EXHIBIT 10.18
FIRST AMENDMENT TO STOCK PURCHASE AGREEMENT
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THIS FIRST AMENDMENT TO STOCK PURCHASE AGREEMENT (this "First Amendment")
is made and entered into this 14th day of October, 1996, by and between
FINANCIAL SERVICE CORPORATION, a Georgia corporation with its principal
executive offices in Xxxx County, Georgia (the "Company"), and E. XXXXX XXXXXX,
a resident of Xxxxxx County, Georgia ("Xxxxxx").
W I T N E S E T H:
WHEREAS, on October 2, 1991, the Company and Xxxxxx entered into that
certain Stock Purchase Agreement (the "Stock Purchase Agreement") pursuant to
which the Company and Xxxxxx agreed that, upon Xxxxxx'x death, the Company would
purchase certain shares of Common Stock of the Company then owned by Xxxxxx on
terms, and subject to conditions, set forth in said Stock Purchase Agreement;
and
WHEREAS, the Company and Xxxxxx have each determined that it is in their
respective best interests to amend the Stock Purchase Agreement to, among other
things, (i) provide for a different method of calculating the purchase price to
be paid by the Company for certain shares of Company Common Stock held by Xxxxxx
at his death, (ii) reflect that the Company has obtained additional life
insurance with which to fund a portion of the purchase price and (iii) provide
that life insurance proceeds in excess of those required to fund a portion of
the purchase price will be paid to the Company and not to Xxxxxx'x estate;
NOW, THEREFORE, FOR AND IN CONSIDERATION of the sum of Ten and No/100
Dollars ($10.00), the premises, the covenants hereinafter set forth and other
good and valuable consideration, the receipt and sufficiency of which hereby are
acknowledged, the parties hereto, intending to be legally bound, do hereby agree
as follows:
1. General. Capitalized terms not otherwise defined herein shall
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have the respective meanings given to such terms in the Stock Purchase
Agreement. The Stock Purchase Agreement, as hereby amended, shall
remain in full force and effect in accordance with its terms as
amended hereby. From and after the date of this First Amendment,
references to the Stock Purchase Agreement shall be deemed to be
references to the Stock Purchase Agreement as amended by this First
Amendment.
2. Definitions. Section 1 of the Stock Purchase Agreement is hereby
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amended as follows:
(a) The definition of "Book Value" that is set forth in Section 1 of
the Stock Purchase Agreement is deleted in its entirety and the
following definition is inserted in lieu thereof:
"Book Value" shall mean the book value per share of Common Stock
of the Company as reflected on the consolidated financial
statements of the Company prepared as of the last day of the
month immediately preceding the month in which Xxxxxx dies and
determined in accordance with generally accepted accounting
principles consistently applied, which statements shall be
certified by the Company's principal financial officer (who for
purposes of this Agreement must be someone other than Xxxxxx) as
presenting fairly the financial condition of the Company.
(b) The definition of "Policy" that is set forth in Section 1 of the
Stock Purchase Agreement is deleted in its entirety and the following
definition is inserted in lieu thereof:
"Policy" shall mean (i) the term life insurance policy (policy
number 79622023) issued by The Prudential Insurance Company of
America in the amount of $1,300,000 on the life of Xxxxxx, a copy
of which is attached as Exhibit I to the First Amendment to Stock
Purchase Agreement and (ii) the term life insurance policy
(policy number 2609892) issued by First Colony Life Insurance Co.
in the amount of $3,500,000 on the life of Xxxxxx, a copy of
which is attached as Exhibit II to the First Amendment to Stock
Purchase Agreement.
(c) The definition of "Purchase Price" that is set forth in Section 1
of the Stock Purchase Agreement is deleted in its entirety and the
following definition is inserted in lieu thereof:
"Purchase Price" of a share of Xxxxxx Stock shall mean an amount
equal to the sum of (i) the per share Book Value (as adjusted for
stock splits, stock dividends, recapitalizations and other
similar events occurring between the date of the financial
statements from which Book Value is determined and the initial
purchase date and (ii) the Purchase Price Adjustment (hereinafter
defined), if any.
(d) Immediately following the definition of "Purchase Price" there is
hereby added the following definition:
"Purchase Price Adjustment" shall mean an amount per share of
Xxxxxx Stock determined as follows. If no Sale (hereinafter
defined) occurs prior to the end of the twenty-fourth month
following the month in which Xxxxxx dies, the amount of the
Purchase Price Adjustment shall be zero. If a Sale does occur
prior to the end of the twenty-fourth month following the month
in which Xxxxxx dies, the
Purchase Price Adjustment shall be equal to (i) the "Adjustment
Factor" (calculated as set forth below) multiplied by (ii) a
fraction, the denominator of which is 24 and the numerator of
which is the number of whole and partial months remaining between
the month in which the Sale occurs and the end of the twenty-four
month period; provided, however, that in no event shall the
numerator be greater than 24. The numerator shall include the
month in which the Sale occurs.
For purposes of this definition of Purchase Price Adjustment, the
Adjustment Factor shall be calculated as follows. If the fair
market value of the consideration per share of Company Common
Stock received by holders thereof in connection with any Sale
(which fair market value per share shall be calculated for this
purpose as though the same number of shares of Company Common
Stock are outstanding on the date of the Sale as were outstanding
on the date as of which Book Value was calculated) is not greater
than two (2) times Book Value, the Adjustment Factor shall be
zero. If the fair market value of the consideration per share of
Company Common Stock received by holders thereof in connection
with any Sale (which fair market value per share shall be
calculated for this purpose as though the same number of shares
of Company Common Stock are outstanding on the date of the Sale
as were outstanding on the date as of which Book Value was
calculated) is greater than two (2) times Book Value, the
Adjustment Factor shall equal the difference between two (2)
times Book Value and the fair market value of the consideration
per share of Company Common Stock received by holders thereof in
connection with the Sale (which fair market value per share shall
be calculated for this purpose as though the same number of
shares of Company Common Stock are outstanding on the date of the
Sale as were outstanding on the date as of which Book Value was
calculated).
(e) Immediately following the definition of "Purchase Price Adjustment"
there is hereby added the following definition:
"Sale" shall mean the consummation, following the date of
Xxxxxx'x death, of any of the following: (i) a sale of
substantially all of the assets of the Company, or of any
subsidiary or subsidiaries of the Company, that results in
consideration being distributed to holders of Company Common
Stock; (ii) a sale of then previously issued and outstanding
shares of the Company, or of any subsidiary or subsidiaries of
the Company, which sale (a) results in a change in beneficial
ownership of 50% or more of the issued and outstanding Common
Stock to the Company, or 50% or
more of the issued and outstanding voting stock of such
subsidiary or subsidiaries and (b) results in consideration being
distributed to holders of Company Common Stock; or (iii) a merger
or share exchange involving the Company, or any subsidiary or
subsidiaries of the Company, which merger or share exchange
results in consideration being distributed to holders of Company
Common Stock.
(f) The definition of "Xxxxxx Stock" that is set forth in Section 1 of the
Stock Purchase Agreement is deleted in its entirety and the following
definition is inserted in lieu thereof:
"Xxxxxx Stock" shall mean (i) the 248,098 shares of Company
Common Stock beneficially owned by Xxxxxx on the date hereof and
(ii) any securities issued or issuable with respect to such
shares of Common Stock by way of stock dividend or stock split or
in connection with a combination of shares, recapitalization,
merger, consolidation, or other reorganization or otherwise, but
the shares referred to in the foregoing clauses (i) and (ii)
shall be "Xxxxxx Stock" only so long as they are beneficially
owned by Xxxxxx or, after Xxxxxx'x death, by Xxxxxx'x estate.
Other than as provided above, "Xxxxxx Stock" shall not include
any shares of Common Stock acquired by Xxxxxx after the date
hereof (including any shares beneficially owned on the date
hereof, transferred to a third party (unless Xxxxxx retains
beneficial ownership), and subsequently reacquired by Xxxxxx).
Xxxxxx shall be deemed to "beneficially own" any shares of Common
Stock which he owns of record, which are held in trust for his
benefit, or from which he otherwise derives a direct pecuniary
benefit. Xxxxxx also shall be deemed to "beneficially own" any
shares of Common Stock held in trust for the benefit of his
spouse or children, or other relatives that are his dependents,
or any shares of Common Stock owned beneficially and of record by
such persons, in either case to the extent that such shares were
acquired from Xxxxxx, whether by gift or purchase. "Xxxxxx
Stock" shall not include any options, warrants, or other
contractual rights to acquire shares of Common Stock.
3. Payment. Section 2(b) of the Stock Purchase Agreement is hereby
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amended by deleting said Section 2(b) in its entirety and inserting, in lieu
thereof, the following:
(b) Payment.
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(i) Purchase Price Excluding Purchase Price Adjustment. The
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Company shall pay the aggregate Purchase Price (excluding the
Purchase Price Adjustment) by wire transfer of immediately
available funds to an account designated by the Representative in
writing at least two days prior to the date of such payment,
except that:
(a) If (I) Xxxxxx dies on or before March 2, 2007 (Xxxxxx'x
65th birthday), or (II) Xxxxxx dies after March 2, 2007, but
the Company has continued to maintain the Policy after such
date, then to the extent that the aggregate Purchase Price
(excluding the Purchase Price Adjustment) exceeds
$4,800,000, the Company, at its option, may issue and
deliver to or at the direction of the Representative a
promissory note substantially in the form attached as
Exhibit A to this Stock Purchase Agreement (the "Note") in
payment of the amount of the aggregate Purchase Price
(excluding the Purchase Price Adjustment) in excess of
$4,800,000; and
(b) If Xxxxxx dies after March 2, 2007, and the Company has
not continued to maintain the Policy, then the Company shall
pay at least one-fourth of the aggregate Purchase Price
(excluding the Purchase Price Adjustment) in immediately
available funds but, at its option, may issue and deliver to
or at the direction of the Representative the Note in
payment of the remainder of the aggregate Purchase Price
(excluding the Purchase Price Adjustment).
If the Note is delivered under Section 2(b)(i)(a), it shall
have a term of 60 months, and if the Note is delivered under
Section 2(b)(i)(b), it shall have a term of 120 months.
(ii) Purchase Price Adjustment. The aggregate amount of the
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Purchase Price Adjustment shall be paid immediately following the
consummation of the Sale that is the cause of the Purchase Price
Adjustment. No less than ten (10) days prior to the consummation
of such Sale, the Company shall notify the Representative in
writing of the date on which the Sale will be consummated.
Representative shall then notify the Company in writing, at least
two days prior to the proposed consummation date, of the account
into which the Purchase Price Adjustment is to be deposited. The
Company shall cause the Purchase Price Adjustment to be wired, in
immediately available funds, to the account designated by the
Representative.
4. Closing. Section 2(c) of the Stock Purchase Agreement is hereby
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amended by deleting the last sentence of said Section in its entirety and
inserting, in lieu thereof, the following:
Except as provided otherwise in Section 3 below, on the date
fixed for the purchase, the Representative shall surrender the
certificates representing the Xxxxxx Stock, free and clear of all
liens and encumbrances and properly endorsed for transfer, at the
principal office of the Company, against payment of the aggregate
Purchase Price (excluding the Purchase Price Adjustment) for the
Xxxxxx Stock.
5. Limitation of Purchase Obligation. Section 3(a) of the Stock
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Purchase Agreement is hereby amended by deleting the reference to "Section 2(b)"
that is contained in said Section and inserting, in lieu thereof, a reference to
"Section 2(b)(i)."
6. Security Interest. Section 4 of the Stock Purchase Agreement is
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hereby amended by deleting said Section 4 in its entirety and inserting, in lieu
thereof, the following:
SECTION 4. Security Interest.
(a) Grant of Security Interest. As security for the payment of the
Purchase Price (excluding the Purchase Price Adjustment), the Company
hereby assigns, transfers and pledges to Xxxxxx a continuing first
priority security interest in all of the Company's right, title and
interest in the Policy and any proceeds thereof (the "Collateral") and
hereby delivers the Policy and a collateral assignment thereof (the
"Assignment") to Xxxxxx, receipt of which is hereby acknowledged by
Xxxxxx.
(b) Representations and Warranties. The Company represents and
warrants to Xxxxxx that except for the security interest granted
hereunder and any interests or liens that may have been created before
Xxxxxx transferred the Policy to the Company, the Company is the legal
and equitable owner of the Collateral and holds the Collateral free
and clear of any liens, and the Company will not make any sale,
assignment, pledge, mortgage, or transfer of the Collateral except
pursuant to this Agreement. The Company covenants that it shall pay
the premiums and otherwise maintain the Policy as provided in Section
5.
(c) Further Assistance. The Company agrees, at its expense, promptly
to execute, acknowledge, deliver and cause to be duly filed all such
further instruments and documents and take all such actions as Xxxxxx
may from time to time reasonably request to better assure and preserve
the security interest and the rights and remedies created hereby,
including the payment of any fees and taxes required in connection
with the execution
and delivery of this Agreement, the granting of the security interest
created hereby, and the filing of any financing statements or other
documents in connection herewith. Without limiting the foregoing,
Xxxxxx is hereby authorized to file one or more financing statements,
continuation statements, or other documents for the purpose of
perfecting, confirming, continuing, enforcing or protecting the
security interest granted by the Company hereunder, without the
signature of the Company, naming the Company as debtor and Xxxxxx as
secured party.
(d) Enforcement. If the Company fails to pay the Purchase Price
(excluding the Purchase Price Adjustment) in accordance with the terms
of this Agreement, the Representative may, on Xxxxxx'x behalf, proceed
to protect and enforce the rights vested in Xxxxxx by this Agreement,
including the right to cause the proceeds of the Policy (up to the
amount of the Purchase Price excluding the Purchase Price Adjustment)
to be paid directly to Xxxxxx'x estate or to another seller of Xxxxxx
Stock hereunder, and to enforce Xxxxxx'x rights hereunder to such
proceeds and all other rights hereunder by such appropriate judicial
proceedings as it shall deem most effective to protect and enforce any
of such rights, either at law or in equity or in bankruptcy or
otherwise, and it may exercise any other or additional rights or
remedies granted to a secured party under applicable law.
(e) Termination of Security Interest. The security interest granted
by the Company hereunder shall terminate on the earlier to occur of:
(i) the termination of this Agreement or (ii) the transfer of the
Policy to Xxxxxx or at the direction of Xxxxxx pursuant to Section
5(d).
7. Payment of Premiums; Maintenance of Policy and Payment of Excess
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Proceeds. Section 5 of the Stock Purchase Agreement is hereby amended by
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deleting said Section 5 in its entirety and inserting, in lieu thereof, the
following:
SECTION 5 Payment of Premiums; Maintenance of Policy and Payment of
Excess Proceeds.
(a) Company's Payment Obligation. For so long as the security
interest described in Section 4 is in effect, the Company shall pay
all premiums and other expenses on the Policy as they become due
through March 2, 2007 (the date of Xxxxxx'x 65th birthday). The
Company may, but is not required to, continue to pay such premiums and
expenses after such date.
(b) Xxxxxx'x Right to Cure Nonpayment. So long as the Company is
obligated to pay the premiums and expenses of the Policy, if at any
time a premium or expense is not paid within twenty days after its due
date, Xxxxxx shall be entitled to pay such premium or expense as agent
of the Company, and the Company shall reimburse him promptly
(in cash or by delivery of a demand promissory note of the Company
substantially in the form attached hereto as Exhibit B) for any such
payment. The Company shall notify Xxxxxx of any nonpayment of any such
premium or expense within twenty days after its due date and shall
authorize and direct The Prudential Insurance Company of America and
First Colony Life Insurance Co. to give Xxxxxx, upon his written
request, any information about the status of the Policy.
(c) Xxxxxx'x Obligation to Cooperate. Xxxxxx agrees to take any
physical examinations and sign any applications as shall be necessary
from time to time to maintain the Policy or to enable the Company to
obtain any additional insurance.
(d) Transfer of Policy upon Termination of Company's Payment
Obligation. When the Company is no longer obligated, and has not
elected, to maintain the Policy as provided in Section 5(a), the
Company shall transfer the Policy to or at the direction of Xxxxxx and
shall change or assist in the changing of the beneficiary under the
Policy at Xxxxxx'x direction.
(e) Payment of Excess Proceeds. If, pursuant to the terms of this
Agreement, the Policy continues to be maintained by the Company at the
time of Xxxxxx'x death, the Company shall be entitled to any and all
proceeds of the Policy which exceed the aggregate amount of the
Purchase Price (excluding the Purchase Price Adjustment).
8. Termination. Section 9 of the Stock Purchase Agreement is
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hereby amended by deleting said Section 9 in its entirety and inserting, in lieu
thereof, the following:
SECTION 9. Termination of this Agreement. This Agreement shall
terminate upon the first to occur of the following:
(a) The mutual written agreement of the Company and Xxxxxx to
terminate this Agreement;
(b) The merger of the Company with another corporation or entity, or
the sale of all or substantially all of the assets of the Company to
another corporation or entity, in which a majority of the voting
equity interest of the surviving or successor corporation or entity is
not owned by the persons who immediately before the transaction were
shareholders of the Company; provided, however, that notwithstanding
anything in this Agreement to the contrary, the obligation of the
Company to pay, or cause to be paid, the Purchase Price Adjustment
shall survive any termination of this Agreement pursuant to this
Section 9(b); or
(c) The date of which either of the following exists: (i) Xxxxxx
shall be alive and shall not beneficially own any shares of Xxxxxx
Stock or (ii) Xxxxxx shall have died and the full amount of the
Purchase Price (including the Purchase Price Adjustment) shall been
paid by the Company.
Upon the termination of this Agreement, the security interest granted
hereby shall be terminated and the Company shall promptly assign the
Policy to Xxxxxx, if he is then living. Once terminated, neither this
Agreement nor the security interest created hereby shall be reinstated
by any subsequent acquisition of shares of Common Stock by Xxxxxx.
9. Governing Law. This First Amendment shall be governed by, and
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construed in accordance with, the internal laws of the State of Georgia
applicable to agreements made and to be performed entirely within such state.
10. Counterparts. This First Amendment may be executed simultaneously in
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one or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same agreement.
IN WITNESS WHEREOF, the parties hereto have affixed their respective hands
and seals, or have caused this First Amendment to be executed by their duly
authorized officers, this 14th day of October, 1996.
FINANCIAL SERVICE CORPORATION
By: /s/Xxxxxx X. Xxxxxxxx
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Title: Senior Vice President
/s/E. Xxxxx Xxxxxx (SEAL)
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E. Xxxxx Xxxxxx
"Exhibits"
Exhibit I.
Prudential Insurance Company Of America;
Policy No. #79622023
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Policy Amount: $1,300,000
Exhibit II.
First Colony Life Insurance Company;
Policy No. #2609892
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Policy Amount: $3,500,000
