1
Exhibit 4.07
EMC HOLDINGS, INC.
RBK EXCHANGE AND REPURCHASE AGREEMENT
As of October 26, 1989
▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Trustee of the Trust
under that certain Revocable Trust Agreement
of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ dated February 18, 1987
▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Dear ▇▇▇:
EMC Holdings, Inc., a Delaware corporation ("Holdings"), hereby agrees with
you in your capacity as Trustee of the Trust (as hereinafter defined) as
follows:
1. Certain Definitions and Conventions.
(a) For the purposes of this Agreement, unless otherwise defined herein or
the context in which any such term is used clearly requires otherwise, the
following terms have the following meanings, respectively:
"1986 Closing Date" means June 24, 1986, the date as of which the Original
Recapitalization occurred.
"Act" means the Securities Act of 1933, as amended.
"Additional Call Repurchase Proceeds" has the meaning set forth in Section
10(a)(ii) hereof.
"Adjusted Consolidated EBIT" means the Consolidated EBIT calculated as of
the end of Holdings' most recent fiscal year, adjusted by adding thereto any
amounts deducted from
2
Holdings' revenues in determining such Consolidated EBIT in respect of (i)
amortization of the Original Recapitalization Premium and the Current
Recapitalization Premium and (ii) contributions by Holdings to the ESOP and/or
payment by Holdings of dividends on Shares held by the ESOP.
"Adjusted Purchase Price" of any Share owned by the Trust means (i)
$1.2899433 per Share with respect to all Shares owned by the Trust immediately
following the Closing or (ii) with respect to all Shares acquired by the Trust
thereafter, the original per share purchase price paid by the Trust for such
Share, as appropriately adjusted to reflect any stock dividends, stock splits,
reverse stock splits, recapitalizations or similar events occurring subsequent
to the date of this Agreement.
"Affiliate" with respect to any Person means a director or officer of such
Person, any corporation, association, firm or other entity of which such Person
(or an officer or director of such Person) is a member, director or officer,
the spouse of such Person (or of any officer or director of such Person),
either parent of such Person (or of any officer or director of such Person) or
of such Person's spouse (or of the spouse of any officer or director of such
Person), any descendent of any such parent, any relative of such Person (or of
any officer or director of such Person) who has the same home as such Person
(or as any officer or director of such Person), and any other Person, directly
or indirectly controlling, controlled by, or under common control with, such
Person. For the purpose of this
- 2 -
3
definition, "control" (including, with correlative meanings, the terms
"controlling," "controlled by," and "under common control with"), as used with
respect to any Person, shall mean the possession, directly or indirectly, of
the power to direct or cause the direction of the management and policies of
such Person, whether through the ownership of voting securities or by contract
or otherwise.
"Amended Subscription Agreement" means the Amended and Restated Common Stock
Subscription and Repurchase Agreement between you and Holdings dated as of June
24, 1986 and amended September 20, 1988.
"Applicable Federal Rate" with respect to any loan made by Holdings to
Designated Officers pursuant to Section 14 hereof means the lowest applicable
Federal rate in effect under section 1274(d) of the Code as of the day such
loan was made, compounded semiannually.
"Appraisal" means an appraisal of the fair market value of all securities
and property described in clause (iii) of the definition of Value made by an
Appraiser.
"Appraiser" means the financial advisor selected by Holdings from a list,
prepared by the Trust and submitted to Holdings with any request for an
Appraisal hereunder, naming three nationally recognized investment banking
firms.
"Business Day" means any day other than a Saturday, Sunday or other day on
which banks are authorized to be closed in New York City or Pittsburgh,
Pennsylvania.
- 3 -
4
"Call Repurchase" has the meaning set forth in Section 10(a)(i) hereof.
"Call Repurchase Price" has the meaning set forth in Section 10(a)(i)
hereof.
"Cause," when used in connection with the termination of your employment
with Holdings and EMC, shall have the meaning set forth in Section 5 of the
▇▇▇▇▇▇▇ Employment Agreement.
"Claims" is defined in Section 3(a)(x) hereof.
"Class A Shares" means Holdings' Class A Common Stock, par value $0.0001 per
share.
"Class B Shares" means Holdings' Class B Common Stock, par value $0.0001 per
share.
"Class C Shares" means Holdings' Class C Common Stock, par value $0.10 per
share.
"Closing" means the consummation of all transactions contemplated to occur
in connection with the Current Recapitalization on the Closing Date.
"Closing Date" means October 26, 1989.
"Code" means the Internal Revenue Code of 1986, as amended.
"Commission" means the U.S. Securities and Exchange Commission and any
successor federal agency having similar powers.
"Compensation Committee" means the Compensation Committee of the Board of
Directors of Holdings.
- 4 -
5
"Consolidated" means the consolidation of the accounts of Holdings and its
subsidiaries in accordance with GAAP.
"Consolidated EBIT" means Holdings' Consolidated earnings before interest
and taxes determined with reference to Holdings' audited income statement for
the pertinent fiscal year.
"Consolidated Net Debt" means, for any period, on a Consolidated basis, the
difference between (a) Holdings' Indebtedness for Borrowed Money and (b) all
cash and cash equivalents held by Holdings and its subsidiaries, including any
amounts held in cash collateral or escrow accounts by another Person on behalf
of Holdings or any of its subsidiaries, but excluding any amounts held pursuant
to the Shareholders Contribution and Repayment Agreement.
"Convertible Preferred Stock" means Holdings' 10.19% Convertible Preferred
Stock as authorized by the Second Restated Certificate of Incorporation and the
action of Holdings' Board of Directors.
"Current Recapitalization" means the Exchange Offer, the merger of Holdings
and EMC Recapitalization, Inc. and the concurrent restructuring of Holdings'
capital stock and the other transactions to be accomplished as described in the
Information Statement.
"Current Recapitalization Premium" means the amount calculated by Holdings'
independent auditors which amount shall be determined by the application of
purchase accounting rules, without limitation, by reference to the amount equal
to the
- 5 -
6
excess of (a) the sum of (i) the aggregate amount of (x) cash paid by the ESOP
Trustee on the Closing Date for 170,750 shares of 10.19% Convertible Preferred
Stock of Holdings and 3,685,604 shares of Class A Common Stock of Holdings and
(y) cash and the value of the Class B Common Stock of Holdings distributed by
Holdings to the holders of such stock in connection with the Current
Recapitalization and (ii) the aggregate amount of expenses incurred by Holdings
which are directly attributable to the Current Recapitalization and related
transactions over (b) the amount of stockholders' equity and deferred taxes
appearing on the Consolidated balance sheet of Holdings at the time immediately
preceding the Closing Date.
"Date of Termination," when used in connection with the termination of your
employment with Holdings and EMC, (i) shall have the meaning set forth in
Section 5(e) of the ▇▇▇▇▇▇▇ Employment Agreement and (ii) if the ▇▇▇▇▇▇▇
Employment Agreement shall lapse, shall be the date that your employment with
Holdings and EMC shall be terminated; provided, however, that if you are
Disabled, such date shall be the date Holdings and EMC are entitled to replace
you under Section 6 of the ▇▇▇▇▇▇▇ Employment Agreement or otherwise by reason
of a Disability regardless of whether or not the ▇▇▇▇▇▇▇ Employment Agreement
is in effect.
"Designated Officer" means any Pre-Designated Officer and any Subsequently
Designated Officer.
"Disability" and "Disabled" have the meaning specified in Section 6 of the
▇▇▇▇▇▇▇ Employment Agreement. Any reference
- 6 -
7
herein to the date of Disability shall mean the date on which you are replaced
in your position with Holdings pursuant to Section 6 of the ▇▇▇▇▇▇▇ Employment
Agreement or otherwise replaced following the lapse of the ▇▇▇▇▇▇▇ Employment
Agreement.
"EMC" means Education Management Corporation, a Pennsylvania corporation.
"ESOP" means the EMC Holdings, Inc. Employee Stock Ownership Plan.
"ESOP Trustee" means Marine Midland Bank, N.A., in its capacity as Trustee
of the ESOP.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Exchange Offer" means the offer made by Holdings pursuant to the
Information Statement to issue certain Class C Shares in exchange for surrender
of certain Class A Shares held by the Management Stockholders.
"Fair Market Value" of any Share means (i) so long as the ESOP is in
existence and is required to obtain appraisals of its capital stock, the most
recent value of a Share as determined by the most recent such appraisal or (ii)
if there is no such appraisal of the Shares, a price equal to the quotient
obtained by dividing (a) the difference between (1) the product of (A) the
Adjusted Consolidated EBIT and (B) seven and (2) the Consolidated Net Debt
determined as of the end of Holdings' most recent fiscal year by (b) the number
of Shares (on a fully diluted basis) as of the date of determination.
- 7 -
8
"GAAP" shall mean generally accepted accounting principles which shall
include, but not be limited to, the official interpretations thereof as defined
by the Financial Accounting Standards Board, its predecessors and its
successors.
"Good Reason" has the meaning specified in Section 5(c) of the ▇▇▇▇▇▇▇
Employment Agreement.
"Holdings" has the meaning set forth in the introduction to this Agreement.
"Holdings Capital Stock" means the Class A Shares, the Class B Shares, the
Class C Shares, the Convertible Preferred Stock and any other shares of capital
stock of Holdings hereafter authorized.
"Holdings Common Stock" means the Class A Shares, the Class B Shares and the
Class C Shares and any other shares of capital stock of Holdings classified as
common stock hereafter authorized.
"Indebtedness for Borrowed Money" as applied to any Person means the
liabilities of such Person for money borrowed or credit received (other than
trade accounts payable incurred in the ordinary course of business), direct or
contingent, whether evidenced by a bond, note, debenture, capitalized lease
obligation, deferred purchase price arrangement, title retention device,
reimbursement agreement, guarantee, book entry or otherwise.
- 8 -
9
"Information Statement" means Holdings' Proxy and Information Statement
dated September 20, 1989, as the same may be from time to time amended and/or
supplemented.
"Initial Put Notice" has the meaning set forth in Section 10(b)(i) hereof.
"Initial Put Repurchase" has the meaning set forth in Section 10(b)(i)
hereof.
"Initial Put Repurchase Price" means the Fair Market Value of the Initial
Put Shares as of the Date of Termination.
"Initial Put Shares" has the meaning set forth in Section 10(b)(i) hereof.
"Institutional Investors" means the parties to the Stockholders Agreement
other than the Management Stockholders, Holdings and the ESOP.
"Junior Subordinated Note" means the junior subordinated promissory note
issued by Holdings to the Trust or any Permitted Transferee for payment of
Initial Put Shares or Secondary Put Shares, as the case may be, in the
principal amount specified in Holdings' notice pursuant to Section 11(b)
hereof, bearing interest on the unpaid principal amount from the date of issue
of such note (the "issue date") until such note is paid in full, payable
quarterly on the first Business Day of each calendar quarter, at a fluctuating
interest rate per annum (based on a year of 365 or 366 calendar days, as the
case may be) equal to 1% per annum above the Prime Rate in effect from time to
time (each change, if any, in such fluctuating interest rate to take
- 9 -
10
effect simultaneously with the corresponding change in the Prime Rate;
provided, that such fluctuating interest rate shall at no time exceed 12% per
annum), and the principal amount of which is payable in full on the date
occurring three months following the latest of payment in full of all notes or
other evidences of indebtedness issued pursuant to (i) the Senior Credit
Agreement, (ii) the Subordinated Credit Agreement and (iii) the Shareholders
Contribution and Repayment Agreement.
"Junior Subordinated Note Holder," when used in connection with the holding
or owning of a Junior Subordinated Note, means the Trust, any Permitted
Transferee or any other holder of a Junior Subordinated Note or any Person who
may make claims under or with respect to a Junior Subordinated Note.
"Key Man Insurance" has the meaning set forth in Section 2(c) hereof.
"▇▇▇▇▇▇▇ Employment Agreement" means the Amended and Restated Employment
Agreement of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ dated as of October 26, 1989 by and among you,
Holdings and EMC.
"Management Repurchase Agreement" means the form of Management Exchange and
Repurchase Agreement dated October 26, 1989 entered into between Holdings and
each of the Management Stockholders.
"Management Stockholders" is used herein as defined in the Stockholders
Agreement.
- 10 -
11
"Merger Agreement" means the Agreement of Merger and Plan of
Recapitalization dated October 26, 1989 between Holdings and EMC
Recapitalization, Inc.
"▇▇▇▇▇▇▇ ▇▇▇▇▇ Investors" means the MLCP Investors and ▇▇▇▇▇▇▇ ▇▇▇▇▇
Interfunding, Inc.
"MLCP Investors" is used herein as defined in the Stockholders Agreement.
"Net Sale Price" means the Sale Price for any Resale Event (i) net of any
taxes, underwriting discounts or commissions or related selling expenses
incurred by Holdings or such Selling Designated Officer and (ii) adjusted in
respect of any stock dividends, stock splits, reverse stock splits,
recapitalizations or similar events that may have occurred following a Call
Repurchase.
"Notice" has the meaning set forth in Section 14(b).
"Obligation" has the meaning set forth in Section 13 hereof.
"Original Recapitalization" means the purchase by Holdings of all the shares
of common stock of EMC and all related transactions.
"Original Recapitalization Premium" means the amount calculated by Holdings'
independent auditors which amount shall be determined by the application of
purchase accounting rules, without limitation, by reference to the amount
equal to the excess of (i) the sum of (A) the aggregate amount of cash and the
value of Class A Common Shares of Holdings paid by Holdings on
- 11 -
12
the 1986 Closing Date for all the shares of EMC common stock and (B) the
aggregate amount of expenses incurred by Holdings which are directly
attributable to the purchase by Holdings of such shares and related
transactions over (ii) the amount of stockholders' equity and deferred taxes
appearing on the Consolidated balance sheet of EMC and its consolidated
subsidiaries prepared in accordance with GAAP at the time immediately preceding
the 1986 Closing Date.
"Permitted Transferee" with respect to the Trust means (i) while you are
living, you, your spouse, parents or issue or a trust of which trust you shall
be a trustee and the beneficiaries of which are limited to you, your estate,
spouse, parents and/or issue and (ii) after your death, your executors,
administrators, testamentary trustees, legatees or beneficiaries.
"Person" means an individual, a partnership, a joint venture, a corporation,
a trust, an unincorporated organization or a government or any department or
agency thereof.
"PDO Offer" has the meaning set forth in Section 14(b).
"PDO Shares" has the meaning set forth in Section 14(b) hereof.
"Pre-Designated Officers" means those persons (i) who own Holdings Common
Stock on the day before the date of your death or Disability, (ii) who are the
elected officers of Holdings on the day before the date of your death or
Disability and (iii) whom the Compensation Committee, by resolution in effect
on the day before the date of your death or Disability,
- 12 -
13
shall have designated as eligible to purchase any Shares pursuant to Section 14
hereof; provided, that such designation shall require the affirmative vote of a
majority of the Compensation Committee, including your vote so long as you are
a member of the Compensation Committee; and provided, further, that you may
recommend changes to the list of such Pre-Designated Officers, and/or to the
portion of Shares to be acquired by such Pre-Designated Officers pursuant to
Section 14 hereof in the event of your death or Disability, from time to time
after the initial designation, subject to the approval of the Compensation
Committee.
"Prime Rate" means the rate of interest announced publicly by Citibank, N.A.
in New York from time to time as its prime rate, corporate base rate, or other
designation announced in replacement of the prime rate.
"Proportion" means, with reference to any Pre-Designated Officer, the
percentage of Pre-Designated Officer Shares required to be offered to such
Pre-Designated Officer pursuant to Section 14 hereof, as designated by the
Compensation Committee, by resolution in effect on the day before your death or
Disability; provided, that such designation shall require the affirmative vote
of a majority of the Compensation Committee, including your vote so long as you
are a member of the Compensation Committee.
"Public Distribution" means a Public Offering of Holdings Common Stock at
the conclusion of which (i) Holdings is
- 13 -
14
required to register shares of Holdings Common Stock under Section 12(b) or (g)
of the Exchange Act and (ii) at least 25% of the outstanding Holdings Common
Stock shall have been sold to the public pursuant to one or more effective
registration statements under the Act.
"Public Offering" means a public offering of securities of Holdings pursuant
to an effective registration statement under the Act.
"Put Repurchase" means an Initial Put Repurchase or a Second Put Repurchase.
"Repurchase" means any Call Repurchase or Put Repurchase.
"Repurchase Notice" means any Call Repurchase Notice, or notice delivered by
Holdings pursuant to the second paragraph of Section 11(b).
"Resale Event" has the meaning set forth in Section 10(a)(ii) hereof.
"Sale Price" means (i) if all issued and outstanding shares of Holdings
Common Stock are sold or transferred in connection with any Resale Event, the
Share Price obtained by Holdings or any Selling Designated Officer in
connection with such Resale Event or (ii) if fewer than all issued and
outstanding shares of Holdings Common Stock are sold or transferred in
connection with any Resale Event, the highest Share Price received during the
twelve-month period following any
- 14 -
15
Call Repurchase by Holdings and/or any Selling Designated Officer.
"Scheduled Expiration Date" has the meaning set forth in Section 1(b) of the
▇▇▇▇▇▇▇ Employment Agreement.
"Second Put Repurchase" has the meaning set forth in Section 10(b)(ii)
hereof.
"Second Restated Certificate of Incorporation" means the amended and
restated certificate of incorporation of Holdings that will, among other
things, authorize the issuance of (i) one or more series of preferred stock
upon such terms as may be established by Holdings' Board of Directors from time
to time and (ii) a new class of common stock, designated as Class C Common
Stock.
"Secondary Put Repurchase Price" means the greater of (x) the Adjusted
Purchase Price of the Secondary Put Shares as of the date of the Second Put
Notice, plus interest thereon from the date of acquisition of such Shares by
you to the date of the Second Put Notice compounded annually at an interest
rate per annum (based on a year of 365 or 366 calendar days, as the case may
be) for each twelve-month period or portion thereof commencing July 1 of an
applicable calendar year, equal to the Prime Rate in effect on July 1 (or the
next succeeding Business Day if such day is not a Business Day) of such
calendar year, and (y) the Fair Market Value of the Secondary Put Shares as of
the date of the Second Put Notice.
- 15 -
16
"Selling Designated Officer" has the meaning set forth in Section 10(a)(ii)
hereof.
"Senior Credit Agreement" means the $52,500,000 Credit Agreement, dated as
of October 26, 1989, among Holdings, Pittsburgh National Bank and the other
banks party thereto.
"Senior Indebtedness" means (i) indebtedness for borrowed money (including,
without limitation, that incurred pursuant to the Senior Credit Agreement and
the Subordinated Credit Agreement), (ii) the current portion of any deferred
purchase price of property or services, (iii) the current portion of
obligations as lessee under leases which shall have been or should be, in
accordance with GAAP, recorded as capital leases, (iv) current obligations
under direct or indirect guaranties in respect of, and obligations (contingent
or otherwise) to purchase or otherwise acquire, or otherwise to assure a
creditor against loss in respect of, indebtedness or obligations of others of
the kinds referred to in clauses (i), (ii) or (iii) above, (v) obligations of
the types referred to in clauses (i), (ii), (iii) or (iv) above which are
secured by any lien, security interest or other charge or encumbrance upon or
in property (including, without limitation, accounts and contract rights) owned
by Holdings, even though Holdings has not assumed or become liable for the
payment of such Indebtedness, (vi) any rights granted pursuant to the
Shareholders Contribution and Repayment Agreement to Shareholders (as such term
is defined in the Shareholders Contribution and Repayment Agreement) and (vii)
any and all
- 16 -
17
extensions, renewals, refinancings or refundings in whole or in part of any of
the foregoing.
"Share Price" when used with reference to a share of Holdings Common Stock
means the cash price paid or to be paid for such share plus the Value of any
property delivered as payment for such share.
"Shareholders Contribution and Repayment Agreement" means that certain
Shareholders Contribution and Repayment Agreement dated as of October 26, 1989
and executed and delivered in connection with the Current Recapitalization.
"Shares" means, collectively, all shares of any class of Holdings Capital
Stock, including any shares of Holdings Capital Stock which may have been
issued or distributed in respect of any shares of any class of Holdings Capital
Stock by way of stock dividend or stock split or other distribution,
recapitalization or reclassification.
"Stockholders Agreement" means the Stockholders Agreement, dated as of
October 26, 1989, among Holdings, ▇▇▇▇▇▇▇ ▇▇▇▇▇ Interfunding, Inc., the ESOP
and the Persons listed on the Schedule of Stockholders attached thereto.
"Stockholder Designation" means the Stockholder Designation attached as
Exhibit A hereto.
"Subordinated Credit Agreement" means the Note and Warrant Purchase
Agreement, dated as of October 26, 1989, between Holdings, Northwestern Mutual
Life Insurance Company and National Union Fire Insurance Company of Pittsburgh,
Pennsylvania.
- 17 -
18
"SDO Offer" has the meaning set forth in Section 14(c) hereof.
"SDO Shares" has the meaning set forth in Section 14(c) hereof.
"Subsequently Designated Officers" shall include (x) the Pre-Designated
Officers, (y) those persons whom the Compensation Committee shall have
designated following the Closing Date but prior to your death or disability as
eligible to purchase Shares pursuant to Section 14 hereof and (z) those persons
(A) whom the Board of Directors of Holdings, within 90 calendar days following
the date of your death or Disability, shall elect to serve as officers of
Holdings and (B) whom the Compensation Committee, by resolution adopted prior
to such 90th day, shall have designated as eligible to purchase Shares pursuant
to Section 14 hereof.
"Third Restated Certificate of Incorporation" means the Third Amended and
Restated Certificate of Incorporation of Holdings which, on or prior to the
Closing Date, in connection with the Current Recapitalization, shall have been
approved and adopted by the Board of Directors of Holdings and the requisite
percentage of the holders of Holdings Capital Stock entitled to vote thereon
and filed with the Secretary of State of the State of Delaware.
"Transfer" has the meaning set forth in Section 8(b) hereof.
- 18 -
19
"Trust" means the Trust established under that certain revocable Trust
Agreement of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ dated February 18, 1987.
"Trustee" means ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, in his capacity as Trustee of the Trust.
"Value" when used with reference to any consideration other than cash
delivered as payment for any share of Holdings Common Stock means the value
determined in accordance with the following: (i) marketable securities listed
on a national securities exchange shall be valued at the last sales price on
the Business Day next preceding the date of the consummation of the event
giving rise to such valuation; (ii) marketable securities traded in the
over-the-counter market and reported in the National Association of Securities
Dealers' Automated Quotation System shall be valued at the closing bid price as
reported by such system on the Business Day next preceding the date of the
consummation of the event giving rise to such valuation; and (iii) all
securities other than marketable securities of the type referred to in clauses
(i) and (ii) above and all other property shall be valued (a) by Holdings or
(b) if requested by the Trust on its behalf and on behalf of its Permitted
Transferees (or your estate on its behalf and on behalf of the Trust's other
Permitted Transferees), by an Appraiser pursuant to an Appraisal, at the fair
market value or such other value as may be deemed by Holdings or the Appraiser,
as the case may be, to be appropriate and reasonable after considering all
- 19 -
20
factors which might reasonably affect the sales price of such securities or
other property, including, without limitation, if and as appropriate, the lack
of a market for such securities or other property, the anticipated impact of an
immediate sale of such securities or other property, the length of time before
any such sale may become possible and the cost and complexity of any such sale.
"Warrants" is used herein as defined in the Subordinated Credit Agreement.
"Whole Board of Directors" means that number of directors of Holdings
required in order to constitute the entire board of directors of Holdings in
accordance with its By-laws and applicable law without any vacancies,
irrespective of any vacancies that may exist from time to time.
(b) In addition, except as otherwise clearly indicated by the context in
which it appears, the use of "you" herein refers to ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, in his
individual capacity and not as Trustee of the Trust, and "your" is used herein
as the correlative possessive.
2. Representations, Warranties and Covenants of Holdings. Holdings
represents, warrants and covenants that:
(a) Holdings is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware; and Holdings has all
requisite corporate power and authority to enter into and perform all of its
obligations under this Agreement.
- 20 -
21
(b) Neither Holdings, nor any Person acting on its behalf, has taken or
will take any action that would subject the Current Recapitalization or the
issuance or exchange on the Closing Date of any Shares in accordance therewith
to the registration provisions of Section 5 of the Act.
(c) During the term of your employment pursuant to the ▇▇▇▇▇▇▇ Employment
Agreement, Holdings shall maintain one or more key man life insurance policies
(the "Key Man Insurance"), with an aggregate face amount of $8.0 million,
naming you as the insured and Holdings as the beneficiary. The Key Man
Insurance and any proceeds therefrom shall be used by Holdings solely to fund
the obligations of Holdings under Section 10(b) hereof and shall not be pledged
or used for any other purpose without the prior written consent of you, the
trust or your estate, as the case may be, during such time that the trust or
your estate or any of the Trust's Permitted Transferees continues to own any
Shares.
3. Investment Representations; Other Representations and Warranties by You
and/or the Trustee.
(a) The Trustee represents and warrants that:
(i) The Trustee has received and read the Information Statement. There
has been made available to the Trustee a reasonable time prior to the Trustee's
execution and delivery hereof in order to provide an opportunity for the
Trustee to ask questions and receive answers concerning the terms and
conditions of the Trust's participation in the Current
- 21 -
22
Recapitalization and to obtain any additional information which Holdings or EMC
possesses or can acquire without unreasonable effort or expense. The Trustee
has received all additional information that was requested.
(ii) The Trustee has been advised that none of Holdings Common Stock has
been registered under the Act or any state securities or "blue sky" laws, and,
therefore, cannot be resold unless (A) such stock is registered under the Act
or under any applicable state securities or "blue sky" laws and/or (B) an
exemption from registration thereunder is available.
(iii) The Trust's acquisition of Shares in connection with the Current
Recapitalization is for its own account, for investment only, and not with a
view to or for resale in connection with, the distribution of any Holdings'
securities presently held or to be exchanged or acquired by the Trust in
connection with the Current Recapitalization, and the Trust has no present
intention of distributing or reselling any thereof, except as otherwise
provided herein and as described in the Information Statement. In making the
foregoing representation, the Trustee is aware that the Trust must bear the
economic risk of such investment for an indefinite period of time.
(iv) The Trustee is aware of and familiar with the prohibitions,
restrictions and limitations imposed on Holdings by the Senior Credit Agreement
and the Subordinated Credit Agreement, including, without limitation, those
- 22 -
23
prohibitions, restrictions and limitations which may prohibit, restrict or
limit Holdings' ability to repurchase any Shares, whether pursuant to this
Agreement or otherwise, or to waive, change, modify or discharge this
Agreement.
(v) The Trustee is aware of and familiar with the restrictions imposed on
the transfer by the Trust of any Shares, including, without limitation, the
restrictions contained in this Agreement and in the Stockholders Agreement, and
the rights of Holdings and others under this Agreement and under the
Stockholders Agreement in connection with transfers of Shares by the Trust.
(vi) The Trustee is aware of and familiar with the provisions of the
Stockholders Agreement and exhibits thereto relating to the management of
Holdings and EMC.
(vii) The Trustee acknowledges that Holdings is entering into this
Agreement in reliance upon the Trustee's representations and warranties made in
this Agreement, including, without limitation, those set forth in this Section.
(viii) The Trustee has full right, power and authority to execute and
deliver this Agreement on behalf of the Trust and any and all other documents
or instruments to be executed and delivered on its behalf in connection with
the Current Recapitalization and the Trust has full right, power and authority
to perform its obligations hereunder and thereunder and this Agreement and all
such other documents and instruments have been duly executed and delivered by
the Trust and are valid,
- 23 -
24
binding and enforceable against the Trust in accordance with their terms,
except that the enforceability thereof may be limited by bankruptcy, insolvency
or other similar laws relating to or affecting creditors' rights generally and
by general equitable principles, regardless of whether such enforceability is
considered in a proceeding in equity or at law.
(ix) The execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated to occur pursuant hereto (i) do
not and will not violate or conflict with the governing instruments of the
Trust, (ii) do not and will not violate, conflict with, result in a breach or
default under, or give any person or entity any right to terminate or modify,
any contract or agreement applicable to the Trust, (iii) do not and will not
violate, conflict with, result in a breach or default under, or give any person
or entity any right to terminate or modify any governmental or court-issued
order, writ, judgment, decree, license, permit, approval or authorization of
any kind applicable to the Trust and (iv) do not and will not violate or
conflict with any law applicable to the Trust.
(x) The Trust has, and immediately prior to the Closing the Trust will
have, good and valid title to the Class A shares (i) to be delivered to
Holdings in exchange for Class C Shares and (ii) to be delivered to the ESOP at
the Closing, free and clear of all of the following (herein collectively called
"Claims"): claims, encumbrances, security interests, liens,
- 24 -
25
equities, options and pledges of every kind, and interests arising in
connection with so-called community property laws or other laws relating to the
rights of spouses; and, upon delivery of such Class A Shares to Holdings and
the ESOP and receipt by the Trust of Class C Shares and cash, respectively,
good and valid title to such Class A Shares, free and clear of any Claims, will
pass to Holdings and the ESOP, as the case may be.
(xi) The Trust qualifies as an "accredited investor," as such term as
defined in Regulation D promulgated under the Act.
(b) You represent and warrant that:
(i) You hereby confirm that the representations and warranties made by
you in your Common Stock Subscription and Repurchase Agreement were true and
correct as of the date on which they were made.
(ii) You are a director of Holdings, Chairman and Chief Executive Officer
of Holdings and an Executive Officer (as such term is defined in Regulation D
promulgated under the Act) of Holdings or otherwise qualify as an "accredited
investor," as such term is defined in Regulation D promulgated under the Act.
(iii) You acknowledge that Holdings is entering into this Agreement in
reliance upon your representations and warranties made in this Agreement,
including, without limitation, those made in this Section.
4. Sale and/or Exchange of Shares and/or Options. Pursuant to the Second
Restated Certificate of Incorporation, the
- 25 -
26
Information Statement, the Merger Agreement and the Third Restated Certificate
of Incorporation, all as described in the Information Statement, at the
Closing, the Trust will have:
(a) received, in exchange for a like number of the Class A Shares set
forth at Item 2 of the Stockholder Designation, the number of Class C Shares
set forth at Item 3 of the Stockholder Designation;
(b) sold the number of Class A Shares set forth at Item 4 of the
Stockholder Designation to the ESOP for the cash consideration set forth at
Item 5 of the Stockholder Designation; and
(c) converted all Class C Shares set forth at Item 3 of the Stockholder
Designation into the number of Class B Shares and the amount of cash set forth
at Items 6 and 7, respectively, of the Stockholder Designation.
5. Delivery of Documents. In connection with the Trust's participation in
the Current Recapitalization, on or prior to the Closing, the Trust shall have
executed and delivered the following:
(i) That certain Stock Purchase Agreement dated as of the Closing Date
among certain stockholders of Holdings, Holdings and the ESOP;
(ii) The Stockholders Agreement;
(iii) The RBK Employment Agreement;
(iv) That certain Escrow and Pledge Agreement dated as of the Closing
Date among all stockholders, option
- 26 -
27
holders and warrant holders of Holdings immediately prior to the Closing and
Pittsburgh National Bank;
(v) The Shareholders Contribution and Repayment Agreement;
(vi) This Agreement; and
(vii) All such other documents as Holdings reasonably may request.
In addition, the Trustee shall have voted all Shares held by the Trust in favor
of the Merger Agreement and the merger to be consummated pursuant thereto.
6. Conditions to Purchase and/or Exchange of Shares. Holdings' obligations
under the transactions described in Section 4 are subject to the fulfillment to
Holdings' satisfaction at or prior to the Closing of the following conditions:
(a) Your representations and warranties and those of the Trustee and the
Trust contained in this Agreement shall be true and correct when made and at
and as of the Closing Date.
(b) The Trust shall have performed and complied with all agreements and
conditions contained in this Agreement required to be performed or complied
with by the Trust prior to the Closing, including, without limitation, the
delivery of the documents and instruments described in Section 5 of this
Agreement.
- 27 -
28
(c) All of the conditions to the Closing under all agreements executed and
delivered in connection with the Current Recapitalization shall have been
satisfied or waived.
7. No Implied Right to Employment. Neither this Agreement nor any provision
hereof nor any action taken or omitted to be taken hereunder shall be deemed to
create or confer upon you any right to be retained in the employ of Holdings
and EMC or other Affiliate thereof, except as provided in the ▇▇▇▇▇▇▇
Employment Agreement.
8. Transfer Restrictions.
(a) General. The Trust hereby agrees that any and all Shares held by it
after the Closing will be subject to the terms and conditions of this Agreement
and the Stockholders Agreement. Unless made in compliance with this Agreement
and the Stockholders Agreement, no Transfer of Shares shall be made or recorded
on the books of Holdings, and any such transfer shall be void and of no effect.
(b) Restrictions Prior to Public Distribution; Agreement to Hold. Neither
the Trust nor any Permitted Transferee will, prior to a Public Distribution,
directly or indirectly, offer, sell, pledge, hypothecate, transfer, assign or
otherwise dispose of or solicit any offers to purchase, or otherwise acquire or
take, or pledge (collectively for purposes of Sections 8 and 9 hereof only,
"Transfer") any Shares owned by the Trust or such Permitted Transferee to
anyone without the express written consent of Holdings (which consent shall be
given
- 28 -
29
pursuant to unanimous vote or consent of the Whole Board of Directors) or
otherwise than in accordance with the Stockholders Agreement except that the
Trust or such Permitted Transferee may Transfer Shares to Holdings or its
designee pursuant to Section 10 hereof. In addition, the Trust may at any time
Transfer any of its Shares to a Permitted Transferee. Each Permitted
Transferee may further Transfer any Shares acquired by such Permitted
Transferee to any of the Trust's other Permitted Transferees (including
transfers back to the Trust). No Transfer to any Permitted Transferee (or to
the Trust) hereunder (whether by the Trust or another Permitted Transferee)
shall be valid unless and until such Permitted Transferee (or the Trust, in the
event of Transfers back to the Trust) shall agree in writing, in form and
substance reasonably satisfactory to Holdings, to become bound, and becomes
bound, by the terms of this Agreement and the Stockholders Agreement.
(c) Restrictions Following Public Distribution. Subsequent to any Public
Distribution, any Shares owned by the Trust (or any of its Permitted
Transferees) may be Transferred without the consent of Holdings under Section
8(b) hereof, subject, however, to (i) all rights of Holdings hereunder and
under the Stockholders Agreement and (ii) compliance with Section 8(e) hereof.
(d) Legend. Prior to any Public Distribution, the certificate or
certificates representing any Shares held by the
- 29 -
30
Trust or any Permitted Transferee shall bear the following legend:
The securities represented by this certificate were issued without
registration under the Securities Act of 1933 and any applicable state
securities and "blue sky" laws, and in reliance upon the holder's
representation that such securities were being acquired for investment and
not for resale. No transfer of such securities may be made on the books of
the issuer unless accompanied by an opinion of counsel, satisfactory to the
issuer, that such transfer may properly be made without registration under
the Securities Act of 1933 or that such securities have been so registered
under a registration statement which is in effect at the date of such
transfer.
The securities represented by this certificate are also subject to the
restrictions on transfer contained in the RBK Exchange and Repurchase
Agreement, dated as of October 26, 1989, and in the Stockholders Agreement,
dated as of October 26, 1989, copies of each of which may be obtained from
the issuer, as well as the rights of the issuer and certain of its
stockholders under such Stockholders Agreement. No transfer of such
securities will be made on the books of the issuer unless accompanied by
evidence of compliance with the terms of each of such Agreements.
(e) Securities Law Compliance. Except for a Transfer effectuated pursuant
to a Public Offering of Holdings Common Stock in accordance with the provisions
of the Stockholders Agreement and anything to the contrary herein contained
notwithstanding, no Transfer of any Shares held by the Trust or any Permitted
Transferee to a Person other than Holdings or its designee pursuant to Sections
10, 11 and 12 hereof shall be effected unless such Transfer may properly be
made without
- 30 -
31
registration because of the availability of an exemption from registration
under the Act and the rules and regulations in effect thereunder and under any
applicable state securities or "blue sky" laws, and Holdings shall have been
furnished with an opinion of counsel, satisfactory in form and substance to
Holdings, to that effect.
9. [Intentionally Left Blank]
10. Death, Disability or Termination of Employment.
(a) Holdings' Call.
(i) Triggering Events and Consideration. Upon your death, Disability or
the termination of your employment by Holdings and EMC for Cause prior to the
earlier to occur of (A) a Public Distribution or (B) the later to occur of (1)
the Scheduled Expiration Date of the ▇▇▇▇▇▇▇ Employment Agreement or (2) the
fifth anniversary of the Closing Date, then, in such event, Holdings shall have
the right, upon delivery of notice to the Trust (or any of its Permitted
Transferees then holding Shares), for a period of 90 calendar days after the
Date of Termination, to repurchase (a "Call Repurchase") any or all Shares
owned by the Trust (or any of its Permitted Transferees); provided, however,
that Holdings may not purchase fewer than the minimum number of Shares
necessary so that the cash received by the Trust (or any of its Permitted
Transferees) in exchange therefor is not treated as a dividend under the Code.
If Holdings so notifies the Trust (or any of its Permitted Transferees) in
accordance with Section 11 hereof of its
- 31 -
32
determination to exercise such right, the Trust (or any of its Permitted
Transferees) shall have the obligation to sell the relevant number of Shares on
the terms and conditions set forth in Section 12 hereof to Holdings at a price
equal to the product of (i) the Fair Market Value of each such Share as of the
Date of Termination (the "Call Repurchase Price") and (ii) the number of Shares
so purchased.
In the event that (i) Holdings elects to repurchase some but fewer than all
Shares pursuant to a Call Repurchase as a consequence of your death and (ii)
such Shares are then held by one or more Permitted Transferees, then, in such
event, Holdings shall repurchase such Shares from such Permitted Transferees
and the Trust on a pro rata basis; provided, that the executor of your estate
within 10 calendar days of Holdings' notice pursuant to Section 11 shall have
the express authority to direct Holdings to repurchase such Shares on any other
basis, and Holdings shall be bound by such direction.
(ii) Additional Consideration. If, within the twelve-month period
commencing on the date of the purchase by Holdings of any Shares pursuant to a
Call Repurchase, (A) Holdings, or a Designated Officer to whom such Shares
subsequently are issued by Holdings under Section 14 hereof (a "Selling
Designated Officer"), shall (1) sell any Shares of Holdings Common Stock
pursuant to a Public Offering, (2) sell or Transfer any Shares of Holdings
Common Stock in a transaction (or series of related transactions) pursuant to
which all or
- 32 -
33
substantially all of the outstanding shares of Holdings Common Stock are
acquired by a Person (other than an Affiliate of Holdings) or exchanged for
securities issued by such Person (or an Affiliate of such Person) or (3) sell
any Shares of Holdings Common Stock to any purchaser (excluding sales to
Designated Officers under Section 14) (each a "Resale Event"), and (B) the Net
Sale Price exceeds the Call Repurchase Price, then, in such event, an amount
(the "Additional Call Repurchase Proceeds") equal to the product of such excess
and the number of Shares sold to Holdings pursuant to such Call Repurchase
shall forthwith be paid over to the Trust (and/or its Permitted Transferees).
Any Additional Call Repurchase Proceeds shall be payable in cash, securities
or such other property (or in any combination thereof) as may have been
received by Holdings or any Selling Designated Officer except that Holdings may
elect to substitute a cash payment for a payment in any such securities or
other property. Any Additional Call Repurchase Proceeds due to the Trust
(and/or any of its Permitted Transferees) shall be paid no later than 30
calendar days after the final determination of the amount of such payment. The
Additional Call Repurchase Proceeds payable to the Trust (and/or its Permitted
Transferees), if any, will be allocated among and paid by Holdings and/or any
Selling Designated Officers in proportion to the relative total Net Sale Prices
in excess of the Call Repurchase Price received by Holdings and/or such Selling
Designated Officers for subsequent
- 33 -
34
sales at higher prices during the twelve-month period following any Call
Repurchase.
Notwithstanding any other provision herein contained, in no event shall any
Permitted Transferee (other than the Trust, you or your estate) have the right
to request an Appraisal. Any Appraisal shall be conclusive and binding on
Holdings and the Trust (or your estate). The fees and expenses of an
Appraisal, if requested in connection with the determination of the Net Sale
Price, shall be borne by Holdings, unless the Appraisal is less than or equal
to Holdings' appraisal, in which case such fees and expenses shall be borne by
the Trust (or your estate).
(b) Your Put.
(i) Initial Put. In the event (A) of your death or Disability and the
failure of Holdings to exercise its right to repurchase all Shares owned by the
Trust or any Permitted Transferee pursuant to subsection (a) of this Section 10
within the period therein specified, (B) Holdings and EMC terminate your
employment without Cause or (C) you terminate your employment for Good Reason,
then, in such event, the Trust and each of its Permitted Transferees then
owning Shares shall have the right, upon delivery of notice to Holdings (the
"Initial Put Notice"), for a period of 90 calendar days (180 calendar days in
the case of your death) commencing on the 91st calendar day after the Date of
Termination, to require Holdings to repurchase (the "Initial Put Repurchase")
in accordance with Section 11 hereof all (but not fewer than all) Shares then
owned by the Trust (or by any
- 34 -
35
Permitted Transferee) (the "Initial Put Shares"). If the Trust (or any
Permitted Transferee) delivers the Initial Put Notice, it (or such Permitted
Transferee) shall have the obligation to sell to Holdings, and Holdings shall
have the obligation to purchase, subject to the limitations hereinafter set
forth, all of the Initial Put Shares then owned by the Trust (or by such
Permitted Transferee) on the terms and conditions set forth in Section 12
hereof at the Initial Put Repurchase Price; provided, that Holdings shall be
obligated to purchase only that number of Initial Put Shares from the Trust
(and its Permitted Transferees) as may be purchased, at the Initial Put
Repurchase Price, for an aggregate consideration equal to the following: (1)
during the period commencing after the Closing Date to, and including, the date
of the first anniversary of the Closing Date, $4.0 million; (2) during the
period commencing after the date of the first anniversary of the Closing Date
to, and including, the date of the second anniversary of the Closing Date, $5.0
million; (3) during the period commencing after the date of the second
anniversary of the Closing Date to, and including, the date of the third
anniversary of the Closing Date, $6.0 million; (4) during the period commencing
after the date of the third anniversary of the Closing Date to, and including,
the date of the fourth anniversary of the Closing Date, $7.0 million; and (5)
after the date of the fourth anniversary of the Closing Date, $8.0 million;
provided, further, that in the event of an Initial Put Repurchase triggered by
your death, Holdings' obligation to
- 35 -
36
purchase any Initial Put Shares shall be subject to proceeds being available
for such purpose under the Key Man Insurance.
In the event that Holdings is required to purchase fewer than all the Initial
Put Shares from the Trust and its Permitted Transferees by reason of any of the
limitations set forth in paragraph (i) of this subsection 10(b), Holdings shall
purchase such smaller number of Initial Put Shares from the Trust and those of
its Permitted Transferees having made an election hereunder on a pro rata
basis; provided, that you (or in the event of your death the executor of your
estate) shall have the express authority in your (or the executor of your
estate's) notice pursuant to Section 11 to direct Holdings to repurchase such
smaller number of Initial Put Shares on any other basis and Holdings shall be
bound by such direction.
(ii) Secondary Put Shares. If, because of any of the limitations set
forth in paragraph (i) of this subsection (b), Holdings shall have purchased
from the Trust and from its Permitted Transferees fewer than all of the Initial
Put Shares, then, in such event, the Trust and each such Permitted Transferee
shall have the right, upon delivery of notice to Holdings in accordance with
Section 11 hereof (the "Second Put Notice"), for a period of 90 calendar days
commencing on the later of (A) the date that is eighteen (18) months after the
date of purchase by Holdings of any Initial Put Shares from the Trust (or its
Permitted Transferees) and (B) the date of the fifth anniversary of the Closing
Date, to require Holdings to repurchase (a "Second
- ▇▇ -
▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇▇") all (but not fewer than all) of the Shares then owned by the
Trust (or by such Permitted Transferee) (the "Secondary Put Shares"). If the
Trust (or such Permitted Transferee) delivers the Second Put Notice, then it
(or such Permitted Transferee) shall sell to Holdings, and Holdings shall
purchase, subject to the limitations hereinafter set forth, such Secondary Put
Shares on the terms and conditions set forth in Section 12 hereof at the
Secondary Put Repurchase Price; provided, that Holdings shall be obligated to
purchase only that number of Secondary Put Shares from the Trust (and/or its
Permitted Transferees) as may be purchased, at the Secondary Put Repurchase
Price, for an aggregate consideration equal to the excess of (1) $10,000,000
over (2) the aggregate purchase price paid by Holdings for the Initial Put
Shares purchased from the Trust (and/or any of its Permitted Transferees), if
any; provided, further, that in the event of a Put Repurchase triggered by your
death, Holdings' obligation to purchase any Secondary Put Shares from the Trust
(or any Permitted Transferee) shall be subject to proceeds being available for
such purpose under the Key Man Insurance. Holdings shall have no further
obligations under this Section 10(b)(ii) with respect to any Secondary Put
Shares not purchased by Holdings because of any of the foregoing limitations.
In the event Holdings is required to purchase fewer than all of the Secondary
Put Shares from the Trust and any of its Permitted Transferees by reason of any
of the limitations set
- 37 -
38
forth in paragraph (ii) of this subsection 10(b), Holdings shall purchase such
lesser amount of Secondary Put Shares from the Trust and those of its Permitted
Transferees having made an election hereunder on a pro rata basis; provided,
that you (or in the event of your death the executor of your estate) shall have
the express authority in your (or the executor of your estate's) notice
pursuant to Section 11 to direct Holdings to repurchase such smaller number of
Secondary Put Shares on any other basis, and Holdings shall be bound by such
direction.
(c) Notwithstanding anything herein contained to the contrary, Holdings
shall not be obligated to purchase any Shares from the Trust (or its Permitted
Transferees) pursuant to any Put Repurchase to the extent that, and so long as,
the purchase of such Shares would be in violation of, or result in a default
under, any agreement or instrument to which Holdings is a party (including,
without limitation, the Senior Credit Agreement, the Subordinated Credit
Agreement and the Shareholders Contribution and Repayment Agreement, but
excluding any agreement entered into in material part for the purpose of
avoiding Holdings' obligations hereunder), or violate Holdings' Certificate of
Incorporation or By-laws, as the same may be amended and/or restated or any
law, regulation or order applicable to Holdings.
In the event that Holdings is not obligated to consummate all or any portion
of any Second Put Repurchase as a result of the foregoing sentence and the
restrictions contained in any agreement or instrument to which Holdings is a
party referred to
- 38 -
39
in the foregoing sentence, Holdings shall endeavor to obtain the waiver of the
other parties to such agreements or instruments so as to enable Holdings to
consummate any Second Put Repurchase; provided, however, that it is understood
that Holdings is not guaranteeing to you or the Trust (or any Permitted
Transferee) that such waiver shall be obtained.
11. Election Procedures.
(a) The parties shall exercise their respective rights under Section 10
hereof by sending a written notice by United States certified or registered
mail, return receipt requested, postage prepaid, addressed:
(i) if to the Trust (or any Permitted Transferee) at the address
specified above (or to any Permitted Transferee at the address furnished by
such Permitted Transferee by written notice to Holdings), and
(ii) if to Holdings, to the attention of the Board of Directors of
Holdings, at the address specified in Section 19 hereof, with copies to ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ and the ▇▇▇▇▇▇▇ ▇▇▇▇▇ Investors, at their addresses
specified in Section 19 hereof, or to such other address as either party has
furnished to the other in writing, except that notices of change of address
shall be effective only upon receipt. Other notices pursuant to this Agreement
shall be communicated in the manner provided in Section 19, unless otherwise
expressly provided herein.
- 39 -
40
(b) Holdings' notice of its determination to effect a Call Repurchase
shall be effective if deposited in the mail as specified in subsection (a) of
this Section 11 or hand delivered to the Trustee and/or any Permitted
Transferee within the applicable time period specified in Section 10(a)(i)
hereof and shall specify (i) the Call Repurchase Price and (ii) in reasonable
detail the basis on which such price was computed.
Any Initial Put Notice or Second Put Notice shall be effective if received by
the Board of Directors of Holdings within the applicable time period specified
in Section 10(b)(i) or Section 10(b)(ii); and, within 45 calendar days after
the receipt by Holdings of any such notice, Holdings shall notify the Trust
(and any Permitted Transferees) of (i) the number of Initial Put Shares or
Secondary Put Shares, as the case may be, to be purchased by Holdings, and (ii)
the applicable Put Repurchase Price (specifying in reasonable detail the basis
on which such price was computed).
(c) Any Repurchase Notice shall specify the place, time and date for the
delivery of and payment for such Shares, which shall be in the City of
Pittsburgh, and during normal business hours on a Business Day which shall not
be less than 10 nor more than 30 calendar days after the receipt of such notice
by the Trust (or by such Permitted Transferees).
12. Delivery and Payment Procedures.
(a) At the place, and at the time and date specified in any Repurchase
Notice, the Trust (and the pertinent Permitted
- 40 -
41
Transferee) shall deliver to Holdings or its designee, certificates for the
Shares purchased by Holdings pursuant to any Repurchase, duly endorsed, or
accompanied by written instruments of transfer, in form satisfactory to
Holdings or its designee, duly executed, on behalf of the Trust (or the
pertinent Permitted Transferee), free and clear of any and all Claims, against
payment of the purchase price for such shares as follows:
(i) If (A) the seller of such Shares is a Permitted Transferee or the
Trust, (B) such Shares are Initial Put Shares and (C) the event triggering the
Initial Put is your death, then, in such event, Holdings shall deliver to such
Permitted Transferee or the Trust, as the case may be, a certified or bank
cashier's check or checks, payable to such Permitted Transferee or the Trust or
upon the order of such Permitted Transferee or the Trust in an amount equal to
the aggregate Initial Put Repurchase Price, determined in accordance with
Section 10(b)(i), for such Shares;
(ii) if the seller of such Shares is a Permitted Transferee and such
Shares are Secondary Put Shares, Holdings shall issue its Junior Subordinated
Note in an amount equal to the aggregate Secondary Put Repurchase Price,
determined in accordance with Section 10(b)(ii), for such Shares to such
Permitted Transferee;
(iii) if (A) the seller of such Shares is a Permitted Transferee or the
Trust, (B) such Shares are Initial Put Shares and (C) the event triggering the
Initial Put is any
- 41 -
42
event other than your death, then, in such event, to the extent that there is
any amount of money available for the purchase of Holdings' capital stock under
Section 6.12 of the Senior Credit Agreement at the time of the Initial Put
Notice, Holdings shall use such available money to purchase such Initial Put
Shares, and shall deliver to such Permitted Transferee or the Trust, as the
case may be, a certified or bank cashier's check or checks, payable to such
Permitted Transferee or the Trust or upon the order of such Permitted
Transferee or the Trust in an amount equal to the lesser of (1) the amount of
such available money or (2) the aggregate Initial Put Repurchase Price,
determined in accordance with Section 10(b)(i), for such Shares; any of such
Initial Put Shares remaining unsold after payment in cash to any Permitted
Transferee or the Trust in accordance with this clause (iii) shall be purchased
by the issuance by Holdings of its Junior Subordinated Note in an amount equal
to the aggregate unpaid Initial Put Repurchase Price, determined in accordance
with Section 10(b)(i), for such Shares to such Permitted Transferee or the
Trust;
(iv) if the Trust is the seller of such Shares and such Shares are
Secondary Put Shares, Holdings shall issue its Junior Subordinated Note in an
amount equal to the aggregate Secondary Put Repurchase Price, determined in
accordance with Section 10(b)(ii), for such Shares to such Permitted Transferee
or the Trust; and
- 42 -
43
(v) if such Shares are purchased by Holdings pursuant to a Call
Repurchase, Holdings shall deliver to the Trust a certified or bank cashier's
check or checks payable to the Trust or upon its order in an amount equal to
the aggregate Call Repurchase Price for such Shares.
Notwithstanding anything to the contrary contained in this Section 12,
Holdings shall not pay for any Initial Put Shares or for any Secondary Put
Shares with its Junior Subordinated Notes (and shall, subject to Section 10(c)
hereof, pay for such Shares in cash) to the extent that, and as long as, the
payment of principal and interest on such Junior Subordinated Notes would, at
the time of issuance thereof, be in violation of, or result in a default under,
any agreement or instrument to which Holdings is a party (including, without
limitation, the Senior Credit Agreement, the Subordinated Credit Agreement and
the Shareholders Contribution and Repayment Agreement), or violate Holdings'
Certificate of Incorporation or By-laws, as the same may be amended and/or
restated, or any law, regulation or order applicable to Holdings.
(b) All transfer and documentary stamp taxes, if any, payable in respect
of the sale of Shares to Holdings shall be borne by the party exercising its
right to purchase or to sell Shares, as the case may be, under Section 10
hereof.
13. Agreement of Subordination. Holdings and each Junior Subordinated Note
Holder, by his or its acceptance of such Note, covenant and agree as follows:
- 43 -
44
(a) Each Junior Subordinated Note is and shall be subordinated, to the
extent and in the manner hereinafter set forth, in right of payment to the
prior payment in full of all obligations of Holdings with respect to any or all
Senior Indebtedness now or hereafter existing, whether for principal, interest
(including, without limitation, interest accrued after the filing of a petition
initiating any proceeding referred to in subsection (c) of this Section 13),
fees, expenses or otherwise (such obligations being the "Obligations"). For
the purposes of these provisions, the Obligations shall not be deemed to have
been paid in full until and unless the holders or owners of the Obligations
shall have indefeasibly received payment of the Obligations in cash.
(b) A Junior Subordinated Note Holder shall not ask, demand, ▇▇▇ for, take
or receive from Holdings, directly or indirectly, in cash or other property or
by setoff or in any other manner (including, without limitation, from or by way
of collateral), payment of all or any amounts payable by Holdings under a
Junior Subordinated Note unless and until the Obligations shall have been paid
in full; provided, however, that a Junior Subordinated Note Holder may receive,
and Holdings may make, payments of interest and principal on account of the
Junior Subordinated Note on the stated dates of payment thereof if, at the time
of making any of such payments and immediately after giving effect thereto, no
nonpayment of amounts due, or no event or events which with notice or lapse of
time, or both, would
- 44 -
45
constitute an event of default, or no other defaults (including, without
limitation, an Event of Default under Article VIII of the Senior Credit
Agreement or Section 13 of the Subordinated Credit Agreement) shall have
occurred and be continuing with respect to any Senior Indebtedness; provided,
further, that an Event of Default under Section 8.1, Section 8.2(c) (with
respect to compliance with Section 6.1) or Section 8.3 of the Senior Credit
Agreement or of the Subordinated Credit Agreement shall be deemed to continue
notwithstanding any waiver thereof or amendment of the agreement with respect
thereto until and unless Holdings is in compliance with each of such sections,
as originally set forth and without giving effect to any such waiver or
amendment.
(c) Upon any distribution of all or any of the assets of Holdings upon the
dissolution, winding up, liquidation, arrangement, reorganization, adjustment,
protection, relief or composition of Holdings or its debts, whether in any
bankruptcy, insolvency, arrangement, reorganization, receivership, relief or
similar proceedings or upon an assignment for the benefit of creditors or any
other marshalling of the assets and liabilities of Holdings or otherwise, any
payment or distribution of any kind (whether in cash, property or securities)
that otherwise would be payable or deliverable upon or with respect to a Junior
Subordinated Note shall be paid or delivered directly to the holders of Senior
Indebtedness for application (in the case of cash) to, or as collateral (in the
case of noncash property or securities) for, the payment or prepayment of the
Senior
- 45 -
46
Indebtedness until the Senior Indebtedness shall have been paid in full.
(d) If any proceeding referred to in subsection (c) of this Section 13 is
commenced by or against Holdings:
(i) the holders of the Obligations are hereby irrevocably authorized
and empowered (in their own name or in the name of the Junior Subordinated Note
Holders or otherwise), but shall have no obligation, to demand, ▇▇▇ for, collect
and receive every payment or distribution referred to in such subsection (c) and
give acquittance therefor and to file claims and proofs of claim and take such
other action (including, without limitation, voting the Junior Subordinated
Note) as they may deem necessary or advisable for the exercise or enforcement of
any of the rights or interests of the holders of the Obligations hereunder; and
(ii) each Junior Subordinated Note Holder shall duly and promptly take
such action as the holders of the Obligations may request (A) to collect any
amounts owing under his Junior Subordinated Note for account of the holders of
the Obligations and to file appropriate claims or proofs of claim in respect of
such Junior Subordinated Note, (B) to execute and deliver to the holders of the
Obligations such powers of attorney, assignments, or other instruments as they
may request in order to enable them to enforce any and all claims with respect
to, and any security interests and other liens securing payment of, such Junior
Subordinated Note, and (C) to collect and receive any and all payments or
distributions which may be
- 46 -
47
payable or deliverable upon or with respect to such Junior Subordinated Note.
(e) So long as any of the Obligations shall remain unpaid, a Junior
Subordinated Note Holder will not commence, join with any holder of the
Obligations in commencing directly or indirectly, or cause Holdings to commence
or assist Holdings in commencing, any proceeding referred to in subsection (c)
of this Section 13.
(f) The holders of the Obligations may, at any time and from time to time,
without any consent of or notice to any Junior Subordinated Note Holder and
without impairing or releasing the obligations of such holder under this
Section 13: (A) change the manner, place or terms of payment or change or
extend the time of payment of, or renew or alter, the Obligations (including
any change in the rate of interest thereon), or amend in any manner any
agreement under which any of the Obligations is outstanding; (B) sell,
exchange, release, not perfect and otherwise deal with any property at any time
pledged, assigned or mortgaged to secure the Obligations; (C) release anyone
liable in any manner under or in respect of the Obligations; (D) exercise or
refrain from exercising any rights against Holdings and others; and (E) apply
any sums from time to time received to the payment of the Obligations.
(g) Holdings will cause each Junior Subordinated Note to be endorsed with
the following legend:
The indebtedness evidenced by this instrument is subordinated,
pursuant to, and
- 47 -
48
to the extent provided in, Section 13 of the RBK Exchange and Repurchase
Agreement, dated as of October 26, 1989 (the "RBK Exchange and Repurchase
Agreement"), between the maker hereof and the Trust established under that
certain Revocable Trust Agreement of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ dated February 18,
1987, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Trustee, to the prior payment in full of the
Obligations (as defined in the RBK Exchange and Repurchase Agreement).
(h) All payments or distributions upon or with respect to the Junior
Subordinated Note that are received by a Junior Subordinated Note Holder
contrary to these provisions shall be received in trust for the benefit of the
holders of the Obligations, shall be segregated from other funds and property
held by such Junior Subordinated Note Holder and shall be forthwith paid over
to the holders of the Obligations in the same form as so received (with any
necessary endorsement) to be applied (in the case of cash) to or held as
collateral (in the case of noncash property or securities) for the payment of
the Obligations in accordance with the terms of the Senior Indebtedness.
(i) No Junior Subordinated Note Holder will:
(A) sell, assign, pledge, encumber or otherwise dispose of his
Junior Subordinated Note unless such sale, assignment, pledge, encumbrance or
disposition is made expressly subject to the provisions of this Section 13; or
(B) permit the terms of the Junior Subordinated Note to be
changed in such manner as to have an adverse effect
- 48 -
49
upon the right or interests of the holders of the Obligations pursuant to this
Section 13.
(j) Each Junior Subordinated Note Holder will, at any time and from time
to time, promptly execute and deliver all further instruments and documents,
and take all further action, that may be necessary or desirable, or that the
holders of the Obligations may request, in order to protect any right or
interest granted or purported to be granted by this Section 13 or to enable the
holders of the Obligations to exercise and enforce their rights and remedies
thereunder.
(k) The foregoing provisions regarding subordination are and are
intended solely for the purpose of defining the relative rights of the holders
of the Obligations on the one hand and the Junior Subordinated Note Holder (or
Junior Subordinated Note Holders) on the other hand. Such provisions are for
the benefit of the holders of the Obligations and shall be enforceable by them
directly against any Junior Subordinated Note Holder, and no holder of the
Obligations shall be prejudiced in its right to enforce subordination of a
Junior Subordinated Note by any act or failure to act by Holdings or anyone in
custody of its assets or property. Nothing contained in the foregoing
provisions is intended to or shall impair, as between Holdings and any Junior
Subordinated Note Holder, the obligations of Holdings to such holder.
- 49 -
50
14. Designated Officers' Right to Repurchase Shares.
(a) General. If, upon your death or Disability, Holdings shall have
purchased any Shares pursuant to a Repurchase and your death or Disability
shall have occurred on or after July 1, 1990, Holdings shall, as soon as
practicable after the date of such purchase, offer (i) at least 50% of such
Shares for sale to the Pre-Designated Officers, and (ii) the balance of such
Shares for sale to the Subsequently Designated Officers.
If your death or Disability shall have occurred prior to July 1, 1990,
Holdings shall, as soon as practicable after the date of such purchases, offer
(i) 80% of the first $2.0 million of such Shares (based upon the aggregate
purchase price paid by Holdings for such Shares) to the Subsequently Designated
Officers and 20% of such Shares to the Pre-Designated Officers and (ii) 40% of
any additional Shares to the Subsequently Designated Officers and 60% of such
additional Shares to the Pre-Designated Officers.
Except as otherwise expressly provided herein, the Compensation Committee
shall, in its sole discretion, determine the basis upon which Designated
Officers shall be selected and, in the case of Subsequently Designated
Officers, upon which Shares shall be allocated.
The Compensation Committee shall not be required to make any offer to any
Designated Officer pursuant to this paragraph (a) who is not an "accredited
investor" (as such term is defined in Rule 501 under the Act) if compliance
with the Act or the
- 50 -
51
securities or blue sky laws of any state is deemed by such Committee to be
unreasonably burdensome or costly or who otherwise fails to meet the
requirements set forth in Section 4.2 of the Stockholders Agreement.
(b) Offers to Pre-Designated Officers.
(i) With respect to any Shares required to be offered to
Pre-Designated Officers pursuant to paragraph (a) of this Section 14 (the "PDO
Shares"), the Compensation Committee shall deliver to each such Pre-Designated
Officer written notice (each, a "PDO Offer") offering each such Pre-Designated
Officer the right to purchase from Holdings any or all of a number of such
Shares obtained by multiplying the number of PDO Shares by such Pre-Designated
Officer's Proportion, at a price per Share equivalent to the purchase price paid
by Holdings for those Shares.
If any Pre-Designated Officer shall fail to (i) notify the Compensation
Committee of his acceptance of his PDO Offer within 90 calendar days following
receipt thereof or (ii) purchase all PDO Shares offered to him, Holdings shall
offer to sell all PDO Shares not then subject to any PDO Offers among all
Pre-Designated Officers who shall have agreed to purchase all PDO Shares
offered pursuant to their PDO Offers in accordance with their respective
Proportions. Such offer must be accepted by the delivery of notice thereof to
the Compensation Committee within 15 calendar days after delivery of such
offer.
- 51 -
52
If any PDO Shares remain unsold thereafter, the Compensation Committee shall
continue to offer such Shares in a similar manner until no Pre-Designated
Officer accepts any PDO Shares for purchase or until all PDO Shares are sold.
(ii) If the Pre-Designated Officers shall not have agreed to purchase all
of the PDO Shares, the Compensation Committee may offer any such PDO Shares not
purchased to any Subsequently Designated Officer or otherwise cause Holdings to
hold or dispose of such Shares as such Committee determines.
(c) Offers to Subsequently Designated Officers.
(i) With respect to any Shares required to be offered to Subsequently
Designated Officers pursuant to paragraph (a) of this Section 14 (the "SDO
Shares"), the Compensation Committee shall deliver to each such Subsequently
Designated Officer written notice offering (each an "SDO Offer") to each such
Subsequently Designated Officer the right to purchase any or all of the number
of SDO Shares allocated to him by such Committee, at a price per Share
equivalent to the purchase price paid by Holdings for those Shares.
If any Subsequently Designated Officer shall fail to (i) notify the
Compensation Committee of his acceptance of his SDO Offer within 120 calendar
days following receipt of such notice or (ii) purchase all SDO Shares offered
to him, such Committee shall offer to sell all unsold SDO Shares not then
subject to any SDO Offer among all Subsequently Designated Officers who shall
have agreed to purchase all SDO Shares offered
- 52 -
53
pursuant to their SDO Offers in proportion to the number of SDO Shares
originally allocated to such Subsequently Designated Officers by the
Compensation Committee. Such offer must be accepted by the delivery of notice
thereof to the Compensation Committee within 15 calendar days after delivery of
such offer.
If any SDO Shares remain unsold thereafter, the Compensation Committee shall
continue to offer such Shares in a similar manner until no Subsequently
Designated Officer accepts any SDO Shares for purchase or until all SDO Shares
are sold.
(ii) If the Subsequently Designated Officers shall not have purchased
all SDO Shares, the Compensation Committee shall cause Holdings to hold or
dispose of any such unsold SDO Shares as it determines.
(d) Procedure for Purchase. The purchase price for any Shares purchased
pursuant to this Section 14 shall be payable, at the option of each Designated
Officer, in cash and/or by the delivery to Holdings of a promissory note
bearing interest at a rate equal to the lowest Applicable Federal Rate for debt
instruments of like maturities, maturing on November 1, 1999, secured to the
reasonable satisfaction of the Compensation Committee, and containing such
other terms and conditions as the Compensation Committee may approve (all
subject to such changes or additional provisions, if any, as may be agreed upon
by the Compensation Committee and the particular Designated Officer).
Notwithstanding any other provision of this Section 14 to the contrary, (i)
Holdings shall not be required to accept promissory
- 53 -
54
notes in payment for such Shares to be sold to Designated Officers, as opposed
to cash payments, in an aggregate principal amount which exceeds 90% of the
aggregate amount of proceeds collected by Holdings under the Key Man Insurance
at such time; and (ii) no transfer of any Shares shall be made (A) to any
Designated Officer not already party to a Management Repurchase Agreement
unless and until such Designated Officer shall agree in writing, in form and
substance reasonably satisfactory to Holdings, to become bound, and becomes
bound, by the terms of a Management Repurchase Agreement and the Stockholders
Agreement, or (B) to a Designated Officer already a party to a Management
Repurchase Agreement unless and until such Designated Officer shall agree to
amend the definition of "Shares" contained in his or her Management Repurchase
Agreement to include in such definition the Shares so purchased by him or her
pursuant to this Section 14. In the event that the thresholds set forth in
clause (i) of the preceding sentence apply, the aggregate principal amount
referred to in the preceding sentence shall be allocated among the Designated
Officers on a pro rata basis.
(e) Contingent Obligation of Purchasers. Each Designated Officer
purchasing Shares under this Section 14 will receive them subject to the
contingent obligation to make payments of Additional Call Repurchase Proceeds
to the Trust (or its Permitted Transferees) if they sell any of such Shares
during the period of twelve months following the date of your death or
Disability under the provisions of Section 10(a)(ii) hereof.
- 54 -
55
Holdings will require each such Designated Officer to agree in writing to be
bound by those provisions as a precondition to the right to purchase such
Shares following your death or Disability.
(f) Modification of Agreement. The parties hereto acknowledge hereby
that the provisions of this Agreement may be amended at any time and from time
to time (in accordance with the provisions of Section 18 hereof) and that the
rights of Designated Officers under this Agreement, if any, shall be limited to
any such rights as may obtain under the then current version of this Agreement,
as so amended.
15. Survival; Assignment. All covenants, agreements, representations and
warranties contained in this Agreement shall survive the execution and delivery
of this Agreement, any investigation at any time made by or on behalf of a
party hereto, and the consummation of the transactions described in Section 4
hereof under this Agreement. Holdings' rights and obligations hereunder may be
assigned by Holdings in whole or in part. Except for any Transfer authorized
by Section 8(b) hereof, the Trust may not assign any of its rights hereunder.
Whenever in this Agreement any of the parties hereto is referred to, such
reference shall be deemed to include the successors, executors or
administrators and permitted assigns of such party; and all covenants, promises
and agreements made in this Agreement by or on behalf of Holdings, or by or on
behalf of the Trust, shall bind and inure to the benefit of and be enforceable
by the
- 55 -
56
respective successors, executors or administrators and permitted assigns of such
parties hereto, whether so expressed or not.
16. Governing Law. This Agreement shall be construed and enforced in
accordance with the laws of the Commonwealth of Pennsylvania.
17. Entire Agreement; Headings. This Agreement and the agreements
referred to herein embody the entire agreement and understanding between the
Trust and Holdings and supersede all prior agreements and understandings
relating to the subject matter hereof. The preceding sentence and any other
provision of this Agreement notwithstanding, this Agreement is not, and shall
not be construed to be, a novation of your Amended Subscription Agreement, and
(a) you and Holdings hereby confirm that you and Holdings shall remain obligated
to one another pursuant to such agreement to the extent that such agreement has
not been fully performed, and (b) the representations and warranties contained
in paragraph 3 of your Amended Subscription Agreement will survive the
execution and delivery hereof. The headings in and date of this Agreement are
for purposes of reference only and shall not limit or otherwise affect the
meaning hereof.
18. Amendments. This Agreement cannot be changed orally, and can be
changed only by an instrument in writing signed by the party against whom
enforcement of any waiver, change, modification or discharge is sought.
19. Notices. All communications provided for herein shall be in writing
and
- 56 -
57
(a) if addressed to the Trust or any Permitted Transferee, shall be
delivered or mailed addressed to the Trust or any Permitted Transferee at the
address specified above, or
(b) if addressed to Holdings, shall be delivered or mailed addressed to it
as follows:
EMC Holdings, Inc.
▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: President
with a copy to:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esquire
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
42nd Floor
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, or
(c) if to the ▇▇▇▇▇▇▇ ▇▇▇▇▇ Investors, shall be delivered or mailed
addressed to it as follows:
c/▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ Capital Partners, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: President, or
(d) to such other address as either party has furnished to the other in
writing.
20. Execution in Counterparts. This Agreement may be executed in
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
- 57 -
58
If you are in agreement with the foregoing, please sign each counterpart of
this Agreement.
Very truly yours,
EMC HOLDINGS, INC.
By:_________________________
C. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇,
Executive Vice President
The foregoing Agreement is hereby
agreed to as of the date first
above written, with the intent to
be legally bound thereby.
The Trust established under the
Revocable Trust Agreement of
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ dated
February 18, 1987.
By:____________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇,
Trustee
- 58 -
59
Exhibit List
Exhibit A - Purchaser Designation
60
EXHIBIT A
STOCKHOLDER DESIGNATION
1. Name and Address of Shareholder:
The Trust established pursuant to that certain Revocable Trust
Agreement of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ dated February 18, 1987, ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇, Trustee, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
2. Number of Class A Shares Currently Held:
4,386,700
3. Number of Class C Shares to be Received Pursuant to Exchange Offer:
1,676,200
4. Number of Class A Shares Remaining After Exchange Offer:
2,710,500
5. Cash Payable by ESOP for Class A Shares:
$14,046,692.79
6. Number of Class B Shares Into Which the Shares Described at Item 3 Will Be
Converted in the Merger:
5,059,778
7. Cash Portion of Merger Consideration in Respect of Class C Shares Described
at Items 3 and 8:
$2,159,788.95
