EXHIBIT 10.5
SELLING STOCKHOLDERS AGREEMENT
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THIS SELLING STOCKHOLDERS AGREEMENT is made this 6/th/ day of June, 2001
(the "Agreement") by and between each of the Selling Stockholders as identified
on Schedule A attached hereto (hereinafter referred to as the "Selling
Stockholders") and U.S. HOME SYSTEMS, INC., a Delaware corporation.
W I T N E S S E T H:
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WHEREAS, U.S. Pawn, Inc., a Colorado corporation ("U.S. Pawn") and U.S.
Remodelers, Inc., a Delaware corporation ("USR") are parties to that certain
Agreement and Plan of Merger dated November 3, 2000 (the "Merger Agreement")
whereby on February 13, 2001 U.S. Pawn acquired USR pursuant to a merger (the
"Merger") and each outstanding share of USR's common stock was converted into
the right to receive a number of shares of U.S. Pawn;
WHEREAS, U.S. Pawn reincorporated in Delaware by merging with and into its
wholly-owned subsidiary U.S. Home Systems, Inc., a Delaware corporation (the
"Company"), whereby each outstanding share of U.S. Pawn's common stock was
automatically converted into one share of the Company's Common Stock;
WHEREAS, Xxxxx X. Xxxxxxx was issued 25,000 shares of the Company's Common
Stock as a banking fee for services rendered in connection with the Merger;
WHEREAS, the Selling Stockholders, except for Xxxxx X. Xxxxxxx, were
shareholders of USR and, pursuant to the terms of the Merger Agreement, acquired
4,045,633 shares of the Company's Common Stock (together with the 25,000 shares
issued to Xxxxx X. Xxxxxxx referred to herein as the "Securities") and each
Selling Stockholder is the beneficial owner of such Securities as identified
next to his name on Schedule A attached hereto; and
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WHEREAS, the Company intends to file a registration statement on Form S-3
with the Securities and Exchange Commission (the "Commission") as soon as
practicable and the Selling Stockholders have advised the Company that all of
the Securities are to be included in such registration statement;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto hereby agree as
follows:
1. Definitions. As used in this Agreement, the following terms shall
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have the meaning set forth below:
(a) "Change in Control" shall have the meaning as set forth in
Section 2(d) of this Agreement.
(b) "Commission" shall mean the United States Securities and Exchange
Commission or any other federal agency at the time administering the
Securities Act.
SELLING STOCKHOLDERS AGREEMENT-Page 1
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(c) "Common Stock" shall mean the Company's Common Stock, par value
$0.001 per share.
(d) "Company" shall mean U.S. Home Systems, Inc., a Delaware
corporation.
(e) "Escrow Agreement" shall mean the escrow agreement executed by
the Company, USR and the Selling Stockholders, except for Xxxxx X. Xxxxxxx,
pursuant to the Merger Agreement.
(f) "Escrowed Shares" shall mean the shares of the Company's Common
Stock as defined in the Escrow Agreement and Merger Agreement, and as
identified on Schedule A.
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(g) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, or any similar federal statute, and the rules and regulations of
the Commission hereunder, all as the same shall be in effect at the time.
(h) "Indemnifying Party" shall have the meaning as set forth in
Section 5 of the Agreement.
(i) "Merger Agreement" shall mean the Agreement and Plan of Merger
executed by U.S. Pawn and USR on November 3, 2000.
(j) "Person" shall mean an individual, a corporation, a partnership,
a limited liability company, a joint venture, a trust, an estate, an
unincorporated organization, a government and any agency or political
subdivision thereof.
(k) "Registration Expenses" shall mean all expenses incurred in
effecting the registration, including, without limitation, all registration
and filing fees, printing expenses, fees and disbursements of counsel for
the Company, underwriting expenses (other than commissions or discounts),
expenses of any Company audits incident to or required by any such
registration and Company expenses of complying with the securities or blue
sky laws of any jurisdictions (but excluding fees and disbursements of
counsel and other agents for the selling holders of Registrable
Securities).
(l) "Registration Rights Agreement" shall mean the registration
rights agreement executed by U.S. Pawn and the shareholders of USR on
February, 13, 2001.
(m) "Registrable Securities" means those Securities identified on
Schedule A hereto to be included in the registration statement.
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Registrable Securities shall not include securities which can be freely
sold to the public in the United States without registration under the
Securities Act. To the extent any securities may be sold pursuant to the
provisions of Rule 144(k) under the Securities Act, such securities shall
be deemed capable of being "freely sold to the public" within the meaning
of this subsection.
(n) "Securities Act" shall mean the Securities Act of 1933, as
amended.
SELLING STOCKHOLDERS AGREEMENT-Page 2
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(o) "U.S. Pawn" shall mean U.S. Pawn, Inc, a Colorado corporation,
the predecessor of the Company.
(p) "USR" shall mean U.S. Remodelers, Inc., a Delaware corporation.
2. Registration.
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(a) Effective Registration. The Company hereby agrees to file by June
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30, 2001 or as soon as reasonably practicable, a registration statement on
Form S-3 with respect to all of the Registrable Securities (the "Shelf
Registration"). The Company agrees to use its commercially reasonable
efforts to have the Shelf Registration declared effective as soon as
reasonably practicable after such filing and to keep the Shelf Registration
continuously effective (i) for a period of two years following the date on
which the Shelf Registration is declared effective by the Commission or
(ii) until all Registrable Securities included in the Shelf Registration
have been sold by the Selling Stockholders pursuant to the Shelf
Registration or (iii) until such Registrable Securities can be publicly
offered and sold without registration under Rule 144(k) or otherwise,
whichever is earlier.
(b) Plan of Distribution. Upon effectiveness of the Shelf
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Registration, the Registrable Securities may be offered by the Selling
Stockholders from time to time in open market transactions (which may
include block transactions), or in private transactions at prices relating
to prevailing market prices or at negotiated prices. The Selling
Stockholders may effect such transactions by selling Registrable Securities
to or through broker-dealers, and such broker-dealers may receive
compensation in the form of discounts, concessions or commissions from the
Selling Stockholders and/or the purchasers of Registrable Securities for
whom such broker-dealers may act as agent or to whom they sell as principal
or both (which compensation as to a particular broker-dealer might be in
excess of customary commissions). The Selling Stockholders and any broker-
dealer acting in connection with the sale of the Registrable Securities
offered under the Shelf Registration may be deemed to be "underwriters"
within the meaning of the Securities Act, in which event any discounts,
concessions or commissions received by them, which are not expected to
exceed those customary in the types of transactions involved, or any profit
on resales of the Registrable Securities by them, may be deemed to be
underwriting commissions or discounts under the Securities Act.
(c) Restriction on Sales of Registrable Securities. Pursuant to
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Section 5(f) of the Registration Rights Agreement the Company and the
Selling Stockholders, except for Xxxxx X. Xxxxxxx, agree that during any
90-day period after the effective date of the Shelf Registration, the
Selling Stockholders shall be allowed to sell up to 25% of the Registrable
Securities owned of record and beneficially by each Selling Stockholder on
the effective date of the registration statement; provided, however, that
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none of the Escrowed Shares (as defined in the Merger Agreement and Escrow
Agreement) shall be sold by the Selling Stockholders until such Escrowed
Shares shall have been released to the Selling Stockholders pursuant to the
provisions of the Escrow Agreement. The number of Registrable Securities
allowed to be sold during any 90-day period shall not be cumulative with
any Registrable Securities that could have been sold in any prior 90-day
SELLING STOCKHOLDERS AGREEMENT-Page 3
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period. Except for the Escrowed Shares, the restriction on sales of
Registrable Securities by the Selling Stockholders in this Section 2 shall
not apply to any Selling Stockholder who owns of record and beneficially
50,000 shares or less of Registrable Securities. This restriction on sales
of Registrable Securities shall terminate on February 13, 2003 or upon a
Change in Control of the Company, whichever shall first occur, subject to
the terms of the Escrow Agreement.
(d) Change in Control. A Change in Control will be deemed to have
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occurred for the purposes hereof (i) when a change of stock ownership of
the Company of a nature that would be required to be reported in response
to Item 6(e) of Schedule 14A promulgated under the Exchange Act, and any
successor Item of a similar nature has occurred; or (ii) upon the
acquisition of beneficial ownership, directly or indirectly, by any person
(as such term is used in Sections 13(d) and 14(d)(2) of the Exchange Act)
of securities of the Company representing 50% of more of the combined
voting power of the Company's then outstanding securities; or (iii) a
change during any period of twelve (12) consecutive months of a majority of
the members of the Board of Directors of the Company for any reason, unless
the election, or the nomination for election by the Company's shareholders,
of each director was approved by a vote of a majority of the directors then
still in office who were directors at the beginning of the period; provided
that a Change in Control will not be deemed to have occurred for purposes
hereof with respect to any person meeting the requirements of clauses (i)
and (ii) of Rule 13-d(b)(1) promulgated under the Exchange Act, as amended.
3. Registration Procedures.
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(a) The Company will use its commercially reasonable efforts to cause
the Shelf Registration to become effective as quickly as practicable, and,
in connection therewith, the Company will as expeditiously as possible:
(i) notify the Selling Stockholders at any time when a
prospectus relating to the Registrable Securities is required to be
delivered under the Securities Act, of the happening of any event as a
result of which the prospectus included in such registration statement
contains an untrue statement of a material fact or omits to state any
fact required to be stated therein and file promptly an appropriate
supplement or amendment to such prospectus correcting any material
misstatement or omission;
(ii) prepare and file with the Commission a registration
statement with respect to such Registrable Securities and prepare and
file with the Commission such amendments and post-effective amendments
to the registration statement as may be necessary to keep the
registration on Form S-3 effective for two years to complete the
proposed distribution; cause the prospectus to be supplemented by any
required prospectus supplement, and as so supplemented to be filed
pursuant to Rule 424 under the Securities Act, and to comply fully
with the applicable provisions of Rules 424 and 430A under the
Securities Act in a timely manner; and comply with the provisions of
the Securities Act with respect to the disposition of all securities
covered by such registration statement during the
SELLING STOCKHOLDERS AGREEMENT-Page 4
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applicable period in accordance with the intended method or methods of
distribution by the sellers thereof set forth in such registration
statement or supplement to the prospectus;
(iii) advise the Selling Stockholders promptly and, if requested
by any Selling Stockholder, confirm such advice in writing, (A) when
the prospectus or any prospectus supplement or post-effective
amendment has been filed, and, with respect to the registration
statement or any post-effective amendment thereto, when the same has
become effective, (B) of any request by the Commission for amendments
to the registration statement or amendments or supplements to the
prospectus or for additional information relating thereto, (C) of the
issuance by the Commission of any stop order suspending the
effectiveness of the registration statement under the Securities Act
or of the suspension by any state securities commission of the
qualification of the Registrable Securities for offering or sale in
any jurisdiction, or the initiation of any proceeding for any of the
preceding purposes, (D) of the existence of any fact or the happening
of any event that makes any statement of a material fact made in the
registration statement, the prospectus, any amendment or supplement
thereto, or any document incorporated by reference therein untrue, or
that requires the making of any additions to or changes in the
registration statement or the prospectus in order to make the
statements therein not misleading. If at any time the Commission shall
issue any stop order suspending the effectiveness of the registration
statement or any state securities commission or other regulatory
authority shall issue an order suspending the qualification or
exemption from qualification of the Registrable Securities under state
securities or blue sky laws, the Company shall use its reasonable
efforts to obtain the withdrawal or lifting of such order at the
earliest possible time;
(iv) furnish to the Selling Stockholders before filing with the
Commission, copies of the registration statement or any prospectus
included therein or any amendments or supplements to any such
registration statement or prospectus (including all documents
incorporated by reference after the initial filing of such
registration statement) and consult with the Selling Stockholders
prior to the filing of such registration statement or prospectus;
(v) if requested by any Selling Stockholder, incorporate in
the registration statement or prospectus, pursuant to a supplement or
post-effective amendment if necessary, such information as such
Selling Stockholder may reasonably request to have included therein,
with respect to the number of Registrable Securities being sold, the
purchase price being paid therefor and any other terms of the offering
of the Registrable Securities to be sold in such offering and make all
required filings of such prospectus supplement or post-effective
amendment as soon as practicable after the Company is notified of the
matters to be incorporated in such prospectus supplement or post-
effective amendment;
(vi) furnish to each Selling Stockholder without charge at
least one copy of the registration statement as first filed with the
Commission and of each
SELLING STOCKHOLDERS AGREEMENT-Page 5
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amendment thereto, including all documents and all exhibits
incorporated therein by reference.
(vii) deliver to each Selling Stockholder without charge as many
copies of the prospectus (including each preliminary prospectus) and
any amendment or supplement thereto as the Selling Stockholder
reasonably may request. The Company hereby consents to the use of the
prospectus and any amendment or supplement thereto by the Selling
Stockholders, in connection with the offering and the sale of the
Registrable Securities covered by the prospectus or any amendment or
supplement thereto;
(viii) register or qualify the Registrable Securities, prior to
any public offering of Registrable Securities, under the securities or
blue sky laws of such jurisdictions as each Selling Stockholder may
reasonably request and do any and all other acts or things reasonably
necessary or advisable to enable the disposition in such jurisdictions
of the Registrable Securities covered by the registration statement;
provided, however, that the Company shall not be required to register
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or qualify as a foreign corporation where it is not now so qualified
or to take any action that would subject it to the service of process
in suits or to taxation, other than as to matters and transactions
relating to the registration statement, in any jurisdiction where it
is not now so subject;
(ix) cooperate with the Selling Stockholders to facilitate the
timely preparation and delivery of certificates representing
Registrable Securities to be sold and not bearing any restrictive
legends; and enable such Registrable Securities to be in such
denominations and registered in such names as the Selling Stockholders
or any underwriter may reasonably request prior to any sale of
Registrable Securities;
(x) cause the Registrable Securities covered by such
registration statement to be registered with or approved by such other
governmental agencies or authorities as may be necessary by virtue of
the business and operations of the Company to enable the Selling
Stockholders to consummate the disposition of the Registrable
Securities;
(xi) enter into such customary agreements (including an
underwriting agreement in customary form) in order to expedite or
facilitate the disposition of such Registrable Securities by the
Selling Stockholders;
(xii) make available for inspection by the Selling
Stockholders, any underwriter participating in any disposition
pursuant to such registration statement, and any attorney, accountant
or other agent retained by the Selling Stockholders or underwriter
(collectively, the "Inspectors"), all financial and other records,
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pertinent corporate documents and properties of the Company
(collectively, the "Records"), as shall be reasonably necessary to
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enable them to exercise their due diligence responsibility, and cause
the Company's officers, directors and employees to supply all
information reasonably requested by any
SELLING STOCKHOLDERS AGREEMENT-Page 6
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such Inspector in connection with such registration statement;
provided that records which the Company determines, in good faith, to
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be confidential and which it notifies the Inspectors are confidential
shall not be disclosed by the Inspectors unless (i) the disclosure of
such Records is necessary to avoid or correct a misstatement or
omission in the registration statement or (ii) the release of such
Records is ordered pursuant to a subpoena or other order from a court
of competent jurisdiction; provided, further, each Selling Stockholder
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agrees that it will, upon learning that disclosure of such Records is
sought in a court of competent jurisdiction, give notice to the
Company and allow the Company, at its expense, to undertake
appropriate action and to prevent disclosure of the Records deemed
confidential; and
(xiii) use its reasonable efforts to take all other steps
necessary to effect the registration of the Registrable Securities
contemplated hereby.
(b) Each Selling Stockholder agrees to furnish to the Company such
information regarding the Selling Stockholder and the distribution of such
Registrable Securities as requested by the Company and such other
information as the Company may from time to time reasonably request, and
each Selling Stockholder shall promptly advise the Company in writing of
any material changes in the information so supplied by the Selling
Stockholder.
(c) Each Selling Stockholder agrees that upon receipt of any notice
from the Company of the happening of any event of the kind described in
Section 3(a)(i) hereof, the Selling Stockholder will forthwith discontinue
disposition of Registrable Securities pursuant to the registration
statement covering such Registrable Securities until the Selling
Stockholder's receipt of the copies of the supplemented or amended
prospectus contemplated by Section 3(a)(i) hereof and, if so directed by
the Company, the Selling Stockholder will deliver to the Company all
copies, other than permanent file copies then in the Selling Stockholder's
possession, of the prospectus covering such Registrable Securities current
at the time of receipt of such notice. In the event the Company shall give
any such notice, the Company shall extend the period during which such
registration statement shall be maintained effective pursuant to this
Agreement by the number of days during the period from and including the
date of the giving of such notice pursuant to Section 3(a)(i) hereof to and
including the date when the Selling Stockholder shall have been sent the
copies of the supplemented or amended prospectus contemplated by Section
3(a)(i) hereof.
(d) The Selling Stockholders agree that they will comply with the
applicable provisions of the Exchange Act and the rules and regulations
promulgated thereunder in connection with the disposition of the
Registrable Securities covered by the registration statement, including, as
applicable, the timely filing of reports with the Commission as required
under Sections 13 and 16 of the Exchange Act (Schedule 13D, Form 3, Form 4,
etc.).
4. Expenses. All expenses incident to the Company's performance of,
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or compliance with, this Agreement (except for the fees and expenses of counsel
to the Selling Stockholders
SELLING STOCKHOLDERS AGREEMENT-Page 7
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and special experts retained by the Selling Stockholders in connection with the
registration of the Registrable Securities and underwriting discounts and
commissions and brokerage fees attributable to the sale of Registrable
Securities) including, without limitation, all registration and filing fees,
fees and expenses of compliance with securities or "blue sky" laws (including
fees and disbursements of registrations or exemptions of the Registrable
Securities); the fees and expenses associated with any filing with the National
Association of Securities Dealers, Inc.; messenger and delivery expenses (other
than expenses of deliveries from the Selling Stockholders to the Company); fees
and expenses of counsel for the Company and its independent certified public
accountants (including the expenses of any special audit or "cold comfort"
letters required by or incident to such performance); and the fees and expenses
of any special experts retained by the Company in connection with such
registration (all such expenses being herein called "Registration Expenses"),
shall be borne by the Company.
5. Indemnification and Contribution.
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(a) The Company agrees to indemnify and hold harmless the Selling
Stockholders from and against any and all losses, claims, damages,
liabilities and expenses arising out of or based upon any untrue statement
or alleged untrue statement of a material fact contained in any
registration statement or prospectus (or any amendment or supplement
thereto), or arising out of or based upon any omission or alleged omission
to state therein a material fact required to be stated therein or necessary
to make the statements therein not misleading, except insofar as such
losses, claims, damages, liabilities or expenses arise out of, or are based
upon, any untrue statement or omission or alleged untrue statement or
omission which has been made therein or omitted therefrom in reliance upon
and in conformity with the information relating to the Selling Stockholders
furnished in writing to the Company by each Selling Stockholder expressly
for use in connection therewith.
(b) If any action, suit or proceeding shall be brought against a
Selling Stockholder in respect of which indemnity may be sought against the
Company, the Selling Stockholder shall promptly notify the parties against
whom indemnification is being sought (collectively the "Indemnifying
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Parties" and each an "Indemnifying Party"), and such Indemnifying Parties
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shall assume the defense thereof, including the employment of counsel and
payment of all fees and expenses; provided, however, that failure to so
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notify an Indemnifying Party shall not relieve such Indemnifying Party from
any liability unless and to the extent it is prejudiced as a result of such
failure. The Selling Stockholder shall have the right to employ separate
counsel in any such action, suit or proceeding and to participate in the
defense thereof, but the fees and expenses of such counsel shall be at the
expense of the Selling Stockholder unless (i) the Indemnifying Parties have
agreed in writing to pay such fees and expenses, (ii) the Indemnifying
Parties have failed to assume the defense and employ counsel, or (iii) the
named parties to any such action, suit or proceeding (including any
impleaded parties) include the Selling Stockholder and the Selling
Stockholder shall have been advised in writing by its counsel that
representation of such indemnified party and any Indemnifying Party by the
same counsel would be inappropriate under applicable standards of
professional conduct (whether or not such representation by the same
counsel has been proposed) due to actual or potential differing interests
between them (in which case the
SELLING STOCKHOLDERS AGREEMENT-Page 8
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Indemnifying Party shall not have the right to assume the defense of such
action, suit or proceeding on behalf of the Selling Stockholder). It is
understood, however, that the Indemnifying Parties shall, in connection
with any one such action, suit or proceeding or separate but substantially
similar or related actions, suits or proceedings in the same jurisdiction
arising out of the same general allegations or circumstances, be liable for
the reasonable fees and expenses of only one separate firm of attorneys (in
addition to any local counsel) at any time for the Selling Stockholder not
having actual or potential differing interests with the remaining Selling
Stockholders or among themselves, which firm shall be designated in writing
by the Selling Stockholders, and that all such fees and expenses shall be
reimbursed as they are incurred. The Indemnifying Parties shall not be
liable for any settlement of any such action, suit or proceeding effected
without their written consent, but if settled with such written consent, or
if there be a final judgment for the plaintiff in any such action, suit or
proceeding, the Indemnifying Parties agree to indemnify and hold harmless
the Selling Stockholders, to the extent provided in paragraph (a) hereof,
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from and against any loss, claim, damage, liability or expense by reason of
such settlement or judgment.
(c) The Selling Stockholders, severally and not jointly, agrees to
indemnify and hold harmless the Company, and its directors and officers,
and any Person who controls the Company within the meaning of Section 15 of
the Securities Act or Section 20 of the Exchange Act to the same extent as
the indemnity from the Company to the Selling Stockholders set forth in
paragraph (a) hereof, but only with respect to information relating to the
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Selling Stockholders furnished in writing by or on behalf of the Selling
Stockholder expressly for use in the registration statement or prospectus;
provided, however that the Selling Stockholder shall not be liable for any
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claims hereunder in an amount in excess of the net proceeds received by the
Selling Stockholder from the sale of the Registrable Securities pursuant to
the registration statement. If any action, suit or proceeding shall be
brought against the Company, any of its directors or officers, or any such
controlling Person based on the registration statement or prospectus, and
in respect of which indemnity may be sought against a Selling Stockholder
pursuant to this paragraph (c), the Selling Stockholder shall have the
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rights and duties given to the Company by paragraph (b) above (except that
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if the Company shall have assumed the defense thereof the Selling
Stockholder shall not be required to do so, but may employ separate counsel
therein and participate in the defense thereof, but the fees and expenses
of such counsel shall be at the expense of the Selling Stockholder), and
the Company, its directors and officers, and any such controlling Person
shall have the rights and duties given to the Selling Stockholders by
paragraph (b) above.
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(d) If the indemnification provided for in this Section 5 is
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unavailable (except if inapplicable according to its terms) to an
indemnified party under paragraphs (a) or (c) hereof in respect of any
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losses, claims, damages, liabilities or expenses referred to therein, then
an Indemnifying Party, in lieu of indemnifying such indemnified party,
shall contribute to the amount paid or payable by such indemnified party as
a result of such losses, claims, damages, liabilities or expenses (i) in
such proportion as is appropriate to reflect the relative benefits received
by the Company, on the one hand, and the Selling Stockholders, on the other
hand, from their sale of Registrable Securities (it being expressly
understood and agreed that the relative benefits received by the Company
from
SELLING STOCKHOLDERS AGREEMENT-Page 9
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the sale of the Registrable Securities shall be equal to the amount of net
proceeds initially received by USR from the sale of the Registrable
Securities to the Selling Stockholders), or (ii) if the allocation provided
by clause (i) above is not permitted by applicable law, in such proportion
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as is appropriate to reflect not only the relative benefits referred to in
clause (i) above but also the relative fault of the Company, on the one
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hand, and the Selling Stockholders, on the other hand, in connection with
the statements or omissions that resulted in such losses, claims, damages,
liabilities or expenses, as well as any other relevant equitable
considerations. The relative fault of the Company, on the one hand, and
that of the Selling Stockholders, on the other hand, shall be determined by
reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission or alleged omission to state a
material fact relates to information supplied by the Company, on the one
hand, or by the Selling Stockholders, on the other hand, and the parties'
relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission.
(e) The Company and the Selling Stockholders agree that it would not
be just and equitable if contribution pursuant to this Section 5 were
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determined by a pro rata allocation or by any other method of allocation
that does not take account of the equitable considerations referred to in
paragraph (d) above. The amount paid or payable by an indemnified party as
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a result of the losses, claims, damages, liabilities and expenses referred
to in paragraph (d) above shall be deemed to include, subject to the
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limitations set forth above, any legal or other expenses reasonably
incurred by such indemnified party in connection with investigating any
claim or defending any such action, suit or proceeding. Notwithstanding the
provisions of this Section 5, each Selling Stockholder shall not be
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required to contribute any amount in excess of the amount by which the net
proceeds received by him in connection with the sale of the Registrable
Securities exceeds the amount of any damages which the Selling Stockholders
has otherwise been required to pay by reason of such untrue or alleged
untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation.
(f) The indemnity and contribution agreements contained in this
Section 5 and the representations and warranties of the Company set forth
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in this Agreement shall remain operative and in full force and effect,
regardless of any investigation made by or on behalf of the Selling
Stockholders or the Company, its directors or officers or any Person
controlling the Company. A successor to a Selling Stockholder, or to the
Company, its directors or officers or any Person controlling the Company
shall be entitled to the benefits of the indemnity, contribution and
reimbursement agreements contained in this Section 5.
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(g) No Indemnifying Party shall, without the prior written consent of
the indemnified party, effect any settlement of any pending or threatened
action, suit or proceeding in respect of which any indemnified party is or
could have been a party and indemnity could have been sought hereunder by
such indemnified party, unless such settlement includes an unconditional
release of such indemnified party from all liability on claims that are the
subject matter of such action, suit or proceeding.
SELLING STOCKHOLDERS AGREEMENT-Page 10
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6. Miscellaneous.
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(a) Assignment. This Agreement may not be assigned by any of the
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parties hereto.
(b) Entire Agreement. This Agreement, including all exhibits and
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other instruments or documents referred to herein or delivered pursuant
hereto which form a part hereof, contains the entire understanding of the
parties hereto in respect of the subject matter contained herein. There
are no representations, warranties, promises, covenants or undertakings
other than those expressly set forth herein or therein. Except for the
Registration Rights Agreement and Escrow Agreement, this Agreement
supersedes all prior agreements, whether written or oral, between the
parties with respect to the subject matter hereof. This Agreement may be
amended only by a written agreement duly executed by the parties hereto.
Any condition to a particular party's obligations hereunder may be waived
in writing by such party.
(c) Headings. The headings contained in this Agreement have been
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inserted for convenience and reference purposes only and shall not affect
the meaning or interpretation hereof in any manner whatsoever.
(d) Invalidity. If any of the terms, provisions or conditions
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contained in this Agreement shall be declared to be invalid or void in any
judicial proceeding, this Agreement shall be honored and enforced to the
extent of its validity, and those provisions not declared invalid shall
remain in full force and effect.
(e) Remedies. In the event of a breach or threatened breach by either
--------
party of its obligations hereunder, each party acknowledges that the other
party will not have an adequate remedy at law and shall be entitled to such
equitable and injunctive relief as may be available to restrain the other
party from any violation of such obligations. Nothing herein shall be
construed as prohibiting either party from pursuing any other remedies
available for such breach or threatened breach, including the recovery of
damages.
(f) Disclosure. Any disclosure made in any exhibit hereto shall be
----------
deemed to be disclosure in all other applicable exhibits hereto.
(g) Notices. All notices, requests, demands and other communications
-------
required or permitted to be given hereunder shall be deemed given when
sent, postage paid, by Registered or Certified Mail, Return Receipt
Requested, addressed to each of the parties as follows:
SELLING STOCKHOLDERS AGREEMENT - Page 11
------------------------------
If to the Company: Xxxxxx X. Xxxxx
President
U.S. Home Systems, Inc.
000 Xxxxx Xxx. 000 Xxxxxx, Xxxxx 000
Xxxxxxxxxx, Xxxxx 00000
(000) 000-0000
If to a Selling Stockholder: At the address as set forth on Schedule A
----------
(h) Governing Law. This Agreement shall be governed by, construed and
-------------
enforced in accordance with the laws of the State of Texas.
(i) Counterparts. This Agreement may be executed in counterparts each
------------
of which shall be deemed an original and all of which together shall
constitute one and the same agreement.
(j) Exhibits. All exhibits referred to herein shall be attached
--------
hereto and shall be deemed to be a part hereof.
(k) Jurisdiction and Venue. Each of the parties hereto hereby
----------------------
consents to the jurisdiction and venue of the courts of the State of Texas
located in Dallas County, Texas and the United States District Court in and
for the Northern District of Texas with respect to any matter relating to
this Agreement and the performance of the parties' obligations hereunder
and each of the parties hereto hereby further consents to the personal
jurisdiction of such courts. Any action suit or proceeding brought by or
on behalf of either of such parties relating to such matters shall be
commenced, pursued, defended and resolved only in such courts and any
appropriate appellate court having jurisdiction to hear an appeal from any
judgment entered in such courts. The parties hereby agree that service of
process may be made in any manner permitted by the rules of such courts and
the laws of the State of Texas.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
U.S. HOME SYSTEMS, INC.
By: /s/ Xxxxxx X. Xxxxx
------------------------------
Xxxxxx X. Xxxxx, President
SELLING STOCKHOLDERS AGREEMENT - Page 12
------------------------------
SELLING STOCKHOLDERS:
ABOUT FACE LTD., a Texas Ltd.
Partnership GP About Face, Inc., a
Texas Corporation
Its General Partner
By: /s/ Xxxxxx X. Xxxxx
--------------------------------
Name: Xxxxxx X. Xxxxx
Its: President
/s/ Xxxx Xxxxxxx
-----------------------------------
XXXX XXXXXXX
/s/ Xxxxx -Xxxxx Xxxxxxxxxx
-----------------------------------
XXXXX-XXXXX XXXXXXXXXX
/s/ Xxxxx X. Xxxxxx
-----------------------------------
XXXXX X. XXXXXX
/s/ Xxxxxx X. XxXxxxxx
-----------------------------------
XXXXXX X. XXXXXXXX
/s/ Xxxxxx Xxxxxx
-----------------------------------
XXXXXX XXXXXX
/s/ Xxxxx Xxxxx
-----------------------------------
XXXXX XXXXX
GARDEN STATE EXTERIOR REMODELING,
INC.
By: /s/ Xxxxx Xxxxx
--------------------------------
Name: Xxxxx Xxxxx
Its: Chairman and Chief Executive
Officer
/s/ Xxxxxx Xxxxx
-----------------------------------
XXXXXX XXXXX
SELLING STOCKHOLDERS AGREEMENT - Page 13
------------------------------
GROSS FAMILY TRUST
By: /s/ Xxxxxx X. Xxxxx
--------------------------------
Name: Xxxxxx X. Xxxxx
Its: Co-Trustee
/s/ Xxxxxxx Xxxxxx
-----------------------------------
XXXXXXX XXXXXX
XXX XXXXXXXXXX TRUST
By: /s/ Xxxx Honisfeld
--------------------------------
Name: Xxxx Xxxxxxxxxx
Its: Trustee
AVI HONIGSFELD TRUST
By: /s/ Xxxx Honisfeld
--------------------------------
Name: Xxxx Xxxxxxxxxx
Its: Trustee
XXXXXX XXXXXXXXXX TRUST
By: /s/ Xxxx Honisfeld
--------------------------------
Name: Xxxx Xxxxxxxxxx
Its: Trustee
XXXX XXXXXXXXXX TRUST
By: /s/ Xxxx Honisfeld
--------------------------------
Name: Xxxx Xxxxxxxxxx
Its: Trustee
SELLING STOCKHOLDERS AGREEMENT - Page 14
------------------------------
XXXX XXXXXXXXXX REVOCABLE LIVING
TRUST
By: /s/ Xxxx Honisfeld
--------------------------------
Name: Xxxx Xxxxxxxxxx
Its: Trustee
/s/ Xxxx Xxxxxx
-----------------------------------
XXXX XXXXXX
/s/ Xxxxxxx X. Xxxxxxx
-----------------------------------
XXXXXXX X. XXXXXXX
XXXXXXX FAMILY TRUST
By: /s/ Xxxx X. Xxxxxxx
--------------------------------
Name: Xxxx X. Xxxxxxx
Its: Trustee
/s/ Xxxxx Xxxxxxxxx
-----------------------------------
XXXXX XXXXXXXXX
/s/ Xxxxx Xxxxxxxx
-----------------------------------
XXXXX XXXXXXXX
/s/ Xxxxxxx Xxxxxxxx
-----------------------------------
XXXXXXX XXXXXXXX
/s/ Xxxxx Xxxxxx
-----------------------------------
XXXXX XXXXXX
/s/ Xxxxxx X. Xxxxxx
-----------------------------------
XXXXXX X. XXXXXX
SELLING STOCKHOLDERS AGREEMENT - Page 15
------------------------------
XXXXX X. XXXX REVOCABLE TRUST
By: /s/ Xxxxx X. Xxxx
--------------------------------
Name: Xxxxx X. Xxxx
Its: Trustee
/s/ Xxxxx X. Xxxxxxx
-----------------------------------
XXXXX X. XXXXXXX
SELLING STOCKHOLDERS AGREEMENT - Page 16
------------------------------
SCHEDULE A
----------
U.S. HOME SYSTEMS, INC.
-----------------------
SELLING STOCKHOLDERS LIST
Percentage of Shares Escrowed Shares
of the Company's Included in
Registrable Common Stock Being Registrable
Name of Selling Stockholder Address of Selling Stockholder Securities Registered Securities
------------------------------ ------------------------------ ------------ -------------------- --------------
About Face Limited 000 Xxxxxxx Xxxxx 640,300 13.1% 64,030
Xxxxxxx, Xxxxx 00000
Xxxx Xxxxxxx 0000 XX 00xx Xxxxxx 68,776 1.4% 6,878
Xxxx Xxxxx, Xxxxxxx 00000
Xxxxx Xxxxx-Xxxxxxxxxx Seacoast East 182,054 3.7% 18,205
0000 Xxxxxxx Xxxxxx, Xxx. 000
Xxxxx Xxxxx, Xxxxxxx 00000
Xxxxx X. Xxxxxx 0000 Xxxxxx Xxxxx 266,041 5.4% 26,604
Xxxxx, Xxxxx 00000
Xxxxxx X. XxXxxxxx 0000 Xxxxxxx Xxxxxx Xxxxx 44,939 0.9% 4,494
Xxxxxxxxx, Xxxxx 00000
Xxxxx Xxxxxx 0000 X Xxxxxx Xxxxx Xxxx. 6,878 0.1% 688
Xxxxxx Xxxxx, Xxxxxxx 00000
Xxxxx X. Xxxxx 000 Xxxxxxxx Xxxxxxx 232,118 4.7% 23,212
Xxxxxxx, Xxx Xxxxxx 00000
Garden State Exterior 000 Xxxxxxxx Xxxxxxx 103,164 2.1% 10,316
Remodeling, Inc. Xxxxxxx, Xxx Xxxxxx 00000
Xxxxxx Xxxxx X. Xxxxx & Co. 90,143 1.8% 9,014
00 Xxxx 00xx, 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
SELLING STOCKHOLDERS AGREEMENT - Page 17
------------------------------
Percentage of Shares Escrowed Shares
of the Company's Included in
Registrable Common Stock Being Registrable
Name of Selling Stockholder Address of Selling Stockholder Securities Registered Securities
------------------------------ ------------------------------ ------------ -------------------- --------------
Gross Family Trust 00000 Xxxxxxxx Xxxxx 203,839 4.2% 20,384
Xxxx Xxxxx, Xxxxxxx 00000
Xxxxxxx Xxxxxx 00000 Xxxxxx Xxxx 77,130 1.6% 7,713
Xxx Xxxx, Xxxxxxxx 00000-0000
Xxxx Xxxxxxxxxx Revocable Trust 000 Xxxx Xxx Xxxxxx 279,149 5.7% 27,915
Xxxxxxxx, Xxx Xxxx 00000
Xxx Xxxxxxxxxx Trust 000 Xxxx Xxx Xxxxxx 30,342 0.6% 3,034
Xxxxxxxx, Xxx Xxxx 00000
Avi Honigsfeld Trust 000 Xxxx Xxx Xxxxxx 30,342 0.6% 3,034
Xxxxxxxx, Xxx Xxxx 00000
Xxxxxx Xxxxxxxxxx Trust 000 Xxxx Xxx Xxxxxx 30,342 0.6% 3,034
Xxxxxxxx, Xxx Xxxx 00000
Xxxx Xxxxxxxxxx Trust 000 Xxxx Xxx Xxxxxx 30,342 0.6% 3,034
Xxxxxxxx, Xxx Xxxx 00000
Xxxx Xxxxxx 0000 Xxxxxxxxx Xxxxx 6,878 0.1% 688
Xxxxxxxxxx, Xxxxx 00000
Xxxxxxx Family Trust 000 Xxx Xxxx Xxxxx Xxxx 257,909 5.3% 25,791
Xxxxxxxx, Xxx Xxxx 00000
Xxxxx Xxxxxxxxx 00 XX 0xx Xxxxxx 5,158 0.1% 516
Xxxx Xxxxx, Xxxxxxx 00000
Xxxxxxx X. Xxxxxxx 000 Xxx Xxxx Xxxxx Xxxx 232,118 4.7% 23,212
Xxxxxxxx, Xxx Xxxx 00000
Xxxxx Xxxxxxxx 000 Xxxxxxxx Xxxxxxx 206,327 4.2% 20,633
Xxxxxxx, Xxx Xxxxxx 00000
Xxxxxxx Xxxxxxxx 000 Xxxx Xxxxx 6,878 0.1% 688
Xxxxxxxxxx, Xxxxx 00000
SELLING STOCKHOLDERS AGREEMENT - Page 18
------------------------------
Percentage of Shares Escrowed Shares
of the Company's Included in
Registrable Common Stock Being Registrable
Name of Selling Stockholder Address of Selling Stockholder Securities Registered Securities
------------------------------ ------------------------------ ------------ -------------------- -------------
Xxxxx Xxxxxx 110 F3 Half Moon Bay 6,878 0.1% 688
Xxxxxxxx, Xxxxxxx 00000
Xxxxx X. Xxxx Revocable Trust 00000 Xxxx Xxxx Xxxxxx 309,491 6.3% 30,949
Xxxxxxx, Xxxxxxxx 00000
Xxxxxx X. Xxxxxx 00 Xxxxxxx Xxxxxx 698,097 14.2% 69,810
Xxxxxx, Xxxxx 00000
Xxxxx X. Xxxxxxx c/o Xxxxxx & Co. 25,000 0.5% -0-
000 Xxxxxxx Xxxxxx, Xxxxx Xxxxx
Xxxxxx Xxxx, Xxx Xxxx 00000
------------- -------------- -----------
TOTAL 4,070,633 82.8% 404,564
SELLING STOCKHOLDERS AGREEMENT - Page 19
------------------------------
