EXHIBIT 10.2
STOCKHOLDERS AGREEMENT
by and among
FS EQUITY PARTNERS III, L.P.
FS EQUITY PARTNERS INTERNATIONAL, L.P.,
CANADIAN IMPERIAL BANK OF COMMERCE,
PILGRIM PRIME RATE TRUST,
▇▇▇ ▇▇▇▇▇▇ AMERICAN CAPITAL PRIME RATE INCOME TRUST,
SENIOR DEBT PORTFOLIO,
ML IBK POSITIONS, INC.
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
AND
AMERICA'S FAVORITE CHICKEN COMPANY
April 11, 1996
TABLE OF CONTENTS
Page
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1. Definitions................................................. 1
2. Rights Upon Issuance of Additional Securities............... 4
2.1 Issuance Notice......................................... 4
2.2 Response Notice......................................... 4
2.3 Revised Issuance Notice................................. 5
2.4 Pro Rata Share.......................................... 5
2.5 Termination and Assignment.............................. 5
3. Transfer of Shares by FS Stockholder; Rights of
Inclusion................................................... 5
3.1 Right of Inclusion...................................... 5
3.2 Third-Party Offer....................................... 5
3.3 Allocation of Included Shares........................... 6
3.4 Consummation............................................ 7
3.5 Termination and Assignment.............................. 8
4. Obligation to Sell Securities............................... 8
4.1 Sale Obligation......................................... 8
4.2 Termination and Assignment.............................. 9
5. Restrictions on Transfers of Securities; Right of First
Offer....................................................... 9
5.1 Transfer Restrictions................................... 9
5.2 Right of First Offer.................................... 10
5.3 Termination and Assignment.............................. 11
6. Registration Rights......................................... 12
6.1 "Piggy-Back" and Demand Rights on Common Stock.......... 12
6.2 Registration Rights on Preferred Stock.................. 12
7. Representation on the Board of Directors.................... 12
7.1 The Board............................................... 12
7.2 Termination and Assignment.............................. 13
8. Other Agreements............................................ 13
9. Copy of Agreement........................................... 13
10. Governing Law............................................... 13
11. Representations and Warranties.............................. 13
i
12. Amendment and Waiver; Successors............................ 14
13. Interpretation.............................................. 14
14. Notices..................................................... 14
15. Legends..................................................... 14
16. Further Assurances.......................................... 15
17. Injunctive Relief; Disputes................................. 15
18. Severability................................................ 15
19. Entire Agreement............................................ 16
20. Counterparts................................................ 16
21. Opinions.................................................... 16
SCHEDULE 1 Ownership of Capital Stock by Stockholders Upon
Consummation of Transactions Contemplated by
Purchase Agreement................................... 19
ii
STOCKHOLDERS AGREEMENT
THIS STOCKHOLDERS AGREEMENT (this "Agreement") is made and entered
into as of April 11, 1996 by and among America's Favorite Chicken Company, a
Minnesota corporation (the "Company"), FS Equity Partners III, L.P., a Delaware
limited partnership ("FSEP III"), FS Equity Partners International, L.P., a
Delaware limited partnership ("FSEP International," and collectively with FSEP
III, the "FS Stockholder"), Canadian Imperial Bank of Commerce, Pilgrim Prime
Rate Trust, ▇▇▇ ▇▇▇▇▇▇ American Capital Prime Rate Income Trust, Senior Debt
Portfolio, ML IBK Positions, Inc., ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇ (collectively, the "Existing Stockholders" and individually, an
"Existing Stockholder").
RECITALS
A. Pursuant to a Stock Purchase Agreement dated as of February 23,
1996 among the Company and the FS Stockholder (the "Purchase Agreement"), FS
Stockholder is making a substantial investment in the Common Stock of the
Company.
B. To induce the FS Stockholder to consummate the transactions
contemplated by the Purchase Agreement, the Existing Stockholders desire to
execute this Agreement.
C. The FS Stockholder's obligation to consummate the transactions
contemplated by the Purchase Agreement is conditioned upon the execution of this
Agreement by the Existing Stockholders.
D. Upon consummation of the transactions contemplated by the
Purchase Agreement, FS Stockholder and the Existing Stockholders will own the
shares of capital stock of the Company set forth on Schedule 1 hereto.
E. The Existing Stockholders and the FS Stockholder wish to
establish through this Agreement certain rights, obligations and restrictions
with respect to the securities of the Company.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing, the mutual
covenants contained herein and for other good and valuable consideration, the
receipt and adequacy of which is hereby acknowledged, the parties hereto agree
as follows:
1. Definitions. As used in this Agreement, the following
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capitalized terms shall have the following meanings:
Additional Securities: All Securities which are issued and sold by
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the Company other than (i) the Initial Shares, (ii) any Securities issued or
issuable to all of the holders of
Common Stock then outstanding on a proportionate basis, (iii) issuances of
additional shares of 10% Preferred Stock in payment of dividends on outstanding
shares of 10% Preferred Stock, (iv) any Securities issued or issuable to any
Employees pursuant to any equity incentive plan, individual agreement, bonus,
award, stock purchase plan, stock option plan or other stock agreement or
arrangement approved by the Company's Board of Directors (a "Benefit Plan");
provided however that with respect to any Benefit Plan approved by the Board
after the date hereof, such exclusion shall only apply with respect to the
issuance of Securities that do not exceed, on an aggregate basis, 3% of the
total outstanding shares of Common Stock, assuming full exercise of all
Securities granted to Employees; (v) any Securities issued in exchange for debt
securities of the Company or any Subsidiary or to any source of, or to any party
arranging, financing for the Company or any Subsidiary of the Company, (vi) any
Securities issued pursuant to a public offering registered under the Securities
Act, (vii) any Securities that are issued or issuable in connection with the
acquisition by the Company of any business, business assets or securities from
any Person; (viii) any Securities that are issued or issuable upon the exercise
of rights, options or warrants to purchase Securities, or upon the conversion or
exchange of Securities convertible into or exchangeable for Securities, where
the parties to this Agreement received (or were not required to receive) an
Issuance Notice pursuant to Section 2.1 of this Agreement; and (ix) any
Securities issued in connection with that certain Nonqualified Option Agreement
dated as of July 19, 1993 between the Company and ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co., Inc.
Affiliate or Associate: Such terms shall have the meanings given them
----------------------
pursuant to Rule 12b-2 of the General Rules and Regulations promulgated under
the Securities Exchange Act of 1934, as amended.
Board: The Board of Directors of the Company.
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Common Stock: The Common Stock, par value $.01 per share, of the
------------
Company.
Employee: Any employee, independent director or consultant of the
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Company or any Subsidiary of the Company.
Existing Stockholders: Canadian Imperial Bank of Commerce, Pilgrim
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Prime Rate Trust, ▇▇▇ ▇▇▇▇▇▇ American Capital Prime Rate Income Trust, ▇▇▇▇▇▇▇
▇▇▇▇▇ & Co., Inc., Pacific Corinthian Life Insurance Company, Senior Debt
Portfolio, ML IBK Positions, Inc., ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇.
Initial Shares: Shall mean the 33,691,039 shares of Common Stock and
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the 535,152 shares of 10% Preferred Stock issued and outstanding on the date
hereof and held beneficially and of record by the Stockholders as follows:
2
INITIAL SHARES
------------------------
10%
PREFERRED
STOCKHOLDER COMMON STOCK STOCK
------------------------------------------------ ------------ ---------
FS Equity Partners III, L.P. 20,288,340 ---
FS Equity Partners International, L.P. 815,067 ---
Canadian Imperial Bank of Commerce 6,312,724 360,545
Pilgrim Prime Rate Trust 413,980 24,848
▇▇▇ ▇▇▇▇▇▇ American Capital Prime Rate Income 604,251 34,864
Trust
Senior Debt Portfolio 806,708 54,895
ML IBK Positions, Inc. 1,800,000 60,000
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ 1,329,969 ---
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ 660,000 ---
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ 660,000 ---
Permitted Transferee: Subject to Section 5.1, Permitted Transferee
--------------------
shall mean an Affiliate of a Stockholder or, with respect to any Stockholder who
is an individual, such Stockholder's spouse or issue or a trust for their or the
Stockholder's benefit.
Person: Any individual, corporation, entity, partnership, joint
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venture, association, joint-stock company, trust, unincorporated organization or
other entity.
Public Offering: A public offering of shares of Voting Securities of
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the Company registered under the Securities Act, but shall not include an
offering registered on Form S-4 or Form S-8 (or any substitute form that is
adopted by the SEC), or an offering of Voting Securities in connection with a
sale of debt securities of the Company. The term "Initial Public Offering"
shall mean an underwritten Public Offering of Voting Securities which results in
gross proceeds to the Company in excess of $25 million from the sale of Voting
Securities.
SEC: The Securities and Exchange Commission.
---
Securities: Shall mean (i) Voting Securities, (ii) all rights,
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options, warrants to purchase such Voting Securities or the securities described
in the following clause and (iii) all other securities or capital stock of any
type whatsoever, including, without limitation, (A) preferred stock, debt
securities and securities that are, or may become, convertible into or
exchangeable for, or that entitle the holder to purchase, Voting Securities, (B)
preferred stock and (C) debt securities; provided, however, that debt securities
shall not include the Company's debt under that certain Credit Agreement dated
as of November 5, 1992 as amended, among the company and the Lenders named
therein.
Securities Act: The Securities Act of 1933, as amended.
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3
Stockholders: The FS Stockholder and the Existing Stockholders.
------------
Subsidiary: With respect to any Person, a corporation or other entity
----------
of which shares of stock or other ownership interests having ordinary voting
power to elect a majority of the directors of such corporation, or other Persons
performing similar functions for such entity, are owned, directly or indirectly,
by such Person.
Voting Securities: All Securities of the Company which possess
-----------------
general voting power to elect members of the Board; provided that Voting
Securities shall not include the 10% Preferred Stock or any options or warrants
to purchase Voting Securities.
10% Preferred Stock: The Cumulative Exchangeable Redeemable Preferred
-------------------
Stock of the Company.
2. Rights Upon Issuance of Additional Securities. The Company hereby
---------------------------------------------
grants to each Stockholder the following rights with respect to any and all
proposed issuances or sales of Additional Securities by the Company:
2.1 Issuance Notice. The Company shall give each Stockholder written
---------------
notice of the Company's intention to issue and sell Additional Securities (the
"Issuance Notice"), describing the type of Additional Securities, the price at
which the Additional Securities will be issued and sold and the general terms
upon which the Company proposes to issue and sell the Additional Securities,
including the anticipated date of such issuance or sale.
2.2 Response Notice. Each Stockholder shall have 20 days from the
---------------
date the Issuance Notice is received to agree to purchase all or any portion of
its Pro Rata Share (as defined below in Subsection 2.4) of such Additional
Securities by giving written notice to the Company of its desire to purchase
Additional Securities (the "Response Notice") and stating therein the quantity
of Additional Securities to be purchased. Such Response Notice shall constitute
the irrevocable agreement of such Stockholder to purchase the quantity of
Additional Securities indicated in the Response Notice at the price and upon the
terms stated in the Issuance Notice. Any purchase by Stockholders of Additional
Securities shall be consummated on the later (i) the closing date specified in
the Issuance Notice or (ii) the closing date on which Additional Securities
described in the applicable Issuance Notice are first issued and sold if other
Persons are also purchasing Additional Securities. Each Stockholder that has
elected to purchase its Pro Rata Share of Additional Securities will have the
right to purchase all or any portion of the Additional Securities unsubscribed
for by the other Stockholders, up to its pro rata share of such unsubscribed
portion (determined by the number of Voting Securities owned by the party or
parties who elect to purchase such unsubscribed for portion) if oversubscribed.
2.3 Revised Issuance Notice. The Company shall have 90 days from the
-----------------------
date of the Issuance Notice to consummate the proposed issuance and sale of the
Additional Securities that are not being purchased by Stockholders at a price
and upon the terms that are not materially changed from those specified in the
Issuance Notice. If the Company proposes
4
to issue Additional Securities after such 90-day period or at a price and upon
terms that are materially changed from those specified in the Issuance Notice it
must again comply with this Section 2.
2.4 Pro Rata Share. For purposes of this Section 2, the Pro Rata
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Share of a Stockholder shall be a fraction, (i) the numerator of which shall be
the total number of shares of Voting Securities then held by the Stockholder and
(ii) the denominator of which shall be the total number of shares of Voting
Securities then issued and outstanding.
2.5 Termination and Assignment. The rights provided to each of the
--------------------------
Stockholders under this Section 2 shall terminate upon the consummation of an
Initial Public Offering. A Stockholder's rights under this Section 2 will
terminate after the Stockholder has transferred a number of Voting Securities
which represents 50% or more of the number of Voting Securities held by the
Stockholder on the date hereof (with FSEP III and FSEP International considered
collectively for this purpose). The rights granted under this Section 2 shall
not be assignable; provided, however that a Stockholder may assign its rights
with respect to the shares of Common Stock transferred to a Permitted Transferee
provided that the Permitted Transferee executes a written undertaking to be and
becomes bound by this Agreement in the same manner and to the same extent as the
Stockholder.
3. Transfer of Shares by FS Stockholder; Rights of Inclusion.
---------------------------------------------------------
3.1 Right of Inclusion. The FS Stockholder agrees not to sell all or
------------------
any portion of the shares of Common Stock it holds to any Person (individually,
a "Third Party" and, collectively, "Third Parties") unless each of the Existing
Stockholders is given an opportunity to sell to the Third Party such number of
shares of Common Stock owned by the Existing Stockholder as is determined in
accordance with Subsection 3.3 of this Section 3; provided, however, that the
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Existing Stockholders shall have no rights pursuant to this Section 3 with
respect to sales or other transfers by the FS Stockholder of Common Stock to any
Permitted Transferee of the FS Stockholder.
3.2 Third-Party Offer. Prior to the consummation of any sale of all
-----------------
or any portion of the shares of Common Stock held by the FS Stockholder to a
Third Party, the FS Stockholder shall cause each bona fide offer from such Third
Party to purchase such shares from the FS Stockholder (a "Third-Party Offer") to
be reduced to writing and shall send written notice of such Third-Party Offer
(the "Initial Offer Notice") to each Existing Stockholder. Each Third-Party
Offer shall include an offer to purchase shares of Common Stock from the
Existing Stockholders in the amounts determined in accordance with Subsection
3.3 of this Section 3, at the same time, at the same price and on the same terms
as the sale by the FS Stockholder to the Third Party, and according to the terms
and conditions of this Agreement. The Initial Offer Notice shall be accompanied
by a true copy of the Third-Party Offer. If an Existing Stockholder desires to
accept the offer contained in the Initial Offer Notice, such Existing
Stockholder shall furnish written notice to the FS Stockholder, within 20 days
after its receipt of the Initial Offer Notice, indicating such Existing
Stockholder's irrevocable acceptance of the offer included in
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the Initial Offer Notice and setting forth the maximum number of shares of
Common Stock such Existing Stockholder agrees to sell to the Third Party (the
"Acceptance Notice"). If an Existing Stockholder does not furnish an Acceptance
Notice to the FS Stockholder in accordance with these provisions by the end of
such 20-day period, such Existing Stockholder shall be deemed to have
irrevocably rejected the offer contained in the Initial Offer Notice. All
shares of Common Stock set forth in the Acceptance Notices of the Existing
Stockholders together with the shares of Common Stock proposed to be sold by the
FS Stockholder to the Third Party are referred to collectively as "All Offered
Shares". Within three days after the date on which the Third Party informs the
FS Stockholder of the total number of shares of Common Stock which such Third
Party has agreed to purchase in accordance with the terms specified in the
Initial Offer Notice, the FS Stockholder shall send written notice (the "Final
Notice") to the participating Existing Stockholders setting forth the number of
shares of Common Stock each Existing Stockholder shall sell to the Third Party
as determined in accordance with Subsection 3.3 of this Section 3, which number
shall not exceed the maximum number specified by an Existing Stockholder in its
Acceptance Notice. Within five days after the date of the Final Notice (or such
shorter period as may reasonably be requested by the FS Stockholder to
facilitate the sale), each participating Existing Stockholder shall furnish to
the FS Stockholder (i) a written undertaking to deliver, upon the consummation
of the sale of Common Stock to the Third Party as indicated in the Final Notice,
the certificates representing the shares of Common Stock held by the Existing
Stockholder which will be transferred pursuant to such Third-Party Offer (such
shares shall be referred to herein as the "Included Shares") and (ii) a limited
power-of-attorney authorizing the FS Stockholder to transfer the Included Shares
pursuant to the terms of such Third-Party Offer. Each Stockholder shall be
required to make representations and warranties in connection with such transfer
only with respect to its own authority to transfer and its title to the shares
of Common Stock transferred. In any such transaction the Company will cooperate
with all Stockholders to facilitate the transaction.
3.3 Allocation of Included Shares. The maximum number of shares of
-----------------------------
Common Stock that may be sold by FSEP III, FSEP International and each Existing
Stockholder and all other holders of Common Stock who have rights to participate
in sales of Common Stock by the FS Stockholder pursuant to written agreements by
and between the FS Stockholder and any such holder (the "Other Tag-Along Rights
Holders") in any sale governed by this Section 3 shall be (i) All Offered Shares
in the event the Third Party has agreed to purchase All Offered Shares and all
shares of Common Stock that the Other Tag-Along Rights Holders who have elected
to participate in such sale seek to include in such sale or (ii) such number of
shares of Common Stock equal to the product of (a) the total number of shares of
Common Stock which the Third Party has agreed to purchase times (b) a fraction,
the numerator of which is the total number of shares of Common Stock owned by
FSEP III, FSEP International, an Existing Stockholder or each Other Tag-Along
Rights Holder who has elected to participate in such sale, as the case may be,
on the date of the Final Notice and the denominator of which is the total number
of shares of Common Stock owned on the date of the Final Notice by FSEP III,
FSEP International, the Existing Stockholders and the Other Tag-Along Rights
Holders who have elected to participate in such sale; provided, however, that,
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in the event FSEP III, FSEP International, the Existing Stockholders or any
Other Tag-Along Rights Holder elects to sell a
6
number of shares of Common Stock which is less than the number of shares such
holder could sell pursuant to clause (ii) above, the shares of Common Stock that
the others of such holders can sell in such transaction shall be increased by an
aggregate amount equal to the number of shares which any of FSEP III, FSEP
International, the Existing Stockholders or any Other Tag-Along Rights Holder
could have sold in such transaction but chose not to sell, and any such increase
shall be allocated among such other holders on a pro rata basis based upon the
total number of shares of Common Stock owned on the date of the Final Notice by
such other holders.
3.4 Consummation. The FS Stockholder shall have 180 days from the
------------
date of the Final Notice in which to sell to the Third Party the shares of
Common Stock owned by the FS Stockholder and the Included Shares of the Existing
Stockholders on terms which are not materially less favorable to the sellers of
shares of Common Stock than those specified in the applicable Initial Offer
Notice; provided, however, that in the event there is a decrease in the price to
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be paid by the Third Party for the shares of Common Stock to be sold from the
price set forth in the Initial Offer Notice, which decrease is acceptable to the
FS Stockholder, or other material change in terms which are less favorable to
the FS Stockholder, but which are acceptable to the FS Stockholder, the FS
Stockholder shall notify the participating Existing Stockholders of such
decrease or change in terms, and each of the participating Existing Stockholders
shall have five business days from the date of receipt of the notice of such
decrease or change in terms to reduce the number of shares of Common Stock it
will sell to such Third Party as previously indicated in the applicable
Acceptance Notice and the number of shares that all other participating
stockholders (including Other Tag-Along Rights Holders) may transfer shall be
increased in accordance with the provisions of Section 3.3. The FS Stockholder
shall act as agent for the Existing Stockholders in connection with such sale
and shall cause to be remitted to an Existing Stockholder the total sales price
of the Included Shares of such Existing Stockholder sold pursuant thereto, which
consideration shall be in the same form as the consideration received by the FS
Stockholder and as specified in the applicable Initial Offer Notice, net of the
Existing Stockholder's respective pro rata portion (based on the number of
shares of Common Stock sold) of the reasonable, out-of-pocket expenses incurred
by the FS Stockholder in connection with such sale (not including, however, any
transaction fee charged by the FS Stockholder or its Affiliates). The FS
Stockholder shall furnish, or shall cause to be furnished, such other evidence
of the completion and time of completion of such sale and the terms thereof as
may be reasonably requested by the Existing Stockholder including, without
limitation, evidence of the expenses incurred by the FS Stockholder in
connection with such sale. If and to the extent that, at the end of 180 days
following the date of the Final Notice, the FS Stockholder has not completed the
sale contemplated thereby, the FS Stockholder shall return to each participating
Existing Stockholder all certificates representing the Included Shares and all
powers-of-attorney which an Existing Stockholder may have transmitted pursuant
to the terms hereof.
3.5 Termination and Assignment. The obligations of the FS
--------------------------
Stockholder pursuant to the provisions of this Section 3 shall terminate upon
the consummation of an Initial Public Offering. The rights granted to Existing
Stockholders under this Section 3 shall not be
7
assignable except to a Permitted Transferee in accordance with Section 5.1,
provided that the Permitted Transferee executes a written undertaking to be and
become bound by this Agreement in the same manner and to the same extent as the
Existing Stockholder.
4. Obligation to Sell Securities.
-----------------------------
4.1 Sale Obligation. If the FS Stockholder finds a buyer for all of
---------------
the shares of Common Stock held by the FS Stockholder (whether such sale is by
way of purchase, merger or other form of transaction), upon the request of the
FS Stockholder, each of the Existing Stockholders shall sell all or any portion
of the Securities beneficially owned by such Existing Stockholder to such third-
party buyer pursuant to the terms and conditions negotiated by the FS
Stockholder. All holders of each class of Securities shall receive the same
form and amount of consideration for such Securities. Any Security that is
convertible into Common Stock shall be purchased on an "as converted" basis.
Any series of preferred stock that is not convertible into Common Stock shall be
purchased for its stated liquidation preference plus accrued and unpaid
dividends. Any debt Security which is not convertible into Common Stock shall
be purchased at its outstanding principal amount plus accrued and unpaid
interest, plus any prepayment or redemption premium set forth in the instruments
governing such Security. The exercise price (if any) of a Security shall be
deducted from the consideration to be received; provided however that if the
exercise price of such Security is greater than the consideration to be
received, such Security shall be cancelled without any payment to its holder.
Each of the Existing Stockholders agrees to such sale and to execute such
agreements, powers of attorney, voting proxies or other documents and
instruments as may be necessary to consummate such sale; provided that no
Stockholder shall be obligated to make any representations and warranties with
respect to such sale other than with respect to its own authority to transfer
and its title to the Securities transferred. Each of the Existing Stockholders
further agrees to timely take such other actions as the FS Stockholder may
reasonably request to enforce its obligation to sell its Securities, and
otherwise as necessary in connection with the approval of the consummation of
such sale, including voting all Securities in favor of such sale. Each
Stockholder shall pay its pro rata portion (based on the total value of the
consideration received by such Stockholder compared to the aggregate
consideration received by all Stockholders in the transaction) of the reasonable
out-of-pocket expenses incurred by the FS Stockholder in connection with a sale
consummated pursuant to this Section 4 (not including, however any transaction
fee charged by the FS Stockholder or its Affiliates). Notwithstanding the
forgoing provisions of this Section 4, no Stockholder shall have any obligation
to sell Securities in connection with any sale by the FS Stockholder of all of
its shares of Common Stock unless, prior to the consummation of such sale, (i)
the Board determines that the consideration to be received by the Stockholders
in such sale for their shares of Common Stock is not less than the aggregate
fair market value of the shares of Common Stock held by the Stockholders and
(ii) the Company shall have obtained a fairness opinion from an investment
banking firm that such a sale is fair, from a financial point of view, to the
holders of Common Stock.
4.2 Termination and Assignment. The obligations of the Existing
--------------------------
Stockholders pursuant to this Section 4 shall be binding on any transferee of
Securities held by
8
an Existing Stockholder, and each Existing Stockholder shall obtain and deliver
to the FS Stockholder a written commitment to be bound by such provisions from
each such transferee prior to any transfer. The obligations of each Existing
Stockholder pursuant to this Section 4, and the obligations of any such
transferee, shall terminate upon the consummation of an Initial Public Offering.
The rights of FS Stockholder under this Section 4 shall not be assignable and
shall terminate in the event that the FS Stockholder holds a number of shares of
Common Stock which represents less than 33-1/3% of the total number of shares of
Common Stock outstanding at any time (with FSEP III and FSEP International
considered collectively for this purpose).
5. Restrictions on Transfers of Securities; Right of First Offer.
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5.1 Transfer Restrictions. No Stockholder shall (i) pledge,
---------------------
hypothecate or encumber any Securities; (ii) sell, assign, transfer, or
otherwise dispose of or convey ("Transfer") any Securities, or any right, title
or interest therein, except in compliance with the Securities Act and all
applicable state securities laws or (iii) Transfer any Securities, or any right,
title or interest therein except for sales of Securities expressly permitted by
and in compliance with this Agreement, including (without limitation) Subsection
5.2. Any attempt to Transfer, pledge, hypothecate or encumber Securities, or
any right, title or interest therein, not in compliance with this Agreement
shall be null and void, and the Company shall not give effect to any such
attempted transaction or Transfer. Any Securities Transferred pursuant to the
terms and requirements of this Agreement shall be Transferred free and clear of
all mortgages, liens, pledges, charges and security interests or encumbrances,
or any obligations or liabilities in connection therewith. Each Stockholder, on
the execution and delivery of this Agreement, agrees that such Stockholder will
not Transfer any Securities prior to delivery to the Company of an opinion of
counsel in form and substance satisfactory to the Company with respect to
compliance with the Securities Act, or until a registration statement with
respect to such Securities under the Securities Act has become effective. All
transferees of Securities will be bound by this Agreement in the same manner and
to the same extent as the transferor and prior to any Transfer must deliver to
the Company and the Stockholders a written undertaking to be and become so
bound. Upon completion of any Transfer in compliance with this Agreement, the
transferee shall become a Stockholder and entitled to the rights hereunder which
may be duly and validly assigned to such transferee. An Existing Stockholder
may transfer Securities to a Permitted Transferee provided that such transferee
executes a written undertaking to be and becomes bound by this Agreement in the
same manner and to the same extent as the transferring Stockholder; and provided
further, that prior to the consummation of any transaction in which a Permitted
Transferee ceases to be an Affiliate of such Stockholder, such Permitted
Transferee shall reconvey all Securities to the transferring Stockholder and the
Securities will remain subject to this Agreement. A Permitted Transferee may
not subsequently transfer the Securities, except transfers of Securities back to
the transferring Stockholder.
5.2 Right of First Offer. Each of the Stockholders hereby agrees not
--------------------
to Transfer any of the Securities held by them to any Person (other than a
Permitted Transferee) unless each other Stockholder is given the right to
acquire such Securities pursuant to the provisions of this Subsection 5.2;
provided, however, that this Subsection 5.2 shall only apply
9
to Transfers by the FS Stockholder of less than all of the shares of Common
Stock it then holds (with FSEP III and FSEP International considered
collectively for this purpose); provided further that Transfers by Belatti,
▇▇▇▇▇▇▇▇ or ▇▇▇▇▇▇▇ to the Company pursuant to any Company repurchase right on
termination of employment shall not be subject to this Section 5.2. If any of
the Stockholders receives an offer from any Person to acquire any Securities, or
decides to solicit or cause to be solicited a proposal or proposals to acquire
Securities, such Stockholder (the "Offering Stockholder") shall first give all
other Stockholders (each, an "Offeree," and together, the "Offerees") written
notice (the "Stockholder Notice") of such intention, which notice shall include
a term sheet stating, among other material terms, the minimum cash sales price
(the "Target Price") that the Offering Stockholder would entertain for the
Securities to be sold (the "Offered Securities"). Each of the Offerees shall
have the right for a period of 30 days following the delivery of the Stockholder
Notice (the "Acceptance Period") to accept the offer to purchase all but not
less than all of its respective Offeree Pro Rata Share (as defined below) of the
Offered Securities at the Target Price and upon the other terms provided with
the Stockholder Notice; provided that all and not less than all of the Offered
Securities are purchased. Each Offeree that has elected to purchase its Offeree
Pro Rata Share of the Offered Securities will have the right to purchase all or
any part of the unsubscribed portion of the Offered Securities up to its pro
rata share of such unsubscribed portion (determined in accordance with the
number of shares of Voting Securities owned by the parties that elect to
purchase such unsubscribed for portion). Each Offeree shall exercise its rights
under this Section 5.2 by delivering to the Offering Stockholder written notice
of its election prior to 5:00 p.m. Los Angeles time on the final day of the
Acceptance Period. On the first business day following the termination of the
Acceptance Period, the Company shall notify all Offerees that have exercised
their rights hereunder of the amount of any unsubscribed portion of the Offered
Securities, and such Offerees shall have two business days to purchase their pro
rata share of such unsubscribed portion. If an Offeree exercises its rights
under this Section 5.2, the sale of such Securities shall be consummated within
30 days of the final day of the Acceptance Period (the "Purchase Period"). If
the Offerees do not elect to purchase such Securities on such terms or fail to
consummate a purchase of such Securities within the Purchase Period, the
Offering Stockholder shall have the right to consummate the sale of such
Securities for a sales price equal to or greater than the Target Price and on
terms no more favorable to the purchaser than specified in the Stockholder
Notice for a period of 90 days (the "Consummation Period") after the expiration
of the Acceptance Period or, if applicable, the Purchase Period. If the
Offering Stockholder does not complete such sale, transfer or conveyance within
the Consummation Period, the Offering Stockholder shall not have the right to
sell, transfer or convey any of such Securities without again complying with
this Subsection 5.2. In the event the Offering Stockholder intends to sell
Securities for consideration other than cash, the Offering Stockholder shall
notify the Offerees of the terms of such non-cash consideration. The Offerees
may elect within ten days of such notice to have the fair market value of such
non-cash consideration determined, with the parties jointly selecting an
investment banking firm to resolve any dispute regarding the fair market value
of such non-cash consideration; in the absence of agreement on such firm,
▇▇▇▇▇▇▇, Sachs & Co. shall determine such fair market value. If the sum of the
fair market value of the non-cash consideration and the cash consideration (in
the case of a sale that is partially for cash) is less than the cash price
offered to the Offerees pursuant to this
10
Subsection 5.2, the Offerees may, within 10 days of the determination of the
fair market value of the non-cash consideration, elect to purchase the
Securities proposed to be sold for an amount equal to the sum of (i) the fair
market value of the non-cash consideration and (ii) the cash consideration, if
any. Such purchase must be consummated within 20 days of the determination of
fair market value. For purposes of this Subsection 5.2, "Offeree Pro Rata
Share" shall mean a fraction (i) the numerator of which is the total number of
shares of Voting Securities then held by a Stockholder and (ii) the denominator
of which is the total number of shares of Voting Securities then held by all
Stockholders entitled to receive the right of first offer. If the Offering
Stockholder receives a written offer for such Securities at any time during the
Consummation Period which is acceptable to the Offering Stockholder but is less
than the Target Price or is upon terms less favorable to the Offering
Stockholder than the terms provided to the Offerees in the Stockholder Notice
(the "Below Target Price Offer"), the Offering Stockholder shall promptly
deliver a copy of such written offer to the Offerees. During the 15-day period
following delivery of such written offer, the Offerees shall have the right to
accept the offer to purchase the Securities offered on the terms reflected in
such written offer. Each Offeree shall, if it so desires, exercise such right
by delivery to the Offering Stockholder written notice of its election to
purchase all but not less than all of its Offeree Pro Rata Share of the Offered
Securities prior to 5:00 p.m. Los Angeles time on the final day of such
additional 15 day period and the sale of such Securities shall be consummated
within 30 days of the delivery of such written notice. Any unsubscribed portion
of the Offered Securities shall be allocated in the manner provided above. If
the Offerees do not elect to accept the offer to purchase the Offered Securities
on such terms or fail to consummate the purchase of the Offered Securities
within 30 days of the date of the Offerees' acceptance of the Below Target Price
Offer, the Offering Stockholder shall have 90 days to consummate the sale of the
Offered Securities at a price and upon terms that are not less favorable to the
Offering Stockholder than the price and terms specified in the written offer
delivered to the Offerees. In the event a Below Target Price Offer involves any
non-cash consideration, the procedures for valuing such non-cash consideration
set forth in Subsection 5.2 above shall be utilized to determine the fair market
value of such non-cash consideration.
5.3 Termination and Assignment. The obligations of a Stockholder
--------------------------
pursuant to this Section 5 shall terminate upon an Initial Public Offering. The
rights granted to Stockholders under Subsection 5.2 shall not be assignable
except to Permitted Transferees. Any transferee of Securities from a
Stockholder other than a purchaser of shares from a Stockholder after the
Stockholder has duly complied with its obligations under this Section 5 with
respect to such sale, shall be bound by the provisions of this Section 5 and
such Stockholder shall obtain and deliver to each other Stockholder a written
commitment to be bound by such provisions from each such transferee prior to any
transfer.
6. Registration Rights.
-------------------
6.1 "Piggy-Back" and Demand Rights on Common Stock. FSEP III, FSEP
----------------------------------------------
International and each Existing Stockholder shall be entitled to certain "piggy-
back" registration rights with respect to future public offerings of Common
Stock by Company and to certain demand registration rights (the "Registration
Rights"). The terms of the Registration Rights are
11
set forth in Exhibit A attached hereto. The rights granted to Stockholders
under this Section 6.1 shall not be assignable except to a Permitted Transferee.
6.2 Registration Rights on Preferred Stock. Each Existing Stockholder
--------------------------------------
that owns 10% Preferred Stock shall be entitled to the registration rights set
forth on Exhibit B hereto. The rights granted to Stockholders under this
Section 6.2 shall not be assignable except to a Permitted Transferee.
7. Representation on the Board of Directors.
----------------------------------------
7.1 The Board. Subject to the terms and conditions of this Section
---------
7, at each annual or special meeting of stockholders of the Company, or in any
written consent executed in lieu of a stockholder meeting, at or pursuant to
which persons are being elected to fill positions on the Board, the FS
Stockholder and the Existing Stockholders agree to exercise, or cause to be
exercised, voting rights with respect to the shares of Voting Securities then
held of record or beneficially owned by them, in such a manner that five
candidates nominated by FS Stockholder and three candidates nominated by the
Chief Executive Officer of the Company (the "CEO") shall be elected to fill and
continue to hold positions on the Board. Pursuant to the terms of the 10%
Preferred Stock, holders of the 10% Preferred Stock are entitled to elect one
member of the Board. The parties shall use their reasonable best efforts to
ensure that the Board consists of not more than nine members. If necessary, the
Board shall elect such additional independent members, if any, as may be
required under applicable law or stock exchange requirements or by the National
Association of Securities Dealers or underwriters in connection with the Initial
Public Offering, and the FS Stockholder and the Existing Stockholders shall each
take all actions necessary in connection therewith.
If at any time from and after the date hereof, FS Stockholder or the
CEO shall give notice of their desire to remove any director previously
nominated by that party to serve on the Board, the FS Stockholder and the
Existing Stockholders agree to exercise or cause to be exercised voting rights
with respect to all shares of Voting Securities held of record or beneficially
owned by it or them so as to remove such director of the Company. If at any
time from and after the date hereof, any director previously nominated by FS
Stockholder or the CEO to serve on the Board ceases to be a director (whether by
reason of death, resignation, removal or otherwise), FS Stockholder or the CEO,
as the case may be, shall be entitled to nominate a successor director to fill
the vacancy created thereby, and the FS Stockholder and the Existing
Stockholders agree to exercise voting rights with respect to the shares of
Voting Securities held of record or beneficially owned by them so as to elect
such nominee as a director of the Company.
7.2 Termination and Assignment. The rights and obligations contained
--------------------------
in this Section 7 shall terminate upon the consummation of an Initial Public
Offering or upon the sale by the FS Stockholder of more than 50% of its Initial
Shares (with FSEP III and FSEP International considered collectively for this
purpose) and shall not be assignable other than to Permitted Transferees.
12
8. Other Agreements.
----------------
(a) Each of the Stockholders agrees that, at the request of any
Existing Stockholder, it shall vote all shares of Common Stock owned by it in
favor of an amendment to the Company's Articles of Incorporation to provide that
shares of Common Stock may, at any holder's request, be converted into shares of
a new series of non-voting common stock, provided that all such shares of non-
voting common stock shall be subject to the provisions of this Agreement to the
same extent as the shares of Common Stock converted.
(b) The Company shall not consummate any material transaction with a
Stockholder or any Affiliate of a Stockholder other than transactions on terms
that are no less favorable to the Company than could have been obtained with a
person that is not a stockholder (as determined in the good faith judgment of
the Board) and other than (i) indemnification of any of Company's officers or
directors whether pursuant to any indemnity agreement or applicable law, (ii)
payment of transaction fees in connection with the Purchase Agreement, and (iii)
any reimbursement by Company of normal and reasonable expenses incurred by the
FS Stockholder or any of its Affiliates after the date hereof.
(c) Each Stockholder shall be promptly provided with all financial
and other information provided to the members of the Board and shall be
permitted to have one representative attend all regularly scheduled Board
meetings.
9. Copy of Agreement. A copy of this Agreement and all amendments
-----------------
hereto shall be filed with the Secretary of Company and shall be kept at the
principal executive offices of Company.
10. Governing Law. This Agreement shall be governed by and construed
-------------
and enforced in accordance with the laws of the State of Minnesota without
regard to the conflicts of laws rules thereof.
11. Representations and Warranties. Each Stockholder represents and
------------------------------
warrants (a) that such Stockholder has full power, capacity, right and
authority, and any requisite approvals or consents to enter into and perform
this Agreement; (b) that this Agreement and the performance of its obligations
hereunder have been duly authorized, executed and delivered by such Stockholder
and is a valid and binding agreement, enforceable against such Stockholder in
accordance with its terms; (c) that such Stockholder owns beneficially and of
record the shares of Common Stock and 10% Preferred Stock and the rights,
options or warrants to purchase any capital stock of the Company set forth
opposite its name on Schedule 1 hereto, free and clear of any lien, claim,
charge, option, security interest, restriction or encumbrance and (d) that such
Stockholder does not own beneficially or of record any other securities or
rights, options or warrants to purchase any securities of the Company.
12. Amendment and Waiver; Successors. This Agreement may be amended,
--------------------------------
modified or supplemented, and compliance with any provision hereof may be
waived, only with the written consent of FSEP III, FSEP International and those
Existing Stockholders then holding
13
a majority of the shares of Voting Securities then held by the Existing
Stockholders, and any amendment, modification, supplement or waiver so consented
to in writing shall be binding upon the parties hereto and their successors and
permitted transferees and assigns; provided that any amendment that materially
and adversely affects the rights of any Existing Stockholder hereunder shall
require the consent of each Existing Stockholder so affected. This Agreement
shall be binding on the parties hereto and, their successors, transferees,
assigns, heirs and personal representatives; provided however, that unless
expressly permitted herein, this Agreement under the rights granted hereunder
shall not be assignable without the written consent of all of the parties
hereto, which consent may be withheld in each such party's sole discretion.
13. Interpretation. The headings of the Sections contained in this
--------------
Agreement are solely for the purpose of reference, are not part of the agreement
of the parties and shall not affect the meaning or interpretation of this
Agreement.
14. Notices. All notices and other communications provided for or
-------
permitted hereunder shall be in writing and shall be deemed to have been duly
given if delivered personally or delivered by telecopier (with receipt
confirmed), on the date of such delivery or transmission, or three (3) days
after deposit in the mail, by registered or certified mail (return receipt
requested) postage prepaid (i) if to Company, at the address or telecopier
number set forth in the Purchase Agreement, (ii) if to the FS Stockholder, at
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & Co. Incorporated, ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, telecopier: (310) 444-
1870, (iii) if to Canadian Imperial Bank of Commerce, at ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: R. ▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇; if to ML
IBK Positions, Inc., at ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co., Inc., Corporate Credit Division,
World Financial Center, ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇,
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇; if to Pilgrim Prime Rate Trust, at The Pilgrim
America Group, ▇▇▇▇ ▇▇▇▇▇, ▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇ Tiffen; if to Senior Debt Portfolio, at ▇▇▇▇▇
▇▇▇▇▇ Prime Rate Reserves, ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
Attention: ▇▇▇▇ ▇▇▇▇▇▇; and if to ▇▇▇ ▇▇▇▇▇▇ American Capital Prime Rate Income
Trust, at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇
▇▇▇▇▇▇▇ (or at such other address or telecopier number for any party as shall be
specified by like notice provided that notices of a change of address or
telecopier number shall be effective only upon receipt thereof).
15. Legends. All certificates evidencing Securities which are issued
-------
to any of FSEP III, FSEP International and the Existing Stockholders shall be
legended as follows (in addition to any other legend required to be placed
thereon):
"THE SECURITIES EVIDENCED BY THIS CERTIFICATE ARE SUBJECT TO
CERTAIN RESTRICTIONS AND OBLIGATIONS WITH RESPECT TO THE TRANSFER,
PLEDGE, HYPOTHECATION AND VOTING THEREOF AS SET FORTH IN THAT CERTAIN
STOCKHOLDERS AGREEMENT DATED AS OF APRIL 11, 1996, WHICH MAY BE
REVIEWED AT THE PRINCIPAL PLACE OF BUSINESS OF THE CORPORATION AND A
COPY OF WHICH MAY BE
14
OBTAINED FROM THE CORPORATION WITHOUT CHARGE UPON WRITTEN REQUEST
THEREFOR."
16. Further Assurances. The Stockholders shall exercise, or cause to
------------------
be exercised, voting rights with respect to Voting Securities held of record or
beneficially owned by them in a manner so that, and shall otherwise take any
necessary actions in order that, the covenants and understandings of the parties
set forth in this Agreement shall be implemented. Each party hereto agrees to
perform any further acts and execute and deliver any documents which may be
reasonably necessary to carry out the intent of this Agreement and to make
appropriate changes to the procedures set forth herein to implement such rights
to the extent necessary to conform to the Minnesota Business Corporation Act or
other applicable law. Each party hereto further agrees not to take any action
violating the intent and purpose of this Agreement. The Company covenants and
agrees that it will act in good faith to preserve for each of the Stockholders
the benefits of this Agreement and that it will take no voluntary action to
impair the benefit hereof or to avoid or seek to avoid the observance or
performance of any of the terms to be observed or performed hereunder or to deny
to any of the Stockholders any of the benefits or protections contemplated
hereby.
17. Injunctive Relief; Disputes. It is acknowledged that it will be
---------------------------
impossible to measure in money the damages that would be suffered if the parties
hereto fail to comply with any of the obligations herein imposed on them and
that, in the event of any such failure, an aggrieved party hereto will be
irreparably damaged and will not have an adequate remedy at law. Any such party
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. In the
event of any dispute among the parties arising out of this Agreement, the
prevailing party shall be entitled to recover from the non-prevailing party the
reasonable expenses of the prevailing party, including, without limitation,
reasonable attorneys' fees.
18. Severability. If any term or other provision of this Agreement
------------
is invalid, illegal or incapable of being enforced by any Rule of law or public
policy, all other conditions and provisions of this Agreement shall nevertheless
remain in full force and effect to the maximum extent permitted by applicable
law. Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties hereto shall negotiate in
good faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible in a mutually acceptable manner in order that
this Agreement be enforced as originally contemplated to the greatest extent
possible.
19. Entire Agreement. This Agreement (and Exhibits hereto), together
----------------
with the Company's Articles of Incorporation and Bylaws as in effect on the date
hereof constitute the entire agreement and understanding among the parties
pertaining to the subject matter hereof and supersede any and all prior
agreements, whether written or oral, relating hereto.
15
20. Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed an original but all of which shall
constitute one and the same instrument.
21. Opinions. Upon the execution of this Agreement, FS Stockholder
--------
shall receive an opinion from ▇▇▇▇▇▇ & Whitney, with respect to the
enforceability of this Agreement against the Existing Stockholders and the
Existing Stockholders shall receive an opinion from Faegre & ▇▇▇▇▇▇ with
respect to the enforceability of this Agreement against FS Stockholder.
16
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
FS EQUITY PARTNERS III, L.P., AMERICA'S FAVORITE CHICKEN COMPANY
a Delaware limited partnership
By: FS Capital Partners, L.P. By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
--------------------------------------
Its: General Partner Its: Chairman of the Board
By: FS Holdings, Inc.
Its: General Partner PILGRIM PRIME RATE TRUST
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇ By: /s/
---------------------- -------------------------------
Its: Vice President Its: Senior Vice President
FS EQUITY PARTNERS ▇▇▇ ▇▇▇▇▇▇ AMERICAN CAPITAL PRIME
INTERNATIONAL, L.P., a RATE INCOME TRUST
Delaware limited partnership
By: FS&Co. International, L.P. By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------------
Its: General Partner Its: Senior Vice-President -
Portfolio Manager
By: FS International
Holdings Limited
Its: General Partner
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇
---------------------------
Its: Vice President
17
CANADIAN IMPERIAL BANK
OF COMMERCE
By: /s/
-------------------------------
Its:
ML IBK POSITIONS, INC. SENIOR DEBT PORTFOLIO
By: Boston Management and Research
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ as Investment Advisor
-------------------------------
Its: Vice President
By: /s/
---------------------------------
Its: Vice President
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
----------------------------------- --------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------------
18
SCHEDULE 1
OWNERSHIP OF CAPITAL STOCK
BY STOCKHOLDERS UPON CONSUMMATION OF
TRANSACTIONS CONTEMPLATED BY PURCHASE AGREEMENT
10%
PREFERRED
STOCKHOLDER COMMON STOCK STOCK
------------------------------------------------ ------------ ---------
FS Equity Partners III, L.P. 20,288,340 --
FS Equity Partners International, L.P. 815,067 --
Canadian Imperial Bank of Commerce 6,312,724 360,545
Pilgrim Prime Rate Trust 413,980 24,848
▇▇▇ ▇▇▇▇▇▇ American Capital Prime Rate Income 604,251 34,864
Trust
Senior Debt Portfolio 806,708 54,895
ML IBK Positions, Inc. 1,800,000 60,000
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ 1,329,969 --
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ 660,000 --
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ 660,000 --
19
