Exhibit 99(C)(2)
INTERIM AGREEMENT
THIS INTERIM AGREEMENT ("Agreement"), effective as of November 19,
1999, is entered into by and among Xxxxxx X. Xxxxxx ("Executive"), Big Flower
Holdings, Inc., a Delaware corporation ("BFH") and Treasure Chest Advertising
Company, Inc., a Delaware corporation and an indirect wholly-owned subsidiary of
BFH ("Treasure Chest").
WHEREAS, Executive, BFH and Treasure Chest are parties to an Employment
Agreement entered into by and among them as of March 29, 1996 ("Employment
Agreement");
WHEREAS, Executive currently holds options to purchase 520,000 shares
of common stock of BFH;
WHEREAS, in contemplation of the merger of BFH Merger Corp. with and
into BFH (the "Merger"), Executive, BFH and Treasure Chest desire to set forth
certain agreements reached with respect to (i) the exchange by Executive of a
portion of the value of his options for certain rights to acquire shares of
common stock of BFH following the Merger, (ii) the grant to Executive of certain
options to purchase common stock of BFH following the Merger and (iii) the
consequences of the termination of Executive's employment during the first year
after the Merger;
NOW THEREFORE, in consideration of the mutual agreements hereinafter
set forth, Executive, BFH and Treasure Chest agree as follows, intending to be
legally bound:
1. INVESTMENT. In connection with the Merger, BFH and Executive, among
other parties, shall enter into a Management Subscription Agreement in the form
developed by BFH and executed by other senior executives of BFH ("Subscription
Agreement"), that shall provide, among other things, that:
(a) Executive shall offer to acquire from BFH rights to
purchase 109,674 shares of common stock in BFH (the "Rights"), pursuant
to the terms to be set forth in the Subscription Agreement; and
(b) In exchange for such Rights, Executive shall surrender to
BFH stock options to purchase shares of common stock of BFH having a
value, as determined by BFH in accordance with Section 2.02 of the
Amended and Restated Agreement and Plan of Merger dated as of October
11, 1999 (the "Merger Agreement") between BFH Merger Corp. and BFH,
equal to $3,454,750;
provided, however, that Executive shall not be obligated to enter into the
Subscription Agreement if he is not satisfied, in his sole discretion, as to the
Federal income tax consequences of the investment.
2. OPTIONS. Concurrently with the closing of the transactions
contemplated by the Subscription Agreement:
(a) BFH shall grant to Executive options to purchase an
additional 219,348 shares of common stock of BFH at a purchase price of
$31.50 per share (the "Options");
(b) Executive and BFH shall enter into an Option Agreement
that (i) provides that the Options shall vest and become exercisable at
the rate of 1/3 per year, beginning on the first anniversary of the
closing of the Merger (the "Closing Date") and ending on the third
anniversary thereof; provided, however, that in no event shall any
Options vest or become exercisable following the termination of
Executive's employment for any reason, nor shall any of the Options
vest or become exercisable, during the period from the Closing Date to
and including the day immediately prior to the first anniversary of the
Closing Date (such period shall be called the "Initial Year"),
notwithstanding the provisions of any other agreement to the contrary
and (ii) shall otherwise be in the form developed by BFH and executed
by other senior executives of BFH.
3. AMENDMENT TO EMPLOYMENT AND SUBSCRIPTION AGREEMENTS. Concurrently
with the closing of the transactions contemplated by the Subscription Agreement,
Executive, BFH and Treasure Chest shall enter into an amendment (the
"Amendment") to the Employment Agreement and the Subscription Agreement that
will provide for the following terms, among other things:
(a) In addition to the provisions of Article 4 of the
Employment Agreement, Executive may elect to resign, for any reason, as
of the last business day of the Initial Year by providing written
notice to BFH of such election no later than the 30th day prior to the
end of the Initial Year. If Executive elects to resign pursuant to this
provision and Executive's employment is not otherwise terminated prior
to the last business day of the Initial Year, then (A) none of the
Options shall vest and (B) Executive shall be entitled to receive the
termination payments described in Section 4(d) of the Employment
Agreement following the effective date of Executive's termination, in
accordance with the provisions for payment specified therein. If
Executive resigns pursuant to this provision and Executive intends to
exercise his right to sell the Rights to BFH pursuant to paragraph
(c)(i) below, Executive must provide notice of such intent concurrently
with the notice of resignation required by this paragraph, and the sale
and purchase of the Rights shall take place at the principal office of
BFH within five (5) business days after the effective date of
Executive's termination.
(b) For the avoidance of doubt and in consideration of the
parties' agreement that under no circumstances shall the Options vest
or become exercisable prior to the first anniversary of the Closing
Date, the provisions relating to the immediate vesting and
exercisability of equity incentive awards in clause (ii) of the first
sentence of Section 4(a), clause (ii) of the third sentence of Section
4(b), and clause (B)(iii) of the first sentence of
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Section 4(d) of the Employment Agreement therefore shall not apply
during the Initial Year, and any similar provisions shall be modified
as appropriate.
(c) For the Initial Year, the Put and Call provisions in
Sections 5.1 and 5.2 of the Subscription Agreement shall be superseded
and replaced by the following:
(i) In addition to any other rights that Executive
may have under the Employment Agreement or applicable law, if
Executive's employment is terminated during the Initial Year
for any reason other than for Cause (as defined in Section
4(c) of the Employment Agreement), Executive and his Permitted
Transferees (as defined in the Subscription Agreement) shall
have the one-time right to sell the Rights to BFH for an
amount equal to $31.50 per underlying share of common stock
(without regard to the fair market value of such Rights or
common stock as of the date of Executive's termination and
without interest or other compensation to Executive for the
period of Executive's investment in such Rights), which right
may be exercised (x) pursuant to the procedure specified in
paragraph (a) above, if applicable, or (y) otherwise by
providing written notice to BFH at any time after such
termination but prior to or on the final day of the Initial
Year;
(ii) In addition to any other rights that BFH may
have under the Employment Agreement or applicable law, if
Executive's employment is terminated during the Initial Year
for any reason, BFH shall have the one-time right to purchase
any or all of the Rights then held by the Executive and the
Purchaser's Group (as defined in the Subscription Agreement)
for an amount equal to $31.50 per underlying share of common
stock (without regard to the fair market value of such Rights
or common stock as of the date of Executive's termination and
without interest or other compensation to Executive for the
period of Executive's investment in such Rights), which right
may be exercised by providing written notice to Executive at
any time after such termination but prior to or on the final
day of the Initial Year; and
(iii) The closing of any sale and purchase of Rights
provided for in clause (i) or (ii) above shall take place at
the principal office of BFH within 5 business days after the
giving of the relevant notice.
(d) Sections 5.3 (Purchase Price to Be Paid by Company) and
6.1 (Certain Limitations on the Company's Obligations to Purchase
Common Stock or Rights) of the Subscription Agreement shall not apply
during the Initial Year.
(e) The Amendment shall not be integrated into, and shall
constitute a valid amendment to, the Subscription Agreement.
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4. EFFECT OF AGREEMENT; SURVIVAL. This Agreement describes certain
specific terms and conditions to which the parties have agreed concerning
Executive's investment in, and continued employment with, BFH following the
Merger. The parties expressly contemplate that the terms of this Agreement will
be incorporated in, and superseded by, the Subscription Agreement and the
Amendment.
5. TERMINATION OF AGREEMENT. This Agreement shall terminate upon the
earliest of: (i) the execution and delivery of the Amendment, (ii) the
termination of Executive's employment or (iii) the termination of the Merger
Agreement.
6. MODIFICATION. This Agreement may not be modified except in a writing
executed by each of the parties hereto.
7. DISPUTE RESOLUTION. Executive, BFH and Treasure Chest each agree
that any dispute that arises as to the parties' rights and obligations under
this Agreement shall be resolved by binding arbitration in accordance with the
terms of Section 8 of the Employment Agreement.
8. GOVERNING LAW. This Agreement and the legal relations thus created
among the parties hereto shall be governed by and construed in accordance with
the laws of the State of New York.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
BIG FLOWER HOLDINGS, INC.
By: /s/ Xxxx X. Xxxxxxxx
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Xxxx X. Xxxxxxxx
Executive Vice President - Office of
the Chairman
TREASURE CHEST ADVERTISING
COMPANY, INC.
By: /s/ Xxxx X. Xxxxxxxx
-------------------------------------
Xxxx X. Xxxxxxxx
Executive Vice President and Secretary
/s/ Xxxxxx X. Xxxxxx
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XXXXXX X. XXXXXX
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