Exhibit 10.19
EXECUTION VERSION
SHAREHOLDERS’
AGREEMENT
This Shareholders’ Agreement,
dated as of October 27, 2004 (this
“Agreement” ), is entered into by and
among Gordon Biersch Brewery Restaurant Group, Inc., a Tennessee
corporation (the “Company” ), Hancock
Park Capital II, L.P., a Delaware limited partnership, (
“HP Fund” ) and each of the other
shareholders of the Company whose names appear on the signature
pages hereto or on Instruments of Accession hereto in the form of
Schedule II hereto.
WHEREAS, the Company and the HP Fund
are parties to that certain Securities Purchase Agreement, dated as
of October 27, 2004 (the “Securities Purchase
Agreement” ), pursuant to which the HP Fund is to
purchase certain shares of Preferred Stock (as defined
herein);
WHEREAS, it is a condition precedent
to the obligations of the HP Fund to purchase the shares of
Preferred Stock pursuant to the Securities Purchase Agreement that
the Company, the HP Fund and the Other Shareholders (as defined
herein) enter into this Agreement;
WHEREAS, the HP Fund and each Other
Shareholder owns such number and class of Company Equity Securities
(as defined below) as are set forth on Schedule I
hereto; and
WHEREAS, the Company, HP Fund and
the Other Shareholders desire to enter into this Agreement for the
purpose of governing certain aspects of the their relationship with
regard to each other on and after the date hereof.
NOW, THEREFORE, in consideration of
the mutual covenants contained herein and for other good and
valuable consideration, the receipt and adequacy of which are
hereby acknowledged, the parties hereto, intending to be legally
bound hereby, agree as follows:
Section 1.
Definitions . For purposes
of this Agreement, the following terms have the indicated
meanings:
“ Affiliate
” means with respect to any Person, (a) in the case of
an entity other than an individual, any other Person directly or
indirectly controlling, controlled by or under common control with
such Person and (b) in the case of an individual, any Related
Persons, Family Trust, Family Limited Liability Company or Family
Limited Partnership of such individual.
“ Common Stock
” means the Company’s common stock, no par value per
share.
“ Company Equity
Securities ” means (a) the Common Stock,
(b) the Preferred Stock, and (c) any securities
convertible into or exchangeable for or containing options or
rights to acquire shares of Common Stock.
“ Disposition
Event ” means (i) the sale, lease or other
disposition of all or substantially all of the assets of the
Company or its Subsidiaries in a single transaction or series of
related transactions whether by liquidation, dissolution, merger,
consolidation or sale, (ii) the sale or other transfer of
greater than fifty percent (50%) of the outstanding shares of
Common Stock (on a fully-diluted basis, including shares of
Preferred Stock convertible into Common Stock) in a single
transaction or series of related transactions; or (iii) any
consolidation, merger, share exchange or other business combination
of the Company with or into any other corporation or
other entity in which the shareholders of the
Company immediately prior to such consolidation, merger, share
exchange or other business combination hold securities of the
surviving entity (or an entity owning 100% of such surviving
entity) immediately after such transaction representing less than a
majority of the combined voting power of the outstanding securities
of such surviving entity (or an entity owning 100% of such
surviving entity).
“ Entity ”
shall mean any corporation (including any non profit corporation),
general partnership, limited partnership, limited liability
partnership, joint venture, estate, trust, company (including any
limited liability company or joint stock company), firm or other
enterprise, association, organization or entity.
“ Exchange Act
” means the
Securities Exchange Act of 1934, as amended, and the rules and
regulations promulgated thereunder.
“ Family Limited
Liability Company ” means, with respect to any
individual, any limited liability company created for the benefit
of one or more of such individual’s Related Persons and
controlled by such individual.
“ Family Limited
Partnership ” means, with respect to any individual,
any limited partnership created for the benefit of one or more of
such individual’s Related Persons and controlled by such
individual.
“ Family Trust
” means, with respect to any individual, any trust created
for the benefit of such individual or nor or more of such
individual’s Related Persons.
“ Governmental
Body ” shall mean any: (a) nation, state,
commonwealth, province, territory, county, municipality, district
or other jurisdiction of any nature; (b) federal, state,
local, municipal, foreign, supranational or other government; or
(c) governmental, self-regulatory or quasi-governmental
authority of any nature (including any governmental division,
department, agency, commission, instrumentality, official,
organization, unit, body or Entity and any court or other
tribunal).
“ HP Securities
” means (i) the shares of Preferred Stock issued to the
HP Fund pursuant to the Securities Purchase Agreement and
(ii) all other Company Equity Securities purchased by, issued
to or otherwise acquired by the HP Fund from time to time,
including, without limitation, upon conversion of the Preferred
Stock. HP Securities shall continue to be HP Securities in the
hands of any holder and each transferee thereof will succeed to the
rights and obligations of a holder of HP Securities hereunder,
provided, however, that shares of HP Securities will cease
to be HP Securities when transferred (a) to the Company,
(b) to an Other Shareholder, or (c) pursuant to a Public
Sale.
“ HP
Shareholders ” means the HP Fund for so long as the
HP Fund holds HP Securities and any other Person to whom HP
Securities are transferred for so long as such Person holds any HP
Securities; provided, that such other Person is (a) an
Affiliate of the HP Fund, (b) a general partner or limited
partner of the HP Fund, (c) a successor purchasing by merger,
acquisition, or otherwise the HP Fund or substantially all the
assets of the HP Fund, or (d) an Affiliate of any of the
foregoing.
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“ Other
Securities ” means (i) the shares of Common
Stock issued to the Other Shareholders as set forth on Schedule I,
(ii) all Company Equity Securities purchased by, issued to or
otherwise acquired by the Other Shareholders from time to time, and
(iii) all Company Equity Securities purchased by, issued to or
otherwise acquired by any Person who is not an HP Shareholder and
who becomes a party to this Agreement as an Other Shareholder by
executing an Instrument of Accession. Other Securities shall
continue to be Other Securities in the hands of any holder and each
transferee thereof will succeed to the rights and obligations of a
holder of Other Securities hereunder, provided, however,
that shares of Other Securities will cease to be Other Securities
when transferred (a) to the Company, (b) to an HP
Shareholder, or (c) pursuant to a Public Sale.
“ Other
Shareholder ” means each of the shareholders of the
Company, other than the HP Fund, whose names appear on the
signature pages hereto or on Instruments of Accession hereto for so
long as such shareholder holds Other Securities and any other
Person to whom Other Securities are issued or transferred for so
long as such Person holds any Other Securities.
“ Person ”
shall mean any individual, Entity or Governmental Body.
“ Preferred
Stock ” means the Company’s Series A
Convertible Preferred Stock, no par value per share.
“ Public Sale
” means any sale of Common Stock to the public pursuant to a
public offering registered under the Securities Act or to the
public through a broker or market-maker pursuant to the provisions
of Rule 144 (or any successor rule) promulgated under the
Securities Act.
“ Related
Persons ” means, with respect to any individual, such
individual’s parents, spouse, siblings, children,
grandchildren and heirs (by will or intestacy).
“ Securities Act
” means the Securities Act of 1993, as amended, and the rules
and regulations promulgated thereunder.
“ Shareholders
” means, collectively, the HP Shareholders and the Other
Shareholders.
“ Voting
Securities ” means, with respect to any Person, any
equity securities entitled under ordinary circumstances to vote for
the election of directors or persons performing similar functions
of such Person (irrespective of whether at the time stock of any
other class or classes shall have or might have voting power by
reason of the happening of any contingency).
Section 2.
Restrictions on
Transfer .
(a) Transfer . No Other
Shareholder may sell, assign, pledge or otherwise transfer or
dispose of (a “ Transfer ”) any interest
in any Company Equity Securities, either voluntarily or
involuntarily, by operation of law or otherwise, except:
(i) to such Other Shareholder’s Affiliates, provided,
however, that such Other Shareholder retains exclusive voting
control over the transferred Company Equity Securities;
(ii) in the case of an Other Shareholder that is a partnership
or limited liability company in the business of investing and
reinvesting in other entities, to a general partner, limited
partner or member of such Other Shareholder; (iii)
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pursuant to Section 2(b);
(iv) pursuant to a Public Sale or an Approved Sale; or
(v) to the Company; provided, however, that
(x) the restrictions contained in this Section 2 shall
continue to be applicable to the Company Equity Securities after
any Transfer pursuant to clauses (i), (ii) or
(iii) above, and (y) the transferee of such Company
Equity Securities in any Transfer pursuant to clauses (i),
(ii) or (iii) above shall either be a party hereto or
shall have executed and delivered to the Company an Instrument of
Accession.
(b) Company Right of First
Refusal .
(i) Each of the Other Shareholders
hereby grants the Company and the HP Shareholders a right of first
refusal with respect to any proposed Transfer of Other Securities
held by such Other Shareholder. Except as permitted pursuant to
Section 2(a), before an Other Shareholder may Transfer any
Other Securities, such Other Securities shall first be offered to
the Company and then to the HP Shareholders pursuant to this
Agreement.
(ii) Should an Other Shareholder
(the “Transferring Shareholder” ) propose
to Transfer any Other Securities, such Other Shareholder shall
deliver a written notice (the “Offer
Notice” ) specifying in reasonable detail the
proposed terms and conditions of such Transfer, including, without
limitation, (A) such Other Shareholder’s bona fide
intention to Transfer the shares of Other Securities, (B) the
number of shares of Other Securities proposed to be transferred
(the “Noticed Shares” ),
(C) the price for which such Other Shareholder proposes to
Transfer the Noticed Shares (in the case of a Transfer not
involving a sale, such price shall be deemed to be the fair market
value of the Noticed Shares as determined pursuant to
Section 2(b)(viii) hereof) and the terms of payment of that
price and other terms and conditions of Transfer, and (D) the
name and address of the proposed transferee(s).
(iii) At any time within 30 days
after receipt of the Offer Notice (the “Company
Election Period ”
), the Company shall notify the
Transferring Shareholder in writing of the number of Noticed
Shares, if any, the Company irrevocably determines to purchase
pursuant to the terms set forth in the Offer Notice. If the Company
fails to timely deliver its written notice of determination to
purchase any of the Noticed Shares, the Company shall be deemed to
have waived its right to purchase any of the Noticed Shares
pursuant to this Section 2(iii) with respect to the particular
offer in the Offer Notice.
(iv) In the event that less than all
of the Noticed Shares were irrevocably determined to be purchased
by the Company, the Transferring Shareholder shall promptly give
written notice of such determination to the HP Shareholders (the
“Second Offer Notice” ) stating
(A) the entire number of Noticed Shares, (B) the number
of Noticed Shares that were not irrevocably determined to be
purchased by the Company (the “Remainder Noticed
Shares” ), and (C) all the terms and conditions
that were set forth in the Offer Notice.
(v) At any time within 15 days after
receipt of the Second Offer Notice (the “HP Election
Period” ), each HP Shareholder shall notify the
Transferring Shareholder in writing of (A) the number of
Remainder Noticed Shares, if any, such HP Shareholder irrevocably
determines to purchase pursuant to the terms of the Second Offer
Notice, up to the HP Shareholder’s Pro Rata Share (as defined
below) of the Remainder Noticed Shares and (B) the number of
Remainder Noticed Shares for which such HP Shareholder desires to
oversubscribe, if
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any, in the event any other HP
Shareholder fails to subscribe for its full Pro Rata Share of
Remainder Noticed Shares. If any HP Shareholder fails to timely
deliver its written notice of determination to purchase any of the
Remainder Noticed Shares, such HP Shareholder shall be deemed to
have waived its right to purchase any of the Remainder Noticed
Shares pursuant to this Section 2(b)(v) with respect to the
particular offer in the Second Offer Notice. The Remainder Noticed
Shares that would otherwise be allocated to a non-exercising HP
Shareholder shall be allocated to the exercising HP Shareholders
that indicated their desire to oversubscribe; provided,
however, that if oversubscriptions exceed the number of shares
available, such shares shall be allocated among the exercising HP
Shareholders that indicated their desire to oversubscribe on a
pro-rata basis as set forth in Section 2(b)(vii), but taking
into account only the exercising HP Shareholders that indicated
their desire to oversubscribe.
(vi) In the event that (A) the
Company has not irrevocably determined to purchase part or all of
the Noticed Shares and (B) the HP Shareholders have not
irrevocably determined to purchase all of the Remainder Noticed
Shares, the Transferring Shareholder may Transfer that number of
Noticed Shares and Remainder Noticed Shares not purchased by the
Company or HP Shareholders (the “Excess Noticed
Shares” ) within 120 days from the expiration of the
HP Election Period; provided, however, that the Transfer of
such Excess Noticed Shares is on terms and conditions no more
favorable to the transferee(s) than those contained in the Offer
Notice; and, provided, further, that if the Excess Noticed
Shares have not been Transferred within such 120 day period, said
shares shall again become subject to all of the provisions of this
Agreement and may not thereafter be Transferred except in the
manner and upon the terms herein provided. Each proposed transferee
must, with respect to Excess Noticed Shares to be received by the
transferee, either be a party hereto or have executed and delivered
to the Company an Instrument of Accession.
(vii) For purposes of this
Section 2(b), “Pro Rata Share” shall
mean, with respect to each HP Shareholder, the number of shares of
Common Stock held by such HP Shareholder (assuming conversion or
exercise into Common Stock of all shares of Preferred Stock and
other Company Equity Securities so convertible or exercisable then
held by such HP Shareholder), divided by the sum of the number of
shares of Common Stock held by all the HP Shareholders (assuming
conversion or exercise into Common Stock of all shares of Preferred
Stock and other Company Equity Securities so convertible or
exercisable then held by such HP Shareholders).
(viii) In the case of any Transfer
of Noticed Shares or Remainder Noticed Shares not involving a sale
or if the price includes consideration other than cash, the fair
market value in cash of such shares shall be as determined in good
faith by the Board and shall be the price to be paid by the Company
or the HP Shareholders. This determination shall be final and
binding upon all parties and Persons claiming under or through
them. Anything to the contrary notwithstanding, if the Transferring
Shareholder is not satisfied with the determination of fair market
value, such Transferring Shareholder may elect not to proceed with
the proposed Transfer.
(ix) The rights of the HP
Shareholders under this Section 2(b) shall terminate upon the
date that the HP Shareholders hold less than a majority of the then
outstanding Common Stock (assuming conversion or exercise into
Common Stock of all shares
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of Preferred Stock and other Company
Equity Securities so convertible or exercisable then held by the HP
Shareholders).
(c) Opinion of Counsel . No
holder of Company Equity Securities may Transfer any such Company
Equity Securities (other than pursuant to an effective registration
statement under the Securities Act) without first delivering to the
Company upon its request an opinion of counsel (which may be
counsel for the Company) reasonably acceptable in form and
substance to the Company and its counsel that registration under
the Securities Act is not required in connection with such
Transfer.
(d) Transfers in Violation of
Agreement . Any Transfer or attempted Transfer of any Company
Equity Securities in violation of this Agreement shall be void
ab initio, and the Company shall not be obligated to record
such Transfer on its books or treat any purported transferee of
such Company Equity Securities as the owner of such Company Equity
Securities for any purpose.
Section 3
. Drag-Along Rights .
(a) Obligations of Other
Shareholders . In the event that a Disposition Event
(i) is approved by the holders of at least a majority of the
HP Securities (the “Majority HP
Shareholders” ) in their sole discretion, and
(ii) is approved by the Board of Directors, (in any such
event, an “Approved Sale” ), each
Other Shareholder hereby waives, to the extent permitted by
applicable law, all rights to object to or dissent from such
Approved Sale (including refraining from exercising any
dissenters’ rights or rights of appraisal) and hereby agrees
to consent to and raise no objection against such Approved Sale. If
the Approved Sale is structured as a sale of shares, the Other
Shareholders shall agree to sell all of their Other Securities on
the terms and conditions of the Approved Sale. Subject to the last
sentence of this Section 3(a). the obligations of the Other
Shareholders with respect to any Approved Sale are subject to the
condition that, upon the consummation of such Approved Sale, all of
the holders of Common Stock and Preferred Stock will receive the
same form and amount of consideration per share on an as converted
basis, or if any holders are given an option as to the form and
amount of consideration to be received, all holders will be given
the same options per share on an as converted basis. If any shares
of Preferred Stock are to be sold in any Approved Sale, then each
holder thereof may be given the option to receive in respect of
such shares either (i) an amount equal to the product of
(A) the number of shares of Common Stock issuable upon
conversion of a share of Preferred Stock and any accrued and unpaid
dividends thereon immediately prior to such Approved Sale
multiplied by (B) the consideration per share received
by the holders of Common Stock in such Approved Sale or
(ii) and amount equal to the liquidation value (as determined
pursuant to the Company’s Charter) per share of Preferred
Stock immediately prior to consummation of such Approved
Sale.
(b) Expenses of an Approved
Sale . No Other Shareholder shall be obligated to make any
out-of-pocket expenditures prior to the consummation of the
Approved Sale (other than expenditures incurred directly by such
holder). If such Approved Sale is consummated, each holder of
Preferred Stock and Common Stock to be sold in such Approved Sale
shall be obligated to: (i) pay its pro rata share (based on
the value of the proceeds to be received by such holder from the
sale of Common Stock or Preferred Stock in connection with the
Approved Sale)
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of the expenses incurred by or on
behalf of the sellers in connection with the Approved Sale, to the
extent such expenses are not otherwise paid by the Company or the
purchaser; provided, however, that expenses incurred by or
on behalf of a holder of Company Equity Securities for such
holder’s sole benefit shall not be considered expenses
incurred by or on behalf of the sellers in connection with the
Approved Sale; provided, further, that such holder’s
pro rata share of the expenses incurred by the sellers in
connection with the Approved Sale shall be deducted first from the
proceeds that would otherwise be payable to such holder in cash
from the sale of Common Stock or Preferred Stock in connection with
the Approved Sale and the remainder, if any, will reduce the number
of shares or amount of other property that would otherwise be
received by such holder from the sale of Common Stock or Preferred
Stock in connection with the Approved Sale in an amount equal to
such remainder as measured by the fair market value of such shares
or other property (as determined in good faith by the Board) which
such cash, shares or other property shall be delivered to the
seller or sellers that actually paid such expenses; and
(ii) join, on a pro rata basis (based on the value of the
proceeds to be received by such holder from the sale of Common
Stock or Preferred Stock in connection with the Approved Sale) in
any indemnification or other obligations that the Majority HP
Shareholders agree to provide in connection with such Approved Sale
(other than any such obligations that relate specifically and not
generally to a holder of Common Stock or Preferred Stock such as
indemnification with respect to representations and warranties
given by a holder regarding such holder’
