<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
Annual Report Pursuant to Section 13 or 15 (d) of
the Securities Exchange Act of 1934
For Fiscal Year Ended December 31, 1994
Commission File Number 1-6553
CARROLS CORPORATION
(Exact name of Registrant as specified in its charter)
Delaware 16-0958146
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
968 James Street, Syracuse, New York 13203
(Address of principal executive office) (Zip Code)
(315) 424-0513
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
11 1/2% Senior Notes Due 2003
(Title of Class)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes x No
The aggregate market value of the voting stock held by non-affiliates of
the Registrant: No voting stock is held by non-affiliates.
The number of shares outstanding of each of the Registrant's classes of
common stock, as of March 15, 1995: 10.
Documents Incorporated by Reference: None
<PAGE>
<PAGE> PART I
ITEM 1. BUSINESS
HISTORICAL DEVELOPMENT
Carrols Corporation (the "Company" or "Carrols") was incorporated in 1968
and through 1976 its principal business was the operation of fast food hamburger
restaurants under the name Carrols Restaurants and movie theaters under the name
CinemaNational. In 1976, as a result of growing competition from larger and
better recognized national fast food restaurant chains, Carrols became a
franchisee of Burger King Corporation ("BKC") and began converting its
restaurants to Burger King restaurants and ceased operating and franchising
restaurants under the name of Carrols Restaurants. In order to facilitate the
financing of the conversion of these restaurants, Carrols disposed of a
substantial portion of its movie theater assets.
In 1969, Carrols offered its common stock through an initial public
offering. The Company's shares were listed for trading on the New York Stock
Exchange in 1983.
The Company was acquired in December 1986 (the "Acquisition") by Carrols
Holdings Corporation ("Holdings"), a corporation formed to effect the
Acquisition by Mr. Alan Vituli and other members of the Company's current senior
management, a private investor group and certain institutional investors. As
a result of the Acquisition, Carrols became a wholly-owned subsidiary of
Holdings. In March, 1992, Mr. Vituli, who was Chairman of the Board of the
Company from the time of the Acquisition in December, 1986, was also elected to
serve as Chief Executive Officer. Mr. Daniel T. Accordino became President of
the Company in February, 1993. In January, 1995, the Company entered into
three-year employment agreements with Messrs. Vituli and Accordino. See
"Executive Compensation -- Employment Agreements".
At the time of the Acquisition, the Company owned 138 Burger King
restaurants and a food distribution business. In August 1990, the Company sold
the distribution business to Burger King Distribution Services (BKDS), a
division of BKC. Carrols currently purchases substantially all of its
requirements for foodstuffs and paper and packaging products from ProSource
Services Corporation ("ProSource"), the successor to BKDS, pursuant to a five
year supply agreement which was entered into on April 1, 1994 and which expires
on March 31, 1999. See "Business--Supplies and Distribution."
Since the Acquisition, Carrols has expanded its operations from 138
Burger King restaurants to 217 as of March 15, 1995. During this period, Carrols
built 27 restaurants, purchased 61 restaurants, and disposed of or closed nine
restaurants. See "Business--Restaurant Locations." Since October 1992, the
Company has acquired 50 Burger King restaurants through the 1992 acquisition
of ten Burger King restaurants for a purchase price of approximately $7.4
million, the 1993 acquisition of 18 Burger King restaurants for a purchase
price of approximately $10.5 million and the 1994 acquisition of 22 restaurants
in three separate transactions, for a total purchase price of $11.6 million.
<PAGE> On August 17, 1993 the Company consummated a refinancing (the
"Refinancing") that repaid all outstanding amounts under the then existing
senior secured credit facility, the senior subordinated notes and the
subordinated debentures. Under the terms of the refinancing and the Company's
present outstanding indebtedness, debt amortization requirements are less than
$1.0 million per year until 2000. The Refinancing included the issuance of
$110.0 million aggregate principal amount of 11-1/2% Senior Notes due 2003 and
the concurrent closing of a new $25.0 million senior secured revolving credit
facility (the "Senior Secured Credit Facility") which replaced the Company's
existing senior secured credit facility with the same lender. On December 20,
1994, Carrols amended certain provisions of the Senior Secured Credit Facility
which included an increase in the maximum amount of the revolver to the original
$25.0 million, elimination of the scheduled annual reductions in the maximum
revolver available and a reduction in the interest rate. As part of the
amendment, an additional $5.0 million credit facility was added to the existing
$25.0 million facility, which additional facility will be secured by the 22
Burger King restaurants acquired during 1994. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations -- Liquidity and
Capital Resources".
COMPANY OPERATIONS
General. Since 1976, the Company's principal business has been the
operation of Burger King restaurants. The Company is the largest independent
Burger King franchisee in the United States. As of March 15, 1995, the Company
operated, as franchisee, 217 Burger King restaurants, of which 195 are
free-standing restaurants and 22 are located in retail shopping centers or
specialty stores. Carrols currently operates Burger King restaurants in nine
Northeastern and Midwestern states and one Southeastern state.
Carrols' Burger King restaurants are typically open seven days a week from
7:00 a.m. to 11:00 p.m. Substantially all of Carrols' Burger King restaurants
offer a breakfast menu and the traditional Burger King menu for lunch and
dinner. The majority of the Company's Burger King restaurants are free-standing
buildings offering in-store seating and drive-thru service. A standard,
free-standing Burger King restaurant building typically has an area of
approximately 3,000 square feet with a seating capacity of approximately 90 and
adjacent parking areas. Smaller Burger King facilities are utilized in retail
shopping centers. In Carrols' free-standing Burger King restaurants, greater
than 50% of sales are generated through drive-thru windows. Carrols leases most
of its restaurant properties, although it owns the land and buildings on which
17 restaurants are located. See "Business--Properties."
Burger King. There are approximately 7,400 Burger King restaurants
worldwide making BKC the second largest hamburger fast food operation. BKC has
been franchising since 1954 and has expanded to locations in all 50 states, the
District of Columbia and approximately 50 foreign countries.
Burger King restaurants are fast food restaurants of distinctive design
which serve a limited menu of moderately-priced foods and offer efficient and
rapid service. The Company believes that convenience, speed of service, quality
of food and price/value are the primary competitive advantages of Burger King
restaurants. Burger King restaurants appeal to a broad spectrum of consumers,
with different meal segments tending to appeal to different groups.
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Burger King restaurants feature flame-broiled hamburgers, which are an
integral part of the Burger King identity, and several widely-known, trademarked
products, the most popular being the Whopper sandwich, which is a large,
flame-broiled hamburger on a five-inch toasted bun garnished with combinations
of mayonnaise, lettuce, onions, pickles and tomatoes. The basic menu of all
Burger King restaurants consists primarily of hamburgers, cheeseburgers, chicken
sandwiches and filets, fish sandwiches, french fried potatoes, salads, shakes,
desserts, soft drinks, milk and coffee. From time to time, other promotional
items are added to the menu for limited periods. BKC continually seeks to
develop new products and concepts as it endeavors to enhance the menu and
service of Burger King restaurants.
Franchise Agreements. Each of Carrols' Burger King restaurants operates
under a separate Franchise Agreement from BKC. The Franchise Agreements require,
among other things, that all restaurants be of standardized design and be
operated in a prescribed manner, including utilization of the standard Burger
King menu. The Franchise Agreements generally provide for an initial term of 20
years and have an initial fee of $40,000. At the option of BKC, a Successor
Franchise Agreement may be granted for an additional 20 year term, provided the
restaurant meets the then-current BKC operating standards and the Company is not
in default under the relevant Franchise Agreement. Currently, the Successor
Franchise Agreement fee is $25,000 per restaurant. In addition to this fee, in
order to obtain a Successor Franchise Agreement, Carrols is typically required
to make capital improvements to the subject restaurant to bring the restaurant
up to BKC's then-current design standards. The amount of such capital
expenditures will vary widely depending upon the magnitude of the required
changes and the degree to which the Company has made interim changes to the
restaurant. Although the Company estimates that a substantial remodeling can
cost in excess of $250,000, the Company's average remodeling cost over the past
five years has been approximately $140,000 per restaurant. The Franchise
Agreements are non-cancelable except for failure to abide by the terms thereof.
Carrols believes that it enjoys a good relationship with BKC, and
believes that it will satisfy BKC's normal Successor Franchise Agreement
policies and, accordingly, that Successor Franchise Agreements will be granted
in due course by BKC at expiration of the existing Franchise Agreements. BKC
has granted Successor Franchise Agreements for all of the Franchise Agreements
for which the Company has sought Successor Agreements.
In addition to the initial franchise fee, franchisees currently pay to
BKC a monthly royalty of 3-1/2% of the gross revenues from their Burger King
restaurants. Burger King operators currently also contribute 4% of monthly gross
revenues from their Burger King restaurants to fund BKC's national and regional
advertising. BKC engages in substantial advertising and promotional activities
and other efforts to maintain and enhance the nationwide Burger King system.
Carrols supplements BKC's marketing with local advertising and promotional
campaigns. See "Business--Business Strategy" and "--Advertising and Promotion."
The franchisee of a new restaurant must also purchase the requisite
equipment, seating, signage, and pay various other costs to open a new Burger
King restaurant. The Company estimates that the average costs for a standard
free-standing restaurant are approximately $260,000 (excluding the cost of the
building and related real estate). In addition, the Company estimates that the
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aggregate cost of constructing a free-standing restaurant and the cost of the
associated real estate ranges from $650,000 to $1,000,000 (or higher) depending
upon building type, land costs and site work.
The BKC Franchise Agreement does not grant any franchisee exclusive
rights to a defined territory. The Company believes that BKC generally seeks to
ensure that newly granted franchises do not materially adversely affect the
operations of existing Burger King restaurants.
The Company is required to obtain BKC's consent prior to the acquisition
or development of new Burger King restaurants. BKC has the right of first
refusal to purchase any Burger King restaurant which the Company wishes to
acquire. In addition, BKC's prior consent is required for the sale by the
Company of any of its restaurants. Since the Acquisition, BKC has consented to
each of the Company's proposed acquisitions.
Management Structure; Staffing; Training. Substantially all executive
management, finance, marketing and operation support functions are conducted
centrally at Carrols' Syracuse, New York headquarters. The Company currently has
three vice president-regional directors who are responsible for the operations
of all Burger King restaurants in their respective regions. Each of the three
regional directors has been employed by Carrols for over 20 years. A fourth
regional director has replaced a recently retired vice president-regional
director. There are 28 district supervisors who report to the regional
directors. The district supervisors have responsibility for an average of eight
restaurants and are responsible for direct supervision of the day-to-day
operations of the restaurants. Typically, district supervisors previously served
as restaurant managers at one of Carrols' restaurants. Both regional directors
and district supervisors are compensated with a fixed salary plus an incentive
bonus based upon the performance of the restaurants under their supervision.
A typical Carrols' Burger King restaurant is staffed with hourly
employees, who are supervised by a full-time manager and two or three assistant
managers.
Carrols provides both classroom and in-restaurant training for its
salaried and hourly personnel, in addition to training programs provided by BKC.
Carrols believes that training and management development are integral to its
success.
Control Systems. Financial and management control of Carrols' restaurants
is facilitated by the use of a computerized point of sale system which
electronically communicates data from each of the Company's restaurants to
Carrols' centralized management information system on a daily basis. Sales
reports, payroll data, food and labor cost analyses, and other operating
information for each restaurant are also available daily to the restaurant
manager, who is expected to react quickly to trends or situations in his or her
restaurant. The daily information is accumulated for weekly operating reports
covering significant restaurant performance indicators for each restaurant.
These reports are monitored by each management level from district supervisor
through senior management. Carrols believes that these systems materially
enhance its ability to control and manage its restaurant operations.
<PAGE>
Factors Affecting the Company's Operations. Carrols' business is affected
by conditions which reduce automobile usage, such as inclement weather, gasoline
prices and road construction. Weather conditions can be particularly severe in
the Northeast where the Company operates a significant number of its Burger King
restaurants. See "Management's Discussion and Analysis of Financial Condition
and Results of Operations." Historically, the Company's business has also been
affected by changes in local and national economic conditions, consumer spending
habits, consumer tastes, consumer concerns about the nutritional quality of fast
food and demographic trends.
Site Selection. The Company believes that the location of its restaurants
is very important to its success. The Company's operations personnel review all
potential acquisition and new development sites for accessibility, visibility,
costs, surrounding traffic patterns and demographic characteristics. The
Company's senior management, based upon analyses prepared by its real estate
professionals and its operations division, determines the acceptability of all
acquisition and new development sites. See "Business--Business Strategy."
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RESTAURANT LOCATIONS
The following table sets forth the locations of the 217 Burger King
restaurants in Carrols' system at March 15, 1995.
NEW YORK (97) OHIO (65) MAINE (3)
Greater Albany (14) Greater Akron (11) Augusta (1)
Auburn (1) Alliance (2) Bangor (2)
Amsterdam (1) Archbold (1)
Greater Binghamton (6) Ashland (1)
Boonville (1) Bowling Green (2) MASSACHUSETTS (2)
Buffalo (1) Bryan (1)
Catskill (1) Greater Canton (11) North Andover (1)
Cobleskill (1) Greater Cleveland (12) Billerica (1)
Cortland (1) Defiance (1)
Fulton (1) Findlay (2)
Glens Falls (2) Fostoria (1) NEW JERSEY (2)
Gloversville (2) Fremont (1)
Herkimer (1) Hartville (1) Franklin (1)
Hudson (1) Lima (2) Newton (1)
Kingston (3) Mansfield (6)
Middletown (2) Medina (1)
New City (1) Mentor (1) CONNECTICUT (1)
Newburgh (3) New Philadelphia (2)
Niagara Falls (1) Ottawa (1) Westport (1)
Norwich (1) Streetsboro (1)
Oneonta (2) Tiffin (1)
Oswego (1) Van Wert (1) VERMONT (1)
Peekskill (1) Wapakoneta (1)
Plattsburgh (3) Wooster (1) Rutland (1)
Poughkeepsie (2)
Port Jervis (1)
Greater Rochester (15) MICHIGAN (14)
Rome (2)
Greater Syracuse (17) Ann Arbor (3)
Schodack (1) Battle Creek (4)
Greater Utica (4) Kalamazoo (4)
Watertown (2) Jackson (3)
Yorktown Heights (1)
NORTH CAROLINA (24) PENNSYLVANIA (8)
Greater Asheville (9) Bradford (1)
Durham (7) East Stroudsburg (1)
Forest City (1) Lebanon (1)
Hendersonville (2) Reading (4)
Marion (1) Tamaqua (1)
Morganton (1)
Raleigh (2)
Shelby (1)<PAGE>
<PAGE>
ADVERTISING AND PROMOTION
As a Burger King franchisee, a significant portion of the Company's
advertising and promotional programs are established and coordinated by BKC
through regional and national advertising campaigns. Carrols supplements BKC's
advertising and promotional activities with local advertising and promotions,
including purchasing additional television, radio and print advertising.
Carrols also utilizes promotional programs, such as combination meals and
discounted prices, targeted to its customers, thereby enabling Carrols to create
a flexible and directed marketing program.
Most BKC franchisees and BKC are required to contribute 4% of monthly
gross revenues from restaurant operations to an advertising fund, utilized by
BKC for its advertising and promotional programs and public relations
activities. BKC's advertising programs are comprised of national campaigns and
local advertising which supplements the national campaigns. BKC's advertising
campaigns are generally carried on television, radio and in the mass circulated
print media (national and regional newspapers and magazines). Carrols believes
that one of the major advantages of being a Burger King franchisee is the
leverage it realizes from the marketing power of BKC.
SUPPLIES AND DISTRIBUTION
As a Burger King franchisee, Carrols is required to purchase all of its
foodstuffs, paper and packaging from BKC-approved suppliers. Other non-food
items such as kitchen utensils, equipment maintenance tools and other supplies
may be purchased from any suitable source provided such items meet BKC product
uniformity standards. On April 1, 1994 Carrols entered into a new supply
agreement with its supplier, ProSource, pursuant to which Carrols is required
to obtain all of its foodstuffs (other than bread products), paper, promotional
premiums and packaging from ProSource. The new supply agreement with ProSource
is a five-year agreement which expires on March 31, 1999. The Company believes
that ProSource's services are competitive with alternatives available to the
Company. Carrols purchases its bread products from local bakeries. See
"Business--Historical Development."
There are other BKC-approved supplier/distributors which compete with
ProSource. Carrols believes that it would be able to substitute another
supplier if ProSource were unable, for any reason, or chose not to continue to
service the Company.
All BKC-approved suppliers are required to purchase all foodstuffs and
supplies from BKC-approved manufacturers and purveyors. BKC is responsible for
quality control and supervision of these manufacturers and purveyors. See
"Business--Quality Assurance."
BKC monitors all BKC-approved manufacturers and purveyors of its
foodstuffs. BKC regularly visits these manufacturers and purveyors to observe
the preparation of foodstuffs and run various tests to ensure that only high
quality foodstuffs are sold to BKC-approved suppliers and distributors. In
addition, BKC coordinates and supervises audits of approved suppliers and
distributors to determine continuing product specification compliance and ensure
that manufacturing plant and distribution center standards are met.
<PAGE>
QUALITY ASSURANCE
All Burger King franchisees, including Carrols, operate subject to a
comprehensive regimen of quality assurance and health standards set by BKC, as
well as standards set by Federal, state and local governmental laws and
regulations. These standards include food preparation rules regarding, among
other things, minimum cooking temperatures, sanitation and cleanliness. In
addition, BKC has set maximum time standards for holding unsold prepared food;
for example, sandwiches and french fries are discarded after ten minutes and
seven minutes following preparation, respectively. The "conveyor belt" cooking
system utilized in all Burger King restaurants, which is calibrated to carry
hamburgers through the flame broiler at regulated speeds, helps ensure that
standardized cooking times and temperatures are met.
Carrols, through its regional directors and district supervisors, closely
supervises the operation of all of its restaurants to help insure that standards
and policies are followed and that product quality, customer service and
cleanliness of the restaurants are maintained. BKC conducts unscheduled monthly
inspections of each Burger King restaurant throughout the Burger King system.
BUSINESS STRATEGY
The Company's primary business strategy is to expand its operations
through the acquisition and construction of additional Burger King restaurants
while enhancing the quality of operations and competitive position of its
existing Burger King restaurants. Carrols believes the size of the nationwide
Burger King system will continue to present opportunities for selective growth
through acquisitions. In addition, Carrols believes that the number of markets
in which the Company operates will provide opportunities for construction of new
restaurants. The ability of the Company to expand through the acquisition and
construction of additional Burger King restaurants is subject to, among other
things, the availability of financing and obtaining the consent of the
franchisor. Concurrent with growth within the Burger King system, the Company
has identified other quick service restaurant concepts with appealing market
niches and favorable unit economics which management believes provide excellent
growth vehicles and will allow the Company to leverage its strong operations
expertise. During the last 12 months, the Company entered into Area Development
Agreements with Taco Cabana, Inc., and Pollo Tropical, Inc., pursuant to which
the Company has the exclusive right in specified territories to develop and
operate franchised restaurants in each of those concepts. See "Business --
Additional Restaurant Concepts".
GOVERNMENT REGULATION
Carrols is subject to various Federal, state and local laws affecting its
business, including various health, sanitation, fire and safety standards. Newly
constructed or remodeled restaurants are subject to state and local building
code and zoning requirements. In connection with the remodeling and alteration
of the Company's restaurants, the Company may be required to expend funds to
meet certain Federal, state and local regulations, including regulations
requiring that remodeled or altered restaurants be handicap accessible. The
Company is also subject to Federal and state environmental regulations, although
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such regulations have not had a material effect on the Company's operations.
The Company is subject to the Fair Labor Standards Act and various state
laws governing such matters as minimum wage requirements, overtime and other
working conditions and citizenship requirements. A significant number of the
Company's food service personnel are paid at rates related to the Federal
minimum wage and increases in the minimum wage could increase the Company's
labor costs.
The Company believes that it is operating in substantial compliance with
applicable laws and regulations governing its operations.
COMPETITION
The fast food industry is highly competitive. In each of its markets,
Carrols' restaurants compete with a large number of national and regional
restaurant chains, as well as locally-owned restaurants, offering low-priced and
medium-priced fare. Convenience stores, grocery store delicatessens and food
counters, cafeterias and other purveyors of moderately priced and quickly
prepared foods also compete with the Company. In the Company's markets,
McDonald's, Wendy's and Hardee's provide the most significant competition.
Carrols believes that national brand name identification is a significant
competitive advantage in the fast food business. The Company's largest
competitor is McDonald's. The Company believes that product quality and taste,
convenience of location, speed of service, menu variety, price and ambiance, are
the most important competitive factors in the fast food restaurant industry.
EMPLOYEES
At December 31, 1994, Carrols employed approximately 7,800
persons;approximately 100 were administrative personnel and 7,700 restaurant
operating personnel. None of Carrols' employees is covered by collective
bargaining agreements. Approximately 7,100 of the restaurant operating personnel
at December 31, 1994 were part-time employees. Carrols believes that its
employee relations are satisfactory.
ADDITIONAL RESTAURANT CONCEPTS
Taco Cabana. On June 20, 1994 Carrols entered into an agreement (the
"Taco Cabana Agreement") with T.C. Management, Inc., an affiliate of Taco
Cabana, Inc., for Carrols to have the exclusive right to develop Taco Cabana
restaurants in North Carolina, South Carolina, and the Tidewater and Richmond
areas of Virginia. Taco Cabana, Inc., is a publicly traded company which
operates quick-service Mexican patio cafe restaurants. As of December 31, 1994,
Taco Cabana owned and operated 104 Taco Cabana restaurants and franchised 23
Taco Cabana restaurants.
Taco Cabana restaurants feature generous portions of fresh, premium
quality Tex-Mex and traditional Mexican style food at low prices. The
restaurants provide interior, semi-enclosed and patio dining areas with a
festive Mexican theme. Menu items include flame-grilled beef and chicken
fajitas served on sizzling iron skillets, "Chicken Flameante" (a marinated
rotisserie chicken), other Tex-Mex dishes, fresh, hot flour tortillas, and
<PAGE>
lighter items such as a variety of salad entrees. Unlike many of its
competitors, Taco Cabana makes all menu items "from scratch," preparing each
item daily in each of its restaurants.
The Taco Cabana Agreement requires Carrols to develop three (3) Taco
Cabana restaurants during the first year, six (6) Taco Cabana restaurants during
the second year, and eight (8) Taco Cabana restaurants during each of the next
three (3) years in order to retain the entirety of its territory under the
agreement. Carrols has the ability to maintain the exclusive right to develop
in its assigned territory provided it continues to develop Taco Cabana
restaurants in accordance with the formula set forth in the Taco Cabana
Agreement. Failure to comply with the formula would result in a reduction or
elimination of its exclusive territorial rights. Upon execution of the Taco
Cabana Agreement, Carrols paid a non-refundable fee of $250,000, which will be
credited against development and license fees for the first five Taco Cabana
restaurants developed by Carrols. The development and license fee for the first
ten Taco Cabana restaurants to be opened by Carrols is $50,000 per restaurant,
thereafter the development and license fee is $25,000 per restaurant.
Pollo Tropical. On January 1, 1995 Carrols entered into an agreement
(the "Pollo Tropical Agreement") with Pollo Franchise, Inc., an affiliate of
Pollo Tropical, Inc., for the exclusive right to develop Pollo Tropical
restaurants in certain specified regions of Ohio and Kentucky. Pollo Tropical
is a publicly traded company which operates a chain of quick service restaurants
featuring grilled marinated chicken. As of December 31, 1994, Pollo Tropical
currently had 34 restaurants systemwide, of which 33 were Company owned and 1
was franchised.
Pollo Tropical restaurants are quick-service restaurants featuring
grilled, fresh chicken, marinated in a proprietary blend of tropical fruit
juices and spices, and authentic "made from scratch" side dishes. The menu's
emphasis on freshness and quality, as well as its focus on chicken served hot
off the grill, provides a healthy and flavorful alternative to ordinary quick-
service restaurants. Pollo Tropical restaurants combine high quality,
distinctive taste and an inviting tropical setting with the convenience and low-
price appeal of quick-service restaurants.
Pollo Tropical restaurants have a tropical and Latin theme, and feature
fresh and flavorful chicken grilled to a quick golden brown over open flames in
view of the customer. Chicken is served whole, in halves or in quarters, and
grilled chicken breasts are served in sandwiches, salads and platters. The
restaurants also offer a wide variety of distinctive and popular side dishes
including black beans and rice, yucatan fries and sweet plantains.
The Pollo Tropical Agreement requires Carrols to develop three (3) Pollo
Tropical restaurants during the first 18 months, six (6) Pollo Tropical
restaurants during the next 12 months, and eight (8) Pollo Tropical restaurants
during each of the next three years in order to retain the entirety of its
territory under the agreement. Carrols maintains the exclusive right to develop
in its assigned territories provided it continues to develop restaurants in
accordance with the formula set forth in the Pollo Tropical Agreement. Failure
to comply with the formula would result in a reduction or elimination of its
exclusive territorial rights. Upon the execution of the Pollo Tropical
<PAGE>
Agreement, Carrols paid a non-refundable fee of $110,000, which will be credited
against franchise fees for the first five Pollo Tropical restaurants developed
by Carrols. The license fee for the first three Pollo Tropical restaurants is
$30,000 per restaurant, thereafter the license fee is $15,000 per restaurant.
In addition to the territories of Ohio and Kentucky, Carrols has certain
limited options to develop Pollo Tropical restaurants in the State of Michigan
(other than Detroit) and Toronto, Canada.
ITEM 2. PROPERTIES
The Company owns the approximately 20,000 square foot building at 968
James Street, Syracuse, New York, in which its executive offices are located.
This building houses all of the Company's administrative operations (except for
those conducted at three small regional offices) and is adequate for future
expansion. The Company is the beneficial owner of a 160,000 square foot
warehouse building in Liverpool, New York. The warehouse is not used in the
current operations of the Company and is available for sale or long-term lease.
In addition to the above, at March 15, 1995, the Company owned or leased
the following properties:
Owned Leased Leased
Land; Land; Land;
Owned Owned Leased
Building Building Building Total
Burger King restaurants 17 16 184(a) 217
Excess properties:
Leased to others 1 -- 7 8
Available for sale or lease 4 -- -- 4
Total properties 22 16 191 229
(a) Includes 22 restaurants located in mall shopping centers or specialty
locations.
Most of the Company's leases are coterminous with the related Franchise
Agreements. The Company believes that it generally will be able to renew at
commercially reasonable rates the leases whose terms expire prior to the subject
Franchise Agreements.
Most leases require the Company, as lessee, to pay utility and water
charges, premiums on insurance and real estate taxes. Certain leases also
require contingent rentals based upon a percentage of gross sales that exceed
specified minimums.
ITEM 3. LEGAL PROCEEDINGS
<PAGE>
The Company is not a party to any pending legal proceeding which, in
management's belief, will have a material adverse effect on the Company's
results of operations or financial condition, nor to any other pending legal
proceedings other than ordinary, routine litigation incidental to its business.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
There is no established trading market for the Company's common equity,
since 100% of its common stock is owned by Holdings.
Cash dividends per share were declared during 1993 and 1994 as follows:
January, 1993 $ 20,010.00
April, 1993 20,010.00
July, 1993 20,010.00
October, 1993 113,935.45
December, 1993 99,995.00
January, 1994 237,301.10
April, 1994 20,000.00
July, 1994 20,000.00
October, 1994 20,000.00
<PAGE>
<PAGE>
ITEM 6. SELECTED FINANCIAL DATA
CARROLS CORPORATION AND SUBSIDIARIES - SUMMARY OF SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
Col. A Col. B Col. C
Col. D Col. E Col. F
YEARS
ENDED DECEMBER 31,
__________ __________
__________ __________ __________
1994 1993
1992 1991 1990
__________ __________
__________ __________ __________
(52 weeks) (52 weeks)
(53 weeks) (52 weeks) (52 weeks)
(Dollars in thousands except
for per share data and restaurants)
<S> <C> <C>
<C> <C> <C>
OPERATING RESULTS:
Revenues $ 204,254 $ 171,634
$ 156,413 $ 146,634 $ 149,890
Loss from continuing operations (1,831) (4,408)
(1,262) (4,919) (5,760)
Income from discontinued operations
2,986
Extraordinary loss on
extinguishment of debt (4,883)
Cumulative effect of change in accounting
for post-retirement benefits
(1,037)
Net Loss $ (1,831) $ (9,291)
$ (2,299) $ (4,919) $ (2,774)
PER SHARE OF COMMON STOCK:
Loss from continuing operations $(183,100) $(440,800)
$(126,200) $(491,900) $(576,000)
Income from discontinued operations
298,600
Extraordinary loss on
extinguishment of debt (488,300)
Cumulative effect of change in accounting
for post-retirement benefits
(103,700)
Net Loss $(183,100) $(929,100)
$(229,900) $(491,900) $(277,400)
Dividends Declared $ 297,301 $ 273,960
$ 20,010 $ 40,000 $ 80,000
OTHER DATA:
Total assets $ 124,688 $ 119,735
$ 115,900 $ 115,592 $ 132,942
Long-term debt 120,680 114,197
91,245 88,541 102,568
Capital lease obligations 3,966 4,603
5,436 6,002 6,632
Total long-term debt and capital lease
obligations 124,646 118,800
96,681 94,543 109,200
Common stockholder's equity (deficit) (27,208) (22,404)
(10,383) (7,884) (2,565)
Burger King restaurants in operation:
At end of period 219 195
177 165 164
Annual weighted average 206.8 184.5
168.7 163.8 162.5
FN> </TABLE
<PAGE>
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
General. The following table sets forth for the years ended December 31,
1992, 1993 and 1994 certain consolidated financial data for the Company,
expressed as a percentage of sales:
PERCENTAGE OF SALES
YEARS ENDED DECEMBER 31,
1994 1993 1992
Sales 100.0% 100.0% 100.0%
Other income .2 .3 .3
Cost of sales 28.4 28.3 27.6
Restaurant wages and related expenses 29.4 30.2 30.2
Other restaurant operating expenses 20.8 20.6 19.7
Depreciation and amortization 5.5 7.1 7.1
Administrative expenses 4.6 4.7 4.5
Advertising expense 4.3 4.6 4.9
Interest expense 7.1 7.3 7.1
Loss on closing restaurants and other .9
Loss before extraordinary item and
cumulative effect of change in
accounting principles (.9) (2.6) (.8)
1994 COMPARED TO 1993
Sales. Sales for the year ended December 31, 1994 increased $32.8
million, or 19.2%, as compared to the year ended December 31, 1993. The Company
operated an average of 207 Burger King restaurants for the year ended December
31, 1994 as compared to 185 for 1993. Average unit sales increased 6.8% when
comparing 1994 to 1993. Sales at comparable restaurants, the 170 units
operating for the entirety of the compared periods, increased $7.9 million, or
5.1%. Net restaurant selling prices were down approximately 0.7%, resulting
from a 7.0% reduction in menu prices offset by a 6.3% increase from fewer
discount promotions in 1994. The pricing changes reflect the value menu pricing
strategy adopted nationally by BKC near the end of 1993 which prices a sandwich,
drink and fries as a meal for less than the prices of the individual items and
correspondingly reduces price-off promotion activity.
Cost of Sales. Cost of sales (food and paper costs) for the year ended
December 31, 1994 increased in dollars due to higher sales. Cost of sales as
a percentage of sales increased 0.1% from 1993 to 1994 as a result of the effect
of lower net restaurant selling prices, partially offset by decreases in various
commodity costs, especially beef.
<PAGE>
Restaurant Wages and Related Expenses. Restaurant wages and related
expenses decreased from 30.2% of sales to 29.4% of sales when comparing the year
ended December 31, 1993 to 1994. Productive labor efficiencies realized from
improved technology utilized in operating the drive-thru windows at the
restaurants and the effect of higher sales on the fixed component of restaurant
wages more than offset the effects of lower restaurant selling prices and
increased wage rates.
Other Restaurant Operating Expenses. Other restaurant operating expenses
increased by $7.2 million and by 0.2% as a percentage of sales for 1994 compared
to 1993. The increase in dollars was caused primarily by expenses associated
with the operation of the additional restaurants during the most recent year
when compared to the prior year. Increased expense for replacement of employee
uniforms was the major cause of the 0.2% increase in the percentage when
comparing 1994 to 1993.
Depreciation and Amortization. Depreciation and amortization decreased
$0.9 million when comparing the year ended December 31, 1994 to 1993. The
effect from assets becoming fully depreciated during the last two years was
partially offset by additional depreciation and amortization from new and
acquired restaurants.
Administrative Expenses. Expenses associated with acquired restaurants and
those arising from improved restaurant operating performance were the principal
cause of increased administrative expenses during the year ended December 31,
1994 as compared to 1993.
Advertising Expense. An increase in advertising payments to Burger King
Corporation of $1.3 million (based on sales levels) was partially offset by
decreases in other forms of promotional activities of $0.5 when comparing
1994 to 1993.
Interest Expense. An increase in average loan balances outstanding was the
principal cause for interest expense to increase $2.0 million for the year
ended December 31, 1994 compared to 1993.
Loss on Closing Restaurants and Other. This charge of $1.8 million
during the year ended December 31, 1994 represents a $1.3 million loss from the
anticipated closing of certain restaurants and the write down of approximately
$.5 million to estimated net realizable value of an unused warehouse. The
charge includes a write down of the related restaurant operating assets to net
realizable value and accrual of lease termination costs.
1993 COMPARED TO 1992
Sales increased $15.1 million, or 9.7%, for the year ended December 31, 1993
compared to the year ended December 31, 1992. After adjusting for the extra
week in 1992, average restaurant unit sales increased 1.7% in 1993 compared to
1992, while sales at comparable restaurants, the 158 units operating for the
entirety of 1992 and 1993 decreased $1.9 million, or 1.3%. Net restaurant
selling prices were down approximately 3.4% from increased discount promotional
activity during the year and a reduction in menu prices during the last quarter
of 1993. Sales were adversely affected during most of the first quarter of 1993
<PAGE>
by unusually heavy snowfall in the geographic areas of Carrols operations.
Cost of Sales. Cost of sales (food and paper costs) for the year ended
December 31, 1993 compared to the year ended December 31, 1992 increased in
dollars due to higher sales and as a percentage of sales, cost of sales
increased from 27.6% to 28.3%. A 1.0% increase in cost of sales resulting from
the decrease in net restaurant selling prices and increases in the cost of beef
were partially offset by decreases in the cost of various other commodities.
Restaurant Wages and Related Expenses. Restaurant wages and related
expenses increased $4.6 million for the year ended December 31, 1993 as compared
to the year ended December 31, 1992. This increase was due to the increased
sales in 1993 and increases in labor rates and payroll taxes, partially offset
by labor efficiencies.
Other Restaurant Operating Expenses. Other restaurant operating expenses
increased both in dollars of $4.5 million and as a percentage of sales of
0.9% from 1992 to 1993. Rent of $1.4 million and other operating costs of $2.7
million associated with restaurants which were not operating for the entirety
of both years contributed $4.1 million to the increase in 1993 compared to 1992.
Additionally, an increase in the costs of utilities and repairs and maintenance
at comparable units contributed to the balance of the increase for the year.
Depreciation and Amortization. The additional depreciation from new
restaurants acquired during 1992 and 1993, partially offset by a decrease from
assets becoming fully depreciated, resulted in a $1.1 million increase in 1993
as compared to 1992.
Administrative Expenses. The increase in administrative expenses of $1.1
million when comparing 1993 to 1992 resulted from costs associated with the
supervision of additional restaurants operating during part of 1992 and 1993 and
costs expended to prepare for planned future expansion.
Advertising Expense. An increase in advertising payments to BKC (based
upon sales levels) offset by a decrease in other promotional advertising
activities resulted in the increase of $0.3 million in advertising expense when
comparing the year ended December 31, 1993 to 1992.
Interest Expense. Higher average loan balances outstanding together with
an increase of approximately 1/2% in the average interest rate were responsible
for the increase in interest expense when comparing 1993 to 1992.
LIQUIDITY AND CAPITAL RESOURCES
On August 17, 1993, the Company consummated the Refinancing, which repaid
substantially all of the Company's outstanding indebtedness through the issuance
of $110.0 million aggregate principal amount of 11-1/2% Senior Notes due 2003
(the "Notes") and the concurrent closing of the $25.0 million Senior Secured
Credit Facility. The Refinancing significantly reduced the Company's then
scheduled debt amortization requirements to less than $1.0 million per year
until 2000, thus enhancing Carrols' ability to pursue its business strategy.
Among other factors, the Company entered into the Refinancing because the
<PAGE>
Company's ability to expand its operations through the acquisition and
construction of additional Burger King restaurants had been constrained in the
past by significant annual debt amortization requirements associated with the
indebtedness incurred to finance the Acquisition.
On December 20, 1994, the Senior Secured Credit Facility was amended to
increase the maximum amount of the revolver to the original $25.0 million,
eliminate the scheduled annual reductions in the maximum revolver availability,
reduce the interest rate and provide an additional $5.0 million acquisition
loan. The acquisition loan will be fully advanced during 1995, secured by the
22 Burger King restaurants acquired during 1994, and requires principal
repayments of $250,000 in 1997, $1.25 million in 1998, $2.0 million in 1999 and
$1.5 million in 2000.
The Company has reported net losses in each of the last three years.
Since completing a leveraged buyout in 1986, the Company's focus has been on
developing annual cash flow to service its indebtedness, maintain its assets,
and provide for modest growth. With its current capital structure and having
depreciation and amortization expense which is considerably greater than its
capital reinvestment requirements, reflecting net income on the statement of
operations is less meaningful to the Company than cash flow. Cash flow from
operations has been adequate to maintain the quality of operations and the
competitive position of the Company's restaurants.
The operating activities of the Company during 1994 provided $14.4
million of cash. The net loss of $1.8 million is after a non-cash charge of
$1.8 million for a loss on closing restaurants and other and $11.3 million of
depreciation and amortization. Operating cash also resulted from an increase
in accounts payable of $1.1 million due to more restaurants being operated at
the end of 1994 and an increase in accrued liabilities of $2.8 million,
primarily because of an increase in accrued payroll and employee benefits.
Capital spending during 1994 of $17.6 million included $13.0 million for
the acquisition of three Burger King restaurants in North Carolina, 19 Burger
King restaurants in New York, and the construction of two new restaurants. The
balance of the spending went toward restaurant maintenance and remodeling. The
Company completed 22 remodelings in 1994.
The Company borrowed a net $6.8 million under the Senior Secured Credit
Facility and completed a sale and leaseback of one restaurant property for $0.7
million. Dividends of $3.5 million were paid to Holdings for the payment by
Holdings of $0.8 million of regular quarterly preferred stock dividends of $0.2
million each and $2.7 million for the redemption and retirement of tendered
Holdings' common stock and warrants to purchase such stock in connection with
the tender offer initiated by Holdings in 1993.
At December 31, 1994, the Company had $19.2 million available under its
Senior Secured Credit Facility after reserving $1.6 million for a letter of
credit guaranteed by the Senior Secured Credit Facility. While interest is
accrued monthly, payments of approximately $6.3 million for interest on the
Notes are made each February 15th and August 15th, thus creating semi-annual
cash needs. The Company believes that future cash flow from operations together
with funds available under the Senior Secured Credit Facility will be sufficient
<PAGE>
to meet all interest and principal payments under its indebtedness, fund the
maintenance of property and equipment, fund restaurant remodeling required under
the Franchise Agreements and meet required payments in respect of Holdings'
Preferred Stock (subject to the terms of the Indenture and the Senior Secured
Credit Facility) for at least the next twelve months. The balance will provide
funds for future acquisitions.
The Company's loan agreements contain restrictions as to payment of
dividends. Based on current limitations, the Company is able to pay only three
regular quarterly dividends on Holdings' Preferred Stock after December 31,
1994. As more fully explained in Note 6 to the financial statements, the
dividend rate is increased if timely dividend payments are not made.
INFLATION
While inflation can have a significant impact on food, paper, labor and
other operating costs, the Company has historically been able to minimize the
effect of inflation through periodic price increases, and believes it will be
able to offset future inflation with price increases, if necessary.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The Index to Financial Statements attached hereto is set forth in Item
14.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
This item is omitted as there have been no disagreements with respect to
accounting and financial disclosure.
<PAGE>
<PAGE> PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
DIRECTORS AND EXECUTIVE OFFICERS
The Company's Directors and executive officers are:
NAME AGE POSITION WITH THE COMPANY
Alan Vituli 53 Chairman of the Board, Chief
Executive Officer and Director
Daniel T. Accordino 44 President, Chief Operating
Officer and Director
Richard V. Cross 59 Executive Vice President - Finance,
Treasurer and Director
Peter J. Weidhorn 48 Director
M. Bruce Adelberg 58 Director
Franklin Glasgall 62 Director
Joseph A. Zirkman 34 Vice President, General Counsel and
Secretary
Richard H. Liem 41 Vice President--Financial Operations
Paul P. Drotar 48 Vice President--Corporate Controller
David R. Smith 45 Vice President--Regional Director
James E. Tunnessen 40 Vice President--Regional Director
Michael A. Biviano 38 Vice President--Regional Director
David Morency 39 Vice President--Casual Dining
Division
Certain biographical information regarding each Director and executive
officer of the Company is set forth below:
Mr. Vituli has been Chairman of the Board of Carrols since 1986 and Chief
Executive Officer since March 1992. He is also a director and Chairman of the
Board of Holdings. Mr. Vituli is also managing general partner of Morgan
Ventures III, a limited partnership ("Morgan Ventures"), which is the record
owner of 1,538,706 shares of voting common stock of Holdings. See "Principal
Stockholders." Between 1983 and 1985, Mr. Vituli was employed by Smith Barney,
Harris Upham & Co., Inc. as a senior vice president responsible for real estate
<PAGE>
transactions. For the 17 years prior to joining Smith Barney, Mr. Vituli was
associated with the accounting firm of Coopers & Lybrand, first as an employee
and the last ten years as a partner. Among the positions held by Mr. Vituli at
Coopers & Lybrand was national director of mergers and acquisitions. Prior to
joining Coopers & Lybrand, Mr. Vituli was employed in a family owned restaurant
business. Mr. Vituli currently serves as a Director on the Board of Directors
of Tyco Toys, Inc., and Pollo Tropical, Inc.
Mr. Accordino has been President, Chief Operating Officer and a Director
of Carrols since February 1993. Prior thereto, he served as Executive Vice
President--Operations of Carrols from December 1986 and as Senior Vice President
from April 1984. He is also a Director of Holdings. From 1979 to April 1984 he
was Vice President responsible for restaurant operations of the Company, having
previously served as the Company's Assistant Director of Restaurant Operations.
Mr. Accordino has been employed by the Company for over 20 years.
Mr. Cross is a Director and Executive Vice President--Finance and
Treasurer of Carrols. He has served as a Director since 1981, Executive Vice
President since 1986 and Treasurer from 1981. From 1984 through 1986, Mr. Cross
was Senior Vice President of Carrols. He is also a Director of Holdings. Prior
to 1984, Mr. Cross was Vice President and Controller of Carrols for more than
five years. Mr. Cross has been employed by the Company for over 20 years.
Mr. Weidhorn has been a Director of Carrols since 1986. He is also a
Director and President of Holdings. Mr. Weidhorn has been engaged in the
commercial real estate business for approximately 15 years. Since April 1981,
he has been president of WNY Management Corp., a firm that manages real estate
properties. Mr. Weidhorn is co-owner with Mr. Vituli of Morgan Realty
Associates, a general partnership formed in June 1985 which owns interests in
a number of residential real estate properties. In addition, Mr. Weidhorn is a
general partner of Morgan Ventures which is the record owner of 1,538,706 shares
of voting common stock of Holdings. Mr. Weidhorn currently serves as a director
on the Board of Directors of Monmouth Capital Corp.
Mr. Adelberg was appointed a Director of Carrols in December 1992. He is
also a Director of Holdings. Since April 1989, Mr. Adelberg has been the
principal of MBA Research Group, an institutional investment research group. For
the 11 years preceding April 1989, he was employed by Merrill Lynch, Pierce,
Fenner & Smith, an investment banking firm, where he was vice president of New
York institutional sales.
Mr. Glasgall was appointed a Director of Carrols Corporation in December
1992. He is also a Director of Holdings. Mr. Glasgall has been a real estate
consultant since 1991. From 1974 through 1990 he was vice president--real estate
for Restaurant Associates Corp., a national restaurant, food service and retail
chain.
Mr. Zirkman became Vice President and General Counsel of Carrols in
January, 1993. He was appointed Secretary of the Company in February 1993. Prior
to joining Carrols, Mr. Zirkman was an associate with the New York City law firm
of Baer Marks & Upham for six and one-half years.
Mr. Liem became Vice President--Financial Operations in May, 1994. Prior
<PAGE>
to joining Carrols Mr. Liem was a Senior Audit Manager with the accounting firm
of Price Waterhouse. Mr. Liem was with Price Waterhouse for ten and one-half
years.
Mr. Drotar has been Vice President--Corporate Controller of Carrols since
April 1984. He was Assistant Controller from June 1982 through April 1984,
having served as Manager of Restaurant Accounting from December 1980 to June
1982. Mr. Drotar has been employed by the Company for over 20 years.
Mr. Smith is Vice President--Regional Director of Carrols. He has been
Regional Director of Operations since 1984, having served as District Supervisor
from 1975 to 1984. Mr. Smith has been employed by the Company for over 20
years.
Mr. Tunnessen is Vice President--Regional Director of Carrols. He has
been Regional Director of Operations since August 1988, having served as
District Supervisor from 1979 to August 1988. Mr. Tunnessen has been employed
by the Company for over 20 years.
Mr. Biviano is Vice President--Regional Director of Carrols. He has been
Regional Director of Operations since October 1989, having served as District
Supervisor from December 1983 to October 1989. Mr. Biviano has been employed by
the Company for over 20 years.
Mr. Morency became Vice President--Casual Dining Division of Carrols in
February, 1995. Prior to joining Carrols, Mr. Morency was Director of
Operations for Vicorp-Bakers Square. Mr. Morency was with Vicorp-Bakers Square
for ten years.
The Board of Directors currently has four committees: the Executive
Committee, of which Messrs. Vituli, Accordino and Cross are members; the Finance
Committee, of which Messrs. Vituli, Cross and Weidhorn are members; the
Compensation Committee, of which Messrs. Adelberg and Glasgall are members; and
the Audit Committee, of which Messrs. Weidhorn, Adelberg and Glasgall are
members.
All Directors hold office until the next annual meeting of stockholders
or until their successors have been elected and qualified. The executive
officers of the Company are chosen by the Board and serve at its discretion.
All non-employee Directors of the Company receive a fee of $6,000 per
annum and also receive $500 for each Board of Directors meeting attended and
$500 for each committee meeting attended. All Directors are reimbursed for all
reasonable expenses incurred by them in acting as Directors, including as
members of any committee of the Board of Directors.
As permitted under the Delaware General Corporation Law, the Company's
Restated Certificate of Incorporation provides that a Director of the Company
will not be personally liable to the Company or its stockholders for monetary
damages for breach of a fiduciary duty owed to the Company or its stockholders.
By its terms and in accordance with the laws of the State of Delaware, however,
this provision does not eliminate or limit the liability of a Director of the
Company (i) for any breach of the Director's duty of loyalty to the Company or
<PAGE>
its stockholders, (ii) for an act or omission committed in bad faith or
involving intentional misconduct or a knowing violation of law, (iii) for any
transaction from which the Director derived an improper personal benefit or (iv)
for an improper declaration of dividends or purchase of the Company's
securities.
The Company's Restated Certificate of Incorporation provides that the
Company shall indemnify its Directors and officers to the fullest extent
permitted by Delaware law.
All of the holders of the voting common stock of Holdings are subject to
the terms of a stockholders agreement dated December 22, 1986 (the "Stockholders
Agreement"). The Stockholders Agreement requires the Board of Directors of
Holdings to consist of six directors, four of whom are designated by Morgan
Ventures and two of whom are designated by a majority of the shares held by a
group of named individuals, including Messrs. Accordino, Cross, Drotar and
Smith.
ITEM 11. EXECUTIVE COMPENSATION
The following table sets forth certain information for the years ended
December 31, 1994, 1993 and 1992 for the Chief Executive Officer and the next
four most highly compensated executive officers of the Company who were serving
as executive officers at December 31, 1994 whose annual compensation exceeded
$100,000.
<PAGE>
<PAGE> SUMMARY COMPENSATION TABLE
LONG TERM
COMPENSATION AWARDS
ANNUAL COMPENSATION
NUMBER OF
SECURITIES
UNDERLYING
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS
Alan Vituli 1994 $300,430 $81,000
Chairman of the Board, 1993 292,118 100,000
Chief Executive Officer 1992 224,788 16,826
and Director
Daniel T. Accordino 1994 226,216 60,891
President, Chief Operating 1993 206,516 25,000
Officer, and Director 1992 193,479 14,426
Richard V. Cross 1994 156,378 42,106
Executive Vice 1993 155,936 8,000
President--Finance, 1992 153,290 11,424
Treasurer and Director
Joseph A. Zirkman 1994 95,890 24,303
Vice President, General 1993 85,711 15,000 5,000
Counsel and Secretary
David R. Smith 1994 77,310 34,596
Vice President - Regional 1993 74,694 5,000
Director 1992 71,798 16,554
DESCRIPTION OF PLANS
Employee Savings Plan. In 1979, Carrols adopted two identical savings
plans, qualified as profit-sharing plans, for its salaried employees, permitting
participating employees to make annual contributions. On December 31, 1994,
Carrols merged the two plans into a single plan, the Carrols Corporation
Corporate Employee Savings Plan (the "Savings Plan"). In accordance with the
Savings Plan, Carrols matches up to $1,060 of an employee's contributions by
contributing $0.50 for each dollar contributed by the employee. Employees are
fully vested in their own contributions; employees become vested in Carrols'
contributions beginning in the fourth year of service, and are fully vested
after seven years of service or upon retirement at age 65 with five years'
service, death, permanent or total disability or termination. Benefits may be
<PAGE>
paid out upon the occurrence of any of the foregoing events in a single cash
lump sum, in periodic installments over not more than 15 years or in the form
of an annuity. The employee's contributions may be withdrawn at any time,
subject to restrictions on future contributions. Carrols' matching contributions
may be withdrawn under certain conditions of financial necessity or hardship as
defined in the Savings Plan.
Bonus Plans. Carrols has cash bonus plans designed to promote and reward
excellent performance by providing employees with incentive compensation. Key
senior management executives of each operating division can be eligible for
bonuses equal to varying percentages of their respective annual salaries
determined by the performance of the Company and the division.
1993 Employee Stock Option and Award Plan. On December 14, 1993,
Holdings and its shareholders adopted the 1993 Employee Stock Option and Award
Plan (the "1993 Option Plan") pursuant to which Holdings may grant "Incentive
Stock Options" (as defined under Section 422 of the Internal Revenue Code),
non-statutory stock options or stock appreciation rights (the foregoing
collectively "Awards") to certain employees, including district supervisors,
division heads and officers of Holdings and its subsidiaries. The 1993 Option
Plan is designed to advance the interests of Holdings and the Company by
providing an additional incentive to attract and retain qualified and competent
persons through the encouragement of stock ownership or stock appreciation
rights in Holdings.
The 1993 Option Plan permits Holdings' Compensation Committee to grant,
from time to time, options to purchase an aggregate of up to 750,000 shares of
Holdings, including, without limitation, the amount of shares in respect to
which stock appreciation rights are granted. The vesting periods for awards and
the expiration dates for exercisability of Awards granted under the 1993 Option
Plan shall be determined by the Compensation Committee of the Board of
Directors; however, all shares granted under options must be purchased within
10 years from the date of the grant. The Compensation Committee is authorized
to grant options under the 1993 Option Plan to all eligible employees of
Holdings and the Company, including executive officers and directors (other than
outside Directors). The 1993 Option Plan provides that Incentive Stock Options
shall not be granted to any person owning directly or indirectly (through
attribution under Section 424(d) of the Internal Revenue Code) at the date of
the grant, stock possessing more than 10% of the total combined voting power of
all classes of stock of Holdings as defined in Internal Revenue Code Section 422
(or of any subsidiary of Holdings [each as defined in Section 424 of the
Internal Revenue Code] at the date of grant) unless the option price of such
option is at least 110% of the fair market value of the shares subject to such
option on the date the option is granted, and such option by its terms is not
exercisable after the expiration of five years from the date such option is
granted. As of December 31, 1994, options to purchase 242,000 shares of common
stock at $4.00 per share are outstanding under the 1993 Option Plan. The option
price per share is determined by the Compensation Committee of the Board of
Directors; however, in no event shall the option price per share of any option
intended to qualify as an Incentive Stock Option be less than the fair market
value of the common stock on the date such option is granted.
The Company in its sole discretion may lend money to an optionee,
<PAGE>
guarantee a loan from a third party to an optionee, or otherwise assist an
optionee to obtain the cash necessary to exercise all or a portion of an option
granted hereunder or to pay any tax liability of the optionee attributable to
such exercise. If the exercise price is paid in whole or part with the
optionee's promissory note, such note shall (i) provide for full recourse to the
maker, (ii) be collateralized by the pledge of the Shares that the optionee
purchases upon exercise of such option, (iii) bear interest at the prime rate
of the Company's principal lender or in its absence, the prime rate charged by
Citibank, N.A., and (iv) contain such other terms as the Board in its sole
discretion shall reasonably require. If stock appreciation rights are granted,
upon vesting of a stock appreciation right, the employee may elect in writing
during a 30 day period designated by the Committee each year to receive a
distribution of the value of a portion or all of his vested interest.
Distribution to an employee of stock appreciation rights amounts shall be
made in cash in a lump sum or by interest bearing notes payable over no more
than five years commencing within a reasonable time after the Committee's
receipt of the optionee's election to receive such payments. Awards may not be
transferred by the optionee otherwise than by will or the laws of descent and
distribution, and each option or stock appreciation right shall be exercisable,
during the optionee's lifetime only by the optionee.
1994 Directors' Stock Option Plan. On April 1, 1994 Carrols Holdings
Corporation adopted the 1994 Directors' Stock Option Plan (the "Directors'
Option Plan") pursuant to which Carrols Holdings Corporation may grant to each
non-employee director stock options to purchase common stock of Holdings. The
Directors' Option Plan is designed to advance the interests of Holdings by
providing an incentive to attract and retain qualified non-employee directors
of Holdings and to foster the commonality of their interest with those of the
general shareholders.
The Directors' Option Plan permits Holdings to grant options to the non-
employee directors to purchase an aggregate of up to 100,000 shares of Holdings
common stock. Under the Directors' Option Plan, each non-employee director
received an initial grant of 5,000 options on April 1, 1994, and will receive
an additional grant of 1,000 shares on the anniversary date of each year of
service as a director. Each option granted under the Directors' Option Plan
vests and is exercisable equally over a three-year period from the date of the
grant. The expiration date of all options is ten years from the date of grant
of such option. The exercise price of the options granted under the Directors'
Option Plan is the "fair market value" (as defined in the Directors' Option
Plan) of the share underlying such option at the date such option is granted.
As of March 15, 1994, options to purchase 15,000 shares of common stock at $4.00
per share have been granted under the Directors' Option Plan.
Employment Agreements. In January 1995, the Company entered into an
employment agreement with Alan Vituli to serve as the Company's Chairman and
Chief Executive Officer. The employment agreement is for an initial term of
three years, commencing on January 1, 1995 and expiring on December 31, 1997 and
automatically renews for successive one-year terms unless terminated by the
Company or Mr. Vituli upon written notice to be provided not less than 90 days
before a scheduled expiration date. Pursuant to the employment agreement, Mr.
Vituli will receive a base salary of $350,000 for the first year of the term,
which amount shall be subject to a consumer price index increase for the second
<PAGE>
and third years of the term. Beginning in 1998, the base salary for each year
thereafter will be increased in accordance with the recommendation of the
Compensation Committee of the Board of Directors. Pursuant to the employment
agreement, Mr. Vituli will participate in the Executive Bonus Plan of the
Company and the Employee Stock Option and Award Plan. The employment agreement
also provides that the Company will provide a split-dollar life insurance policy
on the life of Mr. Vituli providing a death benefit of $1,500,000 payable to an
irrevocable trust designated by Mr. Vituli.
In January 1995, the Company entered into an employment agreement with
Daniel T. Accordino to serve as the Company's President and Chief Operating
Officer. The employment agreement is for an initial term of three years,
commencing on January 1, 1995 and expiring on December 31, 1997 and
automatically renews for successive one-year terms unless terminated by the
Company or Mr. Accordino upon written notice to be provided not less than 90
days before a scheduled expiration date. Pursuant to the employment agreement,
Mr. Accordino will receive a base salary of $250,000 for the first year of the
term, which amount shall be subject to a consumer price index increase for the
second and third years of the term. Beginning in 1998, the base salary for each
year thereafter will be increased in accordance with the recommendation of the
Compensation Committee of the Board of Directors. Pursuant to the employment
agreement, Mr. Accordino will participate in the Executive Bonus Plan of the
Company and the Employee Stock Option and Award Plan. The employment agreement
also provides that the Company will provide a split-dollar life insurance policy
on the life of Mr. Accordino providing a death benefit of $1,000,000 payable to
an irrevocable trust designated by Mr. Accordino.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
PRINCIPAL STOCKHOLDERS
The following tables set forth the number and percentage of shares of
voting common stock of the Company and of Holdings beneficially owned, as of
March 15, 1994, by (i) each Director of the Company who owns shares of such
voting common stock, (ii) each executive officer of the Company included in the
Summary Compensation Table above, (iii) all persons known by the Company to be
the beneficial owners of more than 5% of the shares of such voting common stock
and (iv) all executive officers and Directors of the Company as a group.
<PAGE>
<PAGE> CARROLS' COMMON STOCK
NUMBER OF SHARES PERCENT OF
NAME OF BENEFICIAL OWNER BENEFICIALLY OWNED SHARES
Carrols Holdings Corporation 10 100%
968 James Street
Syracuse, New York 13203
HOLDINGS' COMMON STOCK
NUMBER OF SHARES
BENEFICIALLY PERCENT OF
NAME OF BENEFICIAL OWNER OWNED(a) SHARES(a)
Alan Vituli(b)(k) 1,558,706 68.2%
Peter J. Weidhorn(c)(k) 640,881 28.3
Richard V. Cross(d)(k) 226,222 10.0
Daniel T. Accordino(e)(k) 239,680 10.5
Joseph A. Zirkman(f)(k) 11,000 .5
David R. Smith (f)(k) 18,059 .8
Citicorp Venture Capital, Ltd.(g) 959,388 30.6
Heller Financial, Inc.(h) 488,111 17.7
World Equity Partners, L.P.(i) 234,668 9.4
M. Bruce Adelberg(j) 1,667 .1
Franklin Glasgall(j) 1,667 .1
Directors and executive officers
of Carrols as a group
(12 persons)(k)(l) 2,111,267 91.7
(a) As used in this table, "beneficial ownership" means the sole or
shared power to vote, or to direct the voting of, a security, or the sole or
shared investment power with respect to a security (i.e., the power to
dispose of, or to direct the disposition of, a security). For purposes of
this table, a person is deemed as of any date to have "beneficial ownership"
of any security that such person has the right to acquire within 60 days
after such date. As calculated in this table, the percent of shares is the
percent of each beneficial owner's shares to the total shares of Holdings'
common stock outstanding plus the shares to which only that person has a
right to acquire within 60 days.
(b) Includes 1,538,706 shares of Holdings voting common stock held of
record by Morgan Ventures, over which shares Mr. Vituli, as managing general
partner of Morgan Ventures, exercises voting and investment power. Of the
shares held of record by Morgan Ventures, Mr. Vituli effectively owns 639,214
<PAGE>
shares through his ownership interest in Morgan Ventures. Mr. Vituli
disclaims beneficial ownership of all but such 639,214 shares held of record
by Morgan Ventures. The address of Mr. Vituli is c/o Carrols Corporation,
968 James Street, Syracuse, New York 13203. Also includes 20,000 shares of
Holdings' voting common stock subject to currently exercisable stock options.
(c) Includes 639,214 shares of Holdings voting common stock held of
record by Morgan Ventures, which shares Mr. Weidhorn effectively owns through
his ownership interest in Morgan Ventures. Also includes 1,667 shares of
Holdings' voting common stock subject to currently exercisable options.
The address of Mr. Weidhorn is c/o Morgan Realty Associates, Suite 200, 198
Route 9, Manalapan, New Jersey 07726.
(d) Includes 1,600 shares of Holdings' voting common stock subject to
currently exercisable stock options.
(e) Includes 1,058 shares of Holdings voting common stock subject to
currently exercisable warrants and 5,000 shares of Holdings' voting common
stock subject to currently exercisable stock options.. The address of Mr.
Accordino is c/o Carrols Corporation, 968 James Street, Syracuse, New York
13203.
(f) Includes 1,000 shares of Holdings' voting common stock subject to
currently exercisable stock options.
(g) Includes 740 shares of Holdings Class B Convertible Preferred
Stock issued to Citicorp Venture Capital, Ltd., in connection with the
financing of the Acquisition which are currently convertible into 870,588
shares of Holdings' non-voting common stock, which are, in turn, convertible
at any time into an equal number of shares of Holdings voting common stock.
The address for Citicorp Venture Capital, Ltd. is 399 Park Avenue, New York,
New York 10043.
(h) Includes currently exercisable warrants, issued to Heller
Financial, Inc., the lender under the Senior Secured Credit Facility, for the
purchase of 441,177 shares of Holdings voting common stock at $0.97 per share
and 46,934 shares of Holdings voting common stock at $1.00 per share. The
address for Heller Financial, Inc. is 500 West Monroe Street, Chicago,
Illinois 60661.
(i) Includes currently exercisable warrants, issued to World Equity
Partners, L.P., for the purchase of 234,668 shares of Holdings voting common
stock at $1.00 per share. The address for World Equity Partners, L.P. is 399
Park Avenue, New York, New York 10043.
(j) Includes 1,667 shares of Holdings' voting common stock subject to
currently exercisable options.
(k) Morgan Ventures, Messrs. Cross and Accordino and certain of the
Company's other shareholders have entered into the Stockholders Agreement
which, among other things, prohibits the transfer of the subject shares
(except for certain permitted transfers) and grants Holdings and certain
holders of Holdings voting and non-voting common stock certain rights to
<PAGE>
acquire the shares of a stockholder who wishes to sell shares to a third
party.
(l) Includes 36,200 shares of Holdings' voting common stock subject
to currently exercisable options.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTION
None.
<PAGE>
<PAGE>
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND
REPORTS ON FORM 8-K
(a) Financial Statements
CARROLS CORPORATION AND SUBSIDIARIES:
Page
Opinion of Independent Certified F-1
Public Accountants
Financial Statements:
Consolidated Balance Sheets F-2 to
F-3
Consolidated Statements of Operations F-4
Consolidated Statements of Cash F-5 to
Flows F-6
Notes to Consolidated Financial F-7 to
Statements F-18
(b) Financial Statement Schedules
Schedule Description Page
CARROLS CORPORATION AND SUBSIDIARIES:
II Valuation and Qualifying Accounts F-19
Schedules other than those listed are omitted for the
reason that they are not required, not applicable, or the required
information is shown in the financial statements or notes thereto.
Separate financial statements of the Company are not
filed for the reasons that (1) consolidated statements of the Company and its
consolidated subsidiaries are filed and (2) the Company is primarily an
operating Company and all subsidiaries included in the consolidated financial
statements filed are wholly-owned, and indebtedness of all subsidiaries
included in the consolidated financial statements to any person other than
the Company does not exceed 5% of the total assets as shown by the
Consolidated Balance Sheet at December 31, 1994.
(c) Exhibits Required by Item 601 of Regulation
S-K
The following exhibits are filed with this form 10-K:
<PAGE>
2.1 Purchase and Sale Agreement dated
February 10, 1994 between Carrols
Corporation, as Purchaser, and KIN
Restaurants, Inc., as Seller
2.2 Purchase and Sale Agreement dated April
18, 1994 among Carrols Corporation, as
Purchaser and Riva Development
Corporation and John Riva, as Seller
2.3 Purchase and Sale Agreement dated May
31, 1994 among Carrols Corporation, as
Purchaser and Michael P. Jones and
Donald M. Cepiel, Sr., and the
corporations listed therein
* * * * * * *
3.1 Form of Restated Certificate of
Incorporation is incorporated by
reference from the Annual Report
on Form 10-K filed for the year
ended December 31, 1987
3.2 Form of Restated By-Laws is
incorporated by reference from the
Annual Report on Form 10-K filed
for the year ended December 31,
1987
4.1 Indenture between Carrols
Corporation and Marine Midland Bank,
Trustee, is incorporated by reference
to Exhibit 4 to Registration
Statement on Form S-1, Number
3365100, filed August 10, 1993
The following are incorporated by reference from the
Annual Report on Form 10-K filed for the year ended
December 31, 1987
10.1 First Amended and Restated Loan
Security and Preferred Stock
Purchase Agreement by and among
Carrols Merger Corporation and
Carrols Holdings Corporation, as
"Borrower" and Heller Financial,
Inc., as "Lender" dated 12/22/86
10.2 Form of Stockholders Agreement by
and among Carrols Holdings
Corporation, Morgan Ventures III
Limited Partnership and certain
<PAGE>
Shareholders
The following are incorporated by reference from the
Annual Report on Form 10-K filed for the year ended
December 31, 1992
10.3 Second Amended and Restated Loan
and Security Agreement by and among
Carrols Corporation and Carrols
Holdings Corporation, as "Borrower" and
Heller Financial, Inc., as "Lender"
dated as of September 15, 1992
10.4 Senior Subordinated Credit Agreement
dated as of September 15, 1992
between Carrols Corporation,
Carrols Holdings Corporation and
World Subordinated Debt
Partners, L.P.
The following are incorporated by reference from
Amendment No. 2 to Form S-1 Registration Statement under
The Securities Act of 1933 as filed with the Securities
and Exchange Commission on August 4, 1993:
10.5 Third Amended and Restated Loan
and Security Agreement by and
among Carrols Corporation and
Carrols Holdings Corporation,
as "Borrower" and Heller
Financial, Inc., as "Lender"
dated as of August 9, 1993
The following are incorporated by reference from the
Annual Report on Form 10-K filed for the year ended
December 31, 1993
10.6 First Amendment to Third Amended and
Restated Loan and Security Agreement
by and among Carrols Corporation and
Carrols Holdings Corporation, as
"Borrower" and Heller Financial,
Inc., as "Lender" dated October 27,
1993
<PAGE>
<PAGE>
10.7 Second Amendment to Third Amended and
Restated Loan and Security Agreement
by and among Carrols Corporation and
Carrols Holdings Corporation, as
"Borrower" and Heller Financial,
Inc., as "Lender" dated March 11, 1994
10.8 Carrols Holdings Corporation
1993 Employee Stock Option and
Award Plan
The following exhibits are filed with this Form 10-K:
10.9 Third Amendment to Third Amended and
Restated Loan and Security Agreement
among Carrols Holdings Corporation,
Carrols Corporation and Heller
Financial, Inc., dated May 2, 1994
10.10 Fourth Amendment to Third Amended and
Restated Loan and Security Agreement
among Carrols Holdings Corporation,
Carrols Corporation and Heller
Financial, Inc., dated December 20,
1994
10.11 Supply Agreement between ProSource
Services Corporation and Carrols
Corporation dated April 1, 1994
10.12 Taco Cabana Restaurants Development
Agreement dated June 30, 1994 between
T.C. Management, Inc., and Carrols
Corporation
10.13 Letter Agreement dated September 8,
1994 amending the Taco Cabana
Restaurants Development Agreement dated
June 30, 1994
10.14 Pollo Tropical Area Development
Agreement dated January 1, 1995 between
Pollo Franchise, Inc., and Carrols
Corporation
10.15 Option Agreement for Toronto dated
January 1, 1995 between Pollo
Franchise, Inc., and Carrols
Corporation
<PAGE>
<PAGE>
10.16 Option Agreement for Michigan dated
January 1, 1995 between Pollo
Franchise, Inc., and Carrols
Corporation
10.17 Employment Agreement dated January 1,
1995 between Carrols Corporation and
Daniel T. Accordino
10.18 Employment Agreement dated January 1,
1995 between Carrols Corporation and
Alan Vituli
10.19 1994 Regional Director's Bonus Plan
10.20 1994 Director's Stock Option Plan
10.21 Carrols Corporation Corporate
Employee's Savings Plan dated December
31, 1994
22.1 Subsidiaries of the Registrant, all
wholly-owned are:
Carrols J.G. Corp.
Carrols Realty Holdings Corp.
Carrols Realty I Corp.
Carrols Realty II Corp.
Carrols Realty III Corp.
CDC Theatre Properties, Inc.
H.N.S. Equipment & Leasing Corp.
Quanta Advertising Corp.
Confectionery Square Corp.
Jo-Ann Enterprises, Inc.
27.1 Financial Data Schedule
(d) Reports on Form 8-K
The Company did not file any reports on Form 8-K during
the last quarter of the year covered by this report.
<PAGE>
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned thereunto duly authorized in the City of
Syracuse, State of New York on the 31st day of March, 1995.
CARROLS CORPORATION
BY: /s/ Alan Vituli
Alan Vituli, Chairman
and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
Signature Title Date
/s/Alan Vituli Director, Chairman and March 31, 1995
(Alan Vituli) Chief Executive Officer
/s/Daniel T. Accordino Director, President March 31, 1995
(Daniel T. Accordino) and Chief Operating
Officer
/s/Richard V. Cross Director, Executive March 31, 1995
(Richard V. Cross) Vice President -
Finance, and Treasurer
(Principal Financial &
Accounting Officer)
/s/Peter J. Weidhorn Director March 31, 1995
(Peter J. Weidhorn)
/s/Franklin Glasgall Director March 31, 1995
(Franklin Glasgall)
/s/M. Bruce Adelberg Director March 31, 1995
(M. Bruce Adelberg)
<PAGE>
<PAGE> REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
___________
To the Board of Directors of
Carrols Corporation
We have audited the consolidated financial statements and the financial state-
ment schedules of Carrols Corporation (a wholly-owned subsidiary of Carrols
Holdings Corporation) and Subsidiaries listed in Item 14(a) of this Form 10-K.
These financial statements and financial statement schedules are the responsi-
bility of the Company's management. Our responsibility is to express an opinion
on these financial statements and financial statement schedules based on our
audits.
We conducted our audits in accordance with generally accepted auditing stan-
dards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by man-
agement, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Carrols Corpora-
tion and Subsidiaries as of December 31, 1994 and 1993, and the consolidated
results of their operations and their cash flows for each of the three years in
the period ended December 31, 1994 in conformity with generally accepted ac-
counting principles. In addition, in our opinion, the financial statement
schedules referred to above, when considered in relation to the basic financial
statements taken as a whole, present fairly, in all material respects, the in-
formation required to be included therein.
As further discussed in the notes to the consolidated financial statements, the
Company changed its method of accounting for income taxes and postretirement
benefits in 1993 and 1992, respectively.
COOPERS & LYBRAND L.L.P.
Syracuse, New York
February 25, 1995
F-1
<PAGE><TABLE> CARROLS CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1994 AND 1993
___________
<CAPTION>
ASSETS 1994 1993
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 1,710,000 $ 1,172,000
Trade and other receivables, net of
reserves of $424,000 and $563,000
for 1994 and 1993, respectively 532,000 632,000
Inventories 2,254,000 2,051,000
Prepaid real estate taxes 384,000 273,000
Prepaid expenses and other current assets 459,000 487,000
----------- -----------
Total current assets 5,339,000 4,615,000
----------- -----------
Property and equipment, at cost:
Land 6,543,000 6,431,000
Buildings and improvements 14,260,000 14,341,000
Leasehold improvements 34,854,000 34,125,000
Equipment 40,141,000 35,012,000
Capital leases 15,558,000 15,689,000
----------- -----------
111,356,000 105,598,000
Less accumulated depreciation
and amortization (53,969,000) (47,254,000)
----------- -----------
Net property and equipment 57,387,000 58,344,000
Franchise rights, at cost (less accumulated
amortization of $17,548,000 and $15,146,000
for 1994 and 1993, respectively) 46,042,000 39,566,000
Beneficial leases, at cost (less accumulated
amortization of $7,433,000 and $6,921,000
for 1994 and 1993 respectively) 8,405,000 9,233,000
Excess of cost over fair value of assets acquired
(less accumulated amortization of $462,000
and $404,000 for 1994 and 1993, respectively) 1,849,000 1,907,000
Other assets 5,666,000 6,070,000
---------- ----------
$124,688,000 $119,735,000
<FN> =========== ===========
The accompanying notes are an integral part of the financial statements.
</TABLE> F-2
<PAGE><TABLE> CARROLS CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1994 AND 1993
___________
<CAPTION>
LIABILITIES AND STOCKHOLDER'S DEFICIT 1994 1993
<S> <C> <C>
Current liabilities:
Current portion of long-term debt $ 258,000 $ 283,000
Current portion of capital lease obligations 615,000 584,000
Accounts payable 6,915,000 5,845,000
Accrued liabilities:
Taxes 1,525,000 1,073,000
Payroll and employee benefits 3,748,000 2,340,000
Interest 4,899,000 4,864,000
Other 3,835,000 3,432,000
---------- ----------
Total current liabilities 21,795,000 18,421,000
Long-term debt, net of current portion 120,680,000 114,197,000
Capital lease obligations,
net of current portion 3,966,000 4,603,000
Deferred gain - sale/leaseback of real estate 1,888,000 1,998,000
Accrued postretirement benefits 1,354,000 1,288,000
Other liabilities 2,213,000 1,632,000
----------- -----------
Total liabilities 151,896,000 142,139,000
----------- -----------
Commitments and contingencies
Stockholder's deficit:
Common stock, par value $1; authorized 1,000
shares, issued and outstanding - 10 shares 10 10
Additional paid-in capital 1,474,990 4,447,990
Accumulated deficit (28,683,000) (26,852,000)
----------- ----------
Total stockholder's deficit (27,208,000) (22,404,000)
----------- ----------
$124,688,000 $119,735,000
=========== ===========
<FN>
The accompanying notes are an integral part of the financial statements.
</TABLE> F-3 <PAGE>
<PAGE><TABLE> CARROLS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
___________
<CAPTION>
1994 1993 1992
(52 Weeks) (52 Weeks) (53 Weeks)
<S> <C> <C> <C>
Revenues:
Sales $203,927,000 $171,137,000 $156,020,000
Other income 327,000 497,000 393,000
----------- ----------- -----------
204,254,000 171,634,000 156,413,000
----------- ----------- -----------
Costs and expenses:
Cost of sales 57,847,000 48,502,000 43,133,000
Restaurant wages and related expenses 59,934,000 51,739,000 47,122,000
Other restaurant operating expenses 42,390,000 35,192,000 30,725,000
Depreciation and amortization 11,259,000 12,143,000 11,021,000
Administrative expenses 9,449,000 8,031,000 6,961,000
Advertising expense 8,785,000 7,930,000 7,671,000
Interest expense 14,456,000 12,505,000 11,042,000
Loss on closing restaurants and other 1,800,000
---------- ---------- ----------
205,920,000 176,042,000 157,675,000
----------- ----------- -----------
Loss before taxes, extraordinary item
and cumulative effect of change
in accounting principle (1,666,000) (4,408,000) (1,262,000)
Provision for state taxes, current (165,000)
--------- --------- ---------
Loss before extraordinary item and
cumulative effect of change in
accounting principle (1,831,000) (4,408,000) (1,262,000)
Extraordinary loss on
extinguishment of debt (4,883,000)
Cumulative effect of change in
accounting for postretirement benefits (1,037,000)
--------- ---------- ----------
NET LOSS (1,831,000) (9,291,000) (2,299,000)
Accumulated deficit, beginning of year (26,852,000) (17,561,000) (15,262,000)
---------- ---------- ----------
ACCUMULATED DEFICIT, END OF YEAR $(28,683,000) $(26,852,000) $(17,561,000)
========== ========== ==========
<FN>
The accompanying notes are an integral part of the financial statements.
</TABLE>
F-4<PAGE>
<PAGE><TABLE> CARROLS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
___________
Increase (Decrease) in Cash and Cash Equivalents
1994 1993 1992
(52 Weeks) (52 Weeks) (53 Weeks)
<C> <C> <C>
Cash flows from operating activities:
Net loss $(1,831,000) $(9,291,000) $(2,299,000)
Adjustments to reconcile net loss
to net cash provided by operating
activities:
Depreciation and amortization 11,259,000 12,143,000 11,021,000
Non-cash charges included in
extraordinary loss 2,245,000
Non-cash charges included
in loss on closing restaurants
and other 1,800,000
Change in operating assets and liabilities:
Trade and other receivables 100,000 (278,000) 395,000
Inventories (203,000) (147,000) (355,000)
Prepaid expenses and
other current assets (117,000) (76,000) (132,000)
Other assets (494,000) 424,000 (74,000)
Accounts payable 1,070,000 471,000 (514,000)
Accrued interest 35,000 4,006,000 272,000
Accrued liabilities and other 2,781,000 211,000 2,118,000
---------- ---------- ----------
Cash provided by operating activities 14,400,000 9,708,000 10,432,000
---------- ---------- ----------
Cash flows from investing activities:
Capital expenditures:
Property and equipment (4,509,000) (2,303,000) (2,848,000)
Construction of new restaurants (1,357,000) (1,411,000) (243,000)
Acquisition of restaurants (11,615,000) (10,464,000) (7,863,000)
Franchise fees and renewals (158,000) (149,000) (80,000)
Notes and mortgages issued (613,000) (110,000)
Payments received on notes, mortgages
and capital subleases receivable 112,000 82,000 233,000
Disposal of property, equipment
and franchise rights 569,000 842,000 113,000
------------ ---------- ---------
Net cash used for
investing activities (16,958,000) (14,016,000) (10,798,000)
------------ ---------- ----------
<FN>
Continued
F-5
/TABLE
<PAGE>
<PAGE><TABLE> CARROLS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS, (Continued)
YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
___________
Increase (Decrease) in Cash and Cash Equivalents
<CAPTION>
1994 1993 1992
(52 Weeks) (52 Weeks) (53 Weeks)
<S> <C> <C> <C>
Cash flows from financing activities:
Proceeds from long-term debt $ 6,800,000 $119,629,000 $15,000,000
Principal payments on long-term debt (267,000) (4,187,000) (14,486,000)
Retirement of long-term debt (75,000) (104,090,000)
Proceeds from sale -
leaseback transaction 672,000
Dividends paid (3,473,000) (2,241,000) (200,000)
Principal payments on capital leases (561,000) (564,000) (631,000)
Payment of other liability (4,256,000)
---------- ---------- ---------
Net cash provided by (used for)
financing activities 3,096,000 4,291,000 (317,000)
---------- ---------- ---------
Increase (decrease) in cash
and cash equivalents 538,000 (17,000) (683,000)
Cash and cash equivalents,
beginning of year 1,172,000 1,189,000 1,872,000
----------- ---------- ----------
CASH AND CASH EQUIVALENTS,
END OF YEAR $ 1,710,000 $ 1,172,000 $ 1,189,000
========== =========== ==========
Supplemental disclosures:
Interest paid on debt $14,421,000 $ 8,499,000 $10,770,000
Taxes paid $ 126,000
<FN>
The accompanying notes are an integral part of the financial statements.
</TABLE> F-6
<PAGE>
<PAGE>
CARROLS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
-----------
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Accounting Policies
The following is a summary of certain significant accounting policies
followed in the preparation of the consolidated financial statements.
Basis of Consolidation
The consolidated financial statements include the accounts of Carrols
Corporation and its subsidiaries (the "Company"). The Company is a
wholly-owned subsidiary of Carrols Holdings Corporation ("Holdings"). All
significant intercompany transactions have been eliminated in consolidation.
The Company operates, as franchisee, 219 fast food restaurants under the
trade name "Burger King" in nine Northeastern and Midwestern states and one
Southeastern state. As reported by Burger King Corporation ("BKC"), the
Burger King system is the second largest "hamburger fast food" restaurant
system in the United States in terms of sales and number of restaurants. The
Company is the largest independent Burger King franchisee in the United
States.
Inventories
Inventories are stated at the lower of cost (first-in, first-out) or market.
Acquisitions
The Company has purchased existing restaurants, principally for cash, during
1994 and 1993 consisting of the following:
<TABLE><CAPTION>
1994 1993
<S> <C> <C>
Number of units 22 18
Property and equipment:
Leasehold improvements $ 128,000 $ 967,000
Equipment 2,626,000 2,140,000
--------- ---------
2,754,000 3,107,000
Franchise rights 8,786,000 7,339,000
Other assets 75,000 18,000
--------- ---------
$11,615,000 $10,464,000
========== ==========
These acquisitions have been accounted for by the purchase method; accordingly, their results
are included in the consolidated financial statements from the respective acquisition dates.
<FN>
</TABLE>
F-7
<PAGE>
<PAGE> CARROLS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
___________
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Acquisitions (Continued)
Proforma financial information with respect to the 1993 acquisition of 18
restaurants is as follows and assumes the acquisition took place at the
beginning of the fiscal year:
1993 1992
Revenues $181,341,000 $175,350,000
Income (loss) before extraordinary
item and cumulative effect of
accounting change ($ 3,703,000) 434,000
Net loss ($ 8,586,000) (603,000)
Proforma financial information is not provided for the 1994 acquisitions since
their effect on the 1994 consolidated financial statements is not significant.
Depreciation and Amortization
Depreciation and amortization is provided on the straight-line method for
financial reporting purposes. The useful lives for computing depreciation and
amortization are as follows:
Buildings and improvements 5 to 20 years
Leasehold improvements Remaining life of lease
including renewal op-
tions or life of asset,
whichever is shorter
Equipment 3 to 10 years
Capital leases Remaining life of lease
At the time of retirement or other disposition, the cost and accumulated
depreciation is removed from the accounts and any gain or loss is reflected in
income. Depreciation expense for the years ended December 31, 1994, 1993 and
1992 was $7,404,000, $7,840,000 and $7,240,000, respectively.
Franchise Rights and Beneficial Leases
Fees for initial franchises and renewals paid to Burger King Corporation are
amortized using the straight-line method over the term of the agreement,
generally twenty years.
Acquisition costs allocated to franchise rights and beneficial leases are
amortized using the straight-line method, principally over the remaining lives
of the leases including renewal options, but not in excess of 40 years.
The recoverability of the carrying values of franchise rights and beneficial
leases is periodically evaluated based on current and forecasted cash flow,
future market opportunities, strategic importance and estimated disposal
values.
F-8
<PAGE> CARROLS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
___________
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Excess of Cost Over Fair Value
The excess of cost over fair value of assets acquired is amortized on a
straight-line basis over 40 years.
Deferred Financing Costs
Financing costs incurred in obtaining long-term debt are capitalized and are
amortized over the life of the related debt on an effective interest basis.
Cash and Equivalents
The Company considers all highly liquid investments with a maturity of three
months or less when purchased to be cash equivalents.
Income Taxes
The Company and its subsidiaries are included in the consolidated federal
income tax return of Holdings.
Effective January 1, 1993, the Company adopted FASB Statement No. 109,
"Accounting for Income Taxes" which requires, among other things, an asset
and liability approach to recognizing the tax effects of temporary
differences between tax and financial reporting. This change had no effect
on the Company's 1993 financial statements.
Advertising Costs
All advertising costs are expensed as incurred.
Employee Savings Plan
The Company offers a savings plan for salaried employees. Under the plan,
participating employees may contribute up to 10% of their salary annually.
The Company's contributions, which begin to vest after three years and fully
vest after seven years of service, are equal to 50% of the employee's
contributions to a maximum Company contribution of $530 annually. The
employees have various investment options available under a trust
established by the plan. The plan cost was $125,000, $111,000, and
$101,000 for the years ended December 31, 1994, 1993 and 1992, respectively.
F-9
<PAGE> CARROLS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
___________
Fiscal Year
The Company uses a 52-53 week fiscal year ending on the Sunday closest to
December 31. The financial statements included herein are as of January 1,
1995 (52 weeks), January 2, 1994 (52 weeks) and January 3, 1993 (53 weeks).
Reclassification
Certain amounts for prior years have been reclassified to conform to the
current year presentation.
2. INVENTORIES
Inventories at December 31 consisted of:
1994 1993
Raw materials (food and paper products) $1,415,000 $1,205,000
Supplies 839,000 846,000
--------- ---------
$2,254,000 $2,051,000
========= =========
3. LEASES
The Company utilizes land and buildings in its operations under various
lease agreements. Initially these leases are generally for terms of twenty
years and in most cases contain renewal options for two to four additional
five-year periods. The rent payable under such leases is generally a
percentage of sales with a provision for minimum rent. In addition, most
leases require payment of property taxes, insurance and utilities.
During 1991, the Company sold the real estate of twelve of the Company's
restaurants under sale/leaseback arrangements for total proceeds of
approximately $10,150,000. Deferred gains of approximately $2,050,000 were
recorded in 1991 as a result of these transactions and are being amortized
over the lives of the leases. The leases are operating leases, have a
20 year term with four five-year renewal options and provide for additional
rent based on a percentage of sales in excess of predetermined levels. The
leases contain purchase options at fair market value, as defined in each
lease agreement. The deferred gain of $1,888,000 at December 31, 1994 is
primarily the result of the 1991 transactions.
Accumulated amortization pertaining to capital leases for the years ended
December 31, 1994 and 1993 was $8,285,000 and $7,422,000, respectively.
F-10
<PAGE> CARROLS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
___________
<TABLE>
3. LEASES - continued
Minimum rent commitments under noncancelable leases as of December 31, 1994,
are as follows: <CAPTION>
Capital Operating
Years ending:
<S> <C> <C>
1995 $1,124,000 $10,474,000
1996 1,088,000 10,343,000
1997 980,000 10,085,000
1998 805,000 9,533,000
1999 588,000 8,911,000
2000 and thereafter 2,961,000 81,821,000
--------- ----------
Total minimum lease payments 7,546,000 $131,167,000
===========
Less amount representing interest (7.7% to 16.6%) 2,965,000
---------
Total obligations under capital leases 4,581,000
Less current portion 615,000
---------
Long-term obligations under capital leases $3,966,000
=========
<FN></TABLE>
Total rent expense on operating leases, including percentage rent on both
operating and capital leases, for the years ended December 31, was as
follows: <TABLE><CAPTION>
1994 1993 1992
<S> <C> <C> <C>
Minimum rent on real property $10,147,000 $8,627,000 $7,223,000
Additional rent based on a
percentage of sales 1,917,000 1,290,000 1,148,000
Equipment rent 109,000 69,000 92,000
---------- ---------- ---------
$12,173,000 $9,986,000 $8,463,000
========== ========== =========
<FN></TABLE>
F-11
<PAGE><TABLE> CARROLS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
___________
<CAPTION>
4. LONG-TERM DEBT
Long-term debt at December 31 consisted of:
1994 1993
<S> <C> <C>
Collateralized:
Revolving line of credit $8,622,000 $2,500,000
Acquisition loan 650,000
Industrial Development Revenue bonds 846,000 1,096,000
Other notes payable with
interest rates to 10% 820,000 884,000
Unsecured:
Senior notes 110,000,000 110,000,000
----------- -----------
120,938,000 114,480,000
Less current portion 258,000 283,000
----------- -----------
$120,680,000 $114,197,000
=========== ===========
<FN></TABLE>
The Company issued $110 million of unsecured senior notes in August 1993
to effect a refinancing of existing long-term obligations. The
extraordinary loss of $4,883,000 on extinguishment of debt in 1993
includes $2,245,000 of previously deferred financing costs and $2,638,000
of premium and expenses paid on the retirement of subordinated debentures
and debt.
The senior notes bear interest at a rate of 11.5%, payable semi-annually on
each February 15 and August 15, and are due August 15, 2003. The notes are
not redeemable prior to August 15, 1998, except that, through August 1996,
the Company may redeem up to $33 million in aggregate principal amount at
111.5% plus accrued interest from the proceeds of a public offering of
common stock by the Company or by Carrols Holdings Corporation. The notes
are redeemable at the option of the Company in whole or in part on or
after August 15, 1998 at specified redemption prices. Provisions of the
revolving line of credit facility place limitations on the redemption or
repurchase of the notes so long as the facility remains in effect.
On December 20, 1994, the revolving line of credit agreement was amended to
provide for an additional acquisition loan of $5 million. The $5 million
acquisition loan will be collateralized by the twenty-two restaurants
acquired during 1994 and will be fully advanced during 1995. The $5 million
is required to be repaid by quarterly payments of $250,000 beginning in
November 1997 increasing to quarterly payments of $500,000 beginning in
November 1998. As of December 31, 1994, the outstanding balance under the
acquisition loan was $650,000.
F-12
<PAGE> CARROLS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
___________
4. LONG-TERM DEBT - continued
Effective December 20, 1994, in conjunction with the additional $5 million
acquisition loan, the revolving line of credit agreement was amended to
reduce the interest rate on borrowings to either the London Interbank
Offering Rate plus 2.5% or the prime rate plus 1.25%. If the revolving line
of credit and acquisition loan exceed $25 million, then the interest rate
is increased to either the London Interbank Offering Rate plus 3.5% or the
prime rate plus 2.25% on the amount of the loan exceeding $25 million. The
amount available under the revolving line of credit was increased to $25
million with no future reductions until its maturity in August 2000. At
December 31, 1994 there was $14.8 million available under the revolving line
of credit facility after reduction for the $8.6 million outstanding and a
$1.6 million letter of credit guaranteed by the facility. A commitment fee
of 1/2% is payable on the unused balance. At December 31, 1994, the
facility was collateralized by substantially all assets of the Company.
The Industrial Development Revenue bonds were issued on August 30, 1983 in
connection with the purchase and modernization of a warehouse. Bonds are
due in yearly amounts of $250,000 through 1998, with interest at
seventy-five percent of prime. The bonds are collateralized by the
warehouse which has a net book value of $1,890,000.
Restrictive covenants of the senior notes and the revolving line of credit
facility include limitations with respect to the issuance of additional debt
and redeemable preferred stock; the sale of assets; dividend payments and
capital stock redemption; transactions with affiliates; consolidations,
mergers and transfers of assets and minimum interest and fixed charge
coverage ratios.
At December 31, 1994, principal payments required on all long-term debt are
as follows:
1995 $ 258,000
1996 258,000
1997 291,000
1998 266,000
1999 452,000
Subsequent to 1999 119,413,000
-----------
$120,938,000
===========
F-13
<PAGE> CARROLS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
___________
5. INCOME TAXES
The components of deferred income taxes at December 31, are as follows:
1994 1993
Assets
Receivable and other reserves $ 588,000 $ 351,000
Insurance reserves 707,000 487,000
Accrued vacation 426,000 405,000
Deferred gain on sale/leaseback
transactions 755,000 799,000
Postretirement benefits 542,000 534,000
Capital leases 572,000 555,000
Net operating loss carryforwards 14,845,000 13,096,000
Less: Valuation allowance (11,799,000) (6,376,000)
---------- ----------
6,636,000 9,851,000
---------- ----------
Liabilities
Franchise rights 6,500,000 7,384,000
Depreciation 136,000 2,438,000
Installment sales 29,000
---------- ----------
6,636,000 9,851,000
---------- ----------
$ 0 $ 0
========== ==========
During 1993, the Company settled outstanding disputes with the Internal
Revenue Service relating to income tax claims arising from periods prior to
the acquisition of Carrols by Holdings. The cost to the company of these
settlements approximated $2.7 million of tax claims plus $1.6 million of
interest and had been previously reserved. The Company has net operating
loss carryforwards for income tax purposes of approximately $37 million,
which expire in varying amounts beginning 2001 through 2009.
6. STOCKHOLDER'S EQUITY
The Company
The Company has 1,000 shares of common stock authorized, 10 shares issued
and outstanding. Dividends on the Company's common stock are restricted to
amounts permitted by various loan and debenture agreements.
Additional paid-in capital was reduced for cash dividends declared of
$2,973,000,$2,741,000 and $200,000 in 1994, 1993 and 1992, respectively.
F-14
<PAGE><TABLE> CARROLS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
___________
6. STOCKHOLDER'S EQUITY (Continued)
Holdings
The sole activity of Holdings is the ownership of 100% of the stock of
Carrols Corporation.
Holdings, the parent, has issued various classes of stock with redemption,
convertibility and cumulative dividend payment requirements. At December
31, Holdings stock consists of:
<CAPTION>
1994 1993
<S> <C> <C>
Preferred stock:
Class A, 10% cumulative redeemable,
par value $.01, authorized, issued
and outstanding 7,250 shares at
liquidation preference and
redemption price $7,250,000 $7,250,000
Class B, convertible, 10% cumulative
redeemable Series I, par value $.01,
authorized, issued and outstanding 750
shares at liquidation preference and
redemption price 750,000 750,000
Class B, 10% cumulative redeemable
Series II, par value $.01, authorized
750 shares, issued - none
Common stock:
Voting, par value $.01, authorized
6,000,000 shares, issued and outstanding
2,266,157 and 2,760,012 shares for
1994 and 1993, respectively 23,000 28,000
Non-voting, par value $.01, authorized
882,353 shares, issued - none
<FN></TABLE>
The Class A Preferred Stock, issued in December 1986, is subject to
redemptions equally over each of the tenth through thirteenth anniversaries
of issuance. Subject to the redemption restrictions of various loan
agreements, all preferred stock may be redeemed at the option of Holdings,
at a price of $1,000 per share, plus accrued dividends. In the event that
the scheduled redemptions are not timely made, the annual dividend rate on
the Class A Preferred Stock will automatically increase to 14%.
Each share of Holdings Class B Convertible Preferred Stock is convertible
at any time prior to redemption into 1,176.5 shares of Holdings Non-Voting
Common Stock (subject to adjustment to prevent dilution).
Holders of the Preferred Stock are entitled to cumulative dividends payable
quarterly at the rate of 10% per annum. In the event that Holdings fails
to pay four consecutive quarterly dividends on the Class A preferred stock,
the subsequent dividend rate increases to 11.5%; if eight consecutive
quarterly dividends are missed, the rate increases to 13% per annum until
such dividends are paid. Dividends on the Class B preferred stock cannot
be declared or paid if there are any Class A preferred stock dividends in
arrears.
F-15
<PAGE> CARROLS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
___________
6. STOCKHOLDER'S EQUITY (Continued)
In conjunction with the Class A Preferred Stock, warrants to purchase
529,412 shares of Holdings Common Stock at an exercise price of $.97 to
$1.00 per share were granted. Outstanding warrants as of December 31, 1994
and 1993 totalled 463,549 and 529,412, respectively. Warrants are
exercisable until the redemption of the Class A Preferred Stock. The
warrants contain restrictions as to transfer, dilution and registration
rights.
The Company also granted warrants for the purchase of 281,602 shares of
Holdings Common Stock with various expiration dates through 2004 at an
exercise price of $1.00 per share.
Redemption Offer
During 1993, Carrols Holdings Corporation initiated a redemption and
retirement offer resulting in the tender of 743,843 shares of common stock
and the tender of warrants to purchase 65,863 shares of common stock
with a total redemption value of $3,173,000.
Approximately $500,000, or 249,988 shares, of the redemption was effected
during 1993. The remainder of the redemption, $2,673,000, or 493,855
shares and warrants for 65,863 shares, was completed in 1994.
Stock Options
Carrols Holdings Corporation adopted an Employee Stock Option and Award Plan
on December 14, 1993. Effective April 1, 1994, Holdings also adopted a
Stock Option Plan for non-employee directors. The Plans allow for the
granting of non-qualified stock options, stock appreciation rights and
incentive stock options to directors, officers and certain other Company
employees. The Company is authorized to grant options for up to 850,000
shares, 100,000 shares for non-employee directors and 750,000 shares for
employees. As of December 31, 1994, 51 employees and non-employee directors
were granted options for 257,000 shares at $4.00 per share, of which 15,000
shares were for non-employee directors. Options are generally exercisable
over 5 years with 46,400 options exercisable as of December 31, 1994.
7. LITIGATION
The Company is a party to various legal proceedings arising from the normal
course of business. Management believes adverse decisions relating to
litigation and contingencies in the aggregate would not materially effect
the Company's results of operations or financial condition.
F-16
<PAGE> CARROLS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
___________
8. POSTRETIREMENT EMPLOYMENT BENEFITS
The Company provides postretirement medical and life insurance benefits
covering substantially all salaried employees.
As of January 1, 1992, the provisions of Statement of Financial Accounting
Standard (SFAS) No. 106, Employers Accounting for Postretirement Benefits
Other Than Pensions, were adopted. The Company elected the immediate
recognition approach with respect to the transition obligation.
The following sets forth the plan status at December 31:
Accumulated Postretirement Benefit Obligation (APBO):
<TABLE>
<CAPTION>
1994 1993
<S> <C> <C>
Retirees $ 409,000 $ 364,000
Fully eligible
active participants 130,000 135,000
Other active plan participants
not fully eligible 568,000 851,000
--------- ---------
Total APBO 1,107,000 1,350,000
Unrecognized prior service cost 281,000 304,000
Unrecognized net loss (34,000) (366,000)
--------- ---------
Accrued postretirement
benefit obligation $1,354,000 $1,288,000
========= =========
<FN>
</TABLE>
<TABLE>
<CAPTION>
Net periodic postretirement benefit cost included the following components:
1994 1993 1992
<S> <C> <C> <C>
Service cost $ 47,000 $ 61,000 $ 80,000
Interest cost 70,000 74,000 83,000
Net amortization (20,000) (19,000)
------- ------- ------
$ 97,000 $116,000 $163,000
======= ======= =======
<FN>
</TABLE>
F-17
<PAGE> CARROLS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
___________
8. POSTRETIREMENT EMPLOYMENT BENEFITS (Continued)
A 10.5% annual rate of increase in the per capita costs of covered health
care benefits was assumed for 1994, gradually decreasing to 5.5% by the year
2004. Increasing the assumed health care cost trend rates by one percentage
point in each year would increase the accumulated postretirement benefit
obligation as of December 31, 1994 by $471,000 and increase the aggregate
of the service cost and interest cost components of net periodic
postretirement benefit cost for 1994 by $18,000. A discount rate of 7% was
used to determine the accumulated postretirement benefit obligation. Actual
benefit costs paid on behalf of retirees in 1994 amounted to $31,000.
9. LIQUIDITY AND RESOURCES
Although the Company has experienced losses since inception, it has and
expects to continue to generate sufficient cash flows to meet its
obligations. In addition to cash flows from operations, the Company's
available resources include, among other things, borrowing from available
lines of credit, sale leasebacks of owned real estate to the extent
permitted under the loan agreements and managing certain discretionary
expenditures.
10. LOSS ON CLOSING RESTAURANTS AND OTHER
The loss on closing restaurants and other of $1.8 million for 1994 reflects
approximately $1.3 million associated with the closing during 1995 of
certain restaurants operating at a negative annual cash flow. These costs
include the write-down of assets to net realizable value and estimated
lease termination costs. The loss also includes the write-down of
approximately $0.5 million to net estimated realizable value of a vacant
warehouse held for sale with a net book value as of December 31, 1994 of
$1.9 million.
F-18
<PAGE> CARROLS CORPORATION AND SUBSIDIARIES
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
___________
<TABLE>
<CAPTION>
Col. A Col. B Col. C Col. D Col. E
Additions
Balance at Charged to Balance at
Beginning Costs and End
Description of Period Expenses Deductions of Period
<S> <C> <C> <C> <C>
Year ended December 31, 1994:
Accumulated depreciation of property
and equipment $ 47,254,000 $ 7,404,000 $ (689,000)(d) $ 53,969,000
Accumulated amortization of franchise rights 15,146,000 2,402,000 17,548,000
Accumulated amortization of beneficial leases 6,921,000 785,000 (273,000)(a) 7,433,000
Accumulated amortization of excess
cost over fair value of assets 404,000 58,000 462,000
Reserve for doubtful trade accounts receivable 563,000 2,000 (141,000)(b) 424,000
Reserve for notes and mortgages receivable(c) 521,000 21,000 542,000
Year ended December 31, 1993:
Accumulated depreciation of property
and equipment 40,686,000 7,840,000 (1,272,000)(d) 47,254,000
Accumulated amortization of franchise rights 13,364,000 2,513,000 (731,000)(a) 15,146,000
Accumulated amortization of beneficial leases 5,962,000 1,189,000 (230,000)(a) 6,921,000
Accumulated amortization of excess
cost over fair value of assets 347,000 57,000 404,000
Reserve for doubtful trade accounts receivable 616,000 (53,000)(b) 563,000
Reserve for notes and mortgages receivable(c) 292,000 229,000 521,000
Year ended December 31, 1992:
Accumulated depreciation of property
and equipment 33,573,000 7,240,000 (127,000)(d) 40,686,000
Accumulated amortization of franchise rights 11,153,000 2,211,000 13,364,000
Accumulated amortization of beneficial leases 4,985,000 977,000 5,962,000
Accumulated amortization of excess
cost over fair value of assets 289,000 58,000 347,000
Reserve for doubtful trade accounts receivable 699,000 (83,000)(b) 616,000
Reserve for notes and mortgages receivable(c) 235,000 57,000 292,000
(a) Represents reduction of accumulated amortization for franchise rights due to sale or disposition of
restaurants.
(b) Represents write-offs of accounts.
(c) Included principally in other assets.
(d) Represents retirements of fixed assets.
<FN> </TABLE>
F-19<PAGE>
<PAGE>
EMPLOYMENT AGREEMENT
This employment agreement is effective as of January 1, 1995 (the
"Effective Date"), by and between CARROLS CORPORATION ("Employer"), a
corporation organized under the laws of Delaware and whose address for the
purposes of this agreement is 968 James Street, Syracuse, New York, 13217 and
Alan Vituli whose principal residence is Old Road, Windham, New York 12496
("Employee").
W I T N E S E T H:
WHEREAS, Employee is presently employed by the Employer as its
Chairman of the Board and Chief Executive Officer;
WHEREAS, the Employer desires to continue to employ the Employee in
such capacity and under all of the terms, provisions, and conditions set forth
herein;
WHEREAS, Employee is willing to accept such continued employment,
under all the terms, provisions and conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements herein set forth and other good and valuable consideration, the
receipt and adequacy of which is mutually acknowledged, it is agreed by and
between the parties as follows:
1. Definitions
For purposes of this Agreement, unless the context requires
otherwise, the following words and phrases shall have the meanings indicated
below:
"Change of Control" shall mean:
(a) The acquisition (other than from the Employer) by any
person, entity or "group", within the meaning of Section 13(d)(3) or 14(d)(2)
of the Securities Exchange Act of 1934 (the "Exchange Act"), excluding for this
purpose any employee benefit plan of the Employer or its subsidiaries which
acquires beneficial ownership of voting securities of the Employer, of
beneficial ownership (within the meaning of Rule 13d-3 promulgated under the
Exchange Act), of 50% or more of either the then outstanding shares of common
stock or the combined voting power of the Employer's then outstanding voting
securities entitled to vote generally in the election of directors;
(b) Individuals who, as of the date hereof, constitute the
Board of Directors of the Employer (the "Incumbent Board") cease for any reason
to constitute at least a majority of the Board of Directors; provided that any
person becoming a director subsequent to the date hereof whose election, or
nomination for election by the Employer's shareholders, was approved by a vote
of at least a majority of the directors then comprising the Incumbent Board
(other than an election or nomination of an individual whose initial assumption
<PAGE>of office is in connection with an actual or threatened election contest
relating to the election of Directors of the Employer, as such terms are used
in Rule 14a-11 of Regulation 14A promulgated under the Exchange Act) shall be
for purposes of this Agreement, considered as though such person were a member
of the Incumbent Board, or
(c) Approval by the stockholders of the Employer of a
reorganization, merger, or consolidation, in each case, with respect to which
persons who were the stockholders of the Employer immediately prior to such
reorganization, merger or consolidation do not, immediately thereafter, own more
than 50% of the combined voting power entitled to vote generally in the election
of directors of the reorganized, merged or consolidated company's then
outstanding voting securities, or a liquidation or dissolution of the Employer
or of the sale of all or substantially all of the assets of the Employer.
"Cause" shall mean the commission by the Employee of an act of fraud
against the Employer or any affiliate thereof or embezzlement intended to result
in personal enrichment of the Employee at the expense of the Employer; (2) the
unauthorized disclosure of information of the Employer which disclosure the
Employee knows or reasonably should have known could have the potential to
result in material damage to the Employer; (3) a breach of one or more of the
following duties to the Employer: (i) the duty of loyalty, (ii) the duty not to
take actions which would reasonably be viewed by the Employer as placing the
Employee's interest in a position adverse to the interest of the Employer, which
breach, if curable, is not remedied within thirty (30) days after the Employee's
receipt of written notice thereof provided, however, that the Employer need not
permit the Employee to cure any breach which has been the subject of a prior
written notice; or (iii) the duty not to engage in self-dealing with respect to
the Employer's assets, properties or business opportunities, which breach, if
curable, is not remedied within thirty (30) days after the Employee's receipt
of written notice thereof provided, however, that the Employer need not permit
the Employee to cure any breach which has been the subject of a prior written
notice; (4) a felony conviction of the Employee (or a plea of no lo contendere
in lieu thereof); (5) misconduct as an employee of the Employer, including, but
not limited to, demonstrably willful and deliberate violation by the Employee
of written policies of the Employer or specific written directions of the Board
of Directors, which policies or directives are not illegal, (do not involve
illegal conduct) nor require the Employee to violate reasonable business ethical
standards; (6) the breach by the Employee of any material provision of this
Agreement, which breach, if curable, is not remedied within thirty (30) days
after the Employee's receipt of written notice thereof provided, however, that
the Employer need not permit the Employee to cure any breach which has been the
subject of a prior written notice; (7) an act of gross misconduct in connection
with the Employee's duties hereunder; or (8) habitual or material neglect of the
Employee's duties to the Employer (as determined in good faith by the Board of
Directors).
"Good Reason" shall mean (i) the material failure of the Employer to
comply with the provisions of this Agreement which failure shall not cease
promptly and in no event more than ten (10) days after the Employer's receipt
of written notice from the Employee objecting to such conduct; or (ii) any
purported termination by the Employer of the Employee's employment other than
as expressly permitted in this Agreement.
<PAGE> 2. Representations and Warranties
(a) Employee represents and warrants that he is not subject
to any restrictive covenants or other agreements or legal restrictions in favor
of any person which would in any way preclude, inhibit, impair or limit his
employment by the Employer or the performance of his duties, as contemplated
herein.
3. Employment
(a) The Employer hereby employs Employee and Employee accepts
such employment as Chairman and Chief Executive Officer of the Employer. As its
Chairman and Chief Executive Officer, Employee shall render such services to the
Employer as are customarily rendered by the Chairman and Chief Executive Officer
of comparable companies and as required by the articles and by-laws of the
Employer. Employee shall devote his best efforts to the performance of his
duties hereunder. Employee accepts such employment and, consistent with
fiduciary standards which exist between an employer and an employee shall
perform and discharge the duties that may be assigned to him from time to time
by the Employer in an efficient, trustworthy and businesslike manner. It is
specifically agreed that nothing in this Employment Agreement ("Agreement")
shall prohibit Employee from (i) serving on corporate, civic or charitable
boards or committees; (ii) engaging directly or indirectly, in activities with
other public or private companies or ventures; or (iii) making investments in
any capacity whatsoever, provided only that such activities or any of them do
not significantly impair Employee's performance of his duties for the Employer.
(b) During the term of Employment and for a period of two (2)
years after the termination of the Employee, Employee will not compete, either
directly or indirectly with Employer or any of its subsidiaries as an employee,
officer, consultant, independent contractor, partner or shareholder, if the
effect of such relationship is to materially impair the value of the Employer.
This shall not prevent Employee from investing as a passive investor in any
company in which he owns less than five percent (5%).
4. Place of Employment
During the Term, the Employee shall be entitled to an office and
to secretarial and other assistance at the Employer's offices. The Employee
shall render services where and as required by the Employer. In conformance
with the foregoing and not in limitation thereof, Employee agrees to take such
trips as shall be consistent with or reasonably necessary in connection with his
duties. Employer will also maintain an office within ten (10) miles of the
Employee's abode and shall furnish the Employee with secretarial help and such
other facilities and services reasonably suitable to Employee's position and
necessary for the adequate performance of his duties.
5. Term
(a) Subject to the provisions of Section 10 hereof, the term
of this Agreement shall be three (3) consecutive years commencing on January 1,
1995 and expiring on December 31, 1997 (the "Initial Term"). This Agreement
shall be automatically renewed for successive twelve (12) month periods on all
the remaining terms and conditions set forth herein, unless either party elects
<PAGE>not to renew this Agreement by giving written notice to the other at least
ninety (90) days before a scheduled expiration date. The Initial Term of this
Agreement together with all renewals and extensions thereof are collectively
referred to herein as the "Term."
6. Compensation
(a) As compensation for all services rendered and to be
rendered by Employee hereunder and the fulfillment by Employee of all of his
obligations herein, the Employer shall pay Employee a base salary (the "Base
Salary") at the rate of $350,000 for the first year of the Term payable in
accordance with the Employer's customary payroll practices. The Base Salary for
the second year of the Term ("Adjusted Base Salary") shall be sum of the Base
Salary and the product of $350,000 multiplied by the percentage increase in the
consumer price index (as defined below, hereinafter "CPI Index") from December,
1994 to December, 1995 which percentage increase shall be calculated as
follows: [ (x minus y) divided by y] where (x) equals the CPI Index for
December, 1995 and (y) equals the CPI Index for December, 1994. The Base Salary
for the third year of the term shall be the sum of the Adjusted Base Salary and
the product of the Adjusted Base Salary multiplied by the percentage increase
in the CPI Index from December, 1995 to December, 1996 as calculated above
substituting 1996 for 1995 in (x) and 1995 for 1994 in (y).
By way of illustration, if the CPI Index for December, 1995 is 120
and the CPI Index for December, 1994 is 115, the percentage increase in the CPI
Index is 4.35% and the Base Salary is increased by $15,225 to $365,225 for 1996.
If the CPI Index for December, 1996 is 122, the percentage increase (over the
1995 CPI Index) is 1.67% and the Adjusted Base Salary is increased by $6,087 to
$371,312.
The CPI Index shall be the Consumer Price Index as prepared by the
Bureau of Labor Statistics of the United States Department of Labor for All
Urban Wage Earners and Clerical Workers, All items (1982-84=100) for New York
City (the "Consumer Price Index") or an equivalent measure of increase in the
cost of living if such Consumer Price Index is not then being issued.
(b) The Base Salary for the twelve (12) month period
commencing January 1, 1998 and each successive twelve (12) month period of the
Term shall be increased in accordance with the recommendation of the
Compensation Committee of the Board of Directors of the Employer.
(c) Employee will participate in the Executive Bonus Plan of
the Employer attached hereto as Exhibit A. Notwithstanding any provision
contained herein or in the Executive Bonus Plan to the contrary, no amendment
to the Executive Bonus Plan shall have a material adverse impact on the
Employee. If the Executive Bonus Plan is discontinued, the Employer agrees to
establish a plan which will provide similar potential benefits to the Employee.
(d) Employee will also be eligible to participate in all
phantom and/or actual stock option programs applicable to executive employees.
(e) The Employer shall deduct from the compensation described
in (a),(b),(c) and (d) above, any Federal, state or city withholding taxes,
social security contributions and any other amounts which may be required to be
<PAGE>deducted or withheld by the Employer pursuant to any Federal, state or
city
laws, rules or regulations.
(f) Any compensation otherwise payable to the Employee
pursuant to this Section in respect of any period during which the Employee is
disabled (as contemplated in Section 10) shall be reduced by any amounts payable
to the Employee for loss of earnings or the like under any insurance plan or
policy the premiums for which are paid for in their entirety by the Employer.
7. Business Expenses
(a) The Employer shall pay on behalf of Employee, all dues to
professional societies and other organizations as are customarily joined by
individuals holding the position of Chairman and Chief Executive Officer of
businesses similar to the Employer. In addition, the Employer will require and
shall reimburse the Employee for his out of pocket cost of one complete physical
examination per fiscal year of the Term.
(b) The Employer agrees that the Employee is authorized to
incur reasonable expenses in the performance of his duties hereunder and agrees
that all reasonable expenses incurred by Employee in the discharge and
fulfillment of his duties for the Employer, as set forth in Section 3, will be
promptly reimbursed or paid by the Employer upon written substantiation signed
by Employee, itemizing said expenses and containing all applicable vouchers.
In addition, the Employee shall be entitled to receive prompt reimbursement for
all reasonable travel and entertainment expenses and the costs of attending
conferences and seminars, so long as such expenses relate to Employee's ability
to serve the best interests of the Employer.
8. Benefits and Insurance
(a) The Employer agrees that during the Term, the Employee
shall be insured under all insurance policies and shall receive all benefits
under all pension and welfare benefit plans (including, without limitation group
life, medical, major medical and disability insurance) that the Employer may
maintain and keep in force during the Term of the Agreement for the benefit of
the Employer's employees, subject to the terms, provisions and conditions of
such pension and welfare benefit plans or insurance and the agreements with
underwriters relating to same.
(b) A split dollar life insurance policy on the life of the
Employee shall be maintained providing a death benefit in the amount of One
Million Five Hundred Thousand Dollars ($1,500,000) payable to an irrevocable
trust designated by the Employee. The sum total of the Employer's outstanding
premium payments shall be returned to the Employer from the proceeds of any
death benefit or from the cash value of the policy, if surrendered during the
Employee's lifetime. Any amount in excess of the sum total of the Employer's
premium payments shall be paid to the irrevocable trust designated by the
Employee. The Employer will not cancel or allow such insurance to lapse during
the term of the Employee's employment by the Employer and thereafter, if the
Employee is terminated by reason of disability within the meaning of Section
10(f) during the period of such disability, without the prior written consent
of the Employee. The Employee will cooperate fully in the acquisition of
<PAGE>such insurance policy, including submitting to physical examinations and
providing medical information required by the insurer.
(c) During the term of the Employee's employment and
thereafter, if the Employee is terminated by reason of disability in accordance
with Section 10(f), during the period of such disability, the Employer will pay
each and every premium on the split dollar life insurance policy obtained
pursuant to Section 8(b) on or before the due date for such premium and will
give Employee proof of such payment within fifteen (15) days of the date the
premium was due. If the Employer fails to supply such proof, Employee may pay
the premium and be reimbursed by the Employer for his payment. The policy shall
provide that it may be maintained by the trust following the termination of the
Employee's employment. All dividends on any such policy will be applied to the
payment of premiums.
9. Vacation
Employee shall be entitled to an aggregate of four (4) weeks
paid vacation during each year of the Term at time or times reasonably agreeable
to both the Employee and the Employer, it being understood that any portion of
such vacation not taken in such year shall not be available to be taken during
any other year.
10. Termination; Change of Control; Death; Disability
(a) Subject to the provisions of this Agreement, either the
Employer or the Employee may terminate this Agreement on the thirtieth (30th)
day after receipt of written notice by the other party hereto.
(b) If within six (6) months following a Change of Control
occurring during the Term, the employment of the Employee hereunder is
terminated without Cause, the Employee shall be paid: (1) his accrued but unpaid
Base Salary and vacation as of the date of termination; (2) a cash payment in
an amount equal to 2.99 multiplied by the average of the sum of the Base Salary
and the Annual Bonus paid or deferred in accordance with the Executive Bonus
Plan in the five calendar years prior to the date of termination (the "Five-Year
Compensation Average"); and (3) all amounts previously deferred under the
Executive Bonus Plan (together with any interest accrued thereon) and not yet
paid by the Employer.
(c) If the Employer (1) during the Term enters into a binding
written agreement to engage in a transaction which, if consummated, would result
in a Change of Control; (2) such transaction is consummated within six (6)
months after the last date of the Term; and (3) subsequent to entering into such
agreement the Employer terminates employment of the Employee without Cause, the
Employer shall pay to the Employee an amount equal to the payment set forth in
Section 10(b) hereof.
(d) If the Employee terminates this Agreement pursuant to
Paragraph (a) hereof without Good Reason or the Employer terminates the
employment of the Employee hereunder for Cause (except as otherwise provided in
Section 10), the Employer's sole obligation hereunder shall be to pay to the
Employee his accrued but unpaid Base Salary and vacation pay as of the date of
termination plus any compensation or bonus payments previously deferred by the
<PAGE>Employee under the Executive Bonus Plan (together with any interest
accrued
thereon) and not yet paid by the Employer. The Employee shall have no further
obligation to perform services for the Employer.
(e) If the Employer terminates employment of the Employee
hereunder without Cause, or the Employee terminates for Good Reason, the
Employer shall pay to the Employee (1) his accrued but unpaid Base Salary and
vacation as of the date of termination; (2) a cash payment in an amount equal
to 2.99 multiplied by the Employee's Five Year Compensation Average; and (3) all
amounts previously deferred by the Employee under the Executive Bonus Plan
(together with any interest accrued thereon) and not yet paid by the Employer.
(f) If the Employee becomes physically or mentally disabled
during the Term so that he is unable to perform the services required of him
pursuant to this Agreement for a period of six (6) successive months, or an
aggregate of six (6) months in any twelve (12) month period, the Employer may
give the Employee written notice of its intention to terminate the services of
the Employee hereunder. In such event, the Employee's employment with the
Employer shall terminate effective on the thirtieth (30th) day after receipt of
such notice by the Employee (the "Disability Effective Date") provided the
Employee shall not have returned to the performance of the Employee's duties.
Subject to the provisions of Section 6(f), in the event the Employee's
employment is terminated by reason of disability, the Employer's only
obligations hereunder shall be (1) to continue the Base Salary (at the rate in
effect on the Disability Effective Date) for a period of three (3) years from
the Disability Effective Date; (2) to pay a pro rata portion of the Annual Bonus
for the year in which the Employee's employment is terminated as and when such
amounts are due and payable under the term of the Executive Bonus Plan; (3) to
pay all amounts previously deferred under the Executive Bonus Plan together with
any interest accrued thereon) as prescribed by the Employee; and (4) to fully
vest the Employee in any stock option which has been granted previously to the
Employee.
(g) In the event of the Employee's death during the Term, the
Employer shall pay to his spouse, if he is survived by a spouse, or if not, to
the estate of the Employee, (1) the Employee's accrued and unpaid Base Salary
(at the rate in effect on the date of death) as of the date of death; (2) a pro
rata share of the Annual Bonus for the year of his death as and when such
amounts are due and payable under the term of the Executive Bonus Plan; and (3)
all amounts previously deferred under the Executive Bonus Plan (together with
any interest accrued thereon) and not yet paid by the Employer in the manner
prescribed by the executor of the Employee's estate. In the event of the
Employee's death during the Term, the Employee shall fully vest in any stock
option which has been granted previously to the Employee.
(h) If the Employer does not continue the Employee's
employment upon expiration of the Term, the sole obligation of the Employer
hereunder shall be to pay the Employee in a cash lump sum an amount equal to the
Base Salary actually paid to the Employee for the prior twelve (12) month period
and any amounts payable under the Executive Bonus Plan, as and when such amounts
are due and payable under the terms of the Executive Bonus Plan.
(i) Notwithstanding anything contained in this Agreement to
the contrary, to the extent that the payments and benefits provided under this
<PAGE>Agreement or provided for the benefit of the Employee under any other plan
or
agreement of or with the Employer (each such payment or benefit, a "Payment,"
and such payments and benefits collectively, the "Payments"), would be subject
to the excise tax imposed under Section 4999 of the Code or any interest or
penalties with respect to such excise tax (such excise tax, together with any
such interest and penalties are hereinafter collectively referred to as the
"Excise Tax"), the Payments shall be reduced if and to the extent necessary so
that no Payment shall be subject to the Excise Tax. The Company shall reduce
or eliminate the Payments by first reducing or eliminating the payments due
under Sections 10(b), 10(c) or 10(e) hereof, then by reducing or eliminating any
other amounts payable in cash, and then by reducing or eliminating benefits
which are not payable in cash, in each case in reverse order beginning with
payments or benefits which are to be paid the farthest in time from the date of
the determination.
11. Employee Covenant
For a period of two years following termination of this
Agreement, the Employee (a) will not violate or cause the Employer to violate
the terms of any agreement, including any franchise agreement, which the
Employer is obligated under, except with the express written consent of the duly
empowered officer of the Employer or pursuant to an order of a court of
competent jurisdiction; and (b) divulge or use any confidential information the
effect of which would be injurious to the Employer without the prior written
consent of a duly empowered officer of the Employer. Employee shall have the
right to approve the provisions of any such franchise agreement which restricts
Employee's future employment. For a period of five years following termination
of this Agreement, the Employee will not solicit or employ any person, who was
employed by the Employer within six months prior to the termination of
Employee's employment, in any business in which Employee has a material
interest, direct or indirect, as an officer, partner, shareholder or beneficial
owner.
12. Binding Effect
(a) This Agreement shall inure to the benefit of and be
binding upon the Employer and its successors. The Employer will require any
successor (whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of its assets to expressly assume and
agree to perform this Agreement in the same manner and to the same extent that
the Employer would be required to perform it if no such succession had taken
place or with or into which the Employer may consolidate or merge. Employee
agrees that this Agreement is personal to him and may not be assigned by him
otherwise than by will or laws of descent and distribution. This Agreement
shall inure to the benefit of and be enforceable by the Employee's legal
representatives.
13. Miscellaneous
(a) If any provision of this Agreement, or portion thereof,
shall be held invalid or unenforceable by a court of competent jurisdiction,
such invalidity or unenforceability shall attach only to such provision or
portion thereof, and this Agreement shall be carried out as if any such invalid
<PAGE>or unenforceable provision or portion thereof were not contained herein.
In addition, any such invalid or unenforceable provision or portion thereof
shall
be deemed, without further action on the part of the parties hereto, modified,
amended or limited to the extent necessary to render the same valid and
enforceable.
(b) This Agreement, and all of the rights and obligations of
the parties in connection with the employment relationship established hereby
shall be construed and enforced in accordance with the laws of New York
applicable to contracts made and fully to be performed therein, and without
giving effect to any rules of conflicts of law.
(c) All notices, requests, demands, and other communications
provided for hereunder shall be in writing and shall be given or made when (i)
delivered personally; (ii) two (2) business days following mailing by first
class postage prepaid, registered or certified mail, return receipt requested,
to the party to be notified at its or his address set forth herein; or (iii) on
the date sent by telecopier, if the addressee has compatible receiving equipment
and provided the transmittal is made on a business day during the hours of 9:00
a.m. to 6:00 p.m. of the receiving party and if sent at other times, on the
immediately succeeding business day, or (iv) on the first business day
immediately succeeding delivery to an express overnight carrier for the next
business day delivery.
(d) This Agreement may be executed simultaneously in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. Each party shall deliver
such further instruments and take such further action as may be reasonably
requested by the other in order to carry out the provisions and purposes of this
Agreement. This Agreement represents the entire understanding of the parties
with reference to the transaction set forth herein and neither this Agreement
nor any provisions thereof may be modified, discharged or terminated except by
an agreement in writing signed by the party against whom the enforcement of any
waiver, charge, discharge or termination is sought. Any waiver by either party
or a breach of any provision of this Agreement must be in writing and no waiver
of a particular breach shall operate as or be construed as waiver of any
subsequent breach thereof.
IN WITNESSETH WHEREOF, the parties hereto have executed and have
caused this Agreement to be executed as of the day and year first above written.
DATE:
ALAN VITULI
CARROLS CORPORATION
DATE: By:_______________________
<PAGE>
EMPLOYMENT AGREEMENT
This employment agreement is effective as of January 1, 1995 (the
"Effective Date"), by and between CARROLS CORPORATION (hereinafter "Employer"),
a corporation organized under the laws of Delaware and whose address for the
purposes of this agreement is 968 James Street, Syracuse, New York, 13217 and
Daniel T. Accordino, residing at 4617 Ridge Road, Cazenovia, New York 13235
("Employee").
W I T N E S E T H:
WHEREAS, Employee is presently employed by the Employer as its
President and Chief Operating Officer;
WHEREAS, the Employer desires to continue to employ the Employee in
such capacity and under all of the terms, provisions, and conditions set forth
herein;
WHEREAS, Employee is willing to accept such continued employment,
under all the terms, provisions and conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements herein set forth and other good and valuable consideration, the
receipt and adequacy of which is mutually acknowledged, it is agreed by and
between the parties as follows:
1. Definitions
For purposes of this Agreement, unless the context requires
otherwise, the following words and phrases shall have the meanings indicated
below:
"Change of Control" shall mean:
(a) The acquisition (other than from the Employer) by any
person, entity or "group", within the meaning of Section 13(d)(3) or 14(d)(2)
of the Securities Exchange Act of 1934 (the "Exchange Act"), excluding for this
purpose any employee benefit plan of the Employer or its subsidiaries which
acquires beneficial ownership of voting securities of the Employer, of
beneficial ownership (within the meaning of Rule 13d-3 promulgated under the
Exchange Act), of 50% or more of either the then outstanding shares of common
stock or the combined voting power of the Employer's then outstanding voting
securities entitled to vote generally in the election of directors;
(b) Individuals who, as of the date hereof, constitute the
Board of Directors of the Employer (the "Incumbent Board") cease for any reason
to constitute at least a majority of the Board of Directors; provided that any
person becoming a director subsequent to the date hereof whose election, or
nomination for election by the Employer's shareholders, was approved by a vote
of at least a majority of the directors then comprising the Incumbent Board
<PAGE>(other than an election or nomination of an individual whose initial
assumption
of office is in connection with an actual or threatened election contest
relating to the election of Directors of the Employer, as such terms are used
in Rule 14a-11 of Regulation 14A promulgated under the Exchange Act) shall be
for purposes of this Agreement, considered as though such person were a member
of the Incumbent Board, or
(c) Approval by the stockholders of the Employer of a
reorganization, merger, or consolidation, in each case, with respect to which
persons who were the stockholders of the Employer immediately prior to such
reorganization, merger or consolidation do not, immediately thereafter, own more
than 50% of the combined voting power entitled to vote generally in the election
of directors of the reorganized, merged or consolidated company's then
outstanding voting securities, or a liquidation or dissolution of the Employer
or of the sale of all or substantially all of the assets of the Employer.
"Cause" shall mean the commission by the Employee of an act of fraud
against the Employer or any affiliate thereof or embezzlement intended to result
in personal enrichment of the Employee at the expense of the Employer; (2) the
unauthorized disclosure of information of the Employer which disclosure the
Employee knows or reasonably should have known could have the potential to
result in material damage to the Employer; (3) a breach of one or more of the
following duties to the Employer: (i) the duty of loyalty, (ii) the duty not to
take actions which would reasonably be viewed by the Employer as placing the
Employee's interest in a position adverse to the interest of the Employer, which
breach, if curable, is not remedied within thirty (30) days after the Employee's
receipt of written notice thereof provided, however, that the Employer need not
permit the Employee to cure any breach which has been the subject of a prior
written notice; or (iii) the duty not to engage in self-dealing with respect to
the Employer's assets, properties or business opportunities, which breach, if
curable, is not remedied within thirty (30) days after the Employee's receipt
of written notice thereof provided, however, that the Employer need not permit
the Employee to cure any breach which has been the subject of a prior written
notice; (4) a felony conviction of the Employee (or a plea of no locontendere
in lieu thereof); (5) misconduct as an employee of the Employer, including, but
not limited to, demonstrably willful and deliberate violation by the Employee
of written policies of the Employer or specific written directions of the Board
of Directors or superior officers of the Employer, which policies or directives
are not illegal, (do not involve illegal conduct) nor require the Employee to
violate reasonable business ethical standards; (6) the breach by the Employee
of any material provision of this Agreement, which breach, if curable, is not
remedied within thirty (30) days after the Employee's receipt of written notice
thereof provided, however, that the Employer need not permit the Employee to
cure any breach which has been the subject of a prior written notice; (7) an act
of gross misconduct in connection with the Employee's duties hereunder; or (8)
habitual or material neglect of the Employee's duties to the Employer (as
determined in good faith by the Board of Directors).
"Good Reason" shall mean (i) the material failure of the Employer to
comply with the provisions of this Agreement which failure shall not cease
promptly and in no event more than ten (10) days after the Employer's receipt
of written notice from the Employee objecting to such conduct; or (ii) any
purported termination by the Employer of the Employee's employment other than
<PAGE>as expressly permitted in this Agreement.
2. Representations and Warranties
(a) Employee represents and warrants that he is not subject to
any restrictive covenants or other agreements or legal restrictions in favor of
any person which would in any way preclude, inhibit, impair or limit his
employment by the Employer or the performance of his duties, as contemplated
herein.
3. Employment
(a) The Employer hereby employs Employee and Employee accepts
such employment as President and Chief Operating Officer of the Employer. As
its President and Chief Operating Officer, Employee shall render such services
to the Employer as are customarily rendered by the President and Chief Operating
Officer of comparable companies and as required by the articles and by-laws of
the Employer. Employee shall devote his best efforts to the performance of his
duties hereunder. Employee accepts such employment and, consistent with
fiduciary standards which exist between an employer and an employee shall
perform and discharge the duties that may be assigned to him from time to time
by the Employer in an efficient, trustworthy and businesslike manner. It is
specifically agreed that nothing in this Employment Agreement ("Agreement")
shall prohibit Employee from (i) serving on corporate, civic or charitable
boards or committees; (ii) engaging directly or indirectly, in activities with
other public or private companies or ventures; or (iii) making investments in
any capacity whatsoever, provided only that such activities or any of them do
not significantly impair Employee's performance of his duties for the Employer.
(b) During the term of Employment and for a period of two (2)
years after the termination of the Employee, Employee will not compete, either
directly or indirectly with Employer or any of its subsidiaries as an employee,
officer, consultant, independent contractor, partner or shareholder, if the
effect of such relationship is to materially impair the value of the Employer.
This shall not prevent Employee from investing as a passive investor in any
company in which he owns less than five percent (5%).
4. Place of Employment
During the Term, the Employee shall be entitled to an office and
to secretarial and other assistance at the Employer's offices. The Employee
shall render services where and as required by the Employer. In conformance
with the foregoing and not in limitation thereof, Employee agrees to take such
trips as shall be consistent with or reasonably necessary in connection with his
duties.
5. Term
(a) Subject to the provisions of Section 10 hereof, the term
of this Agreement shall be three (3) consecutive years commencing on January 1,
1995 and expiring on December 31, 1997 (the "Initial Term"). This Agreement
shall be automatically renewed for successive twelve (12) month periods on all
the remaining terms and conditions set forth herein, unless either party elects
<PAGE>not to renew this Agreement by giving written notice to the other at least
ninety (90) days before a scheduled expiration date. The Initial Term of this
Agreement together with all renewals and extensions thereof are collectively
referred to herein as the "Term."
6. Compensation
(a) As compensation for all services rendered and to be
rendered by Employee hereunder and the fulfillment by Employee of all of his
obligations herein, the Employer shall pay Employee a base salary (the "Base
Salary") at the rate of $250,000 for the first year of the Term payable in
accordance with the Employer's customary payroll practices. The Base Salary for
the second year of the Term ("Adjusted Base Salary") shall be the sum of the
Base Salary and the product of $250,000 multiplied by the percentage increase
in the consumer price index (as defined below, hereinafter "CPI Index") from
December, 1994 to December, 1995 which percentage increase shall be calculated
as follows: [(x minus y) divided by y] where (x) equals the CPI Index for
December, 1995 and (y) equals the CPI Index for December, 1994. The Base Salary
for the third year of the term shall be the sum of the Adjusted Base Salary and
the product of the Adjusted Base Salary multiplied by the percentage increase
in the CPI Index from December, 1995 to December, 1996 as calculated above
substituting 1996 for 1995 in (x) and 1995 for 1994 in (y).
By way of illustration, if the CPI Index for December 1995 is 120 and
the CPI Index for December, 1994 is 115, the percentage increase in the CPI
Index is 4.35% and the Base Salary is increased by $10,875 to $260,875 for
1996. If the CPI Index for December 1996 is 122, the percentage increase
(over the 1995 CPI Index) is 1.67% and the Adjusted Base Salary is
increased by $4,357 to $265,232.
The CPI Index shall be the Consumer Price Index as prepared by
the Bureau of Labor Statistics of the United States Department of Labor for All
Urban Wage Earners and Clerical Workers, All items (1982-84=100) for New York
City (the"Consumer Price Index"), or an equivalent measure of increase in the
cost of living if such Consumer Price Index is not then being issued.
(b) The Base Salary for the twelve (12) month period commencing
January 1, 1998 and each successive twelve (12) month period of the Term shall
be increased in accordance with the recommendation of the Compensation Committee
of the Board of Directors of the Employer.
(c) Employee will participate in the Executive Bonus Plan of
the Employer attached hereto as Exhibit A. Notwithstanding any provision
contained herein or in the Executive Bonus Plan to the contrary, no amendment
to the Executive Bonus Plan shall have a material adverse impact on the
Employee. If the Executive Bonus Plan is discontinued, the Employer agrees to
establish a plan which will provide similar potential benefits to the Employee.
(d) Employee will also be eligible to participate in all
phantom and/or actual stock option programs applicable to executive employees.
(e) The Employer shall deduct from the compensation described
in (a),(b),(c) and (d) above, any Federal, state or city withholding taxes,
social security contributions and any other amounts which may be required to be
<PAGE>deducted or withheld by the Employer pursuant to any Federal, state or
city
laws, rules or regulations.
(f) Any compensation otherwise payable to the Employee pursuant
to this Section in respect of any period during which the Employee is disabled
(as contemplated in Section 10) shall be reduced by any amounts payable to the
Employee for loss of earnings or the like under any insurance plan or policy the
premiums for which are paid for in their entirety by the Employer.
7. Business Expenses
(a) The Employer shall pay on behalf of Employee, all dues to
professional societies and other organizations as are customarily joined by
individuals holding the position of President and Chief Operating Officer of
businesses similar to the Employer. In addition, the Employer will require and
shall reimburse the Employee for his out of pocket cost of one complete physical
examination per fiscal year of the Term.
(b) The Employer agrees that the Employee is authorized to
incur reasonable expenses in the performance of his duties hereunder and agrees
that all reasonable expenses incurred by Employee in the discharge and
fulfillment of his duties for the Employer, as set forth in Section 3, will be
promptly reimbursed or paid by the Employer upon written substantiation signed
by Employee, itemizing said expenses and containing all applicable vouchers.
In addition, the Employee shall be entitled to receive prompt reimbursement for
all reasonable travel and entertainment expenses and the costs of attending
conferences and seminars, so long as such expenses relate to Employee's ability
to serve the best interests of the Employer.
8. Benefits and Insurance
(a) The Employer agrees that during the Term, the Employee
shall be insured under all insurance policies and shall receive all benefits
under all pension and welfare benefit plans (including, without limitation group
life, medical, major medical and disability insurance) that the Employer may
maintain and keep in force during the Term of the Agreement for the benefit of
the Employer's employees, subject to the terms, provisions and conditions of
such pension and welfare benefit plans or insurance and the agreements with
underwriters relating to same.
(b) A split dollar life insurance policy on the life of the
Employee shall be maintained providing a death benefit in the amount of One
Million Dollars ($1,000,000) payable to an irrevocable trust designated by the
Employee. The sum total of the Employer's outstanding premium payments shall
be returned to the Employer from the proceeds of any death benefit or from the
cash value of the policy, if surrendered during the Employee's lifetime. Any
amount in excess of the sum total of the Employer's premium payments shall be
paid to the irrevocable trust designated by the Employee. The Employer will not
cancel or allow such insurance to lapse during the term of the Employee's
employment by the Employer and thereafter, if the Employee is terminated by
reason of disability within the meaning of Section 10(f) during the period of
such disability, without the prior written consent of the Employee. Employee
will cooperate fully in the acquisition of such insurance policy, including
<PAGE>submitting to physical examinations and providing medical information
required
by the insurer.
(c) During the term of the Employee's employment and
thereafter, if the Employee is terminated by reason of disability in accordance
with Section 10(f), during the period of such disability, the Employer will pay
each and every premium on the split dollar life insurance policy obtained
pursuant to Section 8(b) on or before the due date for such premium and will
give Employee proof of such payment within fifteen (15) days of the date the
premium was due. If the Employer fails to supply such proof, Employee may pay
the premium and be reimbursed by the Employer for his payment. The policy shall
provide that it may be maintained by the trust following the termination of the
Employee's employment. All dividends on any such policy will be applied to the
payment of premiums.
9. Vacation
Employee shall be entitled to an aggregate of four (4) weeks
paid vacation during each year of the Term at time or times reasonably agreeable
to both the Employee and the Employer, it being understood that any portion of
such vacation not taken in such year shall not be available to be taken during
any other year.
10. Termination; Change of Control; Death; Disability
(a) Subject to the provisions of this Agreement, either the
Employer or the Employee may terminate this Agreement on the thirtieth (30th)
day after receipt of written notice by the other party hereto.
(b) If within six (6) months following a Change of Control
occurring during the Term, the employment of the Employee hereunder is
terminated without Cause, the Employee shall be paid: (1) his accrued but unpaid
Base Salary and vacation as of the date of termination; (2) a cash payment in
an amount equal to 2.99 multiplied by the average of the sum of the Base Salary
and the Annual Bonus paid or deferred in accordance with the Executive Bonus
Plan in the five calendar years prior to the date of termination (the "Five-Year
Compensation Average"); and (3) all amounts previously deferred under the
Executive Bonus Plan (together with any interest accrued thereon) and not yet
paid by the Employer.
(c) If the Employer (1) during the Term enters into a binding
written agreement to engage in a transaction which, if consummated, would result
in a Change of Control; (2) such transaction is consummated within six (6)
months after the last date of the Term; and (3) subsequent to entering into such
agreement the Employer terminates employment of the Employee without Cause, the
Employer shall pay to the Employee an amount equal to the payment set forth in
Section 10(b) hereof.
(d) If the Employee resigns without Good Reason or the Employer
terminates the employment of the Employee hereunder for Cause (except as
otherwise provided in Section 10), the Employer's sole obligation hereunder
shall be to pay to the Employee his accrued but unpaid Base Salary and vacation
pay as of the date of termination plus any compensation or bonus payments
<PAGE>previously deferred by the Employee under the Executive Bonus Plan
(together
with any interest accrued thereon) and not yet paid by the Employer. The
Employee shall have no further obligation to perform services for the Employer.
(e) If the Employer terminates employment of the Employee
hereunder without Cause, or the Employee terminates for Good Reason, the
Employer shall pay to the Employee (1) his accrued but unpaid Base Salary and
vacation as of the date of termination; (2) a cash payment in an amount equal
to 2.99 multiplied by the Employee's Five Year Compensation Average; and (3) all
amounts previously deferred by the Employee under the Executive Bonus Plan
(together with any interest accrued thereon) and not yet paid by the Employer.
(f) If the Employee becomes physically or mentally disabled
during the Term so that he is unable to perform the services required of him
pursuant to this Agreement for a period of six (6) successive months, or an
aggregate of six (6) months in any twelve (12) month period, the Employer may
give the Employee written notice of its intention to terminate the services of
the Employee hereunder. In such event, the Employee's employment with the
Employer shall terminate effective on the thirtieth (30th) day after receipt of
such notice by the Employee (the "Disability Effective Date") provided the
Employee shall not have returned to the performance of the Employee's duties.
Subject to the provisions of Section 6(f), in the event the Employee's
employment is terminated by reason of disability, the Employer's only
obligations hereunder shall be (1) to continue the Base Salary (at the rate in
effect on the Disability Effective Date) for a period of three (3) years from
the Disability Effective Date; (2) to pay a pro rata portion of the Annual Bonus
for the year in which the Employee's employment is terminated as and when such
amounts are due and payable under the term of the Executive Bonus Plan; (3) to
pay all amounts previously deferred under the Executive Bonus Plan together with
any interest accrued thereon) as prescribed by the Employee; and (4) to fully
vest the Employee in any stock option which has been granted previously to the
Employee.
(g) In the event of the Employee's death during the Term, the
Employer shall pay to his spouse, if he is survived by a spouse, or if not, to
the estate of the Employee, (1) the Employee's accrued and unpaid Base Salary
(at the rate in effect on the date of death) as of the date of death; (2) a pro
rata share of the Annual Bonus for the year of his death as and when such
amounts are due and payable under the term of the Executive Bonus Plan; and (3)
all amounts previously deferred under the Executive Bonus Plan (together with
any interest accrued thereon) and not yet paid by the Employer in the manner
prescribed by the executor of the Employee's estate. In the event of the
Employee's death during the Term, the Employee shall fully vest in any stock
option which has been granted previously to the Employee.
(h) If the Employer does not continue the Employee's employment
upon expiration of the Term, the sole obligation of the Employer hereunder shall
be to pay the Employee in a cash lump sum an amount equal to the Base Salary
actually paid to the Employee for the prior twelve (12) month period and any
amounts payable under the Executive Bonus Plan, as and when such amounts are due
and payable under the terms of the Executive Bonus Plan.
(i) Notwithstanding anything contained in this Agreement to the
<PAGE>contrary, to the extent that the payments and benefits provided under this
Agreement or provided for the benefit of the Employee under any other plan or
agreement of or with the Employer (each such payment or benefit, a "Payment,"
and such payments and benefits collectively, the "Payments"), would be subject
to the excise tax imposed under Section 4999 of the Code or any interest or
penalties with respect to such excise tax (such excise tax, together with any
such interest and penalties are hereinafter collectively referred to as the
"Excise Tax"), the Payments shall be reduced if and to the extent necessary so
that no Payment shall be subject to the Excise Tax. The Company shall reduce
or eliminate the Payments by first reducing or eliminating the payments due
under Sections 10(b), 10(c) or 10(e) hereof, then by reducing or eliminating any
other amounts payable in cash, and then by reducing or eliminating benefits
which are not payable in cash, in each case in reverse order beginning with
payments or benefits which are to be paid the farthest in time from the date of
the determination.
11. Employee Covenant
For a period of two years following termination of this
Agreement, the Employee: (a) will not violate or cause the Employer to violate
the terms of any agreement, including any franchise agreement, which the
Employer is obligated under, except with the express written consent of the duly
empowered officer of the Employer or pursuant to an order of a court of
competent jurisdiction; and (b) divulge or use any confidential information the
effect of which would be injurious to the Employer without the prior written
consent of a duly empowered officer of the Employer. Employee shall have the
right to approve the provisions of any such franchise agreement which restricts
Employee's future employment. For a period of five years following termination
of this Agreement, the Employee will not solicit or employ any person, who was
employed by the Employer within six months prior to the termination of
Employee's employment, in any business in which Employee has a material
interest, direct or indirect, as an officer, partner, shareholder or beneficial
owner.
12. Binding Effect
(a) This Agreement shall inure to the benefit of and be binding
upon the Employer and its successors. The Employer will require any successor
(whether direct or indirect, by purchase, merger, consolidation or otherwise)
to all or substantially all of its assets to expressly assume and agree to
perform this Agreement in the same manner and to the same extent that the
Employer would be required to perform it if no such succession had taken place
or with or into which the Employer may consolidate or merge. Employee agrees
that this Agreement is personal to him and may not be assigned by him otherwise
than by will or laws of descent and distribution. This Agreement shall inure
to the benefit of and be enforceable by the Employee's legal representatives.
13. Miscellaneous
(a) If any provision of this Agreement, or portion thereof,
shall be held invalid or unenforceable by a court of competent jurisdiction,
such invalidity or unenforceability shall attach only to such provision or
portion thereof, and this Agreement shall be carried out as if any such invalid
or unenforceable provision or portion thereof were not contained herein. In
<PAGE>addition, any such invalid or unenforceable provision or portion thereof
shall
be deemed, without further action on the part of the parties hereto, modified,
amended or limited to the extent necessary to render the same valid and
enforceable.
(b) This Agreement, and all of the rights and obligations of
the parties in connection with the employment relationship established hereby
shall be construed and enforced in accordance with the laws of New York
applicable to contracts made and fully to be performed therein, and without
giving effect to any rules of conflicts of law.
(c) All notices, requests, demands, and other communications
provided for hereunder shall be in writing and shall be given or made when (i)
delivered personally; (ii) two (2) business days following mailing by first
class postage prepaid, registered or certified mail, return receipt requested,
to the party to be notified at its or his address set forth herein; or (iii) on
the date sent by telecopier, if the addressee has compatible receiving equipment
and provided the transmittal is made on a business day during the hours of 9:00
a.m. to 6:00 p.m. of the receiving party and if sent at other times, on the
immediately succeeding business day, or (iv) on the first business day
immediately succeeding delivery to an express overnight carrier for the next
business day delivery.
(d) This Agreement may be executed simultaneously in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. Each party shall deliver
such further instruments and take such further action as may be reasonably
requested by the other in order to carry out the provisions and purposes of this
Agreement. This Agreement represents the entire understanding of the parties
with reference to the transaction set forth herein and neither this Agreement
nor any provisions thereof may be modified, discharged or terminated except by
an agreement in writing signed by the party against whom the enforcement of any
waiver, charge, discharge or termination is sought. Any waiver by either party
or a breach of any provision of this Agreement must be in writing and no waiver
of a particular breach shall operate as or be construed as waiver of any
subsequent breach thereof.
<PAGE>
<PAGE> IN WITNESSETH WHEREOF, the parties hereto have executed and have
caused this Agreement to be executed as of the day and year first above written.
DATE:
DANIEL T. ACCORDINO
CARROLS CORPORATION
DATE: By:____________________
<PAGE>
CARROLS HOLDINGS CORPORATION
1994 DIRECTORS' STOCK OPTION PLAN
1. Purpose. The purpose of this Plan is to advance the interests of
Carrols Holdings Corporation (the "Company"), by providing an additional
incentive to attract and retain non-employee directors of the Company and to
foster the commonality of their interest with those of the general shareholders.
2. Definitions. As used herein, the following terms shall have the
meaning indicated:
(a) "Annual Meeting Date" shall mean 5:00 p.m. on the
date of the annual meeting of the Company's shareholders at which
the Directors are elected.
(b) "Board" shall mean the Company's Board of Directors.
(c) "Change of Control" shall mean:
(i) if there occurs any transaction (which shall include
a
series of transactions occurring within 60 days or occurring
pursuant to a plan), that has the result that stockholders of the
Company immediately before such transactions cease to own at
least 51 percent of the voting stock of the Company or of any
entity that results from the participation of the Company in a
reorganization, consolidation, merger, liquidation or any other
form of corporate transaction;
(ii) if the stockholders of the Company shall approve a plan
of merger, consolidation, reorganization, liquidation or
dissolution in which the Company does not survive (unless the
approved merger, consolidation, reorganization, liquidation or
dissolution is subsequently abandoned); or
(iii) if the stockholders of the Company shall approve a
plan for the sale, lease, exchange or other disposition of all
or substantially all the property and assets of the Company
(unless such plan is subsequently abandoned).
(d) "Code" shall mean the Internal Revenue Code of 1986, as amended.
(e) "Common Stock" shall mean the Common Stock, par value $.01 per
share of the Company.
(f) "Dilutive Securities" shall mean any security which can be
exchanged or converted into Common Stock where such action would
result in proceeds to the Company which are less than the Fair
<PAGE> Market Value of the Common Stock multiplied by the number
of new
Shares to be issued.
(g) "Director" shall mean a member of the Board.
(h) "EBITDA" shall mean earnings excluding any extraordinary or
unusual items and before interest, income taxes, depreciation and
amortization.
(i) "Eligible Director" means any person who is a member of the Board
and who is not an employee, full time or part time, of the
Company.
(j) "Fair Market Value" of the Common Stock on any reference date
shall be the greatest of a, b, or c: (a) EBITDA multiplied by
6.25 less the sum of (the average of the balance of non-trade
debt, preferred stock including dividends in arrears, and
non-current trade payables as of the end of each of the last
four fiscal quarters) increased by proceeds available or that
would be available as a result of the exercise or conversion of
Dilutive Securities then divided by the average number of the
Company's Common Stock outstanding including Common Stock which
would be issued in conjunction with Dilutive Securities (b) the
quoted market closing price of the stock on the referenced day
if the shares are publicly traded and (c) $4.00 per share
adjusted for any stock splits, stock dividends or any transaction
having a similar effect in accordance with Section 9 hereof.
(k) "Initial Grant Date" means the later of April 1, 1994 or the date
upon first becoming an Eligible Director.
(l) "Option" (when capitalized) shall mean an Option granted under
this Plan.
(m) "Option Agreement" means the agreement between the Company and
the Optionee for the grant of an Option.
(n) "Optionee" shall mean a person to whom an Option is granted or
any person who succeeds to the rights of such person under this
Plan by reason of the death of such person.
(o) "Plan" shall mean this 1994 Directors' Stock Option Plan for the
Company as herein set forth and as amended from time to time.
(p) "Share" shall mean a share of the Common Stock.
3. Shares and Options. Subject to Section 9 of this Plan,the Company may
grant to Optionees, from time to time, Options to purchase an aggregate of up
to One Hundred Thousand (100,000) Shares held in the Company's treasury or from
authorized and unissued Shares. If any Option granted under the Plan shall
terminate, expire, or be cancelled or surrendered as to any Shares, new Options
may thereafter be granted covering such Shares.
<PAGE> 4. Grants of Options.
(a) Each Eligible Director shall receive a grant of an Option to
purchase 5,000 Shares on the Initial Grant Date.
(b) In addition, each Eligible Director shall receive a grant of an
Option to purchase an additional 1,000 Shares on each anniversary date of the
Initial Grant Date.
(c) Upon the grant of each Option, the Company and the Eligible
Director shall enter into an Option Agreement, which shall specify the grant
date and the exercise price and shall include or incorporate by reference the
substance of this Plan and such other provisions consistent with this Plan as
the Board may determine.
5. Exercise Price. The exercise price per Share of any Option shall be
the Fair Market Value of the Shares underlying such Option on the date such
Option is granted.
6. Exercise of Option. An Option shall be deemed exercised when (i) the
Company has received written notice specifying the number of shares subject to
such exercise in accordance with the terms of the Option (ii) full payment of
the aggregate exercise price of the Shares as to which the Option is exercised
has been made, and (iii) arrangements that are satisfactory to the Board in its
sole discretion have been made for the Optionee's payment to the Company of the
amount that is necessary for the Company to withhold in accordance with
applicable Federal, state or local tax withholding requirements. The exercise
price of any Shares purchased shall be paid in cash, by certified or official
bank check or such other mode of payment as the Committee may approve. No
Optionee shall be deemed to be a holder of any Shares subject to an Option
unless and until a stock certificate or certificates for such Shares are issued
to such person(s) under the terms of the Plan. No adjustment shall be made for
dividends (ordinary or extraordinary, whether in cash, securities or other
property) or distributions or other rights for which the record date is prior
to the date such stock certificate is issued, except as expressly provided in
Section 9 hereof.
7. Exercise Schedule for Options. Each Option granted hereunder shall
vest and be exercisable equally over a three year period from the date of grant.
Thereafter, such Option shall be exercisable in full. The expiration date of
an Option shall be ten years from the date of grant of the Option.
8. Termination of Option Period. The unexercised portion of any Option
shall automatically and without notice terminate and become null and void at the
time of the earliest to occur of the following:
(i) Expiration of three months from the date the Optionee ceases to
be a Director of the Company;
(ii) Immediately following a finding by the Committee, after full
consideration of the facts presented on behalf of both the Company and the
Optionee, that the Optionee has breached his duties to the Company, has
willfully or negligently failed to perform his duties or has been engaged in
disloyalty to the Company. (In such event, in addition to immediate termination
<PAGE>of the Option, the Optionee shall automatically forfeit all Option Shares
for
any exercised portion of the Option for which the Company has not yet delivered
the share certificates to the Optionee upon refund by the Company of the Option
Price paid by the Optionee);
(iii) The date, if any, set by the Committee as an accelerated
expiration date in the event of the merger, consolidation, reorganization,
liquidation or dissolution of the Company or a Change of Control.
9. Adjustment of Shares.
(a) If at any time while the Plan is in effect or unexercised Options
are outstanding, there shall be any increase or decrease in the number of issued
and outstanding Shares through the declaration of a stock dividend or through
any recapitalization resulting in a stock split-up, combination or exchange of
Shares, then and in such event:
(i) appropriate adjustment shall be made in the maximum number
of Shares available for grant under the Plan, so that the same percentage of the
Company's issued and outstanding Shares shall continue to be subject to being
so optioned; and
(ii) appropriate adjustment shall be made in the number of Shares
and the exercise price per Share thereof then subject to any outstanding Option,
so that the same percentage of the Company's issued and outstanding Shares shall
remain subject to purchase at the same aggregate exercise price.
(b) Except as otherwise expressly provided herein, the issuance by
the Company of shares of its Common Stock of any class, or securities
convertible into shares of Common Stock of any class, either in connection with
a direct sale or upon the exercise of rights or warrants to subscribe therefor,
or upon conversion of shares or obligations of the Company convertible into such
shares or other securities, shall not affect, and no adjustment by reason
thereof shall be made with respect to, the number or exercise price of the
Shares then subject to outstanding Options granted under the Plan.
(c) Without limiting the generality of the foregoing, the existence
of outstanding Options granted under the Plan shall not affect in any manner the
right or power of the Company to make, authorize or consummate (i) any or all
adjustments, recapitalizations, reorganizations or other changes in the
Company's capital structure or its business (ii) any merger or consolidation of
the Company; (iii) any issue by the Company of debt securities, or preferred or
preference stock that would rank above the Shares subject to outstanding
Options; (iv) the dissolution or liquidation of the Company; (v) any sale,
transfer or assignment of all or any part of the assets or business of the
Company; or (vi) any other corporate act or proceeding, whether of a similar
character or otherwise.
10. Non-Transferability of Options. Each Option shall provide that such
Option shall not be transferable by the Optionee otherwise than by will or the
laws of descent and distribution, and, subject to the terms of the Option
Agreement, each Option shall be exercisable during the Optionee's lifetime only
by the Optionee.
<PAGE>
11. Issuance of Shares. As a condition of any sale or issuance of Shares
upon exercise of any Option, the Board may require such agreements or
undertakings, if any, as the Board may deem necessary or advisable to assure
compliance with any Federal, state or local law, rule or regulation including,
but not limited to, the following:
(i) a representation and warranty by the Optionee to the Company, at
the time any Option is exercised, that he is acquiring the Shares to be issued
to him for investment and not with a view to, the distribution or sale of any
such Shares; and
(ii) a representation, warranty, and/or agreement to be bound by any
legends on the Share certificates and which, in the opinion of the Board,
necessary or appropriate to comply with the provisions of any securities law
deemed by the Board to be applicable to the issuance of the Shares.
12. Administration of the Plans. The Plan shall be administered by the
Board, which shall have the authority to adopt such rules and regulations and
to make such determinations as are not inconsistent with the Plan and as are
necessary or desirable for the implementation and administration of the Plan,
provided that the Eligible Directors shall not have any discretion with respect
to the grant of options under the Plan or the power to modify the Plan.
13. Interpretation. If any provision of the Plan should be held invalid
or illegal for any reason, such determination shall not affect the remaining
provisions hereof, but instead the Plan shall be construed and enforced as if
such provision had never been included in the Plan. The determination and the
interpretation and construction of any provision of the Plan by the Board shall
be final and conclusive. This Plan shall be governed by the laws of the State
of Delaware. The Plan shall be construed to comply with all applicable law,
and to avoid liability to the Company or the Optionee. Headings contained in
this Plan are for convenience only and shall in no manner be construed as part
of this Plan. Any reference to the masculine, feminine, or neuter gender shall
be a reference to such other gender as is appropriate.
14. Term of Plan; Amendment and Termination of the Plan.
(a) This Plan shall become effective upon approval of the Plan by the
Shareholders of the Company, and shall continue in effect until all Options
granted hereunder have expired or been exercised, unless sooner terminated under
the provisions relating thereto. No Option under this Plan shall be granted
after 10 years from the Effective Date.
(b) The Board may from time to time amend, terminate or suspend the
Plan or any Option; provided, however, that, except to the extent provided in
Section 9, no such amendment may (i) without approval by the Company's
shareholders, increase the number of Shares reserved for Options or change the
class of persons eligible to receive Options or involve any other change or
modification requiring shareholder approval under Rule 16b-3 of the Securities
Act of 1933, as amended, (ii) permit the granting of Options that expire beyond
the maximum ten year period described in Section 7, (iii) extend the termination
date of the Plan as set forth in Section 14(a), or (iv) give the Directors
discretion with respect to the grant of Options and, provided, further, that,
<PAGE>except to the extent otherwise specifically provided in Section 8, no
amendment,
termination or suspension of the Plan or any Option issued hereunder shall
substantially impair any Option previously granted to any Optionee without the
consent of such Optionee. Any termination or suspension of the Plan shall not
affect Options already granted and such Options shall remain in full force and
effect as if this Plan had not been terminated or suspended. No Option may be
granted while the Plan is suspended or after it is
terminated.
(c) Notwithstanding anything else contained herein, the provisions
of this Plan which govern the number of Options to be awarded to Eligible
Directors, the exercise price per Share under each such Option, when and under
what circumstances an Option will be granted and the period within which each
Option may be exercised, shall not be amended more than once every six months
(even with shareholder approval), other than to conform to changes to the Code,
or the rules promulgated thereunder, and under the Employee Retirement Income
Security Act of 1974, as amended, or the rules promulgated thereunder, or with
rules promulgated by the Securities and Exchange Commission.
15. Entire Agreement. This Plan and the Option Agreement constitute the
entire agreement with respect to the subject matter hereof, provided that in the
event of any inconsistency between the Plan and the Option Agreement, the terms
and conditions of this Plan shall control.
Executed on this day of , 1994.
CARROLS HOLDINGS CORPORATION
BY: _________________________
Name:
Title:
<PAGE>
<PAGE> THIRD AMENDMENT TO THIRD AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT
among
CARROLS HOLDINGS CORPORATION
CARROLS CORPORATION
and
HELLER FINANCIAL, INC.
Dated as of May 2, 1994
<PAGE>
<PAGE> THIRD AMENDMENT TO THIRD AMENDED AND
RESTATED
LOAN AND SECURITY AGREEMENT
This Third Amendment to Third Amended and Restated Loan and
Security Agreement, dated as of May 2, 1994 (this "Agreement") is
among Carrols Holdings Corporation, a Delaware corporation
("Holdings"), Carrols Corporation, a Delaware corporation
("Borrower") and HELLER FINANCIAL, INC., a Delaware corporation
("Lender").
W I T N E S E T H:
WHEREAS, Holdings, Borrower and Lender are parties to that
certain Third Amended and Restated Loan and Security Agreement
dated as of August 9, 1993 (as heretofore amended, the "Credit
Agreement"; capitalized terms not otherwise defined herein having
the definitions provided therefor in the Credit Agreement) and to
certain other documents executed in connection with the Credit
Agreement; and
WHEREAS, the parties hereto wish to further amend the
Credit Agreement as provided herein;
NOW, THEREFORE, the parties hereto agree as follows:
1. Amendments to the Credit Agreement.
A. Paragraphs (a) and (b) of Section 9.6 of
the Credit Agreement are hereby amended by deleting each of said
paragraphs in their entirety and substituting in their place the
following:
(a) Fixed Charge Coverage Ratio. Maintain as
at the end of each period set forth below, for the period
then-ended, a Fixed Charge Coverage Ratio at least equal to the
respective ratio set forth opposite each such date.
Period Minimum Ratio
June 30, 1993 - December 31, 1993 1.00:1
June 30, 1993 - March 31, 1994 1.05:1
June 30, 1993 - June 30, 1994 1.10:1
Thereafter maintain as of the end of each Fiscal Quarter
for the four Fiscal Quarter period then ended, a Fixed Charge
Coverage Ratio at least equal to 1.10:1.
(b) Total Interest Coverage Ratio. Maintain,
as of the end of each period set forth below, for the period then
ended, a Total interest Coverage Ratio at least equal to the
minimum ratio (as of any date, the "Minimum Interest Coverage
Ratio") set forth below opposite such date:
<PAGE>
Minimum Interest
Period Coverage Ratio
June 30, 1993 - December 31, 1993 1.20
June 30, 1993 - March 31, 1994 1.20
June 30, 1993 - June 30, 1994 1.25
Thereafter maintain at the end of each Fiscal Quarter for
the four Fiscal Quarter period then ended, a Minimum Interest
Coverage Ratio at least equal to 1.25.
2. Representations and Warranties. To induce Lender
to enter into this Agreement, Holdings and Borrower each represents
and warrants to Lender that the execution, delivery and performance
by Holdings and Borrower of this Agreement are within their
respective corporate powers, have been duly authorized by all
necessary corporate action (including, without limitation,
shareholder approval), have received all necessary governmental
approval (if any shall be required), and do not and will not
contravene or conflict with any provision of law applicable to
Holdings or Borrower, the Certificate of Incorporation or Bylaws of
Holdings or Borrower, or any order, judgment or decree of any court
or other agency of government or any contractual obligation binding
upon Holdings or Borrower; and the Credit Agreement as amended as
of the date hereof is the legal, valid and binding obligation of
Holdings and Borrower enforceable against Holdings and Borrower in
accordance with its terms.
3. Conditions. The effectiveness of the amendments
stated in this Agreement is subject to the following conditions
precedent or concurrent:
(a) No Default. No Default or Event of
Default under the Credit Agreement, as amended hereby, shall have
occurred and be continuing.
(b) Warranties and Representations. The
warranties and representations of Holdings and Borrower contained
in this Agreement, the Credit Agreement, as amended hereby, and
the other Loan Documents, shall be true and correct as of the
effective date hereof, with the same effect as though made on such
date.
4. Miscellaneous.
(a) Captions. Section captions used in this
Agreement are for convenience only, and shall not affect the
construction of this Agreement.
(b) Governing Law. This Agreement shall be a
contract made under and governed by the laws of the State of New
York, without regard to conflict of laws principles.
Whenever possible each provision of this Agreement shall be
<PAGE>interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be
prohibited by or invalid under such law, such provision shall be
ineffective to the extent of such prohibition or invalidity,
without invalidating the remainder of such provision or the
remaining provisions of this Agreement.
(c) Counterparts. This Agreement may be
executed in any number of counterparts and by the different parties
on separate counterparts, and each such counterpart shall be deemed
to be an original, but all such counterparts shall together
constitute but one and the same Agreement.
(d) Successors and Assigns. This Agreement
shall be binding upon Holdings, Borrower and Lender and their
respective successors and assigns, and shall inure to the sole
benefit of Holdings, Borrower and Lender and the successors and
assigns of Holdings, Borrower and Lender.
(e) References. Any reference to the Credit
Agreement contained in any notice, request, certificate, or other
document executed concurrently with or after the execution and
delivery of this Agreement shall be deemed to include this
Agreement unless the context shall otherwise require.
(f) Continued Effectiveness. Notwithstanding
anything contained herein, the terms of this Agreement are not
intended to and do not serve to effect a novation as to the Credit
Agreement. The parties hereto expressly do not intend to
extinguish the Credit Agreement. Instead, it is the express
intention of the parties hereto to reaffirm the indebtedness
created under the Credit Agreement which is evidenced by the
Replacement Revolving Promissory Note and secured by the
Collateral. The Credit Agreement as amended hereby and each of the
other Loan Documents remain in full force and effect.
(g) Costs, Expenses and Taxes. Borrower
affirms and acknowledges that Section 2.19 of the Credit Agreement
applies to this Agreement and the transactions and agreements and
documents contemplated hereunder.
Delivered at Chicago, Illinois, as of the day and year
first above written.
CARROLS CORPORATION
Address:
By:
Printed:
Title:
<PAGE> CARROLS HOLDINGS
CORPORATION
Address:
By:
Printed:
Title:
HELLER FINANCIAL, INC.
Address:
By:
Printed:
Title:
<PAGE> FOURTH AMENDMENT TO THIRD AMENDED
AND RESTATED LOAN AND SECURITY AGREEMENT
THIS FOURTH AMENDMENT TO THIRD AMENDED AND RESTATED LOAN AND SECURITY
AGREEMENT (the "Fourth Amendment"), dated as of December 20, 1994, by and among
HELLER FINANCIAL, INC., a Delaware corporation (the Lender"), CARROLS HOLDINGS
CORPORATION, a Delaware corporation ("Holdings" or, either individually or
together with the Company, the "Borrower"), and CARROLS CORPORATION, a Delaware
corporation (the "Company" or, either individually or together with Holdings,
the "Borrower"), amends the Third Amended and Restated Loan and Security
Agreement, made as of the 9th day of August, 1993, as heretofore amended.
WITNESSETH:
WHEREAS, the Lender and the Borrower have agreed to amend the Agreement to
provide for an additional credit facility and to amend certain terms of the
Agreement.
NOW THEREFORE, in consideration of the premises and the agreements,
provisions and covenants herein contained, the Borrower and the Lender hereby
amend the Agreement and agree as follows:
A. AMENDMENT OF AGREEMENT.
1. Defined Terms.
(a) New Defined Terms. The following defined terms and the meanings
thereof are hereby added to subsection 1.1 of the Agreement:
"Additional Loan B Amount" - as defined in Section 2.1B(b).
"Assignments (Loan B)" - the Assignment (Kin), the Assignment (Midon)
and the Assignment (Riva).
"Assignment ("Kin")" - the Assignment of Representations, Warranties,
Covenants, Indemnities and Rights to be executed and delivered by Borrower
whereby Borrower assigns to Lender the representations, warranties and
indemnities of sellers to Borrower contained in the New Acquisition Purchase
Agreement (Kin), substantially in the form of Exhibit 1.1(I).
"Assignment ("Midon")" - the Assignment of Representations,
Warranties, Covenants, Indemnities and Rights to be executed and delivered by
Borrower whereby Borrower assigns to Lender the representations, warranties and
indemnities of sellers to Borrower contained in the New Acquisition Purchase
Agreement (Midon), substantially in the form of Exhibit 1.1(I).
"Assignment ("Riva")" - the Assignment of Representations,
Warranties, Covenants, Indemnities and Rights to be executed and delivered by
Borrower whereby Borrower assigns to Lender the representations, warranties and
indemnities of sellers to Borrower contained in the New Acquisition Purchase
Agreement (Riva), substantially in the form of Exhibit 1.1(I).
"Assignments of Leases" - all assignments of leases in form
acceptable to the Lender, pursuant to which the Borrower or Carrols Realty II
<PAGE>shall have assigned to the Lender as security for the Borrower's Loan B
Liabilities, the Borrower's or Carrols Realty II's interest in any Loan B Leases
and Loan B Leasehold Properties.
"BK Units" - Units which are operated by Borrower as Burger King
restaurants.
"Borrower's Loan B Liabilities" - all Indebtedness, obligations
andliabilities of the Borrower to the Lender in respect of Loan B now and from
time to time hereafter arising, owing, due or payable, and whether or not
currently contemplated, however evidenced, created, incurred, acquired or owing
and however arising, whether under this Agreement or the Other Agreements.
"Cash Equivalents" means: (a) marketable direct obligations
issued or unconditionally guarantied by the United States Government or issued
by any agency thereof and backed by the full faith and credit of the United
States, in each case maturing within one year from the date of acquisition
thereof; (b) commercial paper maturing no more than one year from the date
issued and, at the time of acquisition, having a rating of at least A-1 from
Standard & Poor's Corporation or at least P-1 from Moody's Investors Service,
Inc.; (c) certificates of deposit or bankers' acceptances maturing within one
year from the date of issuance thereof issued by, or overnight reverse
repurchase agreements from, any commercial bank organized under the laws of the
United States of America or any state thereof or the District of Columbia having
combined capital and surplus of not less than $500,000,000 and not subject to
setoff rights in favor of such bank; (d) time deposits maturing no more than
thirty (30) days from the date of creation thereof with commercial banks having
membership in the Federal Deposit Insurance Corporation in amounts not exceeding
the greater of $100,000 or the maximum amount of insurance applicable to the
aggregate amount of Borrower's deposits at such institution, and (e) deposits
or investments in mutual or similar funds offered or sponsored by brokerage or
other companies having membership in the Securities Investor Protection
Corporation in amounts not exceeding the greater of $100,000 or the maximum
amount of insurance applicable to the aggregate amount of Borrower's deposits
at such institution.
"Excess Cash Flow" - for any period, without duplication, the
total of the following for Borrower and its Subsidiaries on a consolidated
basis, each calculated for such period: (a) EBITDA, less (b) any provision for
(or plus any benefit from) income or franchise taxes included in the
determination of Net Income, excluding changes in long term and short term
deferred tax assets and liabilities; plus (c) decreases in Working Capital; less
(d) the unfinanced portion of Capital Expenditures (including Growth Capital
Expenditures); less (e) scheduled amortization of Indebtedness actually paid;
less (f) any Restricted Payments made in cash and permitted under Section
9.2(g); less (g) Interest Expenses; less (h) increases in Working Capital.
"Group I New Acquisitions" - the three (3) New Acquisitions
Units acquired by the Company pursuant to the New Acquisitions Purchase
Agreement (Kin).
"Group II New Acquisitions" - the three (3) New Acquisitions
Units acquired by the Company pursuant to the New Acquisitions Purchase
Agreement (Riva).
<PAGE>
"Group III New Acquisitions" - the sixteen (16) New Acquisitions
Units acquired by the Company pursuant to the New Acquisitions Purchase
Agreement (Midon).
"Initial Loan B Amount" - as defined in Section 2.1B(c).
"Loan B Collateral" - Loan B Leasehold Properties, Loan B
Leases, BK Units and related property acquired with the proceeds of Loan B or
Net Proceeds of Loan B Collateral Dispositions, and all other property in which
the Lender is granted security interest under the Loan B Collateral Documents.
"Loan B Collateral Disposition" - Asset Dispositions of Loan B
Collateral.
"Loan B Collateral Documents" - the Loan B Security Agreement,
the Loan B Leasehold Mortgages, the Assignments of Leases, the Assignments (Loan
B) and any financing statements or other documents executed in connection
therewith.
"Loan B Commitment" - as at any date, the commitment of the
Lender to make Loan B Loans, not to exceed at any time the amounts set forth in
Section 2.1B for the applicable period of the Loan Commitment Period.
"Loan B Leasehold Mortgages" - all leasehold mortgages or deeds
of trust in form acceptable to the Lender, pursuant to which the Borrower or
Carrols Realty II shall have granted or shall grant to the Lender a lien on and
security interest in the Loan B Leasehold Properties.
"Loan B Leasehold Properties" - all Leasehold Properties in
which the Borrower holds or hereafter acquires a leasehold estate pursuant to
the Loan B Leases.
"Loan B Leases" - all Leases the acquisition of which are funded
from proceeds of Loan B or Net Proceeds of Loan B Collateral Dispositions.
"Loan B Note" The Loan B Promissory Note which evidences Loan
B to be executed and delivered by Borrower, substantially in the form of Exhibit
1.1(J).
"Loan B Security Agreement" - the Security Agreement (Loan B)
of even date with the Fourth Amendment from the Borrower to the Lender in the
form attached hereto as Exhibit 1.1(K).
"Loan Commitment Period" - the period commencing on the date
hereof and ending on the Loan Commitment Termination Date.
"Loan Commitment Termination Date" - the earlier to occur of (a)
September 1, 2000 or (b) the date the Borrower's Liabilities and Borrower's Loan
B Liabilities are paid in full, at which time the Revolving Loan Commitment and
Loan B Commitment shall terminate.
"New Acquisitions" - the twenty-two (22) BK Units described in
Exhibit R which were acquired by the Company pursuant to the New Acquisition
<PAGE>Purchase Agreements.
"New Acquisitions Purchase Agreement (Kin)" - the Purchase and
Sale Agreement among the Company, Kin Restaurants, Inc. and Michael Olander
dated as of February 10, 1994.
"New Acquisitions Purchase Agreement (Midon)" - the Purchase and
Sale Agreement among the Company, Midon Restaurant Corp., Wolf Road Enterprises,
Westmere Associates, Home Run Associates and M & D Developers dated as of May
31, 1994, and June 14, 1994.
"New Acquisitions Purchase Agreement (Riva)" - the Purchase and
Sale Agreement among the Company, Riva Development Corporation and John Riva
dated as of April 18, 1994.
"New Acquisitions Purchase Agreements" - the New Acquisitions
Purchase Agreement (Kin), the New Acquisitions Purchase Agreement (Midon) and
the New Acquisitions Purchase Agreement (Riva).
"Note" - the Revolving Note and/or the Loan B Note.
"Revolving Note" - the Replacement Revolving Promissory Note
evidencing the Revolving Loan in the stated principal amount of $25,000,000,
substantially in the form of Exhibit 1.1(E).
"Unused Loan B Commitment" - as at any date, the difference
between(i) the amount of the Loan B Commitment as in effect on such date and
(ii) the aggregate initial principal amount of all Loan B Loans advanced to
Borrower during the term of this Agreement.
"Working Capital" - for Borrower and its Subsidiaries on a
consolidated basis: current assets, less current liabilities, less long term
reserves and long term accrued liabilities, plus long term deferred tax assets,
less long term deferred tax liabilities; excluding cash, Cash Equivalents, the
principal balance of the Revolving Loan, and any amount due to, or due from,
Affiliates.
(b) Amended Defined Terms. The following defined terms and the
meanings thereof set forth in subsection 1.1 of the Agreement are hereby
amended and restated in their entirety and replaced with the following:
"Charges" all national, federal, state, county, city, municipal or
other governmental (or any instrumentality, division, agency, body or department
thereof, including without limitation, Pension Benefit Guaranty Corporation)
taxes, levies, assessments, charges, liens, claims or encumbrances upon or
relating to the Collateral, the Loan B Collateral, the Borrower's Liabilities,
the Borrower's Loan B Liabilities or the business, ownership or use of any
assets, income or gross receipts of the Borrower or any Subsidiary of the
Borrower which is consolidated with the Borrower for tax purposes.
"Commitments" the Revolving Loan Commitment, the Letter of Credit
Commitment, and the Loan B Commitment each individually a "Commitment" and
together, the "Commitments".
<PAGE> "Excluded Collateral" (a) any automobiles owned by the
Company; and
(b) Units, Fee Properties and Leasehold Properties acquired by the Borrower
after the Effective Date (including the Loan B Collateral), other than Units,
Fee Properties and Leasehold Properties acquired with Net Proceeds of Collateral
Dispositions; and (c) the assets or property of the Borrower listed on Exhibit
A hereof; provided that, if any asset or property listed on such Exhibit is a
lease or other agreement in effect on the date hereof which restricts the right
of the Borrower to assign or grant security interests therein without the prior
consent of another Person, the Borrower shall use its best efforts in each case
to obtain such consent and upon obtaining such consent after the Closing, such
item shall cease to be Excluded Collateral and shall constitute Collateral and
the Borrower shall grant to the Lender a lien and security interest therein in
the manner contemplated by this Agreement.
"Franchise Agreement(s)" - all Restaurant Franchise Agreements and
Development Agreements which may be entered into from time to time between the
Borrower and BKC, including, without limitation, the Franchise Agreements
assigned to Borrower in connection with the Store Acquisitions and the New
Acquisitions.
"Loans" - all advances made by the Lender at any time and from time
to time pursuant to the Agreement or any Other Agreement and specifically
including any such advances made with respect to the Revolving Loan, Loan B and
any Lender Letter of Credit, Letter of Credit Guaranty or Letter of Credit
Obligation.
"Other Agreements" - all agreements, instruments and documents,
including without limitation, guaranties, mortgages, deeds of trust, pledges,
powers of attorney, consents, assignments, contracts, notices, security
agreements, leases, financing statements, certificates and all other written
matter heretofore, now and/or from time to time hereafter executed by and/or on
behalf of the Borrower or any shareholder, Parent, Subsidiary or Affiliate of
the Borrower and delivered to the Lender by the Borrower including without
limitation, the Notes, the Applications, the Loan B Collateral Documents, the
Letter of Credit Guaranties, the Supplemental Documentation, those documents,
instruments and agreements referred to in Section 10.1 hereof, and all other
documents executed and delivered in connection herewith or therewith, and all
amendments, modifications and supplements of or to all such documents.
"Outstanding Amount" - at any time, an amount equal to the sum of (a)
the aggregate principal amount of all Revolving Loans then outstanding, plus (b)
the aggregate amount of Lender Letters of Credit and Letter of Credit Guaranties
then-issued, plus (c) the aggregate principal amount of all unreimbursed Letter
of Credit Obligations.
"Post-Default Rate" - in respect of any Loans, a rate per annum
during the Default Period equal to 2% per annum in excess of the otherwise
effective interest rate set forth in Section 2.7(a).
(c) Deleted Defined Terms. The following defined terms and the
meanings thereof set forth in Section 1.1 of the Agreement are hereby deleted
from the Agreement in their entirety: "Borrower's Maximum Borrowings", "IRS
Claim", "Revolving Loan Commitment Period" and "Revolving Loan Commitment
<PAGE>Termination Date". All references in the Agreement to the "Revolving
Loan
Commitment Period" and the "Revolving Loan Commitment Termination Date" shall
be deemed to be references to the "Loan Commitment Period" and the "Loan
Commitment Termination Date" respectively.
2. Amendment to Section 1.9. Section 1.9 of the Agreement is hereby
amended by inserting the words "or Loan B Collateral" following the word
"Collateral" in the eighth line of Section 1.9.
3. Amendment to Article 2. Article 2 of the Agreement is hereby amended
and restated in its entirety to read as follows:
Article 2 The Loans; the Lender's Compensation;
Repayment and Other General Terms
Section 2.1A The Revolving Loan.
(a) Revolving Loan Commitment. Subject to the terms of this
Agreement and provided that no Event of Default or event which, with notice or
lapse of time or both, would constitute an Event of Default, then exists or
would be created thereby, the Lender hereby agrees, on the terms and subject to
the conditions of this Agreement, during the Loan Commitment Period, to make
Loans (individually, a "Revolving Loan" collectively, the "Revolving Loan") to
the Borrower in an aggregate principal amount at any one time outstanding up to,
but not exceeding, an amount equal to $25,000,000, less the amount of the
outstanding principal balance of Loan B in excess of $5,000,000 (the "Revolving
Loan Commitment") (subject to reduction as set forth in Section 2.12).
(b) Borrowing; Repayment. If the Outstanding Amount any time
exceeds the applicable Revolving Loan Commitment set forth above, the Borrower
shall repay the Revolving Loan as set forth in Section 2.11. Revolving Loans
shall, subject to Sections 2.17 and 2.18 hereof and at the option of the
Borrower, be either Prime Rate Loans or LIBOR Loans. Subject to the terms of
this Agreement, the Borrower may borrow, repay, and reborrow Revolving Loans,
by means of Prime Rate Loans or LIBOR Loans, up to the amount of the applicable
Unused Revolving Loan Commitment during the Loan Commitment Period.
Section 2.1B Loan B.
(a) Loan B Commitment. Subject to the terms of this Agreement and
provided that no Event of Default or event which, with notice or lapse of time
or both, would constitute an Event of Default, then exists or would be created
thereby, the Lender hereby agrees, on the terms and subject to the conditions
of this Agreement, during the Loan B Commitment Period, to make Loans
(individually, a "Loan B Loan" collectively, "Loan B") to the Borrower in an
aggregate principal amount up to, but not exceeding the Loan B Commitment set
forth below for the following periods (subject to reduction as set forth in
Section 2.12):
<PAGE>
<PAGE> Period Loan B Commitment
Date of Fourth Amendment - August 31, 1997 $10,000,000
September 1, 1997 - November 30, 1997 $ 9,750,000
December 1, 1997 - February 28, 1998 $ 9,500,000
March 1, 1998 - May 31, 1998 $ 9,250,000
June 1, 1998 - August 31, 1998 $ 9,000,000
September 1, 1998 - November 30, 1998 $ 8,500,000
December 1, 1998 - February 28, 1999 $ 8,000,000
March 1, 1999 - May 31, 1999 $ 7,500,000
June 1, 1999 - August 31, 1999 $ 7,000,000
September 1, 1999 - November 30, 1999 $ 6,500,000
December 1, 1999 - February 29, 2000 $ 6,000,000
March 1, 2000 - May 31, 2000 $ 5,500,000
June 1, 2000 - September 1, 2000 $ 5,000,000
provided, however, that no Loan B Loan shall be made to the extent that making
such Loan B Loan would cause the Outstanding Amount plus the outstanding
principal balance of Loan B, after giving effect to the Loan B Loan, to exceed
$30,000,000.
(b) Initial Loan B Amount. The first $5,000,000 of the Loan B
Commitment ("Initial Loan B Amount") may be used by Borrower only to finance the
New Acquisitions upon the following terms and conditions:
(i) Any Loan B Loan in respect of New Acquisition Units is
incurred within 270 days of the date of the acquisition of the New Acquisition
Units;
(ii) The Loan B Initial Amount may be borrowed by Borrower in
three separate borrowings (each an "Initial Loan B Borrowing") in respect of the
Group I New Acquisitions, the Group II New Acquisitions, and the Group III
Acquisitions in the following amounts:
Amount
Group I New Acquisitions $ 650,000
Group II New Acquisitions $ 375,000
Group III New Acquisitions $3,975,000
(iii) The Borrower shall deliver to the Lender the documents set
forth in Section C 8(v) of the Fourth Amendment in respect of each New
Acquisitions Unit included in an Initial Loan B Borrowing and the Assignment
(Loan B) pertaining to the New Acquisitions Purchase Agreement in respect of
such New Acquisitions Units on or before the date of such Initial Loan B
Borrowing, together with such other financing statements, mortgages, agreements
and documents as Lender may require, in form and substance satisfactory to the
Lender. Notwithstanding the foregoing, for any New Acquisition Unit located in
the State of New York, instead of delivering the Leasehold Mortgage specified
in Section 8(v)(C), Borrower may deliver an Assignment of Lease in respect of
such New Acquisition Unit.
(c) Additional Loan B Amount. The Borrower shall have no right to
<PAGE>borrow any funds in excess of the Initial Loan B Amount (the "Additional
Loan B Amount") unless the Borrower borrows the full Initial Loan B Amount
pursuant
to the terms and conditions of Section 2.1B(b) above. The Additional Loan B
Amount may be used by Borrower only to acquire additional BK Units pursuant to
the terms of this Agreement.
(d) Borrowing; Repayment. If the outstanding principal balance of
Loan B at any time exceeds the applicable Loan B Commitment set forth above, the
Borrower shall repay Loan B as set forth in Section 2.11. Loan B Loans shall,
subject to Sections 2.17 and 2.18 hereof and at the option of the Borrower, be
either Prime Rate Loans or LIBOR Loans. Amounts borrowed and repaid under Loan
B may not be reborrowed; provided, however, that Net Proceeds of Loan B
Collateral Dispositions may be reinvested in new Assets as provided in Section
9.2(a). The Borrower may borrow Loan B Loans, by means of Prime Rate Loans or
LIBOR Loans, up to the amount of the applicable Unused Loan B Commitment during
the Loan Commitment Period.
Section 2.2 Letters of Credit and Guaranties.
(a) Letter of Credit Commitment. Provided that no Event of Default
or event which, with notice or lapse of time or both would constitute an Event
of Default, then exists or would be created thereby, the Lender hereby agrees,
on the terms and subject to the conditions of this Agreement, to issue Lender
Letters of Credit or Letter of Credit Guaranties, upon the request of the
Borrower as hereinafter provided, during the Loan Commitment Period,
guaranteeing the repayment of Reimbursement Obligations up to, at any one time,
an aggregate principal amount equal to, but not exceeding, the Letter of Credit
Commitment as then in effect.
(b) Conditions of Issuance of Letter of Credit or Guaranties. In
addition to all other terms and conditions set forth in this Agreement, the
issuance by Lender of any Lender Letter of Credit or Letter of Credit Guaranty
shall be subject to the conditions precedent that the Lender Letter of Credit
or the Letter of Credit or written contract for which Borrower requests a Letter
of Credit Guaranty be in such form, be for such amount, contain such terms and
support such transactions as are reasonably satisfactory to Lender. Each Lender
Letter of Credit and each Letter of Credit Guaranty shall be in form and
substance satisfactory to Lender. The expiration date of each Lender Letter of
Credit shall be on a date which is at least thirty (30) days before the Loan
Commitment Termination Date. Each Letter of Credit Guaranty shall provide that
the Guaranty terminates and all demands or claims for payment must be presented
by a date certain, which date will be at least thirty (30) days before the Loan
Commitment Termination Date.
Section 2.3 Notices Relating to Loans; Letter of Credit Guaranties.
(a) Loan Notices. The Borrower shall give the Lender written notice
of each borrowing, conversion and payment of the Loans; provided, however, that
the Borrower may give the Lender telephonic notice of borrowings and repayments
of the Revolving Loan provided such notice is confirmed in writing no later than
five days thereafter, and the Borrower shall also give the Lender written notice
of the duration of each Interest Period applicable to each LIBOR Loan (in each
case, a "Borrowing Notice"). Each such notice shall be irrevocable and shall
<PAGE>be effective only if received by the Lender not later than 11:00 a.m.,
Chicago
time on the date which is:
(i) in the case of each notice of borrowing or payment of, or
conversion into, Prime Rate Loans, the proposed date of the related reduction,
borrowing, payment or conversion; and
(ii) in the case of each notice of borrowing or payment of, or
conversion into, LIBOR Loans, or the duration of an Interest Period for LIBOR
Loans, three London Business Days prior to the date of the related borrowing,
payment, or conversion or the first day of such Interest Period.
Each such notice of borrowing, conversion or payment shall
specify the amount (subject to Section 2.1 hereof) and type of Loans to be
borrowed, converted or paid, and the date of borrowing, conversion or payment
(which shall be: (i) a Business Day in the case of each borrowing or payment of
Prime Rate Loans, and (ii) a London Business Day in the case of each borrowing
or payment of LIBOR Loans and each conversion of or into a LIBOR Loan).
(b) Letter of Credit Notices. Each request by the Borrower for the
issuance of a Lender Letter of Credit or a Letter of Credit Guaranty shall be
accompanied by the Borrower's execution and delivery to the Lender of such
documentation as it may request, together with copies of such documentation as
may be required by the Letter of Credit Bank (all such documentation is herein
referred to collectively as an "Application", or the "Applications") duly
completed. In the event of any conflict between the provisions of this
Agreement and the provisions of any Application, the provisions of this
Agreement shall govern as between the Lender and the Borrower.
Section 2.4 Disbursement of Loans.
The Borrower hereby authorizes and directs the Lender to disburse,
for and on behalf of the Borrower and for the Borrower's account, the proceeds
of the Loans to such Person or Persons as an officer or director of the Borrower
shall direct in writing.
Section 2.5 Amounts and Types of Loans.
(a) Minimum Advance. Each request for a Loan shall be in an amount
at least equal to One Hundred Thousand Dollars ($100,000) and integral multiples
thereof (subject to the borrowing limitations imposed by Section 2.1A and
Section 2.1B hereof).
(b) Type of Loan. All Loans comprising any single advance under any
Commitment shall be the same type (whether Prime Rate Loans or LIBOR Loans),
having, if LIBOR Loans, the same Interest Period. Subject to Sections 2.17 and
2.18 hereof, the Borrower may convert Loans of one type into Loans of another
type as provided in Section 2.16 hereof.
Section 2.6 Note, Loan Account and Statements.
(a) Note. The Revolving Loan shall be evidenced by the Revolving
Note and Loan B shall be evidenced by the Loan B Note. The Revolving Note shall
be dated the date of this Agreement, shall be payable to the order of the
<PAGE>Lender in the principal amount of the maximum Revolving Loan Commitment,
and
shall otherwise be duly completed. The Loan B Note shall be dated the date of
the Fourth Amendment, shall be payable to the order of the Lender in the
principal amount of the maximum Loan B Commitment and shall otherwise be duly
completed.
(b) Loan Account and Statements. Lender shall maintain a loan
account (the "Loan Account") on its books and record: (a) all loans and payments
made hereunder; (b) all payments made by Borrower; and (c) all other appropriate
debits and credits as provided in this Agreement with respect to the Borrower's
Liabilities. All entries in the Loan Account shall be made in accordance with
Lender's customary accounting practices as in effect from time to time.
Borrower promises to pay all Borrower's Liabilities as such amounts become due
or are declared due pursuant to the terms of this Agreement. After the
occurrence and during the continuance of an Event of Default, Borrower
irrevocably waives the right to direct the application of any and all payments
at any time or times thereafter received by Lender from or on behalf of
Borrower, and Borrower hereby irrevocably agrees that Lender shall have the
continuing exclusive right to apply and to reapply any and all payments received
at any time or times after the occurrence and during the continuance of an Event
of Default against the Borrower's Liabilities in such manner as Lender may deem
advisable notwithstanding any previous entry by Lender upon the Loan Account or
any other books and records.
The balance in the Loan Account, as recorded on Lender's most recent
printout or other written statement, shall be presumptive evidence of the
amounts due and owing to Lender by Borrower; provided that any failure to so
record or any error in so recording shall not limit or otherwise affect
Borrower's obligation to pay the Borrower's Liabilities. Not more than twenty
(20) days after the last day of each calendar month, Lender shall render to
Borrower a statement setting forth the principal balance of the Loan Account and
the calculation of interest due thereon. Each statement shall be subject to
subsequent adjustment by Lender but shall, absent manifest errors or omissions,
be presumed correct unless, within thirty (30) days after receipt of such
statement, Borrower shall deliver to Lender its written objection thereto
specifying the error or errors, if any, contained in such statement. In the
absence of a written objection delivered to Lender as set forth above, Lender's
statement of the Loan Account shall be presumptive evidence against Borrower of
the amount of the Borrower's Liabilities.
Section 2.7 Interest.
(a) Interest Rate. The Borrower shall pay interest on the unpaid
principal amount of each Loan (including any unpaid Letter of Credit
Obligation), other than Loan B Loans, for the period commencing on the date of
such Loan until such Loan shall be paid in full at a rate per annum, (i) during
such periods that such Loan is a Prime Rate Loan, equal to the Prime Rate plus
1.25%; and (ii) during such periods that such Loan is a LIBOR Loan, equal to the
LIBO Rate plus 2.50%. The Borrower shall pay interest on the unpaid principal
amount of each Loan B Loan for the period commencing on the date of such Loan
until such Loan shall be paid in full at a rate per annum: (i) during such
periods as such Loan is a Prime Rate Loan, equal to the Prime Rate plus 1.25%,
and (ii) during such periods as such Loan is a LIBOR Loan, equal to the LIBO
<PAGE>Rate plus 2.50%; provided, however, that at such time as the Outstanding
Amount
plus the outstanding principal balance of Loan B exceeds $25,000,000, the
Borrower shall pay interest on that portion of the unpaid principal amount of
Loan B in excess of $5,000,000 at a rate per annum, (i) during such periods as
such Loan is a Prime Rate Loan, equal to the Prime Rate plus 2.25%, and (ii)
during such periods as such Loan is LIBOR Loan, equal to the LIBO Rate plus
3.50%. Interest shall be calculated on the basis of days actually elapsed and
a year shall be deemed to consist of 360 days. In no event shall interest
charged hereunder exceed the maximum rate authorized by law.
(b) Default Interest. Notwithstanding the foregoing, at the option
of Lender after the occurrence of an Event of Default and for so long as such
Event of Default continues (such period being called herein the "Default
Period"), the Loans (including any Letter of Credit Obligation) and any other
amount payable by the Borrower hereunder (to the extent permitted by law) shall
bear interest until paid in full at the Post-Default Rate.
(c) Payment of Interest. Except as provided in the next sentence,
accrued interest on each Loan (including unpaid Letter of Credit Obligations)
shall be payable (i) monthly in arrears on the first day of each calendar month,
and with respect to any LIBOR Loan, on the last day of the Interest Period
relating thereto, and (ii) upon the payment thereof or the conversion thereof
into a Loan of another type (but only on the principal so paid or converted).
Interest which is payable at the Post-Default Rate shall be payable from time
to time on demand by the Lender, but in no event less often than monthly.
Section 2.8 Fees.
The Borrower shall pay to the Lender the following:
(a) Unused Line Fee. Monthly, in arrears, an unused line fee (the
"Unused Line Fee") equal to .50% per annum on the difference between the average
daily borrowings outstanding under the Revolving Loan Commitment (including the
average amounts of any outstanding Lender Letters of Credit or Letter of Credit
Guaranties) and the applicable Revolving Loan Commitment, as in effect during
such month.
(b) Lender Letter of Credit and Letter of Credit Guaranty Fee. A
fee in respect of each Lender Letter of Credit and Letter of Credit Guaranty
(the "Letter of Credit Fee") for the period from and including the day of
issuance to and including the date of expiration or termination thereof, which
fee shall be equal to 2.0% per annum (based upon the actual number of days
elapsed, with a year deemed to consist of 360-days) of the average daily amount
of such Lender Letter of Credit or Letter of Credit Guaranty. The Letter of
Credit Fee shall be paid monthly in advance on the date of issuance of such
Lender Letter of Credit or Letter of Credit Guaranty and on the first day of
each month thereafter; provided, however, that in the event any Lender Letter
of Credit or Letter of Credit Guaranty shall expire by its terms prior to the
last day of any month, the Borrower shall pay to the Lender on account of the
Letter of Credit Fee for such Lender Letter of Credit or Letter of Credit
Guaranty with respect to such final month, only such amount as shall reflect the
number of days during such month that such Lender Letter of Credit or Letter of
Credit Guaranty shall be potentially outstanding. In addition, the Borrower
<PAGE>shall also pay or reimburse the Lender, immediately upon demand, for any
fees
or expenses imposed by the Lender generally with respect to its issuance of
letters of credit or of guaranties in connection with letters of credit or
incurred by the Lender in connection with any Letter of Credit Guaranty,
including, but not limited to, any fees payable or paid by the Lender to the
Letter of Credit Bank on account of each reduction of the face amount of any
Letter of Credit (all such fees to be collectively called "Administrative
Fees").
(c) Closing Fee. A closing fee (the "Closing Fee") in the amount
of One Hundred Thousand Dollars ($100,000) payable on the Effective Date.
(d) Loan B Closing Fee. A closing fee ("Loan B Closing Fee") in the
amount of $50,000 payable on the date of the Fourth Amendment.
The Unused Line Fee, Letter of Credit Fee, Closing Fee, and Loan B Closing Fee
are hereinafter sometimes referred to individually as a "Fee" and collectively
as the "Fees".
Section 2.9 Scheduled Repayment of Revolving Loan and Loan B.
The Revolving Loan and Loan B shall be repaid in full on the Loan
Commitment Termination Date.
Section 2.10 Repayment of Letter of Credit Obligations.
The Borrower shall reimburse the Lender for all amounts paid by the
Lender with respect to any Lender Letter of Credit or Letter of Credit Guaranty
(with respect to each Lender Letter of Credit or Letter of Credit Guaranty, a
"Letter of Credit Obligation", and, collectively, the "Letter of Credit
Obligations") immediately, and in no event later than 3:00 p.m. (Chicago time)
on the date when paid, without presentment, demand or other formalities of any
kind; provided, however, in the event of any payment made by the Lender after
3:00 p.m. (Chicago time), the Borrower shall have until noon (Chicago time) of
the next Business Day to reimburse the Lender for such amount. From and after
any payment with respect to a Lender Letter of Credit or Letter of Credit
Guaranty, the Lender shall have the right to debit any account of the Borrower
maintained at the Lender and to debit the Loan Account (by adding the amount due
to the outstanding principal amount of the Revolving Loan), for payment of the
Letter of Credit Obligation pertaining to such Lender Letter of Credit or Letter
of Credit Guaranty.
Section 2.11 Borrower's Maximum Borrowings.
Notwithstanding anything to the contrary herein contained, the
Outstanding Amount shall at no time exceed the then effective Revolving Loan
Commitment, and the outstanding principal balance of Loan B shall at no time
exceed the then effective Loan B Commitment. To the extent that the Outstanding
Amount or outstanding principal balance of Loan B shall, at any time, exceed the
then effective Revolving Loan Commitment or Loan B Commitment, respectively, the
Borrower shall promptly repay the Revolving Loan or Loan B, as applicable, in
an amount sufficient to bring the Outstanding Amount or the outstanding
principal balance of Loan B, as applicable, below the applicable Commitment.
<PAGE>Loan B shall continue to be secured by the Loan B Collateral and the other
Loans
shall continue to be secured by the Collateral at all times without regard to
whether, at any time, the Outstanding Amount or the outstanding principal
balance of Loan B shall exceed the applicable Commitment.
Section 2.12 Prepayment.
(a) Mandatory Prepayments From Net Proceeds of Collateral
Dispositions. The Borrower will make mandatory prepayments of the Revolving
Loan equal to 100% of Net Proceeds from Collateral Dispositions (other than
Inventory or Accounts sold, liquidated or collected in the ordinary course of
the Borrower's business) immediately upon receipt of such proceeds; provided,
however, that the Borrower shall be permitted to retain 100% of Net Proceeds
from Collateral Dispositions made in accordance with the provisions of
subsection 9.2(a) hereof and which are reinvested in accordance therewith.
(b) Mandatory Prepayments From Net Proceeds of Loan B Collateral
Dispositions. The Borrower will make mandatory prepayments of Loan B equal to
100% of Net Proceeds from Loan B Collateral Dispositions (other than Inventory
or Accounts sold, liquidated or collected in the ordinary course of the
Borrower's business) immediately upon receipt of such proceeds; provided,
however, that the Borrower shall be permitted to retain 100% of Net Proceeds
from Loan B Collateral Dispositions made in accordance with the provisions of
subsection 9.2(a) hereof and which are reinvested in accordance therewith.
(c) Mandatory Prepayment From Equity Offerings. The Borrower will
make mandatory prepayments of the Revolving Loan equal to 50% of the proceeds
of the issuance of capital stock by Borrower (other than proceeds from the
issuance of Borrower capital stock received before the Effective Date, proceeds
from the issuance of Borrower capital stock to members of the management of
Borrower, and equity contributions to any Subsidiary of Borrower or any of its
Subsidiaries, and net of underwriting discounts and commissions, and other
reasonable costs and fees associated therewith, all only to the extent permitted
under this Agreement) promptly upon receipt of such proceeds.
(d) Excess Cash Flow. Beginning with Fiscal Year 1998, within 100
days after the end of each Fiscal Year, Borrower shall make mandatory
prepayments of Loan B equal to 50% percent of Excess Cash Flow for such Fiscal
Year calculated on the basis of the audited financial statements for such Fiscal
Year delivered to the Lender pursuant to Section 9.4(b). All such prepayments
shall be applied in inverse order by maturity.
(e) Change of Control. The Borrower shall give the Lender written
notice of any Change of Control at least 30 days, and not more than 75 days,
prior to the occurrence thereof, and in no event later than such notice shall
be given to the holders of the Senior Notes, whereupon by written notice to the
Borrower given no later than 15 days after receipt of the Borrower's Change of
Control notice, the Lender shall have the right to require all, but not less
than all, of the Loans to be prepaid on such date as shall be set forth therein.
(f) Reduction of Commitment; Voluntary Prepayment; Premium. Both
the Revolving Loan and Loan B may be voluntarily prepaid in full at the same
time (but not separately and not in part) from time to time. All prepayments
<PAGE>made by the Borrower hereunder shall be without premium or penalty. The
Revolving Loan Commitment and each applicable Loan B Commitment set forth in
Section 2.1A and Section 2.1B shall be permanently reduced by the aggregate
amount of all prepayments of the Revolving Loan and Loan B, respectively, made
pursuant to this Section 2.12.
Section 2.13 Place and Manner of Payment.
All payments to the Lender on the Loans shall be payable by federal
wire transfer to such account or accounts as the Lender may designate in writing
to the Borrower. The Borrower hereby authorizes the Lender, at the Lender's
option, to charge the Borrower for any payments including, without limitation,
principal, interest, costs, fees, expenses, and Letter of Credit Obligations as
and when due by adding the same to the outstanding principal amount of the
Revolving Loan.
Section 2.14 Use of Proceeds.
The Borrower warrants and represents to, and covenants with, the
Lender that the Borrower shall use the proceeds of the Revolving Loan for any
corporate purposes of the Borrower, as permitted hereunder, including, without
limitation, the repayment of any Letter of Credit Obligations, and that the
Borrower shall use the proceeds of Loan B to finance the acquisition of the New
Acquisitions and for the acquisition or construction of additional BK Units as
permitted hereunder.
Section 2.15 Receipt of Loan or Advance,
Issuance of Letter of Credit Guaranty
Warranty of No Default.
Each Loan or advance made by the Lender to the Borrower, or the
issuance for the account of the Borrower of any Lender Letter of Credit or
Letter of Credit Guaranty pursuant to this Agreement or any of the Other
Agreements, shall constitute an automatic warranty and representation by the
Borrower to the Lender that there does not then exist an Event of Default which
has not been cured within the applicable cure period or waived by the Lender,
or any event or condition which, with the giving of notice or lapse of time or
both, would constitute an Event of Default.
Section 2.16 Conversions of Loans.
The Borrower shall have the right to convert Prime Rate Loans into
LIBOR Loans and LIBOR Loans into Prime Rate Loans from time to time, provided
that: (a) the Borrower shall give the Lender notice of each such conversion as
provided in Section 2.3 hereof; (b) LIBOR Loans may be converted only on the
last day of an Interest Period for such Loans; and (c) except as required by
Sections 2.17 or 2.18 hereof, no Prime Rate Loan may be converted into a LIBOR
Loan if on the proposed date of conversion an Event of Default or an event
which, with notice or lapse of time or both, would constitute an Event of
Default shall exist hereunder.
Section 2.17 Limitation on Types of Loans.
(a) LIBOR Loans. Anything herein to the contrary notwithstanding,
<PAGE>if, on or prior to the determination of an interest rate for any LIBOR
Loans for
any Interest Period therefore, the Lender determines (which determination shall
be conclusive):
(i) by reason of any event affecting the money markets in the
United States of America or the London interbank market, quotations of interest
rates for the relevant deposits are not being provided in the relevant amounts
or for the relevant maturities for purposes of determining the rate of interest
for such Loans under this Agreement; or
(ii) by reason of forces not within the control of the Lender
or its Affiliates, which forces are generally applicable to LIBOR lenders of the
Lender's type or class, the rates of interest upon which the rate of interest
on any Loan for such period is determined, do not accurately reflect the actual
cost to the Lender of making or maintaining such Loans for such period,
then the Lender shall give the Borrower notice thereof (and shall thereafter
give the Borrower prompt notice of the cessation, if any, of such condition),
and so long as such condition remains in effect, the Lender shall be under no
obligation to make Loans of such type or to convert Loans of any other type into
Loans of such type and the Borrower shall, on the last day(s) of the then
current Interest Period(s) for the outstanding Loans of the affected type either
prepay such Loans or convert such Loans into Loans of another type in accordance
with Section 2.16 hereof.
(b) Event of Default. Anything herein to the contrary
notwithstanding, in no event shall the Borrower be entitled to borrow a LIBOR
Loan if an Event of Default, or an event which, with notice or lapse of time or
both, would constitute an Event of Default, shall exist hereunder or be caused
thereby.
Section 2.18 Illegality.
Notwithstanding any other provision in this Agreement, in the event
that it becomes unlawful for the Lender to: (a) honor its obligation to make
LIBOR Loans hereunder, or (b) maintain LIBOR Loans hereunder, then the Lender
shall promptly notify the Borrower thereof, describing such illegality in
reasonable detail (and shall thereafter promptly notify the Borrower of the
cessation, if any, of such illegality), and the Lender's obligation to make
LIBOR Loans and to convert Prime Rate Loans into LIBOR Loans hereunder shall,
upon written notice given by the Lender to the Borrower, be suspended until such
time as the Lender may again make and maintain LIBOR Loans and the outstanding
LIBOR Loans shall be converted into Prime Rate Loans.
Section 2.19 The Lender's Out-of-Pocket Expenses.
Upon demand by the Lender therefor, the Borrower shall reimburse the
Lender for all reasonable costs, fees and expenses incurred by the Lender or for
which the Lender becomes obligated, in connection with the negotiation,
preparation, execution and delivery, ongoing administration, amendments,
modifications, waivers and enforcement of this Agreement and the Other
Agreements, including, but not limited to auditors', appraisers' and attorneys'
fees, costs and expenses, search fees, appraisal fees, costs and expenses, title
<PAGE>insurance policy fees, costs and expenses, filing fees, the Lender's costs
and
expenses of defending its right to the Collateral and Loan B Collateral and all
taxes (other than taxes payable on the Lender's income) payable in connection
with this Agreement or the Other Agreements. All such amounts not paid when due
shall bear interest at the Post-Default Rate.
Section 2.20 Funding Losses.
In the event that the Borrower fails to borrow any LIBOR Loan after
having given a Borrowing Notice with respect to such LIBOR Loan, or makes any
principal payment on any LIBOR Loan on a date other than the last day of the
Interest Period applicable thereto, the Borrower shall pay the Lender, within
fifteen (15) days after demand thereof or by the Lender, for any resulting loss
or expense incurred by the Lender, including, without limitation, any loss
incurred in obtaining, liquidating or employing deposits from third parties
acquired or arranged to fund such Loan.
4. Amendment to Section 5.1(a). Section 5.1(a) is hereby amended by
inserting the words "the Loan B Liabilities," following the words "other than"
in the third line of Section 5.1(a).
5. Amendment to Sections 5.1(b) and (c). Sections 5.1(b) and (c) are
hereby amended by inserting the words "other than the Loan B Liabilities"
following the word "Liabilities" in the second line of each of Section 5.1(b)
and Section 5.1(c).
6. Addition of Section 5.1(d). The following Section 5.1(d) is added
to the Agreement:
(d) The payment and performance of the Loan B Liabilities shall be
secured by the Loan B Collateral pursuant to the Loan B Collateral Documents.
The Company covenants that it shall execute and deliver to the Lender, Mortgages
or Assignments of Leases as required under this Agreement in respect of all
Leasehold Properties in which it has or may acquire any interest which is
acquired from proceeds of Loan B or from the Net Proceeds of Loan B Collateral
Dispositions.
7. Amendment to Section 5.2(a). Section 5.2(a) of the Agreement is
hereby amended and restated in its entirety to read as follows:
(a) Liens. The Borrower acknowledges and confirms that the liens
and security interests granted to the Lender pursuant to Section 5.1 hereof
secure, and such other security documents as may be executed and delivered by
the Borrower pursuant thereto, shall secure, without limitation, all
Indebtedness, liabilities and obligations of the Borrower to the Lender under
the Agreement , as amended and restated hereby, other than the Loan B
Liabilities, and that the terms "Borrower's Liabilities", "obligations", "debt",
and "indebtedness" as used herein or in such security documents (other than the
Loan B Collateral Documents) (or any other term used therein to describe or
refer to the indebtedness, liabilities and obligations of the Borrower to the
Lender) include, without limitation, the Indebtedness, liabilities and
obligations of the Borrower under the Revolving Note, this Agreement and the
Other Agreements (other than the Loan B Collateral Documents). The Other
<PAGE>Agreements are, and shall continue to be, in full force and effect and are
hereby ratified and confirmed in all respects except as is amended and/or
restated in connection with this Agreement.
8. Amendment to Section 5.2(c). Section 5.2(c) of the Agreement is
hereby amended by inserting the parenthetical "(other than Loan B Collateral)"
after the words "Excluded Collateral" in the eighth line of Section 5.2(c).
9. Amendment to Section 7.2. Section 7.2 of the Agreement is hereby
amended by inserting a comma and the words "proceeds of Loan B or Net Proceeds
of Loan B Collateral Dispositions" after the words "Collateral Dispositions" in
the fourth line of the first paragraph of Section 7.2, and after the words
"Collateral Dispositions" in the second line of the second paragraph of Section
7.2.
10. Amendment to Section 8.1. Section 8.1(a) of the Agreement is hereby
amended as follows:
(a) By inserting the words "and Loan B Collateral" after the word
"Collateral" in the second line of Section 8.1(a);
(b) By restating the last sentence of Section 8.1(a) to read as
follows:
"Any and all proceeds from such insurance policies in
respect of the Collateral may be applied, at the Lender's
option to the prepayment of the Revolving Loan with a
corresponding permanent reduction in the Revolving Loan
Commitment".
and
(c) By adding the following sentence to the end of Section 8.1 (a):
"Any and all proceeds from such insurance policies in
respect of the Loan B Collateral may be applied, at the
Lender's option to the prepayment of the Loan B with a
corresponding permanentreduction in the Loan B
Commitment".
11. Amendment to Section 9.1(j). Section 9.1(j) is hereby amended by
inserting the words "and Loan B Collateral" at the end of Section 9.1(j).
12. Amendment to Section 9.1(m). Section 9.1(m) is hereby amended by
inserting the words "or Loan B Collateral" after the words "Collateral" in the
fifth and last lines of Section 9.1(m).
13. Amendment to Section 9.2(a). Section 9.2(a) of the Agreement is
hereby amended and restated in its entirety to read as follows:
(a) Asset Dispositions. Make any Asset Disposition; provided,
however, that the foregoing shall not prohibit:
(i) collection of Accounts and sales of Inventory in the
<PAGE> ordinary course of business, or sales of the automobiles which
constitute part of the Excluded Collateral;
(ii) Asset Dispositions meeting the following conditions:
(A) The consideration for such disposition is at least
equal to the fair market value of the Assets disposed of (as
determined in good faith by the Board of Directors and evidenced
by a resolution of the Board of Directors, other than for (i)
Equipment or Inventory sold in the ordinary course of Borrower's
business consistent with past practices of Borrower, or (ii)
Units sold in any year for aggregate consideration for all Units
sold in such year not exceeding $1,500,000, and sold in the
ordinary course of Borrower's business consistent with past
practices of Borrower);
(B) The Net Proceeds received in respect of such Asset
Disposition of Loan B Collateral consists of 100% cash, and the
Net Proceeds in respect of any other such Asset Disposition
consists of at least 90% cash; provided, however, that the
Borrower may sell Units which are not Loan B Collateral for
aggregate consideration not exceeding $1,500,000 in any fiscal
year without regard to the 90% cash test set forth in this
clause (B) so long as no more than $3,000,000 of non-cash
consideration with respect to all such dispositions is
outstanding;
(C) The Available Net Proceeds of the Asset Disposition
which is a Collateral Disposition or Loan B Collateral
Disposition are reinvestedin new Assets within 270 days from the
date of the Asset Disposition, or, if not so reinvested, 100%
of the Available Net Proceeds of the Assets Disposition shall
be applied to the mandatory prepayment of the Loans as set forth
in Section 2.12(a) or (b) hereof; provided, however, if at any
time any non-cash consideration received in respect of an Asset
Disposition is converted into or sold or otherwise disposed of
for cash, then such cash shall constitute Available Net Proceeds
for purposes of this provision and shall be applied in
accordance with this paragraph within 30 days of the receipt of
such cash. If the Borrower or any of its Subsidiaries retains
or holds any equity interest in the entity to which the Assets
constituting Collateral or Loan B Collateral are sold, Borrower
will grant Lender a security interest in the Borrower's or its
Subsidiary's interest in such entity to the extent not
prohibited by the Franchise Agreement relating to such Assets
(if any). The receipt of all proceeds of insurance paid on
account of the loss of or damage to any Collateral or Loan B
Collateral and awards of compensation for any Collateral or Loan
B Collateral taken by condemnation or eminent domain shall
constitute Available Net Proceeds;
(D) If the aggregate amount of Available Net Proceeds
<PAGE> from Collateral Dispositions and Loan B Collateral
Dispositions
which may be reinvested but is not yet reinvested at any time
exceeds One Million Dollars ($1,000,000), the Borrower shall
deposit all Available Net Proceeds from Collateral Dispositions
and Loan B Collateral Dispositions in excess of such amount,
immediately upon receipt, into an escrow account with the Lender
("Escrow Account") until completion of the reinvestment thereof
as set forth in this Section 9.2(a), or, if not reinvested
within 270 days of receipt of such Available Net Proceeds,
applied in prepayment of the Revolving Loan or Loan B, as
applicable, pursuant to Section 2.12(a) or (b). The Lender
shall not be required to release funds from the Escrow Account
except upon written instruction from the Borrower with
supporting documentation reasonably satisfactory to the Lender
evidencing that the expenses incurred in connection with the
reinvestment have become due and payable. Funds in the Escrow
Account shall accrue interest at a rate per annum equal to 1/2%
per annum less than the lowest interest rate which the Borrower
is paying to the Lender pursuant to Section 2.7 hereof and at
the times and in the manner specified therein. Funds in the
Escrow Account shall not be applied by the Lender to the
repayment of the Borrower's Liabilities or be subject to the
Lender's right of set-off, unless an Event of Default hereunder
has occurred and is continuing;
(E) If Available Net Proceeds from Collateral
Dispositions or Loan B Collateral Dispositions are reinvested
pursuant to paragraph (C) above, Borrower shall deliver to
Lender concurrently with such reinvestment such documents,
agreements, consents and approvals as Lender may reasonably
request in order to create and perfect its security interest in
the replacement Assets;
(F) If the Asset Disposition consists of Equipment, the
Net Proceeds of such Equipment, if reinvested, shall be
reinvested in other Equipment of the same or higher value;
(G) If the Asset Disposition is a Sale/Leaseback
Transaction, the following conditions are met:
(1) The Borrower would be entitled to incur
Indebtedness in an amount equal to Attributable
Indebtedness with respect to such Sale/Leaseback
Transaction pursuant to subsection 9.2(k)(v);
(2) concurrently with the consummation of any
Sale/Leaseback Transaction for a Unit owned by Borrower
which is included in Collateral or Loan B Collateral, the
Lender shall have received such documents, agreements,
consents and approvals as it may have reasonably requested
in order to create and perfect its security interest in
the leasehold interest to be created thereby;
<PAGE> (3) not more than five (5) Fee Properties may
be
included in any such single Sale/Leaseback Transaction;
and
(4) the Borrower shall have given the Lender at
least 30 days prior written notice of such Sale/Leaseback
Transaction, which notice shall include information
concerning the reinvestment of such Net Proceeds in New
Units if such reinvestment is elected by the Borrower and
permitted hereunder;
(H) If the Asset Disposition consists of Units
constituting Collateral or Loan B Collateral (other than by a
Sale/Leaseback Transaction), the Borrower shall have given the
Lender at least 30 days' prior written notice of an Asset
Disposition which is a sale, which notice shall include
information concerning the reinvestment of such Net Proceeds if
such reinvestment is elected by the Borrower and permitted
hereunder;
(I) Notwithstanding the foregoing paragraphs (A)-(H),
Borrower shall not make Collateral Dispositions and/or Loan B
Collateral Dispositions with an aggregate value in excess of
$15,000,000 without the prior written consent of Lender;
(J) Assets Dispositions of Assets which are not
Collateral or Loan B Collateral shall comply with all applicable
terms of the Indenture;
(K) Subject to the conditions of this subsection 9.2(a),
the Borrower may sell the Units set forth on Exhibit Q, and the
Lender shall release its security interest in such Units and its
Leasehold Mortgages associated with such Units; provided that
the Borrower delivers to Lender the executed Note Pledge
Agreement, the Jan-Geo Note endorsed to Lender, a certified
copy of the Jan-Geo Company partnership agreement, a certified
copy of the Jan-Geo partnership certificate duly filed with the
appropriate governmental authority and such other documents as
Lender may reasonably request; and
(iii) the transfer of the Assets set forth on Exhibit O by
Borrower to the Real Estate Subsidiary.
14. Amendment to Section 9.2(g). Section 9.2(g)(iv) of the Agreement is
amended and restated in its entirety to read as follows:
(iv) regularly scheduled interest payments on the Senior Notes
and repurchases of up to an aggregate $2,000,000 in principal
amount of the Senior Notes from Revolving Loan borrowings;
provided that the following conditions are met:
(a) Each repurchase of Senior Notes is at a discount to
par of at least 2%;
<PAGE>
(b) After giving effect to the repurchase, the Revolving
Loan Commitment shall exceed the Outstanding Amount by the
following amount, during the following periods:
Period Amount
August 16, 1994 - February 15, 1995 $2,000,000
February 16, 1995 - August 15, 1995 $2,500,000
August 16, 1995 and thereafter $3,000,000
(c) After giving effect to the Revolving Loan advance,
No Event of Default or event which with the passage of
time or notice or both would become an Event of Default
shall have occurred and be continuing;
(d) The following proforma ratios are met:
(1) the Pro Forma Fixed Charge Coverage Ratio is
at least 1.10:1 for the Reference Period;
(2) the Pro Forma Leverage Ratio is less than 5.5:1
through December 31, 1994, less than 5.25:1 from January
1, 1995 through December 31, 1995 and less than 5.0:1
thereafter, for the Reference Period; and
(3) the pro forma ratios set forth in clauses (1)
and (2) above shall be determined on the date of the
Revolving Loan advance as shown on the pro forma income
statement of Borrower and its Subsidiaries, and for
purposes of calculating said ratios, pro forma Total
Indebtedness shall include all Indebtedness owed by
Borrower, including Indebtedness under the Senior Notes,
the Revolving Loan and Loan B at the average of the
highest outstanding principal balance of such loans on any
day during each Fiscal Quarter within the Reference
Period, and shall include all financed Growth Capital
Expenditures with respect to any acquisition of Units or
construction of Units in progress. The ratios shall be
determined after giving effect to (w) the repurchase of
the Senior Notes, (x) the incurrence of the Revolving Loan
advance, (y) the incurrence and retirement of any other
Indebtedness of Borrower and its Subsidiaries since the
first day of the Reference Period as if such Indebtedness
were issued or retired at the beginning of the Reference
Period, and (z) the acquisition or disposition of any
Units by the Company or its Subsidiaries since the first
day of the Reference Period, including any acquisition or
disposition which will be contemporaneous with the
incurrence of such Revolving Loan advance, as if the
acquisition or disposition occurred at the beginning of
the Reference Period.
15. Amendment to Section 9.2(h). Section 9.2(h) is hereby amended by
<PAGE>inserting the words "or Borrower's Loan B Liabilities" after the words
"Borrower's Liabilities" in the fifth line of Section 9.2(b).
16. Amendment to Section 9.2(k). (a) Section 9.2(k)(v)(C)(2) is hereby
amended to read as follows:
(2) The Pro Forma Leverage Ratio is less than 5.5:1 through December
31, 1994, less than 5.25:1 from January 1, 1995, through December 31,
1995,and less than 5.0:1, for the Reference Period;
(b) The following subsection (xiii) is hereby added to Section
9.2(k) of the Agreement:
(xiii) Indebtedness under Capital Leases and for the acquisition
of the additional BK Units, together with Equipment and Leasehold
Properties associated with such BK Units, including Indebtedness incurred
in connection with Sale/Leaseback Transactions involving existing BK Units
or Fee Properties associated therewith, from proceeds of the Additional
Loan B Amount, to the extent otherwise permitted under Section 2.1B and the
other provisions of this Agreement; provided that the following conditions
are met:
(A) the Loan B Loan shall not exceed 70% of the purchase
price (or construction cost) of such Equipment or Units; provided,
however, that Loan B Loans in respect of Capital Leases and
Sale/Leaseback transactions may be in an amount up to 100% of the
purchase price of the applicable Asset;
(B) the Loan B Loan is incurred within 270 days of the
acquisition;
(C) the following proforma ratios are met:
(1) the Pro Forma Fixed Charge Coverage Ratio is
at least 1.10:1 for the Reference Period; and
(2) the Pro Forma Leverage Ratio is less than 5.5:1
through December 31, 1994, less than 5.25:1 from January
1, 1995 through December 31, 1995 and less than 5.0:1
thereafter, for the Reference Period;
(3) the pro forma ratios set forth in clauses (1)
and (2) above shall be determined on the date of the Loan
B Loan as shown on the pro forma income statement of
Borrower and its Subsidiaries, and for purposes of
calculating said ratios, all Growth Capital Expenditures
in respect of the New Units shall be considered as part
of the purchase price for said New Units. The ratios
shall be determined after giving effect to (x) the
incurrence of the Loan B Loan, (y) the incurrence and
retirement of any other Indebtedness of Borrower and its
Subsidiaries since the first day of the Reference Period
as if such Indebtedness were issued or retired at the
beginning of the Reference Period, and (z) the acquisition
<PAGE> or disposition of any Units by the Company or its
Subsidiaries since the first day of the Reference Period,
including any acquisition or disposition which will be
contemporaneous with the incurrence of such Loan B Loan,
as if the acquisition or disposition occurred at the
beginning of the Reference Period.
(c) The last sentence of Section 9.2(k) of the Agreement is amended
to read as follows:
Notwithstanding the foregoing paragraphs (i) - (xiii), Borrower shall
not permit any Non-Recourse Subsidiary to incur Indebtedness other than
Non-Recourse Indebtedness.
17. Amendment to Section 9.2(m)(v) and (vi). Sections 9.2(m)(v) and (vi)
are hereby amended and restated in their entirety to read as follows:
(v) If the Unit or Units are purchased with the proceeds of
Loan B, with Net Proceeds of Loan B Collateral Dispositions or Net Proceeds
of Collateral Dispositions, the Unit or Units must be a BK Unit or BK
Units, and the Borrower shall grant to the Lender a perfected first
priority lien and security interest in such acquired BK Unit or BK Units,
including the Franchise Agreements, real estate, fixtures, equipment and
other assets acquired in connection therewith (subject only to such liens
existing on the date of acquisition thereof as may be permitted by the
Agreement), and shall execute and deliver such mortgages, financing
statements and other agreements or documents, and take such other actions
as the Lender may require to perfect and protect such liens and security
interests. The purchase of a Unit or Units with Net Proceeds of Collateral
Dispositions or Net Proceeds of Loan B Collateral Dispositions shall not
be deemed to be new borrowings hereunder, but shall be deemed to be a
substitution of Collateral; and
(vi) If any portion of the purchase price for the acquisition
of any Unit is derived from borrowed funds from any source other than the
Revolving Loan or Loan B, the Borrower shall satisfy the conditions of
subsection 9.2(k)(v). If any portion of the purchase price (including any
portion of such amount constituting Growth Capital Expenditures) for the
acquisition of any Unit is derived from the Revolving Loan, the Borrower
shall satisfy the conditions of subsection 9.2(k)(xii), if applicable. If
any portion of the purchase price (including any portion of such amount
constituting Growth Capital Expenditures) for the acquisition of any BK
Unit is derived from the Loan B, the Borrower shall satisfy the conditions
of subsection 9.2(k)(xiii).
18. Amendment to Sections 9.2(n)(iv) and (v). Sections 9.2(n)(iv) and
(v) are hereby amended and restated in their entirety to read as follows:
(iv) If the Unit or Units are constructed with the Net Proceeds
of Collateral Dispositions, Loan B Proceeds or Loan B Collateral
Dispositions, the Unit or Units must be a BK Unit or BK Units, and the
Borrower shall grant to the Lender a perfected first priority lien and
security interest in such BK Unit or BK Units, including the Franchise
<PAGE> Agreements, real estate, fixtures, equipment and other assets
acquired in
connection therewith (subject only to such liens existing on the date of
acquisition thereof as may be permitted by the Agreement), and shall
execute and deliver such mortgages, financing statements and other
agreements or documents, and take such other actions as the Lender may
require to perfect and protect such liens and security interests. The
construction of a Unit or Units with Net proceeds of Collateral
Dispositions or Net Proceeds of Loan B Collateral Dispositions shall not
be deemed to be new borrowings hereunder, but shall be deemed to be a
substitution of Collateral; and
(v) if funds for the construction of any Unit are derived from
borrowed funds from any source other than the Revolving Loan or Loan B, the
Borrower shall satisfy the conditions of subsection 9.2(k)(v). If funds
for the construction of any Unit are derived from the Revolving Loan, the
Borrower shall satisfy the conditions of subsection 9.2(k)(xii), if
applicable. If funds for the construction of any BK Unit are derived from
Loan B, the Borrower shall satisfy the conditions of subsection
9.2(k)(xiii).
19. Amendment to Section 9.6. Section 9.6 is hereby amended by inserting
the words "and Borrower's Loan B Liabilities" after the words "Borrower's
Liabilities" in the second line of Section 9.6.
20. Amendment to Section 11.1(e). Section 11.1(e) is hereby amended by
inserting the words "or Loan B Collateral" after the word "Collateral" in the
first line of Section 11.1(e).
21. Amendment to Section 11.2 through Section 11.11. Section 11.2
through and including Section 11.11 are hereby amended and restated in their
entirety to read as follows:
Section 11.2 Acceleration.
Upon an Event of Default, without notice by the Lender to or demand
by the Lender of the Borrower, the Borrower's Liabilities and the
Borrower's Loan B Liabilities shall be due and payable, forthwith,
and the Commitments shall thereupon terminate. Upon an Event of
Default, the Lender may give notice thereof to the Borrower, but no
failure to give such notice shall affect the rights and liabilities
of the parties pursuant to this Agreement.
Section 11.3 Remedies of the Lender Generally.
Upon an Event of Default that has occurred and continues to be
uncured, the Lender, in its sole and absolute discretion, may: (a)
exercise any one or more of the rights and remedies accruing to a
secured party under the Uniform Commercial Code of the relevant state
or states and any other applicable law upon default by a debtor; (b)
enter, with or without process of law and without breach of the
peace, any premises where the Collateral, Loan B Collateral or the
books and records of the Borrower related thereto is or may be
located, and without charge or liability to the Lender therefor seize
<PAGE> and remove the Collateral and the Loan B Collateral (and copies
of
the Borrower's books and records in any way relating to the
Collateral and Loan B Collateral) from said premises and/or remain
upon said premises and use the same (together with said books and
records) for the purpose of collecting, preparing and disposing of
the Collateral and Loan B Collateral; (c) sell or otherwise dispose
of the Collateral and Loan B Collateral at public or private sale for
cash or credit, provided; however, that the Borrower shall be
credited with the net proceeds of such sale only when such proceeds
are actually received by the Lender; and (d) exercise any other right
or remedy granted to it under this Agreement or any of the Other
Agreements. All of the Lender's rights and remedies under this
Agreement and all Other Agreements are cumulative and nonexclusive.
Section 11.4 Availability of Collateral and the Loan B Collateral.
Upon the occurrence and continuance of an Event of Default, the
Borrower, immediately upon demand by the Lender, shall assemble the
Collateral and the Loan B Collateral and make it available to the
Lender at a place or places to be designated by the Lender which is
reasonably convenient to the Lender and the Borrower. The Borrower
recognizes that in the event the Borrower fails to perform, observe
or discharge any of its obligations or liabilities under this
Agreement or the Other Agreements, no remedy of law will provide
adequate relief to the Lender, and the Borrower agrees that the
Lender shall be entitled to temporary and permanent injunctive relief
in any such case without the necessity of proving actual damages.
Section 11.5 Notice of Disposition of Collateral and the Loan B
Collateral.
Any notice required to be given by the Lender of a sale, lease, other
disposition of the Collateral and Loan B Collateral or any other
intended action by the Lender, deposited in the United States mail,
postage prepaid and duly addressed to the Borrower at its principal
place of business specified at the beginning of this Agreement not
less than ten (10) days prior to such proposed action, shall
constitute commercially reasonable and fair notice to the Borrower
thereof.
Section 11.6 Collection.
Upon an Event of Default, the Borrower shall receive and hold, as the
sole and exclusive property of the Lender and as trustee for the
Lender, all monies, checks, notes, drafts and all other payment for
and/or proceeds of Collateral and the Loan B Collateral which come
into the possession or under the control of the Borrower (or any of
its shareholders, directors, officers, employees, agents or those
Persons acting for or in concert with the Borrower) and immediately
upon receipt thereof, the Borrower shall remit the same (or cause the
same to be remitted), in kind, to the Lender (at the Lender's place
of business designated at the beginning of this Agreement) or to any
<PAGE> agent or agents (at its or their designated address or
addresses)
appointed by the Lender for that purpose. The Lender shall have the
right at any time and from time to time thereafter, in its sole and
absolute discretion, without notice thereof to the Borrower: (a) to
enforce payment of and collect, by legal proceedings or otherwise,
the Accounts in the name of the Lender and the Borrower; and (b) to
take control, in any manner, of any item of payment or proceeds
referred to above. The Lender, if an Event of Default has occurred
and is continuing, in its sole and absolute discretion, may endorse
the Borrower's name to any of the items of payment or proceeds
described above which come into the Lender's possession or under the
Lender's control and, pursuant to the provisions of this Agreement,
the Lender shall apply the same to and on account of the Borrower's
Liabilities or Borrower Loan B Liabilities, as applicable. For the
purposes of this Section, the Borrower, irrevocably, hereby makes,
constitutes and appoints the Lender (and all persons designated by
the Lender for that purpose) as the Borrower's true and lawful
attorney (and agent-in-fact) to endorse the Borrower's name to said
items of payment and/or proceeds.
Section 11.7 The Lender's Rights with Respect to Accounts.
Upon the occurrence and continuance of an Event of Default, the
Borrower, irrevocably, hereby designates, makes, constitutes and
appoints the Lender (and all persons designated by the Lender) as the
Borrower's true and lawful attorney (and agent-in-fact), with power,
without notice to the Borrower and at such time or times thereafter
as the Lender, in its sole and absolute discretion, may determine,
in the Borrower's or the Lender's name: (a) to demand payment of the
Accounts; (b) to enforce payment of the Accounts by legal proceedings
or otherwise; (c) to exercise all of the Borrower's rights and
remedies with respect to the collection of the Accounts; (d) to
settle, adjust, compromise, extend or renew the Accounts; (e) to
settle, adjust or compromise any legal proceedings brought to collect
the Accounts; (f) to sell or assign the Accounts upon such terms, for
such amounts and at such time or times as the Lender deems advisable;
(g) to discharge and release the Accounts; (h) to take control, in
any manner, of any item of payment or proceeds; (i) to prepare, file
and sign the Borrower's name on any proof of claim in bankruptcy or
similar document against any Obligor described in Section 11.6; (j)
to prepare, file and sign the Borrower's name on any notice of lien,
assignment or satisfaction of lien or similar document in connection
with the Accounts; (k) to do all acts and things necessary, in the
Lender's sole discretion, to fulfill the Borrower's obligations under
this Agreement; (l) to endorse the name of the Borrower upon any of
the items of payment or proceeds described in Section 11.6 and to
deposit the same to the account of the Lender to and on account of
the Borrower's Liabilities; (m) to endorse the name of the Borrower
upon any chattel paper, document, instrument, invoice, freight bill,
bill of lading or similar document or agreement relating to the
Accounts; and (n) to sign the name of the Borrower to verifications
of the Accounts and notices thereof to obligors. All costs
(including, but not limited to, any amounts the Lender pays to any
<PAGE> third-party pursuant to any licensing, patent, royalty,
trademark,
tradename or copyright agreement and any expenses incurred by the
Lender in connection therewith) expenses and fees (including, but not
limited to, attorneys' fees) incurred by the Lender (or for which the
Lender becomes obligated to pay) in connection with the foregoing
shall be paid by the Borrower to the Lender.
Section 11.8 Adjournment of Sale of Collateral and Loan B
Collateral.
Upon the occurrence and continuance of an Event of Default, the
Borrower agrees that the Lender may, if the Lender deems it
reasonable, postpone or adjourn any sale of the Collateral or Loan
B Collateral from time to time by an announcement at the time and
place of sale or by announcement at the time and place of such
postponed or adjourned sale, without being required to give a new
notice of sale. The Borrower agrees that the Lender has no
obligation to preserve rights against prior parties to the Collateral
or Loan B Collateral.
Section 11.9 Costs and Expenses of Enforcement.
If at any time or times on or after an Event of Default the Lender
employs counsel for advice or other representation (a) with respect
to the Collateral, Loan B Collateral, this Agreement or the Other
Agreements; (b) to represent the Lender in any litigation, contest,
dispute, suit or proceeding or to commence, defend or intervene or
to take any other action in or with respect to any litigation,
contest, dispute, suit or proceeding (whether instituted by the
Lender, the Borrower or any other Person) in any way or respect
relating to the Collateral, Loan B Collateral, this Agreement, the
Other Agreements or the Borrower's affairs; (c) to enforce any rights
of the Lender against the Borrower or any other Person which may be
obligated to the Lender by virtue of this Agreement or the Other
Agreements, including, without limitation, the Obligors; (d) to
protect, collect, sell, liquidate or otherwise dispose of the
Collateral or Loan B Collateral; and/or (e) to attempt to or to
enforce the Lender's security interest in the Collateral or Loan B
Collateral, the reasonable attorneys' fees arising from such services
and all expenses, costs, charges and other fees of such counsel or
of the Lender in any way or respect arising in connection with or
relating to any of the events described in this Section shall be paid
by the Borrower to the Lender. Without limiting the generality of
the foregoing, such expenses, costs, charges and fees include: (a)
accountant's fees, costs and expenses; (b) court costs and expenses;
(c) court reporter fees, costs and expenses; (d) long distance
telephone charges; (e) telegram charges; (f) expenses for travel,
lodging and food; and (g) expense incurred in fulfilling, in whole
or in part, any order of any Obligor from which an Account has
arisen or will arise.
Section 11.10 The Lender's Remedies Prior to Event of Default.
<PAGE> Upon the occurrence of any of the events described in Section
11.1
above, notwithstanding the Borrower's right to cure the same before
it becomes an Event of Default, the Lender, if it determines that the
Collateral or Loan B Collateral or the payment of the Borrower's
Liabilities or Borrower's Loan B Liabilities is jeopardized, may
enforce such of its rights and remedies under this Article as the
Lender deems necessary or proper.
Section 11.11 BKC Consent. Without limiting in any way any of the
Lender's rights and remedies with respect to the Collateral or Loan
B Collateral, the Lender acknowledges that the BKC Consent may
restrict the Lender's right to dispose of and generally to deal with
the Collateral or Loan B Collateral. The Lender hereby agrees, for
the benefit of BKC only and no other Person (including the Borrower),
that it will comply with the terms and provisions of the BKC Consent.
B. REPRESENTATIONS AND WARRANTIES.
The Borrower represents, warrants, covenants and agrees that as of the date
of this Fourth Amendment, after giving effect to the consummation of the
transactions contemplated by this Fourth Amendment:
1. Authority. The Borrower has full power, authority and legal right to
enter into this Fourth Amendment and the other documents executed in connection
therewith ("Amendment Documents"). The execution, delivery and performance by
the Borrower of the Amendment Documents: (a) have been duly authorized by all
necessary action on the part of each of the Borrower; (b) do not and will not,
by lapse of time, the giving of notice or otherwise, contravene the terms of the
Borrower's Certificate of Incorporation or Bylaws or of any indenture, agreement
or undertaking to which either of them is a party or are bound; (c) do not and
will not require any governmental consent, registration or approval; (d) do not
and will not, by lapse of time, the giving of notice or otherwise, contravene
any material contractual or governmental restriction to which the Borrower is
subject; and (e) do not and will not, except as contemplated herein, result in
the imposition of any lien, charge, security interest or encumbrance upon any
property of the Borrower.
2. Binding Effect. The Amendment Documents have been duly executed and
delivered by the Borrower and are the legal, valid and binding obligation of the
Borrower and are enforceable against the Borrower in accordance with its terms,
except as such enforceability may be limited by bankruptcy, insolvency,
moratorium or other similar laws affecting creditors' rights generally and by
general equitable principles.
3. Loan Agreement Representations and Warranties. The warranties and
representations of Borrower contained in the Agreement and the Other Documents
are true and correct as of the date of this Fourth Amendment, with the same
effect as though made on such date, except to the extent that such
representations or warranties expressly relate solely to an earlier date, in
which case such representations or warranties were true and correct on and as
of such earlier date.
4. Schedules. The revised Exhibits and Schedules to the Agreement
<PAGE>attached to this Fourth Amendment are true and correct as of the date of
this
Amendment. Except to the extent that revised Schedules are attached to this
Fourth Amendment, the Schedules attached to the Agreement are true and correct
as of the date of this Fourth Amendment.
5. Environmental Compliance. Borrower has no knowledge of or any reason
to believe that any of the representations and warranties of the sellers under
the New Acquisition Agreements concerning compliance with Environmental Laws are
untrue or contain any material misstatement.
6. No Adverse Change. There has been no material adverse change in the
assets, liabilities or financial condition of Borrower since December 31, 1993.
C. CONDITIONS TO EFFECTIVENESS OF THIS FOURTH AMENDMENT
The obligation of Lender to make Loan B Loans, and the effectiveness of
this Fourth Amendment are subject to satisfaction of each of the following
conditions precedent:
1. Representations and Warranties. (i) The representations and
warranties contained herein and in each Other Agreement and certificate or other
writing delivered to the Lender pursuant to this Agreement shall be correct on
and as of the Effective Date after giving effect to this Agreement as though
made on and as of such dates except to the extent modified hereby and (ii) no
Event of Default or event which, with the giving of notice or the lapse of time
or both, would constitute an Event of Default shall have occurred and be
continuing on the Effective Date or would result from the taking effect of this
Agreement.
2. Fees. The Borrower shall have paid to the Lender the Loan B Closing
Fee, together with all fees and expenses incurred by the Lender in connection
with the execution of this Agreement and the consummation of the transactions
contemplated hereby, including, but not limited to, the fees and expenses of
Jaffe, Raitt, Heuer & Weiss, Professional Corporation, counsel to the Lender.
3. Performance of Agreements. Each party to this Agreement and the
Other Agreements (other than Lender) shall have performed in all material
respects all agreements which this Agreement provides shall be performed on or
before the Effective Date except as otherwise agreed to in writing by Lender.
4. Security Interests and UCC Filings. The Lender shall have received
satisfactory evidence that the Lender has a valid and perfected first priority
security interest in the Loan B Collateral, subject only to Permitted
Encumbrances. Borrower shall have delivered to or caused to be delivered to
Lender executed documents (including financing statements under the UCC and
other applicable documents under the laws of any jurisdiction with respect to
the perfection of Liens) as Lender may deem necessary to perfect its security
interests in the Collateral. Lender shall have received certified copies of UCC
search reports listing all effective financing statements that name Borrower as
debtor together with copies of such financing statements (none of which shall
cover the Collateral except to the extent evidencing Permitted Encumbrances).
5. Opinion of Counsel. Borrower shall have delivered to the Lender an
<PAGE>opinion of Borrower's counsel dated as of the date of this Fourth
Amendment, in
form and substance satisfactory to the Lender and its counsel, relating to the
enforceability of this Fourth Amendment and such other matters as Lender's
counsel may reasonably request.
6. Officer's Certificate. The Borrower shall deliver to Lender a
certificate executed by the President or principal financial officer of
Borrower, stating that: (a) on the date of this Fourth Amendment, and after
giving effect to the transactions contemplated hereby, no Default or Event of
Default has occurred and is continuing; (b) no material adverse change in the
Collateral or the financial condition or operations of the business of Borrower
has occurred since December 31, 1993, taking into account Borrower's reported
financial performance after such date through and including September 30, 1994;
(c) the representations and warranties set forth in Section 9.1 are true and
correct in all material respects on and as of the date of this Fourth Amendment
with the same effect as though made on and as of such date; and (d) Borrower on
the date of this Fourth Amendment is in compliance with all the terms and
provisions set forth in the Agreement, as amended hereby, on its part to be
observed and performed.
7. Insurance Policies and Endorsements. The Borrower shall have
delivered to Lender certificates of insurance in respect of the New Acquisitions
required to be maintained under this Agreement and the Other Agreements,
together with endorsements satisfactory to Lender naming Lender as loss payee
and additional insured under such policies.
8. Amendment Documents. The Borrower shall have executed and delivered
to Lender the documents listed below, unless otherwise noted, dated the date of
this Fourth Amendment, duly executed, in form and substance satisfactory to
Lender and in quantities reasonably designated by Lender (except for the Note,
of which only the original shall be signed) (the "Amendment Documents"):
(i) this Amendment;
(ii) the Loan B Note;
(iii)the Loan B Security Agreement;
(iv) the Assignment (Kin);
(v) the following (if not previously delivered to Lender) for each
Group I New Acquisitions BK Unit:
(A) the Lease;
(B) a memorandum of lease for the Lease in recordable
form (unless previously recorded);
(C) a Leasehold Mortgage;
(D) a consent and estoppel of the owner of the Fee
Property relating to such New Acquisition; and
<PAGE> (E) a title insurance commitment and policy
relating to
such New Acquisition Leasehold Property.
9. Organizational Documents. The Borrower shall have delivered to the
Lender the following:
(a) Certificates of no change with respect to the certificates of
incorporation of Holdings, the Company, and Carrols Realty II since the
Effective Date.
(b) Certificate of no change with respect to the bylaws of each of
Holdings, the Company, and Carrols Realty II since the Effective Date.
(c) Signature and incumbency certificates of the officers of each
of Holdings, the Company, and Carrols Realty II executing the Amendment
Documents to which any of them is a party.
(d) Resolutions of the Boards of Directors of each of Holdings, the
Company, and Carrols Realty II each certified as of the date of this Fourth
Amendment by its corporate secretary or an assistant secretary as being in full
force and effect without modification or amendment, each authorizing and
approving the transactions contemplated hereby and the execution, delivery and
performance of the Amendment Documents to which such Person is to be a party.
10. BKC Consent. The Borrower shall have delivered to the Lender the
letter agreement between Borrower and BKC regarding the BKC Consent in form and
substance satisfactory to Lender.
11. Exhibits. The Borrower shall have delivered to Lender updated
Exhibits to the Agreement to the extent the information set forth in such
Exhibits shall have changed, in form and substance satisfactory to Lender.
12. Other Deliveries. The Borrower shall have delivered to the Lender
such other documents, instruments or agreements as the Lender or its counsel may
reasonably require.
D. MISCELLANEOUS.
1. Section Titles. The section titles contained in this Agreement shall
be without substantive meaning or content of any kind whatsoever and are not a
part of the agreement between the parties.
2. Parties. Whenever in this Fourth Amendment reference is made to any
of the parties hereto, such reference shall be deemed to include, wherever
applicable, a reference to the successors and assigns of the Borrower and
Lender.
3. References. Any reference to the Agreement contained in any notice,
request, certificate, or other document executed concurrently with or after the
execution and delivery of this Fourth Amendment shall be deemed to include this
Fourth Amendment unless the context shall otherwise require.
<PAGE>
4. Continued Effectiveness. Except to the extent expressly amended by
Section A of this Fourth Amendment, the Agreement and all provisions thereof
remain in full force and effect and are applicable to this Fourth Amendment.
5. Entire Agreement. The Agreement, the Notes, and the Other Documents,
including the Amendment Documents, referred to in the Agreement and this Fourth
Amendment, embody the final, entire agreement among the parties hereto and
supersede any and all prior commitments, agreements, representations, and
understandings, whether written or oral, relating to the subject matter thereof
or hereof and may not be contradicted or varied by evidence of prior,
contemporaneous or subsequent oral agreements or discussions of the parties
hereto. There are no oral agreements among the parties hereto.
6. Counterparts. This Fourth Amendment may be executed in counterparts,
each of which when so executed and delivered shall be deemed an original, but
all such counterparts taken together shall constitute the one and the same
instrument.
IN WITNESS WHEREOF, this Fourth Amendment has been duly executed as of the
day and year first above written.
CARROLS CORPORATION
By:___________________
Title:
CARROLS HOLDINGS CORPORATION
By:___________________
Title:
HELLER FINANCIAL, INC.
By:___________________
Title:
A108261.2
PURCHASE AND SALE AGREEMENT
Between
CARROLS CORPORATION
(as Purchaser)
And
THE CORPORATIONS AND PARTNERSHIPS LISTED ON THE
SIGNATURE PAGE HEREOF
(Collectively as Sellers)
Dated as of May ____, 1994
<PAGE>
<PAGE> TABLE OF CONTENTS
ARTICLE I
PURCHASE AND SALE; CLOSING
1.1 Assets to be Conveyed; Excluded Assets . . . . . . . 1
1.2 Purchase Price for Assets. . . . . . . . . . . . . . 3
1.3 Real Properties: Lease of Owned Real Properties and
Assignments of Leases;
Easements and Parking Agreements . . . . . . . . . . 4
1.4 Assumption of Liabilities. . . . . . . . . . . . . . 5
1.5 Closing; Deliveries. . . . . . . . . . . . . . . . . 6
1.6 Adjustments. . . . . . . . . . . . . . . . . . . . . 6
1.7 Appointment of Sellers' Agent. . . . . . . . . . . . 7
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SELLERS
2.1 Organization and Corporate Power . . . . . . . . . . 8
2.2 Governing Instruments. . . . . . . . . . . . . . . . 8
2.3 Due Authorization. . . . . . . . . . . . . . . . . . 8
2.4 No Violation . . . . . . . . . . . . . . . . . . . . 8
2.5 Consents . . . . . . . . . . . . . . . . . . . . . . 9
2.6 Financial Statements . . . . . . . . . . . . . . . . 9
2.7 Assets . . . . . . . . . . . . . . . . . . . . . . . 9
2.8 Inventory. . . . . . . . . . . . . . . . . . . . . . 10
2.9 Real Properties; Real Property Leases. . . . . . . . 10
2.10 Franchise Agreements . . . . . . . . . . . . . . . . 11
2.11 Employment Arrangements. . . . . . . . . . . . . . . 12
2.12 Contracts and Arrangements . . . . . . . . . . . . . 12
2.13 ERISA. . . . . . . . . . . . . . . . . . . . . . . . 12
2.14 Litigation, Compliance with Laws and Consents. . . . 13
2.15 Environmental Matters. . . . . . . . . . . . . . . . 14
2.16 Insurance Policies . . . . . . . . . . . . . . . . . 14
2.17 Tax Returns. . . . . . . . . . . . . . . . . . . . . 14
2.18 Adverse Restrictions . . . . . . . . . . . . . . . . 14
2.19 Brokers. . . . . . . . . . . . . . . . . . . . . . . 15
2.20 Material Information . . . . . . . . . . . . . . . . 15
2.21 Continuing Representations . . . . . . . . . . . . . 15
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PURCHASER
3.1 Organization and Corporate Power . . . . . . . . . . 15
3.2 Certificate of Incorporation and By-Laws . . . . . . 15
3.3 Due Authorization. . . . . . . . . . . . . . . . . . 15
3.4 No Violation . . . . . . . . . . . . . . . . . . . . 16
3.5 Consents . . . . . . . . . . . . . . . . . . . . . . 16
3.6 Brokers. . . . . . . . . . . . . . . . . . . . . . . 16
3.7 Material Information . . . . . . . . . . . . . . . . 16
3.8 Good Standing. . . . . . . . . . . . . . . . . . . . 16
<PAGE> 3.9 Litigation . . . . . . . . . . . . . . . . . . . .
. 16
3.10 Continuing Representations . . . . . . . . . . . . . 16
ARTICLE IV
COVENANTS OF THE PARTIES
4.1 Access to Records and Properties Prior to the Closing
Date 16
4.2 Operation of the Business of Sellers . . . . . . . . 17
4.3 Supplements to Disclosures . . . . . . . . . . . . . 18
4.4 No Other Asset Sales . . . . . . . . . . . . . . . . 18
4.5 Regulatory Filings and Consents. . . . . . . . . . . 18
4.6 Announcements; Confidentiality . . . . . . . . . . . 19
4.7 Limitation of Sellers, Actions After Closing . . . . 19
4.8 Bulk Sales . . . . . . . . . . . . . . . . . . . . . 19
4.9 Financial Statements and Reports . . . . . . . . . . 20
4.10 Environmental Matters. . . . . . . . . . . . . . . . 20
4.11 Employee Benefit Matters . . . . . . . . . . . . . . 21
4.12 Access to Restaurants Prior to Closing . . . . . . . 21
4.13 Covenants of Donald M. Cepiel, Sr. ("Cepiel") and Michael
P. Jones
("Jones"). . . . . . . . . . . . . . . . . . . . . . 21
ARTICLE V
CONDITIONS TO OBLIGATIONS OF PARTIES
5.1 Conditions to the Obligations of Sellers and Purchaser 21
5.2 Conditions to the Obligations of Sellers . . . . . . 22
5.3 Conditions to Obligations of Purchaser . . . . . . . 23
ARTICLE VI
DAMAGE OR DESTRUCTION
6.1 Damage to or Destruction of One Restaurant - Prior to
Closing 24
6.2 Damage to or Destruction of Two or More Restaurants -
Prior to Closing 24
6.3 Notification of Damage or Destruction. . . . . . . . 25
ARTICLE VII
INDEMNIFICATION
7.1 Survival of Representations. . . . . . . . . . . . . 25
7.2 Agreement to Indemnify . . . . . . . . . . . . . . . 25
7.3 Conditions of Indemnification. . . . . . . . . . . . 25
7.4 Remedies Cumulative. . . . . . . . . . . . . . . . . 26
ARTICLE VIII
<PAGE> COVENANT NOT TO COMPETE
8.1 Covenant Not to Compete. . . . . . . . . . . . . . . 26
8.2 Geographic Area Reasonable; Reduction of Geographical
Area and Time
Restriction. . . . . . . . . . . . . . . . . . . . . 27
8.3 Effect of Breach . . . . . . . . . . . . . . . . . . 27
ARTICLE IX
TERMINATION
9.1 Termination. . . . . . . . . . . . . . . . . . . . . 27
9.2 Effect of Termination; Right to Proceed. . . . . . . 28
ARTICLE X
MISCELLANEOUS
10.1 Further Assurances . . . . . . . . . . . . . . . . . 29
10.2 Waiver and Amendment . . . . . . . . . . . . . . . . 29
10.3 Remedies . . . . . . . . . . . . . . . . . . . . . . 29
10.4 Expenses . . . . . . . . . . . . . . . . . . . . . . 29
10.5 Entire Agreement . . . . . . . . . . . . . . . . . . 29
10.6 Definitions. . . . . . . . . . . . . . . . . . . . . 29
10.7 Interpretation . . . . . . . . . . . . . . . . . . . 31
10.8 Notices. . . . . . . . . . . . . . . . . . . . . . . 31
10.9 Successors and Assigns . . . . . . . . . . . . . . . 32
10.10Governing Law. . . . . . . . . . . . . . . . . . . . 32
10.11Consent to Jurisdiction; Service of Process. . . . . 32
10.12Severability . . . . . . . . . . . . . . . . . . . . 32
10.13Purchaser's Designated Affiliate . . . . . . . . . . 32
10.14Counterparts . . . . . . . . . . . . . . . . . . . . 33
10.15[INTENTIONALLLY OMITTED] . . . . . . . . . . . . . . 33
10.16Payment of Expenses. . . . . . . . . . . . . . . . . 33
10.17Glens Falls Cross Easements. . . . . . . . . . . . . 33
<PAGE>
<PAGE> TABLE OF EXHIBITS
Exhibit A Form of Assignment and Assumption of Lease
Exhibit A-1 Memorandum of Lease
Exhibit B Form of Lease Consent and Estoppel Certificate
Exhibit C Form of Assumption Agreement
Exhibit D Form of Opinion of Purchaser's Counsel
Exhibit E Form of Bill of Sale and Assignment
Exhibit F Form of Opinion of Sellers' Counsel
Exhibit G [Intentionally Omitted]
Exhibit H Like-Kind Exchange Provisions
Exhibit I [Intentionally Omitted]
Exhibit J Form of Lease
Exhibit K Form of FIRPTA Certification
<PAGE>
<PAGE> TABLE OF SCHEDULES
A Sellers and Restaurants operated by them
B Legal Descriptions of Owned Real Properties
C Legal Descriptions of Leased Real Properties
1.1(a)(i) Restaurant Equipment
1.1(a)(vi)Leased Assets
1.1(b)(i) Store Bank Figures
1.2(b)(i) Allocation of Purchase Price among Sellers
1.2(c) Allocation of Purchase Price Among Separate Classes of
Assets
1.3(a)(ii)Base Rent and Percentage Rent
1.3(b)(ii)Real Property Lease Expiration Dates, Monetary Terms and
Renewal Terms
1.3(d) Parking and Easements Agreements
1.6(c) Real Property Lease Adjustment Formulae
2.5 Required Consents
2.6(b) Events or items not reflected in Financial Statements
2.9(a) Liens on Owned Real Properties
2.9(b) Liens on Leased Real Properties
2.9(c) Certificate of Occupancy, Ongoing Repairs
2.11(b) Compliance with Employment Laws, etc.
2.11(c) Sellers' Employees and Wages
2.12 Other Contracts
2.14(a) Litigation
2.14(c) Required Licenses
2.15 Environmental Matters
4.8(b) Creditors Schedule re: Bulk Sales
10.17 Glens Falls Cross-Easement
<PAGE>
<PAGE>
PURCHASE AND SALE AGREEMENT
THIS PURCHASE AND SALE AGREEMENT (the "Agreement") made as of May ____,
1994 by and between CARROLS CORPORATION, a Delaware corporation, with its
principal office at 968 James Street, Syracuse, New York 13217-6969
("Purchaser"); those New York corporations and New York partnerships listed on
the signature page as sellers (sometimes referred to herein collectively, as the
"Sellers" and individually as a "Seller"), all of whom have their principal
office or an office at 20 Wade Road, Latham, New York 12210:
W I T N E S S E T H:
WHEREAS, certain Sellers operate the 16 Burger King restaurants
respectively identified by address and Burger King Franchise number opposite
their names on Schedule A annexed hereto (each restaurant is hereinafter
sometimes referred to individually as a "Restaurant" and collectively as the
"Restaurants"); and
WHEREAS, certain Sellers are the owner or lessee of certain personal
property used or held for use in or in connection with the conduct of business
at its Restaurant and certain Sellers, as set forth on Schedule A are the owner
or lessee of certain buildings, other real property and land upon and in which
its Restaurant is located (individually, the "Real Property" and collectively,
the "Real Properties");and
WHEREAS, each Seller proposes to sell, and Purchaser proposes to purchase,
all of the Assets (as hereinafter defined) of such Seller; and
WHEREAS, certain of the Sellers own the Real Property on which its
Restaurant is located as more particularly described on Schedule B annexed
hereto [attach legal descriptions] (each, an "Owned Real Property" and,
collectively, "Owned Real Properties") and proposes to lease its Owned Real
Property to Purchaser, and Purchaser proposes to lease such real property from
such Seller; and
WHEREAS, each remaining Seller occupies Real Property pursuant to a lease
or sublease agreement (each, a "Real Property Lease" and, collectively, the
"Real Property Leases"), which leased Real Properties are more particularly
described on Schedule C, with an unaffiliated landlord and proposes to assign
to Purchaser, and Purchaser proposes to accept such assignment of such Seller's
leasehold interest with respect to the Real Property on which its Restaurant is
located (each a "Leased Real Property" and, collectively, the "Leased Real
Properties"); and
NOW, THEREFORE, in consideration of the mutual covenants and conditions
herein contained and other good and valuable consideration, the receipt,
adequacy and sufficiency of which are hereby acknowledged, the parties agree as
follows:
<PAGE>
ARTICLE I
PURCHASE AND SALE; CLOSING
SECTION 1.1 Assets to be Conveyed; Excluded Assets.
(a) Assets to be Conveyed. Subject to the terms, provisions and
conditions contained in this Agreement, and on the basis of the representations
and warranties hereinafter set forth, each Seller agrees to sell, assign,
transfer, convey and deliver to Purchaser at the Closing (as hereinafter
defined), and Purchaser agrees to purchase and accept the assignment, transfer,
conveyance and delivery from such Seller at the Closing, all of the following
assets used or located in or held for use in connection with the Restaurant
operated by such Seller (collectively, the "Assets") free and clear of all
mortgages, leases, liens, security interests, encumbrances, equities, claims,
pledges, charges, liabilities and other obligations of whatever kind and
character (collectively referred to herein as "Liens") except only as otherwise
expressly provided in this Agreement:
(i) Restaurant Equipment. All of the machinery, equipment,
furnishings, supplies, uniforms, and all other personal property (other than
Inventory, as hereinafter defined) owned by such Seller and used or held for use
in, or in connection with, the operation of its Restaurant, and which are
located in the Restaurants, including but not limited to the assets set forth
in Schedule 1.1 (a)(i) annexed hereto (collectively, "Restaurant Equipment");
(ii) Leasehold Improvements. All fixtures and other leasehold
improvements owned by such Seller in its Restaurant ("Leasehold Improvements");
(iii) Intentionally Omitted.
(iv) Franchise Agreements. The Burger King Franchise Agreement
or its Restaurant ("Franchise Agreement" and, together with the Franchise
Agreements of other Sellers, the "Franchise Agreements");
(v) Inventory. All of the food, related paper products,
cleaning supplies and promotional items including BK kids' premiums (provided
such promotional items and premiums are consistent with advertising campaigns
which have been conducted within the prior 12 months) owned by such Seller or
otherwise used or held for use in or in connection with the business being
conducted at its Restaurant (collectively, "Inventory");
(vi) Leased Assets. All of the right and interest of such
Seller in any item of personal property which is not owned by it but is leased
by it or otherwise is used or held for use, in or in connection with the
business being conducted at its Restaurant, including but not limited to, the
assets set forth on Schedule 1.1(a)(vi) annexed hereto (collectively the "Leased
Assets"); and
(vii) Miscellaneous Assets. All of the right, title and
interest of such Seller in any other asset or property owned, leased, subleased,
used or held for use in, or in connection with the business being operated at
its Restaurant including, but not limited to, contract rights and other general
<PAGE>intangibles.
(b) Excluded Assets. Notwithstanding anything contained in Section
1.1 (a) hereinabove or anywhere else in this Agreement, the Assets as above
defined shall not include any of the following properties, choses in action,
contract rights or assets (herein collectively called the "Excluded Assets"):
(i) Cash on hand or in bank accounts of any Seller, excepting
the "Store Bank" at each of the Restaurants and which Store Bank shall be paid
for by Purchaser in addition to the purchase price at Closing for each
Restaurant in accordance with the amounts set forth on Schedule 1.1(b)(i);
(ii) All accounts receivable of each Seller and debts owing to
the Seller as of the Closing for each Restaurant, including any deposits of
Seller for utility services or the like;
(iii) All tax records and returns, cancelled checks and all
other business records of each Seller;
(iv) Any and all claims for refunds and credits of any tax,
payment, charge or fee which each Seller now has or may hereafter acquire
against the United States, the State of New York or any political subdivision
thereof or any other state or political subdivision thereof;
(v) Any and all of the Seller's insurance policies, including
any and all claims for refund and payments from or against any such insurance
policies for any covered events or conditions except as to any damages occurring
after the signing of this Agreement and up to the Closing for each Restaurant
in which case any insurance proceeds shall be used as otherwise provided in this
Agreement.
(vi) Any and all tangible personal property of Seller which is
now, and customarily has been, located at Seller's headquarters at 20 Wade Road,
Latham, New York 12110.
(vii) All leased and owned motor vehicles.
(viii) Super Snapshot computer software.
SECTION 1.2 Purchase Price for Assets.
(a) The Purchase Price (as hereinafter defined,) for a particular
Asset shall be payable at the Closing of such Asset to "Sellers' Agent" (as
defined in Section 1.7) (on behalf of all Sellers) either (i) by Federal funds
bank wire transfer in an amount of the Purchase Price allocated to such Asset
to an account designated by Sellers' Agent or (ii) by delivery of one or more
certified checks in said amount; except, however, the Purchase Price to be paid
for the Inventory shall be paid in the manner set forth in Section 1.2(b)(ii)
below
(b) As used herein, "Aggregate Purchase Price" shall mean:
(i) For the Assets of all Sellers, exclusive of the Inventory,
the aggregate sum of $8,750,000 allocated among each Seller and the
<PAGE>corresponding Assets as set forth on Schedule 1.2(b)(i) hereto;
(ii) For the Inventory, the amount equal to the cost therefore
as charged to such Seller by its unaffiliated supplier or vendor. At the "
Closing" (as hereinafter defined), Purchaser shall pay to Sellers' Agent the
cost of the Inventory as calculated below. The cost of the Inventory of each
Seller shall be determined by physical inventories to be taken in its Restaurant
and in any other location where Inventory may be located which inventories shall
be taken after the Restaurants close on the evening immediately prior to the day
of the Closing. Within ten days prior to the Closing, Sellers' Agent shall
submit a price list for all inventory items (the "Price List"), and Purchaser
shall have five days from receipt of the Price List to dispute prices set forth
on the Price List. Seller and Purchaser shall each have the right to have at
least one of its representatives present at the taking of such inventories. The
representatives shall submit a signed, written report of the results of such
inventories to both Sellers' Agent and Purchaser. Promptly after receiving such
report Sellers' Agent shall then price the inventories shown on such report by
multiplying the number of physical items on the report by their respective cost
as set forth on the Price List, and Sellers' Agent shall submit such priced
inventory (the "Priced Inventory Report") to Purchaser at the Closing.
Purchaser shall pay the cost of the Inventory as set forth in the Priced
Inventory Report at the Closing. In the event there is a dispute as to the
amount set forth in the Priced Inventory Report, the party asserting the dispute
must notify the other party within ten days after receipt of the Priced
Inventory Report, and the parties shall
submit the dispute for resolution to an independent public accounting firm.
Within 10 days after the final determination of the Priced Inventory Report: (a)
if the Priced Inventory Report exceeds the amount paid for the Inventory at the
Closing, Purchaser shall pay the amount of such excess to Sellers' Agent; or (b)
if the Priced Inventory Report is less than the amount paid for the Inventory
at the Closing, Seller's Agent shall pay the amount of such difference to
Purchaser.
(c) As used herein, "Purchase Price" shall mean with respect to the
Assets being sold by each Seller, the Purchase Price therefor as allocated among
the separate classes of assets comprising the Assets of such Seller in the
manner set forth on Schedule 1.2(c) annexed hereto and the Sellers and Purchaser
shall prepare and file their respective tax allocation forms consistent with
such allocations.
(d) Notwithstanding anything contained herein to the contrary, the
parties hereto agree that each Seller may elect to receive like-kind property
("Exchange Property")in lieu of receiving cash for all or a portion of the
Purchase Price allocable to such Seller in connection with a like-kind exchange
(the "Exchange") under section 1031 of the Internal Revenue Code of 1986, as
amended (the "Code") and any applicable Internal Revenue Service rules and
regulations. The provisions of this Paragraph notwithstanding, Purchaser shall,
on the relevant Closing Date, receive good and marketable title to the Real
Property Assets and good title to the other assets, free and clear of all Liens
(except as otherwise provided in this Agreement), including, without limitation,
fee simple title to the Owned Real Properties, in each case subject only to the
"Permitted Exceptions" (as defined in Section 2.9 (a)). Purchaser hereby agrees
to give to Seller its reasonable cooperation in arranging for and finalizing any
such Exchange, and Purchaser and Seller hereby agree that any such Exchange
<PAGE>shall be governed by the provisions set forth in Exhibit H attached hereto
and
made a part hereof.
SECTION 1.3 Real Properties: Lease of Owned Real Properties and
Assignments of Leases; Easements and Parking Agreements.
Subject to the terms, provisions and conditions contained in this
Agreement and on the basis of the representations and warranties hereinafter set
forth, at the Closing, the applicable Sellers shall lease to Purchaser the Owned
Real Properties, the applicable Sellers shall assign to Purchaser all of their
right, title and interest in and to their respective leasehold estate in the
Leased Real Properties and shall assign, sublease or otherwise transfer to
Purchaser all of their right, title and interest in and to all parking and other
access agreements or arrangements relating to the Real Properties, as follows:
(a) Leases of Owned Real Property. (i) At the Closing, each Seller
owning Owned Real Property shall lease such real property to Purchaser pursuant
to a lease agreement in the form of Lease Agreement annexed as Exhibit A hereto
(each referred to herein as a "Lease" and, collectively, as the "Leases").
(ii) The Base Rent and Percentage Rent (as those terms are
defined in the Lease) for each Lease shall be as set forth in Schedule
1.3(a)(ii).
(iii) At Closing, the Lessor under each applicable Lease shall
execute, acknowledge and deliver a Memorandum of Lease (each, a "Memorandum of
Lease" and collectively "Memoranda of Leases") for each lease, in the form
annexed hereto as Exhibit A-1, which shall set forth the material terms of the
lease in question and which Memoranda of Leases shall be recorded with the local
register of deeds of the respective counties where the Real Properties are
located.
(b) Assignment of Real Property Leases. (i) At Closing, each
applicable Seller shall assign to Purchaser all of such Seller's right, title
and interest as tenant or subtenant, as the case may be, under the applicable
Real Property Lease pursuant to the form of Assignment and Assumption of Lease
(the "Lease Assignment") annexed hereto as Exhibit A, and Purchaser shall assume
all of the applicable Seller's duties and obligations accruing from and after
the Closing Date in or under such lease or sublease. The Lease Assignment shall
be executed and delivered in duplicate originals at Closing by each applicable
Seller and Purchaser.
(ii) The expiration dates, monetary terms and renewal terms for
each of the Real Property Leases are summarized as set forth in Schedule 1.3
(b)(ii).
(iii) All recording charges for recording the Lease Assignment
shall be paid by Purchaser, except Seller shall pay to record the Gains Tax
Affidavit, and real estate transfer taxes of every kind or nature relating to
the transfer of the Real Property Leases shall be borne by the Sellers.
(c) Lease Assignment Consent. With respect to the Real Property
Leases, at Closing, each applicable Seller shall deliver to Purchaser a Consent
<PAGE>to Assignment and Estoppel Certificate in the form annexed hereto as
Exhibit B
(the "Lease Assignment Consent") pursuant to which the respective landlords
shall: (i) acknowledge and consent to the applicable Lease Assignment, and (ii)
confirm all of the information set forth in the first and last sentences of
Section 2.9(b) of this Agreement.
(d) Parking, Easements and Related Agreements. Schedules B and C
together with Schedule 1.3(d) annexed hereto with respect to each Seller sets
forth all written or oral easements, agreements, grants, licenses, options,
parking leases and any other agreement (collectively referred to herein as
"Easements") pursuant to which such Seller is granted, for use in connection
with its Restaurant, parking privileges or rights, current or prospective,
and/or rights of access of any kind or nature in and to the applicable Real
Property. At Closing each Seller shall deliver to Purchaser such documentation
in form and substance satisfactory to Purchaser and its counsel which
effectively assigns or transfers such Seller's rights under both recorded and
unrecorded Easements to Purchaser (hereinafter individually referred to as an
"Easement Assignment", and, collectively, as the "Easement Assignments"). Any
such Easements conveyed by Deed as described in Section 1.3(a) hereof shall be
a satisfactory transfer provided the title company (without additional cost to
Purchaser) will insure Purchaser's interest in such Easement(s).
SECTION 1.4 Assumption of Liabilities
(a) No Assumption by Purchaser. The parties hereto hereby agree and
acknowledge that no Seller is selling, transferring, assigning, delivering or
otherwise conveying, and Purchaser is not purchasing, receiving, acquiring or
otherwise assuming, any liabilities of any Seller, or any of their respective
Affiliates except as specifically set forth in Section 1.4(b) hereof. Purchaser
shall neither be liable for any liability or obligation of any Seller, or any
of its respective Affiliates nor shall it be required to indemnify any Seller,
or any of its respective Affiliates against any liability or obligation other
than those so specifically assumed or indemnified, as the case may be.
Without limiting the generality of the foregoing, Purchaser is not
assuming and shall not indemnify any Seller, or any of its respective Affiliates
against any liability, obligation, duty or responsibility of any Seller, or any
of its respective Affiliates:
(i) arising from, or out of, the ownership or operations or use
of, or incurred in connection with, or incurred as a result of any claim made
against a Seller, or any of its respective Affiliates in connection with, any
Restaurant, Asset, Real Property, Real Property Lease or Assumed Contract (as
hereinafter defined) on or prior to, or relating to any time period prior to
6:00 A.M. on the respective Closing Date;
(ii) any Federal, state or local income taxes, transfer taxes,
sales taxes (other than sales taxes arising by reason of the transactions
contemplated by this Agreement)or any other kind of tax of whatever kind
including, without limitation, any such tax that may arise from or by reason of
the transactions contemplated by this Agreement;
(iii) with respect to any wages, vacation, severance or sick pay
<PAGE>of any employees of any Seller or its Affiliates or any rights under any
stock
option, bonus or other incentive arrangement of any Seller or its Affiliate that
have accrued as of the Closing Date;
(iv) with respect to any employment, consulting or similar
arrangement to which any Seller is a party or for which any Seller is
responsible;
(v) with respect to any Plan (as defined in Section 2.13)
whether arising before, on or after the Closing Date; or
(vi) under any Laws (as hereinafter defined) relating to public
health and safety and pollution or protection of the environment, including,
without limitation, those relating to emissions, discharges, releases or
threatened releases of pollutants, contaminants, or hazardous or toxic materials
or wastes into ambient air, surface water, ground water, or land, or otherwise
relating to the manufacture, processing, distribution, use, treatment, storage,
disposal, transport, or handling of pollutants, contaminants or hazardous or
toxic materials or wastes or any materials defined or categorized by any of the
above as "Hazardous Materials", "Hazardous Substances", or similar or related
designations (collectively referred to herein as "Environmental Laws") and for
all costs and expenses incurred with respect thereto arising out of events
occurring, or conditions existing, on or prior to 6:00 a.m. on the Closing
Date.
(b) Assumption of Assumed Contracts. Each Seller shall assign to, and
Purchaser shall accept assignment of and assume from and after the respective
Closing Date, all of the rights, obligations and liabilities of such Seller
attributable to the period after the Closing Date, under the Franchise
Agreements, Real Property Leases, Easements and the Other Contracts (as
hereinafter defined) (collectively, the "Assumed Contracts").
SECTION 1.5 Closing; Deliveries
(a) Date. (i) The closing of the transactions contemplated hereby
(the "Closing") shall take place at the offices of Sellers' attorney, Dennis
Irwin, (or such other location as shall be agreed upon by the parties) (said
location hereinafter referred to as the "Closing Location") on a date mutually
selected by the parties, which shall be no later than twenty(20) days after
receipt of Burger King approval, provided, however, that if, through no fault
of the parties hereto, all of the conditions to the parties' obligations to
close hereunder are not satisfied or waived on the date so designated,the
Closing shall be adjourned to a subsequent mutually agreeable date not later
than 45 days after the date originally fixed for the Closing unless further
extended by mutual agreement by the parties. The term Closing Date shall mean
the date upon which the Closing actually takes place.
(b) Delivery of Documents. At the Closing, Sellers' Agent and
Purchaser shall deliver to each other the respective documents and other items
set forth in Article V of this Agreement.
SECTION 1.6 Adjustments.
<PAGE> (a) All customary prorations and adjustments between sellers and
purchasers in Albany County with respect to (i) obligations under the Assumed
Contracts; (ii) utility charges and (iii) personal property taxes, shall be made
between the parties as of 6:00 A.M. on the Closing Date. Payment, if any, owed
by Purchaser to a Seller or by a Seller to Purchaser by reason of such
prorations and adjustments shall be made at the Closing (by adjustment of the
Purchase Price, if practicable). Such prorations and adjustments shall also
include rent payments and any other prepayments for the Restaurants and the Real
Properties.
(b) Each Seller shall pay all transfer taxes (excluding sales taxes),
if any, applicable to its transaction at the Closing. Sellers shall be
responsible for all franchise assignment fees owed to Burger King Corporation
("Burger King") in connection with the assignment of the Franchise Agreements
to Purchaser.
(c) All "minimum" or "fixed rentals" and any other monetary
obligations accruing under the Real Property Leases shall be adjusted for the
month in which the Closing occurs. In the event the period used in computing
and/or adjusting percentage rental (hereinafter referred to as the "Adjustment
Lease Year") under any of the Real Property Leases commences before the Closing
Date and ends after the Closing Date, such percentage rental shall be adjusted
at the end of the Adjustment Lease Year for such Real Property Leases so
affected as follows:
(i) Seller shall be required to pay to Purchaser, within ten
days after the expiration of the Adjustment Lease Year, an amount equal to the
lesser of (1) the amount of percentage rental due for such Adjustment Lease Year
or (2) the "Percentage Rent Contribution" determined by the following formula:
(A - B) x C x D = Percentage Rent Contribution 365 in which:
A = Total net sales or similar term as defined in such Real Property Lease
used in determining such percentage rental during such Adjustment Lease Year;
B = The "sales break point" for such Real Property Lease as indicated in
Schedule 1.6(c):
C = Number of days during the Adjustment Lease Year prior to, but not
including, the Closing Date; and
D = Percentage rent factor for such Real Property Lease as indicated in
Schedule 1.6(c);
provided, however, that, in the event the above formula yields a negative amount
as the Percentage Rent Contribution, the Percentage Rent Contribution shall be
deemed equal to zero; and
(ii) Purchaser shall be required to pay directly to the lessor
under the Real Property Lease the percentage rental, if any, due for the
Adjustment Lease Year.
SECTION 1.7 Appointment of Sellers' Agent.
<PAGE> Each Seller irrevocably appoints and authorizes Donald M.
Cepiel, Sr.
and/or Michael P. Jones, acting severally, as its agent (hereinafter "Sellers'
Agent") to do all such acts and things as agent (and not as principal) on its
behalf and to exercise all such rights, powers and privileges in relation to
this Agreement as fully and completely as such Seller could on its own behalf,
together with all such powers as are reasonably incidental thereto. Each Seller
agrees that the foregoing appointment and powers are coupled with an interest
and every party acting hereunder shall be entitled to rely on any action taken
or omitted by Sellers' Agent on behalf of each Seller. If Sellers' Agent is
incapacitated or otherwise unable to complete the transactions contemplated,
then Seller shall promptly appoint such substitute agent with all such
aforementioned rights, powers and privileges.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SELLERS
Sellers, jointly and severally, represent, warrant, covenant and agree to
and with Purchaser as follows:
SECTION 2.1 Organization and Corporate Power.
Each Seller is a corporation or partnership duly organized, validly
existing and in good standing under the Laws of the State of New York and is
duly qualified and licensed or authorized to do business in the State of New
York which is the only jurisdiction wherein the character of the Real Properties
and other Assets owned or leased or the nature of the business of such Seller
makes such licensing, authorization or qualification to do business necessary.
Each Seller has full power and authority (corporate or otherwise) to own its
assets, to own or hold under lease the Real Property it presently owns or holds
under lease including, without limitation, the Real Properties, and to carry on
the business in which it is engaged at all locations at which it is presently
located including, without limitation, operation of the Restaurants at the Real
Properties and to execute and deliver this Agreement and the other documents and
instruments to be executed and delivered by such Seller, as the case may be,
pursuant hereto or in connection herewith (this Agreement and all other
agreements, documents and instruments to be entered into pursuant to this
Agreement or in connection herewith including all exhibits and schedules annexed
hereto and thereto are collectively referred to herein as the "Transaction
Documents") and to consummate the transactions contemplated hereby and thereby.
SECTION 2.2 Governing Instruments.
The copies of the "Governing Instruments" (as defined in Section 10.6)
of each Seller, and all amendments thereto to date, as certified by the
respective secretaries of each Seller with respect to corporate Sellers, and by
the authorized general partner, with respect to partnership Sellers have
heretofore been delivered to Purchaser, and are complete and correct. No Seller
is in default in the performance, observance or fulfillment of any of the
provisions, terms or conditions of its Governing Instruments.
SECTION 2.3 Due Authorization. Except as set forth in Section 2.5, all
<PAGE>requisite authorizations for the execution, delivery and performance of
this
Agreement and the other Transaction Documents by each Seller have been duly
obtained. The execution and delivery of this Agreement and the other
Transaction Documents and the consummation of the transactions contemplated
hereby and thereby have been duly authorized by the Board of Directors and
shareholders of each Seller with respect to corporate Sellers, and all the
partners with respect to partnership Sellers, and no other corporate or
partnership acts or proceedings on the part of any Seller or its shareholders,
with respect to corporate Sellers, or on the part of any partners, with respect
to partnership Sellers are necessary to authorize the execution and delivery of
this Agreement or any of the other Transaction Documents or the consummation of
the transactions contemplated hereby or thereby. This Agreement and each of the
other Transaction Documents, upon execution and delivery by such Seller, will
be the legal, valid and binding obligation of such Seller enforceable against
it in accordance with its terms, except as enforcement thereof may be limited
by bankruptcy, insolvency and other laws affecting creditors rights
(collectively "Bankruptcy Laws") and subject to general principles of equity
affecting the right to specific performance and injunctive relief.
SECTION 2.4 No Violation.
The execution, delivery and performance of this Agreement and the
other Transaction Documents by each Seller and the consummation by such Seller
of the transactions contemplated hereby and thereby, do not and at Closing will
not: (a) violate its Governing Instruments; (b) violate or conflict with or
constitute a default (or an event which, with notice or lapse of time, or both,
would constitute a default) under any agreement, indenture, instrument or
understanding to which any Seller is a party or by which it is bound; (c)
violate any judgment, decree, law, rule or regulation to which any Seller is a
party or by which it is bound; (d) result in the creation of, or give any party
(other than Purchaser or its successors and/or assigns) the right to create any
encumbrance upon the property and assets of any Seller; (e) terminate or modify,
or give any third party the right to terminate or modify, the provisions or
terms of any agreement or commitment to which any Seller is a party or by which
any Seller is subject or bound; or (f) result in any suspension, revocation,
impairment, forfeiture or non-renewal of any permit, license, qualification,
authorization or approval applicable to any Seller. Exceptions to the
aforementioned are consents/approvals set forth in Section 2.5 below.
SECTION 2.5 Consents.
Schedule 2.5 sets forth a list of all consents, approvals or other
authorizations which each Seller is required to obtain from, and any filing
which such Seller is required to make with, any governmental authority or agency
or any other Person including, but not limited to, consents required from Burger
King (the "Burger King Consents") and consents required from two (2) of Sellers'
lenders in connection with the execution, delivery and consummation of this
Agreement and the other Transaction Documents and the consummation of the
transactions contemplated hereby or thereby (collectively, the "Required
Consents").
SECTION 2.6 Financial Statements.
<PAGE> (a) Midon Restaurant Corp. ("Midon") has delivered to Purchaser
its
audited balance sheet as at May 31, 1993 and May 31, 1992 and the related
statements of income, shareholders equity and cash flows for the 12 months ended
May 31, 1993 and 1992, respectively, together with the unqualified opinion of
such Sellers' accountants that such financial statements present fairly the
financial position of such Seller and its subsidiaries (if any) as of the dates
thereof and present fairly the results of operations of such Seller and its
subsidiaries (if any) for the periods covered thereby, in each case in
conformity with generally accepted accounting principles consistently applied.
(b) The financial statements referred to in Section 2.6(a)
(collectively, the "Financial Statements") are true, correct and complete, have
been prepared in accordance with generally accepted accounting principles
consistently applied and accurately present the assets, liabilities, financial
positions and results of operations of Midon as at the dates thereof and for the
periods covered thereby. The Financial Statements of Midon reflect or provide
for all material claims against, and all debts and liabilities (of any kind or
nature) of, Midon, fixed or contingent, as at the dates thereof and for the
periods covered thereby, and no Seller knows of any basis for the assertion
against it of any liability or obligation of any nature whatsoever, not fully
reflected or reserved against in such Financial Statements. There has not been
any change between the date of the Financial Statements and the date of this
Agreement which has materially affected the financial condition, assets,
liabilities, results of operations or business of any Seller and, except as set
forth in Schedule 2.6(b), no fact or condition exists or is contemplated or
threatened which might cause any such change at any time in the future.
Without limiting the foregoing since January 31, 1994:
(i) No Seller has incurred any obligation or liability (absolute
or contingent) except current liabilities incurred in the ordinary course of
conduct of business and obligations under Contracts entered in the ordinary
course of business; and
(ii) No Seller has paid, loaned or advanced any amounts to, or
sold, transferred, leased, subleased or licensed any Real Properties or Assets
to, or entered into any agreement or arrangements with, any Affiliate or
associate (and any of such transactions shall have been terminated on or before
the Closing Date).
SECTION 2.7 Assets.
(a) Each Seller owns, and will transfer to Purchaser at Closing, good
and marketable title to all of its Restaurant Equipment, Leasehold
Improvements, and Inventory, free and clear of all Liens, except the "Permitted
Exceptions" (as hereinafter defined). The Assets of each Seller include all of
the operating assets used or held for use in or in connection with the business
being conducted by such Seller at the Restaurants. All the Restaurant Equipment
and Leasehold Improvements: (i) are, and on the Closing Date will be, in good
operating condition and repair, capable of performing the functions for which
such items are currently and normally used, normal wear and tear excepted; and
(ii) conform, and on the Closing Date will conform, to the standards of Burger
King under the terms and conditions set forth in the applicable Franchise
<PAGE>Agreements. On the Closing Date, each Restaurant, together with its
related
Assets and Real Property, taken as a whole, will constitute a fully operable
"turn-key" Burger King restaurant sufficient to permit Purchaser to immediately
operate the business at such Restaurant as is presently being conducted therein.
Each Seller will transfer to Purchaser at Closing the 16 Franchise Agreements,
the Leased Assets and Miscellaneous Assets (but none of the Excluded Assets)
free and clear of all Liens except as otherwise expressly provided in this
Agreement.
(b) Each Seller will transfer and/or assign to Purchaser at Closing
all warranties, if any, with respect to its Assets.
SECTION 2.8 Inventory.
The Inventory of each Seller consists, and at Closing will consist,
of items of quality and quantity usable or salable in the ordinary course of
business. The present quality and quantities of all Inventory of each Seller
are, and the qualities and quantities of all Inventory outstanding at the
Closing will be, reasonable in accordance with the current specifications of
Burger King. At Closing, the Inventory at each Restaurant shall be sufficient
for the operation of such Restaurant for at least 48 hours after the Closing
Date, and in no event will there be excess inventory in relation to normal
usage.
SECTION 2.9 Real Properties; Real Property Leases.
(a) With respect to Owned Real Properties, each of such Sellers has
good record and marketable title in fee simple to such real property free and
clear of all Liens, subject only to the Permitted Exceptions. No Seller has any
knowledge or information of any facts, circumstances or conditions which do or
would in any way adversely affect the Owned Real Properties or the operation
thereof or business thereon as presently conducted or as intended to be
conducted. At or prior to Closing, each Seller shall cause to be discharged of
record all Liens affecting the Owned Real Property, except as set forth on
Schedule 2.9(a) annexed hereto.
(b) With respect to the Leased Real Properties, each Seller has
delivered to Purchaser a true and complete copy of the Real Property Lease
applicable to it, together with all amendments thereto. Each applicable owner
of Leased Real Property has good record and marketable title in fee simple to
such real property free and clear of all Liens except as set forth in Schedule
2.9(b). No Seller has knowledge or information of any facts, circumstances or
conditions which do or would in any way adversely affect the Leased Real
Property or the operation thereof or the business thereon as presently conducted
or as intended to be conducted. At or prior to Closing, each Seller shall cause
to be discharged of record all Liens against such Sellers or such Sellers'
interest affecting its Leased Real Property. Each Real Property Lease is valid
and binding in full force and effect and enforceable in accordance with its
terms. There are no existing defaults or offsets which any of the applicable
landlords has against the enforcement of its Real Property Lease by the
applicable Seller thereunder and neither such Seller nor such landlord is in
default under the applicable Real Property Lease, nor have any events under any
<PAGE>such Real Property Lease occurred which, with the giving of notice or
passage
of time or both, would constitute a default thereunder by either party thereto.
(c) The Real Properties and all improvements located thereon and the
present use thereof comply with, constitute a valid non-conforming use, or are
operating pursuant to the provisions of a valid variance under all zoning laws,
ordinances and regulations of governmental authorities having jurisdiction
thereof and, to the best of Sellers' knowledge, the construction, use and
operation of the Real Properties by Sellers are in substantial compliance with
all Laws. Set forth on Schedule 2.9(c) annexed hereto is a true and complete
schedule of each certificate of occupancy for each restaurant located on the
Real Properties, copies of which certificates of occupancy and all amendments
thereto to date have heretofore been delivered to Purchaser, and which copies
are true, complete and correct as of the date of this Agreement and will be
true, complete and correct as of the Closing Date. The Real Properties and the
Restaurants located thereon are in a state of good maintenance and repair and
are in good operating condition, normal wear and tear excepted, and (i) there
are no physical or mechanical defects in any of the Real Properties or
Restaurants, including, without limitation, the structural portions of the Real
Properties and Restaurants and the plumbing, heating, air conditioning,
electrical, mechanical, life safety and other systems therein and all such
systems are in good operating condition and repair (normal wear and tear
excepted); and (ii) except those set forth on Schedule 2.9(c) there are no
ongoing repairs to the Real Properties or Restaurants located thereon being made
by or on behalf of any Seller or being made by or on behalf of any landlord.
All necessary occupancy and other certificates and permits, municipal and
otherwise, for the lawful use and occupancy of the Real Properties for the
purposes for which they are intended and to which they are presently devoted
including, without limitation, for the operation of a Burger King restaurant
thereon, have been issued and remain valid. To the best of Sellers' knowledge,
there are no pending or threatened actions or proceedings that might prohibit,
restrict or impair such use and occupancy or result in the suspension,
revocation, impairment, forfeiture or non-renewal of any such certificates or
permits. All notes or notices of violation of any Laws, against or affecting
any such Real Properties have been complied with. There are no outstanding
correcting work orders from any Federal, State, county, municipal or local
government, or the owner of the Real Properties or any insurance company with
respect to any such Real Properties.
(d) There are no condemnation or eminent domain proceedings of any
kind whatsoever or proceedings of any other kind whatsoever for the taking of
the whole or any part of the Real Properties for public or quasi-public use
pending or, to the knowledge of any Seller, threatened against the Real
Properties.
(e) The Real Properties and all improvements thereon represent all of
the locations at which the respective Sellers conduct business relating to the
Restaurants and are, now, and at Closing will be, the only locations where any
of the Assets are or will be located.
(f) All water, sewer, gas, electric, telephone and drainage
facilities, and all other utilities required by any Law or by the normal use and
operation of the Real Properties and the Restaurants located thereon are
<PAGE>installed to the property lines of the respective Real Properties, are
connected
pursuant to valid permits, are fully operable and are adequate to service the
Real Properties and the Restaurants located thereon and to permit full
compliance with all Laws and normal utilization of the Real Properties and the
Restaurants located thereon.
(g) All licenses, permits, certificates required from all governmental
agencies having jurisdiction over the Real Properties, and from any other
Persons, for the normal use and operation of the Real Properties and the
Restaurants located thereon and to ensure adequate vehicular and pedestrian
ingress to and egress from the Real Properties and the Restaurants located
thereon have been obtained. The Easements are valid and binding, in full force
and effect and enforceable in accordance with their respective terms.
(h) All notes or notices of violations of law or municipal ordinances,
orders or requirements noted in or issued by the Department of Housing and
Building, Fire, Labor, Health or other State or municipal department having
jurisdiction over the Owned Real Property, against or affecting the Owned Real
Property up until the date of the Closing, shall be complied with by Seller and
the Owned Real property shall be conveyed free of the same and the provisions
of this Agreement with respect thereto shall survive delivery of the Deed with
respect to such Owned Real Property.
SECTION 2.10 Franchise Agreements.
Each Seller has delivered to Purchaser a true, complete and correct
copy of the Franchise Agreement relating to its Restaurant, including any and
all amendments thereto. Each Seller owns, and at Closing will transfer to
Purchaser, its respective right, title and interest in its Franchise Agreement,
free and clear of all Liens. Subject to the written consent of Burger King,
which each Seller shall obtain and deliver to Purchaser at or prior to the
Closing, each Seller has the absolute right and authority to sell, assign,
transfer and convey its Franchise Agreement. No Seller has received any notice
of violation with respect to the Franchise Agreements, and no Seller knows or
has no reason to know of any event which would give rise to a violation or
default under the Franchise Agreements.
SECTION 2.11 Employment Arrangements.
(a) Except as required by Law, no Seller has any obligation,
contingent or otherwise, under any employment agreement, collective bargaining
or other labor agreement, any agreement containing severance or termination pay
arrangements, retainer or consulting arrangements, or purchase plan or other
employee contract or non-terminable (whether with or without penalty)
arrangement.
(b) Except as set forth on Schedule 2.11(b), within the last five
years no Seller has experienced any organized labor disputes with its employees,
union organization attempts or any work stoppage due to labor disagreements.
Except as set forth on Schedule 2.11(b), (i) to the best knowledge of each
Seller, each Seller is in substantial compliance with all applicable Laws
respecting employment and employment practices, terms and conditions of
employment and wages and hours, and is not engaged in any unfair labor practice;
<PAGE>(ii) there is no unfair labor practice, charge or complaint against any
Seller
pending or threatened before the National Labor Relations Board; (iii) there is
no labor strike, dispute, request for representation, slowdown or stoppage
actually pending or threatened against or affecting any Seller; (iv) no question
concerning representation has been raised or is threatened respecting the
employees of any Seller; and (v) no grievance which might have an adverse affect
on a Seller or the conduct of its business nor any arbitration proceeding
arising out of or under collective bargaining agreements is pending and no
claims therefor exist.
(c) Schedule 2.11(c) sets forth a true and complete list of (i) the
names of all persons employed by each Seller at the Restaurants as of the date
hereof, and the salary or hourly wage payable to each such person, and (ii) the
total number of vacation days accrued by all persons employed by each Seller and
the total monetary value of such accrued vacation for all such persons.
SECTION 2.12 Contracts and Arrangements.
(a) Except for the Franchise Agreements, Real Property Leases,
Easements, and the Contracts set forth on Schedule 2.12 hereto (the Contracts
set forth on Schedule 2.12 being referred to herein, collectively, as the "Other
Contracts"), no Seller has any Contract relating to the Restaurants, Assets or
Real Properties, including, without limiting the generality of the foregoing any
(i) Contract for the purchase or sale of Inventory; (ii) Contract for the
purchase or sale of supplies, services or other items; (iii) Contract for the
purchase, sale or lease of any Restaurant Equipment; (iv) franchise agreement
or license agreement; and (v) employment or consulting agreement or pension,
disability, profit sharing, bonus, incentive, insurance, retirement or other
employee benefit agreement.
(b) Each Seller has delivered to Purchaser a true, complete and
correct copy of each Other Contract applicable to it together with all
amendments, or if oral, a written description of the terms thereof.
(c) Each Seller has performed all obligations required to be performed
under each Other Contract relating to its business and is not in breach or
default or in arrears in any respect under the terms thereof. Except as
otherwise set forth on Schedule 2.12, no Seller has received notice of the
termination of any such Other Contract prior to the expiration of the scheduled
term thereof or has knowledge of the intent of a party to any such Other
Contract to do the same, nor has any event occurred which, with notice or the
passage of time or both, would constitute a default under any such Other
Contract. Seller has the right, under the terms of each Other Contract, to
assign such Other Contract to Purchaser, except as otherwise set forth on
Schedule 2.12.
(d) Except with powers and rights conferred upon Sellers' Agent, no
Seller has given any power of attorney (revocable or irrevocable) to any Person
for any purpose whatsoever.
SECTION 2.13 ERISA.
No Seller maintains or has any obligations to contribute to any (a)
"employee pension benefit plans" (as defined in section 3(2) of the Employee
<PAGE>Retirement Income Security Act of 1974, as amended ("ERISA")), or any
"multi-employer plans" (as defined in ERISA section 3(37)), or any other stock
bonus, pension, or profit sharing plans described in section 401a of the Code,
that any Seller or any other entity which would be considered in a controlled
group or under common control or as a single employer with any Seller under
ERISA sections 4001(a)(14) or (b) or Code sections 414(b), (c), (m), or (o).
(b) No Seller maintains or has an obligation to contribute to any
employee welfare benefit plans" as defined in ERISA section 3(1) or any deferred
compensation, stock purchase, stock option, incentive, bonus, vacation,
severance (including, without limitation, benefits in the event of a change of
ownership in whole or in part, of Seller), disability, hospitalization, medical
insurance, child care, educational assistance, or other employee benefit plan,
program or arrangement.
(c) All plans, programs or arrangements described in Section 2.13(a)
and (b) are collectively referred to herein as the "Plans".
(d) There are no actions, audits, suits, or claims pending (other than
routine claims for benefits) or, to the knowledge of any Seller, threatened,
against any Plan or any fiduciary of any Plan or against the assets of any Plan.
(e) No Seller has any obligation to any retired or former employee
with respect to, nor made any oral or written representation or communication
to any retired or former employee regarding, the provisions of any disability
(long or short term), hospitalization, medical, dental or life insurance plans
(whether insured or self-insured) or any other "employee welfare benefit" plan
as defined in ERISA section 3(1).
SECTION 2.14 Litigation, Compliance with Laws and Consents.
(a) Except as set forth on Schedule 2.14(a), there are no suits,
grievances, complaints, charges, inquiries, proceedings, hearings, demands,
notices, demand letters, claims, actions, causes of action or investigations
before any court, tribunal, governmental or regulatory authority or any other
Person (each an "Action" and, collectively, "Actions") now pending, or, to the
knowledge of Sellers, in prospect or threatened against, any Seller or any of
its respective officers, directors or partners, at law or in equity, whether or
not fully covered by insurance, in connection with the Assets, Real Property
Leases, Assumed Contracts, Real Properties, Restaurants, business, affairs,
properties or assets of any Seller which would adversely affect the Assets or
the Restaurants in any material respect.
(b) To the best knowledge of Sellers, Sellers at all times during the
past have been, and at Closing, will be, in substantial compliance in all
respects with all laws (whether statutory or otherwise) rules, regulations,
orders, ordinances, judgments, injunctions, demands, or decrees of any
governmental authority (Federal, state, local or otherwise) (collectively
"Laws") applicable to its business, affairs, properties or assets. No Seller,
nor any officer, director or authorized agent of any Seller is in default with
respect to, and has not been charged or to its knowledge threatened with, nor
is under investigation with respect to any violation of any Laws relating to any
aspect of its business, affairs, properties or assets including, but not limited
to, the Restaurants, Assets, Real Property Leases, Assumed Contracts, and the
<PAGE>Real Properties.
(c) Set forth on Schedule 2.14(c) hereto is a list of all licenses,
permits, approvals, permissions, qualifications, consents and other
authorizations (collectively "Licenses") which are required to be obtained in
connection with the ownership, use or operation of the Restaurants, the Assets,
Real Property Leases or the Real Properties ("Required Licenses"). Except as
set forth in Schedule 2.14(c), Sellers have obtained each of the Required
Licenses and each such Required License is and on the Closing Date will be,
validly issued and in full force and effect and there are not now, and at
Closing shall not be any Actions pending, and to Sellers' knowledge, any Actions
in prospect or threatened, challenging the Required Licenses.
SECTION 2.15 Environmental Matters.
For each of the Restaurants and the Real Properties, except as set
forth in Schedule 2.15 annexed hereto: (i) Sellers have each obtained all
Licenses which are required under any Environmental Laws; (ii) to the best of
Sellers' knowledge, Sellers are in substantial compliance with all terms and
conditions of the Required Licenses and are also in substantial compliance with
all other limitations, restrictions, conditions, standards, prohibitions,
requirements, obligations, schedules and timetables contained in any
Environmental Laws or code, plan, order, decree or judgment relating to public
health and safety and pollution or protection of the environment or any notice
or demand letter issued, entered, promulgated or approved thereunder; (iii)
there are no civil, criminal or administrative Actions pending, or to Sellers'
knowledge threatened, against any Seller relating in any way to any
Environmental Law or any regulation, code, plan, order, decree, judgment,
injunction, notice or demand letter issued, entered, promulgated or approved
thereunder; and (iv) no Seller knows or has any reason to know of, nor has any
Seller received any notice of any facts, events or conditions which would
interfere with or prevent continued compliance with, or give rise to any common
law or legal liability under any Environmental Law.
SECTION 2.16 Insurance Policies.
Each Seller has maintained with financially sound and reputable
insurers insurance with respect to its properties and business against loss or
damage of the kinds required by the Franchise Agreements and the Real Property
Leases. All of the applicable insurance policies are valid and enforceable and
in full force and effect and will be continued in full force and effect up to
and including the Closing Date.
SECTION 2.17 Tax Returns.
Each Seller has filed all Federal income tax returns and all state and
local income, franchise and sales tax returns and all real property tax returns
and any other tax return which was required to be filed as of the date of this
Agreement, and will timely file or obtain extensions of time to file all returns
which were not required to be filed prior to the date hereof. The provision for
taxes shown on the Financial Statements of each Seller was sufficient to satisfy
all taxes due and all assessments received by such Seller (and all other
entities included within the Financial Statements) for all periods ended on or
prior to the date of such Financial Statements. As of the date hereof, no taxes
<PAGE>are past due, and no tax liabilities have been assessed or proposed which
remain
unpaid and all current payroll taxes have been paid. No Seller is aware of any
basis upon which any assessment of additional Federal, state or local income or
other taxes could be made, and no Seller has signed any extension agreement with
the Internal Revenue Service or any other governmental agency or given waiver
of a statute of limitations with respect to the payment of taxes for periods for
which the statute of limitations has not expired. Sellers shall be liable for
all tax liabilities in connection with the operation of the Restaurants, the
Assets, the Real Properties, the Real Property Leases, the Easements and Assumed
Contracts, which cover periods prior to the Closing Date. Each Seller shall be
liable for all transfer and similar tax liabilities, if any, in connection with
the leasing of the Owned Real Properties, the assignment of the Real Property
Leases and the Assumed Contracts, and the transfer of any rights under the
Easements. All taxes which any Seller is required by law to withhold or collect
have been duly withheld or collected and to the extent required have been paid
over to the proper governmental authorities on a timely basis or reflected as
an obligation on the current Financial Statements of the applicable Seller.
SECTION 2.18 Adverse Restrictions.
Subject to the consents required and described in Section 2.5, no
Seller is subject to any charter, by-law, Lien, lease, agreement, instrument,
order, judgment or decree, or any other restriction of any kind or character,
or, any law (currently in existence or adopted on or before the Closing Date),
rule or regulation, which now or in the future could affect materially adversely
its Restaurant or the business conducted therein, Assets, Real Properties, Real
Property Leases, the Easements or Assumed Contracts. The execution and delivery
of this Agreement and the other Transaction Documents and the consummation of
the transactions contemplated hereunder and thereby will not result in the
violation or breach of, default or the creation of any Lien under any of the
aforesaid.
SECTION 2.19 Brokers. No broker, finder or selling agent has had a part
in bringing about any of the transactions contemplated by this Agreement or the
other Transaction Documents (including, but not limited to, the leasing of the
Real Properties to Purchaser and the assignment of the Real Property Leases) and
no commission or other fee is due to any party in connection with the
transactions contemplated by this Agreement or the other Transaction Documents.
SECTION 2.20 Material Information. The Financial Statements, this
Agreement, the other Transaction Documents and any exhibit, schedule,
certificate, or other information, representation, warranty or other document
furnished or to be furnished by Sellers (or any of them) to Purchaser pursuant
to or in connection with any of the foregoing, do not (i) contain, nor will the
same contain, any untrue statement of a material fact; or (ii) omit, nor will
the same omit, or fail to state, a material fact required to be stated herein
or therein or which is necessary to make the statements herein or therein not
misleading.
SECTION 2.21 Continuing Representations.
The representations and warranties of Sellers herein contained shall
be true and correct on and as of the Closing Date with the same force and effect
<PAGE>as if made on and as of that date.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser represents, warrants, covenants and agrees to and with each
Seller that:
SECTION 3.1 Organization and Corporate Power.
Purchaser is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware and is duly authorized to
do business in the State of New York and is in good standing with the State of
New York. Purchaser has full power and authority (corporate and other) to
execute and deliver this Agreement and the other Transaction Documents to be
executed and delivered by Purchaser pursuant hereto or in connection herewith
and to consummate the transactions contemplated hereby and thereby.
SECTION 3.2 Certificate of Incorporation and By-Laws.
Copies of the Certificate of Incorporation and By-Laws of Purchaser
and all amendments thereto to date, as certified by the Secretary of Purchaser,
and its New York State Certificate of Good Standing have heretofore been
delivered to Sellers' Agent by Purchaser, and are complete and correct as of the
date of this Agreement and will be complete and correct as of the Closing Date.
Purchaser is not in default in the performance, observance or fulfillment of any
of the terms or conditions of its Certificate of Incorporation or By-Laws.
SECTION 3.3 Due Authorization.
All requisite authorizations for the execution, delivery, performance
and satisfaction of this Agreement and the other Transaction Documents by
Purchaser have been duly obtained. The execution and delivery of this Agreement
and the other Transaction Documents and the consummation of the transactions
contemplated hereby and thereby have been duly authorized by the Board of
Directors of Purchaser and no other corporate acts or proceedings on the part
of Purchaser or its shareholders are necessary to authorize the execution and
delivery of this Agreement or any of the other Transaction Documents or the
consummation of the transactions contemplated hereby or thereby. This Agreement
and each of the other Transaction Documents, upon execution and delivery by
Purchaser, will be the legal, valid and binding obligation of Purchaser,
enforceable against Purchaser in accordance with its terms, except as
enforcement thereof may be limited by Bankruptcy Laws and subject to the general
principles of equity affecting the right to specific performance and injunctive
relief.
SECTION 3.4 No Violation.
The execution, delivery and performance of this Agreement and the
other Transaction Documents by Purchaser and the consummation by Purchaser of
the transactions contemplated hereby and thereby will not (a) violate its
Certificate of Incorporation or By-Laws or its authority to do business in the
<PAGE>State of New York; (b) violate or conflict with or constitute a default
(or an
event which, with notice or lapse of time or both, would constitute a default)
under any agreement, indenture, instrument or understanding to which Purchaser
is a party or by which it is bound; (c) violate any judgment, decree, law, rule
or regulation to which Purchaser is a party or by which it is bound; (d)
terminate or modify, or give any third party the right to terminate or modify,
the provisions or terms of any agreement or commitment to which Purchaser is a
party or by which Purchaser is subject or bound; or (e) result in any
suspension, revocation, impairment, forfeiture or non-renewal of any license,
qualification, authorization or approval applicable to Purchaser. Exceptions to
the aforementioned are the consents and approvals set forth in Section 3.5
below.
SECTION 3.5 Consents.
Except for the Burger King Consents, the consent of Heller Financial,
Inc. (Purchaser's senior lender) and any filings that Purchaser may be required
to make with the Securities and Exchange Commission, Purchaser is not required
to obtain any consents, approvals or other authorizations or to make any filing
with any governmental authority or agency or any other Person in connection with
the execution, delivery and consummation of this Agreement and other Transaction
Documents and the consummation of the transactions contemplated hereby and
thereby. Purchaser shall use due diligence to promptly obtain each and all of
the aforementioned consents and to make the necessary filings.
SECTION 3.6 Brokers.
No broker, finder or selling agent has had a part in bringing about
any of the transactions contemplated by this Agreement or the other Transaction
Documents (including, but not limited to, the leasing of the Real Properties to
Purchaser and the assignment of the Real Property Leases) and no commission or
other fee is due to any party in connection with the transactions contemplated
by this Agreement or the other Transaction Documents.
SECTION 3.7 Material Information.
This Agreement, the other Transaction Documents and any exhibit,
schedule, certificate or other information representation, warranty or other
document furnished or to be furnished by Purchaser to Sellers do not (a)
contain, nor will the same contain, any untrue statement of a material fact; or
(b) omit, nor will the same omit or fail to state, a material fact required to
be stated herein or therein or which is necessary to make the statements herein
or therein not misleading.
SECTION 3.8 Good Standing.
As of the date hereof, Purchaser, to the best of its knowledge, is in
good standing with Burger King Corporation.
SECTION 3.9 Litigation. There are no Actions now pending, or, to the
knowledge of Purchaser, in prospect or threatened against, Purchaser or any of
its officers, directors, at law or in equity, which could prevent or
substantially impair Purchaser from consummating the transactions contemplated
<PAGE>by this Agreement and the Transaction Documents.
SECTION 3.10 Continuing Representations.
The representations and warranties of Purchaser herein contained shall
be true and correct on and as of the Closing Date with the same force and effect
as if made on and as of that date.
ARTICLE IV
COVENANTS OF THE PARTIES
SECTION 4.1 Access to Records and Properties Prior to the Closing Date.
Between the date of this Agreement and the Closing Date, each Seller shall give
Purchaser, its directors, officers, employees, accountants, counsel and other
representatives and agents ("Representatives") reasonable access to the
premises, properties, books, financial statements, Contracts, sales records of
such Seller, relating to the Restaurants, the Assets, Real Properties, Real
Property Leases, the Easements and Assumed Contracts, and shall furnish
Purchaser with such financial and operating data and other information with
respect to the business and properties of such Seller as Purchaser shall from
time to time reasonably request for such purposes as Purchaser shall require
with respect to this Agreement and reasonably need for the operation of the
Restaurants. Any such investigation or examination shall be conducted at
reasonable times and upon reasonable notice to Sellers' Agent and so as not to
unreasonably interfere with the conduct of business at each Restaurant.
Notwithstanding inspections, audits or other studies undertaken by or on behalf
of Purchaser hereunder or any other due diligence investigation undertaken by
or on behalf of Purchaser, Sellers shall not be relieved in any way of
responsibility for their warranties, representations and covenants set forth in
this Agreement.
SECTION 4.2 Operation of the Business of Sellers.
(a) Between the date of this Agreement and the Closing Date, each
Seller shall conduct the operation of its Restaurant in the ordinary and usual
course of business, consistent with past practices and will use its best efforts
to preserve intact the present business organization with respect to its
Restaurant, to keep available the services of its officers and employees, and
to maintain satisfactory relationships with landlords, franchisors, dealers,
licensors, licensees, suppliers, contractors, distributors, customers and others
having business relations with it and its Restaurant and will maintain its
Restaurant, Real Properties, and Assets in a condition conducive to the
operation of the business currently carried on therein.
(b) Without limiting the generality of the foregoing, and except as
otherwise expressly provided in this Agreement or with the prior written consent
of Purchaser, no Seller will:
(i) Keep and maintain its books of account and records other
than in accordance with generally accepted accounting principles consistent with
past practices;
(ii) Amend or restate any Governing Instrument (except as is
<PAGE>necessary to consummate the transactions contemplated by this Agreement
and the
Transaction Documents), its Real Property Leases, Franchise Agreement or any
other material Contract;
(iii) (A) Increase in any manner the compensation of any of the
employees at any of the Restaurants other than in the ordinary course of
business, consistent with past practices; (B) pay or agree to pay any pension,
retirement allowance or other employee benefit not required or permitted by any
Plan, whether past or present; or (C) commit itself in relation to its
Restaurant, the employees at its Restaurant or the Real Properties, to any new
or renewed Plan with or for the benefit of any Person, or to amend any of such
Plans or any of such agreements in existence on the date hereof;
(iv) Permit any of its insurance policies to be canceled or
terminated or any of the coverage thereunder to lapse, unless simultaneously
with such termination, cancellation or lapse, replacement policies are in full
force and effect providing coverage, in form, substance and amount equal to or
greater than the coverage under those canceled, terminated or lapsed for
substantially similar premiums;
(v) Enter into any other Contracts whether written or oral
which, individually or in the aggregate, would be material to its Restaurant,
Assets, Real Properties, Real Property Leases, the Easements or the Assumed
Contracts, except Contracts for the purchase, sale or lease of goods or services
in the ordinary course of business consistent with past practice and not in
excess of current requirements, or otherwise make any material change in the
conduct of the businesses or operations of such Seller;
(vi) Place or allow to be placed, any Liens on the Real
Properties;
(vii) Take any action which would result in any of the
representations or warranties contained in this Agreement or the other
Transaction Documents not being true at and as of the time immediately after
such action at and as of the Closing Date, or in any of the covenants contained
in this Agreement or other Transaction Documents becoming unperformable or which
would have a materially adverse impact on the transactions contemplated hereby
or thereby;
(viii) Operate its Restaurant, or otherwise engage in any
practices, which would materially adversely affect sales at its Restaurant; or
(ix) Agree (in writing or otherwise) to do any of the foregoing.
SECTION 4.3 Supplements to Disclosures.
Prior to the Closing Date, each Seller will promptly supplement or
amend the relevant and material information set forth herein, in the Schedules
and Exhibits referred to herein with respect to any matter hereafter arising
which, if existing or occurring at or prior to the date of this Agreement, would
have been required to be set forth or described herein or in a Schedule or
Exhibit or which is necessary to correct any relevant and material information
herein or in a Schedule or Exhibit or in any representation and warranty, which
<PAGE>has been rendered inaccurate thereby.
SECTION 4.4
No Other Asset Sales. From the date hereof until the Closing Date,
no Seller shall, directly or indirectly and whether by means of a sale of
assets, sale of stock, merger or otherwise:
(a) sell, transfer, assign or dispose of, or offer to, or enter into
any Contract to sell, transfer assign or dispose, of the Assets or any interest
therein, except for normal operations in the ordinary course of business; or
(b) encourage, initiate or solicit any inquiries or proposals by, or
engage in any discussions or negotiations with, or furnish any non-public
information to any Person (excluding Sellers' attorneys, accountants and if
required, governmental agencies)concerning any such transaction described in
subsection (a) above and Sellers' Agent shall promptly communicate to Purchaser
the substance of any inquiry or proposal concerning any such transaction which
may be received.
SECTION 4.5 Regulatory Filings and Consents.
From the date hereof until the Closing Date, each of the parties
hereto shall furnish to the other party hereto such necessary information and
reasonable assistance as such other party may reasonably request in connection
with its preparation of necessary filings or submissions to any governmental
agency and each Seller shall use its respective best efforts to obtain all
Licenses and Required Consents from third parties necessary for each Seller to
consummate the transactions contemplated by this Agreement and the other
Transaction Documents. Each party shall furnish to the other copies of all
significant correspondence, filings or communications (or memoranda setting
forth the substance thereof) between Purchaser, Sellers (or any of them), or any
of their respective Representatives and agents, on the one hand, and any
government agency or authority or third party, or members of the staff of such
agency or authority or third party, on the other hand, with respect to this
Agreement and the other Transaction Documents and transactions contemplated
hereby and thereby. Nevertheless, nothing herein shall require, or be
interpreted to require, any disclosure of any privileged or confidential
correspondence or communications of any kind, whether written or oral, between
or among any party and such parties' respective attorneys or accountants. If
necessary, prior to or subsequent to Closing, Sellers and Seller's Agent will
cooperate with Purchaser and Purchaser's auditors in the preparation of audited
financial statements for filing with the Securities and Exchange Commission.
SECTION 4.6 Announcements; Confidentiality.
(a) From the date of this Agreement until Closing, except as required
by Laws, no announcement of the existence or terms of this Agreement or the
other Transaction Documents or the transactions contemplated hereby and thereby
shall be made publicly or to the employees or customers of Sellers, by any party
to this Agreement or any of its respective Representatives without the advance
written approval of the other parties except that the parties may disclose the
terms of this Agreement and the Transaction Documents to their respective
lenders, Burger King and as is otherwise necessary, or has been necessary to the
<PAGE>negotiation, preparation and execution of this Agreement and to the
consummation
and the transactions contemplated by it and the Transaction Documents.
(b) Purchaser, on the one hand, and Sellers and Sellers' Agent, on the
other hand, each shall hold in strict confidence, and shall use their best
efforts to cause all their representatives to hold in strict confidence, unless
compelled to disclose by judicial or administrative process, or by Law, all
confidential and proprietary information concerning Sellers and Sellers' Agent
(in the case of Purchaser) and Purchaser (in the case of Sellers and Sellers'
Agent) which is created or obtained prior to, on or after the date hereof in
connection with the transactions contemplated hereby, and Purchaser,Sellers and
Sellers' Agent each shall not use or disclose to others, or permit the use or
disclosure of, any such information created or obtained except to the extent
that such information can be shown to have been (i) previously known by
Purchaser, and Seller or Sellers' Agent, as the case may be (ii) in the public
domain through no fault of a party or any of its Representatives, and will not
release or disclose such information to any other Person, except its officers,
directors, employees, Representatives and lending institutions who need to know
such information in connection with this Agreement, and any other person or
entity who has a need to know in order to consummate the transactions
contemplated by this Agreement and the Transaction Documents.
(c) If the transactions contemplated by this Agreement are not
consummated, such confidence shall be maintained except (i) as required by Law
or (ii) to the extent such information comes into the public domain through no
fault of a party or any of its Representatives.
SECTION 4.7 Limitation of Sellers, Actions After Closing.
Subject to the provisions of Articles VII and VIII, from and after the
Closing and thereafter so long as the provisions of Article VII are still
applicable, no Seller nor Sellers' Agent shall, without the prior written
consent of Purchaser: (i) engage in any business which would adversely affect
the value of Purchaser's business; or (ii) take any other action or fail to take
any action, or allow the occurrence of any event, with respect to such Seller's
assets, including without limitation, the Real Properties, which could be
reasonably expected to materially and adversely affect such Seller's ability to
indemnify, defend and hold harmless Purchaser and its officers, directors and
shareholders from and against Damages (as hereunder defined) pursuant to Article
VII.
SECTION 4.8 Bulk Sales.
(a) Purchaser hereby waives compliance by Sellers with the provisions
of the New York Uniform Commercial Code Bulk Sales laws. Sellers hereby jointly
and severally agree to pay and discharge, promptly when due, all undisputed
claims of creditors which may be asserted against Purchaser by reason of such
noncompliance, and, with respect to disputed claims, Sellers jointly and
severally agree to pay and discharge such claims promptly after resolution of
the dispute.
(b) Schedule 4.8(b) annexed hereto accurately sets forth all of the
creditors of each Seller as of the date hereof and the approximate amounts owing
to such creditors as of the date hereof.
<PAGE>
(c) Purchaser also hereby waives compliance by Sellers with the
provisions of any applicable bulk sales state or local tax laws in effect in the
state of New York.
(d) The bulk sales laws referred to in Sections 4.8(a) and (c) hereof
are referred to herein, collectively, as the "Bulk Sales Laws".
SECTION 4.9 Financial Statements and Reports.
Between the date hereof and the Closing Date, Sellers' Agent shall
deliver to Purchaser:
(a) within five business days after the end of each calendar month,
a written statement, certified by Sellers' Agent, of the Gross Sales (as defined
by Burger King) of each Restaurant for that month; and
(b) within five business days of their availability, such financial
statements relating to each Restaurant as may be prepared by Sellers (or any of
them), which shall be prepared on a basis consistent with past practices.
SECTION 4.10 Environmental Matters.
(a) Within five days of the date hereof, Purchaser shall, at its sole
cost and expense, promptly arrange for the preparation of "Level-One" or "Phase
I" environmental site assessments (hereinafter "Phase I's") for each of the Real
Properties, which shall be conducted by a reputable, licensed environmental
services company (the "Environmental Company") selected by Purchaser. The Phase
I's shall be conducted in three groups (of 5, 5 and 6) and each group shall be
commenced only upon completion of the prior Phase I's group.
(b) In the event any of the Phase I's shall recommend that a
"Level-Two" or "Phase II" environmental site assessment (hereinafter "Phase
II's") be performed, or shall disclose any environmental conditions which
Purchaser, in its reasonable discretion, believes should be investigated
further, Purchaser shall promptly deliver a copy of such Phase I to Sellers, and
Purchaser, at its sole cost and expense, shall have the option of requiring
Phase II's for each Real Property so affected to be performed by the
Environmental Company. A true copy of all Phase II's so performed shall
promptly be provided to Seller without cost or charge. The Phase I's for the
subsequent groups of Restaurants shall not be commenced until it has been
determined whether Seller will perform remediation or if Purchaser will exercise
its option to terminate this Agreement as set forth below.
(c) In the event that a Phase II shall identify a Real Property which
is affected by an environmental condition which requires abatement or
remediation (an "Environmentally Damaged Restaurant"), Seller shall be required
to promptly perform the remediation at Seller's sole cost and expense, and the
Closing shall be postponed until Seller shall have completed remediation of all
Environmentally Damaged Restaurants. In the event such remediation is not
completed within 120 days from the date Seller is notified that abatement or
remediation is required, Purchaser shall have the option to terminate this
Agreement, or proceed with the Closing and receive a reduction in the Purchase
Price equal to the cost of Remediation (up to $50,000), as estimated by the
<PAGE>Environmental Company. Anything to the contrary set forth herein
notwithstanding, in the event the cost of abatement or remediation with respect
to an Environmentally Damaged Restaurant shall exceed the sum of $50,000, Seller
shall not be required to spend in excess of $50,000 to perform remediation. If
Seller elects not to spend in excess of $50,000 for an Environmentally Damaged
Restaurant, Seller shall, within ten days of the date Seller is notified of the
cost of remediation, notify Purchaser that it does not intend to spend in excess
of $50,000 whereupon Purchaser shall have the option of incurring the cost of
remediation above $50,000 or terminating this Agreement.
(d) In the event that the Phase II's shall identify three or more Real
Properties affected by environmental conditions requiring remediation or
abatement, Purchaser shall have the option to terminate this Agreement, which
option shall be exercisable within 20 days from the date Purchaser shall have
received the Phase II's disclosing such conditions. In the event Purchaser
shall not elect to terminate this Agreement, the provisions of Section 4.10(c)
above shall apply to each Restaurant so affected.
SECTION 4.11 Employee Benefit Matters.
(a) No later than thirty (30) days after the Closing Date, each Seller
shall discharge and satisfy in full (and provide evidence thereof to Purchaser)
any liabilities it may have with respect to any wages, vacation, severance or
sick pay, or any rights under any stock option, bonus or other incentive
arrangements of its respective employees which shall have accrued as of the
Closing Date. For the purposes hereof, such accrued liabilities shall be
determined as if Sellers do not terminate the employment of their respective
employees on the Closing Date, but nothing herein shall effect or cause, a
waiver by any Seller to dispute any alleged liability so long as such Seller
holds Purchaser harmless from, and indemnifies Purchaser, for any such alleged
liability also asserted against Purchaser.
(b) Seller shall assume full responsibility and liability for offering
and providing "continuation coverage", as required by Law, to any employee of
Seller, and to "qualified beneficiaries" of any employee of Seller or to any
qualified beneficiary who incurs a multiple qualifying event after the Closing
Date provided that the employee or "qualified beneficiary" incurs a "qualifying
event" prior to the Closing Date. The continuation coverage shall be provided
under a group health plan of Seller or an affiliate of Seller. The type of
coverage shall be that described in Section 4980B(f)(2)(A) of the Code. The
continuation coverage shall be provided for the period described in Section
4980B(f)(2)(A) of the Code. "Continuation coverage", "qualified beneficiaries",
and "qualifying event" have the meanings given such terms under Section 4980B
of the Code. Seller hereby agrees to indemnify, defend and hold Purchaser
harmless from and against any "Damages" (as defined in Section 7.2(a) below)
arising out of Seller's failure to offer the continuation coverage described
herein.
SECTION 4.12 Access to Restaurants Prior to Closing.
Within 48 hours prior to the Closing Date, Seller shall give Purchaser
and its reasonably necessary Representatives access to the Restaurants for the
purposes of facilitating Purchaser's conversion of the cash register systems.
Such access by Purchaser shall be upon reasonable prior notice and Purchaser
<PAGE>agrees to use best efforts to conduct said activities in such manner so
as not
to unreasonably interfere with the operation of Seller's business. To the
extent there is storage space available at the Restaurants and the same shall
not cause undue burden on Seller, Purchaser may also, at its sole risk, store
its cash register equipment at the Restaurants. Nothing herein shall be deemed
to permit Purchaser to disconnect or replace Sellers' existing cash register
systems at any Restaurant prior to Closing.
SECTION 4.13 Covenants of Donald M. Cepiel, Sr. ("Cepiel") and Michael P.
Jones ("Jones").
By their signature at the end of this Agreement, Cepiel and Jones,
jointly and severally, agree to observe and be bound by the provisions of
Sections 4.4, 4.6, 4.7, 7.2(b), 10.1, 10.8 and Article VIII hereof.
ARTICLE V
CONDITIONS TO OBLIGATIONS OF PARTIES
SECTION 5.1 Conditions to the Obligations of Sellers and Purchaser.
The obligations of Purchaser and Sellers to consummate a Closing of
each Asset and the transactions contemplated by this Agreement and the
Transaction Documents with respect thereto are subject to the satisfaction at
or prior to the Closing of such Asset of the following conditions, except to the
extent that any such condition may have been waived in writing by both Sellers'
Agent and Purchaser at or prior to the Closing of such Asset:
(a) Impediments to Closing. No Actions shall have been instituted or
shall be pending or threatened which questions the validity or legality of this
Agreement and the other Transaction Documents and the transactions contemplated
hereby and thereby and which could reasonably be expected to damage materially
the business at the Restaurants or the Assets of any Seller if the transactions
contemplated hereby or thereby are consummated. This provision shall not be
applicable to any Action initiated or threatened by Seller or Purchaser for the
sole or primary purpose of creating an impediment to Closing. No injunction,
decree or order shall be in effect prohibiting consummation of the transactions
contemplated by this Agreement or the other Transaction Documents or which would
make the consummation of such transactions unlawful and no Actions shall have
been instituted and remain pending to restrain or prohibit the transactions
contemplated by this Agreement and the other Transaction Documents.
(b) Leasing Transactions. Each of the Leases shall have been executed
and delivered.
SECTION 5.2 Conditions to the Obligations of Sellers.
The obligations of each Seller to consummate the transactions
contemplated hereby and by the other Transaction Documents with respect thereto
are subject to the satisfaction at or prior to the Closing of the following
conditions, except to the extent that any such condition may have been waived
<PAGE>in writing by Sellers' Agent at or prior to the Closing:
(a) Representations, Warranties and Performance. The representations,
warranties, covenants and agreements of Purchaser contained in this Agreement
and the other Transaction Documents or otherwise made in writing by it or on its
behalf pursuant hereto or otherwise made in connection with the transactions
contemplated hereby or thereby shall be true and correct at and as of the
Closing Date, with the same force and effect as if made at and as of the Closing
Date; the Purchaser shall have performed or complied with all agreements and
conditions required by this Agreement and the other Transaction Documents to be
performed or complied with by it on or prior to the Closing Date; and Sellers'
Agent shall have received a certificate to the foregoing effect dated the
Closing Date in form and substance satisfactory to him signed by an officer of
Purchaser.
(b) Governing Instruments, etc. Sellers' Agent shall have received
a certificate in form and substance reasonably satisfactory to Sellers' Agent,
dated the Closing Date, of the Secretary or Assistant Secretary of Purchaser
certifying, among other things, that attached or appended to such certificate
(i) is a true and correct copy of its Certificate of Incorporation and all
amendments, if any, thereto in effect as of the date thereof; (ii) is a true and
correct copy of all of its By-laws; (iii) is a true copy of all corporate
actions taken by it, including resolutions of its board of directors authorizing
the execution and delivery of this Agreement and each other Transaction Document
to be delivered by it pursuant hereto and the consummation of the transactions
contemplated hereby and thereby; and (iv) are the names, the signatures of its
duly elected or appointed officers who are duly authorized to execute and
deliver this Agreement, and any certificate, document or other instrument in
connection herewith.
(c) Payment of Purchase Price. Purchaser shall have tendered to
Sellers' Agent the Purchase Price payable at Closing in accordance with Section
1.2(a) and with this Agreement in all respects.
(d) Assumption of Assumed Contracts. Each Seller shall have received
from Purchaser a duly executed Assumption Agreement substantially in the form
annexed as Exhibit C hereto.
(e) Opinion of Counsel. Sellers' Agent shall have received a duly
executed opinion of counsel for Purchaser, as of the Closing Date, substantially
in the form annexed as Exhibit D hereto.
(f) Purchaser's Consents and Filings. Sellers' Agent shall have
received from Purchaser a certificate, dated as of the Closing Date, certifying
that the consents set forth in Section 3.5 have been obtained and all filings
required to be made, as set forth in section 3.5, have been made.
SECTION 5.3 Conditions to Obligations of Purchaser. The obligations of
Purchaser to consummate the Closing of a particular Asset and the transactions
contemplated hereby and by the other Transaction Documents with respect thereto
are subject to the satisfaction at or prior to the Closing of such Asset of the
following additional conditions, except to the extent that any such condition
may have been waived in writing by Purchaser at or prior to the Closing:
<PAGE> (a) Representations, Warranties and Covenants. The
representations,
warranties, covenants and agreements of each Seller contained in this Agreement
and the other Transaction Documents, or otherwise made in writing by it or on
its behalf pursuant hereto or otherwise made in connection with the transactions
contemplated hereby or thereby shall be true and correct at and as of the
Closing Date with the same force and effect as though made on and as of the
Closing Date; each Seller shall have performed or complied with all agreements
and conditions required by this Agreement and the other Transaction Documents
to be performed or complied with by it on or prior to the Closing Date; and
Purchaser shall have received certificates to the foregoing effect dated the
Closing Date in form satisfactory to Purchaser signed by the Chief Executive
Officer of each Seller.
(b) Governing Instruments, etc. Purchaser shall have received a
certificate, dated the Closing Date, of the Secretary or Assistant Secretary of
each corporate Seller and each partner for each partnership Seller certifying,
among other things, that attached or appended to such certificate (i) is a true
and correct copy of each Governing Instrument and all amendments if any thereto
in effect as of the date thereof; (ii) is a true copy of all corporate actions
taken by it, including resolutions of its board of directors and shareholders
authorizing the execution and delivery of this Agreement and each other
Transaction Document to be delivered by it pursuant hereto and the consummation
of the transactions contemplated hereby and thereby; and (iii) are the names and
signatures of its duly elected or appointed officers and partners who are
authorized to execute and deliver this Agreement and any certificate, document
or other instrument in connection herewith.
(c) Instruments of Transfer. Each Seller shall have delivered to
Purchaser the Deed (if applicable), a bill of sale and assignment ("Bill of
Sale") substantially in the form annexed as Exhibit E hereto, a Lease Assignment
(if applicable) and any other documents of transfer which Purchaser reasonably
shall request in order to evidence and effectuate the sale and assignment to
Purchaser of the Asset, the Real Property Leases, the Assumed Contracts and the
consummation of all other transactions contemplated by this Agreement and the
other Transaction Documents.
(d) Consents. Each Seller shall have obtained, and delivered to
Purchaser, copies of the Required Consents applicable to it in form and
substance satisfactory to Purchaser.
(e) Opinion of Counsel. Purchaser shall have received a duly executed
opinion or opinions of counsel for Sellers, as of the Closing Date,
substantially in the form attached hereto as Exhibit F.
(f) No Material Adverse Change. There shall have been no material
adverse change, nor any events which could reasonably have a material adverse
change, in the business, operations, or financial or other material condition
of any Restaurant or in the respective Assets or Real Properties during the
"Interim Period" (as hereinafter defined) as compared to the same period for the
prior year. The term Interim Period shall be the sixty (60) day period
immediately preceeding the Closing Date . At Closing, Purchaser shall have
received a certificate dated the Closing Date in form satisfactory to Purchaser
signed by the Chief Executive Officer or authorized partner of each Seller, and
<PAGE>attested to by the Secretary of each corporate Seller, to the foregoing
effect.
(g) Environmental Due Diligence. Purchaser shall have completed its
environmental due diligence of the Restaurants, Real Property and Assets.
(h) Other Documents. Each applicable Seller shall have delivered to
Purchaser:
(i) the Assignment of its Real Property Lease, each Assumed
Contract and the Lease Assignment Consent;
(ii) the Easement Assignments;
(iii) a fully executed original counterpart of the Real Property
Lease;
(iv) receipts for funds paid to Sellers' Agent by Purchaser;
(v) certificates dated no earlier than 30 days prior to the
Closing Date, from appropriate authorities in the State of its jurisdiction of
incorporation, as to the good standing of such Seller;
(vi) an updated schedule of creditors as of the Closing Date;
(vii) all other documents, instruments and agreements required
to be delivered by such Seller to Purchaser pursuant to this Agreement and the
other Transaction Documents; and
(viii) an updated schedule of vacation days accrued by all
employees of Seller, and the value of such accrued vacation days for each such
employee, as of the Closing Date.
(i) Senior Lender's Consent. Purchaser shall have received, if
necessary, the written consent of its senior lender, Heller Financial, Inc., to
the transactions contemplated hereby, within ten (10) business days from the
execution of this Agreement, and Purchaser shall use diligent efforts to
promptly obtain such consent.
ARTICLE VI
DAMAGE OR DESTRUCTION
SECTION 6.1 Damage to or Destruction of One Restaurant - Prior to Closing.
If prior to the Closing Date, one of the Restaurants (hereafter referred to as
a "Damaged Restaurant") incurs substantial damage or is destroyed by fire or
other casualty (whether or not such destruction is covered by insurance), Seller
shall be required to promptly repair, rebuild and/or replace such Damaged
Restaurant to at least the condition which existed immediately prior to the fire
or casualty at such Seller's sole cost and expense.The Closing shall occur
pursuant to this Agreement except a portion of the Purchase Price equal to the
Damage Credit shall be held in escrow by the attorneys for Purchaser pending
<PAGE>completion of the repair and/or restoration of the Damaged Restaurant.
During
the period of time during which restoration or repair is being conducted,
Purchaser shall not be required to assume any obligations with respect to such
Damaged Restaurant. In the event such restoration or repair is not completed
within 120 days after the occurrence of the fire or casualty , Purchaser shall
have the option to withdraw the Damaged Restaurant from this transaction,
whereupon the Damage Credit shall immediately be paid to Purchaser and the
Purchase Price reduced by the Damage Credit.
SECTION 6.2 Damage to or Destruction of Two or More Restaurants - Prior to
Closing.
In the event two or more Restaurants are destroyed or incur
substantial damage prior to the Closing Date, Purchaser shall have the option
to terminate this Agreement, which option shall be exercisable within 30 days
from the date the option to terminate shall arise. In the event Purchaser shall
not elect to terminate this Agreement, the provisions of Section 6.1 above shall
apply to each Restaurant so affected.
SECTION 6.3 Notification of Damage or Destruction.
Sellers' Agent shall immediately notify Purchaser of any destruction
or damage to any of the Real Properties or Assets.
ARTICLE VII
INDEMNIFICATION
SECTION 7.1 Survival of Representations.
All representations, warranties, covenants and other agreements made
by each party hereto in this Agreement shall survive the Closing until the
expiration of the applicable statute of limitations relating to the particular
claim.
SECTION 7.2 Agreement to Indemnify.
Subject to the conditions of this Article VII:
(a) Purchaser hereby agrees to indemnify, defend and hold harmless
each Seller and Sellers' Agent from and against all demands, claims, actions or
causes of action, assessments, losses, damages, liabilities, costs and expenses,
including, without limitation, interest, penalties and reasonable attorney's
fees, costs and disbursements and expenses (collectively, "Damages"), asserted
against, resulting to, imposed upon or incurred by such Seller directly or
indirectly, arising out of or resulting from (i) a breach of any representation,
warranty, covenant or agreement of Purchaser contained in or made pursuant to
this Agreement (including but not limited to enforcement of this Article VII),
the other Transaction Documents or the transactions contemplated hereby or
thereby or any facts or circumstances constituting such a breach; and (ii) any
indebtedness, obligation or liability assumed by Purchaser pursuant to Section
1.4(b) hereof and (iii) the operation, use or ownership of the Restaurants,
<PAGE>Assets, Real Property Leases, Real Properties, the Easements and Assumed
Contracts, during, or which have otherwise accrued from or otherwise relate to,
the period of time after the Closing Date; and
(b) Sellers hereby jointly and severally agree to indemnify, defend
and hold harmless Purchaser and its officers, directors and shareholders from
and against all Damages asserted against or incurred by Purchaser or such
officers, directors and shareholders, directly or indirectly, arising out of or
resulting from: (i) a breach of any representation, warranty, covenant or
agreement of a Seller contained in or made pursuant to this Agreement (including
but not limited to enforcement of this Article VII, the other Transaction
Documents or any facts or circumstances constituting such a breach; (ii) any
indebtedness, obligations or liabilities of a Seller including, but not limited
to, any liability or obligation set forth in Section 1.4(a), and the tax
liabilities set forth in Section 2.17 other than those expressly assumed by
Purchaser hereunder, (iii) a breach of or otherwise arising under any
Environmental Law (whether now or hereafter in effect), to the extent the same
arises out of any condition or state of facts or otherwise relates to the period
of time commencing on the date of possession by the applicable Seller of the
Real Property in question and ending on the Closing Date; (iv) the operation,
use or ownership of the Restaurants, Assets, Real Properties, Real Property
Leases, the Easements and Assumed Contracts during, or which have otherwise
accrued from or otherwise relate to the period of time prior to the Closing
Date; (v) a Seller's failure to pay and discharge all claims of creditors which
may be asserted against Purchaser by reason of Purchaser's waiver of compliance
by Sellers of the Bulk Sales Laws; and (vi) any claims made with respect to any
Plan.
SECTION 7.3 Conditions of Indemnification.
The obligations and liabilities of an indemnifying party under Section
7.2 with respect to Damages for which it must indemnify another party hereunder
(collectively, the "Indemnifiable Claims") shall be subject to the following
terms and conditions:
(a) The indemnified party shall give the indemnifying party written
notice of any such Indemnifiable Claim which notice shall set forth in
reasonable detail the basis for and amount of the Indemnifiable Claim, and the
circumstances giving rise thereto. If the Indemnifiable Claim is a third-party
claim, the notice must contain a copy of any papers served on the indemnified
party, and must be given promptly before any time to appear, answer or respond
expires.
(b) If the Indemnifiable Claim is not a third-party claim, unless
within 30 days of receipt by the indemnifying party of notice of the
Indemnifiable Claim the indemnifying party sends written notice to the
indemnified party disputing the facts giving rise to the Indemnifiable Claim or
the amount of Damages stated in the notice, the Damages stated in the notice
shall become due and payable upon the expiration of such 30 day period. If,
however, the indemnifying party disputes the facts, giving rise to the
Indemnifiable Claim or the amount of Damages stated in the notice within such
30 day period and the dispute cannot be resolved within the following 90 days,
the dispute shall be submitted to arbitration under the rules of the American
Arbitration Association in Albany, New York.
<PAGE>
(c) If the Indemnifiable Claim is a third-party claim, the
indemnifying party may undertake the defense thereof at its own expense by
representatives of its own choosing reasonably satisfactory to the indemnified
party and will consult with the indemnified party concerning such defense during
the course thereof. If the indemnifying party, within 30 days after receipt of
notice of any Indemnifiable Claim (or such shorter period as is necessary to
prevent prejudice to the indemnified party, if such 30 day period would
prejudice the rights of the indemnified party), fails to defend, the indemnified
party will (upon further written notice to the indemnifying party) have the
right to undertake the defense, compromise or settlement of such Indemnifiable
Claim on behalf of and for the account and risk of and at the expense of the
indemnifying party. In addition, if there is a reasonable probability that a
third-party Indemnifiable Claim may materially and adversely affect an
indemnified party, the indemnified party shall have the right, at its own cost
and expense, to defend, compromise or settle such Indemnifiable Claim.
(d) Anything in this Section 7.3 to the contrary notwithstanding,
neither the indemnifying party nor the indemnified party, as the case may be,
may settle or compromise any Indemnifiable Claim or consent to entry of any
judgment in respect thereof, without the written consent of the other, which
consent may not be unreasonably withheld or delayed.
SECTION 7.4 Remedies Cumulative.
The remedies provided in this Article VII shall be cumulative and
shall not preclude the assertion by any party hereto of any other rights or the
seeking of any other remedies against the other parties hereto. Either party
may, among its other remedies, offset the amount of any Indemnifiable Claim
which becomes due and payable to it or to its shareholders, officers or
directors, against any payments to be made or consideration to be paid to the
other pursuant to this Agreement or any of the other Transaction Documents
including, but not limited to, the Leases.
ARTICLE VIII
COVENANT NOT TO COMPETE
SECTION 8.1 Covenant Not to Compete. (a) Each Seller and each of Cepiel
and Jones and their respective Affiliates hereby jointly and severally covenant
and agree that it, he or she will not, directly or indirectly, for its, his or
her own account or as an employee, officer, director, partner, joint venturer,
shareholder, investor, consultant or otherwise:
(i) for a period of three years from the Closing Date of each
Asset remaining hereunder, own, operate, manage, develop, or otherwise engage
in any type of restaurant business or operation, fast food or otherwise, within
any of the counties in which any of the Restaurants are located (the "Restricted
Area");
(ii) for a period of three years from the Closing Date of each
Asset remaining hereunder, within the Restricted Area, sell, develop, lease for
occupancy or otherwise use or permit to be used any property presently owned or
<PAGE>leased or hereafter acquired or leased by it, him or her for use as any
type of
restaurant business, fast food or otherwise, except for any transactions with
Purchaser or any of its Affiliates; or
(iii) for a period of three years following the Closing Date of
each Asset remaining hereunder, employ or solicit the employment or engagement
by others of any executive or management level employees of the Restaurants who
are employed by or in any of the Restaurants on the Closing Date.
(b) The provisions of Section 8.1(a) shall not preclude the
development and operation by Sellers, Cepiel, Jones or any Affiliate of Sellers
of any "Boston Chicken" restaurant or the operation of any Burger King
restaurant that is owned or operated by Sellers or any Affiliate of Sellers as
of the date hereof. The foregoing provisions shall also not be deemed to
preclude the "Certain Affiliates" of Cepiel and Jones from developing new Burger
King Restaurants provided Cepiel and Jones do not have a financial interest in
such restaurants, are not involved, directly or indirectly, with the
development,ownership, management operation or financing of such restaurants.
As used herein, the "Certain Affiliates" of Cepiel and Jones shall mean, with
respect to the Burger King Restaurants owned by Cepiel and Jones or Sellers
which are not being transferred under this Agreement, the individuals who are
identified as the Operating Partners under the franchise agreements for such
Burger King Restaurants.
SECTION 8.2 Geographic Area Reasonable; Reduction of Geographical Area and
Time Restriction.
Sellers, Cepiel and Jones acknowledge that the restricted period of
time and geographical area specified in Section 8.1 hereof are reasonable.
Notwithstanding anything herein to the contrary, if the period of time or the
geographical area specified under Section 8.1 hereof should be determined to be
unreasonable in any judicial proceeding, then the period of time and territory
of the restriction shall be reduced so that this Agreement may be enforced in
such area and during such period of time as shall be determined to be
reasonable.
SECTION 8.3 Effect of Breach.
The parties acknowledge that any breach of this Section 8 will cause
Purchaser irreparable harm for which there is no adequate remedy at law, and as
a result, Purchaser shall be entitled to the issuance by an arbitrator or court
of competent jurisdiction of an injunction, restraining order or other equitable
relief in favor of itself restraining any Seller, Cepiel and Jones, as the case
may be, from committing or continuing any such violation. Any right to obtain
an injunction, restraining order or other equitable relief hereunder shall not
be deemed a waiver of any right to assert any other remedy Purchaser may have
at law or in equity.
ARTICLE IX
TERMINATION
<PAGE> SECTION 9.1 Termination.
This Agreement and the transactions contemplated hereby may be
terminated at any time prior to the Closing:
(a) By mutual written consent of Sellers and Purchaser;
(b) By Sellers on behalf of Sellers, if (i) there has been a material
misrepresentation or breach of warranty on the part of Purchaser in the
representations and warranties contained herein and such material
misrepresentation or breach of warranty, if curable, is not cured within 15 days
of written notice thereof from Sellers' Agent; (ii) Purchaser has committed a
material breach of any covenant imposed upon it hereunder and fails to cure such
breach within 15 days of written notice thereof from Sellers' Agent; or (iii)
any condition to Sellers' obligations hereunder becomes incapable of fulfillment
through no fault of such parties and is not waived by such parties;
(c) By Purchaser, if (i) there has been a material misrepresentation
or breach of warranty on the part of any Seller in the representations and
warranties contained herein and such material misrepresentation or breach of
warranty, if curable, is not cured within 15 days of written notice thereof from
Purchaser; (ii) any Seller has committed a material breach of any covenant
imposed upon it hereunder and fails to cure such breach within 15 days of
written notice thereof, from Purchaser; or (iii) any condition to Purchaser's
obligations hereunder becomes incapable of fulfillment through no fault of
Purchaser and is not waived by Purchaser;
(d) By Purchaser in the circumstances provided in Section 4.10(d) or
6.2;
(e) By Sellers' Agent on behalf of Sellers, if the Closing shall not
have occurred on or before August 1, 1994; provided that Sellers' Agent shall
not be entitled to terminate this Agreement pursuant to this clause if the
failure of any Seller or Sellers' Agent to fulfill any of its obligations under
this Agreement shall have been the reason that the Closing shall not have
occurred on or before said date;
(f) By Purchaser, if the Closing shall not have occurred on or before
August 1, 1994; provided that Purchaser shall not be entitled to terminate this
Agreement pursuant to this clause if the failure of Purchaser to fulfill any of
its obligations under this Agreement shall have been the reason that the Closing
shall not have occurred on or before said date; and
(g) By Sellers' Agent on behalf of Sellers, or by Purchaser, if there
shall be any law or regulation that makes consummation of the transactions
contemplated hereby illegal or otherwise prohibited or if any judgment,
injunction, order or decree enjoining Purchaser, or any Seller, from
consummating the transactions contemplated hereby is entered and such judgment,
injunction, order or decree shall become final and nonappealable.
SECTION 9.2 Effect of Termination; Right to Proceed.
In the event that a party is entitled to terminate this Agreement
pursuant to Section 9.1, it shall give written notice thereof whereupon all
<PAGE>further obligations of the parties under the Agreement shall terminate
without further liability of any party hereunder except (i) to the extent that
a party has made a material misrepresentation hereunder or committed a breach
of the material covenants and agreements imposed upon it, hereunder; (ii) to the
extent that any condition to a party's obligations hereunder became incapable
of fulfillment because of the breach by a party of its obligations hereunder and
(iii) that the agreements contained in Sections 4.6, 10.3 and 10.4 and Article
VII shall survive the termination hereof. In the event that a condition
precedent to its obligation is not met, nothing contained herein shall be deemed
to require any party to terminate this Agreement, rather than to waive such
condition precedent and proceed with the transactions contemplated hereby.
Notwithstanding anything to the contrary contained herein, no party shall have
any obligation to the other hereunder arising out of the occurrence of an event
or circumstance not within the control of such party which event or circumstance
resulted in a representation or warranty of such party ceasing to be true.
<PAGE>
<PAGE>
ARTICLE X
MISCELLANEOUS
SECTION 10.1 Further Assurances.
Each of the parties hereto shall without further consideration execute
and deliver to any other party hereto such other instruments of transfer and
take such other action as any party may reasonably request to carry out the
transactions contemplated by this Agreement and the other Transaction Documents.
SECTION 10.2 Waiver and Amendment.
No provisions of this Agreement may be amended, supplemented or waived
at any time except by a written instrument executed by all parties hereto, or
in the case of a waiver, by the waiving party. No waiver of any of the
provisions of this Agreement shall be deemed or shall constitute a waiver of any
other provision hereof (whether or not similar), nor shall any such waiver
constitute a continuing waiver unless otherwise expressly provided.
SECTION 10.3 Remedies.
In the event of a default under this Agreement or the Transaction
Documents, the aggrieved party may proceed to protect and enforce its rights by
a suit for damages, suit in equity action at law or other appropriate legal
proceeding, whether for specific performance, or for an injunction against a
violation of any terms hereof or thereof or in aid of the exercise of any right,
power or remedy granted thereby or by law, equity, statute or otherwise. The
foregoing shall include, but shall not be limited to, allowance for recovery by
the aggrieved party of all of its necessary and reasonable fees, expenses and
disbursements incurred by it in connection with the transactions contemplated
hereby and in the Transaction Documents, including, without limitation, the
reasonable fees and expenses of its counsel, accountants, agents and
representatives employed by it. No course of dealing and no delay on the part
of any party in exercising any right, power or remedy shall operate as a waiver
thereof or otherwise prejudice such party's rights, powers or remedies. No
right, power or remedy conferred hereby shall be exclusive of any other right,
power or remedy referred to herein or now or hereafter available at law, in
equity, by statute, or otherwise. The foregoing paragraph is intended to apply
only to legal proceedings between and among the parties to this Agreement.
SECTION 10.4 Expenses.
Except as expressly otherwise provided for in this Agreement, all
expenses incurred by or on behalf of each of the parties hereto in connection
with the authorization, preparation and consummation of this Agreement and the
other Transaction Documents, including without limitation all fees and expenses
of agents, representatives, counsel and accountants employed by the parties
hereto in connection with the authorization, preparation, execution and
consummation of this Agreement, shall be borne solely by the party who shall
have incurred the same.
<PAGE> SECTION 10.5 Entire Agreement.
This Agreement and the other Transaction Documents and the Exhibits
and Schedules referred to herein and therein contain the entire agreement among
the parties with respect to the subject matter hereof and supersede all prior
arrangements or understandings with respect thereto.
SECTION 10.6 Definitions.
(a) For the purposes of this Agreement:
(i) "Affiliate" shall mean, with respect to any Person, any
other Person that has a relationship with the designated Person whereby either
of such Persons directly or indirectly controls or is controlled by or is under
common control with the other of such Persons.
(ii) "Contract" shall mean any contract, agreement, purchase
order, sales order, guaranty, option, mortgage, promissory note, assignment,
lease, franchise, commitment, understanding or other binding arrangement,
whether written, oral, express or implied.
(iii) The term "Control", with respect to any Person, shall mean
the power to direct the management and policies of such Person, directly or
indirectly, by or through stock ownership, agency or otherwise, or pursuant to
or in connection with a Contract with one or more other Persons by or through
stock ownership, agency or otherwise; and the terms "controlling"and
"controlled" shall have meanings correlative to the foregoing.
(iv) The term "Governing Instruments" shall mean, with respect
to any Person, the certificate of incorporation, articles of incorporation,
bylaws, code of regulations or other organizational or governing documents
howsoever denominated of such Person.
(v) "Person" shall mean an individual, partnership, corporation,
joint venture, unincorporated organization, cooperative, or a governmental
entity or agency thereof.
(b) The following terms have been defined in the following sections
of this Agreement:
Defined Term Section No.
Actions 2.14(a)
Adjustment Lease Year 1.6(c)
Aggregate Purchase Price 1.2
Agreement Preamble
Assets 1.1
Assumed Contracts 1.4(b)
Bankruptcy Laws 2.3
Base Year 2.6(c)
Bill of Sale 5.3(c)
Bulk Sales Laws 4.8(d)
Burger King 1.6(b)
<PAGE>Burger King Consents 2.5
Closing 15(a)
Closing Date 1.5(a)
Closing Location 1.5
Code 1.2(d)
Damaged Restaurant 6.1
Damages 7.2(a)
Easement Assignments 13(d)
Easements 1.3(d)
Environmental Company 4.10(a)
Environmentally Damaged
Restaurant 4.10(c)
Environmental Laws 1.5(a)(vi)
ERISA 2.13(a)
Exchange 1.2(d)
Exchange Property 1.2(d)
Financial Statements 2.6
Franchise Agreements 11(c)
Gains Law Tax 1.3(a)(vi)
Gross Profit 5.3(f)
Gross Sales 3(c)(iii) of the Lease
Indemnifiable Claim 7.3
Interim Period 5.3(f)
Inventory 1.1(d)
Laws 2.14(b)
Lease Assignment 1.3(b)
Lease Assignment Consent 1.3(c)
Leased Assets 11(f)
Leased Real Properties Preamble
Leasehold Improvements 1.1(b)
Licenses 2.14(c)
Liens 1.1
Other Contracts 2.12(a)
Owned Real Property Preamble
Phase I's 4.10(a)
Phase II's 4.10(b)
Plan 2.13(b)
Priced Inventory Report 1.2(a)(ii)
Purchase Price 1.2
Purchaser Preamble
Real Properties Preamble
Real Property Leases Preamble
Representatives 4.1(a)
Required Consents 2.5
Required Licenses 2.14(c)
Restricted Area 8.1(a)(i)
Restaurants Preamble
Restaurant Equipment 1.1(a)
Sellers Preamble
Sellers' Agent Preamble
Subsequent Closings 1.5(a)(ii)
Transaction Documents 2.1
<PAGE> SECTION 10.7 Interpretation.
The article and section headings contained in this Agreement are
solely for the purpose of reference, are not part of the Agreement of the
parties and shall not in any way affect the meaning or interpretation of this
Agreement.
SECTION 10.8 Notices.
All notices, consents, requests, instructions, approvals and other
communications provided for herein shall be validly given, made or served in
writing and delivered personally, sent by telecopier, Federal Express or other
reputable overnight courier or sent by certified or registered mail, postage
prepaid, return receipt requested, at the addresses set forth below:
(a) if to Purchaser, to:
Carrols Corporation
968 James Street
Syracuse, New York 13203-6969
Telecopier Number: (315) 475-9616
Attention:Daniel T. Accordino,
President; and
Joseph A. Zirkman, Esq.
<PAGE>
<PAGE>
(b) if to any Seller or Sellers' Agent, to:
Mr. Donald M. Cepiel, Sr.
Midon Restaurant Corporation
Twenty Wade Road
Latham, NY 12110
with a copy to:
Dennis F. Irwin, Esq.
26 Computer Drive West
Albany, New York 12205
Telecopier Number: (518) 438-2304
or such other address as any party hereto may, from time to time, designate in
a written notice given in a like manner (which change of address shall only be
effective upon actual receipt of same by the other party). Notices shall be
deemed delivered: (i) three days after the date the same is post marked if sent
by registered or certified mail; (ii) on the date the same is delivered
personally; (iii) the next business day after delivery to the courier service,
if sent by Federal Express or other reputable overnight courier and (iv) upon
receipt by the sender of telecopier confirmation, if sent by telecopier.
SECTION 10.9 Successors and Assigns.
This Agreement shall be binding upon and shall inure to the benefit of
and be enforceable by the heirs, executor, personal representatives,legal
representatives, successors and assigns of the parties hereto, and shall not be
assignable by either party without the prior written consent of the other party.
SECTION 10.10 Governing Law.
This Agreement shall be governed by and construed and enforced in
accordance with the laws of the State of New York without giving effect to New
York's conflict of laws rules.
SECTION 10.11 Consent to Jurisdiction; Service of Process.
(a) Except with respect to disputes wherein the parties have expressly
agreed herein to submit such dispute to arbitration, the parties hereto
irrevocably submit to the jurisdiction of the United States District Court for
the Northern District of New York over any dispute arising out of or relating
to this Agreement or any agreement or instrument contemplated hereby or entered
into in connection herewith or any of the transactions contemplated hereby or
thereby, and each party hereby irrevocably agrees that all claims in respect of
such dispute or proceeding shall be heard and determined in such court.
(b) Each of the parties hereto consents to process being served by any
party to this Agreement in any suit action or proceeding of the nature specified
in subsection 10.8 (a) above by mailing a copy thereof in accordance with the
provisions of Section 10.8 of this Agreement or in any other manner provided by
law.
<PAGE>
SECTION 10.12 Severability.
Whenever possible, each provision in this Agreement shall be
interpreted in such a manner as to be effective and valid under applicable law.
If any provision of this Agreement shall be prohibited or invalid under
applicable law, such provision shall be ineffective to the extent of such
prohibition or invalidity, without invalidating the remainder of such provision
or the remaining provisions of this Agreement.
SECTION 10.13 Purchaser's Designated Affiliate.
Purchaser may designate one or more of its wholly-owned subsidiaries
or Affiliates to carry out all or part of the transactions contemplated hereby
to be carried out by Purchaser, however, such assignment or designation shall
not absolve Purchaser from any liability under this Agreement and the
Transaction Documents.
SECTION 10.14 Counterparts.
This Agreement may be executed in one or more counterparts each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
SECTION 10.15 [INTENTIONALLLY OMITTED]
SECTION 10.16 Payment of Expenses.
(a) In the event Sellers terminate this Agreement as a result of
Sellers' lenders not approving this transaction, or Purchaser terminates this
Agreement as a result of Purchaser's lenders not approving this transaction,
then in either event the non-terminating party shall be entitled to recover from
the terminating party an amount equal to such party's actual, reasonable,
out-of-pocket expenses incurred in connection with this transaction, up to
$15,000.
(b) In the event Seller or Purchaser terminates this Agreement
pursuant to Section 4.10, Seller shall, within ten days of written demand,
reimburse Purchaser for (i) the cost of conducting the Phase I's and Phase II's
up to $25,000 and (ii) Purchasers' other expenses incurred in connection with
this transaction up to $15,000.
SECTION 10.17 Glens Falls Cross Easements.
At the Closing of Title, Seller shall deliver to Purchaser an
easement, in duly executed form and, at the Purchaser's election, in recordable
form, covering Restaurant #4292 at the 1 Warren Street premises in the City of
Glens Falls, New York, which easement shall be in effect during the term of the
lease between Seller as Lessor and Purchaser as Lessee of the said premises,
including any renewal terms under said lease, and which easement shall, to
Purchaser's reasonable satisfactions, provide for and permit Purchaser's
employees and customers at the said Burger King Restaurant (located on the
premises now owned by M & D Development and shown on Schedule 10.17) to use the
parking spaces and the shared means of ingress and egress with the adjoining
<PAGE>parcel now owned by Civic Plaza Associates (also shown on Schedule 10.17)
and similarly shall permit the tenants, and customers and employees thereof, of
the
commercial building on the said adjoining Civic Plaza Associates parcel to use
the parking spaces and shared means of ingress and egress on the said M & D
Development parcel during the normal respective business hours of the business
on the respective adjoining parcels.
IN WITNESS WHEREOF, the parties hereto have caused this Purchase and
Sale Agreement to be executed as of the date first written above.
CARROLS CORPORATION
By:
Name:
Title:
MIDON RESTAURANT CORP.
By:
Name:
Title:
WOLF ROAD ENTERPRISES
By:
Name:
Title:
WESTMERE ASSOCIATES
By:
Name:
Title:
HOME RUN ASSOCIATES
By:
Name:
Title:
M & D DEVELOPERS
By:
Name:
Title:
The undersigned are signing this Agreement in their individual capacities
<PAGE>solely to agree to the provisions of Section 4.13 hereof.
Michael P. Jones
Donald M. Cepiel, Sr.
aqcepiel.001<PAGE>
<PAGE>
Schedule A
BURGER KING
NAME OF SELLER ADDRESS OF SELLER FRANCHISE NUMBER
<PAGE>
<PAGE> Schedule A-1
<PAGE>
<PAGE> Schedule A-2
<PAGE>
<PAGE> EXHIBIT A TO PURCHASE AND SALE AGREEMENT
BK No.
ASSIGNMENT AND ASSUMPTION AGREEMENT
AGREEMENT made this day of , 1994 between [Insert
Seller Corporation] a
Corporation having an office at
("Assignor"), and CARROLS CORPORATION, a Delaware Corporation having an office
at 968 James Street, Syracuse, New York ("Assignee").
Pursuant to a lease dated ("Lease")
("Landlord")
demised to [Insert Seller Corporation] certain premises at
. Assignor desires to transfer, sell, assign, convey
and deliver to Assignee the Lease and Assignee desires to accept said transfer,
sale, assignment, conveyance and delivery.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants herein set forth and for $10.00 and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged,
Assignor hereby transfers, sells, assigns, conveys and delivers to Assignee all
of Assignor's right, title and interest in and to the Lease and any and all
options to renew or extend the same. Assignee hereby accepts the foregoing
transfer, sale, assignment, conveyance and delivery and assumes and agrees to
pay and perform all liabilities and obligations under the Lease arising from and
after this date. The assignment shall inure to the benefit of and be binding
upon the heirs, successors and assigns of the Assignor and the successors and
assigns of Assignee.
This Agreement is made in connection with a Purchase and Sale Agreement
dated , 1994 between Assignor and certain other corporations and
partnerships as Seller, and Assignee, as Purchaser, the terms, conditions,
representations and warranties of which are incorporated herein by reference and
made part hereof.
This Agreement is subject to receipt of Landlord's consent to the
assignment of the Lease.
Assignor represents, covenants and warrants that this assignment is not and
shall not constitute a breach or default under the terms of the Lease.
ATTEST: CARROLS CORPORATION
BY:
ATTEST: [INSERT SELLER CORPORATION]
BY:
<PAGE>
<PAGE>
<PAGE>
STATE OF NEW YORK )
COUNTY OF ONONDAGA ) SS:
On this day of , 1994 before me personally came Joseph
A. Zirkman, to me personally known, who, being by me duly sworn, did depose and
say that he resides at 8129 Solomon Seal Lane, Manlius, New York 13104; that
he is a Vice President of Carrols Corporation, the corporation described in and
which executed the Assignment; that he knows the seal of said corporation; that
the seal affixed to said instrument is such corporate seal; that it was so
affixed by order of the Board of Directors of said corporation; and that he
signed his name thereto by like order.
Notary Public
STATE OF )
COUNTY OF ) SS:
On this day of , 1994 before me personally came
to me personally known, who, being by me duly sworn, did
depose and say that he resides at ;
that he is the of , the
corporation described in and which executed the Assignment; that he knows the
seal of said corporation; that the seal affixed to said instrument is such
corporate seal; that it was so affixed by order of the Board of Directors of
said corporation; and that he signed his name thereto by like order.
Notary Public
<PAGE>
<PAGE> EXHIBIT B TO PURCHASE AND SALE AGREEMENT
BK No.
CONSENT AND ESTOPPEL CERTIFICATE
, 1994
Carrols Corporation
968 James Street
Syracuse, New York 13203
Re: ("Premises")
Lease dated , amended ("Lease")
now between [Insert Seller corporation] ("Lessee")
and ("Lessor")
Gentlemen:
It is our understanding that the Lessee has agreed to assign the referenced
lease (the "Lease") to Carrols Corporation ("Carrols") and as a condition
precedent thereto is required to provide you with this Certificate from the
undersigned.
In respect to the Lease, the undersigned certifies and acknowledges as
follows:
1. The undersigned now owns the Premises and is the Lessor under the
Lease. Lessee is now the Lessee under the Lease.
2. The Lease commenced on , and its term is due
to expire on
, . [The Lease allows Lessee to renew same for an additional term of
years]. The present minimum rent paid to Lessor under the Lease is $
. The Lease is the entire agreement between the
parties as to the Premises.
3. As of this date, the Lease is in full force and effect in accordance
with its terms and has not been modified, amended or supplemented in any way
except as set forth in this letter. To the best of Lessor's knowledge, Lessee
is not in default under the Lease, and no act has occurred which with the
passing of time, or the giving of notice, or both will constitute a default
under the Lease.
4. Lessee is given permission to assign the Lease to Carrols provided
Lessee remains liable for any breach of the Lease which occurs after the
assignment is made.
5. Carrols shall have the right to grant a security interest in its
interest under the Lease by way of a leasehold mortgage and/or a collateral
assignment to a financial institution ("Secured Party") to whom Carrols' Burger
King Franchise Agreement may also be collectively assigned. In the event
Secured Party
<PAGE>exercises its remedies against Carrols' interest under the Lease, Secured
Party
may assign the Lease to Burger King Corporation or to an approved Burger King
franchisee.
6. Landlord will give Secured Party notice of any default by Carrols
under the Lease simultaneously with the giving of such notice to Carrols
provided Landlord is provided written notice of the name and address of the
Secured Party. Secured Party, if it so elects, may cure any default of Carrols
within the time permitted in the Lease or, if no cure period is provided in the
Lease, 10 days after its receipt of such notice.
7. The undersigned will not accept any surrender, cancellation or
modification of the Lease without first giving 10 days' written notice thereof
to Secured Party.
8. Landlord agrees that the personal property and trade fixtures of
Carrols (including inventory and equipment) located at the Premises
(collectively "Collateral") will not be deemed "fixtures" and will remain the
personal property of Carrols subject to Secured Party's security interest.
Landlord will not assert any statutory or possessory liens or rights of
distraint against the Collateral or take any other action with respect thereto
and agrees that all of its rights thereto are subordinate to the rights, claims
and security interests therein in favor of the Secured Party to the full extent
that the same secures or hereafter may secure any and all obligations or
indebtedness of every kind, now existing or hereafter arising, of Carrols to
Secured Party.
9. Secured Party and its agents and representatives, upon reasonable
prior notice, but without the consent of Landlord, may enter the Premises and
remove and take possession of the Collateral at any time in accordance with the
security agreements.
10. The provisions hereof shall be irrevocable and remain in full force
and effect until Carrols has fully paid and performed all of its obligations to
Secured Party under all agreements, instruments and documents evidencing such
obligations, and under all security agreements, present and future, and any
extensions, modifications and renewals thereof at any time made, and until all
obligations, if any, of Secured Party to extend loans or financial
accommodations to Carrols shall have terminated.
11. This Consent and Estoppel Certificate shall be binding upon and inure
to the benefit of the parties herein named and their respective assigns and
successors in interest.
Very truly yours,
by:
Title:
<PAGE>
<PAGE> EXHIBIT C TO PURCHASE AND SALE AGREEMENT
BK#
CARROLS CORPORATION
Assumption Agreement
THIS ASSUMPTION AGREEMENT, made this ____ day of ,
1994, by and
among [NAME OF SELLER], a New York corporation ("Seller"), and CARROLS
CORPORATION, a Delaware corporation ("Purchaser"):
W I T N E S S E T H:
WHEREAS, this Assumption Agreement is being executed and delivered
pursuant to that certain Purchase and Sale Agreement, dated as of (the
"Purchase Agreement"), among Purchaser, Seller, certain affiliates of Seller
identified on Schedule A to the Purchase Agreement and
as agent for Sellers (terms used herein without definition shall have the
respective meanings set forth in the Purchase Agreement);
WHEREAS, subject to the provisions of the Purchase Agreement, Seller
has agreed to sell, assign, transfer and convey to Purchaser all of Seller's
right, title and interest in and to the Assets, subject to Purchaser's
assumption of the Assumed Contracts (as hereinafter defined); and
NOW, THEREFORE, in consideration of the execution and delivery of the
Purchase Agreement and the Bill of Sale and Assignment dated the date hereof and
for other good and valuable consideration, the receipt and sufficiency of which
hereby are acknowledged, the parties agree as follows:
1. From and after the date hereof, Purchaser hereby assumes and
agrees to pay, perform, or discharge, as the case may be, and hereby agrees to
indemnify and hold Seller harmless against, all of the rights, obligations and
liabilities of Seller arising on or after 6:00 A.M. on the date hereof (the
"Closing Date") under each of the Contracts set forth on Schedule A hereto (the
"Assumed Contracts").
2. Anything herein to the contrary notwithstanding, Seller shall
remain liable for, and hereby agrees to retain and discharge, and to indemnify
and hold harmless Purchaser from and against, any and all liabilities of Seller
or its Affiliates not being expressly assumed by Purchaser hereunder or under
Section 1.5 of the Purchase Agreement, including, without limitation, any
liability of Seller or any Affiliate of Seller (i) arising from, or out of, the
ownership or operations or use of, or incurred in connection with, any of its
respective Affiliates in connection with, its Restaurant, Assets, Real Property,
Real Property Lease or the Assumed Contracts on or prior to, or relating to any
<PAGE>time period prior to the Closing Date; (ii) arising from or by reason of
the
transactions contemplated by the Purchase Agreement, including, but not limited
to Federal, state or local income taxes, transfer taxes, and other taxes, if
any, arising from or by reason of the receipt of the consideration for the
Assets; (iii) with respect to any wages, vacation, severance or sick pay or any
rights under any stock option, bonus or other incentive arrangement that have
accrued as of the Closing Date; (iv) with respect to any employment, consulting
or similar arrangement to which Seller is a party or for which Seller is
responsible; (v) with respect to any "employee benefit plan" as defined in
Section 3(3) of Employee Retirement Income Security Act of 1974, as amended
("ERISA") including multi-employer plans as defined in Section 3(37) of ERISA
whether arising before, on or after the Closing Date; or (vi) under any Laws
relating to public health and safety and pollution or protection of the
environment, including, without limitation, those relating to emissions,
discharges, releases or threatened releases of pollutants, contaminants, or
hazardous or toxic materials or wastes into ambient air, surface water, ground
water, or land, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport, or handling of
pollutants, contaminants or hazardous or toxic materials or wastes or any
materials defined or categorized by any of the above as "Hazardous Materials",
"Hazardous Substances", or similar or related designations.
3. This Assumption Agreement is delivered pursuant to, and is
subject to, the Purchase Agreement.
4. This Assumption Agreement shall be binding upon and inure to
the benefit of the parties hereto, their respective successors and assigns.
IN WITNESS WHEREOF, the parties have duly executed this Assumption
Agreement this ____ day of , 1994.
PURCHASER:
CARROLS CORPORATION
By:
Name:
Title:
ACKNOWLEDGED AND AGREED
TO BY:
SELLER:
[Name of Seller]
<PAGE>
By:
Name:
Title:
<PAGE>
<PAGE> SCHEDULE A
SEE ATTACHED
<PAGE>
<PAGE> EXHIBIT D TO PURCHASE AND SALE AGREEMENT
[FORM OF OPINION OF COUNSEL TO
CARROLS CORPORATION]
, 1994
To each of the Sellers identified on Schedule A hereto
Ladies and Gentlemen:
I have acted as general counsel for Carrols Corporation, a Delaware
corporation ("Purchaser"), in connection with the transactions contemplated by
that Purchase and Sale Agreement dated as of [ , 199 ] (the
"Purchase Agreement") among (the "Sellers'
Agent") and each of the corporations identified in Schedule A hereto
(collectively the "Sellers" and individually a "Seller"). Terms used and not
otherwise defined herein shall have the respective meanings ascribed to such
terms in the Purchase Agreement. This opinion is being furnished to you, at the
request of Purchaser, pursuant to Section 5.2(e) of the Purchase Agreement.
In connection with rendering the opinions hereinafter set forth, I
have examined the originals, or copies certified or otherwise identified to my
satisfaction as being true copies, of the following:
(a) The Purchase Agreement;
(b) Each of the separate Lease Agreements, dated the date hereof,
between Purchaser and Sellers;
*** (c) The Management Agreement, dated the date hereof, between
Purchaser and Midon Restaurant Corp.;
(d) The various assumption instruments executed by Purchaser on the
date hereof; and
(e) such certificate of public officials, corporate documents and
records, and other certificates to the extent that the same were made available
to me for such examination, and have made such investigation of law, as I have
deemed necessary as a basis for the opinions expressed herein.
The foregoing agreements and instruments together with each other
agreement, document, certificate or instrument executed or delivered by
Purchaser in connection with the consummation of the *** transactions
contemplated by the Purchase Agreement and the Management Agreement (the
"Contemplated Transactions") are referred to herein, collectively, as the
"Transaction Documents".
<PAGE>
For purposes of the opinions expressed herein, with your permission,
I have assumed, without any independent investigation or verification of any
kind: (i) the genuineness of all signatures, the authenticity and completeness
of all documents submitted to me as originals and the conformity to original
documents and completeness of all documents submitted to me as copies; (ii) that
all Transaction Documents have been duly authorized, executed and delivered by
the parties thereto other than Purchaser; and (iii) that the certificates of
public officials dated earlier than the date of this letter remain accurate from
such earlier date through and including the date of this letter.
As to various questions of fact material to my opinion, I have relied
upon the representations made in the Transaction Documents and upon inquiries
and certificates of officers or representatives of Purchaser. When a statement
herein is qualified by "to my knowledge" or similar language, it is intended to
indicate that, during the course of my representation of Purchaser, no
information that would give me actual knowledge of the inaccuracy of such
statement has come to my attention.
I am a member of the bar of the State of New York and do not purport
to be an expert in, or to express any opinion concerning, any law other than the
laws of the State of New York, the General Corporation Law of the State of
Delaware and the federal law of the United States of America. No opinion is
expressed as to the laws of any other jurisdiction or the effect which the laws
of any other jurisdiction might have on the subject matter of the opinions
expressed herein under conflict of laws principles or otherwise.
Based upon and subject to the foregoing and the qualifications set
forth below, were are of the opinion that:
1. Purchaser is a corporation validly existing and in good standing
under the laws of the State of Delaware and has all requisite corporate powers
and all governmental licenses, authorizations, consents and approvals required
to carry on its business as now conducted.
2. Purchaser has full corporate power and authority to enter into the
Transaction Documents to which it is a party and to carry out the Contemplated
Transactions.
3. The execution, delivery and performance of the Transaction
Documents to which Purchaser is party have been duly authorized by all requisite
corporate action.
4. Each Transaction Document to which Purchaser is a party has been
duly and validly executed and delivered by it and constitutes the legal, valid
and binding obligation of Purchaser, enforceable against Purchaser in accordance
with its terms except as may be limited by the Enforcement Exceptions (as
hereinafter defined).
5. Neither the execution, delivery or performance of any Transaction
Document by Purchaser, nor the consummation of the Contemplated Transactions
will, with or without the giving of notice or the passage of time or both,
conflict with, result in a default or loss of rights (or give rise to any right
of termination, cancellation or acceleration) under, or result in the creation
<PAGE>of any Lien, pursuant to:
(a) any provision of the certificate of incorporation or by-laws of
Purchaser; (b) to my knowledge, any material note, contract, agreement or other
instrument or obligation to which Purchaser is a party or by which Purchaser or
its properties may be bound or affected; (c) any law, ordinance, rule or
regulation to which Purchaser is subject or by which its properties may be bound
or affected; or (d) to my knowledge, any judgment, award or order to which
Purchaser is subject or by which its properties may be bound or affected.
6. The execution, delivery and performance of the Transaction
Documents to which Purchaser is a party do not require the consent, approval or
authorization of or license from: (a) any governmental authority or other
regulatory body or (b) to my knowledge, any other Person, except for such
consents, approvals or authorizations that have been obtained and which are in
full force and effect.
The validity and enforceability of the rights and remedies set forth
in the Transaction Documents are subject to bankruptcy, insolvency,
reorganization, fraudulent conveyance, moratorium or similar laws affecting the
enforcement of creditors' rights and remedies generally and the application of
principles of equity whether in an action at law or a proceeding in equity. In
addition, I express no opinion regarding the availability of the remedy of
specific performance, or of any other equitable remedy or relief to enforce any
right under any agreement or document. All of the above have hereinbefore been
referred to as the "Enforcement Exceptions".
This opinion is being furnished for the sole benefit of the named
addressees and their counsel, and may not be relied upon by any other Person or
published, quoted or otherwise used for any other purpose without my prior
written consent. This opinion is based on the law (and interpretations thereof)
and facts existing as of the date hereof. I disclaim any obligation to advise
you of any changes therein that may be brought to my attention after the date
hereof.
Very truly yours,
<PAGE>
<PAGE> EXHIBIT E TO PURCHASE AND SALE AGREEMENT
[NAME OF SELLER]
Bill of Sale and Assignment
[Name of Seller], corporation ("Seller"), for and
in consideration of sums duly paid by CARROLS CORPORATION, a Delaware
corporation ("Purchaser"), and for other good and valuable consideration, the
receipt and sufficiency of which hereby are acknowledged, pursuant to that
certain Purchase and Sale Agreement dated as of , 1994 (the
"Purchase Agreement") among Purchaser, Seller, certain affiliates of Seller
identified in Purchase Agreement and as agent for the
Sellers, DOES HEREBY sell, assign, transfer, and convey and deliver to Purchaser
all of the following assets used or located in or held for use in connection
with the restaurant having a Burger King franchise number of [ ] (the
"Restaurant") operated by Seller (collectively, the "Assets") free and clear of
all mortgages, liens, security interests, encumbrances, equities, claims,
pledges, charges, liabilities and other obligations of whatever kind and
character:
(a) Restaurant Equipment. All of the machinery, equipment,
furnishings, supplies, uniforms, spare equipment parts and all other personal
property (other than Inventory, as hereinafter defined) owned by Seller and used
or held for use in, or in connection with, the operation of its Restaurant,
including but not limited to the assets set forth in Schedule 1.1 (a) annexed
hereto;
(b) Leasehold Improvements. All fixtures and other leasehold
improvements owned by Seller in its Restaurant;
(c) Franchise Agreements. The Burger King Franchise Agreement
for the Restaurant, as more fully set forth in Schedule 1.1 (c) annexed hereto;
(d) Inventories. All of the food, related paper products and
promotional items owned by Seller or otherwise used or held for use in or in
connection with the business being conducted at its Restaurant;
(e) Leased Assets. All of the right, title and interest of
Seller in any item of personal property which is not owned by it but is leased
by it or otherwise is used or held for use, in or in connection with the
business being conducted at its Restaurant, including but not limited to, the
assets set forth on Schedule 1.1 (e) annexed hereto; and
(f) Miscellaneous Assets. All of the right, title and
interest of Seller in any other asset or property owned, leased, subleased, used
or held for use in, or in connection with the business being operated at its
Restaurant, including, but not limited to, contract rights and other general
intangibles.
TO HAVE AND TO HOLD all of the Assets hereby sold, assigned,
transferred, conveyed and delivered to Purchaser, its successors and assigns,
<PAGE>for its and their own use and behalf forever.
This Bill of Sale and Assignment is delivered pursuant to, and it
subject to, the Purchase Agreement.
Seller shall cooperate with Purchaser and shall take such further
action and shall execute and deliver such further documents as may be requested
by Purchaser, its successors and assigns, to implement the provisions and
purposes of this Bill of Sale and Assignment.
<PAGE>
<PAGE>
IN WITNESS WHEREOF, Seller had duly caused this Bill of Sale and
Assignment to be executed this day of , 1994.
[NAME OF SELLER]
By:
Name:
Title:
<PAGE>
<PAGE> EXHIBIT F TO PURCHASE AND SALE AGREEMENT
[OPINION OF COUNSEL TO SELLER]
, 1994
Carrols Corporation
968 James Street
Syracuse, NY 13203
Ladies and Gentlemen:
We have acted as counsel for (the "Sellers'
Agent") and each of the corporations identified in Schedule A hereto
(collectively the "Sellers" and individually a "Seller"), in connection with the
transactions contemplated by that Asset Purchase Agreement dated as of [
, 1994] (the "Purchase Agreement") among Sellers, Sellers' Agent and Carrols
Corporation, a Delaware corporation (the "Buyer"). Terms used and not otherwise
defined herein shall have the respective meanings ascribed to such terms in the
Purchase Agreement. This opinion is being furnished to you, at the request of
Sellers and Sellers' Agent, pursuant to Section 5.3(e) of the Purchase
Agreement.
In connection with rendering the opinions hereinafter set forth, we
have examined the originals, or copies certified or otherwise identified to our
satisfaction as being true copies, of the following:
(a) The Purchase Agreement;
(b) Each of the separate Lease Agreements, dated the date hereof,
between Purchaser and Midon Restaurant Corp.;
*** (c) The Management Agreement, dated the date hereof, between
Purchaser and Midon Restaurant Corp.;
(d) The Bill of Sale ("Bill of Sale") and other instruments of
conveyance, transfer and assignment executed by Sellers on the date hereof; and
(e) such certificate of public officials, corporate documents and
records, and other certificates to the extent that the same were made available
to us for such examination, and have made such investigation of law, as awe have
deemed necessary as a basis for the opinions expressed herein.
The foregoing agreements and instruments together with each other
agreement, document, certificate or instrument executed or delivered by Sellers'
Agent or Sellers (or any of them) in connection with the consummation of the
transactions contemplated by the Purchase Agreement and the Management ***
Agreement (the "Contemplated Transactions") are referred to herein,
<PAGE>collectively, as the "Transaction Documents".
For purposes of the opinions expressed herein, with your permission,
we have assumed, without independent investigation or verification of any kind:
(i) the genuineness of all signatures, the authenticity and completeness of all
documents submitted to us as originals and the conformity to original documents
and completeness of all documents submitted to us as copies; (ii) that all
Transaction Documents have been duly authorized, executed and delivered by
Buyer; and (iii) that the certificates of public officials dated earlier than
the date of this letter remain accurate from such earlier date through and
including the date of this letter.
As to various questions of fact material to our opinion, we have
relied upon the representations made in the Transaction Documents and upon
inquiries and certificates of Sellers' Agent and of the officers or
representatives of Sellers. When a statement herein is qualified by "to our
knowledge" or similar language, it is intended to indicate that, during the
course of our representation of Sellers and Sellers' Agent, no information that
would give us actual knowledge of the inaccuracy of such statement has come to
our attention.
We are members of the bar of the State of New York and do not purport
to be experts in, or to express any opinion concerning, any law other than the
laws of the State of New York and the Federal law of the United States of
America. No opinion is expressed as to the laws of any other jurisdiction or
the effect which the laws of any other jurisdiction might have on the subject
matter of the opinions expressed herein under conflict of laws principles or
otherwise.
Based upon and subject to the foregoing and the qualifications set
forth below, we are of the opinion that:
1. Each Seller is a corporation validly existing and in good standing
under the laws of the jurisdiction of its incorporation and has all requisite
corporate powers and all governmental licenses, authorizations, consents and
approvals required to carry on its business as no conducted. Each Seller is
duly qualified to do business as a foreign corporation and is in good standing
in each jurisdiction where the character of the property owned or leased by it
or the nature of its activities makes such qualification necessary, except for
those jurisdictions where the failure to be so qualified would not, individually
or in the aggregate, have a material adverse effect on the business, properties,
financial condition or the results of operations of such Seller.
2. Sellers and Sellers' Agent each has full corporate power and
authority or capacity, as the case may be, to enter into the Transaction
Documents to which it or he is a party and to carry out the Contemplated
Transactions.
3. The execution, delivery and performance of the Transaction
Documents to which any Seller is party have been duly authorized by all
requisite corporate action.
4. Each Transaction Document to which a Seller or Sellers' Agent is
a party has been duly and validly executed and delivered by it or him and
<PAGE>constitutes the legal, valid and binding obligation of such Seller and
Seller's
Agent, respectively, enforceable against each of them in accordance with its
terms except as may be limited by the Enforcement Exceptions (as herein-after
defined).
5. Neither the execution, delivery or performance of any Transaction
Document by a Seller or Seller's Agent, nor the consummation of the Contemplated
Transactions will, with or without the giving of notice or the passage of time
or both, conflict with, result in a default or loss of rights (or give rise to
any right of termination, cancellation or acceleration) under, or result in the
creation of any Lien, pursuant to: (a) any provision of the Governing
Instruments of such Seller; (b) to our knowledge, any material note, contract,
agreement or other instrument or obligation to which such Seller or Sellers'
Agent is a party or by which such Seller or Sellers' Agent or their respective
properties may be bound or affected; (c) any law, ordinance, rule or regulation
to which such Seller or Sellers' Agent is a party or by which their respective
properties may be bound or affected; or (d) to our knowledge, any judgment,
award or order to which such Seller or Sellers' Agent is a party or by which
their respective properties may be bound or affected.
6. The execution, delivery and performance of the Transaction
Documents to which any Seller or Sellers' Agent is a party do not require the
consent, approval or authorization of or license from or registration or filing
with: (a) any governmental authority or other regulatory body or (b) to our
knowledge, any other Person, except for such consents or approvals that have
been obtained and which are in full force and effect.
7. The Bill of Sale and other instruments of conveyance, transfer and
assignment executed by each Seller are in form sufficient to convey to Buyer all
of such Seller's right, title and interest in and to the Assets. To our
knowledge, the Assets will be conveyed to Buyer free and clear of all Liens.
8. Except as disclosed in the Purchase Agreement, there is no claim,
legal action, counterclaim, suit, arbitration, governmental investigation or
other legal, administrative or tax proceeding, nor any order, decree or judgment
in progress, pending or threatened against or relating to any Seller or their
respective Assets.
9. To our knowledge, each Seller is in compliance in all material
respects with all applicable laws, regulations and administrative orders of the
United States and the State of , the non compliance with
which would have a materially adverse effect upon the Assets or the Contemplated
Transactions.
10. Each Assumed Contract is valid, subsisting, in full force and
effect, binding upon and enforceable against the applicable Seller and, to our
knowledge, on the other parties thereto, in accordance with their respective
terms and, to our knowledge, neither the Seller nor any other party to any such
Assumed Contract is in default thereunder in any material respect nor, to our
knowledge, does any condition exist that with notice or lapse of time or both
would constitute a material default thereunder.
11. Based solely upon a review of the stock transfer ledgers and
<PAGE>minute books of each Seller, Sellers' Agent and [
] are the record and, to our knowledge, beneficial owners of all of the issued
and
outstanding shares of capital stock of each Seller.
The validity and enforceability of the rights and remedies set forth
in the Transaction Documents and the Assumed Contracts are subject to
bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium or
similar laws affecting the enforcement of creditors' rights and remedies
generally and the application of principles of equity whether in an action at
law or a proceeding in equity. In addition, we express no opinion regarding the
availability of the remedy of specific performance, or of any other equitable
remedy or relief to enforce any right under any agreement or document. All of
the above have herein-before been referred to as the "Enforcement Exceptions".
This opinion is being furnished for the sole benefit of the named
addressee, its counsel and any Person providing financing to Buyer and may not
be relied upon by any other Person or published, quoted or otherwise used for
any other purpose without our prior written consent. This opinion is based on
the law (and interpretations thereof) and facts existing as of the date hereof.
We disclaim any obligation to advise you of any changes therein that may be
brought to our attention after the date hereof.
Very truly yours,
<PAGE>
<PAGE> EXHIBIT H TO PURCHASE AND SALE AGREEMENT
LIKE-KIND EXCHANGE PROVISIONS
(a) It is understood and agreed that the election by any Seller to
effectuate an Exchange is not a condition to the obligations of each Seller
under the Agreement (as used herein, a Seller making such election is sometimes
referred to as an "Exchange Party"). Purchaser shall bear no responsibility
with respect to the qualification of the transaction under Section 1031, such
qualification to be at Sellers' sole risk. Purchaser may comply with its
obligations under this Paragraph itself, or through its nominee.
(b) Upon written notice by a Seller to Purchaser of its election to
effectuate a like-kind exchange, given not less than fifteen (15) days prior to
a Closing, and the completion of arrangements by Seller for the conveyance of
the Exchange Property to, or at the direction of, Purchaser, Purchaser shall,
subject to the terms and conditions hereafter set forth, cause the Exchange
Property to be conveyed to Seller in exchange for the Asset to be conveyed to
Purchaser. Purchaser shall not be obligated to expend any funds prior to the
closing of title to an Asset and shall not be required to take title to any
Exchange Property prior to such closing. At the Closing, the portion of the
Purchase Price which would have been payable by Purchaser to such Seller
pursuant to this Agreement in the event an Exchange had not been utilized shall
be reduced by an amount equal to the total costs of (i) acquisition of the
Exchange Property, and (ii) the conveyance thereof to Seller. In the event
such acquisition and conveyance costs exceed the portion of the Purchase Price
which would have been payable by Purchaser to the Exchange Party at the Closing
in the event an Exchange had not been utilized, then at the Closing the Exchange
Party shall pay such excess to Purchaser by certified or official bank check.
As used in this paragraph, acquisition costs shall include, but not be limited
to, the purchase price for the Exchange Property, brokerage commissions,
recording fees, transfer taxes, New York State Real Property Transfer Gains
Taxes, real estate tax adjustments, mortgage recording taxes and title company
expenses incurred by Purchaser with respect to the acquisition of the Exchange
Property and/or the conveyance of same to the Exchange Party. In the event the
Exchange Party does not designate such Exchange Property or arrange for such
exchange, the Asset shall be sold to Purchaser upon the terms hereinbefore
provided and, at the Exchange party's option, the parties shall enter into a
Deferred Exchange Agreement, in form and substance satisfactory to Purchaser and
its counsel, pursuant to which the Purchaser authorized the Exchange Party to
acquire Exchange Property through a designated agent, in which instance the
portion of the Purchase Price to be paid to such Exchange Party at the Closing
pursuant to the terms of this Agreement shall be paid to a Trustee or such
designated agent to be held in escrow for the purpose of acquiring the Exchange
Property. However, if the Exchange Property is not acquired within six (6)
months following the Closing, the proceeds shall be released from escrow and
paid to such Exchange Party. Purchaser shall enter into only those agreements
to acquire Exchange Property designated in writing by the Exchange Party.
(c) In no event shall Purchaser be obligated to enter into a contract
for the acquisition of, or close title to, Exchange Property unless:
(i) the purchase agreement for the Exchange Property shall
provide that the sole remedy of the Seller thereunder in the event of the
<PAGE>Purchaser's default shall be to retain the downpayment paid on account
thereof;
(ii) the purchase agreement for the Exchange Property and any
mortgage or any other financing agreement encumbering such property at the time
of closing shall be fully exculpated as to Purchaser; and
(iii) the purchase agreement shall be freely assignable, and
any mortgage or any other financing agreement encumbering the Exchange Property
at the time of closing shall permit the transfer thereof to Exchange Party at
closing of title.
(d) Except for Purchaser's responsibilities to complete the exchange
in accordance with this Agreement, upon conveyance of the Exchange Property to
Purchaser by the seller thereunder or on Purchaser's default thereunder,
Purchaser shall have no liabilities, obligations, debts, claims, actions,
encumbrances, costs, expenses or fees (including reasonable attorneys fees) of
any kind whatsoever payable to or in favor of any party whomsoever as a result
of such Exchange in lieu of payment to Seller of the allocable portion of the
Purchase Price, and in this regard each Seller shall and hereby does indemnify
and hold harmless Purchaser from and against any of the foregoing which may
arise,or result from, or be caused by any Exchange Party's transactions pursuant
to this Paragraph.
(e) Upon conveyance of the Exchange Property to Seller, Purchaser
shall have no liabilities, obligations, debts, claims, actions, encumbrances,
costs, expenses or fees (including reasonable attorneys' fee) of any kind
whatsoever payable to or in favor of any party whomsoever as a result of the
implementation of an Exchange in lieu of a purchase from Seller for the
allocable portion of the Purchase Price, and in this regard each Seller shall
and thereby does indemnify and hold harmless Purchaser from and against any of
same which might arise or result from or be caused by any Exchange Party's
transactions pursuant to this Paragraph.
(f) If Seller shall not designate any Exchange Property to be
acquired by the Purchaser prior to the Closing Date hereunder or request that
the parties execute a Deferred Exchange Agreement, or if, for any reason other
than as the result of a breach of or default by Purchaser under this Agreement
or under the purchase contract for an Exchange Property, such purchase contract
shall be terminated or the Seller under such purchase contract shall fail or
refuse to close, then Seller will sell and convey and the Purchaser will
purchase each Asset for the Purchase Price as set forth in Section 1.2 of the
Agreement.
<PAGE>
Draft #4
2/4/94
PURCHASE AND SALE AGREEMENT
Among
CARROLS CORPORATION
(as Purchaser)
And
KIN RESTAURANTS, INC.
(as Seller)
And
MICHAEL OLANDER
(as the Seller's Agent)
Dated as of February 10, [ ], 1994
<PAGE>
TABLE OF EXHIBITS
Exhibit A Form of Assignment and Assumption of Lease
Exhibit B Form of Lease Consent and Estoppel Certificate
Exhibit C Form of Assumption Agreement
Exhibit D Form of Opinion of Purchaser's Counsel
Exhibit E Form of Bill of Sale and Assignment
Exhibit F Form of Opinion of Seller's Counsel
<PAGE>
<PAGE> TABLE OF SCHEDULES
A Restaurants operated by Seller
1.1(a) Restaurant Equipment
1.1(e) Leased Assets
1.2(c) Allocation of Purchase Price Among Separate Classes of Assets
1.3(a)(ii)Real Property Lease Terms
1.3(c) Parking and Easements Agreements
2.5 Required Consents
2.6(b) Events or items not reflected in Financial Statements
2.7 (a) Exceptions to Assets to be Conveyed
2.9(a) Liens on Leased Real Properties
2.11(b) Compliance with Employment Laws, etc.
2.11(c) Seller's Employees and Wages
2.12 Other Contracts
2.13 (a) Employee Pension Benefit plans
2.13 (b) Employee Welfare Benefit plans
2.14(a) Litigation
2.14(c) Required Licenses
2.15 Environmental Matters
<PAGE>
<PAGE> PURCHASE AND SALE AGREEMENT
THIS PURCHASE AND SALE AGREEMENT (the "Agreement") made as of February 10,[
,] 1994 by and between CARROLS CORPORATION, a Delaware corporation, with its
principal office at 968 James Street, Syracuse, New York 13217-6969
("Purchaser"); KIN RESTAURANTS, INC. a North Carolina corporation having its
principal office at 170 Wind Chime Court, Raleigh, North Carolina 27615
("Seller"), and Michael Olander, with an address at 170 Wind Chime Court,
Raleigh, North Carolina 27615,an individual residing at [
], as agent for the Seller (the "Seller's Agent"):
W I T N E S S E T H:
WHEREAS, Seller operates the Burger King restaurants identified by address
and Burger King Franchise number on Schedule A annexed hereto (each restaurant
is hereinafter sometimes referred to individually as a "Restaurant" and
collectively as the "Restaurants");
WHEREAS, Seller is the owner or lessee of certain personal property used
or held for use in or in connection with the conduct of business at the
Restaurants and Seller is the lessee of certain buildings, other real property
and land upon and in which the Restaurants are located (individually, the "Real
Property" and collectively, the "Real Properties");
WHEREAS, Seller proposes to sell, and Purchaser proposes to purchase, the
Assets (as hereinafter defined) of Seller;
WHEREAS, Seller occupies Real Property pursuant to a lease agreement (each,
a "Real Property Lease" and, collectively, the "Real Property Leases") with an
unaffiliated landlord and proposes to assign to Purchaser, and Purchaser
proposes to accept such assignment of Seller's leasehold interest with respect
to the Real Property on which the Restaurants are located (each a "Leased Real
Property" and, collectively, the "Leased Real Properties");
NOW, THEREFORE, in consideration of the mutual covenants and conditions
herein contained and other good and valuable consideration, the receipt,
adequacy and sufficiency of which are hereby acknowledged, the parties agree as
follows:
ARTICLE I
PURCHASE AND SALE; CLOSING
SECTION 1.1 Assets To Be Conveyed. Subject to the terms, provisions and
conditions contained in this Agreement, and on the basis of the representations
and warranties hereinafter set forth, Seller agrees to sell, assign, transfer,
convey and deliver to Purchaser at Closing (as hereinafter defined), and
Purchaser agrees to purchase and accept the assignment, transfer, conveyance and
delivery from Seller at Closing of, all of the following assets used or located
in or held for use in connection with the Restaurants operated by Seller
<PAGE>
(collectively, the "Assets") free and clear of all mortgages, liens, security
interests, encumbrances, equities, claims, pledges, charges, liabilities and
other obligations of whatever kind and character (collectively referred to
herein as "Liens"):
(a) Restaurant Equipment. All of the machinery, equipment,
furnishings, supplies, uniforms, spare equipment parts and all other personal
property (other than Inventory, as hereinafter defined) owned by Seller and used
or held for use in, or in connection with, the operation of the Restaurants,
including but not limited to the assets set forth in Schedule 1.1 (a) annexed
hereto (collectively, "Restaurant Equipment");
(b) Leasehold Improvements. All fixtures and other leasehold
improvements owned by Seller in the Restaurants ("Leasehold Improvements");
(c) Franchise Agreements. The Burger King Franchise Agreement for the
Restaurants (the "Franchise Agreements");
(d) Inventories. All of the food, related paper products and
promotional items owned by Seller or otherwise used or held for use in or in
connection with the business being conducted at the Restaurants (collectively,
"Inventory");
(e) Leased Assets. All of the right, title and interest of Seller in
any item of personal property which is not owned by it but is leased by it or
otherwise is used or held for use, in or in connection with the business being
conducted at the Restaurants, including but not limited to, the assets set forth
on Schedule 1.1(e) annexed hereto (collectively the "Leased Assets"); and
(f) Miscellaneous Assets. All of the right, title and interest of
Seller in any other asset or property owned, leased, subleased, used or held for
use in, or in connection with the business being operated at the Restaurants
including, but not limited to, contract rights and other general intangibles.
SECTION 1.2 Purchase Price for Assets. (a) The Purchase Price (as
hereinafter defined,) for the Assets shall be payable at the Closing to Seller's
Agent (on behalf of Seller) either (i) by Federal funds bank wire transfer to
an account designated by Seller's Agent or (ii) by delivery of one or more
certified checks; except, however, the Purchase Price to be paid for the
Inventory shall be paid in the manner set forth in Section 1.2(b)(ii) below.
(b) As used herein, "Purchase Price" shall mean:
(i) For the Assets of Seller, exclusive of the Inventory, the
aggregate sum of One Million Five Hundred Ten Thousand Dollars ($1,510,000);
(ii) For the Inventory, the amount equal to the cost therefore
as charged to Seller by its unaffiliated supplier or vendor. The cost of the
Inventory of Seller shall be determined by physical inventories to be taken on
the Closing Date in the Restaurants and in any other location where Inventory
may be located. Seller and Purchaser shall each have the right to have at least
one of its representatives present at the taking of such inventories. The
representatives shall submit a written report of the results of such inventories
<PAGE>
promptly after Closing to both Seller's Agent and Purchaser. Promptly after
receiving such report Seller's Agent shall then price the inventories shown on
such report by multiplying the physical items by their cost, determined as
aforesaid, and Seller's Agent shall submit such priced inventory (the "Priced
Inventory Report") to Purchaser. If Purchaser and Seller's Agent are unable to
agree upon the purchase price of the Inventory within 10 days after Seller's
Agent and Purchaser have received the Priced Inventory Report, such purchase
price shall be determined by an independent accounting firm selected by Seller
and Purchaser, whose determination shall be final and binding upon Seller and
Purchaser. Within 30 days after the final determination of the purchase price
for the Inventory, Purchaser shall pay said amount by check to Seller's Agent.
(c) With respect to the Assets being sold by Seller, the Purchase
Price therefor shall be allocated among the separate classes of assets
comprising the Assets of Seller in the manner set forth on Schedule 1.2(c)
annexed hereto and Seller and Purchaser shall prepare and file their respective
tax allocation forms consistent with such allocations.
SECTION 1.3 Real Properties: Assignments of Leases; Easements and Parking
Agreements. Subject to the terms, provisions and conditions contained in this
Agreement and on the basis of the representations and warranties hereinafter set
forth, at the Closing, Seller shall assign to Purchaser all of its leasehold
interest in the Leased Real Properties and shall assign, sublease or otherwise
transfer to Purchaser all of its right, title and interest in and to all parking
and other access agreements or arrangements relating to the Real Properties, as
follows:
(a) Assignment of Real Property Leases. (i) At Closing, Seller shall
assign to Purchaser all of Seller's right, title and interest as tenant under
the applicable Real Property Lease pursuant to the form of Assignment and
Assumption of Lease (the "Lease Assignment") annexed hereto as Exhibit A. The
Lease Assignment shall be executed and delivered at Closing by Seller and
Purchaser.
(ii) The expiration dates, monetary terms and renewal terms for
each of the Real Property Leases are as set forth in Schedule 1.3 (a)(ii).
(b) Lease Assignment Consent. At Closing, Seller shall deliver to
Purchaser a Consent to Assignment and Estoppel Certificate in the form annexed
hereto as Exhibit B (the "Lease Assignment Consent") pursuant to which the
respective landlords shall: (i) acknowledge and consent to the applicable Lease
Assignment, and (ii) confirm all of the information set forth in the first and
last sentences of Section 2.9(b).
(c) Parking, Easements and Related Agreements. Schedule 1.3(c)
annexed hereto with respect to Seller sets forth all written or oral parking
leases, easements, agreements, grants, licenses, options and any other agreement
(collectively referred to herein as "Easements") pursuant to which Seller is
granted, for use in connection with the Restaurants, parking privileges or
rights, current or prospective, and/or rights of access of any kind or nature
in and to the applicable Real Property. At Closing Seller shall deliver to
Purchaser such documentation in form and substance satisfactory to Purchaser and
its counsel which effectively assigns or transfers Seller's rights under both
<PAGE>
recorded and unrecorded Easements to Purchaser (hereinafter individually
referred to as an "Easement Assignment", and, collectively, as the "Easement
Assignments").
SECTION 1.4 Assumption of Liabilities
(a) No Assumption by Purchaser. The parties hereto hereby agree and
acknowledge that Seller is not selling, transferring, assigning, delivering or
otherwise conveying, and Purchaser is not purchasing, receiving, acquiring or
otherwise assuming, any liabilities of Seller, or any of its Affiliates except
as specifically set forth in Section 1.4(b) hereof. Purchaser shall neither be
liable for any liability or obligation of Seller, or any of its Affiliates nor
shall it be required to indemnify Seller, or any of its Affiliates against any
liability or obligation other than those so specifically assumed or indemnified,
as the case may be.
Without limiting the generality of the foregoing, Purchaser is not assuming
and shall not indemnify Seller, or any of its Affiliates against any liability,
obligation, duty or responsibility of Seller, or any of its Affiliates:
(i) arising from, or out of, the ownership or operations or use
of, or incurred in connection with, or incurred as a result of any claim made
against Seller, or any of its Affiliates in connection with, any Restaurant,
Asset, Real Property, Real Property Lease or Assumed Contract (as hereinafter
defined) on or prior to, or relating to any time period prior to 6:00 A.M. on
the Closing Date;
(ii) any Federal, state or local income taxes, transfer taxes,
sales taxes or any other kind of tax of whatever kind including, without
limitation, any such tax that may arise from or by reason of the transactions
contemplated by this Agreement;
(iii) with respect to any wages, vacation, severance or sick pay
or any rights under any stock option, bonus or other incentive arrangement that
have accrued as of the Closing Date;
(iv) with respect to any employment, consulting or similar
arrangement to which Seller is a party or for which Seller is responsible;
(v) with respect to any Plan (as hereinafter defined) whether
arising before, on or after the Closing Date; or
(vi) under any Laws (as hereinafter defined) relating to public
health and safety and pollution or protection of the environment, including,
without limitation, those relating to emissions, discharges, releases or
threatened releases of pollutants, contaminants, or hazardous or toxic materials
or wastes into ambient air, surface water, ground water, or land, or otherwise
relating to the manufacture, processing, distribution, use, treatment, storage,
disposal, transport, or handling of pollutants, contaminants or hazardous or
toxic materials or wastes or any materials defined or categorized by any of the
above as "Hazardous Materials", "Hazardous Substances", or similar or related
designations (collectively referred to herein as "Environmental Laws").
<PAGE> (b) Assumption of Assumed Contracts. Seller shall assign to, and
Purchaser shall accept assignment of and assume from and after the Closing Date,
all of the rights, obligations and liabilities of Seller attributable to the
period after the Closing Date, under the Franchise Agreements, Real Property
Leases, Easements and the Other Contracts (as hereinafter defined)
(collectively, the "Assumed Contracts").
SECTION 1.5 Closing; Deliveries
(a) Date. The closing of the transactions contemplated hereby (the
"Closing") shall take place at the offices of the Seller[
], (or such other location as shall be agreed upon by the parties) on a date
which shall be mutually agreed upon by the parties, but in no event more than
30 days after Burger King Corporation ("Burger King") shall have granted its
consent to this transaction (the "BKC Consent Date"), provided, however, that
if, through no fault of the parties hereto, all of the conditions to the
parties' obligations to close hereunder are not satisfied or waived on the date
so designated, the Closing shall be adjourned to a subsequent mutually agreeable
date not later than 60 days after the BKC Consent Date (the "Outside Date"),
unless further extended by mutual agreement by the parties. The "Closing Date"
is the date Closing actually takes place.
(b) Delivery of Documents. At the Closing, Seller's Agent and
Purchaser shall deliver to each other the respective documents and other items
set forth in Article V.
SECTION 1.6 Adjustments. (a) All customary prorations with respect to (i)
obligations under the Assumed Contracts; (ii) utility charges and (iii) personal
property taxes, shall be adjusted between the parties as of 6:00 A.M. on the
Closing Date. Payment, if any, owed by Purchaser to Seller or by Seller to
Purchaser by reason of such adjustments shall be made at the Closing (by
adjustment of the Purchase Price, if practicable) or as soon as reasonably
practicable thereafter.
(b) Seller shall pay all sales taxes, and transfer taxes, if any,
applicable to its transaction at the Closing. Seller shall be responsible for
all franchise assignment fees owed to Burger King in connection with the
assignment of the Franchise Agreements to Purchaser.
(c) All "minimum" or "fixed rentals" percentage rentals and any other
monetary obligations accruing under the Real Property Leases shall be adjusted
for the month in which the Closing occurs.
SECTION 1.7 Appointment of Seller's Agent. Seller irrevocably appoints and
authorizes Seller's Agent to do all such acts and things as agent (and not as
principal) on its behalf and to exercise all such rights, powers and privileges
in relation to this Agreement as fully and completely as Seller could on its own
behalf, together with all such powers as are reasonably incidental thereto.
Seller agrees that the foregoing appointment and powers are coupled with an
interest and every party acting hereunder shall be entitled to rely on any
action taken or omitted by Seller's Agent on behalf of Seller.
ARTICLE II
<PAGE>
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller, jointly and severally, represent, warrant, covenant and agree to
and with Purchaser as follows:
SECTION 2.1 Organization and Corporate Power. Seller is a corporation duly
organized, validly existing and in good standing under the Laws of the State
of North Carolina and is duly qualified and licensed to do business in the State
of North Carolina which is the only jurisdiction wherein the character of the
Real Properties and other Assets owned or leased or the nature of the business
of Seller makes such licensing or qualification to do business necessary.
Seller has full power and authority (corporate or otherwise) to own its assets,
or hold under lease the real property it presently holds under lease including,
without limitation, the Real Properties, and to carry on the business in which
it is engaged at all locations at which it is presently located including,
without limitation, operation of the Restaurants at the Real Properties and to
execute and deliver this Agreement and the other documents and instruments to
be executed and delivered by Seller, as the case may be, pursuant hereto or in
connection herewith (this Agreement and all other agreements, documents and
instruments to be entered into pursuant to this Agreement or in connection
herewith including all exhibits and schedules annexed hereto and thereto are
collectively referred to herein as the "Transaction Documents") and to
consummate the transactions contemplated hereby and thereby.
SECTION 2.2 Governing Instruments. The copies of the Governing Instruments
(as defined in Section 10.6) of Seller, and all amendments thereto to date, as
certified by the secretary of Seller have heretofore been delivered to
Purchaser, and are complete and correct. Seller is not in default in the
performance, observance or fulfillment of any of the provisions, terms or
conditions of its Governing Instruments.
SECTION 2.3 Due Authorization. All requisite authorizations for the
execution, delivery and performance of this Agreement and the other Transaction
Documents by Seller have been duly obtained. The execution and delivery of this
Agreement and the other Transaction Documents and the consummation of the
transactions contemplated hereby and thereby have been duly authorized by the
Board of Directors and shareholders of Seller, and no other corporate acts or
proceedings on the part of Seller or its shareholders are necessary to authorize
the execution and delivery of this Agreement or any of the other Transaction
Documents or the consummation of the transactions contemplated
hereby or thereby. This Agreement and each of the other Transaction Documents,
upon execution and delivery by Seller, will be the legal, valid and binding
obligation of Seller, enforceable against it in accordance with its terms,
except as enforcement thereof may be limited by bankruptcy, insolvency and other
laws affecting creditors rights (collectively "Bankruptcy Laws") and subject to
general principles of equity affecting the right to specific performance and
injunctive relief.
SECTION 2.4 No Violation. The execution, delivery and performance of this
Agreement and the other Transaction Documents by Seller and the consummation by
Seller of the transactions contemplated hereby and thereby, do not and at
Closing will not: (a) violate its Governing Instruments; (b) violate or
conflict with or constitute a default (or an event which, with notice or lapse
<PAGE>
of time, or both, would constitute a default) under any agreement, indenture,
instrument or understanding to which Seller is a party or by which it is bound;
(c) violate any judgment, decree, law, rule or regulation to which Seller is a
party or by which it is bound; (d) result in the creation of, or give any party
the right to create any encumbrance upon the property and assets of Seller; (e)
terminate or modify, or give any third party the right to terminate or modify,
the provisions or terms of any agreement or commitment to which Seller is a
party or by which Seller is subject or bound; or (f) result in any suspension,
revocation, impairment, forfeiture or non-renewal of any permit, license,
qualification, authorization or approval applicable to Seller.
SECTION 2.5 Consents. Schedule 2.5 sets forth a list of all consents,
approvals or other authorizations which Seller is required to obtain from, and
any filing which Seller is required to make with, any governmental authority or
agency or any other Person including, but not limited to, consents required from
Burger King (the "Burger King Consents") in connection with the execution,
delivery and consummation of this Agreement and the other Transaction Documents
and the consummation of the transactions contemplated hereby or thereby
(collectively, the "Required Consents").
SECTION 2.6 Financial Statements. (a) Seller has delivered to Purchaser
its Statement of Profit and Loss for each of the Restaurants for the 12 months
ended December 31, 1993 and 1992, which financial statements present fairly the
financial position of Seller and its subsidiaries (if any) as of the dates
thereof and present fairly the results of operations of the Restaurants for the
periods covered thereby, in each case in conformity with generally accepted
accounting principles consistently applied.
(b) The financial statements of Seller referred to in Section 2.6(a)
(collectively, the "Financial Statements") are true, correct and complete, have
been prepared in accordance with generally accepted accounting principles
consistently applied and accurately present the results of operations of The
Restaurants for the periods covered thereby. The Financial Statements reflect
or provide for all material claims against, and all debts and liabilities (of
any kind or nature) of, Seller, fixed or contingent, as at the dates thereof and
for the periods covered thereby, and Seller knows of no basis for the assertion
against it of any liability or obligation of any nature whatsoever, not fully
reflected or reserved against in such Financial Statements. There has not been
any change between the date of the Financial Statements and the date of this
Agreement which has materially affected the financial condition, assets,
liabilities, results of operations or business of the Restaurants and, except
as set forth in Schedule 2.6(b), no fact or condition exists or is contemplated
or threatened which might cause any such change at any time in the future.
Without limiting the foregoing since January 1, 1994 with, respect to
the Restaurants:
(i) Seller has not incurred any obligation or liability
(absolute or contingent) except current liabilities incurred in the ordinary
course of conduct of business and obligations under Contracts entered in the
ordinary course of business; and
(ii) Seller has not paid, loaned or advanced any amounts to, or
<PAGE>sold, transferred, leased, subleased or licensed any Real Properties or
Assets
to, or entered into any agreement or arrangements with, any Affiliate or
associate (and any of such transactions shall have been terminated on or before
the Closing Date).
SECTION 2.7 Assets. (a) Seller owns, and will transfer to Purchaser at
Closing, good and marketable title to all of its Assets and Assumed Contracts
free and clear of all Liens. The Assets of Seller include all of the operating
assets used or held for use in or in connection with the business being
conducted by Seller at the Restaurants. To the best knowledge of Seller, all
the Assets: (i) are, and on the Closing Date will be, in good operating
condition and repair, capable of performing the functions for which such items
are currently and normally used, normal wear and tear excepted; and (ii) except
as set forth in Schedule 2.7(a) annexed hereto, conform, and on the Closing Date
will conform, to the standards of Burger King under the terms and conditions set
forth in the applicable Franchise Agreements. On the Closing Date, each
Restaurant, together with its related Assets and Real Property, taken as a
whole, will constitute a fully operable "turn-key" Burger King restaurant
sufficient to permit Purchaser to immediately operate the business at such
Restaurant as presently being conducted therein.
(b) Seller will transfer and/or assign to Purchaser at Closing all
warranties, if any, with respect to its Assets.
SECTION 2.8 Inventory. The Inventory of Seller consists, and at Closing
will consist, of items of quality and quantity usable or salable in the ordinary
course of business. The present quality and quantities of all Inventory of
Seller are, and the qualities and quantities of all Inventory outstanding at the
Closing will be, reasonable in accordance with the current specifications of
Burger King. At Closing, the Inventory at each Restaurant shall be sufficient
for the operation of such Restaurant for at least 48 hours after the Closing
Date, and in no event will there be excess inventory in relation to normal
usage.
SECTION 2.9 Real Property Leases. (a) Seller has delivered to Purchaser a
true and complete copy of the Real Property Lease applicable to it, together
with all amendments thereto. To the best of Seller's knowledge, each applicable
owner of Leased Real Property has good record and marketable title in fee simple
to such real property free and clear of all Liens except as set forth in
Schedule 2.9(a). Seller has no knowledge or information of any facts,
circumstances or conditions which do or would in any way adversely affect the
Leased Real Property or the operation thereof or the business thereon as
presently conducted or as intended to be conducted. At or prior to Closing,
Seller shall cause to be discharged of record all Liens against Seller or
Seller's interest affecting its Leased Real Property. Each Real Property Lease
is valid and binding in full force and effect and enforceable in accordance with
its terms. There are no existing defaults or offsets which any of the
applicable landlords has against the enforcement of its Real Property Lease by
the Seller and neither Seller nor such landlord is in default under the
applicable Real Property Lease, nor have any events under any such Real Property
Lease occurred which, with the giving of notice or passage of time or both,
would constitute a default thereunder by either party thereto.
<PAGE>
(b) To the best of Seller's knowledge, the Real Properties and all
improvements located thereon and the present use thereof comply with, constitute
a valid non-conforming use, or are operating pursuant to the provisions of a
valid variance under all zoning laws, ordinances and regulations of governmental
authorities having jurisdiction thereof and, to the best of Seller's knowledge,
the construction, use and operation of the Real Properties by Seller are in
substantial compliance with all Laws. On or prior to Closing, Seller shall
deliver to Purchaser true and complete copies of each certificate of occupancy
for each Restaurant and all amendments thereto to date. In the event Seller is
unable to provide copies of said certificates, Seller shall deliver
documentation from the appropriate municipalities indicating that such
certificates are not required or no longer exist in their records. Seller also
agrees to indemnify and hold Purchaser harmless for all costs, expenses and
damages incurred by Purchaser as a result of Seller's inability to provide
Purchaser with said certificates of occupancy. To the best of Seller's
knowledge, the Real Properties and the Restaurants located thereon are in a
state of good maintenance and repair and are in good operating condition, normal
wear and tear excepted, and (i) Seller is not aware of any material physical or
mechanical defects in any of the Real Properties or Restaurants, including,
without limitation, the structural portions of the Real Properties and
Restaurants and the plumbing, heating, air conditioning, electrical, mechanical,
life safety and other systems therein and to the best knowledge of Seller and
all such systems are in good operating condition and repair (normal wear and
tear excepted); and (ii) there are no ongoing repairs to the Real Properties or
Restaurants located thereon being made by or on behalf of Seller or being made
by or on behalf of any landlord. All necessary occupancy and other certificates
and permits, municipal and otherwise, for the lawful use and occupancy of the
Real Properties for the purposes for which they are intended and to which they
are presently devoted including, without limitation, for the operation of a
Burger King restaurant thereon, have been issued and remain valid. There are
no pending or threatened actions or proceedings that might prohibit, restrict
or impair such use and occupancy or result in the suspension, revocation,
impairment, forfeiture or non-renewal of any such certificates or permits. All
notes or notices of violation of any Laws, against or affecting any such Real
Properties have been complied with. There are no outstanding correcting work
orders from any Federal, state, county, municipal or local government, or the
owner of the Real Properties or any insurance company with respect to any such
Real Properties.
(c) There are no condemnation or eminent domain proceedings of any
kind whatsoever or proceedings of any other kind whatsoever for the taking of
the whole or any part of the Real Properties for public or quasi-public use
pending or, to the knowledge of Seller, threatened against the Real Properties.
(d) The Real Properties and all improvements thereon represent all of
the locations at which the Seller conducts business relating to the Restaurants
and are, now, and at Closing will be, the only locations where any of the Assets
are or will be located.
(e) All water, sewer, gas, electric, telephone and drainage
facilities, and all other utilities required by any Law or by the normal use and
operation of the Real Properties and the Restaurants located thereon are
installed to the property lines of the respective Real Properties, are connected
<PAGE>
pursuant to valid permits, are fully operable and are adequate to service the
Real Properties and the Restaurants located thereon and to permit full
compliance with all Laws and normal utilization of the Real Properties and the
Restaurants located thereon.
(f) All licenses, permits, certificates, including, without
limitation, proof of dedication, required from all governmental agencies having
jurisdiction over the Real Properties, and from any other Persons, for the
normal use and operation of the Real Properties and the Restaurants located
thereon and to ensure adequate vehicular and pedestrian ingress to and egress
from the Real Properties and the Restaurants located thereon have been obtained.
The Easements are valid and binding, in full force and effect and enforceable
in accordance with their respective terms.
SECTION 2.10 Franchise Agreements. Seller has delivered to Purchaser a
true, complete and correct copy of the Franchise Agreements , including any and
all amendments thereto. Seller owns, and at Closing will transfer to Purchaser,
its right, title and interest in the Franchise Agreements, free and clear of all
Liens. Subject to the written consent of Burger King, which Seller shall obtain
and deliver to Purchaser at or prior to the Closing, Seller has the absolute
right and authority to sell, assign, transfer and convey the Franchise
Agreements. Seller has received no notice of violation with respect to the
Franchise Agreements, and Seller does not know or has no reason to know of any
event which would give rise to a violation or default under the Franchise
Agreements.
SECTION 2.11 Employment Arrangements. (a) Except as required by Law,
Seller has no obligation, contingent or otherwise, under any employment
agreement, collective bargaining or other labor agreement, any agreement
containing severance or termination pay arrangements, retainer or consulting
arrangements, or purchase plan or other employee contract or non-terminable
(whether with or without penalty) arrangement.
(b) Except as set forth on Schedule 2.11(b), within the last five
years Seller has not experienced any labor disputes, union organization attempts
or any work stoppage due to labor disagreements. Except as set forth on
Schedule 2.11(b), (i) to the best knowledge of Seller, Seller is in substantial
compliance with all applicable Laws respecting employment and employment
practices, terms and conditions of employment and wages and hours, and is not
engaged in any unfair labor practice; (ii) there is no unfair labor practice,
charge or complaint against Seller pending or threatened before the National
Labor Relations Board; (iii) there is no labor strike, dispute, request for
representation, slowdown or stoppage actually pending or threatened against or
affecting Seller; (iv) no question concerning representation has been raised or
is threatened respecting the employees of Seller; and (v) no grievance which
might have an adverse affect on Seller or the conduct of its business nor any
arbitration proceeding arising out of or under collective bargaining agreements
is pending and no claims therefor exist.
(c) Schedule 2.11(c) sets forth a true and complete list of (i) the
names of all managers and assistant managers employed by Seller at the
Restaurants as of the date hereof, the date such individuals were first employed
by Seller, how long such individuals have been at the particular Restaurants and
<PAGE>
the salary payable to such persons and (ii) the names of all other persons
employed by Seller at the Restaurants as of the date hereof, and the salary or
hourly wage payable to each such person, and (iii) the total number of vacation
days accrued by all persons employed by Seller and the total monetary value of
such accrued vacation for all such persons. From and after the date hereof,
Seller or Olander or any of their respective Affiliates will not remove any
management personnel (managers and assistant managers) from the Restaurants or
relocate such management personnel to any other restaurants owned or operated
by Seller, Olander or their respective Affiliates and at Closing the Restaurants
shall have sufficient management and non-management personnel required to run
and operate the Restaurants in accordance with Burger King Standards.
SECTION 2.12 Contracts and Arrangements. (a) Except for the Franchise
Agreements, Real Property Leases, Easements, and the Contracts set forth on
Schedule 2.12 hereto (the Contracts set forth on Schedule 2.12 being referred
to herein, collectively, as the "Other Contracts"), Seller has no Contract
relating to the Restaurants, Assets or Real Properties, including, without
limiting the generality of the foregoing, any (i) Contract for the purchase or
sale of Inventory; (ii) Contract for the purchase or sale of supplies, services
or other items; (iii) Contract for the purchase, sale or lease of any Restaurant
Equipment; (iv) Franchise Agreement or license agreement; and (v) employment or
consulting agreement or pension, disability, profit sharing, bonus, incentive,
insurance, retirement or other employee benefit agreement.
(b) Seller has delivered to Purchaser a true, complete and correct
copy of each Other Contract applicable to it together with all amendments (if
oral, a written description of the terms thereof) thereto.
(c) Seller has performed all obligations required to be performed
under each Other Contract relating to its business and is not in breach or
default or in arrears in any respect under the terms thereof. Seller has
received no notice of the termination of any such Other Contract prior to the
expiration of the scheduled term thereof or has knowledge of the intent of a
party to any such Other Contract to do the same, nor has any event occurred
which, with notice or the passage of time or both, would constitute a default
under any such Other Contract. Seller has the right, under the terms of each
Other Contract, to assign such Other Contract to Purchaser.
(d) Seller has given no power of attorney (revocable or irrevocable)
to any Person for any purpose whatsoever.
<PAGE>
<PAGE>
SECTION 2.13 ERISA. (a) Schedule 2.13(a) Contains a true and complete list
of all "employee pension benefit plans" (as defined in section 3(2) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA")),
including all "multi-employer plans" (as defined in ERISA section 3(37)), and
any other stock bonus, pension, or profit sharing plans described in section
401a of the Internal Revenue Code of 1986, as amended (the "Code"), that Seller
or any other entity which would be considered in a controlled group or under
common control or as a single employer with Seller under ERISA sections
4001(a)(14) or (b) or Code sections 414(b), (c), (m), or (o) presently maintains
or is obligated to contribute or had maintained or had an obligation to
contribute at any time within the past five years.
(b) Schedule 2.13(b) contains a true and complete list of all
"employee welfare benefit plans" as defined in ERISA section 3(1) and all
deferred compensation, stock purchase, stock option, incentive, bonus, vacation,
severance (including, without limitation, benefits in the event of a change of
ownership in whole or in part, of Seller), disability, hospitalization, medical
insurance, child care, educational assistance, or other employee benefit plan,
program or arrangement currently maintained by Seller or to which Seller has an
obligation to contribute.
(c) Seller has delivered or made available to Purchaser true and
complete copies of all documents, as they may have been amended to the date
hereof, embodying or relating to the plans, programs or arrangements described
in Section 2.13(a) and (b) (collectively the "Plans").
(d) There are no actions, audits, suits, or claims pending (other than
routine claims for benefits) or, to the knowledge of Seller, threatened, against
any Plan or any fiduciary of any Plan or against the assets of any Plan.
(e) Seller has no obligation to any retired or former employee with
respect to, nor made any oral or written representation or communication to any
retired or former employee regarding, the provisions of any disability (long or
short term), hospitalization, medical, dental or life insurance plans (whether
insured or self-insured) or any other "employee welfare benefit" plan as defined
in ERISA section 3(1).
SECTION 2.14 Litigation, Compliance with Laws and Consents. (a) Except as
set forth on Schedule 2.14(a), there are no suits, grievances, complaints,
charges, inquiries, proceedings, hearings, demands, notices, demand letters,
claims, actions, causes of action or investigations before any court, tribunal,
governmental or regulatory authority or any other Person (each an "Action" and,
collectively, "Actions") now pending, or, to the knowledge of Seller, in
prospect or threatened against, Seller or any of its respective officers,
directors or partners, at law or in equity, whether or not fully covered by
insurance, in connection with the Assets, Real Property Leases, Assumed
Contracts, Real Properties, Restaurants, business, affairs, properties or assets
of Seller.
(b) To the best knowledge of Seller, Seller at all times during the
past has been, and at Closing, will be, in substantial compliance in all
respects with all laws (whether statutory or otherwise) rules, regulations,
orders, ordinances, judgments, injunctions, demands, or decrees of any
<PAGE>
governmental authority (Federal, state, local or otherwise) (collectively
"Laws") applicable to its business, affairs, properties or assets. Neither
Seller, nor any officer, director or authorized agent of Seller is in default
with respect to, and has not been charged or to its knowledge threatened with,
nor is under investigation with respect to any violation of any Laws relating
to any aspect of its business, affairs, properties or assets including, but not
limited to, the Restaurants, Assets, Real Property Leases, Assumed Contracts,
and the Real Properties.
(c) Set forth on Schedule 2.14(c) hereto is a list of all licenses,
permits, approvals, permissions, qualifications, consents and other
authorizations (collectively "Licenses") which are required to be obtained in
connection with the ownership, use or operation of the Restaurants, the Assets,
Real Property Leases or the Real Properties ("Required Licenses"). Except as
set forth in Schedule 2.14(c), Seller has obtained each of the Required Licenses
and each such Required License is and on the Closing Date will be, validly
issued and in full force and effect and there are not now, and at Closing shall
not be any Actions pending, and to Seller's knowledge, any Actions in prospect
or threatened, challenging the Required Licenses.
SECTION 2.15 Environmental Matters. Except as set forth in Schedule 2.15
annexed hereto: (i) Seller has obtained all Licenses which are required under
any Environmental Laws; (ii) to the best of Seller's knowledge, Seller is in
substantial compliance with all terms and conditions of the Required Licenses
and is also in substantial compliance with all other limitations, restrictions,
conditions, standards, prohibitions, requirements, obligations, schedules and
timetables contained in any Environmental Laws or code, plan, order, decree or
judgment relating to public health and safety and pollution or protection of the
environment or any notice or demand letter issued, entered, promulgated or
approved thereunder; (iii) there are no civil, criminal or administrative
Actions pending, or to Seller's knowledge threatened, against Seller relating
in any way to any Environmental Law or any regulation, code, plan, order,
decree, judgment, injunction, notice or demand letter issued, entered,
promulgated or approved thereunder; and (iv) Seller does not know or has any
reason to know of, nor has Seller received any notice of any facts, events or
conditions which would interfere with or prevent continued compliance with, or
give rise to any common law or legal liability under any Environmental Law.
SECTION 2.16 Insurance Policies. Seller has maintained with financially
sound and reputable insurers insurance with respect to its properties and
business against loss or damage of the kinds customarily insured against by
reputable companies in the same or similar business, of such types and in such
amounts (with such deductible amounts) as is customary for such companies under
similar circumstances. All of the applicable insurance policies are valid and
enforceable and in full force and effect and will be continued in full force and
effect up to and including the Closing Date.
SECTION 2.17 Tax Returns. Seller has filed all Federal income tax returns
and all state and local income, franchise and sales tax returns and all real
property tax returns and any other tax return which was required to be filed as
of the date of this Agreement, and will timely file or obtain extensions of time
to file all returns which were not required to be filed prior to the date
hereof. The provision for taxes shown on the Financial Statements of Seller was
<PAGE>
sufficient to satisfy all taxes due and all assessments received by Seller (and
all other entities included within the Financial Statements) for all periods
ended on or prior to the date of such Financial Statements. As of the date
hereof, no taxes are past due, and no tax liabilities have been assessed or
proposed which remain unpaid and all current payroll taxes have been paid.
Seller is not aware of any basis upon which any assessment of additional
Federal, state or local income or other taxes could be made, and Seller has not
signed any extension agreement with the Internal Revenue Service or any other
governmental agency or given waiver of a statute of limitations with respect to
the payment of taxes for periods for which the statute of limitations has not
expired. Seller shall be liable for all tax liabilities in connection with the
operation of the Restaurants, the Assets, the Real Properties, the Real Property
Leases, the Easements and Assumed Contracts, which cover periods prior to the
Closing Date. Seller shall be liable for all transfer, sales and similar tax
liabilities, if any, in connection with the leasing of the Real Properties under
the Real Property Leases, the assignment of the Real Property Leases and the
Assumed Contracts, and the transfer of any rights under the Easements. All
taxes which Seller is required by law to withhold or collect have been duly
withheld or collected and to the extent required have been paid over to the
proper governmental authorities on a timely basis or reflected as an obligation
on the current Financial Statements of the applicable Seller.
SECTION 2.18 Adverse Restrictions. Seller is not subject to any charter,
by-law, Lien, lease, agreement, instrument, order, judgment or decree, or any
other restriction of any kind or character, or, any law (currently in existence
or adopted on or before the Closing Date), rule or regulation, which now is or
in the future could be burdensome or which could affect materially adversely the
Restaurants or the business conducted therein, Assets, Real Properties, Real
Property Leases, the Easements or Assumed Contracts. The execution and delivery
of this Agreement and the other Transaction Documents and the consummation of
the transactions contemplated hereunder and thereby will not result in the
violation or breach of, default or the creation of any Lien under any of the
aforesaid.
<PAGE>
<PAGE>
SECTION 2.19 Brokers. No broker, finder or selling agent has had a part
in bringing about any of the transactions contemplated by this Agreement or the
other Transaction Documents (including, but not limited to, the leasing of the
Real Properties and the assignment of the Real Property Leases) and no
commission or other fee is due to any party in connection with the transactions
contemplated by this Agreement or the other Transaction Documents.
SECTION 2.20 Material Information. The Financial Statements, this
Agreement, the other Transaction Documents and any exhibit, schedule,
certificate, or other information, representation, warranty or other document
furnished or to be furnished by Seller to Purchaser pursuant to or in connection
with any of the foregoing, do not (i) contain, nor will the same contain, any
untrue statement of a material fact; or (ii) omit, nor will the same omit, or
fail to state, a material fact required to be stated herein or therein or which
is necessary to make the statements herein or therein not misleading.
SECTION 2.21 Continuing Representations. The representations and
warranties of Seller herein contained shall be true and correct on and as of the
Closing Date with the same force and effect as if made on and as of that date.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser represents, warrants, covenants and agrees to and with Seller
that:
SECTION 3.1 Organization and Corporate Power. Purchaser is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware. Purchaser has full power and authority (corporate and other)
to execute and deliver this Agreement and the other Transaction Documents to be
executed and delivered by Purchaser pursuant hereto or in connection herewith
and to consummate the transactions contemplated hereby and thereby.
SECTION 3.2 Certificate of Incorporation and By-Laws. Copies of the
Certificate of Incorporation and By-Laws of Purchaser and all amendments thereto
to date, as certified by the Secretary of Purchaser, have heretofore been
delivered to Seller's Agent by Purchaser, and are complete and correct as of the
date of this Agreement and will be complete and correct as of the Closing Date.
Purchaser is not in default in the performance, observance or fulfillment of any
of the terms or conditions of its Certificate of Incorporation or By-Laws.
SECTION 3.3 Due Authorization. All requisite authorizations for the
execution, delivery, performance and satisfaction of this Agreement and the
other Transaction Documents by Purchaser have been duly obtained. The execution
and delivery of this Agreement and the other Transaction Documents and the
consummation of the transactions contemplated hereby and thereby have been duly
authorized by the Board of Directors of Purchaser and no other corporate acts
or proceedings on the part of Purchaser or its shareholders are necessary to
authorize the execution and delivery of this Agreement or any of the other
Transaction Documents or the consummation of the transactions contemplated
hereby or thereby. This Agreement and each of the other Transaction Documents,
<PAGE>upon execution and delivery by Purchaser, will be the legal, valid and
binding obligation of Purchaser, enforceable against Purchaser in accordance
with its
terms, except as enforcement thereof may be limited by Bankruptcy Laws and
subject to the general principles of equity affecting the right to specific
performance and injunctive relief.
SECTION 3.4 No Violation. The execution, delivery and performance of this
Agreement and the other Transaction Documents by Purchaser and the consummation
by Purchaser of the transactions contemplated hereby and thereby will not (a)
violate its Certificate of Incorporation or By-Laws; (b) violate or conflict
with or constitute a default (or an event which, with notice or lapse of time
or both, would constitute a default) under any agreement, indenture, instrument
or understanding to which Purchaser is a party or by which it is bound; (c)
violate any judgment, decree, law, rule or regulation to which Purchaser is a
party or by which it is bound; (d) terminate or modify, or give any third party
the right to terminate or modify, the provisions or terms of any agreement or
commitment to which Purchaser is a party or by which Purchaser is subject or
bound; or (e) result in any suspension, revocation, impairment, forfeiture or
non-renewal of any license, qualification, authorization or approval applicable
to Purchaser.
SECTION 3.5 Consents. Except for the Burger King Consents, the consent of
Heller Financial, Inc. (Purchaser's senior lender) and any filings that
Purchaser may be required to make with the Securities and Exchange Commission,
Purchaser is not required to obtain any consents, approvals or other
authorizations or to make any filing with any governmental authority or agency
or any other Person in connection with the execution, delivery and consummation
of this Agreement and other Transaction Documents and the consummation of the
transactions contemplated hereby and thereby.
SECTION 3.6 Brokers. No broker, finder or selling agent has had a part in
bringing about any of the transactions contemplated by this Agreement or the
other Transaction Documents (including, but not limited to, the leasing of the
Real Properties and the assignment of the Real Property Leases) and no
commission or other fee is due to any party in connection with the transactions
contemplated by this Agreement or the other Transaction Documents.
SECTION 3.7 Material Information. This Agreement, the other Transaction
Documents and any exhibit, schedule, certificate or other information
representation, warranty or other document furnished or to be furnished by
Purchaser to Seller do not (a) contain, nor will the same contain, any untrue
statement of a material fact; or (b) omit, nor will the same omit or fail to
state, a material fact required to be stated herein or therein or which is
necessary to make the statements herein or therein not misleading.
SECTION 3.8 Continuing Representations. The representations and warranties
of Purchaser herein contained shall be true and correct on and as of the Closing
Date with the same force and effect as if made on and as of that date.
ARTICLE IV
COVENANTS OF THE PARTIES
<PAGE>
SECTION 4.1 Access to Records and Properties Prior to the Closing Date.
Between the date of this Agreement and the Closing Date, Seller shall give
Purchaser, its directors, officers, employees, accountants, counsel and other
representatives and agents ("Representatives") reasonable access to the
premises, properties, books, financial statements, Contracts, records of Seller
relating to the Restaurants, the Assets, Real Properties, Real Property Leases,
the Easements and Assumed Contracts, and shall furnish Purchaser with such
financial and operating data and other information with respect to the business
and properties of Seller as Purchaser shall from time to time reasonably request
for such purposes as Purchaser shall require. Any such investigation or
examination shall be conducted at reasonable times and upon reasonable notice
to Seller's Agent. Notwithstanding inspections, audits or other studies
undertaken by or on behalf of Purchaser hereunder or any other due diligence
investigation undertaken by or on behalf of Purchaser, Seller shall not be
relieved in any way of responsibility for their warranties, representations and
covenants set forth in this Agreement.
SECTION 4.2 Operation of the Business of Seller. (a) Between the date of
this Agreement and the Closing Date, Seller shall conduct the operation of the
Restaurants in the ordinary and usual course of business, consistent with past
practices and will use its best efforts to preserve intact the present business
organization with respect to the Restaurants, to keep available the services of
its officers and employees, and to maintain satisfactory relationships with
landlords, franchisors, dealers, licensors, licensees, suppliers, contractors,
distributors, customers and others having business relations with it and the
Restaurants and will maintain the Restaurants, Real Properties, and Assets in
a condition conducive to the operation of the business currently carried on
therein.
(b) Without limiting the generality of the foregoing, and except as
otherwise expressly provided in this Agreement or with the prior written consent
of Purchaser, Seller will not:
(i) Keep and maintain its books of account and records other
than in accordance with generally accepted accounting principles consistent with
past practices;
(ii) Amend or restate any Governing Instrument, the Real
Property Leases, the Franchise Agreements or any other material Contract;
(iii) (A) Increase in any manner the compensation of any of the
employees at any of the Restaurants other than in the ordinary course of
business, consistent with past practices;
(B) pay or agree to pay any pension, retirement allowance or other employee
benefit not required or permitted by any Plan, whether past or present; or (C)
commit itself in relation to the Restaurants, the employees at the Restaurants
or the Real Properties, to any new or renewed Plan with or for the benefit of
any Person, or to amend any of such Plans or any of such agreements in existence
on the date hereof;
(iv) Permit any of its insurance policies to be canceled or
terminated or any of the coverage thereunder to lapse, unless simultaneously
with such termination, cancellation or lapse, replacement policies are in full
<PAGE>
force and effect providing coverage, in form, substance and amount equal to or
greater than the coverage under those canceled, terminated or lapsed for
substantially similar premiums;
(v) Enter into any other Contracts whether written or oral
which, individually or in the aggregate, would be material to the Restaurants,
Assets, Real Properties, Real Property Leases, the Easements or the Assumed
Contracts, except Contracts for the purchase, sale or lease of goods or services
in the ordinary course of business consistent with past practice and not in
excess of current requirements, or otherwise make any material change in the
conduct of the businesses or operations of Seller;
(vi) Take any action which would result in any of the
representations or warranties contained in this Agreement or the other
Transaction Documents not being true at and as of the time immediately after
such action at and as of the Closing Date, or in any of the covenants contained
in this Agreement or other Transaction Documents becoming unperformable or which
would have a materially adverse impact on the transactions contemplated hereby
or thereby;
(vii) Operate the Restaurants or otherwise engage in any
practices which would materially affect sales at the Restaurants; or
(viii) Agree (in writing or otherwise) to do any of the
foregoing.
SECTION 4.3 Supplements to Disclosures. Prior to the Closing Date, Seller
will promptly supplement or amend the information set forth herein and in the
Schedules and Exhibits referred to herein with respect to any matter hereafter
arising which, if existing or occurring at or prior to the date of this
Agreement, would have been required to be set forth or described herein or in
a Schedule or Exhibit or which is necessary to correct any information herein
or in a Schedule or Exhibit or in any representation and warranty, which has
been rendered inaccurate thereby.
SECTION 4.4 No Other Asset Sales. From the date hereof until the Closing
Date, Seller shall not, directly or indirectly and whether by means of a sale
of assets, sale of stock, merger or otherwise:
(a) sell, transfer, assign or dispose of, or offer to, or enter into
any Contract to sell, transfer, assign or dispose of, the Assets or any interest
therein, except for normal operations in the ordinary course of business; or
(b) encourage, initiate or solicit any inquiries or proposals by, or
engage in any discussions or negotiations with, or furnish any non-public
information to any Person concerning any such transaction and Seller's Agent
shall promptly communicate to Purchaser the substance of any inquiry or proposal
concerning any such transaction which may be received.
SECTION 4.5 Regulatory Filings and Consents. From the date hereof until
the Closing Date, each of the parties hereto shall furnish to the other party
hereto such necessary information and reasonable assistance as such other party
may reasonably request in connection with its preparation of necessary filings
<PAGE>
or submissions to any governmental agency and Seller shall use its best efforts
to obtain all Licenses and Required Consents from third parties necessary to
consummate the transactions contemplated by this Agreement and the other
Transaction Documents. Each party shall furnish to the other copies of all
correspondence, filings or communications (or memoranda setting forth the
substance thereof) between Purchaser, Seller, or any of their respective
Representatives and agents, on the one hand, and any government agency or
authority or third party, or members of the staff of such agency or authority
or third party, on the other hand, with respect to this Agreement and the other
Transaction Documents and transactions contemplated hereby and thereby.
SECTION 4.6 Announcements; Confidentiality. (a) From the date of this
Agreement until Closing, except as required by Law and except as is necessary
to consummate the transactions contemplated herein and in the Transaction
Documents, no announcement of the existence or terms of this Agreement or the
other Transaction Documents or the transactions contemplated hereby and thereby
shall be made publicly or to the employees or customers of Seller, by any party
to this Agreement or any of its respective Representatives without the advance
written approval of the other parties.
(b) Purchaser, on the one hand, and Seller and Seller's Agent, on the
other hand, each shall hold in strict confidence, and shall use their best
efforts to cause all their Representatives to hold in strict confidence, unless
compelled to disclose by judicial or administrative process, or by other
requirements of law, all confidential and proprietary information (collectively,
"Confidential Information") concerning Seller and Seller's Agent (in the case
of Purchaser) and Purchaser (in the case of Seller and Seller's Agent) which is
created or obtained prior to, on or after the date hereof in connection with the
transactions contemplated hereby, and Purchaser, Seller and Seller's Agent each
<PAGE>
<PAGE>
shall not use or disclose to others, or permit the use or disclosure of, any
such information created or obtained except to the extent that such information
can be shown to have been (i) previously known by Purchaser, and Seller or
Seller's Agent, as the case may be; and (ii) in the public domain through no
fault of a party or any of its Representatives, and will not release or disclose
such information to any other Person, except its officers, directors, employees,
Representatives and lending institutions who need to know such information in
connection with this Agreement.
(c) If the transactions contemplated by this Agreement are not
consummated, such confidence shall be maintained except (i) as required by law
or (ii) to the extent such information comes into the public domain through no
fault of a party or any of its Representatives.
SECTION 4.7 Limitation of Seller, Actions After Closing. From and after
the Closing and thereafter so long as the provisions of Article VII are still
applicable, neither Seller nor Seller's Agent shall, without the prior written
consent of Purchaser: (i) engage in any business which would adversely affect
the value of Purchaser's business; or (ii) take any other action or fail to take
any action, or allow the occurrence of any event, with respect to Seller's
assets, including without limitation, the Real Properties, which could be
reasonably expected to materially and adversely affect Seller's ability to
indemnify, defend and hold harmless Purchaser and its officers, directors and
shareholders from and against Damages (as hereunder defined) pursuant to Article
VII.
SECTION 4.8 Bulk Sales. Purchaser hereby waives compliance by Seller with
the provisions of the North Carolina Uniform Commercial Code Bulk Sales laws.
Seller hereby agrees to pay and discharge, promptly when due, all claims of
creditors which may be asserted against Purchaser by reason of such
noncompliance. Purchaser also hereby waives compliance by Seller with the
provisions of any applicable bulk sales state or local tax laws in effect in the
state of North Carolina. The bulk sales laws referred to in Sections 4.8(a) and
(c) hereof are referred to herein, collectively, as the "Bulk Sales Laws".
SECTION 4.9 Financial Statements and Reports. Between the date hereof and
the Closing Date, Seller's Agent shall deliver to Purchaser:
(a) within five business days after the end of each calendar month,
a written statement, certified by Seller's Agent, of the Gross Sales of each
Restaurant for that month; and
(b) within five business days of their availability, such financial
statements relating to each Restaurant as may be prepared by Seller, which shall
be prepared on a basis consistent with past practices.
SECTION 4.10 Environmental Matters. (a) Seller shall, at its sole cost and
expense, obtain current "Level-One" or "Phase I" environmental site assessments
(hereinafter "Phase I's") for each of the Real Properties, which shall be
conducted by a reputable, licensed environmental services company (the
"Environmental Company"). The Environmental Company shall be selected by
Purchaser subject to the reasonable approval of Seller. The Phase I's shall be
prepared by the Environmental Company so that they may be relied upon by both
<PAGE>Seller and Purchaser.
(b) In the event any of the Phase I's shall recommend that a
"Level-Two" or "Phase II" environmental site assessment (hereinafter "Phase
II's") be performed, or shall disclose any environmental conditions which
Purchaser, in its reasonable discretion, believes should be investigated
further, Seller, at its sole cost and expense, shall cause Phase II's for each
Real Property so affected to be performed by the Environmental Company.
(c) In the event that a Phase II shall identify a Real Property which
is affected by an environmental condition which requires abatement or
remediation (an "Environmentally Damaged Restaurant"), Purchaser shall have the
option, to be exercised within ten days of receipt of such Phase II, to: (i)
require Seller to promptly perform the remediation at Seller's sole cost and
expense; or (ii) elect to have the Environmentally Damaged Restaurant and the
Real Property upon which such Restaurant is located, and all other Assets
relating to such Restaurant, withdrawn from this transaction, whereupon the
purchase price for the Assets shall be reduced by an amount (referred to herein
as the "Damage Credit") which shall be determined by Purchaser and Seller's
Agent by taking into account the sales, profitability and location of such
Restaurant, as well as any other relevant material facts or factors related to
the value of such Restaurant, the Assets related thereto or the Real Property
upon which it is located. In the event Purchaser and Seller's Agent are unable
to agree upon the Damage Credit, such dispute shall be submitted to arbitration
under the rules of the American Arbitration Association in New York, New York.
In the event Purchaser elects to require Seller to perform the necessary
remediation at such Restaurant, the Closing shall occur pursuant to this
Agreement except a portion of the purchase price equal to the Damage Credit
shall be held in escrow by the attorneys for Purchaser pending completion of
such remediation. In the event such remediation is not completed within 90 days
after the date Purchaser has elected to have Seller proceed with such
remediation, Purchaser shall have an additional option to withdraw the
Environmentally Damaged Restaurant from this transaction, exercisable within 30
days from date Purchaser's additional option shall arise, whereupon the Damage
Credit shall immediately be paid to Purchaser.
(d) In the event that the Phase II's shall identify two or more Real
Properties affected by environmental conditions requiring remediation or
abatement, Purchaser shall have the option to terminate this Agreement, which
option shall be exercisable within 20 days from the date Purchaser shall have
received the Phase II's disclosing such conditions. In the event Purchaser
shall not elect to terminate this Agreement, the provisions of Section 4.10(c)
above shall apply to each Restaurant so affected.
SECTION 4.11 Employee Benefit Matters. (a) No later than seven days after
the Closing Date, Seller shall discharge and satisfy in full (and provide
evidence thereof to Purchaser) any liabilities it may have with respect to any
wages, vacation, severance or sick pay, or any rights under any stock option,
bonus or other incentive arrangements of its employees which shall have accrued
as of the Closing Date. For the purposes hereof, such accrued liabilities shall
be determined as if Seller does not terminate the employment of its employees
on the Closing Date.
(b) Seller shall assume full responsibility and liability for offering
and providing "continuation coverage" to any employee of Seller, and to
<PAGE>"qualified beneficiaries" of any employee of Seller or to any qualified
beneficiary who incurs a multiple qualifying event after the Closing Date
provided that the employee or "qualified beneficiary" incurs a "qualifying
event" prior to the Closing Date. The continuation coverage shall be provided
under a group health plan of Seller or an affiliate of Seller. The type of
coverage shall be that described in Section 4980B(f)(2)(A) of the Code. The
continuation coverage shall be provided for the period described in Section
4980B(f)(2)(A) of the Code. "Continuation coverage", "qualified beneficiaries",
and "qualifying event" have the meanings given such terms under Section 4980B
of the Code. Seller hereby agrees to indemnify, defend and hold Purchaser
harmless from and against any "Damages" (as defined in Section 7.2(a) below)
arising out of Seller's failure to offer the continuation coverage described
herein.
SECTION 4.12 Access to Restaurants Prior to Closing. Within 48 hours prior
to the Closing Date, Seller shall give Purchaser and its Representatives access
to the Restaurants for the purposes of facilitating Purchaser's conversion of
the cash register systems. Such access by Purchaser shall be upon reasonable
prior notice and Purchaser agrees to use best efforts to conduct said activities
in such manner so as not to unreasonably interfere with the operation of
Seller's business. To the extent there is storage space available at the
Restaurants and the same shall not cause undue burden on Seller, Purchaser may
also, at its sole risk, store its register equipment at the Restaurants.
SECTION 4.13 Covenants of Michael Olander. By his signature at the end of
this Agreement, Michael Olander agrees to observe and be bound by the provisions
of Sections 4.4, 4.6, 4.7, 10.1, 10.8, 10.11 and Article VIII hereof.
ARTICLE V
CONDITIONS TO OBLIGATIONS OF PARTIES
SECTION 5.1 Conditions to the Obligations of Seller and Purchaser. The
obligations of Purchaser and Seller to consummate the transactions contemplated
by the Transaction Documents are subject to the satisfaction at or prior to the
Closing of the following conditions, except to the extent that any such
condition may have been waived in writing by both Seller's Agent and Purchaser
at or prior to the Closing:
(a) Impediments to Closing. No Actions shall have been instituted or
shall be pending or threatened which questions the validity or legality of this
Agreement and the other Transaction Documents and the transactions contemplated
hereby and thereby and which could reasonably be expected to damage materially
the business or assets of Seller if the transactions contemplated hereby or
thereby are consummated. No injunction, decree or order shall be in effect
prohibiting consummation of the transactions contemplated by this Agreement or
the other Transaction Documents or which would make the consummation of such
transactions unlawful and no Actions shall have been instituted and remain
pending to restrain or prohibit the transactions contemplated by this Agreement
and the other Transaction Documents.
SECTION 5.2 Conditions to the Obligations of Seller. The obligations of
<PAGE>Seller to consummate the transactions contemplated hereby and by the other
Transaction Documents are subject to the satisfaction at or prior to the Closing
of the following conditions, except to the extent that any such condition may
have been waived in writing by Seller's Agent at or prior to the Closing:
(a) Representations, Warranties and Performance. The representations,
warranties, covenants and agreements of Purchaser contained in this Agreement
and the other Transaction Documents or otherwise made in writing by it or on its
behalf pursuant hereto or otherwise made in connection with the transactions
contemplated hereby or thereby shall be true and correct at and as of the
Closing Date, with the same force and effect as if made at and as of the Closing
Date; the Purchaser shall have performed or complied with all agreements and
conditions required by this Agreement and the other Transaction Documents to be
performed or complied with by it on or prior to the Closing Date; and Seller's
Agent shall have received a certificate to the foregoing effect dated the
Closing Date in form satisfactory to him signed by an officer of Purchaser.
(b) Governing Instruments, etc. Seller's Agent shall have received
a certificate, dated the Closing Date, of the Secretary or Assistant Secretary
of Purchaser certifying, among other things, that attached or appended to such
certificate (i) is a true and correct copy of its Certificate of Incorporation
and all amendments, if any, thereto as of the date thereof; (ii) is a true and
correct copy of its By-laws; (iii) is a true copy of all corporate actions taken
by it, including resolutions of its board of directors authorizing the execution
and delivery of this Agreement and each other Transaction Document to be
delivered by it pursuant hereto and the consummation of the transactions
contemplated hereby and thereby; and (iv) are the names, the signatures of its
duly elected or appointed officers who are authorized to execute and deliver
this Agreement, and any certificate, document or other instrument in connection
herewith.
(c) Payment of Purchase Price. Purchaser shall have tendered to
Seller's Agent the Purchase Price payable at Closing in accordance with Section
12(a).
(d) Assumption of Assumed Contracts. Seller shall have received from
Purchaser an Assumption Agreement substantially in the form annexed as Exhibit
C hereto.
(e) Opinion of Counsel. Seller's Agent shall have received an opinion
of counsel for Purchaser, as of the Closing Date, substantially in the form
annexed as Exhibit D hereto.
SECTION 5.3 Conditions to Obligations of Purchaser. The obligations of
Purchaser to consummate the transactions contemplated hereby and by the other
Transaction Documents are subject to the satisfaction at or prior to the Closing
of the following additional conditions, except to the extent that any such
condition may have been waived in writing by Purchaser at or prior to the
Closing:
(a) Representations, Warranties and Covenants. The representations,
warranties, covenants and agreements of Seller contained in this Agreement and
the other Transaction Documents, or otherwise made in writing by it or on its
behalf pursuant hereto or otherwise made in connection with the transactions
<PAGE>contemplated hereby or thereby shall be true and correct at and as of the
Closing Date with the same force and effect as though made on and as of the
Closing Date; Seller shall have performed or complied with all agreements and
conditions required by this Agreement and the other Transaction Documents to be
performed or complied with by it on or prior to the Closing Date; and Purchaser
shall have received certificates to the foregoing effect dated the Closing Date
in form satisfactory to Purchaser signed by the Chief Executive Officer of
Seller.
(b) Governing Instruments, etc. Purchaser shall have received a
certificate, dated the Closing Date, of the Secretary or Assistant Secretary of
Seller certifying, among other things, that attached or appended to such
certificate (i) is a true and correct copy of each Governing Instrument and all
amendments if any thereto as of the date thereof; (ii) is a true copy of all
corporate actions taken by it, including resolutions of its board of directors
and shareholders authorizing the execution and delivery of this Agreement and
each other Transaction Document to be delivered by it pursuant hereto and the
consummation of the transactions contemplated hereby and thereby; and (iii) are
the names and signatures of its duly elected or appointed officers who are
authorized to execute and deliver this Agreement and any certificate, document
or other instrument in connection herewith.
(c) Instruments of Transfer. Seller shall have delivered to Purchaser
a bill of sale and assignment ("Bill of Sale") substantially in the form annexed
as Exhibit E hereto, a Lease Assignment (if applicable) and any other documents
of transfer which Purchaser reasonably shall request in order to evidence and
effectuate the sale and assignment to Purchaser of the Assets, the Real Property
Leases, the Assumed Contracts and the consummation of all other transactions
contemplated by this Agreement and the other Transaction Documents.
(d) Consents. Seller shall have obtained, and delivered to Purchaser,
copies of the Required Consents applicable to it in form and substance
satisfactory to Purchaser.
(e) Opinion of Counsel. Purchaser shall have received an opinion or
opinions of counsel for Seller, as of the Closing Date, substantially in the
form attached hereto as Exhibit F.
(f) No Material Adverse Change. There shall have been no material
adverse change, nor any events which could have a material adverse change, in
the business, operations, prospects or financial or other condition of any
Restaurant or in the respective Assets or Real Properties from the date hereof
to the Closing Date (the "Interim Period") nor shall have there been, for all
Restaurants in the aggregate, a decrease of five percent or more in Gross Sales
or Gross Profit during the Interim Period, as compared with the same period
during the prior calendar year. For purposes hereof, "Gross Profit" shall mean
total Gross Sales reduced by the sum of food, and other goods. At Closing,
Purchaser shall have received a certificate dated the Closing Date in form
satisfactory to Purchaser signed by the Chief Executive Officer of Seller, and
attested to by the Secretary of Seller, to the foregoing effect.
(g) Environmental Due Diligence. Purchaser shall have completed its
environmental due diligence of the Restaurants, Real Property and Assets and
have received results which are satisfactory to Purchaser in its sole
<PAGE>discretion.
(h) Other Documents. Seller shall have delivered to Purchaser:
(i) the Assignments of its Real Property Leases, each Assumed
Contract and the Lease Assignment Consents;
(ii) the Easement Assignments;
(iii) a fully executed original counterpart of the Real Property
Leases;
(iv) receipts for funds paid to Seller's Agent by Purchaser;
(v) certificates dated no earlier than 30 days prior to the
Closing Date, from appropriate authorities in the State of its jurisdiction of
incorporation, as to the good standing of Seller;
and
(vi) all other documents, instruments and agreements required
to be delivered by Seller to Purchaser pursuant to this Agreement and the other
Transaction Documents.
(i) Senior Lender's Consent. Purchaser shall have received, if
necessary, the written consent of its senior lender, Heller Financial, Inc., to
the transactions contemplated hereby.
ARTICLE VI
DAMAGE OR DESTRUCTION
SECTION 6.1 Damage to or Destruction of One Restaurant. If prior to the
Closing Date, one of the Restaurants (hereafter referred to as a "Damaged
Restaurant") incurs substantial damage or is destroyed by fire or other casualty
(whether or not such destruction is covered by insurance) Purchaser shall have
the option, to be exercised within 30 days of the date of such fire or casualty,
to: (i) require Seller to promptly repair, rebuild and/or replace such Damaged
Restaurant at Seller's sole cost and expense; or (ii) elect to have the Damaged
Restaurant and the Real Property upon which such Restaurant is located, and all
other Assets relating to such Restaurant, withdrawn from this transaction,
whereupon the purchase price for the Assets shall be reduced by an amount equal
to the Damage Credit. In the event Purchaser and Seller's Agent are unable to
agree upon the Damage Credit, such dispute shall be submitted to arbitration
under the rules of the American Arbitration Association in New York, New York.
In the event Purchaser elects to require Seller to rebuild and/or replace such
Restaurant, the Closing shall occur pursuant to this Agreement except a portion
of the purchase price equal to the Damage Credit shall be held in escrow by the
attorneys for Purchaser pending completion of the repair and/or restoration of
the Damaged Restaurant. In the event such restoration or repair is not
completed within 90 days after the date Purchaser has elected to have Seller
proceed with the repair and/or restoration, Purchaser shall have an additional
option to withdraw the Damaged Restaurant from this transaction, exercisable
within 30 days from date Purchaser's additional option shall arise, whereupon
<PAGE>the Damage Credit shall immediately be paid to Purchaser.
SECTION 6.2 Damage to or Destruction of Two or More Restaurants. In the
event two or more Restaurants are destroyed or incur substantial damage prior
to the Closing, Purchaser shall have the option to terminate this Agreement,
which option shall be exercisable within 30 days from the date the option to
terminate shall arise. In the event Purchaser shall not elect to terminate this
Agreement, the provisions of Section 6.1 above shall apply to each Restaurant
so affected.
SECTION 6.3 Notification of Damage or Destruction. Seller's Agent shall
immediately notify Purchaser of any destruction or damage to any of the Real
Properties or Assets.
ARTICLE VII
INDEMNIFICATION
SECTION 7.1 Survival of Representations. All representations, warranties,
covenants and other agreements made by each party hereto in this Agreement shall
survive the Closing.
SECTION 7.2 Agreement to Indemnify. Subject to the conditions of this
Article VII:
(a) Purchaser hereby agrees to indemnify, defend and hold harmless
Seller and Seller's Agent from and against all demands, claims, actions or
causes of action, assessments, losses, damages, liabilities, costs and expenses,
including, without limitation, interest, penalties and reasonable attorney's
fees, costs and disbursements and expenses (collectively, "Damages"), asserted
against, resulting to, imposed upon or incurred by Seller directly or
indirectly, arising out of or resulting from (i) a breach of any representation,
warranty, covenant or agreement of Purchaser contained in or made pursuant to
this Agreement (including but not limited to enforcement of this Article VII),
the other Transaction Documents or the transactions contemplated hereby or
thereby or any facts or circumstances constituting such a breach; and (ii) any
indebtedness, obligation or liability assumed by Purchaser pursuant to Section
1.4(b) hereof and (iii) the operation, use or ownership of the Restaurants,
Assets, Real Property Leases, Real Properties, the Easements and Assumed
Contracts, during, or which have otherwise accrued from or otherwise relate to,
the period of time after the Closing Date; and
(b) Seller hereby agrees to indemnify, defend and hold harmless
Purchaser and its officers, directors and shareholders from and against all
Damages asserted against or incurred by Purchaser or such officers, directors
and shareholders, directly or indirectly, arising out of or resulting from: (i)
a breach of any representation, warranty, covenant or agreement of Seller
contained in or made pursuant to this Agreement (including but not limited to
enforcement of this Article VII, the other Transaction Documents or any facts
or circumstances constituting such a breach; (ii) any indebtedness, obligations
or liabilities of Seller including, but not limited to, any liability or
obligation set forth in Section 1.4(a), and the tax liabilities set forth in
Section 2.17 other than those expressly assumed by Purchaser hereunder, (iii)
<PAGE>a breach of or otherwise arising under any Environmental Law (whether now
or
hereafter in effect), to the extent the same arises out of any condition or
state of facts or otherwise relates to the period of time commencing on the date
of possession by the applicable Seller of the Real Property in question and
ending on the Closing Date; (iv) the operation, use or ownership of the
Restaurants, Assets, Real Properties, Real Property Leases, the Easements and
Assumed Contracts during, or which have otherwise accrued from or otherwise
relate to the period of time prior to the Closing Date; (v) Seller's failure to
pay and discharge all claims of creditors which may be asserted against
Purchaser by reason of Purchaser's waiver of compliance by Seller of the Bulk
Sales Laws; and (vi) any claims made with respect to any Plan.
SECTION 7.3 Conditions of Indemnification. The obligations and liabilities
of an indemnifying party under Section 7.2 with respect to Damages for which it
must indemnify another party hereunder (collectively, the "Indemnifiable
Claims") shall be subject to the following terms and conditions:
(a) The indemnified party shall give the indemnifying party notice of
any such Indemnifiable Claim which notice shall set forth in reasonable detail
the basis for and amount of the Indemnifiable Claim, and the circumstances
giving rise thereto. If the Indemnifiable Claim is a third-party claim, the
notice must contain a copy of any papers served on the indemnified party.
(b) If the Indemnifiable Claim is not a third-party claim, unless
within 30 days of receipt by the indemnifying party of notice of the
Indemnifiable Claim the indemnifying party sends written notice to the
indemnified party disputing the facts giving rise to the Indemnifiable Claim or
the amount of Damages stated in the notice, the Damages stated in the notice
shall become due and payable upon the expiration of such 30 day period. If,
however, the indemnifying party disputes the facts, giving rise to the
Indemnifiable Claim or the amount of Damages stated in the notice within such
30 day period and the dispute cannot be resolved within the following 90 days,
the dispute shall be submitted to arbitration under the rules of the American
Arbitration Association in New York, New York.
(c) If the Indemnifiable Claim is a third-party claim, the
indemnifying party may undertake the defense thereof at its own expense by
representatives of its own choosing reasonably satisfactory to the indemnified
party and will consult with the indemnified party concerning such defense during
the course thereof. If the indemnifying party, within 30 days after receipt of
notice of any Indemnifiable Claim (or such shorter period as is necessary to
prevent prejudice to the indemnified party, if such 30 day period would
prejudice the rights of the indemnified party), fails to defend, the indemnified
party will (upon further notice to the indemnifying party) have the right to
undertake the defense, compromise or settlement of such Indemnifiable Claim on
behalf of and for the account and risk of and at the expense of the indemnifying
party. In addition, if there is a reasonable probability that a third-party
Indemnifiable Claim may materially and adversely affect an indemnified party,
the indemnified party shall have the right, at its own cost and expense, to
defend, compromise or settle such Indemnifiable Claim.
(d) Anything in this Section 7.3 to the contrary notwithstanding,
neither the indemnifying party nor the indemnified party, as the case may be,
<PAGE>
may settle or compromise any Indemnifiable Claim or consent to entry of any
judgment in respect thereof, without the written consent of the other, which
consent may not be unreasonably withheld or delayed.
SECTION 7.4 Remedies Cumulative. The remedies provided in this Article VII
shall be cumulative and shall not preclude the assertion by any party hereto of
any other rights or the seeking of any other remedies against the other parties
hereto. Either party may, among its other remedies, offset the amount of any
Indemnifiable Claim which becomes due and payable to it or to its shareholders,
officers or directors, against any payments to be made or consideration to be
paid to the other pursuant to this Agreement or any of the other Transaction
Documents including, but not limited to, the Leases.
<PAGE>
<PAGE>
ARTICLE VIII
COVENANT NOT TO COMPETE
SECTION 8.1 Covenant Not to Compete. (a) Seller and Seller's Agent hereby
jointly and severally covenant and agree that it or he will not, directly or
indirectly, for its or his own account or as an employee, officer, director,
partner, joint venturer, shareholder, investor, consultant or otherwise:
(i) for a period of three years from the Closing Date own,
operate, manage, develop, or otherwise engage in any "fast service" restaurant
business or operation, in Durham County, or Wake County, North Carolina (the
"Restricted Area");
(ii) for a period of three years from the Closing Date, with
respect to Restaurants 755 and 2983 (the"Subject Restaurants"), do any thing or
allow parties within his or its control to do anything which materially
diminishes the value of the Subject Restaurants; or
(iii) for a period of one year following the Closing Date,
employ or solicit the employment or engagement by others of any executive or
management level employees of the Restaurants who are employed by or in any of
the Restaurants on the Closing Date.
(b) The provisions of Section 8.1(a) shall not preclude Seller,
Seller's Agent or any Affiliate of Seller or from owning and operating any
Burger King restaurant which is owned or operated by Seller, Seller's Agent or
any Affiliate of Seller as of the date of this Agreement.
SECTION 8.2 Geographic Area Reasonable; Reduction of Geographical Area and
Time Restriction. Seller and Seller's Agent acknowledge that the restricted
period of time and geographical area specified in Section 8.1 hereof are
reasonable. Notwithstanding anything herein to the contrary, if the period of
time or the geographical area specified under Section 8.1 hereof should be
determined to be unreasonable in any judicial proceeding, then the period of
time and territory of the restriction shall be reduced so that this Agreement
may be enforced in such area and during such period of time as shall be
determined to be reasonable.
SECTION 8.3 Effect of Breach. The parties acknowledge that any breach of
this Section 8 will cause Purchaser irreparable harm for which there is no
adequate remedy at law, and as a result, Purchaser shall be entitled to the
issuance by an arbitrator or court of competent jurisdiction of an injunction,
restraining order or other equitable relief in favor of itself restraining
Seller or Seller's Agent, as the case may be, from committing or continuing any
such violation. Any right to obtain an injunction, restraining order or other
equitable relief hereunder shall not be deemed a waiver of any right to assert
any other remedy Purchaser may have at law or in equity.
<PAGE> ARTICLE IX
TERMINATION
SECTION 9.1 Termination. This Agreement may be terminated and the
transactions contemplated hereby may be abandoned at any time prior to the
Closing:
(a) By mutual written consent of Seller's Agent and Purchaser;
(b) By Seller's Agent on behalf of Seller, if (i) there has been a
material misrepresentation or breach of warranty on the part of Purchaser in the
representations and warranties contained herein and such material
misrepresentation or breach of warranty, if curable, is not cured within 15 days
of written notice thereof from Seller's Agent; (ii) Purchaser has committed a
material breach of any covenant imposed upon it hereunder and fails to cure such
breach within 15 days of written notice thereof from Seller's Agent; or (iii)
any condition to Seller's obligations hereunder becomes incapable of fulfillment
through no fault of such parties and is not waived by such parties;
(c) By Purchaser, if (i) there has been a material misrepresentation
or breach of warranty on the part of Seller in the representations and
warranties contained herein and such material misrepresentation or breach of
warranty, if curable, is not cured within 15 days of written notice thereof from
Purchaser; (ii) Seller has committed a material breach of any covenant imposed
upon it hereunder and fails to cure such breach within 15 days of written notice
thereof, from Purchaser; or (iii) any condition to Purchaser's obligations
hereunder becomes incapable of fulfillment through no fault of Purchaser and is
not waived by Purchaser;
(d) By Purchaser in the circumstances provided in Section 4.10(d) or
6.2;
(e) By Seller's Agent on behalf of Seller, if the Closing shall not
have occurred on or before the Outside Date; provided that Seller's Agent shall
not be entitled to terminate this Agreement pursuant to this clause if the
failure of Seller or Seller's Agent to fulfill any of its obligations under this
Agreement shall have been the reason that the Closing shall not have occurred
on or before said date;
(f) By Purchaser, if the Closing shall not have occurred on or before
the Outside Date; provided that Purchaser shall not be entitled to terminate
this Agreement pursuant to this clause if the failure of Purchaser to fulfill
any of its obligations under this Agreement shall have been the reason that
the Closing shall not have occurred on or before said date; and
(g) By Seller's Agent on behalf of Seller, or by Purchaser, if there
shall be any law or regulation that makes consummation of the transactions
contemplated hereby illegal or otherwise prohibited or if any judgment,
injunction, order or decree enjoining Purchaser, or Seller, from consummating
the transactions contemplated hereby is entered and such judgment, injunction,
order or decree shall become final and nonappealable.
<PAGE> SECTION 9.2 Effect of Termination; Right to Proceed. In the event
that
a party wishes to terminate this Agreement pursuant to Section 9.1, it shall
give written notice thereof whereupon all further obligations of the parties
under the Agreement shall terminate without further liability of any party
hereunder except (i) to the extent that a party has made a material
misrepresentation hereunder or committed a breach of the material covenants and
agreements imposed upon it, hereunder; (ii) to the extent that any condition to
a party's obligations hereunder became incapable of fulfillment because of the
breach by a party of its obligations hereunder and (iii) that the agreements
contained in Sections 4.6, 10.3 and 10.4 and Article VII shall survive the
termination hereof. In the event that a condition precedent to its obligation
is not met, nothing contained herein shall be deemed to require any party to
terminate this Agreement, rather than to waive such condition precedent and
proceed with the transactions contemplated hereby. Notwithstanding anything to
the contrary contained herein, no party shall have any obligation to the other
hereunder arising out of the occurrence of an event or circumstance not within
the control of such party which event or circumstance resulted in a
representation or warranty of such party ceasing to be true.
ARTICLE X
MISCELLANEOUS
SECTION 10.1 Further Assurances. Each of the parties hereto shall without
further consideration execute and deliver to any other party hereto such other
instruments of transfer and take such other action as any party may reasonably
request to carry out the transactions contemplated by this Agreement and the
other Transaction Documents.
SECTION 10.2 Waiver and Amendment. No provisions of this Agreement may be
amended, supplemented or waived at any time except by a written instrument
executed by the parties hereto, or in the case of a waiver, by the waiving
party. No waiver of any of the provisions of this Agreement shall be deemed or
shall constitute a waiver of any other provision hereof (whether or not
similar), nor shall any such waiver constitute a continuing waiver unless
otherwise expressly provided.
SECTION 10.3 Remedies. In the event of a default under this Agreement or
the Transaction Documents, the aggrieved party may proceed to protect and
enforce its rights by a suit for damages, suit in equity action at law or other
appropriate proceeding, whether for specific performance, or for an injunction
against a violation of any terms hereof or thereof or in aid of the exercise of
any right, power or remedy granted thereby or by law, equity, statute or
otherwise. The foregoing shall include, but shall not be limited to, allowance
for recovery by the aggrieved party of all of its fees and expenses and
disbursements incurred by it in connection with the transactions contemplated
hereby and in the Transaction Documents, including, without limitation, the
reasonable fees and expenses of its counsel, accountants, agents and
representatives employed by it. No course of dealing and no delay on the part
of any party in exercising any right, power or remedy shall operate as a waiver
thereof or otherwise prejudice such party's rights, powers or remedies. No
right, power or remedy conferred hereby shall be exclusive of any other right,
<PAGE>power or remedy referred to herein or now or hereafter available at law,
in equity, by statute, or otherwise.
SECTION 10.4 Expenses. Except as expressly otherwise provided for in this
Agreement, all expenses incurred by or on behalf of the parties hereto in
connection with the authorization, preparation and consummation of this
Agreement and the other Transaction Documents, including without limitation all
fees and expenses of agents, representatives, counsel and accountants employed
by the parties hereto in connection with the authorization, preparation,
execution and consummation of this Agreement, shall be borne solely by the party
who shall have incurred the same.
SECTION 10.5 Entire Agreement. This Agreement and the other Transaction
Documents and the Exhibits and Schedules referred to herein and therein contain
the entire agreement among the parties with respect to the subject matter hereof
and supersede all prior arrangements or understandings with respect thereto.
SECTION 10.6 Definitions. (a) For the purposes of this Agreement:
(i) "Affiliate" shall mean, with respect to any Person, any
other Person that has a relationship with the designated Person whereby either
of such Persons directly or indirectly controls or is controlled by or is under
common control with the other of such Persons.
(ii) "Contract" shall mean any contract, agreement, purchase
order, sales order, guaranty, option, mortgage, promissory note, assignment,
lease, franchise, commitment, understanding or other binding arrangement,
whether written, oral, express or implied.
(iii) The term "Control", with respect to any Person, shall mean
the power to direct the management and policies of such Person, directly or
indirectly, by or through stock ownership, agency or otherwise, or pursuant to
or in connection with a Contract with one or more other Persons by or through
stock ownership, agency or otherwise; and the terms "controlling" and
"controlled" shall have meanings correlative to the foregoing.
(iv) The term "Governing Instruments" shall mean, with respect
to any Person, the certificate of incorporation, articles of incorporation,
bylaws, code of regulations or other organizational or governing documents
howsoever denominated of such Person.
(v) "Person" shall mean an individual, partnership, corporation,
joint venture, unincorporated organization, cooperative, or a governmental
entity or agency thereof.
(b) The following terms have been defined in the following sections
of this Agreement:
Defined Term Section No.
Actions 2.14(a)
Agreement Preamble
Assets 1.1
<PAGE>Assumed Contracts 1.5(b)
Bankruptcy Laws 2.3
Bill of Sale 5.3(c)
Bulk Sales Laws 4.8
Burger King 1.5(a)
Burger King Consents 2.5
Closing 15(a)
Closing Date 1.5(a)
Code 2.13(a)
Damage Credit 4.10(c)
Damaged Restaurant 6.1
Damages 7.2(a)
Easement Assignments 13(d)
Easements 1.3(d)
Environmental Company 4.10(a)
Environmentally Damaged
Restaurant 4.10(c)
Defined Term
Section No.
Environmental Laws 1.5(a)(vi)
ERISA 2.13(a)
Financial Statements 2.6
Franchise Agreements 11(c)
Gross Profit 5.3(f)
Gross Sales 3(c)(iii) of the Lease
Indemnifiable Claim 7.3
Interim Period 5.3(f)
Inventory 1.1(d)
Laws 2.14(b)
Lease Assignment 1.3(b)
Lease Assignment Consent 1.3(c)
Leased Assets 11(f)
Leased Real Properties Preamble
Leasehold Improvements 1.1(b)
Licenses 2.14(c)
Liens 1.1
Other Contracts 2.12(a)
Outside Date 1.5(a)
Phase I's 4.10(a)
Phase II's 4.10(b)
Plan 2.13(b)
Priced Inventory Report 1.2(a)(ii)
Purchase Price 1.2
Purchaser Preamble
Real Properties Preamble
Real Property Leases Preamble
Representatives 4.1(a)
Required Consents 2.5
Required Licenses 2.14(c)
Restricted Area 8.1(a)(i)
Restaurants Preamble
Restaurant Equipment 1.1(a)
<PAGE>Seller Preamble
Seller's Agent Preamble
Transaction Documents 2.1
SECTION 10.7 Interpretation. The article and section headings contained
in this Agreement are solely for the purpose of reference, are not part of the
Agreement of the parties and shall not in any way affect the meaning or
interpretation of this Agreement.
SECTION 10.8 Notices. All notices, consents, requests, instructions,
approvals and other communications provided for herein shall be validly given,
made or served in writing and delivered personally, sent by telecopier, Federal
Express or other reputable overnight courier or sent by certified or registered
mail, postage prepaid, return receipt requested, at the addresses set forth
below:
(a) if to Purchaser, to:
Carrols Corporation
968 James Street
Syracuse, New York 13203-6969
Telecopier Number: (315) 475-9616
Attention:Daniel T. Accordino,
President; and
Joseph A. Zirkman, Esq.
(b) if to Seller or Seller's Agent, to :
Michael Olander
KIN Restaurants, Inc.
P.O. Box 20249
Raleigh, NC 27619
or such other address as any party hereto may, from time to time, designate in
a written notice given in a like manner (which change of address shall only be
effective upon actual receipt of same by the other party). Notices shall be
deemed delivered: (i) three days after the date the same is postmarked if sent
by registered or certified mail; (ii) on the date the same is delivered
personally; (iii) the next business day after delivery to the courier service,
if sent by Federal Express or other reputable overnight courier and (iv) upon
receipt by the sender of telecopier confirmation, if sent by telecopier.
SECTION 10.9 Successors and Assigns. This Agreement shall be binding upon
and shall inure to the benefit of and be enforceable by the heirs, executor,
personal representatives, legal representatives, successors and assigns of the
parties hereto, and shall not be assignable by either party without the prior
written consent of the other party.
SECTION 10.10 Governing Law. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of North
Carolina without giving effect to North Carolina's conflict of laws rules.
SECTION 10.11 Consent to Jurisdiction; Service of Process. (a) Except with
respect to disputes wherein the parties have expressly agreed herein to submit
<PAGE>such dispute to arbitration, the parties hereto irrevocably submit to the
jurisdiction of the United States District Court for the Southern District of
New York over any dispute arising out of or relating to this Agreement or any
agreement or instrument contemplated hereby or entered into in connection
herewith or any of the transactions contemplated hereby or thereby, and each
party hereby irrevocably agrees that all claims in respect of such dispute or
proceeding shall be heard and determined in such court.
(b) Each of the parties hereto consents to process being served by any
party to this Agreement in any suit action or proceeding of the nature specified
in subsection 10.8 (a) above by mailing a copy thereof in accordance with the
provisions of Section 10.8 of this Agreement or in any other manner provided by
law.
SECTION 10.12 Severability. Whenever possible, each provision in this
Agreement shall be interpreted in such a manner as to be effective and valid
under applicable law. If any provision of this Agreement shall be prohibited
or invalid under applicable law, such provision shall be ineffective to the
extent of such prohibition or invalidity, without invalidating the remainder of
such provision or the remaining provisions of this Agreement.
SECTION 10.13 Purchaser's Designated Affiliate. Purchaser may designate
one or more of its wholly-owned subsidiaries or Affiliates to carry out all or
part of the transactions contemplated hereby to be carried out by Purchaser.
SECTION 10.14 Counterparts. This Agreement may be executed in one or more
counterparts each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
<PAGE>
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Purchase and
Sale Agreement to be executed as of the date first written above.
CARROLS CORPORATION
By: _____________________
Name: Joseph Zirkman
Title: Vice President
KIN RESTAURANTS, INC.
By: _____________________
Name:Michael Olander
Title:
The undersigned is signing this Agreement in his individual capacity solely
to agree to the provisions of Section 4.13 hereof.
___________________
Michael Olander
aqolandr.001
<PAGE>
<PAGE> EXHIBIT A TO PURCHASE AND SALE AGREEMENT
BK No.
ASSIGNMENT AND ASSUMPTION AGREEMENT
AGREEMENT made this day of , 1994 between KIN
RESTAURANTS, INC., a North Carolina Corporation having an office at 170 Wind
Chime Court, Raleigh, North Carolina ("Assignor"), and CARROLS CORPORATION, a
Delaware Corporation having an office at 968 James Street, Syracuse, New York
("Assignee").
Pursuant to a lease dated ("Lease")
("Landlord") demised to [Insert Seller Corporation] certain premises at
. Assignor desires to transfer, sell, assign, convey and
deliver to Assignee the Lease and Assignee desires to accept said transfer,
sale, assignment, conveyance and delivery.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants herein set forth and for $10.00 and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged,
Assignor hereby transfers, sells, assigns, conveys and delivers to Assignee all
of Assignor's right, title and interest in and to the Lease and any and all
options to renew or extend the same. Assignee hereby accepts the foregoing
transfer, sale, assignment, conveyance and delivery and assumes and agrees to
pay and perform all liabilities and obligations under the Lease arising from and
after this date. The assignment shall inure to the benefit of and be binding
upon the heirs, successors and assigns of the Assignor and the successors and
assigns of Assignee.
This Agreement is made in connection with a Purchase and Sale Agreement
dated , 1994 between Assignor as Seller, and Assignee, as
Purchaser, the terms, conditions, representations and warranties of which are
incorporated herein by reference and made part hereof.
This Agreement is subject to receipt of Landlord's consent to the
assignment of the Lease.
Assignor represents, covenants and warrants that this assignment is not and
shall not constitute a breach or default under the terms of the Lease.
ATTEST: CARROLS CORPORATION
BY:______________________
ATTEST: KIN RESTAURANTS, INC.
BY:______________________
<PAGE>
STATE OF NEW YORK )
COUNTY OF ONONDAGA ) SS:
On this day of , 1994 before me personally came Joseph
A. Zirkman, to me personally known, who, being by me duly sworn, did depose and
say that he resides at 8129 Solomon Seal Lane, Manlius, New York 13104; that
he is a Vice President of Carrols Corporation, the corporation described in and
which executed the Assignment; that he knows the seal of said corporation; that
the seal affixed to said instrument is such corporate seal; that it was so
affixed by order of the Board of Directors of said corporation; and that he
signed his name thereto by like order.
_______________________
Notary Public
STATE OF )
COUNTY OF ) SS:
On this day of , 1994 before me personally came
to me personally known, who, being by me duly sworn, did
depose and say that he resides at ; that he is the
of , the corporation described in
and which executed the Assignment; that he knows the seal of said corporation;
that the seal affixed to said instrument is such corporate seal; that it was so
affixed by order of the Board of Directors of said corporation; and that he
signed his name thereto by like order.
_______________________
Notary Public
<PAGE>
<PAGE> EXHIBIT B TO PURCHASE AND SALE AGREEMENT
BK No.
CONSENT AND ESTOPPEL CERTIFICATE
, 1994
Carrols Corporation
968 James Street
Syracuse, New York 13203
Re: ("Premises") Lease dated
, amended ("Lease") now between [Insert Seller
corporation] ("Lessee") and ("Lessor")
Gentlemen:
It is our understanding that the Lessee has agreed to assign the referenced
lease (the "Lease") to Carrols Corporation ("Carrols") and as a condition
precedent thereto is required to provide you with this Certificate from the
undersigned.
In respect to the Lease, the undersigned certifies and acknowledges as
follows:
1. The undersigned now owns the Premises and is the Lessor under the
Lease. Lessee is now the Lessee under the Lease.
2. The Lease commenced on , and its term is due
to expire on , . [The Lease allows Lessee to renew
same for an additional term of years]. The present minimum rent
paid to Lessor under the Lease is $ . The Lease is the entire
agreement between the parties as to the Premises.
3. As of this date, the Lease is in full force and effect in accordance
with its terms and has not been modified, amended or supplemented in any way
except as set forth in this letter. To the best of Lessor's knowledge, Lessee
is not in default under the Lease, and no act has occurred which with the
passing of time, or the giving of notice, or both will constitute a default
under the Lease.
4. Lessee is given permission to assign the Lease to Carrols provided
Lessee remains liable for any breach of the Lease which occurs after the
assignment is made.
5. Carrols is given permission to grant a security interest in its
interest under the Lease by way of a leasehold mortgage and/or a collateral
assignment to a financial institution ("Secured Party") to whom Carrols' Burger
King Franchise Agreement will also be collectively assigned. In the event
Secured Party exercises its remedies against Carrols' interest under the Lease,
Secured Party may assign the Lease to Burger King Corporation or to an approved
Burger King franchisee.
<PAGE> 6. Landlord will give Secured Party notice of any default by
Carrols
under the Lease simultaneously with the giving of such notice to Carrols
provided Landlord is provided written notice of the name and address of the
Secured Party. Secured Party, if it so elects, may cure any default of Carrols
within the time permitted in the Lease or, if no cure period is provided in the
Lease, 10 days after its receipt of such notice.
7. The undersigned will not accept any surrender, cancellation or
modification of the Lease without first giving 10 days' written notice thereof
to Secured Party.
8. Landlord agrees that the personal property and trade fixtures of
Carrols (including inventory and equipment) located at the Premises
(collectively "Collateral") will not be deemed "fixtures" and will remain the
personal property of Carrols subject to Secured Party's security interest.
Landlord will not assert any statutory or possessory liens or rights of
distraint against the Collateral or take any other action with respect thereto
and agrees that all of its rights thereto are subordinate to the rights, claims
and security interests therein in favor of the Secured Party to the full extent
that the same secures or hereafter may secure any and all obligations or
indebtedness of every kind, now existing or hereafter arising, of Carrols to
Secured Party.
9. Secured Party and its agents and representatives, upon reasonable
prior notice, but without the consent of Landlord, may enter the Premises and
remove and take possession of the Collateral at any time in accordance with the
security agreements.
10. The provisions hereof shall be irrevocable and remain in full force
and effect until Carrols has fully paid and performed all of its obligations to
Secured Party under all agreements, instruments and documents evidencing such
obligations, and under all security agreements, present and future, and any
extensions, modifications and renewals thereof at any time made, and until all
obligations, if any, of Secured Party to extend loans or financial
accommodations to Carrols shall have terminated.
11. This Consent and Estoppel Certificate shall be binding upon and inure
to the benefit of the parties herein named and their respective assigns and
successors in interest.
Very truly yours,
by:____________________________
Title:
<PAGE>
<PAGE> EXHIBIT C TO THE PURCHASE AND SALE AGREEMENT
BK#
CARROLS CORPORATION
Assumption Agreement
THIS ASSUMPTION AGREEMENT, made this ____ day of ,
1994, by and among KIN RESTAURANTS, INC., a North Carolina corporation
("Seller"), and CARROLS CORPORATION, a Delaware corporation ("Purchaser"):
W I T N E S S E T H:
WHEREAS, this Assumption Agreement is being executed and delivered
pursuant to that certain Purchase and Sale Agreement, dated as of (the
"Purchase Agreement"), among Purchaser, Seller, and Michael Olander,as agent for
Seller (terms used herein without definition shall have the respective meanings
set forth in the Purchase Agreement);
WHEREAS, subject to the provisions of the Purchase Agreement, Seller
has agreed to sell, assign, transfer and convey to Purchaser all of Seller's
right, title and interest in and to the Assets, subject to Purchaser's
assumption of the Assumed Contracts (as hereinafter defined); and
NOW, THEREFORE, in consideration of the execution and delivery of the
Purchase Agreement and the Bill of Sale and Assignment dated the date hereof and
for other good and valuable consideration, the receipt and sufficiency of which
hereby are acknowledged, the parties agree as follows:
1. From and after the date hereof, Purchaser hereby assumes and
agrees to pay, perform, or discharge, as the case may be, and hereby agrees to
indemnify and hold Seller harmless against, all of the rights, obligations and
liabilities of Seller arising on or after 6:00 A.M. on the date hereof (the
"Closing Date") under each of the Contracts set forth on Schedule A hereto (the
"Assumed Contracts").
2. Anything herein to the contrary notwithstanding, Seller shall
remain liable for, and hereby agrees to retain and discharge, and to indemnify
and hold harmless Purchaser from and against, any and all liabilities of Seller
or its Affiliates not being expressly assumed by Purchaser hereunder or under
Section 1.5 of the Purchase Agreement, including, without limitation, any
liability of Seller or any Affiliate of Seller (i) arising from, or out of, the
ownership or operations or use of, or incurred in connection with, any of its
respective Affiliates in connection with, the Restaurants, Assets, Real
Property, Real Property Lease or the Assumed Contracts on or prior to, or
relating to any time period prior to the Closing Date; (ii) arising from or by
reason of the transactions contemplated by the Purchase Agreement, including,
but not limited to Federal, state or local income taxes, transfer taxes,
<PAGE>and other taxes, if any, arising from or by reason of the receipt of the
consideration for the Assets; (iii) with respect to any wages, vacation,
severance or sick pay or any rights under any stock option, bonus or other
incentive arrangement that have accrued as of the Closing Date; (iv) with
respect to any employment, consulting or similar arrangement to which Seller is
a party or for which Seller is responsible; (v) with respect to any "employee
benefit plan" as defined in Section 3(3) of Employee Retirement Income Security
Act of 1974, as amended ("ERISA") including multi-employer plans as defined in
Section 3(37) of ERISA whether arising before, on or after the Closing Date; or
(vi) under any Laws relating to public health and safety and pollution or
protection of the environment, including, without limitation, those relating to
emissions, discharges, releases or threatened releases of pollutants,
contaminants, or hazardous or toxic materials or wastes into ambient air,
surface water, ground water, or land, or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport, or
handling of pollutants, contaminants or hazardous or toxic materials or wastes
or any materials defined or categorized by any of the above as "Hazardous
Materials", "Hazardous Substances", or similar or related designations.
3. This Assumption Agreement is delivered pursuant to, and is
subject to, the Purchase Agreement.
4. This Assumption Agreement shall be binding upon and inure to the
benefit of the parties hereto, their respective successors and assigns.
IN WITNESS WHEREOF, the parties have duly executed this Assumption
Agreement this ____ day of , 1994.
PURCHASER:
CARROLS CORPORATION
By:____________________
Name:
Title:
ACKNOWLEDGED AND AGREED
TO BY:
SELLER:
KIN RESTAURANTS, INC.
____________________
By:
Name:
Title:
<PAGE>
EXHIBIT D TO THE PURCHASE AND SALE AGREEMENT
[FORM OF OPINION OF COUNSEL TO
CARROLS CORPORATION]
, 1994
To Seller
Ladies and Gentlemen:
I am the general counsel for Carrols Corporation, a Delaware
corporation ("Purchaser"), in connection with the transactions contemplated by
that Purchase and Sale Agreement dated as of [ , 1994] (the
"Purchase Agreement") among Purchaser, Michael Olander (the "Seller's Agent")
and KIN Restaurants, Inc. ("Seller"). Terms used and not otherwise defined
herein shall have the respective meanings ascribed to such terms in the Purchase
Agreement. This opinion is being furnished to you, at the request of Purchaser,
pursuant to Section 5.2(e) of the Purchase Agreement.
In connection with rendering the opinions hereinafter set forth, I
have examined the originals, or copies certified or otherwise identified to my
satisfaction as being true copies, of the following:
(a) The Purchase Agreement;
(b) The various assumption instruments executed by Purchaser on the
date hereof; and
(c) such certificates of public officials, corporate documents and
records, and other certificates to the extent that the same were made available
to me for such examination, and have made such investigation of law, as I have
deemed necessary as a basis for the opinions expressed herein.
The foregoing agreements and instruments together with each other
agreement, document, certificate or instrument executed or delivered by
Purchaser in connection with the consummation of the transactions contemplated
by the Purchase Agreement (the "Contemplated Transactions") are referred to
herein, collectively, as the "Transaction Documents".
For purposes of the opinions expressed herein, with your permission,
I have assumed, without any independent investigation or verification of any
<PAGE>kind: (i) the genuineness of all signatures, the authenticity and
completeness of all documents submitted to me as originals and the conformity
to original
documents and completeness of all documents submitted to me as copies; (ii) that
all Transaction Documents have been duly authorized, executed and delivered by
the parties thereto other than Purchaser; and (iii) that the certificates of
public officials dated earlier than the date of this letter remain accurate from
such earlier date through and including the date of this letter.
As to various questions of fact material to my opinion, I have relied
upon the representations made in the Transaction Documents and upon inquiries
and certificates of officers or representatives of Purchaser. When a statement
herein is qualified by "to my knowledge" or similar language, it is intended to
indicate that, during the course of my representation of Purchaser, no
information that would give me actual knowledge of the inaccuracy of such
statement has come to my attention.
I am a member of the bar of the State of New York and do not purport
to be an expert in, or to express any opinion concerning, any law other than the
laws of the State of New York, the General Corporation Law of the State of
Delaware and the Federal law of the United States of America. No opinion is
expressed as to the laws of any other jurisdiction or the effect which the laws
of any other jurisdiction might have on the subject matter of the opinions
expressed herein under conflict of laws principles or otherwise.
Based upon and subject to the foregoing and the qualifications set
forth below, I am of the opinion that:
1. Purchaser is a corporation validly existing and in good standing
under the laws of the State of Delaware and has all requisite corporate powers
and all governmental licenses, authorizations, consents and approvals required
to carry on its business as now conducted.
2. Purchaser has full corporate power and authority to enter into the
Transaction Documents to which it is a party and to carry out the Contemplated
Transactions.
3. The execution, delivery and performance of the Transaction
Documents to which Purchaser is party have been duly authorized by all requisite
corporate action.
4. Each Transaction Document to which Purchaser is a party has been
duly and validly executed and delivered by it and constitutes the legal, valid
and binding obligation of Purchaser, enforceable against Purchaser in accordance
with its terms except as may be limited by the Enforcement Exceptions (as
hereinafter defined).
5. Neither the execution, delivery or performance of any Transaction
Document by Purchaser, nor the consummation of the Contemplated Transactions
will, with or without the giving of notice or the passage of time or both,
conflict with, result in a default or loss of rights (or give rise to any right
of termination, cancellation or acceleration) under, or result in the creation
of any Lien, pursuant to: (a) any provision of the certificate of incorporation
or by-laws of Purchaser; (b) to my knowledge, any material note, contract,
<PAGE>agreement or other instrument or obligation to which Purchaser is a party
or by
which Purchaser or its properties may be bound or affected; (c) any law,
ordinance, rule or regulation to which Purchaser is subject or by which its
properties may be bound or affected; or (d) to my knowledge, any judgment, award
or order to which Purchaser is subject or by which its properties may be bound
or affected.
6. The execution, delivery and performance of the Transaction
Documents to which Purchaser is a party do not require the consent, approval or
authorization of or license from: (a) any governmental authority or other
regulatory body or (b) to my knowledge, any other Person, except for such
consents, approvals or authorizations that have been obtained and which are in
full force and effect.
The validity and enforceability of the rights and remedies set forth
in the Transaction Documents are subject to bankruptcy, insolvency,
reorganization, fraudulent conveyance, moratorium or similar laws affecting the
enforcement of creditors' rights and remedies generally and the application of
principles of equity whether in an action at law or a proceeding in equity. In
addition, I express no opinion regarding the availability of the remedy of
specific performance, or of any other equitable remedy or relief to enforce any
right under any agreement or document. All of the above have hereinbefore been
referred to as the "Enforcement Exceptions".
This opinion is being furnished for the sole benefit of the named
addressee and its counsel, and may not be relied upon by any other Person or
published, quoted or otherwise used for any other purpose without my prior
written consent. This opinion is based on the law (and interpretations thereof)
and facts existing as of the date hereof. I disclaim any obligation to advise
you of any changes therein that may be brought to my attention after the date
hereof.
Very truly yours,
<PAGE>
<PAGE> EXHIBIT E TO PURCHASE AND SALE AGREEMENT
[NAME OF SELLER]
Bill of Sale and Assignment
KIN Restaurants, Inc., a North Carolina corporation ("Seller"), for
and in consideration of sums duly paid by CARROLS CORPORATION, a Delaware
corporation ("Purchaser"), and for other good and valuable consideration, the
receipt and sufficiency of which hereby are acknowledged, pursuant to that
certain Purchase and Sale Agreement dated as of , 1994 (the
"Purchase Agreement") among Purchaser, Seller, and Michael Olander as agent for
the Seller, DOES HEREBY sell, assign, transfer, and convey and deliver to
Purchaser all of the following assets used or located in or held for use in
connection with the restaurant having a Burger King franchise number of [
] (the "Restaurant") operated by Seller (collectively, the "Assets") free
and clear of all mortgages, liens, security interests, encumbrances, equities,
claims, pledges, charges, liabilities and other obligations of whatever kind and
character:
(a) Restaurant Equipment. All of the machinery, equipment,
furnishings, supplies, uniforms, spare equipment parts and all other personal
property (other than Inventory, as hereinafter defined) owned by Seller and used
or held for use in, or in connection with, the operation of the Restaurants,
including but not limited to the assets set forth in Schedule 1.1 (a) annexed
hereto;
(b) Leasehold Improvements. All fixtures and other leasehold
improvements owned by Seller in the Restaurants;
(c) Franchise Agreements. The Burger King Franchise Agreement
for the Restaurant, as more fully set forth in Schedule 1.1 (c) annexed hereto;
(d) Inventories. All of the food, related paper products and
promotional items owned by Seller or otherwise used or held for use in or in
connection with the business being conducted at the Restaurants;
(e) Leased Assets. All of the right, title and interest of
Seller in any item of personal property which is not owned by it but is leased
by it or otherwise is used or held for use, in or in connection with the
business being conducted at the Restaurants, including but not limited to, the
assets set forth on Schedule 1.1 (e) annexed hereto; and
(f) Miscellaneous Assets. All of the right, title and interest
of Seller in any other asset or property owned, leased, subleased, used or held
for use in, or in connection with the business being operated at the
Restaurants, including, but not limited to, contract rights and other general
intangibles.
TO HAVE AND TO HOLD all of the Assets hereby sold, assigned,
transferred, conveyed and delivered to Purchaser, its successors and assigns,
for its and their own use and behalf forever.
<PAGE>
This Bill of Sale and Assignment is delivered pursuant to, and is
subject to, the Purchase Agreement.
Seller shall cooperate with Purchaser and shall take such further
action and shall execute and deliver such further documents as may be requested
by Purchaser, its successors and assigns, to implement the provisions and
purposes of this Bill of Sale and Assignment.
IN WITNESS WHEREOF, Seller had duly caused this Bill of Sale and
Assignment to be executed this day of , 1994.
KIN Restaurants, Inc.
By:______________________
Name: Michael Olander
Title: President
<PAGE>
<PAGE> EXHIBIT F TO PURCHASE AND SALE AGREEMENT
[OPINION OF COUNSEL TO SELLER]
, 1994
Carrols Corporation
968 James Street
Syracuse, NY 13203
Ladies and Gentlemen:
We have acted as counsel for Michael Olander (the "Seller's Agent")
and KIN Restaurants, Inc. (the "Seller"), in connection with the transactions
contemplated by that Asset Purchase Agreement dated as of [ ,
1994] (the "Purchase Agreement") among Seller, Seller's Agent and Carrols
Corporation, a Delaware corporation (the "Buyer"). Terms used and not
otherwise defined herein shall have the respective meanings ascribed to such
terms in the Purchase Agreement. This opinion is being furnished to you, at the
request of Seller and Seller's Agent, pursuant to Section 5.3(e) of the Purchase
Agreement.
In connection with rendering the opinions hereinafter set forth, we
have examined the originals, or copies certified or otherwise identified to our
satisfaction as being true copies, of the following:
(a) The Purchase Agreement;
(b) The Bill of Sale ("Bill of Sale") and other instruments of
conveyance, transfer and assignment executed by Seller on the date hereof; and
(c) such certificate of public officials, corporate documents and
records, and other certificates to the extent that the same were made available
to us for such examination, and have made such investigation of law, as we have
deemed necessary as a basis for the opinions expressed herein.
The foregoing agreements and instruments together with each other
agreement, document, certificate or instrument executed or delivered by Seller's
Agent or Seller in connection with the consummation of the transactions
contemplated by the Purchase Agreement (the "Contemplated Transactions") are
referred to herein, collectively, as the "Transaction Documents".
For purposes of the opinions expressed herein, with your permission,
we have assumed, without independent investigation or verification of any kind:
(i) the genuineness of all signatures, the authenticity and completeness of all
documents submitted to us as originals and the conformity to original documents
and completeness of all documents submitted to us as copies; (ii) that all
Transaction Documents have been duly authorized, executed and delivered by
Buyer; and (iii) that the certificates of public officials dated earlier than
<PAGE>the date of this letter remain accurate from such earlier date through and
including the date of this letter.
As to various questions of fact material to our opinion, we have
relied upon the representations made in the Transaction Documents and upon
inquiries and certificates of Seller's Agent and of the officers or
representatives of Seller. When a statement herein is qualified by "to our
knowledge" or similar language, it is intended to indicate that, during the
course of our representation of Seller and Seller's Agent, no information that
would give us actual knowledge of the inaccuracy of such statement has come to
our attention.
We are members of the bar of the State of North Carolina and do not
purport to be experts in, or to express any opinion concerning, any law other
than the laws of the State of North Carolina and the Federal law of the United
States of America. No opinion is expressed as to the laws of any other
jurisdiction or the effect which the laws of any other jurisdiction might have
on the subject matter of the opinions expressed herein under conflict of laws
principles or otherwise. In this connection, we have assumed, with your
permission, that the Transaction Documents and the Assumed Contracts were
governed by the laws of the State of North Carolina.
Based upon and subject to the foregoing and the qualifications set
forth below, we are of the opinion that:
1. Seller is a corporation validly existing and in good standing
under the laws of the jurisdiction of its incorporation and has all requisite
corporate powers and all governmental licenses, authorizations, consents and
approvals required to carry on its business as now conducted. Seller is duly
qualified to do business as a foreign corporation and is in good standing in
each jurisdiction where the character of the property owned or leased by it or
the nature of its activities makes such qualification necessary, except for
those jurisdictions where the failure to be so qualified would not, individually
or in the aggregate, have a material adverse effect on the business, properties,
financial condition or the results of operations of Seller.
2. Seller and Seller's Agent each has full corporate power and
authority or capacity, as the case may be, to enter into the Transaction
Documents to which it or he is a party and to carry out the Contemplated
Transactions.
3. The execution, delivery and performance of the Transaction
Documents to which Seller is party have been duly authorized by all requisite
corporate action.
4. Each Transaction Document to which a Seller or Seller's Agent is
a party has been duly and validly executed and delivered by it or him and
constitutes the legal, valid and binding obligation of Seller and Seller's
Agent, respectively, enforceable against each of them in accordance with its
terms except as may be limited by the Enforcement Exceptions (as herein-after
defined).
5. Neither the execution, delivery or performance of any Transaction
Document by a Seller or Seller's Agent, nor the consummation of the Contemplated
<PAGE>Transactions will, with or without the giving of notice or the passage of
time
or both, conflict with, result in a default or loss of rights (or give rise to
any right of termination, cancellation or acceleration) under, or result in the
creation of any Lien, pursuant to: (a) any provision of the Governing
Instruments of Seller; (b) to our knowledge, any material note, contract,
agreement or other instrument or obligation to which Seller or Seller's Agent
is a party or by which Seller or Seller's Agent or their respective properties
may be bound or affected; (c) any law, ordinance, rule or regulation to which
Seller or Seller's Agent is a party or by which their respective properties may
be bound or affected; or (d) to our knowledge, any judgment, award or order to
which Seller or Seller's Agent is a party or by which their respective
properties may be bound or affected.
6. The execution, delivery and performance of the Transaction
Documents to which Seller or Seller's Agent is a party do not require the
consent, approval or authorization of or license from or registration or filing
with: (a) any governmental authority or other regulatory body or (b) to our
knowledge, any other Person, except for such consents or approvals that have
been obtained and which are in full force and effect.
7. The Bill of Sale and other instruments of conveyance, transfer and
assignment executed by Seller are in form sufficient to convey to Buyer all of
Seller's right, title and interest in and to the Assets. To our knowledge, the
Assets will be conveyed to Buyer free and clear of all Liens.
8. Except as disclosed in the Purchase Agreement, there is no claim,
legal action, counterclaim, suit, arbitration, governmental investigation or
other legal, administrative or tax proceeding, nor any order, decree or judgment
in progress, pending or threatened against or relating to Seller or their
respective Assets.
9. To our knowledge, Seller is in compliance in all material respects
with all applicable laws, regulations and administrative orders of the United
States and the State of North Carolina, the non-compliance with which would have
a materially adverse effect upon the Assets or the Contemplated Transactions.
10. Each Assumed Contract is valid, subsisting, in full force and
effect, binding upon and enforceable against the Seller and, to our knowledge,
on the other parties thereto, in accordance with their respective terms and, to
our knowledge, neither the Seller nor any other party to any such Assumed
Contract is in default thereunder in any material respect nor, to our knowledge,
does any condition exist that with notice or lapse of time or both would
constitute a material default thereunder.
11. Based solely upon a review of the stock transfer ledgers and
minute books of Seller, Michael Olander is the record and, to our knowledge,
beneficial owners of all of the issued and outstanding shares of capital stock
of Seller.
The validity and enforceability of the rights and remedies set forth
in the Transaction Documents and the Assumed Contracts are subject to
bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium or
similar laws affecting the enforcement of creditors' rights and remedies
<PAGE>generally and the application of principles of equity whether in an action
at law or a proceeding in equity. In addition, we express no opinion regarding
the
availability of the remedy of specific performance, or of any other equitable
remedy or relief to enforce any right under any agreement or document. All of
the above have herein-before been referred to as the "Enforcement Exceptions".
This opinion is being furnished for the sole benefit of the named
addressee, its counsel and any Person providing financing to Buyer and may not
be relied upon by any other Person or published, quoted or otherwise used for
any other purpose without our prior written consent. This opinion is based on
the law (and interpretations thereof) and facts existing as of the date hereof.
We disclaim any obligation to advise you of any changes therein that may be
brought to our attention after the date hereof.
Very truly yours,
<PAGE>
<PAGE>
SCHEDULE A
BK Number Address
399 1200 W. Club Boulevard
Durham, NC
755 349 Tyron Road
Tryon Hills Shopping Ctr.
Raleigh, NC
2983 6500 Glenwood Road
Raleigh, NC
<PAGE>
<PAGE> SCHEDULE 1.1(a)
[To be provided by Seller]
<PAGE>
<PAGE> SCHEDULE 1.1(e)
NONE
<PAGE>
<PAGE> SCHEDULE 1.2(c)
Franchises $1,210,000
Equipment $ 300,000
<PAGE>
<PAGE> SCHEDULE 1.3(a)(ii)
Annual
Lease Expiration Option Minimum Percentage
BK Number Landlord Date Date Terms Rent Rent
_________ ________ _____ __________ ______ _______ __________
399 BKC 8/23/74 8/29/2014 n/a $54,185.00 8-1/2%
over
$637,500.
755 Eden 10/1/78 9/30/98 4-5 yr. $36,666. 6-1/2%
Services, *renewal over
Inc. CPI 118% $564,092.
inc.
2983 BKC 7/26/80 7/25/2000 n/a $61,550 8-1/2%
YR. 11-15 over
$724,118.
$65,853 8-1/2%
YR. 16-20 over
$774,741.
<PAGE>
<PAGE> SCHEDULE 1.3(c)
Easement for BK #2983, 6500 Glenwood Road, Raleigh, NC as more particularly
set forth on the attached. [To be provided by Seller]
<PAGE>
<PAGE> SCHEDULE 2.5
Consent from Burger King Corporation
Consent from B & W Partners, Ltd. for assignment of Lease for Store #755
<PAGE>
<PAGE> SCHEDULE 2.6(b)
NONE
<PAGE>
<PAGE> SCHEDULE 2.7 (a)
None, except as set forth in Successor Checklist for Restaurant No. 755 dated
10/19/93
(Copy Annexed Hereto)
<PAGE>
<PAGE> SCHEDULE 2.9(a)
NONE
[To be attached based upon Title reports subject to approval of Purchaser]
<PAGE>
<PAGE> SCHEDULE 2.9(b)
See copies of letters from City of Raleigh with respect to Burger King
Restaurant #755 and #2983 and the Durham City-County Inspections Department with
respect to Burger King Restaurant #399
<PAGE>
<PAGE> SCHEDULE 2.11(b)
NONE
<PAGE>
<PAGE> SCHEDULE 2.11(c)
[To be provided by Seller after contract is executed, but prior to closing]
[Names of Managers and Assistant Managers to be attached prior to execution]
<PAGE>
<PAGE>
SCHEDULE 2.12
See Schedule of Existing Contracts attached hereto and made part hereof.
1<PAGE>
<PAGE> SCHEDULE 2.13 (a)
NONE
<PAGE>
<PAGE> SCHEDULE 2.13 (b)
See Group Benefit Plan of KIN Restaurants, Inc./MOR Restaurants revised August
1, 1993 and MedCost Carolina Preferred Care Directory of Hospitals and
Facilities of June 1993.
<PAGE>
<PAGE> SCHEDULE 2.14(a)
KIN Restaurants, Inc. Before the Property Tax Commission, Case No. 92 PTC
507. From the Valuation and Taxation by Wake County for Tax Years 1987 - 1992
with respect to Burger King Restaurant #755 and 2983.
<PAGE>
<PAGE> SCHEDULE 2.14(c)
#399 N.C. State Privilege License
City of Durham City Privilege
License
N.C. Dept. of Agriculture
N.C. Dept. of Environment,
Health & Natural Resources
#755 N.C. State Privilege License
City of Raleigh City Privilege
License
N.C. Dept. of Agriculture
N.C. Dept. of Environment,
Health & Natural Resources
#2983 N.C. State Privilege License
City of Raleigh City Privilege
License
N.C. Dept. of Agriculture
N.C. Dept. of Environment,
Health & Natural Resources
<PAGE>
<PAGE> SCHEDULE 2.15
See January 1994 Environmental Site Assessment for Burger King Restaurant
located at 1200 West Club Boulevard, Durham, North Carolina prepared by Senior
Environmental Consultants, Inc.
See January 1994 Environmental Site Assessment for Burger King Restaurant
located at 6500 Glenwood Avenue, Raleigh, North Carolina prepared by Senior
Environmental Consultants, Inc.
See January 1994 Environmental Site Assessment for Burger King Restaurant
located at 349 Tyron Road, Raleigh, North Carolina prepared by Senior
Environmental Consultants, Inc.
<PAGE>
POLLO TROPICAL
AREA DEVELOPMENT AGREEMENT
<PAGE>
<PAGE>
EXHIBITS
1. DESIGNATED TERRITORY
2. DEVELOPMENT SCHEDULE
3. APPROVED FORM OF FRANCHISE AGREEMENT<PAGE>
<PAGE>
POLLO TROPICAL
AREA DEVELOPMENT AGREEMENT
This Area Development Agreement ("this Agreement"), made this 1st day of
January, 1995, by and between POLLO FRANCHISE, INC., a Florida corporation,
having its principal place of business at 7300 N. Kendall Drive, Eighth Floor,
Miami, Florida, 33156 ("Franchisor") and CARROLS CORPORATION, having its
principal place of business with a street address at 968 James Street, Syracuse,
New York 13203 ("Developer").
WITNESSETH:
WHEREAS, Franchisor, as a result of the expenditure of time, skill,
effort and money has developed and owns a unique system of company-owned and
franchised restaurants ("System"), identified by the mark "POLLO TROPICAL",
relating to the establishment, development and operation of restaurant
facilities (i) providing on-premises dining as well as carry-out and drive-thru
services, featuring marinated, grilled chicken, other entrees, salads, desserts
and other food and beverage products, all prepared in accordance with specified
recipes and procedures ("Menu Items"); (ii) has developed and continues to
further develop a proprietary line of food products as part of the Menu Items
including special sauces and marinades, special dessert recipes and special
spice mixes ("Trade Secret Food Products"); and (iii) may develop and offer and
sell to Developer for retail sale to its customers an assortment of
private-labeled apparel and related products and merchandise bearing the POLLO
TROPICAL trademark and logo ("POLLO TROPICAL Trademarked Product Lines"), all
of which may be changed by Franchisor from time to time; and
WHEREAS, the distinguishing characteristics of the System include,
without limitation, distinctive exterior and interior layout, design and color
scheme; exclusively designed signage, decorations, furnishings and materials;
special recipes, formulae, menus and food and beverage designations; Trade
Secret Food Products; the POLLO TROPICAL Confidential Operations Manual; the
POLLO TROPICAL Proprietary Software Program, if developed; POLLO TROPICAL
Trademarked Product Lines; food and beverage storage, preparation and service
procedures and techniques; operating procedures for sanitation and maintenance;
and methods and techniques for inventory and cost controls, record keeping and
reporting, personnel management, purchasing, sales promotion and advertising;
all of which may be changed, improved and further developed by Franchisor from
time to time; and
WHEREAS, the parties acknowledge that Developer is currently engaged in
the development of restaurants other than Pollo Tropical restaurants and that
such restaurants may incorporate certain elements of the Pollo Tropical System
which are not unique or specific to the Pollo Tropical System; and
WHEREAS, Franchisor's affiliate, POLLO TROPICAL, INC. (f/k/a "EL POLLO
TROPICAL, Inc."), is the owner of the right, title and interest together with
all the goodwill connected thereto in and to the trade names, service marks and
trademarks "POLLO TROPICAL", "POLLO TROPICAL, plus the design", associated logos
and commercial symbols, and such other trade names, service marks, and
trademarks as are now designated (and may hereinafter be designated by
<PAGE>Franchisor in writing) as part of the System ("Mark(s)") and has licensed
the
use of such Marks to Franchisor with the right to sub-license others to use the
Marks. Franchisor and Franchisor's affiliates continue to develop, use and
control such Marks for the benefit and use of themselves and franchisees in
order to identify for the public the source of food products and services
marketed thereunder and to represent the System's high standards of quality
regarding Menu Items, operations, food products, ingredients, appearance and
service; and
WHEREAS, Franchisor grants to qualified persons a franchise to own and
operate POLLO TROPICAL businesses offering food products and services authorized
and approved by Franchisor and utilizing the System and Marks. Developer
desires to secure an exclusive area franchise to operate POLLO TROPICAL
businesses using the System and Marks and has applied for an exclusive area
franchise, which application has been approved by Franchisor in reliance upon
all of the representations made therein; and
WHEREAS, Developer understands and acknowledges the importance of
Franchisor's high and uniform standards of quality and service and the necessity
of operating the POLLO TROPICAL business in conformity with Franchisor's
standards and specifications; and
WHEREAS, Franchisor expressly disclaims the making of and Developer
acknowledges that it has not received nor relied upon any warranty or guaranty,
express or implied, as to the revenues, profits or success of the business
venture contemplated by this Agreement other than those set forth in
Franchisor's Uniform Franchise Offering Circular. Developer acknowledges that
it has read this Agreement, Franchisor's Franchise Agreement and Franchisor's
Uniform Franchise Offering Circular and that it has no knowledge of any
representations by Franchisor, or its officers, directors, shareholders,
employees or agents that are contrary to the statements made in Franchisor's
Uniform Franchise Offering Circular or to the terms herein.
NOW, THEREFORE, the parties, in consideration of the undertakings and
commitments of each party to the other set forth in this Agreement hereby agree
as follows:
I. GRANT
A. Franchisor hereby grants to Developer, pursuant to the terms and
conditions of this Development Agreement, the exclusive right to obtain
franchises to establish and operate franchised restaurants ("Franchised
Restaurants"), within the territory described on Exhibit 1 attached hereto and
incorporated herein by this reference ("Designated Territory"). Franchised
Restaurants means those facilities authorized and approved from time to time by
Franchisor to utilize Franchisor's System and the Marks.
B. Developer shall be bound by the development schedule ("Development
Schedule") set forth in Exhibit 2 of this Agreement. Except as otherwise set
forth herein, time is of the essence. Each Franchised Restaurant shall be
established and operated pursuant to a separate Franchise Agreement to be
entered into by Developer and Franchisor pursuant to Section III.B. All sites
must be approved by the Franchisor whose consent shall not be unreasonably
<PAGE>withheld or delayed provided the Franchisor's then-current site criteria
for new
sites is complied with. The Franchise Agreement (the "Franchise Agreement")
shall be the form of Franchise Agreement annexed hereto as Exhibit "3". Any
changes to the form of Franchise Agreement shall be subject to the approval of
the Developer, except that the Continuing Service and Royalty Fee shall be
subject to change in accordance with this Agreement without further consent of
the Developer.
C. Franchisor covenants and warrants that it shall not establish,
nor franchise or permit any one other than Developer to establish any POLLO
TROPICAL restaurant business in the Designated Territory prior to the expiration
or termination of the Developer's rights under the Development Schedule, except
as provided below.
1. The Developer's exclusive right to develop "Captive Special Sites"
and "Non-Captive Special Sites" (as hereinafter defined) within the Designated
Territory is subject to the following qualifications. In the event an
independent third party, by way of an exclusive contract or other relationship
(provided such contract or other relationship is not between the third party and
Franchisor, its affiliates or related entities), controls the right to develop
and operate a Captive Special Site or a Non-Captive Special Site, such that
Developer is precluded from developing a Pollo Tropical restaurant at such site,
Franchisor, upon not less than 15 days prior written notice to Developer, may
grant such independent third party the right to develop a Pollo Tropical
restaurant at such Captive or Non-Captive Special Site. Notwithstanding the
foregoing, with respect to Non-Captive Special Sites, Franchisor shall have no
right to grant such right if such development shall be deemed to encroach on one
or more of Developer's existing Pollo Tropical restaurants pursuant to the
encroachment guidelines set forth in Subsection C.2., below. With respect to
Captive Special Sites, Franchisor may grant such development right without
regard to encroachment. For the purposes of this section, "Captive Special
Sites" shall be defined as airport concourses and professional sports
facilities. "Non-Captive Special Sites" shall be defined as highway facilities
(that is, state-owned or state operated facilities within the rights-of-way of
limited access parkways, throughways, or toll roads) or locations on college or
university campuses, or military installations. All such special sites
developed within the Designated Territory shall be credited against the
Development Schedule in effect at the time of such opening.
2. If an encroachment study performed by Sterling Research Group, Inc.
or other reputable independent research company consented to in writing by the
parties determines that the annual revenues of a particular Pollo Tropical
restaurant will be diminished by at least 8% as a result of the opening within
its market area of another Pollo Tropical restaurant within the 12 month period
after such opening, then the parties acknowledge that the second restaurant
shall be deemed encroaching on the first restaurant. Such research company
shall be engaged jointly by the parties. The Franchisor shall pay the research
company's fees and costs if the research company determines the second
restaurant will be encroaching. The Developer shall pay such fees and costs if
the research company determines the second restaurant will not be encroaching.
The protocol and guidelines for the encroachment study shall be as specified in
the letter and attachments from William D. Haulisen, of Sterling Research Group,
Inc., to Rick Cross, of Carrols Corporation, dated 9 February, 1993, with
<PAGE>respect to a similar study to be conducted for a restaurant located in
Battle
Creek, Michigan.
3. Without limiting any other rights of the Franchisor, the Franchisor
may acquire multiple restaurants in a fast food restaurant chain which may be
competitive with the Developer's Franchised Restaurants and located within the
Designated Territory; provided that the majority of all such restaurants are
located outside the Designated Territory. The Developer shall be offered the
right to acquire from the Franchisor all such restaurants located in the
Designated Territory which the Franchisor desires to be operated as fast food
restaurants serving chicken as a principal food item or which encroach upon
other fast food restaurants then operated by Developer (such restaurants offered
to the Developer are sometimes referred to as the "other chain restaurants").
Developer shall not be required to purchase any such restaurants which are
located within any Designated Area designated under any Franchise Agreement
issued hereunder, or which, pursuant to an encroachment study undertaken in
accordance with this Agreement, would be deemed to encroach on any of
Developer's existing Pollo Tropical restaurants issued hereunder. Also,
restaurants which are located within any Designated Area of a Pollo Tropical
franchisee are not required to be included in such offer, provided they are
offered to the applicable franchisee pursuant to its Franchise Agreement with
the Franchisor. Any restaurants acquired under this subsection by the Developer
shall require the Developer to reimburse the Franchisor for its acquisition
expenses consistent with but not to exceed the existing local site and
development costs to open a comparable restaurant in the same general market
area, which Franchisor reasonably allocates to the restaurants to be transferred
and consistent with current site criteria required by Franchisor. In addition,
for each such restaurant, the Developer shall enter into the approved form of
Franchise Agreement hereunder being used between Franchisor and Developer,
subject to the other terms of this Agreement. No initial franchise fees shall
be charged under such Franchise Agreements. The Developer's opening of such
restaurants as Pollo Tropical restaurants under the terms of such Franchise
Agreements, or any other opening by the Franchisor (or any third party
authorized by Franchisor) of such restaurants as Pollo Tropical restaurants,
shall be credited against the development schedule in effect in the Designated
Territory at the time of such opening.
If the Franchisor and Developer do not enter into an agreement, within
ninety (90) days from the offer (provided both parties have negotiated in good
faith), satisfactory to both parties, for the Developer to acquire and operate
any of the other chain restaurants located in the Designated Territory, the
Franchisor or any other affiliate or franchisee of Franchisor may own and/or
operate such restaurants as Pollo Tropical restaurants or under any other marks,
without being in breach of this Agreement provided it is not within the
Designated Area of any of Developer's Franchise Agreements issued hereunder and
further provided that it would not be deemed to encroach (as defined under this
Agreement) on any of Developer's existing restaurants issued under this
Agreement.
4. It shall not be a breach of Franchisor's obligations for any Pollo
Tropical restaurant located outside the Designated Territory to be granted an
exclusive or protected territory which extends into the boundaries of the
Designated Territory, provided such restaurant's primary trade area reasonably
<PAGE>encompasses such territory, and provided that the majority of the primary
trade
area is outside the boundaries of the Designated Territory.
D. This Agreement is not a Franchise Agreement, and Developer shall
have no right to use in any manner the Marks by virtue hereof.
E. Developer shall have no right under this Agreement to franchise
others to operate a business or use the System or the Marks. Franchisor
reserves all rights not expressly granted to Developer under this Agreement.
F. Franchisor agrees to use its good faith efforts to generally
require its franchisees and company-owned restaurants (except with respect to
test marketing) to maintain uniformity, consistency and high quality standards
throughout the System.
II. DEVELOPMENT FEE
A. As consideration for the rights and options granted herein, the
Developer shall pay to Franchisor one-time initial individual franchise fees for
restaurants required to be developed under this Agreement, in accordance with
the following schedule:
For each of the first three Pollo Tropical Franchised Restaurants . . . .
$30,000.00 For the fourth and each additional POLLO TROPICAL Franchised
Restaurant . . . . . . . . . .$15,000.00
Simultaneous with the execution of this Agreement, Developer shall pay
Franchisor the sum of $110,000, to be credited against the initial franchise
fees in the order owed to Franchisor under this Agreement. Said amount is
fully earned by Franchisor upon execution of this Agreement and is
non-refundable. The balance of the initial franchise fees, as specified in this
Section, shall be due as specified in Section II.B. hereof.
B. Developer shall submit a separate application for each Franchised
Restaurant to be established within the Designated Territory by Developer.
Prior to beginning construction of each Franchised Restaurant, a separate
Franchise Agreement shall be executed for each such Franchised Restaurant, at
which time payment representing the appropriate individual franchise fee, as
enumerated in Section II.A. hereof, is due and owing in accordance with the
terms of the Franchise Agreement. Upon the execution of each Franchise
Agreement, the terms and conditions of such Franchise Agreement shall control
the establishment and operation of such Franchised Restaurant. Prior to the
commencement of construction of each restaurant under the Development Schedule,
a separate Franchise Agreement shall be executed for each such Franchised
Restaurant, at which time payment representing the balance of the appropriate
individual franchise fee, as enumerated in Section II.A. hereof; shall be paid.
Upon the execution of each Franchise Agreement, the terms and conditions of such
Franchise Agreement shall control the establishment and operation of such
Franchised Restaurant.
III. DEVELOPMENT SCHEDULE AND MANNER OF EXERCISING RIGHTS
A. By the dates set forth under the Development Schedule
<PAGE>("Development Period(s)"), Developer shall develop and open and enter
into
Franchise Agreements with Franchisor pursuant to this Agreement for at least the
number of Franchised Restaurants described under the Development Schedule
annexed hereto. Each Franchised Restaurant shall be established and operated
pursuant to a separate Franchise Agreement, as specified in Section III.B.
hereof. Developer shall at all times after the expiration of each of the
Development Periods continuously maintain in operation pursuant to each
Franchise Agreement at least the number of Franchised Restaurants set forth on
the Development Schedule, provided however that such obligation does not apply
to facilities that are transferred in accordance with the provisions of the
Franchise Agreement, or are closed due to force majeure.
B. Developer shall exercise its rights to obtain franchises for
Franchised Restaurants as granted herein only as follows:
1. By executing the approved form of Franchise Agreement
attached hereto for the applicable Franchised Restaurant and complying with its
terms including, without limitation, the payment of the applicable franchise
fee, except after the 10th anniversary hereof, the Franchisor's then-current
Continuing Services and Royalty Fee shall be deemed incorporated into and used
in the approved form of Franchise Agreement thereafter used by the parties for
all purposes of this Agreement. The Franchisor's then current Continuing
Services and Royalty Fee shall be defined as the average rate then charged by
the Franchisor to franchisees under the then-most recently granted 15 Franchise
Agreements (excluding any Franchise Agreements granted to Developer from being
counted toward such 15 Franchise Agreements) but in no case shall the Continuing
Services and Royalty Fee be increased above 5%.
Franchisor shall execute the Franchise Agreement only if (i) Developer
is in compliance with all material requirements and obligations of this
Agreement and all other agreements between Franchisor and Developer beyond
applicable periods of grace and notice, if any, set forth in such agreements,
and (ii) Developer and its affiliates are in material compliance with all of
their respective obligations beyond applicable periods of grace and notice if
any under any Franchise Agreement. In order to complete the exercise of any
right to obtain a Franchise Agreement and meet the Development Schedule, the
Franchise Agreement must be executed by Developer and Franchisor at or before
the time required herein. Notwithstanding the foregoing, in the event of a
bona fide dispute as to whether a default exists under a Franchise Agreement
with Developer, Franchisor shall not delay the execution of a Franchise
Agreement hereunder.
IV. TERM AND RIGHT OF ADDITIONAL DEVELOPMENT
A. The rights granted hereunder to Developer shall continue, unless
sooner terminated in accordance with the terms of this Agreement.
B. Developer shall have the right to establish and operate within the
Designated Territory any Franchised Restaurants in addition to the Franchised
Restaurants set forth on Exhibit 2, provided Developer has complied, in all
material respects, with the terms of this Agreement. Developer shall pay the
franchise fee set forth in Article II for the corresponding number of Franchised
Restaurants and execute the approved form of Franchise Agreement, subject to the
<PAGE>restrictions herein, for each such business. For clarification, the
rights
granted in this subsection shall not be construed to allow an extension of this
Agreement, but shall apply only with respect to additional restaurants which may
be opened during the term of this Agreement at the time of grant of any
additional rights to enter into additional Franchise Agreements.
V. DUTIES OF DEVELOPER
Developer shall perform the following obligations:
1. Developer shall comply with all terms and conditions set forth
in this Agreement.
2. In accordance with the terms of Section VI. of this Agreement,
Developer shall at all times preserve in confidence any and all materials and
information furnished or disclosed to Developer by Franchisor and designated by
Franchisor as confidential, and is, in fact, "Confidential Information", and
Developer shall disclose such information or materials only to such of its
employees or agents who must have access to it in connection with their
employment. In accordance with the terms of Section VI of this Agreement,
Developer shall not at any time, without Franchisor's prior written consent,
copy, duplicate, record or otherwise reproduce such materials or information,
in whole or in part, nor otherwise make the same available to any unauthorized
person. Processes or information which is (a) generally known in or used in the
industry, (b) already known or used by Developer, or (c) independently developed
by Developer (excluding with respect to (a), (b) and (c), information acquired
by any principal of Developer from such principal's affiliation as director or
consultant of Franchisor) shall not be deemed confidential.
3. Developer shall comply with all requirements of federal, state
and local laws, rules and regulations.
VI. PROPRIETARY MARKS/CONFIDENTIALITY
A. Notwithstanding any provision to the contrary under this
Agreement, it is understood and agreed that this Agreement does not grant the
Developer any right to the use of the Marks or to use any of Franchisor's trade
secrets and/or Confidential Information, as defined below. Further, it is
understood and agreed that this Agreement does not grant the Developer any right
to any copyright or patent which Franchisor or its affiliate now owns or may
hereinafter own. Rights to the Marks, Confidential Information (as defined
below), copyrights, or patents are granted only under the Franchise Agreements
to be executed by Franchisor and Developer.
B. Developer acknowledges that it and its owners, officers, directors
and partners, if any, knowledge of the operation of a POLLO TROPICAL
restaurant business including, without limitation, the method of preparation of
Menu Items and other food products, and other specifications, product formulae,
standards and operating procedures of a POLLO TROPICAL restaurant business are
derived from information disclosed to Developer by Franchisor and that such
information is proprietary, confidential and the trade secrets of Franchisor.
Developer agrees that it and its owners, officers, directors and partners, if
any, shall maintain the absolute confidentiality of all such information during
<PAGE>and after the term of this Agreement and agrees that neither it nor any
such
persons will use any such information in any other business or in any manner not
specifically authorized or approved in writing by Franchisor. "Trade secrets"
refer to the whole or any portion of know-how, knowledge, methods,
specifications, processes, procedures and/or improvements regarding the business
that is valuable and secret in the sense that it is not generally known to
competitors of Franchisor except as otherwise provided in Article V.2. hereof
Confidential Information includes changes made to this Agreement from the terms
of the Franchisor's standard franchise agreement.
C. Developer agrees that it and its owners, officers, directors and
partners, if any, shall divulge Confidential Information only to such of its
employees as must have access to it in order to perform obligations under this
Agreement. Any and all information, knowledge and know-how of Franchisor,
including, without limitation, the Confidential Operations Manual ("Confidential
Operations Manual"), Trade Secrets, drawings, materials, equipment, techniques,
restaurant systems, product formulae, recipes and other data which Franchisor
designates as confidential shall be deemed confidential for purposes of this
Agreement(collectively, the "Confidential Information"). Confidential
Information does not include information which Developer can demonstrate
lawfully came to its attention prior to disclosure thereof by Franchisor; or
which, at the time of disclosure by Franchisor to Developer, had lawfully become
a part of the public domain, through publication or communication by others; or
which, after disclosure to Developer by Franchisor, lawfully becomes a part of
the public domain, through publication or communication by others. All
references in this Agreement to the Confidential Operations Manual include the
entire series of manuals Franchisor may designate as the Confidential Operations
Manual, including, but not limited to restaurant design criteria, restaurant
operations, forms index, approved vendors, and new products lists. Franchisor
acknowledges that Developer has been engaged in the restaurant industry for a
significant period of time and, consequently, has and continues to have
significant exposure and experience with respect to various processes,
procedures, knowledge, methods, improvements and the like inherent in the
industry. Developer acknowledges that it has no knowledge of the basting
recipe, the cooking spice recipes and other recipes used by the Franchisor in
its food preparation, all of which are deemed confidential.
D. Due to the special and unique nature of the Confidential
Information of Franchisor, Developer agrees and acknowledge that Franchisor
shall be entitled to immediate equitable remedies, including but not limited to,
restraining orders and injunctive relief in order to safeguard such information
of Franchisor and that money damages alone would be an insufficient remedy with
which to compensate Franchisor for any continuing breach of the terms of Section
VI. of this Agreement. Furthermore, Developer shall promptly obtain
nondisclosure agreements and deliver copies of them to Franchisor from
Developer's directors, officers and other persons who are exposed to such
information, including restaurant managers and supervisors (to the extent
Franchisor generally obtains nondisclosure agreements from its employees in a
similar capacity) prior to them having access to the trade secrets, confidential
and proprietary information of Franchisor, in the form acceptable to Franchisor
and subject to the reasonable approval of Developer, all of which agreements
Developer agrees to enforce.
<PAGE> E. Developer is granted access to certain Confidential
Information
pertaining to the System only pursuant to an individual Franchise Agreement
executed between Developer and Franchisor, and the foregoing paragraphs are not
intended, and shall not be interpreted to grant or entitle Developer to receive
any such Confidential Information pursuant to this Agreement.
VII. DEFAULT AND TERMINATION
A. The rights and territorial protection granted to Developer in
this Agreement have been granted in reliance on Developer's representations and
warranties, and strictly on the conditions set forth in Sections I. and III. of
this Agreement, including, without limitation, the condition that Developer
comply strictly with the Development Schedule in a timely manner.
B. Subject to applicable law, the Developer's rights under this
Agreement shall automatically terminate without notice or opportunity to cure
on the date of the occurrence of any of the events described in this subsection
B, which shall be considered defaults under this Agreement by the Developer: the
Developer becomes insolvent or makes a general assignment for the benefit of
creditors; a petition in bankruptcy is filed by the Developer or such a petition
is filed against or consented to by the Developer and such petition is not
dismissed within 90 days; the Developer is adjudicated a bankrupt; a bill in
equity or other proceeding for the appointment of a receiver of the Developer
or other custodian for all or substantially all of the Developer's business or
assets is filed and consented to by the Developer; a receiver or other custodian
(permanent or temporary) of all or substantially all of the Developer's business
or assets is appointed by any court of competent jurisdiction; proceedings for
a composition with creditors under Federal or any state law is instituted by or
against (and not dismissed within 90 days) the Developer; or a substantial
portion of the real or personal property of the Developer is sold after levy
thereupon by any sheriff, marshal or constable. In addition, the Developer shall
notify the Franchisor in writing within 10 days of each of the foregoing events.
C. The Developer shall be deemed to be in default and the Franchisor
may, at its option, terminate all rights granted to the Developer under this
Agreement, effective immediately upon notice to the Developer, upon the
occurrence of any of the following events:
1. If Developer, or any officer, director, or employee
(restaurant manager status or above) of the Developer, is convicted of a felony,
a crime of moral turpitude or any other crime or offense that is reasonably
likely to have a material adverse effect on the System or the Marks, unless the
Developer within ten days after the conviction immediately and legally
terminates such individual as an officer, director, and employee of the
Developer.
2. If the Developer, contrary to the terms of this Agreement,
purports to transfer any rights or obligations under this Agreement, without the
Franchisor's prior written consent as required under this Agreement and
Developer fails to cure within 10 days of written notice from Franchisor.
3. If the Developer, or any of its principals, misrepresented or
withheld any information deemed material by the Franchisor in any application
<PAGE>submitted to Franchisor for purposes of obtaining this Agreement and
Developer
fails to cure within 10 days of written notice from Franchisor.
4. If any breach occurs under Section VI. or Section IX.C. of
this Agreement and Developer fails to cure within 10 days of written notice from
Franchisor.
5. If the Developer makes any unauthorized use of the Marks or
otherwise materially impairs the good will associated with the Marks and
Developer fails to cure within 10 days of written notice from Franchisor.
D. Except as otherwise provided above, the Developer shall have 5
business days with respect to monetary defaults, and 30 days (or such longer
period as is reasonably required to cure the default, provided Developer
commences and continues to use its commercially reasonable best efforts to
effectuate such cure within a reasonable time thereafter) with respect to
nonmonetary defaults, to cure the default after delivery from the Franchisor of
a written notice of default. The notice of default must specify the nature of
the default. If any default is not cured and reasonable evidence of such cure
delivered to the Franchisor within the applicable cure period, all rights of the
Developer shall terminate without further notice to the Developer effective
immediately upon expiration of the applicable cure period or such longer period
as applicable law may require.
The Developer shall have the burden of proving it properly and timely
cured any default, to the extent such cure is permitted under this Agreement.
Upon termination of Developer's rights under this Agreement, the balance
of all unpaid franchise fees under Section II.A. for Franchise Agreements
already executed shall be paid to the Franchisor and the remaining rights
granted Developer to establish Franchised Restaurants under this Agreement shall
automatically be revoked and shall be null and void. Developer shall have no
right to establish or operate any Pollo Tropical business for which a Franchise
Agreement has not been executed by Franchisor. Subject to the Developer's
rights in Section 5 of the Development Schedule, Franchisor shall be entitled
to establish, and to license others to establish, Franchised Restaurants in the
Designated Territory except as may be otherwise provided under any Franchise
Agreement which has been executed between Franchisor and Developer, or
Developer's affiliates, and which has not been terminated. No default under
this Agreement shall constitute a default under any Franchise Agreement between
the parties hereto, except to the extent that any default under this Agreement
constitutes a default under any Franchise Agreement in accordance with the terms
of the Franchise Agreement. All obligations of Developer under Section VI. of
this Agreement, shall survive termination of this Agreement.
E. No right or remedy herein conferred upon or reserved to Franchisor
is exclusive of any other right or remedy provided or permitted by law or
equity.
VIII. TRANSFERABILITY
A. This Agreement and all rights hereunder can be assigned and
transferred by Franchisor and, if so, shall be binding upon and inure to the
<PAGE>benefit of Franchisor's successors and assigns; provided, however, that
with
respect to any assignment requiring the subsequent performance by the assignee
of the functions of Franchisor, the assignee shall expressly assume and agree
to perform such obligations. Franchisor agrees that any assignee of all of
Franchisor's rights under this Agreement shall be required to have experience
at the CEO and COO level comparable to the present experience of the Franchisor
as a condition to such assignment by the Franchisor. Specifically, and without
limitation to the foregoing, Developer expressly agrees that Franchisor may sell
its assets, Marks or System outright to a third party; may make a public
offering of securities; may engage in a private placement of some or all of its
securities; and may merge, acquire other corporations or entities, or be
acquired by another corporation or other entity; may undertake a refinancing,
recapitalization, leveraged buy out or other economic or financial
restructuring. Nothing contained in this Agreement shall require Franchisor to
remain in the business in the event that Franchisor exercises its rights
hereunder to assign its rights in this Agreement.
B. Developer has represented to Franchisor that Developer is entering
into this Agreement with the intention of complying with its terms and
conditions and not for the purpose of resale of the developmental rights
hereunder.
C. Developer, may not without Franchisor's prior written consent,
which shall not be unreasonably withheld or delayed, by operation of law or
otherwise, directly or indirectly, sell, assign, transfer, convey, give away,
or encumber to any person, all or any part of its interest in this Agreement,
nor offer, permit, or suffer the same to be sold, assigned, transferred,
conveyed, given away, or encumbered in any way to any person without
Franchisor's prior written consent which shall not be unreasonably withheld or
delayed. Developer may not without the prior written consent of Franchisor
fractionalize any of the rights of Developer granted pursuant to this Agreement.
Any purported assignment of any of the above interests in Developer or of
Developer's rights herein not having the aforesaid consent shall be null and
void and shall constitute a material default hereunder. If this Agreement is
assigned to a subsidiary or affiliate of Developer (but not the parent of
Developer or any successor to the parent of Developer) then any sale or other
transfer of substantially all of the equity interests in such subsidiary or
affiliate shall be deemed a transfer subject to the terms of this Subsection C.
So long as Developer is in material compliance with this Agreement and
any other agreements to which Developer and Franchisor are parties, Franchisor
shall not unreasonably withhold its approval of an assignment or transfer, to
proposed assignees or transferees if such persons: (i) are of good moral
character and have sufficient business experience, aptitude and financial
resources, (ii) otherwise meet Franchisor's then applicable standards for
developers, and (iii) are willing to assume all obligations of Developer
hereunder and are willing, together with (if such assignee or transferee is not
a public company) all owners of more than 15% of any class of ownership interest
in the transferee, to execute and be bound by all provisions of this Development
Agreement for a term equal to the remaining term hereof. Franchisor's approval
of any transfer of rights in the Developer or its assets, including this
Agreement, shall not be deemed a release of the transferor's obligations to the
<PAGE>Franchisor. Consent to any transfer shall not be deemed a consent to any
future
transfer.
In addition to the above requirements, as a condition to granting its
approval of any such assignment or transfer, Franchisor may require the
Developer to submit to the Franchisor its standard franchise application and
have its principals be interviewed by the Franchisor at its main office, as well
as requiring Developer or the assignee or transferee to pay to Franchisor an
assignment fee to defray expenses incurred by Franchisor in connection with the
assignment or transfer, legal and accounting fees, credit and other
investigation charges and evaluation of the assignee or transferee and the terms
of the assignment or transfer. The transfer fee shall not exceed $10,000.
Transfer fees are non-refundable regardless of whether a transfer is
consummated.
Developer shall be considered in default hereunder for any failure of an
owner to comply with any of the terms of this Section C.
D. This Agreement may be assigned to a partnership or corporation
which is actively managed by Developer and in which Developer owns and controls
not less than fifty-one percent (51%) of the general partnership interest or the
equity and voting power of such corporation and other persons who are not
competitors, or are actively involved (as an officer, director, employee, or
owner of 25% of voting securities) with any competitor of the Franchisor,
provided that (i) such partnership or corporation, shall execute an Assignment
Agreement in form approved by Franchisor undertaking to be bound by all
provisions of this Agreement, and (ii) at the time of transfer the Developer is
in compliance with its material obligations to the Franchisor. No new shares
of voting stock in the transferee corporation, nor grant of partnership interest
in the transferee partnership, which would dilute below 51% the equity interests
of the owners of Developer existing at the time of any approved transfer, shall
be issued without obtaining Franchisor's prior written consent and then only
upon disclosure of the terms and conditions herein being made to the prospective
new holders of the stock. Any assignment by Developer to a parent or subsidiary
which prior to the assignment executes and delivers to Franchisor an assumption
agreement agreeing to assume all of Developer's obligations hereunder shall not
require consent from the Franchisor.
E. If Developer or its owners shall at any time desire to sell the
rights under this Agreement or any of their respective ownership interests in
Developer, or any of Developer's assets (except in the ordinary course of
business), Developer or its owners shall obtain a bona fide, executed written
offer from a responsible and fully disclosed purchaser and shall submit an exact
copy of such offer to Franchisor, which shall, for a period of twenty (20)
days from the date of delivery of such offer, have the right, exercisable by
written notice to Developer or its owners, to purchase such rights under this
Agreement or such ownership interests for the price and on the terms and
conditions contained in such offer, provided that Franchisor may, unless adverse
tax consequences may result to the seller, substitute cash or its publicly
traded securities at their then current fair market value for any form of
payment proposed in such offer and that Franchisor shall have not less than
sixty (60) days to prepare for closing. If Franchisor does not exercise this
right of first refusal, Developer or its owners, as applicable, may complete the
<PAGE>sale of such interest in this Agreement or such ownership interest,
subject to
Franchisor's approval of the purchaser as provided in Section VIII.C. herein,
provided that if such sale is not completed within one hundred eighty (180) days
after delivery of such offer to Franchisor, Franchisor shall again have the
right of first refusal provided. This Section shall not apply to an assignment
to a partnership or corporation, as described in Section VIII.D., to which
Section VIII.D. is applicable. Developer shall be considered in default
hereunder for any failure of an owner to comply with any of the terms of this
Section E. The terms of this Section E. shall apply only if this Agreement is
assigned to or held by a separate subsidiary or affiliate or its affiliates
which separate subsidiary or affiliate operates only the Pollo Tropical
Restaurants and not other businesses of Developer, or Developer is no longer
affiliated with Carrols Corp or its parent, or any successor to Carrols Corp or
its parent.
F. No sale, assignment, transfer, conveyance, encumbrance, or gift
of any interest in this Agreement, shall relieve Developer and the shareholders
or partners participating in any transfer, of the obligations of the covenants
not to compete with Franchisor contained in Section IX., (provided that a
transfer of Developer's entire rights under this Agreement shall be considered
a termination of this Agreement for purposes of determining the duration of such
covenants), except where Franchisor shall expressly authorize in advance in
writing.
G. In addition to the above requirements, in connection with
securities offerings by the Developer, the following terms shall apply:
1. The Developer shall comply with all applicable laws, orders,
rules and regulations of the United States and all other applicable
jurisdictions and governmental agencies governing the offer and sale of
securities.
2. All materials required to be used for a public or private
offering (provided that with respect to a private offering by Developer if it
is Carrols Corp. or its parent, subsidiary or affiliate, it is undertaken to
raise at least $3 million), including those to be submitted to a governmental
agency under any Federal or state securities law in connection with a private
or public offering of securities or bonds shall first be submitted to the
Franchisor for review which review shall be limited to the subject of their
content and veracity as they relate to the Franchisor. No offering or press
release by or for the benefit of the Developer shall imply (by use of the Marks
or otherwise) that the Franchisor is participating in an underwriting, issuance,
or offering of the Developer's or the Franchisor's securities. The Franchisor
shall thereafter promptly advise the Developer in writing as to any objections
relating to the information pertaining to Franchisor or the System and instruct
the Developer within 10 business days as to any information which it believes
is misleading or inaccurate, and therefore shall not be included in the offering
materials. If Franchisor fails to respond within such period, then acceptance
shall be deemed given provided that a conspicuous written statement that silence
is deemed acceptance at the end of the 10 business days is delivered to
Franchisor with such materials. Only after completion of review (or failure to
respond as required within such 10 business day period) by the Franchisor and
the Franchisor has received any required indemnification agreements contemplated
<PAGE>below may the Developer proceed to file, publish, issue or release any of
the
offering materials. Any information found to be false, misleading or misstated
must be stricken from the final draft before release or publication. It is
specifically understood, however, that any such review by the Franchisor is
solely for its own information. The Franchisor's approval of any matter subject
to its approval under this Subsection shall not constitute any kind of
authorization, endorsement, approval or ratification as to the legal or factual
sufficiency on which the Developer or any other person may rely, or a
representation or warranty regarding the suitability or likelihood of success
of the proposed offering, either express or implied. Further, the Developer
agrees that the Franchisor's objection, in accordance with the Franchisor's
rights in this Section, if any, shall not result in any liability to the
Franchisor unless Franchisor is determined to be unreasonable pursuant to any
arbitration or other legal proceedings hereunder. The Developer shall make no
oral or written representations of any kind indicating or implying that the
Franchisor has any interest or relationship whatsoever with the proposed
offering other than acting as the Franchisor pursuant to the terms of this
Agreement. The Developer's offering materials and sales literature shall
include the following statement conspicuously in all such materials:
NEITHER THE FRANCHISOR, POLLO FRANCHISE, INC., ITS PARENT, POLLO
TROPICAL, INC., NOR ANY OF THEIR RESPECTIVE DIRECTORS (UNLESS ACTING ON BEHALF
OF A PERSON OTHER THAN POLLO FRANCHISE, INC., ITS PARENTS, OR ANY OF THEIR
RESPECTIVE DIRECTORS, OFFICERS OR AFFILIATES), OFFICERS OR AFFILIATES (THE
"POLLO GROUP") IS INVOLVED IN THIS OFFERING OR IS RESPONSIBLE FOR THE ACCURACY
OR ADEQUACY OF THE STATEMENTS MADE OR INFORMATION PRESENTED HEREIN. FURTHER,
THE POLLO GROUP WILL NOT AND HAS NOT MADE ANY RECOMMENDATION RESPECTING THE
QUALITY, SUITABILITY, ADVISABILITY, OR NATURE OF THE INVESTMENT CONTEMPLATED BY
THIS OFFERING.
3. The Developer must fully indemnify the Franchisor in connection
with the offering (other than for any liability arising from material errors or
omissions in information provided by the Franchisor to the Developer and
incorporated into the offering materials and relied upon by the investors) and
except for other intentional acts of misconduct of Franchisor.
4. For each proposed offering of securities in which any offering
materials are, or are required to be, used under federal or state securities
laws, the Developer shall pay to the Franchisor a non-refundable Offering Fee
of up to $3,000 to reimburse the Franchisor for its reasonable costs and
expenses associated with and actually incurred in reviewing the proposed
offering materials, including legal and accounting fees. The Developer shall
use its reasonable efforts to give the Franchisor as much time as possible,
subject to applicable securities laws, but in any event at least 10 days',
written notice prior to the effective date of any offering or other transaction
covered by this Section. The Offering Fee is nonrefundable and shall be due and
payable after presentment of a bill for such services actually rendered.
5. Developer shall ensure that any parent entity of Developer,
complies to the terms of this Subsection G. to the same extent as the Developer.
For purposes thereof, such parent entity, if any, shall be deemed included
within the definition of Developer as used in this Subsection G.
<PAGE>
6. If Developer is Carrols Corp. its parent, affiliate, or its
subsidiary, all of the remaining terms of this Subsection G.6. shall be
considered inapplicable and of no effect regarding any public offerings by such
Developer. Developer shall not, without the consent of Franchisor, undertake
any proposed public offering of Developer's securities. For a period of two
years from the date of this Agreement, Franchisor may arbitrarily withhold its
consent to any such public offering which otherwise satisfies the conditions set
forth above in this Section VIII.G. Thereafter, Franchisor may not arbitrarily
withhold its consent to any proposed public offering which satisfies the
conditions set forth above in this Section VIII.G., provided:
(a) the Developer at all times during the public offering process
and at consummation of the public offering is in compliance with its obligations
under this Agreement;
(b) Franchisor shall have the right to approve the managing
underwriter of the public offering, which approval shall not be unreasonably
withheld or delayed;
(c) the securities to be issued in the public offering shall
have been approved for listing, subject to notice of issuance on the New York
Stock Exchange, the American Stock Exchange or the NASDAQ national market
system;
(d) in the public offering, Developer shall not sell more than
a 75% equity interest in Developer; and
(e) in the event that at the time Franchisor receives notice of
Developer's intent to undertake any public offering, Franchisor has undertaken
a public or private offering of Franchisor's securities, Developer, at
Franchisor's request given by written notice within 30 days of receipt of
Developer's notice, shall delay filing of any registration statement with
respect to Developer's public offering until the later of six (6) months from
the completion or abandonment of Franchisor's offering or nine (9) months from
the date of Franchisor's notice to Developer (but in no case shall Developer
undertake an offering prior to May 31, 1995).
IX. COVENANTS
A. Developer covenants that during the term of this Agreement, except
as otherwise approved in writing by Franchisor, Developer or Developer's
full-time manager shall devote full time, energy, and reasonable efforts, to the
management and operation of the Franchised Restaurants to be franchised in
accordance with the rights granted pursuant to this Agreement and shall
complete the Franchisors training requirements to the Franchisor's reasonable
satisfaction.
B. Developer covenants that during the term of this Agreement and for
a period of two (2) years thereafter, except as otherwise approved in writing
by Franchisor, Developer shall not, either directly or indirectly, for himself,
or through, on behalf of, or in conjunction with any person, persons,
partnership, or corporation:
<PAGE> 1. Employ or seek to employ without prior written consent
of
Franchisor any person who is at that time employed by Franchisor, Franchisor's
affiliate, or by any other franchisee of Franchisor, or otherwise directly or
indirectly seek to induce such person to leave his or her employment, nor
attempt to encourage any supplier, consultant, representative or other material
business contact of Franchisor to terminate or otherwise disrupt its
relationship with Franchisor, its affiliates or its franchisees. Unless
Franchisor agrees to waive its right to enforcement of such requirements,
Franchisor shall indemnify Developer for reasonable costs and expenses,
including attorneys fees, arising from third party claims of restraint of trade
or similar claims provided that Franchisor is provided with reasonable notice
thereof and the opportunity to control the defense or settlement of such claims.
Franchisor agrees to be mutually bound to the Developer under the covenants set
forth in this Subsection 1 to the same extent the Developer is bound to the
Franchisor, provided that Developer agrees to indemnify the Franchisor under
this Subsection 1 to the same extent the Franchisor is required to indemnify the
Developer under this Subsection.
2. Except with respect to Burger King and Taco Cabana restaurant
chains being conducted by Developer, own, maintain, engage in, consult with or
have any interest in any restaurant or prepared food business engaging in whole
or in part, in dispensing, promoting or selling chicken products as a principal
food item (i.e., at least 40% of gross revenues during any calendar quarter) or
otherwise operating a Latin-theme restaurant offering food products
substantially similar to those offered in POLLO TROPICAL restaurants. The terms
of this Section 2. shall apply throughout the United States (including Puerto
Rico and its other territories), Canada, Central and South America and the
Caribbean Islands (including without limitation, the Bahamas, Cuba [in the event
trade restrictions are revised to allow the Franchisor to establish restaurants
in such locations] and all other islands in the Greater and Lesser Antilles).
Each of the foregoing covenants in Sections 1. and 2. above shall be
construed as independent of any other covenant or provision of this Agreement.
In the event that any court shall finally hold that the time or territory or any
other provision stated in this Section IX constitutes an unreasonable
restriction upon Developer, Developer hereby expressly agrees that the
provisions of this Section IX shall not be rendered void, but shall apply as to
time and territory or to such other extent as such court may judicially
determine or indicate constitutes a reasonable restriction under the
circumstances involved.
D. Developer understands and acknowledges that Franchisor shall have
the right, in its sole discretion, to reduce the scope of any covenant set forth
in Section IX. in this Agreement, or any portion thereof, without Developer's
consent, effective immediately upon receipt by Developer of written notice
thereof, and Developer agrees that it shall comply forthwith with any covenant
as so modified, which shall be fully enforceable notwithstanding the provisions
of Section XV. hereof.
E. Developer shall promptly obtain signed agreements containing
similar covenants (in a form reasonably satisfactory to Franchisor) and deliver
copies of them to Franchisor from the same persons Developer is bound to obtain
confidentiality agreements from under Section VI.D. hereof provided that the
<PAGE>same or similar covenants are generally required of Franchisor's
personnel.
X. NOTICES
Any and all notices required or permitted under this Agreement shall be
in writing and shall be mailed by certified mail, return receipt requested, or
sent by nationally recognized courier service, to the respective parties at the
following addresses:
Notices to Franchisor: POLLO FRANCHISE, INC.
7300 N. Kendall Drive,
Eighth Floor
Miami, Florida 33156
Attn: Larry Harris, President
Copy to: Ronald N. Rosenwasser, Esq.
Ronald N. Rosenwasser, P.A.
One Boca Place, Suite 234W
2255 Glades Road
Boca Raton, FL 33431
Notices to Developer: At the address specified on
Page 1 of this Agreement.
Copy to: Attn: Daniel Accordino, President
Joseph Zirkman, V.P. General Counsel
Carrols Corporation
968 James Street
P.O. Box 6969
Syracuse, NY 13217-6969
or to such other address as any party may designate by notice complying with the
terms of this Section. Each such notice shall be deemed delivered: on the date
upon which the return receipt is signed or delivery is refused or the notice is
designated by the postal or courier authorities as not deliverable, as the case
may be, if mailed or sent by courier.
XI. INDEPENDENT CONTRACTOR AND INDEMNIFICATION
A. This Agreement does not constitute Developer as an agent, legal
representative, joint venturer, partner, employee, or servant of Franchisor for
any purpose whatsoever. Developer can not represent to third parties that it
is an agent of Franchisor and it is understood between the parties hereto that
Developer shall be an independent contractor and that, unless specifically
authorized herein, neither party is authorized to make any contract, agreement,
warranty or representation on behalf of the other, or to create any obligation,
express or implied, on behalf of the other.
B. Developer shall prominently display, by posting of a sign within
public view, on or in the premises of the Developer, a statement that clearly
indicates that its business is independently owned and operated by Developer.
<PAGE>
C. Developer shall defend at its own cost and indemnify and hold
harmless Franchisor, its shareholders, directors, officers, employees and
agents, from and against any and all loss, costs, expenses (including reasonable
attorneys' fees), damages and liabilities, however caused, resulting directly
or indirectly from or pertaining to the use, condition, or construction,
equipping, decorating, maintenance or operation of its business, except to the
extent such losses, claims, costs, expenses, damages, or liabilities were caused
solely through the negligence or intentional misconduct of Franchisor or any of
its agents or employees. The terms of this Section shall survive any
termination or expiration of the Franchise Agreement.
XII. APPROVALS
Whenever this Agreement requires the prior approval or consent of
Franchisor, Developer shall make a timely written request to Franchisor
therefor, and, except as otherwise provided herein, any approval or consent
granted must be in writing to be binding upon Franchisor.
XIII. NON-WAIVER
No failure of either party to exercise any power reserved to it in this
Agreement or to insist upon compliance by the other party with any obligation
or condition in this Agreement, and no custom or practice of the parties at
variance with the terms hereof, shall constitute a waiver of either party's
rights to demand exact compliance with the terms of this Agreement. Waiver by
either party of any particular default shall not affect or impair either party's
right in respect to any subsequent default of the same or of a different nature,
nor shall any delay, forbearance, or omission of either party to exercise any
power or right arising out of any breach or default by the other party of any
of the terms, provisions, or covenants of this Agreement, affect or impair such
party's rights, nor shall such constitute a waiver by such party's of any
rights hereunder or rights to declare any subsequent breach or default.
XIV. SEVERABILITY AND CONSTRUCTION
A. Each Section, part, term and/or provision of this Agreement shall
be considered severable, and if, for any reason, any Section, part, term and/or
provision herein is determined to be invalid and contrary to, or in conflict
with any existing or future law or regulation, such shall not impair the
operation of or affect the remaining portions, sections, parts, terms and/or
provisions of this Agreement, and the latter will continue to be given full
force and effect and bind the parties hereto; and said invalid sections, parts,
terms and/or provisions shall be deemed not part of this Agreement; provided,
however, that if Franchisor determines that said finding of illegality adversely
affects the basic consideration of this Agreement, Franchisor may, at its
option, terminate this Agreement.
B. Anything to the contrary herein notwithstanding, nothing in this
Agreement is intended, nor shall be deemed, to confer upon any person or legal
entity other than Franchisor or Developer and such of their respective
successors and assigns as may be contemplated by this Agreement, any rights or
remedies under or by reason of this Agreement.
<PAGE> C. Developer shall be bound by any promise or covenant imposing
the
maximum duty permitted by law which is contained within the terms of any
provision hereof, as though it were separately stated in and made a part of this
Agreement, that may result from striking from any of the provisions hereof any
portion or portions which a court may hold to be unreasonable and unenforceable
in a final decision to which Franchisor is a party, or from reducing the scope
of any promise or covenant to the extent required to comply with such a court
order.
D. All captions herein are intended solely for the convenience of the
parties, and none shall be deemed to affect the meaning or construction of any
provision hereof. The singular usage includes the plural, where appropriate in
the context, and the masculine and neuter usages include the other and the
feminine.
E. This Agreement may be executed in multiple copies, and each copy
so executed shall be deemed an original.
F. The recitals set forth in this Agreement are specifically
incorporated into the terms of this Agreement and hereby constitute a part
hereof.
G. The parties acknowledge that any obligations of Developer which
expressly or by their nature survive termination or expiration of this
Agreement, including but not limited to, Developer's obligations under Sections
VI., VIII.G.3., IX., XI., and XVII. hereof, shall continue in full force and
effect following any termination or expiration of this Agreement, until they are
satisfied or by their nature expire.
XV. AMENDMENTS
No amendment, change, or variance from this Agreement shall be binding
on either party unless mutually agreed to by the parties and executed by the
parties in writing.
XVI. APPLICATION OF FRANCHISE AGREEMENT
For each Franchised Restaurant established pursuant to this Agreement,
a separate Franchise Agreement shall be executed and an initial franchise fee
as prescribed by Franchisor shall be paid to Franchisor, subject to the terms
of Sections I -III. and Exhibit "2" of this Agreement. Except as specifically
set forth in this Agreement, the establishment and operation of each Franchised
Restaurant shall be in accordance with the terms of the applicable Franchise
Agreement.
XVII. APPLICABLE LAW
A. THIS AGREEMENT TAKES EFFECT ONLY UPON ITS ACCEPTANCE AND EXECUTION
BY FRANCHISOR IN MIAMI, FLORIDA AND SHALL BE INTERPRETED AND CONSTRUED UNDER THE
LAWS OF SUCH STATE, WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAWS, EXCEPT TO
THE EXTENT GOVERNED BY THE UNITED STATES TRADEMARK ACT OF 1946 (LANHAM ACT, 15,
U.S.C. SECTION 1051 ET SEQ).
B. THIS AGREEMENT IS ENTERED INTO IN DADE COUNTY, FLORIDA AND ANY
<PAGE>ACTION SOUGHT TO BE BROUGHT BY EITHER PARTY FOR THE PURPOSE OF ENFORCING
THE
TERMS AND PROVISIONS HEREOF, EXCEPT AS OTHERWISE PROVIDED IN SECTION XVII.A.,
BELOW, SHALL BE BROUGHT IN THE UNITED STATES DISTRICT COURT (ELEVENTH CIRCUIT),
SOUTHERN DISTRICT, AND PARTIES DO HEREBY WAIVE ALL QUESTIONS OF PERSONAL
JURISDICTION OR VENUE FOR THE PURPOSES OF CARRYING OUT THIS PROVISION.
C. NO RIGHT OR REMEDY CONFERRED UPON OR RESERVED TO FRANCHISOR OR
DEVELOPER BY THIS AGREEMENT IS INTENDED TO BE, NOR SHALL BE DEEMED, EXCLUSIVE
OF ANY OTHER RIGHT OR REMEDY HEREIN OR BY LAW OR EQUITY PROVIDED OR PERMITTED,
BUT EACH SHALL BE CUMULATIVE OF EVERY OTHER RIGHT OR REMEDY.
D. NOTHING HEREIN CONTAINED SHALL BAR EITHER PARTY'S RIGHT TO SEEK
AND OBTAIN INJUNCTIVE RELIEF AGAINST THREATENED OR ACTUAL CONDUCT THAT WILL
CAUSE IT LOSS OR DAMAGES, UNDER THE USUAL EQUITY RULES, INCLUDING THE APPLICABLE
RULES FOR OBTAINING RESTRAINING ORDERS AND PRELIMINARY INJUNCTIONS AND NO BOND
OR OTHER SECURITY SHALL BE REQUIRED TO BE POSTED.
XVIII. ARBITRATION
A. Any monetary claim arising out of or relating to this Agreement,
or any breach thereof, shall be submitted to arbitration in Dade County,
Florida, in accordance with the rules of the American Arbitration Association,
and pursuant to the Federal Arbitration Act, and judgment upon the award may be
entered in any court having jurisdiction thereof. Nothing contained herein
shall, however, be construed to limit or to preclude either party from bringing
any action in any court of competent jurisdiction for injunctive or other
provisional relief as either party deems to be necessary or appropriate to
compel the other party to comply with its obligations hereunder or to protect
the Marks or other property rights of such party. In addition, nothing
contained herein shall be construed to limit or to preclude either party from
joining with any action for injunctive or provisional relief all monetary claims
that either party may have against the other party which arise out of the acts
or omissions to act giving rise to the action for injunctive or provisional
relief. This arbitration provision shall be deemed to be self-executing and in
the event that either party fails to appear at any properly noticed arbitration
proceeding, award may be entered against such party notwithstanding its failure
to appear.
B. Nothing herein contained shall bar the right of either party to
seek and obtain temporary injunctive relief from a court of competent
jurisdiction in accordance with applicable law against threatened conduct that
will cause loss or damage, pending completion of the arbitration.
C. It is the intent of the parties that any arbitration between
Franchisor and Developer shall be of Developer's individual claim and that the
claim subject to arbitration shall not be arbitrated to a classwide basis.
XIX. COST OF ENFORCEMENT OR DEFENSE
If any legal action or other proceeding is brought for the enforcement
of this Agreement, or because of an alleged dispute, breach, default or
misrepresentation in connection with any provision of this Agreement, the
successful or prevailing party or parties shall be entitled to recover
<PAGE>reasonable attorneys' fees, court costs and all expenses even if not
taxable as
court costs (including, without limitation, all such fees, costs and expenses
incident to arbitration, appellate, bankruptcy and post-judgment proceedings),
incurred in that action or proceeding, in addition to any other relief to which
such party or parties may be entitled. Attorneys' fees include paralegal fees,
administrative costs, investigative costs, costs of expert witnesses, court
reporter fees, sales and use taxes, if any, and all other charges billed by the
attorneys to the prevailing party.
XX. ACKNOWLEDGEMENTS
A. Developer represents and acknowledges that it has received, read
and understood this Agreement, Franchisor's Franchise Agreement and Franchisor's
Uniform Franchise Offering Circular; and that Franchisor has fully and
adequately explained the provisions of each to Developer's satisfaction; and
that Franchisor has accorded Developer ample time and opportunity to consult
with advisors of its own choosing about the potential benefits and risks of
entering into this Agreement.
B. Developer acknowledges that it has received a copy of this
Agreement and the attachments thereto, at least five (5) business days prior to
the date on which this Agreement was executed. Developer further acknowledges
that Developer has received the disclosure document required by the Trade
Regulation Rule of the Federal Trade Commission entitled Disclosure Requirements
and Prohibitions Concerning Franchising and Business Opportunity Ventures, at
least ten (10) business days prior to the date on which this Agreement was
executed or any consideration was given to Franchisor.
C. This Agreement and the agreements referenced herein (and the
exhibits and any addendum executed by the parties concurrently herewith)
represent the entire understanding between the parties concerning the subject
matter hereof and supersede all other negotiations, understandings and
representations if any made by and between the parties. No representations,
inducements, promises or agreements, oral or otherwise not expressed herein are
authorized and should not be relied upon by Developer.
D. This Agreement has been negotiated, with many revisions from the
Franchisor's standard Area Development Agreement being made at the request of
the Developer. Therefore, except for the specific terms contained in the
Franchisor's standard Area Development Agreement, the terms of this Agreement
shall be kept confidential by the Developer (except as may be required by the
SEC or otherwise required by law). The Developer may disclose such terms to its
lawyers, accountants, lenders, investors, potential business advisors and other
professional or agents, who are under obligations of confidentiality. Any
breach by them shall be deemed a breach of Developer's obligation of confidence
under this Agreement. The Developer's rights hereunder shall terminate upon
written notice from the Franchisor in the event of Developer's failure to comply
with such obligation.
E. Each of the parties acknowledge that they have been or have had
the opportunity to have been represented by their own counsel throughout the
negotiations and at the execution of the Agreement. Therefore, none of the
parties hereto shall, while the Agreement is effective or after its termination,
<PAGE>claim or assert that any provisions of the Agreement should be construed
against
the drafter thereof.
IN WITNESS WHEREOF, the parties hereto have duly executed, sealed, and
delivered this Agreement in duplicate on the day and year first above written.
WITNESS: POLLO FRANCHISE, INC.
By:___________________________
Its:
Print Name
DEVELOPER: CARROLS CORPORATION
By:___________________________
Its:
Print Name<PAGE>
<PAGE>
DESCRIPTION OF DESIGNATED TERRITORY
Portions of Ohio, Indiana, Kentucky, as more specifically described in Schedules
"A" "B" and "C" attached to Exhibit 2 to this Agreement.
<PAGE>
<PAGE>
DEVELOPMENT SCHEDULE
[Attached]
<PAGE>
<PAGE>
APPROVED FORM OF FRANCHISE AGREEMENT
[Attached]
<PAGE> SUPPLY AGREEMENT
THIS AGREEMENT (hereinafter "Agreement") is made as of the 1st day of
April, 1994, by and between ProSource Services Corporation ("Seller"), a
Delaware corporation with its principal place of business located at 550
Biltmore Way, Coral Gables, Florida and CARROLS CORPORATION ("Buyer"), a
Delaware corporation with its principal place of business located at 968 James
Street, Syracuse, New York 13203.
RECITALS
A. Buyer is the owner and operator of certain franchised Burger King
restaurants identified on Exhibit A hereto; and
B. Seller is an approved distributor of food, paper, dairy, produce and
other products sold or used in Burger King restaurants.
C. Seller is a firm which carries products required and desired by the
Restaurants (as defined herein).
D. Buyer desires Seller to perform the functions of purchasing,
warehousing, distributing, and selling certain products to Buyer for sale and
use in the Restaurants.
THEREFORE, in consideration of the premises, and of the mutual agreements
contained herein the parties hereto agree as follows:
1. SUBJECT MATTER OF AGREEMENT. Buyer hereby agrees to purchase
continuously from Seller, and Seller hereby agrees to distribute and sell
continuously to (hereinafter collectively referred to as "supply") Buyer all of
certain Burger King approved food, paper, dairy, produce, premium and other
products, and certain other incidental products used in the Restaurants, as
provided and in accordance with the terms and conditions contained herein.
2. TERM. The term of this Agreement shall commence as of April 1,
1994, and shall continue in full force and effect for a period of five (5) years
from such date.
3. LOCATIONS. During the term of this agreement Seller shall supply
all of the Burger King Restaurants owned by Buyer and/or its Affiliates. Buyer
agrees that all Burger King restaurants owned by it and/or its Affiliates during
the term hereof shall be subject to and governed by this Agreement. Exhibit A
lists all restaurants currently owned by Buyer and/or its Affiliates. Buyer
shall notify Seller of any additional Burger King restaurants owned by it and/or
its Affiliates at any time during the term of this agreement, and upon receipt
of such notice, Seller shall revise and restate Exhibit A to properly include
thereon all Burger King restaurants owned by Buyer and/or its Affiliates (all
such Burger King restaurants owned by Buyer and/or its Affiliates irrespective
of whether they are in fact subject to a notice from Buyer and/or included in
Exhibit A as it may be revised and/or restated are referred to herein as the
"Restaurants" provided, however, the term Restaurants shall not include
non-Burger King restaurants or restaurants acquired during the term of this
<PAGE>agreement by Buyer and/or its Affiliates which are subject to a
non-cancelable
supply agreement, but such exception shall only apply during the term of any
such agreement). For purposes of this Section, an Affiliate shall mean any
corporation, partnership, trust, joint venture, association or other entity
which is controlled by Buyer, and any such entity in which Buyer owns,
beneficially or of record, fifty-one percent or more of the equity interests.
Without limiting or expanding the foregoing definition of Affiliate, the Buyer
agrees that it will not directly or indirectly participate in the ownership or
operation of Burger King restaurants in a manner or form the purpose of which
is to evade or subvert the purposes of this Agreement. The term "control" means
the power to elect a majority of the board of directors or cause the direction
of the management and policies of such entity, whether through ownership of
voting securities, by contract, or otherwise.
4. PRODUCTS. Seller shall supply the Restaurants in the quantities
constituting the total requirements of the Restaurants for all items of (a)
Burger King approved food, paper, dairy, produce and other products (excluding
uniforms), and (b) certain other incidental products, all as listed on Exhibit
B attached hereto and made a part hereof, and such additional or other products
as the parties may mutually agree in writing to add to or delete from Exhibit
B from time to time. Seller will not be required to stock multiple vendors for
the same item. Buyer may enter into reasonable arrangements to purchase from
sources other than Seller any of the requirements of Buyer and/or its Affiliates
of products which Seller does not stock and sell to its customers in the
relevant Service Center Area or which Seller is not duly licensed to sell in the
relevant Service Center Area provided, however, that if Seller elects to stock
products not previously stocked by Seller or supply products not previously
supplied by Seller or becomes licensed to sell such products then Buyer shall
purchase its requirements and those of its Affiliates of such products from
Seller in accordance with the terms of this Agreement subject to Buyer's right
to complete or fulfill any then existing contractual commitments to purchase
such products from parties other than Seller; and provided further that with
respect to cleaning supplies, if Seller elects to stock only one vendor which
cannot provide product satisfactory to Buyer, Buyer may elect to purchase such
supplies from another source. In addition, Buyer may enter into reasonable
arrangements to purchase from sources other than Seller if Seller fails to
deliver to any Restaurant(s); or if Seller is unable to deliver in the
quantities ordered by Buyer; or if Seller delivers products which have been
reasonably rejected by Buyer as non-conforming, but in each such case Buyer's
other purchases shall be limited to the quantities which Seller has failed to
deliver, is unable to deliver or which were reasonably rejected by Buyer.
Notwithstanding the foregoing, if for any reason Seller's supply of any products
in any Service Center Area or in all Service Center Areas shall be insufficient
to meet all of its customer orders, Seller shall have the right, at its option
and without liability hereunder, to apportion its available supply of such
products in such Service Center Area or all Service Center Areas among any and
all of its customers in an equitable manner. For purposes of this Agreement
"Service Center Area" shall mean that geographic area in which Burger King
restaurants receive deliveries of food, paper, dairy, produce and other products
from a particular distribution facility or warehouse operated by or for Seller.
5. DELIVERY AND SERVICE LEVEL. (a) All orders for Products for any
Restaurant shall be tendered to Seller by 11:00 a.m. two days prior to the
<PAGE>scheduled delivery date for the vehicle servicing such Restaurant. Seller
shall
assign to each Restaurant the day(s) and approximate time when that Restaurant
should call in or transmit its order, which date and time may be adjusted
periodically. All additions must be called in or transmitted by 4:00 p.m. on the
day of the order. (b) Seller shall make deliveries to the Restaurants on a twice
per week basis or every fourth day where practical or, with respect to
Restaurants which cannot be adequately supplied with twice per week deliveries
as listed on Exhibit D, three times per week. Upon mutual agreement of Buyer and
Seller the foregoing delivery schedule may be adjusted. Deliveries will be
scheduled at Seller's sole determination to achieve maximum route efficiency;
however, reasonable accommodation will be made for Restaurants who cannot accept
after hours and/or key deliveries. No deliveries will be scheduled between 11:30
a.m. through 1:00 p.m., if so requested by Buyer. Seller agrees to fill
emergency orders ("Special Deliveries") requested by Buyer to provide continuity
of service to the Restaurants. Provided necessity for the special delivery is
not created by Seller, a delivery fee of $50.00 per order or $.50 per mile
(round trip), whichever is greater, will be added to the invoice total for any
Special Delivery at Seller's option. No fee will be charged for special order(s)
which total a full truck-load of product. Parties will cooperate and use
reasonable judgement to avoid the necessity of a special delivery. (c) All
products supplied by Seller hereunder shall comply with Burger King
specifications applicable to such products. Seller shall maintain a sufficient
inventory to provide reasonably timely delivery to the Restaurants as required.
All items shall be delivered by Seller's employees or agents to a storage
location within each Restaurant reasonably designated by Buyer, provided that
Seller shall have no obligation to rotate or stock any items. (d) Buyer may
elect to have "tailgate" deliveries for any or all of the Restaurants served
hereunder in a Service Center Area so long as Seller is able to assemble a
regularly scheduled route without materially impairing the overall efficiency
of Seller's routing where all restaurants on the route elect tailgate service.
If requested by Buyer, Seller agrees to use reasonable efforts to cooperate with
Buyer in establishing such a tailgate route as described in the preceding
sentence. In such event the "tailgate" deliveries shall be made in accordance
with and subject to Seller's terms, conditions and practices for "tailgate"
deliveries. "Tailgate" discount will be $.08 per full case during the first
twelve months of this agreement and $.12 per full case thereafter. (e) Seller
will provide electronic ordering software (ESS) at Seller's sole cost. PC
hardware, including installation, training, maintenance and help desk support
will be provided for a fee of $45 per unit, per month as more fully described
in Exhibit E. Buyer and Seller confirm their agreement to this arrangement by
signing the agreement included herein at Exhibit E. Carrols has the option (not
the obligation) to add subsequently built or acquired restaurants to Exhibit E.
6. PRICE.
a. Buyer shall pay Seller for the products and services provided
hereunder based on each product's Cost for the applicable Service Center Area
(as defined below) plus a mark-up as follows:
Full-Case items: $1.65 per case
Syrups and Specialty Lighting items: Prevailing National Contract Price (as
negotiated by BKC or RSI)
<PAGE>Non-Case items: 25% gross margin
as listed in Exhibit F (calculated on sales price)
The Cost plus payment shall compensate Seller for the cost of goods provided and
for services rendered, which services shall include, but not be limited to,
purchasing, receiving, storing, selecting and transporting. Until cost standards
based on Restaurant Services, Inc. (RSI) negotiated contracts for product and
freight are established for a Service Center Area, "Cost" as used herein for
such Service Center Area shall mean the weighted average of (i) the actual
supplier's invoice price paid to third parties by Seller for the quantities of
a particular product purchased and sold by the Seller in the Service Center Area
during the term of this Agreement; less (ii) all vendor allowances and/or volume
discounts received by Seller, for the quantities of a particular product
purchased and sold by Seller in the Service Center Area during the term of this
Agreement; plus (iii) the actual freight cost incurred by Seller (being the
preferred carrier rate as negotiated by Seller to deliver the products to its
distribution centers) to transport the particular product to Seller's place of
business. Once cost standards based on RSI contracts are established, Cost will
be based on such standards.
b. Seller shall prepare price quotations, and changes thereto,
for all products regularly supplied hereunder. All such price quotations and
price changes shall be made in accordance with the prevailing customs and
practices of the relevant Service Center Areas in effect from time to time.
c. The parties recognize that the mark-up per case charge to
Buyer under this Agreement is based on Seller's current costs and that the
variable costs of Seller's operation may fluctuate in the future. Accordingly,
the parties agree for each full 1% rise or fall in the Interstate Commerce
Commission ("ICC") Average Index of Diesel Fuel ("Fuel Index") published by the
ICC above or below the Fuel Index Base figure of 115.4, 5% of the mark-up per
case charge shall be adjusted by 1% upward or downward. Adjustments shall be
made annually on the anniversary of the agreement. Adjustments shall be rounded
to the nearest cent. All adjustments shall be cumulative. No adjustments shall
be made for Fuel Index changes less than 5% from the base, EXAMPLE: if the
Diesel Fuel Index increases by 8%, the adjusted charge would be calculated as
follows:
$1.65 x .05 x .08 = $.01 (amount of increase)
$1.65 + $.01 = $1.66 (adjusted per case mark-up)
Thirty months after commencement of this agreement, Seller may at its option
propose an adjustment to 45% of the mark-up per case based on increases in the
Consumer Price Index (CPI - all Consumers, National Average, published by the
U.S. Department of Labor, Bureau of Labor Statistics) over the base index at
October 1,1994. Adjustment may only be proposed for a cumulative increase in
excess of 10%. If Buyer does not wish to accept this adjustment, Buyer may
terminate the agreement upon 4 months prior written notice which notice shall
be- delivered within 30 days after Seller proposes its adjustment.
7. INVOICES AND PAYMENT TERMS.
<PAGE> (a) Seller will invoice Buyer at the time of delivery to
the
Restaurant for all goods and services supplied hereunder.
(i) Except for invoices disputed in good faith, payments
not received by the dates specified in b(i)(A) will be considered past due, and
subsequent deliveries to Buyer may, at Seller's discretion, be placed on a cash
on delivery ("COD") basis; provided, however, that if Buyer thereafter makes
payment of all past due balances and establishes a satisfactory payment record,
Seller will review Buyer's account balances and credit worthiness in a
reasonable manner and may extend credit to Buyer on such terms and conditions
as Seller may reasonably determine and excepting that, if Buyer makes payment
of all past due balances within four business days of their becoming past due,
Seller shall re-establish Buyer's credit without review, unless Buyer becomes
past due twice within a 18-month period, in which case the review and credit
determination stated above shall apply; such review will not eliminate or reduce
the prompt payment discounts specified in (b)(i)(B). In the event of a
restriction of credit, Buyer has the right to request a credit review every
sixty days.
(ii) except for invoices disputed in good faith, past due
payments may, at Seller's option, and without regard to Seller's practices with
respect to other customers in the Service Center Area, be assessed a late charge
at the rate of 1 and 1/2% per month, or such lesser rate as shall be the maximum
legally permissible contract rate between business corporations in the state
where such sales are made;
(b) (i) Buyer shall make payment to Seller for all goods in
accordance with the following terms:
(A) payment for all deliveries made during the current
month shall be paid by the 1 5th of the following month (30 day average).
(B) prompt payment discounts may be taken as follows:
1) a discount of .50% may be taken on the invoice
amount of all invoices for deliveries made during the 1st through the 1 5th of
the current month and paid by the last banking day of the current month and for
deliveries made during the 1 6th through month-end paid by the 1 5th of the
following month (22.5 days average).
2) a discount of .85% may be taken on the invoice
amount of all invoices for deliveries made during the current week (Saturday
through Friday) and paid Monday of the second following week (14 day average).
3) a discount of 1.15% may be taken on the invoice
amount of all invoices for deliveries made during the current week and paid by
Monday of the following week (7 day average).
4) a discount of 1.50% may be taken on the invoice
amount of all invoices which are paid on a cash-on-delivery (C.O.D.) basis.
5) During the third month of the fiscal quarter for
Buyer the following cash discount may be taken so long as during the 15 days
<PAGE>prior to this discount period Buyer was availing itself of the 1.50%
discount
for payments being made on a cash-on-delivery (C.O.D.) basis:
A discount of .85% may be taken on the invoice
amount of all invoices for deliveries made during the four week period starting
on or after the fourth Monday prior to the end of Buyers' fiscal quarter and
ending on Buyers' fiscal quarter and paid on the day following the end of
Buyers' fiscal quarter.
(ii) notwithstanding anything contained in paragraphs
(b)(i), (A) or (B), no prompt payment discount shall be allowed on the invoice
amount of any taxes, or products (as listed in Exhibit F) on which prices or
price terms are governed or otherwise controlled by state law.
(iii) notwithstanding anything contained in paragraph
(b)(i), (A) or (B), no prompt payment discount can be taken or earned at any
time when Buyer has any past due amount balance for items sold and delivered
hereunder except those which relate to invoices which are disputed in good faith
and which comply with Seller's practices and policies for such disputed invoices
as set forth in Exhibit C hereto, as amended from time to time.
(c) For purposes of this Agreement an invoice shall be
considered "paid" only upon receipt of a wire transfer, ACH credit, or
check.(which is not returned) at Seller's lock box or other place to which
payments are required to be made as set forth on Seller's invoices. All payments
shall be sent to the place set forth on Seller's invoices.
8. REDUCTION IN NUMBER OF RESTAURANTS.
The prices set forth herein presume that at all times Seller
will supply not less than 170 Restaurants pursuant to this Agreement. If the
number of Restaurants to be supplied is less than 170 for any twelve month
period of this Agreement, then Seller may propose an adjustment to the
distribution fee for the balance of the term of this Agreement; provided,
however, Seller shall have the right to propose further adjustments pursuant to
this paragraph for further reductions in the number of restaurants (at least 30)
pursuant to this agreement. If Buyer does not agree to any such proposed
adjustments, Buyer may terminate this Agreement upon 4 months prior written
notice. Reductions in restaurants due to default (paragraph 16) shall not be
included in reductions considered under this paragraph 8.
9. TITLE AND RISK OF LOSS. (a) Title to all goods shall pass upon
delivery to the respective Restaurants subject to rejection of certain items by
notation on the delivery ticket. Except in the case of night deliveries or
so-called "key" deliveries, all deliveries shall be checked in jointly by the
driver of the delivery vehicle and an authorized representative of Buyer, both
of whom shall note on the delivery ticket any shortages and damaged or rejected
goods. Seller shall ensure that all billings reflect all shortages and damaged
or rejected goods noted on the delivery ticket. Buyer shall make arrangements
through Seller's order department for.any goods to be returned to Seller. Seller
shall issue a receipt to Buyer for any goods picked up for return to ensure that
Buyer receives a proper credit therefor. Seller shall bear all risk of loss,
damage, or destruction until title passes to Buyer.
<PAGE>
(b) Seller will acquire and maintain an inventory of new
products (i.e., those which have no prior sales history within the Burger King
System), special promotional products (e.g., licensed premiums), and other like
products. If Seller orders such products based upon sales projections provided
by Buyer, then at the conclusion of the promotion or test, or upon expiration
of the product shelf life, whichever comes first, Buyer agrees to reimburse
Seller for the Cost of any unsold products that the Buyer had ordered or
committed for.
10. AUDIT
(a) Not more frequently than once a year, Buyer shall have the
right, at its own expense, to examine Seller's records applicable to verifying
Cost and mark-up charged Buyer in accordance with this Agreement; provided that
Buyer must exercise its audit right for any Annual Period (beginning April 1 st
and ending March 31st) within two years following the end of such Annual Period.
If Buyer's audit reveals an overcharge greater than 1/2% of 1% of annual gross
sales, Buyer may audit beyond the prior two years. Examinations may be done on
a statistically valid test basis whereby reasonable samples may be used to
obtain annualized results. Seller will provide reasonable cooperation and access
to required records and documents.
(b) If Buyer's examination discloses an overstatement of Cost
or mark- ups, Seller shall promptly reimburse Buyer for the overcharge, together
with interest at the rate of 18% per annum. Such interest shall, in the case of
an overstatement of Cost or mark-ups, be calculated from the date of payment of
such overcharge to the date reimbursed. In the event of an overcharge equal to
or greater than 1/2 of 1% of gross sales, Seller will reimburse the expenses of
Buyer's audit conducted pursuant to Section 10 (a) in an amount not to exceed
$20,000.00. Notwithstanding the foregoing, in the event of a disagreement by
Seller with Buyer's examination or audit, no such payment shall be required
until the parties have resolved such conflict.
(c) Seller and Buyer agree to work together in good faith to
resolve any conflict. In the event of a conflict which can not be resolved, if
the amount involved exceeds $10,000.00, then Buyer or Seller may give the other
written notice (the "Notice of Dispute") which shall specify in detail the
nature of any disagreements so asserted. All matters specified in any Notice of
Dispute shall be submitted for resolution to and reviewed by an arbitrator
mutually appointed by Buyer and Seller. If within ten (10) days of the Notice
of Dispute the parties are unable to agree upon the selection of an arbitrator,
then either party may request the American Arbitration Association to select an
arbitrator who is willing to perform such services. The arbitrator selected
shall consider only the disputed items set forth in the Notice of Dispute.
The arbitrator shall act promptly to resolve all disputed matters and its
decision shall be final and binding on the parties. The fees and expenses of the
arbitrator shall be shared equally by Buyer and Seller.
(d) For purposes of reimbursing Buyer under paragraphs (a) & (b)
of this paragraph 10, in the event of a conflict which is resolved by agreement
of the parties, the agreed facts shall be utilized in lieu of the results of
Buyer's examination or audit; and if the conflict is resolved by arbitration,
<PAGE>the decision of the arbitrator will be utilized in lieu of Buyer's
examination
or audit.
11. CONFIDENTIALITY. Seller and Buyer agree that all information
as to quantity, and price of goods and services provided under this Agreement
shall be maintained in confidence, except that such information may be provided
by either party to its auditors, consultants, advisors and to any prospective
purchasers of all or part of their respective businesses. The confidentiality
obligations of this Section shall not apply to information:
(a) which either party is compelled to disclose by judicial or
administrative process, or in the opinion of counsel satisfactory to the other
party, by other mandatory requirements of law including, without limitation
disclosure to the SEC (and similar governmental entities or regulatory bodies)
in connection with public offerings of equity securities, bonds, etc.;
(b) which can be shown to have been generally available to the
public other than as a result of a breach of this Section;
(c) which can be shown to have been provided to either party
by a third party who obtained such information other than as a result of a
breach of this Section;
(d) which can be shown to have been previously known to either
party; or
(e) which can be shown to have been independently acquired by
either party without use of any information provided hereunder.
12. SERVICE CENTER ALIGNMENT. Nothing contained in this Agreement
shall be intended or construed to restrict in any manner Seller's right, from
time to time, to open or close any of its distribution facilities or warehouses
in a Service Center Area, or to realign its Service Center Areas.
13. FORCE MAJEURE. Seller shall not be responsible for damages
caused by delay or failure to perform, in whole or in part, hereunder or
non-compliance with any of the terms hereof where such delay, failure or
non-compliance is attributable to acts of God, fires, floods, storms,
explosions, embargoes, acts or compliance with requests of any governmental
authority without regard to legal validity, war conditions, accidents, delays
in transportation into the service center, or other cause beyond the control of
Seller whether or not similar to those enumerated (excepting that strikes or
differences with Seller's workmen shall not be deemed an event of force
majeure.) In event of a force majeure situation Seller shall give Buyer prompt
notice thereof, and thereafter Seller's obligations hereunder shall be
suspended, in whole or in part, for the duration of such force majeure. Upon
expiration, settlement or other resolution of the force majeure Seller shall
resume performance in full hereunder but shall not be required to make-up for
any deliveries not made during the force majeure period. The happening of an
event of force majeure shall not extend the term of this Agreement. In the event
Seller's obligations hereunder are suspended during an event of force majeure,
Buyer may enter into other reasonable arrangements with other suppliers to
satisfy its requirements hereunder. Such other arrangements shall be reasonable
<PAGE>in scope and duration such that they may be terminated as soon as possible
upon
the expiration, settlement or other resolution of the force majeure.
14. ASSIGNMENT.
(a) Except as set forth in paragraphs (b) and (c), hereof,
neither Buyer nor Seller may assign this Agreement without the prior written
consent of the other party, which consent shall not be unreasonably withheld or
delayed; provided, however, that nothing in this Section shall preclude Seller
from employing common carriers, contract carriers, public warehousemen or other
parties to perform its services hereunder.
(b) Seller may assign its rights and obligations under this
Agreement without Buyer's consent to any party controlled by, or under common
control with Seller, or to any purchaser of all or a substantial part of its
business or assets.
(c) Any permitted assignment of this Agreement by either party
shall, except as otherwise agreed, be deemed an assignment of all of the
assignor's rights and liabilities under this Agreement (including, but not
limited to, those arising under Section 8 (a) accruing, arising or relating to
any period on and after the date of such assignment.
15. TERMINATION BY BKC. Buyer and Seller may terminate this
Agreement without liability in the event Seller is disapproved to distribute to
Buyer by Burger King Corporation ("BKC"). Seller will provide Buyer with notice
of termination within 2 business days of receipt from Burger King Corporation
(expected to be 30 days prior to termination in accordance with BKC Distribution
Agreement). Seller will provide 120 days notice in the event Seller voluntarily
terminates its Distribution Agreement with BKC.
16. DEFAULT. Each party upon material breach of this Agreement by
the other party, which is not cured within the period specified below, shall be
entitled to (a) terminate this Agreement and (b) with respect to all breaches
(material or otherwise) recover its damages according to law. In addition to the
other provisions of this agreement, a breach hereunder shall exist if any of the
following events shall occur and be continuing: (i) if a proceeding is
instituted by or against either party under any applicable Federal or State
bankruptcy, insolvency, reorganization or other similar law to be adjudicated
a bankrupt or insolvent provided that the parties have 60 days to have an
involuntary petition in bankruptcy dismissed; (ii) the appointment of or taking
possession by a custodian, receiver, liquidation, assignee, trustee or similar
official of all or a substantial part of the assets of either party; (iii) the
assignment of all or substantially all of the assets of either party for the
benefit of creditors of either party; or (iv) if either party shall admit in
writing its inability to pay its debts as they become due. It is further
understood that Seller's failure to deliver any shipment of products hereunder,
or Seller's delivery of any shipment of non-conforming products, shall be
deemed, subject to the terms and conditions hereof, to be a breach with respect
to such shipment only and that such default does not substantially impair the
value of this Agreement to Buyer as a whole, nor shall it be deemed to
constitute a breach of this Agreement as a whole. Without limiting the
foregoing, in the event Seller fails to make deliveries to one or more
<PAGE>Restaurants, fails to make deliveries in accordance with this Agreement
within
a given Service Center Area, or fails to make deliveries to all of the
Restaurants in accordance with this Agreement, then Buyer shall give Seller
written notice of such failure, specifying in reasonable detail the alleged
failure to perform, and providing Seller with the opportunity to cure such
alleged failure to perform within 30 days from receipt of such notice or within
3 days if failure is related to product which is non-conforming or rejected or
to un-delivered product. No default by Seller shall be deemed to have occurred
unless Seller has failed to cure such alleged default within such 30-day period
or 3 day period. In the event of a pattern of repeated material failures by
Seller to perform, Buyer may terminate this Agreement; however, if such patterns
are related to a specific Service Center, Buyer may elect to terminate the
Agreement with respect to only that Center.
17. NON-WAIVER. No waiver or waivers by any party of any provision
of this Agreement, whether by conduct or otherwise, shall be deemed to be a
further or continuing waiver of the provision or any other provision of this
Agreement.
18. ATTORNEYS' FEES. If it is necessary for either of the parties
to institute suit to enforce any of the provisions of this Agreement, then the
prevailing party in such suit shall be entitled to collect and receive
reasonable outside attorney's fees and court costs through and including
appellate litigation and the other party shall pay for same.
19. NOTICES. All notices, requests, demands, and other
communications
required or permitted to be given under this Agreement shall be in writing and
shall be deemed to have been properly given if mailed first class, postage
prepaid, certified mail, return receipt requested, or by express mail, or other
express courier service, as follows:
IF TO SELLER: ProSource Services Corporation
550 Biltmore Way, 10th Floor
Coral Gables, FL 33134
ATTENTION: PRESIDENT
IF TO BUYER: Carrols Corporation
968 James Street
P.O. Box 6969
Syracuse, NY 13217-6969
ATTENTION: PRESIDENT
Either party may change the address or addresses to which such communication
should be directed by giving written notice pursuant to this Section to the
other party of such change.
20. CAPTIONED HEADINGS AND CONSTRUCTION OF AGREEMENT: VENUE.
The captioned headings are used in this Agreement only as a matter of
<PAGE>convenience and for reference and do not define, limit or describe the
scope of
the Agreement nor the intent of any provision. In addition, each party consents
and agrees that except as is otherwise expressly provided the exclusive, proper,
and convenient venue for any legal proceeding relating to either this Agreement,
or any instrument or agreement executed pursuant to it is Dade County, Florida,
in the case of state trial court proceedings, and the Southern District of
Florida, in the case of federal trial court proceedings, and each party waives
any defense, whether asserted by motion or pleading, that Dade County, Florida,
or the Southern District of Florida, as the case might be, is an improper or
inconvenient venue.
21. ENTIRE AGREEMENT; MODIFICATION. This Agreement, including the
Exhibits hereto, sets forth the entire agreement and understanding of the
parties in respect of the transactions contemplated by them and supersedes any
and all prior agreements and understandings relating to the subject matter of
this Agreement. All the terms and conditions of this Agreement shall be binding
upon and shall inure to the benefit of and be enforceable by Buyer and Seller
and their respective heirs, successors and assigns.
22. COUNTERPARTS. This Agreement may be executed in two
counterparts each of which shall be deemed an original, and both of which
together shall constitute a single document.
23. SEVERABILITY. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction. If any court determines
that any covenant, or any part of any covenant is invalid or unenforceable, all
other covenants shall not thereby be affected and shall be given full effect,
without regard to the invalid portions.
24. GOVERNING LAW. The parties expressly agree that this Agreement
is a contract for the sale of goods and not a service contract, and shall be
construed in accordance with and governed by the laws of the State of Florida,
including the provisions of the Uniform Commercial Code in effect in Florida to
the extent not inconsistent with the terms of this Agreement.
25. THIRD-PARTY RIGHTS. Notwithstanding any other provision of this
Agreement, this Agreement shall not create benefits on behalf of any third party
or person other than the parties hereto (including without limitation any
broker, finder, supplier, or customer), and this Agreement shall be effective
only as between the parties hereto, their successors and permitted assigns.
26. TERMINATION OF EXISTING SUPPLY AGREEMENT. Upon commencement
of this agreement, the existing Supply Agreement between Buyer and Seller, dated
July 14, 1990, shall be terminated.
CARROLS CORPORATION
<PAGE>
By:________________________
PROSOURCE SERVICES CORPORATION
By:_________________________
XXX indicates deleted text for which Confidential Treatment is sought.
POLLO TROPICAL
AREA DEVELOPMENT AGREEMENT
This Area Development Agreement ("this Agreement"), made this 1st day of
January, 1995, by and between POLLO FRANCHISE, INC., a Florida corporation,
having its principal place of business at 7300 N. Kendall Drive, Eighth Floor,
Miami, Florida, 33156 ("Franchisor") and CARROLS CORPORATION, having its
principal place of business with a street address at 968 James Street, Syracuse,
New York 13203 ("Developer").
WITNESSETH:
WHEREAS, Franchisor, as a result of the expenditure of time, skill, effort
and money has developed and owns a unique system of company-owned and franchised
restaurants ("System"), identified by the mark "POLLO TROPICAL", relating to the
establishment, development and operation of restaurant facilities (i) providing
on-premises dining as well as carry-out and drive-thru services, featuring
marinated, grilled chicken, other entrees, salads, desserts and other food and
beverage products, all prepared in accordance with specified recipes and
procedures ("Menu Items"); (ii) has developed and continues to further develop
a proprietary line of food products as part of the Menu Items including special
sauces and marinades, special dessert recipes and special spice mixes ("Trade
Secret Food Products"); and (iii) may develop and offer and sell to Developer
for retail sale to its customers an assortment of private-labeled apparel and
related products and merchandise bearing the POLLO TROPICAL trademark and logo
("POLLO TROPICAL Trademarked Product Lines"), all of which may be changed by
Franchisor from time to time; and
WHEREAS, the distinguishing characteristics of the System include, without
limitation, distinctive exterior and interior layout, design and color scheme;
exclusively designed signage, decorations, furnishings and materials; special
recipes, formulae, menus and food and beverage designations; Trade Secret Food
Products; the POLLO TROPICAL Confidential Operations Manual; the POLLO TROPICAL
Proprietary Software Program, if developed; POLLO TROPICAL Trademarked Product
Lines; food and beverage storage, preparation and service procedures and
techniques; operating procedures for sanitation and maintenance; and methods and
techniques for inventory and cost controls, record keeping and reporting,
personnel management, purchasing, sales promotion and advertising; all of which
may be changed, improved and further developed by Franchisor from time to time;
and
WHEREAS, the parties acknowledge that Developer is currently engaged in
the development of restaurants other than Pollo Tropical restaurants and that
such restaurants may incorporate certain elements of the Pollo Tropical System
which are not unique or specific to the Pollo Tropical System; and
WHEREAS, Franchisor's affiliate, POLLO TROPICAL, INC. (f/k/a "EL POLLO
TROPICAL, Inc."), is the owner of the right, title and interest together with
all the goodwill connected thereto in and to the trade names, service marks and
trademarks "POLLO TROPICAL", "POLLO TROPICAL, plus the design", associated logos
and commercial symbols, and such other trade names, service marks, and
trademarks as are now designated (and may hereinafter be designated by
<PAGE>Franchisor in writing) as part of the System ("Mark(s)") and has licensed
the use of such Marks to Franchisor with the right to sub-license others to use
the Marks. Franchisor and Franchisor's affiliates continue to develop, use and
control such Marks for the benefit and use of themselves and franchisees in
order to identify for the public the source of food products and services
marketed thereunder and to represent the System's high standards of quality
regarding Menu Items, operations, food products, ingredients, appearance and
service; and
WHEREAS, Franchisor grants to qualified persons a franchise to own and
operate POLLO TROPICAL businesses offering food products and services authorized
and approved by Franchisor and utilizing the System and Marks. Developer
desires to secure an exclusive area franchise to operate POLLO TROPICAL
businesses using the System and Marks and has applied for an exclusive area
franchise, which application has been approved by Franchisor in reliance upon
all of the representations made therein; and
WHEREAS, Developer understands and acknowledges the importance of
Franchisor's high and uniform standards of quality and service and the necessity
of operating the POLLO TROPICAL business in conformity with Franchisor's
standards and specifications; and
WHEREAS, Franchisor expressly disclaims the making of and Developer
acknowledges that it has not received nor relied upon any warranty or guaranty,
express or implied, as to the revenues, profits or success of the business
venture contemplated by this Agreement other than those set forth in
Franchisor's Uniform Franchise Offering Circular. Developer acknowledges that
it has read this Agreement, Franchisor's Franchise Agreement and Franchisor's
Uniform Franchise Offering Circular and that it has no knowledge of any
representations by Franchisor, or its officers, directors, shareholders,
employees or agents that are contrary to the statements made in Franchisor's
Uniform Franchise Offering Circular or to the terms herein.
NOW, THEREFORE, the parties, in consideration of the undertakings and
commitments of each party to the other set forth in this Agreement hereby agree
as follows:
I. GRANT
A. Franchisor hereby grants to Developer, pursuant to the terms and
conditions of this Development Agreement, the exclusive right to obtain
franchises to establish and operate franchised restaurants ("Franchised
Restaurants"), within the territory described on Exhibit 1 attached hereto and
incorporated herein by this reference ("Designated Territory"). Franchised
Restaurants means those facilities authorized and approved from time to time by
Franchisor to utilize Franchisor's System and the Marks.
B. Developer shall be bound by the development schedule ("Development
Schedule") set forth in Exhibit 2 of this Agreement. Except as otherwise set
forth herein, time is of the essence. Each Franchised Restaurant shall be
established and operated pursuant to a separate Franchise Agreement to be
entered into by Developer and Franchisor pursuant to Section III.B. All sites
<PAGE>
<PAGE>
must be approved by the Franchisor whose consent shall not be unreasonably
withheld or delayed provided the Franchisor's then-current site criteria for new
sites is complied with. XXX
C. Franchisor covenants and warrants that it shall not establish, nor
franchise or permit any one other than Developer to establish any POLLO TROPICAL
restaurant business in the Designated Territory prior to the expiration or
termination of the Developer's rights under the Development Schedule, except as
provided below.
XXX
3. Without limiting any other rights of the Franchisor, the Franchisor
may acquire multiple restaurants in a fast food restaurant chain which may be
competitive with the Developer's Franchised Restaurants and located within the
Designated Territory; provided that the majority of all such restaurants are
located outside the Designated Territory. The Developer shall be offered the
right to acquire from the Franchisor all such restaurants located in the
Designated Territory which the Franchisor desires to be operated as fast food
restaurants serving chicken as a principal food item XXX (such restaurants
offered to the Developer are sometimes referred to as the "other chain
restaurants"). XXX Also, restaurants which are located within any Designated
Area of a Pollo Tropical franchisee are not required to be included in such
offer, provided they are offered to the applicable franchisee pursuant to its
Franchise Agreement with the Franchisor. Any restaurants acquired under this
subsection by the Developer shall require the Developer to reimburse the
Franchisor for its acquisition expenses consistent with but not to exceed the
existing local site and development costs to open a comparable restaurant in the
same general market area, which Franchisor reasonably allocates to the
restaurants to be transferred and consistent with current site criteria required
by Franchisor. In addition, for each such restaurant, the Developer shall enter
into the approved form of Franchise Agreement XXX, subject to the other terms
of this Agreement. No initial franchise fees shall be charged under such
Franchise Agreements. The Developer's opening of such restaurants as Pollo
Tropical restaurants under the terms of such Franchise Agreements XXX shall be
credited against the development schedule in effect in the Designated Territory
at the time of such opening.
If the Franchisor and Developer do not enter into an agreement, within
ninety (90) days from the offer (provided both parties have negotiated in good
faith), satisfactory to both parties, for the Developer to acquire and operate
any of the other chain restaurants located in the Designated Territory, the
Franchisor or any other affiliate or franchisee of Franchisor may own and/or
operate such restaurants as Pollo Tropical restaurants or under any other marks,
without being in breach of this Agreement XXX.
4. It shall not be a breach of Franchisor's obligations for any Pollo
Tropical restaurant located outside the Designated Territory to be granted an
exclusive or protected territory which extends into the boundaries of the
Designated Territory, provided such restaurant's primary trade area reasonably
encompasses such territory, and provided that the majority of the primary trade
area is outside the boundaries of the Designated Territory.
<PAGE>
D. This Agreement is not a Franchise Agreement, and Developer shall have
no right to use in any manner the Marks by virtue hereof.
E. Developer shall have no right under this Agreement to franchise
others to operate a business or use the System or the Marks. Franchisor
reserves all rights not expressly granted to Developer under this Agreement.
XXX
II. DEVELOPMENT FEE
A. As consideration for the rights and options granted herein, the
Developer shall pay to Franchisor one-time initial individual franchise fees for
restaurants required to be developed under this Agreement, in accordance with
the following schedule:
XXX
B. Developer shall submit a separate application for each Franchised
Restaurant to be established within the Designated Territory by Developer. XXX
Upon the execution of each Franchise Agreement, the terms and conditions of such
Franchise Agreement shall control the establishment and operation of such
Franchised Restaurant.
III. DEVELOPMENT SCHEDULE AND MANNER OF EXERCISING RIGHTS
A. By the dates set forth under the Development Schedule ("Development
Period(s)"), Developer shall develop and open and enter into Franchise
Agreements with Franchisor pursuant to this Agreement for at least the number
of Franchised Restaurants described under the Development Schedule annexed
hereto. Each Franchised Restaurant shall be established and operated pursuant
to a separate Franchise Agreement, as specified in Section III.B. hereof.
Developer shall at all times after the expiration of each of the Development
Periods continuously maintain in operation pursuant to each Franchise Agreement
at least the number of Franchised Restaurants set forth on the Development
Schedule, provided however that such obligation does not apply to facilities
that are transferred in accordance with the provisions of the Franchise
Agreement, or are closed due to force majeure.
B. Developer shall exercise its rights to obtain franchises for
Franchised Restaurants as granted herein only as follows:
1. By executing the approved form of Franchise Agreement
attached hereto for the applicable Franchised Restaurant and complying with its
terms including, without limitation, the payment of the applicable franchise fee
XXX.
<PAGE>
<PAGE>
Franchisor shall execute the Franchise Agreement only if (i) Developer is
in compliance with all material requirements and obligations of this Agreement
and all other agreements between Franchisor and Developer beyond applicable
periods of grace and notice, if any, set forth in such agreements, and (ii)
Developer and its affiliates are in material compliance with all of their
respective obligations beyond applicable periods of grace and notice if any
under any Franchise Agreement. In order to complete the exercise of any right
to obtain a Franchise Agreement and meet the Development Schedule, the Franchise
Agreement must be executed by Developer and Franchisor at or before the time
required herein.
XXX
IV. TERM AND RIGHT OF ADDITIONAL DEVELOPMENT
XXX
B. Developer shall have the right to establish and operate within the
Designated Territory any Franchised Restaurants in addition to the Franchised
Restaurants set forth on Exhibit 2, provided Developer has complied, in all
material respects, with the terms of this Agreement. XXX For clarification,
the rights granted in this subsection shall not be construed to allow an
extension of this Agreement, but shall apply only with respect to additional
restaurants which may be opened during the term of this Agreement at the time
of grant of any additional rights to enter into additional Franchise Agreements.
V. DUTIES OF DEVELOPER
Developer shall perform the following obligations:
1. Developer shall comply with all terms and conditions set forth
in this Agreement.
2. In accordance with the terms of Section VI. of this Agreement,
Developer shall at all times preserve in confidence any and all materials and
information furnished or disclosed to Developer by Franchisor and designated by
Franchisor as confidential, and is, in fact, "Confidential Information", and
Developer shall disclose such information or materials only to such of its
employees or agents who must have access to it in connection with their
employment. In accordance with the terms of Section VI. of this Agreement,
Developer shall not at any time, without Franchisor's prior written consent,
copy, duplicate, record or otherwise reproduce such materials or information,
in whole or in part, nor otherwise make the same available to any unauthorized
person. XXX
3. Developer shall comply with all requirements of federal, state
and local laws, rules and regulations.
<PAGE>
<PAGE>
VI. PROPRIETARY MARKS/CONFIDENTIALITY
A. Notwithstanding any provision to the contrary under this Agreement,
it is understood and agreed that this Agreement does not grant the Developer any
right to the use of the Marks or to use any of Franchisor's trade secrets and/or
Confidential Information, as defined below. Further, it is understood and
agreed that this Agreement does not grant the Developer any right to any
copyright or patent which Franchisor or its affiliate now owns or may
hereinafter own. Rights to the Marks, Confidential Information (as defined
below), copyrights, or patents are granted only under the Franchise Agreements
to be executed by Franchisor and Developer.
B. Developer acknowledges that it and its owners, officers, directors
and partners, if any, knowledge of the operation of a POLLO TROPICAL
restaurant business including, without limitation, the method of preparation of
Menu Items and other food products, and other specifications, product formulae,
standards and operating procedures of a POLLO TROPICAL restaurant business are
derived from information disclosed to Developer by Franchisor and that such
information is proprietary, confidential and the trade secrets of Franchisor.
Developer agrees that it and its owners, officers, directors and partners, if
any, shall maintain the absolute confidentiality of all such information during
and after the term of this Agreement and agrees that neither it nor any such
persons will use any such information in any other business or in any manner not
specifically authorized or approved in writing by Franchisor. "Trade secrets"
refer to the whole or any portion of know-how, knowledge, methods,
specifications, processes, procedures and/or improvements regarding the business
that is valuable and secret in the sense that it is not generally known to
competitors of Franchisor except as otherwise provided in Article V.2. hereof
Confidential Information includes changes made to this Agreement from the terms
of the Franchisor's standard franchise agreement.
<PAGE>
<PAGE>
C. Developer agrees that it and its owners, officers, directors and
partners, if any, shall divulge Confidential Information only to such of its
employees as must have access to it in order to perform obligations under this
Agreement. Any and all information, knowledge and know-how of Franchisor,
including, without limitation, the Confidential Operations Manual ("Confidential
Operations Manual"), Trade Secrets, drawings, materials, equipment, techniques,
restaurant systems, product formulae, recipes and other data which Franchisor
designates as confidential shall be deemed confidential for purposes of this
Agreement(collectively, the "Confidential Information"). Confidential
Information does not include information which Developer can demonstrate
lawfully came to its attention prior to disclosure thereof by Franchisor; or
which, at the time of disclosure by Franchisor to Developer, had lawfully become
a part of the public domain, through publication or communication by others; or
which, after disclosure to Developer by Franchisor, lawfully becomes a part of
the public domain, through publication or communication by others. All
references in this Agreement to the Confidential Operations Manual include the
entire series of manuals Franchisor may designate as the Confidential Operations
Manual, including, but not limited to restaurant design criteria, restaurant
operations, forms index, approved vendors, and new products lists. Franchisor
acknowledges that Developer has been engaged in the restaurant industry for a
significant period of time and, consequently, has and continues to have
significant exposure and experience with respect to various processes,
procedures, knowledge, methods, improvements and the like inherent in the
industry. Developer acknowledges that it has no knowledge of the basting
recipe, the cooking spice recipes and other recipes used by the Franchisor in
its food preparation, all of which are deemed confidential.
D. Due to the special and unique nature of the Confidential Information
of Franchisor, Developer agrees and acknowledge that Franchisor shall be
entitled to immediate equitable remedies, including but not limited to,
restraining orders and injunctive relief in order to safeguard such information
of Franchisor and that money damages alone would be an insufficient remedy with
which to compensate Franchisor for any continuing breach of the terms of Section
VI. of this Agreement. Furthermore, Developer shall promptly obtain
nondisclosure agreements and deliver copies of them to Franchisor from
Developer's directors, officers and other persons who are exposed to such
information, including restaurant managers and supervisors (to the extent
Franchisor generally obtains nondisclosure agreements from its employees in a
similar capacity) prior to them having access to the trade secrets, confidential
<PAGE>
<PAGE>and proprietary information of Franchisor, in the form acceptable to
Franchisor and subject to the reasonable approval of Developer, all of which
agreements
Developer agrees to enforce.
E. Developer is granted access to certain Confidential Information
pertaining to the System only pursuant to an individual Franchise Agreement
executed between Developer and Franchisor, and the foregoing paragraphs are not
intended, and shall not be interpreted to grant or entitle Developer to receive
any such Confidential Information pursuant to this Agreement.
VII. DEFAULT AND TERMINATION
A. The rights and territorial protection granted to Developer in this
Agreement have been granted in reliance on Developer's representations and
warranties, and strictly on the conditions set forth in Sections I. and III. of
this Agreement, including, without limitation, the condition that Developer
comply strictly with the Development Schedule in a timely manner.
B. Subject to applicable law, the Developer's rights under this
Agreement shall automatically terminate without notice or opportunity to cure
on the date of the occurrence of any of the events described in this subsection
B, which shall be considered defaults under this Agreement by the Developer: the
Developer becomes insolvent or makes a general assignment for the benefit of
creditors; a petition in bankruptcy is filed by the Developer or such a petition
is filed against or consented to by the Developer and such petition is not
dismissed within 90 days; the Developer is adjudicated a bankrupt; a bill in
equity or other proceeding for the appointment of a receiver of the Developer
or other custodian for all or substantially all of the Developer's business or
assets is filed and consented to by the Developer; a receiver or other custodian
(permanent or temporary) of all or substantially all of the Developer's business
or assets is appointed by any court of competent jurisdiction; proceedings for
a composition with creditors under Federal or any state law is instituted by or
against (and not dismissed within 90 days) the Developer; or a substantial
portion of the real or personal property of the Developer is sold after levy
thereupon by any sheriff, marshal or constable. In addition, the Developer shall
notify the Franchisor in writing within 10 days of each of the foregoing events.
C. The Developer shall be deemed to be in default and the Franchisor
may, at its option, terminate all rights granted to the Developer under this
Agreement, effective immediately upon notice to the Developer, upon the
occurrence of any of the following events:
1. If Developer, or any officer, director, or employee (restaurant
manager status or above) of the Developer, is convicted of a felony, a crime of
moral turpitude or any other crime or offense that is reasonably likely to have
a material adverse effect on the System or the Marks, unless the Developer
within ten days after the conviction immediately and legally terminates such
individual as an officer, director, and employee of the Developer.
2. If the Developer, contrary to the terms of this Agreement,
purports to transfer any rights or obligations under this Agreement, without the
Franchisor's prior written consent as required under this Agreement XXX.
<PAGE>
<PAGE>
3. If the Developer, or any of its principals, misrepresented or
withheld any information deemed material by the Franchisor in any application
submitted to Franchisor for purposes of obtaining this Agreement XXX.
4. If any breach occurs under Section VI. or Section IX.C. of this
Agreement XXX.
5. If the Developer makes any unauthorized use of the Marks or
otherwise materially impairs the good will associated with the Marks XXX.
D. Except as otherwise provided above, the Developer shall have 5
business days with respect to monetary defaults, and 30 days XXX with respect
to nonmonetary defaults, to cure the default after delivery from the Franchisor
of a written notice of default. The notice of default must specify the nature
of the default. If any default is not cured and reasonable evidence of such
cure delivered to the Franchisor within the applicable cure period, all rights
of the Developer shall terminate without further notice to the Developer
effective immediately upon expiration of the applicable cure period or such
longer period as applicable law may require.
The Developer shall have the burden of proving it properly and timely
cured any default, to the extent such cure is permitted under this Agreement.
Upon termination of Developer's rights under this Agreement, the balance
of all unpaid franchise fees under Section II.A. for Franchise Agreements
already executed shall be paid to the Franchisor and the remaining rights
granted Developer to establish Franchised Restaurants under this Agreement shall
automatically be revoked and shall be null and void. Developer shall have no
right to establish or operate any Pollo Tropical business for which a Franchise
Agreement has not been executed by Franchisor. Subject to the Developer's
rights in Section 5 of the Development Schedule, Franchisor shall be entitled
to establish, and to license others to establish, Franchised Restaurants in the
Designated Territory except as may be otherwise provided under any Franchise
Agreement which has been executed between Franchisor and Developer, or
Developer's affiliates, and which has not been terminated. No default under
this Agreement shall constitute a default under any Franchise Agreement between
the parties hereto, except to the extent that any default under this Agreement
constitutes a default under any Franchise Agreement in accordance with the terms
of the Franchise Agreement. All obligations of Developer under Section VI. of
this Agreement, shall survive termination of this Agreement.
E. No right or remedy herein conferred upon or reserved to Franchisor
is exclusive of any other right or remedy provided or permitted by law or
equity.
VIII. TRANSFERABILITY
A. This Agreement and all rights hereunder can be assigned and
transferred by Franchisor and, if so, shall be binding upon and inure to the
benefit of Franchisor's successors and assigns; provided, however, that with
respect to any assignment requiring the subsequent performance by the assignee
of the functions of Franchisor, the assignee shall expressly assume and agree
to perform such obligations. XXX Specifically, and without limitation to the
<PAGE>foregoing, Developer expressly agrees that Franchisor may sell its assets,
Marks or System outright to a third party; may make a public offering of
securities; may engage in a private placement of some or all of its securities;
and may merge, acquire other corporations or entities, or be acquired by another
corporation or other entity; may undertake a refinancing, recapitalization,
leveraged buy out or other economic or financial restructuring. Nothing
contained in this Agreement shall require Franchisor to remain in the business
in the event that Franchisor exercises its rights hereunder to assign its rights
in this Agreement.
B. Developer has represented to Franchisor that Developer is entering
into this Agreement with the intention of complying with its terms and
conditions and not for the purpose of resale of the developmental rights
hereunder.
C. Developer, may not without Franchisor's prior written consent, which
shall not be unreasonably withheld or delayed, by operation of law or
otherwise, directly or indirectly, sell, assign, transfer, convey, give away,
or encumber to any person, all or any part of its interest in this Agreement,
nor offer, permit, or suffer the same to be sold, assigned, transferred,
conveyed, given away, or encumbered in any way to any person without
Franchisor's prior written consent which shall not be unreasonably withheld or
delayed. Developer may not without the prior written consent of Franchisor
fractionalize any of the rights of Developer granted pursuant to this Agreement.
Any purported assignment of any of the above interests in Developer or of
Developer's rights herein not having the aforesaid consent shall be null and
void and shall constitute a material default hereunder. If this Agreement is
assigned to a subsidiary or affiliate of Developer (but not the parent of
Developer or any successor to the parent of Developer) then any sale or other
transfer of substantially all of the equity interests in such subsidiary or
affiliate shall be deemed a transfer subject to the terms of this Subsection C.
So long as Developer is in material compliance with this Agreement and any
other agreements to which Developer and Franchisor are parties, Franchisor shall
not unreasonably withhold its approval of an assignment or transfer, to proposed
assignees or transferees if such persons: (i) are of good moral character and
have sufficient business experience, aptitude and financial resources, (ii)
otherwise meet Franchisor's then applicable standards for developers, and (iii)
are willing to assume all obligations of Developer hereunder and are willing,
together with (if such assignee or transferee is not a public company) all
owners of more than 15% of any class of ownership interest in the transferee,
to execute and be bound by all provisions of this Development Agreement for a
term equal to the remaining term hereof. Franchisor's approval of any transfer
of rights in the Developer or its assets, including this Agreement, shall not
be deemed a release of the transferor's obligations to the Franchisor. Consent
to any transfer shall not be deemed a consent to any future transfer.
In addition to the above requirements, as a condition to granting its
approval of any such assignment or transfer, Franchisor may require the
Developer to submit to the Franchisor its standard franchise application and
have its principals be interviewed by the Franchisor at its main office, as well
as requiring Developer or the assignee or transferee to pay to Franchisor an
<PAGE>
<PAGE>assignment fee to defray expenses incurred by Franchisor in connection
with the assignment or transfer, legal and accounting fees, credit and other
investigation charges and evaluation of the assignee or transferee and the terms
of the assignment or transfer. XXX Transfer fees are non-refundable regardless
of whether a transfer
is consummated.
Developer shall be considered in default hereunder for any failure of an
owner to comply with any of the terms of this Section C.
D. This Agreement may be assigned to a partnership or corporation which
is actively managed by Developer and in which Developer owns and controls not
less than fifty-one percent (51%) of the general partnership interest or the
equity and voting power of such corporation and XXX Franchisor, provided that
(i) such partnership or corporation, shall execute an Assignment Agreement in
form approved by Franchisor undertaking to be bound by all provisions of this
Agreement, and (ii) at the time of transfer the Developer is in compliance with
its material obligations to the Franchisor. No new shares of voting stock in
the transferee corporation, nor grant of partnership interest in the transferee
partnership, XXX shall be issued without obtaining Franchisor's prior written
consent and then only upon disclosure of the terms and conditions herein being
made to the prospective new holders of the stock. XXX
E. If Developer or its owners shall at any time desire to sell the
rights under this Agreement or any of their respective ownership interests in
Developer, or any of Developer's assets (except in the ordinary course of
business), Developer or its owners shall obtain a bona fide, executed written
offer from a responsible and fully disclosed purchaser and shall submit an
exact copy of such offer to Franchisor, which shall, for a period of XXX days
from the date of delivery of such offer, have the right, exercisable by written
notice to Developer or its owners, to purchase such rights under this Agreement
or such ownership interests for the price and on the terms and conditions
contained in such offer, provided that Franchisor may XXX substitute cash or its
publicly traded securities at their then current fair market value for any form
of payment proposed in such offer and that Franchisor shall have not less than
sixty (60) days to prepare for closing. If Franchisor does not exercise this
right of first refusal, Developer or its owners, as applicable, may complete the
sale of such interest in this Agreement or such ownership interest, subject to
Franchisor's approval of the purchaser as provided in Section VIII.C. herein,
provided that if such sale is not completed within XXX days after delivery of
such offer to Franchisor, Franchisor shall again have the right of first refusal
provided. This Section shall not apply to an assignment to a partnership or
corporation, as described in Section VIII.D., to which Section VIII.D. is
applicable. Developer shall be considered in default hereunder for any failure
of an owner to comply with any of the terms of this Section E. XXX
F. No sale, assignment, transfer, conveyance, encumbrance, or gift of
any interest in this Agreement, shall relieve Developer and the shareholders or
partners participating in any transfer, of the obligations of the covenants not
to compete with Franchisor contained in Section IX., (provided that a transfer
of Developer's entire rights under this Agreement shall be considered a
termination of this Agreement for purposes of determining the duration of such
covenants), except where Franchisor shall expressly authorize in advance in
<PAGE>
<PAGE>writing.
G. In addition to the above requirements, in connection with securities
offerings by the Developer, the following terms shall apply:
1. The Developer shall comply with all applicable laws, orders, rules
and regulations of the United States and all other applicable jurisdictions and
governmental agencies governing the offer and sale of securities.
2. All materials XXX to be used for a public or private offering XXX
including those to be submitted to a governmental agency under any Federal or
state securities law in connection with a private or public offering of
securities or bonds shall first be submitted to the Franchisor for review which
review shall be limited to the subject of their content and veracity as they
relate to the Franchisor. No offering or press release by or for the benefit
of the Developer shall imply (by use of the Marks or otherwise) that the
Franchisor is participating in an underwriting, issuance, or offering of the
Developer's or the Franchisor's securities. The Franchisor shall thereafter
promptly advise the Developer in writing as to any objections relating to the
information pertaining to Franchisor or the System and instruct the Developer
XXX days as to any information which it believes is misleading or inaccurate,
and therefore shall not be included in the offering materials. XXX Only after
completion of review XXX by the Franchisor and the Franchisor has received any
required indemnification agreements contemplated below may the Developer proceed
to file, publish, issue or release any of the offering materials. Any
information found to be false, misleading or misstated must be stricken from the
final draft before release or publication. It is specifically understood,
however, that any such review by the Franchisor is solely for its own
information. The Franchisor's approval of any matter subject to its approval
under this Subsection shall not constitute any kind of authorization,
endorsement, approval or ratification as to the legal or factual sufficiency on
which the Developer or any other person may rely, or a representation or
warranty regarding the suitability or likelihood of success of the proposed
offering, either express or implied. Further, the Developer agrees that the
Franchisor's objection, in accordance with the Franchisor's rights in this
Section, if any, shall not result in any liability to the Franchisor unless
Franchisor is determined to be unreasonable pursuant to any arbitration or other
legal proceedings hereunder. The Developer shall make no oral or written
representations of any kind indicating or implying that the Franchisor has any
interest or relationship whatsoever with the proposed offering other than acting
as the Franchisor pursuant to the terms of this Agreement. The Developer's
offering materials and sales literature shall include the following statement
conspicuously in all such materials:
NEITHER THE FRANCHISOR, POLLO FRANCHISE, INC., ITS
PARENT, POLLO TROPICAL, INC., NOR ANY OF THEIR RESPECTIVE DIRECTORS
(UNLESS ACTING ON BEHALF OF A PERSON OTHER THAN POLLO FRANCHISE,
INC., ITS PARENTS, OR ANY OF THEIR RESPECTIVE DIRECTORS, OFFICERS OR
AFFILIATES), OFFICERS OR AFFILIATES (THE "POLLO GROUP") IS INVOLVED
IN THIS OFFERING OR IS RESPONSIBLE FOR THE ACCURACY OR ADEQUACY OF
THE STATEMENTS MADE OR INFORMATION PRESENTED HEREIN. FURTHER, THE
POLLO GROUP WILL NOT AND HAS NOT MADE ANY RECOMMENDATION RESPECTING
THE QUALITY, SUITABILITY, ADVISABILITY, OR NATURE OF THE INVESTMENT
CONTEMPLATED BY THIS OFFERING.
<PAGE>
<PAGE>
3. The Developer must fully indemnify the Franchisor in connection
with the offering (other than for any liability arising from material errors or
omissions in information provided by the Franchisor to the Developer and
incorporated into the offering materials and relied upon by the investors) and
except for other intentional acts of misconduct of Franchisor.
4. For each proposed offering of securities in which any offering
materials are, or are required to be, used under federal or state securities
laws, the Developer shall pay to the Franchisor a non-refundable Offering Fee
of XXX to reimburse the Franchisor for its reasonable costs and expenses
associated with XXX reviewing the proposed offering materials, including legal
and accounting fees. The Developer shall use its reasonable efforts to give the
Franchisor as much time as possible, subject to applicable securities laws XXX
written notice prior to the effective date of any offering or other transaction
covered by this Section. The Offering Fee is nonrefundable and shall be due and
payable after presentment of a bill for such services actually rendered.
5. Developer shall ensure that any parent entity of Developer,
complies to the terms of this Subsection G. to the same extent as the Developer.
For purposes thereof, such parent entity, if any, shall be deemed included
within the definition of Developer as used in this Subsection G.
XXX Developer shall not, without the consent of Franchisor,
undertake any proposed public offering of Developer's securities. For a period
of two years from the date of this Agreement, Franchisor may arbitrarily
withhold its consent to any such public offering which otherwise satisfies the
conditions set forth above in this Section VIII.G. Thereafter, Franchisor may
not arbitrarily withhold its consent to any proposed public offering which
satisfies the conditions set forth above in this Section VIII.G., provided:
(a) the Developer at all times during the public offering process
and at consummation of the public offering is in compliance with its obligations
under this Agreement;
(b) Franchisor shall have the right to approve the managing
underwriter of the public offering, which approval shall not be unreasonably
withheld or delayed;
(c) the securities to be issued in the public offering shall have
been approved for listing, subject to notice of issuance on the New York Stock
Exchange, the American Stock Exchange or the NASDAQ national market system;
(d) in the public offering, Developer shall not sell more than a XXX
equity interest in Developer; and
(e) in the event that at the time Franchisor receives notice of
Developer's intent to undertake any public offering, Franchisor has undertaken
a public or private offering of Franchisor's securities, Developer, at
Franchisor's request given by written notice within 30 days of receipt of
Developer's notice, shall delay filing of any registration statement with
respect to Developer's public offering until the later of six (6) months from
the completion or abandonment of Franchisor's offering or nine (9) months from
the date of Franchisor's notice to Developer XXX.
<PAGE>
<PAGE>
IX. COVENANTS
A. Developer covenants that during the term of this Agreement, except
as otherwise approved in writing by Franchisor, Developer or Developer's
full-time manager shall devote full time, energy, and reasonable efforts, to the
management and operation of the Franchised Restaurants to be franchised in
accordance with the rights granted pursuant to this Agreement and shall
complete the Franchisors training requirements to the Franchisor's reasonable
satisfaction.
B. Developer covenants that during the term of this Agreement and for
a period of two (2) years thereafter, except as otherwise approved in writing
by Franchisor, Developer shall not, either directly or indirectly, for himself,
or through, on behalf of, or in conjunction with any person, persons,
partnership, or corporation:
1. Employ or seek to employ without prior written consent of
Franchisor any person who is at that time employed by Franchisor, Franchisor's
affiliate, or by any other franchisee of Franchisor, or otherwise directly or
indirectly seek to induce such person to leave his or her employment, nor
attempt to encourage any supplier, consultant, representative or other material
business contact of Franchisor to terminate or otherwise disrupt its
relationship with Franchisor, its affiliates or its franchisees. XXX
2. XXX maintain, engage in, consult with or have any interest in any
restaurant or prepared food business engaging in whole or in part, in
dispensing, promoting or selling chicken products as a principal food item
(i.e., at least XXX of gross revenues during any calendar quarter) or otherwise
operating a Latin-theme restaurant offering food products substantially similar
to those offered in POLLO TROPICAL restaurants. The terms of this Section 2.
shall apply throughout the United States (including Puerto Rico and its other
territories), Canada, Central and South America and the Caribbean Islands
(including without limitation, the Bahamas, Cuba [in the event trade
restrictions are revised to allow the Franchisor to establish restaurants in
such locations] and all other islands in the Greater and Lesser Antilles).
Each of the foregoing covenants in Sections 1. and 2. above shall be
construed as independent of any other covenant or provision of this Agreement.
In the event that any court shall finally hold that the time or territory or any
other provision stated in this Section IX constitutes an unreasonable
restriction upon Developer, Developer hereby expressly agrees that the
provisions of this Section IX shall not be rendered void, but shall apply as to
time and territory or to such other extent as such court may judicially
determine or indicate constitutes a reasonable restriction under the
circumstances involved.
D. Developer understands and acknowledges that Franchisor shall have the
right, in its sole discretion, to reduce the scope of any covenant set forth in
Section IX. in this Agreement, or any portion thereof, without Developer's
consent, effective immediately upon receipt by Developer of written notice
thereof, and Developer agrees that it shall comply forthwith with any covenant
as so modified, which shall be fully enforceable notwithstanding the provisions
of Section XV. hereof.
<PAGE>
<PAGE>
E. Developer shall promptly obtain signed agreements containing similar
covenants (in a form reasonably satisfactory to Franchisor) and deliver copies
of them to Franchisor XXX.
X. NOTICES
Any and all notices required or permitted under this Agreement shall be
in writing and shall be mailed by certified mail, return receipt requested, or
sent by nationally recognized courier service, to the respective parties at the
following addresses:
Notices to Franchisor: POLLO FRANCHISE, INC.
7300 N. Kendall Drive,
Eighth Floor
Miami, Florida 33156
Attn: Larry Harris, President
Copy to: Ronald N. Rosenwasser, Esq.
Ronald N. Rosenwasser, P.A.
One Boca Place, Suite 234W
2255 Glades Road
Boca Raton, FL 33431
Notices to Developer: At the address specified on
Page 1 of this Agreement.
Copy to: Attn: Daniel Accordino, President
Joseph Zirkman, V.P. General Counsel
Carrols Corporation
968 James Street
P.O. Box 6969
Syracuse, NY 13217-6969
or to such other address as any party may designate by notice complying with the
terms of this Section. Each such notice shall be deemed delivered: on the date
upon which the return receipt is signed or delivery is refused or the notice is
designated by the postal or courier authorities as not deliverable, as the case
may be, if mailed or sent by courier.
XI. INDEPENDENT CONTRACTOR AND INDEMNIFICATION
A. This Agreement does not constitute Developer as an agent, legal
representative, joint venturer, partner, employee, or servant of Franchisor for
any purpose whatsoever. Developer can not represent to third parties that it
is an agent of Franchisor and it is understood between the parties hereto that
Developer shall be an independent contractor and that, unless specifically
authorized herein, neither party is authorized to make any contract, agreement,
warranty or representation on behalf of the other, or to create any obligation,
express or implied, on behalf of the other.
B. Developer shall prominently display, by posting of a sign within
public view, on or in the premises of the Developer, a statement that clearly
<PAGE>
<PAGE>indicates that its business is independently owned and operated by
Developer.
C. Developer shall defend at its own cost and indemnify and hold
harmless Franchisor, its shareholders, directors, officers, employees and
agents, from and against any and all loss, costs, expenses (including reasonable
attorneys' fees), damages and liabilities, however caused, resulting directly
or indirectly from or pertaining to the use, condition, or construction,
equipping, decorating, maintenance or operation of its business, except to the
extent such losses, claims, costs, expenses, damages, or liabilities were caused
solely through the negligence or intentional misconduct of Franchisor or any of
its agents or employees. The terms of this Section shall survive any
termination or expiration of the Franchise Agreement.
XII. APPROVALS
Whenever this Agreement requires the prior approval or consent of
Franchisor, Developer shall make a timely written request to Franchisor
therefor, and, except as otherwise provided herein, any approval or consent
granted must be in writing to be binding upon Franchisor.
XIII. NON-WAIVER
No failure of either party to exercise any power reserved to it in this
Agreement or to insist upon compliance by the other party with any obligation
or condition in this Agreement, and no custom or practice of the parties at
variance with the terms hereof, shall constitute a waiver of either party's
rights to demand exact compliance with the terms of this Agreement. Waiver by
either party of any particular default shall not affect or impair either party's
right in respect to any subsequent default of the same or of a different nature,
nor shall any delay, forbearance, or omission of either party to
exercise any power or right arising out of any breach or default by the other
party of any of the terms, provisions, or covenants of this Agreement, affect
or impair such party's rights, nor shall such constitute a waiver by such
party's of any rights hereunder or rights to declare any subsequent breach or
default.
XIV. SEVERABILITY AND CONSTRUCTION
A. Each Section, part, term and/or provision of this Agreement shall be
considered severable, and if, for any reason, any Section, part, term and/or
provision herein is determined to be invalid and contrary to, or in conflict
with any existing or future law or regulation, such shall not impair the
operation of or affect the remaining portions, sections, parts, terms and/or
provisions of this Agreement, and the latter will continue to be given full
force and effect and bind the parties hereto; and said invalid sections, parts,
terms and/or provisions shall be deemed not part of this Agreement; provided,
however, that if Franchisor determines that said finding of illegality adversely
affects the basic consideration of this Agreement, Franchisor may, at its
option, terminate this Agreement.
B. Anything to the contrary herein notwithstanding, nothing in this
Agreement is intended, nor shall be deemed, to confer upon any person or legal
entity other than Franchisor or Developer and such of their respective
<PAGE>
<PAGE>successors and assigns as may be contemplated by this Agreement, any
rights or remedies under or by reason of this Agreement.
C. Developer shall be bound by any promise or covenant imposing the
maximum duty permitted by law which is contained within the terms of any
provision hereof, as though it were separately stated in and made a part of this
Agreement, that may result from striking from any of the provisions hereof any
portion or portions which a court may hold to be unreasonable and unenforceable
in a final decision to which Franchisor is a party, or from reducing the scope
of any promise or covenant to the extent required to comply with such a court
order.
D. All captions herein are intended solely for the convenience of the
parties, and none shall be deemed to affect the meaning or construction of any
provision hereof. The singular usage includes the plural, where appropriate in
the context, and the masculine and neuter usages include the other and the
feminine.
E. This Agreement may be executed in multiple copies, and each copy so
executed shall be deemed an original.
F. The recitals set forth in this Agreement are specifically
incorporated into the terms of this Agreement and hereby constitute a part
hereof.
G. The parties acknowledge that any obligations of Developer which
expressly or by their nature survive termination or expiration of this
Agreement, including but not limited to, Developer's obligations under Sections
VI., VIII.G.3., IX., XI., and XVII. hereof, shall continue in full force and
effect following any termination or expiration of this Agreement, until they are
satisfied or by their nature expire.
XV. AMENDMENTS
No amendment, change, or variance from this Agreement shall be binding on
either party unless mutually agreed to by the parties and executed by the
parties in writing.
XVI. APPLICATION OF FRANCHISE AGREEMENT
For each Franchised Restaurant established pursuant to this Agreement, a
separate Franchise Agreement shall be executed and an initial franchise fee as
prescribed by Franchisor shall be paid to Franchisor, subject to the terms of
Sections I -III. and Exhibit "2" of this Agreement. Except as specifically set
forth in this Agreement, the establishment and operation of each Franchised
Restaurant shall be in accordance with the terms of the applicable Franchise
Agreement.
XVII. APPLICABLE LAW
A. THIS AGREEMENT TAKES EFFECT ONLY UPON ITS ACCEPTANCE AND EXECUTION
BY FRANCHISOR IN MIAMI, FLORIDA AND SHALL BE INTERPRETED AND CONSTRUED UNDER THE
LAWS OF SUCH STATE, WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAWS, EXCEPT TO
<PAGE>
<PAGE>THE EXTENT GOVERNED BY THE UNITED STATES TRADEMARK ACT OF 1946 (LANHAM
ACT, 15,
U.S.C. SECTION 1051 ET SEQ).
B. THIS AGREEMENT IS ENTERED INTO IN DADE COUNTY, FLORIDA AND ANY ACTION
SOUGHT TO BE BROUGHT BY EITHER PARTY FOR THE PURPOSE OF ENFORCING THE TERMS AND
PROVISIONS HEREOF, EXCEPT AS OTHERWISE PROVIDED IN SECTION XVII.A., BELOW, SHALL
BE BROUGHT IN THE UNITED STATES DISTRICT COURT (ELEVENTH CIRCUIT), SOUTHERN
DISTRICT, AND PARTIES DO HEREBY WAIVE ALL QUESTIONS OF PERSONAL JURISDICTION
OR VENUE FOR THE PURPOSES OF CARRYING OUT THIS PROVISION.
C. NO RIGHT OR REMEDY CONFERRED UPON OR RESERVED TO FRANCHISOR OR
DEVELOPER BY THIS AGREEMENT IS INTENDED TO BE, NOR SHALL BE DEEMED, EXCLUSIVE
OF ANY OTHER RIGHT OR REMEDY HEREIN OR BY LAW OR EQUITY PROVIDED OR PERMITTED,
BUT EACH SHALL BE CUMULATIVE OF EVERY OTHER RIGHT OR REMEDY.
D. NOTHING HEREIN CONTAINED SHALL BAR EITHER PARTY'S RIGHT TO SEEK AND
OBTAIN INJUNCTIVE RELIEF AGAINST THREATENED OR ACTUAL CONDUCT THAT WILL CAUSE
IT LOSS OR DAMAGES, UNDER THE USUAL EQUITY RULES, INCLUDING THE APPLICABLE RULES
FOR OBTAINING RESTRAINING ORDERS AND PRELIMINARY INJUNCTIONS AND NO BOND OR
OTHER SECURITY SHALL BE REQUIRED TO BE POSTED.
XVIII. ARBITRATION
A. Any monetary claim arising out of or relating to this Agreement, or
any breach thereof, shall be submitted to arbitration in Dade County, Florida,
in accordance with the rules of the American Arbitration Association, and
pursuant to the Federal Arbitration Act, and judgement upon the award may be
entered in any court having jurisdiction thereof. Nothing contained herein
shall, however, be construed to limit or to preclude either party from bringing
any action in any court of competent jurisdiction for injunctive or other
provisional relief as either party deems to be necessary or appropriate to
compel the other party to comply with its obligations hereunder or to protect
the Marks or other property rights of such party. In addition, nothing
contained herein shall be construed to limit or to preclude either party from
joining with any action for injunctive or provisional relief all monetary claims
that either party may have against the other party which arise out of the acts
or omissions to act giving rise to the action for injunctive or provisional
relief. This arbitration provision shall be deemed to be self-executing and in
the event that either party fails to appear at any properly noticed arbitration
proceeding, award may be entered against such party notwithstanding its failure
to appear.
B. Nothing herein contained shall bar the right of either party to seek
and obtain temporary injunctive relief from a court of competent jurisdiction
in accordance with applicable law against threatened conduct that will cause
loss or damage, pending completion of the arbitration.
C. It is the intent of the parties that any arbitration between
Franchisor and Developer shall be of Developer's individual claim and that the
claim subject to arbitration shall not be arbitrated to a classwide basis.
XIX. COST OF ENFORCEMENT OR DEFENSE
<PAGE>
<PAGE> If any legal action or other proceeding is brought for the
enforcement of this Agreement, or because of an alleged dispute, breach, default
or misrepresentation in connection with any provision of this Agreement, the
successful or prevailing party or parties shall be entitled to recover
reasonable attorneys' fees, court costs and all expenses even if not taxable as
court costs (including, without limitation, all such fees, costs and expenses
incident to arbitration, appellate, bankruptcy and post-judgement proceedings),
incurred in that action or proceeding, in addition to any other relief to which
such party or parties may be entitled. Attorneys' fees include paralegal fees,
administrative costs, investigative costs, costs of expert witnesses, court
reporter fees, sales and use taxes, if any, and all other charges billed by the
attorneys to the prevailing party.
XX. ACKNOWLEDGEMENTS
A. Developer represents and acknowledges that it has received, read and
understood this Agreement, Franchisor's Franchise Agreement and Franchisor's
Uniform Franchise Offering Circular; and that Franchisor has fully and
adequately explained the provisions of each to Developer's satisfaction; and
that Franchisor has accorded Developer ample time and opportunity to consult
with advisors of its own choosing about the potential benefits and risks of
entering into this Agreement.
B. Developer acknowledges that it has received a copy of this Agreement
and the attachments thereto, at least five (5) business days prior to the date
on which this Agreement was executed. Developer further acknowledges that
Developer has received the disclosure document required by the Trade Regulation
Rule of the Federal Trade Commission entitled Disclosure Requirements and
Prohibitions Concerning Franchising and Business Opportunity Ventures, at least
ten (10) business days prior to the date on which this Agreement was executed
or any consideration was given to Franchisor.
C. This Agreement and the agreements referenced herein (and the exhibits
and any addendum executed by the parties concurrently herewith) represent the
entire understanding between the parties concerning the subject matter hereof
and supersede all other negotiations, understandings and representations if any
made by and between the parties. No representations, inducements, promises or
agreements, oral or otherwise not expressed herein are authorized and should
not be relied upon by Developer.
D. This Agreement has been negotiated, with many revisions from the
Franchisor's standard Area Development Agreement being made at the request of
the Developer. Therefore, except for the specific terms contained in the
Franchisor's standard Area Development Agreement, the terms of this Agreement
shall be kept confidential by the Developer (except as may be required by the
SEC or otherwise required by law). The Developer may disclose such terms to its
lawyers, accountants, lenders, investors, potential business advisors and other
professional or agents, who are under obligations of confidentiality. Any
breach by them shall be deemed a breach of Developer's obligation of confidence
under this Agreement. The Developer's rights hereunder shall terminate upon
written notice from the Franchisor in the event of Developer's failure to comply
with such obligation.
<PAGE>
<PAGE>
E. Each of the parties acknowledge that they have been or have had the
opportunity to have been represented by their own counsel throughout the
negotiations and at the execution of the Agreement. Therefore, none of the
parties hereto shall, while the Agreement is effective or after its termination,
claim or assert that any provisions of the Agreement should be construed against
the drafter thereof.
IN WITNESS WHEREOF, the parties hereto have duly executed, sealed, and
delivered this Agreement in duplicate on the day and year first above written.
WITNESS: POLLO FRANCHISE, INC.
By:________________________
Its:
Print Name
DEVELOPER: CARROLS CORPORATION
By:________________________
Its:
Print Name<PAGE>
<PAGE>
DESCRIPTION OF DESIGNATED TERRITORY
Portions of Ohio, Indiana, Kentucky, as more specifically described in Schedules
"A" "B" and "C" attached to Exhibit 2 to this Agreement.
<PAGE>
<PAGE>
DEVELOPMENT SCHEDULE
[Attached]
<PAGE>
<PAGE>
APPROVED FORM OF FRANCHISE AGREEMENT
[Attached]
<PAGE>
OPTION AGREEMENT FOR MICHIGAN
OPTION AGREEMENT (the "Agreement") dated January 1, 1995, by and between
POLLO FRANCHISE, INC. ("Optionor") and CARROLS CORPORATION ("Optionee"), whose
principal place of business is located at 968 James Street, Syracuse, NY 13203.
BACKGROUND:
A. Optionor, as Franchisor, and Optionee, as Developer, have entered
into that certain Area Development Agreement ("Area Development Agreement" dated
of even date with this Agreement) pursuant to which Optionor granted Optionee
development rights for Pollo Tropical restaurants in the Protected Territory (as
defined in the Area Development Agreement).
B. Optionee has requested Optionor to grant it an option (the "Option")
to enter into an additional area development agreement in the form attached
hereto as Exhibit "A" (the "Additional Area Development Agreement") (provided
that any renewal or extension of the initial development schedule the parties
agree upon, if any, for the Additional Area Development Agreement shall be
determined by the parties at the time of agreement of the initial development
schedule and further provided that the parties shall endeavor in negotiating any
renewal or extension of the initial development schedule to provide for
continuing exclusivity to Developer in the Additional Protected Territory, as
defined below, so long as Developer complies with its past and continuing
development and other obligations under the Additional Area Development
Agreement),, pertaining exclusively to that certain development territory in the
State of Michigan, more specifically described in the map attached to this
Agreement as Exhibit "B" (the "Additional Protected Territory").
C. Optionor desires to grant, and Optionee desires to receive, the
Option on the terms and conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the premises and mutual agreements set forth
in this Agreement, and other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties agree that the foregoing
recitals are true and correct and further agree as follows:
I. Grant of Irrevocable Option/Option Payment
Optionor hereby irrevocably grants to Optionee an Option to enter the
Additional Development Agreement on the terms and conditions set forth in this
Agreement. In consideration of such grant, Optionee shall pay to Optionor
simultaneously with the execution of this Agreement the sum of Ten Thousand
Dollars ($10,000). Such sum shall be considered fully earned and nonrefundable
upon the execution of this Agreement.
II. Term of Option/Termination
Subject to the terms of this Agreement and unless sooner terminated as
provided hereunder, the Option shall remain in full force and effect for a
period (the "Term") which shall commence on the date of this Agreement and shall
end on the earlier of (a) the third anniversary of the date of this Agreement,
or (b) 183 days from the date the Optionor or any franchisee of the Optionor
<PAGE>other than Optionee shall commence construction of a 5th Pollo Tropical
restaurant in the Detroit Metropolitan Statistical Area ("MSA").
Ill. Protected Development Rights
Except as otherwise contemplated in this Agreement, during the period
Optionee may exercise the Option hereunder, Optionor shall not open, nor grant
any third party the right to open, a Pollo Tropical restaurant in the Additional
Protected Territory.
IV. Exercise of the Option
Optionee may exercise the Option only by delivering to Optionee a
written notice of the exercise of the Option which shall contain the following:
(a) A proposed development schedule of up to five (5) years (the
"Proposed Development Schedule") specifying the total number of Pollo Tropical
restaurants to be opened in the Additional Protected Territory, and the time
periods in which the respective Pollo Tropical restaurants shall be opened; and
(b) An executed Additional Development Agreement complying with the
terms and conditions of this Agreement.
V. Optionor's Approval of Option Exercise
Notwithstanding anything set forth in this Agreement to the contrary,
Optionee's effective exercise of the Option granted herein is expressly made
subject to and conditional upon (a) the Optionee being in full compliance with
its obligations under the Area Development Agreement and the Developer
maintaining the right to all Designated Territories thereunder; (b) the Proposed
Development Schedule being satisfactory (with respect to both the total number
of outlets to be opened in the Additional Protected Territory, and the time
periods concerning their respective openings) to the Optionor in its good faith
discretion; and (c) the payment of the applicable fee required under Section
II.A. of the Additional Area Development Agreement (which the parties agree
shall be the same amount as the initial fee paid upon execution of the Area
Development Agreement ($120,000), and which shall be credited against the
initial franchise fees in the order owed to Optionor under the Additional Area
Development Agreement). No cumulation of Franchised Restaurants opened under any
area development agreements shall be considered in determining fees owed under
any other area development agreement. In the event that the Optionor does not
deem the Proposed Development Schedule to be satisfactory in its good faith
discretion, it shall provide written notice to Optionee informing it to such
effect and the parties shall thereupon commence good-faith negotiations to
establish a development schedule that is mutually satisfactory. Failure of
conditions (a)-(c) to be satisfied prior to the expiration of the Term, other
than from the failure of Optionor to undertake negotiations in good faith of any
proposed development schedule from the Optionee, shall result in the expiration
of the Option, and all other rights of Optionee with respect to the Additional
Development Territory, except as specified in Section VI. Nothing in this
Agreement shall require Optionor to undertake or continue negotiations after the
expiration of the Option.
VI. Right of First Refusal
<PAGE>
Without limiting any other rights of Optionor, from time to time,
Optionor may (i) during the Term offer and enter into single unit franchise
agreements (but only for "Captive Special Sites," as defined in the Area
Development Agreement), and (ii) after the Term offer and enter into single unit
franchise agreements and multiple unit development rights, with one or more
independent third parties for Pollo Tropical restaurants anywhere in the
Additional Protected Territory, without restriction, except as follows:
In the event that the Optionee has complied with the condition in
Section V. (a) above, and continues to do so, but the parties have not entered
into the Additional Area Development Agreement, Optionee, for the eighteen (18)
month period immediately following the termination or expiration (whichever is
earlier) of the Term (such 18 month period referred to as the "Right of First
Refusal Period"), shall have a right of first refusal relating to any bona fide
offer to Optionor from any independent third party for Optionor to grant
exclusive area development rights for Pollo Tropical restaurants anywhere in the
Additional Protected Territory. Such right may be exercised solely by Optionee
entering into a binding agreement with Optionor on the same terms as offered to
Optionor by any third party, within 30 days of Optionor presenting such offer
to Optionee. If Optionee fails to accept such offer from Optionor within such
period, Optionor may thereafter grant such area development rights to any third
party on substantially the same terms as offered to Optionee. However, In the
event a third party shall fail to enter into a binding agreement with Optionor
on substantially the same terms as offered to Optionee, within 90 days of the
offer to the Optionee, Optionee's right of first refusal shall be revived
through the end of the Right of First Refusal Period.
VII. Cross-Default
The occurrence of an event of default (subject to any applicable notice
and/or cure provision) by Optionee under any other area development agreement
with Optionor (now or hereafter arising) shall constitute an event of default
under this Agreement. Notwithstanding anything herein to the contrary, any
termination of any such other area development agreement due to the default of
Developer thereunder shall result in the concurrent termination of this
Agreement and all of Optionee's rights hereunder.
VIII. No Assignment
Except as part of a simultaneous transfer of all of its rights as
Developer as permitted under the Area Development Agreement, Optionee shall not
assign, transfer, convey or otherwise dispose of any of the rights conferred
upon it under this Agreement. Any attempt to so assign, transfer, convey, or
otherwise dispose of any of such rights in contravention of this section shall
be null and void.
IX. Notices
Any and all notices required or permitted under this Agreement shall be
in writing and shall be personally delivered or mailed by certified mail, return
receipt requested, or sent by nationally recognized courier service, to the
respective parties at the following addresses:
<PAGE>Notices to Optionor: POLLO FRANCHISE, INC.
7300 N. Kendall Drive,
Eighth Floor
Miami, Florida 33156
Attn: Larry Harris, President
Copy to:
Ronald N. Rosenwasser, Esq.
Ronald N. Rosenwasser,.P.A.
One Boca Place, Suite 234W
2255 Glades Road
Boca Raton, FL 33431
Notices to Optionee: At the address specified on
Page 1 of this Agreement.
Copy to:
Joseph Zirkman, Esq.
CARROLS CORPORATION
968 James St.
Syracuse, NY 13203
or to such other address as any party may designate by notice complying with the
terms of this Section. Each such notice shall be deemed delivered: (a) on the
date delivered if by personal delivery; or (b) on the date upon which the return
receipt is signed or delivery is refused or the notice is designated by the
postal or courier authorities as not deliverable, as the case may be, if mailed
or sent by courier.
X. AMENDMENTS
This Agreement represents the entire understanding and agreement between
the parties hereto with respect to the subject matter hereof, and may not be
amended, modified, supplemented, or changed orally but only by an agreement in
writing signed by the party against whom enforcement of any such amendment,
modification, supplement, or change is sought and making specific reference to
this Agreement.
Xi. APPLICABLE LAW
A. This Agreement takes effect only upon its acceptance and execution
by Optionor in Miami, Florida and shall be interpreted and construed under the
laws of such state, without regard to principles of conflict of laws.
B. This agreement is entered into in Dade County, Florida and any action
sought to be brought by either party for the purpose of enforcing the terms and
provisions hereof, except as otherwise provided in Section XIII, below, shall
be brought in the United States District Court (Eleventh Circuit), Southern
District, or Circuit Court of the State of Florida in Dade County, and parties
do hereby waive all questions of personal jurisdiction or venue for the purposes
of carrying out this provision.
<PAGE>XII. ENFORCEMENT COSTS
If any legal action or other proceeding is brought for the enforcement
of this Agreement, or because of an alleged dispute, breach-h, default or
misrepresentation in connection with any provision of this Agreement, the
successful or prevailing party or parties shall be entitled to recover
reasonable attorneys' fees, court costs and all expenses even if not taxable as
court costs (including, without limitation, all such fees, costs and expenses
incident to arbitration, appellate, bankruptcy and post-judgment proceedings),
incurred in that action or proceeding, in addition to any other relief to which
such party or parties may be entitled. Attorneys' fees include paralegal fees,
administrative costs, investigative costs, costs of expert witnesses, court
reporter fees, sales and use taxes, if any, and all other charges billed by the
attorneys to the prevailing party.
XIII. ARBITRATION
Any claim arising out of or relating to this Agreement, or any breach
thereof, shall be submitted to arbitration in Dade County, Florida, in
accordance with the commercial rules of the American Arbitration Association,
and pursuant to the Federal Arbitration Act, and judgment upon the award may be
entered in any court having jurisdiction thereof. This arbitration provision
shall be deemed to be self-executing and in the event that Optionee fails to
appear at any properly noticed arbitration proceeding, award may be entered
against Optionee notwithstanding its failure to appear.
IN WITNESS WHEREOF, the parties have executed and delivered this Agreement on
the day and year above written.
POLLO FRANCHISE, INC., Optionor
By:____________________________
CARROLS CORPORATION, Optionee
By:____________________________
<PAGE>
<PAGE> EXHIBIT A TO THE OPTION AGREEMENT
FORM OF ADDITIONAL AREA DEVELOPMENT AGREEMENT
[See attachment]
****See Area Development Agreement****
<PAGE>
<PAGE> EXHIBIT B TO THE OPTION AGREEMENT
DESCRIPTION OF ADDITIONAL PROTECTED TERRITORY
[See attachment]
<PAGE> OPTION AGREEMENT FOR TORONTO
OPTION AGREEMENT (the "Agreement") dated January 1, 1995, by and between
POLLO FRANCHISE, INC. ("Optionor" and CARROLS CORPORATION ("Optionee"), whose
principal place of business is located at 968 James Street, Syracuse, NY 13203.
BACKGROUND:
A. Optionor, as Franchisor, and Optionee, as Developer, have entered
into that certain Area Development Agreement ("Area Development Agreement" dated
of even date with this Agreement) pursuant to which Optionor granted Optionee
development rights for Pollo Tropical restaurants in the Protected Territory (as
defined in the Area Development Agreement).
B. Optionee has requested Optionor to grant it an option (the "Option")
to enter into an additional area development agreement in the form attached
hereto as Exhibit "A" (the "Additional Area Development Agreement") (provided
that any renewal or extension of the initial development schedule the parties
agree upon, if any, for the Additional Area Development Agreement shall be
determined by the parties at the time of agreement of the initial development
schedule, and further provided that the parties shall endeavor in negotiating
any renewal or extension of the initial development schedule to provide for
continuing exclusivity to Developer in the Additional Protected Territory, as
defined below, so long as Developer complies with its past and continuing
development and other obligations under the Additional Area Development
Agreement), pertaining exclusively to that certain development territory in the
City of Toronto, Canada, more specifically described in the map attached to this
Agreement as Exhibit "B" (the "Additional Protected Territory").
C. Optionor desires to grant, and Optionee desires to receive, the
Option on the terms and conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the premises and mutual agreements set forth
in this Agreement, and other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties agree that the foregoing
recitals are true and correct and further agree as follows:
I. Grant of Irrevocable Option
Optionor hereby irrevocably grants to Optionee an Option to enter the
Additional Development Agreement on the terms and conditions set forth in this
Agreement.
II. Term of Option/Termination
(a) Subject to the terms of this Agreement and unless sooner terminated
as provided hereunder, the Option shall remain in full force and effect for the
three (3) year period (the "Term") commencing on the date of this Agreement.
(b) Notwithstanding the foregoing, in the event Optionor provides the
Optionee with a Pending Closing Notice (as defined below), during the Pending
Closing Period (as defined below), the Option shall not be exercisable. If the
Optionor enters into a Canadian Area Development Agreement (as defined below)
during any Pending Closing Period (regardless of whether before or during the
<PAGE>Term), the Option shall be considered terminated and of no further force
or
effect. A Pending Closing Notice may not be delivered more frequently than three
(3) times during any consecutive twelve (12) month period.
For purposes of this Agreement, a "Pending Closing Notice" means a
written notice from the Optionor to the Optionee of Optionor's ongoing bona fide
negotiations to enter into a Canadian Area Development Agreement. A "Pending
Closing Period" means the thirty (30) day period after delivery of a Pending
Closing Notice. A "Canadian Area Development Agreement" means a bona fide area
development agreement between the Optionor and independent third party for the
third party to develop Pollo Tropical restaurants in a majority of the seven
Canadian provinces (excluding British Columbia), provided that Ontario is one
of such four (4) provinces to be developed.
(c) In the event Optionor determines to develop the Additional Protected
Territory during the Term as a company market (including if owned by Optionor's
parent or its affiliates), Optionor shall notify Optionee in writing (a "Company
Development Notice"), and provided Optionee has not exercised the Option in
accordance with this Agreement prior to delivery of the Company Development
Notice, the Option shall be deemed terminated and of no further force or effect.
In the event Optionor, after delivery of a Company Development Notice, has not
commenced development of the Additional Protected Territory (commencement of
development shall mean opening at least one (1) restaurant during the period of
eighteen (18) months after delivery of the Company Development Notice), then
upon the expiration of such eighteen (18) month period (or, if sooner, upon
delivery of Optioner's notice of intention to abandon any current plans to so
develop the Additional Protected Territory as a company market), Optionee's
Option shall revive and be extended, subject to the other terms of this
Agreement, for a period of two (2) years from the date of such revival.
(d) Optionor's Option shall be terminated and of no further force or
effect in the event Optionor enters into a bona fide area development agreement
with an independent third party to develop Pollo Tropical restaurants anywhere
in the Additional Protected Territory, after the Optionee has failed to exercise
its right of first refusal with respect to the terms of such agreement as
permitted in Article VI of this Agreement.
Ill. Protected Development Rights
Except as otherwise contemplated in this Agreement, during the period
Optionee may exercise the Option hereunder, Optionor shall not open, nor grant
any third party the right to open, a Pollo Tropical restaurant in the Additional
Protected Territory.
IV. Exercise of the Option
Optionee may exercise the Option only by delivering to Optionee a
written notice of the exercise of the Option which shall contain the following:
(a) A proposed development schedule of up to five (5) years (the
"Proposed Development Schedule") specifying the total number of Pollo Tropical
restaurants to be opened in the Additional Protected Territory, and the time
periods in which the respective Pollo Tropical restaurants shall be opened; and
<PAGE>
(b) An executed Additional Development Agreement complying with the
terms and conditions of this Agreement.
V. Optionor's Approval of Option Exercise
Notwithstanding anything set forth in this Agreement to the contrary,
Optionee's effective exercise of the Option granted herein is expressly made
subject to and conditional upon (a) the Optionee being in full compliance with
its obligations under the Area Development Agreement and the Developer
maintaining the right to all Designated Territories thereunder; (b) the Proposed
Development Schedule being satisfactory (with respect to both the total number
of outlets to be opened in the Additional Protected Territory, and the time
periods concerning their respective openings) to the Optionor in its good faith
discretion; and (c) the payment of the applicable fee required under Section
II.A. of the Additional Area Development Agreement (which the parties agree
shall be the same amount as the initial fee paid upon execution of the Area
Development Agreement ($120,000), and which shall be credited against the
initial franchise fees in the order owed to Optionor under the Additional Area
Development Agreement). No cumulation of Franchised Restaurants opened under any
area development agreements shall be considered in determining fees owed under
any other area development agreement. In the event that the Optionor does not
deem the Proposed Development Schedule to be satisfactory in its good faith
reasonable discretion, it shall provide written notice to Optionee informing it
to such effect and the parties shall thereupon commence good-faith negotiations
to establish a development schedule that is mutually satisfactory. Failure of
conditions (a)-(c) to be satisfied prior to the expiration of the Term, other
than from the failure of Optionor to undertake negotiations in good faith of any
proposed development schedule from the Optionee, shall result in the expiration
of the Option, and all other rights of Optionee with respect to the Additional
Development Territory, except as specified in Section Vi. Nothing in this
Agreement shall require Optionor to undertake or continue negotiations after the
expiration of the Option.
VI. Limitations on Protected Rights/Right of First Refusal
Without limiting any other rights of Optionor, during and after the Term
Optionor may offer and enter into agreements with one or more independent third
parties, from time to time, for the grant of single unit franchise agreements
(but with respect to the period during the Term, only for "Captive Special
Sites," as defined in the Area Development Agreement) and multiple unit
development rights for Pollo Tropical restaurants for a substantial portion of
the Additional Protected Territory, without restriction, except as follows:
(a) Optionee has rightfully attempted to exercise its Option and
prior to the termination or expiration of the Term the parties are in the
process of negotiating the terms of the development schedule for the Additional
Area Development Agreement;
(b) Such action would be a violation of any Additional Area
Development Agreement entered into with Optionee; or
(c) Such action would be a violation of the Optionee's right of
first refusal, described as follows. In the event that the Optionee has complied
<PAGE>with the condition in Section V. (a) above, and continues to do so, but
the
parties have not entered into the Additional Area Development Agreement,
Optionee, during the Term and for the eighteen (18) month period immediately
following the termination or expiration (whichever is earlier) of the Term (such
18 month period referred to as the "Right of First Refusal Period"), shall have
a right of first refusal relating to any bona fide offer to Optionor from any
independent third party for Optionor to grant exclusive area development rights
for Pollo Tropical restaurants anywhere in the Additional Protected Territory.
Such right may be exercised solely by Optionee entering into a binding agreement
with Optionor on the same terms as offered to Optionor by any third party,
within 30 days of Optionor presenting such offer to Optionee. If Optionee fails
to accept such offer from Optionor within such period, Optionor may thereafter
grant such area development rights to any third party on substantially the same
terms as offered to Optionee. However, in the event a third party shall fail to
enter into a binding agreement with Optionor on substantially the same terms as
offered to Optionee, within 90 days of the offer to the Optionee, Optionee's
right of first refusal shall be revived through the end of the Right of First
Refusal Period. Notwithstanding the foregoing, Optionee's right of first refusal
described in this subparagraph (c) shall not apply to any independent third
party offer for it to be granted rights for a Canadian Area Development
Agreement which includes any part of the Additional Protected Territory.
VII. Cross-Default
The occurrence of an event of default (subject to any applicable notice
and/or cure provision) by Optionee under any other area development agreement
with Optionor (now or hereafter arising) shall constitute an event of default
under this Agreement. Notwithstanding anything herein to the contrary, any
termination of any such other area development agreement due to the default of
Developer thereunder shall result in the concurrent termination of this
Agreement and all of Optionee's rights hereunder.
VIII. No Assignment
Except as part of a simultaneous transfer of all of its rights as
Developer as permitted under the Area Development Agreement, Optionee shall not
assign, transfer, convey or otherwise dispose of any of the rights conferred
upon it under this Agreement. Any attempt to so assign, transfer, convey, or
otherwise dispose of any of such rights in contravention of this section shall
be null and void.
IX. Notices
Any and all notices required or permitted under this Agreement shall be
in writing and shall be personally delivered or mailed by certified mail, return
receipt requested, or sent by nationally recognized courier service, to the
respective parties at the following addresses:
Notices to Optionor: POLLO FRANCHISE, INC.
7300 N. Kendall Drive,
Eighth Floor
Miami, Florida 33156
Attn: Larry Harris, President
<PAGE>
Copy to: Ronald N. Rosenwasser, Esq.
Ronald N. Rosenwasser, P.A.
One Boca Place, Suite 234W
2255 Glades Road
Boca Raton, FL 33431
Notices to Optionee: At the address specified on
Page 1 of this Agreement.
Copy to: Joseph Zirkman, Esq.
CARROLS CORPORATION
968 James St.
Syracuse, NY 13203
or to such other address as any party may designate by notice complying with the
terms of this Section. Each such notice shall be deemed delivered: (a) on the
date delivered if by personal delivery; or (b) on the date upon which the return
receipt is signed or delivery is refused or the notice is designated by the
postal or courier authorities as not deliverable, as the case may be, if mailed
or sent by courier.
X. AMENDMENTS
This Agreement represents the entire understanding and agreement between
the parties hereto with respect to the subject matter hereof, and may not be
amended, modified, supplemented, or changed orally but.only by an agreement in
writing signed by the party against whom enforcement of any such amendment,
modification, supplement, or change is sought and making specific reference
to this Agreement.
XI. APPLICABLE LAW
A. This Agreement takes effect only upon its acceptance and execution
by Optionor in Miami, Florida and shall be interpreted and construed under the
laws of such state, without regard to principles of conflict of laws.
B. This agreement is entered into in Dade County, Florida and any action
sought to be brought by either party for the purpose of enforcing the terms and
provisions hereof, except as otherwise provided in Section XIII, below, shall
be brought in the United States District Court (Eleventh Circuit), Southern
District, or Circuit Court of the State of Florida in Dade County, and parties
do hereby waive all questions of personal jurisdiction or venue for the purposes
of carrying out this provision.
XII. ENFORCEMENT COSTS
If any legal action or other proceeding is brought for the enforcement
of this Agreement, or because of an alleged dispute, breach, default or
misrepresentation in connection with any provision of this Agreement, the
successful or prevailing party or parties shall be entitled to recover
reasonable attorneys' fees, court costs and all expenses even if not taxable as
court costs (including, without limitation, all such fees, costs and expenses
<PAGE>incident to arbitration, appellate, bankruptcy and post-judgment
proceedings),
incurred in that action or proceeding, in addition to any other relief to which
such party or parties may be entitled. Attorneys' fees include paralegal fees,
administrative costs, investigative costs, costs of expert witnesses, court
reporter fees, sales and use taxes, if any, and all other charges billed by the
attorneys to the prevailing party.
XIII. ARBITRATION
Any claim arising out of or relating to this Agreement, or any breach
thereof, shall be submitted to arbitration in Dade County, Florida, in
accordance with the commercial rules of the American Arbitration Association,
and pursuant to the Federal Arbitration Act, and judgment upon the award may be
entered in any court having jurisdiction thereof. This arbitration provision
shall be deemed to be self-executing and in the event that Optionee fails to
appear at any properly noticed arbitration proceeding, award may be entered
against Optionee notwithstanding its failure to appear.
IN WITNESS WHEREOF, the parties have executed and delivered this Agreement on
the day and year above written.
POLLO FRANCHISE, INC., Optionor
By:_____________________________
Its:
CARROLS CORPORATION, Optionee
By:_____________________________
Its:<PAGE>
<PAGE>
EXHIBIT A TO THE OPTION AGREEMENT
FORM OF ADDITIONAL AREA DEVELOPMENT AGREEMENT
[See attachment]<PAGE>
<PAGE>
EXHIBIT B TO THE OPTION AGREEMENT
DESCRIPTION OF ADDITIONAL PROTECTED TERRITORY
[See attachment]
<PAGE>
1994 RESTAURANT DIVISION
REGIONAL DIRECTOR BONUS PLAN
Individuals Covered
Individuals included in this plan are Restaurant Division Regional
Directors. An employee must be actively employed for the entire
year and have not terminated nor been terminated from employment
prior to payment of the bonus. Employees with less than a full
year's service may be included based on their contribution to the
Company at the discretion of the Executive Committee. Retirement
between year-end and payment shall not preclude eligibility.
Calculation of Bonus
An annual bonus will be established based on the relation of final
actual results for the year to Profit Plan for the individual's
Region and the Restaurant Division. The bonus will consist of an
amount that is a percentage of the individuals total annual salary
defined as regular weekly salary earned during the fiscal year (52
or 53 weeks) excluding any other bonus or special payments. The
percentage is determined as follows:
Threshold Target Maximum
% of Plan attained 90% 95% 100% 110% 120%
Bonus % based upon
Division Plan
attainment 9 14 20 29 34
Bonus % based upon
Region Plan
attainment 6 11 15 21 26
-- -- -- -- --
Total Bonus % 15% 25% 35% 50% 60%
== == == == ==
The bonus will be determined before any extraordinary or non-
recurring gains or losses, Federal and state taxes, corporate
interest expense and step-up depreciation. Percentage attainment
of plan is to be rounded to the nearest whole number except that
the 90% threshold must be reached without rounding. Bonus
percentage is to be prorated between steps on the above table and
then rounded to the nearest whole number. This plan may be
changed, suspended or terminated by the Company at any time.
<PAGE>
PURCHASE AND SALE AGREEMENT
Among
CARROLS CORPORATION
(as Purchaser)
And
RIVA DEVELOPMENT CORPORATION
and JOHN RIVA
(as Sellers)
Dated as of April ____, 1994
<PAGE>
<PAGE> TABLE OF EXHIBITS
Exhibit A Form of Assignment and Assumption of Lease
Exhibit B Form of Lease Consent and Estoppel Certificate
Exhibit C Form of Assumption Agreement
Exhibit D Form of Opinion of Purchaser's Counsel
Exhibit E Form of Bill of Sale and Assignment
Exhibit F Form of Opinion of Sellers' Counsel
<PAGE>
<PAGE> TABLE OF SCHEDULES
A Restaurant addresses and Burger King Numbers
1.1(a) Restaurant Equipment
1.2(c) Allocation of Purchase Price Among Separate Classes of Assets
1.3(b)(ii)Real Property Lease Expiration Dates, Monetary Terms and Renewal Terms
1.6(c) Real Property Lease Adjustment Formulae
2.5 Required Consents
2.6(b) Events or items not reflected in Financial Statements
2.9(a) Liens, Defaults on Real Properties
2.9(b) Certificate of Occupancy, Ongoing Repairs
2.11(b) Compliance with Employment Laws, etc.
2.11(c) Sellers' Employees and Wages
2.12 Other Contracts
2.13 (b) Employee Welfare Benefit Plans
2.14(a) Litigation
2.14(c) Required Licenses
2.15 Environmental Matters
2.17 Tax Matters
4.8(b) Creditors Schedule re: Bulk Sales
<PAGE>
<PAGE> PURCHASE AND SALE AGREEMENT
THIS PURCHASE AND SALE AGREEMENT (the "Agreement") made as of April ____,
1994 by and between CARROLS CORPORATION, a Delaware corporation, with its
principal office at 968 James Street, Syracuse, New York 13217-6969
("Purchaser"); Riva Development Corporation, a New York corporation with its
principal office at 191 Corn Hill Place, Rochester, New York 14608; and John
Riva, an individual having an address at 191 Corn Hill Place, Rochester, New
York 14608 (sometimes referred to herein collectively, as the "Sellers" and
individually as a "Seller"):
W I T N E S S E T H:
WHEREAS, Sellers operate the Burger King restaurants respectively
identified by address and Burger King Franchise number as set forth on Schedule
A annexed hereto (each restaurant is hereinafter sometimes referred to
individually as a "Restaurant" and collectively as the "Restaurants");
WHEREAS, Sellers are the owner or lessee of certain personal property used
or held for use in or in connection with the conduct of business at the
Restaurants and Sellers are the lessee of certain buildings, other real property
and land upon and in which the Restaurants are located (individually, the "Real
Property" and collectively, the "Real Properties");
WHEREAS, Sellers propose to sell, and Purchaser proposes to purchase, all
of the Assets (as hereinafter defined) of Sellers;
NOW, THEREFORE, in consideration of the mutual covenants and conditions
herein contained and other good and valuable consideration, the receipt,
adequacy and sufficiency of which are hereby acknowledged, the parties agree as
follows:
ARTICLE I
PURCHASE AND SALE; CLOSING
SECTION 1.1 Assets To Be Conveyed. Subject to the terms, provisions and
conditions contained in this Agreement, and on the basis of the representations
and warranties hereinafter set forth, Sellers agree to sell, assign, transfer,
convey and deliver to Purchaser at Closing (as hereinafter defined), and
Purchaser agrees to purchase and accept the assignment, transfer, conveyance and
delivery from Sellers at Closing of, all of the following assets used or located
in or held for use in connection with the Restaurants operated by Sellers
(collectively, the "Assets") free and clear of all mortgages, liens, security
interests, encumbrances, equities, claims, pledges, charges, liabilities and
other obligations of whatever kind and character (collectively referred to
herein as "Liens"):
(a) Restaurant Equipment. All of the machinery, equipment,
furnishings, supplies, uniforms, spare equipment parts and all other personal
<PAGE>property (other than Inventory, as hereinafter defined) owned by such
Seller and
used or held for use in, or in connection with, the operation of the
Restaurants, including but not limited to the assets set forth in Schedule 1.1
(a) annexed hereto (collectively, "Restaurant Equipment");
(b) Leasehold Improvements. All fixtures and other leasehold
improvements owned by Sellers in the Restaurants ("Leasehold Improvements");
(c) Franchise Agreements. The Burger King Franchise Agreements for
the Jefferson Road and Midtown Plaza Restaurants (the "Franchise Agreements");
(d) Inventories. All of the food, related paper products and
promotional items owned by Sellers or otherwise used or held for use in or in
connection with the business being conducted at the Restaurants (collectively,
"Inventory");
(e) Leased Assets. All of the right, title and interest of Sellers
in any item of personal property which is not owned by it but is leased by it
or otherwise is used or held for use, in or in connection with the business
being conducted at the Restaurants, including but not limited to, the assets set
forth on Schedule 1.1(e) annexed hereto (collectively the "Leased Assets"); and
(f) Miscellaneous Assets. All of the right, title and interest of
Sellers in any other asset or property owned, leased, subleased, used or held
for use in, or in connection with the business being operated at the Restaurants
including, but not limited to, contract rights and other general intangibles.
SECTION 1.2 Purchase Price for Assets. (a) The Purchase Price (as
hereinafter defined,) for the Assets shall be payable at the Closing to Sellers
either (i) by Federal funds bank wire transfer to an account designated by
Sellers or (ii) by delivery of one or more certified checks; except, however,
the Purchase Price to be paid for the Inventory shall be paid in the manner set
forth in Section 1.2(b)(ii) below.
(b) As used herein, "Purchase Price" shall mean:
(i) For the Assets of Sellers, exclusive of the Inventory, the
aggregate sum of Seven Hundred Seventy Five Thousand Dollars ($775,000);
(ii) For the Inventory, the amount equal to the cost therefor
as charged to Sellers by its unaffiliated supplier or vendor. The cost of the
Inventory of Sellers shall be determined by physical inventories to be taken
during the evening before the Closing Date in the Restaurants and in any other
location where Inventory may be located. Sellers and Purchaser shall each have
the right to have at least one of its representatives present at the taking of
such inventories. The representatives shall submit a written report of the
results of such inventories promptly after Closing to both Sellers and
Purchaser. Promptly after receiving such report Sellers shall then price the
inventories shown on such report by multiplying the physical items by their
cost, determined as aforesaid, and Sellers shall submit such priced inventory
(the "Priced Inventory Report") to Purchaser. If Purchaser and Sellers are
unable to agree upon the purchase price of the Inventory within 10 days after
Sellers and Purchaser have received the Priced Inventory Report, such purchase
<PAGE>price shall be determined by the accounting firm of Coopers & Lybrand,
whose determination shall be final and binding upon Sellers and Purchaser.
Within 30
days after the final determination of the purchase price for the Inventory,
Purchaser shall pay said amount by check to Sellers. The fees of Coopers &
Lybrand shall be borne by Seller and Purchaser.
(c) With respect to the Assets being sold by Sellers, the Purchase
Price therefor shall be allocated among the separate classes of assets
comprising the Assets of such Seller in the manner set forth on Schedule 1.2(c)
annexed hereto and the Sellers and Purchaser shall prepare and file their
respective tax allocation forms consistent with such allocations.
SECTION 1.3 Real Properties: Assignments of Leases. Subject to the terms,
provisions and conditions contained in this Agreement and on the basis of the
representations and warranties hereinafter set forth, at the Closing, Sellers
shall assign to Purchaser all of their leasehold interest in the Real Properties
and shall assign, sublease or otherwise transfer to Purchaser all of their
right, title and interest in and to all parking and other access agreements or
arrangements relating to the Real Properties, as follows:
(a) Assignment of Leases. (i) At Closing, Sellers shall assign to
Purchaser all of Sellers' right, title and interest as tenant under the lease
agreements pursuant to which it occupies the Real Properties (individually a
"Lease", collectively the "Leases") pursuant to the form of Assignment and
Assumption of Lease (individually the "Lease Assignment") annexed hereto as
Exhibit A. The Lease Assignment shall be executed and delivered at Closing by
each applicable Seller and Purchaser.
(ii) The expiration dates, monetary terms and renewal terms for
each of the Leases are as set forth in Schedule 1.3 (b)(ii).
(c) Lease Assignment Consent. At Closing, Sellers shall deliver to
Purchaser a Consent to Assignment and Estoppel Certificate in the form annexed
hereto as Exhibit B (the "Lease Assignment Consent") which shall have been duly
executed by the respective landlord under the Leases.
SECTION 1.4 Assumption of Liabilities
(a) No Assumption by Purchaser. The parties hereto hereby agree and
acknowledge that Sellers are not selling, transferring, assigning, delivering
or otherwise conveying, and Purchaser is not purchasing, receiving, acquiring
or otherwise assuming, any liabilities of Sellers, or any of their respective
Affiliates except as specifically set forth in Section 1.4(b) hereof. Purchaser
shall neither be liable for any liability or obligation of Sellers, or any of
its respective Affiliates nor shall it be required to indemnify Sellers, or any
of their respective Affiliates against any liability or obligation other than
those so specifically assumed or indemnified, as the case may be.
Without limiting the generality of the foregoing, Purchaser is not assuming
and shall not indemnify Sellers, or any of its respective Affiliates against any
liability, obligation, duty or responsibility of any Seller, or any of its
respective Affiliates:
<PAGE>
(i) arising from, or out of, the ownership or operations or use
of, or incurred in connection with, or incurred as a result of any claim made
against a Seller, or any of its respective Affiliates in connection with, any
Restaurant, Asset, Real Property, Lease or Assumed Contract (as hereinafter
defined) on or prior to, or relating to any time period prior to 6:00 A.M. on
the Closing Date;
(ii) any Federal, state or local income taxes, transfer taxes,
sales taxes or any other kind of tax of whatever kind including, without
limitation, any such tax that may arise from or by reason of the transactions
contemplated by this Agreement;
(iii) with respect to any wages, vacation, severance or sick pay
or any rights under any stock option, bonus or other incentive arrangement that
have accrued as of the Closing Date;
(iv) with respect to any employment, consulting or similar
arrangement to which any Seller is a party or for which any Seller is
responsible;
(v) with respect to any Plan (as hereinafter defined) whether
arising before, on or after the Closing Date;
(vi) with respect to all creditors of Sellers, including,
without limitation, those in connection with Sellers' bankruptcy and those
claims arising subsequent to Sellers' bankruptcy action; or
(vii) under any Laws (as hereinafter defined) relating to public
health and safety and pollution or protection of the environment, including,
without limitation, those relating to emissions, discharges, releases or
threatened releases of pollutants, contaminants, or hazardous or toxic materials
or wastes into ambient air, surface water, ground water, or land, or otherwise
relating to the manufacture, processing, distribution, use, treatment, storage,
disposal, transport, or handling of pollutants, contaminants or hazardous or
toxic materials or wastes or any materials defined or categorized by any of the
above as "Hazardous Materials", "Hazardous Substances", or similar or related
designations (collectively referred to herein as "Environmental Laws" arising
before the Closing Date.
(b) Assumption of Assumed Contracts. Sellers shall assign to, and
Purchaser shall accept assignment of and assume from and after the Closing Date,
all of the rights, obligations and liabilities of Sellers attributable to the
period after the Closing Date, under the Franchise Agreements, Leases, and the
Other Contracts (as hereinafter defined) (collectively, the "Assumed
Contracts").
SECTION 1.5 Closing; Deliveries
(a) Date. The closing of the transactions contemplated hereby (the
"Closing") shall take place at the offices of Purchaser, 968 James Street,
Syracuse, New York, (or such other location as shall be agreed upon by the
parties) on or about May 10, 1994, provided, however, that if, through no fault
of the parties hereto, all of the conditions to the parties' obligations to
<PAGE>close hereunder are not satisfied or waived on the date so designated, the
Closing shall be adjourned to a subsequent mutually agreeable date not later
than June 15, 1994, unless further extended by mutual agreement by the parties.
The "Closing Date" is the date Closing actually takes place.
(b) Delivery of Documents. At the Closing, Sellers and Purchaser
shall deliver to each other the respective documents and other items set forth
in Article V.
SECTION 1.6 Adjustments. (a) All customary prorations with respect to (i)
obligations under the Assumed Contracts; (ii) utility charges and (iii) personal
property taxes, shall be adjusted between the parties as of 6:00 A.M. on the
Closing Date. Payment, if any, owed by Purchaser to Sellers or by Sellers to
Purchaser by reason of such adjustments shall be made at the Closing (by
adjustment of the Purchase Price, if practicable) or as soon as reasonably
practicable thereafter.
(b) Purchaser shall pay all sales taxes arising out of this
transaction. Sellers shall be responsible for all transfer taxes and franchise
assignment fees owed to Burger King Corporation ("Burger King") in connection
with the assignment of the Franchise Agreements to Purchaser.
(c) All "minimum" or "fixed rentals" and any other monetary
obligations accruing under the Leases shall be adjusted for the month in which
the Closing occurs. In the event the period used in computing and/or adjusting
percentage rental (hereinafter referred to as the "Adjustment Lease Year") under
any of the Leases commences before the Closing Date and ends after the Closing
Date, such percentage rental shall be adjusted at the end of the Adjustment
Lease Year for such Leases so affected as follows:
(i) Sellers shall be required to pay to Purchaser, within ten
days after the expiration of the Adjustment Lease Year, an amount equal to the
lesser of (1) the amount of percentage rental due for such Adjustment Lease Year
or (2) the "Percentage Rent Contribution" determined by the following formula:
(A - B) x C x D = Percentage Rent Contribution 365 in which:
A = Total net sales or similar term as defined in such Lease used
in determining such percentage rental during such Adjustment Lease Year;
B = The "sales break point" for such Lease as indicated in Schedule
1.6(c):
C = Number of days during the Adjustment Lease Year prior to, but
not including, the Closing Date; and
D = Percentage rent factor for such Lease as indicated in Schedule
1.6(c);
provided, however, that, in the event the above formula yields a negative amount
as the Percentage Rent Contribution, the Percentage Rent Contribution shall be
deemed equal to zero; and
(ii) Purchaser shall be required to pay directly to the lessor
<PAGE>under the Lease the percentage rental, if any, due for the Adjustment
Lease
Year.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SELLERS
Sellers, jointly and severally, represent, warrant, covenant and agree to
and with Purchaser as follows:
SECTION 2.1 Organization and Corporate Power. Each corporate Seller is a
corporation duly organized, validly existing and in good standing under the Laws
of New York State and is duly qualified and licensed to do business in such
jurisdiction which is the only jurisdiction wherein the character of the Real
Properties and other Assets owned or leased or the nature of the business of
such corporate Seller makes such licensing or qualification to do business
necessary. Each corporate Seller has full power and authority (corporate or
otherwise) to own its assets, to hold under lease the real property it presently
holds under lease including, without limitation, the Jefferson Road and Midtown
Plaza Real Properties, and to carry on the business in which it is engaged at
all locations at which it is presently located including, without limitation,
operation of the Restaurants at the Real Properties and to execute and deliver
this Agreement and the other documents and instruments to be executed and
delivered by such Seller, as the case may be, pursuant hereto or in connection
herewith (this Agreement and all other agreements, documents and instruments to
be entered into pursuant to this Agreement or in connection herewith including
all exhibits and schedules annexed hereto and thereto are collectively referred
to herein as the "Transaction Documents") and to consummate the transactions
contemplated hereby and thereby.
SECTION 2.2 Governing Instruments. The copies of the Governing Instruments
(as hereinafter defined) of each corporate Seller, and all amendments thereto
to date, as certified by the respective secretaries of each corporate Seller
have heretofore been delivered to Purchaser, and are complete and correct. No
corporate Seller is in default in the performance, observance or fulfillment of
any of the provisions, terms or conditions of its Governing Instruments.
SECTION 2.3 Due Authorization. All requisite authorizations for the
execution, delivery and performance of this Agreement and the other Transaction
Documents by each Seller have been duly obtained. The execution and delivery
of this Agreement and the other Transaction Documents and the consummation of
the transactions contemplated hereby and thereby have been duly authorized by
the Board of Directors and shareholders of each corporate Seller, and no other
corporate acts or proceedings on the part of any corporate Seller or its
shareholders are necessary to authorize the execution and delivery of this
Agreement or any of the other Transaction Documents or the consummation of the
transactions contemplated hereby or thereby. This Agreement and each of the
other Transaction Documents, upon execution and delivery by such corporate
Seller, will be the legal, valid and binding obligation of such corporate Seller
enforceable against it in accordance with its terms subject to the general
principles of equity affecting the right to specific performance and injunctive
relief.
<PAGE>
SECTION 2.4 No Violation. The execution, delivery and performance of this
Agreement and the other Transaction Documents by Sellers and the consummation
by Sellers of the transactions contemplated hereby and thereby, do not and at
Closing will not:
(a) violate its Governing Instruments;
(b) violate or conflict with or constitute a default (or an event which, with
notice or lapse of time, or both, would constitute a default) under any
agreement, indenture, instrument or understanding to which Sellers are a party
or by which it is bound;
(c) violate any judgment, decree, law, rule or regulation to which Sellers are
a party or by which it is bound, provided the Required Consents (as hereinafter
defined) are obtained; (d) result in the creation of, or give any party the
right to create any encumbrance upon the property and assets of Sellers; (e)
terminate or modify, or give any third party the right to terminate or modify,
the provisions or terms of any agreement or commitment to which Sellers are a
party or by which Sellers are subject or bound; or (f) result in any suspension,
revocation, impairment, forfeiture or non-renewal of any permit, license,
qualification, authorization or approval applicable to Sellers.
SECTION 2.5 Consents. Schedule 2.5 sets forth a list of all consents,
approvals or other authorizations which Sellers are required to obtain from, and
any filing which Sellers are required to make with, any governmental authority
or agency or any other Person including, but not limited to, consents required
from Burger King (the "Burger King Consents") in connection with the execution,
delivery and consummation of this Agreement and the other Transaction Documents
and the consummation of the transactions contemplated hereby or thereby
(collectively, the "Required Consents").
SECTION 2.6 Financial Statements. (a) The corporate Seller has delivered
to Purchaser its compiled balance sheet as at December 31, 1992 and the related
statements of income, shareholders equity and cash flows for the 12 months ended
December 20, 1992, and its unadjusted internally prepared statements for the
year ending December 19, 1993.
(b) The financial statements of Sellers referred to in Section 2.6(a)
(collectively, the "Financial Statements") in all material respects are true,
correct and complete, have been prepared in accordance with generally accepted
accounting principles consistently applied and accurately present the assets,
liabilities, financial positions and results of operations of Sellers as at the
dates thereof and for the periods covered thereby. The Financial Statements of
Sellers reflect or provide for all known material claims against, and all known
debts and liabilities (of any kind or nature) of, Sellers, fixed or contingent,
as at the dates thereof and for the periods covered thereby, and Sellers do not
know of any basis for the assertion against them of any liability or obligation
of any nature whatsoever, not fully reflected or reserved against in such
Financial Statements. There has not been any change between the date of the
Financial Statements and the date of this Agreement which has materially
affected the financial condition, assets, liabilities, results of operations or
business of Sellers and, except as set forth in Schedule 2.6(b), no fact or
condition exists or is contemplated or threatened which might cause any such
<PAGE>change at any time in the future.
Without limiting the foregoing since December 19, 1993:
(i) No Seller has incurred any obligation or liability (absolute
or contingent) except current liabilities incurred in the ordinary course of
conduct of business and obligations under Contracts entered in the ordinary
course of business; and
(ii) No Seller has paid, loaned or advanced any amounts to, or
sold, transferred, leased, subleased or licensed any Real Properties or Assets
to, or entered into any agreement or arrangements with, any Affiliate or
associate (and any of such transactions shall have been terminated on or before
the Closing Date).
SECTION 2.7 Assets. (a) Sellers will transfer to Purchaser at Closing,
good and marketable title to all of its Assets and Assumed Contracts free and
clear of all Liens. The Assets of Sellers include all of the operating assets
used or held for use in or in connection with the business being conducted by
Sellers at the Restaurants. All the Assets will be transferred "as-is". On the
Closing Date, each Restaurant, together with its related Assets and Real
Property, taken as a whole, will constitute a fully operable "turn-key" Burger
King restaurant sufficient to permit Purchaser to immediately operate the
business at such Restaurant as presently being conducted therein.
(b) Sellers will transfer and/or assign to Purchaser at Closing all
warranties, if any, with respect to its Assets.
SECTION 2.8 Inventory. The Inventory of Sellers consist, and at Closing
will consist, of items of quality and quantity usable or salable in the ordinary
course of business. The present quality and quantities of all Inventory of
Seller are, and the qualities and quantities of all Inventory outstanding at the
Closing will be, reasonable in accordance with the current specifications of
Burger King. At Closing, the Inventory at each Restaurant shall be sufficient
for the operation of such Restaurant for at least 48 hours after the Closing
Date, and in no event will there be excess inventory in relation to normal
usage.
SECTION 2.9 Real Properties; Leases. (a) Seller has delivered to Purchaser
a true and complete copy of the Leases, together with all amendments thereto.
To Sellers' knowledge, each applicable owner of Real Properties has good record
and marketable title in fee simple to such real property free and clear of all
Liens. No Seller has knowledge or information of any facts, circumstances or
conditions which do or would in any way adversely affect the Real Properties or
the operation thereof or the business thereon as presently conducted or as
intended to be conducted. At or prior to Closing, Sellers shall cause to be
discharged of record all Liens against Sellers or Sellers' interest affecting
its Real Property. Except as otherwise set forth on Schedule 2.9(b), each Lease
is valid and binding in full force and effect and enforceable in accordance with
its terms. Except as otherwise set forth on Schedule 2.9(b), there are no
existing defaults or offsets which any of the applicable landlords has against
the enforcement of its Lease by the applicable Seller thereunder and, to
Sellers' knowledge, landlord is not in default under the applicable Lease, nor
have any events under any such Lease occurred which, with the giving of notice
<PAGE>or passage of time or both, would constitute a default thereunder by
landlord.
(b) The Real Properties and all improvements located thereon and the
present use thereof comply with, constitute a valid non-conforming use, or are
operating pursuant to the provisions of a valid variance under all zoning laws,
ordinances and regulations of governmental authorities having jurisdiction
thereof and, to the best of Sellers' knowledge, the construction, use and
operation of the Real Properties by Sellers are in substantial compliance with
all Laws. Set forth on Schedule 2.9(b) annexed hereto is a true and complete
schedule of each certificate of occupancy for each restaurant located on the
Real Properties, copies of which certificates of occupancy and all amendments
thereto to date have heretofore been delivered to Purchaser, and which copies
are complete and correct as of the date of this Agreement and will be complete
and correct as of the Closing Date. There are no ongoing repairs to the Real
Properties or Restaurants located thereon being made by or on behalf of any
Seller or being made by or on behalf of any landlord. All necessary occupancy
and other certificates and permits, municipal and otherwise, for the lawful use
and occupancy of the Real Properties for the purposes for which they are
intended and to which they are presently devoted including, without limitation,
for the operation of a Burger King restaurant thereon, have been issued and
remain valid. There are no pending or threatened actions or proceedings that
might prohibit, restrict or impair such use and occupancy or result in the
suspension, revocation, impairment, forfeiture or non-renewal of any such
certificates or permits. All notes or notices of violation of any Laws, against
or affecting any such Real Properties have been complied with. There are no
outstanding correcting work orders from any Federal, State, county, municipal
or local government, or the owner of the Real Properties or any insurance
company with respect to any such Real Properties.
(c) There are no condemnation or eminent domain proceedings of any
kind whatsoever or proceedings of any other kind whatsoever for the taking of
the whole or any part of the Real Properties for public or quasi-public use
pending or, to the knowledge of Sellers, threatened against the Real Properties.
(d) The Real Properties and all improvements thereon represent all of
the locations at which the Sellers conduct business relating to the Restaurants
and are, now, and at Closing will be, the only locations where any of the Assets
are or will be located.
(e) All water, sewer, gas, electric, telephone and drainage
facilities, and all other utilities required by any Law or by the normal use and
operation of the Real Properties and the Restaurants located thereon are
installed to the property lines of the respective Real Properties, are connected
pursuant to valid permits, are fully operable and are adequate to service the
Real Properties and the Restaurants located thereon and to permit full
compliance with all Laws and normal utilization of the Real Properties and the
Restaurants located thereon.
(f) All licenses, permits, certificates, including, without
limitation, proof of dedication, required from all governmental agencies having
jurisdiction over the Real Properties, and from any other Persons, for the
normal use and operation of the Real Properties and the Restaurants located
thereon and to ensure adequate vehicular and pedestrian ingress to and egress
<PAGE>from the Real Properties and the Restaurants located thereon have been
obtained.
(g) Parking, Easements and Related Agreements. Except as set forth
in the Leases, there are no written or oral parking leases, easements,
agreements, grants, licenses, options and any other agreement pursuant to which
Sellers are granted, for use in connection with the Restaurants, parking
privileges or rights, current or prospective, and/or rights of access of any
kind or nature in and to the Real Properties.
SECTION 2.10 Franchise Agreements. Sellers have delivered to Purchaser a
true, complete and correct copy of the Franchise Agreements relating to the
Restaurants, including any and all amendments thereto.At Closing Sellers will
transfer to Purchaser their respective right, title and interest in the
Franchise Agreements, free and clear of all Liens. Subject to the written
consent of Burger King, which Sellers shall obtain and deliver to Purchaser at
or prior to the Closing, Sellers will have the absolute right and authority to
sell, assign, transfer and convey the Franchise Agreements.
SECTION 2.11 Employment Arrangements. (a) Except as required by Law,
Sellers have no obligation, contingent or otherwise, under any employment
agreement, collective bargaining or other labor agreement, any agreement
containing severance or termination pay arrangements, retainer or consulting
arrangements, or purchase plan or other employee contract or non-terminable
(whether with or without penalty) arrangement.
(b) Except as set forth on Schedule 2.11(b), within the last five
years Sellers have not experienced any labor disputes, union organization
attempts or any work stoppage due to labor disagreements. Except as set forth
on Schedule 2.11(b), (i) to the best knowledge of Sellers, Sellers are in
substantial compliance with all applicable Laws respecting employment and
employment practices, terms and conditions of employment and wages and hours,
and are not engaged in any unfair labor practice; (ii) there are no unfair labor
practice, charge or complaint against Sellers pending or threatened before the
National Labor Relations Board; (iii) there is no labor strike, dispute, request
for representation, slowdown or stoppage actually pending or threatened against
or affecting Seller;s (iv) no question concerning representation has been raised
or is threatened respecting the employees of Sellers; and (v) no grievance which
might have an adverse affect on Sellers or the conduct of its business nor any
arbitration proceeding arising out of or under collective bargaining agreements
is pending and no claims therefor exist.
(c) Schedule 2.11(c) sets forth a true and complete list of the names
of all persons employed by Sellers at the Restaurants as of the date hereof, and
the salary or hourly wage payable to each such person.
SECTION 2.12 Contracts and Arrangements. (a) Except for the Franchise
Agreements, Leases, and the contracts set forth on Schedule 2.12 hereto (the
contracts set forth on Schedule 2.12 being referred to herein, collectively, as
the "Other Contracts"), no Seller has any contract or agreement, which would be
binding on Purchaser on or after Closing, relating to the Restaurants, Assets
or Real Properties, including, without limiting the generality of the foregoing,
<PAGE>any (i) Contract for the purchase or sale of Inventory; (ii) Contract for
the
purchase or sale of supplies, services or other items; (iii) Contract for the
purchase, sale or lease of any Restaurant Equipment; (iv) Franchise Agreement
or license agreement; and (v) employment or consulting agreement or pension,
disability, profit sharing, bonus, incentive, insurance, retirement or other
employee benefit agreement.
(b) Sellers have delivered to Purchaser a true, complete and correct
copy of each Other Contract applicable to it together with all amendments (if
oral, a written description of the terms thereof) thereto.
(c) No Seller has given any power of attorney (revocable or
irrevocable) to any Person for any purpose whatsoever.
SECTION 2.13 ERISA. (a) There are no "employee pension benefit plans" (as
defined in section 3(2) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA")), including all "multi-employer plans" (as defined in ERISA
section 3(37)), and any other stock bonus, pension, or profit sharing plans
described in section 401a of the Internal Revenue Code of 1986, as amended (the
"Code"), that Sellers or any other entity which would be considered in a
controlled group or under common control or as a single employer with Sellers
under ERISA sections 4001(a)(14) or (b) or Code sections 414(b), (c), (m), or
(o) presently maintains or is obligated to contribute or had maintained or had
an obligation to contribute at any time within the past five years.
(b) Schedule 2.13(b) contains a true and complete list of all
"employee welfare benefit plans" as defined in ERISA section 3(1) and all
deferred compensation, stock purchase, stock option, incentive, bonus, vacation,
severance (including, without limitation, benefits in the event of a change of
ownership in whole or in part, of Seller), disability, hospitalization, medical
insurance, child care, educational assistance, or other employee benefit plan,
program or arrangement currently maintained by Sellers or to which Sellers have
an obligation to contribute.
(c) Sellers have delivered or made available to Purchaser true and
complete copies of all documents, as they may have been amended to the date
hereof, embodying or relating to the plans, programs or arrangements described
in Section 2.13(b) (collectively the "Plans").
(d) There are no actions, audits, suits, or claims pending (other than
routine claims for benefits) or, to the knowledge of Sellers, threatened,
against any Plan or any fiduciary of any Plan or against the assets of any Plan.
(e) No Seller has any obligation to any retired or former employee
with respect to, nor made any oral or written representation or communication
to
any retired or former employee regarding, the provisions of any disability (long
or short term), hospitalization, medical, dental or life insurance plans
(whether insured or self-insured) or any other "employee welfare benefit" plan
as defined in ERISA section 3(1).
SECTION 2.14 Litigation, Compliance with Laws and Consents. (a) Except as
set forth on Schedule 2.14(a), there are no suits, grievances, complaints,
<PAGE>charges, inquiries, proceedings, hearings, demands, notices, demand
letters,
claims, actions, causes of action or investigations before any court, tribunal,
governmental or regulatory authority or any other Person (each an "Action" and,
collectively, "Actions") now pending, or, to the knowledge of Sellers, in
prospect or threatened against, any Seller or any of its officers, directors or
partners, at law or in equity, whether or not fully covered by insurance, in
connection with the Assets, Leases, Assumed Contracts, Real Properties,
Restaurants, business, affairs, properties or assets of Sellers.
(b) To the best knowledge of Sellers, Sellers at all times during the
past have been, and at Closing, will be, in substantial compliance in all
respects with all laws (whether statutory or otherwise) rules, regulations,
orders, ordinances, judgments, injunctions, demands, or decrees of any
governmental authority (Federal, state, local or otherwise) (collectively
"Laws") applicable to its business, affairs, properties or assets. No Seller,
nor any officer, director or authorized agent of any Seller is in default with
respect to, and has not been charged or to its knowledge threatened with, nor
is under investigation with respect to any violation of any Laws relating to any
aspect of its business, affairs, properties or assets including, but not limited
to, the Restaurants, Assets, Leases, Assumed Contracts, and the Real Properties.
(c) Set forth on Schedule 2.14(c) hereto is a list of all licenses,
permits, approvals, permissions, qualifications, consents and other
authorizations (collectively "Licenses") which are required to be obtained in
connection with the ownership, use or operation of the Restaurants, the Assets,
Leases or the Real Properties ("Required Licenses"). Except as set forth in
Schedule 2.14(c), Sellers have obtained each of the Required Licenses and each
such Required License is and on the Closing Date will be, validly issued and in
full force and effect and there are not now, and at Closing shall not be any
Actions pending, and to Sellers' knowledge, any Actions in prospect or
threatened, challenging the Required Licenses.
SECTION 2.15 Environmental Matters. Except as set forth in Schedule 2.15
annexed hereto:
(i) Sellers have each obtained all Licenses which are required under any
Environmental Laws; (ii) to the best of Sellers' knowledge, Sellers are in
substantial compliance with all terms and conditions of the Required Licenses
and are also in substantial compliance with all other limitations, restrictions,
conditions, standards, prohibitions, requirements, obligations, schedules and
timetables contained in any Environmental Laws or code, plan, order, decree or
judgment relating to public health and safety and pollution or protection of the
environment or any notice or demand letter issued, entered, promulgated or
approved thereunder; (iii) there are no civil, criminal or administrative
Actions pending, or to Sellers' knowledge threatened, against any Seller
relating in any way to any Environmental Law or any regulation, code, plan,
order, decree, judgment, injunction, notice or demand letter issued, entered,
promulgated or approved thereunder; and (iv) no Seller knows or has any reason
to know of, nor has any Seller received any notice of any facts, events or
conditions which would interfere with or prevent continued compliance with, or
give rise to any common law or legal liability under any Environmental Law.
<PAGE> SECTION 2.16 Insurance Policies. Sellers have maintained with
financially
sound and reputable insurers insurance with respect to the real properties and
business against loss or damage of the kinds customarily insured against by
reputable companies in the same or similar business, of such types and in such
amounts (with such deductible amounts) as is customary for such companies under
similar circumstances. All of the applicable insurance policies are valid and
enforceable and in full force and effect and will be continued in full force and
effect up to and including the Closing Date.
SECTION 2.17 Tax Returns. Except as set forth on Schedule 2.17, as of the
date hereof, no taxes are past due, and no tax liabilities have been assessed
or proposed which remain unpaid and all current payroll taxes have been paid.
Except as set forth on Schedule 2.17, no Seller is aware of any basis upon which
any assessment of additional Federal, state or local income or other taxes could
be made, and no Seller has signed any extension agreement with the Internal
Revenue Service or any other governmental agency or given waiver of a statute
of limitations with respect to the payment of taxes for periods for which the
statute of limitations has not expired. Sellers shall be liable for all tax
liabilities in connection with the operation of the Restaurants, the Assets, the
Real Properties, the Leases, and Assumed Contracts, which cover periods prior
to the Closing Date. Each Seller shall be liable for all transfer and similar
tax liabilities, if any, in connection with the assignment of the Leases and the
Assumed Contracts. All taxes which any Seller is required by law to withhold
or collect have been duly withheld or collected and to the extent required have
been paid over to the proper governmental authorities on a timely basis or
reflected as an obligation on the current Financial Statements of the applicable
Seller.
SECTION 2.18 Adverse Restrictions. Provided Seller obtains the Required
Consents, no Seller is subject to any charter, by-law, Lien, lease, agreement,
instrument, order, judgment or decree, or any other restriction of any kind or
character, or, any law (currently in existence or adopted on or before the
Closing Date), rule or regulation, which now is or in the future could be
burdensome or which could affect materially adversely the Restaurant or the
business conducted therein, Assets, Real Properties, Leases, or Assumed
Contracts. The execution and delivery of this Agreement and the other
Transaction Documents and the consummation of the transactions contemplated
hereunder and thereby will not result in the violation or breach of, default or
the creation of any Lien under any of the aforesaid.
SECTION 2.19 Brokers. No broker, finder or selling agent has had a part
in bringing about any of the transactions contemplated by this Agreement or the
other Transaction Documents (including, but not limited to, the leasing of the
Real Properties and the assignment of the Real Property Leases) and no
commission or other fee is due to any party in connection with the transactions
contemplated by this Agreement or the other Transaction Documents.
SECTION 2.20 Material Information. The Financial Statements, this
Agreement, the other Transaction Documents and any exhibit, schedule,
certificate, or other information, representation, warranty or other document
furnished or to be furnished by Sellers to Purchaser pursuant to or in
connection with any of the foregoing, do not (i) contain, nor will the same
contain, any untrue statement of a material fact; or (ii) omit, nor will the
<PAGE>same omit, or fail to state, a material fact required to be stated herein
or
therein or which is necessary to make the statements herein or therein not
misleading.
SECTION 2.21 Continuing Representations. The representations and
warranties of Sellers herein contained shall be true and correct on and as of
the Closing Date with the same force and effect as if made on and as of that
date.
<PAGE>
<PAGE>
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser represents, warrants, covenants and agrees to and with Seller
that:
SECTION 3.1 Organization and Corporate Power. Purchaser is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware and is duly qualified and licensed to do business in the State
of New York. Purchaser has full power and authority (corporate and other) to
execute and deliver this Agreement and the other Transaction Documents to be
executed and delivered by Purchaser pursuant hereto or in connection herewith
and to consummate the transactions contemplated hereby and thereby.
SECTION 3.2 Certificate of Incorporation and By-Laws. Copies of the
Certificate of Incorporation and By-Laws of Purchaser and all amendments thereto
to date, as certified by the Secretary of Purchaser, have heretofore been
delivered to Sellers by Purchaser, and are complete and correct as of the date
of this Agreement and will be complete and correct as of the Closing Date.
Purchaser is not in default in the performance, observance or fulfillment of any
of the terms or conditions of its Certificate of Incorporation or By-Laws.
SECTION 3.3 Due Authorization. All requisite authorizations for the
execution, delivery, performance and satisfaction of this Agreement and the
other Transaction Documents by Purchaser have been duly obtained. The execution
and delivery of this Agreement and the other Transaction Documents and the
consummation of the transactions contemplated hereby and thereby have been duly
authorized by the Board of Directors of Purchaser and no other corporate acts
or proceedings on the part of Purchaser or its shareholders are necessary to
authorize the execution and delivery of this Agreement or any of the other
Transaction Documents or the consummation of the transactions contemplated
hereby or thereby. This Agreement and each of the other Transaction Documents,
upon execution and delivery by Purchaser, will be the legal, valid and binding
obligation of Purchaser, enforceable against Purchaser in accordance with its
terms, and subject to the general principles of equity affecting the right to
specific performance and injunctive relief.
SECTION 3.4 No Violation. The execution, delivery and performance of this
Agreement and the other Transaction Documents by Purchaser and the consummation
by Purchaser of the transactions contemplated hereby and thereby will not (a)
violate its Certificate of Incorporation or By-Laws; (b) violate or conflict
with or constitute a default (or an event which, with notice or lapse of time
or both, would constitute a default) under any agreement, indenture, instrument
or understanding to which Purchaser is a party or by which it is bound; (c)
violate any judgment, decree, law, rule or regulation to which Purchaser is a
party or by which it is bound; (d) terminate or modify, or give any third party
the right to terminate or modify, the provisions or terms of any agreement or
commitment to which Purchaser is a party or by which Purchaser is subject or
bound; or (e) result in any suspension, revocation, impairment, forfeiture or
non-renewal of any license, qualification, authorization or approval applicable
to Purchaser.
<PAGE>
SECTION 3.5 Consents. Except for the Burger King Consents, the consent of
Heller Financial, Inc. (Purchaser's senior lender) and any filings that
Purchaser may be required to make with the Securities and Exchange Commission,
Purchaser is not required to obtain any consents, approvals or other
authorizations or to make any filing with any governmental authority or agency
or any other Person in connection with the execution, delivery and consummation
of this Agreement and other Transaction Documents and the consummation of the
transactions contemplated hereby and thereby.
SECTION 3.6 Brokers. No broker, finder or selling agent has had a part in
bringing about any of the transactions contemplated by this Agreement or the
other Transaction Documents (including, but not limited to, the leasing of the
Real Properties and the assignment of the Real Property Leases) and no
commission or other fee is due to any party in connection with the transactions
contemplated by this Agreement or the other Transaction Documents.
SECTION 3.7 Material Information. This Agreement, the other Transaction
Documents and any exhibit, schedule, certificate or other information
representation, warranty or other document furnished or to be furnished by
Purchaser to Sellers do not (a) contain, nor will the same contain, any untrue
statement of a material fact; or (b) omit, nor will the same omit or fail to
state, a material fact required to be stated herein or therein or which is
necessary to make the statements herein or therein not misleading.
SECTION 3.8 No Litigation. There are no Actions now pending, or, to the
knowledge of Purchaser, in prospect or threatened against Purchaser or any of
its officers or directors which could have a material, adverse effect on
Purchaser's ability to consummate the transactions contemplated herein.
SECTION 3.9 Continuing Representations. The representations and warranties
of Purchaser herein contained shall be true and correct on and as of the Closing
Date with the same force and effect as if made on and as of that date.
ARTICLE IV
COVENANTS OF THE PARTIES
SECTION 4.1 Access to Records and Properties Prior to the Closing Date.
Between the date of this Agreement and the Closing Date, Sellers shall give
Purchaser, its directors, officers, employees, accountants, counsel and other
representatives and agents ("Representatives") reasonable access to the
premises, properties, books, financial statements, Contracts records of Sellers
relating to the Restaurants, the Assets, Real Properties, Leases, the Easements
and Assumed Contracts, and shall furnish Purchaser with such financial and
operating data and other information with respect to the business and properties
of Sellers as Purchaser shall from time to time reasonably request for such
purposes as Purchaser shall require. Any such investigation or examination
shall be conducted at reasonable times and upon reasonable notice to Sellers.
Notwithstanding inspections, audits or other studies undertaken by or on behalf
of Purchaser hereunder or any other due diligence investigation undertaken by
or on behalf of Purchaser, Sellers shall not be relieved in any way of
responsibility for their warranties, representations and covenants set forth in
this Agreement.
<PAGE>
SECTION 4.2 Operation of the Business of Sellers. (a) Between the date of
this Agreement and the Closing Date, Sellers shall conduct the operation of the
Restaurants in the ordinary and usual course of business, consistent with past
practices and will use best efforts to preserve intact the present business
organization with respect to the Restaurants, to keep available the services of
its officers and employees, and to maintain satisfactory relationships with
landlords, franchisors, dealers, licensors, licensees, suppliers, contractors,
distributors, customers and others having business relations with it and its
Restaurant and will maintain its Restaurant, Real Properties, and Assets in a
condition conducive to the operation of the business currently carried on
therein.
(b) Without limiting the generality of the foregoing, and except as
otherwise expressly provided in this Agreement or with the prior written consent
of Purchaser, no Seller will:
(i) Keep and maintain its books of account and records other
than in accordance with generally accepted accounting principles consistent with
past practices;
(ii) Amend or restate any Governing Instrument, the Leases,
Franchise Agreements or any other material Contract;
(iii) (A) Increase in any manner the compensation of any of the
employees at any of the Restaurants other than in the ordinary course of
business, consistent with past practices; (B) pay or agree to pay any pension,
retirement allowance or other employee benefit not required or permitted by any
Plan, whether past or present; or (C) commit itself in relation to the
Restaurants, the employees at the Restaurants or the Real Properties, to any new
or renewed Plan with or for the benefit of any Person, or to amend any of such
Plans or any of such agreements in existence on the date hereof;
(iv) Permit any of its insurance policies to be canceled or
terminated or any of the coverage thereunder to lapse, unless simultaneously
with such termination, cancellation or lapse, replacement policies are in full
force and effect providing coverage, in form, substance and amount equal to or
greater than the coverage under those canceled, terminated or lapsed for
substantially similar premiums;
(v) Enter into any other Contracts whether written or oral
which, individually or in the aggregate, would be material to the Restaurants,
Assets, Real Properties, Leases, the Easements or the Assumed Contracts, except
Contracts for the purchase, sale or lease of goods or services in the ordinary
course of business consistent with past practice and not in excess of current
requirements, or otherwise make any material change in the conduct of the
businesses or operations of Sellers;
(vi) Take any action which would result in any of the
representations or warranties contained in this Agreement or the other
Transaction Documents not being true at and as of the time immediately after
such action at and as of the Closing Date, or in any of the covenants contained
in this Agreement or other Transaction Documents becoming unperformable or which
would have a materially adverse impact on the transactions contemplated hereby
<PAGE>or thereby;
(vii) Operate the Restaurants or otherwise engage in any
practices which would materially adversely affect sales at the Restaurants; or
(viii) Agree (in writing or otherwise) to do any of the
foregoing.
SECTION 4.3 Supplements to Disclosures. Prior to the Closing Date, each
Seller will promptly supplement or amend the information set forth herein and
in the Schedules and Exhibits referred to herein with respect to any matter
hereafter arising which, if existing or occurring at or prior to the date of
this Agreement, would have been required to be set forth or described herein or
in a Schedule or Exhibit or which is necessary to correct any information herein
or in a Schedule or Exhibit or in any representation and warranty, which has
been rendered inaccurate thereby.
SECTION 4.4 No Other Asset Sales. From the date hereof until the Closing
Date, no Seller shall, directly or indirectly and whether by means of a sale of
assets, sale of stock, merger or otherwise:
(a) sell, transfer, assign or dispose of, or offer to, or enter into
any Contract to sell, transfer assign or dispose, of the Assets or any interest
therein, except for normal operations in the ordinary course of business; or
(b) encourage, initiate or solicit any inquiries or proposals by, or
engage in any discussions or negotiations with, or furnish any non-public
information to any Person concerning any such transaction and Sellers shall
promptly communicate to Purchaser the substance of any inquiry or proposal
concerning any such transaction which may be received.
SECTION 4.5 Regulatory Filings and Consents. From the date hereof until
the Closing Date, each of the parties hereto shall furnish to the other party
hereto such necessary information and reasonable assistance as such other party
may reasonably request in connection with its preparation of necessary filings
or submissions to any governmental agency and each Seller shall use its
respective best efforts to obtain all Licenses and Required Consents from third
parties necessary to consummate the transactions contemplated by this Agreement
and the other Transaction Documents. Each party shall furnish to the other
copies of all correspondence, filings or communications (or memoranda setting
forth the substance thereof) between Purchaser, Sellers or any of their
respective Representatives and agents, on the one hand, and any government
agency or authority or third party, or members of the staff of such agency or
authority or third party, on the other hand, with respect to this Agreement and
the other Transaction Documents and transactions contemplated hereby and
thereby.
SECTION 4.6 Announcements; Confidentiality. (a) From the date of this
Agreement until Closing, except as required by Laws, no announcement of the
existence or terms of this Agreement or the other Transaction Documents or the
transactions contemplated hereby and thereby shall be made publicly or to the
employees or customers of Sellers, by any party to this Agreement or any of its
respective Representatives without the advance written approval of the other
parties.
<PAGE> (b) Purchaser, on the one hand, and Sellers, on the other hand,
each shall hold in strict confidence, and shall use their best efforts to cause
all
their representatives to hold in strict confidence, unless compelled to disclose
by judicial or administrative process, or by other requirements of law, all
confidential and proprietary information (collectively, "Confidential
Information") concerning Sellers (in the case of Purchaser) and Purchaser (in
the case of Sellers) which is created or obtained prior to, on or after the date
hereof in connection with the transactions contemplated hereby, and Purchaser
and Sellers each shall not use or disclose to others, or permit the use or
disclosure of, any such information created or obtained except to the extent
that such information can be shown to have been (i) previously known by
Purchaser or Sellers, as the case may be (ii) in the public domain through no
fault of a party or any of its Representatives, and will not release or disclose
such information to any other Person, except its officers, directors, employees,
Representatives and lending institutions who need to know such information in
connection with this Agreement.
(c) If the transactions contemplated by this Agreement are not
consummated, such confidence shall be maintained except (i) as required by law
or (ii) to the extent such information comes into the public domain through no
fault of a party or any of its Representatives.
SECTION 4.7 Limitation of Sellers, Actions After Closing. From and after
the Closing and thereafter so long as the provisions of Article VII are still
applicable, no Seller shall, without the prior written consent of Purchaser
engage in any business which would adversely affect the value of Purchaser's
business.
SECTION 4.8 Bulk Sales. (a) Prior to the Closing, Sellers shall provide
notice to Sellers' creditors in accordance with the provisions of the New York
Uniform Commercial Code Bulk Sales laws ("Bulk Sales Laws"), or, alternatively,
appropriate notification to such creditors will be made in conjunction with
Bankruptcy Court approval of this transaction.
(b) Schedule 4.8(b) annexed hereto accurately sets forth all of the
creditors of each Seller as of the date hereof and the amounts owing to such
creditors as of the date hereof, and Sellers shall indemnify and hold Purchaser
harmless from claims brought by such creditors against Purchaser (provided such
claims arose or accrued on or prior to the Closing).
SECTION 4.9 Financial Statements and Reports. Between the date hereof and
the Closing Date, Sellers shall deliver to Purchaser:
(a) within five business days after the end of each calendar month,
a written statement, certified by Sellers, of the Gross Sales of each Restaurant
for that month; and
(b) within five business days of their availability, such financial
statements relating to the Restaurants as may be prepared by Sellers, which
shall be prepared on a basis consistent with past practices and minimally,
include profit and loss statements for each of the Restaurants.
<PAGE> SECTION 4.10 Environmental Matters. (a) Sellers shall, at their sole
cost
and expense, obtain current "Level-One" or "Phase I" environmental site
assessments (hereinafter "Phase I's") for the Jefferson Road and the Ridge Road
Restaurants, which shall be conducted by a reputable, licensed environmental
services company (the "Environmental Company"). The Environmental Company shall
be selected by Seller and subject to the reasonable approval of Purchaser. The
Phase I's shall be prepared by the Environmental Company so that they may be
relied upon by both Seller and Purchaser.
(b) In the event any of the Phase I's shall recommend that a
"Level-Two" or "Phase II" environmental site assessment (hereinafter "Phase
II's") be performed, or shall disclose any environmental conditions which
Purchaser, in its reasonable discretion, believes should be investigated
further, Seller, at its sole cost and expense, shall cause Phase II's for each
Real Property so affected to be performed by the Environmental Company except
that Seller shall not be obligated to spend in the aggregate more than $5,000
for the Phase II's to be performed.
(c) In the event that a Phase II shall identify a Real Property which
is affected by an environmental condition which requires abatement or
remediation an "Environmentally Damaged Restaurant"), Purchaser shall have the
option, to be exercised within ten days of receipt of such Phase II, to: (i)
terminate this Agreement, which option shall be exercisable within 20 days from
the date Purchaser shall have received the Phase II's disclosing such
conditions; or (ii) elect to have the Environmentally Damaged Restaurant and the
Real Property upon which such Restaurant is located, and all other Assets
relating to such Restaurant, withdrawn from this transaction, whereupon the
purchase price for the Assets shall be reduced by an amount (referred to herein
as the "Damage Credit") which shall be determined by Purchaser and Sellers by
taking into account the sales, profitability and location of such Restaurant,
as well as any other relevant material facts or factors related to the value of
such Restaurant (other than the environmental condition of the Real Property),
the Assets related thereto or the Real Property upon which it is located. In
the event Purchaser and Sellers are unable to agree upon the Damage Credit, such
dispute shall be submitted to arbitration under the rules of the American
Arbitration Association in New York, New York. In the event Purchaser and
Seller have reached an agreement for performance of the necessary remediation
at such Restaurant, the Closing shall occur pursuant to this Agreement except
a portion of the purchase price equal to the Damage Credit shall be held in
escrow by the attorneys for Purchaser pending completion of such remediation.
In the event such remediation is not completed within 90 days, Purchaser shall
have an additional option to withdraw the Environmentally Damaged Restaurant
from this transaction, exercisable within 30 days from date Purchaser's
additional option shall arise, whereupon the Damage Credit shall immediately be
paid to Purchaser.
SECTION 4.11 Employee Benefit Matters. (a) No later than seven days after
the Closing Date, Sellers shall discharge and satisfy in full (and provide
evidence thereof to Purchaser) any liabilities it may have with respect to any
wages, vacation, severance or sick pay, or any rights under any stock option,
bonus or other incentive arrangements of its respective employees which shall
have accrued as of the Closing Date. For the purposes hereof, such accrued
liabilities shall be determined as if Sellers do not terminate the employment
<PAGE>of their respective employees on the Closing Date.
(b) Sellers shall assume full responsibility and liability for
offering and providing "continuation coverage" to any employee of Sellers, and
to "qualified beneficiaries" of any employee of Sellers or to any qualified
beneficiary who incurs a multiple qualifying event after the Closing Date
provided that the employee or "qualified beneficiary" incurs a "qualifying
event" prior to the Closing Date. The continuation coverage shall be provided
under a group health plan of Sellers or affiliates of Sellers. The type of
coverage shall be that described in Section 4980B(f)(2)(A) of the Code. The
continuation coverage shall be provided for the period described in Section
4980B(f)(2)(A) of the Code. "Continuation coverage", "qualified beneficiaries",
and "qualifying event" have the meanings given such terms under Section 4980B
of the Code. Sellers hereby agrees to indemnify, defend and hold Purchaser
harmless from and against any "Damages" (as defined in Section 7.2(a) below)
arising out of Sellers' failure to offer the continuation coverage described
herein.
SECTION 4.12 Access to Restaurants Prior to Closing. Within 48 hours prior
to the Closing Date, Seller shall give Purchaser and its Representatives access
to the Restaurants for the purposes of facilitating Purchaser's conversion of
the cash register systems. Such access by Purchaser shall be upon reasonable
prior notice and Purchaser agrees to use best efforts to conduct said activities
in such manner so as not to unreasonably interfere with the operation of
Seller's business. To the extent there is storage space available at the
Restaurants and the same shall not cause undue burden on Seller, Purchaser may
also, at its sole risk, store its register equipment at the Restaurants.
SECTION 4.13 After the Closing, for the purposes of determining the amount
of yearly vacation time Sellers' salaried managers and assistant managers can
earn under Purchaser's vacation policies, Purchaser shall count years of service
spent in Sellers' employ by such individuals, provided Sellers deliver to
Purchaser appropriate documentation substantiating the prior service of said
individuals. Such agreement by Purchaser shall not be deemed to obligate
Purchaser to retain any or all of such individuals in Purchaser's employ.
Notwithstanding the foregoing, it is understood that Seller is responsible for
vacation pay accrued up to the date of Closing on such prior service; such prior
service shall be considered by Purchaser only for the purpose of establishing
the level of vacation time such employees are entitled to earn on a
going-forward basis.
ARTICLE V
CONDITIONS TO OBLIGATIONS OF PARTIES
SECTION 5.1 Conditions to the Obligations of Sellers and Purchaser. The
obligations of Purchaser and Sellers to consummate the transactions contemplated
by the Transaction Documents are subject to the satisfaction at or prior to the
Closing of the following conditions, except to the extent that any such
condition may have been waived in writing by both Sellers and Purchaser at or
prior to the Closing:
<PAGE> (a) Impediments to Closing. No Actions shall have been
instituted or
shall be pending or threatened which questions the validity or legality of this
Agreement and the other Transaction Documents and the transactions contemplated
hereby and thereby and which could reasonably be expected to damage materially
the business or assets of Sellers if the transactions contemplated hereby or
thereby are consummated. No injunction, decree or order shall be in effect
prohibiting consummation of the transactions contemplated by this Agreement or
the other Transaction Documents or which would make the consummation of such
transactions unlawful and no Actions shall have been instituted and remain
pending to restrain or prohibit the transactions contemplated by this Agreement
and the other Transaction Documents.
SECTION 5.2 Conditions to the Obligations of Sellers. The obligations of
Sellers to consummate the transactions contemplated hereby and by the other
Transaction Documents are subject to the satisfaction at or prior to the Closing
of the following conditions, except to the extent that any such condition may
have been waived in writing by Sellers at or prior to the Closing:
(a) Representations, Warranties and Performance. The representations,
warranties, covenants and agreements of Purchaser contained in this Agreement
and the other Transaction Documents or otherwise made in writing by it or on its
behalf pursuant hereto or otherwise made in connection with the transactions
contemplated hereby or thereby shall be true and correct at and as of the
Closing Date, with the same force and effect as if made at and as of the Closing
Date; the Purchaser shall have performed or complied with all agreements and
conditions required by this Agreement and the other Transaction Documents to be
performed or complied with by it on or prior to the Closing Date; and Sellers
shall have received a certificate to the foregoing effect dated the Closing Date
in form satisfactory to them signed by an officer of Purchaser.
(b) Governing Instruments, etc. Sellers shall have received a
certificate, dated the Closing Date, of the Secretary or Assistant Secretary of
Purchaser certifying, among other things, that attached or appended to such
certificate (i) is a true and correct copy of its Certificate of Incorporation
and all amendments, if any, thereto as of the date thereof; (ii) is a true and
correct copy of its By-Laws; (iii) is a true copy of all corporate actions taken
by it, including resolutions of its board of directors authorizing the execution
and delivery of this Agreement and each other Transaction Document to be
delivered by it pursuant hereto and the consummation of the transactions
contemplated hereby and thereby; and (iv) are the names, the signatures of its
duly elected or appointed officers who are authorized to execute and deliver
this Agreement, and any certificate, document or other instrument in connection
herewith.
(c) Payment of Purchase Price. Purchaser shall have tendered to
Sellers the Purchase Price payable at Closing in accordance with Section 1.2(a).
(d) Assumption of Assumed Contracts. Sellers shall have received from
Purchaser an Assumption Agreement substantially in the form annexed as Exhibit
C hereto.
(e) Opinion of Counsel. Sellers shall have received an opinion of
counsel for Purchaser, as of the Closing Date, substantially in the form annexed
<PAGE>as Exhibit D hereto.
SECTION 5.3 Conditions to Obligations of Purchaser. The obligations of
Purchaser to consummate the transactions contemplated hereby and by the other
Transaction Documents are subject to the satisfaction at or prior to the Closing
of the following additional conditions, except to the extent that any such
condition may have been waived in writing by Purchaser at or prior to the
Closing:
(a) Representations, Warranties and Covenants. The representations,
warranties, covenants and agreements of Sellers contained in this Agreement and
the other Transaction Documents, or otherwise made in writing by it or on its
behalf pursuant hereto or otherwise made in connection with the transactions
contemplated hereby or thereby shall be true and correct at and as of the
Closing Date with the same force and effect as though made on and as of the
Closing Date; Sellers shall have performed or complied with all agreements and
conditions required by this Agreement and the other Transaction Documents to be
performed or complied with by it on or prior to the Closing Date; and Purchaser
shall have received certificates to the foregoing effect dated the Closing Date
in form satisfactory to Purchaser signed by the Chief Executive Officer of each
corporate Seller.
(b) Governing Instruments, etc. Purchaser shall have received a
certificate, dated the Closing Date, of the Secretary or Assistant Secretary of
each corporate Seller certifying, among other things, that attached or appended
to such certificate (i) is a true and correct copy of each Governing Instrument
and all amendments if any thereto as of the date thereof; (ii) is a true copy
of all corporate actions taken by it, including resolutions of its board of
directors and shareholders authorizing the execution and delivery of this
Agreement and each other Transaction Document to be delivered by it pursuant
hereto and the consummation of the transactions contemplated hereby and thereby;
and (iii) are the names and signatures of its duly elected or appointed officers
who are authorized to execute and deliver this Agreement and any certificate,
document or other instrument in connection herewith.
(c) Instruments of Transfer. Sellers shall have delivered to
Purchaser a bill of sale and assignment ("Bill of Sale") substantially in the
form annexed as Exhibit E hereto, the Lease Assignments (if applicable) and any
other documents of transfer which Purchaser reasonably shall request in order
to evidence and effectuate the sale and assignment to Purchaser of the Assets,
the Leases, the Assumed Contracts and the consummation of all other transactions
contemplated by this Agreement and the other Transaction Documents.
(d) Consents. Sellers shall have obtained, and delivered to
Purchaser, copies of the Required Consents applicable to it in form and
substance satisfactory to Purchaser.
(e) Opinion of Counsel. Purchaser shall have received an opinion or
opinions of counsel for Sellers, as of the Closing Date, substantially in the
form attached hereto as Exhibit F.
(f) No Material Adverse Change. There shall have been no material
adverse change, nor any events which could have a material adverse change, in
<PAGE>the business, operations, prospects or financial or other condition of any
Restaurant or in the respective Assets or Real Properties from the date hereof
to the Closing Date (the "Interim Period") nor shall have there been, for all
Restaurants in the aggregate, a decrease of five percent or more in Gross Sales
or Gross Profit during the Interim Period, as compared with the same period
during the prior calendar year. For purposes hereof, "Gross Profit" shall mean
total Gross Sales reduced by the sum of food and other goods. At Closing,
Purchaser shall have received a certificate dated the Closing Date in form
satisfactory to Purchaser signed by the Chief Executive Officer of each Seller,
and attested to by the Secretary of each Seller, to the foregoing effect.
(g) Environmental Due Diligence. Purchaser shall have completed its
environmental due diligence of the Restaurants, Real Properties and Assets and
have received results which are satisfactory to Purchaser in its sole
discretion.
(h) Other Documents. Sellers shall have delivered to Purchaser:
(i) the Lease Assignment, each Assumed Contract and the Lease
Assignment Consents;
(ii) a fully executed original counterpart of the Leases;
(iii) receipts for funds paid to Sellers by Purchaser;
(iv) certificates dated no earlier than 30 days prior to the
Closing Date, from appropriate authorities in the State of New York, as to the
good standing of the corporate Seller;
(v) an updated schedule of creditors as of the Closing Date; and
(vi) all other documents, instruments and agreements required
to be delivered by Sellers to Purchaser pursuant to this Agreement and the other
Transaction Documents.
(i) Senior Lender's Consent. Purchaser shall have received, if
necessary, the written consent of its senior lender, Heller Financial, Inc., to
the transactions contemplated hereby.
(j) Bankruptcy Court Approval. Seller shall have obtained Bankruptcy
Court approval for this transaction.
ARTICLE VI
DAMAGE OR DESTRUCTION
SECTION 6.1 Damage to or Destruction of Restaurants. If prior to the
Closing Date, one or more of the Restaurants (hereafter individually referred
to as a "Damaged Restaurant" and collectively as the "Damaged Restaurants")
incurs substantial damage or is destroyed by fire or other casualty (whether or
not such destruction is covered by insurance) Purchaser shall have the option,
to be exercised within 30 days of the date of such fire or casualty, to: (i)
<PAGE>require Sellers to assign all insurance proceeds to Purchaser in which
event the
Closing shall occur as scheduled or the Closing Date; (ii) terminate this
Agreement, which option shall be exercisable within 30 days from the date the
option to terminate shall arise; or (iii) elect to have the Damaged
Restaurant(s) and the Real Property upon which such Restaurant(s) are located,
and all other Assets relating to such Restaurant(s), withdrawn from this
transaction, whereupon the purchase price for the Assets shall be reduced by an
amount equal to the Damage Credit. In the event Purchaser and Sellers are
unable to agree upon the Damage Credit, such dispute shall be submitted to
arbitration under the rules of the American Arbitration Association in New York,
New York. In the event Purchaser and Sellers reach an agreement to rebuild
and/or replace such Restaurant(s), the Closing shall occur pursuant to this
Agreement except a portion of the purchase price equal to the Damage Credit
shall be held in escrow by the attorneys for Purchaser pending completion of the
repair and/or restoration of the Damaged Restaurant(s). In the event such
restoration or repair is not completed within 90 days, Purchaser shall have an
additional option to withdraw the Damaged Restaurant(s) from this transaction,
exercisable within 30 days from date Purchaser's additional option shall arise,
whereupon the Damage Credit shall immediately be paid to Purchaser.
SECTION 6.2 Notification of Damage or Destruction. Sellers shall
immediately notify Purchaser of any destruction or damage to any of the Real
Properties or Assets.
ARTICLE VII
INDEMNIFICATION
SECTION 7.1 Survival of Representations. All representations, warranties,
covenants and other agreements made by each party hereto in this Agreement shall
survive the Closing.
SECTION 7.2 Agreement to Indemnify. Subject to the conditions of this
Article VII:
(a) Purchaser hereby agrees to indemnify, defend and hold harmless
Sellers and their officers, directors and shareholders from and against all
demands, claims, actions or causes of action, assessments, losses, damages,
liabilities, costs and expenses, including, without limitation, interest,
penalties and reasonable attorney's fees, costs and disbursements and expenses
(collectively, "Damages"), asserted against, resulting to, imposed upon or
incurred by Sellers directly or indirectly, arising out of or resulting from (i)
a breach of any representation, warranty, covenant or agreement of Purchaser
contained in or made pursuant to this Agreement (including but not limited to
enforcement of this Article VII), the other Transaction Documents or the
transactions contemplated hereby or thereby or any facts or circumstances
constituting such a breach; and (ii) any indebtedness, obligation or liability
assumed by Purchaser pursuant to Section 1.4(b) hereof and (iii) the operation,
use or ownership of the Restaurants, Assets, Leases, Real Properties and Assumed
Contracts, during, or which have otherwise accrued from or otherwise relate to,
the period of time after the Closing Date; and (iv) a breach of or otherwise
arising under any Environmental Law (whether now or hereafter in effect) to the
<PAGE>extent the same arises out of any condition or state of facts or otherwise
relates to the period of time commencing on the Closing Date (it being
understood that Seller shall have the burden of proof with respect to the issue
of whether the condition arose on or after the Closing Date); and
(b) Sellers hereby jointly and severally agree to indemnify, defend
and hold harmless Purchaser and its officers, directors and shareholders from
and against all Damages asserted against or incurred by Purchaser or such
officers, directors and shareholders, directly or indirectly, arising out of or
resulting from: (i) a breach of any representation, warranty, covenant or
agreement of Sellers contained in or made pursuant to this Agreement (including
but not limited to enforcement of this Article VII, the other Transaction
Documents or any facts or circumstances constituting such a breach; (ii) any
indebtedness, obligations or liabilities of Sellers including, but not limited
to, any liability or obligation set forth in Section 1.4(a), and the tax
liabilities set forth in Section 2.17 other than those expressly assumed by
Purchaser hereunder, (iii) a breach of or otherwise arising under any
Environmental Law (whether now or hereafter in effect), to the extent the same
arises out of any condition or state of facts or otherwise relates to the period
of time commencing on the date of possession by the Sellers of the Real Property
in question and ending on the Closing Date; (iv) the operation, use or ownership
of the Restaurants, Assets, Real Properties, Leases, the Easements and Assumed
Contracts during, or which have otherwise accrued from or otherwise relate to
the period of time prior to the Closing Date; (v) Sellers' failure to pay and
discharge all claims of creditors which may be asserted against Purchaser.
SECTION 7.3 Conditions of Indemnification. The obligations and liabilities
of an indemnifying party under Section 7.2 with respect to Damages for which it
must indemnify another party hereunder (collectively, the "Indemnifiable
Claims") shall be subject to the following terms and conditions:
(a) The indemnified party shall give the indemnifying party notice of
any such Indemnifiable Claim which notice shall set forth in reasonable detail
the basis for and amount of the Indemnifiable Claim, and the circumstances
giving rise thereto. If the Indemnifiable Claim is a third-party claim, the
notice must contain a copy of any papers served on the indemnified party.
(b) If the Indemnifiable Claim is not a third-party claim, unless
within 30 days of receipt by the indemnifying party of notice of the
Indemnifiable Claim the indemnifying party sends written notice to the
indemnified party disputing the facts giving rise to the Indemnifiable Claim or
the amount of Damages stated in the notice, the Damages stated in the notice
shall become due and payable upon the expiration of such 30 day period. If,
however, the indemnifying party disputes the facts, giving rise to the
Indemnifiable Claim or the amount of Damages stated in the notice within such
30 day period and the dispute cannot be resolved within the following 90 days,
the dispute shall be submitted to arbitration under the rules of the American
Arbitration Association in New York, New York.
(c) If the Indemnifiable Claim is a third-party claim, the
indemnifying party may undertake the defense thereof at its own expense by
representatives of its own choosing reasonably satisfactory to the indemnified
party and will consult with the indemnified party concerning such defense during
the course thereof. If the indemnifying party, within 30 days after receipt of
<PAGE>notice of any Indemnifiable Claim (or such shorter period as is necessary
to
prevent prejudice to the indemnified party, if such 30 day period would
prejudice the rights of the indemnified party), fails to defend, the indemnified
party will (upon further notice to the indemnifying party) have the right to
undertake the defense, compromise or settlement of such Indemnifiable Claim on
behalf of and for the account and risk of and at the expense of the indemnifying
party. In addition, if there is a reasonable probability that a third-party
Indemnifiable Claim may materially and adversely affect an indemnified party,
the indemnified party shall have the right, at its own cost and expense, to
defend, compromise or settle such Indemnifiable Claim.
(d) Anything in this Section 7.3 to the contrary notwithstanding,
neither the indemnifying party nor the indemnified party, as the case may be,
may settle or compromise any Indemnifiable Claim or consent to entry of any
judgment in respect thereof, without the written consent of the other, which
consent may not be unreasonably withheld or delayed.
SECTION 7.4 Remedies Cumulative. The remedies provided in this Article VII
shall be cumulative and shall not preclude the assertion by any party hereto of
any other rights or the seeking of any other remedies against the other parties
hereto. Either party may, among its other remedies, offset the amount of any
Indemnifiable Claim which becomes due and payable to it or to its shareholders,
officers or directors, against any payments to be made or consideration to be
paid to the other pursuant to this Agreement or any of the other Transaction
Documents.
ARTICLE VIII
COVENANT NOT TO COMPETE
SECTION 8.1 Covenant Not to Compete. (a) Each Seller hereby jointly and
severally covenant and agree that it, he or she will not, directly or
indirectly, for its, his or her own account or as an officer, director, partner,
joint venturer, shareholder, investor, consultant or otherwise:
(i) for a period of five years from the Closing Date own,
operate, manage, develop, or otherwise engage in any type of restaurant business
or operation, fast food or otherwise, within any of the counties in which any
of the Restaurants are located (the "Restricted Area");
(ii) for a period of three years from the Closing Date within
the Restricted Area, sell, develop, lease for occupancy or otherwise use or
permit to be used any property presently owned or leased or hereafter acquired
or leased by it, him or her for use as any type of restaurant business, fast
food or otherwise, except for any transactions with Purchaser or any of its
Affiliates; or
(iii) for a period of three years following the Closing Date,
employ or solicit the employment or engagement by others of any executive or
management level employees of the Restaurants who are employed by or in any of
the Restaurants on the Closing Date.
<PAGE> (b) Notwithstanding the foregoing, the provisions contained in
Section 8.1(a) shall not prohibit John Riva from being employed in competing
business, provided his capacity is one of an employee and he does not have an
ownership or equity interest in such competing business.
SECTION 8.2 Geographic Area Reasonable; Reduction of Geographical Area and
Time Restriction. Sellers acknowledge that the restricted period of time and
geographical area specified in Section 8.1 hereof are reasonable.
Notwithstanding anything herein to the contrary, if the period of time or the
geographical area specified under Section 8.1 hereof should be determined to be
unreasonable in any judicial proceeding, then the period of time and territory
of the restriction shall be reduced so that this Agreement may be enforced in
such area and during such period of time as shall be determined to be
reasonable.
SECTION 8.3 Effect of Breach. The parties acknowledge that any breach of
this Section 8 will cause Purchaser irreparable harm for which there is no
adequate remedy at law, and as a result, Purchaser shall be entitled to the
issuance by an arbitrator or court of competent jurisdiction of an injunction,
restraining order or other equitable relief in favor of itself restraining
Sellers, as the case may be, from committing or continuing any such violation.
Any right to obtain an injunction, restraining order or other equitable relief
hereunder shall not be deemed a waiver of any right to assert any other remedy
Purchaser may have at law or in equity.
ARTICLE IX
TERMINATION
SECTION 9.1 Termination. This Agreement may be terminated and the
transactions contemplated hereby may be abandoned at any time prior to the
Closing:
(a) By mutual written consent of Sellers and Purchaser;
(b) By Sellers, if (i) there has been a material misrepresentation or
breach of warranty on the part of Purchaser in the representations and
warranties contained herein and such material misrepresentation or breach of
warranty, if curable, is not cured within 15 days of written notice thereof from
Sellers; (ii) Purchaser has committed a material breach of any covenant imposed
upon it hereunder and fails to cure such breach within 15 days of written notice
thereof from Sellers; or (iii) any condition to Sellers' obligations hereunder
becomes incapable of fulfillment through no fault of such parties and is not
waived by such parties;
(c) By Purchaser, if (i) there has been a material misrepresentation
or breach of warranty on the part of any Seller in the representations and
warranties contained herein and such material misrepresentation or breach of
warranty, if curable, is not cured within 15 days of written notice thereof from
Purchaser; (ii) any Seller has committed a material breach of any covenant
imposed upon it hereunder and fails to cure such breach within 15 days of
written notice thereof, from Purchaser; or (iii) any condition to Purchaser's
obligations hereunder becomes incapable of fulfillment through no fault of
<PAGE>Purchaser and is not waived by Purchaser;
(d) By Purchaser in the circumstances provided in Section 4.10(d) or
6.2;
(e) By Sellers, if the Closing shall not have occurred on or before
July 15, 1994; provided that Sellers shall not be entitled to terminate this
Agreement pursuant to this clause if the failure of Sellers to fulfill any of
its obligations under this Agreement shall have been the reason that the Closing
shall not have occurred on or before said date;
(f) By Purchaser, if the Closing shall not have occurred on or before
June 15, 1994; provided that Purchaser shall not be entitled to terminate this
Agreement pursuant to this clause if the failure of Purchaser to fulfill any of
its obligations under this Agreement shall have been the reason that the Closing
shall not have occurred on or before said date; and
(g) By Sellers, or by Purchaser, if there shall be any law or
regulation that makes consummation of the transactions contemplated hereby
illegal or otherwise prohibited or if any judgment, injunction, order or decree
enjoining Purchaser, or Sellers, from consummating the transactions contemplated
hereby is entered and such judgment, injunction, order or decree shall become
final and nonappealable.
SECTION 9.2 Effect of Termination; Right to Proceed. In the event that a
party wishes to terminate this Agreement pursuant to Section 9.1, it shall give
written notice thereof whereupon all further obligations of the parties under
the Agreement shall terminate without further liability of any party hereunder
except (i) to the extent that a party has made a material misrepresentation
hereunder or committed a breach of the material covenants and agreements imposed
upon it, hereunder; (ii) to the extent that any condition to a party's
obligations hereunder became incapable of fulfillment because of the breach by
a party of its obligations hereunder and (iii) that the agreements contained in
Sections 4.6, 10.3 and 10.4 shall survive the termination hereof. In the event
that a condition precedent to its obligation is not met, nothing contained
herein shall be deemed to require any party to terminate this Agreement, rather
than to waive such condition precedent and proceed with the transactions
contemplated hereby. Notwithstanding anything to the contrary contained herein,
no party shall have any obligation to the other hereunder arising out of the
occurrence of an event or circumstance not within the control of such party
which event or circumstance resulted in a representation or warranty of such
party ceasing to be true.
ARTICLE X
MISCELLANEOUS
SECTION 10.1 Further Assurances. Each of the parties hereto shall without
further consideration execute and deliver to any other party hereto such other
instruments of transfer and take such other action as any party may reasonably
request to carry out the transactions contemplated by this Agreement and the
other Transaction Documents.
SECTION 10.2 Waiver and Amendment. No provisions of this Agreement may be
<PAGE>amended, supplemented or waived at any time except by a written instrument
executed by the parties hereto, or in the case of a waiver, by the waiving
party. No waiver of any of the provisions of this Agreement shall be deemed or
shall constitute a waiver of any other provision hereof (whether or not
similar), nor shall any such waiver constitute a continuing waiver unless
otherwise expressly provided.
SECTION 10.3 Remedies. In the event of a default under this Agreement or
the Transaction Documents, the aggrieved party may proceed to protect and
enforce its rights by a suit for damages, suit in equity action at law or other
appropriate proceeding, whether for specific performance, or for an injunction
against a violation of any terms hereof or thereof or in aid of the exercise of
any right, power or remedy granted thereby or by law, equity, statute or
otherwise. The foregoing shall include, but shall not be limited to, allowance
for recovery by the aggrieved party of all of its fees and expenses and
disbursements incurred by it in connection with the transactions contemplated
hereby and in the Transaction Documents, including, without limitation, the
reasonable fees and expenses of its counsel, accountants, agents and
representatives employed by it. No course of dealing and no delay on the part
of any party in exercising any right, power or remedy shall operate as a waiver
thereof or otherwise prejudice such party's rights, powers or remedies. No
right, power or remedy conferred hereby shall be exclusive of any other right,
power or remedy referred to herein or now or hereafter available at law, in
equity, by statute, or otherwise.
SECTION 10.4 Expenses. Except as expressly otherwise provided for in this
Agreement, all expenses incurred by or on behalf of the parties hereto in
connection with the authorization, preparation and consummation of this
Agreement and the other Transaction Documents, including without limitation all
fees and expenses of agents, representatives, counsel and accountants employed
by the parties hereto in connection with the authorization, preparation,
execution and consummation of this Agreement, shall be borne solely by the party
who shall have incurred the same.
SECTION 10.5 Entire Agreement. This Agreement and the other Transaction
Documents and the Exhibits and Schedules referred to herein and therein contain
the entire agreement among the parties with respect to the subject matter hereof
and supersede all prior arrangements or understandings with respect thereto.
SECTION 10.6 Definitions. (a) For the purposes of this Agreement:
(i) "Affiliate" shall mean, with respect to any Person, any
other Person that has a relationship with the designated Person whereby either
of such Persons directly or indirectly controls or is controlled by or is under
common control with the other of such Persons.
(ii) "Contract" shall mean any contract, agreement, purchase
order, sales order, guaranty, option, mortgage, promissory note, assignment,
lease, franchise, commitment, understanding or other binding arrangement,
whether written, oral, express or implied.
(iii) The term "Control", with respect to any Person, shall mean
the power to direct the management and policies of such Person, directly or
indirectly, by or through stock ownership, agency or otherwise, or pursuant to
<PAGE>or in connection with a Contract with one or more other Persons by or
through
stock ownership, agency or otherwise; and the terms "controlling" and
"controlled" shall have meanings correlative to the foregoing.
(iv) The term "Governing Instruments" shall mean, with respect
to any Person, the certificate of incorporation, articles of incorporation,
bylaws, code of regulations or other organizational or governing documents
howsoever denominated of such Person.
(v) "Person" shall mean an individual, partnership, corporation,
joint venture, unincorporated organization, cooperative, or a governmental
entity or agency thereof.
(b) The following terms have been defined in the following sections
of this Agreement:
Defined Term Section No.
Actions 2.14(a)
Adjustment Lease Year 1.6(c)
Agreement Preamble
Assets 1.1
Assumed Contracts 1.5(b)
Bill of Sale 5.3(c)
Bulk Sales Laws 4.8(d)
Burger King 1.6(b)
Burger King Consents 2.5
Closing 15(a)
Closing Date 1.5(a)
Code 2.13(a)
Damage Credit 4.10(c)
Damaged Restaurant 6.1
Damages 7.2(a)
Easement Assignments 13(d)
Easements 1.3(d)
Environmental Company 4.10(a)
Environmentally Damaged
Restaurant 4.10(c)
Environmental Laws 1.5(a)(vi)
ERISA 2.13(a)
Financial Statements 2.6
Franchise Agreements 11(c)
Gross Profit 5.3(f)
Gross Sales 3(c)(iii) of the Lease
Indemnifiable Claim 7.3
Interim Period 5.3(f)
Inventory 1.1(d)
Laws 2.14(b)
Lease 1.3(a)(i)
Lease Assignment 1.3(b)
Lease Assignment Consent 1.3(c)
Leased Assets 11(f)
<PAGE>Leased Real Properties Preamble
Leasehold Improvements 1.1(b)
Licenses 2.14(c)
Liens 1.1
Memorandum of Lease 1.3(a)(iv)
Other Contracts 2.12(a)
Owned Real Property Preamble
Phase I's 4.10(a)
Phase II's 4.10(b)
Plan 2.13(b)
Priced Inventory Report 1.2(a)(ii)
Purchase Price 1.2
Purchaser Preamble
Real Properties Preamble
Representatives 4.1(a)
Required Consents 2.5
Required Licenses 2.14(c)
Restricted Area 8.1(a)(i)
Restaurants Preamble
Restaurant Equipment 1.1(a)
Sellers Preamble
Transaction Documents 2.1
SECTION 10.7 Interpretation. The article and section headings contained
in this Agreement are solely for the purpose of reference, are not part of the
Agreement of the parties and shall not in any way affect the meaning or
interpretation of this Agreement.
SECTION 10.8 Notices. All notices, consents, requests, instructions,
approvals and other communications provided for herein shall be validly given,
made or served in writing and delivered personally, sent by telecopier, Federal
Express or other reputable overnight courier or sent by certified or registered
mail, postage prepaid, return receipt requested, at the addresses set forth
below:
<PAGE>
<PAGE>
(a) if to Purchaser, to:
Carrols Corporation
968 James Street
Syracuse, New York 13203-6969
Telecopier Number: (315) 475-9616
Attention:Daniel T. Accordino,
President; and
Joseph A. Zirkman, Esq.
(b) if to Sellers, to :
John Riva
191 Corn Hill Place
Rochester, NY 14608
with a copy to:
Lacy, Katzen, Ryen & Mittleman
130 East Main Street
Rochester, New York 14604
Telecopier Number: (716)
Attention:Louis A. Ryen, Esq.
or such other address as any party hereto may, from time to time, designate in
a written notice given in a like manner (which change of address shall only be
effective upon actual receipt of same by the other party). Notices shall be
deemed delivered: (i) three days after the date the same is postmarked if sent
by registered or certified mail; (ii) on the date the same is delivered
personally; (iii) the next business day after delivery to the courier service,
if sent by Federal Express or other reputable overnight courier and (iv) upon
receipt by the sender of telecopier confirmation, if sent by telecopier.
SECTION 10.9 Successors and Assigns. This Agreement shall be binding upon
and shall inure to the benefit of and be enforceable by the heirs, executor,
personal representatives, legal representatives, successors and assigns of the
parties hereto, and shall not be assignable by either party without the prior
written consent of the other party.
SECTION 10.10 Governing Law. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of New York
without giving effect to New York's conflict of laws rules.
SECTION 10.11 Consent to Jurisdiction; Service of Process. (a) Except with
respect to disputes wherein the parties have expressly agreed herein to submit
such dispute to arbitration, the parties hereto irrevocably submit to the
jurisdiction of the United States District Court for the Southern District of
New York over any dispute arising out of or relating to this Agreement or any
agreement or instrument contemplated hereby or entered into in connection
<PAGE>herewith or any of the transactions contemplated hereby or thereby, and
each
party hereby irrevocably agrees that all claims in respect of such dispute or
proceeding shall be heard and determined in such court.
(b) Each of the parties hereto consents to process being served by any
party to this Agreement in any suit action or proceeding of the nature specified
in subsection 10.8 (a) above by mailing a copy thereof in accordance with the
provisions of Section 10.8 of this Agreement or in any other manner provided by
law.
SECTION 10.12 Severability. Whenever possible, each provision in this
Agreement shall be interpreted in such a manner as to be effective and valid
under applicable law. If any provision of this Agreement shall be prohibited
or invalid under applicable law, such provision shall be ineffective to the
extent of such prohibition or invalidity, without invalidating the remainder of
such provision or the remaining provisions of this Agreement.
SECTION 10.13 Purchaser's Designated Affiliate. Purchaser may designate
one or more of its wholly-owned subsidiaries or Affiliates to carry out all or
part of the transactions contemplated hereby to be carried out by Purchaser.
SECTION 10.14 Counterparts. This Agreement may be executed in one or more
counterparts each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Purchase and
Sale Agreement to be executed as of the date first written above.
CARROLS CORPORATION
By:___________________________
Name: Joseph A. Zirkman
Title: Vice President
RIVA DEVELOPMENT CORPORATION
By:___________________________
Name: John Riva
Title: President
By:___________________________
Name: John Riva
<PAGE>
word\acquisit\aqriva\01
<PAGE>
<PAGE>
EXHIBIT "A" TO PURCHASE AND SALE AGREEMENT
<PAGE>
<PAGE>BK No.
ASSIGNMENT AND ASSUMPTION AGREEMENT
AGREEMENT made this day of , 1994 between [Insert
Seller Corporation], a Corporation having an office at
("Assignor"), and CARROLS CORPORATION, a
Delaware Corporation having an office at 968 James Street, Syracuse, New York
("Assignee").
Pursuant to a lease dated ("Lease") ("Landlord")
demised to [Insert Seller Corporation] certain premises at . Assignor
desires to transfer, sell, assign, convey and deliver to Assignee all of its
right, title and interest in an to the Lease and Assignee desires to accept said
transfer, sale, assignment, conveyance and delivery.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants herein set forth and for $10.00 and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged,
Assignor hereby transfers, sells, assigns, conveys and delivers to Assignee all
of Assignor's right, title and interest in and to the Lease, including, without
limitation, any and all options to renew or extend the same. Assignee hereby
accepts the foregoing transfer, sale, assignment, conveyance and delivery and
assumes and agrees to pay and perform all liabilities and obligations under the
Lease arising from and after this date. The assignment shall inure to the
benefit of and be binding upon the heirs, successors and assigns of the Assignor
and the successors and assigns of Assignee.
This Agreement is made in connection with a Purchase and Sale Agreement
dated , 1994 between Assignor and certain other corporations as
Seller, and Assignee, as Purchaser, the terms, conditions, representations and
warranties of which are incorporated herein by reference and made part hereof.
This Agreement is subject to receipt of Landlord's consent to the
assignment of the Lease.
Assignor represents, covenants and warrants that this assignment is not and
shall not constitute a breach or default under the terms of the Lease.
ATTEST: CARROLS CORPORATION
BY:______________________
ATTEST: [INSERT SELLER CORPORATION]
BY:______________________
<PAGE>
<PAGE>
STATE OF NEW YORK )
COUNTY OF ONONDAGA ) SS:
On this day of , 1994 before me personally came Joseph
A. Zirkman, to me personally known, who, being by me duly sworn, did depose and
say that he resides at 8129 Solomon Seal Lane, Manlius, New York 13104; that
he is a Vice President of Carrols Corporation, the corporation described in and
which executed the Assignment; that he knows the seal of said corporation; that
the seal affixed to said instrument is such corporate seal; that it was so
affixed by order of the Board of Directors of said corporation; and that he
signed his name thereto by like order.
_________________________
Notary Public
STATE OF )
COUNTY OF ) SS:
On this day of , 1994 before me personally came
to me personally known, who, being by me duly sworn, did
depose and say that he resides at ;
that he is the of , the
corporation described in and which executed the Assignment; that he knows the
seal of said corporation; that the seal affixed to said instrument is such
corporate seal; that it was so affixed by order of the Board of Directors of
said corporation; and that he signed his name thereto by like order.
_________________________
Notary Public
<PAGE>
<PAGE> EXHIBIT "B" OF PURCHASE AND SALE AGREEMENT
<PAGE>
<PAGE>BK No.
CONSENT AND ESTOPPEL CERTIFICATE
, 1994
Carrols Corporation
968 James Street
Syracuse, New York 13203
Re: ("Premises") Lease dated
, amended ("Lease") now between [Insert Seller
corporation] ("Lessee") and ("Lessor")
Gentlemen:
It is our understanding that the Lessee has agreed to assign the referenced
lease (the "Lease") to Carrols Corporation ("Carrols") and as a condition
precedent thereto is required to provide you with this Certificate from the
undersigned.
In respect to the Lease, the undersigned certifies and acknowledges as
follows:
1. The undersigned now owns the Premises and is the Lessor under the
Lease. Lessee is now the Lessee under the Lease.
2. The Lease commenced on , and its term is due
to expire on , . [The Lease allows Lessee to renew
same for an additional term of years]. The present minimum rent
paid to Lessor under the Lease is $ . The Lease is
the entire agreement between the parties as to the Premises.
3. As of this date, the Lease is in full force and effect in accordance
with its terms and has not been modified, amended or supplemented in any way
except as set forth in this letter. To the best of Lessor's knowledge, Lessee
is not in default under the Lease, and no act has occurred which with the
passing of time, or the giving of notice, or both will constitute a default
under the Lease.
4. Lessee is given permission to assign the Lease to Carrols provided
Lessee remains liable for any breach of the Lease which occurs after the
assignment is made.
5. Carrols is given permission to grant a security interest in its
interest under the Lease by way of a leasehold mortgage and/or a collateral
assignment to a financial institution ("Secured Party") to whom Carrols' Burger
King Franchise Agreement will also be collaterally assigned. In the event
Secured Party exercises its remedies against Carrols' interest under the Lease,
Secured Party may assign the Lease to Burger King Corporation or to an approved
Burger King franchisee.
6. Landlord will give Secured Party notice of any default by Carrols
<PAGE>under the Lease simultaneously with the giving of such notice to Carrols
provided Landlord is provided written notice of the name and address of the
Secured Party. Secured Party, if it so elects, may cure any default of Carrols
within the time permitted in the Lease or, if no cure period is provided in the
Lease, 10 days after its receipt of such notice.
7. The undersigned will not accept any surrender, cancellation or
modification of the Lease without first giving 10 days' written notice thereof
to Secured Party.
8. Landlord agrees that the personal property and trade fixtures of
Carrols (including inventory and equipment) located at the Premises
(collectively "Collateral") will not be deemed "fixtures" and will remain the
personal property of Carrols subject to Secured Party's security interest.
Landlord will not assert any statutory or possessory liens or rights of
distraint against the Collateral or take any other action with respect thereto
and agrees that all of its rights thereto are subordinate to the rights, claims
and security interests therein in favor of the Secured Party to the full extent
that the same secures or hereafter may secure any and all obligations or
indebtedness of every kind, now existing or hereafter arising, of Carrols to
Secured Party.
9. Secured Party and its agents and representatives, upon reasonable
prior notice, but without the consent of Landlord, may enter the Premises and
remove and take possession of the Collateral at any time in accordance with the
security agreements.
10. The provisions hereof shall be irrevocable and remain in full force
and effect until Carrols has fully paid and performed all of its obligations to
Secured Party under all agreements, instruments and documents evidencing such
obligations, and under all security agreements, present and future, and any
extensions, modifications and renewals thereof at any time made, and until all
obligations, if any, of Secured Party to extend loans or financial
accommodations to Carrols shall have terminated.
11. This Consent and Estoppel Certificate shall be binding upon and inure
to the benefit of the parties herein named and their respective assigns and
successors in interest.
Very truly yours,
by:___________________________
Title:
<PAGE>
<PAGE> EXHIBIT "C" TO THE PURCHASE AND SALE AGREEMENT
<PAGE>
<PAGE>BK#
CARROLS CORPORATION
Assumption Agreement
THIS ASSUMPTION AGREEMENT, made this ____ day of ,
1994, by and among [NAME OF SELLER], a [ ] corporation
("Seller"), and CARROLS CORPORATION, a Delaware corporation ("Purchaser"):
W I T N E S S E T H:
WHEREAS, this Assumption Agreement is being executed and delivered
pursuant to that certain Purchase and Sale Agreement, dated as of
(the "Purchase Agreement"), among Purchaser, Seller, certain affiliates of
Seller identified on Schedule A to the Purchase Agreement and
as agent for Sellers (terms used herein without definition shall have the
respective meanings set forth in the Purchase Agreement);
WHEREAS, subject to the provisions of the Purchase Agreement, Seller
has agreed to sell, assign, transfer and convey to Purchaser all of Seller's
right, title and interest in and to the Assets, subject to Purchaser's
assumption of the Assumed Contracts (as hereinafter defined); and
NOW, THEREFORE, in consideration of the execution and delivery of the
Purchase Agreement and the Bill of Sale and Assignment dated the date hereof and
for other good and valuable consideration, the receipt and sufficiency of which
hereby are acknowledged, the parties agree as follows:
1. From and after the date hereof, Purchaser hereby assumes and
agrees to pay, perform, or discharge, as the case may be, and hereby agrees to
indemnify and hold Seller harmless against, all of the rights, obligations and
liabilities of Seller arising on or after 6:00 A.M. on the date hereof (the
"Closing Date") under each of the Contracts set forth on Schedule A hereto (the
"Assumed Contracts").
2. Anything herein to the contrary notwithstanding, Seller shall
remain liable for, and hereby agrees to retain and discharge, and to indemnify
and hold harmless Purchaser from and against, any and all liabilities of Seller
or its Affiliates not being expressly assumed by Purchaser hereunder or under
Section 1.5 of the Purchase Agreement, including, without limitation, any
liability of Seller or any Affiliate of Seller (i) arising from, or out of, the
ownership or operations or use of, or incurred in connection with, any of its
respective Affiliates in connection with, its Restaurant, Assets, Real Property,
Real Property Lease or the Assumed Contracts on or prior to, or relating to any
time period prior to the Closing Date; (ii) arising from or by reason of the
transactions contemplated by the Purchase Agreement, including, but not limited
to Federal, state or local income taxes, transfer taxes, and other taxes, if
<PAGE>any, arising from or by reason of the receipt of the consideration for the
Assets; (iii) with respect to any wages, vacation, severance or sick pay or any
rights under any stock option, bonus or other incentive arrangement that have
accrued as of the Closing Date; (iv) with respect to any employment, consulting
or similar arrangement to which Seller is a party or for which Seller is
responsible; (v) with respect to any "employee benefit plan" as defined in
Section 3(3) of Employee Retirement Income Security Act of 1974, as amended
("ERISA") including multi-employer plans as defined in Section 3(37) of ERISA
whether arising before, on or after the Closing Date; or (vi) under any Laws
relating to public health and safety and pollution or protection of the
environment, including, without limitation, those relating to emissions,
discharges, releases or threatened releases of pollutants, contaminants, or
hazardous or toxic materials or wastes into ambient air, surface water, ground
water, or land, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport, or handling of
pollutants, contaminants or hazardous or toxic materials or wastes or any
materials defined or categorized by any of the above as "Hazardous Materials",
"Hazardous Substances", or similar or related designations.
3. This Assumption Agreement is delivered pursuant to, and is
subject to, the Purchase Agreement.
4. This Assumption Agreement shall be binding upon and inure to the
benefit of the parties hereto, their respective successors and assigns.
IN WITNESS WHEREOF, the parties have duly executed this Assumption
Agreement this ____ day of , 1994.
PURCHASER:
CARROLS CORPORATION
By:______________________
Name:
Title:
ACKNOWLEDGED AND AGREED
TO BY:
SELLER:_______________________
[Name of Seller]
By:____________________________
<PAGE>
Name:
Title:
<PAGE>
<PAGE> SCHEDULE A
SEE ATTACHED
<PAGE>
<PAGE> EXHIBIT "D" TO THE PURCHASE AND SALE AGREEMENT
<PAGE>
<PAGE> [FORM OF OPINION OF COUNSEL TO
CARROLS CORPORATION]
, 1994
To each of the Sellers identified on Schedule A hereto
Ladies and Gentlemen:
I have acted as general counsel for Carrols Corporation, a Delaware
corporation("Purchaser"), in connection with the transactions contemplated by
that Purchase and Sale Agreement dated as of April ____, 1994 (the "Purchase
Agreement") between Riva Development Corporation, John Riva (collectively the
"Sellers" and individually a "Seller") and Purchaser. Terms used and not
otherwise defined herein shall have the respective meanings ascribed to such
terms in the Purchase Agreement. This opinion is being furnished to you, at the
request of Purchaser, pursuant to Section 5.2(e) of the Purchase Agreement.
In connection with rendering the opinions hereinafter set forth, I
have examined the originals, or copies certified or otherwise identified to my
satisfaction as being true copies, of the following:
(a) The Purchase Agreement;
(b) The various assumption instruments executed by Purchaser on the
date hereof; and
(c) such certificate of public officials, corporate documents and
records, and other certificates to the extent that the same were made available
to us for such examination, and have made such investigation of law, as I have
deemed necessary as a basis for the opinions expressed herein.
The foregoing agreements and instruments together with each other
agreement, document, certificate or instrument executed or delivered by
Purchaser in connection with the consummation of the transactions contemplated
by the Purchase Agreement (the "Contemplated Transactions") are referred to
herein, collectively, as the "Transaction Documents".
For purposes of the opinions expressed herein, with your permission,
I have assumed, without any independent investigation or verification of any
kind: (i) the genuineness of all signatures, the authenticity and completeness
of all documents submitted to us as originals and the conformity to original
documents and completeness of all documents submitted to us as copies; (ii) that
all Transaction Documents have been duly authorized, executed and delivered by
the parties thereto other than Purchaser; and (iii) that the certificates of
public officials dated earlier than the date of this letter remain accurate from
<PAGE>such earlier date through and including the date of this letter.
As to various questions of fact material to my opinion, I have relied
upon the representations made in the Transaction Documents and upon inquiries
and certificates of officers or representatives of Purchaser. When a statement
herein is qualified by "to my knowledge" or similar language, it is intended to
indicate that, during the course of my representation of Purchaser, no
information that would give me actual knowledge of the inaccuracy of such
statement has come to my attention.
I am a members of the bar of the State of New York and do not purport
to be an expert in, or to express any opinion concerning, any law other than the
laws of the State of New York, the General Corporation Law of the State of
Delaware and the Federal law of the United States of America. No opinion is
expressed as to the laws of any other jurisdiction or the effect which the laws
of any other jurisdiction might have on the subject matter of the opinions
expressed herein under conflict of laws principles or otherwise.
Based upon and subject to the foregoing and the qualifications set
forth below, I am of the opinion that:
1. Purchaser is a corporation validly existing and in good standing
under the laws of the State of Delaware and has all requisite corporate powers
and all governmental licenses, authorizations, consents and approvals required
to carry on its business as now conducted.
2. Purchaser has full corporate power and authority to enter into the
Transaction Documents to which it is a party and to carry out the Contemplated
Transactions.
3. The execution, delivery and performance of the Transaction
Documents to which Purchaser is party have been duly authorized by all requisite
corporate action.
4. Each Transaction Document to which Purchaser is a party has been
duly and validly executed and delivered by it and constitutes the legal, valid
and binding obligation of Purchaser, enforceable against Purchaser in accordance
with its terms except as may be limited by the Enforcement Exceptions (as
hereinafter defined).
5. Neither the execution, delivery or performance of any Transaction
Document by Purchaser, nor the consummation of the Contemplated Transactions
will, with or without the giving of notice or the passage of time or both,
conflict with, result in a default or loss of rights (or give rise to any right
of termination, cancellation or acceleration) under, or result in the creation
of any Lien, pursuant to: (a) any provision of the certificate of incorporation
or by-laws of Purchaser; (b) to my knowledge, any material note, contract,
agreement or other instrument or obligation to which Purchaser is a party or by
which Purchaser or its properties may be bound or affected; (c) any law,
ordinance, rule or regulation to which Purchaser is subject or by which its
properties may be bound or affected; or (d) to my knowledge, any judgment, award
or order to which Purchaser is subject or by which its properties may be bound
or affected.
<PAGE> 6. The execution, delivery and performance of the Transaction
Documents to which Purchaser is a party do not require the consent, approval or
authorization of or license from: (a) any governmental authority or other
regulatory body or (b) to my knowledge, any other Person, except for such
consents, approvals or authorizations that have been obtained and which are in
full force and effect.
The validity and enforceability of the rights and remedies set forth
in the Transaction Documents are subject to bankruptcy, insolvency,
reorganization, fraudulent conveyance, moratorium or similar laws affecting the
enforcement of creditors' rights and remedies generally and the application of
principles of equity whether in an action at law or a proceeding in equity. In
addition, I express no opinion regarding the availability of the remedy of
specific performance, or of any other equitable remedy or relief to enforce any
right under any agreement or document. All of the above have hereinbefore been
referred to as the "Enforcement Exceptions".
This opinion is being furnished for the sole benefit of the named
addressees and their counsel, and may not be relied upon by any other Person or
published, quoted or otherwise used for any other purpose without my prior
written consent. This opinion is based on the law (and interpretations thereof)
and facts existing as of the date hereof. I disclaim any obligation to advise
you of any changes therein that may be brought to my attention after the date
hereof.
Very truly yours,
<PAGE>
<PAGE> EXHIBIT "E" TO PURCHASE AND SALE AGREEMENT
<PAGE>
<PAGE> [NAME OF SELLER]
Bill of Sale and Assignment
JOHN RIVA, an individual, and RIVA DEVELOPMENT CORPORATION, a New York
corporation (collectively, "Seller"), for and in consideration of sums duly paid
by CARROLS CORPORATION, a Delaware corporation ("Purchaser"), and for other good
and valuable consideration, the receipt and sufficiency of which hereby are
acknowledged, pursuant to that certain Purchase and Sale Agreement dated as of
April ____, 1994 (the "Purchase Agreement") between Purchaser and Seller, DOES
HEREBY sell, assign, transfer, and convey and deliver to Purchaser all of the
"Assets" (as defined in the Purchase Agreement) used or located in or held for
use in connection with the restaurants having Burger King franchise numbers of
1395, 1774 and 4499 operated by Seller free and clear of all mortgages, liens,
security interests, encumbrances, equities, claims, pledges, charges,
liabilities and other obligations of whatever kind and character.
TO HAVE AND TO HOLD all of the Assets hereby sold, assigned,
transferred, conveyed and delivered to Purchaser, its successors and assigns,
for its and their own use and behalf forever.
This Bill of Sale and Assignment is delivered pursuant to, and it
subject to, the Purchase Agreement.
Seller shall cooperate with Purchaser and shall take such further
action and shall execute and deliver such further documents as may be requested
by Purchaser, its successors and assigns, to implement the provisions and
purposes of this Bill of Sale and Assignment.
<PAGE>
<PAGE>
IN WITNESS WHEREOF, Seller had duly caused this Bill of Sale and
Assignment to be executed this day of , 1994.
RIVA DEVELOPMENT CORPORATION
By:___________________________
Name:
Title:
By:___________________________
John Riva
<PAGE>
<PAGE> EXHIBIT "F" TO PURCHASE AND SALE AGREEMENT
<PAGE>
<PAGE> [OPINION OF COUNSEL TO SELLER]
, 1994
Carrols Corporation
968 James Street
Syracuse, NY 13203
Ladies and Gentlemen:
We have acted as counsel for John Riva ("Riva") and Riva Development
Corporation ("RDC") (Riva and RDC are sometimes collectively referred to herein
as the "Sellers"), in connection with the transactions contemplated by that
Asset Purchase and Sale Agreement dated as of April ____, 1994 (the "Purchase
Agreement") between Sellers and Carrols Corporation, a Delaware corporation (the
"Buyer"). Terms used and not otherwise defined herein shall have the respective
meanings ascribed to such terms in the Purchase Agreement. This opinion is
being furnished to you, at the request of Sellers, pursuant to Section 5.3(e)
of the Purchase Agreement.
In connection with rendering the opinions hereinafter set forth, we
have examined the originals, or copies certified or otherwise identified to our
satisfaction as being true copies, of the following:
(a) The Purchase Agreement;
(b) The Bill of Sale ("Bill of Sale") and other instruments of
conveyance, transfer and assignment executed by Sellers on the date hereof; and
(c) such certificate of public officials, corporate documents and
records, and other certificates to the extent that the same were made available
to us for such examination, and have made such investigation of law, as awe have
deemed necessary as a basis for the opinions expressed herein.
The foregoing agreements and instruments together with each other
agreement, document, certificate or instrument executed or delivered by Sellers
or Sellers (or any of them) in connection with the consummation of the
transactions contemplated by the Purchase Agreement (the "Contemplated
Transactions") are referred to herein, collectively, as the "Transaction
Documents".
For purposes of the opinions expressed herein, with your permission,
we have assumed, without independent investigation or verification of any kind:
(i) the genuineness of all signatures, the authenticity and completeness of all
documents submitted to us as originals and the conformity to original documents
and completeness of all documents submitted to us as copies; (ii) that all
Transaction Documents have been duly authorized, executed and delivered by
Buyer; and (iii) that the certificates of public officials dated earlier than
the date of this letter remain accurate from such earlier date through and
<PAGE>including the date of this letter.
As to various questions of fact material to our opinion, we have
relied upon the representations made in the Transaction Documents and upon
inquiries and certificates of Sellers and of the officers or representatives of
Sellers. When a statement herein is qualified by "to our knowledge" or similar
language, it is intended to indicate that, during the course of our
representation of Sellers, no information that would give us actual knowledge
of the inaccuracy of such statement has come to our attention.
We are members of the bar of the State of New York and do not purport
to be experts in, or to express any opinion concerning, any law other than the
laws of the State of New York and the Federal law of the United States of
America. No opinion is expressed as to the laws of any other jurisdiction or
the effect which the laws of any other jurisdiction might have on the subject
matter of the opinions expressed herein under conflict of laws principles or
otherwise. In this connection, we have assumed, with your permission, that the
Transaction Documents and the Assumed Contracts were governed by the laws of the
State of New York.
Based upon and subject to the foregoing and the qualifications set
forth below, we are of the opinion that:
1. RDC is a corporation validly existing and in good standing under
the laws of the State of New York and has all requisite corporate powers and all
governmental licenses, authorizations, consents and approvals required to carry
on its business as no conducted. RDC is duly qualified to do business and is
in good standing in each jurisdiction where the character of the property owned
or leased by it or the nature of its activities makes such qualification
necessary, except for those jurisdictions where the failure to be so qualified
would not, individually or in the aggregate, have a material adverse effect on
the business, properties, financial condition or the results of operations of
RDC.
2. Riva and RDC each have full power and authority or capacity, as
the case may be, to enter into the Transaction Documents to which it or he is
a party and to carry out the Contemplated Transactions.
3. The execution, delivery and performance of the Transaction
Documents to which RDC is party have been duly authorized by all requisite
corporate action.
4. Each Transaction Document to which Sellers are a party have been
duly and validly executed and delivered by it or him and constitutes the legal,
valid and binding obligation of Sellers, enforceable against them in accordance
with its terms except as may be limited by the Enforcement Exceptions (as
hereinafter defined).
5. Neither the execution, delivery or performance of any Transaction
Document by Sellers, nor the consummation of the Contemplated Transactions will,
with or without the giving of notice or the passage of time or both, conflict
with, result in a default or loss of rights (or give rise to any right of
termination, cancellation or acceleration) under, or result in the creation of
any Lien, pursuant to: (a) any provision of the governing instruments of RDC;
<PAGE>(b) to our knowledge, any material note, contract, agreement or other
instrument
or obligation to which Sellers are a party or by which Sellers or the properties
may be bound or affected; (c) any law, ordinance, rule or regulation to which
Sellers are a party or by which the properties may be bound or affected; or (d)
to our knowledge, any judgment, award or order to which Sellers are a party or
by which the properties may be bound or affected.
6. The execution, delivery and performance of the Transaction
Documents to which Sellers are a party do not require the consent, approval or
authorization of or license from or registration or filing with: (a) any
governmental authority or other regulatory body or (b) to our knowledge, any
other Person, except for such consents or approvals that have been obtained and
which are in full force and effect.
7. The Bill of Sale and other instruments of conveyance, transfer and
assignment executed by Sellers are in form sufficient to convey to Buyer all of
such Seller's right, title and interest in and to the Assets. To our knowledge,
the Assets will be conveyed to Buyer free and clear of all Liens.
8. Except as disclosed in the Purchase Agreement, there is no claim,
legal action, counterclaim, suit, arbitration, governmental investigation or
other legal, administrative or tax proceeding, nor any order, decree or judgment
in progress, pending or threatened against or relating to any Seller or their
respective Assets.
9. To our knowledge, each Seller is in compliance in all material
respects with all applicable laws, regulations and administrative orders of the
United States and the State of New York, the non compliance with which would
have a materially adverse effect upon the Assets or the Contemplated
Transactions.
10. Each Assumed Contract is valid, subsisting, in full force and
effect, binding upon and enforceable against the applicable Seller and, to our
knowledge, on the other parties thereto, in accordance with their respective
terms and, to our knowledge, neither the Seller nor any other party to any such
Assumed Contract is in default thereunder in any material respect nor, to our
knowledge, does any condition exist that with notice or lapse of time or both
would constitute a material default thereunder.
11. Based solely upon a review of the stock transfer ledgers and
minute books of RDC, is/are the record and, to our knowledge,
beneficial owners of all of the issued and outstanding shares of capital stock
of RDC.
The validity and enforceability of the rights and remedies set forth
in the Transaction Documents and the Assumed Contracts are subject to
bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium or
similar laws affecting the enforcement of creditors' rights and remedies
generally and the application of principles of equity whether in an action at
law or a proceeding in equity. In addition, we express no opinion regarding the
availability of the remedy of specific performance, or of any other equitable
remedy or relief to enforce any right under any agreement or document. All of
the above have herein-before been referred to as the "Enforcement Exceptions".
<PAGE>
This opinion is being furnished for the sole benefit of the named
addressee, its counsel and any Person providing financing to Buyer and may not
be relied upon by any other Person or published, quoted or otherwise used for
any other purpose without our prior written consent. This opinion is based on
the law (and interpretations thereof) and facts existing as of the date hereof.
We disclaim any obligation to advise you of any changes therein that may be
brought to our attention after the date hereof.
Very truly yours,
<PAGE>XXX Indicates deleted text for which Confidential Treatment is sought.
TACO CABANA RESTAURANTS
DEVELOPMENT AGREEMENT
THIS AGREEMENT (this "Agreement") is made and entered into on , 1994,
by and between T.C. Management, Inc., a Delaware corporation (hereinafter
referred to as "Licensor"), and Carrols Corporation of Syracuse, New York
(hereinafter referred to as
"Developer").
W I T N E S S E T H :
WHEREAS, Licensor, as a result of its (and its predecessors') expenditure
of time, skill, effort and money, has developed a system for the development and
operation of Mexican patio cafe restaurants featuring counter service for the
restaurant's inside and patio dining facilities and double drive-through lanes
to more conveniently accommodate to-go orders (hereinafter "Taco Cabana
System"); and
WHEREAS, the components of the Taco Cabana System include, without
limitation, distinctive exterior and interior designs (including special
equipment packages and layout); special recipes and menu items; specially
developed techniques for food preparation and service; training in the operation
and management of the business; and promotional programs (all of which may be
changed and further developed by Licensor); and
WHEREAS, Licensor owns all right, title and interest in and to the trade
name, trademark and service mark "Taco Cabana" and such other trade names,
trademarks and service marks as are now designated (or as may hereafter be
designated by Licensor) as part of the Taco Cabana System (hereinafter referred
to as "Proprietary Marks"); and
WHEREAS, Licensor and its predecessors, by reason of their maintenance of
high standards for food quality and service, have established a favorable public
reputation and created significant goodwill for restaurants operated under the
Taco Cabana System and use such Proprietary Marks for their benefit and in order
to identify for the public the source of products and services marketed in
conformity with the Taco Cabana System's standards of quality and service; and
WHEREAS, Developer desires to operate restaurants under the Taco Cabana
System;
WHEREAS, the Parties acknowledge that Developer is currently engaged in the
development and operation of restaurants other than Taco Cabana restaurants and
that such restaurants may incorporate certain elements of the Taco Cabana System
which are not unique or specific to the Taco Cabana System (excluding any
recipes and/or the elements of Taco Cabana's trade dress);
NOW, THEREFORE, in consideration of the mutual promises and considerations
contained herein, the parties mutually agree as follows:
<PAGE> I. GRANT
In consideration of the payment described in Section III herein and
the commitments made by Developer in this Agreement, Licensor hereby grants to
Developer the right to develop and operate Taco Cabana restaurants at locations
to be determined, subject to Licensor's reasonable approval, within the State
of North Carolina, the State of South Carolina, the Norfolk, Virginia
statistical metropolitan area, and the Richmond, Virginia statistical
metropolitan area, subject to the terms and conditions of this Agreement and the
License Agreements which shall be entered into for each restaurant.
Developer's right to develop restaurants shall commence on the date set forth
below in Section II XXX The precise development area for purposes of this
Agreement is fully described at Exhibit A. (The development area described in
Exhibit A, as the same may be adjusted or diminished pursuant to this Agreement,
shall hereinafter be referred to as the "Development Area.") Subject to
Developer's compliance with the terms of this Agreement, Licensor covenants and
agrees not to operate or grant to any other person or entity other than
Developer a license for the operation of a Taco Cabana Restaurant, or any other
Tex-Mex, mexican food restaurant concept (or any other substantially similar
restaurant concept purveying similar food) which would directly compete with a
Taco Cabana restaurant, within the Development Area during the term of this
Agreement.
Developer shall have no right to and shall not sublicense any right
granted under this Agreement. To enforce this intent, Developer may not
transfer less than all of its rights under this Development Agreement and may
transfer any such rights only to the extent permitted and in accordance with
Section VI hereof.
II. TERM
The term of this Agreement shall commence on the earlier of (i) the
date the first license agreement is executed or (ii) August 1, 1994 (hereinafter
the "Commencement Date") and unless sooner terminated pursuant to Section VII
hereof, shall terminate at such time as Developer, pursuant to Section V hereof,
has no further development rights with respect to any portion of the Development
Area (except for any surviving rights pursuant only to Section V.C.5). Licensor
shall deliver to Developer written notice of Developer's failure to comport with
the Development Schedule set forth in Section V, which notice shall, if
applicable, include the date of the termination of this Agreement (the
"Termination Date").
III. CONSIDERATION
In consideration of the rights granted herein, Developer shall pay
to Licensor a nonrefundable fee of TWO HUNDRED FIFTY THOUSAND DOLLARS ($250,000)
upon execution of this Agreement (the "First Development Fee"). This sum
represents the development and license fee for the first five restaurants to be
opened pursuant hereto and is due and payable concurrently with the simultaneous
signing of this Development Agreement and the first License Agreement.
A License Agreement must be signed for each subsequent restaurant at
the time Developer is prepared to begin developing the restaurant; this
Development Agreement confers only the right to develop a specified number of
<PAGE>restaurants in the Development Area, not the right to operate any
particular one
or more Taco Cabana restaurants. Within thirty days after the fifth restaurant
has opened, Developer shall pay an additional nonrefundable development and
license fee of TWO HUNDRED FIFTY THOUSAND DOLLARS ($250,000) for the proximate
five restaurants to be opened (the "Second Development Fee"). For each
restaurant to be opened after the tenth restaurant, Developer shall pay a
nonrefundable development and license fee of TWENTY-FIVE THOUSAND DOLLARS
($25,000) immediately upon the commencement of construction of each restaurant.
XXX
IV. DEVELOPMENT PROCEDURE AND COORDINATION WITH LICENSE
AGREEMENTS
Developer must apply for and obtain license and site approval from
Licensor for each restaurant to be established pursuant to this Agreement in
compliance with Licensor's then current license and site approval criteria and
procedures, which shall be consistently applied throughout the Taco Cabana
system, including without limitation Licensor's company-owned Taco Cabana
restaurants. Licensor shall not unreasonably delay or withhold any license or
site approval. DEVELOPER ACKNOWLEDGES THAT LICENSOR'S ACCEPTANCE OF A SITE DOES
NOT CONSTITUTE ANY REPRESENTATION OR GUARANTEE BY LICENSOR THAT SAID SITE WILL
BE A SUCCESSFUL LOCATION FOR A RESTAURANT. Failure to obtain any such approval
shall not extend or modify the Development Schedule in Section V. Developer
shall not, except at Developer's own risk, enter into any legally binding
commitments with vendors or lessors until Licensor has given in writing both
license and site approval. All restaurants shall be constructed, equipped and
furnished in accordance with then current Taco Cabana System approved plans and
specifications for licensed restaurants, provided that such plans and
specifications shall be consistently applied throughout the Taco Cabana system,
including without limitation Licensor's company-owned Taco Cabana restaurants.
Not less than ten days before the commencement of construction on any
restaurant, Developer and Licensor shall enter into the then current form of
Taco Cabana Restaurant License Agreement. XXX As outlined in Section III, the
license fees for the first ten restaurants will be integrated with the
development fees as part of one of two $250,000 payments. Each License
Agreement executed subsequent to the tenth restaurant and pursuant to this
Development Agreement shall require payment of a nonrefundable development and
license fee of TWENTY-
FIVE THOUSAND DOLLARS ($25,000). The License Agreement for each restaurant
subsequent to the tenth restaurant shall be executed not less than ten days
before the commencement of construction on such restaurant, and the development
and license fee shall be due immediately upon commencement of construction on
such restaurant. License Agreements executed pursuant to this Development
Agreement shall provide for a fixed royalty rate of four percent (4%) of gross
sales and shall provide for advertising payments and advertising fund
administration in the same manner as in the License Agreement executed
concurrently herewith.
Developer recognizes and agrees that it shall at no time use the Taco
Cabana Proprietary marks or System in any manner whatsoever except pursuant to
a then-existing Taco Cabana License Agreement. Nothing in this Development
<PAGE>Agreement shall be construed as obligating Licensor to enter into a
License
Agreement in the event Developer is in default of any obligation contained
herein or in any License Agreement between Licensor and Developer.
V. DEVELOPMENT SCHEDULE
A. Development Schedule.
Developer shall develop and operate licensed restaurants within the
Development Area in strict accordance with the following Development Schedule:
Development Schedule<PAGE>
<PAGE>
Year Restaurant Number of Aggregate Number
Openings Restaurants to of Restaurants
Required By: be Opened Open
1 12 months from 3 3
Commencement
Date.
2 24 months from 6 9
Commencement
Date.
3 36 months from 8 17
Commencement
Date.
4 48 months from 8 25
Commencement
Date.
5 60 months from 8 33
Commencement
Date.
6 72 months from Lesser of 5 or remaining 38+/-
Commencement restaurants Development
Date. Area will support as
determined by
Development Formula
7 84 months from Lesser of 3 or remaining 41+/-
Commencement restaurants Development
Date. Area will support as
determined by
Development Formula.
8 and 96 months from Lesser of 1 or remaining 41+/-
thereafter Commencement restaurants Development
Date for year 8. Area will support as
determined by
The expiration of Development Formula.
12 months from
the required
opening date for
the previous
restaurant for year
9 and thereafter.
<PAGE>
<PAGE> B. Development Formula.
XXX
C. Developer's Continuing Exclusivity For purposes of this
Agreement, the Development Area shall be divided into three discrete
territories: (i) that part of the Development Area within the State of North
Carolina ("Territory A"); (ii) that part of the Development Area within the
State of Virginia ("Territory B"); and that part of the Development Area within
the State of South Carolina ("Territory C"), (collectively, "the Territories").
Developer's exclusive right to develop restaurants within the Development Area
shall be contingent upon Developer's timely compliance with the Development
Schedule set forth above. In the event that Developer fails to timely comport
with the foregoing schedule, Developer's rights with respect to the Development
Area shall be determined as follows.
1. First Year Following Execution of this Agreement. If, in
the first twelve month period following the execution of this Agreement,
Developer develops all three of the restaurants required to be developed
hereunder, then Developer shall retain the exclusive right to develop
restaurants within the entirety of the Development Area. If, in the first
twelve month
period following the execution of this Agreement, Developer develops only two
of the three restaurants required to be developed hereunder, then the
Development Area shall be diminished to include only Territory A and Territory
B in which Developer shall retain the exclusive right to develop restaurants;
in such event, from and after the first anniversary of the execution of this
Agreement, Licensor may operate or grant to any person or entity a license for
the operation of a Taco Cabana restaurant within Territory C. If, in the first
twelve month period following the execution of this Agreement, Developer
develops only one of the three restaurants required to be developed hereunder,
then the Development Area shall be diminished to include only Territory A in
which Developer shall retain the exclusive right to develop restaurants; in such
event, from and after the first anniversary of the execution of this Agreement,
Licensor may operate or grant to any person or entity a license for the
operation of a Taco Cabana restaurant within Territory B and/or Territory C.
If, in the first twelve month period following the execution of this Agreement,
Developer fails to develop any of the restaurants required to be developed
hereunder, then Developer shall have no further development rights with respect
to any portion of the Development Area and Licensor may operate or grant to any
person or entity a license for the operation of a Taco Cabana restaurant within
any portion of the Development Area.
2. Second Year Following Execution of this Agreement.
a. If, at the end of the first twelve month period
following the execution of this Agreement, Developer has retained the exclusive
right to develop restaurants within the entirety of the Development Area:
(i) and Developer develops all of the restaurants
required to be developed hereunder in the second twelve-month period following
the execution of this Agreement, then Developer shall retain the exclusive right
to develop restaurants within the entirety of the Development Area;
<PAGE> (ii) and Developer develops only four or five
of
the restaurants required to be developed hereunder in the second twelve-month
period following the execution of this Agreement, then the Development Area
shall be diminished to include only Territory A and Territory B in which
Developer shall retain the exclusive right to develop restaurants; in such
event, from and after the second anniversary of the execution of this Agreement,
Licensor may operate or grant to any person or entity a license for the
operation of a Taco Cabana restaurant within Territory C;
(iii) and Developer develops only two or three of
the restaurants required to be developed hereunder in the second twelve-month
period following the execution of this Agreement, then the Development Area
shall be diminished to include only Territory A in which Developer shall retain
the exclusive right to develop restaurants; in such event, from and after the
second anniversary of the execution of this Agreement, Licensor may operate or
grant to any person or entity a license for the operation of a Taco Cabana
restaurant within Territory B and/or Territory C;
(iv) and Developer develops less than two of the
restaurants required to be developed hereunder in the second twelve-month period
following the execution of this Agreement, then Developer shall have no further
development rights with respect to any portion of the Development Area and
Licensor may operate or grant to any person or entity a license for the
operation of a Taco Cabana restaurant within any portion of the Development Area
from and after the second anniversary of the execution of this Agreement.
b. If, at the end of the first twelve month period
following the execution of this Agreement, the Development Area has been
diminished to include only Territory A and Territory B:
(i) and Developer develops all of the restaurants
required to be developed hereunder in the second twelve-month period following
the execution of this Agreement, then Developer shall retain the exclusive right
to develop restaurants within the Development Area diminished as described
above;
(ii) and Developer develops only four or five of the
restaurants required to be developed hereunder in the second twelve-month period
following the execution of this Agreement, then the Development Area shall be
diminished to include only Territory A in which Developer shall retain the
exclusive right to develop restaurants; in such event, from and after the second
anniversary of the execution of this Agreement, Licensor may operate or grant
to any person or entity a license for the operation of a Taco Cabana restaurant
within Territory B and/or Territory C;
(iii) and Developer develops less than four of the
restaurants required to be developed hereunder in the second twelve-month period
following the execution of this Agreement, then Developer shall have no further
development rights with respect to any portion of the Development Area and
Licensor may operate or grant to any person or entity a license for the
operation of a Taco Cabana restaurant within any portion of the Development Area
from and after the second anniversary of the execution of this Agreement.
c. If, at the end of the first twelve month period
<PAGE>following the execution of this Agreement, the Development Area has been
diminished to include only Territory A:
(i) and Developer develops all of the restaurants
required to be developed hereunder in the second twelve-month period following
the execution of this Agreement, then Developer shall retain the exclusive right
to develop restaurants within the Development Area diminished as described
above;
(ii) and Developer develops less than six of the
restaurants required to be developed hereunder in the second twelve-month period
following the execution of this Agreement, then Developer shall have no further
development rights with respect to any portion of the Development Area and
Licensor may operate or grant to any person or entity a license for the
operation of a Taco Cabana restaurant within any portion of the Development Area
from and after the second anniversary of the execution of this Agreement.
3. Third, Fourth and Fifth Years Following Execution of this
Agreement:
a. If, at the beginning of the third, fourth and/or fifth
twelve month periods following the execution of this Agreement, Developer has
retained the exclusive right to develop restaurants within the entirety of the
Development Area:
(i) and Developer develops all of the restaurants
required to be developed hereunder during such period, then Developer shall
retain the exclusive right to develop restaurants within the entirety of the
Development Area;
(ii) and Developer develops only six or seven of
the restaurants required to be developed hereunder during such period, then the
Development Area shall be diminished to include only Territory A and Territory
B in which Developer shall retain the exclusive right to develop restaurants;
in such event, from and after the end of such period, Licensor may operate or
grant to any person or entity a license for the operation of a Taco Cabana
restaurant within Territory C;
(iii) and Developer develops only four or five of
the restaurants required to be developed hereunder during such period, then the
Development Area shall be diminished to include only Territory A in which
Developer shall retain the exclusive right to develop restaurants; in such
event, from and after the end of such period, Licensor may operate or grant to
any person or entity a license for the operation of a Taco Cabana restaurant
within Territory B and/or Territory C;
(iv) and Developer develops less than four of the
restaurants required to be developed hereunder during such period, then
Developer shall have no further development rights with respect to any portion
of the Development Area and Licensor may operate or grant to any person or
entity a license for the operation of a Taco Cabana restaurant within any
portion of the Development Area from and after the end of such period.
b. If, at the beginning of the third, fourth and/or fifth
<PAGE>twelve month periods following the execution of this Agreement, the
Development
Area has been diminished to include only Territory A and Territory B:
(i) and Developer develops six or more of the
restaurants required to be developed hereunder during such period, then
Developer shall retain the exclusive right to develop restaurants within the
Development Area diminished as described above;
(ii) and Developer develops only four or five of the
restaurants required to be developed hereunder during such period, then the
Development Area shall be diminished to include only Territory A in which
Developer shall retain the exclusive right to develop restaurants; in such
event, from and after the end of such period, Licensor may operate or grant to
any person or entity a license for the operation of a Taco Cabana restaurant
within Territory B and/or Territory C; and
(iii) and Developer develops less than four of the
restaurants required to be developed hereunder during such period, then
Developer shall have no further development rights with respect to any portion
of the Development Area and Licensor may operate or grant to any person or
entity a license for the operation of a Taco Cabana restaurant within any
portion of the Development Area from and after the end of such period.
c. If, at the beginning of the third, fourth and/or fifth
twelve month periods following the execution of this Agreement, the Development
Area has been diminished to include only Territory A:
(i) and Developer develops four or more of the
restaurants required to be developed hereunder during such period, then
Developer shall retain the exclusive right to develop restaurants within the
Development Area diminished as described above;
(ii) and Developer develops less than four of the
number of restaurants required to be developed hereunder during such period,
then Developer shall have no further development rights with respect to any
portion of the Development Area and Licensor may operate or grant to any person
or entity a license for the operation of a Taco Cabana restaurant within any
portion of the Development Area from and after the end of such period.
4. Additional Years Following Execution of this Agreement.
With respect to each twelve-month period following the Fifth Anniversary, in the
event that Developer develops less than the number of restaurants required to
be developed hereunder during such period, then Developer shall have no further
development rights with respect to any portion of the Development Area and
Licensor may operate or grant to any person or entity a license for the
operation of a Taco Cabana restaurant within any portion of the Development Area
from and after the end of such period.
XXX
5. XXX
<PAGE>
D. Acceleration. Developer shall have the right to accelerate the
rate of licensed restaurant openings. If an opening is delayed because of flood,
fire, Acts of God or other similar events beyond Developer's control ("force
majeure"), the time period in which the restaurant must be opened shall be
extended for the period of the delay, up to a maximum of nine months, provided
Developer, at the time of the force majeure, has entered into a lease or binding
contract for the acquisition of an approved site which required the expenditure
or commitment of funds by Developer within the original Development Schedule
time period. Any such extension shall not affect the remainder of the
Development Schedule or any other provisions of this Agreement. If Developer
opens additional restaurants in any one year, beyond those which are required
by the Development Schedule, such additional restaurants may be applied against
Developer's obligations to open restaurants in the immediately succeeding year.
VI. TRANSFERABILITY
A. Transfer by Licensor. Licensor shall have the right to
transfer or assign all or any part of its rights or obligations under this
Development Agreement and any License Agreement to any person or legal entity,
so long as the transfer is accomplished in such a manner as to recognize and
protect the pre-existing rights of Developer. The transferring Licensor will
remain liable on obligations to Developer which are known and due at the time
of transfer but shall not be liable for subsequently accruing obligations.
B. Transfer by Developer. Developer's rights under this
Development Agreement are generally non-assignable and Licensor may in its sole
and absolute discretion refuse to consider any proposed transfer, except for
certain transfers to other entities controlled by Developer, which shall not
require Licensor's consent, provided that Developer continues to own, directly
or beneficially, at least fifty-one percent (51%) of the voting stock and
interest in such other entity.
C. Corporate Developers. The following requirements also apply
to Developer:
1. Copies of Developer's articles of incorporation, by-laws
and other governing documents, including the resolution of the Board of
Directors authorizing entry into this Development Agreement and related License
Agreements must be furnished to Licensor; and
2. Developer must maintain a current list of all owners of
record and all beneficial owners of any class of its voting stock and must
furnish the list to Licensor upon request, except if Developer becomes a
publicly held corporation.
D. Offerings by Developer. All materials required to be publicly
filed in connection with any public offering by federal or state law must be
submitted to Licensor for review prior to filing with any government agency.
No Developer offering may imply that Licensor is participating in an
underwriting, issuance, or offering of Developer's securities, and Licensor's
review of any offering will be limited solely to the subject of the relationship
between Developer and Licensor. Developer and the other participants in the
offering shall fully indemnify Licensor with respect to any claims or damages
<PAGE>incurred by Licensor (including
reasonable attorneys' fees) arising from or related to the offering. Developer
shall reimburse Licensor for all reasonable out-of-pocket costs and expenses
associated with reviewing the proposed offering, including, without limitation,
legal and accounting fees. Developer shall give Licensor reasonable prior
written notice and opportunity to review the materials proposed to be filed
prior to any filing of the proposed materials. Licensor shall review such
materials and provide comments, as appropriate, reasonably promptly.
E. Non-Waiver of Claims. Licensor's consent to a transfer of any
interest in the rights granted hereunder shall not constitute a waiver of any
claims it may have against the transferring party, nor shall it be deemed a
waiver of Licensor's right to demand exact compliance with any of the terms of
this Agreement by the transferee.
VII. DEFAULT AND TERMINATION
A. General Provisions Concerning Default and Termination. Time
is of the essence in opening restaurants in strict accordance with the
Development Schedule. Except as otherwise provided by law, should Developer
fail for any reason to comply with the Development Schedule specified in Section
V and the other specific provisions of Section V, subject to any extension of
time granted under Section V, the development rights shall immediately end
without further notice and Licensor shall have the unrestricted right to license
persons other than Developer to operate licensed restaurants in the Development
Area.
B. Termination Without Opportunity to Cure. Except as otherwise
provided by law, Licensor may terminate this Development Agreement by so
notifying Developer without affording Developer any opportunity to cure the
default upon the occurrence of any of the following events:
1. If any holder of a ten percent (10%) or greater ownership
interest in Developer, who is also a director or officer of Developer, is
convicted of a felony or any other crime or offense material to the operation
of the licensed restaurants (unless such person is immediately removed as a
director or terminated as an employee, as applicable); or
2. If any two License Agreements executed pursuant to this
Development Agreement are terminated by reason of Developer's default
thereunder; or
3. If Developer intentionally misuses or makes any material
unauthorized use of the Taco Cabana System's proprietary marks or any other
identifying characteristic of the Taco Cabana System in such manner as to
reflect materially and unfavorably upon the Taco Cabana System, or otherwise
intentionally and materially impairs the goodwill associated therewith or
Licensor's rights therein; or
4. Automatically and without need for notice, if Developer
shall become insolvent or make a general assignment for the benefit of
creditors, or if a petition in bankruptcy is filed by Developer or such a
petition is filed against and consented to by Developer, or if Developer is
adjudicated a bankrupt, or if a bill in equity or other proceeding for the
<PAGE>appointment of a receiver of Developer or other custodian for Developer's
business or assets is filed and consented to by Developer, or if a receiver or
other custodian (permanent or temporary) of Developer's business or assets is
appointed by any court of competent jurisdiction, or if proceedings for a
composition with creditors under any state or federal law should be instituted
by or against Developer, or if any substantial real or personal property of
Developer's licensed restaurants shall be sold after levy by any sheriff,
marshal, or constable; or
5. If Developer, except as expressly permitted by the terms
of this Development Agreement, purports to transfer any rights or obligations
under this Development Agreement to any third party without Licensor's prior
written consent; Licensor may treat this Development Agreement as terminated
from the date of the impermissible transfer and need not deal in any fashion
with the purported assignee; Developer, however, shall have a right to reinstate
its rights under this Development Agreement within a period of thirty days from
notice by Licensor by either rescinding such transfer or properly qualifying
such transfer under the terms of this Development Agreement; or
6. If Developer intentionally and wrongfully discloses or
divulges the contents of the Confidential System Manual or other Taco Cabana
trade secrets or confidential information to non-employees; or
7. If Developer makes any material misrepresentations
relating to the granting of the development rights or acquisition of the
licensed restaurants.
C. Termination With Opportunity for Cure. Licensor may terminate
this Development Agreement upon any of the following grounds, if Developer fails
to correct the following conditions (assuming such default is remediable) within
ten days after written notice for financial matters and within thirty days after
written notice for non-financial matters:
1. If Developer fails to execute a License Agreement or
obtain site approval from Licensor prior to the commencement of construction on
any Taco Cabana restaurant; or
2. If Developer fails to maintain the pace of restaurant
development called for by the Development Schedule in Section V hereof, subject
to the specific provisions of Section V(B) hereof; or
3. If Developer fails to materially comply with any other
terms, provisions or conditions of this Development Agreement.
Any such termination takes effect upon the expiration of the
available cure period, if unremedied, or upon the expiration of ten days after
notice if the default is not remediable.
D. Default by Licensor.
1. In the event Licensor violates the terms of the
Development Agreement such that Developer's exclusivity to the development
territory, as defined in Section I, is infringed or threatened with
infringement, Developer shall have the right to enjoy in such action in a court
<PAGE>of competent jurisdiction pursuant to Section XIV. Prior to the
commencement
of any such action, reasonable written notice of the violation, as well as an
opportunity to cure, shall be given to the Licensor. In connection with any
such action by Developer, the nonprevailing party shall reimburse the prevailing
party for reasonable attorney's fees and costs incurred in connection therewith
in addition to any damages determined to be payable in such proceeding.
2. Notwithstanding anything to the contrary contained in this
Agreement, or in any Taco Cabana License Agreement entered into by and between
Licensor and Developer pursuant to this Agreement: (i) Developer's operation of
the Taco Cabana System within the Development Area (as such term is defined,
subject to modification and diminution, in this agreement) shall consist
principally of the sale of fresh, high-quality Tex-Mex food at competitive
prices; and (ii) Licensor shall not impose upon Developer any requirement
(whether in this agreement, in any Taco Cabana License Agreement entered into
pursuant to this agreement, or elsewhere) the effect of which would compel
Developer to operate the Taco Cabana System within the Development Area in such
manner as to be other than principally the sale of fresh, high-quality Tex-Mex
food at competitive prices.
3. Any failure of Licensor to materially comply with any of
the terms, provisions or conditions of any Taco Cabana License Agreement entered
into pursuant to this Agreement shall constitute a default under this Agreement.
VIII. OBLIGATIONS AFTER TERMINATION
The termination of the development rights:
A. Shall not affect or diminish the effect of any provision of
this Agreement which expressly or by implication shall come into force or
continue in force after termination; and
B. Shall not release Developer from obligations to pay any sums
owed under this Agreement or to pay license fees, royalties or other sums owed
to Licensor under License Agreements or other agreements; and
C. Shall not terminate any License Agreements between Licensor and
Developer for the operation of licensed restaurants unless such event of default
also by its terms serves as an event of default under the License Agreement.
IX. INDEPENDENT CONTRACTOR AND INDEMNIFICATION
A. It is understood and agreed by the parties hereto that this
Development Agreement does not create a fiduciary relationship between them,
that Developer shall be an independent contractor, and that nothing in this
Agreement is intended to constitute Developer as an agent, legal representative,
subsidiary, joint venturer, partner, employee or servant of Licensor for any
purpose whatsoever.
B. During the term of this Agreement, Developer shall hold itself
out to the public as an independent contractor pursuant to a license from
Licensor. Developer agrees to take such affirmative action as may be necessary,
including, without limitation, exhibiting a notice of that status and
<PAGE>relationship in a conspicuous place in any restaurant licensed pursuant
hereto
and on stationery and forms.
C. It is agreed that nothing in this Agreement authorizes
Developer to make any agreement or representation on Licensor's behalf, or to
incur any obligation in Licensor's name, and that Licensor shall in no event
assume liability for, or be deemed liable hereunder as a result of any act or
omission of Developer in Developer's conduct of the licensed restaurants.
Developer does hereby indemnify and hold Licensor harmless against any and all
such claims arising in connection with the licensed restaurants and/or this
Development Agreement, as well as the costs, including reasonable attorneys'
fees, of defending against such claims unless such claims are caused by the acts
or negligence of Licensor.
X. APPROVALS AND WAIVERS
A. Whenever this Agreement requires the prior approval or consent
of Licensor, Developer shall make a timely written request to Licensor
therefore, as required, and such approval or consent shall be obtained in
writing.
B. No failure of Licensor to exercise any power reserved to it by
this Agreement, or to insist upon strict compliance by Developer with any
obligation hereunder, and no practice of the parties at variance with the terms
hereof, shall constitute a waiver of Licensor's right to demand strict
compliance with any of the terms herein. Waiver by Licensor of any particular
default by Developer shall not impair Licensor's rights with respect to any
subsequent default of the same, similar or different nature, nor shall any
delay, forbearance or omission of Licensor to exercise any power or right
arising out of any default by Developer of any of the terms hereof, affect or
impair Licensor's right to exercise the same, nor shall such constitute a waiver
by Licensor of any right hereunder, or the right to declare any subsequent
breach or default and to terminate this Agreement prior to the expiration of its
term. Subsequent acceptance by Licensor of any payments due to it hereunder
shall not be deemed to be a waiver by Licensor of any preceding breach by
Developer of any terms of this Agreement.
XI. NOTICES
Any notices required or permitted under this Agreement shall be in
writing and shall be personally delivered or mailed by certified mail, return
receipt requested, to the respective parties at the following addresses unless
a different address has been designated by written notice to the other parties:
Notices to LICENSOR: T.C. MANAGEMENT, INC.
262 LOSOYA, SUITE 330
SAN ANTONIO, TEXAS 78205
ATTENTION: PRESIDENT AND
GENERAL COUNSEL
Notices to DEVELOPER: CARROLS CORPORATION
968 JAMES STREET
SYRACUSE, NEW YORK 13203
<PAGE> ATTENTION: PRESIDENT AND
GENERAL COUNSEL
Any notice by certified mail shall be deemed to have been given at the date and
time of mailing.
XII. ENTIRE AGREEMENT
This Agreement, the documents referred to herein, and the Exhibits
hereto, if any, constitute the entire Agreement between the parties hereto
concerning the subject matter hereof, and supersede all prior agreements, no
other representations having induced Developer to execute this Agreement. No
amendment, change or variance from this Agreement shall be binding on the
parties hereto unless mutually agreed to by the parties and executed in writing
by Licensor and Developer.
XIII. SEVERABILITY AND CONSTRUCTION
A. Except as expressly provided to the contrary herein, Licensor
and Developer agree that if any of the provisions of this Agreement may be
construed in two ways, one of which would render the provision illegal or
otherwise voidable or unenforceable, such provision shall have the meaning which
renders it valid and enforceable. The language of every provision of this
Agreement shall be construed according to its fair meaning and not strictly
against Licensor or Developer. In the event any court or other public agency
shall determine that any provision in this Agreement is not enforceable as
written, Licensor and Developer agree that the provision shall be deemed thereby
amended so that it is enforceable to the fullest extent permissible under the
laws and public policies of the jurisdiction in which enforcement is sought.
If any provision in this Agreement is held invalid or otherwise unenforceable
by any court or other public agency, such findings shall not invalidate the
remainder of this Agreement.
B. All captions in this Agreement are intended for convenience and
shall not affect the meaning of any provision hereof.
C. All references to the masculine, feminine, neuter or singular
shall be construed to include the masculine, feminine, neuter or plural, where
applicable, and all acknowledgements, promises, covenants, agreements and
obligations made or undertaken by Developer shall be deemed jointly and
severally undertaken by all Developer co-parties hereto, if more than one, on
behalf of Developer.
XIV. APPLICABLE LAW
A. This Agreement takes effect upon its acceptance and execution
by Licensor in the State of Texas, and shall be construed under the laws
thereof, which laws shall prevail in the event of any conflict of law.
B. The parties agree that any action brought by either party
against the other in any court, whether federal or state, shall be brought
within Bexar County in the State of Texas (the judicial district in which
Licensor has its principal place of business); and the parties do hereby waive
<PAGE>all questions of personal jurisdiction or venue for the purpose of
carrying out
this provision.
C. No right or remedy conferred upon or reserved to Licensor or
Developer by this Agreement shall be deemed to be exclusive of any other right
or remedy herein or by law or equity provided or permitted, but each shall be
cumulative of every other right or remedy.
XV. ACKNOWLEDGMENTS
A. Developer acknowledges that Developer has conducted an
independent investigation of the business licensed hereunder, and recognizes
that the business venture contemplated by this Agreement involves business risks
and that its success will be largely dependent upon the ability of Developer as
an independent businessman. Licensor expressly disclaims the making of, and
Developer acknowledges that Developer has not received, any warranty or
guarantee, express or implied, as to the potential volume, profits or success
of the business venture contemplated by this Agreement. Developer acknowledges
that it has received, read and understood this Agreement, the exhibits hereto,
if any, and agreements relating thereto, if any, and that Licensor has provided
Developer ample time and opportunity to consult with advisors of Developer's own
choosing about the potential benefits and risk of entering into this Agreement.
B. Developer acknowledges that Developer received a complete copy
of this Agreement, the exhibits hereto, if any, and agreements relating thereto,
if any, at least five business days prior to the date on which this Agreement
is executed. Developer further acknowledges that Developer has received the
disclosure document required by the Trade Regulation Rule of the Federal Trade
Commission entitled Disclosure Requirements and Prohibitions Concerning
Franchising and Business Opportunity Ventures, and by any applicable State law
at least ten business days prior to the date on which this Agreement was
executed.
IN WITNESS WHEREOF, the parties hereto have duly executed and
delivered this Agreement on the day and year first above written.
LICENSOR: T.C. MANAGEMENT, INC.
By:________________________
Its:
DEVELOPER: CARROLS CORPORATION
By:________________________
Its:
<PAGE>
<PAGE> EXHIBIT A
DEVELOPMENT TERRITORY
<PAGE>XXX Indicates deleted text for which Confidential Treatment
is sought.
TACO CABANA RESTAURANT
LICENSE AGREEMENT
THIS AGREEMENT is made and entered into on , 1995,
by and between T.C. MANAGEMENT, INC., a Delaware corporation
(hereinafter referred to as "Licensor"), and CARROLS CORPORATION
(hereinafter referred to as "Licensee").
W I T N E S S E T H :
WHEREAS, Licensor, as a result of its (and its predecessors')
expenditure of time, skill, effort and money, has developed a
system for the development and operation of Mexican patio cafe
restaurants (hereinafter, together with the Company-owned and duly
licensed Mexican patio cafe restaurants operating in accordance
therewith, the "Taco Cabana System"); and
WHEREAS, the components of the Taco Cabana System include,
without limitation, distinctive exterior and interior designs
(including special equipment packages and layout); special
recipes and menu items; specially developed techniques for food
preparation and service; training in the operation and management
of the business; and promotional programs (all of which may
be changed and further developed by Licensor); and
WHEREAS, Licensor owns all right, title and interest in and to
the trade name, trademark and service mark "Taco Cabana" and such
other trade names, trademarks and service marks as are now
designated (or as may hereafter be designated by Licensor) as part
of the Taco Cabana System (hereinafter referred to as "Proprietary
Marks"); and
WHEREAS, Licensor and its predecessors, by reason of their
maintenance of high standards for food quality and service, have
established a favorable public reputation and created significant
goodwill for restaurants operated under the Taco Cabana System and
use such Proprietary Marks for their benefit and in order to
identify for the public the source of products and services
marketed in conformity with the Taco Cabana System's standards of
quality and service; and
WHEREAS, Licensee desires to operate a restaurant business
under the Taco Cabana System and wishes to obtain a license for
that purpose, as well as to receive the training and other
assistance provided by Licensor in connection therewith; and
WHEREAS, Licensee understands and acknowledges the importance
<PAGE>of maintaining Licensor's standards of quality and service
and the
necessity of operating the business licensed hereunder in
accordance with Licensor's standards and specifications;
WHEREAS, the Parties acknowledge that Licensee is currently
engaged in the development and operation of restaurants other than
Taco Cabana restaurants and that such restaurants may incorporate
certain elements of the Taco Cabana System which are not unique
or specific to the Taco Cabana System (excluding any recipes and/or
the elements of Taco Cabana's trade dress);
NOW, THEREFORE, in consideration of the mutual promises and
considerations contained herein, the parties mutually agree as
follows:
I. GRANT
A. Licensor hereby grants to Licensee, upon the terms
and conditions herein contained, the right to operate a restaurant
business (hereinafter referred to as "Restaurant" or "licensed
business"), and to use in connection therewith Licensor's Taco
Cabana System, as it may from time to time be changed and further
developed, only at the following location:
.
B. If as of the date of this Agreement, a location
for the Restaurant acceptable to Licensor has not been secured by
Licensee, Licensee shall thereafter lease or acquire a location
in the manner specified in Exhibit A to this Agreement.
C. Licensee agrees that the rights granted under this
Agreement relate solely to the location set forth in Section I.A,
or hereafter accepted by Licensor pursuant to Section I.B, and that
the grant hereunder is non-exclusive and subject to the limitations
contained in Section X.C.4 hereof. During the term of this
Agreement, Licensor shall not operate or license any third party to
operate a Taco Cabana restaurant within a radius of five miles of
the site of the licensed business. xxx
Licensee shall not relocate the licensed business
without first obtaining the written approval of Licensor. If
Licensee should wish to relocate the site of its restaurant, a
$5,000 relocation fee shall be paid by Licensee to Licensor upon
filing its relocation application on a form provided by Licensor.
In addition, Licensee shall reimburse Licensor for the travel,
room, board, and salary expenses of its staff incurred in
inspecting the proposed new site and in inspecting any construction
or remodeling work required to render it suitable as the site of a
Taco Cabana restaurant.
II. TERM AND RENEWAL
A. Unless otherwise terminated in accordance with the
<PAGE>terms hereof, this Agreement shall expire on the earlier of:
(i)
twenty years from the date of the opening of the Restaurant, or
(ii) the date upon which Licensee shall no longer have the right to
be in possession of the Restaurant location.
B. Licensee may, at its option, renew this Agreement
for a period of twenty years, provided the following conditions
shall have been met prior to renewal:
1. Licensee shall have given Licensor written
notice of its election to renew not less than six months nor more
than twelve months prior to the end of the initial term; provided,
however, that Licensee shall not be required to provide such notice
until two months after it has received an inspection report from
Licensor pursuant to the following paragraph.
2. At least nine months prior to the expiration
of the initial term, Licensor shall inspect the restaurant and give
written notice of all required maintenance, refurnishing,
renovating, and remodeling necessary to bring the restaurant up to
the standards for restaurant premises then uniformly expected of
new Licensees. To the extent Licensor shall not have inspected the
restaurant at least nine months prior to the expiration of the
initial term, Licensor upon the written request of Licensee shall
perform such inspection within 30 days after receipt of such
request or waive its right to require such renovating or remodeling
as a condition to renewal. In such event, at Licensee's
election, the initial term shall be extended for a period equal to
the period which elapses between the date nine months prior to
expiration of the initial term and Licensor's delivery of the
inspection report. Licensee shall have completed, to Licensor's
satisfaction, all required maintenance, refurbishing, renovating,
and remodeling not later than thirty days prior to expiration of
the term; because of the importance of maintaining uniformly high
standards in the Taco Cabana System, Licensee should expect the
required renovations and improvements after a 20-year initial term
to be substantial;
3. Licensee shall not be in default of any
material provision of this Agreement beyond applicable periods of
grace and notice. Any failure to have completed a development
schedule under a Development Agreement shall not of itself affect
Licensee's right to renew this Agreement for an existing
restaurant. In addition, Licensee shall have satisfied all
monetary obligations owed by Licensee to Licensor and shall have
"faithfully and substantially complied" with these obligations
throughout the term of this Agreement. A failure to "faithfully
and substantially comply" is defined as any course of conduct by
Licensee during the initial term which would have entitled Licensor
to then terminate this Agreement, even though Licensor's right to
terminate this Agreement during its initial term was not exercised
at that time if Licensor shall have given to Licensee within 60
days of such event of default, or the expiration of any
<PAGE>cure-period, or within 60 days of Licensor's obtaining actual
knowledge of such event of default, if that is later, written
notice of Licensor's intention to rely upon such default as a basis
for refusing to renew this Agreement despite Licensor's willingness
to permit performance of this Agreement for the remainder of the
initial term;
4. Licensee shall execute upon renewal
Licensor's then-current form of License Agreement, which will
supersede this Agreement; provided that such renewal License
Agreement shall not fundamentally alter the Licensee's rights or
obligations pursuant hereto and shall incorporate such
modifications or amendments to the standard License Agreement as
are negotiated concurrently herewith or mutually agreed upon by
Licensor and Licensee and the renewal license fee will not exceed
50% of the then-current initial license fee being charged to new
Licensees under the Taco Cabana System;
5. Licensee shall comply with Licensor's
then-current training requirements; and
6. Licensee shall execute a general release, in
the form prescribed by Licensor, of any and all claims against
Licensor and its affiliates and their respective officers,
directors, agents, and employees, except for claims expressly
identified and reserved by Licensee in its notice delivered to
Licensor.
The Licensor, in its sole but reasonable
judgment, shall determine whether all of the conditions entitling
Licensee to renew have been satisfied and, if they have not, shall
advise Licensee as promptly as possible but in no event less than
four months prior to expiration of the initial term in order to
permit a cure prior to such expiration, if possible. If any of the
conditions to renewal have not been met by the expiration date of
the initial term, this Agreement and all of Licensee's rights
hereunder shall terminate; however, if Licensee shall have promptly
commenced to cure prior to the expiration date and thereafter
diligently prosecutes such cure, Licensee's time to cure shall
be extended for such time as is reasonably required to complete
such cure. During such extended cure period, the initial term
shall be extended coterminously.
III. DUTIES OF LICENSOR
A. Prior to the opening of the Restaurant, Licensor
shall provide the following assistance and services to Licensee:
1. If Licensee has not already selected and
obtained, and Licensor approved, a site prior to or concurrently
with the execution of this Agreement, Licensor shall provide such
site selection assistance and evaluation, including, in Licensor's
discretion, on-site inspections, as Licensor may deem advisable;
Licensee must select and submit a proposed site to Licensor for
<PAGE>approval as promptly as possible after execution of this
Agreement.
The Licensor may inspect the site and shall notify Licensee in
writing of its approval or disapproval of the proposed site within
thirty days after Licensee submits all required documentation in
connection with its site proposal;
2. Within thirty business days after the
execution of this Agreement, Licensor shall deliver to Licensee a
set of Licensor's standard plans and specifications for a Taco
Cabana restaurant and lists of required furniture, fixtures,
equipment and landscape features and approved suppliers thereof.
The standard plans and specifications shall not be used as
construction plans or blue-prints for the Restaurant, but only as
required design concepts which, in accordance with Section IX.A
hereof, shall be adapted by Licensee and its architect or
contractor to Licensee's site, and Licensee hereby releases and
shall indemnify Licensor and its agents, including architects or
engineers of Licensor from any liability or damages arising from
design or structural flaws in the construction of the restaurant
premises; the standard plans and specifications provided Licensee
are proprietary and confidential information belonging to Licensor,
may not be distributed to third parties except to the extent
necessary by Licensee's architects or contractors in the
performance of their duties, which may include public filing of
same with appropriate municipalities;
3. Licensor shall provide an initial training
program for Licensee (or, if Licensee is not an individual, an
operations supervisor designated by Licensee) and for Licensee's
manager; however, if Licensee already operates three or more
restaurants under the Taco Cabana System, Licensor may elect not to
provide such initial training if, in Licensor's judgment, such
training is not required or can more efficiently and economically
be provided at Licensee's other restaurants;
4. If this restaurant is Licensee's first Taco
Cabana restaurant, Licensor shall send one or more of its
representatives to Licensee's Restaurant for a period of
approximately ten days beginning approximately three days
immediately prior to the scheduled Restaurant opening to assist in
the opening and initial operations of the Restaurant, without
charge; otherwise, such representatives shall be provided only at
the Licensor's option to the extent it deems advisable and with
full reimbursement by Licensee to Licensor for reasonable
accountable expenses for transportation, meals, lodging and wages;
5. Licensor shall provide Licensee with one copy
of Licensor's Confidential System Manual. It is Licensor's
practice to provide Licensee with a copy of the Confidential System
Manual within approximately 14 days after signing the License
Agreement. This Manual shall remain confidential and the property
of Licensor and must be returned to Licensor as provided in Section
XI hereof. Licensor shall have the right to add to and otherwise
<PAGE>modify this Manual from time to time in such respects as it
deems
necessary, as long as such additions or modifications do not alter
Licensee's fundamental status and rights or substantially increase
its obligations or duties under this Agreement; and
6. Licensor shall assist Licensee in planning
and coordinating promotions, advertising and such similar
arrangements as Licensor deems necessary for the opening of the
licensed business. Such promotions and advertising shall be
provided for at Licensee's sole expense.
7. Although not obligated to do so by this
Agreement or any other agreement, Licensor may provide suggestions
or recommendations for construction modifications, remodeling and
interior and exterior decor and make occasional progress
inspections during the construction stage to assure substantial
compliance with Licensor's plans and specifications as adopted in
Licensee's approved construction plans and blueprints.
B. Following the opening, Licensor shall provide the
following assistance and services to Licensee for the operation of
the Restaurant:
1. Licensor may make available such additional
training programs for Licensee and its employees as deemed
advisable to ensure the maintenance of the quality standards
associated with the Taco Cabana System and to disseminate and
implement improvements in the Taco Cabana System. If retraining of
Licensee and its manager becomes necessary because of failure to
observe Taco Cabana System standards, or if new managerial
employees are employed during the term of this Agreement, there
shall be a training fee, which is presently $500, for such
retrained employee or new employee, who is actually trained by
Licensor (it being contemplated, pursuant to Section III.A.3 that,
in time, Licensee may assume responsibility for such training);
such training fee may be adjusted from time to time by Licensor to
reflect increases or decreases in Licensor's costs of providing
such training. Such fees are payable to Licensor prior to
commencement of the training program;
2. Licensor shall provide continuing advice and
bulletins relating to the various aspects of the Taco Cabana System
and promptly advise Licensee of modifications to the Confidential
System Manual and of new developments, modifications or
improvements in the Taco Cabana System;
3. Licensor shall conduct inspections of
Licensee's Restaurant and its operations and provide written
evaluations thereof at such times as it deems advisable to
ensure the maintenance of the quality standards associated with the
Taco Cabana System;
4. As provided in Section V hereof, Licensor
<PAGE>shall administer the national advertising materials fund to
develop
and prepare advertising materials for use within the Taco Cabana
System, such as audio and video tapes, hand-bills, coupons, and
magazine or newspaper layouts. Advertising materials developed
through the fund will be made generally available for use by all
licensees in the Taco Cabana System. If a national media fund is
established by Licensor, or if one or more regional advertising
funds are established by or with the approval of Licensor, Licensor
or its designees shall administer and expend contributions to such
funds to develop and pursue advertising campaigns to promote the
Taco Cabana System and to arrange for media placement or
promotional campaigns in the national or regional markets.
Contributions to such funds will not be assets of the Licensor, but
Licensor shall maintain all of the advertising funds in accounts
separate from its general funds and shall make annual audited
accountings of the receipts and disbursements of such funds
available to Licensee. Licensor shall, for each of its
company-owned Taco Cabana restaurants, make contributions to the
funds determined on the same uniform basis as the assessments
required of licensees under the Taco Cabana System;
5. Licensor shall make its employees reasonably
available for consultation in person or by telephone at Licensor's
business address during regular business hours and, upon Licensee's
request, Licensor may also provide additional supervisory or
consulting assistance during the term of this Agreement provided
that Licensee pays all reasonable expenses incurred by Licensor in
rendering any requested special on-site assistance or other
non-routine assistance immediately upon receipt of a statement
therefor.
6. XXX
IV. INITIAL FEES
In consideration for administrative and other
costs incurred by Licensor and opportunities lost or deferred by
the grant of this license, Licensee shall pay to Licensor a
non-refundable initial license fee of Fifty Thousand Dollars
($50,000) (as to which Licensee shall be entitled to a credit from
the Development Fee paid in conjunction with the Development
Agreement executed by Licensor and Licensee on June 30, 1994);
provided, however, that to the extent this form of License
Agreement is used for the eleventh and subsequent licensed Taco
Cabana Restaurants to be opened by Licensee pursuant to the
above-referenced Development Agreement, the Licensee shall pay to
Licensor a non-refundable initial license fee of Twenty-Five
Thousand Dollars ($25,000.00) payable upon commencement of
construction of such restaurant.
V. ROYALTIES AND ADVERTISING EXPENDITURES
A. The Licensee is required to pay the Licensor by
<PAGE>the 20th day of each month a royalty for the preceding month
equal
to 4% of gross sales of the Restaurant.
B. Licensee shall pay to Licensor a monthly
contribution to the national advertising materials fund in an
amount equal to one-half of one percent (.5%) of the gross sales
of the Restaurant during the preceding month, to develop and
prepare advertising materials for use within the Taco Cabana
System, such as audio and video tapes, hand-bills, coupons, and
magazine or newspaper layouts. Advertising materials developed
through the fund will be made generally available for use by all
licensees in the Taco Cabana System. The national advertising
materials fund shall not be used to defray the cost of distributing
such materials or purchasing space or time in the media.
The Licensee shall independently expend on a
quarterly basis an amount not less than 2% of its gross sales for
the quarter for local advertising and shall, upon Licensor's
request, submit to Licensor a written accounting of such
advertising expenditures by the 20th day following such request;
any deficiency resulting from a bona fide underestimation of gross
sales being realized in a given month may be made up by additional
expenditures in the amount of such deficit during the immediately
following quarter. This requirement will typically be met by
expending such amounts for local television, radio, magazine or
newspaper placement of advertising materials made available to the
Licensee through the national advertising materials fund or, with
the prior written approval of Licensor in accordance with Section
VIII hereof, by so placing Licensee-developed advertising materials
or conducting promotional campaigns.
Licensee agrees that Licensor shall have the
right, in its discretion, to establish national and/or regional
media funds for advertising and promotion of the Taco Cabana
System or any part thereof. Licensee agrees that such media funds
may be used to meet any and all costs of maintaining,
administering, directing, and conducting advertising and/or
promotional activities (including, without limitation, the cost of
preparing and conducting television, radio, magazine and newspaper
advertising campaigns, marketing surveys, and other public
relations activities; employing advertising agencies to assist
therein; and distributing promotional brochures and other marketing
materials to licensees in the Taco Cabana System). In the event
Licensor establishes or approves a regional media fund for an area
incorporating the Licensee's restaurant, Licensee shall participate
therein and submit to Licensor by the 20th day of each month a
contribution based upon a percentage of gross sales to be
determined by the Licensor (or by any other Licensor-approved
administrating group consisting of the Licensor and Licensees), but
not to exceed 2% of the gross sales of each of Licensee's licensed
restaurants in the region for the preceding month, calculated on a
uniform basis for all licensees in the region. Any amounts
contributed to a regional media fund may be applied as a credit
<PAGE>against the local advertising requirement. If a regional
advertising cooperative is established during the term of this
Agreement in the market coverage area in which the Restaurant is
located, then Licensee shall become a member of the cooperative and
shall abide by the bylaws and rules of the cooperative, so long as
the cooperative is in existence XXX
In the event Licensor establishes a national media
fund for the Taco Cabana System, the Licensee shall also
participate therein and submit to Licensor or its designees by the
20th day of each month a contribution based upon a percentage of
gross sales to be determined by the Licensor, but not to exceed 1%
of the gross sales of each of Licensee's restaurants for the
preceding month. Any amounts contributed to the national media
fund may be applied as a credit against the local advertising
requirement.
C. Licensee agrees that the national advertising
materials fund and the media funds, if any are established,
(hereinafter jointly referred to as "Funds") shall be maintained
and administered by Licensor or its designees as follows:
1. Licensor shall direct all advertising and
promotional programs, with sole discretion over the concepts,
materials, and media used in such programs and the placement and
allocation thereof. Licensee agrees and acknowledges that the
Funds are intended to enhance the value of all Taco Cabana
Restaurants in the Taco Cabana System and to maximize general
public recognition and acceptance of the Proprietary Marks for
the benefit of the entire Taco Cabana System, and that Licensor and
its designees undertake no obligation, in administering the Funds,
to make expenditures for Licensee which are equivalent or
proportionate to Licensee's contribution, or to ensure that any
particular Licensee benefits directly or pro rata from advertising
or promotion conducted under the Funds.
2. Licensee shall contribute to the Funds in
accordance with the provisions herein, shall allocate its
contributions as directed by Licensor consistent herewith, and
shall remit all contributions by separate checks made payable to
the appropriate Funds. Fund contributions as a percentage of gross
sales will be uniform for substantially all licensees, except for
contributions to regional media funds, which may differ in
percentage amounts between regions but which will be uniform for
substantially all licensees in a particular region. Licensor
shall, for each of its company-owned restaurants under the Taco
Cabana System, make contributions to the Funds equivalent
to the maximum percentage assessments then required of licensees
within the Taco Cabana System.
3. The Funds are not and shall not be an asset
of Licensor; all contributions to the Funds, plus income earned
from such contributions, shall be used exclusively for the purposes
stated above and the Funds shall be implemented and managed so as
<PAGE>reasonably to minimize the income tax liability, if any, of
such
Funds. All sums paid by Licensee to the Funds shall be maintained
in accounts separate from the other monies of Licensor and shall
not be used to defray any of Licensor's other expenses, except for
such reasonable administrative costs and overhead, if any, as
Licensor may incur in activities directly related to the
administration or direction of the Funds and advertising programs
for the Taco Cabana System. The Funds and their earnings shall
not otherwise inure to the benefit of Licensor. An accounting of
the operations of each Fund as shown on the books of Licensor shall
be prepared annually by an independent certified public accountant
selected by Licensor and such accounting and a Licensor-prepared
detailed schedule of Fund expenditures shall be made available to
Licensee. Licensee may also, upon 30 days advance written notice,
at Licensee's expense inspect at Licensor's headquarters the
relevant portion of the books for the applicable Funds affecting
Licensee.
4. It is anticipated that all contributions to
the Funds shall be expended for advertising and/or promotional
purposes during the taxable year within which the contributions are
made. If, however, excess amounts should remain in the Funds at
the end of such taxable year, all expenditures in the following
taxable year shall be made first out of accumulated funds from
previous years and next out of funds in the current year.
XXX
5. Although the Funds are intended to be of
perpetual duration, Licensor retains the right to terminate any of
the Funds. No Fund shall be terminated, however, until all monies
in the Fund have been expended for advertising and/or promotional
purposes in accordance herewith.
D. All monthly payments required by this Section V
(except for local advertising expenditures which shall be generally
expended on the basis of gross sales for the quarter then in
progress) shall be paid by the 20th day of each month on the gross
sales during the preceding calendar month, and shall be submitted
to Licensor together with any monthly reports required under
Section VI of this Agreement. Any payment or report not actually
received by Licensor on or before such date shall be deemed
overdue. If any payment is overdue, Licensee shall pay to
Licensor, in addition to the overdue amount, interest on such
amount from the date it was due until paid, at the prime rate then
quoted by the Chase Manhattan Bank, N.A. on the date payment was
due, plus 3% per annum or the maximum rate permitted by law,
whichever is less.
E. As used herein, "gross sales" shall include the
amount of all sales of all food, merchandise or services sold or
rendered by Licensee, whether for cash or credit (regardless
of collection in the case of credit), and income of every kind
related to the licensed restaurant, including, without limitation,
<PAGE>on or off premises catering and all revenues from electronic
or
video games and all other vending machines, if authorized;
provided, however, that "gross sales" shall not include any sales
tax or other similar taxes collected from customers; proceeds from
a sale of the business or other sale not in the ordinary course of
business; sales of fixtures and equipment; refunds; sales of
approved premiums; the value of discounts to employees the value
of coupons or similar credits; or, if credit cards are utilized,
credit card fees.
F. Licensor agrees to use its reasonable best efforts
to administer the Funds in such a manner as to enhance the value of
all Taco Cabana Restaurants in the Taco Cabana System .
VI. ACCOUNTING AND RECORDS
A. Licensee shall submit to Licensor by the 20th day
of each month a statement, in the form prescribed by Licensor,
accurately reflecting all gross sales, expense items and operating
income during the preceding month, together with all payments due
hereunder.
B. Licensee shall, at Licensee's expense, submit to
Licensor a quarterly profit and loss statement, which may be
unaudited, for the Restaurant (in the form prescribed by Licensor
and showing the sources of all income and the amount expended each
month during the quarter on local advertising) within 30 days of
the end of each quarter of the fiscal year of Licensee during the
term of this Agreement. Licensee shall also submit, at Licensee's
expense, an annual balance sheet, income statement, and funds flow
statement for Licensee, which may be unaudited, within 90 days of
the end of each fiscal year of Licensee during the term of this
Agreement. Each statement shall be signed by Licensee or by
Licensee's treasurer or chief financial officer attesting that the
statement is true and correct.
C. Licensee shall also submit to Licensor other
reports and information in the form and at the times reasonably
required, upon request and as specified in the Confidential
System Manual or otherwise in writing.
D. Licensee shall use only non-resettable
point-of-sale cash register systems approved by Licensor (which
approval shall not be unreasonably withheld), which shall contain
devices that will record accumulated sales and other management
accounting data.
E. Licensor or its designated agents at Licensor's
sole cost and expense shall have the right at all reasonable times
to examine the books, records, and information contained in the tax
returns of Licensee to the extent the same relate to licensed Taco
Cabana operations. Licensor shall also have the right, at any time,
at Licensor's sole cost and expense to have an independent audit
<PAGE>made of the books, as same relate to Licensee's Taco Cabana
business, of Licensee. If an inspection or audit reveals that any
payments owed to Licensor have been understated in any report to
Licensor, then Licensee shall immediately pay to Licensor, upon
demand, the amount understated plus interest from the date such
amount was due until paid, at the prime rate then quoted by the
Chase Manhattan Bank, N.A., on the date payment was due, plus 3%
per annum, or the maximum rate permitted by law, whichever is less.
If an inspection or audit discloses an understatement of amounts
owed to Licensor in any report of 3% or more, Licensee shall also
reimburse Licensor for any and all costs connected with the
inspection or audit (including, without limitation, reasonable
accounting fees). The foregoing remedies shall be in addition to
any other remedies Licensor may have. Licensee shall have the
right to challenge the audits performed by Licensor and if Licensee
and Licensor cannot agree upon the audit, the dispute shall be
submitted to arbitration.
F. Licensee shall maintain at all times, for the
three most recent fiscal years, complete and accurate books,
records and accounts prepared in accordance with generally
accepted accounting principles.
VII. INSURANCE
A. Licensee shall at its expense procure, prior to
the commencement of business, and maintain in effect during the
term of this Agreement insurance protecting Licensee and Licensor
and their officers, directors, partners and employees, against any
loss, liability, personal injury, death, property damage or expense
whatsoever from fire, lightning, theft, vandalism, malicious
mischief and the perils included in the extended coverage
endorsement, in connection with the construction, operation or
occupancy of the Restaurant.
B. Such policy or policies shall be written by an
insurance company reasonably satisfactory to Licensor and shall
include, at a minimum (except as additional coverages and higher
policy limits may reasonably be specified from time to time by
Licensor in the Confidential System Manual or otherwise by the
Licensor in writing provided such additional coverages and higher
policy limits are standard in the industry and are uniformly
required of Licensor-owned restaurant and other licensed
restaurants in the Taco Cabana system) the following:
1. Comprehensive general liability insurance,
including product liability, completed operations and independent
contractors coverage and comprehensive automobile liability
coverage for both owned and non-owned vehicles in the amount
customarily and reasonably maintained for Taco Cabana System
restaurants per person/per occurrence for bodily injury and
property damage combined, and naming Licensor as an additional
insured in each such policy or policies.
<PAGE>
2. Workers' compensation, dram shop (with
Licensor as an additional insured) and employer's liability
insurance as well as such other insurance as may be required by
statute or rule of the state in which the Restaurant is located and
operated.
3. Fire, vandalism, and extended coverage
insurance with primary and excess limits of not less than the 80%
of replacement value of the licensed restaurant and its furniture,
fixtures and equipment.
C. In connection with any construction or remodeling
of the Restaurant, Licensee shall cause the general contractor to
maintain with a reputable insurer comprehensive general liability
insurance (with comprehensive automobile liability coverage for
both owned and non-owned vehicles, builder's risk, product
liability, and independent contractors coverage) in at least the
amount customarily and reasonably maintained for Taco Cabana System
restaurants, with Licensor named as an additional insured, and such
worker's compensation and employer's liability insurance as may be
required by law.
D. No later than 15 days before the date on which any
construction is commenced and on each policy renewal date
thereafter, Licensee shall submit evidence of
satisfactory insurance by delivery of a certificate of insurance to
Licensor, together with, upon request, original or duplicate copies
of all policies and policy amendments. The evidence of insurance
shall include a statement by the insurer that the policy or
policies will not be cancelled without at least 30 days prior
written notice to Licensor.
E. Should Licensee fail to maintain the required
insurance, Licensor shall have the right upon notice to Licensee to
procure such insurance for Licensee's account, the charges for
which shall be payable by Licensee immediately upon invoice.
VIII. ADVERTISING STANDARDS
Recognizing the value of advertising, and the
importance of the standardization of advertising programs to the
furtherance of the goodwill and public image of the Taco Cabana
System, the parties agree that all advertising by Licensee in any
medium shall be conducted in a dignified manner and shall conform
to such standards and requirements (uniformly applied throughout
the Taco Cabana System including Company-owned restaurants) as
Licensor may specify from time to time in writing. Licensee shall
submit to Licensor, for its prior approval (except with respect to
prices to be charged), samples of all advertising and
promotional plans and materials that Licensee desires to use and
that have not been prepared or previously approved within one year
by Licensor. Licensor shall notify Licensee of Licensor's
approval or disapproval thereof within 10 days from the date of
<PAGE>receipt by Licensor of such materials; failure to respond
within 10
days shall be deemed approval. Licensee shall not use any
advertising or promotional plans or materials which have not been
approved by Licensor, and shall cease to use any plans or materials
promptly upon notice by Licensor.
IX. CERTAIN OPERATING STANDARDS IMPOSED ON LICENSEE
A. To ensure that the Restaurant meets Licensor's
criteria as to size, location and design:
1. If Licensee will occupy the Restaurant
premises under a lease, Licensee shall submit the proposed lease to
Licensor in advance of signing it. XXX
a. XXX
b. XXX
2. Before commencing with construction of the
Restaurant or other related improvements to the premises, Licensee
shall, at its expense, comply to Licensor's reasonable satisfaction
with all of the following requirements:
a. Licensee shall employ a licensed
architect or engineer to prepare a site layout and plan for
construction of the Restaurant;
b. Licensee shall submit to Licensor for
Licensor's approval a site layout and plan adapting Licensor's
then-current building plans and specifications to Licensee's
location and to all applicable local and state requirements.
Licensor shall review and provide Licensee with written notice of
its approval or disapproval (and, in the latter case, specify the
reasons therefor) as promptly as possible and in no event later
than 30 days after receipt of Licensee's site layout and plan.
Licensor's failure to expressly approve or disapprove such
site layout and plan within the prescribed time period shall be
deemed approval.
When approved by Licensor, such layout and plan shall
not thereafter be materially modified without the prior written
consent of Licensor;
c. Licensee shall employ a general
contractor to supervise construction of the Restaurant (Carrols
Corporation may act as its own general contractor);
d. Licensee shall obtain all permits
required for construction and operation of the Restaurant and
certify to Licensor that all permits have been obtained; and
e. Licensee shall execute a release
<PAGE>acknowledging that it has secured its own professional
architectural, engineering and contracting services (Carrols
Corporation may act as its own general contractor) to adapt
Licensor's prototype plans for Licensee's restaurant premises and
releasing, agreeing to hold Licensor harmless and indemnifying
Licensor from any liability, public or otherwise, for design or
construction defects and any damages arising therefrom.
3. After securing all required plan approvals,
Licensee shall provide written notice to Licensor of the date of
commencement of construction of the Restaurant within three days
after commencement. Licensee shall maintain continuous diligent
construction of the Restaurant premises and shall complete
construction in accordance with the approved site layout and plans
within 180 days of the execution of this Agreement, exclusive of
time lost by reason of strikes, lockouts, fire and other casualties
and Acts of God and other causes beyond the reasonable control of
Licensee. Licensee further agrees that Licensor and its agents
shall have the right to inspect the construction at all reasonable
times. After completion of construction, Licensee shall obtain a
Certificate of Occupancy, and after obtaining Licensor's approval
for opening, open the Restaurant as promptly as possible.
B. During the time Licensee is operating the
restaurant pursuant hereto, Licensee shall use the Restaurant
premises solely for the operation of the business licensed
hereunder, and shall keep the Restaurant open and in normal
operation for such minimum hours as is customary with Licensor's
own restaurants and other franchised restaurants, taking into
account market demographics and zoning restrictions. Licensee
shall not locate or permit to be located on or about the Restaurant
premises any pinball machine, jukebox, or any other type of
amusement or vending machine without the prior written approval of
Licensor.
C. Licensee shall maintain the Restaurant in the
highest degree of repair and condition, and otherwise in a manner
consistent with such standards as Licensor may reasonably require,
and in connection therewith shall promptly make such additions,
alterations, modifications, repairs, and replacements thereto as
may be reasonably required, including, without limitation,
repainting and repairs to equipment, and replacement of obsolete
signs uniformly required of Company restaurants and other existing
franchises. At Licensor's request XXX.
Licensee shall remodel and refurbish the Restaurant at its expense
to conform to the building design, trade dress, color schemes, and
presentation of trademarks and service marks consistent with the
design concepts then in effect for new restaurants under the
System.
D. Licensee shall maintain the highest health
standards applicable to the operation of the Restaurant and
consistently applied within the Taco Cabana System as Licensor
may reasonably require.
<PAGE>
E. Licensee shall operate the Restaurant in
conformity with such methods, standards and specifications
consistently and uniformly applied to Licensor's own restaurants
and other franchised restaurants in the Taco Cabana System as
Licensor may from time to time prescribe to ensure that the highest
degree of quality and service is consistently maintained in the
Taco Cabana System and, accordingly, Licensee agrees:
1. To maintain in sufficient supply (as
prescribed in the Confidential System Manual or otherwise by the
Licensor in writing) and to use at all times only such equipment,
small wares, products, materials, ingredients, supplies and paper
goods as conform to Licensor's uniform standards and
specifications, and to refrain from deviating therefrom without
Licensor's prior written consent;
2. To use at the Restaurant only menus which
comply with Licensor's prescribed specifications for materials,
style, content and design; however, Licensor recognizes Carrols
Corporation's substantial restaurant expertise and having due
regard therefor will not unreasonably withhold its consent to
requested modifications of the foregoing which would not in
Licensor's opinion compromise the Taco Cabana System's
reputation for uniformity, consistency and high quality throughout
the System;
3. To sell or offer for sale only such products
and menu items as meet Licensor's uniform standards of quality and
quantity, and as have been expressly approved for sale in writing
by Licensor, and as have been prepared in accordance with
Licensor's prescribed methods and techniques, and shall discontinue
selling and offering for sale such previously approved items as
Licensor, in its discretion, disapproves in writing at any time;
however, Licensor recognizes Carrols Corporation's substantial
restaurant expertise and having due regard therefor will not
unreasonably withhold its consent to requested modifications of the
foregoing which would not in Licensor's opinion compromise the
Taco Cabana System's reputation for uniformity, consistency and
high quality throughout the System;
4. To purchase and install, at Licensee's
expense, such fixtures, furnishings, signs, equipment and landscape
features as prescribed in the Confidential System Manual or as
Licensor may reasonably direct from time to time in writing; and
to refrain from installing, without Licensor's prior written
consent, any fixtures, furnishings, signs, equipment, landscape
features or other improvements in or about the Restaurant not
previously approved as meeting the standards and specifications of
the Taco Cabana System; however, Licensor recognizes Carrols
Corporation's substantial restaurant expertise and having due
regard therefor will not unreasonably withhold its consent to
requested modifications of the foregoing which would not in
Licensor's opinion compromise the Taco Cabana System's reputation
<PAGE>for uniformity, consistency and high quality throughout the
System;
5. To employ such reasonable minimum number of
employees as may be reasonably required by Licensor (in no event
shall such required minimum number be more than are employed in
comparable-sized Company-owned restaurants with similar hours of
operation) and to comply with all applicable regulations with
respect to employees; however, Licensor recognizes Carrols
Corporation's substantial restaurant expertise and having due
regard therefor will not unreasonably withhold its consent to
requested modifications of the foregoing which would not in
Licensor's opinion compromise the Taco Cabana System's reputation
for uniformity, consistency and high quality throughout the System;
6. To maintain a competent staff and to ensure
that employees keep a neat and clean appearance and comply with
such dress code as Licensor reasonably requires; and
7. To comply, at its own expense, with all
federal, state and local laws, ordinances and regulations affecting
the operation of the Restaurant.
F. Licensee shall purchase all equipment, supplies
and other products and materials required for the operation of the
Restaurant solely from suppliers who demonstrate the ability to
meet Licensor's reasonable standards and specifications for such
items, as prescribed in the Confidential System Manual or
promulgated from time to time by the Licensor; who possess adequate
quality controls and capacity to supply Licensee's needs promptly
and reliably; and who have been approved in writing by Licensor,
which approval shall not be unreasonably withheld or delayed, and
not thereafter disapproved. If Licensee desires to purchase any
items from a non-approved supplier, Licensee shall submit to
Licensor a written request for such approval or shall request the
supplier itself to do so. Licensor shall have the right to require
that its representatives be permitted to inspect the supplier's
facilities, and that samples from the supplies be delivered, at its
option, to Licensor or to an independent laboratory designated by
Licensor for testing. A charge not to exceed the reasonable cost
of the inspection and the actual cost of the test shall be paid by
Licensee or the supplier; XXX. Licensee and supplier shall be
promptly notified in writing of the Licensor's approval or
disapproval. Licensor reserves the right, at its option, to
reinspect the facilities and products of any approved supplier and
to revoke its approval upon the supplier's failure to continue to
meet any of the Taco Cabana System criteria.
G. Licensee shall permit Licensor or its agents or
representatives to enter the Restaurant at any time for the purpose
of conducting inspections, provided such visits are conducted in a
manner so as to avoid interference with the operation of the
restaurant; shall cooperate fully with such agents or
representatives in such inspections by rendering such assistance as
<PAGE>such agents or representatives may reasonably request; and,
upon
notice from Licensor or its agents or representatives and without
limiting Licensor's other rights under this Agreement, shall take
such steps as may be necessary to immediately correct any
deficiencies detected during such inspections. Licensee shall
permit Licensor or its agents to remove from the Restaurant samples
of any food or non-food items without payment in amounts reasonably
necessary for testing to determine whether the samples meet the
Taco Cabana System's then current standards and specifications. In
addition to any other remedies available to it for substandard
service by Licensee, Licensor may require Licensee to bear the cost
of such testing if the supplier of the item has not previously been
approved by Licensor or if the sample fails to conform to the Taco
Cabana System's quality standards.
H. Licensee acknowledges that Licensor may from time
to time prepare certain spices, sauces or other products according
to secret recipes and make these available to Licensee. If such
products become part of the Taco Cabana System and Licensor
requires their purchase, then Licensee shall use only such products
and shall purchase from Licensor or from a source designated by
Licensor all of Licensee's requirements of any such products;
provided, however, that if Licensee requests approval of an
alternate supplier of any such item in accordance with Section
IX.F., Licensor (subject to its satisfaction in its sole discretion
with the proposed supplier's acceptance of a confidentiality
agreement and security measures to protect such secret recipes)
shall make at least one alternate supplier of such item an approved
supplier.
I. Licensee shall sell, or make a bona fide attempt
to sell, all of the menu items and promotional materials listed in
the Confidential System Manual, or of which Licensee is informed in
writing from time to time by Licensor unless otherwise reasonably
agreed to based upon demographic and cultural diversity of Carrols'
Taco Cabana restaurants. Such requirements are imposed to ensure
the substantial uniformity of restaurants in the Taco Cabana System
and the maintenance of the high quality food products and beverages
and the fine reputation and goodwill which Taco Cabana restaurants
enjoy.
J. Licensee shall make sales only from its licensed
premises and shall not, without the express authorization of
Licensor and the execution of separate License Agreements for each
licensed restaurant, open or operate different Taco Cabana
restaurants from the one described in this Agreement; provided,
however, that Licensee shall be authorized to offer and provide
off-premises catering from the Taco Cabana restaurant licensed
hereby for functions not lasting more than a consecutive
twenty-four hour period without Licensor's prior written
approval. Off-premises catering for an event for more than a
consecutive twenty-four hour period shall require Licensor's prior
written approval, which shall not be unreasonably withheld. It is
<PAGE>acknowledged, however, that it shall not be unreasonable for
Licensor to reject, at a minimum but without limitation, any
extended term or permanent off-premises catering arrangement or any
arrangement for the sale at wholesale or retail by a third party of
products prepared and supplied by Licensee at its licensed Taco
Cabana restaurant.
X. PROPRIETARY MARKS
A. Licensor represents and covenants with respect to
the Proprietary Marks that:
1. Licensor and/or its parent corporation, Taco
Cabana, Inc., is the owner of all right, title and interest to and
in the registered service mark "Taco Cabana" and, to the best of
its knowledge, the other Proprietary Marks.
2. Licensor will take steps reasonably necessary
to protect the ownership and validity of such Proprietary Marks.
B. Licensee agrees that:
1. Licensee shall use the Proprietary Marks only
in the manner authorized by Licensor.
2. Licensee shall use the Proprietary Marks only
in conjunction with the Restaurant or other Taco Cabana restaurants
which Licensor has licensed Licensee to operate.
3. Licensee shall identify itself as a licensed
owner of the business in conjunction with any use of the
Proprietary Marks, which uses shall include, but not be limited to,
uses on invoices, order forms and contracts, and shall display a
conspicuously placed notice of its licensee status at the
Restaurant.
4. Unless otherwise authorized by Licensor,
Licensee shall refer to the licensed business as a "Taco Cabana,"
without prefix or suffix.
5. Unauthorized use by Licensee of the
Proprietary Marks shall constitute an infringement of Licensor's
rights.
6. Licensee shall not use the Proprietary Marks
to incur any obligation on behalf of Licensor.
7. Licensee shall not use the Proprietary Marks
as part of its legal name.
8. Licensee shall comply with Licensor's
direction in maintaining trade name or fictitious name
registrations, and shall execute any documents deemed necessary
by Licensor to obtain protection for the Proprietary Marks or to
<PAGE>maintain their continued validity and enforceability.
9. In the event of any infringement of, or
challenge to, the Licensee's use of any name, mark, or trade dress
feature associated with the Taco Cabana System, the Licensee is
obligated to immediately notify Licensor and to cooperate fully
with the Licensor in defending or settling any litigation arising
therefrom. If the Licensee is requested to cooperate in such
litigation, the Licensor will reimburse the Licensee for its
reasonable out-of-pocket expenses in so doing (including any
reasonable attorneys' fees).
The Licensor will have sole discretion to take such action as
it deems reasonably necessary in the circumstances in the event of
any such alleged infringement.
While Licensor is not required by the License Agreement or
otherwise to defend the Licensee against any claim of infringement,
unfair competition or other claim respecting the Licensee's use of
any Taco Cabana proprietary name, mark, or trade dress feature,
Licensor will indemnify the Licensee against, and reimburse the
Licensee for, all damages (including any reasonable attorney's
fees) for which it is held liable in any proceeding arising out of
the use of any Taco Cabana proprietary name, mark, or trade dress
feature in a manner expressly authorized by Licensor and for all
costs reasonably incurred by the Licensee in the defense of any
such claim, as long as the Licensee has promptly notified Licensor
of such claim.
If it becomes advisable at any time in the
sole discretion of the Licensor to modify or discontinue the use of
any principal identifying name or mark (excluding such marks as
relate to particular menu items or advertising or promotional
campaigns, which may change from time to time in the ordinary
course of business and for which Licensor will have no
reimbursement obligation) or to use one or more additional or
substitute names or marks, the Licensee is obligated to do so and
the sole obligation of Licensor in any such event will be for
Licensor to reimburse the Licensee for its out-of-pocket costs
(such as changing signs) of complying with this obligation;
obligations to modify, discontinue or use names or marks pursuant
to this paragraph will be uniformly imposed throughout the Taco
Cabana System, including Licensor-owned stores, except where third
party prior use rights in a particular area require nonuniform
treatment.
10. Under the License Agreement, the Licensee
agrees not to contest the Licensor's ownership, title, right or
interest in the names, marks, trade dress, trade secrets, methods,
procedures and advertising techniques which are part of the Taco
Cabana System (excluding such elements of the Taco Cabana System as
are excluded from the definition of Confidential Information by
Section XII.B hereof) and agrees not to contest Licensor's sole
right to register, use or license others to use such names, marks,
<PAGE>trade dress, trade secrets, methods, procedures and
techniques.
11. Any goodwill from Licensee's use of the
Proprietary Marks at the Restaurant shall inure exclusively to
Licensor's benefit, and upon expiration or termination of this
Agreement, no monetary amount shall be assigned as attributable to
any goodwill associated with Licensee's use of the Taco Cabana
System or the Proprietary Marks; XXX
C. Licensee acknowledges that:
1. Licensor and/or its parent corporation, Taco
Cabana, Inc., is the owner of all right, title and interest to and
in the Proprietary Marks and the goodwill associated with and
symbolized by them, subject to the provisions of Section X.B.11.
above.
2. The Proprietary Marks serve to identify the
Taco Cabana System and those who are licensed thereunder.
3. Licensee's use of the Proprietary Marks does
not provide Licensee with any ownership or other interest in or to
the Proprietary Marks, except the non-exclusive license granted
herein.
4. The license of the Proprietary Marks granted
hereunder is non-exclusive (except as otherwise expressly provided
by Section I of this Agreement or by a fully executed and effective
Taco Cabana Development Agreement) and accordingly, Licensor may:
a. Use, and grant licenses to others to
use, the Proprietary Marks.
b. Use the Proprietary Marks in connection
with the sale of food and other products at wholesale and retail,
XXX
c. Establish, develop, and license other
systems which are not substantially similar to the Taco Cabana
System without offering or providing Licensee any rights in, to, or
under such other systems.
XI. CONFIDENTIAL SYSTEM MANUAL
A. In order to protect the reputation of Licensor and
to maintain the highest standards of operation under the Taco
Cabana System, Licensee shall conduct its business in accordance
with the Confidential System Manual, one copy of which will be
loaned to Licensee for the term of this Agreement. The loaned copy
shall be promptly returned to Licensor upon the termination or
expiration of this Agreement.
B. Licensee shall at all times treat the Confidential
<PAGE>System Manual, and all other manuals approved for use at the
Restaurant as confidential and shall use reasonable efforts to
maintain such information as confidential. Licensee shall not at
any time, without Licensor's prior written consent, copy, record or
otherwise reproduce any of such materials, nor make any of such
materials available to any unauthorized person. Licensor consents
to a reasonable number of copies to be made as is necessary for
Licensee's operation of the Licensed Restaurant; provided that each
such copy is properly accounted for by Licensee and returned upon
termination or expiration of this Agreement.
C. The Confidential System Manual shall remain the
sole property of Licensor.
D. Licensor may revise the contents of the
Confidential System Manual; provided that such revisions do not
substantially increase Licensee's duties and obligations
hereunder or substantially decrease Licensee's rights hereunder,
and Licensee agrees to comply with each such revision thereto.
E. Licensor shall timely provide Licensee with all
updates to Licensor's Confidential System Manual. Licensee shall
at all times ensure that its copy of the Confidential System Manual
is kept up-to-date, and in the event of any dispute as to the
contents of the Confidential System Manual, the terms of the
Confidential System Manual maintained at Licensor's headquarters
shall control.
XII. CONFIDENTIAL INFORMATION
A. In order to preserve and protect the trade secrets
and the confidential and proprietary information (hereinafter
"Confidential Information") disclosed to Licensee during the
term of this Agreement, Licensee agrees that:
1. Licensee shall treat such information as
confidential both during the term of this Agreement and thereafter.
2. Licensee shall use such Confidential
Information only in conjunction with its operations under this
Agreement.
3. Licensee shall disclose such Confidential
Information only to such of its employees or agents as require such
information in order to operate the licensed business and, to the
extent required by and observed in practice by Licensor only after
any such managerial employee has executed a non-disclosure
agreement in the form reasonably prescribed by Licensor. Licensor
shall be a third-party beneficiary of such nondisclosure agreement.
B. Any information or techniques which Licensor
designates as confidential shall be deemed Confidential Information
for purposes of this Agreement, except information which, (i)
Licensee can demonstrate it knew about prior to disclosure by
<PAGE>Licensor, (ii) is, or has become, a part of the public domain
or is
generally used in the restaurant industry, or (iii) is
independently developed by Licensee (although in the latter case
Licensor shall enjoy a perpetual royalty-free right to use and
license others under the Taco Cabana System to use such
information). Information or techniques prepared, compiled or
developed by Licensee during the term of this Agreement and
relating to the licensed business, whether developed separately or
in conjunction with Licensor, shall be considered as part of
Licensor's Confidential Information and proprietary to Licensor.
C. Licensee acknowledges that any failure by Licensee
to comply with the requirements of this Section XII shall cause
Licensor irreparable injury, and, provided that Licensor is the
prevailing party, Licensee agrees to pay all court costs and
reasonable attorney's fees incurred by Licensor in obtaining
specific performance of, or an injunction against violation
of, the requirements of this Section XII.
XIII. TRANSFER OF INTEREST
A. Transfer by Licensor: Licensor shall have the
right, insofar as the Licensee is concerned, to transfer or assign
all or any part of its rights or obligations hereunder to any
person or legal entity in such manner as to recognize and protect
the pre-existing rights of Licensee hereunder. Licensor shall
remain liable thereafter on obligations hereunder to Licensee
which are known and due at the time of transfer, but shall not be
liable for subsequently occurring obligations.
B. Transfer by Licensee-General Provisions: Licensee
understands and acknowledges that Licensor has granted this
Agreement in reliance on Licensee's business skill and financial
capacity. Accordingly, except for a public offering of securities
by Licensee and except for certain transfers to other entities
controlled by Licensee or transfers which do not, taken together
with all previous, simultaneous or contemplated transfers, have the
effect of transferring more than a 49% interest in Licensee on a
cumulative basis (which last-referenced transfers shall not require
Licensor's consent, and provided further that restrictions upon the
transfer of any equity interest in Licensee, regardless of whether
such transfers constitute an effective change in control of
Licensee, shall not be applicable for any period during which
Licensee is a reporting company pursuant to Sections 12 or 15(d) of
the Securities Exchange Act of 1934), neither this Agreement nor
Licensee's rights therein may be sold, assigned, transferred,
conveyed, given away, pledged, mortgaged or otherwise encumbered
without first affording Licensor an opportunity to exercise its
rights of first refusal (upon the terms and conditions described in
Section XIII.E. hereunder) and, if such rights are not exercised,
without the prior written consent of Licensor, which shall not be
unreasonably withheld subject to satisfaction of the following
conditions:
<PAGE>
1. All of Licensee's accrued monetary
obligations and all other outstanding obligations to Licensor and
its affiliates shall have been satisfied;
2. Licensee shall not be in default (beyond
applicable periods of grace and notice) of any material provision
of this Agreement or any other agreement between Licensee, on the
one hand, and Licensor or its affiliates, on the other hand, except
for any failure of Licensee to comply with the development schedule
set forth in any Development Agreement to which Licensee is a
party;
3. The transferor shall have executed a general
release, in a form satisfactory to Licensor, of any and all claims
against Licensor and its officers, directors, shareholders, and
employees, except for claims which have been expressly identified
and reserved in the transfer application;
4. The transferee shall either (i) if the
proposed transferee is a company with a net worth at least equal to
Carrols Corporation's current net worth and with restaurant
operating experience at least comparable to Carrols Corporation's
in terms of number of units operated and profitability of
operations, enter into a written assignment in a form satisfactory
to Licensor assuming and agreeing to discharge all of Licensee's
obligations under this Agreement, or (ii) the transferee shall be
required to execute, for a term ending on the expiration date of
this Agreement and with such renewal term as may be provided by
this Agreement, the standard form agreement then being offered to
new Taco Cabana System licensees and such ancillary agreements as
Licensor may require for the licensed business, which agreements
shall supersede this transferred Agreement in all respects and the
terms of which agreements may differ from the terms of this
transferred Agreement, including, without limitation, calling for
a higher percentage royalty rate and advertising contribution; the
transferee, however, shall not be required to pay any initial
license fee and the signing of the new form of License Agreement
may not be required unless two or more new licensees have executed
substantially the same form prior to demand being made on the
transferee pursuant to this provision;
5. The transferee shall have demonstrated to
Licensor's reasonable satisfaction that the transferee meets its
educational, managerial, and business standards; possesses a good
moral character, business reputation and credit rating; has the
aptitude and ability to conduct the licensed business (as may be
evidenced by prior related business experience or otherwise); and
has adequate financial resources and capital to operate the
business;
6. In the event Licensee has not been required
to upgrade its restaurant at any time within five years prior to
the date of the proposed transfer, the transferee shall upgrade the
<PAGE>restaurant to conform to the design concepts then being used
in new
Taco Cabana System restaurants, and shall complete the upgrading
and other requirements within the time period reasonably specified
by Licensor;
7. Licensee shall remain liable for all
obligations to Licensor in connection with the licensed business
which are known and due at the date of transfer and shall execute
any instrument reasonably requested by Licensor to evidence such
continuing liability;
8. At the expense of the transferee, the
transferee and the transferee's manager shall complete any training
programs then required for new licensees; and
9. Except in the case of a transfer to a
corporation or entity formed for the convenience of ownership in
which the original individual or other Licensees continue to
maintain at least a 51% ownership of all classes of equity
security, if Licensee should wish to transfer its interest under
this Agreement to a third party, and if Licensor waives its right
of first refusal with respect to such transfer, Licensee shall pay
to Licensor a $3,000 transfer application fee together with the
transfer application to defray Licensor's expenses incurred in
investigating the character, business background and financial
resources of the proposed transferee (in the event more than a
single licensed Taco Cabana restaurant is being sold by Licensee to
any one transferee, only a single $3,000 transfer application fee
shall be required).
Any purported assignment or transfer not
having the written consent of Licensor shall be null and void and
constitute a breach of this Agreement.
XXX
The terms of this Section XIII. shall not
apply to a sale-leaseback transaction whereby Licensee continues to
operate the Restaurant.
C. Corporate Licensees: If Licensee is a corporation
(and comparable requirements shall apply in the event Licensee is
a partnership, limited liability company or other business entity),
the following requirements shall also apply to Licensee:
1. Copies of Licensee's articles of
incorporation, by-laws and other governing documents, including the
resolution of the Board of Directors authorizing entry into this
Agreement shall be furnished to Licensor; and
2. Licensee shall maintain a current list of all
owners of record and all beneficial owners of any class of its
voting stock and shall furnish the list to Licensor upon request,
<PAGE>except if Developer becomes a publicly held corporation.
D. Offerings by Licensee: All materials required to
be publicly filed in connection with any public offering by federal
or state law must be submitted to Licensor for review prior to
filing with any government agency. No Licensee offering may imply
that Licensor is participating in an underwriting, issuance, or
offering of Licensee's securities, and Licensor's review of any
offering will be limited solely to the subject of the relationship
between Licensee and Licensor. Licensee and the other participants
in the offering shall fully indemnify Licensor with respect to any
claims or damages incurred by Licensor (including reasonable
attorneys' fees) arising from or related to the offering. Licensee
shall reimburse Licensor for all reasonable out-of-pocket costs and
expenses associated with reviewing the proposed offering,
including, without limitation, legal and accounting fees. Licensee
shall give Licensor reasonable prior written notice and opportunity
to review the materials proposed to be filed prior to any filing of
the proposed materials. Licensor shall review such materials and
provide comments, as appropriate, reasonably promptly.
E. Licensor's Right of First Refusal: Licensee shall
give Licensor notice in writing of any intended transfer of the
licensed business or, so long as Licensee is not a public company,
of a controlling interest in Licensee; provided, however, that
Licensor shall have no right of refusal with respect to the
proposed transfer of a controlling interest in Licensee until
such time as Licensee's Taco Cabana Restaurants account for 35% or
more of the total number of restaurants operated by Licensee. The
notice shall set forth the name and address of the proposed
transferee and all the terms and conditions of the proposed
transferee's offer. Licensor may elect to purchase the Restaurant
or interest by giving Licensee written notice of its intention
to purchase within 30 days following receipt of such notice. The
closing with respect to such purchase shall occur in accordance
with the terms of the original offer, but in no event prior to
30 days following the election to purchase the Restaurant.
Purchase of the Restaurant shall be on the same payment terms as
set forth in the offer, less any finder's or broker's fees
(Licensor shall not be obligated to pay any finder's or broker's
fees). If Licensor does not elect to purchase the Restaurant or
interest, but Licensor approves the transfer, and the transfer is
not completed in accordance with the terms of the offer (in no
event to exceed 120 days following the earlier of expiration of the
30-day notice period or delivery of notice of Licensor's approval
of the proposed transfer), Licensor shall continue to have, upon
the foregoing conditions, an option to purchase the Restaurant upon
the payment terms and conditions of any subsequent offer, less
finder's and broker's fees.
If the offer provides for payment of consideration
other than cash XXX.
Licensor may accept the offer by offering a reasonable cash
substitute comparable to the fair market value of the non-cash part
<PAGE>of the offer XXX if Licensee disputes the comparability in
value of the proffered cash substitute, then the fair market value
will be conclusively determined by a licensed appraiser acceptable
to both parties or, if the parties can not agree upon an
appraiser, one licensed appraiser shall be selected by Licensor,
one by Licensee, each of whom shall independently determine such
fair market value, and thereafter such two licensed appraisers
by mutual agreement shall select a third licensed appraiser who
shall conduct his own independent appraisal and select as the final
and binding appraisal the appraisal of the first two appraisers
nearest in amount to his own. Licensee may elect not to accept the
appraised cash substitute; however, in that event Licensor may, in
its sole and absolute discretion, withhold consent to the proposed
transfer. The right of first refusal shall not apply to a public
offering of Licensee's stock.
F. Purchase Upon Termination or Expiration: Upon
termination or expiration of this Agreement (assuming Licensee does
not then continue to operate other licensed Taco Cabana
restaurants; if Licensee does operate other such restaurants,
Licensor's right to purchase provided for hereby shall not apply),
Licensor may, upon written notice within 30 days of such
date of termination or expiration, notify Licensee of its intention
to purchase all, or any portion of, the furniture, fixtures, signs,
equipment, inventory and other personal property bearing the Taco
Cabana System's Proprietary Marks for a sum equal to the lesser of
(i) the price paid by Licensee for such property, or (ii) the fair
market value of such property, and, in the event of termination by
reason of Licensee's default, notify Licensee of its intention to
assume Licensee's lease (to the extent such lease permits such an
assignment) or to purchase at fair market value the Restaurant
building and land from Licensee XXX. During the period of such
option Licensee shall not dispose of such items or remove them from
the Restaurant premises (unless otherwise legally required to do
so, in which case such items must be warehoused with an independent
third party acceptable to Licensor for the term of such option).
Any personal property so purchased by Licensor shall be removed by
Licensor's carrier at the Restaurant on a date specified in the
purchase notice not more than five days after such notice or at
such other time as may be reasonable in the circumstances; any real
property so acquired shall be conveyed and the closing with respect
thereto shall occur within 120 days following such termination.
The fair market value of the real estate upon which the Restaurant
is situated, and of the furniture, fixtures, equipment, inventories
and other personal property shall be conclusively established by a
licensed appraiser acceptable to both parties or, if the parties
can not agree upon an appraiser, one licensed appraiser shall be
selected by Licensor, one by Licensee, each of whom shall
independently determine such fair market value, and thereafter such
two licensed appraisers by mutual agreement shall select a third
licensed appraiser who shall conduct his own independent appraisal
and select as the final and binding appraisal the appraisal of the
first two appraisers nearest in amount to his own.
<PAGE> G. Right To Set Off: If Licensor elects to
exercise
any of the options described in Sections XIII.E. or XIII.F. above,
it shall have the right to set off all amounts due from Licensee
(or, in the appropriate case, the interest holder in Licensee)
under this Agreement or otherwise against any payment required to
be made in connection with such option exercise.
H. Non-Waiver of Claims: Licensor's consent to a
transfer of any interest in the license granted hereunder shall not
constitute a waiver of any claims it may have against the
transferring party, nor shall it be deemed a waiver of Licensor's
right to demand exact compliance with any of the terms of this
Agreement by the transferee.
XIV. DEFAULT AND TERMINATION
A. Termination by Licensee: In the event of any
failure by Licensor to perform any obligation expressly required to
be performed by Licensor under this Agreement at the time required,
and after the Licensor is given thirty (30) days written notice and
opportunity to cure such default (or such longer period as is
reasonably required, under the circumstances, to cure the default,
provided, Licensor has commenced to cure within the 30-day period
and thereafter diligently seeks to effect such cure), the Licensee
may terminate this Agreement and shall be entitled to such remedies
as are available under applicable law including, without
limitation, those provided under Section XV.A.7 hereof.
B. Termination Without Opportunity to Cure: Licensee
shall be deemed to be in default and Licensor may terminate this
Agreement by so notifying Licensee without affording Licensee any
opportunity to cure the default upon the occurrence of any of the
following events:
1. If Licensee or any holder of a 10% or greater
ownership interest therein, who is also a director or officer of
franchisee, is convicted of a felony or any other crime or offense
material to the operation of the licensed restaurant (unless such
person is immediately removed as a director or terminated as an
employee, as applicable); or
2. If Licensee intentionally misuses or makes
any material unauthorized use of the Taco Cabana System's
Proprietary Marks or any other identifying characteristic of the
Taco Cabana System in such manner as to reflect materially and
unfavorably upon the Taco Cabana System, or otherwise intentionally
and materially impairs the goodwill associated therewith or
Licensor's rights therein; or
3. Automatically and without need for notice, if
Licensee shall become insolvent or make a general assignment for
the benefit of creditors, or if a petition in bankruptcy is filed
by Licensee or such a petition is filed against and consented to by
<PAGE>Licensee, or if Licensee is adjudicated a bankrupt, or if a
bill in
equity or other proceeding for the appointment of a receiver of
Licensee or other custodian for Licensee's business or assets is
filed and consented to by Licensee, or if a receiver or other
custodian (permanent or temporary) of Licensee's business or assets
is appointed by any court of competent jurisdiction, or if
proceedings for a composition with creditors under any state
or federal law should be instituted by or against Licensee, or
if any substantial real or personal property of Licensee's licensed
restaurant shall be sold after levy by any sheriff, marshal, or
constable; or
4. If Licensor reasonably determines that an
imminent threat or danger to public health or safety would result
from the continued construction, maintenance, or operation of the
licensed business; or
5. If Licensee, except as expressly permitted by
the terms of this Agreement, purports to transfer any rights or
obligations under this Agreement to any third party without
Licensor's prior written consent; Licensor may treat this Agreement
as terminated from the date of the impermissible transfer and need
not deal in any fashion with the purported assignee; Licensee,
however, shall have a right to reinstate its rights under this
Agreement within a period of 30 days from notice by Licensor by
either rescinding such transfer or properly qualifying such
transfer under the terms of this Agreement; or
6. If Licensee intentionally and wrongfully
discloses or divulges the contents of the Confidential System
Manual or other Taco Cabana trade secrets or confidential
information to non-employees; or
7. If Licensee makes any material
misrepresentations relating to the acquisition of the licensed
business; or
8. If the licensed business is seized, taken
over or foreclosed by a government official in the exercise of his
duties, or is seized, taken over or foreclosed by a creditor,
lienholder or lessor; or
9. If Licensee is in default under this
Agreement for failure to substantially comply with any of the
requirements imposed by this Agreement, and has on at least two
prior occasions within the preceding 180 days committed the same or
a substantially similar act of default under this Agreement of
which it received written notice from Licensor.
Except as otherwise expressly indicated above,
termination of this Agreement takes effect immediately upon receipt
of written notice thereof from Licensor upon the occurrence of the
events of default described above.
<PAGE>
C. Termination With Opportunity to Cure: Except as
set forth above in Section XIII.B., Licensee has 30 days after its
receipt from Licensor of a written notice of termination within
which to remedy any default under this Agreement and to provide
evidence of such cure to Licensor (or such longer period as is
reasonably required, under the circumstances, to cure the default,
provided, Licensee has commenced to cure within the 30-day
period and thereafter diligently seeks to effect such cure). If
any such default is not cured within that time, or such longer
period of time as applicable law may require, this Agreement
terminates without further notice to Licensee effective immediately
upon the expiration of the 30-day period, or such longer period as
applicable law may require. Licensee shall be in default for any
failure to substantially comply with any of the requirements
imposed by this Agreement, as it may from time to time reasonably
be supplemented by the Confidential System Manual, or to carry out
the terms of this Agreement in good faith. Such defaults include,
without limitation, the occurrence of any of the following events:
1. If Licensee fails, refuses, or neglects to
pay promptly when due any monies owed to Licensor or its
affiliates, or to submit the financial information or other
reports required under this Agreement; or
2. If Licensee fails to maintain any of the
standards or procedures prescribed by Licensor in this Agreement,
the Confidential System Manual or otherwise from time to time; or
3. If Licensee, by act or omission, permits a
continued violation in connection with the operation of the
Restaurant of any law, ordinance, rule, or regulation of a
governmental agency, in the absence of a good faith dispute over
its application or legality and the diligent pursuit of
administrative or judicial relief therefrom; or
4. If Licensee ceases to do business at the
Restaurant at any time for a period of more than three consecutive
days (unless because of flood, fire, Acts of God or other events
beyond Licensee's control) or establishes a pattern of closing for
less than three consecutive days without Licensor's consent, except
that if any loss of possession results from the governmental
exercise of the power of eminent domain, or if, through no
fault of Licensee, the premises are damaged by a disaster such that
they cannot, in Licensor's judgment, reasonably be restored, then,
in either such event, this Agreement shall not be terminated for
that reason for 30 days thereafter if Licensee applies within
that time for approval to relocate for the remainder of the term to
other identified premises acceptable to Licensor and expeditiously
and diligently accomplishes such relocation when approved; or
5. If Licensee engages in any business or
markets any service or product under a name or mark which, in
Licensor's reasonable opinion, is confusingly similar to the Taco
<PAGE>Cabana System's Proprietary Marks; or
6. If Licensee fails to comply with the
covenants not to compete applicable during the term of this
Agreement or fails to obtain the execution of covenants
by others as required by this Agreement; or
7. If Licensee fails to materially and in good
faith comply with any other terms, provisions or conditions of this
Agreement.
Licensee relinquishes all interests of every kind
and description in the franchise upon termination or expiration of
this Agreement. Subject to Section X.B.11 hereof, all goodwill
arising from Licensee's operation of the Restaurant under the Taco
Cabana System shall inure solely and exclusively to the benefit of
Licensor; upon expiration or termination of this Agreement, no
monetary amount will be assigned as attributable to any goodwill
associated with Licensee's use of the Taco Cabana System or
Proprietary Marks.
XV. POST-TERMINATION OBLIGATIONS
A. Upon termination (except as otherwise expressly
noted, whether because of Licensor's or Licensee's default or
otherwise) or expiration of this Agreement, and except as
permitted with respect to Taco Cabana restaurants of the Licensee,
if any, for which the License Agreement is not being terminated,
Licensee shall be obligated to do the following:
1. Licensee shall immediately cease to operate
the Restaurant licensed under this Agreement, and shall not
thereafter hold itself out as a present or former Taco Cabana
licensee; and
2. Licensee shall immediately and permanently
cease using any Confidential Information associated with the Taco
Cabana System; the name "Taco Cabana"; and any Taco Cabana
Proprietary Marks, distinctive trade dress, forms, slogans, signs,
symbols, or devices associated with Taco Cabana System.
In addition, Licensee shall cease using all items bearing Taco
Cabana Proprietary Marks, unless such marks can be removed,
including signs, fixtures, furniture, equipment, advertising
materials, stationery, forms, and any other articles which display
the Proprietary Marks associated with the Taco Cabana System; and
3. Licensee shall take such action as may be
necessary to cancel any assumed name or equivalent registration
which contains the name "Taco Cabana" or any other trademark, trade
name, or service mark of Licensor, and licensee shall furnish
Licensor with satisfactory evidence of compliance with this
obligation within 30 days after termination or expiration of this
Agreement; and
<PAGE>
4. In the event this Agreement is terminated
because of Licensee's default, Licensor may exercise such rights or
options as are provided for in Section XIII.F. hereof (provided
that Licensor shall indemnify Licensee for liabilities arising
subsequent to an assignment in the event Licensor should in such
events take an assignment of the lease or sublease). In the event
Licensor does not acquire such lease or sublease, Licensee shall
make such reasonable modifications or alterations to the
Restaurant (including, without limitation, changing the telephone
number), immediately upon termination or expiration of this
Agreement as may be necessary to distinguish the appearance and
operations of the Restaurant from other restaurants under the Taco
Cabana system, and shall make such specific changes as Licensor
may reasonably request for that purpose; and
5. If Licensee continues to operate or
subsequently begins to operate any other business, Licensee shall
not use any reproduction, counterfeit, copy, or colorable
imitation of the Taco Cabana System's Proprietary Marks in
connection with such other business which is likely to cause
confusion, mistake, or deception; or which is likely to dilute
Licensor's exclusive rights in and to the Taco Cabana System's
Proprietary Marks; and, Licensee is prohibited from utilizing any
designation of origin or description or representation which
falsely suggests or represents an association or connection with
Licensor; and
6. Licensee shall promptly pay all sums then
owed by it to Licensor and its affiliates, but without giving
effect to any prospective royalties or advertising contributions
which might have become due over the balance of the uncompleted
term of the License Agreement. In the event of termination for any
default of Licensee, such sums shall include all damages, costs and
expenses, including reasonable attorneys' fees, incurred by
Licensor as a result of the default; and
7. In the event of litigation between the
parties with respect to an alleged default or termination pursuant
hereto including litigation prior to or subsequent to the
termination or expiration of this Agreement in obtaining injunctive
or other relief for the enforcement of any of the provisions of
this Agreement, including, without limitation, those concerning
post-termination obligations, the non-prevailing party in such
litigation shall pay all damages, costs and expenses, including
reasonable attorneys' fees, incurred by the prevailing party; and
8. Licensee shall immediately turn over to
Licensor all manuals, including the Confidential System Manual, and
all materials related to operating the licensed business, and all
copies thereof, except for Licensee's copy of this Agreement and of
any correspondence between the parties, and any other documents
which Licensee reasonably needs for compliance with any provision
of law; and
<PAGE>
9. Unless Licensee then operates other licensed
Taco Cabana restaurants, Licensor may exercise such rights or
options as are provided for in Section XIII.F. hereof; and
10. Licensee and its officers and management
directors shall comply with the covenants contained in Section XVI
of this Agreement.
XVI. COVENANTS AND AGREEMENTS RELATED THERETO
A. Licensee (or, if Licensee is not a natural person,
an operations supervisor designated by Licensee) and Licensee's
Manager shall attend, and complete, to Licensor's reasonable
satisfaction, Licensor's initial training programs prior to the
opening of the Restaurant, and any additional training programs
which Licensor may require in writing from time to time. Licensee
shall cause its employees to complete, to Licensor's reasonable
satisfaction, such initial or additional training as Licensor may
require in writing from time to time. Licensor shall provide only
training materials; and Licensee or its employees shall be
responsible for all other expenses incurred in training. Licensee,
its manager, and other employees of Licensee may attend such
optional training programs as Licensor may offer upon payment
of the training fee, if any, then being charged by Licensor.
Licensee covenants that during the term of this Agreement, except
as otherwise approved in writing by Licensor, Licensee or
Licensee's approved restaurant manager shall devote its or his full
time and best efforts to the operation of the licensed business.
B. Licensee specifically acknowledges that, pursuant
to this Agreement, Licensee shall receive valuable training and
Confidential Information, including, without limitation,
information regarding the operational, sales, and marketing methods
of Licensor and the Taco Cabana System.
Licensee and its officers and management directors
covenant that during the term of this Agreement, except as
otherwise approved in writing by Licensor, Licensee and they,
respectively, shall not, either directly or indirectly, for itself
or themselves, or on behalf of any other person or entity:
1. Divert or attempt to divert any business or
customer of the licensed business to any competitor (not including
other restaurant concepts being operated by Licensee) or do or
perform any other act materially prejudicial to the goodwill
associated with Licensor's Proprietary Marks and the Taco Cabana
System; or
2. Employ or seek to employ any person who is at
that time employed by Licensor, or by any other Taco Cabana
licensee, or otherwise directly or indirectly induce such a person
to leave his or her employment; or
<PAGE> 3. Own, maintain, engage in, or have any
interest in any Mexican food restaurant which is substantially
similar to the licensed business, except for ownership by
Licensee or such other persons of less than a 5% beneficial
interest in the outstanding equity securities of any publicly-held
corporation.
C. Licensee and its officers XXX covenant that,
except as otherwise approved in writing by Licensor, Licensee and
they, respectively, shall not, for a XXX period commencing upon the
expiration or termination of this Agreement, regardless of the
cause of termination, either directly or indirectly, for itself or
themselves, or on behalf of any other person or entity, own,
maintain, engage in, or have any interest in any Mexican food
restaurant which is substantially similar to the licensed business
and which is located within a radius of five miles of the location
of the licensed business or within five miles of any restaurant
under the Taco Cabana System which is in existence on the date of
expiration or termination of this Agreement.
This covenant shall not apply to ownership by Licensee or such
other persons of less than a 5% beneficial interest in the
outstanding equity securities of any publicly-held corporation XXX
this Section XVI.C of officers and management directors shall be
evidenced by the signing of personal covenants in the form
reasonably prescribed by Licensor.
D. The parties agree that each of the foregoing
covenants shall be construed as independent of any other covenant
or provision of this Agreement. If all or any portion of a
covenant in this Section XVI is held unreasonable or unenforceable,
Licensee expressly agrees to be bound by any lesser covenant
subsumed within the terms of such covenant that imposes the maximum
duty permitted by law, as if the resulting covenant were made a
part of this Section XVI.
E. Licensee expressly agrees that the existence of
any claims it may have against Licensor, whether or not arising
from this Agreement, shall not constitute a defense to the
enforcement by Licensor of the covenants in this Section XVI.
F. Licensee acknowledges that Licensee's violation of
the terms of this Section XVI would result in irreparable injury to
Licensor for which no adequate remedy at law may be available, and
Licensee accordingly consents to Licensor seeking the issuance of
an injunction prohibiting any conduct by Licensee in violation of
the terms of this Section XVI.
XVII. TAXES, PERMITS AND INDEBTEDNESS
A. Licensee shall promptly pay when due all taxes
assessed by any tax authority, and any and all other indebtedness
incurred by Licensee in the conduct of the licensed business.
B. In the event of any bona fide dispute as to
<PAGE>liability for taxes assessed or other indebtedness to third
parties, Licensee may contest such tax or indebtedness in
accordance with procedures of the taxing authority or applicable
law.
C. Licensee shall comply with all laws and
regulations necessary for the proper conduct of the licensed
business.
D. Licensee shall notify Licensor in writing within
five days of the commencement of any action, suit or proceeding (in
the event Licensee is a plaintiff or petitioner), or within five
days of receipt of service of process (in the event Licensee is
defendant or respondent) and within five days of the issuance of
any order, writ, injunction, award or decree of any court, agency
or other governmental instrumentality, which may materially
adversely affect the operation or financial condition of the
licensed business.
E. Delinquent payments of any sort payable by
Licensee to Licensor under this Agreement shall bear interest from
the date such payment was first due, at the lesser of (i) the
prime rate then quoted by the Chase Manhattan Bank, N.A., plus 3%
per annum, or (ii) the highest rate permitted by applicable law, in
either case from the due date of such payment until the delinquent
payment and interest thereon is paid in full.
XVIII. INDEPENDENT CONTRACTOR AND INDEMNIFICATION
A. It is understood and agreed by the parties hereto
that this Agreement does not create a fiduciary relationship
between them, that Licensee shall be an independent contractor,
and that nothing in this Agreement is intended to constitute
Licensee as an agent, legal representative, subsidiary, joint
venturer, partner, employee or servant of Licensor for any purpose
whatsoever.
B. During the term of this Agreement, Licensee shall
hold itself out to the public as an independent contractor pursuant
to a license from Licensor. Licensee agrees to take such
affirmative action as may be necessary, including, without
limitation, exhibiting a notice of that status and relationship in
a conspicuous place in the Restaurant premises and on stationery
and forms.
C. It is agreed that nothing in this Agreement
authorizes Licensee to make any agreement or representation on
Licensor's behalf, or to incur any obligation in Licensor's name,
and that Licensor shall in no event assume liability for, or be
deemed liable hereunder as a result of any act or omission of
Licensee in Licensee's conduct of the licensed business. Licensee
does hereby indemnify and hold Licensor harmless against any and
all such claims arising in connection with the licensed business,
as well as the costs, including reasonable attorneys' fees,
<PAGE>of defending against such claims, unless such claims are
caused by
the acts or negligence of Licensor.
XIX. APPROVALS AND WAIVERS
A. Whenever this Agreement requires the prior
approval or consent of Licensor, Licensee shall make a timely
written request to Licensor therefor, as required, and such
approval or consent shall be obtained in writing.
B. No failure of either party hereto to exercise any
power reserved to it by this Agreement, or to insist upon strict
compliance by the other party with any obligation hereunder,
and no practice of the parties at variance with the terms hereof,
shall constitute a waiver of the right to demand strict compliance
with any of the terms herein. Waiver by either party hereto
of any particular default by the other party shall not impair the
nondefaulting party's rights with respect to any subsequent default
of the same, similar or different nature, nor shall any delay,
forbearance or omission to exercise any power or right arising out
of any default of any of the terms hereof, affect or impair the
nondefaulting party's right to exercise the same, nor shall such
constitute a waiver of any right hereunder, or the right to declare
any subsequent breach or default and to terminate this Agreement
prior to the expiration of its term. Subsequent acceptance by
either party hereto of any payments due to it hereunder shall not
be deemed to be a waiver by such party of any preceding breach by
the other party of any terms of this Agreement.
XX. NOTICES
Any notices required or permitted under this
Agreement shall be in writing and shall be mailed by certified
mail, return receipt requested, or reputable overnight courier to
the respective parties at the following addresses unless a
different address has been designated by written notice to the
other parties:
Notices to LICENSOR: T.C. MANAGEMENT, INC.
262 LOSOYA, SUITE 330
SAN ANTONIO, TEXAS 78205
ATTENTION: PRESIDENT AND GENERAL
COUNSEL
Notices to LICENSEE: CARROLS CORPORATION
968 JAMES STREET
SYRACUSE, NEW YORK 13203
ATTENTION: PRESIDENT AND GENERAL
COUNSEL
Any notice by certified mail shall be deemed to have been given at
the date and time of mailing.
<PAGE> XXI. ENTIRE AGREEMENT
This Agreement, the documents referred to herein,
and the Exhibits hereto, if any, constitute the entire Agreement
between the parties hereto concerning the subject matter hereof,
and supersede all prior agreements, no other representations having
induced Licensee to execute this Agreement. No amendment, change
or variance from this Agreement shall be binding on the parties
hereto unless mutually agreed to by the parties and executed in
writing by Licensor and Licensee. Licensor may, however, subject
to the express limitations stated in this Agreement, modify the
Confidential System Manual and other operational requirements under
any conditions and to any extent it in its discretion deems
necessary to meet competition, protect the Licensor's Proprietary
Marks, or improve the quality of the products or services provided
by Taco Cabana restaurants.
XXII. SEVERABILITY AND CONSTRUCTION
A. Except as expressly provided to the contrary
herein, Licensor and Licensee agree that if any of the provisions
of this Agreement may be construed in two ways, one of which would
render the provision illegal or otherwise voidable or
unenforceable, such provision shall have the meaning which renders
it valid and enforceable. The language of every provision
of this Agreement shall be construed according to its fair meaning
and not strictly against Licensor or Licensee. In the event any
court or other public agency shall determine that any provision in
this Agreement is not enforceable as written, Licensor and Licensee
agree that the provision shall be deemed thereby amended so that it
is enforceable to the fullest extent permissible under the laws and
public policies of the jurisdiction in which enforcement is sought.
If any provision in this Agreement is held invalid or otherwise
unenforceable by any court or other public agency, such findings
shall not invalidate the remainder of this Agreement.
B. All captions in this Agreement are intended for
convenience and shall not affect the meaning of any provision
hereof.
C. All references to the masculine, feminine, neuter
or singular shall be construed to include the masculine, feminine,
neuter or plural, where applicable, and all acknowledgements,
promises, covenants, agreements and obligations made or undertaken
by Licensee shall be deemed jointly and severally undertaken by all
the Licensee co-parties hereto, if more than one, on behalf of
Licensee.
XXIII. APPLICABLE LAW
A. This Agreement takes effect upon its acceptance
and execution by Licensor in the State of Texas, and shall be
construed under the laws thereof, which laws shall prevail in
<PAGE>the event of any conflict of law.
B. The parties agree that any action brought by
either party against the other in any court, whether federal or
state, shall be brought within the State of Texas in Bexar County
(the judicial district in which Licensor has its principal place of
business); and the parties do hereby waive all questions of
personal jurisdiction or venue for the purpose of carrying out this
provision.
C. No right or remedy conferred upon or reserved to
Licensor or Licensee by this Agreement shall be deemed to be
exclusive of any other right or remedy herein or by law
or equity provided or permitted, but each shall be cumulative of
every other right or remedy.
XXIV. ACKNOWLEDGMENTS
A. Licensee acknowledges that Licensee has conducted
an independent investigation of the business licensed hereunder,
and recognizes that the business venture contemplated by this
Agreement involves business risks and that its success will be
largely dependent upon the ability of Licensee as an independent
businessman. Licensor expressly disclaims the making of, and
Licensee acknowledges that Licensee has not received, any warranty
or guarantee, express or implied, as to the potential volume,
profits or success of the business venture contemplated by this
Agreement. Licensee acknowledges that it has received, read and
understood this Agreement, the exhibits hereto, if any, and
agreements relating thereto, if any, and that Licensor has provided
Licensee ample time and opportunity to consult with advisors of
Licensee's own choosing about the potential benefits and risk of
entering into this Agreement.
B. Licensee acknowledges that Licensee received a
complete copy of this Agreement, the exhibits hereto, if any, and
agreements relating thereto, if any, at least five business days
prior to the date on which this Agreement is executed. Licensee
further acknowledges that Licensee has received the disclosure
document required by the Trade Regulation Rule of the Federal Trade
Commission entitled Disclosure Requirements and Prohibitions
Concerning Franchising and Business Opportunity Ventures, and by
any applicable State law at least ten business days prior to the
date on which this Agreement was executed.
IN WITNESS WHEREOF, the parties hereto have duly executed and
delivered this Agreement on the day and year first above written.
LICENSOR:
T.C. MANAGEMENT, INC.
BY:
<PAGE>
TITLE:
LICENSEE:
CARROLS CORPORATION
BY:
TITLE:
<PAGE>
<PAGE> EXHIBIT A
Licensee shall select a proposed site in the City of
, and shall advise Licensor of such proposed
site and submit to Licensor for its review copies of the proposed
lease or other conveyance as promptly as possible after the
execution of this Agreement in order to permit the opening of the
restaurant in compliance with the timetable required in
Section II.A. hereof and, if applicable, in the Development
Agreement. Licensor reserves the right to inspect such site and
the submitted documents and to approve or disapprove such site in
its sole, reasonable discretion. Written approval or disapproval
shall be rendered within 30 days after the submission of any such
proposed site and the required supporting documentation. Licensor
has the right to reject the Licensee's site selection on as many
occasions and for as many stated bona fide reasons as Licensor, in
the exercise of reasonable discretion and good business judgment,
shall deem necessary; in such event, Licensee shall have no right
to rescind this Agreement but shall proceed with a good faith
effort to find a suitable location.
<PAGE>September 8, 1994
VIA FACSIMILE (210) 227-0436 &
OVERNIGHT COURIER
T.C. Management, Inc.
Taco Cabana, Inc.
262 Losoya
Suite 330
San Antonio, Texas 78205
Re: Taco Cabana Development Agreement
with Carrols Corporation
Gentlemen:
The following represents our modification to the terms
of that certain letter agreement dated July 1, 1994 (a copy
of which is annexed hereto) with respect to the referenced
Development Agreement:
1. The parties shall attempt in good faith to
negotiate the form of License Agreement to be
utilized in conjunction with the Development
Agreement. In the event the parties have not
reached complete agreement as to the form and
content of the License Agreement on or prior to
October 1, 1994, either party may declare the
Development Agreement cancelled. In the event the
Development Agreement is cancelled pursuant to
this letter, the $250,000 development/license fee
(the "Development Fee") deposited by Carrols upon
execution of the Development Agreement shall be
immediately refunded to Carrols. Upon the
finalization of the form of License Agreement, it
shall become an exhibit of and attached to the
Development Agreement.
2. The effectiveness of the Development Agreement is
no longer conditioned upon Carrols having obtained
the written consent of its senior lender, Heller
Financial, Inc., to enter into the Development
Agreement.
<PAGE>
<PAGE>Page 2
T.C. Management, Inc.
September 8, 1994
3. The parties further agree that no press release or
other public announcement regarding the
Development Agreement or the transactions
contemplated therein may be made by one party
without the written consent of the other. Each
party agrees to forward any proposed press release
or public announcement to the other party for
review and comment prior to its being released to
the public.
4. The "Commencement Date" set forth in Article II of
the Development Agreement is changed to September
1, 1994.
Please indicate your acceptance and approval to the
terms of this agreement by executing in the space provided
below.
Very truly yours,
CARROLS CORPORATION
BY:
ACCEPTED AND AGREED TO
TACO CABANA, INC.
BY:
T.C. MANAGEMENT, INC.
BY:
JAZ:mb
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains Summary Financial Information extracted from the Annual
Report for the twelve months ended December 31, 1994 of Carrols Corporation and
is qualified in its entirety by reference to such financial statement.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> DEC-31-1994
<CASH> $1,710,000
<SECURITIES> 0
<RECEIVABLES> $532,000
<ALLOWANCES> 0
<INVENTORY> $2,254,000
<CURRENT-ASSETS> $5,339,000
<PP&E> $111,356,000
<DEPRECIATION> $53,969,000
<TOTAL-ASSETS> $124,688,000
<CURRENT-LIABILITIES> $21,795,000
<BONDS> $120,680,000
<COMMON> $10
0
0
<OTHER-SE> $(27,208,010)
<TOTAL-LIABILITY-AND-EQUITY> $124,688,000
<SALES> $203,927,000
<TOTAL-REVENUES> $204,254,000
<CGS> $57,847,000
<TOTAL-COSTS> $171,430,000
<OTHER-EXPENSES> $1,800,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> $14,456,000
<INCOME-PRETAX> $(1,666,000)
<INCOME-TAX> $165,000
<INCOME-CONTINUING> $(1,831,000)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> $(1,831,000)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
