AGREEMENT
AGREEMENT (this "Agreement") is made as of April 10, 1995, by and
between Xxxxx Xxxxx Holding Corp., a Delaware corporation (the "Company"), and
Xxxxx X. Xxx ("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, 555.556 shares of the
Company's Class P Common Stock, par value $.01 per share (the "Class P Common")
and 5,000 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 AND BONUS
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 Vice President - Pharmacy Services and shall have a base salary of
$150,000 per annum or such higher rate as the Board of Directors of the Company
(the "Board") 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. (a) 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; provided,
however, Executive shall be entitled to a pro rata portion of the Bonus for
Fiscal Year 1995 based on the number of days between the date hereof and the
end of Fiscal Year 1995. 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
the Company's annual financial statements audited by an independent "big six"
accounting firm. For each Fiscal Year, the Bonus shall be calculated as
follows:
(i) if EBIT is less than or equal to the EBIT Floor, the Bonus shall
be zero;
(ii) if EBIT 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 EBIT exceeds the EBIT Floor, divided by (II) the amount by which the
EBIT Target exceeds the EBIT Floor, multiplied by (y) 35% of Executive's
Base Salary (the "Target Amount") for such Fiscal Year;
(iii) if EBIT is equal to the EBIT Target, the Bonus shall be the
Target Amount; and
(iv) if EBIT is greater than the EBIT Target, the Bonus shall be the
Target Amount plus an amount equal to (x) the quotient of (I) the amount by
which EBIT exceeds the EBIT Target, divided by (II) the amount by which the
EBIT Ceiling exceeds the EBIT Target, multiplied by (y) the Target Amount.
(b) With respect to all Bonuses payable to Executive under paragraph
2(a) above, up to one hundred percent (100%) of such Bonus net of taxes
attributable to such Bonus (the "Net Bonus"), may be withheld from each such
Bonus by Xxxxx Xxxxx to reduce the amount then outstanding under the Executive
Note (as defined below), provided that the amount so withheld in any year shall
not exceed thirty-three percent (33%) of the aggregate principal amount of the
Executive Note (the "Yearly Withholding Cap") . In addition, if (i) the Net
Bonus for any given year exceeds the Yearly Withholding Cap, and (ii) the
Underwithheld Amount (as defined below) at such time is greater than zero, then
up to one hundred percent (100%) of the amount by which the Net Bonus for such
year exceeds the Yearly Withholding Cap may be withheld by Xxxxx Xxxxx to
reduce the Underwithheld Amount.
(c) For purposes of calculating the Bonus under paragraph 2(a) above,
"EBIT Floor," "EBIT Ceiling" and "EBIT Target" shall mean the amounts set forth
in the following table:
FISCAL YEAR EBIT FLOOR EBIT TARGET EBIT CEILING
----------- ---------- ----------- ------------
1995 32,100,000 37,100,000 49,100,000
1996 34,900,000 43,300,000 58,900,000
1997 38,000,000 50,300,000 70,700,000
3. No Employment Agreement. Nothing in this Agreement shall (i)
interfere with or limit in any way Executive's right or the right of Xxxxx
Xxxxx to terminate Executive's employment at any time, (ii) confer upon
Executive any right to continue, or confer upon Xxxxx Xxxxx any right to cause
Executive to continue, in the employ of Xxxxx Xxxxx for any period of time, or
(iii) confer upon Executive any right to receive any payment (including,
without limitation, the Base Salary and the Bonus) on or after the
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termination of Executive's employment with Xxxxx Xxxxx, except for payment of
Executive's Base Salary through the termination date.
PROVISIONS RELATING TO EXECUTIVE STOCK
1. Purchase and Sale of Executive Stock.
(a) Upon execution of this Agreement, Executive will purchase, and the
Company will sell, 555.556 shares of Class P Common at a price of $162.00 per
share and 5,000 shares of Common at a price of $2.00 per share. The Company
will deliver to Executive copies of, and a receipt for, the certificates
representing such Class P Common and such Common, and Executive will deliver to
the Company a total of $100,000 in payment for the shares, consisting of (i)
$25,000 in cash and (ii) a promissory note in the form of Exhibit A attached
hereto in the aggregate principal amount of $75,000 (the "Executive Note").
Executive's obligations under the Executive 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 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 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
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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 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 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 repur-
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chased 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 Repurchase 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
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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 Board in good
faith), 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 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 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 that 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) the fifth anniversary of the date
hereof.
(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
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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 the date hereof, (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 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)
the fifth anniversary of the date hereof.
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 MARCH __, 1995 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 THE
INITIAL HOLDER HEREOF DATED AS OF MARCH __, 1995. A COPY OF SUCH
AGREEMENT MAY BE OBTAINED BY THE HOLDER HEREOF AT THE
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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.
5. Sale of the Comnany.
(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 hand,
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
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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), 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, no holder will vote his or her shares of Executive Stock (or such
other securities) in connection with the removal of any of Tyler's designees as
a director unless
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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 the date hereof.
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 set forth in the Company's
Certificate of Incorporation as in effect immediately prior to such
recapitalization, reorganization, exchange or other transaction.
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
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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, deliver a
written notice to the Company describing his 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.
9. Definitions.
"Affiliate" means any Person, directly or indirectly, controlling,
controlled by or under 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.
"Deficit" means, for any given year, the amount by which the Yearly
Withholding Cap exceeds the amount which is actually withheld by Xxxxx Xxxxx,
pursuant to Section 2(b) of the Provisions Relating to Salary and Bonus hereof,
from the Bonus for such year.
"Executive Stock" will continue to be Executive Stock in the hands of
any holder other than Executive (except for the
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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.
"Fair Market Value" of each share of Common means the average of the
closing prices of the sales of the Common 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
Common 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 Common 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 Common
is not listed on any securities exchange or quoted in the NASDAQ System or the
over-the-counter market, the Fair Market Value of the Common will be the fair
value of the Common mutually agreed upon by the Executive and the Board. Fair
Market Value of each share of Class P Common will be the fair value of the
Class P Common mutually agreed upon by 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 and who is not the spouse or
descendent (by birth or adoption) of any such 5% owner.
"Investors" means Xxxxx, Xxxxx Massachusetts, L.P.,
Tyler-International, L.P. - II, BCIP Associates, and BCIP Trust Associates, L.P.
"1933 Act" means the Securities Act of 1933, as amended from time to
time.
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"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 a 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.
"Qualified 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
(without adjustment for any stock split, stock dividend or recapitalization
declared or effected in connection with such Qualified Public Offering).
"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) or
(ii) all or substantially all of the Company's assets determined on a
consolidated basis.
"Subsidiary" 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
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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.
"Underwithheld Amount" means, at any time, the sum of the Deficits for
all prior years; provided that the Deficit for any given year shall not include
any amounts which have been actually withheld by Xxxxx Xxxxx, pursuant to
Section 2(b) of the Provisions Relating to Salary and Bonus hereof, prior to
the time of determination of the Underwithheld Amount.
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 00000
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:
Xxxxx X. Xxx
00 Xxxxx Xxxxx Xxxx
Xxxxxxxx, XX 00000
To the Investors:
Xxxx Capital
Two Xxxxxx Place
Boston, Massachusetts 02116
Attention: Xxxx Xxxxxx
With a copy to:
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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 and all of which taken
together constitute one and the same agreement.
(e) 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
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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 extended to the business day immediately following such
Saturday, Sunday or holiday.
* * * * *
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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/ Xxxxx X. Xxx
--------------------------------------
Xxxxx X. Xxx
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EXHIBIT A
PROMISSORY NOTE
$75,000.00 March __, 1995
For value received, Xxxxx X. Xxx ("Executive") promises to pay to the
order of Xxxxx Xxxxx Holding Corp., a Delaware corporation (the "Company"), or
its successors or assigns, at such place as designated in writing by the holder
hereof, the aggregate principal sum of Seventy Five Thousand Dollars
($75,000.00). This Note was issued pursuant to and is subject to the terms of
the Agreement, dated as of March __, 1995 (the "Agreement"), between the
Company and Executive.
Interest will accrue on the outstanding principal amount of this Note
at a rate equal to the lesser of (i) 6% per annum or (ii) the highest rate
permitted by applicable law, and shall be payable at such time as the principal
amount of this Note becomes due and payable.
The principal amount of this Note shall be payable in three annual
installments of $25,000 on April 1, 1996, April 1, 1997 and April 1, 1998 (each
a "Payment Date"), with the entire unpaid principal amount together with all
accrued and unpaid interest being due and payable on April 1, 1998 (the
"Maturity Date"). Each installment payable hereunder may be offset by the
Company against any Bonus (as defined in the Agreement) net of taxes
attributable to such bonus then payable to Executive; provided that if the
installment amount then due exceeds the amount of such bonus, the amount of
such excess together with accrued interest thereon will be payable on the
earlier of (a) the next subsequent Payment Date and (b) the Maturity Date.
The amounts due under this Note are secured by a pledge of shares of
the Company's Common Stock, par value $.0l per share, and shares of the
Company's Class P Common Stock, par value $.01 per share. The payment of the
principal amount of and interest on this Note is subject to certain offset
rights under the Agreement. Notwithstanding anything in this Note to the
contrary, if on any Payment Date other than the Maturity Date, the exercise of
such offset rights by the Company does not result in a payment in full of the
installment then due under this Note, the unpaid portion of such installment
shall be due and payable on the next succeeding Payment Date.
In the event Executive fails to pay any amounts due hereunder when
due, Executive shall pay to the holder hereof, in addition to such amounts
due, all costs of collection, including reasonable attorneys fees.
Executive, or his successors and assigns, hereby waives diligence,
presentment, protest and demand and notice of protest, demand, dishonor and
nonpayment of this Note, and expressly agrees that this Note, or any payment
hereunder, may be extended from time to time and that the holder hereof may
accept security for this Note or release security for this Note, all without in
any way affecting the liability of Executive hereunder.
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF NEW YORK (WITHOUT REGARD TO THE CHOICE OF LAW PROVISIONS
THEREOF).
------------------------------
XXXXX X. XXX
- 2 -
EXHIBIT B
EXECUTIVE STOCK PLEDGE AGREEMENT
THIS EXECUTIVE STOCK PLEDGE AGREEMENT is made as of March __, 1995,
between Xxxxx X. Xxx ("Pledgor"), and Xxxxx Xxxxx Holding Corp., a Delaware
corporation (the "Company").
The Company and Pledgor are parties to an Agreement, dated the date
hereof, pursuant to which Pledgor purchased 555.556 shares of the Company's
Class P Common Stock, par value $.01 per share, and 5,000 shares of the
Company's Common Stock, par value $.01 per share (the "Pledged Shares"), for an
aggregate purchase price of $100,000.00. The Company has allowed Pledgor to
purchase the Pledged Shares by delivery to the Company of a promissory note in
the aggregate principal amount of $75,000.00 (the "Note") and payment of
$25,000 in cash. This Pledge Agreement provides the terms and conditions upon
which the Note is secured by a pledge to the Company of the Pledged Shares.
NOW, THEREFORE, Pledgor and the Company hereby agree as follows:
1. Pledge. Pledgor hereby pledges to the Company, and grants to the
Company a security interest in, the Pledged Shares as security for the prompt
and complete payment when due of the unpaid principal of and interest on the
Note.
2. Delivery of Pledged Shares. Upon the execution of this Pledge
Agreement, Pledgor shall deliver to the Company the certificates representing
the Pledged Shares, together with duly executed forms of assignment sufficient
to transfer title thereto to the Company.
3. Voting Rights; Cash Dividends. Notwithstanding anything to the
contrary contained herein, during the term of this Pledge Agreement until such
time as there exists a default in the payment of principal or interest on the
Note or any other default under the Note, Pledgor shall be entitled to all
voting rights with respect to the Pledged Shares and shall be entitled to
receive all cash dividends paid in respect of the Pledged Shares. Upon the
occurrence of and during the continuance of any such default, the Company shall
retain all such cash dividends payable on the Pledged Shares as additional
security hereunder.
4. Stock Dividends; Distributions, etc. If, while this Pledge Agreement
is in effect, Pledgor becomes entitled to receive or receives any securities or
other property (other than cash dividends as provided in Section 3) in addition
to, in substitution of, or in exchange for any of the Pledged Shares (whether
as a
distribution in connection with any recapitalization, reorganization or
reclassification, a stock dividend or otherwise), Pledgor shall accept such
securities or other property on behalf of and for the benefit of the Company as
additional security for Pledgor's obligations under the Note and shall promptly
deliver such additional securities or other property to the Company together
with duly executed forms of assignment, and such additional securities or other
property shall be deemed to be part of the Pledged Shares hereunder.
5. Default. If Pledgor defaults in the payment of the principal or
interest under the Note as it becomes due (whether upon demand, acceleration or
otherwise) or any other event of default under the Note occurs (including the
bankruptcy or insolvency of Pledgor), the Company may exercise any and all the
rights, powers and remedies of any owner of the Pledged Shares (including the
right to vote the shares and receive dividends and distributions with respect
to such shares) and shall have and may exercise without demand any and all the
rights and remedies granted to a secured party upon default under the Uniform
Commercial Code of New York or otherwise available to the Company under
applicable law. Without limiting the foregoing, the Company is authorized to
sell, assign and deliver at its discretion, from time to time, all or any part
of the Pledged Shares at any private sale or public auction, on not less than
ten days written notice to Pledgor, at such price or prices and upon such terms
as the Company may deem advisable. Pledgor shall have no right to redeem the
Pledged Shares after any such sale or assignment. At any such sale or auction,
the Company may bid for, and become the purchaser of, the whole or any part of
the Pledged Shares offered for sale. In case of any such sale, after deducting
the costs, attorneys' fees and other expenses of sale and delivery, the
remaining proceeds of such sale shall be applied to the principal of and
accrued interest on the Note; provided, however, that after payment in full of
the indebtedness evidenced by the Note, the balance of the proceeds of sale
then remaining shall be paid to Pledgor and Pledgor shall be entitled to the
return of any of the Pledged Shares remaining in the hands of the Company.
Pledgor shall be liable for any deficiency if the remaining proceeds are
insufficient to pay the indebtedness under the Note in full, including the fees
of any attorneys employed by the Company to collect such deficiency.
6. Costs and Attorneys' Fees. All costs and expenses, including
reasonable attorneys' fees, incurred in exercising any right, power or remedy
conferred by this Pledge Agreement or in the enforcement thereof, shall become
part of the indebtedness secured hereunder and shall be paid by Pledgor or
repaid from the proceeds of the sale of the Pledged Shares hereunder.
- 2 -
7. Pavment of Indebtedness and Release of Pledged Shares. Upon payment
in full of the indebtedness evidenced by the Note, the Company shall surrender
the Pledged Shares to Pledgor together with all forms of assignment.
S. Further Assurances. Pledgor agrees that at any time and from time
to time upon the written request of the Company, Pledgor will execute and
deliver such further documents and do such further acts and things as the
Company may reasonably request in order to effect the purposes of this Pledge
Agreement.
9. Severability. Any provision of this Pledge Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
10. No Waiver; Cumulative Remedies. The Company shall not by any act,
delay, omission or otherwise be deemed to have waived any of its rights or
remedies hereunder, and no waiver shall be valid unless in writing, signed by
the Company, and then only to the extent therein set forth. A waiver by the
Company of any right or remedy hereunder on any one occasion shall not be
construed as a bar to any right or remedy which the Company would otherwise
have on any future occasion. No failure to exercise nor any delay in exercising
on the part of the Company, any right, power or privilege hereunder shall
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege. The rights and remedies herein provided are
cumulative and may be exercised singly or concurrently, and are not exclusive
of any rights or remedies provided by law.
11. Waivers, Amendments; Applicable Law. None of the terms or
provisions of this Pledge Agreement may be waived, altered, modified or amended
except by an instrument in writing, duly executed by the parties hereto. This
Agreement and all obligations of the Pledgor hereunder shall together with the
rights and remedies of the Company hereunder, inure to the benefit of the
Company and its successors and assigns. THIS PLEDGE AGREEMENT SHALL BE GOVERNED
BY, AND BE CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK
(WITHOUT REGARD TO THE CHOICE OF LAW PROVISIONS THEREOF).
* * * * *
- 3 -
IN WITNESS WHEREOF, this Pledge Agreement has been executed as of the
date first above written.
----------------------------------
XXXXX X. XXX
XXXXX XXXXX HOLDING CORP.
By:
------------------------------
Name: Xxxxx Xxxxx
Title: President and Chief
Executive Officer
- 4 -
EXHIBIT C
ELECTION TO INCLUDE STOCK IN GROSS
INCOME PURSUANT TO SECTION 83(b) OF THE
INTERNAL REVENUE CODE
The undersigned purchased shares of Common Stock, par value $.01 per
share and shares of Class P Common Stock, par value $.01 per share
(collectively the "Shares"), of Xxxxx Xxxxx Holding Corp. (the "Company") on
March __, 1995. Under certain circumstances, the Company has the right to
repurchase the Shares at cost from the undersigned (or from the holder of the
Shares, if different from the undersigned) should the undersigned cease to be
employed by the Company and its subsidiaries. Hence, the Shares are subject to
a substantial risk of forfeiture and are non-transferable. The undersigned
desires to make an election to have the Shares taxed under the provision of
Section 83(b) of the Internal Revenue Code of 1986, as amended (the "Code"),
at the time he purchased the Shares.
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 Shares, to report as taxable income for calendar
year 1995 the excess (if any) of the Shares' fair market value on March __, 1995
over 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:
Xxxxx X. Xxx
00 Xxxxx Xxxxx Xxxx
Xxxxxxxx, XX 00000
Social Security Number: ___________
2. A description of the property with respect to which the election is
being made: 555.556 shares of the Company's Class P Common Stock, par value
$.01 per share (the "Class P Common"), and 5,000 shares of the Company's Common
Stock, par value $.0l per share (the "Common")
3. The date on which the property was transferred: March __, 1995. The
taxable year for which such election is made: calendar 1995.
4. The restrictions to which the property is subject: If the
undersigned's employment with the Company is terminated at any time by the
Company with Cause or by the undersigned's resignation, the Shares will be
subject to repurchase by the Company at the lower of Original Cost or Fair
Market Value ("Cause," "Original Cost" and "Fair Market Value" having the
meanings given such terms in the Agreement, dated as of March __, 1995, by and
between the undersigned and the Company).
5. The fair market value on March , 1995, of the property with respect
to which the election is being made, determined without regard to any lapse
restrictions: $2.00 per share of Common and $162.00 per share of Class P
Common.
6. The amount paid for such property: $2.00 per share of Common and
$162.00 per share of Class P Common.
A copy of this election has been furnished to the Secretary of the
Company pursuant to Treasury Regulations Section 1.83-2(e)(7).
Dated: , 1995
-------------- ------------------------------
XXXXX X. XXX
