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Case Number: CACE-19-022558 Division: 12
Filing # 98142465 E-Filed 10/30/2019 05:32:50 PM
IN THE CIRCUIT COURT OF THE 17TH JUDICIAL CIRCUIT
IN AND FOR BROWARD COUNTY, FLORIDA
CIVIL DIVISION
CASE NO.
JOSHUA PARDUE, Plaintiff,
v.
CATERED FIT CORP, et al., Defendants.
COMPLAINT
EXHIBIT E
*** FILED: BROWARD COUNTY, FL BRENDA D. FORMAN, CLERK 10/30/2019 05:32:48 PM.****SHAREHOLDERS’ AGREEMENT
THIS SHAREHOLDERS’ AGREEMENT (this “Agreement”) is made effective
, 2017 (the “Effective Date”), by and among ADAM M. FRIDEN (“Friden”),
JOSHUA PARDUE (“Pardue”) and MARK GERENGER (“Gerenger”)(Friden, Pardue and
Gerenger being hereinafter sometimes individually referred to as a “Shareholder” and
collectively referred to as the “Shareholders”), and by them with CATERED FIT HOLDINGS,
INC., a Delaware corporation (hereinafter referred to as the “Corporation”) and, solely for
purposes of ARTICLE XV herein, CATERED FIT CORP, a Florida corporation (hereinafter
referred to as “CF”).
RECITALS:
WHEREAS, the Shareholders and CF are parties to that certain shareholders agreement
effective December 1, 2016 (the “CF Agreement”);
WHEREAS, on August 1, 2016 CF, Pardue and Pardue Advisory, LLC, a Florida limited
liability company (“Pardue Advisory”), have entered into that certain consulting agreement (the
“Consulting Agreement”);
WHEREAS, in connection with the corporate restructuring involving CF it was agreed
that the Shareholders will contribute all the CF shares owned by them to the Corporation, such
that CF shall become a wholly owned subsidiary of the Corporation and that they will be issued
shares of the Corporation;
WHEREAS, the Corporation is authorized to issue 10,000,000 shares of common stock,
$0.001 par value per share (the “Stock” or “shares of Stock”) ;
WHEREAS, the Shareholders own 9.000.000 shares of Stock of the Corporation, which
as of the Effective Date represents all the Corporation’s issued and outstanding shares of Stock,
divided among the Shareholders as follows:
SHAREHOLDER NUMBER OF SHARES
Friden 6,750,000
Pardue 1,125,000
Gerenger 125,000
Total 9,000,000
WHEREAS, the Corporation has made or intends to make an election in accordance with
the provisions of Section 1362(a) of the Internal Revenue Code of 1986 (hereinafter referred to
as the “Code”) for the Corporation to be treated as an S-corporation, as that term is defined in
Section 1361(a) of the Code;
WHEREAS, the Shareholders deem it to be in their best interests and in the best interest
of the Corporation for the Corporation to continue to be treated as an S-corporation;
TLV1 626019885v5WHEREAS, the availability of the Corporation to continue to be treated as an
S-corporation is dependent, among other things, upon events within the control of the
Shareholders as more fully described in ARTICLE VI hereinafter;
WHEREAS, the Shareholders desire to enter into this Agreement to provide certain
remedies in the event a Shareholder makes a transfer or disposition of his shares of Stock of the
Corporation causing a termination of the Corporation’s status as an S-corporation;
WHEREAS, the Shareholders further believe it to be in their best interests and in the
best interest of the Corporation to: (a) to provide for certain provision regarding the election and
removal of directors and decision making at the board of directors of the corporation (the
“Board of Directors”) and at the Shareholders level; (b) provide for the prior opportunity to
purchase shares of Stock of the Corporation owned by a Shareholder in the event the Shareholder
desires to sell, transfer, give or otherwise dispose of his Stock, and (c) provide for the sale and
purchase of the shares of Stock owned by a Shareholder upon his or her death, insolvency or
bankruptcy, as provided herein.
NOW THEREFORE, in consideration of the mutual covenants herein contained, the
benefits to be obtained by each Shareholder under this Agreement, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the Shareholders
and Corporation agree as follows:
ARTICLE 1
GENERAL RESTRICTION
No Shareholder may sell, give, pledge, transfer, encumber, or otherwise dispose of all or
any portion of the Shareholder’s shares of Stock of the Corporation, whether now owned or
acquired subsequent to the Effective Date, without the prior written consent of the Board of
Directors of the Corporation, except as may otherwise be specifically provided for in this
Agreement. Any sale, gift, pledge, transfer, or encumbrance of the Stock shall, in addition to the
other terms of this Agreement, be subject to the provisions of ARTICLE VI, providing that
transfers to “Ineligible Shareholders”, as that term is defined therein, are null and void and
subjecting the “Selling Shareholder”, as that term is defined herein, to monetary damages and
costs as further described therein in the event a transfer causes the termination of the
Corporation’s S-corporation election.
ARTICLE I
VOLUNTARY TRANSFER
Section 2.1. Offer Upon Voluntary Transfer. No Shareholder may sell, transfer or
otherwise dispose of any of his or her shares of Stock other than in a Permitted Transfer (as that
term is defined herein) at any time without the consent of the Board of Directors, unless the
Shareholder desiring to make the transfer (hereinafter referred to as the “Selling Shareholder”),
shall (a) have received a bona fide written offer to purchase or otherwise acquire such shares of
Stock by an unrelated third party (hereinafter referred to as the “Proposed Transferee”) and (b)
have first made an offer to tender to the Corporation for redemption and secondly, make an offer
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TLV1 626019885v5to sell to the remaining Shareholders, all of the shares of Stock that the Selling Shareholder
desires to sell, give, and transfer or otherwise dispose (hereinafter referred to as the “Offered
Stock”) in the manner hereinafter described in this ARTICLE II; provided, however, that no such
transfer shall be permitted without the consent of the Corporation if such transfer is in violation of
ARTICLE VI herein. “Permitted Transfer” shall mean a transfer of Stock by such Shareholder for
bona fide estate planning purposes, either during his or her lifetime or on death by will or
intestacy to his or her spouse, child (natural or adopted), or any other direct lineal descendant of
such Shareholder (or his or her spouse) (all of the foregoing collectively referred to as “family
members”), or any other person approved by the Board of Directors of the Corporation, or any
custodian or trustee of any trust, partnership or limited liability company for the benefit of, or the
ownership interests of which are owned wholly by such Shareholder or any such family members;
provided that the Shareholder is not an Ineligible Shareholders and provided further that, the
Selling Shareholder shall deliver prior written notice to the Corporation of such gift, pledge or
transfer and the transferee shall, as a condition to such transfer being permitted, deliver a
counterpart signature page to this Agreement as confirmation that such transferee shall be bound
by all the terms and conditions of this Agreement as a Shareholder (but only with respect to the
shares of Stock so transferred to the transferee). he transferee of any shares of Stock pursuant to a
Permitted Transfer is referred to herein as a “Permitted Transferee”.
Section 2.2. Manner of Offer by Selling Shareholder. The offers to tender to the
Corporation and/or sell to the remaining Shareholders shall be given in writing and include the
nature of the transaction (whether sale, gift, transfer or other disposal), the name and address of
the Proposed Transferee, and the terms of the transaction, including the number of shares
involved, the purchase price or other acquisition amount, and the payment terms (hereinafter
referred to as the “Proposed Transaction”). The written statement shall be accompanied by a copy
of the written offer, proposal, or contract, if any, between the Selling Shareholder and the
Proposed Transferee. The offer shall be given in writing by the Selling Shareholder to the
Corporation and to the remaining Shareholders and shall consist of an offer to first tender to the
Corporation, and secondly to sell to the remaining Shareholders in proportionate shares as
described in ARTICLE VIII hereinafter, all of the shares of Offered Stock in accordance with the
terms of this ARTICLE II.
There shall be no obligation or requirement that either the Corporation or remaining
Shareholders redeem or purchase any of the Offered Stock under this ARTICLE II, any
redemption or purchase of the Offered Stock being solely upon election to do so. Provided,
however, if the Corporation and/or remaining Shareholders exercise their option to redeem
and/or purchase any of the shares of Offered Stock, then the Corporation and/or remaining
Shareholders must, in the aggregate, exercise their option to purchase and/or redeem all of the
shares of Offered Stock.
Section 2.3 Acceptance of Offer. Within ninety (90) days after the receipt of such
written offer from the Selling Shareholder in accordance with Section 2.2, the Corporation shall
have the option, but not the duty, to redeem all or any portion of the shares of Offered Stock. The
Corporation shall exercise its option by giving written notice thereof to the Selling Shareholder
and to the remaining Shareholders. If the Corporation fails to exercise its option to redeem all or
any portion of such shares, then the remaining Shareholders shall have the option, but not the
duty, within thirty (30) days after the expiration of the time within which the Corporation may
exercise its option, to purchase in proportionate shares as described in ARTICLE VIII hereinafter,
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TLV1 626019885v5all, but not less than all, of the shares of Offered Stock as to which the Corporation fails to
exercise its option to redeem. Each of the remaining Shareholders shall exercise his option by
giving written notice thereof to the Corporation, the Selling Shareholder and each other.
The notice of exercise of option, whether by the Corporation or a remaining Shareholder,
shall specify a date for the closing of the redemption and/or purchase of the Offered Stock (the
“Closing” or “Closing Date”). The Closing shall be held at the principal office of the
Corporation or at such other place as the Selling Shareholder and the Corporation and/or
remaining Shareholders shall mutually agree. The Closing shall occur on a date which shall be
not less than thirty (30) nor more than ninety (90) days after the expiration of the time within
which the remaining Shareholders may exercise their option unless the Selling Shareholder and
the Corporation and/or remaining Shareholders otherwise mutually agree on another date, Any
acceptance of the offer made in accordance with the terms hereof shall be binding as hereinafter
provided.
Section 2.4 Redemption/Purchase Price and Terms. If the Corporation and/or the
remaining Shareholders elect to redeem or purchase the Offered Stock, the price for each share of
Offered Stock, and the manner and time for payment therefor, shall be the same as established by
the Proposed Transaction, as set forth in the Selling Shareholder’s written offer to the Corporation
and the remaining Shareholders pursuant to the requirements set forth in Section 2.2 above.
Section 2.5 Documents. At the Closing, the Selling Shareholder shal! deliver, in
exchange for the total purchase price, whether in cash or partially in cash and partially by
promissory note(s), as the case may be, the certificate(s) representing the Offered Stock being
transferred, duly endorsed, and such other documents as shall be necessary and reasonably
required to conclude the transfer.
Section 2.6 Release from Restriction. If the offers are not accepted by the
Corporation and/or by the remaining Shareholders with respect to all of the shares of the Offered
Stock, as provided hereinabove, the Selling Shareholder may make a bona fide transfer of the
Offered Stock in accordance with the Proposed Transaction, the terms of which are described in
the Selling Shareholder’s written offer to the Corporation and remaining Shareholders. The sale
or other transfer of the Offered Stock shall be made only in strict accordance with the terms of the
Proposed Transaction as described in the Selling Shareholder’s offer to the Corporation and
remaining Shareholders and within the time period hereinafter set forth. If the Selling
Shareholder shall fail to make the sale or other transfer within ninety (90) days following the
expiration of the time hereinabove provided for exercise of the option to purchase by the
remaining Shareholders, then the Offered Stock shall again become subject to all the restrictions
of this Agreement. Nothing contained herein shall be construed as releasing any Stock of the
Corporation from any restrictions or requirements of law concerning the transfer of such Stock.
Section 2.7 Continuance of Restrictions Upon Subsequent Holders. In the event the
Selling Shareholder makes a bona fide transfer under the provisions of this ARTICLE II, then the
Offered Stock transferred to the Proposed Transferee shall be subject to all the provisions of this
Agreement. No shares of the Offered Stock shall be transferred on the books of the Corporation
or issued to the Proposed Transferee unless and until the Proposed Transferee has executed a
counterpart of this Agreement, the original of which shall be retained as a part of the corporate
records. The failure of the Proposed Transferee to execute a counterpart of this Agreement,
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TLV1 626019885V5however, shall not affect the applicability of this Agreement to the Offered Stock, it being the
intention of each Shareholder and the Corporation that any and all subsequent owners of Stock
voluntarily transferred shall only receive and own the Stock subject to the same restrictions upon
transfer and encumbrance as set forth in this Agreement to which the Selling Shareholder was
subject, including, without limitation, the provisions of ARTICLE VI hereinafter.
ARTICLE Il
BANKRUPTCY OR ASSIGNMENT
Section 3.1. Involuntary Transfer. In the event any shares of Stock of the Corporation
held by a Shareholder are the subject of an involuntary transfer, whether due to bankruptcy,
assignment for benefit of creditors, judicial order, legal process, execution, attachment,
enforcement of a pledge or other encumbrance, or otherwise (hereinafter referred to as the
“Affected Stock”), the Shareholder of the Affected Stock shall be deemed to have made,
immediately prior to such involuntary transfer, an offer first to tender the Affected Stock to the
Corporation for redemption and secondly to sell the Affected Stock to the remaining
Shareholders, in the manner hereinafter described in this ARTICLE Ill. There shall be no
obligation or requirement that either the Corporation or the remaining Shareholders redeem or
purchase any of the Affected Stock under this ARTICLE III, any purchase or redemption of the
Affected Stock being solely upon election to do so. The Corporation and/or remaining
Shareholders may redeem and/or purchase any portion or all of the Affected Stock.
Section 3.2 Exercise of Option. If the Corporation elects to redeem all or any portion
of the Affected Stock in accordance with this ARTICLE III, the Corporation shall serve notice in
writing of its election upon the Shareholder of the Affected Stock and his creditor(s) who is to be
the recipient of the Affected Stock (hereinafter referred to collectively as the “Transferor”), with
copies thereof to the remaining Shareholders, within ninety (90) days after the President of the
Corporation shall have received actual notice of the involuntary transfer. If the Corporation fails
to exercise its option to redeem all or any portion of the Affected Stock, it shall, within five (5)
days after the expiration of the time within which the Corporation may exercise its option, give
notice to the remaining Shareholders of its failure to exercise its option with respect to all or any
portion of the shares of Stock and the remaining Shareholders shall have the option, but not the
duty, within thirty (30) days after the expiration of the time within which the Corporation may
exercise its option, to purchase in proportionate shares as described in ARTICLE VIII hereinafter,
all or any portion of the Affected Stock which the Corporation does not elect to redeem. Each of
the remaining Shareholders shall exercise the option by giving written notice thereof to the
Corporation, the Transferor and each other.
The notice of exercise of option, whether by the Corporation or by a remaining
Shareholder, shall specify a date for the closing of the redemption and/or purchase of the
Affected Stock (hereinafter referred to as the “Affected Stock Closing” or “Affected Stock
Closing Date”). The Affected Stock Closing shall be held at the office of the Corporation or at
such other place as the Transferor and the Corporation and/or remaining Shareholders shall
mutually agree. The Affected Stock Closing shall occur on a date which shall be not less than
thirty (30) days nor more than ninety (90) days after the expiration of the time within which the
remaining Shareholders may exercise their option unless the Transferor and the Corporation
TLV1 626019885v5and/or remaining Shareholders otherwise mutually agree on another date. Any acceptance of the
deemed offer made in accordance with the terms hereof shall be binding as hereinafter provided.
Section 3.3 Redemption/Purchase Price. If the Corporation and/or the remaining
Shareholders elect to redeem or purchase any or all of the shares of Affected Stock, the price for
each share of Affected Stock shall be the lesser of: (i) the price per share established by
ARTICLE V hereinafter, or (ii) the total amount, including acquisition costs, if any, which had
been due to the creditor of the Shareholder who was to be the recipient of the Affected Stock with
the amount allocated equally among the total number of shares of the Affected Stock which the
creditor was to have received from the Shareholder of the Affected Stock.
Section 3.4 Payment of Redemption/Purchase Price. If the Corporation exercises its
option to redeem any or all of the Affected Stock, the redemption price shal] be paid, at the option
of the Corporation, either entirely in cash at the Affected Stock Closing or by the payment in cash
at the Affected Stock Closing of at least ten percent (10%) of the redemption price and the
delivery of a promissory note for the remaining balance of the redemption price, in the form
hereinafter described. If the remaining Shareholders exercise their option to purchase any or all
of the Affected Stock, each of the remaining Shareholders, at the option of each remaining
Shareholder, shall pay their portion of the purchase price either entirely in cash at the Affected
Stock Closing or by the payment in cash at the Affected Stock Closing of at least ten percent
(10%) of the purchase price and the delivery of a promissory note(s) for the remaining balance of
the purchase price, in the form hereinafter described.
In the event there remains any deferred balance, the promissory note(s) evidencing the
obligation (hereinafter, the “Note”) shall provide, among other provisions normally acceptable in
Broward County, Florida, for interest from the Affected Stock Closing Date on the unpaid
balance at the minimum rate of interest necessary to satisfy, on the Affected Stock Closing Date,
the requirements set forth in Section 483 or Section 1274 of the Code, whichever Section shall
be applicable, giving due consideration to the term of the Note and frequency of payments
thereunder. The Note shall be payable over a term of five (5) years from the Affected Stock
Closing Date and in annual installments sufficient to fully amortize the principal and interest
over the term of the Note, and with the first payment being due one (1) year from the Affected
Stock Closing Date. The Note shall contain a provision that a default in any payment which
continues for more than thirty (30) days after written notice thereof to the maker shall, at the
option of the holder of the note, render the entire debt immediately due and payable. The
promissory note shall permit prepayment of the outstanding principal and interest without
penalty at any time. Payment of any Note evidencing the deferred balance of the purchase price
payable by a remaining Shareholder shall be secured by a lien on the shares of Affected Stock being
purchased by the remaining Shareholder hereunder. Payment of any Note evidencing the deferred
balance of the redemption price payable by the Corporation shall be secured by the Corporation’s
contractual covenant to issue to the holder of the Note additional shares of the Corporation’s Stock
in the event of a default under the Note in order to provide security comparable to a lien on the
shares of Affected Stock being redeemed by the Corporation hereunder, as set forth in ARTICLE X
hereunder.
Section 3.5 Documents. At the time of Affected Stock Closing, the Transferor shall
deliver, in exchange for the total redemption or purchase price, whether in cash or partially in
cash and partially by promissory note(s), as the case may be, the certificate(s) representing the
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TLV1 626019885v5Stock being transferred, duly endorsed, and such other documents as shall be necessary and
reasonably required to conclude the transfer.
Section 3.6 No Prohibited Transfer; Continuance of Restrictions Upon Transferor.
In the event the “deemed offer” of the Transferor is not accepted either by the Corporation or by
the remaining Shareholders as to all of the shares of Affected Stock, then the shares not accepted
may be transferred to the transferee/creditor subject to all the provisions of this Agreement
including, without limitation, any restriction imposed pursuant to ARTICLE VI hereinafter. The
transferee/creditor shall execute a counterpart of this Agreement, the original of which shall be
retained as a part of the corporate records. The failure of the transferee to execute a counterpart
of this Agreement shall not affect the applicability of this Agreement to the Affected Stock, it
being the intention of each Shareholder and the Corporation that any and all subsequent owners of
shares of Stock pursuant to an involuntary transfer shall only receive and own the shares of Stock
subject to the restrictions upon transfer and encumbrance as set forth in this Agreement to which
the original Shareholder was subject including, without limitation, the provisions of ARTICLE VI
hereinafter.
ARTICLE IV
DEATH
In the event a Shareholder shall die during the term of this Agreement, each party to this
Agreement specifically acknowledges and agrees that this Agreement will not prohibit the
transfer of any portion or all of the shares of Stock held by the Shareholder on the date of his
death according to the laws of testacy or intestacy, as the case may be, and that any such transfer
shall not constitute a violation of this Agreement; provided, however, that no shares of Stock
may be transferred in violation of ARTICLE VI hereinafter and provided, further that all shares
of Stock transferred pursuant to this ARTICLE IV shall continue to be subject to all provisions
of this Agreement, including, without limitation, the provisions of ARTICLE VI hereinafter. No
shares of Stock shall be transferred on the books of the Corporation or issued to his transferees
unless and until such transferees have executed a counterpart of this Agreement, the original of
which shall be retained as part of the corporate records. The failure of the transferees to execute
a counterpart to this Agreement, however, shall not affect the applicability of this Agreement to
the Stock so transferred, it being the intention of all the parties hereto that any and all subsequent
owners of Stock transferred as a result of the death of a Shareholder shal! only receive and own
the Stock subject to the same restrictions upon transfer as set forth in this Agreement to which
the deceased Shareholder was subject.
ARTICLE V
PRICE
Except as modified elsewhere in this Agreement, the price per share payable pursuant to
ARTICLE III and ARTICLE IV above, for purchase or redemption of shares of Stock of the
Corporation under this Agreement shall be the fair market value of the Stock as of the end of the
calendar month of the Corporation immediately preceding the month in which the death of a
Shareholder shall occur or the date of the Proposed Transfer or involuntary transfer or
encumbrance, as the case may be. The fair market value of the Stock shali be determined by an
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TLV1 626019885V5appraiser selected by the mutual agreement of the Selling Shareholder or Transferor and the
remaining Shareholders and/or Corporation, as the case may be. If the parties shall be unable to
agree upon the selection of an appraiser, then the Selling Shareholder or Transferor, as the case
may be, shall select one appraiser, and the remaining Shareholders and/or Corporation, as the
case may be, shall select an appraiser and the two (2) appraisers so selected shall select a third
(3rd) appraiser who shall perform the appraisal. The determination of the third (3rd) appraiser
shall be conclusive and binding upon the parties. The expense of the appraisal shall be paid
one-half (1/2) by the Selling Shareholder or Transferor, as the case may be, and one-half (1/2) by
the remaining Shareholders and/or Corporation, as the case may be, in the same ratio as the
Stock required by each bears to the total Stock acquired hereunder.
ARTICLE VI
S-CORPORATION PROVISIONS
Section 6.1 Acknowledgment of S-corporation Status. Each of the Shareholders
acknowledge and agree that an election has been made in accordance with Section 1362(a) of the
Code for the Corporation to be treated as an §-corporation, as that term is defined in Section
1361{a) of the Code. The Shareholders desire that the Corporation maintain its status as an
S-corporation until terminated by mutual agreement and hereby agree that any Shareholder
transferring any shares of Stock which the Shareholder owns in the Corporation, irrespective of
whether the Corporation and/or other Shareholders may have declined to exercise the options
granted hereunder, may be liable for monetary damages to the other Shareholders if the transfer
would cause the Corporation to lose its status as an S-corporation. The Shareholders hereby
acknowledge and understand that there are restrictions on who may own shares of Stock in an
S-corporation. Specifically, no shares of Stock of an S-corporation may be owned by:
(a) Any person who would cause the Corporation to have more than 100
shareholders;
(b) Any person who is a non-resident alien;
(c) Any person who is not an individual, an estate, or trust described in
Section 1361(c)(2) of the Code; or
(d) Any exempt organization which is not described in Section 1361(c)(6) of
the Code.
Those persons who may not be shareholders of an S-corporation shall hereinafter be
referred to as an “Ineligible Shareholder”.
Section 6.2 Transfer to Ineligible Shareholder. Any transfer to, or acquisition of
shares of Stock of the Corporation by, an Ineligible Shareholder shall be null and void. The
Shareholders hereby agree that any such transfer or acquisition may and should be enjoined and
shall not affect the beneficial ownership of the shares of Stock. Therefore, the Shareholder
making a purported transfer to an Ineligible Shareholder shall retain the right to vote the shares of
Stock (to the extent of voting rights attributable to such Stock), receive dividends and liquidation
proceeds attributable to the shares of Stock, and-shall exercise each and every other right of a
Shareholder of the shares of Stock purportedly transferred. Additionally, the Shareholder making
8
TLV1 626019885v5the purported transfer shall continue to report his share of income or loss and other items
allocated to the shares of Stock in accordance with the provisions of Section 1366 of the Code.
The purported transferee shall not be deemed a Shareholder of the Corporation and shall not be
entitled to registration of such transfer on the books of the Corporation.
Section 6.3 Damages. In the event a purported transfer to an Ineligible Shareholder
nevertheless causes the Corporation to lose its status as an S-corporation notwithstanding the
provisions of Section 6.2 hereinabove, the Shareholder owning the shares of Stock immediately
prior to the transfer to the Ineligible Shareholder shall pay to the other Shareholders (hereinafter
the “Remaining Shareholders”) damages caused by the inability of the Corporation to maintain its
status as an S-corporation regardless of the fault of the Shareholder or other circumstances
surrounding the transfer. The amount of damages incurred by the Remaining Shareholders shall
be determined by the regularly retained independent accountant employed by the Corporation.
The accountant’s determination of damages shall be made in accordance with the
provisions of Section 6.4 or Section 6.5 depending upon whether the Corporation recognizes a
profit or loss in the year in which such damages are determined and shall be conclusive and
binding upon all parties. The payment of the damages by the Shareholder of the shares whose
transfer caused the Corporation to lose its status as an S-corporation (hereinafter the
“Responsible Shareholder”) shall commence the first fiscal year of the Corporation in which the
Corporation is unable to report its income and losses as an S-corporation and shall continue until
the fiscal year of the Corporation in which the Corporation may once again elect under current
law to be treated as an S-corporation (hereinafter the “Damages Period”).
The Shareholders recognize that a Corporation, in general, may not make an S-election
after such an election has been terminated before its fifth taxable year which begins after the first
taxable year for which such termination is effective. The Shareholders recognize the damages
payable hereunder may continue for a period of five years and the Shareholders hereby
knowingly and voluntarily waive any and all statutes of limitations which might otherwise apply
to preclude the recovery of damages hereunder absent such a waiver.
The payment of all damages shall be made within ten (10) days following the
accountant’s determination of the damages and shall be secured by a lien upon the shares
purportedly transferred and which resulted in the termination of the Corporation’s S-election.
Section 6.4 Loss Corporation. In the event the Corporation incurs a taxable loss in a
year for which damages are being determined in accordance with Section 6.3, the amount payable
by the Responsible Shareholder to the Remaining Shareholders shall be based upon the inability
of the Remaining Shareholders to use the losses or deductions which would have been passed
through to the Shareholders of the Corporation had the Corporation's S-election remained in
effect. The damage caused to each of the Remaining Shareholders due to the inability to utilize
deductions or losses which would have been passed through to a Shareholder shall be based upon
the marginal tax rate applicable to the taxable income of the Shareholder which the losses or
deductions might have offset. The amount of damages so computed shall take into account that
any recovery by a Shareholder hereunder will be included in the taxable income of the
Shareholder, and, accordingly, the recovery shall be increased so that the net after tax amount
received by the Shareholder shall be equal to the damages incurred by the Shareholder.
TLV1 626019885v5In determining the damages incurred by each of the Remaining Shareholders from the
inability to use the losses and deductions which would have passed through to the Shareholder,
there shall NOT be considered the limitations on a Remaining Shareholder’s ability to use the
losses and deductions due to the provisions of the passive loss limitation rules of Section 469 of
the Code, the “at risk” rules of Section 465 of the Code, and the available basis in a
Shareholder’s Stock and indebtedness as described in Section 1366(d) of the Code.
Section 6.5 Profitable Corporation. In the event the Corporation has taxable income
in a year for which damages are being determined in accordance with Section 6.3, the amount of
damages payable by the Responsible Shareholder to the Remaining Shareholders shall be based
upon the assumption that the taxable income of the Corporation would have been distributed in
full to the Shareholders had the Corporation’s S-election remained in effect. The amount payable
by the Responsible Shareholder to each of the Remaining Shareholders shall be an amount equal
to the difference between: (a) the net after-tax amount available to the Shareholder assuming all
corporate earnings are distributed to the Shareholders as dividends after deduction of corporate
income taxes on the corporate earnings and further reduced by the individual income taxes which
would be incurred with respect to the dividends which are available to be distributed to the
Shareholder had the dividends actually been distributed to the Shareholder during the fiscal year,
and (b) the amount which would have been available to the Shareholder assuming all corporate
earnings are distributed to the Shareholders and that no corporate income taxes would be incurred
with respect to the corporate earnings due to the Corporation’s S-election but after deduction for
individual income taxes which would have been payable with respect to the income passed
through had the S-election remained in effect.
The amount of damages incurred by each of the Remaining Shareholders shall be
determined at the Shareholder level based upon the marginal tax rate of each respective
Shareholder. The amount of damages so computed shall take into account that any recovery by a
Shareholder will be included in the taxable income of the Shareholder, and, accordingly, the
recovery shall be increased so that the net after tax amount received by the Shareholder shall be
equal to the damages incurred by the Shareholder.
Section 6.6 Mitigation of Damages. The parties agree that the Responsible
Shareholder shall be required to attempt to obtain a waiver by the Internal Revenue Service of the
terminating event in accordance with Section 1362(f) of the Code. The Remaining Shareholders
shall do all that is necessary to assist the Responsible Shareholder in obtaining the Internal
Revenue Service waiver but shall not be obligated to incur any expenses in assisting the
Responsible Shareholder nor shal! the Remaining Shareholders be responsible for any of the
legal, accounting or other costs incurred in obtaining such a waiver. The Responsible
Shareholder shall be responsible for and shal! bear all legal, accounting and other costs incurred
in obtaining a waiver including, but not limited to, the costs and expenses (including taxes,
penalties, and interests) of making any adjustments required by the Internal Revenue Service to
obtain the waiver, Should the waiver not be fully retroactive, the Responsible Shareholder shall
be responsible for the damages specified in Section 6.3 for the period for which the waiver is not
applicable.
Section 6.7 Limitation of Damages. In the event a Remaining Shareholder shall take
such action which would cause the Corporation’s S-election to terminate, that Remaining
Shareholder’s recovery of damages from the Responsible Shareholder shall cease at that time.
10
TLV1 626019885V5Such action shall not affect the other Remaining Shareholders from recovery of damages from the
Responsible Shareholder in accordance with the foregoing provisions.
ARTICLE VII
ENDORSEMENT ON STOCK CERTIFICATE
As part of this Agreement, the Shareholders and Corporation agree that the following
legend shall be placed upon all the certificates for shares of Stock of the Corporation:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
“ACT"). THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR
HYPOTHECATED IN THE ABSENCE OF A REGISTRATION STATEMENT IN
EFFECT WITH RESPECT TO THE SECURITIES UNDER SUCH ACT OR AN
OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE
CORPORATION THAT SUCH REGISTRATION IS NOT REQUIRED OR UNLESS
SOLD PURSUANT TO RULE 144 OF SUCH ACT.
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A
CERTAIN SHAREHOLDERS AGREEMENT AND MAY NOT BE SOLD,
TRANSFERRED, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED EXCEPT
AS PROVIDED THEREIN. ANY SALE, TRANSFER, OFFER FOR SALE, PLEDGE
OR HYPOTHECATION IN VIOLATION OF THAT AGREEMENT IS NULL AND
VOID. THE CORPORATION WILL FURNISH ANY OF ITS SHAREHOLDERS A
COPY OF THE AGREEMENT UPON REQUEST AND WITHOUT CHARGE.
ARTICLE VII
PROPORTIONATE SHARE
As used in this Agreement, the term “proportionate share” shall mean that portion of the
shares of Stock of the Corporation available to be purchased by a remaining Shareholder which
the number of shares of Stock of the Corporation owned by each remaining Shareholder bears to
the number of shares of Stock of the Corporation owned by all remaining Shareholders. In
addition, if any shares of the Corporation available for purchase are not purchased by the
remaining Shareholder first entitled thereto, then the term “proportionate share” shall include
that portion of the shares of the Corporation not purchased by the remaining Shareholder first
entitled thereto which the number of shares of Stock of the Corporation owned by a remaining
Shareholder bears to the number of shares of Stock of the Corporation owned by all remaining
Shareholders other than the remaining Shareholder first entitled to purchase the same.
ARTICLE IX
RIGHT OF OFFSET
The Shareholders and the Corporation hereby expressly agree that in the event a
Shareholder (hereinafter the “Selling Shareholder”) whose shares of Stock are being redeemed
and/or purchased by the Corporation and/or Shareholders pursuant to the provisions of
ARTICLE 11 through ARTICLE IV, as the case may be, shall have any outstanding obligations
owing to either the Corporation and/or a Shareholder, then, in the case of a redemption by the
ll
TLV1 626019885V5Corporation, the Corporation may deduct the principal and accrued interest on the obligation
owing to the Corporation by the Selling Shareholder from the redemption price otherwise
payable by the Corporation and, in the case of a purchase by a Shareholder (hereinafter the
“Purchasing Shareholder”), the Purchasing Shareholder may deduct the principal and accrued
interest on the obligation owing to the Purchasing Shareholder by the Selling Shareholder from
the purchase price otherwise payable by the Purchasing Shareholder. This paragraph shall apply
regardiess of whether or not the debt otherwise owed by the Selling Shareholder is due and
payable according to its terms at the time of closing and shall serve to accelerate the maturity
date for any such obligation.
ARTICLE X
COVENANTS OF CORPORATION
In the event the Corporation redeems any shares of Stock pursuant to this Agreement, and
the Corporation delivers a promissory note (the “Note”) as evidence of the deferred balance of
the redemption price hereunder, then the Corporation hereby agrees and acknowledges that it
will, at all times while the Note remains outstanding, reserve a sufficient number of authorized
but unissued shares of Stock of the Corporation and will contractually covenant to issue to the
holder of the Note additional shares of the Corporation’s Stock in the event of a default under the
Note in order to provide security comparable to a lien on the shares of Offered Stock or Affected
Stock, as the case may be, being redeemed by the Corporation hereunder, as set forth in this
ARTICLE X.
ARTICLE XI
DRAG ALONG RIGHTS
Notwithstanding anything in this Agreement to the contrary, in the event that
Shareholders owning, in the aggregate, Stock representing more than fifty percent (50%) of the
total issued and outstanding shares of Stock of the Corporation (referred to in this Article as the
“Selling Majority Shareholders”) elect to sell all of their Stock in a single transaction to a bona
fide third party purchaser, the Selling Majority Shareholders may require all of the Shareholders
other than the Selling Majority Shareholders (referred to in this ARTICLE XI as the “Minority
Shareholders”) to sell al! of their Stock for the same price and on the same payment terms as
those to be received by the Selling Majority Shareholders for their respective shares Stock. In
such case, the provisions of ARTICLE II hereof shall not apply to such transfer and the Minority
Shareholders shall be deemed to have made an offer to sell all of their Stock for the price and
payment terms referenced above and upon such other terms and conditions as those under which
the Selling Majority Shareholders will sell their Stock; provided, however, that the Minority
Shareholders shal! have no liability regarding any representations made by the Selling Majority
Shareholders, except representations relating to the Minority Shareholders’ ownership of their
Stock, their ability to deliver marketable title to such Stock and similar representations.
TLV1 626019885v5ARTICLE XII
TAG ALONG RIGHTS
In the event that a Shareholder (referred to in this ARTICLE XII as the “Selling
Shareholder”) elects to sell all or any portion of their shares of Stock in a single or related series
of transactions, the other Shareholders (referred to in this ARTICLE XII as the “Other
Shareholders”) may elect to sell an equal portion (based on the proportionate shareholdings of
each Shareholder) of their shares of Stock for the same per share price and on the same terms as
those to be received by the Selling Shareholder. Notwithstanding the foregoing, the Selling
Shareholder shall be required to comply with the terms of ARTICLE II hereof, to the extent
applicable, and the Other Shareholders would have the right to participate with Selling
Shareholder in any such sale. In the event that an Other Shareholder desires to elect to
participate in such sale, then each electing Other Shareholder shall give written notice to the
Selling Shareholder and the Corporation of their desire to participate in the sale transaction, in
which event the participating Other Shareholders shall be required to also make any
representations made by the Selling Shareholder in conjunction with such sale, The Selling
Shareholder shall be required to give written notice of any transaction which would give rise to
the rights provided under this ARTICLE XII (which notice shall include the terms of the
transaction) to the Other Shareholders at least 30 days prior to the intended effective date of such
transaction, and the Other Shareholders must notify the Selling Shareholder of their election
whether to participate in such transaction within 15 days after receipt of such notice from the
Selling Shareholder. Notwithstanding the foregoing, this ARTICLE XII shall not be applicable
to any transfers of Stock by a Shareholder to the following transferees: (a) Friden or Pardue, (b)
any person who is a lineal descendant of Friden or Pardue, and (c) any trust under which one or
more of Friden and Pardue or one or more lineal descendants of Friden or Pardue are the only
beneficiaries.
ARTICLE XU
RESTRICTIVE COVENANTS
Section 13.1 Competitive Business. Each of the Shareholders agrees that during the
period of time (the “Share Ownership Period”) that the Shareholder owns shares of Stock, and
for five (5) years following the cessation of the Share Ownership Period, the Shareholder will not
become a proprietor, partner, agent, trustee, director, officer, shareholder or member, directly or
indirectly, of, or be employed by, or render aid or advice to, or perform any services of any
nature whatsoever for, any organization which is engaged or proposes to engage anywhere
within the United States of America, in the business of preparing fresh meals that are cooked and
delivered to customers, or which is engaged or proposes to engage in any other activity similar to
the business conducted by the Corporation.
Section 13.2 Hiring. Each of the Shareholders agrees that during the Share Ownership
Period and for a period of five (5) years following the cessation of the Share Ownership Period,
the Shareholders will not hire or attempt to hire any employee, leased employee, independent
contractor or agent of the Corporation or otherwise encourage or attempt to encourage any
employee, leased employee, independent contractor or agent of the Corporation to leave the
Corporation’s employ.
13
TLV1 626019885v5Section 13.3 Confidentiality; Disclosure; Proprietary Information. Each of the
Shareholders recognizes and acknowledges that all records, documents, employee lists and
information, vendor lists and information, customer lists and information, supplier and
distributor lists and information, referral sources, financial information, trade secrets, recipes,
methods, techniques, processes, marketing and acquisition strategies and plans, intellectual
property (regardless of whether patentable or copyrightable), formulas, computer print-outs and
other information of any kind, whether or not complete and whether or not reduced to writing
(collectively, the “Confidential Information”), obtained by the Shareholders with regard to the
Corporation (or its affiliates, employees, principals, clients, suppliers, distributors or business
associates) during the course of the Share Ownership Period or in connection with the
negotiation and acquisition of shares of Stock by such Shareholder, and not generally known in
the public domain, constitutes valuable, special and unique and proprietary assets of the
Corporation’s business. Each of the Shareholders agrees that during the Share Ownership Period
and following the cessation of the Share Ownership Period, the Shareholders will not at any
time, directly or indirectly, disclose, disseminate, publish or permit the disclosure, dissemination
or publication of any Confidential Information, to or for any other person, group, firm,
corporation, association or other entity, or utilize the same for any reason or purpose whatsoever
other than for the benefit and at the request of the Corporation. At any time upon the request of
the Corporation, each of the Shareholders shall promptly deliver to the Corporation al!
memoranda, notes, records, reports, manuals, drawings, blue prints formulas and other
documents (and all copies thereof) relating to the business of the Corporation and all property
associated therewith, then possessed or under the control of the Shareholders.
Each of the Shareholders recognizes and acknowledges that the Confidential Information
referred to herein constitutes a trade secret within the meaning of Section 812.081 of the Florida
Statutes, appropriation of which for the Shareholder’s own benefit or for the use of any third
party constitutes a theft or embezzlement from the Corporation which may subject the
Shareholder to civil and criminal penalties as provided in the Florida Statutes. Further, the
Shareholder acknowledges that it is the Corporation’s policy to vigorously prosecute anyone
engaging in theft or embezzlement from the Corporation, including the misappropriation of
Confidential Information.
Section 13.4 Solicitation. Each of the Shareholders further agrees that during the Share
Ownership Period and for a period of five (5) years following the cessation of the Share
Ownership Period, the Shareholders will not, in any manner, solicit or encourage any person,
firm, corporation or other business entity who are employees, leased employees, independent
contractors, customers, suppliers, distributors, business associates or referral sources of the
Corporation to cease doing business with the Corporation.
Section 13.5 Covenants Independent. Each restrictive covenant on the part of each of
the Shareholders set forth in this Agreement shall be construed as a covenant independent of any
other covenant or provisions of this Agreement or any other agreement which the Corporation
and the Shareholder may have, fully performed and not executory, and the existence of any claim
or cause of action by the Shareholder against the Corporation, whether predicated upon another
covenant or provision of this Agreement or otherwise, shall not constitute a defense to the
enforcement by the Corporation of any other covenant.
TLV1 626019865v5Section 13.6 Divisibility of Covenant Areas, Periods and Lines of Business. If any
portion of the restrictive covenants contained herein is held to be unreasonable, arbitrary or
against public policy, each covenant shall be considered divisible as to time, geographical area
and line of business; and each one (1) week of the specified period shall be deemed to be a
separate period of time, each state, county, province, city and other governmental subdivision
shall be deemed to be a separate geographical area and each product or service sold or offered in
the business shall be deemed to be a separate line of business, so that the maximum lesser time,
geographical area and line(s) of business shall remain effective so long as the same is not
unreasonable, arbitrary or against public policy. :
Section 13.7 Injunctive and Equitable Relief. Each of the Shareholders and the
Corporation recognize and expressly agree that the extent of damages to Corporation in the event
of a breach by any of the Shareholders of any restrictive covenant set forth herein would be
impossible to ascertain, that the irreparable harm arising out of any breach shall be i
Preview
Case Number: CACE-19-022558 Division: 12 Filing # 98142465 E-Filed 10/30/2019 05:32:50 PM IN THE CIRCUIT COURT OF THE 17TH JUDICIAL CIRCUIT IN AND FOR BROWARD COUNTY, FLORIDA CIVIL DIVISION CASE NO. JOSHUA PARDUE, Plaintiff, v. CATERED FIT CORP, et al., Defendants. COMPLAINT EXHIBIT E *** FILED: BROWARD COUNTY, FL BRENDA D. FORMAN, CLERK 10/30/2019 05:32:48 PM.****SHAREHOLDERS’ AGREEMENT THIS SHAREHOLDERS’ AGREEMENT (this “Agreement”) is made effective , 2017 (the “Effective Date”), by and among ADAM M. FRIDEN (“Friden”), JOSHUA PARDUE (“Pardue”) and MARK GERENGER (“Gerenger”)(Friden, Pardue and Gerenger being hereinafter sometimes individually referred to as a “Shareholder” and collectively referred to as the “Shareholders”), and by them with CATERED FIT HOLDINGS, INC., a Delaware corporation (hereinafter referred to as the “Corporation”) and, solely for purposes of ARTICLE XV herein, CATERED FIT CORP, a Florida corporation (hereinafter referred to as “CF”). RECITALS: WHEREAS, the Shareholders and CF are parties to that certain shareholders agreement effective December 1, 2016 (the “CF Agreement”); WHEREAS, on August 1, 2016 CF, Pardue and Pardue Advisory, LLC, a Florida limited liability company (“Pardue Advisory”), have entered into that certain consulting agreement (the “Consulting Agreement”); WHEREAS, in connection with the corporate restructuring involving CF it was agreed that the Shareholders will contribute all the CF shares owned by them to the Corporation, such that CF shall become a wholly owned subsidiary of the Corporation and that they will be issued shares of the Corporation; WHEREAS, the Corporation is authorized to issue 10,000,000 shares of common stock, $0.001 par value per share (the “Stock” or “shares of Stock”) ; WHEREAS, the Shareholders own 9.000.000 shares of Stock of the Corporation, which as of the Effective Date represents all the Corporation’s issued and outstanding shares of Stock, divided among the Shareholders as follows: SHAREHOLDER NUMBER OF SHARES Friden 6,750,000 Pardue 1,125,000 Gerenger 125,000 Total 9,000,000 WHEREAS, the Corporation has made or intends to make an election in accordance with the provisions of Section 1362(a) of the Internal Revenue Code of 1986 (hereinafter referred to as the “Code”) for the Corporation to be treated as an S-corporation, as that term is defined in Section 1361(a) of the Code; WHEREAS, the Shareholders deem it to be in their best interests and in the best interest of the Corporation for the Corporation to continue to be treated as an S-corporation; TLV1 626019885v5WHEREAS, the availability of the Corporation to continue to be treated as an S-corporation is dependent, among other things, upon events within the control of the Shareholders as more fully described in ARTICLE VI hereinafter; WHEREAS, the Shareholders desire to enter into this Agreement to provide certain remedies in the event a Shareholder makes a transfer or disposition of his shares of Stock of the Corporation causing a termination of the Corporation’s status as an S-corporation; WHEREAS, the Shareholders further believe it to be in their best interests and in the best interest of the Corporation to: (a) to provide for certain provision regarding the election and removal of directors and decision making at the board of directors of the corporation (the “Board of Directors”) and at the Shareholders level; (b) provide for the prior opportunity to purchase shares of Stock of the Corporation owned by a Shareholder in the event the Shareholder desires to sell, transfer, give or otherwise dispose of his Stock, and (c) provide for the sale and purchase of the shares of Stock owned by a Shareholder upon his or her death, insolvency or bankruptcy, as provided herein. NOW THEREFORE, in consideration of the mutual covenants herein contained, the benefits to be obtained by each Shareholder under this Agreement, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Shareholders and Corporation agree as follows: ARTICLE 1 GENERAL RESTRICTION No Shareholder may sell, give, pledge, transfer, encumber, or otherwise dispose of all or any portion of the Shareholder’s shares of Stock of the Corporation, whether now owned or acquired subsequent to the Effective Date, without the prior written consent of the Board of Directors of the Corporation, except as may otherwise be specifically provided for in this Agreement. Any sale, gift, pledge, transfer, or encumbrance of the Stock shall, in addition to the other terms of this Agreement, be subject to the provisions of ARTICLE VI, providing that transfers to “Ineligible Shareholders”, as that term is defined therein, are null and void and subjecting the “Selling Shareholder”, as that term is defined herein, to monetary damages and costs as further described therein in the event a transfer causes the termination of the Corporation’s S-corporation election. ARTICLE I VOLUNTARY TRANSFER Section 2.1. Offer Upon Voluntary Transfer. No Shareholder may sell, transfer or otherwise dispose of any of his or her shares of Stock other than in a Permitted Transfer (as that term is defined herein) at any time without the consent of the Board of Directors, unless the Shareholder desiring to make the transfer (hereinafter referred to as the “Selling Shareholder”), shall (a) have received a bona fide written offer to purchase or otherwise acquire such shares of Stock by an unrelated third party (hereinafter referred to as the “Proposed Transferee”) and (b) have first made an offer to tender to the Corporation for redemption and secondly, make an offer 2 TLV1 626019885v5to sell to the remaining Shareholders, all of the shares of Stock that the Selling Shareholder desires to sell, give, and transfer or otherwise dispose (hereinafter referred to as the “Offered Stock”) in the manner hereinafter described in this ARTICLE II; provided, however, that no such transfer shall be permitted without the consent of the Corporation if such transfer is in violation of ARTICLE VI herein. “Permitted Transfer” shall mean a transfer of Stock by such Shareholder for bona fide estate planning purposes, either during his or her lifetime or on death by will or intestacy to his or her spouse, child (natural or adopted), or any other direct lineal descendant of such Shareholder (or his or her spouse) (all of the foregoing collectively referred to as “family members”), or any other person approved by the Board of Directors of the Corporation, or any custodian or trustee of any trust, partnership or limited liability company for the benefit of, or the ownership interests of which are owned wholly by such Shareholder or any such family members; provided that the Shareholder is not an Ineligible Shareholders and provided further that, the Selling Shareholder shall deliver prior written notice to the Corporation of such gift, pledge or transfer and the transferee shall, as a condition to such transfer being permitted, deliver a counterpart signature page to this Agreement as confirmation that such transferee shall be bound by all the terms and conditions of this Agreement as a Shareholder (but only with respect to the shares of Stock so transferred to the transferee). he transferee of any shares of Stock pursuant to a Permitted Transfer is referred to herein as a “Permitted Transferee”. Section 2.2. Manner of Offer by Selling Shareholder. The offers to tender to the Corporation and/or sell to the remaining Shareholders shall be given in writing and include the nature of the transaction (whether sale, gift, transfer or other disposal), the name and address of the Proposed Transferee, and the terms of the transaction, including the number of shares involved, the purchase price or other acquisition amount, and the payment terms (hereinafter referred to as the “Proposed Transaction”). The written statement shall be accompanied by a copy of the written offer, proposal, or contract, if any, between the Selling Shareholder and the Proposed Transferee. The offer shall be given in writing by the Selling Shareholder to the Corporation and to the remaining Shareholders and shall consist of an offer to first tender to the Corporation, and secondly to sell to the remaining Shareholders in proportionate shares as described in ARTICLE VIII hereinafter, all of the shares of Offered Stock in accordance with the terms of this ARTICLE II. There shall be no obligation or requirement that either the Corporation or remaining Shareholders redeem or purchase any of the Offered Stock under this ARTICLE II, any redemption or purchase of the Offered Stock being solely upon election to do so. Provided, however, if the Corporation and/or remaining Shareholders exercise their option to redeem and/or purchase any of the shares of Offered Stock, then the Corporation and/or remaining Shareholders must, in the aggregate, exercise their option to purchase and/or redeem all of the shares of Offered Stock. Section 2.3 Acceptance of Offer. Within ninety (90) days after the receipt of such written offer from the Selling Shareholder in accordance with Section 2.2, the Corporation shall have the option, but not the duty, to redeem all or any portion of the shares of Offered Stock. The Corporation shall exercise its option by giving written notice thereof to the Selling Shareholder and to the remaining Shareholders. If the Corporation fails to exercise its option to redeem all or any portion of such shares, then the remaining Shareholders shall have the option, but not the duty, within thirty (30) days after the expiration of the time within which the Corporation may exercise its option, to purchase in proportionate shares as described in ARTICLE VIII hereinafter, 3 TLV1 626019885v5all, but not less than all, of the shares of Offered Stock as to which the Corporation fails to exercise its option to redeem. Each of the remaining Shareholders shall exercise his option by giving written notice thereof to the Corporation, the Selling Shareholder and each other. The notice of exercise of option, whether by the Corporation or a remaining Shareholder, shall specify a date for the closing of the redemption and/or purchase of the Offered Stock (the “Closing” or “Closing Date”). The Closing shall be held at the principal office of the Corporation or at such other place as the Selling Shareholder and the Corporation and/or remaining Shareholders shall mutually agree. The Closing shall occur on a date which shall be not less than thirty (30) nor more than ninety (90) days after the expiration of the time within which the remaining Shareholders may exercise their option unless the Selling Shareholder and the Corporation and/or remaining Shareholders otherwise mutually agree on another date, Any acceptance of the offer made in accordance with the terms hereof shall be binding as hereinafter provided. Section 2.4 Redemption/Purchase Price and Terms. If the Corporation and/or the remaining Shareholders elect to redeem or purchase the Offered Stock, the price for each share of Offered Stock, and the manner and time for payment therefor, shall be the same as established by the Proposed Transaction, as set forth in the Selling Shareholder’s written offer to the Corporation and the remaining Shareholders pursuant to the requirements set forth in Section 2.2 above. Section 2.5 Documents. At the Closing, the Selling Shareholder shal! deliver, in exchange for the total purchase price, whether in cash or partially in cash and partially by promissory note(s), as the case may be, the certificate(s) representing the Offered Stock being transferred, duly endorsed, and such other documents as shall be necessary and reasonably required to conclude the transfer. Section 2.6 Release from Restriction. If the offers are not accepted by the Corporation and/or by the remaining Shareholders with respect to all of the shares of the Offered Stock, as provided hereinabove, the Selling Shareholder may make a bona fide transfer of the Offered Stock in accordance with the Proposed Transaction, the terms of which are described in the Selling Shareholder’s written offer to the Corporation and remaining Shareholders. The sale or other transfer of the Offered Stock shall be made only in strict accordance with the terms of the Proposed Transaction as described in the Selling Shareholder’s offer to the Corporation and remaining Shareholders and within the time period hereinafter set forth. If the Selling Shareholder shall fail to make the sale or other transfer within ninety (90) days following the expiration of the time hereinabove provided for exercise of the option to purchase by the remaining Shareholders, then the Offered Stock shall again become subject to all the restrictions of this Agreement. Nothing contained herein shall be construed as releasing any Stock of the Corporation from any restrictions or requirements of law concerning the transfer of such Stock. Section 2.7 Continuance of Restrictions Upon Subsequent Holders. In the event the Selling Shareholder makes a bona fide transfer under the provisions of this ARTICLE II, then the Offered Stock transferred to the Proposed Transferee shall be subject to all the provisions of this Agreement. No shares of the Offered Stock shall be transferred on the books of the Corporation or issued to the Proposed Transferee unless and until the Proposed Transferee has executed a counterpart of this Agreement, the original of which shall be retained as a part of the corporate records. The failure of the Proposed Transferee to execute a counterpart of this Agreement, 4 TLV1 626019885V5however, shall not affect the applicability of this Agreement to the Offered Stock, it being the intention of each Shareholder and the Corporation that any and all subsequent owners of Stock voluntarily transferred shall only receive and own the Stock subject to the same restrictions upon transfer and encumbrance as set forth in this Agreement to which the Selling Shareholder was subject, including, without limitation, the provisions of ARTICLE VI hereinafter. ARTICLE Il BANKRUPTCY OR ASSIGNMENT Section 3.1. Involuntary Transfer. In the event any shares of Stock of the Corporation held by a Shareholder are the subject of an involuntary transfer, whether due to bankruptcy, assignment for benefit of creditors, judicial order, legal process, execution, attachment, enforcement of a pledge or other encumbrance, or otherwise (hereinafter referred to as the “Affected Stock”), the Shareholder of the Affected Stock shall be deemed to have made, immediately prior to such involuntary transfer, an offer first to tender the Affected Stock to the Corporation for redemption and secondly to sell the Affected Stock to the remaining Shareholders, in the manner hereinafter described in this ARTICLE Ill. There shall be no obligation or requirement that either the Corporation or the remaining Shareholders redeem or purchase any of the Affected Stock under this ARTICLE III, any purchase or redemption of the Affected Stock being solely upon election to do so. The Corporation and/or remaining Shareholders may redeem and/or purchase any portion or all of the Affected Stock. Section 3.2 Exercise of Option. If the Corporation elects to redeem all or any portion of the Affected Stock in accordance with this ARTICLE III, the Corporation shall serve notice in writing of its election upon the Shareholder of the Affected Stock and his creditor(s) who is to be the recipient of the Affected Stock (hereinafter referred to collectively as the “Transferor”), with copies thereof to the remaining Shareholders, within ninety (90) days after the President of the Corporation shall have received actual notice of the involuntary transfer. If the Corporation fails to exercise its option to redeem all or any portion of the Affected Stock, it shall, within five (5) days after the expiration of the time within which the Corporation may exercise its option, give notice to the remaining Shareholders of its failure to exercise its option with respect to all or any portion of the shares of Stock and the remaining Shareholders shall have the option, but not the duty, within thirty (30) days after the expiration of the time within which the Corporation may exercise its option, to purchase in proportionate shares as described in ARTICLE VIII hereinafter, all or any portion of the Affected Stock which the Corporation does not elect to redeem. Each of the remaining Shareholders shall exercise the option by giving written notice thereof to the Corporation, the Transferor and each other. The notice of exercise of option, whether by the Corporation or by a remaining Shareholder, shall specify a date for the closing of the redemption and/or purchase of the Affected Stock (hereinafter referred to as the “Affected Stock Closing” or “Affected Stock Closing Date”). The Affected Stock Closing shall be held at the office of the Corporation or at such other place as the Transferor and the Corporation and/or remaining Shareholders shall mutually agree. The Affected Stock Closing shall occur on a date which shall be not less than thirty (30) days nor more than ninety (90) days after the expiration of the time within which the remaining Shareholders may exercise their option unless the Transferor and the Corporation TLV1 626019885v5and/or remaining Shareholders otherwise mutually agree on another date. Any acceptance of the deemed offer made in accordance with the terms hereof shall be binding as hereinafter provided. Section 3.3 Redemption/Purchase Price. If the Corporation and/or the remaining Shareholders elect to redeem or purchase any or all of the shares of Affected Stock, the price for each share of Affected Stock shall be the lesser of: (i) the price per share established by ARTICLE V hereinafter, or (ii) the total amount, including acquisition costs, if any, which had been due to the creditor of the Shareholder who was to be the recipient of the Affected Stock with the amount allocated equally among the total number of shares of the Affected Stock which the creditor was to have received from the Shareholder of the Affected Stock. Section 3.4 Payment of Redemption/Purchase Price. If the Corporation exercises its option to redeem any or all of the Affected Stock, the redemption price shal] be paid, at the option of the Corporation, either entirely in cash at the Affected Stock Closing or by the payment in cash at the Affected Stock Closing of at least ten percent (10%) of the redemption price and the delivery of a promissory note for the remaining balance of the redemption price, in the form hereinafter described. If the remaining Shareholders exercise their option to purchase any or all of the Affected Stock, each of the remaining Shareholders, at the option of each remaining Shareholder, shall pay their portion of the purchase price either entirely in cash at the Affected Stock Closing or by the payment in cash at the Affected Stock Closing of at least ten percent (10%) of the purchase price and the delivery of a promissory note(s) for the remaining balance of the purchase price, in the form hereinafter described. In the event there remains any deferred balance, the promissory note(s) evidencing the obligation (hereinafter, the “Note”) shall provide, among other provisions normally acceptable in Broward County, Florida, for interest from the Affected Stock Closing Date on the unpaid balance at the minimum rate of interest necessary to satisfy, on the Affected Stock Closing Date, the requirements set forth in Section 483 or Section 1274 of the Code, whichever Section shall be applicable, giving due consideration to the term of the Note and frequency of payments thereunder. The Note shall be payable over a term of five (5) years from the Affected Stock Closing Date and in annual installments sufficient to fully amortize the principal and interest over the term of the Note, and with the first payment being due one (1) year from the Affected Stock Closing Date. The Note shall contain a provision that a default in any payment which continues for more than thirty (30) days after written notice thereof to the maker shall, at the option of the holder of the note, render the entire debt immediately due and payable. The promissory note shall permit prepayment of the outstanding principal and interest without penalty at any time. Payment of any Note evidencing the deferred balance of the purchase price payable by a remaining Shareholder shall be secured by a lien on the shares of Affected Stock being purchased by the remaining Shareholder hereunder. Payment of any Note evidencing the deferred balance of the redemption price payable by the Corporation shall be secured by the Corporation’s contractual covenant to issue to the holder of the Note additional shares of the Corporation’s Stock in the event of a default under the Note in order to provide security comparable to a lien on the shares of Affected Stock being redeemed by the Corporation hereunder, as set forth in ARTICLE X hereunder. Section 3.5 Documents. At the time of Affected Stock Closing, the Transferor shall deliver, in exchange for the total redemption or purchase price, whether in cash or partially in cash and partially by promissory note(s), as the case may be, the certificate(s) representing the 6 TLV1 626019885v5Stock being transferred, duly endorsed, and such other documents as shall be necessary and reasonably required to conclude the transfer. Section 3.6 No Prohibited Transfer; Continuance of Restrictions Upon Transferor. In the event the “deemed offer” of the Transferor is not accepted either by the Corporation or by the remaining Shareholders as to all of the shares of Affected Stock, then the shares not accepted may be transferred to the transferee/creditor subject to all the provisions of this Agreement including, without limitation, any restriction imposed pursuant to ARTICLE VI hereinafter. The transferee/creditor shall execute a counterpart of this Agreement, the original of which shall be retained as a part of the corporate records. The failure of the transferee to execute a counterpart of this Agreement shall not affect the applicability of this Agreement to the Affected Stock, it being the intention of each Shareholder and the Corporation that any and all subsequent owners of shares of Stock pursuant to an involuntary transfer shall only receive and own the shares of Stock subject to the restrictions upon transfer and encumbrance as set forth in this Agreement to which the original Shareholder was subject including, without limitation, the provisions of ARTICLE VI hereinafter. ARTICLE IV DEATH In the event a Shareholder shall die during the term of this Agreement, each party to this Agreement specifically acknowledges and agrees that this Agreement will not prohibit the transfer of any portion or all of the shares of Stock held by the Shareholder on the date of his death according to the laws of testacy or intestacy, as the case may be, and that any such transfer shall not constitute a violation of this Agreement; provided, however, that no shares of Stock may be transferred in violation of ARTICLE VI hereinafter and provided, further that all shares of Stock transferred pursuant to this ARTICLE IV shall continue to be subject to all provisions of this Agreement, including, without limitation, the provisions of ARTICLE VI hereinafter. No shares of Stock shall be transferred on the books of the Corporation or issued to his transferees unless and until such transferees have executed a counterpart of this Agreement, the original of which shall be retained as part of the corporate records. The failure of the transferees to execute a counterpart to this Agreement, however, shall not affect the applicability of this Agreement to the Stock so transferred, it being the intention of all the parties hereto that any and all subsequent owners of Stock transferred as a result of the death of a Shareholder shal! only receive and own the Stock subject to the same restrictions upon transfer as set forth in this Agreement to which the deceased Shareholder was subject. ARTICLE V PRICE Except as modified elsewhere in this Agreement, the price per share payable pursuant to ARTICLE III and ARTICLE IV above, for purchase or redemption of shares of Stock of the Corporation under this Agreement shall be the fair market value of the Stock as of the end of the calendar month of the Corporation immediately preceding the month in which the death of a Shareholder shall occur or the date of the Proposed Transfer or involuntary transfer or encumbrance, as the case may be. The fair market value of the Stock shali be determined by an 7 TLV1 626019885V5appraiser selected by the mutual agreement of the Selling Shareholder or Transferor and the remaining Shareholders and/or Corporation, as the case may be. If the parties shall be unable to agree upon the selection of an appraiser, then the Selling Shareholder or Transferor, as the case may be, shall select one appraiser, and the remaining Shareholders and/or Corporation, as the case may be, shall select an appraiser and the two (2) appraisers so selected shall select a third (3rd) appraiser who shall perform the appraisal. The determination of the third (3rd) appraiser shall be conclusive and binding upon the parties. The expense of the appraisal shall be paid one-half (1/2) by the Selling Shareholder or Transferor, as the case may be, and one-half (1/2) by the remaining Shareholders and/or Corporation, as the case may be, in the same ratio as the Stock required by each bears to the total Stock acquired hereunder. ARTICLE VI S-CORPORATION PROVISIONS Section 6.1 Acknowledgment of S-corporation Status. Each of the Shareholders acknowledge and agree that an election has been made in accordance with Section 1362(a) of the Code for the Corporation to be treated as an §-corporation, as that term is defined in Section 1361{a) of the Code. The Shareholders desire that the Corporation maintain its status as an S-corporation until terminated by mutual agreement and hereby agree that any Shareholder transferring any shares of Stock which the Shareholder owns in the Corporation, irrespective of whether the Corporation and/or other Shareholders may have declined to exercise the options granted hereunder, may be liable for monetary damages to the other Shareholders if the transfer would cause the Corporation to lose its status as an S-corporation. The Shareholders hereby acknowledge and understand that there are restrictions on who may own shares of Stock in an S-corporation. Specifically, no shares of Stock of an S-corporation may be owned by: (a) Any person who would cause the Corporation to have more than 100 shareholders; (b) Any person who is a non-resident alien; (c) Any person who is not an individual, an estate, or trust described in Section 1361(c)(2) of the Code; or (d) Any exempt organization which is not described in Section 1361(c)(6) of the Code. Those persons who may not be shareholders of an S-corporation shall hereinafter be referred to as an “Ineligible Shareholder”. Section 6.2 Transfer to Ineligible Shareholder. Any transfer to, or acquisition of shares of Stock of the Corporation by, an Ineligible Shareholder shall be null and void. The Shareholders hereby agree that any such transfer or acquisition may and should be enjoined and shall not affect the beneficial ownership of the shares of Stock. Therefore, the Shareholder making a purported transfer to an Ineligible Shareholder shall retain the right to vote the shares of Stock (to the extent of voting rights attributable to such Stock), receive dividends and liquidation proceeds attributable to the shares of Stock, and-shall exercise each and every other right of a Shareholder of the shares of Stock purportedly transferred. Additionally, the Shareholder making 8 TLV1 626019885v5the purported transfer shall continue to report his share of income or loss and other items allocated to the shares of Stock in accordance with the provisions of Section 1366 of the Code. The purported transferee shall not be deemed a Shareholder of the Corporation and shall not be entitled to registration of such transfer on the books of the Corporation. Section 6.3 Damages. In the event a purported transfer to an Ineligible Shareholder nevertheless causes the Corporation to lose its status as an S-corporation notwithstanding the provisions of Section 6.2 hereinabove, the Shareholder owning the shares of Stock immediately prior to the transfer to the Ineligible Shareholder shall pay to the other Shareholders (hereinafter the “Remaining Shareholders”) damages caused by the inability of the Corporation to maintain its status as an S-corporation regardless of the fault of the Shareholder or other circumstances surrounding the transfer. The amount of damages incurred by the Remaining Shareholders shall be determined by the regularly retained independent accountant employed by the Corporation. The accountant’s determination of damages shall be made in accordance with the provisions of Section 6.4 or Section 6.5 depending upon whether the Corporation recognizes a profit or loss in the year in which such damages are determined and shall be conclusive and binding upon all parties. The payment of the damages by the Shareholder of the shares whose transfer caused the Corporation to lose its status as an S-corporation (hereinafter the “Responsible Shareholder”) shall commence the first fiscal year of the Corporation in which the Corporation is unable to report its income and losses as an S-corporation and shall continue until the fiscal year of the Corporation in which the Corporation may once again elect under current law to be treated as an S-corporation (hereinafter the “Damages Period”). The Shareholders recognize that a Corporation, in general, may not make an S-election after such an election has been terminated before its fifth taxable year which begins after the first taxable year for which such termination is effective. The Shareholders recognize the damages payable hereunder may continue for a period of five years and the Shareholders hereby knowingly and voluntarily waive any and all statutes of limitations which might otherwise apply to preclude the recovery of damages hereunder absent such a waiver. The payment of all damages shall be made within ten (10) days following the accountant’s determination of the damages and shall be secured by a lien upon the shares purportedly transferred and which resulted in the termination of the Corporation’s S-election. Section 6.4 Loss Corporation. In the event the Corporation incurs a taxable loss in a year for which damages are being determined in accordance with Section 6.3, the amount payable by the Responsible Shareholder to the Remaining Shareholders shall be based upon the inability of the Remaining Shareholders to use the losses or deductions which would have been passed through to the Shareholders of the Corporation had the Corporation's S-election remained in effect. The damage caused to each of the Remaining Shareholders due to the inability to utilize deductions or losses which would have been passed through to a Shareholder shall be based upon the marginal tax rate applicable to the taxable income of the Shareholder which the losses or deductions might have offset. The amount of damages so computed shall take into account that any recovery by a Shareholder hereunder will be included in the taxable income of the Shareholder, and, accordingly, the recovery shall be increased so that the net after tax amount received by the Shareholder shall be equal to the damages incurred by the Shareholder. TLV1 626019885v5In determining the damages incurred by each of the Remaining Shareholders from the inability to use the losses and deductions which would have passed through to the Shareholder, there shall NOT be considered the limitations on a Remaining Shareholder’s ability to use the losses and deductions due to the provisions of the passive loss limitation rules of Section 469 of the Code, the “at risk” rules of Section 465 of the Code, and the available basis in a Shareholder’s Stock and indebtedness as described in Section 1366(d) of the Code. Section 6.5 Profitable Corporation. In the event the Corporation has taxable income in a year for which damages are being determined in accordance with Section 6.3, the amount of damages payable by the Responsible Shareholder to the Remaining Shareholders shall be based upon the assumption that the taxable income of the Corporation would have been distributed in full to the Shareholders had the Corporation’s S-election remained in effect. The amount payable by the Responsible Shareholder to each of the Remaining Shareholders shall be an amount equal to the difference between: (a) the net after-tax amount available to the Shareholder assuming all corporate earnings are distributed to the Shareholders as dividends after deduction of corporate income taxes on the corporate earnings and further reduced by the individual income taxes which would be incurred with respect to the dividends which are available to be distributed to the Shareholder had the dividends actually been distributed to the Shareholder during the fiscal year, and (b) the amount which would have been available to the Shareholder assuming all corporate earnings are distributed to the Shareholders and that no corporate income taxes would be incurred with respect to the corporate earnings due to the Corporation’s S-election but after deduction for individual income taxes which would have been payable with respect to the income passed through had the S-election remained in effect. The amount of damages incurred by each of the Remaining Shareholders shall be determined at the Shareholder level based upon the marginal tax rate of each respective Shareholder. The amount of damages so computed shall take into account that any recovery by a Shareholder will be included in the taxable income of the Shareholder, and, accordingly, the recovery shall be increased so that the net after tax amount received by the Shareholder shall be equal to the damages incurred by the Shareholder. Section 6.6 Mitigation of Damages. The parties agree that the Responsible Shareholder shall be required to attempt to obtain a waiver by the Internal Revenue Service of the terminating event in accordance with Section 1362(f) of the Code. The Remaining Shareholders shall do all that is necessary to assist the Responsible Shareholder in obtaining the Internal Revenue Service waiver but shall not be obligated to incur any expenses in assisting the Responsible Shareholder nor shal! the Remaining Shareholders be responsible for any of the legal, accounting or other costs incurred in obtaining such a waiver. The Responsible Shareholder shall be responsible for and shal! bear all legal, accounting and other costs incurred in obtaining a waiver including, but not limited to, the costs and expenses (including taxes, penalties, and interests) of making any adjustments required by the Internal Revenue Service to obtain the waiver, Should the waiver not be fully retroactive, the Responsible Shareholder shall be responsible for the damages specified in Section 6.3 for the period for which the waiver is not applicable. Section 6.7 Limitation of Damages. In the event a Remaining Shareholder shall take such action which would cause the Corporation’s S-election to terminate, that Remaining Shareholder’s recovery of damages from the Responsible Shareholder shall cease at that time. 10 TLV1 626019885V5Such action shall not affect the other Remaining Shareholders from recovery of damages from the Responsible Shareholder in accordance with the foregoing provisions. ARTICLE VII ENDORSEMENT ON STOCK CERTIFICATE As part of this Agreement, the Shareholders and Corporation agree that the following legend shall be placed upon all the certificates for shares of Stock of the Corporation: THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT"). THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF A REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO THE SECURITIES UNDER SUCH ACT OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE CORPORATION THAT SUCH REGISTRATION IS NOT REQUIRED OR UNLESS SOLD PURSUANT TO RULE 144 OF SUCH ACT. THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A CERTAIN SHAREHOLDERS AGREEMENT AND MAY NOT BE SOLD, TRANSFERRED, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED EXCEPT AS PROVIDED THEREIN. ANY SALE, TRANSFER, OFFER FOR SALE, PLEDGE OR HYPOTHECATION IN VIOLATION OF THAT AGREEMENT IS NULL AND VOID. THE CORPORATION WILL FURNISH ANY OF ITS SHAREHOLDERS A COPY OF THE AGREEMENT UPON REQUEST AND WITHOUT CHARGE. ARTICLE VII PROPORTIONATE SHARE As used in this Agreement, the term “proportionate share” shall mean that portion of the shares of Stock of the Corporation available to be purchased by a remaining Shareholder which the number of shares of Stock of the Corporation owned by each remaining Shareholder bears to the number of shares of Stock of the Corporation owned by all remaining Shareholders. In addition, if any shares of the Corporation available for purchase are not purchased by the remaining Shareholder first entitled thereto, then the term “proportionate share” shall include that portion of the shares of the Corporation not purchased by the remaining Shareholder first entitled thereto which the number of shares of Stock of the Corporation owned by a remaining Shareholder bears to the number of shares of Stock of the Corporation owned by all remaining Shareholders other than the remaining Shareholder first entitled to purchase the same. ARTICLE IX RIGHT OF OFFSET The Shareholders and the Corporation hereby expressly agree that in the event a Shareholder (hereinafter the “Selling Shareholder”) whose shares of Stock are being redeemed and/or purchased by the Corporation and/or Shareholders pursuant to the provisions of ARTICLE 11 through ARTICLE IV, as the case may be, shall have any outstanding obligations owing to either the Corporation and/or a Shareholder, then, in the case of a redemption by the ll TLV1 626019885V5Corporation, the Corporation may deduct the principal and accrued interest on the obligation owing to the Corporation by the Selling Shareholder from the redemption price otherwise payable by the Corporation and, in the case of a purchase by a Shareholder (hereinafter the “Purchasing Shareholder”), the Purchasing Shareholder may deduct the principal and accrued interest on the obligation owing to the Purchasing Shareholder by the Selling Shareholder from the purchase price otherwise payable by the Purchasing Shareholder. This paragraph shall apply regardiess of whether or not the debt otherwise owed by the Selling Shareholder is due and payable according to its terms at the time of closing and shall serve to accelerate the maturity date for any such obligation. ARTICLE X COVENANTS OF CORPORATION In the event the Corporation redeems any shares of Stock pursuant to this Agreement, and the Corporation delivers a promissory note (the “Note”) as evidence of the deferred balance of the redemption price hereunder, then the Corporation hereby agrees and acknowledges that it will, at all times while the Note remains outstanding, reserve a sufficient number of authorized but unissued shares of Stock of the Corporation and will contractually covenant to issue to the holder of the Note additional shares of the Corporation’s Stock in the event of a default under the Note in order to provide security comparable to a lien on the shares of Offered Stock or Affected Stock, as the case may be, being redeemed by the Corporation hereunder, as set forth in this ARTICLE X. ARTICLE XI DRAG ALONG RIGHTS Notwithstanding anything in this Agreement to the contrary, in the event that Shareholders owning, in the aggregate, Stock representing more than fifty percent (50%) of the total issued and outstanding shares of Stock of the Corporation (referred to in this Article as the “Selling Majority Shareholders”) elect to sell all of their Stock in a single transaction to a bona fide third party purchaser, the Selling Majority Shareholders may require all of the Shareholders other than the Selling Majority Shareholders (referred to in this ARTICLE XI as the “Minority Shareholders”) to sell al! of their Stock for the same price and on the same payment terms as those to be received by the Selling Majority Shareholders for their respective shares Stock. In such case, the provisions of ARTICLE II hereof shall not apply to such transfer and the Minority Shareholders shall be deemed to have made an offer to sell all of their Stock for the price and payment terms referenced above and upon such other terms and conditions as those under which the Selling Majority Shareholders will sell their Stock; provided, however, that the Minority Shareholders shal! have no liability regarding any representations made by the Selling Majority Shareholders, except representations relating to the Minority Shareholders’ ownership of their Stock, their ability to deliver marketable title to such Stock and similar representations. TLV1 626019885v5ARTICLE XII TAG ALONG RIGHTS In the event that a Shareholder (referred to in this ARTICLE XII as the “Selling Shareholder”) elects to sell all or any portion of their shares of Stock in a single or related series of transactions, the other Shareholders (referred to in this ARTICLE XII as the “Other Shareholders”) may elect to sell an equal portion (based on the proportionate shareholdings of each Shareholder) of their shares of Stock for the same per share price and on the same terms as those to be received by the Selling Shareholder. Notwithstanding the foregoing, the Selling Shareholder shall be required to comply with the terms of ARTICLE II hereof, to the extent applicable, and the Other Shareholders would have the right to participate with Selling Shareholder in any such sale. In the event that an Other Shareholder desires to elect to participate in such sale, then each electing Other Shareholder shall give written notice to the Selling Shareholder and the Corporation of their desire to participate in the sale transaction, in which event the participating Other Shareholders shall be required to also make any representations made by the Selling Shareholder in conjunction with such sale, The Selling Shareholder shall be required to give written notice of any transaction which would give rise to the rights provided under this ARTICLE XII (which notice shall include the terms of the transaction) to the Other Shareholders at least 30 days prior to the intended effective date of such transaction, and the Other Shareholders must notify the Selling Shareholder of their election whether to participate in such transaction within 15 days after receipt of such notice from the Selling Shareholder. Notwithstanding the foregoing, this ARTICLE XII shall not be applicable to any transfers of Stock by a Shareholder to the following transferees: (a) Friden or Pardue, (b) any person who is a lineal descendant of Friden or Pardue, and (c) any trust under which one or more of Friden and Pardue or one or more lineal descendants of Friden or Pardue are the only beneficiaries. ARTICLE XU RESTRICTIVE COVENANTS Section 13.1 Competitive Business. Each of the Shareholders agrees that during the period of time (the “Share Ownership Period”) that the Shareholder owns shares of Stock, and for five (5) years following the cessation of the Share Ownership Period, the Shareholder will not become a proprietor, partner, agent, trustee, director, officer, shareholder or member, directly or indirectly, of, or be employed by, or render aid or advice to, or perform any services of any nature whatsoever for, any organization which is engaged or proposes to engage anywhere within the United States of America, in the business of preparing fresh meals that are cooked and delivered to customers, or which is engaged or proposes to engage in any other activity similar to the business conducted by the Corporation. Section 13.2 Hiring. Each of the Shareholders agrees that during the Share Ownership Period and for a period of five (5) years following the cessation of the Share Ownership Period, the Shareholders will not hire or attempt to hire any employee, leased employee, independent contractor or agent of the Corporation or otherwise encourage or attempt to encourage any employee, leased employee, independent contractor or agent of the Corporation to leave the Corporation’s employ. 13 TLV1 626019885v5Section 13.3 Confidentiality; Disclosure; Proprietary Information. Each of the Shareholders recognizes and acknowledges that all records, documents, employee lists and information, vendor lists and information, customer lists and information, supplier and distributor lists and information, referral sources, financial information, trade secrets, recipes, methods, techniques, processes, marketing and acquisition strategies and plans, intellectual property (regardless of whether patentable or copyrightable), formulas, computer print-outs and other information of any kind, whether or not complete and whether or not reduced to writing (collectively, the “Confidential Information”), obtained by the Shareholders with regard to the Corporation (or its affiliates, employees, principals, clients, suppliers, distributors or business associates) during the course of the Share Ownership Period or in connection with the negotiation and acquisition of shares of Stock by such Shareholder, and not generally known in the public domain, constitutes valuable, special and unique and proprietary assets of the Corporation’s business. Each of the Shareholders agrees that during the Share Ownership Period and following the cessation of the Share Ownership Period, the Shareholders will not at any time, directly or indirectly, disclose, disseminate, publish or permit the disclosure, dissemination or publication of any Confidential Information, to or for any other person, group, firm, corporation, association or other entity, or utilize the same for any reason or purpose whatsoever other than for the benefit and at the request of the Corporation. At any time upon the request of the Corporation, each of the Shareholders shall promptly deliver to the Corporation al! memoranda, notes, records, reports, manuals, drawings, blue prints formulas and other documents (and all copies thereof) relating to the business of the Corporation and all property associated therewith, then possessed or under the control of the Shareholders. Each of the Shareholders recognizes and acknowledges that the Confidential Information referred to herein constitutes a trade secret within the meaning of Section 812.081 of the Florida Statutes, appropriation of which for the Shareholder’s own benefit or for the use of any third party constitutes a theft or embezzlement from the Corporation which may subject the Shareholder to civil and criminal penalties as provided in the Florida Statutes. Further, the Shareholder acknowledges that it is the Corporation’s policy to vigorously prosecute anyone engaging in theft or embezzlement from the Corporation, including the misappropriation of Confidential Information. Section 13.4 Solicitation. Each of the Shareholders further agrees that during the Share Ownership Period and for a period of five (5) years following the cessation of the Share Ownership Period, the Shareholders will not, in any manner, solicit or encourage any person, firm, corporation or other business entity who are employees, leased employees, independent contractors, customers, suppliers, distributors, business associates or referral sources of the Corporation to cease doing business with the Corporation. Section 13.5 Covenants Independent. Each restrictive covenant on the part of each of the Shareholders set forth in this Agreement shall be construed as a covenant independent of any other covenant or provisions of this Agreement or any other agreement which the Corporation and the Shareholder may have, fully performed and not executory, and the existence of any claim or cause of action by the Shareholder against the Corporation, whether predicated upon another covenant or provision of this Agreement or otherwise, shall not constitute a defense to the enforcement by the Corporation of any other covenant. TLV1 626019865v5Section 13.6 Divisibility of Covenant Areas, Periods and Lines of Business. If any portion of the restrictive covenants contained herein is held to be unreasonable, arbitrary or against public policy, each covenant shall be considered divisible as to time, geographical area and line of business; and each one (1) week of the specified period shall be deemed to be a separate period of time, each state, county, province, city and other governmental subdivision shall be deemed to be a separate geographical area and each product or service sold or offered in the business shall be deemed to be a separate line of business, so that the maximum lesser time, geographical area and line(s) of business shall remain effective so long as the same is not unreasonable, arbitrary or against public policy. : Section 13.7 Injunctive and Equitable Relief. Each of the Shareholders and the Corporation recognize and expressly agree that the extent of damages to Corporation in the event of a breach by any of the Shareholders of any restrictive covenant set forth herein would be impossible to ascertain, that the irreparable harm arising out of any breach shall be i