Exhibit 10.36
ADVANCE HOLDING CORPORATION
SENIOR EXECUTIVE STOCK SUBSCRIPTION AGREEMENT
THIS SENIOR EXECUTIVE STOCK SUBSCRIPTION AGREEMENT (this "Agreement") is
made and entered into as of February 1, 2000, by and between Advance Holding
Corporation, a Virginia corporation (the "Company"), and ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
("Purchaser"), pursuant to the 1998 Senior Executive Stock Subscription Plan, as
amended (the "Plan"). Capitalized terms not otherwise defined herein shall
have the meanings set forth in the Plan.
R E C I T A L S:
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A. The Company now desires to sell to Purchaser, who is a senior executive
of the Company and/or any directly or indirectly majority or wholly-owned
entities of the Company (individually, a "Subsidiary" and collectively, the
"Subsidiaries"), and Purchaser desires to purchase from the Company, Shares (as
hereinafter defined) of the Company, subject to the terms and conditions set
forth in this Agreement. The date on which such sale and purchase occur shall
be referred to herein as the "Closing Date."
B. In order to induce the Company to sell the Shares to the Purchaser,
Purchaser agrees to hold such shares subject to the restrictions and interests
created by this Agreement.
A G R E E M E N T:
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NOW, THEREFORE, in consideration of the foregoing recitals and the mutual
covenants and conditions contained herein, the parties agree as follows:
1. Sales and Purchase of Shares. The Company hereby agrees to sell to
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Purchaser, subject to the conditions and restrictions contained in this
Agreement, and Purchaser hereby agrees to purchase from the Company, Seventy-
Five Thousand (75,000) shares of common stock $0.01 par value per share
(individually, a "Share," and collectively, the "Shares") of the Company, at a
price of $16.82 per Share, for an aggregate purchase price of One Million Two
Hundred Sixty-One Thousand Five Hundred Dollars ($1,261,500) (the "Purchase
Price"). The Purchase Price shall be payable by delivery of (a) cash or
Purchaser's check in the amount of Three Hundred Sixty-One Thousand Five Hundred
Dollars ($361,500), and (b) a secured promissory note of Purchaser issued to the
Company (in the form attached hereto as Exhibit A) for Nine Hundred Thousand
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Dollars ($900,000) due five years from the effective date hereof (the "Note").
Payment of all amounts owed under the Note and compliance by Purchaser with the
terms and conditions of this Agreement and the Pledge Agreement (as hereinafter
defined) shall be secured by a pledge of the Shares, in conjunction with which
Purchaser shall execute a Stock Pledge Agreement in the form attached hereto as
Exhibit B (the "Pledge Agreement"). Purchaser
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shall deliver the cash or check, the Note and the Pledge Agreement to the
Company prior to the Closing Date, each dated as of the Closing Date.
2. Restriction on Transfer of the Shares. Except as otherwise provided
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herein, Purchaser may not sell, transfer, assign, pledge, hypothecate or
otherwise dispose of (collectively, "Transfer") any of the Shares, or any right,
title or interest therein prior to the earlier of the third anniversary of the
Closing Date or one (1) year after the date of an Initial Public Offering
(defined below) (such date, the "Permitted Sale Date"), and, thereafter, any
Transfer must be in compliance with Section 4 and Section 9 hereof. All
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Transfers also must comply with Section 6 of the Pledge Agreement. Any
purported Transfer or Transfers (including involuntary Transfers initiated by
operation of legal process) of any of the Shares or any right, title or interest
therein, except in strict compliance with the terms and conditions of this
Agreement, shall be null and void.
3. Repurchase Option Upon Termination.
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(a) In the event that Purchaser's employment or other relationship
with the Company and all of its Subsidiaries terminates for any reason
(including, without limitation, by reason of Purchaser's death, disability,
retirement, voluntary resignation or dismissal by the Company or any of its
Subsidiaries, with or without cause), the Company shall have the option (the
"Repurchase Option") to purchase from Purchaser all or any portion of the Shares
acquired by Purchaser under this Agreement for a period of six (6) months after
the effective date of such termination (the effective date of termination is
hereinafter referred to as the "Termination Date").
(b) The purchase price (the "Repurchase Price") for each Share to be
purchased pursuant to the Repurchase Option shall equal the Fair Market Value
(as defined below) thereof. The "Fair Market Value" of a Share shall be the
fair market value of a Share as of the Termination Date, as determined by the
Board of Directors of the Company, acting in good faith and based upon the best
available evidence, which determination shall be final and binding.
(c) The Repurchase Option shall be exercised by the Company by
delivery to Purchaser, within the six-month period specified above, of a written
notice specifying (a) the number of Shares to be purchased and (b) a day, which
shall not be more than 30 days after the date such notice is delivered, on or
before which Purchaser shall surrender the certificate or certificates
representing the Shares to be purchased pursuant to the Repurchase Option (duly
endorsed in blank for Transfer) at the principal office of the Company in
exchange for a check, payable to Purchaser in the amount equal to the Repurchase
Price, calculated as provided in this Section 3, multiplied by the number of the
Shares to be purchased. If Purchaser fails to so surrender such certificate or
certificates on or before such date, from and after such date the Shares which
the Company elected to repurchase shall be deemed to be no longer outstanding,
and Purchaser shall cease to be a stockholder with respect to such Shares and
shall have no rights with respect thereto except only the right to receive
payment of the Repurchase Price, without
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interest, upon surrender of the certificate or certificates therefor (duly
endorsed in blank for Transfer). Notwithstanding the foregoing in this Section
3(d), in the event any principal, interest, fees, expenses or other amounts due
on or in connection with the Note (the "Outstanding Amount") are owed to the
Company by Purchaser, the Repurchase Price for the number of the Shares to be
repurchased hereunder shall be reduced (to an amount not less than zero) by such
Outstanding Amount, which reduction shall be specified in reasonable detail in
the Company's written notice of election to exercise the Repurchase Option. If
the Outstanding Amount exceeds the Repurchase Price for the number of the Shares
to be repurchased, Purchaser shall remain obligated and liable to the Company
for the unpaid balance thereof. The Company may assign the Repurchase Option to
one or more holders of more than 3% of its outstanding Common Stock.
(d) This Repurchase Option shall terminate upon an underwritten
public offering of Common Stock by the Company registered under the Act (as
defined below) (other than an offering registered on Form S-4 or Form S-8 or any
substitute for such forms) resulting in gross proceeds to the Company in excess
of $25 million (an "Initial Public Offering").
4. Right of First Refusal.
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(a) Sales; Notice. At any time on or after the Permitted Sale Date,
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Purchaser may Transfer for cash (and only for such form of consideration) any or
all of the Shares to any third party subject to the provisions of Section 4,
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Section 7(c), Section 9 and Section 12(a) hereof, and subject to Section 6 of
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the Pledge Agreement. Prior to any such intended Transfer, Purchaser shall
first give at least thirty (30) days' advance written notice (the "Notice") to
the Company specifying (i) Purchaser's bona fide intention to sell such Shares;
(ii) the name(s) and address(es) of the proposed transferee(s); (iii) the number
of Shares Purchaser proposes to Transfer (individually, an "Offered Share," and
collectively, the "Offered Shares"); (iv) the price for which Purchaser proposes
to Transfer each Offered Share (the "Proposed Purchase Price"); (v) such
evidence as the Company may reasonably request to demonstrate the ability of the
proposed transferee(s) to pay the Proposed Purchase Price; and (vi) all other
material terms and conditions of the proposed transfer.
(b) Election by the Company. Within twenty (20) days after receipt
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of the Notice, the Company may elect to purchase any or all of the Offered
Shares at the price and on the terms and conditions set forth in the Notice by
delivery of written notice of such election to Purchaser, specifying a day,
which shall not be more than twenty (20) days after such notice is delivered, on
or before which Purchaser shall surrender (if Purchaser has not already done so)
the certificate or certificates representing the Offered Shares (duly endorsed
in blank for transfer) at the administrative office of the Company. Within
twenty (20) days after delivery of such notice to Purchaser, the Company shall
deliver to Purchaser a check, payable to Purchaser or to such person as
Purchaser shall request, in the amount equal to the product of the Proposed
Purchase Price multiplied by the number of Offered Shares (the "First Refusal
Price") in exchange for the Offered Shares. If Purchaser fails to so surrender
such certificate or certificates on or before such date, from and after such
date the Offered Shares shall be deemed to be no longer outstanding,
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and Purchaser shall cease to be a Shareholder with respect to such Shares and
shall have no rights with respect thereto except only the right to receive
payment of the First Refusal Price, without interest, upon surrender of the
certificate or certificates therefor (duly endorsed in blank for Transfer).
Notwithstanding the foregoing, if any Outstanding Amount is owed to the Company
by Purchaser, the First Refusal Price shall be reduced (to an amount not less
than zero) by such Outstanding Amount, which reduction shall be specified in
reasonable detail in the Company's written notice of election to purchase the
Offered Shares. If the Company does not elect to purchase all of the Offered
Shares, Purchaser shall be entitled to Transfer the Offered Shares, subject to
Section 9 of this Agreement and Section 6 of the Pledge Agreement, to the
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transferee(s) named in the Notice at the Proposed Purchase Price, or at a higher
price, and on the terms and conditions set forth in the Notice; provided,
however, that such Transfer must be consummated within ninety (90) days after
the date of the Notice and any proposed Transfer after such ninety (90) day
period may be made only by again complying with the procedures set forth in this
Section 4. This right of first refusal terminates upon an Initial Public
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Offering. The Company may assign the right to purchase the Offered Shares to one
or more of its Shareholders owing 3% or more of its outstanding common stock.
5. Permitted Transfers. Subject to and upon full compliance with Section
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6 of the Pledge Agreement, Purchaser may, at any time or times, transfer any or
all of the Shares: (a) inter vivos to Purchaser's spouse or issue, a trust for
their benefit, or pursuant to any will or testamentary trust; or (b) upon
Purchaser's death, to any person in accordance with the laws of descent and/or
testamentary distribution (such persons described in clauses (a) and (b) hereof
are collectively referred to herein as "Permitted Transferees").
Notwithstanding the foregoing in this Section 5, Shares shall not be Transferred
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pursuant to this Section 5 until the Permitted Transferee executes a valid
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undertaking, in form and substance reasonably satisfactory to the Company, to
the effect that the Permitted Transferee and the Shares so Transferred shall
thereafter remain subject to all of the provisions of this Agreement (including
the Repurchase Option) and the Pledge Agreement, as though the Permitted
Transferee were a party to this Agreement and the Pledge Agreement, bound in
every respect in the same way as Purchaser. Transfers made in accordance with
this Section 5 shall not be subject to the provisions of Section 4 of this
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Agreement.
6. Security for Performance. The Company and Purchaser hereby acknowledge
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(a) that Purchaser has agreed to pledge the Shares to secure the payment of all
obligations existing under the Note whether for principal, interest, fees,
expenses or otherwise and/or to ensure Purchaser's compliance with the terms and
conditions of this Agreement and the Pledge Agreement and (b) that in connection
with such pledge, Purchaser shall enter into the Pledge Agreement as of the
Closing Date requiring that the certificates evidencing the Shares (the
"Certificates") be held by the Company as security for the payment of all
obligations existing under the Note, whether for principal, interest, fees,
expenses or otherwise, and for Purchaser's compliance with the terms and
conditions of this Agreement and the Pledge Agreement. Subject to compliance
with the terms and conditions of this Agreement and of the Pledge Agreement,
Purchaser shall exercise all rights and privileges of the registered holder of
the Shares held by the
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Company pursuant to the Pledge Agreement and shall be entitled to receive any
dividend or other distribution thereon.
7. Investment Representations. Purchaser represents and warrants to the
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Company as follows:
(a) Purchaser's Own Account. Purchaser is acquiring the Shares for
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Purchaser's own account and not with a view to or for sale in connection with
any distribution of the Shares.
(b) Access to Information. Purchaser (i) is familiar with the
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business of the Company and its Subsidiaries; (ii) has had an opportunity to
discuss with representatives of the Company and its Subsidiaries the condition
of and prospects for the continued operation and financing of the Company and
its Subsidiaries and such other matters as Purchaser has deemed appropriate in
considering whether to invest in the Shares; and (iii) has been provided access
to all available information about the Company and its Subsidiaries reasonably
requested by Purchaser.
(c) Shares Not Registered. Purchaser understands that the Shares have
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not been registered under the Act or registered or qualified under the
securities laws of any state and that Purchaser may not Transfer the Shares
unless they are subsequently registered under the Act and registered or
qualified under applicable state securities laws, or unless an exemption is
available which permits Transfers without such registration and qualification.
8. Partial Termination. This Agreement shall terminate with respect to
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those Shares which are (a) acquired by the Company pursuant to Section 3(b)
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hereof upon such acquisition; or (b) acquired by the Company pursuant to Section
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4 hereof, upon such acquisition.
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9. Obligation to Sell Securities.
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(a) If FS Equity Partners IV, L.P., a Delaware limited partnership,
("FSEP IV") finds a third-party buyer for all shares of common stock of the
Company held by it (whether such sale is by way of purchase, exchange, merger or
other form of transaction), upon the request of FSEP IV, the Purchaser shall
sell all of Purchaser's Shares for the same per share consideration (which may
be less than the Purchase Price per share paid by Purchaser), and otherwise
pursuant to the terms and conditions applicable to the FSEP IV for the sale of
its shares of its common stock of the Company.
(b) Purchaser hereby consents to any sale, transfer, reorganization,
exchange, merger, combination or other form of transaction described in Section
9(a) and agrees to execute such agreements, powers of attorney, voting proxies
or other documents and instruments as may be necessary or desirable to
consummate such sale, transfer, reorganization, exchange, merger, combination or
other form of transaction. Purchaser further agrees to timely take such other
actions as FSEP IV may reasonably request in connection with the approval of the
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consummation of such sale, transfer, reorganization, exchange, merger,
combination or other form of transaction, including voting as a stockholder to
approve any such sale, transfer, reorganization, exchange, merger, combination
or other form of transaction and waiving any appraisal rights that Purchaser may
have in connection therewith.
(c) The obligations of Purchaser pursuant to this Section 9 shall be
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binding on any transferee (other than a transferee in a Public Market Sale, as
defined below) of any of the Shares and Purchaser and any of his transferees
shall obtain and deliver to FSEP IV a written commitment to be bound by such
provisions from a subsequent transferee prior to any Transfer (other than
Transfers constituting a Public Market Sale). The Purchaser's obligations
pursuant to this Section 9, and the obligations of any such transferee, shall
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survive the partial termination of this Agreement pursuant to Section 8 hereof.
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Any transfer effected in violation of this provision shall be void. The term
"Public Market Sale" means any sale of Common Stock after the Initial Public
Offering which is made pursuant to Rule 144 promulgated under the Securities Act
or which is made pursuant to a registration statement filed with the declared
effective by the Securities and Exchange Commission.
10. Tag Along Rights. If FSEP IV finds a third-party buyer (other than a
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buyer that is an investment fund or partnership affiliated with FSEP IV, a
general or limited partner of FSEP IV, or, for the period ending one year from
the date hereof, an unaffiliated institutional investor or merchant banking firm
(each, a "FS Permitted Transferee") or is a transferee in a Public Market Sale),
for all or part of the shares of Common Stock held by FSEP IV (whether such sale
is by way of purchase, exchange, merger or other form of transaction), the
Purchaser shall have the right to sell, on the terms set forth in a written
notice (the "Offering Notice") delivered by FSEP IV to the Purchaser describing
the terms of the proposed sale (including the minimum sale price for the shares
of Common stock that FSEP IV plans to sell), that amount of the Shares he then
owns which constitute the same percentage of his Shares as the percentage of
Common Stock sold by FSEP IV. Each such right shall be exercisable by
delivering written notice to FSEP IV within 15 days after receipt of the
Offering Notice. Failure to exercise such right within such 15-day period shall
be regarded as a waiver of such rights. The obligations of FSEP IV under this
Section 10 shall terminate upon an Initial Public Offering.
11. Miscellaneous.
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(a) Legends on Certificates. Any and all certificates now or
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hereafter issued evidencing the Shares shall have endorsed upon them a legend
substantially as follows:
"THE SECURITIES EVIDENCED BY THIS CERTIFICATE ARE SUBJECT TO RESTRICTIONS
UPON TRANSFER AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED, PLEDGED,
HYPOTHECATED OR OTHERWISE DISPOSED OF, EXCEPT IN ACCORDANCE WITH THE TERMS
AND CONDITIONS OF THAT CERTAIN STOCK PURCHASE AGREEMENT DATED AS OF
FEBRUARY 1, 2000, BY AND BETWEEN ADVANCE HOLDING CORPORATION, A VIRGINIA
CORPORATION,
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AND THE ORIGINAL PURCHASER HEREOF, A COPY OF WHICH AGREEMENT
IS ON FILE AT THE PRINCIPAL EXECUTIVE OFFICES OF ADVANCE HOLDING
CORPORATION."
Such certificates shall also bear such legends and shall be subject to such
restrictions on transfer as may be necessary to comply with all applicable
federal and state securities laws and regulations.
(b) Further Assurances. Each party hereto agrees to perform any
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further acts and execute and deliver any documents which may be reasonably
necessary to carry out the intent of this Agreement.
(c) Notices. Except as otherwise provided herein, all notices,
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requests, demands and other communications under this Agreement shall be in
writing, and if by telegram or telecopy, shall be deemed to have been validly
served, given or delivered when sent, or if by personal delivery or messenger or
courier service, or by registered or certified mail, shall be deemed to have
been validly served, given or delivered upon actual delivery, at the following
addresses, telephone and facsimile numbers (or such other address(es), telephone
and facsimile numbers a party may designate for itself by like notice):
If to the Company:
Advance Holding Corporation
c/o ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & Co. Incorporated
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Flippin ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Drawer 1200
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
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If to Purchaser:
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Advance Auto Parts
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
▇▇▇ ▇▇▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇, ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Goodyear, LLP
▇▇▇ ▇&▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Telephone:__________________
Fax:________________________
or such other address as the parties may provide in writing from time to time.
(d) Amendments. This Agreement may be amended only by a written
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agreement executed by both of the parties hereto and by FSEP IV.
(e) Governing Law. This Agreement shall be governed by and construed
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in accordance with the laws of the Commonwealth of Virginia.
(f) Disputes. In the event of any dispute among the parties arising
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out of this Agreement, the prevailing party shall be entitled to recover from
the nonprevailing party the reasonable expenses of the prevailing party
including, without limitation, reasonable attorneys' fees.
(g) Entire Agreement. This Agreement constitutes the entire
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agreement and understanding among the parties pertaining to the subject matter
hereof and supersedes any and all prior agreements, whether written or oral,
relating hereto.
(h) Recapitalizations or Exchanges Affecting the Company's Capital.
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The provisions of this Agreement shall apply to any and all stock or other
securities of the Company or any successor or assign of the Company, which may
be issued in respect of, in exchange for or in substitution of, the Shares by
reason of any split, reverse split, recapitalization, reclassification,
combination, merger, consolidation or otherwise, and such Shares or other
securities shall be encompassed within the term "Shares" for purposes of this
Agreement and the Pledge Agreement.
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(i) No Rights as an Employee. Nothing in this Agreement shall affect
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in any manner whatsoever the rights of the Company or any of its Subsidiaries to
terminate Purchaser's employment for any reason, with or without cause, subject
to the terms and conditions of any employment agreement to which Purchaser may
be a party.
(j) Disclosure. The Company shall have no duty or obligation to
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affirmatively disclose to Purchaser, and Purchaser shall have no right to be
advised of, any material information regarding the Company or any of its
Subsidiaries at any time prior to, upon or in connection with the Company's
repurchase of the Shares under this Agreement at the cessation or termination of
Purchaser's employment with the Company and/or any of its Subsidiaries.
(k) Successors and Assigns. The Company may assign with absolute
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discretion any or all of its rights and/or obligations and/or delegate any of
its duties under this Agreement to any of its affiliates, successors and/or
assigns and this Agreement shall inure to the benefit of, and be binding upon,
such respective affiliates, successors and/or assigns of the Company in the same
manner and to the same extent as if such affiliates, successors and/or assigns
were original parties hereto. Without limiting the foregoing, the Company may
assign the Repurchase Option and/or the right of first refusal provided for in
Section 3 and Section 4 of this Agreement, respectively, to any of its
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affiliates, successors and/or assigns. FSEP IV may assign its rights under
Section 9 to any FS Permitted Transferee or to a purchaser of shares of Common
Stock then owned by FSEP IV. For purposes of this Agreement, the term "Shares"
shall include shares of capital stock or other securities of the Company or any
successor or assign of the Company, which are issued in respect of, in exchange
for or in substitution of the Shares by reason of any split, reverse split,
recapitalization, reclassification, combination, merger, exchange or
consolidation. Unless specifically provided herein to the contrary, Purchaser
may not assign any or all of its rights and/or obligations and/or delegate any
or all its duties under this Agreement without the prior written consent of the
Company and FSEP IV. Upon an assignment of any or all of Purchaser's rights
and/or obligations and/or a delegation of any or all of its duties under this
Agreement in accordance with the terms of this Agreement, this Agreement shall
inure to the benefit of, and be binding upon, Purchaser's respective affiliates,
successors and/or assigns in the same manner and to the same extent as if such
affiliates, successors and/or assigns were original parties hereto.
(l) Headings. Introductory headings at the beginning of each section
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and subsection of this Agreement are solely for the convenience of the parties
and shall not be deemed to be a limitation upon or description of the contents
of any such section and subsection of this Agreement.
(m) Counterparts. This Agreement may be executed in two
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counterparts, each of which shall be deemed an original and both of which, when
taken together, shall constitute one and the same agreement.
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IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the day and year first above written.
THE COMPANY:
ADVANCE HOLDING CORPORATION,
a Virginia corporation
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
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▇▇▇▇▇▇ ▇. ▇▇▇▇
President and CAO
PURCHASER:
/s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
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▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
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