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Exhibit 10.19
MANAGEMENT STOCK PURCHASE AGREEMENT
THIS MANAGEMENT STOCK PURCHASE AGREEMENT (this "Agreement") is made as
of November __, 1997 (the "Effective Date") between Stepup Limited, a Cayman
Islands corporation ("Stepup"), Xxxxxx Holding Co. (PA), Inc., a Pennsylvania
corporation (the "Company"), and the individual signatory hereto ("Buyer").
R E C I T A L S
A. Buyer is an employee of the Company or a Subsidiary (as defined
herein) and desires to acquire an equity interest in the Company.
B. Buyer does not own shares of common stock of the Company ("Company
Common Stock").
C. Stepup is willing to sell to Buyer shares of Class C Stock, $0.01
par value, of the Company ("Class C Stock") subject to the terms and conditions
of this Agreement.
AGREEMENTS
1. DEFINITIONS. Capitalized terms used herein shall have the following
meanings:
"Act" means the Securities Act of 1933, as amended.
"Agreement" means this Management Stock Purchase Agreement.
"Approved Sale" means a transaction or a series of related
transactions which results in a BONA FIDE, unaffiliated change of economic
beneficial ownership of the Company or its business of greater than 50%
(disregarding for this purpose any disparate voting rights attributable to the
outstanding stock of the Company), whether pursuant to the sale of the stock of
the Company or a Subsidiary, the sale of the assets of the Company, or a merger
or consolidation (other than (i) a sale of stock by an Initial Stockholder to
another Initial Stockholder, an affiliate thereof, or a non-U.S. entity with
respect to which an Initial Stockholder or an affiliate thereof has an
administrative relationship, or (ii) a sale of stock in a public offering or
pursuant to Rule 144 under the Act).
"Articles of Incorporation" means the Restated Articles of
Incorporation of the Company setting forth the rights, preferences and
privileges of and restrictions on the Class C Stock.
"Buyer" is defined in the preamble.
"Cause," when used in connection with the termination of
employment of Buyer, has the meaning set forth in the employment agreement
between the Company and Buyer, or if there is no such employment agreement,
means (a) conviction of Buyer for a felony, or the entry by Buyer of a plea of
guilty or NOLO CONTENDERE to a felony, (b) the
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commission of an act of fraud involving dishonesty for personal gain which is
materially injurious to the Company, (c) the willful and continued refusal by
the Buyer to substantially perform his duties with the Company (other than any
such refusal resulting from his incapacity due to mental illness or physical
illness or injury), after a demand for substantial performance is delivered to
the Buyer by the Company's Board of Directors, where such demand specifically
identifies the manner in which the Company's Board of Directors believes that
the Buyer has refused to substantially perform his duties and the passage of a
reasonable period of time for Buyer to comply with such demand or (d) the
willful engaging by the Buyer in gross misconduct materially and demonstrably
injurious to the Company or its Subsidiaries. For purposes of this paragraph, no
act or failure to act on the Buyer's part shall be considered "willful" unless
done, or omitted to be done, by the Buyer not in good faith and without
reasonable belief that his action or omission was in the best interest of the
Company or its Subsidiaries. Notwithstanding the foregoing, with respect to
termination for Cause arising out of conduct described in clause (b), (c) or (d)
above, a termination shall not be considered for Cause for purposes of this
Agreement unless there shall have been delivered to the Buyer a copy of a
resolution duly adopted by the affirmative vote of not less than three-quarters
of the entire Board of Directors of the Company, at a meeting of such board
called and held for that purpose (after reasonable notice to the Buyer and an
opportunity for the Buyer, together with his counsel or other advisors, to be
heard at such meeting), finding that in the good faith opinion of the board the
Buyer had engaged in conduct described above in clause (b), (c) or (d) of the
first sentence of this paragraph and specifying the particulars thereof in
detail. Such a finding by the Board of Directors of the Company is a
prerequisite to a termination for Cause pursuant to clauses (b), (c) or (d)
above; PROVIDED, HOWEVER, that such a finding may be challenged, by appropriate
judicial process, on the merits (i.e., that Cause did not exist) or on the basis
that the board's finding was not made in good faith (provided that proof that
Cause for termination existed shall be a complete defense to any showing that
the board's findings was not made in good faith).
"Class C Stock" is defined in recital C.
"Closing Date" means the date on which occurs the closing of
the recapitalization of the Company pursuant to the Recapitalization Agreement
dated as of October 8, 1997 by and between the Company and the Investors, as
such term is defined herein.
"Company" is defined in the preamble.
"Company Common Stock" is defined in recital B.
"Cost" means $2421.29 per share.
"Disability" has the meaning set forth in the employment
agreement between the Company and Buyer or, if there is no such employment
agreement, means the failure by Buyer to render full-time employment services to
the Company for an aggregate of ninety (90) days in any continuous period of six
(6) months on account of physical or mental disability.
"Effective Date" is defined in the preamble.
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"Endorsed Certificate" is defined in Section 4(a).
"Fair Market Value" means the value of a Share, as of the
Termination Date, determined pursuant to Section 4(d).
"Fiscal Year" means the fiscal year of the Company.
"Good Reason" means, unless Buyer shall have consented in
writing thereto, any of the following:
(a) except as specifically provided in Buyer's
employment agreement, if any, the assignment to Buyer of duties, or the
assignment of Buyer to a position, constituting a material diminution
in Buyer's role, responsibilities or authority compared with his role,
responsibilities or authority on the Effective Date;
(b) a reduction by the Company in Buyer's bonus
opportunities or base salary as in effect on the Effective Date or as
the same may be increased from time to time;;
(c) unless the members of the Board appointed
pursuant to section 4(iii) of the Shareholder Agreement dated as of
November 24, 1997 agree to such reduction or other action, any material
reduction in the level of benefits (including participation in any
bonus plan) to which Buyer is entitled under one or more employee
benefit plans on the Effective Date, or the taking of any action by the
Company which would adversely affect Buyer's accrued benefits under any
such employee benefit plans or deprive Buyer of any material fringe
benefit enjoyed by Buyer on the Effective Date;
(d) a demand by the Company to Buyer to relocate to
any place that exceeds a fifty (50) mile radius beyond the location at
which Buyer performed his duties on the Effective Date; or
(e) any material breach of this Agreement on the part
of the Company.
"Initial Public Offering" means the sale of any of the common
stock of the Company pursuant to a registration statement that has been declared
effective under the Act, if as a result of such sale (i) the issuer becomes a
reporting company under Section 12(b) or 12(g) of the Securities Exchange Act of
1934, as amended, and (ii) such stock is traded on the New York Stock Exchange
or the American Stock Exchange, or is quoted on the NASDAQ National Market
System, or is traded or quoted on any other national stock exchange or national
securities system.
"Initial Stockholders" means the shareholders of the Company
who became shareholders as of the Closing Date (other than any such shareholders
who are also employees of
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the Company or were shareholders of the Company prior to the Closing Date) and
any transferees of such shareholders prior to an Approved Sale or an IPO.
"Investors" means those entities set forth on Schedule 1 of
the Recapitalization Agreement.
"permitted transferee" is defined in Section 3.
"person" means an individual, partnership, corporation,
limited liability company, trust, joint venture or other entity.
"Remaining Capital Stock" means the Company's capital stock
outstanding immediately prior to the Approved Sale other than the Company's
capital stock disposed of by stockholders of the Company as a result of such
Approved Sale in exchange for money or other property.
"Repurchase Period" is defined in Section 4(a).
"Retirement" has the meaning set forth in the employment
agreement between the Company and Buyer, or if there is no such employment
agreement, means Buyer's retirement from the Company in accordance with the
Company's normal retirement policy generally applicable to its salaried
employees.
"Shareholder Rights Agreement" is defined in Section 5.
"Shares" is defined in Section 2.
"Subsidiary" means any joint venture, corporation, partnership
or other entity as to which the Company, whether directly or indirectly, has
more than 50% of the (i) voting rights or (ii) rights to capital or profits.
"Termination Date" means the date on which Buyer ceases to be
employed by the Company for any reason.
2. PURCHASE AND SALE OF SHARES. On the terms and subject to the
conditions hereof, Stepup hereby sells and transfers to Buyer the number of
shares of Class C Stock of the Company set forth on the signature page hereof
(the "Shares") in consideration of the transfer by Buyer to Stepup of the amount
set forth on the signature page hereof, receipt of which is hereby acknowledged
by Stepup.
3. RESTRICTIONS ON TRANSFERS OF SHARES; PERMITTED TRANSFEREES. Subject
to Sections 4, 5 and 6 hereof and Exhibit A hereto, prior to 180 days following
an Initial Public Offering, the Shares shall not be transferable or transferred,
assigned, pledged or hypothecated in any way (whether by operation of law or
otherwise) except that Buyer may transfer the Shares (i) to his or her spouse,
child, estate, personal representative, heir or successor or to a trust for the
benefit of Buyer or his or her spouse, child or heir or to a partnership the
partners of which consist solely of the Buyer and/or his or her spouse, child,
heir and/or successor (a "permitted transferee"), or
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(ii) [insert appropriate references to the Articles of Incorporation]. This
Agreement shall be binding on and enforceable against any person who is a
permitted transferee of the Shares, and for purposes of Sections 4, 5, and 6,
the rights and obligations relating to Shares owned by Buyer shall extend as
well to Shares owned by permitted transferees of Buyer and, unless the context
otherwise requires, each reference to Buyer in said Sections shall encompass
also permitted transferees of Buyer. The stock certificates issued to evidence
Shares hereunder shall bear a legend referring to this Agreement and the
restrictions contained herein.
4. REPURCHASE OF SHARES.
(a) In the event that Buyer ceases to be employed by the
Company for any reason prior to an Initial Public Offering, Stepup, during the
sixty (60) days following the Termination Date (the "Repurchase Period"), shall
have a one-time right to purchase all, but not less than all, of the Shares. The
purchase price for each Share shall equal Fair Market Value, or, if Buyer
resigns without Good Reason prior to January 1, 2001 or is terminated for Cause
at any time, the lower of Fair Market Value or Cost. If Stepup elects to
purchase the Shares, it shall notify Buyer at or before the end of the
Repurchase Period of such election and the purchase price shall be paid in cash
at a time set by Stepup (the "Repurchase Date") within thirty (30) days after
the end of the Repurchase Period, provided that Buyer has presented to Stepup a
stock certificate evidencing the Shares duly endorsed for transfer (the
"Endorsed Certificate"). If Buyer fails to deliver the Endorsed Certificate, the
Shares represented thereby shall be deemed to have been purchased upon (i) the
payment by Stepup of the purchase price to Buyer or his or her permitted
transferee or (ii) notice to Buyer or such permitted transferee that Stepup is
holding the purchase price for the account of Buyer or such permitted
transferee, and upon such payment or notice Buyer and such permitted transferee
will have no further rights in or to such Shares. If Stepup does not purchase
the Shares, the restrictions on transfer thereof contained in this Agreement
shall terminate and be of no further force and effect.
(b) If Buyer's employment by the Company is terminated prior
to an Initial Public Offering or an Approved Sale (i) by the Company without
Cause or by Buyer for any reason; (ii) due to Buyer's Retirement, death or
Disability; or (iii) by the Company with Cause after January 1, 2001, Buyer or
his or her representative, during the 120 days following the Termination Date,
shall have a one-time right to require Stepup to purchase all, but not less than
all, of the Shares, unless, by the thirtieth (30th) day after Stepup and the
Company have received notice of Buyer's election to exercise his put right, the
Company has notified Buyer and Stepup of its election, exercisable in the
discretion of the Company, to purchase the Shares on the same terms as such
Shares were offered to Stepup, in which case the Shares will be acquired by the
Company. The purchase price shall be at Fair Market Value, unless the employment
of Buyer is terminated for any reason other than Retirement, death, or
Disability prior to January 1, 2001 and Buyer exercises his put right prior to
such date, in which case the purchase price will be the lower of Fair Market
Value or Cost. The purchase price shall be paid in cash on the thirtieth (30th)
day after Stepup and the Company have received notice of Buyer's election to
exercise his put right (the "Put Date"), provided that Stepup or the Company, as
the case may be, need not pay the purchase price until such later time that
Buyer presents to the Company the Endorsed Certificate.
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(c) The Fair Market Value of Shares to be purchased by the
Company or Stepup, as the case may be, hereunder shall be determined in good
faith by the Company's Board of Directors. The Board of Directors shall make its
determination of Fair Market Value annually (the "Annual Valuation") promptly
after the completion of the Company's audited financial statements for the year
then completed and such determination shall remain in effect until the Board of
Directors makes the next Annual Valuation. Notwithstanding the foregoing, if the
Board of Directors or an investment banker or appraiser appointed by the Company
makes a determination of Fair Market Value subsequent to an Annual Valuation,
such subsequent determination shall supersede the Annual Valuation then in
effect and shall establish the Fair Market Value until the next Annual
Valuation. The Fair Market Value shall be based on an assumed sale of 100% of
the outstanding capital stock of the Company (without reduction for minority
interest or lack of liquidity of the Shares or similar discount) and determined
in a manner consistent with the manner in which the purchase price to be paid by
the Investors pursuant to the Recapitalization Agreement was determined. If such
determination of the Fair Market Value is challenged by Buyer, a mutually
acceptable investment banker or appraiser shall establish the Fair Market Value
as of the date of valuation referenced in the Annual Valuation or a subsequent
determination. The investment banker's or appraiser's determination shall be
conclusive and binding on the Company and Buyer. The Company shall bear all
costs incurred in connection with the services of such investment banker or
appraiser unless the Fair Market Value established by such investment banker or
appraiser is less than 115% of the determination challenged by the Buyer, in
which case Buyer shall promptly pay or reimburse the Company for such costs (up
to a maximum amount of $______). If Buyer and the Company cannot agree upon an
investment banker or appraiser, they shall each choose an investment banker or
appraiser and the two shall choose a third investment banker or appraiser who
shall establish the Fair Market Value. Notwithstanding the foregoing, the
Company shall obtain valuation of all of its common stock at least once annually
for purposes of Buyer's estate and gift planning; provided, however, that such
valuation is not binding on the Board of Directors for purposes of determining
Fair Market Value.
(d) Buyer shall not be considered to have ceased to be
employed by the Company for purposes of this Agreement if he or she continues to
be employed by the Company or a Subsidiary, or by a company of which the Company
is a Subsidiary.
5. REPRESENTATIONS OF THE COMPANY. The Company represents and warrants
to Buyer as follows:
(a) The Company is a corporation duly organized, validly
existing and in good standing under the laws of the Commonwealth of
Pennsylvania.
(b) Upon delivery to Buyer in accordance with the terms
hereof, the Shares will be duly and validly authorized, issued and outstanding,
fully paid and non-assessable.
(c) The Shares shall not be subject to dilution upon (i) the
conversion, pursuant to the terms of the Articles of Incorporation, of (A) any
of the Company's Class D Stock or Class E Stock, each with a par value of $0.01,
or (B) any of the Class C Stock, or (ii) the
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exercise of those certain warrants issued by the Company on November __,
1997 entitling the holder thereof to purchase shares of the Company's common
stock, $0.01 par value.
6. REPRESENTATIONS AND ACKNOWLEDGMENTS OF BUYER.
(a) Buyer hereby represents and warrants to the Company as
follows:
(i) Buyer is acquiring the Shares for investment for
his or her own account and without a view to further distribution of
the Shares.
(ii) Buyer is an employee of the Company and has been
given access to all information that Buyer considers necessary to make
an investment decision as to the Shares.
(b) Buyer hereby acknowledges to the Company as follows:
(i) The Shares are being transferred to Buyer without
registration under the Act pursuant to exemptions from registration
thereunder. Buyer cannot transfer the Shares except pursuant to an
effective registration statement or an exemption from registration
under the Act.
(ii) The Shares are nonvoting under the Articles of
Incorporation.
7. GOVERNING LAW. All terms of and rights under this Agreement shall be
governed by and construed in accordance with the internal law of the
Commonwealth of Pennsylvania, without giving effect to principles of conflicts
of law.
8. NOTICES. All notices, requests, demands and other communications
pursuant to this Agreement shall be in writing and shall be deemed to have been
duly given if personally delivered, telexed or telecopied to, or, if mailed,
when received by, the other party at the following addresses (or at such other
address as shall be given in writing by either party to the other):
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If to Stepup to:
Stepup Limited
X.X. Xxx 0000, Xxxx Xxxx Xxxxxxxx
Xxxxx Xxxxxx, Xxxxxx Xxxxxxx B.W.I.
With a copy to:
Investcorp Management Services Limited
x/x Xxxxxxxxxx Xxxx X.X.
X.X. Xxx 0000
Xxxxxx, Xxxxxxx
Attention: H. Xxxxxxx Xxxxxx, III
If to the Company to:
Xxxxxx Holding Co. (PA), Inc.
00 Xxxxxx Xxxx
Xxxxxxxxxx, XX 00000
Attention: Xxxx X. Xxxxxx, Esq.
With a required copy (which shall not constitute notice to the
principal) to:
Xxxxxx, Xxxx & Xxxxxxxx LLP
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: E. Xxxxxxx Xxxxxxx, Esq.
If to Buyer, to the address set forth on the signature page
hereof.
9. AMENDMENTS AND WAIVERS. This Agreement may be amended, and any
provision hereof may be waived, only by a writing signed by the party to be
charged.
10. CAPITALIZATIONS, EXCHANGES, ETC. AFFECTING SHARES; ADJUSTMENT OF
COST.
(a) The provisions of this Agreement shall apply to any and
all shares of capital stock of the Company or any successor or assign of the
Company that may be issued in respect of, in exchange for, or in substitution
of, the Shares by reason of any stock dividend, stock split, stock issuance,
reverse stock split, combination, recapitalization, reclassification, merger,
consolidation or otherwise, other than an Approved Sale. Nothing herein shall
prohibit or restrict the Company from taking any corporate action or engaging in
any corporate transaction of any kind, including, without limitation, any
merger, consolidation, liquidation or sale of assets.
(b) In the event of any stock dividend, stock split, stock
issuance, reverse stock split, combination, recapitalization, reclassification,
merger, consolidation or similar event as a result of which Buyer holds a lesser
or greater number of Shares and/or other securities, the
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Cost of a Share or other security shall be appropriately adjusted as determined
in good faith by the Board of Directors of the Company.
11. ENTIRE AGREEMENT. This Agreement sets forth the entire agreement
and understanding between the parties as to the subject matter hereof and
supersedes all prior oral and written and all contemporaneous oral discussions,
agreements and understandings of any kind or nature.
12. SEPARABILITY. In the event that any provision of this Agreement is
declared to be illegal, invalid or otherwise unenforceable by a court of
competent jurisdiction, such provision shall be reformed, if possible, to the
extent necessary to render it legal, valid and enforceable, or otherwise
deleted, and the remainder of this Agreement shall not be affected except to the
extent necessary to reform or delete such illegal, invalid or unenforceable
provision.
13. HEADINGS. The headings preceding the text of the sections hereof
are inserted solely for convenience of reference, and shall not constitute a
part of this Agreement, nor shall they affect its meaning, construction or
effect.
14. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but which together
shall constitute one and the same instrument.
15. FURTHER ASSURANCES. Each party shall cooperate and take such action
as may be reasonably requested by another party in order to carry out the
provisions and purposes of this Agreement.
16. REMEDIES. Consistent with section 18 herein, in the event of a
breach by any party to this Agreement of its obligations under this Agreement,
any party injured by such breach, in addition to being entitled to exercise all
rights granted by law, including recovery of damages, shall be entitled to
specific performance of its rights under this Agreement. The parties agree that
the provisions of this Agreement shall be specifically enforceable, it being
agreed by the parties that the remedy at law, including monetary damages, for
breach of any such provision will be inadequate compensation for any loss and
that any defense in any action for specific performance that a remedy at law
would be adequate is hereby waived.
17. NOT AN EMPLOYMENT CONTRACT. Nothing in this Agreement or any other
instrument executed pursuant hereto shall confer upon Buyer any right to
continue in the employ of the Company or any Subsidiary or shall affect the
right of the Company or any Subsidiary to terminate the employment of Buyer with
or without Cause.
18. ARBITRATION. Any dispute, claim or controversy arising out of or
relating to this Agreement, or the breach, termination or validity hereof, shall
be finally settled by arbitration in accordance with the then-prevailing
Commercial Arbitration Rules of the American Arbitration Association, as
modified herein ("Rules"). There shall be one arbitrator who shall be jointly
selected by the parties. If the parties have not jointly agreed upon an
arbitrator within twenty days of respondent's receipt of claimant's notice of
intention to arbitrate, either party may request
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the American Arbitration Association to furnish the parties with a list of names
from which the parties shall jointly select an arbitrator. If the parties have
not agreed upon an arbitrator within ten days of the transmittal date of the
list, then each party shall have an additional five days in which to strike any
names objected to, number the remaining names in order of preference, and return
the list to the American Arbitration Association, which shall then select an
arbitrator in accordance with Rule 13 of the Rules. The place of arbitration
shall be Pittsburgh, Pennsylvania. By agreeing to arbitration, the parties
hereto do not intend to deprive any court of its jurisdiction to issue a
pre-arbitral injunction, pre-arbitral attachment or other order in aid of
arbitration. The arbitration shall be governed by the Federal Arbitration Act, 9
U.S.C. xx.xx. 1-16. Judgment upon the award of the arbitrator may be entered in
any court of competent jurisdiction. Each party shall bear its or his own costs
and expenses in any such arbitration and one-half of the arbitrator's fees and
expenses.
19. BINDING EFFECT. This Agreement shall inure to the benefit of and be
binding upon the parties hereto and their respective permitted successors and
assigns.
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IN WITNESS WHEREOF, this Agreement is entered into as of the date first
above written.
XXXXXX HOLDING CO. (PA), INC.
By:
-----------------------------------
Name:
Title:
STEPUP LIMITED
By:
-----------------------------------
Name:
Title:
"BUYER"
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Name:
Address:
No. of Shares of Class C
Stock acquired by Buyer:
Amount paid by Buyer:
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