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EXHIBIT (c)(9)
OPTION AGREEMENT
OPTION AGREEMENT, dated as of May [ ], 1997 (this
"Agreement"), by and between Xxxxxx X. Xxxxxx ("Xxxxxx"), The Xxxxxx Family
Trust (the "Trust"), Xxxxx Xxxx ("Xxxx", and together with Xxxxxx and the
Trust, the "Grantors"), Jillian's Billiard Club, Inc., a Massachusetts
corporation ("Jillian's Boston"), and Jillian's Entertainment Corporation, a
Florida corporation ("Grantee").
WHEREAS, concurrently with the execution of this
Agreement, Jillian's Entertainment Holdings, Inc. ("Holdings"), a Delaware
corporation, Jillian's Entertainment Acquisition Corporation, a Florida
corporation and wholly owned subsidiary of Holdings ("Sub"), and Grantee have
entered into an Agreement and Plan of Merger (the "Merger Agreement") whereby,
upon the filing of Articles of Merger with the Department of State of Florida
(the "Effective Time"), Sub will merge with and into Grantee with Grantee
becoming a wholly owned subsidiary of Holdings (the "Merger");
WHEREAS, as a condition and inducement to Holdings'
execution of the Merger Agreement, Holdings and Grantee have requested that the
Grantors agree, and the Grantors have agreed, to grant Grantee the Option (as
defined below); and
WHEREAS, as a condition and inducement to Holdings'
execution of the Merger Agreement, Holdings and Grantee have requested that
Jillian's Boston agree, and Jillian's Boston has agreed, to execute this
Agreement and to perform its obligations hereunder;
NOW, THEREFORE, in consideration of the foregoing and
the respective representations, warranties, covenants and agreements set forth
herein, in the Merger Agreement and in the License Agreement dated as of May
[ ], 1997 by and between Grantee and Jillian's Boston (the "License Agreement"),
and for other good and valuable consideration the sufficiency of which is
hereby acknowledged, the parties hereto agree as follows:
1. Grant of Option; Purchase Price. (a) Subject to the
terms and conditions set forth herein, each of the Grantors hereby grants to
Grantee an irrevocable option (the "Option") to purchase all, but not less
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than all, of the shares of common stock, no par value, of Jillian's Boston set
forth opposite such Grantor's name on Schedule 1 hereto (collectively, the
"Option Shares") for an aggregate cash purchase price (the "Purchase Price") as
set forth below; such Option Shares being all of the issued and outstanding
equity securities of Jillian's Boston.
(b) The aggregate Purchase Price for the
Option Shares shall be, 6.0 times Jillian's Boston's trailing 12-month EBITDA
(as defined below), valued on a debt-free basis, subject to adjustment as set
forth below. In the event that the exercise of the Option occurs in connection
with an initial public offering of the common stock of Holdings, Grantee or any
subsidiary of Grantee (the "IPO Common Stock"), then the aggregate Purchase
Price shall be: (i) adjusted to 6.5 times Jillian's Boston's trailing 12-month
EBITDA, valued on a debt-free basis, if the initial public offering price of
the IPO Common Stock is at least 10.0 times the issuer's prospective 12-month
EBITDA as reflected in the latest issuer projections furnished to the
underwriters prior to the offering (the "Issuer's Prospective 12-month EBITDA")
and less than 11.0 times the Issuer's Prospective 12-month EBITDA or (ii)
adjusted to 7.0 times Jillian's Boston's trailing 12-month EBITDA, valued on a
debt-free basis, if the initial public offering price of the IPO Common Stock
is at least 11.0 times the Issuer's Prospective 12-month EBITDA. In the event
that there is an initial public offering of the IPO Common Stock prior to, and
not in connection with, the exercise of the Option, then the aggregate Purchase
Price shall be: (i) adjusted to 6.5 times Jillian's Boston's trailing 12-month
EBITDA, valued on a debt-free basis, if the Fair Market Value (as defined
below) of such stock, as of the date of exercise of the Option, is at least
10.0 times the issuer's prospective 12-month EBITDA as reflected in the latest
issuer budget approved by the issuer's board of directors and less than 11.0
times the issuer's prospective 12-month EBITDA as reflected in the latest
issuer budget approved by the issuer's board of directors or (ii) adjusted to
7.0 times Jillian's Boston's trailing 12-month EBITDA, valued on a debt-free
basis, if the Fair Market Value of such stock, as of the date of exercise of
the Option, is at least 11.0 times the issuer's prospective 12-month EBITDA as
reflected in the latest issuer budget approved by the issuer's board of
directors.
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(c) In the event that Grantee exercises
the Option prior to the occurrence of an initial public offering of the IPO
Common Stock, Grantee shall promptly pay, upon completion of any such initial
public offering prior to July 1, 2001, such additional consideration as would
have been owed had such initial public offering occurred in connection with the
exercise by Grantee of the Option and the aggregate Purchase Price had been
adjusted pursuant to the terms of Section 1(b).
"EBITDA" shall mean, with respect to any fiscal year of
Jillian's Boston, Jillian's Boston's operating earnings for such fiscal year,
before interest, taxes, depreciation and amortization, calculated in accordance
with generally accepted accounting principles consistently applied and
excluding all non-recurring income items.
The "Fair Market Value" of shares of IPO Common Stock as
of a given date shall mean the average of the closing prices of such shares on
the Nasdaq National Market (or such other market or exchange on which such
shares are listed) over the twenty trading days ending on and including the
trading day prior to such date or, if such shares are not so listed, shall be
as determined in good faith by the Board of Directors of Holdings.
2. Exercise of Option. Grantee may exercise the Option,
in whole but not in part, at any time and from time to time, upon written notice
(an "Exercise Notice") given between July 1, 1999 and June 30, 2001, inclusive;
provided, that the Option will be exercisable upon the giving of an Exercise
Notice between January 1, 1999 and December 31, 2000, inclusive, if (i) prior
to such exercise there has been an initial public offering of the IPO Common
Stock or (ii) such exercise is in connection with an initial public offering of
the IPO Common Stock (any such period during which the Option is exercisable is
hereinafter referred to as the "Exercise Period"). Notwithstanding anything in
this Agreement to the contrary, Grantee may give an Exercise Notice up to 60
days prior to July 1, 1999 or January 1, 1999, as the case may be, provided
that the Closing Date (as defined below) shall not occur prior to July 1, 1999
or January 1, 1999, as the case may be. The Option shall terminate and be of no
further force and effect upon the expiration of the Exercise Period.
Notwithstanding anything in this Agreement to the contrary, in the event that
the Option
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cannot be exercised on any day during the Exercise Period because of any
injunction, order or similar restraint issued by a court of competent
jurisdiction, the Exercise Period shall be extended so that the Option shall
expire no earlier than on the 60th day after such injunction, order or
restraint shall have been dissolved or shall have become permanent and no
longer subject to appeal.
3. Payment and Delivery of Option Shares. (a) Immediately
following the giving of an Exercise Notice pursuant to Section 2, the parties
hereto will negotiate a definitive purchase and sale agreement (the "Purchase
and Sale Agreement") and such other documentation reasonably necessary in
connection with the Transfer (as defined below) of the Option Shares ("Other
Documentation"). Each of the parties hereto agrees to negotiate the terms of
the Purchase and Sale Agreement and the Other Documentation in good faith and
to take all other actions reasonably necessary to consummate the Transfer of
the Option Shares as promptly as practicable following the giving of the
Exercise Notice, which Transfer will in no event occur more than 60 days
following the giving of such notice (unless delayed by Grantee) (the date on
which such Transfer occurs is hereinafter referred to as the "Closing Date").
The Purchase and Sale Agreement will contain provisions customary in such
transactions including, without limitation, representations and warranties by
each of the Grantors and Jillian's Boston substantially similar to the
representations and warranties given by Grantee in Article II of the Merger
Agreement.
(b) Pursuant to the Purchase and Sale
Agreement, on the Closing Date, simultaneously with the delivery of the
aggregate Purchase Price by Grantee, each Grantor shall deliver to Grantee a
certificate or certificates representing the Option Shares to be purchased from
such Grantor duly endorsed in blank, or accompanied by appropriate stock powers
duly executed in blank, in proper form for transfer and with all requisite
stock transfer stamps, if any, attached or provided for, which Option Shares
shall be free and clear of all liens, claims, charges and encumbrances of any
kind whatsoever.
(c) Each of the Grantors hereby agrees that,
prior to the Closing Date, such Grantor will take all actions reasonably
necessary to eliminate from the
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Articles of Organization and the By-Laws of Jillian's Boston any and all
restrictions or limitations on the Transfer of the Option Shares. Jillian's
Boston hereby agrees to cooperate fully with each of the Grantors in the
elimination of any such restrictions or limitations.
(d) Notwithstanding anything in this Section 3 to
the contrary or the giving an Exercise Notice pursuant to Section 2, Grantee
will have no obligation to execute the Purchase and Sale Agreement or to
purchase the Option Shares; provided, however, that Grantee's right to purchase
the Option Shares pursuant to an Exercise Notice given prior to the expiration
of the Exercise Period shall terminate 60 days following the expiration of the
Exercise Period.
4. Representations and Warranties of the Grantors and
Jillian's Boston. Each of the Grantors and Jillian's Boston hereby jointly and
severally represents and warrants to Grantee as follows, except that only the
Grantors represent and warrant with respect to Section 4(e):
(a) Organization of Jillian's Boston.
Jillian's Boston is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation, has all
requisite corporate power to own, lease and operate its property and to carry
on its business as now being conducted and as proposed to be conducted. Except
as set forth in Section 4(a) of Schedule 2 hereto, Jillian's Boston does not,
directly or indirectly, own any equity or similar interest in, or any interest
convertible into or exchangeable or exercisable for any equity or similar
interest in, any corporation, partnership, joint venture or other business
association or entity.
(b) Capital Structure. The authorized
capital stock of Jillian's Boston consists of [15,000] shares of common stock,
no par value ("Common Stock"). As of the date of this Agreement, (i) [ ] shares
of Common Stock are issued and outstanding, all of which are duly authorized,
validly issued, fully paid and nonassessable; (ii) [ ] shares of Common Stock
are reserved for future issuance pursuant to outstanding stock options and (iii)
[ ] shares of Common Stock are reserved for future issuance pursuant to
outstanding war-
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rants. Except as set forth in this Section 4(b), there are no equity securities
of any class of Jillian's Boston or any securities exchangeable into or
exercisable for such equity securities, issued, reserved for issuance or
outstanding. Except as set forth in this Section 4(b), there are no options,
warrants, calls, rights, commitments or agreements of any character to which
Jillian's Boston or such Grantor is a party, or by which Jillian's Boston or
such Grantor is bound, obligating Jillian's Boston or such Grantor to issue,
deliver or sell, or cause to be issued, delivered or sold, shares of capital
stock of Jillian's Boston or obligating Jillian's Boston or such Grantor to
grant, extend or accelerate the vesting of or enter into any such option,
warrant, call, right, commitment or agreement. The information set forth on
Schedule 1 hereto is true and correct and the Option Shares, as set forth on
Schedule 1 hereto, represent all of the issued and outstanding equity
securities of Jillian's Boston.
(c) Authority; No Conflict; Required Filings and
Consents.
(i) Such Grantor or Jillian's Boston has all
requisite power and authority to enter into this Agreement and to consummate
the transactions contemplated hereby. The execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby have
been duly authorized by all necessary action on the part of such Grantor or
Jillian's Boston. This Agreement has been duly and validly executed and
delivered by such Grantor or Jillian's Boston and constitutes a valid and
binding obligation of such Grantor or Jillian's Boston, enforceable in
accordance with its terms, except as such enforceability may be limited by
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or
other similar laws now or hereafter in effect relating to creditors' rights and
by general equitable principles (regardless of whether enforceability is
considered in a proceeding in equity or at law).
(ii) Except as set forth in Section 4(c)(ii) of
Schedule 2 hereto, the execution and delivery by such Grantor or Jillian's
Boston of this Agreement does not, and the consummation of the transactions
contemplated hereby will not, (A) conflict with, or result in any violation or
breach of any provision of the Arti-
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cles of Organization, as amended, or the By-laws, of Jillian's Boston, or the
organizational documents of such Grantor if such Grantor is not a natural
person, (B) result in any violation or breach of, or constitute (with or
without notice or lapse of time, or both) a default (or give rise to a right of
termination, cancellation or acceleration of any obligation or loss of any
benefit) under any of the terms, conditions or provisions of any note, bond,
mortgage, indenture, lease, contract or other agreement, instrument or
obligation to which Jillian's Boston or such Grantor is a party or by which
Jillian's Boston or such Grantor or any of Jillian's Boston's or such Grantor's
properties or assets may be bound, or (C) conflict with or violate any permit,
concession, franchise, license, judgment, order, decree, statute, law,
ordinance, rule or regulation applicable to Jillian's Boston or such Grantor or
any of Jillian's Boston's or such Grantor's properties or assets, except in the
case of clause (B) for any such violations, breaches, defaults, terminations,
cancellations, accelerations or conflicts which would not, in the aggregate,
have a material adverse effect on Jillian's Boston or impair the ability of
Jillian's Boston or such Grantor to consummate the transactions contemplated by
this Agreement.
(iii) No consent, approval, order or
authorization of, or registration, declaration or filing with (collectively,
"Consents") any person, including, without limitation, any court,
administrative agency or commission or other governmental authority or
instrumentality (a "Governmental Entity"), is required by or with respect to
Jillian's Boston or such Grantor in connection with the execution and delivery
of this Agreement or the consummation of the transactions contemplated hereby,
except for filings pursuant to the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act
of 1976, as amended, and the rules and regulations thereunder (if applicable),
Consents relating to any liquor licenses held by Jillian's Boston or such
Grantor and such other Consents (other than those of a Governmental Entity)
which, if not obtained or made, would not, individually or in the aggregate,
have a material adverse effect on Jillian's Boston or impair the ability of
Jillian's Boston or such Grantor to consummate the transactions contemplated by
this Agreement.
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(d) Litigation. Except as set forth in
Section 4(d) of Schedule 2 hereto, there is no action, suit or proceeding,
claim, arbitration or investigation pending or, to the best knowledge of
Jillian's Boston or such Grantor, threatened against Jillian's Boston or such
Grantor which would have or result in a material adverse effect on Jillian's
Boston or impair the ability of Jillian's Boston or such Grantor to consummate
the transactions contemplated by this Agreement, nor has Jillian's Boston or
such Grantor received notice of any judgment, decree, injunction, rule or order
of any Governmental Entity outstanding against Jillian's Boston or such Grantor
having, or which is reasonably likely to have, a material adverse effect on
Jillian's Boston. Jillian's Boston is not in violation of any term of any
judgment, decree, injunction or order outstanding against it of which it has
received notice.
(e) Title to Option Shares. Except as set
forth in Section 4(e) of Schedule 2 hereto, such Grantor has good, valid and
marketable title to the Option Shares set forth opposite such Grantor's name on
Schedule 1 hereto, free and clear of all security interests, liens, claims,
pledges, charges or other encumbrances of any nature, and upon exercise of the
Option in accordance with the terms of this Agreement, Grantee will acquire
good, valid and marketable title to such Option Shares, free and clear of all
security interests, liens, claims, pledges, charges or other encumbrances of
any nature.
5. Conduct of Business; Restrictions on the
Issuance of Securities. (a) From and after the date hereof and until the
expiration of the Exercise Period (except to the extent that Grantee shall
otherwise consent in writing), Jillian's Boston will, and each of the Grantors
will use its best efforts to ensure that Jillian's Boston does, carry on its
business in the usual, regular and ordinary course as a billiard club or
entertainment facility that primarily features billiards or other indoor games.
(b) From and after the date hereof and until the
expiration of the Exercise Period, Jillian's Boston will not, and each of the
Grantors will use its best efforts to ensure that Jillian's Boston does not,
offer, sell, contract to sell, issue or otherwise dispose of (i)
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any shares of Common Stock or other equity securities of Jillian's Boston, (ii)
any securities convertible into or exchangeable for equity securities of
Jillian's Boston or (iii) warrants or other rights to purchase any equity
securities of Jillian's Boston, without the prior written consent of Grantee.
From and after the date hereof and until the expiration of the Exercise Period,
Jillian's Boston will not, and each of the Grantors will use its best efforts
to ensure that Jillian's Boston does not, enter into any transaction involving
(i) a merger or consolidation of Jillian's Boston or any affiliate thereof,
(ii) a sale of all or substantially all of the assets of Jillian's Boston,
(iii) a change in ownership or control of Jillian's Boston, or engage in any
other transaction having substantially similar effects, without the prior
written consent of Grantee.
6. Restrictions on Transfer. Each of the Grantors
hereby agrees that, from and after the date hereof and until the expiration of
the Exercise Period, it will not, other than pursuant to the exercise of the
Option or pursuant to a Permitted Transfer (as defined below), transfer, sell,
assign, pledge, hypothecate, give, create a security interest in or lien on,
place in trust (voting or otherwise), assign or in any other way encumber or
dispose of, directly or indirectly and whether or not by operation of law or
for value ("Transfer"), any Option Shares owned, directly or indirectly, by
such Grantor. A "Permitted Transfer" shall mean a Transfer of Option Shares by
any Grantor who is a natural person to such Grantor's spouse, children,
grandchildren, parents or siblings or a trust for the benefit of any of them,
provided that such Option Shares remain subject to all of the terms and
provisions of this Agreement as if the transferee of such Option Shares were a
Grantor hereunder.
7. Right of First Refusal on Sale of Equity Securities.
(a) In the event that any Grantor, following the expiration of the Exercise
Period, desires to Transfer any Equity Securities (as defined below), owned,
directly or indirectly, by such Grantor to any person other than pursuant to a
Permitted Transfer, such Grantor (the "Offering Grantor") will (unless it is a
condition precedent to such Transfer that Jillian's Boston cease to operate
under the name "Jillian's" and that the License Agreement be terminated) notify
Grantee in writing (the
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"Notification") of such Grantor's intention to do so, specifying the number of
shares of Equity Securities proposed to be transferred (the "Offered Shares"),
the name of the person or persons to whom such Grantor proposes to Transfer the
Offered Shares (or if no particular purchaser is identified, then the general
class of persons to whom such Grantor proposes to Transfer the Offered Shares),
and a price per share which shall be the minimum price at which such Grantor
proposes to effect the Transfer (the "Minimum Price"). The Notification shall
contain an affirmation by the Offering Grantor that such Grantor has a
reasonable expectation of being able to effect the proposed Transfer at the
Minimum Price and to such person or persons (or class of persons) and shall
recite the basis for such expectation. The Notification shall offer to sell to
Grantee all, but not less than all, of the Offered Shares, free and clear of
any liens or encumbrances, at the Minimum Price and on such other terms and
conditions, if any, not less favorable to Grantee than those proposed to be
offered to such other person or persons (or class of persons). In the event
that all or any part of the consideration for the proposed Transfer shall be
other than cash, the Minimum Price shall include the fair value of such
consideration, including the fair value of any promissory notes of the
prospective purchaser (taking into account, among other matters, the terms of
the notes and the creditworthiness of the prospective purchaser). "Equity
Securities" shall mean the Common Stock and any other common or preferred stock
of Jillian's Boston or option, warrant or other security convertible into, or
exercisable or exchangeable for, common or preferred stock of Jillian's Boston.
(b) Grantee shall act upon the offer of the
Offering Grantor by giving written notice (the "Grantee's Notice") to the
Offering Grantor setting forth Grantee's intention as to the Offered Shares.
The Grantee's Notice shall be given as soon as practicable after receipt of the
Notification, and in all events within 30 days after such receipt (the
"Acceptance Period"). If a Grantee's Notice is not given within the Acceptance
Period, Grantee shall be deemed to have elected not to purchase the Offered
Shares.
(c) In the event that Grantee shall elect
to purchase or acquire all of the Offered Shares, written notice to the
Offering Grantor of such election to pur-
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chase or so acquire all of the Offered Shares shall, when taken in conjunction
with the Notification, be deemed to constitute a valid and legally binding
purchase and sale agreement. The closing of the purchase and sale of Offered
Shares shall take place at the principal executive offices of Grantee at such
time and on such date within 60 days following the expiration of the Acceptance
Period as shall be agreed upon by Grantee and the Offering Grantor, at which
time the Offering Grantor shall deliver the certificate or certificates
representing the Offered Shares so sold against the Offering Grantor's receipt
of payment of the Minimum Price in cash (by certified check, bank cashier's
check or wire transfer); provided, however, that if the Minimum Price consists
in whole or in part of promissory notes or property other than cash, Grantor
shall have the option of giving promissory notes or property other than cash of
like tenor or cash in an amount equal to the fair value of such promissory
notes and such property other than cash.
8. Right of First Refusal on the Sale of Jillian's
Boston. In the event that Jillian's Boston, following the expiration of the
Exercise Period, desires to enter into any transaction with a third party
involving (i) a merger or consolidation of Jillian's Boston or any affiliate
thereof, (ii) a sale of all or substantially all of the assets of Jillian's
Boston, (iii) a change in ownership or control of Jillian's Boston, or to
engage in any other transaction having substantially similar effects, Jillian's
Boston will (unless it is a condition precedent to the consummation of such
transaction that Jillian's Boston cease to operate under the name "Jillian's"
and that the License Agreement be terminated) notify Grantee in writing of
Jillian's Boston's intention and shall offer Grantee the opportunity to enter
into a similar transaction with Jillian's Boston on terms and conditions no
less favorable to Grantee than those offered to the proposed third party. The
notice shall contain an affirmation by Jillian's Boston that Jillian's Boston
has a reasonable expectation of being able to effect the proposed transaction
on the terms and conditions set forth in the notice and shall recite the basis
for such expectation. The procedures set forth in Section 7 with respect to the
right of first refusal on sales by the Grantors of Equity Securities shall
apply to the right of first refusal granted in this Section 8, with such
modifications as the parties mutually agree are
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necessary given the nature of any transaction proposed pursuant to this Section
8.
9. Access to Information. Beginning 60 days prior to
the Exercise Period and during the Exercise Period, notwithstanding any
injunction, order or similar restraint issued by a court of competent
jurisdiction restraining the exercise of the Option, upon the reasonable
request of Grantee, Jillian's Boston will, and each of the Grantors will use
its best efforts to ensure that Jillian's Boston does, provide Grantee with
reasonable access to Jillian's Boston and to officers, directors, employees,
files, reports, statements and other documents (financial or otherwise) of
Jillian's Boston that Grantee, in the exercise of its reasonable judgement,
deems necessary in conjunction with the exercise of the Option. Grantee agrees
to use information revealed as a result of such investigations solely in
conjunction with the possible exercise of the Option and will hold such
information confidential, in keeping with the practices and procedures Grantee
applies in connection with its own internal confidential information. The
parties hereby agree that the foregoing provisions of this Section 9 will also
apply following the expiration of the Exercise Period to Grantee's reasonable
requests for information in conjunction with Grantee's exercise of the rights
of first refusal set forth in Sections 7 and 8.
10. Non-Competition; Non-Solicitation. Jillian's Boston
and each of the Grantors hereby agrees that:
(a) From and after the date hereof and so
long as Xxxxxx X. Xxxxxx is prohibited from competing with Grantee pursuant to
the terms of his employment agreement with Grantee dated the date hereof (the
"Prohibition Period"), Jillian's Boston or such Grantor will not, directly or
indirectly, own, operate or invest in any billiard club or entertainment
facility that primarily features billiards or other games, including an
entertainment facility that includes a restaurant but not a facility that is
primarily a restaurant, bar or nightclub; provided, however, that activities
relating to (i) the business of Jillian's Billiard Club (the "Boston Club"),
currently located at 000 Xxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx or (ii)
the business of the Boston Club at such other location, within a two mile
radius of its current location, to which the Boston Club may be re-
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quired to move, in either case, shall not constitute a violation of this
Section 10(a).
(b) During the Prohibition Period, Jillian's
Boston or such Grantor will not, directly or indirectly, hire, recruit,
solicit, entice or in any other manner persuade or attempt to persuade any
employee, independent contractor, dealer, supplier, client or customer of
Grantee or any of its subsidiaries to discontinue his or her position or
relationship or violate any agreement with Grantee or any of its subsidiaries
as employee, independent contractor, dealer, supplier, client or customer,
respectively, except with the prior written consent of the Board of Directors
of Holdings, which consent shall be given at the sole discretion of such Board
of Directors.
(c) Jillian's Boston and such Grantor will,
in the event that Grantee acquires all or substantially all of the equity
of Jillian's Boston pursuant to the exercise of the Option or the rights of
first refusal set forth in Sections 7 and 8, enter into non-competition and
non-solicitation agreements which contain provisions substantially similar to
those set forth in Sections 10(a) and 10(b) above (except that such
non-competition provisions will only prohibit competition in the City of
Boston, Massachusetts) and which expire on the fourth anniversary of such
acquisition by Grantee.
11. Termination; Effect of Termination. (a) This
Agreement will terminate and be of no further force and effect:
(i) upon the mutual written consent of the parties
hereto;
(ii) upon exercise in full by Grantee of the Option;
(iii) upon termination of the License Agreement in
accordance with its terms, provided that the Exercise Period has expired; or
(iv) upon termination of the Merger
Agreement in accordance with its terms.
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(b) Upon termination of this Agreement pursuant
to Section 11(a) this Agreement shall immediately become void and there shall
be no liability on the part of Grantee, Jillian's Boston or the Grantors in
respect hereof, except for breaches of the representations, warranties and
covenants contained in this Agreement that occur prior to such termination.
12. Miscellaneous. (a) Expenses. Except as otherwise
provided herein, each of the parties hereto shall bear and pay all costs and
expenses incurred by it or on its behalf in connection with the transactions
contemplated hereunder, including fees and expenses of its own financial
consultants, investment bankers, accountants and counsel.
(b) Definitions. For purposes of this Agreement:
(i) "business day" shall mean any day which is
not a Saturday, Sunday or legal holiday in The Commonwealth of Massachusetts;
and
(ii) "affiliate" shall have the meaning
set forth in Rule 12b-2 under the Securities Exchange Act of 1934, as amended.
(c) Waiver and Amendment. Any provision
of this Agreement may be waived at any time by the party that is entitled to
the benefits of such provision. This Agreement may not be modified, amended,
altered or supplemented except upon the execution and delivery of a written
agreement executed by the parties hereto.
(d) Entire Agreement; No Third-Party Beneficiary;
Severability. This Agreement constitutes the entire agreement and
supersedes all prior agreements and understandings, both written and oral,
between the parties with respect to the subject matter hereof and is not
intended to confer upon any person other than the parties hereto any rights or
remedies hereunder. If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction or a federal or state
regulatory agency to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall remain
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in full force and effect and shall in no way be affected, impaired or
invalidated.
(e) Governing Law. This Agreement shall be
governed and construed in accordance with the laws of The Commonwealth of
Massachusetts without regard to any applicable conflicts of law rules.
(f) Descriptive Headings. The descriptive
headings contained herein are for convenience of reference only and shall not
affect in any way the meaning or interpretation of this Agreement.
(g) Notices. All notices and other
communications hereunder shall be in writing and shall be deemed given if
delivered personally, telecopied (with confirmation) or mailed by registered or
certified mail (return receipt requested) to the parties at the following
addresses (or at such other address for a party as shall be specified by like
notice):
If to Grantee to:
Jillian's Entertainment Corporation
000 Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxx
with a copy to:
X.X. Childs Associates, L.P.
Xxx Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxx
If to Grantors or Jillian's Boston to:
Jillian's Billiard Club, Inc.
000 Xxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxx and
Xxxxx Xxxx
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(h) Counterparts. This Agreement and any
amendments hereto may be executed in two or more counterparts, each of which
shall be considered one and the same agreement and shall become effective when
each counterpart has been signed, it being understood that the parties need not
sign the same counterpart.
(i) Assignment. Neither this Agreement nor
any of the rights, interests or obligations hereunder shall be assigned by
any of the parties hereto (by operation of law or otherwise) without the prior
written consent of the other parties; provided, however, that this Agreement
may be assigned by Grantee, without the consent of the other parties, to any
person or entity that acquires all or substantially all of the equity of
Grantee (through a merger, sale of assets, stock purchase or otherwise).
Subject to the preceding sentence, this Agreement shall be binding upon, inure
to the benefit of and be enforceable by the parties and their respective
successors and assigns. As used in this Agreement, Grantee shall include any
person to whom this Agreement or the Option shall be assigned by a previous
Grantee in accordance with the provisions hereof.
(j) Further Assurances. In the event of any
exercise of the Option or the rights of first refusal set forth in Sections 7
and 8, each of the Grantors, Jillian's Boston and Grantee shall execute and
deliver all other documents and instruments and take all other actions that may
be reasonably necessary in order to consummate the transactions provided for by
such exercise.
(k) Specific Performance. The parties hereto
agree that this Agreement may be enforced by either party through specific
performance, injunctive relief and other equitable relief. Both parties further
agree to waive any requirement for the securing or posting of any bond in
connection with the obtaining of any such equitable relief and that this
provision is without prejudice to any other rights that the parties hereto may
have for any failure to perform this Agreement.
(l) Effective Time. Notwithstanding
anything in this Agreement to the contrary, this Agreement shall not be binding
and effective until the Effective Time, except that the provisions of Section
5,
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Section 6 and Section 10 shall be binding and effective as of the date hereof.
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IN WITNESS WHEREOF, the parties hereto have signed this
Option Agreement under seal, all as of the day and year first written above.
JILLIAN'S BILLIARD CLUB, INC.
By:
------------------------------
Name: Xxxxxx X. Xxxxxx
Title:
JILLIAN'S ENTERTAINMENT
CORPORATION
By:
------------------------------
Name: Xxxxxx X. Xxxxx
Title: President and Chief
Operating Officer
---------------------------------
Xxxxxx X. Xxxxxx
---------------------------------
Xxxxx Xxxx
THE XXXXXX FAMILY TRUST
By:
------------------------------
Name:
Title:
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Schedule 1
Schedule of Option Shares
Shareholder Option Shares
Xxxxxx X. Xxxxxx
The Xxxxxx Family Trust
Xxxxx Xxxx
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Schedule 2
Disclosure Schedule
Section 4(a)
[ ]
Section 4(c)(ii)
[ ]
Section 4(d)
[ ]
Section 4(e)
[ ]
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