EXHIBIT 10.6
THE PUT OPTION EVIDENCED BY THIS INSTRUMENT HAS NOT BEEN REGISTERED WITH THE
SECURITIES AND EXCHANGE COMMISSION UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR UNDER THE SECURITIES LAWS OF ANY STATE, AND IS BEING OFFERED AND SOLD IN
RELIANCE ON AN EXEMPTION FROM THE REGISTRATION OR QUALIFICATION REQUIREMENTS OF
SUCH LAWS. THE TRANSFERABILITY OF THE PUT OPTION IS SUBJECT TO RESTRICTIONS SET
FORTH IN THIS INSTRUMENT AND IMPOSED BY SUCH LAWS.
PUT OPTION AGREEMENT
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(Xxxxxx Xxxxxxxxx-Xxxxx)
This Put Option Agreement (this "Agreement") is made as of __________, 2000
by and between Sizzler International, Inc. ("Optionor") and FFPE Holding
Company, Inc. ("Optionee"). Unless the context otherwise indicates, capitalized
terms used herein shall have the meanings given them in Section 10 hereof.
RECITALS
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A. Optionor is a Delaware corporation having its principal place of
business in Culver City, California.
B. Optionee is a Delaware corporation having its principal place of
business in San Diego, California. Xxxx Xxxxxxxxx, an individual
resident of California ("Xxxx"), is the holder of 77.78% and Xxxxxx
Xxxxxxxxx-Xxxxx as trustee of the Xxxxxx Xxxxxxxxx-Xxxxx Family Trust
UTD 10/16/97 ("Xxxxxx"), is the holder of 22.22% of the outstanding
capital stock of Optionee.
C. Before the date hereof, Optionee was the holder of all of the
outstanding units of membership interest in FFPE, LLC, a Delaware
limited liability company (the "Units").
D. Pursuant to an LLC Membership Interest Purchase Agreement dated May 23,
2000 between Optionee as Seller and Optionor as Purchaser (the
"Purchase Agreement"), Optionee has sold 82% of the Units to Optionor.
E. As of the date hereof, Optionee continues to be the holder of 18% of
the outstanding Units (the "Retained Units").
F. Pursuant to the Purchase Agreement, Optionor and Optionee have entered
into this Agreement, under which Optionor agrees to grant to Optionee
an option to sell up to four Retained Units (representing 22.22% of all
of the Retained Units) to Optionor on the terms and conditions set
forth in this Agreement. In this Agreement, such four Retained Units
are referred to as the "Optioned Units."
G. Pursuant to the Purchase Agreement, Optionor and Optionee have entered
into a Put Option Agreement (Xxxx Xxxxxxxxx) dated as of even date
herewith (the "Other Put Option Agreement"), under which Optionor has
agreed to grant to Optionee an option to sell up to 77.78% of the
Retained Units to Optionor on the terms and conditions set forth in the
Other Put Option Agreement.
AGREEMENT
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1. Grant and Acceptance. On the terms and conditions set forth in this
Agreement, (a) Optionor hereby grants to Optionee an option (the "Put
Option") to sell to Optionor the Optioned Units at the Option Exercise
Price and (b) Optionee hereby confirms its acceptance of the Put
Option.
2. Option Exercise Price. The price per Unit at which Optionee shall be
entitled to sell any Optioned Units (the "Option Exercise Price") shall
be the dollar amount described in (a) or (b) below, whichever is
applicable:
(a) With respect to any exercise of the Put Option during Year 1 or
Year 2, the dollar amount equal to the number obtained by dividing
(A) $780,488 by (B) the number of Optioned Units;
(b) With respect to any exercise of the Put Option after the end of
Year 2, the dollar amount equal to the number obtained by dividing
(A) the positive difference, if any, between (1) the number
obtained by multiplying the EBITDA of FFPE, LLC for the Relevant
Trailing 12 Month Period by the Applicable Multiple and (2) the
Current Debt of FFPE, LLC as of the end of such Relevant Trailing
12-Month Period by (B) all of the then outstanding Units.
In determining the EBITDA for purposes of this Section, the parties
shall make any adjustments required by the Intercompany Accounting procedures
set forth on the EBITDA Adjustment Guidelines attached as Exhibit A.
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3. Term. The term of the Put Option shall commence as of the date of the
grant thereof, which shall be the date hereof, and shall expire on the
Expiration Date. Upon the Expiration Date, the Put Option and this Agreement
shall become void and of no force or effect, and the parties shall have no
further rights or obligations under this Agreement, other than any liability for
any breach of the contract arising before the Expiration Date.
4. Exercisability. The Put Option may be exercised by Optionee or any
Transferee thereof in accordance with this Agreement at any time during the term
hereof. The Put Option may be exercised in whole or in part. However, Optionee
shall be entitled to no more than one exercise of the Put Option before the end
of Year 2 and a total of two exercises of the Put Option during the term hereof.
For purposes of the foregoing sentence only, the exercise by Optionee of any put
option under the Other Put Option Agreement made after the end of Year 2 shall
be counted as an exercise under this Agreement. Immediately after the exercise
of the second of two exercises during the term hereof, the Put Option shall
cease to be exercisable.
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5. Method of Exercise. The Put Option may be exercised only by Optionee.
The Put Option shall be exercised by written notice of exercise given by in
accordance with Section 18 hereof. Such notice (a "Notice of Exercise") shall
state that it is intended as an exercise under this Agreement and the number of
the Optioned Units being sold. The Put Option shall include the Optionee's
calculation of the sales price of the Units. To the extent that the Optionor
disagrees with the calculations provided by the Optionee, then Optionor shall
give notice of such disagreement to the Optionee within 30 days. The parties
will use their reasonable efforts to resolve such disagreement. If the Optionor
gives such notice of objection and the parties fail to resolve such objection
within 30 days, then the issues in dispute will be submitted to a "Big Five"
accounting firm (the "Accountants") for resolution. If issues are submitted to
the Accountants for resolution, (i) each party will furnish to the Accountants
such work papers and other documents and information relating to the disputed
issues as the Accountants may request and are reasonably available to that
party, and will be afforded the opportunity to present to the Accountants any
material relating to the determination and to discuss the determination with the
Accountants; (ii) the determination by the Accountants, as set forth in a notice
delivered to both parties by the Accountants, will be binding and conclusive on
the parties; and (iii) the Optionee and the Optionor will each bear 50% of the
fees of the Accountants for such determination.
6. Sale Procedures.
(a) Upon the giving of a Notice of Exercise, Optionor shall thereupon
become obligated to purchase the number of the Optioned Units
stated in the Notice of Exercise from Optionee, subject only to
delivery by Optionee of the instruments described in Section 6(b)
hereof.
(b) The consummation of the purchase of such Optioned Units (the
"Closing") shall take place at the principal executive offices of
Optionor on such business day, not later than 90 days after the
giving of the Notice of Exercise, as Optionor and Optionee may
select.
(c) At the Closing, and upon the tender by Optionee of (i)
certificates evidencing the Optioned Units being sold, duly
endorsed in blank or accompanied by written instruments of
transfer in form satisfactory to Optionor duly executed by the
Optionee, free and clear of any Encumbrances, (ii) an Opinion of
Counsel, and (iii) a Sellers' Certificate, Optionor shall deliver
to Optionee the full amount of the Option Exercise Price, in cash,
due hereunder with respect to the Optioned Units being sold.
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7. Non-Transferability of Put Option.
(a) Except as otherwise provided herein, Optionee shall not Transfer
the Put Option without the express prior written consent of
Optionor, which consent may be withheld in Optionor's sole and
absolute discretion, and the Put Option shall not be subject to
execution, attachment or similar process. Any attempt to Transfer
the Put Option, or to subject the Put Option to execution,
attachment or similar process, other than in accordance with this
Agreement shall be void ab initio.
(b) Optionee may Transfer the Put Option to any Affiliate, provided
that the Optionee gives Optionor at least 30 days' prior written
notice of such Transfer and the Transferee acquires the
unexercised Optioned Units, assumes in writing all of the
obligations of Optionee under this Agreement, and acknowledges
that the acceptance of the Put Option subject to all terms,
conditions and restrictions hereof, a copy of which assumption
and acknowledgement is provided to Optionor.
8. Representations and Warranties of Optionee. Optionee represents and
warrants to Optionor, as of the date hereof and as of the date of any exercise
of the Put Option, that:
(a) The Optioned Units are duly authorized, validly issued, fully
paid and non-assessable units of membership interest of FFPE,
LLC.
(b) There are no outstanding subscriptions, options, warrants,
rights, puts, calls, pre-emptive rights, commitments, conversion
rights, rights of exchange, plans, or other agreements of any
kind relating to the Optioned Units.
(c) Optionee is the sole beneficial owner and holder of record of all
four of the Optioned Units. The Optioned Units are free and clear
of any Encumbrances. The delivery to Optionor of the certificates
evidencing the Optioned Units, duly endorsed in blank or
accompanied by appropriate written instruments of transfer duly
executed by Optionee, is sufficient to transfer to Optionor valid
title thereto, free and clear of any Encumbrance.
(d) Optionee has all necessary corporate power and authority to enter
into this Agreement and make any endorsement or execute and
deliver any written instrument of transfer necessary to transfer
the Optioned Units to Optionor.
(e) This Agreement has been duly executed and delivered by Optionee
and is a valid and binding obligation of Optionee, enforceable
against Optionee in accordance with its terms.
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(f) No consent by any third party or governmental authority is
required in connection with the execution or delivery by Optionee
of this Agreement or the consummation of the sale of the Optioned
Units to Optionor contemplated hereunder. The execution and
delivery by Optionee of this Agreement and the sale of the
Optioned Units to Optionor will not conflict with or result in
any breach of or constitute a default under any agreement or
instrument to which FFPE, LLC or Optionee is a party or by which
its or Optionee's assets are bound.
(g) Optionee has acquired and will exercise the Put Option for its
own account and not with a view to or sale in connection with any
distribution of the security.
(h) The grant of the Put Option under this Agreement was not
accomplished by the publication of any advertisement.
(i) Optionee understands that the Put Option is subject to
restrictions on transferability as set forth in this Agreement.
Optionee understands that the Put Option has not been registered
with the SEC under the Securities Act of 1933, as amended, or
under the securities laws of any state, and has been issued by
Optionor in reliance upon one or more exemptions from
registration or qualification under such laws. Accordingly, the
Put Option may not be transferred or resold by Optionee unless
registered or qualified under such laws, or unless such transfer
or resale is made pursuant to an available exemption from such
registration or qualification.
9. Adjustments. If outstanding Optioned Units subject to the Put Option
are increased, decreased or exchanged for or converted into cash, property
and/or a different number or kind of securities, or if cash, property and/or
securities are distributed in respect of such outstanding securities, in either
case as a result of a reorganization, merger or consolidation of FFPE, LLC, or
as a result of a recapitalization, reclassification, dividend by, or other
distribution, Unit split, reverse Unit split or the like involving, FFPE, LLC,
then Optionor shall make appropriate and proportionate adjustment in the number
and type of shares or other securities or cash or other property that may be
acquired upon the exercise in full of the Put Option, provided, however, that
any such adjustment shall be made without changing the aggregate Option Exercise
Price of the unexercised portion of the Put Option.
10. Definitions. Capitalized terms used in this Agreement without
definition shall have the following meanings:
(a) "Affiliate" shall mean, with respect to a specified person, a
person who controls, is controlled by or under common control
with the
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specified person and with respect to the Optionor, John, Tamara,
or a trust where Xxxxxx or Xxxx are one of the beneficiaries.
(b) "Applicable Multiple" shall mean the average of (A) the Sizzler
Multiple at the time of the exercise of the Put Option for which
the Option Exercise Price is being determined and (B) either (i)
eight (8) if such exercise is during Year 3, (ii) seven (7) if
such exercise is during Year 4, or (iii) six (6) if such exercise
is during Year 5 or Thereafter; provided, however, in no event
shall the Applicable Multiple exceed nine (9) if such exercise is
during Year 3, or eight (8) if such exercise is during Year 4, or
seven (7) if such exercise is during Year 5 or Thereafter.
(c) "Change of Control" shall mean any Transfer of 20% or more of the
issued and outstanding shares of capital stock of Optionee.
(d) "Current Debt" of a company or division shall refer to the total
debt (current and non-current) of such company or division,
determined from the financial statements thereof prepared in
accordance with GAAP.
(e) "EBITDA" of a company or a division for any period shall mean the
earnings of the company or division for such period before
interest, income taxes, depreciation and amortization of the
company or division, other than non-recurring items, determined
from financial statements of such company or division prepared in
accordance with GAAP.
(f) "Encumbrances" shall mean any security interest, pledge,
mortgage, hypothecation, lien, charge, encumbrance, adverse
claim, preferential arrangement or restriction of any kind,
including, without limitation, any pre-emptive rights, options,
warrants, puts, calls, or restrictions on use, voting, transfer
(other than restrictions under applicable securities laws),
receipt of income or other exercise of any attributes of
ownership.
(g) "Expiration Date" shall be the first to occur of (a) the tenth
(10th) anniversary of the date of this Agreement or (b) the date
of the sale of all of the remaining Optioned Units subject to
this Agreement or (c) the date as of which the Put Option is no
longer exercisable under this Agreement.
(h) "Fair Market Value" of a security on any day shall be equal to
the last sale price, regular way, per unit of such security on
such day or, in case no such sale takes place on such day, the
average of the closing bid and asked prices, regular way, in
either case as reported in the principal consolidated transaction
reporting system with
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respect to securities listed or admitted to trading on the New
York Stock Exchange or, if such security is not listed or
admitted to trading on the New York Stock Exchange, as reported
in the principal consolidated transaction reporting system with
respect to securities listed on the principal national securities
exchange on which such security is listed or admitted to trading
or, if securities are not listed or admitted to trading on any
national securities exchange, the last quoted price or, if not so
quoted, the average of the high bid and low asked prices in the
over-the-counter market, as reported by the National Association
of Securities Dealers, Inc. Automated Quotations System
("NASDAQ") or such other system then in use or, if on any such
date such security is not quoted by any such organization, the
average of the closing bid and asked prices as furnished by a
professional market maker making a market in such security
selected by the Board of Directors of the corporation issuing
such security. In all other cases, Fair Market Value shall be the
value determined in good faith by such Board.
(i) "GAAP" shall mean generally accepted accounting principles,
consistently applied.
(j) "Opinion of Counsel" shall mean an opinion of Optionee's legal
counsel, in form satisfactory to Optionor and dated as of the
date of the sale of Optioned Units hereunder, to the effect that:
(a) the Optioned Units are validly issued, fully paid and non-
assessable units of membership interest of FFPE, LLC; (b)
Optionee is the sole holder of record and beneficial owner of the
Optioned Units; (c) the execution and delivery of the assignment
instruments do not contravene any applicable provision of law;
and (d) the Optioned Units have been validly assigned by Optionee
to Optionor and, to the best of counsel's knowledge, are free and
clear of any Encumbrance.
(k) "Permitted Transferee" shall mean an individual to whom the Put
Option and the Optioned Units to which the Put Option relates
have been transferred in accordance with Section 7(b) hereof. A
Permitted Transferee shall be treated as Optionee for all
purposes under this Agreement.
(l) "Relevant Trailing 12-Month Period" shall mean, with respect to
the determination of the Option Exercise Price applicable to any
exercise of the Put Option, the Optionor's thirteen (13)
completed four-week accounting periods immediately preceding the
exercise.
(m) "Sellers' Certificate" shall mean a written certificate signed by
Optionee, in form satisfactory to Optionor and dated as of the
date of any sale of Optioned Units hereunder, to the effect that
the
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representations and warranties of Optionee set forth in Section
8(a), (b), (c), (d) and (f) of this Agreement are true and
correct in all respects as of the date of the sale of any
Optioned Units hereunder.
(n) "Sizzler Multiple" shall mean the number obtained by dividing (A)
the sum of (1) the number obtained by multiplying (x) the Fair
Market Value of a share of Optionor's common stock as of the end
of the Relevant Trailing 12-Month Period and (y) the number of
shares of Optionor's common stock outstanding as of such date and
(2) the Current Debt of Optionor as of such date by (B) EBITDA of
Optionor for the Relevant Trailing 12-Month Period.
(o) "Subsidiary" of a specified person shall mean any corporation or
other entity, more than 50% of the stock or ownership interest of
which is held by the specified person.
(p) "Transfer" shall mean sell, transfer, assign, convey, gift,
pledge, hypothecate or dispose of in any way, whether by
operation of law or otherwise (other than to Optionor or its
Subsidiaries), or any Change of Control.
(q) "Year 1" shall mean the period commencing on _____________, 2000
and terminating on ____________, 2001.
(r) "Year 2" shall mean the period commencing on _____________, 2001
and terminating on ____________, 2002.
(s) "Year 3" shall mean the period commencing on _____________, 2002
and terminating on ____________, 2003.
(t) "Year 4" shall mean the period commencing on _____________, 2003
and terminating on ____________, 2004.
(u) "Year 5 and Thereafter" shall mean the period commencing on
_____________, 2004 and terminating on the Expiration Date.
11. Payment of Income Taxes. If Optionor is required to withhold any
amount on account of federal, state or local tax (including, without limitation,
any income, FICA, disability insurance, or employment tax) imposed as a result
of the exercise of the Put Option, Optionee shall, concurrently with such
withholding, pay such amount to Optionor in full in cash.
12. Stockholder Rights. Optionor shall not be entitled to vote, receive
dividends, or be deemed for any purpose the holder of any Optioned Units until
the Put Option shall have been duly exercised to sell such Optioned Units in
accordance with the provisions of this Agreement.
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13. Expenses. Except as otherwise express set forth herein, all fees and
expenses incurred in connection with this Agreement shall be paid by the party
incurring such costs or expenses.
14. Waiver of Compliance; Consents. Any failure by Optionor or Optionee
to comply with any obligation, covenant, agreement or condition herein may be
waived by Optionee or Optionor, as applicable, only by a written instrument
signed by the party granting such waiver, but such waiver or failure to insist
upon strict compliance with such obligation, covenant, agreement or condition
shall not operate as a waiver of, or estoppel with respect to, any subsequent or
other failure.
15. Governing Law. The interpretation and construction of this Agreement,
and all matters relating hereto, shall be governed by the laws of the State of
California applicable to contracts made and to be performed entirely within the
State of California by California residents without regard to California choice
of law principles.
16. Captions. The Section captions used herein are for reference purposes
only, and shall not in any way affect the meaning or interpretation of this
Agreement.
17. Notices. Any notice or other communications required or permitted
hereunder shall be sufficiently given if delivered in person or sent by telecopy
or by registered or certified mail, postage prepaid, addressed as follows:
if to Optionor at:
Sizzler International, Inc.
0000 Xxxx Xxxxxxxxx Xxxxxx
Xxxxxx Xxxx, Xxxxxxxxxx 00000
Attn: Xxxxxxx X. Xxxxx
Tel: (000) 000-0000
Fax: (000) 000-0000
with a copy to its counsel at:
Xxxxxxxxx, Stang, Ziehl, Young & Xxxxx PC
00000 Xxxxx Xxxxxx Xxxxxxxxx Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxxx X. Xxxxxx, Esq.
Tel: (000) 000-0000
Fax: (000) 000-0000
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and if to Optionee at:
FFPE Holding Company, Inc.
0000 Xxxxxxx Xxxxxxx Xxxx., Xxxxx X
Xxx Xxxxx, Xxxxxxxxxx 00000
Attn: Xxxx Xxxxxxxxx
Tel: 000-000-0000
Fax: 000-000-0000
and with a copy to each of the
following counsel at:
Sheppard, Mullin, Xxxxxxx & Xxxxxxx, LLP
000 Xxxx Xxxxxxxx, 00/xx/ Xxxxx
Xxx Xxxxx, Xxxxxxxxxx 00000-0000
Attn: Xxxxxxx X. Xxxxx, Esq.
Tel: (000) 000-0000
Fax: (000) 000-0000
or such other address or number as shall be furnished in writing by any such
party, and such notice or communication shall be deemed to have been given as of
the date so delivered, sent by telecopy or mailed. Any notice, request, demand,
claim or other communication hereunder shall be deemed duly delivered to and
received by the party to whom it is directed three (3) business days after it is
sent by registered or certified mail, return receipt requested, postage prepaid,
or upon delivery via overnight courier service, in each case addressed to the
intended recipient as described above. Any notice, request, claim, demand or
other communication given in any other manner shall only be deemed received by
the intended recipient thereof upon such recipient's actual receipt thereof.
18. Parties in Interest. This Agreement may not be transferred, assigned,
sold, conveyed, pledged or hypothecated by any party hereto, other than by
operation of law. This Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors and permitted
assigns.
19. Counterparts. This Agreement may be executed in two or more
counterparts, all of which taken together shall constitute one instrument.
20. Entire Agreement. This Agreement contains the entire understanding of
the parties hereto with respect to the subject matter contained herein and
therein. This Agreement supersedes the Letter of Intent between the parties
dated February 28, 2000 and all other prior agreements and understandings
(written or oral) between the parties with respect to such subject matter.
21. Amendments. This Agreement may not be changed orally, but only by an
agreement in writing signed by the parties hereto. Any provision of this
Agreement can
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be waived, amended, supplemented or modified by written agreement of the parties
hereto.
22. Third Party Beneficiaries. Nothing contained in this Agreement shall
create any rights in, or be deemed to have been executed for the benefit of, any
person or entity that is not a party hereto or thereto or a successor or
permitted assign of such a party.
23. Severability. In case any provision in this Agreement shall be held
invalid, illegal or unenforceable in a jurisdiction, such provision shall be
modified or deleted, as to the jurisdiction involved, only to the extent
necessary to render the same valid, legal and enforceable, and the validity,
legality and enforceability of the remaining provisions hereof shall not in any
way be affected or impaired thereby nor shall the validity, legality or
enforceability of such provision be affected thereby in any other jurisdiction.
24. Specific Performance. The parties hereto agree that irreparable
damage would occur in the event that any of the provisions of this Agreement
were not performed in accordance with their specific terms or were otherwise
breached. Accordingly, the parties further agree that each party shall be
entitled to an injunction or restraining order to prevent breaches of this
Agreement and to enforce specifically the terms and provisions hereof in any
court of the United States or any state having jurisdiction, this being in
addition to any other right or remedy to which such party may be entitled under
this Agreement, at law or in equity.
25. Principles of Construction.
(a) All references to sections, schedules and exhibits are to
sections, schedules and exhibits in or to this Agreement unless
otherwise specified.
(b) The words "hereof", "herein" and "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement
as a whole and not to any particular provision of this Agreement.
(c) The words "include", "includes" and "including" shall be deemed
to be followed by the phrase "without limitation", unless already
expressly followed by such phrase or the phrase "but not limited
to."
(d) All references to "U.S. dollars" or "$" shall be deemed
references to lawful money of the United States of America.
(e) All accounting terms not specifically defined herein shall be
construed in accordance with generally accepted accounting
principles in the United States of America.
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(f) All words importing any gender shall be deemed to include the
other genders.
(g) All references to statutes are to be construed as including all
statutory provisions consolidating, amending or replacing the
statute referred to.
(h) Unless otherwise specified, references to agreements and other
contractual instruments shall be deemed to include all subsequent
amendments, modifications and supplements thereto.
(i) Each party has reviewed and commented upon this Agreement and,
therefore, the rule of construction requiring that any ambiguity
be resolved against the drafting party shall not be employed in
the interpretation of this Agreement.
26. Further Assurances. Each party agrees to promptly provide the other
party with such information as is necessary to make the computations required
hereunder and to effectuate the purposes of this Agreement.
IN WITNESS WHEREOF, Optionor and Optionee have entered into this Option
Agreement in ___________, California as of the day and year first written.
"OPTIONOR":
Sizzler International, Inc.
By: _________________________
Its: _________________________
By: _________________________
Its: _________________________
"OPTIONEE":
FFPE Holding Company, Inc.
By: _________________________
Its: _________________________
By: _________________________
Its: _________________________
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EXHIBIT A
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EBITDA ADJUSTMENT GUIDELINES
The parties acknowledge that a substantial portion of the value of the Put
Option may be related to the Units of the Membership Interests of FFPE, LLC (the
"Company"). Therefore, Optionor and Optionee have agreed upon the following
EBITDA Adjustment Guidelines:
1. Intercompany Accounting. During the term of the Put Option, for purposes of
------------------------
determining the Option Exercise Price, the EBITDA of the Company shall be
adjusted to eliminate any impact adverse to Optionee of any of the following
items, unless such item is agreed to by Optionee in the Agreement or otherwise:
(a) Any charge or allocate any corporate overhead services or similar
items (collectively, "Overhead Charges");
(b) Any charge to the Company for any costs related to the Optionor's
acquisition of the Company, including, but not limited to: acquisition
expenses, legal expenses, investment banking and similar expense;
(c) Any non-recurring or extraordinary charges other than attributed to
the Company during the term of the Put Option from any source;
(d) Any subsequent change to the reserves of the Company established at
the Closing (as defined in the Agreement); and
(e) The 2% management fee, if any, paid or payable to Optionor permitted
in Section 6.5 of the limited liability company agreement of the
Company.
2. Corporate Services. During the term of the Put Option, in the event that
-------------------
Optionor can provide needed goods and services at a price and terms equal to or
less than the price and terms offered by and at a quality level equal to that of
unaffiliated third parties, then such goods and services shall be acquired from
Optionor.
3. Volume Discounts. During the term of the Put Option, Optionor shall not
----------------
charge the Company for any volume purchasing discounts that the Company is able
to recognize as a result of the joint purchasing power of Optionor and the
Company.
4. Consent. For purposes of these Guidelines, the agreement of Xxxx Xxxxxxxxx
-------
shall be conclusively presumed to be the agreement of the Optionee and of the
Shareholders.
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Exhibit A
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