EXHIBIT 10.3
AMENDMENT NO. 2 TO STOCK PURCHASE AGREEMENT
This AMENDMENT NO. 2 TO STOCK PURCHASE AGREEMENT (the "Amendment"), is made
and entered into as of December 15, 1998, by and among Xxxxxxx American
Corporation (formerly known as Monroe, Inc.), a Delaware corporation ("Buyer"),
Xxxxxxx Enterprises, Inc., a Massachusetts corporation (the "Company"), Xxxxxx
X. Xxxxxxx and those individuals identified as Stockholders on the signature
pages to this Amendment (each, individually a "Stockholder" and collectively the
"Stockholders"). Capitalized terms used herein and not otherwise defined shall
have the meaning provided in the Purchase Agreement, as hereinafter defined.
WHEREAS, the parties hereto are parties to a Stock Purchase Agreement,
dated as of May 20, 1998, as amended as of November 18, 1998 (as so amended, the
"Purchase Agreement"); and
WHEREAS, the parties hereto desire to amend the Purchase Agreement as
provided herein.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto hereby agree as
follows:
Section 1. Amendment. The Purchase Agreement is amended as set forth
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below:
(a) The second parenthetical in clause (c) of Section 1.2 of the Purchase
Agreement which reads "(written notice of which must be provided to the
Company and the Stockholders' Representative not less than ten (10) days
prior to the Closing Date)," is deleted in its entirety and is replaced by
the following:
(written notice of which must be provided to the Company and the
Stockholders' Representative no later than 9:00 a.m., Boston time, on the
first (1st) business day after the date on which the IPO Price is agreed to
by Buyer and the managing underwriter of the IPO),
(b) Section 1.4 of the Purchase Agreement is amended to add a new paragraph
to the end of such Section, which paragraph shall read in its entirety as
follows:
In the event that, after the Closing but in any event within one
hundred fifty (150) days after the Closing, the IRS waives or reduces
and refunds to the Company the failure to pay penalties with respect
to the Settled Audits which are included in the Audit Amount (which
penalties aggregate $397,524.36 assuming payment to the IRS in full
with respect to the Settled Audits on December 18, 1998) (the "FTP
Penalties"), Buyer agrees to pay to each Stockholder such
Stockholder's Common Proportionate Share of the actual cash amount
received by the Company from the IRS with respect to the FTP
Penalties. Such payment, if any, will be paid to the Stockholders no
later than
fifteen (15) days after the date on which the Company receives the
refund of the FTP Penalties. Subject to the foregoing, such payment
will be paid by wire transfer of immediately available funds to the
accounts specified by each Stockholder prior to the Closing, or, if
not so specified, by check. The Company will not take any action which
would result in any such waiver, reduction or refund of the FTP
Penalties being treated as other than a cash refund (including as a
credit or reduction of other tax liabilities).
(c) Section 1.4A of the Purchase Agreement is deleted in its entirety and
is replaced by the following:
1998 Taxes. As additional consideration for the transfer by the
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Stockholders to Buyer of the Company Shares, Buyer agrees to pay to
each Stockholder such Stockholder's Common Proportionate Share of the
actual amount received by the Company, if any, as a refund with
respect to the Company's federal income tax return for the Company's
taxable year ended August 31, 1998 (collectively, the "Additional
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Payments"). The Additional Payments, if any, shall be paid to the
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Stockholders no later than fifteen (15) days after the date on which
the Company receives its final refund with respect to the Company's
federal income tax return for the Company's taxable year ended August
31, 1998. Subject to the foregoing, the Additional Payments shall be
paid by wire transfer of immediately available funds to the accounts
specified by each Stockholder prior to the Closing, or, if not so
specified, by certified check. If the Company takes any action after
the Closing which would reduce the amount of the Additional Payments,
the Additional Payments will not be so reduced but will be treated as
if such action had not been taken.
The Company shall have the right to prepare and file (or cause
its accountants to prepare and file) prior to the Closing the
Company's federal income tax return for its taxable year ended August
31, 1998. If the Company elects to prepare and file (or cause its
accountants to prepare and file) such federal income tax return, the
Company will also prepare and file (or cause its accountants to
prepare and file) together with such federal income tax return (i) an
election under Section 172(b)(3) of the Code to relinquish the entire
carryback period with respect to the net operating loss for the
Company's taxable year ended August 31, 1998 (the "1998 NOL") and (ii)
an election under Section 172(f)(6) of the Code to have the carryback
period with respect to the Company's taxable year ended August 31,
1998 determined without regard to Section 172(b)(1)(C) of the Code.
Buyer shall have the right to review and discuss such federal income
tax return and such elections with the Company prior to filing. The
Company represents and warrants that since February 1, 1998 it has not
filed IRS Form 1120X or Form 1139 or otherwise made a refund claim
with respect to any taxable year or taken any action inconsistent with
the
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elections under Sections 172(b)(3) and 172(f)(6) of the Code
required under this paragraph. The Company covenants and agrees that
from and after the date hereof and through the Closing Date, it will
not file IRS Form 1120X or Form 1139 or otherwise make a refund claim
with respect to any taxable year or take any action inconsistent with
the elections under Sections 172(b)(3) and 172(f)(6) of the Code
required under this paragraph.
(d) Section 1.9 of the Purchase Agreement is deleted in its entirety and is
replaced by the following:
Indemnification Escrow. On the Closing Date, Buyer shall deposit into
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escrow (the "Indemnity Escrow") with the Escrow Agent (a) cash in the
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aggregate amount of $3,891,161 (the "Cash Escrow Amount") and (b) a
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number of shares of Buyer Common Stock (rounded to the nearest whole
share) equal to (i) $1,300,000 divided by (ii) the IPO Price (the
"Escrowed Shares"), to be held, invested and distributed by the Escrow
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Agent in accordance with the terms of an indemnification escrow
agreement in substantially the form attached hereto as Exhibit D (the
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"Indemnification Escrow Agreement"). The cash portion of the Total
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Consideration otherwise payable to each Stockholder shall be reduced
by such Stockholder's Common Proportionate Share of the Cash Escrow
Amount. The number of shares of Buyer Common Stock to be delivered to
each Stockholder at the Closing pursuant to Section 1.2 shall be
reduced by such Stockholder's Common Proportionate Share of the number
of Escrowed Shares. Notwithstanding the foregoing, the cash portion of
the Total Consideration payable in respect of the Preferred Shares and
the shares of Buyer Common Stock deliverable in respect of Preferred
Shares shall not be reduced and shall not participate in the Indemnity
Escrow.
(e) Section 2.3(b) of the Purchase Agreement is deleted in its entirety and
is replaced by the following:
The Stockholders own of record and, except for (i) the trust fund (the
"ESOP Trust Fund") referred to in Article 2.17 of the Xxxxxxx
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Enterprises, Inc. Employee Stock Ownership Plan as amended and
restated by the Ninth Amendment, effective as of January 1, 1997, as
amended by the Tenth Amendment, effective as of September 1, 1997,
(the "ESOP"), (ii) the Xxxxxxx Trust and (iii) the Xxxxxx X. Xxxxxxx
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1991 Charitable Remainder Unitrust (the "Xxxxxxx CRUT"), beneficially,
all of the issued and outstanding shares of capital stock of the
Company as set forth on Exhibit A hereto.
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(f) The parenthetical in Section 8.2(b) of the Purchase Agreement is
deleted in its entirety and is replaced by the following:
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(giving effect to the Schedules and, with respect to the
representations and warranties contained in the first sentence of
Section 2.6(a), the first sentence of Section 2.6(a)(ii), Section
2.11, the last sentence of Section 2.15 and Section 2.30(b), to the
Closing Disclosure Supplement and any Company Disclosure Supplement)
(g) Section 8.2(i) of the Purchase Agreement is deleted in its entirety and
is replaced by the following:
Employment and Non-Competition Agreements. The existing Employment
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Agreements between each of Xxxxxx X. Xxxxxxx, Xxxxx X. Xxxxxx and
Xxxxxx X. Xxxxx and the Company shall have been terminated, and each
of Xxxxxx X. Xxxxxxx, Xxxxx X. Xxxxxx and Xxxxxx X. Xxxxxx, Xx. shall
have executed and delivered to Buyer an Employment and Non-Competition
Agreement in substantially the form of Exhibit H attached hereto.
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(h) The third sentence of Section 10.7 of the Purchase Agreement is deleted
in its entirety and is replaced by the following:
In determining Losses hereunder, due account shall be taken of all
relevant factors, including, without limitation, the net present value of
(i) any insurance proceeds (net of any negative tax effects) and (ii) any
deduction, credit, amortization, exclusion from income or other tax benefit
realized by the indemnified party on the account of any Loss; provided that
(x) Buyer Indemnifiable Losses relating to the Audit Liabilities will not
be reduced by any such tax benefit which results from any appeal, dispute
or contest of the Settled Audits by Buyer or the Company and (y) Buyer
Indemnifiable Losses will not be reduced for any reason as a result of the
1998 NOL or any use, application or benefit of the 1998 NOL.
(i) Schedule 1.4 (Audit Amount) to the Purchase Agreement is deleted in its
entirety and is replaced by Schedule 1.4 attached hereto.
(j) Exhibit A (List of Stockholders) to the Purchase Agreement is deleted
in its entirety and is replaced by Exhibit A attached hereto.
(k) Exhibit B (Allocation of Total Consideration) to the Purchase Agreement
is deleted in its entirety and is replaced by Exhibit B attached hereto.
(l) Exhibit D (Form of Indemnification Escrow Agreement) to the Purchase
Agreement is deleted in its entirety and is replaced by Exhibit D attached
hereto.
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Section 2. Governing Law. This Amendment shall be construed under and
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governed by the internal laws of The Commonwealth of Massachusetts without
regard to its conflict of laws provisions.
Section 3. Counterparts. For the convenience of the parties, this
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Amendment may be executed in two or more counterparts, each of which shall be
deemed an original, but all of which shall constitute one and the same document.
[Remainder of page intentionally left blank]
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IN WITNESS WHEREOF the parties hereto have caused this Amendment to be
executed as of the date set forth above by their duly authorized
representatives.
XXXXXXX AMERICAN CORPORATION
By: /s/ Xxxxx X. Xxxxxx
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Xxxxx X. Xxxxxx
President
XXXXXXX ENTERPRISES, INC.
By: /s/ Xxxxxx X. Xxxxxxx
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Xxxxxx X. Xxxxxxx
Chief Executive Officer
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STOCKHOLDERS
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/s/ Xxxxxx Xxxxxxxx
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Xxxxxx Xxxxxxxx
00 Xxxxxxx Xxxx
Xxxx Xxxxxx, XX 00000
/s/ Xxxxxxx X. Xxxxxxx
----------------------
Xxxxxxx X. Xxxxxxx
00 Xxxxx Xxxx
Xxxxxxx, XX 00000
/s/ Xxxxxx X.Xxxxx
------------------
Xxxxxx X. Xxxxx
0 Xxxxxxxxx Xxxx
Xxxxxxxxx Xxxxx, XX 00000
/s/ Xxxxxx X. Xxxxx, Xx.
------------------------
Xxxxxx X. Xxxxx, Xx.
000 Xxxxxxxx Xxxxxx
Xxxxxxx, XX 00000
/s/ Xxxxxx X. Xxxxxxx
---------------------
Xxxxxx X. Xxxxxxx
000 Xxx Xxxxx Xxxx
Xxxxxxxx, XX 00000
/s/ Xxxxxx X. Xxxxxxx
---------------------
Xxxxxx X. Xxxxxxx
0000 Xxxxx Xxxxx Xxxxxxxxx
Xxxxxxxx Xxxxx, XX 00000-0000
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XXXXXX X. XXXXXXX 1984 REVOCABLE
TRUST
/s/ Xxxxxx X. Xxxxxxx
----------------------------------
Xxxxxx X. Xxxxxxx, Trustee
/s/ Xxxxxx X. Xxxxx
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Xxxxxx X. Xxxxx, Trustee
/s/ Xxxxx Xxxxx
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Xxxxx Xxxxx, Trustee
XXXXXX X. XXXXXXX 1991 CHARITABLE
REMAINDER UNITRUST
/s/ Xxxxxx X. Xxxxxxx
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Xxxxxx X. Xxxxxxx, Trustee
/s/ Xxxxxx X. Xxxxx
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Xxxxxx X. Xxxxx, Trustee
XXXXXXX ENTERPRISES, INC.
EMPLOYEE STOCK OWNERSHIP TRUST
/s/ Xxxxx X. Xxxxxxxxxxx
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Xxxxx X. Xxxxxxxxxxx, as Trustee and not individually
000 Xxxxxxxx Xxxxxx
Xxxxxx, XX 00000
/s/ Xxxxxx X. Xxxxxx, Xx.
----------------------------------
Xxxxxx X. Xxxxxx, Xx.
00 Xxx Xxxxxx
Xxxxxxx, XX 00000
/s/ Xxxxxx X. Xxxxx
----------------------------------
Xxxxxx X. Xxxxx
00 Xxxxxxxx Xxxxx
X. Xxxxxxxx, XX 00000
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