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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
SCHEID VINEYARDS INC.
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(NAME OF ISSUER)
CLASS A COMMON STOCK, PAR VALUE $0.001 PER SHARE
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(TITLE OF CLASS OF SECURITIES)
806403 10 1
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(CUSIP NUMBER)
ALFRED G. SCHEID
13470 WASHINGTON BLVD., SUITE 300
MARINA DEL REY, CALIFORNIA 90292
(310) 301-1555
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(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON
AUTHORIZED TO RECEIVE NOTICES AND COMMUNICATIONS)
JULY 29, 1997
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(DATE OF EVENT WHICH REQUIRES FILING
OF THIS STATEMENT)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition which is the subject of this Schedule 13D, and is filing
this schedule because of Rule 13d-1(b)(3) or (4), check the following box / /.
Check the following box if a fee is being paid with the statement / /. (A
fee is not required only if the reporting person: (1) has a previous statement
on file reporting beneficial ownership of more than five percent of the class of
securities described in Item 1; and (2) has filed no amendment subsequent
thereto reporting beneficial ownership of five percent or less of such class.)
(See Rule 13d-7.)
NOTE: Six copies of this statement, including all exhibits, should be
filed with the Commission. See Rule 13d-1(a) for other parties to whom copies
are to be sent.
(Continued on following pages)
(Page 1 of 8 Pages)
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CUSIP NO. 806403 10 1 13D Page 2 of 8 Pages
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1 NAME OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
ALFRED G. SCHEID
###-##-####
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) /X/ (b) / /
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
OO (See Item 3 of this Filing)
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDING IS REQUIRED
PURSUANT TO ITEMS 2(d) OR 2(e) / /
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
USA
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7 SOLE VOTING POWER
NUMBER 3,523,721 (See Item 5 of this Filing)
OF --------------------------------------------------------
SHARES 8 SHARED VOTING POWER
BENEFICIALLY NONE
OWNED BY --------------------------------------------------------
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON 3,523,721 (See Item 5 of this Filing)
WITH --------------------------------------------------------
10 SHARED DISPOSITIVE POWER
NONE
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
3,523,721 (See Item 5 of this Filing)
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW 11 EXCLUDES
CERTAIN SHARES*
/ /
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 11
63.8% (55.1% OF OUTSTANDING SHARES OF CLASS
A COMMON STOCK ASSUMING ALL OUTSTANDING SHARES OF CLASS B
COMMON STOCK ARE CONVERTED INTO SHARES OF CLASS A COMMON
STOCK) (See Item 5 of this Filing)
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14 TYPE OF REPORTING PERSON*
IN
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*SEE INSTRUCTIONS BEFORE FILLING OUT!
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CUSIP NO. 806403 10 1 13D Page 3 of 8 Pages
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1 NAME OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
ALFRED G. SCHEID, AS TRUSTEE OF THE ALFRED G. SCHEID
REVOCABLE TRUST, DATED OCTOBER 8, 1997
###-##-####
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) /X/ (b) / /
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
OO (See Item 3 of this Filing)
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDING IS REQUIRED
PURSUANT TO ITEMS 2(d) OR 2(e) / /
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
USA
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7 SOLE VOTING POWER
NUMBER 2,899,851 (See Item 5 of this Filing)
OF ---------------------------------------------------------
SHARES 8 SHARED VOTING POWER
BENEFICIALLY NONE
OWNED BY ---------------------------------------------------------
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON 2,899,851 (See Item 5 of this Filing)
WITH ---------------------------------------------------------
10 SHARED DISPOSITIVE POWER
NONE
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
2,899,851 (See Item 5 of this Filing)
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW 11 EXCLUDES
CERTAIN SHARES*
/ /
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 11
59.2% (45.3% OF OUTSTANDING SHARES OF CLASS
A COMMON STOCK ASSUMING ALL OUTSTANDING SHARES OF CLASS B
COMMON STOCK ARE CONVERTED INTO SHARES OF CLASS A COMMON
STOCK) (See Item 5 of this Filing)
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14 TYPE OF REPORTING PERSON*
IN
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*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
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CUSIP NO. 806403 10 1 13D PAGE 4 OF 8 PAGES
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1 NAME OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
EMANTY LIMITED LIABILITY COMPANY, A CALIFORNIA LIMITED
LIABILITY COMPANY
95-4509690
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) /X/ (b) / /
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
OO (See Item 3 of this Filing)
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDING IS REQUIRED
PURSUANT TO ITEMS 2(d) OR 2(e) / /
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
USA
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7 SOLE VOTING POWER
NUMBER 573,870 (See Item 5 of this Filing)
OF ---------------------------------------------------------
SHARES 8 SHARED VOTING POWER
BENEFICIALLY NONE
OWNED BY ---------------------------------------------------------
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON 573,870 (See Item 5 of this Filing)
WITH ---------------------------------------------------------
10 SHARED DISPOSITIVE POWER
NONE
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
573,870 (See Item 5 of this Filing)
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW 11 EXCLUDES
CERTAIN SHARES*
/ /
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 11
22.3% (9.0% OF OUTSTANDING SHARES OF CLASS A
COMMON STOCK ASSUMING ALL OUTSTANDING SHARES OF CLASS B
COMMON STOCK ARE CONVERTED INTO SHARES OF CLASS A COMMON
STOCK) (See Item 5 of this Filing)
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14 TYPE OF REPORTING PERSON*
OO
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*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
Item 1. SECURITY AND ISSUER.
This Schedule 13D relates to the Class A common stock, $0.001 par
value (the "Class A Common Stock"), of Scheid Vineyards Inc., a Delaware
corporation, (the "Company"). The principal executive offices of the Company
are located at 13470 Washington Blvd., Suite 300, Marina del Rey, California
90292.
ITEM 2. IDENTITY AND BACKGROUND.
(a) This Schedule 13D is filed by (1) Alfred G. Scheid with respect to
shares of Class A Common Stock deemed to be beneficially owned by him, (2)
Alfred G. Scheid, as Trustee for the Alfred G. Scheid Revocable Trust, dated
October 8, 1992, by with respect to shares of Class A Common Stock deemed to be
beneficially owned by him in such capacity and (3) Emanty Limited Liability
Company, a California limited liability company ("Emanty"), with respect to
shares of Class A Common Stock deemed to be beneficially owned by it. Mr.
Scheid is the managing member of Emanty. The foregoing persons are hereinafter
sometimes referred to collectively as the "Reporting Persons." The Reporting
Persons are making this single, joint filing because they may be deemed to
constitute a "group" within the meaning of Section 13(d)(3) of the Securities
Exchange Act, although neither the fact of this filing nor anything contained
herein shall be deemed to be an admission by any of the Reporting Persons that
such a "group" exists.
(b) Mr. Scheid's business address is 13470 Washington Blvd., Suite 300,
Marina del Rey, California 90292. Emanty is located at 13470 Washington Blvd.,
Suite 300, Marina del Rey, California 90292.
(c) Mr. Scheid is Chief Executive Officer and Chairman of the Board of
Directors of Scheid Vineyards Inc., which is located at 13470 Washington Blvd.,
Marina del Rey, California 90292.
(d) During the past five years, neither Mr. Scheid nor Emanty has been
convicted in a criminal proceeding (excluding traffic violations or similar
misdemeanors).
(e) During the past five years, neither Mr. Scheid nor Emanty has been a
party to a civil proceeding of a judicial or administrative body of competent
jurisdiction as a result of which such person or entity was or is subject to a
judgment, decree or final order enjoining future violations of or prohibiting or
mandating activity subject to federal or state securities laws or finding any
violation with respect to such laws.
(f) Mr. Scheid is a citizen of the United States of America.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
Pursuant to the terms and conditions of an Exchange and Contribution
Agreement, dated as of July 29, 1997, by and among the Company, Mr. Scheid and
certain other persons, Mr. Scheid exchanged 97,413 shares of common stock, no
par value, of Scheid Vineyards California Inc. and all of his interests in a
certain limited liability company for an
5
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aggregate of 2,955,851 shares of Class B common stock, $.001 par value (the
"Class B Common Stock"), of the Company, and Emanty exchanged all of its
interests in a certain limited partnership for 573,870 shares of Class B Common
Stock. On July 29, 1997, Mr. Scheid subsequently gifted an aggregate of 56,000
shares of Class B Common Stock to certain persons. Each share of Class B Common
Stock has five votes compared to one vote for each share of Class A Common
Stock. The Class B Common Stock is also convertible at the option of the holder
thereof for shares of Class A Common Stock on a one-for-one share basis, subject
to certain restrictions on transfer.
ITEM 4. PURPOSE OF TRANSACTION
Neither Mr. Scheid nor Emanty has any present plans or intentions
which would result in or relate to any of the transactions described in
subparagraphs (a) through (j) of Item 4 of Schedule 13D. The shares of Class A
Common Stock which may be deemed beneficially owned by Mr. Scheid were acquired
in the exchange transaction described in Item 3 above. Mr. Scheid expects to
evaluate on an ongoing basis the Company's financial condition, business,
operations and prospects, the market price of the Class A Common Stock,
conditions in the securities markets generally, general economic and industry
conditions and other factors. Accordingly, Mr. Scheid reserves the right to
change his plans and intentions at any time, as he deems appropriate. In
particular, Mr. Scheid may purchase additional shares of Class A Common Stock or
Class B Common Stock or may sell shares of Class A Common Stock or Class B
Common Stock from time to time and as the case may be. Any such transactions
may be effected at any time or from time to time, subject to any applicable
limitations imposed on the sale of his shares of Class A Common Stock, if any,
or Class B Common Stock by the Securities Act of 1933, as amended, the Lock-up
Agreement and the Buy-Sell Agreement, as described in Item 6.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
(a) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and generally includes voting or investment
power with respect to securities. Shares of Class A Common Stock into which
shares of Class B Common Stock may be converted on a one-for-one basis within 60
days of August 7, 1997, are deemed outstanding for computing the percentage of
the reporting person holding such shares of Class B Common Stock but are not
deemed outstanding for computing the percentage of any other person.
The approximate aggregate percentage of outstanding shares of Class A
Common Stock owned by Mr. Scheid is based on 2,000,000 shares of Class A Common
Stock (6,400,000 shares of Class A Common Stock assuming all 4,400,000 issued
and outstanding shares of Class B Common Stock are converted into shares of
Class A Common Stock) and 3,523,721 shares of Class B Common Stock, each of
which is entitled to five votes per share, beneficially owned by Mr. Scheid as
of August 7, 1997. Such 3,523,721 shares of Class B Common Stock constitute
approximately 63.8% of the voting power of the Class A Common Stock outstanding
and consist of (i) 2,899,851 shares of Class B Common Stock owned by Mr. Scheid,
as Trustee for the Alfred G. Scheid Revocable Trust, dated October 8, 1992, (ii)
573,870 shares of Class B Common Stock beneficially owned by Mr. Scheid as
managing member of Emanty and (iii)
6
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50,000 shares of Class B Common Stock owned by Mr. Scheid's wife, as trustee of
a trust for her benefit. Mr. Scheid disclaims all pecuniary interest in
568,131 of the 573,870 shares of Class B Common Stock by Emanty. Mr. Scheid
disclaims all beneficial ownership in the 50,000 shares of Class B Common Stock
owned by his wife as trustee of a trust for her benefit, and this Schedule 13D
should not be deemed to be an admission that Mr. Scheid is the beneficial owner
of such securities for Section 16 or any other purpose.
(b) Mr. Scheid has the sole power to vote or to direct the voting of
securities he holds as Trustee of the Alfred G. Scheid Revocable Trust, dated
October 8, 1992, and the shares owned by Emanty, as well as the investment
power, including the power to dispose or to direct the disposition of the shares
he holds as Trustee for the Alfred G. Scheid Revocable Trust, dated October 8,
1992, and the shares owned by Emanty, which powers are not shared and may be
exercised only by Mr. Scheid, as Trustee of the Alfred G. Scheid Revocable
Trust, dated October 8, 1992.
(c) Mr. Scheid has not effected any transactions in the Class A Common
Stock other than as described herein during the 60 days prior to August 7, 1997.
(d) Not Applicable.
(e) Not Applicable.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO SECURITIES OF THE ISSUER .
Pursuant to the terms of a Buy-Sell Agreement, dated as of July 29,
1997 (the "Buy-Sell Agreement"), among the Company, Mr. Scheid, Emanty and
certain other holders of Class B Common Stock, no holder of shares of Class B
Common Stock may, with limited exceptions, transfer such stock or convert such
stock into Class A Common Stock without first offering such stock to the Company
and then to certain other parties to the Buy-Sell Agreement. A copy of the
Buy-Sell Agreement is attached hereto as Exhibit A and incorporated herein by
this reference. The Buy-Sell Agreement applies to a broad range of transfers
and dispositions other than transfers to (i) the Company, (ii) any other Class B
stockholder, (iii) a current or former spouse or direct lineal descendant of any
Class B stockholder including without limitation, adopted persons (if adopted
during minority) and persons born out of wedlock, and excluding foster children
and stepchildren, (iv) a trust under which all of the beneficiaries are persons
described in clauses (ii) or (iii) above, and (v) a corporation, partnership or
limited liability company, all of the equity interests of which are owned by
persons or entities described in clauses (i), (ii), (iii), and (iv) above or
corporations, partnerships and limited liability companies described in clause
(v).
In addition, in connection with the initial public offering of the
Company's Class A Common Stock completed on July 30, 1997, each of Mr. Scheid
and Emanty entered a lock-up agreement (the "Lock-up Agreement") with Cruttenden
Roth Incorporated pursuant to which, among other things, each of Mr. Scheid and
Emanty agreed not to sell or otherwise dispose of any securities of the Company
for one year after July 29, 1997. The Lock-up Agreement exempts transfers and
dispositions permitted pursuant to the terms of the Buy-Sell Agreement. Copies
of the Lock-up Agreement are attached hereto as Exhibits B and C and
incorporated herein by this reference.
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ITEM 7. MATERIAL TO BE FILED AS EXHIBITS
Exhibit A Buy-Sell Agreement, dated July 29, 1997,
among Scheid Vineyards Inc. and the
holders of Class B Common Stock named
therein.
Exhibit B Lock-Up Agreement, dated July 21, 1997,
between Alfred G. Scheid and Cruttenden
Roth Incorporated.
Exhibit C Lock-Up Agreement, dated July 21, 1997,
between Emanty Limited Liability Company
and Cruttenden Roth Incorporated.
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
August 8, 1997
By: /s/Alfred G. Scheid
---------------------------------------------
Alfred G. Scheid, individually
By: /s/Alfred G. Scheid
---------------------------------------------
Alfred G. Scheid, as Trustee of the
Alfred G. Scheid Revocable Trust, dated
October 8, 1992
Emanty Limited Liability Company
By: /s/Alfred G. Scheid
---------------------------------------------
Alfred G. Scheid, as Managing Member
8
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EXHIBIT INDEX
Exhibit No. Document Description Page No.
- ----------- -------------------- --------
A Buy-Sell Agreement 10
B Lock-Up Agreement 23
C Lock-Up Agreement 26
9
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EXHIBIT A
10
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BUY-SELL AGREEMENT
THIS BUY-SELL AGREEMENT (this "AGREEMENT") is made as of July 29, 1997, by
and among SCHEID VINEYARDS INC., a Delaware corporation (the "CORPORATION"),
ALFRED G. SCHEID, AS TRUSTEE OF THE ALFRED G. SCHEID REVOCABLE TRUST, DATED
OCTOBER 8, 1992 ("AGS"), SCOTT D. SCHEID ("SDS"), HEIDI M. SCHEID ("HMS"),
KURT J. GOLLNICK ("KJG"), EMANTY LIMITED LIABILITY COMPANY, a California limited
liability company ("EMANTY"), and the additional stockholders of the
Corporation, if any, identified on Exhibit A attached hereto and by this
reference incorporated herein (the "ADDITIONAL STOCKHOLDERS" and, together with
SDS, HMS, Emanty and KJG the "MINORITY STOCKHOLDERS"). The Minority
Stockholders and AGS are collectively referred to herein as the "STOCKHOLDERS."
RECITALS
WHEREAS, the Stockholders are the holders of all of the outstanding
shares (the "SHARES") of Class B Common Stock of the Corporation;
WHEREAS, AGS, Emily K. Liberty ("EKL") and Tyler P. Scheid ("TPS") are
the sole members of Emanty.
WHEREAS, the Corporation and the Stockholders have determined that it
is in the best interests of the Corporation and the Stockholders that the
transferability of the Shares of the Minority Stockholders be restricted as
provided herein; and
WHEREAS, the parties hereto (the "PARTIES") have each independently
concluded that the method of valuation of the Shares provided in this Agreement
is fair and equitable.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing recitals and the
mutual agreements and covenants contained herein, the Parties agree as follows:
1. RESTRICTIONS ON TRANSFER. Except as expressly permitted or
required by this Agreement, no Minority Stockholder shall, voluntarily or
involuntarily (including, without limitation, by operation of law) transfer,
sell, exchange, give away, pledge, hypothecate or otherwise dispose of
("TRANSFER") all or any portion of the Shares or any rights therein. Any
Transfer or attempted Transfer in violation of the preceding sentence shall be
null and void and of no effect whatever. Each Party hereby acknowledges the
reasonableness of the restrictions on Transfer imposed by this Agreement in view
of the relationship of the Parties. Accordingly, the restrictions on Transfer
contained herein shall be specifically enforceable. Each Party hereby further
agrees to hold each other Party (and each other Party's successors and assigns)
wholly and completely harmless from any cost, liability or damage
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(including, without limitation, liabilities for income taxes and costs of
enforcing this indemnity) incurred by any of such indemnified persons as a
result of a Transfer or an attempted Transfer in violation of this Agreement.
2. INSPECTION OF AGREEMENT. A copy of this Agreement duly executed
by each of the Parties shall be delivered to the Corporation, maintained by the
Corporation at its principal executive office, and made available for inspection
to any person requesting to see it.
3. PERMITTED TRANSFERS.
(a) GENERAL. Subject to the conditions and restrictions set
forth in this Section 3, each Minority Stockholder shall have the right to
Transfer all or any portion of such Minority Stockholder's Shares by means of a
Permitted Transfer.
(b) DEFINITION OF PERMITTED TRANSFER AND PERMITTED TRANSFEREES.
(i) A "PERMITTED TRANSFER" is any Transfer by any
Minority Stockholder of all or any portion of the Shares to a Permitted
Transferee, provided that such Transfer otherwise complies with the conditions
and restrictions of this Section 3.
(ii) A "PERMITTED TRANSFEREE" is any of the following
persons: (1) the Corporation, (2) any of AGS, SDS, HMS, Emanty, KJG, EKL or
TPS, (3) a current spouse, former spouse or direct lineal descendant of any
individual named in clause (2) above, including, without limitation, adopted
persons (if adopted during minority) and persons born out of wedlock, and
excluding foster children and stepchildren, (4) a trust under which all of the
beneficiaries are persons described in clauses (2) or (3) above, or (5) a
corporation, partnership or limited liability company all of the equity
interests of which are owned by the persons or entities specified in clauses
(1), (2), (3) and (4) above or corporations, partnerships or limited liability
companies described in this clause (5).
(c) CONDITION TO PERMITTED TRANSFERS. Each Permitted Transfer
must be preceded by a written notice given by the transferring Minority
Stockholder to the Corporation, and to each of AGS, SDS and HMS to the extent he
or she is not the transferring Minority Stockholder, at least ten (10) business
days prior to such Permitted Transfer. Each person or entity (other than the
Corporation and AGS) to whom or which Shares (or any right, title or interest
therein) are Transferred by means of a Permitted Transfer must, as a condition
precedent to the validity of such Transfer, acknowledge in writing to the
Corporation that such person or entity is bound by the provisions of this
Agreement and the transferred Shares (or any right, title or interest therein)
are subject to the covenants and restrictions set forth in this Agreement to the
same extent such Shares would be so subject if retained by the transferring
Minority Stockholder.
4. RIGHT OF FIRST REFUSAL. Each Minority Stockholder shall have the
right, from time to time, to Transfer or to convert into Class A Common Stock of
the Corporation in accordance with the Certificate of Incorporation of the
Corporation ("CONVERT"), all or any portion of such Minority Stockholder's
Shares, subject to the following rights of the other Parties (the "RIGHT OF
FIRST REFUSAL"), pursuant to the following steps:
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(a) SALE OR CONVERSION NOTICE. Such Minority Stockholder (the
"SELLING OR CONVERTING STOCKHOLDER") shall give written notice (the "SALE OR
CONVERSION NOTICE") to the Corporation, AGS, SDS and HMS of his, her or its
intention to Transfer or Convert Shares. The Sale or Conversion Notice shall
(i) identify the proposed transferee, if applicable, (ii) specify the portion of
the Shares to be transferred or converted, (iii) if applicable, specify the
price and the terms of payment (the "SALE TERMS"), and (iv) if applicable,
specify the Purchase Price and Payment Terms described in Section 7 below.
(b) OPTION TO THE CORPORATION. The Corporation shall have the
first option to purchase all or any part of the Shares referred to in the Sale
or Conversion Notice at the lesser of (i) the Sale Terms, if applicable, and
(ii) the Purchase Price and upon the Payment Terms. Within five (5) business
days after delivery of the Sale or Conversion Notice to the Corporation, the
Corporation shall give written notice to AGS, SDS and HMS regarding the portion
or all of the Shares to be purchased by the Corporation.
(c) OPTION TO AGS. If the Corporation does not elect to
purchase all of the Shares referred to in the Sale or Conversion Notice, AGS
shall have the option to purchase all of the Shares referred to in the Sale or
Conversion Notice (other than the Shares to be purchased by the Corporation) at
the lesser of (i) the Sale Terms, if applicable, and (ii) the Purchase Price and
upon the Payment Terms. Within ten (10) business days after delivery of the
Sale or Conversion Notice to AGS, AGS shall give written notice to the
Corporation, SDS and HMS regarding the portion or all of the Shares to be
purchased by AGS.
(d) OPTION TO SDS AND HMS. If the Corporation and/or AGS do not
elect to purchase all of the Shares referred to in the Sale or Conversion
Notice, (i) SDS and HMS (if neither SDS nor HMS is the Selling or Converting
Stockholder), jointly and (to the extent that each elects to exercise such
option) PRO RATA in proportion to the number of Shares held by each, (ii) SDS
(if HMS is the Selling or Converting Stockholder) or (iii) HMS (if SDS is the
Selling or Converting Stockholder), shall have the option to purchase all of the
Shares referred to in the Sale or Conversion Notice (other than the Shares to be
purchased by the Corporation and/or AGS) at the lesser of (A) the Sale Terms, if
applicable, and (B) the Purchase Price and upon the Payment Terms. Within
fifteen (15) business days after delivery of the Sale of Conversion Notice to
SDS and HMS, SDS and/or HMS, as applicable, shall give written notice the
Corporation, AGS and SDS or HMS, as applicable, regarding the portion or all of
the Shares to be purchased by SDS and/or HMS.
(e) EXERCISE OF OPTION RIGHTS. If the Corporation, AGS, SDS
and/or HMS elect to purchase all of the Shares set forth in the Sale or
Conversion Notice, the Corporation, AGS, SDS and/or HMS, as applicable, shall
purchase all such Shares at the lesser of (i) the Sale Terms, if applicable, and
(ii) the Purchase Price and upon the Payment Terms.
(f) SALE TO PROPOSED TRANSFEREE. If the Corporation, AGS, SDS
and/or HMS do not elect to purchase all of the Shares set forth in the Sale or
Conversion Notice, such Shares, but not less than all of such Shares referred to
in the Sale or Conversion Notice, (i) in the case of a proposed Transfer may be
transferred at any time prior to the thirtieth (30th) business day after the
date of the Sale or Conversion Notice to the transferee identified in the Sale
Notice on the Sale Terms and
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(ii) in the case of a proposed conversion may be converted into shares of Class
A Common Stock of the Corporation in accordance with the Certificate of
Incorporation of the Corporation at any time prior to the thirtieth (30th)
business day after the date of the Sale or Conversion Notice. No Transfer or
conversion of the Shares shall be made after the end of such thirty (30)
business day period, nor shall any change in the terms and conditions of
Transfer or conversion be permitted, without the Selling or Converting
Stockholder first giving to the Corporation, AGS, SDS and HMS a new Sale or
Conversion Notice in compliance with the requirements of this Section.
(g) CONVERSION ON DIVORCE OR LEGAL SEPARATION. Notwithstanding
the foregoing provisions of this Section 4, if any Minority Stockholder who is
an individual should divorce or became legally separated (a "SEPARATING PARTY"),
the spouse of such Party (the "SPOUSE") shall, if such Spouse already is a
Party, or if such Spouse is not already a Party then, such Separating Party
shall cause the Spouse to, promptly give a Sale or Conversion Notice to the
Corporation, AGS, SDS and HMS indicating that all of the Shares owned by the
Spouse are proposed to be converted into Class A Common Stock of the Corporation
and thereby providing the Corporation, AGS, SDS and HMS with the options to
purchase such Shares in the manner specified herein. If the Corporation, AGS,
SDS and HMS do not elect to purchase all of the Shares set forth in the Spouse's
Sale or Conversion Notice, the Spouse shall, if such Spouse already is a Party,
or if such Spouse is not already a Party, then the Separating Party shall cause
the Spouse to, promptly convert all of the Shares owned by the Spouse into Class
A Common Stock of the Corporation in accordance with the Certificate of
Incorporation of the Corporation.
5. LIMITED SALES TO THIRD PARTIES. Notwithstanding the provisions
of Section 4, a Minority Stockholder shall have the right to Transfer all or
part of such Minority Stockholder's Shares, without compliance with the Right of
First Refusal, as follows:
(a) SALES BY SDS, HMS AND KJG. Each of SDS, HMS and KJG shall
be entitled to Transfer to persons other than Permitted Transferees: (i) on or
prior to December 31, 1998, an aggregate of 50,000 Shares (the "INITIAL AMOUNT")
and (ii) during 1999 and each calendar year thereafter, 40,600 Shares (the
"ANNUAL AMOUNT"); provided, however, in the event that such Minority Stockholder
Transfers less than the Initial Amount on or prior to December 31, 1998 and/or
less than the Annual Amount in 1999 or any calendar year thereafter, then such
Minority Stockholder shall be entitled, in 1999 or any subsequent calendar year,
to Transfer Shares in an amount up to the Annual Amount for such calendar year
PLUS any then unused Initial Amount PLUS any then unused Annual Amounts from
prior calendar years.
(b) SALES BY EMANTY. Emanty shall be entitled to Transfer to
persons other than Permitted Transferees: (i) on or prior to December 31, 1998,
an aggregate of 100,000 Shares (the "EMANTY INITIAL AMOUNT") and (ii) during
1999 and each calendar year thereafter, 81,200 Shares (the "EMANTY ANNUAL
AMOUNT"); provided, however, in the event that Emanty Transfers less than the
Emanty Initial Amount on or prior to December 31, 1998 and/or less than the
Emanty Annual Amount in 1999 or any calendar year thereafter, then Emanty shall
be entitled, in 1999 or any subsequent calendar year, to Transfer Shares in an
amount up to the Emanty Annual Amount for such calendar year PLUS any then
unused Emanty Initial Amount PLUS any then unused Emanty Annual Amounts from
prior calendar years.
14
<PAGE>
(c) EFFECT OF TRANSFERS. All transferees of Shares pursuant to
this Section 5 shall take such Shares free and clear of the covenants and
restrictions set forth in this Agreement. Any legend with respect to this
Agreement set forth on any certificate evidencing Shares transferred pursuant to
this Section 5 shall be removed upon the consummation of such Transfer.
6. OPTION TO PURCHASE UPON CERTAIN EVENTS.
(a) SALE EVENTS. Upon the occurrence of any of the following
events (each a "SALE EVENT"), the Corporation, AGS, SDS and/or HMS shall have
the option to purchase all of the Shares of a Minority Stockholder (the
"AFFECTED STOCKHOLDER"), at the Purchase Price and upon the Payment Terms,
pursuant to the provisions of this Section 6:
(i) the death of the Affected Stockholder;
(ii) the entry of a judgment awarding all or any part
of the Shares of the Affected Stockholder to any person who is not a Party;
(iii) the filing or recording of any levy or attachment
against the Shares of the Affected Stockholder;
(iv) the occurrence, with respect to the Affected
Stockholder, of any of the following: (A) filing a voluntary petition in
bankruptcy or for reorganization or for the adoption of an arrangement under the
Federal Bankruptcy Code (as now or in the future amended) or an admission
seeking the relief therein provided; (B) making a general assignment for the
benefit of creditors; (C) consenting to the appointment of a receiver for all or
a substantial part of the Affected Stockholder's property; (D) in the case of
the filing of an involuntary petition in bankruptcy, an entry of an order for
relief; (E) the entry of a court order appointing a receiver or trustee for all
or a substantial part of the Affected Stockholder's property without his
consent; or (F) the assumption of custody or sequestration by a court of
competent jurisdiction of all or substantially all of the Affected Stockholder's
property; or
(v) in the event that KJG is the Affected Stockholder,
the termination of employment of such Affected Stockholder with the Corporation,
voluntarily or involuntarily, with or without cause.
(b) OPTION TO THE CORPORATION. Upon the occurrence of a Sale
Event, the Corporation shall have the first option to purchase all of the Shares
of the Affected Stockholder. Within five (5) business days after the Sale
Event, the Corporation shall give written notice to AGS, SDS and HMS regarding
the portion or all of the Shares to be purchased by the Corporation.
(c) OPTION TO AGS. If the Corporation does not elect to
purchase all of the Shares of the Affected Stockholder, AGS shall have the
option to purchase all of such Shares (other than the portion of the Shares to
be purchased by the Corporation). Within ten (10) business days after the Sale
Event, AGS shall give written notice to the Corporation, SDS and HMS regarding
the portion or all of the Shares to be purchased by AGS.
15
<PAGE>
(d) OPTION TO SDS AND HMS. If the Corporation and/or AGS do not
elect to purchase all of the Shares of the Affected Stockholder, (i) SDS and HMS
(if neither SDS nor HMS is the Affected Stockholder), jointly and (to the extent
that each elects to exercise such option) PRO RATA in proportion to the number
of Shares held by each, (ii) SDS (if HMS is the Affected Stockholder) or
(iii) HMS (if SDS is the Affected Stockholder), shall have the option to
purchase all of such Shares (other than the portion of the Shares to be
purchased by the Corporation and/or AGS). Within fifteen (15) business days
after the Sale Event, SDS and/or HMS, as applicable, shall give written notice
to the Corporation, AGS and SDS or HMS, as applicable, regarding the portion or
all of the Shares to be purchased by SDS and/or HMS.
(e) EXERCISE OF OPTION. If the Corporation, AGS, SDS and/or HMS
elect to purchase all of the Shares of the Affected Stockholder pursuant to this
Section 6, the Corporation, AGS, SDS and/or HMS, as applicable, shall purchase
all of such Shares at the Purchase Price and upon the Payment Terms.
(f) EFFECT OF FAILURE TO EXERCISE OPTION. If the Corporation,
AGS, SDS and/or HMS do not elect to purchase all of the Shares of the Affected
Stockholder following a Sale Event, no portion of the Shares shall be
transferred pursuant to this Section 6 on account of such Sale Event.
7. PURCHASE PRICE AND PAYMENT TERMS.
(a) PURCHASE PRICE. "PURCHASE PRICE" means:
(i) if the Selling or Converting Stockholder or the
Affected Stockholder is a Minority Stockholder other than KJG under the
circumstances described in clause (ii) below, a price per Share equal to the
weighted average trading price of a share of the Class A Common Stock of the
Corporation over the twenty (20) trading days on which such shares were actually
traded immediately preceding the date of the Sale Notice or the Sale Event, as
applicable (the "AVERAGE TRADING PRICE"); or
(ii) if KJG is the Affected Stockholder and the Sale Event
is the termination of KJG's employment with the Corporation, (A) if such
termination is a "Voluntary Termination" as such term is defined in Section
7(a)(iv) of the Employment Agreement between the Corporation and KJG (the
"EMPLOYMENT AGREEMENT") which occurs prior to July 29, 2004, or is for "Cause"
as such term is defined in Section 7(a)(v) of the Employment Agreement
regardless of when such termination for Cause occurs, a price per Share equal to
the price per Share paid by KJG for such Shares and (B) if such termination
occurs for a reason or under circumstances other than as described in
subparagraph (A) above, a price per share equal to the Average Trading Price.
16
<PAGE>
(b) PAYMENT TERMS. The payment of the Purchase Price shall be
made on the following terms (the "PAYMENT TERMS"): (i) if the Purchase Price
for the Shares is $100,000 or less, the Purchase Price shall be paid in one lump
sum within seven (7) business days after the Sale Event or the Sale or
Conversion Notice, as applicable; and (ii) if the Purchase Price for the Shares
is more than $100,000, the Purchase Price shall be paid, at the option of the
Corporation, AGS, SDS and/or HMS, as applicable (x) in one lump sum within three
(3) months after the Sale Event or the Sale or Conversion Notice, as applicable;
or (y) by payment of not less than fifty percent (50%) of the Purchase Price
(the "DOWN PAYMENT") within three (3) months after the Sale Event or the Sale or
Conversion Notice, as applicable, and delivery of a promissory note evidencing
the balance of the Purchase Price, such promissory note to bear interest at the
prime rate in effect on the date of the Down Payment, to be payable in full one
(1) year after the date of the Down Payment and to be secured by the Shares
being purchased.
8. RESTRICTIVE LEGENDS. The stock certificates for the Shares shall
be endorsed with the following restrictive legends:
(1) "The shares represented by this certificate
have not been registered under the Securities Act of 1933.
The shares may not be sold or offered for sale in the
absence of (a) an effective registration statement for the
shares under such Act, (b) a 'no action' letter of the
Securities and Exchange Commission with respect to such sale
or offer or (c) satisfactory assurances to the Corporation
that registration under such Act is not required with
respect to such sale or offer."
(2) "The shares represented by this certificate
are subject to certain rights to purchase and rights of
first refusal granted to the Corporation and certain
stockholders of the Corporation and accordingly may not be
sold, assigned, transferred, encumbered, or in any manner
disposed of except in conformity with the terms of a certain
agreement between the Corporation, the registered holder of
the shares (or the predecessor in interest to the shares)
and certain other persons. A copy of such agreement is
maintained at the Corporation's principal corporate
offices."
9. TERMINATION OF AGREEMENT. This Agreement shall terminate upon
the occurrence of any one of the following events:
(a) The written agreement of the Parties to that effect; or
(b) The dissolution of the Corporation.
10. ALTERATIONS OR AMENDMENTS. This Agreement may be altered or
amended in whole or in part at any time, by filing with this Agreement a written
instrument setting forth the changes signed by each of the Parties.
17
<PAGE>
11. NOTICES. Any and all notices or other communications required or
permitted by this Agreement or by law to be served on, given to, or delivered to
any Party by any other Party shall be in writing and shall be deemed duly
served, given, or delivered when personally delivered to the Party or to an
officer of the Party, or in lieu of such personal delivery, on the third day
after deposit in the United States Mail, registered or certified, return receipt
requested, addressed to a Party at the address set forth below such Party's name
on the signature pages hereof, or such other address as shall have been provided
to the Parties in accordance with the provisions of this Section.
12. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
inure to the benefit of the Parties and, except as restricted above with regard
to Transfers, each of their heirs, executors, administrators, successors and
assigns.
13. SEVERABILITY. Should any provisions or portion of this Agreement
be held unenforceable and invalid for any reason, the remaining provisions and
portions of this Agreement shall continue in full force and effect.
14. GOVERNING LAW. This Agreement shall be construed in accordance
with, and governed by, the laws of the State of California.
15. ENFORCEMENT. In the event of any breach of any covenant in, or
any other default under, this Agreement, any Party may proceed to protect and
enforce his, her or its rights by suit in equity or action at law, whether for
the specific performance of any term contained in this Agreement or for an
injunction against the breach of any such term or in aid of the exercise of any
power granted in this Agreement, or to enforce any other legal or equitable
right of such Party, or to take any one or more of such actions. In the event a
Party brings such an action against another Party, the prevailing party in such
dispute shall be entitled to recover from the losing party all fees, costs and
expenses of enforcing any right of such prevailing party under or with respect
to this Agreement, including without limitation such reasonable fees and
expenses of attorneys and accountants. None of the rights, powers or remedies
conferred upon any Party shall be mutually exclusive, and each such right, power
or remedy shall be cumulative and in addition to every other right, power or
remedy, whether conferred hereby or now or hereafter available at law, in
equity, by statute or otherwise. Except as expressly provided in this
Agreement, no course of dealing between or among the Parties and no delay in
exercising any such right, power or remedy conferred hereby or now or hereafter
existing at law, in equity, by statute or otherwise, shall operate as a waiver
of, or otherwise prejudice, any such right, power or remedy.
16. ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement of the parties hereto respecting the transferability of the Shares and
correctly sets forth the rights, duties, and obligations of each to the other in
relation thereto as of its date. Any prior agreements, promises, negotiations,
or representations concerning its subject matter not expressly set forth or
referenced in this Agreement are of no force or effect.
18
<PAGE>
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the
day and year first above set forth.
SCHEID VINEYARDS INC., a Delaware
corporation
By /s/ Alfred G. Scheid
--------------------
Name: Alfred G. Scheid
Title: Chief Executive Officer
Address: 13470 Washington Boulevard
Suite 300
Marina del Rey, California 90292
/s/ Alfred G. Scheid
--------------------
ALFRED G. SCHEID, AS TRUSTEE OF THE ALFRED G.
SCHEID REVOCABLE TRUST, DATED OCTOBER 8, 1992
Address: 13470 Washington Boulevard
Suite 300
Marina del Rey, California 90292
/s/ Scott D. Scheid
-------------------
SCOTT D. SCHEID
Address: 13470 Washington Boulevard
Suite 300
Marina del Rey, California 90292
/s/ Heidi M. Scheid
-------------------
HEIDI M. SCHEID
Address: 13470 Washington Boulevard
Suite 300
Marina del Rey, California 90292
19
<PAGE>
EMANTY LIMITED LIABILITY COMPANY,
a California limited liability company
By: /s/ Alfred G. Scheid
----------------------
Name: Alfred G. Scheid, as Trustee of the
Alfred G. Scheid Revocable Trust,
Dated October 8, 1992
Title: Managing Member
Address: 13470 Washington Boulevard
Suite 300
Marina del Rey, California 90292
/s/ Kurt J. Gollnick
--------------------
KURT J. GOLLNICK
Address: 29 Paseo Hermosa
Salinas, California 93908
AGREED AND ACKNOWLEDGED:
/s/ Shirley Gladden Scheid
- --------------------------
SHIRLEY GLADDEN SCHEID, AS
TRUSTEE UNDER DECLARATION OF
TRUST, DATED MARCH 12, 1997
/s/ Joyce C. Perry
- --------------------------
JOYCE C. PERRY
20
<PAGE>
/s/ Arthur R. Liberty
- --------------------------
ARTHUR R. LIBERTY
/s/ Peter J. Pugnale
- --------------------------
PETER J. PUGNALE
/s/ Nancy B. Scheid
- --------------------------
NANCY B. SCHEID
/s/ Heidi M. Scheid
- --------------------------
HEIDI M. SCHEID, AS
TRUSTEE OF THE SIENA C. PUGNALE
TRUST, DATED APRIL 4, 1993
/s/ Scott D. Scheid
- --------------------------
SCOTT D. SCHEID, AS
TRUSTEE OF THE SIENA C. PUGNALE
TRUST, DATED APRIL 4, 1993
/s/ Heidi M. Scheid
- --------------------------
HEIDI M. SCHEID, AS
TRUSTEE OF THE COOPER J. PUGNALE
TRUST, DATED MAY 16, 1995
/s/ Scott D. Scheid
- --------------------------
SCOTT D. SCHEID, AS
TRUSTEE OF THE COOPER J. PUGNALE
TRUST, DATED MAY 16, 1995
21
<PAGE>
EXHIBIT A
ADDITIONAL STOCKHOLDERS
Shirley Gladden Scheid, as Trustee under Declaration of Trust, dated March 12,
1997.
Joyce C. Scheid
Arthur R. Liberty
Peter J. Pugnale
Nancy B. Scheid
Heidi M. Scheid and Scott D. Scheid, Trustees of the Siena C. Pugnale Trust,
dated April 4, 1993.
Heidi M. Scheid and Scott D. Scheid, Trustees of the Cooper J. Pugnale Trust,
dated May 16, 1995.
22
<PAGE>
EXHIBIT B
23
<PAGE>
SCHEID VINEYARDS INC.
LOCK-UP AGREEMENT
July 21, 1997
Cruttenden Roth Incorporated
Laidlaw Equities, Inc.
Rodman & Renshaw, Inc.
As Representatives of the Several Underwriters
c/o Cruttenden Roth Incorporated
18301 Von Karman, Suite 100
Irvine, California 92714
Ladies and Gentlemen:
The undersigned understands that you, as Representatives of the
several underwriters (the "Underwriters"), propose to enter into an Underwriting
Agreement with Scheid Vineyards Inc. (the "Company") providing for the public
offering (the "Public Offering") by the Underwriters, including yourselves, of
Class A Common Stock of the Company (the "Common Stock") pursuant to the
Company's Registration Statement on Form SB-2, Registration No. 333-27871, filed
with the Securities and Exchange Commission on May 28, 1997 (the "Registration
Statement").
In consideration of the Underwriters' agreement to purchase and
make the Public Offering of the Common Stock, and for other good and valuable
consideration, receipt of which is hereby acknowledged, the undersigned hereby
agrees, for a period beginning on the date of the final prospectus included in
the Registration Statement and ending on the first anniversary thereof (the
"Lock-Up Period"), not to offer to sell, contract to sell or otherwise sell,
transfer, dispose of, loan, pledge or grant any rights with respect to or
solicit any offer to buy (collectively a "Disposition") any shares of Common
Stock, any options or warrants to purchase any shares of Common Stock or any
securities convertible into or exchangeable for shares of Common Stock
(collectively, "Securities") now owned or hereafter acquired directly by the
undersigned or with respect to which the undersigned has or hereafter acquires
the power of disposition, otherwise than (i) exercise (on a cash or cashless
basis not resulting in any public sale of Class A Common Stock) of options to
purchase Class A Common Stock, provided that the shares of Class A Common Stock
received (net of any shares delivered to the Company in a traditional cashless
exercise thereof) shall be subject to the terms hereof; (ii) as a bona fide gift
or gifts or upon death by will or intestacy, provided each transferee thereof
agrees to be bound by this Lock-Up Agreement; (iii) as a distribution to limited
partners or shareholders or members of the undersigned, provided that the
distributees thereof agree in writing to be bound by the terms of this Lock-Up
Agreement; (iv) transfers of Class B Common Stock of the Company permitted
pursuant to the Buy-Sell Agreement among the holders of the Company's Class B
Common Stock (provided such transfers do not result in any public sale or
distribution of any Securities and the transferees agree in writing to hold such
shares subject to this Lock-Up Agreement); or (v) with the prior written consent
of Cruttenden Roth Incorporated. The foregoing restriction is expressly agreed
to preclude the holder
24
<PAGE>
of the Securities from engaging in any hedging, pledge or other transaction
which is designed to or reasonably expected to lead to or result in any
Disposition of any Securities during the Lock-Up Period even if such Securities
are owned by a person other than the undersigned and/or would be disposed of by
someone other than the undersigned. Such prohibited hedging, pledge or other
transactions would include, without limitation, any short sale (whether or not
against the box), any pledge of shares covering an obligation that matures, or
could reasonably be expected to mature, during the Lock-Up Period, or any
purchase, sale or grant of any right (including without limitation any put or
call option) with respect to any Securities or with respect to any security
(other than a broad-based market basket or index) that includes, relates or
derives any significant part of its value from Securities.
Furthermore, the undersigned hereby agrees and consents to the
entry of stop transfer instructions with the Company's transfer agent against
the transfer of the Securities held by the undersigned except in compliance with
this Lock-Up Agreement.
Very truly yours,
/s/ Alfred G. Scheid
--------------------
Alfred G. Scheid
Accepted as of the ____ day of July, 1997:
Cruttenden Roth Incorporated
Laidlaw Equities, Inc.
Rodman & Renshaw, Inc.
As Representatives of the Several Underwriters
By: Cruttenden Roth Incorporated
By:
-------------------------------------
Title:
----------------------------------
25
<PAGE>
EXHIBIT C
26
<PAGE>
SCHEID VINEYARDS INC.
LOCK-UP AGREEMENT
July 21, 1997
Cruttenden Roth Incorporated
Laidlaw Equities, Inc.
Rodman & Renshaw, Inc.
As Representatives of the Several Underwriters
c/o Cruttenden Roth Incorporated
18301 Von Karman, Suite 100
Irvine, California 92714
Ladies and Gentlemen:
The undersigned understands that you, as Representatives of the
several underwriters (the "Underwriters"), propose to enter into an Underwriting
Agreement with Scheid Vineyards Inc. (the "Company") providing for the public
offering (the "Public Offering") by the Underwriters, including yourselves, of
Class A Common Stock of the Company (the "Common Stock") pursuant to the
Company's Registration Statement on Form SB-2, Registration No. 333-27871, filed
with the Securities and Exchange Commission on May 28, 1997 (the "Registration
Statement").
In consideration of the Underwriters' agreement to purchase and
make the Public Offering of the Common Stock, and for other good and valuable
consideration, receipt of which is hereby acknowledged, the undersigned hereby
agrees, for a period beginning on the date of the final prospectus included in
the Registration Statement and ending on the first anniversary thereof (the
"Lock-Up Period"), not to offer to sell, contract to sell or otherwise sell,
transfer, dispose of, loan, pledge or grant any rights with respect to or
solicit any offer to buy (collectively a "Disposition") any shares of Common
Stock, any options or warrants to purchase any shares of Common Stock or any
securities convertible into or exchangeable for shares of Common Stock
(collectively, "Securities") now owned or hereafter acquired directly by the
undersigned or with respect to which the undersigned has or hereafter acquires
the power of disposition, otherwise than (i) exercise (on a cash or cashless
basis not resulting in any public sale of Class A Common Stock) of options to
purchase Class A Common Stock, provided that the shares of Class A Common Stock
received (net of any shares delivered to the Company in a traditional cashless
exercise thereof) shall be subject to the terms hereof; (ii) as a bona fide gift
or gifts or upon death by will or intestacy, provided each transferee thereof
agrees to be bound by this Lock-Up Agreement; (iii) as a distribution to limited
partners or shareholders or members of the undersigned, provided that the
distributees thereof agree in writing to be bound by the terms of this Lock-Up
Agreement; (iv) transfers of Class B Common Stock of the Company permitted
pursuant to the Buy-Sell Agreement among the holders of the Company's Class B
Common Stock (provided such transfers do not result in any public sale or
distribution of any Securities and the transferees agree in writing to hold such
shares subject to this Lock-Up Agreement); or (v) with the prior written consent
of Cruttenden Roth Incorporated. The foregoing restriction is expressly agreed
to preclude the holder
27
<PAGE>
of the Securities from engaging in any hedging, pledge or other transaction
which is designed to or reasonably expected to lead to or result in any
Disposition of any Securities during the Lock-Up Period even if such Securities
are owned by a person other than the undersigned and/or would be disposed of by
someone other than the undersigned. Such prohibited hedging, pledge or other
transactions would include, without limitation, any short sale (whether or not
against the box), any pledge of shares covering an obligation that matures, or
could reasonably be expected to mature, during the Lock-Up Period, or any
purchase, sale or grant of any right (including without limitation any put or
call option) with respect to any Securities or with respect to any security
(other than a broad-based market basket or index) that includes, relates or
derives any significant part of its value from Securities.
Furthermore, the undersigned hereby agrees and consents to the
entry of stop transfer instructions with the Company's transfer agent against
the transfer of the Securities held by the undersigned except in compliance with
this Lock-Up Agreement.
Very truly yours,
Emanty Limited Liability Company
/s/ Alfred G. Scheid
--------------------
By: Alfred G. Scheid
Managing Member
Accepted as of the ____ day of July, 1997:
Cruttenden Roth Incorporated
Laidlaw Equities, Inc.
Rodman & Renshaw, Inc.
As Representatives of the Several Underwriters
By: Cruttenden Roth Incorporated
By:
---------------------------
Title:
------------------------
28
