SETTLEMENT AND RELEASE AGREEMENT
THIS SETTLEMENT AND RELEASE AGREEMENT dated as of September 2, 1999
executed and delivered by and among HARRY'S FARMERS MARKET, INC., a Georgia
corporation ("HFMI"), MARTHASVILLE TRADING COMPANY, INC., a Georgia corporation
("Marthasville"), KARALEA, INC., a Georgia corporation ("Karalea"), XXXXX
XXXXXX, an individual ("Blazer"; Blazer, HFMI, Marthasville and Karalea are
sometimes collectively referred to as the "HFMI Parties"), PROGRESSIVE FOOD
CONCEPTS, INC. (formerly known as HFMI Acquisition Corporation), a Delaware
corporation and a debtor in possession in the bankruptcy cases described below
("PFCI") and BOSTON CHICKEN, INC., a Delaware corporation and a debtor in
possession in the bankruptcy cases described below ("BCI"; BCI and PFCI are
sometimes collectively referred to as the "BCI Parties").
Recitals
1. PFCI and HFMI entered into that certain Transaction Agreement, dated
January 31, 1997 (the "Transaction Agreement"), which created certain rights and
obligations and outlined a series of transactions and agreements to be entered
into between them.
2. Pursuant to the Transaction Agreement, the HFMI Parties and the BCI
Parties entered into a series of agreements as follows:
A. that certain Secured Loan Agreement, dated January 31, 1997, by
and between HFMI and PFCI (the "Original Agreement") pursuant to which PFCI
agreed to provide certain secured loans to HFMI. The Original Agreement
was amended and restated by that certain Amended and Restated Secured Loan
Agreement, dated as of June 6, 1997 (the "First Amendment") and further
amended and restated by that certain Second Amended and Restated Secured
Loan Agreement, dated as of November 3, 1997 (the "Second Amendment"; the
Original Agreement, as amended by the First Amendment and the Second
Amendment, is referred to herein as the "Loan Agreement").
B. those certain Guaranties and Subsidiary Security Agreements
(collectively, the "Guaranty Documents") dated as of January 31, 1997 of
Marthasville and Karalea in favor of PFCI pursuant to which Marthasville
and Karalea guaranteed the obligations of HFMI to PFCI under the Loan
Agreement.
C. that certain Consulting Services Agreement, dated as of January
31, 1997, as amended by that certain First Amendment to Consulting Services
Agreement dated as of November 3, 1997 (as so amended, the "Consulting
Services Agreement") pursuant to which the parties thereto agreed to
provide certain consulting services to each other as described therein.
D. that certain Warrant Agreement to Purchase Shares of Class A
Common Stock of Harry's Farmers Market, Inc., dated January 31, 1997,
pursuant to
which HFMI issued to PFCI certain warrants to purchase certain capital
stock of HFMI (the "Warrants").
E. that certain Trust Agreement, dated January 30, 1997, as amended
by that certain First Amendment to Trust Agreement dated as of November 3,
1997 (as so amended, "Trust Agreement"), and that certain Administration
and Servicing Agreement dated January 30, 1997 ("Servicing Agreement"),
pursuant to which the Trust (as defined in the Trust Agreement) was created
and pursuant to which, Wilmington Trust Company, a Delaware banking company
("Trustee") was appointed the trustee thereof, and PFCI was appointed
Servicer thereof. Pursuant to the terms of the Trust Agreement, the
Trustee issued and delivered to HFMI a Georgia Class Owner Certificate and
a Worldwide Class Owner Certificate (as such terms are defined in the Trust
Agreement). As required under the Trust Agreement, HFMI immediately
transferred to PFCI the Worldwide Class Owner Certificate. The Trustee, on
behalf of the Trust, entered into two separate license agreements governing
the use of the Trust property, the PFCI License and the Newco License (as
such terms are defined in the Trust Agreement).
3. Each of the BCI Parties is currently a debtor in possession under
chapter 11 of title 11 of the United States Code (the "Bankruptcy Code") in its
respective case (collectively, the "Case") pending before the United States
Bankruptcy Court in the District of Arizona (the "Court").
4. HFMI has offered, and the BCI Parties have agreed, subject only to the
conditions set forth herein, to accept a payment in the amount of $4,000,000 in
exchange for a complete termination of the business relationship between the
HFMI Parties and the BCI Parties, including releases of all claims being given
by each party, cancellation of all contracts, warrants and options and
satisfaction of all outstanding debt obligations under the Loan Agreement, but
only on the terms and conditions set forth herein.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by each of the parties hereto, each
of the parties agrees as follows:
Section 1. Agreement; Terms of Settlement. Each of the parties hereto
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agrees that upon the satisfaction of the conditions set forth in Section 2
hereof, the existing business relationship between the HFMI Parties, on the one
hand, and the BCI Parties, on the other hand, shall be automatically terminated
with no party having any further obligations thereunder other than those
obligations which expressly survive such termination as provided in Section 14
(the "Surviving Obligations"). Not in limitation of the foregoing, upon the
satisfaction of each of the conditions set forth in Section 2 hereof, each of
the following shall be deemed to have automatically occurred without the
necessity of any further action by any party hereto (except where specific
action is called for and specifically described below):
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(a) Payoff of Notes and Release of Liens. All obligations of the HFMI
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Parties to the BCI Parties under the Loan Agreement, the Notes (as defined in
the Loan Agreement), the Guaranty Documents, and all security agreements, pledge
agreements, mortgages, deeds and other documents executed in connection
therewith (collectively, the "Loan Documents") shall be deemed to have been
satisfied in full and the liens and security interests, mortgages, encumbrances,
liens, deeds, and assignments in favor of the BCI Parties arising under any of
the Loan Documents in any of the assets of the HFMI Parties shall be deemed
released, and the Loan Agreement shall be deemed to be terminated with no party
having any further rights or obligations thereunder other than the Surviving
Obligations. In furtherance of the foregoing, each of the BCI Parties agrees
that at the Closing (as defined below) it will deliver to HFMI all termination
statements, releases of mortgages and deeds, and other documents prepared by and
reasonably requested by HFMI and provided to the BCI Parties reasonably in
advance of the Closing to evidence the termination of PFCI's security interest
and liens and will, at HFMI's cost, take such other actions as is necessary to
release such liens (including delivery of any relevant instruments it has in its
possession).
(b) Intellectual Property. All rights of the BCI Parties in and to the
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Newco License, the Worldwide Class Owner Certificate and any other rights under
the Trust Agreement and documents related thereto shall be deemed to have been
terminated. In furtherance of the foregoing, each of the BCI Parties agrees that
at the Closing it will, at HFMI's request and at HFMI's cost: (i) transfer and
convey to HFMI or the Trust all of the BCI Parties' rights, title and interest
in the Newco License, the Worldwide Class Owner Certificate and any other rights
under the Trust Agreement, the Servicing Agreement, and documents related to
the foregoing (collectively, the "IP Documents") and (ii) take any other actions
reasonably requested by HFMI to terminate the Trust Agreement and the Servicing
Agreement, including, but not limited to, actions as Servicer of the Trust to
instruct the Trustee to take actions reasonably requested by HFMI pursuant to
the terms of the Trust Agreement.
(c) Warrants and Options. All of the Warrants and any other rights or
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obligations to acquire to acquire any capital stock of HFMI (including all
options under the Loan Agreement) shall be deemed cancelled and PFCI shall
return the Warrants unexercised to HFMI at Closing. In addition, PFCI shall
deliver a certificate to HFMI at Closing certifying that neither PFCI nor any of
its affiliates has exercised any options under the Loan Agreement.
(d) Consulting Services Agreement. The Consulting Services Agreement shall
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be deemed terminated with no party having any further rights or obligations
thereunder.
(e) Transaction Agreement. The Transaction Agreement shall be deemed
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terminated with no party having any further rights or obligations thereunder.
(f) Other Documents. All of the other documents or agreements entered into
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in connection with any of the documents referenced in clause (a) through (e)
above (collectively, the "Other Documents") shall be deemed terminated with no
party having any further rights or obligations thereunder other than any
Surviving Obligations.
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(g) BCI Parties Releases. Each of the BCI Parties shall be deemed to have
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released, remised, acquitted, and forever discharged the HFMI Parties, their
affiliates, and their respective employees, directors, officers, owners, agents
and professionals (collectively, the "HFMI Released Parties"), from any and all
claims, causes of action, suits, debts, liens, obligations, liabilities,
demands, losses, costs and expenses (including attorneys' fees) of any kind,
character, description, or nature whatsoever, known or unknown, fixed or
contingent, which the BCI Parties have, may have, might have had, or claim to
have now against the HFMI Released Parties including, without limitation, in
connection with the Loan Documents, Consulting Services Agreement, IP Documents,
Other Documents and Warrants or under any causes of action under the Bankruptcy
Code.
(h) HFMI Parties Releases. Each of the HFMI Parties shall be deemed to have
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released, remised, acquitted, and forever discharged the BCI Parties, their
affiliates, their respective bankruptcy estates, and their respective current
employees, directors, officers, owners, agents and professionals (collectively,
the "BCI Released Parties"), from any and all claims, causes of action, suits,
debts, liens, obligations, liabilities, demands, losses, costs and expenses
(including attorneys' fees) of any kind, character, description, or nature
whatsoever, known or unknown, fixed or contingent, which the HFMI Parties have,
may have, might have had, or claim to have now against the BCI Released Parties
including, without limitation, in connection with the Loan Documents, Consulting
Services Agreement, IP Documents, Other Documents and Warrants. In furtherance
of the foregoing, effective on the date of the Closing, the proof of claim filed
by HFMI in the Case shall be deemed to have been withdrawn and shall be
expunged, it being understood that the HFMI Parties are expressly waiving the
claim described in such proof of claim.
Section 2. Closing; Conditions to Settlement and Release.
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(a) Closing. The closing of the settlement referenced herein (the
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"Closing") shall take place at the offices of Xxxxxx & Bird, Atlanta, Georgia or
at such other place as is mutually agreeable to the parties. Unless the parties
hereto shall mutually agree (which agreement must be approved by the Bankruptcy
Court if it extends the Closing date beyond an additional 15 days), the Closing
shall occur on or before the date that is thirty (30) days after the date the
Bankruptcy Court's written order, in substantially the form attached hereto as
Exhibit A, approving the settlement provided for herein has been entered on the
docket in the Case (the "Order").
(b) Conditions to Settlement and Release. The effectiveness of this
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Agreement and the settlement and release provided for in Section 1 hereof is
subject only to the satisfaction of the following conditions:
(i) payment by HFMI to PFCI of $4,000,000 in lawful U.S. currency, by
wire transfer of immediately available funds in accordance with wire
instructions to be delivered by the BCI Parties prior to Closing;
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(ii) HFMI obtaining financing for the transaction contemplated by this
Agreement and obtaining the written consent of its senior lenders to the
transactions contemplated under this Agreement;
(iii) this Agreement executed and delivered by each of the parties
hereto;
(iv) the BCI Parties shall have delivered to HFMI all releases,
instruments and other documents referenced in Section 1 (unless this
condition is waived in writing by HFMI), each of which shall be reasonably
satisfactory in form and substance to HFMI; and
(v) the Order shall have been entered on the docket of the Court in
the Case and shall have become final and non-appealable. For the purposes
hereof, "final and non-appealable" shall mean that either (a) no appeal of
the Order has been filed within the time period specified by Rule 8002(a),
Federal Rules of Bankruptcy Procedure, (b) in the event a timely appeal has
been filed, the effectiveness of the Order has not been stayed in
accordance with Rule 8005, Federal Rules of Bankruptcy Procedure, or (c) in
the event the Order was stayed pending appeal, such stay has been
terminated by subsequent court order.
(vi) if the Trust Agreement is not terminated as of the Closing, the
non-BCI Parties thereto shall have confirmed in writing that PFCI is no
longer a party thereto and is released from all obligations and duties
thereunder (including, without limitation, any reimbursement and
indemnification obligations under Section 8 thereto and the indemnification
obligations under Section 11.02 thereto, in each case with respect to the
period after the Closing). If the Servicing Agreement is not terminated as
of the Closing, the non-BCI Parties thereto shall have confirmed in writing
that PFCI shall, effective as of the Closing, no longer be the "Servicer"
under such agreement and shall have no further obligations thereunder;
Section 3. Binding Obligation; Cooperation. The only conditions to the
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settlement and release set forth in this Agreement are set forth in Section 2
hereof and each of the parties agrees to use its best efforts to satisfy each of
the conditions for which it is responsible to satisfy. Furthermore, each party
agrees that it shall cooperate with each other party hereto in furtherance of
the transactions provided for in this Agreement. Not in limitation of the
foregoing, the BCI Parties shall continue to cooperate with the HFMI Parties
after the Closing in connection with the actions reasonably requested by HFMI in
furtherance of the termination and releases provided for in Section 1 hereof.
Section 4. BCI Parties' Representations. Each of the BCI Parties hereby
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represents and warrants to the HFMI Parties as follows:
(a) Each of the BCI Parties is duly organized, and is a validly existing
corporation, in good standing under the laws of the jurisdiction of its
formation. The execution, delivery
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and performance by the BCI Parties of this Agreement and the transactions
contemplated hereby have been duly authorized by all necessary corporate action.
(b) This Agreement has been duly and validly executed and delivered by each
of the BCI Parties, and, subject to the issuance of the Order, is the legal,
valid and binding obligation of each of the BCI Parties, enforceable against
each of the BCI Parties in accordance with its terms. No registration with,
notice to, consent or approval of, or any other action by, any governmental
authority or other person is required in connection with the execution, delivery
and performance of this Agreement by each of the BCI Parties other than the
approval of the Bankruptcy Court.
(c) PFCI is the owner of all of the rights under the Loan Documents, IP
Documents, Consulting Agreement and Warrants and has not transferred or assigned
any of these assets to any party other than to BCI and its lenders. The BCI
Parties have duly noticed the motion seeking approval of the Court of this
Agreement, including, without limitation, providing notice of the motion to all
parties which have liens, claims or other encumbrances against the Loan
Documents, the IP Documents, the Consulting Agreement and the Warrants.
(d) Neither PFCI nor BCI have exercised any of the Warrants or any of the
options to acquire HFMI's capital stock under the Loan Agreement.
Section 5. HFMI's Representations. HFMI hereby represents and warrants to
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each of the BCI Parties as follows:
(a) HFMI is duly organized, and is a validly existing corporation, in good
standing under the laws of the jurisdiction of its formation. The execution,
delivery and performance of this Agreement and the other documents contemplated
hereby are within HFMI's powers, have been duly authorized by all necessary
action and do not contravene, or result in a default under, any of its charter
documents or any law, agreement or other obligation to which it is subject.
(b) This Agreement has been duly and validly executed and delivered by
HFMI, is the legal, valid and binding obligation of HFMI, enforceable against
HFMI in accordance with its terms. No registration with, notice to, consent or
approval of, or any other action by, any governmental authority or other person
is required in connection with the execution, delivery and performance of this
Agreement by HFMI, other than the consent of its senior lender.
(c) HFMI shall use its best efforts to secure the funds due at Closing and
to secure the consent of its senior lender to the transactions described herein
as of Closing.
(d) The HFMI Parties are the owners of all of the rights that they
originally had under the Loan Documents, IP Documents, Consulting Agreement and
Warrants and have not transferred or assigned any of these rights to any party.
Section 6. Survival of Agreement. All agreements, representations and
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warranties made herein shall survive the execution and delivery of this
Agreement.
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Section 7. Amendments. This Agreement may not be amended except in
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writing signed by all of the parties hereto and approved by the Bankruptcy
Court.
Section 8. Severability. In case any provision of this Agreement shall be
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invalid, illegal or unenforceable in any jurisdiction, the validity, legality
and enforceability of the remaining provisions shall not in any way be affected
or impaired thereby.
Section 9. Review of Documents. Each of the parties hereto acknowledges
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that, prior to the execution and delivery of this Agreement, it has had the
opportunity to review and ask questions regarding this Agreement and the other
documents and instruments referred to herein and to discuss the same and this
Agreement with its counsel.
Section 10. Headings Descriptive; Entire Agreement. The headings of the
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several sections and subsections of this Agreement are inserted for convenience
only and shall not in any way affect the meaning or construction of any
provision of this Agreement. This Agreement, and the agreements and documents
required to be delivered pursuant to the terms of this Agreement constitute the
entire agreement among the parties hereto and thereto regarding the subject
matters hereof and thereof and supersede all prior agreements, representations
and understandings related to such subject matters.
Section 11. Counterparts. This Agreement may be executed in any number
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of counterparts, each of which shall be deemed to be an original and shall be
binding upon all parties.
Section 12. Choice of Law. This Agreement shall be construed and enforced
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in accordance with and subject to the substantive laws of the State of Georgia.
Section 13. Successors and Assigns. Each reference herein to any party
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shall be deemed to include such parties' successors and assigns including any
trustee appointed in the Case; provided, however, no party may assign or
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transfer its obligations hereunder to any person or entity.
Section 14. Survival of Certain Obligations. Notwithstanding anything to
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the contrary herein, the parties do not intend to cancel or abrogate any
obligations either of them has with respect to (i) preserving the
confidentiality of proprietary materials, whether under any of the agreements
being terminated hereunder or under that certain Confidentiality Agreement
entered into between HFMI and PFCI dated as of January 14, 1997, (ii) any
indemnification obligations under any of the Loan Documents (including Section
11.11 of the Loan Agreement, IP Documents, Consulting Agreement or Warrants,
or (iii) Section 11.8 of the Loan Agreement (all of the foregoing, the
"Surviving Obligations"). The parties acknowledge and agree that all such
Surviving Obligations shall continue in full force and effect and shall not be
affected by this Agreement or the transactions contemplated hereunder.
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Section 15. Non-disparagement. The parties hereby agree to refrain from
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making and agree to direct their representatives to refrain from making any
comments that, directly or indirectly disparage any of the parties hereto, the
business of the parties or any officers, directors or employees of the parties.
[Signatures on Following Page]
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IN WITNESS WHEREOF, each of the parties hereto has duly executed and
delivered this Settlement and Release Agreement as of the date and year first
written above.
BOSTON CHICKEN, INC., as debtor and PROGRESSIVE FOOD CONCEPTS,
debtor in possession INC., as debtor and debtor in possession
By: /s/ XXXXXXX X. XXXXXX By: /s/ XXXXXXX X. XXXXXX
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Name: Xxxxxxx X. Xxxxxx Name: Xxxxxxx X. Xxxxxx
Title: Senior Vice President Title: Vice President
HARRY'S FARMERS MARKET, INC. KARALEA, INC.
By: /s/ XXXXX XXXXXX By: /s/ XXXXX XXXXXX
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Name: Xxxxx Xxxxxx Name: Xxxxx Xxxxxx
Title: President Title: President
MARTHASVILLE TRADING COMPANY, INC.
By: /s/ XXXXX XXXXXX /s/ XXXXX XXXXXX
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Name: Xxxxx Xxxxxx XXXXX XXXXXX, individually
Title: President
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