EXHIBIT 10.7
SECOND AMENDED AND RESTATED
STOCKHOLDER'S AGREEMENT
BETWEEN
CENTURY MAINTENANCE SUPPLY, INC.
AND CERTAIN OF ITS STOCKHOLDERS
TABLE OF CONTENTS
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PAGE
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ARTICLE I NATURE AND PURPOSES OF AGREEMENT ....................... 1
ARTICLE II DEFINITIONS ............................................ 1
2.1 Board .................................................. 2
2.2 Cash ................................................... 2
2.3 Commission ............................................. 2
2.4 Confidential Information ............................... 2
2.5 Control ................................................ 2
2.6 Immediate Family ....................................... 2
2.7 Initial Public Offering ................................ 2
2.8 Offering Stockholder ................................... 2
2.9 Other Stockholder ...................................... 2
2.10 Permitted Transferee ................................... 2
2.11 Required Interest ...................................... 2
2.12 Securities Act ......................................... 3
2.13 Share .................................................. 3
2.14 Stockholder ............................................ 3
2.15 Transfer ............................................... 3
ARTICLE III TRANSFER RESTRICTIONS GENERALLY......................... 3
3.1 Stockholders' Agreement ................................ 3
3.2 New Stockholders ....................................... 3
3.3 Pre-Transfer Notice Requirement ........................ 4
3.4 Transfer by Pledge ..................................... 4
3.5 Credit Agreement ....................................... 5
ARTICLE IV PERMITTED TRANSFERS..................................... 5
4.1 Permitted Transfers .................................... 5
4.2 Transfers by Permitted Transferees ..................... 5
4.3 Restrictions on Permitted Transfers by Sale ............ 5
ARTICLE V VOLUNTARY TRANSFER RESTRICTIONS ........................ 5
5.1 Transfers to Non-Stockholders .......................... 6
5.2 Buy-Out Offers ......................................... 8
5.3 Two-Year Restriction ................................... 8
5.4 Transfer of Shares by FSEP IV; Rights of Inclusion ..... 8
ARTICLE VI INVOLUNTARY TRANSFER RESTRICTIONS ..................... 10
6.1 Involuntary Transfers ................................. 10
6.2 Transfers in Bankruptcy ............................... 11
ARTICLE VII PURCHASE UPON DEATH, DIVORCE OR TERMINATION
OF EMPLOYMENT ......................................... 11
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7.1 Death of Stockholder's Spouse ......................... 11
7.2 Death of Stockholder .................................. 12
7.3 Life Insurance ........................................ 12
7.4 Divorce of Stockholder and Stockholder's Spouse ....... 12
7.5 Termination of Employment ............................. 13
ARTICLE VIII PURCHASE PRICE AND TERMS .............................. 13
8.1 Purchase Price ........................................ 13
8.2 Payment of Purchase Price ............................. 14
ARTICLE IX EFFECTIVE DATES ....................................... 14
9.1 Closing Date .......................................... 14
9.2 Notices; Offers; Acceptances .......................... 15
ARTICLE X ENFORCEMENT ........................................... 15
10.1 Creation of Sufficient Surplus ........................ 15
10.2 Endorsements on Stock Certificates .................... 15
10.3 Breach ................................................ 16
10.4 Governing Law ......................................... 16
10.5 Severability .......................................... 16
ARTICLE XI EFFECT ................................................ 16
11.1 Previous Agreements Superseded ........................ 16
11.2 Binding Effect ........................................ 17
11.3 Stockholders' Spouses ................................. 17
11.4 Representations and Warranties ........................ 17
11.5 Effectiveness ......................................... 17
ARTICLE XII AMENDMENT AND TERMINATION ............................. 17
12.1 Amendment ............................................. 17
12.2 Termination ........................................... 17
12.3 Notice ................................................ 18
ARTICLE XIII OTHER AGREEMENTS ...................................... 18
13.1 "Market Stand-Off" Agreement .......................... 18
ARTICLE XIV MISCELLANEOUS ......................................... 18
14.1 Gender and Certain References ......................... 18
14.2 Counterparts .......................................... 18
SCHEDULE 1
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EXHIBIT 3.2 AMENDED AND RESTATED
ADOPTION OF STOCKHOLDERS' AGREEMENT
EXHIBIT 8.2(a) PROMISSORY NOTE
EXHIBIT 8.2(b) STOCK PLEDGE AND PURCHASE MONEY SECURITY AGREEMENT
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SECOND AMENDED AND RESTATED
STOCKHOLDERS' AGREEMENT
THIS SECOND AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT ("AGREEMENT") is
entered into as of July 8, 1998, by and among Century Maintenance Supply, Inc.,
a Delaware corporation having its principal place of business at 0000 Xxxxxxx
Xxxxx, Xxxxxxx, Xxxxx 00000 (the "COMPANY"), the stockholders listed in Schedule
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1 ("STOCKHOLDERS"), and the spouses of the Stockholders listed on the following
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execution pages ("STOCKHOLDERS' SPOUSES"), Xxxxxx Xxxxxxx, and FS Equity
Partners IV, L.P. ("FSEP IV").
ARTICLE I
NATURE AND PURPOSES OF AGREEMENT
The Company, the Stockholders, the Stockholders Spouses, and Xxxxxx Xxxxxxx
executed that certain Stockholders Agreement dated June 30, 1997 (as amended and
restated as of May 5, 1998, the "EXISTING AGREEMENT"). The Stockholders and
Xxxxxx Xxxxxxx currently own beneficially and of record all of the Company's
issued and outstanding shares of common stock, par value $.001 per share, being
a total of 9,916,038 shares, as shown on Schedule 1.
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The Stockholders, Xxxxxx Xxxxxxx and FSEP IV currently contemplate entering
into a recapitalization transaction and, in connection therewith, desire to
amend and restate the Existing Agreement on the terms contemplated herein, such
amendment to be effective concurrent with and only upon the consummation of the
transactions contemplated by that certain Agreement and Plan of Merger entered
into as of May 5, 1998 by and among Century Acquisition Corporation, a Delaware
corporation, FSEP IV, the Stockholders, the Company and Xxxxxx Xxxxxxx (as
amended, the "MERGER AGREEMENT").
As used in this Agreement, the term "STOCKHOLDER'S SPOUSE" means a spouse
of a Stockholder if and only to the extent that such spouse does not own Shares
of record.
In consideration of the premises and mutual covenants of this Agreement,
and the execution of this Agreement by the Company, the Stockholders, the
Stockholders' Spouses, Xxxxxx Xxxxxxx and FSEP IV, the parties to this Agreement
covenant and agree as follows:
ARTICLE II
DEFINITIONS
As used in this Agreement, each parenthetically or otherwise defined
capitalized term in the recitals to, and in other Articles of, this Agreement
shall have the meaning so ascribed to it (either in this Agreement or in the
Merger Agreement), and each of the following terms shall have the meaning
ascribed to it in this Article II:
2.1 BOARD. "BOARD" shall mean the members of the Board of Directors of
the Company.
2.2 CASH. "CASH" shall include cash or other immediately available funds
constituting or payable in legal tender of the United States of America.
2.3 COMMISSION. "COMMISSION" shall mean the United States Securities and
Exchange Commission, or any federal agency administering the Securities Act at
any given time.
2.4 CONFIDENTIAL INFORMATION. "CONFIDENTIAL INFORMATION" shall mean and
include, but is not limited to, the following forms of information relating to
the Company and other information of a similar nature (whether reduced to a
tangible manifestation): discoveries; ideas; concepts; designs; drawings;
specifications; techniques; computer flow charts, programs and software; models;
data; documentation; diagrams; research; development; processes; procedures;
"know-how;" marketing, licensing and franchising techniques; materials; plans;
customer names and lists; agents names and lists; files and other information
related to past and prospective customers or agents; con tracts; cost data,
pricing policies and financial information; and any information specifically
designated as Confidential Information. Confidential Information also shall
include any information described in the preceding sentence that the Company
obtains from another party and which the Company treats or has agreed to treat
as confidential.
2.5 CONTROL. "CONTROL" shall mean 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.
2.6 IMMEDIATE FAMILY. "IMMEDIATE FAMILY" shall mean parents, siblings,
spouse during marriage and not incident to divorce, lineal descendants
(including those by adoption) and spouses of lineal descendants.
2.7 INITIAL PUBLIC OFFERING. "INITIAL PUBLIC OFFERING" shall mean the
consummation of the sale of Common Stock to the general public in a bona fide
firm commitment underwritten public offering pursuant to a registration
statement filed with, and declared or ordered effective by, the Commission under
the Securities Act, pursuant to which the Company receives net proceeds of at
least $5,000,000.
2.8 OFFERING STOCKHOLDER. "OFFERING STOCKHOLDER" shall mean a Stockholder
who intends to Transfer all or any portion of his Shares to any person other
than a Permitted Transferee.
2.9 1998 OPTION PLAN. "1998 OPTION PLAN" shall mean the Century
Maintenance Supply, Inc. 1998 Nonqualified Stock Option Plan as it may be
amended from time to time.
2.10 OTHER STOCKHOLDER. "OTHER STOCKHOLDER" shall mean any Stockholder who
is not an Offering Stockholder and who is not a Permitted Transferee.
2.11 PERMITTED TRANSFEREE. "PERMITTED TRANSFEREE" shall mean any of the
persons listed in Section 4.1 of Article IV.
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2.12 REQUIRED INTEREST. "REQUIRED INTEREST" shall mean the stockholders of
the Company, including FSEP IV, who, at any given time, own of record and
beneficially more than 50% of the then issued and outstanding Shares; provided,
that FSEP IV shall no longer be included within the "Required Interest" once
FSEP IV's percentage ownership in the Company (calculated on the fully diluted
basis) drops below 20%.
2.13 SECURITIES ACT. "SECURITIES ACT" shall mean the Securities Act of
1933, or any similar federal statute, and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at any given time.
2.14 SHARE. "SHARE" shall mean a share of common stock of the Company, par
value $.001 per share, now outstanding or subsequently acquired by the
Stockholders, and any instrument convertible into or constituting an option to
acquire Shares (other than options outstanding under the 1998 Option Plan and
shares issued upon exercise thereof). All references to Shares owned by a
Stockholder include the community interest, if any, of the spouse of that
Stockholder.
2.15 STOCKHOLDER. "STOCKHOLDER" shall mean the persons listed in Schedule
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1 as well as any person or entity (other than Xxxxxx Xxxxxxx or FSEP IV) that
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becomes a Stockholder of the Company in accordance with the provision of Section
3.2 hereof; if the Stockholder is deceased, the executor or legal representative
of the deceased Stockholder's estate, the Trustee of a trust created under the
deceased Stockholder's Last Will and Testament, or a legatee, beneficiary, heir
or successor in interest; and any other persons who become parties to this
Agreement pursuant to the terms of this Agreement.
2.16 TRANSFER. "TRANSFER" shall mean any direct or indirect sale,
assignment, gift, devise, pledge, hypothecation or other encumbrance, or any
other disposition of Shares (or any interest in or voting power of Shares)
either voluntarily or by operation of law.
ARTICLE III
TRANSFER RESTRICTIONS GENERALLY
3.1 STOCKHOLDERS' AGREEMENT. Each Stockholder and Stockholder's Spouse
covenants and agrees that he or she will not Transfer or permit to be
Transferred all or any portion of the Shares now owned or subsequently acquired
by him or her, except in accordance with and subject to the terms and conditions
of this Agreement. A counterpart of this Agreement, as it may be amended from
time to time, shall be maintained by the Company at its principal place of
business.
3.2 NEW STOCKHOLDERS. Notwithstanding any other provision of this
Agreement, other than as contemplated by the Merger Agreement, no Shares shall
be issued or Transferred to any person who is not a party to this Agreement. As
a condition precedent to the acquisition of Shares by any proposed transferee
(other than Xxxxxx Xxxxxxx or FSEP IV), each Stockholder authorizes and directs
the Company, prior to Transferring or issuing Shares to any transferee, to
execute, on its behalf and as agent for each Stockholder and Stockholder's
Spouse, with that transferee and, if applicable, that transferee's spouse, an
adoption agreement pursuant to which he or they agree to be bound by this
Agreement in substantially in the form attached hereto as EXHIBIT 3.2. By
executing
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the adoption agreement, that transferee, transferee's spouse, heirs, legatees
and legal representatives consent and agree to be bound by the terms and
conditions of this Agreement. Upon execution of the adoption agreement, that
transferee and transferee's spouse shall become a "STOCKHOLDER" and a
"STOCKHOLDER'S SPOUSE" for all purposes of this Agreement as if an original
party. The Company agrees that it will not issue or Transfer any Shares to any
proposed transferee without first executing such an adoption agreement with the
transferee and transferee's spouse, and further agrees to affix the endorsements
required by Section 10.2 to the stock certificate(s) issued to the new
Stockholder. The Company also agrees that it will attach a copy of the adoption
agreement to the Company's copy of this Agreement.
3.3 PRE-TRANSFER NOTICE REQUIREMENT. Prior to attempting any Transfer of
Shares, each Stockholder shall:
(a) give written notice to the Company, Xxxxxx Xxxxxxx and the Other
Stockholders describing the proposed Transfer and the proposed transferee in
detail, describing the number of Shares owned by the Stockholder, the number of
Shares the Stockholder proposes to Transfer, the consideration and terms of the
Transfer and any other specific information which may be required elsewhere in
this Agreement; and
(b) provide whatever other information the Company reasonably
requests.
3.4 TRANSFER BY PLEDGE. No Shares shall be pledged or otherwise
voluntarily encumbered unless the Board approves the pledge or other
encumbrance. The Board shall have sole discretion to allow any Shares to be
pledged for any purpose. If the Board approves a pledge of Shares, then the
following procedure will be followed:
(a) The Company, Xxxxxx Xxxxxxx and the Other Stockholders will
receive at least sixty (60) days notice prior to any pledge or encumbrance of
Shares specifying the person to whom the Shares will be pledged or otherwise
encumbered, and the location at which the certificates representing the Shares
will be held;
(b) The Company, Xxxxxx Xxxxxxx and the Other Stockholders shall be
provided, promptly upon execution by the pledging Stockholder, with copies of
all security agreements relating to the pledged Shares and a summary of any oral
agreements affecting the Shares, all as amended from time to time; and
(c) The pledging Stockholder and the secured party under the pledge or
encumbrance (including any trustees or agents for the secured party) shall
execute and deliver an amendment to this Agreement in form and substance
satisfactory to the non-pledging Stockholders and Company to the effect that (i)
those persons agree to be bound by the terms of this Agreement, (ii) the secured
party shall notify the Company and non-pledging Stockholders of the date, time
and location of any foreclosure upon pledged or encumbered Shares at least sixty
(60) days prior to the foreclosure, (iii) that any notice of foreclosure shall
be deemed to be an offer by the pledging Stockholder to sell the pledged Shares
to the secured party at the price established under Section 8.1 and on the terms
described under Section 8.2, which offer shall entitle the Company and the non-
pledging Stockholders to purchase the pledged Shares pursuant to Section 5.1,
and (iv) if the
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Company and/or the non-pledging Stockholders elect to purchase the pledged
Shares within the sixty (60) day period, the foreclosure shall not be held and
the pledged Shares shall be sold and delivered by the pledging Stockholder and
the secured party to the Company and/or the non-pledging Stockholders, as
applicable, at the price and on the terms established in accordance with
Sections 8.1 and 8.2 of this Agreement.
If for any reason the pledged Shares are foreclosed upon, the foreclosure shall
be considered an involuntary Transfer and the provisions of Article VI shall
govern.
3.5 CREDIT AGREEMENT. Notwithstanding any other provision of this
Agreement, a Transfer of Shares shall not be permitted if, in the Company's
reasonable judgment (as evidenced conclusively by a resolution of the Board),
that Transfer would cause an event of default under any credit agreement or loan
agreement to which the Company is a party as a borrower, and the lender in the
credit agreement or loan agreement has not waived the default which would result
from the proposed Transfer.
ARTICLE IV
PERMITTED TRANSFERS
4.1 PERMITTED TRANSFERS.
(a) Subject to the provisions of Section 4.2, the provisions of
Article V shall not apply to any Transfer by any Stockholder during his lifetime
to another existing Stockholder whether by gift, inheritance, sale or other form
of transfer. Except as to any Permitted Transferee described in this Section
4.1 who is a Stockholder prior to a Transfer of Shares made pursuant to this
Section 4.1, a Permitted Transferee shall not be considered a Stockholder for
purposes of this Article IV but, in all other respects, the terms and provisions
of this Agreement shall bind a Permitted Transferee as a Stockholder.
(b) The provisions of Articles III and V of this Agreement shall not
apply to any Transfer by any Stockholder pursuant to the provisions of the
Merger Agreement.
4.2 TRANSFERS BY PERMITTED TRANSFEREES. The provisions of Article V shall
not apply to any Transfer by a Permitted Transferee, or to any existing
Stockholder, to another Stockholder during his lifetime.
4.3 RESTRICTIONS ON PERMITTED TRANSFERS BY SALE. Notwithstanding any
other provision of this Article IV, the provisions of Article V shall apply to a
Stockholder's Transfer by sale or other disposition for consideration of all or
any portion of his Shares to any member of his Immediate Family.
ARTICLE V
VOLUNTARY TRANSFER RESTRICTIONS
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5.1 TRANSFERS TO NON-STOCKHOLDERS. A voluntary Transfer of Shares to any
person who is not a Stockholder is subject to the following provisions (all
terms defined in this Section 5.1 apply only to the provisions of this Section
5.1):
(a) Notice Requirement. Prior to any voluntary Transfer of any Shares
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to any person who is not then a Stockholder, the Offering Stockholder shall
first simultaneously send written notice to the Board, Xxxxxx Xxxxxxx, and FSEP
IV and the Other Stockholders of his intention to Transfer all or a portion of
his Shares to a transferee who has a bona fide intent and the ability to acquire
the subject shares, (the "OFFERING NOTICE"). The Offering Notice shall contain
a conformed copy of the proposed transferee's offer to purchase, and shall
describe the number of Shares involved (the "OFFERED SHARES"), the price per
Share which the proposed transferee will pay, the terms and conditions of
payment to be made by the proposed transferee, and the name of the proposed
transferee. The Offering Notice shall constitute an offer to sell the Offered
Shares in whole or in part to the Company. The Offering Stockholder promptly
shall notify the Board, Xxxxxx Xxxxxxx, FSEP IV and the Other Stockholders in
writing of any changes in the terms of the Offering Notice, which subsequent
notice shall constitute a new offer for purposes of this Section 5.1. Unless
the Offering Stockholder and his proposed transferee mutually agree in writing
to terminate the proposed Transfer, all offers to the Company, Xxxxxx Xxxxxxx,
FSEP IV and the Other Stockholders under this Section 5.1 shall be irrevocable
during the Option Period, as defined below.
(b) Right of First Refusal. Subject to Section 5.1(c), (d), (e) and
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(g), for a maximum period of sixty (60) days after the date on which the Board
receives the Offering Notice (the "OPTION PERIOD"), the Company shall have the
right to elect to purchase all or any portion of the Offered Shares, Xxxxxx
Xxxxxxx and FSEP IV shall have the pro rata right to elect to purchase all or
any portion of the Offered Shares which the Company does not elect to purchase,
and the Other Stockholders shall have the right to elect to purchase all or any
portion of the Offered Shares which the Company, Xxxxxx Xxxxxxx and FSEP IV have
elected not to purchase, in either case (1) at the lesser of (i) the offering
price specified in the Offering Notice, or (ii) the purchase price as determined
under Section 8.1, and (2) on the terms described in the Offering Notice or on
the terms described in Section 8.2.
(c) Company's First Option. During the first twenty (20) days of the
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Option Period, the Company shall have an exclusive option to purchase all or any
portion of the Offered Shares. If the Company desires to exercise its option in
whole or in part, then no later than 11:59 P.M. Houston, Texas time on the
twentieth (20th) day of the Option Period, the Company shall deliver to the
Offering Stockholder, Xxxxxx Xxxxxxx, FSEP IV and the Other Stockholders a
written notice which indicates its acceptance of the offer to purchase Offered
Shares, and specifies the number of Offered Shares which it has elected to
purchase, and its selection of offering price and terms.
(d) Option of Xxxxxx Xxxxxxx and FSEP IV. If the Company does not
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timely deliver the written notice contemplated by Section 5.1(c) or such notice
indicates that the Company has committed to purchase less than 100% of the
Offered Shares, then during the period beginning at 12:00 A.M. Houston, Texas
time on the twenty-first (21st) day of the Option Period and ending at 11:59
P.M. Houston, Texas time on the forty-fifth (45th) day of the Option Period,
Xxxxxx Xxxxxxx and FSEP IV shall have an exclusive option to purchase, on a pro
rata basis based on the
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percentage of the outstanding capital stock of the Company (calculated on a
fully diluted basis) then held by each of such stockholders, all or any portion
of the Offered Shares which the Company did not commit to purchase during the
first twenty (20) days of the Option Period. If either FSEP IV or Xxxxxx Xxxxxxx
desires to exercise its option in whole or in part, then no later than 11:59
P.M. Houston, Texas time on the forty-fifth (45th) day of the Option Period, it
shall deliver written notice to the Company and the Offering Stockholder which
indicates its acceptance of the offer to purchase Offered Shares, and specifies
the maximum number of Offered Shares which it has elected to purchase, and its
selection of offering price and terms.
(e) Other Stockholders' Option. During the period beginning at 12:00
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A.M. Houston, Texas time on the forty-sixth (46th) day of the Option Period and
ending at 11:59 P.M. Houston, Texas time on the sixtieth (60th) day of the
Option Period, the Other Stockholders shall have an exclusive option to purchase
all or any portion of the Offered Shares which Xxxxxx Xxxxxxx and FSEP IV did
not commit to purchase on or before the forty-fifth (45th) day of the Option
Period. If any Other Stockholder desires to exercise his option under this
Section 5.1(e) in whole or in part, then no later than 11:59 P.M. Houston, Texas
time on the sixtieth (60th) day of the Option Period, the Other Stockholder
shall deliver to the Offering Stockholder and the Board a written notice which
indicates his acceptance of the offer to purchase Offered Shares, and specifies
the total number of Offered Shares which he has elected to purchase and his
selection of offering price and terms. The actual number of Offered Shares
which each Other Stockholder who has delivered such notice will be entitled to
purchase shall be pro rata. If as a result of such allocation any Other
Stockholder is allocated a number of Offered Shares to purchase which is greater
than the number of Offered Shares which he committed to purchase, then the
excess Shares shall be reallocated on a pro rata basis among the remaining Other
Stockholders who were not allocated the full number of Shares which they
committed to purchase.
(f) Remaining Shares. If the Company, Xxxxxx Xxxxxxx, FSEP IV and the
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Other Stockholders do not timely deliver the written notice(s) contemplated by
Section 5.1, or if such written notice(s) indicates that the Company, Xxxxxx
Xxxxxxx, FSEP IV or the Other Stockholders committed to purchase less than 100%
of the Offered Shares, then the maximum number of Offered Shares which the
Offering Stockholder will be entitled to sell pursuant to the terms of the
Offering Notice shall be equal to the difference between the total number of
Offered Shares, less the total number of Offered Shares which the Company,
Xxxxxx Xxxxxxx, FSEP IV and/or the Other Stockholders elected to purchase (the
"REMAINING SHARES").
(g) Lapse. If the Company, Xxxxxx Xxxxxxx, FSEP IV or the Other
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Stockholders fail to notify the Offering Stockholder of their respective
elections under this Section 5.1, or if the Company's, FSEP IV, Xxxxxx Xxxxxxx'x
and Other Stockholders' notice(s) to the Offering Stockholder shall specify for
purchase less than 100% of the Offered Shares, then the offer by the Offering
Stockholder to the Other Stockholders, Xxxxxx Xxxxxxx, FSEP IV and the Company
to the extent not accepted shall lapse sixty (60) days after the date on which
the Board receives the Offering Notice.
(h) Continuation of Restrictions. Upon the lapse in whole or in part
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of the offer to the Other Stockholders, Xxxxxx Xxxxxxx, FSEP IV and the Company,
the Offering Stockholder shall be free to Transfer the Remaining Shares in
strict compliance with the terms of the Offering
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Notice for a period of sixty (60) days thereafter, but after such sixty (60) day
period, the restrictions of this Agreement shall again apply. Shares so
Transferred shall be subject to the terms and condi tions of this Agreement in
accordance with the provisions of Section 3.2.
(i) Transfers Not Subject to Right of First Refusal. Any Transfer by
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a Stockholder pursuant to the provisions of Section 5.2 or Section 5.4 of this
Agreement shall not be subject to the provisons of this Section 5.1.
5.2 BUY-OUT OFFERS. Notwithstanding any other provision of this Article V,
if any Stockholder, Xxxxxx Xxxxxxx, FSEP IV or the Company receives a Buy-Out
Offer (as defined below) and a Required Interest elects to accept such offer as
to their Shares, then the Required Interest shall have the right to require that
all Stockholders sell 100% of their Shares to the Buy-Out Offeror (as defined
below) on the same terms and subject to the same conditions of purchase and
sale. A "BUY-OUT OFFER" means an offer made by any person who is not then a
Stockholder to purchase all but not less than all of the then issued and
outstanding Shares. A "BUY-OUT OFFEROR" means the person(s) who makes a Buy-Out
Offer. Notwithstanding the foregoing, if FSEP IV proposes to sell to a third
party buyer all or (in a transaction which contemplates the partial retention by
the Company's existing securityholders of a portion of the Company's issued and
outstanding securities) a substantial portion of the shares of common stock,
preferred stock and other securities held by it (whether such sale is by way of
purchase, merger, recapitalization or other form of transaction, including, in
each case, its permitted transferees and assignees), upon the request of FSEP
IV, each of the Stockholders shall sell the same percentages of shares of common
stock, preferred stock and other securities beneficially owned by such
Stockholder to such third party buyer pursuant to the terms and conditions
negotiated by FSEP IV for the sale of the securities held by FSEP IV. Each of
the Stockholders agrees to such sale and to execute such agreements, powers of
attorney, voting proxies or other documents and instruments as may be necessary
or desirable to consummate such sale. Each of the Stockholders further agrees
to timely take such other actions as FSEP IV may reasonably request as necessary
in connection with the approval of the consummation of such sale, including
voting all securities in favor of such sale and waiving any dissenters' rights
and, in the event such transaction is structured as a recapitalization, agreeing
to transfer and retain those percentages of securities as are requested by FSEP
IV. Each Stockholder shall be required to make customary representations and
warranties in connection with such transfer with respect to its own authority to
transfer and its title to the securities transferred.
The obligations of the Stockholders pursuant to this Section 5.2 shall
continue after the consummation of an initial public offering but shall
terminate once FSEP IV (including its permitted transferee's) percentage
ownership of voting securities in the Company (calculated on a fully diluted
basis) falls below 10%. The rights of FSEP IV under this Section 5.2 shall be
assignable to a permitted transferee or to an entity which purchases at least
50% of the shares of Common Stock then held by FSEP IV and agrees to hold such
Shares subject to the terms and conditions of this Agreement.
5.3 TWO-YEAR RESTRICTION. Other than in connection with a Transfer
pursuant to Section 5.2 or Section 5.4 of this Agreement, no Stockholder shall
attempt to effect any Transfer of Shares to any person who is not a Stockholder
for a period of two years beginning on the date of consummation of the
transactions contemplated by the Merger Agreement.
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5.4 TRANSFER OF SHARES BY FSEP IV; RIGHTS OF INCLUSION.
(a) Right of Inclusion. FSEP IV agrees not to (i) sell all or any
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portion of the shares of Common Stock of the Company it holds (the "FS SHARES")
to any person that is not an affiliate of FSEP IV (individually, a "THIRD PARTY"
and, collectively, "THIRD PARTIES") or (ii) exercise its rights of inclusion
with respect to any shares of the Company's Common Stock transferred by Xxxxxx
Xxxxxxx to a Third Party, unless each Stockholder is given an opportunity to
sell to the Third Party such number of Shares owned by such Stockholder as is
determined in accordance with Section 5.4(c).
(b) Third-Party Offer. Prior to the consummation of any sale of all
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or any portion of the FS Shares to a Third Party pursuant to Section 5.4(a),
FSEP IV and/or Xxxxxx Xxxxxxx shall cause each bona fide offer from such Third
Party to purchase such FS Shares from FSEP IV (an "FS THIRD-PARTY OFFER") to be
reduced to writing and shall send written notice of such FS Third-Party Offer
(the "FS INITIAL OFFER NOTICE") to the Stockholders. Each FS Third-Party Offer
shall include an offer to purchase Shares from the Stockholders in the amounts
determined in accordance with Section 5.4(c), at the same time, at the same
price and on the same terms as the sale by FSEP IV and, if applicable, Xxxxxx
Xxxxxxx, to the Third Party, and according to the terms and conditions of this
Agreement. The FS Initial Offer Notice shall be accompanied by a true copy of
the FS Third-Party Offer. If any Stockholder desires to accept the offer
contained in the FS Initial Offer Notice, such Stockholder shall furnish written
notice to FSEP IV, within 20 days after its receipt of the FS Initial Offer
Notice, indicating such Stockholder's irrevocable acceptance of the offer
included in the FS Initial Offer Notice and setting forth the maximum number of
Shares such Stockholder agrees to sell to the Third Party (the "FS ACCEPTANCE
NOTICE"). If such Stockholder does not furnish an FS Acceptance Notice to FSEP
IV in accordance with these provisions by the end of such 20-day period, such
Stockholder shall be deemed to have irrevocably rejected the offer contained in
the FS Initial Offer Notice. All Shares set forth in the FS Acceptance Notice
of such Stockholder together with the Shares proposed to be sold by FSEP IV and,
if applicable, Xxxxxx Xxxxxxx to the Third Party are referred to collectively as
"ALL OFFERED SHARES". Within three days after the date on which the Third Party
informs FSEP IV of the total number of Shares which such Third Party has agreed
to purchase in accordance with the terms specified in the FS Initial Offer
Notice, FSEP IV shall send written notice (the "FS FINAL NOTICE") to such
Stockholder setting forth the number of Shares such Stockholder shall sell to
the Third Party as determined in accordance with Section 5.4(c), which number
shall not exceed the maximum number specified by such Stockholder in its FS
Acceptance Notice. Within five days after the date of the FS Final Notice (or
such shorter period as may reasonably be requested by FSEP IV to facilitate the
sale), such Stockholder shall furnish to FSEP IV (i) a written undertaking to
deliver, upon the consummation of the sale of Shares to the Third Party as
indicated in the FS Final Notice, the certificates representing the Shares held
by such Stockholder which will be transferred pursuant to such FS Third-Party
Offer (such shares shall be referred to herein as the "STOCKHOLDER INCLUDED
SHARES") and (ii) a limited power-of-attorney authorizing FSEP IV to transfer
the Stockholder Included Shares pursuant to the terms of such FS Third-Party
Offer. Each of FSEP IV, Xxxxxx Xxxxxxx, if applicable, and such Stockholder
shall be required to make representations and warranties in connection with such
transfer with respect to its own authority to transfer and its title to the
Shares transferred. In any such transaction, such Stockholder will cooperate
with FSEP IV, Xxxxxx Xxxxxxx, if applicable, and the Company to facilitate the
transaction.
9
(c) Allocation of Included Shares. The maximum number of Shares that
-----------------------------
may be sold by FSEP IV, Xxxxxx Xxxxxxx, if applicable, the Stockholders and all
other holders of the Company's Common Stock who have rights to participate in
sales of FS Shares pursuant to written agreements by and between FSEP IV and any
such holder (the "OTHER FS TAG-ALONG RIGHTS HOLDERS") in any sale governed by
this Section 5.4 shall be (i) All Offered Shares in the event the Third Party
has agreed to purchase All Offered Shares as well as all shares of the Company's
Common Stock that the Other FS Tag-Along Rights Holders who have elected to
participate in such sale seek to include in such sale, or (ii) such number of
shares of the Company's Common Stock equal to the product of (A) the total
number of shares of the Company's Common Stock which the Third Party has agreed
to purchase times (B) a fraction, the numerator of which is the total number of
shares of the Company's Common Stock owned by FSEP IV, Xxxxxx Xxxxxxx, the
Stockholders, or each Other FS Tag-Along Rights Holder who has elected to
participate in such sale, as the case may be, specified in the FS Final Notice
on the date of the FS Final Notice, and the denominator of which is the total
number of shares of the Company's Common Stock, in the aggregate, owned on the
date of the FS Final Notice by FSEP IV, Xxxxxx Xxxxxxx, the Stockholders and the
Other FS Tag-Along Rights Holders who have elected to participate in such sale;
provided, however, that, in the event FSEP IV, Xxxxxx Xxxxxxx, the Stockholders
-------- -------
or any Other FS Tag-Along Rights Holder elects to sell a number of shares of the
Company's Common Stock which is less than the number of shares such holder could
sell pursuant to clause (ii) above, the shares of the Company's Common Stock
that the others of such holders can sell in such transaction shall be increased
by an aggregate amount equal to the number of shares which any of the FSEP IV,
Xxxxxx Xxxxxxx, the Stockholders or any Other FS Tag-Along Rights Holder could
have sold in such transaction but chose not to sell, and any such increase shall
be allocated among such other holders on a pro rata basis based upon the total
number of shares of the Company's Common Stock owned on the date of the FS Final
Notice by such other holders.
(d) Consummation. FSEP IV shall have 180 days from the date of the FS
------------
Final Notice in which to sell to the Third Party the shares owned by FSEP IV,
Xxxxxx Xxxxxxx, if applicable, and the Stockholder Included Shares on terms
which are not materially less favorable to the sellers of Shares than those
specified in the applicable FS Initial Offer Notice; provided, however, that in
-------- -------
the event there is a decrease in the price to be paid by the Third Party for the
Shares to be sold from the price set forth in the FS Initial Offer Notice, which
decrease is acceptable to FSEP IV, other than material change in terms which are
less favorable to FSEP IV, but which are acceptable to FSEP IV, FSEP IV shall
notify the selling Stockholder of such decrease or change in terms, and such
Stockholder shall have five business days from the date of receipt of the notice
of such decrease or change in terms to reduce the number of Shares it will sell
to such Third Party as previously indicated in the applicable FS Acceptance
Notice, and the number of shares that all other participating stockholders
(including Other FS Tag-Along Rights Holders) may transfer shall be increased in
accordance with the provisions of Section 5.4(c). FSEP IV shall act as agent
for such Stockholder in connection with such sale and shall cause to be remitted
to such Stockholder the total sales price of the Stockholder Included Shares
sold pursuant thereto, which consideration shall be in the same form as the
consideration received by FSEP IV and as specified in the applicable FS Initial
Offer Notice, net of such Stockholder's pro rata portion (based on the total
value of the consideration received by such Stockholder compared to the
aggregate consideration received by all stockholders in the transaction) of the
reasonable out-of-pocket expenses (not including any expenses paid or payable to
an affiliate of FSEP IV) incurred and paid by FSEP IV in connection with such
sale. If
10
and to the extent that, at the end of 180 days following the date of the FS
Final Notice, FSEP IV has not completed the sale contemplated thereby, FSEP IV
shall return to such Stockholder all certificates representing the Stockholder
Included Shares and all powers-of-attorney which such Stockholder may have
transmitted pursuant to the terms hereof.
(e) Termination and Assignment. The obligations of FSEP IV pursuant
--------------------------
to the provisions of this Section 5.4 shall terminate upon the consummation of
an Initial Public Offering. The rights granted to the Stockholders under this
Section 5.4 shall not be assignable except to a Permitted Transferee in
accordance with Article IV, provided that the Permitted Transferee executes a
written undertaking to be and becomes bound by this Agreement in the same manner
and to the same extent as the other Stockholders. A liquidating distribution by
FSEP IV to its partners of the FS Shares shall not give rise to any rights under
this Section 5.4.
ARTICLE VI
INVOLUNTARY TRANSFER RESTRICTIONS
6.1 INVOLUNTARY TRANSFERS. Whenever a Stockholder has any notice or
knowledge of any attempted, impending or consummated involuntary Transfer of, or
lien or charge upon any of, his Shares, whether by operation of law or
otherwise, he shall give immediate written notice to the Company, Xxxxxx
Xxxxxxx, FSEP IV and the Other Stockholders specifying the number of Shares
which are subject to such involuntary Transfer. Whenever the Company has notice
or knowledge of any such attempted, impending or consummated involuntary
Transfer, lien or charge, it shall give written notice to the Stockholder,
Xxxxxx Xxxxxxx and the Other Stockholders specifying the number of Shares which
are subject to such involuntary Transfer. In either case, the Stockholder
agrees to immediately disclose to the Company, Xxxxxx Xxxxxxx and the Other
Stockholders all pertinent information in his possession relating to the
Transfer. If any Share is subjected to an involuntary Transfer, lien or charge,
the Stockholder(s) and/or other record owner of such Shares shall be deemed an
Offering Stockholder(s), and the Company shall at all times have the immediate
and continuing option to purchase the subject Shares in accordance with Section
5.1 for each successive sixty (60) day period, except that the purchase price
shall be as specified in Section 8.1 and the terms shall be as described in
Section 8.2, and any Shares so purchased shall in every case be free and clear
of the Transfer, lien or charge. The purchase price shall first be paid
directly to the holder of the encum brance on the Shares in an amount
sufficient to discharge the obligation underlying, and release, the encumbrance.
The balance of the purchase price, if any, shall be paid to the selling
Stockholder.
6.2 TRANSFERS IN BANKRUPTCY. If a Stockholder or Stockholder's Spouse is
the named debtor in bankruptcy or receivership proceedings and a Transfer of
Shares is proposed or directed, the Company shall have an exclusive right of
first refusal to purchase the named debtor Stockholder's Shares to the same
extent as if such Transfer constituted an offer to sell Shares under Section
5.1, and the provisions of Section 5.1, except the purchase price shall be
determined pursuant to Section 8.1 and the terms shall be as described in
Section 8.2, shall accordingly control the exercise of this right of first
refusal.
11
ARTICLE VII
PURCHASE UPON DEATH,
DIVORCE OR TERMINATION OF EMPLOYMENT
7.1 DEATH OF STOCKHOLDER'S SPOUSE. If any Shares are owned by a
Stockholder and his Stockholder's Spouse jointly and the Stockholder's Spouse
predeceases the Stockholder, then the Stockholder immediately shall
simultaneously send written notice to the Company, Xxxxxx Xxxxxxx and the Other
Stockholders specifying the date of death of his Stockholder's Spouse and the
nature of the deceased Stockholder Spouse's interest in the Shares. Such
interest may be Transferred directly to the Stockholder. If the Stockholder's
Spouse predeceases the Stockholder and the Stockholder's Spouse's interest in
the Shares is not Transferred directly to the Stockholder, then the Company,
Xxxxxx Xxxxxxx, FSEP IV and the Other Stockholders shall have the option to
purchase the Stockholder's Spouse's interest in the Shares under the terms of
Section 7.2 as if the Stockholder rather than the Stockholder's Spouse had died,
and all provisions of Section 7.2 shall apply. Upon the exercise of any such
option, the legal representative or trustee of the deceased Stockholder's
Spouse's estate shall be obligated to sell such interest, and perform any
further acts and execute and deliver any documents which may be reasonably
necessary to carry out the provisions of this Agree ment. In all other
respects, the interest in the Shares of the Stockholder's Spouse shall be
subject to the restrictions and terms of this Agreement.
7.2 DEATH OF STOCKHOLDER. Upon learning of the death of any Stockholder,
the Company immediately shall simultaneously send written notice to Xxxxxx
Xxxxxxx and the surviving Other Stockholders, specifying the date of death and
the number of Shares owned by the deceased Stockholder (the "NOTICE"). For a
period of sixty (60) days after the date on which the Notice is sent, Xxxxxx
Xxxxxxx, FSEP IV the surviving Other Stockholders and the Company shall have the
option to purchase all or any portion of the Shares owned by such deceased
Stockholder on the date of his death, in accordance with the provisions of
Section 5.1, except that the Offering Stockholder shall be the legal
representative or trustee of the deceased Stockholder's estate, the purchase
price shall be determined pursuant to Section 8.1, and the terms shall be as
described in Section 8.2. Upon the exercise of any option under this Section
7.2, the legal representative or trustee of the deceased Stockholder's estate
shall sell the deceased Stockholder's Shares to the Company, Xxxxxx Xxxxxxx,
FSEP IV and/or the Other Stockholders, as the case may be, and perform any
further acts and execute and deliver any documents which may be reasonably
necessary to carry out the provisions of this Agreement. If the Company, Xxxxxx
Xxxxxxx, FSEP IV and/or surviving Other Stockholder do not purchase all of such
deceased Stockholders' Shares, then his estate and any beneficiaries of his
estate to whom the estate distributes Shares shall be subject to the
restrictions and provisions of this Agreement, and shall be treated as Permitted
Transferees under the provisions of Article IV.
7.3 LIFE INSURANCE. In order to fund the payment of the purchase price
for the Shares which may be purchased under this Agreement on the death of any
Stockholder, the Company may apply for and maintain permanent and/or term life
insurance policies on the lives of any or all of such Stockholders in such
amounts as it may deem appropriate and necessary. Each policy shall belong
solely to the Company and, subject to the provisions of this Agreement, the
Company reserves all the powers and rights of ownership of such insurance. The
Company shall be named as the primary beneficiary of each policy and shall pay
all premiums as they become due. No Stockholder shall
12
exercise any of the powers of ownership of any policy by changing the named
beneficiary, canceling the policy, electing optional methods of payment,
converting the policy, borrowing against it, or in any way changing its nature,
value, or the rights under the policy or policies. No proceeds of any insurance
policy funded by the Company shall be available to the Other Stockholders for
the purchase of Shares. Any dividends paid on any policy or policies before
maturity or the insured's death shall be paid to the Company and shall not be
subject to this Agreement. Upon an insured Stockholder's death, the Company
shall file the necessary proofs of death and collect the proceeds of any
outstanding policies of life insurance. All insurance proceeds obtained pursuant
to this Section 7.3 shall be applied to pay the purchase price of the Shares in
cash at the time of purchase, and any excess shall be added to the Company's
working capital.
7.4 DIVORCE OF STOCKHOLDER AND STOCKHOLDER'S SPOUSE. If any Shares are
owned by a Stockholder and his Stockholder Spouse jointly, and the marriage of
that Stockholder and his Stockholder Spouse is terminated by divorce or
annulment, and that Stockholder does not obtain all of his Stockholder Spouse's
interest in the Shares incident to the divorce or annulment, then the
Stockholder shall simultaneously give written notice to the Company, Xxxxxx
Xxxxxxx, FSEP IV and the Other Stockholders within thirty (30) days after the
effective date of the final, nonappealable divorce decree or of the annulment.
The written notice shall specify the effective date of termination of the
marriage and the number of Shares to which any interest retained by the
Stockholder's former Stockholder Spouse relates. For a period of sixty (60)
days after the effective date of termination of the marriage, the Stockholder
shall have an exclusive option to purchase all or any portion of his former
Stockholder Spouse's retained interest in the Shares at the purchase price
specified in Section 8.1 and on the terms described in Section 8.2. The
Stockholder's sixty (60) day option shall be exercised by delivering to his
former Stockholder Spouse, the Company, Xxxxxx Xxxxxxx, FSEP IV and the Other
Stockholders a written notice specifying the number of Shares or interest in the
Shares as to which the option is being exercised. If the Stockholder does not
purchase all of his former Stockholder Spouse's interest in the Shares, then for
a period of sixty (60) days after the lapse of the Stockholder's sixty (60) day
option period, the Stockholder's Spouse shall be deemed an Offering Stockholder,
and the Company, Xxxxxx Xxxxxxx and the Other Stockholders shall have an
exclusive option to purchase all or any portion of the former Stockholder
Spouse's retained interest in the Shares in accordance with the provisions of
Section 5.1 except that the price shall be determined pursuant to Section 8.1
and the terms shall be as described in Section 8.2. If any option is exercised
pursuant to this Section 7.4, then the former Stockholder's Spouse shall sell
any interest in the Shares retained incident to divorce or annulment.
7.5 TERMINATION OF EMPLOYMENT.
(a) If the Company's employment of a Stockholder is terminated for any
reason other than death, then such terminated person shall be deemed an Offering
Stockholder, and the Company, Xxxxxx Xxxxxxx, FSEP IV and the Other
Stockholders, excluding the terminated person, shall have an exclusive option,
but not the obligation, to purchase all or any portion of the Shares owned by
the Offering Stockholder in the priorities of, and in accordance with, the
provisions of Section 5.1, except that the price shall be determined pursuant to
Section 8.1 and the terms shall be as described in Section 8.2.
13
(b) On termination of such a Stockholder-employee, the Company shall
promptly give written notice to Xxxxxx Xxxxxxx, FSEP IV and the Other
Stockholders, as applicable, such notice specifying the termination date and the
number of Shares owned by the Offering Stockholder.
(c) For purposes of this Section 7.5, the term "Company" means the
Company and its subsidiaries.
ARTICLE VII
PURCHASE PRICE AND TERMS
8.1 PURCHASE PRICE.
(a) Whenever any Shares shall be offered at the "PURCHASE PRICE", or
at any offering price determined with reference to the purchase price, the
purchase price shall be the product of (i) quotient of (A) the Company's net
book value as determined pursuant to generally accepted accounting principles
(provided, that the calculation of the Company's net book value shall not
include the effects of the recapitalization transactions contemplated by the
Merger Agreement), divided by (B) the total number of Shares then issued and
outstanding, determined in accordance with the Company's stock records,
multiplied by (ii) the number of Offered Shares The calculations required by
each of (A) and (B) of this Section 8.1 shall be made as of the last day of the
month which immediately precedes the month during which the event occurs making
it necessary or advisable to calculate the purchase price under this Section
8.1.
8.2 PAYMENT OF PURCHASE PRICE. Payment of the purchase price for Shares
purchased pursuant to this Agreement shall be made as follows provided that, (i)
if Article V applies, the Company, Xxxxxx Xxxxxxx, FSEP IV and the Other
Stockholders may elect to purchase on terms specified in the notice of proposed
Transfer instead of on the following terms, and (ii) the purchasing party,
whether the Company, Xxxxxx Xxxxxxx, FSEP IV or an Other Stockholder, may always
elect to pay all or an additional part of the purchase price in cash instead of
on the following terms:
(a) On the closing date, the Company, Xxxxxx Xxxxxxx, FSEP IV or the
Other Stockholder(s) purchasing Shares shall deliver to the Offering Stockholder
a down payment in cash equal to at least twenty percent (20%) of the total
purchase price. The balance of the total purchase price shall be paid in
accordance with the terms of a five (5) year recourse promissory note bearing
interest at a rate equal to the lowest applicable federal interest rate for
midterm notes as published by the Internal Revenue Service pursuant to Internal
Revenue Code Section 1274(d), payable in sixty (60) equal monthly installments
of principal and interest. The promissory note shall be substantially in the
form of the attached EXHIBIT 8.2(a).
(b) Upon receipt of the cash down payment and the five (5) year
promissory note, the selling Stockholder shall deliver to the Company, Xxxxxx
Xxxxxxx, FSEP IV or the Other Stockholder(s) purchasing Shares, as the case may
be, the number of Shares purchased, properly endorsed to the purchaser, or in
the event of a purchase by a party other than the Company, accompanied by an
executed stock transfer power.
14
(c) The payment of all sums due under the promissory note shall be
secured by a pledge of all of the Shares purchased in the transaction to which
the promissory note relates. In the event of a default in payment of the
principal or interest of the promissory note, the selling Stockholder shall have
recourse against the Shares being held as collateral and shall have recourse
against the purchaser of the Shares. The pledge agreement shall be
substantially in the form of the attached EXHIBIT 8.2(b).
(d) In the event the Company is the beneficiary of life insurance
proceeds payable upon the death of a Stockholder, if the successor in interest
of a Stockholder sells the Shares of the deceased Stockholder to the Company,
the Company will utilize one hundred percent (100%) of the life insurance
proceeds as a down payment for the Shares. The down payment will be payable on
the Closing Date and the principal amount of the promissory note will be
correspondingly reduced. If the life insurance proceeds are less than the
twenty percent (20%) cash down payment described in Section 8.2(a), then the
Company shall pay the difference in cash.
ARTICLE IX
EFFECTIVE DATES
9.1 CLOSING DATE. Whenever the Other Stockholders, FSEP IV, Xxxxxx
Xxxxxxx or the Company agree to purchase Shares under the terms of this
Agreement, the closing date of the trans action shall be a business day and
hour specified by the Company at a designated location. Unless the parties
agree to the contrary, the closing date shall not be more than sixty (60) days
after the occurrence of the event or notice which fixed the obligation to
Transfer the Shares. Notice of the details of closing shall be furnished by the
Company no later than ten (10) days prior to the closing date. At the specified
time of closing, certificates for the Shares purchased shall be delivered,
together with stock transfer instruments sufficient to effect the Transfer, duly
endorsed by the transferring Stockholder and transferred of record to the
respective purchasers against payment to the transferring Stockholder in cash or
by certified check of the purchase price or the offering price.
9.2 NOTICES; OFFERS; ACCEPTANCES. Any notice, instruction, authorization,
request or demand required hereunder shall be in writing, and shall be delivered
either by personal delivery, by telegram, telex, telecopy or similar facsimile
means, by certified or registered mail, return receipt requested, or by courier
or delivery service, addressed to the recipient at his address on file with the
Company. Notices shall be deemed given when received, if sent by facsimile
means (confirmation of such receipt by confirmed facsimile transmission being
deemed receipt of communications sent by facsimile means); and when delivered
and receipted for (or upon the date of attempted delivery where delivery is
refused), if hand-delivered, sent by express courier or delivery service, or
sent by certified or registered mail, return receipt requested.
ARTICLE X
ENFORCEMENT
10.1 CREATION OF SUFFICIENT SURPLUS. In the event that the surplus of the
Company shall prove to be legally insufficient (under then existing law) to
enable the Company to exercise any
15
options to purchase Shares, the Board, to the extent legally possible, shall
take such actions, adopt such resolutions and cause such certificates and other
documents to be filed as may be necessary to create sufficient surplus to permit
the redemption or distributions, and the Stockholders agree to perform such
acts, execute such instruments and vote their Shares in such a manner as may be
necessary to authorize or ratify any action taken to create sufficient surplus.
10.2 ENDORSEMENTS ON STOCK CERTIFICATES. Each share certificate
representing Shares now owned or hereafter owned by the Stockholders or any
transferee shall be conspicuously endorsed substantially as follows:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN
RESTRICTIONS AGAINST TRANSFER UNDER THE TERMS OF AN AGREEMENT ENTERED INTO
BY THIS cOMPANY AND ITS sTOCKHOLDERS WHICH PROVIDES FOR, AMONG OTHER
THINGS, AN OPTION IN FAVOR OF THE cOMPANY AND ITS sTOCKHOLDERS TO PURCHASE
THESE SECURITIES IN CERTAIN INSTANCES. tHE cOMPANY WILL FURNISH WITHOUT
CHARGE A COPY OF SUCH AGREEMENT TO THE HOLDER OF THIS CERTIFICATE UPON
WRITTEN REQUEST TO THE sECRETARY OF THE cOMPANY AT ITS PRINCIPAL PLACE OF
BUSINESS OR REGIS TERED OFFICE.
In addition, each Share certificate representing Shares now or subsequently
owned by the Stockholders or any transferee shall bear such legends as may be
required by the Delaware General Corporation Law, as amended, the Code and any
other applicable laws or regulations, including, without limitation, legends
substantially as follows:
THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE FEDERAL
sECURITIES aCT OF 1933, AS AMENDED ("aCT"), OR UNDER ANY APPLICABLE STATE
SECURITIES LAWS, AND THEY CANNOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR
OTHERWISE HYPOTHECATED EXCEPT IN ACCORDANCE WITH THE REGISTRATION
REQUIREMENTS OF THE aCT AND SUCH STATE LAWS OR UPON DELIVERY TO THE cOMPANY
OF AN OPINION OF LEGAL COUNSEL SATISFACTORY TO THE cOMPANY THAT AN
EXEMPTION FROM REGISTRATION IS AVAILABLE.
10.3 BREACH. Any purported Transfer in breach of any provision of this
Agreement shall be void and ineffectual; shall not operate to Transfer any
interest or title in the purported transferee; and shall constitute an offer by
the breaching Stockholder to sell his Shares to the Company, Xxxxxx Xxxxxxx,
FSEP IV and the Other Stockholders pursuant to the provisions of Section 5.1,
provided that (a) the date of the offer for purposes of this Section 10.3 shall
be the date on which the Company has actual knowledge of the purported Transfer,
and (b) the price per Share shall be either (i) the purchase price specified in
Section 8.1 per Share at the time the offer should have been made pursuant to
the terms of this Agreement, or (ii) the price per Share at the time the offer
is made, whichever is less. In connection with any attempted Transfer in breach
of this Agreement, the Company may hold and refuse to Transfer any Shares or any
stock certificate tendered to it for Transfer, in addition to and without
prejudice to any and all other rights or remedies which may be available to the
Company, Xxxxxx Xxxxxxx, FSEP IV or the Other Stockholders. Each party
acknowledges that a remedy at law for any breach or attempted breach of this
Agreement will be inadequate, agrees that each other party shall be entitled to
specific performance and injunctive and
16
other equitable relief in case of any breach or attempted breach, and further
agrees to waive any requirement for showing the inadequacy of damages or
irreparable harm as a condition to obtaining injunctive or other equitable
relief.
10.4 GOVERNING LAW. All questions concerning the construction, validity
and interpretation of this Agreement, including without limitation the relative
rights of the Company, Xxxxxx Xxxxxxx, FSEP IV and the Stockholders, shall be
governed by the internal law, and not the law of conflicts, of Delaware.
10.5 SEVERABILITY. If any one or more provisions of this Agreement shall
be invalid, illegal or unenforceable in any respect, then the validity, legality
and enforceability of the remaining provisions shall not in any way be affected
or impaired thereby.
ARTICLE XI
EFFECT
11.1 PREVIOUS AGREEMENTS SUPERSEDED. This Agreement supersedes all
previous agreements by and among the Company, the Stockholders and the
Stockholders' Spouses relating to the Shares, and contains all agreements
between the parties relating to the Shares.
11.2 BINDING EFFECT. This Agreement shall be binding upon, inure to the
benefit of and be enforceable by the parties hereto, including the Company,
Xxxxxx Xxxxxxx, FSEP IV and their representatives, successors and assigns, as
well as the Stockholders and the Stockholders' Spouses, their respective heirs,
legatees, legal representatives and permitted assigns. If any Stockholder
Transfers all of his Shares in conformity with the terms of this Agreement, he
shall cease to be a party to this Agreement and shall have no further rights
under this Agreement.
11.3 STOCKHOLDERS' SPOUSES. The Stockholders' Spouses are fully aware of,
understand, and fully consent and agree to the provisions of this Agreement and
its binding effect on any interest that Stockholder's Spouse may have by reason
of marriage to a Stockholder in any Shares subject to the terms of this
Agreement held in the Stockholder's name on the stock records of the Company at
or subsequent to the date of execution of this Agreement. Any obligation of a
Stockholder or his legal representative to sell or offer to sell his Shares
under the terms of this Agreement includes an obligation on the part of that
Stockholder's Spouse to sell or offer to sell any interest she may have in the
Shares in the same manner.
11.4 REPRESENTATIONS AND WARRANTIES. Since all the parties to this
Agreement are equally familiar with the business operations and financial
condition of the Company, no party is making any representations or warranties
concerning the business operations or financial condition of the Company. All
parties hereto represent, warrant and covenant that they have full power and
authority to enter into and perform this Agreement in accordance with its terms,
and that they will perform all agreements made by them hereunder in accordance
herewith.
11.5 EFFECTIVENESS. This Agreement shall be effective concurrent with and
only upon the consummation of the transactions contemplated by the Merger
Agreement.
17
ARTICLE XII
AMENDMENT AND TERMINATION
12.1 AMENDMENT. This Agreement may be amended at any time by a written
instrument executed by the Company (which will require Board approval) and the
stockholders of the Company (including FSEP IV) holding the number of Shares
which are required to take stockholder action under the Company's Articles of
Incorporation, provided that no amendment shall adversely affect any rights of
any party under this Agreement which have vested prior to amendment.
12.2 TERMINATION. This Agreement shall terminate upon the occurrence of
any of the following events:
(a) Upon the written agreement of the Company (which will require
Board approval) and the stockholders of the Company (including FSEP IV) holding
the number of Shares which are required to take Stockholder action under the
Company's Articles of Incorporation, provided that no termination shall affect
adversely any rights which have vested prior to termination;
(b) Upon naming of the Company as Debtor in bankruptcy proceedings for
a period of sixty (60) days without dismissal, the execution by the Company of
an assignment for the benefit of its creditors, the appointment of a receiver
for the Company, or the voluntary or involuntary liquidation or dissolution of
the Company; or
(c) The Company's consummation of an Initial Public Offering;
provided, that the obligation contained in Sections 5.2 and 13.1 shall survive
any Initial Public Offering until such obligation terminates in accordance with
its respective terms.
12.3 NOTICE. The Company promptly shall deliver written notice of any
termination of this Agreement to all parties hereto.
ARTICLE XII
OTHER AGREEMENTS
13.1 "MARKET STAND-OFF" AGREEMENT. Each Stockholder hereby agrees that,
(i) during the period of duration specified by the Company and an underwriter of
Common Stock or other securities of the Company and agreed to by a Required
Interest following the effective date of a registration statement of the Company
filed under the Securities Act, such Stockholder shall not, to the extent
requested by the Company and such underwriter, directly or indirectly sell,
offer to sell, contract to sell (including, without limitation, any short sale),
grant any option to purchase or otherwise transfer or dispose of any securities
of the Company held by him at any time during such period except securities of
the Company included in such registration and (ii) such Stockholder shall
execute any and all agreements reasonably requested by such underwriter to
enforce such lockup. In order to enforce this covenant, the Company may impose
stop-transfer instructions with respect to any Shares until the end of such
period. This Section 13.1 shall survive the termination of this Agreement.
18
ARTICLE XIV
MISCELLANEOUS
14.1 GENDER AND CERTAIN REFERENCES. Whenever the context requires, the
gender of all words used herein shall include the masculine, feminine and
neuter, and the number of all words shall include the singular and plural. The
terms "HEREOF", "HEREIN" or "HEREUNDER" shall refer to this Agreement as a whole
and not to any particular Article or Section hereof. All titles and headings to
Articles and Sections in this Agreement are included for convenience and ease of
reference. Titles and headings shall not affect in any way the meaning or
interpretation of Articles or Sections of this Agreement. Any references to
specific Articles or Sections shall mean the Articles and Sections in this
Agreement.
14.2 COUNTERPARTS. This Agreement is executed in multiple counterparts,
each of which shall be considered an original but all of which shall constitute
one and the same instrument, and in making proof of this Agreement it shall not
be necessary to produce or account for more than one counterpart.
[SIGNATURE PAGE FOLLOWS]
19
IN WITNESS WHEREOF, the Stockholders, Stockholders' Spouses, Xxxxxx
Xxxxxxx, FSEP IV and the Company have executed this Agreement on the day and
year first written above.
STOCKHOLDER: STOCKHOLDER'S SPOUSE:
------------------------------ ----------------------------------
Name Name
------------------------- -----------------------------
Federal Tax I.D. No. Federal Tax I.D. No.
--------- -------------
Address Address
---------------------- --------------------------
---------------------- --------------------------
COMPANY: FS EQUITY PARTNERS IV, L.P.,
a Delaware limited partnership
Century Maintenance Supply, Inc.
BY: FS CAPITAL PARTNERS, LLC
Its: General Partner
By:
--------------------------
Name By: /s/ Xxx X. Xxxxx
------------------------- -----------------
Its: Vice President
-----------------
Address
----------------------
----------------------
/s/ Xxxxxx Xxxxxxx
-------------------------------------------------
Xxxxxx Xxxxxxx
20
IN WITNESS WHEREOF, the Stockholders, Stockholders' Spouses, Xxxxxx
Xxxxxxx, FSEP IV and the Company have executed this Agreement on the day and
year first written above.
STOCKHOLDER: STOCKHOLDER'S SPOUSE:
/s/ Xxxxx X. Xxxxxx /s/ Xxxxxxx Xxxxxx
--------------------------------- --------------------------------
Name Xxxxx X. Xxxxxx Name Xxxxxxx Xxxxxx
--------------------------------- --------------------------------
Federal Tax I.D. No. ###-##-#### Federal Tax I.D. No. ###-##-####
------------ -----------
Address 21434 000/xx/ Xx. X.X. Xxxxxxx 00000 129/th/ Pl. S.E.
------------------------- ------------------------
Xxxx, XX 00000 Xxxx, XX 00000
------------------------- ------------------------
COMPANY: FS EQUITY PARTNERS IV, L.P.,
a Delaware limited partnership
Century Maintenance Supply, Inc.
BY: FS CAPITAL PARTNERS, LLC
Its: General Partner
By: By:
----------------------------- --------------------------------------
Name Its:
---------------------------- --------------------------------------
Address
--------------------------
---------------------------------
Xxxxxx Xxxxxxx
IN WITNESS WHEREOF, the Stockholders, Stockholders' Spouses, Xxxxxx Xxxxxxx,
FSEP IV and the Company have executed this Agreement on the day and year first
written above.
STOCKHOLDER: STOCKHOLDER'S SPOUSE:
/s/ Xxxx X. Xxxxxxx /s/ Xxxxx X. Xxxxxxx
--------------------------------- --------------------------------
Name Xxxx X. Xxxxxxx Name Xxxxx X. Xxxxxxx
--------------------------- --------------------------
Federal Tax I.D. No. ###-##-#### Federal Tax I.D. No. ###-##-####
------------ -----------
Address 0000 X. 00xx Xx. Address 0000 X. 00xx Xx.
------------------------- ------------------------
Xxxxxxx. XX 00000 Xxxxxxx, XX 00000
------------------------- ------------------------
COMPANY: FS EQUITY PARTNERS IV, L.P.,
a Delaware limited partnership
Century Maintenance Supply, Inc.
BY: FS CAPITAL PARTNERS, LLC
Its: General Partner
By:
------------------------------ By:
Name -----------------------
---------------------------- Its:
Address ----------------------
-------------------------
--------------------------------
Xxxxxx Xxxxxxx
2
IN WITNESS WHEREOF, the Stockholders, Stockholders' Spouses, Xxxxxx Xxxxxxx,
FSEP IV and the Company have executed this Agreement on the day and year first
written above.
STOCKHOLDER: STOCKHOLDER'S SPOUSE:
/s/ Xxxxx X. Xxxxx
-------------------------------- ------------------------------------
Name Xxxxx X. Xxxxx Name
-------------------------- --------------------------------
Federal Tax I.D. No. ###-##-#### Federal Tax I.D. No.
----------- ----------------
Address 0000 X. Xxxxx Xx. Address
------------------------- ----------------------------
Xxx Xxxxx, XX 00000
------------------------- ----------------------------
COMPANY: FS EQUITY PARTNERS IV, L.P.,
a Delaware limited partnership
Century Maintenance Supply, Inc.
BY: FS CAPITAL PARTNERS, LLC
Its: General Partner
By:
-----------------------------
Name By:
------------------------------
----------------------------- Its:
Address ------------------------------
-------------------------
-------------------------
--------------------------------
Xxxxxx Xxxxxxx
3
IN WITNESS WHEREOF, the Stockholders, Stockholders' Spouses, Xxxxxx Xxxxxxx,
FSEP IV and the Company have executed this Agreement on the day and year first
written above.
STOCKHOLDER: STOCKHOLDER'S SPOUSE:
/s/ Xxxxxxx Xxxxxx /s/ Xxxxxxxx Xxxxxx
-------------------------------- ---------------------------------------
Name Xxxxxxx Xxxxxx Name Xxxxxxxx Xxxxxx
--------------------------- ----------------------------------
Federal Tax I.D. No. ###-##-#### Federal Tax I.D. No. ###-##-####
----------- ------------------
Address P. O. Box 368 Address P. O. Box 368
------------------------ -------------------------------
Anahuac, TX 77514 Xxxxxxx, XX 00000
------------------------ -------------------------------
FS EQUITY PARTNERS IV, L.P.,
a Delaware limited partnership
Century Maintenance Supply, Inc.
BY: FS CAPITAL PARTNERS, LLC
Its: General Partner
By: /s/ Xxxxxxx Xxxxxx, VP
-----------------------------
Name Xxxxxxx Xxxxxx By:
---------------------------- -------------------------------
Its:
-------------------------------
Address 9100 Xxxxxxx
-------------------------
Xxxxxxx, XX 00000
-------------------------
--------------------------------
Xxxxxx Xxxxxxx
4
IN WITNESS WHEREOF, the Stockholders, Stockholders' Spouses, Xxxxxx Xxxxxxx,
FSEP IV and the Company have executed this Agreement on the day and year first
written above.
STOCKHOLDER: STOCKHOLDER'S SPOUSE:
/s/ Xxxxxxx Xxx Xxxxxxxxxx /s/ Xxxx X. Xxxxxxxxxx
-------------------------------- ---------------------------------------
Name Xxxxxxx Xxx Xxxxxxxxxx Name Xxxxxxx Xxx Xxxxxxxxxx
--------------------------- ----------------------------------
Federal Tax I.D. No. ###-##-#### Federal Tax I.D. No. ###-##-####
----------- -----------------
Address 7505 Yaupon Address 7505 Yaupon
------------------------ -------------------------------
Xxxxxx, XX 00000 Xxxxxx, XX 00000
------------------------ -------------------------------
COMPANY: FS EQUITY PARTNERS IV, L.P.,
a Delaware limited partnership
Century Maintenance Supply, Inc.
BY: FS CAPITAL PARTNERS, LLC
Its: General Partner
By:
------------------------------
Name By:
------------------------------
---------------------------- Its:
Address ------------------------------
--------------------------
--------------------------
--------------------------------
Xxxxxx Xxxxxxx
5
IN WITNESS WHEREOF, the Stockholders, Stockholders' Spouses, Xxxxxx Xxxxxxx,
FSEP IV and the Company have executed this Agreement on the day and year first
written above.
STOCKHOLDER: STOCKHOLDER'S SPOUSE:
/s/ R. Xxxxx Xxx /s/ Xxxxx X. Xxx
--------------------------------- ---------------------------------------
Name R. Xxxxx Xxx Name Xxxxx X. Xxx
---------------------------- ---------------------------------------
Federal Tax I.D. No. ###-##-#### Federal Tax I.D. No. ###-##-####
------------ ------------------
Address 0000 Xxxxx Xxxx Address 0000 Xxxxx Xxxx
------------------------- -------------------------------
Xxxxxx, XX 00000 Xxxxxx, XX 00000
------------------------- -------------------------------
COMPANY: FS EQUITY PARTNERS IV, L.P.,
a Delaware limited partnership
Century Maintenance Supply, Inc.
BY: FS CAPITAL PARTNERS, LLC
Its: General Partner
By:
------------------------------
Name By:
---------------------
----------------------------- Its:
Address --------------------
-------------------------
-------------------------
---------------------------------
Xxxxxx Xxxxxxx
6
IN WITNESS WHEREOF, the Stockholders, Stockholders' Spouses, Xxxxxx Xxxxxxx,
FSEP IV and the Company have executed this Agreement on the day and year first
written above.
STOCKHOLDER: STOCKHOLDER'S SPOUSE:
/s/ Xxxxxxx X. Xxxx /s/ Xxxxxxx X. Xxxx
--------------------------------- ---------------------------------------
Name Xxxxxxx X. Xxxx Name Xxxxxxx X. Xxxx
---------------------------- ----------------------------------
Federal Tax I.D. No. ###-##-#### Federal Tax I.D. No. ###-##-####
------------ ------------------
Address 11670 X. Xxxxxxxx Xxxxxxx 00000 X. Xxxxxxxx
------------------------- -----------------------
Xxxxxxxx, XX 00000 Xxxxxxxx, XX 00000
------------------------- -----------------------
COMPANY: FS EQUITY PARTNERS IV, L.P.,
a Delaware limited partnership
Century Maintenance Supply, Inc.
BY: FS CAPITAL PARTNERS, LLC
Its: General Partner
By:
-----------------------------
Name By:
----------------------------- ------------------------------
Its:
------------------------------
Address
--------------------------
--------------------------
---------------------------------
Xxxxxx Xxxxxxx
7
IN WITNESS WHEREOF, the Stockholders, Stockholders' Spouses, Xxxxxx Xxxxxxx,
FSEP IV and the Company have executed this Agreement on the day and year first
written above.
STOCKHOLDER: STOCKHOLDER'S SPOUSE:
/s/ Xxxxxxx Xxxxxx, VP
----------------------------------------- -------------------------------
Name Century Airconditioning Supply, Inc. Name
------------------------------------ --------------------------
Federal Tax I.D. No. 00-0000000 Federal Tax I.D. No.
-------------------- -----------
Address 0000 X. 00xx Xx. Address
--------------------------------- -----------------------
Xxxxxxx, XX 00000
--------------------------------- -----------------------
COMPANY: FS EQUITY PARTNERS IV, L.P.,
a Delaware limited partnership
Century Maintenance Supply, Inc.
BY: FS CAPITAL PARTNERS, LLC
Its: General Partner
By:
------------------------------
Name By:
------------------------------
---------------------------- Its:
------------------------------
Address
--------------------------
--------------------------
---------------------------------
Xxxxxx Xxxxxxx
8
IN WITNESS WHEREOF, the Stockholders, Stockholders' Spouses, Xxxxxx Xxxxxxx,
FSEP IV and the Company have executed this Agreement on the day and year first
written above.
STOCKHOLDER: STOCKHOLDER'S SPOUSE:
/s/ Xxxxxx X. Xxxxxx /s/ Xxxxxxx Xxxxxx
-------------------------------- ---------------------------------------
Name Xxxxxx X. Xxxxxx Name Xxxxxxx Xxxxxx
--------------------------- ----------------------------------
Federal Tax I.D. No. ###-##-#### Federal Tax I.D. No. ###-##-####
--------------- ------------------
Address 000 XX 0000 Address 000 XX 0000
------------------------ -------------------------------
Xxxxx, XX 00000 Xxxxx, XX 00000
------------------------ -------------------------------
COMPANY: FS EQUITY PARTNERS IV, L.P.,
a Delaware limited partnership
Century Maintenance Supply, Inc.
BY: FS CAPITAL PARTNERS, LLC
Its: General Partner
By:
------------------------------
Name By:
---------------------------- -------------------------------
Its:
------------------------------
Address
-------------------------
-------------------------
---------------------------------
Xxxxxx Xxxxxxx
9
IN WITNESS WHEREOF, the Stockholders, Stockholders' Spouses, Xxxxxx Xxxxxxx,
FSEP IV and the Company have executed this Agreement on the day and year first
written above.
STOCKHOLDER: STOCKHOLDER'S SPOUSE:
/s/ Xxxxx X. Xxxxx /s/ Xxxxx X. Xxxxx
-------------------------------- ---------------------------------------
Name Xxxxx X. Xxxxx Name Xxxxx X. Xxxxx
--------------------------- ----------------------------------
Federal Tax I.D. No. ###-##-#### Federal Tax I.D. No. ###-##-####
------------ ------------------
Address 11889 Xxxx Dr. Address 00000 Xxxx Xx.
------------------------ -------------------------------
Xxxxxx, XX 00000 Xxxxxx, XX 00000
------------------------ -------------------------------
COMPANY: FS EQUITY PARTNERS IV, L.P.,
a Delaware limited partnership
Century Maintenance Supply, Inc.
BY: FS CAPITAL PARTNERS, LLC
Its: General Partner
By:
-----------------------------
Name By:
---------------------------- ------------------------------
Its:
------------------------------
Address
-------------------------
-------------------------
-------------------------------
Xxxxxx Xxxxxxx
10
IN WITNESS WHEREOF, the Stockholders, Stockholders' Spouses, Xxxxxx Xxxxxxx,
FSEP IV and the Company have executed this Agreement on the day and year first
written above.
STOCKHOLDER: STOCKHOLDER'S SPOUSE:
/s/ Xxxxxx Xxxxxxxx /s/ Xxxxxx Xxxxxxxx
--------------------------------- ---------------------------------------
Name Xxxxxx Xxxxxxxx Name Xxxxxx Xxxxxxxx
---------------------------- ----------------------------------
Federal Tax I.D. No. ###-##-#### Federal Tax I.D. No. ###-##-####
------------ ------------------
Address 4911 Xxxxx Tree Address 4911 Xxxxx Tree
------------------------- -------------------------------
Xxxxxx, XX 00000 Xxxxxx, XX 00000
------------------------- -------------------------------
COMPANY: FS EQUITY PARTNERS IV, L.P.,
a Delaware limited partnership
Century Maintenance Supply, Inc.
BY: FS CAPITAL PARTNERS, LLC
Its: General Partner
By:
-----------------------------
Name By:
--------------------------- ------------------------------
Its:
Address ------------------------------
------------------------
------------------------
--------------------------------
Xxxxxx Xxxxxxx
11
