Document:

exh_101.htm

EXHIBIT 10.1

 

2014 PERFORMANCE UNIT AWARD AGREEMENT - EXECUTIVE OFFICERS

 

To:           [Name]:

 

You have been selected as a recipient of performance units (“Performance Units”) under the Global Geophysical Services, Inc. 2006 Incentive Compensation Plan, as amended and restated effective as of February 5, 2010, and as thereafter amended (the “Plan”).  This Award Agreement (“Agreement”) and the Plan together govern your rights and set forth all of the conditions and limitations affecting such rights.  Terms used in this Agreement that are defined in the Plan will have the meanings ascribed to them in the Plan.  If there is any inconsistency between the terms of this Agreement and the terms of the Plan, the Plan’s terms will supersede and replace the conflicting terms of this Agreement.

 

	
1.  

	
Terms.  Pursuant to the terms and conditions of the Plan and this Agreement, you have been granted Performance Units as outlined below:

 

	
  

	
Grant Date:

	
___________, 2014

 

	
  

	
Performance Period:

	
January 1, 2014 through December 31, 2016

 

	
  

	
Vesting Date:

	
December 31, 2016, subject to Section 2 and Section 7

 

	
  

	
Settlement Date:

	
March 15, 2017, subject to Section 2 and Section 7

 

	
  

	
Performance Units At Target:

	___________	 

 

	
  

	
Performance Goals:

	
Schedule I to this Agreement describes the manner in which the total number of Performance Units that vest hereunder will be calculated, with the total number of vested Performance Units based on the metrics set forth on Schedule I (the “Performance Goals”).

 

	
2.  

	
Vesting.  After the close of the Performance Period, but before the Settlement Date, the Committee shall determine and certify the extent to which the Performance Goals have been achieved in accordance with Schedule I.  The Performance Units will vest and become non-forfeitable on the Vesting Date in an amount determined based on the results of the Performance Goals, provided you have been continuously employed by the Company or its Subsidiaries at all times from the Grant Date until the Vesting Date.  For the avoidance of doubt, if the Committee determines that the level of achievement of the Performance Goals does not meet the minimum threshold requirements specified in Schedule I, then all Performance Units shall be forfeited.  Except as expressly set forth below, if you are not employed on the Vesting Date, you shall have no rights under this Agreement and all Performance Units shall be forfeited as of your termination date.

 

	
 

	
 
If your employment terminates due to Disability or death, then the date of such termination of employment shall be deemed the Vesting Date and you shall vest in the Performance Units At Target. The Performance Units shall be settled on the Settlement Date, which shall be no later than 10 business days after the date of your termination of employment due to death or Disability.

 

  

1

  

	
  

	
 
If your employment is terminated by the Company without Cause (as defined in the employment agreement between you and the Company (the “Employment Agreement”)) or you resign for Good Reason (as defined in the Employment Agreement), then the date of such termination of employment shall be deemed the Vesting Date and you shall vest in the Performance Units At Target, provided that you enter into the release agreement referenced in Section 6 of the Employment Agreement. The Performance Units shall be settled on the Settlement Date, which shall be no later than 60 days after the date of your termination of employment without Cause or your resignation for Good Reason.

 

	
  

	
 
 
If you terminate your employment due to Retirement, then you will not forfeit your Performance Units as a result of your Retirement, and on the Vesting Date set forth in Section 1 above you will vest in the number of Performance Units determined by multiplying (i) the number of Performance Units that would have vested as determined in accordance with the first paragraph of this Section 2 had your employment not terminated and (ii) a fraction, the numerator of which is the number of days that elapsed between January 1, 2014 and the date of your termination of employment due to Retirement and the denominator of which is 1095.

 

	
  

	
 
 
Notwithstanding the foregoing, regardless of the level of achievement of the Performance Goals, the Committee reserves the discretion to adjust the payout of the Performance Units by any amount it deems appropriate, including reducing the payout of the Performance Units to zero or increasing the payout of the Performance Units to two times the Performance Units at Target.

 

	
3.  

	
Book Entry Account.  The Company shall establish (or shall instruct its stock plan administrator to establish) a book entry account representing the Performance Units At Target in your name effective as of the Grant Date, provided that the Company shall retain control of the Performance Units in such account until the Performance Units have become vested in accordance with this Agreement and shares of Common Stock have been issued, if any, in settlement of the Performance Units.

 

	
4.  

	
Distribution of Shares.  You shall receive one share of Common Stock in satisfaction of each vested Performance Unit credited to your account, which shall be registered in your name and transferable by you, on the Settlement Date.

 

	
5.  

	
Stockholder Rights; Dividend Equivalents.  The Performance Units do not confer on you any rights of a stockholder of the Company unless and until shares of Common Stock are in fact issued to you in connection with the vested Performance Units.  No dividend equivalents shall be paid with respect to unvested Performance Units.

 

	
6.  

	
Transferability.  No rights granted under this Agreement can be assigned or transferred, whether voluntarily or involuntarily, by operation of law or otherwise, except by will or the laws of descent and distribution.  In the event of any transfer or assignment of rights granted under this Agreement in accordance with this Section 6, the person or persons, if any, to whom such rights are transferred by will or by the laws of descent and distribution shall be treated after your death the same as you under this Agreement.  Any attempted transfer or assignment of rights under this Agreement prohibited under this Section 6 shall be null and void.

 

	
7.  

	
Change in Control.  In the event of a Change in Control prior to end of the Performance Period, the Performance Period shall be deemed to end on the date of the Change in Control and you will vest as of such date in the greater of (I) the Performance Units at Target or (II) the number of Performance Units that would have vested based on performance achieved through the end of such adjusted Performance Period, calculated in accordance with Schedule I and certified by the Committee.

 

  

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The vested Performance Units shall be paid in Common Stock or cash (based on the value of the Common Stock immediately prior to the Change in Control multiplied by the number of vested Performance Units), in the discretion of the Committee on the Settlement Date, which shall be no later than 10 business days after the date of the Change in Control.

 

	
8.  

	
Adjustments.  As provided in Section 6.6 of the Plan, certain adjustments may be made to the Common Stock related to the Performance Units upon the occurrence of events or circumstances described in Section 6.6 of the Plan.  Without limiting the generality of the foregoing, and except as otherwise provided in the Plan, in the event of any merger, consolidation, reorganization, recapitalization, reclassification or other capital or corporate structure change of the Company, for all purposes references herein to Common Stock or to Performance Units shall mean and include all securities or other property (other than cash) that holders of Common Stock are entitled to receive in respect of Common Stock by reason of each such successive event, which securities or other property (other than cash) shall be treated in the same manner and shall be subject to the same restrictions as the underlying Performance Units.

 

	
9.  

	
Withholding; Code Section 409A.  The Company has the right to deduct applicable taxes from any payment under this Agreement and withhold, at the Settlement Date or such other date as the Company may determine is appropriate, an appropriate number of shares of Common Stock for payment of required withholding taxes or to take such other action as may be necessary in the opinion of the Company to satisfy all obligations for withholding of such taxes. The Fair Market Value of the shares of Common Stock withheld for payment of required withholding taxes shall equal no more than the required minimum withholding taxes.  The Performance Units granted under this Agreement are intended to comply with or be exempt from Code Section 409A, and ambiguous provisions of this Agreement, if any, shall be construed and interpreted in a manner consistent with such intent.

 

	
10.  

	
Notice.  Any written notice required or permitted by this Agreement shall be mailed, certified mail (return receipt requested) or hand-delivered.  Notice to the Company shall be addressed to the Company’s General Counsel at 13927 South Gessner Road, Missouri City, Texas 77489.  Notice to you shall be addressed to you at your most recent home address on record with the Company.  Notices are effective upon receipt.

 

	
11.  

	
Requirements of Law.  The granting of Performance Units and the issuance of shares of Common Stock under the Plan will be subject to all applicable laws, rules, and regulations, and to such approvals by any governmental agencies or national securities exchanges as may be required.

 

	
12.  

	
Miscellaneous.

 

	
  

	
(i)

	
The granting of this Award shall not give you any rights to similar grants in future years or any right to be retained in the employ or service of the Company or its Subsidiaries or interfere in any way with the right of the Company or any such Subsidiary to terminate your employment or services at any time, or your right to terminate your employment or services at any time.

 

	
  

	
(ii)

	
Notwithstanding anything to the contrary herein, if the Board or an appropriate committee thereof determines that any material misstatement of financial results or a Performance Goal has occurred as a result of your conduct, then the Board or appropriate committee may in its sole discretion require reimbursement of any compensation received by you as a result of any settlement of Performance Units that occurred during the one-year period prior to the date the Board first discovered the material misstatement.

 

  

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(iii)

	
If any term, provision, covenant or restriction contained in this Agreement is held by a court or a federal regulatory agency of competent jurisdiction to be invalid, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions contained in this Agreement shall remain in full force and effect, and shall in no way be affected, impaired or invalidated.

 

	
  

	
(iv)

	
THIS AWARD SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS WITHOUT GIVING EFFECT TO THE PRINCIPLES OF CONFLICT OF LAWS.

 

	
  

	
(v)

	
This Award shall be binding upon and inure to the benefit of the Company and its successors and assigns.

 

	
  

	
(vi)

	
This Award, including the relevant provisions of the Plan, constitutes the entire agreement between the parties with respect to the subject matter hereof and supersedes all prior agreements and understandings, both written and oral, with respect to the subject hereof.  This Award may not be amended, except by an instrument in writing signed by the Company and you.

 

	
  

	
(vii)

	
This Award may be executed in one or more counterparts, each of which shall be an original, but all of which together shall constitute one and the same instrument.

 

	 	GLOBAL GEOPHYSICAL SERVICES, INC.
	 	
 

 

	 	 
	 	

Richard. C. White

President and Chief Executive Officer

	 	 
	 	GRANTEE
	 	
 

 

	 	 
	 	[NAME]

 

 

 

  

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SCHEDULE I

 

GLOBAL GEOPHYSICAL SERVICES, INC.

2006 INCENTIVE COMPENSATION PLAN

 

2014 PERFORMANCE UNIT AWARD AGREEMENT

 

	
1.  

	
Calculation of Vested Performance Units.  The number of Performance Units that shall vest as of the Vesting Date shall be equal to the product of (i) the Performance Units At Target and (ii) the Adjustment Factor (with any fractional shares rounded up to the next whole share).  For this purpose, the Adjustment Factor means the sum of (i) the Total Shareholder Return Adjustment Factor, and (ii) the HSE Adjustment Factor.

 

	
2.  

	
Calculation of Total Shareholder Return Adjustment Factor.  The Total Shareholder Return of the Company and of the Comparison Companies shall be calculated and certified by the Committee.  The ranking of the Company’s Total Shareholder Return as compared to the Total Shareholder Return of each Comparison Company shall determine the Total Shareholder Return Multiplier using the chart below.  The Total Shareholder Return Adjustment Factor shall be equal to the product of (i) the Total Shareholder Return Weighting and (ii) the Total Shareholder Return Multiplier.

 

	
Relative Performance Ranking

	
Total Shareholder Return Multiplier

	
1st

	
2.00

	
2nd

	
1.67

	
3rd

	
1.33

	
4th

	
1.00

	
5th

	
0.67

	
6th

	
0.33

	
7th

	
0.00

 

 

 

	
3.  

	
Calculation of HSE Adjustment Factor.  The HSE of the Company shall be calculated and certified by the Committee.  The level of the Company’s HSE shall determine the HSE Multiplier using the chart below.  The HSE Multiplier for performance rankings between points on this chart shall be determined by linear interpolation between the values listed.  In no event shall the HSE Multiplier exceed 2.00.  If the HSE is greater than 1.7, the HSE Multiplier shall be zero.  The HSE Adjustment Factor shall be equal to the product of (i) the HSE Weighting and (ii) the HSE Multiplier.

 

	
HSE

	
HSE Multiplier

	
1.40

	
2.00

	
1.70

	
0.00

 

 

 

	
4.  

	
Definitions.

 

	
  

	
(i)

	
“Beginning Price” means the average closing price of a share of common stock for the 30 consecutive trading day period including and prior to January 1, 2014.

 

  

Schedule I

  

	
  

	
(ii)

	
“Comparison Companies” means Compagnie Generale de Geophysique – Veritas, Dawson Geophysical Co., Geospace Technologies Corp., ION Geophysical Corp., Mitcham Industries Inc. and TGC Industries Inc; provided, however, that the Committee may modify the list of Comparison Companies if a Comparison Company is no longer, in the Committee’s discretion, a reasonable comparison to the Company (e.g., due to merger, bankruptcy or other change of circumstance of a Comparison Company).

 

	
  

	
(iii)

	
“Dividends” means the sum of all ordinary and extraordinary dividends paid during the Performance Period with respect to the applicable share of common stock.

 

	
  

	
(iv)

	
“Ending Price” means the average closing price of a share of common stock for the 30 consecutive trading day period including and prior to December 31, 2016.

 

	
  

	
(v)

	
“HSE” means the Total Recordable Incident Rate (TRIR) which is the number of recordable injuries in a calendar year multiplied by 200,000 (100 employees working 2,000 hours per year) divided by the total man-hours actually worked during such year.

 

	
  

	
(vi)

	
“HSE Factor” means the adjustment factor calculated in accordance with Section 3 of this Schedule I.

 

	
  

	
(vii)

	
“HSE Multiplier” means the multiplier determined in accordance with Section 3 of this Schedule I.

 

	
  

	
(viii)

	
“HSE Weighting” means 15%.

 

	
  

	
(ix)

	
“Total Shareholder Return” means a fraction, the numerator of which is the Ending Price plus Dividends minus the Beginning Price, and the denominator of which is the Beginning Price.

 

	
  

	
(x)

	
“Total Shareholder Return Adjustment Factor” means the adjustment factor calculated in accordance with Section 2 of this Schedule I.

 

	
  

	
(xi)

	
“Total Shareholder Return Multiplier” means the multiplier determined in accordance with Section 2 of this Schedule I.

 

	
  

	
(xii)

	
“Total Shareholder Return Weighting” means 85%.

 

 

 

Schedule IExhibit 10.1

 

EXECUTION COPY

 

 

STOCKHOLDERS AGREEMENT

 

BY AND AMONG

 

STORE CAPITAL CORPORATION

 

AND

 

THE STOCKHOLDERS PARTY HERETO

 

DATED AS OF NOVEMBER 21, 2014

 

 

 

TABLE OF CONTENTS

 

	
ARTICLE I
    
	
 
    
	
DEFINITIONS
    
	
 
    
	
Section 1.1
    	
Definitions
    	
1
    
	
Section 1.2
    	
Other Interpretive Provisions
    	
4
    
	
 
    	
 
    	
 
    
	
ARTICLE   II
    
	
 
    
	
REPRESENTATIONS   AND WARRANTIES
    
	
 
    
	
Section 2.1
    	
Existence; Authority; Enforceability
    	
5
    
	
Section 2.2
    	
Absence of Conflicts
    	
5
    
	
Section 2.3
    	
Consents
    	
5
    
	
 
    	
 
    	
 
    
	
ARTICLE   III
    
	
 
    
	
GOVERNANCE
    
	
 
    
	
Section 3.1
    	
The Board
    	
5
    
	
Section 3.2
    	
Voting Agreement
    	
8
    
	
 
    	
 
    	
 
    
	
ARTICLE   IV
    
	
 
    
	
GENERAL   PROVISIONS
    
	
 
    
	
Section 4.1
    	
Company Charter and Company Bylaws
    	
9
    
	
Section 4.2
    	
Freedom to Pursue Opportunities
    	
9
    
	
Section 4.3
    	
Assignment; Benefit
    	
10
    
	
Section 4.4
    	
Termination
    	
10
    
	
Section 4.5
    	
Severability
    	
10
    
	
Section 4.6
    	
Entire Agreement; Amendment
    	
10
    
	
Section 4.7
    	
Counterparts
    	
11
    
	
Section 4.8
    	
Notices
    	
11
    
	
Section 4.9
    	
Governing Law
    	
12
    
	
Section 4.10
    	
Jurisdiction
    	
13
    
	
Section 4.11
    	
Waiver of Jury Trial
    	
13
    
	
Section 4.12
    	
Specific Performance
    	
13
    
	
Section 4.13
    	
Subsequent Acquisition of Shares
    	
13
    

 

 

This STOCKHOLDERS AGREEMENT (as it may be amended from time to time in accordance with the terms hereof, the “Agreement”), dated as of November 21, 2014, is made by and among:

 

i.                                          STORE Capital Corporation, a Maryland corporation (the “Company”);

 

ii.                                       STORE Holding Company, LLC, a Delaware limited liability company (“STORE Holding”); and

 

iii.                                    such other Persons who from time to time become party hereto by executing a counterpart signature page hereof and are designated by the Board (as defined below) as “Other Stockholders” (the “Other Stockholders” and, together with STORE Holding, the “Stockholders”).

 

RECITALS

 

WHEREAS, on or about the date hereof, the Company has priced an initial public offering (the “IPO”) of shares of its common stock, par value $0.01 per share (“Common Stock”), pursuant to an Underwriting Agreement, dated as of November 17, 2014 (the “Underwriting Agreement”); and

 

WHEREAS, the parties hereto desire to provide for certain governance rights and other matters, and to set forth the respective rights and obligations of the Stockholders following the IPO.

 

NOW, THEREFORE, in consideration of the foregoing and the mutual promises, covenants and agreements of the parties hereto, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows:

 

ARTICLE I

 

DEFINITIONS

 

Section 1.1                                    Definitions.  As used in this Agreement, the following terms shall have the following meanings:

 

“Affiliate” means, with respect to any specified Person, (a) any Person that directly or indirectly through one or more intermediaries controls, or is controlled by, or is under common control with, such specified Person or (b) in the event that the specified Person is a natural Person, a Member of the Immediate Family of such Person; provided that the Company and its Subsidiaries shall not be deemed to be Affiliates of STORE Holding or the Investor.  As used in this definition, the term “control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through ownership of voting securities, by contract or otherwise.

 

“Agreement” has the meaning set forth in the Preamble.

 

 

“Board” means the board of directors of the Company.

 

“Business Day” means any day that is not a Saturday, a Sunday or other day on which banks are required or authorized by law to be closed in the City of New York or Phoenix, Arizona.

 

“Chief Executive Officer” means the chief executive officer of the Company then in office.

 

“Closing” means the closing of the IPO.

 

“Common Stock” has the meaning set forth in the Recitals.

 

“Company” has the meaning set forth in the Preamble.

 

“Company Bylaws” means the bylaws of the Company in effect on the date hereof, as may be amended from time to time.

 

“Company Charter” means the charter of the Company in effect on the date hereof, as may be amended or supplemented from time to time.

 

“Company Shares” means (a) all shares of Common Stock that are not then subject to vesting (including shares that were at one time subject to vesting to the extent they have vested), (b) all shares of Common Stock issuable upon exercise, conversion or exchange of any option, warrant or convertible security that are not then subject to vesting (including shares that were at one time subject to vesting to the extent they have vested) and (c) all shares of Common Stock directly or indirectly issued or issuable with respect to the securities referred to in clauses (a) or (b) above by way of any unit or stock dividend or unit or stock split, or in connection with a combination of units or shares, recapitalization, merger, consolidation or other reorganization.

 

“Exchange Act” means the Securities Exchange Act of 1934, as amended, and any successor thereto, and any rules and regulations promulgated thereunder, all as the same shall be in effect from time to time.

 

“Fund Indemnitors” has the meaning set forth in Section 3.1(h).

 

“Indemnitee” has the meaning set forth in Section 3.1(h).

 

“Investor” means OCM STR Holdings, L.P., OCM STR Holdings II, L.P., and OCM STR Co-Invest 1, L.P., each a Delaware limited partnership.

 

“Investor Designee” has the meaning set forth in Section 4.2.

 

“IPO” has the meaning set forth in the Recitals.

 

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“Majority in Interest” means, with respect to the Stockholders or any subset thereof, Stockholders who beneficially own a majority of Company Shares held by the Stockholders or such subset of Stockholders, as applicable.

 

“Member of the Immediate Family” means, with respect to an individual, (a) each parent, spouse (but not including a former spouse or a spouse from whom such individual is legally separated) or child (including those adopted) of such individual and (b) each trustee, solely in his or her capacity as trustee and so long as such trustee is reasonably satisfactory to the Company, for a trust naming only one or more of the Persons listed in sub-clause (a) as beneficiaries.

 

“Necessary Action” means, with respect to a specified result, all actions necessary to cause such result, including (a) voting or providing a written or electronic consent or proxy with respect to the shares of Common Stock, (b) causing the adoption of stockholders’ resolutions and amendments to the organizational documents of the Company, (c) executing agreements and instruments, and (d) making, or causing to be made, with governmental, administrative or regulatory authorities, all filings, registrations or similar actions that are required to achieve such result.

 

“Other Stockholders” has the meaning set forth in the Preamble.

 

“Person” means any individual, partnership, limited liability company, corporation, trust, association, estate, unincorporated organization or government or any agency or political subdivision thereof.

 

“Principal Sponsor Designee” has the meaning set forth in Section 3.1(b).

 

“Principal Sponsor Minimum” means, with respect to STORE Holding, a number of shares of Common Stock owned by STORE Holding equal to at least 50% of the outstanding shares of Common Stock owned by STORE Holding as of the closing of all of the transactions contemplated by the Underwriting Agreement, as adjusted appropriately for stock splits, combinations and dividends and similar transactions.

 

“Representatives” means, with respect to any Person, any of such Person’s officers, directors, employees, agents, attorneys, accountants, actuaries, consultants or financial advisors or other Person associated with, or acting on behalf of, such Person.

 

“Requisite Investor Approval” means, for so long as STORE Holding holds at least the Principal Sponsor Minimum, the approval of a majority of the Board, including in each case at least one director designated by STORE Holding.  At such time as STORE Holding does not hold at least the Principal Sponsor Minimum, any action requiring “Requisite Investor Approval” shall be determined by the Company or the Board in accordance with applicable law, the Company Bylaws and the Company Charter.

 

“Stockholders” has the meaning set forth in the Preamble.

 

“STORE Holding” has the meaning set forth in the Preamble.

 

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“Underwriting Agreement” has the meaning set forth in the Recitals.

 

Section 1.2                                    Other Interpretive Provisions.

 

(a)                                 The meanings of defined terms are equally applicable to the singular and plural forms of the defined terms.

 

(b)                                 The words “hereof,” “herein,” “hereunder” and similar words refer to this Agreement as a whole and not to any particular provision of this Agreement; and any subsection and section references are to this Agreement unless otherwise specified.

 

(c)                                  The term “including” is not limiting and means “including without limitation.”

 

(d)                                 The captions and headings of this Agreement are for convenience of reference only and shall not affect the interpretation of this Agreement.

 

(e)                                  Whenever the context requires, any pronouns used herein shall include the corresponding masculine, feminine or neuter forms.

 

ARTICLE II

 

REPRESENTATIONS AND WARRANTIES

 

Each of the parties to this Agreement hereby represents and warrants to each other party to this Agreement that as of the date such party executes this Agreement:

 

Section 2.1                                    Existence; Authority; Enforceability.  Such party has the power and authority to enter into this Agreement and to carry out its obligations hereunder.  Such party is duly organized and validly existing under the laws of its jurisdiction of organization, and the execution of this Agreement, and the consummation of the transactions contemplated herein, have been authorized by all necessary action on the part of its board of directors (or equivalent) and stockholders (or other holders of equity interests), if required, and no other act or proceeding on its part is necessary to authorize the execution of this Agreement or the consummation of any of the transactions contemplated hereby.  This Agreement has been duly executed by it and constitutes its legal, valid and binding obligation, enforceable against it in accordance with its terms.

 

Section 2.2                                    Absence of Conflicts.  The execution and delivery by such party of this Agreement and the performance of its obligations hereunder does not and will not (a) conflict with, or result in the breach of any provision of the organizational documents of such party, (b) result in any violation, breach, conflict, default or an event of default (or an event which with notice, lapse of time, or both, would constitute a default or an event of default), or give rise to any right of acceleration or termination or any additional payment obligation, under the terms of any contract, agreement or permit to which such party is a party or by which such party’s assets or operations are bound or affected, or (c) violate any law applicable to such party.

 

Section 2.3                                    Consents.  Other than as expressly required herein or any consents which have already been obtained, no consent, waiver, approval, authorization, exemption, registration, 

 

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license or declaration is required to be made or obtained by such party in connection with (a) the execution, delivery or performance of this Agreement or (b) the consummation of any of the transactions contemplated herein.

 

ARTICLE III

 

GOVERNANCE

 

Section 3.1                                    The Board.

 

(a)                                 Composition of Initial Board.  Prior to Closing, the Company and the Stockholders shall take all Necessary Action to cause the Board to be comprised of nine (9) directors, (i) five (5) of whom shall be designated by STORE Holding, (ii) one (1) of whom shall be the Chief Executive Officer and (iii) three (3) of whom shall be directors who meet the independence criteria set forth in Rule 10A-3 under the Exchange Act.  The directors shall serve until the Company’s 2015 annual meeting of stockholders at which directors are elected and until their successors are duly elected and qualify.  For the avoidance of doubt, this Section 3.1(a) is applicable solely to the initial composition of the Board following the IPO.

 

(b)                                 STORE Holding Representation.  For so long as STORE Holding holds a number of shares of Common Stock representing at least the percentage of combined voting power of the Company’s outstanding shares of Common Stock shown below under the heading “Voting Percentage”, there shall be included in the slate of nominees recommended by the Board for election as directors by the stockholders of the Company at each applicable annual or special meeting of stockholders at which directors are to be elected that number of individuals designated by STORE Holding (each, a “Principal Sponsor Designee”) such that, if elected, will result in Principal Sponsor Designees representing the lowest whole number of directors serving on the Board that is greater than the corresponding percentage under the heading “Percentage of Directors”.

 

	
Voting Percentage
    	
 
    	
Percentage of Directors
    	
 
    
	
50% or greater
    	
 
    	
50
    	
%
    
	
Less than 50% but greater than or equal to 40%
    	
 
    	
40
    	
%
    
	
Less than 40% but greater than or equal to 30%
    	
 
    	
30
    	
%
    
	
Less than 30% but greater than or equal to 20%
    	
 
    	
20
    	
%
    
	
Less than 20% but greater than or equal to 10%
    	
 
    	
10
    	
%
    

 

Upon any decrease in the number of directors that STORE Holding is entitled to designate for election to the Board pursuant to this Section 3.1(b), STORE Holding shall take all Necessary Action to cause the appropriate number of Principal Sponsor Designees to offer to tender his or her resignation.  If such resignation is then accepted by the Board, the Company, the Board and the Stockholders, as applicable, shall cause the authorized size of the Board to be reduced accordingly unless the Board with Requisite Investor Approval determines not to reduce the authorized size of the Board.

 

(c)                                  CEO Representation.  Subject to the last sentence of Section 3.1(d), if the term of the Chief Executive Officer as a director on the Board is to expire in conjunction with any annual 

 

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or special meeting of stockholders at which directors are to be elected, the Chief Executive Officer shall be included in the slate of nominees recommended by the Board for election.

 

(d)                                 Vacancies.  Except as provided in Sections 3.1(b), (i) STORE Holding shall have the exclusive right to remove its designees from the Board, and the Company shall take all Necessary Action to cause the removal of any such designee at the request of STORE Holding and (ii) STORE Holding shall have the exclusive right to designate for election to the Board directors to fill vacancies created by reason of the death, removal or resignation of its designees to the Board, and the Company shall take all Necessary Action to cause any such vacancies to be filled by replacement directors designated by STORE Holding as promptly as reasonably practicable; provided, that, for the avoidance of doubt and notwithstanding anything to the contrary in this paragraph, STORE Holding shall not have the right to designate a replacement director, and the Company shall not be required to take any action to cause any vacancy to be filled by any such designee, to the extent that election or appointment of such designee to the Board would result in a number of directors designated by STORE Holding in excess of the number of directors that STORE Holding is then entitled to designate for membership on the Board pursuant to Section 3.1(b).  If the Chief Executive Officer resigns or is terminated for any reason, the Company, the Chief Executive Officer and STORE Holding shall take all Necessary Action to remove the Chief Executive Officer from the Board and fill such vacancy with the next chief executive officer in office.

 

(e)                                  Additional Unaffiliated Directors.  For so long as STORE Holding has the right to designate at least one (1) director for nomination under this Agreement, the Company shall take all Necessary Action to ensure that the number of directors serving on the Board shall not exceed nine (9); provided, that the number of directors may be increased if necessary to satisfy the requirements of applicable laws and stock exchange regulations.

 

(f)                                   Committees.  Subject to applicable laws and stock exchange regulations, STORE Holding shall have the right to have a representative appointed to serve on each committee of the Board (other than any committee formed for the purpose of evaluating or negotiating any transaction with STORE Holding) for so long as it has the right to designate at least one (1) director for election to the Board.  Subject to applicable laws and stock exchange regulations, STORE Holding shall have the right to have a representative appointed as an observer to any committee of the Board (other than any committee formed for the purpose of evaluating or negotiating any transaction with STORE Holding) to which it (i) does not elect to have a representative appointed or (ii) is prohibited by applicable laws or stock exchange regulations from having a representative appointed, in each case for so long as STORE Holding has the right to designate at least one (1) director for nomination under this Agreement.

 

(g)                                  Reimbursement of Expenses.  The Company shall reimburse each Principal Sponsor Designee for all reasonable and documented out-of-pocket expenses incurred in connection with such director’s or designee’s participation in the meetings of the Board or any committee of the Board, including reasonable travel, lodging and meal expenses.

 

(h)                                 D&O Insurance; Indemnification Priority.  The Company shall obtain customary director and officer indemnity insurance on commercially reasonable terms.  The Company hereby acknowledges that any director, officer or other indemnified person covered by any such 

 

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indemnity insurance policy (any such Person, an “Indemnitee”) may have certain rights to indemnification, advancement of expenses and/or insurance provided by the Investor, STORE Holding or one of their respective Affiliates (collectively, the “Fund Indemnitors”).  The Company hereby (i) agrees that the Company and any Company subsidiary that provides indemnity shall be the indemnitor of first resort (i.e., its or their obligations to an Indemnitee shall be primary and any obligation of any Fund Indemnitor to advance expenses or to provide indemnification for the same expenses or liabilities incurred by Indemnitee shall be secondary), and (ii) irrevocably waives, relinquishes and releases the Fund Indemnitors from any and all claims against the Fund Indemnitors for contribution, subrogation or any other recovery of any kind in respect thereof.  The Company further agrees that no advancement or payment by the Fund Indemnitors on behalf of an Indemnitee with respect to any claim for which such Indemnitee has sought indemnification from the Company, as the case may be, shall affect the foregoing and the Fund Indemnitors shall have a right of contribution and/or be subrogated to the extent of such advancement or payment to all of the rights of recovery of such Indemnitee against the Company.

 

Section 3.2                                    Voting Agreement.  STORE Holding agrees to cast all votes to which it is entitled in respect of its Company Shares, whether at any annual or special meeting, by written consent or otherwise, so as to cause to be elected to the Board those individuals designated in accordance with Section 3.1(a)-(c) and to otherwise effect the intent of this Article III.

 

ARTICLE IV

 

GENERAL PROVISIONS

 

Section 4.1                                    Company Charter and Company Bylaws.

 

(a)                                 The provisions of this Agreement shall be controlling if any such provisions or the operation thereof conflict with the provisions of the Company Charter or the Company Bylaws.  The Company and STORE Holding agree to take all Necessary Action to amend the Company Charter and Company Bylaws so as to avoid any conflict with the provisions hereof.

 

(b)                                 Any amendment to the Company Bylaws shall only be effective if approved by Requisite Investor Approval or, after Requisite Investor Approval is no longer required, such approval as is set forth in the Company Bylaws.

 

Section 4.2                                    Freedom to Pursue Opportunities.  To the maximum extent permitted by Maryland law, the parties expressly acknowledge and agree that: (i) the Investor, STORE Holding, each Representative of STORE Holding and of the Investor and each director or officer of the Company, that is an Affiliate or designee of STORE Holding or the Investor (each, an “Investor Designee”) has the right to, and has no duty (contractual or otherwise) not to, (x) directly or indirectly engage in the same or similar business activities or lines of business as the Company, including those deemed to be competing with the Company, or (y) directly or indirectly do business with any client, customer or supplier of the Company; and (ii) in the event that the Investor, STORE Holding, any Representative of STORE Holding or the Investor or any Investor Designee acquires knowledge of a potential transaction or matter that may be a corporate opportunity for the Company, STORE Holding, such Investor, such Representative or 

 

7

 

such Investor Designee shall have no duty (contractual or otherwise) to communicate or present such corporate opportunity to the Company or any of its Affiliates, and, notwithstanding any provision of this Agreement to the contrary, shall not be liable to the Company or any of its Affiliates, subsidiaries, stockholders or other equity holders for breach of any duty (contractual or otherwise) by reason of the fact that STORE Holding, such Investor, such Representative or such Investor Designee, directly or indirectly, pursues or acquires such opportunity for itself, directs such opportunity to another Person, or does not present such opportunity to the Company or any of its Affiliates.  For the avoidance of doubt, the provisions of this Section 4.2 shall have independent effect with respect to, and shall not be construed as being in lieu of or otherwise limiting, any separate obligations of any Person under any agreement between the Company and/or STORE Holding or an Affiliate thereof, including any agreement related to noncompetition, nonsolicitation, confidentiality or other restrictions on the activities or operations of such Person.

 

Section 4.3                                    Assignment; Benefit.

 

(a)                                 The rights and obligations hereunder shall not be assignable without the prior written consent of the other parties hereto.  Any attempted assignment of rights or obligations in violation of this Section 4.3 shall be null and void.

 

(b)                                 This Agreement shall be binding upon and shall inure to the benefit of the parties hereto, and their respective successors and permitted assigns, and there shall be no third-party beneficiaries to this Agreement other than the Indemnitees and the Fund Indemnitors under Section 3.1(h), and STORE Holding, the Investor, their respective Representatives and Affiiliates and the Investor Designees under Section 4.2.

 

Section 4.4                                    Termination.  If not otherwise agreed in writing by the Company and such Stockholder, this Agreement shall terminate automatically (without any action by any party hereto) as to each Stockholder as of the later of (i) when such Stockholder no longer owns any shares of Common Stock, or (ii) when such Stockholder no longer has the right to nominate any directors to the Board pursuant to Article III hereof.

 

Section 4.5                                    Severability.  In the event that any provision of this Agreement shall be invalid, illegal or unenforceable such provision shall be construed by limiting it so as to be valid, legal and enforceable to the maximum extent provided by law and the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.

 

Section 4.6                                    Entire Agreement; Amendment.

 

(a)                                 This Agreement sets forth the entire understanding and agreement between the parties with respect to the transactions contemplated herein and supersedes and replaces any prior understanding, agreement or statement of intent, in each case written or oral, of any kind and every nature with respect hereto.  This Agreement or any provision hereof may only be amended, modified or waived, in whole or in part, at any time by an instrument in writing signed by STORE Holding; provided that the prior written consent of the holders of the Majority in Interest of the Company Shares then held by the Other Stockholders shall be required for any amendment, modification or waiver that would have a disproportionate and adverse effect in any 

 

8

 

material respect on the rights of Other Stockholders under this Agreement relative to STORE Holding.

 

(b)                                 No waiver of any breach of any of the terms of this Agreement shall be effective unless such waiver is expressly made in writing and executed and delivered by the party against whom such waiver is claimed.  The waiver by any party hereto of a breach of any provision of this Agreement shall not operate or be construed as a further or continuing waiver of such breach or as a waiver of any other or subsequent breach.  Except as otherwise expressly provided herein, no failure on the part of any party to exercise, and no delay in exercising, any right, power or remedy hereunder, or otherwise available in respect hereof at law or in equity, shall operate as a waiver thereof, nor shall any single or partial exercise of such right, power or remedy by such party preclude any other or further exercise thereof or the exercise of any other right, power or remedy.

 

Section 4.7                                    Counterparts.  This Agreement may be executed in any number of separate counterparts each of which when so executed shall be deemed to be an original and all of which together shall constitute one and the same agreement.  Counterpart signature pages to this Agreement may be delivered by facsimile or electronic delivery (i.e., by email of a PDF signature page) and each such counterpart signature page will constitute an original for all purposes.

 

Section 4.8                                    Notices.  Unless otherwise specified herein, all notices, consents, approvals, reports, designations, requests, waivers, elections and other communications authorized or required to be given pursuant to this Agreement shall be in writing and shall be given, made or delivered by personal hand-delivery, by facsimile transmission, by electronic mail, by mailing the same in a sealed envelope, registered first-class mail, postage prepaid, return receipt requested, or by air courier guaranteeing overnight delivery (and such notice shall be deemed to have been duly given, made or delivered (a) on the date received, if delivered by personal hand delivery, (b) on the date received, if delivered by facsimile transmission, by electronic mail or by registered first-class mail prior to 5:00 p.m. prevailing local time on a Business Day, or if delivered after 5:00 p.m. prevailing local time on a Business Day or on other than a Business Day, on the first Business Day thereafter and (c) two (2) Business Days after being sent by air courier guaranteeing overnight delivery), at the following addresses (or at such other address as shall be specified by like notice):

 

if to the Company to:

 

STORE Capital Corporation
 8501 E. Princess Drive
 Suite 190
 Scottsdale, AZ 85255
 Attention:                 Michael T. Bennett, Secretary
 Facsimile:  (480) 256-1101
 E-mail:                                mbennett@storecapital.com

 

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with a copy (which shall not constitute notice) to:

 

Kutak Rock LLP
 Suite 3100
 1801 California Street
 Denver, CO 80202
 Attention:                 Paul E. Belitz
 Facsimile:                 (303) 292-7799
 E-mail:                                paul.belitz@kutakrock.com

 

if to STORE Holding:

 

STORE Holding Company, LLC
 8501 E. Princess Drive
 Suite 190
 Scottsdale, AZ 85255
 Attention:                 Michael T. Bennett, Secretary
 Facsimile:  (480) 256-1101
 E-mail:                                mbennett@storecapital.com

 

and

 

Oaktree Capital Management, L.P. 
 333 South Grand Ave., 28th Floor 
 Los Angeles, CA 90071 
 Attention:                 Kenneth Liang
 Facsimile:                 (213) 830-6293
 E-mail:                                kliang@oaktreecapital.com

 

with a copy (which shall not constitute notice) to:

 

Debevoise & Plimpton LLP
 919 Third Avenue 
 New York, NY 10022
 Attention:                 Jasmine Ball
 Facsimile:                 (212) 909-6836
 E-mail:                                jball@debevoise.com

 

Section 4.9                                    Governing Law.  THIS AGREEMENT AND ANY RELATED DISPUTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF MARYLAND.

 

Section 4.10                             Jurisdiction.  ANY ACTION OR PROCEEDING AGAINST THE PARTIES RELATING IN ANY WAY TO THIS AGREEMENT MAY BE BROUGHT EXCLUSIVELY IN THE COURTS OF THE STATE OF MARYLAND OR (TO THE EXTENT SUBJECT MATTER JURISDICTION EXISTS THEREFORE) THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MARYLAND, BALTIMORE DIVISION, AND THE PARTIES IRREVOCABLY SUBMIT TO THE JURISDICTION OF 

 

10

 

BOTH SUCH COURTS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING.  ANY ACTIONS OR PROCEEDINGS TO ENFORCE A JUDGMENT ISSUED BY ONE OF THE FOREGOING COURTS MAY BE ENFORCED IN ANY JURISDICTION.

 

Section 4.11                             Waiver of Jury Trial.  TO THE EXTENT NOT PROHIBITED BY APPLICABLE LAW THAT CANNOT BE WAIVED, EACH PARTY HERETO WAIVES, AND COVENANTS THAT SUCH PARTY WILL NOT ASSERT (WHETHER AS PLAINTIFF, DEFENDANT OR OTHERWISE), ANY RIGHT TO TRIAL BY JURY IN ANY FORUM IN RESPECT OF ANY ISSUE, CLAIM OR PROCEEDING ARISING OUT OF THIS AGREEMENT OR THE SUBJECT MATTER HEREOF OR IN ANY WAY CONNECTED WITH THE DEALINGS OF ANY STOCKHOLDER OR THE COMPANY IN CONNECTION WITH ANY OF THE ABOVE, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING AND WHETHER IN CONTRACT, TORT OR OTHERWISE.  EACH PARTY HERETO ACKNOWLEDGES THAT IT HAS BEEN INFORMED BY THE OTHER PARTIES HERETO THAT THIS SECTION 4.11 CONSTITUTES A MATERIAL INDUCEMENT UPON WHICH IT IS RELYING AND WILL RELY IN ENTERING INTO THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED HEREBY.  ANY PARTY HERETO MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION 4.11 WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF EACH SUCH PARTY TO THE WAIVER OF ITS RIGHT TO TRIAL BY JURY.

 

Section 4.12                             Specific Performance.  It is hereby agreed and acknowledged that it will be impossible to measure in money the damages that would be suffered if the parties fail to comply with any of the obligations herein imposed on them by this Agreement and that, in the event of any such failure, an aggrieved party will be irreparably damaged and will not have an adequate remedy at law.  Any such party shall therefore be entitled (in addition to any other remedy to which such party may be entitled at law or in equity) to injunctive relief, including specific performance, to enforce such obligations, without the posting of any bond, and if any action should be brought in equity to enforce any of the provisions of this Agreement, none of the parties hereto shall raise the defense that there is an adequate remedy at law.

 

Section 4.13                             Subsequent Acquisition of Shares.  Any equity securities of the Company acquired subsequent to the date hereof by a Stockholder shall be subject to the terms and conditions of this Agreement.

 

[Signature pages follow]

 

11

 

IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the day and year first above written.

 

 

	
 
    	
STORE   CAPITAL CORPORATION
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Michael T. Bennett
    
	
 
    	
 
    	
Name: Michael   T. Bennett
    
	
 
    	
 
    	
Title: Executive   Vice President - General Counsel 
    

 

[Signature Page to Stockholders Agreement]

 

 

 

	
 
    	
STORE   HOLDING COMPANY, LLC
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Christopher H. Volk
    
	
 
    	
 
    	
Name: Christopher   H. Volk
    
	
 
    	
 
    	
Title: President   and Chief Executive Officer
    

 

[Signature Page to Stockholders Agreement]

 

 

	
ACKNOWLEDGED   & AGREED WITH RESPECT TO SECTION 3.1(c) AND THE LAST SENTENCE OF SECTION   3.1(d)
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
/s/   Christopher Volk
    	
 
    
	
Name:   Christopher Volk
    	
 
    
	
Title:   Chief Executive Officer
    	
 
    

 

[Signature Page to Stockholders Agreement]

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