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EXHIBIT 10.23
SECURITIES PURCHASE AND STOCKHOLDERS' AGREEMENT, dated as of
May 24, 1999, among THE X.X. XXXXXXX COMPANY, INC., a North Carolina corporation
(the "Company"), and each management stockholder named on the signature pages
hereto (a "Purchaser" and, collectively, the "Purchasers").
Introduction
The Company desires to issue and sell to each Purchaser, and
each Purchaser desires to purchase from the Company, that number of shares (the
"Purchased Shares") of the Company's Class A Common Stock, par value $.01 per
share (the "Class A Common Stock"), set forth in Exhibit A attached hereto.
Certain of the Purchasers are also parties to a Securities
Purchase and Stockholders' Agreement, dated as of May 27, 1997 (the "1997
Purchase Agreement"), with the Company, pursuant to which such Purchasers (the
"1997 Purchasers") purchased shares (the "1997 Shares") of Class A Common Stock
in the Company and pursuant to which the Purchasers agreed to certain terms and
conditions regarding their ownership of such shares of Class A Common Stock. The
1997 Purchasers and the Company desire that, with respect to the 1997 Shares, in
the event of any conflict between the terms and conditions of this Agreement and
the terms and conditions of the 1997 Purchase Agreement, the terms and
conditions of this Agreement shall control.
In addition to the terms of the issuance, sale and purchase of
the Purchased Shares, the Company and the Purchasers desire to set forth herein
certain matters regarding the continued ownership of shares of Class A Common
Stock by the Purchasers (the 1997 Shares and the shares of Class A Common Stock
now or hereafter acquired by the Purchasers are referred to herein as the
"Shares").
For good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
ARTICLE I
Purchase and Sale
SECTION 1.1. Purchase and Sale of Common Stock. The Company
hereby issues and sells to each Purchaser, and each Purchaser hereby acquires
from the Company, on the date hereof, that number of Purchased Shares set forth
on Exhibit A hereto for a purchase price of $9.00 per Share (the "Purchase
Price"), in cash, payable by wire transfer of immediately available funds to an
account heretofore designated to the Purchaser by the Company, by certified bank
check or money order payable to the Company, or pursuant to the terms of a
promissory note in the form attached to this Agreement as Exhibit B. The
Purchased Shares shall have the respective rights and preferences of other
shares of Class A Common Stock as set forth in the Company's Amended and
Restated Articles of Incorporation, a copy of which is attached to this
Agreement as Exhibit C.
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SECTION 1.2. Delivery of Certificates. The Company is hereby
issuing and selling to each Purchaser such Purchaser's Purchased Shares by
delivering to such Purchaser a duly executed certificate or certificates
representing the Purchased Shares registered in the name of such Purchaser, with
appropriate issue stamps, if any, affixed at the expense of the Company, free
and clear of all security interests, liens, pledges, charges, options, rights of
first refusal, mortgages, indentures, security agreements or other claims,
encumbrances, agreements, arrangements or commitments of any kind or character,
whether written or oral and whether or not relating in any way to credit or the
borrowing of money ("Claims"), and the Purchaser is hereby purchasing the Shares
for the Purchase Price applicable thereto.
ARTICLE II
Representations and Warranties of the Company
The Company represents and warrants to the Purchasers as
follows:
SECTION 2.1. Organization Standing and Power. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of North Carolina.
SECTION 2.2. Authority; Binding Agreements. The Company has
all requisite corporate power and authority to enter into this Agreement and to
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement by the Company and the consummation of the transactions
contemplated hereby have been duly and validly authorized by all necessary
corporate action on the part of the Company. This Agreement has been duly
executed and delivered by the Company and constitutes the valid and binding
obligation of the Company, enforceable against the Company in accordance with
its terms.
SECTION 2.3. Conflicts; Consents. The execution and delivery
by the Company of this Agreement and the consummation of the transactions
contemplated hereby and compliance by the Company with any of the provisions
hereof do not and will not (i) conflict with or result in a breach of the
articles of incorporation, by-laws or other constitutive documents of the
Company, (ii) conflict with or result in a default (or give rise to any right of
termination, cancellation or acceleration) under any of the provisions of any
note, bond, lease, mortgage, indenture, or any license, franchise, permit,
agreement or other instrument or obligation to which the Company is a party, or
by which the Company or any of the Company's properties or assets may be bound
or affected, except for such conflicts, breaches or defaults as to which
requisite waivers or consents have been obtained, (iii) violate any law,
statute, rule or regulation or order, writ, injunction or decree applicable to
the Company or any of the Company's properties or assets or (iv) result in the
creation or imposition of any Claim upon any of the Company's properties or
assets. No consent or approval by, or notification of or filing with, any person
is required in connection with the execution, delivery and performance by the
Company of this Agreement and the consummation of the transactions contemplated
hereby.
SECTION 2.4. Capitalization. As of the date hereof, the
authorized capital stock of the Company consists of 30,000,000 shares of Common
Stock, of which 10,000,000 shares
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consists of Class A Common Stock and 20,000,000 shares consists of Class B
Common Stock, 7,000 shares of Series A Cumulative Redeemable Preferred Stock,
par value $.01 per share, and 4,500 shares of Series B Cumulative Redeemable
Preferred Stock, par value $.01 per share (collectively, with the Series A
Cumulative Redeemable Preferred Stock, the "Preferred Stock"), and as of the
date hereof, all of such securities are issued and outstanding except for
24,902,333 shares of Common Stock authorized but not issued, of which 6,303,000
shares consists of authorized but unissued Class A Common Stock and 18,599,333
shares consists of authorized but unissued Class B Common Stock. All such issued
shares of capital stock of the Company have been duly authorized and are fully
paid and non-assessable. Except for (i) 1,034,000 shares of Class A Common Stock
reserved for issuance upon exercise of the warrants held by The 1818 Mezzanine
Fund, L.P. (the "Warrants"), (ii) 522,500 shares of Class A Common Stock
reserved for issuance under the Company's 1997 Stock Option Plan (the "1997
Option Plan") and (iii) 1,050,000 shares of Class A Common Stock reserved for
issuance under the Company's 1999 Stock Option Plan (the "1999 Option Plan", and
collectively with the 1997 Option Plan, the "Option Plans"), there are no shares
of capital stock of the Company reserved for issuance. Except for options
granted under the Option Plans and for the Warrants, there are no options,
warrants or other rights to purchase shares of capital stock or other securities
of the Company or any of its subsidiaries, nor is the Company or any of its
subsidiaries obligated in any manner to issue shares of its capital stock or
other securities.
ARTICLE III
Representations and Warranties of the Purchasers
Each of the Purchasers severally represents and warrants to
the Company as follows:
SECTION 3.1. Capacity; Binding Agreements. Such Purchaser has
all requisite capacity to enter into this Agreement and to consummate the
transactions contemplated hereby. This Agreement has been duly executed and
delivered by such Purchaser, and constitutes the valid and binding obligation of
such Purchaser, enforceable against such Purchaser in accordance with its terms.
SECTION 3.2. Conflicts; Consents. The execution and delivery
by such Purchaser of this Agreement, the consummation of the transactions
contemplated hereby and compliance by such Purchaser with any of the provisions
hereof do not and will not (i) conflict with or result in a default (or give
rise to any right of termination, cancellation or acceleration) under any of the
provisions of any note, bond, lease, mortgage, indenture, or any license,
franchise, permit, agreement or other instrument or obligation to which such
Purchaser is a party, or by which such Purchaser or any of such Purchaser's
properties or assets may be bound or affected, except for such conflicts,
breaches or defaults as to which requisite waivers or consents have been
obtained, (ii) violate any law, statute, rule or regulation or order, writ,
injunction or decree applicable to such Purchaser or any of such Purchaser's
properties or assets or (iii) result in the creation or imposition of any Claim
upon any of such Purchaser's properties or assets.
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SECTION 3.3. Purchase for Own Account. (a) The Purchased
Shares to be acquired by such Purchaser pursuant to this Agreement are being
acquired for his own account and the Purchaser has no intention of distributing
or reselling such securities or any part thereof in any transaction that would
be in violation of the securities laws of the United States of America, or any
state thereof. If such Purchaser should in the future decide to dispose of any
of the Purchased Shares, such Purchaser understands and agrees that he may do so
only in compliance with this Agreement and with the Securities Act of 1933, as
amended (the "Securities Act"), and applicable state securities laws, as then in
effect, and that stop-transfer instructions to that effect, where applicable,
will be in effect with respect to such securities. If such Purchaser should
decide to dispose of any Shares, such Purchaser, if requested by the Company,
will have the obligation in connection with such disposition, at such
Purchaser's expense, of delivering an opinion of counsel of recognized standing
in securities law in connection with such disposition to the effect that the
proposed disposition of the Shares will not be in violation of the Securities
Act or any applicable state securities laws and, assuming such opinion is
required and is otherwise appropriate in form and substance under the
circumstances, the Company will accept, and will recommend to any applicable
transfer agent or trustee for such securities that it accept, such opinion.
(b) Such Purchaser agrees to the imprinting of a legend on
certificates representing all of the Shares to the following effect:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED, QUALIFIED, APPROVED OR DISAPPROVED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD OR OTHERWISE
DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH
ACT AND APPLICABLE STATE SECURITIES LAWS OR AN APPLICABLE EXEMPTION TO THE
REGISTRATION REQUIREMENTS OF SUCH ACT OR SUCH LAWS AND NEITHER THE UNITED STATES
SECURITIES AND EXCHANGE COMMISSION NOR ANY OTHER FEDERAL OR STATE REGULATORY
AUTHORITY HAS PASSED ON OR ENDORSED THE MERITS OF THESE SECURITIES. THE TRANSFER
OF ANY SECURITIES REPRESENTED BY THIS CERTIFICATE IS FURTHER LIMITED BY THE
PROVISIONS OF THE SECURITIES PURCHASE AND STOCKHOLDERS' AGREEMENT AMONG THE X.X.
XXXXXXX COMPANY, INC. AND THE MANAGEMENT STOCKHOLDERS IDENTIFIED THEREIN, A COPY
OF WHICH IS ON FILE AT THE EXECUTIVE OFFICE OF THE COMPANY."
SECTION 3.4. Nature of Purchaser. Such Purchaser acknowledges
that the offer and sale of the Purchased Shares is intended to be exempt from
registration under the Securities Act. Such Purchaser is (i) a director,
president, vice president in charge of a principal business unit, division or
function or other officer of the Company who performs a policy making function
for the Company, (ii) an individual with a net worth, or joint net worth with
such Purchaser's spouse, at the date hereof in excess of $1,000,000, (iii) an
individual with an income in excess of $200,000 in each of the two most recent
years or joint income with such Purchaser's spouse in excess of $300,000 in each
of those years and has a reasonable expectation of reaching
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the same income level in the current year or (iv) an individual who has
appointed a "purchaser representative" as described in Section 5.6 to act as
such Purchaser's representative to assist such Purchaser in evaluating the
purchase of the Purchased Shares. Such Purchaser has such knowledge and
experience in financial and business matters so that he is capable of evaluating
the relative merits and risks of purchasing the Purchased Shares. Such Purchaser
has adequate means of providing for his current economic needs and possible
personal contingencies, has no need for liquidity in his investment in the
Company and is able financially to bear the risks of such investment.
SECTION 3.5. Information. All documents, records and books
pertaining to the investment in the Purchased Shares and requested by such
Purchaser or his purchaser representative, if any, have been made available or
delivered to such Purchaser. Each Purchaser has been given full access to all
material information concerning the condition, business, operations, proposed
operations and prospects of Purchaser, including (i) the Annual Report on Form
10-K most recently filed with the SEC by the Company, (ii) all Quarterly Reports
on Form 10-Q filed with the SEC by the Company since the date of such Annual
Report and (iii) all Reports on Form 8-K filed with the SEC by the Company since
the date of such Annual Report (receipt of copies of each of which is hereby
acknowledged by each Purchaser). Such Purchaser has had an opportunity to
discuss the Company's business, management and financial affairs with the
Company's management and to ask questions of and receive answers from the
Company concerning such matters. All such questions, if any, have been answered
to the full satisfaction of such Purchaser and his purchaser representative, if
any, and such Purchaser has received all information about the Company which
such Purchaser or his purchaser representative, if any, desires, including
information which such Purchaser or purchaser representative deems necessary to
verify the accuracy of information the Company has furnished to such Purchaser.
ARTICLE IV
Transferability of Shares
SECTION 4.1. Stock Transfer Restrictions. None of the
Purchasers shall sell, assign, pledge, give away or otherwise transfer (a
"Transfer") any Shares except in accordance with the procedures set forth in
this Agreement. Any attempted Transfer of Shares not permitted by this Agreement
shall be null and void, and the Company shall not in any way give effect to any
such Transfer. Any proposed Transfer of Shares shall be null and void, and the
Company shall not in any way give effect to any such Transfer, unless the
transferee of such Shares who is not, immediately prior to such Transfer, a
Purchaser shall agree in writing to be bound by and comply with the provisions
of this Agreement
SECTION 4.2. Termination of Employment. (a) Termination by
Company for Cause or by Purchaser without Good Reason. If the Company shall
terminate a Purchaser's employment for "Cause" or a Purchaser shall terminate
his employment with the Company other than for "Good Reason" (as such terms are
defined below), the Company shall have the right, commencing on the date of such
termination and continuing until the first anniversary thereof, to purchase all
of such Purchaser's Shares at the Repurchase Price (as defined below) applicable
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thereto; provided that if and to the extent that, prior to such first
anniversary, the Company is prohibited under the terms of any loan agreement,
indenture, note or other agreement from making such repurchase, in whole or in
part, the Company shall have the right to purchase such Shares until the
expiration of 45 days after such first anniversary. In the event the Company
does not exercise its right to purchase such Shares, or is unable to purchase
such Shares, and so long as the Principal Shareholders then own more than 50% of
the Combined Voting Power of the then outstanding shares of capital stock of the
Company, then the Company shall so notify the Principal Shareholders in writing
no later than the first anniversary of the date of the termination triggering
the right to purchase, and for a period of 60 days following the first
anniversary of such termination the Principal Shareholders (through their agent
Charlesbank Capital Partners, LLC) shall have all the rights conferred on the
Company pursuant to this Section 4.2(a). For purposes of this Section 4.2,
"Company" shall include any subsidiary of the Company with respect to a
Purchaser employed directly by such subsidiary.
For purposes of this Agreement,
"Cause", with respect to any Purchaser, has the meaning set
forth in the executive severance or employment agreement, if any, then in effect
between the Company and such Purchaser or, in the absence of such an agreement,
shall mean (i) such Purchaser's conviction of, or plea of guilty or nolo
contendere to a felony, (ii) such Purchaser's gross negligence in the
performance of his employment services to the Company, which is not corrected
within 15 business days after written notice, (iii) such Purchaser's knowingly
dishonest act, or knowing bad faith or willful misconduct in the performance of
such services to the material detriment of the Company, which is not corrected
within 15 business days after written notice, or (iv) such Purchaser's other
material breach of his obligations as an employee or officer of the Company
which is not corrected within a reasonable period of time (determined in light
of the cure appropriate to such material breach, but in no event less than 15
business days) after written notice.
"Combined Voting Power" with respect to capital stock of the
Company means the number of votes such stock is normally entitled (without
regard to the occurrence of any contingency) to vote in an election of the
directors of the Company.
"EBITDA" means earnings before interest, taxes, depreciation,
and amortization as reflected in the Company's financial statements for the four
full fiscal quarters immediately preceding the date on which such termination
shall have occurred. Adjustments for unusual items will be made in the
reasonable discretion of the Board of Directors of the Company, after
consultation with the Chief Executive Officer of the Company.
"Good Reason", with respect to any Purchaser, has the meaning
set forth in the executive severance or employment agreement, if any, then in
effect between the Company and such Purchaser or, in the absence of such an
agreement, shall mean any of the following, unless the basis for such Good
Reason is cured within a reasonable period of time (determined in light of the
cure appropriate to the basis of such Good Reason, but in no event less than 15
business days) after the Company receives written notice specifying the basis of
such Good Reason: (i)
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the failure of the Company to pay any undisputed amount due to such Purchaser in
connection with his employment by the Company or a substantial diminution in
benefits provided pursuant to such employment other than a reduction in benefits
or salary applicable to all of the Company's bonus eligible employees, (ii) a
substantial diminution in the status, position and responsibilities of such
Purchaser that is not instituted to all employees of the Company or (iii) the
Company requiring the Purchaser to be based at any office or location that
requires a relocation or commute greater than 50 miles from the office or
location to which such Purchaser is currently assigned; provided, however, that
Good Reason shall not be deemed to exist due to the travel requirements
consistent with the performance of the Purchaser's employment services.
"Principal Shareholders" means (i) Charlesbank Equity Fund IV,
Limited Partnership and the investors in such fund, (ii) Charlesbank Equity Fund
IV G.P. Limited Partnership, (iii) Charlesbank Capital Partners, LLC (and any
other fund managed by Charlesbank Capital Partners, LLC), (iv) any investor
(other than The 1818 Mezzanine Fund, L.P.) whose investment in the Company is
approved by the representative of management on the board of the Company, (v)
any new investors in the Company designated as Principal Shareholders by
Charlesbank Capital Partners, LLC within one year of the initial investment by
Charlesbank Equity Fund IV, Limited Partnership, and (vi) any corporation,
partnership, limited liability company or other entity a majority of the capital
stock or other ownership interests of which are directly or indirectly owned by
any of the foregoing.
"Repurchase Price" means, with respect to each Share owned by
any Purchaser, (a) in the event of any termination, excluding a termination
described in clause (b) below, the greater of (i) the Purchase Price applicable
thereto, and (ii) the quotient obtained by dividing the Net Equity Value by the
total number of shares of Common Stock outstanding on the date of termination of
such Purchaser's employment (on a fully diluted basis, after assuming the
issuance of shares of Common Stock pursuant to the exercise of in-the-money
options granted under the Option Plans and in-the-money Warrants), (b) in the
event of a termination (i) by the Company for Cause or (ii) within 24 months of
the date hereof, by a Purchaser other than for Good Reason, the Purchase Price
applicable thereto, and (c) notwithstanding the terms of clauses (a) and (b)
above, in the event of a termination by the Company for a Specified Cause Event
or in the event that following termination for any reason the Purchaser violates
the confidentiality or non-compete provisions of any executive severance,
employment or non-competition agreement with the Company, the lesser of (i) the
Purchase Price applicable thereto and (ii) the quotient obtained by dividing the
Net Equity Value by the total number of shares of Common Stock outstanding on
the date of termination of such Purchaser's employment (on a fully diluted
basis, after assuming the issuance of shares of Common Stock pursuant to the
exercise of in-the-money options granted under the Option Plans and in-the-money
Warrants). "Net Equity Value" means the sum of (x) 6 times the Company's EBITDA
plus (y) the aggregate exercise price of all in-the-money options granted under
the Option Plans and all in-the-money Warrants, less (z) the aggregate amount of
principal of and interest on (in the case of debt) and liquidation value of (in
the case of capital stock) all debt for borrowed money and Preferred Stock (or
any replacements therefor) owed or outstanding as of the date of such
termination.
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"Specified Cause Event" means (1) a proven or admitted act of
fraud, misappropriation or embezzlement by the Purchaser that is detrimental to
the Company or (2) the Purchaser's conviction of or plea of guilty or nolo
contendere to a felony that is related to the Company or the performance of the
Purchaser's services for the Company.
(b) Termination by Company other than for Cause or by
Purchaser with Good Reason. If the Company shall terminate a Purchaser's
employment other than for Cause or a Purchaser shall terminate his employment
with the Company for Good Reason, such Purchaser shall have the right,
commencing on the date of such termination and continuing until the first
anniversary thereof, to require the Company to purchase all of such Purchaser's
Shares at the Repurchase Price applicable thereto; provided that if and to the
extent that, prior to such first anniversary, the Company is prohibited under
the terms of any loan agreement, indenture, note or other agreement from
purchasing such Shares to the extent so required by a Purchaser, the Company
shall not be obligated to make such purchase until it is no longer prohibited
from doing so, in which case payment shall be made promptly after the removal of
such prohibition. In the event the option is not exercised, the Company shall
have the right, commencing on the first anniversary and continuing until the
second anniversary thereof, to purchase all of such Purchaser's Shares at the
Repurchase Price applicable thereto. In the event the Company does not exercise
its right to purchase such Shares, or is unable to purchase such Shares, and so
long as the Principal Shareholders then own more than 50% of the Combined Voting
Power of the then outstanding shares of capital stock of the Company, then the
Company shall so notify the Principal Shareholders in writing no later than the
second anniversary of the date of termination triggering the right to purchase,
and for a period of 60 days following the second anniversary of such termination
the Principal Shareholders (through their agent Charlesbank Capital Partners,
LLC) shall have all the rights conferred on the Company pursuant to this Section
4.2(b).
(c) Termination or Repurchase upon Death. If a Purchaser's
employment with the Company shall terminate due to such Purchaser's death, or,
if within one year after any other termination of employment with the Company, a
Purchaser shall die, the Company shall have the right to purchase, and such
Purchaser's descendants shall have the right to require the Company to purchase,
all of such Purchaser's Shares at the Repurchase Price applicable thereto,
commencing on the date of death of such Purchaser and continuing until the first
anniversary thereof; provided that if and to the extent that, prior to such
first anniversary, the Company is prohibited under the terms of any loan
agreement, indenture, note, or other agreement from purchasing such Shares to
the extent so required by a Purchaser's descendants, the Company shall not be
obligated to make such purchase until it is no longer prohibited from doing so,
in which case payment shall be made promptly after the removal of such
prohibition. In the event the Company does not exercise its right to purchase
such Shares, or is unable to purchase such Shares, and so long as the Principal
Shareholders then own more than 50% of the Combined Voting Power of the then
outstanding shares of capital stock of the Company, then the Company shall so
notify the Principal Shareholders in writing no later than the first anniversary
of the date of the death triggering the right to purchase, and for a period of
60 days following the first anniversary of the date of death the Principal
Shareholders (through their agent Charlesbank Capital Partners, LLC) shall have
all the rights conferred on the Company pursuant to this Section 4.2(c).
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(d) Delivery of Payment. The Company or the Principal
Shareholders or the Purchaser, as the case may be, shall notify the other of
such party's exercise of its rights under this Section 4.2 by giving written
notice of such exercise at least 10 and not more than 30 days before the date
established by such electing party for such purchase or sale, as the case may
be. On the date so designated, the Company or the Principal Shareholders shall
deliver the appropriate Repurchase Price to such Purchaser by certified check or
money order and such Purchaser shall deliver the certificates evidencing the
Shares being purchased, duly endorsed for transfer as the Company or the
Principal Shareholders may direct, and free and clear of any Claim. If any
Shares evidenced by a certificate so surrendered are not being purchased
pursuant to the terms hereof, the Company shall promptly issue to such Purchaser
a replacement certificate evidencing the Shares not so purchased.
SECTION 4.3. Transfers Among Management or to Descendants. Any
Purchaser may, so long as any right has not been exercised with respect to such
Shares pursuant to Section 4.2, Transfer any Shares to another Purchaser or
other management employee of the Company or one of its subsidiaries who has
acquired or does acquire shares of Common Stock pursuant to a purchase agreement
containing transfer and other restrictions substantially similar to, and no less
favorable to the Company than, those contained herein or pursuant to an exercise
of any option under the Option Plans (a "Management Employee"). Any Purchaser
may Transfer all or any portion of such Purchaser's Shares to such Purchaser's
spouse or descendants or a trust for the benefit of the Purchaser or his or her
spouse or descendants or to a partnership or corporation controlled by the
Purchaser or his or her spouse or descendants. Such Transfers shall be effective
only if the transferee agrees to be bound by the terms of this Agreement.
SECTION 4.4. Right of First Offer. With respect to any Shares
that a Purchaser wishes to Transfer, other than pursuant to Section 4.3 hereof,
the following provisions shall apply.
(a) If a Purchaser desires to Transfer any such Shares, such
Purchaser shall deliver to the Company, the Principal Shareholders, and the
other Purchasers and Management Employees a written notice, which shall be
irrevocable for a period of 60 days after delivery, offering all of such Shares
to the Company, and so long as the Principal Shareholders then own more than 50%
of the Combined Voting Power of the then outstanding shares of capital stock of
the Company, the Principal Shareholders, and the other Purchasers and Management
Employees at the purchase price and on the terms specified in the written
notice. The Company shall have the first right and option, for a period of 30
days after delivery of such written notice, to purchase all (but not part) of
such Shares at the purchase price and on the terms specified in the notice. Such
acceptance shall be made by delivering a written notice to such transferring
Purchaser within such 30-day period.
(b) If the Company fails to accept such offer, then upon the
earlier of the expiration of such 30-day period or upon the receipt of a written
rejection of such offer from the Company, the Principal Shareholders shall have
the second right and option, until 15 days after the expiration of the 30-day
period, to purchase all (but not part) of such Shares offered at the
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purchase price and on the terms specified in the notice. Such acceptance shall
be made by delivering a written notice to the transferring Purchaser within the
15-day period.
(c) If the Principal Shareholders fail to accept such offer,
then upon the earlier of the expiration of such 15-day period or upon the
receipt of a written rejection of such offer from the Principal Shareholders,
the other Purchasers and Management Employees (as a group) shall have the third
right and option, until 15 days after the expiration of the 15-day period, to
purchase on a pro rata basis with all other Purchasers and Management Employees
so electing all (but not part) of such Shares offered at the purchase price and
on the terms specified in the notice. Such acceptance shall be made by
delivering a written notice to the transferring Purchaser within the second
15-day period.
(d) If the Company, Principal Shareholders, and the other
Purchasers and Management Employees do not elect to purchase the Shares so
offered, then the transferring Purchaser may Transfer all (but not part) of such
Shares at a price not less than the price, and on terms not more favorable to
the transferee of such Shares than the terms, stated in the original written
notice of intention to sell, at any time within 15 days after the expiration of
the period in which the other Purchasers and Management Employees could elect to
purchase such Shares. If such Shares are not sold by the transferring Purchaser
during such 15-day period, the right of the transferring Purchaser to sell such
Shares shall expire and the rights and obligations set forth in this Section 4.4
shall be reinstated with respect to such Shares.
(e) The rights of the Principal Shareholders under this
Section 4.4 shall terminate if at the time of the proposed Transfer the
Principal Shareholders do not own more than 50% of the Combined Voting Power of
the then outstanding shares of capital stock of the Company.
SECTION 4.5. Lock-up Agreements. If the Company proposes to
register under the Securities Act any of its Common Stock for sale to the
public, each Purchaser shall enter into such agreement (a "Lock-up Agreement")
as may be requested by the underwriters of such registered offering, pursuant to
which Lock-up Agreement such Purchaser shall refrain from selling any Shares
during the period of distribution of Common Stock by such underwriters and for a
period of up to 180 days following the effective date of such registration.
SECTION 4.6. Take-Along. If Charlesbank Capital Partners, LLC
agrees to transfer all of the shares of Common Stock which it owns and which are
owned by funds that it manages to any person or entity other than an affiliate
of the Principal Shareholders, and so long as the Principal Shareholders then
own more than 50% of the Combined Voting Power of the then outstanding shares of
capital stock of the Company, then Charlesbank Capital Partners, LLC shall have
the right to require the Purchasers to sell their Shares to such person or
entity upon the same terms and subject to the same conditions as the Principal
Shareholders have agreed to sell their shares. The Principal Shareholders shall
provide a written notice of such sale not less than 30 days prior to the closing
of such sale.
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ARTICLE V
Miscellaneous
SECTION 5.1. Option Shares; Dividends; Reclassifications. If,
subsequent to the date hereof, any shares of Common Stock are issued to a
Purchaser pursuant to the exercise of any option (including options granted
under the Option Plans), warrant or other security convertible into or
exercisable for shares of Common Stock, or any shares or other securities are
issued with respect to, or in exchange for, any of the Shares by reason of any
reincorporation, stock dividend, stock split, consolidation of shares,
reclassification or consolidation involving the Company, such shares of Common
Stock and such other shares or securities shall be deemed to be Shares for all
purposes of this Agreement.
SECTION 5.2. Survival of Provisions; Termination. (a) All of
the representations, warranties and covenants made herein and each of the
provisions of this Agreement shall, except as otherwise expressly set forth
herein, survive the execution and delivery of this Agreement, any investigation
by or on behalf of the Purchasers, the acceptance of the Purchased Shares and
payment therefor or the termination of this Agreement.
(b) This Agreement shall terminate upon the earliest to occur
of the (i) issuance by the Company or sale by the shareholders of the Company to
the public on a Form S-1 under the Securities Act of shares of Common Stock
representing at least 40% of the Common Stock outstanding after such issuance or
sale, (ii) tenth anniversary of the date of this Agreement and (iii) written
consent of all of the Purchasers, the Management Employees and the Company. Upon
such a termination, all rights and obligations under this Agreement shall
terminate, except the Purchasers' obligations under Section 4.5 with respect to
a Lock-up Agreement entered into in connection with a public offering referred
to in the foregoing clause (i), if applicable.
SECTION 5.3. Notices. All notices, demands and other
communications provided for or permitted hereunder shall be made in writing and
shall be by registered or certified first-class mail, return receipt requested,
telecopier, courier services or personal delivery to the following addresses, or
to such other addresses as shall be designated from time to time by a party in
accordance with this Section 5.3:
(a) if to the Company:
The X.X. Xxxxxxx Company, Inc.
0000 Xxxxx Xxxxx Xxxxxxx
Xxxxx 000
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
Attention: J. Xxxxxxx Xxxxxxx
Telecopier No.: (000) 000-0000
with a copy to:
Xxxxxx, Xxxxx & Xxxxx LLP
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1330 Avenue of the Americas
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxx, Esq.
Telecopier No.: (000) 000-0000
(b) if to a Purchaser, at the address set forth
opposite such Purchaser's name on the signature pages hereof; and
(c) if to the Principal Shareholders:
Charlesbank Capital Partners, LLC
000 Xxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000-0000
Attention: Xxxx X. Xxxxx and Xxxx X. Xxxxx
Telecopier: (000) 000-0000
with a copy to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxxx X. Xxxxxxxx
All such notices and communications shall be deemed to have been duly given:
when delivered by hand, if personally delivered; one business day after delivery
to a courier, if delivered by commercial overnight courier service; five
business days after being deposited in the mail, postage prepaid, if mailed; and
when receipt is acknowledged, if telecopied.
SECTION 5.4. Successors and Assigns. This Agreement shall
inure to the benefit of and be binding upon the successors and permitted assigns
of the parties hereto. The provisions of Article IV also shall inure to the
benefit of and be enforceable by the Management Employees and the Principal
Shareholders. A Purchaser may assign its rights hereunder only in conjunction
with, and to a transferee of, a Transfer permitted pursuant to the terms of
Article IV, and any such assignee shall be deemed to be a "Purchaser" for
purposes of this Agreement. The Company may not assign any of its rights or
obligations hereunder without the consent of Purchasers holding a majority of
the Shares outstanding; provided that any successor by merger or consolidation
of the Company or similar transaction shall be bound by and benefit from the
terms hereof as if named as the Company hereunder.
SECTION 5.5. Amendment and Waiver. No failure or delay on the
part of the Company or the Purchasers in exercising any right, power or remedy
hereunder shall operate as a waiver thereof, nor shall any single or partial
exercise of any such right, power or remedy preclude any other or further
exercise thereof or the exercise of any other right, power or remedy. No waiver
of or consent to any departure by the Company or the Purchasers from any
provision of this Agreement shall be effective unless signed in writing by the
party entitled to the benefit
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thereof; provided that notice of any such waiver shall be given to each party
hereto as set forth herein. Except as otherwise provided herein, no amendment,
modification or termination of any provision of this Agreement shall be
effective unless signed in writing by or on behalf of the Company and Purchasers
holding at least a majority of the Shares issued and outstanding and with
respect to any amendment, modification or termination of the rights or
obligations of the Principal Shareholders under Article IV, the Principal
Shareholders (through their agent Charlesbank Capital Partners, LLC); provided
that the provisions of Section 5.2(b) and of this sentence shall not be amended
or waived without the written consent of all of the Purchasers and the Company.
Any amendment, supplement or modification of or to any
provision of this Agreement, any waiver of any provision of this Agreement, and
any consent to any departure by the Company or the Purchasers from the terms of
any provision of this Agreement, shall be effective only in the specific
instance and for the specific purpose for which made or given. Except where
notice is specifically required by this Agreement, no notice to or demand on the
Company or the Purchasers in any case shall entitle the Company or the
Purchasers to any other or further notice or demand in similar or other
circumstances.
SECTION 5.6. Purchaser Representative. If the Purchaser has
been represented by a purchaser representative in connection with his investment
in the Shares, in evaluating the Purchaser's investment in the Shares the
Purchaser has been advised by such purchaser representative as to the merits and
risks of the investment in general and the suitability of the investment for the
Purchaser in particular, and the purchaser representative has disclosed in
writing any material relationship, actual or contemplated, between the purchaser
representative and any entity connected to the transactions contemplated hereby,
or affiliate of any such entity, and any compensation received or to be received
as a result of such relationship.
SECTION 5.7. Counterparts. This Agreement may be executed in
any number of counterparts and by the parties hereto in separate counterparts,
each of which when so executed shall be deemed to be an original and all of
which taken together shall constitute one and the same agreement.
SECTION 5.8. Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
SECTION 5.9. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NORTH CAROLINA,
WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW.
SECTION 5.10. Severability. If any one or more of the
provisions contained herein, or the application thereof in any circumstance, is
held invalid, illegal or unenforceable in any respect for any reason, the
validity, legality and enforceability of any such provision in every other
respect and of the remaining provisions hereof shall not be in any way impaired,
unless the provisions held invalid, illegal or unenforceable shall substantially
impair the benefits of the remaining provisions hereof.
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SECTION 5.11. Entire Agreement; 1997 Purchase Agreement. This
Agreement, together with the exhibits hereto and the terms of the Common Stock,
is intended by the parties as a final expression of their agreement and intended
to be a complete and exclusive statement of the agreement and understanding of
the parties hereto in respect of the subject matter contained herein and
therein. There are no restrictions, promises, warranties or undertakings, other
than those set forth or referred to herein or therein. This Agreement, together
with the exhibits hereto and the Common Stock, supersede all prior agreements
and understandings among the parties with respect to such subject matter hereof.
In addition, the 1997 Purchasers and the Company agree that, with respect to the
1997 Shares, in the event of any conflict between the terms and conditions of
this Agreement and the terms and conditions of the 1997 Purchase Agreement, the
terms and conditions of this Agreement shall control.
SECTION 5.12. Expenses. Each party to this Agreement shall
each bear its or his own costs incurred in connection with the negotiation,
execution and delivery and enforcement of this Agreement, including the fees and
expenses of lawyers, financial advisors and accountants.
SECTION 5.13. Certain Definitions and Rules of Interpretation.
Except as otherwise expressly provided in this Agreement, the following rules of
interpretation apply to this Agreement: (i) the singular includes the plural and
the plural includes the singular; (ii) "or" and "any" are not exclusive and
"include" and "including" are not limiting; (iii) a reference to any agreement
or other contract includes permitted supplements and amendments; (iv) a
reference to a law includes any amendment or modification to such law and any
rules or regulations issued thereunder; (v) a reference to a person includes its
permitted successors and assigns; (vi) a reference to GAAP or generally accepted
accounting principles refers to United States generally accepted accounting
principles; and (vii) a reference in this Agreement to an Article, Section or
Exhibit is to the Article, Section or Exhibit of this Agreement.
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IN WITNESS WHEREOF, the parties hereto have caused this
Securities Purchase and Stockholders' Agreement to be executed and delivered as
of the date first above written.
THE X.X. XXXXXXX COMPANY, INC.
By: /s/ Xxxxxx X. Roof
----------------------------------------
Xxxxxx X. Roof
President and Chief Executive Officer
Address for Notices: /s/ Xxxxxx X. Xxxxx
00000 Xxxxxx Xxxx ----------------------------------------
Xxxxxxxxx, XX 00000 Xxxxxx X. Xxxxx
Address for Notices: /s/ J. Xxxxxxx Xxxxxxx
000 Xxxx 0xx Xxxxxx ----------------------------------------
Xxxxxx, XX 00000 J. Xxxxxxx Xxxxxxx
Address for Notices: /s/ Xxxxxxx X. Xxxxxxx
00000 Xxxxxxx Xxxxx Xxxx ----------------------------------------
Xxxxxxxxx, XX 00000 Xxxxxxx X. Xxxxxxx
Address for Notices: /s/ P. Xxxxxxx Xxxxxxx
4520 Golf Course Drive ----------------------------------------
Xxxxxxxx Xxxxxxx, XX 00000 P. Xxxxxxx Xxxxxxx
Address for Notices: /s/ Xxxxxx X. Roof
0000 Xxxxx Xxxxx Xxxx ----------------------------------------
Xxxxxxxxx, XX 00000 Xxxxxx X. Roof
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Exhibit A
to Securities Purchase and Stockholders' Agreement
Purchase Price
Shareholder Number of Purchased Shares Cash Notes Total
----------- -------------------------- ---- ----- -----
Xxxxxx X. Xxxxx 25,000 $ 25,000 $200,000 $225,000
J. Xxxxxxx Xxxxxxx 25,000 $ 25,000 $200,000 $225,000
Xxxxxxx X. Xxxxxxx 25,000 $ 25,000 $200,000 $225,000
P. Xxxxxxx Xxxxxxx 25,000 $ 25,000 $200,000 $225,000
Xxxxxx X. Roof 50,000 $450,000 0 $450,000
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Exhibit B
to Securities Purchase and Stockholders' Agreement
FORM OF FULL RECOURSE PROMISSORY NOTE
$[ ] May [ ], 1999
For value received, [ ] (the "Payor"), promises to pay to
the order of The X.X. Xxxxxxx Company, Inc., a North Carolina corporation
("Payee"), the aggregate principal sum of $[ ] (the "Principal Sum"),
subject to the terms of, and payable as set forth in, Section 1 hereof, and to
pay interest from the date hereof as provided herein. Interest shall be
calculated on the basis of a 365-day year and shall be payable in arrears on the
last day of April of each year, commencing April 30, 2000, on the unpaid balance
of the principal amount of the Note, at the rate per annum equal to the
Borrowing Rate. The "Borrowing Rate" means, for any period, a fluctuating
interest rate per annum equal for each 30-day period during such period to the
30-day LIBOR rate published by the Wall Street Journal on the first business day
of each such 30-day period during the period plus 1.75%. The Borrowing Rate will
be calculated for each period ending on (but not including) an interest payment
date under this Note. The first period of calculation of the Borrowing Rate
shall commence on the date hereof and each subsequent period shall commence on
the immediately preceding interest payment date under this Note. Unless sooner
paid, all unpaid principal of and interest on this Note shall be due and payable
on May [ ], 2006.
Section 1 - Payments of Principal and Interest
Subject to the Payor's right to prepay this Note at any time,
the Payor shall make annual principal payments on the last day of each April
beginning April 30, 2002 equal to the greater of (x) 20% of the original
Principal Sum of this Note and (y) 50% of the Payor's annual after-tax bonus on
account of the preceding fiscal year under the Executive Bonus Plan or such
other annual bonus plan of the Payee adopted in lieu of the Executive Bonus
Plan.
In the event of the termination of employment of Payor for any
reason and the exercise by Payee (or others) of the right to repurchase the
Pledged Securities (as defined below) pursuant to the Securities Purchase and
Stockholders' Agreement, dated May [ ], 1999, among the Payor, the Payee and
others, the Payor shall promptly after such repurchase repay all then
outstanding principal and interest under this Note. The Payee may setoff against
any amounts owed to the Payor in connection with the repurchase of the Pledged
Securities, amounts outstanding under this Note.
Upon payment in full of all outstanding principal of and
interest on this Note, the Payor's obligations in respect of this Note shall
terminate, the Collateral (as
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defined below) will immediately be released from the Payee's security interest
under Section 4, and the Payee shall deliver to the Payor the Pledged Securities
and all stock powers and other documents and instruments delivered to Payee in
connection with the grant of a security interest in the Collateral.
Payments of principal of and interest on this Note shall be
made to Payee in lawful money of the United States of America by check payable
to the order of The X.X. Xxxxxxx Company, Inc., 0000 Xxxxx Xxxxx Xxxxxxx, Xxxxx
000, Xxxxxxxxx, Xxxxx Xxxxxxxx, 00000, or such other place or places within the
United States as may be specified by Payee in a written notice to the Payor at
least 10 business days before any payment date.
The Payor shall have the right at any time and from time to
time to prepay this Note in whole or in part, together with interest on the
amount prepaid to the date of prepayment, without penalty or premium.
Section 2 - Events of Default
(a) The following shall constitute an "Event of Default"
under this Note.
(i) Default shall be made in the payment of the
principal of or interest on this Note, when and as the same shall
become due and payable, whether at the due date thereof or at a date
fixed for prepayment thereof or by acceleration or otherwise, and such
default shall continue unremedied for 45 days after notice thereof
shall have been given by Payee to Payor;
(ii) Payor shall have filed or have filed against
Payor a petition in bankruptcy or for similar relief pursuant to
present or future federal bankruptcy, insolvency or similar law or the
law of any other jurisdiction or consented to the appointment of or
taking possession by a receiver, liquidator, assignee, trustee,
custodian, sequestrator (or other similar official) for all or any
substantial part of Payor's property: or
(iii) Payor shall have made a general assignment
for the benefit of creditors or shall admit in writing Payor's
inability to pay Payor's debts generally as they become due.
(b) In case of the happening of an Event of Default,
Payee may, by written notice to Payor, declare due and payable this Note,
whereupon the same shall be due an payable without presentment, demand, protest
or other notice of any kind, all of which are hereby expressly waived. In the
case of the happening of an Event of Default under Section 2(a)(ii) or (iii),
this Note shall automatically become due and payable without presentment,
demand, protest or notice of any kind, all of which are hereby expressly waived.
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Section 3 - Set Off
The Payee shall have the right to setoff against any amount of
principal due and payable hereunder as provided in the first paragraph of
Section 1 hereof, amounts owed to Payor under the Executive Bonus Plan or any
other annual bonus plan of the Payee adopted in lieu of the Executive Bonus
Plan.
Section 4 - Grant of Security Interest
(a) As security for the full and punctual payment of the
Principal Sum and accrued interest on this Note when due and payable (whether
upon stated maturity, by acceleration or otherwise), the Payor hereby grants and
pledges a continuing lien on and security interest in, and, as a part of such
grant and pledge, hereby pledges, assigns, transfers and conveys to the Payee as
collateral security, the securities to be acquired from the Payee in exchange
for this Note (the "Pledged Securities") and the proceeds of any and all
dividends and other distributions made in respect of the Pledged Securities
(collectively, the "Collateral").
(b) The Payor will defend the Payee's right, title and
interest in and to the Collateral against the claims and demands of all other
persons.
(c) The Payor hereby delivers to the Payee the
certificates representing the Pledged Securities, together with appropriate
undated stock powers duly executed in blank for the Pledged Securities and
agrees that it will deliver, if necessary or appropriate, additional updated
stock powers duly executed in blank for the Collateral from time to time
hereafter.
(d) So long as there has not been an Event of Default,
the Payor shall be entitled to vote the Pledged Securities and to give all
consents, waivers and ratifications in respect of the Pledged Securities. Upon
the occurrence of an Event of Default, all voting and other consensual rights of
the Payor in the Pledged Securities shall cease and may be exercised by the
Payee.
(e) Upon the occurrence of an Event of Default, the Payee
shall have and may exercise all rights and remedies afforded to a secured party
hereunder and under applicable law, and shall have the right to retain the
Collateral in partial or full satisfaction of the Payor's obligations under this
Note, with the Payor remaining liable for any deficiency.
(f) The Payor agrees that at any time and from time to
time upon the written request of the Payee, the Payor will execute and deliver
such further documents and do or cause to be done such further acts and things
as the Payee may reasonably request in order to effect the grant of the security
interest hereunder.
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Section 5 - Governing Law
THIS NOTE AND THE RIGHTS AND OBLIGATIONS OF THE PAYOR AND
PAYEE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NORTH CAROLINA.
IN WITNESS WHEREOF, the Payor has executed this Note as of the
day and year first above written.
-----------------------------------
[INSERT NAME OF PAYOR]
