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Exhibit 10.01
SETTLEMENT AGREEMENT
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THIS SETTLEMENT AGREEMENT is entered into on February 8th, 1999, by
MERITAGE HOSPITALITY GROUP INC., a Michigan corporation (the "COMPANY"), CBH
CAPITAL CORP., a Florida corporation, f/k/a Meritage Capital Corp. ("CBH
CAPITAL"), and XXXXXXXXXXX X. XXXXXX, individually ("XXXXXX").
RECITALS:
X. Xxxxxx owns all of the issued and outstanding shares of capital
stock of CBH Capital. CBH Capital owns 1,392,858 shares of the Company's common
stock ("CBH CAPITAL'S SHARES"). Pursuant to a First Amended and Restated Stock
Pledge Agreement dated as of September 19, 1995 (the "FIRST AMENDED PLEDGE
AGREEMENT"), CBH Capital's Shares have been pledged to the Company as security
for payment of the indebtedness evidenced by the First Amended and Restated
Secured Promissory Note dated as of September 19, 1995, issued by CBH Capital to
the Company (the "FIRST AMENDED NOTE").
B. At a Special Meeting of the Company's Board of Directors held on
February 8th, 1999, the Board of Directors determined that it would be in the
Company's best interests to exchange the First Amended Note for the Second
Amended and Restated Secured Promissory Note in substantially the form of
Exhibit A to this Agreement (the "SECOND AMENDED NOTE"), and to enter into the
Second Amended and Restated Stock Pledge Agreement in substantially the form of
Exhibit B to this Agreement (the "SECOND AMENDED PLEDGE AGREEMENT") in lieu of
the First Amended Pledge Agreement, provided that CBH Capital enters into the
Option Agreement in substantially the form of Exhibit C to this Agreement (the
"OPTION AGREEMENT") and the Voting Agreement in substantially the form of
Exhibit D to this Agreement (the "VOTING AGREEMENT"), and grants the Irrevocable
Proxy in substantially the form of Exhibit E to this Agreement (the "IRREVOCABLE
PROXY"), and CBH Capital has agreed to do so, on the terms and conditions set
forth below.
X. Xxxxxx (directly or through his XXX) owns 245,811 shares of the
Company's common stock. Xxxxxx has informed the Company's Board of Directors
that he wishes to sell all such stock and that, upon consummation of such sale,
he intends to resign as a member of the Company's Board of Directors. Xxxxxx and
the Company wish to set forth certain agreements between them relating to such
matters.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which the parties acknowledge, the parties agree that:
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SECTION 1
SALE OF XXXXXX'X COMPANY STOCK
1.1 OBLIGATIONS CONTINGENT UPON SALE. The respective rights and
obligations of the parties to this Agreement under this Agreement and any of the
documents to be executed and delivered pursuant to this Agreement (collectively
the "RELATED AGREEMENTS") are contingent upon closing the sale of Xxxxxx'x Stock
for $500,000.00 in cash. Notwithstanding anything to the contrary herein, if
payment in full of such purchase price has not been tendered to Xxxxxx within
five Business Days (a "BUSINESS DAY" is any Monday, Tuesday, Wednesday, Thursday
or Friday which is not a day on which national banks in the City of Grand
Rapids, Michigan are authorized or obligated, by law or executive order, to
close) after the date of this Agreement, this Agreement and each and every one
of the Related Agreements (and all of the terms herein and therein)
automatically shall be null and void. Within five Business Days after written
request by the Company, Xxxxxx shall state in writing whether or not the
contingency set forth in this Section 1.1 has been satisfied. All of the
remaining provisions of this Agreement are subject to satisfaction of such
contingency.
SECTION 2
SECONDED AMENDED NOTE; VOTING AGREEMENT;
IRREVOCABLE PROXY; OPTION AGREEMENT; AND
SECOND AMENDED PLEDGE AGREEMENT
2.1 SECOND AMENDED NOTE. Simultaneously with the execution and delivery
of this Agreement, CBH Capital shall execute and deliver the Second Amended Note
to the Company. Within five Business Days after the Company's receipt of the
duly executed Second Amended Note, the Company shall return the First Amended
Note to CBH Capital.
2.2 VOTING AGREEMENT. Simultaneously with the execution and delivery of
this Agreement, CBH Capital shall execute and deliver the Voting Agreement.
2.3 IRREVOCABLE PROXY; POWER OF ATTORNEY.
(a) Simultaneously with the execution and delivery of this
Agreement, CBH Capital shall execute and deliver the Irrevocable Proxy
to the Company for delivery by the Company to the attorney-in-fact and
proxy named therein.
(b) Within seven Business Days after written request by the
Company, Xxxxxx shall cause CBH Capital to execute and deliver to the
Company such additional and supplemental forms of proxy as may be
required in the reasonable opinion of legal counsel for the Company to
ratify, confirm, extend or renew the Irrevocable Proxy referred to
above so that it remains in full force and effect at all times until
the expiration of the Option Period, as defined in the Option Agreement
(the "EXPIRATION DATE"), and CBH Capital agrees to do
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so. Without in any way limiting the scope of Xxxxxx'x and CBH Capital's
obligations under the preceding sentence, Xxxxxx shall cause CBH
Capital, and CBH Capital agrees, to execute and deliver to the Company,
within seven Business Days after written request therefor, such
additional forms of proxy as may be required, in the reasonable opinion
of legal counsel for the Company, to continue or renew the Irrevocable
Proxy after it otherwise may be deemed (in the absence of such
continuation or renewal) to be terminated by operation of any federal
or state securities law, rule or regulation.
(c) CBH Capital and Xxxxxx irrevocably appoint Xxxxx X.
Xxxxxxxx, with full power of substitution and resubstitution, as
attorney-in-fact, in their name, place and xxxxx, to execute and
deliver to the Company any and all of the documents that CBH Capital or
Xxxxxx may be required to execute and deliver pursuant to paragraph
2.3(b) above; provided, however, that such attorney-in-fact shall have
the power and authority to act under this paragraph 2.3(c) only if CBH
Capital and/or Xxxxxx have failed to observe and perform their
respective obligations under paragraph 2.3(b) above within seven
Business Days after having been requested in writing to do so. The
exercise of any right or power granted pursuant to this paragraph
2.3(c) shall not be deemed to have cured or waived any breach by CBH
Capital or Xxxxxx of their respective obligations under paragraph
2.3(b) above.
2.4 OPTION AGREEMENT. Simultaneously with the execution and delivery of
the Second Amended Note, CBH Capital shall execute and deliver the Option
Agreement to the Company.
2.5 SECOND AMENDED PLEDGE AGREEMENT. Simultaneously with the execution
and delivery of the Second Amended Note, CBH Capital and the Company shall
execute and deliver the Second Amended Pledge Agreement. The Second Amended
Pledge Agreement shall supersede the First Amended Pledge Agreement, which
hereafter shall be null and void.
SECTION 3
OTHER AGREEMENTS BY XXXXXX
3.1 CANCELLATION OF OPTIONS. Xxxxxx holds 5,000 vested options under
the 1996 Directors' Share Option Plan. The date of grant is October 7, 1998; the
expiration date is October 7, 2008; and the option/exercise price is $1.33 per
share. Xxxxxx waives and relinquishes all right, title and interest in and to
such options, and acknowledges that such options are being canceled by the
Company and hereafter shall be null and void. Promptly upon satisfaction of the
contingency set forth in ss. 1.1 above, Xxxxxx shall return the October 7, 1998
option agreement to the Company.
3.2 ACQUISITION OF COMPANY STOCK. During the period that begins on the
date of this Agreement and that ends on the tenth anniversary of the date of
this Agreement, neither Xxxxxx nor CBH Capital shall, directly or indirectly,
acquire any legal or beneficial interest in any of the Company's outstanding
securities, whether now or hereafter issued and outstanding, or aid or abet
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any other person or entity in doing so. If Xxxxxx or CBH Capital should acquire
any legal or beneficial interest in any of the Company's outstanding securities,
the Company shall, in addition to any other rights and remedies that may be
available to the Company at law or in equity for breach of this paragraph 3.2 by
Xxxxxx or CBH Capital, have the option to acquire the securities so acquired by
Xxxxxx or CBH Capital, free and clear of all liens and encumbrances, for a price
equal to the lesser of (a) 50% of the amount paid in cash by Xxxxxx and CBH
Capital for such securities or (b) 50% of the fair market value of such
securities on the date upon which the Company acquires such securities from
Xxxxxx or CBH Capital, as applicable.
3.3 RESIGNATION AS DIRECTOR. Upon satisfaction or waiver by Xxxxxx of
the contingency set forth in paragraph 1.1 above, Xxxxxx shall be deemed to have
tendered his resignation as a director of the Company, effective immediately,
and the Company shall be deemed to have accepted such resignation. Xxxxxx shall
upon written request by the Company submit such letter as the Company may
request to confirm Xxxxxx'x resignation as a director of the Company.
3.4 AGREEMENT RE: CLAIMS. Unless required by law to do so, Xxxxxx shall
not, directly or indirectly, assist or otherwise participate with any other
person or entity in asserting any claims that any such other person or entity
now or hereafter may have against the Company or any of its officers, directors
or employees.
3.5 DELIVERY OF ADDITIONAL DOCUMENTS. Within three Business Days after
written request by the Company, Xxxxxx shall execute and deliver to the Company
any documents that relate to any Company business with respect to which Xxxxxx'x
signature as an officer, director or shareholder (or as a former officer,
director or shareholder) is required, including but not limited to any documents
reasonably requested by the Company (a) to satisfy any reporting obligation
imposed upon Xxxxxx as an officer, director or shareholder of the Company (or as
a former officer, director or shareholder of the Company) under any federal or
state securities law, rule or regulation, (b) to effectuate a settlement of the
claim filed by the Company with its D & O insurance carrier in connection with
the Wendy's of West Michigan Limited Partnership litigation (Kent County Circuit
Court Case No. 97-05360-CB), and (c) to complete the stock sale referred to in
Section 1.1 above. Xxxxxx likewise shall cause CBH Capital to execute and
deliver to the Company, within three Business Days after written request by the
Company, any documents of the type that Xxxxxx individually would be required by
the preceding sentence to execute and deliver to the Company. Neither Xxxxxx nor
CBH Capital shall be required to incur any out-of-pocket expense in discharging
any of its obligations under this paragraph 3.5 unless the Company (i) agrees to
reimburse Xxxxxx and/or CBH Capital for such costs and (ii) agrees to defend and
indemnify Xxxxxx and CBH Capital from all cost and expense arising out of the
execution and delivery of such documents, unless incurred as a result of errors
in factual information furnished by or on behalf of Xxxxxx or CBH Capital to the
Company.
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SECTION 4
RELEASE AND INDEMNITY
4.1 RELEASE BY THE COMPANY. The Company (for itself and each of its
wholly-owned subsidiaries) releases and forever discharges Xxxxxx, CBH Capital
and MCC Food Service, Inc., a Michigan corporation ("MCCFS"), and the present
and past shareholders, officers and directors of CBH Capital and MCCFS, of and
from every claim that, as of the date of this Agreement, the Company or such
subsidiaries have against Xxxxxx, CBH Capital and/or MCCFS, including known and
unknown claims arising under statute, by contract, in tort or otherwise;
provided, however, that the foregoing release shall not constitute a release by
the Company of any claims to enforce its rights under this Agreement or any of
the Related Agreements.
4.2 RELEASE BY XXXXXX, CBH CAPITAL AND MCCFS. Xxxxxx, CBH Capital and
MCCFS release and forever discharge the Company and each of its wholly-owned
subsidiaries (and their respective present and past shareholders, officers and
directors) of and from every claim that, as of the date of this Agreement,
Xxxxxx, CBH Capital and/or MCCFS have against the Company or its wholly-owned
subsidiaries, including known and unknown claims arising under statute, by
contract, in tort or otherwise; provided, however, that the foregoing release
shall not constitute a release by (a) Xxxxxx or CBH Capital of any claims to
enforce their respective rights under this Agreement or any of the Related
Agreements or (b) CBH Capital to enforce its rights as a shareholder of the
Company, other than CBH Capital's claims as of the date of this Agreement
against the Company or its wholly-owned subsidiaries, all of which have been
waived as provided above. Further, nothing in this Agreement shall nullify or
otherwise affect any provision of the Release and Severance Agreement dated
October 6, 1998 between Xxxxxx and the Company.
4.3 INDEMNITY BY THE COMPANY. From and after the date of this
Agreement, the Company shall defend, indemnify and hold Xxxxxx and CBH Capital,
and its present officers, directors and shareholders, harmless from all claims
or liability arising out of or related to the execution and delivery of this
Agreement and the Related Agreements by Xxxxxx and CBH Capital (and any actions
taken hereunder or thereunder or pursuant hereto or thereto) and the observance
and performance of their respective obligations under this Agreement and the
Related Agreements, except as limited by federal and state securities laws,
rules and regulations. This Section 4.3 does not apply to claims and liabilities
arising out of or related to a breach by CBH Capital or Xxxxxx of this Agreement
or a Related Agreement.
SECTION 5
MISCELLANEOUS
5.1 SURVIVAL. All covenants, agreements, representations and warranties
made herein and in any document or certificate delivered herewith pursuant to or
in connection with this Agreement shall survive the execution and delivery of
the Related Agreements.
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5.2 EXHIBITS AND SCHEDULES. All Exhibits referred to herein are
intended to be and hereby are specifically made a part of this Agreement.
5.3 AMENDMENT. This Agreement, the Related Agreements, and the Exhibits
hereto and thereto may not be amended except by an instrument in writing signed
on behalf of the parties hereto.
5.4 CHOICE OF LAW. This Agreement shall be governed by, construed and
interpreted, and the rights of the parties determined, in accordance with the
laws of the State of Michigan without giving effect to any choice or conflict of
law provision or rule that would cause the application of the laws of any
jurisdiction other than the State of Michigan.
5.5 NOTICES. All notices, demands or requests required or permitted to
be given to a party hereto shall be in writing and shall be deemed given if
delivered personally, sent by reputable overnight courier, with acknowledgment
of receipt requested, or mailed by registered, overnight or certified mail, with
full postage paid thereon, return receipt requested (such notice to be effective
on the date such receipt is acknowledged), as follows:
IF TO XXXXXX OR CBH CAPITAL:
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CBH Capital Corp.
17134 El Vuelo [USE THIS AND NOT P. O. BOX FOR OVERNIGHT COURIER]
P. O. Box 2577 [USE THIS AND NOT STREET ADDRESS FOR U. X. XXXX]
Xxxxxx Xxxxx Xx, XX 00000
Attention: Xxxxxxxxxxx X. Xxxxxx, President
IF TO THE COMPANY:
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Meritage Hospitality Group Inc.
00 Xxxxx Xxxxxx, X.X., Xxxxx 000
Xxxxx Xxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxxx, Xx., President
or to such place and with such other copies as a party may designate for itself
by written notice to the others.
5.6 CAPTIONS. The captions appearing in this Agreement are inserted
only as a matter of convenience and in no way define, limit or describe the
scope or intent of this Agreement or any provisions hereof.
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5.7 EXPENSES. Each party shall bear its own expenses incurred in
connection with the negotiation of this Agreement and preparation for and
consummation (or attempted consummation) of the transactions referred to in this
Agreement.
5.8 SUCCESSORS AND ASSIGNS. This Agreement, and all rights and powers
granted hereby, will bind and inure to the benefit of all the parties hereto and
the respective successors and assigns.
5.9 INCORPORATION OF RECITALS. The Recitals set forth above form a part
of and are incorporated into this Agreement as if fully set forth herein.
[SIGNATURES APPEAR ON FOLLOWING PAGE]
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[SIGNATURE PAGE TO AGREEMENT DATED FEBRUARY 8th, 1999
AMONG MERITAGE HOSPITALITY GROUP INC., CBH CAPITAL CORP.
AND XXXXXXXXXXX X. XXXXXX]
IN WITNESS WHEREOF, the parties have executed this Settlement Agreement
as of the date first above written.
MERITAGE HOSPITALITY GROUP INC.
By: /s/ Xxxxxx X. Xxxxxxxx, Xx.
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Xxxxxx X. Xxxxxxxx, Xx.
President
CBH CAPITAL CORP.
By: /s/ Xxxxxxxxxxx X. Xxxxxx
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Xxxxxxxxxxx X. Xxxxxx
President
/s/ Xxxxxxxxxxx X. Xxxxxx
----------------------------------
Xxxxxxxxxxx X. Xxxxxx
Individually
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STATE OF CALIFORNIA )
) ss:
COUNTY OF SAN DIEGO )
The foregoing instrument was acknowledged before me on February 5th,
1999, by Xxxxxxxxxxx X. Xxxxxx, who is the President of CBH Capital Corp., a
Florida corporation, on behalf of such corporation and individually, and who
acknowledged the same to be his free act and deed and the free act and deed of
such corporation.
/s/ Xxxxxxx X. Sanchiou
---------------------------------------
Notary Public, San Diego County, California
My Commission Expires: 3-5-2001
[Graphic]
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EXHIBIT A
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SECOND AMENDED AND RESTATED SECURED PROMISSORY NOTE
---------------------------------------------------
$9,750,000.00 Dated as of September 19, 1995
For value received, CBH CAPITAL CORP., f/k/a Meritage Capital Corp., a
Florida corporation (the "MAKER"), promises to pay to MERITAGE HOSPITALITY GROUP
INC., a Michigan corporation ("MERITAGE" and, together with its successors and
assigns, the "HOLDER"), or its assignee if the Maker has actual knowledge of
such assignee, at the Holder's address at 00 Xxxxx Xxxxxx, X.X., Xxxxx 000,
Xxxxx Xxxxxx, Xxxxxxxx 00000, or a such other place as the Holder may from time
to time specify by written notice to the Maker, the principal sum of NINE
MILLION SEVEN HUNDRED FIFTY THOUSAND AND 00/100 DOLLARS ($9,750,000.00).
I. PAYMENT SCHEDULE; DEFAULT INTEREST
----------------------------------
A. The entire principal balance of this Note shall be due on the date
that is the earlier of: (a) September 19, 2000; or (b) the date upon which the
Holder duly accelerates the due date of the indebtedness evidenced hereby.
Prepayment shall be permitted, in whole or in part, at any time without penalty
or premium.
B. The outstanding principal balance under this Note shall not bear
interest, other than Default Interest as set forth below. If an Event of Default
has occurred (as provided in Section V), then during such time as the Event of
Default is continuing, the outstanding principal balance under this Note shall
bear interest at 3% per annum, payable upon demand and in any event upon payment
in full of the principal balance of this Note. Interest accruing during the
continuation of a Event of Default is referred to as "DEFAULT INTEREST".
II. STOCK PURCHASE AGREEMENT; FIRST AMENDED AND RESTATED NOTE
---------------------------------------------------------
This Note is the second amended and restated version of the Secured
Promissory Note (the "ORIGINAL NOTE") made and delivered by the Maker in
conjunction with, and as an integral part of, the transactions described in a
certain Stock Purchase and Sale Agreement dated September 19, 1995, to which the
Maker and Meritage are parties (the "STOCK PURCHASE AGREEMENT"), pursuant to
which Meritage issued the Pledged Shares (as defined in the Second Amended and
Restated Stock Pledge Agreement executed and delivered by the Maker to Meritage
on February 8, 1999, effective as of September 19, 1995 (the "STOCK PLEDGE
AGREEMENT")) to the Maker. Meritage, by resolution of its Board of Directors
dated May 21, 1996, agreed to accept a First Amended and Restated Secured
Promissory Note executed and delivered by the Maker to Meritage on June 7, 1996,
effective as of September 19, 1995, in substitution for and in place of the
Original Note (such replacement note is referred to as the "FIRST AMENDED AND
RESTATED NOTE"). Meritage, by resolution of its Board of Directors dated
February 8th, 1999, subsequently agreed to accept this
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Second Amended and Restated Secured Promissory Note in substitution for and in
place of the First Amended and Restated Note. The First Amended and Restated
Note shall be marked "canceled" and returned by Meritage to the Maker promptly
upon execution and delivery of this Note by the Maker to Meritage.
III. OPTIONAL PREPAYMENT
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The Maker may, at its option, prepay the indebtedness evidenced by this
Note at any time, in whole or in part, without penalty or premium.
IV. STOCK PLEDGE AGREEMENT; LIMITATION OF LIABILITY
-----------------------------------------------
The Maker's liability under this Note shall be limited at all times to
the Maker's interest in the COLLATERAL, as defined in the Stock Pledge
Agreement. The Holder shall neither seek nor be entitled to a deficiency
judgment or other money judgment under this Note.
V. EVENTS OF DEFAULT; REMEDIES
---------------------------
The failure by the Maker to duly and punctually observe or perform any
material obligation of the Maker set forth in this Note, or the failure of the
Maker or Xxxxxxxxxxx X. Xxxxxx, individually ("XXXXXX"), to duly and punctually
observe or perform any of their respective obligations under any of the
agreements identified below as a "RELATED AGREEMENT", shall constitute an "EVENT
OF DEFAULT" under this Note. If an Event of Default has not been cured within
ten (10) days after receipt by the Maker of written notice from the Holder of
the existence of an Event of Default (such notice from the Holder to specify in
reasonable detail the act or omission that has given rise to the Event of
Default), the indebtedness evidenced by this Note shall be in default (the date
upon which the indebtedness evidenced by this Note first is in default is
referred to below as the "DEFAULT DATE") and the Holder thereafter shall have
the right, at any time during the continuation of the Event of Default, to
accelerate the indebtedness evidenced by this Note and to take such action as
may be permitted at law or in equity (including but not limited to the remedies
provided for in the Stock Pledge Agreement) to collect the indebtedness
evidenced by this Note, subject in all events to the limitation on the Maker's
liability under this Note set forth above. The Related Agreements are: (i) the
Stock Pledge Agreement; (ii) the Voting Agreement dated February 8th, 1999,
between the Company and Xxxxx X. Xxxxxxxx, or any new agreement entered into by
the Maker pursuant to the Voting Agreement; (iii) the Settlement Agreement dated
February 8th, 1999, among Meritage, the Maker and Xxxxxx; (iv) the Option
Agreement dated February 8th, 1999, between the Maker and Meritage; and (v) any
amendment, restatement, replacement, or renewal of any of the agreement
identified above.
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VI. NOTICES
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All notices and other communications hereunder shall be in writing and
shall be deemed given if delivered personally, sent by reputable overnight
courier, acknowledgment of receipt requested, or mailed by registered, overnight
or certified mail, postage prepaid, return receipt requested (such notice to be
effective on the date such receipt is acknowledged) as follows:
If to the Maker, addressed to:
------------------------------
CBH Capital Corp.
17134 El Vuelo [USE THIS AND NOT P. O. BOX FOR OVERNIGHT COURIER]
P. O. Box 2577 [USE THIS AND NOT STREET ADDRESS FOR U. X. XXXX]
Xxxxxx Xxxxx Xx, XX 00000
Attention: Xxxxxxxxxxx X. Xxxxxx, President
If to the Holder, addressed to:
-------------------------------
Meritage Hospitality Group Inc.
00 Xxxxx Xxxxxx, X.X., Xxxxx 000
Xxxxx Xxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxxx, Xx., President
or to such place and with such other copies as the Maker or the Holder may
designate for itself by written notice to the other.
VII. GENERAL
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Neither the failure of the Holder promptly to notify the Maker of the
existence of an Event of Default, nor its failure to exercise any right or
remedy it may have upon the occurrence of an Event of Default, nor the failure
of the Holder to demand strict performance of any obligations of the Maker under
this Note, shall constitute a waiver of any such rights during the continuation
of an Event of Default, nor shall any of the foregoing constitute a waiver of
any such rights during the continuation of any future Event of Default. Further,
acceptance by the Holder of partial payments following due acceleration of the
indebtedness evidenced hereby shall be deemed acceptance of payment on account
and shall not constitute a waiver by the Holder of the Event of Default or a
waiver of the acceleration of such indebtedness.
The Maker waives presentment, protest and demand, notice of protest,
demand, dishonor and nonpayment of this Note. The Holder may extend the time of
payment or otherwise modify the terms of payment of the indebtedness evidenced
by this Note, and such extension or modification shall not alter or diminish the
Maker's liability under this Note.
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VIII. GOVERNING LAW
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This Note shall be governed by and construed in accordance with the
laws of the State of Michigan.
[SIGNATURE APPEARS ON FOLLOWING PAGE]
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[SIGNATURE PAGE TO PROMISSORY NOTE]
-----------------------------------
This Second Amended and Restated Secured Promissory Note is executed
and delivered on February 5, 1999, but is to be effective as of September 19,
1995.
CBH CAPITAL CORP.
By: /s/ Xxxxxxxxxxx X. Xxxxxx
-------------------------------
Xxxxxxxxxxx X. Xxxxxx
President
STATE OF CALIFORNIA )
) ss:
COUNTY OF SAN DIEGO )
The foregoing instrument was acknowledged before me on February 5th,
1999, by Xxxxxxxxxxx X. Xxxxxx, who is the President of CBH Capital Corp., a
Florida corporation, on behalf of such corporation, and who acknowledged the
same to be his free act and deed and the free act and deed of such corporation.
/s/ Xxxxxxx X. Sanchiou
---------------------------------------
Notary Public, San Diego County, California
My Commission Expires: 3-5-2001
[GRAPHIC]
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EXHIBIT B
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SECOND AMENDED AND RESTATED STOCK PLEDGE AGREEMENT
--------------------------------------------------
This Second Amended and Restated Stock Pledge Agreement is made as of
September 19, 1995, by CBH CAPITAL CORP., f/k/a Meritage Capital Corp., a
Florida corporation (the "DEBTOR"), and MERITAGE HOSPITALITY GROUP INC., a
Michigan corporation (the "CREDITOR").
STATEMENT OF FACTS
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A. The Debtor and the Creditor are parties to a Stock Purchase and Sale
Agreement dated September 19, 1995, pursuant to Section 1.2 of which the Debtor
acquired 1,500,000 shares of common stock of the Creditor.
B. As payment for the shares of common stock referred to in Recital A
above, the Debtor executed and delivered to the Creditor the Debtor's Secured
Promissory Note dated September 19, 1995, in the original principal amount of
$10,500,000 (the "ORIGINAL NOTE").
C. To secure the Original Note, the parties entered into a Stock Pledge
Agreement dated September 19, 1995 (the "STOCK PLEDGE AGREEMENT"), and a First
Amendment to Stock Pledge Agreement dated February 26, 1996 (the "FIRST
AMENDMENT"). The Stock Pledge Agreement and the First Amendment thereafter were
replaced by an Amended and Restated Stock Pledge Agreement executed and
delivered by the Debtor to the Creditor on June 7, 1996, effective as of
September 19, 1995 (the "FIRST AMENDED STOCK PLEDGE AGREEMENT").
D. Simultaneously with the execution and delivery of the First Amended
Stock Pledge Agreement, the Debtor executed and delivered to the Creditor the
Debtor's First Amended and Restated Secured Promissory Note (the "FIRST AMENDED
NOTE"). The First Amended Note was delivered to the Creditor in substitution for
and in place of the Original Note, which was canceled and returned to the
Debtor.
E. Simultaneously with the execution and delivery of this Second
Amended and Restated Stock Pledge Agreement, the Debtor has executed and
delivered to the Creditor the Debtor's Second Amended and Restated Secured
Promissory Note in the principal amount of $9,750,000 (the "SECOND AMENDED
NOTE"). The Second Amended Note is delivered to the Creditor in substitution for
and in place of the First Amended Note. The Debtor acknowledges receipt of the
original First Amended Note, which has been canceled by the Creditor.
F. The First Amended Stock Pledge Agreement is to be replaced in its
entirety by this Second Amended and Restated Stock Pledge Agreement, which shall
secure the indebtedness
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represented by the Second Amended Note. All references below to the "Note" shall
be deemed references to the Second Amended Note.
The parties agree that:
1. INCORPORATION OF STATEMENT OF FACTS. The Statement of Facts set
forth above is true and accurate and is incorporated into and forms a part of
this Agreement.
2. GRANT OF SECURITY INTEREST; RELEASED COLLATERAL.
(a) The Debtor grants and conveys to the Creditor a security interest
in (i) 1,392,858 shares of the common stock of the Creditor acquired by
the Debtor pursuant to the Stock Purchase Agreement (such 1,392,858
shares of common stock are referred to below as the "PLEDGED SHARES");
(ii) all dividends, distributions and other sums paid or payable to or
for the benefit of the Debtor on account of or in respect of the
Debtor's status as owner of the Pledged Stock, including without
limitation, the Debtor's right to receive cash and noncash dividends
and distributions from the Creditor in respect of the Pledged Stock and
the Debtor's right, if any, to the redemption of the Pledged Stock by
the Creditor; (iii) all new, substituted or additional shares of
Pledged Stock or other securities of the Creditor at any time issued to
or for the benefit of Debtor on account of or in respect of the
Debtor's status as owner of the Pledged Stock, including without
limitation, any such stock or securities issued by reason of or in
connection with any dividend, reclassification, readjustment or other
change with respect to the Pledged Stock made or declared in the
capital structure of the Creditor, and any "rights" to acquire the
Company's stock or securities acquired pursuant to a "rights offering"
or otherwise; and (iv) all proceeds (whether cash or noncash) and
products of each of the foregoing. The items of collateral described in
clauses (i)-(iv) of this Paragraph are collectively referred to in this
Agreement as the "COLLATERAL".
(b) The Debtor shall use all cash dividends paid with respect to the
Pledged Stock to reduce the principal balance of the Note, as and when
any such cash dividends are paid, regardless of whether any payments
are then due under the Note. The Creditor shall have the right and
option to set-off any such cash dividends against the indebtedness
represented by this Note.
(c) The Debtor shall take such action as may be reasonably requested by
the Creditor in writing to effectuate this Agreement and the
transactions contemplated herein and to perfect the pledge of, and the
Creditor's lien against, the Collateral. The Creditor acknowledges
receipt of all certificates and other instruments and writings
evidencing the shares of stock pledged pursuant to this Agreement, duly
executed, endorsed and assigned in blank by the Debtor. The Debtor
agrees, promptly upon written request by the Creditor, to execute and
deliver such additional certificates and other instruments and writings
evidencing any other Collateral, in the same manner and form as
provided above for the Pledged Stock.
2
19
3. SECURED OBLIGATIONS. The security interest described in Paragraph 2
of this Agreement is granted for the purpose of securing the prompt and full
payment when due (and not merely the ultimate collectibility) of all principal,
interest, and other sums payable by the Debtor to the Creditor pursuant to the
Note (the "SECURED OBLIGATIONS").
4. REPRESENTATIONS, WARRANTIES, ETC. The Debtor represents, warrants
and covenants to the Creditor that:
(a) The security interest granted hereby to the Creditor does now and
shall at all times during the term of this Agreement continue to
constitute a first and prior lien on the Collateral, subject only to
such matters as may be specifically agreed to in writing by the
Creditor.
(b) The Debtor is the lawful and absolute owner of the Collateral,
subject to no other lien, encumbrance, right, claim or interest of any
kind or nature (other than such interests in favor of the Creditor). In
addition, the Debtor has the full and unrestricted right to pledge,
assign and create a security interest in the Collateral as described in
and contemplated by this Agreement.
(c) The Debtor has the legal capacity to enter into and perform all of
its obligations and agreements under this Agreement.
(d) No consent or approval for the entry into and performance by the
Debtor of its obligations and agreements under this Agreement is
necessary.
(e) The certificates, instruments and other writings delivered by the
Debtor to the Creditor pursuant to Paragraph 2(c) of this Agreement are
all of the certificates, etc., representing the Pledged Stock and all
rights and interests with respect thereto.
(f) The execution, delivery and performance of this Agreement by the
Debtor will not affect or in any way impair the Collateral or the
Debtor's or the Creditor's rights or interests therein.
5. AGREEMENTS. So long as this Agreement is in effect, the Debtor
shall:
(a) Maintain the Collateral free from all pledges, liens, encumbrances
and security interests or other claims in favor of others, other than
the security interest in favor of the Creditor, and the Debtor will
defend the Collateral against all claims and demands of all persons.
3
20
(b) Comply with the requirements of all applicable state, local and
federal laws necessary to grant to the Creditor a valid lien upon, and
a duly perfected security interest in, the Collateral in compliance
with the requirements of this Agreement.
(c) Pay all reasonable costs and expenses of whatever kind and nature
that the Creditor may incur, including reasonable attorneys' fees, in
protecting, maintaining, preserving, enforcing or foreclosing the
Collateral or the security interest granted to the Creditor hereunder,
whether through judicial proceedings or otherwise, or in defending or
prosecuting any actions or proceedings arising out of or relating to
any of the Secured Obligations.
(d) Appear in and defend any action or proceeding arising out of or
connected with this Agreement, and pay all reasonable costs and
expenses of the Creditor (including, without limitation, reasonable
attorneys' fees) in any such action or proceeding in which the Creditor
appears or determines to become involved.
(e) Not, without the prior written consent of the Creditor, sell,
assign, encumber, pledge, hypothecate, transfer or otherwise dispose of
the Collateral or any part thereof or any interest therein.
(f) Not issue any additional capital stock to any person or entity, nor
shall the Debtor agree to do so.
(g) Provide the Creditor, and the Creditor's agents and attorneys,
reasonable access to the books and records of the Debtor for inspection
purposes and permit the Creditor and the Creditor's agents and
attorneys to make copies hereof.
6. PERFORMANCE BY THE CREDITOR. If the Debtor fails to duly and
punctually perform, observe or comply with any condition, term or covenant
contained in this Agreement, the Creditor, without notice to or demand upon the
Debtor and without waiving or releasing any of the Secured Obligations, may at
any time thereafter perform such condition, term or covenant for the account and
at the expense of the Debtor. All sums paid or advanced in connection with the
foregoing and all costs and expenses (including, without limitation, reasonable
attorneys' fees) incurred in connection therewith shall be paid by the Debtor to
the Creditor on demand, and shall constitute and become a part of the Secured
Obligations.
7. DEFAULT. The Debtor shall be in default under this Agreement only if
an Event of Default (as defined in the Note) has not been cured within ten (10)
days after receipt by the Debtor of written notice from the Creditor of the
existence of an Event of Default (such notice from the Creditor to specify in
reasonable detail the act or omission that has given rise to the Event of
Default).
4
21
8. REMEDIES. Upon and at any time after a default under this Agreement,
the Creditor shall, at its option and without further notice to the Debtor
(except for such further notices, if any, that may be required by law) be
entitled to exercise any or all rights and remedies provided hereunder or by
law, including without limitation the rights and remedies of a secured party
under the Michigan Uniform Commercial Code. Any requirement under the Michigan
Uniform Commercial Code or otherwise of reasonable notice shall be met if the
Creditor sends the Debtor notice of sale and other notices required by law at
least ten (10) days prior to the date of sale, disposition or other event giving
rise to the required notice. Any sale held pursuant to the exercise of the
Creditor's rights hereunder may be public or private, and at such sale the
Creditor shall have the right, at any time and from time to time, to the extent
permitted by law, to sell, assign and deliver all or any part of the Collateral,
at the Creditor's office or elsewhere, without demand of performance,
advertisement of notice of intention to sell or of the time or place of sale or
adjournment thereof or any other notice (all of which are hereby waived by the
Debtor to the extent permitted by law), except such notice as is required by
applicable law and cannot be waived, for cash, on credit or for other property,
for immediate or future delivery, without any assumption or credit risk, and,
provided that such is not in violation of applicable law, for such terms as the
Creditor in its absolute and uncontrolled discretion may determine. In
furtherance of the Creditor's rights hereunder, the Creditor shall have the
right, for and in the name, place and stead of the Debtor, to execute
endorsements, assignments or other instruments of conveyance or transfer with
respect to all or any of the Collateral. All amounts collected by the Creditor
as the result of any action taken pursuant to this Paragraph 8, and the
liquidation value of any other property received as a result of such action,
shall be applied by the Creditor as follows:
(a) First, to the payment of all fees and costs including, without
limitation, reasonable attorneys' fees, incurred in connection with the
collection of the Secured Obligations or in connection with the
exercise or enforcement of the Creditor's rights, powers or remedies
under this Agreement.
(b) Second, to the payment and satisfaction of all of the Secured
Obligations.
The remedies provided in this Agreement in favor of the Creditor shall
not be deemed exclusive, but shall be cumulative, and shall be in addition to
all other remedies in favor of the Creditor existing at law or in equity.
9. VOTING RIGHTS. Unless and until title to the Pledge Stock is
transferred pursuant to Paragraph 8 of this Agreement, notwithstanding any other
provision of this Agreement to the contrary, the Debtor shall retain all voting
and other rights associated with the Pledged Stock; subject, however, to any
voting agreement to which the Debtor may be a party and any proxy(ies) delivered
in connection with any such voting agreement.
10. NOTICES. All notices, demands or requests required or permitted to
be given to either party hereto shall be in writing and shall be deemed given if
delivered personally, sent by reputable
5
22
overnight courier, with acknowledgment of receipt requested, or mailed by
registered, overnight or certified mail, with full postage paid thereon, return
receipt requested (such notice to be effective on the date such receipt is
acknowledged), as follows:
THE DEBTOR:
-----------
CBH Capital Corp.
17134 El Vuelo [USE THIS AND NOT P. O. BOX FOR OVERNIGHT COURIER]
P. O. Box 2577 [USE THIS AND NOT STREET ADDRESS FOR U. X. XXXX]
Xxxxxx Xxxxx Xx, XX 00000
Attention: Xxxxxxxxxxx X. Xxxxxx, President
THE CREDITOR:
-------------
Meritage Hospitality Group Inc.
00 Xxxxx Xxxxxx, X.X., Xxxxx 000
Xxxxx Xxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxxx, Xx., President
or to such place and with such other copies as the Debtor or the Creditor may
designate for itself by written notice to the other.
11. LIMITATION ON LIABILITY. The Debtor's liability under the Note and
under this Agreement shall be limited at all times to the Debtor's interest in
the collateral that is encumbered, from time to time, by this Agreement. The
Creditor shall neither seek nor be entitled to a deficiency judgment or other
money judgment under the Note or this Agreement.
12. CONTROLLING LAW; SEVERABILITY. This Agreement shall be construed in
each and every respect in accordance with the laws of the State of Michigan. If
any provision hereof is in conflict with any laws or is otherwise unenforceable
for any reason whatever, such provision shall be deemed null and void to the
extent of such conflict or unenforceability, and shall be severed from and shall
not invalidate any other provision of this Agreement.
13. OPTION AGREEMENT. The parties to this Agreement are also parties to
an Option Agreement dated February 8th, 1999 (the "OPTION AGREEMENT"). The
Creditor shall be entitled to retain in its possession all certificates,
instruments and other writings representing the Pledged Stock and any other
Collateral until the expiration of the Option Period, as defined in the Option
Agreement, notwithstanding any provision to the contrary contained in any other
agreement to which the Creditor and the Debtor are parties.
14. MISCELLANEOUS. This Agreement shall be binding upon and shall inure
to the benefit of the parties and their respective successors and assigns. No
failure or delay on the part of the
6
23
Creditor in exercising any power or right hereunder shall operate as a waiver
thereof or as a waiver of any other term, provision or condition hereof, nor
shall any single or partial exercise of any such right or power preclude any
other or further exercise thereof or the exercise of any other right or power
hereunder. This Agreement may be amended only by an instrument in writing signed
by the parties hereto. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect any of the terms hereof.
Time shall be deemed to be of the essence in each and every respect hereunder.
There are no third-party beneficiaries to this Agreement.
[SIGNATURES APPEAR ON FOLLOWING PAGE]
7
24
[SIGNATURE PAGE TO SECOND AMENDED AND
-------------------------------------
RESTATED STOCK PLEDGE AGREEMENT]
--------------------------------
This Second Amended and Restated Stock Pledge Agreement is executed and
delivered on February 5, 1999, but is to be effective as of September 19, 1995.
CBH CAPITAL CORP.
By: /s/ Xxxxxxxxxxx X. Xxxxxx
-----------------------------
Xxxxxxxxxxx X. Xxxxxx
President
MERITAGE HOSPITALITY GROUP INC.
By: /s/ Xxxxxx X. Xxxxxxxx, Xx.
-----------------------------
Xxxxxx X. Xxxxxxxx, Xx.
President
SECRETARY'S CERTIFICATE
-----------------------
The undersigned, as Secretary of Meritage Hospitality Group Inc. (the
"COMPANY"), certifies that the Second Amended and Restated Stock Pledge
Agreement was executed by Xxxxxx X. Xxxxxxxx, Xx. on behalf of the Company
pursuant to a resolution adopted at a Special Meeting of the Company's Board of
Directors on February 8th, 1999.
/s/ Xxxxx X. Xxxxxxxx
-------------------------------
Xxxxx X. Xxxxxxxx
Secretary
8
25
EXHIBIT C
26
OPTION AGREEMENT
----------------
THIS OPTION AGREEMENT (this "AGREEMENT") is made on February 8, 1999 by
CBH CAPITAL CORP., f/k/a Meritage Capital Corp., a Florida corporation ("CBH
CAPITAL"), and MERITAGE HOSPITALITY GROUP INC., a Michigan corporation
("MERITAGE").
STATEMENT OF FACTS
A. CBH Capital and Meritage are parties to a Stock Purchase and Sale
Agreement dated September 19, 1995, pursuant to Section 1.2 of which CBH Capital
acquired 1,500,000 shares of common stock of Meritage.
B. As payment for the stock referred to in Recital A above, CBH Capital
executed and delivered to Meritage CBH Capital's Secured Promissory Note dated
September 19, 1995, in the original principal amount of $10,500,000 (the
"ORIGINAL NOTE").
C. Subsequently, CBH Capital executed and delivered to Meritage CBH
Capital's First Amended and Restated Secured Promissory Note in the stated
principal amount of $10,500,000 (the "FIRST AMENDED NOTE"). The First Amended
Note was delivered to Meritage in substitution for and in place of the Original
Note, which was canceled and returned to CBH Capital.
D. Simultaneously with the execution and delivery of this Agreement,
CBH Capital has executed and delivered to Meritage CBH Capital's Second Amended
and Restated Secured Promissory Note in the principal amount of $9,750,000 (the
"SECOND AMENDED NOTE"). The Second Amended Note is delivered to Meritage in
substitution for and in place of the First Amended Note. All references below to
the "NOTE" shall be deemed references to the Second Amended Note.
E. CBH Capital and Meritage wish to enter into this Agreement to set
forth the basis upon which Meritage shall have the right to require that CBH
Capital sell to Meritage 1,392,858 shares of Meritage's common stock (the
"STOCK"), free and clear of all liens and encumbrances. Pursuant to a Second
Amended and Restated Stock Pledge Agreement between CBH Capital and Meritage
(the "STOCK PLEDGE AGREEMENT"), CBH Capital has pledged the Stock to Meritage to
secure CBH Capital's obligations to Meritage under the Note.
The parties agree that:
1. INCORPORATION OF STATEMENT OF FACTS. The Statement of Facts set
forth above is true and accurate and is incorporated into and forms a part of
this Agreement.
27
2. GRANT OF OPTION; EXERCISE.
(a) On the terms and subject to the conditions of this
Agreement, CBH Capital hereby grants to Meritage the irrevocable and
exclusive option to require CBH Capital to sell the Stock to Meritage
(the "OPTION"). Meritage may exercise the Option by sending written
notice of its election to exercise the Option to Meritage at any time
during the Option Period (as defined below). By delivering such notice
to CBH Capital, Meritage shall be obligated to buy the Stock from CBH
Capital on the terms and conditions set forth in this Agreement.
(b) As used in this Agreement, the "OPTION PERIOD" shall mean:
(i) the period commencing on August 19, 2000 and ending on September
19, 2000; or (ii) the period commencing on the date the indebtedness
evidenced by the Note is paid or declared to be due and ending on the
date which is thirty (30) days thereafter.
3. CLOSING OF TRANSACTION. The closing of the transaction contemplated
by this Agreement (the "CLOSING") shall take place at 10:00 a.m. on the last day
of the Option Period (the "CLOSING DATE", unless such Closing Date would fall on
a Saturday, Sunday or legal holiday, in which case the Closing Date shall be the
first day thereafter that is not a Saturday, Sunday or legal holiday), at the
Grand Rapids, Michigan office of Xxxxxx Xxxxxxx PLLC, legal counsel for
Meritage.
4. PURCHASE PRICE. The purchase price for the Stock shall be a sum
equal to the amount outstanding under the Note on the Closing Date.
5. DELIVERIES BY CBH CAPITAL AT THE CLOSING. At the Closing, CBH
Capital shall deliver the certificate(s) representing the Stock to Meritage,
duly endorsed for transfer or with duly executed stock powers, in either case
free and clear of all liens, including, without limitation, tax liens,
forfeitures, covenants, conditions, pledges, penalties, charges, encumbrances,
buy-sell agreements, rights of first refusal, equities or claims or rights of
others whatsoever.
6. DELIVERIES BY MERITAGE AT THE CLOSING. At the Closing, Meritage
shall deliver the Note to CBH Capital, in full payment of the Purchase Price.
7. REPRESENTATIONS AND WARRANTIES OF CBH CAPITAL. CBH Capital
represents, warrants and covenants to Meritage that as of the date of this
Agreement:
(a) CBH Capital is the lawful and absolute owner of the Stock,
subject to no other lien, encumbrance, right, claim or interest of any
kind or nature (other than such interests in favor of Meritage). In
addition, CBH Capital has the full and unrestricted right to grant the
Option with respect to the Stock as provided in this Agreement.
(b) CBH Capital has the legal capacity to enter into and
perform all of its obligations and agreements under this Agreement.
2
28
(c) No consent or approval for the entry into and performance
by CBH Capital of its obligations and agreements under this Agreement
is necessary.
(d) The execution, delivery and performance of this Agreement
by CBH Capital will not affect or in any way impair the Stock or CBH
Capital's or Meritage's rights or interests therein.
8. NOTICES. All notices and other communications hereunder shall be
made in writing and shall be deemed given when given in accordance with the
Stock Pledge Agreement.
9. CHOICE OF LAW. This Agreement shall be governed by, construed and
interpreted, and the rights of the parties determined, in accordance with the
laws of the State of Michigan without giving effect to any choice or conflict of
law provision or rule that would cause the application of the laws of any
jurisdiction other than the State of Michigan.
10. AMENDMENT. This Agreement may be amended only by an instrument in
writing signed on behalf of the parties hereto.
11. SUCCESSORS AND ASSIGNS. This Agreement, and all the rights and
powers granted hereby, will bind and inure to the benefit of all the parties
hereto and their respective successors and assigns.
[SIGNATURES APPEAR ON FOLLOWING PAGE]
3
29
[SIGNATURE PAGE TO OPTION AGREEMENT]
This Option Agreement is executed and delivered on February 5, 1999.
CBH CAPITAL CORP.
By: /s/ Xxxxxxxxxxx X. Xxxxxx
----------------------------------
Xxxxxxxxxxx X. Xxxxxx
President
MERITAGE HOSPITALITY GROUP INC.
By: /s/ Xxxxxx X. Xxxxxxxx, Xx.
----------------------------------
Xxxxxx X. Xxxxxxxx, Xx.
President
STATE OF CALIFORNIA )
) ss:
COUNTY OF SAN DIEGO )
The foregoing instrument was acknowledged before me on February 5th,
1999, by Xxxxxxxxxxx X. Xxxxxx, who is the President of CBH Capital Corp., a
Florida corporation, on behalf of such corporation, and who acknowledged the
same to be his free act and deed and the free act and deed of such corporation.
/s/ Xxxxxxx X. Sanchiou
---------------------------------------
Notary Public, San Diego County, California
My Commission Expires: 3/5/2001
--------------
-----------------------------------
XXXXXXX X. SANCHIOU
Commission #1128462
Notary Public - California
San Diego County
My Comm. Expires Mar 5, 2001
-----------------------------------
4
30
EXHIBIT D
31
VOTING AGREEMENT
----------------
This Agreement is entered into on February 8th, 1999, by and between
CBH CAPITAL CORP., a Florida corporation ("CBH CAPITAL"), XXXXXXXXXXX X. XXXXXX,
individually ("XXXXXX"), and XXXXX X. XXXXXXXX, individually ("XXXXXXXX").
RECITALS:
A. CBH Capital is the owner of 1,392,868 shares of common stock issued
by MERITAGE HOSPITALITY GROUP INC., a Michigan corporation (the "COMPANY"). The
shares of the Company's common stock owned by CBH Capital are referred to in
this Agreement as "CBH CAPITAL'S SHARES". Xxxxxx owns all of the issued and
outstanding voting securities issued by CBH Capital.
X. Xxxxxxxx is the owner of 7,877 shares of common stock issued by the
Company. In this Agreement, the shares of the Company common stock owned by
Xxxxxxxx are referred to as "XXXXXXXX'X SHARES" and, together with CBH Capital's
Shares, are referred to as the "SUBJECT SHARES".
C. CBH Capital and Xxxxxxxx wish to enter into this Agreement to set
forth the basis upon which the Subject Shares shall be voted.
NOW, THEREFORE, for good and valuable consideration, the receipt and
adequacy of which is acknowledged by the parties, the parties agree that:
1. INCORPORATION OF RECITALS. The Recitals set forth above are
incorporated into and form a part of this Agreement. CBH Capital represents and
warrants the accuracy of the first and third sentences of Recital A and Xxxxxxxx
represents and warrants the accuracy of the first sentence of Recital B.
2. AGREEMENT AS TO VOTING. The Subject Shares shall be voted in
accordance with the recommendation of the Company's Board of Directors on all
matters submitted to a vote of the Company's shareholders. If the Company's
Board of Directors fails for any reason to make a recommendation with respect to
a matter that is submitted to a vote of the Company's shareholders, Xxxxxxxx is
authorized to vote the Subject Shares in such manner as he or his successor(s),
in his or her sole discretion, deem proper.
3. IRREVOCABLE PROXY; TERM.
(a) Simultaneously with the execution and delivery of this
Agreement by CBH Capital, CBH Capital has executed and delivered an
Irrevocable Proxy in substantially the
32
form of Exhibit A to this Agreement (the "IRREVOCABLE PROXY"), pursuant
to which Xxxxxxxx has been designated as attorney and proxy to vote CBH
Capital's Shares. This Agreement shall constitute a voting agreement
within the meaning of Section 461 of the Michigan Business Corporation
Act (the "ACT") and the Irrevocable Proxy therefore shall be
irrevocable in accordance with Section 422 of the Act.
(b) CBH Capital and the Company are parties to an Option
Agreement dated February 8th, 1999 (the "OPTION AGREEMENT"). This
Agreement and the Irrevocable Proxy shall terminate only upon the
expiration of the Option Period, as defined in the Option Agreement.
4. AGREEMENT TO ENTER INTO NEW VOTING AGREEMENTS. The Irrevocable Proxy
provides that should Xxxxxxxx cease to be the Company's Secretary, he shall
likewise thereupon cease to be CBH Capital's attorney-in-fact and proxy under
the Irrevocable Proxy, and that Xxxxxxxx'x successor as the Company's Secretary
automatically shall become CBH Capital's attorney-in-fact and proxy under the
Irrevocable Proxy, with full authority to exercise all rights and powers and do
all acts and things that Xxxxxxxx is thereby authorized to do, and that the same
provisions apply to any successor of Xxxxxxxx and to any successor of any such
successor. So long as the successor to Xxxxxxxx or any of his successors is a
shareholder of the Company, CBH Capital shall promptly upon written request
enter into a new voting agreement, identical in all material respects to this
Agreement (other than as required to reflect the identity of the successor and
such successor's stock ownership in the Company). Xxxxxx shall cause CBH Capital
to promptly observe and perform its obligations under this paragraph.
5. NOTICES. All notices and other communications hereunder shall be
made in writing and shall be deemed given when given in accordance with the
Settlement Agreement, as defined in the Irrevocable Proxy.
6. CHOICE OF LAW. This Agreement shall be governed by, construed and
interpreted, and the rights of the parties determined, in accordance with the
laws of the State of Michigan without giving effect to any choice or conflict of
law provision or rule that would cause the application of the laws of any
jurisdiction other than the State of Michigan.
7. AMENDMENT. This Agreement may be amended only by an instrument in
writing signed on behalf of the parties hereto.
8. SUCCESSORS AND ASSIGNS. This Agreement, and all the rights and
powers granted hereby, will bind and inure to the benefit of the parties hereto
and their respective successors and assigns.
[SIGNATURES APPEAR ON FOLLOWING PAGE]
-------------------------------------
2
33
[SIGNATURE PAGE TO VOTING AGREEMENT]
This Voting Agreement is executed and delivered on February 5, 1999.
CBH CAPITAL CORP.
By: /s/ Xxxxxxxxxxx X. Xxxxxx
----------------------------------
Xxxxxxxxxxx X. Xxxxxx
President
/s/ Xxxxxxxxxxx X. Xxxxxx
--------------------------------------
Xxxxxxxxxxx X. Xxxxxx, Individually
/s/ Xxxxx X. Xxxxxxxx
--------------------------------------
Xxxxx X. Xxxxxxxx, Individually
STATE OF CALIFORNIA )
) ss:
COUNTY OF SAN DIEGO )
The foregoing instrument was acknowledged before me on February 5th,
1999, by Xxxxxxxxxxx X. Xxxxxx, who is the President of CBH Capital Corp., a
Florida corporation, on behalf of such corporation and individually, and who
acknowledged the same to be his free act and deed and the free act and deed of
such corporation.
/s/ Xxxxxxx X. Sanchiou
---------------------------------------
Notary Public, San Diego County, California
My Commission Expires: 3-5-2001
-------------
-------------------------------------------
XXXXXXX X. SANCHIOU
Commission #1128462
Notary Public - California
San Diego County
My Comm. Expires Mar 5, 2001
-------------------------------------------
3
34
EXHIBIT A
IRREVOCABLE PROXY
Pursuant to a Settlement Agreement dated February __, 1999, among CBH
CAPITAL CORP., a Florida corporation (the "SHAREHOLDER"), MERITAGE HOSPITALITY
GROUP INC., a Michigan corporation (the "COMPANY"), and XXXXXXXXXXX X. XXXXXX,
individually (the "SETTLEMENT AGREEMENT"), and a Voting Agreement dated February
__, 1999, between the Shareholder and Xxxxx X. Xxxxxxxx ("XXXXXXXX"), the
Shareholder irrevocably designates and appoints SAALFELD, with full power of
substitution and re-substitution, as the true and lawful attorney-in-fact and
proxy of the Shareholder with respect to the 1,392,858 shares of the Company's
common stock and all of the other Collateral pledged by the Shareholder to the
Company pursuant to the Second Amended and Restated Stock Pledge Agreement (the
"STOCK PLEDGE AGREEMENT") dated February __, 1999, between the Shareholder and
the Company (the "PLEDGED SHARES"), to vote the Pledged Shares in accordance
with recommendation of the Company's Board of Directors on all matters submitted
to a vote of the Company's shareholders. If the Company's Board of Directors
fails for any reason to make a recommendation with respect to a matter that is
submitted to a vote of the Company's shareholders, Saalfeld or his successor is
authorized to vote the Pledged Shares in such manner as he or his successor(s),
in his or her sole discretion, deem proper.
Saalfeld and his or her successor(s) may exercise the authority hereby
granted at any annual meeting or special meeting of the Company's shareholders,
and in connection with any solicitation of written consents from the Company's
shareholders, and under any other circumstance in which matters are submitted to
a vote of the Company's shareholders.
If Saalfeld should cease to be the Company's Secretary, he shall likewise
thereupon cease to be the attorney-in-fact and proxy of the Shareholder
hereunder, and his successor as the Company's Secretary automatically shall be
the Shareholder's attorney-in-fact and proxy hereunder, with full authority to
exercise all rights and powers and do all acts and things that Saalfeld is
hereby authorized to do. This sentence shall apply as well to any successor of
Saalfeld, and to any successor of any such successor.
The Shareholder acknowledges that this Irrevocable Proxy is executed
pursuant to a Voting Agreement dated February __, 1999, between the Shareholder
and Saalfeld, and is therefore irrevocable in accordance with section 422 of the
Michigan Business Corporation Act, as amended (Act No. 284 of the Public Acts of
Michigan).
Dated February __, 1999.
[SIGNATURES APPEAR ON FOLLOWING PAGE]
35
[SIGNATURES TO IRREVOCABLE PROXY]
This Irrevocable Proxy is executed and delivered on February __, 1999.
CBH CAPITAL CORP.
By:
-------------------------------------
Xxxxxxxxxxx X. Xxxxxx
Its: Sole Shareholder, Officer and Director
CERTIFICATION
Xxxxxxxxxxx X. Xxxxxx certifies to the Company and the attorney and proxy
designated above that he is the sole shareholder, officer and director of the
Shareholder, and that this Irrevocable Proxy has been executed and delivered
with the unanimous written consent of the shareholder, officers and directors
of the Shareholder.
---------------------------------------
Xxxxxxxxxxx X. Xxxxxx, Individually
STATE OF CALIFORNIA )
)ss:
COUNTY OF SAN DIEGO )
The foregoing instrument was acknowledged before me on February __, 1999,
by Xxxxxxxxxxx X. Xxxxxx, who is the President of CBH Capital Corp., a Florida
corporation, on behalf of such corporation and individually, and who
acknowledged the same to be his free act and deed and the free act and deed of
such corporation.
-------------------------------------------
Notary Public, San Diego County, California
My Commission Expires:
---------------------
2
36
EXHIBIT E
37
IRREVOCABLE PROXY
Pursuant to a Settlement Agreement dated February 8th, 1999, among CBH
CAPITAL CORP., a Florida corporation (the "SHAREHOLDER"), MERITAGE HOSPITALITY
GROUP INC., a Michigan corporation (the "COMPANY"), and XXXXXXXXXXX X. XXXXXX,
individually (the "SETTLEMENT AGREEMENT"), and a Voting Agreement dated February
8th, 1999, between the Shareholder and Xxxxx X. Xxxxxxxx ("XXXXXXXX"), the
Shareholder irrevocably designates and appoints SAALFELD, with full power of
substitution and re-substitution, as the true and lawful attorney-in-fact and
proxy of the Shareholder with respect to the 1,392,858 shares of the Company's
common stock and all of the other Collateral pledged by the Shareholder to the
Company pursuant to the Second Amended and Restated Stock Pledge Agreement (the
"STOCK PLEDGE AGREEMENT") dated February 8th, 1999, between the Shareholder and
the Company (the "PLEDGED SHARES"), to vote the Pledged Shares in accordance
with recommendation of the Company's Board of Directors on all matters submitted
to a vote of the Company's shareholders. If the Company's Board of Directors
fails for any reason to make a recommendation with respect to a matter that is
submitted to a vote of the Company's shareholders, Saalfeld or his successor is
authorized to vote the Pledged Shares in such manner as he or his successor(s),
in his or her sole discretion, deem proper.
Saalfeld and his or her successor(s) may exercise the authority hereby
granted at any annual meeting or special meeting of the Company's shareholders,
and in connection with any solicitation of written consents from the Company's
shareholders, and under any other circumstance in which matters are submitted to
a vote of the Company's shareholders.
If Saalfeld should cease to be the Company's Secretary, he shall likewise
thereupon cease to be the attorney-in-fact and proxy of the Shareholder
hereunder, and his successor as the Company's Secretary automatically shall be
the Shareholder's attorney-in-fact and proxy hereunder, with full authority to
exercise all rights and powers and do all acts and things that Saalfeld is
hereby authorized to do. This sentence shall apply as well to any successor of
Saalfeld, and to any successor of any such successor.
The Shareholder acknowledges that this Irrevocable Proxy is executed
pursuant to a Voting Agreement dated February 8th, 1999, between the Shareholder
and Saalfeld, and is therefore irrevocable in accordance with section 422 of the
Michigan Business Corporation Act, as amended (Act No. 284 of the Public Acts of
Michigan).
Dated February 8th, 1999.
[SIGNATURES APPEAR ON FOLLOWING PAGE]
38
[SIGNATURES TO IRREVOCABLE PROXY]
This Irrevocable Proxy is executed and delivered on February 5, 1999.
CBH CAPITAL CORP.
By: /s/ Xxxxxxxxxxx X. Xxxxxx
-------------------------------------
Xxxxxxxxxxx X. Xxxxxx
Its: Sole Shareholder, Officer and Director
CERTIFICATION
Xxxxxxxxxxx X. Xxxxxx certifies to the Company and the attorney and proxy
designated above that he is the sole shareholder, officer and director of the
Shareholder, and that this Irrevocable Proxy has been executed and delivered
with the unanimous written consent of the shareholder, officers and directors
of the Shareholder.
/s/ Xxxxxxxxxxx X. Xxxxxx
---------------------------------------
Xxxxxxxxxxx X. Xxxxxx, Individually
STATE OF CALIFORNIA )
)ss:
COUNTY OF SAN DIEGO )
The foregoing instrument was acknowledged before me on February 5th, 1999,
by Xxxxxxxxxxx X. Xxxxxx, who is the President of CBH Capital Corp., a Florida
corporation, on behalf of such corporation and individually, and who
acknowledged the same to be his free act and deed and the free act and deed of
such corporation.
/s/ Xxxxxxx X. Sancholi
-------------------------------------------
Notary Public, San Diego County, California
My Commission Expires: 5 5 2001
---------------------
XXXXXXX X. SANCHOLI
COMMISSION #1128462
NOTARY PUBLIC-CALIFORNIA
SAN DIEGO COUNTY
MY COMM. EXPIRES MAY 5, 2001
2
