STOCK REDEMPTION AND DEBT RESTRUCTURING AGREEMENT
STOCK REDEMPTION AND DEBT RESTRUCTURING AGREEMENT made as of the 24th day
of May, 1999, by and among Champps Entertainment, Inc., f/k/a Unique Casual
Restaurants, Inc. ("Champps"), Xxxxxxxx X. Xxxxxxxxxx ("Mountzuris") and
Restaurant Consulting Services, Inc. (the "Company").
RECITALS
WHEREAS, Champps and Mountzuris each own 500 shares of Common Stock,
par value $1.00 per share, of the Company ("Common Stock"), that being all of
the issued and outstanding shares of the Company;
WHEREAS, on July 1, 1997, Champps, Mountzuris and the Company entered
into a Shareholders Agreement pursuant to which Champps and Mountzuris agreed to
their rights and obligations as shareholders of the Company (the "Shareholders
Agreement");
WHEREAS, on July 1, 1997, Champps and the Company entered into a
Purchase Agreement pursuant to which Champps sold to the Company and the Company
purchased from Champps certain assets used in the Company's professional data
processing and consulting business (the "Asset Purchase");
WHEREAS, in connection with the Asset Purchase, the Company entered
into a sublease with Champps dated as of July 8, 1997 (the "Sublease") pursuant
to which the Company sublet from Champps a portion of the premises located at
One Corporate Place, 00 Xxxxxxxxx Xxxx, Xxxxxxx, Xxxxxxxxxxxxx 00000 (the
"Premises") leased by Champps from Xxxxxx X. Xxxxxxx d/b/a The Xxxxxxx Company
(the "Landlord");
WHEREAS, in connection with the Asset Purchase, Champps and the Company
entered into a professional services contract dated as of July 1, 1997 pursuant
to which the Company promised to provide Champps with professional data
processing and consulting services (the "Old Service Agreement");
WHEREAS, in connection with the financing of the Asset Purchase by the
Company, the Company executed a Promissory Note dated July 1, 1997 in the
principal amount of $2,300,000 payable to Champps (the "Old Promissory Note");
WHEREAS, in connection with the delivery of the Old Promissory Note by
the Company to Champps, the Company granted to Champps a security interest in
all of the equipment of the Company including, without limitation, the equipment
acquired by the Company pursuant to the Asset Purchase, pursuant to a Security
Agreement effective as of July 1, 1997, made in favor of Champps by the Company
(the "Old Security Agreement");
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WHEREAS, in connection with the Asset Purchase, the Company applied to
Champps for a line of credit in the maximum principal amount at any one time
outstanding of $300,000, and Champps accepted such application from the Company
and entered into a Master Loan Agreement, dated as of July 1, 1997 with the
Company (the "Master Loan Agreement");
WHEREAS, pursuant to the Master Loan Agreement, the Company executed a
Master Demand Note dated July 1, 1997 in the maximum amount of $300,000 payable
to Champps on demand (the "Master Demand Note");
WHEREAS, in connection with the Asset Purchase Agreement, Champps and
the Company entered into a management agreement, dated as of July 1, 1997,
pursuant to which Champps provides bookkeeping, payroll, tax and accounting
functions for the Company (the "Management Agreement");
WHEREAS, subject to the terms and conditions hereof, Champps desires to
sell and the Company desires to purchase from Champps 500 shares of Common Stock
owned beneficially and of record by it (the "Stock Redemption");
WHEREAS, Champps desires to restructure the indebtedness owed to it by
the Company under the Old Promissory Note, the Master Loan Agreement and the
Master Demand Note pursuant to the terms and conditions of this Agreement
(collectively, the "Debt Restructuring");
WHEREAS, Mountzuris will derive substantial benefit from the
consummation of the Stock Redemption and Debt Restructuring pursuant to which
Mountzuris will become the sole stockholder of the Company;
WHEREAS, pursuant to the terms and conditions of this Agreement,
Champps, Mountzuris and the Company desire to terminate certain agreements that
prior to this Agreement governed their relationship with each other; and
WHEREAS, the parties to this Agreement desire to enter in to a new
Service Agreement as of the date hereof pursuant to which Mountzuris and the
Company will provide professional data processing services and consulting
services to Champps;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, and intending to be legally bound,
the parties agree as follows:
ARTICLE I. STOCK REDEMPTION AND DEBT RESTRUCTURING
I.1 Stock Redemption. In reliance on the representations, warranties,
covenants and agreements set forth in this Agreement, and subject to the terms
and conditions of this Agreement, at the Closing, Champps shall sell, assign,
transfer and deliver to the Company, free and clear of any and all claims,
restrictions, liens, encumbrances, mortgages, pledges or security interests of
any kind (collectively, "Liens"), 500 shares of Common Stock owned by Champps
(collectively, the "Seller's Stock").
I.2 Debt Restructuring. In reliance on the representations, warranties,
covenants and agreements set forth in this Agreement, and subject to the terms
and conditions of this Agreement, at the Closing, Champps shall:
(a) cancel all amounts due to Champps by the Company pursuant
to the Old Promissory Note, including all outstanding principal in the amount of
$2,300,000 and accrued and unpaid interest thereon in the amount of $200,000;
and
(b) cancel all amounts due to Champps by the Company pursuant
to the Master Loan Agreement and the Master Demand Note, including all
outstanding principal and any accrued and unpaid interest thereon.
The actions referred to in clauses (a) and (b) above are referred to in
this Agreement as the "Debt Restructuring." Any amounts due to Champps by the
Company as described in Sections 1.02(a) and 1.02(b) hereof not satisfied by the
consideration paid under Section 1.04 below shall be deemed to be a contribution
by Champps to the capital of the Company.
I.3 Consideration by the Company for the Sale of Seller's Stock. In
consideration of the sale of Seller's Stock to the Company by Champps and the
Debt Restructuring by Champps, the Company shall:
(a) make a cash payment to Champps in the amount of $750,000.
I.4 Consideration by the Company and Mountzuris for the Sale of
Seller's Stock and the Debt Restructuring. In consideration of the sale of
Seller's Stock to the Company, pursuant to which Mountzuris will become the sole
shareholder of the Company, and the Debt Restructuring by Champps, the receipt
and sufficiency of which is hereby acknowledged by Mountzuris, Mountzuris and
the Company, jointly and severally, shall:
(a) convey certain computer hardware and software and other
assets (the "Assets") to Champps as specifically identified by Champps and the
Company on Schedule 1.04(a) hereto based on Champps' internal information
systems and data processing needs, such Assets valued at $141,548.53;
(b) complete all work in progress to be performed by the
Company and Mountzuris for Champps as specifically set forth in Schedule 1.04(b)
hereto (the "Work in Progress"), the monetary value of such services to be
provided by the Company and Mountzuris as is necessary to complete all Work in
Progress being equal to $313,430;
(c) complete all professional data processing and consulting
services (the "Consulting Services") to be provided by Mountzuris and the
Company to Champps over a term of three (3) years, pursuant to a Service
Agreement by and among Champps, Mountzuris and the Company in substantially the
form of Exhibit 1.04(c) hereto (the "New Service Agreement"), the portion of
such Consulting Services provided as consideration pursuant to this Agreement
valued at $250,000 per year or $750,000 for the entire three (3) year term of
the New Service Agreement;
(d) cancel the aggregate balance in the amount of
$262,682.26 on current outstanding invoices as specifically identified on
Schedule 1.04(d) hereto owed to the Company by Champps and its wholly owned
subsidiary Champps Operating Corporation, Inc.; and
(e) release Champps from its contingent obligation under
Section 2.3 (Employment of Mountzuris) and Section 2.7 (Rights to Compel
Redemption or Dissolution) of the Shareholders Agreement to fund the balance of
the three-year term of Mountzuris' employment contract at a cost of $280,000.
I.5 Termination of Agreements. In reliance on and in consideration of
the representations, warranties, covenants and agreements set forth in this
Agreement, and subject to the terms and conditions of this Agreement, at the
Closing:
(a) Termination of Shareholders Agreement. Champps,
Mountzuris and the Company hereby agree that the Shareholders Agreement shall
terminate as of the Closing Date.
(b) Termination of Management Agreement. Champps and the
Company hereby agree that the Management Agreement shall terminate as of the
Closing Date.
(c) Termination of Old Service Agreement. Champps and
the Company hereby agree that the Service Agreement shall terminate as of the
Closing Date.
(d) Termination of Employment, Consulting and other Personal
Services Contracts. Champps, Mountzuris and the Company hereby agree that any
and all employment and consulting agreements, employee or similar benefit and
related arrangements, including, without limitation, any obligations by Champps
to offer future employment between Champps or any of its subsidiaries or
affiliates and Mountzuris or any other employee of the Company, shall terminate
as of the Closing Date.
(e) Termination of Old Security Agreement. Champps and
the Company hereby agree that the Old Security Agreement shall terminate as of
the Closing Date.
(f) Termination of Master Loan Agreement. Champps and
the Company hereby agree that the Master Loan Agreement shall terminate as of
the Closing Date.
I.6 Assignment and Releases.
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(a) General Release of Contract Rights or Claims by Mountzuris
and the Company. Pursuant to releases in substantially the form of Exhibits
1.06(a) and 1.06(b) hereto, to be executed by Mountzuris and the Company on or
before the Closing Date, Mountzuris and the Company shall agree to forever
release and forever discharge Champps and its shareholders, partners, agents,
directors, officers, parents, subsidiaries, affiliates, predecessors, successors
and assigns from any and all claims, liabilities, obligations, agreements,
damages, costs, losses and expenses and disputes of whatsoever kind and nature
(including, without limitation, any claims for attorneys' fees) whether known or
unknown which Mountzuris or the Company ever had, now has or which it can, shall
or may have arising from or relating to or in connection with any and all
consulting and employment agreements, employee or similar benefit and related
arrangements by and between Champps and Mountzuris, or any and all of the
agreements terminated in accordance with the provisions of Section 1.05 above.
(b) Release of King Xxxxxx, Inc. Payment Obligations.
Pursuant to releases in substantially the form of Exhibits 1.06(a) and 1.06(b)
hereto, to be executed by the Company and Mountzuris on or before the Closing
Date, Mountzuris and the Company shall agree to forever release and forever
discharge Champps and its shareholders, partners, agents, directors, officers,
parents, subsidiaries, affiliates, predecessors, successors and assigns from any
and all claims, liabilities, obligations, agreements, damages, costs, losses and
expenses and disputes of whatsoever kind and nature (including, without
limitation, any claims for attorneys' fees) whether known or unknown which the
Company or Mountzuris ever had, now has or which they can, shall or may have
arising from or relating to any obligation of Champps to make payments to the
Company or Mountzuris for professional data processing, consulting services or
any other services performed by the Company or Mountzuris in connection with the
Old Service Agreement for King Xxxxxx, Inc.
(c) Assignment of King Xxxxxx, Inc. Receivables. Pursuant to
an assignment in substantially the form of Exhibit 1.06(c) hereto, to be
executed by Champps on or before the Closing Date, Champps shall agree to
transfer and assign to the Company, free and clear of any and all Liens,
encumbrances, claims, restrictions and security interests, all of Champps'
right, title and interest in and to the proceeds of any receivables due to
Champps (the "King Xxxxxx Receivables") for professional data processing and
consulting services performed by the Company for King Xxxxxx, Inc. for the
period beginning on May 24, 1999 and ending as of June 30, 1999, following such
time, such professional data processing and consulting services will be or will
have been directly contracted for by King Xxxxxx, Inc. with the Company. In the
event that Champps receives payment of the entire amount of King Xxxxxx
Receivables from King Xxxxxx, Inc. prior to the Closing Date, in lieu of
executing the above-referenced Assignment of King Xxxxxx, Inc. Receivables,
Champps shall make payment of such King Xxxxxx Receivables directly to the
Company.
ARTICLE II. CLOSING AND POST-CLOSING ITEMS
II.1 Closing. The Closing shall take place on August __, 1999, at 10:00
A.M., local time, at the offices of Xxxxxxx, Procter & Xxxx, LLP, Exchange
Place, Boston, Massachusetts 02109 or on such other date and at such other time
and place as the parties hereto may mutually agree upon (the "Closing Date").
II.2 Delivery by Champps. At the Closing Date, Champps shall
deliver to the Company:
(a) certificates representing the Seller's Stock, each of
which is duly endorsed in blank by the registered owner thereof or with signed
stock powers attached, in either case with signatures guaranteed;
(b) an Assignment in substantially the form of Exhibit 1.06(c)
executed by Champps in favor of the Company or direct payment to the Company of
King Xxxxxx Receivables pursuant to Section 1.06(c) hereof;
(c) UCC-3 Termination Statements duly executed and delivered
by Champps sufficient in the opinion of the Company's counsel to release and
terminate all financing statements filed in favor of Champps pursuant to the Old
Security Agreement; and
(d) the original copy of the Old Promissory Note and of the
Master Demand Note, in each case endorsed "Paid in Full."
II.3 Deliveries by the Company. At the Closing Date, the Company
shall deliver to Champps:
(a) by wire transfer, cashier's or certified checks the
aggregate amount of Seven hundred Fifty thousand Dollars ($750,000), provided,
however, that in the event the Closing Date occurs prior to September 30, 1999,
the Company shall deliver a bridge promissory note in the principal amount of
$750,000 to Champps in substantially the form of Exhibit 2.03(a) hereto;
(b) the New Service Agreement duly executed and delivered
by the Company;
(c) a xxxx of sale in the form of Exhibit 2.03(c) hereto, duly
executed and delivered by the Company (the "Xxxx of Sale") and other instruments
of transfer and assignment in accordance with the provisions hereof,
transferring to Champps all of the Company's right, title and interest in and to
the Assets, free and clear of all Liens together with:
(i) copies of UCC financing statements (Form UCC-1)
(or similar instruments) as may be acceptable to Champps and
suitable for filing, naming the Company as the consignee and
Champps as the owner, or other similar instruments or
documents suitable for filing under the UCC of all
jurisdictions as may be necessary or, in the opinion of
Champps, desirable to record notice of Champps' ownership of
the Assets;
(d) a guaranty in the form of Exhibit 2.03(d) hereto,
duly executed and delivered by the Company (the "Company Guaranty");
(e) a release substantially in the form of Exhibit
1.06(b) hereto, duly executed and delivered by the Company; and
(f) an Acknowledgment and Consent to Assignment in
substantially the form of Exhibit 2.03(f) hereto executed by King Xxxxxx, Inc.
acknowledging and consenting to the release of King Xxxxxx, Inc. payment
obligations.
II.4 Deliveries by Mountzuris. At the Closing Date, Mountzuris
shall deliver to Champps:
(a) the New Service Agreement duly executed and delivered
by Mountzuris;
(b) a pledge and security agreement in the form of Exhibit
2.04(b) hereto, duly executed and delivered by Mountzuris (the "Mountzuris'
Pledge and Security Agreement") together with:
(i) the certificates evidencing 250 shares of the
Company's Common Stock, which represents fifty percent (50%)
of the Company's issued and outstanding shares of Common Stock
immediately after the redemption of Champps' 500 shares as
provided in this Agreement, which certificates shall in each
case be accompanied by undated stock powers or powers of
transfer duly executed in blank and such other instruments and
documents as Champps shall deem necessary or desirable under
applicable law to perfect the first priority security interest
of Champps in such shares of Common Stock;
(ii) copies of UCC financing statements (Form UCC-1)
(or similar instruments) as may be acceptable to Champps and
suitable for filing, naming Mountzuris as the debtor and
Champps as the secured party, or other similar instruments or
documents suitable for filing under the UCC of all
jurisdictions as may be necessary or, in the opinion of
Champps, desirable to perfect the first priority security
interest of Champps in the interests of Mountzuris in the
collateral pledged pursuant to the Mountzuris' Pledge and
Security Agreement; and
(iii) executed copies of proper UCC termination
statements (Form UCC-3), if any, necessary to release all
liens and other rights of any person in any collateral
described in the Mountzuris' Pledge and Security Agreement
together with such other UCC termination statements (Form
UCC-3) as Champps may reasonably request from Mountzuris.
Champps and its counsel shall be satisfied that (A) the Liens
granted to Champps in the collateral described in the
documents described above are first priority (or local
equivalent thereof) security interests and (B) no Liens exist
on any of the collateral described above other than the Liens
created in favor of Champps pursuant to the transactions
contemplated by this Agreement;
(c) a guaranty in substantially the form of Exhibit 2.04(c)
hereto, duly executed and delivered by Mountzuris (the "Mountzuris' Personal
Guarantee of the Promissory Note and the Cash Equivalent");
(d) a guaranty in substantially the form of Exhibit 2.04(d)
hereto, duly executed and delivered by Mountzuris (the "Mountzuris' Personal
Guarantee of the New Service Agreement"); and
(e) releases in substantially the form of Exhibit 1.06(a)
hereto duly executed and delivered by Mountzuris.
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF CHAMPPS
III.1 Representations and Warranties of Champps. Champps represents and
warrants to the Company and Mountzuris as follows:
(a) Organization, Standing and Power. Champps is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware.
(b) Authorization and Validity. Champps has all requisite
capacity, power and authority to sell or otherwise transfer the Seller's Stock
and to enter into and to perform its obligations under this Agreement and the
other documents referred to herein to which Champps is a party and to carry out
the transactions contemplated hereby and thereby. The execution, delivery and
performance of this Agreement by Champps, and the execution and delivery of all
other documents incident to the transactions contemplated hereunder have been
duly authorized by all necessary corporate action and will not violate or
constitute a default under any provision of law or any rule, regulation, order,
write, judgment, injunction, decree, determination or award applicable to
Champps. This Agreement constitutes and the other documents and instruments
issued or to be issued hereunder, when executed and delivered pursuant hereto,
constitute or will constitute the authorized, valid and legally binding
obligations of Champps enforceable against Champps in accordance with their
respective terms.
(c) Ownership of Stock. Champps' ownership of the Seller's
Stock described herein consists of good, valid and indefeasible beneficial and
record title, free and clear of all security interests, liens, encumbrances,
options, calls, pledges, trusts, voting trusts and other stockholder agreements,
covenants, restrictions, reservations and other burdens, except as will
terminate upon the Closing Date. The certificates representing the Seller's
Stock to be delivered to the Company at the Closing Date are, and the signatures
on endorsements thereof or stock powers relating thereto will be, valid and
genuine, and such stock certificates, endorsements and other documents will
transfer to and vest in the Company good, valid and indefeasible title to the
Seller's Stock. There are no outstanding subscriptions, options, warrants,
proxies, calls, puts, understandings, arrangements, restrictions, commitments or
rights of any nature to acquire from Champps shares of Common Stock. Champps is
not the beneficial owner of any interest in the Company other than the interest
therein represented by the Seller's Stock.
(d) Litigation. There is (i) no suit, action or claim, (ii) no
investigation or inquiry by any administration agency or governmental body, and
(iii) no legal, administrative or arbitration proceeding pending or, to the best
of the knowledge of Champps, threatened with respect to or affecting Champps
ownership of the Seller's Stock, and there is no basis or grounds for any such
suit, action, claim, investigation, inquiry or proceeding. There is no
outstanding order, writ, injunction or decree of any court, administrative
agency or governmental body or arbitration tribunal affecting or relating to any
of the Seller's Stock.
(e) No Violation of Law. The execution and delivery of this
Agreement by Champps and the consummation of the transactions contemplated
hereby will not violate any law, or any rule or regulation of any administrative
agency or governmental body, or any order, writ, injunction or decree of any
court, administrative agency or governmental body.
(f) Completeness; No Misrepresentations. The representations
and warranties made by Champps in this Agreement or in any Exhibit or other
document furnished by Champps hereunder do not contain any untrue statement of a
material fact, or omit to state a material fact necessary to make the statements
or facts contained herein or therein not misleading.
III.2 Interpretation of Representations and Warranties of Champps.
Champps hereby confirms and agrees that any reference in Section 3.01 to courts,
jurisdictions, governmental or quasi-governmental authorities, agencies or
bodies, or private or public regulatory authorities, agencies or bodies shall
mean as applicable the United States and the appropriate counterparts in any
foreign country or political subdivision thereof, and compliance with any laws,
rules, regulations, orders, writs, judgments, injunctions, decrees or awards
shall include compliance with any applicable laws, rules, regulations, orders,
writs, judgments, injunctions, decrees or awards of the United States and any
appropriate foreign country or political subdivision thereof.
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF MOUNTZURIS AND THE COMPANY
IV.1 Representations and Warranties of the Company. Mountzuris and
the Company represent and warrant to Champps as follows:
(a) Organization, Standing and Power. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware. The Company has all requisite power and authority to
conduct its business as it is now conducted and to own, lease and operate its
properties and the Assets.
(b) Authorization and Validity. The Company has full corporate
power and authority to enter into and to perform its obligations under this
Agreement and to carry out the transactions contemplated hereby. The execution,
delivery and performance of this Agreement and the agreements contemplated
hereby by the Company have been duly authorized by all necessary corporate
action, and this Agreement and the agreements contemplated hereby constitute the
authorized, valid and legally binding obligations of the Company. Mountzuris has
full power and authority to enter into this Agreement and to carry out the
transactions contemplated hereby. This Agreement and the agreements contemplated
hereby have been duly authorized, executed and delivered by or on behalf of
Mountzuris and constitute valid and binding agreements of Mountzuris and are
enforceable against Mountzuris in accordance with the terms thereof.
(c) Equipment. The Assets (i) are in good operating condition
(ordinary wear and tear excepted), (ii) have been and shall through the Closing
Date be maintained in a manner consistent with the past maintenance practices of
the Company.
(d) Title. The Company owns all of the Assets and the Company
has and is conveying to Champps good and marketable title to all of the Assets
owned by the Company and none of the Assets of the Company, tangible or
intangible, is subject to any Liens, except for any Liens in favor of Champps
which will be terminated upon the sale of the Assets to Champps pursuant to this
Agreement. Upon the sale, assignment, transfer and delivery of the Assets to
Champps hereunder, there will be vested in Champps good and marketable title
thereto, free and clear of all Liens. No financing statement under the Uniform
Commercial Code with respect to any of the Assets has been filed in any
jurisdiction, and the Company has not signed any such financing statement or any
security agreement authorizing any secured party thereunder to file any such
financing statement. The Assets include all material assets and properties used
or held for use by the Company to conduct the Consulting Services as presently
conducted by the Company and Mountzuris for Champps.
(e) Location of Assets. The tangible Assets are located
at the Company's leased facility at 00 Xxxxxxxxx Xxxx, Xxxxxxx, Xxxxxxxxxxxxx.
(f) No Violation of Law. The execution and delivery of this
Agreement by the Company and the consummation of the transactions contemplated
hereby will not (i) conflict with, or result in the breach of any of the terms
or conditions of, or constitute a default under, or result in the acceleration
of any obligation under, or require any consent, approval or notice under, the
charter documents or the by-laws or any resolution of the Company, or (ii)
violate any law, or any rule or regulation of any administrative agency or
governmental body, or any order, writ, injunction or decree of any court,
administrative agency or governmental body. The execution, delivery and
performance of this Agreement and the agreements contemplated hereby will not
violate any provision of any agreement, instrument, order, award, judgment or
decree to which Mountzuris is a party or by which he or his properties are
bound.
(g) Completeness; No Misrepresentations. The representations
and warranties made by the Company in this Agreement or in any Exhibit or other
document furnished by the Company hereunder do not contain any untrue statement
of a material fact, or omit to state a material fact necessary to make the
statements or facts contained herein or therein not misleading.
(h) No Litigation; Compliance. The Company is not involved in
nor, to the best knowledge of the Company and Mountzuris, is the Company
threatened to be involved in any litigation arbitration, claim, governmental or
legal or other proceedings in connection with the Assets. To the best knowledge
of the Company and Mountzuris, the Company is in compliance with all laws and
governmental (federal, state and local) rules and regulations applicable to it
with respect to the Assets. The Company has not been charged nor, to the best
knowledge of the Company and Mountzuris, is the Company threatened to be charged
with any violation of any provision of any federal, state or local law or
administrative rule or regulation relating to the Assets. The Company is not
subject to or bound by any agreement, judgment, decree or order which may
materially and adversely affect any of the Assets.
IV.2 Interpretation of Representations and Warranties of the Company.
The Company hereby confirms and agrees that any reference in Section 4.01 to
courts, jurisdictions, governmental or quasi-governmental authorities, agencies
or bodies, or private or public regulatory authorities, agencies or bodies shall
mean as applicable the United States and the appropriate counterparts in any
foreign country or political subdivision thereof, and compliance with any laws,
rules, regulations, orders, writs, judgments, injunctions, decrees or awards
shall include compliance with any applicable laws, rules, regulations, orders,
writs, judgments, injunctions, decrees or awards of the United States and any
appropriate foreign country or political subdivision thereof.
IV.3 Survival of Representations, Warranties, Covenants and
Indemnification. All covenants, agreements, indemnifications, representations
and warranties of the Company under this Agreement shall be deemed made as of
the time and as of the Closing Date and shall survive until the third
anniversary of the Closing Date regardless of any investigation at any time made
by or on behalf of Champps or of any information Champps may have with respect
thereto.
ARTICLE V. POST CLOSING OBLIGATIONS AND COVENANTS OF MOUNTZURIS AND THE COMPANY
V.1 Acceleration of Prepaid Expenses Under New Service Agreement. The
Company and Mountzuris hereby agree that Champps has the option, exercisable at
any time, to apply all or a portion of the $250,000 prepaid expense of Champps
allocated to the third year of the New Service Agreement (the "Third Year
Service Expense") against any amounts due to the Company and Mountzuris in
excess of $250,000 per year of prepaid expenses for services provided by
Mountzuris and the Company to Champps during the initial two (2) years of the
New Service Agreement (the "First and Second Year Service Expense" and together
with the Third Year Service Expense, the "Prepaid Service Expenses").
Notwithstanding the foregoing, the Third Year Service Expense shall not be
applied against that portion of the First and Second Year Service Expense
constituting other non-related third party expenses (the "Third Party
Expenses"). Third Party Expenses shall include, all remote LAN dial charges, WAN
charges, Internet usage charges, expenses associated with incremental Oracle
licenses other than those licenses listed on Schedule 5.01 hereto and any
expenses associated with incremental e-mail accounts other than those set forth
on Schedule 5.01 hereto.
V.2 Conversion of New Service Agreement to Cash Equivalent. The Company
and Mountzuris hereby agree that in the event that Mountzuris is no longer
actively engaged as an employee of the Company or its successors or affiliated
entity in providing the Consulting Services contemplated by the New Service
Agreement for the entire three (3) year term of the New Service Agreement (the
event described above is referred to herein as a "Termination Event"), then,
until such time as the Company and Mountzuris have provided Consulting Services
to Champps valued in the aggregate amount of the Prepaid Service Expenses, at
Champps' option, the Company shall pay to Champps the cash equivalent of the
remaining service obligations outstanding under the New Service Agreement (the
"Cash Equivalent"). The Company and Mountzuris hereby agree that the Cash
Equivalent shall be equal to the difference between (i) the product of (A) the
number of days remaining from the date of the Termination Event until the last
day of the initial term of the New Service Agreement which shall be May 24, 2002
and (B) $684.93 and (ii) the total aggregate amount of any Third Year Service
Expense applied against any amounts due to the Company and Mountzuris in excess
of the First and Second Year Service Expense pursuant to Section 5.01 hereof
prior to the date of the Termination Event. The Company and Mountzuris hereby
agree that the entire amount of the Cash Equivalent shall be paid to Champps
within thirty (30) days of the date of a Termination Event by wire transfer of
immediately available funds, cashier's or certified checks. In the event that
Champps does not elect to receive the Cash Equivalent, the Company or its
successors and assigns shall be required to satisfy all of the obligations of
the Company and Mountzuris under the New Service Agreement. Notwithstanding
anything contained herein to the contrary, the parties agree that any successor
or assignee of Champps shall not be entitled to convert the New Service
Agreement to the Cash Equivalent except upon a Termination Event.
V.3 Tax Returns. The Company and Mountzuris agree to cooperate with
Champps to timely file any federal, state or local tax returns required to be
filed by Champps relating to the period ending as of the Closing Date and
further agree to cooperate with Champps in connection with any federal, state or
local tax or escheat audits of Champps.
V.4 Litigation and Regulatory Cooperation. The Company and Mountzuris
shall cooperate with Champps in the defense or prosecution of any claims or
actions now in existence or which may be brought in the future against or on
behalf of Champps which relate to events or occurrences that transpired while
the Company and/or Mountzuris was engaged to perform services for Champps. The
Company and Mountzuris also shall cooperate fully with Champps in connection
with any investigation or review of any federal, state or local regulatory
authority as any such investigation or review relates to events or occurrences
that transpired while the Company and/or Mountzuris was engaged to perform
services for Champps.
ARTICLE VI. COVENANTS AND AGREEMENTS OF CHAMPPS
VI.1 Further Assurances. At any time or from time to time at and after
the Closing Date, Champps shall, at the request of the Company and at the
Company's expense, execute and deliver or cause to be executed and delivered all
such assignments, consents, documents and instruments, and, in addition take or
cause to be taken all such other actions as the Company may reasonably deem
necessary or desirable in order to more fully and effectively vest in the
Company or to confirm the Company's title to and possession of the Seller's
Stock and the ownership interest in the Company represented thereby, or
otherwise to carry out the intents and purposes of this Agreement.
ARTICLE VII. CONDUCT OF CHAMPPS PENDING THE CLOSING DATE
VII.1 Conduct of Champps Pending the Closing Date. Champps agrees
that, pending the Closing Date, it will not:
(a) Solicit any proposals from or initiate any
negotiations or discussions with, any third party with respect to the sale of
the Seller's Stock;
(b) Issue any options, warrants or other rights with
respect to the Seller's Stock, or any security convertible, actually or
contingently, into the Seller's Stock; or
(c) Voluntarily take any action that would cause any of
its representations and warranties to be untrue on the Closing Date.
ARTICLE VIII. CONDITIONS TO CLOSING DATE
VIII.1 Conditions Precedent to Obligations of Mountzuris and the
Company. The obligations of Mountzuris and the Company to complete the
transactions contemplated by this Agreement are subject to the fulfillment prior
to or at the Closing Date of the following conditions (any of which may, at its
option, be waived by Mountzuris or the Company):
(a) The representations and warranties in Article III or in
any certificate or document delivered by Champps pursuant hereto shall be true
and correct when made and shall be true and correct on the Closing Date with the
same force and effect as if they had been made on and as of such date.
(b) All covenants, agreements and conditions contained in this
Agreement to be performed by Champps on or prior to the Closing Date shall have
been performed or complied with in all material respects.
(c) No litigation challenging the legality of the transactions
provided for in this Agreement shall have been threatened or instituted and not
settled or terminated by any governmental agency or any third parties against
Champps, Mountzuris or the Company.
(d) Each document required to be delivered by Section
2.02 must have been delivered.
VIII.2 Conditions Precedent to Obligations of Champps. The obligations
of Champps to complete the transactions contemplated by this Agreement are
subject to the fulfillment prior to or at Closing Date of the following
conditions (any of which may, at its option, be waived by Champps).
(a) The representations and warranties in Article IV or in any
certificate or document delivered by Mountzuris or the Company pursuant hereto
shall be true and correct when made and shall be true and correct on the Closing
Date with the same force and effect as if they had been made on and as of such
date.
(b) All covenants, agreements and conditions contained in this
Agreement to be performed by Mountzuris or the Company on or prior to the
Closing Date shall have been performed or complied with in all material
respects.
(c) No litigation challenging the legality of the transactions
provided for in this Agreement shall have been threatened or instituted and not
settled or terminated by any governmental agency or any third parties against
Champps, Mountzuris or the Company.
(d) Each document required to be delivered by Sections
2.03 and 2.04 must have been delivered.
(e) At Champps' option, (i) the Company shall have entered
into an agreement with the Landlord satisfactory to Champps pursuant to which
the Company shall agree to undertake a direct obligation to the Landlord with
respect to the Company's lease of the Premises; (ii) Champps shall assign the
Sublease to the Company relating to the Company's lease of the Premises,
provided, however, that the Landlord provides its consent to such assignment; or
(iii) the Company and Champps shall continue their existing relationship under
the terms of the Sublease; provided, however, in each of (i), (ii) or (iii)
above, that the Company shall not be required to assume a higher rental payment
for the Premises then the rental payment on the current Sublease.
ARTICLE IX. CONFIDENTIALITY
IX.1 Disclosure of Confidential Information. The Receiving Party hereby
agrees that it shall keep Confidential Information confidential and that it will
not disclose any of the Confidential Information in any manner whatsoever;
provided, however, that the Receiving Party may make any disclosure of such
information to which the Disclosing Party gives its prior written consent.
"Confidential Information" shall mean any proprietary and confidential
information relating to RCS or Champps, as the case may be, disclosed by either
party in connection with the performance of the parties' obligations under this
Agreement and the agreements and transactions contemplated hereby. For the
purposes of this Agreement, RCS and Champps are referred to as a "Disclosing
Party" with respect to information it provides the other, and RCS and Champps
are referred to as a "Receiving Party" with respect to information it receives
from the other. For purposes of this Article IX, "RCS" shall include the Company
and Mountzuris.
In the event that the Receiving Party is requested or required (by oral
questions, interrogatories, requests for information or documents in legal
proceedings, subpoena, civil investigative demand or other similar process) to
disclose any of the Confidential Information, the Receiving Party shall provide
the Disclosing Party with prompt written notice of any such request or
requirement so that the Disclosing Party may seek a protective order or other
appropriate remedy and/or waive compliance with the provisions of this Article
IX. If, in the absence of a protective order or other remedy or the receipt of a
waiver by the Disclosing Party, the Receiving Party is nonetheless, in the
written opinion of counsel, legally compelled to disclose Confidential
Information to any tribunal or else stand liable for contempt or suffer other
censure or penalty, the Receiving Party may, without liability hereunder,
disclose to such tribunal only that portion of the Confidential Information
which such counsel advises the Receiving Party is legally required to be
disclosed, provided that the Receiving Party exercises its best efforts to
preserve the confidentiality of the Confidential Information, including, without
limitation, by cooperating with the Disclosing Party to obtain an appropriate
protective order or other reliable assurance that confidential treatment will be
accorded the Confidential Information by such tribunal.
IX.2 Return of Confidential Information. Upon the expiration of the
obligations of this Article IX pursuant to Section 9.05, or at any time upon the
request of the Disclosing Party for any reason, the Receiving Party will
promptly deliver to the Disclosing Party all Confidential Information (and all
copies thereof) furnished to the Receiving Party by or on behalf of the
Disclosing Party pursuant hereto. In the event of such a decision or request,
all other Confidential Information prepared by the Receiving Party shall be
destroyed and no copy thereof shall be retained. Notwithstanding the return or
destruction of the Confidential Information, the Receiving Party will continue
to be bound by its obligations of confidentiality and other obligations
hereunder.
IX.3 Excluded Information. The term "Confidential Information" shall
not include (i) information which is or becomes generally available to the
public other than as a result of a disclosure by the Receiving Party; (ii)
information which was within the Receiving Party's possession prior to its being
furnished to the Receiving Party by or on behalf of the Disclosing Party
pursuant hereto, as evidenced by records kept by the Receiving Party in the
ordinary course of business or other appropriate written documentation, provided
that the source of such information was not known by the Receiving Party to be
bound by a confidentiality agreement with or other contractual, legal or
fiduciary obligation of confidentiality to the Disclosing Party or any other
person with respect to such information; and (iii) information which becomes
available to the Receiving Party on a non-confidential basis from a source other
than the Disclosing Party or any of its officers, employees, agents or advisors
(collectively, the "Disclosing Party Representatives") provided that such source
is not bound by a confidentiality agreement with or other contractual, legal or
fiduciary obligation of confidentiality to the Disclosing Party or any other
party with respect to such information.
IX.4 Rights in Confidential Information. Notwithstanding anything in
this Article IX to the contrary, nothing contained in this Agreement shall be
construed as transferring to the Receiving Party any rights, trademarks,
copyrights, patents, technology or proprietary information relating to the
Confidential Information (the "Intellectual Property Rights") and the Receiving
Party agrees that the Intellectual Property Rights are, and shall remain, the
sole and exclusive property of throughout the world and any and all uses of the
Confidential Information and the Intellectual Property Rights shall inure to the
benefit of the Disclosing Party.
IX.5 Term of Obligation. The obligations of this Article IX shall
survive for three (3) years after the Closing Date.
IX.6 Enforceability. The parties each agree and acknowledge that the
subject of this Article IX is unique and a party which is or would be damaged by
a breach or potential breach of this Article IX could not be adequately
compensated solely in monetary damages. Either party shall have the right, in
addition to any other remedies at law or equity, to request the court having
jurisdiction to issue an injunction to prevent harm or avoid damaging
communication of sensitive confidential or proprietary information disclosed
pursuant to this Article IX.
ARTICLE X. GENERAL
X.1 Governing Law. This Agreement and the performance of the
transactions contemplated hereby shall be governed by and construed and enforced
in accordance with the laws of the Commonwealth of Massachusetts.
X.2 Entire Agreement. This Agreement and the Exhibits hereto set forth
the entire agreement and understanding of the parties in respect of the
transactions contemplated hereby and supersede all prior agreements,
arrangements and understandings relating to the subject matter hereof. No
representation, promise, inducement or statement of intention has been made by
any party which is not embodied in this Agreement or in the documents referred
to herein, and no party shall be bound by or liable for any alleged
representation, promise, inducement or statement of intention not so set forth.
X.3 Modification. No amendment, modification or attempt to supersede or
cancel any of the terms, covenants, representations, warranties or conditions
hereof shall be effective unless such amendment, modification or direction to
supersede or cancel such term, covenant, representations, warranty or condition
is in writing executed by all the parties hereto or, in the case of a waiver, by
or on behalf of the party waiving compliance. The failure of either party at any
time or times to require performance of any provision hereof shall in no manner
affect the right at a later time to enforce the same. No waiver by any party of
any condition, or of any breach of any term, covenant, representation or
warranty contained in this Agreement, in any one or more instances, shall be
deemed to be, or construed as, a further or continuing waiver of any such
condition or breach or a waiver of any other condition or of any breach of any
other term, covenant, representation or warranty.
X.4 Counterparts. This Agreement and any amendment or modification
hereof may be executed in two or more counterparts, each of which shall be
deemed an original, but all of which taken together shall constitute one and the
same instrument.
X.5 Expenses. Each of the parties to this Agreement will bear its own
expenses in connection with the negotiation and consummation of the transactions
contemplated by this Agreement.
X.6 Assignments, Successors and No Third-Party Rights. The parties may
not assign any of their rights under this Agreement without the prior written
consent of the other parties. Subject to the preceding sentence, this Agreement
will apply to, be binding in all respects upon, and inure to the benefit of the
successors and permitted assigns of the parties. Nothing expressed or referred
to in this Agreement will be construed to give any person other than the parties
to this Agreement any legal or equitable right, remedy, or law under or with
respect to this Agreement or any provision of this Agreement. This Agreement and
all of its provisions and conditions are for the sole and exclusive benefit of
the parties to this Agreement and their successors and assigns. Notwithstanding
anything herein to the contrary, the provisions of Section 5.02 of this
Agreement shall not apply to any successor or assign of Champps.
X.7 Signatures by Facsimile. Any facsimile signatures of any party
hereto shall constitute a legal, valid and binding execution hereof by such
party.
[Remainder of Page Intentionally Left Blank]
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first above written.
CHAMPPS ENTERTAINMENT, INC.
f/k/a UNIQUE CASUAL RESTAURANTS, INC.
By:_________________________________
Name:
Title:
MOUNTZURIS:
_________________________________
Xxxxxxxx X. Xxxxxxxxxx
RESTAURANT CONSULTING SERVICES, INC.
By:_____________________________
Name: Xxxxxxxx X. Xxxxxxxxxx
Title: Chief Executive Officer
