Exhibit 10.21
POST-CLOSING PAYMENTS AGREEMENT
This POST-CLOSING PAYMENTS AGREEMENT (the "Agreement") is dated as of
January __, 1998 among DAKA INTERNATIONAL, INC., a Delaware corporation
("International"), DAKA, INC., a Massachusetts corporation ("Daka"), COMPASS
GROUP PLC, a public limited company incorporated in England and Wales
("Compass"), COMPASS HOLDINGS, INC., a Delaware corporation ("Compass
Holdings"), UNIQUE CASUAL RESTAURANTS, INC., a Delaware corporation ("UCRI"),
CHAMPPS ENTERTAINMENT, INC., a Minnesota corporation ("Champps"), and
FUDDRUCKERS, INC., a Texas corporation ("Fuddruckers").
RECITALS
WHEREAS, under the terms of an Agreement and Plan of Merger dated as of
May 27, 1997 (the "Merger Agreement"), by and among Compass, Compass Holdings,
Compass Interim, Inc. ("Compass Interim") and International, International
agreed to transfer its restaurant business to UCRI, and Compass Holdings agreed
to commence a tender offer for the shares of International and to thereafter
cause the merger of International into Compass Interim (the "Acquisition"); and
WHEREAS, as a part of the transactions described in the Merger
Agreement, the following agreements were entered into: (a) the Reorganization
Agreement, dated as of May 27, 1997, among International, Daka, UCRI, Compass
and Compass Holdings (the "Reorganization Agreement"), (b) the Tax Allocation
Agreement, dated as of May 27, 1997, among International, UCRI and Compass (the
"Tax Allocation Agreement"), (c) the Post-Closing Covenants Agreement, dated as
of May 27, 1997, among International, UCRI, Champps, Fuddruckers, Compass and
Compass Holdings (the "PCCA"), and (d) the Transition Agreement, dated as of
July 17, 1997, among UCRI, International and Compass (the "Transition
Agreement") (collectively, the "Ancillary Agreements"); and
WHEREAS, the Merger Agreement and Ancillary Agreements specify certain
actions to be taken following the effective date of the Acquisition, including
but not limited to certain payments and purchase price adjustments pursuant to
Articles IV and V, respectively, of the PCCA; and
WHEREAS, the parties to this Agreement have determined to set forth the
amount of such post-closing payments, the method of payment and certain other
post-closing matters;
NOW, THEREFORE, in consideration of the premises, and of the terms and
conditions set forth herein, the parties hereto agree as follows:
Section 1. Trade Receivables and Obligations Settlement. The parties
agree as follows:
(a) Attached hereto as Schedule 1(a) and Schedule 6 is a
complete and accurate list of all Trade Receivables delivered by Daka
to UCRI, as of the date hereof, pursuant to Section 4.8(a) of the PCCA.
The parties acknowledge that payment with respect to the Trade
Receivables set forth in Schedule 1(a) may be received by Daka as the
named account creditor or by Compass as the successor to International.
The parties agree that any payment received by Compass, Daka or
International with respect to such Trade Receivables shall be remitted
to UCRI not later than the third business day following receipt and
that Compass shall have no right of set-off whatsoever against any such
amount.
(b) Attached as Schedule 1(b) is a complete and accurate
description of all Obligations delivered by Daka to UCRI, as of the
date hereof, pursuant to Section 4.8(a) of the PCCA.
(c) The amount to be remitted by UCRI to Compass under Section
4.8(a) of the PCCA is $3,800,000.
(d) Each party has performed fully, to the other party's
satisfaction, all duties and obligations set forth in Article IV of the
PCCA, and all further performance obligations thereunder shall hereby
cease, including without limitation Compass' obligation to collect any
Trade Receivables, to pay any Obligations or to otherwise act in any
capacity as agent on behalf of UCRI in connection therewith.
Notwithstanding the foregoing, Compass' and UCRI's respective
performance obligations under Section 4.8(b) of the PCCA shall remain
in effect, as provided therein.
Section 2. Balance Sheet and Managed Volume/Profit Adjustments. The
parties agree that the aggregate amount to be paid by UCRI to Compass pursuant
to Sections 5.2 and 5.3 of the PCCA is $15,000,000.
Section 3. Amount and Method of Payment. The parties agree as follows:
(a) The methods described in Sections 4.8(a) and 5.4 of the
PCCA for determining the amounts of payments and the method of payment
under Articles IV and V of the PCCA are no longer in force and effect
and are superseded in their entirety by this Agreement. In addition,
Sections 5.6, 5.10, 5.11, 5.12 and 5.13 of the Transition Agreement are
superseded in their entirety by this Agreement.
(b) The aggregate amount of $18,800,000 owing by UCRI to
Compass pursuant to Articles IV and V of the PCCA (the "Post-Closing
Payment"), as described in Sections 1 and 2 hereof, shall be paid as
follows:
(i) Retained Cash (Section 4) $4,200,000
(ii) Tax Refund (Section 5) 6,300,000
(iii) Assigned Trade Receivables (Section 6) 4,200,000
(iv) Assigned UCRI Accounts (Section 7) 2,300,000
(v) Assigned Tax Benefits (Section 8) 8,000,000
(vi) Assigned Rebates (Section 9) 200,000
(vii) Agreed Discount (Section 10) (6,400,000)
-----------
Total $18,800,000
(c) UCRI will have no rights or interests in any assets (or
any portions thereof) assigned by UCRI to Compass and credited against
the Post-Closing Payment pursuant to this Agreement to the extent that
the aggregate value of such asset exceeds $18,800,000, or otherwise.
Compass will have no rights or interests in any assets (or any portion
thereof) assigned by UCRI to Compass and credited against the
Post-Closing Payment pursuant to this Agreement to the extent that the
aggregate value of such asset is less than $18,800,000, or otherwise.
Except for any Assigned UCRI Account that is evidenced by a note and is
to be delivered to Compass pursuant to Section 7 below, Compass
acknowledges and agrees that it is in possession of all cash or other
assets to be conveyed or delivered by UCRI to Compass pursuant to this
Agreement.
Section 4. Retained Cash. The parties agree that the amount of cash in
the possession of Compass that is classified as UCRI Assets pursuant to Section
1.1 of the Reorganization Agreement equals $4,200,000. The parties further agree
that ownership of such cash amount of $4,200,000 has been conveyed to Compass
(the "Retained Cash") pursuant to that certain Conveyance and Assignment
Agreement, dated as of the date hereof, between UCRI and Compass Holdings (the
"Conveyance and Assignment Agreement") and will be credited against the Post-
Closing Payment as specified in Section 3(b) hereof.
Section 5. Tax Refund. The parties agree that (a) the Refund (as
defined in that certain letter from UCRI to Compass, dated July 14,1997) equals
$6,300,000 and has been received and retained by Compass in accordance with
Compass' lien on and security interest therein, (b) the Refund has been conveyed
to Compass pursuant to the Conveyance and Assignment Agreement and will be
credited against the Post-Closing Payment as specified in Section 3(b) hereof,
and (c) UCRI shall have no further rights to or claims on the Refund as a UCRI
Asset pursuant to the Tax Allocation Agreement or otherwise.
Section 6. Assigned Trade Receivables. Attached as Schedule 6 is a list
of trade receivables that have been assigned by UCRI to Compass (the "Assigned
Trade Receivables") pursuant to the Conveyance and Assignment Agreement. The
parties agree that $4,200,000 will be credited against the Post-Closing Payment
as specified in Section 3(b) hereof in consideration for such assignment. The
parties further agree that all client advances related to the Assigned Trade
Receivables are the responsibility of Compass, and UCRI will have no liability
in connection therewith.
Section 7. Assigned UCRI Accounts. Attached as Schedule 7 is a list of
certain notes receivable and accounts that have been assigned by UCRI to Compass
(the "Assigned UCRI Accounts") pursuant to the Conveyance and Assignment
Agreement. To the extent that any Assigned UCRI Account is evidenced by a note,
each such note has been endorsed by UCRI and delivered to Compass. The parties
agree that $2,300,000 will be credited against the Post-Closing Payment as
specified in Section 3(b) hereof in consideration for such assignment.
Section 8. Assigned Tax Benefits. Section 3.2(c) of the Tax Allocation
Agreement provides that Compass shall pay to UCRI the amount of the Income Tax
Benefit (as defined therein) associated with any Carryforward Item (as defined
therein). UCRI has assigned its rights to any such payment under Section 3.2(c)
(the "Assigned Tax Benefits") pursuant to the Conveyance and Assignment
Agreement. The parties agree that $8,000,000 will be credited against the
Post-Closing Payment as specified in Section 3(b) hereof in consideration for
such assignment.
Section 9. Assigned Rebates. Attached as Schedule 9 is a list of
certain rebates that were classified as UCRI Assets, which rebates have been
assigned by UCRI to Compass (the "Assigned Rebates") pursuant to the Conveyance
and Assignment Agreement. The parties agree that $200,000 will be credited
against the Post-Closing Payment as specified in Section 3(b) hereof in
consideration for such assignment.
Section 10. Agreed Discount. In lieu of an itemized valuation of the
Refund, the Assigned Trade Receivables, the Assigned UCRI Accounts, the Assigned
Tax Benefits and the Assigned Rebates, the parties have assigned an aggregate
discount of $6,400,000 to such items.
Section 11. Xxxxxxxxx Claim. As a condition to the various agreements
of the parties contained in this Agreement and in furtherance thereof, the
parties each acknowledge and agree as follows:
(a) UCRI (i) in accordance with the Stipulation and Agreement
of Settlement, dated December 19, 1997, among Xxxxxxx Xxxxx & Xxxx LLP,
Xxxxxxx Xxxxx Xxxxxxx Xxxxx & Xxxxxx LLP, Schiffrin & Xxxxx, Ltd. and
Law Offices of Xxxxxx X. Xxxxx, Xx. (collectively as counsel for the
Plaintiffs) and Xxxxxxx, Procter & Xxxx LLP (as counsel for the
Defendants) and Daka International, Inc. (the "Settlement Agreement"),
and in accordance with the Supplemental Agreement, dated December 15,
1997, among the parties listed above (together with the Settlement
Agreement, the "Xxxxxxxxx Agreements"), has directed National Union
Fire Insurance Company of Pittsburgh, PA (the "Insurer") to proceed
promptly to complete the settlement (the "Xxxxxxxxx Settlement") of the
Xxxxxxxxx Claim (as defined in Section 2.1(d) of the PCCA) and to pay
all settlement amounts as directed in the final approval of the
Xxxxxxxxx Settlement by the United States District Court for the
District of Massachusetts (the "Court"), (ii) in accordance with the
Xxxxxxxxx Agreements, has directed its counsel to immediately take all
actions required to complete the Xxxxxxxxx Settlement and will not
withdraw or modify these instructions, (iii) has fully complied with
all requests to date of plaintiff's counsel in the Xxxxxxxxx Claim for
confirmatory discovery so that no further discovery is necessary to
complete the Xxxxxxxxx Settlement, except as may be directed by the
Court after the date hereof, and (iv) has notified, or has caused its
counsel to notify, the Court in writing that the Xxxxxxxxx Claim has
been settled and has filed an appropriate motion seeking court
approval of the Xxxxxxxxx Settlement.
(b) UCRI will promptly take all actions necessary and to
otherwise use all commercially reasonable efforts to cause the
Xxxxxxxxx Settlement to be completed as soon as practical in accordance
with the Xxxxxxxxx Agreements.
Section 12. Miscellaneous.
(a) UCRI makes no representations or warranties regarding the
condition or value of the Tax Refund, the Assigned Trade Receivables,
the Assigned UCRI Accounts, the Assigned Tax Benefits or the Assigned
Rebates, and Compass agrees that it takes such assets as is.
(b) Except as otherwise expressly amended or modified by this
Agreement, the Merger Agreement and the Ancillary Agreements shall
remain in full force and effect, including without limitation (i)
UCRI's obligations pursuant to the Transition Agreement regardless of
whether UCRI relocates its corporate headquarters and (ii) UCRI's
obligations pursuant to the Tax Allocation Agreement to provide to
Compass access to tax personnel and records. The parties hereto may
modify or amend this Agreement only by written agreement executed and
delivered by duly authorized officers of the respective parties.
(c) No delay on the part of any party hereto in exercising any
right, power or privilege hereunder will operate as a waiver thereof,
nor will any waiver on the part of any party hereto of any right, power
or privilege hereunder operate as a waiver of any other right, power or
privilege hereunder, nor will any single or partial exercise of any
right, power or privilege hereunder preclude any other or further
exercise thereof or the exercise of any other right, power or privilege
hereunder. No waiver will be effective hereunder unless it is in
writing. Unless otherwise provided, the rights and remedies herein
provided are cumulative and are not exclusive of any rights or remedies
which the parties may otherwise have at law or in equity.
(d) For the convenience of the parties, this Agreement may be
executed in any number of separate counterparts, each such counterpart
being deemed to be an original instrument, and all such counterparts
shall together constitute the same agreement.
(e) THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF
DELAWARE APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED
ENTIRELY WITHIN SUCH STATE, WITHOUT REGARD TO THE CONFLICTS
OF LAW PRINCIPLES OF SUCH STATE.
(f) Any notice, request, instruction or other communication to
be given hereunder by any party to any other shall be in writing and
shall be deemed to have been duly given (i) on the date of delivery if
delivered personally, or by telecopy or telefacsimile, upon
confirmation of receipt, (ii) on the first business day following the
date of dispatch if delivered by Federal Express or other nationally
reputable next-day courier service, or (iii) on the third business day
following the date of mailing if delivered by registered or certified
mail, return receipt requested, postage prepaid. All notices hereunder
shall be delivered as set forth below, or pursuant to such other
instructions as may be designated in writing by the party to receive
such notice:
(i) If to UCRI, Champps or Fuddruckers:
Unique Casual Restaurants, Inc.
One Corporate Place
00 Xxxxxxxxx Xxxx
Xxxxxxx, Xxxxxxxxxxxxx 00000-0000
Attention: General Counsel
(ii) If to Compass, International or Daka:
Compass Group USA, Inc.
0000 Xxxxxxxx Xxxx
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
Attention: General Counsel
(g) The Merger Agreement, the Ancillary Agreements, the
Confidentiality Agreement , the Assignment of Debt and Collateral by
UCRI, dated November 20, 1997, and this Agreement constitute the entire
agreement, and supersede all other prior agreements, understandings,
representations and warranties, both written and oral, among the
parties, with respect to the subject matter hereof and thereof.
(h) No party to this Agreement shall convey, assign or
otherwise transfer any of its rights or obligations under this
Agreement without the express written consent of the other parties
hereto in their sole and absolute discretion, except that any party
hereto may assign any of its rights hereunder to a successor to all or
any part of its business. Except as aforesaid, any such conveyance,
assignment or transfer without the express written consent of the other
parties shall be void ab initio. No assignment of this Agreement shall
relieve the assigning party of its obligations hereunder.
(i) If any provision of this Agreement or the application
thereof to any person or circumstance is determined by a court of
competent jurisdiction to be invalid, void or unenforceable, the
remaining provisions hereof, or the application of such provision to
persons or circumstances other than those as to which it has been held
invalid or unenforceable, shall remain in full force and effect and
shall in no way be affected, impaired or invalidated thereby, so long
as the economic or legal substance of the transactions contemplated
hereby is not affected in any manner adverse to any party.
Upon any such determination, the parties shall negotiate in good faith
in an effort to agree upon a suitable and equitable substitute
provision to effect the original intent of the parties.
(j) Nothing contained in this Agreement is intended to confer
upon any person or entity other than the parties hereto and their
respective successors and permitted assigns, any benefit, right or
remedies.
(k) (i) The parties agree that irreparable damage would occur
in the event that any of the provisions of this Agreement were
not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that the parties
shall be entitled to an injunction or injunctions to prevent
breaches of this Agreement and to enforce specifically the
terms and provisions of this Agreement, this being in addition
to any other remedy to which they are entitled at law or in
equity.
(ii) Except for claims barred by the applicable
statute of limitations (which may not be pursued by the
parties in any judicial, arbitral or other forum), any and all
disputes between the parties that arise out of or relate to
this Agreement or any other agreement between the parties
entered into in connection herewith or the transactions
contemplated hereby or thereby, and which cannot be amicably
settled, shall be determined solely and exclusively by
arbitration administered by the American Arbitration
Association ("AAA") under its commercial arbitration rules for
such disputes at its office in Boston, Massachusetts. The
parties expressly, unconditionally and irrevocably waive any
right to recision, repudiation or any similar remedy in any
legal action hereunder. The arbitration panel (the "Panel")
shall be formed of three arbitrators approved by the AAA, one
to be appointed by Compass, one to be appointed by UCRI, and
the third to be appointed by the first two or, in the event of
failure to agree within 30 days, by the President of the AAA.
Judgment on the award rendered by the Panel may be entered in
any court having jurisdiction thereof.
(iii) To the extent a court action is authorized
above, the parties hereby consent to the jurisdiction of the
United States District Court of Delaware. Each of the parties
waives personal service to any and all process upon them and
each consents that all such service of process be made by
certified mail directed to them at their address shown in
Section 12(e) hereof. THE PARTIES WAIVE TRIAL BY JURY AND
WAIVE ANY OBJECTION TO VENUE OF ANY ACTION INSTITUTED
HEREUNDER.
(l) Each party hereto agrees to cooperate reasonably with the
other parties, and to execute and deliver, or use its reasonable best
efforts to cause to be executed and delivered, all instruments and
documents and to take all such other actions as such party may
reasonably be requested to take by any other party hereto from time to
time, consistent with the terms of this Agreement, in order to
effectuate the provisions and purposes of this Agreement.
IN WITNESS WHEREOF, this Agreement has been duly executed and delivered
by the duly authorized officers of the parties hereto on the date first
hereinabove written.
DAKA INTERNATIONAL, INC.
By:
Title:
UNIQUE CASUAL RESTAURANTS, INC.
By:
Title:
DAKA, INC.
By:
Title:
CHAMPPS ENTERTAINMENT, INC.
By
Title:
FUDDRUCKERS, INC.
By:
Title:
COMPASS GROUP PLC
By:
Title:
COMPASS HOLDINGS, INC.
By:
Title:
