EXHIBIT (d)
STOCK CROSS-PURCHASE AGREEMENT
OF
THE ROTTLUND COMPANY, INC.
THIS STOCK CROSS-PURCHASE AGREEMENT ("Agreement"), made effective as of
the 29th day of October, 1992, by and among and the following shareholders
(collectively "Shareholders" and individually "Shareholder") of The Rottlund
Company, Inc., a Minnesota corporation ("Company"):
BR FAMILY GROUP. The following Shareholders shall be
collectively referred to as the "BR Family Group":
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇;
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇;
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇;
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇; and
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ as Custodian for ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇.
DR FAMILY GROUP. The following Shareholders shall be
collectively referred to as the "DR Family Group":
▇▇▇▇▇ ▇. ▇▇▇▇▇▇;
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇;
▇▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇▇▇; and
▇▇▇▇▇ ▇. ▇▇▇▇▇▇ as Custodian for ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇.
RECITALS
1. The Shareholders contemplate that the Company will be filing a
registration statement pursuant to the Securities Act of 1933, as amended,
covering its common stock and that, thereafter, it will become publicly-held
("Public Offering").
2. The Shareholders will continue to own a significant portion of the
Company's common stock after the Public Offering.
3. For their mutual interests, the Shareholders desire to provide for:
(i) the continuity of their ownership and control of the Shares, (ii) continuity
of management of the Company, (iii) the
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prevention of sudden shifts of ownership and control of the Shares to third
persons by imposing certain restrictions and obligations upon themselves with
regard to the ownership and Transfer of Shares, and (iv) options to purchase
Transfer Shares.
4. For their mutual interests, the Shareholders also desire to provide
for certain rights and restrictions regarding the voting of the Shares.
NOW, THEREFORE, in consideration of the premises and of the agreements
and undertakings hereinafter set forth, it is agreed as follows:
1. ORGANIZATIONAL INFORMATION. The following information regarding the
current ownership of the Shares, interpretations and definitions shall apply to
the construction of this Agreement:
1.1 CURRENT OWNERSHIP OF SHARES. The Shareholders currently
own those issued and outstanding shares of capital stock of the Company
described on Schedule A (the "Shares"). The Shareholders hereby
authorize the Controlling Shareholders, or either of them, to make or
cause changes to be made to Schedule A to reflect future changes in the
ownership of Shares, copies of which shall be filed with the Company
and provided from time to time to the Shareholders to be annexed
hereto.
1.2 INTERPRETATION.
(a) The term "person" as used herein shall include
any individual, partnership, corporation, trust, organization,
or other entity, unless the context requires otherwise.
(b) Unless stated otherwise, all references herein to
Sections refer to the Sections of this Agreement. All
references herein to Exhibits and Schedules refer to Exhibits
and Schedules that are attached hereto and are incorporated
herein by reference. All Section headings are for reference
purposes only and shall not affect the interpretation of this
Agreement.
(c) All references in this Agreement to one gender
shall include all genders; any reference to the singular shall
include the plural, where appropriate, and vice-versa.
1.3 DEFINED TERMS. In addition to the abbreviations and terms
otherwise defined in the text of this Agreement, the following terms
used herein shall have the meanings set forth below.
"ACT" The term "Act" means the Securities Act of 1933, as
amended.
"BR FAMILY GROUP" The term "BR Family Group" means the family
members of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ described in the Recitals and who own the
Shares listed on Schedule A.
"CODE" The term "Code" means the Internal Revenue Code of
1986, as amended.
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"COMPANY" The term "Company" means The Rottlund Company, Inc.,
a Minnesota corporation.
"CONTROLLING SHAREHOLDER" The term "Controlling Shareholder"
means either ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ or ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ who own the
controlling interests in the Company and in certain cases, may be
deemed to control the Shares owned by other persons in their respective
Family Groups.
"DR FAMILY GROUP" The term "DR Family Group" means the family
members of ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ described in the Recitals and who own the
Shares listed on Schedule A.
"EXCHANGE ACT" refers to the Securities Exchange Act of 1934,
as amended.
"FAMILY MEMBER SHAREHOLDERS" The term "Family Member
Shareholders" means the members of the Family Group referred to,
excluding the Controlling Shareholder of the same Family Group.
"INVOLUNTARY TRANSFER" The term "involuntary transfer" means
any transfer or disposition of Shares under judicial order, legal
process, execution, attachment or the enforcement of a pledge, trust or
other security interest, excluding, however, transfers to a guardian or
personal representative of a Shareholder due to the disability or death
of a Shareholder.
"MARKET PRICE" The term "Market Price" of a share when made in
reference to Transfer Shares of a Controlling Shareholder shall mean
the average bid price of shares of capital stock of the Company of the
same class as the Transfers Shares being traded on a public market for
the preceding 30 day period ending on the date of the event which gave
rise to the Option or purchase right under this Agreement, determined
by dividing the aggregate "bid" price of the Company's publicly traded
shares of capital stock for said preceding 30 day period by the number
of trading days for which bid prices were recorded. The Market Price of
Shares owned by a Selling Shareholder (as hereinafter defined) other
than a Controlling Shareholder, shall be the low bid price for such
Shares as reported by the public market for the Shares, on the day
notice is first given to a Controlling Shareholder; or if there is no
low bid price reported, the last sale price so reported.
"PRIVATE SALE" The term "Private Sale" means Transfer Shares
intended to be sold by a Shareholder to specified persons in a private
transaction rather than on a public market.
"PUBLIC SALE" The term "Public Sale" means Transfer Shares
intended to be sold by a Shareholder on a public market.
"REPRESENTATIVE" The term "Representative" means the personal
representative or personal representatives of the estate of a deceased
Shareholder.
"SELLING SHAREHOLDER" The term "Selling Shareholder" means the
Shareholder (including a Controlling Shareholder) whose Shares are to
be, or are intended to be, Transferred and, therefore, made subject to
Options and other purchase rights of other Shareholders in accordance
with this Agreement; and also includes the personal representative,
successor in interest, trustee, or receiver who is entitled to receive
the proceeds of sale in the event of the death or bankruptcy of a
Shareholder.
"SHARES" The term "Shares" means all of the capital stock of
the Company owned by the Shareholders and subject to this Agreement,
including, without limitation, (i) Shares and interests
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in Shares held in trust for the benefit of a Shareholder, (ii) all
future or additional shares of capital stock of the Company which may
hereafter be acquired by existing Shareholders by gift, inheritance,
purchase, transfer, exchange or otherwise and (iii) all future or
additional shares of capital stock of the Company which may hereafter
be issued, substituted or exchanged by the Company with regard to the
Shares through a stock dividend, stock split, merger or otherwise.
"TRANSFER" The term "Transfer" means any sale, exchange,
transfer, assignment, gift, bequest, pledge, mortgage, hypothecation,
granting of a security interest or other alienation or disposition
whatsoever of any Shares or any interest therein, whether voluntary or
involuntary, including any distribution by a Representative or trustee.
A Transfer shall also be deemed to occur if a Shareholder enters into
an agreement to sell his or her Shares.
"TRANSFER SHARES" The term "Transfer Shares" means all of the
Shares and interests therein, including without limitation options and
warrants, which are proposed or obligated to be Transferred by a
Selling Shareholder and are subject to the other Shareholders' Options
and other purchase rights set forth in this Agreement.
"TRUST AGREEMENT" The term "Trust Agreement" refers to that
collateral agreement entered into by and among the Shareholders and the
Trustee to administer Secured Shares and the insurance funding of the
option and purchase rights set forth herein, as described in Section
10.
"TRUSTEE" The term "Trustee" refers to the trustee
administering the Trust Agreement.
2. OVERALL TRANSFER RESTRICTIONS. Except as otherwise provided in this
Agreement or in Section 2.1, no Shareholder shall Transfer any Shares, whether
voluntarily or involuntarily, without the written unanimous consent of the
Controlling Shareholders. Any Transfer of Shares attempted in contravention of
this Agreement shall be null and void and without legal effect.
2.1 PERMITTED TRANSFERS. Notwithstanding the overall Transfer
restrictions set forth in Section 2 or in other provisions of this
Agreement, Transfers of Shares shall be permitted, in the following
instances:
(a) the Transfer by a Shareholder of all or part of
his Shares to another Shareholder who is a party to this
Agreement;
(b) the Transfer by a Shareholder of all or part of
his Shares by gift or by sale to any member of such
Shareholder's immediate family (spouse, parent, child or
sibling);
(c) the Transfer by a Shareholder of his Shares to a
revocable living trust created by the Shareholder of which he
is the primary beneficiary during his lifetime; or
(d) the Transfer by a Shareholder by a sale in a
Public Sale of Ten Thousand (10,000) or fewer Shares during
any twelve (12) month period.
2.2 CONTINUING EFFECT OF AGREEMENT ON PERMITTED TRANSFERS. As
a condition to each Permitted Transfer, other than a Transfer pursuant
to Section 2.1(d), the transferees shall (i) execute the Consent set
forth on Schedule B and (ii) hold such Shares subject to, and be bound
by, the terms of this Agreement. In the case of the Transfer of Shares
to a Shareholder's spouse or a revocable living trust, the spouse or
trustee of such trust shall be deemed to hold such Transfer Shares on
behalf of the Shareholder who effected the transfer ("Transferring
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Shareholder"), and such Transfer Shares shall be committed to sale in
accordance with, and otherwise subject to, the terms of this Agreement
upon the occurrence of an event which would permit or require the
purchase of the Shares of the Transferring Shareholder under the
provisions of this Agreement; it being intended that such spouse or
trustee shall be substituted hereunder for the Transferring Shareholder
or the legal representative of his estate, as the case may be, insofar
as the Transferring Shareholder has either the obligation to sell his
Shares or the right to purchase another Shareholder's Shares.
2.3 Notwithstanding anything contained in this Agreement to
the contrary, no Shareholder shall be permitted to Transfer his Shares
in a manner that would violate the "short-swing" profit provisions of
Section 16(b) of the Exchange Act and any such Transfer shall be deemed
null and void and without legal effect.
3. RIGHTS OF FIRST REFUSAL ON LIFETIME TRANSFERS. Subject to any
permitted Transfers in accordance with Sections 2.1 and 2.2, any Shareholder
(the "Selling Shareholder") intending to Transfer any interest in a portion or
all of his Shares ("Transfer Shares") shall first offer (the "Offer") such
Transfer Shares to one or both of the Controlling Shareholders as described in
this Section 3.
3.1 SHARES OF CONTROLLING SHAREHOLDER. In the event a
Controlling Shareholder intends to Transfer any of his Shares, he must
first notify and make an Offer to sell such Shares to the other
Controlling Shareholder in accordance with this Section 3.1. The Offer
shall be in writing and describe (i) the number of Transfer Shares
being offered for Transfer, (ii) the Selling Shareholder's address to
which notice of acceptance of the Offer by the other Controlling
Shareholder is to be sent, (iii) whether the Transfer Shares are to be
sold on the open market ("Public Sale") or in a private transaction
("Private Sale"), and (iv) if a Private Sale, the identity of the
person or persons to whom the Transfer is intended to be made (the
"Transferee") and the bona fide purchase price and terms of payment for
the Transfer Shares offered by the Transferee ("Transferee Offer").
(a) ACCEPTANCE OF OFFER BY THE OTHER CONTROLLING
SHAREHOLDER. Within 60 days after the date of the Selling
Shareholder's Offer and notice of intent to sell Shares in a
Public Sale or a Private Sale, the other Controlling
Shareholder, at his option, may elect to purchase all or any
part of the Transfer Shares at the purchase price and on the
terms of sale determined in accordance with Sections 6 and 7,
respectively. An election to purchase all or part of the
Transfer Shares shall be in writing delivered to the Selling
Shareholder as provided in Section 12.5 and in a form similar
to Exhibit A. The other Controlling Shareholder may also waive
his rights to the 60 day notice period by delivering an
acknowledgment of such waiver in the form attached as Exhibit
B.
(b) UNPURCHASED TRANSFER SHARES. In the event the
other Controlling Shareholder does not elect to purchase all
or part of the Transfer Shares pursuant to his rights of first
refusal in this Section 3.1, then the Selling Shareholder
shall have the right to Transfer the unpurchased Transfer
Shares in accordance with Section 3.4.
3.2 SHARES OF FAMILY MEMBER SHAREHOLDER. In the event any
Family Member Shareholder, other than a Controlling Shareholder,
intends to Transfer any of his Shares, such Selling Shareholder,
subject to the provisions of Section 2.1, must first, make an Offer to
sell such Transfer Shares to the Controlling Shareholder of his Family
Group and, secondly, make an Offer to sell such Transfer Shares to the
Controlling Shareholder of the other Family Group. The Offer shall be
in writing and describe (i) the number of Transfer Shares being offered
for Transfer, (ii) the Selling Shareholder's address to which notice of
acceptance of the Offer by
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either of the Controlling Shareholders is to be sent, (iii) whether the
Transfer Shares are to be sold in a Public Sale or a Private Sale, and
(iv) if a Private Sale, the identity of the person or persons to whom
the Transfer is intended to be made (the "Transferee") and the bona
fide purchase price and terms of payment for the Transfer Shares
offered by the Transferee ("Transferee Offer").
(a) ACCEPTANCE OF OFFER BY CONTROLLING SHAREHOLDER OF
SELLING SHAREHOLDER'S FAMILY GROUP. Within 5 days after the
date of receipt of the Selling Shareholder's Offer, the
Controlling Shareholder of the Selling Shareholder's Family
Group, at his option, may elect to purchase all or any part of
the Transfer Shares at the purchase price and on the terms of
sale determined in accordance with Sections 6 and 7,
respectively. The election to purchase all or part of the
Transfer Shares shall be given in writing to the Selling
Shareholder and to the Controlling Shareholder of the other
Family Group and shall specify the number of Transfer Shares
being purchased in the Form attached as Exhibit A.
(b) ACCEPTANCE OF OFFER BY CONTROLLING SHAREHOLDER OF
OTHER FAMILY GROUP. Within 10 days after the date of the
Selling Shareholder's Offer, the Controlling Shareholder of
the other Family Group, at his option, may elect to purchase
all or any part of the Transfer Shares remaining unpurchased
by the Controlling Shareholder of the Selling Shareholder's
Family Group at the price and on the terms of sale determined
in accordance with Sections 6 and 7, respectively. The
election to purchase all or part of the Transfer Shares shall
be given in writing to the Selling Shareholder and to the
Controlling Shareholder of the Selling Shareholder's Family
Group and shall specify the number of Transfer Shares being
purchased in the Form attached as Exhibit A.
(c) UNPURCHASED TRANSFER SHARES. In the event the
Controlling Shareholders do not elect to purchase all or part
of the Transfer Shares pursuant to their respective rights of
first refusal in this Section 3.2, then the Selling
Shareholder shall have the right to Transfer the unpurchased
Transfer Shares in accordance with Section 3.4.
3.3 CLOSING. The closing of the purchase of the Transfer
Shares by the purchasing Controlling Shareholder shall take place at
the Company's principal office 60 days after the date on which the
Offer is accepted.
(a) DELIVERY OF DOCUMENTS. At the closing, the
Selling Shareholder shall deliver to the purchasing
Controlling Shareholder certificates, duly endorsed for
transfer and in good delivery form, representing all Transfer
Shares sold and all other documents necessary or appropriate
to transfer the Transfer Shares and to vest in the purchasing
Controlling Shareholder good and marketable title thereto,
free of security interests, claims and equities, except those
provided in Section 7.7.
(b) FAILURE OF TRANSFEREE TO CLOSE. In the event a
Controlling Shareholder who exercised his rights under this
Section 3 to purchase Transfer Shares from a Selling
Shareholder is subsequently either unwilling or unable to
close on the purchase of such Transfer Shares within the 60
day period provided in this Subsection 3.3, the Selling
Shareholder shall thereafter have the absolute right to
Transfer such Transfer Shares to any third party at any time
thereafter free of the restrictions set forth in this
Agreement; provided, however, that in the event the Selling
Shareholder is a Controlling Shareholder, then such
Controlling Shareholder shall have the absolute right to sell
any or all of his Shares (as opposed to just the Transfer
Shares) to any third party at any time thereafter, free of the
restrictions set forth in this Agreement.
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3.4 TRANSFER OF UNPURCHASED TRANSFER SHARES TO TRANSFEREE. In
the event the Controlling Shareholders do not elect to purchase all of
the Transfer Shares in accordance with either Section 3.1 or 3.2, the
Selling Shareholder may Transfer all of the unpurchased Transfer Shares
at any time during a 60 day period following the expiration of the
offering periods set forth in Section 3.1 or 3.2, whichever is
applicable. In the event the Offer pertained to a Private Sale to one
or more designated Transferees, then the Transfers permitted under this
Section 3.4 shall be (i) made only to the Transferee(s) previously
disclosed in the Transferee Offer, (ii) made only on the same terms set
forth in the Transferee Offer and (iii) made subject to all applicable
state and federal securities laws. Any other Family Member Shareholder
acting as the designated Transferee of the Transfer Shares shall
immediately become bound by the terms of this Agreement. Failure or
refusal of a Family Member Shareholder to sign this Agreement shall not
relieve him from any obligations under this Agreement. In the event the
Transfer Shares are not Transferred within the above 60 day period,
such Transfer Shares must be re-offered to the Controlling Shareholders
in accordance with the terms of this Section 3 before being eligible
again for Transfer.
3.5 EXTENSION DUE TO EXCHANGE ACT. Notwithstanding any
provision contained in this Agreement to the contrary, if the exercise
of an option by a Controlling Shareholder to purchase Transfer Shares
would, if exercised within the time period specified by this Agreement,
result in a "short-swing profit" liability as provided in Section 16(b)
of the Exchange Act, such time period shall be extended to a day
following a prior sale of the Company's shares by such Controlling
Shareholder which would avoid such liability. The extension provided
for under this Section 3.5 shall only apply with regard to such
Controlling Shareholder's prior sales occurring before its option arose
under this Agreement, and shall in no event be longer than seven months
following the date of death of a Controlling Shareholder from whose
estate the Shares are to be purchased.
3.6 TRANSFER PURSUANT REORGANIZATION AND DISSOLUTION
TRANSACTIONS. Notwithstanding any provision contained in this
Agreement, no Transfer shall be deemed to occur if such Transfer
results from, or occurs pursuant to, any of the following transactions:
(i) a merger or exchange involving the Company or the shareholders
pursuant to Minnesota Business Corporation Act Sections 302A.601 to
302A.661, (ii) a transfer of all or substantially all of the assets of
the Company for cash or securities, or (iii) a dissolution of the
Company, provided that the transactions described in clauses (i)
through (iii) are approved by the holders of a majority of the voting
power of shares entitled to vote.
4. OPTION TO PURCHASE SHARES UPON CERTAIN EVENTS OF SALE. Subject to
Section 3.5, upon the occurrence of the events described in this Section 4
("Events of Sale"), the Controlling Shareholders shall have an option to
purchase all of the Shares ("Transfer Shares") owned by a Shareholder to whom
the Event of Sale applies ("Selling Shareholder"). In the event the Selling
Shareholder is a Controlling Shareholder, the other Controlling Shareholder
shall have the right to purchase the Transfer Shares in accordance with Section
3.1 as if the Selling Shareholder were intending to sell all of his Shares
subject to purchase price and payment terms determined in accordance with
Sections 6 and 7, respectively. In the event the Selling Shareholder is a Family
Member Shareholder, the Controlling Shareholders shall have the respective
rights to purchase the Transfer Shares in accordance with Section 3.2 as if the
Selling Shareholder were intending to sell all of his Shares subject to the
purchase price and payment terms determined in accordance with Sections 6 and 7,
respectively.
4.1 JUDGMENT AGAINST, OR BANKRUPTCY OF SHAREHOLDER. A
Shareholder shall be deemed to have made an Offer to sell all of his
Shares upon the date on which a judgment for a monetary amount having a
material adverse effect upon such Shareholder's net worth, or a
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voluntary or involuntary petition by or against Shareholder is filed
under federal bankrupt laws or any state laws providing relief from
creditors, or an order of a court is entered for the appointment of a
receiver for a Shareholder, and the same shall not have been dismissed
or discharged within 60 days.
4.2 DIVORCE OF SHAREHOLDER. In the event of the divorce or
legal separation of a Shareholder ("Selling Shareholder") from his or
her spouse whereby such Selling Shareholder is required by judicial
decree, separate maintenance agreement, settlement agreement or
otherwise to Transfer all or part of his Shares to his spouse
("Transfer Shares"), then in order to prevent a Transfer or partition
of such Transfer Shares or any interest therein, the Selling
Shareholder shall be deemed to have made an Offer to sell such Transfer
Shares in accordance with the provisions of Section 3.
(a) DIVORCED CONTROLLING SHAREHOLDER. In the event
the Selling Shareholder is a Controlling Shareholder, the
Selling Shareholder shall have the first option to purchase
the Transfer Shares which otherwise would be transferred or
encumbered to or for the benefit of his spouse, and the other
Controlling Shareholder shall have a second subsequent option
to purchase such Transfer Shares. The successive options to
purchase the Transfer Shares shall operate in the same manner
as provided in Section 3.2, except that each Controlling
Shareholder shall have a period of 30 days to determine
whether he will exercise his rights to purchase the Transfer
Shares.
(b) DIVORCED FAMILY MEMBER SHAREHOLDER. In the event
the Selling Shareholder is a Family Member Shareholder, other
than a Controlling Shareholder, such Family Member
Shareholder's Transfer Shares shall be offered to the
Controlling Shareholders in accordance with Section 3.2, as if
such Selling Shareholder had intended to Transfer the Transfer
Shares to a third party.
5. DEATH OF A SHAREHOLDER. Upon the death of a Shareholder ("Selling
Shareholder") all of the Shares owned by the Selling Shareholder shall be
subject to the terms of this Section 5. The Shares of a Controlling Shareholder
and a Family Member Shareholder shall be subject to Sections 5.1 and 5.2,
respectively.
5.1 DEATH OF CONTROLLING SHAREHOLDER. Effective as of the date
of the appointment or confirmation of the Representative of a deceased
Controlling Shareholder, such Representative shall offer to sell to the
surviving Controlling Shareholder an option (the "Option") up to eighty
percent (80%) of the Shares of the deceased Controlling Shareholder.
Within thirty (30) days after such appointment or confirmation, the
Representative shall notify the surviving Controlling Shareholder in
writing of the number of Shares ("Transfer Shares") which the estate of
the deceased Controlling Shareholder agrees to offer to sell to the
surviving Controlling Shareholder. The number of Transfer Shares
subject to the Option shall be equal to up to eighty percent (80%) of
all of the Shares owned by the deceased Controlling Shareholder at the
date of his death. If the Representative fails to give such notice
within such time period, the estate of the deceased Controlling
Shareholder shall be deemed to have elected to sell all of the Shares
owned by the deceased Controlling Shareholder at the date of his death.
The Option shall have the following terms:
(a) OPTION PRICE. The purchase price of the Option
("Option Price") which shall be paid by the surviving
Controlling Shareholder shall be equal to the GREATER of (i)
ten percent (10%) of the Exercise Price for all of the
Transfer Shares (as determined below) or (ii) the amount of
insurance proceeds received by the Trustee as a result of the
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deceased Controlling Shareholder's death. Subject to Section
3.5, the surviving Controlling Shareholder shall have 60 days
after receipt of the notice provided in Section 5.1 of this
Agreement, to exercise his right to purchase the Option;
provided, however, that the surviving Controlling Shareholder
shall be deemed to have automatically exercised his right to
purchase the Option to the extent of any insurance proceeds
received by him or the Trustee on his behalf in accordance
with this Agreement and as a result of the Selling
Shareholder's death. In the event the surviving Controlling
Shareholder purchases the Option and exercises his rights
thereunder to purchase the Transfer Shares, the Option Price
shall be applied as part or all of the required down payment
of the Exercise Price of the Transfer Shares. In the event the
surviving Controlling Shareholder does not purchase the Option
in accordance with this Section 5.1, any Option Price paid
shall be forfeited and promptly distributed by the Trustee to
the Representative of the deceased Selling Shareholder.
(b) OPTION TERM. Subject to Section 3.5, the
surviving Controlling Shareholder shall have sixty (60) days
("Option Term") to exercise his Option commencing with the
date upon which he exercises or is deemed to have exercised
his right to purchase the Option. If exercised, the surviving
Controlling Shareholder shall purchase all, but not less than
all, of the Shares subject to the Option. If the surviving
Controlling Shareholder fails to exercise the Option, any or
all of the shares of the estate of the deceased Controlling
Shareholder may be transferred free of the conditions of this
Agreement.
(c) EXERCISE PRICE. The purchase price of each of the
Transfer Shares ("Exercise Price") shall be determined in
accordance with Section 6.
(d) EXERCISE INSTRUCTIONS. The surviving Controlling
Shareholder's notice of exercise of the Option shall be in
writing in a form similar to Exhibit A, and specify the date,
time and place of closing, which shall be in Hennepin County,
Minnesota. The surviving Controlling Shareholder may also
waive his rights to purchase or exercise his Option by a
written notice in a form similar to Exhibit B.
(e) PAYMENT TERMS. The payment terms for Transfer
Shares purchased upon exercise of the Option granted upon the
death of a Controlling Shareholder shall be in accordance with
Section 7.
5.2 OFFER OF DECEASED FAMILY MEMBER SHAREHOLDER'S SHARES. All
of the Shares of a deceased Family Member Shareholder ("Selling
Shareholder") shall be offered to the Controlling Shareholder of the
deceased family member's family group specified in the initial
paragraph of this Agreement, on the same terms and conditions as set
forth in Section 3.2 as if the Selling Shareholder were intending to
sell his Shares during lifetime at a purchase price and on terms
determined in accordance with Sections 6 and 7.
6. PURCHASE PRICE OF TRANSFER SHARES. The purchase price of Transfer
Shares purchased in accordance with the terms of this Agreement shall be
determined as follows:
6.1 LIFETIME TRANSFERS. The purchase price of Transfer Shares
subject to a lifetime Transfer shall be determined as follows:
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(a) PUBLIC SALE OF SHARES. In the event the Transfer
Shares will be sold at a Public Sale if not purchased in
accordance with this Agreement, the purchase price of such
Transfer Shares shall be equal to their Market Price.
(b) PRIVATE SALE OF SHARES. In the event the Transfer
Shares will be sold at a Private Sale to a designated
Transferee if not purchased in accordance with this Agreement,
the purchase price for such Transfer Shares shall be equal to
the LESSER of (i) their Market Price or (ii) the price
specified in the Transferee Offer.
6.2 DECEASED SHAREHOLDER'S SHARES. The purchase price of the
Transfer Shares of a deceased Shareholder shall be equal to their
Market Price.
7. PAYMENT TERMS FOR TRANSFER SHARES. The purchase price for Transfer
Shares purchased in accordance with this Agreement shall be paid in accordance
with the following provisions and any deferred installments shall be evidenced
by nonrecourse promissory notes ("Notes") executed by the purchasing
Shareholders in the form attached as Exhibit C.
7.1 PAYMENT TERMS FOR LIFETIME TRANSFERS OF CONTROLLING
SHAREHOLDERS. The purchase price for Transfer Shares offered with
regard to a lifetime Transfer by a Controlling Shareholder in
accordance with Section 3 or upon the "Events of Sale" in Section 4
shall be payable by a down payment equal to ten percent (10%) of the
total purchase price, and the balance shall be paid in seven (7) equal
annual installments of principal due and payable on each succeeding
anniversary date of the closing date.
7.2 PAYMENT TERMS FOR TRANSFER SHARES OF DECEASED CONTROLLING
SHAREHOLDER. The down payment of the Exercise Price of the Transfer
Shares of a deceased Controlling Shareholder shall be equal to the
GREATER of (i) ten percent (10%) of the total purchase price or (ii)
the Option Price (life insurance proceeds) previously paid to purchase
the Option. The balance of the purchase price shall be evidenced by a
non-recourse promissory note payable in ten (10) equal annual
installments of principal due and payable on each succeeding
anniversary date of the closing date.
7.3 PAYMENT TERMS FOR TRANSFER SHARES OF FAMILY MEMBER
SHAREHOLDER DURING LIFE OR AT DEATH. The payment terms for the Transfer
Shares of a Family Member Shareholder, other than a spouse of a
Controlling Shareholder, offered during lifetime or upon death shall be
payable by a down payment equal to twenty-five percent (25%) of the
total purchase price, and the balance shall be paid in three (3) equal
annual installments of principal due and payable on each succeeding
anniversary date of the closing date. The payment terms for a Family
Member Shareholder who is the spouse of a Controlling Shareholder or
the surviving spouse of a deceased Controlling Shareholder shall be the
payment terms specified in Sections 7.1 and 7.2.
7.4 INTEREST. Interest shall be charged on the unpaid
principal balance of each Note at an annual interest rate equal to the
GREATER of (i) the Applicable Federal Rate ("AFR") published under the
Treasury Regulations for Section 1274 of the Code for the month during
which the closing occurs or (ii) any other rate required to be charged
in order to avoid imputation of interest under the Code; provided,
however, that the rate charged from time to time shall not exceed the
highest rate permitted under applicable usury laws. The interest rate
shall be amended each subsequent year on the anniversary date of the
Note to represent the current AFR effective for that month. Interest
shall accrue and become due and payable annually at the same time the
installments of principal are due and payable. All payments shall be
applied first against accrued interest and the balance against the
unpaid principal balance.
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7.5 PREPAYMENT. Each Note shall provide that its maker has the
option of prepayment in whole or in part at any time without penalty.
7.6 DEFAULT; NONRECOURSE. In the event of default under the
Note, the holder of the Note shall have the rights and remedies
provided therein.
7.7 SECURITY. Each Note shall be secured by the pledge to the
Trustee, for the benefit of the purchasing Shareholder, of all of the
Transfer Shares being purchased plus, in the case of a purchase from a
Controlling Shareholder, an additional number of the purchasing
Shareholder's Shares, if owned and available, equal to fifty percent
(50%) of the Transfer Shares (collectively the "Secured Shares"), in
the form of the security agreement attached as Exhibit D ("Security
Agreement"), and providing for the following terms:
(a) TRUST AGREEMENT. The Trustee shall hold and
maintain the Secured Shares in accordance with the terms of
the Security Agreement. In the event no Trustee is acting at
the time, the Selling Shareholder shall hold and maintain the
Secured Shares in accordance with the terms of the Security
Agreement.
(b) VOTING RIGHTS. Unless in default, the purchasing
Shareholder shall have all rights to vote the Secured Shares.
(c) DIVIDENDS. Subject to the purchasing
Shareholder's default, all dividends paid on behalf of the
Secured Shares shall be paid to and accumulated by the Trustee
for the benefit of the purchasing Shareholder; provided,
however, that an amount equal to purchasing Shareholder's
combined federal and state income tax liability on such
dividends shall be distributed currently to him. The then
current highest federal and state income tax rates shall be
used for purposes of determining the purchasing Shareholder's
combined federal and state income tax liability.
(d) EXTRA-ORDINARY DIVIDENDS. The proceeds
representing any extraordinary dividends made on behalf of the
Secured Shares shall be treated as a prepayment on the Note
and distributed by the Trustee to the Selling Shareholder. For
purposes of this Section 7.7(d), extra-ordinary dividends
shall include, without limitation, distributions made on
behalf of the Secured Shares resulting from any restructuring
of the Company's equity and debt.
(e) RELEASE OF SECURED SHARES. Upon payment of each
installment of the purchase price due under the Note
(excluding the down payment of the purchase price), the
Trustee shall release and deliver to the purchasing
Shareholder stock certificates representing a number of
Secured Shares equal in proportion to that portion of the
total purchase price represented by such installment payment.
An illustration of how Secured Shares are to be released is
set forth on Schedule C.
8. CONTROLLING SHAREHOLDER NONCOMPETE AND CONFIDENTIALITY COVENANTS.
8.1 NON-COMPETITION. Each Controlling Shareholder agrees that
he will not, directly or indirectly, as an owner, partner, joint
venturer, subcontractor, director, shareholder, employee, agent,
representative or consultant, individually or collectively in
conjunction with others, so long as he is employed by the Company, and
for a period of three (3) years from the date of the termination of
such employment for whatever reason ("3-Year Period") engage in
activities that compete with the Company in the states of the United
States where the Company conducts
11
business or has plans to conduct business at a future date. An activity
shall be considered competitive with the Company, if said activity
directly or indirectly competes with the business of the Company as it
is conducted during the term of this Agreement and shall include
bidding on similar types of projects. As of the date of this Agreement,
this prohibition from competing shall extend to the states of Florida,
Minnesota, Wisconsin, Illinois, Iowa, North Dakota and South Dakota.
Each Controlling Shareholder further agrees that during the
course of his employment with the Company, and for the 3-Year Period he
will not cause or attempt to cause any existing or prospective
customer, client or account to divert, terminate, limit or in any
manner modify or fail to enter into any actual or potential business
relationship with the Company.
Each Controlling Shareholder further agrees that during the
course of his employment with the Company and for the 3-Year Period he
will not directly or indirectly employ or conspire with others to
employ any of the Company's salaried or hourly employees that have been
employed by the Company. The term "employ" for purposes of this
paragraph means to enter into an arrangement for services as a
full-time or part-time employee, independent contractor, agent or
otherwise.
Each Controlling Shareholder shall inform any new employer or
other person or entity with whom Shareholder enters a business
relationship during the 3-Year Period, before accepting employment or
entering the business relationship, of the existence of this Agreement
and give such employer, person or other entity a copy of this Section
8.1.
8.2 CONFIDENTIAL INFORMATION/TRADE SECRETS. Each Controlling
Shareholder acknowledges that during the course of his ownership of
Shares and employment with the Company, he may receive or otherwise
have access to, or contribute to the production of Confidential
Information or Trade Secrets. Confidential Information and Trade
Secrets means information that derives independent economic value,
actual or potential, from not being generally known to, and not being
readily ascertainable by proper means by, other persons who can obtain
economic value from its disclosure or use, and is the subject of
efforts that are reasonable under the circumstances to maintain its
secrecy; or information that is proprietary to or in the unique
knowledge of the Company (including information discovered or developed
in whole or in part by a Controlling Shareholder).
Each Controlling Shareholder acknowledges and appreciates the
importance to the company, of protecting its Confidential Information
and Trade Secrets and accordingly agrees that, except to the extent
required by a Controlling Shareholder's duties to the Company, each
Controlling Shareholder shall never, either during employment with the
Company, or at any time thereafter, use or disclose any Confidential
Information or Trade Secrets of the Company, or otherwise use such
information to his own benefit. Each Controlling Shareholder further
agrees that upon termination of his employment with the Company, he
shall leave with or return to the Company, all of its property,
including everything that contains any Confidential Information or
Trade Secrets of the Company.
8.3 REMEDIES FOR BREACH. In the event of a breach of any
covenant set forth in this Section 8 by any Controlling Shareholder
resulting in damages to the Company, or the other parties, the
non-breaching Shareholders or the Company may recover from the
breaching Controlling Shareholder any and all damages that may be
sustained.
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8.4 SURVIVAL OF COVENANTS. Each covenant and agreement herein
on the part of a Controlling Shareholder shall be construed as an
agreement independent of any other provision of this Agreement, and the
existence of any claim or cause of action of a Controlling Shareholder,
against the Company or any other Shareholder, whether predicated on
this Agreement or otherwise, shall not constitute a defense to the
enforcement by the Company or by any other Shareholder of such Covenant
and agreement.
9. RESTRICTIONS WHILE OBLIGATIONS OWED TO SELLING SHAREHOLDER. So long
as any Notes representing installment obligations owed for the purchase of
Transfer Shares from a Controlling Shareholder or his estate ("Selling
Controlling Shareholder") remain outstanding, the following restrictions shall
apply:
9.1 RESTRICTIONS UPON SALE OF CONTROLLING INTEREST IN COMPANY.
The remaining Controlling Shareholder shall not sell more than 20% of
his Shares ("Controlling Interest") unless all obligations owed to such
Selling Controlling Shareholder are satisfied in full either before or
at the time of such sale of a Controlling Interest. The remaining
Controlling Shareholder shall provide such Selling Controlling
Shareholder with 60 days' prior notice of any proposed sale of a
Controlling Interest, and shall provide for his review of any documents
he reasonably requests regarding such proposed transaction and the
satisfaction of his Note.
9.2 DEATH OF SELLING SHAREHOLDER OR REMAINING SHAREHOLDERS. In
the event that (i) such Selling Controlling Shareholder should die
before all obligations owed to him under this Agreement are satisfied
and (ii) the Trustee or other Shareholders are the beneficiaries of any
insurance proceeds on his life in accordance with this Agreement, the
Trustee and other Shareholders shall apply all of such insurance
proceeds towards the prepayment of any such remaining obligations owed
to the Selling Controlling Shareholder.
10. INSURANCE AND TRUSTEE OBLIGATIONS.
10.1 INSURANCE FUNDING. The acquisition and ownership of life
insurance policies on the lives of one or more of the Shareholders to
provide funding for the various purchase options and obligations under
this Agreement shall be agreed upon, from time to time, by the
Controlling Shareholders and summarized on Schedule D.
10.2 TRUST AGREEMENT. The insurance policies referred to in
Section 10.1, including proceeds therefrom, and the Secured Shares
pledged under the Security Agreement in accordance with Section 7.7
shall be held and managed by the Trustee in accordance with the Trust
Agreement attached hereto as Exhibit E ("Trust Agreement").
11. VOTING RESTRICTIONS. All Shareholders agree to vote their Shares in
the following manner for the purposes specified:
11.1 CONTROLLING SHAREHOLDERS AS DIRECTORS. All Shares shall
be voted to elect both of the Controlling Shareholders to the Board of
Directors of the Company.
11.2 ALTERNATE DIRECTOR DESIGNEE. In the event a Controlling
Shareholder is unwilling or unable to act as a Director, he or his
Representative shall have the right to designate an alternative person
for nomination as a Director, in which case all such Shares shall be
voted for such designee.
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11.3 SHAREHOLDER VOTING RIGHTS. Each Family Member Shareholder
shall vote his Shares in accordance with the instructions of the
Controlling Shareholder of his Family Group on all corporate matters
requiring Shareholder approval under the Company's Articles, Bylaws or
applicable law.
12. ADMINISTRATIVE PROVISIONS.
12.1 COOPERATION. All Shareholders and Representatives shall
execute and deliver all necessary documents required to carry out the
terms of this Agreement.
12.2 FUTURE SHAREHOLDERS. Prior to the issuance or transfer of
any Shares to another member of a Family Group other than the
Shareholders named herein, and as a part of the consideration for the
transfer of Shares, the intended Transferee Shareholder shall execute
the Consent set forth on Schedule B, after which such Transferee shall
be a Shareholder for all purposes hereof.
12.3 ADDITIONAL SHARES. This Agreement shall apply to any
additional Shares issued by the Company to the Shareholders whether on
account of any stock dividend, stock split, recapitalization or
issuance of additional Shares, or similar transactions during the term
of this Agreement.
12.4 ENDORSEMENT AND LEGEND OF CERTIFICATES. Each certificate
representing any Shares now or hereafter held by the Shareholders shall
be plainly marked with a legend in substantially the following form:
THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE ARE
SUBJECT TO A SHAREHOLDERS AGREEMENT DATED AS OF THE 29TH DAY
OF OCTOBER, 1992, AND SUCH SHARES MAY NOT BE SOLD,
TRANSFERRED, ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE
DISPOSED OF EXCEPT IN STRICT COMPLIANCE WITH THE TERMS OF THAT
AGREEMENT.
12.5 NOTICES. All notices, designations, consents, offers,
acceptances or other communication provided for herein shall be given
in writing by registered or certified mail, postage prepaid, addressed
to the Shareholder, or estate of a deceased Shareholder, at the address
shown on the records of the Company. Notice shall be deemed given for
all purposes when deposited in the United States mail and the date of
postmark on the receipt for such article shall conclusively be deemed
the date of notice.
12.6 SPECIFIC PERFORMANCE. In view of the purposes of this
Agreement, it is agreed that the remedy at law for failure of any party
to perform would be inadequate, and that the injured party or parties,
at his or their option, shall have the right to compel the specified
performance of this Agreement in a court of competent jurisdiction;
provided that this right shall be in addition to and not in lieu of any
additional or alternative right or remedy which may be available to a
party at law or in equity.
12.7 TERMINATION OF AGREEMENT. This Agreement shall terminate
upon the happening of any of the following events:
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(a) Entry of an order for relief with respect to the
Company under the Federal Bankruptcy Code, the execution by
the Company of any assignment for the benefit of creditors or
the appointment of a receiver of the Company;
(b) Voluntary or involuntary dissolution of the
Company; or
(c) Upon the written agreement or vote of the
Controlling Shareholders to dissolve the Company; or
(d) Upon the deaths of both of the Controlling
Shareholders within a period thirty (30) days; or
(e) Upon the written agreement of the Controlling
Shareholders, or if there be only one surviving Controlling
Shareholder, upon notice by that Controlling Shareholder to
the remaining Shareholders.
13. MISCELLANEOUS PROVISIONS.
13.1 ENTIRE AGREEMENT. This Agreement contains the entire
agreement between the parties with regard to restrictions and
obligations pertaining to the ownership of Shares and supersedes and
cancels all prior agreements of the parties or any of them on the same
subject matter.
13.2 MODIFICATIONS. No change or modification of this
Agreement shall be valid unless made in writing and signed by the
Controlling Shareholders or the personal representative of a deceased
or disabled Shareholder, and the holders of Shares representing a
majority of the outstanding Shares owned by Shareholders other than the
Controlling Shareholders.
13.3 BENEFIT. This Agreement shall inure to and be binding
upon the parties, their heirs, legal representatives, successors and
assigns; provided, however, that this subsection is not intended to
grant to a successor, legal representative or assign the right of a
Controlling Shareholder to purchase Shares under this Agreement.
13.4 SEVERABILITY. The provisions of this Agreement shall be
applied and interpreted in a manner consistent with each other so as to
carry out the purposes and intent of the parties, but if for any reason
any provision is unenforceable or invalid, such provision shall be
deemed severed from this Agreement and the remaining provisions shall
be carried out with the same force and effect as if the severed
provision had not been a part of this Agreement.
13.5 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of
Minnesota. Any conflict of laws rules which may have the effect of
applying another state's laws shall not apply.
13.6 COUNTERPARTS. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original but all of
which shall constitute but one agreement.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
BR FAMILY GROUP: DR FAMILY GROUP:
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TRUSTEE:
By
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Its
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