NOTE
$3,378,750 Baltimore, Maryland
December 8, 1998
FOR VALUE RECEIVED, the undersigned Xxxxxxx X. Xxxxx
(the "Borrower") promises to pay to the order of Xxxx Xxxxx, Inc.
(the "Company"), at the offices of the Company in Baltimore, Maryland,
the principal sum of THREE MILLION, THREE HUNDRED SEVENTY-EIGHT THOUSAND,
SEVEN HUNDRED FIFTY DOLLARS ($3,378,750), with interest on the unpaid
balance hereof and, to the extent permitted by applicable law, on accrued
and unpaid interest, from the date hereof until paid in full at the rate
of Four and Forty-Seven Hundredths percent (4.47%) per annum, compounded
semi-annually on June 8 and December 8 of each year.
This Note has been issued pursuant to the Xxxx Xxxxx, Inc. 1996
Equity Incentive Plan (the "Plan") and an Executive Stock Purchase and Loan
Agreement (the "Purchase and Loan Agreement") of even date herewith, by and
between the Borrower and the Company, to which reference is made for further
description of the rights and obligations specified herein and of certain
other rights and obligations of the Borrower and the Company which affect
the terms and provisions of this Note.
Interest on the unpaid balance hereof shall be paid on June 8, 1999
and, thereafter, on each succeeding anniversary of that date and at maturity,
until the principal of this Note shall be paid in full.
The principal sum outstanding hereunder and all accrued and unpaid
interest thereon shall be due and payable on June 8, 2006. All principal
amounts outstanding hereunder, together with accrued interest thereon, shall
be forgiven on the date on which (i) a Change of Control (as
defined below) occurs, or (ii) the Borrower's employment with the Company is
terminated (1) by the Company without Cause (as defined below), (2) by
reason of the Borrower's death or (3) by reason of the Borrower's permanent
disability (as defined in the Company's then applicable long-term disability
plan).
Prepayments of principal may be made in the sole discretion of the
Borrower in whole or in part, at any time or from time to time, without
penalty.
For purposes of this Note, a "Change of Control" shall be deemed to
have occurred at such time as (i) any "person" (as such term is used in
Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934, as
amended (the "1934 Act")) other than an affiliate of the Company on the date
hereof, becomes the beneficial owner (as defined in Rule 13d-3 of the 1934
Act), directly or indirectly, of securities of the Company or a successor
representing 50% or more of the combined voting power of the Company's then
outstanding securities having the ordinary right to elect directors of the
Company or (ii) the Company's stockholders shall have approved any agreement
providing for a merger in which the Company will not remain an independent
publicly owned company or a consolidation or sale or other disposition of
all or substantially all of the assets of the Company.
For purposes of this Note, the term "Cause" shall mean the Borrower's
intentional gross misconduct that is damaging to the Company in a material
way.
It shall constitute a default under this Note (a "default") if the
principal or any interest thereon is not paid when due and payable or if the
Borrower shall, FOR ANY REASON, cease to be employed by the Company or one
of its subsidiaries or affiliates, other than following the occurrence of
any event specified in the fourth paragraph of this Note that results in the
principal hereof being forgiven. Upon any default by the Borrower hereunder
that shall remain uncured after ten (10) days written notice from the
Company to the Borrower, the Company may declare the unpaid principal sum
of this Note, together with all accrued and unpaid interest to be due and
immediately payable.
The obligation represented by this Note is secured by a certain
Pledge Agreement of even date herewith by and between the Borrower and the
Company.
The Borrower waives all exemptions to the extent permitted by law,
diligence in collection, demand, presentment for payment, protest, and
notice of protest and non-payment.
This Note shall be a sealed instrument and construed under the
laws of the State of Maryland, other than the conflicts of laws provisions
thereof.
XXXXXXX X. XXXXX
/s/ Xxxx Xxxx Xxxx /s/ Xxxxxxx X. Xxxxx (SEAL)
