ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT ("Agreement") is made and entered into as of
November ___, 1997 by and among SYBRA OF CALIFORNIA, INC. a California
corporation, ("Buyer"), ICH CORPORATION, a Delaware corporation and the parent
corporation of Buyer ("ICH"), XXXXXXX XXXXXXXX, an individual and 294, INC. a
California corporation ("294"), AMERICAN FOOD CONCEPTS, INC., a California
corporation ("AFC"), and WEB ACQUISITION COMPANY LLC, a California limited
liability company ("WEB")(294, AFC and WEB) are collectively referred to herein
as the "Sellers").
W I T N E S S E T H
A. WHEREAS, the Sellers currently own those certain Arby's restaurants set
forth on Schedule A attached hereto (the "Restaurants"); and
B. WHEREAS, Buyer desires to purchase from the Sellers, and the Seller
desires to sell to Buyer, substantially all of the assets used by the Sellers in
connection with the operation of the Restaurants, and the parties hereto desire
to enter into certain other agreements, all upon the terms and conditions set
forth in this Agreement and the attachments hereto.
NOW, THEREFORE, in consideration of the foregoing recitals and mutual
representations, warranties, covenants and agreements hereinafter contained, the
parties hereto agree as follows:
ARTICLE 1
PURCHASE AND SALE
1.1 Purchase and Sale of Assets. Upon and subject to the terms and
conditions of this Agreement, each of the Sellers shall sell, transfer, convey,
assign and deliver to Purchaser, and Buyer shall purchase, acquire and accept
from each of them, all of the assets and properties which are owned or leased
and used by each of the Sellers in the operations of their respective
Restaurants (collectively, the "Assets"), excluding, however, all of the
excluded assets set forth on Schedule 1.1 ("Excluded Assets"). The Assets shall
consist of, among other things, the following:
(a) All of the furniture, fixtures, equipment, signs, cash
registers, uniforms and other personal property (collectively, the "FF&E") owned
and used by each of the Sellers in the operations of their respective
Restaurants and located on the premises thereof;
(b) All inventories of food, beverages, paper supplies and other
consumables (collectively, the "Inventory") located on the premises thereof;
(c) All of each Seller's right, title, and interest in and to the
Arby's License
1
Agreement which are set forth on Schedule 1.1(c) attached hereto (the "License
Agreements"), and all rights for the use of the trademarks, tradenames, and
service marks arising from such agreements (subject to Arby's, Inc.'s ownership
of all identifying marks and logos);
(d) All of each Seller's right, title and interest in and to all of
the contracts, agreements, real property leases, personal property leases,
commitments and undertakings (the "Contracts") as identified in Schedule 1.1(d);
(e) Xxxxx cash in the maximum amount of One Thousand Dollars
($1,000) on hand at each of the Restaurants as of the Closing Date (the "Xxxxx
Cash") at Buyers option.
(f) All of the pre-paid rent, charges and other prepayments and all
of the security and other similar deposits (the "Deposits") which were
previously paid by each of the Sellers and which are held by third parties
pursuant to the Contracts as identified in Schedule 1.1(g); and
(g) All records, technical information, price lists, marketing
information, sales information, employee records, which are or have been
maintained by each of the Sellers in connection with the operation of their
respective Restaurants.
(h) To the extent assignable, all of each Sellers right, title and
interest in and to all permits, licenses, authorizations and approvals relating
to the operation of the Restaurants.
1.2 Assumption of Liabilities. Except as expressly provided in this
Section 1.2, Buyer shall not assume or be responsible for any liabilities,
obligations or debts of any of the Sellers under or by reason of this Agreement.
Upon and subject to the terms and conditions set forth in this Agreement, Buyer
shall assume, become fully and solely responsible for and shall indemnify and
hold Sellers harmless with respect to and shall to timely pay, perform and
discharge in full all of the following liabilities, obligations and debts of
each of the Sellers (collectively, the "Assumed Liabilities"):
(a) All of each Sellers' liabilities, obligations and debts under
the Contracts which come due or relate to time periods from and after the
Closing Date in accordance with the respective terms thereof;
(b) All of each Sellers' liabilities, obligations and debts in
respect of unpaid rent, charges or other payments for which a Purchase Price
adjustment is made pursuant to Section 1.5;
(c) Any utility and telephone bills and other similar liabilities,
obligations and debts arising in the ordinary course from the operations of the
Restaurants which relate to time periods from and after the Closing Date; and
(d) Any liabilities, expenses, or obligations relating to, based on
or arising out
2
of the operations of the Restaurants by Buyer from and after the Closing Date
(it being understood that the Sellers shall remain fully and solely responsible
for, shall indemnify and hold Buyer harmless with respect to, and shall timely
pay, perform and discharge in full any and all liabilities, expenses or
obligations relating to, based upon or arising out of the operations of the
Restaurants prior to the Closing Date).
1.3 Purchase Price. Subject only to the adjustments specified in this
Agreement and upon and subject to all other terms and conditions set forth in
this Agreement, in consideration of the sale, assignment, transfer, conveyance
and delivery of the Assets pursuant to this Agreement, Buyer shall pay to the
Sellers the sum of the following amounts (collectively, the "Purchase Price"):
All sums payable in U.S.
Dollars.
(a) The sum of Six Hundred Fifty Thousand Dollars ($650,000) payable
pursuant to the terms of Section 1.4 below
(b) An amount equal to one-half the value (at each Seller's cost) of
the Inventory.
(c) An amount equal to the transferable Deposits, as set forth on
Schedule 1.1(g) attached hereto; and
(d) The amount equal to the value of the Xxxxx Cash at Buyers
option.
(e) A grant by ICH of 20,000 Warrants (the "Warrants") to expire
seven (7) years from date of grant, to acquire ICH Common Stock at the greater
of Five Dollars ($5.00) or 110% of ICH's closing price as of the date of the
close of this proposed transaction. (Stock symbol IH listed on AMEX, which
Warrants shall be substantially in the form of Exhibit A attached hereto.
1.4 Payment of Purchase Price. The Purchase Price shall be payable by
Buyer to the Sellers as follows:
(a) On the Closing Date, Buyer will deposit the total amount of
Three Hundred Twenty Five Thousand Dollars ($325,000) ("Escrow Deposit") to the
Escrow Holder by bank cashier's check or by wire transfer of immediately
available funds;
(b) Upon the Closing Date, the amount payable for the Inventory and
the Xxxxx Cash if and where applicable.
(c) On the Closing Date, Buyer shall deposit with the escrow holder
a fully executed promissory note (the "Note") in the amount of Three Hundred
Twenty-five Thousand Dollars ($325,000) with interest payable at a rate of ten
percent (10%) per annum from the Closing Date on the unpaid balance, which Note
shall be issued by Buyer and guaranteed (the "Guaranty") by ICH and the Note and
Guaranty shall be substantially in the form of Exhibit B attached hereto. The
Note shall be amortized over ten (10) years in one hundred twenty (120)
3
equal monthly installments of Four Thousand Two Hundred Ninety-five Dollars and
53/100 ($4295.53).
Each of the Sellers acknowledges and agrees as evidenced by Sellers' letter of
direction which shall be deposited into Escrow by Sellers that Buyer shall pay
all amounts payable by Buyer under this Section 1.4 to Xxxxxxx Xxxxxxxx, the
Sellers' designated payee, and that the allocation and distribution of all such
payments shall be the sole responsibility of the Sellers.
1.5 Purchase Price Adjustments. The Purchase Price shall be increased or
decreased, as the case may be, by the amount of rent, taxes, assessments and
other expenses prepaid or unpaid by the Sellers as of the Closing Date.
1.6 Taxes. All sales and use taxes arising out of the purchase and sale of
the Assets shall be paid through the Escrow at the Closing by, and shall be
exclusively the obligation of, Buyer.
1.7 License Transfer Fees. All license transfer and service or training
fees due and owing to Arby's Inc. arising out of the purchase and sale of the
Assets shall be paid through the Escrow at the Closing by, and be exclusively
the obligation of, Buyer.
1.8 Escrow Fees. All fees of the Escrow Holder arising out of the purchase
and sale of the Assets shall be paid one-half (1/2) by the Sellers and one-half
(1/2) by Buyer at the Closing.
1.9 Allocation of Purchase Price. The Purchase Price shall be allocated in
the Buyers sole discretion among the Assets in accordance with Schedule 1.9
attached hereto. The foregoing allocation shall be made in a manner consistent
with Section 1060 of the Internal Revenue Code of 1986, as amended (the "Code").
Each party hereby agrees that it will not make any return, filing, report or
other submission or take any position with or before any federal, state or local
tax agency or other authority which would conflict or be inconsistent with the
allocation provided in this Section 1.9.
1.10 Transfer of Employees. Each of the Sellers shall, effective as of the
Closing Date, terminate the employment of all of the employees who are then
employed by each of the Sellers at the premises of the Restaurants to be
transferred as of the Closing Date (collectively, the "Employees"). Buyer, at
its discretion, effective as the Closing Date, may hire any or all of the
terminated Employees.
1.11 Accrued Vacation Pay. Each of the Sellers shall pay in full the
amount of vacation pay owed to each of their respective Employees no later than
the Closing Date.
1.12 Closing; Closing Deliveries.
(a) The closing of the transactions contemplated by this Agreement
4
("Closing") will take place at the offices of Capitol City Escrow, Inc. located
at 0000 Xxxx Xxxxxx, Xxxxx 000, Xxxxxxxxxx, Xxxxxxxxxx 00000-0000 ("Escrow
Holder") on or before December 31, 1997 ("Closing Date"), subject to such
extensions or sooner as may be mutually agreed upon by the Sellers and Buyer.
The Sellers and Buyer shall open an escrow (the "Escrow") with Escrow Holder
immediately upon the execution of this Agreement.
(b) At the Closing, each of the Sellers will deliver, or cause to be
delivered, to Escrow:
(i) the executed Xxxx of Sale substantially in the form of
Annex B attached hereto;
(ii) the executed Assignment and Assumption Agreement
substantially in the form of Annex C attached hereto (the "Assignment and
Assumption Agreement");
(iii) the executed Lease Assignment and Assumption Agreement
substantially in the form of Annex D attached hereto (the "Lease Assignment and
Assumption Agreement");
(iv) an Opinion of Counsel to the Sellers substantially in the
form of Exhibit C attached hereto;
(v) all other previously undelivered documents required to be
delivered by the Sellers to Buyer at or prior to the Closing in connection with
the transactions contemplated by this Agreement; and
(vi) anything required pursuant to section 1.13 hereof.
(c) At the Closing, Buyer will deliver or cause to be delivered to
Escrow:
(i) The Escrow Deposit by certified or cashier's check or by
wire transfer;
(ii) the Xxxxx Cash and inventory amount, if applicable;
(iii) the executed Assignment and Assumption Agreement;
(iv) the executed Lease Assignment and Assumption Agreement;
(v) Note and Warrants;
(vi) all other previously undelivered documents required to be
delivered by Buyer to the Sellers at or prior to the Closing in connection with
the transactions contemplated by this Agreement and the other agreements
contemplated hereby; and
5
(vii) anything required pursuant to section 1.13 hereof.
(d) At the Closing, ICH will deliver or cause to be delivered the
Guaranty to Escrow.
(e) At the Closing, Xxxxxxx Xxxxxxxx will deliver or cause to be
delivered to Escrow anything required pursuant to section 1.13 hereof.
1.13 Concurrent Land Purchases. Buyer and Sellers hereby acknowledge that
as to Unit 5803 and Unit 1381, the respective Seller or Xxxxxxx Xxxxxxxx is
attempting to purchase the fee interest in the Leased Property with respect to
each of these units. As to Unit 5803, Sellers have the right to acquire the fee
title to the real estate pursuant to a Right of First Refusal upon terms
acceptable to Buyer in Buyer's sole discretion. If Sellers are not able to
obtain the fee interest pursuant to the Right of First Refusal, then Sellers
shall assign the lease to Buyer as provided herein upon the existing terms and
conditions of the lease as a condition to Closing. If Sellers are not provided
with a notice pursuant to the Right of First Refusal prior to the Close of
Escrow, Sellers shall assign the Right of First Refusal to Buyer as provided
herein upon the existing terms and conditions of the Right of First Refusal as a
condition to Closing. If Sellers are successful in obtaining the fee pursuant to
the Right of First Refusal upon terms acceptable to Buyer, the purchase and
sales documentation shall become part of this Escrow and the respective parties
shall deposit such items as are reasonably required by Escrow Holder to effect
the transfer of the right to purchase the property from Sellers to Buyer and
complete the transaction as a condition to Closing, provided, however, if the
close of the real estate transaction cannot be completed by Closing, Buyer, in
Buyer's sole discretion, may waive the condition and Close Escrow. As to Xxxx
0000, Xxxxxxx Xxxxxxxx intends to enter into a contract for the purchase of the
real estate substantially similar to the contract attached hereto as Schedule
1.13 and shall deliver said contract to Escrow and assign Sellers' right to
purchase pursuant to the contract to Buyer as a condition to Closing. If the
close of the real estate transaction cannot be completed by Closing, Buyer, in
Buyer's sole discretion, may waive the condition and Close Escrow.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF THE SELLERS
As a material inducement to Buyer to enter into this Agreement and to
perform its obligations hereunder, each of the Sellers hereby represents and
warrants to Buyer with respect to themselves and the Assets which they purport
to own as follows:
2.1 Organization of the Sellers. WEB is a limited liability company duly
organized, validly existing and in good standing under the laws of the State of
California. 294 and AFC are corporations duly organized, validly existing and in
good standing under the laws of the State of California. Each of the Sellers has
all necessary power and authority to own or lease and operate its properties and
to carry on its business as it is now being conducted.
6
2.2 Authorization and Approvals. Each of the Sellers has all necessary
power and authority to execute and deliver this Agreement and to perform its
obligations hereunder. This Agreement has been duly and validly authorized by
all necessary action on the part of each of the Sellers. This Agreement
constitutes the legal, valid and binding obligation of each of the Sellers,
enforceable in accordance with its terms, subject to judicial discretion
regarding specific performance or other equitable remedies, except as may be
limited by bankruptcy, insolvency, reorganization, moratorium or other laws
relating to or affecting the enforcement of creditors' rights and remedies
generally. No approvals or consents by any third party, other then Arby's Inc.
and each of the Landlords, or any governmental or administrative body or agency
or any court is required in connection with the Sellers' execution and delivery
of this Agreement or the performance of their respective obligations hereunder.
2.3 No Violations. Except for such items which would not have a materially
adverse effect upon the Assets or the operations of any of the Restaurants (a
"Material Adverse Effect"), neither the Sellers' execution and delivery of this
Agreement nor the performance of their respective obligations hereunder will, to
the knowledge of the Sellers, (a) result in a default under any of the terms,
conditions or provisions of any of the Contracts, or any of the respective
organizational documents of any of the Sellers, or (b) violate any existing
order, writ, injunction, decree, law, statute, rule or regulation of any court
or governmental authority applicable to any of the Sellers or the Assets.
2.4 Title to Properties. Each of the Sellers has good, valid and
marketable title to all of the Assets that they each purport to own. The Assets
owned by each of the Sellers are free and clear of any title defects or
objections, liens, mechanic's liens, claims, charges, security interests or
other encumbrances of any kind or nature whatsoever, except for (a) minor
imperfections of title, none of which materially detract from the value or
impair the use of the Assets, (b) liens for current real or property taxes not
yet due and payable, and (c) the liens and encumbrances approved in writing by
Buyer.
2.5 Condition of FF&E. The FF&E (excluding facsimile machines) are, and as
of the Closing Date will be, in working condition and repair, normal wear and
tear excepted, and none of the FF&E (excluding facsimile machines) are in need
of repairs, except for ordinary, routine maintenance and repairs which are not
in the aggregate material in cost.
2.6 Inventory. The Inventory is of a quality usable and saleable in the
ordinary course of business of each of the Sellers in the operations of the
Restaurants, and there are no obsolete items or items of below standard quality
under the standards set forth in the Arby's License Agreements.
2.7 Contracts. To the knowledge of the Sellers, each of the Sellers has
delivered to Buyer complete, current and correct copies of the Contracts, and no
changes have been made thereto since date of delivery. Each of the Contracts is
valid, binding and enforceable in accordance with its respective terms with
respect to parties thereto, and is in full force and effect. To the knowledge of
the Sellers, there are no existing defaults by any of the Sellers thereunder
7
which would have a Materially Adverse Effect.
2.8 Compliance with Laws. To the knowledge of the Sellers, the operations
of their respective Restaurants have been conducted in all material respects in
compliance with all applicable laws, statutes, ordinances, rules, regulations,
orders, decrees or ruling of all governmental authorities or agencies having
jurisdiction over each of the Sellers, except for items which would not have a
Materially Adverse Effect. All licenses, permits and authorization issued or
granted by Federal, State or local governmental authority or agency which are
necessary for the conduct of the Restaurants respective businesses are validly
held by the Sellers, it being understood by the Buyer that the city licenses,
health department permits and shake machine permits and Sellers permit are not
transferable and it shall be Buyers obligation to make the necessary
applications to obtain said permits.
2.9 Litigation. To the knowledge of the Sellers, there is no pending suit,
action, arbitration, proceeding, investigation or inquiry before any court or
governmental or administrative body or agency which would have a Materially
Adverse Effect. The Sellers are not in violation of or in default under or
subject to any order, judgment, writ, injunction or decree of any court or
governmental or administrative body or agency, which violation or default would
a Materially Adverse Effect.
2.10 Leases. Each of the Restaurants' real property leases (collectively,
the "Leases" and each a "Lease"), and all amendments, modifications and/or
extensions thereto or thereof are listed on Schedule 2.10 hereto. Schedule 2.10
hereto also lists, with respect to each Lease the name of the tenant(s) and
landlord(s). With respect to the Leases, (i) the Leases are in full force and
effect, are unmodified (other than listed on Schedule 2.10 hereto), (ii) all
rental and other charges payable pursuant to the terms and conditions of the
Leases have been paid as of the Closing Date, (iii) the Sellers have not
received any written notice of any defaults of any agreement, covenant or
condition on the part of or to be performed by or observed by Sellers pursuant
to the terms of the Leases, (iv) there are no actions or proceedings pending by
any lessor under any of the Leases, (v) except for the security deposits
identified on Schedule 1.1(g) hereto, no lessor holds any deposits for any
Seller's account on any Lease, (vi) there are no defaults by any of the
respective lessors of any agreement, covenant or condition on the part of or to
be performed by or observed by such lessors pursuant to the terms of the Leases
and (vii) each Lease (excluding Unit 5771) is a direct lease with the fee owner
of the real property. The current expiration dates and remaining options to
extend the Leases are as set forth on Schedule 2.10 hereto. Minimum monthly rent
and additional rent under the Leases are also set forth on Schedule 2.10 hereto.
2.11 Normal Use. To the knowledge of the Sellers, none of the Sellers
knows of any facts nor have any of the Sellers failed to disclose any fact which
would prevent any of the Leased Property from being used and operated after the
Closing as Arby's Restaurants in accordance in all material respects with the
operational terms of the license agreements with Arby's, Inc.
8
2.12 Condemnation. None of the Sellers has received any written notice of
any pending exercise of eminent domain, condemnation, environmental, zoning,
other land-use regulations proceedings or any other similar action with respect
to any of the Leased Property and none of the Sellers has received any written
notice of any Federal, state, county, municipal or other governmental plans to
restrict or change access from any highway or road bounding any of the Leased
Property.
2.13 Copies. To the knowledge of the Sellers, all Leases, nondisturbance
agreements, landlord estoppel certificates, certificates of occupancy,
sale/leaseback agreements, leasehold mortgages and other leases in which the
Sellers are a lessee or sublessee and which have been delivered or made
available to Buyer pursuant to this Agreement or otherwise, in connection with
the execution hereof or in connection with Buyer's due diligence review of, are
true, complete and correct copies of the originals of the same documents in the
Sellers' possession, and same have not been modified or amended, except pursuant
to documents copies of which have been delivered to Buyer.
2.14 Violations. To the knowledge of the Sellers, all written notes or
notices of violations of law or municipal ordinances, orders or requirements
noted in or issued by the Department of Housing and Building, Fire, Labor,
Health or other State or municipal department having jurisdiction over the
Leased Property, against or affecting the Leased Property up until the date of
the Closing, shall be complied with by the Sellers and the Leased Property shall
be free of same, provided, however, that any applicable cure periods may extend
the time for Sellers' performance hereunder.
2.15 Environmental Protection.
(i) For purposes of this Section 2.15, the following definitions
shall apply:
(A) "Environmental Laws" shall mean all federal, state, local,
and foreign laws imposing liability or establishing standards of conduct for the
protection of the environment and human health;
(B) "Environmental Claim" shall mean any complaint, summons,
citation, notice, directive, order, claim, litigation, investigation, judicial
or administrative proceeding, judgement, letter or other communication from any
governmental agency, department, bureau, office or other authority having
jurisdiction, or any third party, involving violations of Environmental Laws or
Releases of Hazardous Materials;
(C) "Environmental Liabilities" shall mean any monetary
obligations, losses, damages, costs and expenses (including all reasonable
out-of-pocket fees, disbursements and expenses of counsel, out-of-pocket expert
and consulting fees and out-of-pocket costs for environmental site assessments,
remedial investigations and feasibility studies), fines, penalties, sanctions
and interest incurred as a result of any Environmental Claim filed by any
governmental authority or any third party which relate to any violations of
Environmental Laws, or Release of
9
Hazardous Materials generated by any of the Restaurants;
(D) "Hazardous Materials" shall mean (A) any element,
compound, or chemical that is defined, listed or otherwise classified as a
contaminant, pollutant, toxic pollutant, toxic or hazardous substance, extremely
hazardous substance or chemical, hazardous waste, medical waste, biohazardous
waste or infectious waste, special waste, or solid waste under Environmental
Laws; (B) petroleum and its refined products; (C) polychlorinated biphenyls; (D)
any substance exhibiting a hazardous waste characteristic (as defined under
Environmental Laws), including, but not limited to, corrosivity, ignitability,
toxicity or reactivity as well as any radioactive or explosive materials; and
(E) asbestos-containing materials;
(E) "Release" shall mean any spilling, leaking, pumping,
emitting, emptying, discharging, injecting, escaping, leaching, dumping, or
disposing of Hazardous Materials (including the abandonment or discarding of
barrels, containers or other closed receptacles containing Hazardous Materials)
into the environment.
(ii) To the knowledge of the Sellers during Sellers ownership,
possession or leasehold interest in any of the Leased Properties, the Sellers
have obtained all permits, licenses or authorizations required by Environmental
Laws, except where the failure to obtain any such permit, license or
authorization would not have a Material Adverse Effect, and all such permits,
licenses or authorizations are in full force and effect, except for such
permits, licenses and authorizations which, if not in full force and effect,
would not constitute a Material Adverse Effect.
(iii) To the knowledge of the Sellers, the operations of the
Restaurants are in full compliance with all Environmental Laws, except where
such noncompliance would not have a Material Adverse Effect.
(iv) To the knowledge of the Sellers, there has been no Release at
any of the Leased Properties or at any disposal or treatment facility which has
received Hazardous Materials generated by any of the Restaurants which will
result in Environmental Liabilities that have a Material Adverse Effect.
(v) To the knowledge of the Sellers, there are no outstanding
Environmental Claims that have a Material Adverse Effect.
2.16 License Agreements. The Sellers have previously delivered or made
available to Buyer true, complete and correct copies of all License Agreements
and other agreements between Arby's, Inc. and any of the Sellers. Set forth on
Schedule 2.20 hereto is a list of all of the License Agreements, including the
license agreement number, location and date of termination of each License
Agreement. The Sellers have received no written notice of a violation with
respect to any of the License Agreements. All renewal notices, to the extent
required by the License Agreements, have been delivered by the Sellers to
Arby's, Inc. on a timely basis.
10
2.17 Contracts for Improvements. At the time of Closing, there will be no
outstanding contracts made by any Seller for any improvements to any of the
Restaurants which have not been fully paid for, and the Sellers shall cause to
be discharged all validly filed mechanic's liens or materialman's liens, if any,
arising from any labor or materials furnished to the Restaurants prior to the
time of Closing.
2.18 Improvements and Structural Defects. To the knowledge of the Sellers,
the structural portions of the Restaurants and the plumbing, heating, air
conditioning, electrical, mechanical, life safety and other systems therein are
in sufficient operating condition and repair to allow them to operate as Arby's
restaurants.
2.19 Brokers and Finders. Neither the Sellers nor any of their respective
directors, officers, employees or other representatives has engaged or employed
any broker, finder or agent or incurred any liability or obligation to pay any
brokerage fees, commissions or finder's fees in connection with the transactions
contemplated by this Agreement.
2.20 Accuracy of Representations and Warranties. Subject to the
qualifications stated therein, no representation or warranty made by any of the
Sellers in this Agreement contains any untrue statement of material fact or
omits to state a material fact necessary in order to make the statements so
made, in light of the circumstances under which they are made, not misleading.
For all purposes within this Article 2, the phrase "to the knowledge of the
Sellers" shall mean the actual knowledge, without duty of independent
investigation or inquiry of Xxxxxxx Xxxxxxxx, Xxxxx Xxxxx and Xxxxxx Xxxxxx.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF BUYER
As a material inducement to the Sellers to enter into this Agreement and
to perform its obligations hereunder, Buyer hereby represents and warrants to
the Sellers as follows:
3.1 Authorization and Approvals. Buyer has all necessary power and
authority to deliver this Agreement and to perform his obligations hereunder.
This Agreement constitutes the legal, valid and binding obligation of Buyer
enforceable in accordance with its terms, subject to judicial discretion
regarding specific performance or other equitable remedies, and except as may be
limited by bankruptcy, reorganization, insolvency, moratorium or other laws
relating to or affecting the enforcement of creditors rights and remedies
generally. No approvals or consents by any third party or any governmental or
administrative body or agency or any court is required in connection with
Buyer's execution and delivery of this Agreement or Buyer's performance of its
obligations hereunder.
3.2 No Violation. Neither the execution and delivery of this Agreement nor
the performance of the obligations hereunder will (a) result in a material
default under any of the
11
terms, conditions or provisions of any contract, agreement, instrument,
commitment or undertaking to which Buyer is a party or is subject, or (b) to
Buyer's knowledge, materially violate any existing order, writ, injunction,
decree, law, statute, rule or regulation of any court or governmental authority
applicable to Buyer.
3.3 Brokers and Finders. Neither Buyer nor any of its employees or
representatives has engaged or employed any broker, finder or agent or incurred
any liability or obligation to pay any brokerage fees, commissions or finder's
fees in connection with the transactions contemplated by this Agreement.
3.4 Accuracy of Representations and Warranties. Subject to the
qualifications stated therein, to Buyer's actual knowledge, no representation or
warranty made by Buyer in this Agreement contains any untrue statement of a
material fact or omits to state a material fact necessary in order to make the
statements so made, in light of the circumstances under which they are made, not
misleading.
ARTICLE 4
COVENANTS OF THE SELLERS AND BUYER
Pending the consummation of the transactions contemplated hereunder, the
Sellers and Buyer covenant and agree as follows:
4.1 Conduct of Business. Each of the Sellers shall conduct the operations
of the Restaurants in the ordinary course consistent with prior practices and
pursuant to the terms and provisions of the Arby's License Agreements, except as
may be consented to in writing by Buyer. Each of the Sellers shall maintain the
FF&E in working condition and repair, normal wear and tear excepted. Each of the
Sellers shall continue to meet the contractual obligations incurred by each of
them in the ordinary course and to pay all of each of their respective
obligations as they mature in the ordinary course of the operations of the
Restaurants. Each of the Sellers shall also use their respective commercially
reasonable efforts to keep available the services of the Employees, to maintain
the Contracts in full force and effect, and to preserve the good relations of
the suppliers, customers and others with whom each of the Sellers has business
dealings.
4.2 Access to Buyer. During the period prior to the Closing Date and upon
the prior written request of Buyer, each of the Sellers shall give Buyer, and
its counsel, accountants and other representatives reasonable access, during
each of the Sellers' normal business hours, to the Restaurant premises,
employees, customer books, contracts and records, and all other information
pertaining to the Assets and the operations of the Restaurants as Buyer may
reasonably request. Provided, however, that Buyer may not interrupt or interfere
with Sellers' business and Buyer hereby agrees to indemnify and hold Sellers
harmless from and against any Losses (as defined in Article 7 hereof) caused by
Buyers activities pursuant to this Section 4.2
4.3 Compliance with Laws; Preservation of Accuracy of Representations and
12
Warranties, Etc. Each of the Sellers shall duly comply with all of the laws
applicable to it, the violation of which would have a Material Adverse Effect,
and each of the Sellers shall conduct the operations of their respective
Restaurants and use the Assets in such manner that on the Closing Date the
representations and warranties contained in this Agreement shall be true as
though such representations and warranties were made on and as of such date.
4.4 Consents and Approvals. Each of the Sellers and Buyer shall use their
respective commercially reasonable efforts to acquire all necessary consents,
approvals, authorizations and waivers of all third parties (including without
limitation, the consent of Arby's, Inc., and the lessors under the various
leases) or governmental agencies or authorities required to be respectively
obtained by them in connection with their respective execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereunder.
4.5 Closing Inventory. On or prior to the Closing Date, representatives of
each of the Sellers and Buyer shall jointly conduct an inventory of all the
Inventory and the Xxxxx Cash on hand at each of the Restaurants and all
Inventory on order as of the Closing Date. The results of this inventory shall
be reasonably satisfactory to the parties and shall be attached hereto as
Schedule 4.5 as soon as practicable after the Closing Date. As of the Closing
Date, each of the Sellers shall cause all of the Inventory and the Xxxxx Cash
for each of the Restaurants for operational purposes to remain at the
Restaurants.
4.6 Bulk Sale; Prorations. Each of the Sellers and Buyer shall comply with
the requirements of the California Commercial Code with respect to bulk sales.
Each of the Sellers and Buyer agree to enter into an escrow agreement with
Escrow Holder to instruct Escrow Holder to, among other things, comply with the
bulk sale requirements, obtain necessary employment, sales and franchise tax
releases, and make the necessary publications, prorations and payments.
4.7 Estoppel Certificates. By no later than two (2) business days
following the date hereof, the Sellers shall send out for execution estoppel
certificates, in the form of Exhibit D attached hereto, (the "Estoppel
Certificates"), to each of their respective lessors. Each of the Sellers agrees
to use its commercially reasonable efforts to obtain the return of the executed
Estoppel Certificates prior to the Closing Date. The Sellers each agree to
promptly deliver to Buyer copies of executed Estoppel Certificates as the
Sellers prior to the Closing Date receive them. Notwithstanding anything to the
contrary contained in this Agreement, the receipt of the Estoppel Certificates
by Buyer or Seller prior to or after the Closing Date shall not be a condition
to the Closing of this transaction.
4.8 Non-Disturbance Agreements. The Sellers shall each use their
respective commercially reasonable efforts to obtain for the benefit of Buyer
from any holder of a superior mortgage on any of the Leased Property, an
agreement which shall provide in substance that as long as the Lease is in
effect and Buyer is not in breach or default beyond applicable grace periods
thereunder: (i) Buyer shall not be joined as a party defendant in any
foreclosure action or
13
proceeding which may be instituted or taken by the holder of such superior
mortgage, and (ii) Buyer shall not be evicted from the Leased Property nor shall
Buyer's leasehold estate under the Lease be terminated or disturbed, nor shall
any of Buyer's rights under the Lease be affected, by reason of any default
under such superior mortgage or any disaffirmance of such superior mortgage or
other termination of such superior mortgage (the "Non-Disturbance Agreements").
4.9 Other Transactions. Unless and until the Agreement is terminated
pursuant to Section 8.1 hereof, the Sellers will not, and each of the Sellers
will cause its respective directors, officers, employees, agents and affiliates
not to, directly or indirectly, solicit or initiate the submission of proposals
of offers from, or solicit, encourage, entertain or enter into any agreement,
arrangement or understanding with, or engage in any discussions with, or furnish
any information to, any person or entity, other than Buyer or a representative
thereof, with respect to the acquisition of all or any part of any of the
Sellers, or any of their respective restaurants.
4.10 Supplemental Disclosure. Each of the Sellers agrees that, with
respect to the representations and warranties made by it in this Agreement, it
shall have the continuing obligation, between the date hereof and the Closing
Date, to promptly supplement or amend the Schedules to this Agreement with
respect to any matter hereafter arising or discovered which, if existing or
known at the date of this Agreement, would have been required to be set forth or
described in the Schedules to this Agreement.
4.11 Real Estate Purchase Transactions. Buyer and Seller each agree that
Buyer and Seller shall perform all obligations with respect to Section 1.13.
ARTICLE 5
CONDITIONS PRECEDENT TO OBLIGATIONS OF THE SELLERS
The obligation of each of the Sellers to consummate the transactions
contemplated by this Agreement is subject to the satisfaction, or waiver by each
of the Sellers, on or prior to Closing of the following conditions:
5.1 Representations and Warranties. The representations and warranties
made by Buyer herein shall be true and correct in all material respects on and
as of the date hereof and as of the Closing with the same force and effect as
though all such representations and warranties had been made on and as of the
Closing.
5.2 Covenants and Agreements. All of the covenants and agreements of this
Agreement to be complied with and performed by Buyer on or before Closing will
have been complied with and performed in all material respects.
5.3 Consents. Each of the Sellers shall have obtained the consent from
Arby's, Inc. to convey, transfer or assign the Arby's License Agreements to
Buyer.
5.4 Litigation. No action, suit, proceeding, or investigation by or before
any court,
14
administrative agency or other governmental authority shall have been instituted
to restrain, prohibit or invalidate any of the transactions contemplated by this
Agreement.
ARTICLE 6
CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER
The obligations of Buyer to consummate the transactions contemplated by
this Agreement are subject to the satisfaction, or waiver by Buyer, on or prior
to Closing of the following conditions:
6.1 Representations and Warranties. The representations and warranties
made by each of the Sellers herein shall be true and correct in all material
respects on and as of the date hereof and as of the Closing with the same force
and effect as though all such representations and warranties had been made on
and as of the Closing.
6.2 Covenants and Agreements. All of the covenants and agreements of this
Agreement to be complied with and performed by each of the Sellers on or before
Closing will have been complied with and performed in all material respects.
6.3 Consents. Each of the Sellers will have obtained the consent of Arby's
Inc. to convey, transfer or assign the Arby's License Agreements to Buyer and
each of the Sellers shall have obtained all other necessary consents, approvals,
authorizations and waivers of all third parties (including without limitation,
the consents, to the extent required, of the lessors under the various Leases)
or governmental agencies or authorities required to be respectively obtained by
them in connection with their respective execution, delivery and performance of
this Agreement and the consummation of the transactions contemplated hereunder.
Any item required by this paragraph may be waived in writing by the Buyer so
that this transaction may close and Buyer obtain possession of the Restaurants.
6.4 Litigation and Claims. No action, suit, proceeding, or investigation
by or before any court, administrative agency or other governmental authority
will have been instituted to restrain, prohibit or invalidate any of the
transactions contemplated by this Agreement.
6.5 Absence of Changes. There shall not have occurred prior to the Closing
Date, (a) any material adverse change in the Assets or results of operations of
any of the Restaurants, or (b) the legal inability of any of the Sellers to
convey, assign and transfer the Assets to Buyer.
6.6 Estoppel Certificates. The Sellers shall have sent out and continue to
use Seller's commercially reasonable efforts to obtain and deliver to Buyer
executed copies of the Estoppel Certificates referred to in Section 4.7 hereof
from each of their respective lessors.
6.7 Non-Disturbance Agreements. The Sellers shall have sent out and
continue to use Seller's commercially reasonable efforts to obtain and deliver
to Buyer executed copies of the Non-Disturbance Agreements referred to in
Section 4.8 hereof from each holder of a superior
15
mortgage on any of the Lease Property.
6.8 Real Estate Purchase Transactions. Seller shall perform all
obligations with respect to Section 1.13.
ARTICLE 7
INDEMNIFICATION
7.1 Sellers' Indemnification. Each of the Sellers will indemnify, defend
(with counsel reasonably acceptable to Buyer) and hold Buyer and each of its
officers, directors, employees, representatives, agents, shareholders and
affiliates (and their respective officers, directors, employees,
representatives, agents, shareholders and affiliates) harmless from and against
any losses, claims, damages or liabilities (including reasonable legal and other
expenses incurred in investigating and defending any claims or actions)
(collectively "Losses") to which Buyer or any of them may become subject insofar
as such Losses arise out of or are based upon any untrue representation or
warranty made by them respectively in this Agreement. Payments in respect of the
indemnification provided in this Section 7.1 shall be made promptly (and
currently) as Losses shall be incurred. Alternatively, Buyer shall have the
right to off-set any amounts due from the Sellers pursuant to this Section 7.1
against any amounts due under the Note described in Section 1.4 hereof,
provided, however, that Buyer shall not (i) receive any payment or (ii) exercise
such off-set right unless and until such time as the existence and amount of
such Losses have been definitively determined in the good faith judgement of the
Board of Directors of Buyer after reasonable satisfaction of a prior obligation
to "meet and confer" and negotiate in good faith with Sellers. Notwithstanding
the foregoing, none of Sellers shall have any obligation to indemnify Buyer
under this Section 7.1 unless, and then only to the extent that, Buyer shall
have incurred aggregate losses, damages, liabilities, costs and expenses in
excess of ONE THOUSAND DOLLARS ($1,000).
7.2 Buyer's Indemnification. Buyer will indemnify, defend (with counsel
reasonably acceptable to Sellers) and hold each of the Sellers harmless from and
against any Losses to which Sellers may become subject insofar as such losses
arise out of or are based upon any untrue representation or warranty of
Purchaser contained in this Agreement. Notwithstanding the foregoing, Buyer
shall have no obligation to indemnify any of the Sellers under this Section 7.2
unless, and then only to the extent that, such Seller shall have incurred
aggregate losses, damages, liabilities, costs and expenses in excess of ONE
THOUSAND DOLLARS ($1,000).
7.3 Survival of Indemnification Obligations. All of the Sellers'
obligations under Section 7.1 and all of Buyer's obligation under 7.2,
respectively, shall survive the Closing and continue in full force and effect
for until March 31, 1999.
ARTICLE 8
TERMINATION
8.1 Termination. The respective obligations of the parties hereto to
consummate the
16
transactions pursuant to this Agreement may be terminated as follows:
(a) By mutual written agreement of the parties;
(b) By Buyer or the Sellers if the Closing shall not have occurred
on or before January 31, 1998; provided, however, that the party exercising such
termination right shall not have negligently, intentionally or willfully caused
the failure of any conditions to Closing set forth in Articles 5 or 6 hereof to
be satisfied prior to such date.
(c) Effect of Termination. In the event of termination of this
Agreement as provided above, 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 9.2 hereof and (ii) to the extent that failure to satisfy the
conditions of Articles 5 and 6 hereof results from the grossly 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.
ARTICLE 9
MISCELLANEOUS
9.1 Notices. All notices, requests, demands and other communications
hereunder shall be in writing and shall be delivered personally, sent by
certified mail, postage prepaid, return receipt requested, or sent by telecopier
or other electronic facsimile transmission, as elected by the party giving such
notice:
(a) if to Buyer or ICH, to:
SYBRA OF CALIFORNIA, INC.
c/o I.C.H. CORPORATION
0000 Xxxxxxx Xxxxxx
Xxxxx 000
Xx Xxxxx, XX 00000
Attn: Xx. Xxxxx X. Arabia
with a copy to:
Pryor, Cashman, Xxxxxxx and Xxxxx
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxx X. Xxxxxxxxx, Esq.
17
(b) if to Sellers, to:
Xxxxxxx Xxxxxxxx
00000 Xxxxxxx Xxxxxxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000
with a copy to:
Xxxxx X. Xxxxxx
Law Offices of Xxxxx X. Xxxxxx
0000 Xxxxxxxx Xxxxxxxxx
Xxxxx 000
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000
Any such notice or other communication will be deemed to have been received upon
actual receipt if personally delivered, one (1) business day following
transmission if sent by facsimile and appropriate confirmation is received or if
sent by overnight courier, or three (3) business days following mailing. Any
party hereto may change its address or facsimile number specified above by
giving written notice to the other party hereto in the same manner as specified
in this Section 9.1.
9.2 Expenses. Except as otherwise provided herein, whether or not the
transactions contemplated by this Agreement shall be consummated, each of the
parties hereto agrees that it shall bear all fees and expenses incurred by it in
connection with this Agreement.
9.3 Entire Agreement. This Agreement, including the schedules and annexes
attached hereto, contains the entire understanding of the parties hereto in
respect of its subject matter. There are no other restrictions, promises,
warranties, covenants or understandings, other than those expressly set forth
herein. This Agreement supersedes all prior agreements and understandings
between the parties hereto.
9.4 Amendments; Waiver. This Agreement may not be amended, supplemented,
canceled or discharged except by a written instrument executed by the parties
hereto. No failure to exercise and no delay in exercising, any right, power or
privilege hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise of any right, power or privilege hereunder preclude the
exercise of any other right, power or privilege (hereunder or otherwise). No
waiver of any breach of any agreement hereunder or any other agreement shall be
deemed to be a waiver of any preceding or succeeding breach of the same or any
other agreement. No extension of time of performance of any obligations or other
acts hereunder or under any other agreement shall be deemed to be an extension
of the time for performance of any other obligations or any other acts. The
rights and remedies of the parties under this Agreement are in addition to all
other rights and remedies, at law or in equity, that either party may have
against the other.
9.5 Severability. Any provision of this Agreement or any of the agreements
contemplated hereby that shall be prohibited or unenforceable in any
jurisdiction shall, as to such
18
jurisdiction, be ineffective to the extent of such prohibition or enforceability
without invalidating the remaining provisions hereof, and any such prohibition
or unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
9.6 Headings. The descriptive headings of the Articles and Sections of
this Agreement are inserted for convenience and identification only and do not
constitute a part of this Agreement for purposes of interpretation.
9.7 Assignment. No party may assign its rights or delegate its duties
under this Agreement without the prior written consent of the other party
hereto. Whenever in this Agreement either of the parties hereto is referred to,
such reference will be deemed to include the permitted successors and assigns of
such party. The terms and conditions of this Agreement, the obligations imposed
and the rights conferred hereby will be binding upon and inure to the benefit of
the respective permitted successors and assigns of the parties hereto.
9.8 Attorneys' Fees. In the event of any action at law or suit in equity
in relation to this Agreement or any schedule, annex or other instrument or
agreement required hereunder, the prevailing party in such action or suit shall
be entitled to receive its reasonable attorneys' fees and all other costs and
expenses of such action or suit.
9.9 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, and all of which taken
together shall constitute one and the same Agreement.
9.10 Governing Law. This Agreement will be construed and interpreted
according to the laws of the State of California.
(the balance of this page is intentionally blank)
19
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement
as of the date first above written.
"BUYER":
SYBRA OF CALIFORNIA, INC.
By: /s/ Xxxxx X. Arabia
---------------------
Name: Xxxxx X. Arabia
Title: President/CEO
ICH CORPORATION
By: /s/ Xxxxx X. Arabia
---------------------
Name: Xxxxx X. Arabia
Title: President/CEO
"SELLERS":
294, INC.
By: /s/ Xxxxxxx Xxxxxxxx
---------------------
Name: Xxxxxxx Xxxxxxxx
Title: President
20
AMERICAN FOOD CONCEPTS, INC.
By: /s/ Xxxxxxx Xxxxxxxx
---------------------
Name: Xxxxxxx Xxxxxxxx
Title: President
WEB ACQUISITION COMPANY LLC
By: /s/ Xxxxxxx Xxxxxxxx
---------------------
Name: Xxxxxxx Xxxxxxxx
Title: Member
"XXXXXXX XXXXXXXX":
By: /s/ Xxxxxxx Xxxxxxxx
---------------------
Name: Xxxxxxx Xxxxxxxx
