Exhibit 10.7.1
STOCK PURCHASE AND AMENDMENT AGREEMENT
This STOCK PURCHASE AND AMENDMENT AGREEMENT (the "Agreement") is dated as of
January 21, 2002 between C. XXXX XXXXXXX ("Executive") and LANTE CORPORATION, a
Delaware corporation (the "Company").
BACKGROUND
A. Executive and the Company previously entered into (i) an Employment
Agreement dated as of June 16, 1999 (the "Employment Agreement") concerning
Executive's employment by the Company, (ii) a Lante Corporation Restricted Stock
Agreement dated as of June 30, 1999 (the "Stock Agreement") regarding 2,400,000
shares (adjusted for subsequent stock splits) of the Company's Common Stock, par
value $0.01 per share (the "Common Stock") purchased by Executive from the
Company, (iii) a Secured Promissory Note dated June 30, 1999 (the "Stock Note")
pursuant to which Executive borrowed $3,228,000 from the Company to purchase the
2,400,000 shares, (iv) a Pledge Agreement dated as of June 30, 1999 (the "Pledge
Agreement") pursuant to which Executive pledged the purchased shares to secure
repayment of the Stock Note, (v) a letter agreement dated September 28, 1999
(the "Registration Letter") pursuant to which the Company agreed to take certain
actions to facilitate the registration for sale by Executive of the purchased
shares, and (vi) a Promissory Note dated June 30, 1999 (the "Personal Note")
pursuant to which the Executive borrowed $2,500,000 from the Company.
B. In connection with the annual review of Executive's compensation
pursuant to Section 2 of the Employment Agreement, Executive and the Company
have determined that the Company will repurchase the Shares from the Executive
at their current market value, and that concurrent with and contingent on the
performance of each party's obligations hereunder, certain other provisions of
the aforementioned documents and transactions should be modified, all on the
terms and conditions set forth herein.
NOW THEREFORE, Executive and the Company agree as follows:
Section 1. Share Repurchase
(a) Executive represents and warrants that (i) he is the sole legal and
beneficial owner of all right, title and interest in and to 2,365,500 shares
(the "Shares") of the Common Stock, and that such Shares constitute all of the
Common Stock owned by him, (ii) he has full power and authority to enter into
and perform his obligations pursuant to this Agreement and the documents
contemplated hereby, and (iii) he will convey hereunder good and marketable
title to the Shares to the Company, free and clear of any liens, claims,
security interests, options, leases, restrictions or other encumbrances of any
nature.
(b) The Company hereby purchases, and the Executive hereby sells, all of
Executive's right, title and ownership interest in and to the Shares for an
aggregate of $3,146,115 (the "Purchase Price"). The Company's Board of Directors
has adopted a resolution approving the purchase of the Shares that specifies the
name of the Executive and the number of Shares being repurchased. As payment in
full of the Purchase Price, the outstanding principal and accrued but unpaid
interest pursuant to the Stock Note is hereby reduced in an amount equal to the
Purchase Price.
(c) The remaining $544,920 owed to the Company by the Executive pursuant
to the Stock Note as of the date hereof is hereby converted into a new loan
pursuant to the promissory note attached hereto as Exhibit A (the "2002 Note").
Concurrent with Executive's execution and delivery to the Company of the 2002
Note, together with such documentation as the Company deems reasonably necessary
to effect the sale and transfer of the Shares to the Company, all amounts due
and owing pursuant to the Stock Note shall be deemed satisfied and the Stock
Note and the Pledge Agreement will be automatically terminated and cancelled.
(d) Upon consummation of the transactions contemplated by this Agreement,
each party's rights and obligations pursuant to the Stock Agreement and the
Registration Letter are terminated and cancelled.
Section 2. Option Grant
(a) Concurrent with the performance of each party's obligations pursuant
to Section 1, the Company shall grant to Executive options to acquire 2,000,000
shares of the Common Stock (the "Options"). The Options shall (i) be issued
pursuant to the Lante Corporation 2001 Stock Incentive Plan (as amended from
time to time, the "Plan"), (ii) have an exercise price of $1.33, which was the
closing price of the Company's Common Stock on Nasdaq on the January 21, 2002
effective date of the grant and (iii) be subject to the terms of the Company's
standard option agreement (the "Option Agreement"). 1,250,000 of the Options
shall be immediately vested and exercisable in accordance with the terms of the
Plan and the Option Agreement, and the remaining 750,000 Options shall vest and
become exercisable in a series of twelve (12) equal monthly installments upon
Executive's completion of each full additional month of employment under the
Employment Agreement over the twelve (12)-month period beginning on the date
hereof.
(b) The vesting of any and all outstanding options held by Executive
(including the Options and any options granted to Executive in the future) shall
be modified so that such options will vest and become fully exercisable if (i)
Executive's employment is terminated by the Company other than pursuant to
Section 5.2 or 5.5 of the Employment Agreement, or (ii) Executive terminates his
employment for Good Reason (as that term is defined in the Employment Agreement)
in accordance with Section 5.4 of the Employment Agreement, or (iii) there is a
Change of Control (as that term is defined in the Employment Agreement) while
Executive is still employed pursuant to the Employment Agreement.
Section 3. Other Matters
(a) Sections 6.4(ii) and 6.9 of the Employment Agreement are deleted.
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(b) If any payments or benefits received or to be received by the
Executive in connection with a Change of Control or the Executive's termination
of employment (whether pursuant to the terms of the Employment Agreement or any
other plan, arrangement or agreement with the Company, any person whose actions
result in a Change of Control or any person affiliated with the Company or such
person) (all such payments and benefits, excluding the Gross-Up Payment, being
hereinafter referred to as the "Total Payments") will be subject to the excise
tax on excess parachute payments under Section 4999 (the "Excise Tax") of the
Internal Revenue Code of 1986, as amended (the "Code"), the Company shall pay to
the Executive an additional amount (the "Gross-Up Payment") such that the net
amount retained by the Executive, after deduction of any Excise Tax on the Total
Payments and any federal, state and local income and employment taxes and Excise
Tax upon the Gross-Up Payment, shall be equal to the Total Payments. Should the
Company lack sufficient liquidity to pay the Gross-Up Payment to the Executive,
in lieu of the obligations set forth in Section 3(b), (c) and (d) hereof, the
Company and Executive may agree to reduce Executive's Total Payments in order to
provide Executive with the greatest after-tax benefit after accounting for the
imposition of the Excise Tax.
(c) For purposes of determining whether any of the Total Payments will be
subject to the Excise Tax and the amount of such Excise Tax, (i) all of the
Total Payments shall be treated as "parachute payments" (within the meaning of
section 280G(b)(2) of the Code) unless, in the opinion of tax counsel ("Tax
Counsel") reasonably acceptable to the Executive and the Company and selected by
the accounting firm which was immediately prior to the Change of Control the
Company's independent auditor (the "Auditor"), such payments or benefits (in
whole or in part) do not constitute parachute payments, including by reason of
section 280G(b)(4)(A) of the Code, (ii) all "excess parachute payments" within
the meaning of section 280G(b)(l) of the Code shall be treated as subject to the
Excise Tax unless, in the opinion of Tax Counsel, such excess parachute payments
(in whole or in part) represent reasonable compensation for services actually
rendered (within the meaning of section 280G(b)(4)(B) of the Code) in excess of
the Base Amount (as determined under Code Section 280G) allocable to such
reasonable compensation, or are otherwise not subject to the Excise Tax, and
(iii) the value of any noncash benefits or any deferred payment or benefit shall
be determined by the Auditor in accordance with the principles of sections
280G(d)(3) and (4) of the Code. For purposes of determining the amount of the
Gross-Up Payment, the Executive shall be deemed to pay federal income tax at the
highest marginal rate of federal income taxation in the calendar year in which
the Gross-Up Payment is to be made, and state and local income taxes at the
highest marginal rate of taxation in the state and locality of the Executive's
residence on the date of termination (or if there is no date of termination,
then the date on which the Gross-Up Payment is calculated for purposes of this
section), net of the maximum reduction in federal income taxes which could be
obtained from deduction of such state and local taxes.
(d) In the event that the Excise Tax is finally determined to be less than
the amount taken into account hereunder in calculating the Gross-Up Payment, the
Executive shall repay to the Company, within five (5) business days following
the time that the amount of such reduction in the Excise Tax is determined, the
portion of the Gross-Up Payment attributable to such reduction plus that portion
of the Gross-Up Payment attributable to the Excise Tax and federal, state and
local income and employment taxes imposed on the Gross-Up Payment being repaid
by the Executive, to the extent that such repayment results in a reduction in
the Excise Tax and a
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dollar-for-dollar reduction in the Executive's taxable income and wages for
purposes of federal, state and local income and employment taxes, plus interest
on the amount of such repayment at 120% of the rate provided in section
1274(b)(2)(B) of the Code. In the event that the Excise Tax is determined to
exceed the amount taken into account hereunder in calculating the Gross-Up
Payment (including by reason of any payment the existence or amount of which
cannot be determined at the time of the Gross-Up Payment), the Company shall
make an additional Gross-Up Payment in respect of such excess (plus any
interest, penalties or additions payable by the Executive with respect to such
excess) within five (5) business days following the time that the amount of such
excess is determined. The Executive and the Company shall each reasonably
cooperate with the other in connection with any administrative or judicial
proceedings concerning the existence or amount of liability for Excise Tax with
respect to the Total Payments.
(e) The parties acknowledge and agree that notwithstanding anything to the
contrary contained in the Employment Agreement or the Personal Note, (i) the
repurchase of the Shares pursuant to this Agreement shall be deemed to be a
Liquidity Event (as that term is defined in the Personal Note), (ii) the
repurchase of the Shares pursuant to this Agreement means that the condition
referenced in Section 3(a)(iii) of the Personal Note will not be satisfied, but
nonetheless, subject to the provisions of Section 4 of the Personal Note, the
Maturity Date of the Personal Note shall be the earlier to occur of (x) June 30,
2003, or (y) six months after termination of Executive's employment with the
Company for any reason.
(f) The parties acknowledge and agree that as of the date hereof, both
Executive and the Company have satisfactorily performed their respective
obligations to one another pursuant to the Employment Agreement, the Stock
Agreement, the Stock Note, the Pledge Agreement, the Registration Letter and the
Personal Note, and that neither party is currently in breach of any of such
obligations.
Section 4. Miscellaneous
(a) This Agreement shall be binding upon and shall inure to the benefit of
Executive and the Company and their respective heirs, personal representatives,
successors and assigns, provided, however, that the obligations of Executive
hereunder are personal to Executive and may not be delegated by him.
(b) This Agreement shall be governed by and construed in accordance with
the laws of the State of Illinois, without regard to conflicts of law
principles.
(c) The waiver by either party of any right hereunder or of any failure to
perform or breach by the other party hereto shall not be deemed a waiver of any
other right hereunder or of any other failure or breach by the other party
hereto, whether of the same or a similar nature or otherwise. No waiver shall be
deemed to have occurred unless set forth in a writing executed by or on behalf
of the waiving party. No such written waiver shall be deemed a continuing waiver
unless specifically stated therein, and each such waiver shall operate only as
to the specific term or condition waived and shall not constitute a waiver of
such term or condition for the future or as to any act other than that
specifically waived.
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(d) All notices and communications that are required or permitted to be
given hereunder shall be in writing and shall be deemed to have been duly given
when delivered personally, upon mailing by registered or certified mail, postage
prepaid, return receipt requested, or upon delivery to a reputable overnight
courier as follows:
If to the Company, to:
Lante Corporation
000 Xxxxx Xxxxxx Xxxxxx
Xxxxx 000
Xxxxxxx, Xxxxxxxx 00000
Attention: Chief Financial Officer
With a copy to:
Xxxxxxxx X. Xxxxx
Jenner & Block, LLC
Xxx XXX Xxxxx
Xxxxxxx, Xxxxxxxx 00000
If to Executive, to:
C. Xxxx Xxxxxxx
0000 Xxxxxxxxx Xxxxx
Xxxxxxxxxx, Xxxxxxxx 00000
With a copy to:
Xxxxx X. Xxxxx, Esq.
Xxxxxxx, Xxxxxxx & Xxxxxxxx
One Market - Xxxxx Xxxxxx Xxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
or to such other address as may be specified in a notice given by one party to
the other party hereunder.
(e) If for any reason any term or provision of this Agreement is held to
be invalid or unenforceable, all other valid terms and provisions shall remain
in full force and effect, and all of the terms and provisions of this Agreement
shall be deemed to be severable in nature. If for any reason any term or
provision containing a restriction set forth herein is construed to be too broad
or to any extent unreasonable or invalid, such term or provision shall not be
determined to be null, void and of no effect, but to the extent the same is or
would be valid or enforceable under applicable law, any court of competent
jurisdiction shall construe and interpret or reform this Agreement to provide
for a restriction having the maximum enforceable area, time period and other
provisions (not greater than those contained herein) as shall be valid and
enforceable under applicable law.
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(f) This Agreement may be executed in several counterparts, each of which
shall be deemed to be an original but all of which together shall constitute but
one and the same instrument.
(g) This Agreement may be amended or canceled by mutual agreement of the
parties in writing without the consent of any other person and, so long as
Executive lives, no person, other than the parties hereto, shall have any rights
under or interest in this Agreement or the subject matter hereof.
(h) This Agreement constitutes the entire agreement between the parties,
and supersedes all prior oral or written understandings between the parties,
relating to the matters contained herein. In the event of any inconsistency
between the terms of this Agreement and any other agreement or document
referenced or contemplated herein, including without limitation the Employment
Agreement, the terms of this Agreement shall control.
(i) Each party shall cooperate with the other and shall execute and
deliver all such other documents, stock powers, instruments or agreements, and
will take all such other actions as either party may reasonably request in order
to consummate the transactions contemplated by this Agreement. Each party shall
bear its own costs and expenses in performing its obligations pursuant to this
Agreement.
(j) Notwithstanding anything to the contrary herein or in the 2002 Note,
Executive agrees that the Company shall have the right to set-off the net amount
of any monies owed to Executive pursuant to the 2002 Xxxxxxx Stock Performance
Plan against any then outstanding principal and accrued but unpaid interest on
the 2002 Note, for as long as amounts remain outstanding pursuant to such note.
(Signature page follows)
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Executive and the Company have executed this Agreement on the date and year set
forth above.
LANTE CORPORATION
By: /s/ Xxxxxxx Xxxxx
---------------------------
Its: Chief Financial Officer
---------------------------
EXECUTIVE
/s/ C. Xxxx Xxxxxxx
--------------------------------
C. Xxxx Xxxxxxx
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EXHIBIT A
PROMISSORY NOTE
$544,920 January 21, 0000
Xxxxxxx, Xxxxxxxx
FOR VALUE RECEIVED, the undersigned, C. XXXX XXXXXXX, ("Borrower"), hereby
unconditionally promises to pay to the order of LANTE CORPORATION, a Delaware
corporation ("Lender"), at the office of Lender at 000 Xxxxx Xxxxxx Xxxxxx,
Xxxxx 000, Xxxxxxx, Xxxxxxxx 00000, or at such other place as the holder
("Holder") of this Promissory Note (this "Note") may from time to time designate
in writing, in lawful money of the United States of America and in immediately
available funds, the principal sum of FIVE HUNDRED FORTY FOUR THOUSAND, NINE
HUNDRED TWENTY DOLLARS ($544,920). The outstanding principal amount of this Note
and all accrued, but unpaid, interest hereunder shall be due and payable on the
earlier to occur of (a) June 30, 2003, or (b) six months after termination of
Borrower's employment with Lender for any reason (the "Maturity Date").
1. Interest. Interest on the unpaid principal balance of this Note shall
accrue from the date hereof at the fixed rate of 2.73% per annum (the "Interest
Rate"), compounded annually. If Lender in its sole discretion so elects,
following the occurrence and during the continuance of an Event of Default (as
defined below), interest on the unpaid principal balance of this Note shall
accrue at a rate (the "Default Rate") equal to the Interest Rate plus 7%.
2. Prepayment. Borrower shall have the right to prepay the Note, in whole
or in part, at any time without premium or penalty. All payments hereunder shall
be applied in the following order of priority: (a) first, toward the payment of
interest which has accrued on the outstanding principal balance of the Note; (b)
next, toward payment of any costs of collection as provided herein; and (c)
last, toward payment of the outstanding principal of the Note.
3. Extension of Maturity Date. If Borrower is still employed by Lender on
June 30, 2003, Borrower may extend the Maturity Date of the Note by one
additional year by providing written notice of such extension to an executive of
Lender no later than June 15, 2003. Upon any such extension, the Note will bear
interest based upon the then-current short-term applicable Federal rate. Should
Borrower's employment with Lender terminate for any reason during such one year
extension, the outstanding principal amount of the Note and all accrued but
unpaid interest hereunder shall be due and payable on the date that is six (6)
months after Borrower's final day of employment with Lender.
4. Event of Default. Borrower's failure to pay any amounts owed pursuant
to this Note within 10 calendar days after such payment is due shall constitute
an "Event of Default" under this Note. Lender's rights, remedies and powers, as
provided in this Note shall be in addition to any other right or remedy
available at law or in equity. Additionally, Lender may resort to every other
right or remedy available at law or in equity without first exhausting the
rights and remedies contained herein, all in Lender's sole discretion. Failure
of Lender at any one time, for a period of time or on more than one occasion to
exercise any of its rights or remedies hereunder or at law or in equity shall
not constitute a waiver of the right to exercise the
same right or remedy at any time thereafter. Any and all waivers must be in
writing to be effective.
5. Cost of Collection. If any suit or action is instituted or attorneys
are employed to collect this Note or any part thereof, Borrower hereby promises
and agrees to pay all costs of collection, including attorneys' fees and court
costs, if Lender prevails in the suit or action; and Lender hereby promises and
agrees to pay all of Borrower's attorney's fees and court costs if Borrower
prevails in the suit or action.
6. Waivers. Borrower hereby waives presentment for payment, protest and
demand, and notice of demand, protest, dishonor or nonpayment of this Note. To
the extent permitted by applicable law, Borrower also waives all rights to
notice and hearing of any kind upon the occurrence of an Event of Default and
prior to the exercise by Lender of any of its rights. No delay on the part of
Lender in the exercise of any right or remedy hereunder shall operate as a
waiver thereof, and no single or partial exercise by the Lender of any right or
remedy shall preclude other or further exercise thereof or the exercise of any
other right or remedy.
7. Excess Interest. Notwithstanding any provision to the contrary
contained in this Note, Borrower shall not be required to pay and Lender shall
not be permitted to collect, any amount of interest in excess of the maximum
amount of interest permitted by law ("Excess Interest"). If any Excess Interest
is provided for or determined by a court of competent jurisdiction to have been
provided for in this Note, then in such event: (a) any Excess Interest that
Lender may have received hereunder shall be, at Lender's option, (i) applied as
a credit against the outstanding principal balance of the Note or accrued and
unpaid interest (not to exceed the maximum amount permitted by law), (ii)
refunded to the Borrower, or (iii) any combination of the foregoing; (b) the
interest rate(s) provided for herein shall be automatically reduced to the
maximum lawful rate allowed from time to time under applicable law (the "Maximum
Rate"), and this Note shall be deemed to have been and shall be, reformed and
modified to reflect such reduction; and (c) Borrower shall not have any action
against Lender for any damages arising out of the payment or collection of any
Excess Interest.
8. Choice of Law. THIS NOTE SHALL BE INTERPRETED AND THE RIGHTS AND
LIABILITIES OF THE PARTIES HERETO SHALL BE DETERMINED IN ACCORDANCE WITH THE
INTERNAL LAWS AND DECISIONS OF THE STATE OF ILLINOIS WITHOUT REGARD TO CONFLICTS
OF LAW PROVISIONS.
9. Miscellaneous. Whenever possible, each provision of this Note shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Note shall be prohibited by or invalid under
applicable law, such provision shall be ineffective to the extent of such
prohibition or invalidity, without invalidating the remainder of such provision
or the remaining provisions of this Note. Whenever in this Note reference is
made to Lender or Borrower, such reference shall be deemed to include, as
applicable, a reference to their respective successors, assigns, heirs and
estates. The provisions of this Note shall be binding upon and shall inure to
the benefit of successors, assigns, heirs and estates, provided that Borrower
may not hypothecate, transfer or assign its obligations hereunder.
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IN WITNESS WHEREOF, Borrower has executed this Note as of the day and year
first written above.
/s/
-----------------------------
C. Xxxx Xxxxxxx
