EXHIBIT 10.20
STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT (this "Agreement") is entered into as of
March 5, 1999, by and between City Truck Holdings, Inc., a Delaware corporation
(the "Company"), and John P. Miller ("Purchaser" or "you").
RECITALS
The Company desires to issue and sell to Purchaser, and Purchaser
desires to purchase from the Company, 250 shares (the "Common Shares") of the
Company's authorized but unissued Common Stock, par value $.01 per share (the
"Common Stock") upon the terms and conditions set forth herein.
The Company desires to have, and Purchaser is willing to grant to the
Company, the right and option to repurchase the Common Shares under certain
circumstances upon the terms and conditions contained herein.
It is a condition precedent to the obligations of the Company under
this Agreement that Purchaser enter into (if he has not already) that certain
Stockholders' Agreement of even date herewith (the "Stockholders' Agreement")
among the Company, Brentwood Associates Buyout Fund II, L.P. (the
"Partnership"), the Purchaser and the Company's other stockholders.
THEREFORE, in consideration of the premises and of the covenants and
conditions contained herein, the parties hereto agree as follows:
1. Purchase and Sale; Closing.
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(a) Purchase and Sale. The Company hereby agrees to issue and sell to
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Purchaser, and Purchaser hereby agrees to purchase from the Company on the
Closing Date 250 Common Shares for $170 per share (total purchase price of
$42,500, payable $425 in cash and by delivery
of Purchaser's promissory note in the form attached as Annex "A" (the "Note") in
the principal amount of $42,075.
(b) The Closing. The consummation of the purchase and sale of the Common
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Shares (the "Closing") shall occur on the date of this Agreement or at such
other time as the parties may agree (the actual date being called the "Closing
Date"). At the Closing, the Company shall deliver to the Escrow Agent (as
defined in Section 5 below) the certificates evidencing the Common Shares
purchased hereunder by Purchaser.
2. Vesting of the Common Stock.
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Twenty-five percent (25%) of the Common Shares shall become vested as
of each of December 31, 1999, 2000, 2001 and 2002. The foregoing
notwithstanding, no Common Shares shall become vested unless Purchaser has been
continuously employed by the Company, or any parent or subsidiary of the
Company, from the Closing Date until each respective date on which the Common
Shares are scheduled to vest; provided, however, that if there is a Termination
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of Employment (as defined below), a pro rata portion of any Common Shares which
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are scheduled to vest during the calendar year in which the Termination of
Employment occurs shall become vested immediately upon Termination of Employment
(such pro rata being equal to the ratio of the number of days of employment
during the year in question to 365)
(a) As used herein, "Termination of Employment" shall mean the time when
the employee-employer relationship between Purchaser and the Company is
terminated for any reason whatsoever, with or without cause. For purposes of
this Section 2(b), and elsewhere in this Agreement in the context of employment,
the term "Company" shall mean a subsidiary or
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parent of the Company if Purchaser is then employed by such subsidiary or
parent; provided, however, that neither a transfer of Purchaser from the employ
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of the Company to the employ of such subsidiary or parent nor the transfer of
Purchaser from the employ of such subsidiary or parent to the employ of the
Company shall be deemed a Termination of Employment.
Anything in this Agreement to the contrary notwithstanding, if the
Company is acquired by a third party or parties through an asset purchase,
merger or sale of more than 50% (in value) of the outstanding equity securities
of the Company (an "Acquisition"), all Common Shares not previously repurchased
by the Company pursuant to Section 3 shall vest immediately prior to the
Acquisition closing date.
(b) If the outstanding Common Stock of the Company is hereafter increased
or decreased or changed into or exchanged for a different number or kind of
shares or other securities of the Company by reason of any stock split,
combination of shares, dividend payable in shares, recapitalization,
reclassification or other change, then appropriate adjustment shall be made in
the number and kind of shares acquired by the Purchaser pursuant to this
Agreement, notwithstanding the vesting and escrow requirements contained herein.
Any additional share certificates issued in favor of the Purchaser as a result
of any such adjustment with respect to any of Purchaser's shares then held by
the Escrow Agent pursuant to Section 5 hereof shall be deposited with the Escrow
Agent and held in accordance with the Escrow Agreement. In addition, upon the
occurrence of any of the foregoing events, appropriate adjustment shall be made,
if necessary, in the number, kind and/or price per share of the Shares to be
purchased pursuant to Section 1(c) hereof.
3. Company Purchase Option.
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(a) The Company shall have the unconditional right and option to purchase
any or all of the Vesting Common Shares that have not vested at a purchase price
of $170 per share (the "Option Price") upon a Termination of Employment on the
terms and conditions hereinafter provided.
(b) In addition to the rights set forth in Section 3(a), prior to an
initial public offering of Common Stock, the Company shall have the
unconditional right and option to purchase any and or all of the Vesting Common
Shares that have vested pursuant to this Agreement at a per share purchase price
equal to the Fair Market Value thereof (the "Fair Market Value Price") upon a
Termination of Employment on the terms and conditions hereinafter provided. The
Company's right and option set forth in Sections 3(a) and 3(b) is referred to
herein as the "Purchase Option."
The Purchase Option, if exercised, must be exercised no later than 60
days after a Termination of Employment. The Purchase Option may be exercised in
whole or in part. Any Common Stock which becomes subject to the Purchase Option
as provided herein but with respect to which the Purchase Option is not
exercised in accordance with the terms hereof shall become fully vested upon
expiration of the period during which the Purchase Option with respect thereto
is effective, and no such Common Stock shall at any time thereafter be subject
to the Purchase Option.
(c) The Purchase Option shall be exercised by written notice signed by an
officer of the Company and delivered or mailed to Purchaser as provided in
Section 16(c) of this Agreement and to the Escrow Agent (as defined in Section 5
hereof) as provided in the Joint Escrow Instructions (as defined in Section 5
hereof) and shall be effective immediately upon such delivery or mailing.
Amounts due to Purchaser from the Company as a result of exercise of
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the Purchase Option shall be payable in cash (except as otherwies provided in
the Note)promptly after exercise of the Purchase Option or, in the case of ETA
Stock and/or "Catch Up Vesting", as soon as reasonably practical after
determination of whether or not any applicable Performance Criteria were met.
(d) As used herein, "Fair Market Value" shall mean the fair market value of
a share of Common Stock, representing the price a willing buyer would pay and at
which at willing seller would sell, neither under any compulsion or duress.
Initially, the parties shall attempt to agree on Fair Market Value for a period
of thirty (30) days. If they are unable to reach agreement, each of them shall
within ten (10) days nominate an independent appraiser skilled in valuing
securities similar to the Common Stock, and the two appraisers so nominated
shall appoint a third appraiser within ten (10) days. The third appraiser shall
determine Fair Market Value, and such determination shall be conclusive and
binding on all parties. Each party shall bear the costs, if any, of the
appraiser it nominates, and the parties shall share equally the costs of the
third appraiser, the Purchaser's share of which may be deducted by the Company
from any amounts payable to Purchaser if Purchaser has not otherwise paid his
portion of the third appraiser's costs.
4. Employment.
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Nothing contained in this Agreement, or in any other agreement entered
into by the Company and Purchaser in connection with this Agreement, (i)
obligates the Company, or any subsidiary or parent of the Company, to continue
to employ Purchaser in any capacity whatsoever, or (ii) prohibits or restricts
the Company (or any such subsidiary or parent) from terminating the employment
of Purchaser at any time or for any reason whatsoever, with or without cause,
and Purchaser hereby acknowledges and agrees that neither the Company nor any
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other person has made any representations or promises whatsoever to Purchaser
concerning Purchaser's employment or continued employment by the Company. In
the event of any Termination of Employment, Purchaser shall have the rights set
forth herein and in his Stock Purchase Agreement dated July 10, 1998 (the
"Original Stock Purchase Agreement"), and no more.
5. Escrow of Shares.
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As security for the faithful performance of the terms of this
Agreement and for payment of the Note, and to ensure the availability for
delivery of the unvested Common Shares in case of an exercise of the Purchase
Option, the Common Shares will be deposited with a collateral/escrow agent (the
"Agent"). The Agent shall be the same one named in the joint escrow instructions
executed concurrently with your Original Stock Purchase Agreement, and you agree
that the terms of such joint escrow instructions also control with respect to
the Common Shares purchased pursuant to this Agreement. You also agree that the
Agent may use any of the stock assignments duly endorsed (with date and number
of shares blank) executed by you pursuant to your Original Stock Purchase
Agreement pursuant to the terms of those joint escrow instructions
6. Change in Capitalization.
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If from time to time during the term of this Agreement (i) there is
any dividend of cash or property or rights to acquire same, any liquidating
dividend of cash and/or property, or any stock dividend or stock split or other
change in the character or amount of any of the outstanding securities of the
Company, or (ii) there is (a) any consolidation, merger or sale of all, or
substantially all, of the assets of the Company or (b) a Drag-Along Sale
pursuant to the
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Stockholders' Agreement, then in such event any and all new, substituted or
additional securities or other property to which Purchaser may become entitled
by reason of his ownership of Common Shares shall immediately become subject to
this Agreement and shall assume the same status with respect to vesting as the
Common Shares upon which such dividend was paid or in substitution for which
such additional securities or property were distributed. Any cash or cash
equivalents received pursuant to this Section 6 shall be invested in
conservative, short-term interest bearing securities, and interest earned
thereon shall likewise assume the same status as to vesting. While the total
Option Price for all Common Shares subject to the Purchase Option shall remain
the same after each such event, the Option Price per Common Share upon exercise
of the Purchase Option shall be proportionately or otherwise appropriately
adjusted as determined in good faith by the Board of Directors of the Company.
7. Purchaser Representations and Agreements.
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Purchaser hereby represents and warrants, and agrees with, the Company
as set forth below.
(a) Purchaser has full power and authority to execute, deliver and perform
his obligations under this Agreement and this Agreement is a valid and binding
obligation of Purchaser, enforceable in accordance with its terms, except that
the enforcement thereof may be subject to bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect
relating to creditors' rights generally and to general principles of equity
(regardless of whether such enforcement is considered in a proceeding in equity
or at law). Purchaser is not subject to any agreement not to compete or other
restriction on his ability to acquire the Shares being purchased pursuant to
this Agreement or to become an employee of the
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Company or any of its subsidiaries, and Purchaser will not enter into any such
agreement or restriction.
(b) Purchaser has received and reviewed this Agreement and all annexes and
schedules hereto, including the Stockholders' Agreement and all schedules and
exhibits attached hereto and thereto, and has received all such business,
financial and other information as he deems necessary and appropriate to enable
his to evaluate the financial risk inherent in making an investment in the
Shares and has received satisfactory and complete information concerning the
business and financial condition of the Company in response to all inquiries in
respect thereof.
(c) Purchaser is acquiring the Shares purchased hereunder with his own
funds for investment, for his own account, and not as a nominee or agent for any
other person, firm or corporation, and not with a view to the sale or
distribution of all or any part thereof, and he has no present intention of
selling, granting participation in, or otherwise distributing any of the Shares.
Except as provided herein or pursuant to the Stockholders' Agreement, Purchaser
does not have any contract, undertaking, agreement or arrangement with any
person, firm or corporation to sell, transfer or grant participation to such
person, firm or corporation, with respect to any of the Shares.
(d) Purchaser understands and agrees that (i) the Shares will not be
registered under the Securities Act of 1933, as amended (the "Act"), in part
based upon an exemption from registration predicated on the accuracy and
completeness of his representations and warranties appearing herein and (ii) he
will not be permitted to sell, transfer or assign any of the Shares until they
are registered under the Act or an exemption from the registration and
prospectus delivery
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requirements of the Act is available, and (iii) there is no assurance that such
an exemption from registration will ever be available or that the Shares will
ever be able to be sold.
(e) Purchaser agrees that in no event will he make a disposition of any
Shares or any interest therein, unless such Shares are registered under the Act
or unless and until (i) he shall have notified the Company of the proposed
disposition and shall have furnished the Company with a statement of the
circumstances surrounding the proposed disposition, and (ii) he shall have
furnished the Company with an opinion of counsel reasonably satisfactory in form
and content to the Company to the effect that (A) such disposition will not
require registration of such Shares under the Act or applicable state securities
laws, or (B) that appropriate action necessary for compliance with the Act and
applicable state securities laws has been taken, or (iii) the Company shall have
waived, expressly and in writing, the provisions of clauses (i) and (ii) of this
subsection.
(f) Purchaser does not require the assistance of an investment advisor or
other purchaser representative to participate in the transactions contemplated
by this Agreement, has such knowledge and experience in financial and business
matters as to be capable of evaluating the merits and risks of his investment in
the Company, has the ability to bear the economic risks of its investment for an
indefinite period of time and has been furnished with and had access to such
information as is necessary to verify the accuracy of the information supplied
and to have all questions answered by the Company.
8. Covenants, Representations and Warranties of the Company.
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The Company hereby covenants, represents and warrants to Purchaser as
set forth below:
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(a) The Company is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware and has all requisite
corporate power and authority to enter into this Agreement, to issue the Shares
and to perform its obligations hereunder.
(b) The execution and delivery of this Agreement by the Company have been
duly and validly authorized, and all necessary corporate action has been taken
to make this Agreement a valid and binding obligation of the Company,
enforceable in accordance with its terms, except that the enforcement thereof
may be subject to bankruptcy, insolvency, reorganization, moratorium or other
similar laws now or hereafter in effect relating to creditors' rights generally
and to general principles of equity (regardless of whether such enforcement is
considered in a proceeding in equity or at law).
(c) No approval, authorization, consent, permit or other order or action of
or filing with any bank or other lender, court, governmental department or
authority, commission, board, bureau, agency, or any other party or parties, nor
any compliance with any legally imposed waiting period, is required for the
execution and delivery by the Company of this Agreement, or the consummation by
the Company of the transactions contemplated hereby .
(d) The Company now has, and will continue to have, to and including the
date of Closing pursuant to this Agreement, the absolute right to sell, assign,
transfer and deliver the Shares pursuant to this Agreement, free and clear of
all claims, security interests, liens, pledges, charges, options, security
agreements or other agreements, arrangements, commitments, obligations or other
encumbrances of any kind (hereinafter collectively called "Claims"). Upon the
transfer of the Shares pursuant to the terms of this Agreement, the Purchaser
will have,
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except as otherwise expressly provided in this Agreement, good and marketable
title to and ownership of such Shares, free and clear of all Claims, and such
Shares are, and upon the Closing of this Agreement will be, duly authorized,
validly issued and outstanding and fully paid and nonassessable.
(e) To the best knowledge and belief of the Company, there is no action,
suit or proceeding pending or threatened against or affecting the Company in any
court or other governmental authority, or before any arbitrator of any kind,
which would adversely affect or prevent the execution and delivery by the
Company of this Agreement, or the consummation by the Company of the
transactions contemplated hereby .
9. Conditions of Parties' Obligations.
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The obligations of the Company to issue and sell, and of Purchaser to
purchase and pay for, the Shares are also subject to the fulfillment prior to or
concurrently with the Closing of the conditions set forth below.
(a) The representations and warranties of the Purchaser and the Company
shall be true and correct on and as of the Closing Date.
(b) All permits, consents, approvals, orders and authorizations, if any,
which the Company is required to obtain from, and all registrations,
qualifications, designations, declarations and filings which the Company is
required to make with, any state or Federal governmental authority of the United
States in connection with the execution, delivery or performance of this
Agreement and the consummation of the transactions contemplated hereby shall
have been duly obtained or made and shall be effective on and as of the Closing
Date.
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(c) Purchaser shall have received copies of such supporting documents as
Purchaser may reasonably request. The Company shall have received such
supporting documents as it may reasonably request to satisfy itself concerning
the representations of Purchaser.
(d) Purchaser shall have become a party to and agreed to be bound by the
Stockholders' Agreement, which Stockholders' Agreement is hereby incorporated
herein as if set forth in full in this Agreement.
10. Restriction on Sale or Transfer.
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Except as provided herein, none of the Common Shares that have not
vested pursuant hereto (or any beneficial interest therein) shall be sold,
transferred, assigned or pledged (including transfer by operation of law) and
any attempt to make any such sale, transfer, assignment or pledge shall be null
and void and of no effect.
11. Legends.
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In addition to any legends required by the Stockholders' Agreement,
the certificates representing the shares of Common Stock purchased pursuant to
this Agreement will bear a legend in substantially the following form:
"The shares represented by this certificate are subject to repurchase
under certain circumstances by the issuer pursuant to a Stock Purchase Agreement
between the Issuer and the initial purchaser, to which reference is made for a
fuller description of such repurchase rights."
12. Enforcement.
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The parties acknowledge that the remedy at law for any breach or
violation of the provisions of Section 10 hereof shall be inadequate and that,
in the event of any such breach or
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violation, the Company or Purchaser, as the case may be, shall be entitled to
injunctive relief in addition to any other remedy, at law or in equity, to which
he or it may be entitled.
13. Violation of Transfer Provisions.
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The Company shall not be required (a) to transfer on its books any
Common Shares which shall have been sold, transferred, assigned or pledged in
violation of any of the provisions of this Agreement or (b) to treat as owner of
such Common Shares or to accord the right to vote or to pay dividends to any
purported transferee of Common Shares in violation of any of the provisions of
this Agreement.
14. Covenant Regarding 83(b) Election.
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Purchaser hereby covenants and agrees that he will make an election
pursuant to Treasury Regulation 1.83-2 with respect to the Common Shares and
will furnish the Company with a copy of the form of election Purchaser has filed
and evidence that such an election has been filed in a timely manner.
15. Indemnification.
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Each party hereto shall defend, hold harmless and indemnify the other
against and from any damage, loss, expense or liability, including reasonable
attorneys' fees, resulting from or arising out of the breach or default in the
performance by such party of any of the terms, covenants, representations,
warranties and conditions herein. This hold harmless and indemnification
obligation, together with the representations, warranties, covenants and
agreements of each party hereto, shall survive the termination of this Agreement
from any cause whatsoever.
16. General Provisions.
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(a) No Assignments. Except as specifically provided to the contrary in this
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Agreement, neither party shall transfer, assign or encumber any of its or his
rights, privileges, duties or obligations under this Agreement without the prior
written consent of the other party, and any attempt to so transfer, assign or
encumber shall be void; provided, however, that the Company may assign this
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Agreement and its rights hereunder in connection with an Acquisition of all of
the stock of or all or substantially all of the assets of the Company.
(b) Notices. All notices, requests, consents and other communications
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required or permitted hereunder shall be in writing and shall be deemed to have
been duly given and made and served either by personal delivery to the person
for whom it is intended (including by reputable overnight delivery services
which shall be deemed to have effected personal delivery) or by telecopy,
receipt of which is acknowledged by the telecopy number set forth below for the
applicable addressee, or if deposited, postage prepaid, registered or certified
mail, return receipt requested, in the United States mail:
(i) if to Purchaser, addressed to Purchaser at his address set forth on the
signature page hereto, or at such other address as Purchaser may specify by
written notice to the Company, or
(ii) if to the Company, addressed to City Truck Holdings, Inc., c/o
Christopher A, Laurence, Brentwood Associates, 11150 Santa Monica Boulevard,
Suite 1200 Los Angeles, California 90025, or at such other address as the
Company may specify by written notice to the Purchaser.
Each such notice, request, consent and other communication shall be
deemed to have been given upon receipt thereof as set forth above or, if sooner,
three days after deposit as
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described above. The addresses for the purposes of this Section 16(b) may be
changed by giving written notice of such change in the manner provided herein
for giving notice. Unless and until such written notice is received, the
addresses provided herein shall be deemed to continue in effect for all purposes
hereunder.
(c) Choice of Law. This Agreement shall be governed by and construed in
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accordance with the internal laws, and not the laws of conflicts of laws, of the
State of Delaware.
(d) Severability. The parties hereto agree that the terms and provisions in
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this Agreement are reasonable and shall be binding and enforceable in accordance
with the terms hereof and, in any event, that the terms and provisions of this
Agreement shall be enforced to the fullest extent permissible under law. In the
event that any term or provision of this Agreement shall for any reason be
adjudged to be unenforceable or invalid, then such unenforceable or invalid term
or provision shall not affect the enforceability or validity of the remaining
terms and provisions of this Agreement, and the parties hereto hereby agree to
replace such unenforceable or invalid term or provision with an enforceable and
valid arrangement which in its economic effect shall be as close as possible to
the unenforceable or invalid term or provision.
(e) Parties in Interest. All of the terms and provisions of this Agreement
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shall be binding upon and inure to the benefit of and be enforceable by the
respective permitted successors and assigns of the parties hereto.
(f) Modification, Amendment and Waiver. No modification, amendment or
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waiver of any provision of this Agreement shall be effective against the Company
or Purchaser unless (i) it is contained in a written document executed by the
Company and the Purchaser which specifically states that it is an amendment to
this Agreement, and, in the case of the Company,
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has been authorized by its Board of Directors. The failure at any time 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 any of the parties
thereafter to enforce each and every provision hereof in accordance with its
terms.
(g) Integration. This Agreement constitutes the entire agreement of the
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parties with respect to the subject matter hereof and supersedes all prior
negotiations, understandings and agreements, written or oral.
(h) Headings. The headings of the sections and paragraphs of this Agreement
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have been inserted for convenience of reference only and do not constitute a
part of this Agreement.
(i) Counterparts. This Agreement may be executed in counterpart with the
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same effect as if all parties had signed the same document. All such
counterparts shall be deemed an original, shall be construed together and shall
constitute one and the same instrument.
(j) Attorneys' Fees. In the event of any controversy, claim or dispute
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between the parties arising out of or relating to this Agreement, or the
enforcement of the provisions hereof, the substantially prevailing party shall
be entitled to recover its costs and expenses, including but not limited to
reasonable attorneys' fees incurred in connection herewith.
(k) Further Assurances. The parties agree to use their best efforts and act
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in good faith in carrying out their obligations under this Agreement. The
parties also agree, without further consideration, to execute such further
instruments and to take such further actions as may be necessary or desirable to
carry out the purposes and intent of this Agreement.
[SIGNATURE PAGE TO FOLLOW]
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IN WITNESS WHEREOF, the parties hereto have executed this Stock
Purchase Agreement as of the date first above written.
CITY TRUCK HOLDINGS, INC.
By
______________________________
Name:
___________________________
Title:
____________________________
PURCHASER:
_________________________________
John P. Miller
Address:
___________________________________
___________________________________
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ANNEX A
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PROMISSORY NOTE
$42,075.00 Deerfield, Illinois
March 5, 1999
FOR VALUE RECEIVED, the undersigned, John P. Miller (the "Maker")
promises to pay to City Truck Holdings, Inc., a Delaware corporation (the
"Company"), or order, the principal sum of Forty-Two Thousand Seventy-Five
Dollars ($42,075.00), with interest on the unpaid principal balance from time to
time outstanding, at the rate set forth below. The principal amount of this Note
and any accrued and unpaid interest under this Note, shall be due and payable on
or before the earlier of March 4, 2004, or the date on which the indebtedness
under this Note is accelerated as provided for under this Note. This Note is
issued in connection with that certain Stock Purchase Agreement of even date
herewith by and between the Company and Maker (the "Stock Purchase Agreement").
Accrued and unpaid interest shall be payable annually on March 5 of each year
and at all other times as set forth herein.
The unpaid principal balance on this Note shall bear interest at the
rate of five and 30/100 percent (5.3%) per annum.
All payments under this Note shall be made to the Company or its
order, in lawful money of the United States of America at the offices of the
Company at its then principal place of business or at such other place as the
Company or any holder hereof shall designate for such purpose from time to time.
This Note is secured pursuant to that certain Pledge Agreement of even date
herewith between the Company and Maker (the "Pledge Agreement").
This Note shall be prepaid as follows:
(a) This Note requires mandatory prepayments at the times and in the
amounts set forth in the Pledge Agreement. In addition, upon any other
disposition of any of the capital stock of the Company owned by Maker, an amount
equal to eighty percent (80%) of the gross cash proceeds of such disposition
shall be applied to prepay this Note. In addition, upon an Acquisition (as
defined in the Stock Purchase Agreement), this Note shall be prepaid in full.
Capitalized terms stated herein to be as defined in the Stock Purchase Agreement
shall have the meanings assigned therein or, if not defined therein the meanings
in the Original Stock Purchase Agreement (as such term is defined in the Stock
Purchase Agreement).
(b) An amount equal to thirty percent (30%) of any bonus paid to Maker
by the Company or any subsidiary in connection with Maker's employment shall be
applied to prepay this Note, and the Company is hereby expressly authorized to
offset (or cause any such subsidiary to offset) such amount against any bonus
otherwise payable Maker.
Annex A - 1
(c) The Note shall be prepaid in full if Maker voluntarily terminates
his employment with the Company or any subsidiary of the Company .
(d) If Maker's employment by the Company or any subsidiary of the
Company is terminated by the Company or such subsidiary without "cause" (as
defined in the Stock Purchase Agreement), and if in connection with such
termination the Company elects to repurchase any of Maker's shares of common
stock of the Company pursuant to the Stock Purchase Agreement, the purchase
price for such repurchased shares may be offset by the Company against this
Note.
Each payment under this Note shall be applied in the following order:
(i) to the payment of costs and expenses provided for under this Note; (ii) to
the payment of accrued and unpaid interest; and (iii) to the payment of
outstanding principal. The Company and each holder hereof shall have the
continuing and exclusive right to apply or reverse and reapply any and all
payments under this Note.
This Note may be prepaid in whole or in part at any time, after five
days' written notice of Maker's intention to make any such prepayment, which
notice shall specify the date and amount of such prepayment. Any prepayment
shall be without penalty except that interest shall be paid to the date of
payment on the principal amount prepaid.
The occurrence of any of the following events shall constitute an
"Event of Default" hereunder: (a) failure of Maker to pay when due, whether at
its stated maturity, by declaration, acceleration, demand or otherwise, any
principal or interest due under this Note or under any other note, loan
agreement or obligation for borrowed money or for the unpaid purchase price for
goods or services; (b) (i) a court having jurisdiction in the premises shall
enter a decree or order of relief in respect of Maker in an involuntary case
under Title 11 of the United State Code entitled "Bankruptcy" (as now or
hereinafter in effect or any successor thereto, the "Bankruptcy Code") or any
applicable bankruptcy, insolvency or similar law now or hereafter in effect,
which decree or order is not stayed; or any other similar relief shall be
granted under any applicable federal or state law; or (ii) an involuntary case
shall be commenced against Maker under any applicable bankruptcy, insolvency or
other similar law now or hereafter in effect; or the entry of a decree or order
of a court having jurisdiction in the premises for the appointment of a
receiver, interim receiver, liquidator, sequestrator, trustee, custodian or
other officer having similar powers over Maker or over all or a substantial part
of his property shall have been entered; or a warrant of attachment, execution
or similar process shall have been issued against any substantial part of the
property of Maker and, in the case of any event described in this clause (ii),
such an event shall have continued for thirty (30) days undismissed, bonded or
discharged; (c) Maker shall commence a voluntary case under the Bankruptcy Code
or any applicable bankruptcy, insolvency or other similar law now or hereafter
in effect, or Maker shall make an assignment for the benefit of creditors; or
Maker shall be unable or fail, or shall admit in writing her inability to pay
her debts as such debts become due; or (d) a default shall occur under the
Pledge Agreement.
Upon the occurrence of an Event of Default, including, without
limitation, failure to make any principal or interest payment by the stated
maturity (whether by acceleration,
Annex A - 2
required prepayment, notice of prepayment or otherwise) for such payment,
interest shall thereafter accrue on the entire unpaid principal balance under
this Note, including without limitation any delinquent interest which has been
added to the principal amount due under this Note pursuant to the terms hereof,
at the rate set forth herein plus two percent (2%) per annum (on the basis of a
365-day year and the actual number of days elapsed). In addition, upon the
occurrence of an Event of Default the holder of this Note may, at its option,
without notice to or demand upon Maker or any other party, declare immediately
due and payable the entire principal balance hereof together with all accrued
and unpaid interest thereon, plus any other amounts then owing pursuant to this
Note, whereupon the same shall be immediately due and payable. On each
anniversary of the date of any Event of Default and while such Event of Default
is continuing, all interest which has become payable and is then delinquent
shall, without curing the default under this Note by reason of such delinquency,
be added to the principal amount due under this Note, and shall thereafter bear
interest at the same rate as is applicable to principal, with interest on
overdue interest to bear interest, in each case to the fullest extent permitted
by applicable law, both before and after default, maturity, foreclosure,
judgment and the filing of any petition in a bankruptcy proceeding.
Notwithstanding anything in this Note to the contrary, in no event shall
interest be charged under this Note which would violate any applicable law, and
if the interest set forth in this Note would violate any law it shall be reduced
to an amount which would not violate any law.
No waiver or modification of any of the terms of this Note shall be
valid or binding unless set forth in a writing specifically referring to this
Note and signed by a duly authorized officer of the Company or any holder of
this Note, and then only to the extent specifically set forth therein.
If any Event of Default occurs, Maker and all guarantors and endorsers
hereof, and their successors and assigns, promise to pay any expenses, including
attorneys' fees, incurred by each holder hereof in collecting or attempting to
collect the indebtedness under this Note, whether or not any action or
proceeding is commenced. None of the provisions hereof and none of the holder's
rights or remedies under this Note on account of any past or future defaults
shall be deemed to have been waived by the holder's acceptance of any past due
payments or by any indulgence granted by the holder to Maker.
Maker and all guarantors and endorsers hereof, and their successors
and assigns, hereby waive presentment, demand, diligence, protest and notice of
every kind, and agree that they shall remain liable for all amounts due under
this Note notwithstanding any extension of time or change in the terms of
payment of this Note granted by any holder hereof, any change, alteration or
release of any property now or hereafter securing the payment hereof or any
delay or failure by the holder hereof to exercise any rights under this Note.
Maker and all guarantors and endorsers hereof, and their successors and assigns,
hereby waive the right to plead any and all statutes of limitation as a defense
to a demand under this Note to the full extent permitted by law.
This Note shall inure to the benefit of the Company, its successors
and assigns and shall bind the heirs, executors, administrators, successors and
assigns of Maker. Each reference herein to powers or rights of the Company
shall also be deemed a reference to the same power or right of such assignees,
to the extent of the interest assigned to them.
Annex A - 3
In the event that any one or more provisions of this Note shall be
held to be illegal, invalid or otherwise unenforceable, the same shall not
affect any other provision of this Note and the remaining provisions of this
Note shall remain in full force and effect.
This Note shall be governed by and construed in accordance with the
laws of the State of Illinois, without giving effect to the principles thereof
relating to conflicts of law.
IN WITNESS WHEREOF, Maker has caused this Note to be duly executed as
of the day and year first written above.
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JOHN P. MILLER
Annex A - 4