SENIOR MANAGEMENT AGREEMENT
THIS AGREEMENT is made as of January 24, 1994 between USAI
Acquisition Corp., a Delaware corporation (the "Company"), and Xxxxx X.
Xxxxxx ("Executive").
The Company and Executive desire to enter into an agreement
pursuant to which Executive shall purchase 13,800 shares of the Company's
common stock, par value $.01 per share (the "Common Stock"). All shares of
Common Stock received hereunder by Executive and all shares of Common Stock
hereafter acquired by Executive are referred to herein as "Executive Common
Stock." The Common Stock and the Company's Preferred Stock, par value $.01
per share (the "Preferred Stock"), currently held, or hereafter acquired, by
Executive are referred to herein as "Executive Stock." Certain definitions
are set forth in Section 5 of this Agreement.
The execution and delivery of this Agreement by the Company and
Executive is a condition to the purchase of shares of Common Stock and
Preferred Stock by Golder, Thoma, Xxxxxxx, Xxxxxx Fund IV Limited Partnership
(the "Investor") pursuant to an Equity Purchase Agreement between the Company
and the Investor dated as of the date hereof (the "Equity Purchase
Agreement"). Certain provisions of this Agreement are intended for the
benefit of, and will be enforceable by, the Investor. The Common Stock and
the Preferred Stock are collectively referred to herein as the "Stock."
The parties hereto agree as follows:
1. PURCHASE AND SALE OF EXECUTIVE STOCK.
(a) Upon execution of this Agreement (the "Closing"), the Company
will sell to Executive and Executive will purchase 1,624 shares of Common
Stock at a price of $10 per share. The Company will deliver to Executive the
certificate representing such Common Stock, and Executive will deliver to the
Company a check or wire transfer of funds in an amount of $16.24 and a
promissory note in the form of EXHIBIT A attached hereto in an aggregate
principal amount of $16,223.76 (the "Executive Note"). Executive's
obligations under the Executive Note will be secured by a pledge of all of
the shares of Executive Stock to the Company and in connection therewith
Executive shall enter into a pledge agreement in the form of EXHIBIT B
attached hereto (the "Pledge Agreement").
(b) Upon the election of the Investor to purchase additional
Common Stock pursuant to Section 1B(ii) of the Equity Purchase Agreement,
Executive may elect to purchase a number of shares of Common Stock equal to
the amount necessary to maintain the Executive's pro rata ownership of Common
Stock existing
immediately prior to such purchase by Investor at a price of $10 per share;
provided that the number of shares of Common Stock which Executive may
acquire pursuant to this paragraph (b) shall not exceed 12,176 shares. The
Company will deliver to Executive the certificate representing such Common
Sock, and Executive will deliver to the Company a check or wire transfer of
funds in an amount equal to $.01 per share and a promissory note
substantially in the form of the Executive Note in an aggregate principal
amount equal to the remaining purchase price amount. Executive's obligations
will be secured by a pledge of all of the shares of Executive Stock to the
Company and in connection therewith shall enter into a pledge agreement
substantially similar to the Pledge Agreement.
(c) In connection with the purchase and sale of the Executive
Stock hereunder, Executive represents and warrants to the Company that:
(i) The Executive Stock to be acquired by Executive pursuant to this
Agreement will be acquired for Executive's own account and not with a view
to, or intention of, distribution thereof in violation of the Securities
Act, or any applicable state securities laws, and the Executive Stock will
not be disposed of in contravention of the Securities Act or any applicable
state securities laws.
(ii) Executive is an executive officer of the Company, is
sophisticated in financial matters and is able to evaluate the risks and
benefits of the investment in the Executive Stock.
(iii) Executive is able to bear the economic risk of his investment in
the Executive Stock for an indefinite period of time because the Executive
Stock has not been registered under the Securities Act and, therefore,
cannot be sold unless subsequently registered under the Securities Act or
an exemption from such registration is available.
(iv) Executive has had an opportunity to ask questions and receive
answers concerning the terms and conditions of the offering of Executive
Stock and has had full access to such other information concerning the
Company as he has requested.
(v) This Agreement constitutes the legal, valid and binding
obligation of Executive, enforceable in accordance with its terms, and the
execution, delivery and performance of this Agreement by Executive does not
and will not conflict with, violate or cause a breach of any agreement,
contract or instrument to which Executive is a party or any judgment, order
or decree to which Executive is subject.
(d) As an inducement to the Company to issue the Executive Stock to
Executive, as a condition thereto, Executive acknowledges and agrees that:
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(i) neither the issuance of the Executive Stock to Executive nor any
provision contained herein shall affect any of the rights of the Company
set forth in that certain Employment Agreement of even date herewith
between the Company and the Executive (the "Employment Agreement"); and
(ii) the Company shall have no duty or obligation to disclose to
Executive, and Executive shall have no right to be advised of, any material
information regarding the Company and its Subsidiaries at any time prior
to, upon or in connection with the repurchase of Executive Stock upon the
termination of Executive's employment with the Company and its Subsidiaries
or as otherwise provided hereunder.
2. VESTING OF EXECUTIVE COMMON STOCK.
(a) The Executive Common Stock acquired hereunder will become
vested in accordance with the following schedule, if as of each such date
Executive is still employed by the Company or any of its Subsidiaries:
Cumulative
Percentage of
Executive Common
Date Stock Vested
---- ---------------
At Closing 25%
1st Anniversary of Closing 50%
2nd Anniversary of Closing 75%
3rd Anniversary of Closing 100%
(b) If Executive ceases to be employed by the Company and its
Subsidiaries on any date other than any anniversary date prior to the third
anniversary of the Closing, the cumulative percentage of Executive Common
Stock to become vested will be determined on a pro rata basis according to
the number of days elapsed since the prior anniversary date. Upon the
occurrence of a Sale of the Company or the death or Disability of the
Executive, all shares of Executive Common Stock which have not yet become
vested shall become vested at the time of such event. Shares of Executive
Common Stock which have become vested and shares of Executive Common Stock
acquired hereafter by the Executive pursuant to that certain acquisition
agreement expected to be entered into among the Company, Executive and other
security holders of Western Rock, Inc., (the "Acquisition Agreement") are
referred to herein as "Vested Shares," and all other shares of Executive
Common Stock are referred to herein as "Unvested Shares."
(c) Within 30 days after the date of this Agreement, Executive
will make an effective election with the Internal Revenue Service under
Section 83(b) of the Internal Revenue Code and the regulations promulgated
thereunder in the form of EXHIBIT C attached hereto for the shares of
Executive Common Stock.
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3. REPURCHASE OPTION.
(a) In the event Executive ceases to be employed by the Company
and its Subsidiaries for any reason (the "Termination"), all Executive Stock
(whether held by Executive or one or more of Executive's transferees) will be
subject to repurchase by the Company and the Investor pursuant to the terms
and conditions set forth in this Section 3 (the "Repurchase Option").
(b) The purchase price for each Unvested Share of Executive Common
Stock and each share of Preferred Stock constituting Executive Stock will be
Executive's Original Cost for such share (plus all accrued but unpaid
dividends thereon), and the purchase price for each Vested Share of Executive
Common Stock will be the Fair Market Value for such share.
(c) The Board of Directors of the Company (the "Board") may elect
to purchase all, but not less than all, of the Executive Stock by delivering
written notice (the "Repurchase Notice") to the holder or holders of such
Executive Stock within one year after the Termination (it being understood
that an election to purchase Executive Stock hereunder shall not be an
election to purchase the stock acquired pursuant to the senior management
agreements with other executives of the Company). The Repurchase Notice will
set forth the number of shares to be acquired from each holder, the aggregate
consideration to be paid for such shares and the time and place for the
closing of the transaction.
(d) If for any reason the Company does not elect to purchase all
of the Executive Stock pursuant to the Repurchase Option, the Investor shall
be entitled to exercise the Repurchase Option for the shares of Executive
Stock the Company has not elected to purchase (the "Available Shares"). As
soon as practicable after the Company has determined that there will be
Available Shares, but in any event within ten months after the Termination,
the Company shall give written notice (the "Option Notice") to the Investor
setting forth the number of Available Shares and the purchase price for the
Available Shares. The Investor may elect to purchase all, but not less than
all, of the Available Shares by giving written notice to the Company within
one month after the Option Notice has been given by the Company. As soon as
practicable, and in any event within ten days after the expiration of the
one-month period set forth above, the Company shall notify each holder of
Executive Stock as to the number of shares being purchased from such holder
by the Investor (the "Supplemental Repurchase Notice"). At the time the
Company delivers the Supplemental Repurchase Notice to the holder(s) of
Executive Stock, the Company shall also deliver written notice to the
Investor setting forth the number of shares the Investor is entitled to
purchase, the aggregate purchase price and the time and place of the closing
of the transaction.
(e) In the event that (i) the Executive's employment is terminated
by the Company without Cause, (ii) neither the Company
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nor the Investor has elected to purchase all of the Executive Stock hereunder
and (iii) at the time of such Termination, the Company is meeting all budget
projections set forth by the Board for that fiscal year, the Executive may
require the Company to purchase all, but not less than all, of the Executive
Stock by delivering written notice (the "Put Notice") to the Company within
one year after such Termination. The Put Notice will set forth the number of
shares to be acquired from each holder and the time and place for the closing
of the transaction.
(f) The closing of the purchase of the Executive Stock pursuant to
the Repurchase Option or the Put Notice shall take place on the date
designated by the Company in the case of either the Repurchase Notice or the
Supplemental Repurchase Notice or by the Executive in the case of the Put
Notice, which date shall not be more than one month nor less than five days
after the delivery of the later of any such notice to be delivered. The
Company and/or the Investor will pay for the Executive Stock to be purchased
pursuant to the Repurchase Option by delivery of a check or wire transfer of
funds in the aggregate amount of the purchase price for such shares;
provided, however, that the Company may elect to pay for the Executive Stock
to be purchased pursuant to the Put Notice by delivery of a promissory note
from the Company having a term no longer than five years, payable in sixty
equal installments, a market rate of interest and other typical market terms.
In addition, the Company may pay the purchase price for such shares by
offsetting amounts outstanding under any bona fide debts owed by Executive to
the Company including, without limitation, debts owed under the Executive
Note. The Company and the Investor will be entitled to receive customary
representations and warranties from the sellers regarding such sale and to
require all sellers' signatures be guaranteed.
(g) The right of the Company and the Investor to repurchase Vested
Shares pursuant to this Section 3 and the obligation of the Company to
repurchase the Executive Stock pursuant to paragraph (e) above shall
terminate upon the first to occur of the Sale of the Company or a Qualified
Public Offering.
(h) Notwithstanding anything to the contrary contained in this
Agreement, all repurchases of Executive Stock by the Company shall be subject
to applicable restrictions contained in the Delaware General Corporation Law
and in the Company's and its Subsidiaries' debt and equity financing
agreements. If any such restrictions prohibit the repurchase of Executive
Stock hereunder which the Company is otherwise entitled or required to make,
the Company will make such repurchases as soon as it is permitted to do so
under such restrictions.
4. RESTRICTIONS ON TRANSFER.
(a) LEGEND. The certificates representing the Executive Stock
will bear the following legend:
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"THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ORIGINALLY ISSUED
AS OF JANUARY 24, 1994, HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "ACT"), AND MAY NOT BE SOLD OR
TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE ACT OR AN EXEMPTION FROM REGISTRATION THEREUNDER. THE
SECURITIES REPRESENTED BY THIS CERTIFICATE ARE ALSO SUBJECT TO
ADDITIONAL RESTRICTIONS ON TRANSFER, CERTAIN REPURCHASE OPTIONS AND
CERTAIN OTHER AGREEMENTS SET FORTH IN A SENIOR MANAGEMENT AGREEMENT
BETWEEN USAI ACQUISITION CORP. (THE "COMPANY") AND XXXXX X. XXXXXX
DATED AS OF JANUARY 24, 1994. A COPY OF SUCH AGREEMENT MAY BE
OBTAINED BY THE HOLDER HEREOF AT THE COMPANY'S PRINCIPAL PLACE OF
BUSINESS WITHOUT CHARGE."
(b) OPINION OF COUNSEL. No holder of Executive Stock may sell,
transfer or dispose of any Executive Stock (except pursuant to an effective
registration statement under the Securities Act) without first delivering to
the Company an opinion of counsel (reasonably acceptable in form and
substance to the Company) that neither registration nor qualification under
the Securities Act and applicable state securities laws is required in
connection with such transfer.
5. DEFINITIONS.
"CAUSE" means (i) the commission of a felony or a crime involving
moral turpitude or the commission of any other act involving dishonesty,
disloyalty or fraud with respect to the Company or any of its Subsidiaries,
(ii) conduct tending to bring the Company or any of its Subsidiaries into
public disgrace or disrepute, (iii) failure to perform duties as reasonably
directed by the Board, (iv) gross negligence or willful misconduct with
respect to the Company or any of its Subsidiaries or (v) any other material
breach of this Agreement or any other agreement to which the Executive and
the Company are parties which is not cured within 10 days after written
notice thereof to Executive.
"DISABILITY" means Executive's inability, because of injury,
illness or other incapacity to perform the services to the Company
contemplated by the Employment Agreement for a continuous period of 90 days
or for 120 days out of a continuous period of 360 days. Such Disability
shall be deemed to have occurred on the 90th consecutive day or the 120th day
within the specified period, as applicable.
"EXECUTIVE STOCK" will continue to be Executive Stock in the hands
of any holder other than Executive (except for the Company and the Investor
and except for transferees in a Public Sale), and except as otherwise
provided herein, each such other holder of Executive Stock will succeed to
all rights and obligations attributable to Executive as a holder of Executive
Stock hereunder. Executive Stock will also include shares of the Company's
capital stock issued with respect to Executive Stock by
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way of a stock split, stock dividend or other recapitalization.
Notwithstanding the foregoing, all Unvested Shares shall remain Executive
Stock after any Transfer thereof.
"FAIR MARKET VALUE" of each share of Executive Stock means the
average of the closing prices of the sales of the Company's Common Stock on
all securities exchanges on which the Common Stock may at the time be listed,
or, if there have been no sales on any such exchange on any day, the average
of the highest bid and lowest asked prices on all such exchanges at the end
of such day, or, if on any day the Common Stock is not so listed, the average
of the representative bid and asked prices quoted in the NASDAQ System as of
4:00 P.M., New York time, or, if on any day the Common Stock is not quoted in
the NASDAQ System, the average of the highest bid and lowest asked prices on
such day in the domestic over-the-counter market as reported by the National
Quotation Bureau Incorporated, or any similar successor organization, in each
such case averaged over a period of 21 days consisting of the day as of which
the Fair Market Value is being determined and the 20 consecutive business
days prior to such day. If at any time the Common Stock is not listed on any
securities exchange or quoted in the NASDAQ System or the over-the-counter
market, the Fair Market Value will be the fair value of the Common Stock
determined jointly in good faith by the Company and Executive; provided that
if such parties are unable to reach agreement within 15 days following the
Termination, such Fair Market Value shall be determined by an independent
appraiser jointly selected by the Company and Executive. In the event that
such parties are unable to reach agreement with respect to such independent
appraiser within 5 days following the conclusion of the 15-day period
described above, each of the Company and Executive shall promptly (and in any
event within 5 days therefrom) select an independent appraiser, and the two
independent appraisers so selected shall, as promptly as possible (and in any
event within 10 days therefrom), jointly select a third independent
appraiser. The independent appraiser hereunder shall determine the Fair
Market Value of such Executive Stock within 60 days following the
Termination. Any independent appraiser determining Fair Market Value of the
Executive Stock hereunder shall use one or more valuation methods that such
independent appraiser, in its best professional judgment, determines to be
most appropriate under the circumstances, provided that no premium or
discount shall be applied regarding any presence or absence of control of the
Company. The determination of such third appraiser shall be final and
binding on the Company and Executive. The fees and expenses of all
appraiser(s) shall be borne by the Company and Executive in relation to the
amount by which the fair market value determined by the Company and
Executive, respectively, pursuant to the first clause of the second sentence
of this definition differs from the fair market value determined by the final
appraiser.
"ORIGINAL COST" of each share of Common Stock issued hereunder will
be equal to $10, each share of Common Stock issued pursuant to the
Acquisition Agreement will be equal to $10 and for
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each share of Preferred Stock issued pursuant to the Acquisition Agreement
will be equal to $100 (each as proportionately adjusted for all subsequent
stock splits, stock dividends and other recapitalizations).
"PUBLIC SALE" means any sale pursuant to a registered public
offering under the Securities Act or any sale to the public pursuant to Rule
144 promulgated under the Securities Act effected through a broker, dealer or
market maker.
"QUALIFIED PUBLIC OFFERING" means the sale in an underwritten
public offering registered under the Securities Act of shares of the
Company's Common Stock having an aggregate offering value of at least $30
million.
"SALE OF THE COMPANY" means any transaction or series of related
transaction pursuant to which any person or entity acquires (i) capital stock
of the Company possessing the voting power to elect a majority of the
Company's board of directors (whether by merger, consolidation,
reorganization, combination, sale or transfer of the Company's capital stock
or otherwise) 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.
"SUBSIDIARY" means any corporation of which the Company owns
securities having a majority of the ordinary voting power in electing the
board of directors directly or through one or more subsidiaries.
6. NOTICES. Any notice provided for in this Agreement must be in
writing and must be either personally delivered, mailed by first class mail
(postage prepaid and return receipt requested) or sent by reputable overnight
courier service (charges prepaid) to the recipient at the address below
indicated:
IF TO THE COMPANY:
USAI Acquisition Corp.
c/o Golder, Thoma, Xxxxxxx, Xxxxxx Fund IV
Limited Partnership
000 Xxxxx XxXxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxxxx
Xxxxx X. Xxxxxxx
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WITH A COPY TO:
Xxxxxxxx & Xxxxx
000 Xxxx Xxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxx
Xxxx X. Xxxxxxxxxx
IF TO THE EXECUTIVE:
Xxxxx X. Xxxxxx
0 Xxxxxx Xxxxxxx Xxx
Xxxxx, XX 00000
IF TO THE INVESTOR:
Golder, Thoma, Xxxxxxx, Xxxxxx Fund IV
Limited Partnership
000 Xxxxx XxXxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxxxx
Xxxxx X. Xxxxxxx
WITH A COPY TO:
Xxxxxxxx & Xxxxx
000 Xxxx Xxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxx
Xxxx X. Xxxxxxxxxx
or such other address or to the attention of such other person as the
recipient party shall have specified by prior written notice to the sending
party. Any notice under this Agreement will be deemed to have been given
when so delivered or sent or, if mailed, five days after deposit in the U.S.
mail.
7. GENERAL PROVISIONS.
(a) EXPENSES. The Company agrees to pay, and hold the Executive
harmless against liability for the payment of the fees and expenses of its
counsel arising in connection with the negotiation and execution of this
Agreement and other related senior management agreements and consultant stock
agreements and the consummation of the transactions contemplated by this and
those agreements; provided that the aggregate of such amount attributable to
all such transactions shall not exceed $10,000.
(b) TRANSFERS IN VIOLATION OF AGREEMENT. Any Transfer or
attempted Transfer of any Executive Stock 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
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transferee of such Executive Stock as the owner of such stock for any
purpose.
(c) SEVERABILITY. Whenever possible, each provision of this
Agreement will 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
will not affect any other provision or any other jurisdiction, but this
Agreement will be reformed, construed and enforced in such jurisdiction as if
such invalid, illegal or unenforceable provision had never been contained
herein.
(d) COMPLETE AGREEMENT. This Agreement, those documents expressly
referred to herein and other documents of even date herewith embody the
complete agreement and understanding among the parties and supersede and
preempt 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.
(e) COUNTERPARTS. This Agreement may be executed in separate
counterparts, each of which is deemed to be an original and all of which
taken together constitute one and the same agreement.
(f) SUCCESSORS AND ASSIGNS. Except as otherwise provided herein,
this Agreement shall bind and inure to the benefit of and be enforceable by
Executive, the Company, the Investor and their respective successors and
assigns (including subsequent holders of Executive Stock); provided that the
rights and obligations of Executive under this Agreement shall not be
assignable except in connection with a permitted transfer of Executive Stock
hereunder.
(g) CHOICE OF LAW. The corporate law of the State of Illinois
will govern all questions concerning the relative rights of the Company and
its stockholders. All other questions concerning the construction, validity
and interpretation of this Agreement and the exhibits hereto will be governed
by and construed in accordance with the internal laws of the State of
Illinois, without giving effect to any choice of law or conflict of law
provision or rule (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.
(h) REMEDIES. Each of the parties to this Agreement (including
the Investor) will be entitled to enforce its rights under this Agreement
specifically, to recover damages and costs (including attorneys' fees) caused
by any breach of any provision of this Agreement and to exercise all other
rights existing in its favor. The parties hereto agree and acknowledge that
money damages may not be an adequate remedy for any breach of the provisions
of
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this Agreement and that any party may in its sole discretion apply to any
court of law or equity of competent jurisdiction (without posting any bond or
deposit) for specific performance and/or other injunctive relief in order to
enforce or prevent any violations of the provisions of this Agreement.
(i) AMENDMENT AND WAIVER. The provisions of this Agreement may be
amended and waived only with the prior written consent of the Company,
Executive and the Investor.
(j) BUSINESS DAYS. If any time period for giving notice or taking
action hereunder expires on a day which is a Saturday, Sunday or holiday in
the state in which the Company's chief executive office is located, the time
period shall be automatically extended to the business day immediately
following such Saturday, Sunday or holiday.
(k) TERMINATION. This Agreement shall survive the termination of
Executive's employment with the Company and shall remain in full force and
effect after such termination.
* * * * *
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the date first written above.
USAI ACQUISITION CORP.
By /s/ Xxxxxxx Xxxxx
---------------------------
Its
---------------------------
/s/ Xxxxx X. Xxxxxx
------------------------------
Xxxxx X. Xxxxxx
Agreed and Accepted:
GOLDER, THOMA, XXXXXXX, XXXXXX FUND IV
LIMITED PARTNERSHIP
By Golder, Thoma, Cressey, Rauner, Inc.
Its General Partner
By /s/ Xxxxx Xxxxxx
---------------------------
Its
--------------------------
[PROVISION FOR COMMUNITY PROPERTY JURISDICTIONS]
CONSENT
The undersigned spouse of Executive hereby acknowledges that I have
read the foregoing Senior Management Agreement and that I understand its
contents. I am aware that the Agreement provides for the repurchase of my
spouse's shares of Common Stock under certain circumstances and imposes other
restrictions on the transfer of such Common Stock. I agree that my spouse's
interest in the Common Stock is subject to this Agreement and any interest I
may have in such Common Stock shall be irrevocably bound by this Agreement
and further that my community property interest, if any, shall be similarly
bound by this Agreement.
------------------------------
[SPOUSE]
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Witness
12
