SELLING SHAREHOLDER AGREEMENT
This Selling Shareholder Agreement (this "Agreement") dated as of ________,
is between STB SYSTEMS, INC., a Texas corporation (the "Company"), and each of
William E. Ogle, William D. Balthaser, Jr. and Mark S. Sims (collectively, the
"Selling Shareholders").
WHEREAS, the Company expects to undertake a public offering (the
"Offering") of certain shares of its Common Stock, of which approximately
2,775,000 shares will comprise the portion to be offered by the Company and
approximately 225,000 shares will comprise the portion to be offered by the
Selling Shareholders (it being understood that the Company and the Selling
Shareholders will each further grant an option to sell approximately 225,000
and 225,000 additional shares, respectively, to cover the underwriters'
overallotment option);
WHEREAS, pursuant to the proposed terms of the Underwriting Agreement (the
"Underwriting Agreement") by and among the Company, the underwriters
participating in the Offering (the "Underwriters") and the Selling
Shareholders, the Underwriters are requiring that the Selling Shareholders
indemnify them against certain losses, claims, damages or liabilities arising
out of or based upon the contents of the Registration Statement relating to
the Offering or certain representations of the Selling Shareholders included
in the Underwriting Agreement;
WHEREAS, the Selling Shareholders have indicated to the Company that a
precondition to their participation in the Offering is the Company's
indemnification of the Selling Shareholders for any losses, claims, damages
or liabilities arising out of the Offering, including the indemnification
and contribution obligations owed to the Underwriters under the Underwriting
Agreement;
WHEREAS, the Board of Directors has given extensive consideration to the
contents of this Agreement and has determined that it is in the best
interests of the Company and its shareholders as a whole that the Company
indemnify the Selling Shareholders as requested, because the Board of
Directors believes that (i) the sale of shares by each of the Selling
Shareholders through a registered public offering will provide for a more
orderly sale of such stock to the public than would occur if such
shareholders were to sell such shares under Rule 144 (including consideration
that the market price for the Company's Common Stock is more likely to be
adversely affected by sales of stock under Rule 144 than through a registered
public offering), (ii) the sale of the shares by the Selling Shareholders
would increase the amount of Common Stock publicly held by persons not
affiliated with the Company, (iii) the Underwriters will be able to place the
shares to be sold by the Selling Shareholders with purchasers, such as
institutional investors, that the Company desires, (iv) the Selling
Shareholders would agree to execute a "lock-up agreement" with the
Underwriters, which would enhance the Company's ability to complete
negotiations with the Underwriters, as well as the Offering itself, and
facilitate a calm aftermarket in the Company's stock and (v) the inclusion of
the Selling Shareholders' shares in the Offering will improve the terms upon
which all shares will be sold in the Offering.
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
set forth in this Agreement, the parties agree as follows:
1. INDEMNITY. The Company agrees to indemnify each Selling Shareholder
for all losses, claims, damages or liabilities arising out of the offer and
sale of shares in the Offering (in such Selling Shareholder's capacity as
such), including any losses, claims, damages or liabilities arising out of the
Selling Shareholders' indemnification and contribution obligations owed to the
Underwriters under the Underwriting Agreement. In the event that a claim for
indemnification arises hereunder otherwise than as a result of a claim made
against a Selling Shareholder under the terms of the Underwriting Agreement,
such Selling Shareholder shall immediately notify the Company and the Company
shall at its expense be entitled to assume the defense of any action, suit or
proceeding against, or investigation or inquiry of, such Selling Shareholder;
provided, that in the event the Company assumes such defense, any legal or
other expenses subsequently incurred by such Selling Shareholder in connection
with the defense of the action, suit or proceeding shall be borne by such
Selling Shareholder and the Company shall not be responsible therefor. In the
event that a claim for indemnification arises hereunder as a result of a claim
made against a Selling Shareholder under the Underwriting Agreement, the
Company shall pay to the Selling Shareholder any amount for indemnification or
contribution in accordance with the terms of the Underwriting Agreement at
the same time as such Selling Shareholder is obligated to pay any such amount
to any Underwriter. The right to indemnification as provided by this
Agreement shall be enforceable by any Selling Shareholder in any court of
competent jurisdiction.
2. SUBROGATION. If the Company makes any payment under this Agreement,
the Company shall be subrogated to the extent of such payment to all of the
rights of recovery of the Selling Shareholders to whom payment is made, who
shall execute all papers required and shall do everything that may be
necessary to secure such rights.
3. SEVERABILITY. Each of the provisions of this Agreement is a separate
and distinct agreement and independent of the others, so that if any such
provision shall be held to be invalid or unenforceable for any reason such
invalidity or unenforceability shall not affect the validity or
enforceability of the other provisions hereof.
4. NOTICE. Any notice, consent or other communication to be given under
this Agreement by any party to any other party shall be in writing and shall
be (a) personally delivered, (b) mailed by registered or certified mail,
postage prepaid with return receipt requested, (c) delivered by overnight
express delivery service or same-day local courier service or (d) delivered
by telex or facsimile transmission to the address set forth beneath the
signature of the parties below or at such other address as may be designated
by the parties from time to time in accordance with this Section. Notices
delivered personally, by overnight express delivery service or by local
courier service shall be deemed given as of actual receipt. Mailed notices
shall be deemed given three business days after mailing. Notices delivered by
telex or facsimile transmission shall be deemed given upon receipt by the
sender of the answerback (in the case of a telex) or transmission
confirmation (in the case of a facsimile transmission).
5. GOVERNING LAW. This Agreement shall be interpreted and enforced in
accordance with the laws of the State of Texas.
6. BINDING EFFECT; SUCCESSORS. This Agreement shall be binding upon
each Selling Shareholder and upon the Company, its successors and assigns and
shall inure to the benefit of each Selling Shareholder, its heirs, executors,
administrators, personal representatives and assigns and to the benefit of
the Company, its successors and assigns.
7. AMENDMENT. No amendment, modification, termination or cancellation
of this Agreement shall be effective unless in writing signed by both parties
hereto.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the date first above written.
STB SYSTEMS, INC.
By:
--------------------------------
Randall D. Eisenbach, Executive
Vice President and Chief Operating
Officer
1651 North Glenville Drive
Richardson, Texas 75081
Facsimile: (972) 437-9631
------------------------------------
William E. Ogle
c/o STB Systems, Inc.
1651 North Glenville Drive
Richardson, Texas 75081
Facsimile: (972) 437-9631
------------------------------------
William D. Balthaser, Jr.
c/o STB Systems, Inc.
1651 North Glenville Drive
Richardson, Texas 75081
Facsimile: (972) 437-9631
------------------------------------
Mark S. Sims
c/o STB Systems, Inc.
1651 North Glenville Drive
Richardson, Texas 75081
Facsimile: (972) 437-9631
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