EXECUTIVE STOCK PURCHASE AND LOAN AGREEMENT
THIS AGREEMENT, made as of the 8th day of December, 1998
(the "Agreement"), by and between Xxxxxxx X. Xxxxx ("Xx. Xxxxx") and Xxxx
Xxxxx, Inc., a Maryland corporation (the "Company").
RECITALS
Xx. Xxxxx is the Chairman of the Board of Directors,
President and Chief Executive Officer of the Company. In recognition of his
service and value to the Company and pursuant to the Xxxx Xxxxx, Inc. 1996
Equity Incentive Plan (the "Plan"), the Company wishes to sell to Xx. Xxxxx
on the terms and conditions set forth herein 120,000 shares (the "Shares")
of Common Stock, par value $.10 per share, of the Company (the "Common
Stock'). Xx. Xxxxx wishes to purchase the Shares and to borrow certain
funds from the Company in order to purchase the Shares. The committee
responsible for administration of the Plan (the "Committee") has determined
that it would be in the best interest of the Company to retain the services
of Xx. Xxxxx and that the advance of the funds so requested for the purpose
of purchasing the Shares will provide an important incentive to, and assist
in the retention of, Xx. Xxxxx. Accordingly, the Committee has authorized
the making of such loan on the terms and conditions set forth herein.
Now, therefore, in consideration of the mutual covenants and
agreements herein contained, and other good and valuable consideration, it
is agreed as follows:
1. The Company does hereby sell to Xx. Xxxxx, and Xx. Xxxxx
hereby purchases from the Company, at an aggregate price of $3,378,750, one
hundred twenty thousand (120,000) shares of Common Stock at $28.15625 per
share.
2. The Company hereby agrees to lend to Xx. Xxxxx, and Xx.
Xxxxx hereby agrees to borrow from the Company $3,378,750 (the "Loan"). The
Loan shall be evidenced by a Note in the form attached hereto as Exhibit A.
The Note shall be secured by a Pledge Agreement in the form attached hereto
as Exhibit B.
3. The Company represents and warrants to Xx. Xxxxx that (i)
this Agreement has been duly authorized by the Committee pursuant to the
Plan and constitutes the legal, valid and enforceable obligation of the
Company and (ii) the Shares have been duly and validly authorized and, when
issued and delivered against payment therefore as provided herein, will be
duly and validly issued and fully paid and non-assessable.
4. Xx. Xxxxx represents and warrants to the Company that the
Shares are being purchased for his own account for the purpose of investment
and with no view to the redistribution thereof. Xx. Xxxxx further represents
and covenants that if in the future he decides to offer or dispose of any
Shares or interest therein, he will do so only in compliance with the
Securities Act of 1933, as amended, and all applicable state securities laws.
5. The Committee will, following each fiscal year of the Company,
commencing with the fiscal year ending March 31, 2000, for which a cash
bonus has been authorized for payment to Xx. Xxxxx pursuant to the Xxxx
Xxxxx, Inc. Executive Incentive Compensation Plan, authorize the payment to
Xx. Xxxxx under that plan of an additional bonus amount equal to 25% of the
original principal amount of the Loan (which additional bonus amount shall
be reduced to the extent that it, together with all other bonus amounts
awarded to Xx. Xxxxx for the fiscal year under that plan, exceeds the
maximum bonus amount which the Committee has been authorized to award Xx.
Xxxxx under that plan), provided that the payment of such additional bonus
amount shall be conditioned on Xx. Xxxxx'x application of such additional
bonus toward prepayment of the Loan and in no event will the Committee be
required to authorize the payment of any additional bonus amount that
exceeds the outstanding principal amount of the Loan.
6. All principal amounts of the Loan outstanding, together
with accrued interest thereon, shall be forgiven on the date on which (i) a
Change of Control (as defined below) occurs, or (ii) Xx. Xxxxx'x employment
with the Company is terminated (1) by the Company without Cause (as defined
below), (2) by reason of his death or (3) by reason of his permanent
disability (as defined in the Company's then applicable long-term disability
plan).
For purposes of this Agreement, a "Change of Control" shall
be deemed to have occurred at such time as (i) any "person" (as such term is
used in Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934,
as amended (the "1934 Act")) other than an affiliate of the Company on the
date hereof, becomes the beneficial owner (as defined in Rule 13d-3 of the
1934 Act), directly or indirectly, of securities of the Company or a
successor representing 50% or more of the combined voting power of the
Company's then outstanding securities having the ordinary right to elect
directors of the Company or (ii) the Company's stockholders shall have
approved any agreement providing for a merger in which the Company will not
remain an independent publicly owned company or a consolidation or sale or
other disposition of all or substantially all of the assets of the Company.
For purposes of this Agreement, the term "Cause" shall mean
Xx. Xxxxx'x intentional gross misconduct that is damaging to the Company in
a material way.
7. It shall constitute a default under this Agreement and the
Note issued pursuant hereto if the principal or any interest on the Note is
not paid when due and payable or if Xx. Xxxxx shall, FOR ANY REASON, cease
to be employed by the Company or one of its subsidiaries or affiliates,
other than following the occurrence of any event specified in paragraph 5
above that results in the principal of the Loan being forgiven. In the
event of such a default that shall remain uncured after ten (10) days
written notice from the Company to Xx. Xxxxx, the Company may declare all
unpaid principal of and interest on the Note to be immediately due and
payable and, in such event the Company shall be entitled, in addition to
exercising its rights under the Pledge Agreement, to all other remedies
available at law.
8. Any dispute or disagreement which shall arise under, or as a
result of, or pursuant to, this Agreement shall be determined by the
Committee in its absolute and sole discretion, and any such determination or
any other determination by the Committee under or pursuant to this Agreement
and any interpretation by the Committee of the terms of this Agreement,
shall be final, binding and conclusive on all persons affected thereby.
9. Nothing in this Agreement shall be construed to constitute or
to be evidence of an agreement or understanding, express or implied, on the
part of the Company to employ or retain Xx. Xxxxx for any specific period of
time.
10. The invalidity of any provision of this Agreement shall not
affect the validity of any other provision of this Agreement.
11. This Agreement shall be governed by the laws of the State of
Maryland, other than the conflicts of laws provisions thereof, and shall be
binding upon and inure to the benefit of the Company and its successors and
assigns and Xx. Xxxxx and his heirs, personal representatives and assigns.
This Agreement may not be amended except in writing.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed as of the day and year first herein written.
Xxxx Xxxxx, Inc.
By: /s/ Xxxxxx X. Xxxxx
Name: Xxxxxx X. Xxxxx
Title: Senior Vice President
and General Counsel
Xxxxxxx X. Xxxxx
/s/ Xxxxxxx X. Xxxxx
