executive's employment due to
Executive's death or disability or other incapacity (as determined by the
general partners in their good faith judgment), the Company shall, if
permitted under the loan agreements and indentures to which the Company or any
of its Subsidiaries are subject, make such repurchase with a check or wire
transfer of funds; provided further that in all other instances in which
Executive Stock is being repurchased by the Company under this paragraph 2,
the Company
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shall, if permitted under the loan agreements and indentures to which the
Company or any of its Subsidiaries are subject, use reasonable efforts to make
all such repurchases with a check or wire transfer of funds. If the payment of
any amounts due under any note issued by the Company pursuant to this
paragraph 2(e) is prohibited under any loan agreement or indenture to which the
Company or any of its Subsidiaries is subject, such amounts shall be paid at
the earliest time permitted; provided that all notes issued to management of
the Company and its Subsidiaries in connection with the repurchase of the
Company's stock held by such persons shall be repaid on a pro rata basis. In
addition, the Company may pay the purchase price for such shares by crediting
any bona fide debts owed by Executive to. the Company or any of its
Subsidiaries, including, without limitation Executive's obligations, if any,
under the Executive Note. The purchasers of Executive Stock hereunder will be
entitled to receive customary representations and warranties from the sellers
regarding such sale and to require all sellers' signatures be guaranteed.
(f) The right of the Company and the Investors to repurchase shares of
Executive Stock pursuant to this paragraph 2 shall terminate upon the first to
occur of (i) the Sale of the Company or (ii) the later of (A) the consummation
by the Company of a Public Offering and (B) February 22, 1998.
(g) Notwithstanding anything to the contrary contained in this Agreement,
all repurchases of Executive Stock by the Company shall be subject to
applicable restrictions contained in the Delaware General Corporation Law and
in the Company's and its Subsidiaries debt and equity financing agreements. If
any such restrictions prohibit the repurchase of Executive Stock hereunder
which the Company is otherwise entitled or required to make, the Company may
make such repurchases as soon as it is permitted to do so under such
restrictions.
3. Restrictions on Transfer.
(a) Transfer of Executive Stock. Executive shall not sell, transfer, assign,
pledge or otherwise dispose of (whether with or without consideration and
whether voluntarily or involuntarily or by operation of law) any interest in
any shares of Executive Stock (a "Transfer"), except (i) pursuant to the
provisions of paragraph 2 above or an agreement between Executive and the
Investors, dated as of February 22, 1993, (ii) pursuant to a Sale of the
Company, (iii) pursuant to applicable laws of descent and distribution or
(iv) among Executive's family group; provided that the restrictions contained
herein will continue to be applicable to the Executive Stock after any
transfer pursuant to items (iii) and (iv) above and the transferees of such
Executive Stock shall agree in writing to be bound by the provisions of this
7
Agreement. Executive's "family group" means Executive's spouse and descendants
(whether natural or adopted) and any trust solely for the benefit of Executive
and/or Executive's spouse and/or descendants. The restrictions set forth in
this paragraph 3(a) shall terminate upon the first to occur of (i) the Sale of
the Company or (ii) the later of (A) the consummation by the Company of a
Public Offering and (B) February 22, 1998.
4. Additional Restrictions on Transfer.
(a) The certificates representing the Executive Stock will bear the
following legend:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ORIGINALLY ISSUED
AS OF FEBRUARY 22, 1993, 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 AN EXECUTIVE STOCK AGREEMENT BETWEEN THE COMPANY AND XXXX
XXXXXXXXXX DATED AS OF FEBRUARY 22, 1993. A COPY OF SUCH AGREEMENT MAY
BE OBTAINED BY THE HOLDER HEREOF AT THE COMPANY'S PRINCIPAL PLACE OF
BUSINESS WITHOUT CHARGE."
(b) No holder of Executive Stock may sell, transfer or dispose of any
Executive Stock (except pursuant to an effective registration statement under
the 1933 Act) without first delivering to the Company an opinion of counsel
(reasonably acceptable in form and substance to the Company) that neither
registration nor qualification under the 1933 Act and applicable state
securities laws is required in connection with such transfer.
(c) Each holder of Executive Stock agrees not to effect any public sale or
distribution of any Executive Stock or other equity securities of the Company,
or any securities convertible into or exchangeable or exercisable for any of
the Company's equity securities, during the seven days prior to and the 180
days after the effectiveness of any underwritten public offering, except as
part of such underwritten public offering or if otherwise permitted by the
Company.
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5. Sale of the Company.
(a) If the Board and the holders of a majority of the Company's Common
Stock approve a Sale of the Company (the "Approved Sale"), the holders of
Executive Stock will consent to and raise no objections against the Approved
Sale of the Company, and if the Approved Sale of the Company is structured as
a sale of stock, the holders of Executive Stock will agree to sell their
shares of Executive Stock on the terms and conditions approved by the Board
and the holders of a majority of the Company's Common Stock. The holders of
Executive Stock will take all necessary and desirable actions in connection
with the consummation of the Approved Sale of the Company.
(b) The obligations of the holders of Executive Stock with respect to the
Approved Sale of the Company are subject to the satisfaction of the following
conditions: (i) upon the consummation of the Approved Sale, all of the
holders of Common, on the one hand, and Class P Common, on the other hand1
will receive the same form and amount of consideration per share, or if any
holders of Common or Class P Common are given an option as to the form and
amount of consideration to be received, all holders of Common or Class P
Common, as the case may be, will be given the same option; and (ii) all
holders of then currently exercisable rights to acquire shares of Common or
Class P Common will be given an opportunity to either (A) exercise such
rights prior to the consummation of the Approved Sale and participate in such
sale as holders of Common or Class P Common or (B) upon the consummation of
the Approved Sale, receive in exchange for such rights consideration equal to
the amount determined by multiplying (1) the same amount of consideration per
share received by the holders of shares of such class of capital stock in
connection with the Approved Sale less the exercise price per share of such
rights to acquire such stock by (2) the number of shares of stock represented
by such rights.
(c) If the Company or the holders of the Company's securities enter into
any negotiation or transaction for which Rule 506 (or any similar rule then
in effect) promulgated by the Securities Exchange Commission may be available
with respect to such negotiation or transaction (including a merger,
consolidation or other reorganization), the holders of Executive Stock will,
at the request of the Company, appoint a purchaser representative (as such
term is defined in Rule 501) reasonably acceptable to the Company. If any
holder of Executive Stock appoints a purchaser representative designated by
the Company, the Company will pay the fees of such purchaser representative,
but if any holder of Executive Stock declines to appoint the purchaser
representative designated by the Company such holder will appoint another
purchaser representative (reasonably acceptable to the Company),
9
and such holder will be responsible for the fees of the purchaser
representative so appointed.
(d) Executive and the other holders of Executive Stock (if any) will bear
their pro-rata share (based upon the number of shares sold) of the costs of
any sale of Executive Stock pursuant to an Approved Sale to the extent such
costs are incurred for the benefit of all holders of Common Stock and are
not' otherwise paid by the Company or the acquiring party. Costs incurred by
Executive and the other holders of Executive Stock on their own behalf will
not be considered costs of the transaction hereunder.
(e) The provisions of this paragraph 5 will terminate upon the completion
of a Qualified Public Offering.
6. Voting Agreement. So long as the Investors hold any shares of Common
Stock, each holder of Executive Stock will vote all of his shares of
Executive Stock (and, in the event such holder is entitled to vote any of the
Company's other securities for the election of directors, such holder will
vote all such securities) and take all other necessary actions (whether in
such holder's capacity as a stockholder, director or officer of the Company),
and the Company will take all necessary or desirable actions as are requested
by Tyler Capital Fund, L.P. ("Tyler"), in order to cause all representatives
designated by Tyler to be elected as members of the Company's Board. In
addition, each holder will not vote his shares of Executive Stock (or such
other securities) in connection with the removal of any of Tyler's designees
of as a director unless and until Tyler directs such holder how to vote on
such removal. The provisions of this paragraph 6 will terminate upon the
first to occur of a Qualified Public Offering and the tenth anniversary of
this Agreement.
7. Initial Public Offering. In the event that the Board and Tyler approves
a Public Offering, the holders of Executive Stock will take all necessary or
desirable actions in connection with the consummation of the Public Offering.
In the event that such Public Offering is an underwritten offering and the
managing underwriters advise the Company in writing that in their opinion the
Common Stock structure will adversely affect the marketability of the
offering, the holders of Executive Stock will vote for and consent to a
recapitalization, reorganization and/or exchange of the Common Stock into
securities the managing underwriters, the Board and Tyler find acceptable and
will take all necessary or desirable actions in connection with the
consummation of such recapitalization, reorganization, exchange or other
transaction; provided that the resulting securities provide each holder of
Executive Stock with the same relative economic interest as such holder had
prior to such recapitalization, reorganization and/or exchange and is
consistent with the rights and preferences
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set forth in the Company's Certificate of Incorporation as in effect
immediately prior to such Public Offering.
8. Preemptive Rights.
(a) Except for (i) the issuance of Common Stock pursuant to a Public
Offering, (ii) the issuance of Common Stock or any securities containing
options or rights to acquire shares of Common Stock (the "Option Shares") to
the Company's or its Subsidiaries' management, (iii) the issuance of Common
Stock in connection with the acquisition (by merger, consolidation, purchase,
reorganization or otherwise) of a company, assets or a business or (iv) the
issuance of Common Stock as a dividend on the outstanding Common Stock, if
the Company authorizes the issuance or sale of any shares of any class of
Common Stock or any securities containing options or rights to acquire any
shares of Common Stock to any of the Investors or any Affiliate of any of the
Investors or any other holder of at least 5% of the outstanding Common Stock
on a fully diluted basis (calculated prior to such issuance), the Company
shall first offer to sell to Executive a portion of such stock or securities
equal to the quotient determined by dividing (1) the number of shares of such
class of Common Stock held by Executive by (2) the sum of the total number of
shares of such class of Common Stock then outstanding plus the number of
Option Shares of such class of Common Stock in respect of any options or
rights referred to in 8(a) (ii) above. Executive shall be entitled to
purchase the same class of such stock or securities at the same price and on
the same terms as such stock or securities are to be offered to any other
Persons. For purposes of this paragraph 8, the Class P Common and the
Company's Class P Non-Voting Common Stock, par value $.01 per share, shall be
deemed to be in the same class and the Common and Company's Non-Voting Common
Stock, par value $.01 per share, shall be deemed to be in the same class.
(b) In order to exercise the purchase rights hereunder, Executive must
within 20 days after receipt of written notice from the Company describing in
reasonable detail the stock or securities being offered, the purchase price
thereof, the payment terms and Executive's percentage allotment delivery a
written notice to the Company describing its election hereunder.
(c) Upon the expiration of the 20-day period described above, the Company
shall be entitled to sell such stock or securities which Executive has not
elected to purchase during the 90 days following such expiration on terms and
conditions no more favorable to the purchasers thereof than those offered to
Executive. Any stock or securities offered or sold by the Company after such
90-day period must be reoffered to Executive pursuant to the terms of this
paragraph 8.
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9. Definitions.
"Affiliate" means any Person directly or indirectly, controlling or
controlled by or under direct or indirect common control with such specified
Person.
"Cause" shall mean (i) the conviction of a felony or the commission of any
other act involving willful malfeasance in connection with Executive's
employment having an adverse effect on Xxxxx Xxxxx or any of its
Subsidiaries, (ii) substantial refusal by Executive to perform the duties
required by Xxxxx Xxxxx'x Chief Executive Officer, or (iii) gross negligence
or willful misconduct by Executive with respect to Xxxxx Xxxxx or any of its
Subsidiaries having the effect of materially injuring the reputation of Xxxxx
Xxxxx or any of its Subsidiaries or materially injuring any customer,
supplier, employee or other business relationships of Xxxxx Xxxxx or any of
its Subsidiaries.
"Executive Stock" will continue to be Executive Stock in the hands of any
holder other than Executive (except for the Company and the Investors and
except for transferees in a Public Sale), and except as otherwise provided
herein, each such other holder of Executive Stock will succeed to all rights
and obligations attributable to Executive as a holder of Executive Stock
hereunder. Executive Stock will also include shares of the Company's capital
stock issued with respect to Executive Stock by way of a stock split, stock
dividend or other recapitalization. Notwithstanding the foregoing, all shares
of Executive Stock shall remain Executive Stock after any transfer thereof.
"Fair Market Value" of each share of Executive Stock means the average of
the closing prices of the sales of the Company's common stock on all
securities exchanges on which the Common 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 the Company's common stock is 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 the Company's common
stock is 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 the
Company's common stock is not listed on any securities exchange or quoted in
the NASDAQ System or the overthe-counter market, the Fair Market Value of
each share of Executive Stock will be the fair value of the applicable class
of
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Common Stock mutually agreed upon the Executive and the Board. If Executive
and the Board are unable to agree upon the fair value, then Executive and the
Board will split the cost of a mutually acceptable business appraiser whose
determination of such value as of such date will be binding.
"Independent Third Party" means any person who, immediately prior to the
contemplated transaction, does not own in excess of 5% of the Company's
Common Stock on a fully-diluted basis, who is not controlling, controlled by
or under common control with any such 5% owner of the Company's Common Stock
and who is not the spouse or descendent (by birth or adoption) of any such 5%
owner of the Company's Common Stock.
"Investors" means Xxxxx, Xxxxx Massachusetts, L.P., Tyler International,
L.P. - II, DCIP Associates, and BCIP Trust Associates, L.P.
"1933 Act" means the Securities Act of 1933, as amended from time to time.
"Original Cost" means $2.00 with respect to each share of Common purchased
hereunder and $162.00 with respect to each share of Class P Common purchased
hereunder (in each case as proportionately adjusted for all subsequent stock
splits, stock dividends and other recapitalizations).
"Person" means an individual, a partnership, a joint venture, a
corporation, a trust, an unincorporated organization and a government or any
department or agency thereof.
"Public Offering" means a public offering of the Company's common stock
registered under the 1933 Act.
"Public Sale" means any sale pursuant to Public Offering or any sale to
the public pursuant to Rule 144 promulgated under the 1933 Act effected
through a broker, dealer or market maker.
"Oualified Public Offering" means the sale, in an underwritten public
offering registered under the 1933 Act, of shares of the Company's Common
Stock having an aggregate offering value of at least $25 million and a per
share price of at least twenty-five (25) times the Original Cost of the
Common.
"Sale of the Company" means the sale of the Company to an Independent
Third Party or affiliated group of Independent Third Parties pursuant to
which such party or parties acquire (i) capital stock of the Company
possessing the voting power to elect a majority of the Company's board of
directors (whether by merger, consolidation or sale or transfer of the
Company's capital stock)
13
or (ii) all or substantially all of the Company's assets determined on a
consolidated basis.
"Subsidiaries" means, with respect to any Person, any corporation,
partnership, association or other 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
partnership, association or other business entity, a majority of the
partnership or other similar ownership interest thereof is at the time owned
or controlled, directly or indirectly, by any 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
partnership, association or other business entity if such Person or Persons
shall be allocated a majority of partnership, association or other business
entity gains or losses or shall be or control the managing director or
general partner of such partnership, association or other business entity.
10. 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 return receipt requested) or sent by reputable overnight courier
service (charges prepaid) to the recipient at the address below indicated:
To the Company:
Xxxxx Xxxxx Holding Corp.
00-00 00xx Xxxxx
Xxxx Xxxxxx Xxxx, Xxx Xxxx
Attention: Xxxxx Xxxxx
With a copy to:
Xxxxxxxx & Xxxxx
000 Xxxx Xxxxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxx X. Xxxx, P.C.
Xxxxxxx X. Xxxxxx
To Executive:
Xxxx Charnobeau
-------------------
-------------------
To the Investors:
00
Xxxx Xxxxxxx
Xxx Xxxxxx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxx Xxxxxx
With a copy to:
Xxxxxxxx & Xxxxx
000 Xxxx Xxxxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxx X. Xxxx, P.C.
Xxxxxxx X. Xxxxxx
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.
11. General Provisions.
(a) Transfers in Violation of Agreement. Any Transfer or attempted
Transfer of any Executive Stock 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 Stock as the
owner of such stock 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) Counterparts. This Agreement may be executed in separate counterparts,
each of which is deemed to be an original
15
and all of which taken together constitute one and the same agreement.
(e) Successors and Assians. 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 Stock); provided that the
rights and -obligations of Executive under this Agreement shall not be
assignable except in connection with a permitted transfer of Executive Stock
hereunder.
(f) Choice of Law. The corporate law of the State of Delaware will govern
all questions concerning the relative rights of the Company and its
stockholders. All other questions concerning the construction, validity and
interpretation of this Agreement and the exhibits hereto will be governed by
the internal law, and not the law of conflicts, of the State of New York.
(g) Remedies. Each of the parties to this Agreement (including the
Investors) will be entitled to enforce its rights under this Agreement
specifically, to recover damages and costs (including reasonable 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.
(h) Amendment and Waiver. The provisions of this Agreement may be amended
and waived only with the prior written consent of the Company, Executive and
the holders of a majority of the Common Stock (on a fully-diluted basis) then
held by all Investors.
(i) Absence of Conflicting Agreements. Executive hereby warrants and
covenants that his employment by the Company and his ownership of the
Executive Stock does not result in a breach of the terms, conditions or
provisions of any agreement to which Executive is subject.
(j) 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
16
extended to the business day immediately following such Saturday, Sunday or
holiday.
* * * * *
17
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
date first written above.
XXXXX XXXXX HOLDING CORP.
/s/ Xxxxx Xxxxx
-------------------------
By: Xxxxx Xxxxx
Its: President and Chief
Executive Officer
/s/ Xxxx Xxxxxxxxxx
-------------------------
Xxxx Xxxxxxxxxx
18
AMENDMENT NO. 1 TO AGREEMENT
THIS AMENDMENT is made as of June 28, 1993, by and between Xxxxx Xxxxx
Holding Corp., a Delaware corporation (the "Company"), and Xxxx Xxxxxxxxxx
("Executive").
WHEREAS, the Company and Executive are parties to an Agreement, dated
February 22, 1993 (the "Agreement"); and
WHEREAS, the Company and Executive desire to amend the Agreement as set
forth herein;
NOW, THEREFORE, the Parties agree as follows:
1. Amendments.
(a) Section 2 of the Agreement shall be amended to add clause (iv) as
follows:
"(iv) if EDIT is greater than the EDIT Target, the Bonus shall be the
Target Amount [] an amount equal to (x) the quotient of (I) the amount by
which EDIT exceeds the EDIT Target, divided by (Il) the amount by which
the EDIT Ceiling exceeds the EDIT Target, multiplied by (y) the Target
Amount."
(b) Section 2(c) shall be amended (i) to add "EDIT Ceiling" between the
words "EDIT Floor," and "and", and (ii) to add the following column:
"EDIT CEILING
------------
$34,100,000
40,900,000
49,100,000
58,900,000
70,700,000"
2. Counterparts. This Amendment may be executed in separate counterparts
each of which shall be an original and all of which taken together shall
constitute one and the same agreement.
3. Governing Law. All questions concerning construction solidity and
interpretation of this Amendment shall be governed by and construed in
accordance with the internal law, and not the laws of conflicts, of Delaware.
* * * * * * * * * *
XXXXX XXXXX HOLDING CORP.
/s/ Xxxxx Xxxxx
----------------------------
By: Xxxxx Xxxxx
Its: Chief Executive Officer
EXECUTIVE
/s/ Xxxx Xxxxxxxxxx
----------------------------
Xxxx Xxxxxxxxxx
2
