EXHIBIT 10.7
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "SECURITIES ACT") OR ANY APPLICABLE STATE SECURITIES LAWS
AND ARE BEING OFFERED AND SOLD IN RELIANCE ON EXEMPTIONS FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND FROM EXEMPTIONS FROM
REGISTRATION UNDER APPLICABLE STATE SECURITIES LAWS. THE TRANSFER OF THESE
SECURITIES IS RESTRICTED BY SUCH LAWS AND THE TERMS OF THIS AGREEMENT AND
MAY NOT BE SOLD, OFFERED, TRANSFERRED OR OTHERWISE DISPOSED OF FOR VALUE
EXCEPT PURSUANT TO REGISTRATION UNDER THE SECURITIES ACT AND SUCH STATE LAWS
AS MAY BE APPLICABLE, OR AN EXEMPTION THEREFROM TOGETHER WITH AN OPINION OF
COUNSEL REASONABLY SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT
REQUIRED.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY OTHER FEDERAL OR
STATE AGENCY OR AUTHORITY HAS PASSED ON, RECOMMENDED OR ENDORSED THE MERITS
OF THIS OFFERING. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
PENNSYLVANIA SECURITIES LAWS GENERALLY PROHIBIT PENNSYLVANIA RESIDENTS FROM
SELLING THESE SECURITIES FOR A MINIMUM OF TWELVE MONTHS AFTER THE DATE OF
PURCHASE.
================================================================================
PURCHASE AGREEMENT
BETWEEN
CHEMICAL XXXXXX CORPORATION
AND
XXXXXX X. XXXXXXXXX
September 10, 1996
================================================================================
-1-
PURCHASE AGREEMENT
THIS PURCHASE AGREEMENT, dated September 10, 1996, is by and between
CHEMICAL XXXXXX CORPORATION, a Pennsylvania corporation with offices at 000
Xxxxxxxxx Xxx, Xxxxx, XX 00000-0000 (the "Company") and Xxxxxx X. Xxxxxxxxx, an
individual residing in the Commonwealth of Pennsylvania (the "Employee").
BACKGROUND
Employee desires to purchase 58.25 shares of the common stock of the
Company, par value $2.50 per share (the "Shares") from the Company and the
Company desires to sell the Shares to Employee, and in connection therewith, the
Company and Employee each desire to set forth certain limitations relating to
the Shares, any other securities of the Company or any of its subsidiaries or
affiliates (the "Affiliated Securities") and any Rights (as defined in Section 7
hereof) relating to securities of the Company or any of its subsidiaries or
affiliates (collectively, the "Company Affiliates") held by Employee, all upon
the terms and subject to the conditions set forth herein.
NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, and intending to be legally bound
hereby, the parties hereto hereby agree as follows:
1. Purchase and Sale of the Shares. Subject to the terms and conditions set
forth herein, Employee hereby subscribes for and agrees to purchase from the
Company and the Company hereby agrees to sell to Employee, on the date hereof,
the Shares.
2. Purchase Price. As full payment for the Shares, on the date hereof,
Employee shall pay to the Company an amount equal to Six thousand dollars
($6,000.00) per Share, for an aggregate purchase price of Three hundred
forty-nine thousand five hundred dollars ($349,500.00) (the "Purchase Price")
by the delivery to the Company of (a) a cash payment of $100,656.00 and (b) a
promissory note in the aggregate principal amount of $248,844.00 in
substantially the form attached hereto as Exhibit A (the "Note").
Notwithstanding anything herein contained to the contrary, Employee shall only
be personally liable under the Note and this Section 2 to the extent set forth
in Paragraph 5 of the Note.
3. Gross-Up Bonus. For so long as Employee is employed by the Company on
the date that an interest payment is due and is paid to the Company under the
Note, the Company shall pay to Employee, contemporaneously with the payment of
such interest payment, a bonus (the "Bonus") in an amount equal to (i) the
amount of such interest payment, plus (ii) the amount required to enable
Employee to pay any Federal, state or other applicable taxes on such Bonus.
-2-
4. Representations and Warranties of the Company. The Company represents
and warrants as follows:
a. The Company is a corporation duly organized, validly existing, and in
good standing under the laws of the Commonwealth of Pennsylvania, and has full
corporate power and authority to carry on its business as it is now being
conducted and to own and operate the properties and assets now owned and
operated by it.
b. The Company has the power and authority to execute, deliver and
perform this Agreement. The Agreement is a valid and binding obligation of the
Company, enforceable in accordance with its terms, except as such enforcement
may be limited by applicable bankruptcy, insolvency, moratorium, or similar laws
affecting the enforcement of creditors' rights generally.
c. The execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby and thereby do not and will
not contravene any provision of the Articles of Incorporation or Bylaws of the
Company; nor violate, be in conflict with, or constitute a default under, cause
the acceleration of any payments pursuant to, or otherwise impair the good
standing, validity or effectiveness of any agreement, contract, indenture,
lease, or mortgage, or subject any property or asset of the Company to any
indenture, mortgage, contract, commitment, or agreement, other than this
Agreement, to which the Company is a party or by which the Company or any of its
assets is bound; or violate any provision of law, rule, regulation, order,
permit, or license to which the Company is subject.
d. Upon issuance thereof, the Shares will be validly issued and
outstanding, fully paid and nonassessable, not subject to preemptive or any
other similar rights of the shareholders of the Company or others and will be
free and clear of any and all liens and encumbrances (except for any
restrictions imposed by this Agreement, by the Applicable Laws (as hereinafter
defined) or by the Securities Act of 1933, as amended (the "Securities Act").
5. Representations and Warranties of the Employee. The Employee hereby
represents, warrants, acknowledges and/or agrees as follows:
a. The Employee is acquiring the Shares solely for his own account, for
investment purposes, and not with a view to resale or distribution of all or any
part thereof. The Employee has no present arrangement, understanding or
agreement for transferring or disposing of all or any part of the Shares. The
Employee will not sell, transfer or otherwise dispose of any of his Shares, in
any manner, unless at the time of any such transfer: (a) a Registration (as
hereinafter defined) under the Securities Act and under the Applicable Laws is
in effect with respect to the Shares to be sold, transferred or disposed of, and
the Employee complies with all of the requirements of the Securities Act and the
Applicable Laws with respect to the proposed transaction; or (b) the Employee
has obtained and has provided to the Company an opinion from counsel reasonably
satisfactory to the Company (as to both the
-3-
counsel rendering such opinion and the substance of the opinion) that the
proposed sale, transfer or disposition does not require Registration under the
Securities Act or the Applicable Laws. As used herein: the term "Registration"
means registration under the Securities Act and, with respect to the Applicable
Laws, such registration thereunder (or, with respect to any of the Applicable
Laws which do not provide for registration, such compliance therewith which is
similar to registration) which has then resulted in statutory or administration
authorization for the proposed transaction; and the term "Applicable Laws" means
any applicable state securities laws and any other applicable law.
b. The Employee has such knowledge and experience in financial and
business matters that he is capable of evaluating the merits and risks of an
investment in the Shares and to form an investment decision with respect
thereto. Prior to the execution of this Agreement, the Employee and his
advisers, if any, have received and carefully read the Company's current
quarterly and last annual audited financial statements. The Employee and his
advisers, if any, have also made such other investigation, review, examination
and inquiry concerning the Company and its business and affairs as they have
deemed appropriate; and the Employee and his advisers, if any, have been offered
the opportunity to ask such questions and obtain such additional information
concerning the Company and its business and affairs as they have requested so as
to understand the nature of the investment in the Shares, including, without
limitation, the merits and risks thereof, and to verify the accuracy of the
information obtained as a result of such investigation.
c. The Employee has received and carefully read the Company's financial
statements for the years ended December 31, 1996 and December 31, 1995. Other
than as may be set forth herein, the Employee has not received any other written
material or oral representation of any person with respect to the Company or
this Agreement. Further, the Employee has had the opportunity to ask questions
of, and receive answers from, officers and directors of the Company and persons
acting on its behalf concerning the terms and conditions of this Agreement. The
Employee has received sufficient information relating to the Company to enable
her to make an informed decision with respect to Employee's investment in the
Company.
d. The Employee has adequate net worth and means of providing for his
current needs and personal contingencies and can afford to sustain a complete
loss of the Employee's investment in the Company. The Employee recognizes that
an investment in the Company is speculative and involves certain risks, and the
Employee has taken full cognizance of and understands and can evaluate all of
the risks of the investment in the Shares. The Employee acknowledges that these
risks include, without limitation, the following:
(1) The Company and its operations are subject to all the risks
inherent in the establishment and growth of a business in the trucking industry.
The likelihood of the success of the Company must be considered in light of the
problems, complications and delays frequently encountered in connection with the
trucking industry. There can be no assurance that the Company will operate at a
profit.
-4-
(2) The Shares represent a minor portion of the outstanding capital
stock of the Company. Thus, it can be expected that the current majority owners,
by virtue of their percentage share ownership, will continue to have the
unrestricted ability to determine the composition of the Board of Directors and
the policies of the Company.
(3) It is highly unlikely that dividends will be paid with respect to
the Shares. Moreover, there can be no assurance that the operations of the
Company will generate sufficient revenues to enable the Company to declare or
pay dividends on or make distributions with respect to the Shares, or that such
dividends shall be permitted by the terms of the Company's credit facility with
its senior lender.
(4) The Employee recognizes that:
(a) The existing shareholders of the Company (i.e., those who have
been issued capital stock prior to the date hereof) have paid different amounts
per share for their shares of common stock.
(b) The Company does not represent nor has it been implied that
any of the Shares can be resold at the offering price.
(c) The Employee acknowledges that no Federal, state or foreign
agency has passed upon, approved, recommended or endorsed the merits of the
Shares for investment, or for any other purpose.
e. The Employee understands that the Shares are being offered and sold in
reliance on specific exemptions from the registration requirements of Federal
and state law and that the Company is relying upon the truth and accuracy of the
representations, warranties, agreements, acknowledgments and understandings set
forth herein in order to determine the applicability of such exemptions and the
suitability of the Employee to acquire the Shares.
f. The Employee understands that (i) there is no established market for the
Shares, nor is any such market expected to develop, and (ii) neither the Company
nor any other person has any obligation or intention to effect the Registration
of the Employee's Shares for sale, transfer or disposition by the Employee under
the Securities Act or the Applicable Laws, or to take any action or provide any
information (including, without limitation, the filing of reports or the
publication of information required by Rule 144 under the Securities Act) which
would make available any exemption from the Registration requirements of the
Securities Act or the Applicable Laws. The Employee must therefore hold his
Shares indefinitely unless a subsequent Registration or exemption therefrom is
available and is obtained.
g. The Employee understands that he is not entitled to cancel, terminate or
revoke this subscription, except as may otherwise be set forth in this Section
5.
-5-
h. (1) If the Employee is a Pennsylvania resident, the Employee has
received and read the notice of his right to withdraw under certain
circumstances his subscription for Shares hereunder. The Employee represents
that he understands that, in accepting an offer made pursuant to this Agreement
to purchase Shares hereby, the Employee may elect, within two business days
after the Company is in receipt of this executed Agreement, to withdraw from the
Agreement and receive a full refund of all monies paid for the Shares. Such
withdrawal will be without any further liability to the Employee. To accomplish
this withdrawal, the Employee need only send a letter or a telegram to the
Company indicating his intention to withdraw. If a letter is sent, the Employee
understands that it should be sent by registered or certified mail, return
receipt requested, to ensure that it is received and also to evidence the date
on which it is mailed. If the Employee orally requests to withdraw, he should
ask for written confirmation that the request has been received.
(2) The Employee also agrees that he will not sell any of the Shares
acquired hereby within twelve months from the date of purchase except in
accordance with the requirements of the Pennsylvania Securities Act of 1972, as
amended, as well as the Securities Act.
i. No broker or finder has acted for the Employee in connection with his
purchase of the Shares and no broker or finder is entitled to any broker's or
finder's fees or other commissions in connection therewith based on agreements
between the Employee and any broker or finder.
j. The Employee is a resident of the Commonwealth of Pennsylvania. If an
individual, the Employee is a citizen of the United States of America, is at
least 21 years of age, and has the legal capacity to execute, deliver and
perform this Agreement.
k. All information which the Employee has provided to the Company
concerning such Employee, such Employee's financial position and such Employee's
knowledge of financial and business matters, including all information contained
herein, is true and complete as of the date hereof.
l. Appropriate restrictive endorsement(s) will be placed upon the
certificates evidencing the Shares subscribed to hereby to reflect the foregoing
and that the Company will give appropriate stop transfer instructions to the
person(s) in charge of the transfer of the Employee's Shares.
6. Restrictive Legend. Stock Certificates representing the Shares issued to
the Employee pursuant hereto shall bear the following legends:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR ANY STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE PLEDGED,
HYPOTHECATED, SOLD
-6-
OR TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE
SECURITIES UNDER THE SECURITIES ACT OF 1933 AND APPLICABLE STATE SECURITIES
LAWS OR A SATISFACTORY OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT
SUCH PLEDGE, HYPOTHECATION, SALE OR TRANSFER IS EXEMPT THEREFROM UNDER ANY
SUCH ACT AND APPLICABLE STATE SECURITIES LAWS.
THE HOLDER OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE AGREES BY
ACCEPTANCE HEREOF THAT SUCH HOLDER WILL NOT SELL ANY OF SUCH SECURITIES
WITHIN TWELVE MONTHS FROM THE DATE OF THE PURCHASE THEREOF EXCEPT IN
ACCORDANCE WITH THE REQUIREMENTS OF THE PENNSYLVANIA SECURITIES ACT OF 1972,
AS AMENDED.
7. Termination of Options, Warrants and other Rights. Employee hereby
cancels and terminates in all respects any and all Rights that may be held by
Employee on the date hereof (collectively, the "Terminated Rights"). On the date
hereof, Employee has delivered to the Company for cancellation any original
documents in Employee's control or possession evidencing or representing any
such Terminated Rights. Employee hereby releases the Company, the Company
Affiliates, their respective directors, officers, employees and agents, and
their respective successors and assigns, from any liability to Employee
whatsoever relating to, arising out of, or in connection with, such Terminated
Rights. The foregoing provisions shall not be construed to limit the ability of
the Company to grant or issue to Employee, after the date hereof, any similar
rights to acquire any capital stock or other securities of the Company and/or
the Company Affiliates, including options or warrants. For purposes of this
Agreement, "Rights" shall mean any contracts, subscriptions, calls, rights to
convert, commitments or rights of any character or kind, including without
limitation, options or warrants, to purchase or otherwise acquire or to require
the Company and/or the Company Affiliates, to issue any capital stock or other
securities of the Company and/or any other Affiliated Securities.
8. Mandatory Company Obligation to Repurchase Shares at Premium On
Occurrence of Certain Events.
a. In the event (i) that the Employee shall die ("Death"), (ii) of the
disability of the Employee such that Employee is unable to perform his or her
duties and responsibilities to the Company or any Company Affiliate to the full
extent required by reasons of illness, injury or incapacity for a period of more
than one hundred twenty (120) consecutive days or more than two hundred seventy
(270) days, in the aggregate, during any three hundred sixty-five (365) day
period ("Disability"), or (iii) Employee shall retire at reaching 65 years of
age (or at such earlier age as may be agreed by Employee and the Company)
("Retirement" and together with Death and Disability, collectively the "Section
8 Events"), the Company shall (unless otherwise prevented by law) redeem all of
the Shares owned by the Employee at the time of such Section 8 Event. The
purchase price for the Shares so redeemed pursuant to the
-7-
provisions of this Section 8 shall be equal to the greater of (x) the price paid
for such Shares by the Employee, and (y) the fair market value of such Shares,
which shall be mutually agreed upon by the Employee and Company; provided that,
in the event the Employee and Company cannot agree upon the fair market value
for such Shares within thirty (30) days following the Section 8 Event in
question, the fair market value of such Shares shall be determined by appraisal
(pursuant to Sections 8(b) and 8(c) hereof).
b. Such appraisal shall be conducted by an independent investment banking
firm engaged by Company and agreed upon by the Employee (or Employee's personal
representative or executor, if applicable); provided, however, that if the
Company and Employee (or Employee's personal representative or executor, if
applicable) cannot agree on an appraiser within forty (40) days following the
Section 8 Event in question, each of the Company and Employee (or Employee's
personal representative or executor, if applicable) shall within five (5) days
thereafter select one appraiser, and such appraisers shall mutually agree within
forty five (45) days thereafter upon the value of such Shares; and further
provided, if such appraisers cannot mutually agree upon the value of such
Shares, the appraisers shall (on or prior to such forty fifth (45th) day)
mutually agree upon a third appraiser, which third appraiser shall determine, in
its sole discretion, the value of such Shares. The Company shall be responsible
for all of the costs of such appraisal. Any time periods set forth in this
Section 8 shall be adjusted in order to account for any delay caused by such
appraisal.
c. If the determination of the fair market value of the Shares by the
appraiser(s) depends on or takes into account the net income or projected net
income of the Company for any prior or future period, the appraiser(s) shall be
directed to exclude from such net income or projected net income any amounts
paid or projected to be paid to or for the benefit of Xxxxx X. Xxxxxxxx and to
Xxxxxx XxXxxxxx in excess of their base salary and consulting fees and other
base compensation, if any.
d. Settlement for the purchase of such Shares by the Company pursuant to
this Section shall be made within one (1) year following the date of the Section
8 Event, unless the Company for any reason is legally prohibited from redeeming
any of those Shares, in which case the Company shall thereafter redeem such
shares on the earliest date(s) on which the Company is no longer so prohibited
from redeeming such Shares, or unless the Company has not obtained all required
third party consents to such purchase, in which case settlement shall occur as
promptly as practicable following the date that the Company shall obtain such
consents. The Company hereby agrees to use its best efforts to obtain all such
requisite third party consents. All settlements for the purchase and sale of
such Shares shall, unless otherwise agreed to by the Company and Employee (or
Employee's personal representative or executor, if applicable), be held at the
principal offices of the Company during regular business hours. The precise date
and hour of settlement shall be fixed by the Company (within the time limits
allowed by the provisions of this Section) by notice in writing to Employee (or
Employee's personal representative or executor, if applicable) given at least
five (5) days in advance of the settlement date specified. At settlement, the
Shares being sold shall be delivered by Employee
-8-
(or Employee's personal representative or executor, if applicable) to the
Company, duly endorsed for transfer or with executed stock powers attached, with
any necessary documentary and transfer tax stamps affixed by Employee.
9. Mandatory Company Obligation to Repurchase Shares at Premium On
Occurrence of Other Events.
a. In the event that (i) the Employee voluntarily resigns from the
Company or a Company Affiliate, as the case may be (except as set forth in
Section 10 below) or (ii) the Employee is terminated without Cause (as defined
below) (any of the foregoing, a "Section 9 Event"), the Company shall (unless
otherwise prevented by law), redeem up to all of the Shares owned by the
Employee at the time of such Section 9 Event. The purchase price for any Shares
redeemed pursuant to the provisions of Section 9(a)(i) hereof shall be equal to
(x) the greater of the price paid by the Employee for each such Share, and (y)
an amount equal to two-thirds of the fair market value of such Shares (as
determined in accordance with the provisions of Section 8 hereof). The purchase
price for any Shares redeemed pursuant to the provisions of Section 9(a)(ii)
hereof shall be equal to the greater of (r) the price paid by the Employees for
each such Share, and (s) the fair market value of such Shares (as determined in
accordance with the provisions of Section 8 hereof.
b. Settlement for the purchase of such Shares by the Company pursuant to
this Section shall be made within one (1) year following the date of the Section
9 Event, unless the Company for any reason is legally prohibited from redeeming
any of those Shares, in which case the Company may thereafter redeem such shares
on the earliest date(s) on which the Company is no longer so prohibited from
redeeming such Shares, or unless the Company has not obtained all required third
party consents to such purchase, in which case settlement shall occur as
promptly as practicable following the date that the Company shall obtain such
consents. The Company hereby agrees to use its best efforts to obtain all such
requisite third party consents. Settlement for the purchase and sale of such
Shares shall, unless otherwise agreed to by the Company and Employee, be held at
the principal offices of the Company during regular business hours. The precise
date and hour of settlement shall be fixed by the Company (within the time
limits allowed by the provisions of this Section) by notice in writing to
Employee given at least five (5) days in advance of the settlement date
specified. At settlement, the Shares being sold shall be delivered by Employee
to the Company, duly endorsed for transfer or with executed stock powers
attached, with any necessary documentary and transfer tax stamps affixed by
Employee in exchange for the purchase price therefor.
10. Optional Company Right to Repurchase Shares for Purchase Price Thereof.
a. In the event (each of the following, a "Section 10 Event") that the
Employee's employment with the Company or a Company Affiliate shall cease as a
consequence of (a) the Employee's willful or gross malfeasance or gross
misconduct with respect to the Company or a Company Affiliate, including without
limitation, fraud, embezzlement, theft or proven dishonesty in the course of his
employment or (b) Employee's conviction of a felony (the
-9-
events described in subsections (a) and (b), collectively, "Cause"), the Company
may (unless otherwise prevented by law), at its option, upon written notice
thereof given within 30 days of such Section 10 Event and upon the tender of
payment therefor, redeem all of the Shares owned by the Employee at the time of
such Section 10 Event. The purchase price for any Shares so redeemed pursuant to
the provisions of this Section 10 shall be equal to the price paid by the
Employee for such Shares.
b. Settlement for the purchase of such Shares by the Company pursuant to
this Section shall be made within one (1) year following the date of the Section
10 Event, unless the Company for any reason is legally prohibited from redeeming
any of those Shares, in which case the Company may thereafter redeem such shares
on the earliest date(s) on which the Company is no longer so prohibited from
redeeming such shares, or unless the Company has not obtained all required third
party consents to such purchase, in which case settlement shall occur as
promptly as practicable following the date that the Company shall obtain such
consents. All settlements for the purchase and sale of such Shares shall, unless
otherwise agreed to by the Company and Employee, be held at the principal
offices of the Company during regular business hours. The precise date and hour
of settlement shall be fixed by the Company (within the time limits allowed by
the provisions of this Section) by notice in writing to Employee given at least
five (5) days in advance of the settlement date specified. At settlement, the
Shares being sold shall be delivered by Employee to the Company, duly endorsed
for transfer or with executed stock powers attached, with any necessary
documentary and transfer tax stamps affixed by Employee.
11. Company Purchase Option.
a. Employee shall not (either during or following Employee's employment
with the Company) transfer, sell, donate, pledge or otherwise dispose of or
encumber (collectively, "Transfer") any Shares except as provided in this
Section 11.
b. In the event Employee (either during or following Employee's
employment with the Company) desires to in any way directly or indirectly,
Transfer, either voluntarily or involuntarily, all or any portion of his Shares,
Employee shall first obtain a bona fide written offer which he desires to accept
(hereinafter called the "Offer") to purchase the Shares which he desires to sell
("Offered Shares"). Employee shall then provide written notice to the Company of
such desire which notice shall set forth the price per share for the Offered
Shares set forth in the Offer, and the other terms and conditions upon which
Employee shall sell the Offered Shares. The purchase price payable by the
Company for such Offered Shares shall be equal to the price per Share paid by
the Employee for such Shares.
c. For a period of fifteen (15) days after the delivery to the Company
of notice of the Offer, the Company shall have the option, exercisable by
written notice to Employee, to purchase the Offered Shares for the purchase
price set forth above. If the Company does not exercise its option to purchase
the Offered Shares within the applicable fifteen (15) day period, the Company's
option to purchase the Offered Shares shall terminate and Employee shall have
-10-
the right to sell the Offered Shares to the third party making the Offer at a
purchase price not less than the purchase price set forth in the Offer and
substantially in accordance with the other terms and conditions of the Offer;
provided, however, that if a Transfer to such third party is not consummated
within ninety (90) days after the expiration of the foregoing fifteen (15) day
period at a purchase price not less than the purchase price set forth in the
Offer and substantially in accordance with the other terms and conditions of the
Offer, Employee shall not be entitled to Transfer the Offered Shares unless a
new Offer is obtained and the Offered Shares are then reoffered to the Company
in accordance with the foregoing procedures of this Section.
d. Settlement for the purchase of Offered Shares by the Company pursuant
to this Section shall be made within thirty (30) days following the date of
exercise of the option. Settlements for the purchase and sale of Offered Shares
shall, unless otherwise agreed to, be held at the principal offices of the
Company during regular business hours. The precise date and hour of settlement
shall be fixed by the Company (within the time limits allowed by the provisions
of this Agreement) by notice in writing to Employee given at least five (5) days
in advance of the settlement date specified. At settlement, the Offered Shares
being sold shall be delivered by Employee to the Company, duly endorsed for
transfer or with executed stock powers attached, with any necessary documentary
and transfer tax stamps affixed by Employee.
e. This Section shall not apply to a transfer of Shares by Employee to
his spouse, parents, siblings or lineal descendants or any such persons or to a
trust for the benefit of any of the foregoing (including trusts for such
Employee's benefit); provided, that any such transferee shall agree in writing
to be bound by, and to comply with, all applicable provisions of this Agreement;
provided, further, that any shares so transferred shall be held by the
transferee subject to the rights, obligations, sale/repurchase rights and other
burdens which would be imposed on Employee with respect to such Shares as if he
had not transferred the shares.
f. In connection with, and as a condition of, permitting any Transfer or
delivery of stock certificates under this Section, the Company may require
Employee to pay to it a sufficient sum to enable it to pay, or to reimburse it
for any payment made in respect of, any stamp tax or other governmental charge
in connection with such transfer or delivery.
g. The provisions of this Section 11 shall remain in full force and
effect until the closing of the first public offering of the Company's common
stock after the date hereof.
12. Noncompetition: Non-Solicitation; Proprietary Information; Property.
a. The Employee shall not, during all times (the "Term") that he is
employed or retained by, or otherwise associated with, the Company or a Company
Affiliate and for a period of twelve months thereafter (the "Restricted
Period"), do any of the following directly or indirectly without the prior
written consent of the Company:
-11-
(1) engage or participate in any business activity competitive with
the Company's business, or the business of any of the Company Affiliates, as
same are conducted during the Term with respect to any period during the Term,
or upon the termination of the Term with respect to the balance of the
Restricted Period (the "Business");
(2) become interested in (as owner, stockholder, lender, partner,
co-venturer, director, officer, employee, agent, consultant or otherwise) any
person, firm, corporation, association or other entity engaged in any business
that is competitive with the Business during the Term or the balance of the
Restricted Period, or become interested in any portion of the business of any
person where such portion of such business is competitive with the Business
during the Term or the balance of the Restricted Period. Notwithstanding the
foregoing, Employee may hold not more than one percent (1%) of the outstanding
securities of any class of any publicly-traded securities of a company that is
so engaged.
b. Employee shall not, during the Term and for the balance of the
Restricted Period, do any of the following, directly or indirectly, without the
prior written consent of the Company:
(1) solicit, call on, or in any way contact, either directly or
indirectly, whether on behalf of Employee or any other person, any account,
client, customer or supplier with whom (or which) the Company or a Company
Affiliate shall have dealt at any time during the Term or for the two (2) year
period immediately preceding the Term;
(2) influence or attempt to influence any supplier, customer or
potential customer of the Company or a Company Affiliate to terminate or modify
any written or oral agreement or course of dealing with the Company or a Company
Affiliate;
(3) employ or retain, or arrange to have any other person or entity
employ or retain, any person who shall have been employed or retained by the
Company or a Company Affiliate as an employee, consultant, agent, distributor or
in a similar such capacity at any time during the Term; or
(4) influence or attempt to influence any such person to terminate or
modify his employment, consulting, agency, distributorship or other arrangement
with the Company or a Company Affiliate.
c. (1) Employee recognizes and acknowledges that the Proprietary
Information (as hereinafter defined) is a valuable, special and unique asset of
the business of the Company. As a result, both during the Term and thereafter,
Employee shall not, without the prior written consent of the Company, for any
reason either directly or indirectly divulge to any third-party or use for his
own benefit, or for any purpose other than the exclusive benefit of the Company,
any confidential, proprietary, business and technical information or trade
secrets of the Company or of any Company Affiliate ("Proprietary Information")
revealed, obtained or developed in the course of his retention with the Company
or Company Affiliate.
-12-
Such Proprietary Information shall include, but shall not be limited to, any
information relating to research, computer codes or instructions, costs,
business studies, business procedures, finances, marketing data, methods, plans
and efforts, the identities of customers, contractors and suppliers and
prospective customers, contractors and suppliers, the terms of contracts and
agreements with customers, contractors and suppliers, personnel information,
customer and vendor credit information, and any other confidential information
relating to the business of the Company, provided, that nothing herein contained
shall restrict Employee's ability to make such disclosures during the Term as
may be necessary or appropriate to the effective and efficient discharge of his
duties to the Company or as such disclosures may be required by law, and further
provided, that nothing herein contained shall restrict Employee from divulging
or using for his own benefit or for any other purpose any Proprietary
Information which is readily available to the general public so long as such
information did not become available to the general public as a direct or
indirect result of Employee's breach of this Section 12(c)(1). Failure by the
Company to mark any of the Proprietary Information as confidential or
proprietary shall not affect its status as Proprietary Information under the
terms of this Agreement.
(2) In the event that the Employee is requested pursuant to, or
required by, applicable law or regulation or by legal process to disclose any
such Confidential Information, the Employee shall provide the Company with
prompt notice of such request or the receipt of legal process to enable the
Company to seek an appropriate protective order, to consult with the Company
with respect to the taking of steps to resist or narrow the scope of such
request or process, and/or waive compliance in whole or in part with the
Employee's agreement to maintain the confidentiality of such data or
information. If and to the extent after the foregoing notice, in the absence of
a protective order or receipt of a waiver under this Agreement, the Employee is,
in the written opinion of the Employee's counsel, compelled to disclose such
data or information or be liable for contempt or suffer censure or penalty or
violate applicable laws or regulations, the Employee may disclose such data or
information without liability to the Company under this Agreement.
d. All right, title and interest in and to Proprietary Information shall
be and remain the sole and exclusive property of the Company. During the Term,
Employee shall not remove from the Company's offices or premises any documents,
records, notebooks, files, correspondence, reports, memoranda or similar
materials of or containing Proprietary Information, or other materials or
property of any kind belonging to the Company unless necessary or appropriate in
accordance with his employment and, in the event that such materials or property
are removed, all of the foregoing shall be returned to their proper files or
places of safekeeping as promptly as possible after the removal shall serve its
specific purpose. Employee shall not make, retain, remove and/or distribute any
copies of any of the foregoing for any reason whatsoever, except as disclosure
shall be necessary in the performance of his duties; and upon the termination of
the Term, he shall leave with or return to the Company all originals and copies
of the foregoing then in his possession, whether prepared by Employee or by
others.
-13-
e. Employee acknowledges that the restrictions contained in this Section
12 are reasonable and necessary to protect the legitimate interests of the
Company and its affiliates and that the Company would not have entered into this
Agreement in the absence of such restrictions. Employee also acknowledges that
any breach by him of this Section 12 will cause continuing and irreparable
injury to the Company for which monetary damages would not be an adequate
remedy. Employee shall not, in any action or proceeding to enforce any of the
provisions of this Agreement, assert the claim or defense that such an adequate
remedy at law exists. In the event of such breach by Employee, the Company shall
have the right to enforce the provisions of this Section 12 by seeking
injunctive or other relief in any court, and this Agreement shall not in any way
limit remedies of law or in equity otherwise available to the Company. If an
action at law or in equity is necessary to enforce or interpret the terms of
this Agreement, the prevailing party shall be entitled to recover, in addition
to any other relief, reasonable attorneys' fees, costs and disbursements. In the
event that the provisions of this Section 12 should ever be adjudicated to
exceed the time, geographic, or other limitations permitted by applicable law in
any applicable jurisdiction, then such provisions shall be deemed reformed in
such jurisdiction to the maximum time, geographic, or other limitations
permitted by applicable law. In the event that Employee shall be in breach of
any of the restrictions contained in Sections 12(a) and/or (b) hereof, then the
Restricted Period shall be extended for a period of time equal to the period of
time that Employee is in breach of such restriction.
13. Change of Control.
a. If at any time while Employee is employed by the Company or a Company
Affiliate (i) there shall occur a Change of Control (as defined below) or (ii)
Xxxxx X. Xxxxxxxx shall cease to be Chairman and Chief Executive Officer of the
Company (each of the foregoing, a "Section 13 Event"), then Employee may elect
at any time within twenty-four months after such event to terminate Employee's
employment upon thirty days prior written notice given at any time within said
twelve months, such termination to be effective at the expiration of said thirty
day period.
b. In the event that following the occurrence of a Section 13 Event, (i)
Employee makes such election to terminate Employee's employment as set forth in
Section 13 (a) hereof, or (ii) Employee's employment shall be terminated by the
Company or a Company Affiliate (other than for Cause) within twenty-four months
following the occurrence thereof, then Employee shall receive severance payments
in accordance with Section 14 hereof "Employee Severance".
c. For purposes of this Section 13, a "Change of Control" means the
sale, transfer, assignment or other disposition (including by merger or
consolidation) by stockholders of the Company, in one transaction or a series of
related transactions, such that following such transaction(s) Xxxxx X. Xxxxxxxx
and Xxxxxx XxXxxxxx, collectively, cease to own (directly, or indirectly through
their Affiliates) more than fifty percent (50%) of the voting power represented
by the then outstanding stock of the Company. For these purposes,
-14-
"Affiliate" means (i) any entity directly or indirectly controlling, controlled
by or under common control with such stockholder, (ii) any immediate family
member of such stockholder, or (iii) any trust for the benefit of such
stockholder or any immediate family member of such stockholder.
14. Employee Severance. In the event that (a) Employee's employment with
the Company or a Company Affiliate shall be terminated at any time by the
Company (or a Company Affiliate, as the case may be) under the circumstances
described in Section 13 (b) hereof following the occurrence of a Section 13
Event, then Employee shall, for a period of not less than twelve months
following the termination of Employee's employment, continue to receive
Employee's base salary and benefits package including the use of a company car
and related costs, reimbursement of club dues, health and dental plan,
participation in the Company's Pension and 401 (k) plans and any additional
employee benefits which may be in effect at the time of such termination. Base
salary shall continue to be inclusive of all applicable income, social security
and other taxes and charges which are required by law to be withheld by the
Company and in accordance with Company's normal payroll practices for its
executives from time to time in effect.
15. Notice. Any notice or communication required or permitted under this
Agreement shall be made in writing and sent by certified or registered mail,
return receipt requested, addressed as follows:
If to the Company:
Chemical Xxxxxx Corporation
000 Xxxxxxxxx Xxx
Xxxxx, XX 00000
Fax: (000) 000-0000
If to the Employee:
Xxxxxx X. Xxxxxxxxx
c/o Chemical Xxxxxx Corporation
000 Xxxxxxxxx Xxx
Xxxxx, XX 00000
Telephone (000) 0000000
or to such other address as either party may from time to time duly specify by
notice given to the other party in the manner specified above.
16. Gender; Number. All pronouns and other words used herein shall include
all genders and the singular and the plural as the context requires.
-15-
17. Headings. The headings of the Sections located herein are for
convenience only, and they are not part of this Agreement and shall not affect
its interpretation.
18. Applicable Law. This Agreement shall be governed by and be construed in
accordance with the internal laws of the Commonwealth of Pennsylvania, without
regard to the principles of conflicts of laws thereof.
19. Entire Agreement. This Agreement constitutes the entire understanding
among the parties with respect to the subject matter hereof, and supersedes any
prior understanding and/or written or oral agreements among them with respect
thereto, except as may be contained herein. This Agreement may not be changed or
modified, except by an Agreement in writing signed by each of the parties
hereto.
20. No Third Party Beneficiaries. This Agreement is for the sole benefit of
the parties hereto and their respective permitted successors and assigns, and
neither this Agreement, nor any provision hereof shall be construed as
conferring and are not intended to confer any rights on any other persons. In
furtherance and not in limitation of the foregoing, the parties hereto
acknowledge and agree that the Shares being sold hereunder are being sold by the
Company pursuant to this Agreement only, and are not being sold pursuant to a
plan or other arrangement generally available to the Company's employees.
21. Binding Effect. Except as otherwise provided herein, this Agreement
shall be binding upon and inure to the benefits of the parties hereto, their
successors and assigns.
22. Assignment. The Employee agrees not to transfer or assign this
Agreement, or any of the Employee's interest herein, and further agrees that the
transfer or assignment of the Shares shall be made only in accordance with
applicable laws and the terms of this Agreement.
23. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, and all of which
together shall be deemed to be one and the same instrument.
IN WITNESS WHEREOF, the parties executed this Purchase Agreement on the
date and year first written above.
CHEMICAL XXXXXX CORPORATION
BY: /s/ Xxxxx X. Xxxxxxxx
----------------------------------------
Title:
XXXXXX X. XXXXXXXXX
/s/ Xxxxxx X. Xxxxxxxxx
----------------------------------------
Signature
-16-
