CLAWBACK AGREEMENT
This Clawback Agreement (this "Agreement") is made effective as of
February__, 1998 by and among Wedgestone Financial, a Massachusetts business
trust, and its successors and assigns (the "Company") and JCS Holdings Corp.,
PFG Corp., JMS Holdings Co. Inc., RAB Management Corp. and their respective
affiliates, which are controlled by John C. Shaw, James J. Pinto, Richard A.
Bartlett III and Gerald M. Seslowe, repectively, and Stockwood LLC, a Minnesota
limited liability company (collectively, the "Remaining Shareholders").
WHEREAS, the Remaining Shareholders own 62.1% of the shares of beneficial
interest, $1.00 par value, of the Company;
WHEREAS, the Company is making a tender offer to purchase the issued and
outstanding shares of beneficial interest, $1.00 par value (the "Offer"), held
by persons or entities other than the Remaining Shareholders (the "Public
Shareholders") at the price set forth in the Offer to Purchase, including any
amendments thereto (the "Offer Price"); and
WHEREAS, pursuant to the Offer, the Remaining Shareholders have agreed to
share with the Public Shareholders any Excess Proceeds (as defined herein), if
any, received in the future as a result of certain change in control
transactions as set forth herein.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company and the Remaining
Shareholders hereby agree as follows:
1. DEFINITIONS.
a. "Change of Control" means the occurrence of any of the following:
(i) the sale, lease, transfer, conveyance or other disposition (other than
by way of merger or consolidation), in one or a series of related
transactions, of all or substantially all of the assets of the Company or
any successor to the Company to any "person" (as such term is used in
Section 13(d)(3) of the Securities Exchange Act of 1934, as amended); (ii)
the adoption of a plan relating to the liquidation or dissolution of the
Company or any successor to the Company; or (iii) the consummation of any
transaction (including, without limitation, any merger or consolidation)
the result of which is that any "person" (as defined above), other than the
Remaining Shareholders, acquires a direct or indirect interest in more than
50% of the voting power of the shares of beneficial interest of the Company
or any successor to the Company.
b. Unless otherwise defined herein, all initially capitalized terms
herein shall have the same definitions set forth in the Offer to Purchase,
including any amendments thereto, filed by the Company with the Securities
and Exchange Commission.
2. AGREEMENT REGARDING PROCEEDS UPON A CHANGE OF CONTROL. In the event a
Change of Control occurs at any time within twelve (12) months following the
later of the date of consummation of the Offer or the date of consummation of
the Merger, the parties agree that if the aggregate amount of proceeds received
by the Remaining Shareholders as a result of such Change of Control (the
"Proceeds") exceeds the product of the Offer Price multiplied by the 21,885,668
shares currently issued and outstanding (the "Total Purchase Price"), then any
positive difference between the Proceeds and the Total Purchase Price (the
"Excess Proceeds") shall be distributed by the Company as follows: the
Remaining Shareholders shall receive their proportionate share of the Excess
Proceeds (i.e. 62.1%, collectively) and the Public Shareholders of record on the
date immediately prior to the commencement of the Offer shall receive the
remaining amount of the Excess Proceeds (i.e. 37.9%, collectively) in proportion
to their ownership interests.
3. TRANSFER OF RIGHTS. This Agreement shall be binding on any heirs,
successors or permitted assigns of the parties.
4. ENTIRE AGREEMENT. This Agreement contains the entire agreement of the
parties and there are no other promises or conditions in any other agreement
whether oral or written. This Agreement supersedes any prior written or oral
agreements between the parties.
5. SEVERABILITY. If any provision of this Agreement shall be held to be
invalid or unenforceable for any reason, the remaining provisions shall continue
to be valid and enforceable. If a court finds that any provision of this
Agreement is invalid or unenforceable, but that by limiting such provision it
would become valid or enforceable, then such provision shall be deemed to be
written, construed, and enforced as so limited.
6. TERM. This Agreement shall terminate twelve (12) months following the
later of the date of consummation of the Offer or the date of consummation of
the Merger.
7. APPLICABLE LAW. This Agreement shall be governed by and construed
according to the laws of the State of New York.
8. COUNTERPARTS. This Agreement may be executed in one or more
counterparts all of which taken together will constitute one and the same
instrument.
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WEDGESTONE FINANCIAL
By:
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Name:
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Its:
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JCS Holdings Corp.
By:
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John C. Shaw Name:
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Its:
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PFG Corp.
By:
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James J. Pinto Name:
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Its:
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JMS Holdings Co. Inc.
By:
- ----------------------------- ---------------------------------
Gerald M.. Seslowe Name:
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Its:
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RAB Management Corp.
By:
- ----------------------------- ---------------------------------
Richard A. Bartlett III Name:
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Its:
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Stockwood LLC
By:
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Name:
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Its:
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