EXHIBIT 4(bb)
AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT
THIS AGREEMENT is made and entered into as of the 13th day of July,
1995, by and among TRACER DESIGN, INC., an Arizona corporation (the
"Corporation"), XXXX X. XXXXXX ("Little"), XXXXXX X. XXXXXXXXXXX
("Xxxxxxxxxxx"), XXXXX X. XXXXX ("Xxxxx") and XXXXX XXXXX ("Xxxxx", and together
with Little, Xxxxxxxxxxx and Xxxxx sometimes will be referred to individually as
"Stockholder" and collectively as "Stockholders").
WITNESSETH:
WHEREAS, the Corporation and Little, Xxxxxxxxxxx and Xxxxx
(collectively, the "Original Stockholders") are parties to a Stockholders'
Agreement dated as of February 25, 1992 (the "Original Stockholders'
Agreement").
WHEREAS, Xxxxx Xxxxx ("Xxxxx") has acquired stock of the Corporation
concurrently with the execution of this Agreement. As a condition precedent to
the issuance of stock to Xxxxx, the Corporation has required that Xxxxx become a
party to the Original Stockholders' Agreement.
WHEREAS, the Corporation and the Shareholders desire that the Original
Stockholders' Agreement be amended in certain respects.
WHEREAS, the Class A Common Stock (the "Stock") of the Corporation is
the sole class of capital stock issued by the Corporation and presently
outstanding, and the Stockholders are the sole owners of Stock.
WHEREAS, the Two Hundred Fifty-Five Thousand One Hundred Two (255,102)
issued and outstanding shares of the Stock of the Corporation (the "Shares") are
held by the Stockholders, as their sole and separate property, as follows:
Stockholder No. of Shares
Xxxx X. Xxxxxx 127,500
Xxxxxx X. Xxxxxxxxxxx 61,250
Xxxxx X. Xxxxx 61,250
Xxxxx Xxxxx 5,102
WHEREAS, the Stockholders and the Corporation wish to restrict stock
ownership to parties with whom they mutually choose to deal, to assure the
continued ease of administration of the Corporation's business and to make
certain agreements with each other regarding the Shares.
WHEREAS, the Stockholders wish to provide a smooth transition in
control of the Corporation upon the death or disability of any Stockholder.
WHEREAS, the Stockholders wish to provide a means of resolving disputes
between minority Stockholders and the Corporation's management.
WHEREAS, the parties hereto desire to promote their individual
interests and the interests of the Corporation by imposing certain restrictions
and obligations on the Stockholders, the Corporation, and the Shares.
NOW, THEREFORE, in consideration of the foregoing premises and mutual
covenants hereinafter contained, and for other good and lawful consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties agree
as follows:
1. Endorsement of Stock. Upon the execution of this Agreement, the
certificates representing the Shares shall be surrendered to the Secretary of
the Corporation and endorsed as follows:
THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A
STOCKHOLDERS' AGREEMENT TO WHICH THE CORPORATION IS A PARTY, AND NONE OF SUCH
SHARES, OR ANY INTEREST THEREIN, SHALL BE TRANSFERRED, PLEDGED, ENCUMBERED OR
OTHERWISE DISPOSED OF EXCEPT AS PROVIDED IN SUCH AGREEMENT. A COPY OF THE
STOCKHOLDERS' AGREEMENT IS ON FILE IN THE OFFICE OF THE CORPORATION AND WILL BE
MADE AVAILABLE FOR INSPECTION TO ANY PROPERLY INTERESTED PERSON WITHOUT CHARGE
WITHIN FIVE (5) WORKING DAYS AFTER THE CORPORATION'S RECEIPT OF A WRITTEN
REQUEST.
A copy of this Agreement, together with any amendments thereto, shall
remain on file with the Secretary of the Corporation and shall be available for
inspection to any properly interested person without charge within five (5)
working days after the Corporation's receipt of a written request therefor.
Subject to the terms of this Agreement, the Stockholders shall be
entitled to exercise all rights of ownership in the Shares.
No shares of any class of stock of the Corporation, other than the
Stock, are presently issued and outstanding. If the Corporation issues any
shares of any other class of stock or additional shares of Stock, the
Corporation shall cause all shares so issued to bear the above endorsement, and
to be subject to all the terms and conditions of this Agreement, and such shares
shall for all purposes be deemed "Shares" hereunder. Each person receiving such
issued shares shall automatically be deemed a "Stockholder" hereunder, and in
furtherance thereof, each such
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person shall execute and deliver to the parties hereto an agreement in writing
to be bound by this Agreement.
2. Restrictions on Transfer or Encumbrance. Except as otherwise set
forth in this Agreement, no Stockholder shall, without the prior written consent
of all other Stockholders, transfer, or permit the transfer of, all or any part
of the Shares, or any interest therein, whether legal or beneficial, now owned
or hereafter acquired by such Stockholder. Any attempted transaction not in
compliance with this section 2 shall be void. As used in this Agreement, the
verb "transfer," in whatever form, number or tense, shall mean, as the case may
be, to pledge, encumber or in any manner use as collateral, to transfer, or to
sell or otherwise to dispose of, or suffer disposition or encumbrance,
voluntarily or involuntarily, and includes, without limitation, division of
marital property by voluntary agreement or in connection with a divorce decree,
dissolution of marriage or other equitable division of community property or
other property held by husband and wife. The term "marital property" as used in
this Agreement includes without limitation community property. With respect to
any Stockholder that is a corporation, partnership, trust or other entity, the
occurrence of a change in control of such Stockholder, whether through sale,
exchange, merger, voting trust, or other arrangement or transaction, with
respect to the securities of such entity, or the sale or other transfer of all
or substantially all of the assets of such entity, shall be deemed to be an
involuntary transfer of all the Shares held by such Stockholder. "Control" for
purposes of this Agreement means the possession, direct or indirect, of the
power to direct or cause the direction of the management and policies of a
person, whether through the ownership of voting securities, by contract or
otherwise.
3. Exceptions.
(a) Family Transfers. Notwithstanding any other provision
herein to the contrary, without obtaining the consent of any Stockholder or of
the Corporation and upon prior written notice to each of the other Stockholders
and to the Corporation, an individual Stockholder may transfer any and all
Shares owned by him or her to his or her issue or to any revocable or
irrevocable trust of which the Stockholder, or his or her issue, or any of the
foregoing, are the sole beneficiaries and a trust Stockholder may transfer any
and all shares owned by it to any of the trust beneficiaries; provided, however,
that such transfer shall be for no or minimal consideration, that all Shares so
transferred shall remain subject to all the terms and conditions of this
Agreement, that each transferee shall be deemed a Stockholder hereunder, and
that each transferee shall first agree in writing to be bound by this Agreement.
(b) Transfers Among Original Stockholders. Notwithstanding any
other provision herein to the contrary, without obtaining the consent of any
Stockholder or of the Corporation and upon prior written notice to each of the
other Stockholders and to the Corporation, each Original Stockholder may
transfer some or all of his shares to any other Original Stockholder.
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(c) Cross Purchase Agreement. The Original Stockholders are
parties to a Cross Purchase Agreement among the Original Stockholders and Xxxxxx
X. Xxxx, as trustee, dated as of March 1, 1994 (the "Cross Purchase Agreement"),
a copy of which is attached to this Agreement as Exhibit "A". Notwithstanding
any other provision herein to the contrary, without obtaining the consent of any
Stockholder or of the Corporation and upon prior written notice to each of the
other Stockholders and to the Corporation, each of the Original Stockholders can
comply with its obligations under the Cross Purchase Agreement.
(d) Corporate Redemptions. Notwithstanding any other provision
herein to the contrary, an offer by the Corporation to redeem Shares shall not
be "a bona fide offer from a third party" within the meaning of section 4
hereof, unless the price for such redemption offer exceeds the Fair Market Value
as defined in section 12 hereof.
4. Offering Notice; Non-Cash Consideration; Involuntary Transfer Date;
Sole and Separate Property. Each Stockholder hereby covenants, during the term
of this Agreement, not to transfer, or permit the transfer of, any Shares
(including any Shares previously transferred to such Stockholder pursuant to
section 3(a) or 3(b) hereof), or any interest therein, whether legal or
beneficial, without first offering to transfer the same to or for the benefit of
the Corporation or the Stockholders as provided in section 5.
(a) The Offering Notice. Any Stockholder (the "Selling
Stockholder") having received a bona fide offer from a third party, including
another Stockholder, and desiring to accept the offer, or desiring to transfer
any Shares to a third party, shall before accepting the offer or proposing the
transfer submit the offer or proposal in writing to each of the other
Stockholders (individually called "Optionee" and collectively called
"Optionees") and to the Corporation. The offer or proposal (the "Offering
Notice") shall identify the number of Shares and the interest therein that the
Selling Stockholder proposes to transfer (the "Offered Shares" ), and shall set
forth the consideration for which the Offered Shares are proposed to be
transferred (including assigning a cash value to each element of any proposed
non-cash consideration), and all terms of payment (the "Price and Payment
Terms"), the identity and the address of the third party (the "Proposed
Purchaser" ), and all other terms and conditions of the proposed transaction.
(b) Non-Cash Consideration. In the event the Offering Notice
sets forth a cash value for non-cash consideration, the Corporation and each
Optionee shall have ten (10) days, beginning with the day following receipt of
the Offering Notice by the Corporation and all Optionees, to make written, good
faith objections to the cash value specified for all or any part of the non-cash
consideration. If the Corporation or any Optionee objects to the cash value
specified in the Offering Notice for all or any part of the non-cash
consideration, each objecting party shall notify the Selling Stockholder, the
Secretary of the Corporation, and the other Optionees, as the case may be, in
writing setting forth the cash value he or it would assign to the disputed
non-cash consideration and the reason(s) therefor. If after ten (10) days,
beginning with the day following receipt of each such notice of objection by the
Selling Stockholder, the Corporation and all Optionees, there remains any
objection to the cash value of any item of non-cash consideration,
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the dispute over the cash value of such items shall be submitted for arbitration
pursuant to section 18(o) hereof.
(c) Involuntary Transfer Date. Any Stockholder who becomes
aware (i) that there is a reasonable possibility Shares held by such Stockholder
or any other Stockholder may be transferred involuntarily in the reasonably
foreseeable future or (ii) that, with respect to a Stockholder holding any or
all of his or her Shares as marital property, a division of marital property of
such Stockholder and his or her spouse pursuant to a divorce decree, dissolution
of marriage or equitable division of marital property is reasonably imminent,
shall provide written notice to the Corporation and all other Stockholders
describing in reasonable detail the known circumstances concerning the possible
transfer or division of marital property and thereafter keep the Corporation and
other Stockholders reasonably informed with respect to the potential transfer or
division. The date upon which an involuntary transfer becomes effective, or a
decree, order or definitive agreement in respect of a division of marital
property pursuant to which Shares are awarded or granted to the spouse of a
Stockholder to be held as such spouse's separate property becomes effective,
shall be an "Involuntary Transfer Date" for purposes of this Agreement. In the
event of the occurrence of an Involuntary Transfer Date, any person or entity,
other than a spouse who was a Stockholder immediately before the Involuntary
Transfer Date, who receives Shares as a result of the transfer that occurred on
the Involuntary Transfer Date shall be deemed to be a "Selling Stockholder" for
purposes of this Agreement, such Shares shall be deemed to be "Offered Shares",
and upon receipt of notice of such event, the Corporation shall send written
notice of such event identifying the number of Shares and the interest therein
held by the Selling Stockholder to all "Optionees," who shall consist for this
purpose of all Stockholders other than the Selling Stockholder and the
Stockholder, if any, from whom the Selling Stockholder acquired the Shares, and
such notice shall be deemed to be an "Offering Notice." Such Optionees and the
Corporation shall have the right to purchase such Shares pursuant to section 5.
(d) Sole and Separate Property. Each Stockholder expressly
represents and warrants that all of the Shares held by him are held as his
individual sole and separate property and his spouse, if any, has no interest
therein. Each Stockholder covenants and agrees that he will at all times
maintain all of his Shares as his sole and separate property and will take all
actions necessary to ensure the effectiveness of this agreement including
without limitation obtaining disclaimers and/or prenuptial agreements from any
spouse. It is the parties' intention and agreement, upon which they are relying
in entering into this Agreement, that a divorce or legal separation of any of
them who are individuals and their respective spouses shall not interfere in the
operation of the Corporation and the business relationships among the
Stockholders. To effectuate this intent, each individual Stockholder agrees that
in the event of a property division incident to his or her divorce or legal
separation, such Stockholder shall petition the court or tribunal having
jurisdiction of the matter to award the whole of the Shares in kind to such
Stockholder consistent with his holding such Shares as his sole and separate
property. The parties further recognize that a court or tribunal may choose not
to make an award as contemplated by the preceding sentence and therefore have
provided the Corporation and other Stockholders the
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option to acquire any Shares, however held, on the terms and conditions set
forth in this Agreement.
5. Options to Purchase.
(a) First Option. The Corporation shall have an option,
continuing for thirty (30) days, beginning with the day following receipt of the
Offering Notice, to elect to acquire all or any part of the Offered Shares for
the Price and Payment Terms. Such election shall be made, with due regard to
A.R.S. ss.10-047, or any successor statute, by a majority of the Board of
Directors of the Corporation, unless the proposed transaction includes a loan or
advance of credit to or for a director of the Corporation, in which event such
election shall be made by holders of a majority of the Stock. If the Corporation
elects to acquire all of the Offered Shares, the Secretary of the Corporation
shall, no later than the last day of the Corporation's thirty (30) day option
period, notify the Selling Stockholder and Optionees of its decision in writing.
(As used in this section and hereinafter in this Agreement, the verb "acquire,"
in whatever form, number or tense, shall mean, as the case may be, to take as
security or as collateral, to accept a transfer, to purchase, or otherwise to
acquire.)
(b) Second Option. If the Corporation elects not to exercise
its option under the preceding subsection or elects to acquire less than all the
Offered Shares, the Secretary of the Corporation shall, no later than the last
day of the Corporation's thirty (30) day option period, notify the Selling
Stockholder and Optionees of its decision in writing. Each Optionee then shall
have an option, continuing for a period of thirty (30) days, beginning with the
day following receipt of such notice by all Optionees, to acquire, for the Price
and Payment Terms, all or any part of the Offered Shares (including fractional
Shares) not acquired by the Corporation in the same ratio as the total number of
shares of the Corporation's capital stock owned by such Optionee bears to the
total number of shares of the capital stock of the Corporation then outstanding
and owned (whether or not subject to a pledge or other encumbrance) by all
Optionees. Any Optionee desiring to acquire all or any part of the Offered
Shares not acquired by the Corporation shall deliver to the Secretary of the
Corporation within said thirty (30) day period a written election so to acquire
the Offered Shares or a specified portion thereof up to his proportionate share.
(c) Subsequent Options. If any Optionee does not elect to
acquire his or its proportionate share, the Secretary of the Corporation shall
give written notice thereof to all Optionees who elected to exercise their
options (the "Exercising Optionees"), no later than five (5) days following the
last day of the option period of the last Optionee to receive notice. Each
Exercising Optionee shall then have a further option, continuing for five (5)
days, beginning with the day following receipt of such notice by all Exercising
Optionees, to elect to acquire the still unsold Offered Shares in the same ratio
that the total number of shares of the Corporation's capital stock owned by him
or it bears to the total number of shares of the capital stock of the
Corporation then outstanding and owned by all Exercising Optionees. Any
Exercising Optionee desiring to acquire all or any part of the Offered Shares
not acquired by the Corporation or by any
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Optionee shall deliver a written election as in section 5(b) during said five
(5) day period. Such notices and options shall continue to be given in the same
manner and for the same periods until election(s) to acquire all of the Offered
Shares are made, or until no Exercising Optionee is willing to exercise his or
its option to acquire the remaining Offered Shares. Only an Exercising Optionee
who shall have fully exercised his or its last option under this section 5(c)
shall be deemed to be an Exercising Optionee for purposes of notice and exercise
of the next subsequent option, if any, under this section 5(c).
(d) Certain Procedures for Options. If the death or
dissolution of a Stockholder should occur during any of the above option periods
or if any option pursuant to section 8 hereof shall be open during any option
period under this section 5, any and all option periods under this section 5
shall be tolled until all options under section 8 have been exercised or
terminated. For the purposes of determining the ratios of acquisition pursuant
to section 5(b) and/or section 5(c), an Optionee shall be deemed not to own any
of the Offered Shares owned, acquired or agreed to be acquired by him, and such
Shares shall be deemed to be owned by the Selling Stockholder. The Optionee
shall be deemed to own any shares acquired pursuant to section 8 during a tolled
option period. While any option pursuant to this section 5 is pending, if a
subsequent Offering Notice is submitted pursuant to section 4, all options
relating to such subsequent Offering Notice shall be tolled until all options
relating to the preceding Offering Notice have been exercised and consummated,
or terminated. Any shares acquired by stockholders pursuant to a preceding
Offering Notice and any shares acquired by a Proposed Purchaser pursuant to a
preceding Offering Notice shall be taken into consideration in determining the
ratios of acquisition for a subsequent Offering Notice. If the Corporation or
any Stockholder does not give timely notice of his or its election to exercise
any option under this section 5, such Stockholder shall be deemed to have
elected not to exercise that option.
6. Failure to Acquire All Offered Shares. If the Corporation and
Optionees collectively do not elect pursuant to section 5 or section 10, as
applicable, to acquire all the Offered Shares, then, as applicable, (i) the
Selling Stockholder may complete the transaction with the Proposed Purchaser, no
later than the thirtieth (30th) day following the last day of the last option
period provided for herein, for the consideration per Offered Share, for all,
but not less than the Offered Shares (including those Shares, if any, elected to
be acquired by the Corporation and/or other Stockholders pursuant to section 5
and/or section 11 hereof), and upon all the terms and conditions set forth in
the Offering Notice, or (ii) with respect to Offered Shares acquired upon an
Involuntary Transfer Date, the Corporation shall record the Selling Stockholder
as the owner of record of such Shares. The Offered Shares shall for all purposes
remain subject to this Agreement and the Proposed Purchaser, any person taking
the Shares as collateral pursuant to a pledge or other encumbrance, or any
person holding such Shares on account of the occurrence of an Involuntary
Transfer Date shall, upon completion of the transaction, immediately and
automatically be deemed a Stockholder hereunder and shall be bound by this
Agreement. If requested by the Corporation or any Stockholder, any such
transferee shall, as a condition to transfer, agree in writing to be bound by
the terms of this Agreement, including, in the case of a person taking Shares as
collateral, the requirement that he or it provide notice of default and/or
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foreclosure to the Stockholders and the Corporation pursuant to sections 4 and
10 herein. A person taking the Shares as collateral pursuant to a pledge or
other encumbrance shall not have the right to exercise any option under sections
s or 8 by virtue of his so holding such shares as collateral or following
foreclosure. If the transaction with the Proposed Purchaser is not consummated
by such thirtieth (30th) day pursuant to the exact terms and conditions set
forth in the Offering Notice, then the option transactions shall not be
consummated and all the provisions of this Agreement shall be deemed to apply
again to all the Offered Shares.
7. Election to Acquire Offered Shares. If the Corporation and/or the
Optionees elect to acquire all the Offered Shares pursuant to section 5, the
Corporation and each Exercising Optionee shall be obligated to consummate his or
its election to acquire the Offered Shares pursuant to such election(s) no later
than thirty (30) days following the expiration of the last option in the case of
an acquisition under section 5 hereof (the "Closing"). The price to acquire each
Offered Share shall be the price set forth in the Offering Notice (computed on
the basis of the cash value of all consideration as determined under section 4),
unless no price is set forth in the Offering Notice, in which case the price
shall be the Fair Market Value as defined in section 11 hereof. Notwithstanding
the payment terms set forth in the Offering Notice, said price may be paid by
the Corporation and/or each Exercising Optionee, as it or he, in its or his sole
discretion elects, as follows:
(a) cash in full, payable at the time of the Closing; or
(b) (except in the event the Selling Stockholder proposes only
to pledge, encumber or otherwise use the Offered Shares as collateral) an
initial payment in cash at the closing of twenty percent (20%) of said price,
with the balance payable in not more than four (4) equal annual installments of
principal and interest, the number of which shall be determined by the
Corporation or the Exercising Optionee, as the case may be. The balance shall be
evidenced by a promissory note bearing interest at the higher of (1) one
percentage point (1%) over the prevailing prime interest rate charged by Bank
One Arizona, N.A. (or its successor in interest) as of the date of Closing,
adjusted on a daily basis, or (2) the minimum rate that may be charged without
incurring imputed interest or original issue discount under sections 483(b) or
1272- 1274A of the Internal Revenue Code, as amended. The Selling Stockholder
shall retain a security interest in the Offered Shares subject to the exercised
option as security for performance of the Corporation's and/or the Exercising
Optionee's obligations under the promissory note, and the Exercising Optionee
and/or Corporation agree to execute and deliver such instruments (including
share certificates) and documents as shall be necessary to create and perfect
such security interest; or
(c) With respect to a transfer that is not described in
section 4(b) and not consummated on the terms described in section 7(a), upon
the terms set forth in the Offering Notice. When the Offering Notice pertains to
an offer to lend funds to the Selling Stockholder, secured by Shares of the
Corporation, the Exercising Optionee's sole option shall be to elect to lend the
funds on the terms set forth in the Offering Notice.
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8. Options Upon Death, Disability or Dissolution of Stockholder. In the
event of the death, disability or dissolution of a Stockholder, the Corporation
and the other Stockholders shall have the option to purchase the Shares held by
the deceased, disabled or dissolved Stockholder (including any Shares
transferred by him or it pursuant to section 3(a) or 3(b) hereof) as follows
(provided, however, that if the Cross Purchase Agreement applies to the event,
the terms of the Cross Purchase Agreement shall take precedence over the terms
of this Agreement):
(a) First Option. The Corporation shall have an option,
continuing for sixty (60) days, beginning with the day following the death,
disability or dissolution of the Stockholder, to elect to acquire all or any
part of the Shares owned by the deceased, disabled or dissolved Stockholder
(including any Shares transferred by him or it pursuant to section 3(a) or 3(b)
hereof)("Offered Shares") on the terms set forth in section 9 hereof. If the
Corporation elects to acquire any or all of said Offered Shares, the secretary
of the Corporation shall, no later than the last day of the Corporation's
sixty-day option period, notify all the parties to this Agreement of its
decision in writing.
(b) Second Option. If the Corporation elects not to exercise
its option under the preceding subsection or elects to acquire less than all the
Offered Shares, the Secretary of the Corporation shall, no later than the last
day of the Corporation's sixty (60) day option period, notify the other parties
to the Agreement of its decision in writing. Each of the other Stockholders
(individually called "Optionee" and collectively called "Optionees") shall then
have an option to acquire all or any part of the Offered Shares on the terms set
forth in section 10 hereof in the same ratio as the total number of Shares of
the capital stock of the Corporation then outstanding and owned by such Optionee
bears to the total number of shares of the capital stock of the Corporation then
outstanding and owned (whether or not subject to a pledge or other encumbrance)
by all Optionees. The option shall continue for thirty (30) days, beginning with
the day following receipt of written notice from the Corporation of its election
not to acquire all of the Offered Shares or if the Corporation fails to give
such notice, beginning with the sixty-first (61st) day after the death,
disability or dissolution of the Stockholder. Any Optionee desiring to acquire
all or any part of the Offered Shares shall deliver to the Secretary of the
Corporation within said thirty (30) day period a written election so to acquire
the Offered Shares or a specified portion thereof up to his proportionate share.
If any Optionee does not elect to acquire his or its proportionate share, the
Secretary of the Corporation shall give written notice thereof to all Optionees
who elected to exercise their options (the "Exercising Optionees"), no later
than five (S) days following the last day of the option period of the last
Optionee to receive notice. Each Exercising Optionee shall then have a further
option, continuing for five (5) days, beginning with the day following receipt
of such notice by all Exercising Optionees, to elect to acquire the still unsold
Offered Shares in the same ratio that the total number of shares of the
Corporation's capital stock owned by him or it bears to the total number of
shares of the capital stock of the Corporation then outstanding and owned by all
Exercising Optionees. Any Exercising Optionee desiring to acquire all or any
part of the Offered Shares not acquired by any Optionee shall deliver to the
Secretary of the Corporation within said five (5) day period a written election
so to acquire. Such notices and options shall continue to be given in the same
manner and for the same periods
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until election(s) to acquire all of the Offered Shares are made, or until no
Exercising Optionee is willing to exercise his option to acquire the remaining
Offered Shares. Only an Exercising Optionee who shall have fully exercised his
last option under this section 8(b) shall be deemed to be an Exercising Optionee
for purposes of notice and exercise of the next subsequent option, if any, under
this section 8(b). For the purposes of determining the ratios of acquisition
pursuant to this section 8(b), an Optionee shall be deemed not to own any of the
Offered Shares owned, acquired or agreed to be acquired by him, and such Shares
shall be deemed to be owned by the deceased, disabled or dissolved Stockholder.
If any option as to the Shares of a deceased, disabled or dissolved Stockholder
is pending under this section 8 when notice of the death, disability or
dissolution of another Stockholder is received by the Stockholders, all options
pursuant to this section 8 as to the Shares of the second deceased, disabled or
dissolved Stockholder shall be tolled until all options as to the Shares of the
first deceased, disabled or dissolved Stockholder have been exercised and
consummated, or terminated. If any Stockholder does not give timely notice of
his election to exercise any option under this section 8(b), he shall be deemed
to have elected not to exercise that option.
(c) Definition of Disability. "Disability" or "disabled" means
that a Stockholder (l) is under a legal decree of incapacity or disability
pursuant to title 14 of Arizona Revised Statutes or other applicable law (the
date of such decree being deemed to be the date on which such disability
occurred for purposes of this Agreement), or (2) submits any claim for
disability insurance benefits or for early distribution of the amounts from a
qualified pension or profit-sharing plan maintained by the Corporation on
account of disability (the date of the earliest of such claims shall be the date
on which such disability shall be deemed to have occurred), or (3) is determined
to be disabled pursuant to a determination, made pursuant to the provisions of
this section as specified below, that the Stockholder, because of a medically
determinable disease, injury, or other mental or physical condition or
disability, is unable to perform substantially all of his or her regular duties,
and that such disability is determined or reasonably expected to last at least
six (6) months, based on then-available medical information. The determination
will be based on the written opinion of a majority of a three-physician panel
consisting of the following: one physician shall be the physician regularly
attending the Stockholder whose disability is in question (the "Attending
Physician"); one physician shall be selected by a majority of the other
Stockholders; and the third shall be selected by the aforesaid two physicians.
The expenses of the physicians shall be borne by the Corporation. In conjunction
with this section, each Stockholder hereby consents to examination by the three
physicians, to furnish any medical information requested by any examining
physician, and to waive any applicable physician-patient privilege that may
arise because of such examination. All physicians except the Attending Physician
selected hereunder must be board-certified in the specialty most closely related
to the nature of the Disability alleged to exist.
9. Option Terms. If any party elects to exercise its option pursuant to
section 8 of this Agreement, the purchaser pursuant to such election(s) shall
consummate the purchase no later than the thirtieth (30th) day following the
last day of the last option period provided for herein. Notwithstanding any
provision herein to the contrary, if the Corporation or any Stockholder
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exercises an option to acquire Shares pursuant to section 8 of this Agreement,
it or he shall be obligated to consummate such acquisition even if options are
not exercised with respect to all the Shares subject to such options. Whether or
not transferred hereunder, all Shares of the deceased, disabled, dissolved or
terminated Stockholder shall remain subject to all the terms and conditions of
this Agreement. For purchases and sales pursuant to section 8 of this Agreement
the purchase and sale price per share shall be the Fair Market Value as defined
in section 11, payable in the manner specified in section 7(a) or 7(b), as the
purchasing party in its sole discretion elects.
10. Default on Pledge. Notwithstanding anything to the contrary
appearing in this Agreement, (i) if any Stockholder owning Shares held by any
person (including the Corporation or any Stockholder) as collateral (whether by
written consent of all the Stockholders or under section 6, 7 or 9 hereof)
pursuant to a pledge or other encumbrance shall be in default under the terms of
his or its agreement with said person and shall have failed timely to effect any
cure thereunder, or (ii) if any person holding any of the Shares as collateral
(whether by written consent of all the Stockholders or under section 6, 7 or 9
hereof) pursuant to a pledge or other encumbrance shall seek to foreclose upon
his or its interest in such Shares, or any part thereof, to any third party (in
which cases section 4 would apply), then in either event the person holding the
Shares shall be deemed to be the Selling Stockholder under sections 4 and 5 and
to have received, and to desire to accept, a bona fide offer from a third party
Proposed Purchaser to acquire his or its Shares, or part thereof, at the Fair
Market Value (as determined under section 11 hereof); provided, however, that,
if in connection with foreclosing (whether by public sale or otherwise) upon his
or its interest in said Shares, or any part thereof, said person receives a bona
fide offer from a third party (including the Corporation or a Stockholder) and
desires to accept same, said person shall submit an Offering Notice and
otherwise comply with section 4 hereof. Failure by the Corporation or any
Stockholder to exercise an option respecting any Shares under part (i) of this
section 10 shall not relieve a person holding such Shares from his or its
obligations under part (ii) of this section 10. If, pursuant to this section 10,
the Corporation or any Stockholder exercises an option to acquire Shares at the
Fair Market Value, it or he shall be obligated to consummate such acquisition
even if options are not exercised with respect to all the Shares deemed subject
to acquisition at the Fair Market Value. Whether or not transferred hereunder,
all the Shares so deemed subject to acquisition shall remain subject to all the
terms and conditions of this Agreement.
11. Fair Market Value. The Fair Market Value of a share of the Stock
shall mean that value which is determined pursuant to this section 11. The Fair
Market Value may be mutually agreed upon by the selling and acquiring parties of
the shares of Stock. If the parties cannot mutually agree upon the Fair Market
Value of a share of Stock, or upon the appointment of a single arbiter who shall
determine the Fair Market Value pursuant to this section 11, within ten (10)
days after delivery of a written notice of exercise of a purchase right or
obligation under this Agreement, then the Fair Market Value of a share of Stock
shall be equal to the fair market value of such share as determined as of the
date of such notice pursuant to arbitration in accordance with section 18(o). In
determining the Fair Market Value, all relevant factors shall be taken into
account.
11
12. Limitation on Corporate Acquisition. Notwithstanding any other
provisions herein to the contrary, it is understood and agreed that the
Corporation may (and shall only be obligated to) acquire Stock as provided
herein only to the extent that it shall have funds legally available therefor
under the applicable provisions of the Arizona Revised Statutes then in effect.
To the extent the Corporation is unable, because of such legal restrictions, to
acquire Shares it otherwise has the right to acquire under this Agreement, it
may, but shall not be obligated to, assign such rights to any one or more of the
Stockholders or to third persons.
13. Termination. This Agreement shall terminate upon the occurrence of
either of the following events:
(a) Bankruptcy of the Corporation; or
(b) Voluntary agreement of the Corporation and all
Stockholders (excluding Stockholders not entitled to exercise rights as
Optionees under section 5 or 8 hereof).
"Bankruptcy" shall mean the occurrence of any of the following events
with respect to the Corporation: if (l) it is dissolved; (2) it becomes
insolvent or fails or is unable or admits in writing its inability generally to
pay its debts as they become due; (3) it makes a general assignment, arrangement
or composition with or for the benefit of its creditors; (4) it institutes or
has instituted against it a proceeding seeking relief under any bankruptcy or
insolvency law or other similar law affecting creditors' rights, or a petition
is presented for the winding-up or liquidation of the Corporation and, in the
case of any such proceeding or petition instituted or presented against it, such
proceeding or petition (A) results in a judgment of insolvency or bankruptcy or
the entry of an order for relief or the making of an order for the winding-up or
liquidation of the Corporation or (B) is not dismissed, discharged, stayed or
restrained in each case within 60 days of the institution or presentation
thereof; (5) it has a resolution passed for its winding-up or liquidation; (6)
it seeks or becomes subject to the appointment of an administrator, receiver,
trustee, custodian or other similar official for it or for all or substantially
all its assets (regardless of how brief such appointment may be, or whether any
obligations are promptly assumed by another entity or whether any other event
described in this clause (6) has occurred and is continuing); (7) any event
occurs with respect to the Corporation which, under the applicable laws of any
jurisdiction, has an analogous effect to any of the events specified in clauses
(l) to (6) inclusive; or (8) the Corporation takes any action in furtherance of,
or indicating its consent to, approval of, or acquiescence in, any of the
foregoing acts.
14. Assignment. This Agreement shall be binding upon and inure to the
benefit of the parties hereto, their heirs, legal representatives, successors
and assigns; provided, however, that except as otherwise expressly provided in
this Agreement, no Stockholder shall assign any rights, obligations or interest
hereunder without the prior written consent of all other Stockholders (excluding
Stockholders not entitled to exercise rights as Optionees under section 5 or 8
hereof). Each individual Stockholder in furtherance hereof shall require in his
Will that his executor or personal representative perform such Stockholder's
obligations under this Agreement and execute
12
all documents necessary to effect the purposes of this Agreement. The failure so
to provide by Will shall not affect the rights of any other Stockholder or the
obligations of any estate as provided in this Agreement.
15. Amendment. This Agreement may only be amended by a written
agreement approved by the Board of Directors of the Corporation and all the
Stockholders (excluding Stockholders not entitled to exercise rights as
Optionees under section 5 and 8 hereof). Any agreement so approved shall be
executed by the Corporation and the approving Stockholders and filed with the
corporate records.
16. Agreement Drafted by Corporation's Attorney. The Stockholders each
acknowledge that the Corporation's counsel, XXXXXX XXXXXXX, P.A. prepared this
Agreement on behalf of and in the course of its representation of the
Corporation, as directed by its Board of Directors, and that:
A. SUCH STOCKHOLDER HAS BEEN ADVISED THAT A CONFLICT OF
INTEREST MAY EXIST BETWEEN HIS OR HER INTERESTS AND THOSE OF THE CORPORATION AND
THE OTHER STOCKHOLDERS, AND
B. SUCH STOCKHOLDER HAS BEEN ADVISED BY THE CORPORATION'S
COUNSEL THAT THIS AGREEMENT MAY HAVE TAX CONSEQUENCES, AND
C. SUCH STOCKHOLDER HAS RECEIVED NO REPRESENTATIONS FROM THE
CORPORATION'S COUNSEL ABOUT THE TAX CONSEQUENCES OF THIS AGREEMENT, AND
D. SUCH STOCKHOLDER HAS BEEN ADVISED BY THE CORPORATION'S
COUNSEL TO SEEK THE ADVICE OF INDEPENDENT COUNSEL WITH RESPECT TO ALL ASPECTS OF
THIS AGREEMENT INCLUDING WITHOUT LIMITATION TAX CONSEQUENCES, AND
E. SUCH STOCKHOLDER HAS HAD THE OPPORTUNITY TO SEEK THE ADVICE
OF INDEPENDENT COUNSEL.
17. General. Except to the extent inconsistent with the express
language of the foregoing provisions of this Agreement, the following provisions
shall govern the interpretation, application, construction and enforcement of
this Agreement.
(a) Notices. Any notice to any party under this Agreement
shall be in writing, shall be effective on the earlier of (i) the date when
received by such party, or (ii) the date which is three days after mailing
(postage prepaid) by certified or registered mail, return receipt requested,
13
to the address of such party set forth herein, or to such other address as shall
have previously been specified in writing by such party to all parties hereto in
accordance with this section.
(b) Additional Acts and Documents. Each party hereto agrees to
do all such things and take all such actions, and to make, execute and deliver
such other documents and instruments, as shall be reasonably requested to carry
out the provisions, intent and purpose of this Agreement.
(c) Authority. Each of the parties hereto represents and
warrants to each other party hereto that this Agreement has been duly authorized
by all necessary action and that this Agreement constitutes and will constitute
a binding obligation of each such party.
(d) Attorney Fees. If suit is brought or an attorney is
retained by any party to this Agreement to enforce the terms of this Agreement
or to collect any moneys due hereunder, or to collect money damages for breach
hereof, or in connection with any arbitration or action arising out of this
Agreement, the prevailing party shall be entitled to recover, in addition to any
other remedy, reimbursement for reasonable attorney fees, court costs,
arbitration costs, costs of investigation and other related expenses incurred in
connection therewith.
(e) Counterparts. This Agreement may be executed in any number
of counterparts, all such counterparts shall be deemed to constitute one and the
same instrument, and each of said counterparts shall be deemed an original
hereof.
(f) Time. Time is of the essence of this Agreement and each
and every provision hereof. Any extension of time granted for the performance of
any duty under this Agreement shall not be considered an extension of time for
the performance of any other duty under this Agreement.
(g) Waiver. Failure of any party to exercise any right or
option arising out of a breach of this Agreement shall not be deemed a waiver of
any right or option with respect to any subsequent or different breach, or the
continuance of any existing breach.
(h) Integration Clause: Oral Modification. This Agreement
represents the entire agreement of the parties with respect to the subject
matter hereof, and all agreements entered into prior hereto are revoked and
superseded by this Agreement, and no representations, warranties, inducements or
oral agreements have been made by any of the parties except as expressly set
forth herein, or in other contemporaneous written agreements.
(i) Captions. Captions and section headings used herein are
for convenience only, are not a part of this Agreement, shall not be deemed to
limit or alter any provisions hereof, and shall not be deemed relevant in
construing this Agreement.
14
(j) Governing Law. This Agreement shall be deemed to be made
under, and shall be construed in accordance with and shall be governed by, the
laws of the State of Arizona. Each party expressly and irrevocably consents to
the jurisdiction of the Superior Court, Maricopa County, Arizona.
(k) Indemnity. Each party to this Agreement agrees to
indemnify each other party, and hold it harmless, for, from and against all
claims, damages, costs and expenses (including reasonable attorney fees)
attributable, directly or indirectly, to the breach by such indemnifying party
of any obligation hereunder.
(l) Interpretations. To the extent permitted by the context in
which used, (i) words in the singular number shall include the plural, (ii)
words in the masculine gender shall include the feminine and neuter, and vice
versa, and (iii) references to "persons" or "parties" in this Agreement shall be
deemed to refer to natural persons, corporations, general partnerships, limited
partnerships, trusts and all other entities.
(m) Interest on Overdue Amounts. To the extent any amount
becomes due and owing hereunder, the party to whom such amount is payable shall
be entitled to receive, in addition to such amount, interest thereon at the
higher of 12% per annum or the rate specified in section 7(b) hereof, from and
after the date on which notice of delinquency is given to the party or parties
owing the amount so due.
(n) Specific Performance. In addition to such other remedies
as may be available under applicable law, the parties acknowledge that the
remedies of specific performance and/or injunctive relief shall be available and
proper in the event any party fails or refuses to perform its duties hereunder.
(o) Arbitration. In the event any dispute or controversy
arising out of this Agreement cannot be settled by the parties, such controversy
or dispute shall be submitted to arbitration in Phoenix, Arizona, and for this
purpose each party hereby expressly consents to arbitration in such place. In
the event the parties cannot mutually agree upon an arbitrator and procedure to
settle their dispute or controversy within fifteen (15) days after written
demand by one of the parties for arbitration, then the dispute or controversy
shall be arbitrated by a single arbitrator pursuant to the then-existing rules
and regulations of the American Arbitration Association governing commercial
transactions. The decision of the arbitrator shall be binding upon the parties
hereto for all purposes, and judgment to enforce any such binding decision may
be entered in Superior Court, Maricopa County, Arizona (and for this purpose
each party hereby expressly and irrevocably consents to the jurisdiction of said
court). At the request of either party, arbitration proceedings shall be
conducted in the utmost secrecy. In such case, all documents, testimony and
records shall be received, heard and maintained by the arbitrator in secrecy,
available for inspection only by either party and by their attorneys and experts
who shall agree, in advance and in writing, to receive all such information in
secrecy. In all other respects, the arbitration shall be conducted pursuant to
the Uniform Arbitration Act as adopted in regulations
15
of the American Arbitration Association governing commercial transactions to the
extent such rules and regulations are not inconsistent with such Act or this
Agreement. Nothing in the foregoing shall prohibit any party from seeking or
obtaining any form of interim relief, equitable or otherwise, from a court of
competent jurisdiction as necessary to protect its interests.
(p) Exhibits. Any Exhibit attached hereto shall be deemed to
have been incorporated herein by this reference, with the same force and effect
as if fully set forth in the body hereof.
(q) Invalidity. Notwithstanding any other term or provision of
this Agreement, if any right or interest created by or in connection with this
Agreement would be invalid or unenforceable if not subject to the terms
contained in this sentence, such interest or right shall terminate twenty (20)
years after the date of death of the last to die of the parties and the children
of the parties living at the time of creation of such right or interest.
(r) Severability. If any provision of this Agreement is
declared void or unenforceable, such provision shall be deemed severed from this
Agreement, which shall otherwise remain in full force and effect.
(s) Business Day; Time for Performance. Any reference in this
Agreement to "business day" shall refer to a Monday, Tuesday, Wednesday,
Thursday or Friday on which a majority of the banks (by number) having their
principal executive offices in Phoenix, Arizona are generally open for business
in that City. If the date on which an act specified to occur or be performed
under this Agreement shall not be a business day, or if the last day on which an
election, notice or other act can be made or accomplished under this Agreement
shall not be a business day, then the same shall be timely if it occurs or is
performed, made or accomplished on the next following business day.
18. Covenants to Maintain "S" Corporation Status. The Shareholders
having all consented to have the Corporation elect to be treated as an S
corporation under Subchapter S of the Internal Revenue Code of 1986, as amended
(the "Code"), agree that in order to preserve such election, none of them or
their successors or assigns shall transfer any shares of the Corporation or any
interest therein to any person or organization or take any other action, or fail
to take any action if the effect of such transfer or other action or nonaction
(in the opinion of counsel to the Corporation) may be to disqualify the
Corporation from treatment as an S corporation under the requirements of such
Subchapter S of the Code, as from time to time amended (including without
limitation, those requirements contained in current Section 1361 of the Code).
Any transfer in violation of this Section 18 shall be void and of no effect.
This Section 18 may be amended only with the consent of all shareholders of the
Corporation.
19. Limited Voting Agreement. To provide an orderly transition, Xxxxx,
Little and Xxxxxxxxxxx hereby agree that in event of the death or disability of
Little triggering the provisions of section 8 of this Agreement occurring at a
time when Xxxxx, Little and Xxxxxxxxxxx have the
16
power to elect all of the directors of the Company, until the Shares held by
Little have been disposed of in accordance with the terms of this Agreement, all
of their respective Shares shall be voted to set the size of the Board of
Directors of the Corporation at three (3) and to elect Xxxxx and Xxxxxxxxxxx as
two of the directors and such third person as Xxxxx and Xxxxxxxxxxx shall select
as the third director. Upon application of the provisions of section 8 and the
transfer of the Shares held by Little, the limited voting agreement in this
section 19 shall be of no further force or effect and the shareholders of the
Corporation shall then immediately proceed to the election of a new Board of
Directors in accordance with their Share interest in the Corporation.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day, month and year first written above.
TRACER DESIGN, INC., an Arizona
corporation
By /s/ XXXX X. XXXXXX
-------------------------------------
Its President
"Corporation"
ATTEST:
/s/ XXXXX X. XXXXX
--------------------------------
Secretary
/s/ XXXX X. XXXXXX
----------------------------------------
XXXX X. XXXXXX
/s/ XXXXXX X. XXXXXXXXXXX
----------------------------------------
XXXXXX X. XXXXXXXXXXX
/s/ XXXXX X. XXXXX
----------------------------------------
XXXXX X. XXXXX
/s/ XXXXX XXXXX
----------------------------------------
XXXXX XXXXX
17
DISCLAIMER OF SPOUSES
I, XXXXXXX XXXXXXXXXXX, the wife of XXXXXX X. XXXXXXXXXXX, a party
hereto, do hereby disclaim any and all interest whatsoever in the Shares of
XXXXXX X. XXXXXXXXXXX in Tracer Design, Inc., including without limitation any
of the Shares, which are and shall remain the sole and separate property of
Xxxxxx X. Xxxxxxxxxxx.
DATED as of July 13, 1995.
/s/ XXXXXXX XXXXXXXXXXX
----------------------------------------
XXXXXXX XXXXXXXXXXX
I, XXXXXX X. XXXXX, the wife of XXXXX XXXXX, a party hereto, do hereby
disclaim any and all interest whatsoever in the Shares of XXXXX XXXXX in Tracer
Design, Inc., including without limitation any of the Shares, which are and
shall remain the sole and separate property of Xxxxx Xxxxx.
DATED as of July 13, 1995.
/s/ XXXXXX X. XXXXX
----------------------------------------
XXXXXX X. XXXXX
I, XXXXX XXXXX, the wife of XXXXX X. XXXXX, a party hereto, do hereby
disclaim any and all interest whatsoever in the Shares of XXXXX X. XXXXX in
Tracer Design, Inc., including without limitation any of the Shares, which are
and shall remain the sole and separate property of Xxxxx X. Xxxxx.
DATED as of July 13, 1995.
/s/ XXXXX XXXXX
----------------------------------------
XXXXX XXXXX
18
EXHIBIT "A"
Cross Purchase Agreement
XXXX X. XXXXXX, XXXXXX X. XXXXXXXXXXX, and XXXXX X. XXXXX (hereinafter
referred to as "Stockholders," or individually as "Stockholder"), each owning
capital stock in TRACER DESIGN, INC., (hereinafter referred to as
"Corporation"), and XXXXXX X. XXXX, (later referred to as "Trustee") hereby
agree for themselves, their heirs, successors, and personal representatives, as
follows as of this 1st day of March, 1994.
PURPOSE
The purpose of this agreement is to provide for the purchase by each
Stockholder of the other's corporate interest (as reflected in this agreement,
or alternatively, in the Schedule of Value attached hereto) upon the death of
any Stockholder, and to facilitate payment of the purchase price in the event of
any optional purchase with respect to the withdrawal or retirement of a
Stockholder. Each Stockholder agrees to endorse his stock certificates to
reflect that they are subject to this agreement, and to transfer custody to the
Trustee hereunder. To facilitate such purchase and sale, Trustee accepts
appointment and agrees to perform the duties herein specified. The Stockholders
and the Corporation have previously entered into a Stockholders' Agreement dated
as of February 25, 1992 (the "Stockholders' Agreement"). The parties agree that
this Cross Purchase Agreement shall apply in lieu of Section 8 of the
Stockholders' Agreement with respect to the death of a Stockholder, but
otherwise the Stockholders' Agreement shall remain in full force and effect.
AGREEMENT TO BUY AND SELL UPON THE DEATH OF THE STOCKHOLDER
Upon the death of a Stockholder, that Stockholder's personal
representative shall sell, and the surviving Stockholders shall buy, all of the
deceased Stockholder's stock in the Corporation. The price will equal the value
as provided in Article III below or as set forth on the attached Schedule of
Value, as amended from time to time. The deceased Stockholder's estate and the
surviving Stockholders shall execute and deliver such instruments as may be
necessary to complete the sale and purchase hereunder. Any stock subsequently
acquired by a Stockholder shall likewise be subject to purchase and sale under
the terms of this agreement.
VALUATION AND PURCHASE PRICE
The outstanding capital stock of Corporation consists of 10,000 shares,
which are held and owned by the Stockholders as follows:
NAME SHARES AGGREGATE VALUE PERCENTAGE INTEREST
Xxxx X. Xxxxxx 5100 $500,000 51%
Xxxxxx X. Xxxxxxxxxxx 2450 $240,196 24.5%
Xxxxx X. Xxxxx 2450 $240,196 24.5%
In arriving at the stock values ascribed above, the parties have
determined the current market value of all Corporation assets, making such
adjustments for tax-depreciated assets and undervalued or overvalued assets as
is required to more clearly reflect current market values, and adding thereto a
value ascribed and mutually agreed to by the parties for goodwill. Such value
may be changed from time to time by the parties hereto by endorsement opposite
their signatures in the "Schedule Of Value" attached; provided, however, that if
the parties neglect to revalue the Corporation for a period in excess of one
year,
19
the Corporation's independent accounting firm ("CPA") is directed to apply the
same valuation procedure, measuring adjusted asset values and goodwill as of the
last day of the month proceeding the death, retirement or withdrawal of
Stockholder to make its best good faith determination of value.
The retiring or withdrawing Stockholder (or, in the event of death, the
Stockholder's personal representative) and the surviving or remaining
Stockholder may nevertheless mutually elect to accept the last valuation made as
controlling for purchase and sale purposes.
INSURANCE FUNDING
To provide cash to purchase the stock of a deceased Stockholder,
Trustee shall apply, as owner and beneficiary, for a life insurance policy upon
the life of each Stockholder, in an amount equal to the purchase price-valuation
established under Article III, but not less than the amounts set forth below.
Such policies purchased to date or any policies hereafter acquired shall be
listed on the attached "Schedule of Life Insurance."
Trustee will hold title to policies on each Stockholder's life, and
correspondingly, each Stockholder obtains equitable title to the insurance on
each other Stockholder's life in the following amounts:
INSURED POLICY AMOUNT STOCKHOLDER'S EQUITABLE INTEREST
Name Interest
XXXX X. XXXXXX $750,000 XXXX X. XXXXXX 51%
XXXXXX X. XXXXXXXXXXX $500,000 XXXXXX X. XXXXXXXXXXX 24.5%
XXXXX X. XXXXX $500,000 XXXXX X. XXXXX 24.5%
Within 30 days prior to each policy anniversary each Stockholder shall
transfer to the Corporation (with notice of such transfer being simultaneously
sent to the Trustee) sufficient cash for premiums necessary to maintain his
equitable interest on each policy or policies on his co-Stockholders, as
provided above, and shall provide the insured Stockholder evidence of such
transfers. Where the "split dollar" technique is employed, the Corporation shall
timely pay its premium share under the arrangement. The Corporation shall
immediately thereafter remit such cash premium contribution(s) to the insurer.
In the event a Stockholder fails to transfer such cash premiums within such
period, the insured Stockholder may pay the premium to the insurer, and such
premium advances shall be added to the purchase price of his stock interest.
While this agreement remains in force, the Trustee shall provide written notice
to the Stockholders of his intent to exercise any of the policy rights, options,
or privileges.
TERMS OF PAYMENT UPON DEATH
Upon the death of a Stockholder, the Trustee shall promptly make claim
for the death proceeds of any life insurance policies insuring the life of a
deceased Stockholder. Where it becomes necessary for Trustee to institute a
cause of action to recover the proceeds, the surviving Stockholders agree to
advance and guarantee the Trustee his reasonable expenses, including attorneys
fees and costs. If the insurance proceeds are equal to or in excess of the then
current purchase price, the Trustee shall pay over the full purchase price to
the deceased Stockholder's estate, in cash. The excess proceeds, if any, shall
then be distributed to the Corporation free of any obligations under this
agreement.
If the insurance proceeds are less than the then current purchase price
determined pursuant to Article III, said proceeds, and an additional amount
contributed by the surviving Stockholders equal to the difference between said
proceeds and the purchase price, shall be paid by the Trustee to the deceased
Stockholder's estate, provided, however, that the surviving Stockholder shall
have the option to pay such
20
balance in cash, or by promissory notes, as provided in Section 7(a), (b) and
(c) of the Stockholders' Agreement.
The deceased Stockholder's personal representative shall thereupon
deliver to the Trustee any assignments, xxxx of sale, or other necessary legal
evidence of title as required to transfer to the surviving Stockholders all the
deceased Stockholder's right, title and interest to the stock of the
Corporation. The deceased Stockholder's personal representative shall have the
right to rescind this agreement in the event the surviving Stockholders fail to
perform under the purchase terms above, or to execute such promissory notes and
provide the requested security for any portion of the purchase price not
received in cash.
LIFETIME OR RETIREMENT SALE; RESTRICTIONS ON ENCUMBRANCE
In the event a Stockholder desires to sell his corporate interest
during his lifetime, or upon retirement, he shall be precluded from selling or
offering to sell his stock to any other person or institution, except in
compliance with the Stockholders' Agreement. In the event the remaining
Stockholders elect to purchase the retiring or withdrawing Stockholder's
interest pursuant to the Stockholders' Agreement, such purchase shall be made on
an installment sale basis. The remaining Stockholders shall direct the Trustee
to exercise any available life insurance policy options to borrow or withdraw
policy cash values, and to make an initial down payment in cash of twenty
percent (20%) of the purchase price as determined under Section 7(b) of the
Stockholders' Agreement. The remaining balance shall be paid pursuant to Section
7(b) of the Stockholders' Agreement, commencing with the annual anniversary of
the initial down payment as described above, using the same policy cash value
sources, if any, and otherwise by payments from the purchasing Stockholders.
DISABILITY BUY SELL
The parties acknowledge that they are not presently providing for
insurance to fund cross purchases in the event of a Stockholder disability. They
shall continue to give consideration to doing so, and shall amend this Agreement
appropriately in the event they elect to make provision for such a buy-out.
DISPOSITION OF LIFE OR DISABILITY POLICIES ON TERMINATION OF AGREEMENT
In the event this agreement is terminated under any of the provisions
of Article XIV, the insured Stockholder shall have the option, exercisable
within thirty (30) days of such event, to purchase from the Trustee the life
insurance policy insuring his life for a price equal to the policy's
interpolated terminal reserve value (plus any unearned premium and dividends, or
cash accumulations, if any, and less any policy indebtedness or cash
withdrawals), if any, by giving written notice within such period to the
Trustee. In a similar fashion, and upon the same conditions as above, each
Stockholder may purchase any disability policies insuring his life from the
Trustee for a price equal to the unearned premiums thereunder. Upon a
Stockholder's exercise of this policy purchase option, the Trustee shall
distribute to each policy-owning Stockholder his equitable share of such sale
proceeds.
Conversely, if a Stockholder fails to exercise these policy purchase
options within the prescribed 30-day period, the Trustee shall surrender the
policies for cash and distribute to each policy-owning Stockholder his equitable
share of such sale proceeds.
TRUSTEE DUTIES
1. Stock Certificates
The Corporation's law firm shall receive and hold the stock
certificates of all Stockholders who are party to this agreement. Upon the
death, disability or retirement sale of a Stockholder's interest and full
payment of the purchase price under the terms of this agreement or the
Stockholders' Agreement, as
21
applicable, the Trustee will obtain such certificates from the Corporation's law
firm and submit the purchased Stockholder's share certificates to the
Corporation for reissue to the remaining Stockholders according to their newly
acquired legal interest. Upon the happening of any event specified in Article
XIV, Trustee shall request the law firm to distribute to each Stockholder, or
his personal representative, his respective stock certificates.
2. Life and Disability Insurance
Trustee shall perform all acts necessary to obtain the life insurance
described in Article VI, as well as any disability policies purchased under the
provisions of Article VII. Trustee shall hold and maintain such policies in
force. In meeting premium requirements, the Trustee shall, within 60 days of a
policy anniversary, provide notice to each Stockholder of his share of premium
contributions on his co- stockholders. In the event the "split dollar" technique
is employed in the purchase of life insurance, such notice shall be provided to
both the Stockholders and the Corporation, reflecting the respective premium
contributions of each party.
Upon the death of a Stockholder, the Trustee shall make claim for and
collect the proceeds of insurance upon the life of the deceased Stockholder, and
distribute such proceeds to the deceased Stockholder's estate, as directed by
the surviving Stockholders, under the purchase terms of Article V.
Upon a lifetime or retirement sale of a Stockholder's interest, the
Trustee shall, at the direction of the remaining Stockholders, apply life
insurance policy cash withdrawals or policy loans, if any, together with any
other funds made available by the remaining Stockholders, to the lifetime
installment purchase obligation described in Article VI.
3. Termination of Agreement
Upon the termination of this agreement under any of the terms set forth
under Article XIV the Trustee shall immediately determine the "interpolated
terminal reserve value" (as defined at Article VIII) of each policy insuring the
life of a Stockholder hereunder. Similarly, Trustee shall determine the unearned
premium value of each disability policy, if any, insuring the Stockholders
herein. The Trustee shall thereafter provide notice to each respective insured
Stockholder of such values, and for a 30-day period after such notice, offer to
transfer such policy to the insured in consideration of payment in cash of such
value. Proceeds from such sale shall be distributed to the policy-owning
Stockholders, as their equitable interests dictate.
If the insured Stockholder elects not to purchase the policy or
policies insuring his life within such 30-day period, the Trustee shall
surrender the policy or policies to the insurer thereof, and thereafter
distribute to each Stockholder cash representing his equitable interest therein.
4. Removal or Resignation of Trustee
Upon 30 days' notice to the Stockholders, the Trustee may resign as
Trustee. Conversely, Stockholders may remove or replace Trustee and appoint a
new Trustee upon giving 30 days' notice to the present Trustee. If the Trustee
is removed or resigns his term, Trustee shall deliver over to the Stockholders
all stock certificates and insurance policies held under the terms of this
agreement, together with any other documents he may hold. Any successor Trustee
thereafter named by the Stockholders shall have all the duties and powers herein
conferred to the original Trustee.
5. Trustee Compensation
Trustee's compensation for the performance of the administrative tasks
required hereunder shall be as mutually agreed upon by the Trustee and the
Stockholders.
22
6. Trust Liability
Trustee shall not be liable for any damages sustained by the
Stockholders for any acts or omissions under this agreement, other than those
caused by his own willful misconduct or bad faith.
INSURER'S DUTIES
An insurer's duties, liabilities, and rights under any policy subject
to this agreement shall be governed solely by the policy itself, without any
regard whatsoever to the terms and provisions of this agreement.
REMEDIES FOR FAILURE TO PERFORM
If any party to this agreement defaults or fails to complete his
obligations under this contract, then the other parties may, at their individual
option, seek damages for such default or breach, or obtain specific performance
of the agreement, from a court of competent jurisdiction.
If any action is brought to enforce this contract, or any provision
thereof, the prevailing party, whether plaintiff or defendant, shall be entitled
to recover reasonable attorney fees, plus costs of suit.
NOTICE
All notices, including offers or acceptances, shall be deemed received,
if provided in writing and delivered in person to the other party, upon actual
receipt, or three (3) days after mailing by certified or registered mail to the
last known address of that party.
AMENDMENT OR ALTERATION
This agreement may be altered or amended in whole or in part at any
time by filing with this agreement a written instrument setting forth such
changes, signed by all parties to this agreement.
TERMINATION
This agreement shall terminate upon the occurrence of any of the
following events:
1. Cessation of the business;
2. Bankruptcy or receivership of Corporation;
3. Mutual agreement of the Stockholders;
4. Failure of the Stockholder to provide for any remaining
purchase balance as required under Articles VI and VIII;
5. Termination of the Stockholders' Agreement.
GOVERNING LAW: EFFECT OF HEADINGS
1. This Agreement shall be governed by the laws of the State of
Arizona.
2. All Article headings set forth in this agreement are intended
for convenience only, and shall not control or affect the meaning, construction
or intent of this agreement, or of any provision thereof.
23
IN WITNESS WHEREOF, the Stockholders and Trustee have read and signed
this agreement this 1st day of March, 1994.
WITNESSES:
/s/ Xxxx Xxxxxx /s/ Xxxx X. Xxxxxx
----------------------------------- ----------------------------------------
Xxxx X. Xxxxxx
/s/ Xxxxxx X. Xxxxxxxxxxx
----------------------------------------
Xxxxxx X. Xxxxxxxxxxx
/s/ Xxxxx X. Xxxxx
----------------------------------------
Xxxxx X. Xxxxx
/s/ Xxxxxx X. Xxxx
----------------------------------------
Xxxxxx X. Xxxx, as Trustee
24
CONSENT OF SPOUSES
I, the undersigned spouse of Stockholder XXXXX X. XXXXX hereby certify
that I have read the foregoing Cross Purchase Agreement, that I understand the
terms thereof; that I have been advised of my property rights therein; and that
I agree to be bound by the agreement and to sell any interest I may have under
the provisions thereof in accordance therewith.
WITNESS:
/s/ XXXXX X. XXXXX /s/ XXXXX XXXXX
----------------------------------- ----------------------------------------
XXXXX X. XXXXX SPOUSE OF STOCKHOLDER
I, the undersigned spouse of Stockholder XXXXXX XXXXXXXXXXX hereby
certify that I have read the foregoing Cross Purchase Agreement, that I
understand the terms thereof; that I have been advised of my property rights
therein; and that I agree to be bound by the agreement and to sell any interest
I may have under the provisions thereof in accordance therewith.
WITNESS:
/s/ XXXXXX XXXXXXXXXXX /s/ XXXXXXXX XXXXXXXXXXX
----------------------------------- ----------------------------------------
XXXXXX XXXXXXXXXXX SPOUSE OF STOCKHOLDER
25
SCHEDULE OF VALUE
The revised value of the Corporation, as provided in Article III, is as
follows:
Effective Date: Agreed Value Parties' Signatures
------------------------- ------------------- ------------------------------
STOCKHOLDER
------------------------------
STOCKHOLDER
------------------------------
STOCKHOLDER
26
SCHEDULE OF LIFE INSURANCE POLICIES
INSURANCE COMPANY POLICY DATE POLICY NO. FACE AMOUNT
Chubb 3/28/94 1/5/95 000868872 $350,000
12/31/94 656009592 $400,000
Chubb 3/28/94 1/5/95 000864660 $300,000
12/31/95 656009594 $200,000
Chubb 3/28/94 1/5/95 000864659 $400,000
12/31/95 656009593 $100,000
27
SCHEDULE OF DISABILITY INSURANCE POLICIES
INSURANCE COMPANY POLICY DATE POLICY NO. MONTHLY BENEFIT
$
--------------------- --------------- -------------- -------------------
$
--------------------- --------------- -------------- -------------------
$
--------------------- --------------- -------------- -------------------
28
ACCEPTANCE AND AMENDMENT
For good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the undersigned hereby agrees that the
undersigned and all shares of Common Stock now or hereafter held by him shall be
subject to and governed by that certain Amended and Restated Stockholders'
Agreement dated as of July 13, 1995, by and among Tracer Design, Inc.
("Tracer"), Xxxx X. Xxxxxx, Xxxxxx X. Xxxxxxxxxxx, Xxxxx X. Xxxxx and Xxxxx
Xxxxx (the "Stockholders' Agreement"), and that the same is hereby amended to
provide that, except as otherwise determined by the Board of Directors of
Tracer, in its discretion, the following issuances of capital stock of Tracer
Design, Inc. shall not be subject to the Stockholders' Agreement: (1) any
Preferred Stock (or any capital stock issued in respect of Preferred Stock,
e.g., upon conversion); (2) securities issued pursuant to the acquisition of
another corporation by Tracer by merger, purchase of substantially all of the
assets or shares, or other reorganization whereby Tracer or its shareholders own
not less than a majority of the voting power of the surviving or successor
corporation; (3) shares of Tracer's Common Stock or related options convertible
into or exercisable for such Common Stock issued to employees, officers and
directors (who are not already parties to the Stockholders' Agreement) of, and
consultants, customers, and vendors to, Tracer; and (4) shares of Tracer's
Common Stock or related options convertible into or exercisable for such Common
Stock issued to any bank, equipment lessor or other similar financial
institution or corporate strategic partner.
This Acceptance and Amendment may be signed in counterparts and each
counterpart shall be deemed to be an original hereof.
Dated as of February 5, 1996.
/s/ Xxxx X. Xxxxxx /s/ Xxxxx Xxxxx
----------------------------------- ----------------------------------------
Xxxx X. Xxxxxx Xxxxx Xxxxx
/s/ Xxxxxx x. Xxxxxxxxxxx /s/ Xxxxx X. Xxxxx
----------------------------------- ----------------------------------------
Xxxxxx X. Xxxxxxxxxxx Xxxxx X. Xxxxx
Tracer Design, Inc. hereby agrees that that certain Amended and Restated
Stockholders' Agreement dated as of July 13, 1995, by and among Tracer Design,
Inc., Xxxx X. Xxxxxx, Xxxxxx X. Xxxxxxxxxxx, Xxxxx X. Xxxxx and Xxxxx Xxxxx (the
"Stockholders' Agreement"), is hereby amended as set forth above.
By /s/ Xxxx X. Xxxxxx
------------------------------------
Xxxx X. Xxxxxx, President
29
February 2, 1996
VIA FEDERAL EXPRESS
Mr. and Mrs. R. Xxx Xxxxxx
0000 Xxxxxxx Xxxx
Xxx Xxxxxxx, Xxxxx 00000
Dear Mr. and Xxx. Xxxxxx:
As I have indicated to you, Tracer Design, Inc. ("Tracer") has signed a
term sheet with Wasatch Venture Corporation for the purposes of raising
$350,000. A copy of the term sheet is enclosed for your reference. We anticipate
the definitive documents will be executed and the transaction closed next week
(the week of February 5), and there are several matters with respect to which we
need your assistance.
First, in order to issue the Series A Preferred Stock required by
Wasatch, Tracer will have to amend its Articles of Incorporation substantially.
To do so requires a shareholder vote, which we can accomplish pursuant to a
document called a "Unanimous Consent of Shareholders", provided all shareholders
sign it and return it to us. Early the week of the 5th (hopefully on Monday) we
will be faxing to you a copy of the proposed form of Amended and Restated
Articles of Incorporation, along with a copy of the Unanimous Consent of
Shareholders. We will be asking you to review those documents and sign the
Unanimous Consent and immediately fax back to us a copy of the signature page.
Second, for informational purposes, we just want to let you know that
in connection with the closing of the Wasatch transaction, Tracer will be
adopting a two-for-one stock split. As a result, you will then hold 11,112
shares of Common Stock of Tracer.
Third, as you will note from the term sheet, the purchase price of the
shares Wasatch has agreed to purchase is $5.00 per share. Although it is not
under any legal obligation to do so, and provided you agree that all your shares
in Tracer (including those to be discussed hereafter) will be subject to that
certain Amended and Restated Stockholders' Agreement dated as of July 13, 1995
(the "Stockholders' Agreement"), Tracer will issue to you, if the Wasatch
transaction closes, an additional 8,890 shares of Common Stock of Tracer
(against execution by you of a standard form investment letter regarding
securities laws compliance), which will give you a total holding of 20,002
shares at an average price of $5.00. A copy of the Stockholders' Agreement is
enclosed, along with the form of Acceptance and Amendment being signed now in
order to amend
30
Mr. and Mrs. R. Xxx Xxxxxx
February 2, 1996
Page Two
the Stockholders' Agreement as described therein. Note that the Preferred Stock,
and certain other issuances (like in connection with acquisitions or
employee-related stock grants) will not be subject to the Stockholders'
Agreement, but Xxxxxx, Xxx and I are subject to it, as is Xxxxx Xxxxx and all of
the shares of the warrant holders, should they exercise their warrants. The
issuance of the additional shares to you will be a one-time issuance, and Tracer
will not have any obligation to make any further adjustment in the number of
your shares, whether or not the Wasatch deal closes.
Time is of the essence. If you agree as set forth in paragraph "Third"
above, please so indicate by signing the attached acceptance and faxing it on
Monday the 5th to our counsel, Xxx Xxxxxx, at (fax) 000-000-0000. We appreciate
your consideration and cooperation.
Sincerely,
/s/ Xxxx X. Xxxxxx
----------------------------------------
Xxxx X. Xxxxxx
President
31
ACCEPTANCE AND AGREEMENT
For good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the undersigned hereby agree that the undersigned
and all shares of Common Stock now or hereafter held by them shall be subject to
and governed by that certain Amended and Restated Stockholders' Agreement dated
as of July 13, 1995, by and among Tracer Design, Inc., Xxxx X. Xxxxxx, Xxxxxx X.
Xxxxxxxxxxx, Xxxxx X. Xxxxx and Xxxxx Xxxxx (the "Stockholders' Agreement"), as
being amended in accordance with the attached "Acceptance and Amendment" as
though the undersigned were signatories thereto.
Dated: February 5, 1996.
/s/ R. Xxxx Xxxxxx
----------------------------------------
R. Xxx Xxxxxx
/s/ Xxxxxxx Xxxxxxxx Kailey
----------------------------------------
Xxxxxxx Xxxxxxxx Kailey
Attachment: Form of Acceptance and Amendment dated as of February 5, 1996,
by Tracer Design, Inc., Xxxxx Xxxxx, Xxxx Xxxxxx, Xxxxxx
Xxxxxxxxxxx and Xxxxx Xxxxx.
32
ACCEPTANCE AND AGREEMENT
For good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the undersigned hereby agree that the undersigned
and all shares of Common Stock now or hereafter held by them shall be subject to
and governed by that certain Amended and Restated Stockholders' Agreement dated
as of July 13, 1995, by and among Tracer Design, Inc., Xxxx X. Xxxxxx, Xxxxxx X.
Xxxxxxxxxxx, Xxxxx X. Xxxxx and Xxxxx Xxxxx (the "Stockholders' Agreement"), as
being amended in accordance with the attached "Acceptance and Amendment" as
though the undersigned were signatories thereto.
Dated: May 30, 1996.
/s/ Xxxxx X. Xxxxxxx
----------------------------------------
Xxxxx X. Xxxxxxx
Attachment: Form of Acceptance and Amendment dated as of February 5, 1996,
by Tracer Design, Inc., Xxxxx Xxxxx, Xxxx Xxxxxx, Xxxxxx
Xxxxxxxxxxx and Xxxxx Xxxxx.
33
February 2, 1996
VIA FEDERAL EXPRESS
Xx. Xxxxx Xxxxx
0000 Xxxxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Dear Xxxxx:
As I have indicated to you, Tracer Design, Inc. ("Tracer") has signed a
term sheet with Wasatch Venture Corporation for the purposes of raising
$350,000. A copy of the term sheet is enclosed for your reference. We anticipate
the definitive documents will be executed and the transaction closed next week
(the week of February 5), and there are several matters with respect to which we
need your assistance.
First, in order to issue the Series A Preferred Stock required by
Wasatch, Tracer will have to amend its Articles of Incorporation substantially.
To do so requires a shareholder vote, which we can accomplish pursuant to a
document called a "Unanimous Consent of Shareholders", provided all shareholders
sign it and return it to us. Early the week of the 5th (hopefully on Monday) we
will be faxing to you a copy of the proposed form of Amended and Restated
Articles of Incorporation, along with a copy of the Unanimous Consent of
Shareholders. We will be asking you to review those documents and sign the
Unanimous Consent and immediately fax back to us a copy of the signature page.
Second, for informational purposes, we just want to let you know that
in connection with the closing of the Wasatch transaction, Tracer will be
adopting a two-for-one stock split. As a result, you will then hold 10,204
shares of Common Stock of Tracer.
Third, as you will note from the term sheet, the purchase price of the
shares Wasatch has agreed to purchase is $5.00 per share. Although it is not
under any legal obligation to do so, and provided you agree to the amendment of
that certain Amended and Restated Stockholders' Agreement dated as of July 13,
1995 (the "Stockholders' Agreement"), Tracer will issue to you, if the Wasatch
transaction closes, an additional 26,530 shares of Common Stock of Tracer
(against execution by you of a standard form investment letter regarding
securities laws compliance), which will give you a total holding of 36,734
shares at an average price of $5.00. The issuance of the additional shares to
you will be a one-time issuance, and Tracer will not have any obligation to make
any further adjustment in the number of your shares, whether or not the Wasatch
deal closes. A copy of the Stockholders' Agreement is enclosed. Note that your
current shares are already subject to that Agreement, as will the additional
shares described in this paragraph. The
34
Xx. Xxxxx Xxxxx
February 2, 1996
Page Two
Acceptance and Amendment amends the Stockholders' Agreement in order to provide
that Preferred Stock and certain other issuances (as described in the Acceptance
and Amendment) will not be subject to the Stockholders' Agreement, except as
otherwise required by the Board of Directors. This is necessary in light of the
Wasatch transaction and to give the Board needed flexibility as we go forward.
Time is of the essence. If you agree as set forth in paragraph "Third"
above, please so indicate by signing the attached Acceptance and Amendment and
faxing it on Monday the 5th to our counsel, Xxx Xxxxxx, at (fax) 000-000-0000.
We appreciate your consideration and cooperation.
Sincerely,
/s/ Xxxx X. Xxxxxx
----------------------------------------
Xxxx X. Xxxxxx
President
35
