EXECUTION
XXXXXXXXX SIGN COMPANY
STOCKHOLDERS AGREEMENT
THIS STOCKHOLDERS AGREEMENT (this "AGREEMENT") is made as of September
30, 1998 between Xxxxxxxxx Sign Company, a Texas corporation (the "COMPANY"),
each of the investors listed on the SCHEDULE OF INVESTORS attached hereto (the
"INVESTORS"), each of the executives listed on the SCHEDULE OF EXECUTIVES
attached hereto (the "EXECUTIVES") and each of the other stockholders listed on
the SCHEDULE OF OTHER STOCKHOLDERS attached hereto (the "OTHER STOCKHOLDERS" and
collectively, with the Investors and the Executives, the "STOCKHOLDERS"; each, a
"STOCKHOLDER".) Capitalized terms used and not otherwise defined herein are
defined in Section 9 hereof.
The Investors are entering into a Senior Subordinated Note, Preferred
Stock and Warrant Purchase Agreement, dated as of the date hereof (the "PURCHASE
AGREEMENT"), pursuant to which the Investors are purchasing 12.0% Senior
Subordinated Notes (the "NOTES"), shares of Series A Preferred Stock and the
Investor Warrants. As of the date hereof, each of the Executives and each of
the Other Stockholders owns shares of Common Stock in the amounts set forth
opposite such Executive's name and such Other Stockholder's name, respectively,
on the SCHEDULE OF EXECUTIVES and the SCHEDULE OF OTHER STOCKHOLDERS.
The Company and the Stockholders desire to enter into this Agreement
for the purposes, among others, of (i) establishing the composition of the
Company's board of directors (the "BOARD"), (ii) assuring continuity in the
management of the Company and (iii) limiting the manner and terms by which the
Common Stock may be transferred. The execution and delivery of this Agreement
is a condition to the Investors' obligations under the Purchase Agreement.
NOW, THEREFORE, in consideration of the mutual covenants contained
herein and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties to this Agreement hereby agree as
follows:
1. BOARD OF DIRECTORS.
(a) From and after the Closing (as defined in the Purchase
Agreement) and until the provisions of this Section 1 cease to be effective,
each Stockholder shall vote all of his or its Stockholder Shares which are
voting shares and any other voting securities of the Company over which such
Stockholder has voting control and shall take all other necessary or desirable
actions within his or its control (whether in his or its capacity as a
stockholder, director, member of a Board committee or officer of the Company or
otherwise, and including, without limitation, attendance at meetings in person
or by proxy for purposes of obtaining a quorum and execution of written consents
in lieu of meetings), and the Company shall take all necessary or desirable
actions within its control (including, without limitation, calling special board
and stockholder meetings), so that:
(i) subject to Section 1(e) below, the authorized number of
directors on the Board shall be established at five (5) directors,
(ii) the following individuals shall be elected to the Board:
(A) two (2) representatives (the "INVESTOR DIRECTORS")
designated by holders of a majority of the Investor Shares (the
"MAJORITY INVESTOR HOLDERS"); provided that the designation of the
Investor Directors pursuant to this subparagraph (ii) (A) shall be in
lieu of, and operative only to the extent that, (i) the holders of the
Series A Preferred have failed to designate (or for any reason, have
been prevented from designating) in accordance with Section 6 of the
Certificate of Designation, Series A, two (2) representatives to serve
on the Board, or (ii) the Investors do not hold a majority of the
Series A Preferred;
(B) two (2) members of the Company's management
designated by the Executives, determined by a vote of the Executives
owning a majority of the Stockholder Shares held by all Executives
(the "EXECUTIVE DIRECTORS"), provided that the initial Executive
Directors shall be Xxxxx X. Xxxxxxxx and Xxx X. Xxxxx; and
(C) one (1) representative designated by the Executives
(determined on the basis of a vote of a majority of the Stockholder
Shares held by all Executives) and acceptable to the Majority Investor
Holders, provided that the person so designated is not a member of the
Company's management or an employee or officer of the Company or its
subsidiaries of an Affiliate, or related by blood or marriage to any
affiliate, of any of the Executives or any other member of the
Company's management (the "OUTSIDE DIRECTOR"); provided, further, that
the Outside Director initially shall be Xxxx X. Xxxxxxx;
(iii) the composition of the board of directors of each of the
Company's Subsidiaries, if any (a "SUB BOARD"), shall be the same as that
of the Board;
(iv) the removal from the Board or a Sub Board (with or
without cause) of any representative designated (x) under subparagraph
(ii)(A), shall be at the written request of the Majority Investor Holders,
(y) under subparagraph (ii)(B), shall be at the written request of the
Executives or (z) under subparagraph (ii)(C), shall be at the written
request of the Majority Investor Holders, the Executives or the Majority
Investor Holders and the Executives, collectively, but only upon such
written request and under no other circumstances (in each case, determined
on the basis of a vote of the holders of a majority of the Stockholder
Shares held by such Persons), provided that if any director elected
pursuant to subparagraph (ii)(B) above ceases to be an employee of the
Company and its Subsidiaries, he shall be removed as a director promptly
after his employment ceases and
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shall have no right to designate any representative pursuant to this
Section 1(a), except that, the foregoing not withstanding, Xxxxx Xxxxxxxx
shall be permitted to serve as an Executive Director designated pursuant to
Section 1(a)(ii)(B) for so long as he continue to hold not less than 5% of
the aggregate outstanding shares of the Company's Common Stock, whether or
not he is employed by the Company; and
(v) in the event that any representative designated hereunder
by the Majority Investor Holders or by the Executives, or by the Executives
with the approval of the Majority Investor Holders, ceases to serve as a
member of the Board or a Sub Board during his term of office, the resulting
vacancy on the Board or the Sub Board shall be filled by a representative
designated and/or approved by the Majority Investor Holders or the
Executives, or by a representative designated and/or approved by the
Majority Investor Holders or the Executives, as the case may be, as
provided hereunder.
(b) The Company shall pay the reasonable out-of-pocket expenses
incurred by each director in connection with attending the meetings of the
Board, any Sub Board and any committee thereof. So long as any Investor
Director serves on the Board and for 4 years thereafter, the Company shall, at
the request of such Investor Director, maintain directors and officers
indemnity insurance coverage satisfactory to the Investors.
(c) The rights of each Executive under this Section 1 shall terminate
upon such Executive ceasing to be employed by the Company or, if earlier, at
such time as the Executives and their Permitted Transferees (as defined in
Section 4(c) hereof), for any reason, hold in the aggregate less than 75% of
the Stockholder Shares held by the Executives on the date hereof; provided that,
the foregoing not withstanding, Xxxxx Xxxxxxxx shall be permitted to serve as an
Executive Director designated pursuant to Section 1(a)(ii)(B) for so long as he
continue to hold not less than 5% of the aggregate outstanding shares of the
Company's Common Stock, whether or not he is employed by the Company.
(d) If any party fails to designate a representative to fill a
directorship pursuant to the terms of this Section 1, the individual previously
holding such directorship shall be elected to such position, or if such
individual fails or declines to serve, the election of an individual to such
directorship shall be accomplished in accordance with the Company's Bylaws and
applicable law; provided that the Stockholders shall vote to remove such
individual if the party which failed to designate such directorship so directs.
(e) Notwithstanding anything to the contrary contained in this
Section 1, upon the occurrence of an Event of Noncompliance of the type
described in Section 7 of the Certificate of Designation and so long as any such
Event of Noncompliance continues uncured and unwaived, each holder of
Stockholder Shares shall vote all of his or its Stockholder Shares and any other
voting securities of the Company over which it has voting control and take all
other necessary or desirable actions within his or its control, and the Company
shall take all necessary and desirable actions within its control, in order to
cause, at the option of and as directed by
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Majority Investor Holders, the removal from the Board of one of the
representatives designated pursuant to paragraph 1(a)(ii)(B) and the election to
the Board of a replacement representative designated by the Majority Investor
Holders; provided that, the foregoing notwithstanding, upon the occurrence of an
Event of Noncompliance, the Stockholders shall not be required to vote their
Stockholder Shares to effect the removal and replacement of a representative in
accordance with this Section 1(e) so long as (i) each of two directors
designated to the Board by holders of the Series A Preferred is entitled, in
accordance with Section 7(b)(iii) of the Certificate of Designation, to cast
with respect to each resolution or other matter presented to the Board for
approval, two times the number of votes that each other director is entitled to
cast in with respect to approval of such resolution or other matter, and (ii)
the Investors hold a majority of the Series A Preferred.
(f) Notwithstanding any other provision of this Section 1, the
holders of Series A Preferred shall not be obligated to vote such shares to
elect any person to the Board other than the Investor Directors.
(g) The provisions set forth in Section 1 shall terminate at such
time when the Investors no longer own at least 20% of the Investor Shares
acquired by the Investors under the Purchase Agreement.
2. REPRESENTATIONS AND WARRANTIES. Each Stockholder represents and
warrants that (i) such Stockholder is the record owner of the number of
Stockholder Shares set forth opposite its name on the schedule attached hereto,
(ii) this Agreement has been duly authorized, executed and delivered by such
Stockholder and constitutes the valid and binding obligation of such
Stockholder, enforceable in accordance with its terms, and (iii) such
Stockholder has not granted and is not a party to any proxy, voting trust or
other agreement other than this Agreement. No holder of Stockholder Shares
shall grant any proxy or become party to any voting trust or other agreement
which is inconsistent with, conflicts with or violates any provision of this
Agreement.
3. [Intentionally deleted.]
4. RESTRICTIONS ON TRANSFER OF STOCKHOLDER SHARES.
(a) TRANSFER OF STOCKHOLDER SHARES. No Executive or Other
Stockholder shall sell, transfer, assign, pledge or otherwise dispose of
(whether with or without consideration and whether voluntarily or involuntarily
or by operation of law) any interest in his or its Stockholder Shares (a
"TRANSFER"), except pursuant to the provisions of Section 6, in connection with
a Public Sale, pursuant to the Stock Purchase Option Agreements (as defined in
the Purchase Agreement) or with the prior written approval of the Majority
Investor Holders or, in the case of the Executives, pursuant to the provisions
of this Section 4.
(b) TAG-ALONG RIGHTS. At least thirty 30 days prior to any Transfer
of
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Stockholder Shares (other than a Public Sale), the Executive making such
Transfer (the "TRANSFERRING STOCKHOLDER") shall deliver a written notice (the
"SALE NOTICE") to the holders of Investor Shares, specifying in reasonable
detail the identity of the prospective transferee(s), the number of shares to be
transferred and the terms and conditions of the contemplated Transfer. Each
holder of Investor Shares may elect to participate in the contemplated Transfer
at the same price per share (whether voting or non-voting stock) and on the same
terms by delivering written notice to the Transferring Stockholder within 30
days after delivery of the Sale Notice. If any holder of Investor Shares has
elected to participate in such contemplated Transfer, the Transferring
Stockholder and each such electing holder shall be entitled to sell in the
contemplated Transfer, at the same price and on the same terms, a number of
Stockholder Shares equal to the product of (i) the quotient determined by
dividing the percentage of Stockholder Shares owned by such Person by the
aggregate percentage of Stockholder Shares owned by the Transferring Stockholder
and the holders of Investor Shares participating in such sale and (ii) the
number of Stockholder Shares to be sold in the contemplated Transfer.
Each Executive shall use its best efforts to obtain the agreement of
the prospective transferee(s) to the participation of the holders of Investor
Shares in any contemplated Transfer and to the inclusion of the Investor
Warrants and Series A Preferred in the contemplated Transfer, and no Executive
shall transfer any of its Stockholder Shares to any prospective transferee if
such prospective transferee(s) declines to allow the participation of the
holders of Investor Shares or the inclusion of the Warrants or Series A
Preferred. If any portion of the Investor Warrants is included in any Transfer
of Stockholder Shares under this Section 4(b), the purchase price for the
Investor Warrants shall be equal to the full purchase price determined hereunder
for the Stockholder Shares covered by the portion of the Investor Warrants to be
transferred, reduced by the aggregate exercise price for such shares.
(c) PERMITTED TRANSFERS. The restrictions set forth in this Section
4 shall not apply with respect to any Transfer of Stockholder Shares by any
Executive pursuant to applicable laws of descent and distribution or among such
Executive's Family Group (collectively referred to herein as "PERMITTED
TRANSFEREES"); provided that the restrictions contained in this Section 4 shall
continue to be applicable to the Stockholder Shares after any such Transfer and
provided further that such transferees of such Stockholder Shares shall have
agreed in writing to be bound by the provisions of this Agreement affecting the
Stockholder Shares so transferred to the same extent and in the same manner as
the transferor thereof was so bound (e.g., any transferee of Stockholder Shares
in a Transfer from an Executive shall be subject to the obligations of an
Executive hereunder).
(d) TERMINATION OF RESTRICTIONS. The restrictions on the Transfer of
Stockholder Shares set forth in this Section 4 shall continue with respect to
each Stockholder Share until the date on which such Stockholder Share has been
transferred in a Public Sale or a Sale of the Company in accordance with
Section 6.
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5. LEGEND. Each certificate evidencing Stockholder Shares and each
certificate issued in exchange for or upon the transfer of any Stockholder
Shares (if such shares remain Stockholder Shares after such transfer) shall be
stamped or otherwise imprinted with a legend in substantially the following
form:
"The securities represented by this certificate are subject to a
Stockholders Agreement dated as of September 30, 1998 among the issuer
of such securities (the "Company") and certain of the Company's
stockholders, as amended and modified from time to time. A copy of
such Stockholders Agreement shall be furnished without charge by the
Company to the holder hereof upon written request."
The Company shall imprint such legend on certificates evidencing Stockholder
Shares outstanding as of the date hereof. The legend set forth above shall be
removed from the certificates evidencing any shares which cease to be
Stockholder Shares in accordance with paragraph 9 hereof.
6. DRAG-ALONG RIGHTS.
(a) Simultaneous with or at any time following exercise of the
Investor Warrants, the Majority Investor Holders shall have the right to seek a
Sale of the Company and identify a third party or parties to acquire (i) all of
the issued and outstanding capital stock of the Company (whether by merger,
consolidation or sale or transfer of stock) or (ii) all or substantially all of
the Company's assets on a consolidated basis. The holder or holders proposing a
Sale of the Company (the "PROPOSING STOCKHOLDERS") shall notify the Company and
the other Stockholders (the "NON-PROPOSING STOCKHOLDERS") prior to initiating
contact with any prospective third party purchaser in connection with such
transaction.
(b) ELECTION. The Proposing Stockholders shall deliver written
notice to the Company and the Non-Proposing Stockholders setting forth in
reasonable detail the terms of the proposed Sale of the Company (the "SALE
NOTICE"). Within 20 days following receipt of the Sale Notice (the "ELECTION
PERIOD"), the Non-Proposing Stockholders shall deliver to the Company and the
Proposing Stockholders written notice setting forth such holders' election
(i) to consent to and raise no objections against proposed Sale of the Company,
and if the Sale of the Company is structured as a sale of stock, to sell their
Stockholder Shares on the terms and conditions set forth in the Sale Notice, or
(ii) if such Non-Proposing Stockholders hold more than 20% of the Stockholder
Shares, to deliver a written offer (a "STOCKHOLDER OFFER"), upon substantially
the same terms as described in the Sale Notice, to acquire the Company
(a "STOCKHOLDER TRANSACTION"). If the Non-Proposing Stockholders have not
delivered a Stockholder Offer within such 20-day period, the Proposing
Stockholders shall have 180 days after the expiration of the Election Period to
consummate the Sale of the Company, or during which the Company may enter into
an agreement providing for such a sale, on the terms specified in the Sale
Notice. If the Sale of the Company is not consummated or the Company fails to
enter into such an
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agreement within such 180-day period, the Proposing Stockholders shall again
comply with the provisions of this Section 6. If the Non-Proposing Stockholders
have delivered a Stockholder Offer within the Election Period, the Non-Proposing
Stockholders must (A) obtain an executed definitive and binding agreement to
consummate the Stockholder Transaction and obtain binding commitments regarding
the financing thereof satisfactory in all respects to the Proposing Stockholders
both within 30 days after receipt by the Proposing Stockholders of the
Stockholder Offer and (B) must consummate the Stockholder Transaction within
120 days after receipt by the Proposing Stockholders of the Stockholder Offer.
If any of the conditions set forth in (A) or (B) of the preceding sentence is
not fulfilled, the Other Stockholders must again comply with the provisions of
this Section 6. The consummation of a Sale of the Company or a Stockholder
Transaction pursuant to this Section 6(b) shall be in accordance with the
provisions of the Texas Business Corporation Act.
(c) Upon consummation of the Sale of the Company hereunder, all
holders of Common Stock shall receive the same form and amount of consideration
per share of Common Stock, or if any holders of Common Stock as such holders are
given an option as to the form and consideration to be received, all holders
shall be given the same option.
7. PUT ARRANGEMENTS.
(a) At any time following the fifth anniversary of the date hereof
each holder of Investor Shares shall have the right to require the Company to
repurchase all or any portion of the such holder's Investor Shares at the Put
Price (the "PUT") by delivering a written notice to the Company and each other
holder of Investor Shares specifying the amount thereof to be purchased (the
"PUT NOTICE"). The right to exercise the Put shall inure to the benefit of all
transferees of the Investor Shares (other than transferees in a Public Sale).
(b) Upon the delivery of the Put Notice, the Company and the holder
or holders of Investor Shares delivering the Put Notice (including those
specified in the last sentence of this Section 7(b), the "REQUESTING HOLDERS")
shall in good faith promptly determine the Put Price as provided hereunder, and
subject to the provisions hereof, within twenty (20) days after the
determination of the Put Price, the Company shall purchase and the Requesting
Holders shall sell the amount of such Requesting Holder's Investor Shares
specified in the Put Notice at a mutually agreeable time and place (the "PUT
CLOSING"). Upon receipt of any Put Notice, any other holder of Investor Shares
may, by written notice delivered to the Company within five (5) business days
after receiving such Put Notice specifying the number of Investor Shares that
such holder elects to include in such Put, elect to participate in such Put, and
upon delivery of such written notice each such other holder shall be deemed to
be a Requesting Holder.
(c) At the Put Closing, the Requesting Holders shall deliver to the
Company certificates and other instruments (if any) representing the Investor
Shares to be repurchased by the Company, and the Company shall deliver to the
Requesting Holders the Put Price by cashier's
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or certified check payable to the Requesting Holders or by wire transfer of
immediately available funds to an account designated by the Requesting Holders;
provided that if, as the result of the payment in cash of the Put Price in
accordance with this Section 7(c), there will exist an Event of Default (as
defined in each of the Purchase Agreement and the Loan Agreement) and the
Company shall have used its best efforts to obtain financing from an outside
source for payment of the Put Price, then the Company may pay the Put Price by
delivery (i) of cash (as provided above) up to the maximum portion of the Put
Price, the payment of which will not result in the occurrence or existence of
an Event of Default and (ii) a promissory note in a principal amount equal to
that portion of the Put Price not being paid pursuant to the foregoing clause
(i), payable in three successive annual installments, with the first
installment due on the first anniversary of the delivery of the Put Notice, and
otherwise containing terms substantially similar to the terms set forth in the
Company's 12% Senior Subordinated Notes. If the Requesting Holder deliver to
the Company all or any portion of the Investor Warrants in satisfaction of the
sale of the Investor's Stockholder Shares hereunder, the Put Price shall be
reduced by the aggregate exercise price of such portion of the Warrants.
(d) The "PUT PRICE", as of any date, of any Requesting Holder's
Investor Shares to be repurchased hereunder shall be determined based on a value
of the Company's common stock equal to THE GREATER OF (i) the product of 6.25,
MULTIPLIED BY the Company's EBITDA for the trailing 12-month period (as defined
in the Purchase Agreement) for its most recently completed fiscal year as
reflected on the Company's audited consolidated income statement for such fiscal
year, MINUS the Company's aggregate principal amount of, plus accrued and unpaid
interest on, outstanding indebtedness as of such date MINUS the liquidation
value of, plus accrued and unpaid dividends, if any, on, the then outstanding
preferred stock of the Company, and (ii) the Market Value as of such date. The
aggregate Put Price payable to each Requesting Holder shall be equal to the
amount which such holder would receive with respect to the Investor Shares
specified by such holder in such holder's Put Notice in the event of a Sale of
the Company for an aggregate purchase price equal to the value attributable to
the Company in accordance with the foregoing sentence.
In calculating the Put Price, all accounting determinations shall be
made in accordance with generally accepted accounting principles consistently
applied.
(e) The Investors' right to exercise the Put hereunder shall
terminate upon the first to occur of (i) the 10th anniversary of the date of
this Agreement and (ii) a Sale of the Company.
8. TRANSFER. Prior to transferring any Stockholder Shares (other
than in a Public Sale or a Sale of the Company) to any Person, the transferring
Stockholder shall cause the prospective transferee to be bound by this Agreement
and to execute and deliver to the Company and the other Stockholders a
counterpart of this Agreement.
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9. DEFINITIONS.
"CERTIFICATE OF DESIGNATION, SERIES A" means the Certification of
Designation, Series A, as approved by the Company's Board of Directors and filed
with the Secretary of the State of Texas as of September 30, 1998.
"COMMON STOCK" means the Company's Common Stock, par value $.01 per
share.
"FAMILY GROUP" means an Executive's spouse and descendants (whether
natural or adopted) and any trust solely for the benefit of the Executive and/or
the Executive's spouse and/or descendants.
"INDEPENDENT THIRD PARTY" means any Person who, immediately prior to
the contemplated transaction, does not own in excess of 5% of the Common Stock
on a fully-diluted basis (a "5% OWNER)", who is not controlling, controlled by
or under common control with any such 5% Owner and who is not the spouse or
descendent (by birth or adoption) of any such 5% Owner or a trust for the
benefit of such 5% Owner and/or such other Persons.
"INVESTOR SHARES" means the Stockholder Shares issued to, or issuable
in respect of securities issued to, Continental Illinois Venture Corporation or
MIG Partners VIII at the Closing or thereafter.
"INVESTOR WARRANTS" means the stock purchase warrants issued to the
Investors under the Purchase Agreement exercisable into shares of Common Stock.
"LOAN AGREEMENT" means the Second Amended and Restated Revolving
Credit and Loan Agreement, dated as of the date hereof, by and between the
Company and Comerica Bank-Texas, a Texas banking association.
"MARKET VALUE" means the fair market value of the Company's entire
common equity determined on a going concern basis as between a willing buyer and
a willing seller and taking into account all relevant factors determinative of
value. In determining the Market Value as of any date, the Company and the
Investors first shall use their respective reasonable best efforts to agree on
such Market Value. In the event that the Company and the Investors are unable
to agree on the Market Value as of such date within 15 days after delivery of
the Put Notice, such Market Value shall be determined by an investment banking
firm selected by the Company and acceptable to the Majority Investor Holders,
which firm shall submit to the Company and the Majority Investor Holders a
written report setting forth such determination. If the parties are unable to
agree on an investment banking firm within 20 days after delivery of a Put
Notice, a firm shall be selected by lot, after the Company and the Majority
Investor Holders have each eliminated one such firm. The expenses of such firm
shall be borne by the Company, and the determination of such firm shall be final
and binding upon all parties, except that after the determination of Market
Value following the exercise of the Put, any Requesting Holder may rescind its
exercise of such Put.
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"PERSON" means an individual, a partnership, a corporation, a limited
liability company, an association, a joint stock company, a trust, a joint
venture, an unincorporated organization and a governmental entity or any
department, agency or political subdivision thereof.
"PUBLIC SALE" means any sale of Stockholder Shares to the public
pursuant to an offering registered under the Securities Act or to the public
through a broker, dealer or market maker pursuant to the provisions of Rule 144
adopted under the Securities Act.
"SALE OF THE COMPANY" means the sale of the Company to an Independent
Third Party or group of Independent Third Parties pursuant to which such party
or parties acquire (i) capital stock of the Company possessing the voting power
under normal circumstances to elect a majority of the Company's board of
directors (whether by merger, consolidation or sale or transfer of the Company's
capital stock) or (ii) all or substantially all of the Company's assets
determined on a consolidated basis.
"SECURITIES ACT" means the Securities Act of 1933, as amended from
time to time.
"STOCKHOLDER SHARES" means (i) any Common Stock purchased or otherwise
acquired by any Stockholder, (ii) any Common Stock issued or issuable directly
or indirectly upon exercise of the Investor Warrants, (iii) any Common Stock
issued or issuable with respect to the securities referred to in clauses (i) and
(ii) above by way of stock dividend or stock split or in connection with a
combination of shares, recapitalization, merger, consolidation or other
reorganization and (iv) any other shares of any class or series of capital stock
of the Company held by a Stockholder. For purposes of this Agreement, any
Person who holds Investor Warrants shall be deemed to be the holder of the
Stockholder Shares issuable directly or indirectly upon exercise of the Investor
Warrants in connection with the transfer thereof or otherwise and regardless of
any restriction or limitation on the exercise thereof. As to any particular
Stockholder Shares, such shares shall cease to be Stockholder Shares when they
have been (a) effectively registered under the Securities Act and disposed of in
accordance with the registration statement covering them or (b) distributed to
the public through a broker, dealer or market maker pursuant to Rule 144 under
the Securities Act (or any similar provision then in force).
"SUBSIDIARY" means, with respect to any Person, any corporation,
limited liability company, partnership, association or other business entity
of which (i) if a corporation, a majority of the total voting power of shares
of stock entitled (without regard to the occurrence of any contingency) to
vote in the election of directors, managers or trustees thereof is at the
time owned or controlled, directly or indirectly, by that Person or one or
more of the other Subsidiaries of that Person or a combination thereof, or
(ii) if a limited liability company, partnership, association or other
business entity, a majority of the limited liability company, partnership or
other similar ownership interest thereof is at the time owned or controlled,
directly
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or indirectly, by any Person or one or more Subsidiaries of that Person or a
combination thereof. For purposes hereof, a Person or Persons shall be
deemed to have a majority ownership interest in a limited liability company,
partnership, association or other business entity if such Person or Persons
shall be allocated a majority of limited liability company, partnership,
association or other business entity gains or losses or shall be or control
the managing director or general partner of such limited liability company,
partnership, association or other business entity.
10. CERTAIN PARTICIPATION RIGHTS. At least 10 days prior to any
repurchase by the Company of any Investor Shares, the Company will deliver a
written notice to the Executives holding Stockholder Shares specifying in
reasonable detail the terms and conditions of the contemplated repurchase
transaction (a "Company Repurchase Notice"). Any Executive may elect to
participate in the contemplated repurchase transaction with respect to his or
her Stockholder Shares by delivering written notice to the Company within 10
days after delivery of the Company Repurchase Notice. If any Executive elects
to participate in the repurchase transaction, the Company will repurchase from
the holders of the Investor Shares and each electing Executive, at the same
price and on the same terms, a number of Stockholder Shares equal to the product
of (i) the quotient determined by dividing the number of Stockholders Shares
owned by the electing Executive(s) or the holder of Investor Shares, as the case
may be, by the aggregate number of outstanding Stockholder Shares then owned,
collectively, by the Investors and the Executives, multiplied by (ii) the
aggregate number of Stockholder Shares to be repurchased by the Company in the
proposed transaction.
11. TRANSFERS IN VIOLATION OF AGREEMENT. Any Transfer or attempted
Transfer of any Stockholder Shares in violation of any provision of this
Agreement shall be void, and the Company shall not record such Transfer on its
books or treat any purported transferee of such Stockholder Shares as the owner
of such shares for any purpose.
12. AMENDMENT AND WAIVER. Except as otherwise provided herein, no
modification, amendment or waiver of any provision of this Agreement shall be
effective against the Company or the Stockholders unless such modification,
amendment or waiver is approved in writing by the Company or the holders of at
least a majority of the Stockholder Shares, respectively. The failure of any
party to enforce any of the provisions of this Agreement shall in no way be
construed as a waiver of such provisions and shall not affect the right of such
party thereafter to enforce each and every provision of this Agreement in
accordance with its terms.
13. SEVERABILITY. Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be invalid,
illegal or unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability shall not affect
the validity, legality or enforceability of any other provision of this
Agreement in such jurisdiction or affect the validity, legality or
enforceability of any provision in any other jurisdiction, but this Agreement
shall be reformed, construed and enforced in such jurisdiction as if such
invalid, illegal or unenforceable provision had never been contained herein.
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14. ENTIRE AGREEMENT. Except as otherwise expressly set forth
herein, this Agreement embodies the complete agreement and understanding among
the parties hereto with respect to the subject matter hereof and supersedes and
preempts any prior understandings, agreements or representations by or among the
parties, written or oral, which may have related to the subject matter hereof in
any way.
15. SUCCESSORS AND ASSIGNS. Except as otherwise provided herein,
this Agreement shall bind and inure to the benefit of and be enforceable by the
Company and its successors and assigns and the Stockholders and any subsequent
holders of Stockholder Shares and the respective successors and assigns of each
of them, so long as they hold Stockholder Shares; provided that the rights of
the Investors under paragraph 1 hereof may not be assigned without the prior
written approval of any Executive or Other Stockholder.
16. COUNTERPARTS. This Agreement may be executed in multiple
counterparts, each of which shall be an original and all of which taken together
shall constitute one and the same agreement.
17. REMEDIES. The Company and the Stockholders shall be entitled to
enforce their rights under this Agreement specifically, to recover damages by
reason of any breach of any provision of this Agreement and to exercise all
other rights existing in their favor. The parties hereto agree and acknowledge
that money damages would not be an adequate remedy for any breach of the
provisions of this Agreement and that the Company and any Stockholder may in its
sole discretion apply to any court of law or equity of competent jurisdiction
for specific performance and/or injunctive relief (without posting a bond or
other security) in order to enforce or prevent any violation of the provisions
of this Agreement.
18. NOTICES. Any notice provided for in this Agreement shall be in
writing and shall be either personally delivered, or mailed first class mail
(postage prepaid) or sent by reputable overnight courier service (charges
prepaid) to the Company at the address set forth below and to any other
recipient at the address indicated on the schedules hereto and to any subsequent
holder of Stockholder Shares subject to this Agreement at such address as
indicated by the Company's records, or at such address or to the attention of
such other person as the recipient party has specified by prior written notice
to the sending party. Notices shall be deemed to have been given hereunder when
delivered personally, three business days after deposit in the U.S. mail and one
business day after deposit with a reputable overnight courier service prepaid
for next-business day delivery. The Company's address is:
Xxxxxxxxx Sign Company
0000 Xxx 00 Xxxx
Xxxxx, Xxxxx 00000
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19. GOVERNING LAW. THE CORPORATE LAW OF THE STATE OF TEXAS SHALL
GOVERN ALL ISSUES AND QUESTIONS CONCERNING THE RELATIVE RIGHTS OF THE COMPANY
AND ITS STOCKHOLDERS. ALL OTHER ISSUES AND QUESTIONS CONCERNING THE
CONSTRUCTION, VALIDITY, INTERPRETATION AND ENFORCEABILITY OF THIS AGREEMENT AND
THE EXHIBITS AND SCHEDULES HERETO SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF ILLINOIS, WITHOUT GIVING EFFECT TO ANY
CHOICE OF LAW OR CONFLICT OF LAW RULES OR PROVISIONS (WHETHER OF THE STATE OF
ILLINOIS OR ANY OTHER JURISDICTION) THAT WOULD CAUSE THE APPLICATION OF THE LAWS
OF ANY JURISDICTION OTHER THAN THE STATE OF ILLINOIS.
20. BUSINESS DAYS. If any time period for giving notice or taking
action hereunder expires on a day which is a Saturday, Sunday or legal holiday
in the state in which the Company's chief-executive office is located, the time
period shall automatically be extended to the business day immediately following
such Saturday, Sunday or legal holiday.
21. DESCRIPTIVE HEADINGS. The descriptive headings of this Agreement
are inserted for convenience only and do not constitute a part of this
Agreement.
* * * *
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the day and year first above written.
XXXXXXXXX SIGN COMPANY
By /s/ Xxxxx X. Xxxxxxxx
Its Chairman
CONTINENTAL ILLINOIS VENTURE
CORPORATION
By /s/ Xxxxxx Xxxxxxx
Its Managing Director
MIG PARTNERS VIII
By /s/ Xxxxxx Xxxxxxx
Its General Partner
/s/ Xxxxx X. Xxxxxxxx
Xxxxx X. Xxxxxxxx
/s/ Xxx X. Xxxxx
Xxx X. Xxxxx
/s/ Xxxx Xxxxxx
Xxxx Xxxxxx
/s/ Xxxx Xxxxxxxxx
Xxxx Xxxxxxxxx
/s/ Xxxxxxx Xxxxxxx
Xxxxxxx Xxxxxxx
/s/ Xxxxxxx St. Xxxx
Xxxxxxx St. Xxxx
SCHEDULE OF INVESTORS
Name and Address Number of Stockholder Shares
---------------- ----------------------------
Continental Illinois Venture Corporation
000 Xxxxx XxXxxxx Xxxxxx
Xxxxxxx, XX 00000
MIG PARTNERS VIII
000 Xxxxx XxXxxxx Xxxxxx
Xxxxxxx, XX 00000
SCHEDULE OF EXECUTIVES
Name and Address Number of Stockholder Shares
---------------- ----------------------------
Xxxxx X. Xxxxxxxx 252,243 shares of Common Stock
0000 X. Xxxxxxx Xxxxxxxxxx
Xxxxx 000
Xxxxxx, XX 00000
Xxx X. Xxxxx 61,823 shares of Common Stock
0000 Xxxxxxx 00 Xxxx
Xxxxx, XX 00000
