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EXHIBIT 10.11
IRREVOCABLE PROXY AND STOCK RIGHTS AGREEMENT
THIS IRREVOCABLE PROXY AND STOCK RIGHTS AGREEMENT (this "Agreement")
is made as of the ____ day of September, 1996, by and among (i) PHILLIP G.
NORTON (hereinafter sometimes referred to as "Proxy") and (ii) KEVIN M. NORTON
(hereinafter sometimes referred to as "K. Norton"), PATRICK J. NORTON, JR.
(hereinafter sometimes referred to as "P. Norton") and J.A.P. Investment Group,
L.P., a Virginia limited partnership ("J.A.P.") [K. Norton, P. Norton and
J.A.P. being hereinafter sometimes together referred to as the "Norton Family
Stockholders" and being hereinafter sometimes each individually referred to as a
"Norton Family Stockholder"].
WHEREAS, MLC Holdings, Inc., a Delaware Corporation ("the
Corporation") has authorized common stock consisting of ten million
(10,000,000) shares with a par value of $0.01 per share (which common stock is
hereinafter sometimes referred to as the "Stock");
WHEREAS, the Norton Family Stockholders are the legal and beneficial
owners of certain of the issued and outstanding shares of Stock as follows:
Number of Shares
Stockholder of Common Stock
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K. Norton 376,500
P. Norton 376,500
J.A.P. 2,040,000
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Total 2,793,000
WHEREAS, the parties hereto believe it is in the best interests of the
Corporation and of the Norton Family Stockholders to make provision for future
dispositions of shares of Stock and certain other matters; and
WHEREAS, the parties hereto desire to set forth in writing their
understandings and agreements.
NOW, THEREFORE, in consideration of the foregoing, of the mutual
promises hereinafter set forth and of other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties
hereto, intending to be legally bound, hereby agree as follows:
ARTICLE 1
RESTRICTIONS ON STOCK
1.1. Agreement Binding Upon Transferees. In the event that at any
time or from time to time, any shares of Stock are transferred to any party
(other than the Corporation or any other Norton Family Stockholder) pursuant to
and in compliance with all provisions hereof, including, but not limited to the
first right to purchase under Article 3 hereof, the transferee shall take such
shares of Stock
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free and clear of all provisions, conditions and covenants of this Agreement.
1.2. Endorsement on Stock Certificates. Each certificate, if any,
representing shares of Stock of the Corporation now or hereafter held by a
Norton Family Stockholder shall bear any legend or legends required by
applicable securities laws and, in addition thereto, shall bear a statement in
substantially the following form:
The voluntary or involuntary encumbering, transfer
or other disposition(including, without
limitation, any disposition pursuant to the laws
of bankruptcy, intestacy, descent and distribution
or succession) of the shares of stock evidenced by
the within Certificate is subjected under the
terms of a Proxy and Stock Rights Agreement, dated
September, 1996, by and among Phillip G. Norton,
Kevin M. Norton, Patrick J. Norton, Jr. and J.A.P.
Investment Group, L.P., a copy of which Agreement
is on file at the principal office of the
Corporation. Upon written request of a
stockholder of the Corporation, the Corporation
shall furnish, without charge to such stockholder,
a copy of such Agreement.
ARTICLE 2
APPOINTMENT OF IRREVOCABLE PROXY
2.1. Each Norton Family Stockholder does hereby irrevocably
constitute and appoint Phillip G. Norton attorney and proxy for such Norton
Family Stockholder with power of substitution for and in the name of such
Norton Family Stockholder to vote all shares of voting stock of the Corporation
now owned or hereafter acquired (whether by purchase, dividend, stock split,
reclassification or otherwise) by such Norton Family Stockholder in the
Corporation at any meeting of the stockholders of the Corporation and to
execute a consent, in lieu of voting said shares at a meeting, to any action
that is required to be taken or may be taken at a stockholder meeting, and
gives or grants unto said attorney and proxy the right to exercise all powers,
rights and privileges which such Norton Family Stockholder would possess; and
ratifies and approves all that said attorney and proxy shall lawfully do or
cause to be done, hereby revoking any proxy or proxies heretofore given to any
person or persons to vote said shares. It is understood and agreed that each
appointment and proxy hereunder is irrevocable and coupled with an interest,
and shall terminate only upon the earlier to occur of (i) the death or
formally adjudicated mental incapacity of Phillip G. Norton or (ii) the sale
or transfer of such Norton Family Stockholder's voting stock to a third
party.
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ARTICLE 3
FIRST RIGHT TO PURCHASE STOCK
3.1. First Right to Purchase Shares of K. Norton and P. Norton.
(a) In the event that either K. Norton or P. Norton
("Seller") desires to sell or transfer the Seller's shares of Stock for any
reason, the Seller shall deliver to Proxy a written notice of intent to sell
and first offer to purchase (the "Notice"), and the Proxy shall have the right,
exercisable within thirty (30) days after receipt of the Notice, to require the
Seller to sell to Proxy all (but not less than all) of the shares of Stock
owned by the Seller as hereinafter provided in this Article 3.
(b) If Proxy does not exercise his option to purchase
the Stock of the Seller, as provided in paragraph (a) above, the Seller shall
be entitled to sell his Stock without the restrictions proposed by this
Article 3.
(c) The first right to purchase granted in this Article 3
shall be assignable by Proxy in Proxy's sole discretion.
3.2. Settlement. Settlement shall be held on the purchase of
shares of Stock under Section 3.1 (a) at the principal office of the
Corporation within ninety (90) days after the receipt by Proxy of the Notice.
At settlement on a purchase of shares of Stock by Proxy, under this Article 3,
the Seller shall resign as a director and/or officer of the Corporation (if
and to the extent that the Seller shall be a director and/or officer of the
Corporation as of the date of such settlement) and shall deliver to the Proxy
the shares of Stock owned by the Seller and the Proxy shall execute and deliver
to the Seller a negotiable promissory note in substantially the same form as
the promissory note attached hereto as Exhibit A and made a part hereof
representing the purchase price). The note shall provide for five equal annual
installments of principal and interest which shall be computed in accordance
with the applicable federal rate of interest under Section 1274 of the
Internal Revenue Code of 1986, as amended.
3.3. Purchase Price. The purchase price of the shares of Stock to
be sold under this Article 3 shall be as follows:
(a) If the purchase and sale occurs on or before the
three (3) year anniversary date of the Effective Date of this Agreement, the
purchase price per share shall be 85% of the fair market value of the Stock as
determined under paragraph (c) below; and
(b) If the purchase and sale occurs after the three (3)
year anniversary date of the Effective Date of this Agreement, the purchase
price per share shall be 95% of the fair market value of the Stock as
determined under paragraph (c) below.
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(c) For purposes of this Section 3.3, the fair market
value of the Stock, on a purchase basis, shall mean the mean of the closing
high bid and low asked prices per share in the over-the-counter market, or the
closing price if the Company's Stock is listed as the NASDAQ National Market
System for the last (10) trading days immediately preceding the date of
settlement.
ARTICLE 4
GENERAL PROVISIONS REGARDING PURCHASES
4.1. Delivery of Stock and Documents. Upon the closing of any
purchase of any shares of Stock pursuant to this Agreement, the Seller shall
deliver to the purchaser the following: The certificate or certificates
representing the shares of Stock being sold, duly endorsed for transfer and
bearing such documentary stamps, if any, as are necessary, and such
assignments, certificates of authority, tax releases, consents to transfer,
instruments and evidences of title of the Seller and of his compliance with
this Agreement as may be reasonably required by the purchaser (or by counsel
for the purchaser).
4.2. Remedy for Failure to Transfer Shares. In the event that a
Seller shall become obligated to sell his shares of Stock pursuant to any
provision hereof, and in the further event that such Seller is unable to, or
for any reason does not, deliver the certificate or certificates evidencing
such shares to the person who, or entity which, is (or desires) to purchase
such shares, in accordance with the applicable provisions of this Agreement,
the purchaser of such shares may deposit the purchase price for such shares (by
good check, promissory note or both, as the case may be under the applicable
provisions of this Agreement) with any bank doing business within fifty (50)
miles of the Corporation's principal office, or with the Corporation's
certified public accountants, as agent or trustee, or in escrow, for such
Seller, to be held by such bank or accountant until withdrawn by such Seller.
Upon such deposit by the purchaser of such shares and upon notice to the
Seller who was required to sell, the shares of Stock of such Seller to be
sold pursuant to the applicable provisions of this Agreement shall at such time
be deemed to have been sold, assigned, transferred and convoyed to such
purchaser, such Seller shall have no further rights thereto and the Corporation
shall record such transfer in its stock transfer book.
ARTICLE 5
MISCELLANEOUS
5.1. Notices. Any and all notices, requests or other
communications hereunder provided for herein shall be given in writing and sent
by hand delivery or by registered or certified mail, return receipt requested,
with first-class postage prepaid; and such notices shall be addressed: (i) if
to Proxy, to Phillip G. Norton, 1019 Basil Road McLean, Virginia 22101; and
(ii) if to a Norton Family Stockholder, to the address of such Norton
Family Stockholder as reflected in the stock records of the Corporation, unless
notice of a change of address is furnished to all parties in the manner
provided in this Section 5.1. Any notice which is required to be made within a
stated period of time shall be considered timely if delivered or mailed before
midnight of the last day of such period.
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5.2. Invalid or Unenforceable Provisions. The invalidity or
unenforceability of any particular provision of this Agreement shall not affect
the other provisions hereof, and this Agreement shall be construed in all
respects as if such invalid or unenforceable provision were omitted.
5.3. Benefit and Burden. This Agreement shall inure to the benefit
of, and shall be binding upon, the parties hereto and their legatees,
distributees, estates, executors, administrators personal representatives,
successors and assigns, and other legal representatives.
5.4. Gender. The use of any gender herein shall be deemed to be or
include the other genders and the use of the singular herein shall be deemed to
be or include the plural (and vice versa), wherever appropriate.
5.5. Changes: Waiver. No change or modification of this Agreement
shall be valid unless the same is in writing and signed by all the parties
hereto. No waiver of any provision of this Agreement shall be valid unless in
writing and signed by the person against whom sought to be enforced. The
failure of any party at any time to insist upon strict performance of any
condition, promise, agreement or understanding set forth herein shall not be
construed as a waiver or relinquishment of the right to insist upon strict
performance of the same or any other condition, promise, agreement or
understanding at a future time.
5.6. Entire Agreement. This Agreement sets forth all of the
promises, agreements, conditions, understandings, warranties and
representations among the parties hereto with respect to the shares of Stock
owned by the Norton Family Stockholders and any other matters set forth herein,
and there are no promises, agreements, conditions, understandings, warranties or
representations, oral or written, express or implied, among them with respect
to such shares or such other matters except as set forth herein. Any and all
prior agreements among the parties hereto with respect to the shares of Stock
owned by the Norton Family Stockholders are hereby revoked. This Agreement is,
and is intended by the parties to be, an integration of any and all prior
agreements or understandings, oral or written, by and among the parties with
respect to the shares of Stock.
5.7. Governing Law. This Agreement shall be construed and enforced
in accordance with the laws of the of State of Delaware.
5.8. Headings. The headings, subheadings and other captions in
this Agreement are for convenience and reference only and shall not be used in
interpreting, construing or enforcing any of the provisions of this Agreement.
5.9. Term of Agreement. This Agreement shall be effective as of
the date first hereinabove set forth and shall terminate at such time as such
Norton Family Stockholder shall sell or transfer all of his shares of
Stock to the Proxy or to, with respect to a Selling Norton Family Stockholder,
another Norton Family Stockholder or third party pursuant to any provision of
this Agreement or otherwise. Notwithstanding the foregoing, certain Sections
of this Agreement may terminate prior to the aforesaid termination if such
Sections so provide.
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5.10. Specific Performance. Strict compliance shall be required
with each and every provision of this Agreement and particularly with the
procedures set forth in the provisions of Articles 1, 2 and 3 hereof. The
parties hereto agree that the shares of Stock are unique, that failure to
perform the obligations provided by this Agreement shall result in irreparable
damage and that specific performance of these obligations may be obtained by
suit in equity.
IN WITNESS WHEREOF, Proxy and each Norton Family Stockholder have
executed this Agreement, all as of the day and year first above written.
PROXY:
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PHILLIP G. NORTON
STOCKHOLDERS:
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KEVIN M. NORTON
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PATRICK J. NORTON, JR.
J.A.P. INVESTMENT GROUP, L.P.
By: J.A.P., Inc., General Partner
By:
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Name:
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Title:
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The Corporation, by its duly authorized officer, hereby sets forth its
signature to evidence its agreement, for and on behalf of itself and its
successors and assigns, that:
A. It hereby consents to this Agreement.
B. All certificates representing shares of Stock issued
by the Corporation and held by either Stockholder shall bear an endorsement in
substantially the form specified in Section 1.2 hereof.
MLC HOLDINGS, INC.
By:
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Bruce M. Bowen,
Executive Vice President
COMMONWEALTH OF VIRGINIA )
) To wit:
CITY/COUNTY OF )
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The foregoing instrument was duly acknowledged before me this ______
day of September, 1996 by Kevin M. Norton.
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Notary Public
My Commission expires:
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COMMONWEALTH OF VIRGINIA )
) To wit:
CITY/COUNTY OF )
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The foregoing instrument was duly acknowledged before me this ______
day of September, 1996 by Patrick J. Norton, Jr.
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Notary Public
My Commission expires:
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COMMONWEALTH OF VIRGINIA )
) To wit:
CITY/COUNTY OF )
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The foregoing instrument was duly acknowledged before me this ______
day of September, 1996 by ________, ___________ of J.A.P., Inc., as general
partner of J.A.P. Investment Group, L.P.
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Notary Public
My Commission expires:
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EXHIBIT A
PROMISSORY NOTE
$
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FOR VALUE RECEIVED, the undersigned, Phillip G. Norton (hereinafter
referred to as "Maker"), hereby promises to pay to [insert name of terminated
stockholder] ("Payee"), at ______________________________________, ________, or
at such other place as the holder hereof may from time to time designate in
writing, the principal sum of ___________ Dollars ($_________), in three (3)
equal annual installments of ____________________ Dollars ($____), such
installments due on ___________, 19___ and on _______ of each year thereafter,
together with interest from and after the date hereof at the rate of ___
percent (___%) per annum computed on the unpaid principal balance and payable
at the same time as an installment of principal hereunder is due.
Maker shall have the right to prepay in part or in full, without
penalty, this promissory note (together with accrued interest to the date of
prepayment on the amount of principal thus prepaid) at any time or times in the
inverse order of maturity.
In the event of any failure to pay when due any installment of
interest hereunder or any installment of the principal sum hereof, and the
continuance of such failure to pay for a period of ten (10) days after written
notice (by certified or registered mail or by hand delivery) of such failure,
this promissory note shall be considered to be in default and the entire unpaid
principal sum hereof, together with accrued interest, shall at the option of
the holder hereof become immediately due and payable in full.
Except as set forth herein, Maker waives presentment, demand and
presentation for payment, notice of nonpayment and dishonor, protest and notice
of protest and expressly agrees that this promissory note or any payment
hereunder may be extended from time to time without in any way affecting the
liability of Maker.
In the event of default and the placement of this promissory note in
the hands of an attorney for collection, Maker agrees to pay all collection
costs and expenses, including attorneys' fees equal to fifteen percent (15%) of
the amount then due hereunder.
The validity and construction of this promissory note and all matters
pertaining hereto are to be determined in accordance with the laws of the
_________________ of __________________________.
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IN WITNESS WHEREOF, Maker, has executed this promissory note on this
___ day of ___________, 19___.
By:
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PHILLIP G. NORTON
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