STOCKHOLDERS AGREEMENT
AGREEMENT dated as of October 10, 1995 by and between DAKA
International, Inc., a Delaware corporation ("Parent"), and the other parties
signatory hereto (each, a "Stockholder").
Concurrently herewith, Parent, CEI Acquisition Corp., a Minnesota
corporation and a wholly owned subsidiary of Parent (the "Sub"), and Champps
Entertainment, Inc., a Minnesota corporation (the "Company"), are entering
into an Agreement and Plan of Merger (as such agreement may be amended from
time to time, the "Merger Agreement"; capitalized terms used but not defined
herein shall have the meanings set forth in the Merger Agreement) pursuant
to which Sub will be merged with and into the Company (the "Merger"), whereby
the shares of common stock, par value $.01 per share, of the Company
("Company Common Stock") issued and outstanding and held by each stockholder
of the Company immediately prior to the Effective Time of the Merger (other
than (i) shares of Company Common Stock owned, directly or indirectly, by
the Company or any subsidiary of the Company or by Parent, Sub or any other
subsidiary of Parent and (ii) Dissenting Shares) will be converted into the
right to receive common stock, par value $.01 per share, of the Parent
("Parent Common Stock") (and cash in lieu of any fractional share).
As a condition to their willingness to enter into the Merger
Agreement, Parent and Sub have required that each Stockholder enter into,
and each such Stockholder has agreed to enter into, this Agreement.
AGREEMENT
To implement the foregoing and in consideration of the mutual
agreements contained herein, the parties agree as follows:
1. Representations and Warranties. Each Stockholder hereby
severally represents and warrants to Parent as follows:
(a) Ownership of Shares. Such Stockholder is either
(i) the record and beneficial owner of, (ii) trustee of a trust that is the
record holder or beneficial owner of, and whose beneficiaries are the
beneficial owners (such trustee, a "Trustee") of, or (iii) the beneficial
owner but not the record holder of, the number of shares of Company Common
Stock as set forth opposite such Stockholder's name on Schedule 1 hereto
(the "Existing Shares", and together with any shares of Company Common
Stock acquired by such Stockholder after the date hereof and prior to the
termination hereof, whether upon exercise of options, conversion of
convertible securities, purchase, exchange or otherwise, the "Shares").
On the date hereof, the Existing Shares set forth opposite such Stockholder's
name on Schedule 1 constitute all of the shares of Company Common Stock
owned of record or beneficially by such Stockholder. Such Stockholder has
sole voting power and sole power to issue instructions with respect to the
matters set forth in Section 2 hereof, sole power of disposition, sole power
of conversion, and sole power to demand appraisal rights, in each case with
respect to all of the Existing Shares set forth opposite such Stockholder's
name on Schedule 1, with no restrictions, subject to applicable federal
securities laws and the terms of this Agreement, on such rights.
(b) Power; Binding Agreement. Such Stockholder has the legal
capacity, power and authority to enter into and perform all of such
Stockholder's obligations under this Agreement. The execution, delivery
and performance of this Agreement by such Stockholder will not violate any
other agreement to which such Stockholder is a party including, without
limitation, any trust agreement, voting agreement, stockholders agreement
or voting trust. This Agreement has been duly and validly executed and
delivered by such Stockholder and constitutes a valid and binding agreement
of such Stockholder, enforceable against such Stockholder in accordance with
its terms. There is no beneficiary or holder of a voting trust certificate
or other interest of any trust of which a Stockholder is Trustee whose
consent is required for the execution and delivery of this Agreement or the
consummation of the transactions contemplated hereby. If such Stockholder
is married and such Stockholder's Shares constitute community property, this
Agreement has been duly authorized, executed and delivered by, and
constitutes a valid and binding agreement of, such Stockholder's spouse,
enforceable against such person in accordance with its terms.
(c) No Conflicts. Except for filings under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇
Antitrust Improvements Act of 1976, as amended, if applicable, (A) no filing
with, and no permit, authorization, consent or approval of, any state or
federal public body or authority is necessary for the execution of this
Agreement by such Stockholder and the consummation by such Stockholder of
the transactions contemplated hereby and (B) neither the execution and
delivery of this Agreement by such Stockholder nor the consummation by such
Stockholder of the transactions contemplated hereby nor compliance by such
Stockholder with any of the provisions hereof shall (x) conflict with or
result in any breach of any applicable trust or other organizational
documents applicable to such Stockholder, (y) result in a violation or
breach of, or constitute (with or without notice or lapse of time or both)
a default (or give rise to any third party right of termination,
cancellation, material modification or acceleration) under any of the terms,
conditions or provisions of any note, bond, mortgage, indenture, license,
contract, commitment, arrangement, understanding, agreement or other
instrument or obligation of any kind to which such Stockholder is a party
or by which such Stockholder or any of such Stockholder's properties or
assets may be bound or (z) violate any order, writ, injunction, decree,
judgment, order, statute, rule or regulation applicable to such Stockholder
or any of such Stockholder's properties or assets.
(d) No Encumbrances. Such Stockholder's Shares and the
certificates representing such Shares are now and at all times during the
term hereof will be held by such Stockholder, or by a nominee or custodian
for the benefit of such Stockholder free and clear of all liens, claims,
security interests, proxies, voting trusts or agreements, understandings
or arrangements or any other encumbrances whatsoever except for any such
encumbrances or proxies arising hereunder.
(e) No Broker. No broker, investment banker, financial adviser
or other person is entitled to any broker's , finder's, financial adviser's
or other similar fee or commission in connection with the transactions
contemplated hereby based upon arrangements made by or on behalf of
such Stockholder.
(f) Acknowledgement of Reliance. Such Stockholder understands
and acknowledges that Parent is entering into, and causing Sub to enter
into, the Merger Agreement in reliance upon such Stockholder's execution
and delivery of this Agreement.
(g) Tax Representation. Such Stockholder has no plan or
intention, directly or indirectly, to sell, exchange, or otherwise
dispose of, reduce the risk of loss by short sale or otherwise, or
enter into any contract or other arrangement with respect to, or
consent to the sale, exchange or other deposition of any interest
in any Parent Common Stock to be received by such Stockholder pursuant
to the Merger. Such Stockholder acknowledges that he is giving his
representation to enable ▇▇▇▇▇▇▇, Procter & ▇▇▇▇ and ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇
to opine that the Merger constitutes a reorganization within the meaning
of Section 368(a) of the Code and further recognizes that significant
adverse tax consequences might result if such representation is not
true. Such Stockholder understands and agrees that, in connection
with the Merger, such Stockholder will be required to restate the
foregoing representation on or about the Effective Time of the Merger.
(h) Total Shares Outstanding. As of the date hereof, the
Company has 4,953,774 shares of Company Common Stock outstanding.
(i) Disclosure. The representations, warranties and statements
of each Stockholder made in this Agreement do not contain any untrue
statement of a material fact, and, when taken together, do not omit
to state any material fact necessary to make such representations,
warranties and statements, in light of the circumstances under which
they were made, not misleading.
2. Agreement to Vote; Proxy.
2.1 Voting. Each Stockholder hereby severally agrees
that, during the time this Agreement is in effect, at any meeting of the
stockholders of the Company, however called, or in connection with any
written consent of the stockholders of the Company, such Stockholder shall
vote (or cause to be voted) the number of shares held of record or
beneficially by such Stockholder and set forth on Schedule 1 beside such
Stockholder's name and under the column entitled "Committed Shares" (such
shares hereinafter being referred to as such Stockholder's Committed Shares")
(i) in favor of the Merger, the execution and delivery by the Company of the
Merger Agreement and the approval of the terms thereof and each of the other
actions contemplated by the Merger Agreement and this Agreement and any
actions required in furtherance hereof and thereof; (ii) against any action
or agreement that would result in a breach in any material respect of any
covenant, representation or warranty or any other obligation or agreement of
the Company under the Merger Agreement or this Agreement; (iii) except as
otherwise agreed to in writing in advance by Parent, against the following
actions (other than the Merger and the transactions contemplated by the
Merger Agreement): (1) any extraordinary corporate transaction, such as a
merger, consolidation or other business combination involving the Company
or its subsidiaries; (2) a sale, lease or transfer of a material amount of
assets of the Company or its subsidiaries or a reorganization, recapitalization,
dissolution or liquidation of the Company or its subsidiaries; (3) (a) any
change in the majority of the board of directors of the Company; (b) any
material change in the present capitalization of the Company or any
amendment of the Company's Articles of Incorporation; (c) any other
material change in the Company's corporate structure or business; or (d)
any other action; which, in the case of each of the matters referred to in
clauses 3(a), (b), (c) or (d), is intended, or could reasonably be expected,
to impede, interfere with, delay, postpone, discourage or materially
adversely affect the contemplated economic benefits to the Parent of the
Merger or the transactions contemplated by the Merger Agreement. Such
Stockholder shall not enter into any agreement or understanding with any
person or entity prior to the Termination Date (as defined in Section 7)
to vote or give instructions after the Termination Date in any manner
inconsistent with clauses (i), (ii) or (iii) of the preceding sentence.
2.2 Proxy. Each Stockholder hereby grants to, and
appoints, Parent and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Chief Executive Officer and
President, and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Senior Vice President and Chief
Financial Officer, in their respective capacities as officers of Parent,
and any individual who shall hereafter succeed to any such office of Parent,
and any other designee of Parent, and each of them individually, such
Stockholder's irrevocable proxy and attorney-in-fact (with full power
of substitution) to vote the Committed Shares as indicated in Section
2.1 above, and Parent agrees to so vote such Committed Shares. Each
stockholder intends this proxy to be irrevocable and coupled with
an interest and will take such further action and execute such
other instruments as may be necessary to effectuate the intent
of this proxy and hereby revokes any proxy previously granted
by such Stockholder with respect to such Stockholder's Committed
Shares. In furtherance of the foregoing, within thirty days
after execution hereof, each Stockholder will, if necessary
or requested by Parent, obtain a certificate from the transfer
agent of the Company representing the exact number of Committed
Shares and shall execute a new proxy to the effect set forth in
this Section 2.2 but citing that the shares covered by such
proxy are the shares represented by such stock certificate.
3. Certain Covenants of Stockholders. Except in accordance
with the terms of this Agreement, each Stockholder hereby severally
covenants and agrees as follows:
3.1 No Solicitation. No Stockholder shall (except, as
advised in a written opinion of ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ or other counsel
reasonably acceptable to Parent, as may be required by applicable corporate
law with respect to the provision of materials to a stockholder of the
Company by a Stockholder in his capacity as an officer or director of
the Company), directly or indirectly, solicit or respond to any inquiries
or the making of any proposal by any person or entity (other than Parent
or any affiliate of Parent) with respect to the Company that constitutes
or could reasonably be expected to lead to a Competing Transaction or a
proposal for a Competing Transaction. If any Stockholder receives any
such inquiry or proposal, then such Stockholder shall promptly inform
parent of the terms and conditions, if any, of such inquiry or proposal
and the identity of the person making it. Each Stockholder will immediately
cease and cause to be terminated any existing activities, discussions or
negotiations with any parties conducted heretofore with respect to any of
the foregoing.
3.2 Restriction on Transfer, Proxies and Non-Interference;
Restriction on Withdrawal. No Stockholder shall, directly or indirectly:
(i) except pursuant to the terms of the Merger Agreement, offer for sale,
sell, transfer, tender, pledge, encumber, assign or otherwise dispose of,
or enter into any contract, option or other arrangement or understanding
with respect to or consent to the offer for sale, sale, transfer, tender,
pledge, encumbrance, assignment or other disposition of, any or all of
such Stockholder's Committed Shares or any interest therein; (ii) except
as contemplated hereby, grant any proxies or powers of attorney, deposit
any Committed Shares into a voting trust or enter into a voting agreement
with respect to any Committed Shares; (iii) take any action that would
make any representation or warranty of such Stockholder contained herein
untrue or incorrect or have the effect of preventing or disabling such
Stockholder from performing such Stockholder's obligations under this
Agreement or (iv) following the Merger, sell any shares of Parent Common
Stock until such time as unaudited financial statements covering at least
thirty days of the combined operations of Company and Parent following the
Merger have been published by Parent.
3.3 No Action. Each Stockholder covenants that it
will take no action to assert that the voting rights of the Shares are
adversely affected by this Agreement as a result of the provisions of
Section 302A.671 of the Minnesota Business Corporation Act or any other
antitakeover or business combination statute under Minnesota law.
4. Further Assurances. From time to time, at the other party's
request and without further consideration, each party hereto shall execute
and deliver such additional documents and take all such further action as
may be necessary or desirable to consummate and make effective, in the
most expeditions manner practicable, the transactions contemplated by this
Agreement.
5. Certain Events. Each Stockholder agrees that this Agreement
and the obligations hereunder shall attach to such Stockholder's Shares or
Committed Shares, as the case may be, and shall be binding upon any person
or entity to which legal or beneficial ownership of such Shares or Committed
Shares shall pass, whether by operation of law or otherwise, including
without limitation such Stockholder's heirs, guardians, administrators or
successors.
6. Termination. The covenants and agreements contained herein
with respect to the Company Common Stock shall terminate on the first to
occur of (a) the Effective Time of the Merger and (b) the date upon which
the Merger Agreement is terminated in accordance with its terms. The
covenants contained in Section 8 shall survive the termination of this
Agreement to the extent that and for so long as a Stockholder Fee is due
Parent under Section 8 hereof.
7. Stockholder Capacity. No person executing this Agreement
who is or becomes during the term hereof a director of the Company makes
any agreement or understanding herein in his or her capacity as such
director. Each Stockholder signs solely in his or her capacity as the
record and beneficial owner of, or the trustee of a trust whose beneficiaries
are the beneficial owners of, such Stockholder's Shares.
8. Stockholder Fee.
(a) In the event that the Merger Agreement is terminated
pursuant to Section 7.01(f)(i) thereof and the average per share closing
price of Parent Common Stock on the Nasdaq National Market System over the
twenty trading days immediately preceding the originally scheduled date of
the Company's Stockholder's Meeting was equal to or greater than $22.50,
then each Stockholder shall, within two business days of written demand by
Parent, pay to Parent the amount of money set forth on Schedule 1 beside
such Stockholder's name and under the column entitled "Stockholder Fee"
(such amount of money being hereinafter referred to as such Stockholder's
"Stockholder Fee"), in cash in immediately available funds; provided that
in the event that the Company pays a Termination Fee under Section 7.02 of
the Merger Agreement, the aggregate Stockholder Fees of the Stockholders
shall be reduced accordingly (i.e., one dollar of reduction in the
aggregate for each dollar paid by the Company, with such dollar of
reduction distributed among the Stockholders in the same proportion that
each Stockholder's Stockholder Fee is to the aggregate of all Stockholder
Fees).
(b) In the event that the covenants of a Stockholder
set forth in the last sentence of Section 2.2 or in Section 3.3 are not
satisfied, each Stockholder shall, within two business days of demand by
the Company, pay to the Company such Stockholder's Stockholder Fee, in
cash in immediately available funds. After payment of such Stockholder
Fee, such Stockholder shall be relieved of the obligation to pay a
Stockholder Fee under Section 8(a).
9. Miscellaneous.
9.1 Entire Agreement; Assignment. This Agreement
(i) constitutes the entire agreement between the parties with respect to
the subject matter hereof and supersedes all other prior agreements and
understandings, both written and oral, between the parties with respect to
the subject matter hereof and (ii) shall not be assigned by operation of
law or otherwise without the prior written consent of the other party,
provided that Parent may assign, in its sole discretion, its rights and
obligations hereunder to any direct or indirect wholly-owned subsidiary of
Parent, but no such assignment shall relieve Parent of its obligations
hereunder if such assignee does not perform such obligations.
9.2 Amendments. This Agreement may not be modified,
amended, altered or supplemented, except upon the execution and delivery
of a written agreement executed by the parties hereto; provided that
Schedule 1 hereto may be supplemented by Parent by adding the name and
other relevant information concerning any stockholder of the Company who
agrees to be bound by the terms of this Agreement without the agreement of
any other party hereto, and thereafter such added stockholder shall be
treated as a "Stockholder" for all purposes of this Agreement.
9.3 Notices. All notices, requests, claims, demands
and other communications hereunder shall be in writing and shall be given
(and shall be deemed to have been duly received if so given) by hand
delivery, telegram, telex or telecopy, or by mail (registered or certified
mail, postage prepaid, return receipt requested) or by any courier service,
such as Federal Express, providing proof of delivery. All communications
hereunder shall be delivered to the respective parties at the following
addresses:
If to Stockholder: At the address set forth on Schedule 1
Copy to: ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, P.A.
1100 International Centre
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
If to Parent: DAKA International, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇, ▇▇.
Copy to: ▇▇▇▇▇▇▇, Procter & ▇▇▇▇
Exchange Place
Boston, Massachusetts 02109
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
or to such other address as the person to whom notice is given may have
previously furnished to tie others in writing in the manner set forth above.
9.4 Governing Law. This Agreement shall be governed by
and construed in accordance with the laws of the State of Minnesota regardless
of the laws that might otherwise govern under applicable principles of
conflicts of laws thereof.
9.5 Specific Performance; Cost of Collection. Each of
the parties hereto recognizes and acknowledges that a breach by it of any
covenants or agreements contained in this Agreement will cause the other
party to sustain damages for which it would not have an adequate remedy at
law for money damages, and therefore each of the parties hereto agrees that
in the event of any such breach the aggrieved party shall be entitled to
the remedy of specific performance of such covenants and agreements and
injunctive and other equitable relief in addition to any other remedy to
which it may be entitled, at law or in equity. Parent agrees that it
shall not bring any action for money damages relating to this Agreement or
the transactions herein contemplated against any trustee of any Stockholder
that is a trust in such trustee's personal capacity based upon any action
taken or not taken pursuant to a court order or a final legal judgment.
Any costs reasonably incurred by Parent in connection with its successful
enforcement of this Agreement and collection of the Stockholder Fees
(including reasonable attorneys' fees) shall be borne by the Stockholder
or Stockholders against whom such enforcement was successfully sought or
collection was successfully made.
9.6 Counterparts. This Agreement may be executed in
two counterparts, each of which shall be deemed to be an original, but
both of which shall constitute one and the same Agreement.
9.7 Descriptive Headings. The descriptive headings
used herein are inserted for convenience of reference only and are not
intended to be part of or to affect the meaning or interpretation of this
Agreement.
9.8 Severability. Whenever possible, each provision or
portion of any provision of this Agreement will be interpreted in such
manner as to be effective and valid under applicable law but if any
provision or portion of any provision of this Agreement is held to be
invalid, illegal or unenforceable in any respect under any applicable law
or rule in any jurisdiction, such invalidity, illegality or unenforceability
will not affect any other provision or portion of any provision in such
jurisdiction, and this Agreement will be reformed, construed and enforced
in such jurisdiction as of such invalid, illegal or unenforceable provision
or portion of any provision had never been contained herein.
9.9 Definitions. For purposes of this Agreement:
(a) "Beneficially own" or "Beneficial ownership"
with respect to any securities shall mean having "beneficial ownership" of
such securities (as determined pursuant to Rule 13d-3 under the Exchange
Act), including pursuant to any agreement, arrangement or understanding,
whether or not in writing. Without duplicative counting of the same
securities by the same holder, securities Beneficially owned by a Person
shall include securities Beneficially Owned by all other Persons with whom
such Person would constitute a "group" as described in Section 13(d)(3) of
the Exchange Act. The meaning of this definition shall not be affected by
the third sentence of Section 7 of this Agreement.
(b) "Person" shall mean an individual,
corporation, partnership, joint venture, association, trust, unincorporated
organization or other entity.
IN WITNESS WHEREOF, Parent, the Company and each Stockholder have
caused this Agreement to be duly executed as of the day and year first
above written.
DAKA INTERNATIONAL, INC.
By: /s/▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Senior Vice President, Chief
Financial Officer and Treasurer
(Principal Financial and
Principal Accounting Officer)
/s/▇▇▇▇ ▇. ▇▇▇▇▇▇
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▇▇▇▇ ▇. ▇▇▇▇▇▇
/s/▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
/s/▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
SCHEDULE 1
Number of
Shares of
Company
Common Stock
Name and Address Owned by Committed Stockholder Stock
of Stockholder Stockholder* Shares Fee Certificate(s)
▇▇▇▇ ▇. ▇▇▇▇▇▇ 1,970,300 121,000 $ 693,939
▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ 269,000 269,000 $ 94,742
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ 600,000 600,000 $ 211,319
▇▇-▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Total _________ ________ __________
2,839,300 990,000 $1,000,000
Note: As of the date of this Agreement, the Company has a total of
4,953,774 shares of Company Common Stock outstanding. Total
Committed Shares equals 19.99% of the total number of outstanding
shares.
___________________
* Indicates beneficial and, unless otherwise indicted, record
ownership.