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Exhibit 10.16
Alloy Designs, Inc.
00 Xxxxxxxx Xxxxxx
Xxxxxxx, XX 00000
August 25, 1997
Re: Amendment No. 1 to Stockholders' and Voting Agreement
Dear Stockholder:
As a condition to their investment, certain participants in the recent
private offering of Common Stock, $.01 par value per share ("Common Stock") of
Alloy Designs, Inc. (the "Company") requested that, for so long as the Company
remains a so-called S corporation for federal income tax purposes, the Company
covenant to distribute cash to stockholders in an amount sufficient to enable
stockholders to pay tax liability in years in which the Company has taxable net
income.
Accordingly, the Company hereby agrees to the addition of the following
section to the Stockholders and Voting Agreement (the "Stockholders and Voting
Agreement") dated as of June 30, 1997 by and among the Company and the
stockholders of the Company:
"2.5 Distributions to Stockholders. For so long as the Company is taxed as
an S corporation under Subchapter S of the Internal Revenue Code of 1986, as
amended (the "Code"), subject to any limitations on distributions imposed by
statute, the Company and Stockholders agree as follows:
(i) Subject to terms of this Section 2.5, the Company shall use all
reasonable efforts to make pro rata distributions of money, based on
ownership of shares of Common Stock, to pay the federal and state income
taxes on the income (net of any tax benefits produced for the Stockholders
by the Company's losses, deductions and credits) that passes through from
the Company under the applicable provisions of the Code.
(ii) The total amount to be distributed shall be determined by
conclusively presuming that all taxable income passed through to each
Stockholder will be taxed at the maximum federal rate (without regard to
exemptions or phaseouts of lower tax rates) and the maximum State of New
York rate at which income of any individual can be taxed in the calendar
year that includes the last day of the Company's taxable year. It shall
further be conclusively presumed that the Stockholder can deduct the State
of New York tax for federal income tax purposes, and the calculations
shall be made using the net effective State of New York rate.
(iii) No provision in this Section 2.5 shall cause the total
dividend paid
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with respect to any outstanding share of Common Stock to differ from the
per share amounts paid with respect to any other outstanding share of
Common Stock.
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(iv) No provision of this Section 2.5 shall be construed to limit
the ability of the Company to declare and pay additional dividends to the
Stockholders out of the assets of the Company legally available for such
payment at such time or times as the Board of Directors may determine.
Except as amended hereby, the Stockholders and Voting Agreement remains in
full force and effect.
Very truly yours,
ALLOY DESIGNS, INC.
By:______________________________________
Xxxxxx X. Xxxxxxx, Executive Vice
President and Secretary
ACCEPTED AND AGREED:
______________________________
Stockholder's Signature
______________________________
Print Name
__________________
Date
