AGREEMENT
THIS AGREEMENT is made and entered into as of the 31st of October,
1998, by and among XXXXXX ENTERPRISES, INC., a Florida corporation (together
with its wholly owned subsidiaries, CASTLE ROOM, INC., CLEMATIS BISTRO
CORPORATION and SUSHI ENTERPRISES, INC., each a Florida corporation, "SEI"),
MAX'S BEACH GRILL, LTD., a Florida limited partnership ("Unique Beach Place"),
UNIQUE BRICKELL, LTD., a Florida limited partnership ("Unique Riverfront"),
UNIQUE WESTON, LTD., a Florida limited partnership ("Unique Weston") UNIQUE TBA,
LTD., a Florida limited partnership ("Unique TBA"), UNIQUE RESTAURANT CONCEPTS,
INC., a Florida corporation ("URC"), UNIQUE RESTAURANT CONCEPTS, LTD., a Florida
limited partnership ("URCL"), XXXXXX XXX ("Max"), XXXX XXXXXXXX ("Xxxxxxxx"),
XXX XXXXXXXXX ("Xxxxxxxxx"), XXXXXX XXXXXXXX ("Xxxxxx"), XXX XXXXXXXX ("Xxx")
and XXXX XXXXXXX ("Xxxxxxx").
PRELIMINARY STATEMENT
A. Prior to the initial public offering of shares of its common stock
in November, 1997 (the "IPO"), SEI owned two adjacent restaurants on Clematis
Street in West Palm Beach, Florida, known as Xxxxxx Ristorante and My Martini
Grille and was in the planning stage of opening a third restaurant to be known
as Sushi Rok (collectively, the "Wholly Owned Restaurants"). The principal
shareholders and directors of SEI were Xxxxxx, Xxx and Xxxxxxx (collectively,
the "SEI Founding Shareholders").
B. In contemplation of the IPO, SEI entered into that certain Funding
Agreement dated July 1, 1997 with Unique Beach Place, Unique Riverfront, Unique
Weston, URC, Max and URCL (as amended on September 1, 1997 and October 1, 1997,
the "Funding Agreement"). Generally, the Funding Agreement contemplated that SEI
would apply $3 Million of the net proceeds of the IPO to acquire a 51% equity
interest in Unique Beach Place, Unique Weston, Unique Riverfront and a fourth
entity to be formed, subsequently organized as Unique TBA. Each of the foregoing
partnerships (sometimes hereinafter collectively referred to as the "Operating
Partnerships") was organized to own a single restaurant, each of which
restaurants would generally replicate the Max's Grill concept previously
developed by URC. In addition, the Funding Agreement included provisions
relating to the management structure of SEI and the Operating Partnerships and,
by execution of a Joinder to the Funding Agreement, the SEI Founding
Shareholders agreed to vote their capital stock in SEI consistent with the
provisions of the Funding Agreement. It was further contemplated by the parties
that the restaurants to be owned by the Operating Partnerships and the Wholly
Owned Restaurants would be managed by URC.
C. As contemplated by the Funding Agreement, Max, Xxxxxxxx and
Xxxxxxxxx (collectively, the "Unique Principals") became members of the Board of
Directors of SEI, constituting 50% of the entire Board. The intention of the
parties to the Funding Agreement was that the financial performance of the
Operating Partnerships would be consolidated, on a line item basis,
with SEI's financial statements and the Funding Agreement was structured to
accomplish that. After closing of the IPO, the Unique Principals learned that,
because of their positions on the Board of Directors of SEI and their
affiliation with URC, the entity that would manage all of the restaurants in
which SEI had an interest, the United States Securities and Exchange Commission
had concluded that the financial results of the Operating Partnerships could not
be consolidated with those of SEI on a line item basis. The principal
underwriter for the IPO advised that it would be in the best interests of SEI
and its shareholders if such consolidation could be permitted. It was suggested
that one method by which this might be accomplished would be if the Unique
Principals caused other restaurant assets held by their affiliated entities to
be acquired by SEI in return for shares that would result in the Unique
Principals owning, directly or indirectly, a controlling interest in SEI. This
would not only permit consolidation of the financial results of the Operating
Partnerships, but would also avoid future conflicts that could arise from a
voting deadlock between the Unique Principals and SEI Founding Shareholders on
SEI's Board of Directors.
D. In April, 1998, the Unique Principals, Patti Max (Max's wife) and SEI entered
into a Letter of Intent with respect to a merger transaction pursuant to which
the Unique Principals would cause numerous additional restaurant assets,
including their interests in the Operating Partnerships, to be merged into SEI.
The Letter of Intent contemplated that the Unique Principals would receive cash
and a majority stock position in SEI as a result of the transaction. In
addition, the Letter of Intent contempleated that SEI would complete a secondary
offering to provide additional capital for expansion of the Max's Grill concept.
E. After several months of negotiations, SEI and the Unique Principals
have determined to abandon their efforts to consummate the transactions
contemplated by the Letter of Intent. Changes in market conditions and the
resultant impact on valuations and SEI's ability to raise capital were the
principal obstacles to the ability to consummate a merger transaction of the
nature contemplated by the Letter of Intent. The protracted negotiations also
highlighted conflict of interest issues in the existing management structure
because of the difficulties of the SEI Founding Shareholders and the Unique
Principals sharing positions on SEI's Board of Directors while SEI was seeking
to negotiate transactions with the Unique Principals and while URC was managing
SEI's restaurants.
F. In view of the failed merger efforts, the parties discussed
alternative solutions and have reach an agreement that, it is believed, will
permit complete consolidation of the financial results of the Operating
Partnerships with those of SEI and eliminate conflicts of interests between the
Unique Principals and SEI. Generally, the agreement involves revising the SEI
corporate management structure so that the Unique Principals will not
participate therein. In addition, the parties have agreed to certain changes in
the manner in which the Wholly Owned Restaurants will be operated and have
agreed to resolve certain other pending issues.
NOW, THEREFORE, the parties hereto intending to be legally bound
hereby, for good and valuable consideration the receipt, adequacy and
sufficiency of which are hereby acknowledged, agree as follows:
1. Incorporation of Recitals; Exhibits. The parties hereby agree that
the factual matters set forth in the above recitations are true and correct and
are hereby incorporated into the Agreement. All exhibits referred to as being
annexed hereto are hereby incorporated by this reference into the Agreement as
if fully set forth at length herein.
2. SEI Board Restructuring.
2.1 Cancellation of Joinder. The Unique Principals, the Operating
Partnership, URC and URCL hereby agree with the SEI Founding Shareholders to
cancel the Joinder executed by the SEI Founding Shareholders so that, from and
after the date hereof, the SEI Founding Shareholders, their successors and
assigns, shall have no obligation to vote their capital stock in SEI in favor of
any of the Unique Principals being elected to the Board of Directors of SEI.
Paragraph 2 of the Funding Agreement (as amended in Paragraph 3 of the Second
Amendment to the Funding Agreement) is hereby deleted therefrom in its entirety.
2.2 Resignations. The Unique Principals shall execute and deliver to
SEI resignations of their positions as members of the Board of Directors and as
officers of SEI effective as of the close of business on October 31, 1998.
2.3 Release and Indemnification. SEI shall, simultaneously with the
execution hereof, execute and deliver to the Unique Principals a Release and
Indemnification Agreement in form of Exhibit A.
2.4 Advisory Services. Max agrees that, until October 31, 1999, Max
shall be available to provide advisory services to SEI and shall serve on an
Advisory Board of SEI if one is created; provided, however, that SEI
acknowledges that the foregoing will only require an insubstantial amount of
Max's time and will not interfere with Max's principal employment as President
of URC.
3. Matters Affecting the Operating Partnerships.
3.1 Consent to Assignment. URCL has heretofore assigned its limited
partnership interests in each of the Operating Partnerships to Unique SEI
Holdings, Inc. ("Unique SEI Holdings") pursuant to four Assignment and
Contribution Agreements each dated as of the 31st day of January, 1998.
Simultaneously with the execution hereof, the SEI Founding Shareholders shall
cause the corporate general partner of each of the Operating Partnerships to
execute and deliver a consent to these assignments, which consents had
previously been verbally given but which had heretofore not been delivered in
writing.
3.2 Amendments to Partnerships Agreements. Simultaneously with the
execution hereof, the Unique Principals shall cause Unique SEI Holdings to
execute and deliver, the SEI Founding Shareholders shall cause the corporate
general partners of each of the Operating Partnerships to
execute and deliver, and SEI shall execute and deliver an amendment to the
limited partnership agreements of each of the Operating Partnerships in the form
annexed hereto as Exhibit B.
3.3 Union TBA. As of the date hereof, Unique TBA has not selected a
location for establishment of a Max's Grill restaurant, although a portion of
the $3 Million committed by SEI to the Operating Partnerships has been
allocated, as SEI's capital contribution ("TBA Capital"), to Unique TBA. The
parties hereby agree that in the event SEI's Board of Directors has not voted to
proceed with a designated location ("Location Vote") for development of Unique
TBA's Max's Grill restaurant by June 30, 1999, either Unique SEI Holdings or SEI
may elect to dissolve, liquidate and terminate Unique TBA by giving written
notice of its election to do so any time after June 30, 1999 and prior to a
Location Vote. Upon either of such party's election to terminate Unique TBA, the
parties shall cooperate in promptly liquidating Unique TBA with the TBA Capital
being returned to SEI which may thereafter use the TBA Capital for any purpose
deemed appropriate by SEI.
3.4 Management and License Unaffected. Each of the Operating
Partnerships has entered into a License Agreement dated as of December 30, 1997
with URC (the "License Agreements") and all four Operating Partnerships entered
into a Management Agreement dated as of December 30, 1997 with URC (the
"Operating Partnerships Management Agreement"). The License Agreements and the
Operating Partnerships Management Agreement are not affected by this Agreement
and remain in full force and effect.
4. Wholly Owned Restaurants.
4.1 Termination of Management and Consulting Agreement. URC has
heretofore provided certain management and consulting services for the benefit
of the Wholly Owned Restaurants pursuant to a Management and Consulting
Agreement dated June 1, 1997 between URC and SEI, as amended by an Addendum
thereto dated December 30, 1997 (collectively, the "Management Agreement"). The
Management Agreement, by its terms, expired on May 31, 1998, although the
parties operated pursuant to the Management Agreement thereafter while
continuing to negotiate the possible merger transaction. The parties hereby
agree that, as of the close of business on October 31, 1998, URC shall cease
providing management and consulting services to the Wholly Owned Restaurants
and, from and after that date, the Management Agreement shall be terminated and
neither SEI nor URC shall have any further obligations thereunder. SEI and URC
hereby mutually release each other from any and all claims arising under the
Management Agreement and the relationship created thereby.
4.2 Non-solicitation. URC, URCL, the Unique Principals and each entity
in the restaurant or bakery business affiliated with the Unique Principals
(collectively, the "Unique Parties") hereby agree that, without the express
written consent of SEI: (i) for a period ending twelve (12) months after the
date of this Agreement, the Unique Parties shall not solicit for employment any
of the individuals that, as of the date hereof, are employed by any of the
Wholly Owned Restaurants; and (ii) for a period of six (6) months from the date
hereof, the Unique Parties shall not employ any
individual employed, as of the date hereof, by any of the Wholly Owned
Restaurants (whether or not such person has terminated his employment with a
Wholly Owned Restaurant).
4.3 Payroll Services. Notwithstanding termination of the Management
Agreement, URC shall continue to perform the accounting services it performed
pursuant to the Management Agreement until close of the current financial period
in the third week of November, 1998, and shall continue to perform the payroll
services it performed pursuant to the Management Agreement for the Wholly Owned
Restaurants until December 31, 1998. URC shall also generate for SEI the forms,
such as W-2's, required to satisfy Internal Revenue Service year-end
requirements relating to payroll.
4.4 Miscellaneous. URC hereby consents to, and will not seek to impede,
SEI's efforts to hire Xxxxxxx Xxxxxx who is presently an employee of URC;
provided, however, that URC intends to continue employing Xx. Xxxxxx if she
elects not to accept an offer from SEI. SEI shall be entitled to remove from
URC's offices the items identified in Exhibit C annexed thereto.
5. Financial Matters. The parties hereto have heretofore raised
numerous claims with respect to financial issues between them including, without
limitation, matters relating to the employment and termination of a shared
accounting executive, Transmedia public relations matters, pre-opening expenses
charged to Unique Riverfront, vendor rebates, possible employee defalcations at
Xxxxxx Ristorante, the decision to renovate My Martini and the cost thereof,
management fees paid to date pursuant to the Management Agreement and URC's
preclusion from earning more substantial management fees during the busy season
as a result of termination of the Management Agreement, reasonable compensation
to Max for performance of ongoing advisory services to SEI, the cost of
architectural plans and specifications relating to renovations of Xxxxxx
Ristorante and legal fees and expenses incurred in connection with SEI's
potential acquisition of another restaurant and negotiation of the merger
transaction. After consideration and analysis of each of these claims, the
parties have determined that the respective claims are approximately equal and,
accordingly, all monetary claims between SEI, the SEI Founding Shareholders and
each of the Operating Partnerships, on the one hand, and the Unique Parties, on
the other hand, have been fully resolved so that neither is indebted to the
other and each hereby releases the other from any such claims including, without
limitation, those enumerated herein.
6. Representations and Warranties. Each party to this Agreement hereby
represents and warrants to the other parties to this Agreement as follows:
6.1 Due Organization. To the extent that such party is an entity, it is
a duly organized and validly existing partnership or corporation under the laws
of the State of Florida and has the power and lawful authority to own its
properties and to transact the business in which it is currently engaged.
6.2 Power and Authority. To the extent that such party is an entity, it
has full corporate or partnership power and authority to enter into this
Agreement and to carry out the transactions
contemplated hereby. To the extent that such party is an individual, the
individual has the legal capacity to enter into this Agreement and to carry out
the transactions contemplated hereby. The execution, delivery and performance of
this Agreement and the other agreements, documents and instruments required to
be delivered pursuant to this Agreement and the consummation of the transactions
contemplated by this Agreement and each of such agreements, documents and
instruments have been duly and validly authorized by such party. No other acts
or proceedings on the part of such party are necessary to authorize the
performance of this Agreement and the other agreements, documents and
instruments required to be delivered pursuant to this Agreement.
6.3 Valid and Binding Obligation. This Agreement and agreements,
documents and instruments required to be delivered pursuant to this Agreement
are valid and binding obligations of such party enforceable against such party
in accordance with their respective terms, except as limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other laws of general
application relating to creditors' rights or by the application of equitable
principles when equitable remedies are sought.
6.4 No Violation. Neither the execution, delivery or performance of
this Agreement or the agreements, documents and instruments required to be
delivered pursuant to this Agreement, nor the consummation of the transactions
contemplated hereby or thereby, will:
(a) violate or conflict with any provision of the partnership
agreement or articles of incorporation or bylaws of such party if it is an
entity;
(b) result in a breach of, or default (or an event which, with
notice or lapse of time or both, would constitute a default) under any note,
bond, mortgage, contract or other instrument or obligation to which such party
is bound; or
(c) violate any order, judgment, writ, injunction, decree, or any
law, statute, rule, ordinance or regulation applicable to such party.
7. Miscellaneous.
7.1 Amendment. The parties hereby irrevocably agree that no attempted
amendment, modification, termination, discharge or change of this Agreement
shall be valid and binding unless the parties shall unanimously agree in writing
to such amendment.
7.2 Notices. Any notice required or permitted to be delivered under the
provisions of this Agreement shall be deemed delivered, whether actually
received or not, when deposited in a United States Postal Service Depository,
postage prepaid, registered or certified, return receipt requested, and
addressed to the Partner at the address set forth below, or such other address
as shall be specified by written notice delivered to the Partnership:
If to SEI or SEI 000 Xxxxxxxx Xxxxxx
Founding Suite 202
Shareholders: Xxxx Xxxx Xxxxx, Xxxxxxx 00000
with a copy to: De Martino, Finkelstein, Rose & Xxxxx
0000 Xxxxx Xxxxxx, X.X., Xxxxx 000
Xxxxxxxxxx, X.X. 00000
Attention: Xxxxx X. Xx Xxxxxxx, Esq.
If to Unique Unique Restaurant Concepts, Inc.
Parties: 0000 Xxxx Xxxxxxxx Xxxx Xxxx, Xxxxx 000
Xxxx Xxxx, Xxxxxxx 00000
Attention: Xxxxxx Xxx, President
with a copy to: Xxxxx, McClosky, Smith, Xxxxxxxx & Xxxxxxx, P.A.
X.X. Xxx 0000
Xxxx Xxxxxxxxxx, Xxxxxxx 00000
Attention: Xxxxxxx X. Xxxx, Esq.
All notices, demands and requests shall be effective upon being
deposited in the United States mail. However, the time period in which a
response to any such notice, demand or request must be given shall commence to
run from the date of receipt on the return receipt of the notice, demand or
request by the addressee thereof or the date of actual receipt in the case of
delivery by other means. Rejection or other refusal to accept or the inability
to deliver because of changed address of which no notice was given shall be
deemed to be receipt of the notice, demand or request when sent.
7.3 Further Assurances. The parties will execute and deliver such
further instruments and do such further acts and things as may be required to
carry out the intent and purposes of this Agreement.
7.4 Headings. The headings of the various sections of this Agreement
are intended solely for convenience of reference, and shall not be deemed or
construed to explain, modify or place any construction upon the provisions
hereof.
7.5 Successors and Assigns. This Agreement and any amendments hereto
shall be binding upon and, to the extent expressly permitted by the provisions
hereof, shall inure to the benefit of the parties, their respective successors
and assigns.
7.6 Applicable Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Florida, and agreed upon venue, to
the extent permitted by law, shall be Palm Beach County, Florida.
7.7 Entire Agreement. This Agreement sets forth all (and is intended by
all parties hereto to be an integration of all) of the promises, agreements,
conditions, understandings, warranties and representations among the parties
hereto and supersedes any and all prior and contemporaneous promises,
agreements, conditions, understandings, warranties or representations, oral or
written, express or implied, except as set forth herein.
7.8 Counterparts. This Agreement and any amendments hereto may be
executed in counterparts, each of which shall be deemed an original, and such
counterparts shall constitute but one and the same instrument.
7.9 Gender. Wherever the context requires, any pronoun used herein may
be deemed to mean the corresponding masculine, feminine or neuter in form
thereof and the singular form of any nouns and pronouns herein may be deemed to
mean the corresponding plural and vice versa as the case may require.
7.10 No Third Party Beneficiary. This Agreement is made solely and
specifically among and for the benefit of the parties hereto, and their
respective successors and assigns subject to the express provisions hereof
relating to successors and assigns, and no other person shall have any rights,
interest or claims hereunder or be entitled to any benefits under or on account
of this Agreement as a third party beneficiary or otherwise.
7.11 Prevailing Party; Attorney's Fees. In the event that any
litigation, arbitration or similar administrative or judicial proceeding arises
between the parties with respect to the interpretation or enforcement of this
Agreement, the parties hereto that are the prevailing parties in such proceeding
shall be entitled to recover from the parties hereto that are the non-prevailing
parties in such proceeding, their reasonable attorney's and paralegal fees and
expenses for all negotiations, proceedings and appeals therefrom, and any
post-judgment or award enforcement actions, including bankruptcy proceedings,
related thereto.
[THIS SPACE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, this Agreement has been executed and delivered as
of the day and year first above written.
XXXXXX ENTERPRISES, INC., a Florida corporation
By: Xxxxxx X. Xxxxxxxx, Xx.
Title: President
CASTLE ROOM, INC., a Florida corporation
By: Xxxx X. Xxxxxxx
Title: President
CLEMATIS BRISTRO CORPORATION, a Florida corporation
By: Xxxx X. Xxxxxxx
Title: President
SUSHI ENTERPRISES, INC., a Florida corporation
By: Xxxx X. Xxxxxxx
Title: President
MAX'S BEACH GRILL, LTD., a Florida limited
partnership
By: Max's Beach Grille, Inc., a Florida
corporation, its General Partner
By: Xxxxxx Xxx
Title: President
UNIQUE BRICKELL, LTD., a Florida limited
partnership
By: Unique Brickell, Inc., a Florida corporation,
its General Partner
By: Xxxxxx Xxx
Title: President
UNIQUE WESTON, LTD., a Florida limited partnership
By: Unique Weston, Inc., a Florida corporation,
its General Partner
By: Xxxxxx Xxx
Title: President
UNIQUE TBA, LTD., a Florida limited partnership
By: Unique TBA, Inc., a Florida corporation, its
General Partner
By: Xxxxxx Xxx
Title: President
UNIQUE RESTAURANT CONCEPTS, INC., a Florida
corporation
By: /s Xxxxxx Xxx
Title: President
UNIQUE RESTAURANT CONCEPTS, LTD., a Florida
limited partnership
By: Unique Restaurant Concepts, Inc., its general
partner
By: /s Xxxxxx Xxx
Title: President
/s XXXXXX XXX
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XXXXXX XXX
/s XXXX XXXXXXXX
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/s XXX XXXXXXXXX
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XXX XXXXXXXXX
/s XXXXXX XXXXXXXX
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XXXXXX XXXXXXXX
/s XXX XXXXXXXX
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XXX XXXXXXXX
/s XXXX XXXXXXX
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EXHIBIT A
Release and Indemnification Agreement
