Exhibit 10-7
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EXECUTIVE STOCK AGREEMENT
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THIS AGREEMENT is made as of October 28, 1993, between Nutraceutical
Corporation, a Delaware corporation (the "Company"), and Xxxxxxx X. Xxxxxxxx
("Executive").
The Company and Executive desire to enter into an agreement pursuant
to which Executive will purchase, and the Company will sell, Class P Common
Stock, par value $.01 per share (the "Class P Common"), and shares of the
Company's Common Stock, par value $.01 per share (the "Common"). All of such
shares of Class P Common and Common and all shares of Class P Common and Common
hereafter acquired by Executive are referred to herein as "Executive Stock."
Certain definitions are set forth in paragraph 5 of this Agreement.
The parties hereto agree as follows:
1. Purchase and Sale of Executive Stock.
(a) Upon execution of this Agreement, Executive will purchase, and the
Company will sell 2,500 shares of Class P Common at a price per share of $20.25
and 22,500 shares of Common at a price of $0.25 per share. The Company will
deliver to Executive a copy of, and a receipt for, the certificate representing
such Class P Common and Common, and Executive will deliver to the Company a
check or wire transfer of funds in the amount of $250.00 and a promissory note
in the form of attached hereto in an aggregate principal amount of $56,000 (the
"Executive Note"). Executive's obligations under the Executive Note will be
secured by a pledge of all of the shares of Executive Stock to the Company and
in connection therewith Executive shall enter into a pledge agreement in the
form of Exhibit B attached hereto.
(b) Within 30 days after Executive purchases any Executive Stock from
the Company, Executive will make an effective election with the Internal Revenue
Service under Section 83(b) of the Internal Revenue Code and the regulations
promulgated there under in the form of Exhibit A attached hereto.
(c) In connection with the purchase and sale of the Executive Stock
hereunder, Executive represents and warrants to the Company that:
(i) The Executive Stock to be acquired by Executive pursuant to this
Agreement will be acquired for Executive's own account and not with a view
to, or intention of, distribution thereof in violation of the 1933 Act, or
any applicable state securities laws, and the Executive Stock will not be
disposed of in contravention of the 1933 Act or any applicable state
securities laws.
(ii) Executive is an executive officer of the Company, is
sophisticated in financial matters and is able to evaluate the risks and
benefits of the investment in the Executive Stock.
(iii) Executive is able to bear the economic risk of his investment in
the Executive Stock for an indefinite period of time because the Executive
Stock has not been registered under the 1933 Act and, therefore, cannot be
sold unless subsequently registered under the 1933 Act or an exemption from
such registration is available.
(iv) Executive has had an opportunity to ask questions and receive
answers concerning the terms and conditions of the offering of Executive
Stock and has had full access to such other information concerning the
Company as he has requested. Executive has reviewed, or has had an
opportunity to review, a copy of the Stock Purchase Agreement, dated
October 12, 1993, between the Company, Solaray, Inc., a Utah corporation
("Solaray") and Xxxxx X. Xxxx ("Seller") pursuant to which the Company
acquired all of the stock of Solaray and Executive is familiar with the
transactions contemplated thereby. Executive has also reviewed, or has had
an opportunity to review, the following documents: (A) the Company's
Certificate of Incorporation and Bylaws; (B) the loan agreements, notes and
related documents with the Company's lenders; and (C) the Company's pro
forma balance sheet dated as of the date hereof.
(v) This Agreement constitutes the legal, valid and binding
obligation of Executive, enforceable in accordance with its terms, and the
execution, delivery and performance of this Agreement by Executive does not
and will not conflict with, violate or cause a breach of any agreement,
contract or instrument to which Executive is a party or any judgment, order
or decree to which Executive is subject.
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(d) As an inducement to the Company to issue the Executive Stock to
Executive, as a condition thereto, Executive acknowledges and agrees that:
(i) neither the issuance of the Executive Stock to Executive nor any
provision contained herein shall entitle Executive to remain in the
employment of the Company and its Subsidiaries or affect the right of the
Company to terminate Executive's employment at any time for any reason; and
(ii) the Company shall have no duty or obligation to disclose to
Executive, and Executive shall have no right to be advised of, any material
information regarding the Company and its Subsidiaries at any time prior
to, upon or in connection with the repurchase of Executive Stock upon the
termination of Executive's employment with the Company and its Subsidiaries
or as otherwise provided hereunder.
2. Vesting of Executive Stock.
(a) Except as otherwise provided in paragraph 2(b) below, ten percent
(10%) of the Executive Stock will vest upon the date hereof and the remaining
Executive Stock will become vested in accordance with the following schedule, if
as of each such date Executive is still employed by the Company or any of its
Subsidiaries:
Cumulative
Percentage of Executive
Date Stock Vested
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October 28, 1994 30%
October 28, 1995 50%
October 28, 1996 80%
October 28, 1997 100%
(b) Upon the occurrence of a Sale of the Company or a Public
Offering, all shares of Executive Stock which have not yet become vested shall
become vested at the time of such event. Shares of Executive Stock which have
become vested are referred to herein as "Vested Shares," and all other shares of
Executive Stock are referred to herein as "Unvested Shares."
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3. Repurchase Option.
(a) In the event Executive ceases to be employed by the Company and
its Subsidiaries for any reason (the "Termination"), the Executive Stock
(whether held by Executive or one or more of Executive's transferees) will be
subject to repurchase by the Company and the Investors pursuant to the terms and
conditions set forth in this paragraph 3 (the "Repurchase Option").
(b) If Executive's employment is terminated by the Company other than
for Cause or if Executive's employment is terminated by the Executive for any
reason, the purchase price for each Unvested Share will be Executive's Original
Cost for such share (with shares having the lowest cost subject to repurchase
prior to shares with a higher cost), and the purchase price for each Vested
Share will be the Fair Market Value for such share. If Executive's employment
is terminated by the Company for Cause, the purchase price for each share of
Executive Stock, whether Vested or Unvested, will be Executive's Original Cost
for such share.
(c) The Board may elect to purchase all or any portion of the
Unvested Shares and the Vested Shares by delivering written notice (the
"Repurchase Notice") to the holder or holders of the Executive Stock within 90
days after the Termination. The Repurchase Notice will set forth the number of
Unvested Shares and Vested Shares to be acquired from each holder, the aggregate
consideration to be paid for such shares and the time and place for the closing
of the transaction. The number of shares to be repur chased by the Company shall
first be satisfied to the extent possible from the shares of Executive Stock
held by Executive at the time of delivery of the Repurchase Notice. If the
number of shares of Executive Stock then held by Executive is less than the
total number of shares of Executive Stock the Company has elected to purchase,
the Company shall purchase the remaining shares elected to be purchased from the
other holder(s) of Executive Stock under this Agreement, pro rata according to
the number of shares of Executive Stock held by such other holder(s) at the time
of delivery of such Repurchase Notice (determined as nearly as practicable to
the nearest share). The number of Unvested Shares and Vested Shares to be
repurchased hereunder will be allocated among Executive and the other holders of
Executive Stock (if any) pro rata according to the number of shares of Executive
Stock to be purchased from such persons.
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(d) If for any reason the Company does not elect to purchase all of
the Executive Stock pursuant to the Repurchase Option, the Investors shall be
entitled to exercise the Repurchase Option for the shares of Executive Stock the
Company has not elected to purchase (the "Available Shares"). As soon as
practicable after the Company has determined that there will be Available
Shares, but in any event within 45 days after the Termination, the Company shall
give written notice (the "Option Notice") to the Investors setting forth the
number of Available Shares and the purchase price for the Available Shares. The
Investors may elect to purchase any or all of the Available Shares by giving
written notice to the Company within 30 days after the Option Notice has been
given by the Company. If the Investors elect to purchase an aggregate number of
shares greater than the number of Available Shares, the Available Shares shall
be allocated among the Investors based upon the number of shares of Common Stock
owned by each Investor on a fully diluted basis. As soon as practicable, and in
any event within ten days after the expiration of the 30-day period set forth
above, the Company shall notify each holder of Executive Stock as to the number
of shares being purchased from such holder by the Investors (the "Supplemental
Repurchase Notice"). At the time the Company delivers the Supplemental
Repurchase Notice to the holder(s) of Executive Stock, the Company shall also
deliver written notice to each Investor setting forth the number of shares such
Investor is entitled to purchase, the aggregate purchase price and the time and
place of the closing of the transaction. The number of Unvested Shares and
Vested Shares to be repurchased hereunder shall be allocated among the Company
and the Investors pro rata according to the number of shares of Executive Stock
to be purchased by each of them.
(e) The closing of the purchase of the Executive Stock pursuant to
the Repurchase Option shall take place on the date designated by the Company in
the Repurchase Notice or Supplemental Repurchase Notice, which date shall not be
more than 60 days nor less than five days after the delivery of the later of
either such notice to be delivered. The Company and/or the Investors will pay
for the Executive Stock to be purchased pursuant to the Repurchase Option by
delivery of, in the case of each Investor, a check or wire transfer of funds
and, in the case of the Company, (i) a check or wire transfer of funds, (ii) a
subordinate note or notes payable in up to, three equal annual installments
beginning on the first anniversary of the closing of such purchase and bearing
interest
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(payable quarterly) at a rate per annum equal to the Base Rate (as defined in
the Company's credit agreement) or (iii) both (i) and (ii), in the aggregate
amount of the purchase price for such shares; provided that the Company shall
use reasonable efforts to make all such repurchases with a check or wire
transfer of funds. Any notes issued by the Company pursuant to this paragraph
3(e) shall be subject to any restrictive covenants to which the Company is
subject at the time of such purchase. In addition, the Company may pay the
purchase price for such shares by offsetting amounts outstanding under the
Executive Note issued to the Company hereunder and any other bona fide debts
owed by Executive to the Company. The purchasers of Executive Stock hereunder
will be entitled to receive customary representations and warranties from the
sellers regarding such sale and to require all sellers' signatures be
guaranteed.
(f) The right of the Company and the Investors to repurchase Vested
Shares pursuant to this paragraph 3 shall terminate upon the first to occur of
the Sale of the Company or a Public Offering.
(g) Notwithstanding anything to the contrary contained in this
Agreement, all repurchases of Executive Stock by the Company shall be subject to
applicable restrictions contained in the Delaware General Corporation Law and in
the Company's and its Subsidiaries debt and equity financing agreements. If any
such restrictions prohibit the repurchase of Executive Stock 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.
4. Restrictions on Transfer of Stockholder Shares.
(a) Retention of Executive Stock. Executive shall not sell, transfer,
assign, pledge or otherwise dispose of (a "Transfer") any interest in any
Executive Stock, except Transfers pursuant to paragraph 3, this paragraph 4, an
Approval Sale or a Public Sale.
(b) Participation Rights. At least 30 days prior to any Transfer of
any class of Common Stock by the Investors (other than a Transfer among members
of the Investors or their Affiliates or to an employee of the Company or its
Subsidiaries), the
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Investors will deliver a written notice (the "Sale Notice") to Executive,
specifying in reasonable detail the identity of the prospective transferee(s)
and the terms and conditions of the Transfer. The Executive may elect to
participate in the contemplated Transfer by the Investors by delivering written
notice to the Investors within 30 days after delivery of the Sale Notice. If
Executive has elected to participate in such Transfer, the Investors and
Executive will be entitled to sell in the contemplated Transfer, at the same
price and on the same terms, a number of shares of the same class of Common
Stock proposed to be sold by the Investors equal to the product (i) the quotient
determined by dividing the percentage of Executive Stock owned by Investors by
the aggregate percentage of Common Stock owned by the Investors, the Executive
and any other stockholders of the Company participating in such sale and (ii)
the number of shares of Common Stock to be sold in the contemplated Transfer.
For example, if the Sale Notice contemplated a sale of 100 Stockholder
Shares by the Investors, and if the Investors at such time owns 30% of all
Common Stock and if Executive elects to participate and owns 20% of all
Common Stock, the Investors would be entitled to sell 60 shares (30% / 50%
x 100 shares) and the Executive would be entitled to sell 40 shares (20% /
50% x 100 shares).
The Investors shall use best efforts to obtain the agreement of the prospective
transferee(s) to the participation of the Executive in any contemplated
Transfer, and will not transfer any of its Common Stock to the prospective
transferee(s) if the prospective transferee(s) declines to allow the
participation of the Common Stock.
(c) Permitted Transfers. The restrictions contained in this Section 4
shall not apply to (i) a Transfer of Executive Stock pursuant to the laws of
descent and (ii) distribution or among such Executive's Family Group, provided
that the restrictions contained in this Agreement will continue to be applicable
to the Executive Stock after any Transfer and the transferees of such Executive
Stock shall agree in writing to be bound by the provisions of this Agreement.
Upon the Transfer of Executive Stock pursuant to this paragraph 4(c), the
transferees will deliver a written notice to the Company, which notice will
disclose in reasonable detail the identity of such transferee. Executive's
"Family Group" means
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Executive's spouse and descendants (whether natural or adopted) and any trust
solely for the benefit of Executive and/or Executive's spouse and/or
descendants.
(d) Termination of Restrictions. The restrictions set forth in this
paragraph 4 shall continue with respect to each share of Executive Stock until
the earlier of (i) the date on which such share of Executive Stock has been
transferred in a Public Sale, (ii) the consummation of an Approved Sale or (iii)
the consummation of a Public Offering.
5. Additional Restrictions on Transfer.
(a) The certificates representing the Executive Stock will bear the
following legend:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ORIGINALLY ISSUED AS
OF OCTOBER 28, 1993 HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "ACT"), AND MAY NOT BE SOLD OR TRANSFERRED IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR AN
EXEMPTION FROM REGISTRATION THEREUNDER. THE SECURITIES REPRESENTED BY THIS
CERTIFICATE ARE ALSO SUBJECT TO ADDITIONAL RESTRICTIONS ON TRANSFER,
CERTAIN REPURCHASE OPTIONS AND CERTAIN OTHER AGREEMENTS SET FORTH IN AN
EXECUTIVE STOCK AGREEMENT BETWEEN THE COMPANY AND XXXXXXX X. XXXXXXXX DATED
AS OF OCTOBER 28, 1993. A COPY OF SUCH AGREEMENT MAY BE OBTAINED BY THE
HOLDER HEREOF AT THE COMPANY'S PRINCIPAL PLACE OF BUSINESS WITHOUT CHARGE."
(b) No holder of Executive Stock may sell, transfer or dispose of any
Executive Stock (except pursuant to an effective registration statement under
the 1933 Act) without first delivering to the Company an opinion of counsel
(reasonably acceptable in form and substance to the Company) that neither
registration nor qualification under the 1933 Act and applicable state
securities laws is required in connection with such transfer.
(c) Definitions.
"Cause" shall mean (i) the conviction of a felony or the commission of
any other act involving willful malfeasance in connection with Executive's
employment having an adverse effect on
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the Company or any of its Subsidiaries, (ii) substantial refusal by Executive to
perform the duties required by the Company's Board of Directors, or (iii) gross
negligence or willful misconduct by Executive with respect to the Company or any
of its Subsidiaries having the effect of materially injuring the reputation of
the Company or any of its Subsidiaries or materially injuring any customer,
supplier, employee or other business relationships of the Company or any of its
Subsidiaries.
"Common Stock" means the Class P Common, Common, Class A Common Stock,
par value $.01 per share, Non-Voting Common, par value $.01 per share, and Class
A Non-Voting Common Stock, par value $.01 per share, of the Company.
"Executive Stock" will continue to be Executive Stock in the hands of
any holder other than Executive (except for the Company and the Investors and
except for transferees in a Public Sale), and except as otherwise provided
herein, each such other holder of Executive Stock will succeed to all rights and
obliga tions attributable to Executive as a holder of Executive Stock
hereunder. Executive Stock will also include shares of the Company's capital
stock issued with respect to Executive Stock by way of a stock split, stock
dividend or other recapitalization.
"Fair Market Value" of each share of Executive Stock means the average
of the closing prices of the sales of the Company's Common Stock on all
securities exchanges on which the Common Stock may at the time be listed, or, if
there have been no sales on any such exchange on any day, the average of the
highest bid and lowest asked prices on all such exchanges at the end of such
day, or, if on any day the Common Stock is not so listed, the average of the
representative bid and asked prices quoted in the NASDAQ System as of 4:00 P.M.,
New York time, or, if on any day the Common Stock is not quoted in the NASDAQ
System, the average of the highest bid and lowest asked prices on such day in
the domestic over-the-counter market as reported by the National Quotation
Bureau Incorporated, or any similar successor organization, in each such case
averaged over a period of 21 days consisting of the day as of which the Fair
Market Value is being determined and the 20 consecutive business days prior to
such day. If at any time the Common Stock is not listed on any securities
exchange or quoted in the NASDAQ System or the over-the-counter market, the Fair
Market Value will be the fair value of the Common Stock determined in good faith
by the Board.
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"Independent Third Party" means any person who, immedi ately prior to
the contemplated transaction, does not own in excess of 5% of the Company's
equity securities on a fully diluted basis, who is not controlling, controlled
by or under common control with any such 5% owner of the Company's equity
securities and who is not the spouse or descendent (by birth or adoption) of any
such 5% owner of the Company's equity securities.
"Investors" means Xxxx Capital Fund IV, L.P., Xxxx Capital Fund IV-B,
L.P., BCIP Associates and BCIP Trust Associates, L.P.
"1933 Act" means the Securities Act of 1933, as amended from time to
time.
"Original Cost" of each share of Class P Common purchase hereunder
will be equal to $20.25 and Common purchased hereunder will be equal to $0.25
(as proportionately adjusted for all subsequent stock splits, stock dividends
and other recapitalizations).
"Public Sale" means any sale pursuant to a registered public offering
under the 1933 Act or any sale to the public pursuant to Rule 144 promulgated
under the 1933 Act effected through a broker, dealer or market maker.
"Sale of the Company" means the sale of the Company to an Independent
Third Party or affiliated group of Independent Third Parties pursuant to which
such party or parties acquire (i) capital stock of the Company possessing the
voting power 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.
"Subsidiary" means any corporation of which the Company owns
securities having a majority of the ordinary voting power in electing the board
of directors directly or through one or more subsidiaries.
6. Sale of the Company.
(a) If the Company's Board of Directors and the holders of a majority
of the shares of Common Stock then outstanding
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approve a Sale of the Company (collectively an "Approved Sale"), each holder of
Executive Stock will consent to and raise no objections against such Approved
Sale. If the Approved Sale is structured as (i) a merger or consolidation, each
holder of Executive Stock will waive any dissenters rights, appraisal rights or
similar rights in connection with such merger or consolidation or (ii) sale of
stock, each holder of Executive Stock will agree to sell all of his Executive
Stock and rights to acquire Executive Stock on the terms and conditions approved
by the Board of Directors and the holders of a majority of the Common Stock then
outstanding. Each holder of Executive Stock will take all necessary or
desirable actions in connection with the consummation of the Approved Sale as
requested by the Company.
(b) The obligations of the holders of Executive Stock with respect to
an Approved Sale are subject to the satisfaction of the following conditions:
(i) upon the consummation of the Approved Sale, each holder of Common Stock will
receive the same form of consideration and the same portion of the aggregate
consideration that such holders of Common Stock would have received if such
aggregate consideration had been distributed by the Company in complete
liquidation pursuant to the rights and preferences set forth in the Company's
Certificate of Incorporation as in effect immediately prior to such Approved
Sale; (ii) if any holders of a class of Common Stock are given an option as to
the form and amount of consideration to be received, each holder of such class
of Common Stock will be given the same option; and (iii) each holder of then
currently exercisable rights to acquire shares of a class of Common Stock will
be given an opportunity to exercise such rights prior to the consummation of the
Approved Sale and participate in such sale as holders of such class of Common
Stock.
(c) If the Company or the holders of the Company's securities enter
into any negotiation or transaction for which Rule 506 (or any similar rule then
in effect) promulgated by the Securities and Exchange Commission may be
available with respect to such negotiation or transaction (including a merger,
consolidation or other reorganization), the holders of Executive Stock will, at
the request of the Company, appoint a purchaser representative (as such term is
defined in Rule 501 of the Securities Act) reasonably acceptable to the Company.
If any holder of Executive Stock appoints a purchaser representative designated
by the Company, the Company will pay the fees of such purchaser representative,
but if any holder of Executive Stock declines to appoint the purchaser
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representative designated by the Company, such holder will appoint another
purchaser representative, and such holder will be responsible for the fees of
the purchaser representative so appointed.
(d) Holders of Executive Stock will bear their pro-rata share (based
upon the number of shares sold) of the costs of any sale of Executive Stock
pursuant to an Approved Sale to the extent such costs are incurred for the
benefit of all holders of Common Stock and are not otherwise paid by the Company
or the acquiring party. Costs incurred by holders of Executive Stock on their
own behalf will not be considered costs of the transaction hereunder.
(e) The provisions of this paragraph 6 will terminate upon completion
of a Public Offering.
7. Public Offering. In the event that the Company's Board of
Directors and the holders of a majority of the shares of Common Stock then
outstanding approve an initial public offering and sale of Common Stock (a
"Public Offering") pursuant to an effective registration statement under the
Securities Act, as amended, the holders of Executive Stock will take all
necessary or desirable actions in connection with the consummation of the Public
Offering. In the event that such Public Offering is an underwritten offering
and the managing underwriters advise the Company in writing that in their
opinion the Common Stock structure will adversely affect the marketability of
the offering, each holder of Executive Stock will consent to and vote for a
recapitalization, reorganization and/or exchange of the Common Stock into
securities that the managing underwriters, the Board and holders of a majority
of the shares of Common Stock then outstanding find acceptable and will take all
necessary or desirable actions in connection with the consummation of the
recapitalization, reorganization and/or exchange; provided that the resulting
securities reflect and are consistent with the rights and preferences set forth
in the Company's Certificate of Incorporation as in effect immediately prior to
such Public Offering.
8. Notices. Any notice provided for in this Agreement must be in
writing and must be either personally delivered, mailed by first class mail
(postage prepaid and return receipt requested) or sent by reputable overnight
courier service (charges prepaid) to the recipient at the address below
indicated:
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To the Company:
Nutraceutical Corporation
c/o Clarte Capital
000 X. Xxxxx Xx., Xxxxx 000
Xxxx Xxxx Xxxx, Xxxx 00000
With copies to:
Xxxxxxxx & Xxxxx
000 X. Xxxxxxxx Xx.
Xxxxx 0000
Xxxxxxx, XX 00000
Attention: Xxxxx X. Learner
To Executive:
Xxxx Xxxxxxxx
0000 X. 0000 X.
Xxxxxx, Xxxx 00000
To the Investors:
Xxxx Capital
Two Xxxxxx Place
Boston, MA 02116
Attention: Xxxxxx Xxx
or such other address or to the attention of such other person as the recipient
party shall have specified by prior written notice to the sending party. Any
notice under this Agreement will be deemed to have been given when so delivered
or sent or, if mailed, five days after deposit in the U.S. mail.
9. General Provisions.
(a) Transfers in Violation of Agreement. Any Transfer or attempted
Transfer of any Executive Stock in violation of any provision of this Agreement
shall be void, and the Company shall not record such Transfer on its books or
treat any purported transferee of such Executive Stock as the owner of such
stock for any purpose.
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(b) Severability. Whenever possible, each provision of this Agreement
will be interpreted in such manner as to be effective and valid under applicable
law, but if any provision of this Agreement is held to be invalid, illegal or
unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability will not affect
any other provision or any other jurisdiction, but this Agreement will be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision had never been contained herein.
(c) Complete Agreement. This Agreement, those documents expressly
referred to herein and other documents of even date herewith embody the complete
agreement and understanding among the parties and supersede and preempt any
prior understandings, agreements or representations by or among the parties,
written or oral, which may have related to the subject matter hereof in any way.
(d) Counterparts. This Agreement may be executed in separate
counterparts, each of which is deemed to be an original and all of which taken
together constitute one and the same agreement.
(e) Successors and Assigns. Except as otherwise provided herein, this
Agreement shall bind and inure to the benefit of and be enforceable by
Executive, the Company, the Investors and their respective successors and
assigns (including subsequent holders of Executive Stock); provided that the
rights and obligations of Executive under this Agreement shall not be assignable
except in connection with a permitted transfer of Executive Stock hereunder.
(f) Choice of Law. The corporate law of the State of Delaware will
govern all questions concerning the relative rights of the Company and its
stockholders. All other questions con cerning the construction, validity and
interpretation of this Agreement and the exhibits hereto will be governed by the
internal law, and not the law of conflicts, of the State of Illinois.
(g) Remedies. Each of the parties to this Agreement (including the
Investors) will be entitled to enforce its rights under this Agreement
specifically, to recover damages and costs (including reasonable attorney's
fees) caused by any breach of any
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provision of this Agreement and to exercise all other rights existing in its
favor. The parties hereto agree and acknowledge that money damages may not be an
adequate remedy for any breach of the provisions of this Agreement and that any
party may in its sole discretion apply to any court of law or equity of
competent jurisdiction (without posting any bond or deposit) for specific
performance and/or other injunctive relief in order to enforce or prevent any
violations of the provisions of this Agreement.
(h) Amendment and Waiver. The provisions of this Agreement may be
amended and waived only with the prior written consent of the Company, Executive
the Investors owning a majority of the Company's equity securities on a fully
diluted basis held by all Investors.
* * * * *
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the date first written above.
NUTRACEUTICAL CORPORATION
By /s/ Xxxxxx X. Xxx
----------------------------
Its /s/ President
----------------------------
/s/ Xxxxxxx X. Xxxxxxxx
--------------------------------
Xxxxxxx X. Xxxxxxxx
Agreed and Accepted:
XXXX CAPITAL FUND IV, L.P.
By: Xxxx Capital Partners IV, L.P.
Its: General Partner
By: Xxxx Capital Investors, Inc.
Its: General Partner
By: (Signature illegible)
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Its: Managing Director
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XXXX CAPITAL FUND IV-B, L.P.
By: Xxxx Capital Partners IV, L.P.
Its: General Partner
By: Xxxx Capital Investors, Inc.
Its: General Partner
By: (Signature illegible)
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Its: Managing Director
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BCIP ASSOCIATES
By: (Signature illegible)
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A General Partner
BCIP TRUST ASSOCIATES, L.P.
By: (Signature illegible)
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A General Partner
Exhibit A
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October 28, 1993
ELECTION TO INCLUDE STOCK IN GROSS
INCOME PURSUANT TO SECTION 83(b) OF THE
INTERNAL REVENUE CODE
The undersigned purchased shares of Common Stock, par value $.01 per
share (the "Shares"), of Nutraceutical Corporation (the "Company") on October
28, 1993. Under certain circumstances, the Company has the right to repurchase
the Shares at cost from the undersigned (or from the holder of the Shares, if
different from the undersigned) should the undersigned cease to be employed by
the Company and its subsidiaries. Hence, the Shares are subject to a
substantial risk of forfeiture and are non-transferable. The undersigned
desires to make an election to have the Shares taxed under the provision of Code
(S)83(b) at the time he purchased the Shares.
Therefore, pursuant to Code (S)83(b) and Treasury Regulation (S)1.83-2
promulgated thereunder, the undersigned hereby makes an election, with respect
to the Shares (described below), to report as taxable income for calendar year
1993 the excess (if any) of the Shares' fair market value on October 28, 1993
over purchase price thereof.
The following information is supplied in accordance with Treasury
Regulation (S)1.83-2(e):
1. The name, address and social security number of the undersigned:
Xxxxxxx X. Xxxxxxxx
0000 X. 0000 X.
Xxxxxx, Xxxx 00000
Social Security Number: ###-##-####
2. A description of the property with respect to which the election
is being made: 2,500 shares of Class P Common Stock, par value $.01 per share,
and 2,500 shares of Common Stock, par value $.01 per share.
3. The date on which the property was transferred: October 28, 1993.
The taxable year for which such election is made: calendar 1993.
4. The restrictions to which the property is subject: If during the
first four years after the purchase of the Shares the undersigned ceases to be
employed by the Company or any of its subsidiaries, the unvested portion of the
Shares will be subject to repurchase by the Company at cost, and at any time
prior to a public offering by the Company or a sale of the Company the
undersigned ceases to be employed by the Company or any of its subsidiaries, the
vested portion of the Shares will be subject to repurchase by the Company at
book value. Ten percent, twenty percent, thirty percent and forty percent of
the Shares will become vested shares on each of the first, second, third and
fourth anniversary dates, respectively, of the purchase of the Shares.
5. The fair market value on October 28, 1993 of the property with
respect to which the election is being made, determined without regard to any
lapse restrictions: $20.25 per share of Class P Common Stock and $0.25 per
share of Common Stock.
6. The amount paid for such property: $20.25 per share of Class P
Common Stock and $0.25 per share of Common Stock.
A copy of this election has been furnished to the Secretary of the
Company pursuant to Treasury Regulations (S)1.83-2(e)(7).
Dated:
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XXXXXXX X. XXXXXXXX
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PROMISSORY NOTE
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$56,000.00 October 28, 1993
For value received, Xxxxxxx X. Xxxxxxxx ("Executive") promises to pay
to the order of Nutraceutical Corporation, a Delaware corporation (the
"Company"), at such place as designated in writing by the holder hereof, the
aggregate principal sum of $56,000. The Note was issued pursuant to and is
subject to the terms of the Executive's Stock Agreement, dated as of October 28,
1993, between the Company and Executive.
Interest will accrue on the outstanding principal amount of this Note
at a rate equal to the lesser of (i) 6% per annum or (ii) the highest rate
permitted by applicable law, and shall be payable at such time as the principal
of this Note becomes due and payable.
The principal amount of this Note shall be payable in four annual
installments of $11,200 on October 28, 1994, $11,200 on October 28, 1995 and
$16,800 on Ocober 28, 1996, with the entire unpaid principal amount together
with all accrued and unpaid interest being due and payable on October 28, 1997.
The amounts due under this Note are secured by a pledge of 2,500
shares of the Company's Class P Common Stock and 22,500 shares of the Company's
Common Stock. The payment of the principal amounts of this Note is subject to
certain offset rights under the Executive Stock Agreement.
In the event Executive fails to pay any amounts due hereunder when
due, Executive shall pay to the holder hereof, in addition to such amounts due,
all costs of collection, including reasonable attorneys fees.
Executive, or his successors and assigns, hereby waives diligence,
presentment, protest and demand and notice of protest, demand, dishonor and
nonpayment of this Note, and expressly agrees that this Note, or any payment
hereunder, may be extended from time to time and that the holder hereof may
accept security for this Note or release security for this Note, all without in
any way affecting the liability of Executive hereunder.
This Note shall be governed by the internal laws, not the laws of
conflicts, of the State of Illinois.
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XXXXXXX X. XXXXXXXX
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Exhibit B
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EXECUTIVE STOCK PLEDGE AGREEMENT
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THIS PLEDGE AGREEMENT is made as of October 28, 1993 between Xxxxxxx
X. Xxxxxxxx ("Pledgor"), and Nutraceutical Corporation, a Delaware corporation
(the "Company").
The Executive has purchased 2,500 shares of Class P Common Stock of
the Company's par value $.01 per share, and 22,500 shares of the Company's
Common Stock, $.01 par value (collectively, the "Pledged Shares"), with funds
received pursuant to a promissory note (the "Note") in the aggregate principal
amount of $56,000. This Pledge Agreement provides the terms and conditions upon
which the Note is secured by a pledge to the Company of the Pledged Shares.
NOW, THEREFORE, in consideration of the premises contained herein and
other good and valuable consideration the receipt and sufficiency of which are
hereby acknowledged, and in order to induce the Company to accept the Note as
partial payment for the Pledged Shares, Pledgor and the Company hereby agree as
follows:
1. Pledge. Pledgor hereby pledges to the Company, and grants to the
Company a security interest in, the Pledged Shares as security for the prompt
and complete payment when due of the unpaid principal of and interest on the
Note.
2. Delivery of Pledged Shares. Upon the execution of this Pledge
Agreement, Pledgor shall deliver to the Company the certificate(s) representing
the Pledged Shares, together with duly executed forms of assignment sufficient
to transfer title thereto to the Company.
3. Voting Rights; Cash Dividends. Notwithstanding anything to the
contrary contained herein, during the term of this Pledge Agreement until such
time as there exists a default in the payment of principal or interest on the
Note or any other default under the Note, Pledgor shall be entitled to all
voting rights with respect to the Pledged Shares and shall be entitled to
receive all cash dividends paid in respect of the Pledged Shares. Upon the
occurrence of and during the continuance of any such default, the Company shall
retain all such cash dividends payable on the Pledged Shares as additional
security hereunder.
4. Stock Dividends; Distributions, etc. If, while this Pledge
Agreement is in effect, Pledgor becomes entitled to receive or receives any
securities or other property in addition to, in substitution of, or in exchange
for any of the Pledged Shares (whether as a distribution in connection with any
recapitalization, reorganization or reclassification, a stock dividend or
otherwise), Pledgor shall accept such securities or other property on behalf of
and for the benefit of the Company as additional security for Pledgor's
obligations under the Note and shall promptly deliver such additional security
to the Company together with duly executed forms of assignment, and such
additional security shall be deemed to be part of the Pledged Shares hereunder.
5. Default. If Pledgor defaults in the payment of the principal or
interest under the Note as it becomes due (whether upon demand, acceleration or
otherwise) or any other event of default under the Note occurs (including the
bankruptcy or insolvency of Pledgor), the Company may exercise any and all the
rights, powers and remedies of any owner of the Pledged Shares (including the
right to vote the shares and receive dividends and distributions with respect to
such shares) and shall have and may exercise without demand any and all the
rights and remedies granted to a secured party upon default under the Uniform
Commercial Code of Illinois or otherwise available to the Company under
applicable law. Without limiting the foregoing, the Company is authorized to
sell, assign and deliver at its discretion, from time to time, all or any part
of the Pledged Shares at any private sale or public auction, on not less than
ten days written notice to Pledgor, at such price or prices and upon such terms
as the Company may deem advisable. Pledgor shall have no right to redeem the
Pledged Shares after any such sale or assignment. At any such sale or auction,
the Company may bid for, and become the purchaser of, the whole or any part of
the Pledged Shares offered for sale. In case of any such sale, after deducting
the costs, attorneys' fees and other expenses of sale and delivery, the
remaining proceeds of such sale shall be applied to the principal of and accrued
interest on the Note; provided, however, that after payment in full of the
indebtedness evidenced by the Note, the balance of the proceeds of sale then
remaining shall be paid to Pledgor and Pledgor shall be entitled to the return
of any of the Pledged Shares remaining in the hands of the Company. Pledgor
shall be liable for any deficiency if the remaining proceeds are insufficient to
pay the indebtedness under the Note in full, including the fees of any attorneys
employed by the Company to collect such deficiency.
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6. Costs and Attorneys' Fees. All costs and expenses, including
reasonable attorneys' fees, incurred in exercising any right, power or remedy
conferred by this Pledge Agreement or in the enforcement thereof, shall become
part of the indebtedness secured hereunder and shall be paid by Pledgor or
repaid from the proceeds of the sale of the Pledged Shares hereunder.
7. Payment of Indebtedness and Release of Pledged Shares. Upon
payment in full of the indebtedness evidenced by the Note, the Company shall
surrender the Pledged Shares to Pledgor together with all forms of assignment.
8. Further Assurances. Pledgor agrees that at any time and from time
to time upon the written request of the Company, Pledgor will execute and
deliver such further documents and do such further acts and things as the
Company may reasonably request in order to effect the purposes of this Pledge
Agreement.
9. Severability. Any provision of this Pledge Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
10. No Waiver; Cumulative Remedies. The Company shall not by any act,
delay, omission or otherwise be deemed to have waived any of its rights or
remedies hereunder, and no waiver shall be valid unless in writing, signed by
the Company, and then only to the extent therein set forth. A waiver by the
Company of any right or remedy hereunder on any one occasion shall not be
construed as a bar to any right or remedy which the Company would otherwise have
on any future occasion. No failure to exercise nor any delay in exercising on
the part of the Company, any right, power or privilege hereunder shall preclude
any other or further exercise thereof or the exercise of any other right, power
or privilege. The rights and remedies herein provided are cumulative and may be
exercised singly or concurrently, and are not exclusive of any rights or
remedies provided by law.
11. Waivers, Amendments; Applicable Law. None of the terms or
provisions of this Pledge Agreement may be waived, altered, modified or amended
except by an instrument in writing,
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duly executed by the parties hereto. This Agreement and all obligations of the
Pledgor hereunder shall together with the rights and remedies of the Company
hereunder, inure to the benefit of the Company and its successors and assigns.
This Pledge Agreement shall be governed by, and be construed and interpreted in
accordance with, the laws of the State of Illinois.
* * *
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IN WITNESS WHEREOF, this Pledge Agreement has been executed as of the
date first above written.
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Xxxxxxx X. Xxxxxxxx
NUTRACEUTICAL CORPORATION
By
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Its
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