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EXHIBIT 10.5
STOCK RESTRICTION AGREEMENT
AGREEMENT ("Agreement") made and entered into as of the 1st day of
April, 1998, by and between NATIONAL DELI CORPORATION, a Florida corporation
("Secured Party" or "Purchaser"), the undersigned shareholders of Secured Party
(the "Shareholders," and each a "Shareholder"), and the undersigned Escrow Agent
("Escrow Agent").
R E C I T A L S:
A. This Agreement is entered into in connection with the closing of the
Asset Purchase Agreement, dated December 12, 1997, as amended (the "Purchase
Agreement"), among certain parties hereto and certain other parties including
Epicure Market, Inc., a Florida corporation ("Seller"), relating to the sale to
Secured Party of certain assets and business of Seller ("Business").
B. The Shareholders have entered into a contribution agreement with
respect to their indemnification obligations to Purchaser under the Purchase
Agreement, and the purpose of this Agreement is to provide some collateral
security to Purchaser for certain potential sales tax obligations relating to
the Business.
NOW, THEREFORE, in consideration of the premises and mutual covenants
set forth herein and for other good and valuable consideration, the receipt and
adequacy of which is hereby expressly acknowledged, the parties hereto agree as
follows:
1. The Shareholders have this date delivered to Escrow Agent the stock
certificates for the Stock Consideration they received in connection with the
sale of the Business. The Shareholders have directed that the following shares
of common stock of Jerry's Famous Deli, Inc., a California corporation ("JFD")
be reissued to the Shareholders as indicated below to be held by Escrow Agent
hereunder (collectively, the "Shares"):
NUMBER PROPORTIONATE REGISTERED
OF SHARES SHARE HOLDER
158,665 36% Harry Thal
220,368 50% Mitchell Thal
39,666 9% Naomi Thal
22,037 5% Harry Thal, as Personal Representative for the
Estate of Edith Thal
440,736 100%
2. As security for the full and prompt payment of the Indemnified
Liability (as defined below), the Shareholders hereby deliver, pledge and grant
to the Secured Party a continuing first priority security interest in the
Shares, the certificate(s) representing the Shares and any and all proceeds
thereof including, without limitation, any and all dividends, cash, instruments
and other property from time to time received, receivable, or otherwise
distributed in respect of, or in exchange for, any of the Shares (such proceeds
and the Shares are collectively referred to herein as the "Collateral").
Concurrently with the execution hereof, for purposes of facilitating the
administration and enforcement of Secured Party's security interest in the
Collateral, each Shareholder has directed the Escrow Agent to hold hereunder the
certificate(s) representing his Shares (the "Certificates") upon JFD's
reissuance of the Certificates, and the Certificates for the balance
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of the Shareholders' Stock Consideration, together with a stock power duly
endorsed in blank (copies of which certificate(s) and stock power are attached
as Exhibit A hereto) for the Escrow Agent to hold pursuant to the terms of this
Agreement. Purchaser shall have no rights or interest in the Shares or proceeds
thereof or other Collateral except as expressly provided herein.
3. The Escrow Agent hereby agrees to act as escrow agent as provided
herein. The term "Proportionate Share" shall mean as to each Shareholder the
percentage of the total number of Shares as set forth in Section 1 above.
4. After the date (the "Release Date") upon which the Shareholders
deliver to Purchaser and Escrow Agent a Transferee Liability Certificate issued
at the Seller's request (and expense) by the Florida Department of Revenue (the
"Department") stating that Purchaser is not liable for Florida sales tax
liability of Seller under Section 212.10 of the Florida Statutes, including
without limitation, sales tax, penalties, interest and other sums ("Tax
Liability"), the Escrow Agent shall promptly and within 5 days thereafter
deliver the Certificates and all other Collateral to the Shareholders.
If, prior to the delivery of the Certificates to the
Shareholders, the Department issues to Seller or Purchaser a final nonappealable
assessment against Seller or Purchaser, or the Department initiates any
collection or enforcement action against Purchaser, whichever earlier occurs
("Assessment Action") with respect to a Tax Liability, the Purchaser may,
without waiving any other rights or remedies it may have, promptly give written
notice of the Assessment Action and a copy thereof to the Shareholders and the
Escrow Agent. If the Shareholders and/or Seller, as applicable, do not contest
the Assessment Action within the time required under Department rules, and file
such bond or other security acceptable to the Department to suspend any
collection or enforcement action against Purchaser, or alternatively, pay the
amount due under the Assessment Action, then, at Purchaser's option, it may
deliver instructions to Escrow Agent to deliver to Purchaser for cancellation
Certificates for each Shareholder's Shares having a value (based upon an agreed
value of $2.67 per share) equal to each Shareholder's Proportionate Share of the
Tax Liability to which the Assessment Action relates (a "Cancellation Notice").
If, within 15 days after the Cancellation Notice is given (the
15th day being the "Cancellation Date"), the Tax Liability is not paid in full
by the Seller and/or Shareholders (the "Indemnified Liability"), then the Escrow
Agent shall promptly deliver to Purchaser for cancellation Certificates for each
Shareholder's Shares in denominations sufficient to cover each Shareholder's
Proportionate Share of the Indemnified Liability (based on a value of $2.67 per
share). If the Indemnified Liability is paid in full by the Seller and/or
Shareholders prior to the Cancellation Date, the Escrow Agent shall promptly
deliver the Certificates and all other Collateral to the Shareholders. In the
event that any claim is made against Escrow Agent or there is any other dispute
in respect of the Certificates or the Shares or other Collateral, and provided
there is no collection or enforcement action against Purchaser, the Escrow Agent
shall:
(a) Continue to hold the Certificates and other Collateral until
the dispute is settled among the parties and the Escrow Agent receives (i)
written instructions signed by Purchaser, Mitchell Thal and Harry Thal or such
other person they designate in writing, as to the delivery of the Certificates
and other Collateral, or (ii) a final nonappealable order from a court of
competent jurisdiction stating to whom and in what amounts the Certificates and
other Collateral should be released and delivered; or
(b) At the Escrow Agent's discretion or if requested in writing
by Purchaser or the Shareholders, commence an interpleader action and deposit
the Certificates and other Collateral with any court of competent jurisdiction
whereupon the Escrow Agent shall be relieved of any further obligations pursuant
hereto.
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Upon delivery of any Certificates or other Collateral by Escrow
Agent to the Shareholders, the Purchaser's security interest therein hereunder
shall terminate as to such delivered Certificates.
5. Notices. Any notice, request, instruction, correspondence or other
document to be given hereunder by any party hereto to another (herein
collectively called "Notice") shall be in writing and delivered personally or
mailed by registered or certified mail, postage prepaid and return receipt
requested, or by telecopier, as follows:
To Escrow Agent: Katz, Barron, Squitero, Faust & Berman, P.A.
2699 S. Bayshore Drive, 7th Floor
Miami, Florida 33133
Attn: Howard L. Friedberg
To: Purchaser: National Deli Corporation
12711 Ventura Boulevard, Suite 400
Studio City, California 91604
Attn: Isaac Starkman
To Shareholders: c/o Mitchell Thal
3100 Prairie
Miami Beach, Florida 33140
With a copy to: Greenberg, Traurig, Hoffman, Lipoff,
Rosen & Quentel, P.A.
1221 Brickell Avenue
Miami, Florida 33131
Attn: Gregory M. Marks
Notice given by personal delivery or registered mail with returned receipt shall
be effective upon actual receipt. Notice given by telecopier shall be effective
upon actual receipt if received during the recipient's normal business hours, or
at the beginning of the recipient's next normal business day after receipt if
not received during the recipient's normal business hours. All Notices by
telecopier shall be confirmed by the sender thereof promptly after transmission
in writing by registered mail or personal delivery with returned receipt.
Anything to the contrary contained herein notwithstanding, notices to any party
hereto shall not be deemed effective with respect to such party until such
Notice would, but for this sentence, be effective both as to such party and as
to all other persons to whom copies are provided above to be given. Each of the
above addresses for notice purposes may be changed by providing appropriate
notice hereunder.
6. Entire Agreement; Successors and Assigns. This Agreement constitutes
the entire agreement among the parties hereto pertaining to the subject matter
hereof, supersedes any and all prior or contemporaneous agreements or
understandings of the parties relating to the subject matter hereof, and may not
be modified except in writing signed by all parties hereto. This Agreement shall
inure to the benefit of and be binding upon the respective heirs, executors,
administrators, successors and assigns of the parties hereto. No party may
assign any interest under this Agreement without the prior written consent of
the other parties hereto. If any party assigns its interest under this
Agreement, it will advise Escrow Agent as to the assignee replacing such party
hereunder.
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7. Governing Law. This Agreement shall be construed in accordance with
the laws of the State of Florida.
8. Counterparts. This Agreement may be executed in one or more
counterparts with all such counterparts when taken together constituting one and
the same agreement.
9. Escrow. Escrow Agent is authorized and agrees by acceptance hereof to
promptly deposit and to hold the Shares received by it in escrow and to disburse
same subject to clearance thereof in accordance with the terms and conditions of
this Agreement. Escrow Agent shall not disburse the Shares except in accordance
with this Agreement or upon the prior written approval signed by Purchaser,
Harry Thal and Mitchell Thal, or such other person they designate in writing.
Failure of the clearance of funds shall not excuse performance by the depositor.
In the event of doubt as to its duties or liabilities under the provisions of
this Agreement, Escrow Agent may, in its sole discretion, continue to hold the
monies or other items which are the subject of this escrow until a judgment of a
court of competent jurisdiction shall determine the rights of the parties
thereto, or it may deposit all of the monies or other items then held pursuant
to this Agreement with the Clerk of the Circuit Court of Dade County, Florida,
and upon notifying all parties concerned of such action, all liability on the
part of Escrow Agent shall fully terminate, except to the extent of accounting
for any monies or other items theretofore delivered out of escrow. In the event
of any suit wherein Escrow Agent is made a party by virtue of acting as such
Escrow Agent hereunder, or in the event of any suit wherein Escrow Agent
interpleads the subject matter of this escrow, Escrow Agent shall be entitled to
recover reasonable attorneys= fees and costs incurred through all levels of
proceedings, said fees and costs to be charged and assessed as court costs in
favor of the prevailing party. All parties agree that Escrow Agent shall not be
liable to any party or person whomsoever from misdelivery to any party of monies
or other items subject to this escrow, unless such misdelivery shall be due to
willful breach of this Agreement, or gross negligence on the part of Escrow
Agent. The undersigned parties acknowledge that Escrow Agent has acted and is
also acting herein as counsel to JFD and Purchaser and the undersigned parties
have no objection thereto, with respect to this Agreement, any dispute arising
herefrom or any other matter.
10. Termination of Escrow. The escrow provided for herein shall
terminate at such time as the Escrow Agent ceases to hold any Shares or other
Collateral.
[Signature Page Follows]
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IN WITNESS WHEREOF, the undersigned have executed this Stock Restriction
Agreement as of the date first written above.
SHAREHOLDERS:
/s/ Harry Thal
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Harry Thal
/s/ Mitchell Thal
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Mitchell Thal
/s/ Naomi Thal
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Naomi Thal
Estate of Edith Thal
By: /s/ Harry Thal
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Harry Thal, Personal Representative
SECURED PARTY:
Jerry's Famous Deli, Inc.
By: /s/ Isaac Starkman
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Isaac Starkman, as Chief Executive
Officer
ESCROW AGENT:
Katz, Barron, Squitero, Faust &
Berman, P.A.
By: /s/ Howard L. Friedberg
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Howard L. Friedberg, Partner
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