Exhibit 10.14
STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT (this "Agreement") is entered into as of
July 1, 1998, by and between City Truck and Trailer Parts, Inc., an Alabama
corporation (the "Company") and Xxxx X. Xxxxxxx ("Purchaser" or "you"). As used
herein, Purchaser shall include Northern Trust Company, as custodian for Xxxx X.
Xxxxxxx XXX (the "XXX") to the extent the XXX purchases shares hereunder, which
will be evidence by a number of shares set forth under the IRA's signature on
the signature page hereof.
RECITALS
The Company desires to issue and sell to Purchaser, and Purchaser
desires to purchase from the Company, (x) 6,602 shares (the "Common Shares") of
the Company's authorized but unissued Common Stock, par value $.01 per share
(the "Common Stock") and (y) 6,983.976 shares (the "Preferred Shares") of the
Company's authorized but unissued Series B Preferred Stock, par value $.01 per
share (the "Preferred Stock"), all upon the terms and conditions specified
herein. The Common Shares and Preferred Shares are hereinafter sometimes called
the "Shares." Of the Common Shares, 5,000 such Common Shares are subject to the
vesting provisions contained herein and are sometimes referred to herein as the
"Vesting Common Shares."
The Company desires to have, and Purchaser is willing to grant to the
Company, the right and option to repurchase the Common Shares and Preferred
Shares upon the terms and conditions contained herein.
It is a condition precedent to the obligations of the Company under
this Agreement that Purchaser enter into that certain Amended and Restated
Stockholders' Agreement dated June 19, 1998 (the "Stockholders' Agreement")
among the Company, Brentwood Associates Buyout Fund II, L.P. (the
"Partnership"), BABF City Corp. and the other shareholders of the Company.
THEREFORE, in consideration of the premises and of the covenants and
conditions contained herein, the parties hereto agree as follows:
1. Purchase and Sale; Closing.
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(a) Purchase and Sale. The Company hereby agrees to issue and sell to
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Purchaser, and Purchaser hereby agrees to purchase from the Company on the
Closing Date, a total of 6,602 Common Shares and 6,983.976 Preferred Shares in
exchange for $1.00 per Common Share and $100.00 per Preferred Share. Of Common
Shares being purchased hereunder by Purchaser, 2,500 are Eligible Time
Accelerated Stock ("ETA Stock").
(b) The Closing. The consummation of the purchase and sale of the
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Common Shares and Preferred Shares to be initially purchased hereunder (the
"Closing") shall occur as of the date of this Agreement or at such other time as
the parties may agree (the "Closing Date"). At the Closing, the Company shall
deliver to Purchaser certificates evidencing the shares of Common Stock and
Preferred Stock purchased hereunder by Purchaser, against payment of the
specified consideration therefor; provided, however, that certificates
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evidencing the Common
Shares purchased hereunder by the Purchaser shall be deposited with the Escrow
Agent pursuant to Section 5 hereof.
2. Vesting of the Common Stock.
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(a) 12.5% of the Vesting Common Shares shall become vested as of the
last day of each fiscal year of the Company (the "Fiscal Year End Date")
commencing with fiscal 1998, e.g. fiscal years 1998, 1999, 2000, 2001, 2002,
2003, 2004 and 2005, subject to the earlier vesting of ETA Stock as described
below.
All Common Stock (in excess of the 12.5% of the Vesting Common Stock
scheduled to vest in any such year) which vests as ETA Stock under Section 2(b)
will first reduce the Vesting Common Shares then scheduled to vest as of the
Fiscal Year End Date in 2005; and will thereafter reduce in inverse order the
Vesting Common Shares scheduled to vest as of the Fiscal Year End Date in years
2002 through 2004.
(b) Annex A, attached hereto and incorporated herein by reference,
includes vesting provisions, performance criteria (the "Performance Criteria")
for each of the periods set forth below for the ETA Stock and an example of
vesting which is applicable to ETA Stock which is eligible for accelerated
vesting. If the Company meets the Performance Criteria for fiscal 1998, 25% of
the ETA Stock shall become vested effective as of the Fiscal Year End Date in
1998; if the Company meets the Performance Criteria for fiscal 1999, an
additional 25% of the ETA Stock shall become vested effective as of the Fiscal
Year End Date in 1999; if the Company meets the Performance Criteria for fiscal
2000, an additional 25% of the ETA Stock shall become vested effective as of the
Fiscal Year End Date in 2000; and if the Company meets the Performance Criteria
for fiscal 2001, an additional 25% of the ETA Stock shall become vested
effective as of the Fiscal Year End Date in 2001. (Each of fiscal 1998, 1999,
2000 and 2001 is referred to herein as a "Performance Year.") Notwithstanding
the foregoing, the Company will be deemed to meet the Performance Criteria for
1998 regardless of actual results.
Annex A also includes more detailed vesting provisions applicable to
the ETA Stock, including "Catch Up Vesting" provisions.
(c) The foregoing notwithstanding, with respect to Purchaser, no
Vesting Common Shares or ETA Stock shall become vested unless Purchaser has been
continuously employed by the Company, or any parent or subsidiary of the
Company, from the Closing Date until, in the case of Vesting Common Shares, each
respective date on which the Vesting Common Shares are scheduled to vest and, in
the case of ETA Stock, each respective date on which the ETA Stock is eligible
to vest; provided, however, that if there is a Termination of Employment (as
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defined below):
(i) a pro rata portion of any Vesting Common Shares which are
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scheduled to vest and are not ETA Stock shall become vested immediately upon
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Termination of Employment (such pro rata portion being equal to the ratio of the
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number of days of employment during the fiscal year in question to 365); and
(ii) if the termination of Employment occurs during a Performance
Year, and if, as of the date of Termination of Employment (the "Termination
Date"), EBITDA
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for the fiscal year to date ("Year to Date EBITDA") as of the last full month
preceding the Termination Date equaled or exceeded Plan EBITDA (as defined in
Annex A) for such period, then a pro rata portion (determined as in Section
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2(c)(i)) of the ETA Stock eligible to vest with respect to such Performance Year
shall become vested as of the Termination Date. (It is understood that the
determination of whether these shares of ETA Stock will vest will not
necessarily be able to be calculated as of the Termination Date, but once the
calculation is made, if any such shares do in fact vest, they shall be deemed to
have vested as of the Termination Date).
(d) As used herein, "Termination of Employment" shall mean the time
when the employee-employer relationship between Purchaser and the Company is
terminated for any reason whatsoever, with or without cause. For purposes of
this Section 2(d), and elsewhere in this Agreement in the context of employment,
the term "Company" shall mean a subsidiary or parent of the Company if Purchaser
is then employed by such subsidiary or parent; provided, however, that neither a
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transfer of Purchaser from the employ of the Company to the employ of such
subsidiary or parent nor the transfer of Purchaser from the employ of such
subsidiary or parent to the employ of the Company shall be deemed a Termination
of Employment.
(e) Anything in this Agreement to the contrary notwithstanding, if the
Company is acquired by a third party or parties through an asset purchase,
merger or sale of more than 50% (in value) of the outstanding equity securities
of the Company (an "Acquisition"), all Vesting Common Shares not yet vested
which were not previously repurchased by the Company pursuant to Section 3 shall
vest immediately prior to the Acquisition closing date.
The proceeds of the Acquisition attributable to all of the Vesting
Common Shares outstanding on the closing date of the Acquisition which were not
vested in accordance with this Agreement prior to the acceleration of vesting
pursuant to Section 2(e) (the "Escrowed Acquisition Proceeds"), shall be
deposited with the Escrow Agent and will be distributed to Purchaser one year
after the Acquisition closing date, if, but only if, Purchaser is then an
employee of the Company or the acquiring entity; provided, however, (i) if
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Purchaser is not offered the opportunity to continue in the employ of the
Company or to become an employee of the acquiring entity (or a subsidiary or
parent thereof) (the Company and such entities are each called the "Successor
Employer") after the Acquisition closing date, in either case in a position
which would not be grounds for Purchaser to terminate his employment for "Good
Reason", then the Escrowed Acquisition Proceeds shall be distributed to
Purchaser immediately following the Acquisition closing date or (ii) if
Purchaser terminates his employment for "Good Reason" or is terminated by the
Successor Employer, then the Escrowed Acquisition Proceeds shall then be
distributed to Purchaser. Any Escrowed Acquisition Proceeds not so distributed
to Purchaser shall be paid to the other shareholders or former shareholders of
the Company in accordance with their interests. As used herein, "Good Reason"
shall exist if, without Purchaser's express written consent, (i) the Successor
Employer shall materially reduce the nature, scope, level or extent of
Purchaser's responsibilities from the nature, scope, level or extent of such
responsibilities immediately prior to the Acquisition or shall fail to provide
Purchaser with adequate office facilities and support services to perform such
responsibilities; (ii) the Successor Employer shall reduce Purchaser's salary
below that in effect as of the date of this Agreement (or as of the Acquisition,
if greater); (iii) the Successor Employer shall require Purchaser to relocate
his principal business office or his principal place of residence more than 20
miles from his office or
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place of residence, as the case may be, prior to the Acquisition; or (iv) the
Successor Employer shall fail to continue in effect any cash or stock-based
incentive or bonus plan, retirement plan, welfare benefit plan or other benefit
plan, program or arrangement, unless the aggregate value (as computed by an
independent employee benefits consultant selected by Successor Employer) of all
such compensation, retirement and benefit plans, programs and arrangements
provided to Purchaser is not materially less than their aggregate value as of
the date of this Agreement (or as of the Acquisition, if greater).
3. Company Purchase Option.
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(a) The Company shall have the unconditional right and option to
purchase any or all of the Vesting Common Shares that have not vested as
provided in Section 2 at a purchase price of $1.00 per share (the "Option
Price") upon a Termination of Employment on the terms and conditions hereinafter
provided.
(b) In addition to the rights set forth in Section 3(a), prior to an
initial public offering of Common Stock, the Company shall have the
unconditional right and option to purchase any and or all of the Vesting Common
Shares that have vested, at a per share purchase price equal to the Fair Market
Value thereof (the "Fair Market Value Price") upon a Termination of Employment
on the terms and conditions hereinafter provided. The Company's right and
option set forth in Sections 3(a) and 3(b) is referred to herein as the
"Purchase Option."
(c) The determination of whether ETA Stock has vested or has failed to
vest shall be made as of the date the Termination of Employment occurs with no
credit for the Company's performance in any subsequent Performance Years, and
there will be no "Catch Up Vesting."
The Purchase Option, if exercised, must be exercised no later than 60
days after a Termination of Employment. The Purchase Option may be exercised in
whole or in part. Any Common Stock which becomes subject to the Purchase Option
as provided herein but with respect to which the Purchase Option is not
exercised in accordance with the terms hereof shall become fully vested upon
expiration of the period during which the Purchase Option with respect thereto
is effective, and no such Common Stock shall at any time thereafter be subject
to the Purchase Option.
(d) The Purchase Option shall be exercised by written notice signed by
an officer of the Company and delivered or mailed to Purchaser as provided in
Section 15(c) of this Agreement and to the Escrow Agent (as defined in Section 5
hereof) as provided in the Joint Escrow Instructions (as defined in Section 5
hereof) and shall be effective immediately upon such delivery or mailing.
Amounts due to Purchaser from the Company as a result of exercise of the
Purchase Option shall be payable in cash promptly after exercise of the Purchase
Option or, in the case of ETA Stock and/or "Catch Up Vesting", as soon as
reasonably practical after determination of whether or not any applicable
Performance Criteria were met.
(e) As used herein, "Fair Market Value" shall mean the fair market
value of a share of Common Stock, representing the price a willing buyer would
pay and at which at willing seller would sell, neither under any compulsion or
duress. Initially, the parties shall attempt to
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agree on Fair Market Value for a period of thirty (30) days. If they are unable
to reach agreement, each of them shall within ten (10) days nominate an
independent appraiser skilled in valuing securities similar to the Common Stock,
and the two appraisers so nominated shall appoint a third appraiser within ten
(10) days. The third appraiser shall determine Fair Market Value, and such
determination shall be conclusive and binding on all parties. The Company shall
bear any costs of all three appraisers.
(f) In addition to the above, if there is a Termination of Employment,
the Company will have the option to purchase, and you will have the right to
require the Company to purchase, all or any portion of your Shares other than
Vesting Common Shares, pro rata in proportion to ratio of Common Shares to
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Preferred Shares in which such Shares (other than Vesting Common Shares) were
originally issued. The purchase price for Common Shares will be Fair Market
Value. The purchase price for Preferred Shares will be $100 per share, plus
accrued and unpaid dividends to the date of repurchase. Notwithstanding the
foregoing, the Company will not be obligated to purchase any Shares to the
extent such purchase would cause a default under its credit agreement, indenture
or other agreements for borrowed money.
4. No Employment Agreement.
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(a) Nothing contained in this Agreement, or in any other agreement
entered into by the Company and Purchaser in connection with this Agreement, (i)
obligates the Company, or any subsidiary or parent of the Company, to continue
to employ Purchaser in any capacity whatsoever, or (ii) prohibits or restricts
the Company (or any such subsidiary or parent) from terminating the employment
of Purchaser at any time or for any reason whatsoever, with or without cause,
and Purchaser hereby acknowledges and agrees that neither the Company nor any
other person has made any representations or promises whatsoever to Purchaser
concerning Purchaser's employment or continued employment by the Company. In
the event of any Termination of Employment, Purchaser shall have the rights set
forth in this Agreement and no more, except as provided by law or in equity.
(b) Subject to Section 4(a):
(i) you shall be the Company's President and Chief Executive
Officer. Your base salary will be $275,000, to be reviewed annually by the Board
of Directors. You will be eligible to receive an annual performance bonus
(targeted at 50% of your base salary (pro rated for 1998 based on a start date
of June 1, 1998) if certain performance criteria mutually agreed upon by you and
the Board of Directors prior to the beginning of the year are achieved),
although at the discretion of the Board of Directors, you may be eligible for
additional performance bonuses based upon higher mutually agreed upon
objectives. Notwithstanding the foregoing, for 1998, the Company will pay you a
minimum performance bonus equal to the pro rated portion of your target bonus
for the year. Upon a Termination of Employment, the Company will pay you in cash
a lump sum severance package equal to twelve months' base salary for the fiscal
year in question and will at its expense continue your health insurance benefits
as in effect immediately prior to such Termination of Employment for 12 months.
In addition, if Year to Date EBITDA through the last full month before your
Termination Date is at least 100% of Plan EBITDA for such period, you will also
be paid a pro rata portion of your target bonus for the year in which the
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termination occurs, but you will not receive any other
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bonus regardless of whether the Performance Criteria or any other criteria were
or are ultimately met with respect to any fiscal period. Benefits will include
health insurance, nominal life insurance, business club membership and an
automobile lease allowance, all consistent with those generally available in
entities organized by the Partnership;
(ii) so long as there has been no Termination of Employment, you
shall be nominated as a member of the Company's board of directors. You
acknowledge that initially representatives of the Partnership and other
individuals selected by it in consultation with you will constitute a majority
of the board of directors and that a general partner of the Partnership's
general partner will serve as Chairman of the Board; and
(c) You acknowledge that the Company has entered into or intends to
enter into a Corporate Development and Administrative Services Agreement with an
affiliate of the Partnership providing for the payment of substantial fees, in a
form which has been provided to you.
5. Escrow of Shares. As security for the faithful performance of the
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terms of this Agreement and to ensure the availability for delivery of the
unvested Common Shares in case of an exercise of the Purchase Option, Purchaser
shall deliver to and deposit with the escrow agent (the "Escrow Agent") named in
the Joint Escrow Instructions executed concurrently herewith (the "Joint Escrow
Instructions"), 10 stock assignments duly endorsed (with date and number of
shares blank) together with the certificate or certificates evidencing the
shares of Common Stock purchased hereunder by Purchaser. Such documents are to
be held by the Escrow Agent and delivered by the Escrow Agent pursuant to the
terms of the Joint Escrow Instructions, which shall be executed by Purchaser and
the Company and delivered to the Escrow Agent concurrently with the execution of
this Agreement. As promptly as practicable after each vesting date under this
Agreement (but, with respect to ETA Stock, only after the Company is able to
determine whether or not the applicable Performance Criteria have been met), the
Company shall notify Purchaser and the Escrow Agent in writing of the aggregate
vesting and non-vesting to that date of Common Shares and ETA Stock, and the
Escrow Agent shall, within 30 days after receipt of such notice, deliver to
Purchaser certificates representing that number of Purchaser's Common Shares
that such notice states have become vested (less such shares, the certificates
for which have been previously delivered). From time to time, upon written
request of the Company, the Escrow Agent shall deliver to the Company
certificates representing that number of Common Shares which the Company shall
have purchased upon exercise of the Purchase Option, unless Purchaser objects in
the manner provided in the Joint Escrow Instructions.
In the case of any conflict or inconsistency between this Section 5
and the Joint Escrow Instructions, the Joint Escrow Instructions shall control.
6. Change in Capitalization. If from time to time during the term of
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this Agreement (i) there is any dividend of cash or property or rights to
acquire same, any liquidating dividend of cash and/or property, or any stock
dividend or stock split or other change in the character or amount of any of the
outstanding securities of the Company, or (ii) there is (a) any consolidation,
merger or sale of all, or substantially all, of the assets of the Company or (b)
a Drag-Along Sale pursuant to the Stockholders' Agreement, then in such event
any and all new,
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substituted or additional securities or other property to which Purchaser may
become entitled by reason of his ownership of Common Shares shall immediately
become subject to this Agreement and shall assume the same status with respect
to vesting as the Common Shares upon which such dividend was paid or in
substitution for which such additional securities or property were distributed.
Any cash or cash equivalents received pursuant to this Section 6 shall be
invested in conservative, short-term interest bearing securities, and interest
earned thereon shall likewise assume the same status as to vesting. While the
total Option Price for all Common Shares subject to the Purchase Option shall
remain the same after each such event, the Option Price per Common Share upon
exercise of the Purchase Option shall be proportionately or otherwise
appropriately adjusted as determined in good faith by the Board of Directors of
the Company.
7. Purchaser Representations and Agreements. Purchaser hereby
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represents and warrants, and agrees with, the Company as set forth below.
(a) Purchaser has full power and authority to execute, deliver and
perform his obligations under this Agreement and this Agreement is a valid and
binding obligation of Purchaser, enforceable in accordance with its terms,
except that the enforcement thereof may be subject to bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect
relating to creditors' rights generally and to general principles of equity
(regardless of whether such enforcement is considered in a proceeding in equity
or at law). Purchaser is not subject to any agreement not to compete or other
restriction on his ability to acquire the shares of Holdings Stock being
purchased pursuant to this Agreement or to become an employee of the Company or
any of its subsidiaries, and Purchaser will not enter into any such agreement or
restriction.
(b) Purchaser has received and reviewed this Agreement and all annexes
and schedules hereto, including the Stockholders' Agreement and all schedules
and exhibits attached hereto and thereto, and has received all such business,
financial and other information as he deems necessary and appropriate to enable
him to evaluate the financial risk inherent in making an investment in the
Shares and has received satisfactory and complete information concerning the
business and financial condition of the Company in response to all inquiries in
respect thereof.
(c) Purchaser is acquiring the Shares purchased hereunder with his own
funds or property for investment, for his own account, and not as a nominee or
agent for any other person, firm or corporation, and not with a view to the sale
or distribution of all or any part thereof, and he has no present intention of
selling, granting participation in, or otherwise distributing any of the Shares.
Except as provided herein or pursuant to the Stockholders' Agreement, Purchaser
does not have any contract, undertaking, agreement or arrangement with any
person, firm or corporation to sell, transfer or grant participation to such
person, firm or corporation, with respect to any of the Shares.
(d) Purchaser understands and agrees that (i) the Shares will not be
registered under the Securities Act of 1933, as amended (the "Act"), in part
based upon an exemption from registration predicated on the accuracy and
completeness of his representations and warranties appearing herein and (ii) he
will not be permitted to sell, transfer or assign any of the Shares until they
are registered under the Act or an exemption from the registration and
prospectus delivery
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requirements of the Act is available, and (iii) there is no assurance that such
an exemption from registration will ever be available or that the Shares will
ever be able to be sold.
(e) Purchaser agrees that in no event will he make a disposition of
any Shares or any interest therein, unless such Shares are registered under the
Act or unless and until (i) he shall have notified the Company of the proposed
disposition and shall have furnished the Company with a statement of the
circumstances surrounding the proposed disposition, and (ii) he shall have
furnished the Company with an opinion of counsel reasonably satisfactory in form
and content to the Company to the effect that (A) such disposition will not
require registration of such Shares under the Act or applicable state securities
laws, or (B) that appropriate action necessary for compliance with the Act and
applicable state securities laws has been taken, or (iii) the Company shall have
waived, expressly and in writing, the provisions of clauses (i) and (ii) of this
subsection.
(f) Purchaser does not require the assistance of an investment advisor
or other purchaser representative to participate in the transactions
contemplated by this Agreement, has such knowledge and experience in financial
and business matters as to be capable of evaluating the merits and risks of his
investment in the Company, has the ability to bear the economic risks of its
investment for an indefinite period of time and has been furnished with and had
access to such information as is necessary to verify the accuracy of the
information supplied and to have all questions answered by the Company.
8. Representations and Warranties of the Company. The Company hereby
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represents and warrants to Purchaser as set forth below.
(a) The Company is a corporation duly organized, validly existing and
in good standing under the laws of the State of Alabama and has all requisite
corporate power and authority to enter into this Agreement, to issue the Shares
and to perform its obligations hereunder.
(b) The execution and delivery of this Agreement have been duly and
validly authorized, and all necessary corporate action has been taken to make
this Agreement a valid and binding obligation of the Company, enforceable in
accordance with its terms, except that the enforcement thereof may be subject to
bankruptcy, insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect relating to creditors' rights generally and to general
principles of equity (regardless of whether such enforcement is considered in a
proceeding in equity or at law).
(c) When issued and paid for by Purchaser as provided for herein, the
Shares will be duly and validly issued, fully paid and non-assessable.
9. Conditions of Parties' Obligations.
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The obligations of the Company to issue and sell, and of Purchaser to
purchase and pay for, the Common Shares are also subject to the fulfillment
prior to or concurrently with the Closing of the conditions set forth below.
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(a) The representations and warranties of the Purchaser and the
Company shall be true and correct on and as of the Closing Date.
(b) All permits, consents, approvals, orders and authorizations, if
any, which the Company is required to obtain from, and all registrations,
qualifications, designations, declarations and filings which the Company is
required to make with, any state or Federal governmental authority of the United
States in connection with the execution, delivery or performance of this
Agreement and the consummation of the transactions contemplated hereby shall
have been duly obtained or made and shall be effective on and as of the Closing
Date.
(c) Purchaser shall have received copies of such supporting documents
as Purchaser may reasonably request. The Company shall have received such
supporting documents as it may reasonably request to satisfy itself concerning
the representations of Purchaser.
(d) Purchaser shall have become a party to and agreed to be bound by
the Stockholders' Agreement, which Stockholders' Agreement is hereby
incorporated herein as if set forth in full in this Agreement.
10. Restriction on Sale or Transfer. Except as provided herein, none
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of the Common Shares that have not vested pursuant hereto (or any beneficial
interest therein) shall be sold, transferred, assigned or pledged (including
transfer by operation of law) and any attempt to make any such sale, transfer,
assignment or pledge shall be null and void and of no effect.
11. Legends. In addition to any legends required by the
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Stockholders' Agreement, the certificates representing the shares of Common
Stock purchased pursuant to this Agreement will bear a legend in substantially
the following form:
"The shares represented by this certificate are subject to repurchase
under certain circumstances by the issuer pursuant to a Stock Purchase Agreement
between the Issuer and the initial purchaser, to which reference is made for a
xxxxxx description of such repurchase rights."
12. Enforcement.
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The parties acknowledge that the remedy at law for any breach or
violation of the provisions of Section 10 hereof shall be inadequate and that,
in the event of any such breach or violation, the Company or Purchaser, as the
case may be, shall be entitled to injunctive relief in addition to any other
remedy, at law or in equity, to which he or it may be entitled.
13. Violation of Transfer Provisions. The Company shall not be
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required (a) to transfer on its books any Common Shares which shall have been
sold, transferred, assigned or pledged in violation of any of the provisions of
this Agreement or (b) to treat as owner of such Common Shares or to accord the
right to vote or to pay dividends to any purported transferee of Common Shares
in violation of any of the provisions of this Agreement.
14. Covenant Regarding 83(b) Election. Purchaser hereby covenants
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and agrees that he will make an election pursuant to Treasury Regulation 1.83-2
with respect to the
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Common Shares and will furnish the Company with a copy of the form of election
Purchaser has filed and evidence that such an election has been filed in a
timely manner.
15. General Provisions.
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(a) No Assignments. Except as specifically provided to the contrary
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in this Agreement, neither party shall transfer, assign or encumber any of its
or his rights, privileges, duties or obligations under this Agreement without
the prior written consent of the other party, and any attempt to so transfer,
assign or encumber shall be void; provided, however, that the Company may assign
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this Agreement and its rights hereunder in connection with a sale of all of the
stock of or all or substantially all of the assets of the Company.
(b) Notices. All notices, requests, consents and other communications
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required or permitted hereunder shall be in writing and shall be deemed to have
been duly given and made and served either by personal delivery to the person
for whom it is intended (including by reputable overnight delivery services
which shall be deemed to have effected personal delivery) or by telecopy,
receipt of which is acknowledged by the telecopy number set forth below for the
applicable addressee, or if deposited, postage prepaid, registered or certified
mail, return receipt requested, in the United States mail:
(i) if to Purchaser, addressed to Purchaser at his address shown
on the stock register maintained by the Company, or at such other address as
Purchaser may specify by written notice to the Company, or
(ii) if to the Company, addressed to City Truck and Trailer Parts,
Inc., c/o Xxxxxxxxxxx X. Xxxxxxxx, Brentwood Associates, 00000 Xxxxx Xxxxxx
Xxxxxxxxx, Xxxxx 0000 Xxx Xxxxxxx, Xxxxxxxxxx 00000, or at such other address as
the Company may specify by written notice to the Purchaser.
Each such notice, request, consent and other communication shall be
deemed to have been given upon receipt thereof as set forth above or, if sooner,
three days after deposit as described above. The addresses for the purposes of
this Section 15(b) may be changed by giving written notice of such change in the
manner provided herein for giving notice. Unless and until such written notice
is received, the addresses provided herein shall be deemed to continue in effect
for all purposes hereunder.
(c) Choice of Law. This Agreement shall be governed by and construed
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in accordance with the internal laws, and not the laws of conflicts of laws, of
the State of Delaware.
(d) Severability. The parties hereto agree that the terms and
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provisions in this Agreement are reasonable and shall be binding and enforceable
in accordance with the terms hereof and, in any event, that the terms and
provisions of this Agreement shall be enforced to the fullest extent permissible
under law. In the event that any term or provision of this Agreement shall for
any reason be adjudged to be unenforceable or invalid, then such unenforceable
or invalid term or provision shall not affect the enforceability or validity of
the remaining terms and provisions of this Agreement, and the parties hereto
hereby agree to replace such unenforceable or invalid term or provision with an
enforceable and valid arrangement which in its economic effect shall be as close
as possible to the unenforceable or invalid term or provision.
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(e) Parties in Interest. All of the terms and provisions of this
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Agreement shall be binding upon and inure to the benefit of and be enforceable
by the respective permitted successors and assigns of the parties hereto.
(f) Modification, Amendment and Waiver. No modification, amendment or
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waiver of any provision of this Agreement shall be effective against the Company
or Purchaser unless approved in writing, and, in the case of the Company,
authorized by its Board of Directors. The failure at any time to enforce any of
the provisions of this Agreement shall in no way be construed as a waiver of
such provisions and shall not affect the right of any of the parties thereafter
to enforce each and every provision hereof in accordance with its terms.
(g) Integration. This Agreement constitutes the entire agreement of
-----------
the parties with respect to the subject matter hereof and supersedes all prior
negotiations, understandings and agreements, written or oral.
(h) Headings. The headings of the sections and paragraphs of this
--------
Agreement have been inserted for convenience of reference only and do not
constitute a part of this Agreement.
(i) Counterparts. This Agreement may be executed in counterpart with
------------
the same effect as if all parties had signed the same document. All such
counterparts shall be deemed an original, shall be construed together and shall
constitute one and the same instrument.
[SIGNATURE PAGE TO FOLLOW]
11
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed as of the date first above written.
COMPANY:
CITY TRUCK AND TRAILER PARTS, INC.
By: /s/ Xxxxxxxxxxx X. Xxxxxxxx
---------------------------------
Name: Xxxxxxxxxxx X. Xxxxxxxx
----------------------------
Title: Vice President
---------------------------
PURCHASER:
/s/ Xxxx X. Xxxxxxx
--------------------------
Xxxx X. Xxxxxxx
1,602 shares of common stock, none of which are Vesting Common Shares
3,733.976 shares of Preferred Stock
NORTHERN TRUST COMPANY, custodian for
Xxxx X. Xxxxxxx XXX
/s/ Xxxxxx X. Xxxxxx
--------------------------------------
By: Vice President
------------------------------------
5,000 shares of common stock, all of which are Vesting Common Shares
3,250 shares of Preferred Stock
12
Annex A
-------
CITY TRUCKS AND TRAILER PARTS, INC.
PERFORMANCE CRITERIA
AND VESTING EXAMPLE
--------------------
This Annex A sets forth the Performance Criteria, detailed vesting
provisions and vesting example with respect to the vesting of ETA Stock, which
is a part of the Common Shares to be acquired by Purchaser pursuant to the Stock
Purchase Agreement between the Company and the Purchaser (the "Agreement").
Capitalized terms used herein and not defined have the meanings ascribed to them
in the Agreement.
As stated in Section 2(b) of the Agreement, 25% of the ETA Stock shall
become eligible for vesting as of the end of each of fiscal year from fiscal
1998 through fiscal 2001 (each of such full fiscal years being defined in the
Agreement as a Performance Year). Each installment of ETA Stock when it becomes
eligible for vesting is hereinafter referred to as the "Eligible ETA Stock."
For each Performance Year, the amount of Eligible ETA Stock that shall
become vested (effective as of the end of the fiscal year) will be determined by
comparing the Company's actual EBITDA (as defined below) as of the end of such
fiscal year (as determined from its audited financial statements) to Plan EBITDA
(as defined below) for such fiscal year. The percentage of Eligible ETA Stock
that shall become vested at the end of each Performance Year shall be as set
forth in the following table:
Actual EBITDA as a % Percentage of Eligible
of Plan ETA Stock that
EBITDA shall become vested
--------- -------------------
less than 85.00% 0%
88.75% 30%
92.50% 60%
96.25% 80%
100% 100%
Vesting between the percentages listed in the table above will be
linearly interpolated.
If the Company fails to achieve the dollar amount of Plan EBITDA
required to vest 100% of the Eligible ETA Stock in any one Performance Year, but
in the immediately following Performance Year the Company's actual EBITDA
exceeds Plan EBITDA, the Company shall add the dollar amount by which the
Company's EBITDA exceeds Plan EBITDA in such Performance Year to the Company's
EBITDA for the Performance Year immediately prior thereto and vest the
additional Eligible ETA Stock that would have vested in that Performance Year
with the addition of the dollar amount carried back; provided that there are
--------
limitations in the Agreement in the case of termination of employment and
acquisitions of the
13
Company. Such vesting for the earlier Performance Year is referred to herein as
"Catch Up Vesting."
In the event of an Acquisition, any Eligible ETA Stock which shall
have failed to vest as a result of the Company's failure to achieve the dollar
amount of Plan EBITDA required to vest 100% of the then Eligible ETA Stock shall
become subject to the Company's Purchase Option in Section 3 of the Agreement.
"EBITDA" means, for any fiscal year, consolidated pre-tax income plus
interest expense (including non-cash interest, amortization of original issue
discount and the interest component of capital leases) on indebtedness,
depreciation and amortization of goodwill, covenants not to compete and similar
intangibles, all as determined in accordance with generally accepted accounting
principles and as reflected in the Company's audited consolidated financial
statements..
"Plan EBITDA" means, for each Performance Year, the dollar amount of
EBITDA set forth in the Operating Plan approved by the Board of Directors. Plan
EBITDA will be adjusted from time to time as may be mutually agreed upon to
reflect the expected contribution to EBITDA of acquisitions or major corporate
projects.
14
JOINT ESCROW INSTRUCTIONS
July 7, 1998
Xxxx Xxxxxx
c/o Brentwood Associates
00000 Xxxxx Xxxxxx Xxxxxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Dear Sir or Madam:
As the person identified herein as Escrow Agent for City Trucks and
Trailer Parts, Inc. (the "Company"), a Delaware corporation, and the undersigned
holder of common stock, par value $.01 per share, of the Company (the
"Purchaser"), you are hereby authorized and directed to hold the documents
delivered to you pursuant to the terms of that certain Stock Purchase Agreement
(the "Agreement") dated as of July 1, 1998, in accordance with the following
instructions:
1. In the event the Company, or any assignee of the Company (referred
to collectively herein as the "Company"), shall elect to exercise the Purchase
Option (as defined and described in the Agreement), the Company shall give to
the Purchaser and you a written notice specifying the number of shares of stock
to be purchased, the purchase price and the time for a closing hereunder at the
principal office of the Company, which time shall not be less than 20 days after
the date of such written notice. Unless you shall have received written notice
from Purchaser at least five days prior to the date specified for the closing
objecting to consummation of the transaction, Purchaser and the Company hereby
irrevocably authorize and direct you to close the transaction contemplated by
such notice in accordance with the terms of said notice including prompt
delivery of the stock certificate(s) representing the shares purchased. Any
objecting notice from Purchaser shall set forth in reasonable detail the basis
for his objections, but his failure to do so shall not affect your duties
hereunder.
2. At the closing you are directed to (i) date a stock certificate
assignment form or forms necessary for the transfer in question, (ii) fill in
the number of shares being transferred and (iii) deliver same together with the
certificate or certificates evidencing the shares to be transferred to the
Company, against the simultaneous delivery to you of the purchase price for the
number of shares of stock being purchased pursuant to the exercise of the
Purchase Option. Promptly after the closing, the Company shall deliver to you
any certificate or certificates representing shares which were not so purchased
and remain subject to these Joint Escrow Instructions.
3. Purchaser does hereby irrevocably constitute and appoint you as
his attorney-in-fact and agent for the term of this escrow to execute with
respect to such securities all documents necessary or appropriate to make such
securities negotiable and complete any transaction herein contemplated,
including but not limited to any required filings with all other governmental or
regulatory bodies.
4. This escrow shall terminate upon termination of the Purchase
Option with respect to all Common Shares under the Agreement. Within ten days
after each date of vesting under Sections 2(a) and 2(b) of the Agreement, the
Company shall notify you and Purchaser in writing of the number of shares which
have vested on that date. Within 20 days after your receipt of such notice, you
shall deliver to Purchaser a certificate or certificates evidencing the shares
which have so vested. Promptly following any exercise of the Purchase Option,
you shall deliver to Purchaser a certificate or certificates representing the
number of shares of stock not theretofore repurchased by the Company pursuant to
such exercise of the Purchase Option which have vested (less such shares as have
been previously delivered).
5. If at the time of termination of this escrow you should have in
your possession any documents, securities or other property belonging to
Purchaser, you shall deliver all of same to Purchaser and shall be discharged
from all further obligations hereunder. The Company hereby authorizes you at
any time and from time to time after the date hereof to comply with a written
request from Purchaser, a copy of which you shall deliver to the Company, and
unless the Company shall have given you written notice of its objection to such
request within 30 days following its receipt thereof, to deliver to Purchaser a
certificate for that many shares of stock as have become vested in accordance
with the terms of the Agreement (less such shares as have been previously
delivered).
6. Your duties hereunder may be altered, amended, modified or revoked
only by a writing by the parties hereto.
7. You shall be obligated only for the performance of such duties as
are specifically set forth herein and may rely and shall be protected in acting
or refraining from acting in reliance upon any instrument reasonably believed by
you to be genuine and to have been signed or presented by the proper party or
parties. You shall not be personally liable for any act you may do or omit to
do hereunder as Escrow Agent or as attorney-in-fact for Purchaser while acting
in good faith and in the exercise of your own good judgment, and any act done or
omitted by you pursuant to the advice of our own independent attorneys shall be
conclusive evidence of such good faith.
8. You are hereby expressly authorized to disregard any and all
warnings given by any of the parties hereto or by any other person or
corporation, excepting only orders or process of courts of law, and are hereby
expressly authorized to comply with and obey orders, judgments or decrees or any
court. If you obey or comply with any such order, judgment or decree of any
court, you shall not be liable to any of the parties hereto or to any other
person, firm or corporation by reason of such obedience or compliance,
notwithstanding any such order, judgment or decree being subsequently reversed,
modified, annulled, set aside vacated or found to have been entered without
jurisdiction. For purposes of this paragraph 8, an objection made pursuant to
paragraph 1 by the Purchaser shall not be deemed a warning.
9. You shall not be liable in any respect on account of the identity,
authority or rights of the parties executing or delivering or purporting to
execute or deliver the Agreement or any documents or papers deposited or called
for hereunder or thereunder.
2
10. You shall be entitled to employ such independent legal counsel
and other experts as you may deem necessary properly to advise in connection
with your obligations hereunder, may rely upon the advice of such counsel and
may pay such counsel reasonable compensation therefor.
11. Your responsibilities as Escrow Agent hereunder shall terminate
on the thirtieth day following receipt by the parties of your written notice of
resignation. In the event of any such termination, the Company shall appoint a
successor Escrow Agent.
12. If you reasonably require other or further instruments in
connection with these Joint Escrow Instructions or obligations in respect
hereto, the necessary parties hereto shall join in furnishing such instruments.
13. It is understood and agreed that should any dispute arise with
respect to the delivery and/or ownership or right of possession of the
securities held by you hereunder, you are authorized and directed to retain in
your possession without liability to anyone all or any part of said securities
until such dispute shall have been settled either by mutual written agreement of
the parties concerned or by a final order, decree or judgment of a court of
competent jurisdiction after the time for appeal has expired and no appeal has
been perfected, but you shall be under no duty whatsoever to institute or defend
any such proceedings.
14. Any notice required or permitted hereunder shall be given in
writing and shall be deemed effectively given upon personal delivery or upon
deposit in the United States mail, by registered or certified mail with postage
and fees prepaid, addressed to each of the other parties thereunto entitled at
the following addresses, or at such other addresses as a party may designate by
ten (10) days' advance written notice to each of the other parties hereto.
Company: c/o Brentwood Associates
00000 Xxxxx Xxxxxx Xxxxxxxxx
Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxxxxxx X. Xxxxxxxx
Notice to Purchaser shall be sent to the address set forth below
Purchaser's signature.
Escrow Agent: Xxxx Xxxxxx
c/o Brentwood Associates
00000 Xxxxx Xxxxxx Xxxxxxxxx
Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
15. By signing these Joint Escrow Instructions, you become a party
hereto only for the purpose of these Joint Escrow Instructions; you do not
become a party to the Agreement.
16. All liabilities, losses, costs, fees and disbursements incurred
by you in connection with the performance of your duties hereunder, including
without limitation the
3
compensation paid pursuant to paragraph 10 hereof, shall be borne by the
Company, and the Company hereby agrees to indemnify and hold you free and
harmless in respect of all claims, actions, demands, liabilities, losses, costs,
fees and expenses incurred by you in the performance
4
of your duties hereunder; provided, however, that this indemnity shall not
extend to conduct which has been determined, by a final judgment of a court of
competent jurisdiction, to have been grossly negligent or to have constituted
intentional misconduct.
17. This instrument shall be governed by and construed in accordance
with the internal laws, and not the laws of conflict of law, of the State of
Delaware.
18. This instrument shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and permitted assigns.
19. This instrument may be executed in counterpart with the same
effect as if all parties had signed the same document. All such counterparts
shall be deemed an original, shall be construed together and shall constitute
one and the same instrument.
Very truly yours,
CITY TRUCK AND TRAILER PARTS, INC.
By: _________________________
Name:
Title:
PURCHASER:
____________________________
XXXX X. XXXXXXX
ADDRESS:
0000 XXXXXXXXXXX XXXX
XXXXXXXXXX, XXXXXXXX 00000
ESCROW AGENT:
___________________________
NAME: XXXX XXXXXX
5
ASSIGNMENT SEPARATE FROM CERTIFICATE
FOR VALUE RECEIVED and pursuant to that certain Stock Purchase
Agreement dated as of July 1, 1998 (the "Agreement"), the undersigned hereby
sells, assigns and transfers unto the person identified as Escrow Agent in the
Agreement all rights and interests in ___________________ shares of Common Stock
of City Truck and Trailer Parts, Inc. (the "Company"), an Alabama corporation,
represented by Stock Certificate No. _______________ herewith (the
"Certificate"), which Certificate was deposited by the undersigned with the
Escrow Agent pursuant to the Joint Escrow Instructions (as defined in the
Agreement) among the undersigned, the Company and such Escrow Agent, such
Certificate standing in the undersigned's name on the books of the Company.
The undersigned does hereby irrevocably constitute and appoint the
Escrow Agent attorney to transfer such Common Stock on the books of the Company,
with full power of substitution in the premises.
Dated:______________, ___
_____________________________
XXXX X. XXXXXXX
