EXHIBIT 10.4
STATE OF NORTH CAROLINA
STOCKHOLDERS' AGREEMENT
COUNTY OF MECKLENBURG
THIS STOCKHOLDERS' AGREEMENT (the "Agreement") is executed effective as
of the 29th day of May, 1997, between and among XXXXXX X. XXXXXX, a resident of
the State of North Carolina ("Xxxxxx"), XXXXXX X. XXXXXXX, a resident of the
State of North Carolina ("Xxxxxxx"), (Xxxxxx and Xxxxxxx hereinafter sometimes
referred to jointly as the "Stockholders" and singularly as "Stockholder"), and
XXXXXX XXXX XXXXX INC., an Iowa corporation (the "Corporation").
W I T N E S S E T H:
WHEREAS, Xxxxxx owns one-half (1/2) of the issued and outstanding
common stock of the Corporation (the "Xxxxxx Shares"); and
WHEREAS, Xxxxxxx owns one-half (1/2) of the issued and outstanding
common stock of the Corporation (the "Xxxxxxx Shares"); and
WHEREAS, the Xxxxxx Shares and the Xxxxxxx Shares collectively
constitute all of the currently issued and outstanding common stock of the
Corporation (the Xxxxxx Shares and the Xxxxxxx Shares being sometimes referred
to individually and collectively hereinafter as the "Stock"); and
WHEREAS, the Stockholders believe it to be for their best interests and
for the best interests of the Corporation to provide for the purchase by the
Corporation of a Stockholder's Stock upon his death; and
WHEREAS, the Stockholders believe it to be for their best interests and
for the best interests of the Corporation to restrict the transferability of the
Stock as provided in this Agreement; and
WHEREAS, the Stockholders believe it to be for their best interests and
for the best interests of the Corporation that the Corporation have the ability
to call the Stock of the Stockholders as provided in this Agreement; and
WHEREAS, the Stockholders believe it to be for their best interests and
for the best interests of the Corporation that the Stockholders act with unity
with respect to all matters of the Corporation which are submitted to the
Stockholders for approval, both in their capacity as stockholders and as
Directors of the Corporation.
NOW, THEREFORE, in consideration of the premises and the mutual
promises of the parties hereto and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
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1. STOCK TRANSFER RESTRICTIONS. The Stockholders agree that no shares
of the Stock shall be transferred except pursuant to and in compliance with the
provisions of this Agreement. Transfers made in contravention hereof shall be
void and shall not be recognized by the Corporation. No Stockholder may pledge
or encumber all or any portion of the Stock without the prior written approval
of the Corporation.
2. OBLIGATORY PURCHASE UPON DEATH. Upon the death of a Stockholder, the
Corporation shall purchase, and the personal representative of the decedent's
estate shall sell to the Corporation, all of the Stock owned by the deceased
Stockholder at the time of his death, at such price as is determined in
accordance with the provisions of Paragraph 5 and upon the terms and conditions
of Paragraph 6 hereof. In the alternative, the deceased Stockholder's personal
representative may propose a sale of the decedent's Stock to one (1) or more
third parties, subject to the Corporation's approval thereof as provided in
Paragraph 3 hereof.
3. THIRD PARTY TRANSFERS.
(a) NOTICE OF INTENT TO TRANSFER. No Stockholder may sell,
pledge, give, or otherwise transfer (collectively, "Transfer") any or all of his
Stock to any third party, whether voluntarily or involuntarily, without first
obtaining the
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Corporation's written approval of such transfer. In the event a Stockholder
desires to Transfer any or all of his Stock to a third party, he shall first
provide the Corporation with written notice of such proposed Transfer, delivered
in the manner provided herein (the "Transfer Notice"), naming the proposed third
party transferee and all transfer terms, including, without way of limitation,
any proposed purchase price and terms.
(b) APPROVAL OR DENIAL OF PROPOSED TRANSFER. The Corporation
shall have the absolute discretion to approve or deny all or any part of any
proposed Transfer (a "Stock Transfer"). The Corporation's approval or denial of
a proposed Transfer shall be communicated in writing to the Stockholder
proposing such Transfer within thirty (30) days following the Corporation's
receipt of the Transfer Notice.
(c) PURCHASE BY CORPORATION. In the event the Corporation
denies or fails to approve as provided above a proposed Transfer to a third
party of all or any portion of a Stockholder's Stock, then the Corporation shall
purchase such Stock at such price as is determined in accordance with the
provisions of Paragraph 5 and upon the terms and conditions of Paragraph 6
hereof.
4. CORPORATION'S RIGHT TO CALL. The Corporation shall have the right at
any time to purchase ("Call") all, but not less than
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all, of the Stock then owned by either or both of the Stockholders, at such
purchase price as is determined in accordance with the provisions of Paragraph 5
and upon the terms and conditions of Paragraph 6 hereof. The Corporation shall
exercise its right to Call (a "Stock Call") a Stockholder's Stock by way of
written notice to such Stockholder (the "Call Notice"), delivered in the manner
provided herein.
5. PURCHASE PRICE. The purchase price per share with respect to any and
all purchases by the Corporation of a Stockholder's Stock hereunder shall be the
Stockholder's adjusted cost basis per share of such Stock, as determined by the
Corporation in its sole discretion (the "Purchase Price").
6. PAYMENT OF PURCHASE PRICE.
(a) CLOSING. The closing (the "Closing") for the purchase of
the Stock of a Stockholder disposing of the same under this Agreement shall
occur within sixty (60) days after (i) the qualification of such Stockholder's
personal representative, in the event of a purchase following a Stockholder's
death (but in no event later than one (1) year following the date of death),
(ii) the delivery date of a Stockholder's Transfer Notice, in the event of a
purchase following the Corporation's denial of or failure to approve a proposed
Transfer by such Stockholder, or
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(iii) the delivery date of a Call Notice, in the event of a Call by the
Corporation.
(b) DELIVERY OF PROMISSORY NOTE. At the option of the
Corporation, the Purchase Price shall be paid in good funds at the Closing or by
the delivery of the Corporation's promissory note in the amount of the Purchase
Price for such Stock, payable to the order of the selling Stockholder or his
estate, as the case may be (the "Purchase Note"). The Purchase Note shall be due
and payable in sixty (60) consecutive, equal, monthly installments, together
with interest at the minimum annual rate allowable under the provisions of the
Internal Revenue Code then in effect to prevent imputed interest, original issue
discount or unstated interest. The first such installment of the Purchase Note
shall be due thirty (30) days from the date of Closing and the remaining
installments shall be due on the same date of each month thereafter until
principal and interest shall be fully paid. The Purchase Note shall be
prepayable at any time and from time to time in whole or in part, without
penalty or unaccrued interest, at the option of the Corporation.
(c) TRANSFER OF TITLE. Upon receipt of the Purchase Note, the
selling Stockholder or his personal representative, as the case may be, shall
deliver to the Corporation the certificate(s) for the purchased Stock and such
other instruments as are necessary and proper to transfer full and complete
title
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thereto and said selling Stockholder or his estate shall thereafter have no
further interest in the Corporation.
7. ASSIGNMENT OF RIGHTS TO HLM DESIGN, INC. The parties hereto
acknowledge that it is in the parties' best interests that certain of the
Corporation's administrative and managerial functions be performed by an outside
managerial entity with established expertise in the Corporation's fields of
endeavor, and that toward such end the Corporation has entered into a Management
and Services Agreement with HLM Design, Inc., a Delaware corporation ("HLM
Design") for the provision of such services. The parties further acknowledge and
agree that in order to assure consistency and continuity in the management of
the Corporation's business and affairs, that with respect to all matters
pertaining to the initiation of Stock Calls or the approval or denial of
proposed Stock Transfers, the Corporation shall in all cases act in accordance
with the written recommendations of HLM Design.
8. ENDORSEMENT ON CERTIFICATES. Upon the execution of this Agreement,
the certificates of Stock subject hereto shall be surrendered to the Corporation
and endorsed as follows:
"This certificate is transferable only upon
compliance with the provisions of a
Stockholders' Agreement dated as of the 29th
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day of May, 1997, between and among the
Corporation and certain of its stockholders,
a copy of which is on file in the office of
the Secretary of the Corporation."
After endorsement, the certificates shall be returned to the
Stockholders, who shall, subject to the terms of this Agreement, be entitled to
exercise all rights of ownership of such Stock.
9. UNITY IN VOTING; DEADLOCK. The Stockholders each agree that with
respect to all matters which are submitted to stockholder vote (and, to the
extent that both of the Stockholders serve in the capacity of Directors, then
also with respect to all matters which are submitted to Director vote), neither
Stockholder shall cast any vote with respect to any such matter unless all votes
to be cast by the Stockholders collectively are cast in unity. Prior to casting
any such vote, the Stockholders shall disclose to one another their voting
intentions. In the event the Stockholders are not in agreement with respect to
any particular matter to be voted upon, then they shall immediately move for an
adjournment of any meeting at which such matter is to be voted upon. During such
adjournment, the Stockholders shall attempt in good faith to reconcile their
respective positions with one another. In the event the Stockholders are unable
to reach a reconciliation within thirty (30) days following such adjournment,
then the Stockholders agree
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that such matter shall be submitted within ten (10) days thereafter to HLM
Design, Inc., a Delaware corporation ("HLM Design"), for resolution. The
Stockholders agree to cooperate with HLM Design by providing any and all
information, documentation, statements of their respective positions and other
materials requested by HLM Design in the course of HLM Design's determination.
The determination of HLM Design with respect to such matter shall be final and
binding upon the Stockholders, and the Stockholders agree to vote their Stock
(or cast their votes as Directors, as the case may be) in accordance therewith
immediately upon receiving such determination.
10. TERMINATION. This Agreement shall terminate upon the occurrence of
any of the following events:
(a) Cessation of the Corporation's business;
(b) Bankruptcy, receivership or dissolution of the
Corporation; or
(c) The voluntary agreement of all parties who are then bound
by the terms hereof.
Upon the termination of this Agreement, each Stockholder shall
surrender to the Corporation the certificates for his Stock and the Corporation
shall issue to such
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Stockholder, in lieu thereof, new certificates for an equal number of shares
without the endorsement set forth in Paragraph 8 hereof.
11. NOTICES. All notices, offers and acceptances or rejections thereof
required to be given hereunder, shall be given by certified mail to the parties
hereto at the addresses listed below, or at such other address as may be stated
from time to time, and shall be deemed delivered upon deposit in the United
States mail, postage prepaid:
To the
Corporation: Xxxxxx Xxxx Xxxxx Inc.
000 Xxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx, XX 00000
ATTN: Xxxxxx X. Xxxxxxx
With a Copy to: Xxxxxxx X. Xxxx, Esq.
Xxxxxxxxx Xxxxxx Xxxxxx & Xxxxxx, P.A.
0000 Xxxxxxxxx Xxxxx
000 X. Xxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000-0000
To Xxxxxx: Xxxxxx X. Xxxxxx
00000 Xxxxxxx Xxxxxx Xxxxx
Xxxxxxxx, XX 00000
To Xxxxxxx: Xxxxxx X. Xxxxxxx
0000 Xxxxxxxx Xxxx
Xxxxxxxxx, XX 00000
12. BINDING EFFECT. This Agreement shall be binding not only upon the
parties hereto, but also upon their heirs, executors, personal representatives,
successors and/or permitted assigns; and the parties hereby agree for themselves
and their heirs, executors, personal representatives, successors and/or
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permitted assigns, to execute any instruments and to perform any acts which may
be necessary or proper to carry out the purposes of this Agreement. This
Agreement may be amended or modified only by a unanimous vote of all parties
then bound hereunder.
13. APPLICABLE LAW. This Agreement shall be governed by
the laws of the State of North Carolina and constitutes the
entire agreement between the parties hereto.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
signed and sealed, effective as of the day and year first above written.
/s/ Xxxxxx X. Xxxxxx (SEAL)
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XXXXXX X. XXXXXX
/s/ Xxxxxx X. Xxxxxxx (SEAL)
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XXXXXX X. XXXXXXX
XXXXXX XXXX XXXXX INC.
By: /s/ Xxxxxx X. Xxxxxx
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President
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