EXHIBIT 10.5
EXECUTIVE SECURITIES PURCHASE
AND EMPLOYMENT AGREEMENT
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THIS EXECUTIVE SECURITIES PURCHASE AND EMPLOYMENT AGREEMENT (this
"Agreement") is made as of January 27, 1997, among BrightView Communications
Group, Inc., a Delaware corporation ("BrightView"), ▇▇▇▇▇▇▇▇ Holdings, L.L.C., a
Delaware limited liability company ("Holding LLC"), and ▇▇▇▇▇▇▇▇ Publishing
Company, L.L.C., a Delaware limited liability company ("Operating LLC"), and
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ("Executive"). BrightView, Holding LLC and Operating LLC are
sometimes referred to collectively herein as the "Companies".
BrightView is the sole managing member of Holding LLC, and Holding LLC
and BrightView own all of the membership interests of Operating LLC.
The Companies and Executive desire to enter into an agreement pursuant
to which Executive shall purchase (i) 6 shares of BrightView's Class A Common
Stock, par value $.01 per share (the "Common Stock"), (ii) 1,690.14 of Holding
LLC's Class A Common Units (the "Class A Common Units"), 125 of Holding LLC's
Class B Common Units (the "Class B Common Units") and 125 of Holding LLC's Class
C Common Units (the "Class C Common Units") (in each case as defined in the
Holding LLC Agreement) (collectively, the "Common Units") and (iii) 660 of
Holding LLC's Preferred Units (as defined in the Holding LLC Agreement) (the
"Preferred Units"). All of such shares of Common Stock, Common Units and
Preferred Units and all shares of stock and all other equity interests in
BrightView or Holding LLC hereafter acquired by Executive are referred to herein
as "Executive Securities." Certain definitions are set forth in Section 17 of
this Agreement.
The execution and delivery of this Agreement by the Companies and
Executive is a condition under a Securities Purchase Agreement, dated as of the
date hereof (the "Purchase Agreement"), by and among BrightView, Holding LLC,
▇▇▇▇▇▇▇▇ Investment Corp., a Delaware corporation ("PIC"), and certain other
Persons (the "Investors") to the purchase by the Investors of certain securities
of BrightView, Holding LLC and/or PIC.
The parties hereto agree as follows:
PART I. PURCHASE OF EXECUTIVE SECURITIES
1. Purchase and Sale of Executive Securities.
(a) Upon execution of this Agreement, (i) Executive shall purchase
from BrightView, and BrightView shall sell to Executive, 6 shares of Common
Stock at a price of $500.00 per share (ii) Executive shall purchase from Holding
LLC, and Holding LLC shall sell to Executive, 660 Class A Common Units at a
price of $4.50 per Class A Common Unit and 660 Preferred Units at a price of
$445.50 per Preferred Unit. BrightView and Holding LLC, as applicable, shall
deliver
to Executive a copy of, and a receipt for, the certificate representing such
shares of Common Stock, and Executive shall deliver (i) to BrightView (A) a
promissory note in the form of Annex A attached hereto in an aggregate principal
amount of $2,000.00 and (B) $1,000 in cash (ii) to Holding LLC (A) a promissory
note in the form of Annex A attached hereto in an aggregate principal amount of
$198,000.00 (such promissory note, together with the promissory note referred to
in clause (i), the "Executive Notes") and (B) $99,000 in cash. All cash payments
shall be made by certified or cashier's check or by wire transfer of immediately
available funds to a bank account designated by BrightView or Holding LLC, as
the case may be, for such purpose. The Executive Securities purchased pursuant
to this Section 1(a), and any Executive Securities issued in respect of such
Executive Securities, whether by way of a stock split, stock dividend, other
recapitalization or similar transaction, or in exchange for such Securities
pursuant to Article IV of the Securityholders Agreement, are referred to
collectively herein as "Nonvesting Executive Securities."
(b) Upon execution of this Agreement, Executive shall purchase from
Holding LLC, and Holding LLC shall sell to Executive, for no additional
consideration 1,030.14 Class A Common ▇▇▇▇▇, ▇▇▇ Class B Common Units and 125
Class C Common Units. BrightView shall deliver to Executive a copy of, and a
receipt for, the certificate representing such shares of Common Stock. The
Executive Securities purchased pursuant to this Section 1(b), and any Executive
Securities issued in respect of such Executive Securities, whether by way of a
stock split, stock dividend, other recapitalization or similar transaction, or
in exchange for such Securities pursuant to Article IV of the Securityholders
Agreement, are referred to collectively herein as "Vesting Executive
Securities."
(c) Executive's obligations under the Executive Notes shall be secured
by a pledge of all of the Executive Securities. In connection therewith,
Executive shall enter into a pledge agreement with BrightView and Holding LLC in
the form of Annex B attached hereto. BrightView, individually and in its
capacity as managing member of Holding LLC, shall hold each certificate
representing the Executive Securities until the Executive Securities represented
by such certificate are released from the pledge to BrightView and Holding LLC
shall hold each certificate, if any, representing the Common Units and Preferred
Units purchased hereunder until the Executive Securities represented by such
certificate, if any, are released from the pledge to BrightView and Holding LLC.
(d) Within 30 days after Executive purchases the Vesting Executive
Securities, Executive shall make an effective election with respect to such
Executive Securities with the Internal Revenue Service under Section 83(b) of
the Internal Revenue Code and the regulations promulgated thereunder in the form
of Annex C attached hereto.
(e) In connection with the purchase and sale of the Executive
Securities hereunder, Executive represents and warrants to BrightView and
Holding LLC that:
(i) The Executive Securities to be acquired by Executive pursuant
to this Agreement shall 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
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laws, and the Executive Securities shall not be disposed of in
contravention of the Securities Act or any applicable state securities
laws.
(ii) Executive is an executive officer of BrightView, Holding LLC
or one of their Subsidiaries, 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 subsequent ly
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 Companies as he has requested. Executive has reviewed, or
has had an opportunity to review, a copy of the Asset Purchase Agreement,
dated as of August 15, 1996, between BrightView and ▇▇▇▇▇▇▇▇ Publishing
Company ("Seller"), as amended (which agreement in part has been assigned
to and assumed by Operating LLC and Holding LLC), pursuant to which
Operating LLC acquired substantially all of the assets of Seller, and
Executive is familiar with the transactions contemplated thereby. Executive
has also reviewed, or has had an opportunity to review, the following
documents: (A) BrightView's Certificate of Incorporation and Bylaws, (B)
the Limited Liability Company Agreement of Holding LLC dated as of
September 30, 1996, (C) the Limited Liability Company Agreement of
Operating LLC, (D) the loan agreements, notes and related documents with
BrightView's senior and subordinated lender; and (E) Holding LLC's
consolidated pro forma balance sheet dated as of August 31, 1996. Except as
expressly set forth herein, none of the Companies makes any representations
or warranties regarding the Executive Securities, Executive's investment in
the Companies or otherwise as to the financial condition, assets,
liabilities, business or prospects of any of the Companies and all of such
representations and warranties are hereby disclaimed.
(v) This Agreement constitutes the legal, valid and binding
obligation of Executive, enforceable in accordance with its terms, and the
execution, delivery and performance of this Agreement by Executive do not
and shall 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.
(f) As an inducement to BrightView and Holding LLC to issue the
Executive Securities to Executive, and as a condition thereto, Executive
acknowledges and agrees that:
(i) neither the issuance of the Executive Securities to Executive
nor any provision contained herein shall entitle Executive to remain in the
employment of Holding LLC and its Subsidiaries or affect the right of
Holding LLC or any of its Subsidiaries to terminate Executive's employment
at any time subject to the terms of this Agreement; and
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(ii) neither BrightView, Holding LLC nor Operating LLC shall have
any duty or obligation to disclose to Executive, and Executive shall have
no right to be advised of, any material information regarding BrightView,
Holding LLC, Operating LLC or any of their respective Subsidiaries at any
time prior to, upon or in connection with the repurchase of Unvested
Securities.
(g) The Companies and Executive acknowledge and agree that this
Agreement has been executed and delivered, and the Executive Securities have
been issued hereunder, in connection with and as a part of the compensation and
incentive arrangements between the Companies and Executive.
2. Vesting of Executive Securities.
(a) Except as otherwise provided in Section 2(b) below, the Vesting
Executive Securities shall become vested in accordance with the following
schedule, if as of each such anniversary date Executive is employed by
BrightView or any of its Subsidiaries:
Cumulative
Percentage of Vesting Executive
Anniversary Date Securities Vested
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September 30, 1997 20%
September 30, 1998 40%
September 30, 1999 60%
September 30, 2000 80%
September 30, 2001 100%
(b) If Executive ceases to be employed by the Operating LLC and its
Subsidiaries on any date other than any anniversary date prior to September 30,
2001, the cumulative percentage of Vesting Executive Securities to become vested
shall be determined on a pro rata basis according to the number of days elapsed
since the prior anniversary date. If Executive is employed by the Operating LLC
upon the occurrence of a Sale of the Company or a Qualified IPO, all shares of
Vesting Executive Securities which have not yet become vested shall become
vested at the time of such event. The Vesting Executive Securities which have
become vested and the Executive Securities which are not Vesting Executive
Securities are collectively referred to herein as the "Vested Securities," and
Vesting Executive Securities which have not become vested are referred to herein
as the "Unvested Securities."
3. Repurchase Option.
(a) In the event Executive's employment is terminated by Holding LLC
and its Subsidiaries for Cause or by Executive without Good Reason, the
Companies or any of their Subsidiaries may repurchase all or any portion of the
Executive Securities (whether held by Executive or one or more of Executive's
direct or indirect transferees) pursuant to the terms and conditions set forth
in this Section 3 (a "Repurchase Option") by delivering written notice thereof
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(a "Repurchase Notice") to Executive not later than 90 days after the date of
such termination. Each of the Companies and their Subsidiaries which elects to
purchase Executive Securities pursuant to the Repurchase Option is referred to
as a "Repurchasing Company" and all such persons are referred to collectively as
the "Repurchasing Companies". The Repurchasing Companies may elect (i) to
purchase all or any portion of the Unvested Securities without or before
purchasing any Vested Securities and (ii) to purchase all or any portion of the
Vesting Executive Securities without or before purchasing any Nonvesting
Executive Securities. If the Repurchasing Companies elect to purchase Nonvesting
Executive Securities, the Repurchasing Companies shall purchase a proportionate
amount of each class and type of Nonvesting Executive Securities. The purchase
price for each of the Unvested Securities shall be the lesser of (i) its Fair
Market Value and (b) its Original Cost. The purchase price for each Vested
Security shall be its Fair Market Value.
(b) In the event Executive's employment is terminated by Holding LLC
and its Subsidiaries without Cause or by Executive with Good Reason, the
Companies and any of their respective Subsidiaries may elect to purchase all or
any portion of the Unvested Securities by delivering a Repurchase Notice to
Executive not later than 90 days after the date of such termination. The
purchase price for each of the Unvested Securities shall be the lesser of (i)
its Fair Market Value, and (ii) its Original Cost.
(c) The Repurchase Notice shall set forth the Unvested Securities to
be acquired from each holder of Executive Securities, the aggregate
consideration to be paid for such securities and the time and place for the
closing of the transaction. The number of Executive Securities of any class or
type to be repurchased by the Repurchasing Companies shall first be satisfied to
the extent possible from the Executive Securities held by Executive at the time
of delivery of the Repurchase Notice. If the number of Executive Securities of
any class or type then held by Executive is less than the total number of
Executive Securities of such class or type the Repurchasing Companies have
elected to purchase, the Repurchasing Companies shall purchase the remaining
amount elected to be purchased from the other holder(s) of Executive Securities
under this Agreement, pro rata according to the amount of Executive Securities
of such class or type held by such other holder(s) at the time of delivery of
such Repurchase Notice (determined as close as practicable to the nearest whole
share or unit).
(d) The closing of the purchase of the Executive Securities pursuant
to the Repurchase Option shall take place on the date designated by the
Repurchasing Companies in the Repurchase Notice, which date shall not be more
than 90 days nor less than five days after the delivery of such notice. The
Repurchasing Companies shall pay the purchase price for the Executive Securities
to be purchased pursuant to the Repurchase Option by (i) offsetting all or any
portion of the amounts, if any, then owing under the Executive Notes under any
other bona fide debts owed by Executive to any of the Companies, (ii) delivery
of a check or wire transfer of funds, (iii) if any of the Companies is
restricted at such time from paying cash to repurchase equity securities,
delivery of a subordinated note or notes of BrightView and/or Holding LLC
payable in three equal annual installments beginning on the first anniversary of
the closing of such purchase and bearing interest (payable quarterly) at a rate
per annum equal to the "applicable federal rate" (as defined in Treasury
Regulation Section 1.1274-4(b)), or (iv) solely at the option of the
Repurchasing Companies, any combination of clause (i), clause (ii) and, subject
to the conditions set forth in clause (iii), clause (iii);
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provided that if any Repurchasing Company is restricted from paying cash for any
Executive Securities it elects to repurchase pursuant to the Repurchase Option,
such Repurchasing Company will pay for such Executive Securities first by
offsetting amounts then owing under the Executive Notes pursuant to clause (iii)
if such Repurchasing Company is not restricted from paying for such Executive
Securities in such manner under its debt and equity financing agreements. Any
notes issued by the Companies pursuant to this Section 3(d) shall be subject to
such subordination and other terms specified therefor in any restrictive
covenants to which any of the Companies is subject at the time of such purchase.
The Repurchasing Companies shall be entitled to receive customary
representations and warranties from the sellers regarding such sale of Executive
Securities (including representations and warranties regarding good title to
such shares, free and clear of any liens or encumbrances) and to require that
all sellers' signatures be guaranteed by a national bank or reputable securities
broker.
(e) Notwithstanding anything to the contrary contained in this
Agreement, all repurchases of Executive Securities by any of the Companies shall
be subject to applicable restrictions contained in the Delaware General
Corporation Law, the Delaware Limited Liability Company Act and in the Companies
and their Subsidiaries debt and equity financing agreements. If any such
restrictions prohibit the repurchase of Executive Securities hereunder which the
Companies are otherwise entitled to make, the time periods provided in this
Section 3 shall be suspended, and the Companies may make such repurchases as
soon as they are permitted to do so under such restrictions.
4. Restrictions on Transfer. Contemporaneously with the execution of
this Agreement Executive shall enter into the Securityholders Agreement.
Executive shall not sell, transfer, assign, pledge or otherwise dispose of
(whether with or without consideration and whether voluntarily or involuntarily
or by operation of law) any Executive Securities (a "Transfer"), except pursuant
to the provisions of the Securityholders Agreement and unless the transferee
executes a joinder agreement in form acceptable to BrightView pursuant to which
such transferee agrees to be bound by the provisions of this Agreement and the
Securityholders Agreement. Any Transfer or attempted Transfer of any Executive
Securities in violation of any provision of this Agreement shall be void, and
none of the Companies shall record such Transfer on its books or treat any
purported transferee of such Executive Securities as the owner of such
securities for any purpose.
5. Additional Restrictions on Transfer.
(a) Each certificate which represents Executive Securities shall bear
the following legend:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ORIGINALLY ISSUED ON
JANUARY 27, 1997, 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
EXEMPTION FROM REGISTRATION THEREUNDER. THE SECURITIES REPRESENTED BY THIS
CERTIFICATE ARE ALSO SUBJECT TO
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ADDITIONAL RESTRICTIONS ON TRANSFER, CERTAIN REPURCHASE OPTIONS AND CERTAIN
OTHER AGREEMENTS SET FORTH IN AN EXECUTIVE SECURITIES PURCHASE AND
EMPLOYMENT AGREEMENT BETWEEN THE COMPANY AND D. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ DATED AS OF
JANUARY 27, 1997 AS AMENDED AND MODIFIED FROM TIME TO TIME. A COPY OF SUCH
AGREEMENT MAY BE OBTAINED BY THE HOLDER HEREOF AT THE COMPANY'S PRINCIPAL
PLACE OF BUSINESS WITHOUT CHARGE."
(b) No holder of Executive Securities may sell, transfer or dispose of
any Executive Securities (except pursuant to an effective registration statement
under the Securities Act) without first delivering to BrightView an opinion
(acceptable in form and substance to BrightView) of counsel experienced in
securities laws matters that neither registration nor qualification under the
Securities Act and applicable state securities laws is required in connection
with such transfer.
PART II. EMPLOYMENT TERMS
6. Employment. Operating LLC shall employ Executive, and Executive
hereby accepts employment with Operating LLC, upon the terms and conditions set
forth in this Agreement for the period beginning on the date hereof and ending
as provided in Section 11 hereof (the "Employment Period").
7. Position and Duties.
(a) During the Employment Period, Executive shall render such
administrative, financial and other executive and managerial services to
BrightView and its Subsidiaries as the Board or the President of Operating LLC
may from time to time direct. During the Employment Period, Executive shall
serve as the Chief Financial Officer and Executive Vice President of Operating
LLC and in such capacity shall have the duties, responsibilities and authority
that are normally associated with the office of chief financial officer, subject
to the power of the Board and the President of Operating LLC to expand or limit
such duties, responsibilities and authority and to override actions of the Chief
Financial Officer and Executive Vice President.
(b) Executive, in his capacities as Chief Financial Officer and
Executive Vice President of Operating LLC, shall report to the President of
Operating LLC and the Board. Executive shall devote his best efforts and his
full business time and attention (except for permitted vacation periods and
reasonable periods of illness or other incapacity) to the business and affairs
of Operating LLC and the Subsidiaries of Operating LLC. Executive shall perform
his duties and responsibilities to the best of his abilities in a diligent,
trustworthy, businesslike and efficient manner.
8. Base Amount and Benefits.
(a) During the Employment Period, Operating LLC shall pay to Executive
a base salary at the rate of $200,000 per annum (the "Base Amount"). On each
anniversary of the date of
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this Agreement during the Employment Period, the Base Amount shall be increased
by the percentage increase in the Consumer Price Index, if any, from the
beginning to the end of the immediately preceding calendar year. The Base Amount
shall be paid by Operating LLC and shall be payable in regular installments in
accordance with Operating LLC's general payroll practices and shall be subject
to customary withholding. In addition, during the Employment Period, Operating
LLC will maintain a term life insurance policy (the "Term Life Insurance
Policy") on the life of Executive in an amount equal to $1,000,000 for the
benefit of a Person or Persons designated by Executive and shall be entitled to
participate in all of the employee benefit programs for which senior executive
employees of Operating LLC are generally eligible. Executive shall be entitled
to four weeks of paid vacation each year, which if not taken may not be carried
forward to any subsequent year.
(b) Operating LLC shall reimburse Executive for reasonable expenses
incurred by him in the course of performing his duties under this Agreement
which are consistent with the Companies' written policies in effect from time to
time with respect to travel, entertainment and other business expenses, subject
to the requirements with respect to reporting and documentation of such expenses
which have been established by the Board.
(c) Operating LLC shall reimburse Executive for the loss (the
"Realized Loss") realized by Executive on the sale of Executive's house and
property at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ (the "Residence") as
follows: (i) Operating LLC shall make a payment to Executive of $100,000 prior
to December 31, 1996; (ii) to the extent that the actual Realized Loss exceeds
$100,000, Operating LLC shall make a payment to Executive of the amount of such
excess no later than March 31, 1997; and (iii) to the extent that the actual
Realized Loss is less than $100,000, Executive shall make a payment to Operating
LLC of the amount of such difference no later than March 31, 1997. In addition,
Operating LLC shall reimburse Executive for (i) the reasonable expenses not to
exceed an aggregate of $3,000 incurred by Executive in connection with moving
the furnishings and personal effects of Executive and Executive's wife from the
Residence to Executive's new residence at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇ (ii) other reasonable expenses (such as utility transfer fees) not to
exceed an aggregate of $1,000 incurred by Executive in connection with such
relocation and (iii) reasonable travel expenses not to exceed an aggregate of
$2,150 incurred by Executive and Executive's wife in connection with travel by
Executive and Executive's wife to Augusta, Georgia on August 21, 1996.
Notwithstanding the foregoing, Operating LLC will not be obligated to reimburse
any of the foregoing expenses pursuant to this paragraph (c) unless and until
Operating LLC receives from Executive documentation thereof which is reasonably
satisfactory to Operating LLC (other than with respect to the expenses described
in clause (ii) of the previous sentence).
9. Bonus.
(a) General. In addition to the Base Amount, Executive shall have the
opportunity to accrue a bonus (with respect to each Bonus Year, the "Annual
Bonus Accrual") for each Fiscal Year set forth on Schedule A attached hereto
which ends during the Employment Period (each such Fiscal Year, a "Bonus Year")
in an amount (excluding interest accruing as contemplated in this Section 9(a))
up to the Maximum Annual Bonus Accrual. Such Annual Bonuses shall accrue
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as provided in Section 9(b), but shall be payable only as provided in Sections
9(c) and 9(d), and in such event shall be payable only by Operating LLC. The
amount of the Annual Bonus Accrual with respect to each Bonus Year shall accrue
interest, commencing on the date on which the audited, consolidated financial
statements for BrightView and Holding LLC with respect to such Bonus Year are
released and until such amount is paid, at a rate equal to the lesser of (i) the
Weighted Average Rate, or (ii) the highest rate permitted by applicable law. The
"Maximum Annual Bonus Accrual" for 1997 shall be $100,000 and for each
subsequent Fiscal Year during the Employment Period shall be increased from the
Maximum Bonus Accrual for the preceding Fiscal Year by the percentage increase
in the Consumer Price Index, if any, from the beginning to the end of the
immediately preceding calendar year.
(b) Determination of Annual Bonus. Executive's Annual Bonus Accrual
for each Bonus Year shall be calculated as follows and, subject only to Section
11(b) below, shall accrue until termination of the Employment Period for any
reason:
(i) if EBITDA for such Bonus Year is equal to or greater than the
"Target EBITDA" set forth opposite such Fiscal Year on Schedule A,
Executive's Annual Bonus Accrual for such Bonus Year shall equal the
Maximum Annual Bonus Accrual for such Bonus Year; (ii) if EBITDA for such
Bonus Year is equal to the "Threshold EBITDA" set forth opposite such Bonus
Year on Schedule A, Executive's Annual Bonus Accrual for such Bonus Year
shall equal to 50.0% of the Maximum Annual Bonus Accrual for such Bonus
Year (the "Threshold Bonus Accrual");
(iii)if EBITDA for such Bonus Year is greater than the "Threshold
EBITDA" set forth opposite such Bonus Year on Schedule A and less than the
"Target EBITDA" set forth opposite such Fiscal Year on Schedule A,
Executive's Annual Bonus Accrual for such Bonus Year shall equal the sum of
(A) the Threshold Bonus Accrual plus (B) the Threshold Bonus Accrual for
such Bonus Year multiplied by a fraction, (x) the numerator of which is
EBITDA for such Bonus Year minus the Threshold EBITDA for such Bonus Year,
and (y) the denominator of which is the Target EBITDA for such Fiscal Year
minus the Threshold EBITDA for such Bonus Year; and
(iv) if EBITDA for such Bonus Year is less than the "Threshold EBITDA"
set forth opposite such Fiscal Year on Schedule A, Executive's Annual Bonus
Accrual for such Bonus Year shall be zero;
provided that, notwithstanding anything to the contrary set forth in this
Agreement, Executive's Annual Bonus Accrual for a Bonus Year shall equal zero if
Operating LLC breaches any financial or other performance covenant included in a
financing agreement with respect to any of the Companies (including, without
limitation, the Senior Credit Agreement and the Subordinated Credit Agreement)
during such Fiscal Year.
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(c) Payment of Bonus Accrual Prior to Payout Event. Notwithstanding
any other provision of this Agreement, prior to a Payout Event (as defined
below) Operating LLC shall not be obligated to pay any Annual Bonus Accrual,
except to the extent that the aggregate of all Annual Bonus Accruals which have
accrued pursuant to Section 9(b) and have not been paid (the "Deferred Bonus
Accrual") exceeds the Maximum Deferred Bonus Accrual (as defined below). If the
amount of any Annual Bonus Accrual with respect to a Bonus Year, plus the
Deferred Bonus Accrual calculated immediately prior to such Annual Bonus
Accrual, exceeds the Maximum Deferred Bonus Accrual, the Operating Company shall
pay to Executive, within 30 days following the release of audited, consolidated
financial statements for BrightView and Holding LLC with respect to such Bonus
Year, the amount by which the Deferred Bonus Accrual as of the end of such Bonus
Year exceeds the Maximum Deferred Bonus Accrual. "Maximum Deferred Bonus
Accrual" means, as of any date, Executive's aggregate unpaid obligations under
the Executive Notes as of such date (including interest accrued through such
date).
(d) Payment of Bonus Accrual Upon Payout Event. On the earlier to
occur of a Sale of the Company and December 31, 2001 (the "Payout Event") the
Deferred Bonus Accrual shall be payable by Operating LLC if and only if (i)
Executive has been continuously employed by Operating LLC as its Chief Financial
Officer through such date or (ii) the Employment Period was terminated by
Operating LLC prior to such date without Cause or by Executive for Good Reason
(in which event the Deferred Bonus Accrual shall be calculated in accordance
with Section 11 (b)).
10. 1996 Special Bonuses. On or prior to December 20, 1996, so long as
Executive is employed by Operating LLC as of such date, Operating LLC shall pay
Executive a bonus of $25,000. Such bonus will be in satisfaction of all
obligations of ▇▇▇▇▇▇▇▇ Publishing Company, including all of such obligations
assumed by the Companies, for the payment to Executive of any bonus for any
period prior to October 1, 1996. In addition, Executive shall be eligible for a
bonus of up to $25,000 with respect to the period from October 1, 1996 through
December 31, 1996.
11. Term.
(a) The Employment Period shall begin on the date of this Agreement
and end on the first to occur of (i) December 31, 2001 (ii) Executive's
resignation, death or permanent disability or incapacity (as determined by the
Board in its good faith judgment) and (iii) termination of Executive's
employment by Operating LLC at any time for Cause or without Cause.
(b) If the Employment Period is terminated by Operating LLC without
Cause or by Executive for Good Reason (the date of any such termination
constituting the "Termination Date"), Executive shall be entitled (i) (A) to
continue to receive his Base Amount, (B) to continue to accrue an Annual Bonus
Accrual (if any) in accordance with the terms and limitations of Section 9 and
(C) to receive continuing health and welfare benefits at the levels in effect on
the Termination Date (provided that the Companies' obligation to continue such
health and welfare benefits shall cease at such time as Executive secures other
employment) from the Termination Date to the first anniversary of the
Termination Date as if he were still employed by the Operating LLC during such
period and (ii) to receive payment of the Deferred Bonus Accrual (if any) if
payable in accordance
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with Section 9 hereof to the first anniversary of the Termination Date as if he
were still employed by the Operating LLC to such date; provided that Executive
shall not be entitled to any rights under this Section 11(b) if he breaches any
of the provisions of Sections 12, 13 or 14.
(c) Except as provided in paragraph (b) above, if the Employment
Period is terminated for any reason or on account of any event prior to December
31, 2001, Executive shall be entitled to receive Base Amount through the
Termination Date but not payment of any Deferred Bonus Accrual.
(d) All of Executive's rights (if any) to receive benefits and to
accrue and receive bonuses hereunder shall cease upon the Termination Date
except for Executive's right to accrue and receive bonus payments and to receive
continuing insurance coverage pursuant to paragraph (b) above. The Companies may
offset any amounts Executive owes them or their Subsidiaries (pursuant to the
Executive Notes or otherwise) against any amounts it owes Executive pursuant to
this Section 11.
(e) In the event the Employment Period is terminated for any reason
other than the death of Executive, Executive shall be entitled to continue the
Term Life Insurance Policy by making payments of premium and any other payment
required thereunder and Operating LLC shall use all reasonable efforts (other
than making any payments) to transfer to Executive ownership of such Term Life
Insurance Policy.
(f) If the Employment Period of Executive is terminated, Operating LLC
shall make a lump sum severance payment to Executive in the amount of $300,000
within 30 days of the Termination Date; provided, however, that Operating LLC
shall not be obligated to make any such payments to Executive if the Employment
Period of Executive is (i) terminated by Executive (except in the case of
Constructive Termination Without Cause (as defined below) by the Executive) or
(ii) terminated by Operating LLC on account of a material breach of Executive's
duties hereunder. For purposes of this Section 11(f), "Constructive Termination
Without Cause" means the occurrence of any of the following events without the
express written consent of Executive: (i) relocation of the principal office
Executive from his principal office as of the date hereof (other than to an
office in the same metropolitan area), (ii) any material breach by any of the
Companies of the terms of this Agreement or (iii) the assignment to Executive of
a significantly lower position in the organization of Operating LLC in terms of
his responsibility, authority and status than Chief Financial Officer, in any
such case other than as a result of disability or retirement. The parties agree
that this Section 11(f) amends and restates in its entirety, and is in
substitution for Section 6.7(e) of the Acquisition Agreement as such section
pertains to Executive. Further, Executive acknowledges that the payment required
under this Section 11(f) is in lieu of, and Executive shall not participate in,
any other severance or similar payment for which Executive may otherwise be
eligible pursuant to any policy or other arrangement applicable to any of the
Companies and their respective emplo yees.
12. Confidential Information. Executive acknowledges that the
information, observations and data now or hereafter obtained by him while
employed by the Companies or their predecessors or their respective Subsidiaries
concerning the business or affairs of the Companies or any Subsidiary
("Confidential Information") are the property of the Companies or such
Subsidiary.
-11-
Therefore, Executive agrees that he shall not disclose to any unauthorized
person or use for his own purposes any Confidential Information without the
prior written consent of the Board, unless and to the extent that the
aforementioned matters become generally known to and available for use by the
public other than as a result of Executive's acts or omissions. Executive shall
deliver to the Companies at the termination of the Employment Period, or at any
other time the Companies may request, all memoranda, notes, plans, records,
reports, computer tapes, printouts and software and other documents and data
(and copies thereof in any media whatsoever) relating to the Confidential
Information, Work Product (as defined below) or the business of the Companies or
any Subsidiary which he may then possess or have under his control.
13. Inventions and Patents. Executive acknowledges that all
inventions, innovations, improvements, developments, methods, designs, analyses,
drawings, reports and all similar or related information (whether or not
patentable) which relate to the Companies or any of their Subsidiaries' actual
or anticipated business, research and development or existing or future products
or services and which are now or hereafter conceived, developed or made by
Executive while employed by the Companies or their predecessors or their
respective Subsidiaries ("Work Product") belong to BrightView or such
Subsidiary. Executive shall promptly disclose such Work Product to the Board and
perform all actions reasonably requested by the Board (whether during or after
the Employment Period) to establish and confirm such ownership (including,
without limitation, assignments, consents, powers of attorney and other
instruments).
14. Non-Compete, Non-Solicitation.
(a) In further consideration of the compensation to be paid to
Executive hereunder, Executive acknowledges that in the course of his employment
with the Companies and their Subsidiaries he may become familiar with the trade
secrets of the Companies and their Subsidiaries and with other Confidential
Information concerning the Companies and their Subsidiaries and that his
services shall be of special, unique and extraordinary value to the Companies
and their Subsidiaries. Therefore, Executive agrees that, during the Employment
Period and for one year thereafter (the "Noncompete Period"), he shall not
directly or indirectly own any interest in, manage, control, participate in,
consult with, render services for, or in any manner engage in any business
competing with any of the businesses of BrightView or its Subsidiaries, as such
businesses exist on the date of the termination of Executive's employment,
within any geographical area in which the Companies or their Subsidiaries engage
or plan to engage in such businesses. 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 which is publicly traded, so long as Executive has no
active participation in the business of such corporation.
(b) During the Noncompete Period, Executive shall not directly or
indirectly through another entity (i) induce or attempt to induce any person
employed by any of the Companies or any Subsidiary during the one year
immediately preceding the Termination Date (each such person, a "Recent
Employee," and collectively, the "Recent Employees") to leave the employ of the
Companies or such Subsidiary, or in any way interfere with the relationship
between the Companies or any Subsidiary and any Recent Employee (other than in
the course of discharging his duties hereunder (including, without limitation,
terminating the employment of a Recent Employee) while
-12-
employed by Operating LLC) or (iii) except in the course of discharging his
duties hereunder while employed by Operating LLC, induce or attempt to induce
any customer, supplier, licensee, licensor, lender, franchisee or other business
relation of or to the Companies or their Subsidiary to cease doing business with
any of the Companies or such Subsidiary, or in any way interfere with the
relationship between any such customer, supplier, licensee or business relation
and the Companies or any of its Subsidiaries (including, without limitation,
making any disparaging statements or communications about the Companies or their
Subsidiaries).
15. Enforcement. If, at the time of enforcement of Section 12, 13 or
14 of this Agreement, a court holds that the restrictions stated herein are
unreasonable under circumstances then existing, the parties hereto agree that
the maximum period, scope or geographical area reason able under such
circumstances shall be substituted for the stated period, scope or area. Because
Executive's services are unique and because Executive has access to Confidential
Information and Work Product, the parties hereto agree that money damages would
not be an adequate remedy for any breach of this Agreement. Therefore, in the
event a breach or threatened breach of this Agreement, the Companies 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 perform
ance 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).
In addition, in the event of an alleged breach or violation by Executive of
Section 14, the Noncompete Period shall be tolled until such breach or violation
has been duly cured. Executive agrees that the restrictions contained in Section
14 are reasonable.
16. Executive's Representations. Executive hereby represents and
warrants to the Companies that (i) the execution, delivery and performance of
this Agreement by Executive do not and shall not conflict with, breach, violate
or cause a default under any contract, agreement, instrument, order, judgment or
decree to which Executive is a party or by which he is bound, (ii) Executive is
not a party to or bound by any employment agreement, noncompete agreement or
confidentiality agreement with any other person or entity and (iii) upon the
execution and delivery of this Agreement by the Companies, this Agreement shall
be the valid and binding obligation of Executive, enforceable in accordance with
its terms. Executive hereby acknowledges and represents that he has consulted
with independent legal counsel regarding his rights and obligations under this
Agreement and that he fully understands the terms and conditions contained
herein.
17. Definitions.
"Acquisition" means consummation of the transactions contemplated by
the Acquisition Agreement to occur at the "Closing" described therein.
"Acquisition Agreement" means the Asset Purchase Agreement, dated as
of August 15, 1996, between BrightView and ▇▇▇▇▇▇▇▇ Publishing Company, a
California corporation.
"Board" means the board of directors of BrightView. Actions taken or
approvals given by the Board hereunder may be on behalf of BrightView acting as
managing member of Holding LLC, either in its capacity as such or as managing
member of the Operating LLC.
-13-
"Cause" means (i) the commission of a felony or a crime involving
moral turpitude, (ii) the commission of any other act or omission involving
dishonesty, disloyalty or fraud (A) with respect to any of the Companies and
their respective Subsidiaries or any of their employees, customers or suppliers,
or (B) adversely affecting the reputation or standing of any of the Companies or
their respective Subsidiaries, (iii) substantial and repeated failure to perform
duties as reasonably directed by the Board, the Chief Executive Officer or the
President of Operating LLC, (iv) gross negligence or willful misconduct with
respect to the Companies and their Subsidiaries, (v) any other material breach
of this Agreement or any company policy established by the Board, which breach,
if curable, is not cured within 15 days after written notice thereof to
Executive, or (vi) if EBITDA in any Fiscal Year is less than the "Minimum
EBITDA" set forth for such Fiscal Year on Schedule A hereto.
"Consumer Price Index" means the Consumer Price Index for All Urban
Consumers, U.S. City Average, for all items, or if the government ceases to
publish such index, such index which in the Board's good faith judgment is most
similar to such index.
"EBITDA" means, with respect to any Fiscal Year, the consolidated net
income of BrightView, Holding LLC and its Subsidiaries for such Fiscal Year
plus, to the extent deducted in determining such net income, interest expense,
provisions for taxes, depreciation and amortization, net of the bonuses
contemplated hereby and under similar arrangements (whether paid in cash or
otherwise payable) and before extraordinary gains and losses, calculated in
accordance with generally accepted accounting principles and determined by the
Board from the audited consolidated annual financial statements of BrightView
and Holding LLC for such Fiscal Year.
"Fiscal Year" means the calendar year/fiscal year of Holding LLC.
"Executive Securities" shall continue to be Executive Securities in
the hands of any holder other than Executive (except for the Companies and the
Investors and except for transferees in a Public Sale), and except as otherwise
provided herein, each such other holder of Executive Securities shall succeed to
all rights and obligations attributable to Executive as a holder of Executive
Securities hereunder. Executive Securities shall also include any equity
securities issued by any of the Companies with respect to Executive Securities
by way of a stock split, stock dividend, other recapitalization or similar
transaction. Notwithstanding the foregoing, all of the Unvested Securities shall
remain Executive Securities after any Transfer thereof, even if such Transfer is
approved in accordance with the Securityholders Agreement.
"Fair Market Value" of each share or unit of any class or type of
Executive Securities means the average of the closing prices of the sales of any
such securities on all securities exchanges on which such security 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 security is 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 security is 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
-14-
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, and with respect to any share or unit of any class or type of
Executive Security which is not, as of the date of determination, listed on any
securities exchange or quoted in the NASDAQ System or the over-the-counter
market, the Fair Market Value thereof shall be the fair value of such shares or
units or such class or type of Executive Securities determined in good faith by
the Board.
"Good Reason" means the occurrence, without Executive's consent, of
any of the following: (i) unless corrected within 30 days written notice by
Executive to the Board of Executive's objection thereto, the assignment to the
Executive of any significant duties materially inconsistent with the Executive's
status as a senior executive officer of Operating LLC or a substantial
diminution in the nature or status of the Executive's responsibilities; (ii) a
reduction by Operating LLC in the Executive's Annual Base Amount as in effect on
the date hereof, except for across-the-board salary reductions similarly
affecting all senior executives of Operating LLC; or (ii) the Board requires
Executive to relocate from the Los Angeles area (it being understood that
Executive may be required to spend time in Operating LLC's other offices
throughout the U.S.).
"Investor" has the meaning given such term in the preamble.
"Original Cost" means, with respect to each share of Common Stock
purchased hereunder, $500.00, with respect to each Class A Common Unit purchased
hereunder, $4.50 and, with respect to each Preferred Unit purchased hereunder,
$445.50 (in each case, as proportionately adjusted for all subsequent stock
splits, stock dividends and other recapitalizations).
"Public Sale" means any sale pursuant to a registered public offering
under the Securities Act or any sale to the public pursuant to Rule 144
promulgated under the Securities Act effected through a broker, dealer or market
maker.
"Qualified IPO" means receipt by BrightView of at least $75,000,000
cash proceeds upon consummation of an underwritten sale of Common Stock by
BrightView pursuant to a registration statement filed under the Securities Act,
provided that the sum of (a) the product of the net price per share of such
offering multiplied by the aggregate number of shares of Common Stock issued to
Investors at the closing of the Acquisition (as adjusted for stock splits,
combinations of shares and other recapitalizations), plus (b) the aggregate
amount of all cash paid as distributions or dividends on the equity securities
of Holding LLC which were issued to the Investors at the closing of the
Acquisition, plus (c) the fair market value of such Holding LLC equity
securities, and of any other property received by the Investors at any time in
respect of such securities in connection with any Sale of the Company prior
thereto, in each case as determined by the Board, equals or exceeds
$330,000,000.
"Sale of the Company" means a sale of all the assets or equity
securities of one of the Companies to an unaffiliated third-party.
"Securities Act" means the Securities Act of 1933, as amended from
time to time.
-15-
"Securityholders Agreement" means the Securityholders Agreement, dated
as of the date hereof, by and among the Companies, Executive and the other
Investors, as such agreement may be amended, restated, supplemented or modified
from time to time hereafter.
"Senior Credit Agreement" means the Credit Agreement, dated as of the
date hereof, among Operating LLC, First Union National Bank of North Carolina,
as Administrative Agent (as defined in such Agreement) and Syndication Agent (as
defined in such Agreement), CIBC, Inc., as Documentation Agent (as defined in
such Agreement) and certain banks and other financial institutions, as amended,
modified, supplemented or restated, and including any agreement pursuant to
which indebtedness thereunder is refinanced, as in effect from time to time.
"Subsidiary" of a Person means any entity of which such Person (i)
owns equity securities having a majority of the ordinary voting power in
electing the board of directors directly or through one or more subsidiaries or
(ii) serves as a general partner or managing member or otherwise has the power
and authority to direct the day to day management of such entity. For purposes
of this Agreement, Holding LLC is deemed to be as Subsidiary of BrightView.
"Weighted Average Rate" means the weighted average cost of borrowing
by Operating LLC as in effect from time to time, as determined in good faith by
the Board.
18. Survival. The provisions of this Agreement shall survive and
continue in full force in accordance with their terms notwithstanding any
termination of the Employment Period.
19. 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:
To any of the Companies:
c/o ▇▇▇▇▇▇ ▇▇▇▇▇ & Partners, L.P.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Avy ▇. ▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
With copies to:
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇, Esq.
-16-
To Executive:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Chief Financial Officer
▇▇▇▇▇▇▇▇ Publishing Company, L.L.C.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
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 Agreement shall be deemed to have been given when personally
delivered, five days after deposit in the U.S. mail, or the business day next
following deposit with such an overnight courier service in such a manner, with
instructions for next-day delivery.
20. General Provisions.
(a) Severability. Whenever possible, each provision of this Agreement
shall 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 shall not affect
any other provision or any other jurisdiction, but this Agreement shall be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision had never been contained herein.
(b) 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.
(c) 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.
(d) Counterparts. This Agreement may be executed in separate
counterparts, each of which is deemed to be an original and all of which taken
together constitute one and the same agreement.
(e) Successors and Assigns. Except as otherwise provided herein, this
Agreement shall bind and inure to the benefit of and be enforceable by
Executive, the Companies, 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 transfer of Executive Securities in
accordance with this Agreement and the Securityholders Agreement.
-17-
(f) Choice of Law. All issues and questions concerning the
construction, validity, enforcement and interpretation of this Agreement and the
exhibits and schedules hereto shall be governed by, and construed in accordance
with, the laws of the State of New York, without giving effect to any choice of
law or conflict of law rules or provisions (whether of the State of New York or
any other jurisdiction) that would cause the application of the laws of any
jurisdiction other than the State of New York. In furtherance of the foregoing,
the internal law of the State of New York shall control the interpretation and
construction of this Agreement (and all schedules and exhibits hereto), even
though under that jurisdiction's choice of law or conflict of law analysis, the
substantive law of some other jurisdiction would ordinarily apply.
(g) Remedies. Each of the parties to this Agreement (including the
Investors) shall be entitled to enforce its rights under this Agreement
specifically, to recover damages and costs (including reasonable 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 would 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 specific performance and/or other injunctive relief in
order to enforce or prevent any violations of the provisions of this Agreement.
(h) Arbitration. Each of the parties hereto agrees that in the event
of any dispute arising between or among the parties arising out of or relating
to this Agreement or its breach, such dispute shall be settled by arbitration to
be conducted in the Borough of Manhattan, New York, New York in accordance with
the Commercial Arbitration Rules (except as modified below) of the American
Arbitration Association and with the Expedited Procedures thereof (collectively,
the "Rules"). Each of the parties hereto agrees that such arbitration shall be
conducted by a single arbitrator selected in accordance with the Rules; provided
that such arbitrator shall be a retired judge who is experienced in deciding
cases concerning the matter which is the subject of the dispute. Each of the
parties agrees that in any such arbitration that pre-arbitration discovery shall
be limited to the greatest extent provided by the Rules, that the award shall be
made in writing no more than 30 days following the end of the proceeding, that
the arbitration shall not be conducted as a class action and that no punitive
damages shall be awarded. Any award rendered by the arbitrator shall be final
and binding and judgment may be entered on it in any court of competent
jurisdiction. Each of the parties hereto agrees to treat as confidential the
results of any arbitration (including, without limitation, any findings of fact
and/or law made by the arbitrator) and not to disclose such results to any
unauthorized person. The prevailing party (as determined by the arbitrator)
shall in addition be awarded by the arbitrator such party's own attorneys' fees
and expenses in connection with such proceeding. The non-prevailing party (as
determined by the arbitrator) shall pay the fees and expenses of the
arbitration.
(i) Amendment and Waiver. The provisions of this Agreement may be
amended and waived only with the prior written consent of BrightView and
Executive.
(j) Business Days. If any time period for giving notice or taking
action hereunder expires on a day which is a Saturday, Sunday or legal holiday
in the State of Illinois, the time period
-18-
shall be automatically extended to the business day immediately following such
Saturday, Sunday or holiday.
* * *
-19-
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the date first written above.
-----------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
BRIGHTVIEW COMMUNICATIONS GROUP, INC.
By:
--------------------------------------
Its:
-------------------------------------
▇▇▇▇▇▇▇▇ HOLDINGS, L.L.C.
By BrightView Communications Group, Inc.
Its Managing Member
By:
-----------------------------------
Its:
-----------------------------------
▇▇▇▇▇▇▇▇ PUBLISHING
COMPANY, L.L.C.
By ▇▇▇▇▇▇▇▇ Holdings, L.L.C.
Its Managing Member
By BrightView Communications Group, Inc.
Its Managing Member
By:
------------------------------------
Its:
------------------------------------
-20-
SCHEDULE A
----------
All amounts in $millions
--------------------------------------------------------------------------------
FISCAL YEAR TARGET EBITDA THRESHOLD MINIMUM EBITDA
EBITDA
--------------------------------------------------------------------------------
1997 55 50 42.5
--------------------------------------------------------------------------------
1998 70 60 55
--------------------------------------------------------------------------------
1999 82 67 60
--------------------------------------------------------------------------------
2000 93 75 65
--------------------------------------------------------------------------------
2001 100 80 70
--------------------------------------------------------------------------------
Each of the amounts set forth in the above chart will be adjusted by the Board,
in its good faith judgment after good faith consultation with Executive, in
connection with acquisitions or divestitures (whether by merger, purchase or
sale of assets or otherwise) consummated by any of the Companies at any time
after the Closing. Such amounts, as so adjusted by the Board, will be deemed to
be the amount set forth on the above chart for all purposes of the Agreement to
which this Schedule A is attached.
-21-
[Provision for Community Property Jurisdictions]
CONSENT
-------
The undersigned spouse of Executive hereby acknowledges that I have
read the foregoing Executive Securities Purchase and Employment Agreement and
that I understand its contents. I am aware that the Agreement provides for the
repurchase of my spouse's Executive Securities under certain circumstances and
imposes other restrictions on the transfer of such Executive Securities. I agree
that my spouse's interest in the Executive Securities is subject to this
Agreement and any interest I may have in such Executive Securities shall be
irrevocably bound by this Agreement and further that the my community property
interest, if any, shall be similarly bound by this Agreement.
I am aware that the legal, financial and other matters contained in
this Agreement are complex and I am free to seek advice with respect thereto
from independent counsel. I have either sought such advice or determined after
carefully reviewing this Agreement that I will waive such right.
Date: January 27, 1997
Name of Executive: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Name of Spouse:
---------------------------------
Signature of Spouse:
-----------------------------
Name of Witness:
------------------------------
Signature of Witness:
-------------------------
-22-
ANNEX A
PROMISSORY NOTE
---------------
$________________ January 27, 1997
For value received, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ("Executive") promises to pay to
the order of _______________, a _______________ corporation [limited liability
company] (the "Company"), at its offices in _____________________, or such other
place as designated in writing by the holder hereof, the aggregate principal sum
of $____________ together with interest earned thereon when due. The principal
amount of the Note and all interest accrued thereon shall be due and payable on
the earlier to occur of (i) December 31, 2001, (ii) termination of Executive as
an employee of Operating LLC, and (iii) a Sale of the Company. This Note was
issued pursuant to and is subject to the terms of the Executive Securities
Purchase and Employment Agreement (the "Executive Agreement"), dated as of
January 27, 1997, between the Company and Executive. Capitalized terms used
herein and not otherwise defined shall have the meanings given such terms in the
Executive Agreement
Interest shall accrue on the outstanding principal amount of this Note
at a rate equal to the lesser of (i) Weighted Average Rate, or (ii) the highest
rate permitted by applicable law, and shall be payable at such time as the
principal of this Note becomes due and payable. For purposes hereof, the
"Weighted Average Rate" means the weighted average cost of borrowing by ▇▇▇▇▇▇▇▇
Publishing Company, L.L.C. as in effect from time to time, as determined in good
faith by the board of directors of BrightView Communications Group, Inc.
The amounts due under this Note are secured by a pledge of the
Executive Securities, including all of Executive's membership interest in
▇▇▇▇▇▇▇▇ Holdings, L.L.C., and the payment of the principal amount and accrued
interest under this Note is subject to certain offset rights under the Executive
Agreement.
In the event Executive fails to pay any amounts hereunder when due,
Executive shall pay to the holder hereof, in addition to such amounts due, all
costs of collection, including reasonable attorneys fees.
Executive hereby waives diligence, presentment, protest and demand and
notice of protest, demand, dishonor and nonpayment of this Note, and expressly
agrees that this Note, or any payment hereunder, may be extended from time to
time and that the holder hereof may accept security for this Note or release
security for this Note, all without in any way affecting the liability of
Executive hereunder. The obligations of Executive hereunder may not be assigned.
This Note shall be governed by the internal laws, not the laws of
conflicts, of the State of ________________________.
---------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
-2-
ANNEX B
EXECUTIVE SECURITIES PLEDGE AGREEMENT
-------------------------------------
THIS PLEDGE AGREEMENT is made as of January 27, 1997, between ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ("Pledgor"), and BrightView Communications Group, Inc., a Delaware
corporation (the "Company"), and ▇▇▇▇▇▇▇▇ Holdings, L.L.C., a Delaware limited
liability company ("Holdings").
The Company, Holdings, ▇▇▇▇▇▇▇▇ Publishing Company, L.L.C. (the
"Operating LLC") and Pledgor are parties to an Executive Securities Purchase and
Employment Agreement, dated as of the date hereof, pursuant to which Pledgor
purchased 6 shares of the Company's Class A Common Stock, $.01 par value, and
1,690.14 Class A Common ▇▇▇▇▇, ▇▇▇ Class B Common ▇▇▇▇▇, ▇▇▇ Class C Common
Units and 660 Preferred Units of Holdings (collectively, the "Pledged
Securities"). The Company and Holdings have allowed Pledgor to purchase a
portion of the Pledged Securities by delivery to the Company and Holdings of
promissory notes (the "Notes") in the aggregate principal amount of $200,000.
This Pledge Agreement provides the terms and conditions upon which the Notes are
secured by a pledge to the Company of the Pledged Securities.
NOW, THEREFORE, in consideration of the premises contained herein and
other good and valuable consideration the receipt and sufficiency of which are
hereby acknowledged, and in order to induce the Company and Holdings to accept
the Notes as partial payment for the Pledged Securities, Pledgor, the Company
and Holdings hereby agree as follows:
1. Pledge. Pledgor hereby pledges to the Company and Holdings, and
grants to the Company and Holdings a security interest in, the Pledged
Securities as security for the prompt and complete payment when due of the
unpaid principal of and interest on the Notes and full payment and performance
of the obligations and liabilities of Pledgor hereunder.
2. Delivery of Pledged Securities. Upon the execution of this Pledge
Agreement, Pledgor shall deliver to the Company the certificate(s) representing
the Pledged Securities, if certificated, together with duly executed forms of
assignment sufficient to transfer title thereto to the Company. The Company
shall hold such Pledged Securities for itself and as agent for Holdings (the
Company acting in such capacities, the "Agent").
3. Voting Rights; Cash Dividends. Notwithstanding anything to the
contrary contained herein, during the term of this Pledge Agreement until such
time as there exists a default in the payment of principal or interest on either
of the Notes or any other default under either of the Notes or hereunder,
Pledgor shall be entitled to all voting rights with respect to the Pledged
Securities and shall be entitled to receive all cash dividends paid in respect
of the Pledged Securities. Upon the occurrence of and during the continuance of
any such default, Pledgor shall no longer be able to vote the Pledged Securities
and the Agent shall retain all such cash dividends payable on the Pledged
Securities as additional security hereunder.
4. Stock Dividends; Distributions, etc. If, while this Pledge
Agreement is in effect, Pledgor becomes entitled to receive or receives any
securities or other property in addition to, in substitution of, or in exchange
for any of the Pledged Securities (whether as a distribution in connection with
any recapitalization, reorganization or reclassification, a stock dividend or
otherwise), Pledgor shall accept such securities or other property on behalf of
and for the benefit of the Agent as additional security for Pledgor's
obligations under the Notes and shall promptly deliver such additional security
to the Agent together with duly executed forms of assignment, and such
additional security shall be deemed to be part of the Pledged Securities
hereunder.
5. Default. If Pledgor defaults in the payment of the principal or
interest under either of the Notes when it becomes due (whether upon demand,
acceleration or otherwise) or any other event of default under either of the
Notes or this Pledge Agreement occurs (including the bankruptcy or insolvency of
Pledgor), the Agent may exercise any and all the rights, powers and remedies of
any owner of the Pledged Securities (including the right to vote the shares and
receive dividends and distributions with respect to such shares) and shall have
and may exercise without demand any and all the rights and remedies granted to a
secured party upon default under the Uniform Commercial Code of Illinois or
otherwise available to the Company under applicable law. Without limiting the
foregoing, the Agent is authorized to sell, assign and deliver at its
discretion, from time to time, all or any part of the Pledged Securities at any
private sale or public auction, on not less than ten days written notice to
Pledgor, at such price or prices and upon such terms as the Agent may deem
advisable. Pledgor shall have no right to redeem the Pledged Securities after
any such sale or assignment. At any such sale or auction, the Agent, the Company
and/or Holdings may bid for, and become the purchaser of, the whole or any part
of the Pledged Securities offered for sale. In case of any such sale, after
deducting the costs, attorneys' fees and other expenses of sale and delivery,
the remaining proceeds of such sale shall be applied to the principal of and
accrued interest on the Notes; provided that after payment in full of the
indebtedness evidenced by the Notes, the balance of the proceeds of sale then
remaining shall be paid to Pledgor and Pledgor shall be entitled to the return
of any of the Pledged Securities remaining in the hands of the Agent. Pledgor
shall be liable for any deficiency if the remaining proceeds are insufficient to
pay the indebtedness under the Notes in full, including the fees of any
attorneys employed by the Agent to collect such deficiency.
6. Costs and Attorneys' Fees. All costs and expenses (including
reasonable attorneys' fees) incurred in exercising any right, power or remedy
conferred by this Pledge Agreement or in the enforcement thereof, shall become
part of the indebtedness secured hereunder and shall be paid by Pledgor or
repaid from the proceeds of the sale of the Pledged Securities hereunder.
7. Payment of Indebtedness and Release of Pledged Securities. Upon
payment in full of the indebtedness evidenced by the Notes, the Agent shall
surrender the Pledged Securities to Pledgor together with all forms of
assignment.
8. No Other Liens; No Sales or Transfers. Pledgor hereby represents
and warrants that he has good and valid title to all of the Pledge Shares, free
and clear of all liens, security interests and other encumbrances, and Pledgor
hereby covenants that, until such time as all of the outstanding principal of
and interest on each of the Notes has been repaid, Pledgor shall not
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(i) create, incur, assume or suffer to exist any pledge, security interest,
encumbrance, lien or charge of any kind against the Pledged Securities or
Pledgor's rights or a holder thereof, other than pursuant to this Agreement and
the Executive Agreement, or (ii) sell or otherwise transfer any Pledged
Securities or any interest therein.
9. Further Assurances. Pledgor agrees that at any time and from time
to time upon the written request of the Agent, Pledgor shall execute and deliver
such further documents (including UCC financing statements) and do such further
acts and things as the Agent may reasonably request in order to effect the
purposes of this Pledge Agreement.
10. Severability. Any provision of this Pledge Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
11. No Waiver; Cumulative Remedies. Neither the Company, Holdings or
the Agent shall by any act, delay, omission or otherwise be deemed to have
waived any of its rights or remedies hereunder, and no waiver shall be valid
unless in writing, signed by the Company and Holding, and then only to the
extent therein set forth. A waiver by the Company, Holdings or the Agent of
Holdings of any right or remedy hereunder on any one occasion shall not be
construed as a bar to any right or remedy which the Company, Holdings or the
Agent would otherwise have on any future occasion. No failure to exercise nor
any delay in exercising on the part of the Company, Holdings or the Agent, any
right, power or privilege hereunder shall preclude any other or further exercise
thereof or the exercise of any other right, power or privilege. The rights and
remedies herein provided are cumulative and may be exercised singly or
concurrently, and are not exclusive of any rights or remedies provided by law.
12. Waivers, Amendments; Applicable Law. None of the terms or
provisions of this Pledge Agreement may be waived, altered, modified or amended
except by an instrument in writing, duly executed by the parties hereto. This
Agreement and all obligations of the Pledgor hereunder shall together with the
rights and remedies of the Company, Holdings or the Agent hereunder, inure to
the benefit of the Company, Holdings or the Agent and its respective successors
and assigns. This Pledge Agreement shall be governed by, and be construed and
interpreted in accordance with, the laws of the State of Illinois.
* * * *
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IN WITNESS WHEREOF, this Pledge Agreement has been executed as of the date
first above written.
BRIGHTVIEW COMMUNICATIONS
GROUP, INC.
By:
---------------------------------
Its:
--------------------------------
------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ HOLDINGS, L.L.C.
By BrightView Communications Group, Inc.
Its Managing Member
By:
---------------------------------
Its:
--------------------------------
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ANNEX C
ELECTION TO INCLUDE STOCK IN GROSS
INCOME PURSUANT TO SECTION 83(b) OF THE
INTERNAL REVENUE CODE
The undersigned purchased 6 shares of Class A Common Stock, par value
$.01 per share (the "Shares"), of BrightView Communications Group, Inc., a
Delaware corporation (the "Company") and an interest consisting of 1,690.14
Class A Common ▇▇▇▇▇, ▇▇▇ Class B Common ▇▇▇▇▇, ▇▇▇ Class C Common Units and 660
Preferred Units (the "Units" and, together with the Shares, the "Securities") in
▇▇▇▇▇▇▇▇ Holdings, L.L.C., a Delaware limited liability company ("Holding LLC").
Under certain circumstances, the Company has the right to repurchase the
Securities at cost from the undersigned (or from the holder of the Securities,
if different from the undersigned) should the undersigned cease to be employed
by the Company and its subsidiaries. Hence, the Securities are subject to a
substantial risk of forfeiture and are nontransferable. The undersigned desires
to make an election to have the Securities taxed under the provision of Code
(S)83(b) at the time he purchased the Securities.
Therefore, pursuant to Code (S)83(b) and Treasury Regulation (S)1.83-2
promulgated thereunder, the undersigned hereby makes an election, with respect
to the Securities (described below), to report as taxable income for calendar
year 1997 the excess (if any) of the Securities' fair market value on January
27, 1997 over purchase price thereof.
The following information is supplied in accordance with Treasury
Regulation (S)1.83-2(e):
1. The name, address and social security number of the undersigned:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Address:
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ __________
SSN: ____________________________
2. A description of the property with respect to which the election
is being made: 6 shares of the Company's Common Stock, par value $.01 per share,
and a membership interest in Holding LLC consisting of 1,690.14 Class A Common
▇▇▇▇▇, ▇▇▇ Class B Common ▇▇▇▇▇, ▇▇▇ Class C Common Units and 660 Preferred
Units, entitling the undersigned to an interest in Holding LLC's capital and an
interest in Holding LLC's profits.
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3. The date on which the property was transferred: January 27, 1997.
The taxable year for which such election is made: calendar 1997.
4. The restrictions to which the property is subject: If during the
first five years after the purchase of the Securities the undersigned ceases to
be employed by ▇▇▇▇▇▇▇▇ Publishing Company, L.L.C. ("Operating LLC") or any of
its subsidiaries, the unvested portion of the Securities shall be subject to
repurchase by the Company at the lower of fair market value or original cost.
The Securities shall become vested ratably, on a daily basis, over the five year
period commencing upon issuance as long as Executive remains employed by
Operating L.L.C. or any of its subsidiaries, and shall be deemed to be unvested
to the extent not vested as of termination of such employment; provided that all
Securities shall become Vested Securities if Executive remains employed by
Operating LLC or any of its subsidiaries through the time of certain public
offerings of the Company's Common Stock or certain sales of the Company,
Holdings LLC or Operating LLC.
5. The fair market value on January 27, 1997 of the property with
respect to which the election is being made, determined without regard to any
lapse restrictions: $300,000.
6. The amount paid for such property: $300,000.
A copy of this election has been furnished to the Secretary of the
Company and Holding LLC pursuant to Treasury Regulations (S)1.83-2(e)(7).
Dated:
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▇▇▇▇▇▇▇ ▇▇▇▇▇▇
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