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before a shareholder could transfer his or her stock. The
agreement also provided, regarding the purchase price:
d. Determination of Purchase Price. Except as
otherwise provided in this Agreement, the Corporation
and each Stockholder agree that the purchase price per
share for the Shares of any Stockholder sold and
purchased pursuant to this Agreement shall be (i) in
the case of a bona fide offer by a third party, the
price offered by the prospective purchaser named in the
Offer to Sell (the “Offer Price”) or (ii) in all other
circumstances, the Adjusted Value Per Share determined
pursuant to Subsection 2.d.(2) hereof.
* * * * * * *
(2) Adjusted Value Per Share. The “Adjusted
Value Per Share” is equal to X divided by Y,
where:
“X” is an amount equal to the greater of (i)
eight times the average earnings of the
Corporation before taxes for the
Corporation’s three most recent fiscal years
ending on the Valuation Date, as determined
in accordance with generally accepted
accounting principles consistently applied,
or (ii) two times the net worth of the
Corporation as of the Valuation Date,
determined in accordance with Subsection
2.d.(3) hereof; and
“Y” equals the number of issued and
outstanding shares of common stock of the
Corporation as of the Valuation Date.
The agreement provided, however, that HII and its stockholders
could agree in writing among themselves to a specified value per
share to govern purchases for the time period specified in the
written agreement.3 The initial employment agreement with Mr.
3The stockholders agreement was applicable only in the
(continued...)
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