STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT ("Agreement") is made as of July 31,
1998, among BeautiControl Cosmetics, Inc., a Delaware corporation (the
"Company"), Xxx Xxxxxx Construction Co., Inc., a Texas corporation ("Xxxxxx"),
Xxxxxxx X. Xxxxx ("Xxxxx"), and Xxxxxx X.
Xxxxx ("Xxx. Xxxxx").
RECITALS
Xxxxxx wishes to purchase shares of common stock, par value $0.10 per
share (each a share of "Common Stock"), of the Company and the Company wishes to
issue and sell to Xxxxxx shares of Common Stock.
Xxxxxx and the Company each acknowledge that this Agreement is an
integral part of the transactions relating to Xxxxxx'x purchase of the shares of
Common Stock and that each party has received adequate consideration for
entering into this Agreement and performing its respective obligations
hereunder.
AGREEMENT
Based on the foregoing and the mutual promises contained herein, the
parties agree as follows:
1. Xxxxxx Representation Regarding Shares. As of the date of this
Agreement (and prior to the purchase of Common Stock contemplated hereby) Xxxxxx
and any Affiliate (as defined in Rule 12b-2 under the Securities Exchange Act of
1934, as amended (the "Exchange Act")) own an aggregate of 343,300 shares of
Common Stock.
2. Purchase of Common Stock. Simultaneously with the execution and
delivery of this Agreement, Xxxxxx shall purchase from the Company, and the
Company will issue and sell to Xxxxxx, 1,200,000 shares (the "Shares") of Common
Stock. In consideration of such purchase, Xxxxxx shall (upon execution of this
Agreement) wire $9,912,000 in immediately available funds to the bank account
designated by the Company. As soon as practicable after the date hereof, the
Company shall cause its transfer agent to deliver to Xxxxxx a stock certificate
representing the Shares.
3. Representations of the Company. The Company represents and warrants
to Xxxxxx that (i) the issuance of the Shares will not violate the Company's
Certificate of Incorporation or Bylaws, both as amended to date, (ii) the
issuance of the Shares has been authorized by the Company's Board of Directors,
(iii) assuming payment therefor in accordance with this Agreement, upon issuance
the Shares will be validly issued, fully paid, and nonassessable, and (iv) the
Shares will be free and clear of all liens and encumbrances other than pursuant
to applicable securities laws.
4. Right of Participation in Future Equity Financings. For so long as
Xxxxxx is the legal and beneficial holder of at least 1,200,000 shares of Common
Stock, the Company shall not sell for cash any additional shares of capital
stock of the Company, or securities convertible into, or carrying the right to
purchase additional shares of capital stock of the Company, unless the Company
first permits Xxxxxx the opportunity to participate in such financing so that,
in connection with any such participation, Xxxxxx is able to maintain its
current proportionate ownership in the Company. Xxxxxx'x participation in any
such financing must be on terms no less favorable to the Company than the terms
of the proposed financing offered by the financing source. Xxxxxx'x opportunity
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to participate in any such financing shall remain open for the 20- day period
following written notice from the Company to Xxxxxx that the Company intends to
undertake a financing. Xxxxxx'x intention to participate in any such financing
must be communicated in writing to the Company within such 20-day period.
Notwithstanding the foregoing, no such right of participation shall extend to
capital stock issued by the Company pursuant to any of the Company's stock
option plans.
5. Board Representation. For so long as Xxxxxx is the legal and
beneficial owner of at least 1,200,000 shares of Common Stock, the Company and
Heath shall use their best efforts to cause Xx. Xxxxx X. Xxxxxx to be elected to
the Board of Directors of the Company.
6. Registration of Shares. As soon as practicable after the date of
this Agreement, the Company (at its expense) shall use its best efforts to cause
the registration of the Shares by filing a registration statement relating to
the offer or sale of the Shares under the Securities Act of 1933, as amended
(the "Securities Act"), and in accordance with the terms and provisions set
forth in Exhibit "A" to this Agreement.
7. Purchase of Additional Common Stock. In addition to the Shares and
the 343,300 shares of Common Stock already owned by Xxxxxx, Xxxxxx shall be
entitled to purchase from persons or entities other than the Company additional
shares of Common Stock (the "Additional Shares") not to exceed the greater of
(i) 391,100 shares of Common Stock or (ii) such additional shares of Common
Stock so that, together with all other shares of Common Stock owned by Xxxxxx
and all Affiliates, such shares do not exceed 26.75% of the then-outstanding
shares of Common Stock. Except for the Additional Shares, neither Xxxxxx nor any
Affiliate shall purchase or otherwise acquire, obtain an option to purchase,
receive a proxy for, or gain any other rights with respect to, any additional
shares of Common Stock without the prior written approval of the Company and
Heath.
8. Concurrent Purchases. If Xxxxxx purchases any of the Additional
Shares described in Section 7 in blocks of 10,000 or more shares, then
immediately after any such purchase Xxxxxx shall provide written notice to the
Company. Upon receipt of such notice and for the following 72 hours, the Company
shall have the option to purchase up to 50% of such Additional Shares. Such
option may be exercised by providing to Xxxxxx written notice, within such
72-hour period, of the desire to exercise such option.
9. Co-Sale Right.
(a) Co-Sale. At least ten (10) days prior to a proposed Transfer
(defined below) of shares of Common Stock by the Heaths such that as a result of
such Transfer the Heaths will own a percentage of the then-outstanding shares of
Common Stock less than (i) 26.75%, or (ii) if the percentage of Common Stock
owned by Xxxxxx is less than 26.75%, less than that percentage owned by Xxxxxx,
the Heaths shall deliver a written notice (the "Transfer Notice") to Xxxxxx
specifying in reasonable detail the number of shares of Common Stock proposed to
be transferred by the Heaths (the "Transfer Shares"), the proposed purchase
price and the other terms and conditions of the Transfer. Upon receipt of such
Transfer Notice, Xxxxxx shall have the irrevocable and exclusive right to sell
that number of Shares of Common Stock owned by Xxxxxx to be included among the
Transfer Shares determined by multiplying (x) the total number of such Shares of
Common Stock that are held by Xxxxxx by (y) a fraction (A) the numerator of
which is the number of Transfer Shares and (B) the denominator of which is the
total number of shares of Common Stock owned by the Heaths.
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"Transfer" means any sale, transfer, encumbrance, gift, donation,
assignment, pledge, hypothecation, or other disposition of any shares of Common
Stock or any interest therein, whether voluntary or involuntary, and whether
during each of the Heaths' lifetimes or upon or after his or her death,
including, but not limited to, any Transfer by operation of law, by court order,
by judicial process, or by foreclosure, levy or attachment.
(b) Exercise of Right of Co-Sale. Any exercise of the right of
co-sale pursuant to Section 9(a) above shall be by a written notice
(the "Co-Sale Notice") delivered by Xxxxxx to the Heaths within three
(3) days after his receipt of the Transfer Notice. A Co-Sale Notice
shall state the amount of Shares of Common Stock that Xxxxxx is
proposing to sell to the proposed acquiror pursuant to his right of
co-sale and that Xxxxxx elects to sell such Shares of Common Stock in
accordance with the procedures set forth in this Section 9. Failure to
deliver a Co-Sale Notice shall be deemed conclusive evidence of
Xxxxxx'x intent to decline to exercise his right of co-sale. The
number of Shares of Common Stock which Xxxxxx declines to sell
pursuant to his right of co-sale may be sold by the Heaths for their
own account.
(c) Effect of Exercise of Co-Sale Rights. If Xxxxxx elects to
exercise his right of co-sale in accordance with Section 9(b) above,
the amount of Xxxxxx'x Shares of Common Stock specified in the Co-Sale
Notice and calculated in accordance with Section 9(a) above shall be
sold to the proposed acquiror in lieu of a corresponding amount of
Transfer Shares.
(d) Purchase of Co-Sale Shares. The Shares of Common Stock to be
sold by Xxxxxx to the proposed acquiror pursuant to this Section 9
shall be sold at the same price per share and upon the same terms and
conditions as the Transfer Shares.
(e) Inapplicability of Right of Co-Sale. The right of co-sale
granted pursuant to this Section 9 shall not apply to any Permitted
Transfer (defined below) by the Heaths but any shares of Common Stock
transferred by the Heaths in a Permitted Transfer shall remain subject
to this Section 9 and, if to be transferred to a proposed acquiror,
shall be deemed to be included as Transfer Shares for the purpose of
the Transfer Notice and for the purpose of clause (y)(A) of Section
9(a), and shall be deemed to be included as shares of Common Stock
owned by the Heaths for purposes of clause (y)(B) of Section 9(a).
"Permitted Transfer" means any Transfer of shares of Common Stock by
the Heaths to a person in the Heaths' Family Group (defined below); provided,
however that the terms and provisions of this Agreement shall continue to be
applicable to such shares of Common Stock after any such Transfer; and provided,
further, that the transferees of such shares of Common Stock shall have agreed
in writing to be bound by the provisions of this Agreement.
"Family Group" means, with respect to any natural person, such person's
spouse and descendants (whether natural or adopted) and any trust, limited
partnership or limited liability company, solely or primarily for the benefit of
such person and/or such person's spouse, their respective ancestors,
descendants, or any charitable remainder trust or charitable unit trust the
income of which is primarily for the benefit of such person, such person's
spouse or descendants (whether natural or adopted) and the principal of which is
for the benefit of one or more charitable organizations.
10. Proxy. Simultaneously with the execution of this Agreement, Xxxxxx
will execute an irrevocable proxy in the form attached as Exhibit "B" to this
Agreement. The holder of the irrevocable proxy shall indemnify and hold Xxxxxx
harmless against all losses, claims, damages, liabilities and expenses incurred
by Xxxxxx in connection with or as a result of Xxxxxx executing the proxy
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the proxy pursuant to such irrevocable proxy which result from any violations of
applicable securities laws by the holder of the irrevocable proxy.
11. Investment Representation. Xxxxxx hereby represents and warrants to
the Company that (i) Xxxxxx is an "accredited investor" as that term is defined
in Rule 501(a) of Regulation D and is acquiring the Shares for its own account,
for investment purposes only, and not with a view to the resale or distribution
of all or any part thereof, and (ii) Xxxxxx understands that the Shares have not
been registered under the Securities Act, or the securities laws of any state,
and may not be offered or sold unless a registration statement under the
Securities Act and applicable state securities laws shall have become effective
with regard thereto, or an exemption from registration under the Securities Act
and applicable state securities laws is available.
12. Legend. All certificates representing the Shares shall bear the
following legend:
The shares represented by this certificate have not been
registered under the Securities Act of 1933, as amended, or
any applicable state securities law. Such shares may not be
offered for sale, sold, transferred or pledged until so
registered or unless an exemption from registration exists for
such offer for sale, sale, transfer or pledge.
The Company may enter a stop transfer order with the Company's transfer agent
against the transfer of the Shares, except in compliance with the requirements
of this Agreement.
13. Specific Performance. In the event of a breach or threatened breach
by a party of any of its obligations or covenants contained in this Agreement,
each party acknowledges and agrees that such a breach or threatened breach would
cause irreparable injury to the other party for which an adequate remedy is not
available at law and that the other party, therefore, shall be entitled to
specific performance or other injunctive remedy for any such breach or
threatened breach. Such remedy shall not be deemed to be the exclusive remedy
for a breach of this Agreement, but shall be in addition to all other remedies
available at law or equity.
14. Successors and Assigns. All covenants and agreements contained in
this Agreement by or on behalf of any of the parties hereto shall bind and inure
to the benefit of the respective successors and assigns of the parties hereto.
The proxy referred to in Section 9 hereof shall apply only to shares of Common
Stock owned by Xxxxxx or an Affiliate, and shall not apply to any bona fide
third-party transferee.
15. 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 prohibited
by or invalid under applicable law, such provision shall be ineffective only to
the extent of such prohibition or invalidity, without invalidating the remainder
of this Agreement.
16. Counterparts. This Agreement may be executed simultaneously in two
or more counterparts, each of which shall be an original, but all such
counterparts taken together shall constitute one and the same instrument. Any
counterpart may be delivered by facsimile.
17. Entire Agreement. This Agreement and the schedules and exhibits and
other writings and agreements specifically identified herein contain the entire
agreement between the parties with respect to the transactions contemplated
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hereby and supersede all previous oral negotiations, commitments, understandings
and agreements.
18. Legal Fees and Expenses. The prevailing party in any legal
proceeding based upon this Agreement shall be entitled to reasonable attorney's
fees and court costs, in addition to any other recoveries allowed by law.
19. Notices. All notices, requests, demands and other communications
hereunder shall be in writing and shall be deemed to have been duly given when
delivered or mailed, first class postage prepaid:
if to the Company or the Heaths:
BeautiControl Cosmetics, Inc.
0000 Xxxxxx Xxxx
Xxxxxxxxxx, Xxxxx 00000
Attn: Xxxxxxx X. Xxxxx
Xxxxxx X. Xxxxx
With copy to:
Xxxxx X. Xxxx, Esq.
Xxxxxx and Xxxxx, LLP
000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
if to Xxxxxx:
Xxx Xxxxxx Construction Co., Inc.
0000 XxXxxxxx Xxxxxx
Xxxxx 000
Xxxxxx, Xxxxx 00000
Attn: Xxxxx X. Xxxxxx
With copy to:
Xxx Xxxxxx Construction Co., Inc.
0000 XxXxxxxx Xxxxxx
Xxxxx 000
Xxxxxx, Xxxxx 00000
Attn: Xxxxxx Xxxxxxxx, Esq.
Such addresses may be changed from time to time by written notice to the other
party.
20. Descriptive Headings; Interpretation. The descriptive headings of
this Agreement are inserted for convenience only and do not constitute a
substantive part of this Agreement. The use of the word "including" in this
Agreement shall be by way of example rather than by limitation.
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21. Governing Law. All issues and questions concerning the
construction, validity, interpretation and enforceability of this Agreement
shall be governed by, and construed in accordance with, the laws of the State of
Delaware, without giving effect to any choice of law or conflict of laws rules
or provisions (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.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the day and year first above written.
XXX XXXXXX CONSTRUCTION CO., INC.
By: /s/ XXXXX X. XXXXXX
----------------------------------------
Xxxxx X. Xxxxxx, Chief Executive Officer
BEAUTICONTROL COSMETICS, INC.
By: /s/XXXXXXX X. XXXXX
----------------------------------------
Xxxxxxx X. Xxxxx, President
/s/XXXXXXX X. XXXXX
------------------------------------------------
Xxxxxxx X. Xxxxx, Individually
/s/XXXXXX X. XXXXX
------------------------------------------------
Xxxxxx X. Xxxxx, Individually
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EXHIBIT "A"
------------------
REGISTRATION OF THE SHARES
(a) Registration. The registration statement will be on such
appropriate registration form as may be selected by the Company and will permit
the disposition of the Shares in accordance with the intended method of
disposition furnished to the Company in writing by Xxxxxx. In addition, the
Company (at its expense) will use its best efforts to cause the registration of
the Shares in such states as may be reasonably requested by Xxxxxx in order for
Xxxxxx to accomplish the intended method of distribution of the Shares.
(b) Cooperation. Xxxxxx shall cooperate with the Company in connection
with the registration of the Shares, and shall furnish the Company such
information relating to such registration as may be reasonably requested by the
Company, including information regarding the Shares and the intended method of
their distribution, and shall take all action as may be reasonably requested by
the Company in order to comply with the provisions of applicable securities
laws.
(c) Xxxxxx Indemnification. The Company agrees to indemnify, to the
fullest extent permitted by law, Xxxxxx against all losses, claims, damages,
liabilities and expenses caused by any untrue or alleged untrue statement of a
material fact contained in the registration statement for the Shares, or any
prospectus or preliminary prospectus or any amendment or supplement thereto, or
any omission or alleged omission to state a material fact required to be stated
or necessary to make the statements therein (in case of a prospectus or
preliminary prospectus, in light of the circumstances under which they were
made) not misleading, except insofar as the same is (i) contained in any
information furnished to the Company by Xxxxxx expressly for use in such
registration statement or prospectus, or (ii) caused by the failure to deliver a
copy of any prospectus or any amendments or supplements thereto included in the
registration statement after the Company has furnished Xxxxxx with a sufficient
number of copies of the same.
(d) Company Indemnification. Xxxxxx agrees to indemnify, to the fullest
extent permitted by law, the Company, its directors, its officers, its agents
and employees, and each person who controls the Company (within the meaning of
the Exchange Act) against all losses, claims, damages, liabilities and expenses,
caused by any untrue or alleged untrue statement of a material fact contained in
information furnished by Xxxxxx to the Company and included in the registration
statement for the Shares, or any prospectus or preliminary prospectus or any
amendment or supplement thereto contained therein or any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein (in the case of a prospectus or
preliminary prospectus, in light of the circumstances under which they were
made) not misleading.
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EXHIBIT "B"
-----------------
IRREVOCABLE PROXY
KNOW ALL MEN BY THESE PRESENTS, that pursuant to the provisions of Section 212
of the Delaware General Corporation Law, the undersigned hereby irrevocably
constitutes and appoints:
(i) Xxxxxxx X. Xxxxx, and (ii) upon his death or incapacity, Xxxxxx X. Xxxxx,
as its attorney-in-fact and proxy, to vote and otherwise act (by written consent
or otherwise) with respect to all shares of Common Stock, $0.10 par value, of
BeautiControl Cosmetics, Inc. held of record by the undersigned up to 1,200,000
shares (the "Shares") and all other stock dividends or distributions issuable
with respect to such Shares, whether now owned or acquired after the date
hereof, by the undersigned or any Affiliate (as defined by Rule 12b-2 of the
Securities Exchange Act of 1934, as amended) of the undersigned, which the
undersigned is entitled to vote at any meeting of stockholders (whether annual
or special and whether or not an adjourned or postponed meeting) or consent in
lieu of any such meeting or otherwise, on all matters.
The undersigned hereby affirms that this Irrevocable Proxy is given in
connection with, and pursuant to the terms of, the Stock Purchase Agreement
among BeautiControl Cosmetics, Inc., the undersigned, Xxxxxxx X. Xxxxx, and
Xxxxxx X. Xxxxx, dated July 20, 1998. The undersigned acknowledges that this
proxy is coupled with an interest and is irrevocable and shall not be terminated
by operation of law or upon the occurrence of any other event.
This proxy shall automatically terminate (i) with respect to any Shares sold or
otherwise transferred by the undersigned, or any Affiliate, to a third party
that is not an Affiliate of Xxxxxx and (ii) with respect to all Shares held by
the undersigned at such time as the Heaths are no longer employees of the
Company or, as a result of the Heaths selling their shares of Common Stock, the
Heaths' holdings in the Company are less than an aggregate of 20% of the
then-outstanding shares of Common Stock.
IN WITNESS WHEREOF, the undersigned has executed this Irrevocable Proxy as of
July 31, 1998.
XXX XXXXXX CONSTRUCTION CO., INC.
By: /s/XXXXX X. XXXXXX
----------------------------
Xxxxx X. Xxxxxx
Chief Executive Officer
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STATE OF TEXAS ss.
ss.
COUNTY OF DALLAS ss.
This instrument was acknowledged before me on August 3, 1998, by Xxxxx
X. Xxxxxx, the Chief Executive Officer of Xxx Xxxxxx Construction Co., Inc., a
Texas corporation, on behalf of said corporation.
/s/XXXXXX XXXXXXX
-------------------------
Notary Public Signature
(PERSONALIZED SEAL)
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