STOCK PURCHASE AGREEMENT
THIS AGREEMENT ("Agreement") is made and entered into as of
December 30, 1998, by and among ▇▇▇. ▇▇▇▇▇▇' Holding Company, Inc., a Delaware
corporation ("MFH"), ▇▇▇. ▇▇▇▇▇▇' Original Cookies, Inc., a Delaware corporation
and a wholly owned subsidiary of MFH (the "Buyer"), Pretzel Time, Inc., a
Pennsylvania corporation (the "Company"), and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, a shareholder
of the Company (the "Seller"); all of whom are referred to collectively herein
as the "Parties." MFH and Buyer are referred to collectively herein as "Fields."
A. Pursuant to certain Stock Acquisition Agreements (defined below),
the Buyer (directly or by transfer from MFH) has acquired and presently owns,
seventy-three (73) shares of the issued and outstanding common stock (par value
$10 per share) of the Company. For purposes of this Agreement, the term Stock
Acquisition Agreements shall mean collectively each of the agreements listed on
Exhibit A. (Defined terms set forth in this Agreement are hereby incorporated
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into this Agreement.)
B. In connection with the First Acquisition Agreement, some or all of
the parties entered into a Shareholders Agreement, Management Agreement,
Exchange Agreement, Registration Rights Agreement and Employment Agreement (the
"Old Employment Agreement"), each dated as of September 2, 1997, and more
particularly identified on Exhibit B (collectively, "▇▇▇▇▇▇▇▇▇ Contracts").
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C. Pursuant to that certain Option Agreement, dated as of December 9,
1998, the Seller granted to the Buyer an option (the "Option") entitling the
Buyer to acquire all of the Seller's remaining issued and outstanding shares of
common stock of the Company, consisting of twenty-seven (27) shares (par value
$10.00 per share) (the "Shares"). A copy of the Option is attached hereto as
Exhibit C.
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D. This Agreement (referred to in the Option Agreement as the
"Purchase Agreement") contemplates contemporaneous transactions at the Closing
(defined below), in which (1) the Buyer will exercise the Option, (2) the Buyer
will purchase from the Seller, and the Seller will sell to the Buyer, all of the
Shares, whereupon the Seller will own all of the issued and outstanding common
stock of the Company, (3) the Parties will terminate the ▇▇▇▇▇▇▇▇▇ Contracts,
and (4) the mutual general release provided for herein will become effective
between the Seller Released Parties and the Buyer Released Parties (defined
respectively below).
NOW, THEREFORE, in consideration of the premises and the mutual
promises herein made, and in consideration of the representations, warranties,
and covenants herein contained, the Parties agree as follows.
1. Purchase and Sale of Shares.
(a) Exercise of Option; Execution of Definitive Agreement. The Seller
hereby acknowledges the Buyer's valid and timely exercise of the Option (for the
purchase of all but not less than all of the Shares) pursuant to the Buyer's
written notice thereof, the receipt of which is hereby acknowledged by the
Seller. A copy of such notice is attached hereto as Exhibit D. The Parties
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further acknowledge and agree that this Agreement, upon its execution by all
Parties, shall exclusively set forth the terms and conditions of such purchase
and sale of the Shares (and all transactions related thereto), and shall
supersede and replace the Option in its entirety. Notwithstanding the previous
sentence, the Buyer acknowledges that as of the date hereof the Seller continues
to be operationally in compliance with his area developer and franchise
relationships with the Buyer as described in the Option.
(b) Basic Transaction. On and subject to the terms and conditions of this
Agreement, the Buyer agrees to purchase from the Seller, and the Seller agrees
to sell to the Buyer, each of the Shares for the consideration specified below
in Section 1(c), free and clear of all Liens and Restrictions (respectively
defined below).
(c) Purchase Price. The purchase price for the Shares shall be
$4,739,989.39 (the "Purchase Price"), which, subject to paragraph 2 below, shall
be paid by the Buyer to the Seller by wire transfer or in certified funds in
installments, as follows:
(i) on or before January 5, 1999, the sum of $2,539,989.39 (the
"January 1999 Installment Payment"); and
(ii) on or before December 30, 1999, the sum of $2,000,000.00 (the
"December 1999 Installment Payment"); and
(iii) during the 1999 calendar year, semi-monthly payments of
$6,666.66. The total payment to the Seller pursuant to this subsection
1(c)(iii) will be $160,000.00; and
(iv) during each of the calendar years 1999, 2000, 2001 and 2002,
semi-monthly payments of $416.66, payable pursuant to an employment
agreement to be executed at the Closing by the Seller, as employee, and the
Buyer, as employer, in the form of Exhibit E (the "New Employment
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Agreement"). The total payment to the Seller pursuant to this subsection
1(c)(iv) and the New Employment Agreement will be $10,000 in each such
calendar year.
(d) The Closing. The exercise of the Option, the Parties' execution of this
Agreement and the closing of the transactions contemplated by this Agreement
(the "Closing") will take place at the offices of the Buyer in Salt Lake City,
Utah, on
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a date selected by the Buyer on or before December 30, 1998 (the "Closing
Date"), unless extended by written agreement of the Parties. The Closing Date
selected by the Buyer is December 30, 1998.
(e) Security. The payments to be made by the Buyer to the Seller pursuant
to Sections 1.(c)(i), (ii) and (iii) above, shall be secured by the Buyer's
pledge of the Shares pursuant to a pledge agreement executed by the Buyer and
the Seller, and delivered to the Seller, at the Closing in the form of
Exhibit F.
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(f) Transfer of Shares; Deliveries at the Closing.
(i) The transfer of the Shares by the Seller to the Buyer, pursuant to
this Agreement shall be accomplished as follows: (A) the Company shall
cancel the Seller's existing certificate(s) for the Shares at the Closing,
and (B) the Company shall issue and deliver new certificate(s) to the Buyer
for the Shares, which certificates (together with a copy of this Agreement
and the Pledge Agreement) shall be delivered to the Escrow Agent (defined
below) for deposit into an escrow established pursuant to an escrow
agreement (the "Escrow Agreement") to be executed by the Buyer, the Seller
and the Escrow Agent in the form of Exhibit G. The parties agree that, in
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the event Escrow Agent deems it appropriate, a stock power may temporarily
be substituted for a new share certificate for delivery to the Escrow
Agent, to give effect to this subparagraph (i).
(ii) At Closing, the Seller will deliver to the Buyer, the fully
executed Pledge Agreement. The appropriate Parties and the Escrow Agent
shall execute and deliver to each other at the Closing fully executed
counterparts of the Addendum and the New Employment Agreement and the
Escrow Agreements.
2. Payment of Seller's Indebtedness to the Buyer and Company. The Parties
acknowledge and agree that the Seller is indebted to the Buyer or the Company
(other than for trade payables or on-going fees under the Franchise Agreement),
as the case may be, in the aggregate amount of $1,149,239.39 as more
particularly itemized in Exhibit H (collectively, the Seller's Indebtedness"),
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which shall be paid to the Buyer and the Company (as appropriate) as follows:
(i) $1,039,989.39 shall be deducted and paid from the January 1999
Installment Payment; and
(ii) $109,250.00 shall be deducted and paid from the December 1999
Installment Payment.
Buyer acknowledges that, except as set forth on Exhibit H, Seller has paid all
initial franchise fees for those locations set forth on Exhibit I.
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3. Representations and Warranties of the Seller.
The Seller represents and warrants to the Buyer that the statements
contained in this Section 3 are correct and complete as of the date of this
Agreement and will be correct and complete as of the Closing Date (as though
made then and as though the Closing Date were substituted for the date of this
Agreement throughout this Section 3).
(i) Noncontravention. To the best of Seller's knowledge, neither the
execution and the delivery of this Agreement, nor the consummation of the
transactions contemplated hereby, will (A) violate any constitution,
statute, regulation, rule, injunction, judgment, order, decree, ruling,
charge or other restriction of any government, governmental agency or court
to which the Seller is subject or, if the Seller is a corporation, any
provision of its charter or bylaws, or (B) conflict with, result in a
breach of, constitute a default under, result in the acceleration of,
create in any party the right to accelerate, terminate, modify or cancel,
or require any notice under any agreement, contract, lease, license,
instrument or other arrangement to which the Seller is a party or by which
the Seller is bound or to which any of the Seller's assets is subject.
(ii) Brokers' Fees. The Seller has no liability or obligation to pay
any fees or commissions to any broker, finder or agent with respect to the
transactions contemplated by this Agreement for which the Buyer could
become liable or obligated.
(iii) Shares Being Acquired Pursuant To This Agreement. The Seller
holds of record and owns beneficially the number of Shares (but no more or
other shares of the common stock of the Company than) set forth in
paragraph C above. The Seller holds and owns each of the Shares free and
clear of any of the following (collectively, "Liens"): restrictions on
transfer, Taxes (as defined below), mortgage, pledge, lien, encumbrance,
charge or other security interests, options, warrants, purchase rights,
contracts, commitments, equities, claims and demands. Other than this
Agreement and other written agreements with the Company and/or the Buyer
(and MFH), the Seller is not a party to any of the following (collectively,
the "Restrictions"): (A) any option, warrant, purchase right, shareholders
agreement, co-sale agreement, buy-sell agreement or other contract or
commitment that could require the Seller to sell, transfer or otherwise
dispose of any capital stock of the Company (other than this Agreement), or
(B) any voting trust, proxy or other agreement or understanding with
respect to the voting of any capital stock of the Company.
(iv) Legal Compliance/Litigation. To the best of his knowledge, the
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Seller and his respective predecessors and affiliates have complied with
all applicable laws of federal, state, local and foreign governments (and
all agencies thereof) affecting title to the Shares. To the best of
Seller's knowledge, no action, suit, proceeding, hearing, investigation,
charge, complaint, claim, demand or notice affecting title to the Shares
has been filed or commenced against him alleging any failure so to comply.
To the best of his knowledge, there are no outstanding injunctions,
judgments, orders, decrees, rulings or charges affecting the Shares. To the
best of his knowledge, there are no actions, suits, proceedings, hearings
or investigations, and the Seller does not have reason to believe that any
such action, suit, proceeding, hearing or investigation affecting title to
the Shares may be brought or threatened, against the Seller.
(v) Shares Previously Acquired. Pursuant to a series of Stock
Acquisition Agreements entered into by the Buyer (or MFH) as of and after
January 2, 1998 (other than this Agreement), the Buyer (or MFH) purchased
from the Seller, and the Seller sold to the Buyer (or MFH), seventeen (17)
issued and outstanding shares of the common stock (par value $10.00) of the
Company (collectively, the "Previously Acquired Shares"). In consideration
of the execution of this Agreement and the Closing of the Transactions
contemplated thereby, the Seller (as of the respective dates of purchase
and sale and transfer thereof to the Buyer (or MFH), and as of the dates
set forth in the first sentence of Subsection 3 above) hereby represents
and warrants to the Buyer (and MFH) with respect to each of the Previously
Acquired Shares, as follows:
(A) Prior to the sale and transfer thereof to the Buyer (or MFH),
the Seller held of record and owned beneficially each of the Previously
Acquired Shares, and held and owned each of the Previously Acquired
Shares free and clear of any Liens and Restrictions;
(B) Each of the Previously Acquired Shares was sold and
transferred by the Seller to the Buyer (or MFH, as the case may be),
free and clear of Liens and Restrictions; and
(C) Each of the representations and warranties set forth in
Subsection 2(iv) above is true and correct with respect to each of the
Previously Acquired Shares.
(vi) Investigation. The Seller has investigated or had full
opportunity to investigate the terms and conditions of the transactions
contemplated by this Agreement, including the Purchase Price, and deems
them to be fair and appropriate.
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4. Pre-Closing Covenants. With respect to the period between the execution
of this Agreement and the Closing, (A) each of the Parties will use its/his
reasonable best efforts to take all actions and to do all things necessary,
proper or advisable in order to consummate and make effective the transactions
contemplated by this Agreement, (B) the Seller will use his best efforts to
obtain any third-party consents that the Buyer may request or to otherwise
consummate the transactions contemplated hereby, and (C) the Seller will give
prompt written notice to the Buyer of any material adverse development causing a
breach of any of the representations and warranties in Section 3 above. The
Buyer and the Seller further agree that they will execute following the Closing
(or shall cause their appropriate affiliates to execute) agreements setting
forth all of the franchise, license and area developer relationships and
agreements, oral or written, between the Seller and the Buyer (or any of their
respective affiliates), collectively, the "Franchise Agreements," all of which
shall be listed on Exhibit I.
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5. Post-Closing Covenants. The Parties agree that if at any time after the
Closing any further action is necessary or desirable to carry out the purposes
of this Agreement, each of the Parties will take such further action (including
the execution and delivery of such further instruments and documents) as any
other Party reasonably may request, subject to reimbursement of reasonable costs
by the Party requesting such action.
6. Conditions to Closing.
(a) Conditions to Obligation of the Buyer and the Company. The
obligations of the Buyer and the Company to consummate the transactions to
be performed respectively by them in connection with the Closing are
subject to the satisfaction (or waiver by the Buyer) of the following
conditions:
(i) The representations and warranties set forth in Section 3
above shall be true and correct in all material respects at and as of
the Closing Date.
(ii) The Seller shall have performed and complied with all of his
covenants hereunder in all material respects through the Closing.
(iii) The Seller shall have procured any third party consents
required for the sale of the Shares.
(iv) No action, suit or proceeding shall be pending or threatened
before any court or quasi- judicial or administrative agency of any
federal, state, local or foreign jurisdiction or before any arbitrator
wherein an unfavorable injunction, judgment, order, decree, ruling or
charge would (A) prevent consummation of any of the transactions
contemplated by this Agreement, (B) cause any of the transactions
contemplated by this Agreement to be rescinded following consummation,
or (C) affect adversely the right of the Buyer to own the Shares.
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(v) The Seller shall be prepared to deliver the documents in the
form and executed as required by this Agreement.
(vi) All actions to be taken by the Seller in connection with
consummation of the transactions contemplated by this Agreement, and
all certificates, and other documents required to effect the
transactions contemplated hereby, will be satisfactory in form and
substance to the Buyer.
(vii) Other than the First Acquisition Claims (which are being
paid and satisfied pursuant to this Agreement), the Seller shall not be
in breach under any of the terms and conditions of any of the Stock
Acquisition Agreements or the documents executed in connection with the
Related Transactions (as defined in the First Acquisition Agreement as
defined below).
(viii) The Seller shall have executed the New Employment
Agreement.
(ix) The Seller and the Buyer or, as appropriate, their
respective affiliates shall have executed the Franchise Agreements.
(x) The Seller shall have signed and delivered to the Buyer an
Addendum to the Stock Purchase Agreement, dated as of June 12, 1998,
by and between MFH and the Seller (the "Addendum"), in a form
acceptable to the Seller, showing the buyer therein as the Buyer rather
than MFH. The Addendum shall be in the form of Exhibit J attached
hereto.
(xi) Effective upon the Closing, ▇▇▇▇▇▇▇ ▇▇▇▇▇ and the Seller
shall have resigned as directors of the Company.
The Buyer (for itself and on behalf of MFH and the Company) may waive any
condition specified in this Section 6(a) if Buyer executes a writing so stating
at or prior to the Closing. The Closing itself shall be deemed a waiver or
satisfaction of the conditions to Closing.
(b) Conditions to Obligation of the Seller. The obligation of the
Seller to consummate the transactions to be performed by him in connection with
the Closing is subject to satisfaction of the following conditions:
(i) No action, suit or proceeding shall be pending or threatened
before any court or quasi- judicial or administrative agency of any
federal, state, local or foreign jurisdiction or before any arbitrator
wherein an unfavorable injunction, judgment, order, decree, ruling or
charge would (A)
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prevent consummation of any of the transactions contemplated by this
Agreement, or (B) cause any of the transactions between the Buyer and the
Seller contemplated by this Agreement to be rescinded following
consummation (and no such injunction, judgment, order, decree, ruling or
charge shall be in effect).
(ii) The Buyer shall be prepared to deliver the Pledge Agreement,
the Shares (pursuant to the Pledge Agreement), the Escrow Agreement, and
the New Employment Agreement.
The Seller may waive any condition specified in this Section 6(b) if he executes
a writing so stating at or prior to the Closing. The Closing itself shall be
deemed a waiver or satisfaction of the conditions to Closing.
7. Remedies for Breaches of This Agreement.
(a) Survival of Representations and Warranties. All of the representations
and warranties of the Seller contained in this Agreement shall survive the
Closing hereunder (even if the damaged Party knew or had reason to know of any
misrepresentation or breach of warranty at the time of Closing) and continue in
full force and effect for a period of one (1) year after the Closing.
(b) Indemnification Provisions for Benefit of the Buyer.
(i) In the event the Seller breaches any of its representations,
warranties, and covenants contained herein, and, if Fields (or any of them)
makes a written claim for indemnification against the Seller therefor,
then, the Seller agrees to indemnify Fields (and any of them as
appropriate) from and against the entirety of any Adverse Consequences that
the Buyer or MFH may suffer through and after the date of the claim for
indemnification (including any Adverse Consequences Fields or any of them
may suffer after the end of any applicable survival period) resulting from,
arising out of, relating to, in the nature of, or caused by the breach. For
purposes of this Agreement, "Adverse Consequences" means all actions,
suits, proceedings, hearings, investigations, charges, complaints, claims,
demands, injunctions, judgments, orders, decrees, rulings, damages, dues,
penalties, fines, costs, amounts paid in settlement, liabilities,
obligations, taxes, liens, losses, expenses, and fees, including court
costs and reasonable attorneys' fees and expenses. "Taxes" means any
federal, state, local, or foreign income, gross receipts, license, payroll,
employment, excise, severance, stamp, occupation, premium, windfall
profits, environmental (including taxes under Code Sec. 59A), customs
duties, capital stock, franchise, profits, withholding, social security (or
similar), unemployment, disability, real property, personal property,
sales, use, transfer, registration, value added, alternative or add-on
minimum, estimated, or other tax of any kind whatsoever, including
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any interest, penalty, or addition thereto, whether disputed or not.
(ii) If any third party shall notify Fields (or any them) with respect to
any matter (a "Third Party Claim") which may give rise to a claim for
indemnification against the Seller under this ' 7, then Fields (or any of them)
shall promptly notify the Seller thereof in writing, provided, however, that no
delay on the part of Fields (or any of them), as applicable, in notifying the
Seller shall relieve the Seller from any obligation hereunder unless (and then
solely to the extent) the Seller is prejudiced.
(iii) The indemnification procedure respecting a Third Party Claim
hereunder shall be as follows:
(c) Matters Involving Third Parties.
(i) If any third party shall notify Fields (or any of them) with respect
to any matter (a "Third Party Claim") which may give rise to a claim for
indemnification against the Seller under this Section 7, then Fields (or any
them) shall promptly notify the Seller thereof in writing; provided, however,
that no delay on the part of Fields (or any of them) in notifying the Seller
shall relieve the Seller from any obligation hereunder unless (and then solely
to the extent) the Seller thereby is prejudiced.
(ii) The Seller will have the right to defend Fields (and each of them)
against the Third Party Claim with counsel of its choice satisfactory to Fields
so long as:
(A) the Seller notifies Fields in writing within 15 days after Fields
has given notice of the Third Party Claim that the Seller will indemnify
Fields (and each of them) from and against the entirety of any Adverse
Consequences Fields (and any of them) may suffer resulting from, arising
out of, relating to, in the nature of, or caused by the Third Party Claim;
(B) the Seller provides Fields with evidence acceptable to Fields
that the Seller will have the financial resources to defend against the
Third Party Claim and fulfill its indemnification obligations hereunder;
(C) the Third Party Claim involves only money damages and does not
seek an injunction or other equitable relief;
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(D) the settlement of, or an adverse judgment with respect to, the
Third Party Claim is not, in the good faith judgment of Fields, likely to
establish a precedential custom or practice materially adverse to the
continuing business interests of Fields (or any of them); and
(E) the Seller conducts the defense of the Third Party Claim actively
and diligently.
(iii) The party not conducting the defense of the Third Party Claim above
may retain separate co- counsel at its sole cost and expense and participate in
the defense of the Third Party Claim;
(iv) The party conducting the defense
(A) will not consent to the entry of any judgment or enter into any
settlement with respect to the Third Party Claim without the prior written
consent of the other party (not to be withheld unreasonably); and
(B) will not consent to the entry of any judgment or enter into any
settlement with respect to the Third Party Claim without the prior written
consent of the other party (not to be withheld unreasonably).
(v) In the event any of the conditions in Section 7(c)(ii) above is or
becomes unsatisfied, however,
(A) Fields (or either of them) may defend against, and consent to the
entry of any judgment or enter into any settlement with respect to, the
Third Party Claim in any manner it reasonably may deem appropriate, and
Fields (or either of them) need not consult with, or obtain any consent
from, Seller in connection therewith);
(B) the Seller will reimburse Fields (and each of them) promptly and
periodically for the costs of defending against the Third Party Claim
(including reasonable attorneys' fees and expenses); and
(C) the Seller will remain responsible for any Adverse Consequences
Fields (or any of them) may suffer resulting from, arising out of, relating
to, in the nature of, or caused by the Third Party Claim to the fullest
extent provided in this Section 7.
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(d) Other Rights and Remedies. The foregoing indemnification
provisions are in addition to, and not in derogation of, any statutory,
equitable, or common law remedy Fields (or any of them) may have for breach
of a representation, warranty, or covenant.
8. Termination of Certain Agreements Among the Parties.
(a) Except as set forth in Section 8(b) below, the Parties expressly
intend and agree that, subject to and effective upon the occurrence of the
Closing, all of the ▇▇▇▇▇▇▇▇▇ Contracts and the Stock Acquisition
Agreements shall automatically and irrevocably terminate and be of no
further force or effect (hereinafter collectively, the "Terminated
Agreements"). Each Party hereby agrees that he/it has received, or has
waived in consideration of the Closing of the transactions contemplated by
this Agreement, all respective payments and performances which he/it is
presently entitled to receive, or, prior to the termination thereof, may be
entitled to receive, under any of the Terminated Agreements. Each Party
further acknowledges and agrees that no further payments or performances of
any kind will or is required to be made to him/it under any of the
Terminated Agreements.
(b) Notwithstanding Section 8(a) above, none of the following written
agreements executed by some or all of the Parties, shall terminate by
reason of the execution of this Agreement or the Closing of the
transactions contemplated thereby or shall otherwise constitute Terminated
Agreements, it being the Parties' express intention that each such
agreement shall terminate or expire, if at all, according to the express
terms and conditions of each such agreement:
(i) This Agreement, the New Employment Agreement and any
document or instrument executed or delivered in connection with the
Closing of the transactions that are the subject of this Agreement;
(ii) The Franchise Agreements;
(iii) The Affidavit of Stock Certificate and Indemnity Agreement,
dated as of September 4, 1997, executed by Seller and delivered in
connection with the First Acquisition Agreement; and
(iv) The Notes; provided however that upon payment to the Buyer
of the Seller's Indebtedness, the Notes shall be marked "paid in full"
and delivered to the Seller.
9. The Seller's Release of Claims. Subject to and effective only upon the
occurrence of the Closing, the Seller, for himself and his heirs, successors,
agents, assigns and legal representatives, hereby forever releases and
discharges Fields (and each of them) and the Company and their respective
officers, directors, shareholders, managers,
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parent, sister and affiliated entities, accountants, attorneys (whether in-house
or otherwise), predecessors, successors, agents, assigns and legal
representatives (collectively, the "Buyer Released Parties"), from any and all
payments, charges, costs, wages, salaries, benefits, payments, performances,
claims, actions, liabilities, profits, bonuses, distributions, dividends and
damages of whatever kind or nature, known or unknown, now accrued or existing or
accruing or arising in the future, whether asserted or unasserted, whether based
on tort, contract, statutory or other theory of liability (whether asserted at
law or in equity) (collectively, "Claims"); provided however, nothing contained
in this Section 9 shall release or discharge any Buyer Released Party from the
performance of any obligation required of a Buyer Released Party under any of
this Agreement, the Pledge Agreement, the New Employment Agreement and the
Franchise Agreements. The Seller represents and warrants that he has not
assigned or conveyed to third parties any claims or actions against any of the
Buyer Released Parties.
10. The Company's and Fields' Release of Claims. Subject to and effective
only upon the occurrence of the Closing, Fields and the Company, each for itself
and its respective parent, sister and affiliated entities, successors, agents,
assigns and legal representatives, hereby forever releases and discharges the
Seller and his respective heirs, successors, agents, assigns and legal
representatives, accountants, attorneys, and affiliated entities (collectively,
the "Seller Released Parties"), from any and all Claims, provided however,
nothing contained in this Section 10 shall release or discharge any Seller
Released Party from the performance of any obligation under any of the this
Agreement, the Pledge Agreement, the New Employment Agreement and the Franchise
Agreements. The Buyer represents and warrants that it has not assigned or
conveyed to third parties any claims or actions against any of the Seller
Released Parties.
11. Miscellaneous.
(a) No Third-Party Beneficiaries. This Agreement shall not confer any
rights or remedies upon any Person other than the Parties and their
respective successors and permitted assigns.
(b) Entire Agreement. This Agreement (including the documents referred
to herein) constitutes the entire agreement among the Parties and
supersedes any prior understandings, agreements or representations by or
among the Parties, written or oral, to the extent they relate in any way to
the subject matter hereof.
(c) Succession and Assignment. This Agreement shall be binding upon
and inure to the benefit of the Parties named herein and their respective
successors and permitted assigns. No Party may assign either this Agreement
or any of his or its rights, interests or obligations hereunder without the
prior written approval of the Buyer and the Seller; provided, however, that
the Buyer may (i) assign any or all of its rights and interests hereunder
to one or more of its affiliates, and (ii) designate one or more of its
affiliates to perform its obligations hereunder (in any or all of which
cases the Buyer nonetheless shall remain responsible for the
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performance of all of its obligations hereunder).
(d) Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
(e) Headings. The section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way the meaning
or interpretation of this Agreement.
(f) Notices. All notices, requests, demands, claims and other
communications hereunder will be in writing. Any notice, request, demand,
claim or other communication hereunder shall be deemed duly given if (and
then two business days after) it is sent by registered or certified mail,
return receipt requested, postage prepaid, and addressed to the intended
recipient as set forth below:
If to the Seller: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇.▇. ▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
With a copy to: Mette, ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
If to the Buyer or MFH: ▇▇▇. ▇▇▇▇▇▇' Original Cookies, Inc.
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Legal Department
With a Copy to: Jones, Waldo, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, P.C.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Any Party may send any notice, request, demand, claim or other
communication hereunder to the intended recipient at the address set forth
above using any other means (including personal delivery, expedited
courier, messenger service, telecopy, telex, ordinary mail or electronic
mail), but no such notice, request, demand, claim or other communication
shall be deemed to have been duly given unless and until it actually is
received by the intended recipient. Any Party may change the address to
which notices, requests, demands, claims and other communications hereunder
are to be delivered by giving the other Parties notice in the manner herein
set forth.
13
(g) Governing Law. This Agreement shall be governed by and construed in
accordance with the domestic laws of the State of Utah without giving
effect to any choice or conflict of law provision or rules thereof.
(h) Amendments and Waivers. No amendment of any provision of this
Agreement shall be valid unless the same shall be in writing and signed by
the Buyer and each of the Sellers. No waiver by any Party of any default,
misrepresentation or breach of warranty or covenant hereunder, whether
intentional or not, shall be deemed to extend to any prior or subsequent
default, misrepresentation or breach of warranty or covenant hereunder or
affect in any way any rights arising by virtue of any prior or subsequent
occurrence.
(i) Severability. Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction shall not
affect the validity or enforceability of the remaining terms and provisions
hereof or the validity or enforceability of the offending term or provision
in any other situation or in any other jurisdiction.
(j) Expenses. Each of the Parties will bear his or its own costs and
expenses (including legal fees and expenses) incurred in connection with
this Agreement and the transactions contemplated hereby. The Seller agrees
that none of the Company and its Subsidiaries has borne or will bear any of
the Seller's costs and expenses (including any of their legal fees and
expenses) in connection with this Agreement or any of the transactions
contemplated hereby.
(k) Incorporation of Exhibits and Schedules. The Exhibits and Schedules
identified in this Agreement are incorporated herein by reference and made
a part hereof.
(l) Specific Performance. Each of the Parties acknowledges and agrees
that the other Parties would be damaged irreparably in the event any of the
provisions of this Agreement are not performed in accordance with their
specific terms or otherwise are breached. Accordingly, each of the Parties
agrees that the other Parties shall be entitled to an injunction or
injunctions to prevent breaches of the provisions of this Agreement and to
enforce specifically this Agreement and the terms and provisions hereof in
any action instituted in any court of the United States or any state
thereof having jurisdiction over the Parties and the matter, in addition to
any other remedy to which they may be entitled, at law or in equity.
(m) Joinder of Spouse. The spouse of the Seller is executing this
Agreement to acknowledge its fairness (and the fairness of the Stock
Acquisition Agreements) and that it is in such spouse's best interest to
bind such spouse's community property interest, if any, to the terms of
this Agreement (and the Stock Acquisition Agreements).
14
[Remainder of Page Intentionally Left Blank]
15
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of
the date first above written.
BUYER: ▇▇▇. ▇▇▇▇▇▇' ORIGINAL COOKIES, INC.
By:
----------------------------------------------
Its:
------------------------------------------
MFH ▇▇▇. ▇▇▇▇▇▇' HOLDING COMPANY, INC.
By:
----------------------------------------------
Its:
------------------------------------------
COMPANY PRETZEL TIME, INC.
By:
----------------------------------------------
Its:
------------------------------------------
SELLER:
-------------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
-------------------------------------------------
▇▇▇ ▇▇▇▇▇▇▇▇▇
S-1
LIST OF EXHIBITS
A Stock Acquisition Agreements
B ▇▇▇▇▇▇▇▇▇ Contracts
C Option Agreement
D Notice of Exercise of Option
E New Employment Agreement
F Pledge Agreement
G Escrow Agreement
H Summary of Seller's Indebtedness
I List of Franchise Agreements
J Addendum
EXHIBIT A
(Listing of Stock Acquisition Agreements)
(A) Stock Acquisition Agreement, dated as of September 2, 1997, by and among
MFH, the Company and the Seller (therein referred to as the Principal
Shareholder), assigned (together with all of the Company's stock acquired
thereunder) by MFH to the Buyer pursuant to that certain Capital
Contribution and Assumption Agreement, dated as of November 26, 1997 (the
"Assumption Agreement"), by and between MFH and the Buyer) (the "First
Acquisition Agreement");
(B) Stock Purchase Agreement, dated as of August 19, 1997, among the Company,
MFH and persons (other than MFH and the Company) owning common stock of the
Company, assigned by MFH to the Buyer pursuant to the Assumption Agreement;
(C) Stock Purchase Agreement, dated as of January 2, 1998 (the "Second
Acquisition Agreement"), by and between MFH and the Seller, assigned
(together with all of the Company's stock acquired thereunder) by MFH to
the Buyer pursuant to the Assumption Agreement;
(D) Stock Purchase Agreement, dated as of June 12, 1998, by and between MFH and
the Seller, as amended by the Addendum;
(E) Stock Purchase Agreement, dated as of December 9, 1998, by and between the
Buyer and the Seller; and
(F) Side Letter between MFH and the Seller dated September 2, 1997, concerning
future franchise rights of Seller.
Page 1
EXHIBIT B
(Listing of ▇▇▇▇▇▇▇▇▇ Contracts)
The ▇▇▇▇▇▇▇▇▇ Contracts, each of which was assigned by MFH to MFOC pursuant to
the Assumption Agreement, consist of the following:
A. Shareholders Agreement of Pretzel Time, Inc., dated as of September 2,
1997, by and between the Seller, MFH and the Company;
B. Management Agreement, dated as of September 2, 1997, by and between MFH
and the Company;
C. Exchange Agreement, dated as of September 2, 1997, by and between MFH
and the Seller;
D. Registration Rights Agreement, dated as of September 2, 1997, by and
between MFH and the Seller; and
E. Employment Agreement, dated as of September 2, 1997, by and between the
Seller and the Company, as clarified by that certain Side Letter of even
date executed by the Seller and the Company.
Page 1
EXHIBIT C
Attach Copy of Option
EXHIBIT D
Option Exercise
EXHIBIT E
▇▇▇. ▇▇▇▇▇▇' ORIGINAL COOKIES, INC.
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
December 30, 1998
▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇.▇. ▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Mette, ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
Attn: ▇▇. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Re: Option ("Option") granted pursuant to Option Agreement, dated December
9, 1998 ("Option Agreement"), by and between ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ (Mr.
"▇▇▇▇▇▇▇▇▇"), ▇▇▇. ▇▇▇▇▇▇' Original Cookies, Inc. ("MFOC") and others
---------------------------------------------------------------------
Dear ▇▇. ▇▇▇▇▇▇▇▇▇ and ▇▇. ▇▇▇▇▇▇:
Notice is hereby given that MFOC, effective as of the date hereof, has
exercised the Option with respect to all of the Shares (as defined and described
in the Option Agreement) of Pretzel Time, Inc., a Pennsylvania corporation. The
Closing shall occur on December 30, 1998.
Sincerely,
▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Vice President of Administration
EXHIBIT E
Attach New Employment Agreement
EXHIBIT F
Attach Pledge Agreement
PLEDGE AGREEMENT
This Pledge Agreement ("Agreement") dated as of December 30, 1998, is made
and entered into by and between ▇▇▇. ▇▇▇▇▇▇ Original Cookies, Inc., a Delaware
corporation ("Grantor"), and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ (the "Secured Party").
WHEREAS, Grantor, Secured Party and Pretzel Time, Inc., a Pennsylvanian
corporation (the "Company"), have, as of the date hereof, entered into that
certain Stock Purchase Agreement (the "Purchase Agreement") pursuant to which
Grantor is purchasing twenty seven (27) shares of the Common Stock of the
Company (the "Collateral");
WHEREAS, Grantor has agreed to grant Secured Party a security interest in
the Collateral as security for payment of amounts due under Section 1(c)(i),
(ii) and (iii) of the Purchase Agreement (the "Obligations");
NOW, THEREFORE, in consideration of financial accommodations given or to be
given or continued by Secured Party to Grantor, Grantor hereby agree with
Secured Party as follows:
1. GRANT OF SECURITY INTEREST; DEFINED TERMS
1.1 Collateral. As collateral security for the prompt and complete
----------
payment and performance when due of the Obligations, Grantor hereby conveys,
mortgages, hypothecates, and pledges to Secured Party, and grants to Secured
Party, a continuing lien upon and security interest in, all of Grantor's right,
title and interest, now owned or hereafter acquired, and without any further act
on the part of the Grantor or Secured Party (other than as provided herein), in
the Collateral.
1.2 Other Terms. All capitalized terms used but not defined herein shall
-----------
have the same meanings ascribed to such terms in the Note and the Uniform
Commercial Code as in effect on the date hereof in the State of Utah (the
"Code").
2. COVENANTS
Grantor covenants and agree that from and after the date of this Agreement
and for so long as the Obligations remain outstanding:
2.1 Recording and Legal Costs. Each party shall be responsible for its
-------------------------
own expenses, including attorney fees, incident to the Obligations and other
expenses incident to perfecting Secured Party's security interest in the
Collateral.
2.2 Further Documentation and Actions. At any time, and from time to
---------------------------------
time, upon
request and at the sole expense of Grantor, Grantor will endorse, execute and
deliver to Secured Party all reasonable instruments or documents, including, but
not limited to, financing or continuation statements under the Code in effect in
any jurisdiction with respect to the liens created under this Agreement, and do
all things reasonably necessary to carry into effect the provisions of this
Agreement or to create, preserve or perfect any interest granted hereby or to
enable or assist Secured Party to exercise and enforce their rights and the
rights of Secured Party hereunder or in connection herewith or with the
Obligations, and to facilitate collection of Collateral. Grantor authorizes
Secured Party to file any financing statement or continuation statement in such
form, with or without Grantor's name signed thereon, and in such places as may
be appropriate.
2.3 Further Covenants. Without the prior written consent of Secured
-----------------
Party, Grantor will not sell, transfer, lease or otherwise dispose of any of the
Collateral, or attempt, offer or contract to do so.
2.4 Maintenance of Collateral. Grantor shall pay promptly when due all
-------------------------
property and other taxes, assessments and governmental charges or levies imposed
upon, and all claims (including claims for labor, materials and supplies)
against, the Collateral, except to the extent the validity thereof is being
contested in good faith.
2.5 Delivery of Certificates to Escrow Agent. On the date hereof, the
----------------------------------------
share certificates evidencing the Collateral shall be delivered to Jones, Waldo,
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, P.C., to be held in accordance with the terms of an Escrow
Agreement of even date herewith.
3. EVENTS OF DEFAULT
The following shall constitute "Events of Default" hereunder:
3.1 Nonperformance. Failure to pay the Obligations when due, subject to a
--------------
five (5) day period to cure from the due date, or the failure to cure any other
default under this Agreement within thirty (30) days of the receipt of written
notice from Secured Party of such a default;
3.2 Termination of Interest. Lapse or termination of Grantor's interest
-----------------------
in any of the Collateral; and
3.3 Extraordinary Events. If (i) Grantor shall file a voluntary petition
--------------------
in bankruptcy or a petition or answer seeking a reorganization, arrangement,
composition, readjustment, liquidation, dissolution or other relief of the same
or different kind under any provision of the bankruptcy laws or Grantor shall
make an assignment for the benefit of creditors; or (ii) an involuntary petition
in bankruptcy against Grantor or a petition or answer made by a person other
than Grantor seeking a reorganization, arrangement, composition, readjustment,
liquidation, dissolution or other relief against Grantor of the same or
different kind under any provision of the bankruptcy laws is filed or if a
receiver is appointed having jurisdiction of the business property or assets of
Grantor, and, in any of such events, if such petition shall not be dismissed or
the receivership vacated within
Page 2
ninety (90) days from the date filed or commenced.
4. CERTAIN RIGHTS; EFFECT OF EVENT OF DEFAULT
4.1 Obligations Due; Commitments Terminated. If an Event of Default shall
---------------------------------------
occur, then, notwithstanding any other agreement now or hereafter existing,
Secured Party may declare all Obligations immediately due and payable and
exercise any remedies provided herein.
4.2 Action Regarding Collateral. Secured Party, at any time after the
---------------------------
occurrence of an Event of Default (and subject to any applicable cure periods),
may collect, receive, appropriate and realize upon any Collateral or any part
thereof. Upon any Event of Default, Secured Party may sell, re-sell, assign,
transfer, lease and deliver or otherwise deal or dispose of or decline to deal
with all or any part of the Collateral, in each case in accordance with the
Code, at public or private sale or sales, at such price or prices as it may deem
best, and upon such terms and conditions as it may deem advisable, either for
cash or credit or future delivery without assumption of any credit risk as
Secured Party may elect. Secured Party shall apply the net proceeds of any such
collection, recovery, receipt, appropriation, realization or sale, after
deducting all reasonable costs and expenses incurred therein or incidental to
the care or safekeeping of any of such Collateral or relating to such Collateral
or the rights of Secured Party hereunder, including, without limitation,
reasonable attorneys' fees and disbursements, to the payment in whole or in part
of the Obligations, and only after such application and after the payment by
Secured Party of any other amount required by any provision of law, including,
without limitation, Section 9-504(l)(c) of the Code, need Secured Party account
for the surplus, if any, to Grantor.
4.3 Additional Remedies upon Event of Default. If an Event of Default
-----------------------------------------
shall occur and be continuing, Secured Party may exercise, in addition to all
other rights and remedies granted under this Agreement, and in any other
instrument or agreement securing, evidencing or relating to the Obligations, all
rights and remedies of a secured party under the Code.
4.4 Continuing Security Interest. This Agreement shall create a
----------------------------
continuing security interest in the Collateral and shall (i) remain in full
force and effect until the payment in full of the Obligations, (ii) be binding
upon Grantor, its successors and assigns, and (iii) inure to the benefit of the
parties hereto together with their successors and assigns. Upon the payment of
the Obligations the security interest granted hereby shall terminate, and all
rights in the Collateral shall revert to Grantor. Upon any such termination
Secured Party will promptly execute and deliver to Grantor such documents as
Grantor shall reasonably request to evidence such termination.
Page 3
5. GENERAL PROVISIONS
5.1 Remedies Cumulative. All rights, remedies and powers of Secured Party
-------------------
hereunder and in connection herewith are cumulative, and not alternative or
exclusive, may be exercised singly or concurrently and shall be in addition to
all other rights, remedies and powers of Secured Party whether under law, equity
or agreement. All representations, warranties, covenants and other agreements
of Grantor herein shall be cumulative and if, and to the extent, there is any
inconsistency or conflict between terms contained herein and in the Purchase
Agreement, the terms of the Purchase Agreement shall govern and control.
5.2 Governing Law; Severability. This Agreement shall be governed by and
---------------------------
construed in accordance with the laws of the State of Utah, without giving
effect to the conflicts of laws provisions thereof. Each provision of this
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be prohibited by or
invalid under such law, such provision shall be ineffective to the extent of
such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Agreement.
5.3 Construction. The captions in this Agreement are for convenience only
------------
and shall not affect the construction or interpretation hereof.
5.4 Assignment. This Agreement shall inure to and be binding upon the
----------
heirs, personal representatives, successors, and assigns of the parties.
Neither party shall have any right to assign this Agreement without the prior
written consent of the other party.
5.5 Notice. All notices, requests, demands, and other communications
------
which are required to be or may be given under this Agreement shall be deemed to
have been duly given if (and then two business days after) it is sent by
registered or certified mail, postage prepaid, return receipt requested, and
addressed to the intended recipient as set forth below:
To Secured Party: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇.▇. ▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
with a copy to: Mette, ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
To Grantor: ▇▇▇. ▇▇▇▇▇▇' Original Cookies, Inc.
Attention: Legal Department
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Page 4
with a copy to: Jones, Waldo, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, P.C.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇., ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Any party may send any notice, request, demand, claim or other communication
hereunder to the intended recipient at the address set forth above using any
other means (including personal delivery, expedited courier, messenger service,
telecopy, telex, ordinary mail or electronic mail), but no such notice, request,
demand, claim or other communication shall be deemed to have been duly given
unless and until it actually is received by the intended recipient. Any party
may change the address to which notices, requests, demands, claims and other
communications hereunder are to be delivered by giving the other party notice in
the manner herein set forth.
5.6 Waivers and Amendments. None of the terms or provisions of this
----------------------
Agreement may be waived, amended, supplemented or otherwise modified except by a
written instrument executed by Grantor and Secured Party, provided that any
--------
provision of this Agreement may be waived by Secured Party in a written letter
or agreement executed by Secured Party. Any such waiver, amendment, supplement
or other modification shall be binding upon Grantor and Secured Party.
5.7 Counterparts. This Agreement may be executed in counterparts, all of
------------
which together shall constitute one and the same original.
5.8 Dispute Resolution. All disputes arising out of this Agreement shall
------------------
be settled in accordance with the provisions set forth in the Purchase
Agreement.
5.9 Joinder of Spouse. The spouse of the Sellers is executing this
-----------------
Agreement to acknowledge its fairness and that it is in such spouse's best
interest to bind such spouse's community property interest, if any, to the terms
of this Agreement.
Page 5
IN WHEREOF, Grantor has duly executed this Agreement as of the day and year
first above written.
GRANTOR: SECURED PARTY:
▇▇▇. ▇▇▇▇▇▇' Original Cookies, Inc.
By:
----------------------------------- --------------------------------------
Name ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
----------------------------------- --------------------------------------
Title ▇▇▇ ▇▇▇▇▇▇▇▇▇
Page S-1
EXHIBIT G
Attach Escrow Agreement
ESCROW AGREEMENT
----------------
ESCROW AGREEMENT ("Agreement"), dated as of December 30, 1998, by and among
▇▇▇. ▇▇▇▇▇▇' Original Cookies, Inc., a Delaware corporation (the "Debtor"),
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ (the "Secured Party"), and Jones, Waldo, ▇▇▇▇▇▇▇▇ &
▇▇▇▇▇▇▇▇▇, P.C., a Utah professional corporation with offices at 1500 ▇▇▇▇▇
Fargo Tower, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇ (the "Escrow
Agent").
W I T N E S S E T H:
WHEREAS, pursuant to a Stock Purchase Agreement made and entered into as of
December 30, 1998 (the "Purchase Agreement"), by and among the Debtor, as buyer,
and the Secured Party, as seller, the Secured Party has agreed to sell to the
Debtor twenty-seven (27) shares of the Common Stock (par value $10.00) of
Pretzel Time, Inc., a Pennsylvania corporation (the "Shares"); and
WHEREAS, pursuant to the Purchase Agreement, the Secured Party has executed
and delivered a Pledge Agreement of even date herewith (the "Pledge Agreement"),
granting a security interest in the Shares to secure the Debtor's performance of
the Obligations (as defined in the Pledge Agreement).
WHEREAS, the Debtor and the Secured Party have agreed that at the Closing
(as defined in the Purchase Agreement) the Shares shall be delivered to the
Escrow Agent to be held by it in escrow pursuant to the terms and conditions of
this Escrow Agreement for delivery to the Debtor upon the payment of the
Obligations.
NOW, THEREFORE, intending to be legally bound hereby, the parties hereto
agree as follows:
1. Escrow Agent. The Escrow Agent hereby agrees to act as Escrow Agent
------------
in accordance with the terms and conditions of this Escrow Agreement.
2. Deposits Into Escrow.
--------------------
At the Closing, the Secured Party and the Debtor shall deliver to the
Escrow Agent fully executed counterparts of this Escrow Agreement. The Debtor
shall deliver or cause to be delivered into escrow with Escrow Agent a stock
certificate representing the Share(s) (the "Certificate") together with a Stock
Power, endorsed in blank, for such Certificate(s) (collectively, the "Escrowed
Documents").
3. Disbursement of the Escrowed Documents.
--------------------------------------
a. Conditions to Disbursement. The Escrow Agent shall disburse all of
--------------------------
the Escrowed Documents in accordance with this Escrow Agreement only upon
Page 1
the Escrow Agent's receipt of any of the following directing or permitting
the disbursement of the Shares as set forth therein:
(i) joint written instructions from the Secured Party and the
Debtor; or
(ii) written notice signed by the Debtor, (A) stating that the
Obligations have been paid in full, (B) instructing the Escrow Agent
to deliver the Escrowed Documents to the Debtor pursuant to the Pledge
Agreement, (C) certifying that a copy of the notice delivered pursuant
to the Escrow Agent pursuant to this subparagraph (ii) was
concurrently delivered to the Secured Party; provided however, the
Escrow Agent shall not act in accordance with such notice if, pursuant
to subparagraph c. below, the Secured Party objects thereto; or
(iii) written notice signed by the Secured Party, (A) stating
that a Default (as defined in the Purchase Agreement) by Debtor has
occurred, (B) instructing the Escrow Agent to deliver the Shares to
the Secured Party pursuant to the Pledge Agreement, (C) certifying
that a copy of the notice delivered pursuant to this subparagraph
(iii) was concurrently delivered to the Debtor; provided however, the
Escrow Agent shall not act in accordance with any such notice if,
pursuant to subparagraph c. below, the Debtor objects thereto; or
(iv) an order of a court having jurisdiction as herein
specified.
b. Disbursement. Subject to the terms and conditions of subparagraph 1
above, the Escrow Agent shall disburse the Escrowed Documents from escrow as
follows:
(i) to the Debtor, upon payment of the Obligations; or
(ii) to the Secured Party, upon the occurrence of a Default.
c. Disputes. The Debtor or the Secured Party as the case may be shall
give the Escrow Agent written notice within fifteen (15) calendar days of a
notice as specified in Paragraph 3.a. of any objection to, or any dispute
between the Secured Party and the Debtor concerning, proposed or requested
disbursement of the Escrowed Documents. Absent such an objection, then sixteen
(16) calendar days following receipt of the notice provided for in Paragraph
3.a., Escrow Agent may disburse the Escrowed Documents as provided in Paragraph
3.b. The Debtor and the Secured Party hereby agree that notwithstanding any such
objection by or dispute between the Debtor and the Secured Party, the Escrow
Agent may at any time disburse all of the Escrowed Documents in the manner
directed by any court specified in paragraph 17 below.
Page 2
4. Duties of Escrow Agent. The parties to this Agreement agree as
----------------------
follows:
a. The Escrow Agent is not and shall not be deemed to be an agent with
respect to any obligation or performance required of the Escrow Agent under this
Agreement and is merely acting as a depository and in a ministerial capacity
hereunder with the limited duties herein prescribed. The parties acknowledge
that the Escrow Agent, in its capacity as Escrow Agent, is acting solely as a
stakeholder at their request and for their convenience and that the Escrow Agent
shall not be liable to either Buyer or Seller for any act or omission on its
part unless taken or suffered in bad faith or in willful disregard of this
Escrow Agreement or involving gross negligence on the part of the Escrow Agent.
b. The Escrow Agent does not have and shall not be deemed to have any
responsibility in respect of any instructions, certificate, or notice delivered
to it other than to faithfully carry out the obligations undertaken in this
Escrow Agreement and to follow the directions in such instructions or notice in
accordance with the terms hereof.
c. The Escrow Agent may conclusively rely on and act in accordance
with any certificate, instruction, notice, letter, telegram, cablegram, or other
written instrument reasonably believed by it to be genuine and to have been
signed by the proper party or parties.
d. If any legal proceeding is instituted by or against the Escrow
Agent with respect to the Escrowed Documents or any matter governed by or that
is the subject of this Agreement, the Escrow Agent agrees promptly to give
notice of such proceeding to all of the parties to this Escrow Agreement.
e. The Escrow Agent may resign as such hereunder by giving written
notice of such resignation to the parties to this Escrow Agreement. Upon
receipt of such notice, the parties hereto shall furnish to the Escrow Agent
written instructions for the release of the Escrowed Documents (or such portion
thereof as may then be in escrow) to a substitute Escrow Agent which (whether
designated by written instructions from the parties hereto jointly or, in the
absence thereof, by instructions from a court of competent jurisdiction to the
Escrow Agent) shall be a title company, bank, or trust company organized and
doing business under the laws of the United States or any state thereof. Such
substitute Escrow Agent shall thereafter hold the Escrowed Documents received by
it pursuant to the terms of this Escrow Agreement and otherwise act hereunder as
if it were the Escrow Agent originally named herein. The Escrow Agent's duties
and responsibilities hereunder shall terminate upon the release of all of the
Escrowed Documents then held in escrow according to such written instruction or
upon such delivery as herein provided. This Escrow Agreement shall not
otherwise be assignable by the Escrow Agent without the prior written
Page 3
consent of each of the parties hereto.
f. In the event of any dispute between the parties hereto, the Escrow
Agent shall have the right, at any time, to deposit the Escrowed Documents
with the clerk of any state or federal court of appropriate jurisdiction in
Utah and shall give written notice of such deposit to the Seller and the
Buyer. Upon such deposit, the Escrow Agent shall be relieved and discharged
of all further obligations and responsibilities hereunder.
g. The Escrow Agent hereby acknowledges receipt of a copy of the
Purchase Agreement and the Pledge Agreement, but, except for reference
thereto for certain terms and conditions not set forth herein, the Escrow
Agent is not charged with any duty or obligation arising under any such
documents or any other agreements between or among any of the parties
hereto, and the Escrow Agent's responsibilities, as Escrow Agent, shall be
governed solely by this Escrow Agreement.
h. The Escrow Agent or any attorney thereof, shall be permitted to act
as counsel for the Seller in any dispute as to disbursement of the Escrowed
Documents or any other dispute between the parties whether or not the
Escrow Agent is in possession of the Escrowed Documents and continues to
act as Escrow Agent.
5. Indemnification of Escrow Agent. The Buyer and the Seller, jointly
-------------------------------
and severally, agree to indemnify and to save and hold harmless the Escrow
Agent, in its capacity as Escrow Agent hereunder, from any claim, action, cause
of action, suit, judgment, amount paid in settlement, cost or expense
(individually a "Loss" and collectively "Losses") suffered or incurred by Escrow
Agent, in its capacity as Escrow Agent hereunder, based upon or arising out of
this Escrow Agreement or Escrow Agent's performance hereunder unless it shall be
determined by a court of competent jurisdiction from which no appeal is taken or
allowed that the act or omission of Escrow Agent giving rise to such Loss or
Losses was taken or suffered in bad faith or in willful disregard of this Escrow
Agreement or constitutes gross negligence on the part of the Escrow Agent. The
provisions of this Paragraph 5 shall survive the termination of this Agreement.
6. No Assertion of Rights by Escrow Agent. The Escrow Agent shall not
--------------------------------------
assert any right to use, garnish, attach, levy upon, claim a set-off against or
otherwise encumber the Escrowed Documents.
7. Diligence. Should it be necessary for the Escrow Agent to accept or
---------
act upon any instruments, directions, documents or instruments signed or issued
by, or on behalf of, any corporation, partnership, trade name or individual, it
shall not be necessary for the Escrow Agent to inquire into the authority of the
person or persons who have issued or authenticated such papers unless and to the
extent specifically provided hereinabove.
Page 4
8. Notice of Agreements. Except for this Escrow Agreement and the
--------------------
provisions of the Purchase Agreement referenced herein, the Escrow Agent shall
not be bound in any way by any agreement or contract to which the Debtor and the
Secured Party are parties, whether or not the Escrow Agent has knowledge of the
existence of such an agreement or contract or its terms and conditions, and the
only duties or responsibilities of the Escrow Agent shall be to hold the
Escrowed Documents to disburse the same in accordance with the terms and
conditions of this Escrow Agreement.
9. Amendment. This Escrow Agreement may be altered or amended only with
---------
the written consent of the Debtor, the Secured Party and the Escrow Agent.
Should the Debtor and the Secured Party attempt to change this Escrow Agreement
in a manner that would either increase the duties or responsibilities of the
Escrow Agent or which the Escrow Agent in his sole and absolute discretion deems
undesirable, the Escrow Agent may resign as Escrow Agent by notice to the Debtor
and the Secured Party, and until a successor of the Escrow Agent is appointed by
the Debtor and the Secured Party and accepts such appointment, the Escrow
Agent's only duty shall be to hold the Escrowed Documents in accordance with the
original instructions contained in this Escrow Agreement.
10. Notices. All notices pursuant to this Escrow Agreement shall be given
-------
in writing, hand-delivered or mailed by registered or certified mail, return
receipt requested, or by overnight courier (such as Federal Express) to the
parties hereto at the following addresses:
If to Escrow Agent: ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, P.C.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
ATTN: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
If to Debtor: To ▇▇▇. ▇▇▇▇▇▇' Original Cookies, Inc. (with
copies to counsel) in accordance with the
Purchase Agreement
If to Secured Party: To ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ (with copies to
counsel) in accordance with the Purchase
Agreement
11. Entire Agreement. This Escrow Agreement contains the entire agreement
----------------
between the parties hereto, and supersedes any and all previous oral and written
and all contemporaneous oral negotiations, commitments, writings and
understandings of the parties with respect to the matters specified herein.
12. Governing Law. This Escrow Agreement shall be governed by and
-------------
construed in accordance with the laws of the State of Utah (without giving
effect to choice of law provisions).
13. Submission to Jurisdiction. Each of the parties submits to the
--------------------------
jurisdiction of
Page 5
any state or federal court of appropriate jurisdiction in Utah in any action or
proceeding arising out of this Escrow Agreement and agrees that all claims in
respect of the action or proceeding shall be heard and determined in any such
court. Each party also agrees not to bring any action or proceeding arising out
of this Escrow Agreement in any other court. Each of the parties waives any
defense of inconvenient forum to the maintenance of any action or proceeding so
brought and waives any bond, surety, or other security that might be required of
any other party with respect thereto. Each party agrees that a final judgment in
any action or proceeding so brought shall be conclusive and may be enforced by
suit on the judgment or in any other manner provided by law or at equity.
14. Waiver. No failure or delay on the part of any party hereto to
------
exercise any right hereunder shall operate as a waiver of, or impair, any such
right. No single or partial exercise of any such right shall preclude any other
or further exercise thereof or the exercise of any other right. No waiver of
any such right shall be effective unless given in writing. No waiver of any
such right shall be deemed a waiver of any other right hereunder.
15. Counterparts. This Escrow Agreement may be executed in counterparts,
------------
and each such counterpart shall be deemed to be an original instrument, but all
such counterparts together shall constitute but one agreement.
16. Descriptive Headings. Descriptive headings are for convenience only
--------------------
and shall not control or affect the meaning or construction of any provision of
this Escrow Agreement.
17. Joinder of Spouse. The spouse of the Sellers is executing this
-----------------
Agreement to acknowledge its fairness and that it is in such spouse's best
interest to bind such spouse's community property interest, if any, to the terms
of this Agreement.
Page 6
DEBTOR ▇▇▇. ▇▇▇▇▇▇' ORIGINAL COOKIES, INC.
By
--------------------------------------------
Its
-----------------------------------------
SECURED PARTY ----------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
----------------------------------------------
▇▇▇ ▇▇▇▇▇▇▇▇▇
ESCROW AGENT JONES, WALDO, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇
By
--------------------------------------------
Its
-----------------------------------------
Page S-1
EXHIBIT H
(Summary of the Seller's Indebtedness to the Buyer)
The Seller's Indebtedness to the Buyer and the Company, in the aggregate amount
$1,149,239.39, consists of or arises from the following:
(A) a loan to the Seller in the unpaid principal amount of $500,000, plus
accrued interest from September 2, 1997 through January 4, 1999, of
$66,988.11, pursuant to that certain Promissory Note, dated as of September
2, 1997, issued by the Seller, as Maker, to MFH, as Holder (a copy of which
is attached hereto as Attachment D-1), assigned by MFH to the Buyer
--------------
pursuant to the Assumption Agreement;
(B) $7,500 for certain franchise fees of ▇▇▇ ▇▇▇▇▇▇▇▇▇;
(C) a loan to the Seller in the unpaid principal amount of $15,000 pursuant
to that certain Promissory Note, dated as of September 2, 1997 issued by
the Seller, as Maker, to the Company, as Holder (a copy of which is
attached hereto as Attachment D-2, together with Attachment D-1, the
--------------
"Notes");
(D) $450,501.28 in liabilities arising under the First Acquisition
Agreement, as more particularly set forth in Attachment D-3, for which
--------------
Fields has asserted claims for indemnification against the Seller under the
First Acquisition Agreement (the "First Acquisition Claims"); and
(E) $109,250 for unpaid franchise fees for the Bangor and Steeplegate
franchises, a Brass ▇▇▇▇▇ ▇▇▇. ▇▇▇▇▇▇ location ($2,500), and unpaid area
developer fees for Maine, Massachusetts, New Hampshire, Vermont, and the
greater Dallas-Fort Worth, Texas Metroplex.
EXHIBIT I
List of Franchise Agreements
Bangor, Maine
Steeplegate (2 locations - PT/TCBY & MFC)
*Northshore Mall
*▇▇▇▇▇▇▇ Mall
*Brass ▇▇▇▇▇ (3 locations)
Area Developer Agreement for Maine, Massachusetts, New Hampshire, Vermont, and
the greater Dallas-Fort Worth, Texas Metroplex.
---------------------------
* not executed
EXHIBIT J
Attach Addendum to Stock Purchase Agreement
Page 1 of Exhibit J
ADDENDUM TO STOCK PURCHASE AGREEMENT
THIS ADDENDUM TO STOCK PURCHASE AGREEMENT ("Addendum") is made and entered
into as of June 12, 1998, by and among ▇▇▇. ▇▇▇▇▇▇' Original Cookies, Inc., a
Delaware corporation ("MFOC"), ▇▇▇. ▇▇▇▇▇▇ Holding Company, Inc., a Delaware
corporation ("MFH")and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ (the "Seller"); all of whom are
hereinafter collectively referred to as the "Parties."
A. The Seller and MFOC entered into that certain Stock Purchase
Agreement, dated as of June 12, 1998 (the "Agreement"), pursuant to which the
Seller agreed to sell to the Buyer, incorrectly identified in the Agreement as
MFH, three (3) shares of the outstanding common stock (par value $10.00 per
share) of the Company owned by the Seller (the "Shares").
B. At the Closing (as defined in the Agreement), a certificate for the
Shares was issued and delivered to MFOC.
C. Contemporaneously with the Closing, MFH, MFOC and the Seller orally
agreed that the Agreement should be corrected to reflect that MFOC purchased the
Shares from the Seller, and the Parties are executing this Addendum for such
purpose.
NOW, THEREFORE, in consideration of the premises and the mutual promises
herein made, and in consideration of the representations, warranties, and
covenants herein contained, the Parties agree as follows.
1. Substitution of MFOC as Buyer. The Agreement, effective as the date
thereof, is hereby amended to provide that MFOC, not MFH, is the Buyer for all
purposes under the Agreement, including without limitation the performance of
all duties and responsibilities required of or owed to MFH (or the Buyer) under
the Agreement, as if MFOC had originally executed the Agreement as the Buyer.
MFOC hereby agrees that it shall have and perform all of the duties and
obligations of the Buyer under the Agreement. The Parties hereby agree that MFH
has no duties or liabilities of any kind or nature under the Agreement.
2. Entire Agreement. This Agreement (including the documents referred to
herein) constitutes the entire agreement among the Parties and supersedes any
prior understandings, agreements or representations by or among the Parties,
written or oral, to the extent they relate in any way to the subject matter
hereof.
3. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
4. Joinder of Spouse. The spouse of the Sellers is executing this
Agreement to acknowledge its fairness and that it is in such spouse's best
interest to bind such spouse's community property interest, if any, to the terms
of this Agreement.
Page 1
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of
the date first above written.
MFOC: ▇▇▇. ▇▇▇▇▇▇' ORIGINAL COOKIES, INC.
By:
-------------------------------------------
Its:
---------------------------------------
MFOC: ▇▇▇. ▇▇▇▇▇▇' HOLDING COMPANY, INC.
By:
-------------------------------------------
Its:
---------------------------------------
SELLER:
----------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
----------------------------------------------
▇▇▇ ▇▇▇▇▇▇▇▇▇
Page 2
