EXECUTION COPY
STOCK PURCHASE AGREEMENT
BETWEEN
VALCOR, INC.
AND
I.C.H. CORPORATION
FEBRUARY 7, 1997
TABLE OF CONTENTS
1. Definitions ........................................................... 1
2. Purchase and Sale of Sybra Shares ..................................... 6
(a) Basic Transaction ............................................. 6
(b) Purchase Price ................................................ 6
(c) Pre-Closing Dividends and Distributions to Seller ............. 6
(d) The Closing ................................................... 6
(e) Deliveries at the Closing ..................................... 6
(f) Adjustment to Purchase Price ................................. 7
(g) Contingent Consideration ...................................... 7
3. Representations and Warranties Concerning the Transaction ............. 8
(a) Representations and Warranties of the Seller .................. 8
(i) Organization of the Seller ......................... 8
(ii) Authorization of Transaction ....................... 9
(iii) Noncontravention ................................... 9
(iv) Brokers' Fees ...................................... 9
(v) Sybra Shares ....................................... 9
(b) Representations and Warranties of the Buyer ................... 10
(i) Organization of the Buyer .......................... 10
(ii) Authorization of Transaction ....................... 10
(iii) Noncontravention ................................... 10
(iv) Brokers' Fees ...................................... 11
(v) Investment ......................................... 11
(vi) Financing .......................................... 11
(vii) Due Diligence ...................................... 11
4. Representations and Warranties Concerning Sybra ....................... 11
(a) Organization, Qualification, and Corporate Power .............. 11
(b) Capitalization ................................................ 12
(c) Noncontravention .............................................. 12
(d) Brokers' Fees ................................................. 12
(e) Title to Tangible Assets Other than the Real Property Assets .. 12
(f) Subsidiaries .................................................. 12
(g) Financial Statements .......................................... 13
(h) Events Subsequent to Most Recent Fiscal Quarter End ........... 13
(i) Legal Compliance .............................................. 13
(j) Income Tax Matters ............................................ 13
(k) Intellectual Property ......................................... 14
(l) Contracts ..................................................... 14
(m) Litigation .................................................... 14
(n) Employee Benefits ............................................. 15
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5. Pre-Closing Covenants ................................................. 16
(a) General ....................................................... 16
(b) Notices and Consents .......................................... 16
(c) Operation of Business ......................................... 16
(d) Access ........................................................ 16
(e) Notice of Developments ........................................ 17
(f) Other Transactions ............................................ 17
(g) Estoppel Certificates ......................................... 17
6. Post-Closing Covenants ................................................ 18
(a) General ....................................................... 18
(b) Litigation Support ............................................ 18
(c) Employee Benefits Matters ..................................... 18
7. Conditions to Obligation to Close ..................................... 19
(a) Conditions to Obligation of the Buyer ......................... 19
(b) Conditions to Obligation of the Seller ........................ 20
8. Remedies for Breaches of this Agreement ............................... 21
(a) Survival of Representations and Warranties .................... 21
(b) Indemnification Provisions for Benefit of the Buyer ........... 22
(c) Indemnification Provisions for Benefit of the Seller .......... 22
(d) Matters Involving Third Parties ............................... 22
(e) Determination of Adverse Consequences ......................... 23
(f) Other Indemnification Provisions .............................. 23
9. Termination ........................................................... 23
(a) Termination of Agreement ...................................... 23
(b) Effect of Termination ......................................... 24
10. Income Tax Matters .................................................... 24
(a) Income Tax Sharing Agreements ................................. 25
(b) Income Taxes of Other Persons ................................. 25
(c) Returns for Periods Through the Closing Date .................. 25
(d) Audits ........................................................ 25
(e) Carrybacks .................................................... 25
(f) Post-Closing Elections ........................................ 26
(g) Indemnification for Post-Closing Transactions ................. 26
(h) Post-Closing Transactions not in the Ordinary Course .......... 26
11. Miscellaneous ......................................................... 26
(a) Press Releases and Public Announcements ....................... 26
(b) No Third Party Beneficiaries Other than Affiliated Group Parent 26
(c) Entire Agreement .............................................. 27
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(d) Succession and Assignment ............................................ 27
(e) Counterparts ......................................................... 27
(f) Headings ............................................................. 27
(g) Notices .............................................................. 27
(h) Governing Law; Jurisdiction .......................................... 28
(i) Amendments and Waivers ............................................... 29
(j) Severability ......................................................... 29
(k) Expenses ............................................................. 29
(l) Construction ......................................................... 29
(m) Incorporation of Exhibits ............................................ 29
EXHIBITS
EXHIBIT A Agreed Value
EXHIBIT B Disclosure Schedule
EXHIBIT C Financial Statements
EXHIBIT D Form of Estoppel Certificate
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STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (the "Agreement") is entered into as of
February 7, 1997, by and between I.C.H. CORPORATION, a Delaware corporation (the
"Buyer"), and VALCOR, INC., a Delaware corporation (the "Seller"). The Buyer and
the Seller are referred to individually as a "Party" and collectively as the
"Parties."
The Seller holds all of the outstanding capital stock of Sybra, Inc.,
a Michigan corporation (the "Sybra").
This Agreement contemplates a transaction in which the Buyer will
purchase for cash consideration from the Seller, and the Seller will sell to the
Buyer, all of the outstanding capital stock of Sybra.
Now, therefore, in consideration of the premises and the mutual
promises, representations, warranties and covenants set forth below, the Parties
agree as follows.
1. Definitions.
"Accrued Expenses and Payables" means any liability of Sybra
classified as a current liability in its financial statements prepared in
accordance with GAAP, excluding any current liability classified as (i) current
portion of long-term debt, (ii) current portion of a capital lease obligation,
(iii) payable to affiliates, (iv) current or deferred income taxes payable or
(v) current portion of a reserve for store closures.
"Adverse Consequences" means all actions, suits, proceedings,
hearings, investigations, charges, complaints, claims, demands, injunctions,
judgments, orders, decrees, rulings, damages, dues, penalties, fines, costs,
reasonable amounts paid in settlement, liabilities, obligations, taxes, liens,
losses, expenses, and fees, including court costs and reasonable attorneys' fees
and expenses.
"Affiliate" has the meaning set forth in Rule 12b-2 of the
regulations promulgated under the Securities Exchange Act.
"Affiliated Group" means any affiliated group of companies within the
meaning of Code [section]1504(a).
"Affiliated Group Parent" means, during the period from October 1,
1987 to present, Contran.
"Applicable Rate" means the "Prime Rate" as identified in the Wall
Street Journal Money Rates section from time to time as the base rate of
interest for corporate loans.
"Buyer" has the meaning set forth in the preface above.
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"Cash" means cash and cash equivalents (including marketable
securities and short term investments) calculated in accordance with GAAP
applied on a basis consistent with the preparation of the Financial Statements.
"Closing" has the meaning set forth in [section]2(d) below.
"Closing Date" has the meaning set forth in [section]2(d) below.
"Code" means the Internal Revenue Code of 1986, as amended.
"Confidential Information" means any information concerning the
businesses and affairs of Sybra that is not already generally available to the
public.
"Contran" means Contran Corporation, a Delaware corporation.
"Debt Repayment" has the meaning set forth in [section]2(b) below.
"Determination Date" has the meaning set forth in [section]2(g)(ii)
below.
"Disclosure Schedule" has the meaning set forth in [section]3 below.
"Employee Benefit Plan" means any (a) nonqualified deferred
compensation or retirement plan or arrangement which is an Employee Pension
Benefit Plan, (b) qualified defined contribution retirement plan or arrangement
which is an Employee Pension Benefit Plan, (c) qualified defined benefit
retirement plan or arrangement which is an Employee Pension Benefit Plan
(including any Multiemployer Plan), or (d) Employee Welfare Benefit Plan.
"Employee Pension Benefit Plan" has the meaning set forth in ERISA
[section]3(2).
"Employee Welfare Benefit Plan" has the meaning set forth in ERISA
[section]3(1).
"Environmental Law" means any national or local statute, law,
ordinance, rule, regulation, order, consent, decree, judicial or administrative
decision or directive of applicable law at any time relating to (A) pollution or
protection of the environment, including natural resources, (B) exposure of
persons, including employees, to hazardous substances or other products,
materials or chemicals, or (C) protection of the public health or welfare from
the effects of products, by-products, waste, emissions, discharges or releases
of chemical or other substances from industrial or commercial activities.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Financial Statements" has the meaning set forth in [section]4(g)
below.
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"Fiscal Month" means, as applicable, the four or five consecutive
weeks within an accounting cycle for Sybra for Unit #740.
"GAAP" means United States generally accepted accounting principles
as in effect from time to time.
"Gross Revenues" means all revenues and other items of income as
those terms are normally used in accordance with GAAP.
"Xxxx-Xxxxx-Xxxxxx Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended.
"Income Tax" means any federal, state, local, or foreign income tax,
including any interest, penalty, or addition thereto, whether disputed or not.
"Income Tax Return" means any return, declaration, report, claim for
refund, or information return or statement relating to Income Taxes, including
any schedule or attachment thereto.
"Indemnified Party" has the meaning set forth in [section]8(d) below.
"Indemnifying Party" has the meaning set forth in [section]8(d)
below.
"Inventories" means inventories, including supplies, calculated in
accordance with GAAP applied on a basis consistent with the preparation of the
Financial Statements.
"Knowledge" means actual knowledge without independent investigation
of the referenced person or, if an entity, the executive officers of the
referenced entity and, in the case of Sybra, the executive officers and regional
vice presidents of Sybra.
"Lease" means a lease by and between Sybra and USRP pursuant to which
Sybra leases from USRP the Acquired Assets as defined in the USRP Agreement.
"Monthly Free Cash Flow" means, for each Fiscal Month, or portion
thereof, the excess of Gross Revenues over Operating Expenses.
"Most Recent Financial Statements" has the meaning set forth in
[section]4(g) below.
"Most Recent Fiscal Month End" has the meaning set forth in
[section]4(g) below.
"Multiemployer Plan" has the meaning set forth in ERISA
[section]3(37).
"Operating Expenses" shall mean reasonably necessary and customary
costs and other types of expenses, provided, however, that Operating Expenses
shall
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exclude (x) depreciation, amortization and other non-cash expenses, (y)
interest expense and (z) provision for income taxes, as all of those terms are
normally used in accordance with GAAP.
"Ordinary Course of Business" means the ordinary course of business
consistent with past custom and practice (including, without limitation, with
respect to quantity and frequency).
"Party" has the meaning set forth in the preface above.
"PBGC" means the Pension Benefit Guaranty Corporation.
"Person" means an individual, a partnership, a corporation, a limited
liability company, an association, a joint stock company, a trust, a joint
venture, an unincorporated organization, or a governmental entity (or any
department, agency, or political subdivision thereof).
"Purchase Price" has the meaning set forth in [section]2(b) below.
"Real Property Assets" means the real property assets that Sybra
intends to sell to USRP and USRP intends to purchase from Sybra as described in
the USRP Agreement.
"Reportable Event" has the meaning set forth in ERISA [section]4043.
"Required Consents of Seller" has the meaning set forth in
[section]3(a)(iii) below.
"Required Consents of Buyer" has the meaning set forth in
[section]3(b)(iii) below.
"Securities Act" means the Securities Act of 1933, as amended.
"Securities Exchange Act" means the Securities Exchange Act of 1934,
as amended.
"Security Interest" means any mortgage, pledge, lien, encumbrance,
charge, or other security interest, other than (a) mechanic's, materialmen's,
and similar liens, (b) liens for Taxes not yet due and payable or for Taxes that
the taxpayer is contesting in good faith through appropriate proceedings, (c)
purchase money liens and liens securing rental payments under capital lease
arrangements, and (d) other liens arising in the Ordinary Course of Business and
not incurred in connection with the borrowing of money.
"Seller" has the meaning set forth in the preface above.
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"Subsidiary" means any corporation or other entity with respect to
which a specified Person (or a Subsidiary thereof) owns a majority of the common
stock or other equity interests, or has the power to vote or direct the voting
of sufficient securities to elect a majority of the directors or other persons
performing similar functions with respect to such entity.
"Sybra" has the meaning set forth in the preambles above.
"Sybra Share" means any share of the Common Stock, par value $.50 per
share, of Sybra.
"Tax" means any federal, state, local, or foreign tax, including any
interest, penalty, or addition thereto, whether disputed or not.
"Tax Return" means any return, declaration, report, claim for refund,
or information return or statement relating to Taxes, including any schedule or
attachment thereto.
"Third Party Claim" has the meaning set forth in [section]8(d) below.
"Unit #740" means Sybra's Unit #740 located at the Park City Mall in
Lancaster, Pennsylvania.
"Units Purchase Agreement" means the Units Purchase Agreement by and
between Valhi and USRP, as amended, supplemented or modified.
"USRP" means U.S. Restaurant Properties Master L. P., a Delaware
limited partnership.
"USRP Agreement" means the Asset Purchase Agreement dated December
23, 1996 by and between Sybra and USRP, as amended, supplemented or modified.
"Valcor" means Valcor, Inc., a Delaware corporation.
"Valhi" means Valhi, Inc., a Delaware corporation.
2. Purchase and Sale of Sybra Shares.
(a) Basic Transaction. On the terms and subject to the conditions of
this Agreement, the Buyer agrees to purchase from the Seller, and the Seller
agrees to sell to the Buyer, at Closing, all of its Sybra Shares for the
consideration specified below in this [section]2.
(b) Purchase Price. The Buyer agrees (i) to pay to the Seller at the
Closing $14,000,000 (the "Purchase Price"), subject to adjustment as provided in
[section][section]2(f) and (g)
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below, by delivery of cash in the amount of the Purchase Price payable by wire
transfer or delivery of other immediately available funds, and (ii) to pay in
full indebtedness of Sybra, in an amount not to exceed $23,772,000, more
particularly described in [section]2(b) of the Disclosure Schedule (the "Debt
Repayment").
(c) Pre-Closing Dividends and Distributions to Seller. Immediately
prior to or concurrently with the Closing, the Seller will cause Sybra to pay to
the Seller an aggregate amount equal to Sybra's good faith estimate of the
consolidated Cash of Sybra as of the Closing, including, without limitation, all
of the net cash proceeds of Sybra's sale of certain of its assets to USRP
pursuant to the USRP Agreement, provided however, Seller shall not permit Sybra
to dividend Cash to the extent that, based on Sybra's good faith estimate,
remaining Cash and Inventories as of the Closing Date and after such dividend
would be less than $2,605,000. The Seller may cause Sybra to make any such
payment to it in the form of a dividend or a redemption of capital stock. In
addition, prior to the Closing, the Seller will cause Sybra to dividend to
Seller all of its right, title and interest in and to the real property
described in [section]2(c) of the Disclosure Schedule.
(d) The Closing. The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place at the offices of Valcor in Dallas,
Texas, commencing at 9:00 a.m. local time on the second business day following
the satisfaction or waiver of all conditions to the obligations of the Parties
to consummate the transactions contemplated by this Agreement (other than
conditions with respect to actions the respective Parties will take at the
Closing itself) or such other date as the Buyer and the Seller may mutually
determine (the "Closing Date"); provided, however that the Closing Date shall be
no later than April 14, 1997.
(e) Deliveries at the Closing. At the Closing, (i) the Seller will
execute, acknowledge (if appropriate), and deliver to the Buyer the various
certificates, instruments, and documents to be delivered by Seller as referred
to in [section]7(a) below, (ii) the Buyer will deliver to the Seller the various
certificates, instruments, and documents to be delivered by Buyer as referred to
in [section]7(b) below, (iii) the Seller will deliver to the Buyer stock
certificates representing all of its Sybra Shares, endorsed in blank or
accompanied by duly executed assignment documents, (iv) the Buyer will deliver
to the Seller the Purchase Price specified in [section]2(b) above, and (v) the
Buyer will pay or cause to be paid the Debt Repayment described in [section]2(b)
above.
(f) Adjustment to Purchase Price. The Purchase Price shall be
increased by the Agreed Value set forth on Exhibit A of each restaurant unit
that is not purchased by USRP under the USRP Agreement and Buyer shall pay such
increase at Closing. The Purchase Price also shall be adjusted as provided in
[section]5(g)(ii). In addition, as promptly as practicable, but no later than 90
days following the Closing Date, Seller and Buyer shall jointly prepare, or
cause to be prepared, in accordance with GAAP financial statements of Sybra,
including a consolidated balance sheet as of the close of business on the
Closing Date (after giving effect to the transactions contemplated in the USRP
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Agreement and all dividends contemplated by this [section]2) (the "Closing
Balance Sheet"). Within ten (10) days after completion of the Closing Balance
Sheet, if the aggregate amount of Accrued Expenses and Payables as set forth in
the Closing Balance Sheet, net of the aggregate amount of Cash and Inventories
as set forth in the Closing Balance Sheet, is greater than $6,895,000, the
Purchase Price shall be adjusted and the Seller shall make a cash payment in
immediately available funds to the Buyer in an amount (the "Payment Amount")
equal to the difference between U.S.$6,895,000 and the aggregate amount of
Accrued Expenses and Payables as set forth in the Closing Balance Sheet, net of
the aggregate of Cash and Inventories as set forth in the Closing Balance Sheet,
plus interest on the Payment Amount at the rate of eight percent (8%) per annum
calculated from the Closing Date through the date of such cash payment. Any
payment pursuant to the foregoing provisions shall be an adjustment (net of any
interest included in such payment) to the Purchase Price.
(g) Contingent Consideration. Buyer agrees to pay Seller
additional, contingent consideration computed in accordance with this
[section]2(g).
(i) Commencing on the Closing Date and continuing through
the date of payment in full of the amounts due under
[section]2(g)(ii) and/or [section]2(g)(iii), as applicable, Buyer
shall pay Seller an amount equal to 50% of the Monthly Free Cash Flow
of Unit #740 for each Fiscal Month, or portion thereof. Buyer shall
pay such amount to Seller by wire transfer or delivery of other
immediately available funds within 15 business days after the last
business day of each such Fiscal Month, or portion thereof.
(ii) In the event that, after the Closing Date, (a) Sybra
enters into a lease having a duration of one year or more for Xxxx
#000, (b) Sybra enters into a lease for another location at the Park
City Mall, Lancaster, Pennsylvania or (c) neither of the events
described in (a) or (b) has occurred and Sybra has not been forced by
the lessor to vacate Unit #740 on or before the second anniversary of
the Closing Date (the "Determination Date"), Buyer shall pay Seller
the sum of $2,000,000. At Buyer's option, the Determination Date may
be extended from the second anniversary of the Closing Date to the
third anniversary of the Closing Date, provided that Buyer shall
have given Seller written notice of such extension on or before 30
days prior to the second anniversary of the Closing Date, and
provided further that Buyer has paid and continues to pay all
amounts due pursuant to [section]2(g)(i). Buyer shall pay the amount
due pursuant to this [section]2(g)(ii) to Seller by wire transfer or
delivery of other immediately available funds within 5 business days
after the Determination Date. Upon and after the date of payment in
full of the amount due pursuant to this [section]2(g)(ii), Buyer
shall not be obligated to pay Seller any amounts pursuant to
[section]2(g)(iii) nor, pursuant to [section]2(g)(i), any amounts
for periods commencing after the date of such payment pursuant to
this [section]2(g)(ii).
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(iii) If, prior to the payment of amounts due pursuant to
[section]2(g)(ii), the lease for Unit #740 is terminated, Sybra is
forced by the lessor to vacate Unit #740 and Sybra has not entered
into a lease for another location at the Xxxx Xxxx Xxxx, Xxxxxxxxx,
Xxxxxxxxxxxx, Buyer shall pay Seller cash in an amount equal to 50%
of the cumulative Monthly Free Cash Flow of Unit #740 (in addition to
amounts payable pursuant to [section]2(g)(i)), calculated from the
Closing Date to the date upon which Sybra vacates Unit #740. Buyer
shall pay the amount due pursuant to this [section]2(g)(iii) to
Seller by wire transfer or delivery of other immediately available
funds, within 5 business days after the date Buyer vacates Unit #740.
Unless Buyer subsequently enters into a lease for another location at
the Xxxx Xxxx Xxxx, Xxxxxxxxx, Xxxxxxxxxxxx upon and after the date
of payment in full of the amount due pursuant to this
[section]2(g)(iii), Buyer shall not be obligated to pay Seller any
amounts pursuant to [section]2(g)(ii) nor, pursuant to
[section]2(g)(i), any amounts for periods commencing after the date
of such payment pursuant to this [section]2(g)(iii). In the event
that Buyer subsequently enters into a lease for another location at
the Xxxx Xxxx Xxxx, Xxxxxxxxx, Xxxxxxxxxxxx, Buyer shall be obligated
to pay the amounts due pursuant to [section]2(g)(ii) and, pursuant to
[section]2(g)(i), amounts due for all periods prior to payment in
full pursuant to [section]2(g)(ii).
3. Representations and Warranties Concerning the Transaction.
(a) Representations and Warranties of the Seller. The Seller
represents and warrants to the Buyer that the statements contained in this
[section]3(a) are correct and complete as of the date of this Agreement and will
be correct and complete as of the Closing Date (as though made then and as
though the Closing Date were substituted for the date of this Agreement
throughout this [section]3(a)), except as set forth in the disclosure schedule
attached hereto as Exhibit B and incorporated in this Agreement by this
reference (the "Disclosure Schedule").
(i) Organization of the Seller. The Seller is a
corporation validly existing, and in good standing under the laws
of Delaware.
(ii) Authorization of Transaction. The Seller has the
corporate power and authority to execute and deliver this Agreement
and to perform its obligations under this Agreement and the execution
and delivery of this Agreement has been approved by the Seller's
Board of Directors. This Agreement constitutes the valid and legally
binding obligation of the Seller, enforceable in accordance with its
terms and conditions.
(iii) Noncontravention. Neither the execution and the
delivery of this Agreement, nor the consummation of the transactions
contemplated by this Agreement, will (A) violate any valid
constitution, statute, regulation, rule, injunction, judgment, order,
decree, ruling, charge, or other restriction of any government,
governmental agency, or court to which the Seller is subject or any
provision of its charter or bylaws or (B) conflict with, result in a
breach of,
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constitute a default under, result in the acceleration of,
create in any party the right to accelerate, terminate, modify, or
cancel, or require any notice under any agreement, contract, lease,
license, instrument, or other arrangement to which the Seller is a
party or by which it is bound or to which any of its assets is
subject, except where the violation, conflict, breach, default,
acceleration, termination, modification, cancellation, failure to
give notice, or Security Interest would not have a material adverse
effect the ability of the Parties to consummate the transactions
contemplated by this Agreement. To the Knowledge of the Seller, and
other than in connection with the provisions of the Xxxx-Xxxxx-Xxxxxx
Act and those required notices, consents and approvals relating to
the Seller as described in the Disclosure Schedule (the "Required
Consents of Seller"), the Seller does not need to give any notice to,
make any filing with, or obtain any authorization, consent, or
approval of any government or governmental agency in order for the
Parties to consummate the transactions contemplated by this
Agreement, except where the failure to give notice, to file, or to
obtain any authorization, consent, or approval would not have a
material adverse effect on the financial condition of Sybra or on the
ability of the Parties to consummate the transactions contemplated by
this Agreement.
(iv) Brokers' Fees. The Seller has no liability or
obligation to pay any fees or commissions to any broker, finder, or
agent with respect to the transactions contemplated by this Agreement
for which the Buyer could become liable or obligated.
(v) Sybra Shares. The Seller holds of record and owns
beneficially the number of Sybra Shares set forth in the Disclosure
Schedule, free and clear of any restrictions on transfer (other than
restrictions on transfer imposed by the Securities Act and state
securities laws), taxes, Security Interests, options, warrants,
purchase rights, contracts, commitments, equities, claims, and
demands. The Seller is not a party to any option, warrant, purchase
right, or other contract or commitment (other than this Agreement)
that could require the Seller to sell, transfer, or otherwise
dispose of any capital stock of Sybra. The Seller is not a party to
any voting trust, proxy, or other agreement or understanding with
respect to the voting of any capital stock of Sybra that will exist
after the Closing.
(b) Representations and Warranties of the Buyer. The Buyer represents
and warrants to the Seller that the statements contained in this [section]3(b)
are correct and complete as of the date of this Agreement and will be correct
and complete as of the Closing Date (as though made then and as though the
Closing Date were substituted for the date of this Agreement throughout this
[section]3(b)), except as set forth in the Disclosure Schedule.
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(i) Organization of the Buyer. The Buyer is a corporation
duly organized, validly existing, and in good standing under the laws
of the jurisdiction of its incorporation.
(ii) Authorization of Transaction. The Buyer has the
corporate power and authority to execute and deliver this Agreement
and to perform its obligations hereunder and the execution and
delivery of this Agreement has been approved by the Buyer's Board of
Directors. This Agreement constitutes the valid and legally binding
obligation of the Buyer, enforceable in accordance with its terms and
conditions.
(iii) Noncontravention. Neither the execution and the
delivery of this Agreement, nor the consummation of the transactions
contemplated by this Agreement, will (A) violate any valid
constitution, statute, regulation, rule, injunction, judgment, order,
decree, ruling, charge, or other restriction of any government,
governmental agency, or court to which the Buyer is subject or any
provision of its charter or bylaws or (B) conflict with, result in a
breach of, constitute a default under, result in the acceleration of,
create in any party the right to accelerate, terminate, modify, or
cancel, or require any notice under any agreement, contract, lease,
license, instrument, or other arrangement to which the Buyer is a
party or by which it is bound or to which any of its assets is
subject. To the Knowledge of the Buyer, and other than in connection
with the provisions of the Xxxx-Xxxxx-Xxxxxx Act and those required
notices, consents and approvals relating to the Buyer or any of its
Subsidiaries as described in the Disclosure Schedule (the "Required
Consents of Buyer"), the Buyer does not need to give any notice to,
make any filing with, or obtain any authorization, consent, or
approval of any government or governmental agency in order for the
Parties to consummate the transactions contemplated by this
Agreement, except where the failure to give notice, to file, or to
obtain any authorization, consent, or approval would not have a
material adverse effect on the ability of the Parties to consummate
the transactions contemplated by this Agreement.
(iv) Brokers' Fees. The Buyer has no liability or
obligation to pay any fees or commissions to any broker, finder, or
agent with respect to the transactions contemplated by this Agreement
for which any Seller could become liable or obligated.
(v) Investment. The Buyer is acquiring Sybra Shares for
investment and not with a view to or for sale in connection with any
distribution thereof within the meaning of the Securities Act.
(vi) Financing. Buyer will have, on the Closing Date, all
funds necessary to pay the Purchase Price and related fees and
expenses, and has, or will have on the Closing Date, the financial
capacity to perform all of its other obligations under this
Agreement.
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(vii) Due Diligence. Subject to Buyer's thirty-five (35)
day due diligence period following the execution of this Agreement,
Buyer acknowledges and agrees (A) that Buyer has had access to and
the opportunity to perform unrestricted due diligence with respect to
Sybra; (B) Buyer is acquiring the Sybra Shares without reliance on
any representations or warranties of Seller except as expressly set
forth in [section]4 of this Agreement, and subject to all of the
limitations provided in this Agreement.
4. Representations and Warranties Concerning Sybra. The Seller
represents and warrants to the Buyer that the statements contained in this
[section]4 are correct and complete as of the date of this Agreement and will be
correct and complete as of the Closing Date (as though made then and as though
the Closing Date were substituted for the date of this Agreement throughout this
[section]4), except as set forth in Disclosure Schedule.
(a) Organization, Qualification, and Corporate Power. Sybra is a
corporation validly existing, and in good standing under the laws of the
jurisdiction of its incorporation. Sybra is duly authorized to conduct business
and is in good standing under the laws of each jurisdiction where such
qualification is required, except where the lack of such qualification would not
have a material adverse effect on the financial condition or results of
operations of Sybra. Sybra has the corporate power and authority to carry on the
businesses in which it is engaged and to own and use the properties owned and
used by it. [section]4(a) of the Disclosure Schedule lists the directors and
executive officers of Sybra.
(b) Capitalization. The entire authorized capital stock of Sybra
consists of 200,000 Sybra Shares, all of which are common shares, par value $.50
per share. There are 55,199 Sybra Shares issued and outstanding. No Sybra Shares
are held in treasury. All of the issued and outstanding Sybra Shares have been
duly authorized, are validly issued, fully paid, and nonassessable, and are held
of record by the Seller. There are no outstanding or authorized options,
warrants, purchase rights, subscription rights, conversion rights, exchange
rights, or other contracts or commitments that could require Sybra to issue,
sell, or otherwise cause to become outstanding any of its capital stock. There
are no outstanding or authorized stock appreciation, phantom stock, profit
participation, or similar rights with respect to Sybra.
(c) Noncontravention. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated by this
Agreement, will (i) violate any valid constitution, statute, regulation, rule,
injunction, judgment, order, decree, ruling, charge, or other restriction of any
government, governmental agency, or court to which Sybra is subject or any
provision of the charter or bylaws of Sybra or (ii) conflict with, result in a
breach of, constitute a default under, result in the acceleration of, create in
any party the right to accelerate, terminate, modify, or cancel, or require any
notice under any agreement, contract, lease, license, instrument, or other
arrangement to which Sybra is a party or by which it is bound or to which any of
its
11
assets is subject (or result in the imposition of any Security Interest upon
any of its assets), except where the violation, conflict, breach, default,
acceleration, termination, modification, cancellation, failure to give notice,
or Security Interest would not have a material adverse effect on the financial
condition of Sybra or on the ability of the Parties to consummate the
transactions contemplated by this Agreement. To the Knowledge of the Seller, and
other than in connection with the provisions of the Xxxx-Xxxxx-Xxxxxx Act and
the Required Consents of Seller, Sybra does not need to give any notice to, make
any filing with, or obtain any authorization, consent, or approval of any
government or governmental agency in order for the Parties to consummate the
transactions contemplated by this Agreement, except where the failure to give
notice, to file, or to obtain any authorization, consent, or approval would not
have a material adverse effect on the financial condition or results of
operations of Sybra or on the ability of the Parties to consummate the
transactions contemplated by this Agreement.
(d) Brokers' Fees. Sybra does not have any liability or obligation
to pay any fees or commissions to any broker, finder, or agent with respect to
the transactions contemplated by this Agreement.
(e) Title to Tangible Assets Other than the Real Property Assets.
Sybra has good title to, or a valid leasehold interest in, the material tangible
assets they use regularly in the conduct of its businesses other than the Real
Property Assets.
(f) Subsidiaries. Sybra does not have any Subsidiaries.
(g) Financial Statements. Attached hereto as Exhibit C are the
following financial statements (collectively the "Financial Statements"): (i)
audited consolidated balance sheets and statements of income, changes in
stockholders' equity, and cash flow as of and for the fiscal years ended
December 25, 1993, December 31, 1994, and December 30, 1995 for Sybra; and (ii)
unaudited consolidated balance sheets and statements of income, changes in
stockholders' equity, and cash flow (the "Most Recent Financial Statements") as
of and for the nine months ended September 28, 1996 (the "Most Recent Fiscal
Quarter End") for Sybra. The Financial Statements (including the notes thereto)
have been prepared in accordance with GAAP applied on a consistent basis
throughout the periods covered thereby and present fairly the financial
condition of Sybra as of such dates and the results of operations of Sybra for
such periods; provided, however, that the Most Recent Financial Statements are
subject to normal year-end adjustments and lack footnotes and other presentation
items.
(h) Events Subsequent to Most Recent Fiscal Quarter End. Since the
Most Recent Fiscal Quarter End, there has not been any material adverse change
in the financial condition or results of operations of Sybra except as
contemplated in the USRP Agreement and this Agreement. Without limiting the
generality of the foregoing and except as contemplated in the USRP Agreement and
in this Agreement, including in [section]2(c) of this Agreement, since that date
Sybra has not engaged in any practice, taken any action, or entered into any
transaction outside the Ordinary Course of
12
Business the primary purpose or effect of which has been to generate or preserve
Cash.
(i) Legal Compliance. To the Knowledge of the Seller, Sybra has
complied with all applicable and valid laws (including rules, regulations,
codes, plans, injunctions, judgments, orders, decrees, rulings, and charges
thereunder) of federal, state, local, and foreign governments (and all agencies
thereof), except where the failure to comply would not have a material adverse
effect upon the financial condition or results of operations of Sybra and except
that Seller makes no representation regarding Environmental Laws.
(j) Income Tax Matters.
(i) Sybra has filed, or its Affiliated Group Parent has
filed on behalf of Sybra, all Tax Returns that it was required to
file prior to the Closing, and has paid all Income Taxes due and
payable prior to Closing, except where the failure to file Tax
Returns or to pay Taxes would not have a material adverse effect on
the financial condition or results of operations of Sybra.
(ii) [section]4(j) of the Disclosure Schedule lists all
Income Tax Returns filed with respect to Sybra for taxable periods
ended on or after December 31, 1988, indicates those Income Tax
Returns that have been audited, and indicates those Income Tax
Returns that currently are the subject of audit. The Seller has
delivered to the Buyer correct and complete copies of all federal
Income Tax Returns of Sybra, examination reports relating to
Sybra, and statements of deficiencies assessed against or agreed to
by Sybra since December 31, 1988.
(iii) Sybra has not waived any statute of limitations in
respect of Income Taxes or agreed to any extension of time with
respect to an Income Tax assessment or deficiency.
(iv) Sybra is not a party or subject to any Income Tax
allocation or sharing agreement except with its Affiliated Group
Parent.
(v) To the Knowledge of the Seller, since October 1, 1987,
Sybra has not been a member of an Affiliated Group filing a
consolidated federal Income Tax Return (other than a group the common
parent of which was Contran).
(k) Intellectual Property. [section]4(k) of the Disclosure Schedule
identifies each patent or trademark registration which has been issued to Sybra
with respect to any of its intellectual property, identifies each pending patent
application or application for trademark registration which Sybra has made with
respect to any of its intellectual property, and, to the Knowledge of the
Seller, identifies each material license, agreement, or other permission which
Sybra has granted to any third party with respect to any of its intellectual
property.
13
(l) Contracts. [section]4(l) of the Disclosure Schedule lists all
written contracts and other written agreements to which Sybra is a party the
performance of which will involve consideration in excess of $50,000 on an
annual basis. The Seller has delivered to the Buyer a correct and complete copy
of each contract or other agreement listed in [section]4(l) of the Disclosure
Schedule (as amended to date). To the Knowledge of Seller, no party to any of
such contracts has asserted that Sybra is in breach or default as to any such
contract. To the Knowledge of Seller, none of the parties (other than Sybra) to
any of such contracts is in breach or default as to any such contract.
(m) Litigation. [section]4(m) of the Disclosure Schedule sets forth
each instance in which Sybra or any Employee Benefit Plan or other arrangement
listed on [section]4(n) of the Disclosure Schedule (i) is subject to any
outstanding injunction, judgment, order, decree, ruling, or charge or (ii) is a
party to any action, suit, proceeding, hearing, or investigation of, in, or
before any court or quasi-judicial or administrative agency of any federal,
state, local, or foreign jurisdiction, except where the injunction, judgment,
order, decree, ruling, action, suit, proceeding, hearing, or investigation would
not reasonably be expected to involve consideration in excess of $10,000.
(n) Employee Benefits.
(i) [section]4(n) of the Disclosure Schedule lists each
Employee Benefit Plan that Sybra maintains or to which Sybra
contributes and any employment agreements, collective bargaining
agreements, severance agreements or stock-based compensation or other
incentive, insurance or similar, programs which cover current or
former employees of Sybra.
(ii) To the Knowledge of the Seller, each such Employee
Benefit Plan or other arrangement listed on [section]4(n) of the
Disclosure Schedule (and each related trust, insurance contract, or
fund) complies in form and in operation in all respects with the
applicable requirements of ERISA and the Code, except where the
failure to comply would not have a material adverse effect on the
financial condition or results of operations of Sybra, and there has
been no transaction or any act or omission which would subject an
Employee Benefit Plan or any party dealing with an Employee Benefit
Plan to a civil penalty assessed pursuant to Section 502(i) of ERISA
or a tax under Sections 4971 through 4980B of the Code, inclusive.
(iii) All contributions (including all employer
contributions and employee salary reduction contributions) which are
due have been paid to each such Employee Benefit Plan which is either
an Employee Pension Benefit Plan or an Employee Welfare Benefit Plan.
(iv) Each such Employee Benefit Plan which is an Employee
Pension Benefit Plan has received a post-Tax reform Act of 1986
determination letter
14
from the Internal Revenue Service to the effect that it meets the
requirements of Code [section]401(a).
(v) Sybra does not currently contribute, not has Sybra
contributed to a Multiemployer Plan since 1990, and Sybra is not
currently responsible for any "withdrawal liability" as that term is
defined in Section 4201 of ERISA with respect to any Multiemployer
Plan.
(vi) The Sybra, Inc. Retirement Income Plan does not have
any "amount of unfunded benefit liabilities" as such term is
described in Section 4008(a)(18) of ERISA.
(vii) Except as required by applicable law, no Employee
Welfare Benefit Plan has any obligation for post-retirement or post
employment benefits that cannot be terminated upon no more than sixty
(60) days' notice without incurring a liability thereunder.
5. Pre-Closing Covenants. The Parties agree as follows with respect
to the period between the execution of this Agreement and the Closing.
(a) General. Each of the Parties will use its reasonable efforts to
take all action and to do all things necessary in order to consummate and make
effective the transactions contemplated by this Agreement (including
satisfaction, but not waiver, of the closing conditions set forth in [section]7
below).
(b) Notices and Consents. Each Party will give any notices (and cause
each of its Subsidiaries, if any, to give any notices) to third parties, and
each Party will use its reasonable efforts to obtain (and will cause each of its
Subsidiaries, if any, to use its reasonable efforts to obtain) any third party
consents including the Required Consents of Seller and the Required Consents of
Buyer, that the other Party reasonably may request in connection with the
matters referred to in [section]3(a)(iii), [section]3(b)(iii) and [section]4(c)
above and the related Disclosure Schedule. Each of the Parties will (and will
cause each of its Subsidiaries, if any, to) give any notices to, make any
filings with, and use its reasonable efforts to obtain any authorizations,
consents, and approvals of governments and governmental agencies in connection
with the matters referred to in [section]3(a)(iii), [section]3(b)(iii) and
[section]4(c) above and the related Disclosure Schedule. Without limiting the
generality of the foregoing, each of the Parties will file (and will cause each
of its Subsidiaries, if any, to file as applicable) any notification and report
forms and related material that it may be required to file with the Internal
Revenue Service, the Federal Trade Commission and the Antitrust Division of the
United States Department of Justice under the Xxxx-Xxxxx-Xxxxxx Act or
otherwise, will use its reasonable efforts to obtain (and will cause each of its
Subsidiaries, if any, to use its reasonable efforts to obtain) early termination
of the applicable waiting period, and will make (and will cause each of its
Subsidiaries, if any, to use its reasonable efforts to obtain) any further
filings pursuant thereto that may be necessary.
15
(c) Operation of Business. The Seller will not permit Sybra to engage
in any practice, take any action, or enter into any transaction outside the
Ordinary Course of Business except (i) as contemplated in the USRP Agreement or
this Agreement, (ii) Sybra may pay dividends or make other distributions to
Valcor as permitted by Sybra's bank credit agreements, (iii) Sybra may repay
intercompany loans from Valcor, and (iv) Sybra may make the dividends and
distributions contemplated by [section]2(c).
(d) Access. The Seller will permit representatives of the Buyer to
have access at all reasonable times, and in a manner so as not to interfere with
the normal business operations of Sybra, to all premises, properties, personnel,
books, records (including tax records), contracts, and documents of or
pertaining to Sybra as Buyer may reasonably request from time to time solely for
the purpose of confirming Seller's compliance with [section]5(c) above. The
Buyer will treat and hold in confidence any Confidential Information it receives
or has received from the Seller or Sybra in the course of due diligence review
or the reviews contemplated by this [section]5(d), will not use any of the
Confidential Information except in connection with this Agreement, and, if this
Agreement is terminated for any reason whatsoever, will return to the Seller and
or destroy, at Seller's or Sybra's request, all tangible embodiments (and all
copies) including, without limitation, all electronic media, of the Confidential
Information which are in its possession.
(e) Notice of Developments.
(i) The Seller may elect at any time to notify the Buyer of
any development causing a breach of any of its representations and
warranties in [section]4 above. Unless the Buyer has the right to
terminate this Agreement pursuant to [section]9(a)(ii) below by
reason of the development and exercises that right within the period
of ten (10) business days referred to in [section]9(a)(ii) below, the
written notice pursuant to this [section]5(e)(i) will be deemed to
have amended the Disclosure Schedule, to have qualified the
representations and warranties contained in [section]4 above, and to
have cured any misrepresentation or breach of warranty that otherwise
might have existed hereunder by reason of the development.
(ii) Each Party will give prompt written notice to the
other Party of any material adverse development causing a breach of
any of its own representations and warranties in [section]3 above. No
disclosure by any Party pursuant to this [section]5(e)(ii), however,
shall be deemed to amend or supplement the Disclosure Schedule or to
prevent or cure any misrepresentation or breach of warranty.
(f) Other Transactions. Prior to the expiration of the time periods
specified in [section]7(a)( x) and (xi), the Seller agrees, on behalf of itself
and each of its Affiliates, that, prior to Closing it will not, and will cause
each of its officers, directors, representatives and agents not to, directly or
indirectly, take any action to solicit, encourage, initiate or facilitate
(including by way of making available or furnishing information) any inquiries,
16
proposals or offers with respect to any merger or consolidation involving Sybra,
the acquisition of Sybra Shares or the acquisition of all or substantially all
of the assets of Sybra other than the Real Property Assets by any person other
than the Buyer or its permitted assigns. After the expiration of the time
periods specified in [section]7(a)( x) and (xi), Seller shall no longer be
subject to the limitations of the foregoing sentence unless Buyer has provided
evidence reasonably satisfactory to Seller that Buyer has obtained the formal
commitment letters specified in [section]7(a)(xi).
(g) Estoppel Certificates.
(i) By no later than five (5) business days following the
date of this Agreement, Seller shall cause Sybra to send out for
execution estoppel certificates, in the form of Exhibit D, to each
of its lessors or sublessors, as the case may be.
(ii) Seller agrees to cause Sybra to use commercially
reasonable efforts, without incurring any additional expenses to any
lessor or sublessor unless such expenditure is required by the terms
of a particular lease (a "Consent Fee"), to obtain the maximum number
of estoppel certificates prior to the Closing Date. Buyer agrees to
pay to Seller, prior to expenditure by Seller, an amount equal to
each Consent Fee. At Closing, Seller shall credit Buyer against the
Purchase Price an amount equal to the aggregate amount paid by Buyer
to Seller in respect of Consent Fees.
(iii) Seller agrees to cause Sybra to promptly deliver to
Buyer copies of the executed estoppel certificates as they are
received by Sybra prior to and on the Closing Date.
6. Post-Closing Covenants. The Parties agree as follows with respect
to the period following the Closing.
(a) General. In case at any time after the Closing any further action
is necessary to carry out the purposes of this Agreement, each of the Parties
will take such further action (including the execution and delivery of such
further instruments and documents) as the other Party reasonably may request,
all at the sole cost and expense of the requesting Party (except to the extent
that the requesting Party is entitled to indemnification therefor under
[section]8 below).
(b) Litigation Support. In the event and for so long as any Party
actively is contesting or defending against any action, suit, proceeding,
hearing, investigation, charge, complaint, claim, or demand in connection with
(i) any transaction contemplated under this Agreement or (ii) any fact,
situation, circumstance, status, condition, activity, practice, plan,
occurrence, event, incident, action, failure to act, or transaction on or prior
to the Closing Date involving Sybra, the other Party shall cooperate with it and
its counsel in the defense or contest, make available its personnel, and provide
such
17
testimony and access to its books and records as shall be necessary in
connection with the defense or contest, all at the sole cost and expense of the
contesting or defending Party (except to the extent that the contesting or
defending Party is entitled to indemnification therefor under [section]8 below).
(c) Employee Benefits Matters. The Buyer will adopt and assume at and
as of the Closing each of the Employee Benefit Plans identified in [section]4(n)
of the Disclosure Schedule that Sybra maintains and each trust, insurance
contract, annuity contract, or other funding arrangement that the Seller has
established with respect thereto. The Buyer will ensure that on and after the
Closing Date the Employee Benefit Plans credit employment with Sybra in the same
manner that employment with Sybra prior to the Closing Date was credited for
purposes of eligibility, vesting, and benefit accrual. The Seller will transfer
(or cause the plan administrators to transfer) at and as of the Closing all of
the corresponding assets associated with the Employee Benefit Plans that the
Buyer is adopting and assuming, with such transfers to occur at or as soon as
administratively possible after the Closing without imposition of any
conditions.
7. Conditions to Obligation to Close.
(a) Conditions to Obligation of the Buyer. The obligation of the
Buyer to consummate the transactions to be performed by it in connection with
the Closing is subject to satisfaction of the following conditions:
(i) the representations and warranties set forth in
[section]3(a) and [section]4 above shall be true and correct in all
material respects at and as of the Closing Date;
(ii) the Seller shall have performed and complied with all
of its covenants hereunder in all material respects through the
Closing;
(iii) there shall not be any injunction, judgment, order,
decree, ruling, or charge in effect preventing consummation of any of
the transactions contemplated by this Agreement;
(iv) the Seller shall have delivered to the Buyer a
certificate to the effect that each of the conditions specified above
in [section]7(a)(i)-(iii) is satisfied in all respects;
(v) all applicable waiting periods (and any extensions
thereof) under the Xxxx-Xxxxx-Xxxxxx Act shall have expired or
otherwise been terminated and the Buyer shall have received the
Required Consents of Buyer and all other authorizations, consents,
and approvals of governments and governmental agencies referred to in
[section]3(a)(iii), [section]3(b)(iii), and [section]4(c) above;
(vi) all conditions have been satisfied or waived to the
obligations of the parties to the USRP Agreement and the Units
Purchase Agreement and the
18
closings of the transactions contemplated in the USRP Agreement shall
occur simultaneously with the Closing;
(vii) all conditions have been satisfied to the
obligations of the parties to the Lease and the closings of the
transactions contemplated in the Lease shall occur simultaneously
with the Closing;
(viii) all actions to be taken by the Seller in connection
with consummation of the transactions contemplated hereby and all
certificates, instruments, and other documents required to effect the
transactions contemplated hereby will be reasonably satisfactory in
form and substance to the Buyer;
(ix) Passage of the Effective Date of the First Amended
Joint Plan of Reorganization under Chapter 11, filed in the Chapter
11 cases of I.C.H. Corporation and its related debtors, pending in
the United States Bankruptcy Court for the Northern District of Texas
as Jointly Administered Case Number 395-36351-RCM-11;
(x) Buyer shall have completed a satisfactory business and
due diligence review of Sybra; provided, however, that the condition
to closing set forth in this clause (x) shall expire on the
thirty-fifth day following the date of this Agreement;
(xi) Buyer shall have obtained formal commitment letters
for the financing of at least $31,000,000, which commitment letters
shall be on terms and conditions that are reasonably satisfactory to
Buyer from a commercial point of view; provided, however, that the
condition to closing set forth in this clause (xi) shall expire on
the thirty-fifth day following the date of this Agreement; and
(xii) Buyer shall have received the 1996 audited financial
statements of Sybra, including the unqualified opinion of Sybra's
independent public accountants.
The Buyer may waive any condition specified in this [section]7(a) if it executes
a writing so stating at or prior to the Closing.
(b) Conditions to Obligation of the Seller. The obligation of the
Seller to consummate the transactions to be performed by it in connection with
the Closing is subject to satisfaction of the following conditions:
(i) the representations and warranties set forth in
[section]3(b) above shall be true and correct in all material
respects at and as of the Closing Date;
(ii) the Buyer shall have performed and complied with all
of its covenants hereunder in all material respects through the
Closing;
19
(iii) there shall not be any injunction, judgment, order,
decree, ruling, or charge in effect preventing consummation of any of
the transactions contemplated by this Agreement;
(iv) the Buyer shall have delivered to the Seller a
certificate to the effect that each of the conditions specified above
in [section]7(b)(i)-(iii) is satisfied in all respects;
(v) all applicable waiting periods (and any extensions
thereof) under the Xxxx-Xxxxx-Xxxxxx Act shall have expired or
otherwise been terminated and the Seller and Sybra shall have
received the Required Consents of Seller and all other
authorizations, consents, and approvals of governments and
governmental agencies referred to in [section]3(a)(ii),
[section]3(b)(ii), and [section]4(c) above;
(vi) all conditions have been satisfied to the obligations
of the parties to the USRP Agreement and the Units Purchase Agreement
and the closings of the transactions contemplated in the USRP
Agreement and the Units Purchase Agreement shall occur simultaneously
with the Closing;
(vii) all conditions have been satisfied to the
obligations of the parties to the Lease and the closings of the
transactions contemplated in the Lease shall occur simultaneously
with the Closing; and
(viii) all actions to be taken by the Buyer in connection
with consummation of the transactions contemplated hereby and all
certificates, instruments, and other documents required to effect the
transactions contemplated hereby, which may include any instruments
or documents required by Arby's, Inc. to be executed by the Buyer,
will be reasonably satisfactory in form and substance to the Seller.
The Seller may waive any condition specified in this [section]7(b) if it
executes a writing so stating at or prior to the Closing.
8. Remedies for Breaches of this Agreement.
(a) Survival of Representations and Warranties. Except with respect
to the representations and warranties of the Seller contained in
[section][section]4(b), (j), (m) and (n), which shall survive for the applicable
statute of limitations, none of the representations and warranties of the Seller
contained in [section]4 above shall survive the Closing. All of the
representations and warranties of the Parties contained in [section]3 above
shall survive the Closing (unless the damaged Party knew or had reason to know
of any misrepresentation or breach of warranty contained in [section]3 above at
the time of Closing) and continue in full force and effect forever thereafter
(subject to any applicable statutes of limitations).
20
(b) Indemnification Provisions for Benefit of the Buyer. In the event
the Seller breaches any of its representations and warranties contained in
[section]3(a) and [section]4 of this Agreement, any covenants contained in this
Agreement or any representations and warranties contained in any stock transfer
or other conveyance executed pursuant to this Agreement, and, if there is an
applicable survival period pursuant to [section]8(a) above, provided that the
Buyer makes a written claim for indemnification against the Seller pursuant to
[section]11(g) below within such survival period, then the Seller agrees to
indemnify the Buyer from and against any Adverse Consequences the Buyer shall
suffer through and after the date of the claim for indemnification (but
excluding any Adverse Consequences the Buyer shall suffer after the end of any
applicable survival period) caused proximately by the breach; provided, however,
that the Seller shall not have any obligation to indemnify the Buyer from and
against any Adverse Consequences caused by the breach of any representation or
warranty of the Seller contained in [section]4 of this Agreement other than
those contained in [section]4(j), (m) and (n). Seller's indemnification
obligation to the Buyer pursuant to this Subsection and [section]10 (other than
with respect to breaches of the representations and warranties of Seller
contained in [section][section]3(a) and 4(b)) together with Valcor's
indemnification obligations under the USRP Agreement shall not exceed $4,000,000
in the aggregate, determined, as of any relevant date, based upon claims
actually paid as of such date by Valcor to Buyer or USRP. Buyer agrees that it
will not seek indemnification for any claim under this Subsection unless the
aggregate of all claims under this Subsection together with all claims under the
USRP Agreement , determined as of the date any claim is made, will result in
loss to Buyer and/or USRP in excess of $250,000 in the aggregate, and then only
to the extent of such excess, up to and subject to the $4,000,000 limitation
specified above.
(c) Indemnification Provisions for Benefit of the Seller. In the
event the Buyer breaches any of its representations in [section]3 above or any
of its covenants contained in this Agreement, the Buyer agrees to indemnify the
Seller from and against any Adverse Consequences the Seller shall suffer through
and after the date of the claim for indemnification caused proximately by the
breach.
(d) Matters Involving Third Parties.
(i) If any third party shall notify any Party (the
"Indemnified Party") with respect to any matter (a "Third Party
Claim") which may give rise to a claim for indemnification against
the other Party (the "Indemnifying Party") under this [section]8,
then the Indemnified Party shall promptly (and in any event within
ten (10) business days after receiving notice of the Third Party
Claim) notify the Indemnifying Party thereof in writing.
(ii) The Indemnifying Party will have the right to assume
and thereafter conduct the defense of the Third Party Claim with
counsel of its choice; provided, however, that the Indemnifying Party
will not consent to the entry of any judgment or enter into any
settlement with respect to the Third Party Claim
21
without the prior written consent of the Indemnified Party (not to be
withheld unreasonably) unless the judgment or proposed settlement
involves only the payment of money damages and does not impose an
injunction or other equitable relief upon the Indemnified Party.
(iii) Unless and until the Indemnifying Party assumes the
defense of the Third Party Claim as provided in [section]8(d)(ii)
above, however, the Indemnified Party may defend against the Third
Party Claim in any manner it reasonably may deem appropriate.
(iv) In no event will the Indemnified Party consent to the
entry of any judgment or enter into any settlement with respect to
the Third Party Claim without the prior written consent of the
Indemnifying Party except to the extent that the Indemnified Party
elects to waive its right to indemnification hereunder with respect
to such claim.
(e) Determination of Adverse Consequences. The Parties shall make
appropriate adjustments for tax benefits and insurance coverage and take into
account the time cost of money (using the Applicable Rate as the discount rate)
in determining Adverse Consequences for purposes of this [section]8. All
indemnification payments under this [section]8 shall be deemed adjustments to
the Purchase Price.
(f) Other Indemnification Provisions. The indemnification provisions
in this [section]8 are the sole remedy any Party may have after the Closing for
breach of representation or warranty in this Agreement, any covenant in this
Agreement (excluding those set forth in [section]6 of this Agreement) or any
representations and warranties contained in any stock transfer or other
conveyance executed pursuant to this Agreement; provided, however, that the
Buyer acknowledges and agrees that it shall not have any remedy after the
Closing for any breach of the representations and warranties in [section]4 above
(other than [section]4(j), (m) and (n)); and provided further, either Party
shall be entitled to specific performance of all covenants.
9. Termination.
(a) Termination of Agreement. The Parties may terminate this
Agreement as provided below:
(i) the Buyer and the Seller may terminate this Agreement
by mutual written consent at any time prior to the Closing;
(ii) the Buyer may terminate this Agreement by giving
written notice to the Seller at any time prior to the Closing in the
event (A) the Seller has within the then previous ten (10) business
days given the Buyer any notice pursuant to [section]5(e)(i) above
and (B) the development that is the subject of the notice has had
22
or is reasonably expected to have a material adverse effect upon the
financial condition or results of operations of Sybra;
(iii) the Buyer may terminate this Agreement by giving
written notice to the Seller at any time prior to the Closing (A) in
the event the Seller has breached any representation, warranty, or
covenant contained in this Agreement in any material respect, the
Buyer has notified the Seller of the breach, and the breach has
continued without cure for a period of thirty (30) days after the
notice of breach, or (B) if the Closing shall not have occurred on or
before April 14, 1997, by reason of the failure of any condition
precedent under [section]7(a) hereof (unless the failure results
primarily from the Buyer itself breaching any representation,
warranty, or covenant contained in this Agreement);
(iv) the Seller may terminate this Agreement by giving
written notice to the Buyer at any time prior to the Closing (A) in
the event the Buyer has breached any representation, warranty, or
covenant contained in this Agreement in any material respect, the
Seller has notified the Buyer of the breach, and the breach has
continued without cure for a period of thirty (30) days after the
notice of breach or (B) if the Closing shall not have occurred on or
before April 14, 1997, by reason of the failure of any condition
precedent under [section]7(b) hereof (unless the failure results
primarily from the Seller itself breaching any representation,
warranty, or covenant contained in this Agreement); and
(v) the Buyer may terminate this Agreement by giving
written notice to the Seller at any time prior to the expiration of
the time periods provided in [section]7(a)(x) and (xi) if Buyer is
not satisfied with its business and due diligence review of Sybra as
provided in [section]7(a)(x) or Buyer has not obtained formal
commitment letters as provided in [section]7(a)(xi).
(b) Effect of Termination. If any Party terminates this Agreement
pursuant to [section]9(a) above, all rights and obligations of the Parties
hereunder shall terminate without any liability of any Party to any other Party
(except for any liability of any Party then in breach); provided, however, that
the confidentiality provisions contained in [section]5(d) above shall survive
termination.
10. Income Tax Matters.
(a) Income Tax Sharing Agreements. Any Income Tax sharing agreement
between Affiliated Group Parent or any of its Subsidiaries and Sybra is
terminated as of the Closing Date and will have no further effect for any future
taxable year.
(b) Income Taxes of Other Persons. The Seller agrees to indemnify the
Buyer from and against any Adverse Consequences the Buyer may suffer resulting
from, arising out of, relating to, in the nature of, or caused by any Liability
of Sybra for Income
23
Taxes of any Person other than Sybra under (i) Reg. [section]1.1502-6 (or any
similar provision of state, local or foreign law), or (ii) any Income Tax
sharing agreement.
(c) Returns for Periods Through the Closing Date. Affiliated Group
Parent will include the income of Sybra (including any deferred income triggered
into income by Reg. [section]1.1502-13 and Reg. [section]1. 1502-14 and any
excess loss accounts taken into income under Reg. [section]1.1502-19) on the
Affiliated Group Parent consolidated federal Income Tax Returns for all periods
through the Closing Date and pay any Income Taxes attributable to such income,
including without limitation any Income Tax on any income or gain Sybra may
realize in respect of the transactions contemplated by the USRP Agreement. Sybra
will furnish Income Tax information to Affiliated Group Parent for inclusion in
Affiliated Group Parent's federal consolidated Income Tax Return for the period
which includes the Closing Date and will pay to Affiliated Group Parent its
separate company Income Tax liability for such period, computed in accordance
with the Affiliated Group Parent tax sharing agreement in effect through the
Closing Date in accordance with Sybra's past custom and practice, including
without limitation any Income Tax on any income or gain Sybra may realize in
respect of the transactions contemplated by the USRP Agreement. The income of
Sybra for the period up to and including the Closing Date and for the period
after the Closing Date shall be determined by closing the books of Sybra as of
the end of the Closing Date.
(d) Audits. Affiliated Group Parent will allow Sybra and its counsel
to participate at its own expense in any audits of Affiliated Group Parent
consolidated Income Tax Returns to the extent that such returns relate to Sybra
tax periods ending on or prior to the Closing Date. Affiliated Group Parent will
cooperate with Sybra and its counsel and provide access to books and records
relating to Sybra reasonably related to such audit. Affiliated Group Parent will
not settle any such audit in a manner which would adversely affect Sybra after
the Closing Date without the prior written consent of the Buyer or Sybra, which
consent shall not unreasonably be withheld.
(e) Carrybacks. Affiliated Group Parent will immediately pay to the
Buyer any Income Tax refund (or reduction in Income Tax liability) resulting
from a carryback of a post-Closing Date Income Tax attribute of Sybra into the
Affiliated Group Parent consolidated Income Tax return, when such refund or
reduction is realized by the Affiliated Group Parent group. Affiliated Group
Parent will cooperate with Sybra in obtaining such refunds (or reduction in
Income Tax liability), including through the filing of amended Income Tax
returns or refund claims. The Buyer agrees to indemnify Affiliated Group Parent
for any Income Taxes resulting from the disallowance of such post-Closing Date
Income Tax attribute on audit or otherwise.
(f) Post-Closing Elections. At Affiliated Group Parent's request, the
Buyer will cause Sybra to make and/or join with Affiliated Group Parent in
making certain tax return elections after Closing, as required under the
Affiliated Group Parent tax sharing agreement in effect through the Closing
Date. At Affiliated Group Parent's request, the Buyer will cause Sybra to make
or join with Affiliated Group Parent in making any other
24
election if the making of such election does not have a material adverse impact
on the Buyer (or Sybra) for any postacquisition Income Tax period. Seller agrees
to indemnify Buyer for any liability resulting from such elections.
(g) Indemnification for Post-Closing Transactions. Buyer agrees to
indemnify Seller and Affiliated Group Parent for any additional Income Tax owed
by Seller and/or Affiliated Group Parent (including Income Tax owed by Seller
and/or Affiliated Group Parent due to this indemnification payment) resulting
from any transaction not in the ordinary course of business occurring on or
after the Closing Date following Buyer's purchase of Seller's Sybra Shares.
(h) Post-Closing Transactions not in the Ordinary Course. Buyer and
Seller agree to report all transactions not in the Ordinary Course of Business
occurring on the Closing Date after Buyer's purchase of Seller's Sybra Shares on
Buyer's Income Tax Return to the extent permitted by Reg.
[section]1.1502-76(b)(1)(B).
11. Miscellaneous.
(a) Press Releases and Public Announcements. No Party shall issue any
press release or make any public announcement relating to the subject matter of
this Agreement prior to the Closing without the prior written approval of the
other Party; provided, however, that any Party or any affiliate of such Party
may make any public disclosure it believes in good faith is required by
applicable law or any listing or trading agreement concerning its
publicly-traded securities (in which case the Party which intends, or which has
an affiliate that intends, to issue such press release or make such public
announcement will advise the other Party prior to making the disclosure and
provide the other Party opportunity to comment upon the release or
announcement).
(b) No Third Party Beneficiaries Other than Affiliated Group Parent.
This Agreement shall not confer any rights or remedies upon any Person other
than the Parties and their respective successors and permitted assigns, and as
otherwise set forth in this [section]11(b). The Buyer acknowledges and agrees
that Affiliated Group Parent is intended to be and shall be a beneficiary of
Buyer's representations, warranties, covenants and indemnification obligations
in [section]10 of this Agreement.
(c) Entire Agreement. This Agreement (including the documents
referred to herein) constitutes the entire agreement between the Parties and
supersedes any prior understandings, agreements, or representations by or
between the Parties, written or oral, to the extent they related in any way to
the subject matter hereof.
(d) Succession and Assignment. This Agreement shall be binding upon
and inure to the benefit of the Parties named herein and their respective
successors and permitted assigns. No Party may assign either this Agreement or
any of its rights, interests, or obligations hereunder without the prior written
approval of the other Party; provided however, that (i) Buyer may collaterally
assign its rights, interests and
25
obligations hereunder to its lenders providing the financing to complete the
transactions contemplated by this Agreement, and (ii) after the Closing, Seller
may assign its rights, interests, or obligations under this Agreement to any
successor of Seller's business or any affiliate of Seller, provided that,
concurrently with such assignment Valhi, Inc. enters into an assumption
agreement with respect to Seller's obligations under this Agreement in form and
substance reasonably satisfactory to Buyer.
(e) Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
(f) Headings. The section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
(g) Notices. All notices, requests, demands, claims, and other
communications hereunder will be in writing. Any notice, request, demand, claim,
or other communication hereunder shall be deemed duly given if (and then two
business days after) it is sent by registered or certified mail, return receipt
requested, postage prepaid, and addressed to the intended recipient as set forth
below:
If to the Seller: Valcor, Inc.
---------------- Three Lincoln Centre, Suite 1700
0000 XXX Xxxxxxx
Xxxxxx, XX 00000-0000
Attention: Xxxxx X. X'Xxxxx
Tel: 000-000-0000
Fax: 000-000-0000
Copy to: Xxxxx X. Xxxxxxxxx
------- Bartlit Xxxx Xxxxxx Xxxxxxxxx & Xxxxx
000 00xx Xxxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxx 00000
Tel: 000-000-0000
Fax: 000-000-0000
If to the Buyer: I.C.H. Corporation
--------------- c/o Xxxxx X. Arabia
0000 Xxxxxxx Xxxxxx, Xxxxx 000
Xx Xxxxx, XX 00000
Tel: 000-000-0000
Fax: 000-000-0000
26
Copy to: Xxxxx X. Xxxxx, Esq.
------- Pryor, Cashman, Xxxxxxx & Xxxxx
000 Xxxx Xxxxxx, 00xx xxxxx
Xxx, Xxxx, XX 00000
Tel: 000-000-0000
Fax: 000-000-0000
Any Party may send any notice, request, demand, claim, or other communication
hereunder to the intended recipient at the address set forth above using any
other means (including personal delivery, expedited (next-day) courier,
messenger service, telecopy, telex, ordinary mail, or electronic mail), but no
such notice, request, demand, claim, or other communication shall be deemed to
have been duly given unless and until it actually is received by the intended
recipient; provided, however, that any such notice sent by expedited (next-day)
courier shall be deemed to have been duly given when delivered to the address
set forth above for the intended recipient. Any Party may change the address to
which notices, requests, demands, claims, and other communications hereunder are
to be delivered by giving the other Party notice in the manner herein set forth.
(h) Governing Law; Jurisdiction. This Agreement shall be governed by
and construed in accordance with the domestic laws of the State of Delaware
without giving effect to any choice or conflict of law provision or rule
(whether of the State of Delaware or any other jurisdiction) that would cause
the application of the laws of any jurisdiction other than the State of
Delaware. Any judicial proceeding brought by or against any party to this
Agreement in respect of claims arising under or relating to this Agreement shall
be brought only in a court of competent jurisdiction located in the State of
Delaware, United States of America. By execution and delivery of this Agreement,
each party accepts for itself and in connection with its properties, generally
and unconditionally, the non-exclusive jurisdiction of the aforesaid courts.
Each party to this Agreement waives any objection to jurisdiction and venue of
any action instituted hereunder and shall not assert any defense based on lack
of jurisdiction or venue or based upon forum non conveniens. Nothing in this
subsection shall affect the right to serve process in any manner permitted by
law.
(i) Amendments and Waivers. No amendment of any provision of this
Agreement shall be valid unless the same shall be in writing and signed by the
Buyer and the Seller. No waiver by any Party of any default, misrepresentation,
or breach of warranty or covenant hereunder, whether intentional or not, shall
be deemed to extend to any prior or subsequent default, misrepresentation, or
breach of warranty or covenant hereunder or affect in any way any rights arising
by virtue of any such prior or subsequent occurrence.
(j) Severability. Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction shall not affect
the validity or
27
enforceability of the remaining terms and provisions hereof or the validity or
enforceability of the offending term or provision in any other situation or in
any other jurisdiction.
(k) Expenses. Each of the Buyer and the Seller will bear its own
costs and expenses (including legal fees and expenses) incurred in connection
with this Agreement and the transactions contemplated hereby. Notwithstanding
the foregoing sentence, Buyer shall bear the costs of any and all transfer
taxes, including without limitation any use or sales taxes, associated with or
related to the sale of the Sybra Shares.
(l) Construction. In the event an ambiguity or question of intent or
interpretation arises, this Agreement shall be construed as if drafted jointly
by the Parties and no presumption or burden of proof shall arise favoring or
disfavoring any Party by virtue of the authorship of any of the provisions of
this Agreement. Any reference to any federal, state, local, or foreign statute
or law shall be deemed also to refer to all rules and regulations promulgated
thereunder, unless the context requires otherwise. The word "including" shall
mean including without limitation.
(m) Incorporation of Exhibits. The Exhibits and any annexes and
schedules identified in this Agreement are incorporated herein by reference and
made a part hereof.
*****
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement
as of the date first above written.
I.C.H. CORPORATION
By: ________________________________
Title: _____________________________
VALCOR, INC., a Delaware corporation
By: ________________________________
Title: _____________________________
20815.d9
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