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Exhibit 17 (c)(6)
SKYLINE ACQUISITION CORP.,
AN OHIO CORPORATION
STOCKHOLDERS' AGREEMENT
DATED AS OF [ ], 1998
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TABLE OF CONTENTS
Page
ARTICLE I - DEFINITIONS
1.1 Definitions
1.2 Construction
ARTICLE II - AFFIRMATIVE COVENANTS OF THE COMPANY
AND THE STOCKHOLDERS
2.1 Board Representation and Voting Agreement
of the Shares
2.2 Specified Actions
2.3 Financial Covenants
2.4 Sale of the Company
2.5 Supplementary Bonus Program
ARTICLE III - PREEMPTIVE RIGHTS
3.1 Right to Purchase
3.2 Closing
ARTICLE IV PURCHASE OF MANAGEMENT
STOCKHOLDERS' SHARES
4.1 Purchase of Management Stockholder's Shares
4.2 Put of Management Stockholder's Shares
4.3 Repurchase Closings
4.4 Determination of Market Value
4.5 Required Consents
ARTICLE V - TAKE-ALONG AND TAG-ALONG
5.1 Take-Along and Tag-Along
ARTICLE VI - RESTRICTIONS ON TRANSFER
6.1 Transfer Restrictions
6.2 Regulatory Compliance Cooperation
6.3 Termination
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ARTICLE VII - MISCELLANEOUS
7.1 Reincorporation
7.2 Waivers and Amendments
7.3 Governing Law
7.4 Successors and Assigns
7.5 Entire Agreement
7.6 Notices
7.7 Severability
7.8 Counterparts
7.9 Descriptive Headings
7.10 Consent to Jurisdiction
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STOCKHOLDERS' AGREEMENT
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This Stockholders' Agreement is entered into as of [ ], 1998, by and
among SKYLINE ACQUISITION CORP., an Ohio corporation (the "Company"), and the
Persons named in SCHEDULE A attached hereto and made a part hereof (collectively
the "Stockholders").
RECITALS
WHEREAS, the Company has authorized capital stock consisting of
2,000,000 shares of Class A Voting Common Stock, no par value per share (the
"Class A Common Stock"), and 2,000,000 shares of Class B Nonvoting Common Stock,
no par value per share (the "Class B Common Stock", and together with the Class
A Common Stock, the "Shares");
WHEREAS, each Fleet Entity has a substantial investment in the Company
by reason of such Person's ownership of the Shares shown on Schedule A;
WHEREAS, each member of the Management Group has a substantial
investment in the Company by reason of such Person's ownership of the Shares
shown on Schedule A and/or has the right to acquire Class A Common Stock upon
exercise of the Retained Options and/or has the right to acquire Class B Common
Stock upon exercise of the Performance Options held by such Person; and
WHEREAS, the parties believe that it is in the best interest of the
Company and the Stockholders to make provision for (a) the future disposition of
certain Shares of the Company, and (b) other matters relating to the governance
of the Company;
NOW, THEREFORE, in consideration of the mutual promises and covenants
hereinafter set forth, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
1.1 DEFINITIONS. Capitalized terms used herein and not otherwise
defined herein shall have the following meanings:
"AFFILIATE" shall mean as applied to any specified Person, any
Person directly or indirectly controlling, controlled by or under direct or
indirect common control with such specified Person and shall also include (a)
any Person who is an officer, director, manager or beneficial owner of at least
5% of the then outstanding equity securities of such specified Person and Family
Members and officers, directors or managers of any such Person, (b) any Person
in which such specified Person or an Affiliate (as defined in clause (a) above)
of such specified Person shall, directly or indirectly, either beneficially own
at least 10% of the then outstanding
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equity securities or constitute at least a 10% equity participant, and (c) in
the case of a specified Person who is an individual, any Family Member of such
Person.
"AGREEMENT" shall mean this Stockholders' Agreement, as the
same may be amended, supplemented, restated, replaced or otherwise modified, in
each case from time to time and whether in whole or in part.
"BOARD" has the meaning given such term in SECTION 2.1.
"BOARD CHANGE DATE" has the meaning given such term in SECTION
2.1.
"BOOK VALUE" shall mean as of any date:
(a) with respect to any number of Management Shares (other
than Retained Option Shares), (i)(A) the common stockholders' equity of the
Company as of the end of the Company's most recently ended four week accounting
period of the Company determined in accordance with GAAP, DIVIDED BY (B) the sum
of the number of then outstanding Shares and the number of Shares issuable upon
exercise of Company Options, which as of such date are vested and exercisable,
MULTIPLIED BY (ii) such number of Management Shares;
(b) with respect to any number of Retained Option Shares (i)
the "Book Value" of an equal number of Management Shares, as determined in
subparagraph (a) above, PLUS (ii) the aggregate exercise price paid upon
acquisition of such Retained Option Shares;
(c) with respect to a Retained Option, the number of
Management Shares issuable upon exercise of such Retained Option, MULTIPLIED by
the "Book Value" of one Management Share, as determined in subparagraph (a)
above; and
(d) with respect to a Performance Option, the number of
Management Shares issuable upon exercise of such Performance Option, MULTIPLIED
by the "Book Value" of one Management Share, as determined in subparagraph (a)
above, LESS the aggregate exercise price of such Performance Option.
"BUSINESS" shall have the meaning given such term in the
Merger Agreement.
"BUSINESS DAY" shall mean any day other than a day on which
banks in the States of Ohio are required or permitted by law to remain closed.
"CAPITALIZED LEASE OBLIGATION" shall mean with respect to any
Person any lease to which such Person or any of its Subsidiaries is party as
lessee under which it leases any property (real, personal or mixed) from any
lessor, and which is required to be capitalized in accordance with GAAP,
consistently applied.
"CAUSE" shall mean with respect to the termination of any
Person by the Company for "cause" or "Cause" (a) an act of fraud, embezzlement,
deliberate dishonesty,
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misappropriation or intentional and willful breach of fiduciary duty against the
Company or any of its Subsidiaries by such Person, as determined by the Board of
the Company in its reasonable discretion (provided that if such Person is also a
member of the Board, he or she shall be automatically recused from any Board
vote related to such act or breach), (b) any intentional action by such Person
on or prior to the date hereof which causes the material breach of a
representation or warranty by Skyline Chili or any stockholder of Skyline Chili
under the Merger Agreement, (c) conviction of such Person of any felony or crime
involving moral turpitude, whether or not committed in the course of performing
services to the Company, (d) the habitual drug addiction or intoxication of such
Person, (e) the breach by such Person of any terms of any Related Agreement to
which such Person is a party (including, without limitation, the breach of any
non-competition, non-disclosure, or other restrictive covenants or the willful
failure or refusal of such Person to follow the reasonable instructions of the
Board of the Company), which breach or act continues uncured to the satisfaction
of the Company (i) for a period of thirty (30) days after written notice thereof
is given by the Company to such Person as to beaches under this Agreement and
(ii) for the applicable cure period for breaches under a Related Agreement; (f)
the commission by such Person of an act undertaken with deliberate intent to
cause material loss, damage or injury to the Company or any of its Subsidiaries;
or (g) the commission by such Person of an act undertaken in reckless disregard
of the best interests of the Company, which act has a material adverse effect on
the Business or the reputation, goodwill or image of the Company or any of its
Subsidiaries.
"▇▇▇▇▇▇▇▇" shall mean ▇▇▇▇▇▇▇▇ Partners III, L.P., a Delaware
limited partnership and its successors and assigns.
"CLASS A COMMON STOCK" has the meaning given such term in the
RECITALS.
"CLASS B COMMON STOCK" has the meaning given such term in the
RECITALS.
"COMMISSION" shall mean the Securities and Exchange Commission
or any other federal agency at the time administering the Securities Act.
"COMPANY" shall have the meaning given such term in the
PREAMBLE; provided that, on and after the effective date of the Merger, the term
"Company" shall refer to the Surviving Corporation, as successor-in-interest to
the Company pursuant to the Merger Agreement.
"COMPANY CALL EXPIRATION NOTICE" shall have the meaning given
such term in SECTION 4.3.
"COMPANY OPTIONS" shall mean the Retained Options and the
Performance Options.
"CONSENT OF FLEET ENTITIES" shall mean, at any time of
determination thereof, the written consent of each of the Fleet Entities.
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"CONVERTIBLE SECURITIES" shall mean, with respect to any
Equity Securities, (a) any warrants, options or other rights to subscribe for or
to acquire, directly or indirectly, such Equity Securities, and (b) any shares
of stock, partnership interests, other ownership or beneficial interests, bonds,
notes, debentures or other securities convertible into, exchangeable for, or
otherwise entitling the holder thereof to, directly or indirectly, such Equity
Securities, in each case outstanding at any time.
"DELAWARE GENERAL CORPORATION LAW" shall have the meaning
given such term in the Merger Agreement.
A Person shall be deemed to have a "DISABILITY" if an
independent medical doctor selected by the Company's health or disability
insurer (or, if after written request by the Company, such insurer shall have
failed to select such a doctor willing to examine such Person, by the Board of
the Company) certifies that such Person has for ninety (90) consecutive days in
any twelve (12) month period been unable to perform the essential functions of
his or her then current position with the Company due to physical or mental
illness, injury or other medical disability. Any refusal by such Person to
submit to a medical examination for the purpose of certifying disability within
fifteen (15) days of the Company's written request shall be deemed to constitute
conclusive evidence of such Person's disability.
"DISINTERESTED DIRECTORS" shall have the meaning given such
term in SECTION 4.4 below.
"EFFECTIVE TIME" shall have the meaning given such term in the
Merger Agreement.
"EQUITY SECURITIES" shall mean, with respect to any Person,
any shares of stock of, or partnership or membership interest or other ownership
or beneficial interest in, such Person, in each case outstanding at any time.
"EXERCISE NOTICE" shall have the meaning given such term in
SECTION 4.3.
"FAMILY MEMBER" shall mean, as applied to any Person who is an
individual, a spouse, parent, sibling, child, grandchild, cousin or other lineal
descendent thereof and a trust created for the exclusive benefit of one or more
of such Persons.
"FFG" shall mean Fleet Financial Group, Inc., a Rhode Island
corporation.
"FINANCING AGREEMENT" shall mean that certain [ ] Agreement of
even date herewith by and between the Surviving Corporation and the Senior
Lender, or any credit agreement evidencing a senior debt facility that replaces
the facility evidenced by such Agreement with the Consent of Fleet Entities.
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"FLEET ENTITIES" shall mean the Persons designated as "Fleet
Entities" on SCHEDULE A hereto and shall also mean the successors and assigns of
each "Fleet Entity" hereunder.
"FUNDED DEBT" shall mean with respect to any Person as of any
date the aggregate indebtedness for money borrowed and Capitalized Lease
Obligations of such Person as of such date.
"GAAP" shall mean United States generally accepted accounting
principles as in effect from time to time.
"GOOD REASON" shall mean the termination by a Management
Stockholder of his or her employment with the Company or any of its Subsidiaries
by reason of (a) any intentional or knowing action by the Company on or prior to
the date hereof which causes the material breach of a representation or warranty
by the Company under the Merger Agreement which continues uncured to the
satisfaction of the Management Stockholder for a period of thirty (30) days, (b)
the material breach by the Company, any Fleet entity or the Surviving
Corporation of any terms of any Related Agreement to which such Person is a
party, which breach or act continues uncured to the satisfaction of the
Management Stockholder (i) for a period of thirty (30) days after written notice
thereof is given by the Management Stockholder to such Person, or (ii) for the
applicable cure period for breaches under a Related Agreement, (c) a permanent
relocation of the Management Stockholder's place or location of employment to an
area outside the 100-mile area measured from the nearest point of the city
limits of Cincinnati, Ohio, (d) a material reduction by the Company in the
Management Stockholder's functions, duties or responsibilities, to the detriment
of the Management Stockholder, (e) a material reduction in the Management
Stockholder's base salary, (f) a material change in the Management Stockholder's
terms of employment by the Company to the detriment of the Management
Stockholder, or (g) the normal retirement of such Management Stockholder on or
after his or her 65th birthday.
"INITIAL APPRAISAL" shall have the meaning given such term in
SECTION 4.4 below.
"INITIAL PUBLIC OFFERING" shall mean the first Public Offering
occurring following the Effective Time; provided that in connection with such
Public Offering the Shares or other Equity Securities offered pursuant thereto
are listed for trading on the New York Stock Exchange or the American Stock
Exchange or quoted for trading on the NASDAQ, National Market or SmallCap
Systems.
"LIQUIDITY EVENT" shall mean (i) a Sale of the Company, (ii) a
Transfer of all or substantially all of the assets and property of the Company
and its Subsidiaries taken as a whole, or (iii) an Initial Public Offering.
"MANAGEMENT APPRAISAL" shall have the meaning given such term
in SECTION 4.4 below.
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"MANAGEMENT GROUP" shall mean ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇.
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇., ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and Skyline Trust and shall also mean the successors
and assigns of each member of the "Management Group" hereunder and each Person
who shall subsequently agree in writing to become bound hereunder as a member of
the "Management Group".
"MANAGEMENT INCENTIVE OPTIONS" shall mean Performance Options
granted or to be granted to Persons (other than members of the Management Group)
that in the aggregate shall not entitle such Persons to acquire more than the
number of Shares designated on Schedule A for "Other Employees" or "Reserved"
under the column "Class B Performance Options".
"MANAGEMENT OPTION PLAN" shall have the meaning given such
term in the Merger Agreement.
"MANAGEMENT SHARES" shall mean, with respect to a Management
Stockholder, all of the Shares (i) acquired by such Management Stockholder as of
the date hereof, (ii) subsequently acquired by such Management Stockholder or
the Management Successor of such Management Stockholder, (iii) held by the
Skyline Trust of which such Management Stockholder is a beneficiary, or (iv)
held by the ▇▇▇ of which such Management Stockholder is the beneficiary.
"MANAGEMENT SUCCESSOR" shall have the meaning given such term
in SECTION 4.1.
"MANAGEMENT STOCKHOLDER" shall mean the Management Group and
any Option Holder who acquires Shares upon exercise of any Company Option who
shall subsequently agree in writing to become bound hereunder as a member of the
Management Group.
"MARKET VALUE" shall mean:
(a) with respect to Management Shares (other than Retained
Option Shares), the fair market value of such Management Shares determined
pursuant to SECTION 4.4;
(b) with respect to Retained Option Shares, the "Market Value"
of an equal number of Management Shares, PLUS the aggregate exercise price paid
pursuant to the applicable Retained Option to acquire such Retained Option
Shares,
(c) with respect to a Retained Option, the "Market Value" of
the Management Shares that may be acquired upon exercise of such Retained
Option, without any reduction or allowance for the exercise price of such
Retained Option; and
(d) with respect to a Performance Option, the "Market Value"
of the Management Shares that may be acquired upon exercise of such Performance
Option, LESS the aggregate exercise price of such Performance Option.
"MERGER" shall have the meaning ascribed thereto in the Merger
Agreement.
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"MERGER AGREEMENT" shall mean that certain Agreement and Plan
of Agreement, dated as of November 26, 1997, by and among the Company, Skyline
Chili and certain stockholders of Skyline Chili, as the same may be amended,
supplemented, restated, replaced or otherwise modified, in each case from time
to time and whether in whole or in part.
"NEW SHARES" shall mean any Equity Securities or Convertible
Securities of the Company, whether now authorized or not, and any rights,
options or warrants to purchase said Equity Securities or Convertible
Securities, including, without limitation, any Shares; provided, however, that
"New Shares" do not include (i) securities offered pursuant to a Public
Offering; (ii) Shares issued with the consent of the Fleet Entities in an
arms-length offering solely to one or more Persons who are not Affiliates of the
Fleet Entities; (iii) Shares issued to the Company's Stockholders in connection
with any stock split or stock dividend; (iv) Shares issued to a Fleet Entity or
a Management Stockholder upon conversion of the Class B Common Stock, (v) the
grant of Performance Options; and (vi) the issuance of Shares upon the exercise
of Company Options.
"NON-EXERCISE NOTICE" shall have the meaning ascribed thereto
in SECTION 4.3(a).
"NOTICE OF PROPOSED ISSUANCE" shall have the meaning ascribed
thereto in SECTION 3.1(a).
"OHIO CORPORATION LAW" means the Ohio General Corporation Law,
as amended.
"OFFERED NEW SHARES" shall have the meaning ascribed thereto
in SECTION 3.1(a).
"OPTION HOLDERS" shall mean the Persons designated on Schedule
A hereto who hold "Options" and shall also mean the successors and assigns of
each such Person and each Person granted Performance Options hereafter.
"ORDINARY COURSE OF BUSINESS" shall have the meaning given
such term in the Merger Agreement.
"ORIGINAL COST" shall mean:
(a) with respect to a specified number of Management Shares
(other than Retained Option Shares or Performance Option Shares) an amount equal
to (i) the number of such Management Shares, MULTIPLIED BY (ii) the Purchase
Price Per Share,
(b) with respect to Retained Option Shares, an amount equal to
the "Original Cost" of an equal number of Management Shares, as determined in
subparagraph (a) above, PLUS the aggregate exercise price paid pursuant to the
applicable Retained Option to acquire such Retained Option Shares,
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(c) with respect to Performance Option Shares, an amount equal
to the aggregate exercise price paid pursuant to the applicable Performance
Option to acquire such Performance Option Shares,
(d) with respect to a Retained Option, an amount of $6.75 for
each Share issuable upon exercise of such Retained Option, and
(e) with respect to a Performance Option, an amount equal to
$0, in each case appropriately adjusted to reflect any stock splits, stock
dividends or recapitalizations affecting the Class A Common Stock or Class B
Common Stock.
"PERFORMANCE OPTIONS" shall mean those certain options for the
right to purchase Shares of Class B Common Stock issued to key employees of the
Surviving Corporation pursuant to the Management Option Plan.
"PERFORMANCE OPTION SHARES" shall mean Shares of Class B
Common Stock acquired upon exercise of a Performance Option.
"PERMITTED TRANSFERS" shall mean:
(a) in the case of a Fleet Entity, (i) any Transfer
of Shares to any Affiliate of such Fleet Entity or any other Fleet
Entity, (ii) any Transfer of Shares to a successor corporation or other
successor entity as a result of a merger or consolidation with, or a
sale of all or substantially all of the assets of, such Fleet Entity or
a transfer to one or more of its partners, or a distribution to such
partners, (iii) any Transfer of Shares to the extent required by
governmental rule, law or regulation, or any directive or order of any
governmental authority, (iv) any Transfer of Shares pursuant to a
Public Offering, (v) any Transfer of Shares to an Unaffiliated
Director; provided that the aggregate number of Shares Transferred to
Unaffiliated Directors shall not exceed 30,000 Shares; and (vi) any
other Transfer of Shares so long as such Fleet Entity shall have
performed its obligations under ARTICLE V hereof; or
(b) in the case of a Management Stockholder, (i) any
Transfer of Shares to a Family Member of such Management Stockholder,
or (ii) a Transfer of Shares permitted or effected pursuant to ARTICLES
IV or V hereof.
"PERSON" shall have the meaning ascribed thereto in the Merger
Agreement.
"PERSONAL REPRESENTATIVE" shall mean the successor or legal
representative (including without limitation, a guardian, executor,
administrator or conservator) of a deceased or incompetent Management
Stockholder.
"PROPOSED BUYER" shall have the meaning ascribed thereto in
SECTION 3.1(a).
"PROPORTIONATE SHARE" shall have the meaning ascribed thereto
in SECTION 3.1(c).
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"PUBLIC OFFERING" shall mean the sale or distribution of
Shares or other Equity Securities of the Company pursuant to an underwritten
public offering registered under the Securities Act.
"PURCHASE PRICE PER SHARE" shall mean $6.75 per Share.
"PUT EXERCISE PERIOD" shall have the meaning given such term
in SECTION 4.2.
"PUT NOTICE" shall have the meaning given such term in SECTION
4.2.
The terms "REGISTER," "REGISTERED" and "REGISTRATION" shall
refer to a registration effected by preparing and filing a registration
statement in compliance with the Securities Act, and the declaration or ordering
of the effectiveness of such registration statement.
"REGULATORY PROBLEM" shall have the meaning given such term in
SECTION 6.2.
"RELATED AGREEMENTS" shall have the meaning given such term in
the Merger Agreement.
"RETAINED OPTIONS" shall have the meaning given such term in
the Merger Agreement.
"RETAINED OPTION SHARES" shall mean Shares acquired upon
exercise of a Retained Option with respect to which the exercise price thereof
has been paid in full to the Company.
"SALE OF THE COMPANY" shall mean a Transfer by the Fleet
Entities of the requisite percentage of Shares pursuant to SECTION 5.1(b),
whether pursuant to a Transfer thereof or a recapitalization, merger,
consolidation, combination, exchange or similar transaction.
"SBIC HOLDER" shall have the meaning given such term in
SECTION 6.2.
"SECURITIES ACT" shall mean the Securities Act of 1933, as
amended, or any similar federal statute and the rules and regulations of the
Commission thereunder, each as in effect from time to time.
"SENIOR LENDER" shall mean The Provident Bank or any other
lender providing senior financing to the Company.
"SKYLINE NON-QUALIFIED DEFERRED COMPENSATION PLAN TRUST,
EQUITABLE TRUST COMPANY, TRUSTEE" or "SKYLINE TRUST" shall have the meaning
given thereto in the Merger Agreement.
"SHARES" shall have the meaning given such term in the
RECITALS.
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"STOCKHOLDERS" shall have the meaning ascribed thereto in the
Preamble to this Agreement and shall also mean the successors and assigns of
each Person who shall be a "Stockholder" hereunder; provided that the terms
"Stockholder" or "Stockholders" as used herein shall include any future holder
of any Shares or Company Options who is or becomes a party to this Agreement.
"SUBSIDIARY" shall have the meaning ascribed thereto in the
Merger Agreement.
"SUPPLEMENTARY BONUS" shall have the meaning ascribed thereto
in SECTION 2.5.
"SURVIVING CORPORATION" shall have the meaning ascribed
thereto in the Merger Agreement.
"SKYLINE CHILI" means Skyline Chili, Inc., an Ohio
corporation.
"TAKE-ALONG NOTICE" shall have the meaning given such term in
SECTION 5.1.
"TERMINATION DATE" means the date on which (i) any Management
Stockholder's employment with the Company or, if such Management Stockholder is
employed by any of its Subsidiaries, with such Subsidiary, is terminated, or
(ii) any Management Stockholder is determined to have a Disability.
"THIRD APPRAISAL" shall have the meaning given such term in
SECTION 4.4 below.
"TRANSFER" shall mean, with respect to any Share, property,
asset or other right or interest, when used as a verb, to sell, assign,
transfer, exchange, distribute, devise, gift, ▇▇▇▇▇ ▇ ▇▇▇▇ on, encumber or
otherwise dispose of such Share, property, asset or other right or interest, in
whole or in part, or, when used as a noun, the sale, assignment, transfer,
exchange, distribution, devise, gift, granting of a lien, encumbrance or other
disposition of such Share, property, asset or other right or interest, in whole
or in part, in either case, whether pursuant to a sale, merger, combination,
consolidation, reclassification or otherwise, except for pledges and assignments
made pursuant to the Financing Agreement or collateral documents executed in
connection therewith.
"TRANSFERRING FLEET ENTITY" shall have the meaning given such
term in SECTION 5.1.
"UNAFFILIATED DIRECTOR" shall mean a Person designated by the
Chief Executive Officer of the Company pursuant to SECTIONS 2.1(a)(ii) and
(iii), who (1) shall be reasonably acceptable to the Fleet Entities, and (2)
shall not be an Affiliate or employee of the Company, the Surviving Corporation,
a Management Stockholder or a Family Member of such Affiliate or employee or of
a Management Stockholder.
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"VOTING SECURITIES" shall mean Equity Securities of a Person
having the right to vote generally in the election of the directors, managers or
general or managing partners of such Person.
1.2 CONSTRUCTION. Unless the context of this Agreement clearly requires
otherwise (i) references to the plural include the singular and to the singular
include the plural, (ii) the term "including" is not limiting, and (iii) the
term "or" has the inclusive meaning represented by the term "and/or". The terms
"hereof", "herein", "hereby", "hereunder" and similar terms in this Agreement
refer to this Agreement as a whole and not to any particular provision of this
Agreement. Article, Section, clause, Schedule and Exhibit references are to
Articles, Sections, clauses, Schedules and Exhibits (as each such Schedule or
Exhibit may be amended, modified or supplemented from time to time) of this
Agreement unless otherwise specified.
ARTICLE II
AFFIRMATIVE COVENANTS OF THE COMPANY
AND THE STOCKHOLDERS
2.1 BOARD REPRESENTATION AND VOTING AGREEMENT OF THE SHARES.
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(a) From and after the date hereof and until the provisions of
this Section cease to be effective, each Stockholder shall vote all of the
voting securities of the Company (including without limitation the Shares) over
which such Person has voting control and shall take all other necessary or
desirable actions within his, her or its control (whether in his, her or its
capacity as a stockholder, director, member of a board committee or officer of
the Company or otherwise, and including, without limitation, attendance at
meetings in person or by proxy for purposes of obtaining a quorum and execution
of written consents in lieu of meetings), and the Company shall take all
necessary or desirable actions within its control (including, without
limitation, calling special board and stockholders' meetings) so that:
(i) the authorized number of directors of the Board
of Directors of the Company and each of its Subsidiaries (each a
"Board") shall be established at five (5) directors;
(ii) until such time as the Fleet Entities shall own
a majority of the Shares of Class A Common Stock, the following Persons
shall be elected to each Board at each election of directors during the
term of this Agreement:
(A) three (3) representatives designated by
the Chief Executive Officer of the Company, one of whom shall
be such Chief Executive Officer and the other two of whom
shall be Unaffiliated Directors;
(B) one (1) representative designated by
▇▇▇▇▇▇▇▇; and
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(C) one (1) representative designated by the
Fleet Entities;
(iii) on and after the date that the Fleet Entities
shall own a majority of the Shares of Class A Common Stock (the "BOARD
CHANGE DATE"), the following Persons shall be elected to each Board at
each election of directors during the term of this Agreement:
(A) two (2) representatives designated by
the Chief Executive Officer of the Company, one of whom shall
be such Chief Executive Officer and the other of whom shall be
an Unaffiliated Director;
(B) one (1) representative designated by
▇▇▇▇▇▇▇▇; and
(C) two (2) representatives designated by
the Fleet Entities;
(iv) the following directors shall be removed upon
the occurrence of the events indicated:
(A) one of the Unaffiliated Directors
designated by the Chief Executive Officer of the Company
pursuant to SECTION 2.1(a)(ii), on or after the Board Change
Date upon written notice by the Fleet Entities;
(B) the Person designated as Chief Executive
Officer of the Company on or after the date such Person shall
cease to serve as Chief Executive Officer upon written notice
by any Stockholder; or
(C) a Person who is an Unaffiliated Director
designated by the Chief Executive Officer pursuant to SECTION
2.1(a)(ii), on or after the date that such Person shall no
longer be deemed an Unaffiliated Director pursuant to the
definition of such term;
(v) the Fleet Entities shall have the right to (A)
designate at least one (1) representative to each committee
established by each Board, and (B) have an observer, selected by the
Fleet Entities in their sole discretion, attend each meeting of each
Board and each meeting of any committee of a Board; provided the
Compensation and the Audit Committees, if any, of each Board shall
consist of at least two (2) members, one of whom shall be a director
designated by ▇▇▇▇▇▇▇▇, the other of whom shall be a director
designated by the Fleet Entities, and the majority of which shall be
directors designated by the Fleet Entities;
(vi) subject to SECTION 2.1(a)(iv), any director
designated hereunder shall be removed from a Board (and thereupon from
all committees of such Board) (with or without cause) at the written
request of the Person or Persons which have the right to designate such
director hereunder; and, subject to SECTION 2.1(a)(iv), a director so
designated hereunder shall not be removed from such Board by any Person
other than the
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Person or Persons which have the right to designate such director,
except if such director has engaged in conduct constituting "cause"
under the Ohio Corporation Law or, following the reincorporation of the
Company in Delaware, the Delaware General Corporation Law, in which
case such director may be removed in accordance with the Ohio
Corporation Law or the Delaware General Corporation Law, as applicable,
and such vacancy shall be filled by the Person or Persons who appointed
the removed director;
(vii) in the event that any representative designated
hereunder for any reason ceases to serve as a member of a Board or any
committee thereof during such representative's term of office, the
resulting vacancy on such Board or committee shall be filled by a
representative designated by a Person or Persons which have the right
to designate such representative hereunder;
(viii) after the date hereof, each Board shall hold
quarterly meetings, unless the Fleet Entities shall request otherwise
provided, however, that the Chief Executive officer or the Fleet
Entities may call Board meetings in addition to such quarterly
meetings;
(ix) the respective bylaws, codes of regulations,
certificates of incorporation and other organizational documents of the
Company and its Subsidiaries shall not be amended, restated,
supplemented, revised, modified or repealed, in whole or in part
without the Consent of Fleet Entities;
(x) the Company and its Subsidiaries shall perform
their obligations under and otherwise comply with the provisions of the
Related Agreements applicable to them; and
(xi) upon request of the Fleet Entities, the Company
shall reincorporate in Delaware, as more fully set forth in SECTION 7.1
hereof.
(b) Each and every transferee or assignee of Shares from any
Stockholder shall be bound by and subject to all the terms and conditions of
this SECTION 2.1. So long as the provisions of this SECTION 2.1 are in effect,
the Company shall require, as a condition precedent to the Transfer of any
Shares subject to this SECTION 2.1, that the applicable transferee agrees in
writing to be bound by, and subject to, the terms and conditions of this Section
2.1 and to ensure that such transferee's transferees of Shares shall be likewise
bound.
(c) The Company and the Stockholders agree that, so long as
the provisions of this SECTION 2.1 or ARTICLES III, IV, V or VI are in effect,
all Shares now or hereafter held by each Stockholder will be stamped or
otherwise imprinted with a legend in substantially the following form:
THE SHARES EVIDENCED BY THIS CERTIFICATE ARE SUBJECT TO AGREEMENTS,
COVENANTS AND RESTRICTIONS IN REGARD TO THE VOTING OF SUCH SHARES AND THEIR
TRANSFER, AS PROVIDED IN THE PROVISIONS OF A
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STOCKHOLDERS' AGREEMENT, DATED AS OF_____________, 1998, BY AND AMONG SKYLINE
ACQUISITION CORP., AN OHIO CORPORATION, PREDECESSOR BY MERGER TO SKYLINE CHILI,
INC., [AN OHIO/A DELAWARE] CORPORATION (THE "COMPANY") AND ALL OF THE COMPANY'S
SHAREHOLDERS ON THAT DATE AND AS NAMED THEREIN. THE STOCKHOLDERS' AGREEMENT IS
AN OHIO CLOSE CORPORATION AGREEMENT. THE COMPANY WILL MAIL A COPY OF THE
STOCKHOLDERS' AGREEMENT TO ANY SHAREHOLDER OF THE COMPANY WITHOUT CHARGE WITHIN
FIVE DAYS AFTER RECEIPT OF WRITTEN REQUEST THEREFOR.
(d) Each of the parties acknowledge that all other parties
hereto will be irreparably damaged in the event that the provisions of this
Section are not specifically enforced. Accordingly, should any dispute arise
pursuant to SECTION 2.1, the parties agree that a decree of specific performance
shall be an appropriate remedy. Such remedy shall be cumulative and shall be in
addition to any other remedies which any party may have at law or in equity.
(e) The Company shall reimburse each director for reasonable
out-of-pocket travel, lodging and other related expenses incurred in connection
with attendance at meetings and shall pay to each director elected pursuant to
Section 2.1 who is not a Management Stockholder, an Affiliate or Family Member
of a Management Stockholder or an employee of the Company or any of its
Subsidiaries an annual director's fee of between $15,000 and $30,000 or such
other amount, as shall be reasonably necessary to attract qualified directors
and shall be reasonably acceptable to the Fleet Entities,.
2.2 SPECIFIED ACTIONS. Notwithstanding anything to the contrary
contained in this Agreement or in any other Related Agreement, and except as
specifically provided in the following subsections, no Stockholder shall permit
the Company, the Company shall not, nor shall the Company permit any of its
Subsidiaries to, take any of the following actions without the prior written
Consent of Fleet Entities:
(a) the issuance of Equity Securities of the Company or any of
its Subsidiary, or any Convertible Securities with respect thereto, except as
expressly permitted by this Agreement or any other Related Agreement or pursuant
to the exercise of a Company Option; provided that, notwithstanding the receipt
of any Consent of Fleet Entities, any Person granted a Company Option (other
than a Management Incentive Option) on or after the date hereof shall agree in
writing to become bound hereby as a member of the Management Group.
(b) except as provided in the applicable Budget adopted
pursuant to SECTION 2.3(a), the incurrence by the Company or any of its
Subsidiaries of Funded Debt, other than pursuant to the Financing Agreement, if
after giving effect thereto, the consolidated Funded Debt of the Company, other
than pursuant to the Financing Agreement, shall exceed $50,000;
(c) the amendment, restatement, replacement, supplement or
other modification of the Financing Agreement (or the terms of any other Funded
Debt of $50,000 or more) or the waiver of any material right or remedy
thereunder (or with respect thereto), which in
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either case would have a material adverse effect upon the operations of the
Company or any of its Subsidiaries, if it were determined as of the date of such
modification or waiver;
(d) the amendment, restatement, replacement, supplement or
other modification of this Agreement, any other Related Agreement, the
Certificate of Incorporation, Code of Regulations or By-Laws of the Company or
the Surviving Corporation, or the waiver of any material right or remedy
thereunder; or
(e) except as provided in the applicable Budget adopted
pursuant to SECTION 2.3(a), the purchase or other acquisition of any assets or
businesses, or the merger, consolidation, combination with any other Person or
business, whether in a single transaction or a series of related transactions,
if the aggregate consideration payable in connection with such purchase or other
acquisition or merger, consolidation or combination, when aggregated with the
consideration payable in connection with all other such purchases or other
acquisitions or mergers, consolidations or combinations during the preceding
twelve (12) months for which a Consent of Fleet Entities has not been obtained,
is greater than $50,000;
(f) except pursuant to the Financing Agreement, the sale,
assignment, transfer, exchange, grant of a Lien or encumbrance or other
disposition, or the engaging in any merger, consolidation or combination having
a similar effect, or agreement with any Person (other than the Fleet Entities)
to do or not to do any of the foregoing, whether in a single transaction or a
series of related transactions, of, in or on any of the (i) any Equity
Securities of any Subsidiary of the Company; or (ii) other than in the Ordinary
Course of Business, assets of the Company or any of its Subsidiaries;
(g) the declaration, payment, disbursement or making of any
dividends, distributions, stock repurchase or redemption or other payments with
respect to the Shares;
(h) except in the Ordinary Course of Business, the making of
any loan or cash advance to any Stockholder (other than the Fleet Entities) or
any Affiliate or Family Member thereof, or the engaging in any transaction
therewith;
(i) the dissolution, liquidation or winding up of the Company
or any of its Subsidiaries;
(j) the commencement of a voluntary proceeding with respect to
the Company or any of its Subsidiaries under state or federal bankruptcy,
insolvency, reorganization, rearrangement or similar laws;
(k) the appointment of an accounting firm other than a "big
five" firm as the accountants for the Company and its Subsidiaries;
(l) the agreement (other than under the terms and provisions
of the Financing Agreement) with any Person, which by its terms prohibits,
materially restricts or materially limits
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the performance by the Company or any of its Subsidiaries of any of its
obligations under any Related Agreement; or
(m) conduct the Business other than in the Ordinary Course of
Business;
(n) engage in any business other than the Business;
(o) except for Persons employed by the Company or Skyline
Chili as of the date hereof, employ, retain or otherwise obtain the services of
any Person at annual rate of compensation equal to or exceeding $150,000;
(p) increase the rate of compensation of any Person employed
or retained or whose services have otherwise been obtained by the Company, whose
annual rate of compensation equals or exceeds $100,000 or, after giving effect
to such increase would equal or exceed $100,000;
(q) declare, pay or set aside any amount for and in respect of
incentive, performance or other bonuses; or
(r) remove, replace or accept the resignation of the Chief
Executive Officer of the Company, who initially shall be ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇.
2.3 FINANCIAL COVENANTS. The Company agrees that 30 days prior to the
end of each fiscal year to deliver to the Fleet Entities a budget for the
following fiscal year; provided that the Company shall not adopt any such budget
without the Consent of Fleet Entities.
2.4 SALE OF THE COMPANY.
--------------------
(a) In the event a Sale of the Company is proposed by the
Fleet Entities, each of the Management Stockholders hereby waives, to the extent
permitted by applicable law, all rights to object to or dissent from such Sale
of the Company and hereby agrees that each will raise no objections against such
Sale of the Company. Each of the Management Stockholders agrees to vote his or
her respective Shares to approve the terms of any such Sale of the Company and
any matters ancillary thereto (including any conversion or exchange of Shares
for Equity Securities or indebtedness of any acquiring Person or an Affiliate
thereof) as may be necessary in the judgment of the Fleet Entities, to effect
such Sale of the Company; provided that, (i) no Management Stockholder, solely
in his capacity as a director and not in his capacity as a Stockholder, of the
Company shall be required to vote in any manner which would require a breach of
his fiduciary duties to the Company; and (ii) the consideration per Share to be
received by such Management Stockholder pursuant to such Sale of the Company
shall be at least equal to, and otherwise on terms and conditions at least as
favorable to such Management Stockholder, as the consideration per share and the
terms and conditions to be received by the Fleet Entities pursuant thereto.
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(b) The Company and the Management Stockholders hereby agree
to cooperate fully in any Sale of the Company and not to take any action
prejudicial to or inconsistent with such Sale of the Company. Without limiting
the generality of the foregoing, the Management Stockholders will, upon request,
deliver an executed instrument of transfer with respect to their Shares in
escrow (pending receipt of the purchase price therefor) to counsel for the
Company.
(c) The Company shall cause its officers, employees, agents,
contractors and others under its control to cooperate in any proposed Sale of
the Company and not to take any action which might impede any such Sale of the
Company. Any resignation or threat thereof after the date of the applicable
Take-Along Notice but prior to closing of such Sale of the Company by any
Management Stockholder employed or retained by or otherwise providing services
to, the Company shall be regarded as a breach of this provision. Pending the
completion of any proposed Sale of the Company, the Company shall use reasonable
efforts to operate only in the Ordinary Course of Business and to maintain all
existing business relationships in good standing. In connection with any Sale of
the Company, each Management Stockholder, who is so employed or retained by or
otherwise providing services, agrees to enter into an employment agreement on
reasonable terms and conditions with the Company or any Person that is a party
to such Sale of the Company for a term of employment of at least one year
following the consummation of such Sale of the Company; provided that under such
employment agreement such Management Stockholder will receive compensation
substantially equivalent to or exceeding his or her then current compensation
and will have responsibilities with the Company or such acquiring Person
following such Sale of the Company substantially equivalent to or exceeding his
then current responsibilities with the Company.
2.5 SUPPLEMENTARY BONUS PROGRAM.
----------------------------
(a) In the event of the Sale of the Company or any other
Liquidity Event, the Management Stockholders, who either (i) exercise Retained
Options and Transfer the Shares acquired by such exercise pursuant to such Sale
of the Company or Liquidity Event, or (ii) Transfer such Retained Options to a
buyer in connection with such Sale of the Company or Liquidity Event at a price
no greater than the difference between (A) the purchase price payable pursuant
to such Sale of the Company or other Liquidity Event for the number of Shares
that may be acquired upon exercise of such Retained Options, LESS (B) the
aggregate exercise price of such Retained Options, shall be entitled to receive
a bonus from the Company, payable in cash in the amount set forth on Schedule B
hereto (the "SUPPLEMENTARY BONUS"); provided that, if not all of the Shares of a
Management Holder acquired upon exercise of Retained Options and all of the
Retained Options of a Management Stockholder are Transferred in the manner
described above, such Management Stockholder shall receive a portion of the
applicable Supplementary Bonus proportional to the percentage of such Shares and
Retained Options of such Management Stockholder that shall have been
Transferred.
(b) In the event of the Transfer of any Retained Option Shares
by a Management Stockholder pursuant to the "tag-along" right described in and
in accordance with SECTION 5.1(c), such Management Stockholder shall be entitled
to receive a portion of the applicable
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Supplementary Bonus proportional to the percentage of all Retained Option Shares
and Retained Options of such Management Stockholder that shall have been so
Transferred.
(c) Following the Initial Public Offering, in the event of the
Transfer of any Retained Option Shares by a Management Stockholder pursuant to a
"public sale" through a registered broker/dealer, whether under Rule 144
promulgated under the Securities Act or otherwise, such Management Stockholder
shall be entitled to receive a portion of the applicable Supplementary Bonus
proportional to the percentage of all Retained Option Shares and Retained
Options of such Management Stockholder that shall have been so Transferred
(d) Notwithstanding anything to the contrary contained herein,
no Management Stockholder shall be entitled to receive any proposed payment with
respect to the Supplementary Bonus under this Section 2.5 to the extent the
aggregate amount of prior payments to such Management Stockholder with respect
to such Supplementary Bonus exceeds an amount equal to (i) the applicable
Supplementary Bonus MULTIPLIED BY (ii) one (1) MINUS a fraction, (A) the
numerator of which is equal to the number of Retained Option Shares PLUS the
number of shares acquirable upon exercise of Retained Options, in either case
Transferred by such Management Stockholder pursuant to SECTION 4.1 or 4.2 prior
to the date of the proposed payment, and (B) the denominator of which is equal
to the number of Shares acquirable upon exercise of Retained Options held by
such Management Stockholder as of the date hereof, subject to appropriate
adjustments to reflect any stock splits, stock dividends or recapitalizations
affecting the Class A Common Stock or Class B Common Stock.
ARTICLE III
PREEMPTIVE RIGHTS
3.1 RIGHT TO PURCHASE. Subject to the provisions of SECTION 2.2(A), the
Company shall only issue New Shares in accordance with the following terms:
(a) In the event the Company desires to issue any New Shares,
it shall first deliver to each Stockholder a written notice (each such notice, a
"NOTICE OF PROPOSED ISSUANCE") specifying the name and address of the proposed
purchaser of the New Shares (each such purchaser, a "PROPOSED BUYER"), the type
and total number of such New Shares which the Company then desires to issue to
such Proposed Buyer (such New Shares, the "OFFERED NEW SHARES"), all of the
terms, including the price, upon which the Company proposes to issue such
Offered New Shares to such Proposed Buyer, and stating that the Stockholders
shall have the right to purchase such Offered New Shares in the manner specified
in this SECTION 3.1 at the price and in accordance with the terms and provisions
specified in such Notice of Proposed Issuance.
(b) During the ninety (90) consecutive day period commencing
on the date on which the Stockholders receive the Notice of Proposed Issuance,
each Stockholder shall have the option to purchase the Offered New Shares
subject to such Notice of Proposed Issuance at the price and terms specified in
such Notice of Proposed Issuance and in the amount specified in
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SECTION 3.1(c). A Stockholder shall give written notice of his, her or its
election to purchase Offered Shares to the Company on or before the last day of
such ninety (90) day period and, if a Stockholder has not given such written
notice within such period, such Stockholder shall be deemed to have rejected
his, her or its right to purchase the Offered New Shares. A Stockholder shall
have the right to condition his, her or its purchase of the Offered New Shares
upon the closing of the sale of the balance of such Offered New Shares to the
Proposed Buyer. A Fleet Entity shall have the right to assign its purchase
option and oversubscription right under this SECTION 3.1 to another Fleet Entity
or a Subsidiary of FFG.
(c) Each Stockholder shall have the right to purchase that
number of the Offered New Shares as shall be equal to the number of such Offered
New Shares multiplied by a fraction, (i) the numerator of which shall be the
number of Shares then owned by such Stockholder, and (ii) the denominator of
which shall be the aggregate number of Shares then issued and outstanding. The
amount of such Offered New Shares that a Stockholder is entitled to purchase
under this SECTION 3.1(c) shall be referred to as its "PROPORTIONATE SHARE".
(d) Each Stockholder shall have a right of oversubscription
such that if any Stockholder fails to elect to purchase its full Proportionate
Share of the Offered New Shares, the remaining Stockholders shall, among them,
have the right to purchase up to the balance of such Offered New Shares not so
purchased. A Stockholder may exercise such right of oversubscription by electing
to purchase more than its Proportionate Share of the Offered New Shares. If, as
a result thereof, such oversubscriptions exceed the total number of the Offered
New Shares available in respect to such oversubscription privilege, the
oversubscribing Stockholders shall be cut back with respect to oversubscriptions
on a PRO RATA basis in accordance with their respective Proportionate Shares or
as they may otherwise agree among themselves.
(e) The Company shall have the right, until the expiration of
ninety (90) consecutive days commencing on the first day immediately following
the expiration of the ninety (90) day period specified in SECTION 3.1(b), to
issue the Offered New Shares, which the Stockholders shall not have elected to
purchase, to the applicable Proposed Buyer at the price and terms specified in
the applicable Notice of Proposed Issuance. If for any reason the remaining
Offered New Shares are not issued to such Proposed Buyer within such period and
at such stated price and on such stated terms, the right to issue in accordance
with such Notice of Proposed Issuance shall expire and the provisions of this
Agreement shall continue to be applicable to such Offered New Shares.
(f) The Company shall not issue any shares in the name of such
Proposed Buyer unless and until such Proposed Buyer shall have agreed in writing
to become bound by the terms hereof as a Management Stockholder.
(g) The purchase price for any Offered New Shares to be paid
by a Stockholder or the applicable Proposed Buyer shall be the price set forth
in the Notice of Proposed Issuance relating to such Offered New Shares.
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(h) The Fleet Entity purchasing the greatest percentage of any
Offered New Shares shall set the place, time and date for the closing of the
purchase of the Offered New Shares, which closing shall not be later than the
date of the closing of the sale of any Offered New Shares to the Proposed Buyer.
In the event that none or only a portion of the consideration to be paid by a
Proposed Buyer with respect to any Offered New Shares is in cash, the purchase
price therefor shall be the fair value of the consideration to be paid by such
Proposed Buyer. In the event the Fleet Entities and the Company cannot agree,
acting reasonably, upon the fair value of the consideration to be paid for such
Offered New Shares, such parties shall immediately submit the issue of
determining such fair value to binding arbitration which shall be held in
Providence, Rhode Island, in accordance with the rules and procedures of the
American Arbitration Association applicable to commercial transactions.
The closing of the sale of the Offered New Shares to the Purchasers and
the Proposed Buyer shall be delayed until at least ten (10) days following the
final determination of such fair value.
3.2 CLOSING. At the closing of the purchase of any Offered New Shares,
the purchasing Stockholders and the applicable Proposed Buyer shall deliver the
consideration required by SECTION 3.1, and the Company shall deliver
certificates representing the Offered New Shares.
ARTICLE IV
PURCHASE OF MANAGEMENT STOCKHOLDERS' SHARES
4.1 PURCHASE OF MANAGEMENT STOCKHOLDER'S SHARES.
--------------------------------------------
(a) Subject to and in accordance with the other provisions of
this SECTION 4.1, if the employment or other engagement by the Company of any
Management Stockholder is terminated for Cause by the Company at any time or is
voluntarily terminated by such Management Stockholder (other than for Good
Reason) at any time after the date hereof and on or prior to the fifth
anniversary of Closing Date, the Company may, but shall not be obligated to,
repurchase from such Management Stockholder, and/or any Person to which such
Management Stockholder shall have Transferred any Shares (a "MANAGEMENT
SUCCESSOR"), and, if the Company so elects, such Management Stockholder and
Management Successor shall be obligated to sell to the Company, all or any
portion of the Management Shares, the Retained Options and the Performance
Options, which are not terminated as a result of such employment termination,
held or owned beneficially by such Management Stockholder or the Management
Successor of such Management Stockholder at a purchase price equal to the lesser
of (i) the Original Cost, (ii) the Book Value, or (iii) Market Value of such
Management Shares and Company Options. The purchase price payable in such events
shall be paid in accordance with the provisions of SECTION 4.3 hereof.
(b) Subject to and in accordance with the other provisions of
this SECTION 4.1, at any time after the date hereof in the event of (i) the
termination by the Company of the employment or engagement of such Management
Stockholder (other than for Cause), (ii) the
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voluntary termination by such Management Stockholder for Good Reason of his or
her employment or engagement by the Company, (iii) the voluntary termination by
such Management Stockholder of his or her employment or engagement by the
Company for any reason after the fifth anniversary of the Closing Date; or (iv)
the death or Disability of such Management Stockholder, the Company may, but
shall not be obligated to, repurchase from such Management Stockholder (or his
Personal Representative) and/or any Management Successor of such Management
Stockholder and, if the Company so elects, the Management Stockholder (or his
Personal Representative) and/or any such Management Successor shall be obligated
to sell to the Company, all or any portion of the Management Shares, the
Retained Options and the Performance Options, which are not terminated as a
result of such employment termination, death or disability, held or owned
beneficially by such Management Stockholder and Management Successor at a
purchase price equal to the Market Value of such Management Shares, such
Retained Options and such Performance Options; provided that, if such Management
Stockholder or Management Successor shall have the right pursuant to SECTION 4.2
to require the Company to repurchase any Retained Options included in such
Company Options or any Shares acquired upon exercise of Retained Options
included in such Management Shares, the purchase price under this SECTION 4.1(b)
for such Retained Options or such Shares acquired upon exercise of Retained
Options shall not be less than the Original Cost thereof and the purchase price
paid with respect thereto shall be applied against the limits specified in
SECTION 4.2(c). The purchase price payable in such events shall be paid in
accordance with the provisions of SECTION 4.3 hereof.
4.2 PUT OF MANAGEMENT STOCKHOLDER'S SHARES.
---------------------------------------
(a) Subject to and in accordance with the other provisions of
this SECTION 4.2, any prior exercise by the Company of its rights pursuant to
SECTION 4.1 and the terms and provisions of the Financing Agreement, if the
employment or other engagement by the Company of any Management Stockholder is
terminated by the Company for any reason (other than Cause) or by such
Management Stockholder for Good Reason at any time after the date hereof, such
Management Stockholder or any Management Successor of such Management
Stockholder may by written notice to the Company (the "PUT NOTICE") require the
Company to repurchase from such Management Stockholder and any such Management
Successor the Retained Options and Shares acquired upon exercise of Retained
Options held or owned beneficially by such Management Stockholder and Management
Successor at a purchase price equal to the Original Cost of such Retained
Options and Shares. The Management Stockholder shall have no right to put the
Performance Options. The purchase price payable in such events shall be paid in
accordance with the provisions of SECTION 4.3 hereof.
(b) The Put Notice shall be delivered within sixty (60) days
of the termination of the applicable Management Stockholder (such period being
herein called the "PUT EXERCISE PERIOD").
(c) Notwithstanding anything to the contrary contained herein,
the aggregate amount of the purchase price payable by the Company pursuant to
this SECTION 4.2 (including any amounts applied against the limits specified
herein pursuant to SECTION 4.1(b)) from and after
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the date hereof for Management Shares and Company Options held or beneficially
owned by (i) ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ or their
interests under the Skyline Trust shall not exceed $266,925, (ii) ▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇▇, his Personal Representative or his Management Successors shall not
exceed $225,000, and (iii) ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ or ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
shall not exceed $126,945, and, following payment of the specified aggregate
amount, the Company shall have no further obligations under this SECTION 4.2 to
the applicable Persons indicated in subparagraphs (i), (ii) and (iii) above.
4.3. REPURCHASE CLOSINGS.
--------------------
(a)(i) In the event that the Company elects to exercise its
purchase rights with respect to a Management Stockholder pursuant to SECTION
4.1, the Company shall deliver written notice to such Management Stockholder or
such Management Stockholder's Personal Representative, as applicable (the
"EXERCISE NOTICE"), specifying the number of Shares and Company Options to be
repurchased within one hundred and eighty (180) days following the later of the
appointment of any such Personal Representative or the applicable Termination
Date or the period provided in SECTION 4.3(a)(iv) below.
(ii) The purchase of Shares and Company Options pursuant to
SECTION 4.1 shall be completed at the Company's principal office within sixty
(60) days after the delivery of the Exercise Notice, or if the purchase price
therefor shall be based on the Market Value thereof, thirty (30) days following
the determination of the applicable Market Value.
(iii) The purchase of Shares and Company Options pursuant to a
Put Notice given under SECTION 4.2 shall be completed within sixty (60) days
after the later of delivery of such Put Notice.
(iv) In the event the Company fails to deliver an Exercise
Notice within the period specified above, (x) the purchase rights of the Company
with respect to the applicable Shares and Company Options shall terminate;
provided that the applicable Management Stockholder or Management Successor
shall have given the Fleet Entities written notice of such non-delivery of an
Exercise Notice (a "NON-EXERCISE NOTICE") and the Company shall not have
delivered an Exercise Notice within fifteen (15) days of delivery of such
Non-Exercise Notice, (y) if a Management Stockholder or Management Successor
shall fail to deliver a timely Non- Exercise Notice, the Company shall deliver
written notice of the termination of the Company's purchase rights under
SECTION 4.1 (the "COMPANY CALL EXPIRATION NOTICE") to each Stockholder
(other than the Stockholder holding such Shares or Company Options), and (z)
each of such other Stockholders may elect, by delivery of written notice to the
Company within fifteen (15) days after delivery of the Company Call Expiration
Notice, to purchase all or any portion of such Shares at the same price as the
Company would have paid for such Shares had the Company exercised its purchase
rights with respect thereto pursuant to SECTION 4.1. The purchase price payable
in such event shall be paid in accordance with the provisions of this SECTION
4.3.
(v) In the event that the aggregate number of Shares which the
Stockholders elect to purchase pursuant to SECTION 4.3(a)(iv) exceeds the total
of number of Shares that are subject
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to the Stockholders' purchase rights pursuant to SECTION 4.3(a)(iv), each
electing Stockholder will be entitled to purchase a pro rata portion of such
Shares based upon the respective percentage of such Shares which each such
Stockholder had elected to purchase.
(vi) The purchase of Shares pursuant to SECTIONS 4.3(a)(iv) or
(v) by one or more Stockholders shall be completed at the Company's principal
office within thirty (30) days after the delivery of the Company Call Expiration
Notice, or if the purchase price therefor shall be based on the Market Value
thereof, thirty (30) days following the determination of the applicable Market
Value.
(vii) In the event that any Stockholder fails to provide
timely notice to the Company of its election to purchase Shares that are subject
to purchase under SECTIONS 4.3(a)(iv) or (v) or to tender cash or a note in
payment of the purchase price for such Shares at the Company's principal office
within the specified time period, the purchase rights of such Stockholder under
SECTIONS 4.3(a)(iv) and (v) with respect to such Shares shall lapse.
(viii) In the event a Management Stockholder or the Management
Successor of such Management Stockholder fails to deliver a Put Notice during
the Put Exercise Period, the rights of such Management Stockholder and
Management Successor to cause the Company to repurchase the Management Shares of
such Management Stockholder shall terminate.
(ix) At any closing of any purchase of Shares pursuant to this
ARTICLE IV, the selling Management Stockholder, Management Successor and/or, if
applicable, a Management Stockholder's Personal Representative shall deliver to
the Company, or the purchasing Stockholders, as applicable, fully executed
assignments for the Shares being repurchased by the Company, or the purchasing
Stockholders, as applicable, against receipt of the purchase price therefor,
subject to the provisions of SECTION 4.3(b) below.
(b) The Company or a Stockholder shall be entitled to complete
the purchase of Shares pursuant to this ARTICLE IV by delivering to the selling
Management Stockholder (or his Personal Representative, if any) or a Management
Successor of such Management Stockholder either cash or a promissory note for
the purchase price, at the sole discretion of the Company or such Stockholder.
Each such promissory note shall, subject to the terms and provisions of the
Financing Agreement, (w) accrue interest at the rate paid by the Surviving
Corporation on the [Revolving Loan] (as defined in the Financing Agreement) to
the Senior Lender pursuant to the Financing Agreement payable annually, and (x)
provide for the payment of the principal evidenced thereby (together with
accrued and compounded interest thereon) in thirty-six (36) equal monthly
installments of principal beginning on the first day of the first month
following the purchase of such Shares, and (y) be secured solely by a pledge of
Shares which have been purchased.
4.4 DETERMINATION OF MARKET VALUE. For purposes hereof, the "Market
Value" of any Management Shares to be purchased by the Company shall be the fair
market value of such Management Shares, determined as of the applicable
Termination Date as follows:
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(a) (i) The Board of the Company, by affirmative vote of at
least a majority of such Board (excluding, the Chief Executive Officer and any
director designated by the Chief Executive Officer of the Company [the directors
other than any such excluded directors being herein referred to as the
"DISINTERESTED DIRECTORS"]) and with the Consent of Fleet Entities, shall make a
good faith determination of the fair market value of the Management Shares
proposed to be purchased and by written notice to the applicable Management
Shareholder offer to purchase such Management Shares for such fair market price.
(ii) Within fifteen (15) days after the delivery of the offer
described in (a)(i), the Management Stockholder, whose Management Shares are
being purchased, may object to the such Board determination of the fair market
value of such Management Shares by delivery of written notice of such objection
to the Company. If such Management Stockholder does not so object, then the fair
market value of such Management Shares shall be equal to the fair market so
determined by the Board.
(b)(i) If the Management Stockholder, whose shares are being
purchased, pursuant to (a)(ii) above objects to a determination of fair market
value, within thirty (30) days of such objection, the Board of the Company, by
affirmative vote of at least a majority of the Disinterested Directors and with
the Consent of Fleet Entities, shall select a qualified, nationally recognized
appraiser to make a good faith determination of the fair market value of the
Management Shares proposed to be purchased pursuant to a written report (the
"INITIAL APPRAISAL"). Following receipt of the Initial Appraisal, if after
review thereof, the Board of the Company elects to exercise the Company's
purchase rights with respect to such Management Shares at the fair market value
specified in the Initial Appraisal, the Company shall offer to purchase such
Management Shares for the fair market value specified in the Initial Appraisal
and shall deliver a copy of such Initial Appraisal to the applicable Management
Stockholder. For purposes of the exercise by any Stockholder of such
Stockholder's rights to acquire Management Shares pursuant to this Article, the
Board of the Company shall select the appraiser to perform the Initial Appraisal
but any offer or notice given or decision to accept or reject a fair market
value pursuant to this Article shall be made by such Stockholder rather than the
Board of the Company.
(ii) Within fifteen (15) days after the delivery of the offer
described in (b)(i), the Management Stockholder, whose Management Shares are
being purchased, may object to the Initial Appraisal by delivery of written
notice of such objection to the Company. If such Management Stockholder does not
so object, then the fair market value of such Management Shares shall be equal
to the fair market value set forth in the Initial Appraisal.
(c) In the event a Management Stockholder delivers a timely
notice of objection pursuant to (b)(ii), then such Management Stockholder shall,
at his or her own cost and expense, select a qualified, nationally recognized
appraiser to make a good faith determination of the fair market value of the
Management Shares being purchased pursuant to a written report (the "MANAGEMENT
APPRAISAL"). A copy of such Management Appraisal shall be delivered by the
Management Stockholder to the Company and each Fleet Entity within fifteen (15)
days after the date such notice of objection was delivered. In the event such
Management Appraisal is not
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delivered by such date, the fair market value of such Management Shares shall be
equal to the fair market value set forth in the Initial Appraisal.
(d) Within fifteen (15) days of the delivery of the Management
Appraisal, a majority of the Disinterested Directors (with the Consent of Fleet
Entities) may object to the Management Appraisal by delivery of written notice
thereof to the applicable Management Stockholder. If no timely notice of
objection is so delivered within twenty-five (25) days of the delivery of the
Management Appraisal, then the Fleet Entities may object to the Management
Appraisal by delivery of written notice thereof to the applicable Management
Stockholder. In the event no timely notice of objection to the Management
Appraisal is delivered to the applicable Management Stockholder, then the fair
market value of the Management Shares being purchased shall be equal to the
amount set forth in the Management Appraisal.
(e) In the event the Disinterested Directors or the Fleet
Entities deliver a timely notice of objection pursuant to (d), within fifteen
(15) days after the delivery of such notice, the Company and the applicable
Management Stockholder shall cause the appraisers selected by each of them to
mutually agree to and select a third qualified, nationally recognized
independent appraiser to determine the fair market value of such Management
Shares (the "THIRD APPRAISAL"). The Company and the applicable Management
Stockholder shall equally share the cost and expense of such Third Appraisal.
(f) Copies of the written report of the Third Appraisal shall
be delivered by such third appraiser to the Company and the applicable
Management Stockholder within thirty (30) days of selection of such third
appraiser.
(g) Upon delivery of the Third Appraisal, the fair market
value of the Management Shares to be purchased shall equal the average of the
two closest fair market values of such Management Shares set forth in (i) the
Initial Appraisal, (ii) Management Appraisal, and (iii) the Third Appraisal;
provided that following final determination of the Market Value pursuant hereto,
the Company or any Stockholder, as applicable, may elect not to exercise its
purchase rights pursuant to SECTION 4.1.
4.5 REQUIRED CONSENTS. Any purchase of Management Shares and Company
Options pursuant to Section 4.1 shall require the Consent of the Fleet Entities
and the written consent of the Senior Lender. Any purchase of Management Shares
and Company Options pursuant to Section 4.2 shall require the written consent of
the Senior Lender to the Company, which consent the Company shall seek to
obtain.
ARTICLE V
TAKE-ALONG AND TAG-ALONG
5.1 TAKE-ALONG AND TAG-ALONG.
-------------------------
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(a) Except for any Permitted Transfers, in the event that any
transferring Fleet Entity (a "TRANSFERRING FLEET ENTITY") wishes to accept a
bona fide third party offer for the purchase of all or any of the Shares held by
it, such Transferring Fleet Entity shall give written notice thereof to each
other Stockholder, which notice shall describe the material terms and conditions
of such offer.
(b) Transferring Fleet Entities, which shall propose to sell
pursuant to such a bona fide third party offer at least fifty-one percent (51%)
of the Shares held by the Fleet Entities pursuant to a proposed Sale of the
Company, may by written notice (a "TAKE-ALONG NOTICE") to each other Stockholder
require each other Stockholder to sell the same proportionate percentage of the
outstanding Shares which such Stockholder owns, as the Transferring Fleet
Entities propose to sell, for the same consideration per Share and otherwise on
the same terms and conditions obtained by the Transferring Fleet Entity.
(c) TAG-ALONG. If the Transferring Fleet Entities shall not
have delivered a Take-Along Notice with respect to a proposed sale of Shares by
such Transferring Fleet Entities, any Stockholder, at his, her or its option,
may by written notice to such Transferring Fleet Entities given within fifteen
(15) days of receipt of notice of such bona fide third party offer, require such
Transferring Fleet Entities to cause such third party to acquire the same
proportionate percentage of the outstanding Shares which such Stockholder owns,
as the Transferring Fleet Entity proposes to sell, for the same consideration
per Share and otherwise on the same terms and conditions obtained by the
Transferring Fleet Entity. The Transferring Fleet Entities shall not consummate
any sale of Shares by them unless the acquiring Person shall acquire any Shares
of the Management Stockholders required to be acquired under this SECTION
5.1(c).
(d) Stockholders participating in a sale pursuant to this
ARTICLE V shall bear their PRO RATA share of transaction costs incurred in
connection with such sale to the extent such costs would otherwise be borne by
the Transferring Fleet Entity.
ARTICLE VI
RESTRICTIONS ON TRANSFER
6.1 TRANSFER RESTRICTIONS. Except as provided in Section 6.2 hereof, no
Stockholder other than a Fleet Entity shall Transfer any Shares of the Company
except as specifically permitted by this Agreement or pursuant to a Permitted
Transfer.
6.2 REGULATORY COMPLIANCE COOPERATION.
----------------------------------
(a) In the event that any Fleet Entity that is a Small
Business Investment Company within the meaning of the Small Business Investment
Act of 1958, as amended (an "SBIC HOLDER") determines that it has a Regulatory
Problem (as defined below), such SBIC Holder shall have the right to transfer
its Shares without regard to any restriction on transfer set forth in this
Agreement other than applicable federal or state securities laws (provided that
the
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transferee agrees to become a party to this Agreement and executes an Instrument
of Accession), and the Company shall take all such actions as are reasonably
requested by such SBIC Holder in order to (a) effectuate and facilitate any
transfer by such SBIC Holder of any securities of the Company then held by such
SBIC Holder to any Person designated by such SBIC Holder, (b) permit such SBIC
Holder (or any Affiliate thereof) to exchange all or any number of Shares of any
Class A Common Stock for an equal number of Shares of Class B Common Stock, and
(c) amend this and any related agreements and instruments to effectuate and
reflect the foregoing. The parties to this Agreement agree to vote their Shares
in favor of such amendments and actions.
(b) For purposes of this Agreement, a "REGULATORY PROBLEM"
means any set of facts or circumstances wherein it has been asserted by any
governmental regulatory agency (or any SBIC Holder believes that there is a
substantial risk of such assertion) that such SBIC Holder is not entitled to
hold, or exercise any significant right with respect to, the Shares.
.
6.3 TERMINATION. The provisions of this ARTICLE VI shall terminate upon
the consummation of an initial Public Offering.
ARTICLE VII
MISCELLANEOUS
7.1 REINCORPORATION; AMENDMENT OF ARTICLES OF INCORPORATION AND CODE OF
REGULATIONS.
(a) Following the Effective Time, the Fleet Entities may elect
to cause the reincorporation of the Surviving Corporation as a Delaware
corporation by giving written notice of such election to the Company or the
Surviving Corporation. In any such event, the Company and the Management
Stockholders shall take all necessary steps, including without limitation the
voting by the Management Stockholders of their Shares in favor of any required
action of the stockholders of the Surviving Corporation with respect thereto, at
the expense of the Company to effect such reincorporation within 60 days of such
notice including the ratification of all of the Related Agreements.
(b) As of the Effective Time, immediately following the
consummation of the Merger, the Articles of Incorporation and the Code of
Regulations of the Surviving Corporation shall be amended as set forth on
SCHEDULE C attached hereto. The Company and each of the Stockholders shall take
all necessary steps at the expense of the Company to effect such amendments,
including without limitation, as of the Effective Time, the voting by the
Stockholders of their Shares in favor of such amendments.
7.2 WAIVERS AND AMENDMENTS. Until the Company is reincorporated as a
Delaware corporation, the rights and obligations of the Company and the rights
and obligations of the Stockholders under this Agreement may not be waived
(either generally or in a particular
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instance, either retroactively or prospectively, and either for a specified
period of time or indefinitely) or amended without the written consent of the
Company each Fleet Entity and Persons holding 80% of the number of outstanding
shares of Class A Common Stock and 80% of the number of outstanding shares of
Class B Common Stock. After the Company has been reincorporated in Delaware, the
rights and obligations of the Company and the rights and obligations of the
Stockholders under this Agreement may not be waived (either generally or in a
particular instance, either retroactively or prospectively, and either for a
specified period of time or indefinitely) or amended without the written consent
of the Company, each Fleet Entity and Persons holding a majority of the
Management Shares.
7.3 GOVERNING LAW. Until the Company is reincorporated as a Delaware
corporation, this Agreement shall be governed by and construed in accordance
with the laws of the State of Ohio, without giving effect to any choice or
conflict of law provisions or rule that would cause the application of the
domestic substantive laws of any other state, and this Agreement shall be an
Ohio Close Corporation Agreement and shall be governed by the provisions of Ohio
Revised Code Section 1701.591, as amended from time to time. After the Company
is reincorporated as a Delaware corporation, this Agreement shall be governed by
and construed in accordance with the laws of the State of Delaware without
giving effect to any choice or conflict of law provisions or rule that would
cause the application of the domestic substantive laws of any other state.
7.4 SUCCESSORS AND ASSIGNS. The provisions hereof shall inure to the
benefit of, and be binding upon, the successors, assigns, heirs, executors and
administrators of the parties hereto.
7.5 ENTIRE AGREEMENT. This Agreement constitutes the full and entire
understanding and agreement between the parties with regard to the subject
matter hereof.
7.6 NOTICES. Unless otherwise specifically provided herein, any notice,
consent, waiver or other communication required or permitted to be given
hereunder shall be in writing addressed to the applicable party as set forth
below and may be personally served, telecopied or sent by nationally recognized
overnight courier service or United States certified mail, postage prepaid and
return receipt requested, and shall be deemed to have been given: (i) if
delivered in person, when delivered; (ii) if delivered by telecopy, on the date
of transmission if transmitted on a Business Day before 4:00 p.m. (Providence,
Rhode Island time) or, if not, on the next succeeding Business Day; (iii) if
delivered by overnight courier, one Business Day after delivery to such courier,
properly addressed; or (iv) if by U.S. Mail, four (4) Business Days after
depositing in the United States mail. Notices shall be addressed as follows:
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If to the Company:
c/o Fleet Venture Resources, Inc.
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, III, Vice President
with a copy to:
▇▇▇▇▇▇▇ ▇. Small, Esq.
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to any Fleet Entity:
c/o Fleet Venture Resources, Inc.
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, III, Vice President
and to:
▇▇▇▇▇▇▇▇ Partners III, L.P.
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, III
with a copy to:
▇▇▇▇▇▇▇ ▇. Small, Esq.
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
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If to any Management Stockholder to the residence address of
such Management Stockholder reflected on the books of the Company.
7.7 SEVERABILITY. Wherever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be prohibited by or
invalid under applicable law, such provision shall be ineffective to the extent
of such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Agreement.
7.8 COUNTERPARTS. This Agreement may be executed in any number of
counterparts and by the parties hereto on separate counterparts and each
counterpart, when so executed and delivered, shall be an original, and all such
counterparts shall together constitute one and the same instrument.
7.9 DESCRIPTIVE HEADINGS. The descriptive headings of this Agreement
are inserted for convenience only and do not constitute a part of this
Agreement.
7.10 CONSENT TO JURISDICTION. UNTIL THE COMPANY IS REINCORPORATED AS A
DELAWARE CORPORATION, THE PARTIES HERETO HEREBY AGREE TO SUBMIT TO THE
NON-EXCLUSIVE JURISDICTION OF THE COURTS IN AND OF THE STATE OF OHIO AND TO
JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE [ ] DISTRICT OF OHIO
AND TO THE COURTS TO WHICH AN APPEAL OF THE DECISIONS OF SUCH COURTS MAY BE
TAKEN, AND CONSENTS THAT SERVICE OF PROCESS WITH RESPECT TO ALL COURTS IN AND OF
THE STATE OF OHIO AND THE UNITED STATES DISTRICT COURT FOR THE [ ] DISTRICT OF
OHIO MAY BE MADE BY REGISTERED MAIL TO IT AT SUCH PARTY'S ADDRESS SET FORTH IN
SECTION 7.6.
ON AND AFTER THE DATE THAT THE COMPANY IS REINCORPORATED AS A DELAWARE
CORPORATION, THE PARTIES HERETO HEREBY AGREE TO SUBMIT TO THE NON-EXCLUSIVE
JURISDICTION OF THE COURTS IN AND OF THE STATE OF DELAWARE AND TO JURISDICTION
OF THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF DELAWARE AND TO THE
COURTS TO WHICH AN APPEAL OF THE DECISIONS OF SUCH COURTS MAY BE TAKEN, AND
CONSENTS THAT SERVICE OF PROCESS WITH RESPECT TO ALL COURTS IN AND OF THE STATE
OF DELAWARE AND THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF DELAWARE
MAY BE MADE BY REGISTERED MAIL TO IT AT SUCH PARTY'S ADDRESS SET FORTH IN
SECTION 7.6.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
SKYLINE ACQUISITION CORP.
By:
---------------------------------
Name:
Title:
FLEET VENTURE RESOURCES, INC.
By:
---------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, III
Vice President
FLEET EQUITY PARTNERS VI, L.P.
By: Fleet Growth Resources, II, Inc.,
a General Partner
By:
---------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, III
Vice President
▇▇▇▇▇▇▇ PLAZA PARTNERS
By:
---------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, III
Authorized Partner
35
▇▇▇▇▇▇▇▇ PARTNERS III, L.P.
By: Silverado III, L.P., a General Partner
By: Silverado III, Corp., a General Partner
By:
---------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, III
Vice President
---------------------------------
(▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇)
---------------------------------
(▇▇▇▇▇▇ ▇. ▇▇▇▇▇)
---------------------------------
(▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.)
---------------------------------
(▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇)
---------------------------------
(▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇)
---------------------------------
(▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇)
---------------------------------
(▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇)
36
SKYLINE NON-QUALIFIED DEFERRED
COMPENSATION PLAN TRUST
By Equitable Trust Company, as trustee
By
--------------------------------------
M. ▇▇▇▇ ▇▇▇▇▇▇
Executive Vice President
37
SCHEDULE C
AMENDMENTS
TO
ARTICLES OF INCORPORATION
AND
CODE OF REGULATIONS
OF THE
SURVIVING CORPORATION
I. AMENDMENTS TO ARTICLES OF INCORPORATION. As of the Effective Time,
the following amendments shall be deemed made to the Amended Articles of
Incorporation of the Company (the "Amended Articles"):
A. ARTICLE NINTH. Article Ninth of the Amended Articles shall
be amended by deleting therefrom subsections (c), (d), (e), (f) and (g).
B. ARTICLE TENTH. Article Tenth of the Amended Articles shall
be amended by deleting therefrom subsections (a), (b), (c), (d), (f) and (g) and
by redesignation of subsection (e) thereof as subsection (a).
II. AMENDMENTS TO CODE OF REGULATIONS. As of the Effective Time, the
following amendments shall be deemed made to the Code of Regulations of the
Company (the "Code of Regulations"):
A. SHAREHOLDERS. Section II of the Code of Regulations shall
be amended as follows:
1. SPECIAL MEETINGS. Subsection (b) of Section II of the Code
of Regulations shall be amended by deleting the phrase "fifty percent (50%)"
therefrom and substituting therefor the phrase "ten percent (10%)".
2. NOTICE OF MEETING. Subsection (d) of Section II of the Code
of Regulations shall be amended by deleting the last paragraph thereof and
adding a sentence to the first paragraph thereof as follows:
Such notice shall include a brief description of the business desired to be
brought before the meeting.
3. WAIVER OF NOTICE. Section II of the Code of Regulations
shall be amended by deleting therefrom subsection (h) entitled "PROCEDURE FOR
BRINGING BUSINESS BEFORE MEETING" and inserting in place thereof the following:
38
(h) Waiver of Notice
----------------
Notice of meeting need not be given to any shareholder who signs a
waiver of notice, in person or by proxy, whether before or after the meeting.
The attendance of any shareholder at a meeting, in person or by proxy, without
protesting prior to the conclusion of the meeting the lack of notice of such
meeting, shall constitute a waiver of notice by him.
B. DIRECTORS. Section III of the Code of Regulations shall be
amended as follows:
1. NUMBER OF DIRECTORS. Subsection (a) of Section III of the
Code of Regulations shall be amended as follows:
(a) the phrase "three (3)" shall be deleted from the first
sentence thereof and the phrase "five (5)" substituted therefor; and
(b) the last two sentences shall be deleted therefrom.
2. NOMINATION AND ELECTION OF DIRECTORS. Subsection (b) of
Section III of the Code of Regulations shall be amended as follows:
(a) the second sentence of the second paragraph thereof shall
be deleted; and
(b) the third paragraph thereof shall be deleted.
3. REGULAR MEETINGS. Subsection (e) of Section III of the Code
of Regulations shall be amended by adding the following proviso to the end
thereof:
; provided that the Board of Directors shall meet at least once per calendar
quarter.
4. SPECIAL MEETINGS. Subsection (f) of Section III of the Code
of Regulations shall be amended by deleting the phrase "three (3)" therefrom and
substituting the phrase "two (2)" therefor.
5. COMMITTEES. Section III of the Code of Regulations shall be
amended as follows:
(a) the second paragraph of subsection (j) thereof shall be
designated as subsection (k), entitled "COMMITTEES";
(b) the first sentence of newly designated subsection (k)
thereof shall be amended by adding at the end thereof the following proviso:
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39
; provided that notwithstanding anything to the contrary contained herein the
consent of a majority of the outstanding shares entitled to vote for Directors
shall be required to the appointment to the Audit or Compensation Committees of
any Directors, none of whom shall be an employee or officer of the Corporation,
and the Directors may not establish an Executive Committee without the consent
of sixty-one percent (61%) of the outstanding shares entitled to vote for
Directors.
6. SALE AND LEASEBACK. Section III of the Code of Regulations
shall be amended by inserting at the end thereof new subsection (l) as follows:
(l) SALE AND LEASEBACK. Except pursuant to a vote of a
majority of the Directors, the Corporation shall not engage in any
transaction involving the sale and leaseback of any franchised
restaurant or location.
3