XXXXXXXX'X INTERNATIONAL, INC.
AND
APPLE CAPITOL GROUP, LLC
ASSET PURCHASE AGREEMENT
JULY 16, 2002
TABLE OF CONTENTS
Page
ARTICLE I: PURCHASE AND SALE OF ASSETS.....................................................................1
Section 1.1 Purchased Assets................................................................................1
Section 1.2 Excluded Assets.................................................................................3
Section 1.3 Mechanism of Sale...............................................................................3
Section 1.4 Commencement of Bankruptcy Proceeding...........................................................3
ARTICLE II: PURCHASE PRICE OF ASSETS........................................................................4
Section 2.1 Purchase Price, Deposit and Additional Purchase Price...........................................4
Section 2.2 Adjustment of Purchase Price....................................................................5
Section 2.3 [Reserved]......................................................................................5
Section 2.4 Certain Liabilities and Obligations.............................................................5
Section 2.5 Taxes...........................................................................................6
Section 2.6 Allocation of Purchase Price....................................................................6
ARTICLE III: CLOSING.........................................................................................6
Section 3.1 Date, Time and Place of Closing.................................................................6
Section 3.2 Deliveries by Sellers at Closing................................................................6
Section 3.3 Deliveries by Buyer at Closing..................................................................7
Section 3.4 Transfer of Operations..........................................................................8
Section 3.5 Assignment by Buyer.............................................................................8
ARTICLE IV: REPRESENTATIONS AND WARRANTIES OF SELLERS.......................................................8
Section 4.1 Existence.......................................................................................8
Section 4.2 Power and Authority.............................................................................8
Section 4.3 Execution and Delivery Permitted; Consents......................................................9
Section 4.4 The Purchased Assets............................................................................9
Section 4.5 Binding Effect..................................................................................11
Section 4.6 Condition of Purchased Assets...................................................................11
Section 4.7 Absence of Other Assets.........................................................................11
Section 4.8 Ownership of Assets.............................................................................12
Section 4.9 Real Property...................................................................................12
Section 4.10 [Reserved]......................................................................................12
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Section 4.11 Documents Sufficient............................................................................12
Section 4.12 Litigation or Condemnation......................................................................12
Section 4.13 Taxes...........................................................................................13
Section 4.14 Assumed Contracts...............................................................................13
Section 4.15 Accuracy of Information and Representations and Warranties......................................14
Section 4.16 Employment Matters..............................................................................14
Section 4.17 Employee Benefit Plans..........................................................................14
Section 4.18 Licensure.......................................................................................16
Section 4.19 Insurance Coverage..............................................................................16
Section 4.20 Environmental Matters...........................................................................16
Section 4.21 Restaurant Operations...........................................................................18
Section 4.22 [Reserved]......................................................................................18
Section 4.23 Affiliated Transactions.........................................................................18
Section 4.24 Subsidiaries....................................................................................18
Section 4.25 [Reserved]......................................................................................19
Section 4.26 Financial Statements............................................................................19
Section 4.27 Right to Inspect................................................................................19
Section 4.28 Development Rights..............................................................................19
ARTICLE V: COVENANTS OF SELLERS............................................................................20
Section 5.1 Employee Benefit Plans..........................................................................20
Section 5.2 Performance of Real Property Leases and Assumed Contracts.......................................21
Section 5.3 Transfer of Licenses and Permits................................................................21
Section 5.4 Liabilities of Seller...........................................................................21
Section 5.5 Agreements Respecting Employees of Sellers......................................................21
Section 5.6 Conduct of Business.............................................................................21
Section 5.7 Broker's Fees...................................................................................23
Section 5.8 Access to Information...........................................................................23
Section 5.9 Bankruptcy Motion...............................................................................23
Section 5.10 [Reserved]......................................................................................24
Section 5.11 [Reserved]......................................................................................24
Section 5.12 [Reserved]......................................................................................24
Section 5.13 Change of Name..................................................................................24
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Section 5.14 Insurance.......................................................................................24
Section 5.15 Renegotiation of Assumed Leases.................................................................24
Section 5.16 Confidentiality.................................................................................24
Section 5.17 [Reserved]......................................................................................24
Section 5.18 Employee Receivables............................................................................24
Section 5.19 Survey and Title Report.........................................................................25
Section 5.20 Reporting Requirements..........................................................................25
Section 5.21 Cooperation.....................................................................................25
Section 5.22 Subsequent Contracts............................................................................26
Section 5.23 Prorations and Purchase Price Adjustment Data...................................................26
Section 5.24 Continued Compliance with Franchise Agreements..................................................26
Section 5.25 Repairs and Replacements........................................................................26
ARTICLE VI: REPRESENTATIONS AND WARRANTIES OF BUYER.........................................................27
Section 6.1 Corporate Existence.............................................................................27
Section 6.2 Corporate Power and Authority...................................................................27
Section 6.3 Execution and Delivery Permitted................................................................27
Section 6.4 Adequate Assurances Regarding Executory Contracts...............................................28
Section 6.5 Availability of Funds, etc......................................................................28
ARTICLE VII: COVENANTS OF BUYER..............................................................................28
Section 7.1 Buyer Performance...............................................................................28
Section 7.2 Confidentiality.................................................................................28
Section 7.3 Sellers' Employees..............................................................................28
Section 7.4 Cooperation.....................................................................................29
Section 7.5 Liquor Licenses.................................................................................29
Section 7.6 Broker's Fees...................................................................................29
ARTICLE VIII: ESCROWED AMOUNTS; PURCHASE PRICE ADJUSTMENTS; CONDITIONS TO CLOSING.............................29
Section 8.1 Escrowed Amounts................................................................................29
Section 8.2 Purchase Price Adjustments/Gift Certificate True-Up.............................................30
Section 8.3 Buyer's Conditions to Closing...................................................................32
Section 8.4 Sellers' Conditions to Closing..................................................................33
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ARTICLE IX: MISCELLANEOUS...................................................................................34
Section 9.1 Notices.........................................................................................34
Section 9.2 Applicable Law..................................................................................35
Section 9.3 Binding on Successors; Assignment...............................................................35
Section 9.4 Payment of Costs; Post-Closing Payments.........................................................36
Section 9.5 Closing Not to Prejudice Claim for Damages......................................................37
Section 9.6 Additional Documents............................................................................37
Section 9.7 Time is of the Essence..........................................................................37
Section 9.8 Interpretation..................................................................................37
Section 9.9 Entire Agreement................................................................................37
Section 9.10 Counterparts....................................................................................38
Section 9.11 Termination.....................................................................................38
Section 9.12 Sellers' Representative.........................................................................39
LIST OF EXHIBITS AND SCHEDULES....................................................................................42
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ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (the "Agreement") is made and entered
into this 16th day of July 2002 by and among Apple Capitol Group, LLC, a Florida
limited liability company ("Apple Capitol Group"), Apple Prince Georges Maryland
Group, LLC, a Florida limited liability company ("Apple Prince Georges"), Apple
Washington MD Group, LLC, a Florida limited liability company ("Apple
Washington"), Apple St. Marys MD Group, LLC, a Florida limited liability company
("Apple St. Marys"), Apple Xxxxxxx MD Group, LLC, a Florida limited liability
company ("Apple Xxxxxxx"), Apple Xxxxxxx MD Group, LLC, a Maryland limited
liability company ("Apple Xxxxxxx"), and Berkeley WVA, LLC, a West Virginia
limited liability company ("Berkeley WVA" and together with Apple Capitol Group,
Apple Prince Georges, Apple Washington, Apple St. Marys, Apple Xxxxxxx, and
Apple Xxxxxxx are referred to herein individually as a "Seller" and collectively
as the "Sellers"), and Xxxxxxxx'x International, Inc., a Delaware corporation
("Buyer");
WHEREAS, Sellers own various items of personal property and interests
in real property (the "Purchased Assets," as more fully defined in Section 1.1
below) used in the operation and development of Xxxxxxxx'x Neighborhood Grill &
Bar restaurants listed on Exhibit 1.1 (the "Restaurants") pursuant to the
Franchise Agreements (the "Franchise Agreements") listed on Exhibit 1.1(a) to
this Agreement;
WHEREAS, Sellers desire to sell the Purchased Assets to Buyer;
WHEREAS, Buyer desires to purchase the Purchased Assets from Sellers;
and
WHEREAS, Buyer and Sellers have agreed upon the terms and conditions of
such sale and desire to reduce the same to writing.
NOW, THEREFORE, in consideration of the foregoing and the mutual
agreements, covenants, representations, warranties and promises set forth
herein, and in order to prescribe the terms and conditions of such purchase and
sale, the parties hereto agree as follows:
ARTICLE I
PURCHASE AND SALE OF ASSETS
Section 1.1 Purchased Assets. Subject to the terms and conditions
set forth in this Agreement, Sellers hereby agree that at the Closing (as
defined in Section 3.1, below) they shall sell, transfer, convey, and assign to
Buyer free and clear of all mortgages, taxes, liens, security interests,
pledges, encumbrances and Claims (other than Permitted Liens and Encumbrances as
defined on Schedule 1.1), and Buyer hereby agrees at the Closing to purchase and
accept from Sellers all of Sellers' right, title and interest in and to all
items of personal property, whether tangible or intangible, and all interests in
real estate, whether owned in fee or held under lease or license, used in the
operation of the Restaurants, held or used for Restaurants under development, or
located in the Restaurants (the "Purchased Assets"), including but not limited
to the following:
(a) The Franchise Agreements listed on Exhibit 1.1(a) and the
items described in Section 3.2(f), below;
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(b) Each Seller's interest as lessee in and to the Real Property
Leases (as defined in Section 4.4(c), below), including all of each
such Seller's interest under the Real Property Leases in the buildings,
fixtures, signs, parking facilities, trash facilities, fences,
utilities, other leasehold improvements, and any and all easements,
rights, privileges, tenements, appurtenances and hereditaments related
to such Real Property Leases;
(c) All Owned Real Property (as defined in Section 4.4(a),
below), including all of Sellers' interest in the buildings, fixtures,
signs, parking facilities, trash facilities, fences, utilities, other
improvements, and any and all easements, rights, privileges, tenements,
appurtenances and hereditaments related to the Owned Real Property;
(d) All Assumed Contracts (as listed on Schedule 4.4(j));
(e) All equipment and leasehold improvements used in the normal
and customary operations of the Restaurants (whether or not located or
installed in a Restaurant), including but not limited to the furniture,
machinery, equipment, tables, chairs, cash registers, computer
equipment, ovens, refrigerators, display cases, shelves, utensils,
tools, pans, lights, uniforms, signs, menus, glasses, plates, dishes,
silverware, pitchers, smallwares, books, cabinets, racks, towels,
decor, bars, and bar equipment (the "Equipment");
(f) All inventories of foodstuffs, beverages (including liquor),
paper products, cleaning supplies and other supplies (the
"Inventories") which are in the Restaurants on the Closing Date (as
defined in Section 3.1, below);
(g) All of Sellers' other rights and property interests of any
nature which are customarily used in the operation of the Restaurants,
including, but not limited to rights to use existing Restaurant
telephone numbers and rights arising under equipment warranties to the
extent assignable;
(h) All assignable computer software and related manuals, data
transmission equipment and related software, software licenses
("Transferred Licenses"), and portable computers used by field
personnel and used in connection with the operation of the Restaurants,
including those items set forth on Schedule 1.1(h) hereto;
(i) Stock in any entity (other than a Seller) owned by any Seller
which holds assets related to the Restaurants;
(j) All original records and files (the Sellers may retain copies
thereof) related to the Real Property (as defined in Section 4.4(b)
below) such as rent calculations, landlord correspondence, purchase
agreements, deeds, construction documents, title reports, environmental
and engineering reports, appraisals, surveys, etc.;
(k) All original accounting records and files (the Sellers may
retain copies thereof) related to Retained Employees (as defined in
Section 5.5(a)) in or assigned to the Restaurants who accept employment
with Buyer as of the Effective Time (as defined in Section 3.4 below);
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(l) All rights under all warranties, express or implied, or other
claims for damages or loss (unless any such Purchased Assets are
replaced prior to the Closing Date or the Purchase Price has been
reduced to reflect the loss of any such Purchased Asset) related to any
of the Purchased Assets; and
(m) All cash in amounts normally used to open the Restaurants
(not including prior day's receipts held for deposit), provided that in
no event shall such cash be more or less than $1,000 per Restaurant.
Section 1.2 Excluded Assets. Excluded from sale under this
Agreement are the assets of Sellers listed or described on Schedule 1.2 to this
Agreement. At any time prior to the entry of the Sale Order (as defined in
Section 1.3 below), Buyer may, in its sole discretion, elect to add any Real
Property Leases as it so determines to Schedule 1.2, provided that there shall
be no adjustment to the Purchase Price as a result of such election. If Buyer so
elects, Buyer will nevertheless purchase the Purchased Assets related to such
Restaurant located on the property subject to such Lease and the removal of such
assets from such Restaurant shall be at Buyer's expense and risk of loss.
Section 1.3 Mechanism of Sale. Under the terms of this Agreement,
Buyer's obligation to acquire and Sellers' obligation to sell the Purchased
Assets is conditioned upon, among other things, Sellers' filing of a Chapter 11
petition (the "Bankruptcy") in the United States Bankruptcy Court for the
Southern District of Florida (the "Bankruptcy Court") as more specifically set
forth in Section 1.4 hereof and the entry of an order (or orders) pursuant to 11
U.S.C. ss. 363 approving the sale of the Purchased Assets to Buyer and the
assumption and assignment to Buyer of the Real Property Leases and Assumed
Contracts, upon the terms and conditions of this Agreement (the "Sale Order") as
set forth in Exhibit 1.3, or as otherwise modified, in form and substance
reasonably satisfactory to Buyer, Sellers and Xxxxxx Brothers Holdings, Inc. or
its designee or assignee ("Xxxxxx").
Section 1.4 Commencement of Bankruptcy Proceeding. Subject to,
and as part of, the terms and conditions set forth in this Agreement, Sellers
shall file a Chapter 11 petition in the Bankruptcy Court (the "Bankruptcy
Proceeding") immediately following the execution of this Agreement.
ARTICLE II
PURCHASE PRICE OF ASSETS
Section 2.1 Purchase Price, Deposit and Additional Purchase Price.
(a) Purchase Price. The purchase price paid for the Purchased
Assets shall be Thirty Two Million Seven Hundred and Fifty Thousand
Dollars ($32,750,000), adjusted as set forth in Section 2.2, below (the
"Purchase Price"). Upon the Bankruptcy Court's approval of Sellers'
motion to approve the bidding procedures (the "Bidding Procedures
Motion"), as set forth in Exhibit 2.1(a)(i), Buyer shall provide a
deposit, consistent with the Order approving the Bidding Procedures
Motion, in the amount of Three Million Dollars ($3,000,000) (the
"Deposit"), which sum shall be held in escrow by UMB Bank, n.a., (the
"Escrow Agent") pursuant to an Escrow Agreement substantially in the
form attached hereto as Exhibit 8.1, and paid to Sellers upon the
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Closing of this transaction; otherwise, such Deposit shall be fully
refundable (including interest thereon) to Buyer except as provided in
Section 9.11(b). The Purchase Price shall be paid at Closing, subject
to the Bankruptcy Court's issuance of a final, nonappealable, unstayed
Sale Order (or orders) as set forth in Section 8.3(n), by wire transfer
of federal funds to Seller by (i) the Escrow Agent in the case of the
Deposit and (ii) Buyer, in the case of the balance of the Purchase
Price (less the Escrowed Amounts described in Section 8.1), in each
case at and in favor of Xxxxxx, up to the extent of the amount of
Sellers' then outstanding indebtedness to Xxxxxx, but subject to
disgorgement in the event Xxxxxx'x security interest in the Purchased
Assets is determined to be invalid. Buyer and Sellers agree that the
Purchase Price shall be allocated to the Purchased Assets as set forth
in Exhibit 2.1(a)(ii).
(b) Additional Purchase Price.
(i) In addition to the adjusted purchase price as determined
in accordance with Sections 2.1(a) and 2.2, Buyer shall pay to
Sellers an additional purchase price (the "Additional Purchase
Price") equal to 50% of the excess, if any, of the 12 Month
EBITDA over $8.15 million ($8.15 million, as adjusted as provided
in Schedule 2.1(b), "Threshold EBITDA"). The "12 Month EBITDA"
shall be determined in accordance with Schedule 2.1(b). The
"Measurement Period" shall be the 12 monthly accounting periods
of Buyer beginning with the first such period following the end
of the sixth full monthly accounting period of Buyer following
Closing. Any Additional Purchase Price shall be paid within sixty
(60) days following the Measurement Period by wire transfer of
federal funds to Sellers (for purposes of this Section 2.1(b) and
Schedule 2.1(b), Sellers shall include any assignee of Sellers
entitled to receive amounts due to Sellers under this Section
2.1(b)), at and in favor of Xxxxxx, up to the extent of the
amount of Sellers' then outstanding indebtedness to Xxxxxx, but
subject to disgorgement in the event Xxxxxx'x security interest
in the Purchased Assets is determined to be invalid.
(ii) In the event that Buyer or any affiliate of Buyer sells
all or substantially all of the assets of one (1) or more
Restaurants, whether in one or a series of good faith arms length
transactions, prior to or during the Measurement Period, and
receives sale consideration therefor (and for any related
territory rights) in the aggregate of $5,000,000 or more, Buyer
will pay to Sellers by wire transfer of funds to Sellers, an
amount equal to 5% of the first $10,000,000 of total sale
consideration received by Buyer and 10% of the total sale
consideration received by Buyer in excess of $10,000,000;
provided, that no amounts will be payable by Buyer under this
Section 2.1(b)(ii) unless the total sale consideration received
by Buyer for all Restaurants (and for any related territory
rights) sold during the Measurement Period, when divided by the
total number of Restaurants sold, equals more than $1,725,000.
Any amounts due Sellers under this Section 2.1(b)(ii) shall be
calculated in the aggregate at the end of the Measurement Period
and shall be paid to Sellers within sixty (60) days following the
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Measurement Period by wire transfer of federal funds to Sellers
and in favor of Xxxxxx, up to the extent of the amount of
Sellers' then outstanding indebtedness to Xxxxxx, but subject to
disgorgement in the event Xxxxxx'x security interest in the
Purchased Assets is determined to be invalid.
(iii) Buyer shall provide Sellers with such back-up and
supporting information as Sellers shall reasonably request in
order to review the calculation of any amounts due to Sellers
pursuant to Section 2.1(b).
Section 2.2 Adjustment of Purchase Price. At the Closing, Sellers
shall deliver to Buyer an itemized statement of purchase price adjustments and
prorations as set forth in Section 8.2 of this Agreement for Buyer's and
Xxxxxx'x review and approval and the Purchase Price shall be adjusted
accordingly.
Section 2.3 [Reserved].
Section 2.4 Certain Liabilities and Obligations.
(a) Liabilities Not Assumed. Except for the liabilities and
obligations specifically assumed pursuant to and referred to in Section
2.4(b), Buyer shall not assume, take subject to and shall not be liable
for, any liabilities or obligations of any kind or nature, whether
absolute, contingent, accrued, known or unknown, of Sellers.
(b) Assumed Liabilities. On the Closing Date, Sellers shall
assign to Buyer, and Buyer shall assume: (i) all of Sellers'
post-closing obligations with respect to the Real Property Leases and
the Assumed Contracts; however, Buyer shall not be responsible for any
obligation, whether under the Real Property Leases, the Assumed
Contracts, or otherwise, relating to events or operation of the
Restaurants occurring on or prior to the Closing Date, except as
expressly provided for in this Agreement; (ii) all liabilities incurred
by Sellers prior to the Closing in the ordinary course of business and
consistent with Sellers' past practice for goods and services that are
delivered and performed after the Closing for the direct benefit of the
operation of the Restaurants; (iii) all liabilities of Sellers for
outstanding gift certificates; and (iv) the value of all vacation and
other paid time off benefits, accrued in accordance with Sellers'
standard policy, and unused as of the Closing, of all Retained
Employees of Seller who are hired by Buyer but only to the extent of
any Purchase Price adjustment occurring pursuant to Section 8.2(a)(v)
(collectively, (i), (ii), (iii) and (iv) are referred to as the
"Assumed Liabilities.")
Section 2.5 Taxes. Sellers and Buyer shall share equally all use,
transfer taxes, sales taxes or fees, in accordance with Section 9.4(c), payable
in connection with the purchase, sale or transfer of the Purchased Assets to,
and the assumption of the Assumed Liabilities by, Buyer pursuant to this
Agreement. Sellers shall use their Reasonable Best Efforts to assist Buyer in
minimizing such taxes or fees, consistent with the other terms of this
Agreement.
Section 2.6 Allocation of Purchase Price. Buyer and Sellers agree
that the Purchase Price shall be allocated in a manner as reasonably determined
by Buyer. Such allocation shall be binding on Buyer and Sellers for purposes of
reporting gain or loss and determination of basis for income tax purposes, and
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each of the parties hereto agrees that it or they will file a statement setting
forth such allocation with its or their federal income tax returns and will also
file such further information or take such further actions as may be necessary
to comply with the Treasury Regulations that have been promulgated pursuant to
Section 1060 of the Internal Revenue Code of 1986, as amended (the "Code").
ARTICLE III
CLOSING
Section 3.1 Date, Time and Place of Closing. The consummation of
the transactions contemplated hereby (the "Closing") shall be held on the first
Monday following or coinciding with, at Buyer's option, the later of (i) the
eleventh (11th) day after the Sale Order is issued by the Bankruptcy Court; or
(ii) the day on which all closing conditions have been met, satisfied or waived.
Section 3.2 Deliveries by Sellers at Closing. At the Closing, and
thereafter as may be reasonably requested by Buyer, Sellers shall convey,
transfer, assign, and deliver all of their right, title and interest in and
possession of the Purchased Assets to Buyer, and shall also deliver to Buyer the
following:
(a) Such bills of sale, easements, assignments, leases,
subleases, lease assignments, special warranty deeds regarding the real
property and improvements to be conveyed in fee simple, and other
appropriate instruments of transfer as Buyer has requested, all in
recordable form, of content reasonably acceptable to Buyer and Buyer's
counsel and sufficient to vest in Buyer good and marketable title to
all of the Purchased Assets which, (i) with regard to interests in real
property, is subject to no exception to title insurance coverage which
could, in Buyer's sole reasonable discretion, substantially affect the
value of the Purchased Assets taken as a whole, and (ii) with regard to
both real and personal property, is free and clear of all mortgages,
deeds of trust, liens, security agreements, charges, encumbrances or
Claims (other than Permitted Liens and Encumbrances);
(b) Certified copies of duly adopted resolutions of each Seller's
Board of Advisers authorizing, approving, and consenting to the
execution and delivery of this Agreement, to the consummation of the
transactions contemplated herein, and to performance of the agreements
set forth herein;
(c) Proof that all real and personal property taxes have been
paid that could create a lien on the Purchased Assets after their sale
to Buyer pursuant to the Sale Order;
(d) A duly executed Cross-Receipt;
(e) A duly executed Release and Waiver in favor of Buyer from
Sellers, substantially in the form of Exhibit 3.2(e) to this Agreement;
(f) All operating manuals, recipes, proprietary information and
similar documents and information held by Sellers in connection with
Sellers' status as a franchisee of Buyer and all copies and extracts
therefrom;
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(g) Duly executed Liquor Service and Operating Agreements as
reasonably agreed to among the parties;
(h) A certified final, nonappealable, unstayed Sale Order (or
orders);
(i) A copy on computer disk, or other electronic medium
acceptable to Buyer, of Sellers' detailed fixed asset records related
to the Purchased Assets updated through the Closing Date; and
(j) The original payroll and human resources records and files
(the Sellers may retain a copy thereof) of Retained Employees, as
defined in Section 5.5(a), below.
Section 3.3 Deliveries by Buyer at Closing. Upon receipt, review
and acceptance by Buyer's counsel of all of the documents specified in Section
3.2 above, duly authorized and validly executed, Buyer shall deliver to Sellers
at Closing:
(a) The Purchase Price;
(b) A duly executed Cross-Receipt;
(c) Certified copies of duly adopted resolutions of Buyer's Board
of Directors authorizing, approving, and consenting to the execution
and delivery of this Agreement, to the consummation of the transactions
contemplated herein, and to performance of the agreements set forth
herein;
(d) A duly executed Release and Waiver in favor of Sellers under
the Franchise Agreements, substantially in the form of Exhibit 3.2(e)
to this Agreement; and
(e) Duly executed Liquor Service and Operating Agreements as
reasonably agreed to among the parties.
Section 3.4 Transfer of Operations. Buyer shall be entitled to
immediate possession of, and to exercise all rights arising under, the Purchased
Assets from and after the time that the Restaurants open for business on the
Closing Date, and operation of the Restaurants shall transfer at such time (the
"Effective Time"). Except as provided hereby, all profits, losses, liabilities,
claims, or injuries arising before such transfer shall be solely to the benefit
or the risk of Sellers. All such occurrences after transfer shall be solely to
the benefit or the risk of Buyer. The risk of loss or damage by fire, storm,
flood, theft, or other casualty or cause shall be in all respects upon Sellers
prior to such transfer and upon Buyer thereafter.
Section 3.5 Assignment by Buyer.
(a) Buyer may assign any or all of its rights and benefits under
this Agreement to any entity or entities that control, are controlled
by or are under common control with Buyer, upon written notice to
Sellers of such assignment.
(b) No assignment by Buyer pursuant to this Section shall relieve
Buyer of its obligations under this Agreement.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLERS
As an inducement to Buyer to enter this Agreement and to consummate the
transactions contemplated hereby, each Seller, jointly and severally, represents
and warrants to Buyer as follows:
Section 4.1 Existence. Each of the Sellers is duly organized,
validly existing, and in good standing under the laws of the State of Florida or
the State of West Virginia respectively, and each is qualified to do business
and is in good standing in the respective states listed in Schedule 4.1, which
Schedule includes all jurisdictions where Sellers' activities require such
qualification, except where the failure to be so qualified, licensed, or in good
standing would not reasonably be expected to have (a) a material adverse effect
on the business, results of operations, or condition (financial or otherwise) of
the business operated by Sellers (taken as a whole), or (b) a material adverse
effect on (i) the transactions contemplated by this Agreement, (ii) the
legality, validity, or enforceability of this Agreement and the agreements and
instruments to be entered into in connection herewith, or (iii) the ability of
Sellers to perform their obligations under this Agreement (each, a "Material
Adverse Effect").
Section 4.2 Power and Authority. Each Seller has the corporate
power and authority to own its properties and Purchased Assets and to carry on
its business as now conducted. Subject to the Bankruptcy Code and the Sale
Order, Sellers have the requisite corporate power and authority to convey,
assign, and transfer the Purchased Assets as set forth in this Agreement.
Section 4.3 Execution and Delivery Permitted; Consents. The
execution, delivery and performance of this Agreement will not violate or result
in a breach of any term of each Seller's Operating Agreement, result in a breach
of or constitute a default under any term in any agreement or other instrument
to which each Seller is a party, such default having not been previously waived
by the other party to any such agreement or otherwise resolved by order of the
Bankruptcy Court in such a manner as to not materially adversely affect the
rights and assets of Sellers or the ability of Sellers to complete the
transactions contemplated by this Agreement, or violate any law or any order,
rule or regulation applicable to Sellers, of any court or of any regulatory
body, administrative agency or other governmental instrumentality having
jurisdiction over Sellers or their properties; and will not result in the
creation or imposition of any lien, charge, or encumbrance of any nature
whatsoever upon any of the Purchased Assets after their sale to Buyer pursuant
to the Sale Order. The Board of Advisers of each Seller has taken all action
required by law (other than any action required by the Bankruptcy Court) and by
each Seller's Operating Agreement to authorize the execution and delivery of
this Agreement, and the transfer of the Purchased Assets to Buyer in accordance
with this Agreement. With respect to each Seller, except as set forth on
Schedule 4.3, the execution, delivery and performance of this Agreement and the
other agreements executed in connection herewith, and the consummation of the
transactions contemplated hereby and thereby do not require any filing with,
notice to or consent, waiver or approval of any third party, including but not
limited to, any governmental body or entity. Schedule 4.3 identifies separately
each notice, consent, waiver or approval by reference to each Real Property
Lease and to each Assumed Contract to which it is applicable.
Section 4.4 The Purchased Assets. Except for the Excluded Assets:
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(a) Attached hereto as Schedule 4.4(a) is a complete and accurate
list of each parcel of real property owned by Sellers on which a
Restaurant is located or which is being held for development of a
Restaurant (the "Owned Real Property"), separated by Restaurant
location and listing the street address;
(b) Attached hereto as Schedule 4.4(b) is a complete and accurate
list of each parcel of real estate leased by Sellers or in which it has
a leasehold or other interest on which a Restaurant is located or which
is being held for development of a Restaurant (the "Leased Real
Property"), separated by Restaurant location, listing the street
address of such property and the name and address of the landlord's
agent to which Sellers are obligated to provide notices regarding the
Leased Real Property (collectively, the Owned Real Property and the
Leased Real Property are referred to as the "Real Property");
(c) Attached hereto as Schedule 4.4(c) is a complete and accurate
list of all agreements or documents under which Sellers claim or hold
such leasehold or other interest or right to the use of the Leased Real
Property (the "Real Property Leases") separated by Restaurant location
and showing the street address, each amendment, modification or
extension thereof, and the dates of each such amendment, modification
or extension;
(d) Attached hereto as Schedule 4.4(d) is a complete and accurate
list by Restaurant of the original basis and accumulated depreciation
for financial and tax reporting purposes of (i) fixed assets (other
than inventory and supplies) being conveyed hereunder as of the month
end immediately preceding the date of this Agreement, and (ii) land,
buildings and leaseholds being conveyed hereunder as of the month end
immediately preceding the date of this Agreement;
(e) Attached hereto as Schedule 4.4(e) is a complete and accurate
list of all liens, claims, encumbrances and restrictions on the
Equipment;
(f) Attached hereto as Schedule 4.4(f) is a complete and accurate
list of all leases of personal property used in the operation of the
Restaurants (the "Equipment Leases"), identified by parcel of Owned
Real Property or Leased Real Property where the leased equipment is
located, separated by Restaurant location and identifying the parties
thereto, the property leased thereunder;
(g) Attached hereto as Schedule 4.4(g) is a complete and accurate
list of all loan agreements, indentures, mortgages, pledges, security
agreements, guarantees, leases or lease purchase agreements (not listed
on Schedule 4.4(c) or 4.4(f)) to which each Seller is a party and by
which any of the Purchased Assets are bound;
(h) Attached hereto as Schedule 4.4(h) is a complete and accurate
list of all other contracts, agreements, commitments or other
understandings or arrangements to which each Seller is a party and by
which any of the Purchased Assets are bound or affected, other than
such contracts, agreements or commitments terminable at will,
identified by parcel of Owned Real Property or Leased Real Property to
which such is applicable; and each item on such Schedule that applies
to any restaurants or assets of Sellers that are not being conveyed to
Buyer hereunder is so noted;
9
(i) Attached hereto as Schedule 4.4(i) is a complete and accurate
list of all contracts, agreements, commitments, understandings or
arrangements affecting or relating to the Purchased Assets or the
Restaurants to which any Affiliate of Sellers is a party or by which
any such Affiliate is bound;
(j) The items listed in the above Schedules constitute all of the
matters required to be shown on such Schedules. A true and complete
copy, or with respect to oral agreements an accurate summary, of each
item listed on the above Schedules has been delivered to Buyer. Each
Real Property Lease separately is acknowledged by Sellers to be
material to operation of the applicable Restaurant, and to the
Purchased Assets, business and financial condition of Sellers. The
contracts listed on Schedule 4.4(j) constitute the "Assumed Contracts";
and
(k) With respect to the Assumed Contracts, Sellers shall provide
notice to all other parties to the Assumed Contracts in the Sale Motion
(referenced in Section 5.9) of the amounts necessary to cure any
defaults currently existing under the Assumed Contracts (the "Cure
Amounts") through Closing and will, upon Closing, promptly cure such
defaults, including, without limitation, any and all unpaid royalties,
advertising fees and finance charges due and owing under the Franchise
Agreements as of the Closing Date, being approximately $1,570,000 as of
July 10, 2002.
Section 4.5 Binding Effect. This Agreement and each other agreement
required to be executed and delivered by Sellers in connection herewith, when
executed and delivered, will be the legal, valid and binding obligation of
Sellers, enforceable against each of them in accordance with its terms, except
as enforceability may be limited by (i) the Bankruptcy Proceeding and the
applicable bankruptcy, reorganization, insolvency, moratorium and similar laws
affecting the enforcement of creditors' rights generally, and (ii) general
equitable principles (regardless of whether enforceability is considered in a
proceeding in equity or at law).
Section 4.6 Condition of Purchased Assets. Except as set forth in
Schedule 4.6,
(a) Each Restaurant contains all Equipment required by the
applicable Franchise Agreement and necessary to operate the Restaurant
in accordance with Sellers' historical practices. Except as set forth
in the initial inspection list (the "Initial Inspection List") prepared
by Buyer and acknowledged by Sellers, a copy of which is attached
hereto as Schedule 4.6(a), each Restaurant's Equipment is in operating
condition, no major repairs are necessary concerning the Equipment, and
to Sellers' Knowledge (as defined in Schedule 1.1), the Equipment
complies in all material respects with all federal, state and local
laws, rules and regulations, and all occupational safety and health act
regulations.
(b) To Sellers' Knowledge, all Inventories are saleable or usable
in the ordinary course of business for their intended use (except for
normal spoilage) and exist in such quantity as necessary to operate the
Restaurants in accordance with Sellers' historical practices.
10
(c) The buildings, fixtures, parking facilities, trash
facilities, fences, utilities and other improvements, appurtenances and
hereditaments at or on each Restaurant are in operating condition and
to Sellers' Knowledge, in compliance in all material respects with all
federal, state and local laws, rules and regulations and leases and
lease provisions.
Section 4.7 Absence of Other Assets. Except as specifically
provided in this Agreement or on Schedule 4.7, there is no asset, property, or
right of any nature which is not being transferred to Buyer hereunder that has
been customarily employed, owned, held, or used in connection with the operation
or ownership of any Restaurant (except as listed on Schedule 4.7), other than
permits that are not transferable or assignable, all of which permits are listed
on Schedule 4.7. All Equipment and Inventories used in the operation of any
Restaurant are situated entirely upon the premises of such Restaurant (except as
listed on Schedule 4.7). All assets located at the Restaurants are being
conveyed to Buyer pursuant to this Agreement.
Section 4.8 Ownership of Assets. Sellers have good and marketable
title to the Purchased Assets, which title is, or will be at Closing, free and
clear of all mortgages, taxes (except for taxes that are prorated pursuant to
Section 8.2(e)), liens, security interests, pledges, encumbrances and Claims
(other than Permitted Liens and Encumbrances); Sellers have the full, absolute
and unrestricted right to assign, transfer and convey to Buyer the Purchased
Assets, subject only to Bankruptcy Court orders and such consents as Sellers
shall deliver to Buyer at Closing; no person or entity other than Sellers has
any interest in the Purchased Assets other than the lessors under Real Property
Leases or the Assumed Contracts; and all Equipment employed in the operation of
the Restaurants which is leased under leases other than Assumed Contracts has
been acquired and the purchase price therefor fully paid, or arrangements
satisfactory to Buyer have been made to apply such amount of the Purchase Price
as may be necessary to fully pay the purchase price therefor.
Section 4.9 Real Property. Sellers have good and marketable title
to all of the Owned Real Property and to all of the lessee's interests in and
under the Real Property Leases and has the full, absolute and unrestricted right
to assign, transfer and convey to Buyer said Real Property, subject only to (a)
Bankruptcy Court orders, (b) such consents as Sellers shall deliver to Buyer at
Closing, and (c) any Permitted Liens, Encumbrances and Claims. Each Real
Property Lease is in full force and effect; the terms contained in the Real
Property Leases have not been modified or amended in any respect except as
disclosed on Schedule 4.4(c), and each constitutes the legal, valid and binding
obligation of the parties thereto (to Sellers' Knowledge with respect to any
party other than Sellers), enforceable against them in accordance with their
terms, except as enforceability may be limited by (i) applicable bankruptcy,
reorganization, insolvency, moratorium and similar laws affecting the
enforcement of creditors' rights generally, and (ii) general equitable
principles (regardless of whether enforceability is considered in a proceeding
in equity or in law). Sellers are current in all obligations under each Real
Property Lease. The consummation of the transactions contemplated by this
Agreement will not (and will not give any person a right to) terminate or modify
any material rights of, or accelerate or increase any material obligation of
Sellers under any Real Property Lease.
11
Section 4.10 [Reserved].
Section 4.11 Documents Sufficient. The documents delivered by
Sellers to Buyer pursuant to Section 3.2 of this Agreement will be valid,
sufficient and effective to completely transfer to Buyer good and marketable
title to all of the Purchased Assets.
Section 4.12 Litigation or Condemnation. Except as set forth on
Schedule 4.12(a) to this Agreement, there are no suits, actions, condemnation
actions, investigations, complaints, or other proceedings of any nature
whatsoever in law or in equity, which are pending or, to the best of each
Seller's Knowledge, threatened against, or which affect in any manner, any of
the Purchased Assets, by or before any federal, state, municipal, or other
governmental court, department, commission, board, bureau, agency, or other
instrumentality (whether domestic or foreign). No Seller is in default in any
material respect with respect to any order, writ, injunction, garnishment, levy,
or decree of any federal, state, municipal, or other governmental court,
department, commission, board, bureau, agency, or instrumentality, and the use,
occupancy, ownership, or transfer of the Purchased Assets do not constitute a
default thereunder. To Sellers' Knowledge, the operation of the Restaurants and
the condition of the Purchased Assets do not violate in any material respect any
federal, state, or municipal law, regulation or rule (including any applicable
zoning or similar use regulation or law). Except as set forth on Schedule
4.12(b), during Sellers' operation of the Restaurants no Restaurant has received
a citation, warning, or reprimand for, or otherwise been notified of, any
material violation of any law, rule or regulation governing alcoholic beverages,
or any health, environmental, or similar municipal, state, or federal law or
regulation. To Sellers' Knowledge, since Sellers' operation of the Restaurants
Sellers have not served any food or foodstuff which is adulterated, spoiled, or
contains foreign substances, nor has any Seller served any food item which has
or, except as set forth on Schedule 4.12(c) to this Agreement, is claimed to
have caused any illness or injury to the consumer thereof.
Section 4.13 Taxes. All ad valorem and other property taxes
relating to the Purchased Assets have been fully paid for 2001 and all prior tax
years and there are no delinquent property tax liens or assessments that will
result in the creation or imposition of any lien, charge, or encumbrance of any
nature whatsoever upon any of the Purchased Assets. Sellers have also timely
filed (or will timely file) all federal, state, local and other tax returns and
reports of whatever kind required to be filed by Sellers for all periods up to
and including the Closing Date, and no request (other than extensions filed by
Sellers with respect to their federal tax returns with respect to calendar year
2001) has been made for any extension of time within which to file such returns
and reports. Sellers have paid (or will timely pay) all taxes of whatever kind,
including any interest, penalties, governmental charges, duties, fees, and fines
imposed by the United States, foreign countries, states, counties,
municipalities, and subdivisions, and by all other governmental entities or
taxing authorities, which are due and payable (or which relate to any period
prior to, and including, the Closing Date) or for which assessments have been
received, the nonpayment of which would result in a lien on any of the Purchased
Assets. Except as set forth on Schedule 4.13, there are no audits, suits,
actions, claims, investigations, inquiries, or proceedings pending or to
Sellers' Knowledge, threatened against any Seller with respect to taxes,
interest, penalties, governmental charges, duties, or fines, nor are any such
matters under discussion with any governmental authority, nor have any claims
for additional taxes, interest, penalties, charges, fines, fees or duties been
received by, or to Sellers' Knowledge, assessed against any Seller.
12
Section 4.14 Assumed Contracts. Subject to the consents delivered
to Buyer at Closing, or the entry of an order by the Bankruptcy Court approving
the assumption and assignment of the Assumed Contracts to Buyer, Sellers have
full, absolute and unrestricted right to assign, transfer and convey to Buyer
the Assumed Contracts. Each Assumed Contract is in full force and effect; the
terms contained in the Assumed Contracts have not been modified or amended in
any respect except as disclosed on Schedule 4.4(j) and to the Sellers'
Knowledge, each constitutes the legal, valid and binding obligation of the
parties thereto, enforceable against them in accordance with their terms, except
as enforceability may be limited by (i) applicable bankruptcy, reorganization,
insolvency, moratorium and similar laws affecting the enforcement of creditors'
rights generally, and (ii) general equitable principles (regardless of whether
enforceability is considered in a proceeding in equity or in law). To Sellers'
Knowledge, except as set forth on Schedule 4.14, there have been no events of
default, and no state of facts exists which with notice or the passage of time,
or both, would constitute an event of default under any Assumed Contract. The
consummation of the transactions contemplated by this Agreement will not (and
will not give any person a right to) terminate or modify any rights of, or
accelerate or increase any obligation of any Seller under any Assumed Contract.
Section 4.15 Accuracy of Information and Representations and
Warranties. All representations and warranties made by Sellers in this Agreement
or any Schedule or Exhibit hereto or in any certificate or other document
furnished by any of them pursuant to this Agreement are true and correct in all
material respects on and as of the date hereof.
Section 4.16 Employment Matters.
(a) No employees of the Restaurants are on strike, nor are such
employees threatening to strike, and there is no strike in progress in
any collective bargaining unit of any union to which each Seller's
employees belong. To Sellers' Knowledge, no labor union has recently
attempted, or is presently attempting, to organize the Restaurants'
employees into a collective bargaining unit, and no group of the
Restaurants' employees is presently organized into a collective
bargaining unit.
(b) Schedule 4.16(b) hereto is a true and complete list as of
June 25, 2002, (i) of each person employed in connection with the
operation of the Restaurants from and including each assistant manager
and assistant kitchen manager up through area director; and (ii) of
each other employee whose duties are primarily related to Sellers'
Restaurant operations. For each such person, Schedule 4.16(b) shows the
full name, job title or duty, wages or salary and estimated bonus.
(c) Sellers have, to their Knowledge, operated all Restaurants
in accordance with all local, state and federal laws and regulations
related to employment matters including, but not limited to, payment of
wages and benefits and employee discrimination.
13
Section 4.17 Employee Benefit Plans.
(a) Schedule 4.17(a) contains a true and complete list of each
pension, profit sharing, other deferred compensation, bonus, incentive
compensation, stock purchase, stock option, supplemental retirement,
severance or termination pay, medical, hospitalization, life insurance,
dental, disability, salary continuation, vacation, supplemental
unemployment benefits plan, program, arrangement or contract, and each
other employee benefit plan, program, arrangement or contract,
maintained, contributed to, or required to be contributed to, by each
Seller or any Related Party (hereinafter defined) for the benefit of
any current or former employee, director or agent of Sellers or any
Related Party, whether or not any of the foregoing is funded, whether
formal or informal, whether or not subject to the Employee Retirement
Income Security Act of 1974, as amended ("ERISA") and whether legally
binding or not (collectively, the "Benefit Plans"). Sellers and their
Related Parties do not have any express or implied plan or contract,
whether legally binding or not, to create any additional Benefit Plan
or modify any existing Benefit Plan, other than as may be required to
comply with the Tax Reform Act of 1986. Sellers have delivered to
Buyer, with respect to each applicable Benefit Plan (1) true and
complete copies of all documents embodying or relating to each Benefit
Plan including, without limitation, the plan and trust or other funding
arrangement relating thereto, summary plan descriptions, employee
handbooks or personnel manuals and all amendments and supplements
thereto; (2) the most recent annual report (Series 5500 and all
schedules thereto), if any, required by ERISA; and (3) the most recent
determination letter received from the Internal Revenue Service
("IRS"), if any. "Related Party" means any member of a controlled group
of corporations, a group of trades or businesses under common control
or an affiliated service group, within the meaning of Section 414(b),
(c), (m) or (o) of the Code, of Sellers;
(b) The Benefit Plans that are intended by Sellers or any Related
Party to meet the requirements of Section 401(a) of the Code now meet
and since their inception have met, the requirements for qualification
under Section 401(a) of the Code and the related trusts are now, and
since their inception have been, exempt from taxation under Section
501(a) of the Code and nothing has occurred or, in connection with the
transaction contemplated by this Agreement, will occur that has or
could have an adverse affect on the qualified status of any such
Benefit Plan.
(c) Sellers and any Related Party have performed in all material
respects obligations required to be performed by them under, and are
not in default under or in violation of, any and all of the Benefit
Plans, and each Benefit Plan has been operated in all material respects
in accordance with its provisions and in compliance with all applicable
laws and regulations. Neither any Benefit Plan or fiduciary nor Sellers
or any Related Party has taken any action, or failed to take any
action, that could subject it or any other person to any liability for
any excise tax under Chapter 43 of the Code or for breach of fiduciary
duty with respect to or in connection with a Benefit Plan;
(d) At no time have Sellers or any Related Party been required to
contribute to any "multiemployer plan" (within the meaning of Section
3(37) of ERISA) and Sellers and their Related Parties have no liability
(contingent or otherwise) relating to the withdrawal or partial
withdrawal from a multiemployer plan. Sellers and their Related Parties
do not participate in any "multiple employer plans," within the meaning
of ERISA;
14
(e) No Benefit Plan provides or is required to provide group
health, medical, death or survivor benefits to any former or retired
employee of Sellers or beneficiary thereof, except to the extent (1)
required under any state insurance law providing for a conversion
option under a group insurance policy or (2) under Section 601 of
ERISA;
(f) No "reportable event" (as defined in ERISA) has occurred with
respect to any Benefit Plan. No liability to the Pension Benefit
Guaranty Corporation ("PBGC") has been incurred, or is expected by
Sellers or any Related Party to be incurred, by Sellers or any Related
Party with respect to any Benefit Plan and no Benefit Plan has
"unfunded benefit liabilities" within the meaning of Title IV of ERISA.
No steps have been taken to terminate any Benefit Plan which is subject
to Title IV of ERISA and no proceeding has been initiated by the PBGC
to terminate any such Benefit Plan or to appoint a Trustee to
administer any such Benefit Plan;
(g) Neither any Benefit Plan or fiduciary nor Sellers or any
Related party has any liability to any participant, beneficiary or
other person under any provision of ERISA or any other applicable law
by reason of any payment of, or failure to pay, benefits or other
amounts with respect to or in connection with any Benefit Plan;
(h) Subject to Section 5.1(e), each Benefit Plan may be
terminated by Sellers or their Related Parties on the Closing Date
without acceleration or additional vesting of any benefits (other than
vesting of contributions made by Sellers on behalf of certain employees
to Sellers' 401(k) plan) and without payment of any amount as a
penalty, bonus, premium, severance pay or other compensation or amount;
and
(i) Sellers do not have any ESOP and have not granted any
employee any option or right to acquire an equity interest in any
Seller.
Section 4.18 Licensure. All governmental permits and licenses
necessary to operate each Restaurant are listed on Schedule 4.18 hereto,
identified by Restaurant and separated by Restaurant location ("Licenses").
Sellers have all such Licenses and are in compliance with all requirements and
limitations set forth in such Licenses in all respects, except where the failure
to have any such License or be in compliance will not have a Material Adverse
Effect as defined in Section 4.1 hereof. All Licenses are now, and at Closing
will be, in full force and effect, except where the failure to be in full force
and effect will not have a Material Adverse Effect.
Section 4.19 Insurance Coverage. Schedule 4.19 is a true and
accurate list and brief description of all property, fire, casualty, liability,
life, worker's compensation, and other forms of insurance of any kind owned or
held by Sellers regarding the Purchased Assets or the Restaurants. All such
policies (a) are in full force and effect, (b) are valid and outstanding
policies, (c) insure against risks of the kind customarily insured against and
in the amounts customarily carried by entities similarly situated, and (d)
provide that they will remain in full force and effect through the Closing Date.
15
Section 4.20 Environmental Matters.
(a) To Sellers' Knowledge, Hazardous Materials (as defined
below), except for de minimis quantities of Hazardous Materials which
have been utilized in the ordinary course of Sellers' operation of the
Restaurant and which have not resulted in any violation of applicable
Environmental Laws (as defined below), have not been at any time during
Sellers' ownership of the Owned Real Property or Sellers' possession of
the Leased Real Property, and to Sellers' Knowledge and belief have not
been during any other time, generated, stored, discharged, disposed of,
spilled, dumped, poured, emptied, or released and are not currently
present at, on, in, beside, above, or under the real estate underlying
or used in connection with the Restaurant locations (the "Real
Estate"). Underground storage tanks are not and have not been at any
time during Sellers' ownership of the Owned Real Property or Sellers'
possession of the Leased Real Property, and to Sellers' Knowledge and
belief have not been during any other time, located on the Real Estate.
Sellers have at all times operated the Real Estate in compliance with
all Environmental Laws (as defined below).
(b) Each Seller, jointly and severally, unconditionally agrees to
indemnify and hold harmless Buyer, for any and all losses, claims,
damages, penalties, liabilities, costs and expenses (including
attorney's fees, administrative expenses, prejudgment interest and
court costs), fines, injuries, penalties, response costs (including the
cost of any required or necessary investigation, testing, monitoring,
repair, clean up, detoxification, decontamination, preparation of any
closure or other required plans, removal, response or remedial action
at or relating to the Real Estate) (collectively, "Claims and Costs"),
with respect to, as a direct or indirect result of, or arising out of
any contamination, requirement, lawsuit, notice of violation, notice
letter, warning letter, administrative order, compliance order,
enforcement action, settlement, agreement, consent order, decree or
judgment, injunction, restraining order or prohibition (collectively
"Action") relating to the generation, presence, storage, management,
disposal, release, discharge, escape, emission, spilling, seepage,
leakage, dumping, pumping, pouring, emptying or clean up of Hazardous
Materials (as herein defined) at, on, in, beside, above, from or under
all or a portion of the Real Estate which occurs from activities
undertaken during Sellers' ownership or possession of the Real Estate
prior to Closing.
(c) For the purpose of this Agreement, the term "Hazardous
Materials" shall include, but not be limited to: any substance defined
as "hazardous substances," "hazardous air pollutant," "pollutants,"
"contaminants," "hazardous materials," "hazardous wastes," "toxic
chemicals," "petroleum or petroleum products," "toxics," "hazardous
chemicals," "extremely hazardous substances," "pesticides" or related
materials, including but not limited to radon and asbestos, as now, in
the past, or hereafter defined in any applicable federal, state or
local law, regulation, ordinance, policy or directive, including, but
not limited to, the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended by the Superfund Amendments and
Reauthorization Act of 1986, 42 X.X.X.xx. 9601 et. seq.; the Emergency
Planning and Community Right-to-Know Act, 42 U.S.C.ss.1101 et. seq.;
16
the Resource Conservation and Recovery Act, 42 U.S.C.ss.6901 et. seq.;
the Hazardous Materials Transportation Act of 1974, 49 X.X.X.xx. 1801
et. seq.; the Federal Water Pollution Control Act, 33 X.X.X.xx. 1251
et. seq.; the Clean Air Act, 42 X.X.X.xx. 4701 et. seq.; the Federal
Insecticide, Fungicide and Rodenticide Act, 7 U.S.C.ss.136 et. seq.;
the Safe Drinking Water Act, 42 U.S.C.ss.3001 et. seq.; the Toxic
Substances Control Act, 15 X.X.X.xx. 2601 et. seq.; the Oil Pollution
Act of 1990, 33 X.X.X.xx. 2701 et. seq.; and any laws regulating the
use of biological agents or substances including medical or infectious
wastes and the corresponding State laws, regulations and local
ordinances, etc. which may be applicable, ("Environmental Laws") as any
such acts may be amended.
(d) Sellers agree and consent to the performance of environmental
testing on the Real Estate at Buyer's expense; provided, however, that
neither the performance of nor failure to perform such tests by Buyer
will negate or affect Sellers' representations or warranties or
agreement to indemnify contained herein.
Section 4.21 Restaurant Operations. To Sellers' Knowledge, in all
material respects the activities carried on in all buildings, structures or
improvements included as part of, or located on or at the Restaurants, and the
buildings, structures and improvements themselves, are not in violation of, or
in conflict with, any applicable zoning or health regulation or ordinance or any
other similar law. There is no pending, or to the best of each Seller's
Knowledge, threatened or proposed proceeding or governmental action to modify
the zoning classification of, or to condemn or take by the power of eminent
domain (or to purchase in lieu thereof), or to impose special assessments on, or
otherwise to take or restrict in any way the right to use, alter or occupy all
or any part of any of the Restaurants in any material respect.
Section 4.22 [Reserved].
Section 4.23 Affiliated Transactions. Except as set forth on
Schedule 4.23, Sellers have not been a party to, and there does not now exist,
any transaction affecting the Restaurants or the Purchased Assets (including
without limitation the purchase, sale or exchange of property or the rendering
of any service) with any Affiliate of Sellers or any entity in which any of them
owns a beneficial interest. For purposes of this Agreement, "Affiliate" means
any person or entity that owns or controls more than a 10% interest in any
Seller (a "Controlling Affiliate") or in which any Seller or a Controlling
Affiliate owns or controls more than a 5% interest. Nothing in this Agreement is
intended to preclude any Affiliate of Seller from bidding to acquire the
Purchased Assets.
Section 4.24 Subsidiaries.
(a) Schedule 4.24 is a correct and complete list of each entity
in which any Seller has a direct or indirect interest that has any
direct or indirect interest in any of the Purchased Assets, showing the
following as of the date of this Agreement with respect to each such
entity:
17
(i) the jurisdiction of its organization;
(ii) the title of each authorized class or series of voting
interests or securities;
(iii) the number of those voting interests or securities
outstanding;
(iv) the number of such outstanding interests or securities
owned directly or indirectly by Sellers;
(v) the percentage of such outstanding interests or
securities owned directly or indirectly by Sellers; and
(vi) the Purchased Assets in which such entity has an
interest and the extent of such interest.
Section 4.25 [Reserved].
Section 4.26 Financial Statements. Attached hereto as Schedule
4.26, are unaudited financial statements of Sellers' business, including (i)
consolidated statement of operations and related statement of cash flows for,
and balance sheet as of the end of fiscal year 2000 as reviewed by Agatheas &
Xxxxxx, P.A., including explanatory notes; (ii) consolidated statement of
operations and balance sheet as of the end of fiscal year 2001; (iii)
consolidated monthly statements of operations and balance sheets from January
2000 through and up to the month end prior to signing this Agreement, and
updated at Closing; and (iv) monthly individual Restaurant profit and loss
statements for the same period. All such financial statements set forth in this
Section 4.26 (the "Financial Statements") shall be prepared in accordance with
generally accepted accounting principles, except in the case of (ii), (iii) and
(iv) for the absence of explanatory notes and except as otherwise expressly
described therein. The Financial Statements accurately reflect the operations
and financial condition of Sellers for the periods presented and as of their
respective dates, and the books and records of Sellers from which the Financial
Statements were prepared are true, correct and complete in all material
respects.
Section 4.27 Right to Inspect. Buyer shall have the right to
inspect each Restaurant location at or prior to the Closing Date hereof (the
"Final Inspection"). Buyer's Final Inspection shall be conducted in order to
review, revise and add to the Initial Inspection List attached hereto as
Schedule 4.6(a). The Final Inspection list (the "Final Inspection List") shall
be prepared by an inspection that is consistent in scope to the inspection used
to prepare the Initial Inspection List (attached hereto as Schedule 4.27 is a
"Master Inspection List" used in connection with such inspection), and shall
identify equipment and facilities that are not in working order and that are in
need of repair or replacement. A management-level representative of Sellers' for
each Restaurant location shall review and acknowledge in writing Buyer's
completed list after the Final Inspection. In the event of any dispute between
Buyer and Sellers regarding the contents of the Final Inspection List with
respect to a particular Restaurant(s), at Sellers' request Buyer will provide
Sellers with a copy of the original report prepared by Buyer with respect to
such Restaurant(s) utilizing the Master Inspection List referenced above. Any
such dispute shall be resolved in accordance with the procedures set forth in
Section 5.25(d).
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Section 4.28 Development Rights. Sellers acknowledge (i) that Apple
Capitol Group defaulted in its obligations under the Development Agreement
between Apple Capitol Group and Buyer, (ii) that based on such defaults Buyer
properly and validly terminated said agreement effective on or before June 27,
2001, and (iii) that said agreement is of no force and effect and Sellers have
no rights whatsoever under said agreement, or under any other agreement,
document, or legal or equitable claim, to develop, open or operate any
Applebee's restaurant other than the 21 Restaurants listed on Exhibit 1.1.
ARTICLE V
COVENANTS OF SELLERS
Each Seller, jointly and severally, covenants and agrees as follows:
Section 5.1 Employee Benefit Plans.
(a) Buyer is not obligated to assume any liability, obligation or
other responsibility under any Benefit Plan. With respect to any
"defined benefit" Benefit Plan, Sellers shall treat all employees who
are hired by Buyer at the Closing as if they terminated employment with
Sellers on the Closing Date. With respect to any "defined contribution"
Benefit Plan, Sellers shall pay all amounts owed to the related trust
with respect to each transferred employee as of the Closing Date as
soon as reasonably practicable thereafter. Sellers shall remain
responsible and liable for all payments required under the terms of any
"employee welfare benefit plan" as defined in Section 3(1) of ERISA for
claims incurred and expenses and payments accrued on and prior to the
Closing Date.
(b) Sellers and their Related Parties agree to pay and be liable
to Buyer and shall indemnify and hold harmless Buyer from and against
all losses, expenses and liabilities, arising under Section 4980B of
the Code arising from the failure to comply with the continuation
requirements of Section 4980B of the Code and sections 601 through 608
of ERISA occurring on or prior to the date of Closing.
(c) Sellers and their Related Parties (as defined in Section
4.17) shall not permit any event or condition to exist or occur that
would give rise to a "reportable event" (as defined in ERISA) or to
liabilities or taxes under ERISA or the Code with respect to any
Benefit Plan or incur any commitment to increase their obligation under
any Benefit Plan. Upon becoming aware of the occurrence or forthcoming
occurrence of any of the above, Sellers shall provide a written notice
to Buyer specifying the nature of the event and action taken or
proposed or threatened to be taken by Sellers, their Related Parties,
or any governmental body with respect to such events.
(d) With respect to all employees of Sellers who are hired by
Buyer, Sellers shall cause all retirement plan benefits and other
benefits, to fully vest as of the Closing Date.
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(e) Notwithstanding Section 4.17(h) above, Sellers shall not
cancel, for a period of at least 90 days after the Closing Date, any of
the Company's existing medical plans to the extent necessary in order
to allow Sellers' employees to obtain COBRA insurance coverage.
Section 5.2 Performance of Real Property Leases and Assumed
Contracts. From the date hereof through the Closing Date, except as provided for
in this Agreement (including Section 5.24, which governs the Franchise
Agreements), Sellers shall in all material respects continue to faithfully and
diligently perform each and every continuing obligation of Sellers, if any,
under each of the Real Property Leases and the Assumed Contracts arising after
commencement of the Bankruptcy Proceedings.
Section 5.3 Transfer of Licenses and Permits. Subject to the terms
of Section 7.5, Sellers shall use their Reasonable Best Efforts and cooperate
fully in assisting Buyer with the assumption, transfer or reissuance of any and
all required state, county or city licenses or permits required for the
operation of the Restaurants, including those shown on Schedule 4.18.
Section 5.4 Liabilities of Seller. From the date hereof through the
Closing Date, all liabilities of Sellers related to the Purchased Assets and
Restaurants arising after the commencement of the Bankruptcy Proceedings will be
promptly paid by Sellers as they come due in accordance with the Bankruptcy
Code, including all trade payables, employee wages, benefits, and other such
compensation, and royalties and advertising fees, miscellaneous expenses and
finance charges, except (i) to the extent that any such amounts are being
disputed in good faith by any Seller; and (ii) to the extent Sellers are not
permitted to pay such amounts, or such amounts are modified, by the Bankruptcy
Court.
Section 5.5 Agreements Respecting Employees of Sellers.
(a) From the date hereof through the Closing Date, without the
prior written approval of Buyer, Sellers shall not transfer or reassign
any employee involved in the operation or supervision of the
Restaurants, including supervisory personnel through the director of
operations level ("Restaurant Personnel"), other than in the ordinary
course of business. Through the Closing, Sellers will maintain
employment staffing at historic levels. At the Effective Time, Sellers
shall terminate Restaurant Personnel who have accepted positions with
Buyer (the "Retained Employees"). For a period of 12 months from the
Closing Date, no Seller will solicit, offer to employ or employ any
Restaurant Personnel without the prior written approval of Buyer.
(b) From the date hereof through the Closing Date, Sellers shall
be solely responsible for, and at Closing shall pay, any severance
payments, employee wages or other such benefits (except accrued and
unused vacation) in the amounts due or granted by Sellers to any of
Sellers' employees and Restaurant Personnel, except to the extent
Sellers are not obligated to pay such amounts under the Bankruptcy
Code, or such amounts are modified, by the Bankruptcy Court.
Section 5.6 Conduct of Business. From the date hereof through the
Closing Date, Sellers shall operate the Restaurants as they are currently being
operated and only in the ordinary course, using their Reasonable Best Efforts to
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preserve and maintain the services of their employees, their relationships with
suppliers and customers, and to preserve their current level of sales volume,
and shall continue to insure the Purchased Assets under existing policies of
insurance at current levels. Sellers shall pay all bills and debts incurred by
them and related to the operation of the Restaurants arising after the
commencement of the Bankruptcy Proceedings promptly as they become due, except
(i) to the extent that any such amounts are being disputed in good faith by any
Seller, and (ii) to the extent Sellers are not permitted to pay such amounts, or
such amounts are modified, by the Bankruptcy Court. Sellers shall consult in
advance with Buyer on all decisions relating to the Purchased Assets or the
Restaurants that are not in the ordinary course of business, not consistent with
Sellers' past practices, or not contemplated in the Operating Budget attached as
Schedule 5.6.
(a) In particular, and without limiting the foregoing, with
respect to the Restaurants, Sellers shall:
(i) continue to conduct the advertising activities and
efforts as set forth on Schedule 5.6(a)(i);
(ii) continue to repair and replace the Purchased Assets in
accordance with the maintenance operating expenditure budget set
forth on Schedule 5.6(a)(ii);
(iii) continue to conduct on a timely basis all normal
periodic asset maintenance;
(iv) continue to purchase and maintain inventories for each
Restaurant in such quantities and quality as necessary to operate
the Restaurants in accordance with Sellers' historical practice,
but in no case less than 7 days inventory at each Restaurant
(except perishable items in the normal course of business);
(v) continue to operate the Restaurants in accordance with
all material applicable local, state and federal laws and
regulations; and
(vi) consistent with the requirements of the Bankruptcy Code,
continue to use its Reasonable Best Efforts to preserve and
maintain its business relationships with its critical trade
creditors.
(b) Further, with respect to the Restaurants, Sellers shall not,
without the express prior written approval of Buyer:
(i) change in any manner the ownership of the Purchased
Assets;
(ii) other than as described on Schedule 5.6(b)(ii), increase
the rate of compensation to its officers or employees beyond the
usual and customary annual merit increases or bonuses under
established compensation plans;
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(iii) except pursuant to an order of the Bankruptcy Court
(including, without limitation, in connection with any
debtor-in-possession financing obtained by Sellers or any
adequate protection order of the Bankruptcy Court), mortgage,
pledge or subject to lien any of the Purchased Assets;
(iv) sell or otherwise dispose of any Purchased Asset except
in the ordinary course of business;
(v) enter into or commit to enter into any contract,
agreement or commitment that would be required to be set forth on
Schedule 4.4(h) hereto except in the ordinary course of business;
and
(vi) Other than in the ordinary course of business, cancel or
terminate or consent to or accept any cancellation or termination
of any Assumed Contract or any Real Property Lease, amend or
otherwise modify any of its material terms or provisions or give
any consent, waiver or approval with respect to the agreement,
waive any breach of any of its material terms or provisions or
take any other action in connection with any Assumed Contract or
any Real Property Lease that would materially impair the
interests or rights of Sellers to be transferred to Buyer
hereunder.
Section 5.7 Broker's Fees. Each Seller shall, jointly and
severally, indemnify and hold Buyer harmless in respect to any claim for
brokerage or finder's fees or commissions with respect to the transactions
contemplated herein by anyone claiming to have acted on behalf of Sellers.
Section 5.8 Access to Information. Sellers shall afford Buyer, its
counsel, financial advisors, auditors, lenders, lenders' counsel and other
authorized representatives reasonable access for any purpose consistent with
this Agreement from the date hereof until the Closing, during normal business
hours, to the offices, properties, books, and records of Sellers with respect to
the Purchased Assets and the Restaurants and shall furnish to Buyer such
additional financial and operating data and other information as Sellers may
possess and as Buyer may reasonably request, subject to Buyer's obligations
regarding the confidentiality of such information as set forth in Section 7.2
hereof.
Section 5.9 Bankruptcy Motion. Simultaneous with the Chapter 11
petition in Section 1.3 above, Sellers shall file a motion with the Bankruptcy
Court (the "Sale Procedures Motion"), in the form set forth in Exhibit 5.9, or
as otherwise modified in form and substance reasonably satisfactory to Buyer,
Sellers and Xxxxxx, and the Bidding Procedures Motion requesting orders that (i)
a hearing regarding the Section 363 sale be scheduled within forty-three (43)
days of the commencement of the Bankruptcy Proceeding; (ii) this Agreement be
the sole agreement that any other potential bidders in the Bankruptcy Proceeding
be allowed to bid on; and (iii) the Buyer, if Buyer is not the successful bidder
for the Purchased Assets, be allowed reimbursement for actual out-of-pocket
expenses incurred by Buyer in an amount up to and including Four Hundred
Thousand Dollars ($400,000), in relation to the negotiation and preparation of
this Agreement and its due diligence investigation related thereto and in
preparing, submitting and pursuing any bid Buyer may make in the Bankruptcy
Proceeding.
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Section 5.10 [Reserved].
Section 5.11 [Reserved].
Section 5.12 [Reserved].
Section 5.13 Change of Name. Seller shall change its corporate name
and shall cause to be changed the name of any affiliated entities upon the
Closing to delete the use of the name "Apple," "Applebee's" and other similar or
derivative names. Immediately upon the Closing, Sellers shall cease using the
name "Apple" and "Applebee's" in all of their activities, promotions, brochures,
stationery, products, and in all other respects (except in Bankruptcy
Proceedings) and thereafter Sellers agree not to use the names "Apple" and
"Applebee's" in any business. Notwithstanding the foregoing, Buyer hereby grants
to Sellers a limited license and right to use the "Apple" and "Applebee's" names
solely (A) as required for the Case including without limitation the publication
of any notices required by the Bankruptcy Court or (B) for the purposes of (i)
pursuing rights and claims against third parties, (ii) filing of tax returns,
insurance claims and any other necessary filings; and (iii) selling any of the
Excluded Assets.
Section 5.14 Insurance. Sellers shall continuously keep in force
through the Closing Date the insurance policies listed on Schedule 4.19 at
Sellers' sole cost.
Section 5.15 Renegotiation of Assumed Leases. Sellers will provide
reasonable assistance as requested by Buyer in Buyer's efforts to renegotiate
the Real Property Leases.
Section 5.16 Confidentiality. Sellers shall maintain all
Confidential Information (as defined below) gained from Buyer in strict
confidence, and shall take all precautions necessary to prevent disclosure,
access to, or transmission of the Confidential Information, or any part thereof,
to any third party, except as required by order of any court having competent
jurisdiction or as may be otherwise required by law, the Bankruptcy Court, or as
may be necessary to consult with their professional advisors in their capacity
as such (provided that they shall use their best efforts to ensure that their
professional advisors shall keep the Confidential Information confidential),
regardless of the availability of any such information from any other source. In
the event the Closing does not occur for any reason, Sellers shall, immediately
upon Buyer's request, return all copies and recordings of the Confidential
Information in their possession or under their control and delete all records
thereof in any data storage system maintained by or for Sellers. The term
"Confidential Information" means the negotiations, discussions and any valuation
methodology used in connection with the transactions contemplated hereunder or
thereunder.
Section 5.17 [Reserved].
Section 5.18 Employee Receivables. As of the Closing Date, there
will be no employee receivables in existence with respect to any Restaurant
employees or Restaurant Personnel in excess of $5,000 in the aggregate.
Section 5.19 Survey and Title Report. Buyer has received (i)
current ALTA/ACSM "as-built" surveys of each free-standing Restaurant
(collectively, the "Surveys" and each, a "Survey"), and (ii) current ALTA title
commitments issued by the Title Company for each parcel of Owned Real Property
and Leased Real Property (collectively, the "Title Reports" and each, a "Title
Report").
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Section 5.20 Reporting Requirements. Through the Closing Date,
Sellers shall furnish to Buyer:
(a) Adverse events. Promptly after the occurrence, or failure to
occur, of any such event, information with respect to any event (i)
which materially adversely affected, or is reasonably likely to
materially adversely affect, the Purchased Assets, the operations,
business prospects or condition (financial or otherwise) of the
Restaurants or the ability of Sellers to perform any of their material
obligations hereunder, (ii) which, if known as of the date of this
Agreement, would have been required to be disclosed to Buyer or (iii)
which causes any representation or warranty contained herein to be
untrue or inaccurate in any material respect;
(b) Monthly Financial Statements. As soon as available and in any
event within twenty (20) business days after the end of each month, the
statement of operations and balance sheets on a consolidated basis, all
in reasonable detail and stating in comparative form the respective
consolidated figures for the corresponding date and period in the
previous fiscal year and unaudited but certified by the chief executive
manager and the controller of Sellers, and all normally prepared
monthly or periodic management analytical reports with respect to each
Restaurant, including monthly profit and loss statements;
(c) Management letters. Promptly upon receipt, copies of all
reports submitted to Sellers by independent certified public
accountants in connection with examination of the financial statements
of Sellers made by such accountants;
(d) Notice of litigation. Promptly after the commencement of each
such matter, notice of all actions, charges, orders or other directives
affecting any Restaurant that, if adversely determined, could
materially adversely affect the Purchased Assets, the operations,
business, prospects or condition (financial or otherwise) of the
Restaurants or the ability of Sellers to perform their obligations
hereunder;
(e) General Information. Such other information respecting the
Purchased Assets or the operations, business prospects or condition
(financial or otherwise) of the Restaurants as Buyer may from time to
time reasonably request; and
(f) Operating Budget. Promptly, and simultaneous with, any
provision (whether voluntary or involuntary) of an operating budget to
the Bankruptcy Court or any lender, Sellers shall also provide a copy
of such operating budget to Buyer.
Section 5.21 Cooperation. Upon approval of this Agreement by the
Bankruptcy Court, Sellers will use their respective Reasonable Best Efforts to
facilitate and cause the consummation of the transactions contemplated hereby;
and obtain from all persons, and take all other actions with respect to, all
consent or approvals required on the part of such party with respect to the
consummation of those transactions.
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Section 5.22 Subsequent Contracts. From the date of this Agreement
to the Closing Date, Sellers shall (a) include in any written agreements entered
into by Sellers relating in any way to the Restaurants ("Subsequent Contracts")
a provision permitting the assignment of any such Subsequent Contract to Buyer
and providing that upon such assignment, Buyer shall succeed to all of Sellers'
rights, title and interests thereunder subject to Buyer's assumption of all of
Sellers' duties, powers and obligations under such Subsequent Contract, and (b)
ensure that no Subsequent Contract contains any provision which would limit in
any way the rights, title and interests of Sellers in the Purchased Assets.
Section 5.23 Prorations and Purchase Price Adjustment Data. At
least 3 days prior to the Closing Date, Sellers shall deliver to Buyer all
information and documents necessary for Buyer to review the itemized statement
required under Section 2.2, above, regarding the prorations and Purchase Price
adjustments set forth in Section 8.2 below.
Section 5.24 Continued Compliance with Franchise Agreements. Until
the Closing, Sellers shall continue to be bound by and to use their Reasonable
Best Efforts to comply with the operational provisions of the Franchise
Agreements in a manner reasonably designed to maintain the current operations,
provided that the foregoing shall not require Sellers to cure any defaults
existing on the date hereof under the Franchise Agreements, except as
specifically required by Sections 4.4(k) and 8.3(l) hereof.
Section 5.25 Repairs and Replacements.
(a) Initial Inspection: Repairs and Replacements. Sellers shall
repair or replace any and all items identified on the Initial
Inspection List as not in good working order. The value or cost of
repair or replacement of items identified on the Initial Inspection
List not repaired or replaced within three (3) days prior to the
Closing Date shall be a corresponding reduction to the Purchase Price
in accordance with Section 8.2.
(b) Final Inspection: Repairs and Replacements. Buyer shall have
the right to conduct a Final Inspection of each Restaurant location.
The value or cost of repair or replacement identified on Buyer's Final
Inspection List shall be a corresponding reduction to the Purchase
Price in accordance with Section 8.2.
(c) Valuation of Repairs and Replacements. The value of a repair
or replacement identified on Buyer's Initial Inspection List and Final
Inspection which is not repaired or replaced prior to Closing, shall be
agreed to by Buyer and Sellers at or prior to Closing.
(d) Dispute Procedure. If the parties cannot agree to the amount
of the value or cost of a repair or replacement (and corresponding
reduction to the Purchase Price) in subsection (a) or (b) of this
Section, (i) the amount that is agreed upon (the "Undisputed Amount")
shall be reduced from the Purchase Price, and (ii) the remaining amount
(the "Disputed Amount") shall be a disputed claim against the General
Escrowed Amount pursuant to Section 8.1. Resolution of a Disputed
Amount shall be settled in good faith and by mutual agreement between
authorized representatives, one each from Buyer and Sellers prior to
thirty (30) business days after Closing. Any determination by the
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authorized representatives that all or a portion of a Disputed Amount
is to be paid in favor of Buyer shall be a corresponding reduction of
the General Escrowed Amount as set forth in Section 8.1. If the
authorized representatives cannot agree on a Disputed Amount, after a
good faith attempt within the thirty (30) days, each party shall be
charged with obtaining in good faith either a reasonable, bona fide bid
for repair or a reasonable, bona fide quote of replacement costs, as
the case may be, and submitting such bid (or quote) to the other party
within twenty (20) business days after the initial thirty (30) day
period has expired. The average of the two bids (or quotes), after
subtracting the Undisputed Amount, will be the "Settlement Amount." The
Settlement Amount, if positive, shall be paid to Buyer from the General
Escrowed Amount.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF BUYER
As an inducement to Sellers to enter into this Agreement and to
consummate the transactions contemplated hereby, Buyer represents and warrants
to Sellers as follows:
Section 6.1 Corporate Existence. Buyer is a corporation validly
existing and in good standing under the laws of the State of Delaware and as of
the Closing Date will be qualified to do business and in good standing in each
of the states where the Purchased Assets are located.
Section 6.2 Corporate Power and Authority. Buyer has all requisite
corporate power and authority to own its properties and assets, and to carry on
the business in which it is now engaged. Buyer has the corporate power and
authority to purchase the Purchased Assets, take assignment of the Real Property
Leases and Assumed Contracts, and perform the respective covenants of Buyer set
forth in this Agreement.
Section 6.3 Execution and Delivery Permitted. The execution,
delivery and performance of this Agreement will not violate or result in a
breach of any term of Buyer's Certificate of Incorporation or Bylaws or result
in a breach of or constitute a default under any term in any agreement or other
instrument to which Buyer is a party, such default having not been previously
waived by the other party to such agreements, or violate any law or any order,
rule or regulation applicable to Buyer, of any court or of any regulatory body,
administrative agency or other governmental instrumentality having jurisdiction
over Buyer or its properties, or result in the creation or imposition of any
mortgage, lien, charge, or encumbrance of any nature whatsoever upon any of the
Purchased Assets purchased by Buyer hereunder. Buyer's Board of Directors, or
authorized committees thereof, has taken all action required by law, and by
Buyer's Certificate of Incorporation, Bylaws, and otherwise to authorize the
purchase of the Purchased Assets in accordance with this Agreement. Except as
set forth on Schedule 6.3, the execution, delivery and performance of this
Agreement and the other agreements executed in connection herewith, and the
consummation of the transactions contemplated hereby and thereby do not require
any filing with, notice to or consent, waiver or approval of any third party,
including but not limited to, any governmental body or entity.
Section 6.4 Adequate Assurances Regarding Executory Contracts. As
of the Bankruptcy Court hearing on approval of entry of the Sale Order, Buyer
will be capable of satisfying the conditions contained in sections 365(b)(1)(c)
and (f) of the Bankruptcy Code with respect to the Assumed Contracts and Real
Property Leases.
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Section 6.5 Availability of Funds, etc. Buyer will at Closing have
available funds sufficient to allow it to pay its obligations pursuant to
Section 2.1 at the times and in the manner set forth in this Agreement. In
furtherance and not in limitation of the foregoing, Buyer hereby represents,
covenants and agrees that as of the date hereof and through the Closing Date:
(i) it has and will maintain cash, cash equivalents and availability under lines
of credit in an amount greater than the Purchase Price (free and clear of any
liens and restrictions) and such funds or the applicable portion thereof will be
available (free and clear of any liens or restrictions) to pay the Purchase
Price on the Closing Date and (ii) its net worth (i.e., the fair value of all of
Buyer's assets minus all its liabilities) is and will be at least $35 million.
Buyer acknowledges and agrees that Sellers are relying on the foregoing
representation and covenant in connection with their execution of this
Agreement.
ARTICLE VII
COVENANTS OF BUYER
Section 7.1 Buyer Performance. Buyer hereby covenants and agrees to
accept conveyance of the Purchased Assets and assignment of the Real Property
Leases, and to assume and perform the obligations of Sellers under the Assumed
Contracts after the Closing Date.
Section 7.2 Confidentiality. Buyer shall maintain all information
gained from Sellers in connection with its evaluation of the transactions
contemplated by this Agreement (the "Confidential Information") in strict
confidence, and shall take all precautions necessary to prevent disclosure,
access to, or transmission of the Confidential Information, or any part thereof,
to any third party, except for the exclusive purpose of evaluating the Purchased
Assets and the business of Sellers. In the event the Closing does not occur for
any reason, Buyer shall, immediately upon Sellers' request, return all copies
and recordings of the Confidential Information in its possession or under its
control and delete all records thereof in any data storage system maintained by
or for Buyer.
Section 7.3 Sellers' Employees. Buyer shall offer employment to
such Restaurant employees as Buyer may determine, upon terms and conditions
substantially equivalent to those provided by Sellers prior to the Bankruptcy
Proceeding of which Buyer has been informed in writing and, with respect to each
of the Retained Employees, Buyer shall grant an immediate right of participation
under Buyer's employee pension, health and welfare benefit plans, as such terms
are defined in Sections 3(1) and (2) of ERISA, for purposes of eligibility to
participate under such plans for all such Retained Employee's service with
Sellers. In addition, Buyer will provide vacation and other paid time off
benefits to each Retained Employee equal to the amount accrued for such employee
included in the accrual amount provided for in Section 8.2(a)(v).
Section 7.4 Cooperation. Upon approval of this Agreement by the
Bankruptcy Court, Buyer will use its Reasonable Best Efforts to: (a) facilitate
and cause the consummation of the transactions contemplated hereby; (b) obtain
from all persons, and take all other actions with respect to, all consent or
approvals required on the part of such party with respect to the consummation of
those transactions; and (c) encourage Sellers' trade creditors to continue
providing goods and services to the Sellers after the commencement of the
Bankruptcy Proceedings, provided Sellers are paying such creditors consistent
with the terms of Section 5.6 of this Agreement.
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Section 7.5 Liquor Licenses. Buyer will not submit any applications
for liquor licenses prior to the issuance of the Sale Procedures Order. In
addition, Buyer will promptly withdraw any applications for liquor licenses
submitted with respect to any of the Restaurants after the date this Agreement
is signed in the event the Bankruptcy Court enters an order approving a bidder
other than Buyer or requiring such withdrawal. Notwithstanding anything to the
contrary contained herein, no transfer of any liquor license held by Sellers
shall occur prior to the Closing.
Section 7.6 Broker's Fees. Buyer shall indemnify and hold Sellers
harmless in respect to any claim for brokerage or finder's fees or commissions
with respect to the transactions contemplated herein by anyone claiming to have
acted on behalf of Buyer.
ARTICLE VIII
ESCROWED AMOUNTS; PURCHASE PRICE ADJUSTMENTS;
CONDITIONS TO CLOSING
Section 8.1 Escrowed Amounts. At Closing, Buyer shall deliver to
the Escrow Agent, pursuant to an Escrow Agreement substantially in the form
attached hereto as Exhibit 8.1, the sum of 95% of the face amount of all
outstanding, untendered gift certificates issued by Sellers through the Closing
(the "Gift Certificate Escrowed Amount") and (ii) Five Hundred Thousand Dollars
($500,000) (the "General Escrowed Amount"). Claims against the General Escrowed
Amount shall be limited to claims made by Buyer under Sections 1.1, 4.6 through
4.9, 4.12, 4.13, 4.14, 4.17, 4.21, Article V, and Section 8.2(a).
(a) Escrowed Amounts Dispute Procedures. Any disputes between the
parties with regard to the Gift Certificate Escrowed Amount, the
General Escrowed Amount or the Deposit shall be resolved in accordance
with the dispute procedures set forth in the Escrow Agreement.
Section 8.2 Purchase Price Adjustments/Gift Certificate True-Up.
The items listed below shall be prorated between Buyer and Sellers as of the
Closing Date, or paid by one party on or after the Closing Date, in each case as
set forth below, and shall constitute an adjustment to the Purchase Price.
(a) The Purchase Price will be reduced, without duplication, by
the following:
(i) The face amount of any gift certificates redeemed prior
to 12 months after Closing and paid to Buyer from the Gift
Certificate Escrowed Amount (any such redemption will be deducted
from the Gift Certificate Escrowed Amount and any amounts
remaining in the Gift Certificate Escrow after such 12 month
period will be paid to Sellers or at and in favor of Xxxxxx, up
to the extent of the amount of the Sellers' then outstanding
indebtedness to Xxxxxx);
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(ii) The amount of any claim against the General Escrowed
Amount made within 120 days after Closing that is determined to
be a resolved claim (any amounts above all resolved claims paid
from and the amount of all claims still pending against the
General Escrowed Amount remaining after such 120 day period will
be paid to Sellers or at and in favor of Xxxxxx, up to the extent
of the amount of the Sellers' then outstanding indebtedness to
Xxxxxx);
(iii) The value or cost of any Undisputed Amount for the
repair or replacement of items identified on (a) Buyer's Initial
Inspection List not repaired or replaced within three (3) days
prior to of the Closing Date, and (b) Buyer's Final Inspection;
(iv) The amount of the Apportioned Obligations (as hereafter
defined), if any, for which Sellers are responsible pursuant to
the proration provisions of Section 8.2(e) below;
(v) The value of all vacation and other paid time off
benefits, accrued in accordance with Sellers' standard policy,
and unused as of the Closing, of all Retained Employees of Seller
who are hired by Buyer;
(vi) Any and all outstanding sums due and owing as of the
Closing Date pursuant to Section 5.4;
(vii) Any and all of Sellers' portion of the shared costs as
set forth in Section 9.4(c), not previously paid by Sellers;
(viii) Any Cure Amount under the Assumed Contracts not paid
by Sellers prior to the Closing; and
(ix) Any Gift Certificate True-Up amount owed to Buyer or
other franchisees of Buyer by Sellers as calculated in accordance
with subsection (d) hereof.
(b) The Purchase Price will be increased by the following:
(i) All rentals or other amounts paid by Sellers with respect
to the Real Property Leases which apply to periods past the
Closing Date, including prepaid rentals, percentage rents, and
common area maintenance charges;
(ii) All prepaid insurance premiums on insurance policies
covering the Purchased Assets and regarding welfare benefit
programs, but only if Buyer elects to have said coverage remain
in effect;
(iii) Any Gift Certificate True-Up amount owed to Sellers by
Buyer as calculated in accordance with subsection (d) hereof;
(iv) Any amounts paid by Sellers with respect to the Assumed
Contracts for services extending beyond the Closing Date;
29
(v) Any prepaid expenses including deposits, associated with
the operation of a Restaurant which were paid by Sellers in the
ordinary course of business, including, without limitation, items
such as deposits, service contracts, telephone expenses, real
estate taxes and utility charges, but only to the extent Buyer
receives the benefit of such item after Closing; and
(vi) The amount of the Apportioned Obligations, if any, for
which Buyer is responsible pursuant to the proration provisions
of Section 8.2(e) below.
(c) In addition to the above, the Purchase Price shall be
increased for any xxxxx cash amounts in excess of $1,000 per Restaurant
by the amount of the total of the excess and, alternatively, the
Purchase Price shall be decreased for any xxxxx cash amounts less than
$1,000 per Restaurant by the amount of the shortfall at the Effective
Time.
(d) In addition to the above, at the Closing the Purchase Price
will be adjusted upward or downward, as applicable, by the net
difference between (i) any amounts owed by Sellers to Buyer or other
franchisees of Buyer for gift certificates issued by Sellers and
redeemed at other franchisee or Buyer restaurants and (ii) any amounts
due to Sellers from Buyer or other franchisees of Buyer for gift
certificates issued by Buyer or such other franchisees and redeemed at
the Restaurants (a "Gift Certificate True-Up"), for redemptions
occurring through the end of the month prior to the month in which the
Closing occurs. The preceding adjustment amount shall be calculated and
presented by Sellers to Buyer at Closing. Further, within twenty (20)
business days following the Closing a Gift Certificate True-Up Amount
shall be calculated and presented by Sellers to Buyer for the time
period from the month's end prior to Closing through the Closing Date,
and Buyer or Sellers, as applicable, will pay to the other the amount
shown due by such calculation within twenty (20) business days, unless
otherwise disputed in accordance with this Section 8.2(d). Buyer shall
have twenty (20) business days after receipt of such Gift Certificate
True-Up Amount to provide written notice to Sellers that it disputes
such Gift Certificate True-Up Amount. Buyer and Sellers shall attempt
to resolve the dispute in good faith and by mutual agreement within
twenty (20) business days of Sellers' receipt of Buyer's notice of
dispute. If the parties cannot resolve the dispute, after a good faith
attempt, within the twenty (20) business days, the parties will submit
the dispute to the Bankruptcy Court, which shall make a final
determination with respect to such dispute. The Bankruptcy Court's
decision will be conclusive and binding on the parties. Each party will
bear its own costs in connection with any such dispute.
(e) All ad valorem, real and personal property taxes, general and
special assessments, and any other property taxes on the Purchased
Assets for a taxable period that includes (but does not end on) the
date preceding the Closing Date (collectively, the "Apportioned
Obligations"), shall be apportioned between Sellers and Buyer based on
(x) the number of days of such taxable period up to the Closing Date
(with respect to any such taxable period, the "Pre-Closing Tax Period")
and (y) the number of days of such taxable period including and after
the Closing Date (with respect to any such taxable period, the
30
"Post-Closing Tax Period"). Sellers shall be liable for the
proportionate amount of such taxes that is attributable to the
Pre-Closing Tax Period, and Buyer shall be liable for the proportionate
amount of such taxes that is attributable to the Post-Closing Tax
Period. The aggregate amount of Apportioned Obligations shall be
calculated by Sellers and presented to Buyer prior to or on the Closing
Date, as provided in Section 2.2 hereof. If the amounts of any such
Apportioned Obligation for such periods is not determinable at Closing,
then such Apportioned Obligation shall be prorated on the basis of the
tax for the corresponding period in the immediately preceding tax year
and if, within 120 days after Closing the actual tax assessment (i) is
determined and (ii) is different from the amount in the corresponding
period in the immediately preceding tax year, the appropriate party
shall pay such difference to the other party.
Section 8.3 Buyer's Conditions to Closing. The obligations of Buyer
hereunder are subject to satisfaction of each of the following conditions at or
before Closing, the occurrence of which may, at the option of Buyer, be waived:
(a) All representations and warranties of Sellers in this
Agreement shall be true in all material respects on and as of the
Closing as if made as of the Closing, and Sellers shall have delivered
to Buyer a certificate to such effect dated as of the Closing Date;
(b) The Purchased Assets, taken as a whole, shall not have been
substantially damaged as a result of fire, explosion, earthquake,
disaster, accident, any action by the United States or any other
governmental authority, earthquake, flood, drought, embargo, riot,
civil disturbance, uprising, activity of armed forces, act of God, or
public enemies;
(c) There shall be no material adverse change in the Purchased
Assets, taken as a whole, or the operations of Sellers, taken as a
whole, at the Restaurants from the date hereof to the Closing Date;
(d) Each Seller shall have performed and complied in all material
respects with all of its covenants and obligations under this Agreement
which are to be performed or complied with by such Seller prior to or
on the Closing Date;
(e) Sellers shall be willing and able to deliver all of the items
required to be delivered by them pursuant to Section 3.2 of this
Agreement;
(f) Buyer and Buyer's counsel and Xxxxxx and Xxxxxx'x counsel,
shall have approved the form and substance of the documents delivered
by Sellers pursuant to this Agreement, such approval not to be
unreasonably withheld;
(g) Sellers shall have terminated the employment of all employees
as described in Section 5.5;
(h) Buyer shall have obtained, either from Sellers or directly
from the issuing authority, all permits, licenses, including liquor
licenses, and approvals of all governmental and quasi-governmental
authorities necessary for the operation of the Restaurants as intended
by Buyer; provided, however, that if Buyer is unable to obtain from
local municipal or county authorities a permit necessary for such
operation of the Restaurants, and Buyer reasonably believes that it
will be able to obtain such a permit within two (2) months of the
Closing Date, Closing of the transactions contemplated hereunder will
not be delayed if Sellers deliver to Buyer a duly executed Liquor
Service and Operating Agreement as reasonably agreed to among the
parties;
31
(i) There shall be no claims, actions or suits pending or
threatened by any governmental agency that would restrict or prohibit
the consummation of the transactions contemplated herein;
(j) Sellers shall have paid all outstanding trade payables as
provided for in Section 5.4 incurred during Sellers' Bankruptcy
Proceeding (as described in Section 1.4) in a timely manner or,
alternatively, as soon as practicable, as agreed to by the parties
hereto, after the Closing Date;
(k) All obligations of Sellers to Retained Employees as of the
Closing Date shall be paid through Closing (other than unused vacation
and other paid time off the value of which has been accrued by Sellers
and offset against the Purchase Price under Section 8.2(a)(v)),
including salaries, benefits and any other such compensation, except to
the extent Sellers are not obligated to pay such amounts under the
Bankruptcy Code, or such amounts are modified, by the Bankruptcy Court;
(l) Sellers shall have paid any and all royalties, advertising
fees and finance charges required to be paid under the Franchise
Agreements for the month of June by July 12, 2002 and shall have paid
all such amounts accruing thereafter on a timely basis up and until the
Closing Date;
(m) Sellers shall have satisfied all obligations under Section
5.19; and
(n) The Bankruptcy Court shall have issued a final,
nonappealable, unstayed, Sale Order.
Section 8.4 Sellers' Conditions to Closing. The obligations of
Sellers hereunder are subject to satisfaction of each of the following
conditions at or before Closing, the occurrence of which may, at the option of
Sellers, be waived:
(a) All representations and warranties of Buyer in this Agreement
shall be true on and as of the Closing in all material respects, and
Buyer shall have delivered to Sellers a certificate to such effect
dated as of the Closing Date;
(b) Buyer shall have performed and complied in all material
respects with all of its obligations under this Agreement which are to
be performed or complied with by Buyer prior to or on the Closing Date;
(c) Buyer shall be willing and able to deliver the Purchase Price
and all of the documents required to be delivered by it under Section
3.3 of this Agreement;
(d) Sellers shall have approved the form and substance of the
documents delivered by Buyer pursuant to this Agreement; and
32
(e) The Bankruptcy Court shall have issued a final,
nonappealable, unstayed, Sale Order.
ARTICLE IX
MISCELLANEOUS
Section 9.1 Notices. Except as otherwise expressly provided, all
notices, consents, requests, demands and other communications hereunder shall be
in writing and shall be deemed to have been duly given if delivered personally,
sent by facsimile transmission with confirmation of receipt, sent by commercial
overnight delivery service with confirmed receipt, or sent by certified U.S.
mail, return receipt requested, with first class postage prepaid, and in all
cases, addressed as follows:
(a) If to Seller: Apple Capitol Group, LLC
000 Xxxxxxxx Xxxxxxx
Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Attn: Xxx Xxxxxxxxx
Fax: (000) 000-0000
Phone: (000) 000-0000
With copies to: Akerman, Senterfitt & Edison, P.A.
000 Xxxx Xxx Xxxx Xxxxxxxxx
Xxxxx 0000
Xxxx Xxxxxxxxxx, Xxxxxxx 00000
Attn: Xxxxx Xxxx
Fax: (000) 000-0000
Phone: (000) 000-0000
Xxxxx Xxxxxx, P.A.
0000 Xxxx 00xx Xxxxxx
Xxxxxxxxxx Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxxxx, Xxxxxxxxx 00000
Attn: Xxxx Xxxx
Fax: (000) 000-0000
Phone: (000) 000-0000
Xxxxxx, at the address set forth below.
(b) If to Buyer: Xxxxxxxx'x International, Inc.
0000 Xxxx 000xx Xx., Xxxxx 000
Xxxxxxxx Xxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxxxx
Fax: (000) 000-0000
Phone: (000) 000-0000
33
With a copy to: Xxxxx X. Xxx, Esq.
Xxxxxxxxx Xxxxxxx Xxxxx Xxxxxx LLP
0000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx Xxxx, XX 00000
Fax: (000) 000-0000
Phone: (000) 000-0000
(c) If to Xxxxxx: Xxxxxx Brothers Holdings, Inc.
000 Xxxxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxx Xxxxx and Xxx Xxxxxxx
Fax: (000) 000-0000
Phone: (000) 000-0000
With a copy to: Xxxxxxx X. Xxxxxxxx, Esq.
Xxxx & Hessen LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Fax: (000) 000-0000
Phone: (000) 000-0000
or to such other address as Buyer or Sellers shall have last designated by
notice to the other parties.
Section 9.2 Applicable Law. This Agreement shall be governed by,
and construed and enforced in accordance with, the internal laws of the State of
New York.
Section 9.3 Binding on Successors; Assignment. All of the terms,
provisions and conditions of this Agreement shall be binding upon and shall
inure to the benefit of the parties hereto, their respective successors, assigns
and legal representatives. Buyer may assign this Agreement and any or all of its
rights or obligations as described in Section 3.5, above. Sellers shall have the
right to assign all or a portion of their rights to receive payments due and
owing pursuant to the terms of this Agreement, but no such assignment shall
relieve Sellers of their obligations hereunder and any such assignee shall
receive such assignment subject to all claims and defenses Buyer may have
against Sellers.
Section 9.4 Payment of Costs; Post-Closing Payments.
(a) Sellers' Costs. In addition to all other matters payable by
Sellers hereunder, Sellers shall pay:
(1) All of Sellers' legal expenses;
(2) All other costs and expenses incurred by Sellers in
negotiating this Agreement and in consummating the transactions
contemplated hereby, including any costs associated with
obtaining any consent, waiver or approval shown on Schedule 4.3,
and fees or commissions payable to any party representing Sellers
in connection with arranging or negotiating this Agreement and
the transactions contemplated hereby, including without
limitation all investment banker or financial advisor fees;
34
(3) The costs required for Sellers to perform any of their
covenants under Article V, hereof; and
(4) Its portion of the costs identified in subsection (c) of
this Section.
(b) Buyer Costs. In addition to all other matters payable by
Buyer hereunder, Buyer shall pay:
(1) All of Buyer's legal expenses;
(2) The cost of any environmental investigations required by
Buyer with respect to the Real Property;
(3) Its portion of the costs identified in subsection (c) of
this Section; and
(4) All other costs and expenses incurred by Buyer in
negotiating this Agreement and in consummating the transactions
contemplated hereby, including any fees or commissions payable to
any party representing Buyer in connection with arranging or
negotiating this Agreement and the transactions contemplated
hereby, including without limitation all investment banker or
financial advisor fees.
(c) Shared Costs. Buyer and Sellers, by way of an adjustment to
the Purchase Price, shall equally pay the following costs up to an
amount equal to $250,000 (up to $125,000 by each of Sellers and Buyer),
with any amount hereunder in excess of $250,000 to be paid by Buyer:
(1) All fees, costs and expenses incurred in recording all
real estate documents related to the transactions contemplated
hereby;
(2) The cost of surveys, the cost of the commitments to
provide and the costs of obtaining title insurance on the Real
Property for benefit of Buyer, with endorsements for surveys and
mechanics' lien, except for costs related to extraordinary
endorsements required by Buyer's lenders; and
(3) All sales, use or transfer taxes or fees arising from the
transactions contemplated hereby arising under state law.
Section 9.5 Closing Not to Prejudice Claim for Damages. Closing of
the transactions contemplated by this Agreement shall not prejudice any claim
for damages which any party may have hereunder, in law or in equity, due to a
35
material default in observance in the due and timely performance of any of the
covenants and agreements herein contained or for the breach of any warranty or
representation hereunder, unless such observance, performance, warranty, or
representation is specifically waived in writing by the party making such claim.
Section 9.6 Additional Documents. After Closing, each party agrees
to furnish such additional documents as are necessary to complete the
transactions contemplated hereby.
Section 9.7 Time is of the Essence. Time is of the essence in the
performance of the obligations of the parties hereunder.
Section 9.8 Interpretation. The title of the sections of this
Agreement are for convenience of reference only, and are not to be considered in
construing this Agreement. Whenever required by the context of this Agreement,
the singular shall include the plural and the masculine shall include the
feminine and vice versa.
Section 9.9 Entire Agreement. This Agreement, the Exhibits and
Schedules, attached hereto and incorporated herein by this reference, and the
Sale Order and Sale Motion contain the entire Agreement of the parties hereto
with respect to the transactions contemplated hereby and supersede any and all
prior agreements, arrangements, and understandings between the parties with
respect to such transaction. No inducements contrary to the terms of this
Agreement exist. No waiver of any term, provision, or condition of this
Agreement, whether by conduct or otherwise, in any one or more instances shall
be deemed to be construed as a further or continuing waiver of any such term,
provision or condition or any other term, provision or condition of this
Agreement. This Agreement may not be modified orally and may only be amended in
a writing executed by all parties hereto.
Section 9.10 Counterparts. This Agreement may be executed in one or
more counterparts which in the aggregate shall comprise one Agreement.
Section 9.11 Termination.
(a) This Agreement may be terminated prior to the Closing as
follows:
(i) At any time by the mutual consent of Sellers and Buyer;
(ii) by either Buyer or Sellers, upon written notice in the
event of a material breach of any representation or warranty of
the other party contained in this Agreement or any covenant or
agreement to be performed or complied with by such party pursuant
to the terms of this Agreement ("Material Breach"), which
Material Breach remains uncured for a period of ten (10) days
following notice thereof to the breaching party by the
non-breaching party and would result in a condition to Closing
set forth in Sections 8.3 or 8.4 hereof, as the case may be, not
being satisfied on or before November 30, 2002 (the "Drop Dead
Date"), which condition has not been waived in writing by the
non-breaching party; provided, however, that Buyer or Sellers, as
the case may be, may not elect to terminate this Agreement
pursuant to this Section 9.11(a)(ii) if the terminating party is
itself in Material Breach;
36
(iii) by either Buyer or Sellers if the Closing shall not
have occurred on or before the Drop Dead Date, unless the failure
of the Closing to occur by such date shall have been as a result
of the Material Breach by a party hereto, in which case Section
9.11(a)(ii) shall apply; provided further, however, that the
right to terminate this Agreement under this Section 9.11(a)(iii)
shall not be available to any party whose failure to fulfill any
obligation under this Agreement shall have been the cause of, or
shall have resulted in, the failure of the Closing to occur on or
prior to such date; or
(iv) By either Buyer or Sellers if Sellers shall have
accepted or selected, and the Bankruptcy Court shall have
approved, the bid or bids of any bidder other than Buyer to
purchase all or any portion of the Purchased Assets (whether or
not any transaction contemplated by any such bid or bids shall be
consummated).
(b) In the event of the termination of this Agreement pursuant to
subparagraph 9.11 (a) (ii) above because of a Material Breach committed
willingly or in bad faith by Sellers or Buyer, as the case may be, the
other party shall be entitled to pursue, exercise, and enforce any and
all remedies, rights, powers, and privileges available to it at law or
in equity. In addition to and not in lieu of the foregoing, Sellers
shall be entitled to receive the Deposit out of escrow only in the
event of the termination of this Agreement by Sellers pursuant to
Section 9.11(a)(ii) by reason of (i) Buyer's failure (caused by Buyer's
bad faith) to satisfy Sections 8.4(a), (b) or (c) or (ii) Buyer's
failure to consummate the Closing on the Closing Date notwithstanding
the satisfaction of Buyer's closing conditions in Section 8.3 or where
all conditions in Section 8.3 are satisfied other than Sections 8.3(f)
or (h) and if the failure of such conditions to be satisfied results
from the bad faith of Buyer. Upon any other termination of this
Agreement Buyer shall be entitled to receive the Deposit out of escrow.
Section 9.12 Sellers' Representative. Each Seller hereby
irrevocably appoints Apple Capitol Group as its representative and
attorney-in-fact to act for and on its behalf, with full power and authority,
including power of substitution, to execute and deliver any and all agreements,
waivers, compromises, settlements and claims arising out of or related to the
terms and provisions of this Agreement.
Remainder of Page Left Intentionally Blank
37
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the day, month, and year first above written.
BUYER:
XXXXXXXX'X INTERNATIONAL, INC.,
a Delaware corporation
By:
-------------------------------------------
Name:
-----------------------------------------
Title:
----------------------------------------
SELLERS:
APPLE CAPITOL GROUP, LLC, a Florida limited
liability company
By:
-------------------------------------------
Name:
-----------------------------------------
Title:
----------------------------------------
APPLE PRINCE GEORGES MARYLAND GROUP, LLC,
a Florida limited liability company
By:
-------------------------------------------
Name:
-----------------------------------------
Title:
----------------------------------------
APPLE WASHINGTON MD GROUP, LLC, a Florida
limited liability company
By:
-------------------------------------------
Name:
-----------------------------------------
Title:
----------------------------------------
00
XXXXX XX. XXXXX XX GROUP, LLC, a Florida
limited liability company
By:
-------------------------------------------
Name:
-----------------------------------------
Title:
----------------------------------------
APPLE XXXXXXX MD GROUP, LLC, a Florida
limited liability company
By:
-------------------------------------------
Name:
-----------------------------------------
Title:
----------------------------------------
APPLE XXXXXXX MD GROUP, LLC, a Maryland
limited liability company
By:
-------------------------------------------
Name:
-----------------------------------------
Title:
----------------------------------------
BERKELEY WVA, LLC, a West Virginia limited
liability company
By:
-------------------------------------------
Name:
-----------------------------------------
Title:
----------------------------------------
39
LIST OF EXHIBITS AND SCHEDULES
Exhibit
1.1 Restaurants
1.1(a) Franchise Agreements
1.3 Sale Order
2.1(a)(i) Bidding Procedures Motion
2.1(a)(ii) Allocation of Purchase Price
3.2(e) Release and Waiver
5.9 Sale Motion
8.1 Escrow Agreement
Schedules
1.1 Certain Definitions
1.1(h) Transferred Licenses
1.2 Excluded Assets
2.1(b) 12-Month EBITDA and Adjustment
4.1 Sellers' Jurisdictions
4.3 Consents
4.4(a) Owned Real Property
4.4(b) Leased Real Property
4.4(c) Real Property Leases
4.4(d) Fixed Asset Data
4.4(e) Equipment Liens
4.4(f) Equipment Leases
4.4(g) Loan Agreements, Indentures, Mortgages, Etc.
4.4(h) Contracts
4.4(i) Affiliate Contracts
4.4(j) Assumed Contracts
4.6(i) Condition of Purchased Assets
4.6(a) Initial Inspection List
4.7 Nontransferable Permits
4.12(a) Pending Claims and Litigation
4.12(b) Citations, Warnings and Reprimands
4.12(c) Food Items
4.13 Taxes
4.14 Events of Default
4.16(b) Employee List
4.17(a) Employee Benefit Plans
4.18 Licenses and Permits
4.19 Insurance Coverage
4.23 Affiliated Transactions
4.24 Subsidiaries
4.26 Financial Statements
4.27 Master Inspection List
40
Schedules
5.6 Operating Budget
5.6(a)(i) Advertising Activities
5.6(a)(ii) Maintenance Capital Expenditure Budget
5.6(b)(ii) Compensation Matters
6.3 Buyer Consents
41
Exhibit 1.1(a)
Franchise Agreements
------------------------------------ ----------------------------------------------- -----------------------
DOCUMENT * LOCATION DATE
------------------------------------ ----------------------------------------------- -----------------------
Franchise Agreement 00000 Xxxxxxxxxx Xxxxx Xxxxx 00/00/00
Xxxxxxxxx, XX 00000
Franchise Agreement 00000 Xxxx Xxxxx Xxxxxxxx Xxxxxx 00/00/00
Xxxxxxx, XX 00000
Franchise Agreement 0000 Xxxxxxxx Xxxxxxx 00/00/00
Xxxxxxxxxx, XX 00000
Franchise Agreement 0000 X.X. Xxxxx Xxxxxxx 00/00/00
Xxxxx, XX 00000
Franchise Agreement 0000 Xxxxx Xxxxxxx 00/00/00
Xxxxxxx, XX 00000
Franchise Agreement 000 Xxxxxxxx Xxxxx 00/00/00
Xxxxxxxxxxx, XX 00000
Franchise Agreement 00000 Xxxxxxxxx Xxxxx 00/00/00
Xxxxxxxxxx, XX 00000
Franchise Agreement 00000 Xxxxxxx Xxx 00/00/00
Xxxxxxxxxx, XX 00000
Franchise Agreement 0000 Xxxxx Xxxxxx 00/00/00
Xxxxxxxxxxxx, XX 00000
Franchise Agreement 0000 Xxxxx Xxxxxxxxx (XXXXXX)
Xxxxxxxxxx, XX 00000
Franchise Agreement 0000 Xxxxxxxx Xxxxx 00/00/00
Xxxxxxxxx, XX 00000
Franchise Agreement 0000 Xxxxxxxxx Xxxxxx 00/00/00
Xxxxxxx Xxxx, XX 00000
Franchise Agreement 0000 Xxxxx Xxxx 00/00/00
Xxxxxxxxxxxxxx, XX 00000
Franchise Agreement 0000 Xxxxx Xxxxxx Xxxxx 00/00/00
Xxxxx, XX 00000
Franchise Agreement 000 X. Xxxxx Xxxxxx 00/00/00
Xxxxx Xxxxxx, XX 00000
Franchise Agreement 00000 Xxxxxxxxx Xxxx 00/00/00
Xxxxxxxxxx, XX 00000
Franchise Agreement 45979 Denizen Plaza 05/03/99
Xxxxxxxx, XX 00000
Franchise Agreement 000 X. Xxxx Xxxxxxx 00/00/00
Xxxxxxx, XX 00000
Franchise Agreement 000 Xxxx Xxx Xxxxxxx 00/00/00
Xxxxxxxxx, XX 00000
Franchise Agreement 000 X. Xxxxxxxx Xxxxxx Xxxx 00/00/00
Xxxxxx Xxxxxxxxx, XX 00000
Franchise Agreement 1270 Ocean Outlet 05/03/99
Xxxxxxxx Xxxxx, XX 00000
Franchise Agreement 0000 Xxxxxxx Xxxxx 00/00/00
Xxxxxxxxxxx, XX 00000
* Each document specified includes the original document plus all amendments or
addendums thereto.
Exhibit 2.1(a)(ii)
Allocation of Purchase Price
Xxxxxx Tranche #1 $6,570,048
Xxxxxx Tranche #2 7,484,862
Xxxxxx Tranche #3 6,521,170
Xxxxxx Tranche #4 4,857,882
Xxxxxx Tranche #5 7,316,038
------------
Total $32,750,000*
* Total and individual Tranche allocations are subject to change as a result of
purchase price adjustments in accordance with the Agreement.
Exhibit 3.2(e)
RELEASE AND WAIVER
THIS RELEASE AND WAIVER (the "Release") is entered into this __ day of
______, 2002, by and among Apple Capitol Group, LLC, a Florida limited liability
company, Apple Prince Georges Maryland Group, LLC, a Florida limited liability
company, Apple Washington MD Group, LLC, a Florida limited liability company,
Apple St. Marys MD Group, LLC, a Florida limited liability company, Apple
Xxxxxxx MD Group, LLC, a Florida limited liability company, Apple Xxxxxxx MD
Group, LLC, a Maryland limited liability company, and Berkeley WVA, LLC, a West
Virginia limited liability company (collectively, "Sellers"), and Xxxxxxxx'x
International, Inc., a Delaware corporation ("Buyer");
WHEREAS, Buyer and Sellers have entered into a number of Franchise
Agreements as listed on Schedule I (collectively and as amended from time to
time, the "Franchise Agreements"), relating to the development and operation of
certain Xxxxxxxx'x Neighborhood Grill & Bar restaurants (the "Restaurants"); and
WHEREAS, Buyer and Sellers have executed that certain Asset Purchase
Agreement dated as of July 16, 2002, (the "Acquisition Agreement"), pursuant to
which Sellers shall sell to Buyer, and Buyer shall purchase from Sellers all of
the Purchased Assets;
WHEREAS, in connection with the Acquisition Agreement, Buyer and
Sellers are willing to release each other from any claims or obligations
relating to the Franchise Agreements, as set forth herein.
NOW, THEREFORE, in consideration of the foregoing and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereby agree as follows:
1. Release.
a. Buyer, on behalf of itself, its affiliates, predecessors,
successors and assigns, hereby fully releases and forever
discharges Sellers and their officers, agents, advisors,
employees, predecessors, successors and assigns (other than Xxxxx
Xxxxxx, Xxxxx Xxxxxxxxx, Xxxx Xxxxxxxx and any person or entity
affiliated with these three (3) individuals other than Sellers
(the Nonreleased Parties)), of and from any and all liability,
actions, claims, causes of action, complaints and demands, known
or unknown, fixed or contingent, whatsoever which Buyer now has
or may hereafter have arising directly or indirectly out of or in
any way related to (i) the operation of the Restaurants or
performance by Sellers under the Franchise Agreements and (ii)
the transfer of the Restaurants and the Franchise Agreements to
Buyer pursuant to the Acquisition Agreement.
x. Xxxxxxx, on behalf of themselves, their predecessors,
successors and assigns, hereby fully release and forever
discharge Buyer and its predecessors, successors, assigns,
agents, officers, directors and affiliated entities, all other
persons, firms and corporations whatsoever and whomsoever of and
from any and all liability, actions, claims, causes of action,
complaints and demands, known or unknown, whatsoever which
1
Sellers now have or may hereafter have arising directly or
indirectly out of or in any way related to the transfer of the
Restaurants and the Franchise Agreements to Buyer pursuant to the
Acquisition Agreement.
c. In addition, Buyer, on behalf of itself, its affiliates,
predecessors, successors and assigns, will release and forever
discharge any Nonreleased Party of and from any and all
liability, actions, claims, causes of action, complaints and
demands, known or unknown, fixed or contingent, whatsoever which
Buyer now has or may hereafter have arising directly or
indirectly out of or in any way related to (i) the operation of
the Restaurants or performance by each such officer, director or
shareholder under the Franchise Agreements and (ii) the transfer
of the Restaurants and the Franchise Agreements to Buyer pursuant
to the Acquisition Agreement only if and to the extent that any
such Nonreleased Party executes a release and waiver in favor of
Buyer and its affiliates substantially similar to this Release.
2. No Admission of Liability. Nothing in this Release is to be
construed as an admission of liability on the part of Buyer or Sellers.
3. Representations and Warranties of Buyer. Buyer hereby represents and
warrants as follows:
a. Buyer has not assigned or transferred or purported to assign
or transfer any claim or right as against any Seller, and Buyer
is fully entitled to release the same.
b. Buyer has not entered into any agreement with any person or
entity, other than this Release, which would affect any matter
referred to in this Release.
Buyer hereby indemnifies and agrees to hold harmless Sellers from and
against any claim, debt, liability, demand, obligation, cost, expense, damage,
action, or cause of action, including attorneys' fees and costs incurred (i)
arising out of or in connection with any breach of the representations of Buyer
contained in this Release or (ii) in any action brought by Sellers to enforce
the terms of this Release.
4. Representations and Warranties of Sellers. Sellers hereby
individually and collectively represent and warrant as follows:
a. Sellers have not assigned or transferred or purported to
assign or transfer any claim or right as against Buyer, and
Sellers are fully entitled to release the same.
x. Xxxxxxx have not entered into any agreement with any person or
entity, other than this Release, which would affect any matter
referred to in this Release.
Sellers hereby indemnify and agree to hold harmless Buyer from and
against any claim, debt, liability, demand, obligation, cost, expense, damage,
action, or cause of action, including attorneys' fees and costs incurred (i)
arising out of or in connection with any breach of the representations of
Sellers contained in this Release or (ii) in any action brought by Buyer to
enforce the terms of this Release.
2
5. Effectiveness. The release set forth in Section 1 hereof shall be
effective on and as of the Closing Date as defined in the Acquisition Agreement.
6. Miscellaneous.
a. Should any provision of this Release be held invalid or
illegal, such invalidity or illegality will not invalidate the
whole of this Release, but rather the Release shall be construed
as if it did not contain any invalid or illegal parts and the
rights and obligations of the parties shall be construed and
enforced accordingly.
b. This Release may be executed in one or more counterparts that
in the aggregate shall comprise one Release.
c. This Release shall be binding on and inure to the benefit of
the parties hereto and their respective predecessors, successors,
assigns, agents, directors, officers and affiliated entities.
d. This Release shall be construed under, and any disputes
arising hereunder shall be determined by, the internal laws of
the State of Kansas.
Remainder of Page Intentionally Blank
3
IN WITNESS WHEREOF, the parties hereto have executed this Release as of
the day and year first above written.
BUYER:
XXXXXXXX'X INTERNATIONAL, INC.,
a Delaware corporation
By:
-------------------------------------------
Name:
-----------------------------------------
Title:
----------------------------------------
SELLERS:
APPLE CAPITOL GROUP, LLC, a Florida limited
liability company
By:
-------------------------------------------
Name:
-----------------------------------------
Title:
-----------------------------------------
APPLE PRINCE GEORGES MARYLAND GROUP, LLC,
a Florida limited liability company
By:
-------------------------------------------
Name:
-----------------------------------------
Title:
----------------------------------------
APPLE WASHINGTON MD GROUP, LLC, a Florida
limited liability company
By:
-------------------------------------------
Name:
-----------------------------------------
Title:
----------------------------------------
4
APPLE ST. MARYS MD GROUP, LLC, a Florida
limited liability company
By:
-------------------------------------------
Name:
-----------------------------------------
Title:
----------------------------------------
APPLE XXXXXXX MD GROUP, LLC, a Florida limited
liability company
By:
-------------------------------------------
Name:
-----------------------------------------
Title:
----------------------------------------
APPLE XXXXXXX MD GROUP, LLC, a Maryland
limited liability company
By:
-------------------------------------------
Name:
-----------------------------------------
Title:
----------------------------------------
BERKELEY WVA, LLC, a West Virginia limited
liability company
By:
-------------------------------------------
Name:
-----------------------------------------
Title:
----------------------------------------
5
SCHEDULE I
Franchise Agreements
6
Exhibit 8.1
ESCROW AGREEMENT
THIS ESCROW AGREEMENT is made and entered into this 16th day of July,
2002, by and among Apple Capitol Group, LLC, a Florida limited liability
company, Apple Prince Georges Maryland Group, LLC, a Florida limited liability
company, Apple Washington MD Group, LLC, a Florida limited liability company,
Apple St. Marys MD Group, LLC, a Florida limited liability company, Apple
Xxxxxxx MD Group, LLC, a Florida limited liability company, Apple Xxxxxxx MD
Group, LLC, a Maryland limited liability company, and Berkeley WVA, LLC, a West
Virginia limited liability company (collectively, "Sellers"), and Xxxxxxxx'x
International, Inc., a Delaware corporation ("Buyer") and UMB Bank, n.a., a
national banking organization, as escrow agent ("Escrow Agent");
R E C I T A L S
WHEREAS, Buyer and Sellers have entered into an Asset Purchase
Agreement dated as of even date herewith (the "Purchase Agreement"), which
Purchase Agreement provides, among other things, for the delivery to the Escrow
Agent of the deposit provided for in Section 2.1(a) of the Purchase Agreement in
the sum of Three Million Dollars ($3,000,000) (the "Deposit"), which sum shall
be held and paid to Sellers upon the closing of the transaction contemplated by
the Purchase Agreement; and
WHEREAS, pursuant to Section 8.1 of the Purchase Agreement, Buyer shall
also deliver to the Escrow Agent hereunder the sum of the Gift Certificate
Escrowed Amount and the General Escrowed Amount (collectively referred to herein
as the "Escrow Funds"); and
WHEREAS, this Escrow Agreement is the escrow agreement contemplated by
the Purchase Agreement; and
WHEREAS, all defined terms used in this Escrow Agreement and not
otherwise defined shall have the meaning assigned in the Purchase Agreement.
NOW, THEREFORE, in consideration of the above recitals and the mutual
covenants contained herein, the parties agree as follows:
1. Escrow Agent Designation. Buyer and Sellers (together, the
"Principal Parties") hereby jointly designate the Escrow Agent to receive, hold
and disburse the Deposit and Escrow Funds in accordance with the provisions of
the Purchase Agreement and this Escrow Agreement, and Escrow Agent hereby
accepts such designation, upon the terms, and subject to the conditions, set
forth in this Escrow Agreement.
2. Delivery of Deposit and Escrow Funds. As provided in Section 2.1(a)
of the Purchase Agreement, upon the Bankruptcy Court's Order approving the
Bidding Procedures Motion, Buyer shall deliver the Deposit to the Escrow Agent.
And, as provided in Section 8.1 of the Purchase Agreement, at Closing, Buyer
shall deliver the Escrow Funds to the Escrow Agent. The Deposit and Escrow Funds
shall be delivered by electronic funds transfer to Escrow Agent to be held in
subaccounts, including subaccounts for the Deposit (the "Deposit Account"), the
Gift Certificate Escrowed Amount (the "Gift Certificate Escrowed Account") and
the General Escrowed Amount (the "General Escrowed Account")(collectively, the
"Accounts") in accordance with the Escrow Agent's instructions as set forth on
1
Exhibit A attached hereto. Such Accounts shall be interest-bearing accounts. The
Escrow Agent shall invest and reinvest monies, and earnings thereon, held
pursuant to this Escrow Agreement in the Federated Treasury Obligations - C
overnight sweep money market mutual fund or as otherwise directed in writing by
the Principal Parties. The Principal Parties shall each furnish Escrow Agent
with completed Internal Revenue Service Form W-9 contemporaneously upon the
Bankruptcy Court's Order approving the Bidding Procedures Motion and Buyer's
delivery to the Escrow Agent of the Deposit.
3. Deposit. Disbursement of the Deposit Account shall be made from the
Account as follows:
a. Release Notice and Disbursement. Promptly after (i) all of the
conditions that must be fulfilled prior to the Closing, as set
forth in Sections 8.3 and 8.4 of the Purchase Agreement, have
been fulfilled or waived by Buyer or Sellers, as applicable, or
(ii) the Purchase Agreement has been terminated pursuant to
Section 9.11 thereof, the Principal Parties shall give joint
written notice to the Escrow Agent (the "Release Notice"), with a
copy to Xxxxxx, of such fact and shall direct the Escrow Agent to
disburse, at the time designated in the Release Notice, the
Deposit by electronic funds transfer to an account designated in
the Release Notice. A disbursement of the Deposit pursuant to (i)
above shall constitute the payment of a portion of the Purchase
Price equal to the amount of the Deposit. The Escrow Agent shall
disburse all accrued interest on the Deposit by electronic funds
transfer to such bank account as Buyer shall designate in
writing.
b. Final Disbursement. The Escrow Agent shall continue to hold
the Deposit in escrow pending its receipt of either (i) a Release
Notice or (ii) a certified copy of an order of the Bankruptcy
Court, which shall be a final order, directing the disposition of
the Deposit and interest accrued thereon by the Escrow Agent (any
such order, a "Disposition Order"). Upon receipt of a Disposition
Order, the Escrow Agent is directed to disburse the deposit and
accrued interest thereon as provided in such Disposition Order.
4. Escrow Funds. Disbursements of the Gift Certificate Escrowed Amount
and the General Escrowed Amount shall be made from the Gift Certificate Escrowed
Account as follows:
a. Gift Certificate Escrowed Amount Reimbursement.
i. Time Period. Subject to Section 4(a)(iii) below and
disbursements made in accordance with Section 4(a)(ii), the Gift
Certificate Escrowed Amount shall be held by Escrow Agent for a
period of twelve (12) months and up to forty (40) days after the
Closing.
2
ii. Claims. Within twenty (20) days after the end of each of
the first twelve (12) months after Closing, Buyer shall submit to
Escrow Agent and Sellers a claim (with a copy to Xxxxxx), with
reasonable supporting evidence substantially in the form of
Exhibit B attached hereto, for the face amount of any Seller Gift
Certificate that was redeemed within the preceding month (the
"Monthly Gift Certificate Claim"). Unless, within twenty (20)
days after receipt by Sellers of a Monthly Gift Certificate
Claim, Escrow Agent has received from Sellers a notice, a copy of
which shall be sent by Sellers to Buyer (with a copy to Xxxxxx),
disputing the amount of the Monthly Gift Certificate Claim (the
"Gift Certificate Dispute Notice"), Escrow Agent shall promptly
deduct such Monthly Gift Certificate Claim from the then existing
balance in the Gift Certificate Escrowed Account and promptly pay
such amount to Buyer. At any time, upon request of Buyer, Sellers
or Xxxxxx, Escrow Agent shall provide the requesting party with
the current balance in the Gift Certificate Escrowed Account.
iii. Final Balance and Disbursement. After receipt of Buyer's
final Monthly Gift Certificate Claim (and the expiration of
Sellers' twenty (20) day Gift Certificate Dispute Notice period
or receipt of notice from Sellers that they will not be disputing
the amount of such final Monthly Gift Certificate Claims) and
Escrow Agent's corresponding deduction as set forth in subsection
4(a)(ii) above, Escrow Agent shall disburse to Sellers (or at and
in favor of Sellers', Sellers' assignee or Seller's designee) any
remaining and undisputed balance of the Gift Certificate Escrowed
Account, and all accrued interest thereon. Any amounts disputed
pursuant to a Gift Certificate Dispute Notice shall remain in the
Gift Certificate Escrowed Account until settled in accordance
with this Escrow Agreement.
b. General Escrowed Amount Reimbursement.
i. Claims. At any time and from time to time from the Closing
Date until the 120th day following Closing, Buyer may submit to
Escrow Agent and Sellers a notice of any claim (with a copy to
Sellers, Sellers' assignee or Sellers' designee and Xxxxxx),
including a summary of the relevant facts concerning and the
amount of the claim (a "Buyer General Claim"), against the
General Escrowed Account under Sections 1.1, 4.6 through 4.9,
4.12, 4.13, 4.14, 4.17, 4.21, Article V, and Section 8.2(a) of
the Purchase Agreement. Sellers shall have twenty (20) business
days after receipt of any Buyer General Claim, to provide written
notice to Escrow Agent and Buyer (with a copy to Xxxxxx) that it
(i) disputes the facts or the amount of such Buyer General Claim
and the reason therefor (the "General Escrow Dispute Notice") or
(ii) it has cured the matter for which such Buyer General Claim
has been made, together with such supporting documentation, if
any, as is reasonably necessary to evidence such cure. If Sellers
do not, during the twenty (20) business day period above, provide
a General Escrow Dispute Notice or written notice of cure as
specified herein, Escrow Agent shall deduct from the General
Escrowed Account the amount of the Buyer General Claim and
promptly disburse such amount to Buyer.
3
ii. Final Balance and Disbursements. On the 121st day
following the Closing Date Sellers shall be paid, at and in favor
of Xxxxxx, up to the extent of the amount of the Sellers' then
outstanding indebtedness to Xxxxxx, all amounts remaining of the
General Escrowed Account, less the aggregate amount of all then
pending unresolved Buyer General Claims, with the balance paid
thereafter upon and in accordance with the resolution of such
unresolved Buyer General Claims. In addition, if the aggregate
amount of Buyer General Claims made prior to the 61st day
following the Closing Date is less than $100,000, then on such
61st day Sellers shall be paid, at and in favor of Xxxxxx, all
amounts remaining of the General Escrowed Account in excess of
the sum of $300,000 plus the amount of all Buyer General Claims
unresolved as of such 61st day. Any amounts disputed or
unresolved pursuant to a General Escrow Dispute Notice shall
remain in the General Escrowed Account until settled in
accordance with this Escrow Agreement.
5. Dispute Procedure.
a. General Escrow. In the event that Sellers provide Escrow Agent
and Buyer a General Escrow Dispute Notice as set forth in Section
4(b)(i) above, Buyer and Sellers shall attempt to resolve the
dispute in good faith and by mutual agreement between authorized
representatives, one each from Buyer and Sellers, within twenty
(20) business days of Buyer's receipt of Sellers' General Escrow
Dispute Notice. If the authorized representatives cannot resolve
the dispute, after a good faith attempt, within the twenty (20)
business days, the parties will submit the dispute to the
Bankruptcy Court, which shall make a final determination with
respect to such dispute. The Bankruptcy Court's decision will be
conclusive and binding on the parties. Each party will bear its
own costs in connection with any such dispute.
b. Gift Certificate Escrow. In the event that Sellers dispute a
disbursement from the Gift Certificate Escrowed Account, Sellers
shall provide to the other party and the Escrow Agent (with a
copy to Xxxxxx) a Gift Certificate Dispute Notice in accordance
with Section 4(a)(ii). Buyer and Sellers shall attempt to resolve
the dispute in good faith and by mutual agreement within twenty
(20) business days of Buyer's receipt of Sellers' Gift
Certificate Dispute Notice. If the parties cannot resolve the
dispute, after a good faith attempt, within the twenty (20)
business days, the parties will submit the dispute to the
Bankruptcy Court, which shall make a final determination with
respect to such dispute. The Bankruptcy Court's decision will be
conclusive and binding on the parties. Each party will bear its
own costs in connection with any such dispute.
c. Deposit. Any dispute with regard to the Deposit shall be
settled by (i) Buyer and Sellers in good faith and by mutual
agreement as evidenced by an executed and delivered Release
Notice pursuant to Section 3(b)(i), or (ii) a Disposition Order
pursuant to Section 3(b)(ii).
6. Duties/Responsibilities of Escrow Agent. The Escrow Agent shall not
have any duties or responsibilities, except those expressly set forth in this
Escrow Agreement, which the parties agree are ministerial in nature. The Escrow
4
Agent shall not incur any liability by reason of its action or omission to act
in reliance upon any notice, instructions or other document believed by the
Escrow Agent to be genuine and duly authorized, and shall have no liability to
any party, except for liability based on its own willful misconduct or gross
negligence. The Escrow Agent shall not be responsible for the validity or
sufficiency of any notice, instructions or other document which may be delivered
to it hereunder. The Escrow Agent shall not be required to take any action
hereunder involving any expense, unless the payment of such expense shall be
made or provided for in a manner satisfactory to it. The Escrow Agent shall have
no responsibility for the performance by Buyer or Sellers of this Agreement. The
Principal Parties agree to and hereby do waive any suit, claim, demand or cause
of action of any kind which it or they may have or may assert against the Escrow
Agent arising out of or relating to the execution or performance by the Escrow
Agent under this Escrow Agreement, unless such suit, claim, demand or cause of
action is based upon the gross negligence or willful misconduct of the Escrow
Agent. Buyer (on the one hand) and Sellers (on the other hand) further agrees to
indemnify and hold harmless the Escrow Agent from one-half of any and all
claims, demands, costs, liabilities and expenses, including reasonable attorneys
fees and expenses, which may be asserted against it or to which it may be
exposed or which it may incur by reason of its execution or performance under
this Agreement, except if such claims, demands, costs, liabilities, expenses or
attorneys fees (or expenses) result from the Escrow Agent's gross negligence or
willful misconduct. This Section shall survive the termination of this Escrow
Agreement for any reason.
The Escrow Agent shall be entitled to fees and expenses for its regular services
as Escrow Agent as set forth on Exhibit C attached hereto. Sellers shall pay all
of Escrow Agent's compensation, costs and expenses. In the event such fees are
not paid within thirty (30) days after the invoice for such fees has been
delivered by the Escrow Agent, such fees shall be payable from and may be
deducted by the Escrow Agent from interest and/or principal of any monies held
by the Escrow Agent.
7. Escrow Agent's Right To Rely. As to any questions arising in
connection with the administration of this Agreement and performance of its
obligations hereunder, Escrow Agent may rely absolutely upon the opinions given
to it by its counsel and shall be free of liability for acting or failing to act
in reliance on the good faith opinion and instruction of such independent
counsel.
8. Escrow Agent's Liability. In the event Escrow Agent, in good faith,
should be in doubt as to what action it should take hereunder, at its option,
the Escrow Agent may refuse to comply with any requests or demands made upon the
Escrow Agent, or refuse to take any other action hereunder so long as such doubt
exists; and in such event, the Escrow Agent shall not be or become liable in any
manner to any person for its failure or refusal to act and shall be entitled to
continue to refrain from action until (i) the rights of all parties shall have
been fully and finally adjudicated by the Bankruptcy Court or only in the event
the Bankruptcy Court refuses to hear such dispute, by a court of competent
jurisdiction, or (ii) all differences shall have been adjusted and all doubts
resolved by agreement among all interested parties and the Escrow Agent shall be
notified thereof in writing by all such persons.
9. Resignation of Escrow Agent. Notwithstanding anything to the
contrary contained in this Escrow Agreement, the Escrow Agent may resign from
its duties hereunder for any reason whatsoever by giving prior written notice of
5
such resignation to the Principal Parties (with a copy to Xxxxxx) effective on
the earlier of the effectiveness of the appointment of a replacement or thirty
days after such notice was given. Upon receiving the foregoing notice, the
Principal Parties shall designate within thirty (30) days a new escrow agent
mutually acceptable to them. If the Principal Parties cannot agree on a new
escrow agent within such thirty day period, the Escrow Agent may petition a
court of competent jurisdiction for appointment of a successor escrow agent.
10. Term. This Escrow Agreement shall remain in full force and effect
until terminated in accordance with the applicable terms of the Purchase
Agreement.
11. Compliance with Bankruptcy Court Orders. The Escrow Agent is hereby
authorized and directed by the Principal Parties to comply with each Disposition
Order and any other order of the Bankruptcy Court which is a Final Order
relating to the Deposit or Escrow Funds and accrued interest, if any, thereon
and/or this Escrow Agreement, and if the Escrow Agent complies with any such
order, it shall not be liable to the Principal Parties or to any other person by
reason of such compliance.
12. Amendments Binding Escrow Agent. The Escrow Agent shall not be
bound by any amendment, modification, cancellation or rescission of this Escrow
Agreement, unless and until the same is in writing and signed by all of the
parties hereto and a duly executed original or counterpart thereof has been
received by the Escrow Agent. In no event, however, shall any modification of
this Escrow Agreement which shall affect the rights or duties of the Escrow
Agent be binding on the Escrow Agent, unless the Escrow Agent shall have given
its prior written consent thereto.
13. Notice. Any notice, instruction or other communication required or
permitted to be given under this Escrow Agreement shall be in writing and shall
be sent by certified or express mail, postage prepaid, return receipt requested,
or by personal delivery, receipt requested, or by a nationally recognized
overnight courier guaranteeing next day delivery, receipt requested, if to
either of the Principal Parties (or Xxxxxx) to its address set forth in Section
9.1 of the Purchase Agreement and if to the Escrow Agent, to UMB Bank, n.a.,
Corporate Trust Department, Attention: K. Xxxxx Xxxxxxx, 0000 Xxxxx Xxxx., 0xx
Xxxxx, Xxxxxx Xxxx, Xxxxxxxx 00000, with a copy of each communication sent in
like manner to the Persons indicated in the Purchase Agreement, or to such other
address(es) as a party may from time to time designate to the others by notice
given in accordance with the terms of this Paragraph 13. Communications
hereunder shall be deemed to have been duly given when received by the
recipient, as evidenced by an executed receipt. A notice given by counsel for
Sellers or Buyer shall be deemed a valid notice, if made and addressed in
accordance with the provisions of this Paragraph 13.
14. Entire Understanding. This Escrow Agreement contains the entire
understanding of the Escrow Agent, and this Escrow Agreement and the Purchase
Agreement contains the entire understanding of the Principal Parties hereto,
with respect to the subject matter contained herein and therein. This Escrow
Agreement supersedes all prior agreements and understandings between or among
the parties with respect to such subject matter. In the event of a conflict
between the terms of this Escrow Agreement and the Purchase Agreement, the
Purchase Agreement shall prevail.
6
15. Amendments. This Escrow Agreement may not be orally cancelled,
changed, modified or amended, and no cancellation, change, waiver, modification
or amendment shall be effective or binding, unless in writing and signed by all
the parties to this Escrow Agreement. No waiver shall be deemed a continuing
waiver or waiver in respect of any subsequent breach or default, whether of
similar or different nature, unless expressly so stated in writing.
16. Enforceability. If any provision of this Escrow Agreement is found
to be void and unenforceable by the Bankruptcy Court, the remaining provisions
of this Escrow Agreement shall, nevertheless, be binding upon the parties with
the same effect as though the void or unenforceable part had been severed and
deleted.
17. Governing Law. This Escrow Agreement shall be governed by, and
construed in accordance with, the internal substantive laws of the State of New
York, without giving effect to the choice of law rules thereof. The parties
hereby irrevocably consent to (i) the jurisdiction of the Bankruptcy Court, and
(ii) service of process upon each of the parties hereto by the method prescribed
for the giving of notice pursuant to Paragraph 13 above.
18. 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. Any signature delivered by
a party by facsimile transmission shall be deemed to be an original signature
hereto
IN WITNESS WHEREOF, the parties hereto have executed this Escrow
Agreement as of the day and year first above written.
BUYER:
XXXXXXXX'X INTERNATIONAL, INC.,
a Delaware corporation
By:
-------------------------------------------
Name:
-----------------------------------------
Title:
----------------------------------------
SELLERS:
APPLE CAPITOL GROUP, LLC, a Florida limited
liability company
By:
-------------------------------------------
Name:
-----------------------------------------
Title:
-----------------------------------------
0
XXXXX XXXXXX XXXXXXX XXXXXXXX GROUP, LLC,
a Florida limited liability company
By:
-------------------------------------------
Name:
-----------------------------------------
Title:
----------------------------------------
APPLE WASHINGTON MD GROUP, LLC, a Florida
limited liability company
By:
-------------------------------------------
Name:
-----------------------------------------
Title:
----------------------------------------
APPLE ST. MARYS MD GROUP, LLC, a Florida
limited liability company
By:
-------------------------------------------
Name:
-----------------------------------------
Title:
----------------------------------------
APPLE XXXXXXX MD GROUP, LLC, a Florida limited
liability company
By:
-------------------------------------------
Name:
-----------------------------------------
Title:
----------------------------------------
8
APPLE XXXXXXX MD GROUP, LLC, a Maryland
limited liability company
By:
-------------------------------------------
Name:
-----------------------------------------
Title:
----------------------------------------
BERKELEY WVA, LLC, a West Virginia limited
liability company
By:
-------------------------------------------
Name:
-----------------------------------------
Title:
----------------------------------------
ESCROW AGENT:
UMB BANK, N.A.
By:
-------------------------------------------
Name:
-----------------------------------------
Title:
----------------------------------------
9
EXHIBIT A
The escrow wiring instructions are:
UMB Bank, n.a., Kansas City, Missouri
ABA No. 000000000
Account No. 9800006823
Ref: Apple Capitol Escrow
Attention: Xxxxx Xxxxxxx, ext. 3008
10
EXHIBIT B
Form of Gift Certificates/Gift Card Claim
Total of Apple Capitol gift certificates redeemed current fiscal month:
(attach copies of actual gift certificates.) $
-------------------
Total of Apple Capitol gift cards redeemed current fiscal month:
(Attach Settlement Manager Inter-Divisional Recap Report for
Apple Capitol) $
-------------------
Total Claim Amount: $
===================
* Note: Gift Card claims shall be submitted pursuant to a computer generated
Settlement Manager Report in substantially the form attached hereto.
11
EXHIBIT C
ESCROW AGENT FEES AND EXPENSES
Acceptance Fee
Review escrow agreement and establish account $400.00
Annual Fee
Maintain account, year or any part thereof $1,000.00
Transaction Fees
(a) Deposit or Escrow Funds Disbursement, per item $10.00
(b) Wire Transfer Fee $15.00
(c) Per Form 1099 (Int., B or Misc.) $5.00
In addition to the specified fees, all reasonable out-of-pocket expenses related
to the administration of the Escrow Agreement (other than normal overhead
expenses of the regular staff) such as, but not limited to, travel, postage,
shipping, courier, telephone, facsimile, supplies, legal fees, accounting fees,
etc., will be reimbursable. Monies invested in money market funds and deposits
will be subject to a 25 basis point cash management fee.
12
