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July 13, 1996
Xx. Xxxxxx X. Xxxxx
00 Xxx Xxxx Xxx
Xxxxx Xxxxxxx, XX 00000
Dear Xxxxxx:
Please refer to the Letter Agreement dated June 20, 1996 regarding your
resignation from the XxXxxxx Companies, Inc. effective July 17, 1996. In
addition to the agreements set forth in such letter, this will confirm our
further agreements as follows:
1. The Company will lend you the aggregate exercise price of $99,165.00
under your Non- qualified Stock Option dated August 1, 1991 (the
"NQSO"). Such loan shall be repayable in accordance with the terms of
the Promissory Note attached hereto as Exhibit A and made a part hereof
(the Promissory Note"), and secured by a pledge of the shares of common
stock issuable upon exercise of the NQSO and the shares issuable upon
exercise of your incentive stock options referred to in Section 4
below, in the form of the Pledge Agreement attached hereto as Exhibit B
and made a part hereof.
2. The Company shall remit to the Internal Revenue Service and the
Massachusetts Department of Revenue withholding taxes in the aggregate
amount of $44,531 (assuming a fair market value of $6.125 on the date
of exercise) and in connection therewith the Company shall withhold
7,270 shares (also assuming a fair market value of $6.125 per share)
from the shares issuable to you upon the exercise of the NQSO in
satisfaction of your tax withholding obligations.
The withholding tax amount is calculated as follows:
$6.125 - $2.70 = $3.425 x 36,728 shares = $125,793
x tax rate .28 federal + .0595 state
+ .0145 FICA (Medicare) = .354
--------
$44,531
+ 6.125
--------
7,270
3. In consideration of the foregoing, you agree that you shall not sell in
open market transactions in excess of $10,000 worth of stock of the
Company in any calendar month.
4. You intend to exercise your incentive stock options dated April 28,
1993 and February 11, 1994 by tendering to the Company 3,100 shares of
the Company's Common stock which you previously owned together with
6,836 shares issuable upon exercise of the NQSO (assuming a fair market
value of $6.125 per share).
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Xxxxxx X. Xxxxx
July 13, 1996
Page 2
Please confirm your understanding and agreement with the terms of this
letter by executing below where indicated.
Very truly yours,
THE XXXXXXX COMPANIES, INC.
By: /s/ Xxxx X. Xxxxxxxxxx
-------------------------------------
Xxxx X. Xxxxxxxxxx, Executive
Vice President
Understood and Agreed to
as of the date set forth above
/s/ Xxxxxx X. Xxxxx
-----------------------------------
Xxxxxx X. Xxxxx
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EXHIBIT A
PROMISSORY NOTE
$99,165.00 Lexington, Massachusetts
July 13, 1996
FOR VALUE RECEIVED, the undersigned hereby promises to pay to the order
of THE XXXXXXX COMPANIES, INC. (the "Company"), the principal sum of Ninety-nine
Thousand One Hundred Sixty-five Dollars ($99,165.00) in or within Eighteen (18)
months from the date hereof with interest at the rate of six percent (6%) per
annum on the unpaid balance of principal from time to time outstanding, payment
to be made in installments as follows:
Seventeen (17) equal monthly payments of principal and interest in the
amount of Six Thousand Dollars ($6,000.00) each on the 13th day of each
month commencing August 13, 1996 with a final payment on January 13,
1998 of the balance of principal and interest then remaining. Each such
payment shall be applied first to interest then due and then to
principal.
This Note is secured by a pledge of certain shares of Common Stock of
the Company owned by the undersigned more particularly described in the Pledge
Agreement dated as of the date hereof (the "Pledge Agreement") by and between
the undersigned and the Company. The Pledge Agreement is intended to provide
additional security to the Company for the obligations of the undersigned under
this Note and is not intended to limit in any way the obligations of the
undersigned under this Note which is a full recourse obligation of the
undersigned.
The undersigned, and each endorser and guarantor of this Note, hereby
waives demand, presentment for payment, notice of dishonor and protest, and all
other formalities provided by law. The undersigned hereby agrees that no delay
or
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omission on the part of the holder hereof in exercising any right or remedy
hereunder shall constitute a waiver of such right or remedy or of any other
right or remedy hereunder.
The occurrence of any of the following events shall constitute an Event
of Default under this Note:
1. Failure of the undersigned to pay when due any payment of
principal or interest herein required, which failure continues
unremedied for thirty (30) days;
2. An Event of Default under the Pledge Agreement;
3. the death, dissolution, liquidation, or termination of
existence of the undersigned or of any endorser or guarantor
hereof; or
4. the making of an assignment for the benefit of creditors by,
the insolvency of, the appointment of a receiver of any part
of the property of, or the filing of a petition in bankruptcy
or the commencement of any proceeding under any bankruptcy or
insolvency law or any law relating to the relief of debtors,
readjustment of indebtedness, reorganization, composition or
extension by or against, the undersigned or any endorser or
guarantor hereof.
Upon the occurrence of an Event of Default under this Note, the
outstanding principal balance hereof, together with any accrued unpaid interest
thereon, and together with all reasonable costs of collection, including
reasonable attorneys' fees, shall become immediately due and payable at the
option of the holder hereof. Failure on the part of the holder hereof to
exercise said option shall not constitute a waiver of the right of the holder
hereof to exercise said option in the event of any subsequent Event of Default.
Payments of principal and interest hereunder shall be made at 80 Hayden
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Xxxxxx, Xxxxxxxxx, Xxxxxxxxxxxxx 00000, or such other address as the holder
hereof may designate from time to time. The undersigned shall have the right to
prepay all or any part of the principal sum secured hereby at any time or from
time to time without premium or penalty.
This Note shall take effect as an instrument under seal and shall be
governed by and construed in accordance with the laws of the Commonwealth of
Massachusetts.
EXECUTED as of the date set forth above.
/s/ Xxxxxx X. Xxxxx
----------------------------
Xxxxxx X. Xxxxx
Signed in the presence of:
/s/ Xxxx X. Xxxxxxxxxx
--------------------------------
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EXHIBIT B
PLEDGE AGREEMENT
PLEDGE AGREEMENT made as of this 13th day of July, 1996, by and between
XXXXXX X. XXXXX, of North Andover, Massachusetts (hereinafter referred to as
"Pledgor"), and THE XXXXXXX COMPANIES, INC., a Massachusetts corporation
(hereinafter referred to as "Pledgee").
WHEREAS, in order to permit Pledgor to exercise on the date hereof
certain non-qualified stock options granted to the Pledgor by the Pledgee on
August 1, 1991, Xxxxxxx executed and delivered to Pledgee a Promissory Note
dated the date hereof (the "Note") in the aggregate original principal amount of
Ninety-nine Thousand One Hundred Sixty-five Dollars ($99,165.00); and
WHEREAS, as security for his obligations under; (i) the Note; and (ii)
the letter agreement dated June 20, 1996 between Pledgor and Pledgee and the
letter agreement dated the date hereof between Pledgor and Pledgee (collectively
the "Agreements"), Pledgor has agreed to pledge to Pledgee certain shares of the
capital stock of The XxXxxxx Companies, Inc. (the "Company");
NOW THEREFORE, Pledgor and Pledgee hereby agree as follows:
1. Pledgor hereby pledges to Pledgee, and grants to Pledgee a security
interest in, Thirty-eight Thousand Two Hundred Forty-seven (38,247) shares of
the Common Stock $.01 par value, of the Company specified in Exhibit A attached
hereto and made a part hereof (all of said Thirty-eight Thousand Two Hundred
Forty-seven (38,247) shares being hereinafter collectively referred to as the
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"Shares"). All of the certificates representing the Shares shall be delivered to
Pledgee with stock powers duly executed in blank by Xxxxxxx attached thereto.
The Shares are security for all of the obligations of Pledgor under the Note and
the Agreements.
2. Pledgor hereby represents, warrants, and agrees as follows:
(a) Pledgor has good and valid title to all of the Shares,
free and clear of any other pledge, lien, conditional sale
agreement, security interest, encumbrance or other charge. The
Shares are free from any restrictions upon the transfer or
pledge thereof.
(b) Pledgor has full power and authority to pledge the Shares
as herein contemplated and this Agreement is the valid and
binding obligation of Pledgor in accordance with its terms.
The execution, delivery, and performance by Pledgor of this
Agreement will not violate the laws of any jurisdiction or any
provision of, or result in default under, any mortgage, lien,
lease, agreement, contract, instrument, order, arbitration
award, judgment or decision to which Pledgor is a party or by
which he is bound.
3. Until the occurrence of an Event of Default as defined herein,
Pledgor shall have the right, subject to the restrictions set forth in Section 2
hereof, to vote the Shares, to receive all dividends and distributions paid
thereon, and to sell such number of shares, subject to compliance with
applicable securities laws, as shall be permitted under the letter agreement
dated the date hereof between Pledgor and Pledgee.
4. Any shares of the capital stock of the Company of any class
hereafter issued to or received by Pledgor by reason of any stock dividend,
stock split, recapitalization or similar event affecting the capital stock of
the Company, shall, to the extent that such dividend, stock split,
recapitalization relates to the Shares, be
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added to the Shares and shall be subject to the terms and conditions of this
Agreement. Pledgor shall deliver to Pledgee the certificates representing any
such shares so issued to or received by Pledgor, with stock powers duly executed
in blank by Xxxxxxx attached thereto, contemporaneously with the issuance or
receipt thereof.
5. Upon the occurrence of an Event of Default as defined herein,
Pledgee, at its option, and without further notice to Pledgor, shall have the
right to do one or more of the following:
(a) transfer the Shares immediately into the name of Pledgee
or its nominee;
(b) vote or direct the voting of the Shares and receive all
dividends and distributions declared thereon;
(c) (Upon giving not less than five (5) days notice) sell or
otherwise dispose of the Shares at private sale and apply
the proceeds thereof in accordance with applicable law;
or
(d) pursue any right or remedy of a secured party under the
Uniform Commercial Code.
Pledgor hereby irrevocably appoints Pledgee its attorney-in-fact for purposes of
executing and delivering any instrument or document necessary or desirable for
the exercise of any of the foregoing rights and remedies. Such rights and
remedies may be exercised with respect to all or any part of the Shares at one
or more times in addition to such other rights and remedies as Pledgee may have
either at law or in equity. No sale of the Shares shall be made in violation of
federal and state securities laws.
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6. The occurrence of any of the following events shall constitute an
Event of Default hereunder:
(a) a Default under the Note; or
(b) a breach by Pledgor of any agreement, covenants or
representations contained herein; or
(c) a breach by Pledgor of any obligation or agreement of
Pledgor under either of the Agreements.
7. Any notice or other communication hereunder to Pledgor or Pledgee
shall be given in writing by (a) personal delivery (confirmed by the courier
delivery service), (b) expedited delivery with proof of delivery, (c) telefax
and confirmed in writing by regular first class mail, or (d) first class
registered or certified mail, postage prepaid, return receipt requested, to the
addresses indicated below:
Pledgor: Xxxxxx X. Xxxxx
00 Xxx Xxxx Xxx
Xxxxx Xxxxxxx, Xxxxxxxxxxxxx 00000
Pledgee: The XxXxxxx Companies, Inc.
00 Xxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxxxxxx 00000
Copy to: Xxxxxxx X. Xxxxxx, Xx., Xxxxxxx
Xxxxx, Xxxxxx, Xxxxxxx & Xxxxx, LLP
000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000-1800
Any notice provided for herein shall become effective only upon and at the time
of first receipt by the party to whom it is given, unless such notice is only
mailed by certified mail, return receipt requested, in which case it shall be
deemed to be received three (3) business days after the date that it is mailed.
Any party may, by
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proper written notice hereunder to the other party, change the individual
address to which such notice shall thereafter be sent.
8. Pledgor will pay all of the costs and expenses, including reasonable
attorney fees, of enforcing the pledge contained herein.
9. This Pledge Agreement shall be binding upon and inure to the benefit
of Xxxxxxx, his heirs, successors and assigns and Xxxxxxx, and its successors
and assigns and shall be governed by and in accordance with the laws of the
Commonwealth of Massachusetts. This Pledge Agreement is intended to provide
additional security to Pledgee for the obligations of the Pledgor secured hereby
and is not intended to limit such obligations in any way, such obligations being
full recourse obligations of Pledgor.
EXECUTED under seal as of the day and year first written above.
PLEDGOR: /s/ Xxxxxx X. Xxxxx
--------------------------------
Xxxxxx X. Xxxxx
PLEDGEE: THE XXXXXXX COMPANIES, INC.
By: /s/ Xxxx X. Xxxxxxxxxx
-----------------------------
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SCHEDULE A
Certificate Number 2528 in the name of Xxxxxx X. Xxxxx representing 22,622
shares of the Common Stock, $.01 par value, of the Company.
Certificate Number 2529 in the name of Xxxxxx X. Xxxxx representing 10,000
shares of the Common Stock, $.01 par value, of the Company.
Certificate Number 2530 in the name of Xxxxxx X. Xxxxx representing 5,625
shares of the Common Stock, $.01 par value, of the Company.
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