Exhibit 10.21
EXECUTION COPY
SENIOR MANAGEMENT AGREEMENT
THIS SENIOR MANAGEMENT AGREEMENT (this "AGREEMENT") is made as of
February 6, 2004 (the "EFFECTIVE DATE"), by and among Medtech/Denorex, LLC, a
Delaware limited liability company (the "COMPANY"), Medtech/Denorex Management,
Inc., a Delaware corporation ("EMPLOYER"), and Xxxxxx X. Xxxxxx ("EXECUTIVE").
The Company and Executive desire to enter into an agreement pursuant to
which Executive will acquire from the Company, and the Company will issue to
Executive, Class B Preferred Units of the Company (the "CLASS B PREFERRED
UNITS") and Common Units of the Company (the "COMMON UNITS"). Certain
definitions are set forth in SECTION 11 of this Agreement.
Employer desires to employ Executive and Executive desires to be employed
by Employer upon the terms set forth herein.
The execution and delivery of this Agreement by the Company and Executive
is a condition to (A) the purchase of Class B Preferred Units and Common Units
by GTCR Fund VIII, L.P., a Delaware limited partnership ("GTCR FUND VIII"), GTCR
Fund VIII/B, L.P., a Delaware limited partnership ("GTCR FUND VIII/B"), GTCR
Co-Invest II, L.P., a Delaware limited partnership ("GTCR CO-INVEST") and the
TCW/Crescent Purchasers (as defined herein) pursuant to a Unit Purchase
Agreement among the Company and such Persons dated as of the date hereof (the
"PURCHASE AGREEMENT") and (B) the purchase of warrants to acquire Class B
Preferred Units and Common Units by GTCR Capital Partners, L.P., a Delaware
limited partnership ("GTCR CAPITAL PARTNERS") and the TCW/Crescent Lenders (as
defined herein) pursuant to a Warrant Agreement between the Company and such
Persons dated as of the date hereof. Each of GTCR Fund VIII, GTCR Fund VIII/B,
GTCR Co-Invest and the TCW/Crescent Purchasers is sometimes individually
referred to herein as an "EQUITY INVESTOR" and, collectively, as the "EQUITY
INVESTORS." Each of GTCR Capital Partners and the TCW/Crescent Lenders is
sometimes individually referred to herein as a "DEBT INVESTOR" and,
collectively, as the "DEBT INVESTORS." Each of the Equity Investors and the Debt
Investors is sometimes individually referred to herein as an "INVESTOR" and,
collectively, as the "INVESTORS." Certain provisions of this Agreement are
intended for the benefit of, and will be enforceable by, the Investors.
NOW, THEREFORE, in consideration of the mutual covenants contained herein
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties to this Agreement hereby agree as follows:
PROVISIONS RELATING TO EXECUTIVE SECURITIES
1. ACQUISITION AND ISSUANCE OF EXECUTIVE SECURITIES.
(a) Upon execution of this Agreement, Executive will acquire, and
the Company will issue, 907,367 Common Units at a price of $0.10 per unit
and
125.520 Class B Preferred Units at a price of $1,000 per unit, for an
aggregate purchase price of $216,257. Upon the execution of this
Agreement, the Company will deliver to Executive copies of the
certificates representing such Executive Securities (as defined below),
and Executive will contribute, assign, transfer, convey and deliver to
the Company the following in full consideration for such Executive
Securities:
(i) that number of shares of Medtech Common Stock with
an aggregate Medtech Common Stock Value, determined as of the Closing
Date, of $172,696; and
(ii) that number of shares of Denorex Common Stock with
an aggregate Denorex Common Stock Value, determined as of the Closing
Date, of $43,561.
If the Medtech Common Stock Value and/or the Denorex Common Stock Value
determined as of the Closing Date is increased after the Closing Date pursuant
to adjustments thereto contemplated by the Stock Purchase Agreement, then the
Company shall issue to Executive for no additional consideration (I) the number
of Co-Invest Common Units and Class B Preferred Units (using the same ratio then
in effect as between such units) having an aggregate value equal to such
increase (assuming a Class B Preferred Unit value of $1,000 per unit and a
Co-Invest Common Unit value of $0.10 per unit) and (II) the number of Co-Invest
Common Units and Class B Preferred Units (using the same ratio then in effect as
between such units) having an aggregate value equal to the Class B Yield (as
defined in the LLC Agreement) that would have accrued on the Class B Preferred
Units issued pursuant to the foregoing clause (I) had such units been issued as
of the Closing Date (assuming a Class B Preferred Unit value of $1,000 per unit
and a Co-Invest Common Unit value of $0.10 per unit). If the Medtech Common
Stock Value and/or the Denorex Common Stock Value determined as of the Closing
Date is decreased after the Closing Date pursuant to adjustments thereto
contemplated by the Stock Purchase Agreement, then Executive shall forfeit to
the Company at no cost the number (using the same ratio then in effect as
between such units) of Co-Invest Common Units and Class B Preferred Units (and
the Class B Yield relating thereto) having an aggregate value equal to such
decrease (assuming a Class B Preferred Unit value of $1,000 per unit and a
Co-Invest Common Unit value of $0.10 per unit).
(b) In addition to the Executive Securities acquired pursuant to
SECTION 1(a) above, the Company will issue 9,233 Common Units to
Executive in exchange for Executive's Distribution Offset and
Contribution Obligation (as defined herein). Upon the execution of this
Agreement, the Company will deliver to Executive copies of the
certificates representing such Executive Securities.
(c) 881,751 of the Common Units acquired pursuant to SECTIONS 1(a)
AND (b) hereof are referred to herein as the "CARRIED COMMON UNITS." The
remaining Common Units that are acquired pursuant to SECTIONS 1(a) AND
(b) above are referred to herein as the "CO-INVEST COMMON UNITS." All
Class B Preferred Units
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and the Co-Invest Common Units acquired by Executive hereunder are
referred to herein as the "CO-INVEST UNITS."
(d) Within 30 days after the acquisition of the Carried Common
Units hereunder, Executive will make an effective election with the
Internal Revenue Service under Section 83(b) of the Internal Revenue Code
and the regulations promulgated thereunder in the form of EXHIBIT A
attached hereto.
(e) 293,917 of the Carried Common Units are referred to herein as
the "STANDARD CARRIED COMMON UNITS."
(f) Until released upon the occurrence of a Sale of the Company or
a Public Offering as provided below, all certificates evidencing
Executive Securities shall be held by the Company for the benefit of
Executive and the other holder(s) of Executive Securities, if any. Upon
the occurrence of a Sale of the Company, the Company will return all
certificates evidencing Executive Securities to the record holders
thereof. Upon the consummation of a Public Offering, the Company will
return to the record holders thereof certificates evidencing the
Co-Invest Units and the Vested Carried Common Units.
(g) In connection with the acquisition and issuance of the
Executive Securities, Executive represents and warrants to the Company
that:
(i) The Executive Securities 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 Securities will not be disposed of in contravention of
the Securities Act or any applicable state securities laws.
(ii) Executive is an executive officer of the Company and
Employer, is sophisticated in financial matters and is able to evaluate
the risks and benefits of the investment in the Executive Securities.
(iii) Executive is able to bear the economic risk of his
investment in the Executive Securities for an indefinite period of time
because the Executive Securities have 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 Executive Securities and has had full access to such other information
concerning the Company and its Subsidiaries as he has requested.
(v) Executive has full legal capacity to execute and
deliver this Agreement and to perform his obligations hereunder. This
Agreement constitutes the legal, valid and binding obligation of
Executive, enforceable in accordance
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with its terms, and the execution, delivery and performance of this
Agreement by Executive, to the best of his knowledge, 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. This representation is subject to
SECTION 1(g)(vi) below.
(vi) Except as set forth on SCHEDULE 1(g)(vi) attached
hereto, Executive is neither party to, nor bound by, any other employment
agreement, consulting agreement, noncompete agreement, non-solicitation
agreement or confidentiality agreement.
(vii) Executive is a resident of the State of New York.
(viii) As of the date of this Agreement, Executive is the
holder of record and owns beneficially the number of shares of Medtech
Common Stock and Denorex Common Stock being contributed to the Company by
Executive pursuant to SECTION 1(a) of this Agreement (the "CONTRIBUTED
SHARES"). Other than the transfer restrictions set forth in, with respect
to the Contributed Shares consisting of Medtech Common Stock, the Medtech
Stockholders Agreement, and, with respect to the Contributed Shares
consisting of Denorex Common Stock, the Denorex Stockholders Agreement,
Executive owns the Contributed Shares free and clear of all liens,
pledges, voting agreements, voting trusts, proxy agreements, claims,
security interests, restrictions, mortgages, deeds of trust, tenancies,
and other possessory interests, conditional sale or other title retention
agreements, assessments, easements, rights of way, covenants,
restrictions, rights of first refusal, defects in title, encroachments,
and other burdens, options or encumbrances of any kind (collectively,
"LIENS"). There are no agreements, instruments or other arrangements
restricting or otherwise affecting the transfer of the Contributed Shares
or the other transactions contemplated by this SECTION 1. Upon the
consummation of the transactions contemplated by SECTION 1(a) of this
Agreement, the Company will receive good and valid title to the shares of
Medtech Common Stock and Denorex Common Stock being contributed to the
Company by Executive pursuant to SECTION 1(a) of this Agreement, free and
clear of all Liens.
(h) As an inducement to the Company to issue the Executive
Securities to Executive, and as a condition thereto, Executive
acknowledges and agrees that neither the issuance of the Executive
Securities to Executive nor any provision contained herein shall entitle
Executive to remain in the employment of the Company, Employer or any of
their respective Subsidiaries or affect the right of the Company or
Employer to terminate Executive's employment at any time for any reason,
subject to the remaining terms of this Agreement and any other agreement
between Executive and any such parties.
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2. VESTING OF CARRIED COMMON UNITS.
(a) The Co-Invest Units acquired by Executive shall be vested upon
the acquisition thereof. The Carried Common Units (including the Standard
Carried Common Units which shall vest on a basis proportionate to the
total number of Carried Common Units) shall be subject to vesting in the
manner specified in this SECTION 2.
(b) Except as otherwise provided in this SECTION 2, the Carried
Common Units shall become vested in accordance with the following
schedule, if and only if as of each such date provided below, Executive
has been continuously employed by the Company, Employer or any of their
respective Subsidiaries from the Effective Date through and including
such date:
CUMULATIVE PERCENTAGE OF
DATE CARRIED COMMON UNITS VESTED
------------------------------------ ---------------------------
First Anniversary of Effective Date 20.00%
Second Anniversary of Effective Date 40.00%
Third Anniversary of Effective Date 60.00%
Fourth Anniversary of Effective Date 80.00%
Fifth Anniversary of Effective Date 100.00%
(c) If Executive ceases to be employed by the Company, Employer
and their respective Subsidiaries on any date other than an anniversary
date specified in the schedule above, the cumulative percentage of
Carried Common Units to become vested shall be determined on a PRO RATA
basis according to the number of days elapsed since the Effective Date,
or the most recent anniversary date, as the case may be.
(d) Upon the occurrence of a Sale of the Company, all Carried
Common Units which have not yet become vested shall become vested at the
time of the consummation of the Sale of the Company, if, as of such time,
Executive has been continuously employed by the Company, Employer or any
of their respective Subsidiaries from the Effective Date through and
including such date.
(e) Carried Common Units that have become vested ("VESTED CARRIED
COMMON UNITS") and the Co-Invest Common Units are referred to herein as
"VESTED COMMON UNITS." The Vested Common Units and the Class B Preferred
Units are collectively referred to herein as "VESTED UNITS." All Carried
Common Units that have not vested are referred to herein as "UNVESTED
COMMON UNITS."
3. REPURCHASE OPTIONS.
(a) SEPARATION REPURCHASE OPTION.
(i) Subject to the terms and conditions set forth in
this SECTION 3(a) and SECTION 5 below, the Company and the Equity
Investors will
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have the right to repurchase (the "SEPARATION REPURCHASE OPTION") from
Executive and his transferees (other than the Company and the Equity
Investors) all or any portion of (A) the Unvested Common Units, in the
event Executive ceases to be employed by the Company, Employer and their
respective Subsidiaries for any reason, and (B) the Vested Carried Common
Units and the Co-Invest Units, in the event of Executive's (I) death,
(II) Disability, (III) resignation other than for Good Reason from
Executive's employment with the Company, Employer or any of their
respective Subsidiaries, (IV) employment termination with Cause by the
Company, Employer or any of their respective Subsidiaries or (V)
employment termination when there is Substantial Underperformance (each a
"SEPARATION REPURCHASE EVENT"). The Separation Repurchase Option with
respect to Vested Units under SECTIONS 3(a)(i)(B)(I) and 3(a)(i)(B)(II)
shall be valid only if Executive fails to exercise the Separation Put
Right (if applicable) within the Put Election Period provided in SECTION
4(a)(i) below. The Company may assign its repurchase rights set forth in
this SECTION 3(a) to any Person.
(ii) For any Separation Repurchase Option, (A) the
purchase price for each Unvested Common Unit will be the lesser of (I)
Executive's Original Cost for such unit and (II) the Fair Market Value of
such unit as of the date of the Separation Repurchase Event, (B) the
purchase price for each Vested Common Unit will be the Fair Market Value
of such unit as of the date of the Separation Repurchase Event; PROVIDED
THAT, if Executive's employment is terminated with Cause, the purchase
price for each Vested Common Unit will be the lesser of (I) Executive's
Original Cost for such unit and (II) the Fair Market Value of such unit
as of the effective date of Executive's termination with Cause and (C)
the purchase price for each Class B Preferred Unit will be the Fair
Market Value of such unit as of the date of the Separation Repurchase
Event; PROVIDED THAT, if Executive's employment is terminated with Cause,
the purchase price for each Class B Preferred Unit will be the lesser of
(I) Executive's Original Cost for such unit and (II) the Fair Market
Value of such unit as of the effective date of Executive's termination
with Cause.
(iii) The Company (with the approval of the Board) may
elect to purchase all or any portion of the Unvested Common Units and/or
the Vested Units by delivering written notice (the "SEPARATION REPURCHASE
NOTICE") to the holder or holders of such securities within ninety (90)
days after the Separation Repurchase Event. The Separation Repurchase
Notice will set forth the number of Unvested Common Units and Vested
Units to be acquired from each holder, the aggregate consideration to be
paid for such units and the time and place for the closing of the
transaction. The number of Executive Securities to be repurchased by the
Company shall first be satisfied to the extent possible from the
Executive Securities held by Executive at the time of delivery of the
Separation Repurchase Notice. If the number of Executive Securities then
held by Executive is less than the total number of Executive Securities
that the Company has elected to purchase, the Company shall purchase the
remaining Executive Securities elected to be purchased from the Permitted
Transferee(s) of Executive Securities
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under this Agreement, PRO RATA according to the number of Executive
Securities held by such Permitted Transferee(s) at the time of delivery
of such Separation Repurchase Notice (determined as nearly as practicable
to the nearest unit). The number of Unvested Common Units and Vested
Units to be repurchased hereunder will be allocated among Executive and
the Permitted Transferee(s) of Executive Securities (if any) PRO RATA
according to the number of Executive Securities to be purchased from such
Person.
(iv) If for any reason the Company does not elect to
purchase all of the Executive Securities pursuant to the Separation
Repurchase Option, the Equity Investors shall be entitled to exercise the
Separation Repurchase Option for all or any portion of the Executive
Securities the Company has not elected to purchase (the "AVAILABLE
SEPARATION SECURITIES"). As soon as practicable after the Company has
determined that there will be Available Separation Securities, but in any
event within four months after the Separation Repurchase Event, the
Company shall give written notice (the "SEPARATION OPTION NOTICE") to the
Equity Investors setting forth the number of Available Separation
Securities and the purchase price for the Available Separation
Securities. The Equity Investors may elect to purchase any or all of the
Available Securities by giving written notice to the Company within 30
days after the Separation Option Notice has been given by the Company. If
the Equity Investors elect to purchase an aggregate number greater than
the number of Available Separation Securities, the Available Separation
Securities shall be allocated among the Equity Investors based upon the
number of Common Units owned by each Equity Investor. As soon as
practicable, and in any event within ten days after the expiration of the
30-day period set forth above, the Company shall notify each holder of
Executive Securities under this Agreement as to the number of units being
purchased from such holder by the Equity Investors (the "SUPPLEMENTAL
SEPARATION REPURCHASE NOTICE"). At the time the Company delivers the
Supplemental Repurchase Notice to such holder(s) of Executive Securities,
the Company shall also deliver written notice to each Equity Investor
setting forth the number of units such Equity Investor is entitled to
purchase, the aggregate purchase price and the time and place of the
closing of the transaction.
(v) The closing of the purchase of the Executive
Securities pursuant to the Separation Repurchase Option shall take place
on the date designated by the Company in the Separation Repurchase Notice
or Supplemental Separation Repurchase Notice, which date shall not be
more than 30 days nor less than five days after the delivery of the later
of either such notice to be delivered. The Company will pay for the
Executive Securities to be purchased by it pursuant to the Separation
Repurchase Option by first offsetting amounts outstanding under any bona
fide debts owed by Executive to the Company and will pay the remainder of
the purchase price by, at its option, (A) a check or wire transfer of
funds, (B) if the purchase is being made by a corporate successor to the
Company, the issuance of a subordinated promissory note of such successor
bearing interest at a rate equal to the prime rate (as published in THE
WALL STREET JOURNAL from time to time) and having such maturity as the
Company shall determine in good faith,
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not to exceed three years, (C) issuing in exchange for such securities a
number of the Company's Class A Preferred Units (having the rights and
preferences set forth in the LLC Agreement) equal to (I) the aggregate
portion of the repurchase price for such Executive Securities determined
in accordance with this SECTION 3(a) paid by the issuance of Class A
Preferred Units DIVIDED BY (II) 1,000, and for purposes of the LLC
Agreement each such Class A Preferred Unit shall as of its issuance be
deemed to have Capital Contributions made with respect to such Class A
Preferred Unit equal to $1,000, or (D) any combination of clauses (A),
(B) and (C) as the Board may elect in its discretion. Each Equity
Investor will pay for the Executive Securities purchased by it by a check
or wire transfer of immediately available funds. The Company and the
Equity Investors will be entitled to receive customary representations
and warranties from the sellers regarding such sale and to require that
all sellers' signatures be guaranteed.
By way of example only for the purpose of clarifying the mechanics of
SECTION 3(a)(v)(C), if the Company intends to repurchase 20,025,000
Common Units by issuance of Class A Preferred Units and the aggregate
repurchase price for such Common Units determined in accordance with this
SECTION 3(a) is $400,500, then the Company would issue to Executive 400.5
Class A Preferred Units, and for purposes of the LLC Agreement each whole
Class A Preferred Unit issued to Executive would as of its issuance be
deemed to have Capital Contributions made for such Class A Preferred Unit
of $1,000, and the Capital Contributions made for the one-half Class A
Preferred Unit would be $500.
(vi) Notwithstanding anything to the contrary contained
in this Agreement, if the Fair Market Value of Executive Securities is
finally determined to be an amount at least 10% greater than the per unit
repurchase price for such unit of Executive Securities in the Separation
Repurchase Notice or in the Supplemental Separation Repurchase Notice,
each of the Company and the Equity Investors shall have the right to
revoke its exercise of the Separation Repurchase Option for all or any
portion of the Executive Securities elected to be repurchased by it by
delivering notice of such revocation in writing to the holders of
Executive Securities during the thirty-day period beginning on the date
that the Company and/or the Equity Investors are given written notice
that the Fair Market Value of a unit of Executive Securities was finally
determined to be an amount at least 10% greater than the per unit
repurchase price for Executive Securities set forth in the Separation
Repurchase Notice or in the Supplemental Separation Repurchase Notice.
(b) DILUTION REPURCHASE OPTION.
(i) Capitalized terms used in this SECTION 3(b) or
elsewhere in this Agreement but not otherwise defined herein shall have
the following meanings:
(A) "FOLLOW-ON PURCHASER EQUITY INVESTMENT" means
an investment as equity financing in the Company by one or
more
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Purchasers after the Effective Date pursuant to the
Purchase Agreement.
(B) "FOLLOW-ON PURCHASER EQUITY INVESTMENT
AMOUNT" means, with respect to any Follow-on Purchaser
Equity Investment, the aggregate dollar amount of such
Follow-on Purchaser Equity Investment.
(C) "FULLY-DILUTED EQUITY" means, at any time of
determination, the then outstanding Equity Securities plus
(without duplication) all shares or units (or other
denominations) of Equity Securities issuable, whether at
such time or upon the passage of time or the occurrence of
future events, upon the exercise, conversion or exchange of
all the then outstanding Equity Equivalents.
(D) "MAXIMUM NUMBER OF REPURCHASABLE STANDARD
CARRIED COMMON UNITS" means with respect to any Follow-on
Purchaser Equity Investment, the product of the Maximum
Percentage of Repurchaseable Standard Carried Common Units
MULTIPLIED BY the number of Standard Carried Common Units
owned by Executive immediately prior to the Follow-on
Purchaser Equity Investment.
(E) "MAXIMUM PERCENTAGE OF REPURCHASEABLE
STANDARD CARRIED COMMON UNITS" means, with respect to any
Follow-on Purchaser Equity Investment, the sum, expressed
as a percentage and rounded to the nearest one-hundredth of
a percent, of the Purchaser Equity Fund Dilution Percentage
PLUS the Purchaser Mezzanine Fund Dilution Percentage.
(F) "POST-MONEY EQUITY VALUE" means, with respect
to any Follow-on Purchaser Equity Investment, the sum of
the Pre-Money Equity Value PLUS the Follow-on Purchaser
Equity Investment Amount.
(G) "PRE-MONEY EQUITY VALUE" means, with respect
to any Follow-on Purchaser Equity Investment, the Fair
Market Value of the Fully-Diluted Equity of the Company
immediately prior to the Follow-on Purchaser Equity
Investment.
(H) "PURCHASER EQUITY FUND DILUTION PERCENTAGE"
means, with respect to any Follow-on Purchaser Equity
Investment, the quotient, expressed as a percentage and
rounded to the nearest one-hundredth of a percent, equal to
the Follow-on Purchaser Equity Investment Amount divided by
the Post-Money Equity Value.
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(I) "PURCHASER MEZZANINE FUND DILUTION FACTOR"
means 5.53%.
(J) "PURCHASER MEZZANINE FUND DILUTION
PERCENTAGE" means, with respect to any Follow-on Purchaser
Equity Investment, the product, expressed as a percentage
and rounded to the nearest one-hundredth of a percent, of
the Purchaser Equity Fund Dilution Percentage MULTIPLIED BY
the Purchaser Mezzanine Fund Dilution Factor.
(ii) Subject to the terms and conditions set forth in
this SECTION 3(b), in the event of any Follow-on Purchaser Equity
Investment, the Investors will have the right to repurchase (the
"DILUTION REPURCHASE OPTION") from Executive and his transferees
(including for this purpose the Company and, with respect to any Standard
Carried Common Units acquired other than pursuant to the Dilution
Repurchase Option, the Investors) all or any portion of Executive's
Maximum Number of Repurchasable Standard Carried Common Units as of such
Follow-on Purchaser Equity Investment.
(iii) For any Dilution Repurchase Option, the purchase
price for each Standard Carried Common Unit will be Executive's Original
Cost for such unit PLUS interest on such amount at a rate of 8% per annum
from the date hereof until the date of exercise of such Dilution
Repurchase Option.
(iv) As soon as practicable after the Company has
determined the Maximum Number of Repurchasable Standard Carried Common
Units, the Company shall give written notice (the "DILUTION REPURCHASE
OPTION NOTICE") to the Investors setting forth the Maximum Number of
Repurchasable Standard Carried Common Units and the purchase price
therefor. The Investors may elect to purchase any or all of the Maximum
Number of Repurchasable Standard Carried Common Units by giving written
notice to the Company within 30 days after the Dilution Repurchase Option
Notice has been given by the Company. If the Investors elect to purchase
an aggregate number greater than the Maximum Number of Repurchasable
Standard Carried Common Units, the Maximum Number of Repurchasable
Standard Carried Common Units shall be allocated among the Investors
based upon the number of Common Units owned by each Investor. As soon as
practicable, and in any event within 10 days after the expiration of the
30-day period set forth above, the Company shall notify each holder of
the Standard Carried Common Units as to the number of units being
purchased from such holder by the Investors, the aggregate consideration
to be paid for such units and the time and place for the closing of the
transaction (the "DILUTION REPURCHASE NOTICE"). At such time, the Company
shall also deliver written notice to each Investor setting forth the
number of units such Investor is entitled to purchase, the aggregate
purchase price and the time and place of the closing of the transaction.
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(v) The number of Standard Carried Common Units to be
repurchased by the Investors shall first be satisfied to the extent
possible from the Standard Carried Common Units held by Executive at the
time of delivery of the Dilution Repurchase Notice. If the number of
Standard Carried Common Units then held by Executive is less than the
total number of Standard Carried Common Units that the Investors have
elected to purchase, the Investors shall purchase the remaining Standard
Carried Common Units elected to be purchased from the Permitted
Transferee(s) of Executive Securities under this Agreement, PRO RATA
according to the number of Executive Securities held by such Permitted
Transferee(s) at the time of delivery of such Dilution Repurchase Notice
(determined as nearly as practicable to the nearest unit). The number of
Standard Carried Common Units, vested and unvested, to be repurchased
hereunder shall be allocated among Executive and the Permitted
Transferee(s) of Executive Securities (if any), PRO RATA according to the
number of Standard Carried Common Units to be purchased from such Person.
(vi) The closing of the purchase of the Standard Carried
Common Units pursuant to the Dilution Repurchase Option shall take place
on the date designated in the Dilution Repurchase Notice, which date
shall not be more than 30 days nor less than five days after the delivery
of such notice. Each Investor will pay for the Executive Securities to be
purchased by it pursuant to the Dilution Repurchase Option by a check or
wire transfer of immediately available funds. The Investors will be
entitled to receive customary representations and warranties from the
sellers regarding such sale and to require that all sellers' signatures
be guaranteed.
4. PUT RIGHTS.
(a) SEPARATION PUT RIGHT.
(i) In the event Executive ceases to be employed by the
Company, Employer and their respective Subsidiaries as a result of
Executive's (A) death, (B) Disability, (C) employment termination by the
Company, Employer or any of their respective Subsidiaries without Cause
when there is not Substantial Underperformance or (D) resignation from
his employment for Good Reason when there is not Substantial
Underperformance (each a "SEPARATION PUT EVENT"), Executive may elect
(the "SEPARATION PUT ELECTION"), subject to and in accordance with the
terms of this SECTION 4(a) AND SECTION 5 below, to require the Company to
purchase from Executive and the other holders of Executive Securities
under this Agreement all (but not less than all) of the Vested Units held
by Executive or such holders by delivering written notice (the
"SEPARATION PUT EXERCISE NOTICE") to the Company before the expiration of
the Put Election Period, specifying in such Separation Put Exercise
Notice the number and type of Vested Units required to be purchased by
the Company.
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(ii) For any Separation Put Election, the purchase price
for each Vested Unit will be the Fair Market Value of such unit as of the
Put Event Date.
(iii) The closing of the purchase of the Vested Units
pursuant to the Separation Put Election shall take place on a date to be
designated by the Company in the Company Separation Purchase Price
Notice, which date shall not be more than 30 days nor less than five days
after the Separation Put Exercise Notice is received by the Company. The
Company shall specify in writing to Executive the aggregate consideration
to be paid for such units and the time and place for the closing of the
transaction within five days after receipt of the Separation Put Exercise
Notice (the "COMPANY SEPARATION PURCHASE PRICE NOTICE"). The Company will
pay for the Vested Units to be purchased by it pursuant to the Separation
Put Election by first offsetting amounts outstanding under any bona fide
debts owed by Executive to the Company and will pay the remainder of the
purchase price by a check or wire transfer of immediately available
funds. The Company will be entitled to receive customary representations
and warranties from the sellers regarding such sale and to require that
all sellers' signatures be guaranteed.
(iv) Notwithstanding anything herein to the contrary, the
purchase obligations of the Company pursuant to this SECTION 4(a) shall
terminate if, prior to the consummation of such purchase obligations, a
Public Offering or a Sale of the Company occurs (such termination
effective as of the consummation of the Public Offering or Sale of the
Company, as the case may be).
(b) CLASS B PREFERRED UNIT PUT RIGHT. (i) Upon the occurrence of a
Preferred Put Event described in clause (ii) or (iii) of the definition
thereof, the Company shall deliver to Executive a written notice
notifying Executive of the occurrence of the Preferred Put Event (each of
such notice and the acknowledgement contemplated by clause (i) of the
definition of "Preferred Put Event," a "PREFERRED PUT EVENT NOTICE").
(ii) In the event of a Preferred Put Event, Executive may
elect (the "PREFERRED PUT ELECTION"), subject to and in accordance with
the terms of this SECTION 4(b) and SECTION 5 below, to require the
Company to purchase from Executive and the Permitted Transferee(s) of
Executive Securities all or any portion of the Maximum Number of Put
Class B Preferred Units held by Executive or such Permitted Transferee(s)
by delivering written notice (the "PREFERRED PUT EXERCISE NOTICE") to the
Company before the expiration of the Put Election Period, specifying in
such Preferred Put Exercise Notice the number of Class B Preferred Units
required to be purchased by the Company.
(iii) For any Preferred Put Election, the purchase price
for each Class B Preferred Unit to be purchased (limited to the Maximum
Number of Put Class B Preferred Units) will be the Fair Market Value of
such unit as of the date of the Preferred Put Event.
12
(iv) The closing of the purchase of the Class B Preferred
Units pursuant to the Preferred Put Election shall take place on a date
to be designated by the Company in the Company Preferred Purchase Price
Notice, which date shall not be more than 30 days nor less than five days
after the Preferred Put Exercise Notice is received by the Company. The
Company shall specify in writing to Executive the aggregate consideration
to be paid for such units and the time and place for the closing of the
transaction within five days after receipt of the Preferred Put Exercise
Notice (the "COMPANY PREFERRED PURCHASE PRICE NOTICE"). The Company will
pay for the Class B Preferred Units to be purchased by it pursuant to the
Preferred Put Election by first offsetting amounts outstanding under any
bona fide debts owed by Executive to the Company and will pay the
remainder of the purchase price by a check or wire transfer of
immediately available funds. The Company will be entitled to receive
customary representations and warranties from the sellers regarding such
sale and to require that all sellers' signatures be guaranteed.
5. LIMITATIONS ON CERTAIN REPURCHASES. Notwithstanding anything to
the contrary contained in this Agreement, all repurchases of Executive
Securities by the Company pursuant to any of the Separation Repurchase Option,
Separation Put Election or Preferred Put Election shall be subject to the
ability of the Company to pay the purchase price from its readily available cash
resources (without imposing any obligation on the Company to raise financing to
fund the repurchases) and also subject to applicable restrictions contained in
the
Delaware Limited Liability Company Act, the
Delaware General Corporation Law
or such other governing corporate or limited liability company law, applicable
federal and state securities laws, and in the Company's and its Subsidiaries'
debt and equity financing agreements. If any such restrictions prohibit (A) the
repurchase of Executive Securities hereunder which the Company is otherwise
entitled or required to make or (B) dividends or other transfers of funds from
one or more Subsidiaries to the Company to enable such repurchases, then the
Company may (in the case of the Separation Repurchase Option), or shall (in the
case of the Separation Put Election or Preferred Put Election), make such
repurchases as soon as it is permitted to make repurchases or receive funds from
Subsidiaries under such restrictions. Furthermore, in the event of a
disagreement in accordance with the terms herein relating to the determination
of the Fair Market Value of any Executive Securities, the time periods described
herein with respect to purchases of Executive Securities under SECTIONS 3 and 4
herein shall be tolled until any such determination has been made in accordance
with the terms provided herein.
6. RESTRICTIONS ON TRANSFER OF EXECUTIVE SECURITIES.
(a) TRANSFER OF EXECUTIVE SECURITIES. The holders of Executive
Securities shall not Transfer any interest in any units of Executive
Securities, except pursuant to (i) the provisions of SECTIONS 3 or 4
hereof, (ii) the provisions of Section 1 of the Securityholders Agreement
(a "PARTICIPATING SALE"), (iii) an Approved Sale (as defined in Section 4
of the Securityholders Agreement) or (iv) the provisions of SECTION 6(b)
below.
13
(b) CERTAIN PERMITTED TRANSFERS. The restrictions in this SECTION
6 will not apply with respect to any Transfer of (i) Executive Securities
made pursuant to applicable laws of descent and distribution or to such
Person's legal guardian in the case of any mental incapacity or among
such Person's Family Group or (ii) Common Units at such time as the
Investors sell Common Units in a Public Sale, but in the case of this
clause (ii) only an amount of units (the "TRANSFER AMOUNT") equal to the
lesser of (A) the sum of the number of Vested Carried Common Units and
Co-Invest Common Units owned by Executive and (B) the result of the
number of Common Units owned by Executive multiplied by a fraction (the
"TRANSFER FRACTION"), the numerator of which is the number of Common
Units sold by the Investors in such Public Sale and the denominator of
which is the total number of Common Units held by the Investors prior to
the Public Sale; PROVIDED that, if at the time of a Public Sale of units
by the Investors, Executive chooses not to Transfer the Transfer Amount,
Executive shall retain the right to Transfer an amount of Common Units at
a future date equal to the lesser of (x) the sum of the number of Vested
Carried Common Units and Co-Invest Common Units owned by Executive at
such future date and (y) the result of the number of Common Units owned
by Executive at such future date multiplied by the Transfer Fraction;
PROVIDED further that the restrictions contained in this SECTION 6 will
continue to be applicable to the Executive Securities after any Transfer
of the type referred to in clause (i) above and the transferees of such
Executive Securities must agree in writing to be bound by the provisions
of this Agreement and the LLC Agreement. Any transferee of Executive
Securities pursuant to a Transfer in accordance with the provisions of
clause (i) of this SECTION 6(b) is herein referred to as a "PERMITTED
TRANSFEREE." Upon the Transfer of Executive Securities pursuant to this
SECTION 6(b), the transferring holder of Executive Securities will
deliver a written notice (a "TRANSFER NOTICE") to the Company. In the
case of a Transfer pursuant to clause (i) hereof, the Transfer Notice
will disclose in reasonable detail the identity of the Permitted
Transferee(s).
(c) TERMINATION OF RESTRICTIONS. The restrictions set forth in
this SECTION 6 will continue with respect to each unit of Executive
Securities until the earlier of (i) the date on which such unit of
Executive Securities has been transferred in a Public Sale permitted by
this SECTION 6, or (ii) the consummation of a Sale of the Company.
7. ADDITIONAL RESTRICTIONS ON TRANSFER OF EXECUTIVE SECURITIES.
(a) LEGEND. The certificates representing the Executive Securities
will bear a legend in substantially the following form:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ORIGINALLY
ISSUED AS OF FEBRUARY 6, 2004, HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND MAY NOT
BE SOLD OR TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE ACT OR AN
14
EXEMPTION FROM REGISTRATION THEREUNDER. 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 COMPANY AND AN EXECUTIVE OF THE COMPANY
AND OTHER PARTIES, DATED AS OF FEBRUARY 6, 2004. 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 Securities may
Transfer any Executive Securities (except pursuant to SECTION 3, SECTION
4 or SECTION 6(b) of this Agreement, Section 4 of the Securityholders
Agreement or an effective registration statement under the Securities
Act) without first delivering to the Company a written notice describing
in reasonable detail the proposed Transfer, together with 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. In addition, if the holder of the Executive Securities delivers
to the Company an opinion of counsel that no subsequent Transfer of such
Executive Securities shall require registration under the Securities Act,
the Company shall promptly upon such contemplated Transfer deliver new
certificates for such Executive Securities that do not bear the
Securities Act portion of the legend set forth in SECTION 7(a). If the
Company is not required to deliver new certificates for such Executive
Securities not bearing such legend, the holder thereof shall not Transfer
the same until the prospective transferee has confirmed to the Company in
writing its agreement to be bound by the conditions contained in this
SECTION 7.
PROVISIONS RELATING TO EMPLOYMENT
8. EMPLOYMENT. Employer agrees to employ Executive and Executive
accepts such employment for the period beginning as of the date hereof and
ending upon his separation pursuant to SECTION 8(c) hereof (the "EMPLOYMENT
PERIOD").
(a) POSITION AND DUTIES.
(i) During the Employment Period, Executive shall serve
as the Chief Sales Officer of Employer and shall have the normal duties,
responsibilities and authority implied by such position, subject to the
power of the Chief Executive Officer of Employer and the Board to expand
or limit such duties, responsibilities and authority and to override such
actions.
(ii) Executive shall report to the Chief Executive
Officer of Employer, and Executive shall devote his best efforts and,
except as otherwise requested or directed by the Chief Executive Officer
of Employer with respect to services to be provided by the Company or any
of its Subsidiaries pursuant to the
15
Transition Services Agreement, his full business time and attention to
the business and affairs of the Company, Employer and their Subsidiaries.
(b) SALARY, BONUS AND BENEFITS. During the Employment Period,
Employer will pay Executive a base salary of $218,000 per annum (the
"ANNUAL BASE SALARY"). The existing Medtech/Denorex bonus program will
continue through the fiscal year ending March 31, 2004. Beginning with
fiscal year 2005, the Board shall develop a new bonus program which may
incorporate subjective and objective criteria for bonus achievement
different from the criteria contained in the existing Medtech/Denorex
bonus program; PROVIDED, HOWEVER, THAT the maximum bonus payment
potentials to Executive will not be decreased from those provided in the
existing Medtech/Denorex bonus program. In addition, during the
Employment Period, Executive will be entitled to such other benefits
approved by the Board and made available to the senior management of the
Company, Employer and their Subsidiaries, which shall include vacation
time (in an amount consistent with past practice) and medical, dental,
life and disability insurance. The Board, on a basis consistent with past
practice, shall review the Annual Base Salary of Executive and may
increase the Annual Base Salary by such amount as the Board, in its sole
discretion, shall deem appropriate. The term "Annual Base Salary" as used
in this Agreement shall refer to the Annual Base Salary as it may be so
increased.
(c) SEPARATION. The Employment Period will continue until (i)
Executive's death, Disability or resignation from employment with the
Company, Employer and their respective Subsidiaries or (ii) the Company,
Employer and their respective Subsidiaries decide to terminate
Executive's employment with or without Cause. If (A) Executive's
employment is terminated without Cause pursuant to clause (ii) above or
(B) Executive resigns from employment with the Company, Employer or any
of their respective Subsidiaries for Good Reason, then during the period
commencing on the date of termination of the Employment Period and ending
on the first anniversary of the date of termination (the "SEVERANCE
PERIOD"), Employer shall pay to Executive, in equal installments on the
Employer's regular salary payment dates, an aggregate amount equal to (I)
his Annual Base Salary, plus (II) an amount equal to the annual bonus, if
any, paid or payable to Executive by Employer for the last fiscal year
ended prior to the date of termination. In addition, if Executive is
entitled on the date of termination to coverage under the medical and
prescription portions of the Welfare Plans, such coverage shall continue
for Executive and Executive's covered dependents for a period ending on
the first anniversary of the date of termination at the active employee
cost payable by Executive with respect to those costs paid by Executive
prior to the date of termination; PROVIDED, that this coverage will count
towards the depletion of any continued health care coverage rights that
Executive and Executive's dependents may have pursuant to the
Consolidated Omnibus Budget Reconciliation Act of 1985, as amended
("COBRA"); PROVIDED further, that Executive's or Executive's covered
dependents' rights to continued health care coverage pursuant to this
SECTION 8(c) shall terminate at the time Executive or Executive's covered
dependents become covered, as described in COBRA, under
16
another group health plan, and shall also terminate as of the date
Employer ceases to provide coverage to its senior executives generally
under any such Welfare Plan. Notwithstanding the foregoing, (I) Executive
shall not be entitled to receive any payments or benefits pursuant to
this SECTION 8(c) unless Executive has executed and delivered to Employer
a general release in form and substance satisfactory to Employer and (II)
Executive shall be entitled to receive such payments and benefits only so
long as Executive has not breached the provisions of SECTIONS 9 or 10
hereof. The release described in the foregoing sentence shall not require
Executive to release any claims for any vested employee benefits, workers
compensation benefits covered by insurance or self-insurance, claims to
indemnification to which Executive may be entitled under the Company's or
its Subsidiaries' certificate(s) of incorporation, by-laws or under any
of the Company's or its Subsidiaries' directors or officers insurance
policy(ies) or applicable law, or equity claims to contribution from the
Company or its Subsidiaries or any other Person to which Executive is
entitled as a matter of law in respect of any claim made against
Executive for an alleged act or omission in Executive's official capacity
and within the scope of Executive's duties as an officer, director or
employee of the Company or its Subsidiaries. Not later than eighteen (18)
months following the termination of Executive's employment, the Company
and its Subsidiaries for which the Executive has acted in the capacity of
a senior manager, shall sign and deliver to Executive a release of claims
that the Company or its Subsidiaries has against Executive; PROVIDED
THAT, such release shall not release any claims that the Company or its
Subsidiaries commenced prior to the date of the release(s), any claims
relating to matters actively concealed by Executive, any claims to
contribution from Executive to which the Company or its Subsidiaries are
entitled as a matter of law or any claims arising out of mistaken
indemnification by the Company or any of its Subsidiaries. Except as
otherwise provided in this SECTION 8(c) or in the Employer's employee
benefit plans or as otherwise required by applicable law, Executive shall
not be entitled to any other salary, compensation or benefits after
termination of Executive's employment with Employer.
9. CONFIDENTIAL INFORMATION.
(a) OBLIGATION TO MAINTAIN CONFIDENTIALITY. Executive acknowledges
that the information, observations and data (including trade secrets)
obtained by him during the course of his performance under this Agreement
concerning the business or affairs of the Company, Employer and their
respective Subsidiaries and Affiliates ("CONFIDENTIAL INFORMATION") are
the property of the Company, Employer or such Subsidiaries and
Affiliates, including information concerning acquisition opportunities in
or reasonably related to the Company's and Employer's business or
industry of which Executive becomes aware during the Employment Period.
Therefore, Executive agrees that he will not disclose to any unauthorized
Person or use for his own account (for his commercial advantage or
otherwise) any Confidential Information without the Board's written
consent, unless and to the extent that the Confidential Information, (i)
becomes generally known to and available for use by the public other than
as a result of Executive's
17
acts or omissions to act, (ii) was known to Executive prior to
Executive's employment with Employer, the Company or any of their
Subsidiaries and Affiliates or (iii) is required to be disclosed pursuant
to any applicable law, court order or other governmental decree.
Executive shall deliver to the Company at a Separation, or at any other
time the Company may request, all memoranda, notes, plans, records,
reports, computer tapes, printouts and software and other documents and
data (and copies thereof) relating to the Confidential Information, Work
Product (as defined below) or the business of the Company, Employer and
their respective Subsidiaries and Affiliates (including, without
limitation, all acquisition prospects, lists and contact information)
which he may then possess or have under his control.
(b) OWNERSHIP OF PROPERTY. Executive acknowledges that all
discoveries, concepts, ideas, inventions, innovations, improvements,
developments, methods, processes, programs, designs, analyses, drawings,
reports, patent applications, copyrightable work and mask work (whether
or not including any Confidential Information) and all registrations or
applications related thereto, all other proprietary information and all
similar or related information (whether or not patentable) that relate to
the Company's, Employer's or any of their respective Subsidiaries' or
Affiliates' actual or anticipated business, research and development, or
existing or future products or services and that are conceived,
developed, contributed to, made, or reduced to practice by Executive
(either solely or jointly with others) while employed by the Company,
Employer or any of their respective Subsidiaries or Affiliates (including
any of the foregoing that constitutes any proprietary information or
records) ("WORK PRODUCT") belong to the Company, Employer or such
Subsidiary or Affiliate and Executive hereby assigns, and agrees to
assign, all of the above Work Product to the Company, Employer or to such
Subsidiary or Affiliate. Any copyrightable work prepared in whole or in
part by Executive in the course of his work for any of the foregoing
entities shall be deemed a "work made for hire" under the copyright laws,
and the Company, Employer or such Subsidiary or Affiliate shall own all
rights therein. To the extent that any such copyrightable work is not a
"work made for hire," Executive hereby assigns and agrees to assign to
the Company, Employer or such Subsidiary or Affiliate all right, title,
and interest, including without limitation, copyright in and to such
copyrightable work. Executive shall promptly disclose such Work Product
and copyrightable work to the Board and perform all actions reasonably
requested by the Board (whether during or after the Employment Period) to
establish and confirm the Company's, Employer's or such Subsidiary's or
Affiliate's ownership (including, without limitation, assignments,
consents, powers of attorney, and other instruments).
(c) THIRD PARTY INFORMATION. Executive understands that the
Company, Employer and their respective Subsidiaries and Affiliates will
receive from third parties confidential or proprietary information
("THIRD PARTY INFORMATION") subject to a duty on the Company's,
Employer's and their respective Subsidiaries' and Affiliates' part to
maintain the confidentiality of such information and to use it only for
certain limited purposes. During the Employment Period and thereafter,
18
and without in any way limiting the provisions of SECTION 9(a) above,
Executive will hold Third Party Information in the strictest confidence
and will not disclose to anyone (other than personnel and consultants of
the Company, Employer or their respective Subsidiaries and Affiliates who
need to know such information in connection with their work for the
Company, Employer or any of their respective Subsidiaries and Affiliates)
or use, except in connection with his work for the Company, Employer or
any of their respective Subsidiaries and Affiliates, Third Party
Information unless expressly authorized by a member of the Board (other
than himself if Executive is on the Board) in writing.
(d) USE OF INFORMATION OF PRIOR EMPLOYERS. During the Employment
Period and thereafter, Executive will not improperly use or disclose any
confidential information or trade secrets, if any, of any former
employers or any other Person to whom Executive has an obligation of
confidentiality, and will not bring onto the premises of the Company,
Employer or any of their respective Subsidiaries or Affiliates any
unpublished documents or any property belonging to any former employer or
any other Person to whom Executive has an obligation of confidentiality
unless consented to in writing by the former employer or Person.
Executive will use in the performance of his duties only information
which is (i) generally known and used by persons with training and
experience comparable to Executive's and which is (x) common knowledge in
the industry or (y) otherwise legally in the public domain, (ii)
otherwise provided or developed by the Company, Employer or any of their
respective Subsidiaries or Affiliates or (iii) in the case of materials,
property or information belonging to any former employer or other Person
to whom Executive has an obligation of confidentiality, approved for such
use in writing by such former employer or Person.
10. NONCOMPETITION AND NONSOLICITATION. Executive acknowledges that in
the course of his employment with Employer he will become familiar with the
Company's, Employer's and their respective Subsidiaries' trade secrets and with
other confidential information concerning the Company, Employer and such
Subsidiaries and that his services will be of special, unique and extraordinary
value to the Company, Employer and such Subsidiaries. Therefore, Executive
agrees that:
(a) NONCOMPETITION. During the Employment Period and also during
the period commencing on the date of termination of the Employment Period
and ending on the first anniversary of the date of termination, he shall
not anywhere in the United States, directly or indirectly, own, manage,
control, participate in, consult with, render services for, or in any
manner engage in any business (i) competing with a brand of the Company,
Employer, Medtech, Denorex, any business acquired by such Persons, or any
Subsidiaries of such Persons, representing 10% or more of the
consolidated revenues or EBITDA of the Company and its Subsidiaries for
the trailing 12 months ending on the last day of the last completed
calendar month immediately preceding the date of termination of the
Employment Period or (ii) in which the Company, Employer Medtech,
Denorex, any business acquired by such Persons, or any Subsidiaries of
such Persons has conducted discussions or has requested and received
information
19
relating to the acquisition of such business by such Person (x) within
one year prior to the Separation and (y) during the Severance Period, if
any. Nothing herein shall prohibit Executive from being a passive owner
of not more than 2% of the outstanding stock of any class of a
corporation that is publicly traded, so long as Executive has no active
participation in the business of such corporation.
(b) NONSOLICITATION. During the Employment Period and also during
the period commencing on the date of termination of the Employment Period
and ending on the first anniversary of the date of termination, Executive
shall not directly or indirectly through another entity (i) induce or
attempt to induce any employee of the Company, Employer or any of their
respective Subsidiaries to leave the employ of the Company, Employer or
any such Subsidiary, or in any way interfere with the relationship
between the Company, Employer and any of their respective Subsidiaries
and any employee thereof, (ii) hire any person who was an employee of the
Company, Employer or any of their respective Subsidiaries within 180 days
after such person ceased to be an employee of the Company, Employer or
any of their respective Subsidiaries (PROVIDED, HOWEVER, THAT such
restriction shall not apply for a particular employee if the Company has
provided its written consent to such hire, which consent, in the case of
any person who was not a key employee of the Company, Employer or any of
their respective Subsidiaries, shall not be unreasonably withheld), (iii)
induce or attempt to induce any customer, supplier, licensee or other
business relation of the Company, Employer or any of their respective
Subsidiaries to cease doing business with the Company, Employer or any
such Subsidiary or in any way interfere with the relationship between any
such customer, supplier, licensee or business relation and the Company,
Employer or any Subsidiary or (iv) directly or indirectly acquire or
attempt to acquire an interest in any business relating to the business
of the Company, Employer or any of their respective Subsidiaries and with
which the Company, Employer and any of their respective Subsidiaries has
conducted discussions or has requested and received information relating
to the acquisition of such business by the Company, Employer or any of
their respective Subsidiaries in the two year period immediately
preceding a Separation.
(c) ENFORCEMENT. If, at the time of enforcement of SECTION 9 or
this SECTION 10, 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, Employer, their respective Subsidiaries or their
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
20
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).
(d) ADDITIONAL ACKNOWLEDGMENTS. Executive acknowledges that the
provisions of this SECTION 10 are in consideration of: (i) employment
with the Employer, (ii) the issuance of the Executive Securities by the
Company and (iii) additional good and valuable consideration as set forth
in this Agreement. In addition, Executive agrees and acknowledges that
the restrictions contained in SECTION 9 and this SECTION 10 do not
preclude Executive from earning a livelihood, nor do they unreasonably
impose limitations on Executive's ability to earn a living. In addition,
Executive acknowledges (i) that the business of the Company, Employer and
their respective Subsidiaries will be conducted throughout the United
States, (ii) notwithstanding the state of incorporation or principal
office of the Company, Employer or any of their respective Subsidiaries,
or any of their respective executives or employees (including the
Executive), it is expected that the Company and Employer will have
business activities and have valuable business relationships within its
industry throughout the United States and (iii) as part of his
responsibilities, Executive will be traveling throughout the United
States in furtherance of Employer's business and its relationships.
Executive agrees and acknowledges that the potential harm to the Company
and Employer of the non-enforcement of SECTION 9 and this SECTION 10
outweighs any potential harm to Executive of its enforcement by
injunction or otherwise. Executive acknowledges that he has carefully
read this Agreement and has given careful consideration to the restraints
imposed upon Executive by this Agreement, and is in full accord as to
their necessity for the reasonable and proper protection of confidential
and proprietary information of the Company, Employer and their
Subsidiaries now existing or to be developed in the future. Executive
expressly acknowledges and agrees that each and every restraint imposed
by this Agreement is reasonable with respect to subject matter, time
period and geographical area.
GENERAL PROVISIONS
11. DEFINITIONS.
"AFFILIATE" means, (i) with respect to any Person, any Person that
controls, is controlled by or is under common control with such Person or an
Affiliate of such Person, and (ii) with respect to any Investor, any general or
limited partner of such Investor, any employee or owner of any such partner, or
any other Person controlling, controlled by or under common control with such
Investor.
"BOARD" means the Company's board of managers (or its equivalent).
"CAUSE" means (i) the intentional or knowing commission of a felony or a
crime involving moral turpitude or the commission of any other act or omission
involving dishonesty or fraud with respect to the Company, Employer or any of
their respective Subsidiaries or any of their customers or suppliers, (ii)
substantial and repeated failure to perform duties of the office held by
Executive as reasonably directed by the Board, (iii)
21
gross negligence or willful misconduct with respect to the Company, Employer or
any of their respective Subsidiaries, (iv) conduct tending to bring the Company,
Employer or any of their respective Subsidiaries into substantial public
disgrace or disrepute or (v) any breach by Executive of SECTIONS 9 or 10 of this
Agreement. Notwithstanding the foregoing, if it is alleged or determined that
actions taken by Executive caused the Company, Employer or any of their
respective Subsidiaries to engage in illegal activities or operations, the
taking of such actions by Executive shall not constitute "Cause" hereunder if
Executive had a reasonable and good faith belief that such actions were not in
violation of any law, rule, regulation or court order, were in the best
interests of the Company, Employer and their respective Subsidiaries and were
taken in the ordinary course of business.
"CLASS A PREFERRED UNITS" means the Class A Preferred Units, as defined
in the LLC Agreement.
"CLOSING DATE" has the meaning set forth in the Stock Purchase Agreement.
"CREDIT AGREEMENT" means that certain Credit Agreement dated as of the
date hereof, by and among Medtech Acquisition, Inc., Denorex Acquisition, Inc.,
Xxxxxxx Xxxxx Capital, a division of Xxxxxxx Xxxxx Business Financial Services
Inc., the financial institutions parties thereto and the other parties named
therein, as the same may be amended, supplemented or otherwise modified from
time to time, at any renewal, extension, refunding, restructuring, replacement
or refinancing thereof (whether with the original agent or lenders or another
agent or agents or other lenders and whether provided under the original Credit
Agreement or any other credit agreement).
"DEBT" has the meaning set forth in the Credit Agreement.
"DENOREX" means The Denorex Company, a
Delaware corporation.
"DENOREX COMMON STOCK" means the Class A Common Stock, par value $0.01
per share, of Denorex.
"DENOREX COMMON STOCK VALUE" means the portion of the Denorex Equity
Purchase Price allocable to each share of Denorex Common Stock.
"DENOREX EQUITY PURCHASE PRICE" has the meaning set forth in the Stock
Purchase Agreement.
"DENOREX STOCKHOLDERS AGREEMENT" means the Stockholders Agreement of The
Denorex Company, dated November 6, 2006, among Denorex and its stockholders.
"DISABILITY" means the disability of Executive caused by any physical or
mental injury, illness or incapacity as a result of which Executive is unable to
effectively perform the essential functions of Executive's duties as determined
by the Board in good faith.
22
"DISTRIBUTION OFFSET AND CONTRIBUTION OBLIGATION" means the offset and
contribution obligations set forth in Section 4.1(b) of the LLC Agreement with
respect to Executive's distributions thereunder.
"EBITDA" has the meaning set forth in the Credit Agreement.
"EQUITY EQUIVALENTS" means, at any time, without duplication with any
other Equity Securities or Equity Equivalents, any rights, warrants, options,
convertible securities or Debt, exchangeable securities or Debt, or other
rights, exercisable for or convertible or exchangeable into, directly or
indirectly, Equity Securities and securities convertible or exchangeable into
Equity Securities, whether at the time of issuance or upon the passage of time
or the occurrence of a future event.
"EQUITY SECURITIES" means all shares or units of Common Units, Class A
Preferred Units, Class B Preferred Units and other Units (as defined in the LLC
Agreement) or other equity interests in the Company (including other classes or
series thereof having different rights) as may be authorized for issuance by the
Company from time to time. Equity Securities will also include equity of the
Company (or a corporate successor to the Company or a Subsidiary of the Company)
issued with respect to Equity Securities (i) by way of a unit split, unit
dividend, conversion, or other recapitalization, (ii) by way of reorganization
or recapitalization of the Company in connection with the incorporation of a
corporate successor in accordance with Section 15.7 of the LLC Agreement, or
(iii) by way of a distribution of securities of a Subsidiary of the Company to
the members of the Company following or with respect to a Subsidiary Public
Offering.
"EXECUTIVE SECURITIES" means all Class B Preferred Units and Common Units
acquired by Executive hereunder. Executive Securities will continue to be
Executive Securities in the hands of any holder other than Executive (except for
the Company, the Investors and transferees in a Public Sale, which transferees,
other than as provided in SECTION 3(b)(ii) above, shall not be subject to the
provisions of this Agreement with respect to such securities), and except as
otherwise provided herein, each such other holder of Executive Securities will
succeed to all rights and obligations attributable to Executive as a holder of
Executive Securities hereunder. Executive Securities (or, individually, any
particular type of equity security included therein) will also include equity
securities of the Company (or a corporate successor to the Company or a
Subsidiary of the Company) issued with respect to Executive Securities (or,
individually, any particular type of equity security included therein) (i) by
way of a unit split, unit dividend, conversion, or other recapitalization, (ii)
by way of reorganization or recapitalization of the Company in connection with
the incorporation of a corporate successor in accordance with Section 15.7 of
the LLC Agreement or (iii) by way of a distribution of securities of a
Subsidiary of the Company to the members of the Company following or with
respect to a Subsidiary Public Offering. For the avoidance of doubt, all
Unvested Common Units shall remain Unvested Common Units after a Transfer
thereof, unless such Transfer is to the Company, an Investor or a transferee in
a Public Sale.
"FAIR MARKET VALUE" of each unit of Executive Securities or other Equity
Securities, as the case may be (as applicable, the "APPLICABLE SECURITIES"),
means the
23
average of the closing prices of the sales of such Applicable Securities on all
securities exchanges on which such Applicable Securities 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 such Applicable Securities are 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 such Applicable
Securities are 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 such Applicable
Securities are 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 such Applicable Securities as determined in good faith by the Board
(taking into account, as of such date of determination, Executive's Distribution
Offset and Contribution Obligation). If Executive reasonably disagrees with such
determination, Executive shall deliver to the Board a written notice of
objection (an "OBJECTION") within thirty (30) days after delivery of the
Separation Repurchase Notice (or if no Separation Repurchase Notice is
delivered, then within thirty (30) days after delivery of the Supplemental
Separation Repurchase Notice), the Dilution Repurchase Notice, the Company
Separation Purchase Price Notice or the Company Preferred Purchase Price Notice,
as applicable. Upon receipt of Executive's Objection, the Board and Executive
will negotiate in good faith to agree on such Fair Market Value. If such
agreement is not reached within 20 days after the delivery of the Objection,
Fair Market Value shall be determined by an appraiser jointly selected by the
Board and Executive, which appraiser shall submit to the Board and Executive a
report within 30 days of its engagement setting forth such determination. If the
parties are unable to agree on an appraiser within 25 days after delivery of the
Objection, within seven days, each party shall submit the names of four
nationally recognized firms that are engaged in the business of valuing
non-public securities, and each party shall be entitled to strike two names from
the other party's list of firms, and the appraiser shall be selected by lot from
the remaining four investment banking firms. The expenses of such appraiser
shall be borne equally by Executive and the Company. The determination of such
appraiser as to Fair Market Value shall be final and binding upon all parties.
"FAMILY GROUP" means a Person's spouse and descendants (whether natural
or adopted), and any trust, family limited partnership, limited liability
company or other entity wholly owned, directly or indirectly, by such Person or
such Person's spouse and/or descendants that is and remains solely for the
benefit of such Person and/or such Person's spouse and/or descendants and any
retirement plan for such Person.
"GOOD REASON" means (i) any material diminution in Executive's position,
title, authority, powers, functions, duties or responsibilities with Employer,
(ii) the permanent relocation or transfer of Employer's principal office outside
a 30 mile radius from Irvington, New York or (iii) any failure of Employer to
comply with the Annual Base Salary and bonus provisions of SECTION 8(b) hereof;
PROVIDED, HOWEVER, that either or both of clauses (i) or (ii) above shall be
disregarded for purposes of this definition if Xxxxx
24
Xxxx, as the Chief Executive Officer of the Employer, consents to the
circumstances described in such clause(s).
"LLC AGREEMENT" means the Amended and Restated Limited Liability Company
Agreement of the Company, dated as of the date hereof, as amended from time to
time pursuant to its terms.
"MAXIMUM NUMBER OF PUT CLASS B PREFERRED UNITS" means the product of (i)
the number of Class B Preferred Units acquired by Executive hereunder and held
of record and beneficially by Executive as of the date of the Preferred Put
Event, multiplied by (ii) a fraction (A) the numerator of which is the number of
Class B Preferred Units that remain unpurchased by the Equity Investors on the
date of the Preferred Put Event pursuant to Section 1B of the Purchase Agreement
and (B) the denominator of which is the total number of Class B Preferred Units
to be purchased by the Equity Investors pursuant to Section 1B of the Purchase
Agreement.
"MEDTECH" means Medtech Holdings, Inc., a
Delaware corporation.
"MEDTECH COMMON STOCK" means the Class A-2 Common Stock, par value $0.01
per share, of Medtech.
"MEDTECH COMMON STOCK VALUE" means the portion of the Medtech Equity
Purchase Price allocable to each share of Medtech Common Stock.
"MEDTECH EQUITY PURCHASE PRICE" has the meaning set forth in the Stock
Purchase Agreement.
"MEDTECH STOCKHOLDERS AGREEMENT" means the Stockholders Agreement of
Medtech, dated March 1, 2001, among Medtech and its stockholders.
"ORIGINAL COST" means, with respect to each Common Unit purchased
hereunder, $0.10, and, with respect to each Class B Preferred Unit purchased
hereunder, $1,000 (each as proportionately adjusted for all subsequent unit
splits, unit dividends and other recapitalizations).
"PERSON" means an individual, a partnership, a limited liability company,
a corporation, an association, a joint stock company, a trust, a joint venture,
an unincorporated organization, investment fund, any other business entity and a
governmental entity or any department, agency or political subdivision thereof.
"PREFERRED PUT EVENT" means the first to occur of the following events:
(i) the receipt by Executive from the Equity Investors of an acknowledgment in
writing that the Equity Investors will not purchase all of the Class B Preferred
Units contemplated to be purchased by the Equity Investors pursuant to Section
1B of the Purchase Agreement, (ii) the execution and delivery of a definitive
agreement to consummate a Sale of the Company if at the time of such occurrence
the Equity Investors have not previously acquired all of the Class B Preferred
Units contemplated to be purchased by the Equity Investors pursuant to Section
1B of the Purchase Agreement or (iii) a Public Offering if
25
at the time of such occurrence the Equity Investors have not previously acquired
all of the Class B Preferred Units contemplated to be purchased by the Equity
Investors pursuant to Section 1B of the Purchase Agreement.
"PRO FORMA EBITDA" means, for each month during the applicable period, an
amount equal to (i) with respect to fiscal years 2004 through 2008, the monthly
EBITDA projections set forth on EXHIBIT B attached hereto, and (ii) with respect
to each fiscal year following fiscal year 2008, the monthly EBITDA projections
prepared by or on behalf of management of the Company and approved by the Board
or a committee thereof, as such EBITDA projections under clauses (i) and (ii)
above may subsequently be adjusted, with the approval of the Board, to reflect
subsequent acquisitions or dispositions of businesses or other events,
circumstances or occurrences that affect such projections. If EBITDA projections
are determined on an annual (and not a monthly) basis for any fiscal year, then
monthly EBITDA projections for each month during such fiscal year shall equal
the quotient of the annual EBITDA projection for such fiscal year divided by 12.
"PUBLIC OFFERING" means the sale in an underwritten public offering
registered under the Securities Act of equity securities of the Company or a
corporate successor to the Company.
"PUBLIC SALE" means (i) any sale pursuant to a registered public offering
under the Securities Act or (ii) any sale to the public pursuant to Rule 144
promulgated under the Securities Act effected through a broker, dealer or market
maker (other than pursuant to Rule 144(k) prior to a Public Offering).
"PURCHASER" has the meaning set forth in the Purchase Agreement.
"PUT ELECTION PERIOD" means the period of time commencing on the date, as
applicable, on which the Preferred Put Event Notice is received by Executive or
on which the Separation Put Event occurs and expiring at 5:00 p.m., Chicago,
Illinois time, on the 20th business day thereafter for all Separation Put Events
other than death and Disability. If the Separation Put Event is triggered by the
Executive's death or Disability, the Put Election Period will be extended to 45
business days.
"PUT EVENT DATE" means the date on which a Separation Put Event or a
Preferred Put Event, as applicable, occurs.
"SALE OF THE COMPANY" means any transaction or series of transactions
pursuant to which any Person or group of related Persons other than the
Investors or their Affiliates in the aggregate acquire(s) (i) equity securities
of the Company possessing the voting power (other than voting rights accruing
only in the event of a default, breach or event of noncompliance) to elect a
majority of the Board (whether by merger, consolidation, reorganization,
combination, sale or transfer of the Company's equity, securityholder or voting
agreement, proxy, power of attorney or otherwise) or (ii) all or substantially
all of the Company's assets determined on a consolidated basis; PROVIDED that a
Public Offering shall not constitute a Sale of the Company.
"SECURITIES ACT" means the Securities Act of 1933, as amended from time
to time.
26
"SECURITYHOLDERS AGREEMENT" means the Securityholders Agreement, dated as
of even date herewith, among the Company and certain of its securityholders, as
amended from time to time pursuant to its terms.
"SEPARATION" means the cessation of employment of Executive with the
Company, Employer and their respective Subsidiaries for any reason.
"STOCK PURCHASE AGREEMENT" means that certain Stock Purchase Agreement,
made as of January 7, 2004, among Medtech, Denorex, each stockholder of Medtech,
each stockholder of Denorex, Medtech Acquisition, Inc., and Denorex Acquisition,
Inc.
"SUBSIDIARY" means, with respect to any Person, any corporation, limited
liability company, partnership, association, or business entity of which (i) if
a corporation, a majority of the total voting power of shares of stock entitled
(without regard to the occurrence of any contingency) to vote in the election of
directors, managers, or trustees thereof is at the time owned or controlled,
directly or indirectly, by that Person or one or more of the other Subsidiaries
of that Person or a combination thereof, or (ii) if a limited liability company,
partnership, association, or other business entity (other than a corporation), a
majority of partnership or other similar ownership interest thereof is at the
time owned or controlled, directly or indirectly, by that Person or one or more
Subsidiaries of that Person or a combination thereof. For purposes hereof, a
Person or Persons shall be deemed to have a majority ownership interest in a
limited liability company, partnership, association, or other business entity
(other than a corporation) if such Person or Persons shall be allocated a
majority of limited liability company, partnership, association, or other
business entity gains or losses or shall be or control any managing director or
general partner of such limited liability company, partnership, association, or
other business entity. For purposes hereof, references to a "SUBSIDIARY" of any
Person shall be given effect only at such times that such Person has one or more
Subsidiaries, and, unless otherwise indicated, the term "Subsidiary" refers to a
Subsidiary of the Company.
"SUBSIDIARY PUBLIC OFFERING" means the sale in an underwritten public
offering registered under the Securities Act of equity securities of Employer or
another Subsidiary of the Company.
"SUBSTANTIAL UNDERPERFORMANCE" means the occurrence or existence of
either or both of the following: (i) at any time during the 12-month period
ending on and including the date of termination of the Employment Period (A) a
default, whether or not cured, caused by the failure to make any Material
Payment of any Debt (unless a clerical error caused such failure and such
failure was cured immediately upon discovery), (B) any other material event of
default (after giving effect to any applicable grace period) relating to any
Material Debt the effect of which default is to cause, or to permit the holder
or holders of such Material Debt (or a trustee or agent on behalf of such holder
or holders) to cause, any such Material Debt to become due prior to its stated
maturity (without regard to any subordination provisions relating thereto) or
(C) any Material Debt shall be declared to be due and payable, or required to be
prepaid other than by a regularly scheduled required prepayment, prior to the
stated maturity thereof or (ii) as of
27
the date of the termination of the Employment Period, EBITDA for the 12-month
period ending on the last day of the last completed calendar month immediately
preceding the date of the termination of the Employment Period equals an amount
less than 85% of aggregate Pro Forma EBITDA for the same 12-month period. For
purposes of this definition, "Debt" shall mean, as of any date of determination,
any Debt of the Company, Employer or any of their respective Subsidiaries;
"Material Payment" shall mean any payment equal to or greater than $100,000; and
"Material Debt" shall mean any Debt having an outstanding principal balance in
excess of $3 million.
"TCW/CRESCENT LENDERS" means collectively, TCW/Crescent Mezzanine
Partners III, L.P., a Delaware limited partnership, TCW/Crescent Mezzanine Trust
III, a Delaware business trust, and TCW/Crescent Mezzanine Partners III
Netherlands, L.P., a Delaware limited partnership, any of their Affiliates or
any investment fund for whom Trust Company of the West or any Affiliate of Trust
Company of the West acts as an account manager.
"TCW/CRESCENT PURCHASERS" means collectively, TCW/Crescent Mezzanine
Partners III, L.P., a Delaware limited partnership, TCW/Crescent Mezzanine Trust
III, a Delaware business trust, and TCW/Crescent Mezzanine Partners III
Netherlands, L.P., a Delaware limited partnership, any of their Affiliates or
any investment fund for whom Trust Company of the West or any Affiliate of Trust
Company of the West acts as an account manager.
"TRANSFER" means to sell, transfer, assign, pledge or otherwise dispose
of (whether with or without consideration and whether voluntarily or
involuntarily or by operation of law).
"TRANSITION SERVICES AGREEMENT" means that certain Transition Services
Agreement, dated as of even date herewith, by and among The Spic and Span
Company, a Delaware corporation, and Medtech.
"WELFARE PLANS" mean the welfare benefit plans, practices, policies and
programs provided by Employer to the extent applicable generally to other senior
executives of the Company.
12. 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:
IF TO EMPLOYER:
Medtech/Denorex Management, Inc.
00 Xxxxx Xxxxxxxx
Xxxxxxxxx, Xxx Xxxx 00000
Attention: Chief Executive Officer
WITH COPIES TO:
28
GTCR Xxxxxx Xxxxxx XX, L.L.C.
0000 Xxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000-0000
Attention: Xxxxx X. Xxxxxxx and Xxxxxxx X. Xxxxxx
Xxxxxxxx & Xxxxx LLP
000 Xxxx Xxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxx, P.C.
IF TO THE COMPANY:
Medtech/Denorex, LLC
00 Xxxxx Xxxxxxxx
Xxxxxxxxx, Xxx Xxxx 00000
Attention: Chief Executive Officer
WITH COPIES TO:
GTCR Xxxxxx Xxxxxx XX, L.L.C.
0000 Xxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000-0000
Attention: Xxxxx X. Xxxxxxx and Xxxxxxx X. Xxxxxx
Xxxxxxxx & Xxxxx LLP
000 Xxxx Xxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxx, P.C.
IF TO EXECUTIVE:
Xxxxxx X. Xxxxxx
00 Xxxxx Xxxx
Xxxx Xxxxxx, Xxx Xxxx 00000
WITH A COPY TO:
Ford Xxxxxx Xxxxxxxx Xxxxxxxx & Gleser LLP
Xxxx Xxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: Xxxxx X. Xxxxxx
IF TO THE INVESTORS:
See the attached INVESTOR NOTICE SCHEDULE.
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
29
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.
13. GENERAL PROVISIONS.
(a) TRANSFERS IN VIOLATION OF AGREEMENT. Any Transfer or attempted
Transfer of any Executive Securities 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
Securities as the owner of such equity 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) NO STRICT CONSTRUCTION. The language used in this Agreement
shall be deemed to be the language chosen by the parties hereto to
express their mutual intent, and no rule of strict construction shall be
applied against any party.
(e) COUNTERPARTS. This Agreement may be executed and delivered in
separate counterparts (including by means of facsimile), each of which is
deemed to be an original and all of which taken together constitute one
and the same agreement.
(f) 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 Investors and their respective successors
and assigns (including subsequent holders of Executive Securities);
provided that the rights and obligations of Executive under this
Agreement shall not be assignable except in connection with a permitted
transfer of Executive Securities hereunder.
(g) CHOICE OF LAW. The law of the State of Delaware will govern
all questions concerning the relative rights of the Company, Employer and
its securityholders. All other questions concerning the construction,
validity and interpretation of this Agreement and the exhibits hereto
will be governed by and construed in accordance with the internal laws of
the State of Delaware, without
30
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.
(h) MUTUAL WAIVER OF JURY TRIAL. BECAUSE DISPUTES ARISING IN
CONNECTION WITH COMPLEX TRANSACTIONS ARE MOST QUICKLY AND ECONOMICALLY
RESOLVED BY AN EXPERIENCED AND EXPERT PERSON AND THE PARTIES WISH
APPLICABLE STATE AND FEDERAL LAWS TO APPLY (RATHER THAN ARBITRATION
RULES), THE PARTIES DESIRE THAT THEIR DISPUTES BE RESOLVED BY A JUDGE
APPLYING SUCH APPLICABLE LAWS. THEREFORE, TO ACHIEVE THE BEST COMBINATION
OF THE BENEFITS OF THE JUDICIAL SYSTEM AND OF ARBITRATION, EACH PARTY TO
THIS AGREEMENT HEREBY WAIVES ALL RIGHTS TO TRIAL BY JURY IN ANY ACTION,
SUIT, OR PROCEEDING BROUGHT TO RESOLVE ANY DISPUTE BETWEEN OR AMONG ANY
OF THE PARTIES HERETO, WHETHER ARISING IN CONTRACT, TORT, OR OTHERWISE,
ARISING OUT OF, CONNECTED WITH, RELATED OR INCIDENTAL TO THIS AGREEMENT,
THE TRANSACTIONS CONTEMPLATED HEREBY AND/OR THE RELATIONSHIP ESTABLISHED
AMONG THE PARTIES HEREUNDER.
(i) EXECUTIVE'S COOPERATION. During the Employment Period and
thereafter, Executive shall cooperate with the Company, Employer and
their respective Subsidiaries and Affiliates in any disputes with third
parties, internal investigation or administrative, regulatory or judicial
proceeding as reasonably requested by the Company (including, without
limitation, Executive being available to the Company upon reasonable
notice for interviews and factual investigations, appearing at the
Company's request to give testimony without requiring service of a
subpoena or other legal process, volunteering to the Company all
pertinent information and turning over to the Company all relevant
documents which are or may come into Executive's possession, all at times
and on schedules that are reasonably consistent with Executive's other
permitted activities and commitments). In the event the Company requires
Executive's cooperation in accordance with this paragraph after the
Employment Period, the Company shall reimburse Executive for reasonable
travel expenses (including lodging and meals, upon submission of
receipts) and compensate Executive for his time at a rate that is
mutually agreeable to Executive and the Company.
(j) REMEDIES. Each of the parties to this Agreement (and the
Investors as third-party beneficiaries) will be entitled to enforce its
rights under this Agreement specifically, to recover damages and costs
(including attorney's fees) caused by any breach of any provision of this
Agreement and to exercise all other rights existing in its favor. The
parties hereto agree and acknowledge that money damages may not be an
adequate remedy for any breach of the provisions of this Agreement and
that any party may in its sole discretion apply to any court of law or
equity of competent jurisdiction (without posting any bond or deposit)
for
31
specific performance and/or other injunctive relief in order to enforce
or prevent any violations of the provisions of this Agreement.
(k) AMENDMENT AND WAIVER. The provisions of this Agreement may be
amended and waived only with the prior written consent of the Company,
Employer, Executive and the Majority Holders (as defined in the Purchase
Agreement).
(l) INSURANCE. The Company, at its discretion, may apply for and
procure in its own name and for its own benefit life and/or disability
insurance on Executive in any amount or amounts considered available.
Executive agrees to cooperate in any medical or other examination, supply
any information, and to execute and deliver any applications or other
instruments in writing as may be reasonably necessary to obtain and
constitute such insurance.
(m) BUSINESS DAYS. If any time period for giving notice or taking
action hereunder expires on a day which is a Saturday, Sunday or holiday
in the state in which the Company's chief executive office is located,
the time period shall be automatically extended to the business day
immediately following such Saturday, Sunday or holiday.
(n) INDEMNIFICATION AND REIMBURSEMENT OF PAYMENTS ON BEHALF OF
EXECUTIVE. The Company and its Subsidiaries shall be entitled to deduct
or withhold from any amounts owing from the Company or any of its
Subsidiaries to Executive any federal, state, local or foreign
withholding taxes, excise taxes, or employment taxes ("TAXES") imposed
with respect to Executive's compensation or other payments from the
Company or any of its Subsidiaries or Executive's ownership interest in
the Company, including, without limitation, wages, bonuses, dividends,
the receipt or exercise of equity options and/or the receipt or vesting
of restricted equity. In the event the Company or any of its Subsidiaries
does not make such deductions or withholdings, Executive shall indemnify
the Company and its Subsidiaries for any amounts paid with respect to any
such Taxes, together with any interest, penalties and related expenses
thereto.
(o) REASONABLE EXPENSES. Employer agrees to pay the reasonable
fees and expenses of Executive's counsel arising in connection with the
negotiation and execution of this Agreement and the consummation of the
transactions contemplated by this Agreement.
(p) TERMINATION. This Agreement (except for the provisions of
SECTIONS 8(a) and (b)) shall survive a Separation and shall remain in
full force and effect after such Separation.
(q) ADJUSTMENTS OF NUMBERS. All numbers set forth herein that
refer to unit prices or amounts will be appropriately adjusted to reflect
unit splits, unit dividends, combinations of units and other
recapitalizations affecting the subject class of equity.
32
(r) DEEMED TRANSFER OF EXECUTIVE SECURITIES. If the Company
(and/or the Investors and/or any other Person acquiring securities) shall
make available, at the time and place and in the amount and form provided
in this Agreement, the consideration for the Executive Securities to be
repurchased in accordance with the provisions of this Agreement, then
from and after such time, the Person from whom such units are to be
repurchased shall no longer have any rights as a holder of such units
(other than the right to receive payment of such consideration in
accordance with this Agreement), and such units shall be deemed purchased
in accordance with the applicable provisions hereof and the Company
(and/or the Investors and/or any other Person acquiring securities) shall
be deemed the owner and holder of such units, whether or not the
certificates therefor have been delivered as required by this Agreement.
(s) NO PLEDGE OR SECURITY INTEREST. The purpose of the Company's
retention of Executive's certificates is solely to facilitate the
repurchase provisions set forth in SECTIONS 3 and 4 herein and Section 4
of the Securityholders Agreement and does not constitute a pledge by
Executive of, or the granting of a security interest in, the underlying
equity.
(t) RIGHTS GRANTED TO GTCR FUND VIII AND ITS AFFILIATES. Any
rights granted to GTCR Fund VIII, GTCR Fund VIII/B, GTCR Co-Invest and
their Affiliates hereunder may also be exercised (in whole or in part) by
their designees.
(u) SUBSIDIARY PUBLIC OFFERING. If, after consummation of a
Subsidiary Public Offering, the Company distributes securities of such
Subsidiary to members of the Company, then such securities will be
treated in the same manner as (but excluding any "preferred" features of
the units with respect to which they were distributed) the units with
respect to which they were distributed for purposes of SECTIONS 1(g), 2,
3, 4, 5, 6 and 7 hereof and, in connection therewith, such Subsidiary may
be treated as the Company for purposes of the Company's rights with
respect to such securities.
* * * * *
33
IN WITNESS WHEREOF, the parties hereto have executed this
Senior
Management Agreement on the date first written above.
MEDTECH/DENOREX, LLC
By: /S/ XXXXX X. XXXXX
-------------------------------
Name: Xxxxx X. Xxxxx
-----------------------------
Title: Secretary
----------------------------
MEDTECH/DENOREX MANAGEMENT, INC.
By: /S/ XXXXX X. XXXXXXXX
-------------------------------
Name: Xxxxx X. Xxxxxxxx
-----------------------------
Title: Vice President
----------------------------
/S/ XXXXXX X. XXXXXX
----------------------------------
XXXXXX X. XXXXXX
Agreed and Accepted:
GTCR FUND VIII, L.P.
By: GTCR Partners VIII, L.P.
Its: General Partner
By: GTCR Xxxxxx Xxxxxx XX, L.L.C.
Its: General Partner
By: /S/ XXXXX X. XXXXXXX
------------------------------------
Name: Xxxxx X. Xxxxxxx
Its: Principal
GTCR FUND VIII/B, L.P.
By: GTCR Partners VIII, L.P.
Its: General Partner
By: GTCR Xxxxxx Xxxxxx XX, L.L.C.
Its: General Partner
By: /S/ XXXXX X. XXXXXXX
------------------------------------
Name: Xxxxx X. Xxxxxxx
Its: Principal
[MEDTECH/DENOREX: SIGNATURE PAGE TO
SENIOR MANAGEMENT AGREEMENT
(XXXXXX X. XXXXXX)]
34
GTCR CO-INVEST II, L.P.
By: GTCR Xxxxxx Xxxxxx XX, L.L.C.
Its: General Partner
By: /S/ XXXXX X. XXXXXXX
------------------------------------
Name: Xxxxx X. Xxxxxxx
Its: Principal
GTCR CAPITAL PARTNERS, L.P.
By: GTCR Mezzanine Partners, L.P.
Its: General Partner
By: GTCR Partners VI, L.P.
Its: General Partner
By: GTCR Xxxxxx Xxxxxx, L.L.C.
Its: General Partner
By: /S/ XXXXX X. XXXXXXX
------------------------------------
Name: Xxxxx X. Xxxxxxx
Its: Principal
TCW/CRESCENT MEZZANINE PARTNERS III, L.P.
TCW/CRESCENT MEZZANINE TRUST III
TCW/CRESCENT MEZZANINE PARTNERS III
NETHERLANDS, L.P.
By: TCW/Crescent Mezzanine
Management III, L.L.C.,
its Investment Manager
By: TCW Asset Management Company,
its Sub-Advisor
By: /S/ XXXXXXX X. XXXXXXXX
------------------------------------
Name: Xxxxxxx X. Xxxxxxxx
Its: Managing Director
[MEDTECH/DENOREX: SIGNATURE PAGE TO
SENIOR MANAGEMENT AGREEMENT
(XXXXXX X. XXXXXX)]
35
EXHIBIT A
__________, 2004
PROTECTIVE ELECTION TO INCLUDE MEMBERSHIP
INTEREST IN GROSS INCOME PURSUANT TO
SECTION 83(b) OF THE INTERNAL REVENUE CODE
On February [__], 2004, the undersigned acquired a limited liability
company membership interest (the "MEMBERSHIP INTEREST") in Medtech/Denorex, LLC,
a Delaware limited liability company (the "COMPANY"), for $[________]. Pursuant
to the Operating Agreement of the Company, the undersigned is entitled to an
interest in Company capital exactly equal to the amount paid therefor and an
interest in Company profits.
Based on current Treasury Regulation Section 1.721-1(b), Proposed
Treasury Regulation Section 1.721-1(b)(1), and Revenue Procedures 93-27 and
2001-43, the undersigned does not believe that issuance of the Membership
Interest to the undersigned is subject to the provisions of Section 83 of the
Internal Revenue Code (the "CODE"). In the event that the sale is so treated,
however, the undersigned desires to make an election to have the receipt of the
Membership Interest taxed under the provisions of Code Section 83(b) at the time
the undersigned acquired the Membership Interest.
Therefore, pursuant to Code Section 83(b) and Treasury Regulation Section
1.83-2 promulgated thereunder, the undersigned hereby makes an election, with
respect to the Membership Interest, to report as taxable income for the calendar
year 2004 the excess (if any) of the value of the Membership Interest on
[_____], 2004 over the purchase price thereof.
The following information is supplied in accordance with Treasury
Regulation Section 1.83-2(e):
1. The name, address and social security number of the undersigned:
[NAME]
[ADDRESS]
[SSN]
2. A description of the property with respect to which the election is
being made: A membership interest in the Company entitling the undersigned to an
interest in the Company's capital exactly equal to the amount paid therefor and
___% of the Company's profits.
3. The date on which the Membership Interest was transferred: [_____],
2004. The taxable year for which such election is made: 2004.
4. The restrictions to which the property is subject: If the undersigned
ceases to be employed by the Company or any of its subsidiaries, the unvested
portion of the units will be subject to repurchase by the Company at the lower
of cost or market value.
A-1
5. The fair market value on [_____], 2004 of the property with respect to
which the election is being made, determined without regard to any lapse
restrictions and in accordance with Revenue Procedure 93-27: $[AMOUNT PAID OR TO
BE PAID].
6. The amount paid or to be paid for such property: $[AMOUNT PAID OR TO BE
PAID]
* * * * *
A copy of this election is being furnished to the Company pursuant to
Treasury Regulation Section 1.83-2(e)(7). A copy of this election will be
submitted with the 2003 federal income tax return of the undersigned pursuant to
Treasury Regulation Section 1.83-2(c).
Dated: [_____], 2004
----------------------------------
[NAME]
A-2
EXHIBIT B
EBITDA
Fiscal Year Annual EBITDA
----------- -------------
2004 $ 30,665,000
2005 $ 34,722,000
2006 $ 38,468,000
2007 $ 42,547,000
2008 $ 46,626,000
B-1
INVESTOR NOTICE SCHEDULE
IF TO GTCR FUND VIII, L.P., GTCR FUND VIII/B, L.P. OR GTCR CO-INVEST II, L.P.:
c/o GTCR Xxxxxx Xxxxxx XX, L.L.C.
0000 Xxxxx Xxxxx
Xxxxxxx, XX 00000-0000
Attention: Xxxxx X. Xxxxxxx and Xxxxxxx X. Xxxxxx
WITH A COPY TO:
Xxxxxxxx & Xxxxx LLP
000 Xxxx Xxxxxxxx Xxxxx
Xxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxx, P.C.
IF TO GTCR CAPITAL PARTNERS:
GTCR Capital Partners, L.P.
0000 Xxxxx Xxxxx
Xxxxxxx, XX 00000-0000
Attention: Xxxxx Xxxx
WITH A COPY TO:
Xxxxxxxx & Xxxxx LLP
000 Xxxx Xxxxxxxx Xxxxx
Xxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxx, P.C.
IF TO THE TCW/CRESCENT LENDERS AND/OR TCW/CRESCENT PURCHASERS:
TCW/Crescent Mezzanine Partners III, L.P.
TCW/Crescent Mezzanine Trust III
TCW/Crescent Mezzanine Partners III Netherlands, L.P.
x/x XXX/Xxxxxxxx Xxxxxxxxx, X.X.X.
000 Xxxxxxxx Xxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: Xxxxxxx X. Xxxxxxxx
Telecopier No.: (000) 000-0000
WITH A COPY TO:
Gardere Xxxxx Xxxxxx LLP
3000 Thanksgiving Tower
0000 Xxx Xxxxxx
Xxxxxx, Xxxxx 00000
Attention: Xxxx X. Xxxxx
Telecopier No.: (000) 000-0000
SCHEDULE 1(g)(vi)
EXECUTIVE: DOCUMENTS PARTY TO/BOUND BY:
Xxxxxx X. Xxxxxx Spic and Span Employee Agreement
Spic and Span Termination Agreement
