Exhibit 10.48
SHAREHOLDERS AGREEMENT
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This Shareholders Agreement is entered into as of December 19, 2000,
by and among United Western Grocers, Inc. ("UWG"), C&K Market, Inc. (the
"Company") and the shareholders of the Company listed on the signature page
hereof ("Shareholders").
RECITALS
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A. UWG has agreed to purchase $8 million of preferred stock of the
Company (the "Shares") on condition that the Shareholders enter into certain
agreements for the benefit of UWG.
B. The Shareholders have determined that it is in their best interests
that UWG make an investment in the Company and that the agreements by
shareholders contained herein be given as an inducement to UWG to purchase the
Shares.
AGREEMENT
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NOW THEREFORE, in consideration of the mutual covenants herein
contained and the investment by UWG in the Shares of the Company, the parties
hereto agree as follows:
1. Put Rights.
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1.1 Obligations of the Company to Purchase. At any time (i) the
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Company fails to comply with the mandatory redemption or dividend payment
provisions of the Shares, or (ii) if it is determined that any of the
representations or warranties made by the Company in the Preferred Stock
Purchase Agreement were not true and correct as of the Closing Date in material
respects, or (iii) the Company is in material breach of the Supply Agreement, or
(iv) the Company defaults under any agreement relating to any financial support
provided by UWG to the Company, and such default continues for thirty (30)
calendar days after written notice of such default is given to the Company and
the Shareholders by UWG, UWG may require the Company to purchase any or all
Shares which UWG may then hold (the "Put Shares") at the Redemption Price by
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delivering to the Company a written notice of exercise of the right created by
this Section 1.1.
1.2 Obligations of Shareholders. If for any reason the Company is
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unable to consummate the purchase of the Put Shares as contemplated by Section
1.1, or is not permitted to purchase the Put Shares by the terms of the
Company's loan agreements with GECC, then the obligation to purchase the Put
Shares shall be the joint and several obligation of the Shareholders; provided
that the Shareholders other
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than those Shareholders denoted as "Controlling Shareholders" on the signature
pages hereto (the "Controlling Shareholders") shall be obligated only for an
amount equal to said Shareholder's Proportionate Share (as defined in Section
1.5) of the obligation to purchase the Put Shares, which obligation is secured
by the pledge of said Shareholders' shares as provided in Section 2; the
liability of each such Shareholder shall be limited to UWG's rights in such
shares as collateral and said Shareholders shall have no personal liability in
excess of their obligation as represented by the pledged collateral.
1.3 Put Closing. The closing of any purchase pursuant to this Section
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1 shall be held at the principal executive office of the Company at 10:00 a.m.
local time on the thirtieth (30th) day after the exercise of the put by UWG or
at such other time and place as the parties to the transaction may mutually
agree upon (the "Put Closing"). At the Put Closing, UWG shall deliver a
certificate or certificates representing the Put Shares being purchased duly
endorsed for transfer on the books of the Company. The Put Shares shall be free
and clear of any and all liens, claims, options, charges, encumbrances or rights
of others (other than pursuant to this Shareholders Agreement). At the Put
Closing, the Company (or Shareholders as provided in Subsection 1.2) shall
deliver a cashier's or certified check or wire transfer in the amount of the
Redemption Price. In addition, all parties to the transaction shall execute such
other documents and perform such other acts as are otherwise required or
necessary and appropriate to effectuate the purchase of the Put Shares.
1.4 Company Sale. In the event the Put is exercised and a Company Sale
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occurs within 15 months of the Put Closing, then the Company shall pay to UWG,
within 30 days of the Company Sale, by cashiers check, certified check or wire
transfer, an amount (if any) which is equal to the amount that the Redemption
Price received by UWG is less than the value of Common Stock into which the
Shares, if outstanding on the date of the Company Sale, could have been
converted immediately prior to the closing of the Company Sale, as determined by
the fair market value of the consideration received in the Company Sale.
1.5 Contribution. In the event that any Controlling Shareholder is
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required to make any payment pursuant to this Section 1 which causes such
Controlling Shareholder to pay more than such Controlling Shareholder's
Proportionate Share of the put obligation (an "Excess Payment Shareholder") then
each other Controlling Shareholder ("Other Shareholder") agrees to pay to the
Excess Payment Shareholder the Other Shareholder's Pro Rata Share of the excess
payment promptly upon demand by the Excess Payment Shareholder. For purposes of
this Section 1, (i) Proportionate Share shall be equal to the percentage of the
outstanding
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Shares held by the Shareholder (or Controlling Shareholder, as the case may be)
and (ii) Pro Rata Share shall be determined by adding the Proportionate Shares
of the Other Shareholders and determining the percentage that the Proportionate
Share of each Other Shareholder bears to the total.
2. Security for Put Rights.
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2.1 As security for the Shareholders' obligations pursuant to Section
1 (the "Obligations") each Shareholder (herein in Section 2, a "Pledgor") agrees
to pledge all shares of the Company beneficially owned by them to UWG (herein in
Section 2, a "Pledgee") as collateral for the Obligations.
Pledgor hereby delivers, pledges and grants a continuing security
interest to Pledgee in all of his or her present and future holdings of common
shares of the Company, together with all proceeds, replacements, substitutions,
newly issued shares, shares received by reason of a stock split, bonus or any
other form of issue, dividend or distribution with respect to or arising from
the shares (collectively, the "Collateral"). Pledgor acknowledges that the
Collateral is currently held by General Electric Capital Corporation ("GECC")
pursuant to a pledge agreement ("GECC Pledge Agreement") and is subject to the
prior rights of GECC pursuant to its pledge agreement and that upon termination
of the GECC Pledge Agreement GECC is authorized to forthwith deliver the
Collateral, together with duly executed stock powers in form and substance
satisfactory to Pledgee, to Pledgee. Until such delivery, GECC shall be deemed
to hold the Collateral as bailee for Pledgee, subject to the prior rights of
GECC pursuant to the GECC Pledge Agreement. Attached hereto as Exhibit A is a
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listing of the Collateral as it exists as of the date hereof.
2.2 Representations And Warranties Regarding The Collateral. Pledgor
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represents and warrants that: (i) all of the shares described in paragraph 1
hereinabove are fully paid, non-assessable and validly issued; (ii) the
Collateral was not issued in violation of any person's or entity's preemptive
rights; (iii) the Collateral is owned free and clear of any and all security
interests, pledges, options to purchase or sell, redemptions or liens except (i)
the prior lien in favor of GECC and (ii) the Company's obligations to repurchase
shares of the Company's common stock pursuant to the Company's Stock Purchase
Plan I; (iv) Pledgor has full power to convey the Collateral; and (v) no
financing statements covering the Collateral are recorded with any cognizant
state official or recording office.
2.3 Events Of Default. The occurrence of any of the following shall,
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at the election of Pledgee, constitute an event of default ("Event of Default")
under this Section 2:
(a) The Company and the Shareholders shall fail to pay to Pledgee
when due any amount owing by the Company or Shareholders to
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Pledgee pursuant to Section 1 above, and such failure continues for five
(5) calendar days after written notice of failure to pay is given to the
Company and Pledgors by the Pledgee; or
(b) The Company shall admit in writing its inability to pay its
debts generally as they come due or shall become insolvent as that term is
defined in the Federal Bankruptcy Code, or the Company shall file any
petition or action for relief under any bankruptcy, arrangement,
reorganization, insolvency or moratorium law, or any other law or laws for
the relief of or relating to debtors, or shall, with respect to any
involuntary petition or action for relief under such law or laws, consent
or fail to timely object to the relief requested in such petition or
action; or an involuntary petition shall be filed under any bankruptcy or
insolvency laws against the Company, or a receiver, trustee, custodian, or
similar officer of the court shall be appointed to take possession of all
or any substantial part of the Company's properties.
2.4 Voting Rights. During the term of this Agreement, so long as there
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shall not occur any Event of Default, Pledgors shall have the right to vote the
Collateral on all corporate questions for all purposes not inconsistent with the
terms of this Agreement. Upon the occurrence of an Event of Default, Pledgee
shall thereafter have, at its discretion, the option to exercise all voting
powers and other corporate rights pertaining to the Collateral, and Pledgor
hereby grants Pledgee an irrevocable proxy, coupled with an interest, to vote
the Collateral as aforesaid. Pledgee may, upon or at any time after the
occurrence of an Event of Default, at its option, transfer or register the
Collateral or any part thereof into its own or its nominee's name.
2.5 Stock Adjustments And Dividends. If during the term of this
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Agreement, any stock dividend, reclassification, readjustment or other change is
declared or made in the capital structure of the Company or any option included
within the Collateral is exercised, or both, all new, substituted and additional
shares, or other securities, issued to Pledgor by reason of any such change or
exercise shall be delivered to and held by Pledgee under the terms of this
Agreement in the same manner as the Collateral originally pledged hereunder. If
during the term of this Agreement, any dividend or other distribution is made on
account of the Collateral, Pledgor shall immediately deliver all such dividends
or other distributions to Pledgee in the same form received and in the same
manner as the Collateral pledged hereunder.
2.6 Warrants And Rights. If during the term of this Agreement,
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subscription warrants or any other rights or options shall be issued in
connection with the Collateral, such warrants, rights and options shall be
immediately assigned by Pledgor to Pledgee to be held under the terms of this
Agreement in the same manner as the Collateral originally pledged hereunder.
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2.7 Remedies Upon Default. In addition to the other remedies available
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under applicable law, upon and after the occurrence of an Event of Default, and
subject to the prior rights to GECC with respect to the Collateral,
(a) The Pledgee may:
(i) Exercise in respect of the Collateral, any one or more of
the rights and remedies available under the California Uniform
Commercial Code and other applicable law; or
(ii) Sell or otherwise assign, give an option or options to
purchase or dispose of and deliver the Collateral (or contract to do
so), or any part thereof, in one or more parcels at public or private
sale or sales, at any exchange, broker's board or at any of the
Pledgee's offices or elsewhere upon such terms and conditions as it
may deem advisable and at such prices as it may deem best, for cash,
on credit or for future delivery without assumption of any credit
risk, free of any claim or right of whatsoever kind (including any
right or equity of redemption) of Pledgor, which claim, right and
equity are hereby expressly waived and released. Pledgee shall have
the right to the extent permitted by applicable law, upon any such
sale or sales, public or private, to purchase the whole or any part of
the Collateral so sold; provided, however, Pledgor shall not receive
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any net proceeds, if any, of any such credit sale or future delivery
until cash proceeds are actually received by Pledgee (which cash
proceeds shall be applied by Pledgee to the obligations) and after all
Obligations have been paid in full. In case of any sale of all or any
part of the Collateral on credit or for future delivery, the
Collateral so sold may be retained by Pledgee until the selling price
is paid by the purchaser thereof, but Pledgee shall incur no liability
in case of the failure of such purchaser to pay for the Collateral so
sold and, in case of such failure, the Collateral may again be sold as
herein provided.
(b) Any notice required to be given by Pledgee of a sale of the
Collateral, or any part thereof, or of any other intended action by
Pledgee, which occurs not less than twenty (20) days prior to such proposed
action, shall constitute commercially reasonable and fair notice to Pledgor
thereof. No notification need be given to the Pledgor if it has signed,
after the occurrence of an Event of Default, a statement renouncing or
modifying any right to notification of sale or other intended disposition.
(c) Pledgee shall not be obligated to make any sale or other
disposition of the Collateral, or any part thereof unless the terms thereof
shall, in its sole discretion, be satisfactory to it. Pledgee may, if it
deems it reasonable, postpone or adjourn the sale of any of the Collateral,
or any part thereof,
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from time to time by an announcement at the time and place of such sale or
by announcement at the time and place of such postponed or adjourned sale,
without being required to give a new notice of sale. Pledgor agrees that
Pledgee has no obligations to preserve rights against prior parties to the
Collateral.
(d) Pledgor acknowledges and agrees that Pledgee may comply with
limitations or restrictions in connection with any sale of the Collateral
in order to avoid any violation of applicable law or in order to obtain any
required approval of the sale or of the purchase thereof by any
governmental regulatory authority or official and, without limiting the
generality of the foregoing, Pledgor acknowledges and agrees that Pledgee
may be unable to effect a public sale of any or all the Collateral by
reason of certain prohibitions contained in the federal securities laws and
applicable state securities laws, but may be compelled to resort to one or
more private sales thereof to a restricted group of purchasers who will be
obliged to agree, among other things, to acquire such securities for their
own account for investment and not with a view to the distribution or
resale thereof. Pledgor acknowledges and agrees that any such private sale
may result in prices and other terms less favorable to the seller than if
such sale were a public sale. Notwithstanding any such circumstances,
Pledgor acknowledges and agrees that such compliance shall not result in
any such private sale for such reason alone being deemed to have been made
in a commercially unreasonable manner. Pledgee shall not be liable or
accountable to Pledgor for any discount allowed by reason of the fact that
the Collateral is sold in compliance with any such limitation or
restriction. Pledgee shall not be under any obligation to delay a sale of
any of the Collateral for the period of time necessary to permit the issuer
of such securities to register such securities for public sale under the
federal securities laws, or under applicable state securities laws, even if
the issuer desires, requests or would agree to do so.
(e) Any cash held by Pledgee as Collateral and all cash proceeds
received by the Pledgee in respect of any sale of, collection from, or
other realization upon all or any part of the Collateral may, in the
discretion of the Pledgee, be held by Pledgee as Collateral for the
Obligations and/or then or at any time thereafter applied, without any
marshalling of rights, remedies or assets, and after payment of any amounts
payable to Pledgee hereunder and, after deducting all reasonable costs and
expenses of every kind in connection with the care, safekeeping,
collection, sale, delivery or otherwise of any or all of the Collateral or
in any way relating to the rights of Pledgee hereunder (including
attorneys' fees and disbursements), to the payment of reduction of the
obligations. Any surplus of such cash or cash proceeds held by Pledgee and
remaining after payment in full of all the obligations shall be paid over
to Pledgor or to whomsoever may be lawfully entitled to receive such
surplus.
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2.8 Suretyship Acknowledgments, Agreements and Waivers. Pledgor
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acknowledges that, by pledging to Pledgee and granting Pledgee a security
interest in the Collateral pursuant to this Agreement as collateral security for
the Obligations of the Shareholders, Pledgor is deemed to be a surety of such
Obligations under applicable California law. As such, Pledgor has various
applicable or potentially applicable suretyship rights and defenses to the
enforcement of this Agreement under California law. It is Pledgor's intention in
executing this Agreement to waive any and all of such rights and remedies to the
fullest extent permitted by California law. In this regard, and without limiting
the generality of the foregoing, Pledgor hereby agrees as follows:
(a) Independent Obligations; Subrogation. The obligations of
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Pledgor hereunder are independent of and separate from the obligations of
the Company and of any other guarantor, maker or endorser of the
Obligations and shall not be reduced by, but shall survive as if the same
had not been made, any and all payments by the Company and/or any other
guarantor, maker or endorser of the Obligations and/or the application of
any proceeds from any collateral security for the Obligations until the
Obligations are fully paid and finally discharged. Pledgor hereby waives
forever any claim, right or remedy which he may now have or hereafter
acquire against the Company or against any guarantor or surety of the
Company's obligations that arises hereunder, including, without limitation,
any claim, remedy or right of subrogation, reimbursement, exoneration,
contribution, indemnification, or participation in any claim, right or
remedy of Pledgee against the Company or any such guarantor or surety or
against any security which Pledgee now has or hereafter acquires, whether
or not such claim, right or remedy arises in equity, under contract, by
statute, under common law or otherwise. In addition, Pledgor hereby waives
any right to proceed against the Company or against any such guarantor or
surety, now or hereafter, for contribution, indemnity, reimbursement, and
any other suretyship rights and claims, whether direct or indirect,
liquidated or contingent, whether arising under express or implied contract
or by operation of law, which Pledgor may now have or hereafter have as
against the Company with respect to the Obligations. Pledgor also hereby
waives any rights to recourse to or with respect to any asset of the
Company.
(b) Authority to Modify Obligations and Security. Pledgor
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authorizes Pledgee, without notice or demand and without affecting the
liability hereunder, from time to time, whether before or after any notice
of termination hereof or before or after any default in respect of the
Obligations, to: (i) renew, extend, accelerate, or otherwise change the
time for payment of, or otherwise change any other term or condition of the
Obligations or any other document or agreement evidencing or relating to
any Obligations, including, without limitation: (i) to increase or decrease
the payment terms thereon; (ii) accept, substitute, waive, decrease,
increase, release, exchange or otherwise alter any
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collateral security, in whole or in part, securing the Obligations or any
other guaranty of the Obligations; (iii) apply any and all such collateral
security and direct the order or manner of sale thereof as Pledgee, in its
sole discretion, may determine; (iv) add, release or substitute any one or
more other guarantors, makers or endorsers of the Obligations, and
otherwise deal with the Company or any other guarantor, maker or endorser
as Pledgee may elect; (v) in Pledgee's sole discretion, settle, release on
terms satisfactory to Pledgee, or by operation of law or otherwise,
compound, compromise, collect or otherwise liquidate any Obligation and/or
any collateral security therefor in any manner, and bid and purchase any
collateral security at any sale thereof; (vi) apply any and all payments or
recoveries from the Company, from any other guarantor, maker, endorser or
from Pledgor to such of the Obligations as Pledgee, in its sole discretion,
may determine, whether such Obligations are secured or unsecured or
guaranteed or not guaranteed by others; (vii) apply any and all payments or
recoveries from any other guarantor, maker or endorser of the Obligations
or sums realized from collateral security furnished by any of them upon any
of their indebtedness or obligations to Pledgee as Pledgee, in its sole
discretion, may determine, whether or not such indebtedness or obligations
relate to the Obligations; and (viii) refund at any time, at Pledgee's sole
discretion, any payment received by Pledgee in respect of any Obligations,
and payment to Pledgee of the amount so refunded shall be fully secured
hereby even though prior thereto this Agreement may have been terminated by
Pledgee; all without in any way diminishing, releasing or discharging the
liability of Pledgor hereunder.
(c) Waiver of Defenses. Upon default of the Company and
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Shareholders in respect of any Obligations, Pledgee may, at its option and
without notice to Pledgor, proceed directly against Pledgor to collect and
recover the full amount of the liability hereunder, or any portion thereof,
and Pledgor waives any right to require Pledgee to: (i) proceed against the
Company, or any other guarantor, endorser, or other person whomsoever; (ii)
proceed against or exhaust any collateral security given to or held by
Pledgee in connection with the Obligations; (iii) give notice of the terms,
time and place of any public or private sale of any real or personal
property security for the Obligations or any other guaranty of the
Obligations; or (iv) pursue any other remedy in Pledgee's power whatsoever.
A separate action or actions may be brought and prosecuted against Pledgor
whether or not action is brought against the Company and/or any other
guarantor, maker or endorser of the Obligations and whether the Company
and/or any other guarantor, maker or endorser be joined in any such action
or actions; and Pledgor waives the benefit of any statute of limitations
affecting the liability hereunder or the enforcement hereof, and agrees
that any payment of any Obligations or other act which shall toll any
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statute of limitations applicable thereto shall similarly operate to toll
such statute of limitations applicable to the liability hereunder.
(d) Right to Dispose of Security; Impairment of Rights. Pledgor
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hereby authorizes and empowers Pledgee in its sole discretion, without any
notice or demand to Pledgor whatsoever and without affecting the liability
of Pledgor hereunder, to exercise any right or remedy which Pledgee may
have available to it. Pledgor expressly waives all suretyship defenses
Pledgor would otherwise have under California law or the laws of any other
jurisdiction. Without limiting the foregoing and without waiving the
benefits of California Commercial Code (S) 9501.
(e) Additional Waivers. Pledgor waives any defense arising by
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reason of any disability or other defense of the Company or by reason of
the cessation from any cause whtsoever of the liability of the Company or
by reason of any act or omission of Pledgee or others which directly or
indirectly results in or aids the discharge or release of the Company or
any Shareholders with respect to the Obligations or any security in respect
thereof by operation of law or otherwise. The obligations of Pledgor
hereunder shall be enforceable without regard to the validity, regularity
or enforceability of any of the Obligations or any of the documents related
thereto, any other guaranty of the Obligations or any collateral security
documents securing any of the Obligations or securing any other guaranty of
the Obligations. No exercise by Pledgee of, and no omission of Pledgee to
exercise, any power or authority recognized herein and no impairment or
suspension of any right or remedy of Pledgee against the Company, any other
guarantor, maker or endorser or any collateral security shall in any way
suspend, discharge, release, exonerate or otherwise affect any of Pledgor's
obligations hereunder or any collateral security furnished by Pledgor or
give to Pledgor any right of recourse against Pledgee. Pledgor specifically
agrees that the failure of Pledgee: (i) to perfect any lien on or security
interest in any property heretofore or hereafter given by the Company or
any guarantor, maker or endorser to secure payment of the Obligations or of
any guaranty of the Obligations, or to record or file any document relating
thereto or (ii) to file or enforce a claim against the estate (either in
administration, bankruptcy or other proceeding) of the Company, any
guarantor, maker or endorser, shall not in any manner whatsoever terminate,
diminish, exonerate or otherwise affect the liability of Pledgor hereunder.
(f) Additional Obligations; Duty of Undersigned. Additional
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Obligations may be created from time to time at the request of the Company
and without further authorization from or notice to Pledgor even though the
Company's financial condition may deteriorate since the date hereof. In
entering into this Agreement with Pledgee, Pledgor is aware of the
Company's
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financial condition and waives the right, if any, to require Pledgee to
disclose to Pledgor any information it may now have or hereafter acquire
concerning the Company's character, credit, collateral, financial condition
or other matters. Pledgor has established adequate means to obtain from the
Company on a continuing basis financial and other information pertaining to
the Company's business and affairs, and assumes the responsibility for
being and keeping informed of the financial and other conditions of the
Company and of all circumstances bearing upon the risk of nonpayment of the
Obligations hereunder which diligent inquiry would reveal. Pledgee need not
inquire into the powers of the Company or the authority of its officers,
directors, partners or agents acting or purporting to act in its behalf,
and any Obligations created in reliance upon the purported exercise of such
power or authority is hereby guaranteed. All Obligations of the Company to
Pledgee heretofore, now or hereafter created shall be deemed to have been
granted at Pledgor's special insistence and request and in consideration of
and in reliance upon this Agreement.
(g) Waiver of Marshalling. Pledgor waives any right he may now or
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hereafter have to require Pledgee to xxxxxxxx assets, to exercise rights or
remedies in a particular manner, or to forbear from exercising such rights
and remedies in any particular manner or order.
2.9 Further Assurances. Shareholders covenant and agree that each of
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them: (i) will execute and deliver, or cause to be executed and delivered, all
such other stock powers, proxies, instruments and documents as Pledgee may
reasonably request from time to time in order to carry out the provisions and
purposes hereof; (ii) will take all such other action, as Pledgee may reasonably
request from time to time in order to carry out the provisions and purposes
hereof; (iii) except as provided herein, the Collateral will remain free and
clear of all security interests and liens throughout the term hereof; and (iv)
will forward to Pledgee, immediately upon receipt, copies of any information or
documents received by Pledgor in connection with the Collateral. For purposes of
defining security interest perfection, Pledgor further agrees that any
Collateral which is in transit to Pledgee shall be deemed to be in Pledgee's
possession.
3. Right of First Refusal.
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3.1 Proposed Company Sale. In the event of a proposed Company Sale,
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each Shareholder agrees that it will cause the Company and the other
Shareholders to extend to UWG a right of first refusal to purchase the Company
on terms no less favorable to UWG than the terms of the proposed Company Sale.
3.2 Proposed Sale of Twenty Percent. In the event of a proposed sale
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by a Shareholder ("Selling Shareholder") of shares of Common Stock which total
20%
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or more of the Company's then outstanding Common Stock (the "Sale Shares")(a
"Shareholder Sale"), such Selling Shareholder agrees that it will extend to UWG
a right of first refusal to purchase such Sale Shares on terms no less favorable
to UWG than the terms of the proposed Shareholder Sale. Notwithstanding the
foregoing, the following transfers of shares of Capital Stock by a Selling
Shareholder shall not be subject to the restrictions of this Section 3: (i) a
transfer to an existing holder of Capital Stock, and (ii) a transfer to a trust
established for the benefit of such Selling Shareholder or an existing holder of
Capital Stock.
3.3 Notice. In the event of a proposed Company Sale or Shareholder
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Sale, the Shareholders shall cause the Company to, or in the case of a
Shareholder Sale, the Selling Shareholder shall, send written notice of the
terms of the proposed Company Sale or Shareholder Sale to UWG (the "Notice").
The Notice shall state the terms and conditions of the offer to the Company, the
Shareholders or the Selling Shareholder (the "Offer"), and the name and address
of the prospective purchaser (together with a copy of all writings between such
party and the offering shareholders establishing the terms of the Offer).
3.4 UWG's Option. With respect to a proposed Company Sale, UWG shall
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have the right to purchase the Company at the price and upon the terms and
conditions specified in the Notice. With respect to a proposed Shareholder Sale,
UWG shall have the right to purchase the Sale Shares at the price and upon the
terms and conditions specified in the Notice. Such rights of UWG shall be
exercisable by written notice given to the Shareholders, or the Selling
Shareholder in the case of a Shareholder Sale, within sixty (60) days after
UWG's receipt of the Notice. The failure of UWG to exercise such right within
such sixty (60) day period shall be deemed a waiver of its right pursuant to
this Section. If the offer involves the receipt of a form of consideration which
cannot be delivered by UWG, UWG shall have the right to deliver cash in an
amount equal to the fair market value of the form of consideration proposed to
be delivered by the prospective purchaser.
3.5 Third Party Company Sale. With respect to a proposed Company Sale,
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unless UWG elects to purchase the Company, the Shareholders may participate in
the sale of the Company, on the terms and conditions set forth in the Notice,
provided that such sale is bona fide and consummated within ninety (90) days of
the date of the Notice. If such sale is not consummated within such ninety (90)
day period, all of the restrictions provided for in this Agreement shall again
become effective with respect to any other proposed Company Sale.
3.6 Third Party Shareholder Sale. With respect to a proposed
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Shareholder Sale, unless UWG elects to purchase the Sale Shares, the Selling
Shareholder may sell the Sale Shares, on the terms and conditions set forth in
the Notice, provided that such sale is bona fide and consummated within ninety
(90) days of the date of the Notice. If such sale is not consummated within such
ninety (90) day period, all of the
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restrictions provided for in this Agreement shall again become effective with
respect to any other proposed Shareholder Sale.
3.7 Closing of UWG Purchase. The closing of any purchase of the
-----------------------
Company or the Sale Shares by UWG pursuant to Section 3 shall be held at the
principal office of the Company at 10:00 a.m. local time on or before the
thirtieth (30th) day after notice of exercise by UWG is given to the
Shareholders or the Selling Shareholder, or at such other time and place as the
parties to the transaction may agree upon (as used in this Section 3.7, the
"Closing").
3.8 Terms of Company Sale. Shareholders shall cause the Company not
---------------------
to, and Shareholders shall not, enter into any Company Sale agreement which does
not require the redemption of the Shares at the redemption price and provide
that UWG may, in the alternative, convert the Shares into Common Stock
immediately prior to the consummation of the Company Sale.
4. Piggyback Registration Rights.
-----------------------------
4.1 Notice of Registration. If the Company or any entity which
----------------------
directly or indirectly controls the Company, or any shareholder of either of
them, at any time proposes to Register under the Securities Act any shares of
Capital Stock, whether or not for sale for the account of the Company or others,
on a form and in a manner which would permit Registration of shares of Capital
Stock for sale to the public under the Securities Act, other than a Registration
relating solely to employee benefit plans or a transaction described in Rule 145
promulgated by the Commission, the Company shall give written notice of the
proposed Registration to UWG not later than sixty (60) days prior to the filing
with the Commission of the Registration Statement, or other filing document,
relating thereto.
4.2 Exercise of Registration Rights. UWG shall have the right to
-------------------------------
request that all or any part of its Shares (including the shares of Common Stock
into which the Shares may be converted) be included in such Registration by
giving written notice to the Company within thirty (30) days after the receipt
of the notice from the Company provided for in Section 4.1; provided, however,
that if the Registration is underwritten and the managing underwriter(s)
determine in good faith that the aggregate amount of Capital Stock which the
registrant and UWG propose to include in the Registration Statement exceeds the
maximum amount of Capital Stock that should be included therein, the registrant
will include in such Registration, first, all of the Capital Stock which the
registrant proposes to sell and, second, so much of the Capital Stock which UWG
requested to be so included in such Registration as may be permitted by the
managing underwriter(s).
4.3 Terms of Underwriting. Shares of Capital Stock proposed to be
---------------------
Registered and sold pursuant to this Section 4 and pursuant to an underwritten
offering
-12-
for the account of UWG shall be sold to prospective underwriter(s) selected by
the registrant and on the terms and subject to the conditions of one or more
underwriting agreements negotiated between the registrant and the prospective
underwriter(s), including without limitation any indemnification provisions and
restrictions on sales of Shares by UWG as may be reasonably required by the
managing underwriter(s). The registrant may withdraw any Registration Statement
at any time before it becomes effective or postpone the offering of securities
without obligation or liability to UWG.
4.4 Withdrawal From Registration. If UWG disapproves of the terms of
----------------------------
any underwriting, then UWG may elect to withdraw therefrom by written notice to
the Company and the underwriter(s) delivered at least seven (7) days prior to
the effective date of the Registration Statement. Any Registrable Securities or
other securities excluded or withdrawn from such underwriting shall be withdrawn
from such Registration.
4.5 Blue Sky in Registration. In the event of any Registration of
------------------------
Registrable Securities pursuant to this Section 4, the Company will exercise its
best efforts to Register and qualify the Registrable Securities covered by the
Registration Statement under such other securities or Blue Sky laws of such
jurisdictions as shall be reasonably appropriate for the distribution of such
Registrable Securities; provided, however, that (i) the Company shall not be
required to qualify to do business or to file a general consent to service of
process in any such states or jurisdictions, and (ii) notwithstanding anything
in this Agreement to the contrary, in the event any jurisdiction in which the
Registrable Securities shall be qualified imposes a non-waiveable requirement
that expenses incurred in connection with the qualification of the Registrable
Securities be borne by selling shareholders, such expenses shall be payable pro
rata by selling shareholders.
4.6 Expenses of Registration. All Registration Expenses incurred in
------------------------
connection with Registrations pursuant to this Section 4 shall be borne by the
Company. All Registration Expenses incurred in connection with any other
qualification or compliance shall be borne by the Company. All Selling Expenses
shall be borne by the holders of the securities Registered pro rata on the basis
of the number of shares Registered.
4.7 Registration Procedures. The Company will keep UWG, if its
-----------------------
Registrable Securities are included in any Registration pursuant to this Section
4, advised as to the initiation and completion of such Registration. At its
expense the Company will: (a) use its best efforts to keep such Registration
effective for a period of one hundred twenty (120) days or until the registrant
and UWG have completed the distribution described in the Registration Statement
relating thereto, whichever first occurs; and (b) furnish UWG a number of
prospectuses (including preliminary prospectuses) and such other documents as
UWG may from time to time reasonably request.
-13-
4.8 Information to be Furnished by UWG. UWG, if its Registrable
----------------------------------
Securities are included in a Registration, shall furnish to the Company and/or
the underwriter(s) such information regarding UWG and the distribution of its
Registrable Securities proposed by UWG as the Company and/or the underwriter(s)
may reasonably request.
4.9 Indemnification.
---------------
4.9.1 Indemnification By the Company of UWG. To the extent
-------------------------------------
permitted by law, the Company will indemnify UWG, each of its officers,
directors and constituent partners, each legal counsel and independent
accountant, and each person who controls (within the meaning of the Securities
Act) UWG, and each underwriter, if any, and each person who controls (within the
meaning of the Securities Act) any underwriter (an "Indemnitee"), with respect
to which Registration, qualification or compliance of Registrable Securities has
been undertaken pursuant to this Section 4, against any and all claims, demands,
proceedings, causes of action, damages, liabilities, losses, and expenses (a
"Claim") to the extent the Claim arises out of or is based upon any untrue
statement (or alleged untrue statement) of a material fact contained in any
prospectus or other document (including any related Registration Statement)
incident to any such Registration, qualification or compliance, or is based on
any omission (or alleged omission) to state in any such prospectus or other
document (including any related Registration Statement) a material fact required
to be stated therein or necessary to make the statements therein not misleading,
or any violation by the Company, its directors, officers, agents, employees or
underwriter(s) of any rule or regulation promulgated under the Securities Act
applicable to the Company, its directors, officers, agents, employees or
underwriter(s) and relating to action or inaction required of the Company, its
directors, officers, agents, employees or underwriter(s) in connection with any
such Registration, qualification or compliance. To the extent permitted by law,
the Company will reimburse each Indemnitee, for any legal and consulting costs,
expenses and fees reasonably incurred in connection with investigating or
defending a claim; provided, however, that the indemnity contained in this
Section 4.9 shall not apply to amounts paid in settlement of a Claim if
settlement is effected without the consent of the Company (which consent shall
not unreasonably be withheld); and, provided further, that the Company will not
be liable in any such case to the extent, but only to the extent, that a Claim
arises out of or is based upon any untrue statement or omission based upon
written information furnished by UWG to the Company, an underwriter, or a
controlling person and stated to be for use in connection with the offering of
securities of the Company.
4.9.2 Indemnification Procedure. After receipt by an Indemnitee of
-------------------------
notice of a Claim, the Indemnitee will, if a claim in respect thereof is to be
made against the Company under this Section, notify the Company in writing of
the com-
-14-
mencement thereof and generally summarize the Claim. The Indemnitee shall permit
the Company to assume the defense of the Claim provided that counsel for the
Company, who shall conduct the defense of the Claim, shall be approved by the
Indemnitee (whose approval shall not unreasonably be withheld), and the
Indemnitee may participate in such defense at such party's expense, and provided
further that the failure of any Indemnitee to give notice as provided herein
shall not relieve the Company of its obligations under this Section 4.9, to the
extent such failure is not prejudicial,. the Company, in defense of the Claim,
shall not, except with the consent of each Indemnitee, consent to entry of any
judgment or enter into any settlement that does not include as an unconditional
term thereof the giving by the claimant or plaintiff to such Indemnitee of a
release from all liability in respect to the Claim. Each Indemnitee shall
furnish such information regarding itself or the Claim as the Company may
reasonably request in writing and as shall be reasonably required in connection
with defense of the Claim.
4.9.3 Contribution. If the indemnification provided for in this
------------
Section 4.9 is held by a court of competent jurisdiction to be unavailable to an
Indemnitee with respect to any loss, liability, claim, damage, or expense
referred to therein, then the Company, in lieu of indemnifying the Indemnitee
hereunder, shall contribute to the amount paid or payable by such Indemnitee as
a result of such loss, liability, claim, damage, or expense in such proportion
as is appropriate to reflect the relative fault of the Company on the one hand
and of the Indemnitee on the other in connection with the statements or
omissions that resulted in such loss, liability, claim, damage, or expense as
well as any other relevant equitable considerations. The relative fault of the
Company and of the Indemnitee shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission to state a material fact relates to information supplied by the Company
or by the Indemnitee and the parties' relative intent, knowledge, access to
information, and opportunity to correct or prevent such statement or omission.
5. Definitions.
-----------
"Capital Stock" shall mean the Common Stock plus (a) any other class
of capital stock of the Company issued after the date of this Agreement, (b) any
rights to acquire Common Stock, and (c) any securities which are convertible
into Common Stock by their terms, whether presently held or hereinafter acquired
by any Shareholder.
"Common Stock" shall mean the common stock of the Company.
"Company Sale" shall mean a transaction or series of related
transactions, with any person or group of persons acting in concert, involving
the sale or other disposition of (i) 50% or more of the capital stock of the
Company, (ii) 20% or more of the tangible assets of the Company, (iii) a merger
or consolidation in which
-15-
shareholders of the Company immediately prior to the merger do not own in excess
of 80% of the capital stock of the surviving entity.
"Redemption Price" has the meaning assigned to such term in the
Company's Amended and Restated Articles of Incorporation.
"Register," "Registered" and "Registration" refer to a registration
effected by preparing and filing with the Commission a registration statement or
other filing document in compliance with the Securities Act (a "Registration
Statement"), and the effectiveness of such Registration Statement.
"Registrable Securities" shall mean (i) all Capital Stock not
previously sold to the public which (a) has been issued to the Shareholders, or
(b) is issued to the Shareholders pursuant to stock splits, stock dividends and
similar distributions, and (ii) any Common Stock granted registration rights
under this Agreement.
"Registration Expenses" shall mean all expenses incurred by the
Company in complying with Section 4, including, without limitation, all federal
and state registration, qualification and filing fees, printing expenses, escrow
fees, fees and disbursements of counsel for the Company, Blue Sky fees and
expenses, and the expense of any special audits incident to or required by any
such registration.
"Securities Act" shall mean the Securities Act of 1933, as amended, or
any similar federal statute, and the rules and regulations of the Commission
thereunder.
"Selling Expenses" shall mean all underwriting discounts and selling
commission applicable to the sale of Registrable Securities pursuant to this
Agreement.
6. Term. This Agreement shall remain in full force and effect until all
----
Shares held by UWG have been redeemed or converted into common stock of the
Company. At the expiration of the term of this Agreement, Pledgee shall return
to Pledgor all stock certificates and other documents relating to this
Agreement, together with any further documents necessary to establish that the
within pledge is terminated.
7. Successors And Assigns. This Agreement shall be binding upon and inure
----------------------
to the benefit of the parties thereto and their respective successors and
assigns.
8. Choice of Law.
-------------
The validity of this agreement, its construction, interpretation and
enforcement, and the rights of the parties hereunder and concerning the
collateral, shall be determined under, governed by, and construed in accordance
with the internal laws (as opposed to the conflict of laws principles) of the
state of California.
-16-
9. WAIVER OF JURY TRIAL
--------------------
ALL PARTIES HERETO HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY
TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS
AGREEMENT, OR ANY OTHER AGREEMENT ENTERED INTO IN CONNECTION HEREWITH OR
THEREWITH, OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREIN OR THEREIN, INCLUDING
CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS AND ALL OTHER COMMON LAW OR
STATUTORY CLAIMS. PLEDGOR AND PLEDGEE REPRESENT THAT EACH HAS REVIEWED THIS
WAIVER AND EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING
CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF LITIGATION, A COPY OF THIS
AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.
10. Attorneys' Fees. In the event any action or proceeding is commenced to
---------------
enforce the terms and provisions of this Agreement, the prevailing party in such
action or proceeding shall be entitled to recover from the losing party therein,
such prevailing party's reasonable attorneys' fees and court costs.
11. Legend. The certificates representing common shares of the Company
------
shall bear a restrictive legend with respect to the restrictions contained in
this Agreement.
12. Integrated Agreement. This Agreement sets forth the entire
--------------------
understanding of the parties with respect to the within matters, and may not be
modified except by a writing signed by all parties.
13. Counterparts. This Agreement may be executed in multiple counterparts,
------------
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument and agreement.
14. Section Headings. The section headings herein are for convenience of
----------------
reference only, and shall not affect in any way the interpretation of any of the
provisions hereof.
[END OF TEXT]
-17-
IN WITNESS WHEREOF, this Agreement is executed as of date first above
written.
Unified Western Grocers, Inc.
By: /s/ X X Xxxxxxxx
-------------------------------
Its: V.P. & Treasurer
-------------------------------
C&K Market, Inc.
By: /s/ Xxxxxxx X. Xxxxxxxx
--------------------------------
Xxxxxxx X. Xxxxxxxx, President
Shareholders of C&K Market, Inc.
/s/ J. Xxxxx Xxxxxxx
-------------------------------
J. Xxxxx Xxxxxxx
/s/ Xxxxxxx X. Xxxxxxxx
-------------------------------
Xxxxxxx X. Xxxxxxxx, Special Protector,
Xxxxx X. Xxxxxxxx Irrevocable Trust
"Controlling Shareholder"
/s/ Xxxxxxx X. Xxxxxxxx
-------------------------------
Xxxxxxx X. Xxxxxxxx, Special Protector,
Xxxxx X. Xxxxxxxx Irrevocable Trust
"Controlling Shareholder"
/s/ Xxxxxx Xxxxxxx
-------------------------------
Xxxxxx Xxxxxxx
/s/ Xxxxx Xxxx
-------------------------------
Xxxxx Xxxx
-18-
/s/ Xxxxxx X. Xxxxxxx
-------------------------------
Xxxxxx X. Xxxxxxx
/s/ Xxxxxx XxXxxxxx
-------------------------------
Xxxxxx XxXxxxxx
/s/ Xxxxxxx X. Xxxxxxxx
-------------------------------
Xxxxxxx X. Xxxxxxxx, Special Protector,
Xxxx X. Xxxxxxxx Irrevocable Trust
"Controlling Shareholder"
/s/ Xxxxxxx X. Xxxxxxxx
-------------------------------
Xxxxxxx X. Xxxxxxxx
/s/ Xxxxxxx X. Xxxxxxxx
-------------------------------
Xxxxxxx X. Xxxxxxxx, Special Protector,
Xxxxxxx X. Xxxxxxxx Irrevocable Trust
"Controlling Shareholder"
/s/ Xxxxxxx X. Xxxxxxxx
-------------------------------
Xxxxxxx X. Xxxxxxxx, Special Protector,
Xxxxxxxx X. Xxxxxxxx Irrevocable Trust
"Controlling Shareholder"
/s/ Xxxxxxx X. Xxxxxxxx
-------------------------------
Xxxxxxx X. Xxxxxxxx
"Controlling Shareholder"
/s/ M. Xxxx Xxxxxxxx
-------------------------------
M. Xxxx Xxxxxxxx
"Controlling Shareholder"
/s/ Xxxxxxx X. Xxxxxxxx
-------------------------------
Xxxxxxx X. Xxxxxxxx, Special Protector,
Xxxx X. Xxxxxxxx Irrevocable Trust
"Controlling Shareholder"
-19-
/s/ Xxxxxxxx Xxxxxxxx
-------------------------------
Xxxxxxxx Xxxxxxxx
/s/ Xxxxxx Xxxxxxxx
-------------------------------
Xxxxxx Xxxxxxxx
/s/ Xxx X. Xxxxxxxx
-------------------------------
Xxx X. Xxxxxxxx
/s/ Xxxxxx Xxx Xxxx
-------------------------------
Xxxxxx Xxx Xxxx
/s/ Xxxxxx Xxxxxxxxx
-------------------------------
Xxxxxx Xxxxxxxxx
/s/ Xxxxxxx X. Xxxxxxxx
-------------------------------
Xxxxxxx X. Xxxxxxxx, Special Protector,
Xxxx X. Xxxxxxxx Irrevocable Trust
"Controlling Shareholder"
-20-
Exhibit A
Collateral
Shareholder Name # of Shares
---------------------------------------- -----------
J. Xxxxx Xxxxxxx 4,440
Xxxxx X. Xxxxxxxx Irrevocable Trust 3,520
Xxxxx X. Xxxxxxxx Irrevocable Trust 3,520
Xxx Xxxxxxx 5,065
Xxxxxx Xxxxxxxxx 250
Xxxxx Xxxx 5,779
Xxxxxx X. Xxxxxxx 5,779
H. Xxxxxx XxXxxxxx 5,779
Xxxx X. Xxxxxxxx Irrevocable Trust 3,520
Xxxxxxx X. Xxxxxxxx 42
Xxxxxxx X. Xxxxxxxx Irrevocable Trust 42,900
Xxxx X. Xxxxxxxx Irrevocable Trust 3,520
Xxxxxxxx X. Xxxxxxxx Irrevocable Trust 42,900
Xxxxxxx X. Nd M. Xxxx Xxxxxxxx 396,600
Xxxx X. Xxxxxxxx Irrevocable Trust 3,520
Xxxxxxxx Xxxxxxxx 5,779
Xxxxxx Xxxxxxxx 5,779
Xxx X. Xxxxxxxx 5,779
Xxxxxx Xxx Xxxx 250
-21-
