DEFERRED SECURITIES PURCHASE AGREEMENT
DATED AS OF MARCH 6, 1996
AMONG
ATLANTIC RESTAURANTS, INC.,
▇▇▇▇ ▇▇▇▇▇▇,
AND
PRYOR, CASHMAN, ▇▇▇▇▇▇▇ & ▇▇▇▇▇
(AS ESCROW AGENT)
[DSPA3.DOC]
DEFERRED SECURITIES PURCHASE AGREEMENT
This DEFERRED SECURITIES PURCHASE AGREEMENT (the "AGREEMENT") made and
entered into as of the 6th day of March, 1996, by and among Atlantic
Restaurants, Inc., a Delaware corporation ("BUYER"), ▇▇▇▇ ▇▇▇▇▇▇ (the
"SELLING OPTIONHOLDER") and Pryor, Cashman, ▇▇▇▇▇▇▇ & ▇▇▇▇▇, as escrow
agent (the "ESCROW AGENT"):
W I T N E S S E T H:
WHEREAS, the Selling Optionholder owns (i) an option to purchase
100,000 shares of common stock, par value $.01 per share, of Carrols
Holdings Corporation ("HOLDINGS") at an exercise price of $4 per share and
(ii) an option to purchase 20,000 shares of common stock of Holdings at an
exercise price of $6.12 per share (the foregoing options are referred to
herein, collectively, as the "OPTIONS");
WHEREAS, Holdings is the owner of all of the issued and outstanding
capital stock of Carrols Corporation, a Delaware corporation (the
"COMPANY");
WHEREAS, concurrently with the execution and delivery of this
Agreement, Buyer, Holdings, the Company and certain selling shareholders,
including the Selling Optionholder, are entering into a Securities Purchase
Agreement, dated as of the date hereof (the "SECURITIES PURCHASE
AGREEMENT"), providing for the sale by such selling shareholders to Buyer
of a significant part of all of the issued and outstanding shares of common
stock, including securities that are convertible into or exercisable or
exchangeable for shares of common stock, of Holdings;
WHEREAS, the Options were granted to the Optionholder pursuant to the
terms of certain Award Agreements (the "AWARD AGREEMENTS");
WHEREAS, Buyer has requested the Selling Optionholder not to exercise
any of his Options at this time and to defer the exercise thereof;
WHEREAS, Buyer wishes to purchase all of the Options from the Selling
Optionholder and the Selling Optionholder wishes to sell such Options to
Buyer at the time such Options become exercisable and transferable pursuant
to the terms of the Award Agreements, upon the terms and conditions set
forth below; and
WHEREAS, the parties desire that Escrow Agent shall hold, and Escrow
Agent has agreed to hold, certain amounts to be deposited with Escrow Agent
hereunder in escrow on the terms and conditions provided in this Agreement;
NOW, THEREFORE, in consideration of the aforesaid and the respective
warranties, representations, covenants and agreements hereinafter set
forth, the parties, intending to be legally bound, agree as follows:
1. PURCHASE AND SALE OF OPTIONS; ESCROW ACCOUNT
1.01 PURCHASE AND SALE OF OPTIONS. Upon the terms and subject to
the conditions contained in this Agreement, as provided for in Section 1.04
hereof, Buyer shall purchase and acquire from the Selling Optionholder, and
the Selling Optionholder shall sell, transfer, assign, convey and deliver
to Buyer, all of the Options, free and clear of all liens, pledges,
security interests, charges, claims or encumbrances of any nature
whatsoever at the time such Options become exercisable and transferable by
the Optionholder pursuant to the terms of the Award Agreements.
1.02 PURCHASE PRICE. (a) The aggregate purchase price for the
Options shall be $2,314,784, as the same may be adjusted in accordance with
the provisions of Section 1.04 of the Securities Purchase Agreement, (as so
adjusted, the "PURCHASE PRICE"), payable in cash by wire transfer in
immediately available funds by the Buyer to the Selling Optionholder at the
Closing Date (as defined below) against the transfer of the Options to
Buyer.
(b) Ninety percent of the Purchase Price shall be deposited
(the "PURCHASE PRICE ESCROW DEPOSIT") at the Deposit Date (as defined
below) in cash by wire transfer of immediately available funds to such
escrow account (the "PURCHASE PRICE ESCROW ACCOUNT") as designated in
writing by Escrow Agent as provided for in Section 1.04(b).
1.03 CLOSING. The closing of the transactions contemplated by
this Agreement shall take place on January 5, 1997, at 10:00 a.m., local
time, at the offices of Pryor, Cashman, ▇▇▇▇▇▇▇ & ▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, on such date and at such other time or place as
the parties may mutually agree. The actual date of the Closing is
sometimes referred to herein as the "CLOSING DATE". Time shall be of the
essence with respect to Buyer's obligations hereunder.
1.04 ESCROW DEPOSITS. (a) The Purchase Price Escrow Deposit
contemplated by this Agreement shall take place concurrently with the
Closing set forth in Section 1.03 of the Securities Purchase Agreement, and
such date is sometimes referred to herein as the "DEPOSIT DATE".
(b) On the Deposit Date (i) the Selling Optionholder shall
deliver two (2) instruments of assignment ("OPTION ASSIGNMENT
INSTRUMENTS"), in form and substance satisfactory to Buyer, providing for
the sale, transfer and assignment of Options to Buyer, left undated and
with the number of Options not filled in, but made out to Buyer, to Escrow
Agent (the "OPTION ESCROW DEPOSIT"), to be held in a separate escrow
account (the "OPTION ESCROW ACCOUNT" and (ii) Buyer shall deposit the
Purchase Price Escrow Deposit with Escrow Agent to be held and invested in
accordance with the provisions of Section 1.04(c) hereof.
(c) Escrow Agent shall cause the Purchase Price Escrow
Deposit to be invested in direct obligations of the United States of
America, obligations for which the full faith and credit of the United
States of America is pledged to provide for the payment of principal and
interest, commercial paper rated of the highest quality by ▇▇▇▇▇'▇
Investors Services, Inc. or Standard & Poor's Corporation or 30-day
certificates of deposit issued by, or other 30-day deposit accounts of, and
30-day bankers acceptance issued by, one or more commercial banks having at
least $500,000,000 in capital and surplus. All interest or other income
accrued on the Purchase Price Escrow Deposit is referred to herein as the
"ESCROW INTEREST". Notwithstanding the foregoing provisions of this
Section 1.04(c), any investment of the Purchase Price Escow Deposit shall
be at the sole risk of Buyer, and the Selling Optionholder shall have no
liability, responsibilities or obligation with respect thereto; and no loss
on any investment shall relieve Buyer of its obligation to pay the Purchase
Price.
(d) At least two (2) business days prior to the scheduled
Closing Date, the Buyer shall deposit into the Purchase Price Escrow
Account, in cash by wire transfer of immediately available funds, an amount
equal to the Balance of the Purchase Price. From and after such date, all
references herein to the "Purchase Price Escrow Deposit" shall be deemed to
include such additional deposit.
1.05 DISPOSITION OF ESCROW DEPOSIT. Escrow Agent shall hold the
Purchase Price Escrow Deposit and the Option Escrow Deposit (collectively,
the "ESCROW DEPOSIT") in its possession pursuant to the terms and
provisions of this Agreement and shall distribute the Escrow Deposit to the
respective parties as set forth below:
(a) On the Closing Date, the Escrow Agent shall distribute:
(i) the Purchase Price Escrow Deposit to the Selling Optionholder and (ii)
the Option Assignment Instruments covering all the Options to Buyer;
PROVIDED, HOWEVER, that, upon receipt of a notice of any claim (a "NOTICE
OF CLAIM") by the Selling Optionholder or Buyer for amounts owed to it
pursuant to the indemnification provisions contained in Section 5.02 and
5.03 hereof or otherwise pursuant to this Agreement, as more fully set
forth herein (each, a "CLAIM"), Escrow Agent shall distribute the Escrow
Deposit on or after January 5, 1997 in accordance with 1.05(b) below.
(b) Promptly upon receipt of any Notice of Claim, Escrow
Agent shall mail a copy of such notice to the other parties, specifying the
date on which Escrow Agent received such Notice of Claim. Escrow Agent
shall retain in the Purchase Price Escrow Account an amount equal to the
amount set forth in the Notice of Claim (the "DISPUTED AMOUNT") and shall
retain in the Option Escrow Account such proportion of the Options (the
"DISPUTED OPTIONS") that is equal to the proportion that the Disputed
Amount bears to the Purchase Price. Thereafter, Escrow Agent shall
distribute any undisputed amounts in the Escrow Account to the Selling
Optionholder and any undisputed portion of the Options to Buyer.
(c) Escrow Agent shall continue to hold any undistributed
portions of the Escrow Deposit in escrow and shall only distribute same
upon delivery of and in accordance with (i) joint written instructions of
Buyer and the Selling Optionholder or (ii) written instructions of Buyer or
the Selling Optionholder certifying that the dispute with respect to the
Claim has been determined and resolved by entry of a final order, decree or
judgment by a court of competent jurisdiction in the United States (the
time for appeal therefrom having expired and no appeal having been
perfected), or consent to entry of any judgment concerning the Claim, which
instructions shall be accompanied by a copy of any such order, decree or
judgment certified by the clerk of such court.
(d) For purposes of enabling Escrow Agent to distribute
Options to Buyer strictly in accordance with the provisions of this
Agreement, Selling Optionholder hereby authorizes Escrow Agent to insert
the date, and fill in the appropriate number of Options, into one or more
of the blank Option Assignment Instruments.
(e) At the Closing or as provided in Section 6.02 hereof,
Escrow Agent shall distribute to Buyer the Escrow Interest earned on the
Purchase Price Escrow Deposit from the date of establishment of the
Purchase Price Escrow Account through the date of such distribution. In
the event that any amounts are held as disputed funds under Section 1.05(b)
or (c) above on the Closing Date, the Escrow Interest earned after the
Closing Date attributable thereto shall be retained by Escrow Agent in the
Purchase Price Escrow Account and shall be distributed by Escrow Agent to
the party which ultimately prevails on the related Claim or, if both
parties ultimately prevail, in accordance with their respective interests
therein.
(f) Each party shall be responsible for all taxes payable
on any Escrow Interest distributed to it. Any taxes which become due with
respect to accrued interest on any disputed funds held by Escrow Agent
pursuant to Section 1.05(b) or (c) hereof shall be paid by Escrow Agent out
of such disputed funds.
1.06 DUTIES OF THE ESCROW AGENT. (a) Escrow Agent undertakes to
perform only such duties as are specifically set forth herein. Anything
herein to the contrary notwithstanding, Escrow Agent's sole duties under
this Agreement shall be to hold the Escrow Deposit in each of the two
Escrow Accounts (collectively, the "ESCROW ACCOUNTS") in accordance with
the terms hereof and to follow the instructions regarding the disposition
of the Escrow Deposit and Escrow Interest as set forth in Sections 1.04 and
1.05 hereof.
(b) Escrow Agent, after having fully delivered the Escrow
Deposit and Escrow Interest, if any, pursuant hereto, shall be discharged
from any further obligations hereunder. Buyer and the Selling Optionholder
hereby jointly and severally agree to indemnify Escrow Agent and hold it
harmless against any and all expenses, including reasonable counsel fees
and disbursements, or losses suffered by Escrow Agent in connection with
any action, suit or other proceeding involving any claim, or in connection
with any claim or demand, which in any way, directly or indirectly, arises
out of or relates to this Agreement, the service of Escrow Agent hereunder,
the monies or Options held by it hereunder or PROVIDED, HOWEVER, that this
indemnity shall not apply to any such expense or loss that is the direct
result of Escrow Agent's gross negligence or willful misconduct. Promptly
after the receipt by Escrow Agent of notice of any demand or claim or the
commencement of any action, suit or proceeding, Escrow Agent shall, if a
claim in respect thereof is to be made against any of the other parties
hereto, notify such other parties thereof in writing; but the failure by
Escrow Agent to give such notice shall not relieve any party from any
liability which such party may have to Escrow Agent hereunder. The
indemnities in this Section 1.06(b) shall survive the resignation of Escrow
Agent and the termination of this Agreement.
(c) Escrow Agent shall have no responsibility for the
genuineness or validity of any document or other item deposited with it,
and it shall be fully protected in acting in accordance with any written
instructions given to it hereunder and reasonably believed by it to have
been signed by the parties hereto or proper officers or other
representatives of the parties hereto. Escrow Agent may consult with
counsel and shall be fully protected in any action taken in good faith in
accordance with such advice. From time to time on and after the date
hereof, the other parties hereto shall deliver or cause to be delivered to
Escrow Agent such further documents and instruments and shall do and cause
to be done such further acts as Escrow Agent shall reasonably request (it
being understood that Escrow Agent shall have no obligation to make any
such request) to carry out more effectively the provisions and purposes of
this Agreement, to evidence compliance herewith or to assure itself that it
is protected in acting hereunder.
(d) It is understood and agreed that should any dispute
arise with respect to the payment and/or ownership or right of possession
of the Escrow Deposit or the Escrow Interest, Escrow Agent shall have the
right to (but shall not be obligated to) retain in its possession, without
liability to any one, all or any part of such Escrow Deposit or the Escrow
Interest until such dispute shall have been settled either by mutual
agreement by the parties concerned or by the final order, decree or
judgment of a court or other tribunal of competent jurisdiction in the
United States and time for appeal has expired and no appeal has been
perfected, but Escow Agent shall be under no duty whatsoever to institute
or defend any such proceedings.
(e) Escrow Agent shall be reimbursed for all reasonable
fees, expenses, disbursements and advances (including reasonable attorneys'
fees and expenses if actually incurred by Escrow Agent in connection with
the use of outside attorneys) incurred or made by it in performance of its
duties hereunder. Such reasonable fees, expenses, disbursements and
advances shall be shared by Buyer and the Selling Optionholder upon request
by Escrow Agent (which shall not be made more than once during any one
month period commencing with the one-month period beginning on the date
hereof and, in the case of any such reimbursement, upon submission to Buyer
and the Selling Optionholder of a reasonably detailed itemized statement
relating to the amounts to be reimbursed.
(f) No party shall have the right to withdraw or receive
any of the amounts held in the Escrow Deposit or the Escrow Interest except
as provided herein.
(g) Escrow Agent shall not be entitled to proceed against
the Escrow Account, nor shall Escrow Agent be entitled to any offset
against the Escrow Account, including any proceeding or offset for any
reimbursement of fees, disbursements or expenses (including counsel fees
and disbursements, if any) or losses suffered by Escrow Agent in connection
with any action, suit, proceeding, claim or demand arising out of or
relating to this Agreement.
(h) Escrow Agent may resign as Escrow Agent under this
Agreement by giving notice of such resignation in writing addressed to
Buyer and the Selling Optionholder, which writing shall specify a date not
less than thirty days following the date of such notice when such
resignation shall take effect. Escrow Agent may be removed at any time
with or without cause by an instrument in writing duly executed by Buyer
and the Selling Optionholder. If Escrow Agent shall resign or be removed as
Escrow Agent hereunder, Buyer shall appoint a successor escrow agent
reasonably acceptable to the Selling Optionholder by an instrument of
substitution complying with any applicable requirements of law and, in the
absence of any such requirement, without formality other than appointment
and designation in writing. Such appointment and designation shall be full
evidence of Buyer's right and authority to make such appointment and
designation, and of all facts therein recited. Upon the effective date of
Escrow Agent's removal as escrow agent hereunder, such successor escrow
agent shall become Escrow Agent hereunder and shall have all of the rights,
powers, privileges, immunities and duties hereby conferred upon Escrow
Agent. All references herein to Escrow Agent shall be deemed to refer to
the party from time to time acting hereunder as escrow agent. Upon
replacement of Escrow Agent as escrow agent hereunder, Escrow Agent shall
deliver the entire Escrow Deposit to its successor as escrow agent
hereunder in accordance with the written instructions of Buyer.
(i) Each of the parties hereto acknowledge that Pryor,
Cashman, ▇▇▇▇▇▇▇ & ▇▇▇▇▇ has in the past represented Buyer as legal
counsel, and is currently representing Buyer as legal counsel in connection
with the transactions contemplated by this Agreement, the Securities
Purchase Agreement and other related documents. In addition, the parties
hereto acknowledge and agree that neither the agreement by the parties
hereto that Pryor, Cashman, ▇▇▇▇▇▇▇ & ▇▇▇▇▇ shall act as Escrow Agent, nor
any other term of this Agreement, nor any other agreement or understanding
between or among the parties hereto shall prevent or inhibit, or be
construed or interpreted so as to prevent or inhibit, Pryor, Cashman,
▇▇▇▇▇▇▇ & ▇▇▇▇▇ from serving at any time as legal counsel to Buyer or any
parent, subsidiary, shareholder, director, officer, agent or affiliate of
Buyer, whether in connection with this Agreement or otherwise. The
foregoing notwithstanding, it shall be a condition precedent to Pryor,
Cashman, ▇▇▇▇▇▇▇ & ▇▇▇▇▇'▇ ability to serve as legal counsel to Buyer in
connection with any dispute under this Agreement that Pryor, Cashman,
▇▇▇▇▇▇▇ & ▇▇▇▇▇ deposit any portion of the Escrow Deposit or Options that
are subject to a dispute with a court of competent jurisdiction (subject to
Section 7.09 hereof) or with an unrelated third party successor Escrow
Agent mutually acceptable to Buyer and the Selling Optionholder.
2. CONDITIONS TO CLOSING
2.01 CONDITIONS TO BUYER'S OBLIGATIONS. (a) The obligation of
Buyer to deposit the Purchase Price Escrow Deposit with Escrow Agent is
subject to the satisfaction at the time of the Deposit Date of the
following conditions (any or all of which may be waived by Buyer in Buyer's
sole discretion):
(i) The closing of the transactions contemplated by the
Securities Purchase Agreement;
(ii) No preliminary or permanent injunction or other order
of any court of competent jurisdiction preventing the purchase by Buyer of
the Options shall be in effect; and
(iii) The representations and warranties of the Selling
Optionholder made in Section 3.01(a) through (e) hereof shall be true and
correct as of the Deposit Date as though made as of such time. The Selling
Optionholder shall have performed in all material respects each and every
covenant contained in this Agreement required to be performed by him by the
time of the Deposit Date. The Selling Optionholder shall have delivered to
Buyer a certificate dated the Deposit Date confirming the foregoing.
(b) The obligation of Buyer to pay the Purchase Price is subject
to the satisfaction on the Closing Date of the following conditions (any or
all of which may be waived by Buyer in Buyer's sole discretion);
(i) No preliminary or permanent injunction or other order
of any court of competent jurisdiction preventing the purchase by Buyer of
the Options shall be effect; and
(ii) The representations and warranties of the Selling
Optionholder made in Section 3.01(a) through (d) hereof and the
representations and warranties of Selling Optionholder contained in Section
4.01(h)(i) of the Securities Purchase Agreement shall be true and correct
as of the Closing Date as though made as of such time. The Selling
Optionholder shall have performed in all material respects each and every
covenant contained in this Agreement required to be performed by him by the
time of the Closing Date.
2.02 CONDITIONS TO SELLING OPTIONHOLDER'S OBLIGATIONS. (a) The
obligation of the Selling Optionholder to deliver the Option Assignment
Instruments to Escrow Agent is subject to the satisfaction at the time of
the Deposit Date of the following conditions (any or all of which may be
waived by the Selling Optionholder in the Selling Optionholder' sole
discretion):
(i) The closing of the transactions contemplated by the
Securities Purchase Agreement.
(ii) No preliminary or permanent injunction or other order
of any court of competent jurisdiction preventing the sale by the Selling
Optionholder of the Securities shall be in effect;
(iii) The representations and warranties of Buyer made
in this Agreement shall be true and correct as of the Deposit Date as
though made as of such time. Buyer shall have performed in all material
respects each and every covenant contained in this Agreement required to be
performed by it by the time of the Deposit Date. Buyer shall have
delivered to the Selling Optionholder a certificate dated the Deposit Date
and signed by an authorized representative of Buyer confirming the
foregoing.
(b) The obligation of the Selling Optionholder to Deliver the
Option Assignment Instruments is subject to the satisfaction at the time of
the Closing Date of the following conditions (any or all of which may be
waived by the Selling Optionholder, in the Selling Optionholder's sole
discretion):
(i) No preliminary or permanent injunction or any order of
any court of competent jurisdiction preventing the sale by the Selling
Optionholder of the Securities shall be in effect; and
(ii) The representation and warranties of Buyer made in this
Agreement shall be true and correct as of the Closing Date as though made
as of such time. Buyer shall have performed in all material respects each
and every covenant contained in this Agreement required to be performed by
it by the time of the Closing.
3. REPRESENTATIONS AND WARRANTIES
3.01 REPRESENTATIONS AND WARRANTIES OF THE SELLING OPTIONHOLDER.
The Selling Optionholder hereby represents and warrants to Buyer as
follows:
(a) The Selling Optionholder has all requisite power and
authority to enter into this Agreement and to consummate the transactions
contemplated hereby and all acts and other proceedings required to be taken
by any of the Selling Optionholder to authorize the execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby have been duly and properly taken.
(b) This Agreement constitutes a valid and binding
obligation of the Selling Optionholder, enforceable against him in
accordance with its terms, except that (i) such enforcement may be limited
by or subject to any bankruptcy, insolvency, reorganization, moratorium or
similar laws now or hereafter in effect relating to or limiting creditors'
rights generally and (ii) the remedy of specific performance and injunctive
and other forms of equitable relief are subject to certain equitable
defenses and to the discretion of the court before which any proceeding
therefor may be brought.
(c) The execution and delivery of this Agreement does not,
and the consummation of the transactions contemplated hereby and compliance
with the terms hereof will not, conflict with, or result in any violation
of or default (with or without notice or lapse of time, or both) under, or
give rise to a right of termination, cancellation or acceleration of any
obligation or to loss of a material benefit under or result in the creation
of any lien, claim, encumbrance, security interest, option, charge or
restriction of any kind upon any of the Options, or with respect to the
Options, under any provision of (i) the Certificate of Incorporation or By-
laws of Holdings, (ii) any note, bond, mortgage, indenture, deed of trust,
license, lease, contract, commitment or agreement to which Selling
Optionholder is a party or by which his assets are bound, or (iii) any
judgment, order, decree, statute, law, ordinance, rule or regulation
applicable to Selling Optionholder or his assets. No consent, approval,
license, permit, order or authorization of, or registration, declaration or
filing with, any court, administrative agency or commission or other
governmental authority or instrumentality, domestic or foreign, or any
other third party is required to be obtained or made by or with respect to
the Selling Optionholder or his affiliates in connection with the execution
and delivery of this Agreement or the consummation of the transactions
contemplated hereby, other than the filing required under the HSR Act and
other than as set forth on Schedule 4.01(d) of the Securities Purchase
Agreement.
(d) The Selling Optionholder has good and valid title to
the Options free and clear of any liens, claims, encumbrances, security
interests, options, charges and restrictions whatsoever, and all such
Options have been duly authorized and validly issued. Upon delivery to
Buyer of an Option Assignment Instrument and upon receipt by the Selling
Optionholder of the Purchase Price for the Options as provided for in
Sections 1.02 and 1.05 hereof, and upon the effectiveness of the amendment
to the Award Agreements in accordance with its terms, good and valid title
to the Options will pass to Buyer, free and clear of any liens, claims,
encumbrances, security interests, options, charges and restrictions of any
kind.
(e) The representations and warranties of the Selling
Optionholder set forth in Section 4.01(f) through (nn) of the Securities
Purchase Agreement are incorporated by reference herein and made a part
hereof as if restated in their entirety herein.
3.02 REPRESENTATIONS AND WARRANTIES OF BUYER. Buyer hereby
represents and warrants to the Selling Optionholder as follows:
(a) Buyer is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware and has the
corporate power and authority to enter into this Agreement and to carry out
the transactions contemplated hereby.
(b) The Board of Directors of Buyer have duly authorized
the execution and delivery of this Agreement and the consummation by Buyer
of the transactions contemplated hereby. No other corporate or other
proceedings on the part of Buyer are necessary to authorize this Agreement
or the transactions contemplated hereby.
(c) This Agreement constitutes a valid and binding
agreement of Buyer, enforceable against Buyer in accordance with its terms,
except that (i) such enforcement may be limited by or subject to any
bankruptcy, insolvency, reorganization, moratorium or similar laws now or
hereafter in effect relating to or limiting creditors' rights generally and
(ii) the remedy of specific performance and injunctive and other forms of
equitable relief are subject to certain equitable defenses and to the
discretion of the court before which any proceeding therefor may be
brought.
(d) Neither the execution and delivery of this Agreement
nor the consummation by Buyer of the transactions contemplated hereby (i)
will violate or conflict with any statute, law, ordinance, rule,
regulation, order, judgment or decree affecting Buyer, or (ii) will violate
or conflict with or constitute a default (or an event which, with notice or
lapse of time, or both, would constitute a default) under, or will result
in the termination of, or accelerate the performance required by, or result
in the creation of any lien, security interest, charge or encumbrance upon
Buyer or any of its assets under, any term or provision of (A) the
Certificate of Incorporation or By-Laws (or equivalent organizational
documents) of Buyer or (B) any contract, commitment, understanding,
arrangement, agreement or restriction of any kind or character which Buyer
is a party or by which Buyer may be bound or affected, or to which Buyer or
its respective assets are subject, or (iii) will cause, or give any person
grounds to cause (with or without notice, the passage of time, or both),
the maturity of any debt, liability or obligation of Buyer to be
accelerated, or will increase any such liability or obligation. Except for
the required filing under the HSR Act, no consent, approval, license,
permit, order or authorization of, or registration, declaration or filing
with, any court, administrative agency or commission or other governmental
authority or instrumentality, domestic or foreign, or any other third party
is required to be obtained or made by or with respect to Buyer or any of
its affiliates in connection with the execution and delivery of this
Agreement or the consummation of the transactions contemplated hereby.
(e) Buyer has, or will have on or prior to the Closing
Date, sufficient sources of financing to enable it to purchase the Options
and pay the Purchase Price to the Selling Optionholder.
4. COVENANTS
4.01 COVENANTS OF THE SELLING OPTIONHOLDER. The Selling
Optionholder covenants and agrees with Buyer as follows:
(a) The Selling Optionholder shall not take any action
prior to the Closing Date that would, or that would reasonably be expected
to, result in any of the representations and warranties of the Selling
Optionholder set forth in this Agreement becoming untrue or any of the
conditions set forth in Article II hereof not being satisfied.
(b) For so long as this Agreement is in effect, Selling
Optionholder will not exercise any Options.
(c) The Selling Optionholder shall promptly notify Buyer
of:
(i) any notice or other communication from any
person alleging that the consent of such person is or may be required in
connection with the transactions contemplated by this Agreement;
(ii) any notice or other communication from any
governmental entity in connection with the transactions contemplated by
this Agreement;
(iii) the occurrence, or failure to occur, of any
condition, event or development that (A) causes any representation or
warranty of the Selling Optionholder contained in this Agreement and
qualified as to materiality to be untrue or inaccurate, or causes any
representation or warranty contained in this Agreement and not so qualified
to be untrue or inaccurate in any material respect, at any time from the
date hereof to the Closing Date or (B) would have been required to be set
forth or described under this Agreement if existing or known at the date of
this Agreement; and
(iv) any failure on the part of the Selling
Optionholder to comply with or perform in any material respect any
agreement or covenant to be complied with or performed by it hereunder;
PROVIDED that the delivery of any notice pursuant to this Section 4.01(b)
shall not limit or otherwise affect the remedies available hereunder to
Buyer.
4.02 COVENANTS OF BUYER. The Buyer covenants and agrees with
Selling Optionholder as follows:
(a) The Buyer shall not take any action prior to the
Closing Date that would, or that would reasonably be expected to, result in
any of the representations and warranties of the Buyer or the Selling
Optionholder set forth in this Agreement becoming untrue or any of the
conditions set forth in Article II hereof not being satisfied.
(b) The Buyer shall promptly notify Selling Optionholder
of:
(i) any notice or other communication from any
person alleging that the consent of such person is or may be required in
connection with the transactions contemplated by this Agreement;
(ii) any notice or other communication from any
governmental entity in connection with the transactions contemplated by
this Agreement;
(iii) the occurrence, or failure to occur, of any
condition, event or development that (A) causes any representation or
warranty of the Buyer contained in this Agreement and qualified as to
materiality to be untrue or inaccurate, or causes any representation or
warranty contained in this Agreement and not so qualified to be untrue or
inaccurate in any material respect, at any time from the date hereof to the
Closing Date or (B) would have been required to be set forth or described
under this Agreement if existing or known at the date of this Agreement;
and
(iv) any failure on the part of the Buyer to
comply with or perform in any material respect any agreement or covenant to
be complied with or performed by it hereunder; PROVIDED that the delivery
of any notice pursuant to this Section 4.02(b) shall not limit or otherwise
affect the remedies available hereunder to Selling Optionholder.
(c) Buyer, when and if it becomes the controlling
shareholder of Holdings, hereby covenants and agrees that, until the
Closing Date, it will not take any action to cause Holdings to engage in
any merger, consolidation, liquidation, recapitalization or any other
transaction that would result in a cash-out, termination or modification of
the Options prior to the Closing Date.
5. SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION
5.01 SURVIVAL OF REPRESENTATIONS. None of the representations
and warranties made by any party in this Agreement shall survive the
Closing; except for (i) the representations and warranties of the Selling
Optionholder set forth in subsections (a) through (d) of Section 3.01
hereof and the representations and warranties of Buyer set forth in Section
3.02 hereof, which shall survive any investigation at any time made by or
on behalf of any party for the applicable statute of limitations period set
forth in the Securities Purchase Agreement and (ii) the representations
and warranties of the Selling Optionholder set forth in Section 4.01(h)(i)
of the Securities Purchase Agreement, which shall survive any investigation
at any time made by or on behalf of Buyer for the period therein set forth.
5.02 AGREEMENT OF SELLING OPITIONHOLDER TO INDEMNIFY. The
Selling Optionholder shall indemnify Buyer and each of its officers,
directors, employees, representatives, agents, shareholders, partners and
affiliates (and their respective officers, directors, employees,
representatives, agents, shareholders, partners and affiliates) and hold
each of them harmless from and against any reasonably incurred loss,
liability, claim, cost, damage or expense (including, but not limited to,
any and all expenses reasonably incurred in investigating, preparing or
defending ally litigation or proceeding, commenced or threatened, or any
claim whatsoever) (collectively, "LOSSES") suffered or incurred by any such
indemnified party to the extent arising from (i) any breach of any
representation or warranty of the Selling Optionholder contained in this
Agreement or in any schedule, certificate, instrument or to other document
delivered pursuant hereto or (ii) any breach of any covenant or agreement
of the Selling Optionholder contained in this Agreement; PROVIDED, however,
that the Selling Optionholder's indemnification obligations under this
Section 5.02 (with respect to any breach of the representations and
warranties set forth in Section 3.01(e) hereto) shall be subject to the
basket and cap limitations on indemnification set forth in Section 6.03 of
the Securities Purchase Agreement, including any additional limitations
contained therein, and any Loss suffered by Buyer under this Agreement
shall be added to any Losses (as defined in Section 6.02 of the Securities
Purchase Agreement) suffered by Buyer under the Securities Purchase
Agreement in determining the applicability of such basket and cap.
Payments in respect of the indemnification provided in this Section 5.02
shall be made promptly (and currently) as Losses shall be incurred.
5.03 AGREEMENT OF BUYER TO INDEMNIFY. Buyer shall indemnify the
Selling Optionholder and his respective representatives, agents, employees,
partners and affiliates and hold each of them harmless from and against any
Loss suffered or incurred by any such indemnified party to the extent
arising from (i) any breach of any representation or warranty of Buyer
contained in this Agreement or in any schedule, certificate, instrument or
other documents delivered hereto or (ii) any breach of any covenant or
agreement of Buyer contained in this Agreement or in any schedule,
certificate, instrument or other documents delivered hereto. Payments in
respect of the indemnification provided in this Section 5.03 shall be made
promptly (and currently) as Losses shall be incurred.
5.04 CONDITIONS OF INDEMNIFICATION. Each party indemnified
pursuant to Section 5.02 or 5.03 hereof (an "INDEMNIFIED PARTY") agrees to
give prompt notice to the party required to indemnify such indemnified
party (an "INDEMNIFYING PARTY") of the assertion of any claim, or the
commencement of any suit, action or proceeding, whether brought against
such indemnified party or brought by such indemnified party against the
indemnifying party (each a "CLAIM"), in respect of which indemnity may be
sought by such indemnified party under Section 5.02 or 5.03 hereof or in
respect of which such indemnified party may seek any other remedy against
the indemnifying party under this Agreement; PROVIDED, however, that the
omission so to promptly notify the indemnifying party with respect to a
Claim brought against such indemnified party will not relieve the
indemnifying party from any liability which it may have to such indemnified
party under Section 5.02 or 5.03 hereof unless such failure materially
prejudices the indemnifying party with respect to the defense of such
Claim. If any indemnified party shall seek indemnity under Section 5.02 or
5.03 hereof, the indemnifying party, in the case of a Claim brought against
such indemnified party, shall be entitled to participate therein and, to
the extent that it wishes, to assume and direct the defense and settlement
thereof with counsel reasonably satisfactory to such indemnified party.
After notice from the indemnifying party to an indemnified party of its
election to assume and direct the defense and settlement of a Claim brought
against such indemnified party, the indemnifying party shall not be liable
to such indemnified party (or any of its affiliates) under Section 5.02 or
5.03 hereof for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof other than
reasonable costs of investigation undertaken at the request of the
indemnifying party; except that such indemnified party shall have the right
to employ counsel to represent such party if, in the reasonable judgment of
such party, it is advisable for such party to be represented by separate
counsel, and in that event the fees and expenses of such separate counsel
shall be paid by such indemnified party. Notwithstanding the foregoing
provisions of this Section 5.04, the indemnifying party shall not, without
the prior written consent of an indemnified party (which consent shall not
be unreasonably withheld or delayed), effect any settlement of any pending
or threatened proceeding in respect of which such indemnified party is, or
with reasonable foreseeability, could have been a party and indemnity could
have been sought hereunder by such indemnified party for a Claim brought
against such indemnified party, unless such settlement includes an
unconditional release of such indemnified party from all liability arising
out of such proceeding (PROVIDED that, whether or not such a release is
required to be obtained, the indemnifying party shall remain liable to such
indemnified party in accordance with Section 5.02 or 5.03 hereof, as
applicable, in the event that a Claim is subsequently brought against such
indemnified party).
5.05 REMEDIES CUMULATIVE. Except as otherwise provided herein,
the remedies provided herein shall be cumulative and shall not preclude the
assertion by any party hereto of any other rights or the seeking of any
other remedies against the other party hereto.
5.06 TAX BENEFITS, INSURANCE. In calculating the amount of any
Losses for which an indemnified party is entitled to indemnification under
this Article V, any Tax Benefit (as hereinafter defined) received by such
indemnified party shall be applied against the amount of the Loss to reduce
the amount payable by the indemnifying party. "TAX BENEFIT" shall mean any
tax savings to the indemnified party (computed at the combined Federal,
state and local tax rate applied to the indemnified party in the
immediately preceding taxable year) resulting from any net increase in
deductions, losses or credits or any net decrease in income, gains or
recapture of credits attributable to inclusion of the claims or related
indemnification payment, as the case may be, in any tax return of the
indemnified party plus any interest attributable to such inclusion. In
addition, in calculating the amount of any Losses for which an indemnified
party is entitled to indemnification under this Article V, the amount of
any insurance proceeds received by the indemnified party relating to or in
connection with such Loss shall reduce the amount of any claim.
6. TERMINATION; AMENDMENT AND WAIVER
6.01 TERMINATION OF AGREEMENT. This Agreement may be terminated
at any time prior to the Closing:
(a) By mutual written agreement of the parties hereto; or
(b) By Buyer or the Selling Optionholder, if the Securities
Purchase Agreement is terminated.
6.02 EFFECT OF TERMINATION. In the event of termination of this
Agreement as provided above, Escrow Agent shall return the Escrow Deposit
and the Escrow Interest to Buyer and the Options to the Selling
Optionholder and thereupon this Agreement shall forthwith become void and
there shall be no liability on the part of any party hereto (or any of
their respective officers or directors), except (i) based upon obligations
set forth in Section 7.01 hereof and (ii) to the extent that failure to
satisfy the conditions of Article II hereof results from the negligent,
intentional or willful breach, violation or non-compliance by any party
hereto of any covenant, agreement, obligation, representation or warranty
contained in this Agreement or any other agreement referred to herein.
6.03 AMENDMENT, EXTENSION AND WAIVER. The parties may amend this
Agreement at any time by an instrument in writing signed by Buyer, the
Selling Optionholder and Escrow Agent. Any agreement on the part of a
party hereto to any waiver of compliance with any of the agreements or
conditions contained herein shall be valid only if set forth in an
instrument in writing signed on behalf of such party.
7. MISCELLANEOUS
7.01 EXPENSES, LEGAL COSTS. Selling Optionholder agrees, on the
Closing Date, to contribute to the Company forty cents ($.40) per Option
sold to Buyer hereunder as his pro-rata share of fees and expenses of Buyer
incurred in connection with the negotiation and execution of this
Agreement, the Securities Purchase Agreement and the Related Documents (as
defined in Section 4.01(b) of the Securities Purchase Agreement) and the
consummation of the transactions contemplated hereby and thereby. If any
legal action is brought for the enforcement of this Agreement, or because
of an alleged dispute, breach, default, or misrepresentation in connection
with any of the provisions of this Agreement, the successful or prevailing
party or parties shall be entitled to recover reasonable attorneys' fees
and other costs incurred in that action or proceeding, in addition to any
other relief to which it or they may be entitled. In the event that either
party obtains a judgment in connection with the enforcement or
interpretation of this Agreement, such party shall be entitled to recover
from the other all costs and expenses incurred in connection with the
enforcement of such judgment, including, without limitations reasonable
attorneys' fees, whether incurred prior to or after the entry of the
judgment.
7.02 FURTHER ASSURANCES. From time to time, at the request of
any party hereto and without further consideration, the other party or
parties will execute and deliver to such requesting party such documents
and take such other action as such requesting party may reasonably request
in order to consummate more effectively the transactions contemplated
hereby.
7.03 PARTIES IN INTEREST. This Agreement will be binding upon,
inure to the benefit of, and be enforceable by the respective successors
and assigns of the parties hereto. This Agreement may not be assigned by
Buyer, other than to a subsidiary or corporate affiliate of the Buyer, or
assigned by the Selling Optionholder, without the prior written consent of
the other party, except that no such consent shall be required for an
assignment of Buyer's rights under this Agreement as security for any
acquisition financing.
7.04 ENTIRE AGREEMENT. This Agreement and the Schedules and
Exhibits hereto and the other agreements, instruments and writings referred
to herein or delivered pursuant hereto contain the entire understanding of
the parties with respect to its subject matter. This Agreement supersedes
all prior agreements and understandings between the parties with respect to
its subject matter.
7.05 HEADINGS. The Article and Section headings contained in
this Agreement are for reference purposes only and will not affect in any
way the meaning or interpretation of this Agreement.
7.06 NOTICES. All notices, claims, certificates, requests,
demands and other communications hereunder will be in writing and will be
deemed to have been duly given if delivered personally or mailed
(registered or certified mail, postage prepaid, return receipt requested)
or via facsimile or overnight courier delivery as follows:
(a) If to the Selling Optionholder:
c/o Carrols Corporation
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇ ▇▇▇▇▇▇
With a copy to:
▇▇▇▇ Marks & ▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
(b) If to Buyer:
c/o Dilmun Investments, Inc.
Metro Center
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇ ▇▇▇▇▇▇▇
With a copy to:
Pryor, Cashman, ▇▇▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
(c) If to Escrow Agent:
Pryor, Cashman, ▇▇▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
or to such other address as the person to whom notice is to be given may
have previously furnished to the other in writing in the manner set forth
above.
7.07 GOVERNING LAW. This Agreement will be governed by, and
construed and enforced in accordance with, the laws of the State of New
York, without regard to conflicts of law principles thereof.
7.08 COUNTERPARTS. This Agreement may be executed simultaneously
in counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same instrument.
7.09 CONSENT TO JURISDICTION. Any legal action, suit or
proceeding arising out of or relating to this Agreement or the consummation
of the transactions contemplated hereby may only be instituted in any
federal court of the Southern District of New York or any state court
located in New York County, State of New York, and each party agrees not to
assert, by way of motion, as a defense or otherwise, in any such action,
suit or proceeding, any claim that it is not subject personally to the
jurisdiction of such courts, that the action, suit or proceeding if brought
in such courts, would be in an inconvenient forum, that the venue of the
action, suit or proceeding, if brought in any of such courts, is improper
or that this Agreement or the subject matter hereof may not be enforced in
or by such courts on jurisdictional grounds.
[DSPA3.DOC]
IN WITNESS WHEREOF, this Deferred Purchase Agreement has been duly
executed and delivered by the duly authorized officers of Buyer, the
Selling Optionholder and Escrow Agent as of the date first above written.
ATLANTIC RESTAURANTS, INC.
By:
Name:
Title:
SELLING OPTIONHOLDER:
▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇,
as Escrow Agent
By:
Name:
Title:
[DSPA3.DOC]