STOCK PURCHASE AGREEMENT
BY AND AMONG
MADISON DEARBORN CAPITAL PARTNERS, L.P.
MADISON DEARBORN CAPITAL PARTNERS II, L.P.
ATLANTIC RESTAURANTS, INC.
AND
CARROLS HOLDINGS CORPORATION
TABLE OF CONTENTS
Page
1. Authorization and Closing.......................................................... 1
1A. Purchase and Sale of the Securities......................................... 1
1B. The Closing................................................................. 1
1C. Purchase Price.............................................................. 2
2. Conditions of the Investors' Obligation at the Closing............................. 2
2A. Representations and Warranties; Covenants................................... 2
2B. Registration Agreement...................................................... 2
2C. Executive Options........................................................... 2
2D. Stockholders Agreement...................................................... 2
2E. Securities Law Compliance................................................... 3
2F. Loan Agreement.............................................................. 3
2G. Employment Agreements....................................................... 3
2H. Third Party Consents and Approvals.......................................... 3
2I. Governmental Consents and Approvals......................................... 3
2J. Purchase and Sale of the Securities......................................... 3
2K. Key-Man Life Insurance...................................................... 3
2L. Execution by Bank........................................................... 4
2M. Purchase of Shares by Alan Vituli, Daniel T. Accordino and Joseph A.
Zirkman................................................................. 4
2N. Amendment of Certificate of Incorporation................................... 4
2O. Opinion of the Company's Counsel............................................ 4
2P. Closing Documents........................................................... 4
2Q. Proceedings................................................................. 5
2R. Waiver...................................................................... 5
2S. Fees and Expenses........................................................... 5
3. Conditions of the Company's and Selling Shareholder's Obligations at the
Closing............................................................................ 5
3A. Representations and Warranties.............................................. 5
3B. Registration Agreement...................................................... 5
3C. Stockholders Agreement...................................................... 6
3D. Third Party Consents and Approvals.......................................... 6
3E. Governmental Consents and Approvals......................................... 6
3F. Fees and Expenses........................................................... 6
4. Pre-closing Covenants.............................................................. 6
4A. Company Covenants........................................................... 6
4B. Selling Shareholder Covenants............................................... 7
4C. Investors' Covenant......................................................... 7
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5. Transfer of Restricted Securities.................................................. 7
5A. General Provisions.......................................................... 7
5B. Opinion Delivery............................................................ 7
5C. Rule 144A................................................................... 8
5D. Legend Removal.............................................................. 8
6. Representations and Warranties of the Company; Covenants........................... 8
6A. Organization, Corporate Power and Licenses.................................. 8
6B. Capital Stock and Related Matters........................................... 8
6C. Subsidiaries; Investments................................................... 9
6D. Authorization; No Breach.................................................... 9
6E. Securities Laws............................................................. 10
6F. Financial Statements........................................................ 10
6G. Absence of Undisclosed Liabilities.......................................... 10
6H. Affiliated Transactions..................................................... 11
6I. No Material Adverse Change.................................................. 11
6J. Absence of Certain Developments............................................. 11
6K. Assets...................................................................... 12
6L. Tax Matters................................................................. 15
6M. Contracts and Commitments................................................... 16
6N. Intellectual Property Rights................................................ 18
6O. Litigation, etc............................................................. 19
6P. Brokerage................................................................... 19
6Q. Governmental Consent, etc................................................... 19
6R. Insurance................................................................... 19
6S. Employees................................................................... 19
6T. ERISA....................................................................... 20
6U. Compliance with Laws........................................................ 21
6V. Environmental and Safety Matters............................................ 22
6W. Disclosure.................................................................. 23
6X. Closing Date................................................................ 23
6Y. Reports with the Securities and Exchange Commission......................... 23
7. Representations and Warranties of the Selling Shareholder.......................... 24
7A. The ARI Shares.............................................................. 24
7B. Authorization............................................................... 24
7C. Company Representations..................................................... 25
7D. Compliance with Laws........................................................ 25
7E. Ownership of Selling Shareholder............................................ 25
7F. Brokerage................................................................... 25
7G. Closing Date................................................................ 26
8. Investors' Representations and Warranties.......................................... 26
8A. Investors' Investment Representations....................................... 26
8B. Brokerage................................................................... 26
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8C. Governmental Consent, etc................................................... 26
8D. Closing Date................................................................ 27
9. Definitions........................................................................ 27
9A. Definitions................................................................. 27
10. Termination........................................................................ 30
10A. Conditions of Termination................................................... 30
10B. Effect of Termination....................................................... 30
11. Miscellaneous...................................................................... 30
11A. Expenses.................................................................... 31
11B. Remedies.................................................................... 31
11C. Consent to Amendments....................................................... 31
11D. Successors and Assigns...................................................... 31
11E. Severability................................................................ 32
11F. Counterparts................................................................ 32
11G. Descriptive Headings; Interpretation........................................ 32
11H. Governing Law............................................................... 32
11I. Notices..................................................................... 32
11J. No Strict Construction...................................................... 34
11K. Indemnification............................................................. 34
11L. Further Assurances.......................................................... 38
11M. Consent to Jurisdiction..................................................... 39
Schedules and Exhibits
List of Exhibits
List of Disclosure Schedules
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STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "Agreement") is made as of
February 25, 1997 by and among Carrols Holdings Corporation, a Delaware
corporation (the "Company"), Atlantic Restaurants, Inc., a Delaware corporation
(the "Selling Shareholder" and, together with the Company, the "Sellers"),
Madison Dearborn Capital Partners, L.P. and Madison Dearborn Capital Partners
II, L.P. (together with Madison Dearborn Capital Partners, L.P., the
"Investors"). Except as otherwise indicated herein, capitalized terms used
herein are defined in Section 9 hereof.
WHEREAS, the authorized capital stock of the Company includes
3,000,000 shares of common stock, par value $0.01 per share (the "Common
Stock"), of which 850,000 shares are issued and outstanding;
WHEREAS, the Selling Shareholder owns beneficially and of record
850,000 of the outstanding shares of Common Stock; and
WHEREAS, on the terms and subject to the conditions set forth in
this Agreement, the Investors desire to acquire 283,334 shares of Common Stock
from the Company and 283,333 shares of Common Stock from the Selling
Shareholder.
NOW, THEREFORE, the parties hereto agree as follows:
Section 1. Authorization and Closing.
1A. Purchase and Sale of the Securities. At the Closing, the
Company shall sell to the Investors, and subject to the terms and conditions set
forth herein, the Investors shall purchase and acquire from the Company 283,334
shares of Common Stock (the "Company Shares") at a price of $108.2353 per share,
and the Selling Shareholder shall sell to the Investors and, subject to the
terms and conditions set forth herein, the Investors shall purchase and acquire
from the Selling Shareholder 283,333 shares of Common Stock (the "ARI Shares"
and, together with the Company Shares, the "Shares") at a price of $108.2353 per
share.
1B. The Closing. The closing of the transactions contemplated by
this Agreement (the "Closing") shall take place at the offices of Kirkland &
Ellis, 153 East 53rd Street, New York, New York, or at such other place as may
be mutually agreeable to each of the parties hereto, commencing at 10:00 a.m. on
the date which is five business days after the date on which the conditions to
the Closing set forth in Section 2 and Section 3 have been satisfied or waived,
or at such other time and on such other date as the parties hereto mutually
agree. At the Closing, the Sellers shall deliver to the Investors: (i) stock
certificates evidencing the Company Shares registered in such Investors' name;
and (ii) stock certificates evidencing the ARI Shares, such certificates being
duly endorsed or accompanied by duly executed forms of assignment.
1C. Purchase Price. At the Closing, the Investors shall pay the
purchase price for the Company Shares and the ARI Shares as follows:
(i) an amount equal to $30,666,740.49 by wire transfer of
immediately available funds to an account or accounts designated by the
Company; and
(ii) an amount equal to $30,666,632.25 by wire transfer of
immediately available funds to an account or accounts designated by the
Selling Shareholder.
Section 2. Conditions of the Investors' Obligation at the
Closing2. Conditions of the Investors' Obligation at the Closing. The obligation
of the Investors to purchase and pay for the Company Shares and the ARI Shares
at the Closing is subject to the satisfaction as of the Closing of the following
conditions:
2A. Representations and Warranties; Covenants. Subject to
paragraphs 11K(iii)(a) and 11K(iii)(d) hereof, the representations and
warranties contained in Section 6 and Section 7 hereof shall be true and correct
in all material respects at and as of the Closing as though then made, except to
the extent of changes caused by the transactions expressly contemplated herein,
and the Company and the Selling Shareholder shall have performed in all material
respects all of the covenants required to be performed by them hereunder prior
to the Closing.
2B. Registration Agreement. The Company, the Selling Shareholder,
the Investors, Alan Vituli and certain management optionholders shall have
entered into a registration agreement in form and substance as set forth in
Exhibit A attached hereto (the "Registration Agreement"), and the Registration
Agreement shall be in full force and effect as of the Closing.
2C. Executive Options. The Company shall have entered into an
Unvested Stock Option Agreement with each of Alan Vituli, Daniel T. Accordino,
and Joseph A. Zirkman in form and substance set forth in Exhibit B1, Exhibit B2
and Exhibit B3 attached hereto, respectively. The Company shall have adopted the
Carrols Holdings Corporation 1996 Long-Term Incentive Plan (the "1996 Plan") in
form and substance set forth in Exhibit B4 attached hereto. The Company shall
have entered into stock option agreements with each of Alan Vituli and Daniel T.
Accordino pursuant to the 1996 Plan in form and substance set forth on Exhibit
B5 and Exhibit B6 attached hereto, respectively. Each of the option agreements
referred to in this paragraph 2C shall collectively be referred to herein as the
"Executive Option Agreements."
2D. Stockholders Agreement. The Company, the Selling Shareholder,
the Investors, Alan Vituli and certain management optionholders shall have
entered into a stockholders agreement in form and substance set forth in Exhibit
C attached hereto (the "Stockholders Agreement"), and the Stockholders Agreement
shall be in full force and effect as of the Closing. At the Closing, the Selling
Shareholder shall surrender any and all stock certificates held by the Selling
Shareholder on the date thereof to the Company so that such certificate(s) may
be imprinted with the legends in substantially the form set forth in paragraph
8A hereof and paragraph 6 of the Stockholders Agreement.
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2E. Securities Law Compliance. The Company shall have made all
filings under all applicable federal and state securities laws necessary to
consummate the issuance of the Company Shares pursuant to this Agreement in
compliance with such laws.
2F. Loan Agreement. The Company and its Subsidiaries shall have
entered into a loan agreement providing for one or more loan facilities in form
and substance reasonably satisfactory to the Investors (together with all
related agreements and instruments, the "Loan Agreement").
2G. Employment Agreements. The Company shall have entered into a
Second Amended and Restated Employment Agreement with each of Alan Vituli and
Daniel T. Accordino (the "Employment Agreements") in form and substance
satisfactory to the Investors set forth in Exhibit D1 and Exhibit D2 attached
hereto, respectively, and each of the Employment Agreements shall not have been
amended or modified and shall be in full force and effect as of the Closing.
2H. Third Party Consents and Approvals. The Company and the
Selling Shareholder shall have received or obtained all third party and
shareholder consents and approvals that are necessary for the consummation of
the transactions contemplated hereby or that are required in order to prevent a
breach of or default under, a termination or modification of, or acceleration of
the terms of, any contract, agreement or document listed or described on the
Schedules attached hereto, in each case on terms and conditions reasonably
satisfactory to the Investors (including, without limitation, the approval of
Burger King Corporation).
2I. Governmental Consents and Approvals. The Company and the
Selling Shareholder shall have received or obtained all governmental and
regulatory consents and approvals that are necessary for the consummation of the
transactions contemplated hereby, in each case on terms and conditions
reasonably satisfactory to the Investors and, to the extent applicable, the
waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended (the "Hart-Scott-Rodino Act"), shall have expired or been terminated.
2J. Purchase and Sale of the Securities. The sale of the Company
Shares and the sale of the ARI Shares to the Investors shall have occurred
simultaneously hereunder.
2K. Key-Man Life Insurance. The Company shall have obtained a
key-man life insurance policy on the life of Alan Vituli in the face amount of
$10,000,000 which policy shall be in full force and effect as of the Closing.
Such insurance shall name the Company as beneficiary and shall provide that such
insurance policy may not be canceled unless the insurance carrier gives at least
30 days prior written notice of such cancellation to the Investors.
2L. Execution by Bank. Bahrain International Bank, E.C. (the
"Bank") shall have executed and delivered this Agreement, the Stockholders
Agreement and the Registration Agreement.
2M. Purchase of Shares by Alan Vituli, Daniel T. Accordino and
Joseph A. Zirkman. Simultaneously with the consummation of sale of the ARI
Shares and the Company
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Shares to the Investors, Alan Vituli shall purchase 9,827 shares of Common Stock
at a price of $101.7646 per share, Daniel T. Accordino shall purchase 860 shares
of Common Stock at a price of $101.7646 per share and Joseph A. Zirkman shall
purchase 123 shares of Common Stock at a price of $101.7646, each amount payable
by wire transfer of immediately available funds.
2N. Amendment of Certificate of Incorporation. The Company's
Certificate of Incorporation shall have been amended to eliminate all authorized
shares of nonvoting common stock and all stockholder preemptive rights therein.
2O. Opinion of the Company's Counsel. The Investors shall have
received from each of Schulte Roth & Zabel LLP and Joseph A. Zirkman, Esq.,
counsel for the Company, and Pryor, Cashman, Sherman & Flynn, counsel for the
Selling Shareholder, an opinion with respect to the matters set forth in
Exhibits E1, E2 and E3 attached hereto, respectively, which shall be addressed
to the Investors, dated the date of the Closing and in form and substance
satisfactory to the Investors.
2P. Closing Documents. The Company shall have delivered to the
Investors the documents listed in subparagraphs (i) through (vi) below and the
Selling Shareholder shall have delivered to the Investors the documents listed
in subparagraph (vii) below:
(i) an Officer's Certificate of the Company, dated the
date of the Closing, stating that the conditions specified in Section 1
and paragraphs 2A through 2N, inclusive, have been fully satisfied;
(ii) certified copies of the resolutions duly adopted by
the Company's board of directors authorizing the execution, delivery and
performance of this Agreement, the Registration Agreement, the
Stockholders Agreement and each of the other agreements contemplated
hereby to which the Company is a party;
(iii) certified copies of the Company's Certificate of
Incorporation and the Company's bylaws, each as in effect at the
Closing;
(iv) certified copies of the Loan Agreement, the
Employment Agreements and the Executive Option Agreements, each in
effect at the Closing;
(v) copies of all third party and governmental consents,
approvals and filings required in connection with the consummation of
the transactions hereunder (including the waiver of all preemptive
rights and rights of first refusal with respect to the issuance and sale
of the Company Shares and ARI Shares hereunder);
(vi) such other documents relating to the transactions
contemplated by this Agreement as the Investors or its counsel may
reasonably request; and
(vii) an Officer's Certificate of the Selling Shareholder,
dated the date of the Closing, stating that, with respect to the Selling
Shareholder, the conditions set forth in paragraphs 2A, 2H, 2I, 2J and
2L have been fully satisfied, and certified copies of
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the resolutions duly adopted by the Selling Shareholder's board of
directors and by the Bank's board of directors authorizing the
execution, delivery and performance of this Agreement, the Registration
Agreement, the Stockholders Agreement and each of the other agreements
contemplated hereby to which the Selling Shareholder or the Bank,
respectively, is a party.
2Q. Proceedings. All corporate and other proceedings taken or
required to be taken by the Company in connection with the transactions
contemplated hereby to be consummated at or prior to the Closing and all
documents incident thereto shall be satisfactory in form and substance to the
Investors and their special counsel.
2R. Waiver. Any condition specified in this Section 2 may be
waived if consented to by the Investors; provided that no such waiver shall be
effective against the Investors unless it is set forth in a writing executed by
the Investors.
2S. Fees and Expenses. At the Closing, the Company shall have
reimbursed the Investors for the reasonable fees and expenses of their special
counsel and all other expenses associated with their due diligence review of the
Company and its Subsidiaries, and the Company shall have paid the Investors a
transaction fee in the aggregate amount of $500,000.
Section 3. Conditions of the Company's and Selling Shareholder's
Obligations at the Closing3. Conditions of the Company's and Selling
Shareholder's Obligations at the Closing. The obligations of the Company and the
Selling Shareholder to sell the Company Shares and the ARI Shares, respectively,
at the Closing are subject to the satisfaction as of the Closing of the
following conditions:
3A. Representations and Warranties. The representations and
warranties contained in Section 8 hereof shall be true and correct in all
material respects at and as of the Closing as though then made, except to the
extent of changes caused by the transactions expressly contemplated herein.
3B. Registration Agreement. The Company, the Selling Shareholder,
the Investors, Alan Vituli and the other management optionholders shall have
entered into the Registration Agreement, and the Registration Agreement shall be
in full force and effect as of the Closing.
3C. Stockholders Agreement. The Company, the Selling Shareholder,
the Investors, Alan Vituli and the other management optionholders shall have
entered into the Stockholders Agreement, and the Stockholders Agreement shall be
in full force and effect as of the Closing.
3D. Third Party Consents and Approvals. The Company and the
Selling Shareholder shall have received or obtained all third party consents and
approvals that are necessary for the consummation of the transactions
contemplated hereby or that are required in order to prevent a breach of or
default under, a termination or modification of, or acceleration of the terms
of, any contract, agreement or document listed or described on the attached
Contracts Schedule (all of which are listed on the Third Party Approval Schedule
attached hereto), in each
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case on terms and conditions reasonably satisfactory to the Company and the
Selling Shareholder, as the case may be.
3E. Governmental Consents and Approvals. The Company and the
Selling Shareholder shall have received or obtained all governmental and
regulatory consents and approvals that are necessary for the consummation of the
transactions contemplated hereby (all of which are listed on the Governmental
Approval Schedule), in each case on terms and conditions reasonably satisfactory
to the Company and the Selling Shareholder, as the case may be, and to the
extent applicable, the waiting period under the Hart-Scott-Rodino Act, have
expired or been terminated.
3F. Fees and Expenses. At the Closing, the Company shall have
reimbursed the Selling Shareholder for the reasonable fees and expenses of their
special counsel in connection with this transaction.
Section 4. Pre-closing Covenants
4A. Company Covenants. Prior to the Closing, the Company shall:
(i) provide the Investors' representatives with reasonable
access during normal business hours to the employees, facilities and
books and records of the Company and its Subsidiaries and allow the
Investors' representatives to make copies of such books and records as
reasonably requested;
(ii) provide the Investors with copies of monthly
financial statements of the Company and its Subsidiaries promptly after
preparation thereof and promptly provide any and all other information
reasonably requested by the Investors;
(iii) promptly notify the Investors of any material
adverse event or occurrence affecting the financial condition, operating
results, assets, operations, business prospects, employee relations or
customer or supplier relations of the Company and its Subsidiaries taken
as a whole, and any other event or occurrence which would have a
material adverse effect upon the consummation of the transactions
contemplated hereby (including, without limitation, the filing of any
lawsuit against the Company having such effect); and
(iv) cooperate with the Investors in connection with the
consummation of the transactions contemplated hereby (including without
limitation the filing of any forms and related materials as required by
the Hart-Scott-Rodino Act) and use its reasonable best efforts to cause
the closing conditions set forth in Sections 2 and 3 to be fully
satisfied.
4B. Selling Shareholder Covenants. Prior to the Closing, the
Selling Shareholder shall cooperate with the Investors in connection with the
consummation of the transactions contemplated hereby (including, without
limitation, the filing of any forms and
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related materials as required by the Hart-Scott-Rodino Act) and use its
reasonable best efforts to cause the closing conditions set forth in Section 2
and 3 to be fully satisfied.
4C. Investors' Covenant. Prior to the Closing, the Investors
shall either file all forms and other materials required by the
Hart-Scott-Rodino Act or deliver to the Company and the Selling Shareholder a
written statement certifying that the Investors will have less than $10,000,000
of net sales and total assets (as determined under the Hart-Scott-Rodino Act) as
of the date of the Closing.
Section 5. Transfer of Restricted Securities.
5A. General Provisions. Restricted Securities are transferable
only pursuant to (i) public offerings registered under the Securities Act, (ii)
Rule 144 or Rule 144A of the Securities and Exchange Commission (or any similar
rule or rules then in force) if such rule is available and (iii) subject to the
conditions specified in paragraph 5B below, any other legally available means of
transfer.
5B. Opinion Delivery. In connection with the transfer of any
Restricted Securities (other than a transfer described in paragraph 5A(i) or
(ii) above), the holder thereof shall deliver written notice to the Company
describing in reasonable detail the transfer or proposed transfer, together with
an opinion of counsel which (to the Company's reasonable satisfaction) is
knowledgeable in securities law matters to the effect that such transfer of
Restricted Securities may be effected without registration of such Restricted
Securities under the Securities Act. In addition, if the holder of the
Restricted Securities delivers to the Company an opinion of counsel that no
subsequent transfer of such Restricted Securities shall require registration
under the Securities Act, the Company shall promptly upon such contemplated
transfer deliver new certificates for such Restricted Securities which do not
bear the Securities Act legend set forth in paragraph 8A. If the Company is not
required to deliver new certificates for such Restricted Securities not bearing
such legend, the holder thereof shall not transfer the same until the
prospective transferee has confirmed to the Company in writing its agreement to
be bound by the conditions contained in this paragraph and paragraph 8A.
5C. Rule 144A. Upon the request of the Investors, the Company
shall promptly supply to the Investors or their prospective transferees all
information regarding the Company required to be delivered in connection with a
transfer pursuant to Rule 144A of the Securities and Exchange Commission.
5D. Legend Removal. If any Restricted Securities become eligible
for sale pursuant to Rule 144(k), the Company shall, upon the request of the
holder of such Restricted Securities (and, if necessary, an opinion of counsel
reasonably satisfactory to the Company), remove the legend set forth in
paragraph 8A from the certificates for such Restricted Securities.
Section 6. Representations and Warranties of the Company;
Covenants6. Representations and Warranties of the Company; Covenants. As a
material inducement to the Investors to enter into this Agreement and purchase
the Company Shares and the ARI Shares hereunder, the Company hereby represents
and warrants that:
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6A. Organization, Corporate Power and Licenses. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of Delaware and is qualified to do business in every jurisdiction in which its
ownership of property or conduct of business requires it to qualify. The Company
possesses all requisite corporate power and authority and all material licenses,
permits and authorizations necessary to own and operate its properties, to carry
on its businesses as now conducted and to carry out the transactions
contemplated by this Agreement. The copies of the Company's and each
Subsidiary's charter documents and bylaws which have been furnished to the
Investors' special counsel reflect all amendments made thereto at any time prior
to the date of this Agreement and are correct and complete.
6B. Capital Stock and Related Matters.
(i) As of the date hereof and, except as expressly
contemplated by this Agreement, as of the Closing, the "Capitalization Schedule"
correctly sets forth the authorized and outstanding capital stock of the Company
and the name and number of shares of capital stock held by each stockholder of
the Company. As of the Closing, except as set forth on the Capitalization
Schedule, neither the Company nor any Subsidiary shall have outstanding any
stock or securities convertible or exchangeable for any shares of its capital
stock or containing any profit participation features, nor shall it have
outstanding any rights or options to subscribe for or to purchase its capital
stock or any stock or securities convertible into or exchangeable for its
capital stock or any stock appreciation rights or phantom stock rights. As of
the Closing, neither the Company nor any Subsidiary shall be subject to any
obligation (contingent or otherwise) to repurchase or otherwise acquire or
retire any shares of its capital stock, any warrants, options or other rights to
acquire its capital stock, or any obligation to make any payments with respect
to any profit participation features of any of its capital stock, carried
interest rights, stock appreciation rights, phantom stock rights or similar
rights, except as set forth on the Capitalization Schedule and except pursuant
to the Certificate of Incorporation and the Executive Option Agreements. As of
the Closing, all of the outstanding shares of the Company's capital stock shall
be validly issued, fully paid and nonassessable.
(ii) Except as set forth in the Company's Certificate of
Incorporation, as of the date hereof, there are no statutory or, to the best of
the Company's knowledge, contractual stockholders preemptive rights or rights of
refusal with respect to the issuance of the Common Stock hereunder. The Company
has not violated any applicable federal or state securities laws in connection
with the offer, sale or issuance of any of its capital stock. To the best of the
Company's knowledge, there are no agreements between the Company's stockholders
with respect to the voting or transfer of the Company's capital stock or with
respect to any other aspect of the Company's affairs, except for the
Stockholders Agreement.
(iii) As of the Closing, upon the delivery thereof, all of the
Company Shares shall be validly issued, fully paid and nonassessable and free
and clear of any claims, liens, encumbrances, security interests, options,
participation rights, appreciation rights, carried interest obligations, charges
and restrictions of any kind ("Adverse Claims").
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6C. Subsidiaries; Investments. The attached "Subsidiary
Schedule" correctly sets forth the name of each Subsidiary, the jurisdiction
of its incorporation and the Persons owning the outstanding capital stock of
such Subsidiary. Each Subsidiary is duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation, possesses all
requisite corporate power and authority and all material licenses, permits and
authorizations necessary to own its properties and to carry on its businesses
as now being conducted and is qualified to do business in every jurisdiction in
which its ownership of property or the conduct of business requires it to
qualify. Except as set forth on the Subsidiary Schedule, all of the outstanding
shares of capital stock of each Subsidiary are validly issued, fully paid and
nonassessable, and all such shares are owned by the Company or another
Subsidiary free and clear of any Lien and not subject to any option or right to
purchase any such shares. Except as set forth on the Subsidiary Schedule,
neither the Company nor any Subsidiary owns or holds the right to acquire any
shares of stock or any other security or interest in any other Person.
6D. Authorization; No Breach. The execution, delivery and
performance of this Agreement, the Registration Agreement, the Stockholders
Agreement, the Loan Agreement and all other agreements contemplated hereby
to which the Company is a party have been duly authorized by the Company. This
Agreement, the Registration Agreement, the Stockholders Agreement, the Loan
Agreement and all other agreements contemplated hereby to which the Company is
a party each constitutes a valid and binding obligation of the Company,
enforceable in accordance with its terms. Except as set forth on the
"Restrictions Schedule" attached hereto, the execution and delivery by the
Company and the Selling Shareholder, as the case may be, of this Agreement, the
Registration Agreement, the Stockholders Agreement, the Loan Agreement and all
other agreements contemplated hereby to which the Company or the Selling
Shareholder is a party, the offering, sale and issuance of the Common Stock
and the fulfillment of and compliance with the respective terms hereof and
thereof by the Company or the Selling Shareholder, do not and shall not (i)
conflict with or result in a breach of the terms, conditions or provisions
of, (ii) constitute a default under, (iii) result in the creation of any lien,
security interest, charge or encumbrance upon the Company's or any Subsidiary's
capital stock or assets pursuant to, (iv) give any third party the right to
modify, terminate or accelerate any obligation under, (v) result in a violation
of, (vi) require any authorization, consent, approval, exemption or other
action by or notice or declaration to, or filing with, any court or
administrative or governmental body or agency pursuant to, or (vii) give rise to
any Adverse Claim with respect to any of the Company's capital stock or other
equity securities (or any securities convertible into or exchangeable for any
shares of the Company's capital stock or other equity securities) under, the
charter or bylaws of the Company or any Subsidiary, or any law, statute, rule or
regulation to which the Company, any Subsidiary or the Selling Shareholder is
subject, or any agreement (oral or written), instrument, order, judgment or
decree to which the Company, any Subsidiary or the Selling Shareholder is
subject.
6E. Securities Laws. No consent, authorization, approval,
permit, or order of or filing with any governmental or regulatory authority is
required under current laws and regulations in connection with the execution
and delivery of this Agreement or the offer, issuance, sale or delivery of the
Company Shares or the ARI Shares, other than the qualification
-9-
under applicable state securities laws, which qualification will, if required,
be effected as a condition of the sales contemplated hereby.
6F. Financial Statements. Attached hereto as the "Financial
Statements Schedule" are the following financial statements:
(i) the audited consolidated balance sheets of the Company
and its Subsidiaries as of December 31, 1993, 1994 and 1995, the related
statements of income and cash flows (or the equivalent) for the
respective twelve-month periods then ended; and
(ii) the unaudited consolidated balance sheet of the
Company and its Subsidiaries as of September 30, 1996 (the "Latest
Balance Sheet"), and the related statements of income and cash flows (or
the equivalent) for the nine-month period then ended.
Each of the foregoing financial statements (including in all cases the notes
thereto, if any) is complete in all material respects, is consistent with the
books and records of the Company (which, in turn, are complete in all material
respects) and has been prepared in accordance with generally accepted accounting
principles, consistently applied, and presents fairly the consolidated financial
condition, results of operations and cash flows of the Company and its
Subsidiaries as of the dates and for the periods set forth therein, except for
the absence of notes in the Latest Balance Sheet and subject to normal year-end
audit adjustments for recurring accruals.
6G. Absence of Undisclosed Liabilities. Except as set forth on
the attached "Liabilities Schedule," the Company and its Subsidiaries do not
have any obligation or liability (whether accrued, absolute, contingent,
unliquidated or otherwise, whether due or to become due and regardless of when
asserted) arising out of transactions entered into at or prior to the Closing,
or any action or inaction at or prior to the Closing, or any state of facts
existing at or prior to the Closing other than: (i) liabilities set forth on the
Latest Balance Sheet (including any notes thereto), (ii) liabilities and
obligations which have arisen after the date of the Latest Balance Sheet in the
ordinary course of business (none of which is a liability resulting from breach
of contract, breach of warranty, tort, infringement, claim or lawsuit), (iii)
liabilities and obligations expressly disclosed in the other Schedules to this
Agreement and (iv) liabilities and obligations under agreements, contracts and
commitments not required to be disclosed on the Schedules hereto.
6H. Affiliated Transactions. Except as set forth on the attached
"Affiliated Transaction Schedule" and for employment agreements and stock option
agreements between the Company and certain of its officers, to the Company's
knowledge, no officer, director, employee, stockholder, or Affiliate of the
Company or any individual related by blood, marriage, or adoption to any such
individual or any entity in which such person or individual owns any beneficial
interest, is a party to any material agreement, contract, commitment, or
transaction with the Company or has any material interest in any property used
by the Company or any Subsidiary.
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6I. No Material Adverse Change. Since the date of the Latest
Balance Sheet, there has been no material adverse event or occurrence affecting
the financial condition, operating results, assets, operations, business
prospects, employee relations or customer or supplier relations of the Company
and its Subsidiaries taken as a whole.
6J. Absence of Certain Developments. Except as expressly
contemplated by this Agreement or as set forth on the attached "Developments
Schedule," since the date of the Latest Balance Sheet, neither the Company nor
any Subsidiary have:
(a) issued any notes, bonds or other debt securities or
any capital stock or other equity securities or any securities
convertible, exchangeable or exercisable into any capital stock or other
equity securities;
(b) borrowed any amount or incurred or become subject to
any liabilities, except for current liabilities incurred in the ordinary
course of business and liabilities under contracts entered into in the
ordinary course of business, and except for any sale/leaseback
transactions entered into in the ordinary course of business between the
date hereof and the Closing within the Board's current authorization;
(c) discharged or satisfied any Lien or paid any
obligation or liability, other than current liabilities paid in the
ordinary course of business;
(d) declared or made any payment or distribution of cash
or other property to its stockholders with respect to its capital stock
or other equity securities (except for regularly scheduled dividends on
the Company's preferred stock in accordance with the Company's
Certificate of Incorporation) or purchased or redeemed any shares of its
capital stock or other equity securities (including, without limitation,
any warrants, options or other rights to acquire its capital stock or
other equity securities);
(e) mortgaged or pledged any of its properties or assets
or subjected them to any Lien, except Liens for current property taxes
not yet due and payable;
(f) sold, assigned or transferred any of its tangible
assets, except in the ordinary course of business, or canceled any debts
or claims;
(g) sold, assigned or transferred any patents or patent
applications, trademarks, service marks, trade names, corporate names,
copyrights or copyright registrations, trade secrets or other intangible
assets, or disclosed any proprietary confidential information to any
Person;
(h) suffered any extraordinary losses or waived any rights
of value, whether or not in the ordinary course of business or
consistent with past practice;
(i) made capital expenditures or commitments therefor that
aggregate in excess of $200,000, except for capital expenditures made in
the ordinary course of business between the date hereof and the Closing;
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(j) made any loans or advances to, guarantees for the
benefit of, or any Investments in, any Persons in excess of $100,000 in
the aggregate;
(k) made any charitable contributions or pledges in excess
of $50,000 in the aggregate;
(l) suffered any damage, destruction or casualty loss
exceeding in the aggregate $100,000, not covered by insurance;
(m) made any Investment in or taken steps to incorporate
any Subsidiary;
(n) acquired any operating business or any assets outside
of the ordinary course of business or entered any commitment to do so;
or
(o) except for this Agreement or any other agreement
contemplated hereby, entered into any other material transaction other
than in the ordinary course of business.
6K. Assets. Except as set forth on the attached "Assets
Schedule," the Company and each Subsidiary have good and marketable title to, or
a valid leasehold interest in, the properties and assets used by them, located
on their premises or shown on the Latest Balance Sheet or acquired thereafter,
free and clear of all Liens, except for properties and assets disposed of in the
ordinary course of business since the date of the Latest Balance Sheet and
except for Liens disclosed on the Latest Balance Sheet or 1995 audited
consolidated balance sheet of the Company and its Subsidiaries (including any
notes thereto) and Liens for current property taxes not yet due and payable.
Except as described on the Assets Schedule, the Company's and each Subsidiary's
buildings and other improvements, equipment and other tangible assets are in
good operating condition in all material respects and are fit for use in the
ordinary course of business. The Company and each Subsidiary own, or have a
valid leasehold or other interest in, all assets necessary for the conduct of
their respective businesses as presently conducted and as presently proposed to
be conducted.
(i) Owned Properties. The "Assets Schedule" sets forth a list
of all owned real property (the "Owned Real Property") used by the Company or
any Subsidiary in the operation of the Company's business. With respect to each
such parcel of Owned Real Property except as disclosed on the Assets Schedule:
(a) the Company or one of its Subsidiaries has good and marketable fee simple
title in such parcel, free and clear of all encumbrances; and (b) there are no
leases, subleases, licenses, concessions, or other agreements, written or oral,
granting to any person the right of use or occupancy of any portion of such
parcel.
(ii) Leased Properties. The Assets Schedule sets forth a list
of all of the leases and subleases ("Leases") in which the Company or any
subsidiary has a leasehold and subleasehold interest (the "Leased Real
Property") (the Owned Real Property and the Leased Real Property are
collectively referred to herein as the "Real Property"). Each of the Leases is
in full force and effect and the Company holds a valid and existing leasehold or
subleasehold
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interest under each of the Leases. The Company has made available to the
Investors true, correct, complete and accurate copies of each of the Leases
described in the Assets Schedule. With respect to each Lease listed on the
Assets Schedule: (a) the Lease is legal, valid, binding, enforceable and in full
force and effect; (b) the validity, binding nature and enforceability of the
Lease shall not be adversely affected by the transaction contemplated hereby;
(c) neither the Company, nor to the Company's knowledge, any other party to the
Lease is in breach or default, and no event has occurred which, with notice or
lapse of time, would constitute such a breach or default or permit termination,
modification or acceleration under the Lease; (d) no party to the Lease has
repudiated any provision thereof; (e) the Lease has not been modified in any
respect, except to the extent that such modifications are disclosed by the
documents made available to the Investors' special counsel; and (f) except as
set forth on the Assets Schedule, the Company has not assigned, transferred,
conveyed, mortgaged, deeded in trust or encumbered any interest in the Lease.
(iii) Real Property Disclosure. Except as disclosed on the Assets
Schedule, there is no real property leased or owned by the Company or any
subsidiary and used in the Company's business.
(iv) No Proceedings. There are no pending or, to the Company's
knowledge, threatened proceedings in eminent domain or other similar proceedings
affecting any portion of the Real Property. There exists no writ, injunction,
decree, order or judgment outstanding, nor any litigation, pending or to our
knowledge threatened, relating to the ownership, lease, use, occupancy or
operation by any person of the Real Property.
(v) Current Use. The current use or occupancy of the Real
Property does not violate in any material respect any instrument of record or
agreement affecting such Real Property or any covenant, condition, restriction,
easement, agreement or order of any governmental authority having jurisdiction
over any of the Real Property. No damage or destruction has occurred with
respect to any of the Real Property that, individually or in the aggregate, has
had or resulted in, or will have or result in, a significant adverse effect on
the operation of the Company's business.
(vi) Condition and Operation of Improvements. All buildings and
all components of all buildings, structures and other improvements included
within the Owned Real Property (the "Improvements"), are in good condition and
repair and are adequate to operate such facilities as currently used. To the
best of the Company's knowledge and belief, there are no facts or conditions
affecting any of the Improvements and the Leased Real Property which would,
individually or in the aggregate, interfere in any significant respect with the
use, occupancy or operation thereof as currently used, occupied or operated or
intended to be used, occupied or operated. To the best of the Company's
knowledge and belief, there are no structural deficiencies or latent defects
affecting any Improvements. All water, gas, electrical, steam, compressed air,
telecommunication, sanitary and storm sewage lines and systems and other similar
systems serving the Real Property are installed and operating and are sufficient
to enable the Real Property to continue to be used and operated in the manner
currently being used and operated. Each such utility or other service is
provided by a public or private utility or
-13-
service company and enters the Owned Real Property from an adjacent public
street or valid private easement owned by the supplier of such utility or other
service. Each Improvement has direct access to a public street adjoining the
Real Property on which such Improvement is situated over the driveways and
accessways currently being used in connection with the use and operation of such
Improvement and no existing accessway crosses or encroaches upon any property or
property interest not owned by the Company.
(vii) Permits. All certificates of occupancy, permits, licenses,
franchises, approvals and authorizations (collectively, the "Real Property
Permits") of all governmental authorities having jurisdiction over the Real
Property, required or appropriate to have been issued to the Company to enable
the Real Property to be lawfully occupied and used for all of the purposes for
which it is currently occupied and used, have been lawfully issued and are, as
of the date hereof, in full force and effect, with no suspension, revocation or
modification of any Real Property Permit pending or threatened.
(viii) Compliance with Laws. The Real Property is in full
compliance with all applicable building, zoning, subdivision, health and safety
and other land use and similar laws affecting the Real Property (collectively,
the "Real Property Laws"), and the Company has not received any notice of
violation or claimed violation of any Real Property Law. There is no pending or,
to the best knowledge of the Company, any anticipated change in any Real
Property Law that will have or result in a significant adverse effect upon the
ownership, alteration, use, occupancy or operation of the Real Properties or any
portion thereof. Nothing in this paragraph 6K(viii) shall be deemed to apply to
compliance with Environmental and Safety Requirements, which are covered by the
representations and warranties set forth in paragraph 6V hereof.
6L. Tax Matters.
(i) Except as set forth on the attached "Taxes Schedule": the
Company and each Subsidiary have filed all Tax Returns which they are required
to file under applicable laws and regulations; the Company and each Subsidiary
have either paid all Taxes due and owing by them (whether or not such Taxes are
required to be shown on a Tax Return) or accrued such Taxes on the Latest
Balance Sheet (excluding any amount recorded which is attributable solely to
timing differences between book and Tax income); the Company and each Subsidiary
have withheld and paid over to the appropriate taxing authority all Taxes which
they are required to withhold from amounts paid or owing to any employee,
stockholder, creditor or other third party; neither the Company nor any
Subsidiary has waived any statute of limitations with respect to any Taxes or
agreed to any extension of time with respect to any Tax assessment or
deficiency; the accrual for Taxes on the Latest Balance Sheet would be adequate
to pay all Tax liabilities of the Company and its Subsidiaries with respect to
their current tax year if such year were treated as ending on the date of the
Latest Balance Sheet (excluding any amount recorded which is attributable solely
to timing differences between book and Tax income); since the date of the Latest
Balance Sheet, the Company and its Subsidiaries have not incurred any liability
for Taxes other than in the ordinary course of business; the assessment of any
additional Taxes for periods for which Tax Returns have been filed by the
Company and each Subsidiary shall not exceed the recorded liability therefor on
the Latest Balance Sheet (excluding any amount recorded which is
-14-
attributable solely to timing differences between book and Tax income); the
federal income Tax Returns of the Company and its Subsidiaries have been audited
and closed or otherwise are closed for all tax years through 1992; no foreign,
federal, state or local tax audits or administrative or judicial proceedings are
pending or being conducted with respect to the Company or any Subsidiary, no
information related to Tax matters has been requested by any foreign, federal,
state or local taxing authority and no written notice indicating an intent to
open an audit or other review has been received by the Company from any foreign,
federal, state or local taxing authority; there are no material unresolved
questions or claims raised by a taxing authority concerning the Company's or any
Subsidiary's Tax liability; and the Company and its Subsidiaries have net
operating loss carryforwards for federal income Tax purposes as of December 31,
1996 of at least $25 million (ignoring for this purpose any limitations on the
use of these net operating losses arising either out of the acquisition of the
Company by the Selling Shareholder or out of the transactions contemplated by
this Agreement).
(ii) Neither the Company nor any of its Subsidiaries has made
an election under 'SS'341(f) of the IRC. Neither the Company nor any Subsidiary
is liable for the Taxes of another Person that is not a Subsidiary in a material
amount under (a) Treas. Reg. 'SS' 1.1502-6 (or comparable provisions of state,
local or foreign law), (b) as a transferee or successor, (c) by contract or
indemnity or (d) otherwise. Neither the Company nor any Subsidiary is a party to
any tax sharing agreement that includes any entity other than the Company or any
Subsidiary. Neither the Company nor any Subsidiary has made any payments, is
obligated to make payments or is a party to an agreement that could obligate it
to make any payments that would not be deductible under IRC 'SS'280G.
(iii) "Tax" or "Taxes" means federal, state, county, local,
foreign or other income, gross receipts, ad valorem, franchise, profits, sales
or use, transfer, registration, excise, utility, environmental, communications,
real or personal property, capital stock, license, payroll, wage or other
withholding, employment, social security, severance, stamp, occupation,
alternative or add-on minimum, estimated and other taxes of any kind whatsoever
(including, without limitation, deficiencies, penalties, additions to tax, and
interest attributable thereto) whether disputed or not. "Tax Return" means any
return, information report or filing with respect to Taxes, including any
schedules attached thereto and including any amendment thereof.
6M. Contracts and Commitments.
(i) Except as expressly contemplated by this Agreement or as
set forth on the attached "Contracts Schedule" or the attached "Employee
Benefits Schedule," neither the Company nor any Subsidiary is a party to or
bound by any written or oral:
(a) pension, profit sharing, stock option, employee stock
purchase or other plan or arrangement providing for deferred or other
compensation to employees or any other employee benefit plan or
arrangement, or any collective bargaining agreement or any other
contract with any labor union, or severance agreements, programs,
policies or arrangements;
(b) contract for the employment of any officer, individual
employee or
-15-
other Person on a full-time, part-time, consulting or other basis
providing annual compensation in excess of $100,000 or contract relating
to loans to officers, directors or Affiliates which, in the aggregate,
exceed $50,000;
(c) contract under which the Company or Subsidiary has
advanced or loaned any other Person amounts in the aggregate exceeding
$50,000;
(d) agreement or indenture relating to borrowed money or
other Indebtedness or the mortgaging, pledging or otherwise placing a
Lien on any material asset or material group of assets of the Company
and its Subsidiaries;
(e) guarantee of any obligation in excess of $25,000
(other than by the Company of a Wholly-Owned Subsidiary's debts or a
guarantee by a Subsidiary of the Company's debts or another Subsidiary's
debts);
(f) lease or agreement under which the Company or any
Subsidiary is lessee of or holds or operates any property, real or
personal, owned by any other party, except for any lease of real or
personal property under which the aggregate annual rental payments do
not exceed $50,000;
(g) other than as set forth on the Assets Schedule, lease
or agreement under which the Company or any Subsidiary is lessor of or
permits any third party to hold or operate any property, real or
personal, owned or controlled by the Company or any Subsidiary;
(h) contract or group of related contracts with the same
party or group of affiliated parties the performance of which involves
consideration in excess of $100,00 per annum;
(i) assignment, license, indemnification or agreement with
respect to any intangible property (including, without limitation, any
Intellectual Property Rights) having a value in excess of $50,000;
(j) express warranties with respect to its services
rendered or its products sold or leased;
(k) agreement under which it has granted any Person any
registration rights (including, without limitation, demand and piggyback
registration rights);
(l) sales, distribution or franchise agreement;
(m) contract or agreement prohibiting it from freely
engaging in any business or competing anywhere in the world; or
(n) any other agreement which is material to its
operations and business prospects and involves a consideration in excess
of $50,000 annually.
-16-
(ii) All of the contracts, agreements and instruments set forth
on the Contracts Schedule are valid, binding and enforceable in accordance with
their respective terms. The Company and each Subsidiary have performed all
obligations required to be performed by them under the contracts, agreements and
instruments listed on the Contracts Schedule and are not in default under or in
breach of nor in receipt of any claim of default or breach under any contract,
agreement or instrument listed on the Contracts Schedule; no event has occurred
which with the passage of time or the giving of notice or both would result in a
default, breach or event of noncompliance by the Company or any Subsidiary under
any contract, agreement or instrument to which the Company or any Subsidiary is
subject; neither the Company nor any Subsidiary has any present expectation or
intention of not fully performing all such obligations; and neither the Company
nor any Subsidiary has knowledge of any breach or anticipated breach by the
other parties to any contract, agreement, instrument or commitment listed on the
Contracts Schedule.
(iii) The Contracts Schedule shall list each Burger King
Franchise Agreement and shall disclose the termination date of each such
agreement. The Company has neither any knowledge nor any reason to believe that
any franchise agreement terminating within five years after the date of this
Agreement will not, if so requested by the Company, be renewed on substantially
similar terms and without a cost per restaurant in excess of $40,000 for the
successor franchise fee payable to Burger King Corporation in connection with
such renewal.
(iv) The Company has made available to the Investors' special
counsel a true and correct copy of each of the written instruments, plans,
contracts and agreements and an accurate description of each of the oral
arrangements, contracts and agreements which are referred to on the Contracts
Schedule, together with all amendments, waivers or other changes thereto.
6N. Intellectual Property Rights.
(i) The attached "Intellectual Property Schedule" contains a
complete and accurate list of all (a) patented or registered Intellectual
Property Rights owned or used by the Company or any Subsidiary, (b) pending
patent applications and applications for registrations of other Intellectual
Property Rights filed by the Company or any Subsidiary, (c) unregistered trade
names and corporate names owned or used by the Company or any Subsidiary and (d)
unregistered trademarks, service marks, copyrights, mask works and computer
software owned or used by the Company or any Subsidiary. The Intellectual
Property Schedule also contains a complete and accurate list of all licenses and
other rights granted by the Company or any Subsidiary to any third party with
respect to any Intellectual Property Rights and all licenses and other rights
granted by any third party to the Company or any Subsidiary with respect to any
Intellectual Property Rights, in each case identifying the subject Intellectual
Property Rights. The Company or one of its Subsidiaries owns all right, title
and interest to, or has the right to use pursuant to a valid license, all
Intellectual Property Rights necessary for the operation of the businesses of
the Company and its Subsidiaries as presently conducted free and clear of all
Liens. The loss or expiration of any Intellectual Property Right or related
group of Intellectual Property Rights owned or used by the Company or any
Subsidiary has not had and would not reasonably be expected to have a material
adverse effect on the conduct of the Company's and its Subsidiaries'
-17-
respective businesses, and no such loss or expiration is threatened, pending or
reasonably foreseeable. The Company and its Subsidiaries have taken all
necessary and desirable actions to maintain and protect the Intellectual
Property Rights which they own. To the best of the Company's knowledge, the
owners of any Intellectual Property Rights licensed to the Company or any
Subsidiary have taken all necessary and desirable actions to maintain and
protect the Intellectual Property Rights which are subject to such licenses.
(ii) Except as set forth on the Intellectual Property Schedule,
(a) the Company and its Subsidiaries own all right, title and interest in and to
all of the Intellectual Property Rights listed on such schedule, free and clear
of all Liens, (b) there have been no claims made against the Company or any
Subsidiary asserting the invalidity, misuse or unenforceability of any of such
Intellectual Property Rights, and there are no grounds for the same, (c) neither
the Company nor any Subsidiary has received any notices of, and is not aware of
any facts which indicate a likelihood of, any infringement or misappropriation
by, or conflict with, any third party with respect to such Intellectual Property
Rights (including, without limitation, any demand or request that the Company or
any Subsidiary license any rights from a third party), and (d) the conduct of
the Company's and each Subsidiary's business has not infringed, misappropriated
or conflicted with and does not infringe, misappropriate or conflict with any
Intellectual Property Rights of other Persons, nor would any future conduct as
presently contemplated infringe, misappropriate or conflict with any
Intellectual Property Rights of other Persons. The transactions contemplated by
this Agreement shall have no material adverse effect on the Company's or any
Subsidiary's right, title and interest in and to the Intellectual Property
Rights listed on the Intellectual Property Schedule.
6O. Litigation, etc. Except as set forth on the attached
"Litigation Schedule," there are no actions, suits, proceedings, orders,
investigations or claims pending or, to the Company's knowledge, threatened
against the Company or any Subsidiary (or to the Company's knowledge, pending or
threatened against any of the officers, directors or key employees of the
Company and its Subsidiaries with respect to the Company's or any Subsidiary's
businesses or proposed business activities), or pending or threatened by the
Company or any Subsidiary against any third party, at law or in equity, or
before or by any governmental department, commission, board, bureau, agency or
instrumentality (including, without limitation, any actions, suit, proceedings
or investigations with respect to the transactions contemplated by this
Agreement); neither the Company nor any Subsidiary is subject to any arbitration
proceedings under collective bargaining agreements or otherwise or, to the best
of the Company's knowledge, any governmental investigations or inquiries
(including, without limitation, inquiries as to the qualification to hold or
receive any license or permit); and, to the Company's knowledge, there is no
basis for any of the foregoing.
6P. Brokerage. There are no claims for brokerage commissions,
finders' fees or similar compensation in connection with the transactions
contemplated by this Agreement based on any arrangement or agreement binding
upon the Company or any Subsidiary. The Company shall pay, and hold the
Investors harmless against, any liability, loss or expense (including, without
limitation, reasonable attorneys' fees and out-of-pocket expenses) arising in
connection with any such claim.
-18-
6Q. Governmental Consent, etc. Except for any filings required to
be made pursuant to the Hart-Scott-Rodino Act, no permit, consent, approval or
authorization of, or declaration to or filing with, any governmental authority
is required in connection with the execution, delivery and performance by the
Company of this Agreement or the other agreements contemplated hereby, or the
consummation by the Company of any other transactions contemplated hereby or
thereby, except as expressly contemplated herein or in the exhibits hereto.
6R. Insurance. The attached "Insurance Schedule" contains a
description of each insurance policy maintained by the Company and its
Subsidiaries with respect to its properties, assets and businesses, and each
such policy is in full force and effect as of the Closing. Neither the Company
nor any Subsidiary is in default with respect to its obligations under any
insurance policy maintained by it. The insurance coverage of the Company and its
Subsidiaries is customary for corporations of similar size engaged in similar
lines of business. Except as set forth on the Insurance Schedule, the Company
and its Subsidiaries do not have any self-insurance or co-insurance programs.
6S. Employees. Except as set forth on the attached "Employee
Schedule," the Company is not aware that any executive or key employee of the
Company or any Subsidiary or any group of employees of the Company or any
Subsidiary has any plans to terminate employment with the Company or any
Subsidiary. The Company and each Subsidiary have complied in all material
respects with all laws relating to the employment of labor (including, without
limitation, provisions thereof relating to wages, hours, equal opportunity,
sexual harassment, collective bargaining and the payment of social security and
other taxes), and the Company is not aware that it or any Subsidiary has any
material labor relations problems (including, without limitation, any union
organization activities, threatened or actual strikes or work stoppages or
material grievances). Neither the Company, its Subsidiaries nor, to the
Company's knowledge after due inquiry, any of their employees is subject to any
noncompete, nondisclosure, confidentiality, employment, consulting or similar
agreements relating to, affecting or in conflict with the present or proposed
business activities of the Company and its Subsidiaries, except for agreements
between the Company and its present and former employees, those certain
Franchise Agreements between Burger King Corporation and the Company or any of
its Subsidiaries and those agreements set forth on the attached Employee
Schedule.
6T. ERISA.
(i) Multiemployer Plans. The Company does not have any
obligation to contribute to (or any other liability, including current or
potential withdrawal liability, with respect to) any Multiemployer Plan.
(ii) Retiree Welfare Plans. Except as set forth on the attached
Employee Benefits Schedule, the Company does not maintain or have any obligation
to contribute to (or any other liability with respect to) any Employee Benefit
Plan or arrangement whether or not terminated, which provides medical, health,
life insurance or other welfare-type benefits for current or future retired or
terminated employees (except for limited continued medical benefit
-19-
coverage required to be provided under Section 4980B of the IRC or as required
under applicable state law).
(iii) Defined Benefit Plans. The Company does not maintain,
contribute to or have any liability under (or with respect to) any employee plan
which is a Defined Benefit Plan, whether or not terminated.
(iv) Defined Contribution Plans. The Company does not maintain,
contribute to or have any liability under (or with respect to) any employee plan
which is a Defined Contribution Plan, whether or not terminated, other than the
Carrols Corporation Corporate Division Employee Savings Plan (the "Profit
Sharing Plan").
(v) Other Plans. Except as set forth in the "Employee Benefits
Schedule", the Company does not maintain, contribute to or have any liability
under (or with respect to) any Employee Benefit Plan or arrangement providing
benefits to current or former employees, including any bonus plan, plan for
deferred compensation, employee health or other welfare benefit plan or other
arrangement, whether or not terminated.
(vi) Each Employee Benefit Plan and all related trusts,
insurance contracts, and funds have been maintained, funded and administered in
compliance with applicable laws and regulations, including but not limited to
ERISA and the IRC. None of the Company, any trustee or administrator of any
Employee Benefit Plan, or any other person has engaged in any transaction with
respect to any Plan which would reasonably subject the Company, or any trustee
or administrator of any Employee Benefit Plan, or any party dealing with any
Employee Benefit Plan, or the Investors to any tax or penalty imposed by ERISA
or the IRC. To the Company's knowledge, no actions, suits, claims, complaints,
charges, proceedings, hearings, investigations, or demands with respect to the
Plans (other than routine claims for benefits) are pending or threatened, and
the Company has no knowledge of any facts which could reasonably give rise to or
reasonably be expected to give rise to any actions, suits, claims, complaints,
charges, proceedings, hearings, investigations or demands.
(vii) Each Employee Benefit Plan that is intended to be
qualified under Section 401(a) of the IRC, and each trust forming a part
thereof, has received a favorable determination letter from the IRS as to the
qualification under the IRC of such Plan and the tax-exempt status of such
related trust and nothing has occurred since the date of such determination
letter that would adversely affect the qualification of such Plan or the
tax-exempt status of such related trust.
(viii) No underfunded Defined Benefit Plan has been, during the
five years preceding the Closing Date, transferred out of the Controlled Group
of Companies of which the Company is a member or was a member during such
five-year period.
(ix) As of the Closing Date, all required or recommended
payments, premiums, contributions, reimbursements or accruals with respect to
any Employee Benefit Plan for all periods ending prior to or as of the Closing
Date shall have been made or properly accrued. No Employee Benefit Plan has any
material unfunded liabilities.
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(x) With respect to each Employee Benefit Plan, the Company
has provided the Investors with true, complete and correct copies, to the extent
applicable, of (A) all documents pursuant to which the Plans are maintained,
funded and administered, (B) the two most recent annual reports (Form 5500
series) filed with the IRS (with attachments), (C) the two most recent actuarial
reports, (D) the two most recent financial statements, (E) all governmental
rulings, determinations, and opinions (and pending requests for governmental
rulings, determinations and opinions), and (F) the most recent valuation of the
present and future obligations under each Employee Benefit Plan that provides
post-retirement or post-employment health, life insurance, accident or other
"welfare-type" benefits.
(xi) For purposes of this paragraph 6T, the term "Company"
includes all organizations under common control with the Company pursuant to
Section 414(b) or (c) of the IRC.
6U. Compliance with Laws. Except as set forth on the attached
"Compliance Schedule", neither the Company nor any Subsidiary has violated any
law or any governmental regulation or requirement which violation has had or
would reasonably be expected to have an adverse effect upon the financial
condition, operating results, assets, operations or business prospects of the
Company and its Subsidiaries taken as a whole, and neither the Company nor any
Subsidiary has received notice of any such violation, and neither the Company
nor any Subsidiary has violated any health code regulations or requirements, and
neither the Company nor any Subsidiary has received notice of any such
violation. Nothing in this paragraph 6U shall be deemed to apply to compliance
with Environmental and Safety Requirements, which are covered by the
representations and warranties set forth in paragraph 6V hereof.
6V. Environmental and Safety Matters.
(i) For purposes of this Agreement, the term "Environmental
and Safety Requirements" shall mean all federal, state, local and foreign
statutes, regulations, ordinances and other provisions having the force or
effect of law, all judicial and administrative orders and determinations, all
contractual obligations and all common law, in each case concerning public
health and safety, worker health and safety and pollution or protection of the
environment (including, without limitation, all those relating to the presence,
use, production, generation, handling, transport, treatment, storage, disposal,
distribution, labeling, testing, processing, discharge, Release, threatened
Release, containment or cleanup of any Hazardous Materials; "Hazardous
Materials" shall include (a) any element, compound, or chemical that is defined,
listed or otherwise classified as a contaminant, pollutant, toxic pollutant,
toxic or hazardous substance, extremely hazardous substance or chemical
hazardous waste, medical waste, biohazardous or infectious waste, special waste,
or solid waste under Environmental and Safety Requirements, (b) petroleum,
petroleum-based or petroleum-derived products, (c) polychlorinated biphenyls and
(d) asbestos-containing materials; "Release" shall have the meaning set forth in
the Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended ("CERCLA"); "Environmental Claims" shall include any complaint,
summons, citation, notice of violation, notice of potential liability,
directive, order, claim, litigation, investigation, proceeding, judgement,
letter or other communication from any
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governmental agency, department, bureau, office or other authority, or any third
party involving violations of Environmental and Safety Requirements or Releases
of Hazardous Materials; "Environmental Liabilities" shall mean any monetary
obligations, losses, liabilities (including strict liability), damages, punitive
damages, consequential damages, treble damages, costs and expenses (including
all reasonable out-of-pocket costs for environmental site assessments, remedial
investigation and feasibility studies), fines, penalties, sanctions and interest
incurred as a result of any Environmental Claim filed by any Governmental
Authority or any third party which relate to any violations of Environmental and
Safety Requirements, Remedial Actions, Releases or threatened Releases of
Hazardous Materials; and "Remedial Action" means all actions taken to clean up,
remove, remediate, contain, treat, monitor, assess, evaluate or in any other way
address Hazardous Materials in the environment, prevent or minimize a Release or
threatened Release of Hazardous Materials so they do not migrate or endanger or
threaten to endanger public health or welfare or the environment, perform
pre-remedial studies and investigations and post-remedial operation and
maintenance activities, or any other actions authorized by 42 U.S.C. 9601.
(ii) Except as set forth on the attached "Environmental Schedule":
(a) the Company and its Subsidiaries have complied with
and are currently in compliance with all Environmental and Safety
Requirements, and neither the Company nor its Subsidiaries have received
any Environmental Claims relating to the Company or its Subsidiaries or
any of their properties or facilities;
(b) without limiting the generality of the foregoing, the
Company and its Subsidiaries have obtained and complied with, and are
currently in compliance with, all permits, licenses and other
authorizations that may be required pursuant to any Environmental and
Safety Requirements for the occupancy of their properties or facilities
or the operation of their businesses;
(c) neither this Agreement nor the consummation of the
transactions contemplated by this Agreement shall impose any obligations
on the Company and its Subsidiaries for site investigation or cleanup,
or notification to or consent of any government agencies or third
parties under any Environmental and Safety Requirements (including,
without limitation, any so called "transaction-triggered" or
"responsible property transfer" laws and regulations);
(d) neither the Company nor any of its Subsidiaries has
treated, stored, disposed of, arranged for or permitted the disposal of,
transported, handled or Released any substance (including, without
limitation, any hazardous substance) or owned, occupied or operated any
facility or property, so as to give rise to liabilities of the Company
or its Subsidiaries for response costs, natural resource damages or
attorneys fees pursuant to CERCLA, or any other Environmental and Safety
Requirements; and
(e) neither the Company nor any of its Subsidiaries has,
contractually assumed or undertaken any Remedial Action, obligation or
Environmental Liability of any other Person relating to any
Environmental and Safety Requirements.
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6W. Disclosure. Neither this Agreement nor any of the exhibits,
schedules or attachments hereto nor any certificate delivered by the Company
hereunder contain any untrue statement of a material fact or omit a material
fact necessary to make each statement contained herein or therein not
misleading. There is no confidential or nonpublic fact which the Company has not
disclosed to the Investors in writing and of which any of its officers,
directors or executive employees is aware and which has had or would reasonably
be expected to have a material adverse effect upon the financial condition,
operating results, assets, customer or supplier relations, employee relations or
business prospects of the Company and its Subsidiaries taken as a whole.
6X. Closing Date. The representations and warranties of the
Company contained in this Section 6 and elsewhere in this Agreement and all
information contained in any exhibit, schedule or attachment hereto or in any
certificate delivered by, or on behalf of, the Company to the Investors pursuant
to this Agreement or any schedule hereto shall be true and correct on the date
of the Closing as though then made, except as affected by the transactions
expressly contemplated by this Agreement.
6Y. Reports with the Securities and Exchange Commission. The
Company has made available to the Investors and the Investors' special counsel
complete and accurate copies of its Form 10-K for its three most recent fiscal
years, all other reports or documents required to be filed by the Company
pursuant to Section 13(a) or 15(d) of the Securities Exchange Act since the
filing of the most recent Form 10-K. Such filings do not contain any material
false statements or any misstatement of any material fact and do not omit to
state any fact necessary to make the statements set forth therein not
misleading. The Company has made all filings with the Securities and Exchange
Commission which it is required to make, and the Company has not received any
request from the Securities and Exchange Commission to file any amendment or
supplement to any of the current or pending filings described in this paragraph.
Section 7. Representations and Warranties of the Selling
Shareholder7. Representations and Warranties of the Selling Shareholder. As a
material inducement to the Investors to enter into this Agreement, the Selling
Shareholder hereby represents and warrants to the Investors that:
7A. The ARI Shares. As of the date of this Agreement and
immediately prior to the Closing, the Selling Shareholder is, and will be (as
the case may be), the record and beneficial owner of 850,000 shares of Common
Stock of the Company. Such shares have been duly authorized and validly issued,
are fully paid and nonassessable, and are owned by the Selling Shareholder free
and clear of any Adverse Claims. Upon delivery to the Investors at the Closing
of certificates representing the ARI Shares, such certificates being duly
endorsed or accompanied by duly executed forms of assignment, and upon receipt
by the Selling Shareholder of the purchase price for the ARI Shares, good and
valid title to the ARI Shares shall pass to the Investors, free and clear of any
Adverse Claims (regardless of any knowledge the Investors have of any Adverse
Claims or potential Adverse Claims). The Selling Shareholder has neither entered
into nor violated any agreement, written or oral, that would create any rights,
or would give rise to any Adverse Claims or potential Adverse Claims, in any
shares held by the Selling Shareholder as of the date of this Agreement and
immediately prior to the Closing Date, or that
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would result in any loss, liability or damage with respect to the Company or any
of its Subsidiaries.
7B. Authorization. Each of the Selling Shareholder and the Bank
has full power and authority to enter into this Agreement and the other
agreements, instruments, documents and certificates to be executed and delivered
by Selling Shareholder or the Bank, respectively, pursuant hereto and to
consummate the transactions contemplated hereby. All acts and other proceedings
required to be taken by the Selling Shareholder or the Bank to authorize the
execution, delivery and performance of this Agreement, the Registration
Agreement, the Stockholders Agreement, and all other agreements contemplated
hereby to which the Selling Shareholder or the Bank is a party, and the
consummation of the transactions contemplated hereby have been (or in the case
of the Bank, prior to the Closing will be) duly and properly taken and each of
such agreements constitutes a valid and binding agreement of the Selling
Shareholder and the Bank, respectively, enforceable in accordance with their
terms. The execution and delivery by the Selling Shareholder and the Bank of
this Agreement, the Registration Agreement, the Stockholders Agreement, and all
other agreements contemplated hereby to which the Selling Shareholder or the
Bank is a party do not and shall not (i) conflict with or result in a breach of
terms, conditions or provisions of, (ii) constitute a default under, (iii)
result in the creation of any lien, security interest, charge or encumbrance
upon the Selling Shareholder's capital stock or assets pursuant to, (iv) give
any third party the right to modify, terminate or accelerate any obligation
under, (v) result in a violation of, (vi) require any authorization, consent,
approval, exemption or other action by or notice or declaration to, or filing
with, any court or administrative or governmental body or agency pursuant to, or
(vii) give rise to any Adverse Claim with respect to any of the Company's
capital stock (other than the ARI Shares) or other equity securities (or any
securities convertible into or exchangeable for any shares of the Company's
capital stock or other equity securities) under, the charter or bylaws of the
Selling Shareholder or the Bank, or any law, statute, rule or regulation to
which the Selling Shareholder or the Bank is subject, or any agreement (oral or
written), instrument, order, judgment or decree to which the Selling Shareholder
or the Bank is subject.
7C. Company Representations. To the Selling Shareholder's actual
knowledge (other than with respect to representations and warranties of the
Company contained in paragraphs 6B, 6D and 6P hereof) all of the representations
and warranties contained in Section 6 are true and correct in all material
respects on the date of this Agreement and shall be true and correct in all
material respects on the Closing Date.
7D. Compliance with Laws. Neither the Selling Shareholder nor any
of its Affiliates has violated any law or any governmental regulation or
requirement which violation has had or would reasonably be expected to have an
adverse effect upon the financial condition, operating results, assets,
operations or business prospects of the Company and its Subsidiaries or any
effect on its ownership of the Company and its Subsidiaries taken as a whole,
and the Selling Shareholder has not received notice of any such violation.
Neither the Selling Shareholder nor any of its Affiliates is subject to, or has
any reason to believe it may be subject to, any liability or corrective or
remedial obligation arising under any federal, state, local or foreign law, rule
or regulation (including the common law) relating to or regulating securities,
currency, banking, or
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exchange controls affecting the Company or the Selling Shareholder's ownership
of the Company and its Subsidiaries.
7E. Ownership of Selling Shareholder. BIB (Bermuda) Holdings,
Ltd. and certain executive employees and directors of the Bank and its
Affiliates own in the aggregate 100% of the issued and outstanding capital stock
of the Selling Shareholder (provided that such employees and directors do not
own more than 20% of the issued and outstanding capital stock of the Selling
Shareholder nor more than 20% of the voting power of the Selling Shareholder),
and the Bank owns 100% of the issued and outstanding capital stock of BIB
(Bermuda) Holdings, Ltd. and Dilmun Financial Services.
7F. Brokerage. There are no claims for brokerage commissions,
finders' fees or similar compensation in connection with the transactions
contemplated by this Agreement based on any arrangement or agreement binding
upon the Selling Shareholder or any of its Affiliates. The Selling Shareholder
shall pay, and hold the Company and the Investors harmless against, any
liability, loss or expense (including, without limitation, reasonable attorneys'
fees and out-of-pocket expenses) arising in connection with any such claim.
7G. Closing Date. The representations and warranties of the
Selling Shareholder contained in this Section 7 and elsewhere in this Agreement
shall be true and correct in all material respects on the date of the Closing as
though then made.
Section 8. Investors' Representations and Warranties.
8A. Investors' Investment Representations. Each of the Investors
hereby represents that it is acquiring the Restricted Securities purchased
hereunder or acquired pursuant hereto for its own account with the present
intention of holding such securities for purposes of investment, and that it has
no intention of selling such securities in a public distribution in violation of
the federal securities laws or any applicable state securities laws; provided
that nothing contained herein shall prevent the Investors and subsequent holders
of Restricted Securities from transferring such securities in compliance with
the provisions of Section 5 hereof. Each certificate or instrument representing
Restricted Securities shall be imprinted with a legend in substantially the
following form:
"The securities represented by this certificate were originally issued
on _________, 1997, and have not been registered under the Securities
Act of 1933, as amended. The transfer of the securities represented by
this certificate is subject to the conditions specified in the Stock
Purchase Agreement, dated as of February 25, 1997, and as amended and
modified from time to time, between the issuer (the "Company") and
certain investors, and the Company reserves the right to refuse the
transfer of such securities until such conditions have been fulfilled
with respect to such transfer. A copy of such conditions shall be
furnished by the Company to the holder hereof upon written request and
without charge."
8B. Brokerage. There are no claims for brokerage commissions,
finders' fees or similar compensation in connection with the transactions
contemplated by this Agreement
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based on any arrangement or agreement binding upon the Investors. The Investors
shall pay, and hold the Company and the Selling Shareholder harmless against,
any liability, loss or expense (including, without limitation, reasonable
attorneys' fees and out-of-pocket expenses) arising in connection with any such
claim.
8C. Governmental Consent, etc. No permit, consent, approval or
authorization of, or declaration to or filing with any governmental authority is
required in connection with the execution, delivery and performance by the
Investors of this Agreement or the other agreements contemplated hereby, or the
consummation by the Investors of any other transactions contemplated hereby or
thereby, except as expressly contemplated herein or in the exhibits hereto, and
except for the filings required to be made pursuant to the Hart-Scott-Rodino
Act.
8D. Closing Date. The representations and warranties of the
Investors herein shall be true and correct in all material respects on the date
of the Closing as though then made.
9. Definitions.
9A. Definitions. For the purposes of this Agreement, the
following terms have the meanings set forth below:
"Affiliate" of any particular Person means any other Person
controlling, controlled by or under common control with such particular Person,
where "control" means the possession, directly or indirectly, of the power to
direct the management and policies of a Person whether through the ownership of
voting securities, contract or otherwise.
"Adverse Claims" shall have the meaning set forth in paragraph
6B(iii).
"Controlled Group of Companies" has the meaning set forth in
Section 414 of the IRC.
"Defined Benefit Plan" shall have the meaning set forth in
Section 3(35) of ERISA.
"Defined Contribution Plan" shall have the meaning set forth in
Section 3(34) of ERISA.
"Employee Benefit Plan" means any (a) qualified or nonqualified
Employee Pension Benefit Plan, (b) Employee Welfare Benefit Plan, or (c) fringe
benefit plan, policy, program and arrangement, whether or not subject to ERISA
and whether or not funded.
"Employee Pension Benefit Plan" shall have the meaning set forth
in Section 3(2) of ERISA.
"Employee Welfare Benefit Plan" shall have the meaning set forth
in Section 3(1) of ERISA.
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"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"Indebtedness" means at a particular time, without duplication,
(i) any indebtedness for borrowed money or issued in substitution for or
exchange of indebtedness for borrowed money, (ii) any indebtedness evidenced by
any note, bond, debenture or other debt security, (iii) any indebtedness for the
deferred purchase price of property or services with respect to which a Person
is liable, contingently or otherwise, as obligor or otherwise (other than trade
payables and other current liabilities incurred in the ordinary course of
business), (iv) any commitment by which a Person assures a creditor against loss
(including, without limitation, contingent reimbursement obligations with
respect to letters of credit), (v) any indebtedness guaranteed in any manner by
a Person (including, without limitation, guarantees in the form of an agreement
to repurchase or reimburse), (vi) any obligations under capitalized leases with
respect to which a Person is liable, contingently or otherwise, as obligor,
guarantor or otherwise, or with respect to which obligations a Person assures a
creditor against loss, and (vii) any indebtedness secured by a Lien on a
Person's assets.
"Intellectual Property Rights" means all (i) patents, patent
applications, patent disclosures and inventions, (ii) trademarks, service marks,
trade dress, trade names, logos and corporate names and registrations and
applications for registration thereof together with all of the goodwill
associated therewith, (iii) copyrights (registered or unregistered) and
copyrightable works and registrations and applications for registration thereof,
(iv) mask works and registrations and applications for registration thereof, (v)
computer software, data, data bases and documentation thereof, (vi) trade
secrets and other confidential information (including, without limitation,
ideas, formulas, compositions, inventions (whether patentable or unpatentable
and whether or not reduced to practice), know-how, manufacturing and production
processes and techniques, research and development information, drawings,
specifications, designs, plans, proposals, technical data, copyrightable works,
financial and marketing plans and customer and supplier lists and information,
(vii) other intellectual property rights and (viii) copies and tangible
embodiments thereof (in whatever form or medium).
"Investment" as applied to any Person means (i) any direct or
indirect purchase or other acquisition by such Person of any notes, obligations,
instruments, stock, securities or ownership interest (including partnership
interests and joint venture interests) of any other Person and (ii) any capital
contribution by such Person to any other Person.
"IRC" means the Internal Revenue Code of 1986, as amended, and
any reference to any particular IRC section shall be interpreted to include any
revision of or successor to that section regardless of how numbered or
classified.
"IRS" means the United States Internal Revenue Service.
"Liens" means any mortgage, pledge, security interest,
encumbrance, lien, covenant, condition, restriction or charge of any kind
(including, without limitation, any conditional sale or other title retention
agreement or lease in the nature thereof), any sale of receivables with recourse
against the Company, any Subsidiary or any Affiliate, any filing or
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agreement to file a financing statement as debtor under the Uniform Commercial
Code or any similar statute other than to reflect ownership by a third party of
property leased to the Company or any Subsidiaries under a lease which is not in
the nature of a conditional sale or title retention agreement, or any
subordination arrangement in favor of another Person (other than any
subordination arising in the ordinary course of business).
"Multiemployer Plan" shall have the meaning set forth in Section
3(37) of ERISA.
"Officer's Certificate" means a certificate signed by the
Company's or the Selling Shareholder's, as the case may be, president or its
chief financial officer on behalf of the Company or the Selling Shareholder, as
the case may be, stating that (i) the officer signing such certificate has made
or has caused to be made such investigations as are necessary in order to permit
him to verify the accuracy of the information set forth in such certificate and
(ii) to such officer's knowledge, such certificate does not misstate any
material fact and does not omit to state any fact necessary to make the
certificate not misleading.
"Person" means an individual, a partnership, a corporation, a
limited liability company, an association, a joint stock company, a trust, a
joint venture, an unincorporated organization and a governmental entity or any
department, agency or political subdivision thereof.
"Public Sale" means any sale of securities to the public pursuant
to an offering registered under the Securities Act or to the public through a
broker, dealer or market maker pursuant to the provisions of Rule 144 adopted
under the Securities Act.
"Restricted Securities" means Common Stock issued pursuant to
this Agreement. As to any particular Restricted Securities, such securities
shall cease to be Restricted Securities when they have (a) been effectively
registered under the Securities Act and disposed of in accordance with the
registration statement covering them, (b) been distributed to the public through
a broker, dealer or market maker pursuant to Rule 144 (or any similar provision
then in force) under the Securities Act or become eligible for sale pursuant to
Rule 144(k) (or any similar provision then in force) under the Securities Act or
(c) been otherwise transferred and new certificates for them not bearing the
Securities Act legend set forth in paragraph 8A have been delivered by the
Company in accordance with paragraph 5B. Whenever any particular securities
cease to be Restricted Securities, the holder thereof shall be entitled to
receive from the Company, without expense, new securities of like tenor not
bearing a Securities Act legend of the character set forth in paragraph 8A.
"Securities Act" means the Securities Act of 1933, as amended, or
any similar federal law then in force.
"Securities and Exchange Commission" includes any governmental
body or agency succeeding to the functions thereof.
"Securities Exchange Act" means the Securities Exchange Act of
1934, as amended, or any similar federal law then in force.
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"Subsidiary" means, with respect to any Person, any corporation,
limited liability company, partnership, association or other business entity of
which (i) if a corporation, a majority of the total voting power of shares of
stock entitled (without regard to the occurrence of any contingency) to vote in
the election of directors, managers or trustees thereof is at the time owned or
controlled, directly or indirectly, by that Person or one or more of the other
Subsidiaries of that Person or a combination thereof, or (ii) if a limited
liability company, partnership, association or other business entity, a majority
of the partnership or other similar ownership interest thereof is at the time
owned or controlled, directly or indirectly, by any Person or one or more
Subsidiaries of that Person or a combination thereof. For purposes hereof, a
Person or Persons shall be deemed to have a majority ownership interest in a
limited liability company, partnership, association or other business entity if
such Person or Persons shall be allocated a majority of limited liability
company, partnership, association or other business entity gains or losses or
shall be or control any managing director or general partner of such limited
liability company, partnership, association or other business entity.
"Treasury Regulations" means the United States Treasury
Regulations promulgated under the IRC, and any reference to any particular
Treasury Regulation section shall be interpreted to include any final or
temporary revision of or successor to that section regardless of how numbered or
classified.
Section 10. Termination.
10A. Conditions of Termination. This Agreement may be terminated
at any time prior to the Closing:
(i) by the mutual written consent of the Company, the Selling
Shareholder and the Investors;
(ii) by the Investors if there has been a material
misrepresentation, material breach of warranty or material breach of a covenant
by the Company or the Selling Shareholder in the representations and warranties
or covenants set forth in this Agreement or the Schedules and Exhibits attached
hereto, which in the case of any breach of covenant has not been cured within
ten days after written notification thereof by the Investors to the Company and
the Selling Shareholder; or
(iii) by the Investors, the Selling Shareholder or the Company
if the transactions contemplated hereby have not been consummated by April 30,
1997; provided that the party electing termination pursuant to this subparagraph
(iii) is not in breach of any of its representations, warranties, covenants or
agreements contained in this Agreement or the Schedules and Exhibits attached
hereto.
In the event of termination by either the Investors, the Company or the
Selling Shareholder pursuant to this paragraph 10A, written notice thereof
(describing in reasonable detail the basis therefor) shall forthwith be
delivered to the other parties hereto.
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10B. Effect of Termination. In the event of termination of
this Agreement by either the Investors, the Company or the Selling Shareholder
as provided above, this Agreement shall forthwith become void and of no further
force and effect, except that the covenants and agreements set forth in
paragraphs 10B and Section 11 shall survive such termination indefinitely,
and except that nothing in paragraph 10A or this paragraph 10B shall be
deemed to release any party from any liability for any breach by such party of
the terms and provisions of this Agreement or to impair the right of any party
to compel specific performance by another party of its obligations under this
Agreement.
11. Miscellaneous.
11A. Expenses. The Company shall pay, and hold the Investors and
all holders of Common Stock harmless against liability for the payment of (i)
the reasonable fees and expenses of their special counsel arising in connection
with the negotiation and execution of this Agreement and the consummation of the
transactions contemplated by this Agreement which shall be payable at the
Closing or, if the Closing does not occur for any reason other than as a result
of material breach by the Investors of any of their representations, warranties
or covenants contained in this Agreement, upon the termination of this
Agreement, payable upon demand, (ii) the reasonable fees and expenses incurred
with respect to any amendments or waivers (whether or not the same become
effective) under or in respect of this Agreement, the agreements contemplated
hereby and the Certificate of Incorporation, (iii) stamp and other taxes which
may be payable in respect of the execution and delivery of this Agreement or the
issuance, delivery or acquisition of any shares of Common Stock, (iv) the
reasonable fees and expenses incurred with respect to the enforcement of the
rights granted under this Agreement, the agreements contemplated hereby, and the
Certificate of Incorporation, (v) the reasonable fees and expenses incurred by
each such Person in any filing with any governmental agency with respect to its
investment in the Company or in any other filing with any governmental agency
with respect to the Company which mentions such Person, including, but not
limited to, any filings required to be made under the Hart-Scott-Rodino Act and
(vi) the reasonable fees and expenses incurred by the Investors in connection
with their business, legal and accounting due diligence review of the Company
and negotiation of all legal documents.
11B. Remedies. The Investors shall have all rights and remedies
set forth in this Agreement, the Certificate of Incorporation and all rights and
remedies which holders of Common Stock have been granted at any time under any
other agreement or contract and all of the rights which such holders have under
any law. Any Person having any rights under any provision of this Agreement
shall be entitled to enforce such rights specifically (without posting a bond or
other security), to recover damages by reason of any breach of any provision of
this Agreement and to exercise all other rights granted by law.
11C. Consent to Amendments. Except as otherwise expressly
provided herein, the provisions of this Agreement may be amended and the Company
may take any action herein prohibited, or omit to perform any act herein
required to be performed by it, only if the Company has obtained the written
consent of the holders of a majority of the Shares purchased hereunder. No other
course of dealing between the Company and the holder of any of the Shares
purchased
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hereunder or any delay in exercising any rights hereunder or under the
Certificate of Incorporation shall operate as a waiver of any rights of any such
holders. Notwithstanding the foregoing, no waiver or amendment which would
adversely affect the Selling Shareholder shall be made without the prior written
consent of the Selling Shareholder.
11D. Successors and Assigns. Except as otherwise expressly
provided herein, all covenants and agreements contained in this Agreement by or
on behalf of any of the parties hereto shall bind and inure to the benefit of
the respective successors and assigns of the parties hereto whether so expressed
or not; provided that prior to the Closing, no party hereto may assign its
rights or delegate its duties hereunder without the prior written consent of the
other parties hereto and no holder of Common Stock purchased hereunder shall
assign its rights hereunder except in connection with a sale or other transfer
of the Common Stock (other than in a Public Sale); provided further, that such
rights are not assignable to more than five (5) assignees in total who are not
Affiliates of the Investors or the Selling Shareholder. In addition, and whether
or not any express assignment has been made, the provisions of this Agreement
which are for the Investors' benefit as purchasers or holders of Common Stock
are also for the benefit of, and enforceable by, any subsequent holder of such
Common Stock (other than in a Public Sale).
11E. Severability. Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be prohibited
by or invalid under applicable law, such provision shall be ineffective only to
the extent of such prohibition or invalidity, without invalidating the remainder
of this Agreement.
11F. Counterparts. This Agreement may be executed simultaneously
in two or more counterparts, any one of which need not contain the signatures of
more than one party, but all such counterparts taken together shall constitute
one and the same Agreement.
11G. Descriptive Headings; Interpretation. The descriptive
headings of this Agreement are inserted for convenience only and do not
constitute a substantive part of this Agreement. The use of the word "including"
in this Agreement shall be by way of example rather than by limitation.
11H. Governing Law. The corporate law of the State of Delaware
shall govern all issues and questions concerning the relative rights and
obligations of the Company and its stockholders. All other issues and questions
concerning the construction, validity, enforcement and interpretation of this
Agreement and the exhibits and schedules hereto shall be governed by, and
construed in accordance with, the laws of the State of New York, without giving
effect to any choice of law or conflict of law rules or provisions (whether of
the State of New York or any other jurisdiction) that would cause the
application of the laws of any jurisdiction other than the State of New York. In
furtherance of the foregoing, the internal law of the State of New York shall
control the interpretation and construction of this Agreement (and all schedules
and exhibits hereto), even though under that jurisdiction's choice of law or
conflict of law analysis, the substantive law of some other jurisdiction would
ordinarily apply.
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11I. Notices. All notices, demands or other communications to be
given or delivered under or by reason of the provisions of this Agreement shall
be in writing and shall be deemed to have been given when delivered personally
to the recipient, sent to the recipient by reputable overnight courier service
(charges prepaid) or mailed to the recipient by certified or registered mail,
return receipt requested and postage prepaid. Such notices, demands and other
communications shall be sent to the Investors at the address and to the Company
at the addresses indicated below:
Notices to the Company:
Carrols Holdings Corporation
James Street
Syracuse, NY 13203
Attn: Joseph A. Zirkman, Esq.
With copies (which shall not constitute notice) to:
Schulte Roth & Zabel LLP
Third Avenue
New York, NY 10022
Attn: Andre Weiss, Esq.
Notices to Investors:
Madison Dearborn Capital Partners, L.P.
Three First National Plaza
Suite 1330
Chicago, IL 60602
Attn: Benjamin D. Chereskin, Robin P. Selati
and William J. Hunckler III
Madison Dearborn Capital Partners II, L.P.
Three First National Plaza
Suite 1330
Chicago, IL 60602
Attn: Benjamin D. Chereskin, Robin P. Selati
and William J. Hunckler III
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With copies (which shall not constitute notice) to:
Kirkland & Ellis
East Randolph Drive
Suite 5700
Chicago, IL 60601
Attn: Edward T. Swan, Esq.
Notices to Selling Shareholder:
Atlantic Restaurants, Inc.
c/o Dilmun Investments, Inc.
Metro Center
One Station Place
Stamford, CT 06902
Attn : Paul Durrant
With copies (which shall not constitute notice) to:
Pryor, Cashman, Sherman, and Flynn
Park Avenue, 10th Floor
New York, NY 10022
Attn: Selig Sacks, Esq.
or to such other address or to the attention of such other person as the
recipient party has specified by prior written notice to the sending party.
11J. No Strict Construction. The parties hereto have participated
jointly in the negotiation and drafting of this Agreement. In the event an
ambiguity or question of intent or interpretation arises, this Agreement shall
be construed as if drafted jointly by the parties hereto, and no presumption or
burden of proof shall arise favoring or disfavoring any party by virtue of the
authorship of any of the provisions of this Agreement.
11K. Indemnification. Subject to 11K(iii)(h) below, all
representations and warranties contained herein or made in any certificate or
other writing by any party in connection herewith shall survive the execution
and delivery of this Agreement and the consummation of the transactions
contemplated hereby, regardless of any investigation made by the Investors or on
their behalf.
(i) Company's Indemnification Obligation. Subject to the
limitations set forth in paragraph (iii) below, in consideration of the
Investors' execution and delivery of this Agreement and acquiring the Company
Shares and the ARI Shares hereunder, and in addition to all of the Company's
other obligations under this Agreement, the Company shall defend, protect,
indemnify and hold harmless the Investors and all of their respective officers,
directors, employees and agents (including, without limitation, those retained
in connection with the transactions contemplated by this Agreement)
(collectively, the "Indemnitees") from and against
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any and all actions, causes of action, suits, claims, losses, costs, penalties,
fees, liabilities and damages, and expenses in connection therewith
(irrespective of whether any such Indemnitee is a party to the action for which
indemnification hereunder is sought), and including reasonable attorneys' fees
and disbursements (the "Indemnified Liabilities"), incurred by the Indemnitees
or any of them as a result of, or arising out of, or relating to (a) the
inaccuracy of any representation or warranty made by the Company in this
Agreement or in any certificate delivered by the Company to any of the
Indemnitees pursuant to this Agreement, or (b) the failure of the Company to
comply with any of its covenants under this Agreement or in any certificate
delivered by the Company to any of the Indemnities pursuant to this Agreement.
To the extent that the foregoing undertaking by the Company may be unenforceable
for any reason, the Company shall make the maximum contribution to the payment
and satisfaction of each of the Indemnified Liabilities which is permissible
under applicable law.
(ii) Selling Shareholder's Indemnification Obligation. Subject
to the limitations set forth in paragraph (iii) below, in consideration of the
Investors' execution and delivery of this Agreement and acquiring the Company
Shares and the ARI Shares hereunder and in addition to all of the Selling
Shareholder's other obligations under this Agreement, the Selling Shareholder
shall defend, protect, indemnify and hold harmless the Investors and their
respective officers, directors, employees and agents (including, without
limitation, those retained in connection with transactions contemplated by this
Agreement) (collectively, the "Indemnitees") from and against any and all
actions, causes of action, suits, claims, losses, costs, penalties, fees,
liabilities and damages, and expenses in connection therewith (irrespective of
whether any such Indemnitee is a party to the action for which indemnification
is sought), and including reasonable attorneys' fees and disbursements (the
"Indemnified Liabilities"), incurred by the Indemnitees or any of them as a
result of, or arising out of, or relating to the inaccuracy of any
representation or warranty made by the Selling Shareholder in this Agreement or
in any certificate delivered by the Selling Shareholder to any of the
Indemnitees pursuant to this Agreement. To the extent that the foregoing
undertaking by the Selling Shareholder may be unenforceable for any reason, the
Selling Shareholder shall make the maximum contribution to the payment and
satisfaction of each of the Indemnified Liabilities which is permissible under
applicable law.
(iii) Conditions of Indemnification.
(a) Except as set forth in paragraph (c) below, none of the
Company's representations, warranties or covenants in this Agreement shall be
deemed to have been breached for purposes of paragraph 2A except to the extent
that (x) any individual breach has resulted in or could reasonably be expected
to result in an Indemnified Liability exceeding $20,000 and (y) the total amount
of Indemnified Liabilities that have resulted, and could reasonably be expected
to result, from all breaches identified in (x) would exceed $3 million in the
aggregate.
(b) Except as set forth in paragraph (c) below, the Company shall
only be liable to the Investors for any Indemnified Liabilities arising under
paragraph 11K(i) to the extent that (x) the amount of any individual Indemnified
Liability exceeds $20,000 and (y) the total amount of all Indemnified
Liabilities identified in (x) exceeds $3 million in the aggregate, in
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which case the Company shall be liable to the Investors for all Indemnified
Liabilities from the first dollar.
(c) The foregoing limitations set forth in clauses (a) and (b)
shall not apply to (x) any inaccuracy of any representation or warranty
contained in paragraphs 6A, 6B, 6D and 6P or (y) any Indemnified Liability
resulting from any Adverse Claim with respect to the record or beneficial
ownership of ARI Shares, the Company Shares or any other shares of the Company
held by the Selling Shareholder.
(d) Except as set forth in paragraph (f) below, none of the
Selling Shareholder's representations or warranties set forth in paragraph 7C
shall be deemed to have been breached for purposes of paragraph 2A, except to
the extent that (x) any individual breach has resulted in or could reasonably be
expected to result in an Indemnified Liability exceeding $20,000 and (y) the
total amount of Indemnified Liabilities that have resulted, and could reasonably
be expected to result, from all breaches identified in (x) would exceed $3
million in the aggregate.
(e) Except as set forth in paragraph (f) below, the Selling
Shareholder shall only be liable to the Investors for any Indemnified
Liabilities arising under paragraph 11K(ii) with respect to a breach of
paragraph 7C hereof to the extent that (x) the amount of any individual
Indemnified Liability exceeds $20,000 and (y) the total amount of all
Indemnified Liabilities identified in (x) exceeds $3 million in the aggregate,
in which case the Selling Shareholder shall be liable to the Investors for all
Indemnified Liabilities from the first dollar.
(f) The foregoing limitation set forth in clause (d) and (e)
shall not apply to (x) a breach of paragraph 7C that relates to any inaccuracy
of any representation or warranty contained in paragraphs 6A, 6B, 6D and 6P or
(y) any Indemnified Liability resulting from any Adverse Claim with respect to
the ownership of ARI Shares, the Company Shares or any other shares of the
Company held by the Selling Shareholder.
(g) Notwithstanding any other provision contained in this
paragraph 11K, in the event that the representations and warranties contained in
paragraph 7C (other than with respect to the inaccuracy of any representation or
warranty contained in paragraph 6B, 6D or 6P) hereof are breached, the Selling
Shareholder shall only be required to indemnify the Investors and the other
Indemnitees for one-half (1/2) of the total Indemnified Liabilities of the
Indemnitees as a result of such breach and the corresponding breach under
Section 6 pursuant to paragraphs 11K(i) and (ii) above subject to an aggregate
cap of $30,666,632.25 on the Selling Shareholder's overall indemnification
obligation pursuant to paragraph 11K(ii) with respect to paragraph 7C (other
than with respect to the breach or inaccuracy of any representation or warranty
contained in paragraph 6B, 6D (to the extent that such breach or inaccuracy (i)
pertains to the title to, ownership of, or other rights with respect to, the
Company's capital stock or other equity securities including, but not limited
to, the ARI Shares and the Company Shares, and (ii) impairs or affects the value
thereof or the right to realize the value thereof) or 6P) above; provided,
however, that nothing contained in this paragraph 11K(iii)(g) shall in any way
limit the Company's liability or indemnification obligations under paragraph
11K(i) except to the extent
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that the Investors have recovered any amounts from the Selling Shareholder as a
result of such breach and the corresponding breach under Section 6.
(h) Any claim based upon the breach of any representation or
warranty contained in Section 6, 7 or 8 must be made to the breaching party in
writing prior to the later of (i) April 1, 1998 or (ii) fifteen (15) days after
delivery to the Investors by the Company of its 1997 audited financial
statements pursuant to Section 5 of the Stockholders Agreement; provided that
(A) any claim based upon the breach of any representation or warranty contained
in paragraphs 6L, 6U, 6V or 7C (with respect to the inaccuracy of any
representation or warranty contained in paragraphs 6L, 6U and 6V) must be made
to the Company or the Selling Shareholder (as the case may be) in writing prior
to the third anniversary of the Closing and (B) there shall be no time limit for
claims made for a breach of the representations and warranties contained in
paragraphs 6A, 6B, 6P, 7A, 7B, 7C (with respect to the inaccuracy of any
representation or warranty contained in paragraph 6B), 7D, 7E, 7F and the first
two sentences of 6D.
(i) Notwithstanding anything to the contrary contained in this
paragraph 11K, each of the Company and the Selling Shareholder shall be jointly
and severally liable to the Investors with respect to any Indemnified Liability
arising out of, or as a result of, the breach or inaccuracy of any
representation or warranty contained in paragraph 6B, 6D (to the extent that
such breach or inaccuracy (i) pertains to the title to, ownership of, or other
rights with respect to, the Company's capital stock or other equity securities
including, but not limited to, the ARI Shares and the Company Shares, and (ii)
impairs or affects the value thereof or the right to realize the value thereof)
or 6P hereof.
(iv) Adjustment to Purchase Price. If the Indemnitees recover
Indemnified Liabilities from the Company under paragraph 11K(i) with respect to
a breach of any representations or warranties contained in Section 6 hereof or
in any certificate delivered by the Company to any Indemnitee pursuant to this
Agreement and the Indemnitees do not have any right to recover any Indemnified
Liabilities with respect to such breach from the Selling Shareholder (or
indirectly the Bank) under paragraphs 11K(ii) and (iii), then notwithstanding
anything to the contrary contained in this paragraph 11K, the purchase price
paid by the Investors to the Selling Shareholder for the ARI Shares hereunder
shall be adjusted to reflect the reduction in the value of the Company as a
result of the payment of such Indemnified Liabilities by the Company to the
Indemnitees, and the Selling Shareholder shall be liable to the Indemnitees for
and shall promptly pay to the Indemnitees (as an adjustment to the consideration
paid by the Investors to the Selling Shareholder for the ARI Shares) an amount
in cash equal to (i) $30,666,632.25 (the purchase price paid by the Investors to
the Selling Shareholder for the ARI Shares hereunder), minus (ii) 22.0867% (the
percentage of the Company's fully-diluted Common Stock purchased by the
Investors from the Selling Shareholder) multiplied by the post-Closing valuation
of the Company's Common Stock on a fully-diluted basis (not adjusted to reflect
the reduction in value of the Company as a result of such breach of its
representations and warranties but reduced by any actual recovery of Indemnified
Liabilities from the Company by the Indemnitees).
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(v) Failure to Recover. If any breach or inaccuracy of any
representations and warranties in paragraph 6B, 6D (to the extent that such
breach or inaccuracy (i) pertains to the title to, ownership of, or other rights
with respect to, the Company's capital stock or other equity securities
including, but not limited to, the ARI Shares and the Company Shares, and (ii)
impairs or affects the value thereof or the right to realize the value thereof),
6P or 7A results in a claim against the Company for which the Indemnitees are
entitled to recover Indemnified Liabilities from either the Company or the
Selling Shareholder or both of them and the Indemnitees fail to recover the full
amount thereof from either the Company or the Selling Shareholder or both of
them (after final determination of the judicial authority or alternative dispute
resolution authority selected by the parties, as the case may be, which
determination is either not appealable or all applicable time periods to appeal
have lapsed and thereafter, following five (5) days prior written notice by the
Indemnitees to the Company and the Selling Shareholder), the Company shall (a)
issue that number of additional shares of Common Stock to the Investors (for no
additional consideration and as an adjustment to the purchase price paid for the
Company Shares and the ARI Shares hereunder) such that the Investors' aggregate
fully-diluted ownership of the Common Stock at the Closing would have been equal
to (i) the aggregate amount invested by the Investors at Closing (for the
purchase of both the Company Shares and ARI Shares) less any amounts received by
the Indemnitees for Indemnified Liabilities from either the Company or the
Selling Shareholder, divided by (ii) the fully-diluted post-closing value of the
Common Stock immediately after the Closing (as adjusted to reflect any reduction
in value of the Company resulting from any breaches of representations and
warranties by the Company hereunder and any actual recovery of Indemnified
Liabilities from the Company by the Indemnitees) and (b) issue or grant that
number of additional shares of Common Stock or options to acquire Common Stock
to management shareholders and optionholders as of the Closing, respectively,
such that their aggregate fully diluted ownership of the Common Stock as of the
Closing would have remained the same as it was prior to the Company issuing
additional shares to the Investors hereunder.
(vi) Claims Against the Investors. If any breach or inaccuracy
of any representations and warranties in paragraph 6B, 6D (to the extent that
such breach or inaccuracy (i) pertains to the title to, ownership of, or other
rights with respect to, the Company's capital stock or other equity securities
including, but not limited to, the ARI Shares and the Company Shares, and (ii)
impairs or affects the value thereof or the right to realize the value thereof),
6P or 7A results in a direct claim (a "Direct Claim") against the Investors for
which the Investors are entitled to recover Indemnified Liabilities from either
the Company or the Selling Shareholder or both of them and the Indemnitees fail
to recover the full amount thereof from either the Company or the Selling
Shareholder or both of them, the Company shall (a) issue that number of
additional shares of Common Stock to the Investors so that the fully-diluted
percentage ownership of the Investors as of the Closing would have been equal to
(i) the aggregate amount invested by the Investors at Closing (for the purchase
of both the Company Shares and ARI Shares) plus the amount of the Direct Claim,
less any amounts received by the Indemnitees for Indemnified Liabilities from
either the Company or the Selling Shareholder, divided by (ii) the fully-diluted
post-closing value of the Common Stock immediately after the Closing (as
adjusted to reflect any reduction in value of the Company resulting from any
breaches of representations and warranties by the Company hereunder and any
actual recovery of Indemnified Liabilities from
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the Company by the Indemnitees) and (b) issue or grant that number of additional
shares of Common Stock or options to acquire Common Stock to management
shareholders and optionholders as of the Closing, respectively, such that their
aggregate fully diluted ownership of the Common Stock as of the Closing would
have remained the same as it was prior to the Company issuing additional shares
to the Investors hereunder.
Examples illustrating the operation of paragraphs 11K(iv), 11K(v) and
11K(vi) are set forth in Exhibit F attached hereto.
11L. Further Assurances. The Selling Shareholder agrees that at
any time and from time to time upon the request of the Investors, the Selling
Shareholder shall execute and deliver such further documents and do such further
acts and things as the Investors may reasonably request in connection with the
sale and transfer of the ARI Shares to the Investors under this Agreement.
11M. Consent to Jurisdiction. Any legal action, suit or
proceeding arising out of or relating to this Agreement or the consummation of
the transactions contemplated hereby may only be instituted in any court of the
State of New York or State of Delaware, as determined by paragraph 11H, and each
party (including the Bank) agrees not to assert, by way of motion, as a defense
or otherwise, in any such action, suit or proceeding, any claim that it is not
subject personally to the jurisdiction of such courts, that the action, suit or
proceeding if brought in such courts, would be in an inconvenient forum, that
the venue of the action, suit or proceeding, if brought in any of such courts,
is improper or that this Agreement or the subject matter hereof may not be
enforced in or by such courts on jurisdictional grounds. The Bank hereby
designates and appoints Pryor, Cashman, Sherman & Flynn (the "Authorized Agent")
as its agent to accept and acknowledge on its behalf service of any process
which may be served in any suit, action or proceeding and agrees that service
upon such Authorized Agent shall be deemed in every respect service of process
on the Bank and, to the extent permitted by applicable law, shall be taken and
held to be valid and personal service and shall constitute an appearance by the
Bank for all purposes in any such suit, action or proceeding. The Bank
represents and warrants to the Investors that the Authorized Agent has agreed to
act as such agent for service of process.
* * * * *
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IN WITNESS WHEREOF, the parties hereto have executed this
Agreement on the date first written above.
CARROLS HOLDINGS CORPORATION
By:/s/ Alan Vituli
---------------------------------------
Its: Chairman and Chief Executive Officer
MADISON DEARBORN CAPITAL
PARTNERS, L.P.
By: Madison Dearborn Partners, L.P.
Its: General Partner
By: Madison Dearborn Partners, Inc.
Its: General Partner
By: /s/ Benjamin D. Chereskin
-------------------------------
Benjamin D. Chereskin
Its: Vice President
------------------------------
MADISON DEARBORN CAPITAL PARTNERS II, L.P.
By: Madison Dearborn Partners, L.P.
Its: General Partner
By: Madison Dearborn Partners, Inc.
Its: General Partner
By:/s/ Benjamin D. Chereskin
-------------------------
Benjamin D. Chereskin
Its: Vice President
------------------------
ATLANTIC RESTAURANTS, INC.
By: /s/ David J. Mathies
--------------------------------------
Its: President
--------------------------------------
The undersigned, as the indirect owner of all or substantially all of
the outstanding capital stock of Atlantic Restaurants, Inc., does hereby
guarantee the obligations of Atlantic Restaurants, Inc. under this Stock
Purchase Agreement and shall cause Atlantic Restaurants, Inc. to comply with the
provisions of this Stock Purchase Agreement.
BAHRAIN INTERNATIONAL BANK, E.C.
By /s/ Robin McIlvenny
---------------------------------------
Its Chief Executive Officer
---------------------------------------
LIST OF EXHIBITS
Exhibit A - Registration Agreement
Exhibit B1 - Alan Vituli Unvested Stock Option Agreement
Exhibit B2 - Daniel Accordino Unvested Stock Option Agreement
Exhibit B3 - Joseph Zirkman Unvested Stock Option Agreement
Exhibit B4 - Amended 1996 Long-Term Incentive Plan
Exhibit B5 - Options granted to Alan Vituli pursuant to the Carrols
Corporation 1996 Long-Term Incentive Plan
Exhibit B6 - Options granted to Daniel Accordino pursuant to the
Carrols Corporation
1996 Long-Term Incentive Plan
Exhibit C - Stockholders Agreement
Exhibit D1 - Alan Vituli Employment Agreement
Exhibit D2 - Daniel Accordino Employment Agreement
Exhibit E1 - Form of Opinion of Schulte Roth & Zabel LLP
Exhibit E2 - Form of Opinion of Joseph A. Zirkman, Esq.
Exhibit E3 - Form of Opinion of Pryor, Cashman, Sherman & Flynn
Exhibit F - Operation of Paragraphs 11K(iv), 11K(v) and 11K(vi)
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LIST OF DISCLOSURE SCHEDULES
Third Party Approval Schedule
Governmental Approval Schedule
Capitalization Schedule
Subsidiary Schedule
Restrictions Schedule
Financial Statements Schedule
Liabilities Schedule
Affiliated Transactions Schedule
Developments Schedule
Assets Schedule Taxes Schedule
Contracts Schedule
Intellectual Property Schedule
Litigation Schedule
Insurance Schedule
Employee Schedule
Employee Benefits Schedule
Compliance Schedule
Environmental Schedule
Jurisdiction of Organization and Qualification
for the Company and its Subsidiaries Schedule
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