Exhibit 10.3
ACCOMMODATION AGREEMENT
THIS ACCOMMODATION AGREEMENT is entered into as of July 6, 1998 between
PennCorp Financial Group, Inc., a Delaware corporation (the "Company"), and
Xxxxx X. Xxxxx ("Xxxxx").
RECITALS
WHEREAS, in connection with an extension of credit (the "Credit
Transaction") to Xxxxx X. Xxxxx and Xxxx X. Xxxxx, the Stones propose to pledge
(i) 841,450 shares of common stock of the Company owned by them (the
"Unrestricted Common Shares"), (ii) 112,675 shares of common stock (the
"Restricted Common Shares") issued to Xx. Xxxxx and (iii) 173,160 shares of
common stock (the "Transfer Agreement Shares") to be issued to Xx. Xxxxx
pursuant to that certain Transfer Agreement among the Company, Xx. Xxxxx and a
third party;
WHEREAS, the Restricted Common Shares are held by PennCorp to secure Xx.
Xxxxx'x obligations in respect of the noncompetition covenant contained in his
restricted stock award agreement;
WHEREAS, the Transfer Agreement Shares are not required to be issued to Xx.
Xxxxx prior to April 15, 2001 and are subject to offset in the event of a breach
by Xx. Xxxxx of the noncompetition provisions of his employment agreement with
the Company; and
WHEREAS, the Board of Directors of the Company, has determined that it is
in the best interests of the Company and its shareholders to facilitate the
pledge of the Restricted Common Shares and the Transfer Agreement Shares to the
financial or other institution participating in the Credit Transaction;
NOW, THEREFORE, subject to the terms and conditions stated herein and for
other good and valuable consideration, the adequacy of which is hereby
acknowledged, the Company and Xx. Xxxxx hereby agree as follows:
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1. Establishment of Collateral Arrangements. The Company hereby consents to
the pledge of the Restricted Common Shares and the Transfer Agreement Shares in
connection with the Credit Transaction. The Company hereby waives any
restriction on the Restricted Common Shares and the Transfer Agreement Shares
arising out of the noncompetition provisions of Xx. Xxxxx'x employment agreement
and noncompetition provisions of the restricted stock agreement for so long as
and to extent that the Restricted Common Shares and the Transfer Agreement
Shares are pledged as collateral for the Credit Transaction; provided, however,
that (A) Xx. Xxxxx shall use his reasonable best efforts to use substantially
all the net cash proceeds from the sale of the New York City residence of Mr.
and Xxx. Xxxxx (after the payment of all debts and liabilities relating thereto)
to replace, and obtain a corresponding release as collateral of, as many of the
Restricted Common Shares and the Transfer Agreement Shares as is practicable and
(B) Xx. Xxxxx shall obtain the agreement of the financial or other institutions
participating in the Credit Transaction that if such institutions foreclose upon
the collateral for the Credit Transaction, (x) they shall first use all cash
collateral posted by Mr. and Xxx. Xxxxx before they shall sell any of the shares
of common stock pledged for the Credit Transaction, (y) such institutions shall
sell all the shares of Unrestricted Common Shares before they shall seek to sell
any of the Restricted Common Shares and (z) they shall sell all the Restricted
Common Shares before they shall seek to sell any of the Transfer Agreement
Shares.
2. Certain Matters Relating to the Transfer Agreement Shares. Xx. Xxxxx and
the Company acknowledge that the Transfer Agreement shares are not required, by
the terms of the Transfer Agreement, to be delivered to Xx. Xxxxx until April
15, 2001. However, Xx. Xxxxx has advised the Company that, after diligent
effort, Xx. Xxxxx cannot obtain the agreement of one or more of the
participating financial institutions to accept the agreement of the Company to
issue and deliver the Transfer Agreement Shares to the participating
institutions upon a default by Xx. Xxxxx under the terms of the Credit
Transaction. As a result, the Company has agreed that it shall issue and deliver
to Xx. Xxxxx all the Transfer Agreement Shares, which Xx. Xxxxx shall thereupon
pledge in connection with the Credit Transaction. In consideration for the
foregoing accommodation by the Company, Xx. Xxxxx and the Company agree that,
subject to paragraph 4 below, the annual fee to
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be paid to Xx. Xxxxx under the Transfer Agreement shall automatically, and
without further action by Xx. Xxxxx or the Company, cease to be payable by the
Company. The reduction in the fee shall be effective as of the date of the
issuance of any such shares to the participating financial institutions, with
any such reduction for a period of less than a full year to be made pro rata for
the year in which the reduction occurs based on a year of 365 days.
3. Certain Matters Related to the Restricted Common Shares. The parties
acknowledge that, pursuant to that certain Agreement, dated as of March 31,
1997, between the Company and Xx. Xxxxx (the "Restricted Stock Agreement"), the
Company issued the Restricted Common Shares to Xx. Xxxxx. As an inducement to
Xx. Xxxxx to subject to the Restricted Common Shares to certain noncompetition
provisions contained in the Agreement, the Company issued to Xx. Xxxxx an
additional 28,169 shares of restricted common stock (the "Discount Shares"). The
Company and Xx. Xxxxx agree that because the Company has waived the
noncompetition restrictions of the Restricted Stock Agreement as they relate to
the Restricted Common Shares, Xx. Xxxxx shall redeliver the Discount Shares to
the Company for cancellation, subject to possible reissuance pursuant to
paragraph 4 below.
4. Release of Collateral. In the event that one or more of the
participating institutions shall release any of the Restricted Common Shares or
the Transfer Agreement Shares as collateral (whether as a result of a
substitution of collateral by Xx. Xxxxx or otherwise), such shares of stock
shall be redelivered by Xx. Xxxxx to PennCorp and shall continue to secure Xx.
Xxxxx'x performance of his noncompetition obligations. In the event that any
Portion of the Restricted Common Shares are released as collateral for the
Credit Transaction and redelivered to the Company, the Company shall issue to
Xx. Xxxxx a pro rata portion (based on the ratio of the number of redelivered
Restricted Common Shares to the total number of Restricted Common Shares) of the
Discount Shares. In the event that any portion of the Transfer Agreement Shares
are released as collateral for the Credit Transaction and redelivered to the
Company, a pro rata portion of the annual fee otherwise payable under the
Transfer Agreement (based on the ratio of the number of Transfer Agreement
Shares redelivered to the Company to the total number of Transfer Agreement
Shares) shall be reinstated effective as of the date of the redelivery of the
Transfer Agreement Shares to the Company,
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with any such reinstatement for a period of less than a full year to be made pro
rata for the year in which the reinstatement occurs based on a year of 365 days.
5. Notices, Etc. All notices, requests, demands and other communications
required or permitted hereunder shall be made n writing by hand-delivery,
first-class mail (registered or return receipt requested), telex, telecopier or
air courier guaranteeing overnight delivery:
If to PennCorp Financial Group, Inc.
PennCorp Financial Group, Inc.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
If to Xx. Xxxxx
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
6. Governing Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York, applicable to contracts
executed in and to be performed entirely within that state.
7. Counterparts. This Assignment Agreement may be executed in several
counterparts, each of which shall be deemed to be an original and all of which
shall constitute one and the same instrument.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK.]
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IN WITNESS WHEREOF, the parties hereto have caused this Amended Assignment
Agreement to be executed as of the date first written above by their respective
officers thereunto duly authorized.
PENNCORP FINANCIAL GROUP, INC.
By: /s/ Xxxxx X. Xxxxxxxxx
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Name: Xxxxx X. Xxxxxxxxx
Title: Executive Vice President,
General Counsel and Chief
Administrative Officer
/s/ Xxxxx X. Xxxxx
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Xxxxx X. Xxxxx
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