EXHIBIT 10.13
STOCK PURCHASE AND LOAN AGREEMENT
This Stock Purchase, Stock Pledge, and Loan Agreement ("Agreement") is
made as of December 21, 1998, by and between ANNIE'S HOMEGROWN, INC. ("Company")
and Xxxxxx X. Xxxxxx ("Key Employee").
RECITALS
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WHEREAS, Key Employee has performed and is expected to continue to
perform valuable services for the Company;
WHEREAS, the Company granted to Key Employee certain incentive stock
options ("Options") pursuant to the Company's stockholder-approved 1990
Incentive Stock Option Plan;
WHEREAS, the Options expire on December 30, 1998; and
WHEREAS, to enable Key Employee to purchase up to One Hundred One
Thousand Nine Hundred Fifty-Nine (101,959) shares of the Company's common stock
($.001 par value) ("Shares") pursuant to the Options, the Company and Key
Employee desire the Company to make a personal loan ("Loan") to Key Employee
subject to the terms and conditions of this Agreement.
AGREEMENT
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NOW, THEREFORE, in consideration of the covenants, duties, terms, and
conditions set forth in this Agreement, the parties agree as follows:
1. Share Purchase. Subject to the terms and conditions stated in this
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Agreement, the Company hereby agrees to sell to Key Employee and Key Employee
agrees to purchase 101,959 Shares at the price of $1.005 per Share.
2. Loan. Subject to the terms and conditions stated in this Agreement,
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the Company hereby agrees to loan Key Employee $102,468.80. The amount of the
Loan is equal to the purchase price of 101,959 Shares at $1.005 per Share.
3. Use of Proceeds. Key Employee agrees to use all of the proceeds from
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the Loan to purchase from the Company 101,959 Shares at the price of $1.005
per Share.
4. Interest. The outstanding principal amount of the Loan shall bear
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interest ("Interest") at the rate of 4.51%, compounded annually, from the date
hereof to the date of payment. This interest rate is equal to the Mid-Term
Applicable Federal Rate as defined in Section 1274(d) of the Internal Revenue
Code of 1986, as amended.
5. Payment of Principal and Interest. For value received, Key Employee
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promises to pay to the Company, in lawful money of the United States of America,
and in immediately available funds, the principal sum of One Hundred Two
Thousand Four Hundred Sixty-Eight and 80/100 Dollars
($102,468.80), or so much thereof as may be outstanding, with interest thereon,
on December 30, 2003 (the "Maturity Date"). Subject to Section 6.1, Interest
accrued on this Loan shall be payable annually on December 30th of each year,
commencing on December 30, 1999.
6. Payment of Interest: Reduction of Principal Amount.
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6.1. Payment of Interest. If, as of December 29 of each year, Key
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Employee is still employed with the Company, the Company agrees to pay, on Key
Employee's behalf, all Interest associated with the Loan. Any Interest paid by
the Company on Key Employee's behalf will not be distributed to Key Employee
but, rather, will be automatically applied against Key Employee's Interest
payment obligations under this Agreement. Any Interest paid by the Company on
Key Employee's behalf will be deemed to be additional compensation income to Key
Employee.
6.2. Reduction of Principal Amount. The Company agrees to reduce the
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Principal Amount as follows:
(a) If, as of December 29, 1999, Key Employee is still employed
by the Company, the Company agrees to forgive $20,493.76 of the Principal
Amount;
(b) If, as of December 29, 2000, Key Employee is still employed
by the Company, the Company agrees to forgive an additional $20,493.76 of the
Principal Amount;
(c) If, as of December 29, 2001, Key Employee is still employed
by the Company, the Company agrees to forgive an additional $20,493.76 of the
Principal Amount;
(d) If, as of December 29, 2002, Key Employee is still employed
by the Company, the Company agrees to forgive an additional $20,493.76 of the
Principal Amount;
(e) If, as of December 29, 2003, Key Employee is still employed
by the Company, the Company agrees to forgive the remaining $20,493.76 of the
Principal Amount.
It is the parties intention that, if Key Employee continues to be
employed by the Company as of December 29, 2003, the Principal Amount will be
completely forgiven.
6.3. Change in Control. In the event that a single person or
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entity (other than the current shareholders of the Company) acquires more than
50% of the outstanding stock of the Company, then the full amount of the
Principal Amount not yet paid plus all accrued interest thereon, will be due and
payable in accordance with Section 5 and Section 8 shall not apply.
7. Pledge of Stock.
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7.1. Pledged Shares. Key Employee's obligations under this Agreement
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are secured by the Shares, and Key Employee hereby grants the Company a security
interest in the Shares (the "Pledged Shares"). The foregoing security interest
shall constitute a first priority interest to secure the payment of the
Principal Amount as such amount is reduced by Section 6 of this Agreement. All
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certificates representing the Shares, if any shall have been issued, shall be
fully endorsed in blank by Key Employee and delivered by Key Employee to the
Company.
7.2. Rights of the Company as Secured Party. The Company shall have
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all rights and remedies set forth in this Agreement and all other rights of a
secured party at law or in equity.
7.3. Rights Regarding Pledged Shares. The Company has the right to
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deliver any or all of the Pledged Shares to any person, to have any or all of
the Pledged Shares registered in its name or in the name of any other person,
and Key Employee irrevocably appoints the Company its attorney-in-fact
authorized at any time during the term of this Agreement to take any actions or
exercise any rights available to the Company under this Agreement.
7.4. Voting Rights. Key Employee hereby grants the Company the right
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to vote the Pledged Shares until either Key Employee makes full payment of the
Principal Amount and any applicable Interest or the Principal Amount is
completely forgiven pursuant to Section 6.2 of this Agreement.
7.5. Key Employee's Representations Regarding Shares. Key Employee
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represents that, as of the date of this Agreement, Key Employee has not taken
any action that would result in the Pledged Shares being subject to any adverse
claims, liens, or encumbrances (other than the pled-e under this Agreement),
and, to his knowledge, there are no adverse claims, liens, or encumbrances on
the Pledged Shares as of the date of this Agreement.
7.6. Release of Security. As the Principal Amount is reduced
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pursuant to Section 6, Shares (at a value of $1.005/Share for this purpose) will
be released from the pledge to Key Employee, i.e., 20% of the Shares after one
(1) year, an additional 20% after two (2) years, an additional 20% after three
(3) years, an additional 20% after (4) years, and the balance after five (5)
years of employment. Upon full payment of the Principal Amount and any
applicable Interest or complete forgiveness of the Principal Amount pursuant to
Section 6.2 of this Agreement, the Company shall cause the Shares representing
the balance of the Pledged Shares to Key Employee to be registered on the books
of the Company's transfer agent.
7.7. Remedies Related to Collateral. Upon an Event of Default (as
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defined in Section 11 of this Agreement), the Company may, in its sole
discretion and with or without further notice to Key Employee (in addition to
all rights or remedies available at law or equity or otherwise): (i) register
the Pledged Shares in the name of the Company or in any such name as the Company
may decide, and (ii) exercise any rights provided to a secured party under the
applicable commercial code.
8. Termination of Employment. Except in the event of a Change of
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Control, in which case Section 6.3 shall apply, if Key Employee ceases to be
employed by the Company, the Company may purchase the Shares sold to Key
Employee as provided in this section.
8.1. Termination of Employment Before December 29, 2003. In the
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event of termination of Key Employee's employment with the Company before
December 29, 2003, the Company shall be entitled to buy back from Key Employee,
Shares purchased pursuant to the terms of this Agreement,
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at a price equal to $1.005 per Share plus 140% of interest accrued and not yet
forgiven on the Loan, as follows:
(a) If Key Employee's employment is terminated before December 29,
1999, the Company will be entitled to buy back from key Employee all of the
Shares purchased pursuant to this Agreement;
(b) If Key Employee's employment is terminated on or after December
29, 1999 but before December 29, 2000, the Company will be entitled to buy back
from Key Employee 81,567 Shares purchased pursuant to this Agreement;
(c) If Key Employee's employment is terminated on or after December
29, 2000 but before December 29, 2001, the Company will be entitled to buy back
from Key Employee 61,175 Shares purchased pursuant to this Agreement;
(d) If Key Employee's employment is terminated on or after December
29, 2001 but before December 29, 2002, the Company will be entitled to buy back
from Key Employee 40,783 Shares purchased pursuant to this Agreement;
(e) If Key Employee's employment is terminated on or after December
29, 2002 but before December 29, 2003, the Company will be entitled to buy back
from Key Employee 20,391 Shares purchased pursuant to this Agreement.
8.2. Company's Election Not to Buy Back Shares. In the event that the
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Company elects not to buy back Key Employee's Shares pursuant to the terms
of Section 8.1 of this Agreement, Key Employee may either (i) obtain title to
the Pledged Shares and a release of the Company's security interest in the
Pledged Shares by making full payment of the Principal Amount and any applicable
Interest within 45 days of the termination date, or (ii) sell some or all of the
Shares to the Company for the price of $1.005 per Share (plus accrued interest)
in repayment of the Principal Amount and any applicable Interest. The Company
will be obligated to purchase the Shares from Key Employee pursuant to this
Section 8.2 if the Company elects not to purchase the Shares pursuant to Section
8.1 of this Agreement and Key Employee elects to sell the Shares back to the
Company pursuant to the terms of this Section 8.2.
8.3. Termination of Employment On or After December 29, 2003 or
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Before December 29, 2003 for Other Than Good Cause. In the event of termination
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of Key Employee's employment with the Company on or after December 29, 2003 for
any reason whatsoever, or in the event that the Company terminates Key
Employee's employment before December 29, 2003 for other than Good Cause (as
defined below), the Company will not be entitled to buy back the Shares
purchased by Key Employee pursuant to this Agreement other than as provided in
Section 8.4 of this Agreement. Notwithstanding the foregoing, the parties may
enter into a subsequent agreement whereby the Company agrees to purchase Shares
held by Key Employee.
As used herein, the term "Good Cause" shall mean (i) any act or
omission of gross negligence, willful misconduct, dishonesty, or fraud by Key
Employee in the performance of his
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duties, (ii) the failure or refusal of Key Employee to perform the duties or to
render the services assigned to him from time to time, (iii) the charging or
indictment of Key Employee in connection with a felony or any misdemeanor
involving dishonesty or moral turpitude, (iv) the material breach by Key
Employee of his fiduciary duty or duty of trust to the Company, (v) death of Key
Employee, or (vi) voluntary termination of employment by Key Employee.
8.4. Principal Amount and Interest in the Event of Termination. In
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the event the Company exercises its right to buy back the Shares from Key
Employee pursuant to Section 8.1 of this Agreement, any outstanding Principal
Amount and any applicable Interest will be immediately due and payable and shall
be applied against amounts due to Key Employee for purchase of Shares. In the
event that the Company terminates Key Employee's employment before December 29,
2003 for other than Good Cause, Key Employee may either (i) obtain title to the
Pledged Shares and a release of the Company's security interest in the Pledged
Shares by making full payment of the Principal Amount and any applicable
interest within 45 days of the termination date, or (ii) sell Shares to the
Company (and the Company agrees to purchase the Shares) for the price of $1.005
per Share (plus accrued interest) in repayment of the Principal Amount and any
applicable Interest.
9. Arbitration. If a dispute arises between the Company and Key Employee
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concerning this Agreement, the disputed matter shall be submitted to arbitration
in the City of San Francisco, California, in accordance with the commercial
arbitration rules of the American Arbitration Association ("AAA Rules"). Any
judgment upon the award rendered by the arbitrators may be entered in any court
having jurisdiction thereof. The arbitrators shall have the authority to grant
any equitable and legal remedies that would be available in any judicial
proceeding instituted to resolve the disputed matter. The arbitrators shall
apply the laws of the State of California in making any determination hereunder.
Notwithstanding anything to the contrary which may now or hereafter be contained
in the AAA Rules, the parties agree any such arbitration shall be conducted
before a panel of three arbitrators who shall be compensated for their services
at a rate to be determined by the American Arbitration Association in the event
the parties are not able to agree upon their rate of compensation. Each party
shall have the right to appoint one arbitrator (to be appointed within 20 days
of the notice of a dispute to be resolved by arbitration hereunder), and the two
arbitrators so chosen shall mutually agree upon the selection of the third,
impartial arbitrator. The majority decision of the arbitrators will be final
and conclusive upon the parties hereto.
10. Payments. Any payments due from Key Employee under this Agreement
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shall be made payable to Annie's Homegrown, Inc. and shall be sent to the
Company's offices at 000 Xxxx Xxxxxx, Xxxxxxxxx, XX 00000, Attention: Xxxx
Xxxxx.
11. Event of Default. It shall be an event of default (an "Event of
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Default") if Key Employee fails to pay the Company pursuant to Section 5.
12. Right of Employment. Nothing herein shall confer upon Key Employee
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the right to continue in the employment of the Company nor affect any right
which the Company may have to terminate the employment of Key Employee.
13. Miscellaneous.
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13.1. This Agreement contains the full and complete understanding of
the parties and supersedes all prior representations, promises, agreements, and
warranties, whether oral or written.
13.2. This Agreement shall be governed by and interpreted according
to the laws of the Commonwealth of Massachusetts, without regard to the choice
of law provisions thereunder.
13.3. With respect to the Company, this Agreement shall inure to the
benefit of and be binding upon any successors or assigns of the Company. With
respect to Key Employee, this Agreement shall not be assignable but shall inure
to the benefit of estate of Key Employee or his legal successor upon death or
disability.
13.4. The captions of the various sections of this Agreement are
inserted only for convenience and shall not be considered in construing this
Agreement.
13.5. This Agreement can be modified, amended, or any of its terms
waived only by a writing signed by both parties.
13.6. If any provision of this Agreement shall be held invalid,
illegal, or unenforceable, the remaining provisions of the Agreement shall
remain in full force and effect and the invalid, illegal, or unenforceable
provision shall be limited or eliminated only to the extent necessary to remove
such invalidity, illegality or unenforceability in accordance with the
applicable law at that time.
13.7. No remedy made available to the Company by any of the
provisions of this Agreement is intended to be exclusive of any other remedy.
Each and every remedy shall be cumulative and shall be in addition to every
other remedy given hereunder as well as those remedies existing at law, in
equity, by statute, or otherwise.
13.8. This Agreement may be executed in counterparts, each of which
will be considered an original and each of which will constitute one and the
same document.
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IN WITNESS WHEREOF, this Agreement has been executed as of the date
specified in the first paragraph.
ANNIE'S HOMEGROWN, INC.
By: __________________________
Xxxx Xxxxx
Its: Chief Financial Officer
KEY EMPLOYEE:
_________________________
Xxxxxx X. Xxxxxx
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