Exhibit 10.10
STOCKHOLDERS' AGREEMENT
By and Among
HARU HOLDING CORP.
BENIHANA NATIONAL CORP.
MEI XXXX XXXXXXXXX
and
ESTATE OF XXXXXX XXXXXX
Dated as of: December 9, 1999
STOCKHOLDERS' AGREEMENT
STOCKHOLDERS' AGREEMENT dated as of the 6th day of December, 1999 by and
---
among, Haru Holding Corp., a Delaware corporation whose address is x/x Xxxxxxxx
Inc., 0000 Xxxxxxxxx 00/xx/ Xxxxxxx, Xxxxx, Xxxxxxx 00000 (the "Company"),
Benihana National Corp. ("BNC"), a Delaware corporation whose address is 0000
Xxxxxxxxx 00/xx/ Xxxxxxx, Xxxxx, Xxxxxxx 00000, Mei Xxxx Xxxxxxxxx
("Xxxxxxxxx"), an individual whose address is 0 Xxxx Xxxxx, Xxxxxxxxx Xxxxxx,
Xxx Xxxxxx 00000, and the Estate of Xxxxxx Xxxxxx ("Xxxxxx"), whose address is
c/o Alicart, Inc., 118 West 00/xx/ Xxxxxx, 00/xx/ Xxxxx, Xxx Xxxx, Xxx Xxxx
00000. Matsumura, Xxxxxx and their permitted transferees are hereinafter
sometimes referred to collectively as the "Minority Stockholders."
R E C I T A L S :
The authorized capital stock of the Company consists of one thousand
(1,000) shares of issued and outstanding common stock, par value $.01 per share
(the "Common Stock"), and one thousand (1,000) shares of preferred stock, par
value $1.00 per share. There are no shares of preferred stock issued or
outstanding.
Prior to the date hereof, Matsumura and Xxx Xxxx ("Xxxx") were the record
owners of all of the issued and outstanding Common Stock. Pursuant to a certain
Stock Sale Agreement dated as of August 5, 1999 and amended as of November 12,
1999 (as amended, the "Sale Agreement"), by and among BNC, Matsumura and Wang,
on the date hereof, Matsumura and Wang are selling eighty (80%) percent of the
issued and outstanding Common Stock to BNC, so that, after giving effect to such
sale, the Stock will be owned, beneficially and of record, as follows:
BNC 800 Shares
Matsumura 180 Shares
Xxxxxx 20 Shares
-----
1,000 Shares
The foregoing also gives effect to making a previously held beneficial interest
of Xxxxxx of record.
The Company, through two subsidiaries, Haru Amsterdam Avenue Corp, a New
York corporation and Haru Third Avenue Corp., a New York corporation, operates
Japanese sushi-style restaurants under the name Haru. A third subsidiary, 0000
Xxxxxxxx Restaurant Corp, a New York corporation, is a tenant of space in which
a third Haru restaurant will be established. The parties anticipate that the
Company will be opening additional Haru restaurants as opportunities and
finances permit.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein, the parties agree as follows:
1. Definitions.
-----------
Capitalized terms not otherwise defined herein shall have the meanings
set forth below:
"Affiliate" of any person means another person controlling,
controlled by or under common control with such person.
"Amount of Company Debt" means, as of the end of the Pricing
Fiscal Year, the total of all indebtedness (including all accrued and
unpaid interest) of the Company and its subsidiaries (including,
without limitation, indebtedness to stockholders of the Company and,
in the case of indebtedness to BNC, all accrued and unpaid interest
thereof computed at the rate of interest charged to BNC (or its
-2-
parent, Benihana Inc.) under their primary bank line of credit (which
is, on the date hereof, with First Union National Bank)) other than
accounts payable incurred in the ordinary course of business.
"Board" means the Board of Directors of the Company.
"Call Price" means (A) Five and One-Half (5 1/2) times (B) the
Company's Consolidated Cash Flow for the Pricing Fiscal Year, from
which total is subtracted (C) the Amount of Company Debt, which total
is divided by (D) the number of shares of Common Stock outstanding as
at the date of such computation.
"Consolidated Amortization Expense" means the amortization
expense of the Company and its Subsidiaries for the acquisition of
intangibles (other than goodwill arising from a future acquisition by
the Company or a Subsidiary), determined on a consolidated basis in
accordance with GAAP.
"Consolidated Cash Flow," for any period, means Consolidated Net
Operating Income, (A) increased by the sum of (i) the Consolidated
Interest Expense for such period, (ii) the Consolidated Income Tax
Expense for such period, (iii) the Consolidated Depreciation Expense
for such period, (iv) the Consolidated Amortization Expense for such
period and (v) other non-cash items which reduced Consolidated Net
Operating Income in such period and (B) decreased by the sum of the
non-cash items which increased Consolidated Net Operating Income in
such period.
"Consolidated Depreciation Expense" means the depreciation
expense of the Company and its Subsidiaries, determined on a
consolidated basis in accordance with GAAP.
-3-
"Consolidated Income Tax Expense," for any period, means the
aggregate of the income tax expense of the Company and its
Subsidiaries for such period (to the extent deducted in determining
Consolidated Net Operating Income), determined on a consolidated basis
in accordance with GAAP.
"Consolidated Interest Expense" means, for any period, the
interest expense of the Company and its Subsidiaries accrued on
Indebtedness of the Company or any Subsidiaries determined on a
consolidated basis in accordance with GAAP.
"Consolidated Net Operating Income" means, for any period, the
aggregate net income of the Company and its Subsidiaries, determined
on a consolidated basis in accordance with GAAP.
"GAAP" means generally accepted accounting principles for the
restaurant industry as in effect on the date of this Agreement,
applied on a consistent basis throughout any given period of
measurement.
"Immediate Family" for each Minority Stockholder means such
Minority Stockholder's spouse, parents, lineal descendants and
siblings, and the spouses of any of the foregoing, and trusts solely
for the benefit of one or more of the foregoing.
"Member Representative" means Mei Xxxx Xxxxxxxxx.
"Pricing Fiscal Year" means the Company's fiscal year ended next
preceding July 1, 2005.
"Put Price" means (A) Four and One-Half (4 1/2) times (B) the
Company's Consolidated Cash Flow for the Pricing Fiscal Year, from
which total is subtracted (C) the Amount of Company Debt, which total
is divided by (D) the number of shares of Common Stock outstanding as
at the date of such computation.
-4-
"Subsidiary" means any corporation of which more than 50% of the
voting stock or any partnership, limited liability company or joint
venture of which 50% of the voting stock or profit interests, is owned
or Controlled, directly or indirectly, by the Company or one or more
Subsidiaries of the Company or a combination thereof.
"Transfer" means any transfer, sale, gift, assignment, or bequest
whether or not voluntary or by action of law including, without
limitation, any transfers in enforcement of liens or judgments,
sheriff's sales and sales in bankruptcy.
2. Corporate Governance. The Company shall be managed by a Board
--------------------
consisting of four (4) directors. For so long as Matsumura owns her shares of
the Stock, she shall have the right to nominate one (1) of such directors, and
BNC shall have the right to nominate the remaining three (3) directors. Each of
BNC, Xxxxxx and Xxxxxxxxx agree, for itself and its successors and assigns, to
vote as stockholders in any election of directors, for the persons nominated as
set forth in the preceding sentence.
3. Put Option of Minority Stockholders and Call Option of BNC.
----------------------------------------------------------
3.1 At any time during the period commencing July 1, 2005 and ending
on September 30, 2005, the Minority Stockholders shall have a one-time option
("Put Option") to sell to BNC, and to cause BNC to purchase, all, but not less
than all, of the Common Stock owned by the Minority Stockholders (including any
transferees) in its entirety. Such option shall be exercised by delivering to
BNC a written notice (the "Put Notice") of exercise signed by all Minority
Stockholders.
3.2 The purchase price for each share of Common Stock being sold by
the Minority Stockholders pursuant to Section 3.1 shall be the Put Price.
-5-
3.3 The closing of the sale of shares of Common Stock by the Minority
Stockholders in consequence of the exercise of the Put Option shall take place
at the offices of the Company or such other place as BNC shall elect at a date
selected by BNC, which is not more than 15 days after the Put Price is
determined and the Put Price shall be paid by BNC in cash on closing.
3.4 Provided the Minority Stockholders shall not have exercised their
Put Option pursuant to the provisions of Section 3.1 hereof, BNC shall have a
one-time option ("Call Option") exercisable commencing October 1, 2005 and
ending December 31, 2005 to purchase all, but not less than all, of the Common
Stock owned by the Minority Stockholders (including any transferees) in its
entirety. Such option shall be exercised by delivering to the Member
Representative a written notice (the "Call Notice") of exercise signed by BNC.
3.5 The purchase price for each share of Common Stock being purchased
by BNC pursuant to Section 3.4 shall be the Call Price.
3.6 The closing of the purchase of shares of Common Stock owned by the
Minority Stockholders by BNC in consequence of the exercise of the Call Option
shall take place at the offices of the Company or such other place as BNC shall
elect at a date selected by BNC, which is not more than fifteen (15) days after
the Call Price is determined, and the Call Price shall be paid by BNC in cash on
Closing.
3.7 The calculation of Consolidated Cash Flow of the Company shall be
made in accordance with GAAP and the books and records of the Company's (and its
subsidiaries) business shall be maintained in such a manner as to allow for such
computation to be fairly determined.
3.8 Purchaser will deliver its calculation of Consolidated Cash Flow
of the company to the Member Representative within seventy-five (75) days after
the end of the Pricing
-6-
Fiscal Year. The Member Representative shall have ten (10) business days
following delivery of the calculation of Consolidated Cash Flow for Pricing
Fiscal Year to object to such calculation and the Member Representative will
have access to BNC's work papers used in connection with the determination of
Consolidated Cash Flow. If the Member Representative does not timely object, she
will be deemed to have accepted such calculation. If the Member Representative
does timely object, BNC and the Member Representative shall promptly commence
good faith negotiations with the view to resolving such dispute or controversy,
provided that, if such disputed controversy shall not have been resolved by
-------------
mutual agreement of the parties or their respective accountants within thirty
(30) days after BNC's receipt of the Member Representative Notice of Objection,
then either Purchaser or the Member's Representative shall have the right to
submit the dispute to arbitration conducted in accordance with the Commercial
Arbitration Rules or then existing rules for commercial arbitration of the
American Arbitration Association. The arbitration shall be held in the City of
New York before a single arbitrator who shall be selected by mutual agreement of
the parties from among a list of seven potential arbitrators provided by the
American Arbitration Association. If the parties cannot agree on an arbitrator
from this first list, the parties hereto shall select an arbitrator for such
arbitration from the second list of seven potential arbitrators provided by the
American Arbitration Association with the Member Representative, on the one
hand, and BNC, on the other, alternatively striking names, with the last name
remaining to be the arbitrator so selected. The arbitration shall be binding and
conclusive as between Purchaser and the Member Representative, absent fraud or
manifest error. Each party shall bear its own fees and expenses in connection
with any such arbitration and shall be responsible for paying one-half of the
fees and expenses charged by the arbitrators.
-7-
3.9 In exercising the Put Option set forth herein or in accepting
payment for their Common Stock as a result of the exercise by BNC of the Call
Option, each Minority Stockholder shall be deemed to have represented and
warranted to BNC that such Minority Stockholder owns good title to the shares
being sold free and clear of any and all liens, encumbrances and other rights,
that such Minority Stockholder has the authority, power and capability to effect
such sale and that after payment for such shares, and that BNC will have good
and marketable title to said shares.
3.10 The Minority Stockholders acknowledge that BNC and its Affiliates
presently serve sushi in the Benihana restaurants and operate separate sushi
restaurants presently called "Sushi Doraku" and that these operations may be
developed further and not included in the Company's business.
4. Restrictions On Transfer; Legends.
---------------------------------
4.1 Each of the Minority Stockholders agrees not to make any
voluntary Transfer of the Common Stock owned by such Minority Stockholder
without the written consent of BNC or as otherwise provided herein, except that
such Minority Stockholder may make a voluntary Transfer by gift to a member of
such Minority Stockholder's Immediate Family, provided that the recipient of
such Transfer agrees in a writing (which is satisfactory in form and substance
to BNC) to be bound by this Agreement with respect to such shares as if a
signatory hereto.
4.2 In the event that any shares of Common Stock are Transferred
involuntarily, or Transferred in violation of this Agreement, such Transfer will
give to BNC the right, exercisable by written notice to the record owner of such
shares, to purchase the shares so Transferred at a purchase price equal to the
book value of such shares determined from the Company's financial statements as
of the end of the Company's fiscal year preceding such Transfer. Such right
shall be exercisable for three (3) years after BNC receives notice of any
Transfer.
-8-
4.3 Each certificate representing shares of Common Stock shall be
stamped with a legend as follows:
"THE SHARES REPRESENTED BY THIS CERTIFICATE ARE
SHARES DESCRIBED IN AND SUBJECT TO A STOCKHOLDERS'
AGREEMENT (THE "AGREEMENT"), DATED AS OF DECEMBER __,
1999, A COPY OF WHICH IS ON FILE AT THE OFFICE OF THE
CORPORATION. SUCH AGREEMENT PROVIDES, AMONG OTHER
THINGS, FOR CERTAIN RESTRICTIONS ON THE SALE, TRANSFER,
PLEDGE, HYPOTHECATION OR OTHER DISPOSITION OF THE
SHARES REPRESENTED BY THIS CERTIFICATE, AND FOR CERTAIN
RIGHTS OF THE CORPORATION OR OTHERS TO PURCHASE THE
SHARES REPRESENTED BY THIS CERTIFICATE. THE CORPORATION
WILL FURNISH TO THE OWNER OF THE SHARES REPRESENTED BY
THIS CERTIFICATE UPON REQUEST, WITHOUT CHARGE, A COPY
OF SUCH AGREEMENT."
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE
BEEN ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 OR THE
SECURITIES LAWS OF ANY STATE. SUCH SHARES MAY NOT BE
SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION
OR AN OPINION OF COUNSEL SATISFACTORY TO THE ISSUER
THAT SUCH REGISTRATION IS NOT REQUIRED BY SAID ACT OR
STATE LAWS.
5. Drag Along; Come Along.
----------------------
5.1 As used in this Agreement, the term "Sale of Control Transaction"
means any sale or transfer of Stock by BNC (including in such term for all
purposes of this Section 5, the successors , assigns and Affiliates of BNC), or
any sale and issuance of Common Stock by the Company, or any merger,
consolidation or other corporate transaction which would result in BNC
-9-
and/or its affiliates beneficially owning less than fifty (50%) percent of the
combined voting power of all shares of the capital stock of the Company entitled
to vote generally in the election of directors of the Company.
5.2 BNC shall not enter into or complete any Sale of Control
Transaction unless the Minority Stockholders are given the opportunity to
participate therein (i.e., to sell for the same consideration and on the same
terms as are applicable to the sale of shares of Stock owned by BNC, the same
percentage of the shares of Stock beneficially owned by each Minority
Stockholder as equals the percentage of the total number of shares of Stock
owned by BNC which is to be sold by BNC in the Sale of Control Transaction). In
addition, BNC shall have the right to require that each Minority Stockholder
participate in the Sale of Control Transaction, and the Minority Stockholders
agree to be bound to participate in such Sale of Control Transaction.
5.3 BNC shall give each Minority Stockholder written notice of any
proposed Sale of Control Transaction (the "Sale Notice") at least fifteen (15)
business days prior to the closing thereof. The Sale Notice shall contain a
description of the proposed Sale of Control Transaction and the terms and
conditions thereof, including a description of the consideration to be received
by BNC for each share of Stock being sold by BNC in the Sale of Control
Transaction, and shall state whether BNC is requiring the Minority Stockholders
to participate in the Transaction. If the Sale of Control Notice does not state
that the Minority Stockholders are required to participate in the Sale of
Control Transaction, each Minority Stockholder shall nonetheless have the right
to elect to do so by giving written notice of its election to do so to BNC not
later than ten (10) days after the giving of the Sale of Control Notice.
6. Termination Of This Agreement.
-----------------------------
-10-
This Agreement shall terminate and be of no further force and effect
upon the first to happen of the following:
(i) Voluntary or involuntary dissolution and liquidation of the
Company;
(ii) The sale by the Company of any class of common shares of the
Company for cash in a public offering registered under the
Securities Act of 1933;
(iii) The occurrence of a Sale of Control Transaction; or
(iv) September 1, 2024.
7. Specific Performance.
--------------------
Because the Common Stock will be closely held and the market
therefor will be limited, the parties mutually acknowledge that irreparable
injury would result if this Agreement were not performed according to its terms.
Therefore, the parties acknowledge and agree that the respective rights and
obligation hereunder shall be specifically enforceable in a court of equity by a
decree of specific performance and appropriate injunctive relief may be applied
for an granted in connection therewith, without requiring the posting of any
bond or other security therefor and without requiring any showing of actual
damage, or of likelihood or imminence of actual damage, or that monetary damages
would not provide an adequate remedy. Any such equitable remedy shall be
cumulative and not exclusive, and shall be in addition to any other remedies
(including, without limitation, monetary damages for breach of contract) which
any party may have under this Agreement or otherwise.
-11-
8. General.
-------
8.1 Binding Nature. This Agreement shall be binding upon and
--------------
inure to the benefit of the parties hereto and their respective heirs,
executors, administrators, personal representatives and permitted successors and
assigns, and shall be binding upon any person (including any corporation,
association or other legal entity) to whom any shares of Common Stock are
transferred (even if in violation of the provisions of this Agreement) and the
heirs, executors, administrators and assigns of such person.
8.2 Entire Understanding. This Agreement, together with the Sale
--------------------
Agreement, sets forth the entire understanding of the parties hereto with
respect to the subject matter hereof and thereof and supersedes all prior
agreements, arrangements and understandings, written and oral, among the parties
hereto as to such subject matter. Except as specifically set forth herein, no
party hereto has made or relied upon any representations, warranties, covenants
or understandings of any other party hereto in entering into this Agreement.
8.3 No Waiver. The waiver by any party hereof of any breach of
---------
any provision of this Agreement shall not constitute or operate as a waiver of
any other breach of such provision or of any other provisions hereof, nor shall
any failure to enforce any provision hereof operate as a waiver of such
provision of any other provision hereof.
8.4 Other Documents. Each party hereto agrees to execute such
---------------
further instruments and documents, and to take such further actions, as any
other such party may reasonably require in order to effectuate the terms and
purposes of this Agreement and the transactions contemplated hereby.
-12-
8.5 Amendment. This Agreement may not be amended, nor may any
---------
provisions hereof be modified or waived, except by an instrument duly signed by
or on behalf of each party hereof.
8.6 Notices. All notices, demands and other communication
-------
required or permitted to be given or made hereunder shall be deemed sufficiently
given or made if sent by registered or certified mail, postage prepaid, return
receipt requested, by hand delivery or by facsimile transmission, each party at
the address set forth as follows:
If to BNC or the Company: x/x Xxxxxxxx Inc.
0000 Xxxxxxxxx 00/xx/ Xxxxxxx
Xxxxx, Xxxxxxx 00000
Attn: Xxxx X. Xxxxxxxx, President
If to Xxxxxx: Xx Xxxxx Xxxxxx
c/o Alicart, Inc.,
118 West 00/xx/ Xxxxxx, 00/xx/ Xxxxx
Xxx Xxxx, Xxx Xxxx 00000.
If to Matsumura: Xx. Xxx Xxxx Xxxxxxxxx
0 Xxxx Xxxxx
Xxxxxxxxx Xxxxxx, Xxx Xxxxxx 00000
or at such other address or addresses as any party hereto shall designate by
written notice to the other parties hereto, given in accordance with the
provisions of this Section. Copies of all notices and other communications being
sent to the Company or BNC shall be sent to Xxxxxxxx Xxxxxx Xxxxxxxxxx &
Xxxxxxxxx, LLP, 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Xxxxxx X.
Xxxxxxxx, and copies of all notices and other communications being sent to the
Minority Stockholders shall be sent to Xxxxxxx X. Xxxxxx, Esq., 000 Xxxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000. Except as otherwise expressly provided herein,
any such notice, demand or other communication shall be deemed to have been duly
given or made as of the date so mailed, as evidenced by the postmark on the
envelope or the notation of time and date on the facsimile or hand
-13-
delivery receipt, as the case may be. Any such communication delivered otherwise
than as provided above, and any notice of change of address hereunder, shall be
deemed given or made only at the time actually received by the person to whom it
is addressed.
8.7 Governing Law. This Agreement shall in all events be
-------------
governed by and construed in accordance with the internal laws of the State of
New York without reference to the principles of conflict of laws, irrespective
of the particular forum in which an action may be brought to enforce or secure
an interpretation of this Agreement and irrespective of the principal place of
business, residence or domicile of any party hereto.
8.8 Headings. Section headings contained herein are inserted
--------
for convenience of reference only and are not in any way intended to affect the
meaning or interpretation of this Agreement.
8.9 Execution In Counterparts. This Agreement may be executed
-------------------------
in any number of counterparts, each of which shall be deemed an original but all
of which taken together shall constitute on and the same documents, and any
party hereto may execute this Agreement by signing any such counterpart.
8.10 Reclassification, etc. The provisions of this Agreement
---------------------
shall apply to any capital stock of the Company as may hereafter be issued or
transferred to any Minority Stockholder in respect of his shares as a
consequence of any exchange or reclassification of the Common Stock, corporate
reorganization, recapitalization, consolidation or merger, shares split or
shares dividend, or other like event. All references to shares of Common Stock
will be deemed amended and adjusted to equitably adjust for any such exchange,
reclassification, consolidation, merger, shares dividend, shares split or other
like event.
-14-
8.11 Gender. As used in this Agreement, words in the masculine
------
gender include the feminine and neuter genders, and vice versa, where the
context so requires.
8.12 No Right Of Employment. No right of employment of any party
----------------------
hereto is implied either by ownership of shares of Common Stock or by any
provision in this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Stockholders
Agreement as of the day and year first above written.
BENIHANA NATIONAL CORP.
By: /s/ Xxxx X. Xxxxxxxx
-------------------------
President
-15-
HARU HOLDING CORP.
By: /s/ Xxxx X. Xxxxxxxx
----------------------------------
Xxxx Xxxxxxxx, President
/s/ Mei Xxxx Xxxxxxxxx
-------------------------------------
Mei Xxxx Xxxxxxxxx
ESTATE OF XXXXXX XXXXXX
By: /s/ Xxxxx Xxxxxx
----------------------------------
Xxxxx Xxxxxx, Executrix
-16-
