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EXHIBIT 99(b)
STOCKHOLDERS' AGREEMENT
This STOCKHOLDERS' AGREEMENT (this "Agreement") is made as of
December 31, 1996 by and among The Quizno's Corporation (the "Company"), a
Colorado corporation, Retail & Restaurant Growth Capital, L.P., ("RRGC") a
Delaware limited partnership, Xxxxxxx X. Xxxxxxx and Xxxxxxx X. Xxxxxxx as
Co-Trustees pursuant to a Voting Trust Agreement dated July 14, 1994, and
Xxxxxxx X. Xxxxxxx and Xxxxxxx X. Xxxxxxx individually (Xxxxxxx X. Xxxxxxx and
Xxxxxxx X. Xxxxxxx as Co-Trustees under a Voting Trust Agreement dated July 14,
1994 and Xxxxxxx X. Xxxxxxx and Xxxxxxx X. Xxxxxxx individually are referred
to individually herein as a "Principal Stockholder" and collectively as the
"Principal Stockholders"). The Principal Stockholders and RRGC are referred to
collectively herein as the "Stockholders".
RECITALS
The following is a statement of facts underlying this
Agreement:
A. The Principal Stockholders are the owners of 146,000
shares of the Company's Class A Cumulative Convertible Preferred Stock par
value $0.001 and 1,553,334 shares of the Company's Common Stock par value
$0.001 (the "Common Stock"), as more fully set forth on Exhibit A attached
hereto.
B. RRGC has entered into an Investment Agreement dated
the date hereof (the "Investment Agreement") with the Company pursuant to which
RRGC has agreed to loan $2,000,000 to the Company as evidenced by a Senior
Subordinated Convertible Note due 2001 (the "Loan").
C. As a condition to making the Loan, the parties hereto
agree to certain voting rights and rights governing the transfer of their
Securities (as defined below).
NOW, THEREFORE, in consideration of RRGC making the Loan to
the Company, and their mutual promises set forth herein, the Stockholders and
the Company agree as follows:
1. Definitions.
a. "Affiliate" shall mean any Person that directly, or indirectly
through one or more intermediaries, controls or is controlled by, or is under
common control with, any other Person.
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b. "Fully Diluted Basis" shall mean the amount of capital stock
owned by a Stockholder if the Stockholder is deemed to own all the capital
stock which such Stockholder is entitled to own pursuant to the exercise of all
warrants and options issued by the Company and held by the Stockholder and the
conversion of all convertible securities (both debt and equity) made by the
Company and held by the Stockholder, however the stock obtainable under such
convertible securities, warrants or options shall only be taken into account if
the exercise price of the warrants or options or conversion price of the
convertible securities is less than the price at which the shares may be
purchased by other means.
c. "Permitted Transferee" shall mean Affiliates of a Stockholder,
or spouses, lineal descendants (natural or adopted) or parents of an Affiliate,
or the respective constituent partners or participants of a Stockholder and
such partners' or participants' direct and indirect constituent partners,
stockholders and affiliates, or an inter vivos trust for the benefit of any
such person, if the Permitted Transferee (a) agrees in writing in a form
reasonably satisfactory to the Corporation and the Principal Stockholders (1)
to be bound by the terms of this Agreement, (2) that the Securities transferred
to the Permitted Transferee shall remain subject to the terms of this
Agreement, and (3) that upon the death or termination of existence of the
Permitted Transferee, his or her or its Securities shall only be transferred to
another Permitted Transferee of the transferring Stockholder, and (b) delivers
such written agreement to the Corporation and the other Stockholders at least
three business days prior to the date of such transfer. During the life or
existence (as the case may be) of the Permitted Transferee, such Permitted
Transferee shall have the right to transfer all of or part of the Securities to
(x) the transferring Stockholder or (y) any other Permitted Transferee of the
transferring Stockholder.
d. "Person" shall mean any individual, corporation, partnership
(general or limited), limited liability company, limited liability partnership,
firm, trust, association, or other entity.
e. "Principal Stockholder" as used herein shall mean,
collectively, each Principal Stockholder and each Permitted Transferee of such
Principal Stockholder.
f. "RRGC" as used herein shall mean, collectively, RRGC and each
Permitted Transferee of RRGC.
g. "Securities" shall mean, collectively, all capital stock of
the Company, all rights to acquire any shares of any capital stock of the
Company, now or hereafter owned by each of the Stockholders, together with any
and all securities received as stock splits, dividends on or in substitution
for any capital stock of the Company, or in connection with any increase,
reduction, or reclassification of the capital stock of the Company, or upon any
reorganization, recapitalization, share exchange, exchange
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offer, merger or consolidation of the Company with any one or more entities in
which an entity other than the Company is the surviving entity, or upon
exercise of any warrant or option to purchase capital stock of the Company.
"Securities" shall include the Common Stock and Preferred Stock owned by each
of the Stockholders, the Convertible Note, any warrant issued upon a repayment
of the Convertible Note (a "Warrant"), and the Common Stock underlying the
Convertible Note and the Warrants.
h. "Stockholder" shall mean, collectively, a Stockholder and each
Permitted Transferee of such Stockholder.
2. Tag-Along Rights.
a. If at any time any Principal Stockholder proposes to Transfer
Securities to a purchaser (other than a transfer to a Permitted Transferee),
such Principal Stockholder (which Principal Stockholder is referred to in this
Section 2 as a "Transferring Stockholder") shall give written notice to RRGC,
the remaining Principal Stockholder and the Company at least 30 days prior to
the consummation of the proposed Transfer (the "Tag-Along Notice"). RRGC and
the remaining Principal Stockholder may, upon giving written notice to the
Transferring Stockholder and the Company within 20 business days after its
receipt of the Tag-Along Notice (a "Tag-Along Election Notice"), participate in
such Transfer on a "pro rata basis" as between the Stockholders (as set out in
Section 2(b) below), with a right of over allotment, at the same price and upon
the same terms and conditions as are applicable to the Transferring Stockholder
in such transaction.
b. "Pro Rata Basis" Under Section 2(a), each Stockholder shall
be permitted to sell that fraction of Securities the numerator of which is the
number of shares such Stockholder holds, on a Fully Diluted Basis, and the
denominator of which is the total number of shares held by all Stockholders, on
a Fully Diluted Basis.
c. Notwithstanding the foregoing, the Tag-Along Rights set forth
in this Section 2 shall not apply to any sale of Securities by a Principal
Stockholder pursuant to Rule 144 promulgated under the Securities Act of 1933,
as amended, or in one or more private sales or other transfers, as long as such
Rule 144 sales or private sales or transfers relate to less than 60,000 shares
of Common Stock in the aggregate in any calendar year.
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3. Preemptive Rights.
During the Term, so long as RRGC owns any Securities, RRGC shall have
a preemptive right (that is, a right to purchase its pro rata share of all
capital stock of the Company on a Fully Diluted Basis at the same price and on
the same terms and conditions as those upon which such capital stock is
proposed to be sold) to acquire any shares of any class of capital stock of the
Company, including unissued shares, treasury shares or any rights or options to
purchase such capital stock, or any securities convertible into or exchangeable
for such capital stock or any options to purchase such convertible or
exchangeable securities (collectively, "Capital Stock"), authorized by the
Company's Board of Directors for issuance after the date hereof, provided,
however, that the foregoing provision shall not apply to any such Capital Stock
of the Company issued (i) under the Company's existing stock option plans and
401(k) plans, so long as such shares outstanding in these plans do not
represent more than 15% of the Company's capital stock on a Fully Diluted
Basis; (ii) upon exercise of warrants to purchase Common Stock that are
outstanding on the date hereof, and (iii) upon conversion of the Class A
Convertible Stock of the Company.
4. Board Representation. So long as this Agreement is in effect, and
RRGC owns at least seven and one-half percent (7.5%) of the Company on a Fully
Diluted Basis, the following will occur:
a. Appointment of Director Nominated by RRGC. Each Stockholder
shall cast its Voting Stock for the election of one director nominated by RRGC.
b. Expansion of Board of Directors; Nomination of Seventh
Director. Within nine months of the date hereof, the Company and the
Stockholders shall increase the Board of Directors to seven members. The
seventh member shall be an outside Director appointed with the approval of
RRGC, which approval shall not be unreasonably withheld.
c. RRGC's Board Observer Rights. At any time that RRGC has not
exercised its right to designate a director in accordance with Section 4(a),
the Company shall permit an employee of RRGC (the "RRGC Designee") to attend
meetings of the Company's Board of Directors, subject to the execution by such
RRGC Designee of an appropriate confidentiality agreement.
d. Frequency of Board Meeting. Meetings of the Board of
Directors shall be held at least once per calendar quarter.
e. RRGC Advisor. In addition to the RRGC Director or the RRGC
Designee, RRGC shall be permitted to appoint an advisor to RRGC (the "RRGC
Advisor"), subject to the execution by such RRGC Advisor of an appropriate
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confidentiality agreement. The RRGC Advisor shall be permitted to attend and
participate in meetings of the Company's Board of Directors; however, the RRGC
Advisor shall not be permitted to vote.
f. Expenses. The Company shall pay the reasonable expenses of
the RRGC Director or RRGC Designee or RRGC Advisor of attendance for each Board
meeting attended.
5. Term. This Agreement will remain in full force as long as RRGC owns
at least the equivalent of 74,570 shares of Common Stock on a Fully Diluted
Basis as adjusted for stock splits, subdivisions and combinations.
6. Legend on Securities; Additional Securities.
a. Legend. Each certificate or instrument representing
Securities and any future certificate or instrument evidencing ownership of the
Securities that is subject to this Agreement will be conspicuously imprinted
with the following legend:
THE SECURITIES REPRESENTED HEREBY ARE SUBJECT TO AN INVESTMENT
AGREEMENT DATED DECEMBER 31, 1996, AND A STOCKHOLDERS AGREEMENT DATED
AS OF DECEMBER 31, 1996, COPIES OF WHICH ARE ON FILE AT THE PRINCIPAL
OFFICE OF THE CORPORATION AND WILL BE FURNISHED TO THE HOLDER ON
REQUEST TO THE SECRETARY OF THE CORPORATION. SUCH INVESTMENT
AGREEMENT AND STOCKHOLDERS AGREEMENT PROVIDE, AMONG OTHER THINGS, FOR
CERTAIN RESTRICTIONS ON VOTING, SALE, TRANSFER, PLEDGE, HYPOTHECATION
OR OTHER DISPOSITION OF THE SECURITIES REPRESENTED HEREBY.
The legend in respect of this Agreement shall not be removed from the
Securities so long as this Agreement remains in effect. The legend in respect
of the compliance with applicable federal or state securities laws shall be
removed if an opinion of counsel reasonably satisfactory to the Company and the
Company's counsel is provided to the Company that such legend is not required
in order to establish compliance with any provisions of the Securities Act or
applicable state securities laws.
b. Additional Securities. If the Company distributes any of its
shares of Common Stock or other Securities to any of the Stockholders as a
dividend upon any of the Securities then outstanding or issues any of its
Securities to any of the Stockholders in lieu of, or in exchange for, or in
addition to Securities then outstanding, or any Stockholder acquires or obtains
any additional Securities, then,
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and in any of such events, any such Securities distributed or issued or
acquired or obtained by any Stockholder will be deemed to be "Securities" under
this Agreement and will be subject to the terms of this Agreement.
7. Injunctive Relief. Each Stockholder acknowledges and agrees that the
terms, covenants and obligations of this Agreement relate to special, unique
and extraordinary matters and that a violation of any of the terms, covenants
or obligations of this Agreement will cause the Company and each Stockholder
irreparable injury in an amount which would be impossible to estimate or
determine and for which adequate compensation could not be fashioned.
Therefore, each Stockholder agrees that the Company and the other Stockholders
will be entitled to an injunction, restraining order, or other equitable relief
as a matter of course, and without the necessity of proving irreparable harm or
the inadequacy of a legal remedy, from any court of competent jurisdiction,
restraining such Stockholder and any other person(s) as the court may order
from committing any violation or threatened violation of the terms, covenants
or obligations in this Agreement. The Company's and each Stockholder's rights
and remedies under this Section 9 are cumulative and are in addition to any
other rights and remedies that the Company or any Stockholder may have under
this Agreement or any other agreement or at law or in equity.
8. Miscellaneous.
a. Continuing Force; Remedies Cumulative. The terms, provisions,
conditions, covenants, representations, warranties, indemnities, and remedies
contained in this Agreement will survive and remain in full force and effect
after execution of this Agreement. The remedies contained in this Agreement
will survive and remain in full force and effect after the termination of this
Agreement. The rights and remedies provided for in this Agreement are
cumulative and will be in addition to rights and remedies otherwise available
to the parties under any other agreement or applicable law.
b. Amendment. This Agreement may only be amended by a written
agreement signed by the Company and each of the Stockholders.
c. Waiver. No waiver of any Section or provision of this
Agreement will be valid unless in a writing signed by the party to be charged
and only to the extent set forth in that writing. Unless such a writing
expressly provides otherwise, any waiver by any party of any Section or
provision of this Agreement will not operate or be construed as a waiver of any
subsequent breach of this Agreement or constitute a course of conduct which may
be relied upon to justify any subsequent breach of this Agreement.
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d. Binding Effect and Assignment. This Agreement, and the rights
and duties under it, will be binding upon and inure to the benefit of (a) the
Company, its successors and assigns, (b) each Stockholder, its successors and
assigns and (c) any Permitted Transferee of any Securities, regardless of
whether such Permitted Transferee executes the required written agreement to be
bound by the terms of this Agreement. No Stockholder may assign its rights
under this Agreement or delegate its duties hereunder unless such Stockholder
both assigns its rights and delegates its duties hereunder and such assignment
and delegation is made in connection with a transfer of Securities that does
not violate this Agreement.
e. Governing Law. This Agreement will be governed by, and
construed and enforced in accordance with, the laws of the State of Texas,
except that if any provision of this Agreement or any part of any such
provision would be illegal, invalid or unenforceable under such laws in
connection with a suit or proceeding validly instituted in another
jurisdiction, then the laws of such other jurisdiction will govern insofar as
is necessary to sustain the legality, validity, or enforceability of such
provision or any part of such provision.
f. Captions. Captions to the various Sections in this Agreement
are for the convenience of the parties only and will not affect the meaning or
interpretation of this Agreement.
g. Enforceability and Interpretation. It is the desire and
intent of the parties to this Agreement that the terms, provisions, conditions,
covenants, representations, warranties, and remedies contained in this
Agreement will be enforceable to the fullest extent permitted by law. If any
term, provision, condition, covenant, representation, warranty, or remedy of
this Agreement or the application thereof to any person or circumstances will,
to any extent, be construed to be illegal, invalid, or unenforceable, in whole
or in part, then such term, provision, condition, covenant, representation,
warranty, or remedy will be construed in a manner so as to permit its
enforceability under the applicable law to the fullest extent permitted by such
law. In any case, the remaining terms, provisions, conditions, covenants,
representations ' warranties, and remedies of this Agreement or the application
thereof to any person or circumstance, except those which have been held
illegal, invalid, or unenforceable, will remain in full force and effect.
h. Counterparts. This Agreement may be executed in one or more
counterparts, each of which will be deemed an original, but together they will
constitute one and the same instrument.
i. Additional Documents. Each Stockholder agrees to execute any
and all documents, instruments, certificates and communications deeded to be
necessary or desirable by the Company to effectuate or reconfirm the
applicability of this
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Agreement to any and all future transaction affecting the Company, the
Securities, or any Stockholder.
j. Cost of Enforcement. The Company shall pay to each
Stockholder all fees and expenses (including reasonable fees and expenses of
attorneys) incurred by such Stockholder in enforcing its rights under this
Agreement if such Stockholder is the prevailing party in such enforcement
action. If the Company is successful in defending such enforcement action, the
Stockholder will pay to the Company its costs of such defense, including, but
not limited to, its reasonable attorneys fees, expenses and disbursements.
k. Notices. All notices and other communications hereunder shall
be given to the parties at the addresses shown at the beginning of this
Agreement, by the method provided in the Investment Agreement.
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IN WITNESS WHEREOF, the parties hereto have executed and delivered
this Agreement with full force and effect as of the day and year first written
above.
THE QUIZNO'S CORPORATION, a Colorado corporation
By: Xxxxxxx X. Xxxxxxx
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Its: President
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RETAIL AND RESTAURANT GROWTH CAPITAL, L.P., a
Delaware limited partnership
By: Retail & Restaurant Growth Capital,
L.P., a Texas limited partnership,
its general partner
By: Retail & Restaurant Growth Management,
Inc., a Texas corporation, its general
partner
By: Xxxxxxx X. Xxxxxx
______________________
Its: COB/CEO
_______________________
Xxxxxxx X. Xxxxxxx and Xxxxxxx X. Xxxxxxx as
Trustees Under a Voting Trust Dated July 14,
1994
Xxxxxxx X. Xxxxxxx
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Xxxxxxx X. Xxxxxxx
Xxxxxxx X. Xxxxxxx
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Xxxxxxx X. Xxxxxxx
and
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XXXXXXX X. XXXXXXX
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XXXXXXX X. XXXXXXX, Individually
XXXXXXX X. XXXXXXX
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XXXXXXX X. XXXXXXX, Individually
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EXHIBIT A
TO STOCKHOLDERS' AGREEMENT
Xxxxxxx X. Xxxxxxx and Xxxxxxx X. Xxxxxxx as co-trustees pursuant to a
Voting Trust Agreement, dated as of July 14, 1994 (the "Voting Trust"), jointly
own (i) 1,553,334 shares of the common stock, par value $.001 per share (the
"Common Stock"), of The Quizno's Corporation, evidenced by stock certificates
numbered 462, 505 and 506, respectively representing 534, 154,799 and 1,398,001
shares of Common Stock, and (ii) 146,000 shares of Class A Cumulative
Convertible Preferred Stock (the "Preferred Stock") of The Quizno's
Corporation, evidenced by certificate number 4 representing 131,400 shares of
Preferred Stock and certificate number 5 evidencing 14,600 shares of Preferred
Stock.
