EXHIBIT 10.19
STOCK RESTRICTION AND CROSS PURCHASE AGREEMENT
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THIS STOCK RESTRICTION AND CROSS PURCHASE AGREEMENT is made as of the 6th
day of June, 1996 by and between ▇▇▇▇ ▇. ▇▇▇▇▇ ("▇▇▇▇▇"), ▇▇▇▇▇ ▇▇▇▇▇▇▇
("▇▇▇▇▇▇▇"), ▇▇▇▇ ▇▇▇▇ ("▇▇▇▇") and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ("▇▇▇▇▇▇▇") (Sloan, Andrade,
Funk and Buffett are hereinafter referred to individually as "Shareholder" and
collectively as "Shareholders").
R E C I T A L S
---------------
The Shareholders are owners and holders of all of the issued and
outstanding stock of The GSI Group, Inc., a Delaware corporation (the
"Corporation").
As of the date hereof, the outstanding stock of the Corporation is held as
follows:
Name Voting Non-Voting
------------ --------------------- -------------------
▇▇▇▇▇ 1,175,000 shares 200,000 shares
▇▇▇▇▇▇▇ 300,000 shares 0 shares
Funk 225,000 shares 0 shares
Buffett 100,000 shares 0 shares
The parties hereto believe that in the interest of their continued success,
it is desirable to maintain continuity in the management, policies and ownership
of the Corporation, provide for the purchase of Shares upon the occurrence of
certain contingencies and provide certain other agreements as more fully set
forth herein.
NOW, THEREFORE, for and in consideration of the above premises and the
mutual covenants and agreements hereinafter contained, and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereby agree as follows:
ARTICLE
1
INCORPORATION OF RECITALS AND DEFINITIONS
-----------------------------------------
1.1. Incorporation of Recitals. The Recitals are incorporated herein and
constitute covenants, representations and warranties of the Shareholders.
1.2. Definitions. For purposes of this Agreement:
(a) The term "and/or" shall mean one or the other or both, or any one
or more or all, of the things or persons in connection with which the
conjunction is used.
(b) The term "Remaining Shareholders" shall mean the Shareholders who
are not selling their Shares pursuant to Article 3 hereof.
(c) The term "Requisite Vote" shall mean: (i) at any time that there
are two (2) Shareholders or less, the affirmative vote of the Shareholders
owning more than fifty percent (50%) of the outstanding Shares entitled to vote,
and (ii) at any time that there are three (3) or more Shareholders, the
affirmative vote of the Shareholders owning more than fifty percent (50%) of the
outstanding Shares entitled to vote, provided that the matter under
consideration shall have also received the affirmative vote of all Shareholders
owning Shares entitled to vote, except for any one (1) Shareholder.
(d) The term "Shares" shall mean all shares of the Corporation's
common stock, whether voting or non-voting, now owned or hereafter acquired by
any Shareholder, including but not limited to, newly authorized shares, shares
issued out of authorized but unissued stock, shares issued or credited in
connection with any stock dividend, stock split, or other capital readjustment,
as well as any voting trust certificates (there being none at this date)
representing any shares of stock issued by the Corporation and owned by the
Shareholder which are part of any voting trust or similar agreement.
(e) The term "Shareholders" and/or "Shareholder" shall mean Sloan,
Andrade, Funk and Buffett and/or any other person or entity that at any time may
become a party hereto by reason of his, her or its ownership of Shares.
ARTICLE
2
RESTRICTION ON SHARES
---------------------
2.1. Prohibition on Transfer. Except as (i) otherwise expressly permitted
herein; (ii) provided for under certain pledge agreements between LaSalle
National Bank and the Shareholders (the "LaSalle Pledge Agreement") and pledge
agreements between the Shareholders and each of ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ and
▇▇▇▇▇ ▇. ▇▇▇▇▇ (collectively the "▇▇▇▇▇ Pledge Agreements"); (iii) provided for
under the Stock Restriction and Buy-Sell Agreement dated of even date hereof
between the Shareholders and the Corporation (the "Buy-Sell Agreement"); or (iv)
provided for in the Contribution Agreement dated of even date herewith among the
Shareholders (the "Contribution Agreement"), a Shareholder shall not at any time
sell, pledge, hypothecate, transfer, encumber, assign, give away or in any way
dispose of any Shares now owned or hereafter acquired by him, nor shall such
Shares be transferable, voluntarily or involuntarily, by operation of law or
otherwise, except in strict compliance with the covenants, terms and conditions
set forth in this Agreement. Any attempt to do so in violation of this Agreement
shall be null and void and of no force or effect whatsoever.
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2.2. Restriction on Certificates. Each certificate of Shares which may now
or hereafter be issued to a Shareholder (except certificates evidencing Shares
sold free of the restrictions of this Agreement), shall bear a notice in the
following form:
"The shares of stock evidenced by this Certificate are subject to the terms
and conditions of a certain Stock Restriction and Cross Purchase Agreement,
dated June 6, 1996 ("Agreement"), among the Shareholders of the
Corporation. A copy of the Agreement is on file at the offices of the
Corporation, reference to all the terms and conditions thereof being hereby
made. No sale or transfer of the Shares evidenced hereby may be effected,
except pursuant to the terms and conditions of the Agreement.
If such legend is placed on the reverse side rather than the face of any
such certificate, there shall be placed on the face of such certificate a legend
in the following form:
"For restrictions on transfer, see notice on reverse side hereof."
2.3. Wrongful Transfer. Subject to the terms of Section 2.1 hereof, no
sale, pledge, hypothecation, transfer, encumbrance, assignment, gift or other
disposition by a Shareholder of any of his Shares shall be effective, unless and
until: (i) he has first complied with all the provisions of this Agreement, and
(ii) such transferee shall take such Shares subject to the terms of this
Agreement, shall agree in writing to become a party to this Agreement and to be
bound by all of the terms, conditions and provisions hereof. If a Shareholder
fails to comply with this Agreement, the Remaining Shareholders shall have the
right to compel such Shareholder or any transferee to transfer and deliver its
Shares in accordance with the provisions of this Agreement.
ARTICLE
3
PURCHASE OF SHARES UPON DEATH OF SHAREHOLDER
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Remaining Shareholders' Rights and Obligations. Upon the death of a
Shareholder ("Decedent"), all of the Shares owned by the Decedent (the
"Decedent's Shares") shall be subject to the rights and obligations set forth
below of the Remaining Shareholders to purchase all of such Decedent's Shares
from the Decedent's legal representative (the "Representative") at the price and
on the terms set forth in Articles 4, 5 and 6 hereof. For a period of forty-
five (45) days after the death of the Decedent, the Remaining Shareholders shall
have the right to purchase any or all of the Decedent's Shares at the price and
on the terms set forth in Articles 4, 5 and 6 hereof. In the event that more
than one of the Remaining Shareholders elects to purchase the Decedent's Shares,
then unless otherwise agreed by the Remaining Shareholders, each electing
Remaining Shareholder must purchase only that percentage of the Decedent's
Shares as is equal to his or her proportionate ownership of all of the electing
Remaining Shareholders' then respective Shares. Notwithstanding the previous
two (2) sentences, if the Remaining
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Shareholders, or a partnership of which the Remaining Shareholders are partners,
as described in Section 5.5, are the beneficiaries of any Policies (as defined
herein) on the Decedent's life, the Remaining Shareholders shall have the
obligation to purchase so much or all of the Decedent's Shares as would exhaust
the insurance proceeds from the Policies. To the extent that the insurance
proceeds from the Policies exceed the aggregate Purchase Price (as defined in
Section 4.1) of the Decedent's Shares, such excess proceeds shall remain the
property of and shall be retained by the Remaining Shareholders pursuant to the
agreement of the Partnership (as defined herein). In the event the insurance
proceeds from the Policies are less than the aggregate Purchase Price of the
Decedent's Shares and the Remaining Shareholders elect to purchase the remaining
Shares, the balance of the Purchase Price, after taking into effect such
proceeds, shall be payable in the manner described in Section 5.2 hereof.
If the Remaining Shareholders desire or are obligated to purchase the
Decedent's Shares, each such Shareholder shall give written notice to the
Corporation and the Representative within forty-five (45) days after the death
of the Decedent, specifying the Decedent's Shares which the Remaining
Shareholders wish or are obligated to purchase.
ARTICLE
4
DETERMINATION OF THE PURCHASE PRICE
-----------------------------------
4.1. Purchase Price. The parties hereto recognize the problems relative to
determining the value of the Corporation. As a result, the parties hereto agree
that the purchase price ("Purchase Price") for each Share to be purchased
pursuant to Article 3 hereof shall be the greatest of the following amounts:
(i) Six and 34/100 Dollars ($6.34) per Share;
(ii) two (2) times the Book Value (as defined below) of the
Corporation divided by the total number of Shares outstanding as of the
date of the Decedent's death; and
(iii) an amount equal to: (a) five (5) times the Corporation's EBITDA
(as defined below), minus (b) the principal balance of the Corporation's
interest bearing debt as of the date of the Decedent's death, divided by
(c) the total number of Shares outstanding as of the date of the Decedent's
death;
The Purchase Price determined in the manner set forth above shall be conclusive
and binding on the parties hereto.
4.2. Book Value. As used herein, the term "Book Value" of the Corporation
means the total Shareholder's equity as reflected on the Corporation's balance
sheet as of the last day of the Corporation's fiscal year immediately preceding
the date of the Decedent's death, determined
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by the certified public accounting firm regularly engaged by the Corporation
("Public Accountants") in accordance with generally accepted accounting
principles applied on a basis consistent with that of prior years and using the
FIFO method of accounting for inventories. The Book Value when certified in
writing by the Public Accountants shall be binding and conclusive on the
Decedent's estate, the Representative and all other parties concerned.
4.3. EBITDA. As used herein, the term "EBITDA" shall mean an amount equal
to the average net income of the Corporation for the Fiscal Period (as defined
below) (i) using the FIFO method of accounting for inventories; and (ii) before
deducting interest, income taxes, depreciation and amortization. The term
"Fiscal Period" shall mean (y) if the event (the "Event") which triggers the
purchase and sale hereunder occurs during the first eight (8) months of any
given fiscal year of the Corporation, the three (3) consecutive fiscal years of
the Corporation immediately preceding the fiscal year in which the Event occurs,
and (z) if the Event occurs during the last four (4) months of any given fiscal
year of the Corporation, the three (3) consecutive fiscal years of the
Corporation ending with the fiscal year in which the Event occurs.
4.4. Changes in EBITDA Multiplier. On or about each anniversary of the date
hereof, or at such other time as is agreeable to them, the Shareholders shall
review the multiplier stated in Section 4.1(iii) hereof to determine whether or
not such multiplier should be amended upon the Requisite Vote of the
Shareholders, it being the intention of the Shareholders that the formula
accurately reflects the fair value of the Corporation based upon all relevant
facts and circumstances at the time such matter is being considered.
ARTICLE
5
PAYMENT OF THE PURCHASE PRICE AND OTHER MATTERS
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5.1. Payment. The Purchase Price for the Shares purchased hereunder shall
be paid in full in cash at the closing, except that at the option of each
purchasing party, but in all events subject to Section 5.5 hereof, up to sixty
percent (60%) of the balance of the Purchase Price, if any, after application of
the death benefits payable under the Policies may be deferred as provided
herein, provided that at least forty percent (40%) of such balance of the
Purchase Price is paid in cash at closing.
5.2. Promissory Note. The deferred portion of the Purchase Price shall be
evidenced by a promissory note ("Note") of the purchasing party made payable to
the order of the Representative. The Note shall be in the form of Exhibit "A"
attached hereto and shall be dated as of the closing. Except as otherwise set
forth below, the principal balance shall be paid over a time not exceeding sixty
(60) months and each installment of the principal balance shall include
interest, accruing from the date of the Note, at a rate announced from time to
time by the LaSalle National Bank as its prime rate (the "Interest Rate").
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5.3. Collateral. The Note shall be secured by a pledge of all of the Shares
being purchased by that purchasing party. Any and all documents reasonably
necessary for purposes of perfecting a security interest in all of the purchased
Shares shall be executed by the purchaser including, a pledge agreement
containing, among other provisions, a third party escrow for the Shares, which
pledge agreement shall be subordinated to the LaSalle Pledge Agreement and the
▇▇▇▇▇ Pledge Agreements. Unless and until an Event of Default (as defined in the
Note) occurs, the purchaser of the Shares shall have all the rights of the owner
thereof, including without limitation the right to vote and the right to receive
dividends and other distributions. Following an Event of Default, the pledgee of
the Shares shall have all the rights of the owner thereof, provided that any
dividends or distributions made pursuant to Section 2.5(b) of the Buy-Sell
Agreement with respect to the fiscal year in which the Event of Default occurs
shall be allocated among the purchaser and the pledgee of the Shares in the same
proportion as the tax liability with respect to the income of the Corporation is
allocated among them.
5.4. Guaranteed Indebtedness. If at the time of a sale and purchase of
Shares pursuant to Article 3 hereof, the Corporation has outstanding
indebtedness which is personally guaranteed by certain of the Shareholders
("Guaranteed Debt") (it being understood by the Shareholders that Buffett shall
not at any time personally guarantee any such indebtedness), each of the
Remaining Shareholders who have personally guaranteed such indebtedness agrees
to use his good faith efforts to obtain the release of the Decedent's personal
guaranty of the Guaranteed Debt, provided that such Remaining Shareholders shall
not be required to offer a pledge of his residence or his spouse's guaranty in
order to secure such release, and provided further that such Remaining
Shareholder's actual ability to secure such release shall not be a condition of
closing the sale and purchase under Article 3 hereof.
5.5. Life Insurance Proceeds. Notwithstanding anything to the contrary
contained in Section 5.1 hereof, in the event the Remaining Shareholders are
partners of a partnership ("Partnership") which is the owner and beneficiary of
one or more insurance policies ("Policies") on the life of the Decedent, the
death benefits payable to the Partnership under the Policies, net of applicable
taxes on such proceeds, if any, shall be paid upon the Partnership's receipt
thereof, to the estate of the Decedent on account of the Purchaser Price of the
Shares, and only the balance of the Purchase Price, if any, may be deferred.
ARTICLE
6
THE CLOSING
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6.1. Location. Unless otherwise agreed by the parties, the closing of the
sale and purchase of the Shares under Article 3 hereof shall take place at such
location as the parties to such sale shall agree upon.
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6.2. Time. Except as otherwise provided, the closing shall take place upon
the later to occur of (A) sixty (60) days after the Decedent's death or (B) ten
(10) days after the purchasing party's or Partnership's receipt of the death
benefits from the Policies on the Decedent's life.
6.3. Execution and Delivery of Documents. Upon the closing of the sale and
purchase, the Representative and each purchasing party shall execute and deliver
to each other the various documents which shall be required to carry out their
undertakings hereunder including without limitation, the payment of cash and the
execution and delivery of the Note and any collateral instruments.
ARTICLE
7
TERMINATION OF AGREEMENT
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7.1. Events Causing Termination. This Agreement and all restrictions on
transfer created hereby shall terminate on the following events:
(a) Upon the adoption of a plan of dissolution of the Corporation,
provided said plan is carried out diligently and all assets remaining after
payment of or provision for liabilities are distributed to the Shareholders
within a reasonable time thereafter; or
(b) The execution of a written instrument to that effect signed by all
Shareholders owning Shares entitled to vote; or
(c) Permanent cessation of the business of the Corporation; or
(d) The sale of all or substantially all of the assets or business of
the Corporation; or
(e) A single Shareholder becoming the legal and beneficial owner of
all then issued and outstanding Shares; or
(f) The occurrence of an initial registered public offering of the
Shares.
7.2. Effect of Termination. The termination of this Agreement for any
reason shall not effect any right or remedy existing hereunder prior to the
effective date of such termination.
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ARTICLE
8
MISCELLANEOUS
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8.1. Effect of Improper Transfer. Except as otherwise permitted under the
Buy-Sell Agreement or the Contribution Agreement, if a transfer or attempted
transfer violates any provision of this Agreement or if the transferor, after
the transfer, reacquires all or any portion of the transferred Shares, such
transfers or attempted transfers shall be null and void and the Shares
transferred or attempted to be transferred shall remain subject to this
Agreement as if no transfer had been made.
8.2. Entire Agreement. Except for the Buy-Sell Agreement, the Contribution
Agreement and the partnership agreement of the Partnership, the terms,
conditions and covenants contained herein are the full and complete terms of the
agreement between the parties hereto regarding the subject matter hereof and
supersede any and all prior agreements by and among the Shareholders concerning
the ownership, sale or other disposition of the Shares. No alterations,
amendments or modifications of such terms shall be binding on the parties hereto
unless reduced to writing and approved by the Requisite Vote of the
Shareholders, provided that Section 4.1(i) hereof may not be amended or modified
unless approved by the affirmative vote of the holders of all Shares entitled to
vote.
8.3. Binding Effect. This Agreement shall be binding not only upon the
parties hereto, but upon their respective heirs, legal representatives,
successors and assigns. All persons bound hereby shall execute such instruments
and perform such acts as may be reasonably necessary or desirable to effectuate
the terms and provisions of this Agreement.
8.4. Reference in Will. Each Shareholder shall make reference to this
Agreement in any Will or Codicil that he may hereafter execute and shall direct
the executor therein to comply with all of its terms and provisions.
8.5. Notices. Any and all notices given in connection with this Agreement
shall be deemed adequately given only if in writing and personally delivered,
sent by first class registered or certified mail, postage prepaid, return
receipt requested; sent by telefacsimile, provided a hard copy is mailed on that
date to the party for whom such notices are intended or sent by other means at
least as fast and reliable as first class mail. A written notice shall be
deemed to have been given to the recipient party on the earlier of (i) the date
it shall be delivered to the address required by this Agreement; (ii) the date
delivery shall have been refused at the address required by this Agreement;
(iii) with respect to notices sent by mail, the date as of which the postal
service shall have indicated such notice to be undelivered at the address
required by this Agreement, or (iv) with respect to a telefacsimile, the date on
which the telefacsimile is sent. Any and all notices referred to in this
Agreement, or which any party desires to give to the other, shall be addressed
as follows:
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Name Address
To ▇▇▇▇▇ ▇▇▇▇ ▇. ▇▇▇▇▇
▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
To ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
To Funk ▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
To Buffett ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
with a copy of all notices ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, Ltd.
at the same time to: ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇, Esq.
or to such other address as the person to whom notice is to be given may have
furnished to the other in writing in accordance herewith. A communication given
by any other means shall be deemed duly given when actually received by the
addressee.
8.6. Specific Performance. The Shares cannot be readily purchased or sold
in the open market, and for that reason, among others, the parties will be
irreparably damaged in the event that this Agreement is not specifically
enforced. Should any dispute arise concerning whether a proposed sale or
disposition of the Shares would violate this Agreement, the parties agree that
an injunction may be issued restraining any sale or disposition pending the
determination of such controversy. In the event of any controversy concerning
the right or obligation to purchase or sell any of the Shares, such right or
obligation shall be enforceable in a court of equity by a decree of specific
performance. Such remedy shall, however, be cumulative and not exclusive, and
shall be in addition to any other remedy which the parties may have at law, in
equity or otherwise.
8.7. Construction of Terms. Unless otherwise specifically provided, a
reference to a particular "section", "Section", or "Article" shall mean the
section, Section, or Article in this Agreement.
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8.8. Governing Law. This Agreement shall be interpreted, governed and
construed in all respects by the internal laws of the State of Illinois, and any
action commenced to enforce any of the provisions hereof shall have as its venue
Christian County, Illinois.
8.9. Payment of Legal Costs and Expenses. In the event any action is
commenced to challenge or enforce the terms and provisions hereof, the party who
is successful in such action based upon a final, unappealable court order, shall
be reimbursed by the unsuccessful party for his fee, costs and expenses
(including without limitation reasonable attorneys' and accountants' fees, costs
and expenses) incurred in connection with the legal proceeding.
8.10. Gender. Unless the context otherwise requires, any pronouns, wherever
used herein, shall include the corresponding masculine, feminine or neuter
pronouns and the plural shall include the singular, and vice versa.
8.11. Headings. Article and paragraph headings are included herein solely
for convenience and shall not be construed to modify or explain any of the
substantive provisions hereof.
IN WITNESS WHEREOF, the Shareholders have signed their names, all on the
day and year first above written.
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇
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▇▇▇▇ ▇. ▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
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▇▇▇▇▇ ▇▇▇▇▇▇▇
/s/ ▇▇▇▇ ▇▇▇▇
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▇▇▇▇ ▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
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▇▇▇▇▇▇ ▇▇▇▇▇▇▇
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