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Exhibit 10.5
EXECUTIVE SECURITIES AGREEMENT
This Executive Securities Agreement ("AGREEMENT") is entered into and
effective as of October 20, 2003 by and among Beacon Roofing Supply, Inc., a
Delaware corporation (the "COMPANY"), Xxxxxx X. Xxxx ("EXECUTIVE") and Code,
Xxxxxxxx & Xxxxxxx III, L.P., a Delaware limited partnership ("CHS").
R E C I T A L:
The Company, CHS and Executive desire to enter into an agreement pursuant
to which (among other things) (a) Executive shall purchase, and the Company
shall sell, shares of Class A Common Stock of the Company, and (b) certain
obligations regarding the transfer the Company's securities are set forth.
A G R E E M E N T S:
The parties hereto agree as follows:
1. DEFINITIONS.
(a) For purposes of this Agreement, the following terms shall
have the following meanings unless the context indicates otherwise:
"AFFILIATE" of a Person means any other Person controlling,
controlled by or under common control with such Person and any partner of such
Person if such Person is a partnership. An "Affiliate," with respect to the
Company includes each of the Company's direct or indirect subsidiaries.
"APPLICABLE COUNTY" means Suffolk County, Massachusetts; provided,
however, that when and if Executive relocates his offices to a location outside
of the greater Boston metropolitan area in accordance with Section 5(b) of the
Employment Agreement, then the Applicable County shall be (at all times
thereafter) the county in which such relocated office is situated immediately
after such relocation.
"BEACON OPERATING" means Beacon Sales Acquisition, Inc., a Delaware
corporation.
"BOARD" means the board of directors of the Company.
"BUSINESS" has the meaning given to it in Section 11(a).
"CAUSE" means any of the following, as determined by the board of
directors of Beacon Operating, in its reasonable judgment: (i) Executive's
failure or refusal to perform such material duties and responsibilities as are
reasonably requested by the board of directors of Beacon Operating; (ii)
Executive's failure to observe all material policies of the Beacon Operating
generally applicable to executives of Beacon Operating; (iii) Executive's gross
negligence or willful misconduct in the performance of Executive's duties; (iv)
any act of fraud or embezzlement by Executive against the Company Group, other
wrongful taking by Executive of money or other assets of the Company Group for
Executive's personal use, self-dealing by Executive or his spouse or children
directly or indirectly involving the Company Group, or Executive's conviction
for (or plea of nolo contendere or the like with respect to) any felony; (v)
Executive's dissemination of information, observations and data concerning the
business plans, financial data, referral sources, customers, suppliers,
manufacturing procedures and techniques, trade secrets or acquisition strategies
of the Company or its Subsidiaries, or any other Confidential Information in
violation of Section 11(b); (vi) a breach by Executive of his obligations under
Section 2(a) hereof; or (vii) any other material breach of the terms of this
Agreement or the Employment Agreement.
"CLASS A SHARES" means shares of Class A Common Stock of the
Company.
"CLASS B SHARES" means shares of Class B Common Stock of the
Company.
"COMPANY GROUP" means the Company and its direct and indirect
subsidiaries, including Beacon Operating.
"CONTROL" means the possession, directly or indirectly, of the power
to direct or cause the direction of the management and policies of a Person,
whether through ownership of voting securities, by contract or otherwise.
"CREDIT AGREEMENT" means (i) that certain Amended and Restated Loan
and Security Agreement dated as of June 8, 2001 among Beacon Sales Acquisition,
Inc., as Borrower, the Domestic Subsidiaries of Beacon Sales Acquisition, Inc.
named therein as Domestic Subsidiary Guarantors, Xxxxxx Financial, Inc. as Agent
and as a Lender, CIT Group/Business Credit, Inc. and GMAC Business Credit LLC as
Syndication Agents and as Lenders, Wachovia Bank, N.A. and Fleet Capital
Corporation as Documentation Agents and as Lenders and the Financial
Institutions listed on the signature pages thereof as Lenders and (ii) any
replacement credit or loan agreement between the Company and/or Beacon Operating
and the Lenders specified in clause (i) above or any new or replacement lender.
"DISABILITY" means that (1) Executive is suffering from any illness,
injury or other disability which has caused (or which the board of directors of
Beacon Operating reasonably determines will cause) Executive to be unable to
perform Executive's duties with Beacon Operating for 90 consecutive days or for
120 cumulative days during any 180 day period; or (2) Executive is receiving
long term disability benefits under any policy, plan or program.
"EMPLOYMENT AGREEMENT" means that certain Employment Agreement
effective as of the date hereof, by and between Executive and Beacon Operating.
"EXECUTIVE SECURITIES" means any and all (i) Executive Shares, (ii)
Subordinated Notes (if any) acquired by Executive; (iii) vested Options issued
to Executive, and (iii) securities of the Company issued or issuable with
respect to the securities referred to in clauses (i), (ii) and (iii) above by
way of a stock split, stock dividend, or other recapitalization, in each case
whether on or following the date of this Agreement. Executive Securities shall
continue to be Executive Securities in the hands of any Holder other than
Executive (other than the Company, its Subsidiaries or CHS and except for
transferees in a Public Sale or a Sale of the Company), and, except as otherwise
provided in this Agreement, each such other Holder shall succeed to all rights
and obligations attributable to Executive as a Holder hereunder.
"EXECUTIVE SHARES" means all Shares acquired by Executive pursuant
to this Agreement or any other agreement, option plan or other arrangement with
the Company or any Subsidiary, and all Shares of the Company issued or issuable
with respect to such Shares by way of a stock split, stock dividend or other
recapitalization, in each case whether on or following the date of this
Agreement.
"EXEMPT TRANSACTION" means any transfer of Executive Securities
pursuant to Section 3, 5(d), 7 or 13 of this Agreement.
"FAIR MARKET VALUE" of any security of the Company means:
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(i) the average of the closing prices of the sales of such
security on all securities exchanges on which such security may at the time
be listed, or, if there have been no sales on any such exchange on any
particular day, the average of the highest bid and lowest asked prices on
all such exchanges at the end of such particular day, or, if on any
particular day such security is not so listed, the average of the
representative bid and asked prices quoted in the NASDAQ System as of 4:00
p.m., New York time, or, if on any particular day such security is not
quoted in the NASDAQ System, the average of the highest bid and lowest
asked prices on such particular day in the domestic over-the-counter market
as reported by the National Quotation Bureau Incorporated, or any similar
successor organization, in each such case averaged over a period of
twenty-one (21) business days ending on the day as of which the Fair Market
Value is being determined; or
(ii) with respect to any security which is not listed on any
securities exchange or quoted in the NASDAQ System or the over-the-counter
market for the entire twenty-one (21) day averaging period specified above,
the fair value of such security as determined by a majority of the members
of the Board utilizing valuation methods reasonable to the industry.
With respect to Options, "Fair Market Value" means the amount determined
pursuant to the preceding sentence less the exercise price for such Option. In
determining the fair value of securities, the Board shall not apply a discount
for minority interest or lack of liquidity. In no event shall the Fair Market
Value of a debt instrument be greater than the outstanding principal and accrued
and unpaid interest on that debt instrument.
"FAMILY GROUP" means the spouse and immediate descendants (whether
natural or adopted) of Executive (collectively, "RELATIVES"), any custodian of a
custodianship for and on behalf of one or more Relatives or Executive and any
trustee of a trust solely for the benefit of one or more Relatives.
"FULLY-DILUTED BASIS" shall mean the number of Shares which would be
outstanding, as of the date of computation, if all Options (except options to
the extent not then vested) to acquire Shares had been converted or exercised.
"HOLDER" means any holder of Executive Securities (including,
without limitation, Executive and Executive's Permitted Transferees).
"INDEPENDENT THIRD PARTY" means any Person who, immediately prior to
the contemplated transaction, does not directly or indirectly beneficially own
in excess of five percent (5%) of the Shares on a Fully-Diluted Basis, who is
not an Affiliate of any such five percent (5%) owner and who is not the spouse
or descendant (by birth or adoption) of any such five percent (5%) owner.
"INITIAL PUBLIC OFFERING" means the Company's initial Public
Offering.
"1933 ACT" means the Securities Act of 1933, as amended from time to
time, or any successor thereto.
"1934 ACT" means the Securities Exchange Act of 1934, as amended
from time to time, or any successor thereto.
"OPTIONS" means (i) all warrants, options or other rights to
subscribe for purchase or otherwise acquire Shares and (ii) all or any
securities convertible into or exchangeable for Shares.
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"ORIGINAL COST" means $15,900 per Class A Share (such amount to be
equitably adjusted, upward or downward, for stock splits, stock dividends,
recapitalizations and the like), provided that the Original Cost of Executive
Shares purchased pursuant to the exercise of Options shall be the exercise
price, if any, actually paid therefor, and if such Options have not been
exercised, the Original Cost of such Options shall be the greater of $0.01 per
Option or the cash price actually paid therefor.
"OUTSTANDING INDEBTEDNESS" means, with respect to any Subordinated
Note, the outstanding principal balance of, and all accrued and unpaid interest
under, such Subordinated Note.
"PERSON" means an individual, a partnership, a limited partnership,
a corporation, a limited liability company or partnership, an association, a
joint stock company, a trust, a joint venture, an unincorporated organization,
or the United States of America or any other nation, any state or other
political subdivision thereof, or any entity exercising executive, legislative,
judicial, regulatory or administrative functions of government.
"PUBLIC OFFERING" means a public offering of Shares (or the
securities of any successor to the Company) or any shares of capital stock of a
subsidiary of the Company (or its successor) pursuant to an effective
registration statement under the 1933 Act (except on Form S-4 or S-8 or any
successor form).
"PUBLIC SALE" means any sale pursuant to a Public Offering or any
sale to the public pursuant to Rule 144 (as defined below).
"RESIGNATION" means voluntary termination by Executive of his
employment with the Company and the Subsidiaries, but shall not include
Retirement. A resignation triggered by the diminution of Executive's title of
President and Chief Executive Officer of the Company or of Beacon Operating or a
material diminution in his duties or a reduction in Executive's Base Salary (as
defined in the Employment Agreement) or bonus opportunity from Beacon Operating
shall not constitute a Resignation but rather a termination by Beacon Operating
without Cause. For purposes hereof, Executive's "bonus opportunity" shall be
treated as reduced if (and only if) Beacon Operating breaches its obligations
under Section 3(b) of the Employment Agreement. If Executive's employment ends
effective as of the expiration of the then current term of the Employment
Agreement, and such event occurs because the Company is unwilling to extend the
Employment Agreement on its then current terms, this shall be treated as a
termination without Cause and not as a Resignation. If Executive's employment
ends effective as of the expiration of the then current term of the Employment
Agreement, other than in the circumstances described in the preceding sentence,
this shall be treated as Resignation and not as a termination without Cause.
"RETIREMENT" means the voluntary termination of Executive's
employment with the Company and its Subsidiaries when Executive is at least 65
years old. Such a termination shall not be considered a "Resignation".
"SALE OF THE COMPANY" means the sale (in a single transaction or in
a series of related transactions) of the Company to any Independent Third Party
or group of Independent Third Parties pursuant to which such party or parties
acquire (i) Shares (whether by merger, consolidation, sale or transfer of
shares, reorganization, recapitalization or otherwise) possessing the voting
power under normal circumstances to elect a majority of the members of the Board
or (ii) all or substantially all of the assets of the Company and its
Subsidiaries, determined on a consolidated basis.
"SEC" means the United States Securities and Exchange Commission.
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"SHARES" means Class A Shares or Class B Shares (now or hereafter
issued), and any shares issued in respect of such shares pursuant to a dividend,
stock split reclassification or like action, or pursuant to an exchange
(including a merger).
"SUBORDINATED NOTES" means the 12% Junior Subordinated Promissory
Notes issued from time to time by the Company or assumed by the Company from
time to time.
"SUBSIDIARY" means any Person of which the Company or Beacon
Operating owns securities having a majority of the voting power in electing the
board of directors directly or through one or more Subsidiaries (or, in the case
of a partnership, limited liability company or other similar entity, securities
conveying, directly or indirectly, a majority of the economic interests in such
partnership or entity). In the case of the Company, the term Subsidiary or
Subsidiaries shall include Beacon Operating.
"TRANSFER" shall mean any transfer, sale, assignment, pledge,
encumbrance or other disposition (irrespective of whether any of the foregoing
are effected, with or without consideration, voluntarily or involuntarily, by
operation of law or otherwise, or whether INTER VIVOS or upon death).
(b) OTHER DEFINITIONS. Other defined terms are contained in the body of
this Agreement.
2. PURCHASE AND SALE OF EXECUTIVE SHARES AND SUBORDINATED NOTES.
(a) CLOSING. Executive shall purchase from the Company, and the Company
shall sell to Executive, at a time prior to January 1, 2004 that Executive shall
designate, 31.447 Class A Shares at a price of $15,900.00 per Class A Share. The
aggregate purchase price for such Class A Shares is Five Hundred Thousand
Dollars ($500,000) (the "ORIGINAL SUBSCRIPTION PRICE"). The Original
Subscription Price shall be paid to the Company as follows: at the closing for
such purchase, Executive shall pay to the Company $500,000 in cash, by cashiers
check or by wire transfer in immediately available funds.
(b) EXECUTIVE REPRESENTATIONS AND WARRANTIES. In connection with the
purchase and sale of Executive Securities pursuant to this Agreement, Executive
represents and warrants to the Company, and agrees and acknowledges that:
(i) The Executive Securities to be acquired by Executive
pursuant to this Agreement are and shall be acquired for Executive's own
account, for investment purposes only and not with a present view to, or
intention of, distribution or resale thereof in violation of the 1933 Act
or any state securities laws and that, irrespective of any other provisions
of this Agreement, the Executive Securities shall be Transferred only in
compliance with all applicable federal and state securities laws,
including, without limitation, the 1933 Act.
(ii) The Executive Securities are not registered under the 1933
Act and must be held by Executive until such Executive Securities are
registered under the 1933 Act or an exemption from such registration is
available. The Company shall have no obligation to take any actions that
may be necessary to make available any exemption from registration under
the 1933 Act, and the Company shall place "stop transfer" restrictions on
the party responsible for recording Transfers of Executive Securities in
violation of the foregoing provisions of this clause (ii).
(iii) Executive is familiar with Rule 144 ("RULE 144") adopted by
the SEC which establishes guidelines governing, among other things, the
resale of "restricted securities" (securities, such as Executive
Securities, which are acquired from the issuer of such securities in a
transaction not involving any Public Offering).
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(iv) Rule 144 is not presently available for Transfers of the
Executive Securities because, among other things, the Company is not
presently required to file the reports required to be filed by Section
15(d) of the 1934 Act, and does not have a class of securities registered
pursuant to Section 12 of that statute; and, even if the Company were
required to file reports under the 1934 Act, and had filed all reports
required to be filed, reliance on Rule 144 to Transfer securities is
subject to other restrictions and limitations, as set forth in Rule 144.
(v) In connection with any Transfer of Executive Securities
under Rule 144 or pursuant to any other exemption, Executive may, at the
option of the Company, be required to deliver to the Company an opinion
from counsel for Executive (reasonably acceptable to the Company) and/or
receive an opinion from counsel for the Company, to the effect that all
applicable federal and state securities law requirements have been met.
(vi) Executive is the President and Chief Executive Officer of
the Company.
(vii) Executive is able to evaluate the risks and merits of the
investment in the Executive Securities and to make an informed investment
decision with respect thereto.
(viii) Executive is able to bear the economic risk of Executive's
investment in the Executive Securities for an indefinite period of time
because the Executive Securities have not been registered under the 1933
Act and, therefore, cannot be sold unless subsequently registered under the
1933 Act or unless an exemption from such registration is available.
(ix) Executive has reviewed financial and other information with
respect to the Company and the Subsidiaries and all such other documents
and information made available to, or requested by, Executive, and
Executive has had the opportunity to ask questions and receive answers
concerning all such materials and the terms and conditions of the offering
of the Executive Securities. Executive has had full access to such other
information and materials concerning the Company as Executive has
requested. The Company has answered all inquiries that Executive has made
to the Company relating to the Company and its Subsidiaries and the sale of
the Executive Securities hereunder.
(x) The execution, delivery and performance of this Agreement by
Executive does not and shall not conflict with, violate or cause a breach
of any agreement, contract or instrument to which Executive is a party or
any judgment, order or decree to which Executive is subject.
(xi) Executive has not granted any proxy or become party to any
voting trust or other agreement which is inconsistent with, conflicts with
or violates any provision of this Agreement.
(xii) Executive has the legal capacity to execute and perform this
Agreement. This Agreement has been duly executed and delivered by
Executive, and constitutes a valid and legally binding obligation of
Executive, enforceable against him in accordance with its terms (except to
the extent that enforcement may be affected by laws relating to bankruptcy,
reorganization, insolvency and creditors' rights and by the availability of
injunctive relief, specific performance and other equitable remedies).
(xiii) Executive is an "Accredited Investor" as defined in
Regulation D as promulgated under the 1933 Act.
(c) COMPANY REPRESENTATIONS AND WARRANTIES. In connection with the
purchase and sale of Executive Securities pursuant to this Agreement, the
Company represents and warrants to Executive that:
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(i) The Company is duly organized, validly existing and in good
standing under the laws of the State of Delaware. The Company has full
corporate power and authority to enter into and perform its obligations
under this Agreement. The execution and delivery by the Company of this
Agreement and the performance by the Company of its obligations hereunder
have been duly authorized and approved by all requisite corporate action.
This Agreement has been duly executed and delivered by a duly authorized
officer of the Company.
(ii) The execution, delivery and performance of this Agreement by
the Company does not and shall not conflict with, violate or cause a breach
of any of the terms or provisions of the Certificate of Incorporation of
the Company or its bylaws, or of any agreement, contract or instrument to
which the Company is a party, or any judgment, order or decree to which the
Company is subject.
(d) ADDITIONAL AGREEMENTS AND UNDERSTANDINGS. As an additional
inducement to the Company to issue Executive Shares to Executive, Executive
acknowledges and agrees that:
(i) Neither the issuance of Executive Shares to Executive nor
any provision contained herein shall entitle Executive to remain in the
employment of the Company or any of its Subsidiaries or affect the right of
the Company or any such Subsidiary to terminate Executive's employment
(subject to the provisions of the Employment Agreement).
(ii) Shares issued by the Company pursuant to a stock dividend,
stock split, reclassification or like action, or pursuant to the exercise
of a right granted by the Company to all holders of Shares to purchase
Shares on a proportionate basis, shall be Transferred only, and for all
purposes be treated, in the same manner as, and be subject to the same
options with respect to, the Shares which were split or reclassified or
with respect to which a stock dividend was paid or rights to purchase
Shares on a proportionate basis were granted. In the event of a merger of
the Company where this Agreement does not terminate, partnership units,
membership units or shares of common stock (and/or securities convertible
into such units or shares) which are issued in exchange for Shares shall
thereafter be deemed to be Shares subject to the terms of this Agreement.
(iii) Any Person to whom Executive Securities are to be
Transferred (except pursuant to a Public Offering or a Sale of the Company)
shall execute and deliver, as a condition to such Transfer, whatever
documents are deemed reasonably necessary by the Company, in consultation
with its counsel, to evidence such party's joinder in, acceptance of, and
agreement with, the obligations with respect to the Executive Securities
contained in this Agreement. No Executive Securities may be Transferred (if
the proposed transferee is married), unless, prior to that Transfer, the
transferee furnishes a spousal consent in the form attached hereto as
EXHIBIT A whereby that spouse agrees that his or her marital property
interest or community property interest, if any, in the Executive
Securities held from time to time by the transferee is subject to this
Agreement.
(iv) Within fifteen (15) days from the date hereof, Executive
shall make an election with the Internal Revenue Service under Section
83(b) of the Internal Revenue Code and the regulations promulgated
thereunder in form and substance reasonably satisfactory to the Company.
(v) Except with the prior written consent of CHS, Executive
shall not grant any proxy or become party to any voting trust or other
agreement with respect to the Executive Securities or any interest therein.
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3. REPURCHASE OPTION.
(a) GENERAL. Upon the termination of Executive's employment with the
Company for any reason ("TERMINATION"), all Executive Securities issued to
Executive, whether held by Executive or one or more of Executive's transferees
(collectively, the "AVAILABLE SECURITIES"), shall be subject to repurchase by
CHS and the Company pursuant to the terms and conditions set forth in this
Section 3 (the "REPURCHASE OPTION").
(b) COMPANY OPTION. The Company may elect (in its sole discretion) to
purchase all or any portion of the Available Securities pursuant to the
Repurchase Option by delivering written notice (the "REPURCHASE NOTICE") to CHS
and Executive within thirty (30) days following Termination. The Repurchase
Notice shall set forth the number and amount of Available Securities to be
acquired from each Holder, the aggregate consideration to be paid for such
securities and the time and place for the closing of such purchase.
(c) CHS OPTION. If for any reason the Company does not elect to purchase
all of the Available Securities pursuant to the Repurchase Option, CHS may elect
(in its sole discretion) to exercise the Repurchase Option for all (but not less
than all) of the Available Securities which the Company has not elected to
purchase (the "SECURITIES AVAILABLE FOR CHS"). Within sixty (60) days following
Termination, CHS may elect to purchase all (but not less than all) of the
Securities Available for CHS by giving written notice to Executive as to the
number and amount of securities being purchased by CHS from each Holder (the
"SUPPLEMENTAL REPURCHASE NOTICE").
(d) REPURCHASE PRICE. Upon exercise of the Repurchase Option, the
purchase price for the Available Securities (the "REPURCHASE PRICE") shall be as
follows:
(i) if the Repurchase Option is triggered by termination of
Executive's employment by Beacon Operating by reason of Executive's death,
Executive's Disability, termination of Executive's employment by Beacon
Operating without Cause or the Executive's Retirement, the Repurchase Price
shall be the greater of (A) the Original Cost (in the case of Executive
Shares and Options) or Outstanding Indebtedness (in the case of
Subordinated Notes, if any) or (B) the Fair Market Value of the Available
Securities as of the date of Termination; or
(ii) if the Repurchase Option is triggered by termination of
Executive's employment by Beacon Operating for Cause or Resignation of the
Executive (other than upon Retirement), the Repurchase Price shall be the
lesser of (A) the Original Cost (in the case of Executive Shares and
Options) or Outstanding Indebtedness (in the case of Subordinated Notes, if
any) and (B) the Fair Market Value of the Available Securities as of the
date of Termination.
Notwithstanding anything to the contrary herein, if the aggregate consideration
for the Available Securities is finally determined to be different than the
aggregate consideration set forth in the Repurchase Notice or the Supplemental
Repurchase Notice, then neither the Company nor CHS shall have any obligation to
purchase the Available Securities that were the subject of such notice.
(e) CLOSING. If and only if the Company and CHS collectively have
elected to purchase all (but not less than all) of the Available Securities, the
purchase of Available Securities pursuant to this Section 3 shall be consummated
at the Company's principal office at 10:00 a.m., on the thirtieth (30th) day
next following the final determination of the Repurchase Price as provided in
Section 3(d) or on such earlier day as designated by CHS or the Company, as the
case may be, in its sole discretion, upon not less than ten (10) days prior
notice to Executive. If such date is a Saturday, Sunday or legal holiday, the
closing shall occur at the same time and place on the next succeeding business
day. Subject to Section 4
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hereof, at the option of the Company and/or CHS, the Person exercising the
Repurchase Option shall pay for the Available Securities to be purchased
pursuant to the Repurchase Option by (i) delivery of a cashier's check or wire
transfer of immediately available funds, (ii) delivery of a non-negotiable
junior subordinated promissory note (the "REPURCHASE NOTE") in the form of
EXHIBIT B attached hereto, the principal amount of which shall bear interest at
the rate of eight percent (8%) per annum, with interest and a pro rata portion
of principal payable quarterly over a two-year period following delivery of the
Repurchase Note, and with such additional terms (including subordination
provisions) as shall be required by the senior lenders to the Company and/or its
Subsidiaries and/or (iii) by set off against any and all obligations due and
owing the Company and/or its Subsidiaries from the Executive, or any combination
of the foregoing. The purchasers of Executive Securities to be purchased
pursuant to the Repurchase Option hereunder shall be entitled to receive
customary representations and warranties as to ownership, title, authority to
sell and the like from the Holders regarding such sale and to receive such other
evidence, including applicable inheritance and estate tax waivers, as may
reasonably be necessary to effect the purchase of the Executive Securities to be
purchased pursuant to the Repurchase Option. Notwithstanding anything to the
contrary herein contained, if the Company and CHS collectively have elected to
purchase less than all of the Available Securities, then the Company and CHS
shall be deemed to have elected not to purchase any of the Available Securities
pursuant to the Repurchase Option.
(f) FAILURE TO DELIVER SHARES. If Executive or any other Holder of
Executive Securities whose Executive Securities are to be purchased pursuant to
Section 3 or 5 fails to deliver them on the scheduled closing date of such
purchase, the Company, CHS or their respective designees (as the case may be)
may elect to deposit the consideration representing the purchase price of the
Executive Securities with the Company's attorney (or any other third party,
including a bank or a financial institution), as escrowee. In the event of the
foregoing election, the Executive Securities shall be deemed for all purposes
(including the right to vote and receive payment for dividends) to have been
Transferred to the purchasers thereof and the Company shall issue new
certificates representing the Executive Securities to the Company, CHS or their
respective designees, as the case may be, and the certificates or instruments
registered in the name of the Person obligated to sell such Executive Securities
shall be deemed to have been canceled and to represent solely a right to receive
payment of the purchase price, without interest, from the escrow funds. If,
prior to the third (3rd) anniversary of the scheduled closing date for the
purchase pursuant to Section 3 or 5, the proceeds of sale have not been claimed
by the Executive or other seller of the Executive Securities, the escrow deposit
(and any interest earned thereon) shall be returned to the Person originally
depositing the same, and the transferors whose Executive Securities were so
purchased shall look solely to the purchasers thereof for payment of the
purchase price. The escrowee shall not be liable for any action or inaction
taken by it in good faith.
(g) TERMINATION OF REPURCHASE OPTION. The rights of the Company and/or
CHS to purchase Executive Securities pursuant to Section 3 shall terminate upon
the earliest to occur of (i) the consummation of a Sale of the Company (ii) the
consummation of a Public Offering, and (iii) termination of Executive's
employment upon Retirement.
4. MANNER OF PAYMENT AND RESTRICTION ON THE COMPANY'S RIGHT TO
PURCHASE.
(a) GENERAL RESTRICTION. Notwithstanding anything to the contrary
contained in this Agreement: (i) the Company shall not be obligated (including
if it has given a Repurchase Notice) to purchase such Executive Securities as
the Company may then be prohibited by law or bona fide contract from purchasing,
including, without limitation, the Delaware General Corporation Law (the
"DELAWARE ACT") and covenants contained in the Credit Agreement and any other
loan agreements or other bona fide agreements to which the Company or any
Subsidiary is then a party; and (ii) the Company shall not be obligated
(including if it has given a Repurchase Notice) to purchase Executive Securities
if any loan or other bona fide agreement to which any Subsidiary of the Company
is a party or is bound would prohibit
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the Subsidiaries from paying to the Company dividends or distributions
sufficient to permit the Company to pay the entire purchase price for such
Executive Securities.
(b) PAYMENT LIMITATION. Notwithstanding anything to the contrary
contained in this Agreement or in any Repurchase Note delivered pursuant to the
terms hereof, the Company's obligation to make a payment pursuant to a
Repurchase Note delivered pursuant to Section 3(e) of this Agreement shall be
suspended to the extent and for so long as (i) the making of such payment,
together with the making of all other payments to be made during such fiscal
year on account of the Company's purchases of Executive Securities pursuant to
this Agreement and securities purchased pursuant to any other agreements with
shareholders of the Company, would result in a violation of the Delaware Act or
a breach of any covenant contained in any loan or other bona fide agreement to
which the Company or any of its Subsidiaries is a party, or (ii) the Company's
Subsidiaries are unable to pay to the Company dividends or other distributions
sufficient to permit the Company to pay the entire purchase price for such
Executive Securities in cash as a result of applicable law or any covenant
contained in any bona fide agreement to which any of such Subsidiaries are a
party. If any portion of the Company's obligation to Executive or any of
Executive's transferees has been tolled for a period in excess of three (3)
years from the original closing date, Executive (or such transferee), by written
notice delivered to the Company, may elect to rescind the sale of that portion
of the Executive Securities, the proceeds of sale of which are represented by
unpaid notes made by the Company which are owed to Executive or such transferee.
If payments are suspended pursuant to this Section 4(b), at such time as the
Company is able to resume making payments without violation of the Delaware Act,
applicable law or a covenant in any bona fide agreement to which the Company or
any of its Subsidiaries is a party, the Company shall first make payments of
arrearage owed to the former shareholders on a proportional (to the amount of
arrearage) basis, and shall then make regularly scheduled payments.
5. RESTRICTIONS ON TRANSFER OF EXECUTIVE SECURITIES. This Section 5
shall apply to any proposed Transfer of Executive Securities. Notwithstanding
anything to the contrary contained herein, a Transfer of Executive Securities
shall not be valid or have any force or effect unless (a) such Transfer is made
in accordance with the provisions of this Agreement, (b) such Transfer would not
result in a violation of any applicable federal or state securities law, and (c)
in the reasonable determination of the Board, the intended transferee of such
Transfer is not engaged in the Business, has not been engaged in the Business in
the immediately preceding two (2) years, and is not preparing to engage in the
Business.
(a) TRANSFER OF EXECUTIVE SECURITIES. No Holder shall Transfer any
interest in any Executive Securities except pursuant to an Exempt Transaction or
pursuant to this Section 5. No Holder shall consummate any such Transfer (except
pursuant to an Exempt Transaction or pursuant to Section 5(c)) until sixty-one
(61) days following the latest of the delivery to the Company and CHS of the
Offer Notice (as defined below), unless all rights provided in Section 5(b) have
been exercised or waived, and the parties to the Transfer have been finally
determined pursuant to such exercises or waivers prior to the expiration of such
sixty-one (61) day period (the "ELECTION PERIOD"). Notwithstanding anything to
the contrary herein contained, except pursuant to an Exempt Transaction, neither
Executive nor any of his Permitted Transferees shall Transfer any interest in
Executive Securities (i) unless Executive or such Permitted Transferee(s) has
received a bona fide written offer to purchase such Executive Securities, (ii)
until one hundred twenty (120) days following Executive's Termination and (iii)
in any event without the prior written consent of a majority of the members of
the Board (which approval shall not be unreasonably withheld).
(b) FIRST REFUSAL RIGHT. If any Holder desires to Transfer any Executive
Securities other than in an Exempt Transaction or a transaction pursuant to
Section 5(c), such Holder (the "TRANSFERRING HOLDER") shall deliver a written
notice (the "OFFER NOTICE") to the Company and CHS. The Offer Notice shall
disclose in reasonable detail the identity of the proposed transferee(s)
(including, without limitation,
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all parties holding controlling interests in such proposed transferee), the
proposed number, amount and type of Executive Securities to be transferred and
the proposed terms and conditions of the Transfer and any other material
information reasonably requested by the Board and CHS and shall include a true
and correct copy of the written offer to purchase Executive Securities received
by him. The delivery by the Transferring Holder of the Offer Notice shall create
the following two (2) options:
(i) First, the Board, acting in good faith, may elect (in its
sole discretion) to cause the Company to purchase all or any portion of the
Executive Securities specified in the Offer Notice at the price and on the
terms specified therein (provided, however, that any promissory note given
by the Company pursuant to the terms of this Section 5 shall be
subordinated to indebtedness owed to financial institutions on terms
reasonably acceptable to such financial institutions and that the Company
shall be entitled set off against the purchase price any and all
obligations due and owing the Company or any of its Affiliates from
Executive) by delivering written notice of such election to the
Transferring Holder as soon as practical, but in any event within thirty
(30) days following the delivery of the Offer Notice (the "COMPANY OFFER
PERIOD").
(ii) If the Company has not elected to purchase all of the
Executive Securities within the Company Offer Period, then CHS may elect
(in its sole discretion) to purchase all (but not less than all) of the
Executive Securities not elected to be purchased by the Company at the
price and on the terms specified in the Offer Notice by delivering written
notice of such election to the Transferring Holder as soon as practical,
but in any event within sixty (60) days following the delivery of the Offer
Notice.
If the Company and/or CHS have elected to purchase all (but not less than all)
of the Executive Securities offered by the Transferring Holder, the Transfer of
such Executive Securities to the Company and/or CHS, as the case may be, shall
be consummated as soon as practical after the delivery of the election notices,
but in any event within thirty (30) days following the expiration of the
Election Period. The purchasers of Executive Securities offered in the Offer
Notice hereunder shall be entitled to receive customary representations and
warranties as to ownership, title, authority to sell and the like from the
Holder regarding such sale and to receive such other evidence, including
applicable inheritance and estate tax waivers, as may reasonably be necessary to
effect the purchase of the Executive Securities offered in the Offer Notice.
Notwithstanding anything to the contrary herein contained, if the Company and
CHS collectively have elected to purchase less than all of the Executive
Securities offered by the Transferring Holder, then the Company and CHS shall be
deemed to have elected not to purchase any of the Executive Securities offered
by the Transferring Holder pursuant to this Section 5.
(c) TRANSFER SUBSEQUENT TO EXPIRATION OF ELECTION PERIOD. If the Company
and CHS have not collectively elected to purchase all Executive Securities being
offered, such Transferring Holder may, within ninety (90) days following the
expiration of the Election Period and subject to the provisions of this Section
5 other than Section 5(b), Transfer such Executive Securities referred to in the
Offer Notice to the party or parties named therein at a price no less than the
price specified in the Offer Notice and on other terms and conditions offered in
the Offer Notice. Executive Securities Transferred pursuant to the previous
sentence shall thereafter continue to be subject to all restrictions on Transfer
and other provisions of this Agreement, including, without limitation, the
provisions of this Section 5 with respect to further Transfers of the Executive
Securities and a transferee, as a condition of any such Transfer, shall agree in
writing to be bound by the provisions of this Agreement. Any Executive
Securities not transferred within such sixty (60) day period shall be subject to
the provisions of this Section 5 with respect to any subsequent Transfer.
(d) PERMITTED TRANSFERS. Anything contained in this Agreement to the
contrary notwithstanding, Executive Securities may be Transferred without first
complying with the provisions of
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Section 5 other than as provided in this paragraph (d): (i) by Executive or a
Permitted Transferee to CHS (it being agreed and understood that CHS shall not
be a Holder as a result of such Transfer of Securities), (ii) by Executive to
any member of such Executive's Family Group, (iii) by a Permitted Transferee to
Executive who Transferred such Executive Securities to such Permitted
Transferee, (iv) to the personal representative of Executive or a Permitted
Transferee who is deceased or adjudicated incompetent, (v) by the personal
representative of Executive or a Permitted Transferee who is deceased or
adjudicated incompetent to any member of such Executive's or Permitted
Transferee's Family Group, (vi) upon termination of a trust or custodianship
which is a Permitted Transferee of a Holder, by the trustee of such trust or
custodian of such custodianship to the person or persons who, in accordance with
the provisions of such trust or custodianship, are entitled to receive the
Executive Securities held in trust or custody, or (vii) the pledge by Executive
to the Company of the Executive Securities pursuant to a pledge agreement
(collectively, the "PERMITTED TRANSFEREES"); provided that (A) the restrictions
contained in this Section 5 shall continue to be applicable to the Executive
Securities after any such Transfer, and (B) the Permitted Transferees of such
Executive Securities shall have agreed in writing to be bound by all of the
provisions of this Agreement affecting the Executive Securities so transferred.
(e) CONSIDERATION FOR TRANSFER. Notwithstanding anything to the contrary
herein contained, except as may be required by Section 4 hereof, where a
Transfer is made for consideration, in no event shall any such Transfer by
Executive of Executive Securities be made for any consideration other than (i)
United States dollars payable in full upon consummation of such Transfer and/or
(ii) a promissory note with all amounts owed thereunder payable in United States
dollars.
(f) DURATION OF SECTION 5. Notwithstanding anything to the contrary
contained in this Agreement, the provisions of this Section 5 shall terminate
upon the consummation of a Public Offering or Sale of the Company.
6. CERTAIN RESTRICTIONS AFTER A PUBLIC OFFERING.
(a) The Holders may not, at any time during the first three years after
the Initial Public Offering, Transfer a number of Shares that -- when added to
the aggregate number of Shares previously Transferred by the Holders after the
Initial Public Offering -- would exceed the then current Maximum Number. The
preceding sentence does not restrict Transfers to Permitted Transferees (and
such Transfers are not counted for purposes of such sentence). "MAXIMUM NUMBER"
means, as of a particular time, the product of (i) the CHS Fraction (determined
as of such time) and (ii) the number of Shares held by the Holders (as a group)
immediately after the Initial Public Offering. "CHS FRACTION" means, as of a
particular time, a fraction, the numerator of which is the aggregate number of
Shares sold by CHS on or before that time but after the Initial Public Offering,
and the denominator of which is the number of Shares held by CHS immediately
after the Initial Public Offering.
(b) This Section 6 does not require the Company (or any successor of the
Company): (i) to register or qualify any securities, (ii) to list any securities
for trading on any market or take any steps to engage in any Public Offering, or
(iii) to take any steps to cause Rule 144 to be available (including disclosing
the current public information described in section (c) of Rule 144). The
Transfer restriction imposed by this Section 6 is in addition to, and without
limitation of, any restrictions imposed by any lockup, standstill or other
agreement contemplated by Section 13. If there is any inconsistency between this
Section 6 and any registration rights granted to any Holder, this Section 6
controls.
7. SALE OF THE COMPANY.
(a) If the holder(s) of a majority of the Shares then outstanding and
(if necessary under applicable law) the Board approve a Sale of the Company (an
"APPROVED SALE") (and if the Sale of the
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Company is to an entity that is Controlled by CHS, the consideration for such
Sale of the Company is fair to the Company and the holders of Shares as
determined pursuant to the same mechanism used to determine Fair Market Value
under Section 1), each Holder shall consent to and raise no objections against
the Approved Sale, and if the Approved Sale is structured as a sale of Shares,
each Holder shall, if requested by the holder(s) of a majority of the Shares
then outstanding, sell (or otherwise Transfer) that percentage of his Executive
Securities, on terms and conditions approved by the Board (if necessary under
applicable law) and the holder(s) of a majority of the Shares then outstanding,
as shall equal the percentage of Shares and other securities owned by CHS that
are to be included in such transaction. Each Holder shall take all actions
reasonably necessary or reasonably desirable (as determined by the holder(s) of
a majority of the Shares then outstanding) in connection with the consummation
of the Approved Sale. Without limiting the foregoing, (i) if the Approved Sale
is structured as a merger, consolidation, joint venture or similar transaction,
each Holder shall vote in favor of such transaction and waive any dissenters'
rights, appraisal rights or similar rights in connection with such merger or
consolidation, and (ii) if the Approved Sale is structured as a sale or exchange
of Shares, each Holder shall agree to sell or exchange all of the Shares and
Options held by such Holder on the terms and conditions approved by the Board
and the holders of a majority of the Shares then outstanding. The Company shall
use reasonable efforts to notify Executive in writing not less than thirty (30)
days prior to the proposed consummation of an Approved Sale (or, Participation
Sale as described in Section 7(b) below); PROVIDED that such Executive agrees
that he or she will not, directly or indirectly (without the prior written
consent of the Company), disclose to any other Person (other than to such
Executive's legal counsel in confidence, as otherwise necessary to protect such
Executive's rights under this Agreement or as otherwise required by law) any
information related to such potential Sale of the Company.
(b) If CHS proposes to sell to a purchaser or related group of
purchasers such number of Shares as equals or exceeds 50% of the Shares then
held by CHS (whether in a single transaction or a series of related
transactions) (a "PARTICIPATION SALE"), Executive may elect to participate in
the contemplated transaction by delivering written notice to the Company and CHS
within ten (10) days following the receipt by Executive of notice of such
transaction. Executive shall be entitled to sell, at the same price and on the
same terms as CHS, a number of Shares equal to the product of (1) the number of
Shares owned by Executive on a Fully-Diluted Basis multiplied by (2) the
quotient of (x) the number of Shares to be sold by CHS in such transaction
divided by (y) the aggregate number of Shares held by CHS at such time, on a
Fully-Diluted Basis. Notwithstanding anything to the contrary herein contained,
this Section 7(b) shall not apply to (x) any sale to any officer, director,
employee, agent, or lender to the Company, Beacon Operating or any of its
Subsidiaries, or (y) any sale or other Transfer to any successor CHS approved
fund or to any Affiliate of CHS, provided any such successor CHS approved fund
or Affiliate of CHS agrees to the provisions of this Section 7(b).
(c) If a Holder is required or elects to participate in an Approved Sale
or a Participation Sale pursuant to Subsection (a) or (b) above: (i) upon the
consummation of the Approved Sale or the Participation Sale, as the case may be,
all of the Holders of Shares similarly situated shall receive the same form and
amount of consideration per Share, or if any Holders are given an option as to
the form and amount of consideration to be received, all such Holders shall be
given the same option; (ii) upon the consummation of the Approved Sale or the
Participation Sale, as the case may be, all of the holders of Subordinated Notes
similarly situated shall receive the same form and amount of consideration in
relation to the face amount of Subordinated Notes held by such holders, or if
any such holders are given an option as to the form and amount of consideration
to be received, all holders shall be given the same option; and (iii) all
Holders of then currently exercisable Options shall be given an opportunity to
either (A) exercise such rights prior to the consummation of the Approved Sale
or the Participation Sale, as the case may be, and participate in such sale as
Holders, or (B) upon the consummation of the Approved Sale or the Participation
Sale, as the case may be, receive in exchange for such rights consideration
equal to the amount determined by multiplying (1) the same amount of
consideration per Share received by the
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Holders in connection with the Approved Sale or the Participation Sale, as the
case may be, less the exercise price per share of such rights to acquire Shares,
by (2) the number of Shares represented by such rights. Without limiting the
foregoing, any Holder participating in a transaction pursuant to this Section 7
shall be required to make such representations, warranties and covenants, and
grant such indemnification, as may be required by the purchaser of the Shares
and which have been made by CHS or the holders of a majority of the outstanding
Shares, as the case may be. Notwithstanding anything to the contrary contained
herein, nothing in this Agreement is intended to accelerate the vesting of any
Options.
(d) If, in connection with an Approved Sale or a Participation Sale, the
Board or the holders of a majority of the outstanding Shares of the Company
enter into any negotiation or transaction for which Rule 506 (or any similar
rule then in effect) promulgated by the SEC under the 1933 Act may be available
with respect to the consideration proposed to be received by Holders, each
Holder shall, acting together with other Holders, at the request of the Company,
appoint a purchaser representative (as such term is defined in Rule 501 under
the 0000 Xxx) reasonably acceptable to the Company. If Executive appoints a
purchaser representative designated by the Company, the Company shall pay the
fees of such purchaser representative, but if Executive declines to appoint the
purchaser representative designated by the Company, Executive shall appoint
another purchaser representative (reasonably acceptable to the Company), and
Executive shall be responsible for the fees of the purchaser representative so
appointed.
(e) Each Holder shall bear such Holder's pro rata share (based upon the
number of Shares sold on a Fully-Diluted Basis) of the costs of any sale of
Executive Securities pursuant to an Approved Sale or a Participation Sale to the
extent such costs are not otherwise paid by the Company or the acquiring party;
provided, however, that all Holders are treated on an equal basis. Costs
incurred by a Holder on such Holder's own behalf shall not be considered costs
of the transaction hereunder.
(f) Notwithstanding anything to the contrary contained in this
Agreement: (i) the provisions of Section 7 shall terminate upon the consummation
of a Sale of the Company or a Public Offering; and (ii) the provisions of this
Section 7 shall not apply to any Public Offering.
8. LIMITED PREEMPTIVE RIGHTS.
(a) Except for the issuance of Shares or Options (i) in connection with
or to facilitate the acquisition of another Person's business by the Company or
any of its Subsidiaries or Affiliates (whether by acquisition of stock or
assets, or by merger, consolidation or other similar transaction), the
acquisition of any stock or assets of any Person or the formation of a joint
venture, (ii) pursuant to a Public Offering, (iii) to current or future
officers, employees, directors, agents or consultants of the Company or its
Subsidiaries, to Affiliates of the Company (or any of their respective officers,
directors, employees or agents) or (iv) to the Company's or any Subsidiary's
lenders in connection with the incurrence, renewal or maintenance of
indebtedness (including funded indebtedness), if the Company authorizes the
issuance and sale of any Shares (other than as a dividend on the outstanding
Shares) or any Options (pursuant to the exercise of warrants or otherwise) the
Company shall first offer to sell to Executive a portion of such Shares or
Options equal to the percentage determined by dividing (1) the number of Shares
held by Executive immediately prior to the proposed issuance of such securities,
on a Fully-Diluted Basis, by (2) the aggregate number of Shares outstanding at
such time, on a Fully-Diluted Basis. Executive, if he is exercising his
preemptive rights pursuant to this Section 8, shall, as a condition to such
exercise, also be required to purchase the same proportionate amount of any
other securities that the purchasers of such Shares or Options purchase in
connection with the issuance of the securities subject to the preemptive rights.
Notwithstanding anything in this Section 8 to the contrary, if preemptive rights
are exercised pursuant to this Section and pursuant to the preemptive rights
granted under Executive Securities Agreements with other executives of the
Company or its Affiliates and the Chief Executive Securities Agreements with the
Company's Chief Executive Officer for an aggregate number of Shares or Options
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which is greater than 100% of the Shares or Options to be issued and sold by the
Company, then the number of Shares that each executive, including without
limitation Executive, shall be entitled to purchase pursuant to such agreements
shall be reduced, on a pro rata basis among all such executives exercising
preemptive rights under such agreements, to the extent necessary such that the
number of Shares and Options purchased pursuant to the preemptive rights
exercised under such agreements equal the number of Shares and Options to be
issued and sold by the Company.
(b) Executive shall exercise Executive's preemptive rights hereunder
within fifteen (15) days following the receipt of written notice from the
Company describing in reasonable detail the purchase price, the payment terms
for the Shares or Options, the period in which the preemptive right hereunder is
to be exercised, and Executive's percentage allotment. Executive exercising the
Executive's preemptive right shall execute all documentation, and take all
actions, as may be reasonably requested by the Company in connection therewith.
(c) Upon the expiration of the offering period described above, the
Company shall be entitled to sell such Shares or Options which Executive has not
elected to purchase during the one hundred eighty (180) day period following
such expiration, on terms and conditions no more favorable to the purchasers
thereof than those offered to Executive. Any Shares or Options offered or sold
by the Company following such one hundred eighty (180) day period shall be
re-offered to Executive pursuant to the terms of this Section 8.
(d) The rights of the Executive under this Section 8 shall terminate
upon the earlier of (i) consummation of a Sale of the Company, (ii) the
consummation of a Public Offering, or (iii) the termination of Executive's
employment with the Company or any of its Subsidiaries.
9. ADDITIONAL RESTRICTIONS ON TRANSFER.
(a) LEGEND. All certificates evidencing Executive Shares which are
subject to this Agreement shall bear the following legend:
"The shares represented hereby have not been registered under the
Securities Act of 1933, as amended (the "Act"), and may not be
sold or transferred in the absence of an effective registration
statement under the Act or an exemption from registration
thereunder. The shares represented hereby are also subject to
additional restrictions on transfer, certain repurchase options
and certain other agreements set forth in an Executive Securities
Agreement among Beacon Roofing Supply, Inc. ("the Company"), the
original holder hereof and Code, Xxxxxxxx & Xxxxxxx III, L.P.
dated as of October 20, 2003, and the Company reserves the right
to refuse the transfer of this security until the conditions
therein have been fulfilled with respect to such transfer. A copy
of such agreement may be obtained by the holder hereof at the
Company's principal place of business without charge."
If Executive Shares remain restricted following a Public Offering and the above
legend thereby becomes inappropriate in whole or in part, a new, appropriate
legend shall be set forth on such certificates.
(b) OPINION OF COUNSEL. Executive may not Transfer any Executive Shares
without first delivering to the Company, if requested by the Company, an opinion
of counsel (reasonably acceptable in form and substance to the Company) that
neither registration nor qualification under the 1933 Act and applicable state
securities laws is required in connection with such Transfer.
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10. NOTICES. Any notice provided for in this Agreement must be in
writing and must be either personally delivered, or sent by confirmed facsimile
(provided, however, that notices delivered by facsimile shall be effective only
if such notice is also delivered by hand, or mailed by first class mail (postage
prepaid and return receipt requested) or sent by reputable overnight courier
(charges prepaid), on or before two (2) business days after its delivery by
facsimile) or by reputable overnight courier service (charges prepaid) to the
recipient at the address indicated below:
TO THE COMPANY:
Beacon Roofing Supply, Inc.
c/o Code, Xxxxxxxx & Xxxxxxx III, L.P.
00 Xxxxx Xxxxxx Xxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx Xxxxxxx and Xxxxx X. Xxxxxx
Fax: (000) 000-0000
With a copy (which shall not constitute notice to the Company) to:
Xxxxxx Xxxxxx & Xxxxx
0000 Xxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: S. Xxxxxxx Xxxx, Esq. and Xxxxxxx X. Xxxx, Esq.
Fax: (000) 000-0000
TO EXECUTIVE:
Xxxxxx X. Xxxx
5650 Wm. X. Xxxxxxxx Xxxx
Xxxxxxxxxx, Xxxx 00000
With a copy (which shall not constitute notice to Executive) to:
Xxxx X. Xxxxx
Xxxxx Xxxxx Xxxx LLC
0000 XXX Xxxxxx
Xxxxxxxxxx, Xxxx 00000
Fax: (000) 000-0000
TO CHS:
Code, Xxxxxxxx & Xxxxxxx III, L.P.
00 Xxxxx Xxxxxx Xxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx Xxxxxxx and Xxxxx X. Xxxxxx
Fax: (000) 000-0000
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With a copy (which shall not constitute notice to CHS) to:
Xxxxxx Xxxxxx & Xxxxx
0000 Xxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: S. Xxxxxxx Xxxx, Esq. and Xxxxxxx X. Xxxx, Esq.
Fax: (000) 000-0000
and/or such other address and/or to the attention of such other person as the
recipient party shall have designated by notice given in accordance with this
Section 10. Any notice under this Agreement shall be deemed to have been given:
(i) if delivered in person, at the time delivered; (ii) if sent by confirmed
facsimile, at the time sent; or (iii) if sent by overnight courier, one business
day after being given to the courier.
11. RESTRICTIVE COVENANTS.
(a) NON-COMPETE. During the Restricted Period, Executive must not
directly or indirectly: (i) engage in the Business anywhere in the Territory
other than on the Company Group's behalf; (ii) solicit any actual (as opposed to
merely prospective) customer of the Company Group, with whom Executive has had
direct contact while employed by the Company, to purchase other than from the
Company Group any goods or services sold by the Company Group; or (iii) solicit
the employment (or solicit to retain the services) of any employee, sales
representative or sales agent of the Company Group. Nothing in this Agreement,
however, prevents Executive from owning less than five percent (5 %) of any
class of publicly traded securities so long as such investment is passive and
Executive has no other involvement with the issuer of such securities. To
"ENGAGE" in a business in the Territory means (x) to render services in (or with
respect to) the Territory for that business, or (y) to own, manage, operate or
control (or participate in the ownership, management, operation or control of)
an enterprise engaged in that business in the Territory. "RESTRICTED PERIOD"
means the period beginning on the date hereof and ending eighteen (18) months
after the last day on which Executive or any of his Permitted Transferees (taken
as a group) owns any Executive Securities, except that the Restricted Period
shall in no event end later than eighteen (18) months after the last day of
Executive's employment by the Company. "TERRITORY" means the state of Texas and
all states in the United States east of the Mississippi River. "BUSINESS" means
the wholesale distribution of (i) commercial roofing products, (ii) residential
roofing products or (iii) any related products, including shingles, sheet metal,
lumber, water proofing products, siding, windows or insulation.
(b) CONFIDENTIALITY. During the Confidentiality Period: (i) Executive
must maintain all Confidential Information in confidence and must not disclose
any Confidential Information to anyone outside of the Company Group; and (ii)
Executive must not use any Confidential Information for the benefit of Executive
or any third party. Nothing in this Agreement, however, prohibits Executive: (1)
from disclosing any Confidential Information (or taking any other action) in
furtherance of Executive's duties to the Company Group while employed by the
Company; or (2) from disclosing Confidential Information to the extent required
by law (after giving prompt notice to the Company in order that the Company
Group may attempt to obtain a protective order or other assurance that
confidential treatment will be accorded such information). Upon the Company's
request at any time, Executive must immediately deliver to the Company all
tangible items in Executive's possession or control that are or that contain
Confidential Information, without keeping any copies. For purposes of this
Agreement, "CONFIDENTIAL INFORMATION" means information regarding the Company
Group that is not generally available to the public, including (to the extent
that it is not so generally available): (1) information regarding the Company
Group's business, operations, financial condition, customers, vendors, sales
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representatives and other employees; (2) projections, budgets and business plans
regarding the Company Group; (3) information regarding the Company Group's
planned or pending acquisitions, divestitures or other business combinations;
(4) the Company Group's trade secrets and proprietary information; and (5) the
Company Group's technical information, discoveries, inventions, improvements,
techniques, processes, business methods, equipment, algorithms, software
programs, software source documents and formulae. For purposes of the preceding
sentence, information is not treated as being generally available to the public
if it is made public by Executive in violation of this Agreement.
"CONFIDENTIALITY PERIOD" means the period beginning on the date hereof and
ending three years after the last day on which Executive or any of his
transferees (taken as a group) owns any Executive Securities, except that the
Restricted Period shall in no event end later than three years after the last
day of Executive's employment by the Company.
12. AMENDMENT AND TERMINATION.
(a) This Agreement shall be terminated upon the mutual agreement of the
Company, CHS and Executive provided, however, that the representations and
warranties of the parties hereto contained in Sections 2(b) and 2(c) of this
Agreement and the obligations of Executive referred to in Section 11 of this
Agreement shall survive termination of this Agreement. The rights and
obligations of the parties shall survive termination of the Agreement to the
extent that any performance is required after such termination.
(b) This Agreement may be amended by the written consent of the Company,
CHS and Executive.
13. PIGGYBACK REGISTRATION.
(a) If at any time the Company proposes to file a
registration statement (other than on Form S-8 or any successor
form) with the SEC registering any Shares owned by CHS, the Company
must notify Executive of the proposed registration. Subject to the
last sentence of this Section 13(a), any Holder may (within ten days
after the Company gives that notice) give notice to the Company
requesting that the Company include in the registration any or all
of the Holder's Shares (provided that the Holder's notice must
specify a whole number of Shares that the Holder requests to be
included), in which case the Company must (subject to the remainder
of this Section 13) include those Shares in the registration
statement and use reasonable efforts to have the registration
statement declared effective. The Company, at its sole option, may
elect not to proceed with any registration statement that is the
subject of such a notice by a Holder. Notwithstanding any provision
to the contrary herein, if at the time of the proposed registration
CHS holds any Shares, then (i) no Holder may request to have
included -- and no Holder is entitled without the consent of CHS to
have included -- in the registration a greater percentage of such
Holder's Shares than the percentage of CHS's Shares that are being
included in the registration, and (ii) if CHS so requests, then each
Holder shall request that the same percentage of such Holder's
Shares be included in the registration as the percentage of CHS's
Shares that are being included in that registration.
(b) If any underwriter advises the Company (or, if the
offering is not underwritten, the Company reasonably determines)
that the number of Shares requested to be included in the
registration would adversely affect the offering (including the
pricing thereof or the ability to conduct the offering in an orderly
fashion), then the Company may reduce the number of any Holder's
Shares that are included in the registration to such number as will
not adversely affect the offering (provided that no
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such cutback shall cause the percentage of such Holder's Shares
included in the registration to be less than the percentage of
Shares of CHS included in the registration.
(c) The Company must use reasonable efforts to furnish to
each Holder whose Shares are included in the registration such
number of copies of any prospectus as the Holder reasonably requests
in order to effect the offer and sale of those Shares pursuant to
the registration statement.
(d) Nothing in this Section 13, however, requires the
Company: (i) to cause (or to use any efforts to cause) the
registration statement to remain current (including the filing of
necessary supplements or post-effective amendments, or preparing any
amendments or supplements to any prospectus) at any time after the
initial effective date of the registration statement; or (ii) to
register or qualify any securities (or to use any efforts to cause
any securities to be registered or qualified) under any state or
foreign securities law in any jurisdiction where securities of the
Company would not otherwise be sold in the offering.
(e) A "CHANGE NOTICE") means a notice by the Company to a
Holder (whose Shares are included in the registration statement)
that an event has occurred that makes (or may make) a prospectus
related to the registration statement Misleading. A "Change Notice"
need not identify the event. If the Company gives a Holder a Change
Notice, then that Holder must, upon the receipt of such notice,
immediately discontinue any offers or sales of the Shares until that
Holder subsequently receives either (i) copies of a supplemented or
amended prospectus prepared by the Company to address the event that
triggered the Change Notice, or (ii) a written statement by the
Company informing that Holder that use of the prospectus current at
the time of receipt of the Change Notice (the "OLD PROSPECTUS") may
be resumed. Each Holder must, upon the Company's request, deliver to
the Company all copies, other than permanent file copies then in the
Holder's possession, of the Old Prospectus. As used herein,
"MISLEADING" means, with respect to a prospectus, that such
prospectus (x) contains an untrue statement of material fact, (y)
omits to state a material fact required to be stated therein, or (z)
omits to state a material fact necessary to make the statements
therein, in light of the circumstances under which they were made,
not misleading.
(f) Each Holder must notify the Company immediately upon
learning of any inaccuracy, omission or change in information
previously furnished by the Holder to the Company or of the
occurrence of any event, in each case which causes or will cause any
prospectus relating to the registration to be Misleading with
respect to the Holder. Each Holder must promptly furnish to the
Company any additional information required to correct and update
any previously furnished information or required so that the
prospectus will not be Misleading with respect to the Holder.
(g) If the Company or CHS are selling any Shares pursuant
to the registration statement through underwriters, then each Holder
whose Shares are included in the registration must, at the request
of the Company or CHS, (1) sell the Holder's Shares that are so
included through those underwriters and (2) complete, sign and (to
the extent applicable) comply with all questionnaires, powers of
attorney, indemnities, underwriting agreements, standstill
agreements, and other documents and agreements that (A) are
customarily required in connection with underwriting arrangements of
the type through which the Company or Fund are selling Shares and
(B) have been completed,
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signed and (to the extent applicable as of the time of such request)
complied with by CHS if CHS is a selling shareholder pursuant to the
Registration Statement.
(h) The Company must, subject to applicable law, pay all
expenses incurred in connection with the registration, including all
SEC registration fees, state securities filing fees, printing
expenses (except the printing of any documents pertaining solely to
the sale of Shares by a Holder), the fees and expenses of the
Company's legal counsel, accountants and other advisers, and fees
and disbursements of experts used by the Company in connection with
the registration. Notwithstanding the foregoing, each Holder must
bear (1) the underwriting and brokerage discounts and commissions on
the sale of the Holder's Shares, (2) the transfer taxes on the sale
of those Shares, and (3) the fees and expenses of Holder's own legal
counsel, accountants and other advisers.
(i) If requested by the Company or its underwriters, each
Holder must not effect any public sale or distribution of securities
of the Company, or any securities convertible into or exchangeable
or exercisable for such securities, during the 7 day period before
and the 180 day period starting on the effective date of any
registration statement under the Securities Act for any Public
Offering of the Company's securities. This Section 13(i) does not,
however, apply to securities included in the registration statement
and sold in accordance with this Section 13 (except this Section
13(i))
14. GENERAL PROVISIONS.
(a) SEVERABILITY. Whenever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be invalid,
illegal or unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability shall not affect
any other provision or any other jurisdiction, and this Agreement shall (subject
to Section 14(c) hereof) be reformed, construed and enforced in such
jurisdiction so as to best give effect to the intent of the parties under this
Agreement.
(b) REMEDIES. If Executive breaches any of the provisions of this
Agreement (including the provisions of Section 11), then the Company shall be
entitled, in addition to any other remedies that it may have, to specific,
injunctive or other equitable relief (without the requirement of posting of a
bond or other security) in order to enforce such provision.
(c) SCOPE OF COVENANTS. Executive acknowledges that the territorial,
time and activity limitations set forth in Section 11 (or the lack thereof, as
the case may be) are reasonable and are properly required for the protection of
the Company. If any such territorial, time or activity limitation (or the lack
thereof) is determined to be unreasonable by a court or other tribunal, the
parties agree to the reduction of such territorial, time or activity limitations
(including the imposition of such a limitation if it is missing) to such an
area, period or scope of activity as said court or tribunal shall deem
reasonable under the circumstances. Also, if the Company seeks partial
enforcement of Section 11 as to only a territory, time and scope of activity
which is reasonable, then the Company shall be entitled to such reasonable
partial enforcement. If such reduction or (if the Company seeks partial
enforcement) such partial enforcement is not possible, then the unenforceable
provision or portion thereof shall be severed as provided in Section 14(a).
(d) COMPLETE AGREEMENT. This Agreement, the Employment Agreement, the
Special Purchase Option Agreement of even date herewith between the Company and
Executive, and any and all documents executed by Executive on the date hereof in
connection with the transactions contemplated by the foregoing together embody
the complete agreement and understanding among the parties with respect
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to the subject matter hereof and thereof and supersede and preempt any prior
understandings, agreements or representations by or among the parties, written
or oral, which may have related to the subject matter hereof or thereof in any
way.
(e) COUNTERPARTS. This Agreement may be executed in separate
counterparts (including by facsimile), each of which is deemed to be an original
and all of which taken together constitute one and the same agreement.
(f) SUCCESSORS AND ASSIGNS. Except as otherwise provided herein, this
Agreement shall bind and inure to the benefit of and be enforceable by
Executive, the Company, CHS and their respective legal representatives, heirs,
successors and assigns (including subsequent holders of Executive Securities);
provided that the rights and obligations of Executive under this Agreement shall
not be assignable except in connection with a permitted transfer of Executive
Securities hereunder.
(g) CHOICE OF LAW. This Agreement shall be governed and construed in
accordance with the internal laws of the State of Delaware, without giving
effect to any choice of law or conflict of law provision or rule (whether of the
State of Delaware or any other jurisdiction) that would cause the application of
the laws of any jurisdiction other than the State of Delaware.
(h) CONSENT TO JURISDICTION. The parties irrevocably consent and submit
to the non-exclusive jurisdiction of any local, state or federal court within
the Applicable County for the enforcement of this Agreement. The parties
irrevocably waive (with respect to any such court) any objection they may have
to venue in the defense of an inconvenient forum to the maintenance of such
actions or proceedings to enforce this Agreement.
(i) REMEDIES. Each of the parties to this Agreement shall be entitled to
enforce its rights under this Agreement specifically, to recover damages and
costs caused by any breach of any provision of this Agreement and to exercise
all other rights existing in such party's favor. In the event of a dispute
hereunder, the prevailing party's reasonable attorneys' fees and costs shall be
reimbursed by the opposing party or parties in such dispute within fourteen (14)
days following a judgment by a court or tribunal of competent jurisdiction over
such exercise or enforcement. The parties hereto agree and acknowledge that
money damages may not be an adequate remedy for any breach of the provisions of
this Agreement and that any party may in its sole discretion apply to any court
of law or equity of competent jurisdiction (without posting any bond or deposit)
for specific performance and/or other injunctive relief in order to enforce or
prevent any violations of the provisions of this Agreement.
(j) WAIVER. The failure of any party to enforce any of the provisions of
this Agreement shall in no way be construed as a waiver of such provisions and
shall not affect the right of such party thereafter to enforce each and every
provision of this Agreement in accordance with its terms.
(k) BUSINESS DAYS. If any time period for giving notice or taking action
hereunder expires on a day which is a Saturday, Sunday or legal holiday in the
state in which the Company's chief executive office is located, the time period
shall be automatically extended to the business day immediately following such
Saturday, Sunday or legal holiday.
(l) CONSTRUCTION. As used in this Agreement, the terms "INCLUDING"
"INCLUDES" and "INCLUDE" and terms of like import shall be construed broadly as
if followed by the words "without limitation." The parties hereto jointly
participated in the negotiation and drafting of this Agreement. The language
used in this Agreement shall be deemed to be the language chosen by the parties
hereto to express their collective mutual intent, this Agreement shall be
construed as if drafted jointly by the parties hereto, and no rule of strict
construction shall be applied against any Person.
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(m) GENDER. As used in this Agreement, the masculine, feminine or neuter
gender shall be deemed to include the others whenever the context so indicates
or requires.
(n) HEADINGS. The headings contained in this Agreement are for
convenience of reference only and shall not affect the meaning or interpretation
of this Agreement.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first written above.
BEACON ROOFING SUPPLY, INC.
By: /s/ Xxxxx X. Xxxxxx
----------------------------------
Xxxxx X. Xxxxxx, Vice President
CODE, XXXXXXXX & XXXXXXX III, L.P.
By: CHS Management III, L.P.,
its general partner
By: CODE, XXXXXXXX & XXXXXXX, L.L.C.,
its general partner
By: /s/ Xxxxx X. Xxxxxx
----------------------------------
Xxxxx X. Xxxxxx, Member
EXECUTIVE
/s/ Xxxxxx X. Xxxx
------------------------------------
Xxxxxx X. Xxxx
EXHIBIT A
SPOUSAL CONSENT
I acknowledge that I have read the foregoing Executive Securities Agreement
and that I know its contents. I am aware that by its provisions, my spouse
agrees, among other things, to a right of first refusal, to the granting of
rights to purchase and to the imposition of certain restrictions on the transfer
of the shares of the Company, including any marital property interest or
community interest therein that I may have from time to time, which rights and
restrictions may survive my spouse's death. I hereby consent to such rights and
restrictions, approve of the provisions of the Agreement, and agree that I will
bequeath any interest which I may have in said shares or any of them, including
my community interest, if any, or permit any such interest to be purchased, in a
manner consistent with the provisions of this Agreement. I direct that any
residuary clause in my will shall not be deemed to apply to my community
interest (if any) in such shares except to the extent consistent with the
provisions of this Agreement.
I further agree that in the event of a dissolution of the marriage between
myself and my spouse, in connection with which I secure or am awarded Executive
Securities of the Company, or any interest therein through property settlement
agreement or otherwise, I shall receive and hold said Executive Securities
subject to all the provisions and restrictions contained in the foregoing
Agreement, including any option of the Company or CHS to purchase such shares or
interest from me.
I also acknowledge that I have been advised to obtain independent counsel
to represent my interests with respect to this Agreement but that I have
declined to do so and hereby expressly waive my right to such independent
counsel.
Date: October 20, 2003
-------------------------------
/s/ Xxxxx X. Xxxx
--------------------------
[Name]
Exhibit B to
Executive Securities Agreement
[Repurchase Note]
THIS SUBORDINATED PROMISSORY NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "ACT"), OR WITH ANY SECURITIES REGULATORY AUTHORITY
OF ANY JURISDICTION AND MAY NOT BE OFFERED SOLD, TRANSFERRED, ASSIGNED, PLEDGED,
ENCUMBERED OR OTHERWISE DISPOSED OF, EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE ACT AND APPLICABLE SECURITIES LAWS OR PURSUANT
TO AN EXEMPTION FROM REGISTRATION UNDER THE ACT AND SUCH LAWS, THE AVAILABILITY
OF WHICH MUST BE ESTABLISHED TO THE SATISFACTION OF THE MAKER OF THIS NOTE.
THIS NOTE AND THE INDEBTEDNESS EVIDENCED HEREBY ARE SUBORDINATE IN THE MANNER
AND TO THE EXTENT SET FORTH IN [Describe subordination agreement required by
lender in connection with issuance of Note].
[Insert OID language, if necessary.]
SUBORDINATED PROMISSORY NOTE
$_________ [PLACE]
[DATE]
FOR VALUE RECEIVED, the undersigned, _______________________ (the
"Maker"), hereby promises to pay to_______________ (the "Payee"), in lawful
money of the United States of America, the principal sum of ___________ Dollars
($_________), which principal sum shall be due and payable as hereinafter
provided with interest thereon as set forth below.
This subordinated promissory note ("Note") is issued and delivered
by Maker pursuant, and otherwise subject, to the terms and conditions of that
certain Executive Securities Agreement, dated as of October 20, 2003 (the
"Executive Securities Agreement"), by and among Maker, Payee and another party.
1. PRINCIPAL AND INTEREST PAYMENTS. The principal amount of
this Note shall be due and payable in eight equal quarterly payments commencing
on [insert date which is three months from the date of issuance of the Note] and
payable on the ___ day of each __________, __________ and ___________
thereafter(1), with a final payment on the second anniversary of the date of
this Note. This Note shall bear interest from the date hereof on the unpaid
principal amount outstanding from time to time at the rate of eight percent (8%)
per annum. Accrued interest on the outstanding principal balance hereof shall be
payable quarterly in arrears on the same dates on which principal payments are
made. In no event shall the amount of interest due or payable hereunder exceed
the maximum amount of interest allowed by applicable law.
----------
(1) Insert date and month 6 months, 9 months and 12 months after
issuance.
2. SUBORDINATION. The holder of this Note by its acceptance
hereof acknowledges and agrees that payment of the principal and interest that
may become due and payable under this Note is expressly subordinated in right
and priority of payment pursuant to the terms of that certain Subordination
Agreement dated as of __________ (the "Subordination Agreement") between the
Maker, Payee and [Insert names of lenders to Company and/or its Subsidiaries].
[Subordination provisions to be added as required by the lenders to the Company
and its Subsidiaries such that amounts due hereunder are subordinated to
indebtedness owed to financial institutions in a manner acceptable to such
lenders].
3. PAYMENT. Maker shall make each payment to the Payee
hereunder, by wire transfer of immediately available funds, not later than 5:00
p.m. (Eastern Standard Time) on the day when due in lawful money of the United
States of America.
4. BUSINESS DAY. Whenever any payment to be made hereunder
shall be stated to be due on a Saturday, Sunday or bank holiday under the laws
of the United States of America (any other day being a "Business Day"), such
payment may be made on the next succeeding Business Day.
5. PREPAYMENT. Maker shall have the right to prepay the
principal amount of this Note, in whole or in part, at any time or from time to
time, without premium or penalty, but with interest on the portion of the
principal amount so prepaid accrued to the date of prepayment.
6. EVENTS OF DEFAULT. It shall constitute an "Event of Default"
hereunder if (x) Maker shall fail to pay any payment of principal when due or
any payment of interest within fifteen (15) days following the date when such
interest payment is due, PROVIDED, HOWEVER, that the foregoing clause shall not
apply in the event that Maker does not make all or any portion of such payment
of principal or interest in accordance with or pursuant to the provisions of
this Note or the Subordination Agreement; or (y) Maker shall have entered
against it by a court with competent jurisdiction, a decree or order for relief
in respect to Maker in an involuntary case under any applicable bankruptcy,
insolvency or other similar law now or hereafter in effect, or a receiver,
liquidator, assignee, custodian, trustee, sequestrator or other similar official
shall be appointed for Maker or for any substantial part of Maker's property, or
the winding up or liquidation of Maker's affairs shall have been ordered; or
Maker shall commence a voluntary case under any applicable bankruptcy,
insolvency or other similar law now or hereafter in effect, or consent to the
entry of any order for such relief in an involuntary case under any such law, or
any such involuntary case shall commence, and not be dismissed within sixty (60)
days, or Maker shall consent to the appointment of or taking possession by a
receiver, liquidator, assignee, trustee, custodian, sequestrator or other
similar official for Maker or for any substantial part of Maker's property, or
make any general assignment for the benefit of creditors. If an Event of Default
shall occur hereunder, Payee, at its option, upon written notice to Maker, may
declare the unpaid principal balance, together with accrued interest thereon,
immediately due and payable. If this Note is divided into several promissory
notes of Maker, an Event of Default may not be declared hereunder unless
declared by holders of a majority of the principal amount of such notes.
7. GOVERNING LAW. This Note shall be governed by and construed
in accordance with the substantive laws of the State of Delaware without regard
to the principles of conflicts of law thereof.
8. CONSENT TO JURISDICTION. The parties irrevocably consent and
submit to the nonexclusive jurisdiction of any local, state or federal court
within the Applicable County for the enforcement of this Note. The parties
irrevocably waive (with respect to any such court) any objection they may have
to venue in the defense of an inconvenient forum to the maintenance of such
actions or proceedings to enforce this Note. As used herein, "APPLICABLE COUNTY"
means Suffolk County, Massachusetts; provided, however, that when and if Xxxxxx
Xxxx relocates his offices to a location
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outside of the greater Boston metropolitan area in accordance with Section 5(b)
of the Employment Agreement, then the Applicable County shall be (at all times
thereafter) the county in which such relocated office is situated immediately
after such relocation. As used herein, "EMPLOYMENT AGREEMENT" means the
Employment Agreement dated as of October 20, 2003 between Beacon Sales
Acquisition, Inc. and Xxxxxx Xxxx.
9. WAIVER. Maker hereby waives presentment for payment or
acceptance, demand and protest, and notice of protest, dishonor and nonpayment
of this Note and agrees that Payee shall not be required to initiate any suit or
exhaust its remedies against the undersigned or any other person or parties in
order to enforce payment of this Note.
10. COSTS. Maker agrees to pay all reasonable costs and
expenses, including reasonable attorneys' fees and expenses, expended or
incurred by Payee in connection with the enforcement of this Note.
11. MISCELLANEOUS PROVISIONS. If any terms or provisions of this
Note are deemed invalid, the validity of all other terms and provisions hereof
shall in no way be affected thereby. This Note may not be changed orally, but
only by an agreement in writing and signed by the party against whom enforcement
of any waiver, change, modification or discharge is sought.
[Insert other provisions as required by lenders]
* * * * *
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In Witness Whereof, this Note has been executed as of the day and
year first written above.
[MAKER]
By:
-------------------------
Its:
-------------------------
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