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EXHIBIT 10.12
RIGHT OF FIRST REFUSAL AND PUT AGREEMENT
THIS RIGHT OF FIRST REFUSAL AND PUT AGREEMENT (the "Agreement"), made
on February 3, 1998, between CROWN GROUP, INC., a Texas corporation ("Crown"),
and VAN P. FINGER (the "Shareholder"), an individual residing in Baldwin
County, Alabama;
W I T N E S S E T H:
WHEREAS, the Shareholder is the owner of twenty (20%) percent of the
issued and outstanding shares of Common Stock, $1.00 par value per share, (the
"Stock") of PRECISION IBC, INCORPORATED, an Alabama corporation (the
"Company"); and
WHEREAS, Crown and the Shareholder desire to promote their mutual
interest and interest of the Company by imposing certain rights, restrictions
and obligations on themselves and the shares of Stock owned by the Shareholder;
NOW, THEREFORE, in consideration of the promises contained herein and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, it is hereby agreed as follows:
1. Definitions. The term "Stock" shall mean all shares of Common
Stock, $1.00 par value per share, of the Company, together with all shares of
capital stock of the Company of any class which may hereafter be issued.
Moreover, all references herein to Stock owned by the Shareholder include the
community interest, if any, of the spouse of the Shareholder in such Stock.
2. Right of Refusal. If the Shareholder desires to sell any or
all of his Stock and has received a bona fide offer for same, he shall first
give Crown written notice of the terms of such offer. The purchase price for
the Stock subject to such offer shall be expressed only in terms of cash and
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credit terms. For a period of thirty (30) days after receipt of said notice,
Crown shall have an option to purchase such Stock on the same terms and
conditions as set out in such written notice.
3. Non-Exercise. If, at the end of the option period, the
Shareholder has not received notice of an election by Crown to buy the Stock
offered by him, he may, within a period of thirty (30) days after the end of
said option period, sell such Stock to the buyer named in the Shareholder's
notice at the same price and upon the same terms set out in such written
notice, but if such Stock is not sold by the end of such period, the Stock
shall again be subject to the terms and provisions of this Agreement.
4. Gift or Pledge; Estate Planning. The Shareholder shall not
make a gift or pledge of his Stock without first making arrangements
satisfactory to Crown that the provisions hereof shall continue to apply to
such Stock. With the written consent of Crown, which consent will not be
unreasonably withheld, the Shareholder shall be entitled to transfer his shares
of Stock to any trust, estate or other estate planning entity created by the
Shareholder in connection with estate planning and the ownership of such shares
upon the death of the Shareholder shall be transferred in accordance with the
instrument creating such trust, estate or other estate planning entity. Upon
such transfer, such entity shall be deemed a "Shareholder" for all purposes
hereunder and shall be entitled to all rights, and shall have all obligations
of the Shareholder under this Agreement. Such entity shall become a party to
this Agreement by execution of an agreement reasonably satisfactory to the
legal representative of such entity and Crown.
5. Put Rights.
(a) Shareholder Put Right. Commencing June 1, 2000
through June 30, 2000, and June 1, 2001 through June 30, 2001 (the
"Put Exercise Periods"), the Shareholder shall have the right to
require Crown or the Company to purchase all (but
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not less than all) of the Stock held by the Shareholder (the "Put
Right") at a price equal to the fair market value of such Stock, as
determined in accordance with subparagraph (c) below (the "Fair Market
Value").
(b) Exercise of Put Right. In order to exercise the
rights granted to him pursuant to this Paragraph 5, the Shareholder
shall deliver to Crown and the Company a written notice (the "Put
Notice") during either of the respective Put Exercise Periods, stating
that he elects to require Crown or the Company to purchase all of the
Stock owned by the Shareholder (the "Repurchased Securities").
(c) Determination of Fair Market Value. The Fair Market
Value of the Repurchased Securities shall be the lesser of the EBITDA
Value (as hereinafter defined) or the Appraised Value (as hereinafter
defined).
(i) The "EBITDA Value" shall mean the value of the
Repurchased Securities, determined by (A) multiplying by five
(5) the Company's earnings before interest, income taxes,
depreciation and amortization, plus or minus any extraordinary
charges or credits ("EBITDA") for the fiscal year ended April
30, 2000 with respect to the year 2000 Put Exercise Period,
and for the fiscal year ended April 30, 2001 for the year 2001
Put Exercise Period, (B) subtracting from the product thereof
all Company Indebtedness (as hereinafter defined), and (C)
multiplying the remainder by a fraction, the numerator of
which is the number of shares of Stock owned by the
Shareholder, and the denominator of which is the total number
of shares of Stock issued
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and outstanding. Expressed as an equation, the EBITDA Value
is to be determined as follows:
EBITDA Value = A/B [(5 x C) - D]
Where:
A = Shares of Stock owned by Shareholder
B = Total shares of Stock outstanding
C = EBITDA
D = Company Indebtedness
The determination of the EBITDA Value shall be made in accordance with generally
accepted accounting principles consistently applied ("GAAP"), and the
resolution of all questions with respect to accounting procedures or valuation
in connection therewith, shall be made by the independent public accountants
employed by the Company and the determination of such independent public
accountants shall be conclusive and binding hereunder upon all parties
concerned. The determination of the EBITDA Value shall be made within sixty
(60) days of the date of the Put Notice. The term "Company Indebtedness" shall
mean the principal amount and all interest accrued through the applicable
fiscal year end owed by the Company to all lenders, exclusive of trade debt in
the ordinary course of business. In determining the EBITDA Value, there shall
be excluded from the Company's expenses management fees or other fees charged
by Crown to the Company, but there shall be included all payments by the Company
to Crown to reimburse Crown for costs actually incurred by, or properly
chargeable to, the Company.
(ii) The "Appraised Value" shall mean the value of
the Repurchased Securities, determined as follows:
(1) Within ten (10) days after delivery of the
Put Right Notice, the Shareholder and Crown shall each engage
an independent appraiser (an "Initial Appraiser") for the
purpose of determining the
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Appraised Value of the Repurchased Securities (which
determination shall be made within thirty [30] days after the
selection of the Initial Appraisers). Upon the determination
by each Initial Appraiser of the Appraised Value of the
Repurchased Securities, such Initial Appraiser shall prepare
and deliver to Crown, the Company and the Shareholder and the
other Initial Appraiser a written report (an "Initial
Appraisal Report") stating its determination of the Appraised
Value of the Repurchased Securities and setting forth in
reasonable detail the method by which the same was determined.
(2) After delivery of an Initial Appraisal Report
by each Initial Appraiser, the Initial Appraisers shall
attempt in good faith to agree upon a determination of the
Appraised Value of the Repurchased Securities. If the
independent appraisers agree upon a determination of the
Appraised Value of the Repurchased Securities within ten (10)
days after delivery of an Initial Appraisal Report by both
Initial Appraisers, such determination shall be final,
conclusive and binding on the parties.
(3) If the Initial Appraisers do not agree upon a
determination of the Appraised Value of the Repurchased Shares
within the aforesaid period, the Initial Appraisers shall
promptly select a third independent appraiser (the "Final
Appraiser") to determine the Appraised Value of the
Repurchased Securities. Upon the determination of the
Appraised Value of the Repurchased Securities
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by the Final Appraiser (which determination shall be made
within thirty [30] days after the election of the Final
Appraiser), the Final Appraiser shall prepare and deliver to
Crown, the Company, the Shareholder and the Initial
Appraisers, a written report (the "Final Appraisal Report")
stating its determination of the Appraised Value of the
Repurchased Securities and setting forth in reasonable detail
the method by which the same was determined. Upon delivery of
the Final Appraisal Report, the Appraised Value of the
Repurchased Securities for purposes of this Paragraph 5 shall
be conclusively deemed to be the average of (i) the Appraised
Value of the Repurchased Securities stated in the Final
Appraisal Report and (ii) the Appraised Value of the
Repurchased Securities stated in the Initial Appraisal Report
closest in amount to the Appraised Value stated in the Final
Appraisal Report.
(4) In determining the Appraised Value, there
shall be no discount applied to the Shareholder's Stock based
upon the minority status of such shares of Stock or the lack
of marketability with respect to such shares.
(5) The fees and expenses of the Initial
Appraisers and the Final Appraiser shall be borne equally by
the Shareholder and Crown.
(6) Crown and the Shareholder shall cause the
Company to cooperate in good faith with any appraisal
procedure undertaken pursuant to this Paragraph 5, such
cooperation to include, without
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limitation, providing the independent appraisers with such
reasonable information as may be requested by such Initial
Appraisers and, if applicable, the Final Appraiser.
(d) Put Right Closing. The closing of the sale and
purchase of the Repurchased Securities pursuant to this Paragraph 5
shall take place on the tenth (10th) business day after the later of
the determination of the EBITDA Value as provided for in subparagraph
5(c)(i) hereof and the determination of the Appraised Value as
provided in subparagraph 5(c)(ii) above, at the principal office of
the Company or at such other location as may be mutually agreed upon
by the Shareholder and Crown. At such closing, the Shareholder shall
deliver the certificates or other instruments evidencing the
Repurchased Shares to Crown or the Company, duly endorsed in blank or
accompanied by stock powers duly executed in blank or otherwise in a
form acceptable for transfer on the books of the Company. Upon
receipt of such certificates or other instruments, Crown or the
Company shall pay to the Shareholder the Fair Market Value of the
Repurchased Shares in immediately available funds. Following payment
of the Fair Market Value of the Repurchased Securities as set forth in
this subparagraph 5(d), all right, title and interest in and to the
Repurchased Securities shall pass to Crown or the Company, as the case
may be.
(e) Non-Assignability and Termination of Put Right. The
Shareholder's Put Right is not assignable by the Shareholder, and the
Put Right shall terminate if it is not exercised during either of the
two Put Exercise Periods. Further, the Put Right shall terminate upon
the completion of an Initial Public Offering (as hereinafter defined)
by the Company. The term "Initial Public Offering" shall mean the
first
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public offering of equity securities of the Company effected by the
Company pursuant to a registration statement that has been declared
effective under the Securities Act of 1933, as amended (the "Act")
from time to time and any successor statute thereto.
(f) Additional Put Rights. In addition to the
Shareholder's Put Right set forth in subparagraph 5(a) hereof, the
Shareholder shall have Put Rights in the event that (i) the
Shareholder's employment with the Company is terminated without cause
pursuant to Paragraph 11 of the Employment Agreement dated of even
date herewith between the Company and the Shareholder, or (ii) the
Company files a registration statement under the Act for an Initial
Public Offering. The Put Exercise Period in the event of the
termination of employment of the Shareholder as set forth above shall
commence on the effective date of termination of employment and expire
thirty (30) days thereafter and, in the event of the filing of a
registration statement for an Initial Public Offering, the Put
Exercise Period shall commence on the date of filing of such
registration statement and terminate on the date of closing of the
Initial Public Offering. The EBITDA Value shall be determined for the
twelve (12) month period ending immediately prior to the first day of
the month in which the Shareholder gives a Put Exercise Notice
pursuant to this subparagraph. Further, in the event the Shareholder
exercises his Put Right based upon the filing of a registration
statement for an Initial Public Offering, the Fair Market Value shall
be the EBITDA Value. If the Shareholder does not give a Put Exercise
Notice with respect to an Initial Public Offering within the
applicable Put Exercise Period (as set forth above), the Shareholder's
Put Right with respect thereto shall terminate as set forth in
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subparagraph 5(e) above. The closing of a Put Right exercised
pursuant to this subparagraph shall take place in accordance with
subparagraph 5(d) hereof.
6. Notices. All notices, demands and requests which may be given
or which are required to be given by either party to the other, and any
exercise of a right of termination provided by this Agreement, shall be in
writing and shall be deemed effective when either: (1) personally delivered to
the intended recipient; (2) sent by certified or registered mail, return
receipt requested, addressed to the intended recipient at the address specified
below; (3) delivered in person to the address set forth below for the party to
which the notice was given; (4) deposited into the custody of a nationally
recognized overnight delivery service such as Federal Express Corporation,
Emery or Purolator, addressed to such party at the address specified below; or
(5) sent by facsimile, telegram or telex, provided that receipt for such
facsimile, telegram or telex is verified by the sender and followed by a notice
sent in accordance with one of the other provisions set forth above. Notices
shall be effective on the date of delivery or receipt or, if delivery is not
accepted, on the earlier of the date that delivery is refused or three (3) days
after the date the notice is mailed. For purposes of this Paragraph, the
addresses of the parties for all notices are as follows (unless changes by
similar notice in writing are given by the particular person whose address is
to be changed):
(a) if to the Shareholder, to Van P. Finger, C/O Precision
IBC, Incorporated, PO Box 1171, Fairhope, Alabama 36533-1171; Fax
334-990-6787;
With a copy to Sam W. Irby, Irby & Heard, P.C., 317 Magnolia
Avenue, PO Box 1031, Fairhope, Alabama 36533; Fax (334) 928-7993;
(b) or if to Crown, to Crown Croup, Inc., 4040 North
MacArthur Boulevard, Suite 100, Irving, Texas 75038; Attention: Edward
R. McMurphy, President; Fax (972) 719-4466;
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With a copy to T. J. Falgout, III, Executive Vice President
and General Counsel, Crown Croup, Inc., 4040 North MacArthur
Boulevard, Suite 100, Irving, Texas 75038; Fax (972) 719-4466.
Either party hereto may designate a different address by written notice given
to the other parties.
7. Endorsement of Stock Certificates. All certificates of Stock
of the Company now owned or that may hereafter be acquired by the Shareholder
shall be endorsed on the back thereof as follows:
"The shares of capital stock of the within named Company represented
by this Certificate are subject to the restrictions and purchase
options and obligations contained in that certain Right of First
Refusal and Put Agreement between the owner of this Certificate and
Crown Group, Inc., and the Company will furnish the record holder of a
Certificate without charge, upon written request to the Company at its
principal place of business or registered office, a copy of such
Agreement."
Such certificate shall be endorsed on the front thereof as follows:
"See restrictions on transfer on reverse side hereof."
8. Governing Law. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF ALABAMA.
9. Benefit. Subject to the restrictions on assignment set forth
in Paragraph 5(e) hereof, this Agreement shall be binding upon, and inure to
the benefit of, Crown and the Shareholder and their respective heirs,
executors, administrators, successors and assigns.
10. Amendment. This Agreement may be amended from time to time by
an instrument in writing signed by the parties to this Agreement at the time of
such amendment, such instrument being designated on its face as an "Amendment"
to this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
or as of the date and year first above written.
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CROWN:
CROWN GROUP, INC.
By:
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Edward R. McMurphy, President
SHAREHOLDER:
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VAN P. FINGER
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