Document:

Exhibit 10.1

 

THIRD LOAN MODIFICATION AGREEMENT

 

This Third Loan Modification Agreement (this “Loan Modification Agreement”) is entered into as of February 6, 2018, by and between SILICON VALLEY BANK, a California corporation, with its principal place of business at 3003 Tasman Drive, Santa Clara, California 95054 and with a loan production office located at 2755 East Cottonwood Parkway, Suite 540, Salt Lake City, Utah 84121 (“Bank”) and CONTROL4 CORPORATION, a Delaware corporation with its chief executive office located at 11734 S. Election Road, Suite 200, Draper, Utah 84020 (“Borrower”) and modifies the Loan Agreement (as defined below) as set forth below.

 

1.                                      DESCRIPTION OF EXISTING INDEBTEDNESS AND OBLIGATIONS. Among other indebtedness and obligations which may be owing by Borrower to Bank, Borrower is obligated to Bank pursuant to a loan arrangement dated as of June 26, 2013, evidenced by, among other documents, a certain Amended and Restated Loan and Security Agreement dated as of June 26, 2013, between Borrower and Bank, as amended by that certain First Loan Modification Agreement dated as of October 7, 2013, between Borrower and Bank, and as further amended by that certain Second Loan Modification Agreement dated as of January 29, 2016, between Borrower and Bank (as amended, the “Loan Agreement”).  Capitalized terms used but not otherwise defined herein shall have the same meanings as in the Loan Agreement.

 

2.                                      DESCRIPTION OF COLLATERAL.  Repayment of the Obligations is secured by the Collateral as described in the Loan Agreement (together with any other collateral security granted to Bank, the “Security Documents”). Hereinafter, the Security Documents, together with all other documents evidencing or securing the Obligations shall be referred to as the “Existing Loan Documents”.

 

3.                                      DESCRIPTION OF CHANGE IN TERMS.

 

A.                                    Modifications to Loan Agreement.

 

1                                         The Loan Agreement shall be amended by deleting the following Section 6.2(d) (“Compliance Certificate”) thereof, in its entirety:

 

“                                          (d)                                 Compliance Certificate.  Within (i) thirty (30) days after the last day of each month during which a Testing Period was in effect at any point, and (ii) forty-five (45) days after the last day of each quarter, a duly completed Compliance Certificate signed by a Responsible Officer, certifying that as of the end of such month or quarter, as applicable, Borrower was in full compliance with all of the terms and conditions of this Agreement, and setting forth calculations showing compliance with the financial covenants set forth in this Agreement and such other information as Bank may reasonably request;”

 

and inserting in lieu thereof the following:

 

“                                          (d)                                 Compliance Certificate.  Within forty-five (45) days after the last day of each quarter, a duly completed Compliance Certificate signed by a Responsible Officer, certifying that as of the end of such quarter, Borrower was in full compliance with all of the terms and conditions of this Agreement, and setting forth calculations showing compliance with the financial covenants set forth in this Agreement and such other information as Bank may reasonably request;”

 

2                                         The Loan Agreement shall be amended by deleting the following Section 6.7 (“Financial Covenants”) thereof, in its entirety:

 

“6.7                         Financial Covenants.  Maintain, on a consolidated basis with respect to Borrower and its Subsidiaries:

 

 

(a)                                 Liquidity Coverage.  During any Testing Period, to be tested as of the beginning of each Testing Period and as of the last day of each month during which a Testing Period was in effect, a ratio of (i) Borrower’s unrestricted and unencumbered cash at Bank plus net billed accounts receivable to (ii) the aggregate amount of outstanding Obligations of Borrower to Bank, of at least 1.50:1.0.

 

(b)                                 Intentionally Omitted.

 

(c)                                  Interest Coverage Ratio.  To be tested as of the last day of each quarter, an Interest Coverage Ratio of at least 2.0:1.0.”

 

and inserting in lieu thereof the following:

 

“6.7                         Financial Covenants.  Maintain, on a consolidated basis with respect to Borrower and its Subsidiaries:

 

(a)                                 Leverage Ratio.  To be tested as of the last day of each quarter, a Leverage Ratio not to exceed (i) 3.0:1.0 for the quarters ending March 31, 2018, June 30, 2018 and September 30, 2018, (ii) 2.75:1.0 for the quarters ending December 31, 2018, March 31, 2019 and June 30, 2019, and (iii) 2.50:1.0 for the quarter ending September 30, 2019 and each quarter thereafter.

 

(b)                                 Liquidity.  To be tested as of the last day of each quarter, (i) unrestricted and unencumbered cash and Cash Equivalents in accounts with Bank or Bank’s Affiliates, plus (ii) without duplication of (i), amounts held in securities/investment accounts with Bank’s Affiliates that are subject to a Control Agreement, plus (iii) the unused Availability Amount on the 2016 Revolving Line, in an amount of at least Fifteen Million Dollars ($15,000,000.00).

 

(c)                                  Interest Coverage Ratio.  To be tested as of the last day of each quarter, an Interest Coverage Ratio of at least 2.0:1.0.”

 

3                                         The Loan Agreement shall be amended by deleting the following definitions appearing in Section 13.1 thereof:

 

“                                          “2016 Revolving Line” is an aggregate principal amount equal to Thirty Million Dollars ($30,000,000.00).”

 

“                                          “2016 Revolving Line Maturity Date” is January 29, 2018.”

 

“                                              “Permitted Acquisitions” means the acquisition by Borrower of all or substantially all of the assets of another company or companies (collectively, the “Target”), provided that (a) Target is engaged in a similar line of business as Borrower both prior to and after giving effect to such acquisition, (b) such acquisition is non-hostile in nature, (c) no Event of Default has occurred and is continuing or would exist after giving effect to such acquisition, (d) Borrower provides evidence to Bank acceptable to Bank in its sole and absolute discretion that Borrower is and shall be in compliance with the terms of this Agreement both prior to and after giving effect to such acquisition, (e) such acquisition is consummated within a reasonable amount of time, as determined by Bank in its sole and absolute discretion, (f) Borrower shall provide evidence to Bank, acceptable to Bank in its sole and absolute discretion, that immediately after giving effect to such acquisition, that Borrower shall have (i) unrestricted and

 

2

 

unencumbered cash and Cash Equivalents in accounts with Bank or Bank’s Affiliates, plus (ii) without duplication of (i), amounts held in securities/investment accounts with Bank’s Affiliates that are subject to a Control Agreement, plus (iii) the unused Availability Amount on the 2016 Revolving Line, in an amount of at least Thirty Million Dollars ($30,000,000.00) (without taking into account the amount of any potential earn-out payments pursuant to such acquisition), (g) within thirty (30) days after giving effect to such acquisition, upon request of Bank, Borrower shall (i) cause Target to become a co-borrower hereunder and provide to Bank such appropriate financing statements and/or Control Agreements, all in form and substance satisfactory to Bank (including being sufficient to grant Bank a first priority Lien (subject to Permitted Liens) in and to the assets of Target), (ii) provide to Bank appropriate certificates and powers and financing statements, pledging all of the direct or beneficial ownership interest in Target, in form and substance satisfactory to Bank, and (iii) provide to Bank all other documentation in form and substance satisfactory to Bank, including one or more opinions of counsel satisfactory to Bank, which in its opinion is appropriate with respect to the execution and delivery of the applicable documentation referred to above, (h) Borrower remains a separate legal entity following the transactions in connection with and contemplated by such acquisition, (i) prior to the consummation of such acquisition, Borrower delivers to Bank evidence that the assets of Target are free and clear of all Liens, and (j) no Indebtedness, other than Permitted Indebtedness, shall be assumed or incurred by Borrower in connection with such acquisition.”

 

and inserting in lieu thereof the following:

 

“                                          “2016 Revolving Line” is an aggregate principal amount equal to Forty Million Dollars ($40,000,000.00).”

 

“                                          “2016 Revolving Line Maturity Date” is January 29, 2020.”

 

“                                          “Permitted Acquisitions” means the acquisition by Borrower of all or substantially all of the assets of another company or companies (collectively, the “Target”), provided that (a) Target is engaged in a similar line of business as Borrower both prior to and after giving effect to such acquisition, (b) such acquisition is non-hostile in nature, (c) no Event of Default has occurred and is continuing or would exist after giving effect to such acquisition, (d) Borrower provides evidence to Bank acceptable to Bank in its sole and absolute discretion that Borrower is and shall be in compliance with the terms of this Agreement both prior to and after giving effect to such acquisition, (e) such acquisition is consummated within a reasonable amount of time, as determined by Bank in its sole and absolute discretion, (f) Borrower shall provide evidence to Bank, acceptable to Bank in its sole and absolute discretion, that immediately after giving effect to such acquisition, that Borrower shall have (i) unrestricted and unencumbered cash and Cash Equivalents in accounts with Bank or Bank’s Affiliates, plus (ii) without duplication of (i), amounts held in securities/investment accounts with Bank’s Affiliates that are subject to a Control Agreement, plus (iii) the unused Availability Amount on the 2016 Revolving Line, in an amount of at least Forty Million Dollars ($40,000,000.00) (without taking into account the amount of any potential earn-out payments pursuant to such acquisition), (g) within thirty (30) days after giving effect to such acquisition, upon request of Bank, Borrower shall (i) cause Target to become a co-borrower hereunder and provide to Bank such appropriate financing statements and/or Control Agreements, all in form and substance satisfactory to Bank (including being sufficient to grant Bank a first priority

 

3

 

Lien (subject to Permitted Liens) in and to the assets of Target), (ii) provide to Bank appropriate certificates and powers and financing statements, pledging all of the direct or beneficial ownership interest in Target, in form and substance satisfactory to Bank, and (iii) provide to Bank all other documentation in form and substance satisfactory to Bank, including one or more opinions of counsel satisfactory to Bank, which in its opinion is appropriate with respect to the execution and delivery of the applicable documentation referred to above, (h) Borrower remains a separate legal entity following the transactions in connection with and contemplated by such acquisition, (i) prior to the consummation of such acquisition, Borrower delivers to Bank evidence that the assets of Target are free and clear of all Liens, and (j) no Indebtedness, other than Permitted Indebtedness, shall be assumed or incurred by Borrower in connection with such acquisition.”

 

4                                         The Loan Agreement shall be amended by deleting the following definition appearing in Section 13.1 thereof:

 

“                                          “Testing Period” is any time that the sum of Borrower’s (i) unrestricted and unencumbered cash and Cash Equivalents at Bank, plus (ii) without duplication of (i), amounts held in securities/investment accounts with Bank’s Affiliates that are subject to a Control Agreement, is less than Thirty Million Dollars ($30,000,000.00).”

 

5                                         The Compliance Certificate appearing as Exhibit E to the Loan Agreement is hereby replaced with the Compliance Certificate attached as Schedule 1 hereto.

 

4.                                      FEES.  Borrower shall pay to Bank a commitment fee equal to One Hundred Thousand Dollars ($100,000.00), which fee shall be due on the date hereof and shall be deemed fully earned as of the date hereof.  Borrower shall also reimburse Bank for all legal fees and expenses incurred in connection with this amendment to the Existing Loan Documents.

 

5.                                      RATIFICATION OF PERFECTION CERTIFICATE.  Borrower hereby ratifies, confirms and reaffirms, all and singular, the terms and disclosures contained in a certain Perfection Certificate dated as of January 29, 2016 delivered by Borrower to Bank, and acknowledges, confirms and agrees the disclosures and information Borrower provided to Bank in the Perfection Certificate has not changed, as of the date hereof.

 

6.                                      CONSISTENT CHANGES.  The Existing Loan Documents are hereby amended wherever necessary to reflect the changes described above.

 

7.                                      RATIFICATION OF LOAN DOCUMENTS.  Borrower hereby ratifies, confirms, and reaffirms all terms and conditions of all security or other collateral granted to the Bank, and confirms that the indebtedness secured thereby includes, without limitation, the Obligations.

 

8.                                      NO DEFENSES OF BORROWER.  Borrower hereby acknowledges and agrees that Borrower has no offsets, defenses, claims, or counterclaims against Bank with respect to the Obligations, or otherwise, and that if Borrower now has, or ever did have, any offsets, defenses, claims, or counterclaims against Bank, whether known or unknown, at law or in equity, all of them are hereby expressly WAIVED and Borrower hereby RELEASES Bank from any liability thereunder.

 

9.                                      CONTINUING VALIDITY.  Borrower understands and agrees that in modifying the existing Obligations, Bank is relying upon Borrower’s representations, warranties, and agreements, as set forth in the Existing Loan Documents.  Except as expressly modified pursuant to this Loan Modification Agreement, the terms of the Existing Loan Documents remain unchanged and in full force and effect.  Bank’s agreement to modifications to the existing Obligations pursuant to this  Loan Modification Agreement in no way shall obligate Bank to make any future modifications to the Obligations.  Nothing in this Loan Modification Agreement shall constitute a satisfaction of the

 

4

 

Obligations.  It is the intention of Bank and Borrower to retain as liable parties all makers of Existing Loan Documents, unless the party is expressly released by Bank in writing.  No maker will be released by virtue of this Loan Modification Agreement.

 

10.                               COUNTERSIGNATURE.  This Loan Modification Agreement shall become effective only when it shall have been executed by Borrower and Bank.

 

[The remainder of this page is intentionally left blank]

 

5

 

This Loan Modification Agreement is executed as of the date first written above.

 

	
BORROWER:
    	
 
    	
BANK:
    
	
 
    	
 
    	
 
    
	
CONTROL4   CORPORATION
    	
 
    	
SILICON   VALLEY BANK
    
	
 
    	
 
    	
 
    
	
By:
    	
 
    	
 
    	
By:
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Name:
    	
 
    	
 
    	
Name:
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Title:
    	
 
    	
 
    	
Title:
    	
 
    

 

 

Schedule 1

 

EXHIBIT E

 

COMPLIANCE CERTIFICATE

 

	
TO:
    	
SILICON VALLEY BANK
    	
Date:
    	
                                                                   
    
	
FROM: 
    	
CONTROL4 CORPORATION
    	
 
    

 

The undersigned authorized officer of CONTROL4 CORPORATION (“Borrower”) certifies that under the terms and conditions of the Amended and Restated Loan and Security Agreement between Borrower and Bank (the “Agreement”):

 

(1) Borrower is in complete compliance for the period ending                 with all required covenants except as noted below; (2) there are no Events of Default; (3) all representations and warranties in the Agreement are true and correct in all material respects on this date except as noted below; provided, however, that such materiality qualifier shall not be applicable to any representations and warranties that already are qualified or modified by materiality in the text thereof; and provided, further that those representations and warranties expressly referring to a specific date shall be true, accurate and complete in all material respects as of such date; (4) Borrower, and each of its Subsidiaries, has timely filed all required tax returns and reports, and Borrower has timely paid all foreign, federal, state and local taxes, assessments, deposits and contributions owed by Borrower except as otherwise permitted pursuant to the terms of Section 5.9 of the Agreement; and (5) no Liens have been levied or claims made against Borrower or any of its Subsidiaries relating to unpaid employee payroll or benefits of which Borrower has not previously provided written notification to Bank.

 

Attached are the required documents supporting the certification.  The undersigned certifies that these are prepared in accordance with GAAP consistently applied from one period to the next except as explained in an accompanying letter or footnotes.  The undersigned acknowledges that no borrowings may be requested at any time or date of determination that Borrower is not in compliance with any of the terms of the Agreement, and that compliance is determined not just at the date this certificate is delivered.  Capitalized terms used but not otherwise defined herein shall have the meanings given them in the Agreement.

 

Please indicate compliance status by circling Yes/No under “Complies” column.

 

	
Reporting Covenants
    	
 
    	
Required
    	
 
    	
Complies
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Quarterly financial statements
    	
 
    	
Quarterly within 45 days
    	
 
    	
Yes   No
    
	
Compliance Certificate
    	
 
    	
Quarterly within 45 days
    	
 
    	
Yes   No
    
	
Annual financial statement (CPA Audited)
    	
 
    	
FYE within 90 days
    	
 
    	
Yes   No
    
	
10-Q, 10-K and 8-K
    	
 
    	
Within 5 days after filing with SEC
    	
 
    	
Yes   No
    
	
Board-approved projections
    	
 
    	
Within 30 days prior to FYE
    	
 
    	
Yes   No
    

 

	
Financial Covenants
    	
 
    	
Required
    	
 
    	
Actual
    	
 
    	
Complies
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Maintain (tested quarterly)
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Leverage Ratio
    	
 
    	
            :1.0
    	
*
    	
          :1.0
    	
 
    	
Yes   No
    
	
Liquidity
    	
 
    	
$
    	
15,000,000
    	
 
    	
$
    	
          
    	
 
    	
Yes   No
    
	
Interest Coverage Ratio
    	
 
    	
2.0:1.0
    	
 
    	
          :1.0
    	
 
    	
Yes   No
    
									

 

*as set forth in Section 6.7(a)

 

1

 

Performance Pricing

 

	
 
    	
 
    	
LIBOR Advance
    	
 
    	
Primate Rate Advance
    	
 
    	
Applies
    
	
Leverage Ratio >   2.0:1.0 at any time during such period
    	
 
    	
LIBOR Rate plus 2.75%
    	
 
    	
Prime Rate plus 0.25%
    	
 
    	
Yes   No
    
	
Leverage Ratio <   2.0:1.0 at all times during such period
    	
 
    	
LIBOR Rate plus 2.50%
    	
 
    	
Prime Rate plus 0.0%
    	
 
    	
Yes   No
    

 

The following financial covenant analyses and information set forth in Schedule 1 attached hereto are true and accurate as of the date of this Certificate.

 

Other Matters

 

	
Have there been any   amendments of or other changes to the capitalization table of Borrower and to   the Operating Documents of Borrower or any of its Subsidiaries? If yes,   provide copies of any such amendments or changes with this Compliance   Certificate.
    	
Yes
    	
No
    

 

The following are the exceptions with respect to the certification above:  (If no exceptions exist, state “No exceptions to note.”)

 

	
CONTROL4 CORPORATION 
    	
BANK USE ONLY 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
Received by: 
    	
 
    	
 
    
	
By: 
    	
 
    	
 
    	
 
    	
AUTHORIZED   SIGNER 
    	
 
    
	
Name:
    	
 
    	
 
    	
Date: 
    	
 
    	
 
    
	
Title:
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
Verified: 
    	
 
    	
 
    
	
 
    	
 
    	
AUTHORIZED   SIGNER
    	
 
    
	
 
    	
Date:  
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
Compliance Status:  
    	
Yes     No
    	
 
    
									

 

2

 

Schedule 1 to Compliance Certificate

 

Financial Covenants of Borrower

 

In the event of a conflict between this Schedule and the Loan Agreement, the terms of the Loan Agreement shall govern.

 

	
Dated:
    	
_______________
    	
 
    	
 
    

 

I.                                        Leverage Ratio (Section 6.7(a))

 

	
Required:
    	
To   be tested as of the last day of each quarter, a Leverage Ratio not to exceed   (i) 3.0:1.0 for the quarters ending March 31, 2018, June 30,   2018 and September 30, 2018, (ii) 2.75:1.0 for the quarters ending   December 31, 2018, March 31, 2019 and June 30, 2019, and   (iii) 2.50:1.0 for the quarter ending September 30, 2019 and each   quarter thereafter.
    
	
 
    	
 
    
	
Actual:
    	
         :1.0
    

 

	
A.
    	
Aggregate   value of outstanding Obligations of Borrower to Bank as of the last day of   such twelve (12) month period
    	
$              
    
	
 
    	
 
    	
 
    
	
B.
    	
Adjusted   EBITDA (during subject twelve (12) month period)
    	
$              
    
	
 
    	
 
    	
 
    
	
C.
    	
Leverage   Ratio (line A divided by line B)
    	
________
    

 

	
Is   line C equal to or less than         :1:0?
    	
 
    
	
 
    	
 
    
	
 
    	
             No, not in compliance
    	
             Yes, in compliance
    
			

 

II.                                   Liquidity (Section 6.7(b))

 

	
Required:
    	
To   be tested as of the last day of each quarter, (i) unrestricted and   unencumbered cash and Cash Equivalents in accounts with Bank or Bank’s   Affiliates, plus (ii) without duplication of (i), amounts held in   securities/investment accounts with Bank’s Affiliates that are subject to a   Control Agreement, plus (iii) the unused Availability Amount on the 2016   Revolving Line, in an amount of at least Fifteen Million Dollars   ($15,000,000.00).
    
	
 
    	
 
    
	
Actual:
    	
$                
    

 

	
A.
    	
Aggregate   value of Borrower’s unrestricted and unencumbered cash and Cash Equivalents   in accounts with Bank or Bank’s Affiliates
    	
$              
    
	
 
    	
 
    	
 
    
	
B.
    	
Without   duplication, amounts held in securities/investment accounts with Bank’s   Affiliates that are subject to a Control Agreement
    	
$              
    
	
 
    	
 
    	
 
    
	
C.
    	
Unused   Availability Amount on the 2016 Revolving Line
    	
$              
    
	
 
    	
 
    	
 
    
	
D.
    	
Sum   of Line A plus Line B plus Line C
    	
$              
    

 

Is line D equal to or greater than $15,000,000.00?

 

3

 

	
 
    	
             No, not in compliance
    	
             Yes, in compliance
    

 

III.                              Interest Coverage Ratio (Section 6.7(c))

 

	
Required:
    	
To be tested as of the   last day of each quarter, an Interest Coverage Ratio of at least 2.0:1.0.
    
	
 
    	
 
    
	
Actual:
    	
             :1.0
    

 

	
A.
    	
Adjusted   EBITDA (during subject twelve (12) month period)
    	
$             
    
	
 
    	
 
    	
 
    
	
B.
    	
Unfunded   capital expenditures (during subject twelve (12) month period)
    	
$             
    
	
 
    	
 
    	
 
    
	
C.
    	
Cash   taxes (during subject twelve (12) month period)
    	
$             
    
	
 
    	
 
    	
 
    
	
D.
    	
Line   A minus Line B minus Line C
    	
$             
    
	
 
    	
 
    	
 
    
	
E.
    	
Actual   interest payments on all outstanding Indebtedness of Borrower (during subject   twelve (12) month period)
    	
$             
    
	
 
    	
 
    	
 
    
	
F.
    	
Interest   Coverage Ratio (line D divided by line E)
    	
_______
    

 

Is line F equal to or greater than 2.0:1:0?

 

	
 
    	
             No, not in compliance
    	
             Yes, in compliance
    

 

4Exhibit

CSW INDUSTRIALS, INC.
Time Vested Restricted Share Award Agreement
Date of Grant:   
Name of Participant:   
Number of Restricted Shares:   
CSW Industrials, Inc. (the “Company”) hereby awards to [                    ] (the “Participant”) the number of shares of the presently authorized but unissued Common Shares, $0.01 par value per share, of the Company (the “Restricted Shares”) set forth above pursuant to the CSW Industrials, Inc. Amended and Restated 2015 Equity and Incentive Compensation Plan (the “Plan”). The Restricted Shares granted pursuant to this Award Agreement are subject to the “Recoupment of Incentive Compensation Policy.”
Unless otherwise provided herein, capitalized terms used in this Award Agreement that are defined in the Plan and not defined herein shall have the meanings set forth in the Plan. The terms and conditions of the Restricted Shares granted hereby, to the extent not controlled by the terms and conditions contained in the Plan, are as follows: 
1. No Right to Continued Employee Status  
Nothing contained in this Award Agreement shall confer upon Participant the right to the continuation of his or her employee status, or to interfere with the right of the Company, or any Subsidiary or Affiliate, as applicable, to terminate such relationship. 
2. Vesting of Restricted Shares  
		
	(a) 
	The Restricted Shares granted hereby shall vest in three (3) equal annual installments beginning on the first annual anniversary of the Date of Grant (i.e.,                      ), on condition that the Participant remains an employee of the Company, or one of its Subsidiaries or Affiliates, on the applicable anniversary date that each installment vests. Subject to Section 2(b) below, all unvested Restricted Shares will be forfeited and cancelled upon the Participant’s termination of service from the Company and all Subsidiaries and Affiliates, as applicable, on the date of such termination.  

		
	(b) 
	Notwithstanding anything contained in this Award Agreement to the contrary, any unvested Restricted Shares granted pursuant to this Award Agreement shall automatically vest in full upon the occurrence of any of the following events: (i) a Change in Control, (ii) the Participant’s termination of service from the Company and all Subsidiaries and Affiliates, as applicable, due to his or her Disability, or (iii) the Participant’s termination of service from the Company and all Subsidiaries and Affiliates, as applicable, due to his or her death. For purposes of this Award Agreement, “Disability” means the Participant’s inability to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than twelve (12) months.  

3. Retention of Certificates  
The Company will retain the certificate(s) representing the Restricted Shares granted to the Participant pursuant to this Award Agreement until such time as the vesting restrictions have lapsed and the restrictions on the transfer of such Restricted Shares have terminated. Within a reasonable time thereafter, the Company will deliver to the Participant certificate(s) representing such Restricted Shares free of any applicable restrictions. 
4. Tax Election  
Within thirty (30) days after the Date of Grant, the Participant may make an election with the Internal Revenue Service under Section 83(b) of the Code and the regulations promulgated thereunder. 
5. Restrictions on Transfer  
The Restricted Shares granted hereunder shall not be sold, assigned, transferred, pledged or otherwise encumbered until such Restricted Shares are fully vested. 
6. Dividends and Other Distributions  
The Participant shall be entitled to receive cash dividends or cash distributions declared and paid with respect to the Restricted Shares, if any. Any such cash dividends or cash distributions shall be paid within thirty (30) days after the corresponding cash dividends or cash distributions are paid to the Company’s other Stockholders. The Participant shall also have the right to receive stock dividends or stock distributions with respect to the Restricted Shares, if any. With respect to any unvested Restricted Shares, the stock dividends or stock distributions shall likewise be restricted and shall vest at the same time as the Restricted Shares vest to which such stock dividend or stock distribution relate.
7. Voting of Restricted Shares  
The Participant shall be entitled to vote the Restricted Shares subject to the rules and procedures adopted by the Committee for this purpose. 
8. Withholding  
To the extent that the Company is required to withhold Federal, state or other taxes in connection with the lapse of the restrictions hereunder on the Common Shares, and the amounts available to the Company for such withholding are insufficient, it shall be a condition to the obligation of the Company to make any delivery of Common Shares to the Participant that the Participant make arrangements satisfactory to the Company for payment of the balance of such taxes required to be withheld. 
9. Notices  
Any notice required to be given pursuant to this Award Agreement or the Plan shall be in writing and shall be deemed to be delivered upon receipt or, in the case of notices by the Company, five (5) days after deposit in the U.S. mail, postage prepaid, addressed to the Participant at the address last provided for his or her employee records. 
10. Award Agreement Subject to Plan  
This Award Agreement is made pursuant to the Plan and shall be interpreted to comply therewith. Any provision of this Award Agreement inconsistent with the Plan shall be considered void and replaced with the applicable provision of the Plan. 
11. Entire Agreement  
This Award Agreement, together with the Plan, embodies the entire agreement and understanding between the parties hereto with respect to the subject matter hereof and supersedes all prior oral or written agreements and understandings relating to the subject matter hereof. No statement, representation, warranty, covenant or agreement not expressly set forth in this Award Agreement shall affect or be used to interpret, change or restrict the express terms and provisions of this Award Agreement; provided, however, in any event, this Award Agreement shall be subject to and governed by the Plan. 
12. Severability  
In the event that one or more of the provisions of this Award Agreement shall be invalidated for any reason by a court of competent jurisdiction, any provision so invalidated shall be deemed to be separable from the other provisions hereof, and the remaining provisions hereof shall continue to be valid and fully enforceable. 
13. Electronic Delivery  
The Company may, in its sole discretion, deliver any documents related to the Restricted Shares and the Participant’s participation in the Plan, or future awards that may be granted under the Plan, by electronic means or request the Participant’s consent to participate in the Plan by electronic means. The Participant hereby consents to receive such documents by electronic delivery and, if requested, agrees to participate in the Plan through an on-line or electronic system established and maintained by the Company or another third party designated by the Company. 
14. Counterparts  
This Award Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same agreement. 

IN WITNESS WHEREOF, the parties hereto have executed this Award Agreement on as of the date first above written. 

COMPANY: 
CSW INDUSTRIALS, INC. 

______________________________
By:       Joseph B. Armes 
       Chairman and Chief Executive Officer 
 
PARTICIPANT: 

______________________________
By:   [_____________] 

1

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00279-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00279-of-00352.parquet"}]]