EXHIBIT 4.15
▇▇▇▇▇▇▇ ACQUISITION CORP.
MANAGEMENT SUBSCRIPTION AGREEMENT
THIS SUBSCRIPTION AGREEMENT, dated as of August 16, 1995 (this
"Agreement"), is made by and among ▇▇▇▇▇▇▇ Acquisition Corp., a Delaware
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corporation (together with its successors including, without limitation, ▇▇▇▇▇▇▇
Holding Company which is successor by merger to ▇▇▇▇▇▇▇ Products, Inc. and which
will subsequently change its name to ▇▇▇▇▇▇▇ Products, Inc. and its
subsidiaries, unless otherwise indicated by the context, the "Company"), whose
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address is c/o The Jordan Company, ▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇▇▇, and the persons and entities whose names are set forth at the end of this
Agreement (collectively the "Stockholders").
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1. Stock Subscriptions and Cash Buyout.
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(a) Each Stockholder (i) herewith subscribes for the number of shares
set forth opposite Stockholder's name in Exhibit 1 hereto of the Company's Class
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C Common Stock, $0.01 par value per share (the "Class C Common Stock"), which is
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convertible, under certain circumstances under the Company's Certificate of
Incorporation, into the Company's Class A Common Stock, par value $.01 per share
(the "Class A Common Stock" and together with the Class C Common Stock and the
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other classes of common stock of the Company, "Common Stock"), all as more
specifically described in Exhibit 1, at a purchase price for the Class C Common
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Stock of $1.00 per share, (ii) tenders in consideration of the subscription for
such Class C Common Stock (A) such Stockholder's stock certificates ("Rollover
Shares") representing shares of Old Holdings Common Stock (as defined in Section
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10), if any, as more fully described in Exhibit 2 hereto, (B) amount of the net
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proceeds payable to the Stockholder pursuant to the Merger Agreement from the
cancellation of options to purchase Old Holdings Common Stock held by such
Stockholder, (C) the net proceeds payable to the Stockholder pursuant to the
Merger Agreement from performance bonuses and sale of business bonuses to be
paid by Old ▇▇▇▇▇▇▇ (as defined in Section 10) to such Stockholder, if any, as
more fully described in Exhibit 2 hereto, and (D) a Non-Recourse Promissory Note
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executed and delivered by the Stockholder in favor of the Company in
substantially the form of Exhibit 3 attached hereto (the "Non-Recourse Notes")
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and in an initial principal amount set forth in Exhibit 2 hereto, if any, as
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more fully described in Exhibit 2 hereto, and (E) cash, if any, as more fully
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described in Exhibit 2 hereto, and (3) herewith agrees to enter into a Stock
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Pledge Agreement in favor of the Company in substantially the form of Exhibit 4
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attached hereto in order to secure the payment of amounts due under the Non-
Recourse Notes. Each of the Stockholders, in order to facilitate the
transactions contemplated by this Agreement, authorizes and appoints the Company
or any of its representatives to direct the transfer of the subscription
consideration from any account which such amounts may be paid into for the
benefit of such Stockholder to any account established for the benefit of the
Company. For purposes of this Agreement, the Class C Common Stock (and the Class
A Common Stock, if any, issued upon conversion thereof) and the Options and the
Option Shares (each as defined in Section 1(c)) are collectively referred to as
the "Securities").
(b) The Company pursuant to the Company Stock Option Plan (as defined
in Section 2(b) hereof) shall grant to the Executive Management Group (as
defined in Section 10) options to purchase 172,414 shares of Common Stock as set
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forth on Exhibit 1 (the "Options"). Such Options will vest as set forth in the
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Company Stock Option Plan.
(c) The Company covenants that upon issuance, the Class C Common
Stock subscribed for by the Stockholders pursuant to Section 1(a) of this
Agreement, shall aggregate $1,000,000 in aggregate subscription and purchase
price and, together with and assuming the future issuance of 172,414 additional
shares of Common Stock (the "Option Shares") to the Stockholders upon the
exercise of the options described in Section 1(b) (the "Options"), and assuming
the issuance of 3,448,276 shares of Common Stock upon the exercise of warrants
(the "Warrant Shares") to certain institutional investors, shall represent 13.6%
of all
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Common Stock of all classes of the Company on a fully-diluted basis as of the
date hereof.
(d) Each Stockholder acknowledges to the Company and the other
Stockholders that Stockholder understands and agrees, as follows:
THE SECURITIES HAVE NOT BEEN REGISTERED UNDER FEDERAL OR STATE
SECURITIES LAWS. THE SECURITIES ARE VERY SPECULATIVE AND RISKY. THERE IS NO
PUBLIC OR OTHER MARKET FOR THE SECURITIES NOR IS ANY LIKELY TO DEVELOP. THE
COMPANY HAS NO PREVIOUS FINANCIAL HISTORY AND THE COMPANY AND ITS
SUBSIDIARIES HAVE BORROWED SUBSTANTIALLY ALL OF THE FUNDS AVAILABLE TO IT
TO COMMENCE ITS BUSINESS. EACH STOCKHOLDER ACKNOWLEDGES THAT STOCKHOLDER
MAY AND CAN AFFORD TO LOSE STOCKHOLDER'S ENTIRE INVESTMENT AND THAT
STOCKHOLDER UNDERSTANDS STOCKHOLDER MAY HAVE TO HOLD THIS INVESTMENT
INDEFINITELY.
(e) Each certificate evidencing the Securities being issued pursuant
to this Agreement shall bear legends reflecting (i) this Agreement's existence
and (ii) the fact that the Securities have not been registered under Federal or
state securities laws and are subject to limitations on transfer set forth
herein and set forth in a Stockholders Agreement, of even date herewith, by and
among the Company and the Company's stockholders (the "Stockholders Agreement").
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Each Stockholder acknowledges that the effect of these legends, among other
things, is or may be to limit or destroy the value of the certificate for
purposes of sale or for use as loan collateral. Each Stockholder consents that
"stop transfer" instructions may be noted against the Securities sold to
Stockholder hereunder. Each Stockholder acknowledges that Stockholder is
required to become a party to the Stockholders Agreement as a condition to
acquiring the Securities hereunder.
(f) The Stockholders and the Company acknowledge, accept and agree
that each of their respective Purchase and Stockholder Agreements (as defined
below), is hereby terminated and shall not be of any force and effect. For the
purposes of this Agreement, "Purchase and Stockholder Agreements" means any
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subscription, investment, stockholder, option or similar
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agreement or instrument, including any such agreement or instrument relating to
the subject matter of this Agreement or the Stockholders Agreement, as among Old
Holdings, its affiliates and each of the Stockholders, including those
agreements and instruments listed on the Former Stockholder Agreements Schedule
attached as Schedule 1(e) hereto.
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(g) Each Stockholder represents and warrants that attached to the
Former Stockholder Agreements Schedule are, to the extent applicable to such
Stockholder (i) complete and accurate copies of all of the Purchase and
Stockholder Agreements executed by each of the Stockholders, (ii) copies of the
stock certificates of Old Holdings Common Stock issued to the Stockholders,
(iii) the cancelled promissory notes, if any, ("Old Holdings Notes") made by
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each Stockholder to Old Holdings, (iv) cancelled Stock Pledge Agreements, if
any, executed by the Stockholders in favor of Old Holdings (the "Old Holdings
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Stock Pledge Agreements") in connection with the Old Holdings Notes and (v)
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cancelled stock powers, if any, executed by the Stockholders in favor of Old
Holdings (the "Old Holdings Stock Powers") in connection with the Old Holdings
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Stock Pledge Agreements.
2. Proposed Transaction.
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(a) This Agreement summarizes certain pertinent documents as well as
applicable laws and regulations. While the Company believes that these
summaries fairly reflect and summarize such matters, each Stockholder
acknowledges that such summaries are not complete and are qualified in their
entirety by reference to the complete texts thereof of the documents, laws and
regulations so summarized.
(b) Each Stockholder acknowledges that Stockholder has received and
has had ample opportunity to review and understand the current form of each of
the following documents:
A. The Certificate of Incorporation of the Company.
B. The By-laws of the Company.
C. The Agreement and Plan of Merger (the "Merger Agreement"), dated
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August 14, 1995, by and among the
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Company, Old Holdings, the Stockholders referred to therein, the
Optionholders referred to therein and ▇▇▇▇▇ & Partners, Inc., pursuant
to which the Company will merge with and into Old Holdings, with Old
Holdings being the surviving corporation, and the Agreement and Plan
of Merger of even date herewith between Old ▇▇▇▇▇▇▇ and the Company,
pursuant to which Old ▇▇▇▇▇▇▇ will merge with and into Old Holdings,
with Old Holdings being the surviving corporation and being renamed
▇▇▇▇▇▇▇ Products, Inc.
D. The Second Amended and Restated Credit Agreement (the "Credit
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Agreement"), of even date herewith, by and among the Company and
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▇▇▇▇▇▇ Financial, Inc., as Agent for the Lenders named therein,
including all exhibits and schedules thereto.
E. The Note Agreement, of even date herewith, by and among the Company
and the other signatories thereto, including all exhibits and
schedules thereto.
F. The Securities Purchase Agreement, of even date herewith, executed by
the Company in favor of the Purchasers (as defined therein), including
all exhibits and schedules thereto.
G. The Stockholders Agreement, of even date herewith, by and among the
Company and the stockholders named therein, including all exhibits and
schedules thereto (the "Stockholders Agreement").
H. The Stock Pledge Agreement, of even date herewith, among the Company
and the Stockholders named therein, including all exhibits and
schedules thereto.
I. The 1995 ▇▇▇▇▇▇▇ Management Stock Option Plan in substantially the
form of Exhibit 5 (the "Company Stock Option Plan") of even date
herewith, adopted by the Board of Directors of the Company, including
all exhibits thereto.
J. This Agreement and all exhibits and schedules hereto.
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The documents referred to in A through J are hereinafter collectively
referred to as the "Operative Documents", except that, for purposes of Section
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11(h), this Agreement will not be considered an Operative Document.
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The Company has afforded each Stockholder and each Stockholder's
advisors, if any, the opportunity to discuss an investment in the Securities and
to ask questions of representatives of the Company concerning the terms and
conditions of the offering of the Securities and the Operative Documents, and
such representatives have provided answers to all such questions concerning the
offering of the Securities and the Operative Documents. Each Stockholder has
consulted its own financial, tax, accounting and legal advisors, if any, as to
such Stockholder's investment in the Securities and the consequences thereof and
risks associated therewith and the Operative Documents. Each Stockholder and
such Stockholder's advisors, if any, have examined or have had the opportunity
to examine before the date hereof the Operative Documents and all information
that the Stockholder deems to be material to an understanding of the Company,
the proposed business of the Company, and the offering of the Securities. Each
Stockholder also acknowledges that to Stockholder's knowledge there have been no
general or public solicitations or advertisements or other broadly disseminated
disclosures (including, without limitation, any advertisement, article, notice
or other communication published in any newspaper, magazine or similar media or
broadcast over television or radio, or any seminar or meeting whose attendees
have been invited by any general solicitation or advertising) by or on behalf of
the Company regarding an investment in the Securities.
3. Stockholder Representations and Warranties.
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(a) Each Stockholder represents and warrants that such Stockholder:
(i) (A) has previously worked as an employee of Old Holdings, and is employed in
a managerial or executive position with the Company and is familiar with the
Company's operations, financial condition and business prospects, or (B) is a
family member of a person described in clause (A), and is relying upon such
person in acquiring the Securities hereunder; and (ii) has had an opportunity to
select and consult with such attorneys, business consultants and any other
person(s) the Stockholder has
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wished to confer with since the time when the transactions contemplated by the
Merger Agreement and such Stockholder's participation were first discussed with
such Stockholder. Each Stockholder acknowledges that the Company has made
available to such Stockholder, prior to the signing of this Agreement and the
sale of any Securities, the opportunity to ask questions of any person
authorized to act on behalf of the Company concerning any aspect of the
investment and to obtain any additional information, to the extent the Company
possesses such information or can acquire it without unreasonable effort or
expense, necessary to verify the accuracy of the information.
(b) Each Stockholder agrees that Stockholder will not transfer any
Securities if such transfer would result in a default by the Company under the
provisions of the Operative Documents.
(c) Each Stockholder agrees that Stockholder will complete, execute
and file a form of election under Section 83(b) of the Internal Revenue Code of
1986, as amended, with the Internal Revenue Service within thirty (30) days of
the execution of this Agreement and the purchase of the Securities.
(d) Each Stockholder acknowledges and accepts that pursuant to the
Merger Agreement and the other Operative Documents upon consummation of the
proposed transactions the Securities of ▇▇▇▇▇▇▇ Acquisition Corp. subscribed for
hereunder shall be converted into Securities of ▇▇▇▇▇▇▇ Products, Inc., the
successor to ▇▇▇▇▇▇▇ Acquisition Corp.
4. Risk Factors.
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(a) Each Stockholder acknowledges to the Company and the other
Stockholders that such Stockholder knows and understands that Old ▇▇▇▇▇▇▇ is a
material asset of the Company's, and that the Company borrowed a substantial
portion of the funds used to effect the purchase of Old ▇▇▇▇▇▇▇ and Old
Holdings. It is unlikely that dividends will be paid on the Class C Common
Stock. There is no legal requirement or promise made by the Company to declare
or pay such dividends and such dividends may not in any event be paid if such
payment would violate any term of the Operative Documents. Certain of the
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Operative Documents severely restrict the ability of the Company to make any
dividend or redemption payments in any case and such payment may be restricted
by future agreements or instruments binding on the Company. If a Stockholder
ceases to be an employee of the Company such Stockholder's Securities may be
subject to certain rights of the Company to repurchase such Securities under
this Agreement or the Stockholder's employment agreement with the Company, if
any. Under the repurchase payment terms, such Stockholders may not receive full
cash payment in return for the Stockholder's Securities for several years.
Furthermore, each Stockholder acknowledges that he has pledged, pursuant to the
Pledge Agreement of even date herewith by and between such Stockholder and the
Company (with respect to each Stockholder a "Pledge Agreement"), the Securities
held by such Stockholder for the benefit of the Company to secure payment of the
amounts due under the Non-Recourse Note of such Stockholder. Under the terms of
the Pledge Agreements, each Stockholder may forfeit the Stockholder's Securities
upon certain defaults under the Non-Recourse Note or Pledge Agreement executed
by such Stockholder. Also, dividend and redemption payments may be made only
from funds available to the Company for such use as provided by applicable law.
(b) Each Stockholder acknowledges that any financial projections or
forecasts with respect to the Company are only forecasts prepared by management,
which are subject to many assumptions and factors beyond the Company's control,
and that there are no assurances that these forecasts will be realized.
(c) Each Stockholder acknowledges to the Company and the other
Stockholders that Stockholder knows and understands that an investment in the
Securities of the Company is a speculative investment which involves a high risk
of loss and that on and after the date hereof, there will be no public market
for the Securities and the Company does not contemplate that a public market
will develop.
5. Securities Law and Other Matters.
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(a) Each Stockholder represents and warrants to the Company and the
other Stockholders that Stockholder used no "purchaser's representative" (as
that term is used in Regulation
-8-
D as promulgated by the Securities and Exchange Commission) in connection with
the transactions contemplated by the Operative Documents. Each Stockholder
represents and warrants to the Company and the other Stockholders that neither
The Jordan Company ("Jordan") nor any of its employees or affiliates has acted
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as a representative of said Stockholder in the subject transaction. Each
Stockholder hereby releases Jordan, Jordan/Zalaznick Capital Company and each of
their respective partners, principals, directors, officers, employees, agents
and representatives from and against any claims in respect of each Stockholder's
subscription for the Securities and any related transaction hereunder or under
the Operative Documents. Each Stockholder represents and warrants that such
Stockholder has substantial knowledge and experience in financial, investment
and business matters, and specifically in the business of the Company, and has
the requisite knowledge and experience to evaluate the risks and merits of this
investment. Each Stockholder represents and warrants that the decision of such
Stockholder to purchase the Securities hereunder has been made by such
Stockholder independent of any other Stockholder and independent of any
statements, disclosures or judgments as to the properties, business, prospects
or condition (financial or otherwise) of the Company which may have been made or
given by any Stockholder or other person. Each Stockholder represents and
warrants to the Company and the Company's other stockholders that Stockholder
can and will bear the economic risks of Stockholder's investment in the Company
and acknowledges that the Stockholder is able to hold the Company's unregistered
Stock indefinitely and is able to sustain a complete loss if the Securities
become worthless or are forfeited pursuant to the Pledge Agreement executed by
such Stockholder.
(b) Each Stockholder acknowledges to the Company and the Company's
other Stockholders that the Securities being purchased hereunder have not been
registered under the Securities Act of 1933, as amended, (the "Securities Act")
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on the ground that the sales of Securities pursuant to this Agreement are exempt
under Section 4(2) of the Securities Act as not constituting a distribution, and
that the Company's reliance on such exemption is predicated in part on each
Stockholder's representation which Stockholder herewith makes that the
Securities have been acquired solely by and for the account
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of such Stockholder for investment purposes only, and are not being purchased
for subdivision, fractionalization, resale or distribution. Other than as
expressly set forth in the Operative Documents, such Stockholder has no
contract, undertaking, agreement or arrangement with any other Stockholder to
sell, transfer or pledge to such other Stockholder or anyone else the Securities
(or any part thereof) which such Stockholder has purchased hereunder, and such
Stockholder has no present plans or intentions to enter into any such contract,
undertaking, agreement or arrangement. The Securities have not been registered
or qualified for resale under applicable securities laws, and may not be sold
except pursuant to such registration or qualification thereunder or an exemption
therefrom. Such Stockholder has adequate means of providing for Stockholder's
current needs and possible contingencies. Each Stockholder further acknowledges
to the Company that the Securities being sold to said Stockholder must be held
indefinitely unless they are subsequently registered under the Securities Act or
a transfer is made pursuant to an exemption from such registration, including,
for example, pursuant to Rule 144 thereunder. Each Stockholder further
represents and warrants to the Company and the Company's other stockholders that
such Stockholder's financial condition is such that Stockholder is not under any
present necessity or constraint, and does not foresee in the future any
necessity or constraint, to dispose of these shares to satisfy any existing or
contemplated debt or undertaking.
(c) In the event that in the future the Company engages in any
negotiation or transaction (including a merger or consolidation or other
reorganization by or of the Company) in which Regulation D promulgated by the
Securities and Exchange Commission may or will be available to the Company, each
of the Stockholders who is not then a professional investor agrees irrevocably
(and with the knowledge and intention that the other holders of the Company's
stock of all classes will rely thereon in making their respective present
investment decisions) that Stockholder will, within 5 business days of notice
from the Company, which may be given in the sole discretion of the Company,
appoint a purchaser's representative or representatives who shall be qualified
and acceptable to the Company and any other person(s) who is (are) involved in
the proposed transaction so that the maximum benefits of Regulation D shall be
available
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to the Company and all of its Stockholders. Any Stockholder who does
not perform this covenant shall be liable to the Company and all of the
Company's other stockholders for any damage or loss that may or might be
incurred thereby.
6. Registration Rights. The Securities have not been registered under
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Federal or state securities laws and, in consequence thereof, all of the
Securities must be held indefinitely unless (a) subsequently registered under
applicable Federal and state securities laws or (b) exemptions from such
registration are available at the time of a proposed sale or transfer thereof.
Except as set forth in the Stockholders Agreement, the Company has no agreements
in respect of a registration statement under either Federal or state law.
7. Legend. All certificates representing shares of Securities shall be
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endorsed as follows:
"THIS CERTIFICATE IS SUBJECT TO, AND IS TRANSFERABLE ONLY UPON
COMPLIANCE WITH, THE PROVISIONS OF A STOCKHOLDERS AGREEMENT, DATED
AUGUST 16, 1995, AMONG THE COMPANY AND ITS STOCKHOLDERS AND
SUBSCRIPTION AGREEMENTS, DATED AUGUST 16, 1995, AMONG THE COMPANY AND
CERTAIN INVESTORS THEREIN. REFERENCE ALSO IS MADE TO THE RESTRICTIVE
PROVISIONS OF THE CERTIFICATE OF INCORPORATION AND BY-LAWS OF THE
COMPANY. A COPY OF THE ABOVE REFERENCED AGREEMENTS ARE ON FILE AT THE
OFFICE OF THE COMPANY C/O THE JORDAN COMPANY, ▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 AND MAY NOT BE TRANSFERRED
EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT, OR AN EXEMPTION
FROM REGISTRATION, UNDER SAID ACT."
8. Repurchase Provisions.
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(a) Call Upon Termination. If the employment by the Company of any
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Stockholder is terminated at any time:
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(i) by the Company or the Stockholder due to the death of
the Stockholder;
(ii) by the Company or the Stockholder due to Disability (as
defined in Section 10);
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(iii) by the Company due to Cause or Material Breach (as
defined in Section 10);
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(iv) by the Company due to Unsatisfactory Performance (as
defined in Section 10);
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(v) by the Company due to any reason not referred to in
clauses (i) through (iv), or for no reason,
(vi) by the Stockholder due to Good Reason (as defined in
Section 10); or
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(vii) by the Stockholder due to Retirement (as defined in
Section 10); or
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(viii) by the Stockholder voluntarily or for any reason not
referred to in clauses (i), (ii) or (vi) or for no
reason,
then, all, but not less than all, of the Securities owned by such Stockholder
and by all of such Stockholder's Permitted Transferees under the Stockholders
Agreement may be repurchased by the Company, at the option of the Company, at
the "call" price for the Securities, as follows:
1. If the termination is for the reason described in clause (iii)
above, the call price for shares of Common Stock shall be Cost (as defined
in Section 10), payable in cash, Three Year Junior Notes (as defined in
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Section 10) or any combination thereof.
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2. If the termination is for reasons described in clauses (i), (ii),
(iv) or (vi):
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(A) If the termination occurs on or before the first anniversary
of this Agreement, the call price for shares of Common Stock
shall be Cost, payable in cash.
(B) If the termination occurs after the first anniversary of
this Agreement and on or before the second anniversary of
this Agreement, the call price for shares of Common Stock
shall be as follows: (i) for 33 1/3% of the called shares
the call price shall be the Fair Market Value of the shares
on the date of the call, payable in cash, Three Year Junior
Notes or any combination thereof, subject to the provisions
of Section 8(i); and (ii) for 66 2/3% of the call shares the
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call price shall be the Cost of the call shares, payable in
cash.
(C) If the termination occurs after the second anniversary of
this Agreement and on or before the third anniversary of
this Agreement, the call price for shares of Common Stock
shall be as follows: (i) for 66 2/3% of the call shares the
call price shall be the Fair Market Value of the shares on
the date of the call, payable in cash, Three Year Junior
Notes or any combination thereof, subject to the provisions
of Section 8(i); and (ii) for 33 1/3% of the call shares the
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call price shall be the Cost of the call shares, payable in
cash.
(D) If the termination occurs after the third anniversary of
this Agreement, the call price for shares of Common Stock
shall be the Fair Market Value of the call shares on the
date of the call, payable in cash, Three Year Junior Notes
or any combination thereof, subject to the provisions of
Section 8(i).
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3. If the termination is for reasons described in clauses (v) or
(vii) above, the call price for shares of Common Stock shall be the Fair
Market Value of the called shares on the date of the call, payable in cash,
Three Year Junior Notes or any combination thereof.
To exercise the foregoing call rights, the Company must notify the
Stockholder of its exercise of such call rights within six months following
termination.
4. If the termination is for reasons described in clause (viii)
above:
(A) If the termination occurs on or before the third anniversary
of this Agreement, the call price for shares of Common Stock
shall be Cost, payable in cash, Three Year Junior Notes or
any combination thereof.
(B) If the termination occurs after the third anniversary of
this Agreement, the call price for shares of Common Stock
shall be the Fair Market Value of the called shares on the
date of the call, payable in cash, Three Year Junior Notes
or any combination thereof.
To exercise the foregoing call rights, the Company must notify the
Stockholder of its exercise of such call rights within six months following
termination. In the event that the termination of the Stockholder relates to
circumstances involving Cause or Material Breach, then the Company's call rights
under Section 8(a) will take precedence over and supersede any Stockholder put
rights hereunder.
5. If the termination is for any reason other than Cause or Material
Breach, the call price for unexercised, but earned and vested Stock Options
(determined pursuant to the terms and conditions of the Company Option
Plan) shall be the Fair Market Value of the Option Shares which the
Stockholder would have received had the Stockholder exercised the Options
less the exercise price of such Options, payable in cash, Three Year Junior
Notes or any
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combination thereof (subject to the provisions of Section 8(i)). Pursuant
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to the Company Option Plan, if the termination is for Cause or Material
Breach, all of such Stockholder's Options will upon the Stockholder's
termination be considered unvested, irrespective of being previously
vested, and the Options of such Stockholder will automatically terminate
and expire without any payment.
(b) Stockholder Put Rights. If the employment by the Company of any
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Stockholder is terminated at any time:
(i) due to the death of the Stockholder;
(ii) due to Disability;
(iii) by the Company due to Unsatisfactory Performance;
(iv) by the Company due to any reason not referred to in clause
(i) or (ii) other than Cause or Material Breach;
(v) by the Stockholder due to Good Reason; or
(vi) by the Stockholder due to Retirement;
then the Stockholder (or, solely in the case of death, the person or persons to
whom the Stockholder's rights with respect to the Securities shall have lawfully
passed by will or by applicable law) may, at the Stockholder's or their option,
cause the Company to repurchase any or all of the Common Stock owned by such
Stockholder and by all of the Stockholder's Permitted Transferees under the
Stockholders Agreement at the put price described below:
1. If the Termination is for reasons described in clause (i), (ii),
(iii) or (v) above:
(A) If the termination occurs on or before the first anniversary
of this Agreement, the put price for shares of Common Stock
shall be Cost, payable in cash.
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(B) If the termination occurs after the first anniversary of
this Agreement and on or before the second anniversary of
this Agreement, the put price for shares of Common Stock
shall be as follows: (i) for 33 1/3% of the put shares the
put price shall be the Fair Market Value of the shares on
the date of the put, payable in cash, Three Year Junior
Notes or any combination thereof, subject to the provisions
of Section 8(i); and (ii) for 66 2/3% of the put shares the
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put price shall be the Cost of the put shares, payable in
cash.
(C) If the termination occurs after the second anniversary of
this Agreement and on or before the third anniversary of
this Agreement, the put price for shares of Common Stock
shall be as follows: (i) for 66 2/3% of the put shares the
put price shall be the Fair Market Value of the shares on
the date of the put, payable in cash, Three Year Junior
Notes or any combination thereof, subject to the provisions
of Section 8(i); and (ii) for 33 1/3% of the put shares the
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put price shall be the Cost of the put shares, payable in
cash.
(D) If the termination occurs after the third anniversary of
this Agreement, the put price for shares of Common Stock
shall be the Fair Market Value of the put shares on the date
of the put, payable in cash, Three Year Junior Notes or any
combination thereof, subject to the provisions of
Section 8(i).
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2. If the termination is for reasons described in clauses (iv) or
(vi) above, the put price for shares of Common Stock shall be the Fair
Market Value of the put shares on the date of the put, payable in cash,
Three Year Junior Notes or any combination thereof.
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3. If the termination is for any reason other than Cause or Material
Breach, the put price for unexercised, but earned and vested Options
(determined pursuant to the Company Option Plan) shall be the Fair Market
Value of the Option Shares which the Stockholder would have received had
the Stockholder exercised the Options, less the exercise price of such
Options, payable in cash, Three Year Notes or any combination thereof
(subject to the provisions of Section 8(i)). Pursuant to the Company
Option Plan, if the termination is for Cause or Material Breach, all of
such Stockholder's Options will upon the Stockholder's termination be
considered unvested, irrespective of being previously vested, and the
Options of such Stockholder will automatically terminate and expire without
any payment.
To exercise the foregoing put rights, the Stockholder or such persons who
may exercise the put must notify the Company of its or their exercise of such
put rights within six months following termination. In the event that the
termination of the Stockholder relates to circumstances involving Cause or
Material Breach, then the Company's call rights under Section 8(a) will take
------------
precedence over and supersede any Stockholder put rights hereunder.
(c) Put Upon Voluntary Stockholder Termination. If the employment by
------------------------------------------
the Company of the Stockholder is terminated by the Stockholder voluntarily or
for any reason not referred to in clauses (i) through (vi) of Section 8(b), and
------------
the Company would not otherwise have the right to terminate the employment of
the Stockholder for Cause or Material Breach, then the Stockholder, at
Stockholder's option, may cause the Company to repurchase the Common Stock owned
by such Stockholder and by all of the Stockholder's Permitted Transferees under
the Stockholders Agreement at the put price described below:
(A) If the termination occurs on or before the third anniversary of
this Agreement, the put price shall be Cost payable in cash; provided,
--------
however, the Stockholder shall have the right to put only the number of
-------
shares of Common Stock whose aggregate Cost equals the Stockholder's
Percentage of the Put Pool (as defined in Section 10) at the date of the
----------
put, and with any remaining shares continuing to
-17-
be held by such Stockholder, subject to the call provisions of this Agreement.
(B) If the termination is after the third anniversary of this
Agreement, the put price shall be Fair Market Value, with the amount equal
to Cost of such Securities payable in cash, and for any amount equal to
Fair Market Value minus Cost, payable, at the option of the Company, in
cash, Three Year Junior Notes or any combination thereof; provided,
--------
however, that the Stockholder shall have the right to put only the number
-------
of shares of Common Stock whose aggregate Cost equals the Stockholder's
Percentage of the Put Pool at the date of the put, and with any remaining
shares continuing to be held by such Stockholder, subject to the call
provisions of this Agreement.
To exercise the foregoing put rights, the Stockholder or such persons who
may exercise the put must notify the Company of its or their exercise of such
put rights within six months following termination. In the event that the
termination of the Stockholder relates to circumstances involving Cause, then
the Company's call rights under Section 8(a) will take precedence over and
------------
supersede any Stockholder put rights hereunder.
(d) Payment of Non-Recourse Notes; Right of Set-Off. (i) Amounts
-----------------------------------------------
payable to a Stockholder upon the repurchase of Securities pursuant to this
Section 8 shall first be applied to the outstanding principal, interest and any
other amounts owed under the Non-Recourse Note made by such Stockholder and (ii)
the Company, in addition to any other rights or remedies available to the
Company, shall be entitled to set-off and reduce any amounts payable to a
Stockholder upon the repurchase of Securities pursuant to this Section 8 for (A)
---------
any obligations or liabilities of such Stockholder to the Company or (B) any
claims by the Company against such Stockholder under this Agreement, the Merger
Agreement or any other agreement, written or oral, between the Company and such
Stockholder, in each case, after such obligation, liability or claim becomes a
final decision of a court of competent jurisdiction which is not subject to
appeal.
(e) Expiration of Repurchase Option. If the repurchase call rights
-------------------------------
set forth in Sections 8(a) or the
-------------
-18-
repurchase put rights set forth in Sections 8(b) and 8(c) are not exercised
------------- ----
within six months of termination of employment of a Stockholder, such call
rights and put rights will expire. This Section 8 shall terminate upon (i) an
initial public offering of any shares of Securities for which the aggregate
purchase price of the Securities sold is in excess of $30 million or (ii) a Sale
of the Company (as defined in Section 10).
----------
(f) Restrictions on Payments by the Company. Notwithstanding anything
---------------------------------------
to the contrary contained in this Agreement, all repurchases pursuant to this
Section 8, including issuances of and payments by the Company on, the Three Year
---------
Junior Notes, shall be subject to (i) applicable restrictions contained in any
applicable law, (ii) restrictions contained in the Company's and its
subsidiaries' debt and equity financing agreements, including the Credit
Agreement and the Subordinated Note Purchase Agreement, each as amended and in
effect from time to time, and any Senior Indebtedness (as defined in the Three
Year Junior Notes) and (iii) the availability of cash to make any lump sum cash
payments. If any such restrictions or unavailability prohibit the repurchase of
Securities or other capital stock of the Company hereunder which the Company is
otherwise entitled or required to make, the Company may make such repurchases as
soon as it is permitted to do so under such restrictions.
(g) In the event that the Company is obligated to pay to the
Stockholder the Fair Market Value of any put or call shares pursuant to the
provisions of Section 8 (other than with respect to Section 8(a)(3) to which
---------
this Section 8(g) shall not apply), and the Fair Market Value of such shares
exceeds the cost of such shares, the Company may, at its option, pay the
difference between the Fair Market Value of the shares and the cost of the
shares in cash, Three Year Junior Notes or any combination thereof.
(h) In the event the Company elects or is obligated to make payments
in cash pursuant to the provisions of Section 8, such payments will be made
---------
within twelve months of the date of the put or call, as the case may be. In the
event that the Company elects or is obligated to make payments in Three Year
-19-
Junior Notes, such notes will be executed and delivered within 90 days of the
date of the put or call, as the case may be.
(i) In the event any put or call pursuant to the provisions of
Section 8 arises due to the death or disability of any Stockholder and the
---------
Company has the option of paying a portion of the put or call price in cash or
Three Year Junior Notes, the Company will use commercially reasonable efforts to
pay such put or call price in cash.
9. Non-Competition/Non-Disclosure Provisions.
-----------------------------------------
(a) Non-Competition. In consideration of this Agreement, each
---------------
Stockholder covenants and agrees that during the Restricted Period (as defined
in Section 10), such Stockholder shall not, without the express written approval
----------
of the Board of Directors of the Company, directly or indirectly, in one or a
series of transactions, own, manage, operate, control, invest or acquire an
interest in, whether as a proprietor, partner, stockholder, lender, director,
officer, employee, joint venturer, investor, lessor, supplier, customer, agent,
representative or other participant, or otherwise engage or participate in,
whether as a proprietor, partner, stockholder, lender, director, officer,
employee, joint venturer, investor, lessor, supplier, customer, agent,
representative or other participant, any business which competes, directly or
indirectly, with the Business in the Market ("Competitive Business") without
--------------------
regard to (A) whether the Competitive Business has its office, manufacturing or
other business facilities within or without the Market, (B) whether any of the
activities of the Stockholder referred to above occur or are performed within or
without the Market or (C) whether the Stockholder resides, or reports to an
office, within or without the Market; provided, however, that (x) the
-------- -------
Stockholder may, anywhere in the Market, directly or indirectly, in one or a
series of transactions, own, invest or acquire an interest in up to five percent
(5%) of the capital stock of a corporation whose capital stock is traded
publicly, or that (y) Stockholder may accept employment with a successor company
to the Company.
(b) Notwithstanding the provisions of any employment agreement
between the Company and such Stockholder, the Company covenants and agrees to
provide Benefits and pay Base
-20-
Compensation to the affected Stockholder during any applicable Restricted Period
(as defined in Section 10).
----------
(c) In consideration of this Agreement, each Stockholder covenants
and agrees that during the period such Stockholder is an officer, director or
employee of the Company and for two years thereafter, the Stockholder shall not
(A) directly or indirectly, in one or a series of transactions, recruit, solicit
or otherwise induce or influence any proprietor, partner, stockholder, lender,
director, officer, employee, sales agent, joint venturer, investor, lessor,
supplier, agent, representative or any other person which has a business
relationship with the Company or had a business relationship with the Company
within the twenty-four (24) month period preceding the date of the incident in
question, to discontinue, reduce or modify such employment, agency or business
relationship with the Company, or (B) employ or seek to employ or cause any
Competitive Business to employ or seek to employ any person or agent who is then
(or was at any time within six (6) months prior to the date the Stockholder or
the Competitive Business employs or seeks to employ such person) employed or
retained by the Company. Notwithstanding the foregoing, nothing herein shall
prevent the Stockholder from providing a letter of recommendation to an employee
with respect to a future employment opportunity.
(d) Non-Disclosure. Each Stockholder further agrees that Stockholder
--------------
will not, directly or indirectly in one or a series of transactions disclose to
any person or use or otherwise exploit for the Stockholder's own benefit or for
the benefit of anyone other than the Company any Confidential Information (as
defined below) whether prepared by the Stockholder or not provided, however,
that any Confidential Information may be disclosed to officers, representatives,
employees and agents of the Company who need to know such Confidential
Information in order to perform the services or conduct the operations required
or expected of them in the Business. The Stockholder shall use Stockholder's
commercially reasonable efforts to cause all persons or entities to whom
Confidential Information shall be disclosed by Stockholder hereunder to observe
the terms and conditions set forth herein as though each such person or entity
was bound hereby. The Stockholder shall have no obligation hereunder to keep
confidential any Confidential Information if
-21-
and to the extent disclosure of any thereof is specifically required by law;
provided, however, that in the event disclosure is required by applicable law,
the Stockholder shall provide the Company with prompt notice of such
requirement, prior to making any disclosure, so that the Company may seek an
appropriate protective order. At the request of the Company, the Stockholder
agrees to deliver to the Company all Confidential Information which Stockholder
may possess or control. As used herein, the term "Confidential Information"
means any confidential information including, without limitation, any study,
data, calculations, software storage media or other compilation of information,
patent, patent application, copyright, trademark, trade name, service ▇▇▇▇,
service name, "know-how", trade secrets, customer lists, details of client or
consultant contracts, pricing policies, operational methods, marketing plans or
strategies, product development techniques or plans, business acquisition plans
or any portion or phase of any scientific or technical information, ideas,
discoveries, designs, computer programs (including source of object codes),
processes, procedures, formulas, improvements or other proprietary or
intellectual property of the Company, whether or not in written or tangible
form, and whether or not registered, and including all files, records, manuals,
books, catalogues, memoranda, notes, summaries, plans, reports, records,
documents and other evidence thereof. The term "Confidential Information" does
------------------------
not include, and there shall be no obligation hereunder with respect to,
information that becomes generally available to the public other than as a
result of a disclosure by the Stockholder not permissible hereunder.
(e) Specific Performance. All the parties hereto agree that their
--------------------
rights under this Section 9 are special and unique and that violation thereof
---------
would not be adequately compensated by money damages and each grants the others
the right to specifically enforce (including injunctive relief where
appropriate) the terms of this Agreement.
10. Definitions.
-----------
(a) "Base Compensation" means, with respect to any Stockholder, the
-----------------
Stockholder's annual base salary at the highest
-22-
rate calculated on a per annum basis during the twelve month period preceding
the date of termination.
(b) "Benefits" means health insurance plans and related fringe
--------
benefit programs, if any, maintained by the Company for the benefit of a
Stockholder in the Stockholder's capacity as an employee of the Company.
(c) "Business" means any business conducted by or engaged in by the
--------
Company, or proposed to be conducted by or engaged in by the Company on or prior
to the date hereof or at any time while a stockholder of the Company.
(d) "Cause" means any of the following:
-----
(i) Stockholder's commission or conviction of any crime or
criminal offense involving monies or other property, or
any felony;
(ii) Stockholder's commission or conviction of fraud or
embezzlement; or
(iii) Stockholder's material and knowing violation of any
obligations imposed upon Stockholder, personally, as
opposed to upon the Company, whether as a stockholder or
otherwise, under this Agreement or the Operative
Documents; provided, that the Stockholder has been given
--------
notice and 90 days from such notice fails to cure the
violation;
(e) "Cost" means the initial subscription price for shares of the
----
Common Stock, which will be deemed their value at the time of the closing of the
transactions contemplated by the Operative Documents.
(f) "Determination Period" means the last four consecutive completed
--------------------
fiscal quarters as set forth on the audited financial statements of the Company
immediately preceding the "call" or the "put" exercised pursuant to Section 8
---------
for which Fair Market Value shall be used to determine the "call" or "put"
price.
-23-
(g) "Disability" means due to physical or mental disability any
----------
Stockholder is unable to perform, and does not perform, Stockholder's duties as
an employee of the Company (i) for a continuous period of 180 days or (ii) at
such earlier time as such Stockholder submits satisfactory medical evidence that
the Stockholder has a physical or mental disability which will likely prevent
him from returning to work within 180 days. Determination of Disability shall be
made in the reasonable judgment of the Board of Directors. In the event of any
inconsistency between the definition of disability herein and the definition of
such term in any employment agreement between the Stockholder and the Company
then in effect, the definition of such term in such employment agreement shall
control for purposes of this Agreement.
(h) "EBITDA" shall have the meaning given to such term in the Credit
------
Agreement, as amended or supplemented from time to time.
(i) "Executive Management Group" shall mean ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇▇
--------------------------
▇. ▇▇▇▇▇▇, ▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇.
▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇.
(j) "Fair Market Value" means, for any Determination Period, an
-----------------
amount equal to (i) 5.0 multiplied by the EBITDA for the Determination Period
less (ii) the aggregate amount of all indebtedness or capitalized leases of the
----
Company (including, without limitation, the Credit Agreement and the Notes (as
defined in the Subordinated Note Purchase Agreement) immediately prior to the
call or put date (including, without limitation, interest accrued but unpaid
immediately prior to the call date, all determined in accordance with GAAP
(except that working capital borrowing will be averaged over the Determination
Period) less (iii) the aggregate amount of the Liquidation Value preferred stock
----
of the Company outstanding immediately prior to the call or put date, including
accrued but unpaid dividends, all determined in accordance with GAAP plus (iv)
----
cash or cash equivalents held by the Company immediately prior to the call or
put date; provided, however, that Fair Market Value shall in no event be less
-------- -------
than Cost.
-24-
(k) "GAAP" means the generally accepted accounting principles in the
----
United States of America in effect from time to time, applied on a consistent
basis both as to classification of items and amounts.
(l) "Good Reason" means as a result of material reduction in
-----------
Stockholder's authority, perquisites, salary, position or responsibilities
(other than such a reduction which affects all of the Company's senior
executives on a substantially equal or proportionate basis), the relocation of
the Company's primary place of business or the relocation of Stockholder by the
Company to another Company office more than 50 miles from St. Louis, Missouri,
or the Company's willful, material violation of its obligations under this
Agreement, in each case, after 60 days' prior written notice to the Company and
its Board of Directors and the Company's failure thereafter to cure such
reduction or violation.
(m) "Liquidation Value" shall have the meaning in respect of the
-----------------
Preferred Stock set forth in the Certificate of Incorporation of the Company;
however, in no event shall Liquidation Value ever be less than Cost of Preferred
Stock.
(n) "Market" means any county in the United States of America and
------
each similar jurisdiction in Canada and in any other country in which the
Business was conducted by or engaged in by the Company on or prior to the date
hereof or is conducted or engaged in by the Company, or for which the Company is
planning development.
(o) "Material Breach" means:
---------------
(i) Stockholder's breach of any of Stockholder's fiduciary duties
to the Company or its stockholders or making of a willful
misrepresentation or omission which breach, misrepresentation
or omission would reasonably be expected to materially
adversely affect the business, properties, assets, condition
(financial or other) or prospects of the Company;
-25-
(ii) Stockholder's willful, continual and material neglect or
failure to discharge Stockholder's duties,
responsibilities or obligations prescribed by the Company
(other than arising solely due to physical or mental
disability);
(iii) Stockholder's habitual drunkenness or substance abuse
which materially interferes with Stockholder's ability to
discharge Stockholder's duties, responsibilities or
obligations prescribed by the Company;
(iv) Stockholder's violation of any non-competition or
confidentiality agreement with the Company, including
without limitation, those set forth in Sections 9 of this
----------
Agreement, or any other agreements with the Company; and
(v) Stockholder's gross neglect of Stockholder's duties and
responsibilities, as determined by the Company's Board of
Directors;
in each case, for purposes of clauses (i) through (v), after the Company or
the Board of Directors has provided Stockholder with 60 days' written
notice of such circumstances and the possibility of a Material Breach, and
Stockholder fails to cure such circumstances and Material Breach within
those 60 days.
(p) "New Holdings" means ▇▇▇▇▇▇▇ Acquisition Corp., a Delaware
------------
corporation, which, effective the date hereof, shall be renamed "▇▇▇▇▇▇▇ Holding
Company."
(q) "Old Holdings" means ▇▇▇▇▇▇▇ Holding Company, a Delaware
------------
corporation as in existence prior to the date hereof.
(r) "Old Holdings Common Stock" means the Common Stock, par value
-------------------------
$.01 per share, of Old Holdings.
-26-
(s) "Old ▇▇▇▇▇▇▇" means ▇▇▇▇▇▇▇ Products, Inc., a Delaware
-----------
corporation, as in existence prior to the Effective Time (as defined in the
Merger Agreement).
(t) "Put Pool" means the lesser of (i) the amount equal to 10% of the
--------
net increase (after giving full effect to any losses or reductions therein),
measured from the date hereof, in the Company's retained earnings determined in
accordance with GAAP, less the amount of any extraordinary, nonrecurring gains,
or (ii) $1 million.
(u) "Restricted Period" means with respect to any Stockholder, 24
-----------------
months from the date of termination of employment.
(v) "Retirement" shall mean any voluntary termination of employment
----------
by a Stockholder for any reason other than Death, Disability, Cause, Material
Breach or Unsatisfactory Performance after such Stockholder reaches age 65.
(w) "Right of First Refusal" shall mean an option, but not an
----------------------
obligation, to purchase the Common Stock of the Company from a Stockholder at
the same terms as the proposed sale.
(x) "Sale", "sell", "transfer" and the like shall include any
---- ---- --------
disposition by way of transfer, with or without consideration, to any person for
any purpose and shall include, but shall not be limited in any way to,
redemption by the issuer, private or public sale or exchanges of securities or
any other similar transaction involving stock.
(y) "Sale of the Company" means the sale of the Company to an
-------------------
independent third party or group of third parties pursuant to which such party
or parties acquire (i) capital stock of the Company possessing the voting power
under normal circumstances to elect a majority of the Company's Board of
Directors (whether by merger, consolidation or sale or transfer of the Company's
capital stock) or (ii) all or substantially all of the Company's assets
determined on a consolidated basis. Such sale shall require a vote of 60% of all
Stockholders in order to bind all Stockholders to the sale.
-27-
(z) "Stockholder's Percentage" means with respect to an individual
------------------------
Stockholder, the percentage equal to the fraction the numerator of which is the
number of shares of Common Stock owned by the Stockholder and by all of
Stockholder's Permitted Transferees under the Stockholders Agreement and the
denominator of which is 1,172,424.
(aa) "Subscription Price" shall mean the aggregate purchase price for
------------------
the Company's Common Stock for each given Stockholder.
(bb) "Three Year Junior Notes" means a promissory note of the Company
-----------------------
in the form attached hereto as Exhibit 6.
---------
(cc) "Unsatisfactory Performance" means a Stockholder's failure to
--------------------------
perform Stockholder's duties to the standards set by the Board (such
determination to be solely within the discretion of the Board); provided, that
--------
Stockholder has been given notice and 30 days from such notice fails to cure
such unsatisfactory performance.
11. Miscellaneous.
-------------
(a) Subject to the conditions of transfer of Securities hereunder and
in the Stockholders Agreement, this Agreement shall be binding upon and shall
inure to the benefit of each individual Stockholder and Stockholder's respective
heirs, executors, administrators, assigns and legal representatives and to the
Company and its respective successors and assigns, by way of merger,
consolidation or operation of law or otherwise. Once a Stockholder of the
Company is no longer a stockholder of the Company all rights and benefits
previously enjoyed by such party pursuant to the terms of this Agreement shall
automatically terminate with respect to such party.
(b) Prior to consummation of any transfer of Securities held by a
Stockholder permitted under the Stockholders Agreement, except for transfers
pursuant to a public offering, such party shall cause the transferee to execute
an agreement in which the transferee agrees to be bound by the terms of this
Agreement and the Stockholders Agreement.
-28-
(c) The Stockholders in the Executive Management Group shall be
afforded a Right of First Refusal to purchase Securities held by a Stockholder
if such Stockholder elects to transfer any Securities other than as described in
Section 4.2(b) of the Stockholders Agreement. In the event that this right is
not exercised by any member of the Executive Management Group, such right will
vest in the Company and the other Stockholders.
(d) Each Stockholder acknowledges that the Company may purchase, at
its sole expense, a life insurance policy, the proceeds of which will be used to
purchase Stockholder's Securities in the event of Stockholder's death and each
Stockholder hereby agrees to cooperate with the Company in obtaining such
insurance.
(e) Nothing in this Agreement shall constitute an agreement by, or
shall impose any obligation upon, the Company to employ, or to continue to
employ, any Stockholder, or shall constitute an agreement by, or shall impose
any obligation upon, the Company with respect to the terms and conditions of
employment of any Stockholder, and will not limit or restrict, in any manner,
the Company's right or ability to terminate any Stockholder.
(f) The language used in this Agreement will be deemed to be the
language chosen by the parties hereto to express their mutual intent, and no
rule of strict construction will be applied against any person.
(g) THIS AGREEMENT SHALL BE GOVERNED BY, CONSTRUED, APPLIED AND
ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. EACH OF THE
PARTIES HERETO ACKNOWLEDGES AND AGREES THAT IN THE EVENT OF ANY BREACH OF THIS
AGREEMENT, THE NON-BREACHING PARTY WOULD BE IRREPARABLY HARMED AND COULD NOT BE
MADE WHOLE BY MONETARY DAMAGES, AND THAT, IN ADDITION TO ANY OTHER REMEDY TO
WHICH THEY MAY BE ENTITLED AT LAW OR IN EQUITY, THE PARTIES SHALL BE ENTITLED TO
SUCH EQUITABLE OR INJUNCTIVE RELIEF AS MAY BE APPROPRIATE. EACH PARTY AGREES
THAT JURISDICTION, SUBJECT TO THE PROVISIONS OF SECTION 11(h), AND VENUE WILL BE
PROPER IN THE SOUTHERN DISTRICT OF NEW YORK AND WAIVES ANY OBJECTIONS BASED UPON
FORUM NON CONVENIENS. EACH PARTY WAIVES PERSONAL SERVICE OF PROCESS AND AGREES
THAT A SUMMONS AND COMPLAINT COMMENCING AN
-29-
ACTION OR PROCEEDING SHALL BE PROPERLY SERVED AND SHALL CONFER PERSONAL
JURISDICTION IF SERVED BY REGISTERED OR CERTIFIED MAIL TO THE PARTY AT THE
ADDRESS SET FORTH IN THIS AGREEMENT, OR AS OTHERWISE PROVIDED BY THE LAWS OF THE
STATE OF NEW YORK OR THE UNITED STATES. THE CHOICE OF FORUM SET FORTH IN THIS
SECTION 11(F) SHALL NOT BE DEEMED TO PRECLUDE THE ENFORCEMENT OF ANY JUDGMENT
OBTAINED IN ANY OTHER FORUM OR THE TAKING OF ANY ACTION UNDER THIS AGREEMENT TO
ENFORCE SAME IN ANY OTHER APPROPRIATE JURISDICTION.
(h) THE STOCKHOLDERS AND THE COMPANY AGREE THAT ANY DISPUTE BETWEEN
OR AMONG THE PARTIES TO THIS AGREEMENT RELATING TO OR IN RESPECT OF THIS
AGREEMENT, ITS NEGOTIATION, EXECUTION, PERFORMANCE, SUBJECT MATTER, OR ANY
COURSE OF CONDUCT OR DEALING OR ACTIONS UNDER OR IN RESPECT OF THIS AGREEMENT,
INCLUDING, WITHOUT LIMITATION ANY CLAIM UNDER THE SECURITIES ACT, THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED, ANY OTHER STATE OR FEDERAL LAW RELATING TO
SECURITIES OR FRAUD OR BOTH, THE RACKETEER INFLUENCED AND CORRUPT ORGANIZATIONS
ACT, AS AMENDED, OR FEDERAL OR STATE COMMON LAW, SHALL BE SETTLED BY FINAL,
BINDING AND NON-APPEALABLE ARBITRATION IN NEW YORK, NEW YORK BY THREE
ARBITRATORS. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN THIS SECTION 11, THE
----------
ARBITRATION SHALL BE CONDUCTED IN ACCORDANCE WITH THE VOLUNTARY COMMERCIAL
ARBITRATION RULES OF THE AMERICAN ARBITRATION ASSOCIATION (THE "ASSOCIATION")
-----------
THEN IN EFFECT. ONE OF THE ARBITRATORS SHALL BE APPOINTED BY THE COMPANY, ONE
SHALL BE APPOINTED BY THE STOCKHOLDER, AND THE THIRD SHALL BE APPOINTED BY THE
FIRST TWO ARBITRATORS. IF THE FIRST TWO ARBITRATORS CANNOT AGREE ON THE THIRD
ARBITRATOR WITHIN 60 DAYS OF THE APPOINTMENT OF THE SECOND ARBITRATOR, THEN THE
THIRD ARBITRATOR SHALL BE APPOINTED BY THE ASSOCIATION. UPON THE CONCLUSION OF
ARBITRATION, EXECUTIVE OR THE COMPANY MAY APPLY TO ANY COURT OF THE TYPE
DESCRIBED IN SUBSECTION (g) OF THIS SECTION 11 TO ENFORCE THE DECISION PURSUANT
----------
TO SUCH ARBITRATION. IN CONNECTION WITH THE FOREGOING, THE PARTIES, AFTER
CONSULTING WITH COUNSEL, HEREBY WAIVE ANY RIGHTS TO A JURY TRIAL TO RESOLVE ANY
DISPUTES OR CLAIMS RELATING TO THIS AGREEMENT. SUCH ARBITRATION SHALL TAKE
PLACE IN NEW YORK, NEW YORK, AND SHALL BE SUBJECT TO THE SUBSTANTIVE LAW OF THE
STATE OF NEW YORK. DECISIONS AS TO FINDINGS OF FACT AND CONCLUSIONS OF LAW
PURSUANT TO SUCH ARBITRATION SHALL BE FINAL, CONCLUSIVE AND BINDING ON THE
PARTIES, SUBJECT TO CONFIRMATION, MODIFICATION OR CHALLENGE
-30-
PURSUANT TO 9 U.S.C. (S)(S) 1 ET SEQ. ANY FINAL AWARD SHALL BE ENFORCEABLE AS A
JUDGMENT OF A COURT OF RECORD.
(i) Each of the Stockholders agrees and acknowledges that the
Operative Documents and any other agreement or instrument that may restrict the
ability of the Company to make any dividend or redemption payments may be
created, amended, modified or supplemented, from time to time, and may be
refinanced, extended or substituted, from time to time, without notice to, or
the consent or approval of, the Stockholders.
(j) All personal pronouns used in this Agreement, whether used in
masculine, feminine or neuter gender, shall include all other genders if the
context so requires; the singular shall include the plural, and vice versa.
(k) This Agreement may be executed in two or more counterparts, each
of which shall be deemed an original but all of which together shall constitute
one and the same instrument.
(l) In case any one or more of the provisions or parts of a provision
contained in this Agreement shall, for any reason, be held to be invalid,
illegal or unenforceable in any respect in any jurisdiction, such invalidity,
illegality or unenforceability shall not affect any other provision or part of a
provision of this Agreement or any other jurisdiction, but this Agreement shall
be reformed and construed in any such jurisdiction as if such invalid or illegal
or unenforceable provision or part of a provision had never been contained
herein and such provision or part shall be reformed so that it would be valid,
legal and enforceable to the maximum extent permitted in such jurisdiction.
(m) This Agreement constitutes the entire agreement by and among the
parties with respect to the subject matter hereof and may not be modified
orally, but only by a writing subscribed by the party charged therewith.
(n) Each of the parties hereto agrees to execute all such further
instruments and documents and to take all such further action necessary to
effectuate the terms and purposes of this Agreement.
-31-
(o) Whenever notice is required to be given by any party hereunder,
such notice shall be deemed sufficient when delivered to the Company at its
address above and to each of the other Stockholders at Stockholder's address
below or to such other address as the Stockholder shall have furnished to the
Company.
(p) Each party shall be entitled to rely conclusively upon any notice
received, or the failure to receive any notice, from any other party with
respect to rights and obligations under this Agreement.
12. Receipt of Stock Certificates.
-----------------------------
Each Stockholder herewith acknowledges receipt of the certificate(s)
evidencing the Securities purchased by Stockholder.
-32-
IN WITNESS WHEREOF, each of the undersigned has signed this Agreement:
▇▇▇▇▇▇▇ ACQUISITION CORP.
By /s/ ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice President
STOCKHOLDERS:
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------
▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
---------------------------------
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-33-
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
---------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-34-
NEW STOCKHOLDERS:
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------
Date: March 1, 1996 ▇▇▇▇ ▇. ▇▇▇▇▇▇
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
---------------------------------
Date: December 1, 1996 ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
-35-
EXHIBIT 1
---------
Schedule of Management Investors
EXHIBIT 2
---------
Schedule of Old Holdings Common Stock
and Bonus Proceeds
EXHIBIT 3
---------
Non-Recourse Promissory Note
EXHIBIT 4
---------
Stock Pledge Agreement
EXHIBIT 5
---------
1995 ▇▇▇▇▇▇▇ Management Stock Option Plan
EXHIBIT 6
---------
Three Year Junior Subordinated Note
EXHIBIT 1 TO MANAGEMENT SUBSCRIPTION AGREEMENT
----------------------------------------------
Vesting Schedule for Options
----------------------------
====================================================================================================================================
Options Granted No. of Options Allocated for Vesting for the Twelve Months Ended as of Such Dates
------------------------------------------------------------------------------------------------------------------------------------
Stockholder August 16, 1996 August 16, 1997 August 16, 1998 August 16, 1999 August 16, 2000
------------------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ 10.00 2.00 2.00 2.00 2.00 2.00
-----------------------------------------------------------------------------------------------------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇ 10.00 2.00 2.00 2.00 2.00 2.00
-----------------------------------------------------------------------------------------------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇ 1512.22 302.44 302.44 302.44 302.44 302.46
-----------------------------------------------------------------------------------------------------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇ 35.00 7.00 7.00 7.00 7.00 7.00
-----------------------------------------------------------------------------------------------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇ 10.00 2.00 2.00 2.00 2.00 2.00
-----------------------------------------------------------------------------------------------------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇ 10.00 2.00 2.00 2.00 2.00 2.00
-----------------------------------------------------------------------------------------------------------------------------------
▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ 525.79 105.15 105.15 105.15 105.15 105.19
-----------------------------------------------------------------------------------------------------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ 10.00 2.00 2.00 2.00 2.00 2.00
-----------------------------------------------------------------------------------------------------------------------------------
Total August Vesting Shares 2123.01 424.59 424.59 424.59 424.59 424.65
-----------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
Options Granted No. of Options Allocated for Vesting for the Twelve Months Ended as of Such Dates
------------------------------------------------------------------------------------------------------------------------------------
Stockholder June 1, 1998 June 1, 1999 June 1, 2000 June 1, 2001 June 1, 2002
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ 150.00 30.00 30.00 30.00 30.00 30.00
------------------------------------------------------------------------------------------------------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ 250.00 50.00 50.00 50.00 50.00 50.00
------------------------------------------------------------------------------------------------------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇ 100.00 20.00 20.00 20.00 20.00 20.00
------------------------------------------------------------------------------------------------------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇ 200.00 40.00 40.00 40.00 40.00 40.00
------------------------------------------------------------------------------------------------------------------------------------
▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇ 150.00 30.00 30.00 30.00 30.00 30.00
------------------------------------------------------------------------------------------------------------------------------------
Total June Vesting Shares 850.00 170.00 170.00 170.00 170.00 170.00
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
November 1, November 1, November 1, November 1, November 1,
1998 1999 2000 2001 2002
------------------------------------------------------------------------------------------------------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇ 225.03 45.00 45.00 45.00 45.00 45.03
------------------------------------------------------------------------------------------------------------------------------------
Total November Vesting Shares 225.03 45.00 45.00 45.00 45.00 45.03
------------------------------------------------------------------------------------------------------------------------------------
====================================================================================================================================
TOTAL 3198.04 639.59 639.59 639.59 639.59 639.68
====================================================================================================================================
1-2
EXHIBIT 2 TO MANAGEMENT SUBSCRIPTION AGREEMENT
----------------------------------------------
Schedule of Management Stockholder
Consideration and Securities Received as of December 1, 1996
------------------------------------------------------------
====================================================================================================================================
Net Proceeds
Options No. of Proceeds No. of Sale of from the
No. of Granted cancelled from Rollover Proceeds Business Rollover
Shares of under the Options Cancellation Shares of from Sale Bonus Shares and the
Stockholder Class C Company for Old of Options Old of Cancellation
Common Stock Holdings ------------- Holdings Rollover ---------- of Options in
Stock Option Plan Common Gross Common Shares Old Holdings
Stock Amount Stock Gross Common
Amount Stock (1)
====================================================================================================================================
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ 250.00 0 0 $0 0 $0 $0 $0
------------------------------------------------------------------------------------------------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ 391.18 10.00 15,000 $7,576.68 0 $0 $30,000 $22,590
------------------------------------------------------------------------------------------------------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇ 750.36 10.00 30,000 $31,953.37 0 $0 $40,000 $43,260
------------------------------------------------------------------------------------------------------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇ 200.00 0 0 $0 0 $0 $0 $0
------------------------------------------------------------------------------------------------------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ 166.67 10.00 0 $0 0 $0 $0 $0
------------------------------------------------------------------------------------------------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇ 3787.78 1250.00 162,500 $82,080.75 50,000 $43,500 $200,000 $213,225
------------------------------------------------------------------------------------------------------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇ 873.54 35.00 45,000 $22,730.06 0 $0 $60,000 $49,770
------------------------------------------------------------------------------------------------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇ 811.15 10.00 40,000 $37,004.50 0 $0 $40,000 $46,320
------------------------------------------------------------------------------------------------------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇ 341.18 10.00 15,000 $7,576.68 0 $0 $25,000 $19,590
------------------------------------------------------------------------------------------------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇ 491.18 10.00 15,000 $7,576.68 0 $0 $40,000 $28,590
------------------------------------------------------------------------------------------------------------------------------------
▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ 1274.21 359.14 30,000 $23,553.36 0 $0 $60,000 $50,220
------------------------------------------------------------------------------------------------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ 521.57 10.00 20,000 $10,102.25 0 $0 $40,000 $30,120
------------------------------------------------------------------------------------------------------------------------------------
Retained by Company 141.18 10.00 -- -- -- -- -- --
------------------------------------------------------------------------------------------------------------------------------------
Total 10,000.00 1724.14 387,500(2) $237,731.01(3) 50,000 $43,500 $585,000(4) $538,275(5)
====================================================================================================================================
---------------------------------------------------------------------------------------------------------------
Net Proceeds
from the Rollover
Shares and the Total
Cancellation of Principal Value of
Additional Options in Old Amount of Treasury Total Value of
Stockholder Cash Holdings Non- Shares Consideration
Investment Common Stock Recourse Retained
and Cash Note by the
Invested in Company
Company
===============================================================================================================
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ $25,000 $25,000 0 -- $25,000
---------------------------------------------------------------------------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ $0 $22,590 $16,528 -- $39,118
---------------------------------------------------------------------------------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇ $0 $43,260 $31,776 -- $75,036
---------------------------------------------------------------------------------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇ $12,000 $12,000 $8,000 -- $20,000
---------------------------------------------------------------------------------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ $10,000 $10,000 $6,667 -- $16,667
---------------------------------------------------------------------------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇ $0 $213,225 $165,553 -- $378,778
---------------------------------------------------------------------------------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇ $0 $49,770 $37,584 -- $87,354
---------------------------------------------------------------------------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇ $0 $46,320 $34,795 -- $81,115
---------------------------------------------------------------------------------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇ $0 $19,590 $14,528 -- $34,118
---------------------------------------------------------------------------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇ $0 $28,590 $20,528 -- $49,118
---------------------------------------------------------------------------------------------------------------
▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ $25,000 $75,220 $52,201 -- $127,421
---------------------------------------------------------------------------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ $0 $30,120 $22,037 -- $52,157
---------------------------------------------------------------------------------------------------------------
Retained by Company -- -- -- $14,118 $14,118
---------------------------------------------------------------------------------------------------------------
Total $37,410(6) $575,685(7) $410,197(8) $14,118 $1,000,000
===============================================================================================================
(1) The difference with the Gross Amount reflects the amount of withholding
taxes.
(2) Includes 15,000 cancelled Options provided by ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, a former
employee of the Company, whose stock was repurchased as of June 30, 1996.
(3) Includes $7,576,38 in proceeds from cancelled Options provided by ▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇.
(4) Includes $20,000 provided by ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, a former employee of the
Company, whose stock was repurchased as of February 29, 1996, and $30,000
provided by ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇.
(5) Includes $12,000 provided by ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ and $22,590 provided by
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇.
(6) Represents total cash investment of $72,000, net of payoff of $12,000 to
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ and $22,590 to ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇.
(7) Represents total of $610,275, net of payoff of $12,000 to ▇▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇ and $22,590 to ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇.
(8) Represents total of $426,725, net of cancellation of $8,000 note from
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ and $16,528 note from ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and issuance of
new note for $8,000 from ▇▇▇▇ ▇. ▇▇▇▇▇▇.