EXHIBIT No. 1
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AMENDED AND RESTATED
SHAREHOLDERS AGREEMENT
among
QDI Merger Corp.
and
EACH OF THE SHAREHOLDERS
NAMED ON THE SIGNATURE PAGES HERETO
Dated as of February 3, 2005
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TABLE OF CONTENTS
Page
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ARTICLE I CERTAIN DEFINITIONS .......................................................... 1
ARTICLE II PRE-MERGER MATTERS .......................................................... 9
SECTION 2.1. Joint Filing of Schedule 13D ..................................... 9
SECTION 2.2. Actions with Respect to Merger Corp. ............................. 9
SECTION 2.3. Permission to Disclose; Publicity ................................ 9
SECTION 2.4. Ownership of Stock ............................................... 9
SECTION 2.5. Waiver of Appraisal Rights ....................................... 9
ARTICLE III ORGANIZATIONAL MATTERS ..................................................... 10
SECTION 3.1. Joinder of QDI .................................................. 10
SECTION 3.2. Organizational Documents; Directors; Equity Plan ................. 10
SECTION 3.3. Further Assurances ............................................... 10
ARTICLE IV SIGNIFICANT BUSINESS DECISIONS .............................................. 10
SECTION 4.1. Issuance of Capital Stock ........................................ 10
SECTION 4.2. Merger Transaction ............................................... 11
SECTION 4.3. Access to Information ............................................ 11
SECTION 4.4. Determination of Common Stock Value .............................. 11
ARTICLE V TRANSFERS OF SHARES .......................................................... 11
SECTION 5.1. Restrictions on Transfers and New Share Issuances ................ 11
SECTION 5.2. Permitted Transfers .............................................. 12
SECTION 5.3. Tag Along Right .................................................. 13
SECTION 5.4. Drag Along Right ................................................. 14
SECTION 5.5. Company Call Right ............................................... 14
SECTION 5.6. Shareholder Put Right ............................................ 16
SECTION 5.8. Legend on Certificates ........................................... 18
ARTICLE VI ADDITIONAL AGREEMENTS ....................................................... 18
SECTION 6.1. Access to Financial Statements ................................... 18
SECTION 6.2. Preemptive Rights ................................................ 19
ARTICLE VII MISCELLANEOUS .............................................................. 19
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SECTION 7.1. Amendment of Agreement; Termination .............................. 19
SECTION 7.2. Action by Shareholders ........................................... 20
SECTION 7.3. Notices .......................................................... 20
SECTION 7.4. Binding Effect ................................................... 21
SECTION 7.5. Entire Agreement; Assignment ..................................... 21
SECTION 7.6. Counterparts ..................................................... 22
SECTION 7.7. Headings ......................................................... 22
SECTION 7.8. Bylaws ........................................................... 22
SECTION 7.9. Governing Law; Consent to Jurisdiction and Service of Process .... 22
SECTION 7.10. Injunctive Relief ................................................ 22
SECTION 7.11. Severability ..................................................... 22
SECTION 7.12. Recapitalization, etc. ........................................... 23
Annex A Founding Shareholder Ownership Table
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AMENDED AND RESTATED
SHAREHOLDERS AGREEMENT
This Amended and Restated
Shareholders Agreement (this
"Agreement") is made as of the 3rd day of February, 2005 by and among QDI MERGER
CORP., an
Indiana corporation ("Merger Corp."), and each shareholder of Quality
Dining, Inc., an
Indiana corporation ("QDI"), who is originally, or who
hereafter becomes, a party hereto.
WITNESSETH:
WHEREAS, the original individual signatories to this Agreement
(other than ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇) entered into a
Shareholders Agreement, dated
as of June 15, 2004 (the "Original
Shareholders Agreement"), and have organized
Merger Corp. for purposes of acquiring all the issued and outstanding common
stock of QDI not already owned by them;
WHEREAS, pursuant to the Agreement and Plan of Merger, dated
as of November 9, 2004, by and among QDI and Merger Corp. (as the same may be
amended from time to time, the "Merger Agreement"), Merger Corp. will, subject
to the terms and conditions contained therein, be merged with and into QDI with
QDI as the surviving corporation (the "Merger"); and
WHEREAS, the parties hereto desire to amend and restate the
Original
Shareholders Agreement to add ▇▇. ▇▇▇▇▇▇▇▇▇▇ and to facilitate the
Merger, restrict the sale, assignment, transfer, encumbrance or other
disposition of their shares of common stock of the Company following the Merger,
and to provide for certain rights and obligations with respect thereto as
hereinafter provided;
NOW THEREFORE, in consideration of the premises and the mutual
agreements, covenants and provisions contained herein, and other valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties hereto, intending to be legally bound hereby, agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
The following terms shall have the definitions set forth
below:
"Acceptance Notice" has the meaning set forth Section
5.2(a)(i) hereof.
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"Affiliate" means, with respect to any specified Person, any
other Person directly or indirectly controlling or controlled by or under direct
or indirect common control with such specified Person. For the purposes of this
definition, "control" when used with respect to any specified Person means the
power to direct the management and policies of such Person, directly or
indirectly, whether through the ownership of voting securities, by contract or
otherwise; and the terms "controlling" and "controlled" have meanings
correlative to the foregoing.
"Agreement" has the meaning set forth in the preamble of this
Agreement.
"Board" means the Board of Directors of the Company.
"Business Day" means any day (other than a day which is a
Saturday, Sunday or legal holiday in the State of
Indiana) on which banks are
open for business in the State of
Indiana.
"Buy-Out Note" means an unsecured promissory note of the
Company which shall:
(i) have a stated maturity of five (5) years from the
Original Issue Date;
(ii) accrue interest at a fixed rate per annum equal to
the prime rate (as reported in The Wall Street
Journal on the Original Issue Date) minus one
percent (1%);
(iii) be prepayable at the option of the Company at any
time, in whole or in part, at its principal amount
plus any accrued and unpaid interest; and
(iv) require the Company to repay the original outstanding
principal amount thereof in five equal annual
installments (plus accrued and unpaid interest
thereon) on each anniversary of its Original Issue
Date; provided that if a Buy-Out Note is issued to
pay all or a portion of the purchase price for Put
Shares purchased by the Company pursuant to the
exercise of a Put Right, the outstanding principal
amount of such Buy-Out Note shall automatically be
adjusted on each anniversary of its Original Issue
Date (each, a "Principal Adjustment Date"), with such
adjustment to be effective as of such Principal
Adjustment Date and to remain in effect until the
next Principal Adjustment Date, to an amount equal to
((OPA/PCSV) x LCSV) - P, where:
OPA = the original principal amount of such Buy-Out
Note;
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PCSV = the Common Stock Value used in the
determination of the original principal amount of
such Buy-Out Note;
LCSV = the lowest Common Stock Value in effect on the
Original Issue Date and each anniversary thereof
occurring on or prior to the date of determination;
and
P = the cumulative total of principal payments made
in such Buy-Out Note repaid prior to the applicable
Principal Adjustment Date;
and such adjusted principal amount shall thereupon be
payable in equal annual installments (plus accrued
and unpaid interest thereon) commencing on such
Principal Adjustment Date and thereafter on each
subsequent anniversary of its Original Issue Date
(subject to further adjustment as provided above)
through its stated maturity (subject to adjustment as
provided below); provided further, that in the event
that the foregoing principal adjustment formula
yields a negative number, the Buy-Out Note shall
thereupon automatically be deemed to be paid in full
and the Shareholder shall not be obligated to repay
any such negative balance to the Company; and
provided further, that if on any principal repayment
date, after taking into account the outstanding
principal amount of and all accrued interest on all
Buy-Out Notes, there exists, or payment of such
principal or accrued interest would result in, an
event of default (or an event which with notice or
lapse of time or both would constitute an event of
default) under any Indebtedness of the Company or any
of its Subsidiaries, or such payment of principal or
accrued interest would otherwise be prevented by law,
the principal amount and accrued interest otherwise
payable on such payment date shall not be paid and
such accrued and unpaid interest shall be added to
the principal amount of such Buy-Out Note, which
shall thereafter be payable in equal annual
installments (plus accrued and unpaid interest
thereon) on each remaining anniversary of its
Original Issue Date through its stated maturity,
which stated maturity shall automatically be extended
for one (1) full year each time that repayment of the
principal amount of such Buy-Out Note is not required
to be made on a principal repayment date due to the
circumstances described in this proviso.
"Call Multiple" means 4.8 or such other number as agreed to by
written amendment to this Agreement entered into by all parties hereto.
"Call Notice" has the meaning set forth in Section 5.4 hereof.
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"Call Right" has the meaning set forth in Section 5.4 hereof.
"Called Shares" has the meaning set forth in Section 5.4
hereof.
"Common Stock" means the common stock, no par value, of the
Company.
"Common Stock Value" means, as of the last day of each fiscal
quarter of the Company, the result obtained by dividing:
(a) the result obtained by multiplying the Call Multiple by
(I) the amount by which the sum of
(i) Pro Forma Consolidated Cash Flow for the trailing
four (4) fiscal quarters, plus
(ii) the aggregate exercise price payable in respect of
all outstanding in-the-money options to purchase
Common Stock, plus or minus
(iii) Net Working Capital, excluding
(w) (to the extent included in determining
Net Working Capital) any life insurance
proceeds attributable to the
Shareholder with respect to whom the
determination of Common Stock Value is
being made,
(x) assets held for sale,
(y) insurance costs and
(z) (to the extent reflected in clause
(II) below) Indebtedness, plus
(iv) any dividends or distributions payable in cash or in
kind with respect to the Common Stock (with the value
of any in-kind dividends or distributions being as
determined by the Board) that are declared on or
before the last day of such fiscal quarter but the
record date for which occurs after the closing of the
purchase of Shares from the Shareholder with respect
to whom the determination of Common Stock Value is
being made, minus
(v) any dividends or distributions payable in cash or in
kind with respect to the Common Stock (with the value
of any in-kind dividends or distributions being as
determined by the Board) that are declared after the
last day of such fiscal quarter but the record date
for which occurs before the closing of the purchase
of Shares from the Shareholder with respect to whom
the determination of Common Stock Value is being
made,
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exceeds
(II) Indebtedness,
by
(b) the total number of outstanding shares of Common Stock plus the
outstanding in-the-money options.
For purposes of the foregoing, "in-the-money" options shall be determined by
reference to the Common Stock Value in effect immediately prior to the
determination.
"Company" means, prior to the Effective Time, Merger Corp.,
and following the Effective Time, QDI.
"Consolidated Cash Flow" means, for any period for which the
amount thereof is to be determined, Consolidated Net Income for such period,
plus (to the extent deducted in determining Consolidated Net Income and without
duplication to adjustments to net income (determined in accordance with GAAP)
made in the determination of Consolidated Net Income) (i) provisions for any
Federal, state or local taxes during such period, (ii) interest expense during
such period, (iii) depreciation and amortization during such period and (iv)
other non-cash income or expenses during such period.
"Consolidated Net Income" means, for any period for which the
amount thereof is to be determined, the net income (or net losses) of the
Company and its Subsidiaries on a consolidated basis as determined in accordance
with GAAP after deducting, to the extent included in computing said net income
and without duplication, (i) the income (or deficit) of any Person (other than a
Subsidiary) in which the Company or any of its Subsidiaries has any ownership
interest, except to the extent that any such income has been actually received
by the Company or such Subsidiary in the form of cash dividends or similar cash
distributions, (ii) any income (or deficit) of any other Person accrued prior to
the date it becomes a Subsidiary of the Company or merges into or consolidates
with the Company or another of its Subsidiaries, (iii) the gain or loss (net of
any tax effect) resulting from the sale, exchange or disposal of any capital
assets, (iv) any gains or losses, or other income (net of any tax effect in
respect thereof) which is nonrecurring or otherwise properly classified as
extraordinary in accordance with GAAP), (v) income resulting from any
reappraisal, reevaluation or write-up of any assets, (vi) any portion of the net
income of the Subsidiaries which for any reason is not available for
distribution, and (vii) the proceeds of any life insurance policy on the life of
any officer, director or employee of the Company or any of its Subsidiaries.
"Currency Notice" has the meaning set forth in Section 5.6
hereof.
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"Drag Along Notice" has the meaning set forth in Section 5.4
hereof.
"Drag Along Purchaser" has the meaning set forth in Section
5.4 hereof.
"Drag Along Sale" has the meaning set forth in Section 5.4
hereof.
"Dragging Shareholder" has the meaning set forth in Section
5.4 hereof.
"Effective Time" means the time at which the Merger becomes
effective in accordance with the Merger Agreement.
"Electing Shareholder" has the meaning set forth in Section
5.3 hereof.
"Employee Incentive Plan" has the meaning set forth in Section
3.2(c) hereof.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the SEC promulgated thereunder.
"Founding Shareholders" means ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇. ▇▇▇▇▇ and
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, collectively.
"GAAP" means U.S. generally accepted accounting principles as
in effect on the date of this Agreement except that the effect of consolidating
the financial statements of any affiliated real estate entitles with the
Company's financial statements shall be excluded so long as (i) none of the
Company nor its subsidiaries guarantees any of such affiliates' debt, (ii) the
Company does not control a majority of the voting securities of such affiliate,
and (iii) the Company does not own any equity of such affiliate. Whenever any
accounting term is used herein which is not otherwise defined, it shall be
interpreted in accordance with GAAP.
"Indebtedness" means and includes, as of any date as of which
the amount thereof is to be determined, (i) all obligations of the Company and
its Subsidiaries for borrowed money or which has been incurred in connection
with the acquisition of property; (ii) all indebtedness, liabilities and other
obligations of the Company and its Subsidiaries arising under any conditional
sale or other title retention agreement, whether or not the rights and remedies
of the seller or lender under such agreement in the event of default are limited
to repossession or sale of such property; (iii) all net obligations of the
Company and its Subsidiaries in respect of rate hedging obligations; and (iv)
all capital lease obligations of the Company and its Subsidiaries.
"Merger" has the meaning set forth in the recitals.
"Merger Agreement" has the meaning set forth in the recitals.
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"Merger Corp." has the meaning set forth in the recitals.
"Net Working Capital" means, as of any date as of which the
amount thereof is to be determined, the amount of current assets minus current
liabilities of the Company and its Subsidiaries on a consolidated basis as
determined in accordance with GAAP plus the following amounts in the following
fiscal years:
Fiscal 2005 $7,000,000
Fiscal 2006 $5,000,000
Fiscal 2007 $3,000,000
Fiscal 2008
and thereafter -0-
"Offer Notice" has the meaning set forth in Section 5.2(a)(i)
hereof.
"Offer Period" has the meaning set forth in Section 5.2(a)(i)
hereof.
"Offered Shares" has the meaning set forth in Section
5.2(a)(i) hereof.
"Offeree" has the meaning set forth in Section 5.2(a)(i)
hereof.
"Offering Terms" has the meaning set forth in Section
5.2(a)(i) hereof.
"Offeror" has the meaning set forth in Section 5.2(a)(i)
hereof.
"Original Issue Date" means, with respect to any Buy-Out Note,
the date of the original issuance of such Buy-Out Note.
"Original
Shareholders Agreement" has the meaning set forth in
the recitals.
"Permitted Transferees" means (i) any individual Shareholder
or (ii) a trust which such Shareholder is the sole trustee and which has no
principal beneficiaries other than such Shareholder and/or any spouse, child,
parent, sibling or grandchild of such Shareholder.
"Person" means an individual, partnership, corporation,
unincorporated organization, joint stock company, limited liability company,
trust or joint venture, or a governmental agency or political subdivision
thereof.
"Pro Forma Consolidated Cash Flow" means, for any period for
which the amount thereof is to be determined, Consolidated Cash Flow during such
period; provided that (i) in respect of any acquisition consummated during such
period, Consolidated Cash Flow shall be calculated as if such acquisition had
occurred on the first day of such period, (ii) in respect of any restaurant
first opened during such period, Consolidated Cash Flow shall be calculated on
an annualized basis as if such property
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had been in operation for the entire period, and (iii) in respect of any
dispositions consummated during such period, Consolidated Cash Flow shall be
calculated as if such disposition had occurred on the first day of such period.
"Purchaser" has the meaning set forth in Section 5.3.
"Put Notice" has the meaning set forth in Section 5.5 hereof.
"Put Right" has the meaning set forth in Section 5.5 hereof.
"Put Shares" has the meaning set forth in Section 5.5 hereof.
"QDI" has the meaning set forth in the recitals.
"SEC" means the United States Securities and Exchange
Commission, or any other Federal agency at the time administering the Securities
Act or the Exchange Act.
"Securities Act" means the Securities Act of 1933, as amended,
and the rules and regulations of the SEC promulgated thereunder.
"Shareholders" means each party (other than the Company) named
on the signature pages to this Agreement and any other Person who is a
transferee of Shares, whether from another Shareholder or from the Company, who
is required by this Agreement to agree to be bound by the terms and conditions
of this Agreement. The term "Shareholder" means any one of the Shareholders and,
in the case of a Shareholder who is a natural person, the term "Shareholder"
also includes such Shareholder's legal representatives, executors or
administrators when the context so requires.
"Shares" means shares of Common Stock. For purposes of this
Agreement, all references to the number of Shares owned or held by any
Shareholder shall, with respect to a Shareholder who owns or holds shares of
restricted Common Stock or any securities convertible into or exchangeable for
or representing the right to purchase shares of Common Stock, be deemed to be a
reference to the number of shares of Common Stock into which the shares of
restricted Common Stock or other such securities owned or held by such
Shareholder are then convertible or exchangeable. Any percentage of the
outstanding Shares as of a specified date referred to herein shall be computed
on the basis that each share of restricted Common Stock or any such securities
represents the number of shares of Common Stock into which it is then
convertible or exchangeable in accordance with its terms.
"Subsidiary" means any Person in which the Company, directly
or indirectly through Subsidiaries or otherwise, beneficially owns more than
fifty percent (50%) of either the equity interests in, or the voting control of,
such Person.
"Tag Along Notice" has the meaning set forth in Section 5.3
hereof.
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"Tag Along Right" has the meaning set forth in Section 5.3
hereof.
"Tag Along Sale" has the meaning set forth in Section 5.3
hereof.
ARTICLE II
PRE-MERGER MATTERS
SECTION 2.1. JOINT FILING OF SCHEDULE 13D. Each Shareholder
will cooperate in the filing of any amendments to the joint Schedule 13D filed
by the Founding Shareholders (other than ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇) on June 15, 2004
with the SEC under the Exchange Act.
SECTION 2.2. ACTIONS WITH RESPECT TO MERGER CORP. Each
Shareholder will use his respective reasonable best efforts and cooperate with
each other with respect to the structuring, financing and implementation of the
Merger. To that end, each Shareholder will contribute to Merger Corp. all of his
right, title and interest in any Shares owned by such Shareholder or any of his
Affiliates (excepting only those "exempt shares" as reflected on Annex A
hereto), free and clear of any lien, in exchange for a proportionate number of
shares of common stock of Merger Corp. In the Merger, the outstanding shares of
common stock of Merger Corp. will be exchanged for an equal number of Shares.
SECTION 2.3. PERMISSION TO DISCLOSE; PUBLICITY. Each
Shareholder agrees that the Company and the Shareholders may publish and
disclose in any documents filed with any governmental or regulatory authority in
connection with any of the transactions contemplated by this Agreement or the
Merger Agreement, including in any Schedule 14A, Schedule 14C, Schedule 13E-3 or
Form 8-K filed in connection with the Merger or any of the other transactions
contemplated by this Agreement or the Merger Agreement, his identity and
ownership of Common Stock and the nature of his commitments, arrangements and
undertakings contained in this Agreement.
SECTION 2.4. OWNERSHIP OF STOCK. Each Shareholder is and at
all times through the closing of the Merger will be the owner, beneficially and
of record, of the number of Shares set forth on Annex A hereto, free and clear
of any lien, and will transfer to Merger Corp. good and valid title to such
Shares (excepting only those "exempt shares" as reflected on Annex A hereto)
free and clear of any lien.
SECTION 2.5. WAIVER OF APPRAISAL RIGHTS. Each Shareholder
hereby waives any rights of appraisal or rights to dissent from the Merger that
he may have under applicable law or otherwise.
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ARTICLE III
ORGANIZATIONAL MATTERS
SECTION 3.1. JOINDER OF QDI. Immediately following the
Effective Time, the Shareholders will cause QDI to execute an instrument
providing for QDI to be substituted for Merger Corp. as "the Company" under, and
for all purposes of, this Agreement as though QDI were an original signatory
hereto.
SECTION 3.2. ORGANIZATIONAL DOCUMENTS; DIRECTORS; EQUITY PLAN.
The Shareholders acknowledge and agree that, immediately following the Effective
Time, (a) the Certificate of Incorporation and the Bylaws of the Company shall
be in such forms as provided in the Merger Agreement ; (b) the Board will
consist of six (6) directors, with each of the Founding Shareholders serving
initially as a director; and (c) the Board will adopt an Employee Incentive Plan
providing for the granting of equity incentive compensation awards representing
a maximum issuance of 1,500,000 shares (subject to adjustment for stock splits,
stock dividends, recapitalizations and other similar changes to the Common
Stock) of Common Stock (the "Employee Incentive Plan").
SECTION 3.3. FURTHER ASSURANCES. Each of the Shareholders
shall vote (or cause to be voted) all of the Shares owned by such Shareholder,
and otherwise use all commercially reasonable efforts, to carry out and give
effect to the provisions of this Article III.
ARTICLE IV
SIGNIFICANT BUSINESS DECISIONS
SECTION 4.1. ISSUANCE OF CAPITAL STOCK. Notwithstanding that
no vote may be required, or that a lesser percentage vote may be specified by
law, the Company's Certificate of Incorporation or Bylaws, or otherwise, the
Company and the Shareholders agree that, following the Effective Time, the
Company shall not issue or sell any shares of capital stock of the Company or
any Subsidiary (or any warrants, options or rights to acquire shares of such
capital stock or securities convertible into or exchangeable for shares of such
capital stock) to any director, officer or other employee of the Company or any
of its Subsidiaries without the prior written approval of the holders of at
least seventy percent (70%) of the outstanding number of Shares owned by all the
Shareholders in the aggregate, except for (i) awards and the exercise thereof in
accordance with the terms of the Employee Incentive Plan, and (ii) the sale at
fair market value of up to 500,000 newly issued shares to employees of the
Company. No additional awards or grants shall be made under the Company's 1993
Stock Option and Incentive Plan, 1997 Stock Option and Incentive Plan, 1993
Outside Directors Plan or 1999 Outside Directors Plan
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following the Effective Time, but the terms and conditions of existing awards
may be modified.
SECTION 4.2. MERGER TRANSACTION. Notwithstanding that no vote
may be required, or that a lesser percentage vote may be specified by law, the
Company's Certificate of Incorporation or Bylaws, or otherwise, the Company and
the Shareholders agree that, following the Effective Time, any proposed merger
or consolidation of the Company with, or sale of all or substantially all of the
assets of the Company to, an entity that is an Affiliate of a Shareholder shall
require the prior written approval of the holders of at least seventy percent
(70%) of the outstanding number of Shares owned by all the Shareholders in the
aggregate.
SECTION 4.3. ACCESS TO INFORMATION. The Company shall provide
the Shareholders with as much advance notice as is reasonably practicable (and
in any event not less than five (5) Business Days notice) with respect to any
approval required pursuant to Section 4.1 or Section 4.2, and to furnish such
Shareholders with all information that may be reasonably requested by any of
them to enable them to determine whether to grant or withhold such approval.
SECTION 4.4. DETERMINATION OF COMMON STOCK VALUE. The Company
will, as soon as reasonably practicable following the last day of each fiscal
quarter of the Company (beginning with the fiscal quarter in which the Effective
Time occurs), cause the Common Stock Value to be determined as of the last day
of such fiscal quarter. The Common Stock Value as so determined shall remain in
effect through the last day of the next succeeding fiscal quarter.
ARTICLE V
TRANSFERS OF SHARES
SECTION 5.1. RESTRICTIONS ON TRANSFERS AND NEW SHARE
ISSUANCES. (a) Each Shareholder, severally and not jointly, agrees and
acknowledges that such Shareholder will not, directly or indirectly, offer,
sell, assign, pledge, encumber or otherwise transfer or dispose of any Shares or
any interest therein to any Person unless (i) such offer, sale, assignment,
pledge, encumbrance or other transfer is (w) to the Company, (x) to any of such
Shareholder's Permitted Transferees under clause (ii) of the definition thereof;
provided that each Permitted Transferee shall be required to take subject to and
comply with the provisions of Section 5.8, (y) to another Shareholder in
accordance with the provisions of Section 5.2 or 5.3 or (z) to a Drag Along
Purchaser (as defined in Section 5.4), and (ii) unless waived by the Company in
writing, such Shareholder shall have furnished the Company with an opinion of
counsel or other evidence reasonably satisfactory to the Company to the effect
that no registration of such transfer of Shares is required because of the
availability of an exemption from registration under the Securities Act and all
applicable state securities or "blue sky" laws.
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Notwithstanding the foregoing, a Founding Shareholder may grant a security
interest in his Shares as collateral security for obligations of such
shareholder, provided that such secured party enters into an agreement for the
benefit of, and reasonably satisfactory in form and substance to, the Company
providing that such pledged Shares shall continue to be subject to all terms and
conditions of this Agreement (including following a foreclosure by such
institutional lender on such pledged Shares).
(b) The Company shall not issue or sell any Shares to any
Person (including pursuant to the terms of the Employee Incentive Plan) unless
(i) the certificates representing such Shares bear legends as provided in
Section 5.8 and (ii) such Person shall have executed and delivered to the
Company, as a condition precedent to any acquisition of Shares, an instrument in
form and substance satisfactory to the Company confirming that such Person takes
such Shares subject to all the terms and conditions of this Agreement, and
agrees to be bound by the terms of this Agreement as a "Shareholder".
(c) The Company shall not transfer upon its books any Shares
to any Person except pursuant to a transaction that complies with all the terms
and conditions of this Agreement, and any such non-complying transfer shall be
null and void.
(d) Except as specifically contemplated hereby, no Shareholder
shall grant any proxy or enter into or agree to be bound by any voting trust
with respect to any Shares nor shall any Shareholder enter into any shareholder
or voting agreements or trusts or other arrangements of any kind with any Person
with respect to any Shares that would be inconsistent with the provisions of
this Agreement (whether or not such agreements and arrangements are with other
Shareholders or holders of Shares who are not parties to this Agreement),
including but not limited to, agreements or other arrangements with respect to
the acquisition, disposition or voting of Shares, nor shall any Shareholder act,
for any reason, as a member of a group or in concert with any other Persons in
connection with the acquisition, disposition or voting of Shares in any manner
that would be inconsistent with the provisions of this Agreement.
SECTION 5.2. PERMITTED TRANSFERS.
(a) (i) In the event that any Shareholder or any group of Shareholders acting
together pursuant to a common plan or arrangement (individually or collectively,
an "Offeror") wishes to sell any or all of the Offeror's Shares to another
Shareholder or group of Shareholders acting together pursuant to a common plan
or arrangement (an "Offeree"), the Offeror shall first deliver a written notice
(an "Offer Notice") to the Company specifying in reasonable detail the number of
Shares proposed to be sold (the "Offered Shares"), the identity of the Offeree
and the price and the other bona fide terms for such sale (the "Offering
Terms"). Such Offer Notice shall constitute an irrevocable offer (subject to the
satisfaction of all regulatory requirements) to the Company, for the period of
time set forth below, to purchase all, but not less than all, of the Offered
Shares on the Offering Terms. The Company may elect to purchase all, but not
less than all, of the Offered Shares on the Offering Terms by delivering an
irrevocable written notice (subject
12
to the satisfaction of all regulatory requirements) specifying the number of
Offered Shares it wishes to purchase (the "Acceptance Notice") to the Offeror
within thirty (30) days following receipt of the Offer Notice (the "Offer
Period").
(ii) If an Offeror's offer is not accepted by the Company within
the Offer Period for all of the Offered Shares, the Offeror shall be free to
sell all, but not less than all, of the Offered Shares not subject to an
Acceptance Notice to the Offeree described in the Offer Notice on the Offering
Terms, or at prices or terms more favorable to the Offeror than the Offering
Terms, subject to compliance (if applicable) with the provisions of Section 5.3;
provided that if such sale shall not have been consummated within sixty (60)
days after the end of the Offer Period, none of such Offered Shares may be sold
to the Offeree described in the Offer Notice and all such Offered Shares shall
again be subject to the provisions of this Section 5.2 and may be disposed of
only in the manner provided in, and subject to the provisions of, this Section
5.2. It shall be a condition to any purchase and sale of Shares pursuant to this
paragraph that the Shares so transferred bear legends as provided in Section
5.8.
(iii) Subject to compliance with the provisions of Section 5.3 (where
applicable), any purchase and sale pursuant to the provisions of Section
5.2(a)(i) shall occur on the date designated by the Company, which date shall be
within sixty (60) days following the date of delivery of an Acceptance Notice,
at the principal offices of the Company unless otherwise agreed, subject to the
satisfaction of all applicable regulatory requirements. At any closing of any
such purchase and sale, the Offeror will deliver certificates evidencing the
Offered Shares to be so purchased against delivery by the Company of the price
included in the Offering Terms. The parties to any such purchase and sale will
use their commercially reasonable efforts to accomplish the satisfaction of all
applicable regulatory requirements with respect to such purchase and sale, and
the date on which such purchase and sale must be completed in accordance with
this paragraph will be extended automatically until such time as each applicable
governmental or regulatory authority has given a final determination permitting
or prohibiting or otherwise denying necessary authorization for such purchase
and sale and, in the case of a favorable determination, for an additional five
(5) Business Days.
(b) The failure of the Company to exercise its right to
purchase Offered Shares under this Section 5.2 in connection with any one Offer
Notice delivered by an Offeror will not, in any manner, waive or otherwise
impair the rights of the Company to exercise the right to purchase Offered
Shares under this Section 5.2 in connection with any subsequent Offer Notice.
SECTION 5.3. TAG ALONG RIGHT. In the event that, following
compliance with the provisions of Section 5.1 and 5.2, any Offeror proposes to
sell, in a single transaction or a series of related transactions, to the
Company and/or an Offeree (collectively, a "Purchaser") Offered Shares
representing ten percent (10%) or more of the Shares then issued and outstanding
(a "Tag Along Sale"), such Offeror shall provide notice of such Tag Along Sale
to each of the other Shareholders (a "Tag Along Notice")
13
no later than ten (10) Business Days prior to the proposed closing date of such
Tag Along Sale, and each of such other Shareholders shall have the right (a "Tag
Along Right") to require the Offeror to reduce the number of Offered Shares to
be sold by the Offeror to the Purchaser and instead have the Purchaser purchase
from each Shareholder electing to exercise a Tag Along Right ("Electing
Shareholder"), upon the same terms and conditions as are applicable to the
Offeror, that number of Offered Shares derived by multiplying (x) the total
number of Offered Shares by (y) the Electing Shareholder's "fractional
interest"; provided that such Electing Shareholder shall in no event be required
to sell more than, and may limit such Electing Shareholder's exercise of its Tag
Along Right to, the Electing Shareholder's "pro rata share" of the Common Stock.
For purposes of this Section 5.3, with respect to any Electing Shareholder, the
term "fractional interest" means the result, rounded up to the nearest whole
number, obtained by dividing (a) the total number of Shares owned by such
Electing Shareholder by (b) the sum of the total number of Shares owned by all
Electing Shareholders and the Offeror, and the term "pro rata share" means the
result rounded down to the nearest whole number, obtained by dividing (c) the
total number of Shares owned by such Electing Shareholder by (d) the total
number of issued and outstanding shares of the Company. Each Electing
Shareholder shall give written notice of such Electing Shareholder's election to
the Offeror no later than five (5) calendar days after such Electing
Shareholder's receipt of a Tag Along Notice. The provisions of this Section 5.3
shall not apply to purchases of Shares by the Company pursuant to Section 5.5 or
5.6.
SECTION 5.4. DRAG ALONG RIGHT. In the event that any
Shareholder or any group of Shareholders acting together pursuant to a common
plan or arrangement (individually or collectively, a "Dragging Shareholder")
proposes to sell, in a single transaction or a series of related transactions,
to any purchaser other than (x) the Company, (y) another Shareholder or (z) an
Affiliate of another Shareholder or such Dragging Shareholder (a "Drag Along
Purchaser"), Shares representing (A) more than fifty percent (50%) of the shares
of Common Stock then outstanding and (B) all of such Dragging Shareholder's
Shares (a "Drag Along Sale"), such Dragging Shareholder shall provide notice of
such Drag Along Sale (a "Drag Along Notice"), no later than ten (10) Business
Days prior to the proposed closing date of such Drag Along Sale to each of the
other Shareholders, and such other Shareholders shall be required to sell, upon
the same terms and conditions as are applicable to the Dragging Shareholder, all
of the Shares held by each of them to the Drag Along Purchaser. In connection
with a Drag Along Sale, each of the other Shareholders shall be required to: (i)
tender all of such Shareholder's Shares required pursuant to the Drag Along Sale
(including any certificates representing such Shares), free and clear of any
lien, to the Drag Along Purchaser at the closing, (ii) collect directly from the
Drag Along Purchaser the price to be paid for the Shares being transferred in
the Drag Along Sale and (iii) cooperate in good faith to effect the transfer to
the Drag Along Purchaser.
SECTION 5.5. COMPANY CALL RIGHT. (a) Subject to the
restrictions contained in paragraphs (b) and (c) below, the Company shall have
the right (a "Call Right"), exercisable by written notice (a "Call Notice"), to
purchase at any time or from
14
time to time all or any part of the Shares (the "Called Shares") held by any
Shareholder (including Shares held by any trust that is a Permitted Transferee
of such Shareholder under clause (ii) of the definition of "Permitted
Transferee"). The price to be paid for any Called Shares shall be the amount
determined by multiplying the number of Called Shares by the Common Stock Value
in effect on the date of the related Call Notice. The Company shall be permitted
to purchase such Shares for cash and/or delivery of a Buy-Out Note for all or a
portion of the purchase price.
(b) Notwithstanding the provisions of paragraph (a), the
Company may exercise the Call Right with respect to any Shareholder only in
accordance with the following restrictions:
(i) with respect to a Founding Shareholder, the Company may
only exercise the Call Right on or after the fifth anniversary of the
Effective Time; provided that, if such Founding Shareholder is an
employee of the Company or any Subsidiary on the fifth anniversary of
the Effective Time, the Company may exercise its Call Right only after
the third anniversary of such Founding Shareholder's termination of
employment with the Company or any Subsidiary for any reason (whether
voluntary or involuntary, for cause or without cause, for good reason
or without good reason, including upon disability, but not upon death
(in which case the provisions of paragraph (c) below shall instead be
applicable));
(ii) with respect to any Shareholder, other than a Founding
Shareholder, who on the date he or she becomes a Shareholder is an
employee of the Company or any Subsidiary, the Company may exercise the
Call Right only after (x) such Shareholder's employment with the
Company or any Subsidiary terminates for any reason (whether voluntary
or involuntary, for cause or without cause, for good reason or without
good reason, including upon disability, but not upon death (in which
case the provisions of paragraph (c) below shall apply)) or (y) such
Shareholder is declared mentally incapacitated or incompetent; and
(iii) with respect to any Shareholder not described in
paragraph (i) or (ii) above, the Company may exercise the Call Right
only on or after the fifth anniversary of the Effective Time.
(c) Notwithstanding the provisions of paragraphs (a) and (b)
above, the Company shall exercise the Call Right with respect to all Shares
owned by any Shareholder (including Shares held by such Shareholder's Permitted
Transferees) by delivery of a Call Notice during the one-hundred eighty (180)
day period following the death of such Shareholder. The Company may purchase
insurance to fund the purchase of any Call Right exercisable upon the death of
any Shareholder.
(d) The closing date for the purchase of the Called Shares
shall occur on the date designated by the Company in the Call Notice, which date
shall be within sixty (60) days following the date of delivery of the Call
Notice, at the principal offices
15
of the Company unless otherwise agreed; provided that such closing date shall be
extended as reasonably necessary to allow the Company to complete its financial
statements for the most recently-completed fiscal quarter for purposes of the
calculation of Common Stock Value. At any closing, the Shareholder (or the
Shareholder's personal representatives, as applicable) will deliver certificates
evidencing the Called Shares to be so purchased against delivery by the Company
of the purchase price in cash and/or (to the extent required pursuant to the
provisions of the last sentence of paragraph (a) above) a Buy-Out Note.
SECTION 5.6. SHAREHOLDER PUT RIGHT. (a) Subject to the
restrictions contained in paragraph (b) below, each Shareholder shall have the
right (a "Put Right"), exercisable by written notice to the President of the
Company (a "Put Notice"), to require the Company at any time or from time to
time to purchase all or any part of the Shares (the "Put Shares") held by such
Shareholder (including Shares held by any trust that is a Permitted Transferee
of such Shareholder under clause (ii) of the definition of "Permitted
Transferee.". The price to be paid for any Put Shares shall be the amount
determined by multiplying the number of Put Shares by the Common Stock Value in
effect on the date of the related Put Notice. The Company shall be permitted to
purchase such Shares for cash and/or by delivery of a Buy-Out Note for all or a
portion of the purchase price.
(b) Notwithstanding the provisions of paragraph (a), a
Shareholder may exercise the Put Right with respect to his or her Shares only in
accordance with the following restrictions:
(i) with respect to any Founding Shareholder who is not an
employee of the Company or any Subsidiary on the date of this
Agreement, such Founding Shareholder may exercise the Put Right only on
or after the fifth anniversary of the Effective Time;
(ii) with respect to any Shareholder who on the date he or she
becomes a Shareholder is an employee of the Company or any Subsidiary,
such Shareholder may exercise the Put Right only after (x) such
Shareholder's employment with the Company and its Subsidiaries
terminates for any reason (whether voluntary or involuntary, for cause
or without cause, for good reason or without good reason, including
upon disability but not upon death (in which case the provisions of
Section 5.5(c) shall apply)) or (y) such Shareholder is declared
mentally incapacitated or incompetent; provided that in the case of any
Founding Shareholder who is an employee of the Company or any
Subsidiary on the fifth anniversary of the Effective Time, such
Founding Shareholder may exercise the Put Right specified in the
preceding clause (x) only after the third anniversary of such
termination of employment; and
(iii) in addition to the Put Rights specified in clause (b)(i)
and (ii) above, each Shareholder may exercise a Put Right under the
following circumstances:
16
(A) by delivery of a Put Notice to the President of
the Company during the month of January of each year
specifying the number of shares the Shareholder is putting to
the Company; provided that in any single fiscal year of the
Company, no Shareholder may exercise such Shareholder's Put
Right for more than ten percent (10%) of the highest number of
Shares owned by such Shareholder since the Effective Time;
(B) on or around February 15 of each year, the
Company shall advise any Shareholder who has delivered a Put
Notice during the preceding January in writing (the "Currency
Notice") of the amount of the purchase price that will be paid
in cash and/or by delivery of a Buy-Out Note; and
(C) the Shareholder shall then have the right,
exercisable by written notice to the President of the Company
within five calendar (5) days following the Currency Notice,
to rescind the Put Notice.
(c) The closing date for the sale of the Put Shares shall
occur on the date designated by the Company, which date shall be between fifteen
(15) and sixty (60) days following the date of delivery of the Put Notice, at
the principal offices of the Company unless otherwise agreed; provided that such
closing date shall be extended as reasonably necessary to allow the Company to
complete its financial statements for the most recently-completed fiscal quarter
for purposes of the calculation of Common Stock Value. At any closing, the
Shareholder will deliver certificates evidencing the Put Shares to be so
purchased against delivery by the Company of the purchase price in cash and/or a
Buy-Out Note for all or a portion of the purchase price.
SECTION 5.7. LIFE INSURANCE. Notwithstanding the provisions of
Sections 5.5(a) and 5.6(a), if the Company is the owner and beneficiary of any
insurance on the life of a deceased Shareholder from whose estate the Company is
purchasing Shares which was intended to fund the repurchase of shares of stock
of the Company (as distinct, for example, from "key man" insurance), an amount
equal to the insurance proceeds received by the Company under the policy shall
be paid in cash to the estate of the deceased Shareholder on account of the
purchase price of the Shares, and only the balance, if any, may be paid by
delivery of a Buy-Out Note. If the insurance proceeds exceed the purchase price
of the Shares, the excess shall belong to the Company. Notwithstanding the
foregoing, (i) if the Company is prohibited by law from using all or any portion
of any such insurance proceeds to purchase the Shares, or (ii) if the use of the
insurance proceeds to purchase the Shares would result in an event of default
(or an event which with the giving of notice or the lapse of time, or both would
constitute an event of default) under any Indebtedness of the Company or any of
its Subsidiaries, or (iii) if an event of default exists at the time under any
Indebtedness of the Company or any of its Subsidiaries, this Section 5.7 shall
17
apply only to insurance proceeds which the Company is not otherwise prohibited
from using to apply on the purchase price of the Shares.
SECTION 5.8. LEGEND ON CERTIFICATES. Each outstanding
certificate representing Shares that are subject to this Agreement shall bear an
endorsement reading substantially as follows:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ISSUED IN A
TRANSACTION EXEMPT FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933
(AS THEN IN EFFECT), AND IN RELIANCE UPON THE HOLDER'S REPRESENTATION
THAT SUCH SECURITIES WERE BEING ACQUIRED FOR INVESTMENT AND NOT FOR
RESALE. NO TRANSFER OF SUCH SECURITIES MAY BE MADE ON THE BOOKS OF THE
COMPANY UNLESS ACCOMPANIED BY AN OPINION OF COUNSEL, OR OTHER EVIDENCE
REASONABLY SATISFACTORY TO THE COMPANY, THAT SUCH TRANSFER MAY BE
EFFECTED WITHOUT REGISTRATION UNDER THE SECURITIES ACT OF 1933 (AS
AMENDED) OR THAT SUCH SECURITIES HAVE BEEN SO REGISTERED UNDER A
REGISTRATION STATEMENT WHICH IS IN EFFECT AT THE DATE OF SUCH TRANSFER.
THE SALE, ASSIGNMENT, PLEDGE, ENCUMBRANCE OR OTHER TRANSFER OF THE
SECURITIES REPRESENTED BY THIS CERTIFICATE IS SUBJECT TO THE PROVISIONS
OF A
SHAREHOLDERS AGREEMENT, DATED AS OF ________, 2005, AMONG THE
COMPANY AND CERTAIN HOLDERS OF ITS SECURITIES, A COPY OF WHICH IS ON
FILE AT THE PRINCIPAL EXECUTIVE OFFICE OF THE COMPANY.
ARTICLE VI
ADDITIONAL AGREEMENTS
SECTION 6.1. ACCESS TO FINANCIAL STATEMENTS. The Company will
provide the following financial information relating to the Company and its
Subsidiaries to the Shareholders:
(i) as soon as available after the end of each fiscal year, a
true and complete copy of the consolidated balance sheet and the
related consolidated statements of operations, shareholders' equity and
cash flows of the Company and its Subsidiaries as of and for the fiscal
year then ended, together with the notes relating thereto, prepared in
accordance with generally accepted accounting
18
principles consistently applied and accompanied by a report thereon by
independent public accountants; and
(ii) as soon as available after the end of each of the first
three fiscal quarters of each fiscal year, a true and complete copy of
the consolidated balance sheet and related consolidated statements of
operations, shareholders' equity and cash flows of the Company and its
Subsidiaries as of and for the period then ended, prepared in
accordance with generally accepted accounting principles consistently
applied, subject only to normal year-end audit adjustments.
SECTION 6.2. PREEMPTIVE RIGHTS. In the event that the Company
proposes to sell or otherwise issue additional Shares (including by sale or
issuance of securities convertible into or exchangeable for or representing the
right to purchase Shares), each Shareholder shall have the right to acquire that
number of such Shares (or other securities), at the price and upon the same
terms and conditions as such Shares (or other securities) are to be offered or
placed by the Company to third parties, as shall enable such Shareholder to
maintain the percentage equity interest of such Shareholder in the Company
immediately prior to such issuance on a fully-diluted basis (assuming the
issuance of all Common Stock reserved for issuance pursuant to Employee
Incentive Plan). No such Shares (or other securities) shall be issued by the
Company to any Person unless the Company has first offered such Shares (or other
securities) to the Shareholders in the accordance with this Section 6.2. This
Section 6.2 shall not apply to (i) the sale or issuance of Common Stock pursuant
to the Employee Incentive Plan; (ii) the issuance of Common Stock (or other
securities) pursuant to any merger transaction involving the Company or any of
its Subsidiaries or as consideration for the acquisition by the Company or any
of its Subsidiaries of assets of another business entity, excluding a business
entity that is an affiliate of a Shareholder; (iii) any public offering of
Common Stock registered under the Securities Act; or (iv) the issuance of any
Common Stock pursuant to the exercise, conversion or exchange of any outstanding
securities in accordance with their terms (provided that the initial issuance of
such securities was subject to this Section 6.2).
ARTICLE VII
MISCELLANEOUS
SECTION 7.1. AMENDMENT OF AGREEMENT; TERMINATION. This
Agreement may be modified or amended only by a writing signed by (i) the
Company, with the approval of a majority of the entire Board, (ii) if such
modification or amendment would adversely affect the Shareholders, a majority of
the Shareholders (with each Shareholder having one vote for this purpose,
regardless of the number of Shares held by such consenting Shareholders), (iii)
if such modification or amendment would adversely affect any Shareholder or
Shareholders in a manner that does not impact all Shareholders in proportion to
their interests in the Company, by such Shareholder or
19
Shareholders, and (iv) if such modification or amendment changes the Call
Multiple, by all Shareholders. This Agreement shall automatically terminate and
be of no further force and effect if the Merger Agreement terminates in
accordance with its terms prior to the Effective Time.
SECTION 7.2. ACTION BY SHAREHOLDERS. Any action required or
contemplated by this Agreement to be taken by the Shareholders may be taken by
delivery of a written consent executed by one or more Shareholders holding at
least the requisite number of Shares required for approval of such action and
the Company shall be entitled to rely upon any such written consent without
prior notice to or consultation with any Person.
SECTION 7.3. NOTICES. All notices, requests, waivers and other
communications made pursuant to this Agreement shall be in writing and shall be
deemed to have been effectively given (a) when personally delivered to the party
to be notified; (b) when sent by confirmed facsimile to the party to be notified
at the number set forth below; (c) three (3) Business Days after deposit in the
United States mail postage prepaid by certified or registered mail return
receipt requested and addressed to the party to be notified as set forth below;
or (d) one (1) Business Day after deposit with a national overnight delivery
service, postage prepaid, addressed to the party to be notified as set forth
below with next-Business-Day delivery guaranteed, in each case as follows: (i)
in the case of any Shareholder (other than the Founding Shareholders), to such
Shareholder at such Shareholder's address set forth in the stock ledger of the
Company; (ii) in the case of the Company, to:
Quality Dining, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: General Counsel
(iii) in the case of the Founding Shareholders, to:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
c/o Quality Dining, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
c/o Quality Dining, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
c/o Quality Dining, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
20
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
State House of
Indiana
▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇
c/o Quality Dining, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
(iv) and, in the case of any other Shareholder, to the address of
such Shareholder set forth in the books and records of the
Company maintained for such purpose.
A party may change such party's address for purposes of notice hereunder by
giving prior written notice of such change to all other parties in the manner
provided in this Section 7.3.
SECTION 7.4. BINDING EFFECT. This Agreement shall be binding
upon and inure to the benefit of the respective successors and assigns of the
parties hereto. Without limitation as to any other provision hereof, the rights
of each Shareholder under this Agreement shall be assignable to any transferee
of Shares held by the Shareholder, provided that the transfer of Shares to such
transferee is effected in accordance with the provisions of this Agreement.
SECTION 7.5. ENTIRE AGREEMENT; ASSIGNMENT. This Agreement
(together with the Annex attached hereto and any documents or agreements
specifically contemplated hereby) supersedes all prior discussions and
agreements among any of the parties hereto (and their Affiliates) with respect
to the subject matter hereof and contains the entire understanding of such
parties with respect to the subject matter hereof. This Agreement, and the
rights and obligations of the parties hereunder, may not be assigned or
transferred, except that the Company's rights and obligations hereunder may be
transferred by operation of law and any Shareholder may assign all of his or her
rights and obligations under this Agreement in connection with a sale or other
transfer of Shares in accordance with the terms of this Agreement.
21
SECTION 7.6. COUNTERPARTS. This Agreement may be executed in
counterparts, each of which shall be signed by the Company and one or more
Shareholders, and all of which are deemed to be one and the same agreement
binding upon the Company and each of the Shareholders.
SECTION 7.7. HEADINGS. The headings of the various sections of
this Agreement have been inserted for convenience of reference only and shall
not be deemed to be a part of this Agreement.
SECTION 7.8. BYLAWS. If and to the extent that any provision
of this Agreement conflicts with or is inconsistent with any provision of the
Bylaws, such provision of this Agreement shall be controlling and, to the extent
practicable, the conflicting or inconsistent provision of the Bylaws shall be
construed in a manner consistent with such provision of this Agreement. It is
hereby agreed that the Bylaws shall not be amended to be inconsistent with this
Agreement.
SECTION 7.9. GOVERNING LAW; CONSENT TO JURISDICTION AND
SERVICE OF PROCESS. This Agreement shall be governed by and construed in
accordance with the laws of the State of
Indiana, without regard to its
conflicts of law doctrine. Each party hereby submits to the exclusive
jurisdiction of the United States District Court for the Northern District of
Indiana and of any
Indiana State Court situated in St. ▇▇▇▇▇▇ County and any
judicial proceeding brought against any of the parties on any dispute arising
out of this Agreement or any matter related hereto shall be brought in such
courts. Each party hereby irrevocably waives, to the fullest extent permitted by
law, any objection it may have or hereafter have to the laying of the venue of
any such proceeding brought in such a court and any claim that any such
proceeding brought in such a court has been brought in an inconvenient forum.
Each party hereby consents to process being served in any such proceeding by the
mailing of a copy thereof by registered or certified mail, postage prepaid, to
the address specified in Section 7.3, or in any other manner permitted by law.
EACH PARTY HERETO HEREBY KNOWINGLY, VOLUNTARILY, AND INTENTIONALLY WAIVES ANY
RIGHTS IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY SUCH ACTION OR
PROCEEDING.
SECTION 7.10. INJUNCTIVE RELIEF. It is hereby agreed and
acknowledged that it will be impossible to measure in money the damages that
would be suffered if the parties to this Agreement fail to comply with any of
the obligations imposed on them by this Agreement and that in the event of any
such failure, an aggrieved person will be irreparably damaged and will not have
an adequate remedy at law. Any such person shall, therefore, be entitled to
injunctive relief, including specific performance, to enforce such obligations,
and if any action should be brought in equity to enforce any of the provisions
of this Agreement, none of the parties hereto shall raise the defense that there
is an adequate remedy at law.
SECTION 7.11. SEVERABILITY. The invalidity or unenforceability
of any provisions of this Agreement in any jurisdiction shall not affect the
validity, legality or
22
enforceability of the remainder of this Agreement in such jurisdiction or the
validity, legality or enforceability of any provision of this Agreement in any
other jurisdiction, it being intended that all rights and obligations of the
parties hereunder shall be enforceable to the fullest extent permitted by law.
SECTION 7.12. RECAPITALIZATION, ETC. In the event that any
capital stock or other securities are issued in respect of, in exchange for, or
in substitution of, shares of capital stock of the Company by reason of any
reorganization, recapitalization, reclassification, merger, consolidation,
spin-off, partial or complete liquidation, stock dividend, split-up, sale of
assets, distribution to Shareholders or combination of Shares or any other
change in the Company's capital structure, appropriate adjustments shall be made
to the provisions of this Agreement so as to fairly and equitably preserve, as
far as practicable, the original rights and obligations of the parties hereto
under this Agreement.
23
IN WITNESS WHEREOF, the undersigned, thereunto duly
authorized, have hereunto set their respective hands as of the day and year
first above written.
QDI MERGER CORP.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇
Title: Executive Vice President
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
-------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
-------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
-----------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇
-----------------
▇▇▇▇ ▇. ▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
-------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
24
ANNEX A
STOCK OWNERSHIP TABLE
SHARES OF COMMON EXERCISABLE OPTION
SHAREHOLDER STOCK EXEMPT SHARES* SHARES
----------- ---------------- -------------- ------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇ 3,929,073 0 0
(together with ▇▇▇▇▇▇▇▇▇▇▇
Properties, LLC)
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇ 233,746 0 41,732
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇ 347,445 0 42,304
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇ 481,031 56,000 20,000
(together with ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇ Charitable
Remainder Unitrust)
▇▇▇▇ ▇. ▇▇▇▇▇ 174,356 4,500 105,736
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ 545,220 228,388 0
* Exempt Shares are Shares that will not be contributed to Merger Corp. and will
be cashed out in the Merger.
