Exhibit 10.9
SENIOR MANAGEMENT AGREEMENT
THIS AGREEMENT is made as of September 5, 1996, between American Medserve
Corporation, a Delaware corporation (the "Company"), and Xxxxxxx X. Xxxxxxxx
("Executive").
The Company and Executive desire to enter into an agreement pursuant to
which Executive will purchase, and the Company will sell the number of shares of
the Company's Class B Common Stock, par value $.01 per share (the "Class B
Common") set forth in Section 1(a) below. All of such shares of Class B Common
and all shares of Class B Common hereafter acquired by Executive pursuant to
this Agreement are referred to herein as "Executive Stock." Certain definitions
are set forth in Section 15 of this Agreement.
The execution and delivery of this Agreement by the Company and Executive
is a condition to the Executive's purchase of shares of the Class B Common.
Certain provisions of this Agreement are intended for the benefit of, and will
be enforceable by, Golder, Thoma, Xxxxxxx, Xxxxxx Fund IV, L.P. (the
"Investor"), and the Investor is an intended third party beneficiary of this
Agreement.
The parties also desire to enter into an agreement pursuant to which
Executive shall be employed by the Company as the Company's Vice President-
Business Development.
The parties hereto agree as follows:
PROVISIONS RELATING TO EXECUTIVE STOCK
1. PURCHASE AND SALE OF EXECUTIVE STOCK.
(a) Executive hereby agrees to purchase from the Company, and the
Company hereby agrees to sell to Executive, 1,156.0843 shares of Class B Common.
The purchase price per share of Class B Common (the "Purchase Price") shall
equal $98.46.
(b) The closing of the purchase and sale of the Class B Common (the
"Closing") shall take place at the offices of Xxxxxxxx & Xxxxx, 000 Xxxx
Xxxxxxxx Xxxxx, Xxxxxxx, Xxxxxxxx 00000 at 10:00 a.m. on September 5, 1996, or
at such other place or on such other date as may be mutually agreeable to the
Company and the Executive. At the Closing, the Company shall deliver to the
Executive stock certificates evidencing the Class B Common to be purchased by
the Executive, registered in the Executive's name, upon payment of the purchase
price thereof by a cashier's or certified check, or by wire transfer of
immediately available funds to such account as designated by the Company in an
amount not less than $11,383.00 and by delivery of a promissory note
substantially in the form attached hereto as EXHIBIT A (the "Executive Note") in
the amount of the balance of the Purchase Price owed in respect of the Class B
Common purchased hereunder. Executive's obligations under the Executive Note
will be secured by a pledge of all of the shares of Executive Stock to the
Company and in connection therewith Executive shall enter into a pledge
agreement in the form of EXHIBIT B attached hereto.
(c) Within 30 days after the purchase of Executive Stock by Executive
from the Company, Executive shall make an effective election with the Internal
Revenue Service under Section 83(b) of the Internal Revenue Code and the
regulations promulgated thereunder substantially in the form of EXHIBIT C
attached hereto and will promptly notify the Company of such election.
(d) Executive represents and warrants to the Company that:
(i) The Executive Stock to be acquired by Executive pursuant to
this Agreement will be acquired for Executive's own account and not
with a view to, or intention of, distribution thereof in violation of
the Securities Act, or any applicable state securities laws, and the
Executive Stock will not be disposed of in contravention of the
Securities Act or any applicable state securities laws.
(ii) Executive is sophisticated in financial matters and is able
to evaluate the risks and benefits of the investment in the Executive
Stock.
(iii) Executive is able to bear the economic risk of his
investment in the Executive Stock for an indefinite period of time
because the Executive Stock has not been registered under the
Securities Act and, therefore, cannot be sold unless subsequently
registered under the Securities Act or an exemption from such
registration is available.
(iv) Executive has had an opportunity to ask questions and
receive answers concerning the terms and conditions of the offering of
the Executive Stock and has had access to such other information
concerning the Company as he has requested.
(v) This Agreement constitutes the legal, valid and binding
obligation of Executive, enforceable in accordance with its terms, and
the execution, delivery and performance of this Agreement by Executive
does not and will not conflict with, violate or cause a breach of any
agreement, contract or instrument to which Executive is a party or any
judgment, order or decree to which Executive is subject.
(e) As an inducement to the Company to issue the Executive Stock to
Executive, and as a condition thereto, Executive acknowledges and agrees that:
(i) Neither the issuance of any of the Executive Stock to
Executive nor any provision hereof shall entitle Executive to remain
in the employment of the Company and its Subsidiaries or affect the
right of the Company to terminate Executive's employment at any time
for any reason.
(ii) The Company shall have no duty or obligation to disclose to
Executive, and Executive shall have no right to be advised of, any
material information regarding the Company or any Subsidiary at any
time prior to, upon
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or in connection with the repurchase of the Executive Stock upon the
termination of Executive's employment with the Company or any
Subsidiary or as otherwise provided hereunder.
(f) As an inducement to the Company to issue the Executive Stock to
Executive, and as a condition thereto, Executive covenants and agrees to enter
into an Amended and Restated Stockholders Agreement in the form of EXHIBIT D
attached hereto.
2. VESTING OF EXECUTIVE STOCK.
(a) FULLY VESTED SHARES. 35% of the shares of Executive Stock
purchased hereunder (the "Fully Vested Shares") are vested on the date hereof.
(b) PERFORMANCE VESTING SHARES.
(i) Except as otherwise provided in Sections 2(b)(ii) and
2(b)(iii) below, 20% of the shares of Executive Stock purchased
hereunder (the "Performance Vesting Shares") shall vest on the seventh
anniversary of the Start Date, if as of such date Executive is still
employed by the Company or any Subsidiary, provided that if at the end
of any of the first five fiscal years of the Company following the
date hereof, both the Company's EBITDA and EBITDA Percentage equal or
exceed 90% of the Company's Projected EBITDA and Projected EBITDA
Percentage, as determined in good faith by the Board, respectively,
for such fiscal years, then 20% of the Performance Vesting Shares
shall vest as of the end of each fiscal year in which such requirement
is satisfied. In the event the Company does not satisfy the
requirement for 20% of the Performance Vesting Shares to vest as of
the end of any fiscal year, if (i) the sum of the Company's EBITDA for
the fiscal year in which such requirement is not met and the
immediately succeeding fiscal year equals or exceeds 90% of the sum of
the Company's Projected EBITDA for such two fiscal years, and (ii) the
average of the Company's EBITDA Percentages for such two years equals
or exceeds 90% of the average of the Company's Projected EBITDA
Percentages for such two fiscal years, THEN 40% of the Performance
Vesting Shares shall vest as of the end of the second of such two
fiscal years.
(ii) Except as set forth in Section 2(b)(iii) below, in the event
Executive ceases to be employed by the Company for any reason, then
any Performance Vesting Shares which have not become vested on or
prior to such date shall not vest after such date. Upon the
occurrence of a Sale of the Company while the Executive is still
employed by the Company or its Subsidiaries, all Performance Vesting
Shares which have not yet become vested shall become vested at the
time of such event.
(iii) In the event the Company terminates Executive (other than
for Cause) or in the event of Executive's death or disability (as
reasonably determined by the Board or CEO) prior to the fifth
anniversary of the date of the Closing and
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the Additional Benefits Requirements (as defined below) are satisfied
as determined in good faith by the Board, the Performance Vesting
Shares shall continue to vest after Executive's termination, death or
disability as applicable in accordance with the provisions of
Section 2(b)(i) as if Executive were still employed by the Company.
The "Additional Benefits Requirements" are defined as:
(x) the Company's EBITDA for the 12 months ending as of the
month end immediately preceding the date of Executive's
termination equals or exceeds 85% of the Projected EBITDA for
such 12 month period, provided that if such 12 month period is
not one complete fiscal year of the Company, then the Projected
EBITDA for such period shall be deemed to be a proportionate
blend of the Projected EBITDA for the then current fiscal year
and the immediately preceding fiscal year taking into account the
relative number of months elapsed in each such fiscal year which
are part of such 12 month period; and
(y) the Company's EBITDA Percentage as of the end of such
12 month period equals or exceeds 85% of the Projected EBITDA
Percentage as of the end of such 12 month period, provided that
if such 12 month period is not one complete fiscal year of the
Company, then the Company's Projected EBITDA Percentage for such
period shall be deemed to be a proportionate blend of the
Projected EBITDA Percentages for the then current fiscal year and
the immediately preceding fiscal year, taking into account the
relative number of months elapsed in each such fiscal year which
are part of such 12 month period.
See attached Appendix 1 for an example of such calculation.
(c) TIME VESTING SHARES.
(i) Except as otherwise provided in Section 2(c)(ii) below, 45%
of the shares of Executive Stock purchased hereunder (the "Time
Vesting Shares") will become vested in accordance with the following
schedule, if as of each such date Executive is still employed by the
Company or any Subsidiary:
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CUMULATIVE PERCENTAGE OF
TIME VESTING SHARES
DATE VESTED
---- ------
At the Start Date 20%
1st Anniversary of the Start Date 36%
2nd Anniversary of the Start Date 52%
3rd Anniversary of the Start Date 68%
4th Anniversary of the Start Date 84%
5th Anniversary of the Start Date 100%
(ii) If Executive ceases to be employed by the Company or its
Subsidiaries on any date prior to an anniversary date listed above,
the cumulative percentage of Time Vesting Shares to become vested will
be determined on a pro rata basis according to the number of days
elapsed since the prior anniversary date. Upon the occurrence of a
Sale of the Company while Executive is still employed by the Company
or its Subsidiaries, all Time Vesting Shares which have not yet become
vested shall become vested at the time of such event. In the event
the Company terminates Executive (other than for Cause) or in the
event of Executive's death or disability (as reasonably determined by
the Board or CEO) prior to the fifth anniversary of the Start Date and
the Additional Benefits Requirements are satisfied as of the date of
Executive's termination, death or disability as applicable, all Time
Vesting Shares which have not become vested prior to the date of such
termination shall become vested on such date. Subject to the
preceding sentence, any Time Vesting Shares which have not become
vested as of the date that Executive ceases to be employed by the
Company or its Subsidiaries shall not vest after such date.
(d) Shares of Executive Stock which have become vested (including the
Fully Vested Shares) are referred to herein as "Vested Shares," and all other
shares of Executive Stock are referred to herein as "Unvested Shares."
3. REPURCHASE OPTION.
(a) Subject to 3(f) below, in the event Executive ceases to be
employed by the Company or its Subsidiaries for any reason (the "Termination"),
the Executive Stock (whether held by Executive or one or more of Executive's
transferees) will be subject to repurchase by the Company and the Investor
pursuant to the terms and conditions set forth in this Section 3 (the
"Repurchase Option").
(b) The purchase price for each Unvested Share will be the lesser of
Executive's Original Cost or the Fair Market Value for such share, and the
purchase price for each Vested Share will be the Fair Market Value for such
share.
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(c) The Board may elect to purchase all or any portion of the
Unvested Shares and the Vested Shares by delivering written notice (the
"Repurchase Notice") to the holder or holders of the Executive Stock within 100
days after the Termination. The Repurchase Notice will set forth the number of
Unvested Shares and Vested Shares to be acquired from each holder, the aggregate
consideration to be paid for such shares and the time and place for the closing
of the transaction. The number of shares to be repurchased by the Company shall
first be satisfied to the extent possible from the shares of Executive Stock
held by Executive at the time of delivery of the Repurchase Notice. If the
number of shares of Executive Stock then held by Executive is less than the
total number of shares of Executive Stock which the Company has elected to
purchase, the Company shall purchase the remaining shares elected to be
purchased from the other holder(s) of Executive Stock under this Agreement, pro
rata according to the number of shares of Executive Stock held by such other
holder(s) at the time of delivery of such Repurchase Notice (determined as
nearly as practicable to the nearest share). The number of Unvested Shares and
Vested Shares to be repurchased hereunder will be allocated among Executive and
the other holders of Executive Stock (if any) pro rata according to the number
of shares of Executive Stock to be purchased from such person.
(d) If for any reason the Company does not elect to purchase all of
the Executive Stock pursuant to the Repurchase Option, the Investor shall be
entitled to exercise the Repurchase Option for the shares of Executive Stock the
Company has not elected to purchase (the "Available Shares"). As soon as
practicable after the Company has determined that there will be Available
Shares, but in any event within 60 days after the Termination, the Company shall
give written notice (the "Option Notice") to the Investor setting forth the
number of Available Shares and the purchase price for the Available Shares. The
Investor may elect to purchase any or all of the Available Shares by giving
written notice to the Company within thirty days after the Option Notice has
been given by the Company. As soon as practicable, and in any event within ten
days after the expiration of the thirty day period set forth above, the Company
shall notify each holder of Executive Stock as to the number of shares being
purchased from such holder by the Investor (the "Supplemental Repurchase
Notice"). At the time the Company delivers the Supplemental Repurchase Notice
to the holder(s) of Executive Stock, the Company shall also deliver written
notice to the Investor setting forth the number of shares the Investor is
entitled to purchase, the aggregate purchase price and the time and place of the
closing of the transaction. The number of Unvested Shares and Vested Shares to
be repurchased hereunder shall be allocated among the Company and the Investor
pro rata according to the number of shares of Executive Stock to be purchased by
each of them.
(e) The closing of the purchase of the Executive Stock pursuant to
the Repurchase Option shall take place on the date designated by the Company in
the Repurchase Notice or Supplemental Repurchase Notice, which date shall not be
more than thirty days nor less than five days after the delivery of the later of
either such notice to be delivered. The Company and/or the Investor will pay
for the Executive Stock to be purchased pursuant to the Repurchase Option by
delivery of a check, a wire transfer of funds and/or a note (payable in three
equal annual installments commencing on the first anniversary of such closing
and bearing interest at the corporate base rate as determined by the First
National Bank of Chicago the time the note is issued) in form and substance
determined by the Board in good faith in the aggregate
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amount of the purchase price for such shares. In addition, the Company may pay
the purchase price for such shares by offsetting amounts outstanding under the
Executive Note issued to the Company hereunder and any other debts owed by
Executive to the Company. The Company and the Investor will be entitled to
receive customary representations and warranties from the sellers regarding such
sale and to require all sellers' signatures be guaranteed.
(f) Notwithstanding anything to the contrary set forth above, in the
event the Company terminates Executive (other than for Cause) prior to the fifth
anniversary of the date of Closing and the Additional Benefits Requirements are
satisfied, then (i) Executive will be entitled to retain all Performance Vesting
Shares which are Unvested Shares until it is finally determined whether they
will vest under the EBITDA and EBITDA Percentage tests described in Section 2(b)
above (at which time, as such determinations are made, the Company and the
Investor will be entitled to exercise the Repurchase Option in respect of such
Shares of Executive Stock) and (ii) subject to Section 3(h) below, Executive
shall be entitled to require the Company to purchase all Vested Shares as soon
as practicable after such termination by delivery of written notice to the
Company within 30 days following such termination and all Performance Vesting
Shares which had not vested as of the date of such termination as soon as
practicable after the date on which all such Performance Vesting Shares become
Vested Shares by delivery of written notice to the Company within 30 days
following such vesting. The Company will pay for the Executive Stock to be
purchased pursuant to this Section 3(f) by delivery of a check, a wire transfer
of funds and/or a note (payable in three equal annual installments commencing on
the first anniversary of the date of purchase by the Company and bearing
interest at the corporate base rate as determined by the First National Bank of
Chicago at the time the note is issued) in form and substance determined by the
Board in good faith. In addition, the Company, at its election, may pay the
purchase price of any such shares by offsetting amounts outstanding under the
Executive Note issued to the Company hereunder and any other debts owed by
Executive to the Company.
(g) The right of the Company and the Investor, and the requirement
for the Company, to repurchase Vested Shares pursuant to this Section 3 shall
terminate upon the first to occur of a Sale of the Company or a Qualified Public
Offering.
(h) Notwithstanding anything to the contrary contained in this
Agreement, all repurchases of Executive Stock by the Company shall be subject to
applicable restrictions contained in the Delaware General Corporation Law and in
the Company's and any Subsidiary's debt and equity financing agreements. If any
such restrictions prohibit the repurchase of Executive Stock hereunder which the
Company is otherwise entitled (or required) to make, the Company may (or shall)
make such repurchases as soon as it is permitted to do so under such
restrictions.
4. RESTRICTIONS ON TRANSFER.
(a) TRANSFER OF EXECUTIVE STOCK. Prior to the earlier to occur of
(x) the fifth anniversary of the date of the Closing or (y) 100 days following
the Termination, Executive shall not sell, transfer, assign, pledge or otherwise
dispose of (whether with or without consideration
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and whether voluntarily or involuntarily or by operation of law) any interest in
any shares of Executive Stock (a "Transfer"), except pursuant to (i) the
provisions of Section 3 hereof, a Public Sale or a Sale of the Company ("Exempt
Transfers") or (ii) the approval of the Company and the Investor and pursuant to
the provisions of this Section 4; provided that in no event shall any Transfer
of Executive Stock pursuant to this Section 4 be made for any consideration
other than cash payable upon consummation of such Transfer or in installments
over time. Prior to making any Transfer other than an Exempt Transfer (whether
such Transfer occurs prior to or following the dates set forth in clauses (x)
and (y) above), Executive will give written notice (the "Sale Notice") to the
Company and the Investor. The Sale Notice will disclose in reasonable detail
the identity of the prospective transferee(s), the number of shares to be
transferred and the terms and conditions of the proposed transfer. Executive
will not consummate any Transfer until 90 days after the Sale Notice has been
given to the Company and to the Investor, unless the parties to the Transfer
have been finally determined pursuant to this Section 4 prior to the expiration
of such 90-day period. The date of the first to occur of such events is
referred to herein as the "Authorization Date". Notwithstanding the foregoing,
in no event shall Executive be entitled to Transfer (A) any Unvested Shares of
Executive Stock, other than to the Company or the Investor pursuant to Section 3
until, in the case of Time Vesting Shares which are Unvested Shares, 100 days
following such Termination, and in the case of Performance Vesting Shares which
are Unvested Shares, the later of 100 days following such Termination or, if the
Additional Benefits Requirements are satisfied, 100 days following the date upon
which it is finally determined whether such shares shall become Vested Shares or
(B) any Shares of Executive Stock which the Company and/or the Investor have
elected to purchase pursuant to Section 3, except to the Company or the
Investor, as applicable.
(b) FIRST REFUSAL RIGHTS. The Company may elect to purchase all (but
not less than all) of the shares of Executive Stock to be transferred upon the
same terms and conditions as those set forth in the Sale Notice by delivering a
written notice of such election to Executive and the Investor within 60 days
after the Sale Notice has been given to the Company. If the Company has not
elected to purchase all of the Executive Stock to be transferred, the Investor
may elect to purchase all (but not less than all) of the Executive Stock to be
transferred upon the same terms and conditions as those set forth in the Sale
Notice by giving written notice of such election to Executive within 90 days
after the Sale Notice has been given to the Investor. If neither the Company
nor the Investor elects to purchase all of the shares of Executive Stock
specified in the Sale Notice, Executive may transfer the shares of Executive
Stock specified in the Sale Notice, subject to the provisions of Section 4(d)
below, at a price and on terms no more favorable to the transferee(s) thereof
than specified in the Sale Notice during the 60-day period immediately following
the Authorization Date. Any shares of Executive Stock not transferred within
such 60-day period will be subject to the provisions of this Section 4(b) upon
subsequent transfer. The Company may pay the purchase price for such shares by
offsetting amounts outstanding under the Executive Note or any other debts owed
by Executive to the Company.
(c) CERTAIN PERMITTED TRANSFERS. The restrictions contained in this
Section 4 will not apply with respect to (i) transfers of shares of Executive
Stock pursuant to applicable laws of descent and distribution or (ii) transfers
of shares of Executive Stock among Executive's Family Group, other than
transfers of the type described in the last sentence of Section 4(a)
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above; provided that such restrictions will continue to be applicable to the
Executive Stock after any such transfer and the transferees of such Executive
Stock will have agreed in writing to be bound by the provisions of this
Agreement.
(d) TERMINATION OF RESTRICTIONS. The restrictions on the Transfer of
shares of Executive Stock set forth in this Section 4 will continue with respect
to each share of Executive Stock until the date on which such Executive Stock
has been transferred in a transaction permitted by this Section 4 (except in a
transaction contemplated by Section 4(c)); provided that in any event such
restrictions will terminate on the first to occur of a Sale of the Company or a
Qualified Public Offering; and further provided that the restrictions contained
in clause (A) of the last sentence of Section 4(a) above shall survive in
perpetuity.
5. ADDITIONAL RESTRICTIONS ON TRANSFER.
(a) LEGEND. The certificates representing the Executive Stock will
bear the following legend:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ORIGINALLY ISSUED
AS OF SEPTEMBER 5, 1996, HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY STATE SECURITIES LAWS AND
MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE ACT OR AN EXEMPTION FROM REGISTRATION
THEREUNDER AND IN COMPLIANCE WITH STATE SECURITIES LAWS. THE
SECURITIES REPRESENTED BY THIS CERTIFICATE ARE ALSO SUBJECT TO
ADDITIONAL RESTRICTIONS ON TRANSFER, CERTAIN REPURCHASE OPTIONS AND
CERTAIN OTHER AGREEMENTS SET FORTH IN A SENIOR MANAGEMENT AGREEMENT
BETWEEN THE ISSUER (THE "COMPANY") AND THE ORIGINAL HOLDER HEREOF
DATED AS OF SEPTEMBER 5, 1996. A COPY OF SUCH AGREEMENT MAY BE
OBTAINED BY THE HOLDER HEREOF AT THE COMPANY'S PRINCIPAL PLACE OF
BUSINESS WITHOUT CHARGE."
(b) OPINION OF COUNSEL. No holder of Executive Stock may sell,
transfer or dispose of any Executive Stock (except pursuant to an effective
registration statement under the Securities Act) without first delivering to the
Company an opinion of counsel (reasonably acceptable in form and substance to
the Company) that neither registration nor qualification under the Securities
Act and applicable state securities laws is required in connection with such
transfer.
6. LIMITED PREEMPTIVE RIGHTS.
(a) Except for the issuance of Common Stock (i) pursuant to a public
offering registered under the Securities Act, (ii) to a lender to the Company in
connection with a debt facility, (iii) in accordance with Section 8 of the
Stockholders Agreement, (iv) to employees or
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directors of the Company and/or its Subsidiaries pursuant to any plan approved
by the Board or (v) as consideration in connection with an acquisition, merger,
joint venture, strategic alliance or similar transaction, if the Company at any
time after the date hereof authorizes the issuance or sale of any shares of
Common Stock or any securities containing options or rights to acquire any
shares of Common Stock (other than as a dividend on the outstanding Common
Stock), the Company shall first offer to sell to each holder of Executive Stock
a portion of such stock or securities equal to the quotient determined by
dividing (1) the number of shares of Executive Stock held by such holder by
(2) the total number of shares of Common Stock outstanding on a fully diluted
basis immediately prior to such issuance. Each holder of Executive Stock shall
be entitled to purchase such stock or securities at the most favorable price and
on the most favorable terms as such stock or securities are to be offered to any
other Persons.
(b) In order to exercise its purchase rights hereunder, a holder of
Executive Stock must, within 30 days after receipt of written notice from the
Company describing in reasonable detail the stock or securities being offered,
the purchase price thereof, the payment terms and such holder's percentage
allotment, deliver a written notice to the Company describing its election
hereunder. If all of the stock and securities offered to the holders of
Executive Stock is not fully subscribed by such holders, the remaining stock and
securities shall be reoffered by the Company to the holders purchasing their
full allotment upon the terms set forth in this Section, except that such
holders must exercise their purchase rights within five days after receipt of
such reoffer.
(c) Upon the expiration of the offering periods described above, the
Company shall be entitled to sell such stock or securities which the holders of
Executive Stock have not elected to purchase during the 90 days following such
expiration on terms and conditions no more favorable to the purchasers thereof
than those offered to such holders. Any stock or securities offered or sold by
the Company after such 90-day period must be reoffered to the holders of
Executive Stock pursuant to the terms of this Section.
(d) Nothing contained in this Section 6 shall be deemed to amend,
modify or limit in any way the restrictions on the issuance of shares of Stock
set forth in Section 3C of the Equity Purchase Agreement or in any other
agreement to which the Company is presently bound.
(e) The rights of Executive set forth in this Section 6 shall
terminate on the first to occur of a Sale of the Company or Qualified Public
Offering.
In the event that, in connection with its purchase of shares of Common
Stock or securities containing options or rights to acquire shares of Common
Stock ("Common Convertible Securities") as described in this Section 6, the
other purchasers are also purchasing other securities of the Company or any
Subsidiary (collectively, the "Other Securities"), then the Executive shall
purchase a ratio of Other Securities to the number of Shares of Common Stock or
Common Convertible Securities in the same proportion as the other purchasers
purchase in each of such securities.
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PROVISIONS RELATING TO EMPLOYMENT
7. EMPLOYMENT. The Company agrees to employ Executive and Executive
accepts such employment for the period beginning as of August 1, 1994 (the
"Start Date") and ending upon termination pursuant to Section 9 hereof (the
"Employment Period"). During the Employment Period, Executive shall serve as
the Vice President-Business Development of the Company and shall have the normal
duties, responsibilities and authority of a Vice President-Business Development,
including, without limitation, responsibility for all aspects of the negotiation
and integration of acquisitions, subject to the power of the Board and the CEO
to supervise, and to override any related actions.
8. SALARY, BONUS AND BENEFITS. During the Employment Period, the Company
will pay Executive a base salary (the "Annual Base Salary") as the Board or the
Compensation Committee of the Board may designate from time to time, in its sole
discretion. Following the end of each fiscal year, the Board may, in its sole
discretion, award a bonus to Executive in an amount not to exceed 40% of
Executive's Annual Base Salary for such year, as determined by the Board based
upon the Company's achievement of budgetary and other objectives. Executive's
Annual Base Salary for any partial year will be prorated based upon the number
of days elapsed in such year. Executive will also receive an automobile
allowance of $550 per month and be eligible to participate in group insurance,
vacation and retirement savings (401(k)) plans as the Company may make available
to its executives.
9. TERMINATION.
(a) The Employment Period will continue until Executive's
resignation, disability (as reasonably determined by the Board or the CEO) or
death or until the Board or the CEO determines in its good faith judgment that
termination of Executive's employment is in the best interests of the Company.
(b) If the Company terminates Executive's employment without Cause,
the Company shall provide at least six months written notice to the Executive
prior to the effectiveness of such termination (the "Notice Period"); provided,
however, that if the Company terminates Executive's employment without Cause and
determines that Executive's employment with the Company shall immediately cease,
Executive shall be entitled to receive payments (payable in monthly
installments) equal to the lower of (i) the rate of the Annual Base Salary for
six months following the date of such termination or (ii) the rate of the Annual
Base Salary for the portion of the Notice Period during which Executive is no
longer employed by the Company. Amounts payable by the Company to Executive
pursuant to this Section 9(b) shall be reduced by the amount of any payments
received by Executive from other employment (whether as an employee, consultant
or otherwise) during or in respect of the period in which payments are being
made pursuant to this Section 9(b), and Executive hereby agrees that upon the
termination of Executive, Executive shall use his best efforts to seek
employment with similar responsibilities and similar compensation to the
position with the Company contemplated by the terms of this Agreement. The
Company may cease making payments to Executive pursuant to this Section 9(b) at
any time after which Executive breaches any of the provisions of Section 10
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or 11; provided that no such cessation shall relieve Executive of his
obligations under Section 10 or 11.
(c) If Executive's employment with the Company is terminated by the
Company for Cause or as a result of a voluntary termination by Executive, then
Executive's right to receive the Annual Base Salary and other benefits shall
cease on the date of such termination and no severance payments shall be made.
(d) For purposes of this Agreement, "Cause" shall mean (i) the
commission of a felony or the commission of any other act which is materially
injurious to the Company or any Subsidiary involving dishonesty, disloyalty or
fraud with respect to the Company or any Subsidiary, (ii) gross negligence or
willful misconduct with respect to the Company or any Subsidiary which is
materially injurious to the Company or any Subsidiary, (iii) willful,
substantial and repeated failure to perform duties commensurate with his
position as reasonably directed in writing by the Board or the CEO in good
faith, or (iv) any other material breach of this Agreement which is not cured
within 21 days after written notice thereof to Executive.
10. CONFIDENTIAL INFORMATION. Executive acknowledges that the
information, observations and data obtained by him during the course of his
performance under this Agreement concerning the business and affairs of the
Company and its affiliates are the property of the Company. Therefore,
Executive agrees that he will not disclose to any unauthorized person or use for
his own account or for the account of any third party any of such information,
observations or data without the Board's written consent, unless and to the
extent that the aforementioned matters become generally known to and available
for use by the public other than as a result of Executive's acts or omissions to
act. Executive shall use his best efforts to prevent the unauthorized misuse,
espionage, loss or theft of the aforementioned matters. Executive agrees to
deliver to the Company at the termination of his employment, or at any other
time the Company may request in writing, all memoranda, notes, plans, records,
reports and other documents (and copies thereof) relating to the business of the
Company and its affiliates (including, without limitation, all acquisition
prospects, lists and contact information) which he may then possess or have
under his control.
11. NONCOMPETITION AND NONSOLICITATION.
(a) NONCOMPETITION. Executive acknowledges that in the course of his
employment with the Company he will become familiar with the Company's trade
secrets and with other confidential information concerning the Company and that
his services will be of special, unique and extraordinary value to the Company.
Therefore, in consideration of the opportunity to purchase Executive Stock and
in consideration of the other rights given to Executive hereunder, Executive
agrees that, during the Employment Period and (i) if Executive's employment is
terminated by the Company for Cause or as a result of voluntary termination by
Executive, for two years thereafter, or (ii) if Executive's employment is
terminated for any other reason, the period during which the Company is required
(without giving effect to the last two sentences of Section 9(b)) to make
payments to Executive pursuant to Section 9(b) (the "Noncompete Period"), he
shall not directly or indirectly own, manage, control, participate in,
12
consult with, render services for, or in any manner engage in any business
competing with the businesses of the Company or its Subsidiaries as such
businesses exist on the date of the termination of Executive's employment,
within those limited states or metropolitan areas in which the Company is
engaged in business (or in which the Company is in the process of attempting to
engage in business) during the Employment Period or at the time of termination
of Executive's employment.
(b) NONSOLICITATION. During the Employment Period and for two years
thereafter, Executive shall not directly or indirectly through another person or
entity (i) induce or attempt to induce any employee of the Company or any
Subsidiary to leave the employ of the Company or such Subsidiary, or in any way
interfere with the relationship between the Company or any Subsidiary and any
employee thereof, (ii) hire any person who was an employee of the Company or any
Subsidiary at any time during the Employment Period, or (iii) induce or attempt
to induce any customer, supplier, licensee or other business relationship of the
Company or any Subsidiary to cease doing business with the Company or such
Subsidiary, or in any way interfere with the relationship between any such
customer, supplier, licensee or business relationship and the Company or any
Subsidiary.
(c) ENFORCEMENT. If, at the time of enforcement of Section 10 or 11
of this Agreement, a court holds that the restrictions stated herein are
unreasonable under circumstances then existing, the parties hereto agree that
the maximum duration, scope or geographical area reasonable under such
circumstances shall be substituted for the stated period, scope or area and that
the court shall be allowed to revise the restrictions contained herein to cover
the maximum duration, scope and area permitted by law. Because Executive's
services are unique and because Executive has access to confidential
information, the parties hereto agree that money damages would be an inadequate
remedy for any breach of this Agreement. Therefore, in the event of a breach or
threatened breach of this Agreement, the Company or its successors or assigns
may, in addition to other rights and remedies existing in their favor, apply to
any court of competent jurisdiction for specific performance and/or injunctive
or other relief in order to enforce, or prevent any violations of, the
provisions hereof (without posting a bond or other security).
12. CONFIDENTIAL INFORMATION OF PRIOR EMPLOYERS.
(a) DISCLOSURE AND USE. Executive acknowledges and agrees that
Executive has been employed based upon personal and professional attributes
attained through his experience and education and that his employment with the
Company is not predicated on any implied or explicit understanding or inference
that Executive shall disclose or use any proprietary or confidential information
that Executive has acquired or been made privy to as a result of his prior
employment or relationships. Executive acknowledges and affirms that he has
been directed by the Company not to display or otherwise make available to the
Company, directly or indirectly (including by undisclosed incorporation in his
work product), any such proprietary or confidential information. Executive
represents and warrants that: (i) he has not misappropriated, infringed or
otherwise improperly disclosed or used any proprietary or confidential
information (in whatever form or medium) that he has acquired or been made privy
to as a result of his prior employment or relationships; (ii) no claim by any of
Executive's former employers or any other
13
third parties alleging misappropriation, infringement or improper disclosure or
use of same has been made, is currently outstanding or is threatened, and there
are no grounds therefor; and (iii) no injunction or judgment has been imposed on
Executive that restricts him from disclosing or using same.
(b) PRIOR AGREEMENTS. Executive represents and warrants that:
(i) Executive has provided the Company with copies of any and all written
agreements or other arrangements that restrict or limit his conduct or
activities; (ii) Executive has no oral agreements or constraints with respect to
his conduct or activities; and (iii) all such written and oral agreements,
arrangements and constraints are listed on SCHEDULE 14(b) attached hereto and
incorporated herein. Executive recognizes that the Company is not in a position
to evaluate the scope or extent of his obligations and agreements and is not a
party to such agreements. His disclosure of such agreements in no way creates
an imputation or assumption of such agreements to or by the Company.
(c) PERFORMANCE OF EMPLOYMENT DUTIES. The Company has explained to
Executive the scope and responsibilities of his employment, and Executive hereby
represents and warrants that the performance of his employment duties shall not
place him in breach or violation of any pre-existing fiduciary duty, covenant,
agreement, restriction or limitation. Executive acknowledges and agrees that
Executive has been directed by the Company not to engage in any conduct or
activity that would cause him to violate any pre-existing fiduciary duty,
covenant, agreement, restriction or limitation and that, if requested to engage
in any activity or job function or to disclose any information that would result
in any such violation, Executive shall report such request immediately and is
relieved from any obligation to comply with such request.
13. NO CONFLICTS. Executive represents and warrants that there is no
other contract in existence, written or oral, between him and any third party
that relates to the grant or assignment to others of any interest in
intellectual property hereafter contributed to, or conceived or made by, him and
that his performance of his duties to the Company will not place him in breach
of any existing agreement.
GENERAL PROVISIONS
14. CODE SECTION 280G. Notwithstanding any provision in this Agreement to
the contrary, if all or any portion of the payments or benefits received or
realized by Executive either alone or together with other payments or benefits
which Executive receives or realizes or is then entitled to receive or realize
from the Company or any of its affiliates would constitute a "parachute payment"
within the meaning of Section 280G of the Internal Revenue Code of 1986, as
amended (or any successor section) and the regulations promulgated thereunder
(the "Code") and/or any corresponding and applicable state law provision, such
payments or benefits provided to Executive shall be reduced by reducing the
amount of payments or benefits payable to Executive pursuant to Section 9 of
this Agreement to the extent necessary so that no portion of such payments shall
be subject to the excise tax imposed by Section 4999 of the Code and any
corresponding and/or applicable state law provision; provided, however, that
such reduction shall only be made if, by reason of such reduction, Executive's
net after tax benefit shall exceed the
14
net after tax benefit if such reduction were not made. For purposes of this
Section 14, "net after tax benefit" shall mean the sum of (i) the total amount
received or realized by Executive pursuant to this Agreement that would
constitute a "parachute payment" within the meaning of Section 280G of the Code
and any corresponding and applicable state law provision plus (ii) all other
payments or benefits which Executive receives or realizes or is then entitled to
receive or realize from the Company and any of its affiliates that would
constitute a "parachute payment" within the meaning of Section 280G of the Code
and any corresponding and applicable state law provision, less (iii) the amount
of federal or state income taxes payable with respect to the payments or
benefits described in (i) and (ii) above calculated at the maximum marginal
individual income tax rate for each year in which payments or benefits shall be
realized by Executive (based upon the rate in effect for such year as set forth
in the Code at the time of the first receipt or realization of the foregoing),
less (iv) the amount of excise taxes imposed with respect to the payments or
benefits described in (i) and (ii) above by Section 4999 of the Code and any
corresponding and applicable state law provision.
15. DEFINITIONS.
"BOARD" means the Company's Board of Directors.
"CEO" means the Company's Chief Executive Officer.
"CHANGE OF CONTROL" means any sale, exchange, transfer or issuance, or
series of related sales, exchanges, transfers or issuances of shares of the
Company's capital stock in a recapitalization or otherwise which results in any
person or group of related persons other than holders of Common Stock as of the
date hereof, owning shares entitling them to a majority of the ordinary voting
power to elect directors of the Company.
"COMMON STOCK" means the Company's Class A Common and Class B Common.
"EBITDA" for any fiscal period of the Company means the Company's
consolidated earnings from continuing operations before interest, taxes,
depreciation and amortization for such fiscal period, as determined in
accordance with GAAP.
"EBITDA PERCENTAGE" as of the end of any fiscal period of the Company means
the quotient of (a) the Company's EBITDA for such period divided by (b) the sum
of (1) the monthly average amount of equity invested (not including retained
earnings) in the Company during such period plus (2) the monthly average amount
of Indebtedness of the Company during such period, all as determined in
accordance with GAAP.
"EQUITY PURCHASE AGREEMENT" means the Equity Purchase Agreement by and
between the Company and the Investor dated as of December 3, 1993.
"EXECUTIVE'S FAMILY GROUP" means Executive's spouse and descendants
(whether natural or adopted) and any trust solely for the benefit of Executive
and/or Executive's spouse and/or descendants. Executive Stock will also include
shares of the Company's capital stock issued with respect to Executive Stock by
way of a stock split, stock dividend or other recapitalization.
15
"EXECUTIVE STOCK" will continue to be Executive Stock in the hands of any
holder other than Executive (except for the Company and the Investor and except
for transferees in a Public Sale), and except as otherwise provided herein, each
such other holder of Executive Stock will succeed to all rights and obligations
attributable to Executive as a holder of Executive Stock hereunder.
"FAIR MARKET VALUE" of each share of Executive Stock means the average of
the closing prices of the sales of the Company's Common Stock on all securities
exchanges on which the Common Stock may at the time be listed, or, if there have
been no sales on any such exchange on any day, the average of the highest bid
and lowest asked prices on all such exchanges at the end of such day, or, if on
any day the Common Stock is not so listed, the average of the representative bid
and asked prices quoted in the NASDAQ System as of 4:00 P.M., New York time, or,
if on any day the Common Stock is not quoted in the NASDAQ System, the average
of the highest bid and lowest asked prices on such day in the domestic over-the-
counter market as reported by the National Quotation Bureau Incorporated, or any
similar successor organization, in each such case averaged over a period of 21
days consisting of the day as of which the Fair Market Value is being determined
and the 20 consecutive business days prior to such day. If at any time the
Common Stock is not listed on any securities exchange or quoted in the NASDAQ
System or the over-the-counter market, the Fair Market Value will be the fair
value of the Common Stock determined in good faith by the Board. Such
determination will not reflect discounts for "minority interest" restrictions
upon resale or "limited market" considerations. If the Executive does not agree
with the fair market value determined by the Board, then Executive may request
that such value be determined by an independent investment banking firm of
national or regional reputation utilizing valuation techniques then commonly
used for the valuation of such investment interests, which investment banking
firm will be jointly selected by the Board and Executive in good faith, and
expenses of which will be borne equally by the Company and Executive. If the
Board and Executive cannot agree on an investment banking firm, the Board shall
select one investment banking firm and Executive shall select a second
investment banking firm, which firms shall jointly select a third investment
banking firm (the "Third Firm"). The Third Firm shall then determine the Fair
Market Value in accordance with the specifications set forth within this
definition.
"GAAP" means generally accepted accounting principles, as in effect from
time to time.
"INDEBTEDNESS" shall mean at a particular time, without duplication,
(i) indebtedness for borrowed money or for the deferred purchase price of
property or services in respect of which any Person is liable, as obligor or
otherwise (other than trade payables and other current liabilities incurred in
the ordinary course of business) or any commitment by which any Person assures a
creditor against loss, including contingent reimbursement obligations with
respect to letters of credit and (ii) indebtedness guaranteed in any manner by
any Person, including guarantees in the form of an agreement to repurchase or
reimburse.
"ORIGINAL COST" of each share of Class B Common purchased hereunder will be
equal to the price paid therefor as determined pursuant to Section 1(a) above
(as proportionately adjusted for all subsequent stock splits, stock dividends
and other recapitalizations).
16
"PROJECTED EBITDA" for any fiscal period of the Company shall mean the
EBITDA of the Company for such fiscal period set forth on Appendix 2 attached
hereto.
"PROJECTED EBITDA PERCENTAGE" for any fiscal period of the Company shall
mean the EBITDA Percentage of the Company for such fiscal period set forth on
Appendix 2 attached hereto.
"PUBLIC SALE" means any sale pursuant to a registered public offering under
the Securities Act or any sale to the public pursuant to Rule 144 promulgated
under the Securities Act effected through a broker, dealer or market maker.
"QUALIFIED PUBLIC OFFERING" means the sale in an underwritten public
offering registered under the Securities Act of shares of the Company's Common
Stock having an aggregate offering value of at least $30 million.
"SALE OF THE COMPANY" means any transaction or series of related
transactions pursuant to which any person or entity (other than the Investor)
acquires (i) capital stock of the Company possessing the voting power to elect a
majority of the Board (whether by merger, consolidation, reorganization,
combination, sale or transfer of the Company's capital stock or otherwise) or
(ii) all or substantially all of the Company's assets determined on a
consolidated basis.
"SECURITIES ACT" means the Securities Act of 1933, as amended from time to
time.
"START DATE" shall have the meaning set forth in Section 7.
"STOCKHOLDERS AGREEMENT" means the Amended and Restated Stockholders
Agreement by and among the Company, the Investor, Xxxxxxx X. Xxxxxxxx,
Xxxxxxx X. Xxxxxxxx, Xxxxxxx X. Xxxxxxx, J. Xxxxxxx Xxxxxxx, Xxxxxx X. Xxxxxx,
Xxxxxx X. Xxxx, Xxxxx X.X. Xxxxxx, Xxxxxxx X. Xxxxxxx, Xxxx X. Xxxxxxx,
Xxxxxxx X. Xxxxx, Xxxx Xxxx Xxxxx, Sterling Acquisition Partners, Pharmed, Inc.,
Xxxxxx X. Xxxxxxxxx, Xxxxx Xxxxxxx, Xxxxx Xxxxxxxxxx, Xxx X. Xxxxxxxxx, Xxxxx X.
Xxxxxxx, Xxxxxx X. Xxxxx, Xxxxx Xxxxxxxx, Pharmed of Baton Rouge, Xxxxxx X.
Xxxxxxxxxxx, Xxxxxx X. Xxxxxx and Xxxxxx X. Xxxx.
"SUBSIDIARY" means any corporation of which the Company owns securities
having a majority of the ordinary voting power in electing the board of
directors directly or through one or more subsidiaries.
16. NOTICES. Any notice provided for in this Agreement must be in writing
and must be either personally delivered, mailed by first class mail (postage
prepaid and return receipt requested) or sent by reputable overnight courier
service (charges prepaid) to the recipient at the address below indicated:
17
IF TO THE COMPANY:
American Medserve Corporation
Park Lake Center
000 Xxxxxx Xxxxxxxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Attention: CEO
WITH A COPY TO:
Golder, Thoma, Xxxxxxx, Xxxxxx Fund IV, L.P.
0000 Xxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000-0000
Attention: Xxxxx X. Xxxxxxx
AND
Xxxxxxx, Carton & Xxxxxxx
Quaker Tower
000 Xxxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000-0000
IF TO THE EXECUTIVE:
Xxxxxxx X. Xxxxxxxx
0000 Xxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
IF TO THE INVESTOR:
Golder, Thoma, Xxxxxxx, Xxxxxx Fund IV, L.P.
0000 Xxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000-0000
Attention: Xxxxx X. Xxxxxxx
WITH A COPY TO:
Xxxxxxxx & Xxxxx
000 Xxxx Xxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxx X. Xxxxxxxxx, Esq.
or such other address or to the attention of such other person as the recipient
party shall have specified by prior written notice to the sending party. Any
notice under this Agreement will be deemed to have been given when so delivered
or sent or, if mailed, five days after deposit in the U.S. mail.
18
17. MISCELLANEOUS.
(a) TRANSFERS IN VIOLATION OF AGREEMENT. Any Transfer or attempted
Transfer of any Executive Stock in violation of any provision of this Agreement
shall be void, and the Company shall not record such Transfer on its books or
treat any purported transferee of such Executive Stock as the owner of such
stock for any purpose.
(b) SEVERABILITY. Whenever possible, each provision of this
Agreement will be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be invalid,
illegal or unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability will not affect
any other provision or any other jurisdiction, but this Agreement will be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision had never been contained herein.
(c) COMPLETE AGREEMENT. This Agreement, those documents expressly
referred to herein and other documents of even date herewith embody the complete
agreement and understanding among the parties and supersede and preempt any
prior understandings, agreements or representations by or among the parties,
written or oral, which may have related to the subject matter hereof in any way.
(d) COUNTERPARTS. This Agreement may be executed in separate
counterparts, each of which is deemed to be an original and all of which taken
together constitute one and the same agreement.
(e) SUCCESSORS AND ASSIGNS. Except as otherwise provided herein,
this Agreement shall bind and inure to the benefit of and be enforceable by
Executive, the Company, the Investor and their respective successors and assigns
(including subsequent holders of Executive Stock); provided that the rights and
obligations of Executive under this Agreement shall not be assignable except in
connection with a permitted transfer of Executive Stock hereunder.
(f) GOVERNING LAW. All questions concerning the construction,
validity and interpretation of this Agreement and the exhibits and schedules
hereto shall be governed by and construed in accordance with the internal laws
of the State of Delaware, without giving effect to any choice of law or conflict
of law provision or rule (whether of the State of Delaware or any other
jurisdiction) that would cause the application of the laws of any jurisdiction
other than the State of Delaware.
(g) OTHER AGREEMENTS. Provisions pertaining to Executive's co-sale
rights are set forth in that certain Amended and Restated Stockholders Agreement
dated as of August 23, 1996 and provisions pertaining to Executive's
registration rights are set forth in that certain Registration Agreement dated
as of August 23, 1996.
19
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
date first written above.
AMERICAN MEDSERVE CORPORATION
By: /s/ Xxxxxxx X. Xxxxxxxx
------------------------------
Its: President
/s/ Xxxxxxx X. Xxxxxxxx
-----------------------------------
Xxxxxxx X. Xxxxxxxx
Agreed and Accepted:
GOLDER, THOMA, XXXXXXX, XXXXXX FUND IV, L.P.
By: GTCR IV, L.P.
Its General Partner
By: Golder, Thoma, Cressey, Rauner, Inc.
Its General Partner
By: /s/ Xxxxx X. Xxxxxxx
-------------------------
Its: Principal
20
SCHEDULE 14(b)
None
APPENDIX 1
EXAMPLE OF ADDITIONAL BENEFITS REQUIREMENTS
Assume that Executive was terminated without Cause or assume Executive's
death or disability on the 100th day of a fiscal year and (i) actual EBITDA for
the immediately preceding 12 months was $8 million, (ii) Projected EBITDA for
the then current fiscal year was $10 million, (iii) Projected EBITDA for the
immediately preceding fiscal year was $9 million, (iv) the actual EBITDA
Percentage for the immediately preceding 12 months was 17%, (v) the Projected
EBITDA Percentage for the then current fiscal year was 20% and (vi) the
Projected EBITDA Percentage for the immediately preceding fiscal year was 18%.
Since 100 days had elapsed in the current fiscal year, the 12 month period would
include three months in the current fiscal year and nine months in the
immediately preceding fiscal year. In that event (a) applicable Projected
EBITDA would equal $9.25 million [i.e., (3 DIVIDED BY 12 x $10 million) + (9
DIVIDED BY 12 x $9 million)] and (b) the applicable Projected EBITDA Percentage
would equal 18.5% [i.e., (3 DIVIDED BY 12 x 20) + (9 DIVIDED BY 12 x 18)]. The
Performance Vesting Shares would continue to vest, since (x) actual EBITDA was
greater than 85% of applicable Projected EBITDA [i.e., $9.25 million x 85% =
$7.86 million, which is less than actual EBITDA of $8 million] and (y) the
actual EBITDA Percentage was greater than 85% of the applicable Projected EBITDA
Percentage [18.5 x 85% = 15.725%, which is less than the actual EBITDA
Percentage of 17%].
APPENDIX 2
Projected
Year Projected EBITDA EBITDA Percentage
---- ---------------- -----------------
1996 $5,368,000 12.75%
1997 $9,337,000 16.95%
1998 $13,976,000 20.68%
1999 $19,387,000 24.43%
2000 $24,233,750 28.00%
NOTE: Projected EBITDA Percentage will be recalculated to reflect any
significant recapitalization, including a Qualified Public
Offering, of the Company.
