XXXXXXX 00.000
XXXX LOAN AGREEMENT
by and between
THE XXXXXXX XXXXXX CORPORATION
and
THE XXXXXXX XXXXXX PROFIT SHARING AND
EMPLOYEE STOCK OWNERSHIP PLAN AND TRUST
Effective as of January 19, 1993
TABLE OF CONTENTS
ESOP LOAN AGREEMENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE I. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
The ESOP Loan. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.1 Loan to Borrower. . . . . . . . . . . . . . . . . . . . . . . . . 2
1.2 Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.3 Promissory Note.. . . . . . . . . . . . . . . . . . . . . . . . . 2
1.4 Interest. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE 2. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Time for Repayment . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.1 Repayments of Principal.. . . . . . . . . . . . . . . . . . . . . 3
2.2 Payment of Interest.. . . . . . . . . . . . . . . . . . . . . . . 3
2.3 Prepayment. . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.4 Not Payable on Demand.. . . . . . . . . . . . . . . . . . . . . . 4
2.5 Limitation on Repayment.. . . . . . . . . . . . . . . . . . . . . 4
ARTICLE 3. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Representations and Warranties of the Borrower . . . . . . . . . . . . . 5
3.1 Authorizations. . . . . . . . . . . . . . . . . . . . . . . . . . 5
3.2 Compliance with Obligations and Laws. . . . . . . . . . . . . . . 5
3.3 Restrictions on Transfer. . . . . . . . . . . . . . . . . . . . . 6
ARTICLE 4. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Representations and Warranties of the Company. . . . . . . . . . . . . . 7
4.1 Due Incorporation.. . . . . . . . . . . . . . . . . . . . . . . . 8
4.2 Corporate Authority.. . . . . . . . . . . . . . . . . . . . . . . 8
4.3 Compliance with Laws and Obligations. . . . . . . . . . . . . . . 8
4.4 Company Sales.. . . . . . . . . . . . . . . . . . . . . . . . . . 8
4.5 Exempt Loans. . . . . . . . . . . . . . . . . . . . . . . . . . . 9
ARTICLE 5. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Pledge of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
5.1 Pledge. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
5.2 Release of Shares from Pledge.. . . . . . . . . . . . . . . . . . 9
5.3 Default.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
5.4 Miscellaneous.. . . . . . . . . . . . . . . . . . . . . . . . . . 11
ARTICLE 6. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Miscellaneous. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
6.1 Amendments, Consents, Waivers and Modifications.. . . . . . . . . 11
6.2 No Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
6.3 Survival of covenants, Etc., Successors and Assigns.. . . . . . . 12
6.4 Communications. . . . . . . . . . . . . . . . . . . . . . . . . . 12
6.5 Entire Agreement. . . . . . . . . . . . . . . . . . . . . . . . . 13
6.6 Governing Law.. . . . . . . . . . . . . . . . . . . . . . . . . . 13
6.7 Headings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
6.8 Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . . . 13
6.9 Severability. . . . . . . . . . . . . . . . . . . . . . . . . . . 13
6.10 Capacity of Trustee. . . . . . . . . . . . . . . . . . . . . . . 00
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XXXX LOAN AGREEMENT
THIS AGREEMENT, effective as of 1/19, 1993, by and between XXXXXXX XXXXXX &
CO., INC., a California corporation (the "Company"), and THE XXXXXXX XXXXXX
PROFIT SHARING AND EMPLOYEE STOCK OWNERSHIP PLAN AND TRUST (the "Borrower").
W I T N E S S E T H:
WHEREAS, the borrower has been established by the Company to provide stock
ownership interests to eligible employees, and the Borrower is designed to
qualify as an employee stock ownership plan under Section 4975(e)(7) of the
Internal Revenue Code of 1986, as amended (the "Code"), and Section 407(d)(6) of
the Employee Retirement Income Security Act of 1974, as amended ("ERISA"); and
WHEREAS, the Borrower wishes to acquire common shares of the Company or an
affiliate (the common shares of the Company are hereinafter referred to as
"Company Stock" and the common shares acquired hereunder by the Borrower are
referred to herein as the "Shares"); and
WHEREAS, the Borrower desires to borrow, and the Company desires to lend,
the sum of $15,000,000 (such amount hereinafter referred to as the "Principal
Amount" and such loan as the "ESOP
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Loan") in order to finance the Borrower's purchases of Company Stock;
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
THE ESOP LOAN
1.1 LOAN TO BORROWER. Subject to the terms and conditions herein set
forth, the Company agrees to lend to the Borrower the Principal Amount.
1.2 USE OF PROCEEDS. The Borrower hereby agrees that it will use the
entire proceeds of the ESOP Loan to acquire Company Stock through open market
purchases or from the Company, to the extent the Company makes such Company
Stock available for purchase.
1.3 PROMISSORY NOTE. The indebtedness of the Borrower for the Principal
Amount is evidenced by a promissory note (the "Promissory Note") between the
Company and the Borrower in the form attached hereto.
1.4 INTEREST. Interest (including interest on overdue payments) shall
accrue on the unpaid Principal Amount at the simple interest rate of seven and
nine tenths percent (7.9%) per annum.
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ARTICLE 2
TIME FOR REPAYMENT
2.1 REPAYMENTS OF PRINCIPAL. The borrower shall make principal payments
to the Company on the ESOP Loan according to the following schedule:
Principal Payment Due Date
----------------- --------
$ 623,899 December 31, 1994
$ 673,187 December 31, 1995
$ 726,368 December 31, 1996
$ 783,751 December 31, 1997
$ 845,668 December 31, 1998
$ 912,476 December 31, 1999
$ 984,561 December 31, 2000
$ 1,062,341 December 31, 2001
$ 1,146,266 December 31, 2002
$ 1,236,821 December 31, 2003
$ 1,334,530 December 31, 2004
$ 1,439,958 December 31, 2005
$ 1,553,715 December 31, 2006
$ 1,676,458 December 31, 2007
2.2 PAYMENT OF INTEREST. Interest shall be payable on the outstanding
daily unpaid Principal Amount from the date of execution of this Agreement until
payment in full. Such payment shall be made in annual installments.
2.3 PREPAYMENT. The Borrower may prepay principal in whole or in part at
any time, without any premium or penalty. Any such prepayment shall be applied
to the principal installments in the manner determined by the Company in its
sole discretion.
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2.4 NOT PAYABLE ON DEMAND. Under no circumstances will the outstanding
balance of the ESOP Loan be payable on demand, except in the event of default.
For this purpose, the only event of default shall be the Borrower's failure to
make the payments specified in Sections 2.1 or 2.2.
2.5 LIMITATION ON REPAYMENT. Notwithstanding anything to the contrary
contained herein, in the absence of default, payments of principal and interest
on the ESOP Loan shall not exceed the sum of all contributions that are made by
the Company or any affiliated corporation to the Borrower to meet its
obligations under this Agreement, any earnings on such contributions and any
cash dividends on the Shares (whether or not such shares have been released from
pledge at the time the dividend is paid), less payments made in prior years. In
no event shall the Company have any right to any assets of the Borrower other
than (a) contributions that are made to the Borrower to meet its obligations
hereunder, (b) earnings attributable to the investment of such contributions,
(c) any cash dividends on the Shares and (d) the Shares remaining subject to
pledge under Article 5, but only to the extent permitted under Section 5.3.
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ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE BORROWER
The Plan Administrator (as defined in the Xxxxxxx Xxxxxx Profit Sharing and
Employee Stock Ownership Plan (the "Plan")), on behalf of the Borrower, as of
the date thereof, represents and warrants as follows:
3.1 AUTHORIZATIONS. The Borrower is an employee stock ownership plan
established by the Xxxxxxx Xxxxxx & Co., which, through the trustee of the
Borrower (the "Trustee"), as directed by the Plan Administrator, has all
requisite power and authority to execute, deliver and perform its obligations
under this Agreement. This Agreement has been duly authorized by all necessary
action on the part of the Plan Administrator and the Trustee; this Agreement
has been duly executed and delivered by the Borrower and constitutes, a legal,
valid and binding obligation of the Borrower, enforceable in accordance with its
terms, subject to bankruptcy, insolvency, reorganization and other similar laws
affecting creditors' rights generally and subject, as to enforceability, to
general equitable principles (regardless of whether enforcement is sought in
proceeding in equity or at law).
3.2 COMPLIANCE WITH OBLIGATIONS AND LAWS. Neither the execution and
delivery by the Trustee of this Agreement, nor the consummation of the
transactions contemplated hereby, nor
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compliance by the Borrower with its obligations hereunder, will conflict with,
or result in a breach or violation of, or constitute a default under, any
provision of the Borrower or any law, rule, regulation, order, injunction or
decree of any court, administrative authority or arbitrator applicable to the
Borrower.
3.3 RESTRICTIONS ON TRANSFER. If Borrower purchases Shares directly from
the Company, and not through open market purchases, Borrower understands that
such Shares will not have been registered under the Securities Act of 1933, as
amended ("Securities Act"), and that such Shares are not freely tradeable and
must be held indefinitely unless registered under the Securities Act or an
exemption from registration is available. Borrower further understands that
although an exemption from registration may be available pursuant to Rule 144
promulgated under the Securities Act, satisfaction of a number of conditions is
required to make a sale under that exemption, and that, even if Rule 144 is
applicable in whole or in part, in no event may Borrower sell the Shares to the
public under such rule prior to the expiration of a two year period after
purchase, that any such sales must be limited in amount and that sales can only
be made in full compliance with the provisions of the Rule. Borrower represents
that it is acquiring the Shares for its own account and not with the view to
distribution within the meaning of the Securities Act, other than as may be
effected in compliance with the Securities Act and rules and
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regulations promulgated thereunder. The Company may affix to the certificates
representing the Shares a legend substantially as follows and such additional
legends as the Company reasonably may determine:
These securities have not been registered under the Securities
Act of 1933, as amended, and have been taken by the issuer for
its own account and not with a view to their distribution. Said
securities may not be sold or transferred unless (a) they have
been registered under said Act or (b) the transfer agent (or the
Company, if it is then acting as its own transfer agent) is
presented with either a written opinion of counsel satisfactory
to the Company or a "no-action" letter of the Securities and
Exchange Commission to the effect that such registration is not
required under the circumstances of such sale or transfer.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company, as of the date hereof, represents and warrants as follows:
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4.1 DUE INCORPORATION. The Company is a corporation duly incorporated,
validly existing and in good standing under the laws of the State of Delaware.
4.2 CORPORATE AUTHORITY. The Company has all requisite power and
authority to execute, deliver and perform its obligations under this Agreement.
The Company has taken all corporate action to establish the Borrower and to
authorize this Agreement. This Agreement has been duly executed and delivered
by the Company and is a legal, valid and binding obligation of the Company,
enforceable in accordance with its terms, subject to bankruptcy, insolvency,
reorganization and other similar laws affecting creditors' rights generally and
subject, as to enforceability, to general equitable principles (regardless of
whether enforcement is sought in a proceeding in equity or at law).
4.3 COMPLIANCE WITH LAWS AND OBLIGATIONS. Neither the execution of this
Agreement nor the fulfillment of any of the Company's obligations under this
Agreement will conflict with, or result in a breach or violation of, or
constitute a default under any law, rule, regulation, order, injunction, or any
other obligation, loan, contract or agreement of the Company.
4.4 COMPANY SALES. To the extent that any of the Shares are purchased by
the Borrower from the Company, such Shares shall, as of
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the date of such purchase, be duly authorized and validly issued by the Company.
4.5 EXEMPT LOANS. The ESOP Loan is an exempt loan within the meaning of
Treas. Reg. Section 54.4975-7(b).
ARTICLE 5
PLEDGE OF SHARES
5.1 PLEDGE. Upon the terms and conditions contained herein, the Borrower
does hereby agree to pledge the Shares upon their receipt thereof to the Company
as security for the payment of the ESOP Loan. Such Shares shall nonetheless be
retained by the Trustee and held in a suspense account pursuant to the Plan. As
long as there is no failure to make payments of principal or interest due under
the ESOP Loan, the Borrower shall receive and retain all cash dividends paid
with respect to the Shares and exercise all voting rights with respect to the
Shares.
5.2 RELEASE OF SHARES FROM PLEDGE. Within ten days after each payment of
principal and/or interest under the ESOP Loan, a number of the Shares shall be
released from pledge hereunder. The number of Shares to be so released shall be
calculated by multiplying the number of Shares held by the Company under the
pledge (immediately before the release) by a fraction. The numerator of the
fraction shall be the amount of principal and interest represented by such
payment on the
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XXXX Loan. The denominator of the fraction shall be the sum of the numerator
and the remaining unpaid principal and interest of the ESOP Loan.
5.3 DEFAULT. In the event of a failure to make payments of principal or
interest due under the ESOP Loan, which failure is not cured within 30 days, the
Company shall have the right , at any time thereafter, to repurchase, sell or
otherwise convert to cash all or any portion of the Shares remaining subject to
pledge; provided, however, that such Shares may be so applied by the Company
only upon and to the extent of the Borrower's failure to meet the payment
schedule of the Promissory Note (without regard to any acceleration of such
payment schedule as a result of the failure to pay), and that the Company shall
give the Borrower 15 days' written notice of its intent to repurchase or sell
such Shares pursuant to this Section 5.3. The Company shall apply the proceeds
thereby obtained first to the payment of its reasonable expenses incurred in
effecting such sale or other disposition, including but not limited to
attorneys' and brokers' fees, and thereafter to the payment of the liabilities
of the Borrower to the Company under the ESOP Loan. Any surplus remaining in
the hands of the Company after the payment of such expenses and such liabilities
shall be returned by the Company to the Borrower. A repurchase of Shares by the
Company shall be based upon the then
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prevailing market price of Company Stock on the New York Stock Exchange.
5.4 MISCELLANEOUS. No delay or failure of the Company in exercising any
right, power or privilege hereunder shall affect such right, power or privilege;
nor shall any single or partial exercise thereof nor any abandonment or
discontinuance of steps to enforce such a right, power or privilege preclude any
further exercise thereof or any other right, power or privilege of the Company.
The rights and remedies of the Company hereunder are cumulative and not
exclusive. Any waiver, permit, consent or approval of any kind by the Company
of any breach or default hereunder, or any such waiver of any provisions or
conditions hereof, must be in writing and shall be effective only to the extent
set forth in such writing.
ARTICLE 6
MISCELLANEOUS
6.1 AMENDMENTS, CONSENTS, WAIVERS AND MODIFICATIONS. No amendment or
waiver of any provision of this Agreement shall be effective unless set forth in
an instrument in writing signed by both parties to this Agreement.
6.2 NO WAIVER. No course of dealing between the Company and the Borrower
in exercising any rights or obligations hereunder shall be construed as a waiver
of any rights of the Company or of the Borrower.
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6.3 SURVIVAL OF COVENANTS, ETC., SUCCESSORS AND ASSIGNS. So long as any
portion of the Principal Amount shall be outstanding, all covenants, agreements,
representations and warranties made by the Company and the Borrower in this
Agreement and in any certificate or other document delivered pursuant hereto
shall inure to the benefit of the Company or the Borrower, as the case may be,
and shall be binding upon any successors and assigns of the Borrower or the
Company, as the case may be.
6.4 COMMUNICATIONS. All notices and other communications which are
required or may be given hereunder shall be in writing, shall be effective upon
receipt, and shall be deemed to have been duly given if delivered personally or
sent by cable, telegram, telex or facsimile or by registered or certified mail,
postage prepaid, sent to the following addresses:
If to the Company: The Xxxxxxx Xxxxxx Corporation
000 Xxxxxxxxxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
If to the Borrower: Plan Administrator of the Xxxxxxx Xxxxxx Profit Sharing
and Employee Stock Ownership Plan
000 Xxxxxxxxxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
with a copy to: The Xxxxxxx Xxxxxx Trust Company
Trustee of the Xxxxxxx Xxxxxx Profit Sharing and
Employee Stock Ownership Plan
X.X. Xxx 000000
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
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Such address may be changed from time to time by notice to the Borrower and the
Trustee, in the case of the Company, by notice to the Company and the Trustee,
in the case of the Borrower and by notice to the Company and the Borrower, in
the case of the Trustee.
6.5 ENTIRE AGREEMENT. This Agreement, including attachments thereto,
constitutes the entire agreement between the parties hereto with respect to the
ESOP Loan.
6.6 GOVERNING LAW. This Agreement shall be governed by, and interpreted
in accordance with, the substantive laws of the State of California, except as
preempted by ERISA.
6.7 HEADINGS. The table of contents and headings of the sections and
subsections of this Agreement are inserted for convenience only and shall not be
deemed to constitute a part hereof.
6.8 COUNTERPARTS. This Agreement may be executed in one or more
counterparts each of which will be deemed to constitute an original and shall
become effective when one or more counterparts have been signed by each party
hereto and delivered to the other party.
6.9 SEVERABILITY. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability or any other
provision hereunder.
6.10 CAPACITY OF TRUSTEE. The Xxxxxxx Xxxxxx Trust Company is executing
this Agreement only in its capacity as Trustee for the Borrower and not in its
individual capacity.
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IN WITNESS WHEREOF, the Company and the Trustee, on behalf of the Borrower,
have executed this ESOP Loan Agreement as of this 19th day of January, 1993.
THE XXXXXXX XXXXXX THE XXXXXXX XXXXXX TRUST
CORPORATION COMPANY, AS TRUSTEE OF THE
XXXXXXX XXXXXX PROFIT
SHARING AND EMPLOYEE
STOCK OWNERSHIP PLAN AND
TRUST
By /s/ Xxxxxxx X. Xxxxxx By /s/ Xxxxx X. Xxxxx
ADMINISTRATIVE COMMITTEE AS PLAN ADMINSISTRATOR OF THE XXXXXXX XXXXXX PROFIT
SHARING AND EMPLOYEE STOCK OWNERSHIP PLAN
By /s/ A. Xxxx Xxxxx
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